“Central bankers think they are the masters of the universe because the world is looking to them (and only them) to deliver continuous stability and prosperity. There is no reason to suppose that they understand the modern financial system and economy to any greater extent than they did in 2007 (that is to say, not at all). Nevertheless, they plow ahead, expressing total confidence that what they are saying and doing is wise and not dangerous drivel…”

That’s how billionaire hedge fund manager Paul Singer described the elites’ arrogance in the past, that, we believe, we are seeing once again as Fed Chair Powell – whether under political pressure or his own hubris – practically declares ‘mission accomplished’ over inflation.

Singer had something to say about the threat of inflation too, forecasting years ago – as The Fed unleashed wave after wave of QE – what we have seen in the last two years…

“We believe that if and when inflation goes from being something that affects only a particular list of assets (a growing list, presently a combination of things owned by the well-off plus a number of things that are basic necessities) to a widespread “in-your-face” phenomenon affecting the cost of living of almost the entire population, then the normal yardsticks of risk, return and profit may be thrown into the garbage can.

These measures may be replaced by a scramble by citizens and investors to preserve value on a foundation of shifting sand, together with societal unrest that may make the current politically-useful “inequality” riffs, blaming the “1%” and attacking those “millionaires and billionaires” who refuse to “pay their fair share,” look like mere warm-ups for real class warfare.”

Since the start of the Biden administration, inflation has soared and all those threats have come to pass…

And while inflation looks to be slowing, the billionaire founder of Elliott Investment Management, warned a room of hedge fund managers and large investors this week that there’s likely to be a disorderly unraveling of markets.

Bloomberg reports that, according to people familiar with the discussion at the Managed Funds Association conference this week in Miami, Singer said the bear market isn’t over and that a drop of 20% is likely not enough.

More than a decade of aggressive monetary and fiscal policies can’t be unwound in a year, he explained, drawing parallels to ballooning debts as potentially wreaking havoc rivaling The Great Depression, despite growing hope for a ‘soft landing’.

Singer, 78, added that many valuation metrics in the market remain higher than in 1929 or the dot-com era bubble…

As we noted above this is not the firs time Singer has sounded the alarm bells, citing the Fed’s years of easy money policies.

In 2021, he said he couldn’t wait to say “I told you so” to the people who participated in the “head-smacking craziness.”

Singer also told the crowd this week that inflation is higher than what’s reported and that focusing on core metrics — which exclude food and energy prices — is unrealistic…

Finally, we return to Singer of the past, who offered this reality-check on the market’s apparent belief in central planners’ omnipotence…

“It is important to note that mass human behavior cannot be modeled or predicted with any degree of precision. When forces are brought to bear that suggest a possible shift in direction of mass human behavior (examples include oppression, tyranny, economic underperformance, inflation, incentives and disincentives), there is no way of telling if, how or when such forces will actually result in a change of vector.”

In the past, Singer has had a clarifying investment thesis:

“Although the levitation of financial assets has yet to levitate gold, we will grit our collective teeth on that score and await either ‘asset price justice’ or the ‘end times,’ whichever comes first.”

The recent gains in the precious metal – as the market prices in a pivoting Powell – may just be the sign of the ‘end times’ Singer has warned of.

Update (1615ET):

Network data from NetBlocks shows internet across Italy has mostly been restored after more than five hours of outages. 

Reuters confirmed the outage was due to “an international interconnection problem.”  

In a separate report, Reuters said that Italy’s National Cybersecurity Agency warned about a ransomware attack targeting servers worldwide. 

The hacking attack sought to exploit a software vulnerability, ACN director general Roberto Baldoni told Reuters, adding it was on a massive scale.

Italy’s ANSA news agency, citing the ACN, reported that servers had been compromised in other European countries such as France and Finland as well as the United States and Canada. -RTRS

The US Cybersecurity and Infrastructure Security Agency (CISA) was aware of the attack. The agency said:

“CISA is working with our public and private sector partners to assess the impacts of these reported incidents and providing assistance where needed.” 

Reuters pointed out that the cyberattack and Italy’s internet outage “were not believed to be related.” 

Meanwhile, here’s what people are saying on social media:

So Italy was the first in the West to do lockdowns… Now they’re the first to have the cyber attack ol’ Schwab has been monologuing about. What is it about Italy that the Globalists don’t like? https://t.co/VX8BiuuZJI

— MiggyMack 🙂 (@MiggyMackAttack) February 5, 2023

So in Italy, basically inly 26% of the people have internet at the moment! This is insane! It makes that global cyber attack agenda way more real. Things are going faster than expected! https://t.co/O7cheH5nST

— Radu Ocean (@raduocean) February 5, 2023

The covid pandemic started in Italy, exactly 3 years ago.
Would the internet outage in Italy right now be the start of the predicted cyber pandemic?
👇🏻#CyberAttack https://t.co/PeG5yp2MZz

— Ingrid 💫 (@Stingrid74) February 5, 2023

Italy is hit with a sudden internet outage. How the hell does the entire country of Italy lose the internet.

— Lauren McKenzie (@TheMcKenziest) February 5, 2023

Oh yeah, and there’s this video from last month. 

