Authored by Victor Davis Hanson via RealClear Wire,

It is understandable that Claudine Gay is furious over her forced resignation, her calamitous fall from grace, and the public consensus about the great damage done to Harvard by her presidency.

But still, playing the wounded fawn is no excuse or defense.

Thus Claudine Gay’s recent New York Times disingenuous op-ed alleging racism as the prime cause of her career demise was, to quote Talleyrand, “worse than a crime, it was a blunder.” And her blame-gaming will only hurt her cause and reinforce the public’s weariness with such boilerplate and careerist resorts to racism where it does not exist.

Gay knows that her meteoric career trajectory through prestigious Phillips Academy, Princeton, Stanford, and Harvard was not symptomatic of systemic racism, but rather just the opposite – in large part through institutional efforts to show special concern, allowances, and deference due to her race and gender.

And she knows well that her forced resignation was not caused by a conspiracy of conservative activists. It came at the request also of liberal op-ed writers in now embarrassed left-wing megaphones like the New York Times and the Washington Post, black intellectuals, and academics – and donors who usually identify, like the vast majority of Harvard philanthropists, as liberal Democrats.

Gay knows, too, that in her now notorious congressional testimony, had she just offered an independent assessment of the epidemic of antisemitism on her campus and a Harvard plan to stop it (rather than joining in the finger-in-the-wind groupthink of the other two presidents), and had she not been guilty of long-standing, serial, and flagrant plagiarism, she would still have her job.

Gay knows that other white university presidents have recently been forced to resign for far less culpable behavior than her own. Pennsylvania president Liz Magill was forced to quit after her Dec. 5 seeming inability or unwillingness to act against blatant antisemitic speech and conduct on her own campus, or Stanford’s president Marc Tessier-Lavigne for co-authoring, some decades earlier, scientific papers whose results were not always based on authenticated data.

Again, as for Gay’s insinuations of a cabal that took her down, she also knows that such a charge is no more true or false than the public outrage, both liberal and conservative, over Magill’s obtuseness, or the largely left-wing effort to remove the white male Tessier-Lavigne.

Gay knows that she herself has disciplined and censored lots of Harvard professors, among them preeminent black scholars, such as Roland Fryer and Ronald Sullivan, on speculative allegations far less egregious than her own serial plagiarism and inconsistent policies of addressing “hate speech.” Did anyone suggest she was then a “racist”?

Gay knows that as president she oversaw a code of behavior that routinely severely disciplined students, staff, and professors for plagiarism of a nature far less serial and systematic than her own.

Gay indeed knows that her plagiarism was far more serious than suggested by her half-hearted defense of her scholarship (“I have never misrepresented my research findings, nor have I ever claimed credit for the research of others”).

In fact, when anyone – again and again – copies word-for-word whole paragraphs without attribution or quotation marks, or lifts entire sentences and appropriates the thoughts of another without sufficient footnotes, that is precisely “misrepresentation” and claiming “credit” where credit is not due. If a Harvard president and full professor makes such a defense of intellectual theft, what will it say in the future about Harvard?

Gay knows that her claim of being proactive in correcting some lifted passages was not proactive at all. It was entirely reactive and came only in response to criticism of her scholarly methods.

Gay knows that she has done irrevocable damage to Harvard; given the Harvard Corporation, its legal team, its 700 supportive faculty letter-signers, and its satellite freelancers leave to embarrass themselves further; and gravely eroded the institution’s reputation and credibility by going out of their way to defend the indefensible solely on her behalf:

• By threatening legal action against the New York Post for airing the legitimate charges of plagiarism
• By creating a new, ad hoc vocabulary to legitimize her plagiarism (“duplicative language”/“missteps”)
• By also echoing her charges of racism (and in surreal fashion without any self-awareness that if such charges were true, then Harvard would not have forced her to resign or at least would have refused her resignation)
• By claiming that anonymous complaints of her intellectual theft were somehow illegitimate by virtue of their whistleblower status
• By absurdly insinuating that plagiarism is not plagiarism if the plagiarized does not complain

There was one key issue that Gay neither raised nor much less resolved: Given that now Professor Gay has made no effort to explain item by item all the allegations of decades-long and habitual plagiarism, does she feel now exempt from such charges as a Harvard professor of political science?

And if so, is her faculty exemption of the sort usually accorded other professors and students under similar suspicion of plagiarism?

