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JPMorgan Warning: Israel Poses Higher Investment Risk

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JPMorgan Warning: Israel Poses Higher Investment Risk

In an internal memo posted on Thursday, JPMorgan warned that Israel presents a greater investment risk due to recent developments associated with the ascent of Benjamin Netanyahu’s new government.  

“Israel’s local markets have seen a flareup in idiosyncratic risk, as increased geopolitical tensions were added to investor concerns over plans for judicial reforms,” said JPMorgan in a memo first reported by Israel’s Channel 12. 

The in-depth and negative analysis from the major multinational firm comes just days after Netanyahu claimed JPMorgan and Goldman Sachs weren’t concerned about the effect of the judicial proposals.

“Markets probably need to consider a risk of more persistently elevated risk premia given the less centrist tilt of the current government,” JPMorgan’s Europe Emerging Markets Research desk wrote. 

Of course, saying the new Netanyahu government has a “less centrist tilt” is a huge understatement. It’s widely considered to be the most right-wing government in the country’s history, with critical positions controlled by members of ultranationalist and ultra-religious parties who are prone to both domestic and international provocations

In its apparent own similar warning posted internally on Thursday and then circulated on Twitter on Friday, Barclays was more candid, called it a “heavily right-wing coalition.” (ZeroHedge can’t independently authenticate the memo.) Goldman Sachs has expressed its own “growing concern over domestic political developments.” 

Netanyahu’s government has proposed a package of judicial reforms that would weaken the country’s High Court. One reform would allow the Knesset — Israel’s unicameral legislature — to override High Court decisions with a simple majority vote. Others would end the court’s practice of applying a “reasonableness” test when evaluating laws and government actions. 

“The proposed judicial reforms have triggered significant local protests at various levels, with concerns over the institutional strength in the country and the potential negative impact on investment flows and growth,” writes JPMorgan. 

A massive Jan. 14 protest against the Netanyahu government and its planned judicial reforms (REUTERS/Ilan Rosenberg) 

Looking for an example of the potential fallout from judicial reforms, the JPMorgan authors point to Poland. “Following the judicial reforms in Poland, S&P Ratings downgraded its sovereign credit rating in Jan-16 to BBB+ (from A-).” Noting that Israel’s credit rating “stands comfortably in the investment grade bucket,” the memo says the reaction to an Israeli enactment of the proposed reforms should be “modest.” 

The firm also highlights medium-term risk to investment flows to Israel: “Recent reports suggest that some foreign institutions have already started to move funds out of Israel over concerns over the judicial reform plans. The tech sector has been relatively vocal in voicing its opposition.” 

The risks aren’t just associated with Israel’s legal system. JPMorgan also cites an increase in “geopolitical hostilities.” The Barclays Macro Research memo elaborates on that theme:

“The reiteration of Israel’s strategy to ‘openly’ oppose any attempts by Iran to develop its nuclear programme, recent alleged drone strikes on Iran’s military facilities and discussions with the US on joint efforts against Iran’s nuclear deal …In addition, the recent re-escalation of Israel-Palestine issues, including the politics of the right-wing government in the West Bank, increase geopolitical instability in the region.” 

In France, Netanyahu claimed he met with 60 French business people who told him, “What they’re saying about investors running away is nonsense. We want to increase our investments in Israel.” 

Tyler Durden
Sat, 02/04/2023 – 18:30

Texas Governor Considers ‘New’ County Election After Ballot Issues Found

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Texas Governor Considers ‘New’ County Election After Ballot Issues Found

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Texas Gov. Greg Abbott called for a new election in Harris County, Texas, after ballot issues were more widespread than officials had estimated them to be.

An election worker sorts ballots in a file photo. (John Moore/Getty Images)

In response to an analysis that found there was a ballot paper shortage that was far larger than previously reported, the governor said that “it’s so big it may have altered the outcome of elections.

“It may necessitate new elections,” Abbott also wrote. “It WILL necessitate new LAWS that prevent Harris Co. from ever doing this again.

Abbott, a Republican, was responding to a KHOU-11 analysis suggesting that Harris County allotted ballot paper packets that were enough for 600 ballots to each of the county’s 121 voting centers. However, the analysis found that the total votes that were cast exceeded that amount by upwards of hundreds of ballots in some instances.

Previously, Harris County had said that 46 to 68 centers ran out of their allotted ballot paper. The county’s elections administration released a report last month that had admitted there were problems during the Nov. 8 midterms, but it said that a full report will take months to complete.

Harris County Elections Administrator Clifford Tatum, responding to KHOU on Tuesday, said that “the implications of your article cast the cloud into the community that those locations ran out of paper.”

There were over 4 million sheets of paper in the street on election day,” he also remarked to the station, suggesting there was no shortage.

Harris County Refutes Governor

A spokesperson for Harris County’s elections agency, Nadia A. Hakim, told The Epoch Times on Friday that the KHOU news story “is, at best, misleading” and disputed Abbott’s assertion.