WEF – Klaus Schwab, warning of the next ‘pandemic’, a cyber attack so vast it disconnects the internet.

The new internet will only be accessible to those with biometric digital ID.

Almost as if this is a plan 🤷‍♀️

pic.twitter.com/xqgU7vDLgW

— Bernie’s Tweets (@BernieSpofforth) January 13, 2023

*   *   *

Update (1150ET):

Reuters confirmed “internet outages and glitches” across Italy on Sunday. The problem appears to be an “international link.”  

“An international interconnection problem impacting the service at the national level was detected. Analyses are underway to resolve the problem,” a Telecom Italia (TIM) spokesperson said.

Italy’s ANSA News agency reported there are no signs yet that hackers were responsible for the widespread outage. 

*   *   *

Network data from NetBlocks shows widespread disruption to internet service across Italy on Sunday. It’s been reported that the telecommunications blackout might stem from leading operator Telecom Italia.

NetBlocks’ real-time network data shows that national connectivity plunged from around 100% to 26% this morning. 

ℹ️ Update: Metrics show that the ongoing internet disruption affecting #Italy‘s international connectivity has impacted several major cities; the incident has frustrated users including those planning to stream to today’s #InterMilan match #TIMDown pic.twitter.com/cDFG7fAWNy

— NetBlocks (@netblocks) February 5, 2023

Another internet disruption tracking website shows a heatmap of the outages that appear to be nationwide. 

⚡ Moderato #disservizio Internet rilevato: #TIM in #Italia dalle 14.05

🇮🇹 Mappa e analisi live
👉 https://t.co/wIZ5umBKBb

Retweet se è down anche per te#tim_official #TIMdown #problemiTIM #senzainternet #Italy pic.twitter.com/sARKmufgi9

— Fing Internet Alert (@outagedetect) February 5, 2023

By Peter Tchir of Academy Securities

Why Do I Keep Thinking 0DTE stands for Zero Dark Thirty?

There is a lot to talk about this week:

• How we nailed the inflation story and got the Powell presser more or less right, but got the market reaction completely wrong. The rally on Thursday caught me completely by surprise (though in hindsight, it shouldn’t have – which brings in 0DTE). And, to be perfectly honest, who would have thought that with Treasuries down, earnings misses, and less than stellar guidance the previous night from some tech heavyweights stocks might close in the green? They did briefly, before fading into the close.

• We published a detailed report on the U.S. debt profile – link here and the Fed’s holdings of U.S. Treasuries. This was to give people a sense of how long it takes for higher rates to really increase our average cost of debt, and to provide a sense of the losses that Congress should expect from the Fed’s QE holdings. More on background than an actionable item, but as debt ceiling concerns are likely to mount, it is good to be armed with some facts and figures.

• We finished Friday with what was a Stunning Jobs Report. The word “stunning” was carefully chosen (at least by T-Report standards) because it can mean impressive (which the report was), but it can also “cause astonishment or disbelief” which this report managed to do as well! The ADP report was one of the worst reports in some time (though the methodology change could matter), while the NFP report was one of the best in the past year. However, there will always be “buts” when we have such bizarre ways of calculating this data and incorporating revisions. The Household number, which was strong, was almost entirely due to stacking the revisions into the January number and I’m told by people who dug into it that the real number was more like 80k. I haven’t seen the “response” rate, but that has been an issue plaguing many of these surveys. The response rate has been low, leading many to question if there is a “selection bias” that leads to inflated numbers. In any case, the Fed looks at this data and it should sharpen their “hawkish tongues” as they get back on the media and speaking circuit.

• A Chinese Spy balloon? Please see Friday’s SITREP (and update) for thoughts and comments from several members of Academy’s Geopolitical Intelligence Group. Academy continues to see a rift in U.S./China relations, but I certainly didn’t have “balloon delays Blinken visit” on my bingo card. We do intend to publish World War v3.1 (the battle over chips) early this week, but there were just too many more pressing issues on which to focus.

With all of that said, this weekend’s T-Report will focus on 0DTE or Zero Day to Expiration options. Zero Dark Thirty sounds “cooler” and is military “slang” for half an hour past midnight specifically or a time in the night where operations can be conducted under the cover of darkness – which again, seems to bring me back to 0DTE.

The Rise of 0DTE (first discussed by Zero Hedge last November in “What’s Behind The Explosion In 0DTE Option Trading“, and only now is everyone catching up)

“The Rise of 0DTE” sounds like a “Terminator” sequel, and in some ways it might well be!

Over the past two years we (as market participants) have been forced to understand some heretofore unknown phenomena in order to navigate markets: Meme stocks, Wall Street Bets, and Weekly Gamma Squeezes, to name a few.

We’ve highlighted the growth of trading in short maturity options for a few months now. It started in the past year and has accelerated. It has gone from a blip on our radar screen, to something that was pinging consistently, and now to something that is capturing our full attention.

Randall Forsyth summed up the current zeitgeist well in “Zero-Day Options Fuels Latest Frenzy in the Wall Street Casino”.
Very short-dated options are much more akin to “gambling” than investing. On Thursday, option volumes were dominated by options expiring on the 2nd (true 0-day options) and those expiring on the 3rd (originally longer-dated options that were set to expire on Friday). Friday’s pattern was similar to the vast majority of the most active options expiring that day.

