Today’s News 28th March 2022

• Morgan Stanley Fears Soaring Lithium Prices Could Spark Demand Destruction For EVs
  Morgan Stanley Fears Soaring Lithium Prices Could Spark Demand Destruction For EVs

  Prices of lithium carbonate, a key ingredient in the manufacturing of electric vehicle batteries, have jumped so significantly over the past year that EV manufacturers are beginning to raise vehicle costs. Morgan Stanley points out that demand destruction could be possible if EV prices increase too much in response to soaring commodity prices. 

  Morgan Stanley’s Jack Lu told clients Thursday that the cost of lithium carbonate has jumped fivefold over the past year. Bloomberg data shows lithium carbonate per ton costs around $74k. 

  

  Lu said that because of high lithium carbonate prices, EV manufacturers are set to raise vehicle prices by as much as 15%, which could hurt demand as the cost of ‘going green’ gets more expensive. 

  “Historically, the battery price cost curve had been declining at a pace of 3% to 7% annually for so many years in a row it almost seemed inevitable. 

  “But molecules don’t play by the same rules as Moore’s Law. The world has changed, and along with it is a new paradigm of input costs,” Lu said. 

  The analyst said lithium demand outstrips supply. 

  “The price explosion tells you that lithium supply is simply nowhere near enough to feed this demand surge,” OilPrice.com reported.

  And it’s not just lithium. Nickel, another critical metal for lithium-ion batteries, surged in recent weeks, making the overall cost of batteries more expensive. 

  Tesla has raised vehicle prices twice this month in response to soaring commodity prices. Tesla also raised prices for its megapack battery.

  To counter some of the costs, Tesla recently announced some of its vehicles would use cheaper iron-phosphate battery cells. 

  According to Kelley Blue Book, EVs cost an average of $56,437, much higher than the average new combustion engine car. Rising commodity prices will only make EVs more out of reach for average Americans as the Biden administration continues pushing its going green agenda. 

  Tyler Durden
  Mon, 03/28/2022 – 02:45

• Macron Warns Against Escalation After Biden's Comments On Putin
  Macron Warns Against Escalation After Biden’s Comments On Putin

  Authored by Jack Phillips via The Epoch Times,

  French President Emmanuel Macron on Sunday cautioned against the use of escalating “words or actions” if a peace agreement or ceasefire is to be achieved in Ukraine.

  

  A day before, President Joe Biden said in a speech that President Vladimir Putin “cannot remain in power” and had more critical words for the Russian leader. The comment prompted the White House to issue statements that Biden did not mean that the United States is pushing for a regime change in Russia.

  “I wouldn’t use this type of wording because I continue to hold discussions with President Putin,” Macron told France 3 TV. “We want to stop the war that Russia has launched in Ukraine without escalation … that’s the objective.”

  “We want to stop the war that Russia has launched in Ukraine without waging war and without escalation. This is the objective,” Macron continued, saying that NATO powers and France have “made the choice not to intervene in the conflict militarily.”

  France’s goals are to obtain a ceasefire or the withdrawal of Russian forces from Ukraine, he said. Macron also said he is seeking to speak with Putin this week.

  A Ukrainian negotiator said Kyiv and Moscow would hold talks this week in Turkey, a NATO member that has good relations with both Russia and Ukraine. A Russian negotiator confirmed in-person talks early this week, without giving further details, according to Reuters.

  “If we want to do this, we must not be in the escalation, of neither words nor actions,” Macron continued.

  The French president further stressed that the United States is a staunch ally who has “common values.”

  

  Black smoke billows after authorities said a missile attack hit an industrial area of Lviv, Ukraine, on March 26, 2022. (Charlotte Cuthbertson/The Epoch Times)

  After Biden’s remark, the Kremlin said through a spokesman, Dmitry Peskov, that only the Russian people can decide who they want as president—not outside forces.

  Peskov alleged that Biden made the comments due to “fatigue,” “irritability,” and “sometimes forgetfulness,” adding that it leads to “aggressive statements,” according to state-run media.

  In a bid to further clarify Biden’s statement, U.S. Ambassador to NATO Julianne Smith told Fox News on Sunday that the administration “does not have a policy of regime change towards Russia” and contended Biden was speaking “in the moment,” without elaborating. Secretary of State Antony Blinken told reporters in Israel that the United States doesn’t have a doctrine of regime change in Moscow.

  After more than a month of conflict, Russia has had difficulty in seizing any major Ukrainian city and signaled on March 25 it was scaling back its ambitions to focus on securing the Donbas region of eastern Ukraine.

  A local leader in the self-proclaimed Luhansk People’s Republic said on Sunday the region could soon hold a referendum on joining Russia, just as happened in Crimea after Russia seized the Ukrainian peninsula in 2014.

  The conflict has left several Ukrainian cities devastated, caused a humanitarian crisis, and displaced an estimated 10 million people, nearly a quarter of Ukraine’s population.

  Early on Sunday morning, Ukrainian President Volodymyr Zelenskyy said in a video that NATO forces should provide Kyiv with tanks and fighter planes while accusing the West of not showing courage.

  Tyler Durden
  Mon, 03/28/2022 – 02:00

• "The Move Is A Big Deal" – Yen Tumbles After BOJ Intervenes To Cap JGB Yields Amid Global Selloff
  “The Move Is A Big Deal” – Yen Tumbles After BOJ Intervenes To Cap JGB Yields Amid Global Selloff

  Last Friday, when the BOJ unexpectedly failed to intervene with one of its trademark offers to purchase an unlimited amount of bonds when the 10Y JGB broke above 0.23% – a level which just one month ago prompted Kuroda to step into the market to contained further yield gains – and spiked the yen while pushing the 10Y JGB yield to a 6-year high and on the verge of rising above the 0.25% upper boundary of the BOJ’s Yield Curve Control corridor, we said that “Japan, that paragon of MMT crackpots everywhere, suddenly finds itself trapped in a lose-lose dilemma: intervene in the bond market and spark a furious, potentially destabilizing and uncontrolled plunge in the yen which would also lead to galloping (if not worse) inflation, which could collapse what little faith remains in the BOJ, or do nothing and contain the slump in the yen while risking far higher yields which in a country where the debt is orders of magnitude greater than GDP, could also spell fiscal and monetary doom.”

  We then added the following: “As a result, the market – having long gotten used to amicable interventions from the BOJ – will now surely test one of these two outcomes, and how the BOJ responds could have dramatic consequences for this original MMT test case. Should the BOJ’s reaction spark further erosion of faith in either Japan’s fiscal or monetary policies, the outcome for the world’s most indebted nation would be disastrous.”

  So fast forward to today, when bond traders pushed the 10Y JGB yield even more, rising as high as 0.245%, and clearly intending to force the BOJ to make a decision…

  

  … Kuroda did just that and it was to keep JGBs in line while risk an accelerating collapse in the yen.

  On Monday morning, one day after the BOJ left many stunned with its refusal to announce an open-ended bond market intervention as yields spiked, the central bank changed its mind and conceded that it was not willing to risk a bond market collapse, announcing that it will purchase an unlimited amount of 10-year bonds at a fixed rate of 0.25%.

  The decision comes as interest-rate hikes by major peers such as the Federal Reserve have sent yields across the globe soaring, adding upward pressure on Japan yields. The 10-year yield stood at 0.242% at 10:23 a.m. in Tokyo, compared to a tolerated level by the BOJ of 0.25% under its yield-curve control policy.

  And while JGB yields will remain at or below 0.25% (for now) courtesy of the BOJ’s verbal intervention which however failed to actually prompt any actual trades…

  • *BOJ SAYS NO BIDS TENDERED FOR FIXED-RATE BOND-BUYING OFFER

  … the same can not be said of the Yen which fell to a fresh 6-year low of 123.11 against the U.S. dollar, with little stopping the USDJPY rising as high as 130.

  

  The move underscores the central bank’s commitment to keep monetary settings loose, following Governor Kuroda’s earlier remarks that policy will remain unchanged even if inflation jumps. Japan’s bond yields have been moving higher after the BOJ’s fixed-rate buying offer on Feb 14 – the first such operation since 2018 – helped push them lower.

  Meanwhile, the dilemma facing the BOJ grows: the growing policy divergence between the BOJ and the Fed has heaped pressure on the yen, with the currency slipping to a six-year low against the dollar in March. Of course, by failing to keep a floor under the yen, the BOJ invites even higher inflation, which will – sooner or later – force the BOJ to break, and when it does it will lose control over both the yen and JGBs.

  “The BOJ will automatically conduct such operations when the 10-year yield approaches 0.25%, as waiting for the yield to rise past that would invite unnecessary speculation and also prompt players to test yield upside,” said Takafumi Yamawaki, head of local rates and currency research at JPMorgan in Tokyo. “The BOJ probably separates bond purchases from risk of a weaker yen as changing its stance on bond purchase operations would undermine the current yield curve control framework.”

  Meanwhile, much of the “developed” world tightening (with the sole exception of China), traders had been speculating that the BOJ will also have to start normalizing policy at some point. However, clearly that time is not now and Kuroda has repeatedly ruled out the possibility of near-term policy adjustments. Providing a modest buffer, Inflation in Japan is also far from a 2% target, unlike other countries where red-hot price gains have stoked concerns.

  Meanwhile, the collapse in the yen is set to accelerate. As Bear Traps Report Larry McDonald reminds us, by collapsing to levels last seen in 2015, the Yen’s freefall has reignited fears of a re run of events that led to the 2015 renminbi devaluation. In a recent note from last week, SocGen’s Albert Edwards called this “an earthquake in the world of foreign exchange.” So as Japan weakens the Yen to save the economy China is the loser and could force it to pursue another currency devaluation in a beggar they neighbor world.

  This, as McDonald writes, is bullish hard assets; how can the Fed get aggressive into that? JPY weakness likely has the most negative impact on South Korea within emerging markets and won’t make China happy either.

  Finally, McDonald quotes a CIO from a Florida based hedge fund, who writes that “I’m in the camp that the Yen move is a big deal. This is what happens when money printing goes too far… Zervos at a dinner this week in Miami said he thinks BOJ stays easy and has to … he sees the USD/Yen at 130 by year end. This would make Japan very competitive very quickly, what will that mean for emerging markets?”

  And more importantly, what does that mean for China and its untenably strong currency. We are about to find out.

  Tyler Durden
  Sun, 03/27/2022 – 23:50

• CJ Hopkins: Springtime For GloboCap
  CJ Hopkins: Springtime For GloboCap

  Authored (mostly satirically) by CJ Hopkins via ConsentFactory.org,

  Warm up the Wagnerian orchestra and call in the goose-stepping chorus girls, because … yes, that’s right, it’s Springtime for GloboCap! “The Winter of Severe Illness and Death” is over! The big Black Sun is shining again! God’s in his heaven, all’s right with the world!

  

  OK, sure, the vast majority of humanity are suffering from post-traumatic stress, having been terrorized, gaslighted, threatened, bullied, and otherwise systematically mindfucked by their governments, the media, and “health authorities” on a daily basis for the past two years, and we’re all exhausted and at each other’s throats, and many of our businesses and incomes have been ruined, and inflation is spiraling out of control, and a lot of us are still being gratuitously demonized, segregated from society, banned from traveling, and forced to submit to invasive procedures and wear medically-pointless symbols of ideological conformity on our faces, so we’re not quite in the spirit of the season … but, for GloboCap, things couldn’t be going any better!

  Not only is the final phase of their roll-out of the new pathologized totalitarianism (i.e., the New Normal) going more or less to plan, but those pesky, non-ball-playing Russians have been baited into a military quagmire in the Ukraine that could be dragged out for years! Think of all the destabilization, restructuring, and privatization opportunities, and not just in Russia and Eastern Europe, and not just during the next few years, but throughout the world and well into the future! With the majority of the Western masses brain-buggered into a state of almost catatonic credulity and obedience, who’s going to stop them? The sky’s the limit!

