By Peter Tchir of Academy Securities

This morning, I can’t help but wonder about Tesla cutting prices on some models (first in China and then domestically) and the off-the-charts cancellations builders are facing.  But that could wait until this weekend’s report.

What can’t wait until this weekend is the messaging, I’m seeing related to inflation.

On the “political” front:

• Senator Warren (@SenWarren) tweeted: “Inflation has slowed for six months, providing families more breathing room. The Fed needs to take this data into account and not drive the economy off a cliff with more extreme interest rate hikes.“

• Let’s remember that this was all “transitory” until amongst other things, President Biden and Chair Powell sat down in November 2021 to discuss his renomination.

On the “media” front:

• There is a “victory lap” sort of reporting. It is almost as though mainstream media got fed the talking points that “7.1% is bad! But 6.5% is good”. We are “winning” the war. It is headed in right direction, etc. Do NOT underestimate how much mainstream media is influenced via talking points to influence the public. Almost feels to me like we are setting up for a shift in how inflation is treated.

• Nick Timiraos (@NickTimiraos) is writing about and tweeting about annualizing the Q4 data! (Where have we seen that before? From 2 + 2 =5 on December 15th) Whether true or not, many view him as the person in the press closest to this Fed, so it is interesting to see what narrative he is helping shape for the more specialized audience (financial media as opposed to mainstream media).

I am still neutral, but this shift in political and media talking points could pave the way for a series of Fed speakers to come out downplaying the inflation risk.

That would make me want to get on the bull one more time as that would fuel, likely erroneously, but fuel nonetheless, another big “soft landing” surge in stock prices (with a good rally in the front/belly of the yield curve).

Goldman Sach’s credit card business, anchored by the Apple Card since 2019, has been one of the company’s biggest successes in gaining retail lending scale, but rising losses are very concerning for the new division. 

Disclosed in a regulatory filing Friday, Goldman’s Platform Solutions segment incurred a whopping $1.2 billion loss for the first nine of last year, with losses accelerating by the year. The filing shows pretax losses have mounted to $3 billion since the start of 2020. People who are familiar with the unaudited stats told Bloomberg:

When the latest quarter’s figures get added to it next week, that cumulative loss will approach $4 billion in the three-year span and $2 billion for the year driven by loan-loss provisions. 

The filing also revealed provisions for credit losses were $942 million for the first nine of 2022 (recall last year, we noted the losses were quickly mounting for Goldman). Losses are steadily rising as the Covid money helicopter drop has been over for more than a year. 

Consumers are getting slaughtered with maxed-out credit cards and the highest interest rates in years, on top of 20 months of negative real wages, personal savings wiped out (at least for the poorest of folks), and increasing risks of recession, which has led to the emerging trend of people not being able to service their debts. 

“The division is a whittled-down version of what was once Goldman’s lofty goal of storming the consumer market — building a digital bank of the future that would become an industry leader. Instead, rattled by the persistent costs and difficulty of setting up new business lines, the firm decided to scale back its ambitions and reposition the pieces,” Bloomberg said. 

What’s left of Goldman’s entry into the consumer space is parked in Platform Solutions, including card tie-ups and installment lending. The most profitable part of the group is the transaction-banking business line.

Goldman forecasted the division would be profitable by the end of next year, but that prediction is too rosy and might not be until 2025, people with direct knowledge said. 

Increasing losses offer insight into what executives might have in store for the money-losing division as CEO David Solomon has unleashed the largest job cuts in an attempt to reel in spending. 

Goldman reports quarterly earnings next week and will offer more insight into Platform Solutions. So far, the bank’s bet on consumer subprime (hoping to profit off America’s sub-700 FICO population by lending to it) appears to be a dud. 

Authored by Lance Roberts via RealInvestmentAdvice.com,

Home prices have started to correct as interest rates rose sharply in 2022. However, the real problem for home prices is still coming in 2023 as the standoff between sellers and buyers comes to a head.

However, before we get there, let’s review how we got here.

Since the turn of the century, there have been two housing bubbles, with home prices reaching levels of unaffordability not previously seen in the United States. Such was, of course, due to lax lending policies and artificially low-interest rates luring financially unstable individuals into buying homes they could not afford. Such is easily seen in the chart below, which shows home equity versus mortgage debt. (Home equity is the difference between home prices and the underlying debt.)

The current surge in home prices makes the previous bubble in 2008 look quaint by comparison.

