Authored by Bill Blain via MorningPorridge.com,

‘In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.’

Gold has hit new record dollar levels – reflecting not just current uncertainty, but also the de-dollarisation narrative and it’s attractions as an inflation and market hedge, and long-term value. It’s worth keeping an eye on.

This morning there is so much to write about.

• I could opine on the blind optimism of both bond and equity investors about the Fed et al swiftly easing rates (down 1.25 percentage points via 5 cuts next year in the US, apparently), to the naysayers in the Central Banks who say they remain on vigilant watch, ready to hike further at any sign of re-kindled inflation.

• This week’s employment data will give important clues on the heat of the US economy. Many analysts reckon it will be strong!

• There is a simply superb graphic by James Eagle “Megatechs go kaboom” I urge everyone to take a look at – the big 7 Megatechs: Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia and Tesla are collectively up 83% this year. In contrast, the remaining “S&P 493” has posted a 4.1% gain. Worth thinking about….

• What does the near-but-avoided-for-now collapse of Evergrande mean for China investments?

• I could comment on the threats emerging from increased stalemate around the globe. Ukraine’s multiple travails: the stalled summer offensive, weapons and money from the west under threat, manpower shortages and growing internal dissent towards Zelensky spell trouble. Israel is trapping itself in a Gaza quagmire with the strategic direction of the war secondary to Netanyahu’s blundering political survival imperative. Could these conflicts further destabilise markets?

• Or, maybe I should be looking at 2024 elections and the risks of political surprises roiling markets in the run up to UK and US elections?

Instead…. Let’s talk about Gold…  This morning’s quote is classic Alan Greenspan, Fed Chair from 1987-2006.

The yellow metal has hit a new record dollar high of $2111. Traditionally it’s the ultimate safe-haven investment, and thrives in time of uncertainty. However, it’s also on a tear because of expectations of US rate cuts, the weaker dollar making it cheaper for non-dollar buyers. The FT points out rising gold reserves at non-aligned and BRICS nations have been rising – as these nations have sold US treasuries, they’ve bought gold instead. (Much of what follows is based on an article I wrote for Property Chronicle earlier this year. Great magazine – try it out!)

Gold: Why Gold? Its intrinsically useless – but, oh, so beautiful. Everyone wants some – and not without reason. Whatever we think about history and value, or the returns on other “safe-haven” assets, there remain very good reasons to include Gold as part of a diversified asset portfolio.

Let’s get the “desirability” and emotional aspects out the way. I am told a significant influence on the price of gold is the weather – a good monsoon in India means farmers buy more bangles for their daughters weddings from the gold souks. It is beautiful. It is lustrous. It is unblemished. It is Gold. Always believe in… Gold! There will always be demand for gold for personal adornment – which is pretty much irrelevant when it comes to its proposition as an investment asset.

As an investment in its own right gold performs well; over the last 50 years Gold prices have risen over 3000%, compared to a 3500% gain in the S&P500. However, in periods of financial instability gold outperforms stocks – notably over the past 20-years even though the prices of financial assets were artificially juiced by the effects of zero interest rates! In terms of risk, companies come and go, but Gold is forever. If the world remains unstable – and no reason to think it won’t – then gold should be front and centre on your radar – no matter how archaic you consider it.

Goldbugs always start by telling you what a superb store of value the yellow metal is in times of financial uncertainty. Certainly, the world has seldom felt financially less certain than it does today;

• Burgeoning national debt quantums have called into question the long-term sustainability of sovereign debt loads. If major nations really are going to default on their debt – then gold’s role as a safe-haven can only increase. (Personally, I think the risks of debt default are over-exaggerated, but there are good reasons to be concerned.)

• Geopolitical crises have destabilised supply chains, and threaten further recessionary shocks and energy inflation spikes. Such threats feel to be multiplying. Gold prices hedge against inflation while cash is just cash and offers zero upside.

• Electorates across the democratic West appear to have lost trust in politics in the face of populism and rising authoritarianism. Rising political risks to bond markets, currencies, commodities and growth, raise the need for decorrelated safe-haven investments. Gold as an asset looks less correlated than any alternatives.

• Markets are struggling to maintain still sky-high valuations established during the zero-interest QE interregnum in today “normalised” interest rate environment. In a falling market, gold may struggle, but it won’t default, be invaded or be wiped away be a natural disaster. It will remain … gold. Indestructible!

Goldphobes claim gold is no longer what gold once was. 80 years ago, Allied Airmen around the globe had Gold Sovereigns stitched into the linings of their flight suits to facilitate escape if shot-down – everyone, everywhere, knew hard gold was the ultimate store of wealth and value and exchangeable everywhere and anywhere. In the Middle ages Viking wealth was defined by the gold armbands warriors wore – they would hew off lumps to pay for goods, again secure in the knowledge of its value. Gold worked because it was easily accepted as a medium of exchange.

That is no longer true.

Escaping airmen in dodgy countries will be asked by dodgy smugglers to pay in equally dodgy crypto. In a world where retail outlets will only accept electronic cash via card or mobile device, you are unlikely to find a grog shop willing to carefully weigh your shavings of gold to calculate the weight of gold equivalent to a pint based on the current price. (To be fair, there are even fewer pubs willing to accept a bearer Treasury bond.) In terms of a medium of exchange, gold has become somewhat hypothetical – which has been happening for decades since nations came off the Gold Standard.