  We’re talking radical social and economic restructuring, a brave new GloboCap-curated world! A world of constant chaos and crisis, eternally recurring “apocalyptic pandemics,” intramural proxy wars, climate-change lockdowns, “disinformation” attacks, mandatory genetic-therapy, digital currencies … the whole nine yards. A world not governed as much as “guided” by non-governmental global-governance entities, global corporations, benevolent billionaires, banks, investment management firms, and, of course, the military and Intelligence communities.

  But I’m getting a little ahead of myself. It will be a while before GloboCap can blossom into its full expression. In the meantime, the global “Clear-and-Hold” op continues … and appears to have abruptly shifted into an extremely psychotic and fascist phase.

  This shift was executed in Orwellian fashion, like that scene in 1984 where the Party switches official enemies right in the middle of a Hate Week speech. But, in our case, the switch was a little more complicated, because GloboCap didn’t just switch official enemies — like they did in the Summer of 2016 and then again in the Spring of 2020 — they revised the identity of the official enemy, not just its name, but its fundamental character, or, more accurately, and more psychotically, they split the identity of the official enemy, stripping off and embracing its fascism while simultaneously maintaining and magnifying its fascism, simulating a moral spectrum of fascism, and thus subjecting the New Normal masses to a mind-bending level of Orwellian double-think.

  In the blink of an eye, without missing a beat, both the white-supremacist Putin-Nazis that plagued Democracy throughout the Trumpian Reich and the Covid-denying Anti-Vax Nazis that plagued the New Normals throughout the Global Pandemic were seamlessly replaced by the GloboCap Nazis … but, the thing is, the GloboCap Nazis are the good guys, and the Putin-Nazis and Anti-Vax Nazis are … well, I guess they’re still technically Nazis, except for the fact that they aren’t actual Nazis and are mostly just regular working-class people, whereas the GloboCap Nazis are actual Nazis (i.e., Sieg-heiling, Jew-hating, Hitler-worshiping Nazis), who the US military and Intelligence community, NATO, and assorted private “military advisors” have been funding, arming, and otherwise supporting since the 2014 Ukrainian “revolution” (i.e., coup) that they orchestrated to destabilize Russia as part of that global Clear-and-Hold operation (which operation, of course, doesn’t actually exist, and is just another conspiracy theory disseminated by Putin-Nazi traitors like me to erode support for the GloboCap Nazis, who are really just wholesome young Aryan boys who are trying to defend Democracy from Evil, and cleanse their country of the Jews and the Roma, and exterminate the Russian race, starting with the children, apparently).

  

  OK, I know this is getting confusing, what with all the various Nazis, and so on, but that’s only because you’re still trying to make sense of the psychotic official propaganda that GloboCap is relentlessly bombarding us with. For example, this recent BBC segment in which Ros Atkins explains how the neo-Nazi Azov Detachment is actually “mainstream.” Or this NBC piece by Allan Ripp, explaining how, yes, there is definitely a serious neo-Nazi problem in the Ukraine, but if the Ukrainian Nazis (i.e., the GloboCap Nazis) persecute and murder the Ukrainian Jews, it’s Putin’s fault for invading the country and creating “chaos and insurgency,” or whatever.

  Or this Unherd piece by Aris Roussinous, explaining that arming and supporting neo-Nazis “may be one of the hard choices forced by war,” and advising Zelenskyy to disarm them once the war is over and “freedom” is restored … which, obviously, he intends to do. After all, the man is Jewish! He will probably ban the neo-Nazis outright, like he banned all the non-neo-Nazi parties.

  Or, if you prefer your propaganda less nuanced, you can go with CNN and get it straight from the source, for example, from Major Denis Prokopenko of the neo-Nazi Azov Regiment …

  

  Or these Svoboda neo-Nazis that Jeremy Bowen of the BBC was hanging out with…

  

  Apparently, CNN and the BBC were unable to locate any non-neo-Nazis to bring us the “fact-checked Truth” from the battlefield.

  Or … wait. Sorry, I got all confused again. These are the good Nazis … the GloboCap Nazis! The actual Nazis, not the fictional Nazis. Or … wait, no … never mind. I mean, it’s not like it really matters anyway, right? The point is, it’s Spring, and the goat-footed balloon-Man whistles … no, strike the balloon-Man. This is not the time for balloon-Man references. It’s New Normal Spring! The birds are buzzing! The bees are chirping! The ICBMs are tumescent with rocket fuel and throbbing in their silos! The New Normal masses are out prancing around with their “vaccination passports” and medical-looking masks, in their official neo-Nazi Azov hoodies, waving their Ukrainian flags, and otherwise desperately trying to pretend that they haven’t just been colossally mindfucked by GloboCap for the last two years!

  

  But there I go, getting negative again. I really need to try to focus on the positive, no matter how psychotic things are in reality. Here in New Normal Germany, it’s almost “Freedom Day” again! Technically, “Freedom Day” was March 18, but they rewrote the “Infection Protection Act” (again) to postpone “Freedom Day” until April 2, after which “the Unvaccinated” will be allowed back out into society and everyone will only be forced to wear symbols of conformity to official ideology on their faces on public transport, and trains, and planes, and in hospitals, and various other places, unless federal states declare themselves “hotspots” — which several states have already done — in which case “Freedom Day” is postponed indefinitely.

  But whatever … it’s Springtime for GloboCap! Freedom is slavery! Ignorance is strength! The GloboCap Nazis are winning the war! Sure, Pfizer just released nine pages of “adverse events of special interest” connected to their Covid “vaccine,” but they “may not have any causal relationship” to each other! And all those videos of the GloboCap Nazis duct-taping men, women, and children to lampposts, painting their faces with chemicals, stripping them half naked, and whipping and beating them? Those people are “saboteurs” or “looters,” or “Putin-Nazi collaborators,” and it’s all just Russian disinformation! And whatever. Trust the “Science” … or something!

  

  All right, I think that’s quite enough from me. I’ll sign off and let you get back to the show. Look, here come the triple-vaxxed, double-boosted, goose-stepping GloboCap chorus girls!

  Tyler Durden
  Sun, 03/27/2022 – 23:45

• All Stocks On Moscow Exchange To Trade Monday 
  All Stocks On Moscow Exchange To Trade Monday 

  After two shortened trading sessions, with only a handful of most liquid Russian equities trading, the Moscow Exchange will expand trading to all securities on Monday. 

  A statement on the Russian central bank’s website details all listed securities on the Moscow Exchange will trade on Monday. Corporate and municipal bonds will also begin trading. Monday’s session will be four hours, and short-selling securities will be banned. 

  After a record-long stock trading halt that was instituted on Feb. 28, the Moscow Exchange resumed trading in 33 most liquid Russian equities on Thursday, including some of the biggest companies such as Gazprom PJSC and Sberbank PJSC. 

  To prop up the MOEX Index, Moscow took a page from Washington’s (and Beijing’s) playbook and unleashed its own version of the ‘plunge protection team‘ with its wealth fund purchasing at least $10 billion in equities in the last two sessions. 

  MOEX sunk 3.7% on Friday after rising 4.4% on Thursday. 

  

  The Russian government took other measures to mitigate liquidations, such as preventing foreigners from exiting domestic equities.  

  “Yesterday [Thursday], the main theme was hot money searching for tactical buying,” Dmitry Polevoy, an analyst at Locko-Invest in Moscow, told Bloomberg. “Today [Friday], we see some selling plus more activity from people who stayed aside yesterday seem to be driving the move.”

  “Price-discovery will take time as it is hard to correctly assess new fair prices. The sanctions story is still open-ended,” Polevoy said. 

  Considering many Russian banks are banned from the SWIFT bank-messaging system and sanctions have roiled the country’s economy, some traders are concerned that the artificial prop in the MOEX is temporary. 

  “With restrictions on foreign selling and repatriation, this is not a functional market in terms of efficient price discovery, given foreigners dominate the market’s free float,” said Hasnain Malik, a strategist at Tellimer in Dubai.

  Tyler Durden
  Sun, 03/27/2022 – 23:20

• New Great Game: Can Venezuela Negotiate An End To US Deadly Sanctions?
  New Great Game: Can Venezuela Negotiate An End To US Deadly Sanctions?

  Authored by Ramzy Baroud via Counterpunch.org,

  How the tables have turned. A high-level US delegation visited Venezuela on March 5, hoping to repair economic ties with Caracas. Venezuela, one of the world’s poorest countries partly due to US-Western sanctions is, for once, in the driving seat, capable of alleviating an impending US energy crisis if dialogue with Washington continues to move forward.

  

  Technically, Venezuela is not a poor country. In 1998, it was one of the leading OPEC members, producing 3.5 million barrels of oil a day (bpd). Though Caracas largely failed to take advantage of its former oil boom by diversifying its oil-dependent economy, it was the combination of lower oil prices and US-led sanctions that pushed the once relatively thriving South American country down to its knees.

  In December 2018, former US President Donald Trump imposed severe sanctions on Venezuela, cutting off oil imports from the country. Though Caracas provided the US with about 200,000 bpd, the US managed to quickly replace Venezuelan oil as crude oil prices reached as low as $40 per barrel.

  Indeed, the timing of Trump’s move was meant to ravage, if not entirely destroy, the Venezuelan economy in order to exact political concessions, or worse. The decision to further choke off Venezuela in December of that year was perfectly timed as the global oil crisis had reached its zenith in November.

  Venezuela was already struggling with US-led sanctions, regional isolation, political instability, hyperinflation and, subsequently, extreme poverty. The US government’s move, then, was meant to be the final push that surely, as many US Republicans and some Democrats concluded, would end the reign of Venezuelan President Nicolas Maduro.

  Venezuela has long accused the US of pursuing a regime change in Caracas, based on allegations that the socialist Maduro government had won the 2018 elections through fraud. And, just like that, it was determined that Juan Guaidò, then Venezuela’s opposition leader and president of the National Assembly, should be installed as the country’s new president.

  Since then, US foreign policy in South America centered largely on isolating Venezuela and, by extension, weakening the socialist governments in Cuba and elsewhere. In 2017, for example, the US had evacuated its embassy in the Cuban capital, Havana, claiming that its staff was being targeted by “sonic attacks” – a supposed high-frequency microwave radiation. Though such claims were never substantiated, they allowed Washington to walk back on the positive diplomatic gestures towards Cuba that were carried out by the Barack Obama administration, starting in 2016.

  For years, Venezuela’s inflation continued to worsen, reaching 686.4 percent last year, according to statistics provided by Bloomberg. As a result, the majority of Venezuelans continue to live below the extreme poverty line.

  The government in Caracas, however, somehow survived for reasons that differ, depending on the political position of the analysts. In Venezuela, much credence is being given to the country’s socialist values, the resilience of the people and to the Bolivarian movement. The anti-Maduro forces in the US, centered mostly in Florida, blame Maduro’s survival on Washington’s lack of resolve. A third factor, which is often overlooked, is Russia.

  In 2019, Russia sent hundreds of military specialists, technicians and soldiers to Caracas under various official explanations. The presence of the Russian military helped ease fears that pro-Washington forces in Venezuela were preparing a military coup. Equally important, Russia’s strong trade ties, loans and more, were instrumental in helping Venezuela escape complete bankruptcy and circumvent some of the US sanctions.

  Despite the collapse of the Soviet Union decades ago, Russia remained largely committed to the USSR’s geopolitical legacy. Moscow’s strong relations with socialist nations in South America are a testament to such a fact. The US, on the other hand, has done little to redefine its troubled relationships with South America as if little has changed since the time of the hegemonic Monroe Doctrine of 1823.

  Now, it seems that the US is about to pay for its past miscalculations. Unsurprisingly, the pro-Russia bloc in South America is expressing strong solidarity with Moscow following the latter’s intervention in Ukraine and the subsequent US and Western sanctions. Wary of the developing energy crisis and the danger of having Russian allies within a largely US-dominated region, Washington is attempting, though clumsily, to reverse some of its previous missteps. On March 3, Washington decided to re-open its Havana embassy and two days later, a US delegation arrived in Venezuela.

