- How Democracy Dies: Big Tech Becomes Big Brother
How Democracy Dies: Big Tech Becomes Big Brother
Authored by Leni Friedman Valenta with Dr. Jiri Valenta via The Gatestone Institute,
“Digital giants have been playing an increasingly significant role in wider society… how well does this monopolism correlate with the public interest?,” Russian President Vladimir Putin said on January 27, 2021.
“Where is the distinction between successful global businesses, sought-after services and big data consolidation on the one hand, and the efforts to rule society[…] by substituting legitimate democratic institutions, by restricting the natural right for people to decide how to live and what view to express freely on the other hand?”
Was Mr. Putin defending democracy? Hardly. What apparently worries him is that the Big Tech might gain the power to control society at the expense of his government.
What must be a nightmare for him — as for many Americans — is that the Tech giants were able to censor news favorable to Trump and then censor Trump himself. How could the U.S. do this to the president of a great and free country?
Putin made these comments at the Davos World Economic Forum, in which he and Chinese President Xi Jinping, sped on by the “Great Reset” of a fourth industrial revolution, used enlightened phrases to mask dark plans for nation states in a globalist New World Order. Thus did Xi caution attendees “to adapt to and guide globalization, cushion its negative impact, and deliver its benefits to all countries and all nations.”
In March 2019, Putin signed a law “imposing penalties for Russian internet users caught spread ‘fake news’ and information that presents ‘clear disrespect for society, government, state symbols the constitution and government institutions.'” Punishments got even heavier with new laws in December.
Meanwhile, opposition leader Alexei Navalny has been sentenced to prison for more than three years (with a year off for time served), in part because he revealed photos of a lavish Russian palace allegedly belonging to Putin on the coast of the Black Sea. Its accouterments supposedly include an $824 toilet brush. Many of the thousands of people protesting Navalny’s imprisonment have since been protesting Putin by waving gold-painted toilet brushes.
How nice that American Big Tech companies is pushing democracy in Russia — even while it is denying it at home. Do you notice how many leaders in Europe have risen to condemn censorship in America even though many in Europe are censoring their citizens as well, and are not exactly fans of the person who was being censored, former President Donald J. Trump? Like Putin, they probably do not want Big Tech competing with their governments, either.
The power-sharing of the U.S. Federal government with Big Tech appears a recipe for unharnessed power and corruption. Navalny caught on right away, saying:
“This precedent will be exploited by the enemies of freedom of speech around the world. In Russia as well. Every time when they need to silence someone, they will say: ‘this is just common practice, even Trump got blocked on Twitter.'”
What watchdog, if any, is now restraining Big Tech in America? It has become quite clear that Big Tech’s censorship may well have cost Trump the election, even if one ultimately finds that election fraud did not.
Big Tech took it upon itself to censor an exposé — published by the New York Post on October 24, 2020, as well as follow-up exposés — reporting that Hunter Biden, Joe Biden’s son, had sold his influence to China and Ukraine, and had raked in millions for the family.
The Media Research Center (MRC) found that “One of every six Biden voters we surveyed (17%) said they would have abandoned the Democratic candidate had they known the facts about one or more of these news stories”. That information might well have changed the outcome in all six of the swing states Biden reportedly won.
Last August, Twitter also undertook censoring the trailer of an explosive documentary entitled “The Plot Against the President.” The film, narrated by Rep. Devin Nunes (R-CA) with commentary by leading members of the Republican Party, exposes leading members of the Democratic Party and their deep state allies, many of whom knowingly used phony evidence to frame President Trump and some in his circle to try convince Americans that he and his campaign had colluded with the Russian government to win the 2016 election.
The film claims, using with recently declassified information, that President Barack Obama, as well Hillary Clinton, were involved in an almost four-year attempted coup incomparably more undemocratic than any riot at the Capital Building on January 6.
Rep. Devin Nunes, the top Republican on the House Intelligence Committee, claimed in August 2020 that Biden also knew of the ongoing efforts to unseat Trump. Nevertheless, Trump did not target them, perhaps to avoid dividing the country even further.
According to the Washington Times, the Twitter account of the movie, which debuted in October 2020, attracted 30,000 followers. Twitter blacklisted it for a day, but after a public uproar, put the popular documentary back. Our question is: How many blacklistings did Twitter not put back?
The January 6 riot at the U.S. Capitol was a pivotal event for Trump and the Republican Party. Prior to January 6, President Trump had offered to deploy 10,000 troops to the capitol, according to his former Chief-of-Staff Mark Meadows. The Pentagon and the Department of Justice had also offered help but were also reportedly turned down by the US Capitol Police The problem, apparently, was “optics” — about a Capitol now surrounded by barbed wire and thousands of troops, which the current Administration now seems to like.
Freedom of Information Act (FOIA) requests for further details about the event were also rejected — it is not clear by whom. It is ridiculous, therefore, for anyone to frame the riots, ugly as they were, as a seditious “insurrection,” particularly in light of what appears to be a massive security failure that could have averted the violence. One thing is certain: the timing of the event could not have been more perfect for opposition groups, which is probably why it had been planned for weeks before January 6.
What these efforts and the media did achieve was an end to all attempts to ascertain election fraud at a time when Vice President Mike Pence was counting Electoral College ballots, and allowing speeches from those supporting that claim. Some politicians even called for the resignation of Senators Ted Cruz and Josh Hawley, and referred them to the ethics committee for even suggesting an election audit of battleground states, despite questions having been asked — with no objections — concerning the results of the 2000, 2004 and 2016 presidential elections.
Ultimately, the result of the latest “witch hunt” against President Trump, as it has been called, was a contrived impeachment attempt to bar Trump from a future presidential bid — a kangaroo court devoid of due process, hearings, witnesses, and evidence. The prosecution, however, was undeniably eloquent in evoking “democracy” for a totally undemocratic procedure that justly resulted in Trump’s acquittal.
Meanwhile, Facebook and Twitter banned Trump and some of his supporters from their cyber domains. An alternative social media platform, Parler, was banned from the Apple and Google app stores, and then completely closed down by Amazon.
Meanwhile, mainstream social media platforms were reportedly used to rally and organize carry out riots in American cities last year. No one was penalized.
Do not, however, expect such slackness now. According to Fox News:
“People like Obama-era CIA Director John Brennan and Rep. Alexandria Ocasio-Cortez, D-N.Y., have made various public statements labeling Republicans as extremists — with Ocasio-Cortez claiming the GOP has ‘white supremacist sympathizers’ within its ranks, and Brennan claiming ‘domestic violent extremists’ in the form of far-right supporters of President Trump are more dangerous than Al Qaeda.”
Columnist and radio host Jeffrey Kuhner warns that a new bill, H.R. 350, “is the liberals’ equivalent of the Patriot Act redux. This time, however, it is not aimed at Islamic jihadists. Rather, it directly targets Trump patriots.” Kuhner writes that the bill “has the full backing of the Democratic congressional leadership, the Biden administration… Big Media and Big Tech.”
“The bill empowers the Deep State to monitor, surveil and spy on American citizens’ social media accounts, phone calls, political meetings and even infiltrate pro-Trump or ‘Stop the Steal’ rallies.
“Conservatives who are deemed potentially ‘seditious’ or ‘treasonous’ can be arrested and jailed, fined and/or lose their employment. The goal is simple: to crush all dissent to the Biden regime.”
Moreover, last month the new Secretary of Defense, Lloyd Austin, ordered a “stand down “of the entire military for 60 days, “so each service, each command and each unit can have a deeper conversation about this issue [extremism].” Normally stand downs last only a few hours or days and do not involve the entire military. Austin, in addition, has pledged to “rid our ranks of racists and extremists.”
These are words that can be applied to anyone dreamed up, including Trump supporters, and based, of course, on nothing but propaganda.
Austin’s plan is therefore needless, divisive and dangerous, considering the foreign dangers now circling their prey. This punishment of the regime’s “foes” makes one wonder what is next. Are we already marching in lockstep with Russia and China? The way to unite and strengthen the United States is not through suppression and punishment but through political power with checks and balances, a free press and closer adherence to the Constitution.
But here, again, there seems to be. a problem. The Federalist wrote in July:
“According to a new Quillette survey released last month, 70 percent of self-identifying liberals want to rewrite the U.S. Constitution ‘to a new Americans constitution that better reflects our diversity as a people.'”
Oh, so that is what we lack: diversity!
What can Americans Do? We are presently at a tipping point in America. Communist China is working hard and is focused on global domination; we are just messing around. In an increasingly digital world, the war against infringements on our freedoms most probably needs to be fought largely in the digital and cyber-space. That is why ending censorship in both the traditional and social media is such an important priority. First, break up the Big Tech companies. Let them become the utilities they originally claimed to be, or else be liable to lawsuits as other publishers are.
We do take some comfort that whereas dictatorships in authoritarian countries such as China and Russia is vertical — from the top down — in America, the central government shares power with the states from the bottom up, and with powers separated: the executive, the judiciary and the legislative. Fortunately, governors such as Ron DeSantis in Florida, Greg Abbott in Texas and Kevin Stitt in Oklahoma are now moving legislatively to counter federal laws that may have adverse effects on freedom of speech, jobs, election integrity, the energy industry, the first or second amendments and general constitutional rights.
