We’re certain that no one is lamenting the rise in Bitcoin more than Sam Bankman-Fried, who probably could have gotten away with his FTX fraud – at least for longer than he did – with the price of the key crypto on the rise as it’s been. 

Perhaps that’s what the motivating factor was for his legal team, who is now trying to get SBF a sentence of just 5 to 6 years versus the 100 years he faces, for his fraud charges, Wall Street Journal reported this week. 

SBF’s lawyers filed with the court a hundred-page sentencing memo late Tuesday, arguing that the FTX head should only get 63 to 78 months his jail due to his “autism spectrum disorder”. 

“The social dynamics in prison and the scrutiny he is receiving is likely to result in him facing physical violence,” the memo said. It argued that his autism spectrum disorder could endanger his safety in prison and they suggested that difficulties in interpreting social cues could lead to misunderstandings with inmates and guards.

Bankman-Fried’s defense portrayed him as a philanthropist who lived simply, contrasting with the prosecution’s narrative of a luxurious lifestyle in the Bahamas. Evidence presented by prosecutors however, included a photo with Katy Perry and mentions of high-profile dinners, aiming to depict extravagance.

SBF’s lawyers argued his actions were driven by philanthropy, not greed.

The memo continues: “Those who know Sam are sensitive to the tragic fact that nothing in life brings him real happiness. Sam suffers from anhedonia, a severe condition characterized by a near-complete absence of enjoyment, motivation, and interest. He has been that way since childhood.”

“The harm to customers, lenders, and investors is zero,” they continued. 

But Sunil Kavuri, an FTX creditor based in the U.K., told the Wall Street Journal: “Every customer who held any crypto is not whole. It’s like someone stealing your house, selling it for a profit and paying you back based on what it was worth five years ago.”

A former NYC Police officer that SBF is incarcerated with also wrote a letter to the judge on his behalf, writing: “Even though twelve out of every fourteen of Sam’s weekly meals are just undercooked rice, a scoop of disgusting-looking beans and week-old brown lettuce, Sam has stayed true to his commitment to not participate in the maltreatment of animals.”

By Sam Bourgi of CreditNews

Faced with chronically low supply and record housing costs, 2023 was America’s worst year for home sales in nearly three decades.

But despite dire headlines to the contrary, there still exist red-hot housing pockets where listings are going off the market within weeks—especially in smaller cities.

As we approach the busier spring homebuying season, Creditnews Research ranked the fastest-selling housing markets in America within the top 100 most populous metropolitan areas.

The study also compared how these rankings have evolved since the beginning of Covid and discovered a major shift in best-selling markets.

In fact, none of the 10 fastest-selling metros before Covid made it to the best-selling list today, and vice versa. For example, today’s top-selling metro Hartford ranked just 48th before Covid.

Part of the reason behind this realignment is different inventory levels across the nation—which, we found, has a strong connection with how fast listings sell.

Key Findings

• The top 10 fastest-selling metro areas of 2024 are all located on the East Coast and Midwest, with Hartford, CT, Rochester, NY, Syracuse, NY, Harrisburg, PA, and Richmond, PA coming out on top;

• Five of the top 10 fastest-selling metros were also among the top 10 areas that lost the most per-capita housing inventory since the beginning of Covid;

• The top 10 slowest-selling metro areas are Austin, TX, McAllen, TX, Poughkeepsie, NY, San Antonio, TX, New Orleans, LA, Jacksonville, FL, Cape Coral, FL, Colorado Springs, CO, Deltona, FL, and New York, NY;

• Seven of the top 10 slowest-selling metro areas are located in southern states, and three of them are located in Texas: Austin, McAllen, and San Antonio;

• Austin, TX, is also the biggest Covid “loser,” with its median listing requiring 66 days to sell, compared to 23 before Covid;

• The biggest Covid “winner” is Hartford, CT, with its median days-to-pending marking a major drop from 52 days to eight days between January 2020 and January 2024;

• There’s a strong correlation between housing inventory and selling pace between January 2020 and January 2024.

