Feb 06

Today’s News 6th February 2023

  • How The "Unvaccinated" Got It Right
    How The “Unvaccinated” Got It Right

    Authored by Robin Koerner via The Brownstone Institute,

    Scott Adams is the creator of the famous cartoon strip, Dilbert. It is a strip whose brilliance derives from close observation and understanding of human behavior. Some time ago, Scott turned those skills to commenting insightfully and with notable intellectual humility on the politics and culture of our country.

    Like many other commentators, and based on his own analysis of evidence available to him, he opted to take the Covid “vaccine.”

    Recently, however, he posted a video on the topic that has been circulating on social media. It was a mea culpa in which he declared, “The unvaccinated were the winners,” and, to his great credit, “I want to find out how so many of [my viewers] got the right answer about the “vaccine” and I didn’t.” 

    “Winners” was perhaps a little tongue-in-cheek: he seemingly means that the “unvaccinated” do not have to worry about the long-term consequences of having the “vaccine” in their bodies since enough data concerning the lack of safety of the “vaccines” have now appeared to demonstrate that, on the balance of risks, the choice not to be “vaccinated” has been vindicated for individuals without comorbidities.

    What follows is a personal response to Scott, which explains how consideration of the information that was available at the time led one person – me – to decline the “vaccine.” It is not meant to imply that all who accepted the “vaccine” made the wrong decision or, indeed, that everyone who declined it did so for good reasons. 

    1. Some people have said that the “vaccine” was created in a hurry. That may or may not be true. Much of the research for mRNA “vaccines” had already been done over many years, and corona-viruses as a class are well understood so it was at least feasible that only a small fraction of the “vaccine” development had been hurried.

      The much more important point was that the “vaccine” was rolled out without long-term testing. Therefore one of two conditions applied. Either no claim could be made with confidence about the long-term safety of the “vaccine” or there was some amazing scientific argument for a once-in-a-lifetime theoretical certainty concerning the long-term safety of this “vaccine.” The latter would be so extraordinary that it might (for all I know) even be a first in the history of medicine. If that were the case, it would have been all that was being talked about by the scientists; it was not. Therefore, the more obvious, first state of affairs, obtained: nothing could be claimed with confidence about the long-term safety of the “vaccine.”

      Given, then, that the long-term safety of the “vaccine” was a theoretical crapshoot, the unquantifiable long-term risk of taking it could only be justified by an extremely high certain risk of not taking it. Accordingly, a moral and scientific argument could only be made for its use by those at high risk of severe illness if exposed to COVID. Even the very earliest data immediately showed that I (and the overwhelming majority of the population) was not in the group.

      The continued insistence on rolling out the “vaccine” to the entire population when the data revealed that those with no comorbidities were at low risk of severe illness or death from COVID was therefore immoral and ascientific on its face. The argument that reduced transmission from the non-vulnerable to the vulnerable as a result of mass “vaccination” could only stand if the long-term safety of the “vaccine” had been established, which it had not. Given the lack of proof of long-term safety, the mass-“vaccination” policy was clearly putting at risk young or healthy lives to save old and unhealthy ones. The policy makers did not even acknowledge this, express any concern about the grave responsibility they were taking on for knowingly putting people at risk, or indicate how they had weighed the risks before reaching their policy positions. Altogether, this was a very strong reason not to trust the policy or the people setting it.

      At the very least, if the gamble with people’s health and lives represented by the coercive “vaccination” policy had been taken following an adequate cost-benefit benefit, that decision would have been a tough judgment call. Any honest presentation of it would have involved the equivocal language of risk-balancing and the public availability of information about how the risks were weighed and the decision was made. In fact, the language of policy-makers was dishonestly unequivocal and the advice they offered suggested no risk whatsoever of taking the “vaccine.” This advice was simply false (or if you prefer, misleading,) on the evidence of the time inasmuch as it was unqualified.

    1. Data that did not support COVID policies were actively and massively suppressed. This raised the bar of sufficient evidence for certainty that the “vaccine” was safe and efficacious. Per the foregoing, the bar was not met. 
    1. Simple analyses of even the early available data showed that the establishment was prepared to do much more harm in terms of human rights and spending public resources to prevent a COVID death than any other kind of death. Why this disproportionality? An explanation of this overreaction was required. The kindest guess as to what was driving it was “good-old, honest panic.” But if a policy is being driven by panic, then the bar for going along with it moves up even higher. A less kind guess is that there were undeclared reasons for the policy, in which case, obviously, the “vaccine” could not be trusted. 
    1. Fear had clearly generated a health panic and a moral panic, or mass formation psychosis. That brought into play many very strong cognitive biases and natural human tendencies against rationality and proportionality. Evidence of those biases was everywhere; it included the severing of close kin and kith relationships, the ill-treatment of people by others who used to be perfectly decent, the willingness of parents to cause developmental harm to their children, calls for large-scale rights violations that were made by large numbers of citizens of previously free countries without any apparent concern for the horrific implications of those calls, and the straight-faced, even anxious, compliance with policies that should have warranted responses of laughter from psychologically healthy individuals (even if they had been necessary or just helpful). In the grip of such panic or mass formation psychosis the evidential bar for extreme claims (such as the safety and moral necessity of injecting oneself with a form of gene therapy that has not undergone long-term testing) rises yet further.
    1. The companies responsible for manufacturing and ultimately profiting from the “vaccination” were given legal immunity. Why would a government do that if it really believed that the “vaccine” was safe and wanted to instill confidence in it? And why would I put something in my body that the government has decided can harm me without my having any legal redress?
    1. If the “vaccine”-sceptical were wrong, there would still have been two good reasons not to suppress their data or views. First, we are a liberal democracy that values free speech as a fundamental right and second, their data and arguments could be shown to be fallacious. The fact that the powers-that-be decided to violate our fundamental values and suppress discussion invites the question of “Why?” That was not satisfactorily answered beyond, “It’s easier for them to impose their mandates in a world where people do not dissent:” but that is an argument against compliance, rather than for it. Suppressing information a priori suggests that the information has persuasive force. I distrust anyone who distrusts me to determine which information and arguments are good and which are bad when it is my health that is at stake – especially when the people who are promoting censorship are hypocritically acting against their declared beliefs in informed consent and bodily autonomy.
    1. The PCR test was held up as the “gold standard” diagnostic test for COVID. A moment’s reading about how the PCR test works indicates that it is no such thing. Its use for diagnostic purposes is more of an art than a science, to put it kindly. Kary Mullis, who in 1993 won the Nobel Prize in Chemistry for inventing the PCR technique risked his career to say as much when people tried to use it as a diagnostic test for HIV to justify a mass program of pushing experimental anti-retroviral drugs on early AIDS patients, which ultimately killed tens of thousands of people. This raises the question, “How do the people who are generating the data that we saw on the news every night and were being used to justify the mass “vaccination” policy handle the uncertainty around PCR-based diagnoses?” If you don’t have a satisfactory answer to this question, your bar for taking the risk of “vaccination” should once again go up. (On a personal note, to get the answer before making my decision about whether to undergo “vaccination,” I sent exactly this question, via a friend, to an epidemiologist at Johns Hopkins. That epidemiologist, who was personally involved in generating the up-to-date data on the spread of pandemic globally, replied merely that s/he works with the data s/he’s given and does not question its accuracy or means of generation. In other words, the pandemic response was largely based on data generated by processes that were not understood or even questioned by the generators of that data.) 
    1. To generalize the last point, a supposedly conclusive claim by someone who demonstrably cannot justify their claim should be discounted. In the case of the COVID pandemic, almost all people who acted as if the “vaccine” was safe and effective had no physical or informational evidence for the claims of safety and efficacy beyond the supposed authority of other people who made them. This includes many medical professionals – a problem that was being raised by some of their number (who, in many cases, were censored on social media and even lost their jobs or licenses). Anyone could read the CDC infographics on mRNA “vaccines” and, without being a scientist, generate obvious “But what if..?” questions that could be asked of experts to check for themselves whether the pushers of the “vaccines” would personally vouch for their safety. For example, the CDC put out an infographic that stated the following.

      “How does the vaccine work?

      The mRNA in the vaccine teaches your cells how to make copies of the spike protein. If you are exposed to the real virus later, your body will recognize it and know how to fight it off. After the mRNA delivers the instructions, your cells break it down and get rid of it.”

      All right. Here are some obvious questions to ask, then. “What happens if the instructions delivered to cells to generate the spike protein are not eliminated from the body as intended? How can we be sure that such a situation will never arise?” If someone cannot answer those questions, and he is in a position of political or medical authority, then he shows himself to be willing to push potentially harmful policies without considering the risks involved.

    2. Given all of the above, a serious person at least had to keep an eye out for published safety and efficacy data as the pandemic proceeded. Pfizer’s Six-month Safety and Efficacy Study was notable. The very large number of its authors was remarkable and their summary claim was that the tested vaccine was effective and safe. The data in the paper showed more deaths per head in the “vaccinated” group than “unvaccinated” group.

    While this difference does not statistically establish that the shot is dangerous or ineffective, the generated data were clearly compatible with (let us put it kindly) the incomplete safety of the “vaccine” – at odds with the front-page summary. (It’s almost as if even professional scientists and clinicians exhibit bias and motivated reasoning when their work becomes politicized.) At the very least, a lay reader could see that the “summary findings” stretched, or at least showed a remarkable lack of curiosity about, the data – especially given what was at stake and the awesome responsibility of getting someone to put something untested inside their body.

    1. As time went on, it became very clear that some of the informational claims that had been made to convince people to get “vaccinated,” especially by politicians and media commentators, were false. If those policies had been genuinely justified by the previously claimed “facts,” then determination of the falsity of those “facts” should have resulted in a change in policy or, at the very least, expressions of clarification and regret by people who had previously made those incorrect but pivotal claims. Basic moral and scientific standards demand that individuals put clearly on the record the requisite corrections and retractions of statements that might influence decisions that affect health. If they don’t, they should not be trusted – especially given the huge potential consequences of their informational errors for an increasingly “vaccinated” population. That, however, never happened. If the “vaccine”-pushers had acted in good faith, then in the wake of the publication of new data throughout the pandemic, we would have been hearing (and perhaps even accepting) multiple mea culpas. We heard no such thing from political officials, revealing an almost across-the-board lack of integrity, moral seriousness, or concern with accuracy. The consequently necessary discounting of the claims previously made by officials left no trustworthy case on the pro-lockdown, pro-“vaccine” side at all.

      To offer some examples of statements that were proven false by data but not explicitly walked back:

      “You’re not going to get COVID if you get these vaccinations… We are in a pandemic of the unvaccinated.” – Joe Biden;

      “The vaccines are safe. I promise you…” – Joe Biden;

      “The vaccines are safe and effective.” – Anthony Fauci.

      “Our data from the CDC suggest that vaccinated people do not carry the virus, do not get sick – and it’s not just in the clinical trials but it’s also in real world data.” – Dr. Rochelle Walensky.

      “We have over 100,000 children, which we’ve never had before, in… in serious condition and many on ventilators.” – Justice Sotomayer (during a case to determine legality of Federal “vaccine” mandates)…

      … and so on and so on.

