After a near-apocalyptic 6 months for bitcoin and the broader digital token segment, which led to the now traditional spike in crypto obituaries, some are wondering if the crypto winter is starting to thaw and is sentiment is about to reverse.

One such tentative ray of hope comes from Bank of America’s latest Global Cryptocurrencies note, in which author Alkesh Shah paints a gloomy picture for most assets, yet one where cryptos may soon start diverging, to wit:

Higher rates, driven by inflation and budget deficits, continue to pressure risk assets including the digital assets sector. Our macro colleagues note early signs of capitulation given max bearishness (see this Oct 20 report) for the 5th consecutive week as hedge funds position less bearishly on equity and an S&P YE price forecast indicating 2% downside from current levels as client flows signal expectations of a potential market bottom. But, rate risks remain.

We expect blockchain and application development to drive token price divergence with blockchains exhibiting a growing application ecosystem and Web3 applications providing real-world functionality and capturing traditional company market share to outperform

Of course, we all know what they say about opinions… but what about other tangible indicators?

Let’s start with fund flows.

As Shah writes, BTC exchange outflows last week were the largest since mid-June, tight supply (tokens last moved over 1 yr ago remain near all-time highs) and whale accumulation indicate investor HODLing and limited near-term sell pressure (bullish). ETH saw its 3rd consecutive week of muted activity following large exchange inflows pre/post-Merge and as price headwinds continue (-23% since early Aug), signaling limited near-term buy pressure (bearish). Top 4 stablecoin exchange outflow over the last 2 weeks were 80% and 88% below the average weekly inflow/outflow over the prior 6 weeks, respectively, indicating that investors are moving to the sidelines (neutral).

But what was far more notable than flows, is the recent spike in bitcoin-gold correlation. Here again is BofA:

BTC exchange outflows over the last 4 weeks ($2.6bn) were 3.6x larger than exchange inflows over the prior 4 weeks. Exchange outflows for 3 of the prior 4 weeks (BTC +2% last 4 weeks) indicate that investors continue to HODL instead of selling into strength. A decelerating positive correlation with SPX/QQQ and a rapidly rising correlation with XAU indicate that investors may view bitcoin as a relative safe haven as macro uncertainty continues and a market bottom remains to be seen.

And some more observations:

The correlation between bitcoin and the S&P 500 (SPX) reached all-time highs on Sept 13 of this year and the correlation between bitcoin and the Nasdaq 100 (QQQ) reached all-time highs on Sept 13 as well.

The correlation between bitcoin and gold (XAU), which is commonly viewed as an inflation hedge/store of value, remained close to zero from Jun’21 through Feb’22 and turned negative on Mar 2, but the inverse correlation decreased from Apr’22 through Aug’22 before the correlation turned positive on Sept 5 and continued to increase. The inverse correlation between bitcoin and the dollar (DXY) has increased since Jul 14.”

Of course, such divergence in correlation between risk assets and bitcoin, and convergence between gold and bitcoin, is precisely what should be happening for an asset that was designed to be diversifying, and to hedge inflation, not to be an highly-levered beta on tech names. That said, it is still too soon to tell if bitcoin can move sharply higher as stocks continue to slide and the dollar surges. Incidentally, such a reversal in crypto, where it trade not as a high-beta tech stock, but as an actual alternative to the dollar would be the best news long-suffering crypto bulls will have gotten in a long time.

Housing bubbles are a tricky phenomenon. As a market gathers steam and prices increase, it remains a matter of debate whether that market is overvalued and flooded with speculation, or it’s simply experiencing robust demand.

Of course, once a bubble bursts, it’s all obvious in hindsight.

One common red flag is when prices decouple from local incomes and rents. As well, imbalances in the real economy, such as excessive construction activity and lending can signal a bubble in the making.

Visual Capitalist’s Nick Routley created the map below, based on data from the Real Estate Bubble Index by UBS, to examine 25 global cities, scoring them based on their bubble risk.

Overinflated Markets

In the 2022 edition of the Real Estate Bubble Index, nine of the cities covered were classified as having extreme bubble risk (1.5 or higher score).

Canada’s largest city finds itself at the top of a ranking no city wants to end up on. Toronto’s home prices have been rising steadily for years now, and many, including UBS, believe that the city is now firmly in bubble territory.

