By Tsvetana Paraskeva of Oilprice.com

Significant global economic uncertainties in the coming months made OPEC cut on Monday its estimate of global oil demand growth for this year and next, in the fifth reduction of consumption forecasts since April.

OPEC revised down each of its 2022 and 2023 oil demand growth forecasts by 100,000 barrels per day (bpd) from last month’s estimates due to China’s still-strict Covid policy and economic challenges in Europe, the organization said in its Monthly Oil Market Report (MOMR) out on Monday.  

“The significant uncertainty regarding the global economy, accompanied by fears of a global recession contributes to the downside risk for lowering global oil demand growth. In addition, China’s strict adherence to the ‘zero COVID-19 policy’ adds to this uncertainty, making the country’s recovery path even more unpredictable,” OPEC said.  

In October, a week after announcing a 2-million-bpd headline cut to its collective oil production target, OPEC slashed its global oil demand growth estimates for both 2022 and 2023. 

Those estimates are now further revised down by 100,000 bpd each.

OPEC now sees global oil demand growth at 2.5 million bpd in 2022 after slashing the fourth-quarter demand projections by nearly 400,000 bpd.

Global oil demand is projected to average 99.6 million bpd this year, with developed economies in the Americas seeing the highest rise in demand, led by the U.S. on the back of recovering gasoline and diesel demand, the cartel said. Light distillates are also projected to support demand growth this year, OPEC added.

For 2023, OPEC now sees oil demand growth at 2.2 million bpd, down by 100,000 bpd from the growth expected in the October report. World oil demand is set to average 101.8 million bpd, “supported by expected geopolitical improvements and the containment of COVID-19 in China,” according to OPEC. Next year, U.S. demand is expected to exceed 2019 levels, thanks to a recovery in transportation fuels and light distillate demand. However, OECD Europe and the Asia Pacific are not expected to rise above 2019 consumption levels, the cartel said.

“While risks are skewed to the downside, there exists some upside potential for the global economic growth forecast. This may come from a variety of sources. Predominantly, inflation could be positively impacted by any resolution of the geopolitical situation in Eastern Europe, allowing for less hawkish monetary policies,” OPEC noted.

It’s been a bad year for Wall Street predictions: actually scratch that, it’s been absolutely terrible. Last November when bank after bank released their paperweight 100+ page forecasts for the year ahead (which weren’t worth the cost of the paper they were printed on) the average year ahead forecast among Wall Street’s firms was above 5,000 with a few exceptions: both Bank of America and Morgan Stanley were well below. As we noted exactly one year ago, Morgan Stanley forecast a “below-consensus forecast for the S&P 500 (4,400 by end-2022). That ‘bearish’ forecast is still a historically high multiple (18x) on an optimistic 2023 EPS number (US$245).” Considering that Goldman was pushing 5,100 and JPMorgan’s permabulls led by mARKKo were somewhere in the mid-5000s, Morgan Stanley’s Mike Wilson would end up looking positive like Nostradamus compared to all of the bank’s ridiculous peers (only BofA’s Michael Hartnett was even more accurate, read bearish).

Which is not to say that Morgan Stanley got everything right. On the contrary, as this tweet from one year ago show, the bank’s economists were convinced the Fed would not hike at all in 2022. So much for “Team Transitory” after the fastest hiking cycle since Volcker.

Morgan Stanley: “Our economists see two drivers for no hikes in 2022 – falling core PCE inflation and rising labor force participation.”

— zerohedge (@zerohedge) November 21, 2021

With that in mind, we will gladly skip anything JPM and Goldman have to say about the year ahead (or maybe we will just highlight it as a scenario that will definitely not happen), and instead will selectively cover what the bank’s equity strategist Mike Wilson predicts will happen next year, if for no other reason than he has been unabashedly contrarian – and right for the most part – in 2022.

Ironically, unlike last year when Wilson’s downbeat forecast stood out like a sore thumb, in his latest year-ahead preview titled “2023 US Equities Outlook: The Road Not Taken” (available to pro subs), this year even Wilson – who recently turned quite bullish and correctly predicted a few weeks ago that stocks would spike in the current tactical and technical bear market rally and rise as high as 4,150 before they stumble much lower – admits that his year ahead targets are “unexciting with a narrower range than normal”, although – in taking a page out of the famous Robert Frost poem – he predicts that the path in 2023 “will not be as smooth. Investors will need to be more tactical and make choices with no regrets.”

Here we will cut to the chase, and report upfront that Wilson’s year-end 2023 forecast is not that far from where the market closed today. And while the bank does not expect much to change price-wise between now and Dec 31, 2023, it thinks that the way we get there will be quite a rollercoaster, to wit:

While our year end 2023 base case price target of 3,900 is roughly in line with where we’re currently trading, it won’t be a smooth ride. We remain highly convicted that 2023 bottom up consensus earnings are materially too high. On that score, we revise our ’23 EPS forecast another 8% lower to $195 in the base case, a reflection of worsening output from our leading earnings models. This leaves us 16% below consensus on ’23 EPS in our base case and down 11% from a year-over-year growth standpoint. After what’s left of this current tactical rally, we see the S&P 500 discounting the ’23 earnings risk sometime in Q123 via a ~3,000-3,300 price trough.

