In a controversy-sparking move, Boston, a self-proclaimed sanctuary city, is weighing a resolution to allow immigrants with “legal status” to vote in local elections. This proposal, which has reportedly gained the backing of the majority of Boston city councilors, was a central topic in a council meeting last week.

The resolution, introduced by Councilor Kendra Lara, would allow immigrants who have “worked, sacrificed, and invested in their neighborhoods,” to provide these residents a voice in local governance, despite their lack of citizenship.

The Boston debate echoes a similar policy shift in Takoma Park, Maryland, where city clerk Jessie Carpenter gave Boston lawmakers insights from her experience. Takoma Park, which has allowed noncitizens to vote for 30 years “regardless of their legal status.”

In Takoma Park, “nearly one-third of the residents are foreign-born,” according to Fox News, which adds that a significant portion of registered noncitizen voters actively engage in the electoral process.

Boston, with a population exceeding 650,000, presents a stark contrast to the much smaller town of 17,000, suggesting that the number of potential immigrant voters could be significantly higher. According to Carpenter, immigrant voters are only required to show proof of identity and city residency, without any inquiry into their legal status.

Elections Commissioner Eneida Tavares said a similar policy change could prove logistically challenging for the much larger city of Boston, telling city councilors Tuesday that the Boston Election Department would need to evaluate whether it had the capabilities to maintain two separate databases “without causing any confusion.” 

“Our preferred method would be to use the secretary of state’s database because it’s just one place where we can house everything,” Tavares said. “It’s easier to update voting, voter information, give voter history to voters and everything of that nature.”

Tavares also told councilors that the city would likely not be able to keep an individual’s immigration status private if their public voting information were requested for a court proceeding. –Fox News

Amidst these discussions, concerns were raised about the possibility of noncitizens mistakenly voting in state or federal elections, which could jeopardize their path to citizenship. City Councilor Liz Breadon underscored the potential risks, stressing the need to avoid any errors that might impact an immigrant’s journey towards citizenship.

The broader context of this proposal is Massachusetts’ struggle with the recent influx of migrants from the southern border. Democratic Gov. Maura Healey has declared a state of emergency, with the National Guard activated to manage the crisis. FEMA also granted the city $1.9 million over the summer to help migrants with shelter and transportation.

Meanwhile, House Democrats in the Massachusetts state legislature recently pushed a $2.8 billion spending bill, allocating substantial funds to shelter vulnerable families, including migrants. This bill comes as the state’s emergency shelters face increasing pressure from a surge in migrant and homeless families.

Republicans in the state have voiced strong opposition, criticizing the lack of formal debate on the bill and challenging the actions of the Democratic majority as a “one-party monopoly.”

Via The Cradle,

Israel’s National Security Council issued an “urgent instruction” on Tuesday ordering Israeli ports to remove information on the arrival and departures of ships from their websites, Globes newspaper reported. The directive comes in light of the recent Yemeni attacks on Israeli shipping and vessels headed towards Israel. 

“As soon as it becomes clear in the future that there is no longer a problem that must be taken into account, it will be possible to return to the previous situation immediately,” Israeli officials told Globes.

The National Security Council’s instruction came the same day as a Yemeni naval attack, carried out by Yemen-based Houthis, on a Norweigan vessel north of the Bab al-Mandab strait. The ship was carrying oil and was en route to Italy. 

However, the Norwegian ship was scheduled to dock in Israel’s Ashdod port next month. “Before attacking the STRINDA, the Houthis would have been able to discover that the Norwegian ship was calling at Ashdod through a simple Internet search,” Globes writes. 

Ansarallah and Yemen’s Armed Forces have launched numerous drone and missile attacks on Israeli targets since the Gaza-Israel war began in October, particularly on the southern-occupied port of Eilat. 

As part of its operations in solidarity with Palestine, Sanaa’s forces have declared war on Israeli shipping in the Red and Arabian seas and elsewhere. Since November 19, Yemen has seized one Israeli-linked ship and has launched drone attacks against at least two others.

