Authored by Mark Jeftovic via BombThrower.com,

This past weekend I was at the Canadian Bitcoin Conference in Montreal, where I moderated a panel on Bitcoin As A Treasury Asset For Corporations. At the time I disclosed that 100% of easyDNS‘ retained earnings are in Bitcoin – and that the mark-to-market value of that Bitcoin is currently 300% of the retained earnings balance from our latest year-end financials (hold that thought: the main takeaway being – I have this business, going on over 25 years now, and there’s a stack of sats, cash, or any liquid asset, that the business has built up and continues to grow in retained earnings).

Also in Montreal, there resides a private equity firm that has been bugging me to sell them the business for a long time. Years.

Since the relationship has been cordial, I decided to take an in-person meeting while I was there and the main guy came out to Le Mount Stephen, where I was staying, and we had lunch. What became clear as we talked was that he had no interest in how easyDNS is actually positioned or differentiated, let alone what our growth trajectory or levers were.

All he really wanted to know was top line and EBITDA. “We don’t grow our companies organically”, he told me, “we just acquire them. As many as we can”.

The plan, it turns out, is to hoover up as many small businesses in the ISP, MSP, SaaS space as possible, and in a few years they’re going to mash them all together and take it public. That’s the plan.

It wasn’t even really a roll-up, from the sounds of it. There was no platform business into which the rest would be shoe-horned. It was just going to be a mud-ball.

He asked point-blank if I would be interested in being acquired – and I told him, like I always tell him – if the multiple is high enough and terms don’t suck, sure. Otherwise, no.

That’s when he explained his problem to me:

“When interest rates were zero, we could pay 5X or 7X EBITDA for businesses like yours. But now, with interest rates higher, we can only offer 3X or 4X EBITDA.”

In my business, believe it or not, private companies typically get acquired for a multiple of revenues or else a P/E north of double-digits. I was also having a hard time understanding why his cost of capital had somehow become my problem.

After explaining how the valuations worked, I pointed out that of the publicly traded businesses in our space, one was trading at a P/E of 13 – and the other two were losing money.

“Oh, but public companies are a completely different animal”, he lectured.

So in other words, I asked him, just to confirm I understood this correctly:

You want me to sell you my profitable and growing business for less than a fraction of cash and at a shitty low multiple?

“Exactly right” – he didn’t actually say that – but he confirmed it, but with the qualifier:

“We let you keep the cash”

I pointed out to him that if I just keep the business the cash is mine anyway.

It really was unfathomable why anybody would take this kind of a deal, but I did clue-in to what the entire value prop of the private equity fund was:

• Borrow money and use it to acquire private businesses at 3X – 4X EBITDA

• Flip the agglomerated holdco public at 10X to 15X EBITDA

That’s it.

No overarching blue ocean strategy, no thought toward compounding, no “organic growth” – no differentiation.

It was just an arb play, using borrowed, made-up money to sweep a bunch of privately held small businesses into a public entity and capture the spread.

This was not an isolated incident.

While easyDNS has had acquisition overtures from  the very beginning – the tempo definitely increased during COVID and has remained elevated. And we’re a pretty small company – tiny, compared to where you would think private equity typically plays.

While I was usually demurring before we got to talking about multiples, the overtures have been cutting to the chase earlier in the communications process, and it’s coming in around 3X to 5X EBITDA – to buy a business with SDE around healthy double-digit percentage of top line and with more cash on the balance sheet than the total acquisition price.

It’s insane but given that we’re in the shadow of a craze where even SPACs were being valued in the billions before they even had a business focus – it’s unsurprising.

To be clear – I’m not planning on selling the biz. My flight back from Montreal was delayed so I was whiling away the time shitposting about private equity on twitter and some clients were expressing concern that I was looking to exit. I am not.

How #PrivateEquity adds value in a fiat-financed world… pic.twitter.com/DP5Uayvdm0

— Mark Jeftovic, The ₿itcoin Capitalist (@StuntPope) May 20, 2024

As a Bitcoiner, I have extreme low-time preference – I wrote about this in the inaugural Bombthrower post, and recently revisited it in a twitter thread:

The very first Bombthrower post was called “The Transition Overview: Building Companies That Matter”. Since the last two #Bitcoin cycles have proven it to be on point – I’ll summarize it here in a thread 👇https://t.co/vQlaULfiMQ

— Mark Jeftovic, The ₿itcoin Capitalist (@StuntPope) February 21, 2024

“No Exit Investing” – Totally Alien Concept to PE, VC and Fiat Finance…

As the fiat monetary system’s debasement has accelerated, I viscerally understood that the business is the asset – not the currency these swindlers are trying to get you to trade it for. I wrote about this years ago, even before M2 blew out about 30T over the pandemic, and I talked about the business as a “no exit” investment:

It is hard to build a successful company. By this I mean a company that is self-sustaining, maybe an off year here and there but for the most part healthy and profitable.

It’s also hard to build a brand. So at the prospect of selling off a successful company and an established brand for a pile of money, the big question I can never answer is Then What?

Thanks to worldwide government interventionism and central bank incompetence, all asset classes are malignantly distorted beyond recognition. What the hell is one supposed to do with the proverbial briefcase full-o-cash? You’ll hand 25% to 40% of it over to the government (even more, come June 25th here in Canada), and what’s left then carries a near negative yield because that same government has a “targeted inflation” policy.

Start all over again? With your negative yielding cash and a non-compete barring you from the one business you know best and your customer base and brand gone? The only asset I can possibly think of that produces the kind return on equity that easyDNS has for me, is easyDNS itself, so why sell it?

The private equity playbook is having a hard time being run at these higher interest rates, so holdco builders and funds are out scouring the terrain for healthy, profitable, small, privately held businesses to buy at lower valuations so that they can mash them together and flip them onto lumpenvestors at higher multiples.

It’s easy to understand why, once you realize that because fiat money is disintegrating, in order to keep expanding a financial system built on debt, you have to financialize all the things.