  Now that Russia’s moves in Eastern Europe have re-ignited the ‘Great Game’ of a previous era, Venezuela, Cuba, and others, though thousands of miles away, are finding themselves at the heart of the budding new Great Game. Though some in Washington are willing to reconsider their long-standing policy against the socialist bloc of South America, the US mission is rife with obstacles. Oddly, the biggest stumbling block on the US path towards South America is neither Caracas, Havana or even Moscow, but the powerful and influential lobbies and pressure groups in Washington and Florida.

  A Republican Senator, Rick Scott from Illinois, was quoted in Politico as saying “the only thing the Biden admin should be discussing with Maduro is the time of his resignation.”

  While Scott’s views are shared by many top US officials, US politics this time around may have little impact on their country’s foreign policy.

  For once, the Venezuelan government has the stage.

  Tyler Durden
  Sun, 03/27/2022 – 22:55

• "Market Is Crazy" – Federal Reserve Governor Struggles To Find Home In DC 
  “Market Is Crazy” – Federal Reserve Governor Struggles To Find Home In DC 

  Even the monetary wonks who pull the magic money levers and decide to inflate or deflate asset bubbles are fed up with the red hot housing market. 

  On Thursday, Fed Governor Christopher Waller told an audience at the “Recent Fiscal and Monetary Policy: Implications for U.S. and Israeli Real Estate Markets” conference that his home search in the Washington Metropolitan Area wasn’t going well because of low inventory and high prices. 

  “As we all know, a singular feature of the U.S. expansion since the COVID-19 recession has been the red-hot housing market. 

  “Trust me, I know it is red hot because I am trying to buy a house here in Washington and the market is crazy. Both house prices and rents are up significantly across the nation, while vacancy rates for rented and owner-occupied homes are down,” Waller said.  

  Waller is competing in the D.C. market, where home prices are up 20% since the virus pandemic. Inventory is extremely tight, which has pushed some buyers into areas outside the Capital Beltway and into Maryland and Virginia. 

  The boom in housing prices is a combination of an ultra-aggressive dovish fed policy by slamming interest rates to the floor, panic buying hundreds of billions of dollars of mortgage-backed securities, and tight housing inventory, driving prices sky-high. 

  Waller has been on the hawkish side of things as the Fed began last week’s rate hiking cycle. He told CNBC last Friday, “I really favor front-loading our rate hikes, that we need to do more withdrawal of accommodation now if we want to have an impact on inflation later this year and next year.” 

  Fed members have been overly hawkish as inflation soars to four-decade highs and asset prices across the board are considered ‘elevated.’ Rate traders are pricing in at least 7.8 hikes through the end of this year with an implied rate of about 1.96%. 30Y mortgage rates have risen to 4.42% this year after beginning the year, around 3.30%; 

  

  The 3-month change in 30Y mortgage rates has been one of the fastest up moves on record, making the case a housing affordability crisis is nearing. 

  

  The good news for Waller is that housing demand is about to fall off a cliff, especially in a recession/stagflation. The bad news is BofA’s latest housing market note shows an ugly picture: one of the biggest challenges in the housing market has been dwindling supply, which has reached new record lows.

  

  Given these extraordinary supply challenges, BofA expects home prices to stay hot this year despite plunging housing affordability. Waller might have to wait another year as the housing market has its last hurrah until prices slump. 

  Tyler Durden
  Sun, 03/27/2022 – 22:30

• You Need "Guns, Gold, & A Getaway Plan", Celente Warns "WWIII Has Begun"
  You Need “Guns, Gold, & A Getaway Plan”, Celente Warns “WWIII Has Begun”

  Via Greg Hunter’s USAWatchdog.com,

  Renowned trends researcher and publisher of “The Trends Journal,” Gerald Celente, has long said “when all else fails, they take you to war.” 

  

  To say our world is failing is a profound understatement.  Celente proclaims, “World War III has begun… I was born one year after the end of WWII, and crazy people will take you to war in the blink of an eye… The war criminals are leading us into another war.”

  Celente says the reason for war usually surrounds a failing economy.  This time is no different.  Celente explains, “I have been saying that when all else fails, they take you to war…”

  ”  What followed the Great Depression?  War.  What followed the dot com bust?  More war.  That’s right.  Georgie Bush’s ratings were way down, and the Nasdaq was down 66% before 9/11.”

  Celente goes on to point out the economy in the USA is failing. 

  For proof, look no further than the “16% inflation” destroying paychecks of Americans, especially at the gas pump. 

  Celente also says in the commercial real estate market in NYC alone, only 35% of the office space is being rented. 

  That means 65% is vacant, and it’s the same all over the country.  Celente predicts,

  “We are headed for an economic calamity the likes of which we have never seen in our lifetime.  They are getting our minds off it with the war in Ukraine…

  You know, I wrote in the magazine in the beginning of the year, we said that the Covid war would wind down by late March and mid-April.  It’s winding down…

  So, now, as we said in the magazine, we went from the Covid war to the Ukraine war, and now to world war.  We are headed to World War III…

  There is not a peep about a cease-fire.  Biden is only bragging about more weapons being sent in.  Biden says we are going to defeat the Russians.  We are not backing down.  No one is talking about a cease-fire, and no one is talking about peace.  If we don’t unite for peace, we are all going to die in war.”

  In closing, Celente is warning about some sort of event or false flag giving the banking powers a reason to shut down the banks and separating you from your money.  Celente warns,

  “I am saying to everyone listening, we are at the crucial point where one day, they are going to say a bomb, hacking or whatever, and to save your lives and to save your money, we are closing down the banking system.  You won’t be able to get your money out, and maybe when you do, they will devalue it.  They did it before and they will do it again. 

  This time, it will be much worse.  My plan centers around the three G’s:  guns, gold and a getaway plan.”

  Join Greg Hunter of USAWatchdog.com as he goes One-on-One with the top trends researcher on the planet, Gerald Celente, publisher of The Trends Journal for 3.26.22.  (There is much more in the 42 min. interview.)

  *  *  *

  To Donate to USAWatchdog.com Click Here

  There is free information on TrendsResearch.com.

  Tyler Durden
  Sun, 03/27/2022 – 22:05

• Musk Said Russia Would Need To Fire "A Lot Of Anti-Satellite Missiles" To Take Out Starlink 
  Musk Said Russia Would Need To Fire “A Lot Of Anti-Satellite Missiles” To Take Out Starlink 

  Elon Musk’s satellites connect Ukrainians to the internet as what was first conceived as a civilian program. Now Starlink is helping Ukraine’s military conduct strikes on Russian tanks and positions where infrastructure is damaged and or no internet connection. 

  Using Starlink to monitor and coordinate drones to enable boots on the ground to target Russian military assets or staging areas puts Musk in the crosshairs of Moscow. 

  Musk told Mathias Dopfner, CEO of Bussiness Insider’s parent company Axel Springer, that even if Russia and or China wanted to target Starlink satellites, there are too many of them and near impossible to cripple the next-generation satellite internet service. 

  Dopfner asked Musk: “What happens if the Russians and Chinese are targeting satellites? Is that also a threat for Starlink?” 

  Musk replied, “If you attempt to take out Starlink, this is not easy because there are 2000 satellites. That means a lot of anti-satellite missiles.” He said the Russian anti-satellite test in November was a message to Western countries. 

  

  “I hope we do not have to put this to a test, but I think we can launch satellites faster than they can launch anti-satellite missiles,” Musk added. 

  Musk also said Russia’s President Vladimir Putin should be stopped: “I think the American government has done more than people may realize. But it is just not been very public.” 

  He continued: “But it is important to do something serious,” adding, “we cannot let Putin take over Ukraine. This is crazy.”

  The question remains whether Moscow will prepare sanctions targeting Musk, Starlink, or any of his other companies, such as Tesla, over the providing goods and services for military and intelligence services of Ukraine to target Russian troops. 

  Tyler Durden
  Sun, 03/27/2022 – 21:40

• Bitcoin Is Peace For The 9/11 Generation, Part 2: Wars On The Abstract
  Bitcoin Is Peace For The 9/11 Generation, Part 2: Wars On The Abstract

  Authored by Joe Consorti via Bitcoin Magazine,

  A society built on endless war is only possible given the power to print endless money to finance it…

  

  For full context, make sure you read Part One of this two-part series before continuing. In it, we discussed how the United States’ irresponsible spending stems from the fiat money system, which allows them to engage in continual abstract wars (such as “the war on drugs”) and how a return to a sound monetary standard through bitcoin would stop the endless conflict we’ve experienced over the last century.

  WAR ON POVERTY

  The War on Poverty — the granddaddy of the United States’ poor spending habits.

  58 years ago, former President Lyndon B. Johnson launched a war which would eat into people’s wealth all while trying to cure wealth inequality — a contradiction for the ages.

  Nevertheless, good intentions birthed this series of legislative actions. At the time, more than 20% of Americans were considered poor and Johnson was convinced that state intervention was the most viable way to bring the country back to its feet. While it was supposed to be “a hand up, not a handout,” Johnson’s legislation couldn’t be further from that ideal.

  Over $800 million has been spent to eliminate poverty since his series of initiatives came to pass.

  What do we have to show for it? Welfare rolls have expanded, as the horrifying truth of government dependence has come to fruition for many. The notion of equal opportunity is phenomenal, but rather than cutting red tape and encouraging job creation, wealth was taken from those with more and given to those with less. Some of those on the program leveraged the government assistance to build a life for themselves but given the increase in welfare dependency over the last half cntury, more people have structured their lives around the system instead of using it as it was intended, as a “hand up.”

  It’s safe to conclude that the “handouts” which Johnson was so adamant about excluding have become the hallmark of modern welfare programs. The War on Poverty is a stain on the American track record of raising those with nothing to prosperity – providing equal opportunity for all who reside “from sea to shining sea” to work or to innovate their way to prosperity.

  Funding for such programs would have to become almost entirely voluntary under a bitcoin standard, as taxes could never be high enough to replace the U.S.’s decades-long penchant for money printing. Any functional and accepted state program would be funded by those philanthropists who want to contribute to the cause, and due to this limited available funding, decision-making would be more precise by necessity. When scarcity is a factor in any decision, capital allocation is naturally done in such a way that leads to the optimum outcome. Under fiat, money can be created and seized at any given moment, so the concept of scarcity never plays a hand in decisions — hence why government programs often resemble inefficient money vacuums more than they do functional value-adds.

  While the War on Poverty was the first case study in the inefficiency of government capital allocation, it wouldn’t be the last. Once they discovered their universal solution, the money printer, the necessity for sound money would become even more apparent to the American people.

  WAR ON DRUGS

  The string of government initiatives beginning in the 1970s to end drug usage was the second of four periods of “war on the abstract” that the U.S. has engaged in over the last century.

  Starting as far back as 1914, the regulation of opiates and cocaine began passing in the halls of Congress, followed by Prohibition, followed by the introduction of a heavy marijuana tax in 1937, as well as imprisonment and fines for possession. This was just the beginning of something far more concerted and targeted in the United States — the war on drugs.

  In 1970, the Controlled Substances Act (CSA) was signed into law by President Richard Nixon, introducing an arbitrary “schedule” to classify drugs and ascribe criminal punishment to them. And in June of the following year, Nixon declared a war on drugs, citing drugs as “public enemy number one.”

  Ironically enough, Nixon suspended the convertibility of dollars to gold in August just two months later; his money-sucking initiative was followed by the nail in the coffin for the dollar as a sound representation of gold. Ultimately, this was necessary: To pursue these lofty public initiatives while continuing to finance the war in Vietnam, something had to give.

  Was the United States going to levy a higher tax burden on its citizens? No. As we discussed earlier, this would be a death sentence for any sitting president. The easy solution would be to quietly disconnect the currency from the value it was supposed to represent, despite meaning that this made the dollar a promissory note which promised nothing.

  That is how you finance government expenditure, they learned. And boy, oh boy, did it feel good.

  In 1973, the Drug Enforcement Administration (DEA) was created, still receiving an annual budget of $2.03 billion in 2022. The 1980s saw then-President Ronald Reagan introduce many “Just Say No To Drugs” campaigns – such as the elementary-school-targeted D.A.R.E. programs? The crackdown on even the phrase “drugs” was now underway.