      The last one is particularly interesting because it was made by a judge in a Supreme Court case to determine the legality of the federal mandates. Subsequently, the aforementioned Dr. Walensky, head of the CDC, who had previously made a false statement about the efficacy of the “vaccine,” confirmed under questioning that the number of children in hospital was only 3,500 – not 100,000.

      To make more strongly the point about prior claims and policies’ being contradicted by subsequent findings but not, as a result, being reversed, the same Dr. Walensky, head of the CDC, said, “the overwhelming number of deaths – over 75% – occurred in people that had at least four comorbidities. So really these were people who were unwell to begin with.” That statement so completely undermined the entire justification for the policies of mass-“vaccination” and lockdowns that any intellectually honest person who supported them would at that point have to reassess their position. Whereas the average Joe might well have missed that piece of information from the CDC, it was the government’s own information so the presidential Joe (and his agents) certainly could not have missed it. Where was the sea change in policy to match the sea change in our understanding of the risks associated with COVID, and therefore the cost-benefit balance of the untested (long-term) “vaccine” vs. the risk associated with being infected with COVID? It never came. Clearly, neither the policy positions nor their supposed factual basis could be trusted.

    1. What was the new science that explained why, for the first time in history, a “vaccine” would be more effective than natural exposure and consequent immunity? Why the urgency to get a person who has had COVID and now has some immunity to get “vaccinated” after the fact?
    1. The overall political and cultural context in which the entire discourse on “vaccination” was being conducted was such that the evidential bar for the safety and efficacy of the “vaccine” was raised yet further while our ability to determine whether that bar had been met was reduced. Any conversation with an “unvaccinated” person (and as an educator and teacher, I was involved in very many), always involved the “unvaccinated” person being put into a defensive posture of having to justify himself to the “vaccine”-supporter as if his position was de facto more harmful than the contrary one. In such a context, accurate determination of facts is almost impossible: moral judgment always inhibits objective empirical analysis. When dispassionate discussion of an issue is impossible because judgment has saturated discourse, drawing conclusions of sufficient accuracy and with sufficient certainty to promote rights violations and the coercion of medical treatment, is next to impossible.
    1. Regarding analytics (and Scott’s point about “our” heuristics beating “their” analytics), precision is not accuracy. Indeed, in contexts of great uncertainty and complexity, precision is negatively correlated with accuracy. (A more precise claim is less likely to be correct.) Much of the COVID panic began with modeling. Modeling is dangerous inasmuch as it puts numbers on things; numbers are precise; and precision gives an illusion of accuracy – but under great uncertainty and complexity, model outputs are dominated by the uncertainties on the input variables that have very wide (and unknown) ranges and the multiple assumptions that themselves warrant only low confidence. Therefore, any claimed precision of a model’s output is bogus and the apparent accuracy is only and entirely that – apparent. 

    We saw the same thing with HIV in the ‘80s and ‘90s. Models at that time determined that up to one-third of the heterosexual population could contract HIV. Oprah Winfrey offered that statistic on one of her shows, alarming a nation. The first industry to know that this was absurdly wide of the mark was the insurance industry when all of the bankruptcies that they were expecting on account of payouts on life insurance policies did not happen. When the reality did not match the outputs of their models, they knew that the assumptions on which those models were based were false – and that the pattern of the disease was very different from what had been declared.

    For reasons beyond the scope of this article, the falseness of those assumptions could have been determined at the time. Of relevance to us today, however, is the fact that those models helped to create an entire AIDS industry, which pushed experimental antiretroviral drugs on people with HIV no doubt in the sincere belief that the drugs might help them. Those drugs killed hundreds of thousands of people. 

    (By the way, the man who announced the “discovery” of HIV from the White House – not in a peer-reviewed journal – and then pioneered the huge and deadly reaction to it was the very same Anthony Fauci who has been gracing our television screens over the last few years.)

    1. An honest approach to data on COVID and policy development would have driven the urgent development of a system to collect accurate data on COVID infections and the outcomes of COVID patients. Instead, the powers that be did the very opposite, making policy decisions that knowingly reduced the accuracy of collected data in a way that would serve their political purposes. Specifically, they 1) stopped distinguishing between dying of COVID and dying with COVID and 2) incentivized medical institutions to identify deaths as caused by COVID when there was no clinical data to support that conclusion. (This also happened during the aforementioned HIV panic three decades ago.)
    1. The dishonesty of the pro-“vaccine” side was revealed by the repeated changes of official definitions of clinical terms like “vaccine” whose (scientific) definitions have been fixed for generations (as they must be if science is to do its work accurately: definitions of scientific terms can change, but only when our understanding of their referents changes). Why was the government changing the meanings of words rather than simply telling the truth using the same words they had been using from the beginning? Their actions in this regard were entirely disingenuous and anti-science. The evidential bar moves up again and our ability to trust the evidence slides down. 

    In his video (which I mentioned at the top of this article), Scott Adams asked, “How could I have determined that the data that [“vaccine”-sceptics] sent me was the good data?” He did not have to. Those of us who got it right or “won” (to use his word) needed only to accept the data of those who were pushing the “vaccination” mandates. Since they had the greatest interest in the data pointing their way, we could put an upper bound of confidence in their claims by testing those claims against their own data. For someone without comorbidities, that upper bound was still too low to take the risk of “vaccination” given the very low risk of severe harm from contracting COVID-19.

    In this relation, it is also worth mentioning that under the right contextual conditions, absence of evidence is evidence of absence. Those conditions definitely applied in the pandemic: there was a massive incentive for all of the outlets who were pushing the “vaccine” to provide sufficient evidence to support their unequivocal claims for the vaccine and lockdown policies and to denigrate, as they did, those who disagreed. They simply did not provide that evidence, obviously because it did not exist. Given that they would have provided it if it had existed, the lack of evidence presented was evidence of its absence.

    For all of the above reasons, I moved from initially considering enrolling in a vaccine trial to doing some open-minded due diligence to becoming COVID-“vaccine”-sceptical. I generally believe in never saying “never” so I was waiting until such time as the questions and issues raised above were answered and resolved. Then, I would be potentially willing to get “vaccinated,” at least in principle. Fortunately, not subjecting oneself to a treatment leaves one with the option to do so in the future. (Since the reverse is not the case, by the way, the option value of “not acting yet” weighs somewhat in favor of the cautious approach.)

    However, I remember the day when my decision not to take the “vaccine” became a firm one. A conclusive point brought me to deciding that I would not be taking the “vaccine” under prevailing conditions. A few days later, I told my mother on a phone call, “They will have to strap me to a table.” 

    1. Whatever the risks associated with a COVID infection on the one hand, and the “vaccine” on the other, the “vaccination” policy enabled massive human rights violations. Those who were “vaccinated” were happy to see the “unvaccinated” have basic freedoms removed (the freedom to speak freely, work, travel, be with loved ones at important moments such as births, deaths, funerals etc.) because their status as “vaccinated” allowed them to accept back as privileges-for-the-“vaccinated” the rights that had been removed from everyone else. Indeed, many people grudgingly admitted that they got “vaccinated” for that very reason, e.g. to keep their job or go out with their friends. For me, that would have been to be complicit in the destruction, by precedent and participation, of the most basic rights on which our peaceful society depends.

      People have died to secure those rights for me and my compatriots. As a teenager, my Austrian grandfather fled to England from Vienna and promptly joined Churchill’s army to defeat Hitler. Hitler was the man who murdered his father, my great-grandfather, in Dachau for being a Jew. The camps began as a way to quarantine the Jews who were regarded as vectors of disease that had to have their rights removed for the protection of the wider population. In 2020, all I had to do in defense of such rights was to put up with limited travel and being barred from my favorite restaurants, etc., for a few months. 

    Even if I were some weird statistical outlier such that COVID might hospitalize me despite my age and good health, then so be it: if it were going to take me, I would not let it take my principles and rights in the meanwhile.

    And what if I were wrong? What if the massive abrogation of rights that was the response of governments around the world to a pandemic with a tiny fatality rate among those who were not “unwell to begin with” (to use the expression of the Director of the CDC) was not going to end in a few months? 

    What if it were going to go on forever? In that case, the risk to my life from COVID would be nothing next to the risk to all of our lives as we take to the streets in the last, desperate hope of wresting back the most basic freedoms of all from a State that has long forgotten that it legitimately exists only to protect them and, instead, sees them now as inconvenient obstacles to be worked around or even destroyed.

    Tyler Durden
    Mon, 02/06/2023 – 00:00

  • East-Oregon Movement To Secede And Create 'Greater Idaho' Picks Up Steam
    East-Oregon Movement To Secede And Create ‘Greater Idaho’ Picks Up Steam

    A movement by east-Oregon conservatives to secede and join Idaho is picking up steam, according to the Daily Mail, which interviewed the movement’s leader, Mike McCarter.

    Mike McCarter is president of the Greater Idaho Movement. The campaign is stepping up its push for 15 counties to leave Oregon and join the neighboring state of Idaho

    Armed with just $70,000, McCarter has been lobbying for the move in the two states – and has seen allies introduce legislation in Oregon last month. He also has a bill ready to go in Idaho that would accelerate discussions for 15 counties to immediately secede.

    “I think people within the United States are watching Oregon’s movement, hoping that it’ll establish a pathway for them in the future,” he told the Mail.

    McCarter’s office, adorned with muzzle-loading rifles and the head of a musk deer, “could not be further from the image of Oregon as a haven for woke politics, where a majority voted to decriminalize hard drugs in 2020, where coastal valleys provide the perfect climate for the delicate pinot noir grape and where the liberal lifestyle was sent up in the TV comedy Portlandia,” reads the report.

    That is Portland, with its homeless encampments outside artisan doughnut stores. 

    By contrast, central and eastern Oregon is a land of hardy ranchers, loggers and sawmill workers. Where daytime temperatures dropped below zero at the weekend after a snowstorm.

    And where locals say they have more in common with next-door Idaho than they do Portland and its $6 caffe lattes. 

    ‘Our movement is based on values,’ said McCarter, 75, a retired nursery worker who runs courses for people who want concealed carry permits 

    ‘You know, the traditional values of faith, family, freedom, and independence. 

    ‘We don’t want to be catered to by the government. In other words, if my power goes down, I have generator, I have water, everything … food storage.’

    As America divides between urban and rural, Democratic cities and Republican hiss and prairies, eastern Oregon is at the forefront of reshaping state lines. -Daily Mail

    According to McCarter, conservatives in Oregon would be ‘fairly represented’ in Boise, rather than the Oregon capital of Salem.

    That said, despite 11 eastern counties already voting in favor of moving, he doesn’t expect Oregon to just give up 15 counties which contain 63% of the state’s land without a fight.

    Last month, Oregon lawmakers introduced legislation which would require the state to enter into discussions with Idaho.

    McCarter also pointed out that it would save western Oregon money to allow the east to split off, as rural residents are subsidized to the tune of around $500 per person per year.

    “So if Oregon, let Eastern Oregon go, they would be much richer right on their side,” he said. “They would not have the conflict and the bickering battle that goes back and forth.”