The missile attack on the Norweigan STRINDA ship comes days after Yemeni Armed Forces spokesman Yahya Saree announced that Yemen will prevent the passage of any vessel headed for Israel in the Red and Arabian Seas if food and medicine do not enter the Gaza Strip. 

The announcement was a response to the US veto of a UN resolution calling for a ceasefire in Gaza. As a result of Yemen’s naval operations, shipping companies, including Israeli firm Zim and others, have resorted to price hikes and costly reroutes around Africa. 

Zim’s new ZMP route, which connects ports in China with Turkiye, recently said that its 12 vessels will not pass through the Red Sea. The cost of shipping in the Red Sea, in general, is on the rise due to Yemen’s maritime campaign, industry sources told Reuters this week. 

Western officials are privately telling members of the shipping industry to continue to expect Houthi attacks on vessels in the Red Seahttps://t.co/XwgLV11dS3

— Middle East Eye (@MiddleEastEye) December 12, 2023

War risk premiums – required to be paid by vessels sailing through high-risk areas – have risen this week to up to 0.2 percent of the value of a ship, from 0.007 percent last week, market estimates showed, translating “into tens of thousands of dollars of additional costs for a seven-day voyage,” Reuters reported.

“These attacks have the potential to become far more of a global strategic economic threat than simply a regional geopolitical one,” said Duncan Potts, a former vice admiral in the British navy. 

Via SchiffGold.com,

In a recent interview with Forbes, economic commentator and historian Jim Grant warned that we haven’t fully felt the inevitable fallout from the “free money era.”

I think that the consequences of more or less 10 years of proverbially free money are going to play out in the credit markets.”

Grant traces the root of today’s problems back to 2008 when the Federal Reserve became “completely irrational.”

The central bank pumped trillions of liquidity into the economy with three rounds of quantitative easing. During the pandemic, the Fed doubled down on this extraordinary monetary policy. It also slashed interest rates to zero in 2008 and held them there for nearly a decade. This loose monetary policy caused all kinds of distortions and malinvestments in the economy and incentivized massive levels of debt.

For instance, hundreds of “zombie corporations” stayed afloat by taking out cheap loans in the easy money era. Now these firms face the pressure of rising interest rates. Grant said, “Assets may face the consequences of that yet.”

It could be that the accumulation of errors in lending and an allocation of credit that were brought on by the invitation to lend indiscriminately—that is to say the 0% rate regime—was an open invitation to overdo it in credit.”

According to S&P Global, there were 516 corporate bankruptcies through September. That was more than any full year since 2010.

Almost every mainstream financial analyst believes that the Federal Reserve will begin cutting interest rates early in 2024, despite the fact Fed officials insist rates need to stay higher for longer. But Grant thinks that interest rates will stay higher for longer no matter what the Fed does, and he believes we are in the early stages of a generational bear market in bonds. He told Forbes he bases this on a historical reading of monetary policy.

The phrase would be higher for much, much, much, much longer—but we have to underscore and italicize the conditional—if past is prologue.”

Grant pointed out to the Forbes interviewer that except for a few brief blips, interest rates continuously trended down between 1981 and 2023. But in the 40 years before that, they generally trended higher.

It is the historical track record, it is the pattern, that interest rates exhibit a tendency to trend over generation-long intervals. We seem to have hit some major point of demarcation with interest rates in 2020 and ‘21.”

But Grant said we shouldn’t expect a straight line up. He said if a recession hits, there could be a “substantial” but temporary pullback in interest rates.

Grant is describing a long-term trend of high inflation, low economic growth and high interest rates — in a nutshell — stagflation.

Some argue that technological advances will have a deflationary effect and mitigate the impacts Grant worries about. He conceded that technology tends to be deflationary, but pointed out there have been other historical periods of rapid technological advancement and and high inflation – specifically the 1970s.

I don’t know how to compare the intensity of the technological progress of the 1930s versus the 1970s. But both were marked by terrific improvements in productive technology and one featured deflation, the other mighty inflation.”

Grant tempered his forecast with a word of caution.

“We know how rich we would all be if past were dependably and truly prologue – especially the historians who, as it is, have so little money,” Grant told Forbes, adding that this means experts should “proceed cautiously” when forecasting.

