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JPM Predicts Global AI Data Centers Will Consume 681 Olympic-Sized Pools Of Fresh Water Daily

JPM Predicts Global AI Data Centers Will Consume 681 Olympic-Sized Pools Of Fresh Water Daily

Wall Street banks are in a frenzy over “The Next AI Trade,” piling into the ‘Powering up America’ investment themes, whether that’s power grid companies, commodities, such as copper, gold, silver, and uranium, and artificial intelligence chipmakers, to accommodate the explosion of generative artificial intelligence data centers anticipated nationwide through the end of the decade and beyond. 

JPMorgan’s Asia Pacific Equity Research desk is the latest bank to jump on AI trade in a note titled “Deep Dive into Power, Cooling, Electric Grid and ESG implications.” 

Focusing on AI data center power consumption is too repetitive at this point, considering we’ve laid it all out on a silver platter for premium ZH subs in the “The Next AI Trade” and “The Next AI Trade Just Hit An All-Time High.” 

As well as this real-world example… 

Even Blackstone Chief Executive Officer Steve Schwarzman and BlackRock Chairman and Chief Executive Larry Fink have jumped onto the power grid and AI investment theme as there is plenty of upside in the years ahead – unless AI demand doesn’t shit the bed. 

Back to JPM’s note, authored by analyst William Yang and his team, which near the end explained, “While data centers have been scrutinized for heavy electricity use, the water intensive nature of their operations has been comparatively overlooked.” 

Citing data from Bluefield Research, Yang said total water consumption by global data centers (including on-site cooling and off-site power generation) has grown 6% annually from 2017 to 2022. He said by 2030, water consumption could jump to 450 million gallons per day. To put this in perspective, that’s 681 Olympic-sized pools of fresh water that will be needed each day to cool global data centers in about 4.5 years. 

“By 2027, the same authors suggest that global AI demand may be accountable for 4.2 – 6.6 billion cubic meters of water withdrawal, more than the total annual water withdrawal of half of the United Kingdom when taking account of the combined scope 1 and scope 2 operational water withdrawal,” Yang pointed out. 

He said the immense water demand from data centers in areas where water resources are scarce could spark “increased competition can strain water availability, even causing data center closures.” 

Here are the various ways to cool data centers via water: 

Much of the water usage at data centers is “because millions of gallons of water each day are evaporated in cooling systems designed to off-load server heat,” the analysts said. 

We’d love to know where the critics of crypto miners are now, as AI data centers are set to consume massive amounts of power and water. 

Are any NGOs or Greta going to protest AI data centers? We doubt. 

Tyler Durden
Thu, 05/23/2024 – 06:55

The “Old Money” Secret To Wealth

The “Old Money” Secret To Wealth

Authored by James Rickards via DailyReckoning.com,

I believe that we’re heading for another liquidity crisis or financial crisis. That doesn’t mean it’ll happen tomorrow, but there are disturbing signs that it might not be too far off.

It doesn’t mean the world’s going to end. But investors who aren’t prepared could see large portions of their portfolios wiped out. It could take years to rebuild them, and many investors just don’t have the time to recoup those losses.

But how do you prepare? You might want to start by looking at how “old money” preserves its wealth. Today I want to explore that.

On a cool evening in the fall of 2012, I joined a private dinner in Rome with a small group of the world’s wealthiest investors.

We dined at Palazzo Colonna, a private palace that’s been owned by one family for 31 generations or 900 years. My dinner companions were mainly Europeans, some Asians and relatively few from the United States.

Amid marble, gold, paintings and palatial architecture, I mused on the meaning of old money compared with the new money crowd that congregated for cocktails near the Connecticut home in which I lived at the time.

Old Money vs. New Money

Old money has proved they know how to preserve wealth over centuries, while the jury is still out on new money busy buying yachts, jets and exotic vacations.

In the United States, the “old money” is generally about 150 years old with fortunes dating to the mid-19th century. Families in this category include the Vanderbilts, Rockefellers and Carnegies.

Some U.S. family fortunes are almost 200 years old. But most of the great wealth today isn’t old at all.

It comes from success in the past 30–50 years including Mark Zuckerberg, Jeff Bezos and Warren Buffett.

Yet in Rome I was ensconced in a 900-year-old fortune still intact. Here was a family fortune that had survived the Black Death, the Thirty Years’ War, the wars of Louis XIV, the Napoleonic Wars, both world wars, the Holocaust and the Cold War.

I knew the Colonna family weren’t unique; there were other families like them throughout Europe who kept a low profile. These families are only too happy to be overlooked by the Forbes 400. That type of wealth and longevity could not be due merely to good luck.

In 900 years, too many cards are turned from the deck for luck alone to be sufficient. There had to be a technique.

How Do They Do It?

I turned to a striking Italian brunette to my right and asked, “How does a family keep its wealth for so long? It defies the odds. There must be a secret.”

She smiled and said, “Of course. It’s easy.” You just invest in “the things that last.”

