Pressure On China Heightens As Capital Outflow Chokes Liquidity

Authored by Simon Black, Bloomberg macro strategist,

The latest money data from China shows its capital-outflow problem is worsening, pressuring policymakers to allow a further weakening in the currency.

China released money and inflation data over the weekend. CPI and PPI were not great reading, but money supply data was even more downbeat: M2’s growth disappointed, while M1 growth is moldering, falling 1.4% year-on-year versus +1.2% expected.

Real M1 growth is now also contracting, which is ominous for China’s thus far gingerly-improving growth.

China has a capital-outflow problem that is putting pressure on liquidity.

It has a nominally closed capital account, but we can infer capital outflow by looking at the difference between the trade surplus and official reserves at the central bank, plus FX held at other banks.

Emerging markets typically have foreign reserves forming their monetary base due to the difficulty in reliably borrowing in their own currency cost efficiently. When capital leaves a country that can comfortably borrow in its own currency, the central bank can print money to replace the lost liquidity.

But in a country like China, capital outflow leads to a mechanical fall in domestic liquidity.

Cuts in the required reserve ratio, with another one expected next month, and interest-rate reductions can help alleviate this decline. Another lever is the currency. A weaker yuan eases the pressure on the fall in the monetary base as capital leaves.

USD/CNY continues to bump up against the upper band of the yuan fix, signaling the pressure the currency is under.

Foreign FX at banks is falling. Some of this likely due to capital outflow, but some is also due to China directing state banks to intervene to prevent the currency from weakening too far.

China continues to incrementally ease to try to kickstart a post-Covid traumatized economy.

With a low debt-to-GDP ratio, the central government has scope to borrow more. That is happening, with the Ministry of Finance today announcing it would issue the first CNY 40 billion of ultra-long special sovereign bonds of a total of CNY 1 trillion between now and November.

Despite all this, the stock market has been recovering most of the year.

Oversold conditions hinted a bottom was near.

Excess liquidity (real money growth minus economic growth) is supportive for the advance to continue, as even though real money growth is weak, so is economic growth, implying there is enough “free” liquidity to find its way into the market.

Tyler Durden Mon, 05/13/2024 - 21:00

UN Unleashes Controversy, Accusations Of Deception, Over 'Revised' Gaza Casualty Data

Since the start of the brutal Gaza conflict in the wake of Oct.7, a public 'info-war' has raged over the numbers of wartime casualties, especially on the Palestinian side. Something similar happened in the Syrian war, as well as in the ongoing Russia-Ukraine war: either side's true casualties became a matter of tightly guarded internal secrets on the one hand, and an issue of public propaganda to demean the enemy and hurt their global standing on the other.

Israel especially has faced immense international criticism of late amid allegations of 'genocide' given the very obviously high death toll among Gaza civilians. It is even the case that some Israeli officials have at times admitted to extraordinarily high civilian deaths during the campaign, but they have also blamed Hamas for using civilians as 'human shields' and launching rockets from densely populated urban areas.

Fresh controversy has been unleashed Monday over how the United Nations' Office for the Coordination of Humanitarian Affairs (OCHA) counts the war dead, and the extent to which it relies on Palestinian and Hamas sources:

The United Nations on Monday clarified that the overall number of fatalities in Gaza tallied by the Ministry of Health in Gaza remains unchanged, at more than 35,000, since the war broke out between Israel and Hamas on October 7.

The clarification comes after the UN humanitarian agency OCHA (United Nations Office for the Coordination of Humanitarian Affairs) published a report on May 8 with revised data regarding the number of Palestinian casualties in the war. The UN agency in its report reduced the number of women and children believed to have been killed in the war by nearly half.

The number was reduced because the UN says it is now relying on the number of deceased women and children whose names and other identifying details have been fully documented, rather than the total number of women and children killed. The ministry says bodies that arrive at hospitals get counted in the overall death count.

AFP via Getty Images

According to more via CNN:

UN spokesperson Farhan Haq told a daily briefing at the UN that the health ministry in Gaza recently published two separate death tolls – an overall death toll and a total number of identified fatalities. In the UN report, only the total number of fatalities whose identities (such as name and date of birth) have been documented was published, leading to confusion.

Earlier in the day a FOX headline had alleged that the new UN figures show that almost 50% less women and children were killed than previously reported by the UN office:

According to an infographic published in OCHA’s daily report on May 6, the number of women killed in the fighting was said to be 9,500, while the organization, which admits to relying on figures from the Hamas-run Ministry of Health in Gaza, claimed that 14,500 children had been killed since the war began on Oct. 7. 

Two days later, in its May 8 report, the U.N. agency appeared to have cut the number nearly in half, showing instead that some 4,959 women and 7,797 children had been killed so far in the war, which began after thousands of Hamas-led terrorists infiltrated southern Israel from Gaza, slaughtering more than 1,200 people, mostly civilians, and taking some 240 people hostage. 

Israel's long-running complaint is that the Hamas-Run Gaza Health Ministry consistently exaggerates the death figures, or else tends round up or impose demographic classifications even when details of a particular death are unknown or unverified. On Monday the ministry said that total deaths since Oct.7 have surpassed 35,000.

Critics of the UN have been quoted as saying, "U.N. agencies have consistently shown they prefer to trust the numbers coming out of Hamas-controlled sources rather than doing basic due diligence."

Pro-Israel critics of both the UN office and Gaza's health ministry have pointed to deep inconsistencies in accounting for casualties and have rejected the "fog of war" defense...

@Mike_Wagenheim @JNS_org: The Director of UNICEF Catherine Russell indicated in mid-March, she was citing Hamas health ministry numbers, 13,000 children had died in Gaza. The UN released totals yesterday showing that less than 8,000 children have died in Gaza as a result of the… pic.twitter.com/wCtvC7bxE5

— Hillel Neuer (@HillelNeuer) May 12, 2024

Israel has also long maintained that a huge proportion of the total number of Palestinian deaths were actually armed Hamas combatants - and herein lies the heart of the controversy and questions over discrepancies. 

However, it should be kept in mind that all parties to some extent admit that civilian casualties are tragically and horrifically high.

Even Prime Minister Benjamin Netanyahu himself has recently acknowledged a very high number of Palestinians civilians dead...

Death toll in Gaza acknowledged during the extensive Dr. Phil chat with Israel's Prime Minister Netanyahu:

Israel "killed 14,000 terrorists" & a "slightly bigger number, about 16,000 civilians."

Netanyahu states that those civilians "were killed in the places where the… pic.twitter.com/7WRRECDY2T

— Margaret Brennan (@margbrennan) May 12, 2024

Ultimately, Netanyahu blamed Hamas for the Palestinian deaths, but admitted Israel "killed 14,000 terrorists" & a "slightly bigger number, about 16,000 civilians" according to a recent interview with Dr. Phil in Israel.

The Israeli leader said those civilians "were killed in the places where the terrorists won't let them leave" - thus ultimately seeking to absolve his own forces from any responsibility. He has also echoed this in other recent media interviews:

"Fourteen thousand [Hamas terrorists] have been killed, combatants, and, probably around 16,000 civilians have been killed," Netanyahu told the “Call Me Back” podcast.

The estimate is slightly lower than the numbers provided by the Hamas-run Ministry of Health, which put the total death count at more than 35,000. The ministry’s estimate does not differentiate between terrorists and civilians.

Still, the grim reality remains that this far outpaces civilian deaths even from more than 2-years of the Ukraine war.

Tyler Durden Mon, 05/13/2024 - 20:40

Man Who Attacked Times Square Police Officers With Machete Sentenced To 27 Years

Authored by Ryan Morgan via The Epoch Times (emphasis ours),

A federal judge has handed down a 27-year prison sentence to the suspect who pleaded guilty to attacking a trio of New York Police Department (NYPD) officers in Times Square on New Year’s Eve 2022 in the name of radical Islamic extremism.

A file photograph of a judge's gavel. (Joe Raedle/Getty Images)

Trevor Bickford, 20, of Wells, Maine, pleaded guilty in January to multiple counts of attempting three attempted murder charges and three charges of assaulting U.S. employees or officers just over a year prior on Dec. 31, 2022. Together, the charges carried a maximum potential penalty of up to 120 years in prison.

On Thursday, May 9, U.S. District Judge Kevin Castel sentenced Mr. Bickford to serve 324 months in prison for the attack, a period lasting 27 years. The sentence is longer than the 10-year prison term Mr. Bickford’s lawyers requested but less than the 50-year prison term prosecutors had sought.

During the 2022 attack, Mr. Bickford allegedly shouted “Allahu Akbar,” an Arabic phrase meaning “God is great,” that perpetrators have shouted in past Islamic extremist incidents. Federal prosecutors had alleged and were prepared to present evidence at trial, including post-Miranda statements from Mr. Bickford, indicating he had desired to travel abroad to wage “jihad” but instead chose to carry out his attack closer to home.

