Rumble CEO Says Tether Wanted To “Buy As Much As Possible”
Update (1429ET):
Rumble CEO Chris Pavlovski spoke with Barstool’s Dave Portnoy on Monday, offering more details about the $775 million strategic investment in the video platform. He noted that this is their first major strategic partnership.
Pavlovski said Tether “approached us about a month ago … expressing they wanted to buy as much of Rumble as they could.”
“To put it simply, they are helping to clean up the capitalization table in a major way,” the CEO said.
Earlier, Tether explained in a press release the deal included purchasing 103.3 million of Rumble’s Class A common at $7.50, totaling $775 million.
Pavlovski said there will be a “primary component of about $250 million that will help spur further growth, build out the cloud, further bring in more content creators and things of that nature.”
“It’s a phenomenal opportunity that we had here … it really matches the ethos of Rumble in a major way,” the CEO concluded.
As of 1400 ET, Rumble shares in New York had surged a whopping 100%, nearing record highs. According to the latest Bloomberg data, more than 18% of the float is short, equivalent to about 15.9 million shares.
Squeeze.
* * *
Shares of YouTube competitor Rumble surged as much as 55% in premarket trading in New York after Tether, the issuer of the largest stablecoin USDT, agreed to purchase a $775 million stake in the ‘free speech’ video platform.
Tether purchased about 103.3 million of Rumble’s Class A common at $7.50, totaling $775 million.
“The investment includes a primary commitment of $250 million in cash, with Tether also supporting Rumble’s tender offer for up to 70 million shares at $7.50 per share, reinforcing the platform’s future growth initiatives,” Tether wrote in a press release, adding, “The total anticipated investment from Tether will be approximately $775 million or 103,333,333 shares of common stock.”
This investment between Tether and Rumble marks a partnership dedicated to promoting decentralization and safeguarding freedom of speech.
Tether CEO Paolo Ardoino wrote in a statement: “Tether’s investment in Rumble reflects our shared values of decentralization, independence, transparency, and the fundamental right to free expression.”
“In today’s world, legacy media has increasingly eroded trust, creating an opportunity for platforms like Rumble to offer a credible, uncensored alternative. This collaboration aligns with our long-standing commitment to empowering technologies that promote freedom and challenge centralized systems, as demonstrated through our recent collaborations and initiatives,” Ardoino said.
Rumble CEO Chris Pavlovski stated: “I could not be more excited about this collaboration with Tether for many reasons. First, many people may not realize the incredibly strong connection between cryptocurrency and free speech communities, rooted in a passion for freedom, transparency, and decentralization.”
Rumble shares are up 43% in premarket, trading around $10.30 a share.
As of Friday’s close, 18% of the float was short, equivalent to 15.9 million shares.
The transaction is expected to close in the first quarter of 2025. Cantor Fitzgerald & Co. acted as the transaction’s placement agent and dealer manager. Oppenheimer & Co. served as the capital markets advisor to Rumble, while Willkie Farr & Gallagher LLP provided legal counsel.
As this year comes to an end, the most populous Arab country remains a stagnant mammoth with a slowly rotting political order, lacking domestic legitimacy and kept alive only by a continuous lifeline of cash from the West and Arab Gulf states who fear the repercussions of the Egyptian regime’s implosion.
The year started with Abdel Fattah el-Sisi, who is now 70, renewing his presidential term until 2030 after an electoral circus whose outcome was determined from the start. His only serious competition, former parliamentarian Ahmed Tantawi, was swiftly jailed.
Prison conditions remain draconian, and detainees have repeatedly gone on hunger strikes to protest torture and maltreatment. More than 50 incarcerated people have died in interior ministry-run prisons, Homeland Security branches and police stations this year.
Criticism of the president or regime officials in the mainstream media is virtually non-existent. Most media outlets are officially owned and micromanaged by one company created by the General Intelligence Service (GIS).
A handful of online independent news sites operate under strict conditions, are censored and denied media licences and face constant harassment. At the time of writing, at least 24 journalists and media workers remained in prison, according to the Egyptian Journalists Syndicate.