At that previous peak in 2007, the equity in people’s homes was around $15 trillion, while mortgage debt stood at $9 trillion. When the bubble popped, home prices collapsed, flipping homeowner’s equity from positive to negative. Home equity is roughly $30 trillion, while mortgage debts have increased to roughly $12 trillion. That is an incredible spread, unlike anything seen previously.

However, this time, the surge in home prices wasn’t due to a surge in lax underwriting by mortgage companies but rather the infusion of capital directly to households following the COVID-19 pandemic-driven shutdown.

Of course, many young Millennials took that money and jumped into the home-buying frenzy. In many cases, buying sight unseen or willing to pay way over the asking price (thereby inflating home prices.) To wit:

“More and more millennials are sinking huge sums of money into homes they’ve never actually set foot in. While the sharp increase in sight-unseen buying in 2020 was certainly driven by pandemic restrictions, the phenomenon appears to be here to stay, due to the tech-forward nature of millennials and the competitive nature of the housing market.” – Insider Business

Of course, the rush to buy a home, and overpaying for it, led to regret.

“The number-one reason for buyer’s remorse: 30% of respondents said they spent too much money. The second most common regret was rushing the home-buying process, with 30% saying their purchase decision was rushed and 26% indicating they bought too quickly.” – CNBC

Unfortunately, there will be less demand as the massive flood of money into the housing market from Government stimulus reverses.

At The Margin

The problem with much of the mainstream analysis is that it is based on the transactional side of housing. Such only represents what is happening at the “margin.” Rather, the few people actively trying to buy or sell a home impact the data presented monthly.

To understand “housing,” we must analyze the “housing market” as a whole rather than what is happening at the fringes. For this analysis, we can use the data published by the U.S. Census Bureau.

To present some context for the following analysis, we must first have some basis from which to work. Our baseline for this analysis will be the number of total housing units, which, as of Q3-2021, was 143,613,000 units. The chart below shows the historical progression of the number of housing units in the United States compared to the total number of households and an estimate of the total potential households of buyers over the age of 25. For the estimate, we dividend the total active population over the age of 25 by 1.5 to account for single buyers and couples, who tend to make up the majority.

Not surprisingly, there are currently more houses than households to buy. Such is because several homes are vacant for different reasons, second homes, vacation homes, etc. Such is why, as we wrote previously, there isno such thing as a housing shortage.To wit:

“There are three primary issues that lead to changes in the supply of housing:“

1. Prices rise to the point that sellers come into the market.

2. Interest rates rise, pulling buyers out of the market.

3. An economic recession removes buyers due to job loss.

“When those occur, transactions slow down, and inventory rises sharply.”

Not surprisingly, since that article was written in November 2020, just 2-years later, the supply of homes has risen sharply. Such is often a leading indicator of recessionary onsets as well.

Also, sharply rising interest rates pull buyers out of the market.

 Another drag on prices in the new year will continue to be inventory coming to market as existing homeowners also try to sell their homes. More inventory and few buyers will equate to a further price drop in the coming year.

Home Prices To Fall Further

The chart below is the most telling of why home prices will fall further in the coming year. It is a composite index of everything involved in housing activity. It compiles new and existing home sales, permits, and housing starts. The index was rebased to 100 in 1999. The runup in the activity index into 2007 was a function, as noted above, of lax lending policies that led to the collapse in activity in 2008.

Following the collapse in 2008, the Fed dropped rates to zero and launched multiple QE programs as the Government bailed out everything that moved. The increase in housing activity over the next decade was unsurprising, and repeated monetary interventions boosted the wealth effect.

However, the sharp jump in housing activity in 2020 resulted from the direct monetary injections into households.

The reversion in home prices that has begun will likely continue as that excess liquidity continues to leave the economic system. That drain of liquidity, coupled with higher interest rates, and less monetary accommodation, will drag home prices lower. As that occurs, the “home equity” that many new buyers had in their homes will dissipate as homeownership costs continue to rise due to higher rates and inflation.

As home price depreciation gains traction, more homeowners will be dragged into selling to retain what value they had. For many Americans, most of their net worth is tied up in the homesteads. As the value fades, the decision to sell becomes more of a panic rather than a need.

While there isn’t a vast wasteland of bad mortgages sitting on the books, as seen in 2008, that doesn’t negate the risk of further home price declines in the coming year.

Not only are further home price declines possible, but it is also probable they could be deeper than many currently expect.

