Oct 08

Today’s News 8th October 2021

  • Ireland Agrees To Minimum Global Corporate Tax Deal Leaving Hungary, Estonia As EU's Last Holdouts
    Ireland Agrees To Minimum Global Corporate Tax Deal Leaving Hungary, Estonia As EU’s Last Holdouts

    While the Democrats kick the can on the debt ceiling as a bitter partisan fight threatens to derail President Biden’s entire domestic agenda, a key piece of his foreign agenda has just fallen into place.

    In a commitment that should clear the way for the OECD to lead a global corporate tax reform initiative that would represent the biggest change to international corporate tax rates in a century, Ireland has agreed to abandon its 12.5% corporate tax rate and sign up for the new 15% minimum global corporate rate being pushed by the Biden Administration.

    Donohoe

    According to the FT, the deal is expected to cost Ireland €2 billion ($2.3 billion) in lost revenues in the coming years.

    Finance Minister Paschal Donohoe told the FT that this change in the baseline tax rate would be the only significant change as part of the agreement – although it is of course “very, very significant”, since having the lowest corporate tax rates in its neighborhood has been a cornerstone of Irish economic policy for decades.

    The new rate will affect 1,556 companies in Ireland that employ some 500,000 people, including US tech giants like Apple, Google and Amazon.

    Ireland is joining 140 countries that have agreed via the OECD to the levy of 15% on multinationals. It reached the deal by persuading the OECD to allow it to keep the 12.5% rate for smaller domestic companies with a turnover of less than €750MM. Donohoe added that he had been unsure the OECD would agree to the carve out – but securing Ireland’s participation was critical to making the new policy work, since the idea is to de-incentivize multinationals from leaving the US.

    Donohoe said the change would likely be permanent, and that the change would be “right for Ireland” (in exchange for agreeing to the minimum rate, the US intends to allow European countries to take a bigger piece of the overall corporate tax pie).

    “I believe that change will be right for Ireland and I believe it is also right for Ireland to be playing a positive role in implementing what I believe will be an important agreement,” he said in an interview, adding the deal provided “certainty and stability.”

    Asked if the new rate would remain forever, he said: “I can’t see in my lifetime this kind of circumstances developing again…15 will mean 15.”

    […]

    “We’re all depending on each other to be able to implement this collectively and comprehensively,” Donohoe said. But he added: “I have enough confidence now that this is going to happen globally for me to believe that it’s appropriate that Ireland go into it now.”

    The agreement with Ireland was secured during a meeting in Paris. Details of the international framework have yet to be completed, including the amount that of the tax offset mentioned above. To entice countries to agree, the deal will impose new taxes on multinationals that must be paid in countries where they operate, but aren’t necessarily based. This is known as the “Pillar One” of the deal.

    The president of the Irish Tax Institute, Karen Frawley, said that rejecting the deal would make Ireland look like a “tax haven”, which would have left it with a “damaged” reputation.

    Per the FT, EU members Estonia and Hungary are among the remaining holdouts. For the deal to have any hope of succeeding, the EU needs to secure unanimous support from its 27 members, and then there are still other low-tax nations (including, for example, Singapore), that must be brought on as well.

    Interestingly, polling shows 59% of Irish residents opposed increasing the corporate tax rate but Mark Redmond, CEO of the American Chamber of Commerce of Ireland “warmly welcomed” Ireland’s decision.

    “The revised agreement ensures essential predictability, stability and certainty for multinational employers,” he said. US FDI in Ireland accounts for about 20% of private sector jobs.

    The Irish government expects the higher minimum rate will actually lead to lower revenue, though the FT didn’t go into detail on this. One reporter pointed out that the “headline rate” isn’t that big of a deal for multinationals, anyway.

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    It’s widely expected that the new global tax rate won’t take effect until at least 2023.

    Tyler Durden
    Fri, 10/08/2021 – 02:45

  • What Governments Got Wrong About The Global Energy Transition
    What Governments Got Wrong About The Global Energy Transition

    By Tsvetana Paraskova of OilPrice.com

    The energy crisis in Europe exposed the complexity of a transition to green energy: it is not happening overnight, and it cannot be done successfully with the old tricks. Energy systems, markets, and grids globally need fundamental changes to legislation, regulation, and oversight in order to accommodate 100-percent zero-emission sources. And even in that case, power systems need flexibility and backups in order to avert similar crises down the road as many parts of the world commit to net-zero emissions by 2050 or 2060.

    The current crisis in the UK is a cautionary tale about how not to rush to green energy, Rochelle Toplensky of The Wall Street Journal notes.

    Net-zero electricity systems need an entirely new set of rules in all areas of the energy systems and power markets, as well as enough flexibility to offset environmental factors such as low wind speeds, which happened in the UK last month.

    The UK has cut its reliance on coal dramatically over the past decade.

    But its power systems are not yet as resilient to a major transition to low-carbon energy sources as to prevent concerns about its power supply, the Journal’s Toplensky argues.

    The current energy crisis in the UK, the rest of Europe, and in major energy importers in Asia is a warning to policymakers that the transition cannot be rushed before new rules are set in place and backup battery storage is built en masse to support soaring new solar and wind capacity.

    Boosting power grid resilience, building battery storage, and widespread use of the much-touted green hydrogen will require trillions of U.S. dollars of investment, government support, and much greater coordination and cooperation among industry and policymakers at the national and international level.

    Everyone knew that the energy transition would not be cheap. The ongoing energy crisis shows that no one can put the cart before the horse in the transition – backups and flexibility are vital for any successful energy system.

    UK Power Crisis Shows Challenges To Green Transition 

    Even the UK, which has pledged to phase out coal-fired power generation by October 2024, had to fire up an old coal plant last month in order to meet its electricity demand. 

    The country which kick-started the Industrial Revolution with coal saw the share of the fuel drop to a record-low in 2020 – coal generated just 1.8 percent of electricity, down from 28.2 percent in 2010, as per government data. Renewable generation, on the other hand, hit a record 43.1 percent in 2020, outpacing annual fossil fuel generation for the first time.

    During many days in recent years, wind power generated the largest share of Britain’s electricity, surpassing natural gas. This is a commendable move toward clean energy but does not change the fact that wind power generation depends on…the speed of the wind. On those unfortunate days when the wind doesn’t blow, as it happened on most days in September, natural gas is used more in power generation, driving up gas and power prices and also increasing coal generation because of the sky-high prices of natural gas.

    Although households face higher energy bills, they are protected to some extent because of the so-called Energy Price Cap in the UK. But it is this price cap – when power providers are unable to pass the full extent of surging costs onto consumers – that has already led to nine UK providers going out of business. Just last week, three suppliers said they were ceasing trade, and the Office of Gas and Electricity Markets, Ofgem, had to choose new suppliers to take over the failed businesses.

    The UK likely needs new regulations on how its domestic power market operates, which should take into account the net-zero commitment and increased green energy share in electricity generation, analysts say.

    The European Union is also looking at potential changes to the way wholesale electricity markets operate, European Energy Commissioner, Kadri Simson, said this week.

    Demonization Of Fossil Fuels Cuts Backup Options 

    The two oil price crashes in the past five years, as well as the increasingly louder calls for shunning investment in fossil fuels, have led to chronic underinvestment in new supplies of oil, gas, and coal, especially in developed economies aspiring to reach net-zero by 2050.

    These days, however, those developed economies are scrambling for fossil fuel supplies to ensure they will keep the lights on. The surging price of coal and natural gas is leaving many energy-intensive businesses in Europe vulnerable to the price shock because the energy transition hasn’t reached the point where anything other than gas can efficiently power fertilizer or steel production.

    However, investment from the fossil fuel industry has declined in recent years. Moreover, Wall Street investors have been shunning traditional energy because of poor returns, Jeff Currie, global head of commodities research at Goldman Sachs, told Bloomberg in an interview earlier this week. 

    “The new economy is over-invested and the old economy is starved,” he said. “Gas, coal, oil, metals, mining – you pick – the old economy, it is severely underinvested,” Currie noted.

    Major Challenges Ahead To Avoid “A Disorderly Mess”

    Since the world continues to need a lot of fossil fuels despite the green push, supply shortages and price spikes are in the cards in the future, too.

    “[I]t is important to recognise that the transition is, as its derivation suggests, a process of moving from one state to another, and if it is to be successful must involve the managed decline of the existing energy system as well as its transformation towards a future state,” James Henderson and Anupama Sen of the Oxford Institute for Energy Studies (OIES) wrote in a paper last month. 

    “Policymakers have set countries on this essential road, and technology is the key to accelerating the process, but many complex questions remain to be resolved if the world is to avoid the transition becoming a disorderly mess,” they say.

    Tyler Durden
    Fri, 10/08/2021 – 02:00

  • Big Tech Q3 Earnings
    Big Tech Q3 Earnings

    By Nick Colas of DataTrek

    US corporate earnings season is fast approaching, and Big Tech’s announcements will be key to the market’s direction. Wall Street has been cutting numbers for some names (GOOG, AMZN) and not raising estimates for AAPL, MSFT or FB. The good news is that the Street expects every Big Tech company to print Q3 results that are BELOW Q2 actuals. That’s likely too pessimistic; 2019, for example, saw no seasonality between Q2 and Q3. Big Tech may not be Q4 leadership (cyclicals should be), but they should be no impediment to a market rally later in the quarter.

    We have been saying Q3 US corporate earnings season should be a bright spot that counteracts an otherwise troubled equity market narrative, so today we will discuss upcoming Big Tech earnings. Add up the S&P 500 weightings for Apple (6.0 percent), Microsoft (5.8 pct), Google (4.3 pct), Amazon (3.8 pct) and Facebook (2.1 pct) and you have 22 percent of the index. How markets respond to earnings reports from these 5 companies matters just about as much as the combined impact of announcements from the Industrials, Consumer Staples, Energy, Real Estate, Materials and Utilities sectors (a combined 24 pct of the S&P).

    Let’s start with the most important point: Big Tech has not been immune from the recent trend of Wall Street analysts cutting their Q3 earnings estimates that we’ve been talking about every Sunday for the last month. Numbers have come down for Amazon and Google, and have remained only constant for Apple, Microsoft, and Facebook. As the following 30/60-day earnings revision trends show, Amazon has seen its Q3 expectations slashed over the last 2 months, Facebook’s Q3 estimates actually rose, and Q3 estimates for Google, Apple and Microsoft are basically unchanged:

    • Apple: $1.23/share expected, +$0.01 over the last 60 days, flat over the last 30 days
    • Microsoft: $2.07/share expected, +$0.01 over the last 60 days, flat over the last 30 days
    • Google: $23.40/share expected, +$0.07 over the last 60 days, but -$0.08 over the last 30 days
    • Amazon: $8.92/share expected, -$4.02/share over the last 60 days, -$0.09 over the last 30 days
    • Facebook: $3.17/share expected, +$0.22 over the last 60 days, flat over the last 30 days

    Now, the funny thing about all these estimates is that in every single case they are lower than what these companies reported in Q2 2021. That fits the oddity we’ve also been mentioning in our weekly earnings updates: Wall Street analysts are expecting the S&P 500 to print lower aggregate Q3 earnings ($49/share) than actual Q2 results ($53/share).

    That has struck us as excessively pessimistic in a cyclical recovery (even if it has been slowing through Q3), and Big Tech’s Q3 2021 earnings expectations when compared to how quarterly earnings typically trend between Q2 and Q3 supports that view:

    • Apple’s $1.23 Q3 estimate is lower than Q2’s actual $1.30. In 2019, the company reported $0.55/share (split adjusted) in Q2 and $0.76/share in Q3, so seasonality doesn’t seem to be an issue for Apple’s quarterly earnings progression.
    • Microsoft’s $2.07 Q3 estimate is lower than Q2’s actual $2.17/share. As with Apple’s 2019 results, MSFT saw no drop from Q2 ($1.37/share) to Q3 ($1.38) in that year.
    • Google’s $23.40 Q3 estimate is meaningfully lower than Q2’s actual $27.26. In 2019 the company took a charge for a regulatory fine, but its operating earnings were essentially unchanged from Q2 to Q3 ($9.9 billion in each quarter).
    • Amazon’s $8.92 Q3 estimate is well below Q2’s actual of $15.21. That is a 41 percent drop, and perhaps correct given the incremental costs the company faces. But the Q2 to Q3 2019 earnings progression was $5.22 to $4.23, only a 19 percent decline.
    • Facebook’s $3.17 Q3 estimate is also far below Q2’s actual of $3.61. In 2019, Q3 saw earnings increase, to $2.12, from $1.99 in Q2.