  The cost of this endeavor has been an estimated $1 trillion as of 2015. That’s a hefty tag to pay for an arguably failed attempt at eradicating drugs from the American paradigm (remember this theme for later). Fiscal irresponsibility was sparked by the legally-recognized ability to magically create dollars out of thin air. And this was just the beginning.

  WAR ON TERRORISM

  Now we arrive at the main subject matter of this article, the Global War on Terrorism (GWOT) much more popularly known as “the war on terror,” a term coined by then-President George W. Bush. It was meant to be a catch-all term for war against all terrorist groups (not just Al-Qaeda who claimed responsibility for the 9/11 attacks) which should have been the first signal that perhaps the United States was biting off more than it could reasonably chew.

  Al-Qaeda was allowed to operate with impunity under the protection of the Taliban regime, so the idea was simple: move into Afghanistan to destroy Al-Qaeda, kill Osama bin Laden and remove the Taliban from power. However, the war on terror in the Middle East did not stop here.

  Bin Laden fled to Pakistan, and in 2003 the United States invaded Iraq, with George W. Bush infamously claiming that we needed to remove a regime of terrorists which (allegedly) held weapons of mass destruction. After capturing Saddam Hussein in 2003, and executing him in 2006, the war persisted in Iraq for another four years.

  The United States reportedly killed Osama bin Laden on May 2, 2011, but the war in Afghanistan wouldn’t wrap up in its entirety for nearly another decade. The full withdrawal of U.S. troops was meant to have been completed by 2014, but in 2014 it was announced that over 10,000 troops would remain in Afghanistan. To many this was an indication that this “war on terror,” like the “wars” on poverty and drugs which preceded it, would have no logical and definitive end. For now, President Joe Biden has removed American troops from Afghanistan, but he still “didn’t end the ‘forever war.’”

  Like our first two wars on the abstract and indefinable, the Global War on Terrorism brought with it an ambiguous and subject-to-change price tag. The powers that be hold the baton for the entire race, so they decide when and where money is spent. Under a bitcoin standard, decision-making is forcibly prudent — you wouldn’t throw money at missions and objectives that do not provide real value, as it would be wasteful. But enabled by the reckless spending of fiat money, the war on terror incurred a heavy price: Over 7,000 U.S. service members were killed in action during post-9/11 war operations, not to mention the tragedy of well over four times that number of soldiers who have committed suicide in that same time period.

  Their lives weren’t the only price to pay for the American people. For the post-9/11 wars, the total U.S. budgetary costs and obligations totalled more than $6.4 trillion through 2020. That’s trillion (with a “t”) representing over 20% of our current national debt. What do we have to show for it? While we’ve left our mark by executing some of the worlds most reviled terrorists, the people of Afghanistan are still subjugated by the Taliban, who have regained control of Afghanistan as of 2021.

  Perhaps within a system that holds the spenders’ feet to the fire, our actions would have been swifter and more decisive. Maybe if the money was scarce and it came directly from the citizens through explicit taxes, we would have tactically moved in to execute those who wronged us on 9/11.

  Instead of learning our lesson of avoiding any war with an unclear goal, as we should have from Vietnam, the United States continued our abuse of the money printer by going to war for nearly two more decades with an unclear end goal. But unnaccountable control of the money supply means control of the firepower.

  The war on terror was a lengthy, costly, and tiresome endeavor. It was a failed attempt at eradicating a concept so decentralized and hostile that the chances of success at the outset were slim to none. And after twenty years, thousands of American soldiers dead, and nearly $7 trillion in spending, the grand finale was a hasty retreat from Kabul, leaving hundreds of Americans stranded after the embassy was abandoned. The Taliban now run Afghanistan; for all those dollars printed and all that bloodshed, we’re back at square one. The only measurable outcomes (and they’re not good ones) were the lives lost, and the trillions of dollars added to the balance sheet of the United States government — a debt burden that has yet to be, and likely will never be, serviced.

  The honest and good-natured spirit of defeating those who stole our dignity on September 11, 2001, has completely dissipated two decades into the conflict. That fire from the American people has been replaced by a generation of adults who haven’t been alive in a time where the United States hasn’t been involved in the Middle East. These adults have grown to see the massive and ever-expanding debt bubble as a necessity, just a normal part of life – when this same debt bubble is what’s pricing them out of a job, pricing them out of purchasing a house, and pricing them out of raising a family. This is not normal.

  The United States made a triumphant effort to end terrorism globally and came up short. But just 19 years after 2001, they’d ask us once again to suspend our disbelief, and put our money and decision-making ability into their hands. We were going to war, again.

  WAR ON HEALTH

  What do you do when there’s no war to be had? Health crisis, enter stage left.

  This article is not going to argue the origins of COVID-19, that’s not what it’s here to do. We’re trying to draw the connections between the incentive structures of massive spending and those who aim to gain from it. And one thing is for certain — if you can’t engage in a foreign war, a crisis at home is the next best thing.

  In March 2020, I was running my own small business at the time. Nobody wanted to buy anything from me, and mania had set in as COVID-19 made its way into the United States. People were being laid off en masse, necessities were flying off store shelves, some were convinced these were the end of days.

  Lo and behold, they weren’t. Within a week of the virus moving through Italy it was known and understood that it generally targets those with vulnerable immune systems, namely the elderly and populations with significant comorbidities. Instead of the United States taking the approach of encouraging temporary isolation for those groups while the virus moved naturally through the rest of us, the country was put on full doomsday mode.

  Everybody was treated not only like they had a high chance of dying from the virus, but also that they would kill everybody they met if they went outside. Businesses were shuttered and the economy sputtered to a halt – but people needed to get paid somehow, even if it was with magically-printed fiat money.

  

  M1 Money Supply through 2022

  Through February 2022, nearly $4 trillion has been spent in economic packages intended to jog the economy. We’ve propped the system up by flooding it with dollars that do not represent any real earned value. The U.S. debt-to-GDP (gross domestic product) ratio is sitting at 133.46%. Every dollar of productivity is trounced by one dollar and twenty-eight cents worth of debt: Does that sound like a healthy economy?

  The Federal Reserve Board launched the Municipal Liquidity Facility in April 2020, which was just a mechanism to purchase $500 billion of short-term notes from all 50 states and some of the most productive cities in the country. They also relaunched multiple great recession-era programs to buy assets from United States companies with newly-manifested counterfeit money, adding trillions more to the balance sheet of the government.

  Despite having more open roles in the workforce than ever before (comparative to unemployment), some families are going to be receiving as much as $14,000 from President Biden’s newest COVID-19 relief bill. Make it make sense.

  Under the guise of giving money to the people, the Fed (unintentionally or not) has diluted wealth from the people by way of leveraging the COVID-19 pandemic. Everything from asset purchases, to buying notes from the treasury, even literal helicopter money into the hands of every American, three separate times.

  The Cantillionaires reap the benefit of accessibility to freshly-minted dollars, while the factory workers and schoolteachers had their grocery prices increase, and their lives put on hold. Because of this irresponsible expansion of the money supply, people are working even harder to earn a currency growing ever weaker, while the cost of most goods and services people wish to purchase rises.

  Under a bitcoin standard, an economic shutdown and the minting of trillions of dollars simply is not possible. With something like bitcoin, you cannot mint new units of the currency at will – value that gets transacted always represents underlying earned value, through labor or the sale of goods and services. Since you cannot mint new units in times of crisis, a bitcoin standard would have forced the United States Congress to think more critically of how best to respond to the pandemic.

  We discussed earlier about those who are at great risk from the virus. Under a bitcoin standard, the U.S. would’ve had to take a fiscally responsible approach; no longer having access to printed money would mean they’d need to think efficiently. Their efficient response, likely, would have been to encourage isolation for vulnerable populations, mobilize capital collected through taxes to areas with higher densities of these more-susceptible people, and nothing more.

  Under a bitcoin standard, the government is forced to think efficiently. No helicopter money, no emotionally-charged asset purchases with the fear of total economic collapse, and no shuttering the complex web of relationships that is the U.S. economy. Strategy and prudence naturally froth to the top of the pot using a sound money standard; especially over the fiat response of extravagant spending packages and hastily drawn together decision-making.

   

  A bitcoin standard would disable the government’s ability to inefficiently allocate free, unearned capital in times of crisis. The COVID-19 pandemic should be a shining example of their inability to do so. The free market should allocate capital as it sees fit, maximizing efficiency and prosperity for all. Bitcoin gets out of the way where fiat creates a blockade.

  THE NEXT WAR

  At the time of writing, the United States is threatening to take offensive action on Russia following their invasion of Ukraine. Meanwhile, we utter a collective sigh of “here we go again.” But remember why this article is being written, to explain the incentive structures involved in going to war, and why the United States is chomping at the bit to do so.

  New war means new printing, and the United States is on high alert to gaslight the American public into why this war is an outright necessity. In 2014 The Washington Post published an op-ed opinion piece titled “In The Long Run, Wars Make Us Safer And Richer,” which I believe is filled with uncorrelated statistics to bolster the false claim that war increases long-term domestic productivity for the United States. We should perhaps get ready for more justification, rationalization and outright lies as to why raising the debt ceiling is a national emergency, and printing another $10 trillion will make life better for everybody. They’ll need to lie through their teeth to get away with any more of this, as they always have.

  Bitcoin fixes this. The only means of funding a war without fiat and/or more taxes (which must be approved by those running for future office) are explicit and voluntary – either through issuing domestic debt (war bonds) or foreign debt, made even more voluntary with bitcoin, given that seizure is difficult.

  Bitcoin defangs the wretched and sharp fiat teeth out of the government’s maw. Trigger-happy politicians who salivate at the thought of trillion-dollar war spending packages will have their temperament tested; they’ll be made more prudent and strategic by way of bitcoin’s programmatic scarcity. You can’t fight it, but you can use it.

  FINAL THOUGHTS

  Endless conflict and strife, whether at home or abroad, is enabled by the ability to create money by decree. Since the United States needs to pay down their debt and is incentivized to retain control over the money, they are never going to switch to a hard money standard with bitcoin.

  That’s fine, if you cannot convince the country to adopt bitcoin as their monetary standard, buy and hold it yourself. Whenever possible, transact exclusively in bitcoin. Slowly as we create these circular economies, companies will allocate to the asset, goods will start being denominated in bitcoin, and life on a bitcoin standard becomes more and more inevitable.

  

  Feedback Patterns in the Bitcoin Economy – Image source

  Speculatively attack the dollar on an individual level; don’t allow them to tax you even more than they already do. Legally deprive them of spending power, as they can’t inflate away your wealth as much if you minimize your exposure to the dollar. Make it known through your actions that you do not wish to engage in another decades-long war. Have you had enough of them? I know I have. I’d like to know what it’s like to go at least half of a decade without getting frisky for another foreign conflict. Let’s make it happen.

  *  *  *

  You can find Joe on Twitter @JoeConsorti, thanks for reading.

  Tyler Durden
  Sun, 03/27/2022 – 21:15

• Japanese Automakers Still Grappling With Skyrocketing Cost Of Raw Materials, Shortage Of Semiconductors
  Japanese Automakers Still Grappling With Skyrocketing Cost Of Raw Materials, Shortage Of Semiconductors

  Here we are, almost halfway through 2022, and the semiconductor crisis that was supposed to have been dealt with by this point is still stinging the auto industry. While it was the pandemic that first tossed the industry into turmoil, the war in Ukraine has ensured the shortage won’t stop anytime soon, according to a new report from Nikkei. 

  Automakers like Toyota and Nissan are still grappling with higher costs and struggling to ramp up output, the report says. In total, Japan’s manufacturers “face an increase in raw materials costs of around 1.4 trillion yen ($11.5 billion) for the year through March,” the report says. 

  Seiji Sugiura, an analyst at the Tokai Tokyo Research Institute, commented: “Carmakers are expected to absorb some of the rise in costs through cost-cutting efforts, but it will be difficult to absorb all the increases.”

