May 25

Today’s News 25th May 2022

  • Finland, Sweden Dispatch Teams To Turkey After Erdogan Said 'Don't Even Bother'
    Finland, Sweden Dispatch Teams To Turkey After Erdogan Said ‘Don’t Even Bother’

    Finland and Sweden on Tuesday confirmed they are sending delegations to Ankara in hopes of resolving issues surrounding Turkey’s publicly voiced vehement opposition to the two countries’ bids to join NATO. They formally submitted their applications in a ceremony attended by NATO Secretary-General Jens Stoltenberg last week, which Turkey immediately sought to block.

    Finnish Foreign Minister Pekka Haavisto said the delegations will begin meetings with Turkish counterparts on Wednesday, even after days ago President Recep Tayyip Erdoğan said Finnish and Swedish diplomatic teams “shouldn’t bother coming” if they aren’t prepared to halt support for PKK terrorists.

    Speaking during a panel discussion of the World Economic Forum in Davos, Haavisto acknowledged, “We understand that Turkey has some of their own security concerns vis-a-vis terrorism.” He added: “We think that these issues can be settled. There might be also some issues that are not linked directly to Finland and Sweden but more to other NATO members.”

    Pekka Haavisto, Minister for Foreign Affairs of Finland in Davos, via EPA

    US Secretary Antony Blinken and the Biden administration say they’re “confident” the issues will be smoothed over, despite Ankara officials still showing no sign of stopping the denunciations. Turkey has also demanded that Sweden extradite “terrorists” being hosted in its midst, along with the Nordic countries immediately lifting an EU arms embargo which took effect in 2019 in response to the Turkish military’s anti-Kurdish operations in northern Syria.

    According to the latest statements from Turkey’s foreign ministry, Ankara is waiting on both countries to take concrete steps. “Sweden, which has applied for membership, is expected to take principled steps and provide concrete assurances regarding Turkey’s security concerns,” a statement said.

    “Since 2017, our country has requested the extradition of PKK/PYD and FETO terrorists from Sweden but has yet to receive a positive response,” it added in reference referring to Syria’s main Kurdish party PYD and the Gulenist group FETO.

    Swedish Foreign Minister Ann Linde meanwhile said that “There are a number of diplomatic initiatives ongoing,” but didn’t saying whether there’s been progress made. This after on Saturday Erdogan held phone calls with the leaders of Finland and Sweden informing them of his objections.

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    “I stated that as NATO allies Finland and Turkey will commit to each other’s security and our relationship will thus grow stronger,” Finnish President Niinisto had said after the call.

    Likely there’s currently intense Russian diplomacy being aimed at the Turkish government arguing that Finland especially, which shares an over 800-mile long border with Russia, must not be admitted into the Western military alliance.

    Tyler Durden
    Wed, 05/25/2022 – 02:45

  • UK Chancellor Plans To Levy Windfall Tax If Energy Firms Fail To Reinvest "Enormous Profits"; Report
    UK Chancellor Plans To Levy Windfall Tax If Energy Firms Fail To Reinvest “Enormous Profits”; Report

    Update (0820ET): UK Chancellor Rishi Sunak has asked officials to look at a windfall tax on electricity generators, as well as oil and gas companies, according to reports.

    RBC Europe analyst John Musk wrote in a note that a windfall tax on British utilities is “very short-sighted” and could risk billions of pounds of future investment in the UK.

    Such a levy could cost the country £100 billion ($125 billion) by 2030 if it discourages investors, adding that a large element of the government’s Energy Security Strategy would be “at risk” if the plans went ahead because of lower confidence in future investments.

    Ofgem, the UK’s energy regulator, today indicated that the UK’s energy price is likely to rise to around £2,800 in October, up from £1,971 currently. This would imply a 42% increase in the price cap, somewhat above Goldman Sachs’ previous assumption of 35%. Notably this poushed Goldman to upgrade their UK headline inflation forecast to peak at 10.6% YoY in October, up from 10.2% YoY previously.

    In a separate consultation, Ofgem is proposing changing the price cap at a quarterly, rather than bi-annual frequency, going forward.

    This change could be introduced in October, and would see the price cap updated in the first month of every quarter. While no final decision has been made, Ofgem argues this change would allow consumers to benefit from falling wholesale energy costs more quickly, and would pose a lower risk for energy suppliers, given the shorter fixing period.

    *  *  *

    As The Epoch Times’ Alexander Zhang detailed earlier, the UK government may levy a windfall tax on energy firms if they fail to reinvest their “enormous profits” in domestic energy supplies, a minister has suggested.

    The main opposition Labour Party has been calling on the government to bring in a windfall tax on oil and gas producer profits, which would add another 10 percent to the corporation tax on the companies’ profit on top of the 40 percent they have been paying.

    Several government ministers have openly voiced opposition to the idea, but Chancellor Rishi Sunak has not ruled it out.

    Simon Clarke, chief secretary to the Treasury, warned energy companies that the tax could be levied if they do not invest more in developing more domestic energy sources.

    “The sector is realising enormous profits at the moment. If those profits are not directed in a way in which is productive for the real economy, then clearly all options are on the table,” Clarke told LBC radio on Monday.

    “That’s what we are communicating to the sector, that we obviously want to see this investment, we need to see this investment. If it doesn’t happen, then we can’t rule out a windfall tax,” he added.

    His comments come after several Conservative ministers voiced opposition to the idea of a one-off windfall tax.

    Health Secretary Sajid Javid said on Saturday that the UK has “a very hard-won but strong reputation on being pro-business, welcoming investment,” and the government must be “really careful with these sudden taxes that could have an impact in the long term that we would come to regret.”

    Northern Ireland Secretary Brandon Lewis said the idea “doesn’t really work” and that the government is “very right to be wary of windfall taxes.”

    Meanwhile, Jacob Rees-Mogg, the Brexit opportunities minister, argued it is wrong to raid the “honey pot of business.”

    Talking to Times Radio on Sunday, International Trade Secretary Anne-Marie Trevelyan described a windfall tax as a “very short-term measure,” adding, “I don’t think a windfall tax is the most efficient way to do anything, I don’t think it drives forward at a pace.”

    Education Secretary Nadhim Zahawi warned of the impact a windfall tax could have on elderly people.

    He told Sky News:

    “If you apply a windfall tax, [companies] will probably have to reduce or take away their dividend. Who receives the dividend? Pensioners through their pension funds.”

    The Institute of Economic Affairs (IEA), a London-based free market think tank, has argued that the government could provide help to the population through other measures.

    IEA Economics Fellow Julian Jessop said, “An effective package should include a mix of benefit increases, tax cuts, and measures to lower energy prices, and mainly be targeted at low-income households.”

    “None of this requires a ‘windfall tax’ on energy companies,” he said.

    Tyler Durden
    Wed, 05/25/2022 – 02:00

  • One Billion People At Risk Of Power Blackouts As Global Grids Stretched 
    One Billion People At Risk Of Power Blackouts As Global Grids Stretched 

    This summer, power grids worldwide won’t produce enough electricity to meet the soaring demand, threatening more than one billion people with rolling blackouts. Grids are stretched thin by fossil fuel shortages, drought and heatwaves, commodity disruptions and soaring prices due to the war in Ukraine, and the failed green energy transition where grid operators retired too many fossil fuel generation plants. Combine this all together, and a perfect storm of blackouts threatens much of the Northern Hemisphere. 

    The power crisis, affecting a large swath of the world and top economies, could be less than a month away when summer begins on June 21. Regions that concerned Bloomberg are Asia, Europe, and the US, where there’s not enough power to go around when cooling demand is set to surge as households crank up their air conditions to escape the sweltering heat. 

    Asia’s heatwave has caused hours-long daily blackouts, putting more than 1 billion people at risk across Pakistan, Myanmar, Sri Lanka and India, with little relief in sight. Six Texas power plants failed earlier this month as the summer heat just began to arrive, offering a preview of what’s to come. At least a dozen US states from California to the Great Lakes are at risk of electricity outages this summer. Power supplies will be tight in China and Japan. South Africa is poised for a record year of power cuts. And Europe is in a precarious position that’s held up by Russia — if Moscow cuts off natural gas to the region, that could trigger rolling outages in some countries. –Bloomberg 

    BloombergNEF analyst Shantanu Jaiswal says the combination of “war and sanctions” disrupting commodity markets, “extreme weather,” and “an economic rebound from COVID boosting power demand” is a “unique” situation that he “can’t recall” the last time a “confluence of so many factors” happened together. As we noted in the beginning, it’s a perfect storm of factors. 

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    Henning Gloystein, an analyst at Eurasia Group, warns if major blackouts spread across the world this summer, “that could trigger some form of humanitarian crisis in terms of food and energy shortages on a scale not seen in decades.”