This does not speak, however, to the major issue here — that democracy cannot survive in a country where a few technocrats and oligarchs can choose to deny access to information or platforms to candidates running for office. It is simply unacceptable that they alone — unelected, unappointed, untransparent and unaccountable — can deem what is “harmful” to society. The job now for all of us is to prevent the United States from slowly becoming a full-blown tyranny.
Tyler Durden
Thu, 03/04/2021 – 23:40 - Pompeo Considers 2024 Presidential Run On One Condition
Pompeo Considers 2024 Presidential Run On One Condition
Mike Pompeo won’t rule out a 2024 run for president, but only if Donald Trump does not seek office, the former Secretary of State told Fox News‘ “Hannity.”
“I care deeply about America,” Pompeo told host Sean Hannity, adding “You and I have been part of the conservative movement for an awfully long time now. I aim to keep at it.”
When Hannity said he’d take that as a “strong maybe” in regards to a 2024 run, Pompeo responded “That’s perfect.”
Pompeo said that under the Biden administration, the country has gone from “America First” to “blame America first,” and expressed concern over how President Biden is being perceived by foreign leaders.
“World leaders and my counterparts all across the world are watching closely,” he said, adding “Senior leadership all across the world, they watch every statement that is made, they watch every move. They see what their patterns are like, the kinds of behaviors they exhibit when times are tough and when the pressure is really on.”
The former Secretary of State compared Biden’s lack of press engagement to Trump’s near-constant presence.
“President Trump would be out there. He talked to the media all the time, probably more than any modern president,” he said. “He was out engaging with the media on a broad range of topics … When a leader can’t do that, when they can’t take questions, when they can’t explain the policies they are engaged in, when they seem to be hiding behind — whether that’s staff or just the fact that they don’t have time. Leaders watch that and they wonder.
“When the United States exhibits weakness. It creates real risk for our soldiers, sailors, airmen and Marines all across the world,” Pompeo continued. “Weakness begets wars and strength determines whether an adversary is going to be deterred, and it also determines whether allies really want to toss in with us when the times get most difficult.”
According to Pompeo, China represents “the most sustained threat to our fundamental way of life,” and suggested that the Biden administration “take that threat most seriously.”
“The American people deserve it and I know that they’re going to demand it.”
Watch:
Tyler Durden
Thu, 03/04/2021 – 23:20 - Towards $100 Oil
Towards $100 Oil
WTI stood at $61.50 / barrel when we issued our weekly assessment of EIA oil markets data yesterday. Nevertheless, we stated that, “We might expect WTI at $64 / barrel this time next week, and $65-66 / barrel would not be surprising.” We did not need a week. Less than twenty-four hours later, WTI had surged above $64 / barrel. It could well rise far above this level, and with shocking speed.
Bloomberg notes:
OPEC+ decided to keep a tight limit on oil production next month, sending prices soaring in a market that had been expecting additional supply. The agreement is a victory for Saudi Arabia, which has consistently pushed to tighten the market. The cartel had been debating whether to restore as much as 1.5 million barrels a day of output. But after being urged to “keep our powder dry” by Saudi Energy Minister Prince Abdulaziz bin Salman, members agreed to hold steady at current levels — with the exception of modest increases granted to Russia and Kazakhstan. In a briefing after Thursday’s meeting, the prince went one step further by making the kingdom’s additional 1 million barrel-a-day production cut open-ended. He gave no date for phasing out the voluntary reduction and told reporters he is in no hurry to do so.
This is exactly as we noted in our analysis three weeks ago:
If the trend holds up, the only barrier between us and $100 oil after Memorial Day will be the mood of Vladimir Putin and the goodwill of Saudi Prince Mohammed bin Salman. Both their treasuries are bare. They will be looking to refill the coffers, and not only that, but to buttress their positions against a Biden team less friendly to poisoners and ax murders than the previous administration.
Meanwhile, US shales look to sit on the sidelines a while longer. As Reuters reports from CERAWeek, the industry’s leading conference:
In the past, rising prices have enticed shale companies to ramp up production even after they promised prudence, and $60 oil would have once prompted companies to rush drilling rigs and frack fleets back to work. That is not happening now. “They are not taking the bait,” [IHS Markit analyst Raoul] LeBlanc said. Private companies are likely to increase oilfield activity, but not enough to meaningfully boost U.S. output, said LeBlanc, adding that U.S. spending is likely to remain around $60 billion, flat with 2020, as companies prioritize shareholder returns. “The severe drop in activity in the U.S. along with the high decline rates of shale and the pressure from the investment community to maintain discipline instead of growth means in my view that shale will not get back to where it was in the U.S.,” said Occidental Petroleum CEO Vicki Hollub.
At some point, of course, US operators will take the bait. But too late. The Saudi decision to extend the 1 mbpd cut indefinitely can be taken as a declaration of intent — indeed, a thinly veiled declaration of war on the Biden administration — by the Kingdom, and by extension, the rest of the OPEC+ cartel. They are going to keep pushing prices up relentlessly. Pencil in a $10/barrel rise per month. At that pace, oil prices could reach $100/barrel during the course of the summer. That’s the message the Saudis and Russians want to send to the Biden administration: “Look who has the leverage now.”
Gasoline prices have already neared $4 / gallon in California and are flirting with $3 / gallon for regular on the East Coast. It will get worse. Possibly much worse.
And of course the Fed will have to raise interest rates right into the meat of the stimulus program and a still lingering pandemic.
It will get ugly.
Tyler Durden
Thu, 03/04/2021 – 23:00 - Supersonic Combat Drone Concept Unveiled In Singapore; Already 100 "Pre-Orders"
Supersonic Combat Drone Concept Unveiled In Singapore; Already 100 “Pre-Orders”
The world of drones is quickly evolving as a supersonic unmanned combat air vehicle (UCAV) concept has been officially launched by Singapore-based defense firm Kelley Aerospace, according to Flight Global.
Known as the “Arrow,” Kelley is expected to test a proof of concept 1/4 scale model in early 2021. Kelley has already received 100 “pre-orders” for the UCAV.
Arrow is built from a single-shell of carbon fiber, with a maximum take-off weight of 37,000 pounds. The UCAV is able to travel Mach 2.1 or about 1,611 mph.
“It is designed for a reduced radar cross-section and infra-red signature. The carbon fiber and monocoque design endows the Arrow with outstanding strength and stiffness,” the company said in a statement.
The cost of the drone ranges between $9 million and $16 million. It’s the “world’s first supersonic UAV that pushes the boundary with the state-of-the-art swarm and autonomous aerial flight logic — making it a formidable UAV,” the company said.
The Arrow is designed to work with human-crewed aircraft and be a force multiplier on the modern battlefield. It’s also capable of intelligence, surveillance, target acquisition, and reconnaissance tasks.
No specifics have been provided on the customers who pre-ordered the supersonic drones or when series production begins. This all suggests that the world of combat drones is quickly evolving as stealth and speed are greatly increased in these war machines.
Already, the US and Russia appear to be developing the next generation of drones.
Tyler Durden
Thu, 03/04/2021 – 22:40 - China's "Sharp Eyes" Program Aims To Surveil 100% Of Public Space
China’s “Sharp Eyes” Program Aims To Surveil 100% Of Public Space
Authored by Dave Gershgorn via OneZero.medium.com,
One of China’s largest and most pervasive surveillance networks got its start in a small county about seven hours north of Shanghai.
In 2013, the local government in Pingyi County began installing tens of thousands of security cameras across urban and rural areas — more than 28,500 in total by 2016. Even the smallest villages had at least six security cameras installed, according to state media.
Those cameras weren’t just monitored by police and automated facial recognition algorithms. Through special TV boxes installed in their homes, local residents could watch live security footage and press a button to summon police if they saw anything amiss. The security footage could also be viewed on smartphones.
In 2015 the Chinese government announced that a similar program would be rolled out across China, with a particular focus on remote and rural towns. It was called the “Xueliang Project,” or Sharp Eyes, a reference to a quote from communist China’s former revolutionary leader Mao Zedong who once wrote that “the people have sharp eyes” when looking out for neighbors not living up to communist values.
Sharp Eyes is one of a number of overlapping and intersecting technological surveillance projects built by the Chinese government over the last two decades. Projects like the Golden Shield Project, Safe Cities, SkyNet, Smart Cities, and now Sharp Eyes mean that there are more than 200 million public and private security cameras installed across China.
Every five years, the Chinese government releases a plan outlining what it looks to achieve in the next half-decade. China’s 2016 five-year plan set a goal for Sharp Eyes to achieve 100% coverage of China’s public spaces in 2020. Though publicly available reports don’t indicate whether the program has hit that goal — they suggest that the country has gotten very close.
China’s modern surveillance scheme started in 2003, according to Dahlia Peterson, research analyst at Georgetown University’s Center for Security and Emerging Technology, with the creation of the Golden Shield Project.