What happens when plebs can’t afford bread, and the circuses aren’t that entertaining?

Nothing good. Which is why the cost-of-living crisis is the #1 problem, according to the World Economic Forum’s Global Risks Report – an annual poll of 1,200 government, business and civil society professionals.

According to the poll, there will be little respite from “energy inflation, food and security crises” in the coming years (or months?).

In the near term, nearly 70% of those polled say volatile economies and various ‘shocks’ are in the cards, while 20% or so of those polled say they fear “catastrophic outcomes” within the next 10 years, according to Bloomberg.

“Very few leaders in today’s generation have been through these kind of traditional risks around food and energy, while at the same time battling what’s coming up in terms of debt, what’s coming up in terms of climate,” said Saadia Zahidi, WEF managing director, who warned that the world may be entering a “vicious cycle.”

“We’re going to need a sort of new type of leadership that is much more agile,” she told Bloomberg Television.

Next week will mark the annual WEF conference in Davos, Switzerland, where the global elite will sit around and discuss how best to run our lives.

The gathering begins at a time when inflation is at a four-decade-high across many advanced economies, with interest rates far more elevated than anyone was predicting 12 months ago.

The report calls for global cooperation, and warns that if governments mishandle the current crisis they “risk creating societal distress at an unprecedented level, as investments in health, education and economic development disappear, further eroding social cohesion.”

Increases in military expenditure could reduce support for vulnerable households, leaving some countries in a “perpetual state of crisis” and set back the urgent need to tackle climate change and biodiversity loss. -Bloomberg

The worst case scenario, according to the report, is the risk of “geoeconomic warfare” – in which geopolitical rivalries are likely to increase economic tensions, exacerbating both short and long-term risks. 

“In this already toxic mix of known and rising global risks, a new shock event, from a new military conflict to a new virus, could become unmanageable,” according to Zahidi. “Climate and human development therefore must be at the core of concerns of global leaders to boost resilience against future shocks.”

What’s more, the report also warned that the interaction of a ‘cluster of risks’ can cause a cascade of future problems in a “polycrisis,” such as “resource rivalry” in which countries compete for natural resources.

Lost in all the focus on CPI-driven chaos in capital markets, The SEC charged cryptocurrency lending firm Genesis Global Capital and crypto exchange Gemini with offering unregistered securities through Gemini’s “Earn” program.

As CoinTelegraph’s Jesse Coghlan reported, in December 2020, Genesis, a subsidiary of crypto conglomerate Digital Currency Group (DCG) entered into a deal with Gemini to offer the exchange’s customers the yield-bearing crypto product. This was then launched in February 2021.

Under the agreement, Gemini customers could loan their crypto to Genesis under the promise the latter would repay the loan with interest. Genesis had full control over how it would earn a yield to repay Gemini creditors.

In a statement, the SEC said its complaint alleges that the Gemini Earn program constitutes an offer and sale of securities and should have been registered with the commission.

“We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors,” SEC Chair Gary Gensler said in a statement.

We @SECGov charged Genesis & Gemini for the unregistered offer & sale of crypto asset securities through Gemini Earn.

Crypto intermediaries need to comply with our securities laws. This protects investors. It promotes trust in markets. It’s not optional. It’s the law.

— Gary Gensler (@GaryGensler) January 12, 2023

Gensler added the charges “build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws.”

“It’s not optional. It’s the law.”

The SEC said its investigating other securities law violations from other entities relating to the Gemini Earn program.

But, as Coghlan reported later in the day, Tyler Winklevoss, the co-founder of cryptocurrency exchange Gemini, hit back at the SEC charging Gemini, calling the action “totally counterproductive” in a series of tweets.

5/ But seriously, what is the point or urgency here? The Earn program has been shut down for almost two months.

— Tyler Winklevoss (@tyler) January 12, 2023

In a series of tweets on Jan. 12, Winklevoss shared his disappointment about the charges by the Securities and Exchange Commission (SEC) over Gemini’s “Earn” program, claiming the regulator was “optimizing for political points,” calling the allegations “super lame” and a “manufactured parking ticket.”

4/ We look forward to defending ourselves against this manufactured parking ticket. And we will make sure this doesn’t distract us from the important recovery work we are doing.

— Tyler Winklevoss (@tyler) January 12, 2023

Gemini’s Earn product launched in February 2021 and officially ran until Jan. 8. A deal with the crypto lender and Digital Currency Group (DCG) subsidiary Genesis allowed Gemini users to earn yield by lending their crypto to the market-making firm.