I admit, I pull up MOSO (on Bloomberg) to follow the most active options during the day. It is a bit like watching a horse race. There is SPY Feb 2 410 in the lead. TSLA Feb 3 190 is running a close second. TSLA Feb 3 190 then takes the lead, but up pops TSLA Feb 3 200 from the back of the field. SPY Feb 2 415 is making a charge, but whoa, what happened here, TSLA Feb 3 200 is now the front runner. However, look at this field. Of the 20 top contenders, only one is a put and only one is longer than Friday maturity (an ARKK Feb 17 Call, presumably because ARKK doesn’t have a shorter dated option).

Thursday saw the heaviest call option trading ever recorded (see “Today Was The Largest Option Volume Session Of All Time”)! The relatively tiny premiums involved in 0DTE allowed massive notional lots be traded. It is the ultimate way to leverage your “portfolio”.

Put option volumes also ticked up and were relatively balanced with calls on Friday – which may be why the “rip” into the European close faded throughout most of the day. This could be an important feature of 0DTE options trading that differs from the “meme stock” crowd (which tends to be a “long only” trade).

Forget VIX

The VIX calculations use S&P 500 option contracts with more than 23 days and less than 37 days left to maturity. So, none of the 0DTE options trading impacts VIX.

You can stare at VIX all you want, but you are unlikely to get much useful information. Speculators, vol sellers, covered call sellers, and hedges have all moved their money from the more expensive options (included in the VIX options) to less expensive options. Some option purists will scream bloody murder that the daily option implied volatility is way more expensive than it is in the longer-dated options, but they are being too smart for their own good as this is about leveraged dollars, not trading implied versus realized volatility.

It may still be valid to look to VIX for a signal, but if those options that go into it are not the “trading vehicle of choice” then how should we expect a timely “early warning” signal? I don’t think that we can. VIX has been drifting lower and lower on my daily “market checklist” and risks dropping off of the screen entirely. I get far more information pulling up the MOSO screen compared to knowing where VIX is.

Ironically, VIX 0DTE calls were being bought on Friday during certain parts of the day (so there is still correlation), but I think that it will be a coincidental indicator at best and more likely a lagging indicator for any larger moves.

Why It Matters

So far, I’ve done little to explain why I think that it is so important. When we used to write about the “Gamma Squeeze” we focused on stocks and ETFs where early in the week you would see weekly option volumes tick up. You’d get large activity in a strike price that seemed unreachable (certainly in a week). Then you would see buying activity in the stock and options across the board. That would start driving the price higher causing more buying until (lo and behold) that previously “unreachable” strike is now in the money.

The 0DTE options trading has some advantages:

• It is less reliant on single stocks, which I think lets more people participate in the game.
• The low dollar price of these options lets even smaller players control more notional.
• You can do it every day! Literally every day is set up to try to gap things higher (or lower). I think lower is also a feature more likely to appear in 0DTE trading than even in the “traditional” gamma squeezes.

But I still haven’t explained “why it matters”, so let’s try to do that here.

I will use SPY (S&P 500 ETF) because that seems to be a fan favorite in the 0DTE space.

Let’s say SPY opens at $412 on Monday (it closed $412.35 on Friday).

I buy a SPY 420 Feb 6 Call. It should cost a few cents, let’s say 10 cents. The SPY Feb 6 415C closed Friday at $0.60 and the 420 is a full percentage point more out of the money than the 415.

I could buy that from an existing options holder, from an options market maker (who may delta hedge it), from someone writing a covered call, or from someone selling it “naked” to get some premium.

The “delta” or the amount of SPY represented by a 420 call expiring that day when the stock is at 412 is minimal no matter what volatility assumption you use.

So, I’m buying this option as a lottery ticket. Presumably most others are as well. At some point, there will be sellers that didn’t hold the options. Let’s look at their behavior:

• Market Maker. They sell the option and buy 2% of the notional of the stock (the “delta”). That’s not the “correct” amount, but close enough. At this stage they sold the option and created a tiny amount of buying interest in the stock.
• Covered Call Writer. They sell the option and they’d be okay if SPY gets called away at 420 (they tend to focus more on single names, but let’s simplify for now).
• Naked Call Writer. The proverbial “picking up nickels in front of a steamroller”. They are going to collect some premium income on these “crazy” trades people are willing to spend money on.

Now, lets say we get “good” news and suddenly SPY is at 416. This will have impacted everyone in the 415 Calls in the same way we will demonstrate on the 420 and that may well be why the news got us to 416 in the first place, but this is getting complex and circular (because it is).

SPY jumps to 416.

• Market Maker. Has been buying stock on the way up. Maybe 1% out of the money is a 20% delta, so they had to increase their stock holding from 2% to 20% of the notional (would have added pressure).
• Covered Call Writer. Starts wondering if they really wanted to let go of the stock at 420 because things feel so good.
• Naked Call Writer. Little nervous here. Do they buy some calls? Buy some stock? Sit on their hands? Definitely a wildcard.

This complex interplay of gamma and 0DTE options across a number of strikes and a number of similar stocks/indices gets SPY to 422.