The Golden Shield Project, run by the Ministry of Public Security (MPS), is, in part, responsible for the country’s strict internet censorship. But the program also included physical surveillance. The MPS created databases that included 96% of China’s citizens, with one titled the National Basic Population Information Database. That database includes household registration information, called “hukou,” as well as information on past travels and criminal history, according to a report from the Immigration and Refugee Board of Canada.
Local population databases were also created, according to a paper published in the American Journal of Political Science. These local databases allowed for blacklists, which barred the use of public transportation. Police would be dispatched if someone who had been blacklisted tried to book a bus, train, or airline ticket.
Following Golden Shield, China launched two other surveillance projects focused on the installation of cameras. Safe Cities, launched in 2003, focused on disaster warnings, traffic management, and public security. SkyNet focused on installing cameras connected to facial recognition algorithms.
“Chinese state-run media has claimed Skynet can scan the entire Chinese population in one second with 99.8 percent accuracy, yet such claims ignore glaring technical limitations,” Peterson wrote.
Observers should take these figures with a grain of salt: Accurate and up-to-date information about China’s surveillance initiatives isn’t easily available, and what is publicly known is mainly generated by academics and journalists with some access to government officials or surveillance equipment manufacturers. It’s also unclear which cameras are exclusively viewed by village, city, and provincial governments, and which feed data back to the central government.
Just like Golden Shield, the SkyNet program still exists today, and benefits from 16 years of A.I. research, as well as the tech industry’s boom. According to the New York Times, SkyNet data is used at building complexes that use facial recognition to open security gates. The photos from those security gates are then shared with local police to build a database of the local population.
However, these surveillance schemes are mostly targeted at cities, where funding and population density makes centralized surveillance easier. Sharp Eyes, which is focused on rural areas, is meant to offload work from potentially understaffed police departments.
For instance, an article written by Chinese state media about the Sharp Eyes implementation in Pingyi notes that the county has a population of 1 million people, and only about 300 police officers.
What gets reported to police by the Sharp Eyes program isn’t just limited to crime. One Pingyi resident in the state media article spoke of reporting a collapsed manhole cover, while another mentioned that they had suspected a multilevel marketing scheme happening in a nearby building. The MLM organization was reported to the police, who allegedly broke it up with warnings and fines.
According to Peterson, the Sharp Eyes project is implemented differently depending on each city or town’s needs, but the general premise is the same: The city or town is divided into a grid, and each square of the grid acts as its own administrative unit. Citizens watch security footage from within their grid, giving a sense of ownership over their immediate surroundings. Municipal data can then be aggregated based on reports from each square on the grid.
Cities can also add new technology to the mix at their discretion. Though the system primarily relies on facial recognition and locally broadcast CCTV, the city of Harbin, for instance, published a notice that it was looking for predictive policing technology to sweep a person’s bank transaction data, location history, and social connections, as well as make a determination as to whether they were a terrorist or violent.
Much of the funding for these various surveillance schemes comes from the central government, but regional municipalities and cities also foot the bill for local networks of cameras. At times, counties’ surveillance spending far outstrips other municipal services. An analysis of more than 76,000 government procurement notices by ChinaFile showed that surveillance spending has become a significant portion of many cities’ budgets. In 2018, contracts from the city of Zhoukou showed that officials spent as much on surveillance as they did on education, and spent more than twice as much money on surveillance as on environmental protection programs.
In some instances, Chinese citizens even crowdfund these surveillance measures. In the Shandong province, residents of the small city of Linyi raised an additional 13 million yuan, or $2 million, to help support the full coverage of video surveillance cameras.
This countrywide demand for surveillance technology has created a gold rush for companies developing and selling surveillance technology. Many of the companies selling camera hardware and video management software, especially for locally streamed Sharp Eyes footage, aren’t well known outside of China.
In a list translated by CSET’s Peterson, some of the top companies supplying this technology are surveillance camera manufacturers VisionVera and UniView, as well as big data company Neusoft. On its website, Neusoft specifically calls out that it manages a database on a population of 1.3 billion, and integrates data from more than 20 government sectors, as well as analyzes tens of millions of social videos.
Internationally known Chinese companies like Sensetime, Megvii, Hikvision, and Dahua are far more prevalent in conversations about the persecution of ethnic minorities. These companies have all been sanctioned by the U.S. government based on their involvement with the human rights abuses in Xinjiang, where the Chinese government has been accused of committing genocide against the country’s Uighur ethnic minority. Reports from Xinjiang’s internment camps are horrific, with documented cases of rape, sterilization, or forced labor.
The facial recognition system pitched to Xinjiang’s Shawan region to detect religious minorities was developed by Megvii, which denies involvement in the program. However, ChinaFile found contracts and state media reports that suggest large parts
A recent report from the LA Times and surveillance industry watchdog IPVM also showed that Dahua had also developed facial recognition to specifically detect Uighurs, a Chinese ethnic minority widely persecuted in China’s Xinjiang province. A separate report from IPVM showed how Huawei and Megvii cooperated in the development of a Uighur detection system in 2018.
China’s next five-year plan, which covers 2021 to 2025, places specific emphasis on giving social governance to local municipalities via the grid system, as well as building out even more security projects, to “strengthen construction of the prevention and control system for public security.”
This means the future of China’s surveillance apparatus likely looks a lot like Sharp Eyes: More power and social control given to local governments, so neighbors watch neighbors.
The government also emphasized the persecution of those it maintains as hostile and separatists.
“We will also closely guard against, and crack down on, the infiltration, sabotage, subversion and separatist activities of hostile forces,” the plan says.
Tyler Durden
Thu, 03/04/2021 – 22:20 - Mark Cuban Says Dallas Mavericks Will Accept Dogecoin For Tickets And Merchandise
Mark Cuban Says Dallas Mavericks Will Accept Dogecoin For Tickets And Merchandise
In continued proof positive that we are living in a simulation that has been set up for the sole purpose of ridiculing us, Mark Cuban has now come out and said that the Dallas Mavericks are going to be accepting Dogecoin for ticket sales and merchandise.
Dogecoin was a “meme” crypto that has slowly mutated from a joke among the investing community to a coin that is being taken semi-seriously by people like Elon Musk – though we’re not sure exactly how much credibility that lends the coin.
“Sometimes in business you have to do things that are fun,” Mavericks owner Mark Cuban said on Thursday, Bloomberg reported. “Because we can, we have chosen to do so,” he continued.
The coin has been praised by Cuban for its “entertainment and educational value,” Bloomberg writes.
We also wrote about a week ago that Elon Musk was taunting the SEC, who were reportedly investigating Musk over his Tweets about Dogecoin. It was just hours after the headline broke the the SEC could be investigating Musk over Tweets he put out related to cryptocurrency Dogecoin that Musk – who formerly had told the SEC he didn’t respect them, and to “suck Elon’s c*ck” – yet again took to Twitter to taunt regulators.
Responding to a Tweet casting doubt about an SEC investigation and referring to Musk as “Emperor Musk”, Musk responded that he “hopes” the SEC does open an investigation into his Tweets.
“It would be awesome,” Musk wrote.
Meanwhile, Cuban went on the record telling GameStop shareholders in February to hold “if you can afford to”.
Cuban took to a Reddit message board to do an “Ask Me Anything (AMA)” for the WallStreetBets crowd last month. “If you can afford to hold the stock, you hold. I don’t own it, but that’s what I would do,” were Cuban’s words of wisdom to Reddit users, while GameStop stock plunged in the background.
Tyler Durden
Thu, 03/04/2021 – 22:00 - Bipartisan Senators Seek To Strip Biden Of War Powers
Bipartisan Senators Seek To Strip Biden Of War Powers
Authored by Mike Shedlock via MishTalk,
At long last we see action to kill war power authorizations used by three presidents.
Senators Go After Endless Wars
In a long overdue effort Bipartisan Senators Introduce Bill to Strip Biden of War Powers.
Sens. Tim Kaine and Todd Young on Wednesday introduced bipartisan legislation that would repeal decades-old authorizations for the use of military force in the Middle East, amid escalating tensions between the U.S. and Iran in the region.
Kaine (D-Va.) and Young (R-Ind.) unveiled the measure as lawmakers have expressed frustration with President Joe Biden’s decision to launch airstrikes in Syria last week without first seeking congressional approval. It also comes just hours after an Iraqi military base housing U.S. troops and civilian contractors was hit by rocket attacks.
The bill would repeal the 1991 and 2002 authorizations that cleared the way for a prolonged military conflict in Iraq, culminating in calls from Democrats and Republicans alike to end the so-called “forever wars” in the region.
Senators from across the ideological spectrum signed onto the Kaine-Young bill as co-sponsors on Wednesday, including Sens. Tammy Duckworth (D-Ill.), Mike Lee (R-Utah), Chris Coons (D-Del.) and Chuck Grassley (R-Iowa).
“Last week’s airstrikes in Syria show that the executive branch, regardless of party, will continue to stretch its war powers,” Kaine said. “Congress has a responsibility to not only vote to authorize new military action, but to repeal old authorizations that are no longer necessary.”
Biden angered congressional Democrats when he launched airstrikes against Iran-backed military installations in Syria, with lawmakers lamenting that the White House did not consult with Congress ahead of time and did not properly notify them about the strikes.
