Jan 27

Today’s News 27th January 2025

  • China's DeepSeek AI Moves The Capital Of Tech From Palo Alto To Hangzhou
    China’s DeepSeek AI Moves The Capital Of Tech From Palo Alto To Hangzhou

    Authored by Mike Whitney,

    In a matter of days, the news of China’s AI sensation, DeepSeek R1, has gone from a gentle breeze to a Force 5 hurricane. It’s clear now that no one in Silicon Valley or Washington DC had the slightest idea that their world was about to be turned upside-down by an innovative new product that would shift the geopolitical plates further eastward. But that, in fact, is what has happened. And it’s not simply because DeepSeek’s latest version matches or exceeds the performance of America’s best model, OpenAI; but because it is cheaper, more accessible and more transparent. This is AI for everyone regardless of their station or income. And its sudden emergence from ‘out of the blue’ has cast doubts on the ability of western tech giants to anticipate the capability of their competitors or to lead an industry that is essential for Washington to preserve its ever-loosening grip on global power. Here’s a brief recap from Venture Beat:

    ….thanks to the release of DeepSeek R1, a new large language model that performs “reasoning” similar to OpenAI’s current best-available model o1 — taking multiple seconds or minutes to answer hard questions and solve complex problems as it reflects on its own analysis in a step-by-step, or “chain of thought” fashion.

    Not only that, but DeepSeek R1 scored as high or higher than OpenAI’s o1 on a variety of third-party benchmarks…, and was reportedly trained at a fraction of the cost…, with far fewer graphics processing units (GPU) under a strict embargo imposed by the U.S., OpenAI’s home turf.

    But unlike o1, which is available only to paying ChatGPT subscribers of the Plus tier ($20 per month) and more expensive tiers (such as Pro at $200 per month), DeepSeek R1 was released as a fully open source model, which also explains why it has quickly rocketed up the charts of AI code sharing community Hugging Face’s most downloaded and active models. 

    – Why everyone in AI is freaking out about DeepSeek, Venture Beat

    “Freaking out” is probably the understatement of the century. Silicon Valley is in a full-blown emotional meltdown and the path forward is far from certain. As we will see further along, western tech mandarins are going to have to return to Square 1 and modify their approach to the new reality. In short, the agenda is being set by people with different priorities, values and beliefs who live 10,000 miles away. They do not ascribe to the idea that advances in technology should reinforce police-state surveillance or other repressive forms of social control.(as they do in the West) Their vision of the future is altogether different, but invariably optimistic.

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    Did you notice that “DeepSeek R1 scored as high or higher than OpenAI’s o1 (while) under a strict embargo imposed by the US”?

    In other words, these Chinese whiz-kids created their cutting-edge version with one hand tied behind their back. They shrugged off Washington’s onerous sanctions and beat Uncle Sam at his own game, which is quite an accomplishment. (Forbes: “U.S. export controls on advanced semiconductors were intended to slow China’s AI progress, but they may have inadvertently spurred innovation.”) Here’s more:

    thanks to the fact that it is fully open source, people have already fine-tuned and trained many multiple variations of the model for different task-specific purposes such as making it small enough to run on a mobile device or combining it with other open-source models. Even if you want to use it for development purposes, DeepSeek’s API costs are more than 90% cheaper than the equivalent o1 model from OpenAI. 

    – Why everyone in AI is freaking out about DeepSeek, Venture Beat

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    Cheaper, more adaptable and more transparent. Is there more? There is:

    Most impressively of all, you don’t even need to be a software engineer to use it: DeepSeek has a free website and mobile app even for U.S. users with an R1-powered chatbot interface very similar to OpenAI’s ChatGPT. Except, once again, DeepSeek undercut or “mogged” OpenAI by connecting this powerful reasoning model to web search — something OpenAI hasn’t yet done…

    – Why everyone in AI is freaking out about DeepSeek, Venture Beat

    Is the author right; are the tech-honchos and their moneybags allies “freaking out” over DeepSeek or do they see it as a minor glitch on the road to AI supremacy? Here’s how he answers that question:

    A message posted to Blind… has been making the rounds suggesting Meta is in crisis over the success of DeepSeek because of how quickly it surpassed Meta’s own efforts to be the king of open source AI with its Llama models.

    It sounds like a lot of people are very concerned, and for good reason. DeepSeek is a nuclear bomb detonated in the heart of Silicon Valley. It is a straight-up challenge to America’s de facto Royal Family of tech Brahmins who thought their reign would last forever. Now they find themselves playing ‘catch-up’ with an upstart cadre of bluestocking brainiacs who are bringing their world crashing down around them. More importantly, the future of AI is being decided in Hangzhou not Palo Alto which means we might see a lull in the warmaking as Uncle Sam finds it harder to finance his endless bloodletting. What a welcome reprieve that would be.

    The author of the above piece even quotes one of my favorite analysts on X, Arnaud Bertrand, an invaluable source of unbiased information about developments in China. Here’s what he said:

    “There’s no overstating how profoundly this changes the whole game. And not only with regards to AI, it’s also a massive indictment of the US’s misguided attempt to stop China’s technological development, without which Deepseek may not have been possible…”

    Yep, the whole semiconductor embargo-thing backfired spectacularly illustrating once again that we are ruled by incompetent lamebrains who love to punish people for violations to rules they make up on-the-fly. Just look at the mess these ‘geniuses’ have made.

    We’ll end with Bertrand’s insightful critique of Trump’s $500 billion Stargate boondoggle which will be obsolete before they even break ground:

    Stargate, if it goes forward, is likely to become one of the biggest wastages of capital in history:

    1) It hinges on outdated assumptions about the importance of computing scale in AI (the ‘bigger compute = better AI’ dogma), which DeepSeek just proved is wrong.

    2) It assumes that the future of AI is with closed and controlled models despite the market’s clear preference for democratized, open-source alternatives

    3) It clings to a Cold War playbook, framing AI dominance as a zero-sum hardware arms race, which is really at odds with the direction AI is taking (again, open-source software, global developer communities, and collaborative ecosystems)

    4) It bets the farm on OpenAI—a company plagued by governance issues and a business model that’s seriously challenged DeepSeek’s 30x cost advantage.

    In short it’s like building a half a trillion dollars digital Maginot line: a very expensive monument to obsolete and misguided assumptions. This is OpenAI and by extension the US fighting the last war.
    Arnaud Bertrand @RnaudBertrand

    Or, as Jim Fan said: the … future of AI is democratization…. It’s the tide of history that we should surf on, not swim against.…Jim Fan @DrJimFan

    Indeed, it is.

    Tyler Durden
    Sun, 01/26/2025 – 23:55

  • Trump Effect: LA Bends The Knee, Will Reopen Pacific Palisades To Residents Starting Monday
    Trump Effect: LA Bends The Knee, Will Reopen Pacific Palisades To Residents Starting Monday

    Two days after President Trump scolded Los Angeles for refusing to allow residents affected by the recent fires to return to their homes, Mayor Karen Bass announced that Pacific Palisades will be completely reopened to residents during daylight hours, starting Monday, Jan. 27.

    During a Friday roundtable, Bass told Trump that it was unsafe for residents to return. After residents at the meeting decried the slow response, Bass compromised – saying they could return “within a week.”

    Trump replied: “That’s a long time, a week. I’ll be honest, to me, everyone standing in front of their house, they want to go to work and they’re not allowed to do it. … They’re safe. They’re safe. You know what? They’re not safe. They’re not safe now. They’re going to be much safer. A week, a week is actually a long time the way I look at it.“

    Residents of the Palisades began trying to their homes and lots on Saturday – some of whom were able to talk their way past police, according to Breitbart‘s Joel Pollak, a Palisades resident whose house was spared. Pollak has been reporting from the ground since the fires began.

    The county’s decision to allow residents to return on Monday came with a caveat; weather permitting, and only until 5:00 p.m., which will allow people to sift through the rubble for belongings, or grieve and make peace with their loss.

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    Tyler Durden
    Sun, 01/26/2025 – 23:20

  • The Most Important Week Of The Quarter: Month End, Fed, ECB, Earnings , PCE And More
    The Most Important Week Of The Quarter: Month End, Fed, ECB, Earnings , PCE And More

    By Goldman trader Paolo Schiavone

    Key Events – Global Week Ahead:  Fed and ECB, Lunar New Year, 20% S&P Earnings

    • Monday : China industrial profits and PMI, Germany IFO , US new home sales, Lagarde speak in Budapest, Bessent confirmation. 3rd Feb first QRA. 
    • Tuesday : US consumer confidence, durable goods, Informal dinner Lagarde and Von der Leyen. GM, Starbucks results. 
    • Wednesday : Fed, Brazil and Canada rate decision, Spain GDP, Tesla, Microsoft, Meta, ASML earnings, Reeves speech in Oxfordshire, BOJ minutes
    • Thursday : ECB, Apple, CAT, Visa, UPS Deutsche Bank, Shell earnings, US Q4 GDP; RBA Jones speaks, BOJ Himino speaks.
    • Friday : France CPI, Germany CPI, unemployment, US personal income, PCE inflation, employment cost index, Samsung earnings, Bowman remarks.

    Trading markets

    1. The plethora of events suggest x-asset vol is likely to be back next week. It’s Fed vs Mag7 earnings                          
    2. Very opportunity-rich environment if you’re quick on the trigger. But also, plenty of bad volatility (in as, not fundamentally driven, hard to forecast).                                                                                                                           
    3. So, you need to be nimble, size at half-75% of normal. Strong convictions weakly held. Weak convictions expressed in a risk efficient, premium down format.

    Framework: Technical, Flows, Positioning. Valuation, Sentiment. 

    • Technical 30% : Top of the channel for US Equities/ Europe Breaking out / Oil and Copper at support / Momentum in bonds sell off seem to have calmed. 
    • Flows 30% :  Global equity funds slowed (+$6bn vs +$13bn last week). Fixed income stronger demand (+$14bn vs +$11bn last week). EM negative flows. FX , USD demand. 
    • Positioning 20% : Cleaner in Equities/ FI/ FX. Tariffs, strong earnings, healthy thematic, supportive macro have left clients with limited convictions. 
    • Valuation 10% : Low Equity Risk premia / Neutral for bonds. Would say not very high for the Mag7 given the reset in EPS expectations. Bonds 
    • Sentiment 10%: AAII stretched, GS Neutral. Despite one of the largest USD weekly drawdowns in years still constructive in Equities, Short oil, Neutral bonds. 

    Fed view: We are pricing, 7 for March ,14 for May 25 for June. We view “market pricing as a probabilistic statement about possible Fed paths in coming years is too hawkish”

    Interesting Trades:

    1. Fed- Dovish vs pricing- Rec SFRM5Z5
    2. Rec BOC meeting on Wed- 25 or more than 0
    3. Deepseek- low quality dip on Nasdaq. Buy dips in NQH5
    4. Earnings: ASML short MSFT long/ Meta long
    5. Earnings: Oracle/ Microsoft/ Amazon vs NVDA
    6. Long Copper into Chinese seasonality and Lunar new year destocking.

    Weekend News flow: 

    1. Trump ridicules Denmark and insists US will take Greenland – FT
    2. Meta’s chief AI scientist says DeepSeek’s success shows that “open source models better vs proprietary ones”
    3. President Trump said he wants to “clean out” the Gaza Strip and urged Jordan and Egypt
    4. German Election Taboos Broken as Merz and Musk Flirt With AfD
    5. Baltic Sea data cable damaged in latest case of potential sabotage
    6. Reeves seeks to unlock billions from UK pension schemes for investment- FT

    Charts: 

    Chart 1 GS Flow of funds last week:

    Chart 2: Mag Seven: EPS expectations slowing- buying opportunity on a lower bar ( BBG)

    Chart 3: SPX short and USD shorts capitulation was at full speed.

    Chart 4: Corporate Insiders are dumping shares at the fastest pace in history (data going back to 1988) 

    Chart 5: Gold continues to be one of the highest conviction/ trend trades out of the gates in 2025. (Goldman)

    More in the full Goldman note available to pro subs.

    Tyler Durden
    Sun, 01/26/2025 – 23:13

  • Russian Forces Officially Seize Last Strategic City In Southern Donbas Region
    Russian Forces Officially Seize Last Strategic City In Southern Donbas Region

    As we warned at the end of December, Russian troops had been gaining ground on the eastern front at an exponential rate, with the key city of Velyka Novosilka nearly encircled and ready to fall.  After weeks of incomplete reports on the situation, Ukrainian officials have finally confirmed that the area has been overrun.  Some reports also indicate that Ukrainian soldiers were nearly surrounded during the retreat.

    Kiev claims encirclement while Russian footage of clean-up operations on the ground indicates that some Ukrainian units may have been abandoned. 

    The establishment media has remained relatively quiet on the event, even though geo-located video footage showing Russian troops raising flags over the center of the city are circulating widely on social media.  Analysis of known Ukrainian defenses suggests that Kiev’s lines are thin beyond Velyka Novosilka and that the city was the last major stronghold preventing Russian troops from surging into central Ukraine and the Dnipropetrovsk Oblast region.

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    Velyka Novosilka was made vulnerable to Russian attack after Ukraine retreated from Vuhledar, roughly 30 kilometers (18 miles) east.  The Ukrainians originally claimed that Vuhledar was strategically “unimportant”, but the loss has proven to be disastrous. 

    The prevailing ugly truth for the Ukrainians is one of manpower – They don’t have enough.  In the early days of the war a steady stream of western mercenaries, many of them military veterans from the US and the UK, flooded into Ukraine along with NATO weapons, cash and “advisers”.  This source of extra manpower dried up at least 18 months ago 

    The initial retreat by Russia to the east in 2022 was wrongly interpreted by western media as a sign of surrender by Vladimir Putin, but Russia was in fact reforming their lines in order to execute a new attrition strategy.  Attrition warfare negates the tactical advantages of maneuver warfare commonly used by NATO armies.

    Continuing Russian gains bring into question the context of peace talks being arranged by the new Trump Administration.  It is unlikely that Putin will accept any agreement that requires Russia to give up any part of the Donbas territory; Russia has all the leverage.

    Trump has indicated that Vladimir Zelensky is also resistant to entering negotiations and insists on continuing the war.  Zelensky seems to operate under the assumption that the US or the EU will eventually be forced to deploy troops to the front and that Ukraine will not be required to give up any territory.  This, of course, would would result in a new world war over a country that most Americans are no longer interested in propping up.      

    Tyler Durden
    Sun, 01/26/2025 – 22:45

  • Trade War Ends In Less Than 10 Hours After Colombia Agrees To All Of Trump's Terms
    Trade War Ends In Less Than 10 Hours After Colombia Agrees To All Of Trump’s Terms

    Update (10:26pm ET): Just after 10pm ET, and just under 10 hours after Trump lobbed the first shot in the first trade war of his second admin, the White House announced that Colombia had agreed to all of Trump’s terms, “including the unrestricted acceptance of all illegal aliens from Colombia returned from the United States, including on U.S. military aircraft, without limitation or delay.”

    Based on this agreement, the White House notes, the hastily drafted tariffs and sanctions “will be held in reserve, and not signed, unless Colombia fails to honor this agreement.” The visa sanctions issued by the State Department, and enhanced inspections from Customs and Border Protection, will remain in effect until the first planeload of Colombian deportees is successfully returned.

    The statement concludes by noting that President Trump “will continue to fiercely protect our nation’s sovereignty, and he expects all other nations of the world to fully cooperate in accepting the deportation of their citizens illegally present in the United States.”