    As Michael Snyder wrote in 2020:

    Out of Oregon’s existing 36 counties, only 14 would remain in the state if Greater Idaho is able to achieve their goals, and a big chunk of northern California would become Idaho territory as well.

    But getting this accomplished will not be easy.  Approval would be needed from the state legislatures of Oregon, California and Idaho, and that would be a real challenge.

    On top of that, the U.S. Congress would have to approve any plan, and getting that to happen would probably require a miracle.

    But one thing that this movement has going for it is the fact that it has been endorsed by some big name state lawmakers in Oregon, and that includes the top Republican in the state Senate…

    The move would also give western Oregon Democrats a supermajority in the state legislature, allowing them to more freely pursue their progressive agenda.

    “Chicago controls Illinois. Atlanta controls Georgia. New York City controls all of New York state,” said McCarter. “And there’s a distinct difference between urban and rural.“

    Tyler Durden
    Sun, 02/05/2023 – 23:30

  • The New York Times Just Admitted That The West's Anti-Russian Sanctions Are A Failure
    The New York Times Just Admitted That The West’s Anti-Russian Sanctions Are A Failure

    Authored by Andrew Korybko via The Automatic Earth blog,

    The “official narrative” surrounding the Ukrainian Conflict has flipped in recent weeks from prematurely celebrating Kiev’s supposedly “inevitable” victory to nowadays seriously warning about its likely loss.

    It was therefore expected in hindsight that other dimensions of the information warfare campaign waged by the US-led West’s Golden Billion against Russia would also change. As proof of precisely that, the New York Times (NYT) just admitted that the West’s anti-Russian sanctions are a failure.

    In Ana Swanson’s article about how “Russia Sidesteps Western Punishments, With Help From Friends”, she cites Western experts who concluded that “Russia’s imports may have already recovered to prewar levels, or will soon do so, depending on their models.” Even more compelling, she references the IMF’s latest assessment from Monday, which “now expected the Russian economy to grow 0.3 percent this year, a sharp improvement from its previous estimate of a 2.3 percent contraction.”

    Neither the NYT, the Western experts that Swanson cites, nor the IMF can credibly be accused of being “Russian-friendly”, let alone so-called “Russian propagandists” or even “Russian agents”, which thus confirms the observation that this dimension of the Golden Billion’s infowar has also decisively shifted. The fact of the matter is that the West’s anti-Russian sanctions failed to catalyze the collapse of that targeted multipolar Great Power’s economy, which continues to remain impressively resilient.

    The timing at which this narrative changed is also important because it extends credence to the more widely known new narrative that’s nowadays seriously warning about Kiev’s likely loss in NATO’s proxy war on Russia. After all, if the sanctions achieved the goal that they were supposed to and which the US-led West’s Mainstream Media (MSM) hitherto lied that they supposedly had, then it naturally follows that Kiev would “inevitably” win exactly as they claimed would happen up until mid-January.

    With this in mind, the most effective way to “reprogram” the average Westerner after brainwashing them over the past 11 months into expecting Kiev’s supposedly “inevitable” victory is to also decisively change the supplementary narratives that artificially manufactured that aforesaid false conclusion. To that end, the order was given to begin raising the public’s awareness about the failure of the Golden Billion’s anti-Russian sanctions, ergo the NYT’s latest piece and the specific timing thereof.

    What’s left unsaid in that article is the “politically incorrect” but nevertheless heavily implied observation that the jointly BRICS– & SCO-led Global South of which Russia is a part has defied the Golden Billion’s demands to “isolate” that multipolar Great Power. No MSM outlet will ever admit it, at least not yet, but their de facto New Cold War bloc has limited sway outside the US’ recently restored “sphere of influence” in Europe, whose countries are the only ones suffering from these sanctions.

    The NYT’s latest piece might inadvertently make many members of their public conscious of that, however, and they might therefore increasingly object to their governments scaling up their commitment to NATO’s proxy war on Russia under American pressure. Croatian President Zoran Milanovic recently joined Hungarian Prime Minister Viktor Orban in condemning this campaign and raising wider awareness of just how counterproductive it’s been for Europe’s objective interests.

    As Europeans come to realize that they’re the only ones suffering from the anti-Russian sanctions that their American overlord coerced them into imposing and that their sacrifices haven’t adversely affected that targeted multipolar Great Power’s special operation, massive unrest might follow. It’s unlikely to influence their US-controlled leaders into reversing course, remembering that the German Foreign Minister vowed late last year never to do so, but could instead catalyze a violent police crackdown.

    The reason behind this pessimistic prediction is that a reversal or at the very least lessening of the presently rigid anti-Russian sanctions regime would represent an unprecedentedly independent move by whichever European state(s) does/do so. Seeing as how that didn’t even happen in the eight years prior to the US’ successful reassertion of its unipolar hegemony all across 2022, the likelihood of that happening nowadays under those much more difficult conditions is practically nil.

    The US’ “Lead From Behind” subordinate for “managing” European affairs as part of its new so-called “burden-sharing” strategy, Germany, has more than enough levers of economic, institutional, and political influence to several punish any of those lower-tier American vassals who get out of place. It’s therefore unrealistic to expect any single EU member to unilaterally defy the bloc’s anti-Russian sanctions that their own government previously agreed to.

    Considering this reality, those leaders who want to remain in power or at least not risk the US’ German-driven Hybrid War wrath against their economies are loath restore a semblance of their largely lost sovereignty in such a dramatic manner. Instead, their most pragmatic course of action is to not participate in the military aspect of this proxy war by refusing to dispatch arms to Kiev exactly as the emerging Central European pragmatic bloc of Austria, Croatia, and Hungary have done.

    The population of those countries are thus unlikely to protest against the sanctions even after being made aware of the facts contained in the NYT’s latest piece and naturally coming to the conclusion that the anti-Russian sanctions have only harmed their own economies and not that targeted Great Power’s. Folks in France, Germany, and Italy, however, could very well react differently, especially considering their tradition of organizing massive protests.

    In such a scenario, their governments are expected to order a violent police crackdown under whatever pretext they concoct, whether it’s falsely accusing the protesters of employing violence first or accusing them all of being so-called “Russian agents”. Regardless of how it happens, the outcome will be the same whereby Western European countries will slide deeper into liberal-totalitarian dictatorship, which will in turn contribute to further radicalizing their population towards uncertain ends.

    Returning back to the NYT’s piece, it represents a remarkable reversal of the “official narrative” by frankly admitting that the West’s anti-Russian sanctions are a failure. This coincides with the decisive shift of the larger narrative driven by American and Polish leaders over the past month whereby they’re nowadays seriously warning about Kiev’s likely loss in NATO’s proxy war on Russia.

    It remains to be seen what other narratives will change as well, but it’s predicted that more such ones will inevitably do so.

    *  *  *

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    Tyler Durden
    Sun, 02/05/2023 – 23:00

  • Devastating Footage Emerges After 7.8 Magnitude Earthquake In Turkey
    Devastating Footage Emerges After 7.8 Magnitude Earthquake In Turkey

    A magnitude 7.8 earthquake struck southern Turkey at 4:18 a.m. Monday near the city of Nurgadi, which was followed by a powerful 6.7 magnitude aftershock. Devastation spread into northern Syria, and the quake was felt as far away as Tel Aviv and Beirut.

    Earthquake rubble in Malatya

    Search and rescue teams have been dispatched to the affected areas, with President Erdogan conveying his “best wishes” to citizens via a Monday tweet, adding “We hope that we will get through this disaster together as soon as possible.”

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    One of the largest cities near the epicenter is Gaziantep, located near the Syrian border. According to Governor Davut Gul, the earthquake was “felt severely” in the city.

    Via BBC.com

    According to USGS seismologist Susan Hough, the quake risked being particularly dangerous due to its location and shallow depth.

    “The world has seen bigger magnitudes than this over the past 10-20 years,” she tweeted. “but quakes close to M8 are not common on shallow strike-slip fault systems, and by virtue of proximity to population centers can be especially deadly.”

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    Several buildings in the province of Kahramanmaras have collapsed, and a fire has broken out.

    130 buildings have reportedly collapsed, including two hotels, in the city of Malatya, according to the governor.

    In Osmaniye, a province near the epicenter, five people were killed and 34 buildings collapsed, local media reports.

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    In the province of Sanliurfa, the earthquake was “severe and long-lasting,” Governor Salih Ayhan tweeted. 

    According to the NY Times, Turkey has asked the European Civil Protection and Humanitarian Aid Operations orgnaization for help. The Turkish army also has two planes ready to carry units to the region. 

    Meanwhile, Syria’s Civil Defense declared a state of emergency after the earthquake, saying on Twitter that dozens of people remained trapped in the northwest region of the country on Monday.

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    Tyler Durden
    Sun, 02/05/2023 – 22:30

  • Innovation Or Attack? Sorting Out The "NFT Big Block" On The Bitcoin Network
    Innovation Or Attack? Sorting Out The “NFT Big Block” On The Bitcoin Network

    By Liu Chongyong of WuBlockchain,

    On February 1, 2023, Bitcoin Network mined the largest block in history, containing a nearly 4M largest transaction in the history, and the transaction fee is 0…

    The big transaction was sent out by indie developer @udiWertheimer’s “Taproot Wizard”, an NFT project on the Bitcoin network. The main data is an NFT, not a hash, but an entire jpg image.

    The developer and project have not been named, but the incident has caused a huge shock to the Bitcoin ecosystem, with Blockstream CEO Adam Back (@adam3us), Bitcoin Core developer @LukeDashjr and others calling it an attack on Bitcoin.

    See CoinDesk’s report:https://www.coindesk.com/tech/2023/02/02/giant-bitcoin-taproot-wizard-nft-minted-in-collaboration-with-luxor-mining-pool/

    However, @udiWertheimer stresses that this is an innovation based on “Ordinals” proposed by former Bitcoin core developer Casey Rodarmor.

    Ordinals Doc:https://docs.ordinals.com/introduction.html

    @udiWertheimer and Casey Rodarmor claim that the theory can tag every basic unit of bitcoin: satoshi, and can be transferred. NFT is just one of many ways to enable more functionality on the Bitcoin network without the need for a hard and soft fork upgrade.

    Rodarmor claims that Ordinals came up because Bitcoin lacks a stable public identity. Bitcoin addresses tend to be single-use, wallet accounts are local, and ownership of public and private keys is not transferable. So, by marking each satoshi in each output, Ordinals creates a transferable account or identity for Bitcoin.

    For technical details see：https://github.com/casey/ord/blob/master/bip.mediawiki

    Specifically, in the NFT project “Taproot Wizard”, the publisher is supposed to use a specific satoshi to refer to jpg images to implement the identification and circulation of the NFT. I haven’t fully understood how this is done.

    It’s an interesting experiment in innovation, but bitcoin core doesn’t like it for a couple of reasons:

    1. Blockchain size inflation: This will result in the rapid expansion of bitcoin blockchain size, greatly increased requirements for devices running full-node, resulting in the reduction of full-node of the whole network and the decline of anti-censorship. This was the main reason for rejecting Vitalik’s smart contract in OP_RETURN in 2014, and rejecting hard fork expansion in 2017.