The U.S. Department of Justice said Mr. Bickford had spent months consuming radical Islamist materials, “including materials promoting the Taliban and reflecting the teachings of Sheikh Abu Muhammad Al-Maqdisi, a prominent radical Islamic cleric who was a spiritual mentor of al Qaeda,” prior to carrying out the attack.

“The defendant’s brutal ambush of three New York City police officers keeping watch over New Year’s Eve celebrations was a premeditated act of terrorism,” FBI Director Christopher Wray said Thursday.

The New Year’s Eve attack began near the edge of a high-security zone where revelers were to be screened before joining the celebrations in Times Square. Mr. Bickford admitted to swinging a 13-inch machete-like chopping blade called a khukuri toward the heads of NYPD Officers Michael Hanna, Louis Lorio, and Paul Cozzolino, causing injuries to all three men.

Law enforcement officers recovered a 13-inch khukuri-style blade following an attack on three NYPD officers on Dec. 31, 2022. (U.S. Department of Justice photo/Released)

The three officers sustained lacerations to their heads during the attack.

Mr. Lorio said he could barely remain conscious after a large cut to his scalp required seven stitches that night. He told the court he now has migraine headaches several days a week and is likely to be forced into retirement after a decade-long police career as he copes with anxiety and depression that cause him to “burst out crying for no reason” or cripple him with waves of sadness. Therapy, though, has helped, he added.

Mr. Cozzolino, who had graduated from the police academy only a day before the attack, said some of his physical pain, such as headaches, will last forever.

As he swung his blade at the NYPD officers, Mr. Bickford also allegedly attempted to take one of the officer’s guns.

It was Mr. Hanna who, despite being injured, reportedly managed to put an end to the attack by drawing his service weapon and shooting Mr. Bickford in the shoulder.

Mr. Bickford’s legal team pointed to mental illness as a contributing factor in the attack.

“I understand that I left scars, physical and mental,” Mr. Bickford said when given the chance to address the court during his sentencing. “My mental illness took me down a dark path.”

Defense attorney Marisa Cabrera said her client is “deeply remorseful.“ She said her client came from a family with a background in U.S. military service and said her client had sought to join the military before his mental illness prevented that possibility. Ms. Cabrera said her client ”has returned to his old self with the aid of medication and treatment.”

Judge Castel noted Mr. Bickford’s history of mental health issues and his relatively young age as reasons for granting some leniency in his sentence.

NTD News reached out to Ms. Cabrera for comment following the sentencing decision but did not receive a response by press time.

The Associated Press contributed to this article.

From NTD News

Tyler Durden Mon, 05/13/2024 - 20:20

"Combat Illegal Corporate Behavior" - Dem Lawmakers Urge Biden To Use Executive Action Against High Food Prices 

Greedflation is a myth, and Democrats are well aware of this. However, they will never acknowledge that corporate greed isn't the root cause of inflation, as greed tends to be constant in the economy. What changed is the overstimulation of the economy through failed Bidenomics, which involves spending $1 trillion every 100 days. 

In the early days of Russia's 'special operation' in Ukraine, the Biden administration was able to scapegoat any failed economic policy on the 'Putin Price Hike' narrative - but not so much anymore - as they've pivoted the propaganda cannon from Putin to mega-corporations through their cheerleaders at leftist corporate media outlets. Now it's all about popular buzzwords 'greedflation' and 'shrinkflation.' 

Shown below via Bloomberg data, headlines featuring 'greedflation' in corporate media spiked in the summer of 2023, right around the time the administration launched the Bidenomics propaganda campaign. We all know Bidenomics has stoked a complete inflation shitstorm. However, Biden's team is giving greedflation one last shot ahead of the November presidential elections to deflect blame on corporations for why working poor Americans can no longer afford to pay rent, eat at restaurants, afford the $1,000 monthly auto loan, and any other luxuries they were accustomed to before the worst inflation mess since the 1970s. Basically, Goldman's brightest warned the other day: low-income consumers are in trouble. 

We suspect the greedflation narrative won't stick—just like the failed Bidenomics campaign—because Americans are waking up to the out-of-control spending in Washington, DC. 

But anyway, Democratic Senator Elizabeth Warren, who once identified as a Native American, and other leftist lawmakers penned a very public letter (all about optics) to the Biden administration, requesting the immediate use of executive action to lower food prices. 

"We commend the important steps your administration has recently taken on this issue, including steps to combat illegal and unfair corporate behavior, encourage competition in the food and grocery sectors, and more. The federal government should use every possible tool to lower food prices," Warren and other lawmakers wrote. 

They continued, "We believe you can exercise your executive authority to take additional action to address rising food prices without congressional action. Americans are facing sky-high food prices, caused by excessive price gouging by food and grocery giants." 

Democrats begging for price controls sounds like what communist or socialist lawmakers in third-world countries do. Yet, these lawmakers never learn a proper lesson (look at Cuba, North Korea, and Venezuela), where imposing price controls triggers shortages or surpluses, longer lines, lower quality products, and, of course, misallocation of products. 

But, honesty, Democrats could care less. They have a mission of spending to bankrupt the nation literally, somehow lower prices in an inflation storm, and enable illegal aliens to vote. 

Instead of blaming corporations, let's remind readers again that overstimulating the economy generates price increases and windfall profits, so it's not smart for lawmakers to do so. And this overstimulation, which Duquesne Family Office Chairman & CEO Stan Druckenmiller pointed out last week, is likely one of the biggest economic policy errors ever:

If I was a professor, I'd give them an F. Basically, they misdiagnosed COVID and thought it was -- we were going into a depression. The Fed did, too. I worried about it, too, in early days. The Fed eventually pivoted, better late than never. Treasury -- Treasury is still acting like we're in a depression.

We outlined last summer that "stealth stimulus" was propelling Bidenomics, with the government spending  $1 trillion every 100 days. Now, with stagflationary threats emerging, the US economic situation is quickly deteriorating. 

And here's what comes next when the government starts calling for price controls, as explained by Alt-Market's Brandon Smith:

This same pattern has been witnessed from 1920s Weimar Germany to 1970s America to 1990s Yugoslavia to 2000s Argentina and Venezuela and beyond. But what happens next? In each case the trend leads first to price controls on producers and distributors, which ultimately fail. Then comes government rationing and the complete takeover of necessities including the food supply.

Smith continued:

The problem is simple, price controls lead to lost profit incentive which leads to less production. Less production leads to less supply and less supply leads to rising prices. This is on top of the root cancer that is fiat money creation. Politicians will rarely if ever address the actual cause of an inflationary crisis:  The government and the central banks. Instead, they try to blame free markets, “greedy” businesses and profit taking in times of distress.

He concluded:

Historically speaking, though, both Democrat and Republican presidents have tried price controls in the past. Public pressure must be applied (at the state level at minimum) to stop this from happening. As convenient as it might seem to blame producers and distributors, the real threat is coming from governments and banks. We cannot let the people who caused the crisis also benefit from it by giving them even more power.

It's a slippery slope from here... 

*    *    * 

Here's the full letter:

Tyler Durden Mon, 05/13/2024 - 20:00

'I Gave Up Shame Years Ago': Clinton Denounces Trump For Doing What She Did In 2016

Authored by Jonathan Turley,

“I gave up shame years ago.” Those words from actor John Lithgow appear to have been taken to heart by Hillary Clinton who has severed any sense of self-awareness or shame in her public comments. Lithgow, who played Bill Clinton in Broadway production of Hillary and Clinton, appears to have inspired the subject of his play. In a recent interview, Hillary Clinton heralded the prosecution of former president Donald Trump in Manhattan as “election interference” by keeping “relevant information” from voters before an election. For those of us who criticized Clinton for the funding of the infamous Steele dossier, it was a perfectly otherworldly moment.

In the interview, Clinton went after the Supreme Court for delaying a trial of Trump despite the push by Special Counsel Jack Smith for a verdict before the election. She then left many in disbelief with the following statement:

“And the one going on now currently in New York is really about election interference. It is about trying to prevent the people of our country from having relevant information that may have influenced how they could have voted in 2016 or whether they would have voted.”

In the same election, it was Hillary Clinton’s campaign that lied about funding the Steele dossier and then hiding the funding as a legal expense through then Clinton General Counsel Marc Elias.

(MSNBC/via YouTube)

The Clinton campaign staff has never been known for transparency. Buried in the detailed account is a  footnote stating that Elias “declined to be voluntarily interviewed by the Office.” Likewise, John Durham noted that “no one at Fusion GPS … would agree to voluntarily speak with the Office” while both the DNC and Clinton campaign invoked privileges to refuse to answer certain questions.

Elias, his former partner Michael Sussmann, and the campaign were later found involved in not just spreading the false claims from the Steele dossier but other false stories like the Alfa Bank conspiracy claim.

