Former Chicago Mayor Lori Lightfoot has been appointed by the trustees of Dolton, Illinois as a special investigator to probe Dolton’s embattled mayor, Tiffany Henyard – for $400 per hour.

Henyard is accused of mishandling funds. Last month she vetoed calls for an investigation into herself, which was overturned Monday night. A former city employee also accused Henyard of retaliation after she says a village trustee sexually assaulted her on a trip to Las Vegas last year, after which she was fired after speaking up.

During a Monday meeting which had roughly 150 community members in attendance – but Henyard and two village trustees skipped out on, the four remaining trustees present voted in favor of appointing Lightfoot, a former assistant US attorney, to investigate the mayor.

“This board specifically has made reaches to the state’s attorney, attorney general, governor’s office, and as we know, there are ongoing, well, it’s been reported that there are ongoing investigations from federal entities. Those entities as we know can take anywhere from two months to five years,” said Trustee Jason House – mayor pro tempore for the meeting, Fox32 Chicago reports.

“We feel this option will give us an independent process,” House continued.

Lightfoot will get to work right away, starting her new role as ‘special investigator’ for the Village of Dolton on Tuesday.

She will be launching a probe into Henyard’s alleged mishandling of village funds, among other complaints.

“She has more authority to get what we’re missing, to seal this deal and take our community back,” said Belcher.    

On Monday, Belcher stated that the Village of Dolton is more than $7 million in debt. -Fox32

Lightfoot, an objectively horrible mayor, lost her bid for re-election in Chicago last March, coming in third place. Her greatest hits include;

• “F**k Clarence Thomas!” Shouts Chicago Mayor Lori Lightfoot During Pride Parade
• Chicago Mayor Lori Lightfoot Granting Interviews “Only To Black Or Brown Journalists”
• Did Chicago Punish Car Dealership Rocked By $1 Million Theft After Lightfoot Called Owner An “Idiot”?
• Chicago’s Ex-City Attorney Brands Mayor Lori Lightfoot A ‘Disaster’ After $2.9 Million Settlement Over Botched Police Raid
• Chicago Homicide Crisis Worsens As Mayor Lightfoot Fails To Quell Violence
• Illinois Sheriffs Reject Mayor Lightfoot’s Urgent Plea To Cover Police Shortage In Crime-Hit Chicago

Henyard tries a lawyer trick!

In response to Lightfoot’s appointment, a Dolton Township lawyer hired by Henyard to serve as the village’s prosecutor, Michael del Galdo, said in a Monday letter to the legal team representing the trustees that if Lightfoot is appointed as “additional legislative counsel,” Henyard will “not be approving any payments to Lightfoot,” as her appointment would violate the law due to the trustees’ existing attorney.

Burt Odelson, an attorney for the Trustees, hit back- saying that Lightfoot would serve not as “additional legislative counsel,” but rather a “special investigator.”

According to the report, Lightfoot’s $400 per hour investigation will be capped at $30,000 for now – so she better wrap this up in 75 hours or less.

Henyard was called the “worst mayor in America” by an angry resident during a monthly board meeting earlier this month.

“You know what you’re doing. You’re violating our rights, and that’s a shame,” one resident testified. “This is a disgrace what you have done to this village … They say that you’re the worst mayor in America. I agree.”

Via SchiffGold.com,

This week Peter recaps another stellar week for precious metal. He also discusses Friday’s jobs report, commodity prices, and Bitcoin.

Peter starts by putting this week’s surge into context:

“There’s an old Wall Street saying: ‘nobody rings a bell,’ meaning that nobody warns you when you’re at a major top or a major bottom. The problem is there are bells. It’s just that people don’t recognize them. They don’t hear them. They don’t know what to listen for. Well, there was a big bell rung today in the gold market, in the silver market. And everybody is tone deaf. … To give you an idea of the size of the gain this week in gold and silver, gold rose 4% on the week, which is a big move for gold in one week. Silver rose 10%.”