*  *  *

When the pandemic hit I had no idea how my small business was going to navigate it. So I laid out a Business Survival Blueprint in a huge mindmap and it helped me break things out into areas of focus and decision trees. Sign up to the mailing list and I’ll send you the PDF – you’ll also get The CBDC Survival Guide when it drops later this year. Follow me on Twitter, or Nostr.

A Singapore Airlines Boeing 777-300ER was hit by ‘severe turbulence’ on a London to Singapore flight on Tuesday, forcing an emergency diversion to Bangkok. Tragically, one passenger has been confirmed dead. This incident raises fresh concerns about the safety of air travel of Boeing jets amid a series of mid-air mishaps.

Aviation sleuths on X are citing website flight tracking data from Flightradar24, which shows that Flight SQ 321 abruptly dropped 6,000 feet ‘due to an air pocket’, but nothing has been confirmed. 

Singapore Airlines flight SQ321 dropped about 6000 feet due to an air pocket. One person dead. Must have been incredibly scary pic.twitter.com/NDWnWxMuLF

— USA Observer (@TheUSAmonitor) May 21, 2024

Flight tracking data suggests that #SQ321 had a steep drop of 6,000 feet within 4 minutes from 37,000 ft altitude (see lines 4.06 am to 4.11am) before stabilizing to 31,000 ft, leading to its emergency landing at BKK. https://t.co/Km611aNp1d pic.twitter.com/ng1R0di6T0

— Saksith Saiyasombut (@SaksithCNA) May 21, 2024

Here are images inside the plane moments after the incident. 

Just in :

– Singapore Airlines flight #SQ321 on @Boeing 777 from London @HeathrowAirport to Singapore on 20th May, encountered severe turbulence

– Diverted to Bangkok

– But one dead and multiple injuries per @SingaporeAir.

✈️ 🙏 pic.twitter.com/82fk23usOI

— Tarun Shukla (@shukla_tarun) May 21, 2024

The plane has since landed and emergency crews were dispatched to rush the injured to local area hospitals. 

Breaking: Singapore Airlines flight diverted to Bangkok due to turbulence. 20 passengers reportedly injured. #SQ321 pic.twitter.com/kXXcJOfNyh

— Tommy Shelby (@T0M5helby) May 21, 2024

A #SingaporeAirlines Boeing B777-300ER operating flight SQ321 from #London to #Singapore encountered severe #turbulence.

As per reports, many passengers are injured. The aircraft diverted to #Bangkok. There were 211 passengers and 18 crew members onboard.

📸: @fl360aero pic.twitter.com/O0I1F2ZmrN

— IH Aviation and Travel (@ihaviation) May 21, 2024

Ambulances heading to Suvarnabhumi Airport to assist and transport those injured on board Singapore Airlines flight SQ 321 from London shortly after 4pm Tuesday. #Thailand #singaporeairlines #SQ321 #Suvarnabhumihttps://t.co/NVhgaBMrrY

— Khaosod English (@KhaosodEnglish) May 21, 2024

“We can confirm that there are injuries and one fatality on board the Boeing 777-300ER,” Singapore Airlines wrote in a statement published on Facebook, adding there were a total of 211 passengers and 18 crew on board. 

“Singapore Airlines flight #SQ321, operating from London (Heathrow) to Singapore on 20 May 2024, encountered severe turbulence en-route. The aircraft diverted to Bangkok and landed at 1545hrs local time on 21 May 2024,” the airlines added. 

Authored by Mike Maharrey via Money Metals,

Several states have taken action over the last two years in an effort to block the implementation of a central bank digital currency (CBDC) in the United States.

Indiana was the first state to pass legislation relating to central bank digital currency. Enacted in 2023, the law explicitly excludes a CBDC from the definition of money under the state’s Uniform Commercial Code (UCC). The law amends the definition of money to specify, “The term does not include a central bank digital currency that is currently adopted, or that may be adopted, by the United States government, a foreign government, a foreign reserve, or a foreign sanctioned central bank.”

A similar law was enacted in Florida last year, and this year South Dakota, Tennessee, and Utah followed suit. A Nebraska bill repealing the capital gains tax on gold and silver also changed the definition of money in the state tax code to exclude CBDC.

This year, Indiana took a second step to hinder the implementation of a CBDC with the enactment of a measure prohibiting state agencies from accepting payments made with a central bank digital currency for any service, tax, license, permit, fee, information, or other amount due the governmental body. It also bars government agencies from requiring payments to be made with a central bank digital currency.

Additionally, under the law, state government bodies are prohibited from advocating for or supporting the testing, adoption, or implementation of a central bank digital currency by the United States government.

Alabama, North Dakota, and Georgia have passed similar laws. 

Impact

It remains unclear how changing the definition of money in the UCC and other steps taken at the state level would play out in practice against a CBDC if the federal government attempts to implement one.

The UCC is a set of uniformly adopted state laws governing commercial transactions in the U.S. According to the Uniform Law Commission, “Because the UCC has been universally adopted, businesses can enter into contracts with confidence that the terms will be enforced in the same way by the courts of every American jurisdiction. The resulting certainty of business relationships allows businesses to grow and the American economy to thrive. For this reason, the UCC has been called ‘the backbone of American commerce.’”

Passage of this legislation would, as noted by one opponent of the legislation, put a CBDC “into the bucket of ‘general intangibles” – rather than money, and wouldn’t ban its use completely.

But it could still potentially gum up the works and make it difficult for the government to fully implement a CBDC.

Opponents of the strategy and supporters of CBDC generally take the position that states can’t do anything to stop a CBDC, since – according to their view – under the supremacy clause “any federal law on this point will automatically override state law.”

We’ve heard this song and dance on other issues before. That’s what they said when California legalized medical marijuana in 1996. It didn’t quite turn out that way.