GOOD NEWS… One of The Fed’s favorite inflation indicators – Core PCE Deflator – dropped to +2.8% YoY in January (as expected) – the lowest since March 2021.

Headline PCE Deflator rose 0.3% MoM as expected, down at +2.4% YoY in January …

Source: Bloomberg

BAD NEWS… Services soared on a MoM basis…

However, shorter-term signals are less encouraging:

• Core PCE 3M annualized rate 2.8% from 2.0%

• Core PCE 6M annualized rate 2.6% from 2.2%

On a core basis, services costs jumped even more and Durable Goods costs flipped from deflation…

UGLY NEWS… Even more focused, from The Fed’s perspective, is Services inflation ex-Shelter, and the PCE-equivalent actually ticked up on a YoY basis to 3.45%, thanks to a large 0.6% MoM jump – the biggest MoM rise since Dec 2021.

Source: Bloomberg

Under the hood, the SuperCore, every sub-element rose MoM…

Source: Bloomberg

Income and Spending both increased with the former soaring 1.0% MoM (+0.4% exp) but the latter up only 0.2% (in line)…

Source: Bloomberg

Most notably, spending is now rising at a slower pace than incomes on a YoY basis (spending growth at the lowest since Feb 2021)…

Source: Bloomberg

On the income side, Govt wage growth slumped from a record 8.8% in Dec to 7.8% in January

Of course, private wages also dropped to 5.4% in Jan from 5.6% in Dec

But, the January savings rate only rose very modestly to 3.8% (from 3.7%)…

Here’s why… Government handouts exploded higher by $92BN MoM in January!!!! The biggest jump since July 2021…

This was driven by the COLA adjustment (but after this, how is the consumer going to keep spending).

Source: Bloomberg

Finally, while the markets are exuberant at the headline disinflation, we do note that it’s not all sunshine and unicorns. The vast majority of the reduction in inflation has been ‘cyclical’…

Source: Bloomberg

Acyclical Core PCE inflation remains extremely high, although it has fallen from its highs.

Is The (apolitical) Fed really going to cut rates 4 times this year with a background of strong growth (GDP) and still high Acyclical inflation?

There are reports of a mass casualty event in Gaza City on Thursday, with Hamas claiming at least 104 Palestinians killed and several hundred wounded or injured (though casualty numbers have fluctuated in the immediate aftermath). However, Israel is disputing local accounts of what happened and says people died following a stamped caused by Palestinians rushing aid trucks.

There are several different versions of what happened, but all accounts agree that mayhem was unleashed when some 30 humanitarian aid trucks containing food were positioned on the street under Israeli protection. Gaza has been on the brink of famine, and so reportedly hundreds of people rushed toward to trucks hoping to obtain something.

And that’s when according to The Guardian, “An Israeli source said Israeli troops opened fire on Thursday at ‘several people’ among a crowd that surrounded aid trucks in the Gaza Strip after feeling under threat.”

Quickly in the aftermath, and as gruesome videos emerged from the scene, Palestinian Authority president Mahmoud Abbas issued a statement condemning what he described as “the ugly massacre conducted by the Israeli occupation army this morning.”

Palestinians say that Israeli troops shot indiscriminately into the crowd and used the aid trucks in a kind of “ambush” – while Israel’s military says people were killed in a “stampede for aid” and “crowd crush”, and that some of the deaths were the result of Israeli soldiers being under immediate threat. 

Widely circulating video from the aftermath (warning: disturbing images)

⚡️Harsh scenes after the occupation committed a massacre against Palestinians on Al-Rashid Street in Gaza while they were waiting for aid.

More than 150 martyrs so far. pic.twitter.com/4tTH305r3j

— War Monitor (@WarMonitors) February 29, 2024

Al Jazeera’s on the ground account is as follows: 

The more we talk to people about what happened during the attack near Gaza City this morning, the more it becomes clear they feel it was a trap, an ambush.