Vancouver also finds itself in a similar position. Both Canadian cities have a high quality of life and have thriving tech industries.

Notably, none of the U.S. cities analyzed find themselves in the most extreme bubble risk category. The closest scoring U.S. city was Miami, which sits firmly in overvalued territory (0.5-1.5 range) with a score of 1.39.

Examining the Trends

In recent years, low interest rates helped push home prices and incomes further apart.

For cities in the bubble risk zone, prices have climbed by an average of 60% in inflation-adjusted terms over the past decade, while rents and real incomes increased by just 12%. And, while COVID-19 briefly put a dent in urban demand, rents in the cities analyzed rose at around the same pace as pre-pandemic times.

As a result, all but three of the cities saw positive price growth over the past year from a nominal price perspective:

U.S. cities occupy a number of spots at the top of this chart. Miami, in particular, is seeing strong internal migration patterns, as well as renewed interest from foreign investors.

Hong Kong experienced the biggest one-year nominal drop of all the cities analyzed. The report notes that since around 2019 Hong Kong “has broadly stagnated as the lack of affordability, economic woes, and pandemic restrictions all took a major toll on demand.”

Prices can’t rise forever. According to UBS, most cities with high valuations, price corrections have already begun, or could be right around the corner.

By Remix News

It may already have seemed that inflation in the West is slowly approaching its peak, but that is not the case. Considering the numbers coming from Germany, inflation may be far from peaking.

Producer prices in Germany increased by a record 45.8 percent year-over-year in September, the same as in August. Energy prices, which rose by 132.2 percent year-over-year, had the most impact on this. The only positive thing about this is that the month-over-month growth slowed a little due to the drop in commodity prices. However, for consumers, it follows that consumer inflation, which lags behind the so-called production inflation, must still climb. We cannot lie about this.

For Germans, however, the following sentence, which German statisticians added as a comment to the numbers, sounds the most frightening: “Compared to the same period last year, August and September recorded the highest increase in producer prices since the start of the survey in 1949.”

Germany is extremely sensitive to mentions of inflation or public debt. To understand why, we have to go back in history. The pre-war hyperinflation in Germany was caused by the fact that Germany could not finance the reparations from World War I. It began to pay its reparations with debt and started to monetize this debt, printing uncovered inflationary money and using it to pay off the debt. The result was hyperinflation and total economic disruption. Many historians believe it was this economic undergrowth that brought Hitler to power and marked World War II.

After the war, Germany, therefore, made a literal 180-degree turn. While before the war it showed enormous fiscal indiscipline, went into debt, printed money, and faced hyperinflation, after the war, on the contrary, it became Europe’s top-of-the-class in fiscal policy. It began scrupulously taking care to keep its public finances under control, not excessively inflating its debt, and not even remotely playing with anything resembling monetization. Jens Wiedmann, former governor of the German central bank, has been the most vocal central banker in Europe when it comes to criticizing the monetization of southern European debt and the policy of negative interest rates that the European Central Bank has begun to commit to in recent years. And it was the German Constitutional Court, through which some of the ECB’s plans of monetizing public debt did not pass.

So we have to understand that for Germany, the current inflation and debt monetization are much more sensitive topics than for any other European country. So far, consumer inflation in Germany is “only” 10 percent, a drop above the average inflation rate in the entire Eurozone, which reached 9.9 percent. Inflation, however, continues to rise.

Economics is not mathematics; economics is mainly about psychology. And here, we begin to encounter very sensitive limits of psychological tolerance. At this moment, inflation has several dimensions. In the first place, the Germans are becoming alarmed and irritated, although they are not yet venting such emtions via mass riots.

Secondly, it is politically very tricky to call a spade a spade. Given the German sensitivities on the mentioned topics, it is simply not politically appropriate to say that inflation is caused by the monetization of European sovereign debt. Rather, they talk about expensive energy, which in turn is linked to the war in Ukraine. They do not directly name the causes. But if we do not identify the causes, we cannot eliminate them, so we cannot solve the problem. The fact that the presidents and prime ministers of the countries of the European Union are trying to find the solution to expensive energy, and talk in particular about the regulation of gas prices, is a testament to this blind stumbling. This is what’s happening instead of admitting the simple facts that, on the one hand, there is more money than goods in circulation and, on the other hand, energy demand is greater than the supply after we voluntarily switched off energy as part of the Green Deal.

