Today’s News 2nd February 2024

• Escobar: Will The Hegemon Ever Accept A New Westphalian World Order?
  Escobar: Will The Hegemon Ever Accept A New Westphalian World Order?

  Authored by Pepe Escobar,

  A new book by scholar Glenn Diesen, The Ukraine War & The Eurasian World Order,  out in mid-February, asks the make-or-break question of the young 21st century: will the Hegemon accept a new geopolitical reality, or will it go Captain Ahab on Moby Dick and drag us all to the depths of a – nuclear – abyss?

  

  An extra touch of poetic beauty is that the analysis is conducted by a Scandinavian. Diesen is a professor at the University of Southeast Norway (USN) and an associate editor at the Russia in Global Affairs journal. He had a stint at the Higher School of Economics in Moscow, working closely with the inimitable Sergey Karaganov.

  It goes without saying that European MSM won’t touch him; rabid yells – “Putinista!” – prevail, including in Norway, where he’s been a prime target of cancel culture.

  That’s irrelevant, anyway. What matters is that Diesen, an affable, unfailingly polite man and an ultra-sharp scholar, is aligned with the rarified cream of the crop who is asking the questions that really matter; among them, whether we are heading towards a Eurasian-Westphalian world order.

  Apart from a meticulous deconstruction of the proxy war in Ukraine that devastatingly debunks, with proven facts, the official NATOstan narrative, Diesen offers a concise, easily accessible mini-history of how we got here.

  He starts to make the case harking back to the Silk Roads: “The Silk Road was an early model of globalization, although it did not result in a common world order as the civilizations of the world were primarily connected to nomadic intermediaries.”

  The demise of the Heartland-based Silk Road, actually roads, was caused by the rise of the thalassocratic European powers reconnecting the world in a different way. Yet the hegemony of the collective West could only be fully achieved by applying Divide and Rule across Eurasia.

  We did not in fact had “five centuries of western dominance”, according to Diesen: it was more like three, or even two (see, for instance, the work of Andre Gunder Frank). In a historical Long View that barely registers.

  What is indeed The Big Picture now is that “the unique world order” produced by controlling “the vast Eurasian continent from the maritime periphery is coming to an end”.

  Mackinder is hit by a train

  Diesen hits the nail on the head when it comes to the Russia-China strategic partnership – on which the overwhelmingly majority of European intellectuals is clueless (a crucial exception is French historian, demographer and anthropologist Emmanuel Todd, whose latest book I analyzed here.)

  With a lovely on the road formulation, Diesen shows how “Russia can be considered the successor of the Mongolian nomads as the last custodian of the Eurasian land corridor”, while China revives the Ancient Silk Roads “with economic connectivity”. In consequence, “a powerful Eurasian gravitational pull is thus reorganizing the supercontinent and the wider world.”

  Poviding context, Diesen needs to engage in an obligatory detour to the basics of the Great Game between the Russian and British empires. What stands out is how Moscow already was pivoting to Asia all the way to the late 19th century, when Russian Finance Minister Sergei Witte started to develop a groundbreaking road map for a Eurasia political economy, “borrowing from Alexander Hamilton and Friedrich List.”

  Witte “wanted to end Russia’s role as an exporter of natural resources to Europe as it resembled ‘the relations of colonial countries with their metropolises’”.

  And that implies going back to Dostoyevsky, who argued that “Russians are as much Asiatics as European. The mistake of our policy for the past two centuries has been to make the people of Europe believe that we are true Europeans (…) It will be better for us to seek alliances with the Asiatics.” Dostoyevsky meets Putin-Xi.

  Diesen also needs to go through the obligatory references to Mackinder’s “heartland” obsession – which is the basis of all Anglo-American geopolitics for the past hundred and twenty years.

  Mackinder was spooked by railway development – especially the Trans-Siberian by the Russians – as it enabled Moscow to “emulate the nomadic skills of the Scythians, Huns and Mongols” that were essential to control most of Eurasia.

  Mackinder was particularly focused on railways acting “chiefly as feeders to ocean-going commerce”. Ergo, being a thalassocratic power was not enough: “The heartland is the region to which under modern conditions, sea power can be refused access.”

  And that’s what leads to the Rosetta Stone of Anglo-American geopolitics: to “prevent the emergence of a hegemon or a group of states capable of dominating Europe and Eurasia that could threaten the dominant maritime power.”

  That explains everything from WWI and WWII to the permanent NATO obsession in preventing a solid rapprochement between Germany and Russia, by any means necessary.

  The Little Multipolar Helmsman

  Diesen offers a succinct perspective of Russian Eurasianists of the 1920s such as Trubetskoi and Savitsky, who were promoting an alternative path to the USSR.

  They conceptualized that with Anglo-American thalassocracy applying Divide and Rule in Russia, what was needed was a Eurasian political economy based on mutual cooperation: a stark prefiguration of the Russia-China drive to multipolarity.

  Savitsky in fact could have been writing today: “Eurasia has previously played a unifying role in the Old World. Contemporary Russia, absorbing this tradition”, must abandon war as a method of unification.

  Cue to post-Maidan in 2014. Moscow finally got the message that trying to build a Greater Europe “from Lisbon to Vladivostok” was a non-starter. Thus the new concept of Greater Eurasian Partnership was born. Sergey Karaganov, with whom Diesen worked at the Higher School of Economics, was the father of the concept.

  Greater Eurasia Partnership repositions Russia “from the periphery of Europe and Asia to the center of a large super-region.” In short, a pivot to the East – and the consolidation of the Russia-China partnership.

  Diesen dug up an extraordinary passage in the Selected Works of Deng Xiaoping, proving how the Little Helmsman in 1990 was a visionary prefiguring multipolar China:

  “In the future when the world becomes three-polar, four-polar or five-polar, the Soviet Union, no matter how weakened it may be and even if some of its republics withdraw from it, will still be one pole. In the so-called multipolar world, China too will be a pole (…) Our foreign policies remain the same: first, opposing hegemonism and power politics and safeguarding world peace; and second, working to establish a new international political order and a new international economic order.”

  Diesen breaks it down, noting how China has to a certain extent “replicated the three-pillared American System of the early 19th century, in which the U.S. developed a manufacturing base, physical transportation infrastructure, and a national bank to counter British economic hegemony.”

  Enter China’s Belt and Road Initiative (BRI); the Shanghai Cooperation Organization (SCO); the AIIB; the de-dollarization drive; the China International Payment System (CIPS); increased use of yuan in international trade; the use of national currencies; Made in China 2025; The Digital Silk Road; and last but not least, BRICS 10 and the NDB, the BRICS development bank.

  Russia matched some of it – as in the Eurasia Development Bank (EDB) of the Eurasia Economic Union (EAEU) and in advancing the harmonization of financial arrangements of BRI and EAEU projects via the SCO.

  Diesen is one of the very few Western analysts who actually understands the drive to multipolarity: “BRICS+ is anti-hegemony and not anti-Western, as the objective is to create a multipolar system and not assert collective dominance over the West.”

  Diesen also contends that the emerging Eurasian World Order is “seemingly based on conservative principles.” That’s correct, as the Chinese system is drenched in Confucianism (social integration, stability, harmonious relationships, respect for tradition and hierarchy), part of the keen sense of belonging to a distinct, sophisticated civilization: that’s the foundation of Chinese nation-building.

  Can’t bring Russia-China down

  Diesen’s detailed analysis of the Ukraine proxy war, “a predictable consequence of an unsustainable world order”, is extrapolated to the battleground where the future, new world order is being decided; it is “either global hegemony or Westphalian multipolarity.”

  Everyone with a brain by now knows how Russia absorbed and re-transformed everything thrown by the collective West after the start of the Special Military Operation (SMO). The problem is the rarified plutocracy that really runs the show will always refuse to acknowledge reality, as Diesen frames it: “Irrespective of the outcome of the war, the war has already become the graveyard of liberal hegemony.”

  The overwhelming majority of the Global South clearly sees that even as what Ray McGovern indelibly defined as MICIMATT (military-industrial-congressional-intelligence-media-academia-think tank complex) cast the Russia-China partnership as the main “threats” – in reality those that created the “gravitational pull to reorganize the world order towards multipolarity” – they can’t bring Russia-China down geoeconomically.

  So there’s no question “the conflicts of the future world order will continue to be militarized.” That’s where we are at the crossroads. There will be no peaceful road towards to Westphalian world order. Fasten your seat belts – it’s gonna be a bumpy ride.

  Tyler Durden
  Thu, 02/01/2024 – 23:40

• Ukraine Publishes Video Showing Major Sea Drone Attack Of Russian Ship Off Crimea
  Ukraine Publishes Video Showing Major Sea Drone Attack Of Russian Ship Off Crimea

  Even as the frontlines are stalled and look bleak, Ukrainian forces have continued to strike both deep into Russian territory and against naval assets along the Crimea coast. These attacks have done nothing to change the tide of the war from a strategic standpoint, but it seems borne out of Kiev’s desire to inflict revenge on Russia and to keep up pressure on President Putin. Ukraine’s military intelligence (GUR) on Thursday announced that sea drones attacked and sank a Russian corvette in the Black Sea overnight.

  The GUR claimed that the ship, identified as the Russian Tarantul-class Ivanovets missile corvette, was taken out while traveling in the western part of Crimea, near Lake Donuzlav. Ukraine Foreign Ministry official Olexander Scherba called the attack “impressive” and told the BBC, “At 03:45 [01:45 GMT] there was the first hit and at 04:00 the whole crew was evacuated already. So there was no chance at all that this vessel would be saved.”

  Ukraine’s military intelligence subsequently released a video of the suicide sea drones approaching the ship. The video indicates that the Ivanovets received “direct hits to its hull” and was irreparably damaged. There’s the possibility that Ukraine may have had help from US or UK intelligence services in the attack (as with other high-level operations involving advanced military tech). Ukraine further said the vessel sunk afterward. Watch below:

  Tyler Durden
  Thu, 02/01/2024 – 23:20

• Terror By Night: Who Pays The Price For Botched SWAT Team Raids? We Do…
  Terror By Night: Who Pays The Price For Botched SWAT Team Raids? We Do…

  Authored by John & Nisha Whitehead via The Rutherford Institute,

  “We’re all potential victims.”

  – Peter Christ, retired police officer

  Sometimes ten seconds is all the warning you get.

  Sometimes you don’t get a warning before all hell breaks loose.

  Imagine it, if you will: It’s the middle of the night. Your neighborhood is in darkness. Your household is asleep. Suddenly, you’re awakened by a loud noise.

  Barely ten seconds later, someone or an army of someones has crashed through your front door.

  The intruders are in your home.

  Your heart begins racing. Your stomach is tied in knots. The adrenaline is pumping through you.

  You’re not just afraid. You’re terrified.

  Desperate to protect yourself and your loved ones from whatever threat has invaded your home, you scramble to lay hold of something—anything—that you might use in self-defense. It might be a flashlight, a baseball bat, or that licensed and registered gun you thought you’d never need.

  You brace for the confrontation.

  Shadowy figures appear at the doorway, screaming orders, threatening violence, launching flash bang grenades.

  Chaos reigns.

  You stand frozen, your hands gripping whatever means of self-defense you could find.

  Just that simple act—of standing frozen in fear and self-defense—is enough to spell your doom.

  The assailants open fire, sending a hail of bullets in your direction.

  In your final moments, you get a good look at your assassins: it’s the police.

  

  Brace yourself, because this hair-raising, heart-pounding, jarring account of a SWAT team raid is what passes for court-sanctioned policing in America today, and it could happen to any one of us or our loved ones.

  Nationwide, SWAT teams routinely invade homes, break down doors, kill family pets (they always shoot the dogs first), damage furnishings, terrorize families, and wound or kill those unlucky enough to be present during a raid.

