The war drums in the Middle East are getting louder by the hour as the world braces for an imminent Iranian (or Iranian proxy forces) strike on Israel. The US faces the daunting task of defending Israel from Iranian strikes if deterrence missile defense shields fail, which could potentially ignite a regional conflict. 

Jared Cohen, President of Global Affairs and Co-Head of the Goldman Sachs Global Institute, and Sam Morgan, Global Head of FICC Sales and Co-Head of One Goldman Sachs, discussed Tuesday the latest developments in the Middle East, structural changes across the region, and how markets are responding to the overseas crisis as war risks soar. 

Here’s the complete transcript of the conversation between Cohen and Morgan released for clients on Tuesday:

MORGAN:

Last month we witnessed a series of shocks and escalations in the Middle East, and tensions are only increasing. How have these developments changed the post-October 7 conflict in the Middle East?

COHEN:

A wider war has been possible since the beginning. In particular, a war between Israel and Hezbollah has been possible since October 8, when Hezbollah fired its first rockets after Hamas’s attack. More than 80,000 Israelis have evacuated their homes in northern Israel since, and most remain displaced. The killing of 12 Druze children playing on a soccer field on July 27 made a larger war between the two sides much more likely.

An all-out war with Hezbollah could be more violent, for both Lebanon and Israel, than the conflict with Hamas has been to date. Hezbollah has an arsenal of 120,000 to 200,000 rockets and missiles, including hundreds of precision guided missiles and 65,000 short-range rockets. These munitions could strike cities throughout Israel, as well critical infrastructure, such as electricity grids.

Israel has also reshaped the war in the last few weeks. Despite ten months of conflict, Israel’s longest since its War of Independence from 1948 – 1949, the Israel Defense Forces and intelligence services have shown themselves to still be tremendously capable. In retaliation for the Houthi drone attack on Tel Aviv, Israel’s air force struck the Houthi-controlled Hudaydah port in faraway Yemen, refueling mid-air during the long-distance mission. The bomb that killed Hamas leader Ismail Haniyeh was reportedly planted in an Iranian Revolutionary Guard Corps (IRGC) guesthouse months ago. This was a shock for the Supreme Leader, who is aging and now never leaves the country. Combined with the elimination of Hamas leader Mohammed Deif and Hezbollah military commander Fuad Shukr, who played a role in the 1983 Marine Corps Barracks bombing in Beirut, and other targeted assassinations, Israel may be trying to retake the initiative and show Iran the unexpected and high costs of escalation.

MORGAN:

Many observers are expecting retaliation by Iran, possibly including a direct assault against Israel. Is such an attack likely, and are Israel, the US and their partners prepared for such an escalation?

COHEN:

We don’t know the timing of a potential Iranian retaliation, and it’s impossible to predict the scale with certainty. But a direct Iranian-led assault against Israel looks increasingly likely, and Israelis and their partners are preparing.

This is a very precarious moment for the region, and the risks are high. In April, Iran broke the geopolitical seal on direct confrontation, when it fired 170 drones, more than 30 cruise missiles, and more than 120 ballistic missiles against Israel. Israel reportedly struck back. After the killing of Haniyeh, on August 1 in Tehran, Supreme Leader Ayatollah Ali Khamenei met in Tehran with proxy groups from Iraq, Syria, and Lebanon to discuss retaliation against Israel.

What could make this potential attack different from April’s? There is an increased level of coordination among Iran and its proxies across seven fronts. In addition, it’s possible that Iran could use more munitions, attack different targets, and engage in prolonged assaults that could overwhelm Israel’s defense systems, or even use its proxies to simultaneously attack US forces in Syria or Iraq, where several servicemembers were injured earlier this week. Iran or its proxies could also attack Israel or Jewish targets abroad, such when Hezbollah attacked a Jewish community center in Argentina in 1994 or attempted to execute a plot in Brazil at the beginning of the current war. And the closer we get to the US election, the more uncertainty there will likely be about US politics and engagement in the region.

The preparations to defend against Iranian attacks are extensive. Israel and its partners intercepted almost all Iran’s missiles and drones four months ago, and Jerusalem and its allies and partners are working together again. Countries are urging their citizens to leave Lebanon. The US and Arab countries have in recent days sent envoys and messages to Tehran to work to deescalate the situation, so far without success. The commander of US Central Command arrived in Israel earlier this week. The US is moving more defensive assets to the region, including the USS Abraham Lincoln aircraft carrier strike group, which will replace the USS Theodore Roosevelt. Israel is likely closely coordinating with its Sunni Arab neighbors – what Prime Minister Netanyahu now refers to as the “Abraham Alliance” – to defend against their shared rival in Iran. And, depending on the scale of the attack, Israeli Defense Minister Yoav Gallant has said the military is ready for a “swift transition to offense.”

MORGAN:

How do the events of the last month fit into Iran’s broader regional strategy, and do you expect any change in Iran’s calculus?

COHEN:

In my view, Iran relies on proxies to achieve its objectives to attack Israel, push the US out of Iraq and Syria, and become the dominant power in the Middle East. Those objectives likely have not changed. But, as April’s Iranian attack against Israel showed, Tehran is now more prepared than it was before to engage in direct confrontation, rather than relying exclusively on proxies and covert action. If Iran directly attacks Israel, the US, or their allies and partners in the next few days or weeks, we will be able to better calculate if Tehran is seeking a wider, all-out regional war, with all the costs that would bring, or if its strategy is to save face and continue the conflict at its current levels. An attack is increasingly likely, but as Israel’s actions over the last few weeks have shown, escalation presents enormous risks to the regime in Iran as well.

