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Tucker Carlson Launches Streaming Subscription Service

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Tucker Carlson Launches Streaming Subscription Service

Tucker Carlson has launched a new streaming service, the Tucker Carlson Network, which costs $9 per month (with a $6/month introductory price to become a ‘founding member’).

The former Fox News host’s network features interviews, behind-the-scenes footage, commentary and early access to tickets for future live events.

“We’ve been working in secret and producing an awful lot of material for months now. We’re launching a brand-new thing very soon,” Carlson said in a Saturday post on X.

On Monday, Carlson’s network posted a preview of what’s to come:

His social media person is already off to a good start:

Carlson, who parted ways with Fox in April, has been releasing interviews on X, which have included Donald Trump, Victor Orban, Javier Milei, Ice Cube, Devon Archer, Andrew Tate, Alex Jones, and many more. And we should note, these interviews often pull better numbers than Fox News‘ primetime lineup, while the losers at Fox attempt to badger presidential candidates into shilling for more Ukraine funds.

Join the Tucker Carlson Network here…

Tyler Durden
Mon, 12/11/2023 – 17:20

It’s Dark, But Breadth Says It’s Not Quite Dawn For China Stocks

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It’s Dark, But Breadth Says It’s Not Quite Dawn For China Stocks

Authored by Simon White, Bloomberg macro strategist,

After another dismal set of China inflation data, sentiment for Chinese stocks feels like it can’t get much worse.

That can be a sign the market will soon bottom, but breadth is not yet at the extreme capitulatory levels that would give a much higher confidence to this view. Nevertheless, the risk-reward for some exposure to China stocks remains attractive.

I had thought the bottom in China stock was perhaps in last month, but the economic data has continued to be dreadful. Over the weekend, November’s CPI came in at -0.5% and PPI at -3%, both lower than the previous month.

Confidence would be higher that a tradeable bottom is near if breadth was more extreme. However, the net number of stocks in the CSI 300 index making new 52-week lows has been more stretched at previous bottoms in the index. Similarly for the number of stocks with an RSI of less than 30 and the percentage of stocks trading below their 200-day moving averages.

Furthermore, we haven’t yet seen a spike in volume which often occurs at capitulatory junctures.

China’s decision to have one of the longest and most stringent lockdowns while giving its household sector scant support (unlike many DM countries) has led to the country being the only one to have experienced outright deflation since 2020, when every other main country has experienced inflation, often the highest for decades.

A weak real-estate sector and the severe dent to confidence from lockdowns has led to a spend-averse household sector.

The fall in CPI is being driven by a decline in food and consumer goods. Food is estimated to be about a third of the CPI basket, with goods (including food) accounting for just under two thirds of the total.

Global food prices have started to rise again, so this may soon provide support to China’s CPI.

With so much bad news already in the price, there is good risk-reward for beginning to accumulate China stocks, but breadth data suggests we are perhaps not quite yet at the point of “revulsion,” forcing the last speculative longs out, and clearing the way for a sustainable rally.

Tyler Durden
Mon, 12/11/2023 – 17:00

“This Is The Big Fight!” Bitcoin Battered As Sen. Warren Unveils Bill To “Crack Down” On Crypto

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“This Is The Big Fight!” Bitcoin Battered As Sen. Warren Unveils Bill To “Crack Down” On Crypto

Bitcoin was hit with a double-whammy today with a large liquidation of longs overnight (around $100 million)

Source: CoinGlass

Additionally, data from the statistics resource CoinGlass had cross-crypto long liquidations for the day stood at over $400 million.

And then another leg lower as US Senator Elizabeth Warren introduced legislation to address her concerns surrounding the alleged misuse of digital currencies in illicit activities, citing money laundering, drug trafficking, sanctions evasion, and more.

Which smashed BTC down to test support just above $40,000…

As Nik Hoffman reports at BitcoinMagazine, the bill, supported by a coalition within the Banking Committee, marks a significant push for increased oversight and regulation within the Bitcoin and cryptocurrency sphere. Citing risks associated with cryptocurrencies, Senator Warren stressed that digital currencies are used as an avenue for criminal activities, and that must be addressed through stringent regulatory frameworks.

“The Treasury Department is making clear that we need new laws to crack down on crypto’s use in enabling terrorist groups, rogue nations, drug lords, ransomware gangs, and fraudsters to launder billions in stolen funds, evade sanctions, fund illegal weapons programs, and profit from devastating cyberattacks,” said Warren. “I’m glad that five new senators are joining the fight to take action, including three members of the Banking Committee – our bipartisan bill is the toughest proposal on the table cracking down on crypto’s illicit use and giving regulators more tools in their toolbox.” 

