“…I came away with the sense that it’s probably literally both [a migration and an invasion]…”

Those are the chilling words that renowned biologist Bret Weinstein uses to describe what he found when he visited the Darien Gap in an attempt to understand just what is behind the sudden and overwhelming flood of migrants at the southern border of America.

The Darien Gap is a crucial yet perilous passage for migrants traveling from South America to North America that acts as a natural barrier (where, for 60 miles, the Pan-American highway ends and deadly jungle begins) that saw over half a million migrants traverse its challenging terrain last year alone.

“The jungle in the Darien Gap is some place that one does not go without careful preparation. It is quite dangerous… They’re sleeping on the ground, and so they get hypothermia. It’s extremely slippery.”

In this chilling interview with Tucker Carlson – about a topic that apparently no actual reporter is willing to investigate and write about – Weinstein expolains that his journey to the Darien Gap was spurred by his interest in the unexplained aspects of mass migration, and the findings of Michael Yon, a former Green Beret turned investigative journalist.

“You wonder why there’s not a permanent team of New York Times reporters there trying to tell the rest of us what exactly is happening.”

Through their journey, Weinstein and Yon uncovered a complex narrative involving not political asylum-seekers, but economic migrants and potentially orchestrated movements that appear coordinated by various NGOs and, of particular concern, the Chinese migrant camps they encountered.

The first camp that Weinstein described visiting was full of migrants who were very open to discussing their stories with travelers, and looked superficially like the migration of Central Americans that we are constantly told about.

“Many of them are South American, but that is by no means the whole story. People are coming from the Middle East. We met Afghans. We met people from the Caribbean, Haitians. There are people from Yemen, Iran. It’s shocking really.”

But, the supranational authorities were all evident:

“You see, the hallmark of the international community. You see NGO emblems all over the place, proudly American flags. They’ve paid for the water system, the toilets that are there. The United States government is facilitating this economic migration. And it’s unmistakable, as is an organization called the IOM, which is the International Organization for Migration. It’s a branch of the UN.

And if you read their charter, you will discover that this organization believes that migration is an inherently good thing, that it’s always good. And so they see it as their job to bring it about to facilitate it.

And in this case, that’s particularly tragic because their desire to induce people to migrate is causing people who are woefully unprepared for the Darien Gap to try to make that journey. And, the the humanitarian tragedy is, is immense.“

Weinstein then pivoted to contrast that experience with a second one, highlighting for Carlson how it had been “built as a transit camp” for “almost” all Chinese migrants.

“The SENAFRONT, the Panamanian border control, actually forbid us to go into the camp. So we had to stay on the outside of it. We were also forbidden to photograph it. So what photographs we have were taken covertly,” Weinstein explained.

“These, Chinese folks who are overwhelmingly male, military age… It is not a friendly migration… This felt like people who did not want to share information, because it would be a mistake to do so.”

Weinstein criticizes the lack of distinction made between political refugees and economic migrants at the US border, suggesting that the current policy framework is inadvertently supporting an unsustainable and potentially exploitative system.

This system, he notes, not only undermines the economic well-being of Americans but also contributes to a humanitarian crisis that is largely ignored by mainstream media and political discourse.

Tuckr Carlson concludes with words to live by:

“I think we have to stop punishing ourselves for considering things that one seems crazy. I’m getting that tattooed.”

Watch the interview here:

Ep. 71 Bret Weinstein traveled to the Darien Gap to understand who’s behind the invasion of our country. His conclusion: “it’s not a friendly migration.” pic.twitter.com/mY8TlrLPnm

— Tucker Carlson (@TuckerCarlson) February 1, 2024

…and read the full transcript here at TCN.

Finally, following the interview, @KanekoaTheGreat wrote a post on X following the thread that Weintein pulled about this being potentially orchestrated…

America’s illegal immigration crisis is shattering century-old records with alarming numbers.

2023: 3,201,144
2022: 2,766,582
2021: 1,956,519
2020: 405,036
2019: 859,501
2018: 404,142
2017: 310,531
2016: 415,816
2015: 337,117
2014: 486,651
2013: 420,789
2012: 364,768
2011: 340,252
2010: 463,382

On President Biden’s inaugural day, he introduced policies that incentivize illegal immigration:

• Paused Deportations

• Suspended “Remain in Mexico”

• Stopped Border Wall Construction

Since Biden’s policy changes, over 8 million people have illegally entered the country, with millions more slipping past border patrol undetected.

This surge in illegal immigration is a national security crisis, costing American taxpayers hundreds of billions per year.

Major U.S. cities, grappling with the escalating financial burden, are slashing budgets for essential services such as fire, police, and education.

President Biden holds the power to halt this crisis that is draining America’s resources and endangering its citizens.

The solution is as simple as the actions that led to this crisis—Biden should use his pen to reverse his executive orders.

“No great nation can be in a position where they can’t control their borders. It matters how you control your borders. Not just for immigration, but it matters for drugs, terror, and a whole range of things.”

— Joe Biden

“We simply cannot allow people to pour into the United States undetected, undocumented, unchecked, and circumventing the line of people who are waiting patiently, diligently, and lawfully to become immigrants in this country.”

— Barack Obama

“All Americans, not only in the States most heavily affected but in every place in this country, are rightly disturbed by the large numbers of illegal aliens entering our country. The jobs they hold might otherwise be held by citizens or legal immigrants. The public service they use imposes burdens on our taxpayers. That’s why our administration has moved aggressively to secure our borders by hiring a record number of new border guards, by deporting twice as many criminal aliens as ever before, by cracking down on illegal hiring, and by barring welfare benefits to illegal aliens.”

— Bill Clinton

Watch:

🚨WATCH: America’s illegal immigration crisis is shattering century-old records with alarming numbers.

2023: 3,201,144
2022: 2,766,582
2021: 1,956,519
2020: 405,036
2019: 859,501
2018: 404,142
2017: 310,531
2016: 415,816
2015: 337,117
2014: 486,651
2013: 420,789
2012: 364,768… pic.twitter.com/9NGhmmnlf6

— KanekoaTheGreat (@KanekoaTheGreat) January 31, 2024

Authored by Debra Heine via American Greatness,

The U.S. Capitol Police announced on Thursday that they have declined to press charges against the former Democrat Senate staffer who filmed a gay sex video in a Capitol Hill hearing room last month.

In a news release, the USCP said there was no evidence that Aidan Maese-Czeropski, a former aide for Sen. Benjamin L. Cardin (D-Md.), broke the law by filming himself copulating with another male inside the Hart Senate Office Building on the morning of Wednesday, December 13.

“After consulting with federal and local prosecutors, as well as doing a comprehensive investigation and review of possible charges, it was determined that — despite a likely violation of Congressional policy — there is currently no evidence that a crime was committed,” the agency said in a statement.

“Although the hearing room was not open to the public at the time, the Congressional staffer involved had access to the room,” the agency said. “The two people of interest were not cooperative, nor were the elements of any of the possible crimes met.”