MORGAN:

How do you think about the broader geopolitical setup in the Middle East and the incentives and positioning of each of the key regional actors?

COHEN:

There have been two key strategic questions since October 7. First, can Iran and its proxies create a new normal in the Middle East, with constant conflict and attrition that wears down Israel, the US and their allies and partners, without imposing unacceptable direct costs on Tehran? And second, can they break apart an emerging Israel-Sunni Arab bloc and become the dominant power in the region?

On the former, Iran has so far succeeded. The damage that Iran and its proxies have done to Israel, Palestinians, and populations throughout the region is enormous. The costs to Iran – including attacks on Iranian soil and the targeting of IRGC commanders – have so far not been high enough to change Tehran’s overall strategy.

But Iran has not yet succeeded in breaking apart the Israel-Sunni bloc. We saw that in April, when Israel coordinated its defense with countries like Saudi Arabia and Jordan. The Abraham Accords between Israel and the United Arab Emirates, Bahrain, Morocco, and even Sudan continue to hold. The incentives for this bloc – as diverse as the actors are – to not let Iran dominate the Middle East are clear. And if anything, this geopolitical test has reinforced the direction of travel for wealthy Gulf countries, who have been pushing for economic integration and diversification and for greater influence on the global stage. To succeed, however, Israel and Washington’s partners in the Gulf will likely need US support.

COHEN:

How have markets reacted to the rise in geopolitical tensions?

MORGAN:

There has been a significant re-pricing of regional assets (e.g. Israel CDS, USDILS FX, ILS interest rate swaps) since mid-July, but the impact on commodities has been limited (and the oil price is down on the month). Equity markets (SPX in particular, but notably Nasdaq and Topix as well) and bond markets (such as short dated UST) have re-priced meaningfully in recent weeks, and Middle Eastern escalations have contributed to a sense of market nervousness, but the primary drivers of market moves have been a changing market perception around US recession risk, US tech earnings reports, questions about the timing and magnitude of the impact of developments in Gen(AI), and de-risking of crowded trades.

COHEN:

If the market reactions to the events in the Middle East have (so far) been limited, what escalations in the region could shift how the markets view the current crisis and its effects on global growth? What lessons have we learned that could be useful for future geopolitical shocks?

MORGAN:

The primary market nexus through which Middle Eastern tensions could have global growth impact would be via the oil market (as was the case in the 1970s). To date, the oil market has largely shrugged off geopolitical concerns and focused on the impact on demand of US and China slowdowns (and the potential impact of the US election on supply). A further escalation could impact oil markets to the upside if critical oil infrastructure were endangered. The broader lesson remains that the markets focus first and foremost on the economy and policy. Geopolitical tensions have major impacts on specific companies, sectors (e.g. defense), and countries, but for global impacts there needs to be a direct knock-on to growth, inflation (e.g. via oil prices), or monetary and fiscal policy. The focus for now will remain on the US economy and areas of potential concern (such as low-end consumers, and housing), the extent of the Fed’ put’ and their willingness to ease rates fast (e.g. the possibility of 50bp increment cuts), and big tech AI expenditure and earnings.

Via Campus Reform,

Harvard University will be offering a course examining medieval texts by using “queer theory.”

Harvard’s English department will be featuring a “Queer/Medieval” class in the upcoming spring 2025 semester. The course will be an “introduction to queer theory as an intellectual tool with which to read texts far removed from the political, cultural, and social discourses from which queer theory emerged,” specifically, in this case, medieval texts. 

“We will ask: what can queer theory offer readers of medieval literature in its explorations of gender, sexuality, race, power, narrative, trauma, and time?” the course description states.

The course will use the lens of “queer theory” to examine classic medieval texts such as Sir Gawain and the Green Knight.

Though the course is listed on Harvard’s website as taking place in the spring 2025 semester, a Harvard official told Campus Reform that it will actually take place in the fall of 2024.

The course will be taught by Assistant Professor of English Anna Wilson, Harvard’s “Medieval Studies Faculty Liaison for Equity and Diversity,” whose faculty profile lists “BGLTQ Studies” as one of her academic specialties. Her research interests include “medieval Christian visionary writing,” “women’s writing,” “fanfiction and fan communities,” “queer theory,” “gender and sexuality studies,” and “race in medieval literature,” among others.

“I am delighted to mentor all Harvard students,” her page reads.

“As a queer woman, I am particularly happy to support students who identify as LGBTQAII+.”

Harvard offers a wide array of services catered to LGBTQ-identifying students, including its “Office of BGLTQ Student Life” which hosts a number of events each year, including “a National Coming Out Day open mic, a vigil for Trans Day of Remembrance, and Lavender Graduation in honor of graduating members of the BGLTQ community.”

“The Office of BGLTQ Student Life serves as a central resource for bisexual, gay, lesbian, transgender, queer, and questioning (BGLTQ) students at Harvard College,” the office’s website reads.

“Through our work, we foster the inclusion, affirmation, and celebration of all BGLTQ identities and expressions. We strive to create a community where BGLTQ students can thrive and where all students are well-equipped to engage knowledgeably and compassionately with regard to gender and sexuality.”