    2. Ecological impact: Big transactions and Big blocks exceeding expectations impact wallet, mining pool, browser and other ecological facilities, resulting in some facilities abnormal, such as the transaction of btc.com browser failed to parse properly.

    3. Reduce security: In order to reduce the time of synchronization and verification of big transactions and blocks, the mining pool or miners may choose not to download and release blocks without verifying the transactions and blocks, which brings security risks.

    In the expansion debate in 2017, Bitcoin core refused to expand by means of hard fork to increase the block limit, and chose to use segwit to bring the verification information outside the block on the premise of avoiding hard fork, so as to bypass the 1M block limit and achieve partial expansion. However, there was no restriction on the length of the verification message. Hard choices now have to be made:

    1. Do nothing and allow applications to enter the Bitcoin blockchain in this way, making the debate about limiting OP_RETURN and expanding capacity meaningless;

    2. Hard fork upgrade, write the size limit of the data witnessed in isolation into the consensus. This is also difficult. The impact of hard fork is great and all nodes need to be updated, which is also the main reason for rejecting the New York Consensus upgrade to 2M in 2017.

    3. Reach a partial consensus on major pools and reject big blocks and big tx. This is very bad. It opens the door to manual block review, loses the sense of decentralization, and is operationally difficult for all pools to comply with.

    Overall, option 1 is more likely because option 3 is difficult to achieve, and the Bitcoin ecosystem is already very large, making it difficult to smoothly hard fork.

    Relevant data:

    Block height: 774628

    Block size: 3,955,272 bytes

    Transaction ID

    0301e0480b374b32851a9462db29dc19fe830a7f7d7a88b81612b9d42099c0ae

    Transaction size: 3,938,383 bytes

    Transaction type: segwit

    Transaction fee: 0

    Block miner: “Luxor Mining”

    Sending address of transaction:

    bc1pscu742m5eyt6vwzl62fjugy9mj5yq8pgk674qc2x44892t3zjqfs3ca78z

    Note: I have not yet sorted out all the technical details, such as how Ordinals implemented NFT, the structure of the isolated witness data and related restrictions, etc. Corrections or additions are welcome.

    Tyler Durden
    Sun, 02/05/2023 – 22:00

  • Polls Show Record Number Of Americans Worse Off Financially Since Biden Took Office
    Polls Show Record Number Of Americans Worse Off Financially Since Biden Took Office

    The Biden White House has made it their top priority to present the US economy as a wellspring of jobs creation and recovery.  Biden relies primarily on jobs data as proof that his economy is the “best economy ever” and has consistently tried to take credit for falling unemployment data and “12 million jobs created since he took office.”  This claim of course ignores the 25 million+ jobs lost during the covid lockdowns, which Biden avidly supported even after it became clear that covid was a non-threat to the vast majority of the population.  

    In other words, Biden has been trying to take credit for the recovery of jobs he originally helped to destroy. Many Democrat run states are still lagging and a return to financial stability has been difficult.  Other concerns surround the manner in which labor data is being calculated.  Only last year the Philly Fed had to revise and refute White House labor gains and cut over 1 million jobs from their stats in the process.  That kind of discrepancy is not normal. 

    In the meantime, inflation numbers have dropped slightly while interest rates rise, yet prices on most goods remain high.  Higher wages have not been able to catch up to far higher costs, and the stagflationary problem does not look like it will be going away anytime soon.  

    With the ongoing price crisis as a backdrop, stagnant growth in half the states in the country, the apparent end to covid stimulus and credit costs rising, expectations of a recessionary crash are growing.  The White House says everything is fine, but what do the American people say?

    According to a new ABC/Washington Post poll, 41% of the American public say they are now in worse shape financially since Joe Biden took office.  Only 16% of those polled said they were better off.  This is a record number of people in dire straights according to the data, which has been collected for 37 years.   Contrast this with the first two years of Donald Trump’s administration, when only 13% of people said they were worse off.

    The poll coincides with Biden’s falling approval numbers – Just 37 percent approval for handling the economy, 38 percent on the war in Ukraine and 28 percent on the immigration situation at the Mexican border.  The public by a broad 62-36 percent would be disappointed or even angry if he were re-elected, rather than enthusiastic or satisfied.

    This leads us to a not so surprising development among Democrats:  6 in 10 Democrats do not want to see Biden run for a second term.  The push for Biden to step down has been growing for the past year, with the aging candidate barely able to read a teleprompter and often seen as bumbling or incoherent.  The admissions by far-left outlets like the Washington Post of Biden’s waning popularity and economic uncertainty may be part of a growing dissatisfaction among leftists with Biden and their intention of replacing him by 2024.   

    Tyler Durden
    Sun, 02/05/2023 – 21:30

  • Hedge Fund CIO: "China's Helium Balloon Is A Distraction: The Real Risks Are Off The Radar"
    Hedge Fund CIO: “China’s Helium Balloon Is A Distraction: The Real Risks Are Off The Radar”

    By Eric Peters, CIO of One River Asset Management

    “You take something off the table here,” barked Biggie Too.

    “Feels like we’re somewhere in peak Goldilocks,” continued the Global Chief Strategist for one of Wall Street’s Too-Big-To-Fail affairs.

    “At some point you get a challenge to Goldilocks – Biggie sees things and it’s coming,” he bellowed, most comfortable in 3rd person.

    “Maybe the dollar resumes its rally. Conviction trades roll over – investment grade, emerging markets. Not yet. Biggie feels a little back and forth first.”

    Overall

    “I ordered the Pentagon to shoot it down on Wednesday as soon as possible,” said President Biden, caving to the cries of the crowd.

    “They decided – without doing damage to anyone on the ground – they decided that the best time to do that was when it got over water,” added America’s Commander-in-Chief, acknowledging that of the many terrific uses for F-22s, engineering soft landings is not one.

    “Within the 12-mile limit, they successfully took it down, and I want to compliment our aviators who did it.”

    The media sure loved it all.

    Clicks, conspiracies, coverups.

    And presumably some Americans felt safer knowing a nation that landed a rover on the dark side of the moon and tested encrypted satellite communications using quantum entanglement technology, is no longer floating a helium balloon overhead.

    It reminded us that what we fear need not make much sense.

    The real risks, of course, are most often off the radar.

    One such risk is that the nation with the world’s most important economy and mightiest military is becoming increasingly difficult to responsibly govern.

    China’s helium balloon illustrated this disturbing fact for all those tuned in to its faint signal.

    But the much larger object floating overhead is the Federal Reserve’s unfathomably bloated balance sheet, which is both impossible to photograph and even more difficult to explain to the nation’s distracted citizenry.

    “We’ve raised rates four and a half percentage points, and we’re talking about a couple of more rate hikes to get to that level we think is appropriately restrictive,” said Chairman Powell, at the press conference. “Why do we think that’s probably necessary? We think because inflation is still running very hot,” he added. But the yield curve remained steeply inverted, dismissing Powell’s guidance, as the bond market fears sustained rate hikes when combined with the ongoing quantitative tightening campaign will precipitate a hard landing.

    Tyler Durden
    Sun, 02/05/2023 – 21:00

  • US Ban On Pot Users Owning Guns Ruled Unconstitutional
    US Ban On Pot Users Owning Guns Ruled Unconstitutional

    Another week, another defeat for the gun-grabbers: A federal law barring marijuana users from owning and possessing firearms has been ruled unconstitutional.  

    In a 54-page ruling in favor of Jared Harrison handed down Friday in Oklahoma, U.S. District Judge Patrick Wyrick said the government cannot claim that Harrison’s “mere status as a user of marijuana justifies stripping him of his fundamental right to possess a firearm.”

    It’s the latest of many rulings against gun restrictions that are following in the widening wake of last June’s watershed U.S. Supreme Court ruling in New York State Rifle & Pistol Association v. Bruen.

    U.S. District Judge Patrick Wyrick (AP/ Sue Ogrocki via The Journal Record

    That case established a test that judges across the country must now apply when evaluating gun control laws: Such laws must be “consistent with the nation’s historical tradition of firearm ownership.” 

    “The mere use of marijuana carries none of the characteristics that the Nation’s history and tradition of firearms regulation supports,” wrote Wyrick. Further, “the United States has not identified a single historical law that is ‘distinctly similar'” to the one barring marijuana users from possessing firearms. 

    The DOJ tried to relate the general firearms ban against marijuana users to laws that targeted intoxicated people. Wyrick, a Trump appointee, wasn’t having it: 

    “The restrictions imposed by each law only applied while an individual was actively intoxicated or using intoxicants. Under these laws, no one’s right to armed self-defense was restricted based on the mere fact that he or she was a user of intoxicants…

    Where the seven [DOJ-cited] laws took a scalpel to the right of armed self-defense, [this marijuana-gun law] takes a sledgehammer to the right.” 

    Harrison’s public defender, Laura Deskin, called the ruling a “step in the right direction for a large number of Americans who deserve the right to bear arms and protect their homes just like any other American.” The federal goverment is expected to appeal the decision. 

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    Harrison was pulled over in Lawton, Oklahoma in May 2022 for failing to stop at a red light. The officer smelled marijuana, and a subsequent search of the vehicle produced a loaded revolver on the driver-side floor. At the time, Harrison was on probation for aggravated assault.

    A federal grand jury indicted him for possessing a firearm with knowledge that he was an unlawful user of marijuana. The aggravated assault charge had no bearing on the prosecution: In Wyrick’s words, the federal case had the government arguing that, “Harrison’s mere status as a user of marijuana justified stripping him of his fundamental right to possess a firearm.” 

    Expect the Bruen test to continue hacking away at America’s thicket of gun law that infringe on a fundamental human right. 

    Tyler Durden
    Sun, 02/05/2023 – 20:30

  • "Confidential Letters": FTX Demands Politicians Return Millions In SBF Donations
    “Confidential Letters”: FTX Demands Politicians Return Millions In SBF Donations

    Just when you thought the FTX travesty couldn’t get any more bizarre, the now bankrupt company is trying to claw back political donations and other spending that took place at the direction of former CEO Sam Bankman-Fried. 

    A press release made its way out mid-day Sunday that FTX’s debtors and the company had sent “confidential messages to political figures, political action funds, and other recipients of contributions or other payments that were made by or at the direction of the FTX Debtors, Samuel Bankman-Fried or other officers or principals of the FTX Debtors” requesting the funds back. 

    “These recipients are requested to return such funds to the FTX Debtors by February 28, 2023,” the release states. 

    It continues: “The messages follow the December 19, 2022, announcement by the FTX Debtors that they have established arrangements for such recipients to return funds voluntarily by contacting (FTXrepay@ftx.us).”

    Then, the release threatens legal action to those who are unwilling to return funds: “To the extent such payments are not returned voluntarily, the FTX Debtors reserve the right to commence actions before the Bankruptcy Court to require the return of such payments, with interest accruing from the date any action is commenced.”

    “Recipients are cautioned that making a payment or donation to a third party (including a charity) in the amount of any payment received from a FTX Contributor does not prevent the FTX Debtors from seeking recovery from the recipient or any subsequent transferee,” the release says. 

    We noted back in December that $73 million in political donations were now at risk as a result of the bankruptcy. SBF also donated to Democratic Rep. Ritchie Torres of New York, who last year was one of 8 members of Congress who lobbied against regulating crypto.

