On May 30th, Donald Trump was found guilty on 34 counts of… falsifying records of something, no one really quite knows what. A week later on June 6th, Trump announced that he has raised $400 MILLION since the verdict.
Speaking at a Turning Point Action town hall event in Arizona, Trump stated “I just went through a rigged trial in New York with a highly conflicted, and I mean highly conflicted, judge where there was no crime.”
“They didn’t want to bring the case. They could have brought the case seven years ago. It’s only when you run for office they bring cases,” Trump continued.
Trump further noted that he is “beating Biden, by the way, by a lot,” adding that following the conviction, “more campaign funds were given to this campaign than any campaign they think in history, almost $400 million.”
It is an unprecedented amount and likely will not be matched by Biden before the election.
A fundraiser, co-hosted by tech entrepreneur David Sacks sold out with the tickets per couple costing $500,000 a piece. single tickets were sold at a cost of $300,000 each.
The outlet recontacted the same voters who they had polled prior to the conviction, and found that 46 percent of them would cast their ballot for Biden, with 47 percent saying they will vote for Trump.
Before the outcome of the rigged trial the numbers were 45 percent for Biden, and 48 percent for Trump.
The word “measly” and the phrase “shockingly decrepit” somehow didn’t make edit for the headline. Small Shift Toward Biden After Trump Verdict https://t.co/omh9m9e431
In other words, it had practically ZERO effect on Trump’s popularity.
The same has been seen in other polls:
Is the conviction helping Biden? Well, not so far. I compared every poll taken since the conviction to its previous result and found a net 0.5% swing towards Trump. Although some of these did last poll at the height of Biden’s nomination bump, so this could be deceiving. pic.twitter.com/RkNCJjEsTw
Some have even shown an increase in support for Trump:
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Shock Decline In Credit Card Debt Is First Since Covid Crash, As Card APRs Hit New All Time High
On a day when the jobs report was a “pick your adventure” in economic analysis, and signaled either a very strong job market (if you looked at the Establishment survey) or a dire one (if you looked at the Household survey and peaked even a bit below the surface), moments ago we got the tie-breaker in the form of the latest Consumer credit data, and it confirmed our fears: the consumer has hit a brick wall.
According to the Federal Reserve’s monthly consumer credit report, in April total consumer credit rose $6.4 billion, far below the median estimate of $10 billion, but more notably, the March number was shocking revised from $6.3BN to a negative $1.1BN, the biggest drop since last August when Biden enacted his unconstitutional student debt relief.
And while the reason behind the dramatic revision to the March print was due to a plunge in non-revolving credit, the result of even more student debt cancellations which however were only apparent in retrospect, with April reverting somewhat back to normal at $6.9 billion, if well below the recent monthly average of $12 billion…
… what was the real shocker in today’s print was the April revolving credit print, i.e., credit card debt. At -$0.5BN, it followed last month’s puny $1.7BN, and was the first negative number since the covid crisis!
To get a sense just how rare it is to get a negative credit card debt monthly change, consider that in the six years prior to the covid crash, the US had recorded just 5 months of negative prints, and all tended to precede major drawdowns in the economy. We expect no less this time.
Of course with the Fed refusing to cut rates – for good reason – the brutal slowdown in new credit card debt is hardly a surprise because in Q1 the average rate across all commercial banks on all credit card amounts just hit a new record high of 21.59%, which is a vivid reminder that while banks are happy to hike credit card rates, they rarely if ever cut them, and it’s also one of the main reasons why Goldman’s trading desk just went bearish on US consumers.
Yet with consumers ever more strapped for actual cash and equity, as the personal savings rate in the US has collapsed from over 5% to 3.6% – the lowest since 2022 – in just a few months…
… there is only so much more credit card maxing out that can take place before reality finally sets in, as can be seen in the next and perhaps most striking chart yet: total credit card debt is record high while the personal savings rate is record low!