Congress has largely abdicated its constitutional authority to declare war, and presidents from both parties have used outdated authorizations to legally justify U.S. military action — including, and perhaps most notably, the 2001 authorization for the use of military force against al Qaeda and the Taliban, which was approved in the aftermath of the Sept. 11 attacks. The Kaine-Young bill, though, only deals with the 1991 and 2002 measures, which are entirely focused on Iraq.
No Longer Necessary?!
Not quite. Those bills were never necessary and never should have been passed at all, in any form.
Bush, Obama, and Trump all made terrible use of those bills.
Congress and Congress alone should authorize war and be damn careful when it does.
Warmongers on both sides, notably Hillary Clinton, agreed to fight a stupid second war with Iraq on what any reasonable person should have seen as a pack of lies by Bush and Cheney.
We are still there needlessly and senselessly.
Republicans would not strip Trump but some will be happy to strip Biden. Better late than never, but still not enough.
One Step Further
Congress should go one step further and set a timeline for all troops to return from everywhere starting with the Mideast and Cuba, preferably immediately.
Tyler Durden
Thu, 03/04/2021 – 21:40 - February Payrolls Preview: Has The Surge Arrived
February Payrolls Preview: Has The Surge Arrived
It’s crunch time.
After several disappointing payrolls reports including just +49K in January and a loss of -227k in December – which helped keep the reflation genie at bay – Friday’s jobs report is expecting to show that the pace of nonfarm payroll growth is starting pick-up in February. And while JPMorgan now expects the US to start adding 675,000 jobs every month to hits its bogey of 8 million new jobs created for the year, the labor market signals are mixed going into the report: as Newsquawk recaps…
- ADP’s gauge of payrolls missed expectations, noting only a sluggish labor market recovery;
- initial jobless claims data surged in the BLS jobs report survey week, although analysts suggest that the data might have been distorted by reporting issues and potential fraud, blunting the signal it provides for the BLS jobs report;
- the ISM report showed that while both employment sub-components remained above the 50-mark, the manufacturing jobs market improved, while the services jobs market cooled slightly;
- Challenger’s job cuts data was far more optimistic, however, seeing announced layoffs falling to Dec’19 levels, but warned that if the jobs market doesn’t improve soon, it could signal stagflation.
Beyond the headline, desks are paying attention to the dynamic between the participation and wage growth; if participation continues to fall, it could buoy the wage growth metrics, but this should not be taken as a good sign, and would instead reflect the hardship low-paid workers are facing.
Finally, a blowout number will be the worst possible outcome, adding to the already mounting reflationary concerns and adding to them the possibility that the Fed will hike much sooner than expected should the unemployment rate tumble in coming months.
Looking at Goldman’s individual forecast, the bank estimates nonfarm payrolls rose 225k in February, as “above consensus of +200k.Falling infection rates and a net easing of business restrictions likely supported job growth in virus-sensitive industries.” According to the vampire squid, Big Data employment signals also indicate a pickup in job growth on net, and the severe winter storms in the South probably struck too late to significantly affect the report. At the same time, seasonal adjustment represents a two-sided source of uncertainty, as the seasonal hurdles have evolved in an increasingly unfavorable direction in recent months. Goldman also estimates an unchanged unemployment rate of 6.3%, “reflecting a solid expected rise in household employment offset by a rebound in labor force participation.”
With that said, here is what sellside expectations are currently courtesy of Newsquawk:
- Nonfarm payrolls (exp. 200k, prev. 49k);
- Private Payrolls (exp. 210k, prev. 6k);
- Manufacturing Payrolls (exp. 18k, prev. -10k);
- Government Payrolls (prev. 43k);
- Unemployment Rate (exp. 6.3%, prev. 6.3%);
- Average Hourly Earnings M/M (exp. +0.2%, prev. 0.2%);
- Average Hourly Earnings Y/Y (exp. 5.3%, prev. 5.4%);
- Average Workweek Hours (exp. 34.9hrs, prev. 35.0hrs);
- Participation Rate (prev. 61.4%),
- U6 Underemployment (prev. 11.1%).
WAGES: BMO’s analysts will be closely watching labor market participation as well as the average hourly earnings data. Earnings are seen rising by 0.2% m/m, although BMO says watching the composition will be key, explaining that as we continue to see struggles in the low-skill, low-wage earning sector, that will cause natural upward pressure on average hourly earnings, simply because those lower paid jobs will not factor into the equation. Therefore, if the participation rate continues to slip, and hourly earnings are reported to rise, it should not be taken as a positive sign, and instead will highlight the plight faced by low-income earners.
ADP: There were 117k private payrolls added to the US economy in February, according to ADP, short of the 177k that the Street was expecting. ADP said that the labour market continued to post a sluggish recovery across the board; large-sized companies are increasingly feeling the effects of the pandemic, while job growth in the goods producing sector paused in the month. The report also noted that the services sector remained well below its pre-pandemic levels; however, this sector is one that will likely benefit the most over time with re-openings and increased consumer confidence. In terms of the read for Friday’s official BLS data, Pantheon macroeconomics reminds us that the ADP data incorporates lagged official BLS payrolls data, although it is unclear how heavily these data are weighed; “The BLS estimates that private payrolls rose only 6K in January, thanks in part to seasonal adjustment problems which substantially depressed the manufacturing and construction numbers, at least,” Pantheon says, “We’re assuming these seasonal quirks will reverse in February, so we expect the official payroll number to be stronger than ADP, but we’re pulling our estimate down to 300K from 400K.”
INITIAL JOBLESS CLAIMS: Initial jobless claims coinciding with the BLS survey window reported 841k initial jobless claims, way above the 765k the Street was expecting, and was the highest weekly figure since early December. The data revealed that claims for regular state benefits also rose by 13k to 861. However, some desks were noting that the data might have been distorted by a spike in pandemic assistance claims in Ohio, amid backlogs and fraud, perhaps blunting the signal claims provides this month. Nevertheless, Oxford Economics said that “the latest jobless claims data are consistent with the downbeat message from labour market indicators at the start of the year,” adding that “while downside risks remain, broader vaccine distribution and increased fiscal support should lead to a marked improvement in labour market trends by the spring and summer.”
BUSINESS SURVEYS: The two ISM surveys highlighted the differing fortunes for the manufacturing and services sectors (The former surprised to the upside, while the latter disappointed). Within the survey’s sub-components, the manufacturing survey saw Employment rise by 1.8 points to 54.4, the third straight month of manufacturing employment growth; ISM said that continued strong new-order levels, low customer inventories and an expanding backlog indicate potential employment strength for the rest of the first quarter, adding that for the sixth straight month, survey panellists’ comments indicate that significantly more companies are hiring or attempting to hire than those reducing labour forces. The Services ISM report, however, saw the employment sub-index slip by 2.5 points in the month to 52.7, tough remained in growth territory (above 50.0) for the second month; ISM noted that comments from respondents included: “Unable to fill vacant positions with qualified applicants” and “Need more resources to meet demand.”
CHALLENGER LAYOFFS: Data from Challenger showed that US-based employers’ planned job cuts fell to around 34.5 k from around 79.5k, which the data compiler said was the lowest monthly total since December 2019. The commentary attached was optimistic, noting that the jobs churn has come to a halt: “If healthy job creation follows, this could mean a full recovery is on the horizon, especially as companies see an end to the pandemic in sight,” though warned that “if we do not see jobs begin to return, we could be entering a stagnation cycle, potentially keeping the currently unemployed out of work longer.” But Challenger also added that there was some good news: “we are seeing a high number of hiring plans, particularly in Retail, Entertainment, and Health Care, which were hit hard due to the pandemic.”
ARGUING FOR A BETTER THAN EXPECTED REPORT:
- Covid. While the public health situation remained dire in February, infection rates fell and the severity of business restrictions generally eased. Reflecting this, restaurant seatings on OpenTable rebounded modestly further to -56% from -59% (yoy survey week to survey week).
- Big Data. High-frequency data on the labor market were generally positive in February, with five of seven measures Goldman tracks indicating acceleration relative to the January report and generally stronger gains in the more reliable datasets.
- Job cuts. Announced layoffs reported by Challenger, Gray & Christmas fell by 58%nin February after declining by 19% in January (mom, SA by GS). Layoffs were at the lowest level since May 2018 (35k).
- Employer surveys. Business activity surveys increased on net in February employment components of both our services (+0.6pt to 50.0) and manufacturing (+1.2 to 57.4, the highest level since Nov. 2018) survey trackers increased.
Neutral/mixed factors:
- Seasonality. The seasonal factors used to convert the unadjusted data into seasonally adjusted nonfarm payroll growth evolved in a more restrictive direction in both December and January. The seasonal hurdles relative to the prior year were 216k and 284k higher, respectively, despite survey periods with the same lengths and similar calendar configurations. Seasonal factors evolve for many reasons, but the magnitude of the evolution over the last two months and the plethora of one-time adjustments by the BLS in mid-2020 (whose effects could now be unwinding) present two-sided risk for tomorrow’s data.