She added that the secret was, “a third, a third and a third.”

She paused, knowing I needed more, and continued, “You keep one third in land, one third in art and one third in gold.” Her advice followed the first rule of investing — diversification

She meant that wealth should be allocated one-third to land, one-third to gold and one-third to fine art (of course, some cash is needed for operating costs and some business investment is fine also).

But the “old money” shows that true wealth preservation comes from art, gold and land rather than stocks and bonds.

That doesn’t mean you shouldn’t own stocks and bonds. You should — I own them myself. But for long-term wealth preservation, you should also dedicate a portion of your portfolio to the assets that “old money” invests in.

Many of my readers know that I recommend they hold 10% of their investable assets in gold. I’ve also written about the value of fine art.

But there’s another old money asset you might want to consider: diamonds.

Diamonds Are Forever

The cliche from ad campaigns about diamonds being “forever” rings true. And crucially, it’s no longer just a haven asset for the super wealthy. Diamonds are a protection asset for investors with a resale value.

As strategist Yoni Jacobs writes, while investors focus their attention on gold and silver (for good reason) they miss important benefits of diamonds.

Consider these four reasons he lists as to why diamonds are a good investment:

1. Highest Value per Unit Weight. Diamonds are the most valuable items in the world. And they are the most portable. A small number of diamonds can make you wealthy. So this portability is essential to store wealth in case of emergency. Would you rather carry a few diamonds in a small bag or have to carry gold bars?

2. Diamonds Have Industrial Use. Having the highest hardness and heat conductivity of any bulk material, diamonds possess tremendous value for industrial use. In fact, 80% of mined diamonds are used industrially. Many investors think the value of diamonds is only based on demand and speculation. The reality is they serve an important industrial purpose.

3. Necessary for Global Growth. With infrastructure projects developing in many emerging countries, roads and highways must be built. Diamonds are used in many tools for stone cutting, highway building and other technologies. Demand for diamonds used in these ongoing projects will increase, along with higher prices.

4. Diamonds Have Emotional Value. The value that diamonds give as gifts is immeasurable. Whether it is for engagement rings, anniversary gifts or Valentine’s Day presents, diamonds will always be a valuable asset and in demand for emotional relationships around the world. Diamonds’ portability may be one of the most important things to consider as the world faces turmoil.

Priceless

In some future crisis, when gold has spiked to $10,000 per ounce, a similar weight of diamonds would take you into the tens of millions range!

And like land, gold or art, diamonds are nondigital. They cannot be wiped out by power outages, asset freezes or cyberbrigades. That’s crucial in a time of looming central bank digital currencies (CBDCs) or as I call them in the U.S. context, “Biden Bucks.”

The biggest difference between diamonds and gold is that the market for gold is much larger. Gold is a more liquid investment that’s easier to assign a price to. But that is changing as we speak.

In fact, this year, the world’s second regulator-approved, exchange-tradable diamond commodity will launch. It’s a sign of the growing demand for alternatives to cash as a store of wealth.

I’m not suggesting you just rush out to buy diamonds. There are many factors that contribute to a diamond’s value. You need to do your homework and maybe solicit professional assistance.

But you want to create a portfolio that can stand the test of time. Land, gold and fine art are among that.

Diamonds can be too.

Tyler Durden
Thu, 05/23/2024 – 06:30

Walmart, Target Unleash Price-Cut Tsunami As Working-Poor Hit Brick-Wall

Walmart, Target Unleash Price-Cut Tsunami As Working-Poor Hit Brick-Wall

Some of the nation’s largest retailers are rolling back prices in response to low-income consumers hitting a proverbial brick wall. These consumers have maxed out credit card debt and drained personal savings to dangerously low levels in the era of failed Bidenomics. This also comes after an underwhelming April retail sales report and several notes from Goldman warning about faltering low-income consumers:

On Monday, Target announced, “It will lower everyday regular prices on approximately 5,000 frequently shopped items across its assortment. The retailer has just reduced prices on about 1,500 items, with thousands more price cuts planned to take effect over the course of the summer.”

“Consumers will enjoy savings on everyday items such as milk, meat, bread, soda, fresh fruit and vegetables, snacks, yogurt, peanut butter, coffee, diapers, paper towels, pet food and more,” the retailer said. 

One can’t help but ask what influence (if any) the Biden administration had in potentially pressuring Target to lower prices. Food inflation is crushing the working poor, as Democrats are begging the president to lower prices by executive fiat. 

It wasn’t just Target rolling back prices. Walmart, America’s largest retailer, told analysts on an earnings call last week that it had begun reducing prices of grocery items. 

John Furner, Walmart US’ chief executive, said stores have already issued 7,000 rollbacks. This move is intended to boost food sales in the second half of the year and prevent low-income consumers from trading down to Dollar Generals. 

Walmart noted that high-income consumers were trading down to the retailer, which helped drive sales in its grocery business last quarter. 