• Market Maker. Would have been buying more and the delta is likely much higher than 50% or they would be buying all the way up and would have to start buying more for every tick higher. This adds real buying pressure.
• Covered Call Writer. Do some buy the stock or try to buy back the call because they regret not holding it? It wouldn’t take many people doing this to put further price pressure on the stock because the bulls would be fully in charge of the price action.
• Naked Call Writer. PAIN. Many will cover or be forced to cover as not everyone can sit there accepting that selling something for 10 cents might cost them $5 or more (currently costing them $2).

Like everything else in trading, this doesn’t work in isolation.

Positioning plays a crucial role in helping this sort of strategy work. You don’t need to “share the idea” because it is so visible that it attracts attention, but sharing the ideas and “profitability” helps (my social media stream is getting clogged up with “turn $500 into $100,000” with 0DTE). Thursday was ripe picking for this strategy for many reasons and it worked!

Puts Can Work as Well

This strategy can work (and has been working) in either direction and there were some high put activity days. 0DTE trading tends to amplify moves in “both directions”.

On Friday, it seemed like many got sucked into the “this only goes up” mantra (which almost worked), but 0DTE is different than meme stocks in that respect.

Windshield Wipers

I’m thinking of 0DTE as a “windshield wiper” strategy.

• It can push higher and if something cracks, it can drive it a lot higher.
• If nothing cracks, then they can push it lower. If something cracks, then they can drive it much lower.

This is a game of high leverage where you spend 50 cents knowing that you will lose on a bunch, but you can hit a few $5 tickets and be an overall winner.

What Stops It?

More prudent options sellers. The weekly gamma squeezes seemed to stop working once market makers decided what realistic vol was. Then they doubled that to be safe, doubled it again to be extra safe, and then doubled it one more time for good measure. Suddenly squeezes didn’t work as well.

We are far from that occurring since I suspect a lot of today’s readers will dismiss the focus on 0DTE as the “ravings of a madman”.

It won’t be the first time, but I suspect that within weeks this will be the biggest topic of conversation out there (helped by the fact that we can stop talking about the Fed for a few weeks and the debt ceiling issue is still a bit distant). It is occupying 90% of my conversations and not just because I bring it up.

I do not think that this is an “up” only strategy, so be careful next week. The one lesson (even for those who don’t really believe that 0DTE is important) is that it helps drive stocks higher. That, I think, is not the correct lesson, though it certainly was true on Thursday!

Bottom Line

For me (and I haven’t been positioning aggressively) it means running smaller risk and covering when it is going against you, or at least waiting longer to add to losing positions as the 0DTE option trading will extenuate moves!

On the bright side, it was fun to think about something other than central bank policy, if only for a few hours!

In January this year, Tesla made the surprising announcement that it would be cutting prices on its vehicles by as much as 20%.

While price cuts are not new in the automotive world, they are for Tesla. The company, which historically has been unable to keep up with demand, has seen its order backlog shrink from 476,000 units in July 2022, to 74,000 in December 2022.

This has been attributed to Tesla’s robust production growth, which saw 2022 production increase 41% over 2021 (from 930,422 to 1,313,851 units).

With the days of “endless” demand seemingly over, Tesla is going on the offensive by reducing its prices—a move that puts pressure on competitors, but has also angered existing owners.

Cranking up the Heat

But, as Visual Capitalist’s Marcus Lu details below, Tesla’s price cuts are an attempt to protect its market share, but they’re not exactly the desperation move some media outlets have claimed them to be.

Recent data compiled by Reuters shows that Tesla’s margins are significantly higher than those of its rivals, both in terms of gross and net profit.

Our graphic only illustrates the net figures, but gross profits are also included in the table below.

Price cutting has its drawbacks, but one could argue that the benefits for Tesla are worth it based on this data—especially in a critical market like China.

Tesla has taken the nuclear option to bully the weaker, thin margin players off the table.

– BILL RUSSO, AUTOMOBILITY

In the case of Chinese EV startups Xpeng and Nio, net profits are non-existent, meaning it’s unlikely they’ll be able to match Tesla’s reductions in price. Both firms have reported year-on-year sales declines in January.

As for Tesla, Chinese media outlets have claimed that the firm received 30,000 orders within three days of its price cut announcement. Note that this hasn’t been officially confirmed by anyone within the company.

Tit for Tat

Ford made headlines recently for announcing its own price cuts on the Mustang Mach-E electric SUV. The model is a direct competitor to Tesla’s best-selling Model Y.

Chevrolet and Hyundai have also adjusted some of their EV prices in recent months, as listed in the following table.

Source: Observer (Feb 2023)

Volkswagen is a noteworthy player missing from this table. The company has been gaining ground on Tesla, especially in the European market.

We have a clear pricing strategy and are focusing on reliability. We trust in the strength of our products and brands.

– OLIVER BLUME, CEO, VW GROUP

This decision could hamper Volkswagen’s goal of becoming a dominant player in EVs, especially if more automakers join Tesla in cutting prices. For now, Tesla still holds a strong grip on the US market.

Thanks, Elon

Recent Tesla buyers became outraged when the company announced it would be slashing prices on its cars. In China, buyers even staged protests at Tesla stores and delivery centers.