Senator Warren’s bill aims to mandate stricter reporting requirements by extending the Bank Secrecy Act (BSA) responsibilities, including Know-Your-Customer (KYC) requirements, file reports on “transactions involving unhosted wallets”, and more. All in attempt to close “loopholes and bring the digital asset ecosystem into greater compliance.”

This bill is endorsed by Bank Policy Institute, Massachusetts Bankers Association, Transparency International U.S., Global Financial Integrity, National District Attorneys Association, Major County Sheriffs of America, Massachusetts Sheriffs’ Association, AARP, National Consumer Law Center, and National Consumers League.

The proposed legislation comes at a time when the popularity and adoption of Bitcoin has surged worldwide, particularly in the United States. As next month, the Securities and Exchange Commission (SEC) will have to make a decision on whether to approve the US’s first spot Bitcoin exchange traded fund (ETF) or not, which if approved, could see massive institutional and retail demand for BTC.

Last Thursday, Senator Warren went live on CNBC claiming that North Korea is using Bitcoin and crypto to fund nearly half of its nuclear weapons program. 

As Galaxy Digital head of firmwide research Alex Thorn notes in a sobering X thread, Warren’s bill would effectively ban crypto in America.

Continued from X:

Take miners or validators as an example. these entities passively add transaction data to the blockchain. while they can exclude known sanctioned addresses, they are structurally incapable of “knowing” the identity of every user. It would be impossible for miners or validators to perform KYC on every public blockchain transactor. indeed, it cannot even be said that these entities even have a “customer” to “know.”

Warren’s bill also seeks to impose the bank secrecy act on non-custodial wallets, many of which are free and open source. to be clear, there is no such thing as “unhosted” digital wallets – these are just wallets.

Requiring non-custodial open-source software to perform bank-like compliance is *the big attack* bitcoin’s enemies have always threatened. it’s impossible for bitcoin core, for example, to comply with this, so it amounts to an effective ban of bitcoin in the USA.

These rules effectively ban crypto in america, and they fundamentally undermine the core innovation itself — P2P digital cash. if you believe humans should have the right to transact without an intermediary, you must oppose this bill. call your senators! this is the big fight!

Update: And a question…

Tyler Durden
Mon, 12/11/2023 – 15:05

Missouri Hits Media Matters With Notice Of Investigation, Demands Preservation Of Evidence

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Missouri Hits Media Matters With Notice Of Investigation, Demands Preservation Of Evidence

On Monday, Missouri Attorney General Andrew Bailey announced that his office has notified Media Matters of a pending investigation based on claims brought by X and Elon Musk against the Democratic-operative-founded ‘watchdog’ organization accusing them of using fraud to solicit donations from Missourians against its efforts to target X.

Media Matters president Angelo Carusone

“We have reason to believe Media Matters used fraud to solicit donations from Missourians in order to trick advertisers into pulling out of X, the last platform dedicated to free speech in America. Radicals are attempting to kill Twitter because they cannot control it, and we are not going to let Missourians get ripped off in the process,” said Bailey, adding “I’m fighting to ensure progressive tyrants masquerading as news outlets cannot manipulate the marketplace in order to wipe out free speech.”

Media Matters is accused of having “falsely and deceptively manipulated the algorithm on X (formerly known as Twitter) through coordinated, inauthentic behavior.”

Specifically, Musk’s suit claims:

Media Matters has opted for new tactics in its campaign to drive advertisers from X. Media Matters has manipulated the algorithms governing the user experience on X to bypass safeguards and create images of X’s largest advertisers’ paid posts adjacent to racist, incendiary content, leaving the false impression that these pairings are anything but what they actually are: manufactured, inorganic, and extraordinarily rare.

Media Matters executed this plot in multiple steps, as X’s internal investigations have revealed.

First, Media Matters  accessed accounts that had been active for at least 30 days, bypassing X’s ad filter for new users. Media Matters then exclusively followed a small subset of users consisting entirely of accounts in one of two categories: those known to produce extreme, fringe content, and accounts owned by X’s big-name advertisers. The end result was a feed precision-designed by Media Matters for a single purpose: to produce side-by-side ad/content placements that it could screenshot in an effort to alienate advertisers.