    And just like that, Trump wins, in a victory so complete even the president of Colombia reposted his own loss.

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    The only problem: the next trade wars – and there will be many – won’t be nearly as easy to win…

    * * *

    Update (6:50pm ET): Despite appearing to cave earlier when he ordered the use of the presidential plane to repatraite illegal aliens from the US, late on Sunday Colombia President Gustavo Petro ordered an increase of import tariffs on goods from the United States in retaliation to President Trump’s tariffs and sanctions.

    Petro, in a post on the social platform X, said he ordered the “foreign trade minister to raise import tariffs from the U.S. by 25%.”

    “American products whose price will rise within the national economy must be replaced by national production, and the government will help in this regard,” the post continued.

    https://platform.twitter.com/widgets.jsThen in a meandering post in Spanish, the president also issued several empty threats to Trump.

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    Meanwhile, as Bloomberg notes, Colombian assets are set for a rout after US President Donald Trump said he’d implement a spate of tariffs and sanctions on the South American nation.

    The announcement of an emergency 25% tariff on all Colombian goods coming into the US, made by Trump on social media on Sunday, caught traders off guard — most of the focus so far has been on levies on Mexico, Canada and China. The move will likely spark a slump that will reverberate across local bond, currency and equity markets when trading opens Monday.

    Daniel Velandia, chief economist at Credicorp Capital Colombia, said the peso will weaken against the dollar Monday morning, adding that the economy could inch toward a recession in an “extreme scenario.”

    “This is completely unexpected and unpredictable,” Velandia said. “We need to see how far Trump goes and how Colombia’s government will respond, hoping that diplomacy will be used to prevent adverse effects.”

    And it’s not just Colombia: the Mexican peso is also tumbling more than 1% in late Sunday trading amid concerns that the southern US neighbor will be next to suffer Trump’s wrath.

    * * *

    Update (4:15pm ET): that may have been the fastest trade war capitulation in history:

    • COLOMBIA OFFERS PRESIDENTIAL PLANE TO HELP REPATRIATE DEPORTEES FROM US: CNN

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    Full statement translated:

    * * *

    For those in the market breathing repeated sighs of relief that Trump has – so far – not imposed sanctions on China or any other major country, we have some news, just wait.

    Case in point: on Saturday afternoon, one day after Colombia’s president Gustavo Petro refused to allow two military flights from the United States full of undocumented migrants to land on its soil, President Donald Trump announced on his Truth Social platform that he would slap sweeping sanctions and travel bans on Colombia.

    In a social media post, Trump said he has ordered an emergency 25% tariff on all Colombian goods coming into the US, which will be raised to 50% in one week.

    He has also called for a travel ban and immediate visa revocations on Colombian government officials “and all Allies and Supporters” as well as visa sanctions on party members, family members and supporters of the government of President Gustavo Petro.

    “Petro’s denial of these flights has jeopardized the National Security and Public Safety of the United States,” Trump said.

    While the US is hardly overly reliant on Colombian exports – with the exception of cocaine whose prices are about to skyrocket – the speed and severity with which Trump unveiled his latest set of weaponized sanctions is an indication of just how ruthless and relentless Trump will be when dealing with other, much bigger trade partners.

    Lastly, anyone hoping that Trump was just bluffing about tariffs on China, Europe, or NAFTA member states, is about to get a very nasty surprise.

    Tyler Durden
    Sun, 01/26/2025 – 22:32

  • Will Any Federal Officials Pay For What They Did?
    Will Any Federal Officials Pay For What They Did?

    Authored by James Bovard via The Brownstone Institute,

    The biggest scientific con of the century is finally being exposed. But will any politicians or government officials ever be held responsible for the carnage they unleashed on Americans?

    In early 2020, when the Covid pandemic was starting to ravage America, federal bureaucrats and politicians rushed to suppress any suggestion that the pandemic originated from a Chinese government lab bankrolled by US government agencies. Key Biden administration officials effectively exonerated the Chinese government even though the Chinese completely stonewalled any outside investigation into the origin of the Covid virus, as the Wall Street Journal recently revealed in a front-page scoop. 

    The FBI’s top expert concluded that the virus leaked from the lab but he was derailed by the Biden administration, blocked from presenting his evidence at a key White House meeting in August 2021. Three scientists at the National Center for Medical Intelligence, part of the Pentagon’s Defense Intelligence Agency, concluded that Covid leaked from a lab but they were muzzled. The Inspector General is conducting an investigation to determine why those experts were silenced. The Department of Energy also concluded that Covid originated in a lab. In September 2023, a senior CIA analyst told a Congressional committee that six key CIA analysts had been bribed by the agency to abandon their conclusion that Covid originated in a lab leak.

    The Chinese government first admitted that a pandemic had broken out in the city of Wuhan in early 2020. Though the Chinese military-affiliated Wuhan Institute of Virology had been experimenting with bats for years, the Chinese government insisted the new virus came from a nearby marketplace. But the lead scientists involved with bat research had all been struck down by Covid-19 symptoms shortly before the Chinese government denied any responsibility. There was a deluge of circumstantial evidence quickly linking the new virus to the lab. 

    The outbreak of Covid-19 spurred one of the most brazen cover-ups in modern US history. The National Institute for Health had been financing gain-of-function research at the Wuhan Institute of Virology. That type of research seeks to genetically alter organisms to enable the spread of viruses into new species. Such research is extremely dangerous; as MIT professor Kevin Esvelt asked in 2021, “Why is anyone trying to teach the world how to make viruses that could kill millions of people?” The risks were compounded because the Wuhan Institute had a very poor safety rating. Two years earlier, the State Department confidentially “warned other federal agencies about safety issues at Wuhan labs studying bat Covid,” but the public disclosure of that alert was delayed until 2022.

    In January 2020, top federal scientists recognized that the pandemic could obliterate their reputations. Dr. Francis Collins, the director of the National Institutes for Health, wrote in an email that “a swift convening of experts in a confidence-inspiring framework is needed or the voices of conspiracy will quickly dominate, doing great potential harm to science and international harmony.” The “conspiracy” was the facts of the matter.

    Anthony Fauci, the chief of the National Institute for Allergy and Infectious Diseases (NIAID), speedily enlisted a handful of trusted scientists to gin up a paper supposedly “proving” that the virus could not have originated in the lab. A top NIAID scientist accepted the task of debunking the lab-leak story because, as he emailed a colleague, “Tony doesn’t want his fingerprints on origin stories.” The Lancet, one of the most respected medical journals in the world, enlisted in the cover-up with an op-ed by 27 scientists who proclaimed: “We stand together to strongly condemn conspiracy theories suggesting that Covid-19 does not have a natural origin.” Maybe the same scientists also sent an addendum to NIH: Keep giving us grant money or your reputation will “swim with the fishes.”

    Further “proof” was provided by a torrent of accusations of racism against anyone who publicly suggested that the virus originated in a Chinese lab. The State Department’s Global Engagement Center added a federal fist to the debate, pressuring Twitter to suppress hundreds of thousands of accounts (including thousands of average Americans) in early 2020 for the crime of suggesting that Covid originated in a lab. Bureaucrats secretly decided that wildly exaggerated forecasts of pandemic mortality made the First Amendment null and void. 

    If Covid-19 had been initially recognized as the result of one of the biggest government boondoggles in history, it would have been far more difficult for American politicians and government scientists to pirouette as saviors as they seized sway over daily life. 

    The virus that the NIH financed provided push-button dictatorial power to politicians at every level of government. In the name of saving lives, politicians entitled themselves to destroy an unlimited number of livelihoods. Most governors responded to Covid-19 by dropping the equivalent of a Reverse Neutron Bomb — something that destroys the economy while leaving human beings unharmed. But the only way to assume people were uninjured was to presume that their lives were totally detached from their jobs, bank accounts, mortgage and rent payments, and friends and family.

    A virus with a 99+% survival rate spawned a 100% presumption in favor of despotism. From the start of the pandemic, many people who swore allegiance to “science and data” also believed that absolute power would keep them safe. Doubters became dissidents who deserved to be covertly silenced. 

    Shutdown advocates appealed to science like righteous priests invoking God and the Bible to sanctify scourging enemies. But the “science” was often farcically unreliable. Mandatory mask mandates became the new version of the Emancipation Proclamation. Fauci and other top officials deceived Americans into believing that cloth masks offered far more protection than they delivered. Do Americans finally recognize that the federal government was the biggest source of disinformation during the pandemic?

    A century ago, historian Henry Adams declared that politics has “always been the systematic organization of hatreds.” Covid-19 policies were so disruptive in part because politicians intentionally sought to maximize fear and rage against anyone who refused to submit to any dictate. After the efficacy of the Covid-19 vaccines collapsed, Biden responded by dictating that a hundred million American adults must get injected based on his personal decree.

    A few weeks later at a CNN town hall, Biden derided vaccine skeptics as murderers who only wanted “the freedom to kill you” with Covid. A few months later, a Rasmussen poll found that 59% of Democratic voters favored house arrest for the unvaccinated, and 45% favored locking the unvaxxed into government detention facilities. Almost half of Democrats favored empowering the government to “fine or imprison individuals who publicly question the efficacy of the existing Covid-19 vaccines on social media, television, radio, or in online or digital publications.” But hatred proved to be as ineffective as the Pfizer vaccine when it came to fighting Covid-19.

    Fauci, who was also Biden’s chief medical advisor, justified Covid mandates because average citizens “don’t have the ability” to determine what is best for them. But Congressional investigations revealed that Fauci was at the center of string-pulling to shirk responsibility for the Wuhan debacle. After Sen. Ted Cruz (R-TX) suggested prosecuting Fauci for false testimony on bankrolling “gain-of-function” research, Fauci howled that his critics are “really criticizing science because I represent science. That’s dangerous.” But not nearly as dangerous as vesting vast power in secretive federal agencies.

    On September 20, 2023, the Biden administration belatedly banned the Wuhan Institute of Virology from receiving any US government research funding for 10 years as punishment for its unauthorized gain-of-function experiments on bat coronaviruses. But why did the Biden administration omit the same condemnation and similar prohibitions from any American scientist, institute, or government officials that had any role in this debacle? 

    Instead of Tony Fauci bobbleheads, the slogan “Your Government at Work” superimposed atop a million American caskets captured the reality of Covid-19. 

    An earlier version of this piece was posted by The Libertarian Institute

    Tyler Durden
    Sun, 01/26/2025 – 22:10

  • "I Don't Really Care, Margaret": Vance Shuts Down CBS Journo Over Unvetted Migrants
    “I Don’t Really Care, Margaret”: Vance Shuts Down CBS Journo Over Unvetted Migrants

    In his first interview since taking office on CBS News‘ “Face the Nation,” Vice President JD Vance shut down host Margaret Brennan during a line of questioning over allowing unvetted illegal migrants into the United States.

    “We absolutely cannot unleash thousands of unvetted people into our country,” said Vance. To which Brennan shot back “These people are vetted.”

    “Just like the guy who planned a terrorist attack in Oklahoma a few months ago? He was allegedly properly vetted.”

    ” I don’t want my children to share a neighborhood with people who are not properly vetted,” Vance continued.

    Brennan then tried to pivot, suggesting “It wasn’t clear if he was radicalized when he got here or while he was living here.”

    To which Vance shot back, “I don’t really care, Margaret.“

    https://platform.twitter.com/widgets.jsh/t Colin Rugg

    Vance also Defense Secretary Pete Hegseth, for whom the VP cast the tie-breaking vote to push through his confirmation.

    “I think Pete is a disrupter, and a lot of people don’t like that disruption,” Vance said of the tight vote.

    “If you think about all of those bipartisan, massive votes, we have to ask ourselves, what did they get us?” Vance continued. “They got us a country where we fought many wars over the last 40 years, but haven’t won a war about as long as I’ve been alive.”

    According to Vance, Hegseth’s primary task will be “to fix the problems at the Department of Defense,” including increasing recruitment and fixing an “incredibly broken” weapons procurement process.

    “If you look at where we are with the rise of artificial intelligence, with the rise of drone technology and drone warfare, we have to really, top to bottom, change the way that we fund the procurement of weapons, the way that we arm our troops,” Vance said.

    Vance also said he’s “confident” that Tulsi Gabbard will be confirmed as director of national intelligence – brushing aside criticism she’s received, and saying she’ll “ultimately get through.” Vance described Gabbard as a “career military servant who’s had a classification at the highest levels for nearly two decades,” and “a person who I think is going to bring some trust back to the intelligence services.”

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    The Economy

    When asked how the Trump-Vance administration will help Americans’ pocketbooks, Vance cited “a number of  executive orders that have caused, already, jobs to start coming back into our country, which is a core part of lowering prices.”

    According to Vance, “Capital investment” will “help lower prices.”

    “You asked specifically what executive order is going to help lower prices, all of the stuff that we’ve done on energy, to explore more energy reserves, to develop more energy resources in the United States of America,” Vance said.

    “How does bacon get to the grocery store? It comes on trucks that are fueled by diesel fuel,” he continued. “If the diesel is way too expensive, the bacon is going to become more expensive. How do we grow the bacon? Our farmers need energy to produce it. So if we lower energy prices, we are going to see lower prices for consumers, and that is what we’re trying to fight for.”

    FEMA

    On Friday while touring the disaster zones from Hurricane Helene in North Carolina and the wildfires in Los Angeles, Donald Trump said that the Federal Emergency Management Agency was broken, and that he planned to sign an executive order that would “”begin the process of fundamentally reforming and overhauling FEMA, or maybe getting rid of FEMA.”

    Vance concurred, saing that FEMA “has often been a disaster,” criticizing the agency for not working “well enough with state and local officials to get resources to the people who need it.”

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    Watch the entire interview below:

    h/t Paul Villarreal

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    Tyler Durden
    Sun, 01/26/2025 – 21:35

  • CIA Admits COVID-19 "More Likely" Came From Chinese Lab
    CIA Admits COVID-19 “More Likely” Came From Chinese Lab

    Having been temporarily banned from Twitter, Facebook, and Google over ‘COVID conspiracy theories’ (when we first suggested in January 2020 that the fact there was a Level 4 virus lab in Wuhan was likely not a coincidence to the origin of COVID), and being accused by intel officials of being a propaganda spreading site, we couldn’t help but see the irony (and not rage, frustration, or desire for retribution), when the CIA itself confirmed this week that it found a lab origin “more likely” for the COVID-19 pandemic, joining two other top U.S. agencies that have previously made the assessment.

    “CIA assesses with low confidence that a research-related origin of the COVID-19 pandemic is more likely than a natural origin based on the available body of reporting,” a spokesperson for the agency said in a Jan. 25 statement to media outlets.

    More comical is the fact that, despite no actual physical evidence of a natural origin, the agency emphasized that it has “low confidence” in the assessment and still considers it plausible that the virus came from nature.

    The CIA will “continue to evaluate any available credible new intelligence reporting or open-source information that could change CIA’s assessment,” the spokesperson said.

    President-elect Donald Trump’s nominee for CIA Director, John Ratcliffe, testifies before the Senate Select Committee on Intelligence on Capitol Hill in Washington on Jan. 15, 2025. Madalina Vasiliu/The Epoch Times

    As Eva Fu reports for The Epoch Times, the assessment marks a shift in stance from the intelligence agency that has for years refrained from making a conclusion on the issue, citing lack of information.

    John Ratcliffe, the new CIA director, has long supported the lab leak possibility, telling a congressional panel in April 2023 that it’s the “only explanation” for the disease that has since killed millions around the globe.