Then again, with an election on the horizon – one which ensures that any credit-card fueled spending must be encouraged – don’t be surprised if the White House instructs banks to just ignore soaring delinquency and charge-off rates…
As of yesterday, Nvidia has surpassed Apple as the world’s second largest company, trading above a $3 trillion valuation and now single-handedly accounting for 6.5% of the S&P 500’s weight. This chart from Zero Hedge shows Nvidia in black:
Nvidia CEO Jensen Huang signing the tits of a perky female “fan” at a booth at Computex, a computer expo held annually in Taipei, Taiwan days ago should have been our clue: animal spirits – of one type of the other – continue to drive the market.
She must really like semiconductors. Here’s a follow up photo for forensic analysis:
If Nvidia’s colossal weighting as a percentage of the S&P 500 (just think, one of the 500 stocks in the index makes up 6.5% of the index, leaving an average of a 0.2% weighting for the other 499 names) wasn’t enough of a clue, or if you’ve missed the last year of financial commentators opining about the importance of the “Magnificent Seven,” let me sum it up: the market is being driven by a handful of stocks at best, and now, one stock, at worst.
Market breadth is the worst its been since March 2009, Zero Hedge wrote last week, confirming that fewer stocks are responsible for the upward index moves:
Heading into the last few Nvidia earnings reports, sentiment all over social media was that the company’s report was single-handedly going to drive the entire stock market’s reaction the next day, the next week, the next month and the next quarter. At least for the time being, that looks like it is going to continue to be the case.
Nvidia is the stock market right now. And it is tearing ass higher.
This is great news when a company is on the cusp of new innovation and is driving a major secular trend in a bull market. It means they are doing the heavy lifting for all of the other companies that are underperforming in the same indices as them.
But it also can become an inordinate risk.
Not only does Nvidia’s sway over the entire market strike me as having concentration risk, but it also comes at possibly the worst time for today’s stock market.
If you believe, like I do, that the market is simply waiting for a massive reality check that has already started to make its way through the bowels of our economy in the form of higher interest rates, less discretionary spending, and a coming tidal wave of delinquencies and defaults as the consumer runs out of savings and racks up record debt, it becomes evident that Nvidia could wind up being the fuse of a market-wide timebomb.
At 68x trailing earnings, 44x forward earnings and 36.4x sales and an EV/EBITDA of 56.1x, the market has ascribed quite the aggressive valuation to the name. That valuation means the market has set certain lofty expectations for Nvidia.
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First, Nvidia owners obviously believe that the company is going to single-handedly drive the artificial intelligence revolution that we are on the cusp of. Sir John Templeton once said about electricity:
“The world would never be the same. Electricity was going to change everything. They were right. It did change everything, but the time to get out of electricity stocks was 1910.”
The point is that sometimes the hype can get ahead of the actual runway for growth. Artificial intelligence may be here with us for a while, and this may very well be the beginning of a secular trend, but the rush to pin all of its benefits on the stock of Nvidia may be pricing in too many years of growth occurring too quickly for an industry where competition is going to grow excessively.
Where would you pin AI growth expectations versus reality on a chart like this?
Let’s use Tesla as another analogue. Tesla got all of the electric vehicle premium from the stock market several years back because everybody thought that they were the only company that would make electric vehicles. They were synonymous with electric vehicles in the way that Nvidia is synonymous with artificial intelligence right now.
Today, Tesla is 57.3% lower than its all time high.
What happened? Eventually, General Motors, Volkswagen, Stellantis, and a number of companies all emerged, rather quickly, to provide Tesla with competition.
Now, not only is Tesla not the sole beneficiary of the electric vehicle market, but the entire EV market has become supersaturated, leading many manufacturers to reduce investment and revert back to hybrids.
In other words, the market valuation of Tesla far outpaced where it should have been, and got far ahead of where it may ever return to, if my predictions are correct.
Similarly, it may look like Nvidia will be the only chip running at the heart and soul of any and all artificial intelligence projects going forward, but it simply isn’t going to be the case. In the future, there is going to be semiconductor competition specifically for artificial intelligence, meaning it is worth keeping an eye on exactly how aggressively valued Nvidia becomes.