Campus Reform has reached out to Anna Wilson for comment. This story will be updated accordingly.

Authored by Chase Smith via The Epoch Times,

Elon Musk, the CEO of Tesla, X, and SpaceX, has reignited a legal battle against OpenAI and its co-founders, Sam Altman and Greg Brockman, months after initially dropping his lawsuit.

The revived complaint, filed Aug. 5 in the U.S. District Court for the Northern District of California, accuses the defendants of multiple counts, including fraud, breach of contract, and violations of federal civil racketeering laws.

Musk had originally sued in February before dropping the suit in June with no explanation given at the time.

Musk’s revived lawsuit includes several allegations against OpenAI, Altman, and Brockman—at the heart of which is a claim that Altman and Brockman “intentionally courted and deceived” Musk into co-founding OpenAI under false pretenses.

Musk asserted in the 81-page suit that he was misled into believing that OpenAI would be a nonprofit organization focused on developing artificial intelligence (AI) technologies “for the benefit of humanity,” operating as a counterbalance to for-profit tech giants.

According to the lawsuit, OpenAI’s co-founders allegedly manipulated Musk by making repeated promises and assurances that the organization would remain open-source and not driven by profit.

The suit defines “open source” as the practice of making AI technology and research freely accessible to the public, allowing for transparency and collaboration.

“Altman assured Musk that the non-profit structure guaranteed neutrality and a focus on safety and openness for the benefit of humanity, not shareholder value,” the suit claimed. “But as it turns out, this was all hot-air philanthropy—the hook for Altman’s long con.”

Musk claims that these representations were part of a scheme to attract significant funding and expertise, which he provided, including “tens of millions of dollars” and the recruitment of top AI scientists.

The complaint further accuses Altman and Brockman of engaging in “rampant self-dealing” and transforming OpenAI into a for-profit entity in partnership with Microsoft, thereby abandoning its original mission.

Musk argued that OpenAI’s pivot to a for-profit model has resulted in substantial unjust enrichment for the defendants, which he contends was at the expense of the nonprofit’s mission.

Company Responds to Lawsuit

OpenAI responded to the latest legal filing in a statement.

“As we said about Elon’s initial legal filing, which was subsequently withdrawn, Elon’s prior emails continue to speak for themselves,” a spokesperson for the company told The Associated Press in an emailed statement.

In March, OpenAI released emails purportedly written by Musk showing initial support for making the company for-profit to secure the necessary funding to compete with Google DeepMind. Musk also supported the idea of merging OpenAI with Tesla.

“We may wish it otherwise, but, in my and [redacted]’s opinion, Tesla is the only path that could even hope to hold a candle to Google. Even then, the probability of being a counterweight to Google is small. It just isn’t zero,” Musk wrote in an email dated Feb. 1, 2018.

Musk’s legal team has outlined several demands for relief, including compensatory and punitive damages, restitution, and surrendering ill-gained profits.

The lawsuit seeks to impose a “constructive trust” on the alleged ill-gotten gains of the defendants, demands an accounting of all profits derived from the purported misconduct, and requests a judicial declaration that the licensing agreement between OpenAI and Microsoft is “null and void” or that certain OpenAI technologies fall outside the scope of this license.

Additionally, the complaint seeks an injunction to prevent further harm, alleging that the defendants’ actions have caused substantial injury to Musk’s reputation and commercial interests, impacting his ability to recruit leading scientists.

Authored by Nick Giambruno via InternationalMan.com,

As I’ve discussed recently, I believe proxy wars will determine who wins WW3 and gets to shape the new world order.

There are numerous ongoing proxy wars in World War 3.

However, the ones I believe will prove decisive will be in Taiwan, Ukraine, and the Middle East. The others are peripheral in comparison.

I think it’s clear the proxy wars in Ukraine and Taiwan are likely to end in favor of BRICS+.

That’s why I expect NATO & Friends will make their last stand to scuttle the emergence of a multipolar world order and preserve the US-led world order in the Middle East.

The Middle East is on the precipice of its largest war in generations.

The region is roughly divided into two different geopolitical groups.

The first is the US and its allies—Israel, Turkey, Jordan, Egypt, Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain, and others.

(Though Egypt, Saudi Arabia, and the UAE are members of BRICS+, their true allegiance is with the agenda of NATO & Friends).

The second group describes itself as the Axis of Resistance. It consists of Iran, Syria, the Houthis in Yemen, Hezbollah in Lebanon, several Palestinian groups (including Hamas), and an assortment of militias in Iraq. Russia and China are standing behind the Axis of Resistance.

If there is a regional war in the Middle East, it will undoubtedly be between these two groups.

In the context of World War 3, the US and its allies represent NATO & Friends, and the Axis of Resistance represents BRICS+.

Here is a geopolitical map of the Middle East as I see it (click to enlarge).

Iran is the main sponsor of the Axis of Resistance, and it does not have nuclear weapons.

Unlike in Europe (Russia) or East Asia (China), there is no sophisticated nuclear power to deter NATO & Friends from more aggressive military action in the Middle East. Iran is, therefore, the weak link in the BRICS+ alliance to push for a multipolar world order.

That’s why I expect NATO & Friends will make their last stand to scuttle the emergence of a multipolar world order in the Middle East by trying to neutralize the Axis of Resistance.