  No longer reserved exclusively for deadly situations, SWAT teams are now increasingly being deployed for relatively routine police matters such as serving a search warrant, with some SWAT teams being sent out as much as five times a day.

  SWAT teams have been employed to address an astonishingly trivial array of so-called criminal activity or mere community nuisances: angry dogs, domestic disputes, improper paperwork filed by an orchid farmer, and misdemeanor marijuana possession, to give a brief sampling.

  Police have also raided homes on the basis of mistaking the presence or scent of legal substances for drugs. Incredibly, these substances have included tomatoes, sunflowers, fish, elderberry bushes, kenaf plants, hibiscus, and ragweed. In some instances, SWAT teams are even employed, in full armament, to perform routine patrols.

  These raids, which might be more aptly referred to as “knock-and-shoot” policing, have become a thinly veiled, court-sanctioned means of giving heavily armed police the green light to crash through doors in the middle of the night.

  No-knock raids, a subset of the violent, terror-inducing raids carried out by police SWAT teams on unsuspecting households, differ in one significant respect: they are carried out without police even having to announce themselves.

  Warning or not, to the unsuspecting homeowner woken from sleep by the sounds of a violent entry, there is no way of distinguishing between a home invasion by criminals as opposed to a police mob. In many instances, there is little real difference.

  According to an in-depth investigative report by The Washington Post, “police carry out tens of thousands of no-knock raids every year nationwide.”

  While the Fourth Amendment requires that police obtain a warrant based on probable cause before they can enter one’s home, search and seize one’s property, or violate one’s privacy, SWAT teams are granted “no-knock” warrants at high rates such that the warrants themselves are rendered practically meaningless.

  In addition to the terror brought on by these raids, general incompetence, collateral damage (fatalities, property damage, etc.) and botched raids are also characteristic of these SWAT team raids.

  In some cases, officers misread the address on the warrant. In others, they simply barge into the wrong house or even the wrong building. In another subset of cases, SWAT teams have conducted multiple, sequential raids on wrong addresses; executed search warrants despite the fact that the suspect is already in police custody; or conducted a search of a building where the suspect no longer resides.

  That appeared to be the case in Ohio, when a botched SWAT team raid in pursuit of stolen guns at a home where the suspects no longer resided resulted in a 17-month-old baby with a heart defect and a breathing disorder ending up in the ICU with burns around the eyes, chest and neck. In that Jan. 10, 2024, incident, police waited all of six seconds after knocking on the door before using a battering ram to break in and simultaneously launch two flash-bang grenades into the home. The baby’s mother, having lived in the house for a week, barely had time to approach the door before she was grabbed at gunpoint, handcuffed and hustled outside. Only later did police allow her to enter the home to check on the baby, who had been hooked up to a ventilator near the window that police shattered before deploying the flash grenades. 

  Aiyana Jones is dead because of a SWAT raid gone awry. The 7-year-old was killed after a Detroit SWAT team—searching for a suspect—launched a flash-bang grenade into her family’s apartment, broke through the door and opened fire, hitting the little girl who was asleep on the living room couch. The cops weren’t even in the right apartment.

  Exhibiting a similar lack of basic concern for public safety, a Georgia SWAT team launched a flash-bang grenade into the house in which Baby Bou Bou, his three sisters and his parents were staying. The grenade landed in the 2-year-old’s crib, burning a hole in his chest and leaving him with scarring that a lifetime of surgeries will not be able to easily undo.

  The horror stories have become legion in which homeowners are injured or killed simply because they mistook a SWAT team raid by police for a home invasion by criminals.

  That’s exactly what happened to a 16-year-old Alabama boy. Mistaking a pre-dawn SWAT team raid for a home invasion, the boy grabbed a gun to protect his family only to be gunned down by police attempting to execute a search warrant for drugs. The boy’s brother, not home at the time of the raid, was later arrested with 8 grams of marijuana.

  Then there was Jose Guerena, the young ex-Marine who was killed after a SWAT team kicked open the door of his Arizona home during a drug raid and opened fire. According to news reports, Guerena, 26 years old and the father of two young children, grabbed a gun in response to the forced invasion but never fired. In fact, the safety was still on his gun when he was killed. Police officers were not as restrained. The young Iraqi war veteran was allegedly fired upon 71 times. Guerena had no prior criminal record, and the police found nothing illegal in his home.

  All too often, botched SWAT team raids have resulted in one tragedy after another for those targeted with little consequences for law enforcement.

  The problem, as one reporter rightly concluded, is “not that life has gotten that much more dangerous, it’s that authorities have chosen to respond to even innocent situations as if they were in a warzone.”

  A study by a political scientist at Princeton University concludes that militarizing police and SWAT teams “provide no detectable benefits in terms of officer safety or violent crime reduction.” The study, the first systematic analysis on the use and consequences of militarized force, reveals that “police militarization neither reduces rates of violent crime nor changes the number of officers assaulted or killed.”

  SWAT teams, designed to defuse dangerous situations such as those involving hostages, were never meant to be used for routine police work targeting nonviolent suspects, yet they have become intrinsic parts of federal and local law enforcement operations.

  There are few communities without a SWAT team today.

  In 1980, there were roughly 3,000 SWAT team-style raids in the US.

  Incredibly, that number has since grown to more than 80,000 SWAT team raids per year, often for routine law enforcement tasks.

  In the state of Maryland alone, 92 percent of 8200 SWAT missions were used to execute search or arrest warrants.

  Police in both Baltimore and Dallas have used SWAT teams to bust up poker games.

  A Connecticut SWAT team swarmed a bar suspected of serving alcohol to underage individuals.

  In Arizona, a SWAT team was used to break up an alleged cockfighting ring.

  An Atlanta SWAT team raided a music studio, allegedly out of a concern that it might have been involved in illegal music piracy.

  And then there are the SWAT team raids arising from red flag gun laws, which gives police the authority to preemptively raid homes of people “suspected” of being threats who might be in possession of a gun, legal or otherwise.

  With more states adding red flag gun laws to their books, what happened to Duncan Lemp—who was gunned down in his bedroom during an early morning, no-knock SWAT team raid on his family’s home—could very well happen to more people.

  At 4:30 a.m. on March 12, 2020, in the midst of a COVID-19 pandemic that had most of the country under a partial lockdown and sheltering at home, a masked SWAT team—deployed to execute a “high risk” search warrant for unauthorized firearms—stormed the suburban house where 21-year-old Duncan lived with his parents and 19-year-old brother. The entire household, including Lemp and his girlfriend, was reportedly asleep when the SWAT team directed flash bang grenades and gunfire through Lemp’s bedroom window. Lemp was killed and his girlfriend injured.

  No one in the house that morning, including Lemp, had a criminal record.

  No one in the house that morning, including Lemp, was considered an “imminent threat” to law enforcement or the public, at least not according to the search warrant.

  So, what was so urgent that militarized police felt compelled to employ battlefield tactics in the pre-dawn hours of a day when most people are asleep in bed, not to mention stuck at home as part of a nationwide lockdown?

  According to police, they were tipped off that Lemp was in possession of “firearms.”

  Thus, rather than approaching the house by the front door at a reasonable hour in order to investigate this complaint—which is what the Fourth Amendment requires—police instead strapped on their guns, loaded up their flash bang grenades and acted like battle-crazed warriors.

  This is what happens when you use SWAT teams to carry out routine search warrants.

  These incidents underscore a dangerous mindset in which the citizenry (often unarmed and defenseless) not only have less rights than militarized police, but also one in which the safety of the citizenry is treated as a lower priority than the safety of their police counterparts (who are armed to the hilt with an array of lethal and nonlethal weapons).

  Yet it wasn’t always this way.

  There was a time in America when a person’s home was a sanctuary, safe and secure from the threat of invasion by government agents, who were held at bay by the dictates of the Fourth Amendment, which protects American citizens from unreasonable searches and seizures.

  The Fourth Amendment, in turn, was added to the U.S. Constitution by colonists still smarting from the abuses they had been forced to endure while under British rule, among these home invasions by the military under the guise of “writs of assistance.” These writs gave British soldiers blanket authority to raid homes, damage property and wreak havoc for any reason whatsoever, without any expectation of probable cause.

  We have come full circle to a time before the American Revolution when government agents—with the blessing of the courts—could force their way into a citizen’s home, with seemingly little concern for lives lost and property damaged in the process.

  If these aggressive, excessive police tactics have also become troublingly commonplace, it is in large part due to judges who largely rubberstamp the warrant requests based only on the word of police; police who have been known to lie or fabricate the facts in order to justify their claims of “reasonable suspicion” (as opposed to the higher standard of probable cause, which is required by the Constitution before any government official can search an individual or his property); and software that allows judges to remotely approve requests using computers, cellphones or tablets.

  This sorry state of affairs is made even worse by the U.S. Supreme Court, which tends to shield police under the guise of qualified immunity. As Reuters concluded, “the Supreme Court has built qualified immunity into an often insurmountable police defense.”

  Rubber-stamped, court-issued warrants for no-knock SWAT team raids have become the modern-day equivalent of colonial-era writs of assistance.

  Given President Biden’s determination to expand law enforcement and so-called crime prevention at taxpayer expense, our privacy, property and security may be in even greater danger from government intrusion.

  Be warned: as I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, the American police state has become a powder keg waiting for a lit match.

  Tyler Durden
  Thu, 02/01/2024 – 23:00

• January Jobs Preview: Market Wants A Miss As It Raises Rate Cut Odds
  January Jobs Preview: Market Wants A Miss As It Raises Rate Cut Odds

  With the QRA, Fed and all megatech earnings now in the rearview mirror, the busiest week of the quarter comes to a merciful end tomorrow, but first we have to survive the January payrolls report. Here is what economists believe the report will show:

  • Nonfarm payrolls are expected to grow by 185k, a drop from December’s 216k,
  • The unemployment rate is forecast to tick up to 3.8% from 3.7%.
  • Average hourly earnings are seen rising 0.3% M/M in January, easing from the 0.4% pace in December; the Y/Y increase is expected to remain unchanged at 4.1%.

  According to Newsquawk, labor market proxies have been leaning soft with a miss in ADP and a rise in Challenger layoffs (since ADP is always the polar opposite of the BLS print, expect the jobs number to be a multiple-sigma beat).

  Elsewhere, the initial jobless claims data for the week that coincides with the usual BLS survey window saw a notable decline, although it was likely weather-related with more recent initial claims figures rising, whereas the continued claims data rose. However, the December JOLTS data rose above expectations while the quits rate was unchanged (this data, however, lags by a month). Analysts highlight the unchanged quits rate signals slower wage gains, which was also evident in the softer US Employment Cost Index report for Q4. Note, the BLS will also be releasing annual revisions to the establishment survey, but it will not provide revisions to the household survey despite adopting a new methodology for the January figures, thus, the January household survey data will not be directly comparable with data for December 2023 or earlier periods.

  Regarding Fed implications, Fed Chair Powell stated the base case is not for a March rate cut but he did add that if the labour market saw an unexpected weakening, the Fed would be prepared to cut sooner. A dire report which takes the Fed off their base case would likely help put a March rate cut in play, providing the disinflation process continues, but there is still plenty of data due between now and March, including another NFP and PCE report, as well as two CPI reports.

  Some more details on each of these:

  EXPECTATIONS:

  • Headline jobs added are expected to grow by 185k in January, down from the 216k gain in December although analyst forecasts are wide, ranging between 120-300k.
    • Private payrolls are expected to rise by 170k, up from the 164k added in the prior month.
      • Manufacturing payrolls are expected to add 5k jobs vs 6k in December.