“The Congressional staffer, who has since resigned from his job, exercised his Fifth Amendment right to remain silent and refused to talk to us,” the agency added.

USCP said it was closing the investigation into the facts and circumstances surrounding the sex tape “for now,” but that investigators “are willing to review new evidence should any come to light.”

George Washington University Law professor Jonathan Turley was one of several legal experts who speculated last month that the staffer could be charged with a crime.

“The question is whether this unofficial use would constitute trespass,” Turley wrote in a blog post.

“It also uses an official area for personal purposes, though it is not clear if there were any commercial benefits garnered from the video found on various sites,” the professor added.

“The U.S. Capitol Police answered much debated question today: it turns out that shooting a porn scene in a Senate Hearing room and posting it on the Internet is not a crime…” Turley quipped on X Thursday morning.

“The decision officially confirms for many that Congress can be legally obscene.”

Conservative X erupted in indignation at the Biden regime’s double standard when it comes to its choice of prosecutions.

“Let me get this straight… merely walking through the capitol unauthorized is a felony,” wrote Real Clear Investigations Senior Writer Mark Hemingway.

“But having public sex in the building, filming it, and putting it online doesn’t merit a public lewdness charge?”

“Please tell why I am supposed to respect rule of law in this country.”

“Jacob Chansley spent 310 days in solitary before he took a plea deal then was sentenced to 41 months in prison for saying a prayer in the Senate chamber,” former American Greatness author Julie Kelly posted on X.

“It is officially legal to have recorded sex in US Senate hearing room,” Judicial Watch President Tom Fitton wrote.

“Of course,” Newsbusters Managing Editor Curtis Houck posted on X. “Democrats can do just about anything without consequences.”

“You can film yourself having gay sex on a Capitol desk, but if you put your feet up on one you get four years in prison,” noted X account Amuse.

“A Democrat staffer proudly makes a gay porn video in a Senate hearing room, NO CHARGE. A Trump-supporting grandmother with cancer walks into the Capitol, JAIL TIME,” political strategist Joey Meugniot wrote on X.

“Activists tear down a statue of a Catholic Saint, NO CRIMINAL CHARGES. A Navy Reserve veteran beheads a Satanic statue in the Iowa State Capitol, charged with HATE CRIME,” Meugniot continued. “Under Biden, America has literally become Sodom and Gommorah.”

Well, we did warn readers that anyone hoping for a negative print in an election year would be disappointed, and moments ago the BLS proved us right.

With Wall Street expecting a continued declines in the pace of monthly growth, and consensus looking for a decline from last month’s 219K print to 185K, the BLS decided to once again show logic and common sense who is boss, and damn your mass tech layoff torpedoes…

Dear @BLS_gov, since you have trouble finding actual data, we’ve made it easy for you – here are the layoffs announced in the past few months:

1. Twitch: 35% of workforce
2. Hasbro: 20% of workforce
3. Spotify: 17% of workforce
4. Levi’s: 15% of workforce
5. Zerox: 15% of…

— zerohedge (@zerohedge) January 31, 2024

… it reported that in January the US created a ridiculous 353K jobs…

… double the 185K expected, and higher than than the highest forecast estimate, which as a reminder was 300K. In fact, as shown below, this was a 4-sigma beat to expectations…

… and putting the beat in the context of the past year, it was an absolute blowout:

What is notable is that once again there was a huge dispersion between the Establishment and Household Surveys, and while the former indicated an increase of 353K, the latter reported a drop in Employment of 31K!

Clearly none of that mattered to the BLS which had just one mission: to make the economy look double super good-good, and it wasn’t just payrolls which blew away expectations, the unemployment rate also slipped, staying at 3.7%, vs expectations of an increase to 3.8%. That said, Among the major worker groups, the unemployment rates for adult men (3.6 percent), adult women (3.2 percent), teenagers (10.6 percent), Whites (3.4 percent), Blacks (5.3 percent), Asians (2.9 percent), and Hispanics (5.0 percent) showed little or no change in January.

More notable was the sudden jump in wages, with the BLS reporting that average hourly earnings increase 0.6% from December (and double the 0.3% estimated increase), rising 4.5% YoY, also blowing away estimates of a 4.1% increase.

But, in keeping with the endless gimmicks by the BLS, this is not because of an actual wage increase but because people literally worked less (the denominator in the average hourly earnings equation) as the average workweek for all employees on private nonfarm payrolls decreased by 0.2 hour to 34.1 hours in January and is down by 0.5 hour over the year, down to the lowest level seen in the depths of the covid crisis.

Developing

Developing.

The massive beat for payrolls, and resurgence in average hourly earnings, prompted a sharp response from markets with the dollar spiking, along with bond yields, as gold and the yield curve tumbled, as rate-cut expectations plunged…

A March cut is now priced at around 20% and 2024 cut expectations have dropped to 125bps…

Source: Bloomberg

The dollar spiked back to unchanged on the week…

Source: Bloomberg

Treasury yields soared, led by the short-end (2Y +19bps). 10Y yields are back above 4.00%…

Source: Bloomberg

Gold dumped…

Source: Bloomberg

Bitcoin is also sliding, back below $43,000…

Source: Bloomberg

And finally, all the US major equity markets are tumbling, led by Small Caps, back into the red from before the FOMC…

Now we all wait to see what Powell says on 60 Minutes…

Last November, OPEC+ agreed to voluntary oil production cuts totaling about 2.2 million barrels per day. These cuts begin in the first quarter of this year, with Saudi Arabia rolling over a 1 million bpd voluntary reduction. Now, sources within OPEC+ have informed Reuters that coalition members are scheduled to discuss whether or not to extend oil production cuts in March. 

Two OPEC+ sources tell the media outlet that production cuts will be reviewed in March. They said an announcement will follow the meeting and reveal if these voluntary cuts will be extended. 

On Thursday, OPEC member Algeria said it was committed to continue voluntary cuts into the second quarter if needed. Kuwait said it was committed to the supply curbs but gave no firm answer if they should be extended.  

Earlier on Thursday, leading ministers from OPEC+ gathered in an online discussion about market conditions and oil production levels and made no changes to the current policy. 

“The meeting was a very healthy, quick meeting and what we noticed is that there is good cohesion among members. There was reiteration of commitments,” another OPEC+ source said.

OPEC countries and allies have implemented supply curbs to prevent a global supply surplus from crashing crude prices. They’re also dealing with slowing demand growth (China) and US shale production soaring, sending total US crude production to new records. 

Prices of Brent crude have chopped around $80 a barrel for more than a year, despite recent conflicts erupting in the Middle East and Iran-backed Houthi rebels attacking dozens of commercial vessels with suicide drones and missiles in the Red Sea.  

The latest International Energy Agency forecast revealed that global oil markets could slide back to a surplus next quarter and remain oversupplied through this year – if OPEC+ eases curbs and revives production. 