It was Elias who managed the legal budget for the campaign. We now know that the campaign hid the funding of the Steele dossier as a legal expense.

New York Times reporter Ken Vogel said that Elias denied involvement in the anti-Trump dossier. When Vogel tried to report the story, he said, Elias “pushed back vigorously, saying ‘You (or your sources) are wrong.’” Times reporter Maggie Haberman declared, “Folks involved in funding this lied about it, and with sanctimony, for a year.”

Elias was also seated next to John Podesta, Clinton’s campaign chairman, when he was asked about the role of the campaign, he denied categorically any contractual agreement with Fusion GPS. Even assuming that Podesta was kept in the dark, the Durham Report clearly shows that Elias knew and played an active role in pushing this effort.

Elias is now ironically advising Democratic campaigns on election ethics and running a group to “defend democracy.” He is still counsel to the Democratic Congressional Campaign Committee (DCCC) headed by Rep. Suzan Kay DelBene, D-Wash. Elias was later severed by the Democratic National Committee from further representation and has been previously sanctioned in federal court in other litigation.

Notably, the Federal Election Commission sanctioned the Clinton campaign for hiding the funding as a legal expense. The Clinton campaign litigated the issue and insisted that the term is broadly used to cover a wide array of payments through counsel. That is precisely what the Trump team is arguing in the Manhattan case.

Lying to the media and hiding the funding was a conscious effort to hide “relevant information that may have influenced” voters. With the help of the media, these false stories were spread throughout the country and later were used to start the Russian collusion investigation.

Famous philosopher and mathematician Blaise Pascal once declared that “the only shame is to have none.” Hillary has finally achieved that ignoble status. She appears now to have lost even the capacity for shame.

Tyler Durden Mon, 05/13/2024 - 19:40

Pro-Israel PAC Guns For Massie - Did Speaker Johnson Encourage Attack?

A prominent pro-Israel super PAC is gunning for Republican Congressman Thomas Massie, in retribution for his many recent votes against bills that advance Israel's agenda in Washington. The group may have had some high-placed encouragement: Massie says House Speaker Mike Johnson recently threatened to sic the Israel lobby on Republicans who didn't toe the pro-Israel line. 

In March 2020, Massie explains his effort to prevent a massive Covid stimulus package from being adopted without a recorded vote (Susan Walsh-AP) 

The vaguely-named United Democracy Project -- the independent campaign-spending arm of the mighty American Israel Public Affairs Committee (AIPAC) -- announced that it's pouring $300,000 into advertisements on Fox television affiliates in Massie's home state of Kentucky. "We are trying to shine a light on the radical anti-Israel record of Tom Massie," spokesman Patrick Dorton told the Louisville Courier Journal. "We want every single voter in the state of Kentucky to know about his anti-Israel actions."

With its statewide attack, AIPAC likely intends to influence the 2026 election as well: McClatchyDC reports that Massie is considered to be one of three favorites for the 2026 Republican nomination to replace retiring Senate Majority Leader Mitch McConnell. 

Clearly crafted to appeal to the religious right, the 30-second ad says "Israel, the Holy Land under attack by Iran, Hamas, Hezbollah...and Congressman Tom Massie," and points to 15 Massie votes in April against measures favored by Israel's advocates inside the United States. The ad concludes by saying, "Everyone who cares about the Holy Land needs to know: Tom Massie is hostile to Israel."  

https://t.co/hEJYFaBcPp pic.twitter.com/yoIdIg0pEX

— United Democracy Project (@UnitedDemocProj) May 9, 2024

Rather than having "attacked the Holy Land," Massie has simply tried to defend the US Treasury from being plundered for the benefit of a foreign country that's among the world's richest.

When Speaker Mike Johnson announced he would advance a bill to give another $14.3 billion to Israel, Massie -- knowing he would face the wrath and perhaps the dollars of the Israel lobby -- tweeted that he would vote "no." His rationale: "Israel has a lower debt-to-GDP ratio than the United States. This spending package has no offsets, so it will increase our debt by $14.3 billion plus interest."

Massie also tried to defend the First Amendment, as one of only 19 representatives voting against the Antisemitism Awareness Act. Still pending in the Senate, it characterizes various statements about Israel as being antisemitic, subjecting colleges and universities to civil rights enforcement action if someone says the wrong thing. “Policing speech, religion and assembly is not the role of the federal government. In fact, it’s expressly prohibited by the U.S. Constitution,” said Massie. 

Kentucky's Republican primary will be held on Tuesday, May 21. Massie, a star of the libertarian movement, is being opposed by two GOP challengers, Eric Deters and Michael McGinnis. 

Via his campaign's X account, Massie said the pro-Israel super PAC was targeting him "because I am often the lone Republican for freedom of speech, against foreign aid, and opposed to wars in the Middle East." He added that he was "urgently requesting" like-minded Americans to help him thwart the attack by donating to his campaign.   

Massie told the Courier Journal there's reason to think Johnson may have encouraged the AIPAC to give Massie's primary challengers some indirect help:

"This week in our GOP conference meeting, as members groused about blowback from the latest anti-antisemitism resolution, Speaker Johnson pledged to call his contacts at Jewish/Israel groups if [dissident GOP representatives] mustered opposition...

This, and the timing of the ad announcement, does raise the question of whether the ads were suggested by or sanctioned by Speaker Johnson."

In addition to now being creatively accused of attacking the Holy Land, Massie has endured baseless accusations of antisemitism, including this gem from the editor of Commentary magazine: 

Of course you’re a no, you disingenuous piece of anti-Semitic filth. https://t.co/pI4FM6hdm5

— John Podhoretz (@jpodhoretz) February 4, 2024

Massie has previously suggested that AIPAC's role in US politics amounts to "foreign interference in our elections." Critics called that sentiment an antisemitic "trope." Undeterred, Massie last week posted a poll asking if AIPAC should be forced to register as an agent of Israel under the Foreign Agents Registration Act (FARA).  

Foreign interest lobbying group AIPAC is running $300,000 of ads as part of a pressure campaign to influence my votes in Congress.

The Foreign Agents Registration Act requires agents of foreign principals to register & disclose certain information. Should AIPAC register w/FARA?

— Thomas Massie (@RepThomasMassie) May 10, 2024

Tyler Durden Mon, 05/13/2024 - 19:20

Will The Fed Lose Control?

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

According to new reports from the Social Security and Medicare trustees, Social Security and a Medicare fund that pays for hospital expenses will both begin running deficits in 2035 and 2036. Disappointingly, but not surprisingly, Congress was too preoccupied spending billions more on military aid for foreign countries and banning TikTok to pay attention to the looming bankruptcy of the two largest federal entitlement programs.

Many in Congress no doubt believe they can ignore the impending bankruptcy of Social Security and Medicare because they can count on the Federal Reserve to do the “dirty work” of cutting real benefits and raising taxes.

This result can be produced via the hidden, and regressive, “inflation tax.”

The Federal Reserve makes the debt-financed welfare-warfare state possible by monetizing the federal debt.

This is one reason why, even though interest on the debt is now the third largest item in the federal budget behind Social Security and Medicare and ahead of military spending, there are so few in Congress serious about cutting welfare or warfare. Those few who seek real spending cuts in welfare are smeared as “heartless” while those seeking real cuts in warfare are smeared as “anti-American” by the uniparty.

The government’s excessive spending and debt is leading to what some economists call “fiscal dominance.” Fiscal dominance occurs when a central bank must prioritize monetizing ever higher levels of government debt, giving Congress de facto control over monetary policy.

The Federal Reserve’s purchase of federal debt will result in price inflation. It will also encourage more government spending by reinforcing the uniparty delusion that, as former Vice President Dick Cheney said, “deficits don’t matter.” The Federal Reserve’s inflationary policies artificially lower the interest rates, which are the price of money. The artificially low interest rates distort the signals sent to investors and entrepreneurs, leading to malinvestment. This creates bubbles resulting in illusionary prosperity. Eventually, economic reality will catch up with the Fed-created illusions and the bubbles will burst, causing an economic downturn.

The next economic crisis will likely either be caused by or result in a rejection of the dollar’s world reserve currency status. Congress will be forced to make drastic cuts in spending while the Fed will be enabled to monetize the debt. This will result in massive public unrest potentially resulting in violence, the rise of authoritarian movements on the left and right, and increasing authoritarianism.

The only way to avoid this fate is for a critical mass of Americans to demand Congress immediately begin rolling back the welfare-warfare state, starting with our bloated military budget. The savings from this can be used to help protect those currently reliant on government welfare and entitlement programs as those programs are phased out and the job of providing aid is returned to private charities, churches, and local communities. Congress should also rein in the Federal Reserve by passing the Audit the Fed bill, legalizing alternative currencies, and forbidding the Fed from purchasing government debt.

