Authored by Jonathan Turley,

Many of us have expressed alarm at the politicization of the criminal justice system in New York by figures such as Attorney General Letitia James and Manhattan District Attorney Alvin Bragg.

It now appears that New Jersey Attorney General Matthew Platkin is angling to get into the lawfare frenzy.

The conviction of Trump on 34 felonies has either thrilled or repelled citizens. For many of us, it is a sign of the degradation of our legal system. Even the chief CNN legal analyst has acknowledged that Bragg contorted the law to bring the recent case against former President Donald Trump in an unprecedented prosecution.

Yet, the use of the legal system for political purposes is clearly popular in New York where people were literally dancing in the street outside of the courthouse after the recent verdict against Trump. Now Platkin’s office has announced that it is “reviewing” whether to pull the liquor licenses for Trump golf clubs since he is now convicted of felonies in New York. It appears that lawfare is nothing if not intoxicating for Democratic politicians.

According to an article in the Hill, the New Jersey Attorney General’s Division of Alcoholic Beverage Control is “reviewing the impact of President Trump’s conviction” on his liquor licenses for the Trump National Golf Club in Colts Neck, Lamington Farm Club, and Trump National Golf Club Philadelphia in Pine Hill.

The latest effort is based on a vague standard governing crimes of “moral turpitude” under New Jersey law:

No license of any class shall be issued to any person under the age of 18 years or to any person who has been convicted of a crime involving moral turpitude. A beneficiary of a trust who is not otherwise disqualified to hold an interest in a license may qualify regardless of age so long as the trustee of the trust qualifies and the trustee shall hold the beneficiary’s interest in trust until the beneficiary is at least the age of majority.

A “crime of moral turpitude” is a familiar, though dated, standard in American law. I teach the standard in torts as one of the traditional “per se” categories for slander under the common law. It was generally used to denote conduct of immorality or serious offenses to norms of society. New Jersey defines it as including “any offense that carries the possibility of one year in jail and involves acts of baseness, vileness, or depravity in the private and social duties which a man owes to his fellowmen, or to society in general.

Even the New Jersey Alcoholic Beverage Control handbook notes that in “some instances, it may be unclear whether a conviction involves an element of moral turpitude.” Yet, Trump has a way to bringing clarity for his critics whenever they must chose between politics and principle.

For most of us, it is hard to see how falsifying business records would constitute “acts of baseness, vileness, or depravity in the private and social duties which a man owes to his fellowmen, or to society in general.”

However, for democrats, it seems that any act by Trump is by definition base, vile, and depraved.

The piling on of investigations and charges by Democratic officials has reinforced Trump’s long narrative of a weaponization of the legal system against him and his supporters. Polling shows that most citizens view some of these cases as political prosecutions and that they are having diminishing impact on voter preferences. Yet, they remain thrilling for democratic voters who lionize prosecutors who come up with novel or unprecedented avenues to hammer Trump or hit his businesses. It does not seem to matter that removing the liquor licenses of these clubs can endanger thousands of jobs of citizens or chill other businesses in considering investments in New York or New Jersey.

In the end, the effort is hardly surprising. Lawfare is like binge drinking: the excess is the very measure of its success.

The blowout in European bond yields extended for a second day as French bonds tumbled, driving the biggest two-day jump in yields since the pandemic, amid rumors that Macron was preparing to announce his resignation, which has been swiftly denied by a person close to him. The French president is set to hold a press conference on Wednesday to set out his campaign.

While Macron’s resignation rumors were quickly quickly denied according to Bloomberg, speculation over his future spurred a sharp selloff in French government bonds with the yield on 10-year French bonds surging as much as 10 basis points Tuesday, and widened the spread over equivalent German bonds to the highest level since March 2020 on a closing basis.

Meanwhile, Italian bonds, viewed among the region’s riskiest given the government’s debt pile, were swept up in the rout for a second day with the spread over bunds jumping to 150 basis points.

Over the weekend, Macron shocked the world after calling a snap election to curb the political rise of Marine Le Pen, whose National Rally party won widespread support in the EU elections over the weekend. The first round of the vote on June 30 risks becoming the ultimate showdown over Macron’s trademark economic policies, which had largely reassured investors and businesses since he took office in 2017.

After rejecting President Emmanuel Macron’s offer of an alliance against the far right, France’s left wing parties have instead sealed a pact amongst themselves as they seek to block the ascendance of Rassemblement National and Marine Le Pen, the Financial Times reported earlier.

A joint statement was signed late on Monday night between the Socialists, Communists, Greens and several smaller parties, grouped together as the Front Populaire (Popular Front). That raises the risks given it is likely to mean more polarization, and a weakening of the centrists.

Meanwhile, the first polling released by Harris Interactive on Monday evening predicted the RN would come first with 235-265 seats, short of the 289 needed for an outright majority.

According to Newsweek, multiple open-source intelligence analysts have said the US has deployed air and naval assets off Florida’s eastern coast to ‘shadow’ Russian warships. This comes as Russian warships are expected to arrive in Cuba this week ahead of military drills in the Caribbean.

Open source intelligence (OSINT) analysts on Tuesday posted updates showing the CG Stone coastguard vessel, the USS Truxtun and USS Donald Cook destroyers, and the Royal Canadian Navy frigate HMCS Ville de Quebec travelling southwards down the Florida coast, purportedly following the Russian ships headed to Cuba. Above them, at least one US Navy P-8A Poseidon appeared to be conducting surveillance. -Newsweek

OSINT analysts on X weren’t clear which of Russia’s four-ship grouping, made up of the Gorshkov frigate, the nuclear-powered submarine Kazan, the fleet oil tanker Pashin, and the rescue tug Nikolai Chiker, were transiting in international waters off the coast of Florida. Still, they posted flight tracking data that showed at least one Boeing P-8 Poseidon circling above. 

🚨Update: US ON FULL ALERT!! The Hunt is on!! US Navy P8 Poseidon ‘Sub hunter’ is flying over the coast of Florida in search of rogue Russian submarine!!

The Russian Navy nuclear Submarine Kazan is 66 miles away from Florida coast, equipped with 4500-km Kalibr-M missiles, off… pic.twitter.com/xuSJV5hAX8

— US Civil Defense News (@CaptCoronado) June 10, 2024

The BOEING P-8 Poseidon that’s been monitoring a Russian Submarine off the Coast of Florida has been relieved by a second BOEING P-8 Poseidon. There’s also A US Warship, Canadian Warship and Coast Guard Ships in the area. pic.twitter.com/ygT45GFDnE

— Matthew Smith (@MatthewKCWX) June 11, 2024

❗🇺🇸⚔️🇷🇺 – Russian submarine spotted off the east coast of Florida! 😱

175 miles east of Melbourne, Florida, a Russian submarine was detected at 9:45 a.m. EST on June 10, heading 253 at 14 knots. 😳

In response, a US Navy P8 Poseidon, also known as the “Submarine Hunter”, was… pic.twitter.com/x3I9dcp2V6

— 🔥🗞The Informant (@theinformant_x) June 11, 2024

The Russian warships are expected to arrive in Havana in the coming days and stay through early next week, according to Cuba’s Foreign Ministry. This deployment signals Russia’s capacity to operate globally while still fully engaged in its third year of war in Ukraine. 

“This is about Russia showing they are still capable of some level of naval power projection,” a US senior official told McClatchy and the Miami Herald, adding, “We should expect more of this activity going forward.” 

Meanwhile, Jake Broe, a former US Air Force nuclear and missile operations officer, stated on X on Sunday, “Russians on Kremlin State TV yesterday declared that Mexico was their military ally and they are wanting to place their missiles on Mexican territory so Mexico can attack the United States.” 

I have no idea why this is not getting mainstream media coverage but the Russians on Kremlin State TV yesterday declared that Mexico was their military ally and they are wanting to place their missiles on Mexican territory so Mexico can attack the United States. This is insane. pic.twitter.com/SU7CdhgDEK

— Jake Broe (@RealJakeBroe) June 10, 2024

All of this is the result of the Biden administration’s weak foreign policy, which has sparked turmoil around the world. Terrible foreign policy decision-making has become a liability for Biden’s campaign before the November elections. The majority of Americans don’t want World War III.