    If the US is any guide to the world’s faltering power grids, as warned last week, regulators said half the country could experience blackouts from the Great Lakes to the West Coast. The reason is due to the lack of power generation and a megadrought. 

    The pattern across the world’s power grids is fragility due to the lack of fossil fuel investments and the reduction of fossil fuel power generation plants as grids attempt to transition to cleaner and greener power sources. 

    Alex Whitworth, an analyst with Wood Mackenzie Ltd, points out that as grids transition to green energy, the lack of battery storage when the sun doesn’t shine or the wind doesn’t blow will create instabilities and more stress on grids at a time fossil fuel plants are being retired at a rapid clip. 

    “You’ll be facing a supply scare every time there’s clouds or storms or a wind drought for a week,” Whitworth said. “We really expect these problems to get worse in the next five years.”

    Bloomberg provides a snapshot of the most strain grids that could result in massive power blackouts this summer: 

    US

    Supplies of natural gas, the No. 1 power-plant fuel in the US, are constrained nationwide and prices are soaring. Power in much of the country and part of Canada will be stretched, according to the North American Electric Reliability Corporation. It’s among the most dire assessments yet from the regulatory body. Consumers will be asked to step up to help keep the grids stable by curtailing their consumption.  

    In California, the most populous state, gas supplies are clipped even further because of a pipeline rupture last year that has limited imports. Plus, climate change is fueling drought, severely curbing hydropower supplies. The California Independent System Operator said this month that the state may be at risk of blackouts for the next few summers amid extreme weather.

    On the 15-state grid operated by the Midcontinent Independent System Operator (MISO), consumers in 11 states are at risk of outages. MISO, which serves about 42 million people, projected it has “insufficient” power generation to meet the highest demand periods this summer, especially in its Midwest states. The grid has never before given a warning of this kind ahead of the start of summer demand.

    In Texas, the grid “is still at risk” of shortages despite the state’s scramble to improve resilience after a February 2021 winter storm that left millions in the dark for days, said Gary Cunningham, director of market research at brokerage Tradition Energy.

    Aging infrastructure and maintenance delays during the pandemic have added to the problems of more severe weather, said Teri Viswanath, lead economist for power, energy and water at CoBank ACB.

    “The US is experiencing more outages globally than any other industrialized nation,” she said. “About 70% of our grid is nearing end of life.”

    Asia

    The epicenter of the outages so far has been South and Southeast Asia, where brutal heat waves have put air conditioners on full blast. Blackouts have been basically nationwide in Pakistan, Sri Lanka and Myanmar, home to a combined 300 million people. And in India, 16 of the nation’s 28 states — home to more than 700 million people — have been grappling with outages of two to 10 hours a day, a state official said this month.

    India’s government has recently directed firms to increase purchases of expensive foreign coal, while also rolling back environmental protocols for mine expansions to try to increase fuel supply. But it remains to be seen whether these moves will ease the strain. The looming monsoon season should bring cooler temperatures and trim energy demand, though it can also flood mining regions and hamper fuel supply.

    In Vietnam, the state-owned utility has been bracing for power shortages for more than a month as demand rises while domestic coal supply has sagged and foreign fuel costs have surged.

    In China, where coal shortages led to widespread power curtailments last year, officials have promised to keep the lights on in 2022 and have pressed coal miners to boost output to a record. Even so, industry officials have warned that the power situation will be tight this summer in the country’s heavily industrialized south, which is far from inland mining hubs and therefore more reliant on expensive foreign coal and gas.

    Japan had a power scare in March, when a cold wave triggered a demand surge just days after an earthquake had knocked several coal and gas plants offline. Power supply is expected to be tight during the upcoming summer months, and demand will likely exceed supply again next winter as well, according to grid forecasts. The Tokyo Metropolitan Government has started a campaign for energy conservation, asking residents to take measures like watching less television.

    Europe

    The risk of blackouts is lower in Europe, because fewer people use air conditioning at home. The continent is also racing to fill its gas storage. 

    But there’s little room for error. A dry spring in Norway has limited hydropower supplies. Adding pressure to prices and supplies are extended outages at Electricite de France SA’s nuclear reactors. The region’s biggest producer cut its nuclear output target for a third time this year, the latest sign that Europe’s power crisis is worsening.

    If Russia were to cut off natural gas supplies to the region, that could be enough to trigger rolling blackouts in some countries, said Fabian Ronningen, a power markets analyst for Rystad Energy.

    While he said the chances that Russia would make that bold move are “unlikely,” his views have become more pessimistic as the war in Ukraine continues; two months ago, he said, he’d have put the chances at “highly unlikely.”

    Some countries have been receiving huge imports of liquefied natural gas and would probably have adequate supplies to absorb the blow, including Spain, France and the UK. The story might be different in Eastern Europe, where nations including Greece, Latvia and Hungary use gas for a significant portion of their power and are heavily dependent on Russian supplies. That’s where the potential would be highest for blackouts, Ronningen said.

    “I don’t think European consumers can even imagine a scenario like that,” he said. “It’s never happened in our lifetime.”

    If grids become stressed and break down this summer, it would be an ominous sign for things to come this winter. 

    Tyler Durden
    Tue, 05/24/2022 – 23:45

  • World War 3: Is The Stage Being Set For The US To Go To War With China And Russia Simultaneously?
    World War 3: Is The Stage Being Set For The US To Go To War With China And Russia Simultaneously?

    Authored by Michael Snyder via The End of The American Dream blog,

    You would have to be out of your mind to fight wars with China and Russia simultaneously.  Unfortunately, the guy in the White House actually fits that description.  Joe Biden has been a hothead throughout his career in politics, but now he is a hothead that is in an advanced state of mental decline.  And as I have warned for more than a year, he is surrounded by the worst foreign policy team in U.S. history, and that is really saying something.  Biden and his team just keep making one colossal mistake after another, and now we are on a path that could soon have us fighting major wars with both China and Russia at the same time.

    If there was ever a time to invoke the 25th Amendment, it is now.  If we start shooting at the Chinese and the Russians, the unthinkable will actually become reality.  There will be no “do overs”, and there will be no going back to the way that life was before.

    During a press conference in Japan, Biden was asked if he would use the U.S. military to defend Taiwan if China invades.  This is how he responded…

    “Very quickly, you didn’t want to get involved in the Ukraine conflict militarily for obvious reasons. Are you willing to get involved militarily to defend Taiwan if it comes to that?” a reporter asked the president during a news conference in Japan.

    “Yes,” Biden replied.

    “You are?” the reporter pressed.

    “That’s the commitment we made,” the president said.

    As he made those remarks, Biden seemed dazed and confused, as if he was in some sort of a mental fog at the time.

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    Immediately after Biden’s press conference, administration officials attempted to walk back his remarks.

    They said that he had “misspoke” and that there had been no change in policy.

    But the damage had already been done, and the Chinese were furious.  In fact, a spokesperson for the Chinese Foreign Ministry responded by stating that “there is no room for compromise” when it comes to Taiwan…

    ‘On issues concerning China’s sovereignty and territorial integrity and other core interests, there is no room for compromise,’ said Wang Wenbin, a spokesman for the Chinese Foreign Ministry.

    ‘We urged the US side to earnestly follow the One China principle … be cautious in words and deeds on the Taiwan issue, and not send any wrong signal to pro-Taiwan independence and separatist forces — so it won’t cause serious damage to the situation across the Taiwan Strait and China-US relations.’

    China has always considered Taiwan to be Chinese territory, and in recent weeks there have been all sorts of rumblings that the Chinese are getting ready to invade.

    Let me share just one example with you…

    Officials from the Chinese finance ministry and central bank on April 22 met with representatives of dozens of banks, including HSBC, to discuss what Beijing could do in the event of the imposition of severe sanctions on China. The finance ministry noted, in the words of the Financial Times, that “all large foreign and domestic banks operating in China” were present.

    Participants concluded Beijing could not protect foreign assets, but the holding of the “emergency meeting” is nonetheless ominous. Chinese officials have seen the effect of sanctions imposed on Russia after it launched its “special military operation” in Ukraine in February, and they are planning to weather any such measures applied to their own country.

    Why would the Chinese hold such an emergency meeting?

    Of course the answer is obvious.

    The only reason why the U.S. would impose the same sort of sanctions on China as it has on Russia would be if China decided to invade Taiwan.

    As I have detailed in previous articles, the Chinese have been sending military aircraft into Taiwan’s air defense identification zone on a constant basis for months.  And there have been all sorts of reports and rumors that the Chinese military is actively making preparations for an invasion.

    So that is why Biden is being asked about a potential invasion.  Everyone realizes that such a scenario is a distinct possibility.

    And once China invades, the U.S. and China will immediately be in a state of war.