    Takeaway (1): you can see why US Big Tech has had a tough slog in the last month (flat/down Q3 earnings expectations), but estimates seem too low just based on what these companies reported for Q2. Seasonality doesn’t explain the expected drop, nor do economic factors. Now, that doesn’t mean Big Tech can be market leaders over the balance of the year; our “Pandemic Peacetime” paradigm points to other, more cyclical, groups playing that role. But nor should they embarrass themselves when they report Q3 results and take the market down with them.

    Takeaway (2): going from the “micro” of 5 companies’ earnings reports to the “macro” of what this says about US large cap stocks, we think markets broadly agree with our point that Q3 earnings reports will surprise meaningfully to the upside. That’s why the S&P 500 is only off 4 percent from its early September highs despite cuts to earnings estimates, a slowing US economy, a de facto announcement of Fed bond purchase tapering and 2022 rate hikes, not to mention DC’s recent debt limit wrangling. That’s good and bad news, because it put all the market’s eggs in one basket. For that reason, we expect market volatility to continue at least until more than half the S&P 500 has reported (i.e., late in the month).

    Tyler Durden
    Thu, 10/07/2021 – 22:40

  • Indian Central Bank Accumulating Large Quantities Of Gold Almost Under The Radar
    Indian Central Bank Accumulating Large Quantities Of Gold Almost Under The Radar

    Submitted by Ronan Manly of BullionStar.com

    While large one-off central bank gold purchases get a lot of media attention and the same is true for central banks accumulating gold reserves over a two or three month period, sizeable accumulation of gold by central banks on a month in, month out basis, with the exception of the Chinese and Russian central banks, tends to go almost unnoticed.

    A prime case in point is the gold buying strategy of India’s central bank, the Reserve Bank of India (RBI), which almost under the radar, has now become one of the world’s biggest and most consistent central bank gold buyers every year for the last four years.    

    Starting in early 2018 and up to the end of August 2021, over that time the RBI has added a staggering 166 tonnes to it’s strategic gold reserves, and now holds a claimed 724.24 tonnes of gold, making India the 9th largest sovereign gold holder in the world, well ahead of the Netherlands (in 10th place), and within shouting distance of Japan (8th place).   

    Arguably, this stealthy gold accumulation by the Indian official sector is now becoming more apparent since two of the big guns that are normally active in the central bank gold buying market, the central banks of Russia and China, are currently ‘taking a break’.

    Reserve Bank of India (RBI) – India’s central bank

    According to it’s official figures, China (via the People’s Bank of China) last added to it’s monetary gold reserves in September 2019, leaving it with a unchanged official total of 1948 tonnes of gold since then. This is notwithstanding the fact there is widespread skepticism about the real size of China’s sovereign gold reserves. 

    Additionally, the Russian Federation (via the Bank of Russia) officially stopped buying gold in the domestic Russian market at the end of March 2020 and actually made an official announcement about this hiatus at the time. Due to this pause since March 2020, Russia’s official gold reserves have essentially remained unchanged except for some tiny adjustments, and Russia currently claims to hold 2,294.5 tonnes of monetary gold.

    With these two gold buying giants now officially “off the grid”, the gold buying activities of the Indian central now come into sharper focus.

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    The Details    

    According to the Reserve Bank of India’s latest FX Reserves report dated 16 September 2021, the RBI, as of 27 August, held 724.24 tonnes of gold. See report online here and in pdf here. Compared to the same report from 30 July 2021 when the RBI held a total of 711.18 tonnes, this shows that the RBI added 13.06 tonnes to it’s gold reserves during August 2021.

    Indian central bank gold holdings (tonnes), 27 August 2021 and 30 July 2021. Source.

    Prior to August, the RBI had already purchased a combined 34.6 tonnes of gold during five months of 2021 (in February, March, May, June and July). Adding the 13.06 tonnes of gold that the RBI bought in August, this means that so far in 2021, the Indian central bank has bought 47.66 of gold, which on an annualized basis would be 71.5 tonnes, and would be more than the gold buying totals of Hungary (63 tonnes bought in March), and Brazil (62.3 tonnes bought during May, June and July). See “Hungarian central bank boosts its gold reserves by 3000% in less than 3 years” and “Brazil’s Central Bank refuses to answer any questions about its Gold Reserves”.

    RBI – Consistent Gold Buyer since 2018

    This sizeable gold buying by the Indian central bank in 2021 is not a one off, and it continues a trend that began in early 2018. The following statistics come from World Gold Council (EGC) data (which itself is based on IMF data that each central bank submits to the IMF (on a voluntary basis)).

    During 2018, the RBI accumulated a total of 42.3 tonnes of gold, with gold purchases claimed to be made in each of the 10 months from March to December 2018.

    The following year in 2019, the RBI was again a substantial buyer of gold, adding a total of 34.5 tonnes during seven of the twelve months (each month from January to April, and again in each month between October and December).

    During 2020, the RBI bought another 41.7 tonnes of gold, again by pursuing the ‘buy often and consistently’ strategy, adding gold to it’s reserves in each month except for January and September.

    Therefore, over the three years of 2018 – 2020 inclusive, the Reserve Bank of India purchased 118.5 tonnes of gold. Adding the 47.66 tonnes of gold purchased so far in 2021 (up to the end of August), this means that since early 2018, the RBI has bought a whopping 166.16 tonnes of gold.

    You will also see that the 47.66 tonnes bought by the RBI so far in 2021 (up to month 8) is more than the total amount of gold that the RBI bought in each of 2018, 2019 and 2020. So far in August 2021, the RBI has been buying an average of 6 tonnes of gold per month, compared to buying an average of 2.5 tonnes per month in each of 2018 and 2020, and an average of 2.9 tonnes per month in 2019. So not only is RBI’s gold buying consistently happening in most months, the quantities of gold that the RBI is buying each year are accelerating,

    Additionally, given that the RBI purchased gold in each of 10 months of 2018, in each of 7 months of 2019, and in each of 10 months of 2020, and has purchased gold in 6 of the 8 months so far this year, we should therefore expect further gold buying by the Indian central bank in at least one or two (or maybe even all) of the remaining months of 2021.

    Whichever way you look at it, the total amount of gold accumulated by the RBI since early 2018 is sizable and ranks up there among the top central bank gold buying nations.

    Between 2020 and year-to-date 2021, the Indian central bank has purchased a combined 89.4 tonnes of gold, which is just marginally less than the largest central bank gold buyer over that same period, the Bank of Thailand, which bought 90.2 tonnes. See “Thai central bank leads pack, buying 90 tonnes of gold over April and May”. 

    Over the period from the beginning of 2019 up to year-to-date 2021, the Reserve Bank of India has added 123.9 tonnes of gold. This is second only to Russia’s 182 tonnes of gold buying over that same period, and more than Poland’s 100 tonne gold purchase over the same timeframe (see “Poland joins Hungary with Huge Gold Purchase and Repatriation”)

    Over the period from the start of 2018 through to year-to-date 2021, in which the Indian central bank accumulated 166.2 tonnes of gold, this is third only to Russia’s huge gold buying over that period (456.7 tonnes) and not too much less than Turkey’s claimed 209.7 tonnes of gold buying over the same timeframe. For the rationale on Russian and Turkish central bank gold purchases, see “Turkey and Russia Highlight Gold’s Role as a Strategically Important Asset”.

    Where is the RBI Gold Held?

    The 166 tonnes of gold purchased by the Indian central bank since 2018 is also nearly as much as the 200 tonnes of gold that India claimed to have bought from the International Monetary Fund (IMF) in October 2009, in what the IMF called an ‘off-market’ transaction. There is little information known about how this sale by the IMF to India was transacted and, like everything in the central bank gold market, the real details remain secret. See “IMF Gold Sales – Where ‘Transparency’ means ‘Secrecy’” for more details on the IMF gold sales.

    So where is the RBI’s 724.24 tonnes of gold held? This is where it gets interesting.

    From the RBI Annual report for 2021 (up to March 30, 2021), we see that of the RBI’s claimed gold holdings, “292.30 metric tonnes is held as backing for notes issued and shown separately as an asset of Issue Department”, while the rest “is treated as an asset of Banking Department”.

    However, the gold held by the Banking Department and the gold held by the Issue Department are both classified as part of the RBI’s foreign exchange reserves, along with foreign currencies, and IMF SDRs.

    Table XII.4 of the 2021 RBI annual report. Source

    Table XII.4 of the 2021 RBI annual report also illustrates these two components of the RBI’s gold holdings, where, from year to year, an unchanged 292.30 tonnes is classified as “Gold held for backing notes issued (held in India)”, while the rest of the gold holdings are classified as “Gold held as asset of Banking Department (held abroad)”, which as of 31 March 2021 amounted to 403.01 tonnes.

    RBI Nagpur gold vault: Strategically located in the very center of India

    The gold which the RBI holds in India is actually held in the vaults of the RBI’s building in Nagpur, in the state of Maharashtra. See below for more on the RBI’s gold vaults in Nagpur.

    Turning to the latest half-yearly RBI “Report on Management of Foreign Exchange Reserves”, dated 12 May 2021, we find in section I.6. “Management of Gold Reserves”, that the RBI gold that is held abroad (outside India), is held at the Bank of England and with the Bank for International Settlements (BIS).

    “I.6. Management of Gold Reserves

    As at end-March 2021, the Reserve Bank held 695.31 metric tonnes of gold. While 403.01 metric tonnes of gold is held overseas in safe custody with the Bank of England and the Bank of International Settlements (BIS), 292.30 tonnes of gold is held domestically.”

    Interestingly, the previous version of this “Report on Management of Foreign Exchange Reserves”, dated 8 December 2020, also mentioned that some of the RBI’s gold was in the from of gold deposits (in other words gold loans to bullion banks), as the wording says:  

    “As at end-September 2020, the Reserve Bank held 668.25 tonnes of gold (including gold deposits of 9.04 tonnes). While 366.91 tonnes of gold is held overseas in safe custody with the Bank of England and the Bank of International Settlements (BIS), 292.30 tonnes of gold is held domestically.”

    Of the RBI’s two components of gold, the 292 tonnes attributed to the RBI’s Issue Department has been constant since at least 2002, save for a few tiny additions over the years due to an increase in gold coin holdings.   

    While it’s not clear where the RBI purchased 166 tonnes of gold over 2018-2021, the fact that all of this increase is held abroad and the fact that all of RBI’s gold stored internationally is with the Bank of England and the BIS, then it’s logical to conclude that the RBI’s gold purchases over 2018-2021were at the Bank of England in London, or via gold transactions with the BIS, or both.

    Note that the BIS maintains gold storage accounts in Berne with the Swiss National Bank (SNB), in London at the Bank of England, and in New York with the Federal Reserve Bank of New York (FRBNY). As the BIS states on it’s website under banking services (for central banks):

    “Gold location exchange, safekeeping and settlement: loco London, Berne or New York”

    So any reference to the BIS holding RBI gold either means that the RBI has lent gold out to bullion banks using the gold loan (deposit) services of the BIS, or the RBI has bought gold from the BIS and holds this gold in a sub-account of the BIS in either Berne (SNB), London (Bank of England) or New York (FRBNY).

    Bank of England’s gold vaults, London – Home to the bulk of India’s gold

    If we go back to mid-2009, to before the RBI supposedly purchased 200 tonnes of gold from the IMF, we find in the “Report on Foreign Exchange Reserves” dated 16 July 2009, that:

    “I.7. Management of Gold Reserves

    The Reserve Bank holds about 357 tonnes of gold forming about 3.8 per cent of the total foreign exchange reserves in value terms as on March 31, 2009. Of these, 65 tonnes are being held abroad since 1991 in deposits / safe custody with the Bank of England and the BIS.

    Eagle-eyed readers will see that, of this 357 tonnes, with 65 tonnes stored aboard as of mid 2009, that left 292 tonnes of RBI gold stored in India at that time, i.e. the unchanged 292 tonnes of gold has been stored in India for many years.

    Looking at the RBI’s “Report on Foreign Exchange Reserves” dated 19 January 2010, i.e. after the RBI’s supposed 200 tonnes gold purchase from the IMF, we again see reference to the gold held abroad since 1991:

    I.7. Management of Gold Reserves

    The Reserve Bank held about 357.75 tonnes of gold forming about 3.7 per cent of the total foreign exchange reserves in value terms as at the end of September 2009. Of these, 65.49 tonnes are being held abroad since 1991 in deposits / safe custody with the Bank of England and the Bank for International Settlements.

