Today’s News 8th February 2022

• Are Warnings About "Imminent Russian Invasion Of Ukraine" Any More Than A Deep-State Intel Operation?
  Are Warnings About “Imminent Russian Invasion Of Ukraine” Any More Than A Deep-State Intel Operation?

  Via StrategicMacro.com,

  I think what is happening overall is brinkmanship by a number of parties, which is not uncommon in geopolitics, and it is unlikely anything significant happens.

  

  But lets discuss the interests of different parties in each state:

  Ukrainian interests

  There are interest groups in Ukraine that want Nord Stream 2 sanctioned as it going live in June 2022 would end $3bn of transit revenues that the Ukraine government gets.

  The oligarchs in the Ukraine owe a lot of their wealth to milking the state budgets.

  Then there are Neo-Nazi militias that were folded into the military without much ‘re-education’ who dream of taking Donbass region back and like to wear WWII Galician division insignia.

  So we had a Ukraine forces build up last Feb/ March then a climb down (NS2 was supposed to go live last summer but a German court said the legal structure was not compliant and needed to be changed and then re-approved) now is the last gamble before it goes live.

  

  Ukraine built up forces in Oct and used newly received Nato weapons, such as a TB2 drone to strike 15kms behind the ceasefire line.

  They also crossed the ceasefire line and attacked two small villages with an armoured column. There are daily ceasefire violations of 100-1000 events that the OSCE record in a daily report published on the OSCE website.

  Here is a video of a Ukraine journalist firing a howitzer towards the area. They generally try and shell utilities to make the area as unlivable as possible but also routinely injure and kill civilians.

  Meanwhile the BBC Kiev correspondent notes little frontline expectation of an invasion:

  

  President Zelensky is a former slap stick comedian who was pushed forwards to power by an Oligarch. He won on a reform mandate with pro-western alignment, but has failed to challenge the oligarchs who can easily bribe officials, so has become dependent on the support of the nationalists. He has not implemented the Minsky agreement.

  The Minsk agreement is a treaty that Ukraine, Russia, Germany and France negotiated. It would deliver a federal Ukraine and MPs from Donbass would go to Kiev. But the nationalists want to defeat the Donbass fighters and don’t want pro-Russian MPs in Kiev. So it has never been implemented.

  Russia

  So Russia responded to the events in Oct by increasing their troops near the border from circa 90k to 120-130k. Also there was evidence of more equipment rail way shipped into Donbass. So they were definitely trying to menace Ukraine into stopping the heavy weapons attacks with the implicit threat of a bigger conflict. But they only did the build up after Ukraine provocations.

  Then the western media reports the Russian activities and is encouraged to conclude that Putin is about to invade.

  Russia has repeatedly called for the Minsky treaty to be implemented. If it is not implemented this year there are calls in the Russian parliament for the Donbass region to have a referendum on joining Russia. Most of the residents have Russian citizenship now.

  Russia recently seems to have decided to push back and use the reporting of their invasion threat in the western media to try and push for long term extra-territorial security guarantees, which the US/ UK have blown off, but there seems to be a serious discussion starting with France and Italy and by inference the EU in general.

  A low probability event is a conflagration happens/ is engineered and Putin then annexes the sea front from Mariupol to Crimea and possibly the area around the Dnieper river/ canal to secure the fresh water supply.

  That operation might take a week or so, it is flat land and his tanks would literally just roll across it. Our understanding is that Putin, Medvedev, Lavrov and other centrists in Moscow see the sanctions fall out from that as not worth it, but there are hardliners who dream of doing this.

  An invasion would also give the hardliners in the Washington ample excuse to impose much tougher sanctions and trade embargoes on Russia. We don’t see a broader invasion of western Ukraine as likely.

  In the last few weeks various Russian officials have alluded to what they see is little more than a UK/ US intelligence operation aimed at misleading their respective political leaders and bouncing said leaders into further anti-Russian sanctions. 

  “West cooked up ‘Russian threat’ to save face after Afghan flop, diplomat says”

  

  US/ UK

  America and the UK are unlikely to agree to any Russian security guarantees and are more likely to try and periodically antagonise Putin and his security people, as part of the old ‘great game’. Although this week it seems France and Italy are willing to negotiate security with Russia.

  Apparently, an MI6 dossier, no doubt drawing on Ukrainian sources, has been rubber stamped by the CIA/ State Dept and is the basis for the UK/ US claiming that Putin ‘could/ almost certainly will’ invade. Ie the deep state is bouncing the politicians to try and get more sanctions imposed on Putin and Russia. The Russians are aware of this and have alluded to it several times.

  By claiming Putin might invade imminently they justify sending more arms (Germany would block a NATO MAP) and can provide NATO training to an Army that has neo-Nazi elements within it

  Then when Putin does not invade they will be able to claim diplomatic victory and claim that they stared down the Russian threat.

  But it is almost certainly built on a series of false narratives and manipulated analysis and conclusions.

  Later this year/ Resolution

  Once NS2 is up and running in June and Ukraine has lost the >$3bn in transit revenues, it will be easier for Germany to pressure them to implement the Minsk agreement to make Ukraine a federal state as Ukraine will still want a closer EU relationship. If Kiev refuses to implement Minsk, which is quite likely, then perhaps Donbass would then join Russia, and having the Russian military directly in the disputed areas would necessarily end the low intensity conflict.   

  Germany and Russia don’t want anything to happen that would sanction NS2, Biden has accepted that without NS2 gas prices in Europe would be too high and that affects global gas prices, hence the administration blocked a sanction attempt in the Senate recently on NS2.

  

  German industry don’t want high gas prices or their investments in Russia to be affected, hence the US has given up on the idea of disconnecting Russia from Swift.

  So for now, there are multiple groups within each country that have competing agendas and some brinkmanship has suited a lot of them.

  It is possible that there is a sizable ‘border incident’ but we think it would likely be contained quickly.

  Then a permanent resolution is likely to be pushed for in H2 this year.

  Tyler Durden
  Tue, 02/08/2022 – 00:00

• Biden's Top Science Advisor Forced Out Over Harsh Treatment Of Subordinates
  Biden’s Top Science Advisor Forced Out Over Harsh Treatment Of Subordinates

  President Joe Biden’s top advisor on science and technology policy – two areas that have become extremely important to the White House over the past two years – has just been fired for demeaning and mistreating his subordinates following an internal White House probe.

  Recordings and documents obtained by Politico exposed how Eric Lander bullied his former general counsel, and how he spoke to White House Office of Science and Technology Policy staff in “a disrespectful or demeaning way,” which he acknowledged in his apology.

  “I am devastated that I caused hurt to past and present colleagues by the way in which I have spoken to them,” Lander wrote in a resignation letter to his boss. White House press secretary Jen Psaki said Monday night that the president had accepted Lander’s resignation from his cabinet-level position (which technically put him in the line of succession)

  This could create serious problems for the president as he tries to shift the public’s attention to his cancer moonshot. Biden appeared alongside Dr. Lander during an event last week where the White House re-launched an initiative to cut the death rate from cancer by at least 50% over the next 25 years. The president said Dr. Lander would take a lead role in implementing the initiative. Dr. Lander had already recused himself from all COVID vaccine-related issues, but he has still played an important role in shaping the White House’s response to the pandemic.

  

  Dr. Lander

  Biden now finds himself in a difficult spot: he has repeatedly promised to fire anybody in his administration who “talks down to someone…on the spot”.

  One former subordinate of Dr. Lander’s complained that his behavior was downright “shocking”.

  Rachel Wallace, a career civil servant who works at OSTP, filed a complaint about Dr. Lander’s behavior to the White House, according to people familiar with the matter. A person who has spoken to OSTP staff said other people who worked in the office had similar concerns about Dr. Lander’s behavior.

  “Dr. Lander’s behavior is shocking, to say the least, and I’m concerned that this kind of misconduct may adversely affect science policy,” said David Seide, senior counsel at the Government Accountability Project, which is representing Ms. Wallace.

  However, Lander’s transgressions are much bigger than all that.  While his behavior offered a convenient excuse for the White House to get rid of him, Lander has an employment record fraught with potential controversies. For one: before joining the White House, he was the founding director of the Broad Institute, a biotech outfit whose genomics work has touched upon eugenics – specifically the role that genetics plays in same-sex attraction, the development of PTSD and other issues, according to a report from the Organic Consumers Association.

  Lander also helped cover up evidence showing that “gain-of-function” research financed in part by the US had helped a team of Chinese scientists create the highly infectious SARS-CoV-2, before the virus escaped from the lab and set off the global pandemic

  Here’s more on that from the OCA:

  In January 2020, when scientists examined the genome of SARS-CoV-2 it was immediately clear that the unique feature that made it “100 to 1,000 times” more infectious than the first SARS was something that couldn’t have been achieved through natural recombination. In fact, the virus’s genetic code bore a tell-tale sign that it had been engineered in the lab. This was obvious to every scientist who looked at the virus, even those who later published articles claiming the virus wasn’t engineered.

  The US government engaged in a coordinated cover-up that has been revealed in emails obtained through Freedom of Information Act requests, but one aspect of the cover-up hasn’t been explored before now: A January 2020 analysis conducted by Eric Lander’s Broad Institute for the Director of National Intelligence that falsely claimed that the virus wasn’t genetically engineered.

  Fortunately for Lander, he doesn’t even need this job: He is already among the richest members of President Biden’s cabinet, with a personal net worth of $45 million.

  The top Democrat and Republican on the House Science, Space and Technology Committee demanded that the White House turn over its report on Landers’ behavior – for which he issued a formal apology to staffers on Friday – as soon as possible.

  Tyler Durden
  Mon, 02/07/2022 – 23:40

• Arizona Senate Approves Bill To Ban Males From Female School Sports
  Arizona Senate Approves Bill To Ban Males From Female School Sports

  Authored by Allan Stein via The Epoch Times,

  A Republican-sponsored bill prohibiting males from playing on Arizona female school sports teams passed by a majority vote of the state’s Senate on Feb. 2 and now goes to the state House for review and vote.

  The Senate voted 16-13 to pass the bill, with all Democrats voting against it.

  

  Trinity junior Mack Beggs, a transgender athlete, wrestles Katy Morton Ranch junior Chelsea Sanchez in the final round of the 6A Girls 110 Weight Class match during the Texas Wrestling State Tournament at Berry Center in Cypress, Texas, on Feb. 25, 2017. (Leslie Plaza Johnson/Icon Sportswire via Getty Images)

  Sen. Juan Mendez (D) was not present for the vote as he is currently away on paternity leave, a staffer said Feb. 4.

  The bill, SB1165, acknowledges gender athletic performance differences exist between males and females, and “athletic teams or sports designated for females, women or girls may not be open to students of the male sex.”