Authored by Lance Roberts via RealInvestmentAdvice.com,

More than a few individuals were active in the markets in 1999-2000, but many participants today were not. I remember looking at charts and writing about the craziness in markets as the fears of “Y2K” and the boom of “internet” filled media headlines. It was quite the dichotomy. On one hand, it was feared that the turn of the century would “break the computer age,” as computers could not handle the date change to 2000. However, at the same moment, the internet would turbocharge the world with massive productivity increases.

Back then, the S&P 500, particularly the Nasdaq, rallied harder each day than the last. Market breadth looked pretty weak, as the big names were soaring, forcing indexers and ETFs to buy them to keep their weightings. The reinforcing positive feedback cycle fueled markets higher day after day.

I remember those days clearly. It was the “gold rush” of the 21st century for investors.

Interestingly, much like then, we are witnessing investors chase anything related to “artificial Intelligence.” Just as the internet had companies adding a “dot.com” address to their corporate name in 1999, today, we are seeing an increasing number of companies announce an “AI” strategy in their corporate outlooks.

“Execs can’t stop talking about AI. The number of companies that have mentioned AI on earnings calls has rocketed since the launch of ChatGPT. The number of times AI has been mentioned on earnings calls has seen a similar rise.” – Accenture Technology Vision 2024 Report

The difference versus today was that companies would advance regardless of actual revenue, earnings, or valuations. It only mattered if they were on the cutting edge of the internet revolution. Today, the companies racing higher on artificial intelligence have actual revenues and income.

But does that difference remove the risk of another disappointing outcome?

A Forced Feeding Frenzy

As noted above, in 1999, as the “Dot.com” bubble swelled, ETF providers and index tracking managers were forced to buy increasing quantities of the largest stocks to remain balanced with the index. As we have discussed previously, given the proliferation of ETFs and investors’ increasing amount of money flows into passive ETFs, there is a forced feeding frenzy in the largest stocks. To wit:

“The top-10 stocks in the S&P 500 index comprise more than 1/3rd of the index. In other words, a 1% gain in the top-10 stocks is the same as a 1% gain in the bottom 90%.

As investors buy shares of a passive ETF, the shares of all the underlying companies must get purchased. Given the massive inflows into ETFs over the last year and subsequent inflows into the top-10 stocks, the mirage of market stability is not surprising.

Unsurprisingly, the forced feeding of dollars into the largest weighted stocks makes market performance appear more robust than it is. As of June 1st, only 30% of stocks were outperforming the index as a whole.

That lack of breadth is far more apparent when comparing the market-capitalization-weighted index to the equal-weighted index.

However, the concentration of flows into the largest market-cap-weighted companies continues to increase the market capitalization of those top stocks to levels well above that of the “Dot.com” bubble.

The forced feeding of the largest companies in the index, while reminiscent of 2000, does not mean there will be an immediate reversal. If this is indeed a bubble in the market, it can last far longer than logic would suggest.

Just as it was in 2000, what eventually causes the market reversal is when reality fails to live up to expectations. Currently, the sales growth expectations are an exponential growth trend higher.

While it is certainly possible that those expectations will be met, there is also a considerable risk that something will happen.

Trees Don’t Grow To The Sky

Just as in 2000, the valuations investors paid for companies like Cisco Systems (CSCO), which was the Nvidia (NVDA) of the Dot.com craze, plunged back to reality. The same could be true for Artificial Intelligence in the future. As noted recently by the WSJ:

“AI has had an astounding run since OpenAI unveiled ChatGPT to the world in late 2022, and Nvidia has been the biggest winner as everyone races to buy its microchips. To see what could go wrong, note that this isn’t the usual speculative mania (though there was a mini-AI bubble last year). Nvidia’s profits are rising about as fast as its share price, so if there is a bubble, it’s a bubble in demand for chips, not a pure stock bubble. To the extent there is a mispricing, it’s more like the banks in 2007—when profits were unsustainably high—than it is to the profitless dot-coms of the 2000 bubble.”

It is a good analysis of the four (4) things that could go wrong with AI:

1. Demand falls because AI is overhyped. (Much like we saw with the Dot.com companies.)

2. Competition reduces prices.

3. Suppliers ask for a more significant share of the revenue.

4. What if the scale doesn’t matter?

As Rober McNamee, a Silicon Valley investing legend, stated:

“There are corporations and journalists that have completely bought into this [the AI hype.] Before investors buy into this we should just ask: How are you going to get paid? How are you going to get a return on something that is effectively a half million dollars each time you do a training set… in a 5% environment.”

As is always the case, the current boom of “artificial intelligence” stocks is just another in a series of “investment themes” over the market’s long term.

“But if we learned nothing else during the SPACs, the crypto, the meme stocks, and whatever else fueled the market’s last run – you know, the one when stocks were the only place to put your money because rates were so low – it’s that when this stuff reverses, it’s always brutal.” – Herb Greenberg

And, as we noted previously:

“These booms provided great opportunities as the innovations offered great investment opportunities to capitalize on the advances. Each phase led to stellar market returns that lasted a decade or more as investors chased emerging opportunities.” 

We are again experiencing another of these speculative “booms,” as anything related to artificial intelligence grips investors’ imaginations. What remains the same is that analysts and investors once again believe that “trees can grow to the sky.” 

“Trees don’t grow to the sky is a German proverb that suggests that there are natural limits to growth and improvement.
The proverb is associated with investing and banking where it is used to describe the dangers of maturing companies with a high growth rate. In some cases, a company that has an exponential growth rate will achieve a high valuation based on the unrealistic expectation that growth will continue at the same pace as the company becomes larger. For example, if a company has $10 billion in revenue and a 200% growth rate it’s easy to think that it will achieve 100s of billions in revenue within a few short years.

Generally speaking, the larger a company becomes the more difficult it becomes to achieve a high growth rate. For example, a firm that has a 1% market share might easily achieve 2%. However, when a firm has an 80% market share, doubling sales requires growing the market or entering new markets where it isn’t as strong. Firms also tend to become less
efficient and innovative as they grow due to diseconomies of scale.

Modeling how quickly a growth rate will slow as a firm becomes larger is amongst the most difficult elements of equity valuation.” – Simplicable

The internet craze in 1999 sucked in retail and professionals alike. Then, Jim Cramer published his famous list of “winners” for the decade in March 2000.

Such is unsurprising, as endless possibilities existed of how the internet would change our lives, the workplace, and futures. While the internet did indeed change our world, the reality of valuations and earnings growth eventually collided with the fantasy.

No, today is not like 2000, but there are similarities. Is this time different, or will trees again fail to reach the sky? Unfortunately, we won’t know for certain until we can look back through the lens of history.

US equity futures are lower with small-caps lagging, while Treasuries and the dollar rose as traders braced for a landmark day tomorrow that sees the release of both CPI data in the morning and then the Fed’s latest decision at 2pm ET. The crowded schedule sets up a crucial 36 hours for risk assets, including Bitcoin, which is currently getting hammered despite billions in ETF purchases in recent weeks, and is moving in the opposite direction to Treasury yields to an unusual degree. As of 7:50am, S&P futures were down 0.3%, near session lows while Nasdaq futures dropped 0.4%; both underlying indexes closed at record highs on Monday.

US Treasuries gained before inflation data and the Federal Reserve’s interest rate decision on Wednesday; bond yields are 3-5bps lower ahead of today’s 10Y auction and follows yesterday’s poor, tailing 3Y auction. The USD is stronger pre-mkt with both EUR and JPY weaker. French bonds tumbled the most since 2020 and the French-German yield spread blew out to October level following rumors that Macron could resign after his decision to call snap elections. Commodity markets are mostly lower with Ags finding a bid and natgas outperforming crude. Small Business Optimism is the macro data release today and even though it rose and beat expectations, coming in at 90.5, vs exp. 89.7, it will not be market-moving. As JPM notes, today’s pre-market setup is similar to yesterday but let’s see how many position adjustments are made into tomorrow’s CPI/Fed double feature as today sets up as the proverbial calm before the storm.   