  Sanshiro Fukao, a senior fellow at the Itochu Research Institute, added about the supply chain for building automobiles: “The premise that ‘if you place an order, parts will be immediately delivered’ is collapsing.”

  And even as some parts have become unavailable, raw materials for other parts have skyrocketed in price. For example, palladium, nickel and aluminum have all surged to record highs this month. The metals are used in automobile catalytic converters, batteries and other car parts.

  

  The price hikes are likely due to the fact that 40% of palladium production comes from Russia, Nikkei notes. This has forced auto manufacturers to abandon buying from Russia and seek out alternative sources. 

  Hiroo Suzaki, president of South African metal producer Impala Platinum Japan, commented: “Losing Russian supply would leave a significant impact on the palladium market.”

  Some demand for palladium will eventually wane due to the adoption of electric vehicles, Mikio Fujita, senior market analyst for Johnson Matthey, said. But for now, that doesn’t help automakers. Fujita commented: “As the auto industry shifts to electric vehicles, catalyst demand is expected to gradually shrink in the long run.”

  Nickel, on the other hand, is expected to see a significant increase in demand thanks to the adoption of EVs. “This has led to an even tighter market and premiums are soaring to record high levels in Europe,” one trader told Nikkei. 

  Russia is also the world’s number 2 aluminum producer, accounting for 5% of global output. “These metals are not as essential as oil and therefore are more likely to be exposed to supply risks or to become a target of sanctions,” Takayuki Honma, chief economist at Sumitomo Corporation Global Research, commented.

  The rising cost of raw materials means that price hikes will be passed on to consumers. Honda CFO Kohei Takeuchi explained: “We usually absorb the costs through our internal efforts to cut costs, but the rise is too large to do so.”

  Tyler Durden
  Sun, 03/27/2022 – 20:50

• Trying To Sort Out This Market Mess
  Trying To Sort Out This Market Mess

  By Peter Tchir of Academy Securities

  After a few tumultuous weeks, it feels like we finally have the luxury of collecting our thoughts and can sort out this “Market Mess”. We will also evaluate where we are with several key market drivers and how markets are priced and positioned relative to those drivers.

  Market Driver – War

  Let’s start with the war in Ukraine. Right now, it seems easiest to break this into what we can see in the near-term and what will potentially happen over the longer-term.

  Near-Term

  Russia focusing on the Donbass. Russia has lost some ground in and around Kyiv and is even “officially” focusing their attention on the Donbass region. This is the region where Academy’s Geopolitical Intelligence Group initially expected an attack, as they had enough troops for that and there was little doubt as to how the citizens there would react to an invasion. This is also the region where Putin’s view that his forces would be “welcomed” seemed at least plausible. This is good news, especially if it indicates that Russia has reduced its goals in the Ukraine. But it may just be Russia adopting a more achievable long-term plan, i.e., conquer the Donbass and then proceed West with better lines of communication and supply. A positive development, but it does not indicate any imminent ceasefire.

  More fear tactics being employed. While Russia seems to be scaling back its operations in terms of where they are focusing their forces, they seem more indiscriminate in their bombing. We have seen some potential escalation in terms of weapons allegedly being used (hypersonic seems likely, thermobaric unclear at best), but it has not escalated to chemical or tactical/ “battlefield” nukes despite U.S. intelligence warnings. Cyber-attacks have also remained focused on Ukraine and have not been used as a widespread tool by the Russians in retaliation for the sanctions. Though, on cyber in particular, Admiral (ret.) Barrett reminds us that Russian hackers are patient and are very good at controlling the “time and place” of their attacks. Given the seemingly decreased scope of Russia’s invasion, the lack of escalation should be a good thing, but the intelligence warnings haven’t stopped and Putin has “surprised” the West with his brutality in the past, so we cannot ignore this risk.

  Increasing backlash including from the media within Russia. While a coup of any sort seems highly unlikely, there are signs that the messaging within Russia is becoming moderately less one sided. Whether the snippets that seem negative against the invasion are part of a bigger strategy to identify an “enemy within” or are a sign that discontent is truly growing, we don’t know yet. By now, a month into the invasion, there are families missing loved ones who will start to doubt the official narrative. They will share their grief. That communication will be personal and be outside of what the Russians can control via internet restrictions or a state-run media. The tide continues to turn in Russia against Putin and the invasion, which might be enough for him to start pursuing talks that lead to something that he can claim as peace, which would be very positive.

  India is not backing sanctions. This is both a near-term issue and something we need to think about longer-term. Virtually every economic scenario that had the West shifting away from China had a bigger link to India. India, with a political system more akin to ours than China’s and a population growing and getting wealthier (with long-standing competition with China), seemed to be a country we could work well with. While that is still likely true, India’s ongoing purchases of Russian commodities (and Russian weapons), which largely mimics their engagement with Venezuela, should give us some pause. This helps Russia continue its invasion and raises questions for the future.

  From a near-term perspective, things seem to be heading in the right direction, but a lot of scenarios including some bad ones, remain plausible.

  Long-Term

  • DANTE vs NATO. I cannot come up with a good acronym for some geopolitical “alliances” that seem to be forming, so for now I will go with DANTE – Dictatorships Autocratic Nations Treaty Entity. This follows up last weekend’s Who Needs Who?

  

  Almost every geopolitical headline this week seemed to confirm that China is using our sanctions as an opportunity to engage with countries that do not adhere to the political and moral standards we purport to represent.

  I believe that regardless of how the war goes, we are seeing an accelerated shift to new alliances that will affect supply chains, the dollar, the yuan, and even foreign demand for our securities. This will not change overnight, but it is something that we need to grapple with and where we need to find our own solutions.

  • Marshall Plans, Monroe Doctrines, National Security, and more. I wholeheartedly agree that we need an “Energy Marshal Plan” – something that accelerates our buildout of sustainable energy sources while ensuring that we maintain our existing energy infrastructure until we get there (which will require significant spending and regulatory changes after what has been an extended period of underinvestment and likely overregulation). I continue to advocate that supply chains will evolve around countries we are “close” to, where close can mean politically/based on shared values or simply geographic proximity. While this should benefit North America/Central America/South America interconnectivity, I can’t bring myself to say it is the Monroe Doctrine. However, while it does highlight the importance of the Western Hemisphere in our past (and likely future) policy, this reminds me a bit too much of Manifest Destiny, but we won’t quibble about that today. Basically, supply chains will be evaluated to some degree by looking at them through a National Security lens. That will be done on a national level, but I expect corporations to seriously incorporate “security” issues into their supply chains far more in the future than they have in the past (i.e., what are the risks of exports being blocked, production being halted, shipping interrupted, etc.) Many products will fall outside the scope of this, but energy, commodities, high tech, and healthcare related items/ products will receive additional scrutiny.

  • If there was “peace” today, could we go back to the world as it was in January 2022? That is a question that comes up quite often. While we do tend to be pragmatic and willing to move past certain events when it is too problematic not to do so, I think “this time is different.” Security (whether national or corporate) has been exposed as a much bigger risk than previously thought and will come even more to the forefront of decision making than COVID caused it to be.

  Longer-term there are risks (as we see commodity centric and authoritative regimes work more closely together), but we have an opportunity to reshape our supply chains and business allegiances, which can create some exciting opportunities for growth and jobs.

  Market Driver – The Fed

  The Fed, which came across as dovish as possible at their meeting and press conference, has sent out speaker after speaker to hammer home just how serious they are about fighting inflation! I cannot remember a time when the speakers have been so universally in agreement and so quick to hammer home a point that could have easily been hammered home at the FOMC meeting and press conference. Academy had the pleasure of discussing the Fed and rates on Friday’s Real Yield show. I regret not stating out loud whether the Fed “doth protest too much”, but given all the firms calling for more and bigger hikes, it was difficult to fight too hard. It also didn’t help when one speaker started “glitching” and you can see the panic in my face wondering if it was my connection breaking at the worst possible time (similar to what happened during the prior week’s appearance).

  Rate Hikes

  • I cannot understand the urgency of not being urgent! Inflation, broadly speaking for the Fed, seemed to stop being “transitory” in late November or early December. Did we cut back on bond purchases faster than previously telegraphed? No. Did we dial back on bond purchases immediately when the minutes, back in January, stated that QT would begin faster and more aggressively than the previous time? No. Did we hike rates in January? No. Did we spend a lot of time talking about 50 bps in January? No. Did we hike 50 bps in March? No. Did we start QT in March? No. I fail to see what is so “urgent” now that wasn’t at all “urgent” in January or March. Yes, we will likely get 50 bps at the May meeting and I just have to accept that 50 bps in May is crucial, but doing nothing in January and the bare minimum in March was part of that “cunning plan” to tame inflation (if you’ve never watched the Blackadder series, I highly recommend it). Again, I’m kind of stuck in the “they doth protest too much” camp and wonder if they won’t just continue the tradition of jawboning and talking tough while providing a light touch?

  • Quantitative Tightening. On April 6th we will get the Fed minutes, which Powell hinted would cover their thoughts on QT in more detail. While markets have been “prepped” for this, I think this poses more of a threat to risk assets than rate hikes partly because we still really don’t know what QE does, but it does seem to inflate asset prices, so it is reasonable to assume that QT may hurt asset prices more than is already expected.

  I’m less worried about rate hikes, partly because I think that the predictions have become excessive, but I am more concerned (especially near-term), about quantitative tightening.

  Energy Prices

  We cannot have any discussion about anything, whether it is the economy, the Fed, markets, etc., without first looking at oil.

  

  While it is fascinating and even fun (if you are a glutton for punishment) to stare at the first futures contract, that contract swings wildly with supply, demand, storage, speculation, etc. Just like when the front contract went negative, we shouldn’t read too much in to where it is trading today. Yes, it is important, but it is subject to a variety of forces, one of which right now is finding a high enough price where demand destruction occurs. Oil (two years out) is “only” at $80, but it was almost $70 back in November and briefly dipped to $75 last week. 5 year oil prices are even more contained. Both the two-year and five-year markets price in the likely impact of new supply coming on line, which the front contract doesn’t have the luxury of doing.

  I expect energy stocks to do well as we initiate plans to build out sustainable AND fossil fuels in the coming months and years, but I’m not getting overly excited by big swings (in either direction) in the front contract.

  Oil and energy prices are “bad” but the worst (for the next several years) may be getting behind us as nations adapt to the events of this year.

  From Houston two weeks ago, the most common comments were:

  • Why, as the U.S. Energy Information Administration states, was 1977 the last time a refinery with “significant” downstream production built? I’m not an energy expert, but it does seem likely that our refining capacity may not be conducive to keeping gasoline prices low.

  • Why not greenlight Keystone Pipeline? Incredible efforts had been made on safety, the environmental risks, and the use of union workers. However, the reality is that much of the product that would have flowed through the pipeline will still make its way to the U.S., just much less efficiently via rail and truck.

  Domestically, energy is an opportunity, but not something to keep you awake at night.

  Europe has bigger problems, with fewer immediate fixes, and I think that it will contribute to Europe significantly underperforming the U.S.

  The government will look for ways to offset the “flat tax” which is how gas prices behave for the ordinary consumer. Expect subsidies of some form to lessen the blow to lower income households. Yes, there is a certain irony in helping sustain demand for one of the products that would benefit from demand destruction, but too many are too dependent on it, and the higher gas prices really do hit lower income households disproportionally hard.

  Housing

  Mortgage applications have dropped 6 of the last 7 weeks!

  • Pending home sales – down.
  • New home sales – down.

  Mortgage rates – much higher!

  

  Yes, housing has been inflationary and will continue to be inflationary in the CPI data (a function of how it is calculated embeds a lag effect), but the real world might see a far different outcome!

  I look at housing and cannot help but think we might be fighting the wrong battle at the wrong time!

  Financial Conditions

  Financial conditions, while still “easy” are far less easy than they’ve been and with the exception of the pandemic, are more restrictive than we’ve seen since 2012!

  

  Why negative numbers represent easy and positive numbers represent tightening is beyond me, but it is what it is. So, we’ve seen financial conditions get less easy. If it wasn’t for inflation staring us in the face, we’d probably be talking about whether the Fed should be helping ease financial conditions, but we aren’t – at least not yet!