Since the 2008 meltdown, Federal Reserve apologists have spent a lot of time saying that Audit the Fed puts Congress in charge of monetary policy while ignoring the fact that a real threat to the central bank’s autotomy is the growth in federal spending and debt. The goal, though, should be to abolish the Federal Reserve, not protect it. Those who truly want a monetary system free from political interference should join the movement to restore government’s constitutional limits and separate money and state.  

Tyler Durden Mon, 05/13/2024 - 19:00

"Sand Volcano" Emerges In Central Florida

Devo Seereeram, a Consulting Geotechnical Engineer and the owner of Devo Engineering has deemed the anomaly that has emerged in Central Florida to be a "sand volcano". 

The issue surfaced at a 300-million-gallon wastewater reservoir located west of State Road 429 in Apopka, near Golden Gem Road. This facility holds water intended for irrigating Apopka, Altamonte Springs, and nearby regions. It stores excess rainwater for use during dry periods, according to FOX 35.

But mother earth has responded that the facility may not be located at the best possible location, Seereeram said: "This is ‘Mother Nature’ telling us we can't do certain things, and we are going to respect that and respond and modify."

Speaking about the facility, Seereeram continued: "It’s one of the most important facilities we can be built in Central Florida. From an environmental standpoint, there's absolutely no way we can keep putting treated wastewater into our streams, directly into the streams anymore."

FOX 35 reported that the construction team excavated too deeply and excessively thinned the land while building the storage area. This overburdened the ground, leading to a collapse similar to snow breaking through a roof.

A sinkhole formed, and the combined air and water pressure ruptured a protective tarp, releasing 130 million gallons of water back into the upper Floridan aquifer and forming a sand volcano.

Devo Engineering has previously addressed similar issues and is planning to reinforce and fill in parts of the land, reducing storage capacity but preventing further sand volcanoes. The engineers are now racing against time to complete the repairs before Central Florida's rainy season begins, the report says.

Seereeram concluded: "Here we have a situation where we have, fortunately, discovered it early. But it gave us enough time. So it was not a catastrophic release of water like a dam failure."

What's the over/under on how long it takes Democrats to blame this obviously man-made anomaly on climate change, before using it to try and pass trillions of dollars in new spending?

Tyler Durden Mon, 05/13/2024 - 18:40

Leftists Triggered By Trump Policy To Potentially Execute Child Sex-Traffickers

Authored by Steve Watson via Modernity.news,

Leftist outlet The Huffington Post is upset that Donald Trump has suggested that the death penalty should be extended to drug kingpins and child sex traffickers.

In an article headlined “There’s A GOP Plan For An Execution Spree If Trump Wins The White House,” the outlet points to remarks Trump made two years ago.

The Huffington Post is freaking out that #DonaldTrump allies are planning to expand the #deathpenalty to include sexual abuse of children - There's A #GOP Plan For An Execution #Spree If Trump Wins The White House - https://t.co/07ovo9g9Sv

— Jeff Hertzog (@_jeffhertzog) May 11, 2024

He stated that while it “sounds horrible” to advocate for the death penalty, countries that don’t have a “drug problem” are “those that institute a very quick trial, death penalty sentence” for traffickers.

“You execute a drug dealer, and you’ll save 500 lives, because they kill on average 500 people,” Trump asserted at the time.

The article cites former Trump DOJ official Gene Hamilton, noting that he previously advocated pursuing the death penalty for violent criminals, particularly those convicted of sexual abuse of children. 

Hamilton wrote that the DOJ “should also pursue the death penalty for applicable crimes—particularly heinous crimes involving violence and sexual abuse of children—until Congress says otherwise through legislation.”

By referring to past court decisions, the piece subtly argues that the death penalty for child rape “would violate constitutional protections against cruel and unusual punishment.”

It also negatively points to efforts in states such as Florida to expand the death penalty to such horrific crimes, before pointing out that Joe Biden has previously opposed execution entirely, but is currently remaining silent.

The article then points to multiple bills in the House and Senate that seek to abolish the death penalty for any crime.

Why is the left apparently triggered by the suggestion to extend the death penalty to make it an option for convicted violent child rapists?

*  *  *

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Mon, 05/13/2024 - 18:20

Fast Casual Dining Foot Traffic "Plummets" Across New York-New Jersey As Consumer Cracks 

The cost-of-living squeeze is crushing low-income consumers, so much that Goldman's top consumer trader, Scott Feiler, recently pointed out that his desk is "getting bearish on consumer and our soft landing basket." Days ago, Goldman analysts led by Bonnie Herzog provided clients with a fascinating list of corporate America's warnings about mounting cracks materializing in the consumer space. 

A Bloomberg report, citing new data from research firm Black Box Intelligence, continues the theme of the low-income consumer under severe financial stress. This data shows that fast-casual dining foot traffic across New York and New Jersey has abruptly plunged into early spring. 

The slide in foot traffic comes as Red Lobster is considering a bankruptcy filing, and TGI Friday's is in distress, closing stores and working with Guggenheim Partners to address its debt problem as sales decline. 

Moody's Ratings wrote in a report last week that rising menu prices have slowed fast-casual sales as the working poor ditch restaurants for food at home. 

Dennis Cantalupo, chief executive officer of credit-rating and consulting shop Pulse Ratings, said restaurant chains relying on that demographic "are feeling it the most.' 

Cantalupo warned operators are concerned about a more prolonged slump since price-conscious consumers are eating at home. 

The big takeaway here is that working-poor consumers are pulling back on restaurant spending as pandemic excess savings have been depleted and credit card debt has hit insurmountable levels, just to survive the era of failed Bidenomics. 

Tyler Durden Mon, 05/13/2024 - 18:00

Mayor Johnson Deepens Concerns About What Side He Will Be On If DNC Protesters Become Lawbreakers And Challenge Cops

By Mark Glennon of Wirepoints

Whose side will Chicago Mayor Brandon Johnson be on if protesters become lawbreakers at the August Democratic National Convention in Chicago, and how will he direct police to respond?

Concerns that Johnson will side with lawbreakers already are common, and Johnson’s  interview published Sunday by the Chicago Tribune should increase those concerns.

Mayor Johnson on MSNBC

The interviewers asked Johnson whether he agreed with police who forcibly broke up a recent protest at the Chicago Art Institute, arresting many protesters. Johnson answered that his primary concern was protesters’ rights. The reporters pressed further, asking, “Was the final response, the outcome — which led to dozens of arrests — was that necessary?”

Johnson’s answer:

Well, in some instances — and I’ve been a part of these demonstrations — in some instances, arrests are part of the objective. I’ll say it like that. I’ve taken arrest before. It’s not unprecedented for demonstrators to take arrest. The most important thing, though, here is that the First Amendment? Protected. Keeping people safe, it’s the primary goal, and we’ve done both of those.

In other words, getting arrested for breaking the law while protesting is no biggie.

The Chicago Tribune’s editorial board recognized the concern about what side Johnson will be on. “Democratic bosses,” their editorial says, “have figured something else out too. Chicago’s activist mayor is sympathetic to the pro-Palestinian protesters and likes to refer to the police as an entity separate from himself rather than under his control. Thus, he cannot be counted on to protect the convention and the party’s prospects.”

Others noting the same concern include the Wall Street Journal. A column there asked last week whether Democrats can trust Johnson to protect the convention. The city’s weak response to protests at the University of Chicago, the Journal said, added to questions about the political will to enforce the law.

The deliberate weakness in that response is now clear. In a Saturday MSNBC interview with Rev. Al Sharpton, Johnson said expressly that he opposed the university’s plan to clear the camp and assistance from the Chicago police.

Even left-leaning Politico wrote in some detail last week about concerns over what side Johnson will be on. From Politico: “There’s already a joke going around Democratic strategist circles that the main difference between 2024 and 1968 is that the Chicago mayor this year will be on the side of the protesters, not the cops.”

It’s no joke.

Tyler Durden Mon, 05/13/2024 - 17:40

Trump Tells Massive Crowd: "Day One" Executive Order Will Target Offshore Wind To Save Whales

Former President Trump revealed at a large rally on Saturday evening in Wildwood, New Jersey, that if re-elected, he would sign an executive order on his first day in office to address offshore wind development along the East Coast. 

Trump told a crowd of thousands that windmills are killing whales and fish. He pointed out that only a small number of whales died before wind farm developments, but now, whales are dying "all the time." 

A dead humpback whale washed up at Atlantic City on Jan 7, and was observed to have head trauma (via @AtlanticCity911 on Twitter) 

"We are going to make sure that that ends on day one," he said, adding, "I'm going to write it out in an executive order."

Made the claim back in 2022 President Trump would end offshore wind development on day one, in fact President Trump will sign an executive order on day one. FULL STOKE!!!!!!!!!!!!!!!!!!!!! pic.twitter.com/TJhxLmJU49

— Patrick Jay (@Jaysay1776) May 12, 2024

Trump has said before, "Windmills are causing whales to die in numbers never seen before." He made that comment at a campaign rally in South Carolina in 2023.  