Tyler Winklevoss stated Gemini would defend itself against the unregistered security charges and would “make sure this doesn’t distract us from the important recovery work we are doing.”

As OilPrice’s Alex Kimani writes, oil prices have kicked off the new year on the back foot, tumbling to large losses in the first week before staging a modest recovery in the second as demand uncertainty continues to weigh on trading. Concerns over the rapid expansion of China’s COVID cases, following the relaxation of strict zero-COVID policies have continued to weigh heavily on oil prices.

Commenting on oil’s recent lethargy, Goldman trader Rich Privorotsky writes that for all the excitement on China re-opening, time spreads in WTI remain negative (2m-3m) and are trading at 1m lows and “something just doesn’t quite jive between the optimism flooding back into cyclicality versus an oil price which should have lot more going for it given”

1. low US inventories

2. a de facto put from the SPR

3. issues on Russian supply/exports

4. China re-opening expectations becoming fully entrenched.

Incidentally, Privorotsky notes that copper does not share the concern, breaking out above the recent range: “perhaps the relative pricing differential is a reflection on China growth relative to growing concerns about US growth…a thematic which is very clearly reflected in equity performance over the last couple months. Keeping an open mind, seems market is chasing short term momentum with investors keen to re-deploy capital/chasing what has recently been working.”

Luckily, for oil bulls, reprieve could be on the way with oil markets having reacted positively to China re-opening its borders on February 8, 2023 as one of the final acts of abandonment of the zero-Covid era. More relief is expected to come thanks to the Lunar New Year travel providing a short-term demand boost. Chinese Lunar New Year lasts for two weeks, and is set to begin on Sunday, 22 January 2023, and end on February 5, the date of the rising of the full “Snow Moon.” Indeed, the Civil Aviation Administration of China (CAAC) has predicted that passenger flights might reach 88% of their pre-pandemic levels by the end of January. However, this might only be a temporary bump unless China is able to move past its latest COVID wave before the oil markets feel confident about prospects of a sustained demand uplift.  But some experts are still holding out hope that the worst could be in the rearview mirror. Commodity analysts at Standard Chartered have expressed optimism that the prolonged selloff could have reached an inflection point, with the analysts saying that the seven-month long downwards trend is likely to falter now. The analysts say that the previous hyperbole that triggered a huge oil price rally has cooled off and has been replaced by excessive pessimism leading to oil prices undershooting their 2023 target.

StanChart points to the oil futures markets, where…

“…speculative positioning now reflecting an overly bearish viewpoint in our opinion and with crude oil the least popular positive exposure apart from palladium among investors, we think there is now short-term upside of USD 5-10/bbl, with more to follow in H2. With supply risks biased towards lower supply, and with OPEC patience likely to be strained by further attempts to push prices significantly below.”

The commodity experts have forecast that demand growth in 2023 will clock in at 1.04 million barrels per day (mb/d), with non-OECD countries providing all but 9 thousand barrels per day (kb/d) of that. Demand is expected to be stronger in the second half of the year, with H2 demand coming in at 101.1mb/d, 1.7mb/d higher than the H1 average. The analysts say much of that growth will come from the Asia-Pacific region where they have predicted that growth will accelerate from 177kb/d in 2022 to 852kb/d in 2023, with China seeing demand growth of 483kb/d compared to a 350kb/d decline in 2022.

At this juncture we could say the oil market is almost evenly divided between the bulls and the bears.

Hedge fund manager Pierre Andurand is wildly bullish, and recently came out and predicted that oil may top $140/bbl this year if Asian economies fully reopen after COVID-related lockdowns. According to Andurand, the market is “underestimating the scale of the demand boost [a full reopen] will bring,” also telling Bloomberg that oil demand could grow by more than 4M bbl/day, or ~4%, this year. Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners LP, has told the Financial Post that oil prices will return to $100 per barrel in 2023 while Bank of America has predicted that Brent could quickly go past $90 per barrel on the back of a dovish pivot in the U.S. Federal Reserve and a “successful” economic reopening by China.

But there’s no shortage of bears, either.