Street activism, which experienced a rare, sudden revival in October 2023 with the outbreak of the Gaza war, was quickly crushed by security services, who ensured the streets remained quiet. A year later, more than 100 people are still in prison for taking part in peaceful solidarity actions with the Palestinian people.
Syria shows the way?
While organized street dissent remains under siege, spontaneous social protests by politically unaffiliated citizens involving confrontations with state forces have become increasingly frequent. Specifically, there have been industrial actions over wages and working conditions, as well as protests over housing, evictions and road safety.
Since the 2013 coup, the regime has embarked on one of the biggest demolition campaigns in Egypt’s modern history, part of its militarised urban restructuring. Architect Omnia Khalil estimates that roughly 10 percent of the residents of Giza and Cairo alone have been displaced since 2013.
This onslaught has triggered long-running fights against evictions, which have turned into clashes with the military and police, such as in Jemima, Port Said, Warraq and elsewhere. These protests should be monitored because they will likely escalate in the coming year.
Earlier this month, Egyptians watched in jubilation as the brutal dynastic dictatorship of Bashar al-Assad fell. How this will play out for the millions who live under Sisi’s brutal dictatorship remains to be seen. With the destruction of the Egyptian opposition and almost daily acts of state terror against the slightest sign or gesture of dissent, a repetition of the 2011 domino effect is unlikely – at least in the short run.
However, there are certainly those in Egypt who are watching the Syrian events and contemplating whether an armed insurgency is the only way to topple Sisi, just as the Syrian ‘rebels’ did. Needless to say, the rebels’ victory will boost political Islam in Egypt and elsewhere.
Sisi is also nervous about the events in Syria. Roughly one week after Assad’s downfall, he met with military commanders, senior police officials, the GIS chief, the prime minister and several other top government officials at the defense ministry’s strategic command headquarters in the new administrative capital to discuss the impact of the regional wars in Syria and Gaza.
Humanitarian organizations and media reports have estimated that there are some 70,000 political prisoners under Sisi…
“Sisi’s prisons are no less horrifying than the atrocities of Syria’s prisons.”
After Syria’s rebels freed scores of political detainees, Egyptians are calling for the same in Egypt.
Since 2013, Egypt’s President Sisi has detained over 60,000 political prisoners nationwide. pic.twitter.com/ZCdvGc7Knq
Speaking to his publicists on the same day, he called on the people to unite and safeguard the Egyptian state. “There are two things I’ve never done, thanks to God,” he said. “I neither stained my hands with anyone’s blood nor took anyone’s money.”
Military business
Despite pressure from international donors – and occasionally, prominent Egyptian businessmen – on the regime to remove the army from the civilian economy, the military continues to expand its control. It manipulates free-market forces in its favor and uses its clout to impose itself in partnerships with local and global capital.
In 2024, Sisi continued to dodge calls to privatize military corporations or curb their influence. On the contrary, they were given more monopolies and a larger share of the pie. Early this month, Prime Minister Mostafa Madbouly announced plans to list several companies affiliated with the military on the Egyptian Exchange. However, this is not the first time such statements have been made.
Sisi announced in November 2022 that two military firms – a petrol company and a bottled water producer – would be listed on the stock exchange. A few months later, Madbouly announced that 10 more army companies would be offered on the stock market. To date, no single military firm has been privatised.
There is a good reason why the regime has been procrastinating all those years with selling those firms. At this point, Sisi’s loyal constituency is confined to the officer corps. His popularity among all social classes in Egypt, including sections of big capital, has hit rock bottom. Antagonising the brass or messing with their economic privileges could prove fatal in such turbulent times. So, is the regime finally embarking on privatizing the army’s firms?
The devil is always in the details.
According to Madbouly’s statements, parts of the firms will be sold directly to a “strategic investor”, though no specifics were provided regarding the identity of these investors or the percentage of shares to be sold. Also, the firms will not be fully privatized, but a percentage will be offered in the stock market. Again, it is unclear what percentage.