(Illustration by The Epoch Times)

"They're washing up ashore. I saw it this weekend, three of them came up. You wouldn't see it once a year. Now they're coming up on a weekly basis," he continued. 

Trump is correct. Since 2016, or around the time offshore wind development began to ramp up, there has been a noticeable uptick in whale deaths along the East Coast. 

Data from NOAA Fisheries shows humpback whale strandings from Maine to Florida have surged post-2016. 

Meanwhile, New Jersey has been on a quest to distinguish itself as the top offshore wind state on the east coast. The Garden State has approved three offshore wind farms and is soliciting more requests. 

However, left-leaning corporate media has routinely blasted Trump for attacking wind farms - calling his attacks "largely baseless." Bloomberg, which prides itself in ESG, said, "There is no evidence linking offshore wind development to whale deaths." 

Regarding the promise of the executive order, we're sure he'll fulfill it - just add it to the stack of executive orders that will likely be released on day one (only if he gets reelected). 

Tyler Durden Mon, 05/13/2024 - 17:20

Squeezed For Decades, America's Working Class Is Finally Up Against The Wall

Authored by Charles Hugh Smith via OfTwoMinds blog,

The net result is America's working class is up against the wall, maxed out.

Let's start by defining the working class in a meaningful way rather than by tossing around meaningless income metrics which implicitly suggest that exceeding some semi-arbitrary income bracket will magically lift a working class household into the middle class.

In the real world, in terms of class status it doesn't matter whether the household income is $30,000 or $130,000; what matters is 1) ownership of assets that have bubbled higher in the Everything Bubble which then provide a buffer of wealth that can be tapped when misfortune strikes, and 2) a cost of living that is consistently and significantly lower than net income, enabling regular savings.

In other words, a household earning $130,000 that owns negligible assets / wealth buffers and consumes every dollar of income just to service its debts and pay all the other bills is working class, while the household earning $30,000 that owns meaningful assets and frugally gets by on $20,000 a year is middle class. The household that earns $130,000 (generally considered a middle class income) but has a net worth is $2 million, no debt and an annual cost of living of $90,000 is upper middle class.

Income by itself misses what's truly important: wealth buffers and a lifestyle that leaves surplus income to be consistently saved and invested.

While we focus on the alarming leap in the cost of living over the past three years, we lose focus on the larger issue: America's working class has been squeezed for decades by the relentless decline in the purchasing power of wages. I explained how to calculate this in We Feel Poorer Because We Are Poorer: Here's Proof (December 4, 2023).

The devastating decline in the purchasing power of wages since 1975 is beyond dispute. As I noted in the above post: "The status quo cheerleaders in the Ministry of Truth ignore the $5,000 annual cost increases in essentials while trumpeting the $100 decline in occasional discretionary purchases. Your rent costs you 100 more hours of work, but you save $100 on airfare, so it all evens out. Um, no."

This chart reveals that the decades of hyper-globalization-hyper-financialization transferred trillions of dollars from wage earners to owners of capital. I explained this in Labor Rising: Will Class Identity Finally Matter Again? (May 1, 2024).

As the purchasing power of wages fell and costs increased, it became more difficult to save earnings and climb the ladder of social mobility. The net result is the bottom 50%'s share of the nation's financial wealth has plummeted to a rounding error / signal noise: 2.6%. A great many of the bottom 80% households have little financial wealth to serve as buffers when misfortune strikes.

Many of the bottom 90% of households own a family home....

But "ownership" doesn't measure equity or mortgage debt. This chart shows that the bottom 90% "own" the majority of debt that drains income, while the wealthy own income-producing assets:

Meanwhile, with interest rates rising, the cost of servicing debts is soaring: since the majority of debt is "owned" by the working class and middle class, the higher interest payments burden the many, not the few.

The working class households which don't own a home are being squeezed by sharply higher rents: as for buying a house now, that is a luxury only affordable to the top layer of American households.

The net result is America's working class is up against the wall, maxed out: whatever lines of credit that were available have been tapped (credit cards, "buy now, pay later" credit, etc.) and wage increases are soaked up immediately by higher costs for virtually everything.

The ladder of universally accessible social mobility has been broken. The stresses generated are already visible, but the political-social consequences are still ahead, and once they manifest, economic earthquakes will follow.

*  *  *

Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

Tyler Durden Mon, 05/13/2024 - 17:00

China's Broadest Credit Metric Just Turned Negative For The First Time Since 2005

China has lots of economic problems (even if the market has been surprisingly generous in the past 4 months and allowed Chinese stocks to surge despite any actual economic rebound or recovery), but this is a new one.

It is hardly a secret that for much of the past 15 years, and certainly in the aftermath of the Lehman collapse, it was China's unstoppable credit creation that lifted the world out of a deflationary shock time and again, and indeed it is a fact that as long as we can remember, China's broadest credit aggregate, Total Social Financing, was always positive, come rain, blizzard, or shina.

But in a stunning reversal, the latest credit data published over the weekend by the PBOC revealed that for the first time since late 2005 - nearly 20 years ago - China's Total Social Financing turned negative!

The drop was thanks to a combination of weak loan demand and slow pace of bond issuance, but whatever the reason, there is a bigger problem: China can't grow the economy without injecting billions (or trillions) of credit into it. Yet, without credit demand - at any interest rate or price - all the money that China does inject will go into various asset bubbles, which means we are back at square one.

Here are the details:

• New CNY loans: RMB 730bn in April (RMB loans to the real economy: RMB 331bn) vs. Bloomberg consensus: RMB 914bn
• Outstanding CNY loan growth: 9.6% yoy in April (+8.0% mom sa ann); March: 9.6% yoy (+8.7% mom sa ann).
• Total social financing (TSF flow, reported): RMB -199bn in April, vs. Bloomberg consensus: RMB 941bn.
• TSF stock growth: 8.3% yoy in April, vs. 8.7% in March. The implied month-on-month growth of TSF stock: 3.5% in April (seasonally adjusted annualized rate), vs. 8.2% in March.
• M2: 7.2% yoy in April (-1.6% mom sa ann estimated by GS) vs. Bloomberg consensus: 8.3% yoy, GS forecast: 8.0% yoy. March: 8.3% yoy (+6.4% mom sa ann).

According to Goldman, it wasn't just the negative print in TSF that conveyed weak credit demand: so did the composition of RMB loan data which showed household loans contracted in April, and corporate loans expanded mainly due to a surge in bill financing. As the bank further adds, the broad weakness in money and credit data likely reflects

1. the focus of policymakers on optimizing the structure and effectiveness of loan extension;
2. more stringent measures to tackle “idle money circulation” in the financial system (e.g., corporates’ borrowing for redeposits).
3. deposit outflows from banks to financial markets (particularly the bond market).

Now a closer look at the narrative behnid the numbers:

1. Total social financing (TSF) flows turned negative in April, the first time since October 2005, significantly below market expectations. The disappointing TSF data was driven by weak loan demand and slow pace of bond issuance. Bill financing surged as banks tried to fill in unused loan quota, which reduced the amount of undiscounted bankers’ acceptance bills. Shadow banking credit (undiscounted bankers’ acceptance bills, trust loans, entrusted loans) declined by RMB 246bn vs. an expansion of RMB 223bn in March. Bond net issuance fell sharply in April compared with March: Government bond net issuance moderated to RMB 159bn vs. RMB 478bn in March, while corporate bond net issuance was negative in April after seasonal adjustment (RMB -88bn vs. RMB 260bn in March). In year-over-year terms, TSF stock growth slowed to 8.3% from 8.7% in March. The sequential growth of TSF stock moderated to 3.5% mom sa annualized in April from 8.2% in March. For
2. New CNY loans missed market expectations notably as well in April, and the sequential growth of RMB loans slowed to 8.0% mom sa annualized from 8.7% in March. That said, year-over-year growth of RMB loans was flat at 9.6% in April. The composition of new loans showed weak credit demand as household loans contracted and bill financing grew much faster than medium-to-long term corporate loans. After Goldman's seasonal adjustment, household loans contracted by -0.4% month-over-month annualized in April, vs +5.6% in March. Bill financing rose 70.4% month-over-month annualized in April (vs. -3.2% in March), while corporate medium-to-long term loans growth accelerated modestly to 11.8% month-over-month annualized in April (vs. 9.5% in March). The sizeable gap between “total new loans” (which was RMB 730bn in April) and the “new RMB loan under TSF” (which was RMB 331bn in April) was mainly due to the RMB 261bn expansion of loans to non-bank financial institutions.
3. M2 growth slowed materially to 7.2% yoy in April (vs. 8.3% in March). On a sequential basis, M2 declined by 1.6% month-over-month annualized, vs +6.4% in March. Year-over-year growth of M1 turned negative in April, the first time since January 2022. The Financial News, a media outlet affiliated with PBOC, reported that the slowdown of M2 growth was driven by three factors: 1) deposit outflows from banks to non-bank financial institutions for higher returns of wealth management products, thanks to falling bond yields and lower deposit rates (more on this shortly); 2) more stringent measures to address “idle money circulation” (e.g., corporates’ borrowing for redeposits); 3) lower incentives for local governments to boost deposit/loan growth due to changes in accounting methods of value-added in financial sectors (in an effort by the central government to improve the GDP measurement).
4. 4. April’s credit and money data consistently pointed to weak credit demand. Recent policy communications suggest that the PBOC continued to focus on enhancing monetary policy transmission and improving the efficiency of loan usage. Looking ahead, the growth of new CNY loans and M2 may gradually slow down further, as the PBOC highlighted weakening relationship between economic growth and credit expansion. Taken together with soft year-to-date growth of TSF stock, we revise down our TSF stock growth forecast to 9.5% for 2024 (vs. 10.0% previously). In light of upcoming acceleration of government bond issuance, we continue to expect two more RRR cuts and one policy rate cut through the remainder of this year.