And thirdly, people are increasingly fleeing inflation by going into real assets. They can no longer run to mortgages due to the rapidly rising interest rates. Although gold is in great demand in Europe, having a choice between gold and gold is not enough for somebody. And so the demand for such things as historical weapons, aged alcohol, or Swiss watches is growing. Exports of Swiss watches rose by 19 percent in September and could be a record this year. A time is coming when people will increasingly use cash instead of bank accounts and pour cash into cashable durables.

Authored b y Jeffrey Tucker via The Epoch Times,

This is the age of censorship, pushed by government and interests and enacted by wholly captured Big Tech firms.

If you doubt it, look through the hundred or so pages of emails dug up in court discovery between government agencies and social media firms during the COVID crisis. The relationship is warm and wholly normalized.

If, for three years, you had a sense that you were being fed a canned line through all major media platforms, that the science was being filtered, that the talking heads were merely telling you what they were told to tell you, that dissent was being crushed, you aren’t wrong. This is exactly what was happening.

COVID was a major test case, but the model has been rolled out to cover a whole range of other topics, including election fraud, vaccine safety, and climate change. If an issue is important to a powerful interest and prevailing government priorities, the censors are tasked to get to work. The platform you have today could be gone tomorrow, no matter how much of a personal investment you have in it. In fact, large accounts seem more likely to be attacked than small ones.

We now know about a series of emails between former FDA commissioner and Pfizer board member Scott Gottlieb (now at the American Enterprise Institute) and tech firms concerning the writings of Alex Berenson. Berenson was an early critic of COVID policies and among the first to sound the alarm about vaccine efficacy and safety. Gottlieb targeted Berenson by name and told Twitter and others precisely what needed to happen as soon as possible. Berenson had to be silenced.

It’s true that Gottlieb wasn’t a government employee at the time, but these things can get murky. We know from many reports inside the White House that Jared Kushner consulted him directly in the days when they were twisting Trump’s arm to approve a lockdown of society. Gottlieb’s connections in and out of government regulatory agencies are vast.

It’s one case of hundreds, thousands, and countless other cases. People write to me daily to report that LinkedIn has taken down a message without warning, that Facebook has slapped a warning on a post, that Twitter has taken down their account, or that Google’s YouTube has dinged or deleted their account.

More intense forms are happening in web hosting (Amazon can throw you off) and even finance. PayPal has cut many individuals and institutions from access and even dared floating a fee for “misinformation”—a word we now understand to mean opinions not approved by ruling class censors. If this practice is rolled out further—and there’s no question that many intend to do so—we could find ourselves surrounded in a Chinese-like social credit system.

This raises serious legal issues which are now being litigated across the country. Governments can’t simply privatize their censorious ambitions to the private sector and pretend that is entirely consistent with the First Amendment. The freedom of speech is a general principle that prohibits government from muscling speech platforms to comply with their edicts. And this is true even with private entities who sign up willingly for the job like earnest members of the Red Guard.

There’s another reason why censorship is more pervasive than at any time in our lifetime. It’s because we have never had such access to so many varied information portals. Imagine if the whole lockdown scenario had taken place in the early 1970s. There were three television networks. Each offered 30 minutes of news each day; 10 minutes or so were devoted to national and international affairs and the rest to sports and weather. The news anchors all said essentially the same thing, which led most people to believe that this was all they needed to know.

Why did we have a sense that there was no arbitrary censorship? Probably because there didn’t need to be. The information cartel was fully intact. The ruling class was perfectly positioned to script the prevailing narrative. Not even newspapers were distributed outside their region of influence. The New York Times was for New York, The Washington Post for Washington, and so on.

There were no websites, podcasts, Substacks, discussion forums, group messages, and not even emails. There was no way to send documents except by government mail because not even the fax machine had yet been invented.

Yes, there were alternative newsletters and things, but they were often expensive, and you had to know about them to get them. Other than that, the whole population was largely in the dark. Looking back, it’s amazing that there ever were protests for civil rights or against the Vietnam War at all. This is why arts and music were so hugely important to both movements: They were a way to get the message out that the news cartel couldn’t control.