In the ramp-up to the 1996 vote on Proposition 215, voters were repeatedly told that legalization of marijuana, even for limited medical purposes, was a fruitless effort, since, under the supremacy clause, any such state law would be automatically overridden by the Controlled Substances Act of 1970 (CSA). At best, opponents told Californians, the state would end up in a costly, and losing court effort.

But despite those warnings, Californians voted yes, setting in motion the massive state-level movement we see today, where a growing majority of states have legalized what the federal government prohibits. Ultimately, the federal government will likely have to back down, even if just to save face, because it has become impossible to fully enforce its federal prohibition over this massive state and individual resistance.

A similar scenario played out in response to the REAL ID Act of 2005. The national ID system still isn’t fully up and running more than 17 years after the “final deadline” for full implementation.

Why not?

Because a significant number of states decided not to participate, drug their feet, or in some cases, simply provide residents with a choice to opt-out. Federal officials have confirmed that state-level roadblocks to implementation are the primary reason for the continuing delays.

“Roadblock” is likely how this and other state-based strategies to oppose a CBDC will play out. This is part of James Madison’s four-step blueprint for how states can stop federal programs.

But, as can be seen so far with issues like marijuana and the REAL ID Act, whether a federal program is implemented or not ultimately gets down to the number of roadblocks put up by states, and more importantly, the willingness of the people to participate, or not.

What Is CBDC?

Generally speaking, digital currencies are virtual banknotes or coins held in a digital wallet on a computer or smartphone. The difference between a central bank (government-imposed) digital currency and peer-to-peer electronic currencies such as Bitcoin and Ethereum is the value of CBDC is backed and controlled by the government, just like traditional fiat currency.

Governments sell the idea of CBDC by promising to provide a safe, convenient, and more secure alternative to physical cash. We’re also told it will help stop dangerous criminals who like the intractability of cash. But there is a darker side – the promise of control.

At the root of the move toward government digital currency is “the war on cash.” The elimination of cash creates the potential for the government to track and even control consumer spending.

Imagine that all cash disappeared this morning and all that was left was a government-controlled digital currency. You would be forced into doing all business electronically with this government money. It would be impossible to hide even the smallest transaction from the government’s eyes. Something as simple as your morning trip to Dunkin would be known by government functionaries. As Bloomberg put it in an article published when China launched a digital yuan pilot program in 2020, digital currency “offers China’s authorities a degree of control never possible with physical money.”

Governments could even “turn off” your ability to make purchases. Bloomberg described the level of control a digital currency could give Chinese officials.

The PBOC (People’s Bank of China) has also indicated that it could put limits on the sizes of some transactions, or even require an appointment to make large ones. Some observers wonder whether payments could be linked to the emerging social-credit system, wherein citizens with exemplary behavior are ‘whitelisted’ for privileges, while those with criminal and other infractions find themselves left out. ‘China’s goal is not to make payments more convenient but to replace cash, so it can keep closer tabs on people than it already does,’ argues Aaron Brown, a crypto investor who writes for Bloomberg Opinion.

Economist Thorsten Polleit explained the level of Big Brother-like government control possible with the advent of a digital euro in an article published by the Mises Wire.

As he put it, “The path to becoming a surveillance state regime will accelerate considerably” if and when governments begin issuing CBDC.

In 2022, the Federal Reserve released a “discussion paper” examining the pros and cons of a potential U.S. central bank digital dollar. According to the central bank’s website, there has been no decision on implementing a digital currency, but this pilot program reveals the idea is further along than most people realized.

The Tenth Amendment Center contributed to this report.

The US faces one of the worst geopolitical climates since the end of World War II. As the war rages on in Eastern Europe and conflict risks broadening across the Middle East, there are mounting concerns the People’s Republic of China could invade Taiwan by the end of the decade. 

If Chicoms invaded Taiwan, it would upend the global microchip supply chain. That’s because the tiny island nation off mainland China in East Asia produces more than 90% of the world’s most advanced chips. These chips are critical for powering smartphones, electric vehicles, and artificial intelligence applications.

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chip manufacturer, is responsible for Taiwan’s chip dominance. It supplies chips to Apple, Nvidia, and Qualcomm. 

TSMC has factories with ASML Holding NV’s extreme ultraviolet machines, known within the industry as EUVs. These machines use high-frequency light waves to print the most advanced chips in the world. 

In the event of a Chinese invasion, several sources told Bloomberg that ASML EUVs in sprawling TSMC factories have remote ‘kill switches.’ 

They said that with a flip of the switch, the Netherlands-based company could render the machines as large as a city bus and cost $217 million a piece, utterly useless.

Here’s more from the report: 

Officials from the US government have privately expressed concerns to both their Dutch and Taiwanese counterparts about what happens if Chinese aggression escalates into an attack on the island responsible for producing the vast majority of the world’s advanced semiconductors, two of the people said, speaking on condition of anonymity. 

ASML reassured officials about its ability to remotely disable the machines when the Dutch government met with the company on the threat, two others said. The Netherlands has run simulations on a possible invasion in order to better assess the risks, they added.

News of remote kill switches in ASML EUV machines will satisfy political elites in Washington who are waging an aggressive tech war against China’s chipmaking industry. The Netherlands has already imposed restrictions on ASML, preventing the sale of EUV machines to China.  

In recent years, US military and intelligence officials have testified publicly about Beijing’s plan to invade Taiwan to reunify the island with the mainland.

“All indications point to the PLA meeting President Xi Jinping’s directive to be ready to invade Taiwan by 2027,” Admiral John Aquilino, the leader of the Indo-Pacific Command, told the US House Armed Services Committee in prepared testimony in March, adding, “The PLA’s actions indicate their ability to meet Xi’s preferred timeline to unify Taiwan with mainland China by force if directed.”

The West has to face the harsh reality that the post-1945 order has come to an abrupt end. While the US remains the dominant power, other aggressive nations, such as China and Russia, are competing for a multipolar future. This means a decade or more of uncertainty, conflicts, and chaos. 

