Vis Raghavan of J.P. Morgan confirmed this week that his firm isn’t immune to the “anemic” year that investment banking had in 2022. As a result, he told Bloomberg from Davos that bonuses would “absolutely” fall. 

Raghavan, who is the company’s global investment-banking co-head who also oversees Europe, the Middle East and Africa, said: 

“All banks pay for performance, so if the performance isn’t there, the compensation isn’t going to be there.”

Raghavan said the company’s markets desks had a “mixed year” and, despite anemic dealmaking and lower demand for equities, posted strong performances in “commodities, rates and macro, as well as volatility-based equity trades”.

The firm’s investment banking revenue was down 57% year over year, per its earnings report last week. But Reghavan is optimistic the company is now at “steady state”, telling Bloomberg:

 “We have most of our people back in the office. There is a spring in people’s steps, I think it’s really good having people back.”

Credit Suisse Group AG Chairman Axel Lehmann also made a statement this week warning about lower bonuses after what he called a “horrifying year”. Recall we wrote days ago that the bank had come out and was considering a large cut to its bonus pool. It was considering a 50% cut to its bonus pool, Bloomberg reported last week. 

Meanwhile, as Credit Suisse tries to stave off swirling questions about its solvency, we noted last month that the bank filed a criminal complaint against a financial blog in Zurich, escalating a legal attack the bank has been putting in place over reader comments that were appended to a series of stories the blog ran about the bank earlier this year. Bloomberg reported that the complaint follows a 265 page civil lawsuit that was filed over the comments, which the bank said “were harshly critical of it and some of its executives”, including the bank’s new CEO Ulrich Koerner. 

Credit Suisse and J.P. Morgan join a number of Wall Street banks who laid off employees, cut bonuses or both after a torrid 2022. Goldman Sachs, for example, is set to lay off up to 4,000 employees, we noted last month. The bank was also “considering shrinking the bonus pool for its more than 3,000 investment bankers by at least 40 per cent this year”.

Also in mid-December, we wrote that Ernst and Young would be cutting its bonuses entirely. The company held an “all hands” meeting two weeks ago where it delivered the news to its employees. The company is in the midst of splitting its audit business from a tax and advisory business heading into 2023. Morgan Stanley’s Asia banker bonuses were also at risk by as much as 50%, we wrote days before that. In December, we also noted that Jefferies was considering slashing bonuses. 

By Charles Kennedy of Oilprice.com,

Continued increases in U.S. dry natural gas production are expected to outpace domestic demand and exports this year and next, sending the average U.S. benchmark price lower than in 2022, the U.S. Energy Information Administration (EIA) said on Wednesday.

The EIA expects the U.S. benchmark Henry Hub price to average $4.90 per million British thermal units (MMBtu) this year, according to its January Short-Term Energy Outlook (STEO). The projected average would be more than $1.50/MMBtu lower compared to the 2022 average of natural gas prices.

In 2024, Henry Hub prices are expected to remain almost the same compared to 2023 levels, as U.S. production is set to continue growing, the EIA said.

This year, prices are likely to average close to $5.00/MMBtu in the first quarter, due to higher demand in the winter and LNG exports at near-capacity volumes. The return of Freeport LNG after a fire in June 2022 will also drive higher natural gas demand in the first quarter, the EIA said.

As the winter ends in the second quarter of 2023, and as LNG exports will stay flat once Freeport LNG comes back online, natural gas prices are expected to drop in Q2, also because U.S. production will continue to rise, according to EIA’s estimates. 

U.S. natural gas prices are back to reflecting the domestic supply and demand balances, shaking off – for now – the geopolitical premium that ruled the energy and natural gas markets throughout most of 2022 after the Russian invasion of Ukraine in February. 

Early on Wednesday, the U.S. benchmark price was tumbling by 4.10% to $3.433/MMBtu, as demand is light in the U.S. right now.

For the week January 18 to January 24, overall U.S. natural gas demand is expected to be very light through Friday, and then light from Saturday to Tuesday, according to NatGasWeather.com.

Update (1215ET): It appears fears over what the DoJ would say in their much-heralded Crypto Enforcement Action were what droive the weakness in crypto and dragged stocks lower too.

Deputy Attorney General Lisa Monaco led the press conference announcing the action, which began at 12ET…

Now that the DoJ has announced the arrest of the Russian founder of Bitzlato for money-laundering…

…the markets are ripping back as this is far from the far-reaching crackdowns some were concerned about (or even speculation about Binance)…

Preston Byrne (@prestonjbyrne) summarized the expectations mis-step by the DoJ perfectly:

“Several multibillion dollar Ponzis operated under our noses for a half a decade, but in this huge announcement we are pleased to notify the public that we took down a couple of guys running a crypto exchange with 100 followers on Linkedin who ran it out of a hot dog stand.”