  

  • The unemployment rate is expected to tick up to 3.8% from 3.7%, with analysts forecasting between 3.7-3.9%.
    • Note, in December the labour force participation saw a notable decline to 62.5% from 62.8%.
  • On wages, average hourly earnings are seen rising 0.3%, easing from the prior 0.4%.
    • The Y/Y earnings are expected to rise by 4.1%, maintaining the pace in January, although forecasts range between 4.0 and 4.2%.

  One of the notable upside outliers, is Goldman which in its preview writes that it expects “a strong report, with a large underlying gain in employment partially offset by weather effects… We estimate nonfarm payrolls rose by 250k in January (mom sa)—above consensus of +185k—reflecting below-normal end-of-year layoff rates that more than offset a roughly 50k drag from cold, snowy weather during the survey week. We see a wide range of outcomes for the weather drag and expect this headwind will be visible in the construction and leisure and hospitality categories. Big Data employment indicators were mixed in the month but are also broadly consistent with low layoff rates and a potentially large weather drag.”

  LABOR MARKET PROXIES:

  • The January ADP report, although not the best gauge for NFP, saw 107k jobs added in January, beneath the 145k forecast and prior 158k. However, Pantheon Macroeconomics highlight that the ADP measure has been close to the official estimate in the past three months. Meanwhile, within the ADP report, the wage metrics for job stayers eased to 5.2% from 5.4%, while for job changers it eased to 7.2% from 8.0%.
  • The January Challenger Layoffs report saw a notable increase to 82k from 35k in December.
  • The Initial Claims data for the week that coincides with the usual NFP survey window saw a notable decline to 189k from 203k, albeit the drop was likely related to the freezing weather in the US. The 4wk initial claims average over January rose to 208k from 203k in the prior week, but it does incorporate the steep weather-related drop, leaving it unchanged from the end of December 4wk average. The Continued Claims data for the NFP survey week, however, rose to 1.828mln from 1.806mln.
  • The JOLTS data, albeit for December, was hotter than expected, rising to 9.026mln from 8.925mln (revised up from 8.79mln) although the quits rate was unchanged at 2.2%. Pantheon Macroeconomics writes the rebound in JOLTS does not matter as the data is volatile and subject to large revisions, however, the quits rate is more important as it signals slower wage gains.
  • The Q4 Employment Costs Index eased to 0.9% from 1.1%, beneath the 1.0% forecast, also indicative of slowing wages. Employment wages within the report eased to 0.9% from 1.2%, while employment benefits eased to 0.7% from 0.9%.

  ANNUAL REVISIONS: The report will see the incorporation of the 2023 revisions. Within the establishment survey, the BLS tells us that “nonfarm payroll employment, hours, and earnings data from the establishment survey will be revised to reflect the annual benchmark process and updated seasonal adjustment factors. Not seasonally adjusted data beginning with April 2022 and seasonally adjusted data beginning with January 2019 are subject to revision“. Meanwhile, for the household survey, new population controls will be used in the estimation process which reflect the annual update of population estimates by the US Census Bureau. However, the BLS highlights, “In accordance with usual practice, historical data will not be revised to incorporate the new controls. Consequently, household survey data for January 2024 will not be directly comparable with data for December 2023 or earlier periods“. Note, the US unemployment rate is derived from the household survey.

  ARGUING FOR A STRONGER THAN EXPECTED REPORT:

  • Layoffs. Expect a boost from below-normal end-of-year layoffs on the order of 100k in tomorrow’s report. As shown in Exhibit 1, the Goldman layoff tracker indicates 1.1 million layoffs in January, a low level and a roughly 10% decline since mid-2023. The January payroll seasonals have started to evolve to reflect and offset the this post-pandemic trend, with a month-over-month hurdle for private payrolls of -2,584k in January 2023 compared to -2,773k in January 2019 (which was also a 4-week payroll month). However, even with this unfavorable evolution, nonfarm payrolls still rose by 436k month-over-month in January 2023—a 140k pickup relative to the 3-month average. Goldman’s layoff tracker is 50k higher than it was last January, which would argue for a boost from low layoffs of around 90k this January, other things equal.

  

  • Jobless claims. Initial jobless claims decreased to an average of 204k in the January payroll month, down from 212k in December and 225k on average in 2023. The JOLTS layoff rate was unchanged at low levels (1.0%) in December. Announced layoffs reported by Challenger, Gray & Christmas increased by 16k in January to 57k (SA by GS), compared to 54k on average in the second half of 2023.
  • Job availability. JOLTS job openings increased by 101k month-over-month to 9.0mn in December, well above consensus expectations, and online measures have declined slightly in recent months. While labor demand has fallen meaningfully on net, it remains elevated by 1-2 million relative to 2019 and represents a positive factor for job growth, in our view. Indeed, job openings remain above their 2019 levels in nearly every industry. Additionally, the Conference Board labor differential—the difference between the percent of respondents saying jobs are plentiful and those saying jobs are hard to get—increased by 8.4pt to +35.7 in January.

  

  ARGUING FOR A WEAKER-THAN-EXPECTED REPORT

  • Weather. Goldman assumes a 50k drag from cold, snowy weather during the survey week in the Midwest and Northeast. As shown below, the January increase in population-weighted snowfall (mom sa) argues for a drag in weather-sensitive industries such as construction, leisure, and retail—especially because good weather likely flattered the December employment report. While there are a wide range of outcomes for the weather drag, expect low layoff rates to offset or partially offset this headwind in the retail and leisure categories.

  

  • Employer surveys. The employment components of business surveys were net weaker in January. The employment component of the GS manufacturing survey tracker declined 1.3pt to 47.5 while the employment component of the services survey tracker increased 0.2pt to 49.8. Both trackers remain below their 2018-2019 average levels of 55.3 and 56.6, respectively.

  NEUTRAL/MIXED FACTORS:

  • Big Data. Big Data employment indicators were mixed in January, with an average pace of +179k across the four indicators tracked by Goldman economists. This compares to the +150k median of these measures in December.

  

  • Worker strikes. The return of 3k striking workers will boost payroll growth by that amount in tomorrow’s report. This compares to the 8k boost in last month’s report and a 38k boost in November.

  FED IMPLICATIONS: The FOMC on Wednesday saw rates left unchanged and removed its tightening bias in the statement as expected, it also played down the prospects of near-term rate cuts with Powell explicitly saying a March cut is not likely. Money markets have pared back their implied probability of a rate cut for the March meeting to c. 35% from the 50%+ pricing pre-FOMC. The NFP report will help shape those expectations, where a surprise downside report for the labour market would support the case for a March cut but it is seen as increasingly unlikely. Barclays and Goldman Sachs have both pushed back their March rate cut calls since the FOMC to May, while BofA pushed back their rate cut call to June from March. Nonetheless, Fed Chair Powell said many times in his post-FOMC Presser/Q&A that the labor market remains strong, but he did warn of earlier rate cuts than expected if that were to change, “If we saw an unexpected weakening [in the labour market] that would certainly weigh on cutting sooner”, how sooner remains to be seen, but March would still appear a possibility, providing the data supported it. When questioned on a March cut, Powell said, “I don’t think that’s…what we would call the base case”, but he also didn’t rule out the possibility. Powell pointed to the December SEPs – which saw three rate cuts in 2024 – “as good evidence of where people are”, whilst saying that the “base case” assumes that “we have a strong labor market, we have inflation coming down, that’s what people are writing their SEP around”. So, if the base case assumes continued disinflation progress and a strong labor market leading to three rate cuts this year – with March being too early for the first cut in that scenario – a weak labour market report that takes the Fed off that base case could be the key to putting March back in play for the Fed and a deeper cutting cycle than the Dec SEPs median forecast of three 25bp cuts, assuming disinflation continues as expected.

  DATES AHEAD: The next FOMC is on March 19-20th. The January & February CPI reports are due on February 13th and March 12th, respectively, as well as the February jobs report due March 8th and the January PCE due February 29th. All will be key in determining the timing of the Fed’s first rate cut and extrapolating the depth of cuts over the year, with the market still priced for nearly six 25bps cuts across the year.

  MARKET REACTION: According to Goldman, while the S&P is less than 1% below ATHs, markets should still like a miss since it raises the chance of a cut (Reminder March Cut probability stands at 40%). The reaction should prove out to be more so asymmetric for equities as Powell was pretty unconcerned about upside growth, but acknowledged they will be quick to cut in a downside surprise scenario. Given that the market isn’t really concerned about a bad growth outcome anymore, bad news tomorrow should be good for the market.

  • 250k+ S&P sells off at least 50-75bps
  • 200k – 250k S&P + / – 40bps
  • 150k – 200 S&P +75bps-100bps
  • 50 – 150k S&P -25bps / +50bps  

  The question, however, is what does Biden want: does he still believe that if he manipulates the data long and strong enough, the average American will finally give him credit for “Bidenomics.” Alternatively, has Biden given up on the economy, and is he more focused on levitating stocks as a shortcut to gaining votes. The answer to those two questions will determine what number we get tomorrow.

  More in the full payrolls preview folder available to pro subscribers.

  Tyler Durden
  Thu, 02/01/2024 – 22:50

• Putin Envisages Building A New Veteran-Led Russian Elite
  Putin Envisages Building A New Veteran-Led Russian Elite

  Authored by Andrew Korybko via Substack,

  The Russian leader knows the “new guard” of veterans haven’t been tainted by a life’s worth of Western-leaning sympathies unlike most of the “old guard” political and economic elite, whose naivete about the West led to them misleading him about its intentions and thus played role in the events leading up to the special operation.

  

  President Putin shared his vision of a new veteran-led Russian elite in late January when meeting with ministers and top St. Petersburg officials according to RT’s report about their conversation:

  “The Russian head of state previously revealed that some 617,000 service members had been deployed in Ukraine. ‘I met today with students, who put their studies on hold, many of them, [and] went to the warzone,’ Putin remarked. ‘It’s out of these people that we should be forming the country’s elite in the future,’ he added. The Russian head of state described returning troops as those who can be entrusted with the country’s development. ‘Hence, they should be supported [and] assisted.’”

  Here are five background briefings about the ways in which the Russian leader has sought to reshape his country’s domestic affairs by way of reforming its elite:

  * 1 January 2020: “20 Years Of Putin: His Top Domestic & Foreign Policy Successes”

  * 28 October 2020: “President Putin’s 2020 Valdai Club Speech Articulated His Vision of Populist Statism”

  * 4 November 2021: “Is Putin’s ‘Healthy/Moderate/Reasonable Conservatism’ Really a New Russian Ideology?”

  * 11 June 2022: “President Putin’s Insight Into State Sovereignty Is Instructive For All Countries”

  * 3 October 2022: “Putin’s Revolutionary Manifesto Focuses On The Struggle For Democracy Against The Deep State”

  He basically wants to facilitate the rise of patriotic conservative-nationalists who’ll prioritize sovereignty and seamlessly channel the people’s will in order to continue safeguarding and modernizing the country.

  The special operation, which has gone on for much longer than both sides expected due to each of them underestimating the other as explained here back in July 2022, led to over half a million Russians proving their patriotism by defending Russia’s national interests on the battlefield. These can be summarized as preserving its sovereignty, protecting its conservative–nationalist values, and promoting multipolarity. They’re accordingly the best crop of people to gradually replace the existing elite.

  Up until the special operation, Russia’s political and economic elite privileged the West over the Global South, which was done for reasons of convenience and familiarity. Director of the Foreign Policy Planning Department of the Russian Ministry of Foreign Affairs Alexei Drobinin shared his detailed thoughts on “The lessons of history and vision for the future” in August 2022 where he lambasted this class for their “ideological separation from the popular masses” over the centuries. All of that has now changed.

  While most existing members of the elite were able to change their stripes by pivoting to the Global South in light of changing circumstances, it’s much better for them all to be replaced by proven patriotic conservative-nationalists who literally put their lives on the line fighting the West. The latter are much more politically reliable and can more easily adapt to everything than the “old guard”, who either fled or were compelled to change their ways in order to keep what they’d obtained thus far in their lives.