Authored by Emel Akan via The Epoch Times (emphasis ours),

Monica Lomax, a 59-year-old resident of Elkridge, Maryland, has been feeling the pinch of rising costs.

She’s had to tighten her budget, especially for groceries and clothing. Now, her shopping trips are primarily for essentials, a necessary adjustment in her life to manage the financial squeeze.

“I was thinking about purchasing or downsizing into another home. But because the interest rates are still high, I’ve put that off,” she told The Epoch Times.

Many Americans like Ms. Lomax are putting off major life plans due to high inflation. Moving to a new home, buying new furniture, or booking a vacation now seem like distant dreams.

While some cling to the hope that things will eventually go back to normal, others fear that high inflation is here to stay.

Susan Garland, 47, from Elkridge, Maryland, believes inflation remains one of the top issues facing the country.

“We are definitely feeling it. We’re a two-person family. Our grocery bill is now over $100 a week,” she told The Epoch Times.

For more than 10 years, the Garlands’ grocery bills used to be roughly $70 per week—before high inflation hit, she noted. She and her husband have had to cut back on spending on everything, from vacations to eating out.

Her husband, plumber Michael Garland, 53, says homeowners are also reducing their spending on services, which has a direct impact on his income.

“If they can’t afford services, they won’t call me, which affects my job,” he said.

The annual inflation rate has significantly dropped from its peak of 9.1 percent in June 2022 to 3.4 percent in April this year. However, it’s still above the Federal Reserve’s 2 percent target rate. Some economists are cautioning that high inflation might be the new normal and are advising Americans to brace themselves for this reality.

Dipping Into Retirement

Adding to the financial woes, an increasing number of Americans are being forced to tap into their 401(k) savings early to cover emergencies and basic expenses.

Internal data from investment firm The Vanguard Group revealed that 3.6 percent of its participants made a “hardship withdrawal” last year, up from 2.8 percent in 2022.

This issue is particularly serious for retirees, as they face the risk of depleting their savings.

“While we are generally very frugal, it appears our efforts are not enough,” KT Hundsen from Minneapolis told The Epoch Times.

“I have noticed that my husband has cashed out several times, either bonds or stocks, in $10,000 amounts, to be able to pay our usual bills,” she said.

She and her husband are finding ways to reduce expenses by trimming their budget on clothing and furnishings, while also growing more plants and flowers from seeds in their garden.

“We eat out once or twice a month with the grandkids, but instead of dinner, we go for breakfast, which is less costly,” she said.

Retirees rely on a fixed income from their pension plans or Social Security checks, and inflation is gradually depleting their investments and emergency reserves. In a recent report, Boston College projects that middle-income retirees will see a 14.2 percent decline in their financial wealth between 2021 and 2025 due to inflation.

Dennis O’Connor, an 84-year-old retiree from Temecula, Calif., says it’s harder for retirees to adjust their spending to cope with inflation.

“Personally, like most seniors, we have had to adjust not only our current spending but also our spending for a very unpredictable future,” Mr. O’Connor told The Epoch Times.

Read more here…

Almost one thousand points higher and almost a year after he said to short the S&P at 3,900 in December 2022, Mike Wilson – who along with JPM’s Marko Kolanovic was the most steadfast bear on Wall Street – has finally capitulated.

Recall that last October, just around the time we and a handful of others said a major market meltup was coming – and it turned out to be the biggest such meltup in history – Morgan Stanley’s chief equity strategist Mike Wilson said that his “observations on narrowing breadth, cautious factor leadership, falling earnings revisions and fading consumer and business confidence tell a different story than the consensus, which sees a rally into year-end that’s based mostly on bearish sentiment and seasonal tendencies” adding that a “rally into year-end looks more unlikely to us.”

In retrospect, “consensus” was right (actually the call for a meltup was anything but consensus, but this is just Mike trying to sound ultra contrarian when in reality he was in the same bearish echo chamber as everyone else in late October), while Wilson’s call to kiss a year-end rally goodbye, will go down in history as one of the worst in history…

this may go down as the worst call in history https://t.co/yvljHlo4XR

— zerohedge (@zerohedge) December 1, 2023

… as markets have melted up in a straight line since his note, with a mindblowing 24 weeks of gains since late October, and what’s worse Wilson literally bottom-ticked an explosive 30% gain in the S&P since the fateful “no rally” call.

What happened then? Well, having dug himself into an impossibly deep hole, Wilson knew that capitulation would crush his credibility as an analyst who once upon a time was good at timing market inflection points and was hoping that a broken clock would finally be right that stocks would finally crack, and he would be able to go home head held high, writing an “I told you so” note to his clients and readers (even though stocks first moved 20% in the opposite direction of his call, peaking at 4,600 this summer)… if only he could wait a little longer.

And so one week passed, then another, and another, and all through this time Wilson would “explain” why stocks kept levitating higher (i.e., why he was wrong) and instead of flipping his call and joining the momentum higher (and at least saving his clients some money) he would keep doubling down on a losing position… only to “explain” the coming week why, again, stocks kept levitating higher.

Then in late December, Wilson took the first tentative step to admitting he had gotten all of 2023 wrong, when picking up on something we have been pounding the table since last summer, he said that “Equities Have The Green Light To Ramp Higher.”

That, however, was about the weakest endorsement of the ongoing melt-up one could muster, and instead of placating his clients and superiors, it only infuriated them further as it was apparent Wilson wanted to have his bearish cake while eating his bullish flip-flop (he refused to change his 4,500 S&P year-end price target), and then in February the humiliation was complete when Wilson – Morgan Stanley’s chief US equity strategist – was forced to step down from his role as the chair of the bank’s Global Investment Committee, and instead would “focus on serving his key institutional clients, where the demand for generating tactical alpha is intensifying,” which of course was even more hilarious as Wilson had failed to generate any alpha – or beta – since some time in mid-2022.