  Surprise!

  What will be the next economic surprise?

  

  Economic data has been surprising to the upside in the U.S. That is great, but the cycle always looks the same:

  • Data comes in better than expected.

  • Economists ratchet up expectations.

  • Data still beats.

  • Economists ratchet up expectations even faster.

  • The data is very strong, but not beating expectations by much.

  • Data starts missing.

  • Economists bring down forecasts.

  • Data misses more.

  • Economists drop forecasts sharply.

  • Data is weak, but meeting expectations.

  • Data comes out better than expected. Repeat loop.

  Yes, economic data could continue to surprise to the upside, but the law of averages and the job requirements of economists could easily cause us to see a reversal of this bullish pattern.

  Where On the Curve Are We?

  If you thought I was going to discuss the shape of the yield curve here, you are highly mistaken! I’m not that much of a glutton for punishment, yet! Rather, since I’m on a roll with charts that would make a kindergartner appalled at my lack of charting skills, I’m going to do another one.

  

  I find it impossible to believe that we are starting the tightening cycle just as inflation is at the start of an uptrend. I will say it is “possible” that we are in the middle of the inflation rising cycle, but I think it is also possible that inflation has crested. While I don’t think the “scary” scenario is likely, I cannot dismiss it out of hand.

  I am clearly not a believer in the soft landing scenario as I suspect we are far enough behind the curve we may have missed the curve entirely.

  Now For the Yield Curve

  If there was one piece of data I’d like to know right now, it is what are the Chinese, the Saudis, and others doing with their Treasuries?

  I’d like to know the tic data in advance, but I think we are at least 6 weeks away from getting data after we imposed our sanctions on Russia’s Central Bank. China (with $1.2 trillion) and the Saudis (with on rates.

  I do know that the 7s 10s inversion and the 20s 30s large inversion seem to indicate that liquidity and mandate issues mean more than a well-structured opinion on future yields. With 10s at 2.47%, 20s at 2.74%, and 30s at 2.58% I can do some pretty simple calculations (no convexity, repo, etc., just basic kindergarten level math).

  Today’s 10 year yield is 2.47%. To be “fair” for 20s, the 10 year yield in 10 years would need to be 3.01%. Then, in 20 years, the 10 year yield would need to drop to 2.26%.

  I warned you that it was a simple calculation fraught with all sorts of issues that will be pointed out to me (I’m sure), but it still seems like an incredibly awkward path for rates, which leads me to believe that prices are distorted!

  As discussed in “What a Mess” so many correlations seem to have shifted, liquidity seems bad, and the selling seems relentless, so it is extremely difficult to call a bottom here and it is too messy and too early to worry about whether 2s 10s is signaling recession or not (I’ll be lazy and suggest they are starting to hint that we should brace for a hard rather than soft landing).

  One positive (for bonds) is that pension fund rebalancing should not be skewed to selling stocks and buying bonds (the 30 year bond is down almost 10% since the start of the month, while the S&P 500 is up 4%).

  Risk Assets

  I’m far more comfortable with credit here versus equities (more on that to come early this week, as I’ve run out of time and space today).

  On the balance, I think:

  • Markets have priced in enough good news on the war that actual good news will deliver little in the way of additional positive price action and may cause the market to fear the Fed more as the war, despite its inflationary aspects, has been cited by many as a reason for the Fed to be cautious on tightening.

  • Economic data may disappoint, which should help give Treasuries a bid, and while that would have helped risky assets (especially big tech) a few months ago, the first reaction might be more “risk off” rather than lower yields are good.

  • The Fed, a lot is priced in, but QT concerns me.

  Caution on risk while slightly optimistic the worst of the war is close to being behind us!

  Tyler Durden
  Sun, 03/27/2022 – 20:25

• Shanghai Orders Staggered Lockdowns After Reporting Record New COVID Cases
  Shanghai Orders Staggered Lockdowns After Reporting Record New COVID Cases

  Update (2000ET): In an effort to mitigate the economic blowback from its latest lockdown, authorities in Shanghai said that the city’s port would continue to operate amid the staggered lockdowns that were ordered on Sunday.

  * * *

  After weeks of panic-buying for fear that the Communist authorities would order another lockdown, President Xi has apparently tossed his “targeted” approach aside and ordered a lockdown in Shanghai, the country’s largest city and its financial hub.

  

  The city of 26 million will be locked down “in two stages” over the span of nine days as authorities try to quash surging COVID numbers. The lockdowns were ordered after the city reported a new record number of infections on Saturday.

  During that 24 hours period, the city recorded 2,631 new asymptomatic cases, which accounted for nearly 60% of China’s total new asymptomatic cases that day, plus 47 new cases with symptoms.

  China’s financial hub of Shanghai will be locked down in two stages over nine days.. pic.twitter.com/iEXzb3mjwJ

  — Cathy Yuan Zhang (@cathyyuanzhang) March 27, 2022

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

  Local authorities announced on Sunday they would divide Shanghai into two districts for the purposes of the mass testing, using the Huangpu River that passes through the city as a guide. Districts to the east of the river, and some to its west, will be locked down and tested between March 28 and April 1, while the rest of the city will be locked down and tested between April 1 and 5.

  During the lockdowns, public transit will be suspended, including ride-hailing services, according to an announcement from the city government released on its official WeChat account. Personal vehicles will be barred from the roads unless otherwise approved.

  While authorities have sought to assuage the public’s growing sense of unease, locals have been panic-buying food and other essentials for fear that a new lockdown could be ordered at any time, potentially leaving them confined to their homes (or, worse, to “bubble”-style dormitories in the factories where they work)

  As a result of the lockdown order, local companies and factories will suspend manufacturing, or require workers to work remotely during the lockdown, with the exception of those who work in food production or supply, or who provide other essential services.

  “The public is asked to support, understand and cooperate with the city’s epidemic prevention and control work, and participate in nucleic acid testing in an orderly manner,” the government added.

  Western investment banks have been scrambling to gauge the impact of more potential lockdowns in China, and a team from Goldman Sachs recently postulated that continuing lockdowns could wipe an entire percentage point off of annual GDP growth for every four weeks that a lockdown persists.

  Meanwhile, a team of analysts from Mizuho warned in a note to clients published over the weekend that the Chinese economy is suffering its worst contraction since COVID first emerged in Wuhan more than two years ago.

  Economic activity “may notably deteriorate across the board” in March due to increasing mobility restrictions across China, exacerbated by an ongoing slump in the domestic property market. Outbreaks are hammering a wide range of industries and sectors, including in-person services, construction and some manufacturing activity. The result is that “it’s getting harder for Beijing to achieve its ‘around 5.5%’ GDP growth target for 2022,” the economists said. Mizuho now sees a possibility that annualized GDP growth for 2022 could contract to just 2.9%, Bloomberg reports.

  More than 14M residents of the city have already taken rapid antigen tests recently, and restive residents have recently started pushing back harder against authorities’ constant insistence on testing. Videos of angry crowds pushing through cordons have recently circulated on western social media.

  China is in a tough spot 😬 pic.twitter.com/HqzepoBapi

  — Gabriel Hébert-Mild™ ⓥ (@Gab_H_R) March 24, 2022

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

  Expect to see more of those as exhausted locals vent their frustration with the CCP’s “zero COVID” policy failure.

  Tyler Durden
  Sun, 03/27/2022 – 20:00

• FDA Tells Doctors In 8 States To Stop Using COVID-19 Treatment
  FDA Tells Doctors In 8 States To Stop Using COVID-19 Treatment

  Authored by Zachary Stieber via The Epoch Times,

  U.S. drug regulators have directed health care workers in eight states to stop using a COVID-19 treatment because it may not be effective against an Omicron subvariant that is rising in prevalence.

  

  The Food and Drug Administration (FDA) said sotrovimab, a monoclonal antibody used to treat COVID-19, can no longer be used in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.

  Providers in Puerto Rico and the Virgin Islands are also being told to stop using stotrovimab.

  Regulators believe the treatment, which was given emergency use authorization in May 2021, “is unlikely to be effective against the BA.2 subvariant,” the FDA said in a statement.

  BA.2 is a subvariant of Omicron, a variant of the CCP (Chinese Communist Party) virus.

  According to genomic surveillance conducted by the Centers for Disease Control and Prevention, BA.2 was responsible for 12.6 percent of COVID-19 cases in the United States in the week ending on March 5. But the agency projected an increase to 35 percent in the week ending on March 19, and the subvariant was pegged as circulating widely in the northeast.

  Based on the estimates, BA.2 is responsible for the majority of the cases in the states where administration of sotrovimab is now limited.

  The FDA had indicated in February that it would limit the treatment.

  Several studies have indicated sotrovimab does not perform well against BA.2, including one published in Nature Medicine.

  But GlaxoSmithKline and Vir Biotechnology, the makers of the drug, have said testing suggested the treatment retained neutralizing activity against BA.2.

  The companies said Friday they were aware of the FDA’s move and are preparing to send a data package to the agency and other regulatory authorities that show a higher dose of sotrovimab works against BA.2.

  COVID-19 treatments that do appear to be effective against BA.2 include Pfizer’s pill, paxlovid; the antiviral from Gilead Sciences known as remdesivir; and the recently authorized bebtelovimab, a monoclonal made by Eli Lilly, according to the FDA.

  “We will continue to monitor BA.2 in all U.S. regions and may revise the authorization further to ensure that patients with COVID-19 have effective treatments available. Health care providers should also monitor the frequency of BA.2 in their region as they choose appropriate treatment options for patients,” the agency said.

  The FDA previously cut off authorization for REGEN-COV, a monoclonal from Regeneron, and a separate treatment from Eli Lilly because laboratory testing suggested they didn’t hold up well against Omicron.

  Tyler Durden
  Sun, 03/27/2022 – 19:35

• "The Morgan Stanley Fade" – Clients Who Felt Cheated By Bank's Block Trading Business Seize Opportunity For Revenge
  “The Morgan Stanley Fade” – Clients Who Felt Cheated By Bank’s Block Trading Business Seize Opportunity For Revenge

  As the SEC sharpens its knives for the slaughter of Morgan Stanley’s lucrative block-trading business, the bank is finding – much, we imagine, to its deep chagrin – that many of its colleagues and counterparties are aiding in the investigation, even regaling regulators with a flurry of “I told you so’s”.

  

  We have already seen several of Morgan Stanley’s counterparty/rivals snitch on the company by helping the Feds to build their case. But as it turns out, these acts of vengeance aren’t limited to just Credit Suisse, which lost billions of dollars thanks to Morgan’s decision to break ranks during the Archegos collapse (we were among the first to highlight those block trades back in March of last year).

  Many of the biggest buy-side firms have long kvetched about Morgan Stanley’s block-trading business. Many eyed the bank’s ability to quickly unload large block’s of (heavily discounted) shares, suspicious of what they believed might be the bank’s skilled front-running by lining up buyers ahead of time, before an order to sell has even been placed.

  Now, according to Bloomberg, as the federal block-trading probe advances with Morgan Stanley as its primary target, bankers are reportedly joking among themselves about the “Morgan Stanley fade” – a practice that results from the bank leaking news of potential sales before they happen, allowing other firms to front-run the trade accordingly, ultimately moving the market to the banker’s advantage.

  The group of malcontents includes some of the biggest PE firms in the country, including Blackstone, KKR and Carlyle Group.

  Yet now, all across Wall Street the knives are out for Morgan Stanley. Since word emerged last month that the equities powerhouse is being examined as part of U.S. probes into whether banks tipped off hedge funds to stock sales big enough to move markets, the industry has been buzzing about the “Morgan Stanley fade.”

  Competitors, who couldn’t figure out how Morgan Stanley was bidding for block trades at such tight discounts, are now swapping “I told you so’s.” Authorities examining Morgan Stanley’s business haven’t accused it of wrongdoing.