Friday’s relatively strong jobs report is no consolation since most of this month’s new jobs are in the public sector:

“All these jobs— net— are part-time jobs. Look at the jobs. Almost 70% of them are government jobs. They are health care jobs, and a lot of health care jobs are really government jobs in disguise. And food and beverage, hospitality, waiters, bartenders, hotel maids, that kind of stuff— that’s where the jobs are. We had no creation of manufacturing jobs at all. And last month’s loss of manufacturing jobs, which was originally reported at minus 4,000, was revised to minus 10,000.”

Even with bond yields rising, gold still went up this week. This suggests there’s something more at play than what Wall Street’s trading algorithms can detect:

“Gold’s going up no matter what. It’s just that it’ll go up even more on weak economic news than on strong economic news. But whatever the news is, gold is going up! Gold is being repriced. Central banks are increasing their gold reserves. They don’t care! They don’t care about the Fed at this point. They don’t care how many rate cuts we’re going to get this year. They don’t even care if we get any rate cuts this year. None of it matters. Gold is going up no matter what.”

Evidence keeps mounting that inflation is not under control, with the CRB Commodity Index up 17% this year and oil up 22%. This directly counters the Federal Reserve’s most recent narrative:

“The Fed should be hiking rates, but they can’t. As I said, they’ll cause a financial crisis. … So they keep talking about how inflation is contained— that they still think it’s coming down. They’re just not quite sure yet. They need a little bit more evidence. All the evidence shows that inflation is going up. So it’s all B.S. They’re sticking to their script. … If the Fed hiked rates, it would be the biggest admission of a mistake, because if the Fed hikes rates, what does that mean? … They were wrong!”

Today’s economy is reminiscent of 2007’s. Every economic problem is supposedly under government control— until it isn’t:

“This is all like 2007, 2008, when after so many years of warning about a problem in the housing market and the subprime market, it finally blew up. And the mainstream were still completely oblivious. They were still holding to this ‘Goldilocks’ greatest story ever told. … Right up until the collapse of Lehman. This is the same thing. We’ve had the equivalent of the subprime lenders going bankrupt and people thinking, ‘Don’t worry about that. It’s contained.’ And at the same time, we got all these Bitcoin ETFs creating this huge distraction, this huge side show that’s distracted people’s attention from the center ring. They’re all over there in Bitcoin, and they’re missing out on gold.”

Some of the economic damage could’ve been contained had Jerome Powell and the Fed not enabled disastrous Federal policy:

“When the president makes a mistake and the chairman of the Federal Reserve knows it’s a mistake, he doesn’t just sit there silent! It’s his job to criticize it, because the average American doesn’t know. … We’re supposed to put real smart guys to head the Federal Reserve— smarter than the average truck driver or waitress. So he needs to explain to that truck driver and that waitress what they’re doing is wrong. They’re going to destroy the value of your savings— of your paychecks. But no, he’s afraid to do that. He won’t criticize any policy because he doesn’t want to upset any of the congressmen. Why not? If they’re doing the wrong thing, what’s more important? Their feelings? Their political career or the country?”

Sadly it does in fact seem that the political forces at play will keep the Fed from exercising the proper monetary policy needed to correct years of inflation.

Cruise, the driverless car company owned by General Motors, is preparing to resume robotaxis operations in Phoenix, Arizona. This is a crucial step before resuming service nationwide following the grounding of the taxi fleet after a pedestrian in San Francisco in October was dragged under one of the vehicles. 

Sources familiar with Cruise told Bloomberg that the company is planning to announce the resumption of robotaxi service in Phoenix sometime on Tuesday. They said Cruise officials have been talking with government leaders in dozens of US cities before the planned restart. 

“We are in the process of meeting with officials in select markets to gather information, share updates and rebuild trust,” Cruise spokesman Pat Morrissey wrote in an emailed statement, adding there was no timeline on when operations would begin.

What led to Cruise’s nationwide grounding of robotaxis was an October incident when one of the vehicles ran over a pedestrian in San Francisco. California regulators immediately investigated the incident and found that the company withheld key video and details, which resulted in the suspension of Cruise’s license in California. Shortly after, Cruise suspended all operations nationwide, reshuffled top management, and added a new chief safety officer. 

