Fed Chair Powell is likely to hammer home the message that rate-cuts are coming but not just yet in a keynote address at Stanford University this afternoon. His remarks follow an endless parade of his peers also jawboning market expectations down (successfully) to the point where the market is now more hawkish than The Fed’s latest dots.

Fed’s Bostic was the latest to speak; reiterating his view this morning that more time is needed to confirm the disinflationary path and that he expects only one rate-cut this year.

“I think it will be appropriate for us to start moving down at the end of this year, the fourth quarter,” Bostic said in an interview with CNBC.

“If that trajectory slows down in terms of inflation, then we’re going to have to be more patient than I think many have expected.”

Additionally, on the anniversary of SVB and the regional banking crisis, Fed Governor Michelle Bowman warned that the central bank should weigh whether discount-window borrowing capacity should be recognized in reviews of lenders’ liquidity resources.

Last week Powell said there is no rush to ease monetary policy.

He is likely “to remain consistent,” AmeriVet’s Gregory Faranello says in a note. “Perhaps he gets more granular.”

Faranello expects the chairman to “stick to the notion on monetary policy that ‘at some point this year’ it will be appropriate to begin lowering rates.”

Treasury yields are rising ahead of the speech and rate-cut odds fading.

The Fed could risk losing its credibility if it cuts interest rates too soon.

“Jerome Powell said very early on he is a student of what happened in the seventies,” according to Eric Veiel, chief investment officer and head of global investments at T. Rowe Price Group Inc.

“If they go ahead and start cutting now, I think they are in danger of making the same mistake.”

So Powell has lots of potential points to make today, but as many expect, he will carefully walk the tight-rope between being too positive about the economy, overly worried about inflation re-igniting, and avoiding the appearance of politicization – cutting rates in an economy that (based on aggregate data) is firing on all cylinders… with  inflation expectations surging…

Watch Powell speak here (due to start at 1210ET)

Read Powell’s full remarks below: (emphasis ours)

It is a pleasure to be here today. I will begin with the economy and the road ahead for monetary policy before briefly discussing the Federal Reserve’s monetary policy independence.

Over the past year, inflation has come down significantly but is still running above the Federal Open Market Committee’s (FOMC) 2 percent goal. In February, headline inflation was 2.5 percent over the past 12 months based on the personal consumption expenditures (PCE) index. A year earlier, it was 5.2 percent. Core inflation, which excludes the volatile food and energy components, stood at 2.8 percent; a year ago, it was 4.8 percent. While this progress is welcome, the job of sustainably restoring 2 percent inflation is not yet done.

Tight monetary policy continues to weigh on demand, particularly in interest-sensitive spending categories. Nonetheless, growth in economic activity and employment was strong in 2023, as real gross domestic product expanded more than 3 percent and 3 million jobs were created, even as inflation fell substantially. This combination of outcomes reflects significant improvements in supply that offset to some extent the effects on demand of tighter financial conditions. The healing of global supply chains helped address pent-up demand for goods, particularly in sectors that had faced considerable shortages, such as autos. In addition, labor supply increased significantly, thanks to rising participation among 25-to-54-year-olds, as well as a strong pace of immigration.

Recent readings on both job gains and inflation have come in higher than expected. The economy added an average of 265,000 jobs per month in the three months through February, a faster pace than we have seen since last June. And the higher inflation data over January and February were above the low readings in the second half of last year.

The recent data do not, however, materially change the overall picture, which continues to be one of solid growth, a strong but rebalancing labor market, and inflation moving down toward 2 percent on a sometimes bumpy path. Labor market rebalancing is evident in data on quits, job openings, surveys of employers and workers, and the continued gradual decline in wage growth. On inflation, it is too soon to say whether the recent readings represent more than just a bump. We do not expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward 2 percent. Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy.

We have held our policy rate at its current level since last July. As shown in the individual projections the FOMC released two weeks ago, my colleagues and I continue to believe that the policy rate is likely at its peak for this tightening cycle. If the economy evolves broadly as we expect, most FOMC participants see it as likely to be appropriate to begin lowering the policy rate at some point this year.

Of course, the outlook is still quite uncertain, and we face risks on both sides. Reducing rates too soon or too much could result in a reversal of the progress we have seen on inflation and ultimately require even tighter policy to get inflation back to 2 percent. But easing policy too late or too little could unduly weaken economic activity and employment. As progress on inflation continues and labor market tightness eases, these risks continue to move into better balance.

As conditions evolve, monetary policy is well positioned to confront either of these risks. We are making decisions meeting by meeting, and we will do everything we can to achieve our maximum-employment and price-stability goals.

That brings me to my second topic. The Fed has been assigned two goals for monetary policy—maximum employment and stable prices. Our success in delivering on these goals matters a great deal to all Americans. To support our pursuit of those goals, Congress granted the Fed a substantial degree of independence in our conduct of monetary policy. Fed policymakers serve long terms that are not synchronized with election cycles. Our decisions are not subject to reversal by other parts of the government, other than through legislation. This independence both enables and requires us to make our monetary policy decisions without consideration of short-term political matters. Such independence for a federal agency is and should be rare. In the case of the Fed, independence is essential to our ability to serve the public. The record shows that independent central banks deliver better economic outcomes.