  But before the investigation was made public, MS and many of its rivals saw nothing wrong with this type of behavior. Senior bankers are constantly pitching deals, and so offering select clients a tasty ‘hint’ about a potential block sale didn’t seem like the illegal sharing of material non-public information, but rather a necessary aspect of marketing potential deals. All of thi

  Unfortunately for them, the boundaries of what’s deemed acceptable are changing rapidly.

  Yet now, all across Wall Street the knives are out for Morgan Stanley. Since word emerged last month that the equities powerhouse is being examined as part of U.S. probes into whether banks tipped off hedge funds to stock sales big enough to move markets, the industry has been buzzing about the “Morgan Stanley fade.”

  Competitors, who couldn’t figure out how Morgan Stanley was bidding for block trades at such tight discounts, are now swapping “I told you so’s.” Authorities examining Morgan Stanley’s business haven’t accused it of wrongdoing.

  Firms like KKR have even adopted strategies to guard against the Morgan “fade” – including working with a single broker to try and minimize the odds of unfavorable leaks allowing rivals to front-run the trade.

  One longtime PE executive, speaking with Bloomberg, said he felt helpless to combat a trend, which he noticed over time, of prices moving unfavorably against him just before block trades were executed. However, given Morgan Stanley’s massive clout in the market, he worried that the bank would punish him for speaking out.

  Another executive pointed to one particularly messy block trade as an example of the bank’s uncanny ability to will prices to move in their favor just as trades were about to be executed.

  Some market participants point to a particularly messy block trade on Monday Aug. 9, when a group of investors tapped Morgan Stanley to unload shares of ZoomInfo Technologies Inc. The group had selected Morgan Stanley for another ZoomInfo trade days earlier with satisfactory results.

  The Friday before the second sale, the stock sank 3.1%, the third-worst performance in the Dow Jones Internet Service Index. Then early on Monday morning, the shares tumbled another 3.2% before the offering was announced.

  Banks are supposed to handle block trades discreetly so that prices don’t fall. The reality, according to market participants, is that declines can happen, potentially because of the way banks track interest among prospective buyers.

  The SEC initially launched its block-trading probe in 2018, and the DoJ later joined in after the disastrous collapse of Archegos Capital Management, which involved several massive block trades that hammered valuations in the firm’s portfolio stocks as a group of Wall Street brokers – led by Goldman and Morgan Stanley – aggressively offloaded the shares. MS and Goldman avoided major losses on their positions in the Archegos portfolio stocks (which Archegos had bet on via what’s known as a total return swap, leaving the prime brokers in possession of the shares, and thus on the hook for losses in the event of a blowup) by reportedly breaking an agreement on a half dozen prime brokers to try and manage the sales of Archegos’s portfolio. But their decision to break ranks had devastating consequences for their far-slower rivals, as banks like Nomura and Credit Suisse were ultimately saddled with billions in losses.

  Like the old saying goes, “revenge is a dish best served cold”. Now, after years of biding their time, Morgan’s clients and counterparties are seizing the opportunity for some good ol’ fashioned payback.

  Tyler Durden
  Sun, 03/27/2022 – 19:10

• Stockman: How The C-Suite Embraced Lockdowns And Economic War
  Stockman: How The C-Suite Embraced Lockdowns And Economic War

  Authored by David Stockman via The Brownstone Institute,

  A while back, corporate America was bending over backwards to appease the Virus Patrol with lockdowns, mandatory masking and threats to fire anyone who didn’t take the Jab.

  

  This was supposedly owing to the “science,” but it has long been evident that the latter was a limpid cover story. Big Business complied because the business culture of the corporate elites has become deeply confused and even corrupt.

  Their stocks being vastly overvalued owing to the Fed’s relentless and egregious monetary expansion, the C-suites have lost track of their #1 duty—profit maximization. The latter has been sacrificed to corporate virtue signaling, head pats from the politicians and invitations to White House soirees.

  These corporate “statesmen” get all the above psychic rewards, plus mighty fat stock option enrichment, too, because the Fed won’t see it any other way. They are pleased to call it “wealth effects” policy, when the truth is it is market-wrecking and wealth-destroying policy.

  The utter economic waste and injustice to employees, shareholders, and various other stakeholders brought on by the new corporate virtue signaling is now starkly evident in the global data that prove beyond a shadow of doubt that the whole Virus Patrol-dictated anti-Covid regime was completely wrong from the very beginning.

  Ironically, the smoking gun evidence comes from South Korea, which is a hot-house case of state-dominated capitalism, if there ever was one. The so-called Chaebols take their marching orders from the state in return for unfettered access to state fiscal subsidies and protectionist trade arrangements that shield them from the rigors of free market competition.

  In any event, South Korean businesses complied rigorously with the government’s absurd efforts to stamp out the Covid with what amounted to a corporate-administered totalitarian regime that actually made the Fauci’s and Scarf Ladies of Washington drool with envy.

  Accordingly, during 2020 and 2021, South Korea chased zero Covid with strict border controls, aggressive testing and tracing, and a vaccination campaign that reached nearly its entire adult population with mRNA (and some DNA) shots. In fact, the latest data show that 87% of the population is fully vaxxed and fully 60% have taken the booster.

  Still, the country didn’t quite get to zero. Infections and deaths rose slowly last year. But it came close enough that the usual highly credentialed “public health experts” held it up as a beacon of light:

  For instance, one seer argued,

  Maximum suppression helped buy time for scientists to get to work, and therefore find a sustainable exit from the crisis… The pivot from maximum suppression to mass vaccination was a rational and logical shift to achieve a successful transition out of the pandemic.

  Never have the so-called “experts” been so completely blindsided. Here is what has happened to the Covid-free nation of South Korea. Namely, the scoreboard suddenly went tilt:

  • The South Korean case rate has soared to an off-the-charts 7,800 per million, which is 86X the current US rate of 91 per million;

  • The current sky-high South Korean rate is 3.3X the all-time high experienced by the US at the Omicron peak in early 2022.

  In short, the entire South Korean Covid dragnet was for naught. When Omicron came along, a population within minimal natural immunity (from Covid infection) and maximum vaccination rates turned out to be a sitting duck for new infections.

  Of course, the Covid capitulation was just a warm-up for what the corporate world is doing with respect to the wartime frenzy loose in Washington and among the mainstream media.

  Take the case of Pepsi, for instance. It was the pioneering US company which went to Russia during the peak of the Soviet brutality against its own citizens, but is now run by a virtue-signaling CEO, who happens to be a fellow traveler of the World Economic Forum where he chairs one of its major committees.

  Back in the day when Pepsi first went to the Soviet Union—a place far more evil and barbaric than Putin’s Russia by a longshot—US companies had enough grit to fight back when Washington threatened to harm corporate interests and shareholder value.

  No longer, however. Pepsi’s CEO, one Ramon Laguarta, rashly decided to stop selling Pepsi in Russia, even before Washington could get around to issuing mandatory sanctions.

  So doing, Laguarta destroyed tens of billions of investment value that Pepsi had built up over five decades. And he did so, apparently, because the foolish CEO of McDonald’s closed its 850 stores in Russia first in order to get a pat on the head from the Biden administration.

  The Wall Street Journal, in fact, chronicled Pepsi’s betrayal of its shareholders quite succinctly:

  Pepsi in 1974 was among the first American brands to enter the Soviet Union, after a Cold War encounter in Moscow in 1959 when then-Vice President Richard Nixon offered a cup of the cola to Soviet Premier Nikita Khrushchev.

  By 2022, PepsiCo Inc. had 20,000 employees in Russia and it was the company’s third-largest market after the U.S. and Mexico. The company’s 24 plants and three R&D centers in Russia made soft drinks, potato chips, milk, yogurt, cheese, baby food and baby formula.

  The company’s top officials discussed the geopolitical crisis nearly every day. They were reluctant to shut down the Russian operations, according to people familiar with the matter. The leaders wanted to do right by their employees and consumers, and they were under pressure to join other Western companies making moves to penalize Russia. They also had a responsibility to shareholders.

  On the afternoon of March 8, McDonald’s said it was closing its restaurants in Russia. Then Coca-Cola said it was suspending its business there. Within half an hour, PepsiCo CEO Ramon Laguarta sent a memo to staff. The company would stop selling Pepsi and 7UP in Russia, he told them, but it wasn’t pulling out.

  Behind the scenes, the company’s leaders explored another action it could still take. PepsiCo could write down the value of its Russian business to zero, modeling the process it used for its Venezuelan operations in 2015.

  Why wantonly destroy shareholder value? Because the Fed-corrupted markets would ignore the writedowns, that’s why.

  Never mind that tens of billions of cumulative investment would be destroyed by Pepsi’s virtue signaling C-suite, its stock options-glutted executives didn’t care because the Fed-fattened stock market didn’t care, either.

  Needless to say, the so-called financial press has no compunction about cheerleading for this kind of destructive C-suite virtue-signaling. The above cited WSJ article was fulsome in its praise for companies acting on political, not economic, motives:

  This time, companies were more prepared. The pandemic had given leaders a crisis playbook. Years of corporate activism on issues such as climate change and racial discrimination had trained them to respond to a range of issues. The invasion took many by surprise, but they reacted quickly to what was a potentially fatal threat to their employees and also a reputational threat to their businesses.

  When President Vladimir Putin launched the attack on Feb. 24, and pressure from governments and employees began to build, as well as escalating sanctions on Russia, companies moved with unusual speed and a sense of collective action. The result was a corporate participation in geopolitics with little recent precedent.

  Well, they got that right, but are clueless about the danger. Namely, that neither capitalism nor democracy can thrive when business becomes a subservient tool of the state and a vessel for the expression of political fashion and social conformity.

  Moreover, the idea that these capitulatory actions were undertaken by the C-suites for the purpose of reputational protection is just flat-out nonsense. Nobody was going to stop buying Pepsi and Lay’s potato chips because the parent company had a 50-year old business in Russia.

  Indeed, the sheer obsequiousness and hypocrisy of the C-suites defies credulity. For instance, the Volkswagen CEO shut down his Russian plants for the practical reason of lack of parts, but nevertheless explained his action with a phony bow:

  Within days of the invasion, Mr. Diess shut down or curtailed production at some of his biggest factories in Europe because the plants couldn’t get wiring harnesses from suppliers in Ukraine. The company later closed down production at its car plants in Russia, citing its “great dismay and shock” over the invasion.

  At the end of the day, this kind of corporate politicking is why the Fed has run rampant printing money and generating vast asset bubbles like never before in history. The politically correct C-suites of the Fortune 500, which should be on the warpath against the Fed’s rampant monetary debasement, have not said a peep about the Fed’s destructive digression into madcap money printing.

  The fact is, any one paying half attention could see that the Eccles Building has been blind to the effects of is destructive Keynesian policies for years—at least reaching back to this gob-smacker from Ben Bernanke on the eve of the Great Financial Crisis:

  Thus, the Fed’s minutes from January 2008 quoted Chairman Bernanke as reassuring that—

  “The Federal Reserve is not currently forecasting a recession.”

  That’s right. By the official dating of the NBER (National Bureau Of Economic Research) the start of the official recession was December 2007!

  That is to say, if Ben Bernanke still didn’t know a recession was underway one month after it started, why would anyone think the Fed has a clue about the state of the domestic and global economy nor the capability and wherewithal to micromanage its course into even the near-term future?

  Nor was the 2008 recession a unique occurrence. The table below was put together by the astute Lance Roberts and it makes clear that the real (inflation-adjusted) economic growth rate even on the eve of recession does not always give a signal as to what is coming around the macroeconomic bend. As Roberts noted,

  Each of the dates above shows the growth rate of the economy immediately prior to the onset of a recession. You will note in the table above that in 7 of the last 10 recessions, real GDP growth was running at 2% or above. In other words, according to the media, there was NO indication of a recession.

  But the next month one began.

  

  With respect to the current cycle, Roberts further noted that the 2-month 2020 recession never really ended, and that we may be on the cusp of a relapse, notwithstanding the false boom stimulated by Washington print-borrow-and spending bacchanalia last year:

  While the NBER declared the 2020 recession the shortest in history, such does not preclude another recession from occurring sooner than later. All the excesses that existed before the last recession have worsened since then.