  It states violation of the law by any school, institution, or government authority, would be cause for civil action.

  “Each interscholastic or intramural athletic team or sport that is sponsored by a public school, or a private school whose students or teams compete against a public school, shall be expressly designated as one of the following bases on the biological sex of the students who participate on the team or in the sport”—males, men or boys, females, women or girls, co-ed or mixed, the bill states.

  “Any student who is deprived of an athletic opportunity or suffers any direct or indirect harm as a result of a school knowingly violating this section has a private cause of action or injunctive relief, damages, or any other relief available under law against the school,” the bill adds.

  Civil action would have to be filed within two years of the alleged offense.

  The legislation is based on findings that assert the reality of biological sex, that a person’s physiological gender is determined before birth, and acknowledges physical sex differences in prenatal and early childhood through puberty.

  “Having separate sex-specific teams furthers efforts to promote sex equality by providing opportunities for female athletes to demonstrate their skill, strength, and athletic abilities; while also providing them with opportunities to obtain recognition, accolades, college scholarships, and the numerous other long-term benefits that flow from success in athletic endeavors,” according to the bill’s findings.

  Among the bill’s 24 Republican sponsors were Sen. Sonny Borrelli, Rep. Shawnna Bolick, Sen. Warren Petersen, Rep. Judy Burges, and Sen. Vince Leach.

  Leach, representing Arizona’s District 11, said he supported the bill based on his long-time position that acknowledges performance differences between males and females. For 18 years he was a high school sports and club coach in Wisconsin.

  “I can tell you from firsthand observation it’s different” between male and female athletes, Leach told The Epoch Times.

  “The game is played differently. Men are much more aggressive, much more using their body strength. If you introduce men’s strength into the [female sports] equation, it just magnifies that.”

  Leach said it’s becoming more common to see males wanting to participate in female athletics programs.

  “We’re making sure that girls get to play and get to play sports without fear of getting hurt,” he said.

  Leach said that males who participate on female athletics teams “doesn’t make the sport any better.”

  “It dilutes the sport. It’s presented as an issue of fairness, but who’s fairness is it? We’re taking away from a beautiful experience” in sports.

  The legislation will go before the Arizona House where it will be handed over to a committee for review and recommendation to the full House.

  Absent any amendments the approved legislation will be presented to Gov. Dough Ducey for signing.

  On Feb. 3, South Dakota Gov. Kristi Noem signed a bill into law prohibiting transgender girls and women from playing on female sports teams, making South Dakota the 10th state to pass such legislation.

  Tyler Durden
  Mon, 02/07/2022 – 23:20

• "No National Security Risks": Trudeau Admin Turns Blind Eye To Chinese Takeover Of Canadian Lithium Miner
  “No National Security Risks”: Trudeau Admin Turns Blind Eye To Chinese Takeover Of Canadian Lithium Miner

  According to Justin Trudeau’s liberal administration, the Chinese takeover of a lithium mine located headquartered in Toronto “poses no national security risks whatsoever,” according to a report by True North. 

  The report comes after Neo Lithium Corp. was purchased by Zijin Mining Group Co. without a national security review. Neo Lithium spokesperson Carlos Vicens said last month that the government had only conducted a brief security screening of the potential purchase, stating: “The law states they have 45 days after announcement to start a review if they believe there is a specific concern. The timeline passed in early December and no review was done.”

  Industry minister François-Philippe Champagne told True North: “This transaction was absolutely reviewed to make sure there was no security risk.”

  Zijjin Mining acquired the company for $960 million. Neo Lithium “has developed one of the world’s largest overseas lithium brine projects in Argentina,” the report says.

  

  In late January, some experts had warned against takeovers by the Chinese Communist Party, pointing out that they could have impacts on the country’s intellectual property and economic security. 

  Royal Roads University Professor Dr. Jeffrey B. Kucharski told MPs: “I think, as part of a bigger story, what I’m saying is that there are intellectual property issues, there is management knowledge and there is this company as part of a supply chain, potentially, that we now don’t have any longer to help build our own supply chain here in Canada.”

  Senior Fellow of the Centre for International Governance Innovation Dr. Wesley Clark added: “I believe the government addressed the Neo Lithium acquisition using too narrow a framework; misjudged its significance to Canadian national and economic security, now and in the future; failed to translate policy promises into action; and was caught up in a protracted period of political transition while the transaction was being reviewed—all of which, I believe, led to a wrong decision.”

   

  Tyler Durden
  Mon, 02/07/2022 – 23:00

• Hong Kong Will Send More COVID Patients To Quarantine Camp Amid Record Surge In Cases
  Hong Kong Will Send More COVID Patients To Quarantine Camp Amid Record Surge In Cases

  COVID outbreaks may be waning in the US, UK and a number of other countries – including far-flung Australia, where Prime Minister Scott Morrison just unveiled plans to reopen the country to tourists on Monday as that country’s omicron wave has diminished – but in Hong Kong, mainland China, and a handful of other countries in the Asia-Pacific region, case numbers are rising at an alarming rate, much to the consternation of local health officials.

  On Monday, Hong Kong reported 614 new COVID cases, the largest daily tally since the start of the pandemic two years ago. The figure was double the number of cases reported the day prior, prompting local health officials to declare that the “fifth wave” of the pandemic has already begun, and that the city would soon be dealing with 1,000 new cases per day, according to Health minister Sophia Chan Siu-chee. 219 of the new cases were deemed asymptomatic or untraceable, and seven imported.

  

  The prospect of exponential growth of the virus has prompted Hong Kong to impose even tougher quarantine restrictions, including sending both close contacts of the infected, and those who tested positive but exhibit mild symptoms, to a quarantine camp similar to the barbed-wire-enclosed camps opened in Australia where some infected people have been forced to sit out their illness (and a trio of persons made headlines around the world when they escaped late last year). The camp is already housing patients who are deemed symptomatic and at high risk of spreading the virus. Authorities will also consider adopting even tougher social distancing restrictions.

  This facility is located at the Penny’s Bay facility on Lantau Island.

  Officials have laid out plans to start sending more patients who meet the new criteria there on Tuesday, according to the SCMP. Although some infected patients will be allowed to quarantine at home if their digs are deemed “suitable” by the HK government (which, remember, is now under the untrammeled control of Beijing):

  Warning that the Omicron-fuelled fifth wave of the pandemic was spiralling out of control, officials laid out plans to begin sending infected people to Penny’s Bay from Tuesday and allow home quarantine for close contacts whose flats were approved as suitable for isolation.

  The city’s leader will also meet her top advisers on Tuesday to discuss further tightening social-distancing measures to address the infection surge, partly blamed on Lunar New Year celebratory gatherings. Tougher steps could entail expanding the use of the vaccine pass to cover shopping malls and public transport.

  Authorities blamed family gatherings during the Chinese Lunar New Year for fueling the surge in infections. There have been a few notable clusters of cases in the city so far, illustrated below:

  

  As of Monday, COVID patients were occupying 1,146 of the 3,416 units available in the facility on Penny’s Bay. Meanwhile, more contacts of the infected will be required to quarantine at home for 14 days if their homes are deemed “suitable.”

  With fewer spaces available, close contacts of patients and the family members of those secondary contacts can isolate at home starting from Tuesday, for 14 days and four days, respectively, provided their living arrangements proved suitable.

  “Our colleagues will assess whether the household is suitable for home isolation, such as whether they need to share rooms or facilities with their family members,” said Centre for Health Protection controller Edwin Tsui Lok-kin.

  Authorities in Hong Kong have imposed more draconian restrictions as of late, including locking down an entire housing complex after roughly 50 cases were found there. The city has also imposed a requirement for all Hong Kongers to be innoculated. If they aren’t fully vaccinated before Feb. 24, they will not be allowed to enter crowded public places, which will now require proof of inoculation to enter.

  Tyler Durden
  Mon, 02/07/2022 – 22:40

• Philadelphia Has Had At Least 140 Carjackings This Year So Far, Double The Year-To-Date Total From 2021
  Philadelphia Has Had At Least 140 Carjackings This Year So Far, Double The Year-To-Date Total From 2021

  Philadelphia’s carjacking problem is reaching new heights in 2022, according to reports by Brietbart and the Philadelphia Inquirer. 

  So far this year, there have been “at least” 140 carjackings in the city – an average of between 4 and 5 per day, every day, so far in 2022. 

  

  The 140 number is already “double the year-to-date total from 2021″, according to the reports. The number had stood at “at least” 90 carjackings in the first two weeks of the year and “over 100” in the first three weeks of the year. 

  2022’s carjacking pace is “seven times the pace reported at the beginning of 2020,” the Inquirer reported.

  

  Police think “it’s a small group of criminals that are responsible for the majority of carjackings in the city, and they say social media is a driving force,” according to CBS. Police believe the perpetrators are between the ages of 14 to 24.

  “Some carjackings that are getting social media attention are leading to other carjackings and that’s predominantly where a lot of juveniles are coming into play. We think they have been making somewhat of a spectacle or game at keeping score outta something like this,” concluded Philadelphia Police Deputy Commissioner Ben Naish.

  Tyler Durden
  Mon, 02/07/2022 – 22:20

• Thunder Out Of China: The Lab-Leak Theory Strengthens
  Thunder Out Of China: The Lab-Leak Theory Strengthens

  Authored by Yuri Deigin, biotech entrepreneur and co-founder of DRASTIC, via Inference-Review.com

  On August 27, 2021, the Office of the Director of National Intelligence released a summary of the US Intelligence Community’s assessment on the origins of COVID-19.¹ Four of the agencies involved and the National Intelligence Council assessed “with low confidence that the initial SARS-CoV-2 infection was most likely caused by natural exposure to an animal infected with it or a close progenitor virus.”²

  One of the agencies—later reported as the FBI³—assessed “with moderate confidence that the first human infection with SARS-CoV-2 most likely was the result of a laboratory-associated incident, probably involving experimentation, animal handling, or sampling by the Wuhan Institute of Virology.”

  “These analysts,” the summary continued, “give weight to the inherently risky nature of work on coronaviruses.”⁴

  According to the World Health Organization (WHO), there have now been more than 360 million confirmed cases of COVID-19, resulting in over 5.6 million deaths worldwide.⁵

  Questions about the origins of COVID-19 are of more than academic interest.