“One of several glaring failures of the story is that it compares turnout numbers at individual voting locations from 2018 (before countywide voting was implemented) to this past November’s election (when voters could vote at any location in the county),” Hakim added. “This apples to kale comparison never clarifies whether any site requested or received any additional paper. Precinct-level turnout in 2018 is not comparable to countywide voting centers in 2022. This is a critical mistake in analysis.”

For the 2022 midterms, Harris County had nearly 5 million sheets of ballot paper and more than “3 million sheets of ballot paper were returned to the Elections Office after the conclusion of voting,” Hakim said. “There is no question that the supply of paper was more than sufficient for the 350,000 in-person voters who cast a two-page ballot on Election Day.”

Other Details

In November’s report, officials in the county—which includes Houston—some 170 of 782 locations weren’t able to complete their planned setups on Nov. 7 due to the Houston Astros World Series parade that was held the day before. The report did not specify which locations were impacted by the parade.

“Overall, while the initial media reports suggested a problem more extensive than what the [Election Administrator Office] has been able to confirm, the EAO will continue reviewing the processes and will implement systems to ensure this type of challenge is never encountered in the future,” the report said.

The report noted that paper ballot jams and inaccurate wait time updates caused issues at some polling locations.

Our investigation has not yet revealed how many of these [voting centers] had to turn voters away due to a paper shortage,” the report stated. “Media reports claimed that a total of 24 VCs (3.1 percent) ran out of paper and had to turn voters away.”

Texas Gov. Greg Abbott speaks at a press conference in Houston, Texas, on Sept. 13, 2022. (Brandon Bell/Getty Images)

But it claimed that “the judges at the VCs indicated that they did receive supplemental paper deliveries, and two of these [presiding judges] from these VCs reported they did not run out of paper at all.”

Harris County’s elections divisions did not immediately respond to a request for comment.

Read more here…

Tyler Durden
Sat, 02/04/2023 – 18:00

It’s Official: Ugly People More Likely To Wear Masks – University Study

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It’s Official: Ugly People More Likely To Wear Masks – University Study

Aggravated by the holdouts who keep wearing face masks despite mounting evidence that they’re essentially useless against Covid-19? Maybe you should be a little grateful

According to findings published at Frontiers in Psychology, people who consider themselves less attractive are more likely to continue wearing face masks. 

“Our findings suggest that mask-wearing can shift from being a self-protection measure during the COVID-19 pandemic to a self-presentation tactic in the post-pandemic era.”

The findings spring from a trio of studies using American subjects, conducted by researchers at Korea’s Seoul National University. The studies found that people with high self-perceived attractiveness are less willing to wear a mask, and vice versa.

A February 2022 protest against Connecticut’s school mask mandate (Tyler Russell/Connecticut Public

They also found that each groups’ respective anti- and pro-mask inclinations are intensified in situations where their attractiveness is important — such as a job interview, versus simply walking a dog. That is, someone who considers themselves relatively unattractive is more likely to mask up at the interview.  

Earlier studies found that unattractive people are indeed considered more attractive when wearing masks, while the good-looking crowd is perceived as less attractive, the researchers noted

Koreans have coined a slang term for less-attractive people who wear a mask to benefit from letting others give them the benefit of the doubt about what’s under it: “ma-gi-kkun.” In the United States, the term “mask-fishing” was popularized on TikTok, and has some traction in the school-age cohort. As the New York Times noted last year, masks “obscured all kinds of transformations teenagers may feel inclined to hide: braces, pimples, acne scars, the first growths of facial hair.”

Parent Dana Alequin speaks out against mask mandates at a school board meeting in Wayne Township, New Jersey (CBS This Morning)

Meanwhile, the medical case for mask-wearing — which was rightfully doubted even in the early months — now lies in complete shambles. Most recently, a study-of-studies published in the peer-reviewed Cochrane Database of Systematic Reviews concluded that, in the words of one author, “wearing masks in the community probably makes little or no difference to the outcome.”

Apparently, the only outcomes masks affect are the ones related to how others perceive us. While the latest research focused on attractiveness, in 2023, masks are increasingly sending signals about the wearers’ psychological health and intelligence.  

Tyler Durden
Sat, 02/04/2023 – 17:30

US Says Russian Athletes Should Compete Under Neutral Flag At Olympics, Resists Ban

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US Says Russian Athletes Should Compete Under Neutral Flag At Olympics, Resists Ban

Amid calls from Ukrainian officials to ban all Russian and Belarusian athletes from the upcoming Paris 2024 Olympic summer games, the White House has issued a statement saying it agrees with the International Olympic Committee (IOC) policy of allowing the two countries to compete under a neutral flag.

“In cases where sports organizations and event organizers, such as the International Olympics Committee, choose to permit athletes from Russia and Belarus to participate in sporting events, they should be absolutely clear that they are not representing the Russian or Belarus states,” Biden press secretary Karine Jean-Pierre said Thursday.