Ignore the sell side bullshitters. They all want to do investment banking business with Nvidia so they won’t say a bad word about them. Literally everybody on the street and financial media right now wants you to believe that there isn’t a valuation that the company can’t fulfill with future AI demand right now.
But like every darling company does, someday the difference between actual demand and expectations will close and the air pocket baked into Nvidia’s valuation will start to collapse, like we’re seeing with Tesla. And, with the entire stock market tied to Nvidia now, something as simple as a 5% or 10% correction lower as a result of such an air pocket could be devastating for the overall market.
For now and in the short term, at least, it doesn’t look like it’s going to happen. Nvidia has outperformed all expectations in recent earnings reports, and there are no indications that the momentum is going to stop.
But remind yourself: there are always critical questions and “blind spots” to keep an eye on with such a company that moves so fast. One such question has surrounded Nvidia’s relationship with one key customer, Core Weave. You can familiarize yourself with Nvidia’s interesting relationship with one of its key customers in this excellent writeup by FT.
This reminds me: anytime public companies have large customers that account for a material part of their business, they often disclose it in filings as customer concentration risk. Meaning that if we lose this one customer, the effects on the business could be devastating. If the S&P 500 was a corporation, it would now have to disclose Nvidia as part of its concentration risk. If the S&P 500 loses the momentum of Nvidia, it could be devastating for the overall index.
With interest rates still at 5.5%, it’s not going to take much to send this market off the edge. And now, it isn’t just the economy that is a risk factor for all market participants, it is Nvidia’s stunning performance, too.
When I look for signs of a bubble somewhere, I look for euphoria and unbridled optimism. Like many people noted over the last week, I can’t remember a time in recent history where the chief executive officer of a public company was asked to sign autographs.
The last time I remember this happening was the executives at Herbalife signing autographs at one of their “extravaganza events.”
That company, which literally relied on hype to sell its business opportunity, is down -79.7% in the last 3 years and is trading about -81% from its all time highs.
It’s not going to be a surprise to my readers that I think the market is overvalued and that the delta between the sky-high valuations in stocks and the economic reality of what higher interest rates are doing on the ground, has reached its widest point yet.
This means I believe the market, today, is at its highest chance of a sharp move lower than it has ever been at in recent history. Here’s a glimpse of where we stand today:
The truth is that animal spirits in the stock market have been dying over the last two years, despite stocks moving to all time highs, driven by bullishness in a small group of select names.
High interest rates kill animal spirits and Nvidia is running on animal spirits. High rates force people to think about tightening their belts and spending less while reducing their leverage, raising cash, and preparing for, then riding out, price deflation. The fact that the remaining, dwindling animal spirits in the market have now all concentrated themselves into one name, Nvidia, in my opinion, only adds more significant risk of an overall broader market correction.
“Don’t put all your eggs in one basket,” has been a saying for a trillion years for good reason. I would not want to be long technology stocks, the NASDAQ index, the S&P 500, or Nvidia at these levels. As I said in my “24 Stocks to Watch for 2024” at the beginning of the year, I still believe we are going to see a heavy rotation out of overvalued tech names and into things like utilities, consumer staples, and defense stocks heading into 2025. I believe that is going to come as a market decline takes place.
We can run, we can hide, we can bamboozle our economic data, and we can put lipstick on this pig for as long as we want to try to, but at the end of the day, the simple math and economics behind 5.5% interest rates are going to rule the day, and this market is going to have to correct. The only question to me now is whether it will be economic forces or Nvidia that sets off the selling.
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Houthis Tout Radar-Evading ‘Palestine’ Missile That Resembles Iranian Hypersonic
Yemen’s Houthis have for the first time announced a strike on Israel that was coordinated with allies in Iraq, namely the ‘Islamic Resistance in Iraq’ – an umbrella organization of Iran-linked Shia paramilitary groups.
The leader of Yemen’s Houthi militia, Abdul Malik Al-Houthi, announced Thursday, “Today at daybreak, our military forces commenced coordinated operations with the Islamic Resistance in Iraq by carrying out an important operation towards the port of Haifa.”