  

  From Animal Hosts

  Zoonosis is considered the default explanation for the outbreak of any new infectious disease. A number of pandemics occurred during the twentieth century, almost all of them of zoonotic origin. The one known exception is the 1977 H1N1 flu pandemic, which was caused by an insufficiently attenuated vaccine candidate that escaped either from a laboratory or from clinical trials.⁶

  A number of disease outbreaks began in Southeast Asia following zoonotic jumps: the Asian flu pandemic (1957), which originated in China; the Hong Kong flu pandemic (1967); and the avian flu outbreak (2005), which was first reported in Vietnam. The first SARS (severe acute respiratory syndrome) coronavirus outbreak began in China during 2002 and infected more than 8,000 people worldwide between 2002 and 2003, as well as dozens more people in 2004 after several laboratory leaks.

  In a 2007 paper for Clinical Microbiology Reviews, a team of virologists from the University of Hong Kong issued a clear warning:

  The presence of a large reservoir of SARS-CoV-like viruses in horseshoe bats, together with the culture of eating exotic mammals in southern China, is a time bomb. The possibility of the reemergence of SARS and other novel viruses from animals or laboratories and therefore the need for preparedness should not be ignored.⁷

  Horseshoe bats, the genus Rhinolophus, are the natural reservoir for hundreds of coronavirus strains closely related to the SARS virus.⁸

  Once the SARS-CoV-2 outbreak had begun, virologists quickly reached the conclusion that the pandemic was almost certainly of natural origin. In February of 2020, barely a month after the SARS-CoV-2 genome was released, a team led by Kristian Andersen, an immunologist at the Scripps Research Institute in California, published a preprint and then a paper in Nature Medicine entitled “The Proximal Origin of SARS-CoV-2.”⁹ If SARS-CoV-2 had been designed, they argued, it could have been designed better, and since it was not designed better, it most likely was not designed. “While the analyses … suggest that SARS-CoV-2 may bind human ACE2 with high affinity,” the Nature Medicine paper noted, “computational analyses predict that the interaction is not ideal and that the RBD [receptor-binding domain] sequence is different from those shown in SARS-CoV to be optimal for receptor binding.” “The high-affinity binding of the SARS-CoV-2 spike protein to human ACE2,” the authors concluded,

  is most likely the result of natural selection on a human or human-like ACE2 that permits another optimal binding solution to arise. This is strong evidence that SARS-CoV-2 is not the product of purposeful manipulation [emphasis added].¹⁰

  A month before Nature Medicine issued the paper by Andersen et al., The Lancet published a letter signed by 27 leading virologists dismissing the hypothesis that the virus originated in a laboratory:

  The rapid, open, and transparent sharing of data on this outbreak is now being threatened by rumors and misinformation around its origins. We stand together to strongly condemn conspiracy theories suggesting that COVID-19 does not have a natural origin.¹¹

  One of the authors of the letter was Peter Daszak, the president of EcoHealth Alliance, a US-based nonprofit NGO. Since 2004, EcoHealth had been collaborating with the Wuhan Institute of Virology (WIV) on studies of coronaviruses in bats.¹² The relationship between EcoHealth and the WIV was close. A specialist in the transmission of infectious diseases among animals, Daszak was frequently listed as a coauthor on their papers, often alongside the director of the WIV’s Center for Emerging Infectious Diseases, Shi Zhengli.¹³

  The authors of the letter that appeared in The Lancet, Daszak among them, declared that they had reached their conclusions while holding no competing interests. Five months later, the journal issued a demurral with respect to Daszak’s declaration. He updated his statement to clarify his employment at EcoHealth and the nature of EcoHealth’s research in China, and to affirm that their “work in China was previously funded by the US National Institutes of Health (NIH) and the United States Agency for International Development (USAID).”¹⁴ Daszak’s updated disclosure does not include any mention of the WIV, instead referring to EcoHealth’s “collaboration with a range of universities and governmental health and environmental science organisations.”

  On January 14, 2020, a multidisciplinary team of international experts, Daszak among them, traveled to Wuhan to investigate the origins of the virus on behalf of the WHO.¹⁵ The study lasted 28 days. The WHO team was given a guided tour of the WIV facilities and they were able to interview some of its scientists. The “introduction [of the virus] through a laboratory incident,” the WHO concluded, “was considered to be an extremely unlikely pathway.”¹⁶ Instead, they argued, “introduction through an intermediate host is considered to be a likely to very likely pathway.”¹⁷ Elsewhere in their report, the WHO team repeated assurances they had received during their time in China:

  The Wuhan CDC [Center for Disease Control and Prevention] lab which moved on 2^nd December 2019 [to a new location near the Huanan market] reported no disruptions or incidents caused by the move. They also reported no storage nor laboratory activities on CoVs or other bat viruses preceding the outbreak.¹⁸

  If, in February of 2021, the WHO’s team of experts were prepared to take the WIV scientists at their word, by August of 2021, some of them confessed to having had reservations all along. In an interview for a Danish television documentary, Peter Ben Embarek, the leader of the WHO team, admitted that Chinese officials had pressured them to drop the laboratory leak hypothesis. “In the beginning, they didn’t want anything about the lab [in the WHO report], because it was impossible, so there was no need to waste time on that,” Ben Embarek remarked. “We insisted on including it,” he continued, “because it was part of the whole issue about where the virus originated.”¹⁹ Ben Embarek added that there were scenarios under which the laboratory leak hypothesis could be consistent with the assumption that COVID-19 had an animal origin:

  A lab employee infected in the field while collecting samples in a bat cave—such a scenario belongs both [emphasis added] as a lab-leak hypothesis and as our first hypothesis of direct infection from bat to human. We’ve seen that hypothesis as a likely hypothesis.²⁰

  When questioned about the interview by the Washington Post, Ben Embarek initially claimed his remarks had been mistranslated before declining to comment further.²¹ But Ben Embarek was not the only one expressing reservations. A month earlier, the WHO’s director-general, Tedros Adhanom Ghebreyesus, conceded during a press conference that there had been a “premature push” to rule out the laboratory leak hypothesis—comments that contradicted the conclusions of the WHO’s own report, released just a few months beforehand.²² He called on China to allow a full audit of the Wuhan laboratories.²³ “I was a lab technician myself, I’m an immunologist, and I have worked in the lab, and lab accidents happen,” Tedros remarked. “It’s common.”²⁴

  As it turned out, Tedros had every reason to express caution. To date, nearly 82,000 animal samples have been tested in China for SARS-CoV-2. No intermediate animal host has been identified in Wuhan or anywhere else in the country.²⁵

  When Mandarins Command

  Anthony Fauci has been the director of the US National Institute of Allergy and Infectious Diseases (NIAID) since 1984. Over the last few decades, he has expressed his support for gain-of-function research on numerous occasions. In a 2011 op-ed for the Washington Post co-authored with Francis Collins, the director of the NIH between 1993 and 2019, they made the case for viruses “engineered in isolated biocontainment laboratories” as a means to identify “genetic pathways by which such a virus could better adapt to transmission among people.”²⁶ The benefits were not elaborated in detail, the authors simply noting that, “important information and insights can come from generating a potentially dangerous virus in the laboratory.” The op-ed concludes with a brief consideration of the risks involved.

  The following year Fauci published a paper entitled “Research on Highly Pathogenic H5N1 Influenza Virus: The Way Forward,” again making the case for gain-of-function research.²⁷ In his commentary, Fauci acknowledges the question of whether “knowledge obtained from these experiments could inadvertently affect public health in an adverse way, even in nations multiple time zones away.”²⁸ He then invites the reader to consider a hypothetical scenario concerning “an important gain-of-function experiment involving a virus with serious pandemic potential … performed in a well-regulated, world-class laboratory by experienced investigators.” The information gleaned from the study is then “used by another scientist who does not have the same training and facilities and is not subject to the same regulations.”

  In an unlikely but conceivable turn of events, what if that scientist becomes infected with the virus, which leads to an outbreak and ultimately triggers a pandemic? Many ask reasonable questions: given the possibility of such a scenario—however remote—should the initial experiments have been performed and/or published in the first place, and what were the processes involved in this decision?

  Fauci’s answer is unequivocal:

  Scientists working in this field might say—as indeed I have said—that the benefits of such experiments and the resulting knowledge outweigh the risks [emphasis added]. It is more likely that a pandemic would occur in nature, and the need to stay ahead of such a threat is a primary reason for performing an experiment that might appear to be risky.

  In his conclusion, Fauci acknowledges “genuine and legitimate concerns about this type of research,” but his message remains clear: the research is worthwhile and important.

  Of course, no amount of gain-of-function research has helped the world to “stay ahead” of the COVID-19 pandemic, nor can any advocate of virological gain-of-function research explain exactly how one can stay ahead of nature.

  At the end of 2012, Fauci spoke at a workshop on gain-of-function research on HPAI H5N1 viruses hosted by the NIH. “There’s disagreements to the scientific and/or public health value of these experiments,” he remarked in a section of his presentation that discussed funding guidelines, “but I believe people who feel they shouldn’t be conducted are in the minority.”²⁹

  During Fauci’s tenure at NIAID, the NIH funded numerous studies involving coronaviruses and gain-of-function research. In 2015, the NIH supported a study led by Ralph Baric, a virologist from the University of North Carolina at Chapel Hill, and the WIV’s Shi. Published in Nature Medicine, their paper described the creation of a chimera, the result of a spike protein gene from a bat coronavirus being pasted into a mouse-adapted SARS virus.³⁰

  The completion of this study was only possible after Baric received an exemption for his research from NIH officials.³¹ In October 2014, the White House Office of Science and Technology instituted a pause in new funding for gain-of-function research after a series of “biosafety incidents at Federal research facilities.”³² They also recommended “those currently conducting this type of work, whether federally funded or not, to voluntarily pause their research while risks and benefits are being reassessed.” Baric wrote to the NIH’s biosecurity board to plead his case and an exemption was granted.³³

  Three years later, following the election of Donald Trump, Fauci played a key role in the NIH’s decision to resume gain-of-function research.³⁴ The NIH funded a new study that expanded on the WIV’s 2015 work with Baric, creating eight novel chimeric coronaviruses.³⁵ When the 2019 SARS-CoV-2 outbreak occurred, work at the WIV was underway on further research, under yet another round of funding.³⁶

  In his May 2021 US Senate hearing, Fauci claimed that the NIH-funded research at the WIV did not constitute gain-of-function research.³⁷ He was emphatic in his denial because his memory was defective in its scope. In a February 2020 email that Fauci sent to his subordinates, obtained under the Freedom of Information Act (FOIA), an attached PDF of the Baric and Shi paper was labeled “SARS Gain of Function.”³⁸

  A Perfect Call

  Fauci had at his command virologists willing to offer him their advice. Kristian Andersen was among them. Having consulted with his colleagues, Andersen sent Fauci an email on February 1, 2020—also obtained under the FOIA—in which he claimed that the SARS-CoV-2 genome looked engineered, and, what is more, that its genome was “inconsistent with expectations from evolutionary theory.”³⁹ Within hours, Fauci held a teleconference with Andersen, Sir Jeremy Farrar, director of the Wellcome Trust, Collins, and several other virologists.⁴⁰