Via AP

She added that “the use of official state Russia and Belarus flags… should be prohibited as well.” The IOC last week had ruled that this will be the policy moving forward due to Russia’s invasion of Ukraine.

But Kiev has consistently demanded that it’s for Russia to suffer “complete isolation” on the world stage, including at international sporting events. President Zelensky in a December phone call with IOC president Thomas Bach requested that Russia not even be able to participate as a neutral team.

“Since February, 184 Ukrainian athletes have died as a result of Russia’s actions,” Zelensky said in the call. “One cannot try to be neutral when the foundations of peaceful life are being destroyed and universal human values are being ignored.”

Bach had defended the committee’s the position that “Athletes cannot be punished for acts of their government as long as they do not contribute or support it.” He explained, “What we never did and we never want to do is prohibiting athletes from participating in sports only because of their passport.”

Based on the latest IOC ruling, neither Russian nor Belarusian officials will be allowed to attend the games, and essentially all Russian or Belarusian national displays will be banned.

Tyler Durden
Sat, 02/04/2023 – 15:30

From EMP-Delivery To Nuke-Mapping: Potential Purposes Of China’s High-Altitude Invasion

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From EMP-Delivery To Nuke-Mapping: Potential Purposes Of China’s High-Altitude Invasion

Authored by Brandon Smith via Alt-Market.us

My home state of Montana was recently featured in news feeds this week as the first to observe and identify what the US Air Force says is a Chinese spy balloon. The Chinese claim it is a civilian weather apparatus that was blown off course and they expressed “regret” for the event, but the equipment visible in photographs suggests that this is a lie. Beyond that, another similar balloon has been spotted over Latin America – One wayward high tech Chinese balloon might be believable, but two is not a coincidence.

There are numerous theories as to why such a surveillance platform would be used by the CCP and what it is designed to look for, and I thought I would offer a couple theories based on my years of study into similar projects pursued by the US Department of Defense and DARPA.

First, the immediate question is why the Biden Administration has not destroyed the balloon? Why not shoot first and ask questions later? Well, Biden’s silence on this issue suggests he either has no answers or that the truth will make the American public very angry. The most likely reason it has not been shot down is because it is very difficult to shoot down.

[It appears the balloon has finally been shot down, but only after the device crossed the entire country – Whatever data the platform was meant to collect, China likely has it now]. 

High altitude balloons travel at 80,000 to 120,000 feet. The average fighter jet can hit altitudes of 65,000 feet and new generation drones can climb to 50,000 feet. These balloons also emit little to no heat signature, which makes them very difficult to target using missiles. If laser technology exists that has such a range, the US military is not talking about it. It might actually be easier to shoot down a Chinese satellite than one of these balloons.

Is there a way? It could be done perhaps with a missile using a large fragmentation-type warhead, but the White House does not seem too interested in exploring options.

Another explanation is that the DoD is waiting to see what these balloons do. This is where I would present a few theories as to their purpose. Here is what I think is most likely given the progress of spy balloon technology right now…

Chinese ALTA Balloon Program

For a few years now DARPA has been playing with a concept for high altitude surveillance balloons using a technology called “Strat-OAWL.” Balloons have been fielded for centuries as surveillance weapons, but unpredictable wind and atmospheric changes push the balloons around, making them useless within a coupe of days for any specific region.

To break it down simply, Strat-OAWL is the experimental use of lasers to read wind speed and direction far ahead of a balloon. The balloon then uses that data to increase or decrease altitude to ride airstreams in whatever directing the military wants the balloon to go. This could allow increased navigational control, but the Holy Grail that DARPA seeks is a high alt balloon that can stay in one place indefinitely.

I find this idea impractical, like most DARPA projects, if only because wind currents can change faster than any balloon can adjust altitude, but I do see the potential uses here. The Chinese could unleash hundreds of high flying spy balloons with similar capabilities to spy satellites at a fraction of the cost and with less risk of destruction by enemy fire. The CCP may be attempting to test their own version of the DARPA directional balloon tech, while also waiting to see if the US has the means to shoot down the devices.

Lidar Observation From A Balloon Platform

The Chinese have been messing with lidar technology a lot lately. Lidar uses pulsed lasers to measure small variations in terrain to uncover hidden shapes and structures. It also has a knack for cutting through forest canopy and other obstructions. The problem with lidar is that the platforms commonly used to carry the apparatus are faster moving and only capture a snapshot in time. Also, it cannot see through thick clouds, dust, rain, snow or fog.

NASA and DARPA have both been testing lidar from balloons as a means to keep the lasers in the sky longer above a specific area. The Chinese balloon also looks somewhat similar to the equipment used on European lidar balloon experiments.

A lidar based spy balloon would explain Chinese interest in Eastern Montana, where there are numerous known nuclear missile silos as well as suspected hidden silos. The Chinese balloon did in fact come near at least one known nuclear missile base near Billings. Lidar could be exploited to find hidden bases in the region.