“The Yemeni Armed Forces conducted two coordinated military operations with the Iraqi Islamic Resistance. The first targeted two ships carrying military equipment in Haifa’s harbor,” a follow-up Houthi military statement had sadi.
However, the Israel Defense Forces had quickly issued a statement denying that there was any successful strike on Haifa port, which is in the north. “It’s not true,” a military spokesman said. Reaching Haifa would have indeed been a significant long-range achievement, but there’s as yet no evidence of this.
Iraqi militants aligned with Tehran have since Oct.7 conducted several attempted drone or missile operations against Israel, with the projectiles often being intercepted once they get near Israeli airspace.
The Houthis have also fired missiles into southern Israel, which have either fallen into the desert or been intercepted by the country’s significant anti-air capabilities.
Yemen’s Houthis are currently touting that they’ve engaged in the following operations in the past 30 days alone in the Red Sea, Arabian Sea, and Mediterranean:
fired 91 ballistic missiles
38 operations against ships
unveiled and launched a long-range ballistic missile capable of evading radar
Footage from the launch of the Palestine’ ballistic missile.
— محمد عبدالملك – Mohamed (@Almutawakkil560) June 5, 2024
As for the new missile, the Houthis have said they’ve already fired the new “Palestine” missile Monday at southern Gulf of Aqaba port of Eilat in Israel. According to a description and some details in Associated Press:
Yemen’s Houthi rebels have unveiled a new, solid-fuel missile in their arsenal that resembles aspects of one earlier displayed by Iran that Tehran described as flying at hypersonic speeds.
…Footage released by the Houthis late Wednesday showed the Palestine being raised on what appeared to be a mobile launcher and rising quickly into the air with plumes of white smoke coming from its engine. White smoke is common with solid-fuel missiles.
There is widespread suspicion the Houthis got the technology or even the whole missile itself and its components from Iran. There also remains deep skepticism that the Houthis actually have in their possession radar-evading hypersonic missiles.
If there are any successful strikes on Israeli positions using the ‘Palestine’ missile, there’s a likelihood Israel won’t publicize it, also to avoid handing the Houthis a propaganda ‘win’.
Ozy Media Former COO Testifies He Impersonated YouTube Exec To Try And Win Investment From Goldman
Former chief operating officer of Ozy Media, Samir Rao, impersonated a YouTube executive using a voice-altering app during a call with Goldman Sachs to try and win a $35 million investment, Bloomberg reported this week.
Rao is testifying against Ozy Media co-founder Carlos Watson as part of a plea agreement. Watson is on trial in Brooklyn after being accused that he “conspired to defraud investors out of tens of millions of dollars”.
Rao said that he and Watson conspired in February 2021 to pose as YouTube executive Alex Piper to try and win an investment from Goldman. The company collapsed shortly thereafter the impersonations were reported by The New York Times.
Rao said on the stand: “We decided that I would proceed and try and fake the reference call and pretend to be Alex. I was about to do something incredibly — incredibly fraudulent and illegal. I was now actually going to pretend to be somebody else.”
The Bloomberg report notes that e-mails and chat messages sent to jurors show Watson was across the room from Rao, directing him on what to say.
Goldman, however, reached out to Piper who then turned around to Rao and demanded an explanation. “‘What are you doing? Like, what’s going on with this? Like, why am I hearing there was a call?,”’ Rao testified that Piper said to him, according to the report.
Rao also explained how Goldman’s Allison Berardo asked him about the call: “I tried to ask, you know, how was the reference call? How did it go? And I remember her saying some version of ‘Well, how do you think it went?’ And then she started to turn the call into a — almost an attempt to get me to confirm that I had impersonated Alex.”
Rao continued: “She said ‘who really was on that call? Who was on that call, Samir?’ She said something like ‘I can help you walk out of this, I can help you walk back from this or get out of this, but you have to tell me the truth.”’
Rao and Watson then decided Rao would take the fall and attribute the decision to a “mental health” issue, in order to save Ozy.