- Jobless claims. Initial jobless claims declined during the February payroll month, naveraging 827k per week vs. 835k in January, despite a +25k boost to the payroll-month average from likely fraud in Ohio. Continuing claims fell 393k between the payroll survey weeks, but this decline partly reflects expiring regular-state-programs (as opposed to reemployment). Across all employee programs including emergency benefits, continuing claims increased by 71k (some of which reflect benefit renewals following the Phase 4 package).
- ADP. Private sector employment in the ADP report increased by 117k in February, below consensus expectations but above the pace of the official measure in January.
- Job availability. 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 into expansionary territory (to +0.7 in February from -2.5 in January), but sits well below the October level (+7.1).
Arguing for a weaker-than-expected report:
- Winter Storms. Severe weather disrupted business activity and caused mass power outages in Texas and the South in the middle of the month. However, we believe the resulting power outages and business disruptions began 2-3 days after the payroll survey week was already over (see Exhibit 2). We still view weather as a negative factor this month, because the Northeast and Midwest also endured a few blizzards in the first half of the month.
As usual, pay close attention to the number of unemployed workers on temporary layoff, which spiked to a record high 18.1mn in April, retraced to 2.75mn in January. The smaller number of workers left on temporary layoff reduces the scope for the rapid pace of gains seen in the summer, but it remains a positive factor relative to the pre-coronavirus pace of job gains.
Tyler Durden
Thu, 03/04/2021 – 21:20 - China Makes Move On Riyadh As Washington Considers Sanctions
China Makes Move On Riyadh As Washington Considers Sanctions
Submitted by James Durso of OilPrice,
Panda Express isn’t just a fast-food chain in Saudi Arabia. Soon it’ll be the daily Air China flight bringing Chinese businessmen and officials to the kingdom.
Saudi Arabia recently achieved the distinction of joining Turkey as an American ally subject to sanctions.
The sanctions followed the U.S. Director of National Intelligence report that an operation to “capture or kill” Saudi activist (and Qatari agent of influence) Jamal Khashoggi in October 2018 was “approved” by Saudi crown prince Mohammed bin Salman.
U.S. Treasury Department sanctions targeted Saudi officials and the Rapid Intervention Force, the crown prince’s bodyguards. The U.S. State Department announced the “Khashoggi Ban,” a visa restriction policy targeting 76 Saudis believed to have acted against activists, dissidents, or journalists. The Biden administration announced it would consider limiting Saudi arms sales to “defensive” weapons.
The American sanctions and visa restrictions left the Crown Prince unscathed for now, but many in Washington are still angry he sidelined their candidate for the throne, former interior minister Muhammad bin Nayef, and may hope to criminalize him to scupper improved relations with Israel, and move him out of the line of succession.
Financial markets took the two-year-old news in stride, and the crown prince’s allies claimed the report was a “practical victory” as it lacked details and “used equivocal words like ‘probably.’” (The report’s phrase “capture or kill” left open the possibility things just got out of hand.) The Saudi foreign ministry declared the government “categorically rejects the abusive and incorrect conclusions” and affirmed the “enduring partnership” between the kingdom and the U.S.
Not so the media, who feel “Biden is doing the same thing as Trump” or Representative Adam Schiff (D-CA), who thundered, “There must be accountability, and we will continue to press for it.”
Biden’s announcement the U.S. would re-join the Iran nuclear deal, and a U.S. pause in arms sales to Saudi Arabia over the brutal campaign against Iran’s proxies in Yemen, signaled Washington’s intent to align itself with Iran. But some relief is in sight for Riyadh: the kingdom’s growing relationship with China, which is now receiving over 2 million barrels of oil per day from Saudi Arabia, its largest supplier.
Riyadh will remind Beijing it did them a solid when Mohammed bin Salman defended China’s treatment of its 10 million Muslim Uighurs. (Though, like governments everywhere do when they do something unpleasant, it was couched as “counter-terrorism and de-extremism measures.”
The relationship with China goes back to 1986, when the Saudis bought about 50?Chinese CSS-2 ballistic missiles. Saudi Arabia was the largest relief donor following the 2008 Sichuan earthquake, and it recently offered support after the COVID-19 outbreak. Though the relationship has been described as “functional, but not strategic” and won’t replace the American relationship, better Sino-Saudi ties will give Riyadh breathing room.
Beijing will be glad to increase its influence on both shores of the Persian Gulf. It has secured a partnership with Iran and has boosted BRI links with Saudi Arabia, but it will work to avoid getting drawn into regional conflicts to safeguard its $150 billion investment in the Gulf region. In the kingdom, China will pursue additional sales of high-technology goods, and seek to invest in Mohammed bin Salman’s showplace, the $500 billion NEOM, the “first cognitive city.” One venue for Sino-Saudi cooperation – and a signal to the U.S. – would be adoption of the Yuan in place of the Dollar in payment for hydrocarbon sales to China.
Aside from moving closer to China politically and economically, Saudi Arabia may diversify its weapons suppliers and China is the kind of no-conditions seller every buyer wants. And the kingdom may start to “make” instead of “buy” by growing the capability of Saudi Arabian Military Industries so it is less vulnerable to a parts cutoff by the U.S.
Qatar, Bahrain, and the United Arab Emirates voiced their support for Saudi Arabia as Washington’s actions probably reminded them how quickly the U.S. abandoned longtime ally Hosni Mubarak for the Muslim Brotherhood. As Cairo, Jerusalem, and Abu Dhabi ponder Iran’s next steps and the shape of their mutual support, the potential for a U.S. reversal will be baked in. Accordingly, they may explore broader relations with Beijing.
Two days after announcing sanctions, the White House undermined itself when it justified the absence of action against the crown prince by explaining “The United States has not historically sanctioned the leaders of countries where we have diplomatic relations or even some where we don’t have diplomatic relations,” which is surely news to Syrian President Bashar al-Assad. It’s a far cry from Candidate Biden’s boast he would “make them [Saudi Arabia] in fact the pariah that they are.”
To be sure nothing was lost in translation, the State Department then said “We are very focused on future conduct,” and so grandfathered Khashoggi’s killing.
So, the U.S. “circled back” to business as usual over a few days, but it was few very illuminating days for America’s friends and enemies.
Saudi Arabia faces a rough patch, but the U.S. faces a dilemma: It pined for a youthful modernizer who would liberalize the economy and put the kingdom on a “new religious trajectory.” Now that it has him, what does it do if he commissions a murder and doesn’t seem worried he was found out?
Tyler Durden
Thu, 03/04/2021 – 21:00 - A Preview Of What's Coming: Vaccinated Americans' Spending On Air Travel Soars
A Preview Of What’s Coming: Vaccinated Americans’ Spending On Air Travel Soars
In the week following the unprecedented Texas cold blast which literally froze spending both the plains states and, to a lesser extent, across the US…
… the latest BofA aggregated credit and debit card data showed that, as expected, total card spending rebounded to 3.5% yoy for the 7 days ending February 27th as the deep freeze lifted.
Some observations from the bank’s economists:
Winter blizzard recovery: Combined total card spending in TX, LA, OK, MS, AR, and TN jumped to +6.5% yoy for this 7-day period from -25% yoy the prior week (Exhibit 13).
Low income slowdown: Total card spending for the low income cohort has slowed, owing to a delay in tax refunds. As shown in the chart below, tax refunds are running about 2 weeks behind last year.
Naturally, this impairs the yoy growth rate in spending, particularly for the lower income population. However, BofA expects spending to be boosted in mid-March when tax refunds accelerate, especially if it overlaps with the next fiscal stimulus, at which point we may see a supernova in spending.
But perhaps the most interesting data point in the latest weekly spending report from BofA was the bank’s focus on spending trends amongst older Americans, or as BofA calls them “traditionalists” which are aged 73 –92, who are most likely to have received the COVID vaccine.
In particular, spending on airfare surged for traditionalists as compared to other generations – this can be seen in the chart below which shows the indexed level of average spending by cohort to June 2020; traditionalists – i.e., vaccinated Americans’ – spending is now 4X the level in June.
As an aside, BofA did not see the same spending surge for lodging which may suggest that traditionalists are traveling to see family rather than take vacations.
Finally, spending at restaurants and bars increased modestly for this cohort recently relative to other age cohorts but there was little difference in brick & mortar retail spend.
Tyler Durden
Thu, 03/04/2021 – 20:40 - To Defend Conservative Media, GOP Must Defend The Constitution
To Defend Conservative Media, GOP Must Defend The Constitution
Authored by Rick Santorum via RealClear Politics (emphasis ours),
Republicans have long understood that the modern Democratic Party has little patience for free expression. Leftist speech police shut down debate on college campuses; biased media outlets like MSNBC lambasted President Trump’s language instead of discussing his policies; and now congressional Democrats are looking to cancel conservative media outlets like Fox News and Newsmax.
It is critical that conservatives don’t allow the left to ignore the First Amendment or make it irrelevant. Free speech is a core value that has made America the best country in human history. That’s why last summer I asked conservative consumers to press social media to allow more conservative content. Unfortunately, some conservatives have made the mistake of thinking the government can force platforms to host content in violation of their policies. As our wise Founding Fathers knew, the government is not the savior or protector of our rights, it is the biggest threat to them.