In premarket trading, Mag7 and Semi stocks were lower. Among US single stocks, Apple were set for a second day of losses, after its much-anticipated AI announcement last night saw no major surprises. The firm is making a high-stakes bid to catch up with rivals in the booming AI market, and yesterday announced a new platform called Apple Intelligence. A partnership with OpenAI — in the works for months — was only briefly mentioned at the event; it failed to inspire traders and sparked an angry backlash from Elon Musk who said he would ban Apple devices from his companies. LLY was the standout gainer, rising 2% after an FDA advisory panel deemed the firm’s Alzheimer’s drug effective and recommended US regulatory approval. Here are some of the biggest US movers before the opening bell:

• Calavo Growers rises 12% after the distributor of avocados and other produce posted 2Q profit and sales that topped estimates.
• Cleveland-Cliffs slips 3% after JPMorgan downgrades its rating on the steel producer to neutral, citing concerns over free cash flow and shareholder returns.
• DXC Technology rises 2% after Reuters reported Apollo Global and Kyndryl Holdings are in talks for a joint bid for the information technology services company.
• General Motors rises 1% after announcing a $6 billion share buyback.
• Target Hospitality sinks 28% after a Wall Street Journal report that the Biden administration is closing an Immigration and Customs Enforcement detention center in Dilley, Texas, that was used to jail migrant families who crossed the border illegally.
• Yext falls 13% after the digital-media technology company cut its full-year revenue forecast.

Ahead of tomorrow’s busy calendar, where the market is focused on tomorrow’s CPI/FOMC double whammy, some bond traders are already turning their attention to next year. With sticky inflation raising the prospect of higher-for-longer interest rates through 2024, the big question in the fixed-income space is how to game out 2025 and beyond, heaping more attention on the Fed’s interest rate projections, aka the dot plot.

Meanwhile, European assets extended Monday’s rout as jitters over political upheaval in France continued. The euro edged lower and the Stoxx 600 fell for a third day. US equity futures dropped. Initially, it looked like some calm had returned to European markets on Tuesday after rising political risks rocked assets at the beginning of the week. But things took a turn throughout the day, with stocks sliding and French bonds remaining under pressure, pushing the 10-year spread over German bunds to the highest since October following rumors that President Emmanuel Macron was preparing to resign; while the rumors were swiftly denied, the selling in local bonds continued…

… and appears to have quickly spread to other regions too.

• SPREAD BETWEEN ITALIAN AND GERMAN 10-YEAR YIELDS WIDENS TO 150 BPS, WIDEST SINCE FEBRUARY

The biggest moves were in French markets. The yield on 10-year notes jumped as much as 10 basis points to 3.32%, putting them on course for the biggest two-day increase since March 2020. The selloff has widened the spread over equivalent German bonds to 64 basis points, the highest since October on a closing basis. European stocks were also lower with energy and industrial goods and services gain while miners are the worst performers as copper and iron ore fall. Here are some of the biggest movers on Tuesday:

• UCB gains as much as 5.6%, the most since February and to a record high, after JPMorgan raised its recommendation for the Brussels-listed biotech to neutral from underweight, betting on continued strong demand for UCB’s key Bimzelx drug.
• Covestro shares gain as much as 7.6% after Bloomberg News reported the German chemical company is close to granting Adnoc access to in-depth due diligence in expectation of an improved takeover bid.
• Oxford Instruments shares jump as much as 12% after the instrument maker delivered annual results ahead of expectations and outlined new medium-term growth targets that should keep investors happy, according to analysts.
• Idox rises as much as 4.7% as analysts at Canaccord Genuity (buy) say that the British software company continues to deliver reliable growth and forecast stability.
• Maersk and European shipping peers fall after several Asian peers notched double-digit declines in Tuesday trading as traders assess the impact of revised interest-rate paths and the geopolitical impact from the latest Israel-Gaza ceasefire plan. In the US, American dockworkers halted labor talks.
• European Miners were the worst performers in Europe as they followed copper and iron ore prices lower, with both commodities weakened by concerns over Chinese demand.
• Naturgy shares fall as much as 13%, the most since March 2020, after Taqa and Criteria Caixa ended talks to jointly acquire the Spanish utility.
• GN said it will gradually wind-down its Elite and Talk product lines and lowered its financial forecast range. The shares fell as much as 9.7% in Copenhagen.
• CBrain falls as much as 14% after ABG Sundal Collier downgraded the Danish software firm to sell from hold, quoting an “excessive” near-term valuation.

In the UK, an unexpected rise in the jobless rate boosted the outlook for rate cuts later this year. Traders are fully pricing in the first quarter-point reduction by November and see around a 40% chance of a second decrease the following month.  In a separate development, the country attracted over £104 billion ($132 billion) of orders for bonds in a record for gilt sales.

Earlier,  Asian stocks fell, as Chinese and Australian shares led declines as markets reopened following holidays. The MSCI Asia Pacific Index fell 0.5%, with BHP Group, Samsung Electronics and China Construction Bank among the biggest drags. Benchmark in mainland China fell to their lowest closing levels since April. Korean shares were among the few gainers in Asia. Slow travel growth over the Dragon Boat Festival holiday was the latest sign of weak consumer demand in China. Property woes in the country also continued to weigh on sentiment, despite signals of additional government support measures.

• Hang Seng and Shanghai Comp. were pressured amid ongoing property sector concerns after a Hong Kong court issued a wind-up order to Chinese property developer Dexin China.
• ASX 200 declined amid broad weakness across sectors and as miners led the descent.
• Nikkei 225 bucked the trend as it benefitted from recent currency weakness.

“The recent weekend holiday didn’t see as strong consumption as the previous May Golden Week, and weekly property sales are weak,” said Xin-Yao Ng, director of investment at abrdn.

In FX, the Bloomberg Dollar Spot Index gained for a fourth day and was up 0.2% as investors positioned for the Fed’s policy decision on Wednesday at which officials are expected to scale back forecasts for a pivot; US CPI data will be released the same day. 

“The US dollar has bounced back, underpinned by widening monetary policy divergences,” Elias Haddad and Win Thin, strategists at Brown Brothers Harriman & Co., wrote in a note. “We expect the Fed to deliver a hawkish hold Wednesday”
Treasury 10-year yields slipped 4bps to 4.43%, tracking gains in European bond markets; the Department of the Treasury will auction $39 billion of 10-year debt on Tuesday, which follows the sale of three-year notes on Monday which drew a higher-than-expected yield. Traders see an 80% possibility that the Fed will start cutting rates in November, compared with 75% on Monday; they are pricing a total of 40bps of cuts by the end of the year

In rates, treasury futures extend advance in early US session, with yields near lows of the day, richer by up to 5bp across belly of the curve and outperforming European rates. US yields richer by 3bp to 5bp across the curve with belly-led gains steepening 5s30s spread by ~2bp vs Monday’s close. US 10-year yields around 4.43%, outperforming bunds in the sector by 2bp and French bonds by 10bps. Main focal point for Tuesday’s US session is $39 billion 10-year note auction, while in Europe French bonds continue to fall amid heightened political uncertainty following the European Parliament elections. Treasury coupon auction cycle resumes with $39b 10-year reopening at 1pm New York, concludes Thursday (after FOMC decision Wednesday) with $22b 30-year bond reopening; WI 10-year yield at around 4.425% is ~6bp richer than last month’s, which tailed by 1bp.

In commodities, oil held its biggest jump since March ahead of an OPEC report that will provide a snapshot on the market outlook. Crude surged on Monday as traders piled back into the commodity after the biggest weekly loss since early May.

The OPEC report will be followed by a Short-Term Energy Outlook from the US later on Tuesday, and a monthly release from the International Energy Agency on Wednesday.

Bitcoin slumped below $68K with Ethereum also sliding towards $3.5k, giving back some of its overnight advances. Crypto insiders are said to be meeting with US Senate staffers to try to resolve a surprise crypto policy push embedded in a recent Senate spending package that cleared the intelligence committee, according to CoinDesk.