  The “new guard” is just starting off with their lives, however, and have little to lose but lots to gain by growing within this new elite system. The Russian leader also knows that they haven’t been tainted by a life’s worth of Western-leaning sympathies unlike most of the “old guard”, whose naivete about the West led to them misleading him about its intentions. He’s responsible for his policy choices, but they were arguably influenced by Western-leaning advisors. Here are five background briefings on this:

  * 7 July 2022: “Putin Cautioned Russian Strategic Forecasters Against Indulging In Wishful Thinking”

  * 8 December 2022: “Merkel’s Admission That Minsk Was Just A Ruse Guarantees A Protracted Conflict”

  * 24 December 2022: “Putin Explained Why He Had No Choice But To Protect The Russian Population In Ukraine”

  * 26 December 2022: “The Five Ways In Which 2022 Completely Changed Russian Grand Strategy”

  * 20 December 2023: “Putin’s Admission Of Naivety About The West Signals His New Stance Towards Peace Talks”

  The lesson that he learned is that he can no longer rely on the existing elite after their pre-special operation paradigm of International Relations was comprehensively debunked. That’s not to say that there don’t exist any patriotic conservative-nationalists within the elite whose previously fringe views were proven right by events, nor that some previously Western-leaning ones didn’t sincerely change their stripes, but just that he’s obviously uncomfortable with how few there are within their ranks.

  President Putin couldn’t in good conscience hand the country off to whoever his successor may be without knowing that the “new guard” is actively in the process of replacing the “old guard”. To be sure, this is already underway, but he wants to accelerate it as much as possible and that’s why he explicitly said in late January that he envisages a veteran-led elite in the coming future. Just like Moscow wasn’t built in a day, so too will it take time to rebuild the Russian elite, but thankfully they’re off to a solid start.

  Tyler Durden
  Thu, 02/01/2024 – 22:20

• Aozora Delivers Grim Reminder Of Japan Carry-Trade Risk
  Aozora Delivers Grim Reminder Of Japan Carry-Trade Risk

  By Masaki Kondo, Bloomberg Markets Live reporter and strategist

  Aozora Bank’s shock loss projection serves as a reminder of just how little room the Bank of Japan has to tighten its policy and for the nation’s bond yields to rise.

  Carry trade isn’t just about buying and selling currencies in the spot or forward market (see “The $20 Trillion Carry Trade That Will Destroy Japan“). When investors in a country where interest rates are low raise funds domestically and invest the proceeds in higher-yielding assets abroad, it’s a form of carry trade. Banks in Japan can do this by gathering deposits at an average rate on ordinary deposits at 0.001% and buying higher-yielding overseas securities, such as five-year Treasuries with a yield of 3.8%.

  It looks like Aozora has been doing just that.

  

  The bank sold foreign securities to cut losses that were mainly caused by a rise in US interest rates. Nearly 40% of Aozora’s securities portfolio consists of foreign bonds but a share of foreign-currency assets is probably higher considering other asset classes such as ETFs include overseas securities. Japanese government bonds made up just 2% of the total portfolio.

  

  This isn’t to say other Japanese banks are facing similar risks. But Japanese investors as a whole have boosted their overseas investment since the BOJ expanded monetary easing in 2013. Even if overseas assets have positive returns, a substantial rise in yen borrowing costs could risk triggering unwinding of this big Japan carry trade.

  This suggests a first rate hike since 2007 will be a balancing act for the BOJ. It will probably settle for only small increases to avoid wreaking havoc. This outlook also argues for low bond yields in Japan.

  More here.

  Tyler Durden
  Thu, 02/01/2024 – 22:00

• It's Biden Vs Texas (And Texas Is Right)
  It’s Biden Vs Texas (And Texas Is Right)

  Authored by Ryan McMaken via The Mises Institute,

  In what can only be a surprising move, Texas Governor Greg Abbott has openly defied the White House and invoked Article 1 section 10 of the US constitution as a reason to ignore the Biden Administration’s demand that the State government cease erecting a border barrier along the Texas-Mexico border.

  

  For months, the federal government has ratcheted up threats against the state government and condemned Texas for erecting razor-wire barriers and other impediments to migration. The White House has sued to force the demolition of these barriers in further efforts to increase foreign migration into Texas. Texas took legal action of its own against the federal order. However, on Monday, the US Supreme Court ruled that the Federal government could proceed with its plans to cut the razor-wire barrier. 

  Texas officials, however, have refused to grant federal agents access to the border. This extends a Texas policy that has essentially ejected federal personnel from a 2.5 mile stretch of the Rio Grande in Eagle Pass which has been used extensively by coyotes, cartels, and migrants as an entry point into the US. 

  The situation continues to escalate, and now Washington Democrats are demanding that Biden “take control” of the National Guard and turn it against the state government. 

  The situation is shocking because Republican-controlled state and local governments rarely show any willingness to oppose federal usurpations of local authority. For decades, the standard operating procedure of Republicans has been to instantly surrender the second anyone in Washington utters the phrase “supremacy clause” or the Supreme Court makes a ruling. Democrats, on the other hand, routinely scoff at federal supremacy, such as with “sanctuary cities.” 

  This is a rare instance in which a Republican-controlled state government has not immediately bent the knee in the name of national unity and “law and order.” 

  So, what exactly does the Texas governor’s declaration say? Overall, it makes the case that the Biden administration has been ignoring federal immigration laws and illegally withdrawing border-control operations from the Texas-Mexico border. Abbott concludes: 

  Under President Biden’s lawless border policies, more than 6 million illegal immigrants have crossed our southern border in just 3 years. That is more than the population of 33 different States in this country. This illegal refusal to protect the States has inflicted unprecedented harm on the People all across the United States.

  If that were all, we’d just chalk this up to a document that amounts to little more than a letter to the editor. But then Abbott says that the US Constitution provides a remedy for the situation: 

  the Framers included both Article IV, § 4, which promises that the federal government “shall protect each [State] against invasion,” and Article I, § 10, Clause 3, which acknowledges “the States’ sovereign interest in protecting their borders.

  The final paragraph is where it gets interesting. Abbott writes: 

   The failure of the Biden Administration to fulfill the duties imposed by Article IV, § 4 has triggered Article I, § 10, Clause 3, which reserves to this State the right of self-defense. For these reasons, I have already declared an invasion under Article I, § 10, Clause 3 to invoke Texas’s constitutional authority to defend and protect itself. That authority is the supreme law of the land and supersedes any federal statutes to the contrary. The Texas National Guard, the Texas Department of Public Safety, and other Texas personnel are acting on that authority, as well as state law, to secure the Texas border.

  Abbott is essentially saying that federal supremacy in this case has been rendered null and void by a federal refusal to enforce federal law. 

  Can he get away with it? 

  For clarity, let’s look at Article 1, section 10. It reads: 

  No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.

  The key phrase here is “unless actually invaded.” Whether or not the current flood of migrants across the border constitutes “invasion,” as stated here, is perhaps debatable. However, what is self-evident here is that it is up to the state government to determine for itself whether or not the state is being invaded. After all, the whole point of the section is to grant certain powers to states outside the authority of the federal government. If the federal government also gets to determine for itself whether or not the state is being invaded, then the section is pointless. 

  So, an honest reading of this text ought to preclude the Biden administration or US Supreme Court coming back and saying “you’re not being invaded, now do what we say.” 

  The governor’s letter is also well-worded in the way that it declares the state’s actions to be directly authorized by the US constitution and therefore not subject to mere federal statutes. This will be useful in resisting any federal attempts to federalize the Texas National Guard.  That is, if the Biden administration attempts to take control of the Guard, as it is generally authorized to do in federal law, Abbott could say “our right to command the National Guard under Article 1, Sec 10 supersedes your claim to federalize the Guard under federal statute.”

  After all, the details of the president’s authority to “call forth the militia” relies primarily on federal statutes, and not on the constitution. Historically, state governments have had wide latitude to veto presidential attempts to use state troops. Those state veto powers were largely abolished in the past fifty years by conservatives, Cold Warriors, and other Pentagon simps. 

  The way the Abbott declaration is worded, he could be making a case that he has constitutional authority over presidential attempts to seize control of the National Guard. 

  The Situation Has Moved Beyond Legal Arguments 

  As the situation progresses, we are likely to hear much from legal scholars about what court said this and what judicial text said that. Yet, in crises situations like the current one, legal rulings will grow increasingly irrelevant. Politics and public opinion will take over as the real criteria for what is feasible for each side.  

  At this point, the Biden Administration is clearly motivated to move into Texas, take control of the situation, and throw the border open. In an election year, however, this will be problematic for Biden with many constituencies. Many will see the situation for what it is: a powerful Washington establishment, with no skin in the game in southern Texas, shows up to tell the locals that they are hereby ordered to house limitless numbers of unscreened migrants in their own neighborhoods, and for the taxpayers to cover the cost. With the legacy media on his side, Biden may be able to get away with it. 

  Here’s what should happen, though: any federal agents that attempt to intervene with state agents on the border should be arrested and tried for obstruction and trespassing under Texas law.  Federal attempts to take control of the National Guard should be declared non-starters by the governor under Section 1, Article 10. Federal agents should be treated as the criminals they are. After all, the ATF, FBI, federal Border Control, NSA, and countless federal regulators are all unconstitutional agents with no authorization within the constitution itself. (Federal control over immigration is an invention of the late nineteenth century.)

  It’s unclear what Washington’s next move would be. After all, the feds are used to unquestioning obedience from state governments. It is a sure thing that the White House would immediately seek out retaliatory action, such as denying Texans access to federal funds—which Texans already paid for through their payroll and income taxes. The Defense Department will send its stooge generals to threaten state authorities for not taking orders from the Pentagon—in a manner similar to its opposition to the Defend the Guard bills.

  If the Supreme Court keeps issuing rulings that are subsequently ignored, then the SCOTUS will just make itself look ridiculous.

  It will likely avoid this, and thus the situation will rest on political realities, not legal ones.

  What is nice to see, however, is that the aura of authority around the central government is gradually being pierced and destroyed. Such things are long overdue. 

  Tyler Durden
  Thu, 02/01/2024 – 21:40

• GM Shifting From EVs To Plug-In Hybrids, Following Industry Trends
  GM Shifting From EVs To Plug-In Hybrids, Following Industry Trends

  Don’t tell the Biden administration, but it’s almost as if the free market is capable of arriving at the most efficient solutions by itself…

  The latest example of this is General Motors, who posted better than expected earnings earlier this week and also said that it plans on changing its product lineup to include more hybrid vehicles, drifting away from pure electric vehicles. 

  CEO Mary Barra said on this week’s earnings call: “Let me be clear, GM remains committed to eliminating tailpipe emissions from our light-duty vehicles by 2035, but, in the interim, deploying plug-in technology in strategic segments will deliver some of the environment or environmental benefits of EVs as the nation continues to build this charging infrastructure.”

  Barra announced plans to introduce plug-in hybrid electric vehicles (PHEVs) in North America on select models, aiming to comply with stricter federal fuel economy regulations. This shift mirrors industry trends, as automakers increasingly adopt hybrid technology to meet consumer demands and federal standards, following GM’s main rivals who already offer hybrids and PHEVs, according to CNBC. 

  

  Barra hinted at GM’s potential use of plug-in hybrid technology, similar to what it has implemented in China, the CNBC report said. Currently, GM’s only hybrid in the U.S. is a traditional version of the Chevrolet Corvette. The company was a pioneer in plug-in electric vehicles with the Chevrolet Volt in the 2010s but discontinued it in 2019 due to demand and cost issues.