Walmart’s disclosure last week and Target’s announcement this week of price reductions on everyday items, with core cuts in food items, are direct responses to consumer fatigue after three years of high inflation. 

A recent FT-Michigan Ross poll showed persistent inflation has soured the mood of 71% of those surveyed. And maybe if the Biden administration’s US Treasury, under Janet Yellen, wasn’t spending like it was in a depression, $1 trillion every 100 days, then perhaps inflation could come back down to Earth. 

Joe Feldman, an analyst at Telsey Advisory Group, told the FT that Target unleashed price cuts on popular items to keep pace with Walmart. 

Or, in our view, the administration likely nudged the retailers to drop prices or risk being attacked by ‘greedflation’ buzzwords by Biden’s social media team. 

Feldman expects the price cuts by Walmart and Target will “likely expand to the rest of retail.”  

Consumers are likely to vote with their empty wallets this election season. Research firm NIQ said the effects of inflation have led to consumers spending a third more on consumer packaged goods than they did in 2019. 

“I don’t think we’re going to see much in the way of wholesale declines in prices,” Steve Zurek, vice president of pricing and promotion thought leadership at NIQ, said, adding that the outlook for prices was vastly different from two years ago: “It’s not going to be everything going up.”

Should consumers celebrate retailers lowering prices? Possibly, but don’t expect substantial relief anytime soon. 

In addition to major retailers, McDonald’s recently considered returning $5 meal deals because low-income people are broke. 

Great job, Bidenomics! The working poor has been crushed, set back a generation because of persistent inflation, produced by out-of-control spending by the federal government. 

Goldman’s trading desk this morning noted, “The theme of challenging 1Q consumer results has continued.” This followed an underwhelming Target earnings report

Tyler Durden
Thu, 05/23/2024 – 05:45

Nvidia Explodes Higher After Blowing Away Estimates, Guiding Sharply Higher, Unveils 10:1 Stock Split

Nvidia Explodes Higher After Blowing Away Estimates, Guiding Sharply Higher, Unveils 10:1 Stock Split

As discussed in our preview, Nvidia has been called the mother of all earnings — the “single most important stock on the planet” according to Goldman – and for good reason: it accounts for 5% of the S&P. This morning, Mizuho’s desk analyst even said “they are the market in AI in many respects.”

So intense is the interest in today’s print that according to Bloomberg, some investors and onlookers I’ve heard from are making assessments of Jensen Huang’s body language when I spoke to him on Bloomberg Television in Las Vegas on Monday. They want any and all clues about whether this is going to go well. My conclusion from that conversation: Nvidia knows it needs to make sales beyond just cloud providers and is seeking fortune in enterprise and government markets (with help from Dell).

So with that preamble for what may be the most important earnings release this quarter, if not this year, here is what NVDA just reported for Q1:

  • Revenue $26.04 billion (up from $7.19 billion y/y) and destroying estimates of $24.69 billion
    • Data center revenue $22.6 billion vs. $4.28 billion y/y, smashing estimates of $21.13 billion. This is the all important one
    • Professional Visualization revenue $427 million, +45% y/y, missing estimates of $479.1 million
    • Automotive revenue $329 million, +11% y/y, beating estimates of  $292.4 million
       
  • Adjusted gross margin 78.9% vs. 66.8% y/y, blowing away estimates of 77%
  • R&D expenses $2.72 billion, +45% y/y, in line with estimate $2.73 billion
  • Adjusted operating expenses $2.50 billion, +43% y/y, in line with estimates of $2.51 billion
     
  • Adjusted operating income $18.06 billion vs. $3.05 billion y/y, crushing estimates of $16.46 billion
  • Free cash flow $14.94 billion vs. $2.64 billion y/y, estimate $12.29 billion

While the company blew away Q1 expectations, attention was on Q2 and specifically the revenue bogey where we said earlier $28BN was the magical number that would determine if the stock would plunge or soar. Well, not surprisingly, here is what NVDA just previewed for the second quarter:

  • Revenue is expected to be $28.0 billion, plus or minus 2%.

Or right on the screws, and judging by the company’s track record, that “plus or minus” will be a “plus”, so realistically we are looking at almost $29 billion! Here is the only chart that matters.

Other guidance for Q2 and full year was the following:

  • GAAP and non-GAAP gross margins are expected to be 74.8% and 75.5% (+/- 50 basis points). For the full year, gross margins are expected to be in the mid-70% range.
  • GAAP and non-GAAP operating expenses are expected to be approximately $4.0 billion and $2.8 billion, respectively. Full-year operating expenses are expected to grow in the low-40% range.
  • GAAP and non-GAAP other income and expense are expected to be an income of approximately $300 million, excluding gains and losses from non-affiliated investments.
  • GAAP and non-GAAP tax rates are expected to be 17%, plus or minus 1%, excluding any discrete items.