We recognize that we need to continually earn this grant of independence, and we do so by carrying out our work with technical competence and objectivity, in a transparent and accountable manner, and by sticking to our knitting.

By technical competence, I mean that Fed policymakers use the most up-to-date information and research to deepen our understanding of the ever-evolving economy and to reliably deliver on our assigned goals. We are supported by a highly capable staff. We also draw on the insights and experiences of a wide array of business, academic, community, and labor leaders, as well as others engaged in the economy. And by objective, I mean that our analysis is free from any personal or political bias, in service to the public. We will not always get it right—no one does. But our decisions will always reflect our painstaking assessment of what is best for our economy in the medium and longer term—and nothing else.

Transparency and accountability are fundamental for any government agency in a democracy but are especially important for one granted policy independence. The Fed has a special obligation to explain ourselves clearly—to describe what we are doing and why we are doing it. We are always striving to improve on this communication, and it is a job that is never complete. But we have come a long way. Before 1994, the FOMC did not even announce our monetary policy decisions. Today we announce those decisions and explain the thinking behind them in our post meeting statement and press conference. We publish detailed minutes of our deliberations and a quarterly summary of the economic and policy projections of each FOMC participant. We publish a monetary policy report twice a year, and the Chair appears before Congress to present that report and answer any and all questions that are on the minds of our oversight committee members. In 2020, we completed a yearlong public review of our monetary policy framework, and late this year, we will begin another such review. My colleagues and I explain our views on the economic outlook and monetary policy in speeches like this one, and in visits to communities across the country, as part of extensive outreach in which we seek input from individuals and groups throughout society. Transparency is an affirmative and proactive commitment to the public.

To maintain the public’s trust, we also need to avoid “mission creep.” Our nation faces many challenges, some of which directly or indirectly involve the economy. Fed policymakers are often pressed to take a position on issues that are arguably relevant to the economy but are not within our mandate, such as particular tax and spending policies, immigration policy, and trade policy. Climate change is another current example. Policies to address climate change are the business of elected officials and those agencies that they have charged with this responsibility. The Fed has received no such charge. We do, however, have a narrow role that relates to our responsibilities as a bank supervisor. The public will expect that the institutions we regulate and supervise will understand and be able to manage the material risks that they face, which, over time, are likely to include climate-related financial risks. We will remain alert to the risk that there will be pressure to expand that role over time. We are not, nor do we seek to be, climate policymakers.

In short, doing our job well requires that we respect the limits of our mandate.

Thank you. I look forward to our discussion.

Authored by Zachary Steiber via The Epoch Times,

The federal judge overseeing former President Donald Trump’s classified documents case in Florida needs to clarify recent instructions to parties so the government can seek a higher court ruling, special prosecutor Jack Smith said late April 2.

In March, U.S. District Judge Aileen Cannon, who was appointed by President Trump, ordered prosecutors and the defendant’s lawyers to file proposals for jury instructions.

The parties must offer “alternative draft text” that assumes two “competing scenarios” are “a correct formulation of the law to be issued to the jury,” she wrote.

The scenarios are former presidents being able to retain personal records under the Presidential Records Act (PRA), and presidents being able to designate records as personal.

But both scenarios rest on a “fundamentally flawed legal premise,” Mr. Smith and his team wrote in the new filing.

The distinction in the PRA between personal and presidential records is irrelevant because President Trump has been charged under the Espionage Act, prosecutors said.

“Based on the current record, the PRA should not play any role at trial at all,” they wrote, urging Judge Cannon to “decide whether the unstated legal premise underlying the recent order does, in the Court’s view, represent ‘a correct formulation of the law.’”

If Judge Cannon wrongly decides that it does, the filing states, then the government may seek intervention from a higher court.

This is why Smith is so angry–he knows if Cannon proceeds with the proposed scenario presented in her jury instructions order, he is, as one defense attorney told me at the time, f*cked.

He essentially demands that she rule now on jury instructions (she doesn’t have to) or… pic.twitter.com/765SfIDygK

— Julie Kelly 🇺🇸 (@julie_kelly2) April 3, 2024

They cited a ruling by an appeals court in a separate case that concluded, “the adoption of a clearly erroneous jury instruction that entails a high probability of failure of a prosecution—a failure the government could not then seek to remedy by appeal or otherwise—constitutes the kind of extraordinary situation in which we are empowered to issue the writ of mandamus.”

A writ of mandamus is an order to a lower court.

“The question of whether the PRA has an impact on the element of unauthorized possession … does not turn on any evidentiary issue, and it cannot be deferred,” prosecutors said. “It is purely a question of law that must be decided promptly. If the court were to defer a decision on that fundamental legal question it would inject substantial delay into the trial and, worse, prevent the government from seeking review before jeopardy attaches.”

President Trump, charged with 32 counts of violating the Espionage Act for retaining what the government described as national defense documents and other sensitive materials after his presidency, has stated that under the PRA, he could designate even classified records as personal and retain them upon leaving office.

“There is no basis for the special counsel’s office, this court, or a jury to second-guess President Trump’s document-specific PRA categorizations,” his lawyers wrote in a separate filing on April 2.