But this activity still was not enough to create the pairings of advertisements and content that Media Matters aimed to produce.

Media Matters therefore resorted to endlessly scrolling and refreshing its unrepresentative, hand-selected feed, generating between 13 and 15 times more advertisements per hour than viewed by the average X user repeating this inauthentic activity until it finally received pages containing the result it wanted: controversial content next to X’s largest advertisers’ paid posts.

In his letter, Bailey also demands that Media Matters preserve all evidence in the case.

“I have reason to believe that your firm’s alleged actions may have violated Missouri consumer protection laws, including laws that prohibit nonprofit entities from soliciting funds under false pretenses. E.g., Mo. Rev. Stat. § 407.020.1.  I am especially concerned that Media Matters’ actions, if proven true, have hampered free speech by targeting an expressly pro free speech social media platform in an attempt to cause it financial harm while defrauding Missourians in the process,” the letter continues. “You are thus hereby instructed to preserve all records that may relate to your alleged effort to engage in coordinated, inauthentic behavior on social media platforms in order to generate false statements that were used to solicit charitable contributions under false pretenses.”

Tyler Durden
Mon, 12/11/2023 – 14:45

The Price Of Rent Surged 27 Straight Months. Is Relief Finally Coming?

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The Price Of Rent Surged 27 Straight Months. Is Relief Finally Coming?

Authored by Mike Shedlock via MishTalk.com,

The CPI report is on Tuesday. Reports suggest rent concessions from landlords. We’ve heard this story before. Is this time the real deal?

Concessions From Landlords

The Wall Street Journal reports Renters Are Starting to Get Concessions From Landlords Again, emphasis mine.

After suffering through a three-year period when rents jumped by 30% or more in many U.S. cities, renters are now starting to enjoy small breaks like this. Rents still aren’t falling by much. But thanks largely to an unusual surge in new building supply, more landlords are offering other enticements to fill up their properties, from a month of free rent to a reduction in fees and deposits. 

The deepest discounting is happening in the South and other Sunbelt markets, in cities such as Charlotte, N.C., and Dallas, where there has been more construction than in the rest of the country. Mid-America Apartment Communities, a publicly traded company focused on Sunbelt cities, said in an October earnings call that widespread use of concessions by developers was weighing on how much rent it could charge.

Concessions don’t always reflect a great deal. Some landlords might offer discounts only on rent that was unusually high to begin with. Landlords dangling concessions also often ask tenants to sign 18-month leases. That means units leased in fall or winter months come up for renewal in the spring or summer, when landlords tend to have more pricing power. Tenants could end up paying much higher rents down the line.

The concession trend might also prove short-lived. Permits for new buildings are falling, amid a financing crunch that makes it difficult for developers to put stakes in the ground.

And a for-sale market that remains inaccessible to so many could also prop up rents long term and cut into all the freebies. Coats, the Virginia Beach renter, was readying to buy a home until interest rates shot up last year and prices hovered near record highs.

Is This the Real Deal?

I have doubted every one of these falling rent stories for two years. This one seems a little more solid.

Rather than saying I doubt it. I will change my tune to I just don’t know.

For sure, a half percent on average for 27 straight months doesn’t seem sustainable, but many have been yapping about 1 year lags for about two years.

Seasonality in Play

The Journal caught one key idea with “units leased in fall or winter months come up for renewal in the spring or summer, when landlords tend to have more pricing power. Tenants could end up paying much higher rents down the line.

National Rent Price vs CPI Rent of Primary Residence

Is the Fourth Time a Charm?

The “falling rent” stories to date have all been wrong due to a combination of factors.

First, they ignored seasonality. Second they have primarily been based on new leases not renewals.

New leases only account for 15 percent of the market according to census data. Judging from the above chart, one might have expected the price of rent to fall at the beginning of 2021, 2022, and 2023.

Many did. Look what happened.

CPI Rent

Rent of primary residence, the cost that best equates to the rent people pay, jumped another 0.5 percent in October. 

CPI month-over-month data from the BLS, chart by Mish

People kept telling me rent is falling. I keep saying it isn’t (and the data proves it).

For discussion, please see Falling Rent is Extremely Rare, Yet Economists Keep Expecting That

Rent of primary residence has gone up at least 0.4 percent for 27 consecutive months although the widely believed lag is 12 months!

Let’s assume rent reverses for a while due to a combination of strong seasonality, finished apartments, and increased competition for new leases.