Maybe many people like that world. It seemed orderly. There was a “national culture” mostly informed by prevailing news control. No one knew a better system. But then came technology. Even by the late 1980s, things were opening up. Ronald Reagan himself credited new information flows for provoking the unrest in Eastern Europe and the Soviet Union that led to so many revolutions.

By 1995, the end of the orderly and controlled information cartel had been shattered by the web browser and the explosive growth of the internet beyond a few to everyone. It seemed to many at the time to be the beginning of a great and new renaissance. Information is the light, and with the light comes emancipation from old forms and new opportunities for everyone. It seemed like “the end of history,” and those years spawned a kind of wild optimism that humanity would forever escape the despots.

At the same time, this created a major problem for ruling class elites who once enjoyed complete hegemony over the public mind. Their control was collapsing before their eyes. We loved it.

The fix has been a quarter century in the making, one step at a time, toward somehow rebuilding what they lost. This is precisely why this is all happening now. In other words, it’s the age of censorship precisely because it’s the age of information. One follows the other.

Why is information so dangerous to some people? Because information is about ideas, and history is shaped by the ideas we hold. They’re more powerful than armies because ideas are mentally and emotionally powerful, and infinitely reproducible and malleable, and they inspire action. Once an idea takes hold in a population, nothing can stop its forward advance and eventual victory.

In other words, there’s a strange way in which censorship itself should give us hope simply because elites find it’s so desperately needed right now. Censorship is the tribute that lies pay to truth. If truth were not so powerful, no censorship would be necessary. Also, if the system of information distribution were as highly controlled and narrow as it was in the 1970s and earlier, there would be no real need to silence anyone.

Authored by J.A.Frascino via AmericanThinker.com,

Woke progressivism seeks to strengthen the weak by weakening the strong…

We are told that the MAGA cult, Trump voters, and Republicans in general are a threat to democracy, who, if not neutralized, will lead the nation into fascism.  In theory, a politically divided nation such as ours could evolve into fascism or socialism, should a political faction gain autocratic control.  In reality, however, we are confronted with the threat of evolving into a much more unique political structure – a Mediocracy.

A Mediocracy is a social structure in which mediocrity prevails.  Those who would change America pursue mediocrity under the banner of our moral obligation to elevate the status of the underachievers, marginalized, and minorities in our society.  The basic ploy is to lump such individuals into groups and to define them as victims of oppression.  They suffer solely from the oppressive social structure of patriarchal white supremacy, which must be dismantled.  

To entertain other reasons for the obstacles they might face is hateful, immoral, and racist.  White underachievers are dispensed with as irredeemable deplorables and deserve no further attention.  Our society, based in racism and xenophobia, is deemed illegitimate.  The fact that it has grown to become the most honored and respected on earth does not redeem it.  We must throw out the baby with the bath water and restructure society.

This message is delivered to the masses via mediacracy, the utilization of the media to control, mislead, and manipulate public thought through ambiguous and deceptive language, analogous to Orwellian newspeak.  Those not adhering to the mediocracy are debased as deniers, haters, or purveyors of disinformation, and need to be silenced.  

(Cancel culture is a natural extension of political correctness; from “you shouldn’t say that” to “you can’t say that”.)

To elevate the status of those defined as oppressed, we must embark upon a program of diversity, equity, and inclusivity.  “Diversity is our strength!”  Is it?  The strength of our society lies in its ability to achieve its constitutional purpose, requiring it to align its forces with sufficient magnitude and direction so as to achieve its goals.  In physics, this thrust is referred to as a primary vector.  Diverse forces flying off in all directions only serve to weaken the vector forces.  

Strength lies in overcoming the diverse forces and aligning them with the primary vector.  In society this is achieved through assimilation.  Woke progressivism thwarts assimilation by dividing social elements into adversarial factions – the oppressors v. the oppressed – via identity politics.  Facilitating diversity, per se, in such a confrontational manner already divides and weakens our nation.

Equity is the quest of equal outcomes.  A seemingly noble quest, eclipsing that for equal opportunity.  It equates meritocracy with white privilege and mandates that advancement be based instead on race or gender – “checking the boxes”.  Checking the boxes produces a Vice President of the caliber of Kamala Harris.  When universally applied, a major step down the pathway to mediocrity.