Proposed jury instructions from President Trump said that to establish unauthorized possession of the records in question, “the government must prove beyond a reasonable doubt that the document you are considering is a ‘presidential record’ and not a ‘personal record.’”

“Before the end of President Trump’s term in office on January 20, 2021, President Trump had exclusive authority under the Presidential Records Act to, himself or in working with his staff, categorize records as either ‘presidential records’ or ’personal records,’ and he was authorized to possess both types of records,” the proposed instructions state.

In proposed instructions from prosecutors, jurors would be told that possession of classified records is unauthorized if a person “does not hold a security clearance or the individual does not have a need to know the information.”

“I instruct you, however, that, as to a former president, even if he lacks a security clearance, lacks a need to know classified information, and stores information outside of a secure facility, he is authorized to do so if the classified information is contained within a ‘personal record,’ as that term is defined by the Presidential Records Act (PRA), a statute that establishes the public ownership of presidential records and ensures the preservation of presidential records for public access after the termination of a president’s term in office,” the instructions state.

“Therefore, to determine whether the defendant had ‘unauthorized possession’ of the documents charged in Counts 1-32, you must determine whether each document was a ‘presidential record’ or a ‘personal record’ within the meaning of the PRA.”

Prosecutors said they were offering the draft instructions to comply with Judge Cannon’s order even as they protested against the premise.

Walt Disney Co. and Chief Executive Officer Bob Iger are set to defeat Nelson Peltz’s Trian Fund Management in a multi-month proxy battle, Bloomberg reports, citing people with knowledge of the matter. 

Enough votes had been cast as of Tuesday evening, including ones from Vanguard Group, BlackRock Inc., T. Rowe Price, Norges Bank Investment Management, ValueAct Capital Management, and retail investors to prevent Trian’s Peltz and former Disney chief financial officer Jay Rasulo from joining the company’s board. 

Trian had pushed for changes to management and strategy at the DEI-driven entertainment company to improve years of terrible performance. Just last year, the company suffered a series of movie flops, as one South Park episode explained very accurately that the woke mind virus is destroying the company’s media content.  

Peltz has said, “Disney is stupid because I’m not trying to fire [chief executive] Bob Iger; I want to help him.” He added, “We don’t fire CEOs.”

The shareholder vote, slated for Wednesday, is the latest test for Iger, who returned to the helm in November 2022 to save the sinking ship.

Peltz has gained support from a group of current and former directors of major corporations, including Mondelez International Inc., Procter & Gamble Co., and Janus Henderson Group Plc. On Wednesday, the activist even won the support of Elon Musk. 

“Nelson Peltz should definitely be on the Disney board! He would help reform the company, improve the quality of product and generally serve in the best interests of shareholders, as he has done at many other companies. This would significantly improve Disney’s share price.” 

Nelson Peltz should definitely be on the Disney board!

He would help reform the company, improve the quality of product and generally serve in the best interests of shareholders, as he has done at many other companies.

This would significantly improve Disney’s share price. https://t.co/JPa6dP7kbQ

— Elon Musk (@elonmusk) April 3, 2024

Musk continued, “While I don’t own any Disney shares today, I would definitely buy their shares if Nelson were elected to the board. His track record is excellent.” 

While I don’t own any Disney shares today, I would definitely buy their shares if Nelson were elected to the board.

His track record is excellent.

— Elon Musk (@elonmusk) April 3, 2024

Disney shares have imploded since peaking above $200 in early 2021, recently bottoming around $80. 

In recent months, shares jumped more than 50% to $122 amid the proxy battle. 

Following the mixed picture on Manufacturing PMIs (ISM up, S&P Global down), but strong impulse in prices in both surveys; today’s Services PMIs offered no more clarity at all…

• S&P Global’s Services PMI printed 51.7 final for March (flat to the flash print) but down from February’s 52.3 – that is the lowest Services print since December
• ISM’s Services PMI disappointed, printing 51.4 in March from 52.6 in February (and below 52.8 exp).

So both weak at the headline level (which fits with recent weakness in ‘soft’ survey data).

Source: Bloomberg

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:

“The US service sector reported a further rise in business activity in March, adding to signs that the economy enjoyed robust growth in the first quarter. Combined with an acceleration of growth in the manufacturing sector, the latest services PMI data point to GDP having risen at an approximate 2% annualized rate in the first three months of the year.

“Confidence in the outlook for the coming year has also lifted higher, which should help to sustain solid growth into the second quarter.

But there is a major problem looming for Powell and his pals…

“The sustained upturn is being accompanied by renewed upward price pressures, however, with wage growth in particular driving costs higher.

Rising raw material and fuel prices are also adding to cost burdens, which is in turn driving average selling prices for goods and services higher at a rate not seen since July of last year.

Both manufacturers and services providers alike are seeing intensifying cost and selling price inflation rates, which is likely to feed through to higher consumer price inflation in the near term.“

That surge in prices fits with a resurgent trajectory for wage growth (from ADP) but, as always, the data is there to baffle you with bullshit.

The ISM Service Prices Paid print plunged to 53.4… the lowest since March 2020…

So, take your pick: either Services prices are rising at the fastest pace since July (S&P Global)… or they are rising at the slowest pace since March 2020 (ISM).