Here is a brief overview of where things stand now in various areas of the Middle East. It will help us zoom out and put together the pieces to see the big picture.

Gaza

While Israel has caused widespread destruction in Gaza, they are nowhere close to their goal of totally destroying Hamas.

Even the US government acknowledges that Israeli military action will be unable to totally destroy Hamas. The Israeli military has also come to reluctantly admit that Hamas cannot be defeated by military force alone.

That’s because Hamas is waging a classic guerrilla warfare campaign against the far superior Israeli military on the ground in Gaza.

Guerrilla warfare is a form of irregular warfare that relies on unconventional tactics such as hit-and-run attacks, sabotage, and ambushes to harass and exhaust a much stronger, better-equipped enemy force.

The main objective is not to achieve a decisive victory through conventional means but rather to undermine the enemy’s morale and force them to expend resources in a war of attrition.

The emphasis on survival and persistence allows guerrilla fighters to maintain their presence in the conflict, inspire more people to join their cause, and create a sense of frustration and demoralization among the enemy troops.

This strategy has been employed successfully by various groups throughout history—the Taliban, the Viet Cong, etc.—demonstrating the effectiveness of guerrilla warfare to challenge much more powerful adversaries.

Simply put, in a guerrilla war, to survive is to win.

That’s because merely surviving allows guerrillas to continue exhausting their enemies. By surviving, they undermine attempts to destroy their movement and demonstrate their resilience and determination to continue fighting.

Moreover, their enemy’s inability to completely eliminate the guerrilla fighters can lead to the perception that they are losing the war, as they cannot achieve a decisive victory despite their superior resources and technology.

Here’s the bottom line.

Israel has been trapped in a no-win situation with two unappealing choices:

1. Negotiate a ceasefire and an exchange of prisoners on unfavorable terms. The region will likely view it as a victory for the Axis of Resistance because Hamas will have forced the much stronger Israel to accept some of its terms.

2. Engage in a fruitless protracted guerrilla war that drains its military, economy, and diplomatic capital. Such a scenario will also risk sparking a much larger full-scale regional war against the Axis of Resistance—with Russia and China standing behind them—that Israel, the US, and its allies aren’t guaranteed to win.

No matter how the Gaza war ultimately ends, the events of October 7 and afterward have likely shattered the aura of invincibility of the Israeli military. In other words, Israel has lost its deterrence, and it will not easily or quickly regain it.

In short, Israel’s regional position is deteriorating. That weakens the geopolitical position of NATO & Friends in the Middle East.

Syria

Since 2011, NATO & Friends have tried to overthrow Syrian President Bashar Al Assad and replace him with someone more pliable. However, that effort failed thanks to the intervention of Russia, Iran, and Hezbollah.

Syria will remain a crucial member of the Axis of Resistance and sympathetic to BRICS+.

Iraq

After the US overthrew Saddam Hussein in 2003, they hoped to mold Iraq in the shape of Jordan, one of its most reliable allies in the Middle East.

Though, it didn’t work out the way they had hoped.

Instead, the removal of Sunni Saddam empowered Iraq’s Shia majority, which is much more sympathetic to Iran than the US agenda for the region.

Numerous powerful Iraqi militia groups are members of the Axis of Resistance. The Iraqi central government cannot challenge them and is more or less on the same geopolitical page anyway.

However, there are still a couple of thousand US soldiers in Iraq, which the Iraqi central government recently asked Washington to withdraw. Negotiations are ongoing.

Regardless of whether the relatively small number of US troops stays or leaves, Iraq’s geopolitical orientation has tilted towards the Axis of Resistance and BRICS+.

Yemen

Yemen has sometimes been called “the Afghanistan of the Middle East” because it is an impoverished tribal society that is well-armed, situated on mountainous terrain, and generally inhospitable to foreign invaders.

The Houthis, an Iran-backed group that controls most of Yemen, frustrated a military coalition of Saudi Arabia and its allies. Despite waging war since 2015, the Saudis have not been able to defeat the Houthis.

However, most people are unaware of this war or its details. It’s remarkable that the Saudis, who are among the wealthiest in the Middle East and backed by the military and political support of the US, could not defeat the Middle East’s most impoverished people in Yemen.

The Houthis—and thus the Axis of Resistance—remain firmly in control of most of Yemen.

Amid the ongoing conflict in Gaza, the Houthis have demonstrated an ability to disrupt global shipping in the Red Sea—some of the most important sea lanes in the world. They have targeted ships associated with the US and Israel with missiles and drones and have also hit Israeli cities.

However, there is little appetite for anyone to take on the Houthis. The Saudis’ poor performance against them is still fresh in everyone’s minds.

Here’s the bottom line with Yemen.

The Houthis will likely remain in power and sympathetic to the BRICS+ agenda for a multipolar world order.

Iran

Unlike most other nation states in the Middle East, Iran (known as Persia before 1935) is not an artificial construct. By race, religion, and social history, it is a nation. European bureaucrats didn’t dream up Iran by drawing zigzags on a map. The map reflects the geographic reality of a country with natural, fortress-like mountain borders. In the east, the Roman Empire generally ended where the Persian Empire began.

Iran leads the Axis of Resistance in the Middle East and is the main power pushing for the BRICS+ goal of a multipolar order in the region.