As soon as people approached incoming trucks carrying food aid, they were shot at. There were attack drones in the sky. There was also fire from naval forces and armored vehicles in the vicinity.

All at once, these military forces fired at a group of people who were hungry, traumatized and displaced. People who were just trying to get their hands on whatever they could to feed their families and stay alive.

The number of dead from the attack has now risen to 104 and there are still, unfortunately, injured people left on the road. Paramedics, civil defense crew and volunteers are trying to help get these people to hospitals, but are finding it very difficult to get to the area. We are expecting the number of casualties to increase even more in the coming hours.

The Israel Defense Forces (IDF) are admitting that at least some of the deaths are the result of Israeli fire. “However, the army also acknowledged that troops opened fire on several of the Gazans, who they said were endangering soldiers,” reports Times of Israel.

This morning humanitarian aid trucks entered northern Gaza, residents surrounded the trucks and looted the supplies being delivered. As a result of the pushing, trampling and being run over by the trucks, dozens of Gazans were killed and injured.

— Israel Defense Forces (@IDF) February 29, 2024

The IDF is saying that the vast majority of the deaths were the result of the stampede itself, or being run over by trucks, after “looting” broke out. There were reportedly some 30 trucks and thousands of Palestinians rushing past checkpoints during the mayhem to try and access the aid. 

Israel has since published overhead drone footage which its says vindicates its version of events, but which also included the admission of shooting people in the legs. The below contains the IDF version of events:

According to an initial IDF probe of the crush, the vast majority of the casualties were a result of trampling and being struck by the aid trucks.

The incident began at around 4 a.m., when some 30 trucks carrying humanitarian aid arrived at the coast of Gaza City, to deliver food to Palestinians in the Rimal neighborhood.

…Dozens of Palestinians who rushed the last truck in the convoy began to move toward an IDF tank and troops stationed at the military’s checkpoint, the investigation found.

An officer stationed in the area ordered soldiers to fire warning shots in the air as the Palestinians were within a few dozen meters, as well as gunfire at the legs of those who continued to move toward the troops, the probe said.

The IDF said that fewer than 10 of the casualties were a result of Israeli fire.

Below is the drone footage published by Israel’s military:

תיעוד אווירי של המבצע להכנסת סיוע הומניטארי לצפון רצועת עזה, המראה כיצד ההמון פלסטיני התנפל על המשאיות וכתוצאה מכך נהרגו עשרות מצפיפות, דוחק ודריסה>> pic.twitter.com/a7DqU9kKFB

— צבא ההגנה לישראל (@idfonline) February 29, 2024

The Associated Press has interviewed one of the victims and has published the following eyewitness account:

Kamel Abu Nahel, who was being treated for a gunshot wound at Shifa hospital, said he and others went to the distribution point in the middle of the night because they heard there would be a delivery of food. “We’ve been eating animal feed for two months,” he said.

He said Israeli troops opened fire on the crowd, causing it to scatter, with some people hiding under nearby cars. After the shooting stopped, they went back to the trucks, and the soldiers opened fire again. He was shot in the leg and fell over, and then a truck ran over his leg as it sped off, he said.

Medics arriving at the scene on Thursday found “dozens or hundreds” lying on the ground, according to Fares Afana, the head of the ambulance service at Kamal Adwan hospital. He said there were not enough ambulances to collect all the dead and wounded and that some were being brought to hospitals in donkey carts.

Hamas has released a statement saying this mass killing calls into question the future of ceasefire talks. “The negotiations conducted by the movement’s leadership are not an open process at the expense of the blood of our people,” the statement said as reported by Reuters.