  A June 2021 article by USA Today reported that, “details of what was said in the meeting, including extensive notes taken by one participant and further thoughts shared by others, were blacked out by the NIH before the emails were made public.”⁴¹ Interviewed for the same article, Fauci recalled:

  “It was a very productive back-and-forth conversation where some on the call felt it could possibly be an engineered virus” … Others, [Fauci] said, felt the evidence was “heavily weighted” toward the virus emerging from an animal host.⁴²

  Although the details of the conversation remain opaque, when the preprint of Andersen’s “Proximal Origin” paper appeared several weeks later, what had before looked engineered now looked natural.⁴³

  When the Fauci emails were published in June 2021,⁴⁴ the shifts in Andersen’s views were greeted with consternation. It had been the WIV’s release of the genome for a viral strain called RaTG13, Andersen later explained, that had changed his mind.⁴⁵ Curiously enough, Andersen had tweeted about RaTG13 a week before writing his initial email to Fauci.⁴⁶ Rather than attempting to resolve all these inconsistencies when they were pointed out to him, Andersen instead chose to first delete the offending tweets, and then to delete his Twitter account altogether.⁴⁷ 

  According to Andersen’s senior colleague, Farrar, other coauthors of the “Proximal Origin” paper were initially even more convinced the virus originated in a laboratory. Farrar later described the events surrounding the meeting with Fauci, Collins, Andersen, et al., in his book Spike: The Virus vs. The People.⁴⁸ That account was the subject of a mid-2021 article by Unherd:

  Before the call on 1 February, Farrar says Andersen was “60 to 70%” convinced the virus came from a lab, while Australian virologist Eddie Holmes was “80% sure this thing had come out of a lab.” Patrick Vallance, Britain’s chief scientific officer who joined the call, tipped off intelligence agencies about their concerns. But others on the hour-long call argued the new virus “was more convincingly explained, scientifically, as a natural spillover than a laboratory event.” Afterwards, the participants swapped notes but Farrar remained torn on the origins. “On a spectrum if 0 is nature and 100 is release I am honestly at 50,” he emailed Fauci. “My guess is this will remain grey unless there is access to the Wuhan lab—and I suspect that is unlikely.”⁴⁹

  The emails obtained under the FOIA revealed that, three days after the call with Fauci, Andersen and Baric assisted Daszak in drafting the letter that subsequently appeared in The Lancet denouncing what, in an email, Andersen would call the “crackpot” and “fringe” hypotheses that SARS-CoV-2 was engineered.⁵⁰

  The following day, Farrar emailed Fauci and Collins again.⁵¹ In his message, Farrar reported having convinced the WHO to form a group that would look at the origins of SARS-CoV-2. He also informed Fauci and Collins that the WHO had asked for “names to sit on that Group” and requested that the pair “please do send any names.” Farrar proposed a subsequent meeting to “frame the work of the group” and suggested there would be “pressure on this group from your and our teams next week.”

  The emails also reveal that having helped draft the Lancet letter, Baric and Daszak—initially at least—opted not to sign it.⁵² Baric expressed concern that if he were to sign the letter it might look “self-serving, and we lose impact.” Daszak, on the other hand, sought to downplay his own involvement, along with that of Baric and another virologist, Linfa Wang. “You, me, and him should not sign this statement,” Daszak suggested to Baric and Wang, “so that it has some distance from us and therefore doesn’t work in a counterproductive way.”

  “We’ll then put it out in a way that doesn’t link it back to our collaboration so we maximize an independent voice.”

  Hot Spot

  Whatever the origins of SARS-CoV-2, it was first observed in Wuhan, the initial outbreak occurring between October and December of 2019. The hypothesis that SARS-CoV-2 originated elsewhere and traveled undetected until it reached Wuhan is implausible. Earlier transmission would have led to earlier outbreaks in other locations, or would have produced viral lineages at earlier spots on the SARS-CoV-2’s phylogenetic tree. The virus phylogeny is strongly rooted in Wuhan.⁵³

  While there is little doubt that SARS-CoV-2 originated in Wuhan, questions remain about where in Wuhan it originated. After the 2002 SARS outbreak in Guangdong, the first SARS patients had almost immediately been traced to restaurant workers handling exotic animals: palm civets sold at a local market were, within weeks, identified as an intermediate host.⁵⁴

  In November of 2021, the virologist Michael Worobey, writing in Science, argued that the SARS-CoV-2 outbreak originated in the Huanan Seafood Market in Wuhan.⁵⁵ In an interview with University of Arizona News, Worobey remarked that the evidence was like a “flashing red arrow pointing to the Huanan market as by far the most likely site of origin, with a failure to put a stop to sales of illegal wildlife in markets like Huanan as the reason.”⁵⁶

  Worobey’s article, it should be noted, provided no new evidence for zoonosis and his conclusion was based solely on a reanalysis of Wuhan patient data from December 2019. The data were subsequently shown to be erroneous.⁵⁷ The “strong evidence” for zoonosis cited by Worobey in his article for Science amounted to nothing more than conjecture: “[T]hat most early symptomatic cases were linked to Huanan Market—specifically to the western section (1) where raccoon dogs were caged (2)—provides strong evidence of a live-animal market origin of the pandemic.”⁵⁸ Not a single racoon dog has yet been found carrying a progenitor of SARS-CoV-2, nor has any other animal been infected by such a progenitor. Around 82,000 animal samples have now been analyzed in China, including 1,700 recent wildlife trade samples sold in wet markets.⁵⁹ All were negative for any SARS-like virus.

  Whether the outbreak originated in a female seafood vendor at the Huanan Market remains unclear. But the market itself clearly served as an epidemiological hot spot, harboring what Worobey described as a “genuine preponderance of early COVID-19 cases.”⁶⁰ While some early human cases were, indeed, linked to the Huanan Market, many cases predated the market outbreak.⁶¹ Moreover, the SARS-CoV-2 strains circulating in the market were not ancestral, all of them carrying three novel mutations not seen in earlier patients.⁶² Nor is Wuhan home to the horseshoe bats known to carry SARS-like viruses. Indeed, the likelihood of a bat virus outbreak in Wuhan was deemed so small that in 2018 the city was used as a negative control for a study by the WIV that assessed the risk of zoonotic jumps of SARS-like viruses in Yunnan from bats to people who lived within one to six kilometers of such bats.⁶³ The study found that six of 218 farmers carried antibodies to the bat SARS-like virus called Rp3, in contrast to none of the 240 residents of Wuhan. Both Daszak and Shi are listed among the sixteen coauthors for the study.

  After the SARS-CoV-2 outbreak broke out, Daszak cited this study in a tweet to estimate the general incidence of coronavirus zoonotic spillovers.

  These jumps occur every day. We conducted sero-surveys in SE Asia & found 3% of rural people have antibodies to bat CoVs. That means 1-7 million people per year exposed to bat origin SARS-related CoVs. It’s utterly illogical to think that this did not lead to the current outbreak.⁶⁴

  If 218 residents of rural Yunnan living in proximity to bat caves showed a 3% rate of seropositivity, then by extrapolation, he argued, one to seven million people in rural Southeast Asia should be exposed to some SARS-related coronavirus every year. It was certainly a curious argument for someone in Daszak’s position to make.

  By contrast, Shi acknowledged that Wuhan is an unlikely place for a SARS-like virus to emerge. She addressed the topic in a 2020 interview with Scientific American:

  “I had never expected this kind of thing to happen in Wuhan, in central China,” [Shi] remarked. Her studies had shown that the southern, subtropical provinces of Guangdong, Guangxi, and Yunnan have the greatest risk of coronaviruses jumping to humans from animals—particularly bats, a known reservoir. If coronaviruses were the culprit, she remembers thinking, “Could they have come from our lab?”⁶⁵

  The Wuhan Laboratory

  In 2019, EcoHealth was scheduled to receive another round of funding from the NIH for project 2R01AI110964-06, “Understanding the Risk of Bat Coronavirus Emergence.”⁶⁶ This grant, the umbrella project that had funded EcoHealth’s collaboration with the WIV since 2014, had been initiated with three broad aims. The first was to “[c]haracterize the diversity and distribution of high spillover-risk SARSr-CoVs in bats in southern China,” while the second involved “[c]ommunity, and clinic-based syndromic, surveillance to capture SARSr-CoV spillover, routes of exposure and potential public health consequences.” The third aim was much more explicit about what the researchers had in mind:

  In vitro and in vivo characterization of SARSr-CoV spillover risk, coupled with spatial and phylogenetic analyses to identify the regions and viruses of public health concern. We will use S protein sequence data, infectious clone technology, in vitro and in vivo infection experiments and analysis of receptor binding to test the hypothesis that % divergence thresholds in S protein sequences predict spillover potential.⁶⁷

  Prior to the cancellation of the NIH grant in April 2020,⁶⁸ EcoHealth received US$3.1M in funding for the project.⁶⁹ Of that amount, US$600,000 was passed on to the WIV.⁷⁰

  In a December 2018 paper for Nature Reviews Microbiology, researchers from the WIV outlined their vision for the next stages of the project:

  [F]uture work should be focused on the biological properties of [SARS-like and MERS (Middle East Respiratory Syndrome)-like] viruses using virus isolation, reverse genetics and in vitro and in vivo infection assays. The resulting data would help the prevention and control of emerging SARS-like or MERS-like diseases in the future.⁷¹

  The ultimate goal of such work may have been to create a pan-coronavirus vaccine. Research focused on SARS-like and MERS-like viruses was a stated goal not just for WIV, but for EcoHealth as well. Daszak said as much publicly in a November 2019 interview:

  You can manipulate [coronaviruses] in the lab pretty easily, it is the spike protein drives a lot of what happens with the coronavirus zoonotic risk. You can get the sequence, you can build the protein. We worked with Ralph Baric at UNC who did this, insert into a backbone of another virus and do some work in the lab. So, you can get more predictive when you find a sequence. … The logical progression for vaccines — if you are going to develop a vaccine for SARS, people are going to use pandemic SARS, but let’s try to insert some of these [other spike genes] and get a better vaccine.⁷²

  In addition to sub-grants from EcoHealth, research at the WIV was supported by Chinese funding. Ben Hu, a researcher at the WIV, was awarded a three-year grant from the Youth Science Fund for a project to investigate “Pathogenicity of Two New Bat SARS-Related Coronaviruses to Transgenic Mice Expressing Human ACE2 Receptor.”⁷³ Hu has been a member of Shi’s group at the WIV since 2015.⁷⁴

  The WIV undertook its work for the best of reasons. Prior to the emergence of SARS-CoV-2, it was widely held among researchers that a future epidemic, or Disease X as the WHO termed it, might be caused by a coronavirus.⁷⁵ In June 2020, Shi and her colleague Shibo Jiang published a paper entitled “The First Disease X Is Caused by a Highly Transmissible Acute Respiratory Syndrome Coronavirus.”⁷⁶ “Disease X,” Shi and Jiang observed, “would be a new disease with an epidemic or pandemic potential caused by an unknown pathogen.” Unknown? Not quite. “[T]he first Disease X,” they wrote, “could be a transmissible infectious disease caused by a novel coronavirus originated from bats.”