Looking ahead, Goldman expects government bond issuance to pick up in late Q2, and the PBOC to facilitate the government bond issuance by increasing interbank liquidity. We continue to forecast one 25bp RRR cut in Q2.

While economists are trying to goal seek this latest disappointment out of China, the market has already priced it in, and overnight Chinese government bonds gained, as the poor credit data fueled expectation of more monetary policy easing and allowed traders to shrug off debt supply concerns. The offshore yuan touched its weakest level in over a week.
Bonds. And with credit demand plunging 10Y yields are dumping just fast; here are some more from Bloomberg:

• China plans to start selling the first batch of its 1 trillion yuan ($138 billion) of ultra-long special central government bonds on Friday.
• Weakness in credit print “adds to the possibility of another RRR cut" coming before end-2Q, likely coinciding with the special bond issuance and a step-up of local government bond issuance for the remainder of 2Q,” Becky Liu, head of China macro strategy at Stanchard Chartered Bank said

10-year bond yields fell to 2.29% versus previous close at 2.34% on Saturday; the domestic interbank bond market was open on May 11 due to holiday adjustment

Finally, China’s credit in April shrank for the first time as government bond sales slowed, while loan expansion was worse than expected in a sign of weak demand.

Bottom line: the yuan is dumping, credit is not only stalling but outright contracting, and while stocks are modestly higher as traders hope thay finally bottom-ticked the rebound, the collapsing Chinese yields signal that much more deflation is coming unless Beijing can arrest it. In either case, China is now facing a toxic cocktail of two equally bad choices: i) devalue the currency in hopes of kickstarting exports (since nothing else works), or ii) do nothing and watch as the economy spontaneously collapses in on itself and leads to a global economic shockwave that forces all developed central banks to quickly turn on the money printer.

Tyler Durden Mon, 05/13/2024 - 16:40

"If Mr. Trump Is Hitler, Think Of Newsom As Godzilla With Hair Gel..."

Authored by James Howard Kunstler via Kunstler.com,

Monster Mash-Up

“My take is that the US is incredibly unstable right now, and could go in almost any imaginable direction between now and the election, as well as some unimaginable ones.”

- John Michael Greer

Did you notice that it took just a little bit of internal chaos to alert the Party of Chaos that maybe chaos wasn’t the greatest thing to be the party of? Something went awry the past two weeks when thousands of creamy coeds on every campus across America donned the keffiyeh and, in effect, demanded submission to history’s most notorious misogynist cult. It struck a most cacophonous chord among progressives, like Kumbaya as orchestrated by Karlheinz Stockhausen. To awaken from Wokery, you see, is a brutal shock to the brain.

And so, over the weekend every big dog in the Democratic Party’s doghouse came out barking against the current direction of the Democratic Party — that is, over an electoral cliff, lemming-style. Bill Clinton lamented at the Milken Conference that:

“the political rewards of grievance politics and name-calling and being negative have been so immense that nobody could give’em up. That’s what this whole shebang has come down to now.”

James Carville had a veritable nervous breakdown on X:

“It’s going the wrong way, it’s not working. Everything we’re throwing is spaghetti at a wall, and none of it is sticking, me included.”

Fareed Zakaria over on CNN confessed that:

“None of this is playing out the way I thought it would.”

Gee, really?

None of them could bring themselves to actually name the doddering donkey in the room, “Joe Biden.”

Nor did they dare call out the stage manager behind the old Joe-from-Scranton show, Barack Obama, not exactly coasting into his fourth term, as expected.

They’re all surprised the way things are turning out. And, of course, “JB” himself did not come out of his Rehoboth Beach hidey-hole after declaring no more bullets and missiles for you, Israel, which landed amongst the Party’s donor class like a tear-gas bomb.

Hillary Clinton popped up on the Morning Joe show wearing royal purple to remind the audience that Donald Trump is another Hitler, threatening “the sanctity of the Constitution” and adding “maybe this will be our last election.”

If she’s putting herself up as possible last-minute replacement for the ever more ghostly “Joe Biden,” she was not so crass as to say so. The party will have to come pleading to her on its knees, hoping she can once again muster the legions of indignant women to oppose the wicked Golden Golem of Greatness — who was, that very day, on display in a Manhattan courtroom having to endure the jibes of the paradigmatic wronged woman, porn-star Stormy Daniels.

What else have they got, really? Gavin Newsom?

If Mr. Trump is Hitler, then think of Mr. Newsom as Godzilla with hair gel. Imagine what he could do to the whole USA after trashing California, as he has managed to do. Sorry to tell you, but in an election contest between Hitler and Godzilla, Hitler would probably win. It’s a rock-paper-scissors deal. Any other ringers they might throw in? The only name that ever comes up is Illinois governor JB Pritzker, who actually looks a bit like King Kong, and has certainly done a Kong-job on Chicago. And, by the way, that’s where the Democrats’ convention will happen in August. Wouldn’t it be something to see King Kong versus Godzilla there?

All of which is to say that something beyond desperation has set in amongst the Democrats, an emotion so dire that Elizabeth Kubler Ross couldn’t find a word for it on her transect of grief. They don’t know what to do at this point. They have only a few months to figure it out and there is more at stake than a mere turnover in administrative duties. The shadow of the gibbet looms in their nightmares. Their lawfare schtick was one thing, a kind of fun-and-games compared to what’s coming at them: the actual law, trials for more serious crimes than mere book-keeping errors and mis-pricing real estate valuations. Think: sedition, treason, bribery and tack on conspiracy to commit all the above.

Meanwhile, Mr. Trump provided a further shock to the awakening Woke with a Saturday evening fan meetup down-the-shore in Wildwood, New Jersey. Somewhere between eighty to a hundred-thousand voters showed up in what is said to be among the bluest states in the country. Bruce Springsteen must have been weeping into his avocado toast over in Red Bank. Then, across the Sunday morning news digests there was talk about “a landslide win,” and even more amazed chatter about RINOs and Never-Trumpers returning to the folds of the Golden Golem’s heavenly garment, as though Mr. Trump had virtually Jeezified himself through a year of tribulation.

Will the Democrats just go through the motions the next six months, awaiting execution? Naw. One way or another, they are going to jam Hillary into this psychodrama.

Stay tuned for a couple of medical emergencies.

First, Kamala Harris will resign on account of a sudden “health problem” that prevents her from attending to her duties. Cancer will be implied but not spelled out. “Joe Biden” will appoint HRC of the Purple Pantsuit as veep.

Three weeks later, “JB” will submit his resignation for medical reasons, and nobody will need to ask why.

Voila! The first woman president, she-whose-turn-has-finally-come, flies triumphantly out of the Democratic Convention in her hometown, Chicago, like Rodan the Flying Reptile emerging from the mythic volcano, cawing her battle-cry across the land. The Golden Golem answers with a roar. The great re-match is on!

*  *  *

Support his blog by visiting Jim’s Patreon Page or Substack

Tyler Durden Mon, 05/13/2024 - 16:20

Hedge Funds Hammered As 'Roaring Kitty' Returns; Bitcoin & Black Gold Bid

The return of 'Roaring Kitty' sent GME soaring higher (up 110% at its highs)...

Source: Bloomberg

...and prompted squeezes/panic-covering across the 'most shorted' names and 'retail favorites (memes)' soared...

Source: Bloomberg

As John Flood noted from Goldman's trading desk: "GS Most Short Rolling basket in focus having a top 5 move over the past 5 Years (3.3std)."

Source: Bloomberg

Volume/activity has been abysmal recently and today was no better with overall activity levels -7% vs the trailing two weeks average.