President Biden says he’s looking to restart Israel-Hamas negotiations in order to gain the freedom of the several Americans still in captivity. However, all signs point to this as an unlikely scenario anytime soon.

The president met with relatives of American citizens still being held hostage in Gaza at the White House on Wednesday. Most or all of the captives are dual citizens. 

There are still 135 captives in total being held, though some might be feared dead – and of the total seven are American citizens and one is a US Green Card holder. The prior seven-day truce saw over 100 captives freed, including some Americans.

The family members that attended included Yael and Adi Alexander, Ruby and Roy Chen, Ronen and Orna Neutra, Jonathan Dekel-Chen, Gillian Kaye, Aviva, Elan, Shir and Hanna Siegel, and Liz Naftali. Three others joined by phone: Jon Polin, Rachel Goldberg and Iris Haggai.

“We have no better friend in Washington or in the White House than President Biden himself,” said Jonathan Dekel-Chen, a family member among those meeting with Biden. “They are willing and ready to do all that they possibly can, by any number of means to get the hostages out.”

However, just last Friday the US shot down UN efforts to revive a ceasefire, given it was the lone “no” vote for a UN Security Council draft resolution urging immediate ceasefire.

In the opening weeks of the Gaza War, the Pentagon confirmed it had dispatched a team of special forces to advise and assist the Israeli military concerning the hostages.

Alarmingly, this week Israeli officials said the military has begun flooding Gaza’s tunnel system, hoping to flush out the Hamas militants who hide there. Critics warn this could kill any hostages potentially being held underground as well.

As the Israel ground operation presses on, also now in the south, the situation grows riskier by the day for the remaining hostages. Some are believed to have already been killed by airstrikes. 

GAZA pic.twitter.com/CDoxOUIBOB

— The_Real_Fly (@The_Real_Fly) December 13, 2023

The specific fate of the eight remaining American captives remains unknown. Currently, it’s unlikely that Israeli or US intelligence so much as has any idea where they are being kept inside the Gaza Strip, now a full besieged military zone. Secretary of State Antony Blinken will again travel to Israel in the coming days, where he’ll meet with Israel’s war cabinet.

Between the ‘dovish’ dots and the optimistic inflationary comments (and SEP), The Fed delivered more than the doves could have hoped…

Looking at the distribution of 2024 dots:

• 2 no cuts (4 in Sept)

• 1 one cut (4 in Sept)

• 5 two cuts (4 in Sept)

• 6 three cuts (3 in Sept)

• 4 four cuts (2 in Sept)

• 1 six cuts (0 in Sept)

This is the most confused “year ahead” FOMC we have seen in years

Stocks soared…

The dollar tanked…

Gold ripped higher, back above $2000…

And Treasury yields are crashing lower with 2Y yields down over 23bps now…

…to its lowest since early June…

Finally, as The Fed continues to push towards where the market was, the market pushes further away, now pricing in 135bps of rate-cuts for 20124…

Source: Bloomberg

Here’s what’s odd:

• In Sept, Fed saw 2 cuts in 2024, 5 cuts in 2025

• Now, Fed sees 3 cuts in 2024, 4 cuts in 2025

So, is The Fed frontloading (in an election year) at the expense of 2025?

Now, will Powell crush this?

So, as expected, The Fed did nothing on rates, adjusted its dots dovishly (more than expected), and the market kneejerked exuberantly…

Gold, bonds, and stocks all soaring (and dollar dumping)…

George Goncalves at MUFG says:

“At face value it looks like the Fed has gone back to underwriting what the rates market has been pricing in, now we need to see if chair Powell walks this back as it’s not a forecast path but just how median math works, and that we should not take this as a signal, the standard speech that ignores the dots.”

Now it’s Powell’s turn to tamp down that excitement:

Most likely FOMC walkthru:

Risk spikes initially after statement is “as expected”, Fed dots ease and SEP inflation dips, interpreted by market as dovish capitulation

Then Powell unleashes Hawknado mode during presser, steamrolling Waller comments and slamming risk

— zerohedge (@zerohedge) December 13, 2023

Someone needs to talk this silliness back, right?

So, will Powell wreck the ‘Wall(er) of worry’?