    After gaining Senate confirmation, Ratcliffe told Breitbart News that addressing the pandemic origin would be a “day one” priority for him.

    “I’ve been on record, as you know, in saying I think our intelligence, our science, and our common sense all really dictates that the origins of COVID was a leak at the Wuhan Institute of Virology,” he said, adding that he plans to look at intelligence and get the agency “off the sidelines.”

    The international efforts to get more clarity about the source of the virus from China have made little headway.

    In late December 2024, the World Health Organization repeated a request for Beijing to share COVID-related data.

    “This is a moral and scientific imperative,” the organization said. “Without transparency, sharing, and cooperation among countries, the world cannot adequately prevent and prepare for future epidemics and pandemics.”

    In the years since the pandemic broke out from central Chinese city Wuhan, Beijing has silenced on-the-ground citizen journalists, doctors, and academics who sought to shed light on the issue or criticize the regime’s handling of the virus.

    Sen. Tom Cotton (R-Ark.), the Senate Intelligence Committee chairman, said he was pleased to see the CIA’s assessment.

    “I’ve said from the beginning that COVID likely originated in the Wuhan labs. Communist China covered it up and the liberal media covered for them,” he said in a Jan. 25 statement “Now, the most important thing is to make China pay for unleashing a plague on the world.”

    The FBI and the Energy Department have previously assessed that the virus had originated from a lab. The State Department, under the first Trump administration, said in a fact sheet that several researchers had fallen sick with COVID-like symptoms in the autumn of 2019, months before the pandemic exploded to a global scale.

    Leaked Chinese documents that The Epoch Times obtained also show that Chinese hospitals were treating patients with COVID-like symptoms months before the regime’s official timeline.

    “The Chinese government, it seems to me, has been doing its best to try to thwart and obfuscate the work here—the work that we’re doing, the work that our U.S. government and close foreign partners are doing. And that’s unfortunate for everybody,” then-FBI Director Christopher Wray said in early 2023.

    Tyler Durden
    Sun, 01/26/2025 – 20:25

  • Crank Your Amps To 11
    Crank Your Amps To 11

    By Peter Tchir of Academy Securities

    In this industry we are always trying to decipher the signal from the noise. That is never easy, but the level of “noise” coming out of D.C. and elsewhere is making it extremely difficult to identify signals. Some weekend T-Reports write themselves (thankfully) and some are a struggle.

    • What economic data is relevant and indicative of potential trends going forward?
    • How much of the data is largely irrelevant if policies shift dramatically?

    The level of noise is so high that all I could think of was Spinal Tap and how they were fortunate that their amps went to 11, while everyone else’s only went to 10.

    Given all the hype surrounding the first 24 hours and all of the executive orders, I’m surprised that I am more confused, rather than less confused, by the trajectory of this administration (one week into it).

    Most Surprised by…

    Bitcoin. I am most surprised that Bitcoin isn’t a lot higher. This administration seems keen to embrace crypto. There is a lot of chatter about the potential for Bitcoin or crypto reserves. Is Bitcoin failing to break a lot higher because people believe that there are enough politicians in D.C. who think it isn’t a good idea (or even think that it is a bad idea) to use tax dollars to buy and hold crypto? Is there a belief that the crypto community can’t donate enough money to politicians to get some kind of a deal through? Or is the question on Kalshi too narrow and the reserve will include things other than just Bitcoin? We linked to that betting site in last weekend’s report – $Trump, TikTok, and Trea$urie$. Or, quite simply, has so much been priced in that we will need to see a lot more out of D.C. to get another big rally? If so, that has implications for the broader market.

    Least Surprised by…

    The number of responses on this month’s Around the World. Academy’s Geopolitical Intelligence Group weighed in on:

    • The Ceasefire in Gaza.
    • Iran Signing a Strategic Partnership Pact with Russia.
    • The Escalation in the War between Russia and Ukraine.
    • The Chinese Cyber Threat.
    • The U.S. “Engagement” with Greenland.

    Most Intrigued by…

    DeepSeek. Given all the “noise” around TikTok, you would think that would be a focus, but DeepSeek caught my attention. It seems like this AI model may have been out there for some time, but it exploded in my social media timeline this weekend. On the face of it, we have an AI tool that is cheaper to build and possibly better than existing AI platforms. The “catch” is that it is a Chinese developed AI engine. Given privacy concerns and the cyber threats, I cannot help but wonder who would (or should) use it?

    That is, assuming it is real. Periodically we used to get stories about some group achieving “cold fusion” that never turned out to be real, and lately, some similar claims about quantum computing have yet to pan out in reality.

    In any case, if extremely good AI can be built with “old school” chips, it would have a lot of ramifications for this market. It does seem unbelievable in some ways but reminds us of the discussion we’ve been having about China’s efforts to develop chips of their own.

    • The smallest chips require state of the art tech manufacturing to be built efficiently. However, small chips can be made inefficiently using old tech. It isn’t an efficient way to make the thinnest chips, but it can be accomplished to a degree, which is presumably how China is making some of its smallest chips (assuming they haven’t figured out how to get access to state of the art tech that the U.S. and others are trying to prevent China from obtaining).
    • The “packaging” (vertically stacking multiple chips) may play a bigger role in semiconductors continuing to adhere to Moore’s Law (or some variation of it) as opposed to just creating smaller and smaller chips. While packaging is also challenging, it is not necessarily “state of the art” challenging, which would reduce “our” lead over Chinese chipmakers.

    Given the importance of AI in our markets (if not yet in our economy), this “story” could be interesting (and also harkens back to the question at the end of the first section – how much is priced in already?).

    A Little Concerned by…

    Delinquencies. This is something we are digging into in more detail as it has become a common theme in more meetings. With student loan forgiveness becoming a thing of the past (it was never really a thing) and no real clarity on how things like not taxing tips will play out, there are more and more questions about some segments of the consumer. With hopes of much lower interest rates being dashed (for now) the concern about consumption is increasing (at least for those who didn’t load up on crypto).

    We are digging through the various metrics on delinquencies to figure out if this is something that should be a larger concern or not. The fact that it is coming up more in conversations means it definitely warrants some further digging. If it is true that consumers are stretched, then it shines a different light on what policies are needed, and how quickly they are needed, to ensure that the economic data doesn’t tumble.

    A recession isn’t on anyone’s mind right now, and maybe it should be? It surprised us by not showing up when everyone was talking about it, so maybe a recession will make a surprise entrance? Doubtful, but time to start digging into the data that is concerning and possibly difficult to turn around.

    A Little Confused by…

    Inflation. Too much to unpack here, but we are working on a chart package. Of all the economic data that will be influenced by policies out of D.C., inflation is the most significant, so maybe it is a fool’s errand to think too much about it, but here are some things that keep coming to mind:

    The owners equivalent rent (OER) is once again lagging virtually any “real time” measure of rent. This time around it is overstating rent inflation in CPI data. We discussed the quandary of Making Policy on Bad Data and that remains a concern.

    Can the president tell the Fed what to do? No. Can the president enact policies that reduce inflation and allow the Fed to cut? Yes, but that might be difficult.

    Is inflation simply oil? No, though the president, in my opinion, is not completely wrong to focus on getting oil prices lower as a strategy to lower inflation.

    What impact will tariffs and immigration policy have on inflation? We still don’t really know how these “day 1” policies are going to play out, so it is difficult to estimate. Frankly, what has been done on the tariff front and on immigration has been fairly benign. That may continue, though the risk of a hiccup on the tariff front is rising as so much (maybe too much) good news is being priced in.

    It is difficult enough to form good policy when the data is noisy, but when we are surrounded by even more noise out of D.C., it will be increasingly difficult not to make policy mistakes.

    Bottom Line

    Set your amps to 11 and prepare to deal with the noise! Fortunately, from a T-Report perspective, noise fits our 2025 theme of “messy, but manageable.”

    Expect weakness in both bonds and stocks in the coming days and weeks. So much good has been priced in that it will be difficult for bonds or stocks to surprise to the upside. We’ve been looking to Bitcoin as a “tell” and even that isn’t sending a strong buy signal any longer (even with mounting evidence that it should be).

    Caution is the order of the day as we try to filter the signal from the immense amount of noise and also get back to looking for the trends that will be difficult to turn around.

    Good luck and maybe before or after football today, it is worth finding and watching a good mockumentary – we could all use a laugh or two.

    Tyler Durden
    Sun, 01/26/2025 – 19:50

  • Watch: Angry Migrant Mob Blocks Dallas Traffic In Protest Of ICE Raids
    Watch: Angry Migrant Mob Blocks Dallas Traffic In Protest Of ICE Raids

    A mob of angry migrants blocked traffic on a major roadway in the Dallas metro area to protest President Trump’s Immigration and Customs Enforcement raids, which are targeting criminal illegal aliens and deporting them to their home countries.   

    Footage uploaded to X early Sunday evening shows a mob of what appears to be migrants yelling “F*ck Trump” while waving Mexican flags. They are disrupting traffic and obstructing local law enforcement.

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    Migrant uprisings are an ongoing risk as Trump’s illegal alien raids kick into high gear.  

    Tyler Durden
    Sun, 01/26/2025 – 19:35

  • Hamas On Recruiting Drive Adds 15K Fighters Since War Began: US Intelligence
    Hamas On Recruiting Drive Adds 15K Fighters Since War Began: US Intelligence

    We’ve been documenting evidence which strongly suggests Hamas is far from being eradicated even after 475 days of war in the Gaza Strip. For example, on Saturday when four Israeli female captives were finally freed in exchange for 200 Palestinian prisoners, Hamas crowded a large city square with a well-armed battalion-sized force.

    And now newly revealed US intelligence has indicated that Hamas, a US-designated foreign terrorist organization, has actually been able to embark on a successful recruiting drive since the Israeli offensive began in Gaza in the wake of October 7.

    “The Palestinian militant group Hamas has recruited between 10,000 and 15,000 members since the start of its war with Israel, according to two congressional sources briefed on U.S. intelligence, suggesting the Iran-backed fighters could remain a persistent threat to Israel,” Reuters reports.

    Via NBC

    “The intelligence indicates a similar number of Hamas fighters have been killed during that period, the sources said,” the report continues. “The latest official U.S. estimates have not been previously reported.”

    Israeli government figures have put the number of Hamas dead at 20,000 or more. The group has been able to wage a guerilla insurgency using the Strip’s sprawling tunnel networks. Hamas sends small teams to ambush Israeli tank and infantry units, popping up from concealed tunnel entrances.

    Just days before Trump entered the White House for a second time, then Secretary of State Antony Blinken assessed, “Each time Israel completes its military operations and pulls back, Hamas militants regroup and re-emerge because there’s nothing else to fill the void.”

    President Trump is meanwhile taking a hawkish stance in his rhetoric, as expected. On the one hand he’s hailed the truce deal as a result of his early diplomacy, but on the other he has just declared that Gaza should be “cleaned out”…

    President Donald Trump said on Jan. 25 that he wants Egypt, Jordan, and other Arab nations to accept more Palestinian refugees from the Gaza Strip, with the goal of moving out enough of the war-torn area’s population to “just clean [it] out” and create a virtual clean slate of the Palestinian territory.

    As for Hamas’ ability to still recruit, many analysts have pointed out that each time Israel’s military occupies the Strip, more and more young people are radicalized.

    Scenes of Hamas openly parading around the Gaza Strip sporting combat rifles and gear…

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    It also remains that hundreds of thousands of Palestinians are internal refugees and are homeless. This is likely to contribute to the trend of men signing up to enter Hamas’ armed ranks.

    Trump’s ‘cleaning out’ Gaza would certainly complicated by the fact that Israel’s military would have to fully eradicate Hamas first – which is a tall order and something the IDF clearly has not been able to do up to this point.

    Tyler Durden
    Sun, 01/26/2025 – 19:15

  • The Algorithmic Age
    The Algorithmic Age

    Authored by Josh Stylman via The Brownstone Institute,

    Having explored the physical and psychological mechanisms of control in a previous article, and their deployment through cultural engineering in yet another article, we now turn to their ultimate evolution: the automation of consciousness control through digital systems.

    In my research on the tech-industrial complex, I’ve documented how today’s digital giants weren’t simply co-opted by power structures—many were potentially designed from their inception as tools for mass surveillance and social control. From Google’s origins in a DARPA-funded CIA project to Amazon’s founder Jeff Bezos’ familial ties to ARPA, these weren’t just successful startups that later aligned with government interests

    What Tavistock discovered through years of careful study—emotional resonance trumps facts, peer influence outweighs authority, and indirect manipulation succeeds where direct propaganda fails—now forms the foundational logic of social media algorithms. Facebook’s emotion manipulation study and Netflix’s A/B testing of thumbnails (explored in detail later) exemplify the digital automation of these century-old insights, as AI systems perform billions of real-time experiments, continuously refining the art of influence at an unprecedented scale.

    Just as Laurel Cc served as a physical space for steering culture, today’s digital platforms function as virtual laboratories for consciousness control—reaching further and operating with far greater precision. Social media platforms have scaled these principles through ‘influencer’ amplification and engagement metrics. The discovery that indirect influence outperforms direct propaganda now shapes how platforms subtly adjust content visibility. What once required years of meticulous psychological study can now be tested and optimized in real-time, with algorithms leveraging billions of interactions to perfect their methods of influence.

    The manipulation of music reflects a broader evolution in cultural control: what began with localized programming, like Laurel Canyon’s experiments in counterculture, has now transitioned into global, algorithmically-driven systems. These digital tools automate the same mechanisms, shaping consciousness on an unprecedented scale

    Netflix’s approach parallels Bernays’ manipulation principles in digital form—perhaps unsurprisingly, as co-founder Marc Randolph was Bernays’ great-nephew and Sigmund Freud’s great-grand-nephew. Where Bernays used focus groups to test messaging, Netflix conducts massive A/B testing of thumbnails and titles, showing different images to different users based on their psychological profiles.

    Their recommendation algorithm doesn’t just suggest content—it shapes viewing patterns by controlling visibility and context, similar to how Bernays orchestrated comprehensive promotional campaigns that shaped public perception through multiple channels. Just as Bernays understood how to create the perfect environment to sell products—like promoting music rooms in homes to sell pianos—Netflix crafts personalized interfaces that guide viewers toward specific content choices. Their approach to original content production similarly relies on analyzing mass psychological data to craft narratives for specific demographic segments.

    More insidiously, Netflix’s content strategy actively shapes social consciousness through selective promotion and burial of content. While films supporting establishment narratives receive prominent placement, documentaries questioning official accounts often find themselves buried in the platform’s least visible categories or excluded from recommendation algorithms entirely. Even successful films like What Is a Woman? faced systematic suppression across multiple platforms, demonstrating how digital gatekeepers can effectively erase challenging perspectives while maintaining the illusion of open access.

    I experienced this censorship firsthand. I was fortunate enough to serve as a producer for Anecdotals, directed by Jennifer Sharp, a film documenting Covid-19 vaccine injuries, including her own. YouTube removed it on Day One, claiming individuals couldn’t discuss their own vaccine experiences. Only after Senator Ron Johnson’s intervention was the film reinstated—a telling example of how platform censorship silences personal narratives that challenge official accounts.

    This gatekeeping extends across the digital landscape. By controlling which documentaries appear prominently, which foreign films reach American audiences, and which perspectives get highlighted in their original programming, platforms like Netflix act as cultural gatekeepers—just as Bernays managed public perception for his corporate clients. Where earlier systems relied on human gatekeepers to shape culture, streaming platforms use data analytics and recommendation algorithms to automate the steering of consciousness. The platform’s content strategy and promotion systems represent Bernays’ principles of psychological manipulation operating at an unprecedented scale.