In the end, was it really asking too much of a Harvard president just to do two things? 1) Explain to Congress why there was a problem of antisemitism at Harvard, and then outline the concrete steps she would take to stop the spread of growing antisemitic speech and conduct at her campus, and 2) Don’t plagiarize the work of other scholars?

This article originally appeared on X, formerly Twitter, Jan. 4, 2024.

It’s what Goldman’s head of TMT trading, Peter Callahan, calls the story of the day: almost a year after IBM said it would stop hiring for roles that can be replaced by AI, with Goldman estimating that some 300 million non-menial, highly paid workers could be made redundant thanks to AI (which will automate up to one-fourth of current work tasks)…

… overnight, Bloomberg reported that Duolingo, maker of language-learning software, is cutting 10% of contracted workers while using generative artificial intelligence to create more content, the latest sign that companies are handing off tasks typically handled by (paid) workers to (largely free) AI tools. It is, according to Callahan, one of the first “efficiency gains on the back of A.I” headlines that he recall seeing (“even if this is small in scope, it is a notable datapoint for the GenAI theme.”)

“We just no longer need as many people to do the type of work some of these contractors were doing. Part of that could be attributed to AI,” a Duolingo spokesperson said, confirming that 10% of contractors were “offboarded.”

Chief Executive Officer Luis von Ahn said in a November letter to shareholders that the company is using generative AI to produce “new content dramatically faster,” such as the scripts to shows that help teach languages. The company also uses AI to generate voices within the app and has introduced a premium tier, Duolingo Max, with AI-generated feedback and conversations in other languages.

Naturally, the market rewarded this announcement, pushing DUOL stock 3% higher after more than tripling in 2023. This, of course, guarantees that most publicly-traded companies will follow suit and fire all non-critical workers in coming months, sparking an avalanche of new layoffs and forcing the Fed to actively consider how the coming Universal Basic Income wave will be funded.

As Bloomberg notes, the intense interest in generative AI has led employee groups and unions to question whether businesses will use the technology as an excuse to reduce their workforce (spoiler alert: they will). A report published in April by the World Economic Forum estimated that AI would cause “significant labor-market disruption” over the next five years, though the net impact may be positive as employers seek workers with more technical skills to navigate the use of the technology. Actually, the net impact will be catastrophic and will lead to mass riots around the world and certainly in China where labor protests just hit a 7 year high in 2023.

Last month, Microsoft responded to those concerns and announced an alliance with the American Federation of Labor and Congress of Industrial Organizations, which is made up of 60 unions that represent 12.5 million workers, to train people about AI and look at how the technology may affect employment.

At an event announcing the partnership, Microsoft President Brad Smith said the goal is to bring industry and labor to the table to “enhance” the way people work.

“I can’t sit here and say that AI will never displace a job,” Smith said the event. “I don’t think that would be honest. AI is well-designed to accelerate and eliminate some of the parts of people’s jobs that you might consider to be drudgery.”

Translation: AI will displace millions of jobs… and since the large language models behind AI are trained using such leftist garbage as WaPo, NYT and Business Insider, the results will be nothing short of hilarious.

Authored by Robert Malone via The Brownstone Institute,

Starting in the mid-20th century, companies began distorting and manipulating science to favor specific commercial interests.

Big tobacco is both the developer and the poster child of this strategy.

When strong evidence that smoking caused lung cancer emerged in the 1950s, the tobacco industry began a campaign to obscure this fact.

The Unmaking of Science

The tobacco industry scientific disinformation campaign sought to disrupt and delay further studies, as well as to cast scientific doubt on the link between cigarette smoking and harms. This campaign lasted for almost 50 years, and was extremely successful…until it wasn’t.

This tobacco industry’s strategic brilliance lay in the use of a marketing and advertising campaign (otherwise known as propaganda) to create scientific uncertainty and sow doubts in the minds of the general public. This, combined with legislative “lobbying” and strategic campaign “donations” undermined public health efforts and regulatory interventions to inform the public about the harms of smoking and the regulation of tobacco products.

Disrupting normative science has become a de rigueur component of the pharmaceutical industry business model. A new pharmaceutical product is not based on need; it is based on market size and profitability. When new data threatens the market of a pharmaceutical product, then that pharma company will try to sprout the seeds of scientific uncertainty and lack of proof. For instance, clinical trials can be easily coopted to meet specified end-points positive for the drug products. Other ways to manipulate a clinical trial include manipulating the dosing schedule and amounts. As these practices have been exposed, people no longer trust the science.