Looking at today’s calendar, US economic data is empty for the session, while Fed officials are expected to refrain from commenting until after Wednesday’s policy announcement

Market Snapshot

• S&P 500 futures down 0.1% to 5,365.50
• STOXX Europe 600 little changed at 521.82
• MXAP down 0.5% to 179.29
• MXAPJ down 0.5% to 558.40
• Nikkei up 0.2% to 39,134.79
• Topix down 0.2% to 2,776.80
• Hang Seng Index down 1.0% to 18,176.34
• Shanghai Composite down 0.8% to 3,028.05
• Sensex up 0.2% to 76,670.09
• Australia S&P/ASX 200 down 1.3% to 7,755.38
• Kospi up 0.2% to 2,705.32
• German 10Y yield little changed at 2.67%
• Euro little changed at $1.0760
• Brent Futures up 0.1% to $81.73/bbl
• Gold spot down 0.1% to $2,307.44
• US Dollar Index little changed at 105.20

Top Overnight News

• Elon Musk isn’t a fan of Apple’s AI announcement. He said he’d ban Apple devices from his companies if OpenAI’s software is integrated at the OS level, calling the tie-up a security risk. BBG
• An aggressive market grab by low-cost Chinese retailers has delivered bumper earnings for some firms but has also intensified a bruising price war, exacerbating deflationary fears in the world’s second-largest economy. From coffee to cars to clothes, China’s discount retailers have cut prices on just about everything as they chase a consumer whose confidence has been battered by a property crisis, high unemployment and a gloomy economic outlook. RTRS
• France’s National Rally expected to win the upcoming election but fall short of an absolute majority. RTRS
• ECB’s Lagarde repeats that policy isn’t on a preset path and rates could stay on hold for more than one consecutive meeting. FT
• UK labor report showed a rise in Apr unemployment (employment fell 139K vs. the Street -98K and the UR climbed to 4.4% vs. 4.3% in the prior period) while wages stayed elevated (+5.9% vs. the Street +5.7%). WSJ
• Israel is ramping strikes against Hezbollah and Hezbollah-related targets in Syria, signs the country is “gearing up for a full-scale war” against the terror group in Lebanon. RTRS
• Blackstone is targeting ~$10B in Japanese deals over the next few years as the country’s economy continues improving. Nikkei  
• OpenAI dismissed speculation that Sarah Friar’s hiring means it is about to pursue an IPO. Market Watch
• Advertising outlook increased by WPP’s GroupM to +7.8% for ’24 (ex-politics) vs. the prior estimate of +5.3% (although a big chunk of the increase was a function of how certain areas of the industry in China are measured). WSJ

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded with a negative bias after the choppy performance stateside where the S&P 500 and Nasdaq notched fresh record closes but the gains were capped ahead of the mid-week key events. ASX 200 declined amid broad weakness across sectors and as miners led the descent. Nikkei 225 bucked the trend as it benefitted from recent currency weakness. Hang Seng and Shanghai Comp. were pressured amid ongoing property sector concerns after a Hong Kong court issued a wind-up order to Chinese property developer Dexin China.

Top Asian News

• China’s Auto Industry CPCA said China sold 1.72mln passenger cars in May, -2.2% Y/Y; said China’s pure EV exports saw a temporary decline in May amid Red Sea shipping issues alongside other factors; still have strong growth momentum despite disruptions in European markets.
• China saw 110mln domestic tourist trips during the three-day Dragon Boat Festival holiday and official data showed that Chinese cross-border trips rose 45.1% Y/Y during the three-day holiday.
• Hong Kong court issued a wind-up order to Chinese property developer Dexin China (2019 HK), while it was later reported that Dexin China suspended trading in Hong Kong.

European bourses, Stoxx 600 (-0.4%) began the session on a modestly firmer footing, though did succumb to slight selling pressure as the morning progressed, in a continuation of the downbeat mood in APAC trade overnight. European sectors are mixed, with the breadth of the market fairly narrow. Basic Resources is the standout laggard, given the broader weakness in metals prices. US equity futures (ES -0.2%, NQ -0.3%, RTY -0.7%) are modestly in the red, with price action tentative ahead of Wednesday’s key risk events, including the FOMC & US CPI.

Top European News

• ECB’s Villeroy said rate reduction markets a “decisive orientation”; limited spill-over from Fed/ECB’s difference in timing. Fed policy should not greatly impact the ECB’s. Significant leeway to reduce rates before exiting restrictive territory. Monitoring actual inflation data, in particular for services but monthly figures will be volatile due to base effects on energy. “Noise” is not very meaningful and as such is more outlook driven. Will look more closely at inflation forecasts. Remains confident that the Bank will bring inflation to target by next year; will reach it with a soft, rather than hard landing.
• ECB’s Simkus said it is too early to declare victory over inflation; rates can be cut more if ECB is sure the 2% inflation target will be met.
• ECB’s Rehn said monetary policy has dampened price pressures; considerable progress has been made. ECB knows the inflation path is a bumpy road, but sees stabilisation ahead
• France’s National Rally party and lawmaker Marion Marechal are in talks about potentially joining forces to oppose President Macron in the upcoming elections, according to Bloomberg.
• Moody’s said France’s snap election is negative for France’s credit rating; said outlook and rating could move to negative if interest payments relative to revenue and GDP are seen to be significantly larger than peers.
• French President Macron is said to be mulling potential resignations in the case of a possible right-wing victory in early parliamentary elections, according to News AZ.
• French Elysee Palace has reportedly denied media reports suggesting that French President Macron might resign.
• French President Macron is to hold a press conference on June 12 around 11:00 BST/ 06:00 EDT.

FX

• USD is broadly steady vs. peers with DXY holding above the 105 mark and within yesterday’s 104.93-105.38 range; trade is contained ahead of Wednesday’s CPI/FOMC where focus will reside on the M/M core rate and any adjustments to the Fed’s FFR dots.
• EUR is softer vs. the USD and ultimately still weighed on via the double-whammy of Friday’s NFP and the weekend’s EU parliamentary elections. For now, the pair is stuck on a 1.07 handle and holding above Monday’s 1.0732 low.
• GBP is a touch softer vs. both the USD following UK jobs metrics which showed an unexpected uptick in unemployment, a larger-than-expected decline in employment, and mixed, but sticky wage growth. Cable ventured as low as 1.2714 but refrained from testing the 1.27 mark.
• JPY is marginally building on the losses vs. the USD seen since Friday with USD/JPY now up to 157.38.
• Antipodeans are both steady vs. the USD in quiet trade after managing to claw back some of Friday’s losses during yesterday’s session.
• PBoC set USD/CNY mid-point at 7.1135 vs exp. 7.2724 (prev. 7.1106).

Fixed Income

• USTs are firmer but ultimately unable to recoup much of the lost ground seen in the wake of Friday’s NFP release; price action has been tentative as focus lies on the US CPI and FOMC on Wednesday. The Sep’24 UST contract continues to hold above the 109 mark and did catch a recent bid in tandem with news that French President Macron is said to be mulling potential resignations in the case of a possible right-wing victory in early parliamentary elections, according to News AZ – although this was later denied. A record Gilt sale also played a factor.
• European debt markets are slightly more contained, though OATs remain under pressure with Moody’s noting that the snap election called by Macron is negative for the nation’s credit rating. Sep’24 Bund sits towards the bottom end of yesterday’s 129.52-130.27 range.
• Gilts are outperforming peers on account of the latest UK jobs data, which showed an unexpected uptick in unemployment and mixed, but sticky wage growth. Gilts are currently higher by around 35 ticks, taking another leg higher after UK got a record GBP 104bln in orders for its Gilt sale, via Bloomberg; beating the prior record of GBP 100bln; pricing +4bps over UKT, pricing expected later on Tuesday.

Commodities

• Crude is slightly softer after spending much of the session flat in what has been a catalyst thin session, except for news that Hamas is reportedly ready to negotiate the details of the ceasefire following yesterday’s UNSC vote; oil markets were unreactive to the news. Brent Aug trades within 81.37-82.02/bbl.
• Bullish price action across nat gas futures with US Henry Hub front-month back above USD 3/MMBtu for the first time since January. The rise in US prices is partly attributed to expectations of a tightening market in the medium-to-long term.
• Subdued trade across precious metals despite relatively steady markets elsewhere aside from metals. Spot gold is flat/modestly lower while spot silver and spot palladium see deeper losses to the tune of -1.5 to 1.7%.
• Considerable weakness across base metals with desks citing recent developments of US rate cuts expectations coupled with high Chinese inventories whilst a softer CNY also reduces the purchasing power of Chinese buyers.
• India Oil Minister said India state refiners in talks for long term oil import deal with Russia.
• OPEC MOMR to be released at 12:30 BST/ 07:30 EDT.