    “Nobody ends up looking great in this,” said University of Rochester political science professor, David Primo, at the time. 

    While there’s precedent for forcing political entities to return contributions in cases of fraud, recovery prospects are unclear in FTX’s case. Recouping campaign funds as part of the bankruptcy proceedings is a complicated and lengthy process, and the scope of the total funds eligible for clawback depends on myriad federal and state laws. It is also subject to the bankruptcy lawyers’ judgment on what money, which may be long spent by the time the FTX trustees try to go after it, is worth the effort.

    Bankman-Fried is facing additional scrutiny for recently saying he gave equally to Republicans and Democrats, but funded conservatives through  “dark money” groups that don’t identify donors. The claim is almost impossible to verify unless the recipients voluntarily disclose they received money from him. -Bloomberg

    One factor noted in the debate over clawbacks is whether the bankruptcy court determines there was fraud or fraudulent intent involved in the collapse of FTX, according to Ilan Nieuchowicz, a litigator for law firm Carlton Fields. If that’s the case, nearly all donations tied to FTX could be a recovery target. If not, then only those made within the 90-day period prior to FTX’s insolvency, or around $8.1 million, would potentially be subject to recapture.

    Meanwhile, $26.6 million of FTX-linked contributions went directly to large super PACs, including those who gave money to House and Senate leadership of both parties (and of course, the proportion isn’t mentioned). 

    Recall, we reminded readers back in December that SBF was being heralded as “one of the people most responsible” for Biden’s 2020 win.

    Somebody better flip over Hunter Biden and see how much change falls out of his pockets…

    Tyler Durden
    Sun, 02/05/2023 – 19:30

  • Mission Accomplished!
    Mission Accomplished!

    Authored by MN Gordon via EconomicPrism.com,

    About the time the most trusted man in America, Walter Cronkite, signed off from the CBS Evening News for the last time, something momentous happened in the U.S. credit market.  Few people, apart from Bill Gross and A. Gary Shilling, understood what was going on.

    Hindsight is always 20/20.  And looking at a chart of U.S. interest rates several decades later it all seems so obvious.  Specifically, that the rising part of the interest rate cycle peaked out in 1981.

    This one thing, in essence, changed everything.  Over the next 39 years interest rates fell as mega-asset bubbles were puffed up and floated across the land.

    The relationship between interest rates and asset prices isn’t complicated.  Tight credit generally produces lower asset prices.  Loose credit generally produces higher asset prices.

    When credit is cheap and plentiful, individuals and businesses increase their borrowing to buy assets they otherwise couldn’t afford.  As cheap credit flows into various assets, it balloons their prices in kind.

    For example, individuals may use cheap credit to take on massive jumbo loans.  This allows them to bid up house prices.  Businesses, flush with a seemingly endless supply of cheap credit, may borrow money and use it to buy back shares of company stock.  This has the effect of inflating share prices, and the value of executive stock options.

    When credit is tight, the opposite happens.  Borrowing is reserved for activities that promise a high rate of return; one that exceeds the high rate of interest.  This has the effect of deflating the price of financial assets.

    More Pain to Come

    In 1981, following a great wave of Federal Reserve manufactured inflation, credit was expensive.  At the same time, stocks, bonds, and real estate were cheap.  For example, in 1981, the interest rate on a 30-year fixed mortgage reached the unimaginable high of 18.45 percent.  That year, the median sales price for a U.S. house was about $70,000.

    By comparison, in December 2020, the 30-year fixed mortgage rate dropped to a historical low of 2.68 percent.  Rates remained below 3 percent for most of 2021.  This allowed many borrowers to refinance or buy houses at extreme low rates.

    Thus, the median sales price for a U.S. house peaked at $468,000 in Q3 2022.  Along the Country’s east and west coasts prices inflated much higher.

    In 2022, as the Fed commenced hiking the federal funds rate in an attempt to contain the raging consumer price inflation of its making, the 30-year fixed rate mortgage spiked up to over 6.5 percent.  Consequently, U.S. house prices are now deflating and likely have much further to fall to complete this boom-and-bust cycle.

    Similarly, the Dow Jones Industrial Average (DJIA) was roughly 900 points in 1981.  Then, on January 4, 2022, the DJIA hit its all-time closing high of 36,799.  That comes to over a 3,988 percent increase.  Since then, however, as interest rates have increased, the DJIA has started deflating to its recent close of 34,053.  Like house prices, we believe the DJIA also has much further to fall.

    Without question, the 39-year run of cheaper and cheaper credit had something to do with ballooning stock and real estate prices.  Asset prices and other financialized costs, like college tuition, have been grossly distorted and deformed by nearly four decades of falling interest rates.

    The gap between high asset prices and low borrowing costs have positioned the world for a great reckoning.  Certainly, 2022 was a difficult year for stock and bond investors.  Nonetheless, there is plenty more pain to come.

    Only 37 More Years to Go

    The Fed has strong influence over credit markets through its open market operations.  But it is not the credit market’s ultimate master.  The fact is, Fed credit market intervention plays second fiddle to the overall rise and fall of the interest rate cycle.

    From a historical perspective, today’s 10-Year Treasury note yield of 3.39 is still extraordinarily low.  But if you consider just the last two years, it’s extraordinarily high.

    The yield on the 10-Year Treasury note bottomed out around just 0.62 percent in July 2020.  At 3.39 percent today, the yield his increased dramatically.  In fact, the yield on the 10-Year Treasury note has increased over 446 percent over the last 31 months.  Quite frankly, it’s amazing there hasn’t been a major blow up of a major investment fund – yet.

    The last time the interest rate cycle bottomed out was during the early-1940s.  The low inflection point for the 10-Year Treasury note at that time was a yield somewhere around 2 percent.  After that, interest rates generally rose for the next 40 years.

    No one can predict the future.  But looking to past interest rate cycles for guidance provides a startling realization.  We may be less than three years into a 40-year period of rising interest rates.  In other words, everything the world has come to know and love about financial markets since 1981 has been stood on its head.

    Between 1981 and 2020, each time the economy went cold, the Fed cut interest rates to juice financial markets.  In this disinflationary environment, asset prices increased while incomes stagnated.  Moreover, aided by an abundance of cheaply made goods from China, increases to consumer prices over this period were moderate.

    The Fed, while conflating apparent success with luck, thought it had somehow tamed the business cycle.  Congress also discovered it could spend printing press money without consequences.  These takeaways couldn’t be further from the truth.

    Your Broker Has No Clue

    Not many people are still alive who remember how drastically different the effects of the Fed’s policy adjustments are during the rising part of the interest rate cycle than during the falling part of the interest rate cycle.

    During the rising part of the interest rate cycle, as demonstrated in the 1970s, after the U.S. defaulted on the Bretton Woods Agreement, Fed interest rate policy became increasingly damaging.  Fed policy makers demonstrated they are politically incapable of staying out in front of rising consumer prices.  Their efforts to hold the federal funds rate artificially low, to boost the economy, no longer had the desired effect.

    In this scenario, monetary inflation brought about consumer price inflation.  Fed policies were policies of disaster.

    In July 2020, roughly 39 years after it last peaked, the credit market finally bottomed out. Yields are rising again.  In truth, they may rise for the next three to four decades.

    This means the price of credit will increasingly become more and more expensive well into the mid-21st century.  Hence, the world of perpetually falling interest rates – the world we’ve known since the early days of the Reagan administration – is over.

    This is something most politicians, consumers, and investors have little comprehension of.  Your broker also likely has no clue what has happened.

    Many investors, having little experience beyond two decades, let alone four decades, are enamored with the vaunted salvation of a forthcoming Fed pivot.  This limited focus will compel them into strategic mistakes.  They may unwittingly put their hard-earned savings and wealth in a place of great danger.

    Mission Accomplished?

    Fed Chair Jay Powell has studied the on again off again inflation of the 1970s.  He knows how quickly consumer price inflation can flare-up if the Fed does not fully snuff it out.  He recognizes the dangers of taking his foot off the break too soon.  He doesn’t want a repeat of another decade of high consumer price inflation.

    Still, Powell is human just like you.  He’s subject to influence.  Specifically, political influence.

    After this week’s 25 basis points rate hike, the federal funds rate is now at a range of 4.5 percent to 4.75 percent.  Another 25-basis point rate hike in March will take the top end of the federal funds rate to 5 percent for the first time in 17-years.

    Will that be the end of it?  Will it be mission accomplished?  Will the Fed then pause?  Will it then pivot?

    Investors, the foolish ones, seem to think so.  This week, following the Fed’s rate hike and subsequent press conference, investors went all in on a variety of companies.  On Thursday, Grainger jumped over 30 percent, followed by Align Technology (up over 27 percent), Coinbase (up nearly 24 percent), and Meta (up over 23 percent).

    What gives?

    The U.S. economy appears to be slipping and sliding into a recession.  Consumers are tapped out.  They’ve maxed out their credit cards.  Technology workers are getting massively RIFed.  The depth and intensity of the economic contraction will test the Fed’s courage to act.

    The political pressure applied to Powell may become too much to resist.  The Fed may, in fact, cut rates later this year.  This is what the fools are banking on.  Though the result may not be what they expect.

    Because the Fed will be cutting the federal funds rate in an environment of rising interest rates.  The last time the Fed tried this, in the 1970s, the results were disastrous.

    Certainly, yields on Treasury notes may periodically fall during periods of recession.  For example, they could fall over the coming months.  However, the long-term trend is up.

    The experience of 2022 will repeat several times per decade until the cycle has concluded.  By our estimation, that will be sometime around 2060 – give or take a few years.

    Investment decisions should be made accordingly.

    *  *  *

    Hoping for a Fed pivot to bailout your retirement is a fool’s strategy.  At this point in the credit cycle, the deck’s stacked against you.  But are things you can do.  If you’re interested in discovering several ideas, take a look at my Financial First Aid Kit.  Inside, you’ll find everything you need to know to prosper and protect your privacy as the global economy slips into a worldwide depression.

    Tyler Durden
    Sun, 02/05/2023 – 19:00

  • Iranian-Designed Drone Production Site To Be Built Inside Russia
    Iranian-Designed Drone Production Site To Be Built Inside Russia

    Russia and Iran plan to establish a joint drone manufacturing facility inside Russia, according to a weekend Wall Street Journal report, which comes following US and European efforts to target Iranian-made drones going to Russia with sanctions.

    The Iranian kamikaze drones which have for many months now been pummeling Ukraine’s energy infrastructure, such as the Shahed-136 drones, cost as little as $20,000 to make. According the WSJ a plant established on Russian soil to ramp up Iranian-designed drone production would result in an additional 6,000 of them rolling of the line, for deployment by Russian forces in Ukraine.

    Source: IRNA

    Reportedly the agreement to establish manufacturing operations in Russia was inked with Iran back in November, when the Iranian drones and their devastating attacks in Ukraine were focus of international media attention and condemnation.

    But the new plans for a drone factory could result in new, more effective UAVs, reports WSJ further. “As part of their emerging military alliance, the officials said, a high-level Iranian delegation flew to Russia in early January to visit the planned site for the factory and hammer out details to get the project up-and-running,” according to the report.

