Authored by Frank Miele via RealClear Politics,

When House Speaker Mike Johnson and 60 GOP members of Congress went to Eagle Pass, Texas, recently for a photo-op, they were probably shocked that the first question they were asked was for a show of hands of those who would shut down the government if President Biden doesn’t shut the border.

You see, that question actually frames unrestricted immigration at the southern border as the existential national crisis which it is. No wonder Texas Republican Rep. Pat Fallon lost it and immediately shouted, “We’re not gonna do ‘show of hands.’ We’re not in a classroom. We’re not doing ‘show of hands.’”

No, of course not. It’s much easier to shut down a reporter seeking the truth than it is to shut down the border and save the country.

The “show of hands” question came from Ben Bergquam of Real America’s Voice, one of the few journalists who has reported the hard realities about the border crisis on a near daily basis for years. He has followed migrants from the dangerous Darién Gap between Colombia and Panama all the way up the cartel corridor through Costa Rica, Nicaragua, Honduras, Guatemala, and Mexico. If you watch his reporting, you will know this is not an innocent caravan of asylum seekers; it is an invasion, plain and simple. He asks each immigrant two questions: Where are you from and where are you going? They are from across the globe, not just Central or South America. Yes, there are plenty from Venezuela, but just as many from Somalia, Egypt, West Africa, or China. And most of them are military age men. They aren’t escaping from persecution or violence; they are coming to America for jobs – and for benefits – and ultimately to drain our country of resources.

Bergquam also travels to the cities where the migrants say they want to go after the Border Patrol helps them cross the border – New York, Chicago, Los Angeles. Those cities have opened their doors to the migrant invasion, and they will pay the price as the newcomers sign up for health care, schooling, welfare, and other benefits. But we are all paying, and at a rate of at least 12,000 illegal migrants a day, the bill is rapidly becoming untenable. The influx of millions of illegals under the Biden regime has cost the nation billions of dollars at a time when our national debt has skyrocketed to an unimaginable $34 trillion. And yet Washington does nothing to solve the problem – not the Biden administration and not the Republican House of Representatives.

That’s why Bergquam asked for a show of hands from the members of Congress who had arrived in Eagle Pass, as though they had just heard of the immigration crisis. Who here is willing to shut down the government if the government doesn’t shut down the border?

It’s a reasonable question. And there were certainly some members on the tour who would have raised their hands – warriors like Andy Biggs and Eli Crane from Arizona, Matt Rosendale from Montana, and others, but the Republican leadership in the House has a dismal habit of surrendering to globalist Democrats who are more interested in settling illegal immigrants in our country than stopping them at the border.

Of course, the mainstream media paints Biggs and Rosendale and others who want to stop the flow of illegals as heartless nationalists – or worse. And when they reject fake solutions that only spend more money to make it easier for migrants to adjust to life in America, the left says they want to exploit the border crisis for political gain. No wonder weak Republicans constantly cave to the phony deals offered by Joe Biden and Sen. Chuck Schumer.

Right now, Republican Sen. James Lankford of Oklahoma is being used as the sacrificial lamb who will shepherd a fake compromise plan through Congress even though it allows up to 5,000 illegal entries per day. If this plan is approved by the Senate, it will give Republicans in the House just one logical response: Shut down the government.

And it won’t be difficult. A large part of the federal government will run out of money on Friday when the continuing resolution that Speaker Johnson “negotiated” with Democrats expires. Craven Republicans would just find some way to keep the government open and pretend that they had won a victory on border security, but smart Republicans know that the Friday deadline is a huge opportunity.

Remember, it takes just one member of the House to bring a motion to “vacate the chair,” and there is no way that Johnson would survive such a motion with the narrow majority Republicans currently hold. At least one GOP member, Marjorie Taylor Greene of Georgia, has threatened to bring such a motion unless the border is shut down. If she does, all business comes to a close until a new speaker is selected, which could easily take weeks.

In other words it would shut down the government. And that, some of us believe, would not be a bad thing – not when the alternative is business as usual at the broken border.

Frank Miele, the retired editor of the Daily Inter Lake in Kalispell, Mont., is a columnist for RealClearPolitics. His newest book, “What Matters Most: God, Country, Family and Friends,” is available from his Amazon author page. Visit him at HeartlandDiaryUSA.com or follow him on Facebook @HeartlandDiaryUSA or on Twitter or Gettr @HeartlandDiary.