Before last year’s accident, the company had hundreds of robotaxis operating across San Fran, Austin, Houston, and Phoenix. 

Meanwhile, crowds in downtown San Fran destroyed a Waymo self-driving car earlier this year. 

BREAKING: An autonomous Waymo vehicle is intentionally set on fire in Chinatown, according to SF Fire. Firefighters said they got reports around 10 people were involved.

Waymo said “a crowd surrounded and vandalized the vehicle, breaking the window and throwing a firework … pic.twitter.com/6QN2jTppRu

— Gia Vang (@Gia_Vang) February 11, 2024

Days ago, Elon Musk wrote on X, “Tesla Robotaxi unveil on 8/8.” 

Authored by Simon White, Bloomberg macro strategist,

Momentum stocks are very stretched. A reversal exposes the equity market to the risk of a potentially sizable correction, with rising inflation a potential catalyst. Portfolios taking advantage of cheap hedges are better placed to weather any fall in prices.

Momentum is leading the charge in the current rally, with it being the best performing of the most popular types of factor. But the trend is looking increasingly extended.

On a quarterly basis, you have to go back over 30 years before you decisively see more extreme outperformance in the factor.

The two most recent times showing a similar degree of relative upside were March 2022 and June 2008, neither of which were particularly propitious for the stock market.

That’s a risk that it would be folly to ignore, especially as — even if the market escapes unscathed — portfolio hedges remain cheap (although that is already changing as vol begins to rise — discussed here last month).

Momentum’s popularity means when the unwind comes, it has the potential to be severe. Hedge-fund portfolios carry a record tilt to momentum, according to Goldman Sachs.

Source: Goldman Sachs

Furthermore, JPMorgan sees record high crowding in momentum stocks (i.e. stocks that are part of momentum-factor portfolios).

Source: JP Morgan

Momentum’s blessing is also its curse. Momentum begets momentum, driving the market yet higher. But when the trend changes, momentum strategies can quickly go into reverse, selling stocks that are falling. In some cases, that can cause the market to correct, or worse. That risk is especially elevated when everybody’s in the same trade, as is the case today.

The prognosis is not good from a historical standpoint. The quarterly outperformance of MSCI’s momentum factor is at 13 percentage points. The forward return of the MSCI US is negative on a one and three-month basis when the quarterly outperformance is more than 10 percentage points, and it is well under the average on a six-month horizon. History is telling us too much momentum is a bad thing.

But it could be even worse given the current set up. Momentum is a key reason why the stock market has managed to rally despite elevated and rising yields. Of the most common factors (using the Bloomberg market-neutral factor indexes), momentum currently has the highest beta-and-correlation combination to changes in US 10-year real yields.

This is almost exactly inverse to the S&P, which has a very negative correlation and beta to 10-year real yield changes. It is unusual to have this combination. But it is a mix that has allowed stocks to continue rallying despite higher real yields.

Why? In the months when yields have risen, the index was down slightly, but the momentum factor was up strongly. In months when yields were down, the momentum factor fell by more than the index rose. But as yields increased in about twice as many rolling-month periods as they fell since the rally began in October 2022, overall the market has been able to rise — despite real yields rising over 150 bps.

The positive yield-versus-momentum correlation and the negative yield-versus-index correlation started to develop at the beginning of 2022, before inflation had topped, but around the time when the peak was soon anticipated. A re-acceleration in inflation would likely trigger a reversal in this trend, with elevated real yields quickly becoming a problem for stocks.

We will get March data for US CPI on Wednesday. Disinflation has already stalled, while leading indicators see a re-rise in inflation.

Assets are not priced for this eventuality. Among the biggest stocks in many momentum portfolios are tech firms, such as Nvidia, Meta and Broadcom, which have high duration and are therefore in the inflation headlights. With such extreme crowding in the momentum space, a re-increase in CPI has the potential to trigger a selloff that could develop into a nasty correction, or worse.