Multispectral Imaging

Much like Lidar, multispectral imaging tech is highly dependent on the platform that it is mounted on. MI is used to measure wavelengths of light that are not visible to the human eye and it is tested in many scientific applications. However, there are military applications, including using MI to discover hidden variations in terrain that do not match the surrounding environment. In other words, its meant to sniff out camouflaged buildings, vehicles, fighting positions, etc.

China launched two satellites for multispectral imaging in 2019 and may now be trying to test the same equipment on balloons. It’s hard to say if they are looking for a unique target, or if they are just establishing baseline image maps to be used in the future for…who knows?

Weapons Delivery Platform

High altitude balloons are cheap and relatively effective surveillance platforms that can be used much like satellites but, with the right equipment, could become far more maneuverable. With the CCP’s limited resources it makes sense that they would be utilizing low-cost and low visibility measures instead of expensive and easier to target long range drones or spy planes.

However, these systems are not just useful for observation – They can also be used to deliver weapons packages, including EMP weapons, nuclear weapons and biological agents. The US has been testing balloons for nuclear delivery ever since Operation Yucca in 1956.

In the event of war between China and the US, the CCP may be looking for a way to strike with weapons of mass destruction with a passive delivery system that’s hard to defend against.

The end goal is difficult to figure out. No doubt, the Chinese expect conflict with the US in the near future. The surveillance may be in preparation for an invasion of Taiwan in the near term (next couple years).

Or, the entire circus may just be designed to see how America reacts. So far, the Biden White House has done nothing and has said nothing.

Tyler Durden
Sat, 02/04/2023 – 15:00

Watch: US Fighter Jets Shoot Down Chinese Spy Balloon Off Carolinas

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Watch: US Fighter Jets Shoot Down Chinese Spy Balloon Off Carolinas

Watch Live: US Restricts Airspace Near Myrtle Beach For “National Defense Airspace” Operation

*   *   *

Update (1441ET):

US fighter jets have shot down the Chinese spy balloon off the Carolina coast. 

The best view so far of the spy balloon being shot down. 

The balloon is falling back to Earth. 

Here comes the recovery vessel. 

*   *   *

Update (1330ET):

Shortly after President Biden reportedly said, “we are going to take care of it,” referring to the Chinese spy balloon that is calmly drifting across US airspace, the FAA has shut down three airports and closed airspace in parts of North and South Carolina:

Fighter jets are circling the spy balloon. 

A US military surveillance plane is circling offshore of North Carolina. 

A vessel with a large crane might be headed to an area where the military might shoot down the balloon.  

*   *   *

A suspected Chinese surveillance balloon appears to be heading toward North Carolina, according to ABC News, citing a senior US official familiar with the situation. That official said the US would probably shoot the balloon down over the Atlantic Ocean and retrieve it. 

Within the last hour, numerous Twitter users have uploaded footage of what appears to be the Chinese balloon floating above North Carolina. 

Local police tell residents don’t shoot their guns at the giant balloon. 

On Friday, we cited Capital Weather Gang, who accurately predicted the balloon’s trajectory while it was floating above the Midwest. Now updated predictions for Saturday morning show the balloon might be headed toward the Atlantic. 

The balloon’s payload is approximately 90 feet long, or the length of two motorhomes, and the balloon itself is much larger. Here’s one of the clearest views of the balloon. 

And there might be more balloons. We noted last night:

“We are seeing reports of a balloon transiting Latin America,” Brig. Gen. Pat Ryder, a Pentagon spokesperson, told Fox News Friday night. “We now assess it is another Chinese surveillance balloon.”

US officials have not ruled out shooting the balloon down. That might happen as soon as the balloon moves offshore into the Atlantic. Time for Space Force to shine. 

Tyler Durden
Sat, 02/04/2023 – 14:41

Not So “F**king Awesome”… Bill Maher Blasts “Insane Arrogance” Of Today’s ‘Woke Revolutionaries’

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Not So “F**king Awesome”… Bill Maher Blasts “Insane Arrogance” Of Today’s ‘Woke Revolutionaries’

In 2019, comedian Bill Maher warned Americans “we are going to have to learn to live with each other or there will be blood.”

Almost exactly three years ago, the HBO host reminded the world that he was the only liberal pundit on TV who will call “the tolerant” left on its BS, by daring to admit that the US media manufactures more “fake news” than Russia ever could (and ironically, in recent weeks, has been proven 100% correct on ‘Russia collusion’ hoax lies).

Then, two years ago, Maher first ratcheted up his honest-reality filter to ’11’ by refusing to follow fellow Democrats down the ‘woke’ abyss, exclaiming “you’re the fucking nuts, this is insane” at progressive officials’ relentless anti-white activism in New York schools, both public and private.

Since then he taken a shot at “social justice warriors”, mocked the left’s demands for reparations, made fun of progressives’ hypocritical claims of racism against the ‘Chinese virus’, and further shamed the left’s constant COVID fear porn, among many other topics including mask-wearing fanaticism, media burying the Hunter Biden laptop story, gender reassignment, and celebrating obesity.