Geopolitics

• Israel conducted raids on the Hosh al-Sayed Ali area of the Hermel district near the Lebanese-Syrian border, according to Al Jazeera.
• US State Department said Secretary of State Blinken discussed with Israeli Defence Minister Gallant on Monday the Gaza ceasefire proposal.
• “Hamas ready to implement ceasefire agreement: Senior official”, via IRNA; Senior Hamas official Mahmoud al-Mardawi said that the Hamas movement is ready to cooperate for the implementation of the ceasefire agreement. According to the Palestinian Samaa News Agency, al-Mardawi made the remarks in reaction to a United Nations Security Council (UNSC) resolution; Wider reporting: Hamas agreed to Security Council ceasefire resolution and is ready to negotiate details, according to a Hamas official cited by Reuters.
• “Israeli media: About 40 rockets were launched from southern Lebanon and one landed in the Upper Galilee”, according to Sky News Arabia.
• US President Biden is to lift the ban on allowing a controversial Ukrainian unit to use US weapons, according to The Washington Post.
• South Korean military said it fired warning shots after North Korean soldiers briefly crossed the border on Sunday, according to Yonhap.

US Event Calendar

• 6:00: May small business optimism 90.5 Est. 89.7, Prior 89.7

DB’s Jim Reid concludes the overnight wrap

As I cry in a corner and hang on tight to my last day in my 40s, its fair to say its been a dramatic couple of weeks for elections with each of them having their own major surprises in a year with the largest % of the global population ever going to national elections. As we discussed yesterday the European Parliamentary elections broadly went as the polls suggested (a slight move to the right but with the centre holding) but that the big news was President Macron calling a snap legislative election. This led to sizeable losses across Europe with France at the epicentre, albeit taking Italy along for the ride. But the declines were clear across the rest of the continent, with governing parties experiencing defeats in several countries, including Germany as well.

When it came to markets, French bonds were the worst-affected, with their 10yr yield surging by +12.8bps yesterday to 3.22%. That’s their highest level since November, and the Franco-German 10yr spread also widened by +7.6bps, which is its biggest daily widening since July 2022. Moreover, equities slumped, with the CAC 40 (-1.35%) falling to its lowest level since February, though it did recover by about 1% from intra-day lows. Banks were among the worst performers, including Société Générale (-7.46%) and BNP Paribas (-4.76%). The STOXX 600 closed -0.27% lower, having traded -0.88% intra-day, while the DAX and the FTSE MIB both fell back by -0.34%. As we’ll see in more detail later, the S&P 500 (+0.26%) ignored the European noise and hit a new record high.

The French losses come against the backdrop of recent jitters around their public finances, and it was only at the end of May that S&P downgraded their credit rating from AA to AA-. Remember as well that France hasn’t run a budget surplus since 1974, and its budget deficit stood at 5.5% of GDP in 2023. In terms of what’s next, the first round of the parliamentary election is on June 30, with the second round taking place the following weekend on July 7. See our economists’ note for more on the potential implications of the snap vote here. So that’s another busy political calendar that week, as the votes come either side of the UK election on July 4. However the UK is for once looking like a beacon of potential stability and it was noticeable that GBP rose +0.52% against the Euro yesterday to 1.184, its highest since August 2022. The euro also weakened -0.44% against the dollar.

The uncertainty over the snap parliamentary vote in France certainly heightened concern over the EP election results but the reality is that they were broadly in-line with expectation. In Germany, Chancellor Scholz’s SPD had their worst-ever performance in a European election, with just 14% of the vote. By contrast, the AfD came in second place with 16% of the vote, up from 11% in 2019. Meanwhile in Italy, Prime Minister Meloni’s Brothers of Italy party came first, with provisional results placing them on 29% of the vote. Maybe markets suddenly woke up to the prospect of populists having greater influence in Europe’s policy making, just as election uncertainty persists in the US.

The general concerns ignited a Europe-wide sovereign bond selloff, with yields on 10yr bunds (+5.2bps) and BTPs (+11.7bps) both rising sharply as well. Indeed, Italian 10yr yields were up to 4.07%, their highest since December, whilst 10yr bund yields closed at 2.67%, which is just shy of their 2024 closing high of 2.69%. It is an open question how much the Italian spread widening reflected Italy’s general position as being more sensitive to European stress versus reflecting more specific concerns that the policy-making of Italy’s government could take a more populist turn if a right-wing government is formed in France.

The bond selloff in Europe got further momentum thanks to comments from ECB officials, who struck a cautious tone on future rate cuts. For example, Slovakia’s Kazimir said that September “ will be the right moment to reassess our stance and decide whether we need to adjust our monetary policy settings.” So the implication there is that the next meeting in July would be too soon. Separately, Bundesbank President Nagel said that “ I don’t see us on a mountain top from which we will inevitably come down”, and instead he viewed it as “a ridge where we still have to find the right point for a further descent.” Quite poetic! Finally, around the European close, Lagarde said in an interview that “We’ve made the appropriate decision, but it doesn’t mean interest rates are on a linear declining path”. Those comments added to the sense that the ECB weren’t going to rush future rate cuts, and that narrative got further support from another rise in commodity prices yesterday. Indeed by the close, Brent crude oil prices (+2.52% to $81.63/bbl) posted their largest gain since March a nd they have now fully erased the decline seen in the aftermath of the OPEC+ meeting on June 2.

Back to politics, it’s worth noting that the European Parliament elections only mark the beginning of the EU’s new institutional cycle, and several important appointments now need confirming. Most notably, there’s the position of European Commission President, where incumbent Ursula von der Leyen is seeking a second term. What happens now is the EU leaders will propose a presidential candidate to the Parliament that takes account of the election results, and a majority of MEPs then need to vote in favour of the new Commission President. Von der Leyen’s political group, the centre-right European People’s Party, is still the largest in the parliament, so that leaves her in a good position on paper. But she’ll still need a majority of MEPs to vote in favour, so will need to put together a larger coalition of political groupings. Last time she only exceeded the majority threshold by 9 votes, which is done by a secret ballot, so this could well be very close. The next step is an EU leaders summit on June 17, where they’re set to discuss appointments for the next institutional cycle. See Marion Muehlberger’s note here on the EP elections and what happens next.

Over in the US, markets were much more subdued yesterday, with the focus now turning to the double excitement tomorrow of the CPI release and the Fed’s decision (with the latest dot plot). Treasuries did sell off in sympathy with Europe, but the moves were relatively contained, and the 10yr yield was up +3.4bps at 4.47%. For equities, the S&P 500 (+0.26%) managed to eke out another all-time high. The NASDAQ (+0.35%) and the Magnificent 7 (+0.30%) also posted new record highs, even as Apple slid by -1.91% after unveiling long-awaited new AI features and a tie up with OpenAI.

Ahead of tomorrow’s CPI release, one data point that was of interest was the New York Fed’s Survey of Consumer Expectations. It showed that 1yr inflation expectations were down a tenth in May to 3.2%, but 5yr expectations were up two tenths to a 9-month high of 3.0%. There was also growing optimism about the stock market, with the mean probability that US stock prices would be higher in a year up to a three-year high of 40.5%.

Asian equity markets are mostly lower this morning with Chinese stocks underperforming. The Hang Seng (-1.67%) is leading losses with the CSI (-1.08%) and the Shanghai Composite (-1.07%) also lower after returning from the holiday yesterday. Elsewhere, the S&P/ASX 200 (-1.49%) is also notably lower (again after a holiday) whilst the Nikkei (+0.30%) and the KOSPI (+0.41%) are higher. US equity futures are down around a tenth of a percent and 10yr US yields have reversed some of yesterday’s move falling -1.8bps. There is a 10yr US auction today so one to watch in terms of the demand.

In FX, the Japanese yen (-0.11%) is losing ground for the third consecutive day, trading at 157.20 against the dollar ahead of the BOJ’s policy decision on Friday and the edging back closer to the recent lows. The next major event in the region is tomorrow’s Chinese CPI data.

To the day ahead, and data releases include UK unemployment for April, and in the US there’s the NFIB’s small business optimism index for May. From central banks, we’ll hear from the ECB’s Simkus, Villeroy, Rehn, Holzmann, Lane and Elderson.

Authored by Matthew Piepenburg via VonGreyerz.gold,

There is much legitimate (as well as dramatic) talk about the failing US, its debased currency and its identity-fractured/inflation-taxed middle-class which has been increasingly described more aptly as the working poor.

The End, or Just Change?

But is America coming to an end? Will the USD lose its world reserve currency status? Will the greenback disappear? Will gold or BTC save us from all that is breaking before our media-clouded eyes and increasingly centralized state?

Nope.

America is slipping, but not ending.

The USD is being repriced not replaced.

The greenback is still a key spending, liquidity and FX currency. But it’s no longer the premier savings asset or store of value.