    In fact, an article that was recently posted on Fox News is suggesting that the Chinese may actually launch a “first strike” against U.S. military assets if it decides to launch an invasion of Taiwan…

    For China to seize Taiwan, it must first gain air superiority and then knock out Taiwan’s navy. And unlike Russia’s invasion of non-NATO ally Ukraine, China must assume from the start that America and Japan will swiftly come to Taiwan’s aid, meaning that China will launch a first strike on American and Japanese naval and air assets. Thus, unless successfully deterred, a Chinese invasion of Taiwan is likely to be a high-intensity affair from the first hour, with American ships, submarines, and air bases targeted by hundreds of Chinese missiles—regardless of whether America formally returns to strategic ambiguity or even abandons Taiwan as some suggest.

    Personally, I don’t think that the Chinese would risk such an attack.

    Instead, I think that they would hit Taiwan with overwhelming force and hope that Biden would just respond with sanctions.

    But I could be wrong.

    Switching gears, both sides continue to escalate the war in Ukraine.

    On Sunday, we learned that the U.S. is actually considering sending troops into Ukraine to guard the U.S. embassy in Kiev…

    Plans to send U.S. forces back into Ukraine to guard the recently reopened American Embassy in Kyiv are “underway at a relatively low level,” Gen. Mark Milley, the chairman of the Joint Chiefs of Staff, said Monday.

    The Wall Street Journal reported Sunday that officials are mulling plans to send special forces to Kyiv to guard the U.S. Embassy. The effort is a delicate one, as it requires balancing the safety of American diplomats while avoiding what Russia could see as an escalation.

    That is not a good idea, but rational people are not running our foreign policy at this point.

    If rational people were making these decisions in Washington, we would not have already committed 54 billion dollars to this conflict.  That is an amount that is nine times larger than what Ukraine normally spends on their entire military for an entire year.

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    In the war in Ukraine, it is the U.S. that is spending most of the money, it is the U.S. that is providing most of the equipment, it is the U.S. that is providing most of the intelligence, and U.S. Secretary of Defense Lloyd Austin has admitted that we are even flying members of the Ukrainian military into the United States to train them.

    This has already become a full-blown proxy war between the United States and Russia, and we are dangerously close to it becoming an actual shooting war between our two nations.

    And that is a scenario that we should be trying to avoid at all costs.

    This week is is also being reported that Vladimir Putin “survived an assassination attempt” shortly after the war in Ukraine began…

    Vladimir Putin survived an assassination attempt not long after starting his war in Ukraine, the country’s intelligence chief has claimed.

    Kyrylo Budanov said Putin was ‘attacked.. by representatives of the Caucasus’ – a region that includes Armenia, Azerbaijan, Georgia and parts of southern Russia – around two months ago.

    ‘[It was an] Absolutely unsuccessful attempt, but it really happened… It was about 2 months ago,’ Budanov said. ‘I repeat, this attempt was unsuccessful. There was no publicity about this event, but it took place.’

    If this happened, I severely doubt that it was “representatives of the Caucasus” that were ultimately behind it.

    To me, it is far more likely that western intelligence was involved.

    And this could explain why I saw Vladimir Putin in danger just before the Russians launched their special military operation.  In that experience I saw that Putin had been knocked down, but he had not been killed.

    However, as I went on to explain, I had another experience that led me to believe that he will ultimately end up dead.  Interestingly, it is being rumored that Putin underwent cancer surgery just last week…

    Vladimir Putin underwent ‘successful’ cancer surgery last week and is recovering, it has been claimed in just the latest rumour about the Russian leader’s health.

    The 69-year-old underwent an unknown procedure late last Monday following advice from medics that treatment was ‘essential’, according to Telegram channel General SVR which claims to be getting information from inside the Kremlin.

    Some in the western media are cheering for Putin’s death, but I believe that whoever replaces him will be even more antagonistic toward the west.

    My hope is that a way can be found to have peace, but at this moment U.S. officials do not seem inclined to pursue peace with Russia.

    Meanwhile, the Biden administration has decided to allow the U.S. military to participate in “an Israeli drill simulating a massive attack on Iran’s nuclear facilities”…

    As if an intense proxy war with nuclear powerhouse Russia isn’t bringing enough heat, the Biden White House has now given the greenlight for unprecedented U.S. participation in an Israeli drill simulating a massive attack on Iran’s nuclear facilities.

    According to The Times of Israel, “The U.S. Air Force will serve as a complementary force, with refueling planes drilling with Israeli fighter jets as they simulate entering Iranian territory and carrying out repeated strikes.” The mock attack on Iran will happen this month, as part of a broader Israeli military exercise called “Chariots of Fire.”

    This is another future war that I have been warning about, and I believe that it could erupt at any time in the months ahead.

    And when the missiles start flying back and forth, the entire globe will be shocked by the carnage and devastation.

    This is a time of wars and rumors of wars, and I believe that World War 3 has already started.

    But for now the major powers are still not shooting at one another, and we should be very thankful for that.

    Unfortunately, the Biden administration continues to make one glaring error after another, and at some point our good fortune will run out.

    *  *  *

    It is finally here! Michael’s new book entitled “7 Year Apocalypse” is now available in paperback and for the Kindle on Amazon.

    Tyler Durden
    Tue, 05/24/2022 – 23:25

  • Morgan Stanley Explores Whether Stock-Based Compensation Should Be Viewed As Cash
    Morgan Stanley Explores Whether Stock-Based Compensation Should Be Viewed As Cash

    As the market looks to scrutinize companies far more closely, thanks to the worsening macroeconomic environment, Morgan Stanley was out with a new note last week discussing the valuation impact of stock based compensation and which companies had the most exposure.

    The note asks whether or not stock based compensation should be treated as a “real” cash expense due to companies potentially needing to issue more stock and equity grants as a way to retain talent. 

    To better help clients understand the issue, the bank provided several analyses looking at the theoretical impact of treating SBC as real cash. The note first pointed out that, on average, SBC represents about 34% of industry FCF for positive FCF companies. 

    The note shows annual SBC as a percentage of 2023 FCF across 39 companies, to show who is most reliant on the practice and where the risk may lie. Topping the list is COMP, RBLX, REVG and LYFT:

    Additionally, the note points out that five names it examined were expected to have negative FCF even excluding SBC:

    It also looked at each company’s current price to FCF excluding SBC and treating it as a cash expensive. Names like AMZN, CHWY, FIGS, PINS, QUOT, ATVI, TRVG and DESP were all impacted. 

    The note found that online advertising and eCommerce were both negatively impacted:

    And finally, it identified which company had the most underwater non-cash equity based awards. MS found that 27 companies it tracks have average equity strike prices underwater by a median of 28%. Names like PTON, LYFT, CHWY, Z and UBER were all at the median, or below it. 

    “Market volatility/talent competition are raising concerns whether SBC should be viewed as cash,” the note, published late last week, said.

    “Part of this is likely cyclical (see prior cycles) but we’re not dismissive. We analyze where FCF and valuation would be most impacted with SBC as cash and which companies’ grants are most under-water.”

    While the note says that these concerns are likely just heightened and temporary, it says that “many investors only focus this much on SBC as a cash expense on the way down”.

    Tyler Durden
    Tue, 05/24/2022 – 23:05

  • JPMorgan Trading Desk Commentary: "The Supply On Our Desk Is Starting To Dissipate"
    JPMorgan Trading Desk Commentary: “The Supply On Our Desk Is Starting To Dissipate”

    After another market rollercoaster session, here are some thoughts from JPMorgan’s trading desk, starting with Ron Adler, TMT trader, who is seeing what may be the start of a reversal in bearish sentiment in the TMT space…

    The transcript on many conversations goes like this: “So I know WHY X is down, but WHY is X down SO MUCH?”

    The supply on our desk is starting to dissipate. Some are trying to pick a bottom in names like SNAP, FB, and UBER…but that strategy has been futile.

    • INTERNET: IT FEELS LIKE YOU CAN’T OWN ANYTHING IN INTERNET RIGHT NOW – CHANGE MY MIND….
    • E-COMMERCE: If AMZN, WMT and TGT are having issues, I don’t think anyone is inclined to be long anything else in eCom.
    • ADVERTISING: between the macro landscape and competition from TikTok, it’s hard to want to own the ad centric names. The ripple effects from SNAP & GOOGL are more like a tidal wave. It almost feels like the all-clear in these names will be TikTok going public (which could be a ways off).
    • RIDESHARING: More people are starting to subscribe to the “great service, tough business” line of thinking. Ridesharing was subsidized dramatically as it scaled with VC funding; they are targeting profitability, but have to subsidize along the way.
    • STREAMING: Starting to feel like the above; “great service, tough business.”
    • OTAs: probably the safest place to hide, but price elasticity and the macro is certainly becoming a risk factor.