Amid endless pushback from ‘his side’ of the political spectrum, a year ago, Maher shit back accurately stated that it is the left that has changed, not him.

“Let’s get this straight. It’s not me who changed – it’s the left, who is now made up of a small contingent who’ve gone mental, and a large contingent who refuse to call them out for it. But I will. That’s why I’m a hero at Fox these days. Which shows just how much liberals have their head up their a–, because if they really thought about it, they would have made me a hero on their media.”

And he previously warned that the US has already lost to China because because of our “wokeism” and “culture wars” which is ironic as a Chinese spy balloon quietly snaps piccys of all of us with President Biden twiddling his thumbs.

All of which sets the scene for the liberal comedian’s monologues from last night , pulling no punches as he opened with the following anti-woke salvo:

If you’re part of today’s woke revolution, you need to study the part of revolutions where they spin out of control because the revolutionaries get so drunk on their own purifying elixir, they imagine they can reinvent the very nature of human beings.”

“We do have our own Red Guard here, but they do their rampaging on Twitter,” Maher added comparing “woke” mobs on Twitter to the Red Guard of the Cultural Revolution.

Yesterday I asked ChatGPT: “Are there any similarities between today’s woke revolution and Chairman Mao’s Cultural Revolution of the 1960s?” and it wrote back: “How long do you have?”

Which is super ironic since, as we detailed here, ChatGPT itself has become ‘woke.

“The problem with communism and some very recent ideologies here at home, is that they think you can change reality by screaming at it,” Maher said.

“That you can bend human nature by holding your breath.”

Maher also took a shot at the biology-deniers who oppose plans to restrict males from competing in female’s sporting events…

“I’ve spent three decades on TV mocking Republicans who said climate change is a theory,” Maher concluded.

“And now I got to say, ‘You know what else is just a theory? Biology.’”

Maher hammers the final nails in the coffin of woke arrogance in his last few words:

How good intentions can turn into the insane arrogance of thinking your revolution is so fucking awesome, and your generation is so mind-bendingly improved, that you have bequeathed the world with a new kind of human…

…that human was no longer selfish, in America today that human is no longer born male or female, and obesity is not something that affects health.

All in all, one of Bill Maher’s best (and most honest) monologues ever…

We leave you with one of Maher’s most clarifying sentences ever about the increasingly extreme Millennial left’s policy prescriptions:

“The problem is that your ideas are stupid.”

Indeed, Bill!

Tyler Durden
Sat, 02/04/2023 – 14:30

Bonds Die, CPI’s Lie, & Gold Flies

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Bonds Die, CPI’s Lie, & Gold Flies

Authored by Matthew Piepenburg via GoldSwitzerland.com,

Below we look at Gold’s rise in a backdrop of more bond destruction in the public markets and more truth destruction in the war on inflation.

No Recession Yet?

As I argued in 2022, the much-debated and pending recession was in many ways already here, despite official attempts to re-define the same.

The thousands being laid off at Google, Amazon and even Goldman Sachs in 2023, for example, can likely attest to that.

Speaking of recession, last week’s embarrassing Empire Manufacturing report of -32.9 adds more confirmation that productivity and growth are not going to save our increasingly knee-capped economy.

In fact, the manufacturing figures have not been this bad since 2008 and 2020, which, if I recall, were pretty bad vintage years for markets—”saved” only by money printing at warp speed.

This, of course, raises the ever-charged question of whether Powell will be forced to return to more desperate mouse-click money creation—i.e., “quantitative easing.”

For now, of course, the current Fed is going the other direction, “tightening” rather than “easing” reserve assets to the tune of -$95B per month into a perfect debt storm.

As we’ll see below, this lose-lose option is just one of many hidden mines lying just beneath the surface of an already limping US Treasury market.

In the meantime, the dumb just keeps getting dumber.

U.S. Government Bonds: Safe Haven or Mine Field?

Most investors, sensing a recession, are doing what most investors typically do in bad times: Make bad choices.

Key among these bad choices is the traditional flight to long-dated US Treasuries as a “safe haven” as markets and economies head south.

I am here to suggest that such a traditional safe haven is now more like a death trap.

Why?

Well, the answers are found in blunt facts and simple math—two themes our policy makers have long-ago decided to cancel, deny or ignore.

So, let’s do the math. It’s as easy as 1, 2, and 3.

The Simple Math of Dying US Bonds

  1. Fed Deficits—The First Land Mine

In the painful days of 2008 and 2020, U.S. deficits as a percentage of GDP rose by 8% and 10% respectively.

After all, bad times require more debt “accommodation”—i.e., more deficit spending and rising growth rates for debt.

Heading into 2023, the annual Federal deficit burn rate was already at $1.5T, which is not only embarrassing but dangerous.

Unfortunately, hard math suggests that this figure is likely to get worse in 2023.

Much worse.