It’s possible. And if it does, then on Tuesday we could easily see a negative CPI print.

But if rent just slows to 0.2 percent or less, reported inflation will head towards the Fed’s 2 percent annual target.

Is the BLS Is Overstating Rent and Exaggerating Inflation?

On December 7, I investigated A Curious Claim that the BLS Is Overstating Rent and Exaggerating Inflation

I provide solid evidence that the BLS has been doing no such thing.

Nonetheless, assume inflation slows along with rent. At some point it’s bound to happen.

The key question then becomes: Was inflation transitory or is it the easing that’s transitory?

Please see the above link for my take on inflationary pressures and how long they might last.

Tyler Durden
Mon, 12/11/2023 – 14:25

Turley: With Hunter’s Indictment, Democrats Face A Moment Of Maddening Truth

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Turley: With Hunter’s Indictment, Democrats Face A Moment Of Maddening Truth

Authored by Jonathan Turley,

Below is my column in The Hill on the expected formal vote this week on the impeachment inquiry.

The vote is only to continue to look into the allegations that President Joe Biden knew of the influence peddling operation of his family and fostered those efforts.  The final line of defense is to acknowledge that this was influence peddling but that Biden was only trying to support his son.

The question for this vote is: how do you know? We have millions raised in what most view as corrupt influence peddling. Many of those payments are now confirmed by the Justice Department in the second Hunter Biden indictment.

Only an investigation will establish the truth on the President’s knowledge and involvement. Yet, for years, Democratic members have opposed any investigation. They now face a moment of truth.

Here is the column:

Author Aldous Huxley once said, “you shall know the truth, and the truth shall make you mad.”

Such a moment of madness has arrived in Congress as members prepare to vote on the formal approval of an impeachment inquiry. The second indictment of Hunter Biden shattered long-standing denials and narratives repeated by the White House and members of Congress. What is left in its wake is now plain to the public: corruption.

The vote is not whether to impeach President Biden, but whether members support the investigation into these growing allegations of corruption by the Biden family. According to recent polling, nearly 70 percent of voters (and 40 percent of Democrats) believe that Biden has acted unlawfully or unethically or both. Yet with almost half of the Democratic Party viewing Biden’s conduct as worthy of investigation, it is not clear whether a single Democratic member will vote to look into these allegations.

In September, I testified at the first impeachment inquiry hearing and stated that the evidence had clearly passed the threshold for such an inquiry. While there was no requirement to hold a formal vote to start this process (as the Democrats did with Trump), I encouraged the members to hold such a vote.

Since that hearing, the evidence has only mounted against President Biden.

It is now clear that Biden lied when he maintained as a candidate, and later as president, that he had no knowledge of his son’s business dealings with foreign interests. Even Hunter himself contradicted the president on this claim.

It is also now clear that he lied in denying that his son never made money in China. The indictment confirms massive transfers from Chinese sources.

It is also clear that Hunter was engaged in raw influence peddling. This included threatening at least one Chinese businessman that his father was sitting next to him and would retaliate against him if he did not send millions to the Bidens.

President Biden also lied when he claimed this week that he had not had any “interactions” with his son’s business associates.

There are emails, audiotapes and testimony now disproving that claim.

Millions of dollars flowed to Biden family members through a labyrinth of shell companies and accounts. Hunter Biden sent emails saying that up to half of his income went to his father while they used shared accounts and credit cards for expenses.

Even Biden associates now admit that they were selling “the Biden brand” and influence with Joe Biden. Advocates simply argue that they were merely selling the “illusion” of influence.

It is now time to see if a single Democratic member will stand against corruption and support an inquiry into the president’s role and later cover-up of this corruption. That includes the use of White House staff to spread false claims and attack critics.

I have previously discussed four possible articles of impeachment that warrant investigation.

One of the false narratives being bandied about is that there is no proof that the influence peddling of Biden’s son and brothers benefited the president himself.

Thus, the argument goes, even though he was the subject of the influence peddling, Joe Biden did not legally or constitutionally benefit from the payments to constitute bribery or other crimes.

That is utter nonsense. The courts have repeatedly found that benefits to family members (far more modest than the millions in this case) can constitute bribery for a politician. That has also been the position of the Justice Department in past cases. Regardless of whether Hunter or his associates were speaking truthfully about handing over percentages of these funds to Joe Biden, he practically and legally benefited from the millions going to his family.