Two weeks ago, Credit Suisse broke the hearts of the bulls after declaring that the selloff is not done yet, and Brent could see further downside towards the 61.8% retracement at $63.02 per barrel. Interestingly, Brent prices have given up another 4% since that dire prediction was made to trade at $80.75 per barrel, implying the downside risk remains huge. A week ago, famous oil broker PVM Oil wrote in a blog that,“There is no doubt that the prevailing trend is down, it is a bear market,’’ citing warm weather in Europe as well as China’s bing Covid woes. Another ominous sign: a week ago, Brent futures prices slipped into backwardation suggesting that traders believe that future oil prices will be lower than current prices.

Meanwhile, ING strategists see a weak Q1 but stronger prices from Q2 going forward, writing in a blog last week that, “The oil market is looking better supplied in the near term and risks are likely skewed to the downside. However, our oil balance starts to show a tightening in the market from the second quarter through to the end of the year, which suggests that we should see stronger prices from 2Q23 onwards.”

By Todd Maiden of FreightWaves

Freight costs fell year over year (y/y) in December for the first time in 28 months, according to a Thursday report from Cass Information Systems.

The Cass Freight Index report showed total expenditures on the payments platform were down 4.3% y/y and 5.5% lower than in November. The shipments component of the index recorded a 3.9% y/y decline, meaning actual transportation rates were likely 0.4% lower y/y during the month (down 2.2% sequentially and 5.3% seasonally adjusted).

The report said lower truckload contract rates were the main catalyst for the index’s decline during the month. The data set includes other transportation modes, like less-than-truckload, rail and parcel, and also captures fuel and accessorial charges, creating some noise in the numbers. Truckload accounts for more than half of freight expenditures on the platform.

“Freight rates are on track to fall 5% in 2023 just based on the normal seasonal pattern of this index,” ACT Research’s Tim Denoyer said. “With loose market conditions and some welcome relief in diesel prices, the actual decline is likely to be a good bit larger.”

With the fourth-quarter earnings season set to start next week, analysts have been dialing in expectations and picking likely winners and losers for the year. While some analysts have noted key indicators are slightly improving, the consensus is TL contract rates saw some pressure in the fourth quarter and will likely be down y/y by mid- to high-single-digit percentages at least through the first half of 2023.

However, most are pointing to firming fundamentals for carriers by midyear, resulting in a potential upcycle in the back half. The thesis is that persistent cost pressures on carriers, and regulatory impediments to capacity like AB5, will result in a steady exodus of operators, removing downward pressure on rates. Further, the weakness in demand and pricing evident in the third quarter appears to have accelerated during the fourth quarter, creating easier y/y comps for the group later this year.

While shippers may be beginning to see some savings, freight costs are still much higher than they were before the pandemic. Cass’ expenditures subindex was up 23% for full-year 2022, which followed a 38% increase in 2021.

Cass’ Truckload Linehaul index, which excludes fuel and accessorials, increased 1.7% y/y but fell 1% from November. December marked the seventh straight sequential decline for linehaul rates. The report also noted that the y/y comps ramp higher with December’s result sitting 5% below January 2022 levels.  

“With a tougher comparison in January, this index is likely to turn down on a y/y basis,” Denoyer continued. “New truckload contracts are generally being renewed with considerable rate reductions, but this pressure will be partly offset by strong trends since Thanksgiving in spot rates, which have held most of their gains even as drivers have by and large come back from holiday break.”

Although he said the TL market was “transitioning from the late-cycle stage to the bottoming stage” and that tightening in the spot-contract spread is “a key signpost of this new stage of the cycle, even green shoots of a new rate cycle.”

Shipments were down 3.3% from November, but up 1.2% on a seasonally adjusted basis.

“Normal seasonality from here would have shipments back in positive territory y/y in 1H’23, but sharpening declines in imports, into the West Coast in particular, suggest near-term trends may soften further,” Denoyer said.

Data used in the Cass indexes is derived from freight bills paid by Cass, a provider of payment management solutions. Cass processes $37 billion in freight payables annually on behalf of customers.

Turkey on Thursday summoned Sweden’s ambassador to complain about issues related to the country’s attempt at NATO ascension, at a moment Stockholm has lately admitted that Turkey is asking what it cannot give. 

This latest example of Turkey’s anger is perhaps among the most absurd examples of Turkish overreach regarding its demands that Sweden clamp down on dissident Kurdish groups, given it involves a mere tweet and a group exercising free speech.

The offending tweet by a Swedish-based activist group called Rojava Committee of Sweden is described by AFP as follows: “A tweet by the Rojava Committee of Sweden on Wednesday compared Erdogan to Italy’s Fascist dictator Benito Mussolini, who was hung upside down after his execution in the closing days of World War II.”