As UBS so eloquently described:

“The meeting will be followed by Fed Chair Powell delivering the full benefit of his economic insight at the press briefing (this should not take long).

Powell will try to prevent markets from expecting earlier rate reductions.

This task would be a lot easier had Powell not trashed the Fed’s reputation for forward guidance.”

Watch the Fed Press Conference live here (due to start at 1430ET):

Tl;dr: Powell “pivoted”.

Instead of the old mantra of “don’t fight The Fed”, it appears The Fed’s new mantra is “don’t fight the market” as the Dot Plot adjusted down significantly more dovishly than expected, narrowing the gap to the market’s expectation significantly…

Median assessment of appropriate pace of policy:

• 2023 5.375% (range 5.375% to 5.375%); prior 5.625%

• 2024 4.625% (range 3.875% to 5.375%); prior 5.125%

• 2025 3.625% (range 2.375% to 5.375%); prior 3.875%

• 2026 2.875% (range 2.375% to 4.875%); prior 2.875%

Here’s what’s odd:

• In Sept, Fed saw 2 cuts in 2024, 5 cuts in 2025

• Now, Fed sees 3 cuts in 2024, 4 cuts in 2025

Put another way:

• In Sept, 5 Fed members expected three cuts or more

• In Dec, 11 Fed members expect three cuts or more.

So, is The Fed frontloading (in an election year) at the expense of 2025?

Will Powell unleash the hawknado?

*  *  *

Since The Fed’s last meeting (on Nov 1st), the markets have been extreme to say the least. The dollar (and gold) are lower as Bitcoin has soared higher and stocks and bonds both surged…

Source: Bloomberg

For context, that 9%-plus rally in the S&P 500 is the best inter-meeting performance since June-August 2009.

Even more extreme is the fact that the rally in bonds and stocks and decline in the dollar has sparked an almost unprecedented easing of financial conditions since Nov 1st.

Source: Bloomberg

This is particularly noteworthy because The Fed explicitly mentioned the fact that “Tighter financial… conditions…are likely to weigh on economic activity, hiring, and inflation” with the ‘the market is doing The Fed’s job for it’ narrative being espoused by all.

Well, all that good work by The Fed has now been undone!

And with its usual lag, the previous tightening appears to have indeed weighed down macro data…

Source: Bloomberg

The market has pushed dramatically more dovish, pricing in 125bps of rate-cuts next year (from around 75bps at the last Fed meeting)…

Source: Bloomberg

And, as we have been highlighting, this means the market is now pricing in an expectation that every single member of The Fed is wrong (too hawkish) about rates next year…

Source: Bloomberg

Which leads us to the crux of today’s FOMC statement and press conference, which is – just how much will they (hawkishly) push back against the easing of financial conditions or (dovishly) adjust their dots to meet the market’s demand?

As Mohamed El-Erian noted just ahead of the statement:

Fascinating to see markets push yields further down ahead of this afternoon’s announcement/remarks.

Either they are comfortable that there will be a January 2019 repeat or are bluntly ignoring the longstanding mantra of “don’t fight the Fed”.

And so, what did we get?

No change in policy rates as fully expected – the third consecutive meeting in this “temporary pause.”

But, then unleashed the doves in the statement:

• FOMC softens stance toward further hikes by adding one word to the statement, saying officials will consider the extent of “any” additional policy firming that’s needed

• Fed also acknowledges that “inflation has eased over the past year but remains elevated,” and says that economic growth has slowed from the third quarter’s “strong pace”

The dots went uber-dovish, with the median dots calling for 3 cuts, up from 2 cuts before.

• Sept dots median 2024 dot was 5.1%

• Dec dots median 2024 dot is 4.6%

There are 5 Fed officials below that media point (seeing 100bps of cuts)…

Median assessment of appropriate pace of policy:

• 2023 5.375% (range 5.375% to 5.375%); prior 5.625%

• 2024 4.625% (range 3.875% to 5.375%); prior 5.125%

• 2025 3.625% (range 2.375% to 5.375%); prior 3.875%

• 2026 2.875% (range 2.375% to 4.875%); prior 2.875%

Additionally, median projections for inflation tick down in 2024 and 2025, while unemployment forecasts are little changed, indicating Fed officials’ growing confidence they can cool price gains without big job losses.