  The Tell-Tale Genome

  SARS-CoV-2 contains a number of curious genomic features—its novel furin cleavage site most obviously. No other known SARS-related coronavirus has a furin cleavage site. To enter human cells, SARS-CoV-2 uses a spike protein that attaches to human ACE2 receptors. The protein must then be cut by an enzyme in order to fuse with the cell membrane and penetrate the cell. The spike protein consists of two parts, S1 and S2. S1 is responsible for primary contact with the receptor, and S2, for fusion and penetration. For S2 to initiate fusion, the S1/S2 junction must be cut by a host enzyme like furin or TMPRSS2. This junction is where the novel furin cleavage site is found in SARS-CoV-2. Furin is a very efficient enzyme, found both on the surface and in the interior of many human cells, most notably in the airway epithelium. It is furin’s presence in the interior of the cell that allows newly formed virions to emerge in a pre-cut conformation, enhancing their infectivity.

  The furin cleavage site in SARS-CoV-2 was created by a peculiar 12-nucleotide insertion—so peculiar, in fact, that the genomic locus in SARS-CoV-2 enveloping its furin cleavage site is, at least, twelve nucleotides longer than any of its relatives.⁷⁷ Virologists have created novel furin cleavage sites in coronaviruses repeatedly.⁷⁸ It is obvious why.⁷⁹ Furin cleavage sites greatly expand both the tissue and species tropism of a virus.⁸⁰ And furin cleavage sites enhance the adaptation of a viral strain to certain cell lines.

  The WIV failed to mention the novel furin insertion in its first two papers on SARS-CoV-2,⁸¹ even though the WIV had in its possession the closest relative of SARS-CoV-2 at that time—the strain RaTG13.⁸² Genomic comparison made the furin cleavage site obvious. In their diagram comparing the two genomes, the WIV cut off the comparison just before the novel insertion. In the paper that first mentioned RaTG13, the WIV researchers did not explain where RaTG13 came from or how they came to possess it.

  The novel insertion is comprised of the nucleotides T CCT CGG CGG GC; the corresponding amino acids are proline (CCT) arginine (CGG) arginine (CGG) alanine (GCA)—or PRRA in one-letter amino acid notation. The nucleotide insertion is odd because it is not completely in frame, the insertion splitting the ancestral serine codon TCA while preserving the downstream frame.⁸³ Odd as well are the two repeating CGG arginine codons. CGG is the rarest of the six codons to code for arginine in bat coronaviruses, and the SARS-CoV-2 insertion is the only example in which two CGG codons are consecutive. In fact, the CGG-CGG doublet is the only one coding for two arginines in all 255 SARS-like viruses with protein annotations listed in the NIH Genetic Sequence Database (GenBank).⁸⁴

  In contrast to bat coronaviruses, CGG is the most frequent arginine codon in humans.

  To continue reading, click here.

  Tyler Durden
  Mon, 02/07/2022 – 22:00

• Meta Threatens To Shutter Facebook, Instagram Across EU If Data Privacy Rules Aren't Changed
  Meta Threatens To Shutter Facebook, Instagram Across EU If Data Privacy Rules Aren’t Changed

  The newly renamed Meta Platforms (the company formerly known as Facebook) is once again threatening to shut down two of its most popular social media services in the European Union (a move that would be devastating for the company’s bottom line while also instigating a backlash from EU consumers) if EU regulators don’t strike a more suitable agreement on a new data privacy arrangement with regulators in Washington.

  

  Meta said that if it couldn’t rely on new or existing agreements to shift some data back to the US using “standard contractual clauses,” then it would “likely be unable to offer a number of our most significant products and services, including Facebook and Instagram, in Europe,” according to Bloomberg. The warning came in Meta’s annual report.

  This isn’t the first time the company has threatened to cut off its services in Europe: Meta raised the prospect of pulling the plug in last year’s annual report, too. It also threatened to block news articles from being shared on its platform in Australia after a court ruling there required social media firms to pay news organizations for use of their content.

  “We have absolutely no desire and no plans to withdraw from Europe, but the simple reality is that Meta, and many other businesses, organizations and services, rely on data transfers between the EU and the US in order to operate global services,” a Meta spokesman said in an emailed statement.

  But Meta’s  continuedthreats highlight “the increasing tension between the social media company and lawmakers over the ownership of user data” collected on Facebook’s platforms.

  Ultimately, the issue must be worked out between the European Commission and Washington. The two sides are currently enmeshed in negotiations with Washington over its data transfer policy. These discussions “take time given the complexity of the issues discussed and the need to strike a balance between privacy and national security.”

  A spokesman for the commission told BBG on Monday that “only an arrangement that is fully compliant with the requirements set by the EU court can deliver the stability and legal certainty stakeholders expect on both sides of the Atlantic.”

  All of this stems from a 2020 legal battle between Facebook and Ireland, during which the court ruled that Facebook couldn’t use “standard contractual clauses” as a basis for transferring user data back to servers in the US. Facebook tried to appeal that decision, but the Irish court rejected the appeal.

  The spokesman continued…

  “Only an arrangement that is fully compliant with the requirements set by the EU court can deliver the stability and legal certainty stakeholders expect on both sides of the Atlantic,” the spokesperson added.

  But what’s the point of all these European data laws? Four years after the passage of the EU’s General Data Protection Regulation, many critics are warning that the new regulations have almost no impact on consumer choice – and instead of mostly just become an annoyance for tech companies and users alike.

  About a week ago, the NYT‘s Joe Nocera wrote in the paper’s daily “Dealbook” email newsletter that Europe’s GDPR regulations haven’t worked like their architects had hoped. Turns out, nobody reads the “cookie” warnings that sites are required to push to readers – so this whole notion about making an “informed” choice just went completely out the window. It has created a whole new concept called “consent optimization.”

  Four years ago, the European Union’s General Data Protection Regulation went into effect. It requires any website that is accessible in Europe, which means most websites, to post a notice of its privacy policy and to give people an opportunity to accept or reject cookies, the files that allow their data to be collected. When it passed, many digital privacy activists thought that digital privacy was on its way to being solved.

  That’s not how things turned out. The last time a pop-up window appeared on a website and asked whether you would allow cookies to gobble up your personal data, did you actually read the fine print or think for more than five seconds before you pressed “accept”? Me neither. “No one reads cookie banners,” said Max Schrems, an Austrian privacy advocate who played a key role in pushing for the regulation.

  “They’ve become almost a useless exercise.” Actually, it is worse. In practice, the proliferation of cookie banners has both numbed people to their purpose and given companies yet another way to manipulate users. Companies have turned cookie banners into a tool that does the opposite of what regulators intended.

  You’ve heard of “search engine optimization”? There are now firms, called consent management platforms, that are promising “consent rate optimization”— meaning they create cookie banners that will move people to hit the “accept” button.

  One simple example: According to one study, removing the “opt out” button on the front page of the cookie banner increases consent by 22 or 23 percentage points. Some of these companies say they can achieve a consent rate of 90 percent.

  Given the decision by the Irish courts, and the European Commission’s unflagging support for its GDPR, it doesn’t look like the negotiations between the EU and Washington will be resolved in CEO Mark Zuckerberg’s favor. That’s unfortunate since, as the NYT explained above, Europe’s data privacy rules haven’t made much of a difference to consumers.

  Tyler Durden
  Mon, 02/07/2022 – 21:40

• Watch: Rand Paul Warns COVID Mandates Have "Always Been About Growing Government Power Over Your Lives"
  Watch: Rand Paul Warns COVID Mandates Have “Always Been About Growing Government Power Over Your Lives”

  Authored by Steve Watson via Summit News,

  Senator Rand Paul warned Friday that the COVID mandates and restrictions have always been more about getting people to act submissively to government than they have been about health and safety.

  

  Appearing on Hannity, Paul stated “the dirty little secret is it’s always been more about submission.”

  “It’s always been more about collectivism. It’s been about growing government power over your lives,” Paul adding, further noting “the science has been clear for a long time on masks for children.”

  Paul continued, “Sweden didn’t have their school kids wear masks at all. Not one child died. The incidence of the disease and the teachers did not rise, with the kids not wearing masks. I mean, it’s sort of, you know, I worry about the future of America if the Europeans are leading us toward freedom.”

  Paul also referred to the Canadian trucker convoy standing against mandates, urging that “the Canadians are ahead of us in trying to unwind mandates.”

  Referring to Dr. Ezekiel Emanuel’s recent false assertion that unvaccinated children are at risk of contracting “a serious condition,” Paul continued, “We’ve got to stop the ridiculous mandates on children that Dr. Emanuel, that you put forward saying that kids are dying from omicron. The statistics are this and the science is this. The wild variant was a thousand times less deadly for kids than 80-year-olds, and it’s become progressively less dangerous to the delta, to the omicron.”

  Paul continued, “As far as whether you vaccinate your kids, that’s up to you. But there should be no mandate.”

  “And I think particularly for young males, the evidence is pretty strong now that the more vaccines you give young males, the higher their incidence of myocarditis,” Paul, who is also a doctor asserted.

  “If you were asking me about your children, I would get them checked first to see if they’ve already had COVID. If a child has already had COVID, I don’t think they need any treatment,” Paul added.

  Watch:

  https://video.foxnews.com/v/embed.js?id=6295580207001&w=466&h=263Watch the latest video at foxnews.com

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  Tyler Durden
  Mon, 02/07/2022 – 21:20

• Amazon Doubles Maximum Base Salary For Employees Worldwide
  Amazon Doubles Maximum Base Salary For Employees Worldwide

  Following Amazon’s blockbuster earnings last week and recent news of employee angst over crappy pay, an internal memo from the e-commerce giant leaked to Bussiness Insider states the maximum base salary cap has been doubled. 

  

  According to an internal memo, Amazon will increase its maximum base salary to $350k, more than doubling the previous $160,000 salary cap for most employees. The memo states new base pay ranges will be set for most jobs within the company and will apply worldwide. 

   “The increases are much more considerable than we’ve done in the past.