Just days ago President Biden raised eyebrows in hastily and seemingly prematurely declaring his hope that a truce deal between Hamas and Israel would be achieved by Monday. But now this is even less likely, though that timetable was acknowledged as unrealistic by all parties in response. A spokesperson for Biden’s National Security Council said this in the wake of Thursday’s Gaza City tragedy: “This is a serious incident and we are looking into the reports. We mourn the loss of innocent life and recognize the dire humanitarian situation in Gaza, where innocent Palestinians are just trying to feed their families.”

Amid the increased desperation and some initial reports that children in Gaza have already begun dying of starvation and malnutrition, the US administration is now said to be mulling air-dropping food crates and medical supplies over Gaza. Jordan has already been doing this with some degree of success, as we previously highlighted.

Authored by Charles Hugh Smith via OfTwoMinds blog,

Part of why AI chatbots are so dreadful is we know the corporation / agency doesn’t care whether our problem gets resolved or not.

Click-bait-scary forecasts of hundreds of millions of jobs lost to AI are as ubiquitous as incompetent AI chatbots. Richard Bonugli and I recently took a more nuanced look at AI Job Challenges and Trends, with the goal not of throwing the baby out with the bathwater (i.e. concluding all AI is junk science) but of focusing on AI’s limits in real-world problem-solving.

We can summarize these limits in one question: who error-corrects AI? the intrinsic problem here is data harvesting machine learning–the essence of Large Language Model (LLM) AI and other machine learning approaches–is the illusion of precision: the model selects the correct diagnosis 95% of the time, but who’s going to error-correct the vital 5%?

Consider being a patient with cancer that receives an all-clear/no-cancer diagnosis from an AI processed scan. In other words, consider the consequences of the AI tool being wrong 5% of the time. In the case of cancer diagnoses, a wrong diagnosis can be a death sentence, or it can open a pathway to unnecessary treatments and surgeries.

The illusion of precision leads to fatal assumptions: if the AI error rate is “only” 5%, but the majority of the 5% errors are the most consequential, then the entire idea of basing accuracy on the percentage of correct / incorrect hits is grievously flawed. In effect, AI might be accurate on the 95% of cases with limited consequences and mostly inaccurate on the cases that really matter, but this reality is lost in the claim that it’s 95% accurate.

Data harvesting machine learning is useless when problem-solving boils down to individual cases. Consider a modern vehicle, which is essentially a rolling platform of software. Each vehicle has a diagnostic port that the mechanic uses to detect what system / component has failed, but this doesn’t automatically solve 100% of the problems that crop up in complex machines.

Having a model that predicts the likelihood of the source of unidentified mechanical problems is useful in the sense that the model predicts where to start the investigation, but it doesn’t actually identify the problem with this vehicle. That requires a physical presence and experience beyond any model’s guesstimate. Someone has to actually drop the engine to reach the failed control board. That someone performs both the essential tasks in actually repairing the vehicle: error-correction and the physical work of doing the repair.

The physician who reviews the AI scan results brings real-world experience that cannot be codified in data harvesting.

AI is being touted in cases that largely fall into the service sector such as customer service. (As I’ve outlined recently, the real-world results have been abysmal, simply reinforcing the trend of making customers do all the work, i.e. shadow work.) Digital Service Dumpster Fires and Shadow Work.

In the real world of work, AI can’t actually repair the rotted handrailing or install the piping. AI tools may well offer potentially useful guidelines or help get the needed materials onsite logistically, the but actual work in the field is most cost-effectively performed by humans with long experience.

Another intrinsic limit in AI is the high-touch, low-touch divide. A physician with 40 years of experience recently told me that patients report feeling better after being seen by a nurse or doctor, and we can intuit why: they feel better because someone cares about them and their health enough to actually be physically present. Another experienced physician once told me that he’d concluded many of his patients sought an appointment with him just to have someone listen to them.

These are examples of high-touch experiences that cannot be replaced with low-touch robotic voices and printouts. There are many others. Do you want your hair cut by your barber, who has become a friend of sorts, or a robot? Do you recall with fondness a particular dinner because the wait staff was charming and attentive without being overbearing?