As a result, gold in the form of easily traded gold linked investments and Exchange Traded Funds (EFTs) linked to the Gold price is now the simplest way to hold gold exposure. That is not risk free. You will have counterparty risk. Gold purists (ahem) say this is dangerous – having direct physical control of specie is the only truly safe way to own gold. I take the pragmatic view that if my Blackrock Gold ETF defaults, events will mean that redeeming my gold vouchers will be among the last of my immediate worries.

(And if I held physical gold – would it have been destroyed by the atomic fire, or would it have slowed me down escaping from the rampaging victims of a zombie plague? (These are just two of the low probability real gold scenarios I’ve stress tested. Honest…))

As for sovereign bonds such as US Treasuries or UK Gilts, I have a very simple approach to their value as safe haven assets. What is the likelihood is they will repay in full? High. And what is the risk of inflation? High. Gold is a good inflation hedge, but the downside of any Sovereign Financial Nation is that they own the keys to the money printing presses. That means all a government has to do to repay debt is press print to repay outstanding debt. That leaves the nation exposed to consequences including rising inflation by increasing the money supply, and a collapse in its currency (from money printing and inflation), and a negative shift in its terms of trade, further destabilising the economy.

Bonds are never completely free of risk. There is a simple way to consider such risks – the Virtuous Sovereign Trinity: that a nation with a stable currency, a sustainable bond market, and political competency will tend to do well and be able to keep the trinity in balance. If one part fails – as we saw dramatically demonstrated during the brief but too long Liz Truss premiership when her brash political naivety spiked the Gilts market – then the result is chaos.

IF there is one particular risk to Sovereign Bond markets to be aware of, it’s the US 2024 Elections. This morning Donald Trump is leading the polls in five of the key swing states. If he wins the consensus is for a serious re-appraisal of the US Treasury market and the US dollar by global investors. Although there is no other as liquid safe-haven asset and global trade is de facto dollarised – the risks of the US Virtuous Sovereign Trinity being upended by vengeful Trump should not be underestimated. It’s would undoubtably boost the price of gold if US treasury investors decide gold looks a better option!

Finally, let’s consider the pretender to the safe-haven market; Cryptocurrencies, and Bitcoin in particular, claim to be digital gold. Bollchocks. They are not. They are constructs of pointlessness. They claim to be a store of value – they are not, witness the enormous volatility in prices. They claim to be freely exchangeable – they are not, they are subject to ongoing concerns on legality, traceability and the safety of trade  execution. They claim to a means of exchange – or as a very funny TV ad put it’s as a chap tries to buy some apples from a scruffy roadside stall: “which cryptocurrency would you like settle this transaction in?” 

Many years ago I offered £100 to any reader of my daily Morning Porridge market commentary who could explain to me one thing cryptocurrency can do (legally) better that isn’t already done? I am still waiting…

US equity futures, most European bourses and Asian markets as well as global bonds all retreated after five consecutive weeks of gains, as traders paused to digest November’s blockbuster rally and to consider the case for interest rate cuts, which they aggressively priced in after Powell’s “not as hawkish as feared” fireside chat on Friday. As of 8am ET, S&P futures were lower by 0.3%, dropping back below the 4,600 unwinding a portion of Friday session rally (which however left hedge fund bruised and battered as the most shorted stock soared much more than the HF VIP basket); USD is stronger and commodities are weaker: crude futures are lower by around 0.4%, adding to Friday losses; 10-year Treasury yields added five basis points to 4.25%. Despite the rise in the DXY, Bitcoin surged past $41,000, while gold briefly touched an all time high. With the Fed in its blackout window, the macro data releases will be the key focus; no treasury auctions this week. Today, that focus is on factory orders and durable/cap goods; this week we get a deluge of labor data starting with the latest reading on US job openings (or JOLTS) tomorrow, followed by ADP’s National Employment Report on Wednesday and non-farm payrolls on Friday.

In premarket trading, Spotify shares rose 1.7% after the company said it will reduce headcount by about 17%, at least the third time this year the streaming service has cut jobs. Roche Holding AG gained after the Swiss drugmaker agreed to buy Carmot Therapeutics Inc. for as much as $3.1 billion in a deal that would give it access to experimental medicines in obesity and diabetes. Cryptocurrency-linked stocks rallied in premarket trading on Monday as Bitcoin extends gains to surpass the $42,000 mark, its highest level since April 2022. Shares of Hawaiian Airlines shares soared 181% after rival Alaska Air agreed to purchase the carrier for $1.9 billion. Here are some other notable premarket movers:

• Carvana rose 4.5% after JPMorgan upgraded the online used-car dealer to neutral from underweight. The broker said the upgrade reflects improvements in “productivity, costs, and culture.”
• Lululemon shares decline 2.0% after Wells Fargo downgraded the athletic-apparel brand to equal-weight from overweight, noting the valuation is “no longer cheap.” The broker also removes the stock from their Top Picks list, replacing it with Nike.
• Uber Technologies, Jabil and Builders FirstSource all rise in premarket trading as the companies are set to join the S&P 500 Index.
• Virgin Galactic fell 14% after Richard Branson told the Financial Times that he doesn’t plan further investments in the space tourism startup he founded.