  “This past year has seen a particularly competitive labor market, and in doing a thorough analysis of various options, weighing the economics of our business and the need to remain competitive for attracting and retaining top talent, we decided to make meaningfully bigger increases to our compensation levels than we do in a typical year,” the memo states.

  Insider reports the memo comes as Amazon employees have complained about low pay and the lack of compensation packages compared to competitors. The changes in maximum base salary are expected to be reflected in the company’s internal system beginning on Wednesday.

  Since this news just hit, we suspect Amazon’s recruiting office will be flooded with phone calls and emails today of millennial white-collar workers begging for a job.

  Tyler Durden
  Mon, 02/07/2022 – 21:00

• Shipping Rates Could "Blow Through The Roof" In 2022 If This Happens
  Shipping Rates Could “Blow Through The Roof” In 2022 If This Happens

  Submitted by QTR’s Fringe Finance

  This is part 2 of an exclusive Fringe Finance interview with shipping analyst (and friend of mine) J Mintzmyer, where we discuss the state of the supply chain in the country, the developments with Canadian truckers, logistics, the effects of Covid and what shipping names he likes for 2022. Part 1 of this interview is here.

  

  J is a renowned maritime shipping analyst and investor who directs the Value Investor’s Edge (“VIE”) research platform on Seeking Alpha.  You can follow him on Twitter @mintzmyer. J is a frequent speaker at industry conferences, is regularly quoted in trade journals, and hosts a popular podcast featuring shipping industry executives.

  J has earned a BS in Economics from the Air Force Academy, an MA in Public Policy from the University of Maryland, and is a PhD Candidate at Harvard University, where he researches global trade flows and security policy.

  Q: J, What do you make of Covid’s effect on the shipping sector? Is there any chance that a loosening of restrictions will happen this year, in your opinion? If so, what affect will that have?

  COVID-19, or more precisely the global policy response to COVID-19, is a key factor in the entire supply chain mess. Things were already tight in late-2019 and US ports, particularly on the West Coast, have been underinvested for a decade, but the enormous lockdown disruption is what ‘broke’ the machine.

  

  Probably not the best metaphor, but I sometimes compare this to a snake accustomed to eating a steady diet of hamsters every day and keeping the jungle free of rodents.

  Then the hamsters disappear for a few weeks and the snake gets super hungry, eventually finds a warthog and panic eats. While the warthog is stuck digesting in the snake, hundreds of hamsters are piling up, running amok, and the jungle is infested. That’s crude, but that’s essentially what happened with ports operating at near full capacity by 2019 while the world was addicted to gimmicks like Just-in-Time inventory management. …the unwind is taking awhile.

  Easing restrictions obviously will help, but the system is all sorts of broken right now. Even with no government meddling and friction, this will take several months to unwind, even in the most optimistic scenarios.

  Do you see the U.S. economy heading toward recession. Why or why not?

  That’s a bit out of my scope as a maritime shipping investor. Frankly, the Chinese economy is a bigger focus and risk area for many of our investments. Generally speaking, my concern would be if a mixture of higher rates and equity market collapse drove a rapid slowdown in hiring and other economic activity. The corrections we saw in January were very encouraging and it looks like a decent chunk of the speculative bubble has started to deflate.

  Do you ever use market cap to GDP to measure how expensive stocks are? Why are why not? If not, what’s your favorite metric to use.

  Also a pretty broad question for me, but I’ll try my best, just please remember I’m outside of my lane here! I think the market cap-GDP ratio is likely skewed based on how many companies are public versus private. Although not a perfect index, I do like the Schiller CAPE (cyclically-adjusted price to earnings) caveated by interest rate levels.

  

  A mistake a lot of bears have made for the past 3-4 years was to ignore that we are in a ZIRP environment (zero interest rate policy), which means historical CAPE comparisons are flawed. With rates now set to slowly start rising in 2022, the CAPE starts to become more relevant and that’s likely why high-flier speculative things like the ARKK ETF have been unwinding hard.

  If you look past the broad market indices (SPY, QQQ, Dow 30), we are arguably in the midst of a raging bear market in small caps. Price discovery is starting to come back, and fundamental valuations should hopefully play a much larger role going forward.

  Any progress on ports being upgraded or rail lines being improved, as you suggested may happen back in 2021?

  The infrastructure bill had some hefty port allocations, but these are massive projects which will take years to roll out. Call me in 2023-2024 to chat about those!

  The far bigger supply chain concern this year is the pending renewal of the ILWU (west coast labor union) contract, which expires at the end of June. This was a hard-fought 3 year extension agreed back in mid-2019 when the industry was in a far weaker position. This time around, the workers have enormous bargaining power and they are likely to fight for better provisions. If this leads to a strike or shutdown of any sort, then congestion could surge, freight rates could blow through the roof, and all my more conservative projections are likely to be exceeded.

  In this sort of outcome, stocks like ZIM could go to $200+. Will this happen? It is hard to tell. Labor negotiations are never easy, but the industry might also be more willing to cut a sweetheart deal or offer a lucrative extension until things are more normalized. We’ll see… I am watching closely!

  Do you ever invest in rail? If so, what are some of your favorite names and why? If not, why not? How does rail differ from shipping to a novice investor?

  No. Valuations just are not attractive in rail right now versus the maritime angles. Rail is a better business in general due to fixed capacity and extreme difficulty for new entrants to compete (i.e. a strong moat), but I don’t believe it’s worth paying 5-10x the valuations versus strong maritime shipping firms.

  Maritime shipping is more of a commodity like energy stocks or mining stocks. Rail is much more comparable to utility or telecom stocks.

  Tell us about what’s new with your service.

  Thanks for asking! We have rolled our updated Model Portfolios for 2022, which recently included an update for February 2022. Thus far YTD (as of 2 February), our models have returned an average of 12.3% while the Russell 2000 is down over 10%, so I am very proud of that performance. As a reminder, in 2021, our models returned an average of 136.2%, which was the best year on record. We cater primarily to larger investors and traders and also work with a few dozen family offices and hedge funds. If you are interested in checking out our research platform, please head to www.mintzmyer.com. If you are a smaller trader or investor, then you can follow me on Twitter @mintzmyer.

  Part 1 of this interview is here.

  —

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  I have not personally vetted J’s returns — it is up to readers considering his service to do so. I own ZIM as does J, as disclosed. None of this is a solicitation to buy or sell securities. It is only a look into our personal opinions and portfolios. These positions can change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe.

  MORE DISCLAIMER:  

  These are not the opinions of any of my employers, partners, or associates. I get shit wrong a lot. If I am here listing things I got right or things I think will happen in the future, note that there are likely twice as many things I got wrong over the same period of time. I’m not a financial advisor, I hold no licenses or registrations and am not qualified to give advice on anything, let alone finance or medicine. Talk to your doctor, talk to your financial advisor or your therapist. Leave me a alone and do your research elsewhere. If you can find somewhere to rate this Substack one star, please do so as to save future readers from the misery of my often wholly incorrect prognostications.

   

  Tyler Durden
  Mon, 02/07/2022 – 20:40

• Goldman Finds Most Financial Tightening On Record Already Priced Into Markets
  Goldman Finds Most Financial Tightening On Record Already Priced Into Markets

  Last week’s strong NFP print coupled with the BoE and ECB joining the Fed’s hawkish pivot has sparked a panic-scramble across the bond market to price in the unthinkable.

  Short-term interest rates are pricing in 5 rate-hikes this year (and a 25% chance of a 6th) as well as a 30% chance that The Fed surprises in March with a 50bps hike…

  

  The Bank of England is expected to hike 5 more times by November 2022 and European rates see a 75% chance of 5 rate-hikes by The ECB this year.

  These are dramatic pivots from just a few months ago, and every asset-class is coming to terms with the realization central banks are serious this time (for now).

  In fact, as Goldman Sachs’Cecilia Mariotti notes her latest strategy research note, our RAI PC2 “Monetary policy” is signaling the most hawkish pricing across assets on record (outside the COVID-19 shock)…

  

  However, Mariotti points out that while equities have been more under pressure, it is mostly longer duration, growth pockets of the market that have suffered – value has outperformed and cyclicals are flat vs. defensives.

  

  The current level of extreme monetary tightness expected by the market is the same as was priced-in in 2014 and 2018 – during which both times The Fed flip-flopped and reversed its hawkish stance (in the interest of ‘financial stability’)…

  

  The difference is… they had room then because ‘global growth’ was still positive (and obviously inflation under control).

  However, this time growth is already negative and declining…

  

  As Goldman concludes:

  We believe markets have entered a regime in which monetary policy will no longer support equity (and risky assets more broadly), and while a large part of the hawkish shift has likely been priced by equities, any rally from here will have to be supported by improving growth expectations…

  …and there is little on the horizon to make that seem likely as Washington is mired in gridlock into the midterms.

  In fact, as BofA recently noted, their global EPS model predicts deceleration from 40% last summer to 0-10% by summer (with a 40% probability that global EPS growth negative in H2)…

  

  Which doesn’t give stocks any room for complacency that any bounce is other than for selling.

  Tyler Durden
  Mon, 02/07/2022 – 20:20

• IRS Abandons Plans To Require Third-Party Facial Recognition
  IRS Abandons Plans To Require Third-Party Facial Recognition

  Authored by Jack Phillips via The Epoch Times,

  The Internal Revenue Service (IRS) will not use a third-party company to verify new accounts with facial recognition, the agency announced on Monday in a news release.

  

  The proposed move, which would have used the company ID.me, was criticized resoundingly by privacy advocates and some members of Congress, who say the technology is flawed and would not recognize users if they experienced significant physical changes. Previously, the IRS said it would use the software to cut down on fraudulent accounts.

  The IRS “will transition away from using a third-party service for facial recognition to help authenticate people creating new online accounts,” according to its news release. “The transition will occur over the coming weeks in order to prevent larger disruptions to taxpayers during filing season.”

  At the same time, the agency continued, it will “bring online an additional authentication process that does not involve facial recognition.” It’s not exactly clear how that will be accomplished ahead of the tax-filing deadline in mid-April.

  “The IRS takes taxpayer privacy and security seriously, and we understand the concerns that have been raised,” said IRS Commissioner Chuck Rettig in a statement.

  “Everyone should feel comfortable with how their personal information is secured, and we are quickly pursuing short-term options that do not involve facial recognition.”

  The IRS’s change will “not interfere” with taxpayers’ capability to file their tax returns or pay the taxes owed, the agency confirmed.

  “During this period, the IRS will continue to accept tax filings, and it has no other impact on the current tax season. People should continue to file their taxes as they normally would,” said the IRS.

  Some members of Congress hailed the move on Monday.

  “This is big,” Sen. Ron Wyden (D-Ore.) wrote on Twitter in response to the IRS’s policy change.