    … that optimism however is reversed by the dismal landscape seen by Brian Heavey, the bank’s Consumer trader:

    Combination of more retail blow-ups (ANF) and the slowdown in new home sales this morning just further bolstering the recession case -> anything with leverage getting crushed today (Casinos, cruise lines, casual diners, levered airlines like AAL just to name a few sectors that down 7-10% today). There have been a multitude of data points over the past few weeks showing a consumer spending slowdown and WMT/TGT put it into hyper-drive.

    Credit markets are tightening which is leading to increased risks of ATMs and other equity raises for the levered companies that are not equipped for dramatic slowdown in spending (Cruise lines have barely even seen the pandemic recovery at this point and now will have to grapple with a potential recession…the sector is now firmly back to the INITIAL early pandemic equity offering prices).

    What are we seeing?

    • Investors are shedding leverage, retailers and other sectors that will underperform in a slowdown (a theme we’ve been seeing for weeks now).
    • Defensives/Staples are bouncing following the WMT/TGT sell-off as investors ignore potential margin-driven EPS cuts and seek safety in defensive low vol.
    • We’re 2:1 to buy today in Staples and 1.5 for sale today in Cons Disc (Cons Disc is our second biggest sell sector behind Info Tech today).

    Only real buy tickets we are seeing today is covering in Sporting goods (ASO/DKS down big today ahead of DKS print tomorrow), dept stores while we continue to see real demand for grocery space (ACI, KR).

    Tyler Durden
    Tue, 05/24/2022 – 22:45

  • As Food Protectionism Spreads, India Limits Sugar Exports, Malaysia Halts Chicken Sales
    As Food Protectionism Spreads, India Limits Sugar Exports, Malaysia Halts Chicken Sales

    Tuesday was a jammed-packed day for food protectionism developments across Asia. India announced a sugar export ban, and Malaysia halted shipments of chicken. Like many others in the region, both countries suffer from high inflation. Each respective government and central bank seeks to suppress inflation, and what appears to be the move at the moment (besides raising interest rates) are protectionist measures.

    If inflation continues to run hot in these countries, the risk of socio-economic turmoil increases. 

    Today’s events first began with India. Bloomberg reported earlier that sources expected a sugar export ban was imminent. The Indian government announced the new trade restrictions late in the US cash session. Following India’s lead, Malaysia announced trade restrictions on chickens to curtail rising prices. 

    We suspect more countries to announce protectionist measures to quell food inflation, though such trade restrictions will only exacerbate food insecurity worldwide. 

    * * * 

    Update: India, the world’s second-biggest sugar producer, will cap sugar exports at ten million tons during the current sugar season (2021-22). It’s another attempt to contain inflation and stabilize domestic prices. 

    “Taking into consideration unprecedented growth in exports of sugar and the need to maintain sufficient stock of sugar in the country as well as to safeguard interests of the common citizens of the country by keeping prices of sugar under check, Government of India has decided to regulate sugar exports from June 1, 2022,” Consumer Affairs Ministry said. 

    The ministry will allow only 10 million tons of sugar exports for the season that ends in Sept. 2022. Sugar mills have already contracted 9 million tons, and a record 7.8 million tons have already been shipped. 

    India’s curbs on sugar exports follow another protectionist step as wheat exports were restricted earlier this month. The government is trying to get a handle on soaring food inflation by ensuring adequate domestic supplies. 

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    India’s government is on a protectionist roll. What crop will they ban for export next?

    * * * 

    Food protectionism soars and will continue worldwide through 2022, exacerbating food security risks for the world’s most vulnerable countries. One country safeguarding its food supplies is India. 

    Earlier this month, India’s government halted wheat exports amid heatwaves threatened crop yields. Another act of protectionism could be announced in the coming days with an export restriction on sugar, according to Bloomberg. 

    A person familiar with the new trading restrictions says the government plans to announce a ten million ton cap on sugar exports through September. The move guarantees that domestic stockpiles are adequate ahead of the next growing season in October. 

    India is the second-largest sugar exporter behind Brazil. Its largest customers include Bangladesh, Indonesia, Malaysia, and Dubai. 

    Bloomberg notes the proposed sugar trade restriction “appears to be an extreme case of precaution:” 

    India is expected to produce 35 million tons this season and consume 27 million tons, according to the Indian Sugar Mills Association. Including last season’s stockpiles of about 8.2 million tons, it has a surplus of 16 million, including as much as 10 million for exports.

    India rarely shipped more than 7 million tons until last year, when exports hit a record 7.2 million. Sugar mills tended to rely on government subsidies to boost exports. However, global prices have jumped almost 20% in the past year, allowing India to increase shipments without subsidies. There are expectations for exports to range between 9 million and 11 million tons this season. 

    The person said once shipments reach 9 million tons. Exporters will have to submit paperwork to the government to apply for permits to send the remaining 1 million tons. They added the export halt could support global sugar market prices. 

    Besides increasing protectionism in India, Indonesia’s ban on palm oil exports roiled edible oil markets for a month (the restriction has since been reversed). Malaysia also announced to halt 3.6 million chickens a month from June 1 and increase wheat imports to stabilize prices.   

    The trend is clear: Food protectionism will exacerbate the global food crisis, creating headaches for governments and central banks desperately trying to curb inflation before it becomes unmanageable and results in socio-economic turmoil. 

    Tyler Durden
    Tue, 05/24/2022 – 22:25

  • Russia Will Strengthen Economic Ties With China, Cooperate With Beijing On Technology: Russian Foreign Minister
    Russia Will Strengthen Economic Ties With China, Cooperate With Beijing On Technology: Russian Foreign Minister

    Authored by Frank Fang via The Epoch Times (emphasis ours),

    Russian Foreign Minister Sergei Lavrov said his country will focus on strengthening ties with China, saying the two neighboring countries have common interests and can make technological advances together.

    “Now that the West has taken the position of a ‘dictator,’ our economic ties with China will grow even faster,” Lavrov said, according to a transcript published by Russia’s Foreign Ministry on May 23.

    Russian Foreign Minister Sergei Lavrov (R) shakes hands with his Chinese counterpart Wang Yi at the end of a joint press conference following their meeting in Sochi, Russia, on May 13, 2019. (Pavel Golovkin/AFP via Getty Images)

    According to Russia’s state-run media RT, Lavrov made the remarks while speaking to students at a high school in Moscow.

    Lavrov said Russia and China have “common interests” in international affairs and the two sides can reap the benefits of working closely on technology.

    “This is an opportunity for us to realize our potential in the field of high technology, including nuclear energy, but also in a number of other areas,” Lavrov added.

    Three weeks before Russia invaded Ukraine, Beijing and Moscow updated their bilateral relationship to a “no limits” partnership, following a meeting between Russian President Vladimir Putin and Chinese leader Xi Jinping. The two leaders also declared that there would be “no ‘forbidden’ areas of cooperation” between the two neighbors.

    China has not condemned Russia over its invasion but has been critical of Western sanctions against Moscow. On May 4, Sen. Dick Durbin (D-Ill.), who co-chairs the Senate Ukraine Caucus, informed Qin Gang, China’s ambassador to the United States, that he was “extremely concerned” about China’s refusal to “clearly condemn Putin’s unjustified and unprovoked war.”

    Meanwhile, China’s energy imports from Russia have increased in recent months. The communist regime’s purchase of Russian oil, gas, and coal jumped 75 percent in April to over $6 billion, according to Bloomberg, citing Chinese customs data. Imports of Russia’s liquefied natural gas topped 463,000 tons in April, a surge of 80 percent from a year earlier.

    Lavrov dismissed the possibility that Russia would be willing to improve ties with Western countries soon.

    “If they [the West] want to offer something in terms of resuming relations, then we will seriously consider whether we will need it or not,” he said. “We must stop being dependent in any way on the supply of anything from the West.”

    Space Technology

    One particular field of Sino–Russian cooperation that has great implications for U.S. national security is outer space. The two sides are currently in the final year of a five-year space cooperation program that started in 2018. In December last year, China’s state-run media Global Times reported that the program was expected to extend for another five years ending in 2027.

    The Russian space agency Roscosmos signed a memorandum of understanding with China’s National Space Administration in March 2021, agreeing to work together on an international lunar research station. Roscosmos’s chief, Dmitry Rogozin, told Russian state-run media Tass in April that he planned to talk to Chinese partners about cooperation on the moon before the end of May.

    China’s and Russia’s interests in the moon were highlighted in a report titled “Challenges to Security in Space 2022” published by the Defense Intelligence Agency (DIA) in April.

    “Both nations seek to broaden their space exploration initiatives, together and individually, with plans to explore the moon and Mars during the next 30 years,” John F. Huth, the DIA’s defense intelligence officer, said at a briefing announcing the report.

    Huth added, “​​If successful, these efforts will likely lead to attempts by Beijing and Moscow to exploit the moon’s natural resources.”

    The moon could potentially turn out to be an important source of rare-earth metals, which are scarce on Earth but are needed to manufacture everyday electronics such as computers and lithium batteries, in addition to defense products used by the U.S. military, such as night-vision goggles and armored vehicles.