    In November 2009, the Reserve Bank concluded the purchase of 200 metric tonnes of gold from the International Monetary Fund (IMF), under the IMF’s limited gold sales programme.  The purchase was an official sector transaction and was executed over a two week period during October 19-30, 2009 at market-based prices. As a result of this purchase, the Reserve Bank’s gold holdings have increased from 357.75 tonnes to 557.75 tonnes.

    So before supposedly buying 200 tonnes of IMF gold in 2009, the RBI had held 65.49 tonnes of gold at the Bank of England  and / or with the BIS.

    Which IMF Gold was Sold to India?

    Assuming that the IMF did sell 200 tonnes of gold to the Indian central bank in October 2009, then where was this gold located when ownership was transferred from the IMF to the RBI?

    IMF gold is stored in 4 “gold depositories” across the world. These 4 gold depositories are the Federal Reserve Bank of New York, the Bank of England in London, the Banque de France in Paris, and the Reserve Bank of India in Nagpur India. For details, see “The IMF’s Gold Depositories – Part 1, The Legal Background” and “The IMF’s Gold Depositories – Part 2, Nagpur and Shanghai, the Indian and Chinese connections“.

    The most logical answer is that the IMF gold transferred to the RBI in 2009 had been held in the Bank of England vaults in London. Why? Firstly, the IMF gold sale to the RBI in October 2009 definitely did not use IMF stored in Nagpur, India. This is because the 200 tonnes purchase in 2009 was immediately classified by the RBI as “held abroad” as soon as it was transacted. Besides, the IMF never had as much as 200 tonnes of gold stored at the Nagpur depository. The most IMF gold that was ever stored in Nagpur was 144.4 tonnes. Additionally, some of the IMF gold held in India is of variable quality and includes confiscated smuggled gold and other non-good delivery gold from domestic mine production.

    Secondly, the IMF gold held in the New York and Paris depositories (i.e. FRB New York and Banque de France) is not / was not in good delivery form. To quote the IMF during the 1970s when it previously conducted gold sales:  

    “…most of the gold of the Fund is not in the form of individually stamped and weighed bars but consists, with the exception of the gold held in depositories in the United Kingdom and India, of melts, comprising 18-22 individual bars, which will first need to be identified, weighed, and selected before they can be delivered.”

    “A melt is an original cast of a number of bars, usually between 18 and 22. The bars of an unbroken melt are stamped with the melt number and fineness but weight-listed as one unit; when a melt is broken, individual bars must be weighed and stamped for identification. It is the practice in New York and Paris to keep melts intact.”

    “As indicated in the staff paper on Gold Sales (EBS/76/46, 2/2/76), most of the Fund’s gold held with the Federal Reserve Bank of New York and the Banque de France is in the form of melts. Before the gold can he offered in gold auctions a part of these holdings has to be transformed into individually weighed and identified bars.

    For details see “The IMF’s Gold Depositories – Part 3, Gold Swaps and the Quality of the IMF Gold”.

    And additionally, as the Banque de France commented to National Geographic in February 2011:

    “Buyers don’t want the beat-up American gold. In a nearby room pallets of it are being packed up and shipped to an undisclosed location, where the bars will be melted down and recast in prettier forms.”

    So with the IMF gold in Nagpur being a hodgepodge of mostly low quality old gold, and with IMF gold in New York and Paris being in the form of bundled up old US Assay Office melts and even some low quality coin bars, then it would be logical for the IMF in October 2009 to sell the RBI some of its good delivery gold which was stored in London (which, until at least the late 1970s, was predominantly held in the form of Rand Refinery 400 oz gold bars).

    Thirdly, prior to October 2009, the only gold which the RBI stored abroad was with the Bank of England and the BIS, and after October 2009 this was still the case, so the 200 tonnes of gold which the IMF acquired in October 2009 had to have come from IMF gold bars that the IMF had stored at the Bank of England, because this is the only remaining IMF gold depository when the other 3 IMF gold depositories are excluded.

    Note that prior to 2009, the RBI had not purchased any gold in the preceding years between 2002 – 2008 (which is the earliest data that is available on the World Gold Council website).

    Conclusion

    So putting this all together, we know that of the 724.24 tonnes that the Indian central bank claims to hold, 292.3 tonnes in held by the RBI in its vaults in Nagpur, India, and the rest, 432 tonnes, is held with the Bank of England and the BIS. Of this 432 tonnes, 65.5 tonnes has been held with the Bank of England / BIS since 1991, 200 tonnes was bought from the IMF in 2009 and is stored at the Bank of England, and the rest, 166 tonnes (purchased over 2018 – 2021) is held with the Bank of England / BIS.

    But similar to all central banks the world over, the Indian central bank never publishes any physical audits of the RBI gold, never publishes weight lists (bar lists) of the gold bars held, never published a breakdown of much RBI gold is held by the Bank of England and how much is held by the BIS, and never publishes any information about gold loans or gold swaps nor how much gold is out on loan with bullion banks.

    The 292.3 tonnes of gold held by the RBI in Nagpur has been held for many years. Some since pre-Independence times, and some accumulated during the 1950s – 1960s. This gold is not high quality / purity. In fact, in July 2014, the RBI was in discussions with bullion banks about conducting gold location and quality swaps whereby the RBI would provide this old / inferior quality gold to the banks, and swap it for access to Good Delivery gold bars in London. See Economic Times article here – “RBI plans to swap old gold in Nagpur vault with purer variety”.

    The Reserve Bank of India building in Nagpur

    Appendix – The Gold Vault in RBI Nagpur

    For those who are interested in central bank gold vaults, and especially vaults which claim to gold IMF gold, I will leave you with an intriguing old report from the RBI website which was published in February 1984 and which is titled “Report of the Committee on Security Arrangements, Vol 1” (pdf RBI CR671). This report gives some insight into the RBI’s gold vault in Nagpur at that time. From pages 107 – 109:  

    “Gold vaults

    5.8 The Bank has in its custody a considerable quantity of gold not only on its own account as Reserve Gold for note issue but also balances held in safe custody on behalf of Government of India and the International Monetary Fund. The bulk of this gold is held in Nagpur. The major portion of the remaining gold is held in Bombay.

    In regard to the custody and operation of the gold vaults, the Committee would recommend the following :-

    (a) Nagpur

    (i) The main door of the gold vault is enclosed in a grilled enclosure in the patrol corridor

    (ii) The actual joint custodians of the gold balances are the Assistant Currency Officer and the Treasurer. In view of the nature of the treasure, viz gold and the fact that not only is it the Reserve Bank of India’s own gold but also gold of the Government of India and the International Monetary Fund which means that it is not merely the tangible value of the gold that is involved but also the intangible, viz. the image of the Reserve Bank as the custodian of the gold of the World body and the Central Government that is involved, it will be more appropriate to elevate the status of the joint custodians.

    On the analogy of the holding of one key by the Treasurer, the head of the cash department, the other key may be held by the other comparable head of the issue department, viz. the Currency Officer (Administration). This will also be in keeping with the controlling key being held by the Manager.

    (b) (ii) In Nagpur, the original keys of the joint custodians are held in safes, under the third lock of the Manager, and the safes themselves are kept in different vaults.

    A lot may have changed in the Nagpur vaults since 1984, although a lot may have remained the same. And with the RBI vault in Nagpur being an IMF gold depository, the IMF would undoubtedly prefer that the world forgets that the Nagpur gold vault even exists. 

    This article was originally published on the BullionStar.com website under the same title “Indian Central Bank accumulating large quantities of Gold almost under the Radar”.

    Tyler Durden
    Thu, 10/07/2021 – 22:10

  • San Francisco Eases Indoor Mask Requirements As UK Removes 47 Countries From Travel "Red List"
    San Francisco Eases Indoor Mask Requirements As UK Removes 47 Countries From Travel “Red List”

    Here’s something you don’t see every day: headlines about the authorities dialing back COVID-related restrictions, as CNBC’s Carl Quintanilla pointed out in a tweet.

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    Most notably, San Francisco is easing its indoor mask requirements beginning Oct. 15 – or next week. The decision comes after several high-profile California politicians including Gov. Gavin Newsom and San Francisco Mayor London Breed have been caught violating their own COVID guidelines.

    And it’s not just San Francisco, the county, along with seven of its neighbors, will mostly remove local mandates as COVID cases continue to decline and vaccination rates rise (this second requirement may prove to be a bit of a snag), according to the San Francisco Examiner.

    Here’s more:

    The eight Bay Area counties with indoor mask mandates currently in place must reach moderate levels of transmission as defined by the Centers for Disease Control and Prevention and low hospitalization rates as defined by the local health officer. In counties that haven’t reached 80% of the population vaccinated, the orders may be lifted three weeks after children ages 5-11 are granted access to vaccines.

    San Francisco will partially lift its mask mandate a week from Friday, assuming local COVID cases and hospitalizations remain stable or decline over the next week. At that time, people may stop wearing masks at indoor spaces that require proof of vaccination — including gyms, offices and places that host small gatherings — as long as no children under 12 are present and other ventilation and safety measures are in place.

    The criteria announced Thursday apply to Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara and Sonoma counties, which all reinstated indoor mask mandates in August amid the delta surge. Solano County did not put in place a local mandate.

    […]

    “I’m excited that we’re once again at a place where we can begin easing the mask requirements, which is the direct result of the fact that we have one of the highest vaccination rates in the country, our cases have fallen, and our residents have done their part to keep themselves and those around them safe,” said San Francisco Mayor London Breed in a statement.

    On top of all this, relaxing SF’s mask requirements might help law enforcement end the epidemic of shoplifting afflicting the City by the Bay.

    Moving on from San Francisco to Europe, Germany’s Health Minister Jens Spahn said Thursday that he believes Europe’s biggest economy will be able to forego additional COVID-related restrictions during the fall and winter since the country’s vaccination rate is actually higher than authorities had previously believed.

    According to Reuters, Spahn said that a study by Germany’s RKI had found that the number of people vaccinated against COVID was 5% higher than the government had believed. This, according to Spahn, means the existing rules requiring people to show evidence of showing a negative test or having been vaccinated or recovered on entering an indoor space or event should be enough.

    “As things stand, this vaccination rate means no further restrictions are needed,” he said.

    But it wasn’t all good news. While the UK removed 47 countries from its “red list” of countries where travelers must quarantine after returning, with Transportation Secretary Grant Shapps, UK health authorities also reported more than 40K cases in a single day for the first time in a month, according to Sky News.

    Still, travelers in the UK need a Day 2 test if they’re fully vaccinated, and a pre-departure test if they’re not, even to travel to countries on the green list.

    Whether restrictions are further relaxed will likely depend on which direction case numbers break toward during the coming week.

    Tyler Durden
    Thu, 10/07/2021 – 21:40

  • In Stunning Rebuke, Poland's Top Court Rules Polish Law Takes Presedence Over The EU
    In Stunning Rebuke, Poland’s Top Court Rules Polish Law Takes Presedence Over The EU

    In a stinging rebuke to Europe’s unelected bureaucrats, and a major escalation in the rule of law crisis between Warsaw and Brussels, Poland’s constitutional court ruled on Thursday that Polish law can take precedence over EU law amid an ongoing dispute between the European bloc and the eastern European member state. The decision by the Constitutional Tribunal came after Polish Prime Minister Mateusz Morawiecki requested a review of a decision by the EU’s Court of Justice (ECJ) that gave the bloc’s law primacy. Two out of 14 judges on the panel dissented from the majority opinion.

    “The attempt by the European Court of Justice to involve itself with Polish legal mechanisms violates … the rules that give priority to the constitution and rules that respect sovereignty amid the process of European integration,” the ruling said, in an outcome that could have wide-reaching consequences for Europe when the next crisis hits.

    Meanwhile, Brussels considers the Constitutional Tribunal illegitimate due to the political influence imposed upon Poland’s judiciary by the ruling Law and Justice party (PiS).

    As the FT’s Henry Foy notes, it is “Hard to overstate the importance of this ruling.” He goes on to note that “Poland is *the* EU success story of eastern enlargement, and the biggest recipient – by a long long way – of EU taxpayer money since 2004. And now it is saying that it refuses to recognize a fundamental part of the whole project.”

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    As DW reports, the court had looked specifically at the compatibility of provisions from EU treaties, which are used by the European Commission to justify having a say in the rule of law in member states, with Poland’s constitution.

    A ruling by the ECJ in March said that the EU can force member states to disregard certain provisions in national law, including constitutional law. The ECJ says that Poland’s recently implemented procedure for appointing members of its Supreme Court amounts to a violation of EU law. The ruling from the ECJ could potentially force Poland to repeal parts of the controversial judicial reform.

    Meanwhile, the EU is withholding billions of euros of aid for post-pandemic rebuilding in Poland over concerns that the rule of law is being degraded in the country.