“If the board or investors believed that Carlos was aware of what had happened and that it was his judgment that that was an acceptable course of action for me to impersonate Alex Piper, that would have probably ended the company right there,” he said.
“My ambition, my desire to be successful, my desire to be seen as tough enough or good enough to succeed in this world completely overtook my judgment and my moral compass.”
Rao is set to testify again when the trial, expected to run through July, continues on Friday.
Watch Live: Roaring Kitty Says ‘Not Working With Hedge Funds’ As GameStop Shares Hit Low
Watch Roaring Kitty Live:
Update (1259ET):
Roaring Kitty reveals positions.
Oof.
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Update (1251ET):
Here’s a great take.
It’s fine to “bet on management” but why would pay a premium for that? Every investment is a bet on management…
— Martin Shkreli (e/acc) (@MartinShkreli) June 7, 2024
And that is a very good question.
Good question
— Martin Shkreli (e/acc) (@MartinShkreli) June 7, 2024
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Update (1241ET):
Roaring Kitty stated that he is actively managing his accounts and is not working with hedge funds. He clarified that he is not an institutional investor and that all trades are his own.
Dave chimes in…
The Roaring Kitty live stream is kinda disappointing. Not gonna lie.
Roaring Kitty will have some serious explaining regarding his investment thesis in GameStop during the 1200 ET live-streaming event on YouTube.
‘Meme’ stock trader Keith Gill’s (aka Roaring Kitty) latest pump was situated around GME CEO Ryan Cohen announcing another at-market equity offering (impeccable timing) – set to dump tens of millions of shares on Reddit momentum traders. Also, first-quarter earnings were messy, with sharp revenue declines in the first quarter.
Again, what’s the thesis here?
Meanwhile, GME shares have nearly been halved from the premarket highs following GME’s at-market equity offering announcement and dismal earnings report.
Ahead of the live-streaming event, over 200,000 people are tuning in to hear Roaring Kitty speak.
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Redditors and momentum chasers are being led into a burning building by ‘meme’ stock trader Keith Gill’s (aka Roaring Kitty) on the latest pump as GameStop shares erase overnight gains following the announcement of sharp revenue declines in the first quarter and an “at-the-market offering” program to sell more shares.
The grift continues:
*GAMESTOP MAY SELL UP TO 75M SHARES OF CLASS A STOCK
Let’s begin by describing the source of the latest pump. Roaring Kitty’s YouTube live event, slated for 1200ET, was announced on Thursday afternoon, which sent shares doubling from around $26 in cash session to as high as $66 in after-hours trading.
In premarket trading, shares were above the $60 handle, then crashed 40% to around $38 following the news that GME filed an at-the-market offering to sell 75 million shares of the company’s Class A common stock.
Jefferies is the ‘Sales Agent’ on the deal.
Earlier, GME reported first-quarter results showing net sales of 881.80 million, down from $1.237 billion year over year. Net sales missed Wall Street’s consensus estimate of $995.30 million.
GME also reported an EPS loss of 12 cents, missing the average estimate of 9 cents. According to Reuters, this miss highlights customers’ shift to online video games and collectibles, while the retailer continued to rely on its brick-and-mortar stores.
Just weeks ago, during another pump by Gill, GME announced it sold 45 million shares of common stock for about $933.4 million. CEO Ryan Cohen is effectively using Gill’s pumps to dump millions of shares into mom-and-pop retail, chasing momentum.
momentum chasers are literally giving their money to Ryan Cohen
At 1200 ET, Gill will have to re-explain his investment thesis in GME, as first-quarter earnings show a sharp decline, and Cohen is dumping endless shares.
Meanwhile, reports suggest that ETrade might take action against Gill, and at least one securities regulator is currently investigating him for potential stock manipulation.
Retail stores are being shut down at a staggering rate all over the country. If we stay on the pace that we are on, the total number of stores closed in 2024 will be nearly 40 percent higher than the total number of stores closed in 2023. That is what you call a crisis! Meanwhile, banks are shuttering hundreds of branches from coast to coast, and a “restaurant apocalypse” is sweeping across the nation. Everywhere around us, “space available” signs are going up on buildings that were once considered to be prime commercial real estate. If someone tries to convince you that the U.S. economy is in good shape, just show them this article and ask them why so many once prosperous businesses are closing. Needless to say, they will not be able to win the argument after that.
