Authored by Travis Gillmore via The Epoch Times,

The California Assembly’s Appropriations Committee approved a bill May 1 which would require the state to issue an apology for its role in perpetuating harm related to slavery.

Assembly Bill 3089, introduced by Assemblyman Reginald Jones-Sawyer, would declare California recognizes and accepts responsibility for “atrocities” it and its representatives committed as well as any entities under its control who promoted, facilitated, enforced, and permitted the institution of chattel slavery.

The bill would also require the Legislature to draft and have signed by officials a document of recognition and apology to be stored in the state archives for the public to review at will, in addition to creating a memorial plaque to be hung in the Capitol.

The author celebrated the bill’s progress after the hearing.

“California moves one step closer to having a formal apology for its role in allowing Jim Crow racists laws as a part of its history of oppression towards the African American community,” Mr. Jones-Sawyer told the Epoch Times by email.

“I am grateful to the members of the appropriations committee for their due diligence and recognition of the importance of AB 3089.”

He said the measure is crucial to overcome the state’s past faults.

“AB 3089 represents the first effort to heal and accept the wrongs of our state’s past,” Mr. Jones-Sawyer said.

“Knowing that laws aimed at suppressing the economic, academic, civil, and human rights of a specific community were purposeful, and effective, we can now work to ensure equitable measurers are put forth to quash the effects of those former laws.”

He suggested the impact of discriminatory behavior is negatively affecting millions of Californians.

“Since its inception, every branch of California Government has knowingly and intentionally perpetuated the harms of human enslavement and its lasting effects on Black Californians,” Mr. Jones-Sawyer said in the bill’s Legislative analyses.

“Despite small moments of positive confrontation of these harms, these infrequent moments are vastly overshadowed by the repeated negative impact of state-sanctioned violence.”

Countering critics who point to California having never been a slave state, the author said the state was free in name only.

“Despite having joined the Union as a free state, California has contradicted its pledge time after time,” Mr. Jones-Sawyer said.

“If we are to maintain the positive momentum toward truth and reconciliation, this apology and the small plaque shows the world that we honor our commitment to rectifying past wrongs.”

Included in the official apology would be a recognition that racial prejudice, segregation, discrimination, and inequitable access to state and federal funding caused African Americans to be harmed and a promise such would never happen again.

Yusef Miller speaks in support of Assembly Bill 3089 at the Assembly’s Appropriations Committee on May 1, 2024. (Travis Gillmore/The Epoch Times)

The apology is the first of a series of recommendations from the state’s Task Force to Study and Develop Reparation Proposals for African Americans, established in 2020 by the passage of Assembly Bill 3121.

After meeting for more than two years, the task force published more than 100 recommendations last year in a document containing more than 1,000 pages of historical research and included suggestions for cash payments for five types of discrimination—ultimately totaling more than $1 million per eligible person if approved by the Legislature.

While recommending formal apologies, the task force noted that such alone is inadequate, though a necessary first step.

Californians are wary of supporting cash payments, according to a Berkeley Intergovernmental Studies poll from late last year that showed most respondents disapproved. Additionally, others have expressed concern that the state’s estimated $73 billion budget deficit leaves little room for providing cash reparations.

One supporter in attendance at the appropriations hearing agreed a formal apology is needed and said that more must be done.

“This is an important first step, one of many, and we need many steps and pushing from many pressure points,” Yusef Miller, representing Clean Earth for Kids and the North County Equity and Justice Coalition, told The Epoch Times after the hearing. “To get everyone on board, it’s going to take education, and once everyone understands what it really looks like, their opposition may go away and fizzle out.”

He said the bill is vital to correcting historical wrongs while educating the public about what he described as the long-lasting impacts of slavery.

“AB 3089 is extremely important because the legacy of harm to people of African descent in California has gone undereducated and uninformed, and people just don’t know and don’t realize the continuous impact on the African American community,” Mr. Miller said.

“That impact has lasted from the 1850s all the way up until 2024.”

One organization in support of the bill said California can lead the nation if it chooses to abide by the task force’s recommendations.

“California has an opportunity to be the first State in the nation to finally formally recognize and acknowledge the atrocities caused by its role in U.S. chattel slavery and its vestiges,” the Alliance for Reparations, Reconciliation, and Truth said in Legislative analyses.