Using the prior deficit growth percentages (800 and 1000 bps) in 2008 and 2020, respectively, 2023 could mathematically see annualized Federal deficit burn rates hitting $2T to $2.6T, which would conservatively place the U.S. Federal deficit somewhere between $3.5T and $4T in 2023.

But that’s just the beginning.

  • More QT, More Deficit Pain: Land Mine Number 2

If we then tack on the current -$95B monthly tightening (QT) at the Fed, this would take our 2023 deficit levels near and then past the $5T mark.

This, of course, is assuming Powell doesn’t pivot from his QT war on inflation, which as my last report objectively confirmed, risks sending the US markets and economy to lows not seen since well before 1871…

  • Foreigners Dumping Uncle Sam’s IOUs: Land Mine Number 3

The growing lack of trust and interest in USTs merely compounds the problem and math of this ticking deficit timebomb.

As argued throughout 2022, Powell and Yellen’s myopic and one-sided policy of raising rates and strengthening the USD was an absolute gut-punch to foreign currencies and economies.

Like the sanctions against Putin, this attempt to lure foreign money into the UST market backfired.

Instead, it just forced developing and developed nations (from the BRICS to Japan) to dump (sell) USTs in order to defend their own currencies against the otherwise bully-like and unsustainable rise in the USD.

Given the foregoing, we could easily witness another $1T in foreign selling of US Treasuries in 2023, which could ostensibly lift that growing US deficit figure above $6T by year end.

Doing the Math

The very notion of such a net issuance in USTs suggests that the supply of Uncle Sam’s IOUs will be greatly surpassing their demand as we limp into 2023.

From high-school econ, we know that such a mis-match in supply and demand means a massive fall in price.

Stated otherwise, U.S. Treasuries will be falling like Newton’s apples as yields rise like approaching shark fins.

Do USTs Still Make Sense to You?

Returning, then, to the original question of whether the traditional flight to long-dated US Government bonds as a safe-haven makes sense in the current reality, the answer becomes easier to see.

In short, the need to dramatically increase the supply of USTs to match growing US deficit levels is greatly at odds with the hard fact that natural and foreign demand for those IOUs just aint there anymore…

Unless, of course, these IOUs are purchased with mouse-click money and Powell’s so-called war against inflation pivots toward a QE policy of extreme inflation.

Ahhh. The ironies, they do abound. Powell is quite simply cornered. His options are horrific.

He either tightens and thus destroys markets and Main Streets, or he loosens and destroys the USD within an inflationary hurricane.

Given current policies and trends, it is therefore mathematically safe to suggest that going long those long-dated USTs is more akin to tip-toeing through a minefield rather than sailing into a “safe-haven.”  

As maintained throughout 2022, and despite the official narrative to the contrary, my view is that growth rates and yield curves suggest we are already in a recession, and that once that recession becomes official (always a lagging announcement), there will be even more UST issuance and hence even more tanking bond prices.

The USD and Gold

As for the USD and its impact on the Dollar-based gold price, throughout 2022 I argued that the strong USD was an obvious gold headwind.

I also argued, many times, that such a strong USD was not a sustainable path, for the simple reason that rising debts, rising interest rates and a rising currency are not a sustainable trio.

Given the deficit levels discussed above, and given the $2.9T the U.S. spends on entitlements as well as the $900B annually handed over to its military industrial complex/leadership, there’s simply no way the US can continue a strong dollar policy without risking outright default.

But given the fact that defaults amount to political suicide as well as global disruptions in credit and banking systems not seen since the second world war, it’s far more likely that the Fed, which is apparently more powerful than the White House in setting economic policy, will eventually require more “liquidity” to buy Uncle Sam’s otherwise unwanted but increasingly issued bonds.

Such liquidity is a clear and seemingly inevitable inflationary tailwind, so please don’t be mollified by the so-called fall in official CPI inflation from 9% levels to the current and misreported 6.5% headlines.

This liquidity is also an open headwind to the USD, whose temporary rise in 2022 is potentially heading for a much longer-term fall in the months ahead.

As the USD’s relative strength as well as inherent purchasing power makes deeper turns south into the foregoing debt storm and inflationary flood, gold’s slow and steady trend north is fairly easy to foresee.

How to Fix Inflation? Just Lie

But as for inflationary pain and gold’s gradual victory over the same, our genius policy makers in DC have come up with a simple and familiar solution: Just lie about it.

As former Finance Minister and European Commission President, Jean-Claud Juncker, famously confessed, “when it becomes serious, you have to lie.”

And when it comes to lies from high, the empirical abundance of such lies over the years is not fable but fact.

From employment data to CPI data, or from central bank distortions and digital currencies to Ex-Items accounting scams and media fictions on viral science or the re-definition of a recession, the rising levels of open fantasy passing for daily reality seems to suggest that things must indeed be getting “serious.”

In other words, the lies are mounting in lock step with mounting financial desperation.

Despite such serious problems, the latest changes now being made to redefine an already dishonest CPI scalefor measuring inflation is nothing short of comical, or at least tragi-comical.