All eyes are on OPEC+’s March decision, as any announcement will likely spark volatility in global energy markets. 

Authored by Ven Ram, Bloomberg cross-asset strategist,

The non-farm payrolls data for January is unlikely to move the needle much for the rates markets so long as the narrative of economic resilience remains intact.

The labor market has traditionally fared well in the first month of the year, with the actual headline number coming in way higher that forecast over the past two January iterations.

A better-than-forecast reading today won’t tell the Fed anything that it doesn’t already know about the strength of the labor market.

The jobless rate has been close to historical lows at 3.7% and a marginal uptick to that number, in line with the forecast, isn’t exactly going to bring the labor market back into balance immediately.

Hourly wage earnings are still growing at a 4%+ clip, which is largely incongruent with the Fed’s overall inflation target.

That is perhaps one reason why Chair Jerome Powell suggested earlier this week that policymakers are “looking for more good data on inflation” and need continued evidence price pressures are waning.

Absent a shocker from today’s jobs report, Treasuries may decide to march to a drumbeat that has been dictated by concerns about the health of the banking industry.

The bid tone has also been pronounced ahead of Powell’s upcoming TV interview over the weekend, where, as colleague Mark Cranfield points out, the chatter seems to be focused on the Chair using the opportunity to persuade wavering voters within the FOMC that it is time for a rate cut.

US futures and global markets rallied on Friday after tech megacaps Meta and Amazon.com posted blowout earnings (even as Apple dropped on a plunge in China sales and disappointing guidance) and as investors awaited a jobs report expected to support the case for interest-rate cuts. As of 7:30am, S&P 500 futures rose 0.7% while the Nasdaq 100 rose 1% after the indexes advanced by more than 1% Thursday. Rates were flat with 10Y yields unchanged around 3.88% while the dollar dropped and oil extended losses. All eyes will be on today’s jobs report; we also get the latest Factory Orders, Durables Goods and Michigan sentiment (and inflation outlook) prints.

The sharp gains in the past two days meant that the S&P is once again on track for aweekly gain, which will make it 13 increases in the past 14 weeks!

In premarket trading, Meta soared 17% and Amazon rallied 7.1% after the tech behemoths smashed quarterly profit expectations. The pair’s results boosted social media and e-commerce peers, with Snap up 6.8% and Shopify rising 4.8%. Apple slipped after its earnings showed weakness in China. Big Oil added to the earnings buzz Friday, with Chevron and Exxon Mobil shares rising after both beat profit expectations. Here are some other notable premarket movers:

• Atlassian (TEAM US) shares fell 8.6% as analysts said the application software company’s cloud metrics came in short of expectations.
• Amazon (AMZN) shares jumped 6.7% after fourth-quarter results beat expectations and the company’s outlook for operating income surpassed estimates. Analysts cited operating income and the company’s Amazon Web Services (AWS) businesses as highlights.
• Apple (AAPL US) shares fell 2.7% after weakness out of the greater China region overshadowed strong results in most product categories. Analysts expect that competition in China will intensify.
• Intel (INTC US) shares fell 1.2% following a Wall Street Journal report that the chipmaker is delaying a $20 billion chip facility planned for Ohio, sparking worries over its capital expenditure plans.
• Meta Platforms (META US) jumps 18% after the Facebook parent reported fourth-quarter results that beat expectations and gave an outlook that is seen as strong. It also introduced its first ever dividend.
• Skechers (SKX US) shares slid 10% after the footwear company issued full-year sales and earnings per share guidance that trailed consensus estimates.
• Solo Brands (DTC US) fell 2.5% as JPMorgan double-downgrades the stock to its only underweight rating, citing growing concerns around shifts in the outdoor product retailer’s business model since its IPO.

After a torrid week there is one more major market event: Friday’s US jobs report is expected to show a slower hiring pace in 2023 after figures out Thursday showed rising jobless claims,  and following annual revisions, indicating the labor market was softer than realized (full preview is here). Wall Street expects 185K payroll gains with a wide range of forecast between 120K and 300K. Bloomberg economists see the unemployment rate edging up to 3.8%, from 3.7% in December.

Investors will parse monthly US jobs figures due later for confirmation of further cooling in the labor market that might encourage policy easing by the Federal Reserve.

“Any move closer to 4% could see markets changing bets on when Fed cuts could begin,” economists at Rand Merchant Bank in Johannesburg said in a note to clients.

Investors will also continue to closely track developments around smaller banks as an index for the sector heads for its worst week since the fallout from the banking crisis last May. New York Community Bancorp has plunged 45% since shocking investors Wednesday by reducing its dividend, posting a quarterly loss and ramping up loan-loss provisions for exposure to commercial real estate.

Meanwhile, as investors rush into technology stocks, Bank of America strategists said they see similarities with the bubble of 1999, with markets assuming that the economy will perform strongly, despite tighter monetary policy. While falling yields were pushing the Nasdaq higher in the fourth quarter, the script has now flipped to both rising over the past four weeks. This price action would typically only occur after a recession, such as in 2009 or the dot-com bubble around the turn of the century, BofA strategists led by Michael Hartnett wrote on a note. Hartnett’s view on the rising dominance of tech stocks resembles a warning by JPMorgan strategists earlier this week that the US equity market is increasingly drawing similarities with the dot-com bubble.

European stocks are also higher, led by real estate and auto names. The Stoxx 600 is on course for back-to-back weekly gains for the first time this year, with most subgroups on the regional benchmark notching gains, with the real estate and automotive subindexes the biggest risers, while the energy sector the biggest laggard. Mercedes-Benz Group AG shares rose as much as 3.3% and Danske Bank climbed 6.7%. Here are the biggest movers Friday:

• Danske Bank shares rise as much as 6.5%, the most in three months, after reporting results, with Jefferies saying capital distributions are the “key positive” element
• Vallourec climbs as much as 9.6% after French tube-maker reported “good” preliminary fourth-quarter Ebitda that beat estimates, and will likely also beat 2023 expectations, Oddo says
• Zalando rises as much as 5.7% after Morgan Stnaley raised its rating on the European fashion platform to overweight, saying it will be a key online volume share winner as inflation slows
• OCI jumps to highest since April after the stock was raised to buy by Berenberg, which flags “lots of cash, lots of options” as fertilizer maker is about to unlock $6.1b of divestment proceeds
• SAP gains as much as 2.2% to a record high after Jefferies upgraded the software firm to buy, saying there is now “no reason to question growth” given elevated cloud revenue in its pipeline
• Mercedes rises as much as 3.3% after reporting preliminary industrial free cash flow for the full year that beat the average analyst estimate, with Deutsche Bank seeing upside potential
• Delivery Hero falls as much as 13% to record lows after Malaysian newspaper New Straits Times reported that the food delivery firm’s talks to sell its Southeast Asia business to Grab collapsed
• Electrolux falls as much as 6.8% after the Swedish home appliances firm flagged a gloomy outlook for the first half of 2024, according to Citi. It also failed to pay a dividend last year
• Lem shares fall as much as 8.2%, most since July 2022, after the Swiss electrical component manufacturer’s results missed estimates and it cut its sale guidance
• YouGov falls as much as 2.5%, dropping from a one-month high hit yesterday, after suffering a slow start to the financial year because of the challenging macro-economic environment
• Close Brothers falls as much as 5% as RBC cuts its recommendation on the UK bank to sector perform as it expects shares to be held back by FCA reviews into motor loans and premium finance

Earlier in the session, the picture was more mixed in Asia, where key Chinese benchmarks pared steep declines in a session marked by wild swings. A broader gauge of the region’s stocks climbed 0.7% with South Korean shares leading the charge. The MSCI Asia Pacific Index rose as much as 1.1%, with Tencent among the biggest contributors to the gauge’s gain after China approved a slew of online games. South Korea’s benchmark Kospi headed for its best week since November 2022, boosted by automakers and other holding firms amid a push by authorities for better valuations.