Inclusivity relates to a union of the oppressed and their woke advocates.  Oppressors need not apply, since they are largely incapable of overcoming their white privilege, unconscious bias, and white fragility.  The left, once advocating for assimilation of the disadvantaged into the mainstream, now seeks to demonize and eliminate the mainstream.  They say that we must also legalize drugs, ignore homelessness, family breakdown, depression, suicide, crime, and an influx of unskilled labor – hardly strengthening measures.

Woke progressivism, under the banner of racism, preaches that our society, solely a product of white supremacy, is irredeemably immoral and unsustainable.  All the products of such a society, its greatness included, must be sacrificed.  The ensuing Mediocracy then will be ripe for control by the ruling elite.

Having delayed the avalanche of macro data just ahead of the Party Congress (with no explanation), and having now ‘crowned’ Xi to his third term, it appears China is more than willing to share what data it decides the rest of the world needs to know now.

With just two minutes notice, China dumped everything from import/export data to GDP to unemployment at 2130ET… and it will likely surprise no one at all that the data was significantly better than expected (well you can’t start a third term on a down note can you?).

Chinese GDP grew 3.9% in Q3 – significantly better than the +3.3% expected – and far better than the +0.4% recorded in Q2.

Chinese Industrial Production also beat expectations in September (+6.3% YoY vs +4.8% exp)

However, Chinese Retail Sales disappointed in September (+2.5% YoY vs +3.0% YoY exp), as did Fixed Asset Investment (+5.9% YoU vs +6.0% exp) as Property Investment continued to plunge (-8.0% YoY).

Finally, the Surveyed Jobless Rate rose to 54.5% in September (youth unemployment ticked lower in the month, which is interesting given the increase in broader unemployment. Perhaps there are seasonal issues at play such as the new academic year).

And all of this in the face of major rolling lockdowns as Zero-COVID policies remain in place.

Additionally, in dollar terms, China imports and exports were better than expected:

• China Sept. Exports Rise 5.7% Y/Y in Dollar Terms; Est. 4.0%

• China Sept. Imports Rise 0.3% Y/Y in Dollar Terms; Est. 0.0%

Meanwhile real estate blues persist. New-home prices in 70 cities, excluding state-subsidized housing, dropped 0.28% last month from August as September residential property sales tumbled 15.3% YoY.

Offshore Yuan is falling on the news, despite yet another strong RMB Fix…

The data (and the Yuan slide) comes after significant changes at the top in China, which were not necessarily good for those hoping for a market-friendly government that’s keen on opening to the world.

Authored by Zachary Stieber via The Epoch Times,

Any state that requires COVID-19 vaccination to attend school will face a lawsuit, lawyers said this week.

The Informed Consent Action Network (ICAN), run by TV host Del Bigtree, has pledged to finance up to 50 lawsuits, Aaron Siri, who frequently represents the group, said.

“ICAN has told us it will financially support a challenge against any state. So, if all 50 states require it to attend school, ICAN will support challenging the mandate in every single one of those states,” Siri told The Epoch Times.

The process would require finding parents or others who want to challenge any mandate that arises, but the funding and legal representation for such suits are in place.

The pledge comes after the Centers for Disease Control and Prevention’s (CDC) advisory panel on Oct. 20 recommended adding COVID-19 vaccines to the child and adolescent immunization schedules.

The CDC still has to accept the recommendation, but is expected to do so given its stance on vaccines throughout the pandemic. The agency did not respond to a request for comment.

Some states require most vaccines on the immunization schedules for school and daycare attendance, including Virginia, though none require annual influenza vaccines for school attendance, according to Immunize.org.

Some governors and gubernatorial hopefuls have vowed to block COVID-19 vaccine mandates for children, including the governors of Florida, Colorado, Tennessee, and Virginia.

Other states are expected to mandate the vaccines, including California.

Authorities there were preparing to require the vaccines for schoolchildren but have delayed the statewide mandate until at least July 2023. Some local governments started to mandate the shots, but at least one mandate was blocked due to a legal challenge—from Siri.

The updated CDC schedules won’t take effect until 2023, and Siri expects any mandates would not take effect until the start of the 2023–2024 school year.

But the mandates would be announced well before they take effect, to give parents time to vaccinate their children.

Siri declined to speak about the basis for any challenges.

“I don’t discuss litigation strategy for potential matters,” he said.