    “The primacy of constitutional law over other sources of law results directly from the Constitution of the Republic of Poland,” PiS government spokesman Piotr Muller wrote on Twitter after the court’s decision. “Today (once again) this has been clearly confirmed by the Constitutional Tribunal.”

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    However, the EPP group, the center-right bloc in the European Parliament to which PiS belongs, come out strongly against the court’s ruling: “It’s hard to believe the Polish authorities and the PiS Party when they claim that they don’t want to put an end to Poland’s membership of the EU. Their actions go in the opposite direction. Enough is enough,” Jeroen Lenaers, MEP and spokesperson for the group, said. “The Polish Government has lost its credibility. This is an attack on the EU as a whole,” he added.

    Previously, the European Parliament called on Morawiecki to cancel the court case in a resolution passed last month. It stressed the “fundamental nature of primacy of EU law as a cornerstone principle of EU law”, which however now is put in doubt.

    Poland has come under repeated fire from the EU including over issues to do with LGBTQ rights and women’s rights and media freedom, and in general for refusing to do whatever Brussels tells it do.

    As DW notes, the judiciary reforms by the PiS government have been seen as a threat to Poland’s membership within the 27-member bloc as well as to the stability of the EU as a whole.

    That said, the court’s decision on Thursday came as little surprise. The presiding judge, Julia Przylebska, is a government loyalist who was appointed by the ruling party. Similar to the highly partial US Supreme Court justices who are anything but impartial themselves.

    Jack Parrock, DW’s correspondent in Brussels, highlighted the importance the decision could have on Poland’s role in the EU.

    “One of the cornerstones of EU membership is that EU law has primacy over all other laws and that the European Court of Justice is the top court within the European Union and what these judges are saying is that in some aspects they don’t believe that that is the case,” he told DW.

    “This all started because the European Court of Justice essentially ruled that certain aspects of judicial tampering that the government was doing in Poland’s judiciary were not in line with EU law,” Parrock explained.

    “This has been an ongoing saga, and this is a pretty major issue now for the EU. We’ve already seen some pretty strong reactions coming from European parliamentarians and I’m sure we’re going to see some harsh criticism of this ruling coming from the European Commission,” he added.

    Needless to say, the EU was not happy, and promptly escalated the war of words tweeting that “The Commission will not hesitate to make use of its powers under the Treaties to safeguard the uniform application & integrity of Union law.”

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    Tyler Durden
    Thu, 10/07/2021 – 21:10

  • Oh My: Amazon Looks At Leaving Seattle Over City Council Hostility
    Oh My: Amazon Looks At Leaving Seattle Over City Council Hostility

    Authored by Ed Morrissey via HotAir,

    AP Photo/Matt Rourke

    To paraphrase Animal House, Andy Jassy hasn’t dropped the big one — yet — but he put it in play this week. After years of deteriorating relations with their home city of Seattle and its ultra-progressive city council, Amazon’s CEO made it known that the online giant may look for greener pastures. Citing the city’s hostility toward their presence, Jassy suggested that the suburbs are looking better and better for a new home to its 50,000-employee home base (via Instapundit):

    The world’s largest online retailer is by far the biggest private employer in Seattle with more than 50,000 workers. That distinction has proved a headache in recent years, with some residents and government officials blaming the company for exacerbating homelessness and traffic.

    “I’d say the last five years, the city council has become less enamored with business or with Amazon,” Jassy said during an event hosted by technology news site GeekWire. “It’s just been rougher.” …

    The company, which is wrapping up construction of an expanded Seattle headquarters campus, has since shifted its expansion planning toward neighboring cities like Bellevue and Redmond. Bellevue, just east of Seattle, “is where most of our growth will end up being,” Jassy said. He added that he wouldn’t be surprised if Amazon opened other offices in additional cities in the region.

    Bloomberg notes that Amazon may have contributed to the current state of hostilities with the city. Three years ago, they made a $1 million contribution to the local chamber of commerce’s campaign to get more moderates on the city council. That worked out as well as could be expected in the pre-CHAZ era of Seattle; it backfired and left the impression that Amazon wanted to buy its own city council. The winning ultra-progressives came into office with an even bigger axe to grind against the city’s biggest capitalist organization.

    Post-CHAZ and post-riot, one has to wonder whether Seattle voters might regret that choice. Even some of the city’s leadership had reason to regret that final expression of ultra-progressive activism. Remember Jenny Durkan’s abrupt about-face on CHAZ after the activists targeted her home?

    The big question here is whether Amazon regrets its massive investment in its new Seattle HQ enough to abandon it and take the loss. Jassy might just be looking for more leverage with a now-chastened city council, but they’re not that chastened, and the situation hasn’t improved over the last year. Jassy may not completely abandon Seattle, but he can move enough of the business out of the council’s jurisdiction to make their budgeting a lot more complicated in the future. And it’s not just Amazon feeling the Bern, either. Things got so bad for Boeing that they decamped in 2001 for Chicago, as Don Surber reminds readers:

    Seattle’s hostility to business led to Boeing’s departure for Chicago in 2001. The company was founded in Seattle in 1916. It decided last year to shutter its last factory in Seattle. …

    No, to really kill business, you need a government that is hostile and frankly jealous of success. In 22 short years, the garage business became the top retailer in the country. Seattle is doing everything it can to force Amazon out.

    The CEO finally got the hint because when it comes to Democrat policy, there is no such thing as unintended consequences. Seattle wants Amazon out. So be it.

    Seattle’s city council doesn’t really want Amazon out. It wants Amazon to fund The Revolution, and resents the company’s refusal to do so. The council keeps escalating the stakes and assumes — weirdly — that Amazon has more invested in Seattle for its online business model than Boeing did for its manufacturing model. At some point, Jassy will have to call Seattle’s bluff and take the short-term loss on its commercial real estate venture, or the city council will have to back down from its capitalist bête noire. I’d put my bet on the former, and sooner rather than later. Either way, the radical leftists in Seattle are playing out a lose-lose scenario.

    Tyler Durden
    Thu, 10/07/2021 – 20:40

  • September Payrolls Preview: It Will Be A Beat, The Question Is How Big
    September Payrolls Preview: It Will Be A Beat, The Question Is How Big

    After a strong initial claims report and a solid ADP private payrolls print, all eyes turn to the most important economic data point of the week, and the month, Friday’s nonfarm payrolls report due at 830am ET on Friday, where consensus expects a 500K print- more than double last month’s disappointing 235K print – as well as a drop in the unemployment rate to 5.1% and an increase in average hourly earnings to 4.6%. And unlike last month, when we correctly predicted the big miss in August payrolls, this time we agree that tomorrow’s report will be a beat, the only question is how big.

    Here is a snapshot of what to expect tomorrow:

    • Total Payrolls: 500K, Last 235K
    • Private Payrolls: 450K, Last 243K
    • Unemployment Rate: 5.1%, Last 5.2%
    • Labor force participation rate: 61.8%, Last 61.7%
    • Average Hourly Earnings Y/Y: 4.6%, Last 4.3%
      • Average Hourly Earnings M/M: 0.4%, Last 0.6%
    • Average Weekly Hours: 34.7, Last 34.7

    As Newsquawk writes in its NFP preview, September’s jobs data, the last before the Fed’s November 3rd policy meeting, will be framed in the context of the central bank’s expected taper announcement, where a merely satisfactory report would likely to be enough for the FOMC to greenlight a November announcement to scale-back its USD 120BN/month asset purchases.

    Goldman economists are more bullish than normal, and estimate nonfarm payrolls rose 600k in September, above consensus of +500k, and they note that “labor demand remains very strong, and we believe the nationwide expiration of enhanced unemployment benefits on September 5 boosted effective labor supply and job growth—as it did in July and August in states that ended federal benefits early.” As a result, Goldman is assuming a 200k boost in tomorrow’s numbers and a larger boost in October. The bank also believes the reopening of schools contributed to September job growth, by around 150k. Despite these tailwinds, Big Data employment signals were mixed, and dining activity rebounded only marginally.

    Labor market proxies have been constructive for the month: ADP’s gauge of payrolls surprised to the upside, although analysts continue to note that the direct relationship between the official data and the ADP’s gauge is tenuous, despite the gap being under 100k over the last three reports. The number of initial jobless claims and continuing claims has eased back between the survey periods of the August and September jobs data, although analysts note that more recent releases have shown an uptick in claims potentially clouding the outlook. The ISM business surveys have signaled employment growth in the month, with manufacturing employment rising into growth territory again, but services sector hiring cooled a little in the month, but remains expansionary; survey commentary continues to allude to a tight labour market. The Bureau of Labor Statistics will release the September employment situation report at 13:30BST/08:30EDT on October 8th.

    POLICY: The September jobs report might have reduced relevance on trading conditions given that Fed officials have effectively confirmed that, barring a collapse in the jobs data, it is on course to announce a tapering of its asset purchases at the November 3rd meeting. Accordingly, trading risks may be skewed to the downside, rather than to the upside, where a significant payrolls miss may present obstacles to the Fed announcing its taper. Additionally, it is worth being cognizant of how efforts in Washington to raise the debt ceiling are progressing; as yet, officials have not struck a deal, and are in the process of enacting stop gap legislation to allow funding into December; some analysts suggest that the Fed may be reticent to tighten policy in the face of potential default risks.

    PAYROLLS: The consensus looks for 500k nonfarm payrolls to be added to the US economy in September (prev. 235k), which would be a cooler rate of growth than the three- and six-month average rate, though in line with the 12-month average (3-month average is 750k/month, the six-month average is 653k/month, and the 12-month average is 503k/month – that technically at least suggests an improving rate of payrolls growth in recent months). Aggregating the nonfarm payrolls data since March 2020, around 5.33mln Americans remain out of work relative to pre-pandemic levels.

    MEASURES OF SLACK: The Unemployment Rate is expected at 5.1% (prev. 5.2%); Labour Force Participation previously at 61.7% vs 63.2% pre-pandemic; U6 measure of underemployment was previously at 8.8% vs 7.0% prepandemic; Employment-population ratio was previously 58.5% vs 61.1% pre-pandemic. These measures of slack are likely to provide more insight into how Fed officials are judging labour market progress, with many in recent months noting that they are closely watching the Underemployment Rate, Participation Rate, and the Employment-Population Ratio for a better handle on the level of slack that remains in the economy. Analysts would be encouraged the closer these get to pre-pandemic levels.

    EARNINGS: Average Hourly Earnings expected at +0.4% M/M (prev. +0.6%); Average Hourly Earnings expected at +4. 6% Y/Y (prev. +4.3%); Average Workweek Hours expected at 34.7hrs (prev. 34.7hrs). Aggregating the nonfarm payrolls data since March 2020, around 5.33mln Americans still remain out of work relative to pre-pandemic levels.

    ADP: The ADP National Employment Report showed 568k jobs added to the US economy in September, topping expectations for 428k, and a better pace than the prior 340k (revised down from 374k initially reported). ADP itself said that the labor market recovery continued to make progress despite the marked slowdown in the rate of job additions from the 748k pace seen in Q2. It also noted that Leisure & Hospitality remained one of the biggest beneficiaries to the recovery, though said that hiring was still heavily impacted by the trajectory of the pandemic, especially for small firms. ADP thinks that the current bottlenecks in hiring will likely fade as the pandemic situation continues to improve, and that could set the stage for solid job gains in the months ahead. On the data methodology, analysts continue to note that ADP’s model incorporates much of the prior official payrolls data, other macroeconomic variables, as well as data from its own payrolls platform; “Payrolls were soft in August, thanks to the hit to the services sector from the Delta variant, and that weakness likely constrained ADP data,” Pantheon Macroeconomics said. “The overshoot to consensus, therefore, suggests that the other inputs to ADP’s model were stronger than we expected, but none of the details are published, so we don’t know if the overshoot was model-driven or due to stronger employment data at ADP’s clients.”

    INITIAL JOBLESS CLAIMS: Initial jobless claims data for the week that coincides with the BLS jobs report survey window saw claims at around 351k – little changed from the 349k for the August jobs data survey window – where analysts said seasonal factors played a role in boosting the weekly data, while there may have been some lingering Hurricane Ida effects; the corresponding continuing claims data has fallen to 2.802mln in the September survey period vs 2.908mln in the August survey period. In aggregate, the data continues to point to declining trend, although in recent weeks the level of jobless claims has been picking up again.