Going back to the results, we will ignore the non-Data Center results which are now largely de minimus for the company, and focus on the big driver for NVDA results, where the company reported the following:

First-quarter revenue was a record $22.6 billion, up 23% from the previous quarter and up 427% from a year ago.

  • Unveiled the NVIDIA Blackwell platform to fuel a new era of AI computing at trillion-parameter scale and the Blackwell-powered DGX SuperPOD™ for generative AI supercomputing.
  • Announced NVIDIA Quantum and NVIDIA Spectrum™ X800 series switches for InfiniBand and Ethernet, respectively, optimized for trillion-parameter GPU computing and AI infrastructure.
  • Launched NVIDIA AI Enterprise 5.0 with NVIDIA NIM inference microservices to speed enterprise app development.
  • Announced TSMC and Synopsys are going into production with NVIDIA cuLitho to accelerate computational lithography, the semiconductor manufacturing industry’s most compute-intensive workload.
  • Announced that nine new supercomputers worldwide are using Grace Hopper Superchips to ignite new era of AI supercomputing.
  • Unveiled that Grace Hopper Superchips power the top three machines on the Green500 list of the world’s most energy-efficient supercomputers.
  • Expanded collaborations with AWS, Google Cloud, Microsoft and Oracle to advance generative AI innovation.
  • Worked with Johnson & Johnson MedTech to bring AI capabilities to support surgery.

If all that was not enough to send the stock soaring to all time highs, this shoudl seal the deal: the company also announced a 10 for 1 stock split, which guarantees that in a few weeks time, all retail investors will be piling into the suddenly “cheaper” stock.

And with all that, it’s hardly a surprise that the stock is surging after hours, and is up about 4% trading in the mid $970s having earlier nearly jumped above $1,000 to a new all time high.

And while the company may not hit 4 digits after the close, it’s just a matter of days if not hours before it does just that.

Tyler Durden
Thu, 05/23/2024 – 05:11

These Are The Countries Hosting The Most Refugees

These Are The Countries Hosting The Most Refugees

According to estimates from the UN Refugee Agency (UNHCR), some 36.5 million people were living as refugees under the UNHCR or UNRWA mandates as of mid-2023.

As Statista’s Anna Fleck shows in the chart below, the countries hosting the most refugees are predominantly neighbors to nations that have been experiencing conflict or war.

Infographic: The Countries Hosting the Most Refugees | Statista

You will find more infographics at Statista

For example, Iran documented a jump in the number of refugees from 798,343 in 2021 to 3,425,091 in 2022, largely due to an increase in people leaving Afghanistan. According to humanitarian agency Concern Worldwide, this is also in part due to a change in the country’s system of classifying refugees and an effort to legitimize previously-undocumented refugees. Similarly, in Turkey, some 3.3 million refugees out of the country’s total 3.4 million are from neighboring Syria.

According to UNHCR data from mid-2023, the countries from which the most people have been forced to flee are Syria (6.5 million), Afghanistan (6.1 million), Ukraine (5.9 million), South Sudan (2.2 million).

It’s important to note here that actual numbers are likely even higher as this data only reflects the number of people identified by the UN as forcibly displaced.

Tyler Durden
Thu, 05/23/2024 – 04:15

Dutch Lawyer Faces Prosecution For Social Media Post Slamming Mass Migration

Dutch Lawyer Faces Prosecution For Social Media Post Slamming Mass Migration

Authored by Paul Joseph Watson via Modernity.news,

A Dutch conservative female lawyer is being prosecuted on charges of “racism” and “inciting hatred” after she expressed fury over mass migration in response to a viral video showing a white boy being beaten up and thrown onto a railway track by a gang of migrants.

Raisa Blommestijn revealed how she had received a letter that amounted to an order to appear before a Dutch prosecutor at a court hearing in front of multiple judges on August 19th.

The charges stem from comments Blommestijn made on social media in response to a video of a defenseless Dutch boy being brutally kicked and punched as he lay on the ground at an Amsterdam Metro station in May last year before he was thrown onto the railway track.

“Yet another white man got kicked around in the street by a group of black primates. How many defenseless white people remain to become victims? Countless probably: the open borders elite is importing these people in droves, with all the consequences that entails,” she wrote.

Blommestijn said she was subjected to a four hour police interrogation over her comments and later learned that she would be facing prosecution.

“Until now, it was still unclear what would happen next with this case. Unfortunately, I can tell you that as of today, there is clarity. The sword of Damocles has fallen because this morning I found this letter in my letterbox. A letter that cannot be seen as anything other than a subpoena,” the lawyer told her followers.

The conservative warned that people were being “persecuted for their political opinions” and for opposing mass migration by a nation that is “pretending to be a democracy, a country with freedom of speech.”

Prominent conservatives being punished by authorities for expressing strong anti-mass migration views has become a common theme across Europe, with the state seeking to make an example of them in order to silence dissent.

As we recently highlighted, a German politician was found guilty of ‘incitement’ by a district court after she posted a link to the government’s own statistics on crimes committed by migrants, specifically rape, and asked why they are so disproportionately high.