Top 10 Stocks in iShares MSCI US Momentum Factor ETF

It comes at a time of potential short-term headwinds from liquidity as taxes are paid to the Treasury. The Treasury General Account at the Federal Reserve has its largest average two-week rise in the second half of April — leading to the removal of market liquidity, all other things equal — until the Treasury re-injects the money back into the system.

It’s probably not enough to derail the bull market as recession risk remains low and excess liquidity is supportive, but that doesn’t mean it won’t be uncomfortable.

Equity hedges, though, still remain cheap.

Other hedges include VIX call options (vol of vol remains low), short credit, and bond volatility.

Momentum signals for US stocks, such as Z scores of returns, look to have peaked and are rolling over. That brings forward the time when systematic strategies such as CTAs start to exit high-momentum and crowded stocks.

A trickle of selling could turn into a flood. Momentum begets momentum — until it doesn’t.

Discount retailer Dollar Tree has sparked a revolt among some of its customers after increasing the price cap of items to $7 across thousands of stores nationwide. 

“If it were really going to go up like $7 … that’d be too much. I’d rather just get everything at Walmart,” Scott Kolack, a Dollar Tree regular, told WPTV-TV (West Palm Beach). 

On March 13, Dollar Tree CEO Rick Dreiling told investors during a conference call, “This year, across 3,000 stores, we expect to expand our multi-price assortment by over 300 items at price points ranging from $1.50 to $7.” 

Dreiling said the higher costs would include food, pet, and personal care items, though not all items will reach the $7 mark. 

“Over time, you will also see us fully integrate multi-price merchandise more into our stores so our shoppers will find $5 bags of dog food next to our traditional $1.25 pet treats and toys, and our $3 bags of candy will be found in the candy aisle,” Dreiling said.

Dollar Tree’s CEO also pointed out that the company’s fastest-growing demographic is consumers making around $125k a year. This comes as Bidenomics fails what’s left of the middle class. 

There really is something amiss with the economy when budget retailers can no longer supply customers with low-cost items. 

Last Friday, hundreds of 99 Cents Only stores abruptly closed, and the company was forced into liquidation due to “rising levels of shrink, persistent inflationary pressures and other macroeconomic headwinds.”

Here’s what X users are saying about Dollar Tree’s new $7 price cap:

What is happening? Dollar Tree is now $7 Tree and now this.

Inflation is radically transforming the world we live in, faster than I’ve ever seen before. https://t.co/6lPS6lrDiQ

— Open Mike 🎙️🇺🇸🌯 (@mikeCAburritos) April 5, 2024

STORE CLOSINGS

All 99 Cents Only — 300+ stores across the nation — are closing for good.

Dollar Tree is closing nearly 1,000 Family Dollar stores, citing theft & inflation.

Economists say this trend of bargain store closures is troubling.

This is Joe Biden’s economy.

— #ThePersistence (@ScottPresler) April 6, 2024

🚨🚨BREAKING🚨🚨
Dollar Tree to officially change the name to Inflation Tree

— fudnewstm.loopring.eth (@fudnewstm) April 1, 2024

“Dollar Tree” already had to become the “Five Dollar Tree” this year. No way these niche stores will last much longer in this #inflation. Now we’ll have even MORE unemployed on the streets across America.

The Dems are getting their way… They are so close to destroying us.

— Shelley W | 🇺🇸 | 🗽| ♀️| ✝️ (@Shay_Bits) April 5, 2024

It may be time for Dollar Tree to change its name.

The failure of Bidenomics has crushed confidence among US small businesses to the lowest level in more than a decade, as the future path of inflation remains a significant concern. Readers must remember small businesses are vital to the economy, contributing 44% of the country’s economic activity and creating two-thirds of net new jobs.

The National Federation of Independent Business (NFIB) reported Tuesday that its small-business optimism index declined .9 points to 88.5, the lowest level since the second half of 2012 – or about when the US economy climbed out of the worst financial crisis ever. 