We think this occurs in advance of the eventual trough in EPS, which is typical for earnings recessions. While we see 2023 as a very challenging year for earnings growth, 2024 should be a strong rebound where positive operating leverage returns—i.e., the next boom. Equities should begin to process that growth reacceleration well in advance, and rebound sharply to finish the year at 3,900 in our base case.

Bear/Base/Bull price skew: 3,500/3,900/4,200

So with the summary out of the way, let’s take a closer look at Wilson’s forecast starting with where the title comes from. Well, as the strategist explains “last year’s Fire and Ice narrative worked so well we decided to dust off another Robert Frost jewel to describe this year’s outlook with The Road Not Taken. As described by many literary experts, and Frost himself, the poem presents the dilemma we all face in life that different choices lead to different outcomes, and while the road taken can be a good one, these choices create doubt and even remorse about the road not taken – i.e., what if/could have been? For the year ahead, we think investors will need to be more tactical with their views on the economy, policy, earnings and valuation. This is because we are closer to the end of the cycle at this point, and that means the trends in these key variables can zig and  zag before the final path is clear. In other words, while flexibility is always important to successful investing, it’s critical now.”

In contrast to what lies ahead, Wilson says that “the set-up was so poor a year ago that the trends in all of the variables mentioned above were headed lower, in our view” (although let’s just pretend that MS economists did not predict that the first rate hike would take place in 2023). Under these conditions, he goes on, “the right choice/strategy was about managing and/or profiting from the new downtrend. After all, Fire and Ice, the poem, is not a debate about the destination – it’s the end of the world. Instead, it’s about what causes it and the path to that destination. In the case of our bear market call, it was a combination of both Fire AND Ice – inflation AND slowing growth, a generally toxic cocktail for stocks.”

Of course, as it would later turn out, that cocktail proved to be just as bad for bonds, at least so far. However, as the Ice overtakes the Fire and inflation cools off, Wilson is becoming more confident that bonds should handily beat stocks in this final verse that has yet to fully play out .

That divergence, he notes, “can create new opportunities and confusion about the road we are on” and is why as we speculated in recent posts, Wilson has pivoted to a more bullish tactical view.

This sets up a convenient transition to Wilson’s well-telegraphed near-term outlook where he maintains a “tactically bullish call” as we transition from Fire to Ice, “a window of opportunity when long-term interest rates typically fall prior to the magnitude of the slowdown being reflected in earnings estimates and the economy. This is the classic late cycle period between the Fed’s last hike and the recession.” It’s also why BofA’s Michael Hartnett correctly called for a post-Halloween rally and why this site has been pounding the table on the strong technicals that will drive the market until the fundamentals return with next month’s Payrolls, CPI, and FOMC.

Historically, Wilson writes, this period is a profitable one for stocks as shown in the chart below, denoted by the double-digit rallies that follow the moment the Fed pauses as markets price in the inevitable rate cuts that follow.

What happens after this tactical rally however, is more tricky: three months ago, Wilson suggested the Fed’s pause would coincide with the arrival of a recession this cycle given the extreme inflation dynamics. In short, the Fed would not pause until payrolls were negative, the unequivocal indicator of a recession (something which we believe may happen as soon as December, and considering the mass layoff announcements we have seen in recent days we are willing to double down on this forecast). Needless to say, the advent of a recession will make it too late to kick save the cycle or the downtrend for stocks. However, for now, the jobs market – as indicated by the highly politicized BLS – has remained “stronger for longer” even in the face of weakening earnings. And yes, there is a possibility that Biden has instructed the Department of Labor to maintain this charade, and the strong jobs numbers may persist into next year (just ignore the tens of thousands of highly-paid tech workers getting fired every day now), leaving the window open for a period when the Fed can slow/pause rate hikes before we get a negative payroll reading. That hope for a softish landing – in a nutshell – is what Wilson thinks is behind the current rally, and why he thinks it can push further “because we won’t have evidence of the hard freeze for a few more months and markets can dream of a less hawkish Fed, lower rates and resilient earnings in the interim.” Obviously in this context, last week’s softer than expected CPI report was the critically necessary data point to fuel that dream.

Here Wilson brings up an interesting nuance: while a pause (or semi pivot) is good for stocks, a full-blown pivot (i.e., rate cuts) is actually bad. In his own words:

… we want to remind readers that a pause is different than a cut. While some investors may think a cut is even better than a pause in rates, the evidence does not bear that out. Exhibit 3 shows that when the cuts coincide with a recession, it’s not good for equities. So, while we think there is a window for stocks to run into year end as the markets dream of a pause, a Fed that is cutting is probably a bad sign that the recession has arrived (negative payrolls). This is especially true given the uniqueness of this cycle – i.e., higher than target inflation and fear of a resurgence means the Fed may pause, but won’t cut rates before a recession arrives.