  “While this transition may take time, the administration recognizes that privacy and security are not mutually exclusive.”

  Under the now-abandoned policy, in order to apply for the ID.me service, users would have to submit copies of bills and another form of ID, including a license, state ID, or a passport. They would also have to take a photo of themselves, or they would have to send it a recorded video of themselves if there were not enough materials available. The IRS, at the time in January, noted that people won’t have to submit to facial recognition software to file their taxes.

  Security researcher Brian Krebs, who operates the blog Krebs on Security, wrote in a January post that ID.me users can delete their biometric data at any time.

  “When I asked the support technician who conducted the video interview to remove my biometric data, he sent me a link to a process for deleting one’s ID.me account. So, it seems that removing one’s data from ID.me post-verification equals deleting one’s account, and potentially having to re-register at some point in the future,” he wrote.

  Tyler Durden
  Mon, 02/07/2022 – 20:00

• Delta CEO Asks DOJ To Enforce A National "No Fly" List For Unruly Passengers
  Delta CEO Asks DOJ To Enforce A National “No Fly” List For Unruly Passengers

  It looks like the “friendly skies” are a thing of the past. Ever since the beginning of the pandemic, air travel has become an increasingly cantankerous undertaking, with flights routinely breaking out into fisticuffs over mask policies, social distancing rules and other guidelines that were introduced as part of 15 days to slow the spread…almost 2 and a half years ago.

  Now, Delta Airlines has seen enough. They are asking that unruly travelers should be placed onto a national “no-fly” list, according to CNBC. 

  CEO Ed Bastian has officially asked the U.S. Department of Justice for the help in an effort to deter aggressive behavior on flights, the report says. 

  Bastian wrote to Attorney General Merrick Garland that the list “will help prevent future incidents and serve as a strong symbol of the consequences of not complying with crew member instructions on commercial aircraft.”

  

  Of the 5,981 cases of unruly passenger behavior that were logged in 2021, 72% of them were related to disputes over mask compliance. 350 enforcement actions followed. 

  This year, 323 reports of such passengers have found their way to the FAA. 

  The idea of a central “no fly” list for unruly passengers was put forth by Delta last September. Garland then told prosecutors to prioritize cases involving disruptive and violent behavior on flights. 

  So far, 1,900 people have been barred from flying Delta due to not adhering to mask mandates. 

  Tyler Durden
  Mon, 02/07/2022 – 19:40

• Credit Canary Upends Hope Of Benign Bond Selloff
  Credit Canary Upends Hope Of Benign Bond Selloff

  Last night we warned that “Credit Market Cracks Could Spark Doom-Loop With Stocks“, and today, Bloomberg’s Cormac Mullen picks up a different angle in the ominous thread of cracking credit, writing that with the credit market showing increasing signs of stress, the chances of a disorderly rise in yields are piling further pressure on global risk assets.

  Here are some more details from Mullen’s latest Markets Live note:

  A key measure of U.S. corporate credit risk reached the highest since September 2020 on Friday – and its European equivalent soared – after strong U.S. payrolls data and a hawkish ECB stoked expectations for aggressive rate hikes around the globe.

  Unlike during last year’s Treasuries slump, when high-yield debt continued to push higher, this time junk bonds are selling off alongside their government equivalents — witness the two popular iShares ETFs tracking the asset classes.

  

  This credit weakness removes a key argument from bulls that risk assets can tolerate higher bond yields — corporate debt is often used as a canary in the coal mine to detect broader market stress.

  As always it is the pace of yield rises that poses the biggest threat to investors and last week they realized that the prospect of faster-than-expected central bank rate hikes is not just confined to the U.S.

  Traders accelerated bets on ECB policy tightening to fight record inflation, when President Christine Lagarde declined to rule out a hike this year and the Bank of England came within a whisker of hiking rates by half a percentage point this month.

  This spreading uncertainty over the speed of global rate hikes will have to be priced in to the upcoming slate of corporate bond issuance, coming in the midst of the ongoing earnings season. And if wage inflation continues to beat expectations, investors will have to adjust their expectations for corporate margins on top of accounting for rising borrowing costs in future refinancings.

  Of course the hopeful demise of the omicron wave could brighten the economic picture and an alleviation in the supply-chain crisis could blunt inflation’s rise. But the fact that corporate bonds look to have joined the risk-asset slide is an ominous sign for global markets.

  Tyler Durden
  Mon, 02/07/2022 – 19:20

• China Locks Down Border City Of 3.6 Million As COVID Flares Amid Winter Games
  China Locks Down Border City Of 3.6 Million As COVID Flares Amid Winter Games

  As Beijing scrambles to wall off its 3,000-mile-long southern border with a new “Great Wall” of fencing, barbed wire and cameras/motion sensor tech – all iin the name of combating COVID – local authorities in one southern province have locked down a city situated along China’s border with Vietnam after discovering an outbreak there.

  

  The latest lockdown in Baise, a city of nearly 4 million people, was ordered by authorities on Monday, Reuters reports. The decision comes as authorities have allowed COVID positive athletes to continue competing in the ongoing Winter Games (which have attracted abysmal viewership in the US).

  Authorities in China’s southwestern city of Baise ordered residents to stay at home from Monday and avoid unnecessary travel as they enforced curbs that are among the toughest in the nation’s tool-box to fight rising local infections of COVID-19.

  The outbreak in Baise, which has a population of about 3.6 million and borders Vietnam, is tiny by global standards, but the curbs, including a ban on non-essential trips in and out, follow a national guideline to quickly contain any flare-ups.

  It’s worth noting that the size of the outbreak in Guangxi was surprisingly large, as typically authorities are only willing to admit to small numbers of locally spread cases. Authorities reported 99 domestically transmitted cases with confirmed symptoms between Saturday and noon on Monday, according to Pang Jun, deputy director of the regional health commission, who offered confirmation during a news briefing.

  In that group of 99 cases, only 2 were said to be infected with omicron, according to the Chinese authorities.

  Lockdown restrictions mirrored those of other earlier lockdowns: residents should stay indoors except for trips to buy essentials or test for COVID, and they should opt for delivery rather than in-store purchases whenever possible, state television said, citing a statement from the highest municipal authorities in Baise. Essential workers will be required to show special passes allowing them to travel between their homes and work.

  The CCP authorities had locked down several Chinese cities – most notably Xi’an, the provincial capital of Shaanxi with a population of 13M – to try and prevent a potentially embarrassing outbreak ahead of the Winter Olympics.

  While the total number of omicron cases reported in China isn’t clear, Reuters says cases of the variant have been confirmed in 10 of China’s provinces.

  One local guide to tourists in Guangxi said he was worried that his income would suffer as authorities ordered him to cease taking new groups of travelers during the flare-up.

  “My income is basically zero at this moment,” the guide, surnamed Luo, told Reuters, adding that he had already been affected in previous outbreaks in Guangxi and elsewhere.

  In Baise, a hotel front desk agent who gave only his surname, Li, said, “Because of the outbreak, our hotel’s projected occupancy rate (this year) may not be as high as expected.”

  The southern province of Guangdong and the municipalities of Beijing and Tianjin also reported small localized outbreaks on Sunday. In total, Chinese authorities reported 45 locally transmitted cases during the prior 24 hours, up from 13 cases reported during the prior day, according to data from China’s NHC.

  Tyler Durden
  Mon, 02/07/2022 – 19:00

• Watch: CNN Guest Claims The Network "Saved Democracy"
  Watch: CNN Guest Claims The Network “Saved Democracy”

  Authored by Steve Watson via Summit News,

  CNN is so far entrenched within its own echo chamber reality that even as the network faces multiple scandals involving sexual abuse and pedophilia, as its CEO was forced to resign, and as well as losing 90% of its viewers, guests and hosts are still claiming the network is the tip of the spear of media credibility.

  

  A most hilarious example of this came over the weekend as CNN’s potato headed host Brian Stelter platformed Media Studies Professor David Zurawik who declared that the network literally “saved democracy” in America.

  “CNN is one of the stations of all the television broadcast networks and cable channels it pushed harder from 2016 to 2020 against Trump and it was part of the fire wall that I think has saved democracy this far under Jeff Zucker,” Zurawik stated.

  That will be the Jeff Zucker who just resigned for allegedly having an affair with a CNN colleague.

  Clearly in total denial, Stelter replied “That is a very important piece of context for the conversations that I’ve been having the last few days about Zucker’s exit. I know a lot of people blame him for enabling Trump, others praise him for holding the line and even taking Trump to court when–here at CNN.”

  Watch:

  CNN peddled ‘Russia stole the 2016 election’ crap for five years straight, and continues to do so. Stelter has campaigned for outright censorship of any and all of CNN’s competitors no matter who they are. The notion that he or the network saved anything is patently ludicrous.

  *  *  *

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  Tyler Durden
  Mon, 02/07/2022 – 18:40

• Putin Warns "No Winners" In Nuclear-Armed Conflict, Agrees To Work With Macron On Peace Proposals
  Putin Warns “No Winners” In Nuclear-Armed Conflict, Agrees To Work With Macron On Peace Proposals

  “The next few days will be decisive and will require intensive discussions which we will pursue together,” France’s Emmanuel Macron told reporters after a lengthy Monday summit focused on the Ukraine standoff with Putin in Moscow. Both leaders cited “progress” made in a post meeting press conference. 

  “A number of his ideas, proposals, which are probably still too early to talk about, I think it is quite possible to make the basis of our further joint steps,” he said. Macron described finding terms of convergence with Putin, saying further that Putin “agreed to review concrete de-escalation steps.” Putin said some of Macron’s ideas were a “possible basis” for future steps.

  

  However, Putin pointed out in statements to the press that NATO had “unfortunately rejected” Russia’s three key security demands centered around NATO halting its expansion eastward.

  Russian media described a generally positive and optimistic end to the marathon talks, reporting that:

  Moscow and Paris have agreed to further work on “a number” of Macron’s proposals on Ukraine, the two leaders told reporters, after finishing their marathon Monday talks, which pushed the press conference past midnight Moscow time. Neither of them offered any details on what the proposals might be.

  Further, Putin referenced that an agreeable solution regarding Ukraine can be reached on the basis of the Minsk accords, while…

  Macron said new, “alternative” mechanisms to ensure stability in Europe may need to be constructed, as revising the existing arrangements and agreements would not be practical.

  Indeed specifics were lacking, but Putin underscored the dire nature of the United States’ recently ratcheting rhetoric and accusations. For example, on Monday Pentagon spokesman John Kirby alleged that Russia’s troop build-up threatening Ukraine is now “north of 100,000”. Moscow has consistently rejected that the troops are in the south as part of “plans” for an offensive on Donbass.