    Reality TV: Engineering the Self 

    Before social media turned billions into their own content creators, Reality TV perfected the template for self-commodification. The Kardashians exemplified this transition: transforming from reality TV stars into digital-age influencers, they showed how to convert personal authenticity into a marketable brand. Their show didn’t just reshape societal norms around wealth and consumption—it provided a masterclass in abandoning genuine human experience for carefully curated performance. Audiences learned that being oneself was less valuable than becoming a brand, that authentic moments mattered less than engineered content, and that real relationships were secondary to networked influence.

    This transformation from person to persona would reach its apex with social media, where billions now willingly participate in their own behavioral modification. Users learn to suppress authentic expression in favor of algorithmic rewards, to filter genuine experience through the lens of potential content, and to value themselves not by internal measures but through metrics of likes and shares. What Reality TV pioneered—the voluntary surrender of privacy, the replacement of authentic self with marketable image, the transformation of life into content—social media would democratize at a global scale. Now anyone could become their own reality show, trading authenticity for engagement.

    Instagram epitomizes this transformation, training users to view their lives as content to be curated, their experiences as photo opportunities, and their memories as stories to be shared with the public. The platform’s ‘influencer’ economy turns authentic moments into marketing opportunities, teaching users to modify their actual behavior—where they go, what they eat, how they dress—to create content that algorithms will reward. This isn’t just sharing life online—it’s reshaping life itself to serve the digital marketplace.

    Even as these systems grow more pervasive, their limits are becoming increasingly visible. The same tools that enable manipulating cultural currents also reveal its fragility, as audiences begin to challenge manipulative narratives.

    Cracks in the System

    Despite its sophistication, the system of control is beginning to show cracks. Increasingly, the public is pushing back against blatant attempts at cultural engineering, as evidenced by current consumer and electoral rejections.

    Recent attempts at obvious cultural exploitation, such as corporate marketing campaigns and celebrity-driven narratives, have begun to fail, signaling a turning point in public tolerance for manipulation. When Bud Light and Target—companies with their own deep establishment connections—faced massive consumer backlash in 2023 over their social messaging campaigns, the speed and scale of the rejection marked a significant shift in consumer behavior. Major investment firms like BlackRock faced unprecedented pushback against ESG initiatives, seeing significant outflows that forced them to recalibrate their approach. Even celebrity influence lost its power to shape public opinion—when dozens of A-list celebrities united behind one candidate in the 2024 election, their coordinated endorsements not only failed to sway voters but may have backfired, suggesting a growing public fatigue with manufactured consensus.

    The public is increasingly recognizing these manipulation patterns. When viral videos expose dozens of news anchors reading identical scripts about ‘threats to our democracy,’ the facade of independent journalism crumbles, revealing the continued operation of systematic narrative control. Legacy media’s authority is crumbling, with frequent exposures of staged narratives and misrepresented sources revealing the persistence of centralized messaging systems.

    Even the fact-checking industry, designed to bolster official narratives, faces growing skepticism as people discover that these ‘independent’ arbiters of truth are often funded by the very power structures they claim to monitor. The supposed guardians of truth serve instead as enforcers of acceptable thought, their funding trails leading directly to the organizations they’re meant to oversee.

    The public awakening extends beyond corporate messaging to a broader realization that supposedly organic social changes are often engineered. For example, while most people only became aware of the Tavistock Institute through recent controversies about gender-affirming care, their reaction hints at a deeper realization: that cultural shifts long accepted as natural evolution might instead have institutional authors. Though few still understand Tavistock’s historic role in shaping culture since our grandparents’ time, a growing number of people are questioning whether seemingly spontaneous social transformations may have been, in fact, deliberately orchestrated.

    This growing recognition signals a fundamental shift: as audiences become more conscious of manipulation methods, the effectiveness of these control systems begins to diminish. Yet the system is designed to provoke intense emotional responses—the more outrageous the better—precisely to prevent critical analysis. By keeping the public in a constant state of reactionary outrage, whether defending or attacking figures like Trump or Musk, it successfully distracts from examining the underlying power structures these figures operate within. The heightened emotional state serves as a perfect shield against rational inquiry.

    Before examining today’s digital control mechanisms in detail, the evolution from Edison’s hardware monopolies to Tavistock’s psychological operations to today’s algorithmic control systems reveals more than a natural historical progression—it shows how each stage intentionally built upon the last to achieve the same goal. Physical control of media distribution evolved into psychological manipulation of content, which has now been automated through digital systems. As AI systems become more sophisticated, they don’t just automate these control mechanisms—they perfect them, learning and adapting in real time across billions of interactions.

    We can visualize how distinct domains of power—finance, media, intelligence, and culture—have converged into an integrated grid of social control. While these systems initially operated independently, they now function as a unified network, each reinforcing and amplifying the others. This framework, refined over a century, reaches its ultimate expression in the digital age, where algorithms automate what once required elaborate coordination between human authorities.

    The Digital Endgame

    Today’s digital platforms represent the culmination of control methods developed over the past century. Where their researchers once had to manually study group dynamics and psychological responses, AI systems now perform billions of real-time experiments, continuously refining their influence techniques through massive data analysis and behavioral tracking. What Thomas Edison achieved through physical control of films, modern tech companies now accomplish through algorithms and automated content moderation.

    The convergence of surveillance, algorithms, and financial systems represents not just an evolution in technique but an escalation in scope. This convergence appears by design. Consider that Facebook launched the same day DARPA shut down ‘LifeLog,‘ their project to track a person’s ‘entire existence’ online. Or that major tech platforms now employ numerous former intelligence operatives in their ‘Trust & Safety’ teams, determining what content gets amplified or suppressed. 

    Social media platforms capture detailed behavioral data, which algorithms analyze to predict and shape user actions. This data increasingly feeds into financial systems through credit scoring, targeted advertising, and emerging Central Bank Digital Currencies (CBDCs). Together, these create a closed loop where surveillance refines targeting, shapes economic incentives, and enforces compliance with dominant order norms at the most granular level.

    This evolution manifests in concrete ways:

    • Edison’s infrastructure monopoly became platform ownership

    • Tavistock’s psychology studies became social media algorithms

    • Operation Mockingbird’s media infiltration became automated content moderation

    • The Hays Code’s moral controls became ‘community guidelines

    More specifically, Edison’s original blueprint for control evolved into digital form:

    • His control of production equipment became platform ownership and cloud infrastructure

    • Theater distribution control became algorithmic visibility

    • Patent enforcement became Terms of Service

    • Financial blacklisting became demonetization

    • His definition of ‘authorized’ content became ‘community standards’”

    Edison’s patent monopoly allowed him to dictate which films could be shown and where—just as today’s tech platforms use Terms of Service, IP rights, and algorithmic visibility to determine what content reaches audiences. Where Edison could simply deny theaters access to films, modern platforms can quietly reduce visibility through “shadow banning” or demonetization.

    This evolution from manual to algorithmic control reflects a century of refinement. Where the Hays Code explicitly banned content, AI systems now subtly deprioritize it. Where Operation Mockingbird required human editors, recommendation algorithms now automatically shape information flow. The mechanisms haven’t disappeared—they’ve become invisible, automated, and far more effective.

    The Covid-19 pandemic demonstrated how thoroughly and quickly modern control systems could manufacture consensus and enforce compliance. Within weeks, established scientific principles about natural immunity, outdoor transmission, and focused protection were replaced by a new orthodoxy. 

    Social media algorithms were programmed to amplify fear-based content while suppressing alternative viewpoints, while news outlets coordinated messaging to maintain narrative control, and financial pressures ensured institutional compliance. 

    Just as Rockefeller’s early capture of medical institutions shaped the boundaries of acceptable knowledge a century ago, the pandemic response demonstrated how thoroughly this system could activate in a crisis. The same mechanisms that once defined ‘scientific’ versus ‘alternative’ medicine now determined which public health approaches could be discussed and which would be systematically suppressed. 

    The Great Barrington Declaration scientists found themselves erased not just through typical censorship, but through the invisible hand of algorithmic suppression—their views buried in search results, their discussions flagged as misinformation, their professional reputations questioned by coordinated media campaigns. This trifecta of suppression rendered dissenting perspectives effectively invisible, demonstrating how modern platforms can converge with state power to erase opposition while maintaining the illusion of independent oversight. Most users never realize what they’re not seeing—the most effective censorship is invisible to its targets.

    Elon Musk’s acquisition of Twitter offered a crack of light, exposing previously hidden practices like shadow banning and algorithmic content suppression through the release of the Twitter Files. These revelations demonstrated how thoroughly platforms had integrated government influence into their moderation policies—whether through direct pressure or voluntary compliance—erasing dissent under the guise of ‘maintaining community standards.’ Yet even Musk acknowledged the limits of free expression within this framework, stating that ‘freedom of speech doesn’t mean freedom of reach.’ This admission underscores the enduring reality: even under new leadership, platforms remain bound by the algorithms and incentives that shape visibility, influence, and economic viability.

    Perhaps the ultimate expression of this evolution is the proposed introduction of Central Bank Digital Currencies (CBDCs), which transform social control mechanisms into financial infrastructure. The merger of ESG metrics with digital currency creates unprecedented granular control—every purchase, every transaction, every economic choice becomes subject to automated social compliance scoring. 

    This fusion of financial surveillance with behavioral control represents the ultimate expression of the control systems that began with Edison’s physical monopolies. By embedding surveillance into currency itself, governments and corporations gain the ability to monitor, restrict, and manipulate transactions based on compliance with official criteria—from carbon usage limits to diversity metrics to social credit scores. These systems could render dissent not just punishable, but economically impossible—restricting access to basic necessities like food, housing, and transportation for those who fail to comply with approved behaviors.

    What began with Tavistock’s careful study of mass psychology, tested through Facebook’s crude emotion experiments, and perfected through modern algorithmic systems, represents more than a century of evolving social control. Each stage built upon the last: from physical monopolies to psychological manipulation to digital automation. Today’s social media platforms don’t just study human behavior—they shape it algorithmically, automating mass psychological manipulation through billions of daily interactions.

    Unplugging from the Matrix: A Path Back to Reality

    Understanding these systems is the first step toward liberation. As the machinery of control reaches its peak, so too does the opportunity for resistance. The endgame for centralized power presents a paradox: the same systems designed to limit freedom also expose their own vulnerabilities. 

    While the evolution from Edison’s physical monopolies to today’s invisible algorithmic controls may feel overwhelming, it reveals a crucial truth: these mechanisms are constructed—and what is constructed can be dismantled or circumvented.

    We can already see glimmers of resistance. As I’ve observed in my investigation of Big Tech’s origins, people are increasingly demanding transparency and authenticity—and once they see these control systems, they don’t unsee them. Public backlash against obvious ideological sculpting—from corporate virtue-signaling campaigns to platform censorship—suggests an awakening to these methods of control. The public rejection of corporate news networks in favor of independent journalism, the mass exodus from manipulative social media platforms to decentralized alternatives, and the growing movement toward local community building all demonstrate how awareness leads to action.

    The rise of platforms committed to free speech, even within centralized systems, shows that alternatives to algorithmic manipulation are possible. By championing transparency, reducing reliance on automated content moderation, and supporting the open exchange of ideas, these platforms challenge the status quo and push back against the dominance of centralized narratives. Building on these principles, truly decentralized networks represent our best hope for resistance: by eliminating gatekeepers entirely, they offer the greatest potential to counter hierarchical control and empower authentic expression.

    The battle for freedom of consciousness is now our most fundamental struggle. Without it, we are not autonomous actors but non-player characters (NPCs) in someone else’s game, making seemingly free choices within carefully constructed parameters. Each time we question an algorithmic recommendation or seek out independent voices, we crack the control matrix. When we build in-person local communities and support decentralized platforms, we create spaces beyond algorithmic manipulation. These aren’t just acts of resistance—they’re steps toward reclaiming our autonomy as conscious human actors rather than programmed NPCs.

    The choice between authentic consciousness and programmed behavior requires daily discernment. We can passively consume curated content or actively seek diverse perspectives. We can accept algorithmic suggestions or consciously choose our information sources. We can isolate ourselves in digital bubbles or build real-world communities of resistance.

    Our liberation begins with recognition: these systems of control, though powerful, are not inevitable. They were constructed, and they can be dismantled. By embracing creativity, fostering authentic connection, and restoring our sovereignty, we don’t just resist the control matrix—we reclaim our fundamental right to author our own destiny. The future belongs to those aware enough to see the system, brave enough to reject it, and creative enough to build something better.

    *  *  *

    Essential Resources for Understanding Power and Influence

    Friends and readers often ask where they can learn more about the esoteric topics I explore, particularly the intersections of culture, power, and social control. This curated list of resources has been instrumental in shaping my understanding of how power structures operate, influence, and shape public consciousness. These works span disciplines—from history and psychology to investigative journalism and cultural critique.

    I share these not as a definitive roadmap but as an invitation to independent inquiry. In an era when algorithms increasingly shape what we see and think, engaging with diverse, well-researched perspectives becomes an act of empowerment. I hope the resources below serve as valuable starting points for those seeking to understand the deeper systems that shape our world.