• Hang Seng and Shanghai Comp were both initially boosted with outperformance in automakers after their January delivery updates, while tech names were supported after China’s NPPA approved 32 imported online games. However, stocks then gradually reversed course after the PBoC continued to drain liquidity despite next week’s Lunar New Year holiday. Later in the session Chinese stocks rebounded shortly after the Shanghai Composite fell to fresh multi-year lows under 2,700; with some highlighting increased capital flows from Hong Kong via Stock Connect
• Nikkei 225 gained with headlines dominated by another busy day of earnings results, while Aozora Bank suffered another double-digit drop after it recently flagged losses linked to US commercial property loans.
• ASX 200 printed fresh all-time highs with real estate and tech front running the gains amid softer yields.

In FX, the Bloomberg Dollar Spot Index fell 0.1% while the Australian dollar tops the G-10 FX leaderboard, rising 0.5% versus the greenback. The yen is among the weakest, dropping 0.2%.

• AUD/USD rose as much as 0.5% to 0.6603 as the Australian dollar led G-10 gains against the dollar on bolstered risk appetite; Japanese yen led G-10 losses
• GBP/USD rose as much as 0.2% to 1.2768, the highest level in over a week, as markets bet on the BOE lagging other major central banks in cutting rates; Gilts underperformed Treasuries and EGBs with front-end yields climbing 6-8bps

In rates, Treasuries were unchanged with the curve flatter, pushing 2s10s and 5s30s spreads beyond Thursday’s lows. The move was led by pronounced bear-flattening of gilts curve, a laggard among core European rates. Front-end yields cheaper by around 3bp with long-end slightly richer on the day, leaving 2s10s, 5s30s spreads flatter by 2.5bp and 2bp. Two-year yields rose 2bps to 4.22%, while 10-year yields were little changed around 3.88%, with bunds and gilts lagging by 1.5bp and 6bp in the sector. Dollar issuance slate includes KDB 3Y/5Y; just one deal was done Thursday, bringing weekly volume to just over $20b, in line with $20b to $25b expected; dealers are calling for about $150 billion of new supply in February.

In commodities, oil headed for the biggest weekly loss since early November as negotiations advance for an agreement to pause the Israel-Hamas war in what could be a crucial step toward ending the conflict; oil prices advanced, with WTI rising 0.7% to trade near $74.30, after the contracts settled lower by $2/bbl for WTI and USD 1.85/bbl for Brent after mixed reporting regarding a Gaza ceasefire yesterday; currently Brent holds below the $79.50/bbl.  Gold headed for its largest weekly increase since the start of December as lower Treasury yields offered support for the metal, amid the concerns over US regional banks.

Looking to today’s calendar, economic data includes January jobs report (8:30am), January final University of Michigan sentiment and December factory orders (10am). Federal Reserve Chair Jerome Powell will appear on CBS News’s 60 Minutes this Sunday and will discuss inflation risks, expected rate cuts and the banking system, among other topics, the network said; no Fed members are scheduled to speak Friday while other central bank speakers include ECB’s Centeno and BoE’s Pill. Finally, earnings releases include ExxonMobil, Chevron and Aon.

Market Snapshot

• S&P 500 futures up 0.5% to 4,954.25
• STOXX Europe 600 up 0.5% to 486.32
• MXAP up 0.7% to 167.35
• MXAPJ up 1.2% to 510.00
• Nikkei up 0.4% to 36,158.02
• Topix up 0.2% to 2,539.68
• Hang Seng Index down 0.2% to 15,533.56
• Shanghai Composite down 1.5% to 2,730.15
• Sensex up 0.6% to 72,074.30
• Australia S&P/ASX 200 up 1.5% to 7,699.40
• Kospi up 2.9% to 2,615.31
• German 10Y yield up 2 bps at 2.17%
• Euro up 0.2% to $1.0894
• Brent Futures up 0.4% to $79.03/bbl
• Gold spot down 0.0% to $2,054.65
• US Dollar Index down 0.12% to 102.93

Top Overnight News

• Stocks posted broad gains Friday after robust earnings from technology giants and as investors looked forward to a US jobs report expected to show further cooling in the labor market in a boost for hopes of interest-rate cuts.
• Meta Platforms Inc. and Amazon.com Inc. spent 2023 cutting costs and re-focusing their businesses. It was a strategy that upended the lives of displaced tech workers in Seattle and Silicon Valley, but appears to have paid off handsomely for investors who are likely to continue reaping benefits.
• A monthly US jobs report due Friday will probably show a slower pace of hiring in 2023 following annual revisions, according to Bloomberg Economics.
• A sense of panic gripped Chinese investors on Friday as shares swung sharply in the final hours of trading before closing at a five-year low.
• Federal Reserve Chair Jerome Powell will appear on CBS News’s 60 Minutes this Sunday and will discuss inflation risks, expected rate cuts and the banking system, among other topics, the network said.
• Oil headed for the biggest weekly loss since early November as negotiations advance for an agreement to pause the Israel-Hamas war in what could be a crucial step toward ending the conflict.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks mostly took impetus from the gains on Wall St where stocks were underpinned amid a softer yield environment and with US equity futures boosted following the big tech earnings. ASX 200 printed fresh all-time highs with real estate and tech front running the gains amid softer yields. Nikkei 225 gained with headlines dominated by another busy day of earnings results, while Aozora Bank suffered another double-digit drop after it recently flagged losses linked to US commercial property loans. Hang Seng and Shanghai Comp were both initially boosted with outperformance in automakers after their January delivery updates, while tech names were supported after China’s NPPA approved 32 imported online games. However, stocks then gradually reversed course after the PBoC continued to drain liquidity despite next week’s Lunar New Year holiday. Later in the session Chinese stocks rebounded shortly after the Shanghai Composite fell to fresh multi-year lows under 2,700; with some highlighting increased capital flows from Hong Kong via Stock Connect

Top Asian News

• China National Press and Publication Administration approved 32 imported online games, according to Reuters.
• China urges state Cos to step up equity investments in new equity firms, via Bloomberg
• IMF says China growth is projected to slow to 4.6% in 2024 amid the ongoing weakness in the property sector and subdued external demand. Inflation expected to increase gradually to 1.3% in 2024.