Fast forward to the present, and the entire industry of evidence-based (and academic) medicine is now suspect due to the malfeasance of certain pharma players. In the case of Covid-19, Pharma propaganda and cooptation practices have now compromised the regulatory bodies controlling the pharma product licensing and deeply damaged global public confidence in those agencies.

We all know what climate change is. The truth is that the UN, most globalists, and a wide range of world leaders” blame human activities for climate change. Whether or not climate change is real or that human activities are enhancing climate change is not important to this discussion. That is a subject for another day.

Most climate change scientists receive funding from the government. So they must comply with the government edict and policy position that human activity-caused climate change is an existential threat to both humankind and global ecosystems. When these “scientists” publish studies supporting the thesis that human activities cause climate change, they are more likely to receive more grant monies and therefore more publications and therefore are more likely to be academically promoted (or at least to survive in the dog-eat-dog world of modern academe).

Those who produce a counternarrative from the government-approved one soon find themselves without funding, tenure, without jobs, unable to publish and unable to procure additional grants and contracts. It is a dead-end career wise. The system has been rigged.

And by the way, this is nothing new. Back in the day, during the war on drugs, if a researcher who had funding by the NIH’s NIDA (National Institute of Drug Addiction) published an article or wrote an annual NIH grant report showing benefits to using recreational drugs, that would be a career-ending move, as funding would not be renewed and new funding would never materialize. Remember, the NIH peer-review system only triages grants; it does not actually chose who receives grant money.

The administrative state at NIH does that! And anything that went against the war on drugs was considered a war on the government. Funding denied. This little truth bomb was conveyed to me – word of mouth – many years ago by a researcher and Professor who specialized in drug addiction research. Nothing printed, all heresay. Because that is how the system works. A whisper campaign. A whiff of a message on the wind.

The ends justify the means.

The new wrinkle in what has now happened with corrupted climate change activism/propaganda/”science” is that the manipulation of research is crossing disciplines. No longer satisfied with oppressing climate change scientists, climate change narrative enforcers have moved into the nutritional sciences. This trend of crossing disciplines portends death for the overall independence of any scientific endeavors. A creeping corruption into adjacent disciplines. Because climate change activists, world leaders, research institutions, universities, and governments are distorting another branch of science outside of climate science. They are using the bio-sciences, specifically nutrition science, to support the climate change agenda. It is another whole-of-government response to the crisis, just like with Covid-19.

Just like with the tobacco industry’s scientific disinformation campaign, they are distorting health research to make the case that eating meat is dangerous to humans. Normal standards for publication have been set aside. The propaganda is thick and easily spotted.

As the NIH is now funding researchers to find associations between climate change and health, it is pretty clear that those whose research is set up to find such associations will be funded. Hence, once again, the system is rigged to support the climate change narrative.

The standard approach for nutritional research is based on a food-frequency and portion questionnaire – usually kept as a diary. The nutrient intake from this observational data set is then associated with disease incidence. Randomized interventional clinical trials are not done due to expense and bioethical considerations.

The problem is that the confounding variables in such studies are hard to control. If obese people eat more, would their intake of meat be more or less in proportion to dietary calories? What do they eat in combination? What about culture norms, combined with genetic drivers of disease? Age? Geo-considerations? The list of confounding variables is almost never ending. Garbage in, garbage out.

We have all witnessed how these studies get used to promulgate one point of view or another.

It’s not just within the context of red meat. The same thing happens over and over. We get dietary recommendations put together by expert committees and the data are reviewed. But when subsequent, so-called systematic reviews of specific recommendations take place, the data don’t meet reliability standards…

Yes, available information is mostly based on studies of association rather than causation, using methods that fall short of proving chronic disease effects, especially in view of the crucial dietary measurement issues. The whole gestalt produces reports that seem very uncertain in terms of the standards that are applied elsewhere in the scientific community for reliable evidence.

Dr. Ross Prentice, Fred Hutchinson Cancer Research Center

Some Recent “Peer Reviewed” Academic Publications on Climate Change and Diet:

Enter climate change regulations, laws, and goals – such as those found in UN Agenda 2030. Enter globalists determined to buy up farmland to control prices, agriculture, and eating trends. Enter politics into our food supplies and even the science of nutrition What a mess.