Some possible scenarios to watch in 2025 include stocks being sold to civilian investors who act as fronts for the military or to companies that the military partially or wholly owns. For instance, the army’s National Service Projects Organization (NSPO) holds a 20 percent stake in Taqa Arabia, which is seen as a potential bidder for Wataniya – one of the four firms to be listed.
If Sisi takes something away from the army with one hand, he will compensate them for it with the other hand. This could mean more concessions in other sectors, allocated lands and so on. For example, while planning the privatization of Silo Foods, the Egyptian Air Force (EAF) is now, in effect, running the agricultural production sector and has recently been given a monopoly over grain imports.
Crisis of hegemony
In the summer of 2023, Sisi signed a law ending tax exemptions for government economic activities. But tax exemptions for army business ventures remained in place, as the new law included an exception for economic activities related to “national security”, which could be conveniently interpreted as anything related to the military.
In the coming year, the regime is likely to continue evading calls to reform the military-economic complex. It will likely resort to maneuvers such as floating military firms in the stock market, only to buy them through other companies and businessmen who are fronts for the army, or curbing the privileges of military corporations in one sector, only to compensate in another.
Egyptian President Abdel Fattah El-Sisi unveiled the new administrative capital and presidential palace, built 45 kilometers east of Cairo in the desert, during the D-8 summit.
Meanwhile, news emerged this month that Ibrahim al-Organi, a criminal smuggler-turned-militiaman and state-sponsored businessman, is planning to launch a political party. An official declaration has yet to be made. But if the project proceeds, the proposed party will contest the parliamentary and senate elections in 2025. (I stress “if”, as Organi has not publicly confirmed this, and the project could ultimately be scrapped.)
But we must ask why such plans are being floated. This is not necessarily driven by Organi’s personal ambitions. He is an agent for the state and can be easily replaced at any point if the regime deems him useless or harmful.
Sisi is ruling solely by coercion, unlike his predecessors and has eviscerated the civil society and political institutions that manufacture some necessary level of consent, which is crucial for the endurance of the regime and the state.
Political desert
Sisi desperately needs something a la former President Hosni Mubarak’s National Democratic Party (NDP). But so far, he has failed to replicate it, including through the miserable Nation’s Future Party, whose public events for shoring up support for Sisi only backfire and turn into anti-regime protests. Attempts at rigging the votes in professional syndicates either fail or descend into pure thuggery, causing scandals that the regime has to scramble to manage.
News of Organi’s proposed political party is the latest attempt to “create politics” in a country whose political scene has become wholly desertified. The total reliance on foreign debt has led to domestic fallout, widening class gaps in Egypt and a state of social decay, along with a decline in Cairo’s regional clout and soft power.
From an active regional hegemon under previous regimes, Sisi’s Egypt is now dependent on foreign loans, grants and continuous bailouts by regional and international donors who see Egypt as “too big to fail” and do not want to risk further instability in the Middle East.
As a result, Sisi has been unable to steer the course of events in Egypt’s traditional spheres of influence. Instead, he has either suffered diplomatic defeats or brought Egypt to a state of shameless complicity in the ongoing genocide on his eastern border under the watchful eyes of his military.
In the coming year, Egypt will remain relevant to the Israeli–Palestinian conflict by virtue of geographical proximity, which puts it in control of Gaza’s only exit to the outside world – the Rafah crossing.
While incapable of forcing Israel to withdraw from the Philadelphi Corridor along its border, Cairo will continue to pressure the weaker side – the Palestinians – into concessions and compromises to prove its own worth to the Trump administration in the US.
Migrant Accused Of Setting Woman On Fire In NYC Subway Car Is Here Illegally, ICE Confirms
A Guatemalan migrant has been arrested for allegedly lighting a woman on fire while she was asleep in a subway car in Brooklyn.
This is Sebastian Zapeta.
He is an illegal Guatemalan migrant, who is accused of setting a woman on fire on the NYC subway.
He was deported under Trump’s first admin in 2018 but invaded the US again at an unknown date and stayed in the NYC taxpayer-funded shelter system. pic.twitter.com/uAawMjLGvu
A spokesperson for Immigration and Customs Enforcement (ICE) confirmed that the migrant suspect is Sebastian Zapeta-Calil, a 33-year-old foreign national living in the U.S. unlawfully.