Twenty-five percent of business owners identified inflation as the largest issue plaguing day-to-day operations, highlighting the impact of increased costs for inputs and labor. This represents a 2-point increase from February. Additionally, the proportion of businesses that have increased their average selling prices went up by 7 points compared to the previous month. 

“Owners continue to manage numerous economic headwinds,” Bill Dunkelberg, the group’s chief economist, wrote in a statement, as quoted by Bloomberg. 

Dunkelberg said, “Inflation has once again been reported as the top business problem on Main Street and the labor market has only eased slightly.”

The worsening sentiment among small business owners directly correlates to the rise in consumer prices in the first two months of the year:

• CPI Prints Hotter Than Expected In January As SuperCore Soared
• Inflation Hot: Consumer Prices Hit New Record High, Up 19% Since ‘Bidenomics’ Began

Rising gasoline prices at the pump, inching closer to the politically sensitive level of $4 a gallon, have likely also contributed to the souring mood. 

Last week, the NFIB reported that small businesses’ hiring plans in March were the shockingly weakest since May 2020. This report is a major concern, considering small firms are the economic engine of the economy. 

The gloom among small business owners is an ominous sign that the US economy is on shaky ground while the federal government recklessly spends to avert a recession before the November elections. 

By Garfield Reynolds, Bloomberg Markets Live reporter and strategist

The Treasury market is palpably on tenterhooks going into this week’s inflation release, especially after payrolls joined the long list of data releases to come in stronger than expected. Bond traders’ inflation expectations have surged this year to signal doubts the Fed can meet its goal, meaning risks are tilted to the upside for yields going into Wednesday’s CPI release.

While the pace of consumer-price gains is expected to ease, even the most optimistic economist forecast still sees headline annual inflation above 3%. Surging oil and other commodity prices aren’t helping, and the same goes for supply disruptions that threaten to undo the goods disinflation that has helped cool costs in the economy.

That helps explain why two-year breakeven rates have climbed to ~30bps under Feb. CPI. If average inflation does come in at the 2.85% or so now envisaged by TIPS then it’s possible the Fed doesn’t reach its target in that time frame. That casts doubt on the capacity of policymakers to deliver on their projected six rate cuts through the end of next year.

During the peak of the COVID-19 pandemic, many companies transitioned to a work-from-home model to maintain operations, a practice many have continued, according to WalletHub, who recently studied work from home trends.

From October 2023 to January 2024, over 21% of employees eligible to work remotely did so for five or more days a week, with more than 67% working from home at least once a week. However, not all remote workers find themselves in ideal working conditions, which ideally encompass low expenses, comfort, security, and minimal distractions.

The feasibility of remote work can significantly vary based on one’s location. WalletHub’s analysis of the 50 states and the District of Columbia, utilizing 12 key metrics, aimed to ascertain the regions offering the most conducive environments for working from home. This evaluation covered a spectrum of factors, including the proportion of the workforce operating remotely, internet affordability, cybersecurity measures, and the size and occupancy rates of homes.

According to Cassandra Happe, a WalletHub analyst, “Working from home can save people a lot of money on transportation expenses, as well as make their work environment a lot more comfortable and their hours more flexible. However, factors like energy costs, internet speed, home sizes, and household occupancy can significantly impact people’s savings and productivity.”

She continued: “While remote jobs can technically be done from anywhere, certain states offer much better conditions for this work mode.”

Happe highlights New Jersey as the top state for remote work, attributing its ranking to affordable internet and widespread broadband access, alongside a significant portion of the workforce already working from home.

WalletHub’s list ranking the best states to work from home showcases a diverse range of locales, from densely populated areas to expansive rural regions, emphasizing factors beyond just geography. Leading the pack is New Jersey. Following closely are Utah and Delaware. Maryland and the District of Columbia round out the top five, with the latter standing out for its top-tier internet access despite being ranked last for living space.

Katina Sawyer, Ph.D., an Associate Professor at the University of Arizona, predicts, “Despite many employers’ efforts to bring staff back to the office, the desire among employees for hybrid or flexible work arrangements persists. A complete return to office settings appears unfeasible for organizations contemplating how to reduce physical office spaces. The work-from-home model is here to stay, with companies encouraged to embrace rather than resist this trend.”