“[This is] an opportunity to affirm the State of California’s role in protecting the descendants of enslaved people as well as the civil, political, and socio-cultural rights of Black Californians, particularly during a time when the rights of minority and traditionally underrepresented groups are being targeted, attacked, and devalued.”

Another group in support said the safety and dignity of current and future generations can be protected by the bill.

“The passage of AB 3089 will not only provide a formal acknowledgment and apology for California’s historical involvement in forced human enslavement but will also affirm the state’s commitment to remediation and non-repetition of such atrocities,” the California Black Chamber of Commerce said in Legislative analyses. “The provision for permanent public access to the apology in the California State Capitol complex and the California State Archives ensures that this acknowledgment is preserved for future generations.”

No groups or individuals were listed in committee analyses in opposition, and no opposing testimony was provided at hearings.

After clearing the 15-member appropriations meeting, the measure will next be considered by the Assembly in the coming weeks.

The Biden administration has just leveled a somewhat bizarre chemical weapons accusation against Russia, coming a day after the US Treasury came out with nearly 300 new anti-Moscow sanctions. Those previously reported sanctions targeted Russia’s defense-industrial sector, including its alleged chemical weapons program (Russia denies having one).

“The U.S. State Department accused Russia Wednesday of having used chemical weapons against Ukrainian soldiers in violation of the Chemical Weapons Convention,” AFP reports.

This was enough to generate ominous sounding headlines implying ‘Putin is gassing people’ – or something along those lines. Yes, technically the chemicals identified would count as “chemical weapons” according to technical definitions in international treaties.

But the key caveat is contained in a State Department factsheet, that Russia is using “riot control agents [tear gas] as a method of warfare in Ukraine, also in violation of the CWC.”

Another choking agent, chloropicrin, was also mentioned by the US. Moscow forces are basically deploying riot control agents “as a method of warfare” in Ukraine, the US Department of State said.

“The use of such chemicals is not an isolated incident, and is probably driven by Russian forces’ desire to dislodge Ukrainian forces from fortified positions and achieve tactical gains on the battlefield,” the statement added. Al Jazeera explains of chloropicrin: 

Chloropicrin, a nearly colourless oily liquid which causes severe irritation to the eyes, skin and lungs, was used in large quantities during World War I, according to the US’s National Institute for Occupational Health and Safety.

While it continues to be used as an agricultural pesticide, its use in war is banned under the 1993 Chemical Weapons Convention (CWC).

So the ‘big’ chemical weapons accusation against Moscow is that it is using tear gas – or basically the same measures now actively being deployed against pro-Palestine protesters on college campuses. Russian forces have reportedly been using grenades loaded with CS and CN gasses… again, this appears to be the sum total of the allegation.

Kremlin spokesman Dmitry Peskov rejected the charge of Russian forces using chemical weapons in Ukraine. “As always, such announcements are absolutely unfounded and are not supported by anything. Russia has been and remains committed to its obligations under international law in this area,” he told a press briefing.

The US claim generated some scary headlines on Thursday, including this from the New York Times:

Separately, Russian ambassador to the US Anatoly Antonov slammed the fresh accusations as “odious and unsubstantiated.”

As for the US, it has been caught deploying much worse in civilian areas of Iraq – with white phosphorus munitions and depleted uranium topping the list.

By Tsvetana Paraskova of OilPrice.com

Permian producers are not shutting in oil wells with associated natural gas despite the fact that the Texas regional gas price has been stuck at below-zero levels since early March.

Major pipeline operators in the Permian basin haven’t yet seen any effect of the negative gas prices at the Waha hub in West Texas on activity as producers are look to maximize oil realizations at West Texas Intermediate crude prices at above $80 per barrel.

But the U.S. natural gas benchmark, Henry Hub, has been depressed below $2.00 per million British thermal units (MMBtu) since early February due to weak winter demand amid milder weather, record output at the end of 2023, and higher-than-average natural gas stocks. 

Natural gas prices at the Waha hub slumped to a negative value of -$2.00 per MMBtu in April as the recent rise in oil prices prompted producers to bring drilled but uncompleted wells online. The Waha hub prices remained below zero for most of March and April amid high production and not enough takeaway capacity.