    BUSINESS SURVEYS: The Services and Manufacturing ISM reports showed divergent trends in September, with the service sector employment sub-index easing a little to 53.0 from 53.7, signalling growth but at a slower rate, while the manufacturing employment sub-index rose back into expansionary territory, printing 50.2 from 49.0 prior. On the manufacturing sector, ISM said companies were still struggling to meet labour-management plans, but noted some modest signs of progress compared to previous months: “Less than 5% of comments noted improvements regarding employment, compared to none in August,” it said, “an overwhelming majority of panelists indicate their companies are hiring or attempting to hire,” where around 85% of responses were about seeking additional staffing, while nearly half of the respondents expressed difficulty in filling positions, an increase from August. “The increasing frequency of comments on turnover rates and retirements continued a trend that began in August,” ISM said. Meanwhile, in the services sector, employment activity rose for a third straight month; respondents noted that employees were flocking to better-paying jobs and there was a lack of pipeline to replace these staff, while other respondents talked of labor shortages being experienced at all levels.

    ARGUING FOR A BETTER-THAN-EXPECTED REPORT:

    • End of federal enhanced unemployment benefits. The expiration of federal benefits in some states boosted labor supply and job-finding rates over the summer, and all remaining such programs expired on September 5. The July and August indicated a cumulative 6pp boost to job-finding probabilities from June to August for workers losing $300 top-up payments and a 12pp boost for workers losing all benefits. Some of the 6mn workers who lost some or all benefits on September 5 got a job by September 18—in time to be counted in tomorrow’s data. Goldman assumes a +200k boost to job growth from this channel, with a larger increase in subsequent reports (+1.3mn cumulatively by year end).

    • School reopening. The largest 100 school districts are all open for in-person learning, catalyzing the return of many previously furloughed teachers and support staff. While full normalization of employment levels would contribute 600k jobs (mom sa, see left panel of the chart below), some janitors and support staff did not return due to hybrid teaching models, and job openings in the sector are only 200k above the pre-crisis level (see right panel). Relatedly, the BLS’s seasonal factors already embed the usual rehiring of education workers on summer layoff, so if fewer janitors returned to work than in a typical September, this would reduce seasonally adjusted job growth, other things equal. Taken together, assume a roughly 150k boost from the reopening of schools in tomorrow’s report.

    • Job availability. The Conference Board labor differential—the difference between the percent of respondents saying jobs are plentiful and those saying jobs are hardto get – edged down to 42.5 from 44.4, still an elevated level. Additionally, JOLTS job openings increased by 749k in July to a new record high of 10.9mn.
    • ADP. Private sector employment in the ADP report increased by 568k in September, above consensus expectations for a 430k gain, implying strong growth in the underlying ADP sample. Additionally, schools generally do not use ADP payroll software, arguing for a larger gain from school reopening in the official payroll measure.

    ARGUING FOR A WEAKER-THAN-EXPECTED REPORT:

    • Delta variant. Rebounding covid infection rates weighed on services consumption and the labor market in August. And while US case counts began to decline in early September, restaurant seatings on Open Table rebounded only marginally. leisure and hospitality employment rose in September, but probably not at the ~400k monthly pace of June and July.
    • Employer surveys. The employment components of our business surveys were flat to down, whereas we and consensus forecast a pickup in job growth. Goldman’s services survey employment tracker remained unchanged at 54.5 and the manufacturing survey employment tracker declined 0.4pt to 57.8. And while the Goldman Sachs Analyst Index (GSAI) decreased 0.8% to 68.5, the employment component rose1.9% to 71.9.

    NEUTRAL FACTORS:

    • Big Data. High-frequency data on the labor market were mixed between the August and September survey weeks, on net providing little guidance about the underlying pace of job growth. Three of the five measures tracked indicate an at-or-above-consensus gain (Census Small Business Pulse +0.5mn, ADP +0.6mn,Google mobility +2mn), but the Homebase data was an outlier to the downside. At face value, it would indicate a large outright decline in payrolls. The Census Household Pulse (-0.6mn) was also quite weak, though encouragingly, it also indicated a large drop in childcare-related labor supply headwinds as schools reopened.
    • Seasonality. The September seasonal hurdle is relatively low: the BLS adjustment factors generally assume a 600-700k decline in private payrolls (which exclude public schools), compared to around -100k on average in July and August. Continued labor shortages encouraged firms to lay off fewer workers at the end of summer. Partially offsetting this tailwind, the September seasonal factors may have evolved unfavorably due to the crisis—specifically by fitting to last September’s reopening-driven job surge (private payrolls +932k mom sa).
    • Jobless claims. Initial jobless claims fell during the September payroll month, averaging 339k per week vs. 378k in August despite a boost from individuals transitioning or attempting to transition to state programs. Across all employee programs including emergency benefits, continuing claims fell dramatically (-3.3mn)–but again for non-economic reasons (federal enhanced programs expired). Continuing claims in regular state programs decreased 106k from survey week to survey week.
    • Job cuts. Announced layoffs reported by Challenger, Gray & Christmas rebounded 11% month-over-month in September after decreasing by 14% over the prior two months (SA by GS). Nonetheless, layoffs remain near the three-decade low on this measure (in 1993).

    Tyler Durden
    Thu, 10/07/2021 – 20:10

  • Senate Advances $480 Billion Debt Ceiling Deal After 11 Republicans Join Democrats To Invoke Cloture
    Senate Advances $480 Billion Debt Ceiling Deal After 11 Republicans Join Democrats To Invoke Cloture

    Update (2105ET): The Senate has officially advanced the short-term debt limit by a simple majority vote of 50-48, after 11 GOP lawmakers joined Democrats in a vote to invoke cloture, achieving the 60-vote filibuster threshold.

    The $480 billion increase will now move to the House, where it could be considered as early as next week. It should be enough to last through at least early December.

    *  *  *

    Update (2000ET):  The debt ceiling can has been kicked to December.

    After Senate Majority Leader Chuck Schumer set up Thursday night vote on a short-term debt ceiling increase that would leave the battle to be rejoined less than two months from now, in the middle of an already packed congressional agenda, moments ago a procedural cloture vote which needed 60 votes – meaning at least 10 Republicans would need to join McConnell in agreeing to concede – took place and as expected, amid all the high theatrical drama, not 10 but 11 Republicans votes were found to join the Democrats in a 61-38 vote.

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    The republicans voting Aye were:

    • Barrasso
    • Blunt
    • Capito
    • Collins
    • Cornyn
    • McConnell
    • Murkowski
    • Portman
    • Rounds
    • Shelby
    • Thune

    So with the vote having passed (Incidentally, Mitt Romey voted no), the next vote to follow tonight will be a vote to raise the debt ceiling by $480 billion where is a simple majority vote is needed, which the Democrats will be able to muster on their own, in the process punting the debt ceiling discussion for some time in mid-December, when as noted earlier, the bond market is already bracing for the next round of high drama with mid-December Bills “kinking” relative to the prior week.

    * * *

    Update (1440ET): According to The Hill, several Senate Republicans aren’t exactly thrilled with the debit limit deal brokered by GOP leader Mitch McConnell (R-KY) and Senate Majority Leader Charles Schumer (D-NY) – arguing that the Republicans gave Democrats and easy way out. 

    Several Senate Republican sources said members of their caucus were “surprised and disappointed” when McConnell unveiled the parameters of the deal with Schumer on Wednesday.

    One GOP senator said “you could hear a pin drop” when McConnell shared the details of his plan to allow Democrats to raise the debt ceiling to “a fixed number” without having to undergo the arduous process of amending the 2022 budget resolution and holding multiple time-consuming vote-a-ramas on the Senate floor. -The Hill

    According to Sen. Kevin Cramer (R-ND), some of his GOP colleagues had whiplash after 46 Senate Republicans signed an August letter warning Schumer that they “will not vote to increase the debt ceiling, whether that increase comes through a stand-alone bill, a continuing resolution, or any other vehicle.”

    “I’m not surprised that they are a little surprised and disappointed, because of course 46 Republicans signed a letter saying they wouldn’t vote for an increase,” said Cramer, adding “I think they feel like maybe we could have pushed it a little longer.“

    “The problem is the Republican members feel like we’re blinking and blinking a little earlier than might be necessary,” he continued, adding that the upcoming Columbus Day recess slated to begin this weekend “probably entered into the calculation.”

    “It’s not insignificant because people have plans and all that but plans aside, your plans to go on a CODEL [congressional delegation trip] are not the highest priority, the government is,” Cramer said. “I think some people wanted to go closer [to the deadline] and feel like we blinked too soon.”

    The biggest downside of the deal, in the view of these disappointed Republicans, is that the their conference will divide over a procedural vote on bringing a two-month extension of the debt limit to the floor for an up-or-down vote.

    Republicans have said for months that they would not provide any assistance to Democrats in raising the debt limit, especially since Democrats are working on a $3.5 trillion human infrastructure package that would raise taxes by hundreds of billions of dollars.

    But now they face the prospect of having to vote on a cloture motion to bypass a filibuster so that Democrats can pass the short-term debt limit increase with a simple-majority vote.

    At least 10 Republicans need to vote for the procedural motion to pave the way for legislation that would raise the debt limit by $480 billion, which is enough to cover the U.S. government’s financial obligations until Jan. 3. -The Hill

    According to the report, it appeared as though McConnell is facing a tough time rounding up enough GOP votes to bypass a filibuster and allow the two-month debt limit increase proceed to the floor – after which Democrats would then pass it on their own.

    Several Republican Senators are still on the fence – which could complicate matters. They include Sens. John Thune of SD and Roy Blunt of MO.

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    That said, National Republican Senatorial Committee Chairman Rick Scott (R-FL) said he expects there will be a 60-vote threshold for advancing the debt deal.

    “There’s going to be a cloture vote,” he said.

    *  *  *

    Update (1312ET): According to the NYT’s Manu Raju, the debt-ceiling deal might be hitting a snag: many GOP senators don’t want to vote for it, meaning McConnell needs to secure at least 10 GOP votes to pass the bill over a GOP filibuster.

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    * * *

    Update (1300ET): As the Democratic leadership scrambles to get the short-term debt-ceiling deal passed, the Democratic leadership is ramping up its criticisms of Minority Leader Mitch McConnell, as one might expect.

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    Some more details about the new deal: after passing the Senate via a series of likely unanimous votes, the amended bill must also pass the House, which is in recess.

    Speaking Thursday on the Senate floor, McConnell said “the pathway our Democratic colleagues have accepted will spare the American people any near term crisis.” The deal also means “there’ll be no question they’ll have plenty of time” to use the reconciliation process to approve a long-term increase.

    * * *

    Update (1140ET): Fox News’ senior Hill correspondent and seasoned political reporter Chad Pergram shared some new details about the debt-ceiling deal. The updated bill  (which is technically an amendment) doesn’t mention a date and solely authorizes the $480 billion needed for the Treasury to pay debts coming due between now and early December.

    But Pergram’s report also shared some new details suggesting that the margin between the “drop dead” date and actual default might be thinner than previously believed.

    According to Pergram’s sources, the Treasury started using cash from emergency accounts over the summer, and the deal doesn’t include any additional funding to replenish these accounts.

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    That could contribute to the perception that Dec. 3 truly is a “hard” deadline, and that the closer we get to it without a long-term deal, the greater the risk to the market.

    * * *

    Update (1125ET): As we await a Senate vote on the short-term debt ceiling deal, Goldman’s political analyst Alec Philips has just chimed in with a brief note to clients, advising that the $480 billion debt-ceiling increase was larger than he had anticipated, meaning that the real deadline for a more long-term deal (or at the very least another can-kick) is probably “somewhat later than Dec. 3”.

    Media reports indicate that Senate leaders have struck a deal to raise the debt ceiling by $480bn (i.e., to $28.88 trillion). This is intended to carry the Treasury to December 3, at which point an additional debt limit increase or suspension would be required. The amount is higher than we would have anticipated the Treasury would need to get to that date, so there appears to be a good chance that the actual deadline for the next increase will come somewhat later than Dec. 3. That said, it is probably not sufficient to last past the end of the year, so it appears likely that Congress will need to address the issue in December as expected, either as part of the next reconciliation bill, a standalone bill, or part of a spending package for FY22 to extend spending authority past the current expiration, which Congress also set at Dec. 3 when it passed its continuing resolution on Sep. 30.

    Meanwhile, the T-bills market responded to news of the deal by shifting the “kink” in the curve out to December.

    * * *

    Update (1115ET): Cogs are already turning to tee up a vote on the short-term debt deal on Thursday.

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    Of course, as part of the deal, GOP senators will vote to raise the debt limit, something that McConnell had initially tried to avoid by pushing to force the Democrats to use reconciliation, a process that could have allowed them to bypass a GOP filibuster, but Dems – including President Biden – complained doing so would be unworkable and complex.