    “The two countries are aiming to build a faster drone that could pose new challenges for Ukrainian air defenses, the officials said.”

    It’s also an effort to sidestep what the US administration called its plans to “choke off Iran’s ability to manufacture the drones” as US forces help “Ukraine’s military to target the sites where the drones are being prepared for launch,” according to prior statements from officials in The New York Times.

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    Ukrainian forces regularly announce that their anti-air defenses intercept inbound Iranian drones. This has possibly happened many dozens or perhaps hundreds of times, and yet it remains that the anti-air systems needed for such intercepts are many times more expensive than the relatively cheap but effective drones by comparison.

    Tyler Durden
    Sun, 02/05/2023 – 18:30

  • Fake Meat Fail: Sales Collapse At Beyond Meat, Impossible Foods As 20% Of Staff Laid Off
    Fake Meat Fail: Sales Collapse At Beyond Meat, Impossible Foods As 20% Of Staff Laid Off

    The fake meat industry appears to be in a death-spiral as sales at plant-based ‘meat’ companies Impossible Foods and Beyond Meat have imploded.

    As Axios reports, “after years of hype, the tide is turning against the first generation of plant-based protein makers.”

    Last year, both companies were riding high – with prime placement on supermarket shelves, and Burger King even adding an Impossible Whopper to its menu.

    Impossible Meat even began to branch out – looking to expand offerings to highly processed meats such as chicken nuggets and sausages.

    Sales have collapsed, however, which according to a recent Bloomberg report, has resulted in Impossible Foods planning to lay off around 20% of its workers.

    Impossible Foods Inc., the maker of meatless burgers and sausages, is preparing to cut about 20% of its staff, according to a person familiar with the matter.

    The Redwood City, California-based company currently employs about 700 workers. The new round of dismissals could reduce that amount by more than 100. 

    Impossible Foods also offered voluntary separation payments and benefits to employees at the end of 2022, said the person, who asked not to be named discussing private information. An internal document viewed by Bloomberg confirmed the separation packages being offered. The company previously reduced headcount in October, cutting about 6% of its workforce at the time. -Bloomberg

    Beyond Meat’s sales fell over 22% in the third quarter of 2022, as the company is preparing to similarly cut 20% of its workers. The company has also lost several executives.

    According to the report, supermarket sales fell by 15% y/y as of Jan. 1, according to market-research firm IRI, while orders in restaurants dropped 9% in the12 months ended in November, according to NPD Group. 

    Meanwhile, data from consumer-experience strategy firm HundredX suggests waning interest in general – as the percentage of shoppers polled who have eaten Impossible products and say they won’t do it again has risen.

    Beyond Meat stock is also down around 67% vs. one year ago.

    Tyler Durden
    Sun, 02/05/2023 – 17:45

  • Update To 'Sims' Video Game Features Teen Trans Characters With Chestbinders, Breast Removal Scars
    Update To ‘Sims’ Video Game Features Teen Trans Characters With Chestbinders, Breast Removal Scars

    Authored by Steve Watson via Summit News,

    A new update to the popular “Sims” video game, where the player controls communities of simulated characters, now features transgender characters replete with chest binders and scars from having their breasts surgically removed.

    The Update was recently announced by EA Games:

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    The game, which is aimed at children from age 12, also enables players to place ‘packing’ or ‘tucking’ underwear’ on their sims, garments that give or hide the appearance of male genitalia.

    Rebel News editor Ian Miles Cheong notes:

    The “Create a Sim” character creator now has a “Top Surgery Scar” subcategory, which can be added to male Sims characters aged Teen or older. Furthermore, chest binders can be found under the “Tanks” subcategory in the “Tops” section, while “tucking underwear” can be situated under “Bottoms” in the “underwear” subcategory.

    In a statement, “The Sims 4” producer John Faciane called the update “a step in the direction of a more inclusive experience for Simmers.” 

    It’s just a simulation though right?

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    *  *  *

    Brand new merch now available! Get it at https://www.pjwshop.com/

    In the age of mass Silicon Valley censorship It is crucial that we stay in touch. We need you to sign up for our free newsletter here. Support our sponsor – Turbo Force – a supercharged boost of clean energy without the comedown. Also, we urgently need your financial support here.

    Tyler Durden
    Sun, 02/05/2023 – 17:00

  • A Return To 'Head-Smacking Craziness'? Hedge Fund Billionaire Singer Warns 'Bear Market Is Not Over Yet'
    A Return To ‘Head-Smacking Craziness’? Hedge Fund Billionaire Singer Warns ‘Bear Market Is Not Over Yet’

    “Central bankers think they are the masters of the universe because the world is looking to them (and only them) to deliver continuous stability and prosperity. There is no reason to suppose that they understand the modern financial system and economy to any greater extent than they did in 2007 (that is to say, not at all). Nevertheless, they plow ahead, expressing total confidence that what they are saying and doing is wise and not dangerous drivel…”

    That’s how billionaire hedge fund manager Paul Singer described the elites’ arrogance in the past, that, we believe, we are seeing once again as Fed Chair Powell – whether under political pressure or his own hubris – practically declares ‘mission accomplished’ over inflation.

    Singer had something to say about the threat of inflation too, forecasting years ago – as The Fed unleashed wave after wave of QE – what we have seen in the last two years…

    “We believe that if and when inflation goes from being something that affects only a particular list of assets (a growing list, presently a combination of things owned by the well-off plus a number of things that are basic necessities) to a widespread “in-your-face” phenomenon affecting the cost of living of almost the entire population, then the normal yardsticks of risk, return and profit may be thrown into the garbage can.

    These measures may be replaced by a scramble by citizens and investors to preserve value on a foundation of shifting sand, together with societal unrest that may make the current politically-useful “inequality” riffs, blaming the “1%” and attacking those “millionaires and billionaires” who refuse to “pay their fair share,” look like mere warm-ups for real class warfare.”

    Since the start of the Biden administration, inflation has soared and all those threats have come to pass…

    And while inflation looks to be slowing, the billionaire founder of Elliott Investment Management, warned a room of hedge fund managers and large investors this week that there’s likely to be a disorderly unraveling of markets.

    Bloomberg reports that, according to people familiar with the discussion at the Managed Funds Association conference this week in Miami, Singer said the bear market isn’t over and that a drop of 20% is likely not enough.

    More than a decade of aggressive monetary and fiscal policies can’t be unwound in a year, he explained, drawing parallels to ballooning debts as potentially wreaking havoc rivaling The Great Depression, despite growing hope for a ‘soft landing’.

    Singer, 78, added that many valuation metrics in the market remain higher than in 1929 or the dot-com era bubble…

    As we noted above this is not the firs time Singer has sounded the alarm bells, citing the Fed’s years of easy money policies.

    In 2021, he said he couldn’t wait to say “I told you so” to the people who participated in the “head-smacking craziness.”

    Singer also told the crowd this week that inflation is higher than what’s reported and that focusing on core metrics — which exclude food and energy prices — is unrealistic…

    Finally, we return to Singer of the past, who offered this reality-check on the market’s apparent belief in central planners’ omnipotence…

    “It is important to note that mass human behavior cannot be modeled or predicted with any degree of precision. When forces are brought to bear that suggest a possible shift in direction of mass human behavior (examples include oppression, tyranny, economic underperformance, inflation, incentives and disincentives), there is no way of telling if, how or when such forces will actually result in a change of vector.”

    In the past, Singer has had a clarifying investment thesis:

    “Although the levitation of financial assets has yet to levitate gold, we will grit our collective teeth on that score and await either ‘asset price justice’ or the ‘end times,’ whichever comes first.”

    The recent gains in the precious metal – as the market prices in a pivoting Powell – may just be the sign of the ‘end times’ Singer has warned of.

    Tyler Durden
    Sun, 02/05/2023 – 16:30

  • Italy's Internet Restored After Nationwide Outage; Reports Of Global Ransomware Attack
    Italy’s Internet Restored After Nationwide Outage; Reports Of Global Ransomware Attack

    Update (1615ET):

    Network data from NetBlocks shows internet across Italy has mostly been restored after more than five hours of outages. 

    Reuters confirmed the outage was due to “an international interconnection problem.”  

    In a separate report, Reuters said that Italy’s National Cybersecurity Agency warned about a ransomware attack targeting servers worldwide. 

    The hacking attack sought to exploit a software vulnerability, ACN director general Roberto Baldoni told Reuters, adding it was on a massive scale.

    Italy’s ANSA news agency, citing the ACN, reported that servers had been compromised in other European countries such as France and Finland as well as the United States and Canada. -RTRS

    The US Cybersecurity and Infrastructure Security Agency (CISA) was aware of the attack. The agency said:

    “CISA is working with our public and private sector partners to assess the impacts of these reported incidents and providing assistance where needed.” 

    Reuters pointed out that the cyberattack and Italy’s internet outage “were not believed to be related.” 

    Meanwhile, here’s what people are saying on social media:

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    Oh yeah, and there’s this video from last month. 

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    Update (1150ET):

    Reuters confirmed “internet outages and glitches” across Italy on Sunday. The problem appears to be an “international link.”  

    “An international interconnection problem impacting the service at the national level was detected. Analyses are underway to resolve the problem,” a Telecom Italia (TIM) spokesperson said.

    Italy’s ANSA News agency reported there are no signs yet that hackers were responsible for the widespread outage. 

    *   *   *

    Network data from NetBlocks shows widespread disruption to internet service across Italy on Sunday. It’s been reported that the telecommunications blackout might stem from leading operator Telecom Italia.

    NetBlocks’ real-time network data shows that national connectivity plunged from around 100% to 26% this morning. 

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    Another internet disruption tracking website shows a heatmap of the outages that appear to be nationwide. 

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    Tyler Durden
    Sun, 02/05/2023 – 16:15

  • The Long-Term Negative Effects Of ESG Will Be Catastrophic
    The Long-Term Negative Effects Of ESG Will Be Catastrophic

    Authored by Tom Czitron via The Epoch Times,

    Environmental, social, and governance (ESG) has been a hotly debated topic over the last few years. The seemingly unquestioned march towards corporate utopia has met with resistance among those who oppose the idea that government oligarchs should dictate the affairs of private business firms. The long-term effects of the ESG movement are largely ignored by the mainstream.

    ESG is largely justified on the basis that corporations and financial institutions should be socially responsible. They should work obsessively to address the perceived menaces of climate change, racism, sexism, and a host of subjects. Our benevolent political and economic elite define what is virtuous and what is not for a grateful public.

    Corporations are compelled to enact policies that will reduce carbon dioxide in the atmosphere, eliminate perceived negative economic outcomes against aggrieved groups, and be “sustainable,” as well as other virtuous goals. It matters little to the “select group of human beings,” as John Kerry called them, who are tasked with “saving the planet” that many of their solutions to these existential challenges are far more harmful than their worst-case scenarios.

    The Friedman Doctrine, named after the eminent Chicago School economist, states that the sole responsibility of businesses is to maximize long-term shareholder value. I was exposed to this view in 1980 when I attended the University of Toronto’s Master of Business Administration program. I was surprised by the moral certainty and simplicity implied by the statement.