Part of why AI chatbots are so dreadful is we know the corporation / agency doesn’t care whether our problem gets resolved or not. Simply put, replacing human interactions with sterile AI interactions fails at the human level. If we grasp this reality, we realize humans cannot be replaced by AI except at the most superficial low-touch level.

In real world situations, AI can’t be said to “understand” problems. It’s good at statistically identifying the most likely subsets of solutions and presenting those possibilities in a form that can be compared to actual results, and assigning a confidence level to each of its predictions. But this doesn’t mean it’s diagnoses or solutions are accurate or that it’s right in the most critical, consequential situations.

What’s interesting is the really hard problem AI is incapable of solving is how to manage the unintended consequences of its runaway expansion in our global socio-economic system. There is more on this in my book Will You Be Richer or Poorer?: Profit, Power and A.I. in a Traumatized World.

Vision Series: AI Job Challenges and Trends (34:54 min)

*  *  *

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In the real world labor market, 2024 has been a shitshow of layoffs…

1. Twitch: 35% of workforce
2. Roomba: 31% of workforce
3. Hasbro: 20% of workforce
4. LA Times: 20% of workforce
5. Spotify: 17% of workforce
6. Levi’s: 15% of workforce
7. Xerox: 15% of workforce
8. Qualtrics: 14% of workforce
9. Wayfair: 13% of workforce
10. Duolingo: 10% of workforce
11. Washington Post: 10% of workforce
12: Snap: 10% of workforce
13. eBay: 9% of workforce
14. Business Insider: 8% of workforce
15. Paypal: 7% of workforce
16. Okta: 7% of workforce
17. Charles Schwab: 6% of workforce
18. Docusign: 6% of workforce
19: CISCO: 5% of workforce
20. UPS: 2% of workforce
21. Nike: 2% of workforce
22. Blackrock: 3% of workforce
23. Paramount: 3% of workforce
24. Citigroup: 20,000 employees
25. Pixar: 1,300 employees

But, according to the government-supplied data…

The number of Americans filing for jobless benefits for the first time last week rose from 202k to 215k (SA) while claims declined on an NSA basis to four month lows…

Source: Bloomberg

Massachussetts and Rhode Island saw the biggest increases in claims (NSA) last week, while Oklahoma and Oregon saw the biggest declines…

Continuing Claims ticked back above 1.9mm for the first time since November…

Source: Bloomberg

And WARNs have surged recently as claims haven’t…

As a reminder, if you doubt the accuracy of the Biden admin’s data, here’s what the most recent FOMC Minutes said:

“While the recent trends prior to the meeting had been remarkably positive, Fed officials judged that some of the recent improvement “reflected idiosyncratic movements in a few series.”

Even they aren’t buying it.

But, Pantheon Macro expects that to change soon…

“Claims are still very low by historical standards.

We expect that to change soon.

The WARN numbers, capturing advance notice of plant closures and mass layoffs, have jumped recently and point to initial claims rising significantly over the next few months”

Of course, we know the solution…

Dear BLS: you’re going to have to rig state level WARN data next cause it’s, well, diverging pic.twitter.com/YWvyULOqNQ

— zerohedge (@zerohedge) February 23, 2024

Ah, Bidenomics!!

WW International, previously known as “Weight Watchers,” crashed in premarket trading after the company revealed late Wednesday that media icon Oprah Winfrey will exit its board later this year. 

Winfrey’s exit from the WW board, which she joined in 2015, occurred about three months after an interview with People Magazine, in which she disclosed her use of a weight-loss medication as a “maintenance tool.” 

“The fact that there’s a medically approved prescription for managing weight and staying healthier, in my lifetime, feels like relief, like redemption, like a gift.”

As of 0700 ET, shares in premarket trading in New York were down 24.5% to $2.88 a share. The stock will open at a record low if the trading holds into the cash session. 

It’s important to note that 18% of the float is short. 