A slew of economic reports this week culminating with Friday’s jobs report are expected to shed light on the state of the US labor market and whether markets are prematurely excited that softer economic conditions can open the door to Federal Reserve rate cuts. Soft-landing hopes built on an economy at “stall speed” look fragile, leaving the market open to risks of a deeper contraction, JPMorgan strategists led by Mislav Matejka warned in a note, although they have been saying the same thing for so long nobody cares any more.

Optimism around a peak in interest rates pushed the 10Y  TSY yield down 60 basis points in November from a 16-year high of 5% the previous month, and brought a gauge of the securities into positive territory for the year. The S&P 500 advanced about 9%, one of its best November rallies in a century.

“While yield declines were warranted, the magnitude is too big given the recent data releases,” said Piet Christiansen, chief strategist at Danske Bank. “I think the market is too aggressive about rate cuts.”

As noted on Friday, bond traders doubled down on wagers that the Federal Reserve will cut interest rates as soon as next March even after Fed Chair Jerome Powell reiterated it’s premature to speculate on easing. Late last week, the swaps markets saw an 80% chance of a reduction in March and are fully pricing in a cut in May; March odds have since eased modestly. Those bets are set to be tested tomorrow, with the latest reading on US job openings (or JOLTS) for October. That report will be followed by ADP’s National Employment Report on Wednesday and non-farm payrolls on Friday.

“Still-robust demand and labor-market dynamics in the US” should keep traders wary that inflation can keep cooling, according to Barclays Plc strategists including Ben McLannahan. “Further falls in inflation will be more difficult from here,” they wrote in a report.

European stocks reversed earlier gains, trading about 0.1% lower as oil stocks underperformed most sub-sectors on Europe’s Stoxx 600 index. The Stoxx Europe 600 Energy index drops as much as 2% after Citi cited pressure on oil prices coming from more spare capacity and UBS flagged demand concerns. Citi analysts including Alastair Syme expect further oil price easing to low $70s by end-2024 in the face of growing spare capacity. The mining sector was the biggest underperformer amid falling iron ore prices. Here are Monday’s biggest movers:

• Rolls-Royce shares gain as much as 4.1% as JPMorgan upgrades the plane-engine maker to overweight and Goldman Sachs reinstates its buy rating, adding to a chorus of bullish views
• UCB rises as much as 7.8% after it announced that the EU has granted marketing authorization for Zilbrysq (zilucoplan) as an add-on to standard therapy for generalized Myasthenia Gravis
• Wolters Kluwer rises as much as 4% and hits new all-time high. The German software and services provider is set to join the Euro Stoxx 50, replacing UK gambling firm Flutter
• 888 shares gain as much as 18% after the Sunday Times reported Playtech made an unsuccessful £700 million ($890 million) bid in July for the William Hill owner
• DS Smith gains as much as 2.7% after Barclays upgraded its recommendation for the UK paper and packaging firm to overweight, calling it “one of the cheapest stocks in global packaging”
• ITM Power jumps as much as 13% after the clean-fuel company reiterated its FY guidance. Analysts welcomed its update, which contrasts with recent profit warnings from sector peers
• Nokia shares fall as much as 4.1% amid speculation that the telecom equipment maker could be removed from AT&T’s 5G equipment vendor list; rival Ericsson meanwhile gains as much as 2.7%
• European mining stocks fall as much as 2% as iron ore prices drop after inventories rose and the steel market moved into the typically slower winter season across northern China
• IMCD slips as much as 2% after JPMorgan cut its rating, noting that it doesn’t see earnings of chemical distributors’ in 2024 being “positively levered” to a possible macro recovery

Earlier in the session, Asia’s equity benchmark dropped, led by losses in Chinese and Hong Kong stocks as investors looked for fresh catalysts after a strong rally in November. Indian equities headed for a fresh record after Prime Minister Narendra Modi’s victories in three key state elections boosted expectations of policy continuity. The MSCI Asia Pacific Index declined 0.2%, after rising as much as 0.7% earlier. Stocks in Japan slid as the yen strengthened while Chinese shares extended declines. China Evergrande rallied 9% in Hong Kong after the distressed developer won breathing room to strike a restructuring agreement with creditors. That wasn’t enough to help boost Chinese stocks, however, and the CSI 300 Index closes down 0.7% at the lowest level of 2023 – which was also a fresh 5 year low – on Monday..

… as traders remain concerned about the health of the world’s second-largest economy despite Beijing’s recent push to shore up the market.

• Hang Seng and Shanghai Comp traded indecisively as PBoC Governor Pan’s repeated support pledges were offset by a substantial net liquidity drain and geopolitical frictions in the South China Sea, while attention was also on Evergrande’s windup hearing which the Hong Kong court adjourned to January 29th to give the Co. some breathing space to work on its restructuring proposal.
• Australia’s ASX 200 was higher with gains led by the yield-sensitive sectors such as tech and real estate, while gold miners were boosted after the precious metal initially surged above USD 2,100/oz and printed a fresh record high before fading the majority of the early spike.
• Japan’s Nikkei 225 lagged and briefly approached the 33,000 level to the downside with pressure from recent currency strength.