One month after the downbeat November Beige Book found economic activity was “slowing“, moments ago the Fed released the latest, December Beige Book in which we find a continuation of said gloominess because a majority of the twelve Federal Reserve Districts reported “little or no change in economic activity since the prior Beige Book period” while of the four districts that differed, three reported modest growth and one reported a moderate decline.

That said, consumers – which as we reported previously loaded up on near-record amount of credit card debt to pay for holiday purchases…

… delivered some seasonal relief over the holidays by “meeting expectations in most Districts and by exceeding expectations in three Districts, including in New York”, which noted strong holiday spending on apparel, toys, and sporting goods. In addition, seasonal demand lifted airfreight volume from e-commerce in Richmond and credit card lending in Philadelphia. Said eruption in credit card usage also boosted leisure travel as several Districts noted, while a tourism contact described New York City as bustling.

On the other hand, contacts from nearly all Districts reported decreases in manufacturing activity while districts continued to note that “high interest rates were limiting auto sales and real estate deals.” The flip side is that the prospect of falling interest rates was cited by numerous contacts in various sectors as a source of optimism; now all we need is for the Biden admin to admit the economy is, in fact, slowing. In contrast, concerns about the office market, weakening overall demand, and the 2024 political cycle were often cited as sources of economic uncertainty.

Overall, “most Districts indicated that expectations of their firms for future growth were positive, had improved, or both”

Some more details from the latest Beige Book, starting with labor markets:

• Seven Districts described little or no net change in overall employment levels, while the pace of job growth was described as modest to moderate in four Districts.
• Two Districts continued to note a tight labor market, and several described hiring challenges for firms seeking specialty skills, such as auto mechanics or experienced engineers in the Boston and San Francisco Districts, respectively.
• However, nearly all Districts cited one or more signs of a cooling labor market, such as larger applicant pools, lower turnover rates, more selective hiring by firms, and easing wage pressures.
• The pace of wage growth was characterized as moderate in Boston, Richmond, Chicago, and Dallas; as modest in New York and Philadelphia; and as slight in St. Louis.
• Firms from many Districts expected wage pressures to ease and wage growth to fall further over the next year.

Turning to price pressures, six districts noted that their contacts had reported slight or modest price increases, and two
noted moderate increases. Five districts also noted that overall price increases had subsided to some degree from the prior period, while three others indicated no significant shift in price pressures. Some more:

• Firms in most Districts cited examples of steady or falling input prices, especially in the manufacturing and construction sectors, and more discounting by auto dealers.
• Districts also noted that increased consumer price sensitivity had forced retailers to narrow their profit margins and to push back in turn on their suppliers’ efforts to raise prices.
• Premium increases for property and casualty insurance and for health insurance continue to impact most firms.
• Three Districts noted that their firms were expecting price increases to ease further over the next year, while four Districts’ firms anticipated little change