As I’ve argued for years, the Fed’s public ruse to fight inflation while simultaneously exploiting inflation (and negative real rates) to “inflate away” historical debt levels was a dishonest of way of “having their cake and eating it too.”

That is, the Powell camp can lie about (i.e., misreport) actual inflation (the “cake”) for the headlines while enjoying the benefits of hidden/denied inflation (“eating it too”), whose presence and continued rise toward stagflation (in my opinion) has been and will be anything but “transitory,” as I warned long before Powell invented that term (lie).

As for the CPI methodology changes scheduled to take effect next month, the inflation fiction writers over at the Bureau of Labor Statistics (i.e., the BLS, or “Office of BS” for short) have decided to adjust the weightings for Owners’ Equivalent Rent (or, “OER”).

The Official Data: Never Right, but Never Wrong

Among other tricks, the aim of the Office of BS is to now use neighborhood level information on housing structure types for a calendar year to effectively manipulate a lower than honest CPI inflation rate.

This is rich coming from a CPI scale (red line below) that is already notorious for under-reporting genuine inflation by 50% when compared to the old inflation scale (blue line below) used in the Volcker era.

Effectively, such lies may never be right, but as the official data point of the US Government, they are also never wrong.

Now, the big question going forward is simple: Will the lie work?

The inflation data from the US Office of BS is the effective equivalent of a thermometer which promises the sick a healthy temperature despite the fact that they are literally burning with a 103-degree fever, night-sweats and aching muscles.

Such tricks open the door for Powell to even return to more inflationary money printing without risking inflationary headlines simply because the CPI scale is telling us the inflation “data” is improving—despite the fact that consumer expenses are literally burning with a 103-degree fever, night sweats and aching muscles…

Just ask yourselves: Does your cost of living seem to be rising by 6.5%, or does that “fever” feel a bit higher than what you’re being told?

Gold: A Better Safe Haven?

Based upon the foregoing, each of us must therefore ask ourselves where to find his or her safe haven in a time of extended war, dishonest math, re-defined recessions, dying bonds, debased currencies and gyrating equity markets trending noticeably south.

Traditionally, of course, the risk-free-return of sovereign bonds in general and USTs in particular was understood as the safest bet.

Based, however, upon 1) the non-traditional, and in my opinion, complete distortion/destruction of the global bond marketsdue to years of criminally negligent monetary policies from Tokyo to DC and 2) the genuine rather than reported real (i.e., inflation-adjusted) return on Uncle Sam’s IOUs, it becomes increasingly clear that their “risk-free-return” is little more than return-free-risk.

That is why more informed investors, willing to take the extra minutes to understand simple bond history and math soon discover that yes, even the 0% yield of gold with its naturally-derived/constrained stock to flow ratio (i.e., a nearly “finite” annual production of barely 2%) and infinite duration does a far better job of preserving wealth than bonds of finite duration and seemingly infinite issuance…

Got gold?

Tyler Durden
Sat, 02/04/2023 – 14:00

Trump: Truth About “Fake News” Reporting On “Russia Hoax” Is Finally Coming Out

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Trump: Truth About “Fake News” Reporting On “Russia Hoax” Is Finally Coming Out

Authored by Janice Hisle via The Epoch Times (emphasis ours),

Former U.S. President Donald Trump says he finally sees some truth emerging about “the fake news.”

President Donald Trump speaks to reporters after participating in a Thanksgiving teleconference with members of the U.S. military, in the Diplomatic Room of the White House in Washington on Nov. 26, 2020. (Andrew Caballero-Reynolds/AFP via Getty Images)

More than six years after the media began covering the former president’s alleged collusion with Russia–which Trump calls “the Russia, Russia, Russia” hoax–has been dissected from within journalism.

The Columbia Journalism Review (CJR), which calls itself “the most respected voice on press criticism,” recently published findings from an 18-month investigation: a 24,000-word expose’ entitled, “The Press Versus The President.”

President Donald Trump speaks to reporters on his way to Marine One on the South Lawn of the White House in Washington, on May 14, 2020 (Drew Angerer/Getty Images)

Days later, Trump reacted with righteous indignation to the tactics of the press, as revealed in the CJR article.

It is a STAGGERING, detailed account of the lies, disinformation, and complete lack of journalistic integrity,” Trump wrote Feb. 2 on Truth Social, singling out “the purveyors of Fake News at the Washington Compost (sometimes known as the Washington Post), the Failing New York Times, and many others.”

Trump also decried the incalculable damage that dishonest coverage caused to his 2020 reelection bid.

“This Fake News, with all of its disinformation, had a huge impact on the 2020 Presidential Election, just one of the many ways that the Election was Rigged and Stolen,” he wrote in another Truth Social message. “This proves, once again, that the Corrupt, Woke, Radical Democrats stole the 2020 Election, making it impossible for that fact to be called ‘the Big Lie,’ as the Marxists and Communists in our Country attempt to portray it.”