European bourses, Stoxx600 (+0.5%), are on a firmer footing, taking impetus from gains in Wall Street and further optimism also stemming from blockbuster earnings from Amazon (+6% pre-market) and Meta (+16.7% pre-market). European sectors are mostly firmer; Autos takes the top spot benefitting from outperformance within the sector in APAC trade and after a positive update from Mercedes-Benz. Energy is the major laggard, dragged down by weaker crude prices following mixed reporting on a ceasefire in Gaza. US equity futures (ES +0.5%, NQ +1.1%, RTY U/C) are firmer, with clear outperformance in the NQ, being led higher by significant strength in Amazon (+6.7%) and Meta (+16.7%) post-earnings; though, Apple is softer by over 2%.

Top European News

• Citi/YouGov UK Inflation Expectations: 12-month 3.9% (prev. 3.5%), 5-10yrs 3.6% (prev. 3.4%). Short-run expectations increased amid an increase in shipping disruption.
• Riksbank comment on the Swedish National Audit Office’s report: Riksbank recognises that circumstances may arise in the future, in which purchases of securities may be an appropriate way to influence inflation. Further analysis is required.
• German Engineering Orders in December -6% Y/Y (Domestic -13%, Foreign -3%), according to VDMA

Earnings

• Amazon.com (AMZN) – Q4 2023 (USD): EPS 1.00 (exp. 0.80), Revenue 169.96bln (exp. 166.21bln).SALES BREAKDOWN:Online stores 70.54bln (exp. 68.91bln). Physical Stores 5.15bln (exp. 5.23bln). Third-Party Seller Services 43.56bln (exp. 41.96bln). AWS 24.20bln (exp. 24.22bln). GEOGRAPHICAL REGIONS: North America 105.51bln (exp. 102.88bln). International 40.24bln (exp. 38.96bln). KEY METRICS: Third-party seller services net sales excluding F/X +19% (exp. +15.9%). AWS net sales excluding F/X +13% (exp. +11.8%). Operating income 13.21bln (exp. 10.49bln). Operating margin 7.8% (exp. 6.17%). North America operating margin +6.1% (exp. +4.12%). International operating margin -1% (exp. -1.27%). Fulfillment expense 26.10bln (exp. 25.2bln). GUIDANCE: Q1 net sales view 138.0-143.5bln (exp. 142.01bln). Q1 operating income view 8-12bln (exp. 9.1bln). CFO said improved delivery speeds have led to increased purchase frequency by customers across major geographies, and there are no immediate plans for dividend. (Amazon/Newswires) Shares rose 7.1% after-market. Index weightings: SPX (3.5%), NDX (4.9%). Shares up 6.1% pre-market
• Meta Platforms Inc (META) – Q4 2023 (USD): EPS 5.33 (exp. 4.96), Revenue 40.11bln (exp. 39.17bln); authorised 50bln increase to share buyback programme and declared cash quarterly dividend of 0.50/shr. KEY METRICS: Advertising revenue 38.71bln (exp. 38.12bln). Facebook DAUs 2.11bln (exp. 2.07bln). Facebook MAUs 3.07bbln (exp. 3.06bln). Ad impressions +21% (exp. +24.6%). Average Family service users per day 3.19bln (exp. 3.11bln). Average Family service users per month 3.98bln (exp. 3.93bln). GUIDANCE: Q1 revenue view 34.5-37bln (exp. 33.34bln). Meta (META) noted the FTC is seeking to substantially modify consent order on Meta and if contesting is unsuccessful, this could impose additional restrictions on its ability to operate and would adversely impact its business. CEO said the Co. is getting ready to roll out AI services more widely in coming months, adds Threads now has more people using it daily than initial launch and Metaverse focus this year is going to be growing mobile version of Horizon. CFO said Co. will discontinue reporting of Facebook monthly and daily active users, Co. expects to maintain an active share repurchase program. (Meta/Newswires) Shares rose 15.2% after-market. Index weightings: SPX (2.2%), NDX (4.2%). Shares up 16.8% pre-market
• Apple Inc (AAPL) – Q1 2024 (USD): EPS 2.18 (exp. 2.10), Revenue 119.58bln (exp. 117.91bln). Greater China revenue 20.82bln (exp. 23.5bln). REVENUE BREAKDOWN: Products 96.46bln (exp. 95.14bln).iPhone 69.70bln (exp. 68.55bln). Mac 7.78bln (exp. 7.9bln). iPad 7.02bln (exp. 7.06bln). Wearables, home and accessories 11.95bln (exp. 12.02bln). Service 23.12bln (exp. 23.37bln). KEY METRICS: Total operating expenses 14.48bln (exp. 14.62bln). Gross margin 54.86bln (exp. 53.56bln). Cash and cash equivalents 40.76bln (exp. 38.81bln). Apple expects March quarter total revenue and iPhone revenue to be similar to the previous year after accounting for inventory replenishment. Expects gross margins between 46%-47% for fiscal Q2. Expects operating expenses of USD 14.3bln-14.5bln in fiscal Q2. Expects services business to show double-digit growth similar to the December quarter in fiscal Q2. CEO Cook said the Co. will make announcements this year on new AI features. CEO Cook added that FX was a headwind for China sales, and the decline in China sales was in part on a stronger USD. (Apple/Newswires) Shares fell 2.9% after-market. Index weightings: SPX (6.6%), NDX (8.7%), DJIA (3.2%) Shares down 2.5% pre-market
• Microchip Technology Inc (MCHP) – Q3 2024 (USD): Adj. EPS 1.08 (exp. 1.04), Revenue 1.77bln (exp. 1.77bln). GUIDANCE: Q4 adj. EPS view 0.46-0.68 (exp. 0.91). Q4 revenue view 1.225-1.425bln (exp. 1.66bln). COMMENTARY: Taking steps to limit discretionary spending and tightly manage inventory levels during downcycle. Cautious about demand in near term given weak macro environment and customers’ ongoing actions to reduce inventory. (Newswires) Shares down 3.1% pre-market
• TomTom (TOM2 NA) – Q4 (EUR): Revenue 143mln (exp. 142mln), Net -11.6mln (exp. -23mln), EBIT -10.4mln (exp. -29mln). FY24 Outlook: Revenue 570-610mln (exp. 600mln). Shares up 9.2% in European trade / Garmin shares up 0.7% in pre-market trade.