Turning to the specific regional Feds, we found these summaries notable

• Boston:  Economic activity was down slightly. Employment was stable, and wage growth was moderate. Manufacturers reported mostly weaker sales but remained cautiously optimistic for 2024. The Boston area experienced strong growth in tourism and convention activity. Home sales stayed in the doldrums, but contacts expressed optimism that the market would rebound in 2024 pending a decline in home mortgage rates.
• New York: Regional economic activity declined slightly. Labor market conditions remained solid but continued to cool as the demand for labor softened. Led by a strong holiday season, consumer spending increased moderately. Manufacturing activity contracted sharply. Prices rose modestly. Businesses and households across the District expressed concern about the high cost and reduced availability of credit.
• Philadelphia: Business activity held steady during the current Beige Book period—after falling for most of 2023. Employment grew slightly, and labor availability improved. Wage and price inflation subsided further, with prices rising at a slight pace as consumers pushed back more on higher prices, especially among lower-income households. Sentiment improved, but firms remained cautious and expectations for economic growth remained subdued.
• Cleveland: District business activity edged up. Employment stabilized, and wage increases returned to more typical levels. Cost and price pressures changed little after easing through much of 2023, though upward price pressure persisted in certain industries. Retailers reported strong sales for discounted items, and consumers became more reliant on “buy now, pay later” payment options.
• Richmond: The regional economy grew mildly in recent weeks as consumer spending was flat to increasing modestly. Nonfinancial services demand and commercial real estate activity was little changed. Meanwhile, trade and trucking volumes were down modestly and residential housing sales and mortgage lending softened. Employment and wages rose moderately and inflation moderated but remained elevated.
• Atlanta: Economic activity grew at a slow pace. Labor markets cooled further, and wage pressures eased. Some nonlabor input costs moderated. Retail sales were mixed. Travel activity remained strong, but spending at hotels declined. Home sales slowed, on balance. Banking conditions were mixed. Transportation activity was sluggish. Energy demand was robust.
• Chicago: Economic activity in the Seventh District was up modestly. Employment increased moderately; nonbusiness contacts saw a modest increase in activity; consumer spending was up slightly; construction and real estate and business spending were flat; and manufacturing decreased modestly. Prices and wages rose moderately, while financial conditions loosened modestly. Net farm incomes were above average in 2023.
• St. Louis: Economic activity has remained unchanged since our previous report. Labor markets eased, and the rate of price increases for many firms has slowed over the past few months. Travel and hospitality firms reported strong leisure travel growth during the holiday season and an optimistic outlook for the upcoming year. Rental prices were flat and residential inventory rose slightly.
• Minneapolis: District economic activity was down slightly. Hiring was positive but job postings declined. Wage pressures continued to moderate, approaching pre-pandemic conditions. Price increases were mild, with most firms reporting no change in input or final prices. Holiday sales and traffic were generally strong, but construction and manufacturing activity decreased.
• Kansas City: Economic activity in the Tenth District declined moderately. Consumer spending fell, even at low-cost quick-serve restaurants. Demand for seasonal employment was low, with few workers converting to full-time. Commercial real estate transactions were suppressed, while CRE loan modification activity was inhibited by lenders’ concerns about credit performance and borrower liquidity.
• Dallas: Economic activity expanded at a modest pace over the reporting period, with most sectors holding steady or experiencing slight growth. Wage growth moderated and input cost and selling price growth held slightly above average overall. Business outlooks were neutral to pessimistic, with contacts citing weakening demand as the primary concern going forward.
• San Francisco: Economic activity was stable overall. Labor availability improved, and wage and price pressures eased. Retail sales grew modestly, and demand for services was mixed. Demand for manufactured products weakened, while conditions in agriculture were solid. Real estate activity varied by property type. Financial sector conditions changed little.

One particular highlight: The Kansas City Fed notes that “commercial real estate transactions were suppressed, while CRE loan modification activity was inhibited by lenders’ concerns about credit performance and borrower liquidity.” In other words, the Fed is now on notice that unless it cuts rates, a CRE accident is just waiting to happen.

Finally, taking a visual approach to the data, we find that after mentions of inflation dropped to the lowest since Jan 2022 in November, in January there was a material rebound with 15 mentions of the world, suggesting that prices may indeed be headed higher.

Perhaps the only silver lining in today’s data is that while we would expect mentions of “slowing” to jump in keeping with the broader report theme, what actually happened was a drop in the use of that word to the lowest since April 2022, suggesting that a soft landing is still possible but only if the Fed is careful and eases into it.

More in the full Beige Book (link).

As the World Economic Forum (WEF) kicks off in Davos, Switzerland, two people are the talk of the town – Donald Trump and Volodymyr Zelensky – the former of whom just cemented his position as the leader of the Republican party going into the 2024 US election, and Zelensky, who was freaking about about it.

According to the NY Times, “Zelensky used an expletive to describe a Trump claim about containing Vladimir Putin,” (without revealing said expletive), and suggested that if the US withdraws support, Europe will ‘lose Ukraine.’

At a Q. and A. with journalists that Andrew moderated, Zelensky dismissed the idea that Trump could stop the Russian president from going after other parts of Europe. Putin, he added, “will not stop — but the question is what will the U.S. and Trump do after this point, because in this case it will mean that Europe lost the most useful and most strong army in Europe because we lost Ukraine.”

Zelensky makes an appearance at Davos World Economic Forum to beg for more money to start World War 3.

Zelensky has ‘Maternity Uniforms’ for pregnant women that go to the frontlines.

Ukraine is a Money Laundering and Human Trafficking Operation. pic.twitter.com/tRmhvodlo1

— Liz Churchill (@liz_churchill10) January 16, 2024

He also demanded EU troops for Ukraine.

Zelensky demands EU troops for Ukraine.

“How many men and women are you willing to send to protect another country?”

Europeans are you ready to fight and die to protect Zelensky and globalists billions? pic.twitter.com/WVJFsHa87O

— Dagny Taggart (@DagnyTaggart963) January 17, 2024

Following his decisive victory in this week’s Iowa Caucus, Trump pledged that if he wins the election, he’ll solve the war in Ukraine “very quickly” because he knows Russian President Vladimir Putin and Zelensky “very well.”