  Originally, GM planned to transition from internal combustion engines to solely all-electric models. However, this change in strategy seems at odds with the industry’s recent focus on EVs and the significant investments being made in this area, aligned with the Biden administration’s efforts to increase EV usage in the U.S.

  In other words, the automotive industry – which has now seen investment pulled from EV development by both major automakers that just struck massive extortion labor deals with the UAW – is screaming that pure electric vehicles don’t make financial sense. 

  Tyler Durden
  Thu, 02/01/2024 – 21:20

• What Is Nikki Haley Doing?
  What Is Nikki Haley Doing?

  Authored by Sean Trende via RealClear Wire,

  Before we start evaluating what Nikki Haley’s plans are for the Republican primaries, let’s get one thing out of the way: Barring catastrophe, Donald Trump is going to be the Republican presidential nominee. We will go into the reasons why below, but it is an important enough fact that we should lay it out up front.

  

  So given this, why is Nikki Haley continuing her bid? I see five possibilities:

  She thinks she might pull ahead in the delegate count. Pure intentions are always a good place to start, so we should mention (and eliminate) this possibility upfront. Haley finished third in Iowa, while Donald Trump received a majority of the vote. She placed second in New Hampshire (and almost certainly still would have, even if Ron DeSantis had not dropped out), while Trump received a majority of the vote.

  So in a state dominated by evangelicals, and in a state where white evangelicals were just 19% of the electorate, Trump won handily. Almost every state to follow will fall somewhere between these two. Next up is South Carolina which looks like a catastrophe for Haley (although it hasn’t been polled in a while). The remaining states look more like South Carolina than they do New Hampshire.

  In short, former Gov. Haley likely just had one of her best shots at Trump. She missed. It’s not clear where she connects. Surely she knows this. Surely her team knows this. It would be malpractice if they didn’t.

  She wants to give establishment Republicans a chance to be heard. Maybe she is staying in so that anti-Trump voters can vent their frustration with the quasi-incumbent president. That would be an unusually benevolent move on the part of a politician (see also 4 and 5 below). Yet, if you’re insisting upon a charitable explanation, this is probably where you end up.

  She thinks she might win at the convention and/or a catastrophe might befall Trump. The former president is 77 years old. He turns 78 in June. He is infamous for enjoying fast food and eschewing exercise. Health concerns aside, there are the criminal indictments that are following him around (although it seems increasingly unlikely that any trials will occur prior to the Republican National Convention).

  I wouldn’t put the odds of any of these occurring and mattering at higher than 10%. But on the off chance that something does happen between now and July, it wouldn’t hurt Haley to have some actual delegates in her pocket at the convention.

  She wants to be vice president. This is the conventional explanation for why candidates stay in. Maybe Haley wants to prove her toughness to Trump, and that she could take on the traditional “attack dog” role that veeps are often slotted to fill.

  But there are ways to do this and then there are ways not to do this. Questioning the likely presidential contender’s mental fitness, for example, falls squarely within the “ways not to do this” basket. This is especially true with Trump, who is hardly known for having thick skin. Moreover, Trump has said that Haley – and her donors – are permanently “barred from MAGA.” It’s far more likely that this campaign ends Haley’s career in Republican politics than it is that it catapults her into the presidency.

  That leaves us with:

  She wants to hurt Donald Trump. Imagine that you previously served in President Trump’s cabinet and were so horrified by what you saw that you concluded he should never sit in the Oval Office again. Or, imagine that you simply despise the guy and think he’s categorically unfit to be president. What would you do?

  YMMV (your mileage may vary, for readers below a certain age), but you could certainly do a whole lot worse than what Haley is doing. By staying in and needling the former president, she delays him from claiming the mantle of GOP nominee and from transitioning to the general election. She knocks him off message, as he feels compelled to punch down, hard (as opposed to giving, say, his gracious Iowa speech). Her criticisms echo those coming from President Biden’s camp, so they probably soften Biden up some for the general election.

  ***

  What’s in it for her? If she fits the bill of someone in the first paragraph, it speaks for itself. If not? A job from wealthy donors? A network television show? The speaking circuit? Plenty of opportunities are available for failed presidential candidates, especially those who attack a candidate the establishment genuinely despises.

  Sean Trende is senior elections analyst for RealClearPolitics. He is a co-author of the 2014 Almanac of American Politics and author of The Lost Majority. He can be reached at strende@realclearpolitics.com. Follow him on Twitter @SeanTrende.

  Tyler Durden
  Thu, 02/01/2024 – 21:00

• 'IRGC Is Getting Out Of Dodge': Biden Has Telegraphed Syria-Iraq Response Too Much
  ‘IRGC Is Getting Out Of Dodge’: Biden Has Telegraphed Syria-Iraq Response Too Much

  US Secretary of Defense Lloyd Austin in a Thursday press briefing claimed that “Our soldiers were killed by Iranian agents,” in reference to the weekend drone attack on a Jordanian base which killed three American troops. It is now being widely reported that the Pentagon will launch multiple days of airstrikes on ‘Iranian targets’ and assets in Syria and Iraq.

  Biden admin officials in the last two days have been leaking to the press information about the scope of operations. But Iran hawks aren’t happy, saying this level of telegraphing has given Iranian and IRGC officers ample time and opportunity to vacate their bases.

  Even as of Monday there were widespread reports that Iran-linked groups were temporarily abandoning their bases in the region, fearing immediate major attacks.

  One think tank Iran hawk, Jason Brodsky, complained on Thursday as US strikes are imminent, “The U.S. government is really helping IRGC terrorists get out of Dodge—the long lead time coupled with visibility into the U.S. response. It raises all kinds of questions and none of them are good.”

  And Republican Congressman from Florida Mike Walz said the extent of foreknowledge and wait time makes the whole operation “deliberately unserious”. 

  This is deliberately unserious. https://t.co/bvEEqYydW0

  — Rep. Mike Waltz (@michaelgwaltz) February 1, 2024

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

  Another commentator pointed out that the Biden admin has been “vocal about targeting the IRGC in Iraq & Syria, yet reports say the IRGC has moved its top officers back to Iran… This move raises questions: Is the admin soft on the IRGC or looking to protect them?”

  According to Reuters:

  Iran’s Revolutionary Guards have scaled back deployment of their senior officers in Syria due to a spate of deadly Israeli strikes and will rely more on allied Shi’ite militia to preserve their sway there, five sources familiar with the matter said.

  The Guards have suffered one of their most bruising spells in Syria since arriving a decade ago to aid President Bashar al-Assad in the Syrian war. Since December, Israeli strikes have killed more than half a dozen of their members, among them one of the Guards’ top intelligence generals.

  Earlier in the day Defense Secretary Austin was asked whether the US has telegraphed its response too much to the point of essentially allowing leaders to return to Iran. He essentially dodged the question, saying, “We will have a multi-tiered response.”

  We should point that to some degree the basic Western assumptions that there are “Iran-backed” groups running around all over Syria, and that they take orders directly from Tehran is an exaggeration and misleading. While certainly any group fighting on behalf of the pro-Damascus/Baghdad/Tehran axis is ‘Iran-linked’, there’s still multiple and varied interests driving them. For example, militias close to the Syrian government are seeking to push out the years-long US troop occupation of the country’s vital oil and gas resources. Syrian nationalism is something very different from Iran’s Islamic revolutionary ideology. 

  

  The New York Times too has conceded that despite it being well-known that Tehran arms and funds the main Shia militias in Iraq, there remains no evidence that Tehran is “calling the shots” when it comes to events like attacks on US personnel out of Syria or Iraq.

  As for the major counter-Iran strikes, it seems Biden wants to show he’s “doing something” ahead of the election, but an operation which poses less risk for rapid direct escalation with the Islamic Republic. He’s going for the “easy” lay up of attacking Syria again, which has already been done several times over the years.

  Tyler Durden
  Thu, 02/01/2024 – 20:40

• Trump Says He's Interviewing Lawyers For E. Jean Carroll Appeal
  Trump Says He’s Interviewing Lawyers For E. Jean Carroll Appeal

  Authored by Jack Phillips via The Epoch Times (emphasis ours),

  Former President Donald Trump said he is interviewing attorneys to appeal a jury’s ruling stipulating that he must pay writer E. Jean Carroll $83 million.

  

  In a post on Truth Social, the former president wrote that he is in the process of “interviewing various law firms to represent me in an appeal” of the Carroll ruling, which he described as “one of the most ridiculous and unfair Witch Hunts our Country has ever seen.”

  “Any lawyer who takes a TRUMP CASE is either ‘CRAZY,’ or a TRUE AMERICAN PATRIOT,” President Trump wrote on Jan. 30. “I will make my decision soon.”

  He was represented during the trial by attorney Alina Habba, who represents him in the separate civil fraud trial in New York and other cases. After the verdict was issued in the Carroll case, Ms. Habba filed a letter to the court alleging that Judge Lewis Kaplan was biased.

  She cited a New York Post report that he previously worked at the same firm as Carroll attorney Roberta Kaplan.

  “The underlying defamation case tried last year, and the damages trial completed last week, were both litigations in which there were many clashes between Your Honor and defense counsel,” Ms. Habba wrote.

  “We believe, and will argue on appeal, that the Court was overtly hostile towards defense counsel and President Trump, and displayed preferential treatment towards Plaintiff’s counsel.”

  In a court filing of her own on Jan. 30, Roberta Kaplan denied allegations that she was mentored by the judge, as Ms. Habba had alleged. She said they never interacted and suggested that she could sanction Ms. Habba.

  In response, the Trump lawyer responded by saying she was asking a question about whether there was any truth to the report.

  “The length of our overlap at Paul, Weiss was less than two years,” Ms. Kaplan wrote in a response on Jan. 30, adding that “during that relatively brief period more than thirty years ago, I do remember the Paul, Weiss partners with whom I worked and none of them are Your Honor.”

  Ms. Habba responded in a letter, saying: “The purpose of the letter was simply to inquire as to whether there is any merit to a recently published New York Post story which reported on the alleged existence of such a relationship.”

  This past week, a New York jury found that President Trump had damaged Ms. Carroll’s reputation in 2019 after she went public with her accusations. Jurors awarded her $18 million to compensate for the personal harm she experienced, then added $65 million more to punish President Trump.

  A different jury concluded last May that President Trump assaulted Ms. Carroll in a Manhattan department store dressing room in 1996. Those jurors awarded Ms. Carroll $5 million.

  The former president said he did not know Ms. Carroll and vehemently denied her allegations.

  What’s Next

  Days after the ruling, Ms. Carroll appeared in an MSNBC interview this past week with host Rachel Maddow and suggested they go shopping.

  “I have such great ideas for all the good I’m going to do with this money,” Ms. Carroll said on the show, referring to the money.

  “First thing, Rachel, you and I are going to go shopping. We’re going to get completely new wardrobes, new shoes, a motorcycle for [attorney Shawn] Crowley, a new fishing rod for [attorney Roberta Kaplan].”

  “Rachel, what do you want? A penthouse? It’s yours, Rachel,” she stated. “You want France? You want to go fishing in France?”

  Rachel Maddow asks E. Jean Carroll what she’s going to do with “Trump’s money” to help “women’s rights.”

  Carroll says she and Maddow will “go shopping, get completely new wardrobes, new shoes…Rachel, what do you want, penthouse?”

  Her lawyer nervously says “that’s a joke”: pic.twitter.com/5LAx5xU5Uy

  — Steve Krakauer (@SteveKrak) January 30, 2024

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

  Her lawyer then interjected and said her comments were “a joke.”

  Lawyers for the former president have said they will appeal both verdicts. “It will not deter us. We will keep fighting. And I assure you, we didn’t win today, but we will win,” Ms. Habba said in a recent statement.