FX

• DXY has pivoted around the 103.00 mark compared to levels closer to 103.50 in recent sessions as yield-driven selling in USD saw the index hit a trough of 102.91. In what has been a contained few weeks of trade for the USD, a soft NFP could see a test of the Jan 24th low at 102.77.
• EUR remains supported by recent USD selling but unable to muster a test of 1.09; last breached on Jan 25th at 1.0901.
• JPY is the only major currency softer vs. the USD as the JPY’s recent tepid recovery vs. the dollar pauses for breath. Ultimately, the pair remains at the whim of relative Fed/BoJ expectations. Currently sits at the 21DMA and within yesterday’s 145.89-147.11 range.
• AUD attempting to recoup recent lost ground vs. the USD which saw the pair hit a trough of 0.6508 yesterday.
• PBoC set USD/CNY mid-point at 7.1006 vs exp. 7.1655 (prev. 7.1049).

Fixed Income

• USTs are softer and pivoting Wednesday’s 112-20+ peak ahead of NFP, which is expected to print at 180k (prev. 216k).
• Bunds are weaker by around 60 ticks but still over 100 ticks from the week’s 134.37 trough; the German 10yr yield has recovered back to 2.18% but is still set to close the week out lower.
• Gilts are the relative underperformer but similarly well within WTD 98.56-100.62 parameters with drivers thin post-BoE though we await commentary from Chief Economist Pill.
• Italian Treasury says foreign investors bought 70% of new 15yr BTP syndicated bond

Commodities

• Choppy/contained across the crude complex this morning ahead of US jobs data, and after the contracts settled lower by USD 2.03/bbl for WTI and USD 1.85/bbl for Brent after mixed reporting regarding a Gaza ceasefire yesterday; currently Brent holds below the USD 79.50/bbl.
• Precious metals are trading horizontal in the run-up to the US jobs report in an otherwise quiet European morning; whilst base metals are mixed with early China-induced weakness trimmed as the USD edges lower; XAU holds above USD 2050/oz and within a tight range.
• Iraqi oil exports averaged 3.3mln BPD in Jan (prev. 3.5mln in Dec); Average price USD 77.536/bbl (prev. USD 76.96/bbl in Dec)

Geopolitics

• Hamas said they are still in the stage of consultation between internal and foreign leaders on the exchange deal, while it received the Paris truce proposal but has not given a response to any parties and it is still being studied. Furthermore, it cannot say the current stage of negotiations is zero, but also cannot say they have reached an agreement.
• An Iranian revolutionary guard advisor killed in Israeli strike on Damascus, Syria, via semi-official Iranian News site..
• Iraq’s pro-Iran Al-Nujaba movement vows to keep up attacks on US troops, according to AFP
• North Korea fired several cruise missiles off its west coast, according to South Korea.

US Event Calendar

• 08:30: Jan. Change in Nonfarm Payrolls, est. 185,000, prior 216,000
  • Jan. Change in Private Payrolls, est. 170,000, prior 164,000
  • Jan. Change in Manufact. Payrolls, est. 3,000, prior 6,000
  • Jan. Unemployment Rate, est. 3.8%, prior 3.7%
  • Jan. Underemployment Rate, prior 7.1%
  • Jan. Labor Force Participation Rate, est. 62.6%, prior 62.5%
  • Jan. Average Weekly Hours All Emplo, est. 34.3, prior 34.3
  • Jan. Average Hourly Earnings YoY, est. 4.1%, prior 4.1%
  • Jan. Average Hourly Earnings MoM, est. 0.3%, prior 0.4%
• 10:00: Dec. Durable Goods Orders, est. 0%, prior 0%
  • Dec. Durables-Less Transportation, est. 0.6%, prior 0.6%
  • Dec. Cap Goods Ship Nondef Ex Air, prior 0.1%
  • Dec. Cap Goods Orders Nondef Ex Air, prior 0.3%
• 10:00: Dec. Factory Orders, est. 0.2%, prior 2.6%
  • Dec. Factory Orders Ex Trans, est. 0.2%, prior 0.1%
• 10:00: Jan. U. of Mich. Current Conditions, est. 83.5, prior 83.3
  • Jan. U. of Mich. Sentiment, est. 78.9, prior 78.8
  • Jan. U. of Mich. Expectations, est. 76.0, prior 75.9
  • Jan. U. of Mich. 5-10 Yr Inflation, est. 2.8%, prior 2.8%
  • Jan. U. of Mich. 1 Yr Inflation, est. 2.9%, prior 2.9%

DB’s Jim Reid concludes the overnight wrap

Welcome to payrolls Friday and if you want a bit of light relief as we draw towards the close of a busy week then note that we have a fancy dress quiz night for parents at my kids’ school tomorrow night and I’m going as Dame Edna Everage. My wife is going to have a field day turning me into her. Why I agreed to this I don’t know and why I’m telling you I don’t know either so please don’t tell anyone. I’m actually hoping some of the younger parents know who she was and don’t just think that’s my normal Saturday night attire.

Onto more weighty matters, our recent “ Everything points to a soft landing except… .. history ” pack, suggested that the current US data points to a soft landing (with more evidence yesterday as we’ll see below). However, history cautions that the lags from a hiking cycle are long and variable and regularly have a substantial sting in their tail. Often these come from an unforeseen event. Clearly in this cycle, the Regional Bank shock was dealt with aggressively by the Fed last year. However this was mainly helping them out with high quality assets (e.g. treasuries and MBS) that had been (and still are) marked down. Although the BTFP ends in March, the market generally would expect the Fed to do something similar if the need arose and therefore are less likely to force them to. However if the next round of problems covered CRE then could the Fed really intervene as quickly or as easily given a more challenging moral hazard issue? Underwater CRE which could be impaired is a very different proposition to underwater Treasuries.

We’re clearly some way from that at the moment but it’s worth highlighting that the latest attack on US regional banks is more for fear of potential credit losses than the mark to market losses of high quality securities of last year, which could be more easily mitigated via liquidity measures. On a related theme, it will be interesting to see the Fed’s SLOOS on Monday to see whether banks have continued to loosen conditions relative to what are still very tight lending standards to the wider economy and CRE.

Notwithstanding a second day of US Regional Bank losses (-2.28%), the S&P 500 roared back last night to close +1.25%, reversing most of Wednesday’s -1.61% decline. The market shrugged off the continued concerns over New York Community Bancorp, which fell a further -11.1% (-44.6% over 2-days) after news the previous evening that Moody’s had placed their credit ratings on review for a downgrade. The S&P 500 bank index was down -1.38% (-3.34% over 2-days). But overall, equities seemed to respond to the data whereas the bond market saw a flight to quality as 10yr US yields fell -3.2bps to 3.88%. Overnight in Japan it’s been a similar story, with Aozora Bank currently the worst performer in the Nikkei with a further -15.55% decline, but the Nikkei as a whole is still up +0.70%. Meanwhile, March Fed Funds futures are pricing in a 38% chance of a cut this morning, up from 35% after the FOMC influenced close on Wednesday.