    Books:

    1. Dave McGowan, Weird Scenes Inside the Canyon
      Detailed investigation of the Laurel Canyon music scene and its military/intelligence connections.
      https://www.goodreads.com/book/show/18681494-weird-scenes-inside-the-canyon
    2. John Coleman, The Tavistock Institute of Human Relations
      Inside perspective on one of the key architects of mass psychological manipulation.
      https://www.goodreads.com/book/show/7863459-the-tavistock-institute-of-human-relations?ref=nav_sb_ss_1_22
    3. John Coleman, The Committee of 300
      An exploration of the power structures shaping global policies, culture, and narratives.
      https://www.goodreads.com/book/show/105897.The_Committee_of_300
    4. Miles Copeland, The Game of Nations
      Insights from a former CIA operative on covert operations and manipulation of public perception.
      https://www.goodreads.com/book/show/1344357.The_Game_of_Nations
    5. Daniel Estulin, Tavistock Institute: Social Engineering the Masses
      Contemporary analysis of ongoing influence operations.
      https://www.goodreads.com/book/show/29351771-tavistock-institute
    6. Edward Bernays, Propaganda
      A foundational work on the manipulation of public opinion and the psychology behind mass persuasion.
      https://www.goodreads.com/book/show/191140.Propaganda
    7. Neil Postman, Amusing Ourselves to Death
      An exploration of how entertainment and media shape public consciousness and discourse.
      https://www.goodreads.com/book/show/74034.Amusing_Ourselves_to_Death
    8. Marshall McLuhan, Understanding Media: The Extensions of Man
      A critical analysis of how media environments influence human perception and behavior.
      https://www.goodreads.com/book/show/61786.Understanding_Media
    9. Shoshana Zuboff, The Age of Surveillance Capitalism
      In-depth exploration of how technology companies exploit personal data for control and profit.
      https://www.goodreads.com/book/show/26195941-the-age-of-surveillance-capitalism
    10. Mark Crispin Miller, Boxed In: The Culture of TV
      A critique of television as a medium of social and psychological control.
      https://www.goodreads.com/book/show/1342360.Boxed_In
    11. Gore Vidal, Perpetual War for Perpetual Peace
      Essays on the military-industrial complex and its ties to media narratives.
      https://www.goodreads.com/book/show/53078.Perpetual_War_for_Perpetual_Peace
    12. Jay Dyer, Esoteric Hollywood (Parts 1 & 2)
      A deep dive into the occult, intelligence connections, and symbolic manipulation in Hollywood films.
      https://www.goodreads.com/book/show/32851888-esoteric-hollywood
    13. Tom O’Neill, Chaos: Charles Manson, the CIA, and the Secret History of the Sixties
      A riveting investigation into the CIA’s covert experiments and their connections to the counterculture and Charles Manson.
      https://www.goodreads.com/book/show/43015073-chaos
    14. The Memoirs of Billy Shears
      Presented as historical fiction, this book delves into the Paul McCartney replacement conspiracy, blending elements of autobiography, cultural critique, and an exploration of The Beatles’ role as a socially engineered phenomenon that shaped and redirected 20th-century youth culture.
      https://www.goodreads.com/book/show/31178916-the-memoirs-of-billy-shears
    15. Paul L. Williams, Operation Gladio: The Unholy Alliance Between the Vatican, the CIA, and the Mafia
      A detailed account of covert operations, propaganda, and the intelligence community’s hidden influence on global events.
      https://www.goodreads.com/book/show/22245430-operation-gladio
    16. Konstandinos Kalimtgis, Dope, Inc.: Britain’s Opium War Against the World
      An explosive investigation into the global drug trade, exposing its ties to elite financial and political institutions.
      https://www.goodreads.com/book/show/16145722-dope-inc 

    Essential Voices and Further Investigations:

    1. Mike Williams, Sage of Quay
      Comprehensive documentation of The Beatles, Tavistock, and their role in cultural manipulation.
      https://www.youtube.com/channel/UCtimXpaec1UWO4lHSYNgfvg
    2. Michael Benz, Foundation for Freedom Online
      Current analysis of media manipulation and digital censorship infrastructure.
      https://foundationforfreedomonline.com
    3. Courtney Turner, The Courtney Turner Podcast
      Engaging conversations on cultural engineering, Tavistock’s legacy, and modern social control mechanisms.
      https://www.courtneyturner.com/podcast
    4. Jay Dyer, Jay’s Analysis Deep dives into Hollywood, esoteric symbolism, and the intersection of culture, power, and intelligence networks.
      https://jaysanalysis.com
    5. Solari Report – Catherine Austin Fitts
      A comprehensive resource exploring the financial, geopolitical, and systemic structures shaping global events, with unparalleled research into transparency, hidden systems, and actionable solutions.
      https://home.solari.com
    6. Whitney Webb, Unlimited Hangout
      Investigative reporting on intelligence agencies, corporate power, and media manipulation.
      https://unlimitedhangout.com
    7. Monica Perez, The Monica Perez Show
      Thought-provoking discussions on propaganda, psychological operations, and media narratives.
      https://monicaperezshow.com
    8. Sam Tripoli, Tin Foil Hat Podcast
      Unfiltered conversations exploring alternative theories, hidden histories, and systemic manipulation.
      https://samtripoli.com/tin-foil-hat
    9. William Ramsey Investigates
      In-depth examinations of occult influences, historical conspiracies, and intelligence operations shaping society.
      https://www.williamramseyinvestigates.com
    10. Adam Curtis, The Century of the Self (Documentary)
      A powerful visual journey through the evolution of psychological manipulation in media and advertising.
      https://www.youtube.com/watch?v=DnPmg0R1M04

    Tyler Durden
    Sun, 01/26/2025 – 18:40

  • Trump Fires 'Virtually Worthless' Inspectors General, Liz Warren Freaks Out Over 'Purge'
    Trump Fires ‘Virtually Worthless’ Inspectors General, Liz Warren Freaks Out Over ‘Purge’

    President Donald Trump fired at least a dozen ‘independent’ watchdogs known as inspectors general, who oversee government agencies – prompting immediate shrieking from the usual suspects who insist that the move is illegal.

    REUTERS/Kevin Lamarque

    The ousters are likely to be one of Trump’s first major court battles since taking office – with at least one of the fired inspectors general, Cardell Richardson Sr. of the State Department – telling staff he’ll ignore Trump and show up to work on Monday, arguing that the firings are illegal, Politico reports, citing an anonymous source.

    Other fired inspectors general include those at State, Agriculture, Interior, Transportation, Housing and Urban Development, Education, Labor and Defense, the Small Business Administration, the Department of Energy, and the Environmental Protection Agency.

    The inspectors general at the Department of Justice, Office of Personnel Management, the Federal Communications Commission, the Export-Import Bank and the Department of Homeland Security remain in place, according to the person.

    The inspectors general were dismissed via emails from the White House Presidential Personnel Office, with no notice sent to lawmakers on Capitol Hill, who have pledged bipartisan support for the watchdogs, in advance of the firings, the person said. The emails gave no substantive explanation for the dismissals, with at least one citing “changing priorities” for the move, the person added. -Politico

    Speaking Saturday night aboard Air Force One, Trump told reporters that he didn’t know the inspectors general who were fired, but that “some people thought that some were unfair, or some were not doing the job,” and that the firings were “a very common thing to do.”

    When he was asked if he planned to install loyalists in their place, Trump said he didn’t “know anybody that would do that,” adding “We’ll put people in there that will be very good.”

    As the Epoch Times notes further, Hannibal Ware, the inspector general for the Small Business Administration (SBA) and chairperson of the Council of the Inspectors General on Integrity and Efficiency (CIGIE), said in a Jan. 24 letter sent to Sergio Gor, director of presidential personnel at the White House, objecting to a series of dismissal emails Gor had sent to a number of inspector generals—including to Ware.

    “I am writing in response to your email sent to me and other Inspectors General earlier this evening wherein you informed each of us that ‘due to changing priorities, your position as Inspector General … is terminated, effective immediately,’” Ware wrote in the letter to Gor.

    “At this point, we do not believe the actions taken are legally sufficient to dismiss Presidentially Appointed, Senate Confirmed Inspectors General,” Ware wrote.

    Ware said that the Inspector General Act of 1978 requires the president to notify Congress at least 30 days in advance of dismissal of an inspector general and that “substantive rationale, including detailed and case-specific reasons” for such terminations must be provided.

    Ware was confirmed to his role by the Senate in 2018. In 2024, President Joe Biden appointed Ware to also lead the Office of the Inspector General for the Social Security Administration. Ware’s eligibility to serve in the latter acting role, sans Senate confirmation, expired on Jan. 24.

    It’s unclear which inspectors general were told by the White House they are being fired.

    The White House has not confirmed the terminations and did not respond to a request for comment from The Epoch Times. An inquiry sent to Ware asking what further action the CIGIE is planning to take was also not returned.

    Congress established modern-era offices of inspectors general in response to government waste and fraud scandals in the 1970s. The role of inspectors general is to independently audit, inspect, and investigate government agencies to ensure accountability.

    There are currently 74 inspectors general and more than 14,000 employees within their offices, according to the Congressional Research Service.

    Reports of the dismissals sparked a number of critical reactions on the part of Democratic lawmakers.

    “Yesterday, in the dark of night, President Trump fired at least 12 independent Inspectors General at important federal agencies across the administration,” Sen. Chuck Schumer (D-N.Y.) said on the Senate floor on Jan. 25.

    Schumer called it a “chilling purge” and added that the dismissals appear to be in violation of federal law.

    In a post on X, Sen. Elizabeth Warren (D-Mass.) called the dismissals a “purge of independent watchdogs in the middle of the night” and accused Trump of “dismantling checks on his power and paving the way for widespread corruption.”

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

    Responding to Warren’s criticism, Trump supporter and attorney. Sidney Powell, defended the terminations.

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

    “Existing IGs are virtually worthless,” Powell wrote in a post on X. “They may bring a few minor things to light but accomplish next to nothing. The whole system needs to be revamped!! They are toothless and protect the institution instead of the citizens.”

    Inspectors general often serve across multiple administrations, but during his first term, Trump fired five over the course of several months in 2020. In context of one of the dismissals, Trump said that it was within his executive authority to do so and that he believed inspectors general were in most cases “very political.”

    In 2022, Congress enhanced protections for inspectors general, limiting presidential authority to replace them and requiring detailed justifications for their removal.

    Tyler Durden
    Sun, 01/26/2025 – 18:05

  • Musk Exploring Blockchain Use To Curb US Govt Spending; Report
    Musk Exploring Blockchain Use To Curb US Govt Spending; Report

    Authored by Vince Quill via CoinTelegraph.com,

    Elon Musk, the head of the Department of Government Efficiency (DOGE), is reportedly exploring implementations of blockchain technology in US government operations to track and reduce federal spending.

    According to Bloomberg, the DOGE is also looking at using blockchain to secure data, make payments, and manage buildings as part of the DOGE’s efficiency push.

    Personnel from the newly commissioned non-government department have also met with representatives from public permissionless blockchain networks to consult about potential use by the US government.

    The initiative is part of Musk’s broader goal of eliminating trillions of dollars from the annual federal budget and ensuring government accountability through transparency.

    US government spending vs. tax revenue. Source: Charlie Bilello

    Blockchain to force government transparency?

    Musk’s push to use blockchain technology to force government transparency is not a new idea in US politics.

    In April 2024, former Presidential candidate Robert F. Kennedy Jr. said he wanted to put the entire federal budget onchain. The politician told an audience at a Michigan rally:

    “Every American can look at every budget item in the entire budget, anytime they want, 24 hours a day. We are going to have 300 million eyeballs on our budget. If somebody is spending $16,000 for a toilet seat, everybody will know about it.”

    Kennedy’s proposal was met with widespread support from small government and sound money advocates, who argued that US government spending was out of control.

    US national debt clock. Source: US Debt Clock

    Department of Government Efficiency takes first steps

    The Department of Government Efficiency launched its website on Jan. 21 and officially adopted the DOGE logo used by the world’s first memecoin, Dogecoin.

    Following the website’s launch, the price of Dogecoin rallied by approximately 11% to $0.38.

    On Jan. 20, former Presidential candidate, entrepreneur, and DOGE co-founder Vivek Ramaswamy announced he was stepping away from the project to focus on running for governor of Ohio.

    “I’m confident that Elon and his team will succeed in streamlining government,” Ramaswamy wrote in an X post, hinting at his plans to run for office in an official capacity.

    Tyler Durden
    Sun, 01/26/2025 – 17:30

  • Hartnett: These Are The 10 Biggest Themes In The Next 5 Years
    Hartnett: These Are The 10 Biggest Themes In The Next 5 Years

    There was a lot to unpack in Michael Hartnett’s latest Flow Show, in which he detailed the just released report from BofA’s thematic group analyzing “The Big 10 Themes for the Next 5 Years” (available to pro subs), and we’ll get to that in a bit, but first a quick recap of his latest qualitative observations which are for the most part, a continuation of his “bond bullish” theme discussed last week, with the CIO once again underscoring that there is a potential “twin peaks” in bond yields (5% on 30-year UST)…

    … but also in the US$ …

    … which he views as risk-on catalysts if gold rises above $2800/oz (just $30 away)…

    … and if the NYSE can rise above 20,500.

    That said, equity breadth still remains very poor (SPW/SPX & ACWX/SPX pinned to lows) but global PMIs are once again in expansion territory and rising >50

    … which when coupled with potential monetary policy divergence (Fed set to hike again as the RoW cutting), would result in  better breadth.

    Hartnett then looks at the latest BofA Private Client data, and finds that it maps perfectly into the Fed’s quarterly estimate for US household equity net worth ($55.7tn in 3Q24), which also reveals that US equity wealth was up $1.6tn in 4Q24, and set to gain another $1.9tn in 1Q25 (unless the market crashes).

    Taking a step back, the BofA strategist reveals that the bank’s high net worth clients are holding on to $3.9tn AUM, broken down into a near-record 63.2% in stocks, 18.8% in bonds, and 11.2% cash…

     

    … where Hartnett urges readers to note the contrast in position in “Magnificent 7” stocks ($430bn) vs. gold ($9bn); Another highlights: BofA’s private clients have been big bond buyers past 2 weeks (biggest since Jul’24), and remain buyers of stocks ($13bn since election, biggest 2-month add since 2022), while in ETFs, private clients buying bank loans, staples, discretionary, selling low-volatility, healthcare, resources past 4 weeks.

    Ok, but if the high net worth client list is already near record stock capacity, do they have the capacity to buy more? Well, looking at the source of funds – for future stock buying – Hartnett makes the following observations:

    Conventional wisdom is money market fund asset AUM, which is at a record $6.9tn…

    … will be a big 2025 source of funds for risk assets; But Hartnett warns that conventional wisdom will likely be disappointed as history shows MMFA inflows continue for 9 months after 1st Fed cut for 9 months, i.e. peak MMFA AUM will hit in June ’25, and the past 2 cycles of big Fed easing in ’09 & ’20 saw sharp drop in MMFA/cash but bonds & gold were big beneficiaries (bear markets & recession are when cash rates are slashed).

    Turning to “unconventional wisdom”, Hartnett notes that housing is a source of funds for both stocks & crypto, and especially now for the following reason: the US housing affordability index is hovering at 40-year lows, US home price-to-rent ratio close to all-time highs…

    … which has pushed the median age of the US first-time homebuyer to a  record-high 38 years old (was 29 years in 1985); As a result of this housing unaffordability, the millennial & Gen Z “can’t-buy-a-home” liquidity recycled into risk assets.

    All of this leads to a virtuous cycle: since the US economy has become “exceptionally” sensitive to asset prices in the post QE/financial crisis era … 

    … the higher equity net worth means more wealth that either supports consumption or is recycled into risk assets; for context, US household equity net worth is $55.7tn in 3Q24; and while the Fed has yet to release 4Q24 data (due in March) as noted above the BofA private client equity holdings data maps perfectly into Fed estimate of US household equity net worth, and it reveals equity wealth rose $1.6tn in 4Q24, and is set to gain another $1.9tn in 1Q25, which makes the stock market a self-fulfilling catalyst for “US exceptionalism”.

    Which then brings us to the punchline of the latest Flow Show: Hartnett recaps of the latest must read BofA thematic research report, looking at the “World In 2030″ (full note available to pro subscribers), and specifically what the bank thinks will be the 10 biggest themes in the next 5 years.

    We excerpt from the full must-read report:

    1. “Technology is eating the world”: Agentic AI + Reasoning + Rich Simulations + Embodied AI = Industry 6.0 which is minimizing human intervention.

    Summary: Technology is moving us to a new phase in the next 5 years. Powered by the AI revolution, we will watch technology prices plummet. We will see AI’s integration in all aspects of our lives. We will witness its game-changing role in leap-frogging innovation. Agentic AI will influence the job market, rich AI simulations will develop new products in healthcare, industrials and financial services. Furthermore, AI will interact with the physical environment, enabling the next generation of automation. At the same time, we are likely to see a tech war “arms race” between the Superpowers, complicated by accelerated deglobalization and tech protectionism, as well as privacy and demographic concerns.

    Welcome to Industry 6.0 – minimizing human intervention

    The AI large language model (LLM) revolution has accelerated the adoption of Industry 5.0, which aimed to build on the Industry 4.0 digitalization era by integrating “humancentric” approaches into industrial processes. Industry 5.0 emphasized collaboration between humans and advanced technologies, such as AI-driven robots, to optimize workplace processes. We are now seeing AI integrated in every aspect of our economy and our lives, and “humanizing” automated processes. This is moving us from the humanization era (Industry 5.0) to Industry 6.0, which aims to minimize human intervention by creating a fully integrated, intelligent manufacturing systems based on the next generation of technologies.