    John F. Plumb, assistant secretary of defense for space policy, warned about Russian and Chinese space capabilities during a congressional hearing on May 11.

    “Russia and China have developed directed energy weapons to blind intelligence, surveillance, and reconnaissance (ISR) satellites, and they continue the development, testing, and proliferation of direct-ascent and on-orbit antisatellite weapons to hold at risk U.S. and allied space assets,” Plumb said, according to a prepared statement (pdf).

    He added, “They continue to develop the means to deny others the use of space through employment of malicious cyberspace activities, including cyber attacks, against ground sites supporting space operations.”

    Tyler Durden
    Tue, 05/24/2022 – 22:05

  • Moderna CEO Laments 'Throwing 30 Million Doses In The Garbage Because Nobody Wants Them'
    Moderna CEO Laments ‘Throwing 30 Million Doses In The Garbage Because Nobody Wants Them’

    Moderna CEO Stéphane Bancel is complaining about having to ‘throw away’ 30 million doses of Covid-19 vaccine because ‘nobody wants them.’

    “It’s sad to say, I’m in the process of throwing 30 million doses in the garbage because nobody wants them. We have a big demand problem,” Bancel told an audience at the World Economic Forum, adding that attempts to contact various governments to see if anyone wants to pick up the slack was a total fail.

    “We right now have governments – we tried to contact … through the embassies in Washington. Every country, and nobody wants to take them.“

    “The issue in many countries is that people don’t want vaccines.”

    Watch:

    Bancel’s comments come days after Bloomberg reported that EU health officials want to amend contracts with Pfizer and other vaccine makers in order to reduce supplies. 

    During a virtual meeting organized by Polish Health Minister Adam Niedzielski, governments shared a joint letter to the EU Commission which reads: “We hope that the discussion with the commission and among member states will allow flexibility in the vaccine agreements,” adding “We are also counting on vaccine producers to show understanding to the exceptional challenges that Poland is facing supporting Ukraine and giving shelter to millions of Ukrainian citizens fleeing the war.”

    Some countries are seeking to amend so-called advanced purchase agreements signed with producers, as demand for shots wanes and budgets come under strain from the fallout of the war in Ukraine and the costs of accommodating refugees.

    Adjusting deals with suppliers could grant member states the right to “re-phase, suspend or cancel altogether vaccine deliveries with short shelf life,” Estonia, Latvia and Lithuania’s prime ministers wrote in a joint letter to Commission President Ursula Von Der Leyen late last month.

    Meanwhile, in a separate letter the health ministry of Bulgaria called for an “open dialog” with the commission and pharmaceutical companies, arguing that the current arrangement forces member states to “purchase quantities of vaccines they don’t need.”

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    Tyler Durden
    Tue, 05/24/2022 – 21:45

  • Gov. Newsom Warns Californians Of Mandatory Water Restrictions Amid Worsening Drought
    Gov. Newsom Warns Californians Of Mandatory Water Restrictions Amid Worsening Drought

    Authored by Katabella Roberts via The Epoch Times,

    California Gov. Gavin Newsom has called on water associations to take “aggressive actions” to increase water conservation and warned that mandatory water restrictions may lie ahead this summer if the state does not significantly cut down its consumption.

    Newsom made the comments during a meeting with leaders from the state’s largest urban water suppliers—including those covering Los Angeles, San Diego, and the San Francisco Bay Area—and water associations on May 23 amid worsening drought conditions.

    “Every water agency across the state needs to take more aggressive actions to communicate about the drought emergency and implement conservation measures,” Newsom said. 

    “Californians made significant changes since the last drought but we have seen an uptick in water use, especially as we enter the summer months. We all have to be more thoughtful about how to make every drop count.”

    Newsom also called on water suppliers to “better engage” their customers to ensure all Californians are attempting to save water in the state.

    In July 2021, the Democratic governor declared a drought emergency and called on Californians to voluntarily reduce their water use by 15 percent. But by the end of March 2022, the state had failed to meet that goal and Newsom issued an executive order asking local agencies to increase their response to the ongoing drought, the governor’s office said.

    On May 24, California’s State Water Resources Control Board, under direction from Newsom, is set to vote on a statewide ban on “watering of non-functional turf in the commercial, industrial and institutional sectors” according to Newsom’s office.

    It will also vote on regulations that would require local agencies to implement water use restrictions amid a potential 20 percent decline in supplies because of extreme weather.

    If approved by the board, every city in the state will be covered by the regulations directing decreased water usage.

    A sign advocating water conservation is posted in a field of dry grass in San Anselmo, Calif. on April 23, 2021. (Justin Sullivan/Getty Images)

    The first three months of this year were the driest in the state’s recorded history, Newsom said, with the state’s largest reservoirs currently at half of their historical averages, and the state’s snowpack—which provides 30 percent of the state’s water—is at just 14 percent of average.

    Despite this, the state only used 3.7 percent less water during that period than in the same period in 2020, according to the State Water Resources Control Board.

    “Currently, local water agencies have implemented restrictions on about half of California’s population. If the Board’s regulations are approved, every urban area of California will be covered by a local plan to reduce water use,” Newsom’s office said on Monday.

    The governor’s office is also calling on Californians to conserve water by limiting outdoor watering, taking shorter showers, taking showers instead of baths, using a broom as opposed to a water hose to clean outdoor areas, and washing clothes in a full load.

    Tyler Durden
    Tue, 05/24/2022 – 21:25

  • Glencore Pleads Guilty To Decade Of Bribery And Market Manipulation, Will Pay $1.5 BIllion Penalty
    Glencore Pleads Guilty To Decade Of Bribery And Market Manipulation, Will Pay $1.5 BIllion Penalty

    Swiss commodity trading giant Glencore agreed to plead guilty to multiple counts of bribery and market manipulation and pay penalties of up to $1.5BN to settle US, UK and Brazilian probes that have hung over the commodities giant for years.

    The settlements will help remove question marks that have long overshadowed the trader’s (shady) business, profiled extensively in the gripping book The World For Sale. But the charges and admissions of guilt paint a damning, globe-spanning picture of how far the company, founded by U.S. fugitive Marc Rich, has been willing to go in pursuit of profit.

    According to Bloomberg, Glencore units agreed to plead guilty to a list of charges that range from bribery and corruption in South America and Africa, to price manipulation in US fuel-oil markets.

    The UK’s Serious Fraud Office on Tuesday charged the group’s subsidiary Glencore Energy UK with seven cases of profit-driven bribery and corruption in connection to oil operations in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan. In a statement, the SFO said that its case was that “Glencore agents and employees paid bribes worth over $25mn for preferential access to oil, with approval by the company”.

    In the US, Glencore pleaded guilty in two separate criminal cases and agreed to pay approximately $1.1bn in criminal fines and forfeiture. One case involved what prosecutors described as a decade-long bribery scheme, and in the second, Glencore’s US commodities trading arm pleaded guilty to engaging in an eight-year scheme to manipulate US fuel oil price benchmarks.

    Glencore said it would pay about $1.5bn in overall penalties, including the $1.1bn to US authorities, $40mn to Brazilian prosecutors and an amount due to the UK to be finalised at a sentencing hearing. The company made a $1.5bn provision for the settlement in February, and said in an update on Tuesday that it does not expect the total fines to “differ materially” from what it has set aside.

    Merrick Garland, US attorney-general, called it the US Department of Justice’s “largest criminal enforcement action to date for commodity price manipulation conspiracy in oil markets”.

    “Bribery was built in to the corporate culture,” Manhattan US Attorney Damian Williams said at a press conference. “The tone from the top was clear: whatever it takes.” Glencore paid more than $100 million in bribes to government officials in Brazil, Nigeria, the Democratic Republic of the Congo and Venezuela, he said.

    Glencore is the largest among a handful of independent commodity merchants that dominate global trading of oil, fuel, metals, minerals and food. The company and its rivals, most of which are privately held, have traditionally operated outside of the view of regulators and been willing to go to countries and do deals that others shy away from. In recent months, Glencore has fallen under the microscope for continuing to conduct Russian oil trade despite blanket western sanctions.

    Glencore first said it was being investigated by the US in 2018 and details of the corruption in Africa began to emerge last year as a former Glencore trader pleaded guilty in the US to participating in an international scheme to bribe officials in Nigeria to win favorable treatment from the state-owned oil company.

    The commodity trader and miner said in February it expected to resolve the UK, US and Brazilian investigations this year and set aside $1.5 billion. However, it still faces investigations in Switzerland and the Netherlands.

    In an order Tuesday, the Commodity Futures Trading Commission describes how Glencore traders would use codes like “newspapers” or “chocolates” to refer to corrupt payments. The corruption and manipulation took place from at least 2007 through at least 2018, the CFTC said.