The price at the Waha Hub rose by $1.25 in the latest reporting week, from -$1.18/MMBtu to $0.07/MMBtu on April 24, only the second day the price was above zero since April 1, per EIA data.

The negative Waha gas prices and the supply glut are creating a problem for Permian producers regarding how they should dispose of part of the excess natural gas output.

Takeaway capacity has been constrained in recent weeks due to some maintenance, but more pipelines are set to begin operations in the coming months to potentially alleviate the glut as demand for LNG exports from the U.S. Gulf Coast will continue rising for years to come.

For the time being, the Permian is holding natural gas production relatively steady or slightly lower than at the start of the year, but rigs haven’t been dropped in the most prolific U.S. oil basin, unlike in the giant shale gas basins such as Appalachia and the Haynesville in East Texas and Western Louisiana.

“Essentially, you’ve seen no effect from the weak natural gas prices,” Anthony Chovanec, Vice President, Fundamentals and Supply Appraisal at Enterprise Products, said on the pipeline giant’s earnings call this week.

“If you look at what drives the economics of the producers in the Permian, it’s not natural gas. And, you know, you’re — what we’ve seen in natural gas prices is not going to cause people to shut in or even throttle back oil-related natural gas at this point,” Chovanec told analysts.

“But if you go and look at rig counts in the Permian, since the first of the year, they’re as steady as they can be. Actually, the same can be said for the Eagle Ford. You see rig counts down in the Haynesville and you see them down somewhat in Appalachia, but not in your oil rig basins.”

In the oil rig basins, producers aren’t rushing to boost oil production at above-$80 WTI crude prices, partly due to the weak natural gas prices. But they aren’t scaling back production, either, as they are keen to continue pumping oil and the associated natural gas that goes with it.

Some oil and gas producers in Texas have significantly increased in recent weeks the number of requests to the Railroad Commission of Texas (RRC) to allow flaring on some operations as low natural gas prices and a glut of supply present challenges to the drillers how to get rid of the unwanted gas. RRC, the oil and gas industry regulator of Texas, approved last week as many as 21 requests from producers to be exempt from rules banning or limiting flaring, Reuters reported on Tuesday.

Midstream infrastructure company MPLX expects additional takeaway capacity out of the Permian, apart from the Matterhorn pipeline expected to enter into service in the third quarter this year, MPLX’s top executives said on the earnings call this week.

“There’s going to be more takeaway out of the basin,” MPLX chief executive Michael Hennigan said.

LNG exports out of the Gulf Coast will be a major pull for natural gas produced in the Permian, MPLX’s senior vice president David Heppner added.

“You’ve got the pull coming from these LNG facilities down in the Gulf Coast, which are majority of them backstopped by 20-year take or pays, which is a nice long-term pull,” Heppner said, adding that “there is incremental capacity needed clearly with barrels out of the Permian to the Gulf Coast.”

On Wednesday, Fed Chairman Jerome Powell dismissed the idea that the economy could slide into “stagflation” despite multiple warning signs of a slowing economy and inflation reaccelerating higher. 

“I was around for stagflation, and it was 10% unemployment, it was high-single-digit inflation,” Powell said, noting, “Right now we have 3% growth, which is pretty solid growth, I would, say by any measure, and we have inflation running under 3%.” 

Powell then claimed he didn’t see “stag” or the “flation” anywhere. 

However, Powell has been very wrong before. He missed the initial surge in inflation in the months following the virus pandemic after the government helicopter dropped trillions of dollars on the economy. More recently, Powell prematurely pivoted on the interest rate hiking cycle before having to backtrack. 

Meanwhile, America’s largest companies are warning consumers are buckling due to the weight of inflation. This comes amid the failure of Bidenomics, where a new Gallup poll has shown a parabolic surge in households complaining about inflation-related financial problems. 

All you need to know pic.twitter.com/a3Ay7c0PA0

— zerohedge (@zerohedge) May 2, 2024

On Wednesday, Starbucks logged the largest single-day crash since early Covid, nearly exceeding the 16.2% level that would’ve made it the worst drawdown since the Dot Com bust. The reason is simple: Earnings were a complete disaster as misses were reported across the board due to headwinds of a “cautious consumer.” 