“Sebastian Zapeta-Calil, 33, is an unlawfully present Guatemalan citizen who entered the United States without admission by an immigration official,” ICE spokesperson Jeff Carter said in a statement provided to the Daily Caller News Foundation.
“U.S. Border Patrol in Sonoita, Arizona, encountered Zapeta June 1, 2018, and served him with an order of expedited removal and Enforcement and Removal Operations removed Zapeta from the U.S. to Guatemala June 7, 2018.”
The victim burned to her death while the suspect allegedly sat on a bench “calmly” watching the fire consume her body.
The New York Post reports the disturbing crime was one of the most savage to take an innocent life in the city of New York.
The immigrants are evil people with no civilization?
As AP reports, Transit police apprehended the suspect after receiving a report from three high school students who had recognized the man.
They had seen images of the suspect taken from surveillance and police body cam video and widely distributed by police.
“New Yorkers came through again,” said New York City Police Commissioner Jessica Tisch, who described the case as “one of the most depraved crimes one person could possibly commit against another human being.”
After the train came to a stop, surveillance video from the subway car showed the man “calmly” walk up to the victim, who was seated motionless, possibly sleeping, and set her clothing on fire with what appeared to be a lighter.
The woman’s clothing then “became fully engulfed in a matter of seconds,” Tisch said.
Unbeknownst to the officers, the suspect had remained at the scene and was seated on a bench on the subway platform, just outside the train car, Tisch said.
Body cameras worn by the officers caught a “very clear, detailed look” at the suspect and those images were publicly disseminated.
Officials said the 33-year-old suspect came to the US in 2018 from Guatemala.
He was detained by border patrol agents in Arizona in June of that year, sources said. His legal status wasn’t immediately clear Sunday night.
He received a transit summons in May 2023, but his criminal record in New York City was largely clean otherwise, sources said. He was living at a shelter on Randall’s Island at the time of the infraction.
The police reportedly do not believe the migrant and the victim he burned to death knew each other before the disturbing killing. The woman had not yet been identified as of Sunday night.
The Ron Paul ‘Revolution‘ could be on the horizon as President-elect Donald Trump prepares to take office next month. Elon Musk, one of Trump’s top advisors, wrote on X about creating efficiencies at the Federal Reserve.
“The Fed is absurdly overstaffed,” Musk wrote on X early Monday morning, responding to Chamath Palihapitiya’s post about the Fed’s latest interest rate decision (read here).
A recent note from the Mises Institute pointed out that about 23,000 people work at the Federal Reserve Board in Washington and 12 regional reserve banks across the US.
The Federal Reserve System
“But there’s more to it than that. The financial statements reveal that the Board of Governors expenses and currency costs were $2 billion. If this constitutes salaries, then total salaries and pension costs at the Fed become closer to $7 billion. Dividing this figure by 23,000 people equals around $304,000 per employee,” Mises said.
This is the breakdown of employees by function/organization (should be roughly accurate). The vast majority is at the Reserve Bank level.
Where is the bloat and that should be optimized?
Would be interesting to see how AI is being used for automation and more advanced… pic.twitter.com/EpHRuP1S1c
Musk and Vivek Ramaswamy have been tasked with streamlining federal operations through the Department of Government Efficiency (DOGE). The department aims to create a leaner, more efficient government, including $2 trillion in spending cuts. The wish list of potential efficiencies continues to grow – with a ‘really bold plan for day one ‘ …
Days before the presidential election, Ron Paul asked on X if he could join DOGE in Trump’s second term. Musk responded: “Would be great to have Ron Paul as part of the Department of Government Efficiency!”
Would be great to have Ron Paul as part of the Department of Government Efficiency!
Last week, Ron Paul wrote on X, “We should wean ourselves off The Fed, like we weaned ourselves off the mainstream media.” Musk responded: “Yes!! Ron Paul ftw.”