And so, having pretty much lost everything, both his stock-picking credibility and also his standing in the company’s org chart, there was little left for him to lose, which brings us to today when in his just published “mid-year outlook” note (available to pro subscribers in the usual place), Wilson – formerly one of Wall Street’s most prominent bears – just turned positive in his outlook for US stocks.

That’s right: having missed the most powerful rally in a generation, with the S&P and Nasdaq trading at all time highs, and the Dow above 40,000 for the first time ever, Wilson “stunned” his readers by dramatically raising his June 2025 S&P price target to 5,400, from his previous forecast which saw the S&P tumbling to 4,500, or 15%, by December.

Hoping to put his entire bearish phase behind him, Wilson jumps straight to declaring that in his latest “base case 12-month price target moves to 5,400″ and explains that “In the base case, we forecast a 19x P/E multiple on 12-month forward EPS (June 2026) of US$283, which equates to a 5,400 forward 12-month price target. Our 2024 and 2025 earnings growth forecasts (8% and 13%, respectively) assume healthy, mid single- digit top-line growth in addition to margin expansion in both years as positive operating leverage resumes (particularly in 2025).” Funny how he did not “assume” any of these things as recently as a week ago.

And while Wilson wistfully contemplates his bear case that could see stocks drop to 4,200 (or roughly what was his base case On this front, he also notes that his bull (6,350) case represents ~20% upside potential versus the current index level, respectively: “Our bull case reflects stronger (11-15%) EPS growth driven by continued fiscal support and cyclical/structural drivers out to 2026 alongside multiple expansion to ~21x. Our bear case incorporates a recession (negative EPS growth and multiple compression).”

There is a bunch of other arguments for the various bear and bull cases (all laid out in detail in his note available to pro subs), but the bottom line is that Wilson finally admits he really has no idea what is coming (hence the 20% upside, downside interval of “confidence”) but he knows that whatever he predicted before is wrong.

Amusingly, even in his capitulation, he desperately tries to hold on to the bearish case as if that – or his reputation – even matters any more. To do that, he converts all nominal numbers into inflation adjusted ones or, even better, shows returns in gold terms, something we haven’t seen since the days of Dennis Gartman:

Finally, real equity returns have looked less attractive over the past few years as policy makers try to inflate out of the excessive debt the government and creditors have accumulated over the past 2 decades. More specifically, when looking at equity returns after inflation, we have yet to make new highs in all of the major indices. In a world where returns are measured and rewarded in nominal terms, such an analysis may not be relevant to most clients. However, we do think there is an important message in this analysis as a sign that this rally is not nearly as strong as the one in 2020-21 when companies were able to extract price and margin more easily. In short, it could be telling us something about the health of the real economy and sustainability of profits and margins.

When we look at real returns using the price of gold, the performance results are weaker. We think this ratio captures much of what has been going on since the pandemic, including the intent of policy. First, notice that the real returns in gold were exceptionally strong coming out of the COVID lows in March 2020. This very much syncs with our view at the time that there would be significant operating leverage and real earnings growth as companies were able to extract pricing while simultaneously keeping costs under control during the lock downs. This was by far the best time to be fully invested (i.e., April 2020-November 2021) across a wide swath of the market. Since then, it’s been much more challenging and narrow as most companies have struggled to maintain the extraordinary margins and over-earning enjoyed during the pandemic. With the rally since last October due largely to multiple expansion, investors should be asking themselves if this rise in valuations is justified. We don’t think it is which is why we still have multiples coming down moderately in our base case view which assumes a soft/goldilocks landing for the economy and strong earnings growth. In the bear case context, we worry that if the soft landing outcome doesn’t happen, the multiple contraction will be swift as investors realize the performance dynamic in nominal returns is about to reverse. The breakdown in equity markets when shown in gold terms is an early warning sign that perhaps the late cycle environment may be at greater risk than appreciated.

Yes, Mike, the risk is far “greater” than appreciated, but this is it for you: you have capitulated and you don’t get to say “told you so… in the small print” when stocks crash, which they will now that the last bears have thrown in the towel, just as we predicted back in February 2023 when we said that the “rally won’t end until Wilson and Marko turn bullish.”

Rally won’t end until Wilson and Marko turn bullish

— zerohedge (@zerohedge) February 7, 2023

And yet, despite Wilson’s capitulation, the bulls – and the rally – are not dead just yet: that’s because only one half of our forecast has materialized. Yes, Wilson finally flipped, but in a desperate attempt to keep the rally going, even as his trading desk beats the bullish drum day after day, JPMorgan’s equivalent to Wilson, Marko Kolanovic, just published a note (also available to pro subs) – as if desperate to respond to the U-turn just taken by his Morgan Stanley colleague – in which he reiterated his bearish view, urging them not to buy stocks, while acknowledging that this negative outlook has hurt JPMorgan’s model portfolio allocation over the past year as global equity markets rose to record highs. As Bloomberg notes, “he cited a litany of reasons for maintaining his pessimistic position, including high valuations, the likelihood rates will remain restrictive for longer, elevated inflation readings, consumer stress, and geopolitical uncertainty.”

Of course, none of these are in any way unknown or not priced in, so the Croat hasn’t said anything the market doesn’t already know, and if anything he merely continues to feed the extremely bullish JPM flow trading desk with what little sales JPM’s retail clients have left.

“A negative stance on equities has hurt the performance of our multi-asset portfolio over the past year,” Marko acknowledged, while adding, “we do not see equities as attractive investments at the moment and we don’t see a reason to change our stance.”

Kolanovic has the lowest year-end target for the S&P 500 at 4,200, implying a drop of more than 20% from Monday’s closing level.