Below are some of the more outlandish claims being made in the name of climate science and nutrition. The United Nations’s World Food Program writes:

The climate crisis is one of the leading causes of the steep rise in global hunger. Climate shocks destroy lives, crops and livelihoods, and undermine people’s ability to feed themselves. Hunger will spiral out of control if the world fails to take immediate climate action. 

Note that “Climate shocks” have always existed and will always exist. The existence of readily observed (and easily propagandized) human tragedies associated with hurricanes, fires, and droughts are embedded throughout the entire archaeological record of human existence. This is nothing new in either written human history or prehistory. This does not equate to a pressing existential human crisis.

In fact, reviewing the evidence of calories and protein available reveals a very different trend. Over time, per capita caloric and protein supplies have increased almost across the board.

The prevalence of undernourishment is the leading indicator of food availability. The chart below shows that the world still has a significant issue with poverty and food stability, but it is not increasing. If anything, people are better nourished in countries with extreme poverty than they were 20 years ago.

*Note the Covid crisis has most likely exacerbated extreme poverty and undernourishment, but those results for the 2021-2023 years are not (yet?) available.

Despite clear and compelling evidence that climate change is not impacting on food availability or undernutrition, websites, news stories, and research literature all make tenuous assertions about how the climate change “crisis” is causing starvation.

These are from the front search page on Google for “climate change starvation:”

But the actual data documents something different.

This is not to say that that the poorest nations in the world don’t have issues with famine; they do. It is an issue, but not a climate change issue. It is a gross distortion of available data and any objective scientific analysis of those data to assert otherwise.

The best way to stop famine is to ensure that countries have adequate energy and resources to grow their own food supply, and have a domestic manufacturing base. That means independent energy sources.

If the United Nations and the wealthy globalists at the WEF truly want to help nations with high poverty and famine rates and reduce our immigration pressure, they would help them secure stable energy sources. They would help them develop their natural gas and other hydrocarbon projects. Then they could truly feed themselves. They could attain independence.

Famine is not a climate change issue; it is an energy issue. Apples and oranges. This is not “scientific.” Rather, it is yet more weaponized fear porn being used as a Trojan horse to advance hidden political and economic objectives and agendas of political movements, large corporations, and non-governmental organizations.

Facts matter.

*  *  *

Republished from the author’s Substack

Oil prices actually rallied today, reversing a tumble the previous day that was kicked off by Saudi Arabia trimming its official selling prices.

Underpinning the rebound are continued attacks on merchant shipping in the Red Sea and shutdowns of major oil fields in Libya.

Crude prices have also tracked the trajectory of equity markets as they pared their losses for the day.

API

• Crude -5.125mm (-600k exp)

• Cushing -625k

• Gasoline +4.896mm (+2.1mm exp)

• Distillates +6.873mm (+1.00mm exp)

Another large crude draw along with major product builds in the week-ending Jan 5th… and stocks at Cushing fell for the first time since October…

Source: Bloomberg

WTI was trading around $72.25 ahead of the API print and was flat after…

On the bright side (for oil bulls), the US benchmark’s prompt spread, a critical barometer for supply and demand, briefly flipped to a bullish structure known as backwardation for the first time since November.

In the options market, some traders are betting that the worst of oil’s early-year malaise may be over, with contracts that would profit from a rally above $110 in June futures changing hands in large volumes.

Finally, the EIQA said in its monthly report that it expects, global oil demand will exceed supply by 120,000 barrels a day in 2024 as output cuts by OPEC+ tighten the market. That modest supply deficit could push Brent futures to average $85 a barrel in March.

Recent days have also seen a surge in oil-tanker rates as one Asian shipper sparked a frenzy by hiring a slew of vessels. The move has tightened the availability of the world’s largest tankers and led to the biggest one-day gain in the cost of hauling oil from the US to China since November 2022. High freight rates can sometimes make it difficult to send cargoes over long distances.

With Ivy League institutions finally revealed as Marxist, plagiarist echo chambers, it appears the public is also officially done with another “woke” ritual: removing statues.

Just hours after the National Park Service announced they would be removing a statue of William Penn at Philadelphia’s Welcome Park, located in the Old City section of the city, the service swiftly reversed course.