Gold (now a Tier-1 asset btw…) will continue to store value (i.e., preserve wealth) better than any fiat money; and BTC will certainly make convexity headlines in the future.

And yes, we all know the Fourth Estate died long before Don Lemon or Chris Cuomo stained our screens or insulted our collective IQ.

And as for centralization, it’s not coming, but already here.

Be Prepared Rather than Emotional

So, yes there is tremendous reason for informed and genuine concern, but rather than wait for the end of the world, it would be far more effective to logically prepare for a changing world.

Rather than debate left or right, black or white, straight or trans, safe or effective, smart (Barrington Resolution) or stupid (Fauci), we’d likely serve our individual and collective minds far better by embracing the logical and tabling the emotional.

Toward that end, we’d be equally better off relying on our own judgement rather than that of the children making domestic, monetary or foreign policy decisions from DC to Belgium…

Logically speaking, the USD (and US of A) is changing.

Like its recent swath of weak leadership, the greenback and US IOU are quantifiably less loved, less trusted, less inherently strong and well…far less than they were at Bretton Woods circa 1944.

Change Is Obvious

Since our greatest generation stormed the beaches of Normandy in June of 44, we’ve gone from being the world’s leading creditor and manufacturer to the world’s greatest debtor and labor-off-shorer by June of 2024.

This is not fable but fact. A recent Normandy veteran admitted that he no longer recognizes the country he fought for—and that’s worth a pause rather than “patriotic” critique.

When the post-2001-WTO-daft policy makers weaponized what should have been a neutral world reserve currency in 2022 against a major nuclear power (i.e. stole $400B worth of Russian assets) already in economic bed with a China-driven and now growing BRICS coalition, the “payback” writing was on the wall for the greenback—as many of us understood from day-1 of the Putin of sanctions.

De-Dollarization Is a Reality, not a Headline

In short, many nations of the world, including the oil nations, quickly understood that the world wants a reserve asset that can’t be frozen/stolen at will and that simultaneously retains (rather than loses) its value.

But rather than end the USD as the world reserve currency, most of that world is simply going around (or outside of) it…

Or even more bluntly, the prior hegemony of the UST, and by extension, the USD, irrevocably changed in 2022.

Thank You Ronni & Luke

Thanks to data-focused and credit/currency-savvy thinkers like Ronnie Stoeferle and Luke Gromen, we can plainly see the facts rather than drama of these trends.

The actions rather than mere words of the BRICS+ nations and global central banks, who prefer to save in physical gold rather than US IOU’s, speak loudly for themselves, which Stoeferle’s objective charts remind.

That is, since the US weaponized its Dollar, there has been an undeniable move away from the greenback and its UST in favor of gold as a reserve asset:

The COMEX et al…

The hard facts are in, and dozens of BRICS+ countries are trading outside the USD, purchasing in local currencies for local goods, and then net settling the surpluses in physical gold, which is far better/fairer priced in Shanghai than in London or New York, two critical exchanges that are seeing more physical deliveries out of their exchanges than in.

Immodestly, we saw this coming years ahead of the White House…

This means decades of artificially rigging precious metal pricing on legalized fraud platform like the COMEX are coming to a post-Basel III and post-sanction slow end.

This matters, because like it or not, the rising power of the BRICS+ nations, generationally tired of being the dog wagged by the USD’s inflation-exporting tail, are growing in economic power away from a debt-driven West, which again, the facts (global share of GDP) make clear rather than sensational.

The Chart of the Decade?

Ronni posted a similarly critical chart over a year ago, asking, somewhat rhetorically, if it was not the chart of the decade?

That is, he asked if the world is moving toward a commodity super-cycle wherein real assets begin their slow rise against falling (yet currently inflated) equity markets and a falling (yet increasingly debased) USD.

As Grant Williams, would say, this should make far-sighted investors all go hmmm.

Commodity Markets: Change is Gonna Come to the Petrodollar

And as for commodities, currencies and hence gold, the changes are all around us, at least for those with eyes to see and ears to hear.

Toward this end, we can’t ignore what has been happening in the global energy markets, topics which I’ve previously (and so-far, correctly) addressed here and here.

But when it comes to understanding oil, the USD and gold, Luke Gromen leads the way in clear thinking and has informed us as well as anyone.

He reminds, for example, that oil, like any other object of international supply and demand (i.e., trade), can be equally net-settled in gold rather the UST-linked petrodollars.

(In 2023, by the way, 20% of global oil sales were outside of the USD, a fact otherwise unthinkable until the Biden White House sanctioned Russia.)

The implications of this simple observation (as well as its impact on) the USD, commodity pricing and gold are extraordinary.

Oil: The Recent Past, Prior to Sanctions…

Before the US weaponized its USD against Russia (and publicly insulted its key oil partner, Saudi Arabia), the world towed the line of both the UST and the USD-denominated oil trade, which was very, very, very convenient for Uncle Sam and his Modis Operandi of exporting US inflation to everyone else.

For example, in the past, when commodity prices got too high, nations like Saudi Arabia would absorb USTs and effectively go long the USD, which the US pumps out faster than the Saudis do oil…

This, of course, was good for stabilizing and absorbing an otherwise over-produced and debasement-vulnerable USD while simultaneously helping US government bonds stay loved and hence yield’s compressed/controlled.

In a way, this was even good for global growth, as it kept the USD stable and low enough for nations like China and other EM countries to grow.

These other nations, in turn, would keep buying the “risk-free-returning” UST’s and thus help refund (“reflate”) the US’s own debt-based “growth narrative.”

After all, if every one else is buying his IOU’s, Uncle Sam can forever go deeper and deeper into debt-financing the American Dream, right?

Oil: Present Facts, Post the Sanctions…

Well, that is true only if you assume the world never changes, and that reported–i.e., utterly dishonest inflation–makes our UST’s truly “risk-free” rather than just returning nothing but negative real yields.

Fortunately (or unfortunately), the rest of the world is seeing the changes which DC pretends to hide.

Specifically, and as of November of last year, the Saudi’s met with a bunch of BRICS+ nations looking for ways around the USD and UST when it comes to trading among themselves—and this includes the oil trade.

Think about that for a second.

This means that what has been working in favor of the USD and sovereign bond market since the early 70’s (i.e., global demand for the USD via oil) is slowly (but surely) unwinding right before Biden’s barely open eyes…

All those decades of prior support/demand for USDs and USTs is going down not up, which means unloved UST’s will have to be supported by fake (i.e., inflationary) at-home liquidity rather than immortal foreign demand.

This, by the way, leads to currency debasement—the endgame of all debt-soaked nations.

Oil: The Changing Future, Post Sanctions…

It also means that commodities, from copper to yes, even oil, can and will continue to be purchased outside the Dollar and net settled in gold, which likely explains why central banks have been net stacking gold (top line) and net-dumping USTs (bottom line) since 2014…

Again, watch what the world is actually doing rather than what your politico’s (or even bank wealth advisors) are telling you.

Gold & Oil: Impossible to Ignore?

As for gold and oil in the foregoing backdrop of a changing rather than static world, any sane investor has to give serious consideration to the changing petrodollar dynamics which Luke Gromen has been tracking with sober farsightedness.

The compressed but inevitably rising super cycle (Stoeferle chart above) in commodities this time around will differ markedly from past rallies.

As oil, for example, goes up (for any number of reasons), the old system that once recycled those costs in UST purchases can (and has) pivoted/changed to another asset.

You guessed it: GOLD.

Think it through: Russia can sell oil to China, Saudi Arabia can sell oil to China. But now in Yuan not USDs. These trading partners can then take their Yuan payments to buy Chinese “stuff” (once made in America…) and finally net settle any surpluses in gold rather than USTs.

That gold can then be converted into any EM/BRICS+ local currency (from rupees to reals) rather than Dollars to trade among themselves for other raw commodities, of which many BRICS+ nations are resource rich.

This, by the way, is not some distant possibility, but a current and ongoing reality. It can devastating to USD demand and hence strength.

When copper and other commodities, including, oil starts repricing (and stockpiling) outside the USD with increasing frequency, the Dollar’s so-called “hegemony” becomes increasingly hard to believe, telegraph or sustain.

The Ignored Gold/Oil Ratio

As Luke Gromen observes, but few wish to see…if/when gold becomes the “de facto release valve for non-USD commodity pricing and net settlement,” the impact this will have on the long-term gold price is simply a matter of math rather than debate.