  

  Among other things, his team wants higher courts to rule that President Trump was within his rights to deny Ms. Carroll’s allegations forcefully and suggest that she had ulterior motives.

  “Everyone has a right to defend themselves,” his lawyer said.

  President Trump’s lawyers also are contesting Judge Kaplan’s ruling that the jury in the second trial did not need to revisit whether the former president was liable for sexual assault, and that the judge unfairly limited what the Trump legal team could say in front of the jury.

  Appeals will go to a panel of judges in New York. The appeals eventually could reach the U.S. Supreme Court for the justices to consider.

  The Associated Press contributed to this report.

  Tyler Durden
  Thu, 02/01/2024 – 20:20

• 75% Of House Democrats Voted Against Deporting Criminal Migrants Who Commit Social Security Fraud
  75% Of House Democrats Voted Against Deporting Criminal Migrants Who Commit Social Security Fraud

  Democrats talk a big game about ‘Republican attacks on Social Security,’ but 75% of House Dems just voted against deporting migrants who commit Social Security fraud.

  

  Introduced by Rep. Tom McClintock (R-CA) in December, H.R. 6678 passed with 172 “yea” votes, and 155 “nay” votes – all Democrats, with 55 of them voting with the Republicans.

  As former Trump adviser and head of the America First Legal Foundation Stephen Miller posted on X, “155 HOUSE DEMOCRATS — 75% OF THEIR CONFERENCE — JUST VOTED AGAINST DEPORTING CRIMINAL MIGRANTS WHO COMMIT SOCIAL SECURITY FRAUD AND ROB OUR SENIORS.”

  Biden’s Democrat Party is so ruthlessly, menacingly, staggeringly extreme on immigration they are not even willing to remove lawbreaking criminal aliens who steal identities and prey on seniors.

  — Stephen Miller (@StephenM) January 31, 2024

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

  “They’d rather protect illegal aliens than our seniors,” said the House Judiciary Committee in a Thursday post on X.

  🚨 155 House Democrats voted today against deporting criminal migrants who commit social security fraud.

  They’d rather protect illegal aliens than our seniors.

  RT if you think that’s insane!

  — House Judiciary GOP (@JudiciaryGOP) February 1, 2024

  Meanwhile, 150 Democrats also voted against legislation that would quickly deport illegal aliens who drive drunk.

  “I am appalled to see a majority of Democrats in the House of Representatives voting to prevent illegal aliens who endanger the lives of American citizens by drunk driving from being deported. Americans deserve leaders who put their safety and prosperity first,” said Rep. August Pfluger (R-TX).

  According to OA Online, “H.R. 6976, the Protect Our Communities from DUIs Act, introduced by Rep. Barry Moore (R-AL), closes a gaping loophole in U.S. immigration law related to drunk driving. Because there is neither a ground of inadmissibility nor a ground of removability explicitly related to driving under the influence (DUI) of alcohol or drugs, criminal aliens currently can escape accountability for their reckless actions and be free to re-offend and endanger communities. By creating a ground of inadmissibility and a ground of removability for aliens who have committed DUI offenses, this legislation provides long-awaited and much-needed reforms to safeguard American communities.“

  According to Rep. Rashida Tlaib (D-MI), the bill would create a “separate but unequal” system of justice for immigrants.

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

  Tyler Durden
  Thu, 02/01/2024 – 20:00

• Today's Censorship Is Personal
  Today’s Censorship Is Personal

  Authored by Jeffrey Tucker via The Brownstone Institute,

  The United States has the distinction the world over for being a home to the First Amendment, which guarantees free expression. And yet a mere seven years after its ratification in 1791, Congress violated it in the most severe way with the “Alien and Sedition Acts” of 1798, which made it a crime to engage in “false, scandalous, and malicious writing” against government officials. 

  

  The Sedition Act mentioned Congress, the President (John Adams), government generally as protected, but was silent about the Vice President, who was Thomas Jefferson. Upon the election of Jefferson in 1800, it was repealed immediately. Indeed, the censorship was so controversial that Jefferson’s opposition contributed to his victory. 

  The experience taught an important lesson. Governments have a tendency to want to control speech, meaning writing in those days, even if it means trampling on the rules that bind them. This is because they have an insatiable desire to manage the public mind, which is the story people carry around that can make the difference between stable rule and popular discontent. It has always been thus. 

  We like to think that free speech is settled doctrine but that’s not true. Thirty-five years after Jefferson’s victory, in 1835, the U.S. Post Office banned the circulation of abolitionist materials in the South.

  This went on for 14 years until the ban was lifted in 1849. 

  Then 12 years later, President Abraham Lincoln revived censorship after 1860, imposing criminal penalties on newspaper editors that supported the Confederacy and opposed the draft. Once again, people who disagreed with regime priorities were considered seditious. 

  Woodrow Wilson did the same during the Great War, targeting anti-war newspapers and pamphleteers again. 

  A new book by David Beito is the first to document FDR’s censorship in the 1930s, muzzling opponents of his administration. Then in World War Two, the Office of Censorship got busy monitoring all mail and communications. The practice continued on after the war in the early years of the Cold War with the blacklists against alleged communists. 

  There is a long history of government using every means to channel speech, especially when technology finds a way around the national orthodoxy. Government has usually adapted to the new problem with the same old solution. 

  When radio came along in the early 1920s, radio stations exploded around the country. The federal government quickly responded with the Congress-created Radio Act of 1927, which made the Federal Radio Commission. When television seemed inevitable, that agency converted itself to become the Federal Communications Commission, which long kept a tight rein on what Americans heard and saw in their homes. 

  In each of the above cases, the focus of government pressure and coercion was the distribution portals of information. It was always the editors of newspapers. Then it became the broadcasters. 

  Sure, the people had free speech but what does it matter if no one hears the message? The point of controlling the broadcast source was to impose top-down messaging for purposes of managing what people generally think. 

  When I was a kid, “news” consisted of a 20-minute broadcast on one of three channels that said the same thing. We believed that’s all there was. With such strict controls on information, one can never know what one is missing. 

  In 1995, the web browser was invented and an entire world grew up around it that included news from many sources, and then eventually social media too. The ambition was summarized in the name “YouTube:” this was a television from which anyone could broadcast. Facebook, Twitter, and others came along to give every single person the power of an editor or broadcaster. 

  Keeping with the long tradition of control, what was government to do? There had to be a way but getting hold of this giant machinery called the Internet was not going to be an easy task. 

  There were several steps.

  • The first was to impose high-cost regulations on admission so that only the most well-heeled companies could make it big and consolidate.

  • The second was to rope these companies into the federal apparatus with various rewards and threats.

  • The third was for government to winnow its way into the companies and subtly push them to curate information flows based on government priorities. 

  This takes us to 2020, when this vast apparatus was deployed fully to manage messaging on the response to the pandemic. It was highly effective. For all the world, it seemed as if everyone responsible was fully in support of policies that have never before been attempted, such as stay-at-home orders and church cancellations and travel restrictions. Businesses nationwide were shut, with hardly a peep of protest that we could hear at the time. 

  It seemed spooky but, over time, investigators came to discover a vast censorship industrial complex that was in heavy operation, to the point that Elon Musk declared that the Twitter he bought might as well have been a megaphone for military intelligence. Thousands of pages have been amassed in court filings that confirm all of this.

  The case against the government here is that it cannot do through third parties such as social media platforms what it is forbidden from doing directly by virtue of the First Amendment. The case in question is popularly known as Missouri v. Biden, and there is much at stake with its results. 

  If the Supreme Court decides that the government violated free speech with these measures, it will help secure the new technology as a tool of freedom. If it goes the other direction, censorship will be codified in law and it will give license to agencies to lord it over what we see and hear forever. 

  You can see the technological challenge here for government. It’s one thing to threaten editors of paper newspapers or throttle communications on radio and television. But it is another matter to gain full control over the vast web of global communication architecture in the 21st century. China has had some measure of success and so has Europe generally. But in America, we have special institutions and special laws. That should not be possible here. 

  The challenge of censoring the Internet is vast but consider what they have achieved so far in the US. Everyone knows (we hope) that Facebook, Google, LinkedIn, Pinterest, Instagram, and YouTube are thoroughly compromised venues. Amazon’s servers have stepped up in service of federal priorities such as when the company shut down Parler on January 10, 2021. Even auspicious services like EventBrite serve their masters: Brownstone even had an event canceled by this company. At whose behest? 

  Indeed, when you look at the lay of the land today, the reed on which free speech still stands is pretty thin. What if Peter Thiel had not invested in Rumble? What if Elon Musk had not bought Twitter? What if we didn’t have ProtonMail and other foreign providers? What if there were no truly private server companies? For that matter, what if we had only to rely on PayPal and conventional banks for sending money? Our freedoms that we know now would gradually come to an end.

  These days, and thanks to technological advancements, speech has become deeply personal. As communication has become democratized, so have the censorship efforts. If everyone has a microphone, everyone has to be controlled. The efforts to do so affect the  tools and services everyone uses every day.. 

  The outcome of Missouri v. Biden – the Biden administration has fought the case at every step – could make the difference as to whether the US will recapture its former distinction as the land of the free and home of the brave. It’s hard to imagine that the Supreme Court will decide any other way than to smack down the federal censors, but we cannot know for sure these days. 

  Anything could happen. There is much at stake. The Supreme Court will hear arguments on the pre-trial injunction against agency intervention in social media on March 13, 2024. This year will be the year of decision about our fundamental rights.

  Tyler Durden
  Thu, 02/01/2024 – 19:40

• Double Standard: Pro-Life Activists Could Get 11 Years In Prison For Protesting Abortion Clinic
  Double Standard: Pro-Life Activists Could Get 11 Years In Prison For Protesting Abortion Clinic

  One of the surest signs that a society is falling into authoritarianism is the development of double standards in law enforcement and criminal prosecution in the name of political division.  When laws are created or used to target one political group above another, and those people are consistently punished by officials more harshly than other groups who commit similar offenses, then your nation is on a fast-track to Orwell’s Animal Farm.

  In other words, “All animals are equal, but some are more equal than others…”

  We have seen numerous instances of these double standards in US courts in the past few years.  For example, the entirety of the January 6th response was an attempt to falsely portray an unarmed protest (which capitol police attacked with rubber bullets and tear gas grenades until people reacted violently) as an “insurrection.”

  More recently we have seen Michael Cassidy, the man who knocked down a satanic statue in the Iowa capitol building, charged with a “hate crime” even though satanists are not a victim status group and they often deny they are a religion.  Keep in mind that leftist activists have spent the better part of the past several years destroying statues of historic figures as well as destroying biblical symbols.  To this day very few leftists have been charged with a crime for these actions, let alone a hate crime. 

  This week, six pro-life activists were prosecuted and convicted under a little known federal law called the “FACE Act” for blocking entrances to an abortion clinic in Tennessee in 2021.  Protesters performed a “sit-in” and sang hymns until they were removed by police.  Using the FACE Act, prosecutors turned the case into a federal matter carrying felony charges.  The activists could be sentenced to nearly 11 years in prison for protesting.  Here is what they are guilty of doing…

  BREAKING: Six pro-life activists were just found guilty in federal court after being prosecuted by Biden’s DOJ under the FACE Act for protesting outside a Nashville abortion clinic.

  Here’s a snippet of the protest, which occurred on March 5, 2021.

  For the crime of praying and… pic.twitter.com/UPzZvtZebM

  — Greg Price (@greg_price11) January 30, 2024

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

  Truly terrifying.  Compare this to the multiple mob events and more violent measures used by leftist activists at government buildings and private businesses in just the past couple years.  This behavior has included attacking people entering and leaving establishments as well as vandalizing property.