As a reminder, in March 2022, crypto cybercrime experts Chainalysis confirmed that there is no evidence, whatsoever, that sanctioned Russian entities are using crypto to evade sanctions.

*  *  *

Crypto and stocks are puking simultaneously this morning…

Dragging all the US majors into the red for the day…

The immediate catalyst for this joint-collapse is unclear…

Some suggest it was Bullard’s hawkish comments (but he said nothing at all that was not known).

Fed’s Mester’s hawkish comments also piled on the pressure according to some traders: “We’re not at 5% yet, we’re not above 5%, which I think is going to be needed given where my projections are for the economy… I just think we need to keep going.”

Others suggested it is DoJ headlines about a crypto enforcement action (but that hit the wires a while before this plunge).

A few traders noted that the drop happened as it was reported that Fed Chair Powell has COVID (seriously!)

Still more commented that Morgan Stanley’s Mike Wilson appeared on CNBC around that time and unleashed his bearish views on a desperate ‘soft landing’ narrative-loving audience (but Wilson’s comments are not new and simply repeat what he said last week).

Technically, selling accelerated as the S&P 500 broken below its 200DMA…

And reversed at its downtrend…

For now, your guess is as good as ours…

Authored by Dave DeCamp via AntiWar.com,

Former Secretary of State Henry Kissinger said in a video address to the World Economic Forum (WEF) on Tuesday that Ukraine joining NATO would be an “appropriate outcome” of the war, reversing his previous position that Kyiv shouldn’t join the Western military alliance.

“Before this war, I was opposed to membership of Ukraine in NATO because I feared that it would start exactly the process that we have seen now,” Kissinger said. “Now that this process has reached this level, the idea of a neutral Ukraine under these conditions is no longer meaningful.”

Kissinger’s comments reflect an article he wrote for The Spectator last month. In the piece, he didn’t explicitly say Ukraine should join NATO but argued that “a peace process should link Ukraine to NATO, however expressed.”

In The Spectator article, Kissinger called for negotiations to avoid another world war and suggested referendums could be held to settle disputes over some of the territory Russia has captured from Ukraine. But his opinion on the matter appears to have changed.

While he still called for talks with Moscow in his address on Tuesday, he said on Tuesday that the fighting should only end after Russia is pushed back to the pre-invasion lines. “I believe in dialogue with Russia while the war continues, an end of fighting when the prewar line is reached,” he said.

The chances of negotiations between Russia and Ukraine are slim as Ukrainian officials are demanding a complete withdrawal and for Moscow to face war crimes tribunals before talks can even happen. For their part, Russia says it’s open to talks but maintains that any deal must involve the territories it annexed joining the Russian Federation.

Kissinger said that the conflict should be kept “from becoming a war against Russia itself” due to Moscow’s large nuclear arsenal. He also said after the war, Russia should be given “an opportunity to rejoin the international system.”

Speaking at Davos, Kissinger backs Ukraine’s NATO bid and says the U.S. should intensify its military aid to Kyiv. pic.twitter.com/cMmzjNFBQw

— Sampieri Franco (@SampieriFranco2) January 17, 2023

The former secretary of state angered Ukrainian officials the last time he addressed the WEF back in May 2022. In those remarks, Kissinger suggested Ukraine should cede Crimea and the territory separatists controlled in the Donbas before Russia’s invasion.

While known as a hawk for his infamous role in leading the secret US bombing of Cambodia as President Nixon’s national security advisor, Kissinger has long called for a more friendly posture toward Russia since the end of the Cold War. In 2014, shortly after the US-backed ousting of former Ukrainian president Viktor Yanukovych, Kissinger warned that if Ukraine were to “survive and thrive,” it must function as a “bridge” between Russia and the West.

The chair of the House Oversight Committee on Wednesday demanded that the University of Pennsylvania – home to the infamous Penn-Biden center where classified documents were found in November – answer questions over anonymous donations from China, based on concerns that the CCP may have bought influence with the Biden administration.

“The Committee has learned UPenn received millions of dollars from anonymous Chinese sources, with a marked uptick in donations when then-former Vice President Biden was announced as leading the Penn Biden Center initiative,” said the GOP-led committee in a statement that followed a report from Just the News regarding the donations.

“Following the formation of the Penn Biden Center, donations originating from China tripled and continued while Joe Biden explored a potential run for President,” the statement continues.

The committee is already investigating now-President Biden’s possible mishandling of classified documents from his time as vice president. While some of the documents were discovered in November in Biden’s former Washington, D.C., office at the Penn Biden Center for Diplomacy and Global Engagement, news about the records did not surface until this month. -JTN

“The Committee is concerned about who had access to these documents given the Biden family’s financial connections to foreign actors and companies,” wrote committee Chairman Rep. James Comer to university President M. Elizabeth Magill.