And now we wait for Powell’s presser, which UBS wittily described as follows:

“The meeting will be followed by Fed Chair Powell delivering the full benefit of his economic insight at the press briefing (this should not take long).

Powell will try to prevent markets from expecting earlier rate reductions.

This task would be a lot easier had Powell not trashed the Fed’s reputation for forward guidance.”

Harsh but fair.

*  *  *

Read the full redline below:

Update (1156ET):

House Oversight Committee Chairman James Comer got into a heated debate with reporters after Hunter Biden refused to attend a closed-door deposition to face questions over his business dealings, and whether his father Joe Biden was involved with them.

Instead of appearing in accordance with a subpoena, Hunter gave a speech on Capitol Hill in which he said he would testify publicly rather than in a closed depostion.

“But Chairman Comer, do you acknowledge that you haven’t answered that question and that you’ve found no evidence of wrongdoing or criminal conduct?” asked Washington Post congressional investigations reporter Jacqueline Alemany.

“We’ve found some very serious evidence that–” Comer replied, before Alemany cut him off, saying “But Joe Biden–“

To which Comer shot back: “No, no, no, no. The checks. There’s two checks to Joe Biden from his brother that the money to give Joe Biden was influence-peddling. One was through—no, you asked a question. No, no, listen.”

Alemany then tried to argue that the $40,000 check was “law firm money” rather than funds from a Chinese energy firm.

“What do you think? You’re defending him. I mean you’re acting as if—are you positive that that money came from Joe Biden?” Comer shot back. “You’ve raised it. Are you positive? No.”

Watch:

As the Daily Caller reports:

Bank records released by Comer found that Biden received a $40,000 check in September 2017 after the Biden family received money from Chinese business associates. The records show that Hunter Biden, his uncle James and his aunt Sara wired money through several accounts before Sara sent Biden a check as a “loan repayment” less than a month after James Biden’s business relationship with Hudson West III, Hunter’s business venture with CEFC, began.

Ahead of the 2020 presidential election, then-presidential candidate Biden falsely said his son never made money from China. He further said he had never discussed business with son or any of his associates, but it now known he attended two dinners with hs son’s business associates, one with a Russian oligarch in 2014 and another with Burisma executive Vadim Pozharskyi in 2015.

*  *  *

Hunter Biden’s legal team set up a podium on Capitol Hill Wednesday, where the First Son decided to make his case in the court of public opinion, as opposed to appearing in a closed-door deposition by House investigators.

Hunter Biden and his lawyer Abbe Lowell are here.

Hunter says he’s open to testifying at a public hearing. But won’t testify where Comer and Jordan want him to in a behind closed doors setting pic.twitter.com/Lt1ShcNtBH

— Max Cohen (@maxpcohen) December 13, 2023

“Let me state as clearly as I can,” said Hunter. “My father was not financially involved ion my business. Not as a practicing lawyer. Not as a board member of Burisma. Not in my partnership with a Chinese private businessman. Not in my investments at home nor abroad, and certainly not as an artist.”

Watch:

Hunter Biden moves the goalposts again: “My father was not financially involved in my business” pic.twitter.com/n9L3miu2h8

— RNC Research (@RNCResearch) December 13, 2023

Watch the entire speech below:

Last week, House Oversight Committee Chairman James Comer and House Judiciary Committee Chairman Jim Jordan warned Hunter that he would face contempt of Congress if he skips out on today’s closed-door deposition, after his lawyer demanded it to “prevent selective leaks, manipulated transcripts, doctored exhibits, or one-sided press statements.”

“Contrary to the assertions in your letter, there is no ‘choice’ for Mr. Biden to make; the subpoenas compel him to appear for a deposition on December 13. If Mr. Biden does not appear for his deposition on December 13, 2023, the Committees will initiate contempt of Congress proceedings,” reads the letter, issued a week after his attorney, Abbe D. Lowell suggested that Hunter should instead be allowed to testify publicly.