Even if members insist that they are not yet convinced, it makes no sense to insist that there is no direct evidence while opposing efforts to establish such evidence. These members have opposed any investigation into the allegations from the start.

Polling suggests most people believe there was a massive influence peddling operation built around Joe Biden, and that the president lied about not knowing about these deals.

It is now time to get answers directly from the key players, from Hunter Biden to the president himself.

There is more at stake for the members than a Democratic president. The Democratic Party has already embraced censorship and abandoned its long advocacy of free speech. Democrats are now running on the pledge to expand censorship on social media. The question is whether, as a party, it will now vote to shield corruption, even with almost half of Democratic voters calling for answers.

The Democratic Party that I was raised in and supported was more than the party of censorship and corruption. It fought for free speech and good government. There were principles that came before personalities.

That is why we have reached a point of inescapable clarity. There is no principled basis to oppose an investigation into these chilling allegations. Stripped of the false narratives and faux constitutional claims, what remains are raw politics and utter madness.

The only question is, who will step forward on the Democratic side to demand not impeachment but answers?

So let’s call the vote.

Tyler Durden
Mon, 12/11/2023 – 13:45

Special Counsel Asks Supreme Court To Immediately Weigh In On Trump Presidential Immunity Defense

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Special Counsel Asks Supreme Court To Immediately Weigh In On Trump Presidential Immunity Defense

Special Counsel Jack Smith has asked the Supreme Court to immediately weigh in on former President Trump’s federal 2020 election case.

In a Monday filing, Smith asked the justices to weigh in on Trump’s immunity defense, by which Trump has cited presidential immunity to try and have the case tossed. The former president is accused of entering multiple criminal conspiracies to change the results of the 2020 US election.

The move comes after Trump appealed an appeals court judge’s rejection of that argument.

In the Monday filing, Smith cited Trump’s fast-approaching March 4 trial date.

“It is of imperative public importance that respondent’s claims of immunity be resolved by this Court and that respondent’s trial proceed as promptly as possible if his claim of immunity is rejected,” reads the filing.

Smith has also requested that the Supreme Court expedite its decision on whether it will take up the issue, period. If they do, he wants them to prioritize it over all other cases.

This case presents a fundamental question at the heart of our democracy: whether a former President is absolutely immune from federal prosecution for crimes committed while in office or is constitutionally protected from federal prosecution when he has been impeached but not convicted before the criminal proceedings begin,” reads the filing.

In his Supreme Court brief, Mr. Smith conceded that the trial would most likely have to be paused because of the appeal of the immunity issue. That position reversed the one his prosecutors took over the weekend in court papers, in which they argued that Judge Chutkan should not have to stay the case pending appeal.

Winning the appeal of the immunity decision was only one of Mr. Trump’s goals in challenging the decision. All along, he and his lawyers have had an alterative strategy: to delay the election interference trial for as long as possible. –NY Times

The filing comes after Judge Tanya S. Chutkan – who worked at the law firm which repped Fusion GPS, the company that helped orchestrate the Russia collusion hoax – rejected Trump’s sweeping claims of “absolute immunity” from an election interference indictment because it was based on actions taken while in office.

In her ruling, Chukan condemned attempts to “usurp the reins of government,” and said that nothing in the Constitution or US history supports the notion that a former president is immune.

As the Times further suggests, “If the trial were to be put off until after the 2024 election and Mr. Trump were to win, he could have his attorney general simply dismiss the charges. Holding a trial after the presidential race would also mean that voters would never hear any of the evidence that prosecutors have collected about Mr. Trump’s expansive efforts to reverse the results of the last election before weighing in on whether to re-elect him.”

Tyler Durden
Mon, 12/11/2023 – 13:22

UN Climate Karens Melt Down After COP28 Summit Ditches Fossil Fuel ‘Phase-Out’ Language

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UN Climate Karens Melt Down After COP28 Summit Ditches Fossil Fuel ‘Phase-Out’ Language

Last week, Sultan al Jaber, the president of the UN’s COP28 climate summit, insisted that there is “no science” behind calls to phase-out fossil fuels, before getting in a hilarious eco-fight with three leading women from the conference over climate change and gender.

“You’re asking for a phase-out of fossil fuel,” al-Jaber said.

“Please, help me, show me for a phase-out of fossil fuel that will allow for sustainable socio-economic development, unless you want to take the world back into caves.”

Responding to the remark, U.N. Environment Program Executive Director Inger Andersen said she lives in Kenya with solar power and clean electricity from the local utility.