    The investigations overshadowed the last years at the helm for former Chief Executive Officer Ivan Glasenberg, who built the company in its current form and remains a top shareholder. Glasenberg handed over the leadership last year to his handpicked successor, Gary Nagle, as part of a wider generational transition.

    The company, which shifts millions of tonnes of metals, minerals and oil across the globe, also faces probes by Swiss and Dutch authorities, the timing and result of which remain uncertain.

    Last July, a former Glencore oil trader pleaded guilty in New York over his role in a scheme to bribe government officials in Nigeria in return for lucrative oil contracts. The allegations in the original US DoJ investigation, which date as far back as 2007, happened during Glasenberg’s 19-year reign at the top of the company.

    And while two Glencore traders have pleaded guilty as part of the US cases, the company’s top executives have so far escaped punishment.

    Glasenberg and his top lieutenants took the company public in 2011 in what was then one of the largest ever flotations in London. It partly used the funds to transform the company from a pure commodity trader into a mining company through a merger with Xstrata in 2013 and a series of acquisitions.

    But the company has struggled to shake off a reputation for sometimes questionable activity that many investors saw as embedded in its DNA, stretching back to its time as a privately held trading house, the FT notes.

    “We acknowledge the misconduct identified in these investigations and have cooperated with the authorities,” CEO Nagle said in a statement. “This type of behavior has no place in Glencore, and the board, management team and I are very clear about the culture that we want and our commitment to be a responsible and ethical operator wherever we work.”

    While the expected total payment is among the largest anti-corruption fines on record, it’s a pittance amount for Glencore. The company is expected to earn more than $17 billion this year, according to analysts’ consensus, meaning that it would make back the $1.5 billion in less than 5 weeks, according to Bloomberg.

    “Glencore shouldn’t be allowed to gloss over what these charges reveal,” said Alexandra Gillies, an adviser at the Natural Resource Governance Institute. “These are some of the poorest countries in the world, countries where citizens have suffered the terrible costs of corruption for many years.”

    Some more details from Bloomberg:

    Glencore expects to pay about $1 billion to U.S. authorities after accounting for credits and offsets payable to other jurisdictions and agencies, and about $40 million to Brazil, the company said. The payment to the UK will only be finalized after a hearing next month but Glencore said it doesn’t expect the amount will result in the total penalties differing materially from the $1.5 billion previously disclosed.

    Earlier Tuesday, Shaun Teichner, the general counsel for the company, told a federal judge in New York that Glencore International AG knowingly and willingly entered into a conspiracy to violate the Foreign Corrupt Practices Act by making payments to corrupt government officials.

    “It’s a good day for them to finally get this done because it’s been hanging over them for a while,” said Ben Davis, a mining analyst at Liberum Capital. “It at least allows them to start to move forward.”

    The bottom line, however, is that today’s settlement once again reveals that there are those who can pay their way out of legal trouble, and those who go to jail. Glencore, and its executives, are among the former: as Bloomberg’s Javier Blas notes, “not a single senior executive faces jail time. Other than Enron’s executives, the US last jailed a top oil trader in 2007-08 when it sent to prison David Chalmers and Oscar Wyatt, the CEOs of Bayoil and Coastal after the Iraq’s Oil-for-Food scandal.”

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    Tyler Durden
    Tue, 05/24/2022 – 21:05

  • Sussmann Trial Day 7: How The FBI Hamstrung The Alfa Bank Investigation
    Sussmann Trial Day 7: How The FBI Hamstrung The Alfa Bank Investigation

    Authored by Techno Fog via The Reactionary,

    Today in the Michael Sussmann trial, we received additional information regarding the FBI leadership’s involvement in the opening – and execution – of the Alfa Bank/Trump investigation. This included FBI Headquarters not approving an FBI agent’s repeated requests to interview the sources of the Alfa Bank “materials.”

    But first we’ll start with the examination of Trisha Anderson.

    Anderson is currently the Deputy Assistant Attorney General in the Office of Legal Counsel. Back in 2016, she was an FBI deputy general counsel and reported directly to then-FBI general counsel James Baker.

    The purpose of her testimony was to prove-up her notes from a September 19, 2016 meeting she had with Baker, where Baker discussed his meeting with Michael Sussmann. (The notebook was necessary because Anderson didn’t recall the meeting itself.)

    Anderson stated she knew of Sussmann prior to September 2016 but denied knowing he was an attorney for the DNC. In response, she was presented with an intersting e-mail discussing an FBI meeting with Sussmann, the DNC CEO, Shawn Henry of Crowdstrike, and another FBI official (Cyber Division’s James Trainor) to take place on June 16, 2016:

    For reference, that meeting took place two days after the DNC announced on June 14, 2016 that it had been a victim of Russian hacking and over a month before the DCCC said it had been hacked by the Russians.

    Curtis Heide

    Back in September 2016, FBI Special Agent Curtis Heide was assigned to the Alfa Bank “investigation in a co-case-agent capacity.” His trainee, FBI Agent Allison Sands, was the lead investigator on the case. The case came from FBI Headquarters in DC – specifically from Joe Pientka. While Heide understood the Alfa Bank allegations came from an “anonymous source,” Heide never learned the identity of that source:

    The Alfa Bank opening communication drafted by Heide said it was opened as a “Full Field Investigation.” He was “ordered” to open the investigation by FBI headquarters:

    Pientka made clear that the opening of the investigation was demanded by the FBI’s 7th Floor – including Director Comey – at the behest of Bill Priestap.

    This is the type of investigation, as Heide said, that “employs all of our resources.” As Agent Heide explained:

    “In order to open a full field investigation, we would need specific and articulable facts that a threat to U.S. national security has occurred or there’s been a violation of federal law.”

    This is in contrast to lower investigative levels – those for which the Alfa Bank allegations would be more appropriate – which “allows limited investigative techniques to see if an allegation or an investigation is warranted.”

    As to some of the Alfa Bank allegations brought by Sussmann?

    Q: Now, Agent Heide, what, if anything, did you find regarding these allegations and the purported findings in this white paper?

    Heide: We were not able to substantiate any of the allegations in the white paper.

    The FBI’s Cyber Division also discounted the Sussmann white paper:

    Heide: The cyber division “were also unable to substantiate any of the allegations in the white paper, and they deemed that the information provided was not in accordance with how the Russians would conduct cyber activities.”

    In fact, Agent Pientka (whom we have long-criticized) relayed the Cyber Division’s conclusions to Heide, stating:

    .

    Relatively early on in the investigation – on September 26, 2016 – Agent Heide sent a message to Pientka, requesting an interview of the source of the Alfa Bank white papers. By that time, Heide knew the white paper was bunk. He received no response from Pientka. He repeated this request on October 3, 2016. Agent Heide’s requests were rebuffed by his liaison at FBI headquarters:

    Regarding Heide’s background – he supported “the initial efforts of Crossfire Hurricane” and was involved in the George Papadopoulos case. He said he is currently under an administrative investigation by the FBI for intentionally withholding classified information in a Carter Page FISA warrant.

    When asked about the details of his involvement in the FISA applications, Heide said he “didn’t author any of the affidavits or any of the materials related to the applications in question.”

    Then there’s the testimony regarding another FBI confidential human source. According to today’s transcripts, another person provided information to the FBI regarding the Alfa Bank allegations:

    Who is this CHS? Someone with media connections (or someone in the media) close to the Joffe researchers with a political interest in the Alfa Bank allegations.

    The significance of this is two-fold. First, we have another source that needs to be identified. A source that is seemingly close to the Joffe “researchers” with politics that likely lean left.

    Second, not interviewing sources – and not providing information of the sources to the investigating agents – is part of Sussmann’s defense. Agent Heide admitted they didn’t interview Dagon. During their case in chief, and during closing, Sussmann’s attorneys will argue that it was the FBI, and not Sussmann, who prevented inquiry into Sussmann’s sources.

    More to come once we get the afternoon transcript…

    Tyler Durden
    Tue, 05/24/2022 – 20:45

  • "Worst Jim Crow Ever": After Voting Law Hysteria, Georgia Shatters Turnout Records
    “Worst Jim Crow Ever”: After Voting Law Hysteria, Georgia Shatters Turnout Records

    When Georgia revised its election laws in 2021, the liberal world lost its collective mind over what the National Urban League called “one of the most insidious partisan attacks on voting rights in history.”   

    Democratic politicians tripped over each other in a competition to see who could condemn Georgia’s perfectly reasonable law in the most catastrophic terms:

    For entertainment value alone, let’s give an honorable mention to poor Joe Biden. In a characteristically garbled comparison that ended up saying the opposite of what he intended, Biden declared, “This makes Jim Crow look like Jim Eagle…I mean, this is gigantic!”