Recent buyers not only missed out on a better price, but their cars have effectively depreciated by the amount of the cut. This is a bitter turn of events, given Musk’s 2019 claims that a Tesla would be an appreciating asset.

I think the most profound thing is that if you buy a Tesla today, I believe you are buying an appreciating asset – not a depreciating asset.

– ELON MUSK, CEO, TESLA

These comments were made in reference to Tesla’s full self-driving (FSD) capabilities, which Elon claimed would enable owners to turn their cars into robotaxis.

Authored by Mark Jeftovic via BombThrower.com,

The Oracle of Omaha’s second banana has pronounced judgement on crypto.

It was even more unhinged than previous attacks (“rat poison”), as Munger applauded communist China’s technocratic dictatorship as a sensible ideal we should be following here in the West.

“the communist government of China recently banned cryptocurrencies because it wisely concluded that they would provide more harm than benefit…What should the U.S. do after a ban of cryptocurrencies is in place? Well, one more action might make sense: Thank the Chinese communist leader for his splendid example of uncommon sense.”

The fact that Munger is able to aggrandize a communist police state that maintains concentration camps, engages in organ harvesting and forced labour with impunity is a testament to his insular position (not to mention the lopsidedness of our political zeitgeist).

Munger is a Cantillionaire – after Richard Cantillion who wrote one of the first economic treatise in the eighteenth century describing how proximity to the monetary inputs of a society confer special advantages at the expense of wider populus.

The Cantillon Effect

Munger’s crocodile tears for those who lose out in the economic game of life are ironic, given that Berkshire Hathaway’s mantra (and Westco, Munger’s sidecar conglomerate) for decades has been to buy often distressed businesses that are out of fashion but have a “durable competitive advantage ” or “moat”.

Those are euphemisms for monopolies, and both Buffet and Munger love owning them. They don’t seem to care if those monopolies draw rentier like returns on monetizing low income housing or opioid addiction.

Munger and Buffet’s dynastic wealth was built on the crest of three structural tailwinds:

If there is such thing as “structural inequality”, it has more to do with the way the monetary system is constructed to benefit people who are already super-wealthy than anything else. “Fix the money, fix the world”.

The first of these pillars below is more of a dynamic than a structure, and one that there’s nothing wrong with, actually.

But it seemed odd to hear Munger, a man who made his fortune exploiting valuation gaps in publicly traded companies, singing on the virtues of  England’s “bann[ing of] all public trading in new common stocks and kee[ping] this ban in place for about 100 years.” .

That happened back in the 1700’s when Richard Cantillon was figuring out that the monetary system was structurally rigged, even then.

So while Buffett and Munger’s investing acumen is not in dispute, these three forces acted as the lubricant, if not steroids, for their astonishing returns over the decades:

1) Value investing

…is the foundation upon which Buffett (and Munger) built Berkshire. It is buying companies or assets below their perceived intrinsic value.  The fact that other investors have lost money on it is a prerequisite, otherwise they wouldn’t be “value plays”. “All this wild and wooly capitalism”  that Munger is ruminating about in his WSJ op-ed is what created the valuation asymmetries that Berkshire Hathaway has exploited ever since the duo took it over, in 1965.

2)  Fiat currency debasement

The Cantillon Effect makes inflation acutely pernicious, widening wealth inequality as the asset values of the ultra-wealthy get higher, it drives up the cost of living for everybody else.

Buffett and Munger have been playing inflation like a fiddle for decades. They both know that all fiat currencies are headed for zero, so they gravitate toward “inflation proof” assets with “pricing power” and “moats” (…because inflation-proofing goes better with monopolies.)

Then when things run too hot, they can play the populists and urge government to raise taxes on the wealthy (suggesting tax structures which would barely impact themselves, if at all) and chide the central bank to “reign in inflation, even if it causes a recession”. Like nearly all super-wealthy elites, they love to make policy recommendations that impact everybody else, yet put them in a position capitalize on the second-order effects: Recessions cause unemployment, bankruptcies and a plethora of valuation asymmetries where they can reload on durable assets and businesses at discounted prices.

3) A 40-year decline in cost-of-capital

At the age of 52, Warren Buffett’s net worth was 0.3% of what it is today, and the correlation of Munger’s personal wealth to Buffett’s is basically 1.

That was 1982, which marked the beginning of a bond super-cycle that saw the cost of capital decline to zero by the end of it.

Real rates are still negative today, and all of this compounded with the fiat currency debasement that lifted Buffett and Munger’s boats and accentuated their returns for decades.

I’m not saying that currency debasement and secularly suppressed cost-of-capital are the sole factors for Berkshire Hathaway’s success.

But they were indisputably beneficiaries of the fiat system structure over decades. Also during periods of dislocation, like when it was weaponized against the plebes during lockdowns and the Fed started buying up Berkshire’s debt (along with every other billion and trillion dollar juggernaut) while lending rapidly devaluing dollars to small and independent businesses (that is, if they weren’t simply banned from operating).

Berkshire Hathaway was built atop a system that Bitcoin was created to destroy

Many years ago I found myself sitting in a Bay St. conference room at one of Canada’s “Big Four” banks. There was a representative there from three of those Big Four, plus an Entrepreneur-in-Residence from the Business Development Bank of Canada (BDC) who shall remain nameless, and had organized the meeting at the behest of another BDC contact.