Last April, a government watchdog asked the US attorney investigating Hunter Biden to investigate $54.6 million in Chinese donations to the University of Pennsylvania – most of which happened after the university’s February 2017 announcement that it would create the Biden Center – and $23.1 million of which were anonymous and started in 2016, according to public records.

According to the NY Post, the vast majority of donations from China to UPenn occurred after the announcement that the university would create the Penn Biden Center for Diplomacy and Global Engagement shortly after Biden’s term as vice president had just ended.

The center, which is located in Washington, DC., opened its doors in February 2018. Antony Blinken, whom Biden named as Secretary of State, briefly served as its managing director.

The Ivy League university received $15.8 million in anonymous Chinese gifts that year, including one eye-popping $14.5 million donation in May 2018, records show.

The flurry of donations may be related to Hunter Biden’s business interests in China, the National Legal and Policy Center, a Virginia-based watchdog, alleged in complaints sent in May and October 2020 to the Departments of Education and Justice. -NY Post

The classified documents found at the Penn Center included materials related to Iran and Ukraine, while more classified documents were found at Biden’s home in Wilmington, Delaware.

“The American people deserve to know whether the Chinese Communist Party, through Chinese companies, influenced potential Biden Administration policies with large, anonymous donations to UPenn and the Penn Biden Center,” wrote Comer.

According to Just the News, Secretary of State Antony Blinken – the Penn-Biden Center’s former managing director, is one of 10 people who took the revolving door from Penn to senior positions in the Biden White House.

Blinken claimed on Tuesday that he “had no knowledge” of the classified documents.

According to UPenn spokesman Stephen MacCarthy last April, “The Penn Biden Center has never solicited or received any gifts from any Chinese or other foreign entity. In fact, the University has never solicited any gifts for the Center.”

Authored by Mike Shedlock via MishTalk.com,

Not quite. He actually said money 7 consecutive times…

WEF2023: John Kerry Says the Only Way to Get to 1.5 Degrees of Global Warming is “Money, Money, Money, Money, Money, Money, Money” pic.twitter.com/ub6S4AiWpk

— Kevin smith (@KJ00355197) January 17, 2023

“The state of the union is coming up. The president’s got to, and you know I think will, because he believes this, we gotta move this. Because that’s the only way we can keep 1.5 degrees alive.”

“So how do we get there? The lesson I’ve learned in last years, and I’ve learned it as secretary and leaned it since reinforced in spades, is money. money, money, money, money, money, money.”

In contrast to free money stupidity from President Biden and John Kerry, I present The Best Video On Climate Change in History. 

Brilliant speech addressed to our ‘woke’ youth fighting #climatechange by Konstantine Kisin. pic.twitter.com/mFS8w0t2ip

— Brandon Taylor Moore (@LetsGoBrando45) January 14, 2023

In case it was not obvious before, please note that Biden is hell bent on producing sustained high inflation.

For discussion of inflation, please see 

• How Long Will High Inflation Persist? What Happened to the Great Moderation? 

• Also see my follow-up post “America First”, Biden and Trump Both Guilty of Sponsoring Inflation

*  *  *

Like these reports? I hope so, and if you do, please Subscribe to MishTalk Email Alerts.

Federal Reserve Board Chair Jerome Powell tested positive for Covid-19 and is experiencing mild symptoms. 

The 69-year-old Powell received the positive test Wednesday and “is up to date with Covid-19 vaccines and boosters,” and is working remotely while isolating at home, the Fed said in a statement at the same time as Davos billionaires were being addressed by Pfizer CEO Bourla (himself probably a billionaire by now courtesy of covid).

The next meeting of the policy-setting Federal Open Market Committee is set for Jan. 31-Feb. 1, and Powell is scheduled to deliver an in-person press conference at 2:30 p.m. in Washington after the meeting concludes.

Whereas stocks would have freaked out if this news hit three years ago, this time Bloomberg is quick to note that the Covid-19 landscape “is different than it was earlier in the pandemic: Most people have hybrid immunity from vaccinations or infections, and antivirals are widely available to older adults and those with compromised immune systems.”

US Industrial Production was expected to decline for the third straight month in December and it did, tumbling 0.7% MoM (and November’s 0.2% decline was revised down to a 0.6% drop)…

Source: Bloomberg

That lowered the YoY gain in industrial production to just 1.65%, the lowest since March 2021.

Under the hood, everything was red except utilities “as cold temperatures boosted the demand for heating”

Focusing in on manufacturing production, the picture was even worse with a 1.3% MoM tumble (2nd straight monthly decline)…

Source: Bloomberg

Capacity Utilization plunged more than expected to 78.7% (79.5% exp)…

Source: Bloomberg

Does any of that look like a soft landing?