Needless to say, and as much as it will anger the permabears out there, so far the tactical rally call has played out to a tee. Interestingly, prior to last week’s softer than expected CPI release, it’s produced very bifurcated performance, with the Dow Industrials and small caps dominating the Nasdaq and S&P 500. However, that all changed last week when bonds moved higher (yields lower) on the softer CPI, a necessary development for the tactical long call to have another leg higher.

How far does the current rally go?

As Wilson discussed in last week’s note, lower rate volatility was the key to the first leg of this rally which supported valuations and the more cyclical parts of the equity market initially. But in order to get the next leg of the tactical equity rally, Wilson argued rate levels would need to fall. Furthermore, this leg would be led by a catch up in Nasdaq/long duration growth stocks relative to the Dow Industrials and Russell 2000.

In short, the move lower in yields last week was the catalyst for even higher prices for the S&P 500, even from here. While the lower end of Wilson’s prior target for this rally (4000-4150) was achieved on Friday when the S&P hit 4,000, the strategist thinks the upper end of that range will be reached, and he would even not rule out even higher prices should 10-year UST yields fall more precipitously – i.e., 3.25%.

That’s the good news. The bad news is that once we do hit the bear market rally target, the bear market will resume with a vengeance. Here is Wilson:

Unfortunately, we have more confidence today than we did a few months ago in our well below bottom-up consensus earnings forecasts for next year. In fact, we are cutting our estimates even further today, essentially moving to the bear case earnings scenario we first presented in early September. More specifically, Morgan Stanley’s base case S&P EPS forecast for 2023 is now $195, down from $212, while its bear and bull case forecasts are $180 and $215, respectively. These forecasts are derived from our top down earnings leading indicators (Exhibit 6 and Exhibit 7).

To summarize the story so far: we have about 200 more points left in the bear market rally which rises to 4,200, followed by a 1000 points swoon to 3,200 over the near-to-mid term. What happens then?

Getting back to the narrative for the next 12 months, Wilson concedes that the path forward is much more uncertain than a year ago and likely to bring several twists and days/weeks of remorse for investors regretting they traded it differently – i.e., “The Road Not Taken.” If one were to take Wilson’s S&P bear/base/bull targets (3500/3900/4200) at face value, they might say it looks like he is expecting a generally boring year. However, as the strategist cautions, “nothing could be further from the truth. In fact, we would argue the past 12 months have been pretty boring because a bear market was so likely we simply set our defensive strategy and stayed with it –i.e., “boring can be beautiful.”

Drilling down on Wilson’s year-end price forecast matrix, he warns that while his year-end 2023 base case price target of 3,900 is roughly in line with where we’re currently trading, it won’t be a smooth ride. In short, he expects “a bust before a boom, and it comes down to earnings.” Here’s why:

Our highest conviction view across the board is that 2023 bottom up consensus earnings are materially too high. On that score, we revise our ’23 EPS forecast another 8% lower to $195 in the base case, a reflection of worsening output from our leading earnings models and increased conviction that margin pressure will be greater than appreciated. This leaves us 16% below consensus on ’23 EPS in our base case and down 11% from a year-over-year growth standpoint. After what’s left of this current tactical rally, we see the S&P 500 discounting the ’23 earnings risk sometime in the first quarter of next year via a ~3,000-3,300 price trough. We think this occurs in advance of the eventual trough in EPS, which is typical for earnings recessions. In other words, price leads earnings and it’s not typical to put a trough multiple on trough earnings. We think that means the Q1 price low is marked by a 13.5-15X multiple on a forward EPS number of ~$220.

The good news for those who survive the coming rollercoaster is that while “2023 will be a very challenging year for earnings growth, 2024 should be the opposite—a rebound growth year where positive operating leverage resumes—i.e., the next boom.” As such, Wilson believes that equities should begin to process that growth reacceleration well in advance, rebounding off a ~3,000-3,300 price trough in Q1 and finishing the year at 3,900 in his base case.

We conclude by presenting Wilson’s three cases for year-end 2023: the base, the bull and the bear.

Base Case Price Target for Dec. ’23: 3,900

In our 3,900 base case, the market puts a 16.1x P/E multiple on forward (2024) EPS of $241. This outcome represents a proper earnings recession (year-over-year EPS growth contracts by 11%). We see nominal top line growth slowing to low single digit territory (from low teens in ‘22). Meanwhile, margins do the heavy lifting to the downside as cost pressures remain stickier than slowing end demand and pricing. On that front, we see margins contracting by ~150 bps next year, taking the net margin time series back just below its 25-year trend line. We see the S&P 500 discounting this earnings risk sometime in the first quarter of next year in advance of the eventual trough in EPS which is typical for earnings recessions. While we see 2023 as a very challenging year for earnings growth, 2024 should be the opposite—a rebound growth year where positive operating leverage resumes. As such, equities should process that growth reacceleration well in advance, rebounding off a ~3,000-3,300 price trough in Q1 and finishing the year at ~3,900 in our base case.