Some conservatives are asking the government to use antitrust law and changes to Section 230 to pressure social media to host more conservative speech. These requests for government intervention are likely to blow up in our face — and will prevent us from being able to take a principled stand against the left using government to attack our free speech rights.
Democrats just held a hearing where House members laid into right-leaning television channels for spreading disinformation about COVID and last year’s presidential election. And House Democrats issued a letter to cable companies and streaming providers demanding to know why they are carrying programming from Fox News, Newsmax, and One America News.
Here we see Democrats using government power to do precisely what our founders prohibited in the First Amendment when they wrote, “Congress shall make no law … abridging the freedom of speech.” Now that Democrats are in control of the federal government, they want to kick the First Amendment aside and intimidate broadcasters and social media into removing conservative content they don’t like.
Republicans are rightfully irate at this authoritarian power play, but I have been warning them for months that threatening Big Tech with government action for barring content would open the door for government to bar content! When are conservatives going to figure out that joining hands with the left to call for government sanctions against companies exercising their legal rights never ends well for us or the country.
Unfortunately, some conservative are still pushing the government to get involved in speech issues. In a dozen Republican-led states, we see legislation designed to punish social media for their content moderation policies by denying tax exemptions and empowering private lawsuits. These state laws surely will not survive First Amendment court challenges, which will only embolden social media to use more political bias in content moderation. And through unconstitutional attempts to make social media sites carry our content, conservatives give up the constitutional high ground we need when criticizing Democrats for undermining the First Amendment.
If conservatives are to protect free speech, we must show America that Democrats’ attempt to cancel Fox News is unconstitutional. We must show how, once again, the American left is willing to sacrifice our core national ideals to silence their political opponents. But conservatives can’t do this if we too are willing to use the heavy hand of government to enforce our own speech codes. Instead, we should ensure Section 230 remains intact so competitors to Big Tech social media outlet, like Gab, Rumble, and Parler, can continue to thrive. And we should avoid politicizing antitrust law to allow leftist bureaucrats to go after any American company that’s not living up to the left’s social justice agenda.
As I wrote last September, “Liberal Bias and All, Social Media Is Still Conservatives’ Best Electoral Tool. We shouldn’t help progressives destroy it.” Now we see what’s happened once Republicans opened the door for government to circumvent the First Amendment — Democrats are ripping that door off its hinges. If we want to protect the American right to free speech, we must not hand the left the tools they need to silence us once and for all.
Tyler Durden
Thu, 03/04/2021 – 20:20 - Stunning Views Of Freight Train Derailment In California Desert
Stunning Views Of Freight Train Derailment In California Desert
On Wednesday evening, a freight train derailment in the Southern California desert sent more than 40 railcars careening off the tracks into a mangled mess of metal.
San Bernardino County Fire (SBCF) tweeted pictures and a drone video of the train derailment. They said the incident occurred on the Burlington Northern Santa Fe Railway Company (BNSF Railway) rail network east of Ludlow, on Old National Trails Highway, or about 150 miles northeast of Los Angeles.
SBCF said, “BNSF cargo railcars, no injuries, no fire, Haz-Mat on scene. No impact to I-40.” Judging by the pictures released by the local police agency, a variety of cars were involved in the incident, including tanker cars, boxcars, and hoppers.
Mixed Freight Derailment
Tanker Cars And Other Cars Derailed
More Scenes Of The Incident
A drone video shows first responders in hazmat suits inspecting a tanker car.
Ludlow (update): #SBCoFD & @BNSFRailway Haz-Mat units make entry into a round tank car carrying a flammable liquid. pic.twitter.com/c1xqk6ZeV4
— San Bernardino County Fire (@SBCOUNTYFIRE) March 4, 2021
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The police drone captured stunning views of the mangled railcars.
“Initial reports indicate 44 cars derailed, and one car carrying ethanol alcohol is leaking,” BNSF spokeswoman Lena Kent told NBC Los Angeles.
Investigators are still working the incident area to figure out how the derailment occurred.
Tyler Durden
Thu, 03/04/2021 – 20:00 - 10Y Treasury Hits A Stunning -4.25% In Repo As Yields Blow Out
10Y Treasury Hits A Stunning -4.25% In Repo As Yields Blow Out
Last night we first pointed out something shocking: as a result of a massive wave of shorting in Treasurys in the past three days, the 10Y hit a record -4% in repo, an extremely rare event and one which occurs only when there is a dramatic shortage of collateral as a result of overshorting (think of it as very hard to borrow condition for stocks). What was even more amazing is that the repo rate was below the fails charge, which at least in theory is the absolute minimum that a 10Y rate can hit in repo. Effectively, it meant that an investor in the repo market lending money so others could short the 10Y ends up paying rather than getting paid. Needless to say, this is a clear breach of one of the most fundamental relationships in the repo market, where lenders of cash always get paid – however little – in order to make a more liquid and efficient market.
This stunning issue quickly escalated and this morning Bloomberg followed up on this critical topic:
And with everyone suddenly obsessing with both the SLR and repo malfunction, that’s why we said that during today’s WSJ video conference event, Jerome Powell has to address i) the ongoing crunch in the repo market and ii) the fate of the SLR extension, as the two are closely tied – after all if the bond market is confident that there is capacity to soak up the trillions in reserves being released by the Fed as the Treasury drains the $1.5 trillion in cash held in the TGA account, many of the acute issues in the extremely illiquid Treasury market would go away.
Alas, for some bizarre reason Powell never got that question today… or perhaps he simply did not want to answer it and made it clear in advance. In any case, with everyone in the market expecting Powell to discuss the fate of the SLR, his failure to do so was one of the reasons why bond yields erupted shortly after 12pm, as uncertainty over the fate of the SLR – and by extension bank balance sheet capacity – has now grown exponentially (for those confused by all the SLR hoopla, please read this).
It’s also why during the disappointing Powell address we said that we should brace for an even more dramatic move in repo:
Let’s see if 10Y hits -8% in repo today
— zerohedge (@zerohedge) March 4, 2021
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Ok, fine, we were just a bit hyperbolic, but in retrospect we may not have been too far off. Here’s why.
In his latest repo market commentary by Curvature’s Scott Skyrm published after the Powell conference, the repo guru asked – rhetorically – “how low can Repo rates go in the 10 Year Note? Or, in the past, how low have 10 Year Repo rates gone? Extremely low 10 Year Note rates only occur during single-issues.” That, Skyrm explained, is the period of time between when a new 10 Year Note was issued and its first reopening a month later. Which is true… however usually the single-issue repo crunch pushes the 10Y to -1%, at most -2% in repo. What we saw yesterday was unprecedented. Or rather, there was just one precedent… and it was during a market crash.
Skyrm said that from his own experience, what we call “extremely low” Repo rates is anything that’s below -3.00% – which is below the Fail Charge right now. Since the beginning of 2018, the 10 Year Note traded below -3.00% only two other times: a more “solid” -3.50% from 6/10/20 to 6/12/20, and the only time there was an even lower, record low repo print of -5.75% was during the peak of the covid crash, on 3/13/20.
What is striking is that March 3, 2021 was not a crisis. Neither was March 4. And yet, as Skyrm says after hitting -4.00% on Wednesday, the 10Y dipped even further to -4.25% today.
The good news is that after hitting a near record low in repo today, the 10Y stabilized modestly, rising to a still abnormal -1.00%, which may have been the result of today’s announcement that the Treasury’s 10Y reopening next week will be $38BN, which should relieve some of the single-issue pressure (it was below . But if there is more to the repo squeeze than just single-issue funding pressure, the 10Y will remain very special in repo for a long, long time.
Meanwhile, the shorting in the 10Y has now resumed, and after blowing out to 1.55% during Powell’s catastrophic speech, the benchmark treasury was last seen trading north of 1.57%, and fast approaching last week’s blowout level of 1.61%.
And while we wait for tomorrow’s repo market data to see just how massive the latest shorting burst has been, one thing that is certain is that with Powell neither doing nor saying anything today because as the Fed Chair said there was nothing “abnormal” about the market, the same market will now quickly push the 10Y to a level Powell does find “abnormal” and forces him to launch YCC far sooner than if Powell had simply said something about the SLR today and eased some of the soaring market panic.
Tyler Durden
Thu, 03/04/2021 – 19:40 - How Much Money Will Biden's New Stimulus Inject Into The Market
How Much Money Will Biden’s New Stimulus Inject Into The Market
Looking at market action over the past few weeks, it is clear that markets are finally fretting about yields and inflation. As DB’s Jim Reid puts it, “there is no doubt the forces working in financial markets in 2021 will be fairly extreme – reopenings, massive pent-up demand, the strongest US growth since the early 1980s, huge central bank liquidity and a likely enormous Biden fiscal package.”
And yet, as everyone knows by now, a substantial portion of the coming Biden stimulus will quickly be redirected into stocks. But how much?