Yet what remains extremely laughable, if not outright criminal, is that at the same time that Kolanovic pounds the table on his ridiculous bearish view that has cost anyone who listened to him the 50% gain in the S&P since Oct 2022 when Marko turned bearish, the JPM trading desk could not be more bullish. Here is what JPM market intel trader Andrew Tyler wrote this morning in the bank’s daily note to a select number of institutional clients:

Tactically Bullish. Still following the formula of (i) at/above average GDP growth plus (ii) positive earnings growth and a (iii) paused Fed translate to a bull market. When considering the macro component, there is a clear slowing of the economy, but I remain less concerned about that then some clients. Why? I think survey data and diffusion indices (ISM/PMI) are painting a picture that is more dire than hard data, earnings, and consumer behavior suggest. For example, ISM-Mfg has had one expansionary print since October 2022; historically, one would conclude that the US was in a recession but instead we saw real GDP print above the long-term trend in 6 of the last 7 quarters. More generally, I think we are still normalizing to pre-COVID times and not seeing a material deterioration from there. While there is a divergence in Consumer outcomes based on income, I think the aggregate consumer remains in good shape. (more in the full JPM note available to pro subs).

So yes, the meltup will continue because while Wilson has had enough of being “contrarian”, Marko still hopes to find a few remaining holdouts who i) still bother to read what he writes and ii) will sell what risk assets they have to, who else, JPMorgan.

More in the full note from Morgan Stanley and JPMorgan.

Authored by Steve Watson via Modernity.news,

The freshly reelected Mayor of London, Sadiq Khan has declared Donald Trump to be a “racist, sexist homophobe,” urging the Labour party to “call him out” as you would do a “best mate.”

Khan told POLITICO “I’m quite clear, I understand on Trump… He’s a racist. He’s a sexist. He’s a homophobe. And it’s very important, particularly when you’ve got a special relationship, that you treat them as a best mate.”

“If my best mate was a racist, or a sexist or a homophobe, I’d call him out and I’d explain to him why those views are wrong.”

Maaate.

Khan went on to whine about the possibility of another Trump presidency, stating “You know, I’ve been speaking to governors from America. I’ve been speaking to mayors from America. Of course, we’ll have a relationship whoever the president is. But we shouldn’t be literally rolling out a red carpet for a state visit.”

Er, why have you been speaking to Governors in the US? There are children being stabbed to death practically every day in London.

“It’s really important that we of course, have good relations with Democrats and Republicans. But I lost count of the amount of Republicans I’ve spoken to who are also worried about a Trump presidency,” Khan added.

Of course, this is all part of Khan’s incessant and obsessive play to appear woke, which has also included, in no particular order commissioning a statue of an obese black woman and a green blob next to Nelson’s column in Trafalgar Square, as well as blocking the placing of a statue of the late Queen Elizabeth there in favour of a selection of ‘transgender faces’.

Earlier this year, Khan also announced that London Overground train lines would be given new ‘woke’ names to further degrade and insult the British people.

He’s also appointed panels of lunatics to identify ‘offensive’ statues, street names and buildings to be replaced, while also boxing up statues of Historic British figures like Winston Churchill, as well as war memorials to appease Black Lives Matter and Anti-Israel agitators.

Nothing can happen on Khan’s watch without it being used to relentlessly push THE MESSAGE:

Khan is dangerous, a far-left position who has a history of turning a blind eye to street violence on his watch.

He must not be allowed to use social media to preach hate and further fuel the politics of division.

🤷‍♂️

— Graham Kemp (@accountingetc) November 20, 2022

How do you think Trump would respond to Khan’s suggestion of a come to Jesus meeting?

Trump has previously called Khan a “stone cold loser,” and a “terrible” and “incompetent mayor”

….Kahn reminds me very much of our very dumb and incompetent Mayor of NYC, de Blasio, who has also done a terrible job – only half his height. In any event, I look forward to being a great friend to the United Kingdom, and am looking very much forward to my visit. Landing now!

— Donald J. Trump (@realDonaldTrump) June 3, 2019

….”knife crime,” which is totally out of control in London. People are afraid to even walk the streets. He is a terrible mayor who should stay out of our business!

— Donald J. Trump (@realDonaldTrump) September 3, 2019

*  *  *

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.

The Slovak police are investigating a possible broader criminal conspiracy surrounding the May 15 attempted assassination of Prime Minister Robert Fico.

He was shot multiple times, and has survived his wounds, by what authorities initially said was a “lone-wolf” shooter who was immediately taken into custody. That official narrative appears to quickly be shifting, however.

The 71-year old attacker fired five shots while Fico greeted supporters in the street outside a government building, sustaining life-threatening injuries.

Deputy Prime Minister Robert Kalinak announced over the weekend of Fico, “He has emerged from the immediate threat to his life, but his condition remains serious and he requires intensive care.“

“We can consider his condition stable with a positive prognosis,” Kalinak said outside the hospital where the prime minister is expected to remain likely for an extended period of time. “We all feel a bit more relaxed now.”

Concerning the shooter’s motives, Interior Minister Matus Sutaj Estok has said in a fresh briefing that “the suspect was angered by the government’s Ukraine policy” and that he may not have been a lone wolf. According to Bloomberg:

On Sunday, authorities said that cooperation with domestic and foreign intelligence services had led to a broadening of the probe, to include a version in which a group – which wasn’t identified – may have been linked to the crime.

According to more details from Estok, “A potential broader assassination plot is supported by the fact that the assailant’s social media communications were erased by another person about two hours after the shooting.”

The Interior Minister explained, “we added a version that it wasn’t only a lone-wolf attacker, but that the crime may have been conducted by a certain group of people.”

There hasn’t been an assassination attempt on a head of state in Europe for some two decades, international reports have underscored. 

Slovak Prime Minister Fico was shot in an armed attack 3 days after meeting with Azerbaijani President Aliyev.

The Iranian President’s helicopter crashed hours after his meeting with Ilham Aliyev. pic.twitter.com/2m6Ad1ARCO

— Globe Eye News (@GlobeEyeNews) May 20, 2024

Fico had long been outspoken against deepening Western involvement in the Ukraine war, for which he’s made many enemies and critics among Western allies, and of course within Ukraine itself.