We were there to talk Bitcoin.

He told me a story. More of a parable. Maybe it was just the facts of life.

He said, basically this (paraphrasing),

“when a new disruptive technology comes along, you want to be out front with big investment money behind you, you want to engage with government, the banks and policy makers right away, from the start – and you develop your relationships and your platform, all the while you are engaging with policy makers and the system incumbents to develop the rules.

When the government finally moves on regulating the new space, you are already there and you are on the right side of it, because you helped shape the policies.

Then the regulatory hurdles keep getting higher, and you’re always on the right side of it, while all the later entrants are playing catch up or falling behind.

In other words (and I remember this exactly, along the with the big, smug smile he had on his face when he said it):

“You get to turn around and pull the ladder up behind you!”

I left that meeting not sure what had just happened and nothing more ever came of it, at least with me.

But Bitcoin is more than a disruptive technology. It’s a decentralized counter-attack against a structurally unsustainable and predatory financial system.

Whenever I hear Buffett, Munger, Jamie Dimon, Larry Fink or any other High Priests of the Gerontocracy complaining about Bitcoin specifically, or crypto-currencies in general, I feel like that’s what I’m listening to: a bunch of super-rich Sith Lords frantically  trying to pull up the ladder behind them.

Because the last thing they want or can fathom, is to wind up back on a level playing field.

*  *  *

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If you had “Netflix partnering with GM” on your unlikely corporate tie-up Bingo card for 2023, you can now cross that square off.

That’s because last week it was announced that the streaming giant would be partnering with General Motors to get more of the Detroit automaker’s electric vehicles in movies and television shows that are featured on Netflix. 

Netflix said it will increase the presence of electric vehicles in its original programming “where relevant”, Yahoo Finance reported this week. 

Netflix Chief Marketing Officer Marian Lee said last week: “At Netflix, we create shows and films that can influence culture and spark meaningful conversations. From the TikTok dance trends inspired by Wednesday to thoughtful discussions about climate change with Don’t Look Up, we know that entertainment can drive fandom and inspire connections.”

Because saying “we need the cash” doesn’t quite have the same nice ring to it…

Nevertheless, models like the Chevrolet Bolt EUV, GMC HUMMER EV Pickup, and Cadillac LYRIQ will all be slated to appear in a slate of Netflix shows that sound like a Democratic party diversity and inclusion seminar: Love is Blind, Queer Eye and Unstable.

The companies are also going to be launching a joint commercial during the Super Bowl on February 12 that will not only feature their products, but also (of course) their “commitment to a more sustainable future.”

Because what’s good old fashioned capitalism and marketing without slathering it in faux-ESG virtue signaling, right? We all know that NFL fans are hard left environmentalists to begin with, after all. 

And if you’re a Netflix creator, prepare to have your creative plans altered. The streaming giant says it is going to help its creators “better understand how EVs can complement and enhance their stories.” 

In other words: “Put this EV in your movie or you’re fired”. 

Authored by Caden Pearson via The Epoch Times (emphasis ours),

Facebook and Instagram have threatened to restrict or ban Project Veritas from their platforms, both owned by Meta, after a journalist confronted a senior YouTube official about the removal of a video about Pfizer’s COVID-19 vaccines.

On Friday, the nonprofit journalism organization Project Veritas published footage that appears to show one of its reporters confronting YouTube’s vice president of Global Trust and Safety, Matt Halprin.

The video shows the reporter approaching Halprin in public regarding YouTube’s removal of a video featuring a senior Pfizer official, unaware he was being recorded, discussing how the company is considering mutating the COVID-19 virus to develop new vaccines proactively.

Halprin refused to answer the reporter’s inquiries and instead told the reporter not to touch him while also threatening to call the police, before walking away.

“YouTube took down our Pfizer exposé. YouTube gave us a strike and will not let us post for a week,” said James O’Keefe, head of Project Veritas, in a video.

Facebook and Instagram warned Project Veritas that its video of Halprin violates “Community Standards.”

“We have these standards because we want everyone to feel safe, respected, and welcome,” the warning said. “If your content goes against our Community Standards again, your account may be restricted or disabled.”

Project Veritas also announced Friday that it had been “wrongfully locked out” of its Twitter account for two hours over a post that featured the video of one of its journalists questioning Halprin. The organization said it received a warning from Twitter that the post was “abuse and harassment.”

Twitter later apologized for the move, calling it an “error,” according to a screenshot shared by O’Keefe.

Halprin Video

Halprin appeared to be out for a walk or run on a suburban street when he was confronted by Project Veritas journalist Christian Hartsock.

When Hartsock introduced himself as a reporter from Project Veritas, Halprin immediately seemed to recognize the organization and quickly walked away.

“Why did you ban our videotape of a Pfizer director talking about mutating viruses?” Hartsock asked, following Halprin. “How much is Pfizer paying you to run cover for them? Is YouTube brought to us by Pfizer?” he added, getting no responses.

Halprin, who was dressed in a hooded sweatshirt, pulled the hood over his mouth.

“Matt, you’re the global head of trust and safety at YouTube. Why don’t you trust the public with a matter that absolutely concerns their safety?” Hartsock asked.