Does this sound like prices are plunging?

“Continued inflationary pressure across multiple clinical device categories as contracts expire or are renewed.” [Health Care & Social Assistance]

“Public opinion on the value of higher education compared to the cost is having an impact on our enrollment.” [Educational Services]

Oh and if Prices are plunging, why are barely any of the components down in price?

ISM saying prices lowest in 4 years. Surely commodity prices are tumbling then.

Let’s take a look, shall we? pic.twitter.com/NSybEg7JPj

— zerohedge (@zerohedge) April 3, 2024

And then there’s manufacturing prices (which ISM sees rising)…

What a fucking joke!

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

Back in 1989, Japan was taking over the world. The country’s economy had grown 6.7% in 1988. Sony had just bought Columbia Pictures, one of the largest Hollywood studios, for $3.45 billion. Japanese property company Mitsubishi Estate took control of Rockefeller Center in New York City that October. When land prices peaked in Tokyo, Japan’s Imperial Palace grounds were more valuable than all the land in Florida. – WSJ

At its height, in 1989, real estate in Tokyo sold for as much as $139,000 a square foot—more than 350 times as much as choice property in Manhattan. – Vanity Fair

Some say the U.S. economy and financial markets are in epic bubbles. Undoubtedly, our increasing dependence on debt to fund economic expansion and years of prior debt is unsustainable without central bank intervention in markets. Furthermore, there are hints of irrational exuberance in the stock, credit, and crypto markets. While we are in a bubble of sorts, our current situation pales compared to Japan’s bubble and subsequent lost decades.

Japan’s situation then and ours now are in no way an apples-to-apples comparison. However, there are similarities. Accordingly, the lessons Japan learned and the price they continue to pay for extreme leverage and irrational exuberance are worth understanding in hopes we can take steps today and avoid Japan’s lost decades.  

Japan’s Twin Bubbles

In the first week of January 1990, Japan’s Nikkei 225 stock market index peaked at 38,916. As shown below, the Nikkei index surged 488% in just ten years preceding that record high. At the time, its P/E ratio stood near 60. Today, thirty-five years later, the Nikkei has finally set a new record high. Over the same period (1990 to current), the S&P 500 has risen by 1350%!

It wasn’t just the stock market that was in a bubble in the late 1980s. Real estate values, bolstered by extreme leverage, were skyrocketing. At the time, it was estimated that the total property market in Japan was worth four times the United States’ property value. That is unbelievable, considering the U.S. has about 26 times more acreage. The real estate valuation stats in the opening quotes further highlight the mind-boggling valuations.

Out Of The Rubble And Into The Bubble

After rebuilding from the devastation of World War II, Japan embarked on an economic boom. It quickly became one of the world’s leading economic and financial powerhouses. In 1970, Japan’s GDP was $217 billion. By 1990, it had grown to $3.19 trillion, an astonishing 14.4% annual growth rate. In context, economists have marveled at China’s single-digit growth rate since 2000.

Their massive economic gains came to a complete halt in the mid-1990s, marking the beginning of “Japan’s Lost Decades.”

Since then, Japan has been plagued by economic stagnation and deflation. The first graph below shows Japan’s GDP has shrunk since 1995. Similarly, prices have been flat over the same period, with numerous bouts of deflation.

The Long Road To Recovery

There are many factors contributing to Japan’s lost decades.

At the bubble’s apex, in December 1989, the government and Bank of Japan (BOJ) implemented policies to prick its asset bubbles. Hindering the banking system’s ability to create new debt and refinance old debt put a pin in the stock and real estate bubbles. The banking system was in grave danger, with asset values falling precipitously and the loans backing said assets lacking sufficient collateral.

For better or worse, the government supported the banks to prevent catastrophic failures. Japan likely avoided a banking crisis and economic depression on par or possibly worse than our own experience in the 1930s. Unfortunately, the banks became zombies. They could not write off bad loans; thus, their ability to create new loans or refinance maturing loans was severely limited. Japan effectively avoided a massive depression but ended up with decades of economic stagnation. Pick your poison!

Lingering Demographic Effects

Further accentuating Japan’s lost decades of economic woe is its declining and aging population. The first graph below, courtesy of Macro Trends, shows that Japan’s population growth peaked in 2009 and has declined since. Further concerning, the second graph shows that a large percentage of their population is over 50 and supported by a shrinking base of younger people.

One significant consequence of Japan’s prolonged economic stagnation was its impact on the labor market and demographic landscape. High unemployment rates, particularly among the youth, and stagnant wages became the norm. The result was poor sentiment, which led to declines in personal consumption and confidence. Consequently, the desire to have children declined broadly across their population.

Many adult children continue to live with their parents and refuse to work or get married and start families.

Making demographic matters worse, Japan has strict immigration laws. Its net immigration rate is .74 per 1,000 people compared to 3 per 1,000 for the U.S. Given its low net migration rate, Japan has been unable to offset its negative birth/death rate with foreigners.