Bull Case Price Target for Dec. ’23: 4,200

In our 4,200 bull case, the market puts a 16.7x P/E multiple on forward (2024) EPS of $251. This outcome represents a disappointing EPS growth backdrop for ’23 but it’s more of a muddle through (-4% year-over-year EPS growth). The correction of cycle excesses is less pervasive and, as a result, the magnitude of the growth rebound in 2024 is less significant than it is in our base and bear cases. In this scenario, we see nominal top line growth slowing to positive mid single digit territory next year. Margins compress by ~100 bps, a less severe outcome than what we see in our base and bear cases. By the end of next year, the market is processing a healthy mid-teens EPS growth rebound in 2024, and the multiple expands to ~16.7x. Because our bull case presents the least attractive ’24 EPS growth profile as ’23 is more of a muddle through scenario, it also offers a less attractive upside price skew to our base and bear cases than we’ve typically forecasted. In this scenario, we don’t expect new Q1 ’23 price lows (i.e., we’d expect a retest of 3,500 but not a new low).

Bear Case Price Target for Dec. ’23: 3,500

In our 3,500 bear case, the market puts a 15.3x P/E multiple on forward (2024) EPS of $230. This outcome represents a more severe earnings recession in ‘23 as compared to our base case (year-over-year EPS growth contracts by 16%). Margins do the heavy lifting to the downside which is typical even in more significant earnings recessions. On that score, we see margins contracting by ~200-225 bps next year. We think the S&P 500 discounts this earnings risk sometime in the first half of next year at a price level of ~3,000. As in our base case, the market can then look forward to a growth reacceleration in 2024, albeit from a lower price and $ EPS level

Much more in the full MS forecast available to pro subs.

We reported earlier on Monday that Turkey has made an arrest for the terror bombing of a busy tourist hub in central Istanbul which left six people dead and dozens more injured. 

But soon after the rare deadly attack which Turkey quickly blamed on the outlawed Kurdistan Workers Party (PKK) – and despite no official initial claims of responsibility – Ankara officials used the incident to air broader geopolitical grievances. 

Turkey lashed out at Washington, going so far as to suggest the Untied States was to blame the blast. “Turkey’s interior minister accused the U.S. of being complicit in a recent bombing in the city of Istanbul on Sunday that left at least six people dead and dozens of others injured,” The Hill reports.

The accusation was prompted by an official condolence statement from the US Embassy in Ankara. Interior Minister Suleyman Soylu in a dramatic press conference said that Turkey has rejected the condolence statement from Washington. 

“I emphasize once again that we do not accept, and reject the condolences of the US Embassy,” Soylu said, according to Turkish state media publication Anadolu Agency.

Soylu slammed the US statement as being akin to “a killer being first to show up at a crime scene.” The allegation was hurled due to America’s well known longtime support of Syrian Kurds, which form the core of the US-trained Syrian Democratic Forces (SDF). Ankara has long alleged that Washington is giving aid to “terrorists”.

The hugely provocative Turkish reaction to the US condolence message came despite the White House saying it stands “shoulder-to-shoulder” with its NATO ally Turkey.

The U.S. strongly condemns the act of violence that took place today in Istanbul, Turkiye. Our thoughts are with those who were injured and our deepest condolences go to those who lost loved ones. We stand shoulder-to-shoulder with our NATO Ally Turkiye in countering terrorism.

— Karine Jean-Pierre (@PressSec) November 13, 2022

Turkey will likely hold this against NATO applicants Finland and Sweden as well, given it has been blocking their membership to the Western military alliance based on accusations that they harbor Kurdish terrorists and entities linked to the outlawed PKK. 

Turkey says it has a Syrian woman linked to the PKK in custody. However, both the PKK and Syrian YPG (as well as SDF) have issued official statements denying their involvement. 

FTX founder Sam Bankman-Fried has listed his Bahamas penthouse for sale at $39,500,000 following the collapse of his net worth when his crypto exchange imploded.

The 12,000 square-ft, five bedroom residence is located in the luxury Albany resort was listed last week, according to Semafor, however the realtor declined to name the owner. That said, people close to current and former FTX employees who have been at the residence confirmed that it was SBF’s pad.

Sam’s penthouse “The Orchid” in the Albany exclusive community is now listed on the market for sale — $39,500,000https://t.co/6TsURzyEZg pic.twitter.com/fZ2pY4ujCh

— Autism Capital 🧩 (@AutismCapital) November 13, 2022

After growing to become one of the world’s largest crypto exchanges, FTX filed for bankruptcy on Friday, while Bankman-Fried, resigned as CEO. He has been reportedly looking to liquidate other holdings in recent days, with the Financial Times reporting that he was looking to offload his large stake in brokerage Robinhood, worth around $472 million, for a 20% discount.

Scrolling through pictures of this $39million dollar palace is much more enjoyable with this playing in the background pic.twitter.com/iZnRxnJG5g

— Luke Martin (@VentureCoinist) November 14, 2022

Authored by Dave DeCamp via AntiWar.com,

Treasury Secretary Janet Yellen said Sunday that she believes some sanctions will remain on Russia even if Moscow reaches a peace deal with Kyiv, demonstrating that the US wants to keep pressure on Russia’s economy for the long term.