    1. Tech-onomy: Technologies powering themselves towards lower prices – Investments in automation, AI and tech are reducing prices across the board and increasing returns. For example, while drive capacity has risen by more than 20,000x in the past 20 years, the price per gigabyte has fallen by >99%. More technology gets deployed to satisfy demand, leading to falling prices. Then these technologies become cost-effective in new applications, feeding increased demand again.
    2. “Reasoning AI”: adding the human element, one step before AGI – AI model capabilities are expanding to include tasks that require reasoning. All LLMs thus far have used algorithms for tasks that can be solved with rapid thinking, with increasingly sophisticated versions owing to their emergent properties. However, the new versions of models, like OpenAI’s o1 and o3 models, can now break down complicated problems into separate tasks and hypothesis, using “reasoning” to get to a solution – like human thinking.
    3. Agentic AI: A world of 100bn AI agents working alongside us – Agentic AI is the next big trend in commercializing AI models. It is able to use reasoning capability and build upon that to choose and use the right tools to complete the tasks it is set. At our Transforming World Conference, Steve Brown gave examples such as a marketing plan or a travel booking. He described using AI agents as a way to scale an organization and transform a company’s workforce, as well as their ability to interact with other AI agents, e.g., to obtain an approval or review (e.g., legal or compliance). This doesn’t mean human workers would be completely out of the loop, in his view, but that AI agents could be partners or subordinates that work for humans.
    4. AI-enriched simulations changing industries –  AI-enriched simulations are being leveraged for other innovations; for example, simulation for drug discovery and material breakthroughs. AI has helped to discover 45x times more crystals ever known to man. Using AI in drug discovery facilitated the finding of a candidate for liver cancer in just 30 days. Many of our everyday products are complex and over time designers have come to rely on computer-driven simulations, but they often take time to run. Even once possibilities are found, additional simulations are needed to ensure safety. AI simulation combines techniques from quantum physics and deep learning to enable sampling a vast dataset quickly and efficiently. AI and simulation technologies bring the ability to take a molecular structure and simulate it billions of times, making small changes each time to see which structure is optimal. We can now do this in a matter of weeks and months – a task that would take 10 years in the physical world.
    5. Embodied AI, physical intelligence & humanoid robots – AI is enabling rapid progress in robots, given the ability to programme and interact with them via language models. The term “embodied AI” was first used to describe the branch of AI that focuses on how computers, systems and technology can interact with the physical world. It typically includes AI for sensorimotor skills, navigation, and realworld interactions. But with the rise of generative AI, embodied AI is also being used to give this technology a physical form, typically a robot including autonomous vehicles and drones. The next half a decade will be the breakthroughs years of robotics thanks to AI.
    6. Welcome to the quantum era. Quantum advantage as soon as 2025? We are currently in the early prototype phase of quantum. Scaling up a quantum computers’ qubit number involves solving for many problems such as error correction, cost, speed, and energy efficiency. Current quantum computing companies will need to solve these problems but will reach a limit on the qubit number they can achieve because of the complex architecture that they employ e.g., cabling and racks.
    7. Artificial General Intelligence (AGI)…by 2028? AI smart enough to automate AI research to improve itself, providing feedback loops where superintelligence is possible. Since the first discussions about general AI and technological singularity by mathematician Von Neumann in the mid-20th century, scientists and technologists have repeatedly predicted the coming of human-level intelligent machines in the near term. NVDA’s CEO projected we will reach AGI by 2030, while futurist Steve Brown claimed it could be sooner than that in our Transforming World Conference, that AGI is between 1 year away and never being achieved. The assumption at the moment is 2027-28, as per company/press reports.

    * * *

    2. Peak Monopoly: Dominance of the “Magnificent 7” peaks as AI benefits broaden & politics pressures mega-caps via taxation and regulation.

    Summary: The US stock market has never been so concentrated, dominated by a handful of mega-cap companies, aka the “Magnificent 7”. However, the monopoly of capital and returns by monopolistic tech peaks in coming years as AI gains broaden to a much wider array of corporations, and populist politicians target the monopoly of megacap wealth via taxes & regulations to ease deficits and placate impact of AI on labour market.

    The bigger, the better

    AI has been the positive exogenous shock of the 2020s, as “Technology is eating the World” indicates. And AI has dominated investor bull psychology in the past two years encapsulated by the rise of the “Magnificent 7” (Microsoft, Nvidia, Apple,  Amazon, Google, Meta & Tesla). Even before the AI-shock, these seven companies had become the “leadership” of the US stock market driven by their first-class products, brands & management. Investors also rewarded their strong balance sheets that could withstand the rise in interest rates in the early-2020s, and their monopolistic market positions that guaranteed revenue streams and low-cost suppliers. AI has added to their lustre whether via ability to fund AI capex (Microsoft, Apple, Amazon, Meta, Google spent US$62bn on capex in Q3’24), lead the provision of AI services (e.g., cloud computing), and provide the chips best suited to handle the computing required by AI (Nvidia).

    The combined market cap of the Magnificent 7 has risen to US$18tn, roughly equivalent to the GDP of China, and representing 35% of the market cap of the S&P 500. The US stock market is now the most concentrated in many, many decades.

    In the past two years nearly 60% of S&P 500 returns have been driven by these 7 companies (the number of companies outperforming the index has fallen to its lowest since 1998/99). In addition, the dominance of the “Magnificent 7” has caused the US to rise a record-high 67% of the global stock market capitalization and has led to big shifts in regional wealth concentration (Exhibit 26).

    3. Digital Insecurity: Ending the decade with the “death” of privacy, job market disruption, 10 deepfakes for every person on the planet and cybercrime as the 3rd largest GDP in the world.

    Summary: Many of us feel more anxious than ever before about technology risks given everything from cybersecurity hacks, AI agents displacing human workers, the rise of fake news and the spread of mis/disinformation through deepfakes, and social media addiction leading to loneliness. The global cost of cybercrime is expected to surge to US$15.63tn by 2029-30 (source: Statista). At the same time, an attempted deepfake attack occurs every 5 minutes (source: Onfido, Entrust). The number of deepfake videos has been doubling every 6 months since 2018 (source: Sensity, Information Matters). And deepfake damage costs are projected to reach US$40bn by 2027 (source: Deloitte). Finally, we need to reskill 1bn people by 2030, which is a third of all jobs worldwide, because of technology disruption (source: WEF, OECD).

    Cybersecurity: the digital black swan for 2030? – Cybersecurity is the #1 risk in a Transforming World because of how reliant we are on technology, in our view. Most of the world managed to get through COVID lockdowns and physically social distance, but would this have been possible without access to the digital world? The rise of Generative AI now creates a new ‘threatscape’. For example, using the compute power of 10,000+ A100 Nvidia GPUs to train ChatGPT, it would take just 1 second to crack a password today (source NetSec, Hive Systems). Hacks now take an average of 277 days or about 9 months to identify and contain (source: IBM). And cybersecurity is increasingly becoming a matter of national security, with critical infrastructure more vulnerable to attacks. The costs of cybercrime are eyewatering and set to hit US$10.5tn by 2025E, making it the world’s 3rd largest ‘economy’ behind only the US and China.

    4. More! Exponential growth of tech requiring more resources like infrastructure, compute, bandwidth, human capital, energy, water, skills, and data centers.

    Summary: A Transforming World has transforming needs. Exponential growth of technology will require significantly more resources and infrastructure, adding to the already growing requirements from population growth. The rise of artificial intelligence (AI) in particular is accelerating demand for data, computing power, bandwidth and expanded infrastructure such as energy, water, commodities and data centres. Several bottlenecks are already emerging in these areas, as well as gaps in the skills and human capital required to deliver them. New technologies and solutions are needed to avoid structural deficits between 2025 and 2030.

    Our Transforming World is hungry – and thirsty – for more

    Exponential technology requires a lot more of…everything: Simply put, deepening technology adoption alongside population growth means we need significantly more resources to enable the productivity gains and economic growth potential from AI and future technologies. The key investment opportunities in the next 5 years include:

    • Compute: AI is set to accelerate demand for more powerful chips such as GPUs, with the TAM for AI accelerators set to treble between 2024-2030 to c.US$360bn (BofA Global Research). Manufacturing capacity and supply chains are expanding to accommodate, with an overall market opportunity of over US$1tn (McKinsey).
    • Energy: increased power generation, storage and grid connections will be required for the electrification of industry, transport and buildings, adding c.7,000 TWh of electricity demand globally by 2030 (IEA). Within that, data centres could add c.250TWh in the US alone by 2030 (McKinsey).
    • Water: cooling data centres and advanced manufacturing adds demand to already strained freshwater supplies. Global data centres consumed 309m gallons of water a day on average in 2023, projected to rise to 468m by 2030 (Bluefield Research).
    • Metals: increased demand for critical minerals from AI, renewable energy and electric vehicles is expected to lead to structural shortages of several metals by 2030, including copper, nickel, lithium, cobalt and silver. Trade tensions are already increasing, such as China’s recent ban on exports of gallium and germanium – both required in semiconductor chip manufacturing (BofA Global Research).
    • Bandwidth: rising AI/tech adoption will stress internet infrastructure, requiring more fibre and advanced networks such as 5G, and beyond (6G, plus new satellitebased networks). In the US, the largest network provider, Verizon, said network traffic doubled between 2020-24, and it predicts it will double again between 2025 and 2030 owing to demand from AI tools (Bloomberg/Verizon).
    • Skills: shortages in skilled labour, e.g., in AI, data science and hardware engineering, could worsen in the next 5 years; 1bn people are set to retrain/reskill by 2030 owing to tech disruption (OECD).
    • Real Estate: more land will be needed to accommodate growing technology requirements. Per Bloomberg >7,000 public data centres are either built or in development, but more will be needed – ABI research forecasts 8,400 will be in operation by 2030 (vs 5,700 in 2024, and 3,600 in 2015).

    5. Rebuilding Everything: US$94tn of funding needed by 2040 to rebuild ageing assets and expand the infrastructure supporting tech.

    Summary: Global Infrastructure needs to be expanded and modernised to accommodate converging demographic, sustainability and innovation trends. But there’s a funding gap – US$94tn is required globally by 2040 (source: Oxford Economics), and an estimated US$500bn is needed each year by 2030 on top of available public funds (source: Brookfield). This spans several structural trends – including decarbonisation, electrification, disruptive technologies, reshoring, shifting demographics and ageing of existing assets – all requiring a significant increase in infrastructure investment.

    The long and winding road to nextgen infrastructure – The relationship between technology, economic growth and infrastructure is closely tied to both expansion and modernisation requirements.

    Addition: Expanding infrastructure to support digital technologies and several structural trends, including data centres, high-speed data networks, and energy installations to power them.

    Rebuilding ageing assets: Older infrastructure such as power grids, water systems and transport networks require replacement and modernisation to integrate new technologies such as IOT/sensors, AI monitoring and intervention.

    Energy transition: towards a decarbonised, decentralised, digital energy system The global energy system is transitioning towards more diversified sources of power generation and storage, which requires significant infrastructure and technology. Global investment trends are beginning to reflect this, with close to US$2tn invested in a range of clean energy assets in 2023 (double that of 2020). However, much more is needed. BNEF projects investment needs will rise to US$3tn per year based on current technologies/policies on average over 2023-30, and could reach US$5tn on average per year if further policies were instated. Power generation, EVs and grids made up c.90% of this investment in 2023, but the range of sectors is diversifying to clean industry (steel, ammonia, bioplastics), storage and electrified heat, for example

    6. The End of “Anything But Bonds”: Self-driven or market-imposed, era of government fiscal excess ends, reversing the primal “Anything but Bonds” theme in asset markets.

    Summary: The end of 5,000-year lows in interest rates, fiscal excess, inflation….the “Anything but Bonds” trade has been the most powerful Wall St trend of the past 5 years; in the next 5 years either self-driven or market-imposed, we believe the era of government fiscal excess ends, reversing “Anything but Bonds” pricing in asset markets.

    Big Government, Big Debt, Big Bond Bear

    Big government has been one of the biggest themes of the 2020s. Central banks dominated economic policy making for much of the past 30 years. Fiscal policy was secondary. Asset prices in the 2010s were particularly driven by extreme monetary policies such as Quantitative Easing, Zero Interest Rates, Negative Interest Rates. By the start of the 2020s, interest rates had fallen to 5000-year lows. This has changed dramatically in recent years as a global pandemic, wars, and fiscal excess ended the 40-year long bond bull market (1981-2020). Now both governments and central banks share responsibility for economic growth.

    The US federal budget deficit has averaged 9% of GDP in the past 5 years, the 2020s, with the past two administrations running the largest deficits since FDR in the ’30s/’40s. The US$7tn US government sector is now the 3rd largest economy in the world in GDP terms. Big government has aided and abetted big nominal GDP growth (up almost 50% in past 5 years). The trend is global. Governments running budget surpluses have become rare…last time China ran a budget surplus was 2007, US 2001, Japan 1992, France 1974, Italy 1905.

    7. Populism: “incumbents” were voted out in 26 of 32 elections in ’24…populism means less globalization, immigration, and central bank independence.

    Summary: Populism is politically very popular in the 2020s; populist policies in coming years mean less globalization, less immigration, less central bank independence, and fiscal policy divergence between the US (less government spending) & Europe (more government spending).

    A global political theme – Populism is politically on the rise in the 2020s. Occupy Wall Street, Brexit, Trump 1.0 were all harbingers in the 2010s, and the political trend has deepened in the 2020s. Electorates are increasingly shunning mainstream political leaders and parties in response to rising inflation, rising immigration, and rising inequality (the asset prices on Wall St are 6.7x the size of the GDP of Main St – Exhibit 68).

    In 2024, elections were held in countries that accounted for 40% of the world’s population, 60% of world GDP, and 80% of the world’s equity market cap. Trump’s sweep in the US Presidential election was the most consequential populist victory, but voters notably ousted “incumbents” in 26 of the 32 elections in 2024, a year that saw the share of votes won by mainstream parties fall to its lowest in the UK since 1918 in (57%), to its lowest level in France since 1945 (36% – Exhibit 69). The German election on February 23rd looks set to be the next populist milestone. The German economy has been stagnant for 10 years, and “far-left” and “far-right” parties have recently attracted over 40% of regional election votes.

    8. War & Peace: Protectionism to continue; but “forever wars” set to end & America First policies to spur Asian & European stimulus & reform.

    Summary: Global trade & tech protectionism is set to continue; for Trump, tariffs address “unfair trade practices”, raise US import duty revenues, achieve non-trade objectives; but the US “forever wars” are set to end to the benefit of Europe; and America First policies will spur Asian & European stimulus & reform.

    The End of Globalization

    The 1990-2010 era of peace and globalization has been replaced in the past 10 years by trade wars, military wars, greater geopolitical conflict. The US has become more protectionist, and the 2018-2019 trade war resulted in the largest rise in % of US duties collected since 1930 and Smoot-Hawley (Exhibit 74). And the US-China battle for economic, technological, geopolitical supremacy has disrupted global supply chains, causing China to shift its exports to the rest of the world, away from the US, EU, Japan – Exhibit 75), and giving birth to the early-2020s theme of reshoring.

    9. Rise of the Zoomers…and Boomers! US Boomers’ net wealth = c.80% of world GDP. In 2030, over-65s and Gen Zs could spend c.US$28tn combined.