According to the Daily Mail, nearly 2,600 store closings were announced during the first four months of 2024…
US retailers have announced the closure of almost 2,600 stores in 2024 – just four months into the year.
Big names including Macy’s, Walmart, Walgreens, Foot Locker and 7-Eleven have all said they are closing shops.
But discount stores like Family Dollar and bankrupt 99 Cents Only have been worst hit, as have drugstores like CVS and Rite Aid.
If the U.S. economy is heading in the right direction, why are many of the largest retail chains in the U.S. shutting down stores?
If the closures were to continue at the same rate for the rest of the year they would total 7,800 in 2024 – almost 40 percent more than the total in 2023.
When the number of retail stores shutting down goes up by 40 percent in a single year, that is a sign that your economy is really “booming”, eh?
Sadly, we are losing more stores with each passing day.
On Thursday, we learned that a major convenience store chain in Wisconsin has decided to close down all of their locations…
Wisconsin convenience store and gas station chain The Store is being forced to close all of its 25 locations.
The Store, established in 1976, will shutter its businesses at the end of July. It also has locations in Michigan.
Earlier this week, I was intrigued by an article that was cleverly titled “Lego thefts across Southern California leave police trying to piece together clues”…
Believe it or not, the Lego sets and figurines collecting dust in your childhood bedroom could fetch a pretty penny.
So pretty, in fact, that two suspects have allegedly stolen more than $100,000 in Lego merchandise from six Bricks & Minifigs stores across Southern California.
The Lego reseller, which stocks mini figures, accessories and bricks, has more than 100 outlets across the U.S.
The Riverside store was the first one burglarized, with the suspects hitting it April 3, followed by Ontario on April 12, Whittier on May 3, Irvine on May 9 and the Costa Mesa and Fullerton locations on June 1, Whittier store owner Katie Leuschner said.
US banks closed 79 branches in just six weeks – as the industry increasingly offers services online.
The figures suggest the axing of costly bricks-and-mortar locations will continue, with total closures so far for 2024 above 400.
California is worst affected by the recent closures with 20 registered shutterings between April 20 and June 1.
When banks get into trouble, they get really tight with their money, they fire workers, and they close branches.
So expect to see a lot more branches get shuttered during the months ahead.
We are also in the midst of a “restaurant apocalypse”, and that is very bad news if you like to eat out a lot.
For example, Red Lobster recently closed 93 locations earlier this year, and now we have learned that 135 more are on the brink of being canned if they continue to lose money…
Red Lobster is ready to close another batch of more than 100 restaurants if it is unable to renegotiate cheaper rent with its landlords.
The seafood chain abruptly closed 93 of its 700-odd restaurants on May 13 – and the next week filed for Chapter 11 bankruptcy in the hope it can restructure its debts.
New court documents reveal that there are another 135 restaurants that bosses say will keep losing money if leases stay as they are, Restaurant Business reported. The option is for the company to pay less rent or shut them.
If I owned a restaurant chain, a bank, or a major retailer, I would be trimming locations too.
Economic conditions are horrible, theft is absolutely rampant, and the violence in our streets is rapidly approaching levels only seen in the most dangerous areas of the planet.
Unfortunately, most Americans still don’t understand the fundamental transformation that is happening to our society and they still believe that our leaders will be able to return things to “normal” eventually.
Leader Of The Free World Apologizes To Zelensky While Handing Him Another Check
While handing over to Kiev the latest $225 million check defense aid package, the “leader of the free world” has apologized to Ukrainian President Volodymyr Zelensky.
Biden during the bilateral meeting in Normandy, where world leaders are attending events for the 80th anniversary of the D-Day landings, told Zelensky he is sorry for the delayed passage of the new military aid package earlier this year (at $61 billion total for Ukraine out the $95 billion passed) and disparaged the Republican opposition that held it up.