Earlier in the week, McDonald’s CEO Chris Kempczinski warned the burger chain faced “broad-based consumer pressures persist around the world.” 

“Consumers continue to be even more discriminating with every dollar that they spend as they faced elevated prices in their day-to-day spending,” Kempczinski said. 

Clearly, a $15 Big Mac combo meal is too expensive for many working poor folks. Plus, the food quality is junk. 

Moving on to the 3M Company, the maker of Scotch tape and Post-it Notes, top executives told analysts during an earnings call that it “continued seeing softness in consumer discretionary spend.” 

As for Newell Brands, the owner of Rubbermaid, Yankee Candle, Coleman, Paper Mate, and many others, warned, “Consumers continuing to carefully manage their discretionary spend as the cumulative impact of inflation on food, energy and housing cost has outpaced wage growth.” 

Looking at Bloomberg data, the term “sticky inflation” has surged to a record 17 mentions in earnings calls. Other topics on the rise include “inflation” and “interest rates” and “labor costs.” 

But don’t worry, Powell has glanced over the mounting stagflation threat because it’s an election year… 

For months, relations between Turkey and Israel have been on the brink of breaking point. Already there has been the recalling of ambassadors, inflammatory rhetoric exchanged between leaders, and then things got more serious when Turkey a month ago moved to restrict 54 products from being exported to Israel until a Gaza ceasefire can be reached.

But Turkey’s government on Thursday has taken the next big step, halting all exports and imports to and from Israel, according to Bloomberg which cited Turkish government officials. It has begun effective today, but Ankara has yet to officially announce the dramatic move.

Israeli Foreign Minister Israel Katz has confirmed that the breaking headlines are accurate. He said that Ankara has already begun to block Israeli imports and exports at Turkish ports.

Katz has ordered the foreign ministry to immediately pursue alternatives for trade which focus on “local production and imports from other countries.”

Bilateral trade volume between the two countries, which prior to Oct.7 were enjoying warmer relations, had stood at $5.4 billion last year.

• Turkey sells $5B-$7B of exports to Israel every year.
• Israel sells $2B-$3B of exports to Turkey every year.

But President Recep Tayyip Erdoğan has been unrelenting in his attacks on Israel and directed against Netanyahu personally. 

In March, he went so far as to suggest the Israeli prime minster should be assassinated for overseeing war crimes in Gaza and against Muslims.

 In a prior election rally the Turkish president vowed to “send [Netanyahu] to Allah to take care of him, make him miserable and curse him.”

This week Turkish Foreign Minister Hakan Fidan announced Turkey will join South Africa’s case against Israel before the Hague-based International Criminal Court (ICC).

So it appears at this point Turkey is waging both full-scale diplomatic and economic war on Israel. This is unprecedented for a NATO member, which also happens to have the second largest military within the Western military alliance, and is sure to put Western officials in an awkward spot.

Via The Cradle

Arrests of Saudi citizens over social media posts related to ‘Israeli genocide’ in Gaza have markedly increased in recent months, as Riyadh is reportedly concerned that “Iran and Islamist groups could exploit the conflict to incite a wave of uprisings,” according to people familiar with the matter who spoke with Bloomberg.

Recent arrests include “an executive with a company involved in the kingdom’s Vision 2030 economic transformation plan,” who reportedly expressed views on Gaza deemed “incendiary,” an unnamed media figure who said “Israel should never be forgiven,” and a citizen who called for the boycott of US fast food chains in the kingdom.

According to one of Bloomberg’s sources, over the past six months, there has been a “significant increase” in the number of prisoners entering a maximum-security prison south of Riyadh. The New York-based publication says this account was corroborated by diplomats in the Saudi capital and human rights organizations who have tracked a “spike in social media-related arrests” since 7 October.

“The Saudi arrests for Gaza-related posts indicate Prince [Mohammed bin Salman’s] regime will take a hard line against citizens not toeing the line when it comes to normalizing ties with Israel,” Bloomberg reports.

In a visit to the Gulf kingdom on Monday, US Secretary of State Antony Blinken said that intensive work has recently been done toward a Saudi–Israel normalization deal, which he said is “potentially very close to completion.”