The New York Times this week has detailed more of the desperate behind the scenes scramble of US and Western officials to keep up the steady supply of arms and ammo, especially artillery munitions (155mm shells), to Ukraine in order to beat back the Russian invasion. It’s yet another significant acknowledgement of the Pentagon’s own dwindling stockpiles as it now must tap heretofore not publicly disclosed stores in Israel…

“The Pentagon is tapping into a vast but little-known stockpile of American ammunition in Israel to help meet Ukraine’s dire need for artillery shells in the war with Russia, American and Israeli officials say,” the Times reports. “The stockpile provides arms and ammunition for the Pentagon to use in Middle East conflicts. The United States has also allowed Israel to access the supplies in emergencies.”

Western backers of Kiev are currently also seeking to prepare Ukraine to defend against an anticipated Russian spring offensive, and Ukrainian forces need hundreds of thousands of rounds. 

As for what’s being tapped from the Pentagon’s ammo stores in Israel, “About half of the 300,000 rounds destined for Ukraine have already been shipped to Europe and will eventually be delivered through Poland, Israeli and American officials said,” according to the report.

The stockpile in Israel has previously gone unreported, while another stockpile held oversees is also being tapped, in South Korea. Both countries have themselves thus far maintained an official policy of not arming Ukraine, with Israel in particular coming under pressure by both Washington and Ukrainian officials to send lethal aid.

Israeli reluctance and the fact that it must walk a fine diplomatic line with Russia given the Russian military presence in Syria, makes the Pentagon using its Israeli stores for a conflict in eastern Europe deeply controversial. 

The new Tuesday NYT report continues a consistent theme which has been an issue concerning US defense officials since even the opening months of the war – how to arm Ukraine enough to claw back territory without endangering America’s own defense preparedness.

The Times underscores this dilemma in the following: “The shipment of hundreds of thousands of artillery shells from the two stockpiles to help sustain Ukraine’s war effort is a story about the limits of America’s industrial base and the diplomatic sensitivities of two vital U.S. allies that have publicly committed not to send lethal military aid to Ukraine.”

Last week, at a defense conference in D.C. some among the US Navy’s top leadership put the dilemma in stark terms, with a reporter from Defense One capturing a top commander’s words: “An admiral alluded to the US needing to choose between itself and Ukraine during a panel at the conference.”

Authored by Paul Joseph Watson via Summit News,

During a discussion on his podcast, Joe Rogan suggested the latest scandals surrounding Joe Biden suggested that top Democrats are “trying to get rid of him.”

The president has been embroiled in more controversy after it was revealed that at least 20 classified documents relating to his time as vice-president were found at Biden’s home.

Biden is now being investigated by a special counsel appointed by the US Department of Justice, having previously called Donald Trump “irresponsible” after his home was raided by the FBI for similar reasons.

According to Joe Rogan, the scandal is part of a Democrat subversion campaign to ensure Biden doesn’t try to run for office again in 2024.

“I don’t know jack shit about politics, but if I had to guess — they’re trying to get rid of him. My guess would be they’re trying to get rid of him,” said the podcast host.

Joe Rogan predicts Biden’s handlers are “trying to get rid of him” before 2024 pic.twitter.com/jbvmLvclOM

— Valiant News (@ValiantNewsLive) January 17, 2023

He was responding to a comment by Shane Gillis, who joked, “It’s crazy. He’s getting jammed up on like manila folders when he was like kissing 12-year-old girls on camera.”

“If all of a sudden they’re — his own aides are sending these — instead of like taking these classified documents, which you have located and go, ‘Well, let’s not do that again’ and fucking locking them up somewhere,” Rogan added. “His own aides.”

Speculation that Biden’s own team is trying to sabotage him correlates with previous indications that prominent Democrats fear Biden will get crushed if he tries to run for president again.

Last summer, Rep. Carolyn Maloney (D-NY), who chairs the House Committee on Oversight and Reform, told the NY Times Editorial Board that President Joe Biden won’t run for office a second time.

“Off the record, he’s not running again,” Maloney said.

According to Dick Morris, former top advisor to Bill Clinton, the Democratic establishment knows “that Biden can’t run again in 2024” due to his “quickly declining mental abilities” and the economic disaster he had presided over.

An ABC News/Washington Post poll found that the majority of Democrats and Democrat-leaning independents don’t want the 80-year-old to be their party’s candidate.

Biden would be in his mid-80’s by the time he left the White House if he won again in 2024.

*  *  *

Brand new merch now available! Get it at https://www.pjwshop.com/

In the age of mass Silicon Valley censorship It is crucial that we stay in touch. I need you to sign up for my free newsletter here. Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown. Get early access, exclusive content and behind the scenes stuff by following me on Locals.