  Putin took the opportunity to warn that Europe will be dragged into military conflict if Ukraine joins NATO. He took swipes at NATO’s recent history of overreaching military interventions which ended in disaster for the local populations: “They say Nato is a defensive alliance. Ask the citizens of many countries – Iraq, Libya, Afghanistan,” the Russian leader said.

  “There will be no winners” in a war among nuclear-armed states, Putin said.

  Putin: we understand that conventional power of NATO is more than Russia’s one. But Russia is the top nuclear power. And there will be no winners in the war (in case of Ukraine in NATO, and will attempt to return Crimea with force) https://t.co/BjwGddInT0 #Ukraine pic.twitter.com/T0lnEkVnyX

  — Liveuamap (@Liveuamap) February 7, 2022

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

  He further reminded Europe and the globe of what actual war between Russia and NATO would mean…

  PUTIN TO FRENCH PRESS: “Do you want war between France and Russia? Do your readers want that?” pic.twitter.com/okCFAHCAv8

  — The_Real_Fly (@The_Real_Fly) February 7, 2022

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

  He tore into Western media for appearing bent on stoking conflict and pushing both sides to engage in confrontation and threatening rhetoric. 

  Earlier, just before flying to Moscow Macron had pointed out in a weekend interview with Le Journal du Dimanche that “The geopolitical objective of Russia today is clearly not Ukraine, but to clarify the rules of cohabitation with NATO and the EU.” While during the Putin meeting, no major breakthroughs were made, given Macron can’t make the kind of serious concessions Putin is looking for on NATO or Europe’s behalf, there’s at least hope this will lead to a cooling of tensions and offer an off-ramp in the face of encroaching military confrontation on the ground.

  Tyler Durden
  Mon, 02/07/2022 – 18:20

• Bank Of America Forecasts 7 Rate Hikes In 2022 And Then… Pain
  Bank Of America Forecasts 7 Rate Hikes In 2022 And Then… Pain

  Last week, gasps of shock were heard around Wall Street trading desks when Bank of America decided to outdo every other economist with its either idiotic or brilliant forecast for seven 25bp rate hikes this year. All else equal, we would say “idiotic” as 7 rates hikes would almost certainly send the market crashing as real yields explode, long before the 7th hike is implemented, and to our surprise, BofA does not completely disagree.  Yet as the bank correctly notes, the Fed is caught in a trap, and while markets will certainly crack long before the tightening process is completed, the economy is in desperate need to cooling off after Biden’s ridiculous trillions in stimmies have unleashed a historic inflationary tsunami.

  Admitting the forecasts from her own bank’s economists “may sound extreme”…

  

  … BofA chief equity strategist Savita Subramanian – who maintains her 4,600 year-end S&P price target for reasons she explains below – writes that “the pivot from super dovish to more hawkish policy underscores that we are at the point of peak liquidity” as the Fed is now more focused on containing the inflationary conflagration that has been sparked by Biden’s out of control spending. 

  What is remarkable, and summarizing the findings from Matt King’s seminal note from last month, Savita notes that seven hikes doesn’t even get us to a “neutral” rate, “which is why a move to 1.75% on the Fed Funds rate this year is, in our economists’ view, entirely warranted.” She is, of course, right when discussing the economy. The far bigger question is how many hikes can the market sustain without breaking. That is the $64 trillion question.

  But beyond mere balance sheet reduction, Subramanian notes that other factors are more concerning: according to BofA, the key risk to stocks from a Fed hiking cycle remains that the Fed is embarking on a hiking cycle into an overvalued market, in fact as Michael Hartnett showed last Friday, the only time stocks were more overvalued entering a rate hike cycle was 1999.

  

  As BofA reminds us – tongue in cheek – “this ended poorly last time (1999).“

  Of course, it’s not just risk that overly aggressive rate hikes send stocks tumbling: QT itself will have a far bigger impact on risk assets than mere rate hikes; as Savita explains, Fed Fund rates alone have no significant relationship to US equity returns (we disagree but here is her evidence)…

  Despite our economists forecasting a faster pace of hiking than the market is pricing in (with their call for seven hikes this year and four next year), this would still be one of the slowest tightening cycles in history (implying a 1.5ppt annualized rise in the Fed Funds rate vs. a 2.1ppt average annualized rise in prior tightening cycles), with the total increase in the Fed Funds rate in-line with the average for prior tightening cycles.We find no consistent relationship between the pace of hiking and the absolute or relative performance of large and small caps (charts below)

  

  

  … and “what matters more is quantitative tightening, its effect on 10-yr yields and, of course, earnings.” But QT is likely to take center stage in 2022 given that as BofA shows below, Fed balance sheet increases have explained more of S&P 500 returns than earnings post-GFC.

  

  So in light of all this why isn’t Savita predicting a far lower year-end price target for the S&P? After all, her BofA colleague Michael Hartnett will not rest until the S&P tumbled well below 4,000 (which he believes is the strike price on the Fed put).

  The reason, according to the BofA strategist, is that she views her 4,600 price target as conservative – at least in the context of far more bullish Wall Street peers – and notes that her liquidity framework “suggests muted returns from here – 4600 on the S&P 500 by year end, and just +1.5%/yr over the next three years based on YoY Fed balance sheet change and +2.8%/yr based on rate of change.”

  

  Additionally, she expects EPS growth to slow to 6.5% this year from 48% in 2021; as a reminder, Hartnett is far more bearish, and in his latest Flow Show noted that the probability of global EPS turning negative in H2 is 40% and rising.

  

  Addressing this question directly, Savita writes that she maintains her “year-end target of 4600 based on our five-factor target outlook incorporating valuation, sentiment, fundamentals and technical factors, and we believe that risks to equities would be greater if the Fed did nothing.”

  Still, since her job in this particular case is to explain to the bank’s client why 7 rate hikes does not translate to a market crash, one specific reason why the BofA strategist remains relatively bullish (if only because she was told to be),  is that according to her, the public to private sector liquidity hand-off pushed combined consumer/corporate cash to >$19T+, which would shift from generating no return to a healthier ~2ppt returns. She explains:

  Following a ~$11T increase in the Fed balance sheet and money supply (M2), the Fed and US government successfully injected much needed liquidity into the system and saved the world. Now, the consumer and corporates are sitting with a record $19T in cash, a 35% increase from 2019.

  

  Naturally more cash is better than less cash, and as Savita extrapolates, “balance sheet strength is bullish for the real economy. The financial crisis taught corporates and consumers about the risks of leverage and the unsustainable leverage that we saw during the financial crisis is nonexistent today and bloated leverage ratios post-recessions are non-existent today.” While we disagree here because the big variable is the trillions in excess reserves that have been injected into banks and thus any sharp decline in reserves will act to dramatically destabilize banks (as we saw in Sept 2019), BofA claims that banks, as a proxy, “are better capitalized than ever, and are expecting to see loan growth in 2022.” Meanwhile, corporates locked in long-dated debt obligations at low fixed rates, with the mix of long-term fixed debt now 80% vs. 58% pre-GFC. The upshot from all this – and we agree with this – rising rates may not hurt for a while.

  

  What will companies do with the excess cash? BofA expects more capex, R&D spend and dividend raises than buybacks, while consumers are likely to ramp up spending in services in 2022 given that durable goods spending accelerated post-COVID leaving more pent-up demand for services.

  Clearly showing just how much she stretched the goalseek function in excel to come up with some more favorable “benefits” from higher rates, Savita goes so far as to praise the generous benefits that higher rates will confer on –  wait for it – interest income!

  A higher cash yield translates in additional interest income, and we estimate a 0.8% tailwind to S&P 500 EPS from a 90bp YoY increase in the Fed funds rate (house forecast for average 2022), all else equal. And we see a smaller headwind from higher interest expense, as 80% of corporate debt has long-term fixed rates today, compared to just over 50% prior to the GFC.

  

  Right… just ignore interest expense.

  There is one more argument brought up by Savita as to why higher rates will boost risk assets, and it has to do with the strong, significant relationship between S&P 500 Price to Earnings ratios and CPI, where higher inflation usually translates into lower multiples…

  

  … which is hardly a surprise, but what is amazing is how the BofA chief equity strategist actually manages to spin this as a positive.

  As she says, one reason is that S&P 500 earnings are positively correlated with CPI. But S&P 500 EPS are negatively correlated with wage inflation (Exhibit 7). Moreover, the bank’s Corporate Misery Indicator, a macro model that has led the profits cycle, remained positive during the early and mid-stages of Fed tightening cycles indicating that the Fed’s attempt to control inflationary pressures was either (a) positive for margins, (b) not enough to derail demand, or (c) some combination of the two (Exhibit 8)

  

  In other words, and this is some truly remarkable logical gymnastics, she concludes that “if the Fed is hiking rates to control inflation, that’s positive for equities” as runaway inflation would likely compress S&P 500 multiples and cut into earnings; and if inflation moderates significantly, the Fed has signaled it will adapt its policy on a real-time basis.

  And that’s how you just take your first step toward “validating” Erdoganomics, or in this case that rate hikes are actually positive for stocks.

  Yet while we commiserate with Savita for having been told to somehow spin the bank’s forecast of 7 rate hikes into a non-apocalyptic outcome, not even she can avoid the reality that what comes next will be painful, and while one can ignore rate hikes (we wouldn’t), just focusing on the bank’s “QT model” suggests far more muted returns from here, which according to Savita translates to 4600 on the S&P 500 by year end (a far more bearish Morgan Stanley is at 4,400 just so readers get a sense of what Wall Street’s bears have to work with; the bulls are all 5,000 and higher), and low single digit returns over the next two years.

  That said, even Savita admits that if inflation continues to surprise to the upside, “the strong negative relationship to PE multiples is worrisome. Moreover, EPS growth for the S&P 500 and most sectors has been inversely correlated with changes in wage inflation.” Finally, the bank forecasts a demonstrable slowdown in EPS growth from 48% in 2021 to 6.5% in 2022, a number which Subramanian’s colleague Michael Hartnett believes will turn negative in the second half.

  And while other notable Wall Street voices, including Morgan Stanley’s Michael Wilson, (see “Wall Street’s Most Bearish Analyst Warns Of “Calamitous” Collapse In First-Half Earnings“) share BofA’s modest pessimism, the assessment is by no means the consensus view. JPMorgan Chase & Co.’s team reiterated on Monday that growth will remain solid this year and with still more upside for equities, following the ferocious rally of 2021. Then again, since it is JPM’s mandate to remain the fluffer of the Biden/Powell regime until the bitter end, we would urge all to discount what Jamie “Bitcoin is a worthless fraud” Dimon’s bank has to say about the future.

  Tyler Durden
  Mon, 02/07/2022 – 18:00

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