    Activists called for boycotts of Delta Air Lines, Home Depot and other companies headquartered in the Peach State. “The pressure isn’t going to relent on @CocaCola and other Georgia-based companies over this Georgia Jim Crow law,” tweeted MSNBC’s Joy Reid.

    In the most visible economic consequence, Major League Baseball succumbed to the contrived hysteria and moved its 2021 All-Star game from Atlanta to Denver.

    Never mind that Colorado voting laws are arguably more restrictive than Georgia’s, or that many black Georgians were victimized by the loss of $100 million in tourism revenue redirected from 50%-black Atlanta to 9%-black Denver.  

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    Among other provisions, the Georgia Election Integrity Act of 2021 imposed a voter ID requirement for absentee ballots, codified and limited the use of ballot drop boxes, and barred the mass mailing of unsolicited absentee ballot request forms. It also expanded early voting.  

    The left wanted Americans to believe that somehow adds up to a stunning and unprecedented voting-suppression mechanism. Let’s fast-forward to the 2022 Georgia primary and see how it worked out

    If Republicans really intended the Georgia Election Integrity Act of 2021 to be what Vanity Fair called a “massive voter suppression” mechanism, they better rush back to the drawing boards.

    As Fox News reports:

    “According to the office of Georgia Secretary of State Brad Raffensperger, there have been nearly 800,000 ballots cast by Georgians as of Friday, a number three times that of 2018 and significantly higher than 2020, [a presidential] election year when voting typically increases.”

    Last year, the Washington Post declared that “Georgia’s new law makes voting harder.” Today, confronted by the colossal turnout, the paper that joined others in making Jim Crow allusions is eating crow instead:   

    “After three weeks of early voting ahead of Tuesday’s primary, record-breaking turnout is undercutting predictions that the Georgia Election Integrity Act of 2021 would lead to a fall off in voting.”  

    The Post even quoted Patsy Reid, a 70-year old black woman who was shocked to learn all the liberal wailing and gnashing of teeth was about nothing:

    “I had heard that they were going to try to deter us in any way possible because of the fact that we didn’t go Republican on the last election, when Trump didn’t win. To go in there and vote as easily as I did and to be treated with the respect that I knew I deserved as an American citizen—I was really thrown back.”

    What else have they been lying about to you, Patsy?

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    Tyler Durden
    Tue, 05/24/2022 – 20:25

  • North Korea Launches 3 Ballistic Missiles Soon After Biden Departed Japan
    North Korea Launches 3 Ballistic Missiles Soon After Biden Departed Japan

    In a likely message to the Biden administration which came a bit too late, given President Joe Biden is in the air and soon expected to touch down in Washington after having departed Japan – preparing also to address the Texas elementary school massacre now gripping the country – North Korea has fired three ballistic missiles on Wednesday morning local time.

    South Korea’s Joint Chiefs of staff in a statement said the missiles were fired in an easterly direction. The launches come days after Biden met with South Korea’s new President Yoon Suk Yeol during his Asia trip.

    Illustrative prior launch from last year, via The Korean Central News Agency/Reuters

    “South Korea’s Joint Chiefs of Staff said in a statement that all three missiles were fired toward waters off North Korea’s eastern coast one after another between 6 a.m. and 7 a.m. on Wednesday,” reports The Associated Press.

    And CNN writes that “Last week, a US official warned that North Korea appeared to be preparing for an intercontinental ballistic missile test during Biden’s trip, after satellite imagery revealed activity at a launch site near the capital, Pyongyang.”

    Biden during his weekend visit to Seoul was questioned by reporters over whether he’d be willing to meet with North Korean dictator Kim Jong Un, to which he responded it would “depend on whether he’s sincere and whether he’s serious.”

    Washington-Pyongyang talks have been completely frozen since Trump left office, and this year the north has been clearly ramping up its ballistic missile testing, coming multiple times a month thus far.

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    Kim last month announced that he plans to “strengthen and develop” his military’s nuclear forces at the “highest possible” speed. This fresh occasion marks at least the 15th instance of a set of missile launches for this year.

    Tyler Durden
    Tue, 05/24/2022 – 20:05

  • Baby Formula Airlift: Government "Fixing" A Problem Of Its Own Making
    Baby Formula Airlift: Government “Fixing” A Problem Of Its Own Making

    As Robert LeFevre said, “Government is a disease masquerading as its own cure.” The American people are witnessing a grand illustration of that truth in the form of the US Air Force airlift of baby formula from Europe to the United States. The airlift is part of the Biden administration’s response to a nationwide baby formula shortage that has desperate parents searching all over for the product and even venturing to create it themselves.

    As the government credits itself for racing to the rescue, most people don’t realize the baby formula crisis is largely a creation of the government itself.  

    Yesterday, the White House launched a publicity blitz wrapped around a slickly-produced video showing a USAF C-17 in Germany being loaded with pallets of formula. 

    While the video’s pretty sharp, we have to wonder which public relations whiz came up with the official name of the airlift. “Operation Fly Formula” sounds like the title of a gruesome new Jeff Goldblum flick. 

    Meanwhile, much as he’s prone to do on Air Force One stairways, Biden stumbled in rolling out the airlift PR blitz too. In a Sunday morning Tweet, Biden boasted that a single USAF C-17 was about to land in Indiana with “70,000 tons of infant formula.” The tweet was deleted and replaced with one that said “70,000 pounds.”

    The most perceptible cause of the shortage is a months-long pause in production at an Abbott Nutrition plant in Sturgis, Michigan. Abbott suspended operations after bacteria at the plant was identified as the cause of two deaths.

    The ensuring shortage was greatly exacerbated by the fact that just two companies—Abbott and Mead Johnson—represent about 80% of the U.S. market. Nestlé accounts for another 10%.

    Naturally, Twitter is rife with knee-jerk hot takes decrying the shortage as a failure of “unregulated capitalism.”

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    However, as is typically the case, the baby formula market’s domination by just a few players isn’t caused by too little government involvement, but rather far too much of it.

    That starts with the government’s presence as the overwhelming number one purchaser of baby formula. Via the federal Women, Infants and Children (WIC) program—which enables states to hand out “free” formula—the federal government buys about half of all infant formula used in America.

    Worse, in administering the program, each state contracts with just one producer, and Abbott is the sole provider for roughly half the children in the program.

    With those government contracts and daunting FDA regulations, the federal government erects formidable barriers to entry for would-be challengers of the big three producers. 

    Then there’s protectionism that shelters them from foreign competition. As Reason’s Eric Boehm explains:

    “Imports of infant formula are subject to tariff-rate quotas of 17.5 percent after certain thresholds are met. As the name suggests, tariff-rate quotas are meant to be set high enough that they effectively block additional imports by making it unprofitable to pay the tariff. In a year like this one, when domestic supplies are flagging and more formula is needed, that creates a serious impediment for suppliers.”

    On top of that, Trump’s USMCA trade agreement restricted imports of Canadian baby formula—a move eye-rollingly aimed at undercutting a Chinese company’s investment in a Canadian plant.

    “Chalk it up as another self-inflicted wound of the trade war with China,” writes Boehm.

    Some protectionism comes dressed up in the guise of consumer safety. Try importing formula that’s perfectly acceptable in the European Union. The U.S. Customs and Border Patrol will seize it for not meeting FDA regulations—and then brag about it as if they found a vial of sarin gas. In many cases, European formula is banned simply because the labels don’t meet FDA requirements.

    “These companies are cemented in place and protected by government regulations and laws,” said Chris Rossini on The Ron Paul Liberty Report.

    In sum, the domination of the U.S. baby formula market by just three companies happens not for a lack of government regulation, but because of it.  

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    Tyler Durden
    Tue, 05/24/2022 – 19:45

  • Banks Face Trouble As Credit Cycle Turns
    Banks Face Trouble As Credit Cycle Turns

    By Simon White, Bloomberg Markets Live Commentator and Analyst

    Weak stock markets and worsening growth data – today’s miss in the flash PMI is case in point – did not deter Jamie Dimon from making positive comments on credit and the US economy at the WEF summit in Davos yesterday. Banks jumped on his remarks, but they face an increasingly challenging environment as the credit cycle turns and growth slows.

    Bank outperformance is more closely linked to longer-term yields than the yield curve, and as a sector it is the most sensitive to changes in yields.

    But bonds are already oversold, and as economic data starts to disappoint (today’s disappointing flash PMI is case in point), yields face greater resistance. Moreover, the only seasonally positive months for yields — January to April — are now behind us, with yields on average falling in the latter two-thirds of the year.

    Everything in macro operates with lags of varying lengths, and the rise in yields has fed into credit through a fall in loan demand and tighter lending conditions.

    The credit cycle itself operates in a well-defined sequence: first lending conditions tighten, the loan demand falls, followed by a fall in loan supply. Loan delinquencies then rise as more loans go bad, followed by a rise in charge-off rates as losses are realized. Finally, bankruptcies rise as loan losses lead to insolvencies.