Three former members of Belgium’s right-wing ‘Nation’ party were also convicted for Facebook posts in which they compared the Brussels district of Molenbeek to Africa due to its massive non-native population and demanded the Belgian government put “our people first.”

*  *  *

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden
Thu, 05/23/2024 – 03:30

These Are The 5 Most Common Cybersecurity Mistakes

These Are The 5 Most Common Cybersecurity Mistakes

Cyber attacks are becoming more prevalent with increasingly damaging outcomes, presenting new cybersecurity risks to users.

But in spite of the ever-evolving threat landscape, many of the best defenses remain the same. This includes the basics like creating strong passwords and avoiding malicious links. Yet often, people take unnecessary risks due to convenience, among other factors.

This graphic, via Visual Capitalist’s Niccolo Conte, shows the top cybersecurity mistakes in 2023, based on data from Proofpoint.

The Most Common Mistakes Made by Users

Below, we rank the most common risky actions that people made online in 2023, based on a survey of 7,500 end users across 15 countries:

Overall, 71% of respondents said they made a cybersecurity mistake, with the vast majority doing so knowingly.

As we can see, the most common error was using a work device for personal activities followed by reusing or sharing a password. These actions were shown to be motivated by convenience, time-saving benefits, or urgency across users.

Ranking in third was connecting to WiFi networks in public spaces without using a virtual private network (VPN). This presents risks, because when a user connects to public WiFi, it exposes them to unsecured networks. These networks allow cybercriminals to intercept sensitive information, such as login credentials and personal messages.

By using a VPN, it prevents malicious actors from stealing personal information through creating an encrypted tunnel that hides a user’s location and other personal data.

 

Top Cybersecurity Risks, According to Professionals

While the above data deals with the most common risks taken by users, the same report by Proofpoint also highlights the professional view around what risks are actually the most dangerous.

According to a survey of 1,050 security professionals, clicking on links or downloading attachments from someone that they don’t know was considered the most risky action users could take. By downloading an infected file, it exposes users to computer viruses and malware that mine a computer or device for personal data.

In addition, reusing passwords posed the second-highest security threat, followed by accessing inappropriate websites.

 

Overall, there is a strong degree of overlap between the top cybersecurity mistakes and the most common risks taken by users. In this way, it highlights how many respondents may be unaware of the scale of risk they expose themselves to, and the importance of using the basic tools to avoid financial losses and unwanted outcomes.

Tyler Durden
Thu, 05/23/2024 – 02:45

The Eurocrats Fear That Fico’s Attempted Assassination Will Influence Next Month’s Elections

The Eurocrats Fear That Fico’s Attempted Assassination Will Influence Next Month’s Elections

Authored by Andrew Korybko via Substack,

European Commission President Ursula von der Leyen warned last week that Russia will ramp up its meddling ahead of next month’s parliamentary elections, which preceded European Commission Vice President Vera Jourova assessing that they’d be a test of the bloc’s disinformation resilience. This speculation is nothing new, but what’s different this time around is that the attempted assassination of Slovak Prime Minister Robert Fico will be on every voter’s mind, thus likely influencing the outcome.

The preceding hyperlinked analysis argued that fake news was responsible for radicalizing the pro-Ukrainian suspect into thinking that shooting his premier was a legitimate form of protest against what he’d been misled by the media into believing was his “pro-Russian dictator with blood on his hands”. This black swan event might have served the short-term interests of that leader’s many enemies, but the blowback could be considerable if it leads to a conservative landslide during next month’s elections.

Hungarian Prime Minister Victor Orban predicted that the upcoming vote will influence the direction of war and peace in Europe, and while the European Parliament admittedly can’t do much in terms of shaping the NATO-Russian proxy war in Ukraine, it could still exert positive pressure if conservatives win. It’s with that in mind that Eurocrats like von der Leyen and Jourova are fearmongering about Russian meddling since they want to preemptively discredit this potential outcome.

To be sure, the first of those two had no idea that an assassination attempt would be made against Fico the day after she shared her earlier mentioned warning, but the second’s assessment about the upcoming elections being a test of the bloc’s disinformation resilience came some days later. Instead of speaking vaguely about alleged Russian meddling, the Eurocrats are now honing their information warfare narrative to muddle the conversation about Fico’s attempted assassination and its political aftermath.

The targeted audience is the unclear number of on-the-fence voters who might usually lean liberal but have recently begun to sympathize with some conservative positions on issues like Ukraine. Last week’s incident was driven by the liberal media’s fake news about the Slovak leader, which might influence some of these voters to give the more narratively responsible conservatives their support. In an attempt to desperately prevent this, the Eurocrats want them think that it would be doing Russia’s bidding.  