Putting today’s weakness on context, Asian stocks headed into December on the back of a 7.7% rally last month, their best monthly gain since January, as investors pile into bets that the Federal Reserve may cut interest rates by mid next year. Optimism also remains that China will continue its policy support for its struggling economy. Historically, regional equities tend to have a quiet December with average rise in the past 10 years seen at around 0.9%, according to data compiled by Bloomberg.  

In FX, the Bloomberg Dollar Spot Index rose 0.2% reversing part of Friday’s steep losses. The Swiss franc is one of the worst performers, falling 0.5% versus the greenback after data showed inflation slowed more than expected in November.

In rates, Treasuries are cheaper with losses led by the front-end and belly across the curve, flattening 2s10s and 5s30s spreads. There is no strong catalyst for price action according to Bloomberg analysts, as Treasuries follow similar bear flattening across German curve, unwinding a portion of Friday’s sharp rally. US yields cheaper by up to 6bp across front and belly of the curve with 2s10s, 5s30s spreads flatter by 1.2bp and 4bp on the day; 10-year yields around 4.245%, cheaper by 5bp on the day and lagging bunds and gilts by 5bp and 2bp in the sector. Focus on the session includes factory orders, while Fed speakers are now in a self-imposed quiet period ahead of Dec. 13 policy announcement. The Dollar IG issuance slate is empty so far; this week’s issuance forecast is $15b to $20b, with bond sales expected to be front-loaded with Monday anticipated to be the busiest day of the week. No coupon issuance scheduled for this week with next Treasury auctions being next week’s 3-, 10- and 30-year sales.

In commodities, oil prices extended their recent CTA-driven decline, with WTI falling 0.5% to trade near $73.70. Meanwhile, European natural gas prices declined amid persistent low demand for the fuel kept supplies intact. Benchmark futures fell as much as 4.9%, breaking two consecutive days of gains for the contract. Gold surpassed $2,130 an ounce before giving up gains for the day.

Bitcoin climbed past the $41,000 level to the highest since April 2022.

US economic data includes October factory orders, durable goods orders at 10am. Fed members are now in self-imposed black-out period for speaking ahead of Dec. 13 policy announcement

Market Snapshot

• S&P 500 futures down 0.3% to 4,588.00
• STOXX Europe 600 down 0.3% to 465.03
• MXAP little changed at 161.80
• MXAPJ up 0.1% to 503.65
• Nikkei down 0.6% to 33,231.27
• Topix down 0.8% to 2,362.65
• Hang Seng Index down 1.1% to 16,646.05
• Shanghai Composite down 0.3% to 3,022.91
• Sensex up 2.1% to 68,881.89
• Australia S&P/ASX 200 up 0.7% to 7,124.65
• Kospi up 0.4% to 2,514.95
• German 10Y yield little changed at 2.37%
• Euro little changed at $1.0877
• Brent Futures down 1.3% to $77.88/bbl
• Gold spot up 0.2% to $2,075.57
• U.S. Dollar Index little changed at 103.29

Top Overnight News

• Defaults by Chinese borrowers have surged to a record high since the outbreak of the coronavirus pandemic, highlighting the depth of the country’s economic downturn and the obstacles to a full recovery. A total of 8.54mn people, most of them between the ages of 18 and 59, are officially blacklisted by authorities after missing payments on everything from home mortgages to business loans, according to local courts. FT
• ALK (Alaska Air) said it would buy HA (Hawaiian Holdings) for $18/shr. in cash in a deal worth $1.9B (including ~$900M of net debt), a significant premium to HA’s Fri close of $4.86/shr. BBG
• US goods deflation is in place and will likely continue for the foreseeable future (given that supply chains are back to normal while monetary tightening curbs demand), a trend that should help bring overall inflation back to the Fed’s 2% target as soon as the second half of 2024. WSJ
• Israel expanded its offensive, with a ground invasion of southern Gaza expected. A US Navy ship responded to a flurry of drone and missile attacks against commercial ships in the Red Sea. The US said it’s working to restart hostage release negotiations. BBG
• A Hong Kong judge has delayed a decision on Evergrande’s liquidation, an unexpected move that gives the Chinese property developer until next month to come up with a restructuring plan that satisfies its creditors. FT
• Indian refiners have resumed Venezuelan oil purchases through intermediaries, with Reliance (RELI.NS) set to meet executives from state firm PDVSA next week to discuss direct sales following the easing of U.S. sanctions on the South American country. RTRS
• Speaker Johnson has proven to be a surprisingly staunch supporter of Washington providing more financial aid to Ukraine. WSJ
• US corporate profits are beginning to rebound, a trend that could help prevent the US from experiencing a recession. WSJ
• Spotify is preparing to cut 17% of its workforce, or about 1500 people, as the company looks to bolster margins and profitability. WSJ

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks traded mixed with an initial positive bias after last Friday’s gains on Wall St owing to a decline in yields amid increased Fed rate cut bets for next year despite the pushback from Fed Chair Powell, although the upside was capped in the region after quiet macro newsflow from the weekend and ahead of this week’s key events including central bank rate decisions and a slew of data releases. was higher with gains led by the yield-sensitive sectors such as tech and real estate, while gold miners were boosted after the precious metal initially surged above USD 2,100/oz and printed a fresh record high before fading the majority of the early spike. lagged and briefly approached the 33,000 level to the downside with pressure from recent currency strength. Hang Seng and Shanghai Comp traded indecisively as PBoC Governor Pan’s repeated support pledges were offset by a substantial net liquidity drain and geopolitical frictions in the South China Sea, while attention was also on Evergrande’s windup hearing which the Hong Kong court adjourned to January 29th to give the Co. some breathing space to work on its restructuring proposal.