  Given the dynamics for an economic recession remain, it will only require an unexpected, exogenous event to push the economy back into contraction.”

  And also one to push the top 1% and 10% into a world of hurt. That’s because the latter account for 85% of financial assets and 75% of household net worth, respectively.

  So when the great bubble collapse finally comes, the wailing and gnashing of teeth among the wealthy households —whose brokerage accounts have been fattened beyond sanity by the Fed’s egregious inflation of financial assets— will be excruciating.

  Perhaps then the C-suites will be awakened from their slumbering compliance.

  Or at least, we can hope.

  Tyler Durden
  Sun, 03/27/2022 – 18:45

• RV Shipments Soar To Record For This Time Of Year 
  RV Shipments Soar To Record For This Time Of Year 

  New RV shipment data from the RV Industry Association’s (RVIA) February 2022 survey of manufacturers revealed demand for this time of year is at some of the highest levels ever. 

  RVIA said total RV shipments last month topped 53,722 units, an increase of 11.3% compared to the 48,286 units shipped during the same month last year. RV shipments jumped 13.6% through February versus the same point last year with 107,012 wholesale shipments.

  

  Red hot demand for RVs continues through 1Q22, well above a ten-year average. 

  

  “Our latest shipment report shows the RV industry is continuing its strong start to 2022,” said RVIA President & CEO Craig Kirby. 

  “While the pandemic has had an impact on people’s desire to purchase an RV, our data shows the increased interest in RVing is being driven by changing attitudes around the increased importance consumers are placing on the health benefits of getting outdoors. We expect this trend towards an active outdoor lifestyle to continue into the foreseeable future, which bodes well for the RV industry,” Kirby continued. 

  We correctly pointed out last July, “Strong Demand For RVs Expected To Roll Into 2022”, and that’s precisely what’s happening as the virus pandemic has redefined how people travel. Forget dangerous cities where violent crime is soaring, Americans want to travel the great outdoors, and by doing so, they need an RV. 

  Tyler Durden
  Sun, 03/27/2022 – 18:20

• Sanctions On Russia May Achieve Opposite Of Biden's Stated Long-Term Goals
  Sanctions On Russia May Achieve Opposite Of Biden’s Stated Long-Term Goals

  Authored by Dimitri Simes Jr. via Glenn Greenwald’s Outside Voices (emphasis ours),

  In Russia, sanctions have taken a bite out of the Russian economy, but interviews and data suggest they cannot fulfill the West’s strategic motives for imposing them…

  

  During a visit to Brussels for the NATO summit on Thursday, President Joe Biden unveiled his latest Russia sanctions package. Biden told reporters that the U.S. and the European Union had agreed to sanction more than 300 Russian lawmakers and oligarchs, as well as several Russian defense companies. 

  Over the past month, Russia has overtaken both Iran and North Korea to become the most sanctioned country in the world. Some of the measures adopted by the U.S. and its European allies include the freezing nearly half of the Russian central bank’s $640 billion financial reserves, expelling several of Russia’s largest banks from the SWIFT global payment system, imposing export controls aimed at limiting Russia’s access to advanced technologies, closing down their airspace and ports to Russian planes and ships, and instituting personal sanctions against senior Russian officials and high-profile tycoons. 

  Multinational corporations have joined Western governments in cutting economic ties with Russia. Since the start of the Kremlin’s military campaign in Ukraine on February 24, more than 450 companies ranging from Apple to McDonalds have shut down their operations in Russia, according to a database compiled by Yale University’s Chief Executive Leadership Institute. 

  But what exactly are the goals of the new sanctions regime against Moscow? Biden has stated that its primary objectives are “to impose severe costs on the Russian economy, both immediately and over time” and to turn Russian President Vladimir Putin into a “pariah on the international stage.” The New York Times has reported, citing current and former U.S. officials, that another aim is to “create domestic pressure on Putin to halt his war in Ukraine.”

  So far, Western sanctions have succeeded in delivering a serious blow to the Russian economy. The Russian ruble has lost almost 30% of its value against the dollar since February 24, a development which has caused prices on imported goods to skyrocket. Further exacerbating Russia’s inflation problem is a wave of panic buying in major cities across the country, with shoppers seeking to stock up on essentials ranging from basic food products to medicines. At the same time, Russian lawmakers have estimated that nearly 96,000 workers have been put on leave following the mass exodus of Western corporations. 

  Despite these economic costs, however, there is so far little sign that Western sanctions are changing Putin’s political calculus on Ukraine. If anything, there are some reasons to believe that growing sanctions pressure could encourage the Russian president to harden his stance. 

  Fyodor Lukyanov, chairman of the Council of Foreign and Defense Policy, a research group that advises the Russian government, explained to this page that the high costs inflicted on the Russian economy by Western sanctions have put significant pressure on Moscow to compensate for them with military successes. Consequently, the Kremlin could very well respond to increased sanctions pressure by doubling down on its military operation in Ukraine instead of seeking a diplomatic way out. 

  “If the West continues to impose new sanctions, then Russia will have no other option but to also raise the stakes because there is no room for retreat,” Lukyanov said. “There is no option in the current situation that would allow us to smoothly take a step back without suffering catastrophic political consequences.” 

  A similar argument was made by Dmitry Suslov, a professor of international relations at National Research University Higher School of Economics, one of Russia’s most elite universities. Suslov told us that there was currently a divide within the Russian political establishment between supporters of a diplomatic settlement with Ukraine and hawkish elements who want to continue fighting until the Russian military succeeds in bringing about “regime change” in Kyiv. 

  “Western sanctions right now are the central question,” he explained. “If the West makes it clear that sanctions will at least be partially removed once the military operation comes to an end, then the compromise faction will be strengthened. However, if Moscow gets the sense that the West is waging ‘total economic war’ against Russia, then Putin will have little incentive to not go all the way.” 

  Much of the Kremlin’s response to sanctions so far has centered on mitigating the damage to the Russian economy rather than hitting back at the West. For example, the Russian central bank has sought to keep the value of the ruble from sliding by hiking up its key interest rate to 20% and limiting foreign currency exchanges. 

  Yet both Lukyanov and Suslov predicted that Moscow could introduce its own export controls if tensions with the West continue to escalate. Although Russia’s economy ($1.65 trillion) is much smaller than that of the U.S. ($22.9 trillion) and the European Union ($17.1 trillion), Moscow is a major global supplier of key commodities such as oil, natural gas, grains, timber, and rare earth metals used in the production of computer chips, electric vehicles, and airplanes. 

  To be sure, such a move would also significantly damage the Russian economy by depriving it of much needed revenue, but Lukyanov and Suslov suggested that it’s a price the Kremlin may be willing to pay if it concludes that the West will maintain its sanctions against Russia indefinitely. 

  What about the impact of sanctions on Russian public opinion? It is difficult to fully assess since the Kremlin has tightly regulated domestic media coverage of the conflict in Ukraine, detained thousands of anti-war protestors, and even introduced new legislation that threatens jail time for those who spread “fake news” about the Russian military. Under such circumstances, many critics of the government’s actions in Ukraine will understandably choose to remain silent. 

  However, based on the available polling data from a diverse range of sources…

  Subscribers to Outside Voices can click here to read the rest…

  NOTE FROM GLENN GREENWALD: As is true with all of the Outside Voices freelance articles that we publish here, we edit and fact-check the content to ensure factual accuracy, but our publication of an article or op-ed does not necessarily mean we agree with all or even any of the views expressed by the writer, who is guaranteed editorial freedom here. The objective of our Outside Voices page is to provide a platform for high-quality reporting and analysis that is lacking within the gates of corporate journalism, and to ensure that well-informed, independent reporters and commentators have a platform to be heard.

  Tyler Durden
  Sun, 03/27/2022 – 17:55

• Seven Years Later: #OscarsStillSoWhite?
  Seven Years Later: #OscarsStillSoWhite?

  Out of the 35 nominations for the Big Five categories of this year’s 94th Academy Awards, only seven include participants of Black, Asian or Latin American ethnic backgrounds. The Big Five, generally seen as the most prestigious categories at the Oscars, are comprised of Best Picture, Best Director, Best Actor, Best Actress and Best Screenplay, both adapted and original. As Statista’s Florian Zandt shows in the chart below, this is largely in line with the share of minority nominees combined between 2015 and 2021.

  

  You will find more infographics at Statista

  This issue appears to be most prevalent in the award category Best Actress, where only five women from Black or Latin American backgrounds were nominated and none of them won between 2015 and 2021. Concerning Best Director and Best Picture, 2019 saw a landmark victory for South Korean director Bong Joon-Ho, who won both awards with his black comedy thriller Parasite. Joon-Ho and his co-writer Han Jin-Won were the first people of Asian descent ever to win screenwriting and Best Picture awards at the Oscars. A Latin American mainstay in terms of Academy Award nominations is Guillermo del Toro, who was nominated for three awards since 2015 and is up for another in the Best Picture category with Nightmare Alley this year.

  The idea that this share of nominees doesn’t reflect the demographics of the United States and serves to underline the minority status of non-white voices in the movie industry led to the #oscarssowhite movement in 2015, which gained increased traction in 2016 after the Academy allegedly failed to address the concerns voiced by proponents of this movement. The issue that the movie industry doesn’t reflect general society has also been backed by research in the past. For example, according to a study by the University of California, 26 percent of movie writers and 25 percent of movie directors had a minority background in 2020, while the group of people with singular Hispanic, Latin American, Black or African American backgrounds alone comprised 31 percent of the U.S. population in the same year.

  One group that’s particularly absent and isn’t talked about at length are actors, directors and writers with a distinctly Arabian background. In 2021, for example, only two films by Arabian filmmakers were nominated, Tunisian director Kaouther Ben Hania’s The Man Who Sold His Skin and The Present by Palestinian filmmaker Farah Nabulsi.

  But, as Scott Johnson writes at LAMag.com, the Academy has a plan to ‘fix’ this…

  Have you heard about Aperture 2025?

  It may sound like a Roland Emmerich sci-fi movie, but it’s actually more frightening. And much more controversial. It’s the Academy of Motion Picture Arts and Sciences’s latest initiative to make Hollywood more equitable and diverse – more woke – by changing the rules by which films are eligible for Best Picture nominations.

  Here’s how it works: Starting in 2024, producers will be required to submit a summation of the race, gender, sexual orientation, and disability status of members of their movie’s cast and crew. If a particular movie does not have enough people of color or disabled people or gays or lesbians working on the set—and what is “enough” will be determined by a knotty tangle of byzantine formularies—then that movie will no longer be eligible for an Oscar.

  Not surprisingly, the plan is not being universally applauded in Hollywood. Critics say it’s invasive, anticreative, opens the door to privacy issues, and is spectacularly unfair to actors and crew members, who may want to keep their sexual orientation or health profiles to themselves, not to mention to producers and directors who have enough to worry about while shooting a movie than to be saddled with the thankless task of tallying up the identity markers of their creative partners. 

  “I mean, why aren’t animals in this?” sneers one industry insider. “What if the main character is a horse?”

  Last year, the Oscars drew an all-time low of 9.85 million viewers – less than what an episode of The Big Bang Theory used to get. Granted, the pandemic and the resulting dearth of theatrical releases contributed to the decline, but the truth is, Oscar ratings began plummeting long before COVID-19. At its height in the 1990s, the ceremony was pulling in as many as 55 million viewers in the United States…

  …

  There’s no shortage of theories to explain why viewers are turning off to the Oscars: The shrinking of movie actors as cultural icons (as TikTok and Instagram stars become the ascendant media gods); the reluctance of the Academy to update the ceremony, which has remained substantially unchanged since it was first broadcast in 1953; the growing chasm between the esoteric tastes of the Academy’s voting members (who this year nominated Drive My Car, a Japanese drama about a grieving theater director putting on a production of Uncle Vanya in Hiroshima) and the preferences of the wider theater-going public (who likes Spider-Man). 

  

  Whatever the reason, the conclusion is inescapable: The Oscars are tanking.

  Tyler Durden
  Sun, 03/27/2022 – 17:30

Digest powered by RSS Digest