The BOJ

The Bank of Japan (BOJ) has done everything it can to support the economy and banks. The graph below from Trading Economics shows that its key lending interest rate has been near zero for over 20 years. They recently raised their lending rate to 0-.10%. If you squint, you might see the rate increase highlighted with the red circle.

Furthermore, they have heavily relied on asset purchases (QE). The World Bank estimates that the BOJ’s assets are a stunning 89% of Japan’s GDP. That is nearly triple that of the Fed. Furthermore, the BOJ owns approximately 60% of the stock ETF market and is the top shareholder of over one-fifth of the Nikkei 225 companies. They also hold over half of the nation’s Treasury securities.

They claim they are trying to normalize policy. However, with the yen trading at 20-year lows and depreciating versus the dollar, the BOJ will have to prove its claim via higher rates and less QE. Is Japan’s banking system and economy able to handle such a normalization?

Summary

Japan made critical mistakes in the 1970s, fostering one of the largest financial bubbles in history. It can also be criticized for its handling of the bubbles’ fallout.

Their struggle to regain economic and monetary policy normalcy highlights how the bubble still dramatically impacts the nation.

It’s not too late for America to manage her finances better. Unfortunately, most politicians want to get re-elected and will not do what is best for America. Continuing down our path will eventually lead to Japan circa 1989. But do not mistake our situation with that of Japan forty years ago.

There are more dormant office towers in the United States than at any point since 1979, according to a new report from Moody’s Analytics, which began tracking office leasing vacancies that year. 

The rising supply of office space is due to a combination of surging remote and hybrid work that forces companies to reduce corporate footprints. Also, companies are exiting imploding progressive cities and high-taxed blue states for red ones while downsizing space. 

In the report, office tower vacancies rose to a record 19.8%, up from 19.6% in the fourth quarter of 2023. 

Even with the increase, there is an eerily calm across the commercial real estate sector. This comes as the Federal Reserve’s interest rate hiking cycle is higher for longer, indicating that the pain train is nearing (perhaps after the presidential election). 

“The office stress isn’t quite done yet,” Thomas LaSalvia, Moody’s head of commercial real estate economics and one of the authors of the report, told Bloomberg in an interview. He noted recent positive economic indicators stave off a “perfect storm in the office sector.” 

“There are spots of light and there are spots of extreme darkness,” LaSalvia said, adding, “This is part of a longer-term evolution where we are seeing obsolete buildings in obsolete neighborhoods.”

The high office vacancy rate continues to be terrible news for landlords and developers eager to fill their buildings, and the Fed’s hiking cycle has made refinancing very challenging. 

Last month, Goldman’s Vinay Viswanathan penned a note explaining how “office mortgages are living on borrowed time.” 

Viswanathan said there have been no major fireworks in CRE tower debt because the debt is being “extended and modified rather than refinanced,” which “mitigates a default wave and a sharp pick-up in losses on CRE loan portfolios.”

Authored by Simon White, Bloomberg macro strategist,

Positioning in US Treasuries is becoming less long as the risk of persistently higher yields increases from a cyclically strong US and global economy.

Leading data have been vindicated in projecting a US and global cyclical upturn that coincident data are now unequivocally confirming. Monday’s release of the March ISM showed the index is back into expansion territory, matching the message from the manufacturing PMI.

The US manufacturing ISM is not only the best cyclical barometer of US growth, it is also the best single gauge of global growth given the sector’s outsized importance to the world economy.

The new orders-to-inventory ratio is a very good short-term leading indicator for the ISM and has been turning up for several months. But even before that, there were strong signs from longer-leading data that the slip in the ISM was likely to be short lived. The chart below shows that the Global Financial Tightness Indicator (GFTI) – essentially a diffusion of global central bank rates – had started rising strongly last summer as global policy began to become less tight.

As the chart shows, the GFTI leads the ISM by around nine months, and anticipates the ISM’s upturn has more to go.

Bond investors might be getting the message that recession risk, as a consequence, is very low, and that inflation risk may be higher than they initially thought.

That would explain the continued reduction in UST longs, based on futures data.

The chart below looks at a positioning proxy for USTs based on 10-year bond futures, and shows that the sharp rise in long positioning at the start of the year when a hard landing was perceived as more likely (even though by then, leading data was clear-cut one was not imminent), is being steadily reduced.

(This proxy, whose methodology is explained in the chart, circumvents the distortion to Commitment of Traders data from the basis trade, i.e. trading the cash bond versus the future.)

Ten-year yields have been rising steadily all year, with the recent move being driven by real yields, inferring the market sees this as primarily a growth story for now.

Payrolls due Friday may challenge this, as there are some signs of slowing in the jobs market.

However, it’s unlikely to be enough to derail the burgeoning positive US and global growth story, and the concomitant rise in inflation risks.

Authored by James Rickards via DailyReckoning.com,

A lot of people seem to have forgotten about the war in Ukraine. That’s a mistake.

Russia is slowly but steadily defeating Ukraine, which is becoming increasingly obvious to everyone except the most anti-Russian diehards.

That’s leading to desperation in elite Western circles determined to stop Russia one way or the other. In their minds, they simply can’t let Putin win. They think that if Putin wins in Ukraine, he’ll next move on to the Baltic states, Poland and elsewhere.