As all that was going on, we then heard from Apple, Amazon and Meta after the close. All three beat earnings estimates, with a mixed but overall positive reaction in extended trading. Meta saw a stunning gain (of c. 15%) after hours, as its revenue guidance for Q1 came in clearly above analysts’ expectations, and the company announced additional share buybacks and its first ever dividend. Amazon gained 7%, also posting a strong profit outlook for Q1. This is despite its sales guidance for Q1 actually coming in a touch below estimates, and investors appeared to reward both companies for their cost control efforts. By contrast, Apple’s shares were down close to 3% in after-hours trading, with a deepening sales slump in China taking the shine off what was otherwise a modest beat. Prior to the results, the Magnificent Seven outperformed yesterday, gaining +1.59%. This morning, NASDAQ 100 futures are trading up +0.99%, and those on the S&P 500 are up +0.54%.

Talking of Apple, they are due to release their Vision Pro headset today. We conducted a survey of over 3,300 consumers to assess their perceptions and readiness for AR, VR, and the metaverse which should give you an idea of how ready consumers are for the next round of technology to be launched from the Magnificent Seven. See the full chartbook on the Metaverse, AR, & VR just published by Marion Laboure and Cassidy Ainsworth Grace here.

Looking forward now, the main highlight today will be the US jobs report for January, which will be one of the first pieces of hard data that covers 2024. Our US economists are looking for a +200k (consensus +185k) rise in nonfarm payrolls, and for unemployment to rise a tenth to 3.8% (in line with consensus). Remember as well that this report is set to see more substantial revisions than usual, since it’s the annual benchmark revision that can affect the numbers throughout the entirety of 2023, and not just the previous two months. It’ll also be an important print when it comes to the timing of rate cuts from the Fed, with March still in the balance regardless of what Powell said 36 hours ago.

Before the jobs report, there was some good news from the ISM manufacturing print, which rose to a 15-month high of 49.1 (vs. 47.2 expected). And on top of that, growth in nonfarm productivity surpassed expectations in Q4, coming in at an annualised rate of +3.2% (vs. +2.5% expected). So that added to the sense that a soft landing was increasingly likely, and it meant the Atlanta Fed’s latest GDPNow estimate for Q1 now stands at an annualised growth rate of 4.2%. The main point of weakness was in the weekly initial jobless claims, which rose to 224k (vs. 212k expected) in the week ending January 27, whilst continuing claims were up to 1.898m (vs. 1.839m expected) in the week ending January 20, the second highest reading since November 2021.

Over in the Euro Area, the main news came on the inflation side, as the flash CPI release for January came in a bit higher than the consensus had expected. That showed headline CPI only fell by a tenth to +2.8% (vs. +2.7% expected), and core CPI also fell a tenth to +3.3% (vs. +3.2% expected). To be fair, that’s the lowest core inflation has been since March 2022, but the slower decline has added to questions about how soon the ECB will actually be able to cut rates. At the same time, we also heard that the Euro Area unemployment rate had remained at 6.4% in December, matching its joint-lowest since the single currency’s formation. These releases saw pricing of a March cut by the ECB decline from 23% to 17%, and overnight it’s down to 16%.

Here in the UK, the Bank of England announced their latest policy decision yesterday, where they left rates unchanged as expected. There were a few elements of ongoing hawkishness in the decision. In particular, the BoE’s latest inflation forecasts showed inflation above target during H2 2024 and 2025, based on market rate expectations. So the implication was that the amount of cuts priced in would keep inflation too high in the years ahead. Moreover, even as 6 of the 9 committee members voted to hold rates, 2 preferred another 25bp hike, whilst 1 voted for a 25bp cut. BoE Governor Bailey also said that they “need to see more evidence that inflation is set to fall all the way to the 2% target, and stay there, before we can lower interest rates”.

But as with the Fed the previous day, there was a growing sense of a gradual shift towards considering rate cuts. Notably, the summary dropped the earlier explicit tightening bias, instead saying that the “MPC remained prepared to adjust monetary policy as warranted “ and adding that it “will keep under review for how long Bank Rate should be maintained at its current level.” In the press conference, Governor Bailey noted that the MPC “won’t leave Bank Rate on hold any longer than we need to”. Markets dialled back the chance of a cut by May, which fell from 77% to 62% by the close, but there was little change in end-24 pricing with over 110bps of cuts priced by the December meeting. Our UK economist continues to see the first rate cut coming in May – see his full reaction here.

When it came to markets in Europe, equities caught up with the post-Fed selloff, and the STOXX 600 (-0.37%) ended its run of 6 consecutive daily gains. Yields also moved lower, although given the CPI print, the declines weren’t as big as the US, with those on 10 yr bunds (-2.0bps), OATs (-0.5bps) and BTPs (-0.5bps) seeing smaller moves. Gilts outperformed, with the 10yr yield down -4.8bps.

Overnight in Asia, there’s been a mixed performance for equities. On the one hand, the KOSPI (+2.76%) has surged this morning, which came as investors expected reforms to the South Korean stock market, which the finance minister announced the previous day. Moreover, the January CPI data surprised on the downside in South Korea, with headline inflation down to +2.8% (vs. +2.9% expected). By contrast, Chinese equities have seen further losses, with the CSI 300 (-0.98%) currently on track to close at a 5-year low, whilst the Shanghai Comp is down -1.25%. Otherwise, the Hang Seng (+0.16%) has posted a modest gain, and the Nikkei is up +0.70%, despite the performance from Aozora Bank (-15.55%).

To the day ahead now, and the main highlight will be the US jobs report for January. Other US releases include factory orders for December, and the University of Michigan’s final consumer sentiment index for January. Central bank speakers include the ECB’s Centeno and the BoE’s Pill. Finally, earnings releases include ExxonMobil and Aon.

Four out of five illegal migrants who were caught on camera attacking two NYPD cops in Times Square were arrested, set free on no bail, and then given free bus tickets to California.

Look how two cops get beat up by migrants. But the White House will deny anything is going on pic.twitter.com/sCHkZjQwr7

— Edwin Montes (@SETNOMM) January 31, 2024

Following their release, a smirking Johan Boada, 22, could be seen giving a double middle finger to media covering the situation.

BREAKING: Four of the illegal migrants who assaulted NYPD officers near Times Square may be on the run to California according to the New York Post.

Gee, maybe letting them out without bail wasn’t a good idea?

“Cops believe the group hopped on a bus bound for California on… pic.twitter.com/Sa9b3Jjt7d

— Collin Rugg (@CollinRugg) February 1, 2024

When asked if he should be deported, Gov. Kathy Hochul said: “I think that’s actually something that should be looked at,” adding “I mean, if someone commits a crime against a police officer in the state of New York and they’re not here legally, it’s definitely worth checking into.“

“These are law enforcement officers who should never under any circumstances be subjected to physical assault,” Hochul added. “It’s wrong on all accounts and I’m looking to judges and prosecutors to do the right thing.”

Mayor Eric Adams suggested that lawmakers need to “reexamine” laws that prevent deportation.