“Putin and I get along great”

Trump again promised to end the war in Ukraine “very quickly” if he is elected US President

“I know President Putin and President Zelensky well. I believe it is possible to resolve this situation very quickly… This should never have happened.… pic.twitter.com/FCgfiS3T1R

— S p r i n t e r (@Sprinter99800) January 16, 2024

According to the Times, Zelensky initially downplayed worries about Trump, and whether the former US president’s re-election would lead to a drop in support for Ukraine. “One man cannot change the whole nation,” he said during the Q&A.

Zelensky later acknowledged that a win for Trump could affect his country’s military campaign or settlement talks, claiming that “radical voices from the Republican Party” have caused tension and pain for Ukrainians.

More via DealBook:

Zelensky isn’t the only leader at Davos worried about Trump. Multiple attendees have told DealBook that the outcome of the election is a potential risk for business, particularly after the former president thumped his Republican rivals in the Iowa caucuses.

The Ukrainian leader has sought to shore up global business support. He spoke at a private gathering of executives organized by JPMorgan Chase, which is advising Ukraine on its reconstruction efforts.

In the audience at the Congress Center for the talk were Steve Schwarzman of Blackstone, Ray Dalio of Bridgewater, David Rubenstein of Carlyle and Michael Dell of Dell, DealBook hears.

Zelensky also said that US-China tensions are affecting Ukraine, and that bringing Beijing in for postwar reconstruction is important.

He also called on anyone of ‘mobilization age’ in Ukraine to fight, and for punishing Putin’s children and grandchildren.

“If you are of mobilization age, you should be in Ukraine”

– Zelensky

“This is a fact. And then you will fight or not fight. You will work. You cannot rest. You either work or fight,” said the President of Ukraine.
pic.twitter.com/SYQEcnlc6o

— The_Real_Fly (@The_Real_Fly) January 17, 2024

Zelensky calls for punishment for Putin’s children and grandchildren pic.twitter.com/JRFqjwjcZD

— The_Real_Fly (@The_Real_Fly) January 17, 2024

Well then.

Authored by Mike Shedlock via MishTalk.com,

The climate fear-mongers are pressuring Biden to ban natural gas exports. Let’s discuss the ramifications.

Climate Test for Natural Gas Exports

Politco notes Biden’s Aides Weigh Climate Test for Natural Gas Exports.

The Biden administration is launching a review that could tap the brakes on the booming U.S. natural gas export industry — a move that threatens to pit the president’s climate ambitions against his foreign policy agenda.

The review being led by the Department of Energy will examine whether regulators should take climate change into account when deciding whether a proposed gas export project meets the national interest, according to two people familiar with the action who were granted anonymity to discuss deliberations that have not yet been publicly acknowledged.

U.S. gas exports have jumped four-fold during the past decade as production has surged, turning the United States into the world’s largest natural gas exporter and helping Europe replace Russian shipments after Moscow’s invasion of Ukraine. But Biden also faces growing pressure from environmental groups to live up to his pledge to transition away from fossil fuels — something the U.S. also promised to do at last month’s climate summit in Dubai.

Roishetta Ozane, the founder of environmental group Vessel Project of Louisiana, welcomed the news that the Biden administration may be rethinking how it determines whether a proposed project is in the public interest. Ozane is among a group of green activists planning to protest next month at the Energy Department headquarters to pressure the administration to change how it evaluates export proposals.

“We’re really hoping that DOE will pause any new permits for industry, because we know that the Biden administration really needs a climate win and in order for them to win” the 2024 election, said Ozane, whose hometown of Sulphur, La., is within an hour’s drive of three LNG plants. “If these politicians want to be elected or re-elected in this upcoming presidential election, they’re going to have to make some bold choices and some bold moves.”

Democrats have been asking the Biden administration for months to consider how shipping massive amounts of natural gas overseas affects greenhouse gas emissions. Sen. Jeff Merkley (D-Ore.) asked Granholm in a letter last year to review how DOE weighs whether a project is in the public interest.

Democratic Minnesota Sen. Tina Smith said it was a mistake to ignore the pollution produced by the LNG sector.

Climate Win For Biden?

“We know that the Biden administration really needs a climate win and in order for them to win.”

The public is more than a bit sick of the policies of this administration. Banning natural gas exports would hurt Biden’s elections chances.