Top Asian News

• Chinese Center for Disease Control and Prevention requested that the elderly and patients with underlying diseases and children avoid public gatherings, while it advised the public to wear masks in crowded places such as public transportation. It also stated that some public cultural venues, museums and indoor attractions can implement measures to avoid high density of people.
• PBoC Governor Pan reiterated a pledge to defend the housing market’s healthy operation and said China’s financing structure needs to be improved, while he vowed to handle actions disrupting market order and vowed low-cost funding aid to affordable home projects.
• BoJ’s Noguchi said Japan has yet to achieve a wage-driven rise in inflation and said they must see price rises backed by sustained wage increases to achieve the 2% price target, according to Reuters.
• A bombing attack killed four people and wounded several others in the Philippines’ southern city of Marawi City in Mindanao, while it was later reported that Islamic State claimed responsibility for the bombing.
• China’s internet companies including Didi (DIDIY), Tencent (700 HK/ TCEHY) and Alibaba (9988 HK/ BABA) are reportedly drawing complaints amid growing system failures; industry experts call for strengthened oversight, according to Global Times

European equities are mixed, Eurostoxx50 -0.2%, with trade ultimately choppy throughout the session. The FTSE 100, -0.5%, underperforms, largely hampered by losses in Basic Resources and Energy. European sectors are mixed with Retail and Media to the upside, though the overall breadth of the market is narrow; Basic Resources and Energy are the main underperformers, largely a factor of losses in base metals and lower oil prices respectively. Stateside futures are trading on the backfoot, ES -0.3%, amid a mixed risk tone in European trade; with the RTY, +0.3%, outperforming.

Top European News

• ECB’s Nagel said it is way too early to declare victory over inflation and noted that inflation in the Eurozone will carry on declining in the months ahead but at a slower pace, according to Kathimerini.
• ECB’s de Guindos says recent inflation data is good news and it has been a “positive surprise”; too early to declare victory.
• Riksbank Minutes: monetary policy has reduced demand in the Swedish economy and contributed to an easing of inflationary pressures; monetary policy needs to remain contractionary, however, it is now appropriate to leave the policy rate unchanged. Bremen says In my overall monetary policy assessment, the prospects for inflation and economic activity weigh more heavily than the continued weak krona.
• German Economic Minister Habeck cancelled his COP28 trip to focus on budget talks.
• French Interior Minister said one person died and two were injured from an attack by a suspect on tourists, while the suspect was said to be motivated by the Gaza situation and was on the French security services watch list, as well as known for psychiatric disorders.
• S&P affirmed France at AA; Outlook Negative and affirmed Poland at A-; Outlook Stable, while Fitch affirmed the UK at AA-; Outlook Stable, affirmed Ireland at AA-: Outlook Positive and raised Greece from BB+ to investment grade status of BBB-; Outlook Stable.

FX

• The Dollar index has kicked off the week on a firmer footing as yields eased off Friday’s highs and risk gradually soured overnight and into early European hours.
• EUR/USD is slightly more cushioned vs G10 peers (ex-USD) following last week’s decline on dovish ECB commentary coupled with the softer-than-forecast regional CPI data across the bloc.
• Japanese Yen is now flat intraday following the notable rise on Friday on the back of narrowing rate differentials – dipping from a 148.34 high towards a 146.65 low against the Dollar.
• Swissy is the G10 laggard this morning following the region’s CPI metrics which printed sub-forecast across the board in the release before the SNB’s quarterly decision later this month.
• Aussie, Loonie and Kiwi are hit by the broader risk mood, with the AUD and CAD narrowly lagging amid their commodity links.
• PBoC set USD/CNY mid-point at 7.1011 vs exp. 7.1271 (prev. 7.1104).

Fixed Income

• Core benchmarks are essentially unchanged at the time of writing, and reside towards the mid-point of circa. 40 tick parameters in EGBs.
• Bunds were lifted to the 133.44 session peak in the wake of domestic Import/Export data, though the move proved fleeting.
• USTs are just over 10 ticks shy of Friday’s peak and a touch softer on the session as yields, particularly at the short-end, lift and pause for breath during the Fed blackout & pre-data.