Though Zero Hedge can’t confirm that the outlet received significant pushback on the idea, social media was littered yesterday with objectors to the statue removal. As we noted yesterday, the modest sized Penn statue is located at the site of of William Penn’s former home.

The “Welcome Park” site was completed in its current form back in 1982, according to 6ABC, who said yesterday that park officials wanted to “reenvision the park and expand the interpretation of the Native American history of Philadelphia to make it more welcoming and inclusive for visitors.”

The initiative involved consultation with representatives from various indigenous groups such as the Haudenosaunee, Delaware Nation, Delaware Tribe of Indians, Shawnee Tribe, and Eastern Shawnee Tribe of Oklahoma, the report said.

House Republican Leader, state Rep. Bryan Cutler had called the plan “another sad example of the left in this country scraping the bottom of the barrel of wokeism to advance an extreme ideology and a nonsensical view of history.”

But it could be the residents of the city who may have had the final say in the matter. By the end of the day yesterday, the Park Service had reversed course, publishing a mea culpa that stated: ” Independence National Historical Park has withdrawn the review of a draft proposal to rehabilitate Welcome Park and closed the public comment period.”

It continues: “The preliminary draft proposal, which was released prematurely and had not been subject to a complete internal agency review, is being retracted.  No changes to the William Penn statue are planned.”  

Said one person on social media, responding to the flip flop: “Everything is a test. From this memorial of Penn, to the taking over the bridges and freeways out West, highways here on the East Coast to Ireland and the UK and beyond, Covid Isolation, trampling on the 1st Amendment. They’re seeing how far they can go.”

Everything is a test. From this memorial of Penn, to the taking over the bridges and freeways out West, highways here on the East Coast to Ireland and the UK and beyond, Covid Isolation, trampling on the 1st Amendment. They’re seeing how far they can go.

— MichelleJane (@MichelleJarw) January 8, 2024

We couldn’t agree more. 

Even Democrat governor Josh Shapiro weighed in, stating the Park Service made the right decision. He wrote on social media last night: “My team has been in contact with the Biden Administration throughout the day to correct this decision.”

Shapiro continued: “I’m pleased Welcome Park will remain the rightful home of this William Penn statue — right here in the Commonwealth of Pennsylvania Penn founded.”

We’re glad he stepped in before South Philly had to get involved…

South Philly guys are defending the Christopher Columbus statue and just slashed the bike tires of an Antifa guy who was harassing them pic.twitter.com/wsm4ijYADl

— Jack Poso 🇺🇸 (@JackPosobiec) June 14, 2020

Authored by Simon White, Bloomberg macro strategist,

Will it come in March? Or the summer? When the Federal Reserve makes its first rate cut and when it tapers or ends quantitative tightening will in the first instance be a function of reserves, not the economy. It is through this prism that the Fed’s dovish conversion in December makes sense, and gives a practical framework for understanding its new de facto reaction function.

Liquidity is everything in markets.

At the base of the liquidity pyramid are central-bank reserves.

These have always been key to understanding market functioning, but in the post-GFC regime of many central banks their volume, velocity and the variation in their ownership now play a pivotal role in driving market dynamics.

To put it succinctly, the primary binding constraint on the Fed this year – and thus a key driver of the bank’s decision to pivot and when it cuts rates – is reserves. These are the frontline defense against a sharp drop in risk assets, dysfunctional funding markets, and thus a hard landing.

A cut in rates therefore need not require a significant worsening in the economy, leaving a March rate reduction on the table. With -18 bps currently priced in for that month, the risk-reward is not currently attractive, but at around -7 bps or more that calculus changes.

The liquidity backdrop for most of 2023 was benign as the Treasury skewed issuance towards bills which were scooped up by money market funds using idle liquidity parked at the Fed’s reverse repo facility (RRP).

But the RRP is falling rapidly and, unchecked, the liquidity environment this year is set to become much more hostile for risk assets and the economy.

Further headwinds for liquidity this year are already baked in. As discussed last month, the government’s ballooning interest rate bill will become an increasing suck on reserves and their velocity.

A more malign liquidity backdrop would endanger asset prices, and risks the formation of a negative feedback loop with the economy. Recessions occur when these feedback loops cascade, with falling markets denting economic confidence, and weakening economic data in turn pushing asset prices lower.

Currently still-robust soft (market and survey) data is countervailing weak but stable hard (economic) data. If the Fed can keep soft data aloft by supporting reserves, it can try to prevent a negative feedback loop from developing and delay the recession.