That’s the question Jim Reid asked in his recent daily note, writing that whilst rising yields are a threat to all risk assets, “it’s worth highlighting that a large amount of the upcoming US stimulus checks will probably find their way into equities.” He then refer to a survey conducted last week by DB’s chief equity strategist Binky Chadha polling online brokerage account users which suggested they would invest around 37% of future stimulus checks in the stock market. This is a material force because as Reid notes, “behind the recent surge in retail investing is a younger, often new-to-investing and aggressive cohort not afraid to employ leverage.”
This makes sense, although someone should probably tell those respondents with an income level over $100,000 (who plan on investing 43% of their stimulus into the market) that they aren’t getting a stimulus…
So here is Reid’s math: “Given stimulus checks are currently penciled in at c.$405bn in Biden’s plan, that gives us a maximum of around $150bn that could go into US equities based on our survey. Obviously only a proportion of recipients have trading accounts, though. If we estimate this at around 20% (based on some historical assumptions), that would still provide around c.$30bn of firepower – and that’s before we talk about any possible boosts to 401k plans outside of trading accounts.”
For some context, the DB credit strategist notes that over the last five years mutual funds and ETFs have seen monthly outflows of -$9.1bn from US equities. The marginal buyer has been companies themselves conducting buybacks. However, over the last four months following Biden’s victory, this number has increased to over $15bn per month (a near record).
His conclusion: “stimulus checks could accelerate the large inflows into US equities seen in recent months after many years of weak flow data. Will this be enough to offset any impact of higher yields? Expect this push/pull to continue for some time.”
Tyler Durden
Thu, 03/04/2021 – 19:20 - Newsom Urges Double-Masking For All Californians, Will Not Make "Terrible Mistake" Like Texas
Newsom Urges Double-Masking For All Californians, Will Not Make “Terrible Mistake” Like Texas
Having immediately decried the actions of Texas and Mississippi – in giving their citizens back some freedom and the ability to think for themselves – as “absolutely reckless,” California Governor Gavin Newsom has doubled-down (literally) on the virtue-signaling.
“We will be doubling down on mask wearing,” said California Governor Gavin Newsom on Thursday, “not arguing to follow the example of Texas and other states that I think are making a terrible mistake.”
The Sacramento Bee is reporting tonight that new state health guidelines announced by Gov. Gavin Newsom on Thursday recommend that Californians wear two cloth masks or one filtered mask when going out in public to prevent the spread of COVID-19.
“We are encouraging people basically to double down on mask wearing, particularly in light of all what I would argue is bad information coming from at least four states in this country. We will not be walking down their path, we’re mindful of your health and our future,” Newsom said.
To Newsom’s point about doubling down, California updated its recommendations for mask wearing on Thursday with the following:
“‘Double masking’ is an effective way to improve fit and filtration. A close-fitting cloth mask can be worn on top of a surgical/disposable mask to improve the seal of the mask to the face.”
Interestingly, Newsom also announced Thursday that counties across the state could be cleared to open more businesses and lift other restrictions sooner than anticipated under an update that loosens some requirements in his Blueprint for a Safer Economy.
So he is easing restrictions (cough recall pandering cough), like Texas; and at the same time urging ‘double masking’?
Of course, he will claim he is ‘just following the science’ but as AIER’s Paul Alexander detailed at length, why the CDC’s mask-mandate study is fault-ridden:
Based on our assessment of this CDC mask mandate report, we find ourselves troubled by the study methods themselves and by extension, the conclusions drawn. The real-world evidence exists and indicates that in various countries and US states, when mask mandates were followed consistently, there was an inexorable increase in case counts. We have seen that in states and countries that already have a high frequency of mask wearing that adding mandates had little effect. There was no (zero) benefit of adding a mask mandate in Austria, Germany, France, Spain, UK, Belgium, Ireland, Portugal, and Italy, and states like California, Hawaii, and Texas. Importantly, we do not ascribe a cause-effect relationship between the implementation of mask mandates and the rise in case rates, but we also demand the same approach when it comes to claiming some sort of causal relationship between the introduction of mask mandates and likely claims by the CDC that their findings could support their implementation countrywide.
We think that inclusion of such evidence on the failures of masks mandates globally and states within the US would have made for more balanced, comprehensive, and fully-informed reporting.
…
Trusting the science means relying on the scientific process and method and not merely ‘following the leader.’ It is not the same as trusting, without verification, the conclusory statements of human beings simply because they have scientific training or credentials.
History does not bode well for times that politics meddles with science. Martin Kulldorff, a professor at Harvard Medical School and a leader in disease surveillance methods and infectious disease outbreaks, describes the current COVID scientific environment this way: “After 300 years, the Age of Enlightenment has ended.”
We wonder how a citizenry that is already demanding his recall will react to this latest escalation in restrictions.
Tyler Durden
Thu, 03/04/2021 – 19:00 - Honda Is Now Selling Japan's First Level 3 Autonomous Car
Honda Is Now Selling Japan’s First Level 3 Autonomous Car
Honda is taking the lead in autonomous driving sales in Japan.
The auto manufacturer has announced that sales of its Legend sedans in Japan will be equipped with a “Traffic Jam Pilot” feature that allows the car to drive itself on crowded highways.
Honda says it is going to make 100 of the limited edition sedans, according to Bloomberg on Thursday. The company was one of the first to be granted a Level 3 self-driving designation in Japan. Hitoshi Aoki, who was in charge of the project for Honda, said: “Long-distance driving will be very comfortable and drivers will have less stress”.
The 2021 Honda Legend Level 3 means that certain features are autonomous, but the driver still must be able to take over.
The end game for many vehicle manufacturers is seen as Level 5 autonomy, where a car doesn’t need any human input to navigate roadways.
Autonomy has been brought up time after time as a bull case in the Tesla world. For example, Cathie Wood used it as the centerpiece of her Tesla bull case on Benzinga’s podcast earlier this week. “Our conviction on its autonomous strategy has increased over last few months,” she said, apparently unaware that Tesla has logged just 12.2 autonomous testing miles in California.
Gene Munster also threw around the world “autonomy” during a CNBC debate with Gordon Johnson earlier in the week.
Elon Musk has claimed that Tesla will have Level 5 autonomy by the end of 2021. C|NET has called Tesla’s current level of autonomy not “even reliably Level 3 autonomous”.
And so, once again, the legacy auto manufacturers – which are already vying to pass Tesla in battery, design, quality, hardware and service – now appear to be passing Musk in sales of bona-fide Level 3 vehicles.
Tyler Durden
Thu, 03/04/2021 – 18:40 - Powell Plunges Markets Into "Disorder"
Powell Plunges Markets Into “Disorder”
Fed Chair Powell’s failure to deliver during his speech today – No hints at a ‘Twist’, refuses to speculate on repo issues, no pushback against recent bond vol, and no mention of SLR exemption – sparked chaos across all asset classes today with stocks, bonds, and gold puking as the dollar soared…
Powell sparked the biggest sell program since October…
Source: Bloomberg
Or to put it another way…
Small Caps were the days biggest loser, puking over 5% from the intraday highs. Stocks rebounded after S&P found support at its 100DMA and unch for the year and Nasdaq reversed right at its 10% correction level and 100DMA…
Nasdaq entered correction (down 10%) and is in the red for 2021. The S&P also fell into the red but found support there…
Source: Bloomberg
Robinhood’s brand new investor hotline right now pic.twitter.com/dNO0b64h1Y
— zerohedge (@zerohedge) March 4, 2021
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The Nasdaq fell below its 100DMA today and all the other majors fell below their 50DMA but found support at those levels…
Energy stocks rallied on the day (as oil exploded higher) but tech wrecked and financials were hit (even with higher rates)…
Source: Bloomberg
Hedge funds have really puked up their favorite holdings. After a solid February, March has been a bloodbath…
Source: Bloomberg
BUZZ – the social media sentiment ETF – tanked from its open…
TSLA tumbled to $600…
ARKK sank hard – down 28% from the highs…
The collapse of momo stocks continued…
Source: Bloomberg
Growth and value puked – this was not simply rate-related…
Source: Bloomberg
And suddenly, profitability (and not narratives) matter…
Source: Bloomberg
As IPOs and SPACs were clubbed like a baby seal into a bear market…
Source: Bloomberg
VIX spiked to 32 intraday…
Credit markets had an ugly day with IG and HY spreads blowing out…
Source: Bloomberg
Bonds were a bloodbath today after Powell’s failure to deliver (2Y unch, 10Y +6bps)…
Source: Bloomberg
10Y yields spiked up to 1.55%… and stayed there…
Source: Bloomberg
Real yields surged higher and dragged gold down…
Source: Bloomberg
The dollar shot higher as we suspect liquidity fears are rearing their ugly head, hitting its highest since November…
Source: Bloomberg
Broad selling pressure spilled over into crypto with Bitcoin dumping back below $50k…
Source: Bloomberg
Oil surged on surprise OPEC+ decision to not hike output…
And as oil prices surge, so $3.000 gas prices at the pump loom…
Source: Bloomberg
PMs were pummeled…with gold back below $1700..
And silver tumbled below $26, erasing all the Reddit-Raiders’ gains…
Finally, we note that amid all of Powell’s comments he said:
“I would be concerned by disorderly conditions in markets or persistent tightening in financial conditions that threatens the achievement of our goals.”