If the European Parliamentary elections have absolutely no effect on anything, then they wouldn’t care who votes for whom, but the outcome will clearly at the very least have a major impact on popular perceptions and could lead to cascading consequences like more anti-war protests across the bloc. It’s for this reason that the Eurocrats and their media allies, including those being promoted by state-run Ukrainian outlets like this one here, are pushing the abovementioned information warfare narrative.

The growing gap between liberals and conservatives over Ukraine, which is foreign policy issue that Fico was most closely associated with, is naturally occurring as a result of their polar opposite worldviews and not due to Russian meddling. It’s so emotive and significant that some from both sides have become single-issue voters who’ll cast their ballots purely based on candidates’ positions towards this. Attempting to discredit this trend as being due to Russian meddling is disrespectful to democracy.

Tyler Durden
Thu, 05/23/2024 – 02:00

From COVID To Campus Protests: How The Police-State Muzzles Free-Speech

From COVID To Campus Protests: How The Police-State Muzzles Free-Speech

Authored by John & Nisha Whitehead via The Rutherford Institute,

“Politicians of both parties want to use the power of government to silence their foes. Some in the university community seek to drive it from their campuses. And an entire generation of Americans is being taught that free speech should be curtailed as soon as it makes someone else feel uncomfortable.”

– William Ruger, “Free Speech Is Central to Our Dignity as Humans

The police state does not want citizens who know their rights.

Nor does the police state want citizens prepared to exercise those rights.

This year’s graduates are a prime example of this master class in compliance. Their time in college has been set against a backdrop of crackdowns, lockdowns and permacrises ranging from the government’s authoritarian COVID-19 tactics to its more recent militant response to campus protests.

Born in the wake of the 9/11 attacks, these young people have been raised without any expectation of privacy in a technologically-driven, mass surveillance state; educated in schools that teach conformity and compliance; saddled with a debt-ridden economy on the brink of implosion; made vulnerable by the blowback from a military empire constantly waging war against shadowy enemies; policed by government agents armed to the teeth ready and able to lock down the country at a moment’s notice; and forced to march in lockstep with a government that no longer exists to serve the people but which demands they be obedient slaves or suffer the consequences.

And now, when they should be empowered to take their rightful place in society as citizens who fully understand and exercise their right to speak truth to power, they are being censored, silenced and shut down.

Consider what happened recently in Charlottesville, Va., when riot police were called in to shut down campus protests at the University of Virginia staged by students and members of the community to express their opposition to the ongoing humanitarian crisis in Palestine.

As the local newspaper reported, “State police sporting tactical gear and riot shields moved in on the demonstrators, using pepper spray and sheer force to disperse the group and arrest the roughly 15 or so at the camp, where for days students, faculty and community members had sang songs, read poetry and painted signs in protest of Israel’s ongoing war in the Palestinian territory of Gaza.”

What a sad turn-about for an institution which was founded as an experiment in cultivating an informed citizenry by Thomas Jefferson, the author of the Declaration of Independence, champion of the Bill of Rights, and the nation’s third president.

Unfortunately, the University of Virginia is not unique in its heavy-handed response to what have been largely peaceful anti-war protests. According to the Washington Postmore than 2300 people have been arrested for taking part in similar campus protests across the country.

These lessons in compliance, while expected, are what comes of challenging the police state.

What was unexpected were the campus protests themselves.

For those of us who came of age in the 1960s, college campuses were once the bastion of free speech, awash with student protests, sit-ins, marches, pamphleteering, and other expressive acts showing our displeasure with war, the Establishment and the status quo.

Contrast that with college campuses today, which have become breeding grounds for compliant citizens and bastions of censorship, trigger warningsmicroaggressions, and “red light” speech policies targeting anything that might cause someone to feel uncomfortable, unsafe or offended.

Free speech can certainly not be considered “free” when expressive activities across the nation are being increasingly limited, restricted to so-called free speech zones, or altogether blocked.

Remember, the First Amendment gives every American the right to “petition his government for a redress of grievances.”

There was a time in this country, back when the British were running things, that if you spoke your mind and it ticked off the wrong people, you’d soon find yourself in jail for offending the king.

Reacting to this injustice, when it was time to write the Constitution, America’s founders argued for a Bill of Rights, of which the First Amendment protects the right to free speech. James Madison, the father of the Constitution, was very clear about the fact that he wrote the First Amendment to protect the minority against the majority.

What Madison meant by minority is “offensive speech.”

Unfortunately, we don’t honor that principle as much as we should today. In fact, we seem to be witnessing a politically correct philosophy at play, one shared by both the extreme left and the extreme right, which aims to stifle all expression that doesn’t fit within their parameters of what they consider to be “acceptable” speech.

There are all kinds of labels put on such speech—it’s been called politically incorrect speech, hate speech, offensive speech, and so on—but really, the message being conveyed is that you don’t have a right to express yourself if certain people or groups don’t like or agree with what you are saying.

Hence, we have seen the caging of free speech in recent years, through the use of so-called “free speech zones” on college campuses and at political events, the requirement of speech permits in parks and community gatherings, and the policing of online forums.