• HF buy skew sticks out @ +16.6% unsurprisingly, that’s 97th %-ile & the highest level in 6wks.  Covering most acute in Info Tech with a buy skew @ +20% and short ratio of only 34%.  HCare, Consumer, REITs & Comms Svcs all net to buy; Macro Products & Energy (likely PR hedges) net for sale

• LOs are 15% better for sale with just Cons Disc and Fins as small to buy.  The most concentrated selling is in Macro Products & Info Tech, with modest supply across HCare, Indust, Comms Svcs & Energy

Most notably, the weakest sleeves of the market are surging higher – Most Short Basket up +3 sigmas // YOLO basket up +3 sigmas // China Internet basket up +2 sigmas

GameStop “stonks” surged up to 119% after a cryptic post on X from Keith Gill, aka 'Roaring Kitty', his first since June 2021. Some investors interpreted it to mean that Gill is coming back into action (BBG).

S&P is unchanged but NOT all is calm underneath the surface. HF community under pressure on this Manic Monday. We are seeing a considerable amount of covering by the fast money community in both single stocks and macro products during the first 3 hours of trading.

Keep an eye on the following thematics as it feels like this could get worse before it gets better...

'HF VIP Longs vs Most Short' was down 7% - the biggest drop since June 2021 (today’s move is a 4SD over last 1 year of trading)

Source: Bloomberg

Mega Cap Tech vs Non Profitable Tech down 4% (today’s move is a 3SD over last year of trading)

Long Momentum down 4% (today’s move is a 4 SD over last year of trading)

In context, today saw half of all indicative hedge fund gains year-to-date have been cut in half...

Source: Bloomberg

Here we go again: explosion in most shorted names means worst day for hedge funds since Dec 2023. Gross unwinds, margin calls, stay puft marshmallow man all to follow pic.twitter.com/yxl8220Nau

— zerohedge (@zerohedge) May 13, 2024

The jump in inflation expectations (and household debt stress) from The New York Fed's survey did provide some selling pressure on the day however - as well as Chevron's decline (driven by reports that influential proxy giant ISS recommended Hess investors abstain from voting on the proposed $53 billion acquisition).

By the close, the S&P was unchanged, The Dow was the laggard (down around 0.2%), while Small Caps outperformed and Nasdaq held on to some gains (both well off the day's highs)...

Treasuries were bid today (but traded in a narrow range), ending the day down only 1bp...

Source: Bloomberg

The dollar ended the day flat, recovering overnight losses...

Source: Bloomberg

Bitcoin ripped back up to $63,000 today, erasing Friday's plunge losses...

Source: Bloomberg

Gold gave back more than half of last week's gains today, back below $2340...

Source: Bloomberg

Oil bounced back off $78 (WTI) - around its 100DMA - recovering most of Friday's losses...

Source: Bloomberg

Finally, this trend is not Powell's (or Biden's) friend...

Source: Bloomberg

'Growth' data continues to surprise to the downside, and 'inflation' data surprise to the upside. What do we call that Jay? Clue: it rhymes with blag-station.

Tyler Durden Mon, 05/13/2024 - 16:00

Turkey Treating Over 1,000 Wounded Hamas Members In Hospitals: Erdogan

The NATO country with the second largest military in the alliance has just admitted to aiding and abetting a US-designated terror organization.

Turkish President Recep Tayyip Erdogan in surprisingly frank statements acknowledged that Turkey is currently treating over 1,000 Hamas members in various hospitals across the country. In the remarks he stressed that Turkey does not consider them terrorists, but as part of a "resistance movement" against Israel.

Via AFP

Also surprising is that such an admission, which is sure to anger other Western allies, came as Greek Prime Minister Kyriakos Mitsotakis was on an official visit with Erdogan in the capital city of Ankara.

"Hamas is a resistance organization whose lands have been occupied since 1947, and it has protected its lands after the occupation," Erdoğan said, clashing with Greece's view of the militant organization currently fighting Israel.

"I do not see Hamas as a terrorist organization. On the contrary, I see Hamas as people struggling to protect their own land and their own people," Erdogan added.

According to more from the exchange:

Speaking at a press conference after talks with Greek Prime Minister Kyriakos Mitsotakis in Ankara, Erdogan also said he was saddened by the Greek view that deems Hamas a terrorist organization.

Greece and Turkey cannot agree on all issues related to the war in Gaza but they can agree that violence must end and a long-term ceasefire is needed, Mitsotakis said.

“Let’s agree to disagree,” Mitsotakis said, responding to Erdogan.

Erdogan at one point told his Greek counterpart that terrorist organizations "should have no place in the region's future" and that there is "growing unity" on this, but that Turkey differs on the definition when it comes to Hamas.

But, Erdogan explained, "we are in agreement that a ground operation in Rafah would be unacceptable."

Since the Gaza War started in the wake of the Oct.7 Hamas terror attack, Erdogan has been a constant critic of both Israel and Prime Minister Netanyahu personally. 

Erdogan corrects Greek PM Mitsotakis, says “Hamas isn’t a terror group, it is an insurgent group that is trying to protect its territories that have been occupied since 1947” pic.twitter.com/U0mrRdjEcG

— Ragıp Soylu (@ragipsoylu) May 13, 2024

Turkey has also cut trade with Israel over what it called the "worsening humanitarian tragedy" currently unfolding. Israel has in turn accused Erdogan of being a "dictator". 

As for treating hardline jihadists in hospitals, this also happened during the war in Syria, but in that case even Israel at one point had been giving medical aid to anti-Assad militants on its soil, most of which were linked to al-Qaeda.

Tyler Durden Mon, 05/13/2024 - 15:45

What's The Inflation Rate Under Biden Vs 7 Previous Presidents?

Authored by Mike Shedlock via MishTalk.com,

Voters seem angry about inflation despite economists telling us how great things are. A few pictures explain.

Why Biden Is Losing on the Economy

The Wall Street Journal comments on Why Biden Is Losing on the Economy

Democrats and the press keep telling Americans that they don’t know how good they have it. The U.S. economy is great, Bidenomics is the reason, and don’t worry, be happy. Yet the voters, those numbskulls, keep telling pollsters they don’t feel the boom and they don’t approve of President Biden’s economic performance.

If our friends on the left want to stop berating voters and admit reality, they might look at the chart nearby from Dan Clifton of Strategas Research Partners. It compares the average annual consumer-price inflation rate across the first term of the last eight presidencies. As you can see, Mr. Biden’s average inflation rate of 5.5% is second only to Jimmy Carter’s average rate of 10.3%, and Mr. Carter wasn’t re-elected.

The President keeps telling voters that inflation has fallen on his watch to 3.5% from that peak, but voters remember how low inflation was for some 40 years before Mr. Biden took office and went on his historic spending spree. Americans can also see that prices aren’t falling back to where they were when Mr. Trump was President. They know their average real earnings have declined since Mr. Biden took office.

Voters aren’t stupid, and this is why they don’t like Mr. Biden’s economic record.

It's not the hand that Biden was dealt that mattered. It's how he played the hand he was dealt.

1. The biggest fiscal stimulus in the world, totally unwarranted
2. Student debt cancellation
3. Absurd energy policy
4. Rent moratoriums
5 The IRA

All massively inflationary

— Mike "Mish" Shedlock (@MishGEA) May 11, 2024

The Journal explains what I have been talking about for months.

But the article misses a big point. Neither the Fed nor economists in general view housing prices as inflation. The economic illiterates do not count asset prices in general as inflation.

Home Prices Hit New Record High, Don’t Worry

The Case-Shiller national home price index hit a new high in February. That’s the latest data. Economists don’t count this as inflation.

Case-Shiller national and 10-city indexes via St. Louis Fed, OER, CPI, and Rent from the BLS

On May 2, I commented Home Prices Hit New Record High, Don’t Worry, It’s Not Inflation

Not Inflation?!

Economists, including the Fed, consider homes a capital expense, not a consumer expense.

As a result, they all ignore economic bubbles and blatantly obvious inflation on grounds it’s not consumer inflation. This has gotten the Fed into trouble at least three times. The first was the dot-com bubble, then the Great Recession housing bubble and now.

It’s really pathetic when you make the same major mistake over and over and over. It’s a result of groupthink.

Inflation Since January 1, 2020

• CPI: 20.3%

• OER (Owners’ Equivalent Rent): 22.1%

• Rent: 22.5%

• Case-Shiller National Home Prices: 47.2%

Allegedly, the latter has nothing to do with inflation. And adding insult to injury for those seeking to buy a home, mortgage rates have sky rocketed.

Mortgage News Daily Average Mortgage Rates

Image courtesy of Mortgage News Daily, anecdotes by Mish

On January 1, 2020 the mortgage rate was 3.76. Now it’s 7.16% with home prices up 47.2%.

But hey, let’s claim that this has nothing to do with inflation.

Trapped In Your House?