For example, here’s how CNN last October described his ascendancy to prime minister and leader of the small NATO member state… “A party headed by a pro-Kremlin figure came out top after securing more votes than expected in an election in Slovakia, official results show, in what could pose a challenge to NATO and EU unity on Ukraine.”

While in the hospital fighting for his life, Fico’s top officials have at times lashed out at Western media, telling reporters to ‘reflect’ on the way they cover the populist prime minister and his policies. 

Authored by Dan Berger via The Epoch Times,

Three expert witnesses testifying before a House Foreign Affairs subcommittee on May 17 said a recent U.N. investigation into its troubled agency assisting Palestinians in Gaza was a whitewash.

They told the Subcommittee on Global Health, Global Human Rights, and International Organizations, chaired by Rep. Chris Smith (R-N.J.), that the Colonna Report was released by a committee stacked with agency supporters handpicked by the agency’s director.

The agency, the U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), has overseen relief distribution and other services to Palestinians in Gaza and the West Bank since 1949.

Former French Foreign Minister Catherine Colonna led the U.N. investigation. It included representatives of three institutions that witnesses said were regarded as pro-UNRWA: the Raoul Wallenberg Institute of Human Rights and Humanitarian Law in Sweden, the Christian Michelsen Institute in Norway, and the Danish Institute for Human Rights.

The nine-week investigation began in response to Israeli allegations of the deep entanglement of UNRWA with Hamas, the terror group controlling Gaza.

Those allegations have already had an effect: $450 million in foreign aid was halted, and President Joe Biden signed a bipartisan foreign aid bill halting all aid to UNRWA until at least March 25, 2025. The United States had been providing a third of UNRWA’s billion-dollar budget.

Ms. Colonna’s committee began work a week after the House Foreign Affairs Committee voted 30–19 to halt UNRWA’s funding.

The Colonna Report “was set up solely to whitewash UNRWA’s record,” according to Mr. Smith. The House subcommittee wanted to examine that, he said, as well as “U.S. funding to organizations other than UNRWA, which are affiliated to terrorists or otherwise promote violence against Israelis.”

Ms. Colonna’s panel released a 54-page report of dense bureaucratic language obscuring the gravity of Israel’s charges: that at least a dozen UNRWA employees participated in Hamas’s Oct. 7, 2023, massacre in Israel, that 1,200 UNRWA employees belong to the banned terrorist organization controlling Gaza, and that 6,000 of its 13,000 employees have family members in Hamas.

Israel has stated that Hamas arms have been found in or under some of the 2,000 buildings that the agency controls in Gaza, that a Hamas spy computer center tapped the UNRWA building above it for electric power, and that at least two hostages were held in the homes of likely UNRWA staffers, including a teacher and a doctor.

Ms. Colonna “has a long history of support for UNRWA and hostility to Israel,” according to Mr. Smith. All three organizations tapped to work with her have similar histories, he said.

“Senior officials connected to the report repeatedly stated that their goal was to, quote, reassure donors and to provide donors with further cover,” he said.

Several nations, including Australia, Canada, and Sweden, resumed funding UNRWA even before the Colonna Report was published.

One of the witnesses, Hillel Neuer, spoke of UNRWA’s refusals to appear with him or debate him. On May 13, he was disinvited from a panel discussing UNRWA at the Stimson Center in Washington after, he was told, UNRWA’s representative refused to participate if he was there.

Rep. Chris Smith (R-N.J.) near the U.S. Capitol on March 22, 2024. (Madalina Vasiliu/The Epoch Times)

“[The Colonna Report] is, we’re told, an independent audit that has given UNRWA a clean bill of health exonerating the agency of all charges of its ties with terrorism. This headline was repeated around the world and used by several countries to reinstate funding,” Mr. Neuer said.

“There’s one problem, though, Mr. Chairman. These claims are completely false.”

The investigators were not impartial, he said. UNRWA Commissioner-General Philippe Lazzarini had denounced Israel’s charges of terror ties as a disingenuous, politically motivated, and a smear campaign, according to Mr. Neuer.

“In doing so he irreparably tainted the credibility of the inquiry,” Mr. Neuer said.

Mr. Lazzarini picked Ms. Colonna to head it a few weeks after she had posted her backing of UNRWA on social media. She had done that, Mr. Neuer said, after his own group, U.N. Watch, had exposed a social media group in which 3,000 UNRWA employees had celebrated the Oct. 7, 2023, massacre.

Hillel Neuer, executive director of U.N. Watch, speaks at the 2015 Geneva Summit for Human Rights and Democracy. (Courtesy Hillel Neuer)

“He chose someone who he knew very well was sympathetic to UNRWA, to say the least,” Mr. Neuer said.

And France is UNRWA’s fourth-largest donor. A former UNRWA spokesman subsequently told the Al Jazeera television network that “the report by the former French foreign minister, quote, will provide the donors with further cover.”

“The report says the following: UNRWA, quote, ’remains pivotal in providing life saving humanitarian aid. UNRWA is irreplaceable and indispensable, [a] humanitarian lifeline.’ Mr. Chairman, we didn’t need to have an independent review group of the French foreign minister and three Scandinavian institutes to produce those lines. Those words are the official UNWRA talking points,” Mr. Neuer said.

He derided the report for its proclamation that “UNRWA has established a significant number of policies and mechanisms and procedures to ensure compliance with a more developed approach to neutrality than any other similar U.N. or NGO entities.”

“The truth is the complete opposite,” Mr. Neuer said.

He compared the report to the Soviet Union’s Stalin-era constitution, a soaring statement of human rights—guaranteeing direct elections, freedom of conscience, and other liberties. The Soviet dictator proclaimed it the most democratic constitution in the world.

“The reality was the complete opposite,” Mr. Neuer said, noting that the constitution came into play in 1936, just before the Great Purge began, a terror resulting in the arrest and then execution or deportation to Siberia of millions of citizens.