    The tightening of lending conditions today is captured by the steady widening of credit spreads, signalling the credit cycle is turning.The rise in charge-off rates typically follows wider credit spreads by six months.

    Banks can pre-empt losses by increasing their loan-loss provisions. They did this at the beginning of the pandemic, but they turned out to be way more pessimistic than necessary, given the depth and breadth of fiscal and monetary support given to the economy. However, the loan-loss provisions of US banks are now negative, meaning there is currently zero absorbency for approaching loan losses. Banks were over-prepared in 2020, and they are under-prepared now.

    It’s possible of course the growth scare is a storm in a teacup, and that credit spreads will soon tighten again. But that is not the way to bet, with a swathe of leading indicators from manufacturing new orders to heavy truck sales all pointing in the direction of an acceleration in growth’s decline in the coming months.

    Inflation won’t help banks either. Elevated and persistent inflation typically leads to the real value of bank assets heading to zero faster than the real value of liabilities. Financials were in the bottom third of performers of sectors and asset classes through the four inflationary regimes experienced since the 1970s.

    There are times when the macro stars align, pointing to a great trade set-up, but this is not one of them, despite what a bank CEO may say.

    Tyler Durden
    Tue, 05/24/2022 – 19:25

  • Gervais Trumps Chapelle As Most-Hated Comedian Among Trans Community…
    Gervais Trumps Chapelle As Most-Hated Comedian Among Trans Community…

    Comedian Ricky Gervais is the latest comedian in hot water with the transgender community, just hours after the release of his new Netflix comedy special SuperNature.

    Four minutes into the special, Gervais starts in, according to Variety.

    “Oh, women!” he starts. “Not all women, I mean the old-fashioned ones. The old-fashioned women, the ones with wombs. Those fucking dinosaurs. I love the new women. They’re great, aren’t they? The new ones we’ve been seeing lately. The ones with beards and cocks. They’re as good as gold, I love them. And now the old-fashioned ones say, ‘Oh, they want to use our toilets.’ ‘Why shouldn’t they use your toilets?’ ‘For ladies!’ ‘They are ladies — look at their pronouns! What about this person isn’t a lady?’ ‘Well, his penis.’ ‘Her penis, you fucking bigot!’ ‘What if he rapes me?’ ‘What if she rapes you, you fucking TERF whore?'”

    Watch:

    TERF stands for “Trans-Exclusionary Radical Feminist,” and is a pejorative term for those who reject the claim that trans women are indeed women.

    A short while later, Gervais continued:

    “You can’t predict what will be offensive in the future,” he states. “You don’t know who the dominant mob will be. Like, the worst thing you can say today, get you cancelled on Twitter, death threats, the worst thing you can say today is, ‘Women don’t have penises,’ right? Now, no one saw that coming. You won’t find a ten-year-old tweet of someone saying, ‘Women don’t have penises.’ You know why? We didn’t think we fucking had to!”

    At the end of the special, not that it’ll make a lick of difference, Gervais said: “Full disclosure: In real life of course I support trans rights. I support all human rights, and trans rights are human rights. Live your best life. Use your preferred pronouns. Be the gender that you feel that you are. But meet me halfway, ladies: Lose the cock. That’s all I’m saying.”

    As Variety notes, Gervais seriously kicked the hornet’s nest.

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    Tyler Durden
    Tue, 05/24/2022 – 19:05

  • 60,000 Migrants Waiting In Mexico Across Border From El Paso, Texas
    60,000 Migrants Waiting In Mexico Across Border From El Paso, Texas

    Authored by Charlotte Cuthbertson via The Epoch Times,

    In the past two weeks, more than 60,000 migrants have amassed in Ciudad Juárez, Mexico, directly across the border from El Paso, Texas, in anticipation of Title 42 being lifted from the border.

    “And we can only imagine it growing even further,” Mario D’Agostino, El Paso deputy city manager, told his city council members on May 23. About a month ago, the number of migrants in Ciudad Juárez was about 15,000, D’Agostino said. He said state and federal officials keep him updated on the numbers.

    Title 42 is an emergency public health order that allows for quick expulsion of nonessential travel across U.S. borders to curb the pandemic. The Biden administration had planned to lift it on May 23, but a federal judge blocked that move, keeping it in place for now.

    The El Paso City Council met on May 23 to discuss invoking local emergency measures—including increasing capacity for shelter, food, and transport—to deal with an anticipated influx of illegal immigrants into the city.

    The call came after Border Patrol apprehended more than 1,200 illegal immigrants on May 14 and subsequently released 119 at a charter bus station due to space constraints.

    “Busy times! Just today, #ElPaso #USBP agents have encountered over 1,200 migrants & counting entering the border illegally,” El Paso Sector Border Patrol Chief Gloria Chavez wrote on Twitter on May 14. “Haitians, Cubans, Nicaraguans, and Turkish nationals to name a few.”

    On most days, Border Patrol drops between 400 and 500 illegal immigrants per day at local NGOs, who then assist with food, lodging, and transport out of El Paso, according to Chief Jorge Rodriguez, emergency management coordinator for the city of El Paso.

    “If and when Title 42 … is eliminated, we can anticipate that the numbers that we are seeing now (which is about 400 to 500 per day), conservatively speaking, will double to at least 1,000 per day,” Rodriguez said.

    “Almost zero percent of migrants remain in El Paso,” he said.

    “The choice of travel—which has changed from what we saw in 2019—is primarily through the airlines.”

    If the airplanes and buses are full, illegal immigrants are forced to stay an extra 24 to 48 hours in the city, which jams up city and NGO resources, D’Agostino said.

    During the first four months of this year, Border Patrol agents have apprehended more than 94,000 illegal immigrants in the El Paso area, up from 63,000 during the same period in 2021.

    D’Agostino said the city’s emergency team has temporary housing options in place, but they can’t be accessed and staffed without an emergency ordinance in place.

    An emergency ordinance is part of the council’s police powers to respond to local emergencies and it suspends the bidding process requirement when procuring goods and services during an emergency.

    It has to be passed unanimously and with the consent of the mayor.

    On May 23, the seven city council members voted on the ordinance and it failed by one vote. Council member Claudia Rodriguez said she would be more inclined to give her affirmative vote if the mayor signed a local disaster declaration first.

    El Paso Mayor Oscar Leeser said he rejected a call last week to invoke a local disaster declaration, saying it would trigger an unwanted state response.

    “We were really worried that the governor would get the [disaster declaration] … and he would send the National Guard down to the border, or the DPS [Texas Department of Public Safety] to the border and create a scene that was not welcome in our community,” Leeser said.

    D’Agostino said the disaster declaration proposal last week was a more extreme option in anticipation of Title 42 being lifted.

    Council members took a second vote and passed the ordinance, which goes into effect immediately and expires in 30 days.

    Tyler Durden
    Tue, 05/24/2022 – 18:45

  • Letter From A US Supplier Of Industrial Chemicals: "I Have Never Seen Anything Like The Current Supply Problems"
    Letter From A US Supplier Of Industrial Chemicals: “I Have Never Seen Anything Like The Current Supply Problems”

    In his latest weekly letter to client, One River Asset Management CIO, Eric Peters, attached a letter that a small US supplier of industrial chemicals sent to all its customers earlier this month, in which they apologize for their 70% price hikes. It forecasts additional price hikes.

    Dear Customer:

    I hope that you and your business are doing well. New price sheets are enclosed. I have been working at xxxxxxxxxx Industries for over 50 years. I have never seen anything like the current supply problems.

    Not with COVID-19 in 2020, not during Nixon’s presidency in 1968 and 1969. Raw materials are in short supply, because good workers cannot be found, because of production line breakdowns, because of COVID-19 variant outbreaks, because the automotive industry let themselves run out of everything, because freight rates have increased and now, because of a Hitler doppelganger trying to start a World War.

    The cost of metal containers has more than doubled in some cases. We can’t get plastic buckets. The prices of all plastic containers have gone up sharply. The main ingredient in metal adhesive has nearly doubled in cost, and freight on the next container of it is expected to double.

    Prices are up from 5% to 70% with even more increases expected.

    We hoped to hold our pricing until costs came back down. That was a mistake.

    Now we are faced with having to catch-up because prices are out of control and are apparently not coming back down.

    We have not offered the usual 30-day notice of the increases because we have already been paying these higher costs. Old prices were below cost in some cases.

    What we are offering is 10% off the new prices until May 25. This is for one order only, in quantities similar to your usual orders.

    Unfortunately, if you order more than an average amount, we will have to cut back your order so that everyone can get some product. With supply running considerably behind current demand we cannot let a few customers get the lion’s share. I hope you understand.

    Thank you for your continued business.

    Best regards, xxxxxxxxx.

    Coming to your industry and its suppliers soon…

    Tyler Durden
    Tue, 05/24/2022 – 18:25

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