In an earnings release Wednesday, WW revealed that fourth quarter subscribers were 3.8 million, down from 4 million in the prior quarter and 4.1 million as of July 1. The loss of subscribers comes as a seismic shift has hit the weight-loss industry following the release of anti-obesity drugs such as Ozempic and Wegovy. 

Presumably Oprah is on Semaglutide, Tirzepatide, or Retatrutide and couldn’t live the lie of ‘counting calories’ anymore.

GOOD NEWS… One of The Fed’s favorite inflation indicators – Core PCE Deflator – dropped to +2.8% YoY in January (as expected) – the lowest since March 2021.

Headline PCE Deflator rose 0.3% MoM as expected, down at +2.4% YoY in January …

Source: Bloomberg

BUT… Services soared on a MoM basis…

However, shorter-term signals are less encouraging:

• Core PCE 3M annualized rate 2.8% from 2.0%

• Core PCE 6M annualized rate 2.6% from 2.2%

On a core basis, services costs jumped even more and Durable Goods costs flipped from deflation…

BAD NEWS… Even more focused, from The Fed’s perspective, is Services inflation ex-Shelter, and the PCE-equivalent actually ticked up on a YoY basis to 3.45%, thanks to a large 0.6% MoM jump, considerably bigger than the last few months increases…

Source: Bloomberg

Under the hood, the SuperCore, every sub-element rose MoM…

Source: Bloomberg

Income and Spending both increased with the former soaring 1.0% MoM (+0.4% exp) but the latter up only 0.2% (in line)…

Source: Bloomberg

Most notably, spending is now rising at a slower pace than incomes on a YoY basis (spending growth at the lowest since Feb 2021)…

Source: Bloomberg

On the income side, Govt wage growth slumped from a record 8.8% in Dec to 7.8% in January

Of course, private wages also dropped to 5.4% in Jan from 5.6% in Dec

January savings rate rose to 3.8% (from 3.7%)…

Finally, while the markets are exuberant at the headline disinflation, we do note that it’s not all sunshine and unicorns. The vast majority of the reduction in inflation has been ‘cyclical’…

Source: Bloomberg

Acyclical Core PCE inflation remains extremely high, although it has fallen from its highs.

Is The (apolitical) Fed really going to cut rates 4 times this year with a background of strong growth (GDP) and still high Acyclical inflation?

Core PCE lor January, the Fed s preferred gauge of inflation, will be released on Thursday, 29th February at 8:30am ET. As Newsquawk reports, the report will be key as it will be used to confirm the hot inflationary narrative seen from the other January inflation data. Following the hot CPI, PPI and US import prices, many analysts ramped up their PCE forecasts.

• The street expects Core PCE to rise 0.4% M/M (range of 0.1-0.4%) accelerating from December’s 0.2%, and the highest monthly reading in 12 months;
• The Y/Y Core PCE print is seen easing to 2.8% (range of 2 6-2.9%) from 2.9%.
• Meanwhile headline PCE is seen at 0.3% M/M (prev. 0 2%: range 0.2-0 4%) and 2.4% Y/Y (prev. 2.6%: c range of 2.2-2 7%).
• The super core metrics which are considered to be levered to wage pressures, will also be closely watched. According to Nomura, “we forecast an even larger increase in US supercore PCE inflation to 0.569% m-o-m, the fastest pace since December 2021″

In the January CPI release, services ex-housing saw a notable rise, and further pressure in the January PCE figures will add to the rise already seen in December, where Core PCE services prices ex-housing M/M rose to 0.3% from 0.1%.

Also within the report Personal Income is expected to rise by 0.4% in January from 0.3% in December with consumption seen easing to 0.2% from 0.7%: real consumption is expected to decline by 0.1%. The downbeat consumption metrics would be in fitting with the soft January’ Retail Sales report. Meanwhile, major retail earnings have seen both Home Depot (HD) and Lowe’s (LOW) note that the extreme weather in January saw an unfavorable impact.