Commodities

• Crude futures, WTI, -0.6%, lose further ground in a continuation of the price action seen since last week’s OPEC+ meeting which ultimately underwhelmed markets as voluntary supply cuts by OPEC+ members have raised doubts about their implementation; the complex has bounced off lows though very much within ranges.
• Spot gold surged at the open to record levels, surpassing USD 2,100/oz before waning back to levels under USD 2,075/oz, with the rally primarily driven by traders betting on the Federal Reserve cutting interest rates early next year.
• US Department of Energy said on Friday that oil companies will return 4mln barrels of oil to the US SPR by February from the previous exchange and the US seeks to buy up to 3mln more barrels of oil for SPR for February delivery.
• US, UK and EU are to tighten compliance and increase leverage for buyers to keep getting discounted oil, while they jointly reached out to Liberia, the Marshall Islands and Panama to warn of increased circumvention of the Russian oil price cap.
• Kuwait Oil Company said several were injured after a limited fire broke out at an oil line, although production was unaffected.
• Canada’s First Quantum notified buyers that the Co. will not be able to meet agreements due to a force majeure.
• UBS forecasts Gold at USD 2250/oz by end-2024
• Kazakhstan daily oil output recovered to 230.5k tons on Dec 3rd after falling amid CPC shipping disruptions, according to data cited by Reuters.

Geopolitics: Israel-Hamas

• Israel’s military chief said the operation in southern Gaza will match the operation in northern Gaza where they fought strongly and thoroughly, while an Israeli military spokesman said forces are operating on the ground against Hamas centres in all of Gaza, according to Reuters.
• Hamas deputy chief said Israeli hostages will not be freed unless there is a ceasefire, and all Palestinian detainees are released, while the Hamas armed wing said they bombarded Tel Aviv with a barrage of missiles.
• A Mossad team was in Doha on Saturday for discussions with Qatari mediators on restarting the Gaza truce in which talks focused on the potential release of new categories of Israeli hostages and new truce parameters. However, it was later reported that Israeli PM Netanyahu’s office said the Mossad team was recalled from Qatar due to deadlock in negotiations over Gaza and that Hamas did not meet its obligation to free all children and women hostages on the list it approved.
• Israeli military spokesperson said several humanitarian trucks entered Gaza after being security cleared on the Israeli side of the border, while the spokesperson added that this will be a long war and not bound by time, according to Reuters.
• Israel’s army said a launch was identified from Syria towards Israeli territory and the army responded by targeting the launch site, while it was also reported that Iran said two Revolutionary Guards were killed in an Israeli attack in Syria, according to Reuters.
• US Pentagon said it is aware of reports regarding an attack on USS Carney and several commercial vehicles in the Red Sea, while the US said that USS Carney engaged and shot down a drone launched from Houthi-controlled areas in Yemen. It was separately reported that the Yemeni Houthi group said its navy targeted two Israeli ships although Israel’s military said the ships targeted had no connection to the state of Israel, while AFP reported that a UK-owned ship passing through the Red Sea was hit by rocket fire.
• US carried out a self-defence strike in Iraq against an imminent threat at a drone staging site, according to a US military official.
• US Vice President Harris said international humanitarian law must be respected in the Gaza war and too many innocent Palestinians have been killed, while she added that Israel has a legitimate military objective against Hamas but must do more to protect civilians. There were also comments from Secretary of Defense Austin who said protecting civilians in Gaza is a strategic imperative for Israel, as well as noted that the US will remain Israel’s closest friend and won’t let Hamas win.
• UK Foreign Secretary Cameron will travel to Washington D.C. on Wednesday and will conduct bilateral meetings with US Secretary of State Blinken, as well as meet congressional figures, while the focus of discussions will be support for Ukraine and to work to de-escalate tensions in the Middle East, according to Reuters.
• Islamic Jihad said Britain announced the participation of its air force in intelligence missions in Gaza as an effective participation in the aggression, according to AJA Breaking via social media platform X.
• Turkish President Erdogan said the chance for peace in the conflict is lost for now due to Israel’s uncompromising approach, while he added that Hamas is not a terrorist organisation and nobody should expect him to define them otherwise. Furthermore, Erdogan said a contact group of Muslim countries is ready to prepare a roadmap for the resolution of conflict in Gaza after talks with Western powers.
• Israel General says ground forces have almost completed their mission in Northern Gaza strip

Other

• NATO Secretary General Stoltenberg said NATO should be ready for bad news from the Ukrainian front as Kyiv continues to defend against Russia’s invasion, while he added that they have to support Ukraine in both good and bad times, according to an ARD interview cited by Politico.
• China’s military said a US combat ship illegally entered waters adjacent to the Second Thomas Shoal and that the US deliberately disrupted the South China Sea, while it added the US seriously violated China’s sovereignty and undermined regional peace and stability.
• Philippines Coast Guard said it is to conduct patrols in the vicinity of the Whitsun Reef and it is monitoring the illegal presence of more than 135 Chinese maritime militia vessels at a reef in the South China Sea.
• North Korea said interference with its satellite operation would be considered a declaration of war and that North Korea would respond to any US interference in space by eliminating the viability of US spy satellites. North Korea also stated that its laws stipulate mobilisation of war deterrence if an attack against its strategic assets becomes imminent, according to KCNA.
• North Korea said US sanctions violate international law and that it will retaliate against the US, Japan and Australia for sanctions against its satellite launch, while it said it will take countermeasures against individuals and organisations that impose and enforce sanctions, according to KCNA. Furthermore, North Korea warned a “physical clash and war” have become a matter of time after the scrapping of a key military pact designed to reduce tensions with South Korea, according to The Telegraph.
• Venezuela on Sunday approved a referendum called by the government of President Maduro to claim sovereignty over an oil- and mineral-rich area of Guyana, according to AP News.
• Ukrainian drone attacked an oil depot within Russian-controlled Luhansk, via Ria