Let’s not forget about 400 PhD economists at the Fed failed to forecast the inflationary storm triggered by the rapid expansion of the money supply by trillions—only for them to dismiss it as “transitory.” Such a massive misreading underscores the urgent need for restructuring. Errors of this magnitude are unacceptable.
With a workforce of 23,000, the Fed still manages to lose money—upwards of $200 billion.
Montana’s Supreme Court on Wednesday upheld a landmark climate ruling that said the state was violating residents’ constitutional right to a clean environment by permitting oil, gas and coal projects without regard for global warming.
The justices, in a 6-1 ruling, rejected the state’s argument that greenhouse gases released from Montana fossil fuel projects are minuscule on a global scale and reducing them would have no effect on climate change, likening it to asking: “If everyone else jumped off a bridge, would you do it too?”
The plaintiffs can enforce their environmental rights “without requiring everyone else to stop jumping off bridges or adding fuel to the fire,” Chief Justice Mike McGrath wrote for the majority. “Otherwise the right to a clean and healthful environment is meaningless.”
Going forward, Montana must “carefully assess the greenhouse gas emissions and climate impacts of all future fossil fuel permits,” said Melissa Hornbein, an attorney with the Western Environmental Law Center and attorney for the plaintiffs.
Republican Gov. Greg Gianforte said the state was still reviewing the decision, but warned of “perpetual lawsuits that will waste taxpayer dollars and drive up energy bills for hardworking Montanans.”
“This decision does nothing more than declare open season on Montana’s all-of-the-above approach to energy,” he said, which promotes using both fossil fuels and renewables.
Montana’s Constitution requires agencies to “maintain and improve” a clean environment. A law signed by Gianforte last year said environmental reviews may not consider climate impacts unless the federal government makes carbon dioxide a regulated pollutant. The Montana Supreme Court’s ruling found that law to be unconstitutional.
Montana contributes less than less than ½ of one percent of global carbon dioxide emissions.
Carbon dioxide is not a pollutant in the first place. It’s necessary for plant life and the entire food chain.
More Dependence on China
A huge irony in this madness is the push towards clean energy makes us more dependent on batteries.
Over 80 percent of the minerals needed for the batteries are mined or refined in China.
China is still building coal-fired plants for the electricity to refine the minerals. And the refining process itself is extremely messy.
The kids won a victory to delay natural gas production with pathetic legal challenges making us more dependent on China.
And the bottom line is more dependence on China and more pollution for their effort when the only byproduct of natural gas is carbon dioxide and water.
This week’s holiday-shortened economic calendar is extremely light as 2024 comes to a close.
Late last week, and just after midnight on Friday, the big drama was resolved after Congress managed to pass a three-month continuing resolution to fund the government after acrimonious negotiations that threatened a shutdown. So with that big overhang removed, market participants will have only a handful of data releases to digest that will largely serve to sharpen forecasters’ estimates of current-quarter real GDP growth.
Monday kicks off with December consumer confidence which unexpectedly came at 104.7, or below the lowest estimate (median est was 113.5 vs. 112.8 previously), even as most analysts were expecting it to edge up to its highest level since July 2023. More important than the headline will be consumers’ outlook on the labor market in the jobs plentiful / jobs hard-to-get series within the conference board survey which rose for a 2nd month after hitting a post-covid low in September. Though the percentage of respondents reporting that jobs were plentiful slipped slightly in November to 33.4%, those noting that jobs were “hard to get” fell by 2.4ppts to 15.2% – the lowest level since May (14.3%). Historically, the unemployment rate has been highly correlated with the spread between the two series and at 18.2% as of November, consumers’ views on the labor market could signal some downward movement in the unemployment rate.