In its preview of the core PCE report, Goldman economists said that “based on details in the PPI, CPI, and import price reports, we estimate that the core PCE price index rose 0.43% in January (vs. 0.35% previously).”

Meanwhile, as reported earlier, the market is now too dealing with a bunch of confusion around the recent BLS email communication with their “super user” market participants regarding OER inflation methodology adjustments, which then could create UPSIDE RISK to our inflation forecast…more from Nomura:

“Without any official announcement, the BLS made changes to their OER calculation methodology in January 2024 (assigning more weight to detached single-family homes) although the BLS website states that the weight for single-family homes has increased in January 2023 (as opposed to January 2024),

Rent inflation is higher for single-family homes than for apartments and other structures.(This is a bit surprising because CoreLogic, a private research firm, estimates that rent inflation for both single-family homes and other types of structures has moderated for a while.)

That’s how we reacted when we got the original email from the BLS. Then we sent a follow-up email to the BLS asking if our above interpretation was correct. We have not heard back from them but some of our clients seem to have received a response from the BLS saying that the original email should be ignored and they were looking into this.

Despite some uncertainty, there is the possibility that the recent resilience of OER inflation might not be a fluke if single-family rent is structurally higher and the BLS allocates a higher weight to single-family units in OER calculation.

At this moment, we are waiting for an official statement from the BLS, but there is some upside risk to our inflation forecast.”

* * *

Fed Views: The Fed will no doubt be watching this data closely for confirmation on the expected pick up in the M/M figures, with Fed’s Waller noting that although the data is not out yet, “an estimate factoring in producer prices is that core PCE inflation rose to a 12-month rate of 2 8 percent and three- and six- month rates rose to 2 4 percent and 2.5 percent respectively.“

Waller stated that while this is not a welcome development the Fed has made a lot of progress and the latest CPI revisions show the progress was not a mirage. Nonetheless he wants to see a couple more months of inflation data to be sure that January was a one-off and the Fed is still on the right track. The Fed Governor also warned “I see predominately upside risks to my general expectation that inflation will continue to move toward the FOMC’s 2 percent goal .” Therefore Waller supports being patient on Fed policy, concluding his latest speech with the quip. “What’s the rush?”

French President Emmanuel Macron’s words at the start of the week which opened the door to European ‘boots on the ground in Ukraine’ elicited shock, dismay and caution even from within the Western allies. NATO itself scrambled to assure the world that it has no plans to deploy troops inside Ukraine, with Secretary General Jens Stoltenberg rejecting the idea in remarks, given it would certainly mean automatic WW3.

According to CNN, “Macron had told reporters at a news conference that while he and the other 21 European leaders present did not agree on deploying military personnel, the prospect was discussed openly.” Even typically hawkish countries Poland and the UK distanced themselves from such a possibility. 

However one tiny NATO country did step up to back Macron’s words. The Netherlands has said it won’t rule out sending Western troops to Ukraine. Dutch Chief of Defense, General Onno Eichelsheim, told an Amsterdam-based news outlet that while it’s a possibility it is “not yet opportune” to do so.”I think you should keep all options open to see how you can best support Ukraine,” Eichelsheim said.

According to more from the Dutch interview: 

Ukraine has not asked the Netherlands to send troops and there is no point in discussing it at the moment, Eichelsheim added. If Western militaries were to go to Ukraine, it would have to be in a coalition, the Dutch military chef said. “This could either happen via NATO or via an alliance of 10-15 countries.”

“It would be very odd if one or two countries did it,” he added.

Indeed, President Putin’s ominous response to Macron’s words seized precisely on the question of NATO Article 5…

“If Ukraine joins NATO, you won’t even have time to blink your eye when you execute Article 5,” Putin said, which suggests that possibly a nuclear response could be on the table.