    * * *

    Update (1020ET): Following reports earlier this morning about a short-term deal to suspend America’s debt ceiling, Senate Majority Leader Chuck Schumer was on the tape just a few minutes ago confirming that a short-term deal has indeed been reached, and that he hopes the Senate will vote on the measure Thursday.

    “I have some good news…we’ve reached agreement to extend the debt ceiling through early December,” Schumer said during opening remarks on the Senate floor.

    US stocks celebrated the headline by sending the S&P 500 and Dow surging past key technical levels, as we pointed out. 

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    Punchbowl News’ Jake Sherman reports that the deal will raise the debt limit by $480 billion – the figure that Treasury says is required – to extend the deadline until Dec. 3, giving the Dems’ a little bit of wiggle room to continue their divisive, bitter factional battle over President Biden’s domestic agenda, which includes an infrastructure bill and an even larger expansion of the social safety net.

    The Dec. 3 deadline lines up with the short-term extension of government spending signed by Biden a week ago.

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    Minority Leader Mitch McConnell first offered the deal on Wednesday and leaders negotiated the details into Thursday. Defying expectations, the deal – which is really just a short-term can-kick – comes more than a week before the Oct. 18 “drop dead” date quoted by Treasury Sec. Janet Yellen (which is really just a point in a range that could be days or weeks, since the Treasury can’t say exactly when it would run out of money).

    While the market celebrated, White House reporters criticized the deal, with one claiming it’s such a weak can-kick that it’s “not even a band-aid…it’s like, the scrap of Kleenex that you found lying around that you have to use…” The criticism lined up with an analysis by Goldman strategists.

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    Another reporter noted that the early December deadline could create even more problems for Democrats, since they have other important issues and deadlines coming up in December.

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    As we reported earlier, Goldman’s top political strategist Alec Phillips published a note to clients advising that McConnell’s short-term offer likely wouldn’t be that attractive to Democrats.

    * * *

    Following negotiations that stretched late into Wednesday evening, Democrats and Republicans have reportedly forged a compromise deal on a short-term increase in the the debt ceiling which will avoid default, but as Bloomberg notes, “threatens to exacerbate year-end clashes over trillions in government spending.”

    In moving forward, Democrats appear to be on the verge of accepting a proposal from GOP leader Sen. Mitch McConnell (R-KY) which would raise the debt limit by a specific amount – enough to move things into December, when Congress will have to vote again to avoid a default.

    While the details aren’t totally clear, McConnell’s offer was to allow a vote on extending the debt limit at a fixed collar amount – which Goldman’s Alec Phillips expects a number on over the next day or so.

    “We’re making good progress,” Senate Majority Leader Chuck Schumer said in early Thursday morning comments from the Senate floor, adding “we hope to have agreement tomorrow morning,” adding that the Senate would come back into session at 10 a.m. Thursday.

    That said, this is classic can-kicking which will have consequences down the road, as Democrats will likely attempt to move forward with their massive tax and spending package and separate infrastructure bill while at the same time funding the government to avoid yet another potential shutdown after December 3.

    News of a possible debt-ceiling accord stoked the biggest positive turnaround in the equity market in more than seven months, as the S&P 500 Index closed up 0.4% after tumbling earlier. In the bond market, traders bid back up the prices of Treasuries set to mature in the window around a potential default. Investors then moved on to gauge which securities may now be most at risk of a missed or delayed payment under the new congressional timeframe. -Bloomberg

    Treasury Secretary Janet Yellen has warned that the US would likely default after October 18 without congressional action. At present, the current debt limit is $28.4 trillion, while the Treasury reported that it had $343 billion in combined extraordinary measures and cash on hand.

    As an approximation, during the period from Sep. 29 to Dec. 3, 2019, debt subject to limit (this includes marketable and non-marketable debt) increased by $356bn and the cash balance declined by $50bn, suggesting that the Treasury would use around $400bn in borrowing capacity by early December if cash flows are similar this year. Since the Treasury still had more than $300bn in room under the debt limit at the end of September, a debt limit increase to only $28.5-$28.6 trillion might be sufficient to accomplish the intent of the agreement, but the Treasury will be the final word on this and the amount will depend on expected cash flows this year. -Goldman Sachs

    And while a fixed dollar amount (vs. a calendar-based solution) injects a bit of uncertainty as to when exactly the next deadline will hit, the debt deal alleviates concerns which were beginning to reverberate throughout the investment community. Earlier this week, McConnell sidestepped a question over whether any major banks or wall street titans had contacted him over the debt ceiling fight.

    It was thought that the investment community would hammer Washington if lawmakers bumbled into a debt ceiling crisis. 

    Worry started to permeate Washington that rating agencies could downgrade the creditworthiness of the U.S. before Oct. 18 – the deadline when Treasury says the U.S. will run out of cash. –Fox News

    Senate Democrats have considered the debt deal a victory –  with Sen. Elizabeth Warren (D-MA) exclaiming on Wednesday that “McConnell caved,” adding “And now we’re going to spend our time doing child care, health care, and fighting climate change.”

    From here, the focus will undoubtedly return to negotiations over Biden’s fiscal agenda – and in particular, the stalemate within the Democratic party between Senate moderates Joe Manchin (WV) and Kyrsten Sinema (AZ), who have vowed to sink any reconciliation plan that exceeds $1.5 trillion, and House progressives, who will likewise tank the $1.2 trillion bipartisan infrastructure deal unless Manchin and Sinema bend the knee.

    Assuming that drags into December, expect fireworks into the end of the year.

    Tyler Durden
    Thu, 10/07/2021 – 20:06

  • Energy Crisis May Unleash Winter Blackouts Across US, Insider Warns 
    Energy Crisis May Unleash Winter Blackouts Across US, Insider Warns 

    The energy crisis that is rippling through Asia and Europe could unleash electricity shortages and blackouts in the U.S., according to Bloomberg. 

    Ernie Thrasher, CEO of Xcoal Energy & Resources LLC., told energy research firm IHS Markit that U.S. utilities quickly turn to more coal because of soaring natural gas prices. 

    “We’ve actually had discussions with power utilities who are concerned that they simply will have to implement blackouts this winter,” Thrasher warned.

    He said, “They don’t see where the fuel is coming from to meet demand,” adding that 23% of utilities are switching away from gas this fall/winter to burn more coal. 

    With natgas, coal, and oil prices all soaring is a clear signal the green energy transition will take decades, not years. Walking back fossil fuels for unreliable clean energy has been a disaster in Asia and Europe. These power-hungry continents are scrambling for fossil fuel supplies as stockpiles are well below seasonal trends ahead of cooler weather. 

    A similar story is playing out in the U.S., where increased demand for coal might not be reached by mining companies. We noted Thursday morning that boosting output might be challenging due to years of decommissioning mines to reduce carbon emissions and transition the economy from fossil fuels to green energy. There’s also been a steady decline of miners over the last three and a half decades. 

     “That whole supply chain is stretched beyond its limits,” Thrasher said. “It’s going to be a challenging winter for us here in the United States.”

    Utility company Duke Energy Corp.’s Piedmont Natural Gas unit, covering North and South Carolina customers, warned power bills this winter are set to rise due to high natgas prices and low production. 

    A pure-play coal company that is already benefiting from the demand surge and rising prices is Peabody Energy Corporation. As cooler weather fast approaches, the company may see increased demand for its thermal coal that utility companies use to produce electricity. On a technical basis, a so-called bullish “golden cross” was just triggered. 

    The troubled green energy transition gives the fossil fuel industry new hope, especially “Making Coal Great Again.” 

    Tyler Durden
    Thu, 10/07/2021 – 19:40

  • Twitch Hack Exposes How Top Streamers Earn Millions Of Dollars On Platform
    Twitch Hack Exposes How Top Streamers Earn Millions Of Dollars On Platform

    The hacker, or hackers, who stole and published reams of invaluable source code, internal security tools and creator payouts from Twitch – the Amazon-owned streaming service that’s popular with gamers and has come to dominate the world of “eSports” (to be sure, there are plenty of Twitch streamers who aren’t focused on video games, but we digress) – allegedly managed to “own” Jeff Bezos by – claiming in a 4chan post that “Jeff Bezos paid $970MM for this, we’re giving it away for free #dobettertwitch” – they also exposed how much money some of the platform’s most popular streamers are raking in.

    The leaked data showed popular streamers raking in payouts from Twitch ranking in six-figure territory, with the top earners pulling in millions of dollars.

    According to one leaked document listing Twitch’s top earners shows gross earnings since 2019 reached $9.6MM for the platform’s top account, “CriticalRole.” This account, which is run by a set of voice actors, according to its Twitch page, generated an average of $370,000 a year, according to the document. The list points to 13 accounts that have made more than $108,000 a year and at least 80 that have collected more than $1MM since 2019.

    Several Twitch streamers confirmed via social-media posts that the leaked payout figures were consistent with what they earned on the platform. The data showed some users reaching payouts in the six figures.

    This isn’t exactly a surprise: data on the highest-earning eSports stars collected by Statista shows that players are raking in more than $100MM in aggregate earnings. While that’s still peanuts compared to professional athletes in the major American sports leagues, earnings have soared over the last decade.

    Infographic: The Keyboard Kings of the World | Statista You will find more infographics at Statista

    On Twitch, streamers can generate income via advertising, sponsorships and tips from viewers. But Twitch cuts bespoke deals with its most popular streamers, part of a strategy to lock them (and their audience) into the platform.

    Scott Hellyer, a streamer who has been part of Twitch’s partner program for six years, said in a direct message on Twitter that information about his payouts was exposed in the breach.

    “I really hope that no major personal info (Full names, emails, address, phone number, banking info) gets out in the rumored next part of the leak,” said Mr. Hellyer, who has about 72,000 followers on his channel, “tehMorag.” “I’ll take the heat if people are surprised about how much I make in the coming days, and try to have an open dialog about it.”

    Amazon bought Twitch back in 2014 for nearly $1 billion in cash. The platform boasts 2.5MM viewers tuned in at any given time, with more than 7MM creators using the platform.

    But now that the source code has been published, cybersecurity experts are warning Twitch users to exercise extreme caution to protect their accounts and any sensitive personal data, since hackers can now comb through the source code in search of vulnerabilities that can be exploited. While the hacker who pulled off the original Twitch hack apparently took measures to avoid releasing any sensitive data that could harm others, others might not be so accommodating.

    Tyler Durden
    Thu, 10/07/2021 – 19:10

  • Musk Says Tesla Will Move Headquarters To Austin, Texas
    Musk Says Tesla Will Move Headquarters To Austin, Texas

    Tesla is moving its headquarters to Austin, Texas, from Silicon Valley, CEO Elon Musk said Thursday during the company’s annual shareholder meeting in the Austin area, where the company is building a factory. He stressed that Tesla will continue to expand in both California and Nevada, saying “we will continue to expand our activities in California. This is not a matter of Tesla leaving California. Our intention is to increase output from Freemont and giga-Nevada by 50%.”

    As part of the overhaul, Musk unveiled what appears to be Tesla’s new logo: “Don’t Mess With Tesla.”

    Some other highlights from the meeting courtesy of Bloomberg:

    • Elon Musk said that the Shanghai plant is now outproducing the Fremont plant.
    • Musk hopes the chip shortage will abate, saying the year has been a “constant struggle” with the supply chain, but said there is also a shaip shortage, which was logistically challenging.
    • Tesla has no plans to offer a dividend, which is something several retail investors had asked about.
    • Musk repeated his call for a carbon tax

    One investor asked if Tesla would start issuing a dividend. To which Musk responded: “When a company offers dividends, it’s kind of cresting the hill. They’ve run out of things to invest in internally. We’ve not run out of things to invest in by a long shot.”

    Musk also addressed Cybertruck production, saying it will start at the end of next year, with volume production in 2023. “Hopefully we can also produce the Semi and new Roadster in 2023.”

    Ironically, Musk stressed that his goal is to make Tesla cars as affordable as possible but is seeing cost pressure in the supply chain, so they had to increase prices temporarily.

    Tyler Durden
    Thu, 10/07/2021 – 19:02

  • Biden Doesn't Know That Vaccinated Individuals Can Still Spread Covid
    Biden Doesn’t Know That Vaccinated Individuals Can Still Spread Covid

    The sitting president of the United States, advised by the nation’s top infectious diseases specialists, doesn’t know what is now common knowledge; that vaccinated individuals can still spread Covid-19.

    (Susan Walsh/AP)

    For those keeping track, this is the second major issue Biden had no knowledge of – the first being an international spat with France over a tri-lateral submarine agreement.

    Speaking in Elk Grove Village, Illinois on Thursday, Biden urged more employers to institute strict vaccine requirements – calling them “tough medicine” that will help bring the United States out of the Covid-19 pandemic.