He repeatedly reminds that the global oil market is 12-15x the size of the global gold markets in physical production terms:

We thus can surmise that gold can and will be pushed higher by oil in particular and other commodities in general, a reality already in play as measured by the global gold/oil ratio, which has risen (not so coincidentally) by 4x since Moscow began stacking gold in 2008 while the Fed was preparing to mouse-click trillions of fake Dollars in DC…

The Most (Deliberately) Misunderstood Asset…

Meanwhile, as we stare in awe at the consensus-think which still places gold at only 0.5% of global asset allocations (the 40Y mean is 2%) and just barely over 1% of all family office allocations (still crawling further and further on the risk branch for yield), we have to wonder if it is human nature (or just political and monetary self-interest) to fear change, even when the evidence of it is all around us.

Yet few see gold’s real role…

For gold investors (rather than speculators) who think generations ahead rather news cycles per day, and who understand that preserving wealth is the secret to having wealth, this asset (and change) is not feared.

It is understood.

And that is how we understand gold. It preserves wealth while paper currencies destroy it.

That is why despite positive real yields, a relative strong USD and so-called contained inflation, gold is breaking away from these correlations and making all-time-highs despite their profiles as traditional gold “headwinds.”

It’s so simple.

Gold is trusted far more than broken currencies from broke countries, including the once revered USA in particular and the West and East in general:

As Ronni correctly says: “In gold we trust.”

Makes a lot of (common/historical) sense. Just do the math and read some history…

Four American college instructors from a small Iowa college were stabbed in broad daylight during a teaching trip to China, highlighting the increasing dangers abroad amid rising Sino-US tensions. Beijing says the incident was “isolated,” and foreigners are safe there.

The four educators are from Cornell College, a private liberal arts college in Mount Vernon, Iowa. The school’s president, Jonathan Brand, told CNN the educators were involved in a “serious incident” during a daytime visit to a public park. 

“We have been in contact with all four instructors and are assisting them during this time,” Brand said. 

The injured educators were walking with faculty members from the school’s Chinese partner school, Beihua University, when the incident occurred in the northeastern Chinese city of Jilin. 

Graphic footage circulating on X shows the educators covered in blood on the ground, accompanied by a police officer. 

Four American educators are wounded after a stabbing in Beishan Park in China’s Jilin City.

The incident comes as Chinese leader Xi Jinping pushes for more student exchanges to bolster US-China relations.

The latest. pic.twitter.com/v1jnrcHZeB

— Kristie Lu Stout✌🏽 (@klustout) June 11, 2024

China’s foreign ministry spokesman, Lin Jian, said the incident was “isolated” and that Beijing would protect the safety of foreigners in the country. 

“The police preliminarily judged that the case was isolated. Further investigation is underway,” Jian said, adding the incident would not “affect the normal development of China-US people-to-people exchanges.”

The rare attack on foreigners in the powerful security state comes as Sino-US relations sour amid a military arms race, trade war, and expanding tech war. 

The Biden administration has yet to release an official statement about the incident.

*This story is developing… 

Authored by Mark Gilman via The Epoch Times (emphasis ours),

Many of this summer’s Generation Z college graduates are immediately getting a reality check with large school debt and few job guarantees after college graduation. This dilemma is why many are now suggesting that encouraging high school graduates to learn skilled trades not only is a suitable alternative but also could save several industries that are desperate to find new workers.

From plumbers and electricians to welders, auto mechanics, and construction workers, skilled trade jobs far exceed the people available to fill them.

According to a recent study by management consulting firm McKinsey, from 2022 to 2032, annual hiring in trades is expected to be more than 20 times the projected annual increase in net new jobs, costing companies more than $5.3 billion annually.

With a renewed focus on the lack of skilled trade workers, 47 states in 2023 enacted 115 policies related to career and technical education (CTE), according to the nonprofit Advance CTE, which represents state CTE directors.

According to Kevin Koehler, the president of the Construction Association of Michigan (CAM), part of the issue of the dearth of skilled trade workers needed for jobs is the stigma attached to choosing that career path over college.

“Obviously, that’s an issue with students coming out of high school. What they don’t realize is that trade jobs offer complete benefits, with some providing over $100,000 a year to provide for your family,” he told The Epoch Times.

However, one thing that could energize Gen Z students is the technology component that now exists in many of these available jobs, Mr. Koehler said.

“Everything is going computerized, from building online modeling, the use of drones on job sites, and a ton of 3D printing. That is adding to new attraction for some of these students,” he said.

But manufacturing-rich states such as Michigan are being especially hard hit by the shortage of skilled trade workers. According to the Michigan Department of Labor and Economic Opportunity, skilled trade positions alone will account for about 47,000 annual job openings through 2028.

Mr. Koehler says one of the more significant factors he’s seen is the lack of emphasis on skilled trades in many high schools nationwide, including Michigan.

“Shop and arts classes are the first things to go in school budget cuts,” he said. “We’re doing a lot of advocacy and are constantly in front of the Michigan Legislature, asking for money to support some of these things. Listen, students need to be told they’re going to come out of these trade programs with a certificate to get a job and not $124,000 in debt at college.”

The dilemma of a lack of skilled trade workers is affecting multiple industries, including homebuilders trying to add to the depleted inventory in the United States.

Labor a Top Concern

The National Association of Home Builders found in a survey that labor is a top concern for the industry, with 85 percent expecting future cost and availability problems, up from 13 percent in 2011.

For more than a decade, automotive repair shop owners have struggled to find enough technicians to work on the cars their customers bring in. A recent study from the TechForce Foundation showed that the number of graduates completing postsecondary programs in the automotive sector has dropped by 20 percent since 2020, with 11.8 percent of the decrease occurring in just one year. TechForce reported that the United States will need more than four times more automotive technicians than will graduate in the next five years.

This dilemma is familiar to those trying to run small auto repair shops efficiently, such as Nicole Miskelley, the manager of PMR Auto and Diesel Repair in Marion, Illinois.

“We’re definitely still struggling in finding mechanics and are regularly short and right now have five [repair] bays and only three technicians, including the owner,” she told The Epoch Times.

Ms. Miskelley said that the types of vehicles coming into her shop now for repair are making it even more challenging to find mechanics with the skill levels to repair them.

“Cars now aren’t what they were 20 to 30 years ago,” she said. “There’s a lot of electronics involved and mechanics have to learn programming. You can’t even fix brakes on some cars now without knowing how to turn off the electronics to get to them. Kids are still being pushed to go to college and not to learn trades.”

Recruiting for PMR has become so difficult that the company is now posting job listings in Chicago, more than five hours away from Marion.

“Honestly, the best we can hope for is that they want to get out of the city and move here for a simpler life and have a job when they arrive,” Ms. Miskelley said.

The nation is also struggling to find plumbers, pipefitters, and steamfitters. The U.S. Bureau of Labor Statistics estimates that between now and 2031, there will be 48,600 vacancies in those skills.

One of the bigger obstacles for people such as Mr. Koehler and CAM is teaching schools, parents, and students that there are available trades jobs for which they may be more qualified than the skills they could achieve with college degrees.

“They’re being told to go to college and be a doctor, but not everyone is cut out for that. There are a lot of intelligent people who should be entering the trades because of the money involved,” he said.

“The sky is the limit for them and they can even end up starting their own company. Listen, AI technology is great, but they haven’t figured out how to use it to build new buildings yet.”

The Ron Paul Institute for Peace and Prosperity’s Daniel McAdams has revealed a rather concerning US government-affiliated non-governmental organization (NGO) based in Ukraine, which has published a list of ‘enemies’ that includes American journalists, business leaders, media outlets, websites, and basically anyone who has been critical of the Biden administration. And of course – they’ve already backpedaled.

NGO “Data Journalism Agency,” also known as (TEXTY), published a report last week titled “American swing. From Trumpists to communists, who and how is campaigning for the end of aid to Ukraine.”

The report intends to smear American conservative journalists, media outlets, and organizations as disseminators of Russian propaganda.

But it’s really a list of anyone opposed to the war in Ukraine, or Biden, or the left in general.

This is also a list of anyone who has ever been critical of biden. Pretty clear pattern emerging https://t.co/kB4Vo2WPMa https://t.co/fCpmhEfdbc

— zerohedge (@zerohedge) June 8, 2024

A total of 390 individuals and 76 organizations are included in what McAdams describes as Ukraine’s “enemies list.” 