A New York Fed survey shows 1-year and 3-year look ahead moving expectations are at record lows.

Data download from the New York Fed, chart by Mish

On May 6, I commented Trapped In Your House? Moving Expectations Hit Record Low

The above post started some interesting discussion on Twitter. One person noted that expectations had been declining anyway.

OK but two things. From 2014 to 2022 expectations fell from 20.8 percent to 16.4 percent. A decline of 4.4 percentage points in 8 years. In the next two years, expectations fell another three percentage points,

Trapped offers a reasonable explanation for the acceleration.

Second, those are “expectations” not actual results. Unfortunately, we will not have 2024 data for two more years.

According to data from the U.S. Census Bureau, moving rates for Americans declined from 12.8% in 2021 to 12.6% in 2022. Thus, more people thought they would move than actually did.

I suggest 2023 and 2024 will be lower for obvious reasons. But if for some reason it’s higher it will be more renters moving around, not homeowners.

We do not have the precise data that proves homeowners are trapped, but we do have strong enough data to suggest that is the case.

Young Voters Bail on Biden

On March 7, I commented Polls Show Biden is Losing Black, Hispanic, and Young Voters to Trump

Q: Why is Biden losing black voters and young voters?

A:Those are the groups most likely to rent. In general, those are the groups most impacted by inflation whether you count home prices or not.

People Who Rent Will Decide the 2024 Presidential Election

Immigration won’t decide the election. Polls have not yet captured what will. This may come as a surprise, but the top issue housing. More explicitly, it’s shelter costs.

On April 30, I commented People Who Rent Will Decide the 2024 Presidential Election

The economy is a very broad category that encompasses inflation, jobs, unemployment, wages, rent, and housing.

Other polls split the economy in various pieces, such as inflation and jobs. Not a single poll mentioned housing specifically.

Q: What is it that young voters really have on their minds?
A: Rent – Unaffordable Housing

I said people who rent will decide the election. One might also say young voters and blacks will decide the election. It’s really the same issue, but none of the polls framed it the way I just did.

Trump would be wise to pick a candidate who appeals to young voters and also women for the abortion issue. Trump might win even if he doesn’t.

This was a discussion among several friends of mine recently.

One friend accurately noted that VP candidates don’t swing many voters. Yep, that’s true, but even half a percentage point could swing the election. It would behoove Trump to choose wisely.

Tyler Durden Mon, 05/13/2024 - 15:25

"An Absolute Disaster": Media Freaks As Trump Dominates Battleground States

A new set of polls reveals that Donald Trump is leading President Biden in five out of six critical battleground states, as young and nonwhite voters grow increasingly dissatisfied with the current president.

The surveys, from the New York Times, Siena College and the Philadelphia Inquirer found that Trump is smoking Biden in Michigan, Arizona, Nevada, Georgia and Pennsylvania, while Biden is barely clinging to Wisconsin. The top grievances among disaffected voters are cost of living, immigration, and the war in Gaza, in what the NY Times characterizes as "widespread dissatisfaction with the state of the country and serious doubts about Mr. Biden’s ability to deliver major improvements to American life."

Nearly 70 percent of voters say that the country’s political and economic systems need major changes — or even to be torn down entirely.

Only a sliver of Mr. Biden’s supporters — just 13 percent — believe that the president would bring major changes in his second term, while even many of those who dislike Mr. Trump grudgingly acknowledge that he would shake up an unsatisfying status quo.

...

The economy and the cost of living, however, remain the most important issues for one-quarter of voters — and a significant drag on Mr. Biden’s prospects. More than half of voters still believe that the economy is “poor,” down merely a single percentage point since November despite cooling inflation, an end to rate hikes and significant stock market gains. -NY Times

And the media is freaking out:

"AN ABSOLUTE DISASTER": President Trump post MASSIVE leads in battleground states over Crooked Joe Biden in New York Times poll.

NEVADA: Trump +13
GEORGIA: Trump +9
ARIZONA: Trump +6
PENNSYLVANIA: Trump +3
WISCONSIN: Trump +1 pic.twitter.com/f92WSa7i4l

— Trump War Room (@TrumpWarRoom) May 13, 2024

In particular, Biden's impotence has "helped erode his standing among young, Black and Hispanic voters, who usually represent the foundation of any Democratic path to the presidency."

Young hispanics, for example, gave Biden more than 60% of their vote in 2020. Now, Trump and Biden are virtually tied among that demographic. Trump has also garnered over 20% of black votes according to the poll, the highest level for any Republican candidate wince the Civil Rights Act was enacted in 1964.

Because of this, Trump's strength among young and nonwhite voters has "upended the electoral map."

Based on the latest RCP Averages, this is what the map would look like if the election were held today: https://t.co/qt0zX3Gvxv pic.twitter.com/GWa0z7IC5d

— Tom Bevan (@TomBevanRCP) May 13, 2024

"It is concerning to me when I keep seeing press come out of the White House where they keep saying the economy is good," according to 32-year-old Jacob Sprague of Reno, Nevada, who voted for Biden in 2020 but won't be doing so again. "That’s really weird because I’m paying more on taxes and more on groceries and more on housing and more on fuel. So that doesn’t feel good."

Even more hilarious is that nearly 20% of voters blame Biden more than Trump for the Supreme Court's 2022 decision to overturn Roe v. Wade (what?).

Trump is polling particularly well with voters who believe that political and economic systems need to be torn down - around 15% of registered voters, with whom Trump is leading by 32 points.

Things are so bad some are convinced Biden will be replaced at the Democratic National Convention in mid-August.

Tyler Durden Mon, 05/13/2024 - 15:00

"There's A Lag In The Real Economy... And It's Hitting Now" - Ed Dowd Warns Of "Huge Credit Crisis Coming"

Via Greg Hunter’s USAWatchdog.com,

Former Wall Street money manager Ed Dowd is a skillful financial analyst.  Even though he has a wildly popular book on CV19 vax deaths and injuries called “Cause Unknown,” he is now turning his attention back to the economy. 

Dowd warns the economy can fall out of bed at any time.  Dowd explains, “What’s coming up next is a credit cycle..."

"We are going to see commercial real estate go into problem mode.  There are a lot of loans that need to be rolled over in 2024 and 25.  A lot of these properties are down 80%...

There is huge credit risk coming.  The prediction of bank failures is accurate.  We are going to see, over the next 12 to 24 months, banks go belly-up.  Then, they will have to get merged with bigger banks.”

What happens to the Biden economy?  Dowd says,

“The economy is going to take a nosedive sometime in the next 12 months.  The real economy is not doing well...

The only thing that has been holding up the GDP growth is government spending. 

We are spending $1 trillion every 100 days.  That’s adding $1 trillion to the deficit. 

The only job creation is government jobs, and they don’t actually add to the economy...

Reports are coming out now that the low-income consumer is getting absolutely hammered.  McDonald’s talked about it in their most recent earnings call...

So, low-income and the middle-class are getting squeezed while the rich continue to plug along.”

Dowd told me off camera that the economy could get into trouble without warning.  Dowd explains,

“You’ve got to look at history.  In 2008 and 2009, everyone talks about the crisis, but bank failures started showing up in 2007...

I suspect as we roll through time in the real economy and the money supply issues start to hit the economy, we will see more bank failures and more businesses shut down. 

46% of small businesses are having problems paying their rent.   There is going to come a time in the next 6 to 12 months this huge shock that we saw in the 2008 financial crisis, and the 2000 bubble where massive layoffs start to happen–it’s inevitable. 

This is what happens when you crank up interest rates from 0% to 5.5%.  There is a lag in the real economy, and it’s hitting right now.  It’s only going to intensify as time goes on.

Dowd likes gold as a core asset.  He also thinks the dollar has a way to go before it tanks, but it will tank someday. 

Dowd also thinks that the CV19 bioweapon shot pushers are trying to change the narrative to admit “some deaths” happened, but the amount is small.  Dowd calls BS on that, and he thinks the death and injuries are at least 33 million in the USA alone. 

According to Dowd’s research, the CV19 vax was a criminal enterprise that murdered and seriously harmed millions.  Dowd thinks the deaths and injuries from the CV19 vax are going to get worse.  Dowd thinks Johns Hopkins and the rest of the medical community are trying to change the narrative, so they don’t get blamed for pushing a massive death and disability CV19 vax program.

There is much more in the 53-minute interview.

Join Greg Hunter of USAWatchdog.com as he goes One-on-One with money manager and investment expert Ed Dowd, author of the recently updated book called “Cause Unknown: The Epidemic of Sudden Deaths in 2021, 2022 and 2023” for 5.11.24.

*  *  *

To Donate to USAWatchdog.com Click Here

You can order Dowd’s newly updated book called “Cause Unknown” by clicking here. If you want to go to Dowd’s website called PhinanceTechnologies.com, click here.

Tyler Durden Mon, 05/13/2024 - 14:40