One key way to do this is by mitigating headwinds from the government’s rising interest bill. The drop in the ten-year yield since the Fed’s pivot already translates into a significant saving for the US Treasury in bond-coupon payments. In numbers, the ~50 bps drop in the 10y since November translates into over $250 billion lower interest costs for the government, based on a simple regression. This will mean less stress on reserves.

The December pivot begins to make more sense viewed through this lens, and strongly indicates the Fed’s implicit primary reaction function is based on reserves, with inflation and employment secondary considerations.

If this supposition is correct, it means the Fed is deciding policy on variables that lead and not – as is usual – ones that heavily lag.

Investors should thus be more focused on reserves for gauging when the Fed cuts rates and when it tapers or ends QT, with the economy only a secondary driver (even though data releases will continue to influence market expectations).

Specifically, reserves’ volume, velocity and the variation in their ownership are key to monitor. As the RRP gets closer to zero, the total volume of reserves in the system will become a greater concern. Velocity will drop the more interest the government pays, as bank deposits are used to make tax payments, which in turn are used to pay interest. As these interest payments filter through the system, they are more likely to be held by those with a lower propensity to spend.

Then there is the variation in reserve ownership.

The distribution of ownership resembles a power law, with most of the reserves held by only a very few banks (with JP Morgan the largest holder). This likely played an important part in the repo funding crisis in September 2019, which struck even though there were still ~$2 trillion reserves in the system.

That skew in ownership is even more extreme now, with the top 5% largest US banks owning almost 40% of reserves.

Thus even though reserves and the RRP are ~$4.5 trillion today, the Fed has begun to discuss the slowing of QT. It was mentioned at its December meeting, and then again in comments on Saturday from Dallas Fed president Lorie Logan, who explicitly referenced the distribution problem, stating individual banks can approach scarcity before the system as a whole. Several banks have mooted summer or as early as April for when the Fed starts to taper or end QT.

This imputed switch in focus to reserves is a big gamble for the Fed, as it assumes inflation will continue to moderate this year back towards the 2% target. But there’s an increasing litany of reasons why that might not happen, with, to name a only a few, supply constraints worsening again, leading indicators for wages climbing, and a still-large fiscal deficit.

In this paradigm of increasing fiscal dominance – where government borrowing and spending decisions overwhelm monetary policy – central-bank independence has been eaten away at, and instead has led to a form of “reserve dominance”, with decisions on rate cuts and QT – as well as the evolution of markets, the economy and Treasury funding – heavily intertwined.

Last week, when looking at the latest global container shipping rates, we observed a surge in prices for all legacy Red Sea routes such as US and Europe to China, while simple trans-Atlantic or trans-Pacific routes remained subdued.

Here comes the next supply-driven inflation shock pic.twitter.com/2H7ppdmRVQ

— zerohedge (@zerohedge) January 5, 2024

However this surge pricing in container rates is also shifting over to tankers: as Bloomberg reports, the cost to ship crude oil from the US Gulf to China surged after a slew of vessel hires by a South Korean shipowner.

A flurry of booking activity by Sinokor Merchant Marine in the past week rapidly tightened the availability of tankers, spurring what Bloomberg said was a “market frenzy.” While the transporters were booked for long-haul voyages, the motivation for the unusually large hiring spree was unclear.

At least one vessel bound for the US to China route was chartered for just shy of $10 million, compared with about $7 to $8 million last week. Surprisingly, some of the tankers were booked with no underlying cargo.

As a result of this booking spree, tanker rates have soared: the cost for VLCCs (or very-large crude carriers) from the US Gulf to Asia jumped by more than $1 million a day on Monday, the largest gain since November 2022. The vessels can haul 2 million barrels. That rippled across the world, impacting other key oil routes often served by supertankers. Rates for the benchmark Middle East to China route rose by the most since September.

“Sinokor continues to charter VLCCs in what appears to be a major punt on the VLCC freight market,” shipbroker Braemar wrote in a note. It was unclear if the Korean shipping company is hoping to corner at least a small part of the VLCC market, but one thing that’s certain is that tanker shipping clients will now have no choice but to pass on the surging costs to end-users, sending oil prices higher.