Biden Threat

Just some back of the napkin math based on US LNG exports in 2023

Assuming an average price of $10 per million British thermal units (MMBtu) and an average conversion rate of 0.005367 MMBtu per metric ton of LNG, the estimated revenue generated by U.S. LNG exports in 2023 would…

— Tracy (𝒞𝒽𝒾 ) (@chigrl) January 16, 2024

Natural Gas Math

91.2 million tons * 0.005367 MMBtu/ton * $10/MMBtu = $48.8 billion. If we look at oil exports (back of the napkin math) 3.99 million b/d (avg) * $80/barrel (avg 2023)* 365 days = $110.5 billion. That seems like a lot of revenue for a country $34T in debt to stifle…just saying.

The top five dry natural gas-producing states in 2022, by amount and percentage share of total U.S. dry gas production, were:

Texas—9.25 Tcf—25.4%
Pennsylvania—7.41 Tcf—20.4%
Louisiana—4.04 Tcf—11.1%
West Virginia—2.69 Tcf—7.4%
Oklahoma—2.51 Tcf—6.9%

— Mike “Mish” Shedlock (@MishGEA) January 17, 2024

But what is this really about?

Banning LNG exports would tend to lower prices.

My Guess

My Guess

Biden will not want to give trump another energy card.

— Mike “Mish” Shedlock (@MishGEA) January 17, 2024

Biden will not want to give Trump another energy card.

Nor will he want to risk Pennsylvania.

Addendum

One of my readers noted a point I failed to mention: Russia will sell more natural gas as a result.

Bingo: Reducing exports does not change global demand. It will only shift the source of the supply.

By Greg Miller of Freightwaves

U.S. and U.K. airstrikes on Houthi positions in Yemen have not made the Red Sea any safer for shipping. “Red Sea issues are getting worse, not better,” said Stifel shipping analyst Ben Nolan.

The dry bulk carrier Gibraltar Eagle, owned by Connecticut-based Eagle Bulk (NYSE: EGLE), was struck by an anti-ship ballistic missile in the Gulf of Aden on Monday. The Greek-owned dry bulk carrier Zografia was hit by a missile in the southern Red Sea on Tuesday.

Energy shipper Shell halted all Red Sea transits on Tuesday, as did the big three Japanese tanker and bulker owners: MOL, NYK and K-Line.

Container-ship diversions around the Cape of Good Hope now appear likely to last for months. Spot rate gains from diversions will almost certainly extend into the period when 2023 annual trans-Pacific contracts are negotiated, pushing up contract rates.

The Red Sea effect on tanker trades remains uncertain, although a tipping point may be very near. If crude and product tankers divert away from the Red Sea and Suez Canal to the same extent as container ships, tanker spot rates should rise, because longer voyages would soak up tanker capacity.

Will tankers follow container ships around Cape?

“There has already been a sharp decline in container ships approaching the Gulf of Aden, which feeds into the narrow Bab-el-Mandeb Strait, and there are likely to be major declines across other shipping segments as well in the coming weeks,” predicted Omar Nokta, shipping analyst of Jefferies, in a client note on Tuesday.

Ship-position data shows container transits down precipitously, tanker transits down modestly, and dry bulk transits down very little if at all.

Container-ship arrivals in the Gulf of Aden were at their lowest level on record last week, down 90% from the 2023 average, according to Clarksons Securities.

In contrast, bulk carrier arrivals in the Gulf of Aden were in line with the historical average, and tanker arrivals were down 20% versus 2022-2023 levels, according to Nokta, who cited Clarksons data.

According to data from commodity analytics group Kpler, the moving average of tanker transits of the Suez Canal had fallen to 14 per day as this week, the lowest level since May 2022 and down from an average of 22 per day a month ago.

In other words, there are detours on the tanker side, which are positive for rates, but still nothing close to what’s being seen in container shipping.

Potential for ‘widespread rerouting’ of tankers

“So far, most tanker owners remain unwilling to commit to a costly rerouting around the African Cape,” said ship brokerage BRS on Monday.

“Since the events of Friday [the beginning of coalition strikes in Yemen], shipping data implies that only a handful of tankers heading from east to west have definitely changed course away from the Red Sea. Most other tankers in the Middle East scheduled to head west appear to be delaying their passage.

“Accordingly, there remains the potential that widespread rerouting could occur over the coming days. If this were to take place, it would provide a significant injection of ton-miles [demand measured in volume multiplied by distance] into the market,” said BRS, which sees the highest potential rate upside for tankers carrying refined products from east to west.

Skyrocketing insurance premiums could tip the scales

Spiking insurance costs could ultimately tip the scales for tankers toward the Cape route, said Frode Mørkedal, shipping analyst at Clarksons Securities.