Hunter was subpoenaed on Nov. 8 to appear for a deposition before the committee. In response, Comer said: “Hunter Biden is trying to play by his own rules instead of following the rules required of everyone else,” adding “Our lawfully issued subpoena to Hunter Biden requires him to appear for a deposition on December 13.”

Comer and Jordan are investigating extensive evidence that the Biden family was running an international influence peddling scheme, raking in tens of millions of dollars from foreign business partners despite no obvious product or service in exchange.

House lawmakers are also seeking testimony from Hunter’s uncle James Biden, as well as multiple former business associates.

“I did not have financial relations with that father” https://t.co/XEQKHpg76B

— zerohedge (@zerohedge) December 13, 2023

So, contempt of Congress it is…

By Ven Ram, Bloomberg Markets Live reporter and strategist

For a big Fed day, the one aspect that traders are least riveted on is the decision itself. Given the recent progress on disinflation, the Fed has an ample-enough real policy rate to stand pat, so investors will look beyond the decision.

That means the dot plot, the summary of economic projections and Chair Jerome Powell’s post-meeting remarks are what will move Treasuries.

Dot plot & the summary of economic projections:

• With core inflation still sticky at 4%, the Fed is unlikely to feel comfortable with recent market positioning that has swung between pricing 100 basis points and 125 basis points of cumulative rate cuts for 2024.

• With financial conditions already considerably loose, the Fed has a lot at stake in showing its hand. It is unlikely, therefore, that its dot plot will show more than two rate cuts for 2024, a case laid out in detail here. It may also revise up its growth forecast for next year, both of which should send Treasury yields higher, especially at the front end.

• Any upward revision of growth estimates will prolong the inversion in the yield curve.

• The Fed’s implicit estimate of the real neutral rate will give us an inkling about how far its policy accommodation might go when it eventually pivots, but I don’t expect any change there.

Powell in the spotlight:

• Powell will likely be asked if policymakers discussed rate cuts during their deliberations, though he will be at pains to emphasize that any talk of policy loosening at this stage is premature given the resilience of the real economy in general and, in particular, the labor market.

• With the jobless rate having ticked lower in November, the Fed has its work cut out in sending a higher-for-longer message to the markets. At the moment, though, Treasuries are glossing over that prospect.

Another day, another ESG pipe dream falling victim to the reality that we’ve been pointing out for years: “green” investing and ESG is a grift.

This week the victim is the Goldman Sachs ActiveBeta Paris-Aligned Climate U.S. Large Cap Equity ETF, which we’re certain you didn’t know existed until you just read about it today. 

The idea of the ETF was to provide investment results that closely corresponded to the performance of the Goldman Sachs ActiveBeta Paris-Aligned U.S. Large Cap Equity Index. 

The ETF is shutting down, per a Goldman Sachs press release out this week. The release says that “the Fund’s Board of Trustees, at the recommendation of GSAM, has approved a plan of liquidation for the Fund”. 

“The Fund will begin the process of liquidating portfolio assets and unwinding its affairs in an orderly fashion over time,” the release says. 

Bloomberg ETF expert and friend of Zero Hedge Eric Balchunas pointed out on Twitter that “there was just way too much supply for the demand” with the ETF and that “it’s going to get worse too”.

Balchunas says the ETF only took in $7 million over the course of 2 years. 

I warned issuers FOUR years ago there was just way too much supply for the demand. It’s going to get worse too. pic.twitter.com/ebFQDHA4OZ

— Eric Balchunas (@EricBalchunas) December 12, 2023

Recall, we have been following the recent implosion of “green” investing and ESG that has taken place this year. We wrote just days ago about Jeff Ubben – who is shuttering his sustainability fund – calling traditional climate summitry an “echo chamber” of diplomats. 

Less than a week before that we noted that $30 billion has been shaved off the value of clean energy stocks over the last 6 months. 

We also pointed out weeks ago how the ESG grift was reaching endgame after Markus Müller, chief investment officer ESG at Deutsche Bank’s Private Bank stated that sustainability funds should include traditional energy stocks, arguing that not doing so deprives investors of a prime opportunity to invest in the transition to renewable energy.