In the wake of Russia announcing it was withdrawing from Kherson, there has been more talk about opening up negotiations to end the fighting in Ukraine. Yellen said that while some sanctions “adjustment” was possible, the US would want to maintain pressure on Russia.

“I suppose in the context of some peace agreement, adjustment of sanctions is possible and could be appropriate,” Yellen said in Indonesia, where she is attending the G20 summit. “We would probably feel, given what’s happened, that probably some sanctions should stay in place.”

The US-led sanctions campaign against Russia has largely backfired on the West, with Europe facing soaring energy prices while Moscow’s oil profits exceeded to levels higher than before the war. In an effort to curb Russia’s profits, Yellen has led a G7 push to implement a price cap on Russian oil, which is supposed to take effect in December.

The price cap could hurt the West even more as it requires the cooperation of Russia and its customers, and if Moscow retaliates by cutting production, global oil prices could skyrocket.

Yellen apparently recognized some of the issues with the plan and conceded on Friday that India could continue to purchase Russian oil at whatever price it wants.

Russia has vowed to retaliate and said it wouldn’t sell oil to any countries trying to impose price caps. Yellen said Sunday that she doesn’t know what the Russians will do. “It’s hard to know what Russia’s response is going to be. I don’t think that they can really afford to shut a lot of oil in. They need the revenue,” she said.

Why is Big Pharma investigating their own covid vaccines for myocarditis side effects if the vaccines were already supposedly tested and proven safe and effective?

Both Pfizer and Moderna have announced that they will be undertaking studies to determine the longer term risks of Myocarditis (an inflammatory condition of the heart which can lead to death) for people who have been injected with the mRNA based covid vaccines.  The decision comes after the release of multiple medical studies which show a correlation and causation between the vaccines and an exponential increase in heart problems, specifically among men 40 years old and younger.  Only a year ago the link between covid vaccinations and myocarditis was widely denied. 

Studies also show that myocarditis risk increases with the number of boosters a person has taken.

Before the year 2020, the average vaccine was tested and re-tested by pharmaceutical companies and the FDA for 10 to 15 years before it could be released to the public.  This was done not only because testing is a complex process with a lot of red tape involved, but also because it is the only way to discover any long term side-effects that might be associated with a particular immunization product.  If you read any medical journal or scientific outline on vaccine development published before 2020, they all agree that long term testing is necessary for public safety.

Suddenly, after 2020 and the advent of public activism against the covid mandates, a host of medical “professionals” and bureaucrats began arguing that the mRNA vaccines do not need the same lengthy testing time frame because government funding allowed for everything to be accomplished much faster.  This is a lie.  

What really happened?  Governments fast tracked approval using national emergency measures allowing Big Pharma to skip necessary tests and trials.  Example:  Pfizer representatives recently admitted under oath that they never tested the covid vaccine to see if it actually prevented transmission of the virus.  They simply claimed that it did without verification.  And governments began trying to enforce vaccines requirements on the populace based on the false claim that vaccination stops the spread.  

Mainstream media “fact checkers” insist that the covid vaccines were “initially effective” in preventing transmission of the original strains of the virus.  There is no concrete evidence to confirm this.  In fact, covid cases of the original variants began to plunge in the US and in other countries before the vaccines were widely distributed.  This is a fact, and the incredible drop in cases was likely due to an increase in natural immunity within the population.  

Some government and Big Pharma funded scientists also argue that mRNA technology as a whole has been tested for many years.  This is a dishonest misdirection.  The technology and concept might have been tested in various experiments for years, but the specific covid vaccines were not, and this matters.  Any scientist that says this claim is a foundation for safety confirmation for the vaccines should be ashamed of themselves.  

Studies which take natural immunity and asymptomatic reactions into account when studying vaccine efficacy are highly limited.  There is no way to know if a person survived covid or avoided infection because they were vaccinated, or because they already had the virus, experienced minor symptoms or no symptoms, and developed natural immunity.  Government paid virologists and scientists don’t seem to care about testing the distinction.  What we do know from various studies is that natural immunity is far superior in every way to mRNA vaccination.

The dangers of releasing a pharmaceutical cocktail for mass consumption or even forced mass consumption without long term study cannot be overstated.  The bottom line?  Given the current information, no one knows for sure what will happen in terms of vaccine effects over a long timeline (several years).  Pharma companies don’t know and governments don’t know (if we take their production claims for the vaccines as accurate).

In all likelihood, Pfizer and Moderna are trying to get out ahead of burgeoning side effects with their own studies as a means to spin or mitigate bad press in the future.  The chances of these studies providing honest data driven assessments are low.  

It’s been less than two years since widespread distribution of the covid vaccines and we are already seeing signs of negative health issues through myocarditis and blood clotting disorders.  One has to wonder what further terrible developments will unfold for vaccinated people in another two years. 