Echoing this sentiment, Katrina A. Burch, Ph.D., an Associate Professor and Director at Western Kentucky University, sees an increase in remote work options, which “will broaden the talent pool for positions and potentially attract top talent. Organizations recognize that remote work and flexible arrangements can enhance employee productivity, engagement, satisfaction, and decrease turnover.”

Jerel E. Slaughter, a Professor at The University of Arizona, outlined the advantages for employees, including time savings from commuting and enhanced concentration leading to increased creativity. However, he notes the challenges in fostering a culture of trust and close personal relationships remotely. Slaughter advocates for hybrid arrangements to balance relationship-building in-office days with productivity-focused remote work.

Raymond J. Keating, Chief Economist at the Small Business & Entrepreneurship Council, noted the productivity gains and work-life balance improvements for remote employees but cautions about potential impacts on career advancement due to reduced personal connections. For employers, Keating emphasizes the advantages in talent retention and the challenges in identifying employees suited for remote work.

You can read the full WalletHub study here.

Perhaps the world’s most influential banker – JPMorgan Chase CEO Jamie Dimon – warned the world in his annual letter to shareholders that while he expects US economic resilience (and higher inflation and interest rates), and is optimistic about transformational opportunities from AI, he worries geopolitical events including the war in Ukraine and the Israel-Hamas war, as well as U.S. political polarization, might be creating an environment that “may very well be creating risks that could eclipse anything since World War II.”

He begins with an ominous overview of the geopolitical chaos the world faces.

America’s Global Leadership is being challenged…

Across the globe, 2023 was yet another year of significant challenges, from the terrible ongoing war and violence in the Middle East and Ukraine to mounting terrorist activity and growing geopolitical tensions, importantly with China. Almost all nations felt the effects last year of global economic uncertainty, including higher energy and food prices, inflation rates and volatile markets. While all these events and associated instability have serious ramifications on our company, colleagues, clients and countries where we do business, their consequences on the world at large — with the extreme suffering of the Ukrainian people, escalating tragedy in the Middle East and the potential restructuring of the global order — are far more important.

As these events unfold, America’s global leadership role is being challenged outside by other nations and inside by our polarized electorate. We need to find ways to put aside our differences and work in partnership with other Western nations in the name of democracy. During this time of great crises, uniting to protect our essential freedoms, including free enterprise, is paramount. We should remember that America, “conceived in liberty and dedicated to the proposition that all men are created equal,” still remains a shining beacon of hope to citizens around the world. JPMorgan Chase, a company that historically has worked across borders and boundaries, will do its part to ensure that the global economy is safe and secure.

In spite of the unsettling landscape, including last year’s regional bank turmoil, the U.S. economy continues to be resilient, with consumers still spending, and the markets currently expect a soft landing. It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus. There is also a growing need for increased spending as we continue transitioning to a greener economy, restructuring global supply chains, boosting military expenditure and battling rising healthcare costs. This may lead to stickier inflation and higher rates than markets expect. Furthermore, there are downside risks to watch.

Quantitative tightening is draining more than $900 billion in liquidity from the system annually — and we have never truly experienced the full effect of quantitative tightening on this scale. Plus the ongoing wars in Ukraine and the Middle East continue to have the potential to disrupt energy and food markets, migration, and military and economic relationships, in addition to their dreadful human cost.

These significant and somewhat unprecedented forces cause us to remain cautious.

Inflation and market over-optimism

And he warns that investors seem too complacent about these geopolitical risks when it comes to markets.

Geopolitical and economic forces have an unpredictable timetable – they may unfold over months, or years, and are nearly impossible to put into a one-year forecast. They also have an unpredictable interplay: For example, the geopolitical situation may end up having virtually no effect on the world’s economy or it could potentially be its determinative factor.

We have ongoing concerns about persistent inflationary pressures and consider a wide range of outcomes to manage interest rate exposure and other business risks.