    In addition to failing to recognize naturally-acquired immunity for individuals who have recovered from Covid, Biden made clear that he has no idea vaccinated people can still spread the virus.

    “If you seek care at a healthcare facility, you should have a certainty that the people providing that care are protected from Covid and cannot spread it to you,” Biden said, explaining the rationale behind forcing healthcare workers and other professionals to get vaccinated or lose their job.

    Watch (relevant portion starts at 50 seconds):

    Biden’s latest false statement comes one week after his own CDC director Rochelle Walensky said that vaccines “can’t prevent transmission.”

    “Our vaccines are working exceptionally well. They continue to work well for Delta with regard to severe illness and death – they prevent it, but what they can’t do anymore is prevent transmission,” she told CNN‘s Wolf Blitzer. “So if you’re going home to someone who is not vaccinated…I would suggest you wear a mask in public indoor settings,” she continued.

     Again, this is common knowledge by now:

    • Emerging data suggest that Delta could spread more readily than other coronavirus variants among people vaccinated against COVID-19. (Nature, Aug. 12)
    • Vaccinated People With Breakthrough Infections Can Spread The Delta Variant, CDC Says (NPR, Jul. 30)
    • UC study finds similarities in COVID viral loads between vaccinated, unvaccinated people (KTXL, Oct. 6)
    • CDC study says COVID-19 can spread in vaccinated (AP, Sep. 21)

    Alas, the president of the United States – or whoever wrote that speech – doesn’t follow the science.

    Cover photo: Ashlee Rezin/Sun-Times

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    Tyler Durden
    Thu, 10/07/2021 – 18:50

  • NASA Engineer Earns Crypto By Helping Crowdsource Stock Picks
    NASA Engineer Earns Crypto By Helping Crowdsource Stock Picks

    One NASA engineer is using his smarts not only planning to explore outer space, but also earning cryptocurrency by picking stocks.

    When 32-year-old Hayden Burgoyne isn’t plotting a mission to explore Jupiter’s moons as part of project Europa Clipper, the Los Angeles resident spends his spare time as an amateur quant – poring through market data for Paul Tudor Jones-backed crowdsourcing firm Numerai, according to Bloomberg. 

    Without revealing their models, the contributors pick stocks they think will outperform in the coming month and make bets in online trading tournaments using a digital currency issued by Numerai. The San Francisco-based firm, established in 2015, then invests in the corresponding stocks. 

    Those picks from the likes of Burgoyne, a world away from Wall Street, have powered the market-neutral fund to a 9% gain this year through August. In 2020 it was up 8% when many storied quants faltered.

    “I have no finance background so it puts people like me on an equal footing with somebody with an economics PhD,” he told Bloomberg. 

    Burgoyne uses an “assortment of data” on 5,000 stocks to make his picks. He uses metrics like price history to valuation ratios, sometimes without even knowing what the underlying metrics are.

    Those who perform well get “NMR” tokens, which are now worth about $50 a piece. 

    Numerai founder Richard Craib commented: “By setting up the problem and being in charge of data people look at, we can get exactly the type of signal we want. Although they might not work individually, when you combine them altogether the increase in accuracy and performance is huge.”

    Craib also commented on paying out in crypto: “Even if we gave away 100% of our profits of the fund to our users we will never be able to pay as much. What I like about cryptocurrencies is the idea that actually through the community, the cryptocurrency is valuable for its own reasons.”

    Burgoyne has 630 NMR tokens backing his predictions. 

    Another Numerai trader, Sharon Moran, commented: “As a mother of three with a daughter in private college, there’s the money consideration. But the ability to learn and grow and apply some of what I’ve been learning as far as modeling was the initial motivation.” 

    And people are taking notice: one pension fund that has $45 million in assets with Numerai could increase their allocation to $130 million if the firm hits “certain milestones”. 

    While quant funds and factor-based investing have consistently shown themselves to be unreliable at best, crowdsourcing ideas as a quant model still hasn’t been fully vetted. And something is working for Numerai. 

    Tyler Durden
    Thu, 10/07/2021 – 18:40

  • Labor Strikes Target Big Food As Workers Seize On Industry Turmoil
    Labor Strikes Target Big Food As Workers Seize On Industry Turmoil

    By Chris Casey of Food Dive,

    At food plants around the country this year, workers have been making themselves heard about the state of wages, working hours and conditions.

    Just this week, roughly 1,400 Kellogg workers at ready-to-eat cereal plants in four states — Michigan, Pennsylvania, Nebraska and Tennessee — went on strike after their contract expired. In a statement, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) said its goal is to “obtain a fair contract that provides a living wage and good benefits.”

    Anthony Shelton, BCTGM’s president, said Kellogg workers “have been working long, hard hours, day in and day out, to produce Kellogg ready-to-eat cereals for American families” but that the company has responded by cutting benefits and threatening to send jobs to Mexico if employees don’t accept the company’s proposals.

    “Kellogg is making these demands as they rake in record profits, without regard for the well-being of the hardworking men and women who make the products that have created the company’s massive profits,” Shelton said in a statement. 

    Just a couple weeks earlier, more than a thousand workers returned to their jobs at Mondelēz Nabisco factories in five states after a walkout that lasted nearly six weeks. It also was led by BCTGM. The workers were protesting what they considered unfair changes in overtime rules and shift lengths.

    This came a few months after hundreds of Frito-Lay employees in Topeka, Kansas, were on strike in July for 19 days, demanding better hours and higher pay. That same month, dozens of Teamster truck drivers gathered to strike against Coca-Cola in West Virginia, rejecting a contract that would reportedly have made them pay more for health insurance and give them less commission.

    Some of these strikes, including those at Mondelēz and Frito-Lay plants, have reached their conclusion after the manufacturers came to terms with workers and their unions. And some, like the strike affecting Kellogg plants, are only ratcheting up. The turmoil reflects a unique set of conditions — a labor shortage, growing demand and supply chain disruptions in the midst of a pandemic — that has given labor unions extra leverage, and food manufacturers a greater incentive to meet their demands. 

    CPGs are currently hobbled by a massive labor shortage. There are now 4.9 million more people who are either not working or not looking for work compared to pre-pandemic times, The Washington Post recently reported. At the same time, demand for food has skyrocketed, rising 8.7% in the second quarter of this year alone, as people spend more time at home, the Consumer Brands Association reported. This has left CPG manufacturers scrambling to increase production with fewer workers and a shaky, fragile supply chain — all while dealing with continued uncertainty over the outlook for COVID-19.

    The leverage that workers and labor advocates currently enjoy is a recent change in fortunes. The power of unions, specifically in the food manufacturing sector, had deteriorated during the past four decades as companies avoided meeting worker demands by moving many jobs overseas, according to Bryant Simon, labor scholar and history professor at Temple University.

    But the COVID crisis, Simon believes, has provided a unique opportunity for American factory workers to reassess their pivotal role in the food industry.

    “Workers are like, ‘Look, I’m not going to work on these terms anymore, and you’ve given me a chance to explore some other options,’ ” Simon said.

    Uncertain outcomes

    The Mondelēz strike demonstrates how all of these factors can come into play.

    The dispute began in May when workers were offered a new contract that would increase hourly shifts from eight hours to 12, without additional overtime pay for the first five days of the week. A Mondelēz spokesperson told CBS News at the time that the changes were intended to “promote the right behaviors” among workers. 

    Meanwhile, some Mondelēz employees at its Chicago factory told The New York Times they had worked 16-hour shifts during the pandemic to keep up with the increased demand for the snack giant’s most popular products, such as Oreos.

    Workers were also worried that their jobs would be sent to Mexico, similiar to what happened in 2016, when Mondelēz cut nearly 1,000 jobs at plants in Chicago and Philadelphia. 

    Mondelēz International spokesperson Laurie Guzzinati told Food Dive in August that the contract negotiations were “not about” moving jobs to Mexico and that the company was committed to keeping its U.S workforce. 

    Workers in Portland, Ore., launched the first walkout on Aug. 10, with signs reading “No contract, no snacks,” “Weekends are family time” and “Spit out that Oreo” populating the picket line. As the strikes spread to other states — Illinois, Virginia, Colorado and Georgia — they quickly made national headlines. Actor Danny DeVito and Vermont Sen. Bernie Sanders came out in support of the workers. 

    The snacks giant told Food Dive that it began negotiating with the union “as soon as the action took place in Portland.” In its last quarterly earnings call on Sept. 9, Mondelēz’s CEO Dirk Van De Put said that after the company requested contract changes to increase capacity at its plants as well as product inventory, it “foresaw that it would not be an easy conversation.” He said Mondelēz was making a new offer to the union, which included increased wages, a higher 401(k) match and more flexible hours. The company was not willing to reinstate its pension plan. 

    The new terms sealed the deal. In a statement after its members voted to approve the new four-year contract, BCTGM said that they “made enormous sacrifices” to reach a deal “that preserves our Union’s high standards for wages, hours and benefits for current and future Nabisco workers.” BCTGM did not respond to multiple requests for comment by Food Dive.

    The Kellogg strikes, meanwhile, may not be coming to a quick, amicable conclusion any time soon.

    BCTGM called for a strike a month after Kellogg announced plans to invest $45 million in restructuring its ready-to-eat cereal supply chain, which includes cutting more than 200 jobs at its Battle Creek factory. The company said it is shifting production to more efficient production lines, even as it struggled with shortages of factory line workers and truck drivers at many of its plants.

    BCTGM representatives said last week that Kellogg did not provide workers with a “comprehensive offer” during contract negotiations like it had stated.

    In a statement to Food Dive, Kellogg spokesperson Kris Bahner said the company is “disappointed by the union’s decision to strike,” and that its proposed new contract provides wage and benefits increases “while helping us meet the challenges of the changing cereal business.” Bahner said the company hopes to reach an agreement with the union soon. 

    Raising the stakes of negotiations even further: Kellogg filed a lawsuit on Tuesday against BCTGM in the U.S. District Court of Nebraska, saying that it “seeks to recover damages for ongoing breaches of a labor agreement.” The cereal giant said the union’s “improper actions” have the intention of inflicting “significant economic harm” to the company before a contract agreement is able to be met.

    What’s next for labor

    Despite this test of wills between labor and food manufacturers, the “ultimate leverage” for workers in 2021 is their ability to create negative publicity for their parent company through strikes to make them appear “union-busting” in hopes of spurring a consumer boycott of their products, said Erik Loomis, a labor expert and University of Rhode Island professor.

    Loomis said this can bring about more immediate benefits to unions compared to legal frameworks, which are often not on the side of workers and could take months or years to result in better contracts.

    The use of social media to spread organization efforts and make the public aware of working conditions makes today’s strikes different to those of the past, according to Simon with Temple University. In the case of Mondelēz, calls for a boycott of Nabisco snacks like Oreos and Wheat Thins gained traction on social media during the strikes, with users uploading photos of shelves stocked with unsold Oreos and Chips Ahoy! cookies at grocery stores.

    However, relying on public support to dictate change has its drawbacks. Simon said wage increases for food manufacturing workers is a larger “ideological hurdle” because many consumers ultimately may not be willing to pay more for food products to support higher wages. This is despite the fact that the annual mean salary of a food factory employee is under $33,000, significantly lower than the roughly $56,000 national average for all jobs, according to Bureau of Labor Statistics data. Food prices have also been rising during the pandemic as manufacturers pass along higher costs for ingredients, manufacturing, packaging and transportation. 

    Loomis expects strikes to continue due to the supply chain crisis, and as workers see more examples of successful organizing taking place.

    Meanwhile, under the Biden administration, the political climate is also friendlier to unions. The PRO Act (Protecting the Right to Organize), which passed Congress in March with five Republicans joining, is supported by The White House. One of its biggest elements — monetary punishments for companies that infringe on workers’ union-based rights — was added as part of the budget reconciliation bill package currently being debated in the Senate.

    “You’re going to see more strikes within the legal sense,” Loomis said. “Even outside of that, workers will take matters into their own hands when they feel it is necessary to do so.”

    Tyler Durden
    Thu, 10/07/2021 – 18:15

  • JPMorgan: Institutions Are Rotating Out Of Gold Into Bitcoin As A Better Inflation Hedge
    JPMorgan: Institutions Are Rotating Out Of Gold Into Bitcoin As A Better Inflation Hedge

    For much of the summer, when bitcoin was shedding its April 15 all time high of $63,000 by more than half, Wall Street was bombarded with weekly notes from JPMorgan’s cross-asset strategist Nikolaos Panigirtzoglou who would encourage selling, telling institutional clients that upward momentum had fizzled and that the only logical direction for bitcoin was lower. Those notes ended abruptly in July when Bitcoin reversed sharply and start its latest upward trek, and were instead replaced with warnings that there is too much euphoria in the market and thus the only logical direction for bitcoin was… you can guess the rest.