Authored by Kyle Anzalone via The Libertarian Institute,

Kiev is planning a buildup of its weapons industry to produce more sophisticated arms, with Ukrainian Defense Minister Oleksii Reznikov saying government takeovers of several companies will help Kiev to create an “army of drones” and other NATO-caliber weapons. The defense chief noted that growing military ties between Kiev and the West makes Ukraine a de facto NATO partner.

In an interview on Thursday, Reznikov told reporters Kiev was seeking to replicate Tel Aviv’s defense industry. “We are trying to be like Israel – more independent during the next years,” he said.

The defense head argued that Israel’s advanced defense industry helps it maintain its sovereignty, adding “I think the best answer [can be seen] in Israel … developing their national industry for their armed forces. It made them independent.”

Ukraine has received tens of billions in security assistance from the US and its global partners. “We understood that [by] using Soviet weapon systems … we are not independent. And it is better to have new systems with new ammunition of a NATO standard,” Reznikov went on.

On Friday, Reuters reported additional details of Kiev’s plans for its weapons industry. Reznikov said Ukraine was already in the process of making an “army of drones” and was looking at manufacturing NATO-caliber artillery. The official also said Ukraine needs to develop drone jamming capabilities, as well as unmanned vehicles for the air, land and sea.

Kiev’s plans to upgrade its defense sector could face several challenges given the complications of wartime. In recent months, the Kremlin has proven its ability to bypass Ukraine’s air defenses and has severely damaged the country’s electric grid. Additionally, Kiev has already passed a 2023 budget with a $38 billion deficit.

One of the reasons why Israel won’t provide weapons to Ukraine is the fear that it could end up in Iranian hands. https://t.co/yxcS9X4Whu

— Anna Ahronheim (@AAhronheim) November 8, 2022

It’s unclear how the Kremlin would respond if Ukraine were to produce NATO standard weapons. While Moscow repeatedly voiced concerns that Kiev could someday host NATO weapons before it invaded Ukraine last winter, Reznikov insisted his country’s ties with the North Atlantic bloc would continue regardless.

“It doesn’t matter when we become a member of the NATO alliance de jure. We have become a NATO partner de facto right now,” Reznikov said. “That’s why we need to develop our military industry together.”

Authored by Katabella Roberts via The Epoch Times (emphasis ours),

The Republican candidate for governor of Pennsylvania, Doug Mastriano, has conceded the race to his Democratic opponent Josh Shapiro. on Sunday, while calling for election results to be counted faster.

In a statement posted to Twitter, Mastriano, who former President Donald Trump endorsed, said the results of the midterm elections had not gone the way Republicans had hoped and “fought so hard for.”

“In all, we received votes from almost 2.2 million Pennsylvanians, and I thank every one of you, from the bottom of my heart,” he said.

Shapiro was projected as the winner in the race for governor late on election night by NBC News. The Associated Press also called the race in favor of Shapiro on election night, when Shapiro had 54.42 percent of the vote, or 2,571,668 votes, and Mastriano 43.74 percent. As of Sunday, Shapiro has 56.3 percent of the vote compared to Mastriano’s 41.9 percent.

“We gave this race everything we have,” Mastriano said. “Difficult to accept as the results are, there is no right course but to concede, which I do, and I look to the challenges ahead. Josh Shapiro will be our next governor, and I ask everyone to give him the opportunity to lead and pray that he leads well.”

Mastriano’s statement comes nearly five days after NBC’s initial projection.

He retired as a Colonel in November 2017 following 30 years of active-duty service and was elected to serve as a Pennsylvania senator by District 33 two years later in 2019.

Campaign Promises

Mastriano’s campaign had focused largely on election integrity, protecting the Second Amendment rights of Americans, and securing the border amid a mass immigration crisis that has led to an increase of fentanyl being snuck across the southern border.

The rise in fentanyl transportation across the border is now claiming the lives of Pennsylvanians each and every day, according to Mastriano’s campaign website.

As a state senator, Mastriano introduced Tyler’s Law, which targets drug dealers who push fentanyl resulting in a fatal overdose, resulting in a mandatory minimum 25-year sentence upon conviction.

Mastriano also supported a complete ban on abortions and was vocal in his opposition to vaccine mandates and draconian COVID restrictions.

In contrast, Shapiro, the state’s two-term elected attorney general, had vowed to protect Pennsylvanians’ access to abortions, including protecting the state’s existing 24-week law. He has also focused his campaign on tackling the fentanyl crisis and overhauling the state’s criminal justice system.

As attorney general, Shapiro had spoken out against Trump’s claims of fraud in the 2020 presidential election.

In a statement on Sunday, the Democrat thanked Pennsylvanians for giving him “the honor of a lifetime to give me the chance to serve you as Pennsylvania’s next Governor.”

“While my name was on the ballot, it was always your rights on the line,” Shapiro wrote. “I believe this Governor’s race was a test for each of us to decide what kind of Commonwealth and what kind of country that we want to live in. It was a test of whether or not we valued our rights and freedoms, and whether we believed in opportunity for all Pennsylvanians.”

“I humbly write to you as your Governor-elect knowing that you met this moment,” he said.