US Event Calendar

• 10:00: Oct. Cap Goods Orders Nondef Ex Air, prior -0.1%
• 10:00: Oct. Cap Goods Ship Nondef Ex Air, prior 0%
• 10:00: Oct. -Less Transportation, prior 0%
• 10:00: Oct. Factory Orders Ex Trans, prior 0.8%
• 10:00: Oct. Factory Orders, est. -3.0%, prior 2.8%
• 10:00: Oct. Durable Goods Orders, est. -5.4%, prior -5.4%

DB’s Jim Reid concludes the overnight wrap

All roads this week point to payrolls on Friday with the usual build up via JOLTS (tomorrow) and ADP (Wednesday). Elsewhere in the US the Services ISM is out tomorrow (we will also watch the employment sub component ahead of payrolls), and the initial read on inflation expectations in the University of Michigan confidence sentiment release (Friday) will be of note after 5-10yr expectations ticked up to a decade high of 3.2% last month. Remember the Fed are now on a blackout period ahead of next week’s FOMC so some of the big catalyst for moves of late, i.e. Fed speakers, won’t be there.

Around the globe, other highlights include a few important releases in Germany including the trade balance (today), factory orders (Wednesday) and industrial production (Thursday). Industrial production indicators are also due in France and Italy. Retail sales data is out for the Eurozone on Wednesday. In China, the Caixin services PMI (tomorrow) and trade balance figures (Thursday) are the highlights. Tokyo CPI is out just before midnight tonight

From central banks, Lagarde and Guindos speak today with the RBA (tomorrow) and Bank of Canada (Wednesday) expected to hold rates by the consensus although our economist is an outlier and predicts a hike in Australia . For the full week ahead the day-by-day calendar is at the end as usual.

Digging a bit deeper into the US employment picture, our US economists expect headline and private payrolls to come in at +130k with consensus at +180k and +160k respectively. The returning post-strike autoworkers will boost the data by around +30k. Unemployment is expected to hold steady at 3.9% by DB and the consensus, although our economists see the risks tilted to a 3.8% print. One thing our economists look carefully at is the diffusion index that shows the breadth of job gains. It’s currently at 52%, its lowest rate since the pandemic. They show that 70% of the private job gains in the last year come from only two sectors, namely leisure and hospitality and private education and healthcare. Outside of that job creation in the last 12 months is a very lowly 0.7% and just 0.2% over the last 6. Staying with US labour markets, the JOLTS data tomorrow is also important even if it’s October data. As our economists point out, while the hiring and quits rates were at or below their 2019 averages in September, the layoffs and discharges rate remained near historical lows. So that gap is keeping labour markets tight for now. Our base case is that the demand for labour eases in the next few months.

Asian equity markets are mostly trading lower as I type. The Nikkei (-0.72%), Hang Seng (-0.60%), CSI (-0.27%) and Shanghai Composite (-0.14%) are slipping while the KOSPI (+0.39%) is bucking the negative trend this morning. S&P 500 (-0.12%) and NASDAQ 100 (-0.28%) futures are also edging lower. 2 and 10yr Treasuries are back up +5-6bps this morning after a very strong rally last week as we’ll see below. Gold is up just under a percent and looking set for its highest close ever and Bitcoin is up over +3% and to the highest since April last year. In stock specific news, shares of Evergrande Group rose over +9.0% as a court hearing of the world’s most-indebted property developer over its possible liquidation was surprisingly postponed to January 29, 2024.

Recapping last week now, markets continued their strong performance as positive data added to growing investor confidence that the next move for central banks will be a dovish pivot. In fact, last week saw the close of the best month for a global 60:40 portfolio of equities and bonds since the positive vaccine news in November 2020. Supporting last week’s rally was encouraging inflation data on both sides of the Atlantic, an upward revision of US GDP for Q3 that showed annualised growth of +5.2% (previously +4.9%), and some dovish Fedspeak .

The rally was most pronounced in fixed income. After a brief stumble on Thursday, it continued on Friday as markets proved unphased by Fed Chairman Powell’s statement on Friday that the Fed was ready to tighten if needed. Instead, markets elected to focus on his comment that policy is “well into restrictive territory”. Fed funds futures moved to price in 134bps of cuts by December 2024, up from 90bps at the start of the week. This meant that 2yr Treasury yields fell -41.1bps (and -14.2bps on Friday) to their lowest level since June. 10yr yields were down -27.1bps (-13.0bps on Friday), their sharpest weekly decline since January and hitting their lowest level since the first week of September .

The stream of good news was also echoed in Europe, most notably with the November inflation numbers on Wednesday and Thursday, which saw Eurozone inflation slow to 2.4% (2.7% exp), its lowest since July 2021. With disinflation playing out faster than the ECB expected, markets raised their expectations of ECB rate cuts to price in 69bps of rate cuts by June 2024, up from 28bps at the start of last week. You can read our European economists’ take on the inflation numbers here. Off the back of this, 10yr bund yields fell -28.2bps last week (and -8.5bps on Friday) hitting their lowest level since June. The more interest-rate sensitive 2yr bund yields fell -39.0bps (and -13.4bps on Friday), to their lowest level since May.