“War risk insurance premiums for ships have skyrocketed,” Mørkedal wrote in a client note on Monday, prior to the attacks on the Gibraltar Eagle and Zografia.

“In the past few weeks, premiums have increased from 0.1% normally to 0.5% of a ship’s hull value. With the escalation of tensions in the Red Sea, we would not be surprised if insurance premiums increase to 1% of the ship’s value.”

Mørkedal cited the example of a 10-year-old LR2 (Long Range 2) product tanker valued at $60 million. The premium is now $300,000, quintuple the usual $60,000. If premiums rose to 1% of hull value, the cost would jump to $600,000. And on top of insurance, the Suez Canal transit fee for an LR2 is around $500,000.

In comparison, the extra fuel cost of taking an LR2 around the Cape at 12 knots would be $250,000. “Shipowners and charterers may find that rerouting around Africa is more cost-effective than incurring the combined costs of Suez Canal transit fees and insurance premiums,” said Mørkedal.

Richard Meade, editor in chief of Lloyd’s List, a publication that covers both shipping and insurance, wrote late Tuesday that Red Sea premiums have now risen to 1% of hull value, that a “tipping point has been reached,” and that further diversions of tankers and bulkers should be announced within the next 24 hours.

It’s just not Boeing’s year

After the recent fiasco involving the Boeing 737 Max, aka the “convertible” model, and the subsequent grounding the last thing the woke aerospace giant needed was more focus to its DEI-inspired airplane production practices (where airplanes are “designed by clowns, who in turn are supervised by monkeys” but it’s all very equitable and anti-white). Alas, that’s precisely what it got moments ago when Bloomberg reported that US Secretary of State Antony Blinken was unable to fly home from Davos as scheduled on Wednesday due to a critical error with his aircraft…. which, you may have guessed – is a Boeing 737.

After flying from Davos on helicopters (the gas-free variety, because we all know that the Davos set is very concerned about the environment and CO emissions) and boarding the modified Boeing 737, Blinken and his party were informed that the aircraft had been deemed unsafe to fly. An oxygen leak detected previously could not be remedied.

A smaller jet (supposedly “more private” and even more gas-guzzling, yet one that does not spontaneously become a convertible model mid-air) was being flown to Zurich from Brussels to ferry home the top US diplomat, while many of his aides and members of the press pool had to travel to Washington commercially. Those peasants.

Last September, Canadian Prime Minister Justin Trudeau got stuck in India after a Group of 20 summit in New Delhi after a mechanical fault with his plane. Back in 2018, then German Chancellor Angela Merkel’s plane also suffered from a malfunction.

The 911 call for Defense Secretary Lloyd Austin’s January 1st admission to Walter Reed National Military Medical Center has been released and it shows that from the very first moment of his health emergency, his aides and staff tried to make it discreet. 

“Can the ambulance not show up with lights and sirens? We’re trying to remain a little subtle,” said the caller, whose identity hasn’t been released. The ambulance later arrived to a residence on Austin’s street in Virginia.

A 911 obtained call by @CBSNews reveals that an aide to Secretary of Defense Lloyd Austin asked the dispatcher to handle the emergency discreetly, and for “no lights” and “no siren.” pic.twitter.com/nrI0l1zMfF

— CBS Evening News (@CBSEveningNews) January 17, 2024

The 911 audio file from the Fairfax County Public Safety Department was obtained through a Freedom Of Information (FOIA) request and first reported by The Daily Beast and subsequently released by CBS and others.

The whole audio exchange wherein the caller clearly doesn’t want neighbors or the public for that matter to know is made all the more interesting in light of what unfolds communications-wise during the week following, in which even the White House was kept in the dark while the Pentagon chief was in the ICU for several days, as we’ve detailed before.

According to more details from the recording: 

The 911 recording partly redacted information about Austin’s medical condition, as well as his primary complaint. The recording includes a series of unredacted answers to questions from the dispatcher about his condition.

Austin didn’t have chest pain, and he did feel like he was going to pass out, according to the caller’s answers. The caller also said Austin was alert and hadn’t vomited blood or had blood in his stool. One of the dispatcher’s questions was redacted.

The caller also asked whether it was possible for the ambulance to take Austin to Walter Reed in Bethesda. The dispatcher asked the caller to let the medics know that when they arrived.

The medical episode was reportedly due to with complications resulting from earlier prostate cancer treatment, and Austin stayed in the hospital for two weeks, and now is currently said to be working from home.