“You know, you haven’t bowed down, you haven’t yielded at all, you continue to fight in a way that is just remarkable, is just remarkable—and we’re not going to walk away from you,” Biden told the Ukrainian leader. That’s when he followed with:
“I apologize for the weeks of not knowing what’s going to pass, in terms of funding, because we had trouble getting the bill that we had to pass that had the money from some of our very conservative members who were holding it up, but we got it done.”
However, Biden still touted that since finally signing the supplemental in April, there’s been a surge in new packages.
“Since then, including today, I’ve announced six packages of significant funding—today I’m also signing an additional package for $225 million to help you reconstruct the electric grid,” he said.
Many of these new packages have focused on delivering badly needed artillery ammo. At the front lines, Russia has been outpacing Ukrainian forces’ rate of artillery fire by a rate of 10 to 1, according to war monitors. Ukraine has been fairing poorly, is being pushed back in places like Kharkiv, and is suffering its worst ever manpower shortage and crisis.
But Biden still committed to Zelensky and to Ukraine that: “We’re still in… Completely. Thoroughly.”
The day prior, Zelensky in a speech addressing D-Day anniversary commemorations drew parallels with Russia’s war in Ukraine: “Allies defended Europe’s freedom then, and Ukrainians do so now. Unity prevailed then, and true unity can prevail today.”
Zelensky was in Normandy today along with Old Man Biden, I’m not sure why but Zelensky was in his normal cardigan which seems a bit disrespectful in my opinion pic.twitter.com/8Lgxfkyd38
— Getting Britain Moving (@UKAndNIasOne) June 6, 2024
Biden also struck a similar theme, talking about the “struggle between a dictatorship and freedom” and linking Russia’s President Putin with ‘tyranny’ against the ‘free world’ – a message also reminiscent of the Cold War.
California has the highest income tax rate in the country (top tier of 14.4 percent). It has the highest statewide sales tax rate (7.25 percent, plus local sales taxes). It has the highest gas tax rate ($0.78 per gallon). Yet, it ranks third to last in the country in terms of road quality.
The old joke is that California would tax the air we breathe if it could. Well, California’s latest tax proposal comes close. The state is recruiting drivers for a pilot program to track and tax the miles they drive.
The plan is borne from the fact that Californians have switched to electric and hybrid vehicles at a faster rate than other states, spurred on by large state, as well as federal, subsidies. As a result, gas consumption has declined, in turn reducing the state’s gas tax receipts. One might think this could be rectified by simply shifting money from the general fund to make up for it. But the state faces up to a $55 billion deficit this year, causing it to consider a host of additional taxes, including a wealth tax.
California has long relied upon the gas tax to take care of its roads. It was a good idea at first. The gas tax was initially used in lieu of toll roads, which made a lot of sense. Pricing the cost of road maintenance into the price of gas was a good way of taxing people based upon usage. Toll roads do the same, but they are cumbersome, requiring toll booths, workers, cash, and long lines. However, California ultimately succumbed to the need for more money and added some toll roads in addition to the gas tax.
But thanks to the state’s green initiative, it has convinced Californians to switch from gas to hybrid or electric vehicles. While electric vehicles are more expensive, Californians were enticed to buy them by the subsidies and by the savings they would enjoy by no longer having to buy gas. But like most government programs, this was not well thought out. California has lost millions in tax revenue due to this scheme and now needs to make that up. From the myriad of options available to it, it has chosen a plan to begin tracking drivers with GPS monitors.
Buyers of electric cars may not have been aware of the new tax-by-the-mile plan before they made the decision to purchase their vehicle. Had they known about the potential added cost, they may have made a different decision. But regardless, California law mandates that all new car sales be electric by 2035.
Under the new plan, according to Caltrans, mileage could be tracked by plugging an electronic device into a vehicle or using the vehicle’s tracking system. There was a time when many Californians were civil libertarians and would have vehemently opposed such a government intrusion into their personal lives. But many today put their undying trust in the government, believing it to be infallible and capable of curing all societal ills. We saw during the pandemic how most Californians had no problem trusting the government to interfere in virtually all elements of private life, mandating when we could leave our homes, who we could invite into our homes, and that we inject an unproven vaccine. Allowing the government to track our every move is right in line with such mandates.