You know the West is getting desperate based on recent threats by France’s Emmanuel Macron to send troops to Ukraine.

The vice president of the Russia Duma, Pyotr Tolstoy (descendant of the great Russian writer Leo Tolstoy), warned that French troops would be priority targets for Russian forces if they entered Ukraine.

Even though France would send troops independent of NATO, that puts us on a very dangerous path that ultimately leads to direct conflict between NATO and Russia. And that path ends in nuclear war ultimately.

Tolstoy added that it would take “just two minutes to nuke Paris.” It’s not hard to envision how quickly things could escalate if France decided to send troops to Ukraine.

More Escalation

Meanwhile, NATO is preparing to send F-16s to Ukraine. Airfields in Ukraine are highly vulnerable to Russian attack, especially since Ukraine’s air defenses are heavily depleted at this point and the Russian air force is becoming increasingly active in Ukraine.

But if NATO allows the F-16s to be based on its own airbases, Putin has warned that these airfields would become a “legitimate target” if strikes against Russian forces were launched from them.

By the way, Russia has hypersonic missiles that NATO has no practical ability to shoot down, so these attacks would likely be successful. Of course, NATO would have to retaliate in kind. You can imagine where all this could lead.

We’re already well along the escalation ladder. And the higher you go, the more face you stand to lose if you back down. I warned about that from the outset of the war.

But the entire notion that Russia poses some existential threat to NATO or Europe is absurd.

Putin Has Nothing to Gain and Everything to Lose

First off, the theory that Putin will invade other countries if he wins in Ukraine is nonsense. The Russian army lacks the men and materiel to occupy Ukraine while simultaneously invading other countries.

This isn’t the Soviet Union with its massive tank armies poised to roll over Western Europe. And Soviet communism is long dead, so there’s no ideological basis for Russia to invade Europe. These days Russia is a conservative, Orthodox Christian nation.

But more importantly, Putin has absolutely no incentive to invade any of these nations, which are NATO members. What do they have that he wants?

All it would do is trigger Article 5 of the NATO Charter, which stipulates that an attack on one member is an attack on all, inviting a massive NATO response. At that point, you’re on the fast track to nuclear war.

Putin is fully aware of that.

Fearmongers like to point to what Putin once said in a speech:

“Whoever doesn’t miss the Soviet Union doesn’t have a heart.”

They take that as proof that he wants to recreate the Soviet Union. But they conveniently omit what he said next:

“Whoever wants it back doesn’t have a brain.”

Whatever you think of Putin, he definitely has a brain. He has no intention to restore the Soviet Union.

It’s Not Just About Intentions

But like any great power, Russia has interests, and Ukraine has always been a vital strategic interest to Russia.

And Russia is not going to tolerate Ukraine joining a NATO alliance that’s hostile to Russia. Critics say Ukraine is a free and independent nation that can join NATO if it wants. Russia has no say in the matter, even though Ukraine borders Russia.

Well, I guess they never heard of the Monroe Doctrine. The U.S. basically declared the entire Western hemisphere its own domain. But a great power like Russia can’t have a say in its own backyard?

Critics also say that the idea of NATO invading Russia is ridiculous. That’s just Russian paranoia. And that’s true, NATO isn’t going to actually invade Russia. But it’s not just intentions that count in the world of geopolitics. It’s also capabilities.

As Bismarck once noted: “What matters in politics is capabilities, not intentions. Intentions change, capabilities remain.”

Given Russia’s long history of being invaded, it’s not hard to imagine why it might seem a bit paranoid of exterior threats.

If you look at a map, parts of Ukraine are actually east of Moscow.

Source: The Economist

Will the U.S. Keep the War Going?

Of course, Ukraine can’t continue fighting without U.S. assistance. The Biden White House wants $60 billion of new money to give to Ukraine to fight the war. This is on top of several hundred billion already provided.

This was proposed last summer but has stalled in the Senate and House of Representatives ever since. The House passed a separate bill to aid Israel last fall, but the Senate refused to take it up because they want to tie that aid to money for Ukraine.

The Senate passed a bill that would provide aid for Ukraine, Israel and Taiwan in one package combined with some money for phony border security.

That bill was so unpopular it could not even make it out of the Senate. Then the House insisted on passing regular appropriations before considering Ukraine.

That process was completed on March 23, but now Congress is on a two-week Easter recess so nothing further will happen until mid-April. No one has even answered the most important question, which is what would Ukraine do with the money.

They can’t buy badly needed 155mm artillery shells because the Western arsenals are bare and factories are not geared to make more than a handful. It will take years to expand that manufacturing capacity.

You can walk into a store with a wallet full of $100 bills, but if the shelves are empty, it doesn’t do you any good. The products simply aren’t there.

Meanwhile, wonder weapons from the West such as tanks, cruise missiles, armored personnel carriers, HIMARS precision-guided artillery and anti-missile batteries have all been destroyed, disabled or shot down by Russia.

The war in Ukraine hasn’t been good advertising for Western weapons.

Fallout

To repeat what I said earlier, Ukraine is losing the war badly. Russia is advancing on the southern and eastern fronts in Ukraine.