  Supreme Court Justices dealt with a host of threats from pro-abortion activists in 2022 and 2023.  This included protests outside their homes and even the attempted assassination of Brett Kavanaugh after rumors leaked that the SC was considering overturning Roe v. Wade.  Leftists groups and the media widely defended this behavior as justified.

  And let’s not forget the unchecked aggression of Pro-Palestinians protesters using intimidation tactics outside of private businesses.  Where are the harsh sentences for these people?  A majority are released if they are arrested, most are never charged.

  Punishment for this behavior is rarely applied despite the fact that it happens so frequently.  It is becoming obvious that a two-tier legal system is being constructed in the US right under the nose of the American public:  One for leftist activists and another for the conservatives and moderates that oppose them.  

  This kind of disparity in prosecution and sentencing leads to a number of significant problems.  

  First, it encourages more crime and violence on the part of the politically protected group (leftists) because they know they can get away with it.  Second, it inspires anger and animosity among the unprotected population, leading to retribution and civil unrest.  Third, it creates ambiguity in law enforcement to the point that government officials start to make standards up as they go.  Leftists might want to consider this final point, because it means that one day they could be hit with the same dubious treatment.

  The fabric of western civilization relies on a number of tenets in order to remain intact.  Yes, people should be treated as innocent until proven guilty, but the punishment must also fit the crime, and punishment must be applied fairly to all groups.  When this principle is abandoned, the breakdown of the flailing society is not far behind.

  People singing in front of a door does not deserve an 11 year prison sentence (or a 1 year prison sentence, for that matter).  And if the purpose for this kind of aggressive prosecution is to make an example of the protesters and send a message, why hasn’t a similar message been sent to leftist protesters?     

  Tyler Durden
  Thu, 02/01/2024 – 19:20

• A Soft Landing Is A Fairytale
  A Soft Landing Is A Fairytale

  Authored by Michael Wilkerson via The Epoch Times,

  The last time the phrase “soft landing” was this popular on the internet was on the eve of the largest financial crisis the world has ever seen.

  

  The idea behind an economic soft landing is that the central bank (for the United States, the Federal Reserve) is able to bring inflation from an overheated economy under control by increasing interest rates without producing a recession or a collapse of the financial markets. This is what markets desperately long for in early 2024 and are trying to manifest by simply repeating it as a mantra and believing in it hard enough.

  The premise behind such a hope is the belief that the Federal Reserve will lower the Fed Funds target interest rate from its current upper limit of 5.5 percent. The futures markets are signaling multiple reductions of a total of 75 to 100 basis points over the next several months, bringing the target interest rate to 4.5 percent by mid-year.

  The market believes this because it believes that the fight against inflation has been won. This is also a fantasy. Inflation remains stubbornly high, and will persist so as long as the United States continues to deficit spend billions of dollars and tack on trillions of new debt each year to pay debt service costs and fund massive defense spending. In short, the Fed will not be able to reduce rates without restoking substantially higher inflation.

  Finally, the U.S. economy isn’t performing nearly as well as the statistics coming out of the federal government would like us to believe. Indeed, the disappointing Jan. 31 Chicago Purchasing Managers Index results indicate that the economy is contracting.

  The market is in a speculative bubble. The S&P 500, after rising nearly 21 percent in 2023, has broken through to an all-time high, surpassing the previously attained highs of two years ago (January 2022), and is now trading at 26 times estimated 2023 earnings. The market-weighted S&P 500’s success is based on the performance of its seven largest constituents, while effectively ignoring the disappointing performance and struggles of the vast majority.

  This “Magnificent Seven,” which includes tech platform names like Microsoft, Google’s parent Alphabet, Facebook’s parent META, Amazon, and Apple, outperformed earnings expectations by 4 percent in the fourth quarter, while the other 493 stocks are now estimated to underperform previous estimates by 15 percent. Despite this broad-based decline in performance, the index has continued to rise through January on the back of this narrow but highly visible group of companies.

  At the same time, the VIX, the so-called “fear gauge” of equity investor sentiment, is near an all-time low, suggesting widespread complacency.

  When bubbles inflate this rapidly and spectacularly, the end comes as quickly and as dramatically. Imagine the shape of a parabola whose downward slope is as steep as the ascent. Given the heights to which the markets have climbed since 2020, the bursting of the bubble may be as consequential as the global financial crisis of 2008-09. Or worse. Either way, there will be blood.

  An equity market collapse will bleed over into other asset categories as liquidity dries up. This will then lead to a wider credit crisis as investors struggle to cover losses. As I wrote at the end of the year, the banks, especially the regional and community banks, are not OK. In December, these banks were borrowing more than $131 billion from the Bank Term Funding Program, the Fed’s emergency funding line established after the collapse of Silicon Valley Bank in March 2023. The program is set to expire in March 2024. What will the banks do then? Market liquidity isn’t robust enough to absorb this at a cost the banks can afford.

  There are other signs that the banks will wobble again this year. On Jan. 31, shares of NYCB, the New York bank that acquired the deposits of the failed Signature Bank, fell 40 percent after the bank announced a surprise fourth-quarter loss of $252 million and that it would cut its dividend by 70 percent.

  In the years leading up to the global financial crisis, the phrase “Goldilocks economy” was often used to describe the apparent health of the U.S. economy, conveying the idea that it was neither too hot nor too cold. Market investors and regulators blithely ignored—until it was too late—the massive speculative bubble that was growing in residential housing markets as a result of gross monetary policy mismanagement by the Federal Reserve.

  As evidence of a looming catastrophe mounted to the point it could no longer be ignored, the term Goldilocks economy was replaced in internet searches by “soft landing.” Indeed, searches for soft landing hit an all-time high in the weeks following the collapse of Bear Stearns, while searches for Goldilocks economy fell to approximately zero. Today, with the collective hive mind of the internet invoking a soft landing, we’re again trying to will into existence something that cannot and will not happen.

  A soft landing is a fairy tale told by liars and believed by fools.

  Tyler Durden
  Thu, 02/01/2024 – 19:00

• Ukraine Celebrates EU Approval Of $54BN Aid Package After Hungary's Orban Caved
  Ukraine Celebrates EU Approval Of $54BN Aid Package After Hungary’s Orban Caved

  “We have a deal,” European Council President Charles Michel announced on X Thursday, declaring that all 27 European Union countries have finally agreed to the additional 50-billion-euro ($54bn) aid package for Ukraine, which was under threat of Hungarian veto.

  The unanimous approval “locks in steadfast, long-term, predictable funding for Ukraine” and further demonstrates the “EU is taking leadership and responsibility in support for Ukraine; we know what is at stake,” Michel said.

  Ukrainian President Zelensky too hailed the ‘victory’ – stressing that “It is very important that the decision was made by all 27 leaders, which once again proves strong EU unity.”

  

  Zelensky added, “Continued EU financial support for Ukraine will strengthen long-term economic and financial stability, which is no less important than military assistance and sanctions pressure on Russia.”

  The approval for the funding was reportedly achieved merely within an hour into the special summit of EU leaders which gathered in Brussels on Thursday.

  Estonia’s leader Prime Minister Kaja Kallas also hailed the “important signal to Ukraine that the EU stands behind you long-term, until victory.”

  There’s also been a lot of backslapping and self-congratulations in Brussels over EU diplomats getting lone holdout Viktor Orban to fold: 

  The European leaders managed to win over Orbán with three additions, diplomats said. There will be an annual report by the European Commission on the implementation of the aid package, there will be a debate at leaders’ level on the implementation of the package and, if it is needed, in two years the European Council will ask the Commission propose a review of the new budget, according to the latest version of the draft European Council conclusions.

  EU leaders added a line referring to earlier conclusions from December 2020 to guarantee that the way the rule of law in Hungary is evaluated by the European Commission is done in a fair and objective manner.

  This is music to Orbán’s ears, as the 2020 text has implications for the €6.3 billion of EU cohesion funds that were frozen for Hungary over rule-of-law shortcomings.

  Ron Paul Institute director Daniel McAdams, who worked as a journalist in Budapest throughout the 1990s said that the Orban government “caved” plane and simple…

  Hungary caved. No other way to put it. They caved. As they continue to do. And the EU will continue to be emboldened to spit on Orban and all Hungarians. https://t.co/anFLBNEl0R

  — Daniel McAdams (@DanielLMcAdams) February 1, 2024

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

  But McAdams clarified that “I still have great admiration for Orban but this should have been handled differently. I know the exact kinds of internal discussions on this. But you can’t be both a bold maverick and a ‘team player.’ That scumbag Tusk likely tipped the balance.”

  He added: “Hungary has no real allies in the EU at present, save for perhaps Fico. But even that for historic reasons is not the smoothest of sailing, particularly when suddenly karpatalja is being whispered about. So Orban probably figured this is not the time to go for broke.”

  And a Rabobank note pointed out the following broader ironies: 

  In Europe, we have disinflation; and deindustrialisation; and Macron, Scholz, and Rutte saying Europe must rearm to help Ukraine beat Russia’s war economy – this from a Chancellor who didn’t arm Ukrainians, and a PM who didn’t arm the Dutch.

  At the start of the week, amid Hungary’s perceived intransigeance on the Ukraine funding issued, some EU diplomats have begun to complain Europe is “starting to look weak”. But Orban beginning on Tuesday began giving off signals that he was ready to soften his stance.

  Tyler Durden
  Thu, 02/01/2024 – 18:40

• California Legislature Introduces Slavery Reparations Bills
  California Legislature Introduces Slavery Reparations Bills

  Authored by Eric Lundrum via American Greatness,

  On Wednesday, lawmakers in the state of California introduced a series of bills aimed at providing reparations for historical slavery, which would include giving out property and financial compensation for alleged descendants of slaves.

  

  As Politico reports, the bills represent the first of their kind in the country, after a rising left-wing movement in favor of reparations first emerged shortly after the 2020 race riots. The California bills had been in the works for the last several years after Governor Gavin Newsom (D-Calif.) set up a reparations “task force” to make suggestions, which led to a 111-page report issued last year.

  The 14 different bills introduced by the state’s Legislative Black Caucus focus on a wide variety of areas that are allegedly impacted by the legacy of slavery, including education, civil rights, and criminal justice.

  While none of the bills include a measure to provide direct payments to those who would qualify based on slave ancestry, there is a provision to provide financial relief to certain groups based on allegedly race-based “property takings.” Authored by State Senator Steven Bradford (D-Calif.), the bill would “restore property taken during raced-based uses of eminent domain to its original owners or provide another effective remedy where appropriate, such as restitution or compensation.”

  Speaking on the lack of direct payouts, which many on the far-left have considered the ultimate end goal of reparations, Assemblywoman Lori Wilson (D-Calif.), chairwoman of the Black Caucus, gave a statement saying that “while many only associate direct cash payments with reparations, the true meaning of the word, to repair, involves much more.”

  “We need a comprehensive approach to dismantling the legacy of slavery and systemic racism,” Wilson added.

  While the bills are all expected to easily pass due to the Democratic supermajority in both chambers, the laws will most likely face legal challenges after Newsom signs them into law.

  As a result, some lawmakers are demanding that the California State Constitution be changed to allow for such provisions to be legal. Assemblyman Corey Jackson (D-Calif.), proposed a ballot referendum that would see the state’s voters approve such changes, so that the state could implement these programs with the intention of “increasing the life expectancy of, improving educational outcomes for, or lifting out of poverty specific groups based on race, color, ethnicity, national origin, or marginalized genders, sexes, or sexual orientations.”

  Such race-based initiatives are facing more widespread backlash from the American public in recent years, particularly with regards to corporate diversity enforcements in the form of Diversity, Equity, and Inclusion (DEI). Last year, the Supreme Court issued a historic ruling overturning affirmative action – the practice of race-based preferences in the admission of college students, which overwhelmingly favors minorities over White applicants – ruling that such a practice was unconstitutional.