The basis for the San Diego case was separation of powers. Plaintiffs said the mandate, which lacked religious exemptions, violated state law. Only the state legislature can impose such mandates, San Diego Superior Court Judge John Meyer ruled.

“In a long-awaited victory by those seeking to retain the right to informed consent and medical decision-making free from coercion, the Court found that it was ‘compelled’ to invalidate the mandate as the school district had no authority to implement or enforce such a requirement,” Siri wrote on his blog at the time. “The basis for this decision, that school boards in California do not have the authority to require a COVID-19 vaccine, would apply to all school boards across California that are seeking to mandate a COVID-19 vaccine.”

Investors may have been ok with banks reporting a jump in bad loan provisions, but when it comes to credit card companies, they are in full-blown “Death Con 3” mode.

On Friday, American Express – which traditionally targets the upper classes of US society – tumbled the most in four months after the credit card processing giant set aside much more for bad loans than analysts expected, suggesting the fastest ever surge in interest rates is adversely impacting customers’ ability to pay their bills.

Provisions for souring loans were $778 million in the quarter, worse than the $573 million analysts in a Bloomberg survey were expecting, and the most since Q2 2022 when the US economy was still in lockdown due to covid. The move should probably not have come as a surprise after AmEx warned investors for months that charge-offs would rise as consumers begin borrowing more in the wake of the pandemic. The net write-off rate jumped to 1.1% from 0.8% a year ago.

“They’re just reverting to somewhat higher levels, exactly as we would have expected,” Chief Financial Officer Jeff Campbell said in an interview.

The unexpected surge in bad loans came even as the company reported another quarter of year-over-year spending growth and strong credit performance, not to mention an impressive 24% increase in year-over-year revenue growth: the net write-off rate on card-member loans was unchanged from the second quarter, and the rate of card-member loan payments 30-plus-days past due was up to 0.9% from 0.7%. They remain better than many other card-lenders’ metrics, even at big banks that also tend toward an affluent customer base.

There was more good news: while additional provisions crimped profits, earnings per share still topped estimates. AmEx said it added a record number of Platinum customers in the third quarter, pushing revenue up 24% to an all-time high and prompting executives to boost their profit forecast. The credit-card giant said it now expects per-share profit will be above the $9.25 to $9.65 range it previously expected.

AmEx also said spending on travel – which generates more lucrative transactions – jumped 57% during the third quarter. But overall volume on the firm’s network increased 19% to $394.4 billion, missing the $401.7 billion average estimate.

According to the company, Millennial and Gen Z-aged consumers were more than 60% of new proprietary card acquisitions in the quarter. It said that without giving them the option of using revolving debt, that group may have started out with a competitor’s card before later turning to a higher-fee, higher-reward Amex charge card. And these are good customers: Millennial and Gen-Z U.S. consumer spending grew nearly 40% year-over-year in the third quarter, almost twice the rate of Gen X and more than triple the rate of baby boomers.

For now, AmEx and its rivals are benefiting from historically high prices. That’s because the firm takes a slice of the purchase price each time a consumer uses one of its cards at checkout. But investors are concerned that the Federal Reserve’s efforts to raise interest rates and tamp down inflation may spark a recession and lead to higher card losses even as overall card volumes crater.

So far though, as the WSJ notes, credit is the dog that has not yet barked, especially for higher-income consumers. But when even the premium spender-targeting AmEx warns that the dam is starting to crack, not even the NBER will be able to avoid the reality of US recession.

Authored by Matt Taibbi via TK News,

About a month ago, on September 26th, explosions rocked the undersea “Nord Stream” natural gas pipelines connecting Russia to Germany, sending boiling methane rushing to the surface in masses big enough to be seen from space.

We’ve all seen the video of Joe Biden promising last February, “There will no longer be a Nord Stream 2” and “We will bring an end to it.”

The history of America’s bellicose threats with regard to Nord Stream were far more expansive than just a clip or two.

Stopping Nord Stream was a central goal of American foreign policy for nearly a decade, with politicians from both parties pounding the table to stop it, and all that history was disappeared the moment the blasts took place.

We can’t say yet who blew up the pipelines.

Matt Orfalea’s video captures three troubling things we already know about the Nord Stream blasts:

TK News subscribers can read more here…