Nevertheless, on Wednesday, the Guardian reported that Riyadh has devised a “more modest” defense pact with Washington as authorities prepare to move past Israeli normalization over Tel Aviv’s intransigence regarding the formation of an independent Palestinian state and their determination to assault Gaza’s southernmost city of Rafah.

The British daily described this “Plan B” as a joint US–Saudi effort to “contain Iranian expansionism and [as part of] Washington’s ‘great-power competition,’ particularly with China.”

Moreover, Israeli media on Thursday cited a source in the Saudi royal family as saying that the kingdom sent a message to Tel Aviv stating that any military operation in Rafah “would be a big mistake and would push normalization between the two parties away.”

“Riyadh will appear as a traitorous country in that case,” the Israeli report adds, as Saudi leaders reportedly believe “Saudi Arabia will not be able to normalize relations with Israel if there is no Palestinian state.”

Barry McCarthy, CEO of Peloton Interactive, is stepping down after the company’s stock plummeted 92% since he took over in a bid to revitalize the connected fitness company known for slapping iPads on stationary bikes and charging high markups. 

In February 2022, McCarthy—a former Spotify and Netflix executive—took over from co-founder John Foley. He attempted to turn around the company, which had experienced thousands of layoffs, management shake-ups, and outsourcing business as the Covid pop in demand faded. 

However, those efforts failed when Peloton announced a new restructuring program on Thursday. The struggling company plans to cut 15% of staff, or about 400 workers, and reduce its retail footprint to save $200 million by the end of 2025. 

“This restructuring will position Peloton for sustained, positive free cash flow, while enabling the company to continue to invest in software, hardware and content innovation, improvements to its member support experience, and optimizations to marketing efforts to scale the business. Upon full implementation, the company expects the plan to result in reduced annual run-rate expenses by more than $200 million by the end of its 2025 fiscal year,” the company wrote in a press release. 

A series of product recalls over safety issues only added to problems for McCarthy as lower sales and profits continued sliding. The share price has plunged 92% during the CEO’s tenure.

Besides a new restructuring program, the company also reported it lost $167.3 million, or 45 cents per share, for the third quarter. That’s better than the $275.9 million, or 79 cents per share, in the same quarter last year. Revenue totaled $717.7 million, below the average Wall Street estimate of $719.2 million tracked by Bloomberg. 

Here’s a snapshot of third-quarter results (courtesy of Bloomberg): 

• Revenue $717.7 million, estimate $719.2 million

• Connected fitness revenue $279.9 million, estimate $288.2 million

• Subscription revenue $437.8 million, estimate $429.7 million

• Connected fitness subscribers 3.06 million, estimate 3.08 million

• Paid digital subscribers 674,000, estimate 742,266

• Adjusted Ebitda $5.8 million, estimate loss $25 million

• Loss per share 45c

• Cash flow from operations $11.6 million vs. negative $40.9 million y/y, estimate negative $29.6 million

Peloton also lowered its full-year revenue guidance by $25 million to a range of $2.675 billion to $2.7 billion, a dip from last year’s $2.8 billion.

Here’s a snapshot of the full-year outlook (courtesy of Bloomberg): 

• Sees revenue $2.68 billion to $2.70 billion, saw $2.68 billion to $2.75 billion, estimate $2.71 billion (Bloomberg Consensus)

• Sees adjusted Ebitda loss $5.0 million to $20.0 million, saw loss $25 million to loss $75 million, estimate loss $62.9 million

• Sees connected fitness subscribers 2.96 million to 2.98 million, saw 2.99 million to 3.01 million, estimate 3.04 million

Here’s what Wall Street analysts are saying (list courtesy of Bloomberg):

Bloomberg Intelligence, Geetha Ranganathan

•  The headcount cuts will aid free cash flow “yet the core issues remain, namely the weakness in demand and uncertainty over subscription growth, with 44,000 subscriber losses in 3Q”

JPMorgan, Doug Anmuth

• Says he’s encouraged by the company returning to positive free cash flow, and reporting lower operating expenses and positive adjusted Ebitda 

• In addition, “the cost reductions announced today should better align the cost profile to PTON’s current revenue trends & help make debt refinancing increasingly likely, which should help the equity story”

• Rates overweight with PT $8

BMO Capital Markets, Simeon Siege

• “From our outsider’s viewpoint, we continue to believe growth is behind us and focusing on bear-hugging brand loyalists/walking away from expensive growth hopes can improve FCF/Ebitda (seemingly happening)”

• If this happens with new management, shares look undervalued, but if growth remains new management’s priority, “we worry about sustained FCF/looming debt questions.”