Still, the pressure on House Speaker Mike Johnson to do something remains. The Republican warmongers in the Senate like Lindsey Graham and Joni Ernst won’t let up. Many Republicans in the House such as Chip Roy and Marjorie Taylor Greene are opposed to Johnson on this.

Incredibly, Johnson may respond to the pressure with a solution worse than an outright appropriation. He may get behind efforts to steal $300 billion in Russian central bank assets held in the form of U.S. Treasury securities.

That would destroy confidence in the U.S. dollar, U.S. Treasury securities and the U.S. rule of law. Russia would quickly recover the loss by seizing $300 billion or more of Western assets still in Russia. No one in Congress seems to understand any of this.

If they follow through, the economic fallout would be bad enough. But if this war doesn’t stop soon, we could ultimately be looking at nuclear fallout.

Have we reached peak DEI stupidity? 

Yes, we are well past the peak. As we explained in early March, “Both the DEI and ESG gravy trains on Wall Street are finally coming to an unceremonious end.” 

The unraveling of “diversity, equity, and inclusion” initiatives was seen on the state level, as Red states rushed to ban DEI programs in 2023. Google, Facebook, and other tech companies slashed DEI staff by late last year. Early this year, universities began rolling back diversity programs, while Harvard President Claudine Gay was demoted. 

DEI was doomed to fail, and corporations have been quickly scrambling to abandon mindless and profitless diversity programs with Marxist roots. The latest earnings call data shows that “DEI” mentions have collapsed from their peak in 2021, according to Axios, citing data from AlphaSense. 

In January, Johnny Taylor, president of the Society for Human Resource Management, told Axios that corporate executives are fed up with DEI. 

“The backlash is real. And I mean, in ways that I’ve actually never seen it before,” Taylor said, adding, “CEOs are literally putting the brakes on this DE&I work that was running strong” since George Floyd’s murder in early 2020. 

Kevin Clayton, senior vice president and head of social impact and equity for the Cleveland Cavaliers, said the chief diversity officer role was all the rage across corporate America after Floyd’s murder. He said companies filled these positions “out of gilt,” and hiring wasn’t the best. 

Boeing has figured out this the hard way… 

Axios noted, “Some businesses are cutting back funding, trimming DEI staff — and even considering pulling back on things like employee resource groups comprised of workers of various races, ethnicities or interests.” 

The pushback on DEI is finding momentum across corporations and universities. Subha Barry, former head of diversity at Merrill Lynch, told Bloomberg last month: “We’re past the peak.”

“The seemingly small changes — lawyerly tweaks, executives call them — are starting to add up to something big: the end of a watershed era for diversity in the U.S. workplace, and the start of a new, uncertain one,” per Bloomberg.

If it’s DEI or ESG, the blowback phase is well underway. Companies are running away from these diverse and green programs because, simply, they don’t make money. 

Authored by Tamás Klein via The Mises Institute,

In recent years, my homeland, Hungary, a small country in central-eastern Europe, has captured the attention of the American public, particularly those on the political Right. Led by Prime Minister Viktor Orbán, Hungary’s government has championed a somewhat “Pat Buchanan” style of conservatism, with a strong emphasis on putting the interests of Hungarian families first and resisting supranational political powers, such as the federalist bureaucrats of the European Union, globalist nongovernmental organizations like the Open Society Foundation backed by George Soros, mass immigration, and other threats to its national sovereignty. Viktor Orbán’s unapologetic embrace of right-wing sovereigntism and noninterventionist foreign policy offers valuable lessons and points of inspiration for the American Right. However, like all states, Hungary is far from being a perfect model; thus, Americans should be cautious when trying to learn from it.

Dispelling the Smears

First, it is unfortunately necessary to address and dispel at least some of the most common smears perpetuated by leftists in mainstream Western media. Hungary’s leader, Viktor Orbán, is often portrayed as a puppet of Russian president Vladimir Putin, a narrative that conveniently overlooks the geopolitical realities of the region. While Orbán does maintain good diplomatic relations with Russia—as do many other nations—insinuating that he is under Putin’s thumb is just as unfounded as was the Trump-Russia hoax.

The reality is that there is a historical minority of about one hundred twenty-five thousand Hungarians living in Transcarpathia, a territory that was unjustly taken away from Hungary after World War I and is currently being occupied by the Ukrainian regime. As any sober-thinking person would realize, Orbán is understandably making sure that the Russian artillery and Air Force do not target his people. Furthermore, Hungary has been dependent on Russian natural gas ever since the communist era, a fact Orbán has endeavored to change. Orbán, being the leader of Hungary and not Ukraine nor the European Union, is first and foremost responsible for the well-being of his people and is completely in the right when refusing to satisfy the absurd demands of the Western Left in Washington and Brussels about completely cutting its diplomatic relationships with Russia.

Moreover, even though Orbán could have refused to take in refugees from Ukraine, a country that has been terrorizing its Hungarian minority for decades, he decided to provide refuge for the innocent civilians trying to flee this war. But, of course, almost no one in the West gave him credit for his actions. As Paul Gottfried rightly pointed out,

The media have said little about the world’s “largest democracy,” India, also buying energy from Russia and remaining conspicuously neutral in the Russian-Ukrainian conflict. There is a good reason for that lack of indignation. Since India is predominantly non-Christian, lies outside the West, and has a relatively dark-skinned population, the media is not going to hold that country to the same PC standard as a non-woke Western state.