Authored by Peter Berkowitz via RealClear Wire,

Responsible foreign policy in a free and democratic nation-state is a matter of balance. Interest and principle; the logic of geopolitics and the sway of tradition, faith, and political ideology; force of arms and diplomatic finesse; national interest and alliances; spheres of influence and the laws binding all nations; necessity and justice – these and more must be constantly combined and reconciled to meet the demands of the moment and long-term strategic objectives. The Biden administration has thrown this combining and reconciling out of whack.

Despite President Trump’s bluster and bravado, his administration transmitted to the Biden administration a variety of foreign-policy accomplishments. Foremost among them was reorientation of U.S. diplomacy around the threat posed by the Chinese Communist Party to American freedom and prosperity and to the nation’s interest in preserving a free and open international order.

In addition, the Trump administration revived the Quad – Japan, India, and Australia, along with the United States – to advance shared interests in the Indo-Pacific. It withdrew from the Iran deal, which omitted reliable mechanisms for monitoring Tehran’s nuclear programs and put the terrorism-exporting Islamic republic on a clear timetable to join the nuclear club. It brokered the Abraham Accords, inaugurating a new era of comity between Israel and Arab nations. It persuaded several NATO partners to meet – or come closer to fulfilling – their agreed-upon obligations to fund the alliance. It fostered U.S. self-reliance by encouraging development of domestic oil and natural gas. And it reasserted control over America’s southern border, substantially reducing the influx of illegal immigrants.

Biden and his team laudably followed the Trump administration in breaking with decades of engagement with China by recognizing that the CCP acts as a strategic competitor determined to reshape the world order to suit the party’s authoritarian convictions. But Biden’s diplomacy has left America in a weaker position than the one his White House inherited.

The Biden administration opened the southern border, producing record numbers of non-citizens illegally entering the country and permitting the importation of deadly drugs. It restricted production of domestic oil and natural gas, which enriched oil-and-gas-rich Russia and increased European dependence on Vladimir Putin; then, when U.S. gasoline prices predictably skyrocketed, the Biden administration went hat in hand to Venezuela and Saudi Arabia (despite during the 2020 campaign Biden scorning the Kingdom as a “pariah”) pleading for them to pump more oil. It entreated Iran to conclude a second nuclear deal which, like the first, would lack adequate monitoring procedures and provide Tehran tens of billions of dollars in relief while allowing the ayatollahs to continue to develop ballistic missiles and foment terror and sectarian strife throughout the region. It strained to pronounce the words “Abraham Accords” let alone celebrate the historic agreements. And the Biden administration’s calamitously ill-conceived withdrawal from Afghanistan cast doubt in friends’ minds about America’s competence and trustworthiness and emboldened adversaries to surmise that the United States need not be feared.

To the United States’ detriment, Biden administration foreign policy reflects the spirit and duplicates the consequences of Obama administration foreign policy. To take one example, in August 2013, in the Syrian civil war, President Bashar al-Assad attacked adversaries with the chemical agent sarin. Instead of enforcing his openly declared red line – and decades after the Soviet Union’s expulsions from the region – Obama invited Moscow back into the Levant to preside over removal of Assad’s chemical weapons. Six months later, on February 20, 2014, Putin invaded Ukraine. Similarly, on February 24, 2022 – almost exactly eight years later and six months after President Biden’s August 2021 Afghanistan debacle – Putin again invaded Ukraine. By misjudging foes and leaving friends high and dry, the Obama and Biden administrations dishonored the nation, encouraged aggression, and eroded world order.

The continuities between the two Democratic administrations are not a matter of bad luck, overpowering events, or impersonal and irresistible forces, argues Sen. Tom Cotton. In “Only the Strong: Reversing the Left’s Plot to Sabotage American Power,” Cotton (an old friend whom I’ve known since his undergraduate days at Harvard) contends that the method to the messes made by Presidents Obama and Biden stems from their progressive convictions and dispositions. With characteristic forthrightness, shrewdness, and tenacity, he sets forth a devastating indictment of the progressive mindset in foreign affairs. He also provides a blistering critique of the deleterious policy choices and ham-handed execution of military operations and diplomacy to which, for more than half a century, progressivism has disposed Democratic presidents. His goal is “to reclaim the tradition of American strength.”

Cotton knows full well that over the last half century conservatives, too, have made costly foreign-policy errors. But his analysis, informed by serious study of American political ideas and institutions, reveals a crucial difference: Whereas conservatives go wrong when they depart from their principles, which derive from the American founding, progressives do damage by acting on their principles, which repudiate the Founders’ wisdom.

Cotton contrasts the Founders’ sobriety to progressives’ utopianism. The Founders “built America on eternal principles and timeless truths” rooted in a realistic assessment of human nature. They knew that human beings were unequal in many respects and prone to selfishness and shortsightedness but also inclined to cooperate to achieve common goods and, when put to the test, capable of self-sacrifice and nobility. The Founders embraced the Declaration of Independence’s self-evident truths: Human beings are equally endowed with natural and unalienable rights; government’s chief purpose is to secure these rights; and just power derives from the consent of the governed and is limited by what is necessary and proper to secure citizens’ rights.