Hartsock told Halprin that millions would see this interview and “your cowardice,” challenging him to “be brave” and answer some of the questions. Halprin batted away the microphone, remaining silent.

“They’re going to see your absolute contempt for the public trust and they’re going to see your absolute disregard for public safety. Are you sure this is how you wish to portray yourself?” Hartsock asked while walking alongside Halprin.

Hartsock asked Halprin if he knows how much ad revenue YouTube takes in from Pfizer. “How much was at stake?” he asked.

“A Pfizer director talking about mutating viruses, and you don’t want the American public or the world to know about it. Why not?” Hartsock asked, following the question up by asking if Halprin has “any ethical responsibility” to people all around the world.

“Why does the public not deserve to see that videotape?” Hartsock asked.

Halprin remained silent throughout the inquiries, only speaking at one point to say: “You touched me. That’s not something you want to do.” Hartsock asked if that was a threat, to which Halprin responded: “No. I just said I’d call the police if you accost me.”

Walker Video

The Project Veritas video that YouTube removed was originally released on Jan. 25. It showed Dr. Jordon Walker, a director of research and development at Pfizer, telling an undercover reporter for Project Veritas that the pharmaceutical company was exploring the idea of mutating COVID-19 to preemptively develop new vaccines.

However, Walker acknowledged the risk and noted that scientists at Pfizer were being cautious in their approach.

“One of the things we’re exploring is like, why don’t we just mutate it ourselves so we could create—preemptively develop new vaccines, right?” Walker said.

“If we’re going to do that though, there’s a risk of like, as you could imagine—no one wants to be having a pharma company mutating [expletive] viruses,” he added.

Walker suggested that the company was proceeding slowly and being controlled, so as not to advertise its intentions and avoid creating an unintended mutation. He also stated his belief that COVID-19 would continue to be a source of revenue for Pfizer.

“Obviously they don’t want to accelerate it too much. I think they are also just trying to do it as an exploratory thing because you obviously don’t want to advertise that you are figuring out future mutations,” Walker said. “You have to be very controlled to make sure that this virus that you mutate doesn’t create something that just goes everywhere. Which, I suspect, is the way that the virus started in Wuhan, to be honest,” he also said, adding that COVID-19 is going to be “a cash cow for us for a while going forward.”

Read more here…

After a US stealth fighter jet shot down the Chinese surveillance balloon off the South Carolina coast on Saturday afternoon, the reaction from Beijing abruptly changed from expressing regret to being defensive and outraged.

China’s Foreign Ministry published a statement on Sunday morning, stating its “strong dissatisfaction and protest against the US’s use of force to attack civilian unmanned airships.”

“China will resolutely uphold the relevant company’s legitimate rights and interests, and at the same time reserving the right to take further actions in response,” the ministry said.

The ministry continued: 

“The Chinese side clearly requested that the US appropriately deal with this in a calm, professional and restrained manner.”

It added:

“For the United States to insist on using armed force is clearly an excessive reaction.”

As early as Wednesday, President Biden wanted to blast the balloon out of the sky, though Pentagon officials persuaded him to wait until the balloon was safely over the Atlantic Ocean. 

Beijing has stated the balloon accidentally veered off course and was primarily used for “meteorological purposes.” But not according to US Defense Secretary Lloyd Austin, he accused China of using the balloon to “surveil strategic sites in the continental United States.” 

The incident forced US Secretary of State Antony Blinken to postpone his weekend trip to Beijing, indicating high-level talks between both countries to calm tensions won’t happen for some time. 

“This incident tells us we haven’t found the floor of the relationship,” Drew Thompson, a visiting senior research fellow at the Lee Kuan Yew School of Public Policy in Singapore, told Bloomberg. 

Thompson added:

 “The relationship is not heading in a positive direction and could deteriorate further.” 

Even before this weekend, President Biden was ramping up a tech war against China to ensure their chipmaking capabilities were capped. 

Meanwhile, General Mike Minihan, head of the US Air Mobility Command, last week predicted a major conflict between the US and China might occur in “2025” — as a result of a Chinese invasion of Taiwan.  

And Republicans have spent the last several days criticizing the Biden administration’s balloon response. 

“Would Trump have let China fly a spy balloon over our country?” Rep. Jim Jordan tweeted. “Would Reagan? JFK? Truman? No, no, and no.”

Would Trump have let China fly a spy balloon over our country?

Would Reagan?

JFK?

Truman?

No, no, no, and no.

So why’s Biden letting China off the hook?

— Rep. Jim Jordan (@Jim_Jordan) February 3, 2023

South Carolina Republican Senator Tim Scott also tweeted, “the balloon should have been shot down before it crossed the continental United States, not after,” adding that the incident was a “dereliction of Biden’s duty.”

The balloon should have been shot down before it crossed the continental United States, not after. We still don’t know what information was collected and where it was sent. This was a dereliction of Biden’s duty, and let’s hope the American people don’t pay a price.

— Tim Scott (@SenatorTimScott) February 4, 2023

However, Bussiness Insider pointed out suspected surveillance balloons breached US airspace during the Trump years though US officials never made it public until the last week. 