Well, judging by today’s explosion in vol across every asset class, and financial conditions at their tightest since November…
Source: Bloomberg
Dear Fed Chair: are market conditions still orderly?
— zerohedge (@zerohedge) March 4, 2021
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It’s time to get back to work, Mr. Powell. It’s pretty clear that’s what the market is demanding… and with the market pricing in 118bps of rate-hikes.between the end of 2022 and the end of 2024…
Source: Bloomberg
We leave you with former Dallas Fed president Richard Fisher’s comments:
“[The Fed] cannot live in fear that gee whiz the market is going to be unhappy that we are not giving them more monetary cocaine.“
“Does The Fed really want to have a put every time the market gets nervous? …Coming off all-time highs, does it make sense for The Fed to bail the markets out every single time… creating a trap?”
“The Fed has created this dependency and there’s an entire generation of money-managers who weren’t around in ’74, ’87, the end of the ’90s, and even 2007-2009.. and have only seen a one-way street… of course they’re nervous.”
“The question is – do you want to feed that hunger? Keep applying that opioid of cheap and abundant money?”
“…but we have to consider, through a statement rather than an action, that we must wean the market off its dependency on a Fed put.”
Tyler Durden
Thu, 03/04/2021 – 18:22 - The Fed Will Need More Than Words To Keep The Bubble Inflated
The Fed Will Need More Than Words To Keep The Bubble Inflated
Authored by Michael Maharrey via SchiffGold.com,
Bond yields spiked. The stock market threw a tantrum. Reuters analyst Dhara Ranasinghe called it “a tussle over borrowing costs.”
The Fed won round 1, thanks to a little help from the Aussies.
But even the mainstream seems to have noticed that this wrestling match isn’t over and the Fed may be forced to take real action soon.
As Ranasinghe put it, “Round Two, and perhaps even Round Three, are inevitable, and they may require policy action rather than just words.”
By policy action, they mean upping quantitative easing – exactly as Peter Schiff has predicted.
The bond market got clobbered on Friday. As prices fell, the yield on the 10-year Treasury pushed as high as 1.61% and the 30-year hit 2.4%. These rates aren’t high by historical standards, but Peter said it was one of the biggest interday moves in the bond market that he’s ever seen. Up to that point, stock markets hadn’t reacted much to rising interests rate, but on Friday, they sat up, took notice, and threw a tantrum. The Dow dropped some 480 points.
The bond market bloodbath on Friday is part of a larger trend. Yields have been pushing upward for weeks. Conventional wisdom tells us that this is due to a quicker than expected economic recovery and this may force the Fed to tighten monetary policy sooner than expected. This is precisely why we’ve seen the big selloff in gold. A lot of people actually believe the Fed is going to reverse course on its monetary policy.
But Fed officials have been working diligently to jawbone this notion away. Jerome Powell testified on Capitol Hill last week saying he doesn’t expect inflation to reach the 2% target for at least three years.
But Peter says there is a reality out there that nobody wants to acknowledge. Bond yields are not spiking because the economy is strong. They are spiking because of inflation – Powell’s assurances notwithstanding.
Bond yields are going up because there is a massive supply of bonds because we have massive deficits. And even though the Fed is buying a lot of bonds, they ain’t buying enough. So, those extra bonds, there’s no buyer, and so the price keeps falling.”
The reality is that talk isn’t going to be enough to keep a lid on rising interest rates. And this Reuters article reveals that at least some people out there in the mainstream get it too.
Reiterating such messages [that inflation isn’t a problem and loose monetary policy will remain in place for years], alongside interventions by smaller central banks such as Australia and South Korea, calmed bond markets. Bets on early-2023 Fed rate hikes have ebbed.”
Reuters mentioned Australia. The fact of the matter is the Reserve Bank of Australia stepped in and did the Fed’s dirty work this time. On Monday, the Aussie central bank announced plans to double its quantitative easing program.
After the big selloff Friday, stock markets rallied on Monday, with the Dow up better than 600 points. As Peter noted, very few people in the US mainstream financial media connected the rally with the RBA’s policy move.
Nobody was really talking about the fact that our rally was made in Australia. But it was. And the significance, I think, of what the Australian central bank did, is I think it created an implied put here in the US market. Because I think when traders looked at what the Reserve Bank of Australia did, they assumed that the Federal Reserve would ultimately do the same thing, which is exactly what I’ve been saying the entire time.”
The Reuters analyst seems to get this. Ranasinghe identifies the stock market bubble blown up by the Fed.
Central bank stimulus that crushed borrowing costs to below inflation has fed an equity bull run that has added $64 trillion to the value of global stocks since 2008. Higher yields would put that entire edifice at risk.”
Then Ranasinghe accurately observes that the Fed has consistently played the role of white knight, riding in to rescue the market when necessary.
The shifting power balance [between the markets and the Fed] became evident in 2013 when a market tantrum forced the Fed to backtrack on plans to start withdrawing stimulus. Another market revolt erupted in late 2018, egged on by then President Donald Trump. The Fed soon pivoted from raising rates to cutting them. So markets have seen this movie before.”
And Ranasighe understands that the Fed really can’t let interest rates rise when the entire economy is predicated on cheap money.
What happens in sovereign bond markets matters because higher yields here raise borrowing costs for companies and households. As capital flow slows, so does economic growth. And higher yields are harder to stomach in a world that has racked up an additional $70 trillion rise in debt since 2013.”
Given the realities, it’s not hard to predict what the Fed will do. The central bank will do exactly what Peter Schiff has been saying it will do. It will boost QE.
If the Australian central bank has already panicked and is increasing the size of its QE program, not to help the economy but to stop interest rates from rising, why wouldn’t the Federal Reserve do the same thing? After all, all of these central bankers are using the same playbook. So, I think what happened is now the markets are starting to realize that they don’t have to worry about a big increase in interest rates because if there is more significant upward pressure, if the bonds really start to fall, then the US Federal Reserve is going to do exactly what the Australian Reserve Bank did, and it is going to increase the size of its asset purchase program – QE – and is going to start buying more bonds to prevent bond prices from falling and to prevent interest rates from rising.”
The Fed could be put to the test sooner rather than later. Next week, the Fed will auction 3-year and 10-year bonds. The last debt sale saw lackluster demand and there’s no reason to think investors are going to suddenly be starving for US bonds. That could mean another bad day for the bond market and another spike in yields.
According to Reuters, ING Bank predicts the US Treasury will issue another $4 trillion in debt this year. That compares with $3.6 trillion in 2020. The Fed’s monthly purchases currently total $120 billion.
The math doesn’t add up, as a John Hancock analyst told Reuters.
As we do more stimulus, we will issue more US Treasuries, so if the Fed doesn’t increase quantitative easing they are in essence tapering.”
The Fed can’t taper. It can’t let interest rates spike. And words won’t be enough to hold interest rates down. The Fed is going to have to take action and that means more bond-buying.
Tyler Durden
Thu, 03/04/2021 – 18:20 - "Full Throttle Correction" – Tumbling Nickel Prices Lead Sudden Industrial Metals Slump
“Full Throttle Correction” – Tumbling Nickel Prices Lead Sudden Industrial Metals Slump
Industrial metal prices have soared over the last year to highs not seen in over a decade as bets on economic recovery from the pandemic push up the prospects for “pent-up demand” due to a cleaner and greener future. Though industrial metal prices are stumbling in the last five sessions, that has set off alarm bells with some commodity analysts.
S&P GSCI Industrial Metals index tagged a near-decade high last week after an 11-month rip roar rally of 75% from pandemic lows. Base metals are essential inputs for batteries and home electronics as post-crisis consumption and supply chain disruptions have led to price increases. The prospects of a greener future with government and companies globally announcing net-zero emissions have unleashed momentum and speculative traders into these metals.
But over the last five sessions, something spooked the industrial metals market. On Thursday, nickel prices plunged more than 4%, dragging down copper by almost 5% at one point.
Saxo Bank commodity analyst Ole Hansen told Reuters that the massive influx of speculative money flowing into industrial metals over the last year was bound to burst. He said, “It’s been a long time coming.”
Hansen said the latest plunge in nickel prices was the “trigger” and “now we see correction at full throttle.”
Commodity analysts at Citi told clients that more supply from Tsingshan Holding Group Co., the world’s top stainless steel producer, in China, and Tesla’s efforts to reduce the nickel in its batteries threatens the industrial metal price outlook.
“We are very concerned the impact this will have on speculative positioning at a time the market also goes into a large physical surplus,” Citi analysts wrote.
A little more than two months ago, we told our Premium subs that Chinese credit impulse “just peaked” – and since it impacts virtually every aspect of the global economy – it is a proxy of global economic growth.
JPMorgan’s Mislav Matejka explained last month China’s credit impulse is in the process of “peaking.” The change in the growth rate of aggregate credit as a percentage of gross domestic product in the country has a tremendous impact on the global economy’s future. Saxo Bank once said the credit impulse leads the global economy by 9 to 12 months.
Putting this all together – could a downturn in industrial metals as China’s credit impulse tops, suggest global economic growth is set to stumble later this year?
Tyler Durden
Thu, 03/04/2021 – 18:00
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