The White House has meanwhile stonewalled inquiries, merely saying “we don’t want this to happen” again…

White House Press Secretary Karine Jean-Pierre doesn’t have the faintest idea why Biden was kept in the dark about Lloyd Austin’s cancer diagnosis and hospitalization.

So much for national security. pic.twitter.com/320P6NMMb4

— Julia 🇺🇸 (@Jules31415) January 9, 2024

Austin has faced increasing calls from Congressional leaders and former defense officials to resign, given he failed to properly notify the Commander-in-Chief, also at a moment the batuib;s armed forces are involved in several hotspots from Ukraine to Syria and Iraq to the Red Sea and in the Gaza crisis.

Austin says he’s taken full responsibility and “could have done a better job ensuring the public was appropriately informed”—yet has refused to resign. President Biden has at the same time said he would not accept Austin’s resignation if he were to try to step down. It’s a scandal that Republicans will likely seize upon going into the November election. 

Authored by Simon White, Bloomberg macro strategist,

Retail sales data today further chiseled away at the odds of a March rate-cut, but the chance of reductions in subsequent meetings is likely to commensurately rise, and thus flatten e.g. the April versus May spread in fed funds futures.

“Who knows best?” is being played out again between markets and the Federal Reserve.

The market is of the (weighted-average) view that rate cuts – six of them – will be required this year.

The Fed, at least going by Board of Governors member Christopher Waller in a speech on Tuesday, is not yet convinced. He stressed there is no reason to move as quickly or cut as rapidly as in the past.

The market reluctantly knocked a couple of basis points off the pricing for a March rate cut, but leaving the probability still at 60-65%. About six bps were knocked off expected cuts through the whole of 2024.

Retail sales in the US have been buoyant in recent months, exceeding many expectations as pandemic savings were estimated to have been depleted by now (for those with a propensity to spend).

Short-term leading data anticipates that real retail-sales growth should continue to rise…

…while other data that was hitherto negative for consumption, such as homebuyer affordability and mortgage rates (see chart below), have inflected higher.

But the market is unlikely to give up on rate cuts so easily if perceived risks to financial stability are rising, which would be coherent with such a dovish outlook in the absence of a sudden deterioration in the economic data. Banks are bringing forward their tapering and end dates for quantitative tightening, while the Fed’s reverse repo facility (RRP) continues to fall at an increasing rate.

The chart below shows the domestic RRP and reserves. The horizontal dashed line is the approximate upper-end of where Waller believes the endpoint is for QT, which he re-iterated in Tuesday’s speech as being about 10-11% of GDP.

No bank will want to run their reserves down to their so-called lowest comfortable level, preferring instead to keep a buffer.

As the system approaches the Waller target, perceived risks will rise, and buffers are likely to be increased.

Reserves could go from abundant to scarce very quickly.

Under this lens, the greater expectation of rate cuts is the market’s way of expressing that the risk outlook could quickly deteriorate.

Thus even if a March cut is largely priced out, a cut in the May meeting is likely to be more priced in.

As we noted yesterday, this should keep pressure on the April versus May fed funds spread (which was 24.5 bps on Tuesday and is 23 bps today).

Speaking at the World Economic Forum (WEF) in Davos, Iranian Foreign Minister Hossein Amir-Abdollahian has warned that “we are witnessing an expansion of the conflict in the Middle East.”

Many Western leaders and officials present are not happy that the Iranian top diplomat was given prominence on the main stage at Davos Wednesday, which included an interview with CNN’s Fareed Zakaria. During that discussion Abdollahian boasted that Iran’s ballistic missile attack on northern Iraq on Monday targeted “elements and agents of Mossad” in Erbil.

There are reports that a building used as a Mossad headquarters in the region was blown up by the short-range ballistic missile strike. The below image has circulated widely on social media, purporting to show the destroyed alleged Israeli intelligence center…

As for the Iranian Foreign Minister’s presence on the Davos stage, it reportedly drew a huge media presence, and Politico captured some of the shock and anger among attendees in a blog entry called “Iran Comes to Town”:

IRAN IN THE SPOTLIGHT: One of the international community’s best-known pariah states — Iran — will have pride of place at the WEF today, when Foreign Minister Hossein Amir-Abdollahian is interviewed by CNN’s Fareed Zakaria in the Congress Center.

Awks: The Iranian’s appearance is scheduled a few hours after U.S. Secretary of State Antony Blinken graces the stage. (Don’t expect any fist-bumps in the corridors.)

Courting controversy: Amir-Abdollahian was a relatively last-minute addition to the schedule — a move that’s being slammed by groups like United Against Nuclear Iran.