Many key economic indicators today continue to be good and possibly improving, including inflation. But when looking ahead to tomorrow, conditions that will affect the future should be considered. For example, there seems to be a large number of persistent inflationary pressures, which may likely continue.

All of the following factors appear to be inflationary:

• ongoing fiscal spending, remilitarization of the world,

• restructuring of global trade,

• capital needs of the new green economy,

• and possibly higher energy costs in the future (even though there currently is an oversupply of gas and plentiful spare capacity in oil) due to a lack of needed investment in the energy infrastructure.

In the past, fiscal deficits did not seem to be closely related to inflation. In the 1970s and early 1980s, there was a general understanding that inflation was driven by “guns and butter”; i.e., fiscal deficits and the increase to the money supply, both partially driven by the Vietnam War, led to increased inflation, which went over 10%.

The deficits today are even larger and occurring in boom times — not as the result of a recession — and they have been supported by quantitative easing, which was never done before the great financial crisis.

Quantitative easing is a form of increasing the money supply (though it has many offsets). I remain more concerned about quantitative easing than most, and its reversal, which has never been done before at this scale.

Equity values, by most measures, are at the high end of the valuation range, and credit spreads are extremely tight. These markets seem to be pricing in at a 70% to 80% chance of a soft landing — modest growth along with declining inflation and interest rates.

“I believe the odds are a lot lower than that,” Dimon warns.

In the meantime, there seems to be an enormous focus, too much so, on monthly inflation data and modest changes to interest rates. But the die may be cast — interest rates looking out a year or two may be predetermined by all of the factors I mentioned above. Small changes in interest rates today may have less impact on inflation in the future than many people believe.

Therefore, we are prepared for a very broad range of interest rates, from 2% to 8% or even more, with equally wide-ranging economic outcomes — from strong economic growth with moderate inflation (in this case, higher interest rates would result from higher demand for capital) to a recession with inflation; i.e., stagflation.

Economically, the worst-case scenario would be stagflation, which would not only come with higher interest rates but also with higher credit losses, lower business volumes and more difficult markets.

Under these many different scenarios, our company would continue to perform at least okay.

AI Transformational, but…

While we do not know the full effect or the precise rate at which AI will change our business – or how it will affect society at large – we are completely convinced the consequences will be extraordinary and possibly as transformational as some of the major technological inventions of the past several hundred years:

Think the printing press, the steam engine, electricity, computing and the Internet, among others.

…

Over time, we anticipate that our use of AI has the potential to augment virtually every job, as well as impact our workforce composition.

It may reduce certain job categories or roles, but it may create others as well.

Banking crisis is over, for now…

The mini banking crisis of 2023 is over, but beware of higher rates and recession — not just for banks but for the whole economy.

Dimon previously explained that that the crisis was over provided that interest rates didn’t go up dramatically and we didn’t experience a serious recession.

If long-end rates go up over 6% and this increase is accompanied by a recession, there will be plenty of stress — not just in the banking system but with leveraged companies and others.

Remember, a simple 2 percentage point increase in rates essentially reduced the value of most financial assets by 20%, and certain real estate assets, specifically office real estate, may be worth even less due to the effects of recession and higher vacancies.

Also remember that credit spreads tend to widen, sometimes dramatically, in a recession.

Finally, we should also consider that rates have been extremely low for a long time — it’s hard to know how many investors and companies are truly prepared for a higher rate environment.

Dimon concludes:

“When terrible events happen, we tend to overestimate the effect they will have on the global economy. Recent events, however, may very well be creating risks that could eclipse anything since World War II – we should not take them lightly.”

Ambitious readers can peruse the entire 30,000 word diatribe below:

Authored by Mike Shedlock via MishTalk.com,

Peter Pellegrini, a pro-Russia candidate is elected President of Slovakia. Prime Minister Robert Fico is also pro-Russia. The EU further splinters.

Pellegrini Wins Slovak Presidential Election

Reuters reports Pellegrini Wins Slovak Presidential Election in Boost for Pro-Russian PM Fico

Slovak nationalist-left government candidate Peter Pellegrini won the country’s presidential election on Saturday, cementing the grip of pro-Russian Prime Minister Robert Fico over the country.