Vladimir Putin… “If Ukraine joins NATO, you won’t even have time to blink your eye when you execute Article 5”…🇷🇺🇺🇦 pic.twitter.com/4Z7Rdt9k6t

— Pelham (@Resist_05) February 27, 2024

Moscow has since warned of major direct conflict with the West. According to more from the Kremlin response: “The very fact of discussing the possibility of sending certain contingents to Ukraine from Nato countries is a very important new element…in that case, we would need to talk not about the probability, but about the inevitability (of a direct conflict).”

Already there’s clear evidence of a significant amount of Western mercenaries and foreign fighters among Ukraine’s ranks:

#Breaking! #US SOLDIERS CAPTURED IN #Ukraine BY #Russian FORCES!

WATCH: One of the prisoners cries and shouts, “Don’t Shoot.”

US siding with #Israel in the #Gaza war. #Russia is with #Iran and #Palestinian resistance!

This is a setback for @netanyahu
as well! pic.twitter.com/EOzgddbkks

— @Misra_Amaresh (@misra_amaresh) February 25, 2024

Some countries, including France, the US, and UK have also in the past made statements which seem to confirm that they already have military ‘advisers’ on the ground in Ukraine. Certainly Western intelligence services have been there for years, even for the past decade at least.

* * *

Below is a note analyzing the scramble that Macron’s provocative words set off this week, courtesy of Rabobank…

President Macron’s remarkable public speech saying Europe will “do everything needed” to stop Russia winning in Ukraine, and “not ruling out” sending troops, of course, saw President Putin immediately reply that the latter would mean war with Russia; and, of course, Germany then stated they oppose this course of action. Macron may have then tweeted a video saying Europe needs to be prepared to act militarily without the US vis-à-vis Ukraine, but its inability to do so was laid bare.

You might think this doesn’t matter in a markets Daily. You’d be wrong. To translate it to someone limited to the narrow world of finance, imagine if a central bank promised to do “whatever it takes”, but when a crisis hit said, “except QE.” Markets would crash, and headlines would be of crushing humiliation and total loss of credibility. Europe just experienced the same in realpolitik. After all, France is not only a member of the UN Security Council –alongside a UK whose aging submarine nuclear deterrent may or may not work– but the only EU state with a serious military; and it just displayed that, within an EU mechanism that’s the only way to scale up to make it a serious global player, it cannot be taken seriously at all.

Promising to send troops, but no new weapons, was always a dangerously contradictory, escalatory action that invited Putin to show that he wouldn’t blink, and Europe would – which it did. The only actual breakthroughs from Macron were promises of an unspecified quantity of long-range missiles at an undisclosed future date, and a U-turn on using new EU funds for Ukraine to purchase foreign ammunition in light of the fact that Europe cannot manufacture it itself at the required scale, the latter pragmatism a scandalous reflection of its military incapacity.

To bring it back it back to markets, if a central bank (in)acted like Macron, everyone would know the final bill would be vastly higher than it originally looked like being. The same is true for the EU in terms of any dreams of any “Strategic Autonomy” in an ever-more ‘geopolitical’ world. That world was watching, and face-palming or laughing; as a result, you could, literally, be talking about needing to spend many tens, perhaps many hundreds, of billions more on EU defence to try to reinstall an element of real deterrence. In short, when it comes to violence, reputations matter more than they do in the world of central banking.

Yet Macron just displayed, again, that most Western leaders have never been physically worried about their own safety in a world of streetfighters, who look at their ‘whatever it tales’ and say ‘whatever’. That’s as even the Financial Times carries an opinion piece warning that Europe needs to consider a wider range of potential future geoeconomic threats, including from the US under Trump, not just from Russia and China. (And the US author ignored Iran; and, as the Wall Street Journal puts it, ‘While the World Was Looking Elsewhere, North Korea Became a Bigger Threat: Kim enlarged his nuclear arsenal and built ties to Russia, no longer aiming for reunification with South Korea. The US and its allies are alarmed.’)