The US and its allies have not been successful in limiting Iran’s power. They’ve tried pretty much everything short of a full-scale invasion.

Instead, the opposite happened: Iran’s influence grew.

Iran’s economy has strengthened thanks to expanding relations with China, and its military has strengthened thanks to expanding ties with Russia and a well-developed domestic military-industrial complex.

In short, NATO & Friends have few cards to play against Iran.

If the US really wants to decapitate the BRICS+ agenda in the Middle East, it would need to overthrow the Iranian government. That would require waging a full-scale regional war against all members of the Axis of Resistance and launching a ground invasion of Iran.

Remember, during the Iran-Iraq War (1980-1988)—back when Saddam was a “good guy”—he threw over 500,000 Iraqi soldiers at the Iranian meat grinder, had the backing of the US AND the Soviet Union, and used chemical weapons on a scale not seen since WW1… and he barely made a dent in Iran.

The reality is that if the US is serious about invading Iran, it would likely require total mobilization and bringing back the draft. That is not likely to happen, but even if it did, it would not guarantee US victory.

If Iran thought the US was going to invade, it could also develop nuclear weapons as a deterrent within a matter of weeks or less. It might also already have a couple of secretly obtained nukes.

Given those unfavorable prospects, NATO & Friends could decide to use nuclear weapons on Iran preemptively.

Iran is well aware that the US or Israel could use nuclear weapons against it. It has contingency plans for that outcome to ensure the survival of its government. Iran’s plans also likely include making a dash for developing its own nuclear arsenal to be able to respond in kind.

Further, it’s doubtful that Russia and China would just sit back and do nothing if NATO & Friends looked like they might nuke Iran. For example, Russia could decide to station nuclear weapons and Russian soldiers on Iranian soil as a deterrent.

In short, NATO & Friends using nukes on Iran could lead to an unpredictable series of events that could quickly spiral out of control, so I don’t view it as a likely outcome.

Here’s the bottom line.

NATO & Friends don’t have any attractive options when it comes to dealing with Iran.

Conclusion

NATO & Friends are not in a weak position in the Middle East. They have nuclear weapons, advanced militaries, and some of the largest regional armies—notably Egypt, Israel, and Turkey—at their disposal.

That being said, when you take a step back and put it all together, it is clear that the geopolitical momentum is with the Axis of Resistance, which is eroding the power and influence of NATO & Friends in the Middle East.

The situation is trending in favor of the Axis of Resistance and BRICS+. If those trends continue—and I think they will—sooner or later, NATO & Friends must make a fateful decision.

They can either cede the region to BRICS+, which would seal the creation of a multipolar world order, or launch a full-scale war with the Axis of Resistance as a last-ditch Hail Mary attempt to scuttle the emergence of a multipolar world order.

There is no guarantee that NATO & Friends would win such a war. I think it’s likely it would end in disaster for them. That’s probably a big reason it hasn’t happened yet, despite no shortage of hostile intentions.

However, if NATO & Friends feel the sun is about to set on the US-led unipolar world order, they may go for it anyway. That would require them to take a bad hand and double down in a desperate attempt to get even. They may do so if they have nothing to lose, but I doubt it will change the ultimate outcome.

The situation is fluid and volatile. It’s impossible to quantify the conflict precisely.

That being said, when you put everything together, I think there is a good chance that BRICS+ will prevail in the three key proxy wars of WW3—Ukraine, Taiwan, and the Middle East.

The main implication is that we’re likely to see the end of the unipolar world order and the emergence of a multipolar world order.

Many people will be unprepared for that change of historical significance. However, when you look at the Big Picture, that is where I think we’re headed.

Unfortunately, most people have no idea what really happens when the world order changes, let alone how to prepare…

The coming crisis will likely be much worse, much longer, and very different than what we’ve seen since World War 2.

We’ll likely see entirely new political, social, and economic structures established to replace the crumbling ones from the post-WW2 era.

Countless millions throughout history were wiped out financially—or worse—during the previous world wars because they failed to see the correct Big Picture and take appropriate action.

Don’t be one of them.

But what if you get the Big Picture right?

The wealth-creating opportunities for those who correctly see what is happening and act upon it could be enormous.

That’s the difference between being on the right and wrong side of these changes of historical proportion.

It’s a rare fortune-building opportunity for those who see the investment implications of WW3 before others figure out what is really happening and how it’s likely to end.

That’s why I just released an urgent new report with all the details, including what you must do to prepare. It’s called The Most Dangerous Economic Crisis in 100 Years… the Top 3 Strategies You Need Right Now. Click here to download the PDF now.

Authored by Zachary Stieber via The Epoch Times,

Harvard University on Aug. 6 lost its bid to throw out a lawsuit that accuses university officials of ignoring discrimination against Jewish students and breaching university policies with their handling of pro-Palestinian protests.

Facts outlined in the suit, brought by a Jewish student and a nonprofit with students who stand against anti-Semitism, “show that Harvard failed its Jewish students,” U.S. District Judge Richard Stearns said in a 25-page decision.

Title VI of the Civil Rights Act of 1964 bars universities that receive federal funds, including Harvard, from intentionally discriminating against students on the ground of national origin. Violations of the law occur when a university exhibits deliberate indifference, or “affirmatively choosing to do the wrong thing, or doing nothing, despite knowing what the law requires,” according to court precedent.