But Viktor Orbán, as the leader of a white Christian country, is, of course, held to different standards; but what is this double standard if not antiwhite racism?

Orbán’s Success

Viktor Orbán’s success in winning elections through populism cannot be ignored. His ability to tap into the concerns and aspirations of ordinary people has been a driving force behind his political longevity. Moreover, after winning elections, he was able to institute meaningful reforms.

Since taking office in 2010, Orbán has quickly restored public order from the chaos that the social democrats created. He also instituted a more just and reasonable flat tax than the previous “progressive” tax policy that punished success. Orbán’s government also passed an income tax break for young people under twenty-five and tax relief that increases with the number of children raised by the family. Moreover, he built a fence on the southern border of the country to keep out the masses of invaders coming from the Middle East and Africa. Although receiving massive international attacks for doing so, Orbán has not shied away from confronting the agendas of powerful figures like George Soros, whose funding of leftist NGOs has been a toxic intrusion into Hungary’s domestic affairs. On the war question, Orbán consequently held a “Hungary first” position, advocating for peace and staying out of the Ukraine-Russia conflict, not sending soldiers, weapons, or ammunition. Also, in the European Union parliament, Hungary has been a frequent solo veto against economic sanctions that hurt its people. Orbán also banned LGBTQ propaganda from schools, putting an end to the “drag queen story hour” before it even really began.

Orbán’s government has effectively grabbed power by recognizing the concerns of ordinary people and unapologetically pointing out who the enemies are: leftists, socialists, the bureaucrats of the European Union, Soros-backed nongovernmental organizations, warmongers, and more. Thus, by not being afraid to use his political power against the Left, Orbán was able to implement policies that have positioned him as a champion of national sovereignty.

Proceed with Caution

While Hungary’s successes under Orbán cannot be understated, American right-wingers must proceed with caution before embracing it as a flawless model. Like any nation, Hungary has its share of challenges and imperfections, many of which are legacies of its communist past and the social democrats that came after it and before Orbán. Also, since Orbán must play by the rules of the game—that is, a democracy—he has to appeal to a population that grew up in socialism; thus, often, even though he most likely understands how some of his policies are detrimental to the economy, he has an election to win in order to make any reforms and thus has to embrace bad economic policies to please the Hungarian public. Nevertheless, high taxes, massive bureaucracies, inflation, economic regulations, price controls, subsidies, protectionist trade policies, and the promotion of green energy are all things that exist under Orbán and greatly hinder economic prosperity.

Moreover, the extreme regulations on gun ownership and the effective impossibility of obtaining permits to carry firearms for self-defense are not something that we, Hungarians, can be proud of either. Additionally, Orbán’s government sadly also passed a new Public Education Law that extensively regulates private schools, effectively bans homeschooling, and makes kindergarten mandatory from age four.

Learning from Each Other

In considering Hungary as a model, the American Right should recognize both its strengths and weaknesses. Orbán’s strategic approach to politics and his ability to enact meaningful policies that protect Hungary’s sovereignty and identity from global leftist hegemony offer valuable lessons. However, blindly adopting all aspects of Hungary’s governance would be shortsighted. Americans should be selective, taking inspiration from Orbán’s successes while remaining vigilant against policies that undermine liberty and prosperity.

Additionally, Hungary could benefit from observing the American Right, especially paleolibertarians, particularly in areas such as free-market economics, sound money, the importance of the right to bear arms, and the sovereignty of parents over their children’s education. By learning from each other, both Hungary and the American Right could greatly benefit. To ensure that both sides only learn from each other the good and not the bad, it is vital to keep in mind the words of Saint Basil the Great in his “Address to Young Men on the Right Use of Greek Literature.” In it, Saint Basil the Great of Caesarea gave guidance to the Christian youth about whether they should read literature from pagan sources, such as the great Greek philosophers. St. Basil instructed them to do so but with caution, only taking the good and leaving the bad:

Now, then, altogether after the manner of bees must we use these writings, for the bees do not visit all the flowers without discrimination, nor indeed do they seek to carry away entire those upon which they light, but rather, having taken so much as is adapted to their needs, they let the rest go. So we, if wise, shall take from heathen books whatever befits us and is allied to the truth, and shall pass over the rest. And just as in culling roses we avoid the thorns, from such writings as these we will gather everything useful, and guard against the noxious.

In conclusion, Hungary under Viktor Orbán presents a compelling case study for the American Right, showcasing the power of right-sovereigntist populism. However, it is essential to approach the Hungarian model with wisdom. The relationship between Hungary and the American Right should mirror the wisdom of Saint Basil’s counsel on using Greek literature. Just as bees selectively gather nectar from flowers, Americans should selectively adopt elements from Hungary’s model that align with its principles and goals while guarding against those that may be detrimental. And we, as Austrians and paleolibertarians, must be ready to point out when fellow right-wingers are about to take “poison with honey.” By doing so, the American Right can continue advancing its vision for a better future, guided by wisdom and discernment.