With respect to Q4 real GDP, last Friday’s personal consumption data pointed to stronger consumer spending than we had initially anticipated. This was one reason DB boosted its current-quarter growth estimate to 2.6% (annualized) from 2.1%, previously. If the bank’s forecast is close to the mark, real GDP will have grown 3.2% annualized over the 16 quarters of the Biden Administration… and it only cost $2 trillion in debt per year. Though the swift debt-funded recovery from the pandemic played a significant role in that performance, it is nonetheless remarkable that despite the historic tightening of monetary policy over the past two years, inflation-adjusted output will have increased at a 2.9% annualized pace – the same growth rate as the 8 quarters following the 2017 Tax Cut and Jobs Act. Tuesday’s durable goods orders (-1.1% vs exp. -0.3% headline / +0.7% ex-transportation vs exp 0.1%/ +0.7% core vs exp. 0.1%) will further inform current-quarter assessment of inflation-adjusted output. DB expects headline orders to get a mild boost from Boeing aircraft alongside a healthy rebound in orders for non-defense capital goods excluding aircraft. That being said, recall that core shipments is the component from the durables report that used to benchmark equipment spending in the GDP accounts and despite the decline in core orders in October, core shipments were up slightly. Though Tuesday’s new home sales (664K vs. exp. 670K) will also factor into Q4 growth estimates, this series is highly volatile and often revised, particularly during the low-volume winter months.
Thursday’s initial jobless claims (225k vs. 220k) and Friday’s advance goods trade balance (-$101.1bn vs. -$99.0bn) will round out this week’s data docket. Regarding the former, last week’s data showed a notable drop in initial claims which confirmed our prior view that seasonal factors around the Thanksgiving holiday were boosting the series. With respect to the trade balance release, import and export growth has been particularly volatile of late and thus any surprises could meaningfully move Q4 GDP tracking estimates.
Here is the full global event calendar.
A more detailed analysts comes from Goldman Sachs, which writes that the key economic data release this week is the durable goods report on Monday. There are no speaking engagements from Fed officials this week.
Monday, December 23
08:30 AM Durable goods orders, November preliminary (GS -1.0%, consensus -0.3%, last +0.3%); Durable goods orders ex-transportation, November preliminary (GS +0.1%, consensus +0.3%, last +0.2%); Core capital goods orders, November preliminary (GS +0.2%, consensus +0.1%, last -0.2%); Core capital goods shipments, November preliminary (GS +0.2%, consensus +0.2%, last +0.3%): We estimate that durable goods orders declined 1.0% in the preliminary November report (month-over-month, seasonally adjusted), reflecting a decline in commercial aircraft orders. We forecast 0.2% increases for core capital goods orders and shipments, reflecting mixed global manufacturing data.
10:00 AM New home sales, November (GS +7.0%, consensus +9.8%, last -17.3%)
10:00 AM Conference Board consumer confidence, December (GS 113.4, consensus 113.0, last 111.7)
Tuesday, December 24
NYSE will be closed early at 1:00 PM. SIFMA recommends an early 2:00 PM close to bond markets.: 10:00 AM Richmond Fed manufacturing index, December (consensus -11, last -14)
Wednesday, December 25
Christmas Day holiday. There are no major economic data releases scheduled. NYSE will be closed. SIFMA recommends that bond markets also close.
Thursday, December 26
08:30 AM Initial jobless claims, week ended December 21 (GS 215k, consensus 221k, last 220k); Continuing jobless claims, week ended December 14 (consensus 1,885k, last 1,874k)
Friday, December 27
08:30 AM Advance goods trade balance, November (GS -$102.0bn, consensus -$101.1bn, last -$98.3bn)
10:00 AM Wholesale inventories, November preliminary (consensus +0.2%, last +0.2%)
Independence of central banks has been under question for many years. However, the disappearance of “higher for longer” in 2024 erased any doubt about the monetary authorities’ lack of independence.
The Federal Reserve panicked in June 2024 and decided to delay the normalization of its balance sheet, coinciding with a period of massive deficit spending and Treasury debt issuance at elevated rates.
The Federal Reserve proceeded to implement an unnecessary 50 basis point rate cut during a period when financial conditions were at their loosest in years, growth was allegedly robust, and employment was solid, according to the Fed, but inflation remained above target.
It was not only the Fed. The ECB has been more dovish than any other central bank, apart from the Bank of Japan, despite stubbornly elevated inflation rates in many of the eurozone countries. The ECB has kept the “anti-fragmentation” tool and all its liquidity measures and incentivized France, Spain, and others to continue bloating government debt.