Harvard argued that it did respond to the campus protests and acts of anti-Semitism. Even if the response was less than ideal, it was not clearly unreasonable, lawyers for the university told the court.

Stearns disagreed, calling Harvard’s response “at best, indecisive, vacillating, and at times internally contradictory.”

As an example, he pointed to how Harvard Dean of Students Stephen Ball informed all students that a lounge on campus was only for “personal or small group study and conversation.” After Ball’s email, though, demonstrators hosted a pro-Palestinian vigil in the lounge. Administrators not only did not seek to respond, but the dean himself attended the vigil.

“To conclude that the [complaint] has not plausibly alleged deliberate indifference would reward Harvard for virtuous public declarations that for the most part, according to the allegations of the [lawsuit], proved hollow when it came to taking disciplinary measures against offending students and faculty,” Stearns wrote.

The lawsuit was originally filed by Alexander Kestenbaum, a Jewish student, and Students Against Antisemitism Inc. in January, shortly after Harvard President Claudine Gay stepped down over criticism of her handling of the pro-Palestinian protests and unearthed plagiarism in her scholarly work.

Brown University and New York University faced similar lawsuits but settled them in July. Brown University agreed to conduct annual nondiscrimination training for employees and students while New York University said it would create a new position of Title VI coordinator.

Columbia University in June said in its settlement announcement that officials would start providing security escorts upon request.

Harvard could choose to settle its case since its motion to dismiss was largely rejected. Stearns said plaintiffs’ claims of contract breach could also move forward, while the plaintiffs did not provide sufficient evidence to advance a claim that Harvard enforced its policies inconsistently.

He directed Harvard to file a response to the lawsuit by Aug. 27 and set other deadlines as the case heads toward trial absent a settlement.

A lack of ongoing collapse in the yen overnight (did BoJ quietly step in?)…

Source: Bloomberg

…and no new macro news to feed the recession narrative, provided just the recipe for a Turnaround Tuesday rally in stocks. Notice that the entire US equity complex moved together (no cycs vs defs or tech vs energy or small vs large diffs) and each time the indices tested back down to unchanged, a mysterious bid magically arrived. As we note below, once the S&P hit its 100DMA, all the majors started selling off, erasing a good chunk of today’s gains…

…most notably, the algos lifted the S&P perfectly to its 100DMA… and immediately reversed…

As Bloomberg noted, it’s an old cliché but the phenomenon known as Turnaround Tuesday – when markets rebound from a selloff at the start of the week – is an opportunity that shows up time and again in the data. The bad news is such recoveries don’t guarantee a bottom has been reached.

Investor psychology during a rout tends to begin with jitters on Thursday, hedging on Friday and all-out selling on Monday, according to Brent Donnelly, veteran trader and president of trading analysis firm Spectra Markets.

By Tuesday, the downdraft is primed for a reversal, he wrote in a note published Monday.

“I wouldn’t expect this to be a durable bounce,” said Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore.

“There is likely to remain volatility into October, November. Any counter trend rally today and persisting for a few weeks would be something to trim risk into.”

‘Most Shorted’ stocks squeezed up to a technical resistance level and stalled…

Source: Bloomberg

Mag7 stocks rebounded today but were unable to recover yesterday’s losses…

Source: Bloomberg

Overall, rate-cut expectations have retraced most of Friday’s surge (with 2024 expectations re-shifting back into 2025)…

Source: Bloomberg

For context – pre-payrolls, the market was pricing in 200bps of cuts to the end of 2025. At its peak yesterday, the market priced-in over 230bps of cuts and today that has drifted back to around 210bps.

The overall drop in rate-cut expectations pushed Treasury yields higher (with the long-end underperforming – 2Y +6bps, 30Y +10bps today). All yields remain below payrolls plunge highs for now…

Source: Bloomberg

The 2y yield tested up to 4.00% once again…

Source: Bloomberg

The dollar rallied back and erased yesterday’s losses…

Source: Bloomberg

Gold dipped back below $2400…

Source: Bloomberg

Oil limped very modestly lower today with WTI holding around $73…

Source: Bloomberg

Bitcoin extended its bounce off $50k yesterday, testing $57,000 intraday today…

Source: Bloomberg

Finally, usage of The Fed’s Reverse Repo facility plunged back below the $300BN mark for the first time since May 2021…

Source: Bloomberg

How long before liquidity fears start to reignite?

Authored by Jonathan Turley,

CNN has been fighting a defamation case brought after a segment by Jake Tapper that accused Zachary Young and his company Nemex Enterprises Inc. of preying on people seeking to flee Afghanistan, even suggesting that he was a type of human trafficker.

CNN’s new motion for summary judgment raised eyebrows in citing Sharia law to say that what Young was doing in rescuing people was unlawful under Islamic restrictions.

CNN recently lost a recent major ruling from Judge L. Clayton Roberts found that there was evidence of malice by CNN to support the higher standard needed for defamation. The evidence in the case is remarkably bad for the network after discovery of internal memoranda and emails.

The report at the heart of the case aired Nov. 11, 2021, segment on CNN’s “The Lead with Jake Tapper” and was shared on social media and (a different version on) CNN’s website. In the segment, Tapper tells to his audience ominously how CNN correspondent Alex Marquardt discovered “Afghans trying to get out of the country face a black market full of promises, demands of exorbitant fees, and no guarantee of safety or success.”