Clearly, this elitist, monolithic mindset is at odds with everything America is supposed to stand for.

Indeed, we should be encouraging people to debate issues and air their views. Instead, by muzzling free speech, we are contributing to a growing underclass of Americans—many of whom have been labeled racists, rednecks and religious bigots—who are being told that they can’t take part in American public life unless they “fit in.”

Remember, the First Amendment acts as a steam valve. It allows people to speak their minds, air their grievances and contribute to a larger dialogue that hopefully results in a more just world. When there is no steam valve to release the pressure, frustration builds, anger grows and people become more volatile and desperate to force a conversation.

The attempt to stifle certain forms of speech is where we go wrong.

In fact, the U.S. Supreme Court has held that it is “a bedrock principle underlying the First Amendment…that the government may not prohibit the expression of an idea simply because society finds the idea offensive or disagreeable.” For example, it is not a question of whether the Confederate flag represents racism but whether banning it leads to even greater problems, namely, the loss of freedom in general.

Along with the constitutional right to peacefully (and that means non-violently) assemble, the right to free speech allows us to challenge the government through protests and demonstrations and to attempt to change the world around us—for the better or the worse—through protests and counterprotests.

If citizens cannot stand out in the open and voice their disapproval of their government, its representatives and its policies without fearing prosecution, then the First Amendment with all its robust protections for free speech, assembly and the right to petition one’s government for a redress of grievances is little more than window-dressing on a store window—pretty to look at but serving little real purpose.

After all, living in a representative republic means that each person has the right to take a stand for what they think is right, whether that means marching outside the halls of government, wearing clothing with provocative statements, or simply holding up a sign.

That’s what the First Amendment is supposed to be about: it assures the citizenry of the right to express their concerns about their government to their government, in a time, place and manner best suited to ensuring that those concerns are heard.

Unfortunately, through a series of carefully crafted legislative steps and politically expedient court rulings, government officials have managed to disembowel this fundamental freedom, rendering it with little more meaning than the right to file a lawsuit against government officials.

In more and more cases, the government is declaring war on what should be protected political speech whenever it challenges the government’s power, reveals the government’s corruption, exposes the government’s lies, and encourages the citizenry to push back against the government’s many injustices.

Indeed, there is a long and growing list of the kinds of speech that the government considers dangerous enough to red flag and subject to censorship, surveillance, investigation and prosecution: hate speech, conspiratorial speech, treasonous speech, threatening speech, inflammatory speech, radical speech, anti-government speech, extremist speech, etc.

Clearly, the government has no interest in hearing what “we the people” have to say.

Yet if Americans are not able to peacefully assemble for expressive activity outside of the halls of government or on public roads on which government officials must pass, or on college campuses, the First Amendment has lost all meaning.

If we cannot stand peacefully outside of the Supreme Court or the Capitol or the White House, our ability to hold the government accountable for its actions is threatened, and so are the rights and liberties that we cherish as Americans.

And if we cannot proclaim our feelings about the government, no matter how controversial, on our clothing, or to passersby, or to the users of the world wide web, then the First Amendment really has become an exercise in futility.

The source of the protest shouldn’t matter. The politics of the protesters are immaterial.

To play politics with the First Amendment encourages a double standard that will see us all muzzled in the end.

You don’t have to agree with someone to defend their freedoms.

Responsible citizenship means being outraged at the loss of others’ freedoms, even when our own are not directly threatened. It means remembering that the prime function of any free government is to protect the weak against the strong. And it means speaking up for those with whom you might disagree.

The Framers of the Constitution knew very well that whenever and wherever democratic governments had failed, it was because the people had abdicated their responsibility as guardians of freedom. They also knew that whenever in history the people rejected this responsibility, an authoritarian regime arose which eventually denied the people the right to govern themselves.

The demons of our age—some of whom disguise themselves as politicians—delight in fomenting violence, sowing distrust and prejudice, and persuading the public to support tyranny disguised as patriotism.

Overcoming the evils of our age will require us to stop marching in lockstep with the police state and start thinking—and speaking—for ourselves.

It doesn’t matter how old you are or what your political ideology is: it’s our civic duty to make the government hear us—and heed us—using every nonviolent means available to us: picket, protest, march, boycott, speak up, sound off and reclaim control over the narrative about what is really going on in this country.

The power elite has made their intentions clear: they will pursue and prosecute any and all words, thoughts and expressions that challenge their authority.

As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, this is the final link in the police state chain.

If ever there were a time for us to stand up for the right to speak freely, even if it’s freedom for speech we hate, the time is now.

Tyler Durden
Wed, 05/22/2024 – 23:40

This Is What Hedge And Mutual Funds Did In Q1: Goldman’s HF and MF Monitors

This Is What Hedge And Mutual Funds Did In Q1: Goldman’s HF and MF Monitors

Today Goldman published two of the bank’s most widely read periodic reports: the Hedge Fund Trend Monitor (available to pro subs here) and Mutual Fundamentals (also available here), which summarize the quarterly activity and flows of hedge and mutual funds, respectively. Both are available to pro subs in the usual place, but here are the key points from each report.