Given the lack of evidence of sustainable disinflation, especially in the second half of 2024, central banks should not have initiated an easing cycle. It was clear that central banks had one priority: keeping the government debt bubble alive.
The situation will remain unchanged in 2025. It’s important to keep in mind that in 2024, elections took place in over 70 nations, leading to a significant increase in government spending. Central banks will prefer to maintain government debt costs stable rather than to combat inflation in a year in which many emerging economies face a large maturity wall of dollar-denominated debt issued during the pandemic spending spree.
Furthermore, according to SP Global, global debt maturities will rise from nearly $2 trillion in 2024 to a peak of $2.78 trillion in 2026. The FT reports that the average annual rollover of existing global debt is nearly $50tn.
What does this mean for investors? Central banks will inject as much liquidity as needed to avoid a reckoning moment, especially for sovereign issuers. Central banks will prefer zombification and stagflation to a sovereign debt cost burst. And what does “liquidity” mean? Money supply growth.
Governments print money through massive deficit spending, and central banks must ease their policies to avoid a slump in asset prices, which means abandoning their long-forgotten target of price stability. This means that markets cannot accept 4–5% annual money supply growth. By now, in an economy that grows only 2.5%, “liquidity” needs to rise at least eight percent. Simultaneously, the risk associated with Treasury issuances increases and the foreign demand for US government bonds decreases, thereby limiting the central bank’s ability to conceal fiscal policy imbalances and federal insolvency. Powell may say what he wants about being “data dependent,” because the only data they depend on is the supply of new debt and the yield it demands.
The central banks set price stability as their target precisely to limit governments’ endless appetite for monetary destruction. However, independence vanished when central banks abandoned or ignored price stability, blaming inflation on various absurdities instead of government spending and money supply growth.
Yellen’s inclination toward short-term borrowing strategies will come back to haunt the Fed in 2025-2026. Though disinflation showed some promise earlier in the year, its stalling after June highlights the persistence of inflationism, often veiled by hollow hawkish promises. The Fed will not fight the government. It will pass the bill to consumers.
Yes, 2024 was a year of insane government spending. In 2025, central banks will have to handle most of the government debt maturities from 2020’s insane spending spree, along with the short-term borrowing maturities that Yellen has favoured. This means that central banks will likely increase their balance sheets, and global liquidity will soar again. In 2024, global money supply rose $1.6 trillion, and disinflation stalled after June. Inflationism is not back; it never left. It was only disguised by empty promises.
Americans’ consumer confidence apparently (and unexpectedly) tumbled in December (104.7 from 112.8 prior vs 113.2 exp), driven largely by a plunge in expectations (which dropped from93.7 to 81.1)…
Source: Bloomberg
“The recent rebound in consumer confidence was not sustained in December as the index dropped back to the middle of the range that has prevailed over the past two years,” Dana Peterson, chief economist at the Conference Board, said in a statement.
And if that is a little confusing given the surge in confidence we have seen among small business, large business, and various other sentiment indicators (like UMich), the explanation is simple….
It’s not the economy, it’s partisan ideologues, stupid!
In write-in responses to the survey, consumers increasingly cited politics and tariffs. A special question showed that 46% of respondents expected tariffs to raise the cost of living, while 21% expected tariffs to create more US jobs.
While we saw the party-denominated confidence from Umich show Dems plunged as Republicans soared, The Conference Board does not break the survey down that way… but we can get a glimpse…
New England and Mountain regions saw confidence collapse while the middle of the country saw confidence surge…
Source: Bloomberg
And drilling down further – Dem-dominant states like NY and CA saw consumer expectations plunge while Republican-heavy states like Texas saw expectations soar… and so did Pennsylvania…
Source: Bloomberg
On the bright side, the labor market showed signs of improvement in December…
Source: Bloomberg
So is the economy going to do great (like Texans think) or will it crash and burn in hell (like Californians think)?
California’s high gasoline prices are primarily driven by state taxes and fees, not excessive profits by oil refiners.