Marquardt piled on in the segment, claiming that up “desperate Afghans are being exploited” and need to pay “exorbitant, often impossible amounts” to flee the country.

He then named Young and his company as the example of that startling claim.

The damages in the case could be massive but Young had to satisfy the higher New York Times v. Sullivan standard of “actual malice” with a showing of knowing falsehood or a reckless disregard of the truth.

Judge Roberts found that “Young sufficiently proffered evidence of actual malice, express malice, and a level of conduct outrageous enough to open the door for him to seek punitive damages.”

The evidence included messages from Marquard that he wanted to “nail this Zachary Young mfucker” and thought the story would be Young’s “funeral.” After promising to “nail” Young, CNN editor Matthew Philips responded: “gonna hold you to that cowboy!” Likewise, CNN senior editor Fuzz Hogan described Young as “a shit.”

As it often done by media, CNN allegedly gave Young only two hours to respond before the story ran. It is a typical ploy of the press to claim that they waited for a response while giving the target the smallest possible window.

In this case, Young was able to respond in the short time and Marquardt messaged a colleague, “fucking Young just texted.”

After losing the earlier motion on malice, CNN’s lead counsel Deanna K. Shullman surprised many in the motion of summary judgment by turning to Sharia law in defense of CNN. She argued that

“this entire defamation case centers on Young’s accusation that CNN implied he engaged in illegal conduct when he arranged, for a substantial fee, to have women smuggled out of Afghanistan…[D]iscovery has indicated that those activities he orchestrated and funded, which involved moving women out of Afghanistan, almost certainly were illegal under Taliban rule.”

Young’s counsel objected and noted that the allegations were never that “what Young and other private operators were doing was illegal under Taliban law.”

It is hard to see how CNN would prevail on this summary judgment motion.

At most, this would seem a question that requires a finding of fact from a jury.

I would be surprised if jurors agree with CNN that the outrage expressed by the network was based on the violation of the draconian, oppressive laws of the Taliban.

Those were the very laws that these people were desperately trying to escape.

The case could not come at a worst time for CNN which has been struggling with low ratings, layoffs, and failing revenue.

A lawyer who worked on Donald Trump’s 2020 election campaign will dodge a potential jail sentence by cooperating with Arizona’s Democratic attorney general, who’s charged 18 defendants with election interference over their participation in post-election challenges. Trump hasn’t been charged — yet — and is currently described as an unindicted co-conspirator. 

According to the agreement, nine felony charges against attorney Jenna Ellis have been dropped in exchange for her committing to “completely and truthfully” testify, and to turn over documents that could help prosecutors trying to build a case that centers on what Democrats like to call “fake electors.” These were Republicans who were encouraged by the Trump campaign to meet on Dec. 14, 2020 and sign a certificate asserting that they were “duly elected and qualified” electors, on the assumption that Trump had actually won the state’s 11 Electoral College votes.  

“This agreement represents a significant step forward in our case,” said Attorney-General Kris Mayes in a statement issued Monday. “[Ellis’] insights are invaluable and will greatly aid the state in proving its case in court…I will not allow American democracy to be undermined — it is far too important.” In 2022, Mayes — who’s lauded by leftists for being openly lesbian and seeking to turn Arizona into an abortion safe haven for people in other states — defeated her Trump-endorsed opponent by just 510 votes out of more than 2.5 million.  

The remaining defendants — who’ve all plead not guilty — have been charged with nine felonies apiece, including forgery, conspiracy and fraudulent schemes. In addition to the self-proclaimed GOP electors, they include Rudy Giuliani and former Trump chief of staff Mark Meadows. 

The Arizona cases aren’t expected to reach the trial phase until next year. In June, lawyers for defendants filed challenges to the prosecution, saying it ran afoul of an Arizona law that, like similar statutes in other states, takes aim at what is called a “strategic lawsuit against public participation,” or “SLAPP.” A motion filed for charged Trump lawyer John Eastman asserted that…

“[Arizona’s anti-SLAPP law] is quite clearly aimed at preventing public officials from using the criminal process as a weapon to punish and prevent speech on political issues…Public officials have the right to voice their disagreement through open discourse guaranteed by the First Amendment, but they should not use indictments to silence their opponents, as the attorney general has tried to do here.” 

Ellis was also targeted by Georgia prosecutors. In October, she tearfully pleaded guilty to a felony count of aiding and abetting false statements and writing, telling a judge in an Atlanta courtroom that she regretted not having performed “due diligence” about the campaign’s claims of election fraud. “If I knew then what I know now, I would have declined to represent Donald Trump in these post-election challenges.” She was sentenced to five years probation, $5,000 in restitution, 100 hours of community service and was ordered to write an apology letter addressing the citizens of Georgia. 

During the 2020 campaign, Ellis described herself as one member of an “elite strike force team” of attorneys, and frequently shared a microphone with Giuliani. She reportedly urged Trump to try persuading Mike Pence not to open election results from contested states on Jan. 6, 2021.  

By Tsvetana Paraskova of OilPrice.com

The U.S. Department of Energy is allocating $2.2 billion in grants for upgrades of the grid to make it more resilient to extreme weather events and accommodate more renewable energy.

The funding from the DOE will add to private sector financing to support eight grid upgrade projects across 18 states.