Fico, who took power for the fourth time last October, has turned the country’s foreign policy to more pro-Russian views and initiated reforms of criminal law and the media, which have raised concerns over weakening the rule of law.

Slovak presidents do not have many executive powers, but can veto laws or challenge them in the constitutional court. They nominate constitutional court judges, who may become important in political strife over the fate of Fico’s reforms, which would dramatically ease punishments for corruption.

Pellegrini, 48, said his victory meant the government would have support in its aims, and not face an “opposition, opportunistic power centre” in reference to outgoing liberal president Zuzana Caputova.

The independent Korcok, 60, was Slovakia’s envoy to the EU and later ambassador to the U.S., before taking the foreign affairs portfolio in centre-right governments in 2021-2022. At the time, Slovakia was a staunch ally of Ukraine, providing it with air defence and fighter jets.

Pellegrini has portrayed Korcok as a warmonger for his support for arming Ukraine and suggested he could take Slovak troops into the war in the neighbouring country, which Korcok denied.

EU Parliament Polls in France

Decline of the EU Center

The EU is increasingly fragmented over Ukraine, agricultural policy, and energy policy. There is no chance that the EU increases its push towards EVs.

The European parliament elections are in June and the centrists rate to take some huge losses, especially in France, but all across Europe.

The EU is increasingly dysfunctional. Rules make it near impossible to implement any major changes on the Euro, trade policy, and fiscal policy rules, areas that require unanimity to make changes.

In areas where countries can decide individual actions such as support for Ukraine, Slovokia now firmly joins Germany and Hungary in a pro-Russia stance.

Hungarian Leader Victor Orban Congratulates Pellengrini

My heartfelt congratulations to @PellegriniP_ on his overwhelming victory at the Slovak presidential elections. A big win for the people of 🇸🇰 and a big win for the advocates of #peace all around Europe! Blahoželáme, pán prezident!

— Orbán Viktor (@PM_ViktorOrban) April 7, 2024

Macron is increasingly isolated in France for wanting to stand up to Putin. That will hurt him the parliamentary elections.

European Council President Calls on Europe to Switch to a War Economy

On March 21, I reported European Council President Calls on Europe to Switch to a War

As a way to create jobs, EC President Charles Michel promotes a war economy. Where that would lead is obvious.

Solidarity With Ukraine

Solidarity with Ukraine is drying up everywhere. Support is “so deep” that in the EU it died over wheat. Seriously. It’s not just Poland. Farmers across the EU are hopping mad over Ukrainian wheat and corn.

Fortunately, Michel’s call is going nowhere for two reasons.

The first is support for Ukraine is waning. The second and more important is fiscal rules would prevent it.

And it’s impossible to change the fiscal rules.

Expect a Financial Crisis in Europe With France at the Epicenter

The EU never enforced its Growth and Stability Pact or Maastricht Treaty rules. The crisis is coming to a head with France and Italy in the spotlight. The first casualty will be Green policy.

Image composite by Mish from the European Commission Compliance Tracker

For discussion, please see Expect a Financial Crisis in Europe With France at the Epicenter

The EU never enforced its Growth and Stability Pact or Maastricht Treaty rules. The crisis is coming to a head with France and Italy in the spotlight. The first casualty will be Green policy.

Ukraine Won’t Win the War, It’s Time for a New Strategy

On March 16, I noted Ukraine Won’t Win the War, It’s Time for a New Strategy

Support for Ukraine is waning in the US and has totally dried up in Germany. French president Emmanuel Macron is making a symbolic last stand but it’s more likely to backfire than help Ukraine.

In Germany, SPD, the lead party in the ruling coalition, openly supports a partition of Ukraine.

In the US, Biden is making a big push for Ukraine with no stated goals or endgame.

It will be interesting to see what concoction Speaker Mike Johnson come up with, but more money will do nothing but prolong the war.

Why is this our battle anyway when Europe increasingly does not give a damn? Don’t we have enough problems here on our own border?