“I’m not living in a cave,” she added.

“That’s all I can say.”

 The remarks from al Jaber draw criticism from scientists and are in contrast with the view of Antonio Guterres, the Secretary-General of the United Nations, who said at the climate summit on Friday,

The science is clear: The 1.5C limit is only possible if we ultimately stop burning all fossil fuels. Not reduce, not abate. Phase out, with a clear timeframe.”

Fast forward to Monday, with the Financial Times reporting that a draft agreement from the summit has dropped all references to the phaseout of fossil fuels, following opposition from oil and gas-producing countries led by Saudi Arabia.

The document — which will have to be agreed by almost 200 countries at the summit in Dubai — sets out an optional range of actions that countries “could” take to cut emissions to net zero by 2050.

This includes reducing “consumption and production of fossil fuels, in a just, orderly and equitable manner so as to achieve net zero [carbon emissions] by, before, or around 2050 in keeping with the science”. -FT

The climate Karens, however, want the text to go further by committing to a phase out of fossil fuels – which any honest idiot could tell you would have extreme repercussions in terms of both energy price inflation (which of course hurts the poor the most), and the logistics of shifting developed nations onto unreliable primary energy sources.

“We have made progress, but we still have a lot to do . . . including on fossil fuel language,” said a Jaber, adding “We should not allow anything to get between the fact we have all decided to keep our focus on our north star . . . of keeping 1.5[C] in reach.”

The 1.5c target was set during the landmark 2015 Paris climate accord, as countries agreed to limit temperature increases to well below 2C and, ideally, 1.5C, as if that’s even possible, and even if it were, assumes China and India would give a rat’s ass and play ball in this completely academic exercise.

It is our very survival that is at stake. That is why in every room our negotiators have been pushing tirelessly for decisions that align with staying under 1.5[C] degrees,” said Samoa’s minister of natural resources Toeolesulusulu Cedric Schuster, speaking on behalf of a group of small island countries vulnerable to climate change.

Marshall Islands minister of natural resources, John Silk, said the country “did not come here to sign our death warrant,” calling for a fossil fuel phaseout.

We will not go silently to our watery graves. We will not accept an outcome that will lead to the devastation for our country.”

Watery Graves!? he told the room full of elites with beachfront homes.

Perhaps the biggest climate Karen, Al  Gore, wrote a lengthy screed on X, slamming COP28 as being “on the verge of complete failure” due to the elimination of the phase-out language.

Here’s what the current draft agreement entails (via FT).

  • Triple renewable energy capacity globally and double the global average annual rate of energy efficiency improvements by 2030

  • Rapid phasedown of unabated coal and limits on permitting new and unabated coal power generation

  • Accelerated efforts globally towards net zero emissions energy systems, using zero and low carbon fuels well before or by around mid-century

  • Accelerating zero and low emissions technologies, including renewables, nuclear, abatement and removal technologies, including such as carbon capture and utilisation and storage, and low carbon hydrogen production, to enhance efforts in substitution of unabated fossil fuels

  • Reducing both consumption and production of fossil fuels, in a just, orderly and equitable manner, so as to achieve net zero by, before, or around 2050 in keeping with the science

  • Accelerating and substantially reducing non-CO₂ emissions, including, in particular, methane emissions globally by 2030

  • Accelerating emissions reductions from road transport through a range of pathways, including development of infrastructure and rapid deployment of zero and low-emission vehicles

  • Phaseout of inefficient fossil fuel subsidies that encourage wasteful consumption and do not address energy poverty or just transitions, as soon as possible

Know who else can’t wait for the green revolution?

Child laborer mines cobalt for batteries

Tyler Durden
Mon, 12/11/2023 – 11:45

For The Market To Be Right, Every Member Of The FOMC Has To Be Wrong

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For The Market To Be Right, Every Member Of The FOMC Has To Be Wrong

By Benjamin Picton, senior macro strategist at Rabobank

For Lease Navidad

Following a softish ADP jobs figure last week, the market was poised for a similarly weak print in the much more consequential non-farm payrolls report. Alas, the recent form of virtually no correlation between the two numbers held, and non-farm employment growth in November handily beat the 185,000 consensus estimate to print at 199,000.

The bond market reacted in orthodox fashion. 2-year yields jumped 12.5bps and 10-year yields pumped higher by 7.6bps. Fed Funds futures show the centre of gravity for market-implied probability of rate cuts have been pushed a little further out the yield curve into 2024, but there are still 4.5 cuts priced in before Christmas.