Progressivism arose in the late 19^th century and early 20^th century in opposition to the Founders’ ideas about human nature and government. Progressives tended to deny that human nature served as a moral guide and political standard. Instead, they supposed that science and enlightenment could steadily perfect human beings, and they placed their faith in a theory of history as ineluctably impelling humanity towards peace, prosperity, and happiness. Owing to the elites’ moral improvement and intellectual refinement coupled with the people’s persisting backwardness, progressives argued, government must be expanded beyond the Constitution’s obsolete limits to enable officials to instruct and improve ordinary voters.

Opinions about human nature and government shape accounts of America’s dealings with other nations. The Founders, Cotton stresses, fashioned a “hard-nosed” foreign policy that made a priority in a dangerous world of ensuring the American people’s safety, freedom, and prosperity. The flux of circumstance, the Founders readily acknowledged, compelled prudent statesmen to adjust policies to achieve America’s abiding national interests. President Reagan’s diplomacy, culminating in the U.S.-led victory in the Cold War, epitomizes, for Cotton, a foreign policy that secures American freedom and prosperity through a blend of principle, competence, and courage.

In line with the belief that history drives humanity’s unification and perfection, progressive foreign policy tended to put the international community first. Progressives appealed to a transnational corps of supposedly disinterested technocrats, diplomats, and judges to overcome great-power politics and make war obsolete by crafting rules, regulations, and agreements that knit together all peoples and nations in a global society under unified government.

In practice, argues Cotton, the progressive sensibility issues in dithering and inconstancy, overestimation of America’s persuasive powers, underestimation of adversaries’ ruthlessness, and aversion to use of American military force. The senator chronicles the high price paid by the nation – and military men and women in particular – for progressive heedlessness and irresoluteness. His “brutally frank” examination covers President Kennedy and the Bay of Pigs; President Johnson and the Vietnam War; President Carter and the Iran hostage crisis; President Clinton and Somalia; President Obama and Libya, Iraq, and Afghanistan as well as Syria and Iran; and President Biden and Afghanistan and Iran.

To secure anew the American people’s freedom and prosperity, Cotton argues, we must recover the Founders’ wisdom, rebuild the military, strengthen the southern border, achieve energy independence, distinguish friends – including non-democratic ones – from foes, maintain our global network of partners, and gear up to prevail in the strategic competition launched by China.

“Only the strong,” Cotton concludes, “can defend a city on a hill.” This stirring image does not mean that the patriotic warrior’s grit, discipline, and courage alone secure justice.

Fidelity to America’s founding principles and the finest in its constitutional traditions obliges America also to educate its young people in, rather than against, constitutional democracy. Such fidelity fosters the political cohesiveness that enables partisans of many stripes to recognize one another as fellow citizens. And it disposes a responsible U.S. foreign policy to champion human rights while respecting the harsh realities of world affairs and the diversity of other peoples and nations.

Striking the right balance is the fullest and truest expression of national strength.

Instead of delaying the largely meaningless GDP print, maybe Xi should have instructed his henchmen to push back on the latest retail sales/industrial production data dump which was once again confirmed that China’s economy is a walking, tocking timebomb.

In short, everything missed:

• October Retail sales -0.5% Y/Y, missing exp. +0.7%
• October Industrial Output +5.0% Y/Y, missing exp. +5.3%
• Jan-Oct Fixed Investment 5.8%, missing exp. 5.9%
• Jan-Oct. residential property sales -28.2% y/y vs -28.6% in Jan.-Sept.
• Oct jobless rate 5.5% vs 5.5% in Sept.

And visually:

Some more details: retail sales missed by 1.1 standard deviations, and industrial production by 0.6 standard deviations; fixed asset investment which reflects government efforts to stimulate the economy was the closest to consensus. Property investment missed by 0.9 standard deviations, and remains in deep contraction for the year. Unemployment met consensus for 5.5%.

While stocks initially slid on the news, futures traded up to session highs as the across the board miss – similar to last week’s US CPI – was seen as encouraging for equities and negative for yuan on the expectation that these numbers could spark further easing. Also, recall that the latest Chinese CPI and PPI data showed that China is now in outright deflation, meaning the bar for further easing is getting lower by the day, especially since the post congress environment seems focused on economic revival.

To be sure, as Bloomberg notes, policy, especially monetary, still has a lot to do — note that the total social financing data last week registered a 2.5 standard deviation miss versus consensus, the biggest shortfall since April.

One final quick note: Beijing was quick to blame the dismal economic data on the latest round of covid outbreaks and resulting lockdowns, which is precisely why Xi continues to use Covid Zero as a “justification” for every economic miss, and why as long as China’s economy continues to stagnate – mostly due to the ongoing collapse in housing and property markets – the covid zero scapegoat will remain to divert attention from the real source of economic devastation – the bursting of the housing bubble.

And yet, with China’s massive population becoming increasingly angry at the relentless lockdowns, the latest property “rescue package” which just passed this weekend, was right in time to allow China to miraculously exit its “national covid nightmare” some time in Q1 2023.