  Tyler Durden
  Thu, 02/01/2024 – 18:20

• Apple Slides On Plunging China Sales, Service Revenue Miss, Disappointing Guidance
  Apple Slides On Plunging China Sales, Service Revenue Miss, Disappointing Guidance

  After Amazon and Facebook reported blowout earnings, sending their stocks up double digits after hours and soothing the bitter taste left from the recent disappointing earnings from MSFT, TSLA and GOGL, everyone was looking at the last Mag 7 of them all, the (formerly?) biggest company in the world, Apple which however left a bit to be desired, because while the iPhone maker reported both revenue and EPS which beat (iPhone sales actually beat this time while Mac, iPad and Wearables all missed), the company’s Greater China revenue disappointed, coming in below estimates, with Service revenues also disappointing.

  Here is what the company reported for fiscal Q1:

  • EPS $2.18 vs. $1.88 y/y, beating estimates of $2.11
  • Revenue $119.58 billion, +2.1% y/y, beating estimates of $117.97 billion
    • Products revenue $96.46 billion vs. $96.39 billion y/y, beating estimates $95.14 billion
    • IPhone revenue $69.70 billion, +6% y/y, beating estimates of $68.55 billion
    • Mac revenue $7.78 billion, +0.6% y/y, missing estimates of $7.9 billion
    • IPad revenue $7.02 billion, -25% y/y, missing estimates of $7.06 billion
    • Wearables, home and accessories $11.95 billion, -11% y/y, missing estimates of $12.02 billion
    • Service revenue $23.12 billion, +11% y/y, missing estimates of $23.37 billion
    • Greater China rev. $20.82 billion, -13% y/y, missing estimates of $23.5 billion
  • While Revenue of nearly $120BN finally grew from a year ago, ending a period of 4 quarters of decline, it was still down from two years prior.

  

  • Gross margin $54.86 billion, +9% y/y, beating estimates $53.56 billion
  • Cash and cash equivalents $40.76 billion, above estimates  $38.81 billion

  While the numbers were mixed, the good news is that AAPL managed to avoid a 5th consecutive quarter of annual revenue declines (it would have been the first time since the company’s existential crisis in the 1990s).

  

  Commenting on the quarter, CEO Tim Cook said that “today Apple is reporting revenue growth for the December quarter fueled by iPhone sales, and an all-time revenue record in Services. We are pleased to announce that our installed base of active devices has now surpassed 2.2 billion, reaching an all-time high across all products and geographic segments. And as customers begin to experience the incredible Apple Vision Pro tomorrow, we are committed as ever to the pursuit of groundbreaking innovation — in line with our values and on behalf of our customers.”

  CFO Luca Maestri chimed in that “our December quarter top-line performance combined with margin expansion drove an all-time record EPS of $2.18, up 16 percent from last year. During the quarter, we generated nearly $40 billion of operating cash flow, and returned almost $27 billion to our shareholders. We are confident in our future, and continue to make significant investments across our business to support our long-term growth plans.”

  Despite the optimistic rhetoric, the rumors about the company’s weakness in China turned out to be true, and revenues there missed estimates of $23.5BN badly, the company generating just $20.82BN in sales in what until recently was the biggest growth market, confirming action by Beijing to shun the western cell phone. Here is the geographic breakdown of Apple’s sales…

  

  … and here is the YoY change. China’s 13% drop sticks out like a sore thumb.

  

  This shouldn’t be a surprise: for months, Apple watchers have been beating the drum that the iPhone is underperforming in China, citing strong growth by rivals like Huawei, Xiaomi and others, combined with some government agencies banning the use of the device at work. Apple pushed back considerably on its last earnings call against that idea; but it turns out it was lying. Today, we learned that sales in China actually fell nearly $3 billion in the critical holiday quarter. That’s the lowest China 1Q revenue for Apple since 2020!

  CFO Luca Maestri had this to say about the plunge in China: “There is a decline. We are not happy with the decline but we know China is the most competitive market in the world…We continue to see significant opportunity for us in China in the long term.”

  Judging by the move in AAPL stock after hours, the market disagrees.

  Turning to revenue by product category, iPhones beat and… that was it: all other categories disappointed:

  • IPhone revenue $69.70 billion, +6% y/y, beating estimates of $68.55 billion
  • Mac revenue $7.78 billion, +0.6% y/y, missing estimates of $7.9 billion
  • IPad revenue $7.02 billion, -25% y/y, missing estimates of $7.06 billion
  • Wearables, home and accessories $11.95 billion, -11% y/y, missing estimates of $12.02 billion

  While it is notable that the iPhone 15 grew, the context is critical – the iPhone 14 Pro before it slumped considerably because of supply-chain hiccups in China (i.e. base effect). That issue wasn’t replicated this year, plus the iPhone 15 Pro was a much bigger update. Still, the pick up in iPhone revenues was at best modest as the chart below shows.

  

  Mac revenue was the biggest product miss (revenue was -1.6% or so off of estimates). Computer sales have been challenged for over a year now as consumers were increasingly cost sensitive, and many had already bought new computers during the pandemic. Industry analyst IDC expects 2024 to bring long-awaited growth in computer sales.

  Commenting on the disappointing results, Tim Cook said the decrease in Wearables, Home and Accessories was due to a difficult comparison to new products released in 2022. That included the first Apple Watch Ultra and a new Apple TV. The 2023 updates in the category were minor — and Apple dealt with a few days of halted sales in the US due to the patent fight with Masimo Corp.

  And then there was service revenues, which despite rising to a new all time high of $23.1BN (up 11.3%) missed estimates of $23.4BN.

  

  Still, according to CFO Luca Maestri, Apple has well over one billion paid subscriptions, more than double what it had four years ago, across its ecosystem (this includes first and third-party subscriptions).

  Putting it all together, despite the solid iPhone results and profit beat, investors are disappointed by the China numbers, with the stock falling as much as around 4% so far after-hours, the loss accelerating during the call when the company said that during the March quarter it expected total and iPhone revenue to be similar to previous years when factoring in that 2Q revenue last year came in about $5 billion higher due to certain conditions (i.e., inventory replenishment). The company also expects gross margins between 46%-47% for Q2, as well as operating expenses of $14.3BN-$14.5BN, and expects service business the show double digit growth similar to the current quarter. Finally, CFO Maestri said services in the March quarter will be negatively impacted by foreign exchange rates and that comparisons for the March quarter are more challenging than in other quarters (translation: take last Q2 and slash $5BN due to “pent up” demand for iPhone in the March 2023 quarter which obviously won’t be here this time).

  Not surprisingly, AAPL’s stock is doing the worst of all the megatechs reporting today, with both AMZN and META surging after their repective reports, and only AAPL sliding.

  

  Tyler Durden
  Thu, 02/01/2024 – 18:02

• Trump Prosecutor Avoids Tainting Fani, Gives Booty To Estranged Wife In Last-Minute Divorce Settlement
  Trump Prosecutor Avoids Tainting Fani, Gives Booty To Estranged Wife In Last-Minute Divorce Settlement

  Trump special prosecutor Nathan Wade will avoid testifying about his alleged relationship with Fulton County District Attorney Fani Willis.

  

  Wade notably filed for divorce from his stay-at-home wife of 20 years, Jocelyn Wade, on Nov. 2nd, 2021, the day after Fani hired him as a special prosecutor in the Trump case, from which he earned more than $650,000 in taxpayer dollars – which he used to take Fani on lavish vacations, according to claims from Trump co-defendant Michael Roman and corroborated by receipts revealed in the divorce case.

  Cobb County Superior Court Judge Henry Thompson signed a temporary settlement in the divorce case on Jan. 30, then canceled a hearing scheduled for Jan. 31 in which Wade was expected to testify about his relationship with Willis.

  The two have been accused of being in an “improper” relationship, with Trump and other Republicans arguing that the case has been a politically-driven prosecution from the start, meant to derail the former president’s 2024 reelection bid.

  Fani was also subpoenaed to testify on Jan. 31 after she was unsuccessful in quashing it. Judge Thompson rejected her attempt, however the settlement means that she will dodge testimony as well.

  Meanwhile, Fulton Superior Court Judge Scott McAfee has ordered Willis to respond to allegations of having an “improper” relationship with Wade by Friday, and a hearing has been scheduled for mid-February.

  As the Epoch Times reports further, an attorney representing Michael Roman, one of the co-defendants, filed a motion on Jan. 8 to dismiss the Fulton County election interference case, alleging misconduct on the part of Fulton County prosecutors.

  Mr. Roman’s attorney, Ashleigh Merchant, alleged in the 100-plus page filing that Ms. Willis was engaged in an “improper, clandestine personal relationship” with Mr. Wade and of “profiting significantly” from the relationship at the expense of taxpayers.

  Court documents show that Mr. Wade paid for Ms. Willis to fly with him to two different cities.

  Ms. Merchant also accused Ms. Willis of using funds meant for clearing a pandemic-era backlog of cases in Fulton County to pay Mr. Wade a large sum of money.

  Documents show Mr. Wade has been paid at a rate of $250 per hour for his involvement in the case, or around $650,000 in total.

  Mr. Roman is seeking to disqualify Ms. Willis and her office from the election interference case, per his attorney’s Jan. 8 filing.

  

  President Trump has also made similar demands, saying that both Ms. Willis and the case have been “totally compromised” and the case against him should be dismissed.

  Prosecutors have not yet filed a response to Ms. Merchant’s motion, although they have said they intend to.

  The Fulton County Audit Committee has also asked Ms. Willis to address the “improper” relationship allegations.

  Bob Ellis, the Fulton County Commissioner, called on Ms. Willis in a Jan. 21 letter to provide explanations, including regarding payments to Mr. Wade, by Feb. 2.

  Investigation and Articles of Impeachment

  Ms. Willis faces an investigation in the Georgia Legislature over alleged misconduct, while a Georgia lawmaker recently filed a resolution to impeach Ms. Willis, alleging various acts of “malfeasance, tyrannical partiality, and oppression.”

  Accusing Ms. Willis of suffering from “Trump Derangement Syndrome,” State Rep. Charlice Byrd, a Republican, alleged that Ms. Willis used her office not to pursue justice but for political gain.

  Ms. Byrd said in a Jan. 26 statement that she has introduced H.R. 872, a resolution to vote on impeachment charges against Ms. Willis.

  The resolution calls Ms. Willis’ indictment “the severest case of gross abuse of discretion” while alleging that the Fulton County DA “grossly violated” her oath of office, in which she swore to be impartial.

  Ms. Byrd’s impeachment resolution also accuses Ms. Willis of engaging in an “inappropriate” and “unethical” relationship with Mr. Wade while alleging that she profited from the relationship.

  There are a total of 22 articles of impeachment in the resolution, each an alleged violation of Georgia Code 16-10-1.

  While the resolution doesn’t go into detail about the allegedly political nature of the prosecution, similar claims have been made by House investigators.

  The Georgia Senate adopted a resolution in a Jan. 26 floor vote that establishes a committee to investigate the various misconduct allegations against Ms. Willis.

  The alleged misconduct includes ongoing expenditure of “significant public funds for the purpose of hiring a special assistant district attorney with whom District Attorney Willis had, and may yet have an ongoing romantic relationship,” the Senate resolution reads.

  If such a relationship were proven to exist, it would amount to a “clear conflict of interest and a fraud upon the taxpayers of Fulton County and the State of Georgia,” potentially leading to Ms. Willis’ recusal, delays in the trial against President Trump, the appointment of a special prosecutor, and disciplinary actions, per the resolution.

  Ms. Willis’ office did not respond to a request for comment.

  In prior remarks regarding the scandal, however, she suggested racism was the motivation behind the scrutiny.

  Tyler Durden
  Thu, 02/01/2024 – 18:00

Digest powered by RSS Digest