• Rates market perform with PT $7.50

Peloton’s recovery depends on another Covid lockdown by the government that shuts down businesses and forces everyone into their homes for months. 

Summary: Last night, CNN spent its prime time segment decrying the Democratic president’s “radio silence” on the Gaza-related campus protests and chaos. MSM pundits have pointed to his lack of leadership as violence at times erupted from UCLA to Columbia to a number of elite schools. 

As expected, Biden began by trying to chart a kind of middle course condemning “antisemitism” and “Islamophobia”… though many conservatives have pointed out it’s only the former they are seeing evidence of during these campus protests.

“Dissent is essential to democracy. But dissent must never lead to disorder or denying the rights of others… no place for hate speech in America,” Biden said. The line about “denying the rights of others” appears a very vague reference to students occupying buildings, and denying the ability of tuition-paying students to go to their classes, libraries, or to take exams. 

“There is no place for hate speech or violence of any kind, whether its antisemitism, Islamophobia or discrimination against Arab Americans or Palestinian Americans. It’s simply wrong,” Pres. Biden says during remarks on campus protests. https://t.co/8o7HAK8j8x pic.twitter.com/Slq8PrStJo

— ABC News Politics (@ABCPolitics) May 2, 2024

“In moments like this, there are always those who rush in to score political points. But this isn’t a moment for politics. It’s a moment for clarity. So let me be clear…Violent protest is not protected. Peaceful protest is.”

“Destroying property is not a peaceful protest, it’s against the law. Vandalism, trespassing, breaking windows, shutting down campuses, forcing the cancellation of classes and graduation. None of this is a peaceful protest, threatening people, intimidating people,” Biden said.

We should note that Biden’s ‘middle way’ attempt (akin to “good folks on both sides” rhetoric that the Left gets angry about) is unlikely to satisfy either side. In the end, this lackluster speech is not going to make the encampments disappear, or the protesters disperse. In fact, he has most certainly lost almost the entirety of the Progressive vote, and increasingly young voters as well.

Update: Sure enough, it is about the protests, which apparently have had zero impact on anything as expected:

• *BIDEN: RULE OF LAW, FREEDOM OF SPEECH MUST BOTH BE UPHELD
• *BIDEN: DISSENT MUST NEVER LEAD TO DISORDER, DENIAL OF RIGHTS
• *BIDEN: RIGHT TO PROTEST DOESN’T MEAN RIGHT TO CAUSE CHAOS
• *BIDEN: NATIONAL GUARD SHOULD NOT INTERVENE ON CAMPUS PROTESTS
• *BIDEN: NO CHANGE IN MIDDLE EAST POLICY OVER CAMPUS PROTESTS

* * *

The White House has announced that President Biden will deliver unscheduled remarks at 10:30am ET (so he is already about 30 minutes late). It is unclear what Biden’s handlers will feed the teleprompter but it is a very safe bet that the university protests around the country will be a key topic… pause.

Authored by Simon White, Bloomberg macro strategist,

Rising volatility in USD/JPY will make the yen carry trade less attractive. Dollar-yen is now more correlated with US 2-year yields compared to the 10 year, meaning FX volatility is likely to keep rising the closer the Federal Reserve gets to making its first change in rates.

It’s getting precarious for yen carry traders. Twice in recent days has Japan been suspected of intervening to strengthen the yen, with the latest occurring not long after Wednesday’s Fed meeting, where the FOMC pushed back against further rate hikes and tapered quantitative tightening more than expected.

The carry trade depends on rate differentials. Traders borrow the yen, swap it for dollars, i.e. buy USD/JPY, then use the proceeds to buy a US asset, such as T-bills or Treasuries. But that leaves them long USD/JPY and therefore exposed to falls. A big enough move in spot could wipe out the profit from the US versus Japanese rate spread.