The pricing spike comes amid a risk of disruption in tanker markets due to Houthi attacks on merchant vessels in the Red Sea, which has led many ships traversing the world’s oceans to take safer but longer routes, adding to their voyage length and reducing availability. Meanwhile, the volume that needs to be transported could be boosted by the allocation of bumper quotas to refineries in top importer China and near-record US exports.

Sinokor’s fleet covers a range of sectors, according to Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. In addition to roughly 22 oil tankers, it also has bulk commodity, LNG and container transporters.

While not nearly as interesting as the upcoming long-duration 10Y and 30Y auction later this week, all eyes were on today’s sale of 3Y paper as it was the first coupon auction of the year. And despite some erroneous previews at competing publications, the auction was nothing short of stellar.

Pricing at a high yield of 4.105%, down 38.5bps from the December yield of 4.490%, and the lowest 3Y high yield stop since May 2023, today’s auction stopped through the When Issued 4.116% by 1.1bps, the biggest stop through since Aug 2023.

The bid to cover was 2.672, a solid jump from the 2.416 in December, and the highest since September.

The internals were most impressive of all, however with Indirects awarded 65.3%, a big jump from last month’s 52.1%, and the highest since August (also well above the six-auction average of 62.3%). And with Directs awarded 16.8%, Dealers were left holding 17.8%, down from 26.2% last month and right on top of the recent average of 17.7%.

Overall, this was a stellar 3Y auction although since yields dropped sharply just ahead of the pricing, much of the good news was already discounted, and not surprisingly there was practially no market reaction after the results.

Authored by Charles Hugh Smith via OfTwoMinds blog,

No wonder Corporate America added $1.2 trillion in profits to be distributed to the elites of America: everything is diminished, stripped of quality and rendered miserable. Too bad there’s no real competition left in the US economy.

One of the most extraordinary economic marvels of the past decade is the astounding 50% leap in corporate profits, from $2.4 trillion (pre-tax) pre-pandemic lockdown to $3.6 trillion (pre-tax) in the years since the lockdown ended.

Strangely, few seem to ask the source of this astounding 50% leap. Wall Street has certainly cheered this vast increase, but few analysts ponder the source, or ask if the source is a net plus for the economy and nation.

As shockingly heretical as it sounds, the interests of corporate America often diverge from the interests of the citizenry, overall economy and the nation. For example, the wholesale gutting of the US industrial base in the mad rush to lower costs and quality by shipping entire supply chains to China.

As I’ve often pointed out, the meagre savings that trickled down to the consumer were more than offset by the collapse of quality and durability in the globalized goods that now line the shelves of every retailer in the US.

Corporate PR and its well-paid army of toady analysts and pundits would have us believe this is “capitalism” busily at work as pent-up consumer demand naturally pushed prices higher, and corporations were–sadly–forced to pass along these higher costs to consumers.

Recall that “higher costs” don’t show up as higher profits. If the “cost of goods” is $1, and I charge the consumer $2, I reap $1 profit. If my costs double to $2 and I charge the consumer $3, I reap the same $1 profit as I did before the cost spike pushed my production costs up.

The higher corporate profits are the direct result of profiteering and price-gouging. Oh boo-hoo, our costs went up and we were forced to pass them along was simply the cover story. If the cost of a $1 item went up $1 to $2, Corporate America merrily doubled its profit margin from $1 to $2.

This is what happens when you allow your economy to be dominated by quasi-monopolies and cartels. They all raise prices and diminish quality as a unified concentration of financial and political power.

The other source of sharply higher corporate profits is shrinkflation, the relentless reduction in the quantity of product in the packaging. One wonders how thin the can of tuna will eventually be–the thickness of a pancake? Or how thin can they make the box of cereal before the container can no longer stand upright?

The reduction of the quality of goods and services, a.k.a. crapification, is a key source of soaring corporate profits. As the unhappy buyer of three replacement appliances this year alone, all replacements for failed name-brand appliances that lasted 7 years or less–I can attest that crapification / planned obsolescence is a core source of higher profits.

Design the product to fail, or default to the lowest cost components, i.e. failure by default, and consumers are forced to replace appliances every few years that once routinely lasted decades. This conveyor belt of products to the Landfill is highly profitable.

Lastly, there’s the immiseration of services, making standard service so miserable that consumers are forced to either endure wretched, incompetent, unreliable service, or pay extra for a “premium” service which is actually of poorer quality than the old standard of service.

We’re adding adverts to all the films and TV programs you’re already paying for. If you want to watch ad-free content, that will now cost you another $2.99 a month.