Hedge Fund trend monitor
 
1) PERFORMANCE: US equity long/short hedge funds have generated a solid +8% YTD return. The strong performance of popular hedge fund long positions has boosted hedge fund returns despite a recent short squeeze in popular shorted stocks. Goldman’s Hedge Fund VIP list of the most popular long positions (ticker: GSTHHVIP) has returned +16% YTD, outperforming the S&P 500 (+12%) and the equal-weight S&P 500 (+7%). The most shorted stocks (GSCBMSAL, +7% YTD) surged +25% in mid-May.

2) LEVERAGE AND SHORT INTEREST: Hedge funds have modestly lifted net leverage alongside the broader market rally while maintaining record gross leverage. Concentrated short positions have been particularly volatile recently, causing funds to rotate out of their favorite longs to cover shorts. However, the most recent short squeeze fell shy of the recent experiences in 2021 and December 2023. Short interest for the median S&P 500 stock remains very low at 1.8% of float. Instead, funds continue to use macro products.

3) HEDGE FUND VIPS: Mega-caps remain the most popular hedge fund long positions. AMZN, MSFT, META, GOOGL, NVDA continue to rank as the top five stocks in the VIP list this quarter, with AAPL joining the top six. The VIP list contains the 50 stocks that appear most often among the top 10 holdings of fundamental hedge funds. The basket has outperformed the S&P 500 in 60% of quarters since 2001 with an average quarterly excess return of 47 bp. 14 new constituents: ALIT, APP, DELL, DFS, GDDY, JPM, MU, NEE, SE, SN, VST, WDC, WIX, X.

4) MEGA-CAPS AND ARTIFICIAL INTELLIGENCE: Hedge funds trimmed positions in the mega-caps while adding to broader AI beneficiaries. Share price outperformance has supported the weight of the Magnificent 7 in hedge fund long portfolios, which stabilized at 13% during 1Q. AAPL was the exception where hedge funds incrementally added. In contrast, hedge funds added to winners across the entire AI universe, particularly in Phase 2 Infrastructure. MRVL, SNX, AES, LFUS are Infrastructure stocks with the largest increase in hedge fund popularity.

5) SECTORS: Hedge funds continued to rotate toward cyclicals, with broad-based increases across Consumer Discretionary, Financials, and Energy. DFS joined this quarter’s VIP list, as did JPM, and also joined BK and SPGI to screen among this quarter’s list of Rising Stars with the largest increase in hedge fund popularity. Soaring prices also lifted the weight of Semiconductor stocks in hedge fund long portfolios to a new record, at 6.5%. MRVL is the top Rising Star and MU entered our basket of favorite hedge fund long positions.

Mutual Fundamentals
 
1. PERFORMANCE: Mutual funds have delivered strong results YTD. 45% of large-cap mutual funds are outperforming their benchmarks YTD, compared with the historical average of 38%.

Fund managers have grown increasingly bullish on US equities, with cash allocations falling to 1.5% and matching the lowest level on record.

Nonetheless, active mutual funds have experienced $139 billion of outflows YTD.

2. THEMES IN FOCUS: (1) MEGA-CAP TECH: Increasing benchmark weights and diversification restrictions mean that the average large-cap mutual fund was 660 bp underweight the Magnificent 7 in 1Q 2024, largely unchanged vs. last quarter. A net of 120 funds (25%) reduced their exposure to MSFT, the largest decline across the group.

(2) AI: Despite the broadening of the AI trade across share prices, mutual fund managers generally avoided taking large tracking error on the theme. However, mutual funds lifted their exposure to Utilities to a new 10-year high.

(3) CYCLICALS/DEFENSIVES: The average large-cap mutual fund maintained a 437 bp overweight in cyclical industries vs. the benchmark, which has benefited performance as investor confidence about economic growth drove Cyclicals to outperform Defensives (GSPUCYDE) by 4% YTD.

3. SECTORS: The average large-cap mutual fund is currently most overweight Financials (+167 bp) and Industrials (+139 bp) and most underweight Info Tech (-341 bp).

Relative to 4Q 2023, the average fund increased exposure most to Consumer Discretionary (+53 bp) and cut the most to Health Care (-42 bp) and Financials (-34 bp).

4. STOCKS: Goldman has rebalanced its Mutual Fund Overweight (GSTHMFOW) and Mutual Fund Underweight (GSTHMFUW) baskets in this report. 12 new constituents in GSTHMFOW: JCI, GM, TRV, CAH, KDP, DASH, TTD, NET, LHX, PNC, GD, AMP.

6 new constituents in GSTHMFUW: GE, HON, AMGN, UNP, DLR, TMO.

Much more in the full reports available to pro subs (here and here)

Tyler Durden
Wed, 05/22/2024 – 23:20