That’s why the volatility of the currency matters to carry traders. If it is too high, then the trade becomes too risky. Which is one of the reasons, as Paul Dobson mentions, that the MOF likely prefers to intervene when market liquidity is low.

Adjusting the US-Japan real rate differential for USD/JPY volatility shows the measure is still high, but it is beginning to fall. The more vol rises, the more it will keep falling (other things equal).

Aside from the intentional introduction of vol premium from intervention, USD/JPY volatility is likely to pick up more the closer the Fed gets to making its next interest-rate move – which is more likely to be a cut if they shift rates this year.

The reason why is that USD/JPY is now more correlated to US 2-year yields than 10-year yields. Since the Fed started hiking in 2022, and the yield curve kept inverting with the 10-year UST’s yield falling versus the 2-year, the latter’s yield has been more correlated to USD/JPY.

Shorter-term yields are likely to get more volatile, which will feed into FX volatility and make the yen-dollar carry trade less attractive.

Still, carry is a moreish drug, and it’s unlikely to be enough to completely derail the trade. The endgame’s not likely to come until the Fed cuts rates – given the US Treasury’s swelling interest bill and the impact on market liquidity, the likelihood they do is increasing, despite rising inflation.

Despite the lack of total carnage in spot bitcoin prices, yesterday was an ugly (nay the ugliest) day for the newly minted ETFs (although bitcoin is down over 10% this week).

Most notably, BlackRock’s ETF saw around $37 million in outflows for the first time, while the remaining spot Bitcoin ETFs collectively notched over $526.8 million in outflows.

The largest outflow for the day was the Fidelity Wise Origin Bitcoin Fund, which saw $191.1 million in net outflows. The Grayscale Bitcoin Trust took the second spot with outflows of $167.4 million.

This means the total net inflow since inception has fallen to USD11.2bn.

On the crypto-specific we have now had 6 days in a row of outflows from the US spot ETFs and, as importantly, we are now below the average ETF purchase price of around 58k…

Source: Geoffrey Kindrick

Bloomberg ETF analyst James Seyffart noted that the Bitcoin ETFs are still “operating smoothly across the board” and that “inflows and outflows are part of the norm in the life of an ETF.”

Coinglass data shows that there has been around $200mm in ‘long liquidations’ in the last coupled of days…

“Bitcoin is our favorite canary,” ByteTree Asset Management Chief Investment Officer Charlie Morris wrote in a note.

“It is warning of trouble ahead in financial markets, but we can be confident it’ll bounce back at some point.”

But this is not a time to panic, as CoinTelegraph reports, ETF Store president Nate Geraci pointed out that the iShares Gold ETF and SPDR Gold ETFs have had $1 billion and $3 billion in outflows so far this year.

Yet, gold is up 16% year-to-date, Geraci noted in a May 2 X post.

As CoinDesk reports, the current lull is likely to be followed by a new wave from a different type of investor, said Robert Mitchnick, head of digital assets for BlackRock, the world’s largest asset-management company.

The coming months will probably see financial institutions such as sovereign wealth funds, pension funds and endowments start to trade in the spot ETFs, Mitchnick said in an interview. The firm is seeing “a re-initiation of the discussion around bitcoin,” which turns on the topic of allocating to bitcoin (BTC) and how to think about it from a portfolio construction perspective.

“Many of these interested firms – whether we’re talking about pensions, endowments, sovereign wealth funds, insurers, other asset managers, family offices – are having ongoing diligence and research conversations, and we’re playing a role from an education perspective,” Mitchnick said.

And finally, Geoffrey Kendrick – who correctly predicted $4k in ETH few months ago – is sticking with his 150k target for year-end 2024 and 200k for year-end 2025 (with chance of overshoot to 250k).

“The next three to four months will be less bullish and more risk-oriented, with the market closely monitoring inflation, employment and economic data for any unexpected shocks or to gain confidence about potential rate cuts,” said Youwei Yang, chief economist and vice president of crypto miner BIT Mining Ltd.

But, Kendrick notes, the next leg higher may take some time and require us to be closer to the US election.

At that time we would expect BTC to rally into year-end, particularly if a Trump presidential election victory becomes more likely, as a Trump administration will be more crypto friendly than a Biden one.