More from McAdams:

The report also includes such prominent American politicians and journalists as Sen. JD Vance, Sen. Rand Paul, Rep. Matt Gaetz, Rep. Marjorie Taylor Greene, Rep. Jim Jordan, and Col. Douglas Macgregor.

Even our friends at Antiwar.com…and your own correspondent (!) find ourselves appearing on the Ukrainian “enemies list”:

Continued:

Perhaps what is most shocking about this attack on American citizens is the fact that the Data Journalism Agency (TEXTY) has a long affiliation with the US Government itself! In fact, the founder of the publication Anatoly Bondarenko appears prominently on a US Government website as a participant in the US State Department’s “TechCamp” project.

The Data Journalism Agency (TEXTY) is listed as an “Implementing Partner” of the US Agency for International Development’s Transparency and Accountability in Public Administration and Services/ TAPAS Project.

The Ukrainians seemingly love to make lists of their “enemies.” One of their most notorious of these is the infamous “kill list” put out by the Mirotvorets Center in Kiev. From that list several have already been murdered by Ukraine, including prominent Russian journalist Daria Dugina.

One wonders how, for example, former US President Donald Trump and dozens of members of the US Congress will react when they hear that US tax dollars are being sent to Ukraine for US-backed Ukrainian organizations to make “hate lists” and “kill lists” of patriotic Americans like themselves.

Commentator Robby Starbuck chimed in on X; “This is insane. A Ukrainian NGO just put out an enemies list that includes US citizens. This list blames us for Ukraine’s issues on the battlefield,” adding “Here’s where it gets crazy… The founder of this NGO (http://Texty.org.ua) was TRAINED by the US State Department.“

More…

The list includes me, @elonmusk , @DavidSacks , @Jim_Banks , @RandPaul , @JackPosobiec , @charliekirk11 , @RealCandaceO , @JDVance1 , @michaeljknowles , @HawleyMO , @Eric_Schmitt , @benshapiro , @RonDeSantis , @DonaldJTrumpJr , @realDonaldTrump , @Jim_Jordan , @LauraLoomer , @ggreenwald @TuckerCarlson , @RonPaul , @RepThomasMassie , @timburchett , @dbongino , @TateTheTalisman , @Cobratate , @RobertKennedyJr and more.

Elon Musk has made the list. 

“The NGO also received US funds. This is beyond unacceptable. Not only are we being forced to fund a meat grinder killing countless young men and women when peace could’ve been attained but now that country that’s been taking our money has a group targeting US citizens AND the US government trained their founder!” he continued. 

This is insane. A Ukrainian NGO just put out an enemies list that includes US citizens. This list blames us for Ukraine’s issues on the battlefield.

Here’s where it gets crazy… The founder of this NGO (https://t.co/I5l9UMJ39c) was TRAINED by the U.S. State Department. The list… pic.twitter.com/ALJoBnRbhx

— Robby Starbuck (@robbystarbuck) June 8, 2024

Even more disturbing is the NGO’s list targeting journalists. Some of those names include Tucker Carlson, Matt Taibbi, Glenn Greenwald, and Alex Jones. Oh, and as we mentioned above, ZeroHedge.

*  *  *

At the end of the report, the NGO wrote, “We value and respect freedom of speech, which is a necessary prerequisite for the existence of a democratic society.” 

Now, that’s laughable, considering the US-government-affiliated NGO’s enemies list targets mainly American conservatives, most of which are seen as political opponents of the Biden administration. 

Here’s the US affiliation… 

On X, Starbuck asked: “Hey @SpeakerJohnson , are you going to call Zelensky about this? How about the State Dept? Will you cut funding? Any consequences at all? People want answers.” 

Hey @SpeakerJohnson, are you going to call Zelensky about this? How about the State Dept? Will you cut funding? Any consequences at all? People want answers.

Also, consider this: “Research” from NGO’s like this have been used before in FISA courts to spy on American citizens.

— Robby Starbuck (@robbystarbuck) June 8, 2024

Oh but wait, after this began going viral on social media, they added a disclaimer to say that it’s neither “a list of enemies of Ukraine” nor a “kill-list.”

The Ukrainians have clarified that it is “not a kill list”, phewhttps://t.co/kB4Vo2XnBI pic.twitter.com/sCdhp6gBL6

— zerohedge (@zerohedge) June 9, 2024

This is yet more evidence that NGOs serve as extensions of the deep state intel community, doing what they can’t legally do on the surface. So, they must funnel taxpayer money into shady foreign entities, which are then weaponized against their political opponents domestically.  It also further proves that Ukraine is merely a puppet of Washington, but we already know that. It’s time to investigate shady NGOs. 

In the end, Apple’s 2024 Worldwide Developers Conference proved to be a flop, with the stock sliding 1.9%, its worst WWDC performance since 2010 and the 4th worst in the iPhone era.

$AAPL finished down 1.9%. Worst performance since 2010. 4th worst performance in the iPhone era. https://t.co/IhzdKMYNU5

— Walter Piecyk (@WaltLightShed) June 10, 2024

It wasn’t supposed to be like this: Apple was supposed to make the grand introduction of (Open AI’s ChatGPT) artificial intelligence features and pretend they are the company’s, leading to the long-overdue surge in AAPL stock which has painfully underperformed most pure AI names. However, once the market realized that Apple can even in house its own AI module, that’s when the wheels fell off (the “introduction” of a calculator for the iPad did not help Apple’s trailblazing image).

But the slump in AAPL stock was just the start of its woes. Shortly after the close, in response to OpenAI founder Andrej Karpathy’s observation that the laughably named “Apple Intelligence” as it will be called (and which Elon Musk said it is “neither Apple nor intelligent“) will be a persistent layer on top of the entire Apple operating system, Elon Musk made the casual observation that Apple’s approach means that “we can never turn it off“, in other words it is an always on spying system feeding the OpenAI LLM (and who knows what and who else) with constant data.

So can we never turn it off?

— Elon Musk (@elonmusk) June 10, 2024

That’s when the fireworks started.

Realizing that his sworn enemy Sam Altman (whose “non-profit” ChatGPT only exists thanks to funding from Musk in the first place) is using his chatbot to supplant Amazon as the most ubiquitous spyware system in the world by having it installed across the entire Apple ecosystem, Musk first responded to an X user that he might have to launch his own phone “if Apple actually integrates woke nanny AI spyware into their OS”…

If Apple actually integrates woke nanny AI spyware into their OS, we might need to do that!

— Elon Musk (@elonmusk) June 10, 2024

… before directly telling Tim Cook that “he doesn’t want” the latest Apple product, and adding that “either stop this creepy spyware or all Apple devices will be banned from the premises of my companies.”

Don’t want it.

Either stop this creepy spyware or all Apple devices will be banned from the premises of my companies.

— Elon Musk (@elonmusk) June 10, 2024

And just to underscore that point, the Tesla CEO said that “If Apple integrates OpenAI at the OS level, then Apple devices will be banned at my companies. That is an unacceptable security violation” and “visitors will have to check their Apple devices at the door, where they will be stored in a Faraday cage.”

And visitors will have to check their Apple devices at the door, where they will be stored in a Faraday cage

— Elon Musk (@elonmusk) June 10, 2024

Musk saved the piece de resistance for last, slamming Apple as a dumb company which can’t even come up with its own AI, and even dumber for promising it is “somehow capable of ensuring that OpenAI will protect your privacy” even as it is “handing your data over to a third-party AI that they don’t understand and can’t themselves create is *not* protecting privacy at all!”

The punchline: “Apple has no clue what’s actually going on once they hand your data over to OpenAI. They’re selling you down the river.”

It’s patently absurd that Apple isn’t smart enough to make their own AI, yet is somehow capable of ensuring that OpenAI will protect your security & privacy!

Apple has no clue what’s actually going on once they hand your data over to OpenAI. They’re selling you down the river.

— Elon Musk (@elonmusk) June 10, 2024

While we assume that much of Elon’s outrage is genuine (mixed in with just a smidge of personal self-interest to have Grok handle the world’s AI requests), this particular eruption by the world’s richest man (or 2nd, or 3rd, or wherever he is now) is a good example of the coming AI wars where competing AI vendors will do everything in their power to have their LLM be the sofrware of choice for the entire world due to its ubiquitous data gather and analysis which will make China’s “always on” spying nanny state seem like amateur hour by comparison.