Interesting company: One of Amir-Abdollahian’s recent international visits was to Qatar, where he met with Ismail Haniyeh, the head of the political bureau of Hamas. And just a couple of days ago, Amir-Abdollahian spoke by phone with Russian Foreign Minister Sergey Lavrov.

Iran has also been accused by the US of arming the Houthis even as the Yemeni rebel group wages war on international shipping in the Red Sea. Sky News Arabia has also newly cited a US defense official who says the Houthis “have prepared plans to target US bases in the Arab region.”

Prior to taking the stage with Fareed Zakaria, Abdollahian on Tuesday told CNBC that Washington’s backing of Israel is “the root of insecurity” in the Middle East. “The US should not, Mr. [Joe] Biden should not, tie their destiny to the fate of Netanyahu,” he had said. “The full-scale cooperation of Biden and the White House with thugs like Netanyahu in Israel is the root of insecurity in the region.”

He had a similar theme Wednesday on the Davos main stage. Within 24 hours prior, Iran had also launched missiles on an area of Pakistan’s southwest Balochistan province, said to be targeting the Sunni militant group Jaish al-Adl, which is known in Iran as Jaish al-Dhulm. Tehran said this is in response to the Kerman city suicide bombing which killed over 100 people on January 3rd.

Watch Iran’s foreign minister and CNN’s Zakaria on stage at Davos…

🔴LIVE: Iran FM Amir-Abdollahian takes part in debate on sidelines of World Economic Forum in Davos https://t.co/FFJNe5vQ4i

— Press TV (@PressTV) January 17, 2024

Abdollahian was asked about this and the attack on Iraq, and responded to Zakaria, “We have good relations with both Pakistan and Iraq, and we have security pacts with both fighting terrorism & securing our common borders. We targeted the Mossad headquarters in Erbil with missiles, not Iraq.”

However, he also stressed, “We don’t tolerate terrorist presence in Pakistan and the Zionist presence in Erbil. We consider the security of Iraq and Pakistan as part of Iran’s security.” He claimed that Iran didn’t target Pakistani nationals, despite Pakistan reporting that two children were killed as a result of the missile strikes. Throughout the interview with Zakaria, the Iranian FM charged Israel with genocide, and also blamed the West – including the United States – for enabling the mass killing of Palestinians.

Fed Governor Waller started it with a significant reversal from his earlier dovish exuberance that helped kick off an unprecedented rally in bonds and stocks (and easing of financial conditions to end last year), but positioning The Fed’s next move as slow and steady and no rush (suggesting a March start is off the tabel and six cuts are unlikely).

Then Christine Lagarde attempted some open-mouth operations this morning from Davos, seemingly issuing forward guidance on the ECB’s actions (but notably walking back the expectations of an April cut). When asked about rate-cuts in 2024, she replied:

“I would say it’s likely too,” Lagarde said.

“But I have to be reserved, because we are also saying that we are data dependent, and that there is still a level of uncertainty and some indicators that are not anchored at the level where we would like to see them.”

Lagarde also warned that market expectations weren’t helping policy makers in their fight against inflation.

And then UK inflation hit, reaccelerating unexpectedly for the first time in 10 months. The Consumer Prices Index rose 4% from a year earlier in December, up from a 3.9% rise the previous month, the Office for National Statistics said Wednesday. Economists had expected a slight fall to 3.8%. Services inflation also increased, and a core measure stripping out food and energy held at 5.1%.

UK food inflation continued to slow, dropping to 8% from 9.2% in November. That was more than offset by an increase in alcohol and tobacco prices, which rose by 12.8% from a year ago.

BOE Governor Andrew Bailey has stuck to his higher-for-longer messaging on rates, warning that January’s CPI figures could show an increase due to higher household energy bills.

“The rise in inflation today suggests that the market has got ahead of itself in expecting early rate reductions,” said Ed Monk, associate director at Fidelity International.

“Today’s reading is a setback. The last portion of above-target inflation may prove the most difficult to shift.”

All of which sent yields higher in each region and rate-cut expectations in the US, EU, and UK are all sliding fast (most notably the latter)…

This month’s inflation figures pour cold water on the market’s ‘mission accomplished’ attitude towards central bank inflation-battling.

“Inflation was never going to be a straight line down, as we have seen in the US and Europe,” said Luke Hickmore, investment director at abrdn.

“Rates will fall this year but market expectations around when and how much are going to be very volatile.”

Stocks, bonds, and gold are all lower this morning, and the dollar stronger after this ‘hawkish’ shift.