    Summary: Over the next 10 years, we expect increased consumer spending, particularly from Gen Zs and the ageing Boomer population. Why?

    • Boomers have amassed significant wealth that they will unwind during their retirement. As an example, US Boomers have built US$82tn in net worth as of 2024 Q3 (source: Federal Reserve, Survey of Consumer Finances and Financial Accounts of the US). Globally, over-65s are projected to spend almost US$15tn a year by 2030, up from US$8.7tn in 2020 (source: Ageing Analytics Agency; Brookings).
    • Younger generations will benefit from the Great Wealth Transfer in the coming decades. Some US$84tn could be transferred to them from older generations by 2045 (source: Cerulli Associates).
    • Gen Zs will continue to represent the largest cohort of the global population over the next 10 years at c.30% (source: BofA Global Research, United Nations). Their global income levels are set to be the largest of all generations, increasing from US$9tn in 2023 to US$36tn in 2030E and US$74tn in 2040E (source: BofA Global Research, Euromonitor). This generation could also see the largest increase in spend of US$2.7tn between 2024 and 2030, reaching US$12.6tn (source: BofA Global Research, World Data Lab, Generations Forecasts, UN).

    With large wealth and spending levels over the next 10 years, the consumption patterns of Gen Zs and ageing Boomers will have a strong influence on the global economy. Gen Z’s preferences are shifting away from the old economy towards tech-compatibility, sustainability, and New Media. And an ageing population entails greater spend on healthcare, aged care, leisure and financials.

    10. Health The New Wealth: 10mn global health worker shortage by 2030. Ageing population stretching resources. Solution – Infusion of technology in biology.

    Summary: We believe healthcare is one of the industries set to be most impacted by AI over the next 5 years. AI drug discovery could shorten the time for R&D development from decades to weeks. And AI agents could fill the 10mn global health worker shortage expected by 2030 (source: WHO). However, it’s not just AI transforming healthcare but also demographic trends, with the focus on wellness. It is now a larger market than many other major industries including the green economy, IT, sports, and pharmaceuticals. Worth US$6.3tn today, wellness is 4x larger than the global pharmaceutical industry (US$1.6tn) and 30% larger than the green economy (US$4.8tn). GLP-1 will likely be a key ‘lifestyle’ enabler. By 2030, more Americans will have tried GLP-1 than the entire Canadian population today. Beyond treating obesity, we see many other sectors indirectly being impacted (consumer staples, food retailers, restaurants, apparel retail, gambling, alcohol, tobacco, senior living).

    Finally, here is a snapshot of the biggest beneficiaries of the 10 themes over the next 5 years.

    Much more in the full “The World in 2030” report (available to pro subscribers), and the full Flow Show (also available to pro subscribers).

    Tyler Durden
    Sun, 01/26/2025 – 17:11

  • NATO, Sweden, Latvia On High Alert After Baltic Undersea Data Cable "Damaged"
    NATO, Sweden, Latvia On High Alert After Baltic Undersea Data Cable “Damaged”

    The third severing of an undersea cable in just three months occurred on Sunday, this time between Latvia and Sweden in the Baltic Sea. The incident has prompted a criminal investigation and heightened concerns of potential sabotage by Russia or China.

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    Latvia’s State Radio and Television Center, a data transmission provider, released this statement about the damaged cable connecting Ventspils in Latvia and Sweden’s Gotland island:

    In the early morning of January 26, the submarine fiber optic cable of the Latvian State Radio and Television Centre (hereinafter – LVRTC) in the Baltic Sea was damaged. The LVRTC Data Transmission Monitoring System recorded disruptions in data transmission services on the Ventspils – Gotland (Fårösund) section. LVRTC continues to provide services using other data transmission routes. Currently, there is a possible delay in data transmission speed, but it does not affect end users in Latvia for the most part.

    Prime Minister Evika Silina commented about the incident on X:

    Early morning today we received information that the data cable from Latvia to Sweden was damaged in the Baltic Sea, in the section that is located in the Exclusive economic zone of Sweden. We are working together with our Swedish Allies and NATO on investigating the incident, including to patrolling the area, as well as inspecting the vessels that were in the area. Authorities have intensified information exchange and started criminal investigation.

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    Sweden, Latvia, and NATO are on high alert:

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    Over the past 18 months, three alarming incidents have been reported in which commercial ships traveling to or from Russian ports are suspected of severing undersea cables in the Baltic region.

    Source: WaPo 

    Washington Post recently cited Western officials who said these cable incidents are likely maritime accidents – not sabotage by Russia and/or China. 

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    Due to all the cable severing risks, intentional and unintentional, a report from late November via TechCrunch said Meta planned a new “W” formation undersea cable route around the world to “avoid areas of geopolitical tension.” 

    Tyler Durden
    Sun, 01/26/2025 – 16:55

  • DOJ Asks Supreme Court To Freeze Student Debt, Environmental Cases
    DOJ Asks Supreme Court To Freeze Student Debt, Environmental Cases

    Authored by Matthew Vadum via The Epoch Times,

    The Justice Department reversed the agency’s position on a redistricting dispute currently before the U.S. Supreme Court. At the same time, the department asked the justices to halt the processing of pending student loan and environmental regulation cases.

    The new court filings were issued on Jan. 24, days after President Donald Trump was inaugurated.

    Position changes in high-profile court cases often take place when a new party assumes the presidency. After President Joe Biden was inaugurated in January 2021, the Department of Justice (DOJ) also changed position on several court cases that were pending at the time.

    The DOJ’s new court filings leave the door open to the Supreme Court resuming processing of the student debt and environmental cases in the future, but also suggest the cases may become moot if the Trump administration decides to undo the Biden administration policies that prompted the various lawsuits.

    Acting Solicitor General Sarah M. Harris, who is currently the Trump administration’s top lawyer at the Supreme Court, said in a new court filing that the DOJ has changed its position in the redistricting case.

    She is also asking the court to halt all written briefing deadlines in the student loan case and two environmental cases, which would suspend the processing of those cases indefinitely. Before the court hears oral argument in a case, it typically asks the litigants to file briefs outlining the legal arguments they intend to make.

    In legal parlance, Harris filed motions to hold the briefing schedule in those three cases in abeyance. In other words, she asked the court to suspend briefings until the new administration can decide how to proceed.

    Trump has nominated attorney John Sauer as solicitor general. Sauer, who was Missouri’s solicitor general from 2017, represented Trump at the Supreme Court in his successful bid for immunity after being prosecuted for attempting to overturn the 2020 presidential election.

    Student Debt Case

    Harris filed an abeyance motion with the Supreme Court in U.S. Department of Education v. Career Colleges and Schools of Texas. The court granted the petition on Jan. 10. The oral argument has not been scheduled.

    An association of colleges challenged the Biden-era Department of Education’s rule establishing the procedures that student borrowers can follow to show that they were defrauded by the schools they attended and thereby qualify for student loan forgiveness. Some borrowers claim that schools committed fraud by using unethical recruitment tactics or by advertising exaggerated post-graduation job placement figures.

    A lower court issued a ruling halting the department-directed expansion of defenses that student loan borrowers can use to contest repayment.

    “After the change in Administration, the Acting Secretary of Education has determined that the Department should reassess the basis for and soundness of the Department’s borrower-defense regulations,” Harris wrote in the motion.

    California Emissions Dispute

    Harris filed an abeyance motion with the high court in Diamond Alternative Energy LLC v. Environmental Protection Agency (EPA).

    The Supreme Court agreed on Dec. 13, 2024, to decide whether it would revive a lawsuit filed by energy companies over California’s tough vehicle emissions standards. The court has not yet scheduled oral argument in the case.

    A lower court ruled that California had the authority to regulate tailpipe emissions. That court held that the energy companies bringing the legal action could not demonstrate that they had legal standing to sue, meaning they couldn’t show a strong enough connection to the claim to justify their participation in the lawsuit.

    Energy companies told the Supreme Court in their petition that they will suffer economic harm if California, whose state economy is large, is allowed to continue imposing vehicle emissions standards that are more stringent than those mandated by the federal government.

    California’s policy stances are influential, and several states have already adopted its regulatory framework for automobiles. California says its policies are needed to fight climate change by driving down demand for liquid fuel.

    “After the change in Administration, EPA’s Acting Administrator has determined that the agency should reassess the basis for and soundness of the 2022 reinstatement decision,” Harris wrote, referring to a regulatory action taken by the EPA.

    “Such a reassessment could obviate the need for this Court to determine whether petitioners had Article III standing to challenge that decision.”

    Article III of the U.S. Constitution governs federal courts and has been interpreted as stating those courts may only hear cases involving actual controversies in which at least one litigant has standing to sue.

    Other Environmental Cases

    The DOJ also asked the Supreme Court to pause the processing of two other cases that dispute EPA actions.

    Both are about the federal Clean Air Act, which provides that challenges to “nationally applicable regulations” may “be filed only” in the U.S. Court of Appeals for the District of Columbia Circuit.

    In the first case, Oklahoma v. EPA, which has been consolidated with Pacificorp v. EPA, Oklahoma and other states argue that state disputes over EPA policies should be heard in regional circuit courts, rather than in the nation’s capital.

    The Supreme Court granted the petition on Oct. 21, 2024. No oral argument has yet been scheduled.

    At issue is the EPA’s “good neighbor” rule that cracks down on states whose industries are said to be contributing to smog.

    The Clean Air Act requires each state to adopt an implementation plan to comply with national standards, which the EPA then reviews, but in 2023, the agency drafted its own rule after rejecting 23 states’ plans for meeting national ozone standards.

    In February 2024, the U.S. Court of Appeals for the 10th Circuit determined that challenges to EPA disapproval of the state plans could be filed only in the D.C. Circuit.

    The Supreme Court voted 5–4 on June 27, 2024, to temporarily put the EPA’s rule on hold. The court held that the emissions-reduction standards established by the EPA’s plan would probably cause irreversible harm to several of the affected states unless the plan were stayed until it could be reviewed by the lower courts.

    The states said the regulation was illegal, costly, and could lead to blackouts, while the EPA said the rule was urgently needed to fight air pollution. They said the EPA’s plan undermines the principles of the Clean Air Act.

    In the second case, EPA v. Calumet Shreveport Refining, oil refineries argue they should be exempted from a federal mandate that the gasoline they produce should be made with a percentage of ethanol.

    The Supreme Court approved the petition on Oct. 21, 2024. Oral argument has not been scheduled by the court.

    The EPA argued the case should be heard by the D.C. Circuit, but the U.S. Court of Appeals for the Fifth Circuit found in November 2023 that it—and not the D.C. Circuit—was the proper forum for that appeal.

    Harris used identical language in part of the Oklahoma v. EPA abeyance motion and the EPA v. Calumet Shreveport Refining abeyance motion.

    “After the change in Administration, EPA’s Acting Administrator has determined that the agency should reassess the basis for and soundness of the underlying disapproval action,” Harris wrote. “Such a reassessment could obviate the need for this Court to determine the proper venue for challenges to that action.”

    Redistricting Case

    In the redistricting case, the Supreme Court decided on Nov. 4, 2024, the day before the presidential election, to take up the racial gerrymandering dispute known as Louisiana v. Callais, which was consolidated with the related case of Robinson v. Callais.

    Gerrymandering is the manipulation of electoral district boundaries to favor a particular party or constituency.

    A federal district judge in 2022 had ordered the Republican-controlled Louisiana State Legislature to revise its electoral map, which provided for one black-majority congressional district, because it discriminated against black voters, who constitute almost one-third of the state’s population.

    The Legislature complied, approving a new map that featured two black-majority districts. Map opponents told the Supreme Court in briefs that the new redistricting plan discriminated against non-black voters.

    A panel of three federal district judges then sided with the non-black voters, determining in April 2024 that the map could not be used in upcoming elections. The Supreme Court intervened and stayed that order, allowing the map to be used.

    Harris told the justices in a Jan. 24 letter that the Biden-era DOJ filed a friend-of-the-court brief on Dec. 23, 2024, arguing that there was “a strong basis in evidence” for the single federal district judge to believe a new map had to be drawn to bring the state into compliance with the federal Voting Rights Act. On Jan. 16, while Biden was still president, the DOJ also asked to participate in the oral argument of the case.

    But with “the change in Administration, the Department of Justice has reconsidered the government’s position in these cases,” and the Biden-era brief “no longer represents the position of the United States.”

    The DOJ is also “withdrawing its pending motion to participate in the oral argument,” Harris wrote.

    Oral argument in the case has not yet been scheduled.

    It is unclear when the Supreme Court will respond to the change in position in the redistricting case and to the abeyance motions.

    Tyler Durden
    Sun, 01/26/2025 – 16:20

  • Goldman Finds "More Nuclear & Fewer EVs" As Trump Supercharges Powering Up America Theme
    Goldman Finds “More Nuclear & Fewer EVs” As Trump Supercharges Powering Up America Theme

    There is a lot to unpack in Goldman’s note, “US Policy Implications: Reliability, AI/Data Center Power Surge, More Nuclear/Fewer EVs,” which discusses President Trump’s “energy emergency” executive orders alongside the private sector announcement of the Stargate AI infrastructure project. 

    Goldman analysts Brian Singer, Brendan Corbett, and others noted that despite President Trump’s executive order freezing all Inflation Reduction Act funding disbursements, they remain “bullish on multiple sustainable themes” because of corporate/consumer/policymaker/regulator priority:

    • Reliability of energy, power and water supply.

    • Efficiency innovation towards energy, land and resource use. AI/Data Center power demand growth and willingness by Big Tech/hyperscalers to pay Green Reliability Premiums in support of nuclear generation and multiple other Clean Reliable virtual/on-site power sourcing.

    • Increased embrace by Sustainable Investors of the need for AI and Automation to fill rising labor challenges accelerated by aging populations in developed economies with tailwinds for Reskilling/Education/Womenomics stocks.

    The team of analysts noted a convergence of multiple drivers impacting Sustainable Investing themes and the broader US economy in 2025 that only provides tailwinds for other themes, including “Reliability, Efficiency, AI/Automation, Training/Reskilling, Womenomics, and Affordability/Access. ” 

    They see tailwinds for Green Capex to support growth and infrastructure modernization… 

    The analysts next provided a breakdown of President Trump’s executive orders related to energy and AI announced last week:

    In the first days of the new US Administration, President Trump issued executive orders declaring a National Energy Emergency, reviewing wind energy permitting and promoting affordable/reliable energy and domestic natural resources.

    What was broadly consistent with our prior reports. Much of the policy and priorities were in-line with discussions in Washington in October, our post-election outlook and our 2025 outlook, in particular regarding:

    • Prioritizing acceleration of permitting processes for US energy/power/minerals development.

    • De-emphasis on EVs and offshore wind.

    • Suspension of further IRA loans/grants.

    • Broad support for nuclear.

    • Broad support for infrastructure/AI/data centers.

    What was not consistent with our prior reports. Beyond the topics discussed in our prior reports, the executive orders issued in the opening days of the Administration:

    • Call for a suspension of federal permitting for onshore wind projects pending the completion of a comprehensive assessment and review of Federal wind leasing and permitting practices.

    • Pause the disbursement of funds appropriated through the Inflation Reduction Act pending a 90-day review of processes, policies, and programs for issuing grants, loans, contracts, or any other financial disbursements of such appropriated funds for consistency with the law.

    • Supply and maintain a critical minerals National Defense Stockpile.

    Four investment takeaways for key 2025 themes.