Meanwhile, Trump’s allies cried out for media outlets to correct the record as his campaign to win back the White House gains momentum. Detractors, however, fault CJR for failing to put Trump himself far enough under the microscope.

Important but Too Long

CJR, in an introduction to its piece, wrote that the investigation’s findings “aren’t always flattering, either for the press or for Trump and his team.” CJR predicted that the article’s revelations would be “debated and maybe even used as ammunition in the ongoing media war being waged in the country.”

American computer analyst turned Russian citizen Edward Snowden, best known for leaking information about the National Security Administration’s spying on Americans, weighed in with a brief analysis on Twitter for people who may think the piece was “TL/DR,” an abbreviation for “too long, didn’t read.”

His summary of the CJR’s findings: Corporate media “knowingly suppressed facts that cut against popular narratives, ignored denials, eagerly laundered partisan attacks via ‘anonymous sources,’ and refuses to reflect on mistakes.”

CJR said its article raises issues that are “important, and worthy of deep reflection as the campaign for the presidency is about, once again, to begin.”

The publication also wrote: “No narrative did more to shape Trump’s relations with the press than Russiagate.”

That term refers to the FBI’s investigation of Trump, which began while President Barack Obama was in office and Trump was then running his first presidential campaign. Information later surfaced revealing that the federal government relied in large part on a “Trump-Russia dossier” to justify its investigation.

But that dossier was found to be of dubious origin. A former British spy, hired by people with connections to Trump’s political opponent, Hillary Clinton, used unverified information from people with ties to Russia.

Despite a 22-month investigation by former special counsel Robert Mueller, none of the 103 allegations in the dossier was declared valid.

Special counsel Robert Mueller speaks on the investigation into Russian interference in the 2016 presidential election, at the U.S. Justice Department in Washington on May 29, 2019. (Mandel Ngan/AFP via Getty Images)

Big Impact

Reporting on the allegations “resulted in Pulitzer Prizes as well as embarrassing retractions and damaged careers,” CJR noted. “For Trump, the press’s pursuit of the Russia story convinced him that any sort of normal relationship with the press was impossible.”

When Trump first announced his run for president in 2016, the real estate magnate/media personality was laughed off as a joke. But then he morphed into somewhat of a media darling. Everything Trump-related became clickbait. Before long, however, the media put Trump in its crosshairs; reporters were “going all in on efforts to catalogue Trump as a threat to the country,” CJR wrote.

The publication said journalist Jeff Gerth took an “encyclopedic look at one of the most consequential moments in American media history.” Gerth is an investigative reporter who worked for almost three decades at The New York Times. His investigation for CJR required interviews with dozens of insiders connected to Trump and media organizations.

Gerth wrote that the U.S. news media’s coverage of Trump helped sink the American people’s trust in journalists.

Read more here…

Tyler Durden
Sat, 02/04/2023 – 12:00

Price Cuts Working: Tesla Shipped 66,051 Vehicles In China In January, Up 18% From December

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Price Cuts Working: Tesla Shipped 66,051 Vehicles In China In January, Up 18% From December

It looks like Tesla’s price cuts in China have worked, at least for now.

The company’s China segment shipped 66,051 vehicles in January, according to Bloomberg, citing preliminary data released by China’s Passenger Car Association. In December, that number stood at 55,800.

The figure is up 18% from December, while China’s new energy passenger vehicles, in total, are seen down 45% month over month from December to January. 

The company is now reportedly planning to increase output at its Shanghai plant – bringing its run rate back toward where it was in September 2022 – in order to continue meeting the demand from price cuts on its best selling models. 

Tesla had suspended operations at its Shanghai plant for a portion of December. The EV maker was expected to halt production – as we noted in a previous article – but continued swirling questions about demand had surfaced after the company shut down operations at the key location earlier than expected. Back on December 9th we wrote that the company was shutting down operations due to upgrades at the plant and waning consumer demand.

Meanwhile, looking at the broader scope of EV sales in China, domestic names like Nio, Xpeng and Li Auto all recorded monthly and YOY sales declines in January, per Jalopnik

“Apparently, Tesla’s huge discounts [on its Model 3 and Model Y vehicles] siphoned off drivers’ buying interest in the Chinese-developed smart EVs. Overall, demand for expensive EVs appears to be weak, which could lead to price wars in the premium EV segment this year, “Gao Shen, an independent analyst in Shanghai, told SCMP.

Recall, as we wrote last month, Tesla has been dealing with a flood of protestors in both the U.S. and China, complaining about the company’s recent swift price cuts. 

Customers were demanding rebates and credits, claiming that they had overpaid for the same cars that weren’t marked down at the time they were purchased. Prices of Tesla vehicles in China are now between 13% and 24% lower than they were in September.  About 200 recent buyers of the Tesla Model Y and Model 3 made their way to a Tesla delivery center in Shanghai to protest.

Tyler Durden
Sat, 02/04/2023 – 11:30