So, the huge disparity between market pricing and the Fed dot plot continues. The dot plot median for 2024 is 5.125%, and the lowest value is 4.375%, while the futures market is suggesting that Fed Funds will finish the year just a touch above 4%. This suggests that every member of the FOMC would have to be wrong (or fibbing) about the likely future path of their policy rate decisions for the market to have it right.

Jerome Powell and other Fed speakers who have been warning traders not to get too carried away with bets on looser policy will be pleased to see some tentative crabwalking back towards the higher for longer meme. You can only huff and puff about hawkish policy stances for so long before you have to actually deliver, or risk losing your credibility. Equity markets were sufficiently unfazed by a firmer than expected labor market to see the Dow Jones rise by 0.36% and the more duration sensitive NASDAQ up by 0.45%. Mr Market says “I do not believe you!” to the Fed.

This week brings the December FOMC meeting (previewed here by Philip Marey), so we will get an updated picture of how determined the Fed is to stick to the higher for longer meme. No-one will be sweating on this meeting more than the commercial real estate sector and the regional banks who loaded up their balance sheets with CRE risk in the go-go years of ever lower policy rates (and money printing). Unrealized losses on held to maturity bond portfolios might be looking a little better since 10-year yields encountered resistance at 5% and subsequently fell by ~80bps, but this might be splitting hairs between disaster and calamity.

The soft-landing becomes important in this context as office fund managers sweat on the double-whammy of refinancing risk and vacancy rates driven higher by the work from home trend that just won’t die. Assets bought off funny-money cap rates don’t make much sense in a normalized free market where supply and demand of credit is determined by free exchange between willing borrowers and lenders. Mispricing is just one negative legacy of interventionist easy money policies. As Walter Bagehot famously put it: “John Bull (or Uncle Sam) can stand many things, but he cannot stand 2% (or 0.25%)”.

Obviously, there are financial stability risks here, and the Fed already demonstrated a willingness to ride to the rescue with new liquidity when similar risks were exposed earlier in 2023. This is the underlying tension between r* (the neutral rate of interest) and r** (the financial stability rate of interest). The Fed is talking about the former, the market is pricing for the latter. Who can blame them if CRE managers are heading towards the holidays saying “for lease Navidad” as all of the white-collar workers telecommute from their living room.

Major Bank CEOs in the USA seem to be well aware of the financial stability risks inherent in such a system. CEOs appearing before a Senate Hearing on December 6th pushed back against the proposed implementation of the Basel III capital framework, which would require banks to hold more capital against the assets on their balance sheets. Critics will say that the resistance is pure self-interest, because lower capital requirements means more leverage and therefore higher potential profits. Another interpretation might be that senior bankers don’t want to be forced to hold a greater volume of debt securities whose value is routinely manipulated by the central bank.

The case could be made that, beyond a certain point, capital requirements that force banks to buy government debt at what can be effectively off-market rates (during periods of yield-curve control, for example) is not only a form of financial repression, but a source of systemic risk in the future. Unfortunately, that future appears to be arriving quickly as interest rates normalize, debts fall due for refinance and bond portfolio’s nurse whopping losses.

The more arcane points of monetary frameworks and financial stability will get a good airing this week because the Fed won’t be the only central bank in action. We also have rates decisions due from the BOE, ECB, SNB, BCB and the Norges Bank. Almost all of these are expected to remain on hold, with the exception of the BCB who are in the midst of a cutting cycle. On Friday our rates team put out a detailed summary of the Bloomberg survey ahead of the ECB meeting this week. The key takeaways were that:

  • Economists’ expectation for the volume of rate cuts in 2024 has remained at 75bp (albeit that the first cut is now expected in June rather than September) but this is of course now hugely less than market pricing.
  • A majority now expect that the ECB will bring forward its current commitment to invest bonds maturing under the PEPP until the end of 2024, with the favoured timing being Q2 2024.
  • -The expectations regarding the ECB’s forecast for 2025 headline and core inflation are almost evenly split between those that expect them to be left unchanged and those that expect downward revisions.

This week will also bring the release of CPI figures for the United States on Tuesday. As always, headline inflation is expected to decline further while core inflation remains resilient. It will be very interesting to see which direction any surprises come, especially after last week’s inflation numbers our of China that showed accelerating deflation for both consumer and producer prices. Hopefully the soft landing survives the week!