And more provocatively the tweet included imagery of a dummy made to look like Erdogan swinging from a rope, continuing the Mussolini death comparisons. Apparently the group staged the “hanging” of the dummy on a street in Stockholm as part of a demonstration.

“History shows how dictators end up,” the group wrote as part of the message. “It is time for Erdogan to resign. Take this chance and quit so that you don’t end up hanging upside down on (Istanbul’s) Taksim Square.”

🇹🇷🇸🇪 Turkey summons Swedish ambassador as Kurdish group hangs puppet of Turkish President Erdogan in Stockholm . pic.twitter.com/0rbanl5Gd8

— SlowFlights (@FlightsSlow) January 12, 2023

Turkey’s government is demanding severe action against the Kurdish activist group from Swedish authorities over the whole thing. While Sweden’s foreign ministry condemned the video and tweet, this wasn’t enough to satisfy Turkish officials, who want a legal crackdown by authorities against the Rojava Committee of Sweden.

“We urge the Swedish authorities to take necessary steps against terrorist groups without further delay,” Erdogan’s chief spokesman Fahrettin Altun tweeted. In response, Sweden’s Foreign Minister Tobias Billstrom said Stockholm supports “an open debate about politics” but “distances itself from threats and hatred against political representatives.”

“Portraying a popularly elected president as being executed outside city hall is abhorrent,” the Swedish diplomat wrote. However, legally tweet is being interpreted in Sweden and Europe as protected speech, and there is unlikely to be any further action against the Kurdish group. Of course, Turkey under Erdogan hasn’t been a fan of free speech for a number of years at this point.

Lately Turkey has demanded that Sweden go so far as to even change its laws related to speech and freedom of assembly in order to crack down on anti-Turkey Kurdish groups. But Swedish Prime Minister Ulf Kristersson has admitted that at this point regarding Ankara’s stipulations to joining NATO, “We cannot meet all of Turkey’s demands.” 

Authored by Denes Albert via Remix News,

Russian forces, who have reportedly suffered considerable losses on the front line, have now deployed additional units of the world’s most powerful mortar, which is capable of using a nuclear warhead on the battlefield.

Dubbed the “Sledgehammer,” the self-propelled 2S4 Tyulpan mortar, known as the Tulip in English, has a 240mm cannon — twice the caliber of NATO mortars, which are just 120mm — making it by far the largest caliber mortar system in the world. Carried on its own tracks, it has a range of 19 kilometers and is used to destroy large fortifications, military equipment, or strategic positions.

🇷🇺 2S4 Tyulpan en action. pic.twitter.com/2GDC0vUNHC

— Fulgur advenit (@GrillardEric) January 2, 2023

The 2S4 Tulip self-propelled mortar is capable of firing nuclear bombs, but this is likely to be limited to “micro-nuclear bombs” designed to destroy an area the size of a football stadium. It can also fire armor-piercing, laser-guided, and prohibited cluster munitions, as well as tactical nuclear bombs, according to Hungarian news outlet Ziare.

“It is a massive weapon, devastating when conventional weapons are used, capable of destroying a large area. But it would also make a very large target for Ukrainian artillery and drone crews, who hunt for offensive equipment on a daily basis,” a security expert told the Daily Mirror.

“The mortar is capable of targeting an out-of-sight target with bombs that would be extremely difficult if not impossible to intercept,” he explained.

Ukrainian forces have targeted the mortar system on the battlefield, and some footage from drone operators has shown a number of the weapons knocked out.

Minus one Russian 240-mm self-propelled heavy mortar 2S4 Tyulpan. A Russian heavy mortar burst into flames. The fire was extinguished, but the mortar was disabled. pic.twitter.com/b6bR12kd0w

— Paul Jawin (@PaulJawin) January 2, 2023

Developed during the Cold War, an initial batch of three vehicles was completed in 1969; it was immediately directed to a factory test program, which ended in October. The Tyulpan entered service two years later, and serial production began in 1974. The 2S4 Tyulpan was first seen by Westerners in 1975, so it was given the NATO designation M-1975, while its official name is 2S4.

Out of hundreds produced, Russia is believed to have only 40 to 50 still in operational service. However, Moscow is believed to have 400 units in storage and to be activating additional mortars to send to the battlefield in Ukraine.