    • In aggregate, the policy initiatives broadly support our bullish outlook for investment towards Reliability of power, energy and water which we believe will be a priority of regulators, policymakers, corporates and consumers.

    • The increased focus on affordability we believe is bullish for the broad theme of Efficiency — energy, resources and land.

    • Support for AI/data centers benefits companies in the supply chain of the AI/data center global power surge, in our view, including those providing low-carbon solutions.

    • At the same time there remain uncertainties, most importantly over the sustainability of IRA tax incentives and outlook for federal permitting of onshore wind. Not all onshore wind projects require federal permits, suggesting greater nuance regarding company-specific impact.

    The analysts turned their focus on “AI/data centers’ global power surge: Continue to see aggressive US/global growth, all-in approach to power sourcing.” This coincides with our “The Next AI Trade” note in April 2024.  

    Here’s more from the analysts about the data center power surge that will boost demand on the grids through the end of the decade:

    Our analysis suggests a 160%-165% increase in data center power demand by 2030 vs. 2023 levels. In the US, this implies that data centers will contribute a ~1% CAGR to overall US power demand; our Utilities team in its April 2024 report expects overall US power demand CAGR of 2.4% through 2030. We see data centers adding a 0.3% CAGR to overall global power demand. Our base case implies data center power demand moves from 1%-2% of overall global power demand to 3%-4% by 2030. In the US, the pace of mix increase is even greater, more than doubling by 2030 from 4% in 2023. If global data center growth in 2030 vs. 2023 levels were its own country, it would be a top 10 global power consumer.

    However.

    The analysts cautioned that, amid the surge in data center power demand, five potential constraints could pose significant risks to their updated base case of a 160% jump in global data center power demand growth in 2030 vs. 2023 levels: 

    1. Will AI server shipments be constrained by data center capacity? Our analysis led by our Telecom Infrastructure team suggests a tightening market for data center real estate in the coming years but sufficient capacity for our base case expectations for power demand.

    2. Will data center capacity be constrained by power infrastructure? Our analysis led by our Utilities team suggests a combination of new generation additions and greater utilization of existing capacity will be sufficient to meet data center power demand with transmission/interconnection the greatest risk. The investment split of the intended $500 bn Stargate project into AI servers vs. other infrastructure remains unclear. Broadly, we believe a $50 bn purchase of high-powered AI servers would lead to about 8-17 TWh of annual power demand, depending on power intensity of the servers purchased (new gen vs. older gen).

    3. Will power infrastructure be constrained by low-carbon optionality/cost? We believe Big Tech will continue to take an all-in approach to data center power sourcing, with continued willingness to pay Green Reliability Premiums while at the same time prioritizing time-to-market. We estimate the impact of major hyperscalers absorbing Green Reliability Premiums consistent with our recent AI/data center power surge report represents a modest 2%-3% of EBITDA and a minimal impact on >30% corporate returns. We note that Microsoft’s CEO noted continued intentions to achieve 2030 decarbonization objectives in a CNBC interview on January 22, and Amazon’s Chief Sustainability Officer was quoted in a press report as staying course on low-carbon goals.

    4. Will new-gen AI chips drive lower or higher aggregate power demand? We assume Big Tech cash flow/budgets will be the key constraint, leaving upside risk if there are no constraints and downside risk if compute speed demand is finite. We continue to see more risk to the upside (i.e., fewer capital constraints) while AI is in the training phase.

    5. Will AI server demand be constrained by AI results/innovations? This will remain key to watch, particularly from a Sustainability perspective whether we see accelerated efficiency solutions in the health care, energy, agriculture and education sectors.

    The analysts then shifted their focus on “underinvestment in infrastructure” amid tailwinds by the Trump administration, plus ongoing power demand shift higher: 

    We believe the confluence of rising power demand, historical underinvestment in infrastructure and rising temperatures/more extreme weather events will continue to drive rising tailwinds for investments in Reliability — primarily of Power/Energy and Water. We continue to see opportunity for investment in stocks levered to the theme globally, which we believe will be a priority for both policymakers and corporate/residential consumers.

    Infrastructure replacement and hardening both necessitate Reliability investment. Our meetings with corporates, regulators and policymakers in 2024 indicated increased recognition of the need for grid/water infrastructure hardening and modernization. This is due to both underinvestment in recent years as well as a wider range of expected temperatures between summer and winter. We believe both policymakers and regulators will look to reduce risk of outages and as such prioritize measures that would improve Reliability and Resiliency.

    Adaptation will likely be a rising theme regardless of climate outcome, in our view. We believe the growing realization of potential risks/impacts/opportunities as global temperatures rise will serve to further investor and corporate focus on Adaptation. Since 1970, the world has seen an acceleration in temperature rise vs. the 1850-1900 average, per Berkeley Earth data. In the near to medium term we believe investors and corporates will take increased measures to quantify physical risks, increase investments towards Adaptation mitigation/solutions and look for new ways of gaining exposure to Adaptation solutions. Our meetings with regulators and corporates suggest recognition of the need to invest to mitigate Reliability risk from extreme weather events or more volatile summer/winter temperatures via investment in water/power solutions.

    Generational growth will act as a further tailwind for infrastructure spending. We expect electricity demand growth in the US and Europe to accelerate to levels not seen in a generation, a function of electrification (Europe and US), AI/broader data center demand (US and Europe) and industrialization/reshoring (US). Also, with an eye on reducing risk of outages, we believe regulators will support investments to meet rising demand, with particular support for affordable technologies that advance meeting demand and reliability goals. We also see regionalization driving increased water infrastructure needs in select geographies.

    Reliability a driver of recent US power M&A. On January 10, Constellation Energy (CEG, Coverage Suspended) announced plans to acquire privately held company Calpine, which would fuse Constellation’s largely nuclear generation fleet with Calpine’s largely natural gas generation fleet. The companies in their statement announcing the deal highlighted the increased need for Reliability amid rising demand growth, in particular from data centers.

    Goldman’s Utilities Research teams provided their outlook on US electricity consumption…

    To conclude, the analysts said a more significant shift is underway within the Trump era: “Accelerated nuclear generation expansion combined with reductions in incentives for electric vehicles in the US may not derail overall Green Capex while potentially leading to net lower long-term carbon emissions.” 

    Let’s not forget that in December 2020, one of our major themes was the nuclear trade.

    Separately, on Saturday, we provided readers with Michael Hartnett’s latest Flow Show, which shows the 10 biggest themes through the end of the decade. 

    Tyler Durden
    Sun, 01/26/2025 – 15:45

  • Stockman: America's Fiscal Doomsday Machine Must Be Stopped
    Stockman: America’s Fiscal Doomsday Machine Must Be Stopped

    Authored by David Stockman via the Brownstone Institute,

    The following is Chapter One of David Stockman’s latest book, “How to Cut $2 Trillion: A Blueprint From Ronald Reagan’s Budget Cutter to Musk, Ramaswamy and the DOGE Team.”

    The DOGE $2 trillion budget savings goal is crucial to the very future of constitutional democracy and capitalist prosperity in America. In fact, the soaring public debt is now so out of control that the Federal budget threatens to become a self-fueling financial doomsday machine.

    Recall this sequence.

    When Ronald Reagan was elected in 1980 on a call to bring the nation’s inflationary budget under control, the public debt was $930 billion and about 30 percent of GDP.

    By the time Donald Trump was elected the first time it had erupted to $20 trillion, which has now become $36 trillion and 125 percent of GDP. Moreover, by the end of this decade the Federal fiscal equation will be going supercritical without sweeping budget reductions at the level of the DOGE target. Thus, by FY 2034 the annual baseline deficit according to CBO will total $2.9 trillion and 7 percent of GDP.

    Yet even these enormous figures are based on a Rosy Scenario fairy tale. Namely, that Congress will never again adopt another spending increase or tax cut, including the impending $5 trillion extension of the expiring 2017 Trump tax cuts. It also conveniently assumes there will be no recessions, no inflation recurrence, no interest rate flare-ups nor any other economic crises for the remainder of this decade and forever thereafter.

    Furthermore, it presumes that these surging red ink totals and soaring debt service expenses would be copacetic in the bond pits just the same. That is, CBO inexplicably projects that 7 percent of GDP deficits and annual interest expense of $1.7 trillion or 4.1 percent of GDP by 2034 would be compatible with a weighted average yield on nearly $60 trillion of public debt of just 3.4 percent.

    Yes, and if dogs could whistle the world would be a chorus! Give the average yield just another 250 basis points, however, and now you have $3.1 trillion of annual debt service expense and a $4 trillion annual deficit by 2034. In short, there is a doom-loop building inside the Federal fiscal equation and nothing short of the DOGE target of $2 trillion of annual budget savings by the end of this decade can reverse its explosive materialization in the years beyond.

    If sweeping budget retrenchment does not occur soon, in fact, soaring interest expense will ignite a veritable fiscal wildfire. On paper, the public debt would power upward unabated to $150 trillion or 166 percent of GDP by mid-century (2054) under CBO’s current Rosy Scenario projections. Of course, long before the debt actually hits this staggering figure, the whole system would implode. Every remnant of America as we now know it would go down the tubes.

    So we need to be clear that the DOGE team of Musk and Ramaswamy must focus on savings of $2 trillion per year commencing relatively soon. That’s because the nation’s fiscal doomsday machine will be accumulating interest expense so fast as to make $2 trillion of savings spread over a longer period–such as a decade–little more than a rounding error. To wit, Federal interest expense has already passed the $1 trillion per year mark, will exceed $2 trillion per year in the early 2030s and would top $7.5 trillion per year at minimum by our calculations by mid-century.

    Stated differently, if something drastic is not done now—like a $2 trillion annual budget savings by the end of Donald Trump’s second term—America will be paying more interest on the public debt within 25 years than the entirety of today’s Federal budget. That’s right: Debt service will exceed current outlays for Social Security, defense, Medicare, education, highways, the national parks, Head Start, interest, and the Washington Monument, too.

    Obviously, the sprawling Federal government and its prodigious expanse of spending and debt literally defies easy comprehension and graspable solutions. After all, the current annual budget of $7 trillion amounts to Federal spending of nearly $20 billion per day and $830 million per hour. And when you talk about the 10-year budget outlook, comprehension literally fades away completely: The current CBO spending baseline for 2025-2034 amounts to $85 trillion or just shy of the annual GDP of the entirety of planet Earth this year.

    So based on experience we suggest that the DOGE team needs to build its $2 trillion case around a target year and several big buckets of savings by broad type. The latter can then be used to fashion a detailed but comprehensible blueprint for arraying and conveying the desperately needed housecleaning of the Federal budget that the DOGE has been tasked with accomplishing.

    In that context, FY 2029 makes the most sense as a target year since it would represent the 4th and outgoing Trump budget; and also one which would give sufficient time for phasing in some of the sweeping cuts that will be needed, but not so far in the distant future as to be largely irrelevant to the here and now of fiscal governance during Donald Trump’s second term.

    We’d also suggest three big buckets of savings, which we would short-hand as follows:

    • Slash the Fat… by eliminating unnecessary and wasteful agencies and bureaucrats wholesale.

    • Downsize the Muscle… by curtailing national security capacities and functions that have grown up during the Forever Wars but are not needed for an America First foreign policy.

    • Cut the Bone… by reducing low-priority entitlements and subsidies that the nation cannot afford, and which a reasonable view of societal equity does not require.

    Needless to say, when it comes to the vast wasteland of the Federal budget there are innumerable ways to skin the cat. But based on our own experience of more than a half-century of familiarity with the Federal budget as both a participant and an informed observer, we judge the following mix to be the most plausible and balanced way to get to the $2 trillion of annual savings by FY 2029.

    To be sure, even this relatively judicious mix is sure to ignite firestorms on the banks of the Potomac like never before, but it can be strongly justified and defended for the reasons we will lay out in detail below.

    Annual DOGE Savings Targets by Component:

    • Slash the Fat: $400 billion or 20 percent.

    • Downsize the Muscle: $500 billion or 25 percent.

    • Cut the Bone: $1.1 trillion or 55 percent.

    Suffice it here to say that the first bucket alone would leave them screaming to high heaven in the swamplands of DC. But even that $400 billion savings could be accomplished only by eliminating 16 agencies entirely, slashing another nine departments by 50 percent, cutting the balance of the nondefense payroll by 34 percent, terminating $40 billion per year worth of wasteful farmer subsidies, cancelling entirely $60 billion per year of energy boondoggles including all EV credits, and eliminating $150 billion per year of all other forms of corporate welfare and subsidies embedded in the budget and tax code.

    We will amplify the details of this $400 billion of inherent Federal budget fat and waste in the chapters below. But suffice it here to say that attacking the usual shock effect lists of outrageous studies, stupid foreign aid projects, or even payments to dead people, as is often used to illustrate wasteful spending, will get you barely a fractional decimal point of the savings target, as desirable as eliminating this nonsense might be in its own right.

    For instance, a recent “outrageous spending” list showed $4 million was wasted on “Dr. Fauci’s Transgender Monkey Study” and $6 million on a “USAID Fund to Boost Egyptian Tourism,” among countless more absurdities. Still, eliminating these two items would contribute only 0.0005 percent to the $2 trillion savings target.

    Even some of the larger ideas of this sort, such as timelier elimination of dead people from the Social Security rolls, would not get you very far, either. To be sure, 1.1 million Social Security recipients pass on to their rewards each year, while departing beneficiaries would be receiving an average benefit currently of $1,907 per month. So one extra month of dead people on the rolls costs the not inconsiderable sum of $2.1 billion.

    At the present time, however, not much excess dwell time actually happens. The rolls are purged every month based on newly filed death certificates, and this encompasses the termination of payments to anyone who died during the course of the month, including the last day. So the average duration on the rolls of Social Security decedents is 15 days, which computes to $1.050 billion of payments.

    Of course, if the Musk and Ramaswamy team could come up with some more super-duper software to monitor, report, calculate final month benefits and then terminate decedents in real time, it might reduce dwell time by two-thirds. In turn, this means that getting dead people off Social Security 10 days faster would generate a savings of $700 million per year or about 0.04 percent of the $2 trillion target. That is to say, there is undoubtedly room for efficiency improvements and elimination of outright waste and stupidity everywhere in the Federal budget, but it unfortunately adds up to rounding errors.

    Stated differently, if it doesn’t “scream and bleed” politically it won’t likely make a dent in achieving the $2 trillion goal. There is just plain nothing antiseptic about slashing the Federal budget.

    For instance, even a thundering 50 percent cut in the current nondefense Federal headcounts of 1.343 million would save just $100 billion annually by the target year of 2029. And that’s a comprehensive figure based on the current average cost per Federal employee of $100,000 in pay per year plus $44,000 in average benefits and fringes–-escalated for inflation to $160,000 per bureaucrat by FY 2029.

    Accordingly, to reach $2 trillion of annual savings will require a deep dive into the three buckets listed above. In the next five chapters we will lay out the most plausible and judicious route to the $400 billion of “Slash the Fat” savings, followed by the details and an America First rationale for cutting $500 billion per year of unneeded muscle from the national security budget in Chapter 7. Chapter 8 will then delve into $1.1 trillion per year of cuts from the bone of entitlement and domestic welfare that would be needed to reach the $2 trillion DOGE savings target.

    But one thing should be clear from the outset. Lists of outrageous anecdotal items provide color about the stupidity and waste that is rampant in the Federal government. But they have nothing whatsoever to do with the fact-based analysis and philosophical U-turns that will actually be required to complete the DOGE mission successfully.

    Tyler Durden
    Sun, 01/26/2025 – 15:10

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