Displaced Palestinian people sit on benches as they wait outside a clinic of the U.N. Relief and Works Agency for Palestine Refugees (UNRWA) in Rafah in the southern Gaza Strip on Jan. 28, 2024. (AFP via Getty Images)

Yona Schiffmiller, research director for NGO Monitor, a group watchdog nonprofit group, said Hamas’s coercion makes accountability and oversight of UNRWA unlikely. U.S. law bans funding groups that promote violence, terrorism, anti-Semitism, or the employment of individuals espousing those.

James G. Lindsay, former general counsel for UNRWA, former Justice Department criminal lawyer, and author of a 2009 report on the group, told the committee that he walked away from it when it became apparent that while it stated that it was vetting staff members for terror ties, it wasn’t doing it.

He saw a quote from the UNRWA commissioner-general in the Canadian media saying, “Yes, I know we have Hamas people working for us, but it’s not something we worry about.”

He objected to UNRWA’s management, “and I was rebuffed.”

“And so I moved on,” Mr. Lindsay said.

The Colonna Report itself documents indirectly how incompetent the agency is, he said. Of its 50 recommendations, he said, about 37 “reflect obvious management deficiencies, things like the need for training, better coordination with other agencies, better enforcement of rules, employing more women as managers, that any competent management team would have long ago addressed with prodding from an independent review.”

He noted that of the 5.9 million Palestinians UNRWA designates as “refugees,” 1.8 million don’t meet the legal definition because they are citizens of and live in Jordan. Someone can’t be a citizen and a refugee at the same time, he said. Others should be stricken from the assistance rolls for their criminal records or support of terrorism, he said.

The hearing was slightly disrupted by pro-Palestinian demonstrators. Several had “FREE GAZA” written on their arms. They held their arms up in the air and checked the monitors of the hearing’s cameras to make sure the messages were showing. One wore a “Free Palestine” T-shirt.

At one point, Mr. Smith stopped the hearing to admonish them, noting that showing signs was illegal. Some shouting broke out off camera, and he then had police clear them from the hearing chamber.

Authored by Chase Smith via The Epoch Times (emphasis ours),

In an update to enforcement of the Hatch Act, the U.S. Office of Special Counsel (OSC) on May 20 issued new guidelines aimed at clarifying and tightening the rules governing political activities by federal employees.

The Hatch Act restricts the political activities of government employees to ensure a nonpartisan federal workforce. The Act has seen evolving interpretations and enforcement mechanisms since its enactment in 1939.

The new advisory opinion from the OSC head Hampton Dellinger outlines several key changes that will impact how these regulations are applied, particularly concerning White House personnel and the display of political items in federal workplaces. Mr. Dellinger was recently confirmed by the U.S. Senate and took office in March 2024, with prior work overseeing the U.S. Department of Justice Office of Legal Policy.

Mr. Dellinger in an opinion piece published in Politico on May 20, noted that the updates are meant to target a loophole that has allowed senior White House personnel to evade full compliance with the Hatch Act.

He noted that the changes mark a decisive move to ensure that the law’s restrictions on political activities apply uniformly across all federal employees, including top White House staff.

Mr. Dellinger emphasized the importance of balancing robust Hatch Act enforcement with protecting federal employees’ speech rights.

“While this Advisory Opinion updates OSC’s approach to Hatch Act enforcement in certain areas, it is important to note what remains unchanged,” the advisory opinion announcing the changes stated. “OSC will continue to provide extensive training, education, and advice to inform federal agencies and employees of Hatch Act obligations. Relatedly, OSC continues to encourage government workers to come into immediate compliance once alerted of violations. Quickly remedied and minor violations often can be addressed and closed through warnings from OSC rather than a filed case.”

Enforcement Actions and White House Personnel

The OSC has announced a shift in how it handles Hatch Act violations by White House commissioned officers and other senior staff.

Previously, due to the absence of a quorum in the U.S. Merit Systems Protection Board (MSPB) and historical legal opinions, the OSC would refer cases involving White House personnel to the president.

With the MSPB now having a quorum, the OSC will bring such cases directly to the MSPB for adjudication, in line with the clear statutory mandate, according to an advisory opinion announcing the changes. This change underscores that all non-Presidential Senate-confirmed appointees (PAS) will be subject to the same disciplinary processes as other federal employees.

Political Activity Restrictions Extended

In an effort to create a uniform and clear standard, the OSC has also updated its guidance on the display of political candidate or party items in the federal workplace.

Previously, there was a distinction between items supporting political candidates, which were prohibited only during election periods, and those supporting political parties, which were banned year-round. The new rule eliminates this distinction, imposing a year-round ban on both types of items.

This change reflects the increasing association of candidates with specific political parties, rendering any distinction between candidate and party items practically insignificant.

Another notable update concerns former federal employees. The OSC clarified that the Hatch Act’s prohibitions apply even after an employee has left federal service.

This means that individuals who violated the Hatch Act while in government can still face disciplinary actions post-resignation. This extension ensures accountability and deters future violations, maintaining the integrity of federal service, according to the advisory opinion.

Balancing Free Speech and Political Neutrality

The OSC has also addressed the balance between protecting federal employees’ speech rights and ensuring political neutrality in government operations.

While the Hatch Act restricts overt political advocacy by government employees, it allows for certain policy-related discussions that may touch on politically sensitive issues.

“Importantly, OSC will always find violations of the Hatch Act when on-the-job speech or conduct includes express advocacy (i.e. please support the election of, vote against, donate to, or variations thereof),” the new policy explained. “Beyond that, prohibited advocacy can also include using words, phrases, or images associated with a specific candidate or party, particularly when they appear alone, virtually alone, or gratuitously.”

The new advisory reaffirms that clear advocacy for or against political candidates or parties in the workplace remains prohibited. However, discussions involving policy matters related to federal programs or legislative proposals may be permissible, provided they do not serve as covert political endorsements.

The OSC’s updated enforcement approach is an attempt at ensuring that federal employees adhere to political neutrality and accountability.