Data from the California Energy Commission reveals that oil refiners often operate on razor-thin or even negative profit margins.
Policymakers should focus on reforming California’s tax and regulatory structure to address high gas prices instead of targeting oil companies.
In 2022, California Governor Gavin Newsom signed SB-1322, the Oil Refiner Price Disclosure Act, into law. The legislation was hailed as a major step toward transparency, requiring refiners in California to report detailed monthly data on their gasoline profit margins. Specifically, refiners must disclose:
The cost of crude oil purchased
The wholesale price of gasoline sold
The gross and net profits earned per gallon of refined gasoline
Supporters, including consumer advocacy groups like Consumer Watchdog, argued that SB-1322 would expose “excessive profits” earned by refiners and hold them accountable amid California’s notoriously high gasoline prices. In fact, as captured in this recent TikTok video from Matt Randolph, Gavin Newsom continues to claim that oil companies are fleecing California consumers.
However, a little over two years after signing the bill into law, the data tells a different story.
Far from uncovering windfall profits, the disclosures reveal razor-thin — and often negative — margins for refiners in the state.
Gross vs. Net: The Misleading Narrative
Earlier this year, several public interest groups pointed to California Energy Commission (CEC) data showing that refiners earned gross margins (which these groups mischaracterized as “gross profits”) exceeding $1 per gallon in 2023. They urged the CEC to impose a price-gouging penalty ahead of the summer driving season.
But this interpretation missed a critical point: gross margins do not equal net profits. The CEC defines Gross Gasoline Refining Margin as the wholesale gasoline price minus the cost of crude oil. To derive the Net Gasoline Refining Margin, refiners must subtract operational costs, which averaged just over $1 per gallon during the reporting period.
Since California began reporting net margins in June 2023, the data paints a very different picture than that promoted by supporters of anti-gouging measures. Over the past 11 months that have been reported, refiners posted a positive net margin in only six months. The average net profit margin from June 2023 to April 2024 was just $0.09 per gallon — hardly the excessive profits that critics claim.
Follow the Money: Where Do Gasoline Dollars Go?
If refiners are not the primary cause of California’s sky-high gasoline prices, where does the money go? According to CBS 8 San Diego, Californians pay roughly $1.40 per gallon in taxes and fees — the highest in the nation. Here’s the breakdown:
State Excise Tax: 57.9 cents per gallon (as of July 2024)
Federal Excise Tax: 18.4 cents per gallon
Cap-and-Trade Program: 23 cents per gallon
Low-Carbon Fuel Standard (LCFS): 18 cents per gallon
Underground Storage Tank Fee: 2 cents per gallon
Sales Tax: ~3.7% of the retail price
These taxes and regulatory fees combined with California’s stringent fuel standards — which mandate unique summer and winter gasoline blends — drive up prices far more than the refiners’ net margins.
Conclusion: The Real Culprits Behind California’s High Gas Prices
SB-1322 may have been designed to shine a light on oil refiners, but its findings reveal a fundamental truth: California itself profits more from gasoline sales than the refiners do. When operational costs are factored in, the profits earned by refiners are minimal.
If policymakers and consumer groups are serious about tackling high gasoline prices in the state, they would be better served scrutinizing California’s tax and regulatory structure instead of targeting the refiners.
New Home Sales Rebounded In November As Prices Tumble
New home sales rose 5.9% MoM in November (less than the expected 9.8% surge) as October’s initial 17.3% plunge (ascribed to the hurricanes) was revised up to 14.8% MoM decline…
Source: Bloomberg
That lifted new home sales SAAR up 8.7% YoY – the highest since Oct 2023.
Source: Bloomberg
On the bright side, median new home prices are tumbling (once again below existing home median prices) to the lowest since Feb 2022…
Source: Bloomberg
New home sales continue to roughly track mortgage rates (with a lag) which suggests this short-term (post-storm) blip may not last long..
Source: Bloomberg
…and with Powell pivoting to more hawkish rate trajectory, good luck expecting mortgage rates lower any time soon.