    I remember our professor being challenged by my class on two fronts. One was the issue of charitable donations. That argument was quickly dispatched when it was pointed out that corporate CEO’s had no moral right to give away shareholders’ money. It was not theirs to give. If the benevolent CEO wanted to make charitable donations out of his own pocket he was free to do so. Shareholders had this same ability.

    The other argument we put forward appeared a more difficult one for our professor to argue against, or so I believed. What about “social responsibility”? Surely, companies should not pollute, produce dangerous products, or underpay their employees. Without going into minute details, he argued that corporations were subject to the discipline of the marketplace, laws, and regulations (albeit at that time over-regulation). Underpay your workers? They would be hired by others willing to pay them more and your business would suffer due to poor employee productivity. Dump toxins into lakes and rivers? There were laws against that and the bad publicity would harm profitability. It would be counterproductive for a company seeking long-term shareholder value to produce hazardous products.

    What is clear is that the Friedman Doctrine, also called shareholder theory, maximizes not only long-term shareholder value, but economic utility as a whole. If the senior management of firms did not maximize shareholder value they would be in breach of their duties. I contend that if the Friedman Doctrine maximizes economic utility, then ESG syllogistically yields suboptimal outcomes. In fact, the negative effects of ESG will be catastrophic. Those who doubt that contention have never noticed the correlation between a nation’s average income per person and life expectancy. ESG will literally kill people, if it is not already doing so.

    ESG is socialism by stealth insofar as it enables central government economic planning without having to publicly acknowledge such and deal with the unpleasant repercussions of property confiscation. In the past, democracies could merely nationalize companies by forcing shareholders to sell their shares to the government. This was done frequently with products and services which politicians deemed essential, like utilities. In some cases, such as post offices, governments would simply provide a service that the public sector could not compete with due to heavy government subsidies or legislation to prevent private competition.

    Totalitarian regimes like the Soviet Union would simply steal the property of owners for the public good and then attempt to manage those entities. Absent the need to compete, satisfy the consumer, appoint managers based on merit or earn a profit, these entities performed poorly. Any pushback was met with a trip to Siberia or a bullet to the head. Some socialistically inclined totalitarian regimes realized that it was far more efficient to allow the private management system to remain and be coerced, violently if necessary, to do the will of the government. Profits could easily be confiscated covertly by a system of corruption, or merely taxed away.

    In a sense, ESG is a novel and brilliant way to place private corporations under the yolk of government. No longer would governments have to deal with having to pay shareholders a fair price. They would not have to use the threat of physical violence to coerce managers to do their bidding. The supporters of ESG merely had to bully companies into adopting policies that destroyed shareholder value by psychologically manipulating employees, shareholders, and the public into believing that these activities were virtuous.

    Of course, all too many corporate leaders learned to “love their enslavement.” Why wouldn’t they? Instead of competing in a brutal capitalistic world, they had their markets protected by government dictate creating defacto monopolies and oligopolies. Senior managers would be heavily compensated for playing along, creating a billionaire and multi-millionaire parasite class.

    Of course, this brave new world of “stakeholder capitalism” comes at a terrible cost. Economic efficiency declines precipitously. Also, this form of socialism is a huge transfer of wealth to senior managers and corrupt politicians at the expense of shareholders. Whereas as the old Soviet Union engaged in murderous robbery, and the methodology of fascist regimes were more akin to blackmail, stakeholder capitalism resembles a confidence game. In a confidence game, suckers willfully hand over their money in the hopes that the con man will give them a positive return.

    ESG is an economic and moral affront to the very concept of private ownership. Shareholders are robbed. Their pension plans end up with less value than they otherwise would have. The managers they entrusted with their wealth, whether they are company executives or portfolio managers of their retirement funds, are betraying them. Yet those people will grow fabulously wealthy, not by excellence but by government edict. Government officials decide the winners and losers in a charade that resembles capitalism the way professional wrestling resembles authentic combat sports.

    It is difficult to assess the numeric affect ESG will have on GDP over the next generation. It is early days and we hope and expect that this terrible idea will join the ranks of other missteps like Lysenkoism and apartheid. We will be significantly poorer in a generation than we would be without ESG. Therefore, life expectancy will be significantly lower than if we avoided ESG, especially for the poor in both developed and less developed nations.

    ESG will literally kill millions. To a narcissistic and Machiavellian elite, however, this would be a small price to pay for personal wealth, diversity, and the average global temperature being half a degree less than predicted by climate change models.

    Tyler Durden
    Sun, 02/05/2023 – 16:00

  • "It's Disinformation": Trump, Former Officials Slam Anonymous Report Of Chinese Spy Balloons Under Their Watch
    “It’s Disinformation”: Trump, Former Officials Slam Anonymous Report Of Chinese Spy Balloons Under Their Watch

    Former President Donald Trump lashed out at a report from an anonymous US Defense Department official who said over the weekend that spy balloons transited over US territory while he was president.

    “This never happened. It would have never happened,” Trump told Fox News on Sunday, adding that the Chinese regime “respected us greatly” under his watch.

    “It never happened with us under the Trump administration and if it did, we would have shot it down immediately,” Trump added.

    “It’s disinformation.“

    Trump said the Biden administration is spreading this because “they look so bad, as usual.“

    “They are incompetent,” he said. -Fox News

    Trump also posted to Truth Social:

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    Trump’s former Director of National Intelligence, John Ratcliffe, also says it never happened.

    As did Richard Grenell.:

    “I don’t know of any balloon flights by any power over the United States during my tenure, and I’d never heard of any of that occurring before I joined in 2018,” said former US National Security adviser John Bolton. 

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    More via the Epoch Times, 

    Other Officials Respond

    Mark Esper, who served under Trump as secretary of defense, refuted claims about balloons flying over the United States under the previous administration.

    “I don’t ever recall somebody coming into my office or reading anything that the Chinese had a surveillance balloon above the United States,” he told CNN. “I would remember that for sure.”

    *  *  *

    “Unequivocally, I have never been briefed on the issue,” added Robert O’Brien, who served as White House national security adviser under Trump. “It never came up,” he said. “If a balloon had come up, we would have known. Someone in the intelligence community would have known, and it would have bubbled up to me to brief the president,” former acting Director of National Intelligence Ric Grenell told Fox.

    “It’s not true. I can refute it,” former Director of National Intelligence John Ratcliffe also said. “The American people can refute it for themselves. Do you remember during the Trump administration, when photographers on the ground and commercial airline pilots were talking about a spy balloon over the United States that people could look up and see, even with the naked eye, and that a media that hated Donald Trump wasn’t reporting?”

    What Was Claimed

    A top Defense official, who was not identified, said Saturday that the Chinese regime’s “surveillance balloons transited the continental United States briefly at least three times during the prior administration and once that we know of at the beginning of this administration, but never for this duration of time,” according to a transcript released by the Pentagon.

    “We spoke directly with Chinese officials through multiple channels, but rather than address their intrusion into our airspace, the [Chinese regime] put out an explanation that lacked any credibility,” the official said.

    On Saturday, officials said President Joe Biden issued the order but had wanted the balloon downed even earlier on Wednesday. He was advised that the best time for the operation would be when it was over water, U.S. officials said. Military officials determined that bringing it down over land from an altitude of 60,000 feet would pose an undue risk to people on the ground.

    The giant white orb was spotted Saturday morning over the Carolinas as it approached the Atlantic coast. At about 2:39 p.m. EST, an F-22 fighter jet fired a missile at the balloon, puncturing it while it was about 6 nautical miles off the coast near Myrtle Beach, South Carolina, senior defense officials said.

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    Tyler Durden
    Sun, 02/05/2023 – 15:30

  • Why 0DTE Is So Important, And Why The VIX Is Now Meaningless
    Why 0DTE Is So Important, And Why The VIX Is Now Meaningless

    By Peter Tchir of Academy Securities

    Why Do I Keep Thinking 0DTE stands for Zero Dark Thirty?

    There is a lot to talk about this week:

    • How we nailed the inflation story and got the Powell presser more or less right, but got the market reaction completely wrong. The rally on Thursday caught me completely by surprise (though in hindsight, it shouldn’t have – which brings in 0DTE). And, to be perfectly honest, who would have thought that with Treasuries down, earnings misses, and less than stellar guidance the previous night from some tech heavyweights stocks might close in the green? They did briefly, before fading into the close.

    • We published a detailed report on the U.S. debt profile – link here and the Fed’s holdings of U.S. Treasuries. This was to give people a sense of how long it takes for higher rates to really increase our average cost of debt, and to provide a sense of the losses that Congress should expect from the Fed’s QE holdings. More on background than an actionable item, but as debt ceiling concerns are likely to mount, it is good to be armed with some facts and figures.

    • We finished Friday with what was a Stunning Jobs Report. The word “stunning” was carefully chosen (at least by T-Report standards) because it can mean impressive (which the report was), but it can also “cause astonishment or disbelief” which this report managed to do as well! The ADP report was one of the worst reports in some time (though the methodology change could matter), while the NFP report was one of the best in the past year. However, there will always be “buts” when we have such bizarre ways of calculating this data and incorporating revisions. The Household number, which was strong, was almost entirely due to stacking the revisions into the January number and I’m told by people who dug into it that the real number was more like 80k. I haven’t seen the “response” rate, but that has been an issue plaguing many of these surveys. The response rate has been low, leading many to question if there is a “selection bias” that leads to inflated numbers. In any case, the Fed looks at this data and it should sharpen their “hawkish tongues” as they get back on the media and speaking circuit.

    • A Chinese Spy balloon? Please see Friday’s SITREP (and update) for thoughts and comments from several members of Academy’s Geopolitical Intelligence Group. Academy continues to see a rift in U.S./China relations, but I certainly didn’t have “balloon delays Blinken visit” on my bingo card. We do intend to publish World War v3.1 (the battle over chips) early this week, but there were just too many more pressing issues on which to focus.

    With all of that said, this weekend’s T-Report will focus on 0DTE or Zero Day to Expiration options. Zero Dark Thirty sounds “cooler” and is military “slang” for half an hour past midnight specifically or a time in the night where operations can be conducted under the cover of darkness – which again, seems to bring me back to 0DTE.

    The Rise of 0DTE (first discussed by Zero Hedge last November in “What’s Behind The Explosion In 0DTE Option Trading“, and only now is everyone catching up)

    “The Rise of 0DTE” sounds like a “Terminator” sequel, and in some ways it might well be!

    Over the past two years we (as market participants) have been forced to understand some heretofore unknown phenomena in order to navigate markets: Meme stocks, Wall Street Bets, and Weekly Gamma Squeezes, to name a few.

    We’ve highlighted the growth of trading in short maturity options for a few months now. It started in the past year and has accelerated. It has gone from a blip on our radar screen, to something that was pinging consistently, and now to something that is capturing our full attention.

    Randall Forsyth summed up the current zeitgeist well in “Zero-Day Options Fuels Latest Frenzy in the Wall Street Casino”.
    Very short-dated options are much more akin to “gambling” than investing. On Thursday, option volumes were dominated by options expiring on the 2nd (true 0-day options) and those expiring on the 3rd (originally longer-dated options that were set to expire on Friday). Friday’s pattern was similar to the vast majority of the most active options expiring that day.