    Well, maybe not, because on Wednesday bitcoin soared higher, surging above $55,000 and once again sporting a market cap of over $1 trillion, and pushing the total market cap of all crypto markets above $2.3 trillion (still below the market cap of one Apple, Inc.), and suddenly the doom and gloom from JPM’s Panigirtzoglou has done a 180, with the quant writing in his latest Flows and Liquidity report published overnight that “the increase in the share of bitcoin is a healthy development as it is more likely to reflect institutional participation than smaller cryptocurrencies.”

    Blindsided by the surge in bitcoin, the JPM strategist was also wrong about the institutional preference for bitcoin vs ethereum, writing two weeks ago that “JPMorgan: Institutional Investors Are Piling Into Ethereum, Leaving Bitcoin” – starting in early October, the two largest cryptos have decoupled with Bitcoin clearly outperforming its smaller peer.

    Not surprisingly Panigirtzoglou addressed this latest flub, writing in his note that “we had argued before our position proxies based on CME futures had showed strong preference for ethereum vs. bitcoin by institutional investors during most of August and September. But as shown in Figure 16 this preference appears to be have been reversing since the end of September with a sharp rebound in the position proxy for bitcoin. This rebound reflects at least partly short covering as indicated by Figure 17 which depicts bitcoin futures liquidations across all futures exchanges. According to Figure 17 short bitcoin futures position liquidations appear to have picked up over the past week or two.”

    Having completed his damage control homework, Panigirtzoglou then shifted to the main thrust of his note, which was once again trying to explain why bitcoin was surging, where he offered three distinct reasons. While the first two have been extensively discussed here in the past few weeks, and we thus found them of marginal value, it was his third point that may have some insight especially when presented to gold bugs, namely that “institutional investors appear to be returning to bitcoin perhaps seeing it as a better inflation hedge than gold.”

    Here is what JPM believes has triggered the bitcoin recovery:

    1. the recent assurances by US policy makers that there is no intention to follow China’s steps towards banning the usage or mining of cryptocurrencies;
    2. the recent rise of the Lightning Network and 2nd layer payments solutions helped by El Salvador’s bitcoin adoption. According to President Bukele 2.7m Salvadorians had onboarded by early October the Chivo wallet which uses the Lightning Network. We have to admit we are skeptical of this second explanation; and
    3. the reemergence of inflation concerns among investors has renewed interest in the usage of bitcoin as an inflation hedge. Bitcoin’s allure as an inflation hedge has perhaps been strengthened by the failure of gold to respond in recent weeks to heightened concerns over inflation, behaving more as a real rate proxy rather than inflation hedge.

    The last point is notable, especially since we have frequently noted the growing price divergence between actual gold and its digital counterpart, which while not only providing a credible diversification tool to risk assets (compared the return of bitcoin to any other asset class YTD) has also shown a strong correlation with soaring inflation expectations in recent months, unlike gold which is sharply lower for the year.

    In the chart below, JPMorgan shows “tentative signs that the previous shift away from gold into bitcoin seen during most of Q4 2020 and the beginning of 2021 has started re-emerging in recent weeks.”

    If JPM is correct (this time) and if indeed bitcoin is emerging as not only an accepted inflation hedge – certainly better than gold – but as an asset JPM will push to its institutional clients, especially those sporting a balanced, 60/40 portfolio, the potential inflows into bitcoin and cryptos in general would be remarkable if even a small portion of the global 60/40 portfolio is reallocated toward the digital currency, an outcome One River’s CIO Eric Peters has been predicting for a long time.

    Tyler Durden
    Thu, 10/07/2021 – 17:50

  • $137 Million Racism Verdict Against Tesla May Be Cut In Half On Appeal
    $137 Million Racism Verdict Against Tesla May Be Cut In Half On Appeal

    A $137 million verdict against Tesla for failing to prevent racism against contract employee Owen Diaz may be cut in half if the automaker appeals. 

    Law professor Michael Selmi said the original verdict of punitive damages about 20 times as large as actual damages is “well in excess” of typical punishment, according to Bloomberg.

    Punitive damages are usually calculated at 9 to 1 or 10 to 1, the report notes. 

    This means the $137 million award is “unlikely to survive a challenge,” according to Selmi. 

    This doesn’t mean the jury didn’t send a strong message in the case. One juror told Bloomberg: “They claim to have a zero tolerance policy, but suspended rather than fired, and ignored rather than rectified or retrained their employees on proper prevention.”

    Recall, a jury awarded Diaz $137 million for enduring “racist abuse” while working for the company. 

    Diaz’s attorneys told CNBC that the case was only able to move forward because Diaz didn’t sign one of the company’s mandatory arbitration agreements. 

    One attorney, J. Bernard Alexander, said: “We were able to put the jury in the shoes of our client. When Tesla came to court and tried to say they were zero tolerance and they were fulfilling their duty? The jury was just offended by that because it was actually zero responsibility.”

    Owen Diaz, right. Photo by Bloomberg. 

    Diaz found the work at Tesla through a staffing agency in 2015 and told the jury that coworkers told him to “go back to Africa” and left racist graffiti in the company’s restrooom. They also left a racist drawing in his workspace, he told the court.

    Back in August, Tesla was forced to pay another former employee $1 million for enduring racism while working at the company. The former employee won a ruling that the company failed to stop his supervisors from calling him the “N-word” at the company’s Fremont factory.

    Melvin Berry won the discrimination award after a closed-door proceeding that came on the heels of “years of complaints from Black workers that Tesla turned a blind eye to the commonplace use of racial slurs on the assembly line,” Bloomberg wrote at the time. 

    Similarly, it was also alleged that the company was slow to remove graffiti containing hate symbols.

    Berry was hired by Tesla in 2015 and quit within 18 months. He claimed that when he confronted a supervisor about being called the “N-word” he was forced to work longer hours and “push a heavier cart”.

    Diaz commented on the verdict, stating: “I’m really happy to be able to shine a light on what happened. I want it to be less about me and more about what’s going on at Tesla. It’s like they saw right through the smoke and mirrors. They were courageous in saying ‘enough’ to this billion-dollar company and say, ‘This is not acceptable.”’

    Tyler Durden
    Thu, 10/07/2021 – 17:25

  • De Blasio Misused Public Resources For Family's Benefit: Report
    De Blasio Misused Public Resources For Family’s Benefit: Report

    New York Mayor Bill de Blasio misused public resources for his own political and personal benefit – and has not reimbursed the city for security costs related to his presidential campaign, according to the New York Times, citing a city investigation released on Thursday.

    Among other things, de Blasio deployed his security detail to move his activist daughter to Gracie Mansion, while the city spent nearly $320,000 for members of his security detail to travel during his presidential campaign trips in 2019.

    According to the Times:

    The report painted a deeply unflattering portrait of Mr. de Blasio’s reliance on his security detail — behavior that a top investigator said amounted to the mayor having his own personal “concierge service” to shuttle around relatives and staffers.

    It found that the use of a police van and personnel to help move Mr. de Blasio’s daughter was “a misuse of N.Y.P.D. resources for a personal benefit,” and that Howard Redmond, the police inspector in charge of the family’s security detail, had “actively obstructed and sought to thwart this investigation.”

    At a news conference, Margaret Garnett, the commissioner of the investigation department, said that Mr. Redmond had deleted communications and that he had tried to destroy his cellphone after he was told to surrender it. She said that she had referred Mr. Redmond’s conduct to the Manhattan district attorney’s office for a criminal investigation into obstruction of justice.

    De Blaso, who has just three months left in office as he mulls a run for New York governor, has faced multiple investigations into his fundraising practices during his time in office – including a 2017 incident in which prosecutors raised questions but ultimately declined to bring criminal charges.

    The mayor pushed back on Thursday, criticizing the findings as “naïve” and blaming advice he had received about using the detail.

    “I’m honored to be the mayor of this city, but my first responsibility is as a father and a husband,” he said, adding “And so I think of the safety of my family all the time.”

    Just not on his own dime, apparently.

    According to the report, de Blasio’s misuse of his security detail during his failed presidential campaign in 2019 ran the city nearly $320,000 – which includes hotels, meals, rental cars and flights for members of the detail – who accompanied de Blasio on multiple campaign stops.

    “Government resources should be used for government business,” said Betsy Gotbaum, the executive director of Citizens Union, a good-government group, adding “The mayor should reimburse these funds immediately.”

    More:

    The report also cited several occasions where the mayor’s detail was used to pick up his brother from the airport, and to drive him to pick up a Zipcar in Palmyra, N.J. The detail also drove Mr. de Blasio’s brother “to an Alamo rental car location without the mayor present.”

    Asked if Mr. de Blasio was using his security detail as “glorified Uber drivers,” Ms. Garnett said there was a culture of treating the officers like they were City Hall staffers and a “concierge service.”

    The report made recommendations to prevent the misuse of the mayor’s security detail in the future. One was for the Conflicts of Interest Board to publicly release advice for elected officials about the use of city resources in connection with political activities. -NYT

    In addition, de Blasio’s security detail was used to drive his son, Dante, between NYC and Yale University in Connecticut – with one detective recalling that it happened “approximately seven or eight times without the mayor or first lady present.”

    After Dante graduated, he continued to benefit from his father’s taxpayer-funded security detail, as well as rides from the police every weekday morning from Gracie Mansion to his workplace in Brooklyn.

    De Blasio’s office also hit back – citing several examples of threats his children faced, yet failing to explain why that should fall on the shoulders of New York taxpayers.

    Tyler Durden
    Thu, 10/07/2021 – 17:11

  • Afghan Gun Shop Bonanza: US-Supplied Weapons Including .50 Cals Being Sold To Public
    Afghan Gun Shop Bonanza: US-Supplied Weapons Including .50 Cals Being Sold To Public

    Since the botched US evacuation and withdrawal at the end of August, Afghanistan seems to have become one big gun bizarre where individuals with enough cash can purchase an array of American-supplied weapons and advanced equipment from right off the streets – no questions asked.

    A New York Times report has found not only small arms like pistols and military assault rifles are showing up in gun shops around major cities like Kabul and Kandahar, but two-way radios and even grenades and night vision goggles along with ample ammunition. The American military items were “originally provided to the Afghan security forces under a U.S. training and assistance program that cost American taxpayers more than $83 billion through two decades of war,” the report emphasizes.

    Illustrative image via Al Jazeera

    The NY Times report noted that American M4 carbines are going for about $4,000, and at least $1,200 for Beretta M9 handguns, with other NATO-supplied handguns common among Afghan police forces going for about $350. Many of these had been acquired by local gun dealers as the Taliban was gobbling up territory during the rapid US draw down. Desperate Afghan soldiers who hadn’t been paid would gain far more than a month’s salary by essentially pawning their weapons to local dealers.

    Russian-made rocket-propelled grenade launchers are also popping up in local gun shops, for about $1,100, and Kalashnikov rifles – perhaps already long ubiquitous in the region – going for an average of $900.

    One shop owner in the southern city of Kandahar told the Times: “American-made weapons are in great demand, as they work very well and people know how to use them.” Another dealer said: 

    “We used to work as a mobile team,” he said. “We would meet many government soldiers and officers to buy weapons from them. After that we would take those weapons to the Taliban and sell it to them, or to anyone who would give us a good price.”

    Pistols, hand grenades, and ammunition for sale in Kandahar province. AFP/Getty Images

    Further the Times report details that “A third gun merchant in Kandahar, who asked not to be identified because the Taliban had warned him not to speak to the news media, said dealers had sold weapons as large as anti-aircraft guns to the Taliban this summer.” 

    “Now, he said, he sold American-made M4s and .50-caliber machine guns, as well as weapons manufactured by other nations, including rocket launchers and Kalashnikov assault rifles,” she shop keeper added.

    Interestingly, the Taliban is trying to claim that it has imposed a strict accounting system for US weapons seized after the American troop exit, with a spokesman cited in the report as commenting on whether the weapons were being sold on the streets to the public: “I totally deny this; our fighters cannot be that careless.” He added dubiously: “Even a single person cannot sell a bullet in the market or smuggle it.”

    The Taliban official claimed they “are all listed, verified and are all saved and secure under the Islamic Emirate for the future army.” But the Times investigative team verified that significant amounts of American weapons were being sold openly in shops, and that dealers have continued to receive new merchandise in waves.

    Tyler Durden
    Thu, 10/07/2021 – 17:00

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