As Darth Vader would summarize this immiseration: “Pray I don’t alter the deal any further.” No wonder Corporate America added $1.2 trillion in profits to be distributed to the elites of America: everything is diminished, stripped of quality and rendered miserable. Too bad there’s no real competition left in the US economy.

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Authored by Joel Bauman via SchiffGold.com,

December saw a resurgence of “degrowth” advocates in the media, with two articles published by Nature garnering special attention on X (formerly Twitter).

The fallacies underlying the degrowth movement are not new in economics, but it’s worth revisiting them and their important connections to monetary policy in the age of central banking.

Proponents of degrowth will usually argue the following:

Wealthy economies should abandon growth of gross domestic product (GDP) as a goal, scale down destructive and unnecessary forms of production to reduce energy and material use, and focus economic activity around securing human needs and well-being. This approach, which has gained traction in recent years, can enable rapid decarbonization and stop ecological breakdown while improving social outcomes.” 

Now, this argument does have a kernel of truth; while it is wrong to completely throw out GDP as a useful measure of economic progress, it is equally wrong to focus on it exclusively. GDP is an imperfect metric. It counts wasteful government social programs, destructive military spending, and spending on natural disaster recovery as contributors to economic growth. It also severely underestimates growth in home production and black or gray markets that evade the calculation of government statisticians. 

This premise betrays perhaps the most central error at the heart of degrowth and central planning in general: both assume that the optimal use for scarce labor and capital are either obvious or that they can be ascertained with big data or burgeoning artificial intelligence technology.

This, as the Austrian School emphasizes, is not the case. Instead, the market is a means of discovering the optimal use of resources. This discovery takes place through the action of entrepreneurial agents, who make judgements about the uncertain future value of resources under their command and are rewarded with profits if they direct said resources to more highly-valued uses. 

Under degrowth policy, resources directed by state bureaucrats, PhDs, or machine learning algorithms would be subject not to the calculation of market profits and loss, but to the whims and subjective evaluations of whoever plans the economy. 

Degrowthers also misunderstand monetary policy and its role in the business cycle. Hickel and his coauthors, for example, claim that recession “is chaotic and socially destabilizing and occurs when growth-dependent economies fail to grow.” According to degrowthers, recessions are the result of “growth-dependencies,” which include the fiduciary duty of company executives, the unreliable funding of pensions and social programs, and the ease of capital movement across borders (oh, the horror!).

The economist Ludwig von Mises, a key figure in the Austrian School, offers an alternative to this perspective with the Austrian Business Cycle Theory. In this theory, the business cycle (i.e. the cycle of economic expansion and recession) is caused by credit expansion at the hands of central bankers, not growth dependencies. Central banks, by artificially lowering the interest rate, induce long-term projects to be undertaken that would not be started at the market rate of interest. When, as is arguably happening now, the interest rate returns to or approaches the natural market rate of interest, the unprofitability of these mistaken projects rears its head and causes them to fail. What follows is the recession, or “bust,” a period of slower or shrinking economic activity, during which the resources previously devoted to failed projects are reallocated to profitable ones.

In the Austrian perspective, the bust, while unpleasant, is the necessary correction mechanism that remedies the mistakes induced by expansionary monetary policy. Mises explains:

The return to monetary stability does not generate a crisis. It only brings to light the malinvestments and other mistakes that were made under the hallucination of the illusory prosperity created by the easy money. People become aware of the faults committed and, no longer blinded by the phantom of cheap credit, begin to readjust their activities to the real state of the supply of material factors of production. It is this — certainly painful, but unavoidable — adjustment that constitutes the depression.”

Contrary to the degrowther perspective, where recessions are an inherent feature of growth-focused market capitalism, Mises shows us that recessions are the means by which markets cleanse themselves of mistaken and wasteful resource allocations, allocations that would not have occurred in the absence of central banking and that degrowth advocates themselves may oppose.

In their focus on GDP and private “growth-dependencies,” degrowthers miss what may be the central culprit in many of the United States’ economic ills: the Federal Reserve. Were it not for the Fed’s inflationary policy, recessions would be milder and less common, and the centrality of the finance sector, which Hickel and company lament, would be diminished.

If degrowth advocates want to improve the functioning of market economies, they should join libertarians and conservatives in demanding a stable currency that is subject to market forces, not political interests.