There is no telling what the government may use this new information for. The main page of the Caltrans website for the program, entitled “California Road Charge,” presents the tagline, “Funding transportation in an equitable way.” There’s that word again. Government-imposed “equity” can take any number of forms. On the next page it states that the charge is, “Fair. Transparent. Sustainable.”
We already know California is trying to increase the cost of fossil fuels to drive people to electric cars and green energy like wind and solar. The state has even sued the oil companies for causing climate change, in order to make it “more expensive to be dirty than clean,” according to state Attorney General Rob Bonta. By charging an exorbitant fee per mile, it could effectively reduce the number of cars on the road to reduce climate change. It could also easily charge varying fees based on driver income to impose “equity.” It could also charge varying fees based upon miles driven, penalizing those who the government determines drive too much. It could also add a tax for homeless housing, as Los Angeles recently did on all retail sales.
One thing we know, the tax is unlikely to do is actually improve the roads. California has ranked toward the bottom of all states in road quality for a long time, pre-dating the impact of electric cars. In 2016, Reason Foundation’s Annual Highway Report listed California 43rd among states in road quality. It has since gotten worse, dropping in 2019 to 45th and in 2020 to 47th. Perhaps these drops are starting to reflect the impact of the reduced gas tax revenue, but 43rd was not a good starting point, especially for a state with great weather which does not have to deal with the impact of snow, ice, and salt.
The truth is, California has greater priorities than roads. Road upkeep is a basic, old-school obligation of government. It’s not sexy. State politicians are more focused on changing the earth’s temperature, rectifying the scourge of slavery, and building housing for all. In California, basic needs like roads, schools, and safety take a back seat.
Biden’s Top Antitrust Enforcer To ‘Urgently’ Scrutinize AI Sector For Monopoly Risks
The top US anti-trust enforcer warned in an interview with the Financial Times about the “monopoly choke points and the competitive landscape” in the artificial intelligence space. He pointed out critical areas of concern, ranging from computing power and the data needed to train large language models, to cloud service providers, engineering talent, and access to critical hardware such as graphics processing unit chips.
According to Jonathan Kanter, the head of the Justice Department’s anti-trust division, regulators are concerned with Big Tech’s potential oligopolistic power over AI and must act “with urgency” to ensure that these companies do not control the market.
Kanter said regulators are concerned that AI is already “at the high-water mark of competition, not the floor.”
“Sometimes the most meaningful intervention is when the intervention is in real-time,” the official continued, adding, “The beauty of that is you can be less invasive.”
Kanter pointed out that regulators are reviewing the competitive landscape in graphics processing units, as these critical chips have become a “scarce resource.” He said the government is looking at how chipmakers allocate their GPUs amid skyrocketing demand.
“One of the things to think through is conflict of interest, a thumb on the scale, because they fear enabling a competitor or are helping to prop up a customer,” the official said.
He noted, “If decisions are being made that show companies are not caring about maximizing profitability or generating shareholder value, but more looking at the competitive consequences,” then that would be a major issue.
In the LLM space, OpenAI’s ChatGPT chatbot has become the most dominant and recognizable. Microsoft’s $13 billion investment in OpenAI has sparked inquiries from the Federal Trade Commission and multiple competition watchdogs in Europe. These regulators are also probing Google and Amazon’s multi-billion deals with rival Anthropic.
As Kanter probably understands, it’s not just AI. Big Tech’s stranglehold over data, search, and cloud services is similar to past monopolies, such as Standard Oil and AT&T. The government is realizing that anti-trust action is necessary moving forward.
However, regulation kills innovation, and perhaps government intervention will only hurt tech companies in the global competitive market. Perhaps the Biden administration’s overregulation is why more Silicon Valley investors than ever are jumping on Trump’s deregulation and capitalism bandwagon ahead of the presidential elections.