Tyler Durden
Mon, 12/11/2023 – 11:25

Israeli Troop Deaths Surpass 100 in Gaza, Thousands Wounded As Hospitals Deal With ‘Tsunami Of Trauma’

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Israeli Troop Deaths Surpass 100 in Gaza, Thousands Wounded As Hospitals Deal With ‘Tsunami Of Trauma’

Shortly after weekend reports of Israeli tanks having reached the center of the southern Gaza city of Khan Younis, the Israel Defense Forces (IDF) on Monday issued a new casualty count of its soldiers slain since the ground offensive began. 

Seven new deaths were announced, which includes six killed Sunday while fighting in the southern Gaza Strip, bringing the official IDF death toll to 104. Also on Sunday the IDF for the first time issued an official tally of troops wounded in action, saying that 1,593 Israeli soldiers have been wounded since Oct.7.

However, Haaretz alongside other publications have speculated that the real casualty figure is much higher, with Haaretz in particular reporting that accessible hospital data points to much higher than published troop casualties (possibly double) from the Gaza operations.

Image: Times of Israel/Flash90

“The military noted that 255 soldiers had suffered serious injuries, 446 moderate injuries and 892 minor injuries. The army released the information on the numbers of wounded soldiers and their condition after Haaretz reported two weeks ago that it had been refusing to do so,” reported Haaretz.

But an examination of hospital records by the Israeli newspaper showed “a considerable and unexplained gap between the data reported by the military and that from the hospitals.”

“For example, Barzilai Medical Centre in Ashkelon alone reports treating 1,949 soldiers hurt in the war since October 7 (out of 3,117 injured people treated there during the war), whereas the army reports a total of 1,593 wounded soldiers. Assuta Ashdod reportedly treated 178 patients, Ichilov (Tel Aviv) 148, Rambam (Haifa) 181, Hadassah (Jerusalem) 209 and Sha’arei Tzedek (Jerusalem) 139,” said the newspaper.

Haaretz continued, “Another 1,000 or so soldiers were treated at Be’er Sheva’s Soroka Medical Centre, while another 650 were treated at Sheba Medical Centre in Tel-Hashomer. This is a partial list, as the data does not include soldiers currently in rehab wards who have already been counted as wounded upon arrival at emergency wards and inpatient wards.”

The Haaretz report concluded that the number of wounded soldiers are in actuality at least twice as high as the army’s numbers. This would put the true figure in the thousands. Other Israeli publications have pointed to further indicators that casualties are bigger than what’s being published…

There are regional reports of 60 IDF wounded per day coming into Israel’s hospital system

Limor Luria, deputy director general and head of the ministry’s Rehabilitation Department, told Yedioth Ahronoth newspaper that at least 2,000 Israeli soldiers had been declared disabled, with health officials “in a hurry to release the wounded so it can admit new patients”.

“We have never faced something like this,” Luria said, adding that 5,000 soldiers had been wounded since the start of the fighting

“Who will help them shower or get around the house? Most of the victims suffered serious injuries, and the state needs to understand that there is an arena here that requires a new distribution of injuries.” 

Over the weekend a Hamas spokesman claimed that the group has destroyed or disabled at least 180 Israeli personnel carriers, tanks and bulldozers. Hamas has been regularly issuing combat videos which appear to prove that it has indeed been in at least some instances taking out Israeli armor and groups of IDF infantry. 

The IDF has conducted a supply airdrop to its troops in Khan Younis. This its first airdrop to an active military zone since the 2006 war in Lebanon

Gaza civilians meanwhile are running out of options for safe areas or shelters. Many say they have nowhere to go, and can’t escape the IDF aerial onslaught, also as Hamas rockets continue to be fired on southern Israel. 

The IDF is reportedly trying push Palestinian civilians toward a coastal designated “safe zone” in al-Mawasi (in the south). But the small tent city is already on the verge of collapse, also as it lacks basic necessities including running water.

Israel’s military has published a series of videos and images showing the mass arrest of what it says are Hamas members, which has unleashed international criticism and outrage given many of those rounded up are believed to be civilians:

The Associated Press has written of the area that it has “no running water or bathrooms, assistance, and international humanitarian groups are nowhere to be found, and the tents provide little protection from the coming winter’s cool, rainy weather.” Speaking of the internally displaced, the report noted: “Some don’t even have enough materials to build a tent.”

Tyler Durden
Mon, 12/11/2023 – 11:05