According to the U.S. Administration, the DOE funding is expected to support the construction of more than 600 miles of new transmission lines and the upgrade of about 400 miles of existing lines so that they can carry more current.

“The first half of 2024 has already broken records for the hottest days in Earth’s history, and as extreme weather continues to hit every part of the country, we must act with urgency to strengthen our aging grid,” U.S. Secretary of Energy Jennifer Granholm said in a statement carried by Reuters.

As power demand grows, the share of renewables rises, and extreme weather events such as heat waves and winter freezes become more frequent, electric utilities say that the U.S. grid reliability will need significant spending, more than the expenditures in previous decades.

U.S. utilities and regulators have raised significantly their forecasts of peak power demand in the coming decade, as both expect exponential growth in electricity demand from data centers and new technologies such as generative AI.

Investments that have been pushed back in recent years have now become urgently needed to address grid reliability issues and expand the transmission infrastructure to meet growing demand and accommodate more solar and wind power in the system.

“The problem that we have right now comes from decades of lack of investment,” Pedro Azagra, chief executive at Avangrid, which operates utilities in New England and New York, told The Wall Street Journal last month.

“You cannot catch up in one minute,” added the executive, who said that Avangrid has hiked expenditures to address challenges in grid reliability.

By Satish Jindel, president of ShipMatrix Inc., a consultancy, and founding member of RPS (now FedEx Ground) who has analyzed trends in the parcel and less-than-truckload sectors for 30 years. Via FreightWaves

For decades, FedEx and UPS essentially functioned as a duopoly in the U.S. parcel delivery market. With few challengers, they made lots of money.

The second-quarter earnings release from UPS on July 23 shocked many investors, resulting in the stock dropping 12% within minutes of the earnings call. The big surprise was that UPS customers are downgrading from Air Express to Ground service and from Ground to the lower-priced SurePost, an economy service that involves injecting parcels into the U.S. Postal Service system for final-mile delivery.

If the market was paying attention to what the carriers were saying in prior earnings calls, they should have expected these changes. Both FedEx and UPS in recent years have touted how their improved Ground service made transit times faster than those of their competitors. In the process, they also created a competitor to their own Express and Deferred services.

Since 2019, UPS has expedited Ground transit times to the point that delivery time has fallen from three days to two days for 12% of lanes and from three days to two days for an additional 22% of its routes, allowing more express and deferred parcels to be converted to ground. Even SurePost, which takes one to two days longer than Ground service for delivery, has experienced transit time improvements for 7% of packages, prompting customers to downgrade service options.

The decline of Express and Deferred volumes actually started more than two decades ago. It began when FedEx acquired RPS (rebranded as FedEx Ground) and the industry guaranteed day-definite ground service. In 2000, the FedEx Express operating unit handled 2.92 million parcels per day. Throughput for fiscal year 2024, ended May 31, was 2.58 million parcels. During the same period, FedEx Ground daily volume has increased from 1.52 million to 10.7 million parcels.

Furthermore, with investment in multicarrier manifesting systems from companies like ProShip, and visibility and analytics from companies like ShipMatrix, shippers are now able to utilize cheaper and yet faster ground services.

A major inflection point has been the explosive growth of e-commerce over the past 10 years, which has resulted in 65% of all domestic parcels being delivered directly to consumers. And, with more online orders now fulfilled from local stores or by Chinese retailers like Temu and Shein bringing orders into gateway airports like Miami, Los Angeles, Dallas and Chicago, the last-mile deliveries are being done by smaller companies like Better Trucks, Jitsu, Veho, Uni-Uni and SpeedX, which operate with a lower cost structure. 

And, while these regional carriers may eventually lose the business to FedEx and UPS, the heightened regional competition forces the giants to operate in shorter shipping zones that have lower margins, resulting in lower yields per parcel. 

Equally important is the growth of private fleets by major retailers. Amazon delivering over 22 million parcels per day using drivers employed by its network of delivery service partners. Walmart is doing something similar.

“In Walmart U.S., over the last 12 months, 4.4 billion items were delivered the same or next day, with about 20% of those delivered within three hours,” Walmart CEO Doug McMillon stated on the company’s May 16 earnings call.

That means Walmart delivers over 4 million parcels per day from its 4,600 local stores by deploying alternate approaches, including the use of gig workers at companies like Uber Eats and DoorDash typically known for food delivery.

With the push over the past decade to fulfill online orders from facilities closer to the consumer, the percentage of parcels traveling shorter distances (less than 300 miles) has increased from 45% to 68% while those going 1,400 miles or more have shrunk from 17% to 10%.

The shift of large e-commerce retailers from Ground to SurePost and UPS’ rollout of a cheaper Ground Saver service with transit time of Ground plus three days illustrates that consumers will accept slower delivery for a lower price of the item. Even Amazon, which has pushed the envelope on faster delivery, is responding to low-cost competition from Temu and Shein. 

Amazon recently announced it will offer a discount marketplace for lower-priced items that are shipped from overseas directly to consumers within 10 days of an order by avoiding stocking at more expensive U.S. fulfillment centers. 

Given these monumental developments, by the 2026 peak season the private fleets of major retailers and local companies are positioned to deliver more parcels to residences than FedEx and UPS combined. We’re talking about more than 40 million parcels per day. FedEx and UPS leaders need to prepare for that future.