    I admit, I pull up MOSO (on Bloomberg) to follow the most active options during the day. It is a bit like watching a horse race. There is SPY Feb 2 410 in the lead. TSLA Feb 3 190 is running a close second. TSLA Feb 3 190 then takes the lead, but up pops TSLA Feb 3 200 from the back of the field. SPY Feb 2 415 is making a charge, but whoa, what happened here, TSLA Feb 3 200 is now the front runner. However, look at this field. Of the 20 top contenders, only one is a put and only one is longer than Friday maturity (an ARKK Feb 17 Call, presumably because ARKK doesn’t have a shorter dated option).

    Thursday saw the heaviest call option trading ever recorded (see “Today Was The Largest Option Volume Session Of All Time”)! The relatively tiny premiums involved in 0DTE allowed massive notional lots be traded. It is the ultimate way to leverage your “portfolio”.

    Put option volumes also ticked up and were relatively balanced with calls on Friday – which may be why the “rip” into the European close faded throughout most of the day. This could be an important feature of 0DTE options trading that differs from the “meme stock” crowd (which tends to be a “long only” trade).

    Forget VIX

    The VIX calculations use S&P 500 option contracts with more than 23 days and less than 37 days left to maturity. So, none of the 0DTE options trading impacts VIX.

    You can stare at VIX all you want, but you are unlikely to get much useful information. Speculators, vol sellers, covered call sellers, and hedges have all moved their money from the more expensive options (included in the VIX options) to less expensive options. Some option purists will scream bloody murder that the daily option implied volatility is way more expensive than it is in the longer-dated options, but they are being too smart for their own good as this is about leveraged dollars, not trading implied versus realized volatility.

    It may still be valid to look to VIX for a signal, but if those options that go into it are not the “trading vehicle of choice” then how should we expect a timely “early warning” signal? I don’t think that we can. VIX has been drifting lower and lower on my daily “market checklist” and risks dropping off of the screen entirely. I get far more information pulling up the MOSO screen compared to knowing where VIX is.

    Ironically, VIX 0DTE calls were being bought on Friday during certain parts of the day (so there is still correlation), but I think that it will be a coincidental indicator at best and more likely a lagging indicator for any larger moves.

    Why It Matters

    So far, I’ve done little to explain why I think that it is so important. When we used to write about the “Gamma Squeeze” we focused on stocks and ETFs where early in the week you would see weekly option volumes tick up. You’d get large activity in a strike price that seemed unreachable (certainly in a week). Then you would see buying activity in the stock and options across the board. That would start driving the price higher causing more buying until (lo and behold) that previously “unreachable” strike is now in the money.

    The 0DTE options trading has some advantages:

    • It is less reliant on single stocks, which I think lets more people participate in the game.
    • The low dollar price of these options lets even smaller players control more notional.
    • You can do it every day! Literally every day is set up to try to gap things higher (or lower). I think lower is also a feature more likely to appear in 0DTE trading than even in the “traditional” gamma squeezes.

    But I still haven’t explained “why it matters”, so let’s try to do that here.

    I will use SPY (S&P 500 ETF) because that seems to be a fan favorite in the 0DTE space.

    Let’s say SPY opens at $412 on Monday (it closed $412.35 on Friday).

    I buy a SPY 420 Feb 6 Call. It should cost a few cents, let’s say 10 cents. The SPY Feb 6 415C closed Friday at $0.60 and the 420 is a full percentage point more out of the money than the 415.

    I could buy that from an existing options holder, from an options market maker (who may delta hedge it), from someone writing a covered call, or from someone selling it “naked” to get some premium.

    The “delta” or the amount of SPY represented by a 420 call expiring that day when the stock is at 412 is minimal no matter what volatility assumption you use.

    So, I’m buying this option as a lottery ticket. Presumably most others are as well. At some point, there will be sellers that didn’t hold the options. Let’s look at their behavior:

    • Market Maker. They sell the option and buy 2% of the notional of the stock (the “delta”). That’s not the “correct” amount, but close enough. At this stage they sold the option and created a tiny amount of buying interest in the stock.
    • Covered Call Writer. They sell the option and they’d be okay if SPY gets called away at 420 (they tend to focus more on single names, but let’s simplify for now).
    • Naked Call Writer. The proverbial “picking up nickels in front of a steamroller”. They are going to collect some premium income on these “crazy” trades people are willing to spend money on.

    Now, lets say we get “good” news and suddenly SPY is at 416. This will have impacted everyone in the 415 Calls in the same way we will demonstrate on the 420 and that may well be why the news got us to 416 in the first place, but this is getting complex and circular (because it is).

    SPY jumps to 416.

    • Market Maker. Has been buying stock on the way up. Maybe 1% out of the money is a 20% delta, so they had to increase their stock holding from 2% to 20% of the notional (would have added pressure).
    • Covered Call Writer. Starts wondering if they really wanted to let go of the stock at 420 because things feel so good.
    • Naked Call Writer. Little nervous here. Do they buy some calls? Buy some stock? Sit on their hands? Definitely a wildcard.

    This complex interplay of gamma and 0DTE options across a number of strikes and a number of similar stocks/indices gets SPY to 422.

    • Market Maker. Would have been buying more and the delta is likely much higher than 50% or they would be buying all the way up and would have to start buying more for every tick higher. This adds real buying pressure.
    • Covered Call Writer. Do some buy the stock or try to buy back the call because they regret not holding it? It wouldn’t take many people doing this to put further price pressure on the stock because the bulls would be fully in charge of the price action.
    • Naked Call Writer. PAIN. Many will cover or be forced to cover as not everyone can sit there accepting that selling something for 10 cents might cost them $5 or more (currently costing them $2).

    Like everything else in trading, this doesn’t work in isolation.

    Positioning plays a crucial role in helping this sort of strategy work. You don’t need to “share the idea” because it is so visible that it attracts attention, but sharing the ideas and “profitability” helps (my social media stream is getting clogged up with “turn $500 into $100,000” with 0DTE). Thursday was ripe picking for this strategy for many reasons and it worked!

    Puts Can Work as Well

    This strategy can work (and has been working) in either direction and there were some high put activity days. 0DTE trading tends to amplify moves in “both directions”.

    On Friday, it seemed like many got sucked into the “this only goes up” mantra (which almost worked), but 0DTE is different than meme stocks in that respect.

    Windshield Wipers

    I’m thinking of 0DTE as a “windshield wiper” strategy.

    • It can push higher and if something cracks, it can drive it a lot higher.
    • If nothing cracks, then they can push it lower. If something cracks, then they can drive it much lower.

    This is a game of high leverage where you spend 50 cents knowing that you will lose on a bunch, but you can hit a few $5 tickets and be an overall winner.

    What Stops It?

    More prudent options sellers. The weekly gamma squeezes seemed to stop working once market makers decided what realistic vol was. Then they doubled that to be safe, doubled it again to be extra safe, and then doubled it one more time for good measure. Suddenly squeezes didn’t work as well.

    We are far from that occurring since I suspect a lot of today’s readers will dismiss the focus on 0DTE as the “ravings of a madman”.

    It won’t be the first time, but I suspect that within weeks this will be the biggest topic of conversation out there (helped by the fact that we can stop talking about the Fed for a few weeks and the debt ceiling issue is still a bit distant). It is occupying 90% of my conversations and not just because I bring it up.

    I do not think that this is an “up” only strategy, so be careful next week. The one lesson (even for those who don’t really believe that 0DTE is important) is that it helps drive stocks higher. That, I think, is not the correct lesson, though it certainly was true on Thursday!

    Bottom Line

    For me (and I haven’t been positioning aggressively) it means running smaller risk and covering when it is going against you, or at least waiting longer to add to losing positions as the 0DTE option trading will extenuate moves!

    On the bright side, it was fun to think about something other than central bank policy, if only for a few hours!

    Tyler Durden
    Sun, 02/05/2023 – 15:00

  • Visualizing Tesla's Unrivaled Profit Margins
    Visualizing Tesla’s Unrivaled Profit Margins

    In January this year, Tesla made the surprising announcement that it would be cutting prices on its vehicles by as much as 20%.

    While price cuts are not new in the automotive world, they are for Tesla. The company, which historically has been unable to keep up with demand, has seen its order backlog shrink from 476,000 units in July 2022, to 74,000 in December 2022.

    This has been attributed to Tesla’s robust production growth, which saw 2022 production increase 41% over 2021 (from 930,422 to 1,313,851 units).

    With the days of “endless” demand seemingly over, Tesla is going on the offensive by reducing its prices—a move that puts pressure on competitors, but has also angered existing owners.

    Cranking up the Heat

    But, as Visual Capitalist’s Marcus Lu details below, Tesla’s price cuts are an attempt to protect its market share, but they’re not exactly the desperation move some media outlets have claimed them to be.

    Recent data compiled by Reuters shows that Tesla’s margins are significantly higher than those of its rivals, both in terms of gross and net profit.

    Our graphic only illustrates the net figures, but gross profits are also included in the table below.

    Price cutting has its drawbacks, but one could argue that the benefits for Tesla are worth it based on this data—especially in a critical market like China.

    Tesla has taken the nuclear option to bully the weaker, thin margin players off the table.

    – BILL RUSSO, AUTOMOBILITY

    In the case of Chinese EV startups Xpeng and Nio, net profits are non-existent, meaning it’s unlikely they’ll be able to match Tesla’s reductions in price. Both firms have reported year-on-year sales declines in January.

    As for Tesla, Chinese media outlets have claimed that the firm received 30,000 orders within three days of its price cut announcement. Note that this hasn’t been officially confirmed by anyone within the company.

    Tit for Tat

    Ford made headlines recently for announcing its own price cuts on the Mustang Mach-E electric SUV. The model is a direct competitor to Tesla’s best-selling Model Y.

    Chevrolet and Hyundai have also adjusted some of their EV prices in recent months, as listed in the following table.

    Source: Observer (Feb 2023)

    Volkswagen is a noteworthy player missing from this table. The company has been gaining ground on Tesla, especially in the European market.

    We have a clear pricing strategy and are focusing on reliability. We trust in the strength of our products and brands.

    – OLIVER BLUME, CEO, VW GROUP

    This decision could hamper Volkswagen’s goal of becoming a dominant player in EVs, especially if more automakers join Tesla in cutting prices. For now, Tesla still holds a strong grip on the US market.

    Thanks, Elon

    Recent Tesla buyers became outraged when the company announced it would be slashing prices on its cars. In China, buyers even staged protests at Tesla stores and delivery centers.

    Recent buyers not only missed out on a better price, but their cars have effectively depreciated by the amount of the cut. This is a bitter turn of events, given Musk’s 2019 claims that a Tesla would be an appreciating asset.

    I think the most profound thing is that if you buy a Tesla today, I believe you are buying an appreciating asset – not a depreciating asset.

    – ELON MUSK, CEO, TESLA

    These comments were made in reference to Tesla’s full self-driving (FSD) capabilities, which Elon claimed would enable owners to turn their cars into robotaxis.

    Tyler Durden
    Sun, 02/05/2023 – 14:30

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