Authored by Katie Spence via The Epoch Times (emphasis ours),

The Biden administration’s new Department of Labor (DOL) rule allowing 401(k) managers to invest in Environmental Social Governance (ESG) funds will harm two-thirds of America’s retirement accounts, according to Kansas Attorney General Kris Kobach in an interview that aired on Newsmakers by NTD and The Epoch Times on Feb. 1.

Kobach said that the Jan. 30 change was being done “in the name of this left-wing partisan agenda.”

He said, “There should be no partisan agenda when it comes to investing our funds. It should be done based purely on financial return without any regard to whether it helps left-wing causes or right-wing causes.”

Kansas is one of the 25 states suing the Biden administration over its rule allowing 401(k) managers leeway to invest in ESG funds by stipulating that the managers can decide to invest by considering “nonpecuniary benefits.”

Meaning they can make investing decisions where the benefits aren’t related to financial gain.

“What this latest rule does is it basically says you can consider these non-pecuniary factors when deciding where to invest the retirees’ funds,” Kobach said.

“And our lawsuit says, ‘Hey, wait a minute, that violates the express terms of [the Employee Retirement Income Security Act] ERISA,’ which is the 1973 Act that President [Gerald Ford] signed into law that is designed to protect the employee retirement savings in these funds.

“And we’re saying, ‘Look, you, as an agency—and it’s the Department of Labor under Biden that’s doing this—as an agency, you can enact regulations, but your regulations cannot contradict the exact express terms of the law.

“Section 404 A of the law says very clearly that [401(k) managers] have to act for the economic benefit of the retiree, for the person whose assets are being invested.”

An ‘Illegal Rule’

According to Kobach, the new ESG rule is illegal as it didn’t go through Congress.

“It’s illegal … an agency cannot contradict the terms of the law that gives the agency the authority to act,” Kobach said.

“If President Biden wanted to do this, he should try to change the law. He should try to change the terms of the ERISA statute and allow ESG considerations to weigh into the investment of these funds.

“I think that would be a horrible idea because it would mean we would gain less return on our retirement assets. But he can’t do this unilaterally. As an executive, he can’t use his agency’s regulatory authority to do this. He has to go through Congress to do it.”

Circling back to the impact of the ESG rule, Kobach added, “[The rule] basically means that [fund managers] can take into account things other than financial value, financial return, or pecuniary interests.

Financial Return Only

“So, it opens up the door for the investment adviser who thinks, ‘Well, you know, I think, you know, saving the Earth from climate change is a long-term interest that my investment strategy ought to consider.’

“Well, that’s not what they’re supposed to be doing. They’re supposed to be looking at the financial return and the financial return only.”

Kobach added about the impact on retirement accounts, “What that means in real terms is that companies that have anything to do with oil or fossil fuels, anything to do with firearms, anything to do, increasingly now with things like agriculture, and the beef industry, are going to be excluded.

“And that means that in almost every case, the return on investment for those funds is going to be lower because you’re taking investment options off the table.”

Kobach said he’s confident the states’ case against Biden will succeed.

Bipartisan Pushback

In addition to the states’ lawsuit challenging the legality of the Biden administration’s new ESG rule, every GOP Senator—plus Democrat Joe Manchin (W.Va.)—signed on to a disapproval resolution, protesting against the DOL directive.

The resolution alleges that the Biden administration is putting the pensions of 152 million Americans at risk to support “climate and social justice.”

“A number of studies have shown that ESG investing policies have worse rates of return. For example, a study by UCLA and NYU found that over the past five years, ESG funds underperformed the broader market, averaging a 6.3 percent return compared to 8.9 percent return respectively.

“Additionally, in comparison to other investment plans, ESG investors generally end up paying higher costs for worse performance,” a statement from Senator Mike Braun (R-Ind.) says.

Read more here…

Update (1150ET):

Reuters confirmed “internet outages and glitches” across Italy on Sunday. The problem appears to be an “international link.”  

“An international interconnection problem impacting the service at the national level was detected. Analyses are underway to resolve the problem,” a Telecom Italia (TIM) spokesperson said.

Italy’s ANSA News agency reported there are no signs yet that hackers were responsible for the widespread outage. 

*   *   *

Network data from NetBlocks shows widespread disruption to internet service across Italy on Sunday. It’s been reported that the telecommunications blackout might stem from leading operator Telecom Italia.

NetBlocks’ real-time network data shows that national connectivity plunged from around 100% to 26% this morning. 

ℹ️ Update: Metrics show that the ongoing internet disruption affecting #Italy‘s international connectivity has impacted several major cities; the incident has frustrated users including those planning to stream to today’s #InterMilan match #TIMDown pic.twitter.com/cDFG7fAWNy

— NetBlocks (@netblocks) February 5, 2023

Another internet disruption tracking website shows a heatmap of the outages that appear to be nationwide. 

⚡ Moderato #disservizio Internet rilevato: #TIM in #Italia dalle 14.05

🇮🇹 Mappa e analisi live
👉 https://t.co/wIZ5umBKBb

Retweet se è down anche per te#tim_official #TIMdown #problemiTIM #senzainternet #Italy pic.twitter.com/sARKmufgi9

— Fing Internet Alert (@outagedetect) February 5, 2023