“Those migrants who are here because they want to be part of the American dream, we say ‘Yes’ to that,” said Adams. “But those who are breaking our laws, we need to reexamine the laws that don’t allow us to deport them because they are doing violent acts. We cannot create an atmosphere where you’re going to bring violence in our city,” the NY Post reports.

Now, the NYPD is looking for the men…

Massive man hunt for the migrants who assaulted NYPD officers.
Under the command of NYPD assistant commissioner @NYPDDaughtry, the NYPD formed an army of cops to search for the suspects. The NYPD went to multiple migrant locations, took illegal scooters, and questioned 100s of… pic.twitter.com/LcYu0em1pY

— Viral News NYC (@ViralNewsNYC) February 1, 2024

…however the Post is now reporting that “Cops believe the group hopped on a bus bound for California on Wednesday after giving phony names to a church-affiliated nonprofit group that helps migrants get rides out of the city.” 

Not only were they not deported, they were given a free ticket to California!https://t.co/YAZ9ZGILQi https://t.co/ZticfYnfTT

— Elon Musk (@elonmusk) February 1, 2024

Interesting to see what it takes to motivate city officials to act…

pic.twitter.com/5TLVK7lbQt

— Juanita Broaddrick (@atensnut) February 1, 2024

Authored by Leonard Hyman and William Tilles via OilPrice.com,

Yes, they are still building the Hinckley Point C nuclear power station in the United Kingdom, and yes the latest estimated cost is more than the previously estimated cost and the completion date has receded another two years into the future. 

This nuclear project received its license for construction in 2012, with an estimated cost of £18 billion and completion date in 2025. The last estimate calls for 2029-2031 completion at a cost of £46 billion. To the extent that these estimates can be trusted, the plant would end up costing double the original estimate in real terms. In the same time period, solar and wind costs will decline by at least one half. We are not sure yet whether Hinckley Point will set an all-time record as the most expensive and most delayed power-related project in history, but it certainly will be a contender.

As is the case for so many climate- or security-related projects, the UK government offered significant subsidies to the builder. But in a different way.  Most governments, nowadays, offer start-up subsidies in order to bring production levels up to a point where economies of scale kick in, after which costs drop rapidly and consumers get real benefits.  The cost curves for wind, solar, and energy storage show how well this strategy works. Give the industry a kickstart and watch the action take place. Not so with nuclear, where costs seem to rise with encouragement rather than fall.

Opting for nuclear, then, seems more like an ideological rather than a technological or economic choice, especially for British Conservative politicians. “Nuclear has to be part of the package”, they seem to say. Even if the nuclear cost per kW installed is five-eight times higher than non-fossil alternatives. But, fortunately, the UK government is not directly on the hook for the added costs, the Chinese co-investor in the project has declared that it will not contribute more, and it looks as if French utility EDF will bear the increased costs if it does not get a new power contract. But if the UK decides to stick EDF with the bill, what will that decision do to discourage further nuclear construction? Given the perilous nature of that construction (namely the danger of cost inflation), who could take the risk of initiating new projects other than a government agency?

Hinkley Point might cause us to examine the premises underlying nuclear projects. Building a nuke has two purposes: to ensure national security and to reduce carbon emissions. As for reducing carbon emissions, those reductions could take place anywhere in the world and still benefit the planet. Some contractors (Russians or South Koreans?) in some countries apparently can build nuclear plants for less than contractors in Europe or the United States. So why not let them build nukes where it is economic to do so and pay the host countries for the carbon reductions? And maybe, if there still are savings, the paying countries that have natural gas supplies and wish to use that gas for national security reasons could contribute the savings to an international carbon reduction fund. In other words, the substantial nuclear savings made possible by differences in construction costs might create an opportunity for nuclear cost arbitrage. Just a thought.

Our point: Hinkley Point C could put the kibosh on new nuclear construction in the West, but it need not discourage nuclear building everywhere.

Just as American Zennials took to social media a few months ago to express their outrage after rumors swirled about a possible military draft, younger Brits are also not happy after multiple government officials hinted that national conscription might be necessary in the near future to combat Russia.

Chief of the General Staff, General Sir Patrick Sanders, has suggested that British men and women could face a call-up to the army in the event of a war.  The head of the British Army said UK citizens should be “trained and equipped” to fight in a potential conflict between NATO and Vladimir Putin’s forces.  The problem that is apparently stumping British military brass and political leaders is their ever dwindling recruitment numbers.  They just can’t seem to fathom why no one wants to fight for them.

In an interview with Sky News, Britain’s former top NATO commander General Sir Richard Sherriff echoed Sanders’ position, suggested that involuntary conscription might be required to fill British military ranks.

“I think we need to get over many of the cultural hang-ups and assumptions, and frankly think the unthinkable…I think we need to go further and look carefully at conscription…”

The notion has been repeated by officials within the British government as well as former political leaders like Boris Johnson, who posted a rambling article to the Daily Mail promoting conscription as an opportunity for the young people of Britain.  Johnson salutes the idea of a “citizens army,” making it sound similar to an American-style militia where young people can learn weapons and tactics and defend the homeland. 

The reality, according to Sanders, is that this is not the case.  Rather, the likelihood of the drafted being shipped off to fight in countries like Ukraine would be high.  Younger Brits are not having it.

Some take a sarcastic approach to the issue (as in America, Gen Z in Britain often reverts to the claim that they are “too gay to fight”), but many present some serous insights into the zennial perception of government driven wars.  The most common refrain is “Why should we go and die in a trench in a foreign country for a bunch of rich elites?”  This is a valid argument.  

Public outcry prompted Prime Minister Rishi Sunak’s spokesman, Max Blain, to make a statement denying that there are any plans for forced military service at this time.  But the fact that so many officials are willing to broach the issue so publicly suggests there may be a plan in motion.      

All the talk of conscription comes at the same time that the US will be stationing nuclear weapons within the UK after removing them 15 years ago.  It is also probably no coincidence that saber rattling in Europe is rising as American support for Ukraine is waning.  Hundreds of billions of dollars in arms and aid has been sent overseas to no avail, with Ukraine’s war prospects turning more bleak by the month and their long hyped “counter-offensive” resulting in abject failure.

The propaganda machine is exploiting the old Vietnam-era narrative of the “domino effect,” asserting that Putin intends to advance his forces on Europe after taking Ukraine.  There is absolutely no concrete evidence to support this prediction, but war hawks in both the US and the EU repeat it often.  

Dropping hints of a military draft may also be a way for officials to frighten the public into supporting even more funding and weapons for the Ukrainian government in the assumption that if the Ukrainians lose, westerners will be forced to fight in their place.      

The big question? Is the establishment really willing to escalate the proxy war in Ukraine into World War III by openly putting troops on the ground?  It sounds like they want to press the issue but don’t have a way to effectively expand the battlefield. Conscription might solve their conundrum. Ample public resistance could be the only thing standing between the planet and devastating global conflict.  As the old saying goes, “What if they gave a war and no one showed up?”