The fixed income rally boosted risk appetite, though the +0.77% weekly rise for the S&P 500 (+0.59% on Friday) was remarkably its smallest gain in five weeks. The gains were broad-based, with the NASDAQ slightly underperforming (+0.38% on the week; +0.55% on Friday) and with the Magnificent Seven mega cap index down -1.19% (-0.24% Friday). Small cap stocks enjoyed the risk-on tone after rising +3.05% last week (and +2.96% on Friday). Over in Europe, the STOXX 600 posted a solid gain of +1.35% week-on-week (and +0.99% on Friday).

Finally, in commodities, gold enjoyed a strong week, soaring +3.57% (+1.73% on Friday) to a new all-time high of $2,072/oz. Meanwhile, the confirmation of OPEC+ cuts into 2024 did little to drive upward price momentum in oil, as markets remained doubtful over compliance to the new “voluntary cuts”. Brent crude fell -2.11% to $78.88/bbl, though its -4.77% fall on Friday was exaggerated by a shift in the benchmark month. WTI crude fell -2.49% to $74.07/bbl (and -1.95%% on Friday).

The Israel Defense Forces (IDF) on Sunday announced for the first time that not only are its air strikes extending to the south of the Gaza Strip, where the bulk of civilians from the north have fled, but it is expanding its ground operations to the whole of Gaza.

Following the collapse of the week-long truce on Friday, spokesman Daniel Hagari said in a press briefing, “The IDF is resuming and expanding the ground operation against Hamas’ strongholds across the whole Gaza Strip.”

“Our policy is clear — we will forcefully strike any threat posed against our territory,” he emphasized in words that came the day after Prime Minister Benjamin Netanyahu pledged “total victory” and that the war will be taken to Hamas “until the end.” 

He still vowed to “do everything possible” to return the 137 hostages still in Hamas captivity. Contrary to Washington’s stance, he batted down a reporter’s question about the Palestinian Authority’s (PA) potential role in a post-war Gaza, saying it “pays murderers” and “educate[s] their children to hate Israel and, to my sorrow, to murder Jews, and ultimately for the disappearance of the State of Israel.”

“I’m not prepared to delude myself and say that this defective thing, established under the Oslo Accords in a terrible mistake,” he said of the idea of the PA governing a post-war Gaza.

During his weekend remarks, Netanyahu also again warned Hezbollah that its further involvement in the war would bring about the destruction of all of Lebanon. This came amid reports that a Hezbollah missile attack sent 12 Israelis to the hospital – with troops and civilians among them.

Following last week’s ceasefire, the death toll has once again continued to mount, with the latest data from the Hamas-controlled Ministry of Health in Gaza saying at least 15,200 Gazans have died since Oct.7 – with most of them being women and children.

Two weeks ago, the Associated Press reported, “Palestinian health officials in Gaza said Tuesday that they have lost the ability to count the dead because of the collapse of parts of the enclave’s health system and the difficulty of retrieving bodies from areas overrun by Israeli tanks and troops.”

As for the IDF death toll since ground operations were initiated, this stands at 75 Israeli troops killed, according to official military numbers. 

Given the huge and rising Palestinian death toll, the White House has been feeling more international pressure to place conditions on the US weaponry sent to Israel, which Biden has so far refused to do. Biden’s top national security (NSC) official John Kirby faced scrutiny concerning the administration’s stance on multiple fronts related to Gaza:

The White House believes Israel is “making an effort” to minimize civilian deaths in Gaza, a senior official said Sunday, as international concern mounted over the numbers killed in the resumed war with Hamas.

Speaking on the US Sunday talk shows, National Security Council spokesman John Kirby also insisted that US intelligence was unaware of any secret, advance Hamas blueprint for its brutal October 7 attack on Israel that triggered the conflict.

The New York Times reported last week that Israeli authorities had obtained such a document a year before the attack occurred, and a report on Israel’s Channel 12 Sunday claimed plans for a Hamas assault on the scale of the October 7 attack were in Israeli hands as early as 2018.

As the reported Gaza death toll surpassed 15,000 – Blinken simply repeated the standard talking point that the US believes Israel is doing everything it can to minimize civilian deaths and ‘collateral damage’.

⚡️The moment a building was bombed in Gaza city a short while ago. pic.twitter.com/69PyhZ2QcR

— War Monitor (@WarMonitors) December 4, 2023

“We believe they have been receptive to our messages here of trying to minimalize civilian casualties,” he said. He pointed to Israel having published a map informing civilians of where they can go to find safety. 

“There’s not a whole lot of modern militaries that would do that… to telegraph their punches in that way. So they are making an effort,” Kirby said. However, Palestinian officials have long complained that places once thought safe, such as southern towns, are still coming under major bombardment.

Authored by Tom Ozimek via The Epoch Times (emphasis ours),

A significant jump in the number of Americans yanking money out of their 401(k) accounts to pay bills and buy necessities is the latest sign that the U.S. consumer is experiencing increasing levels of financial strain.

A new report from Fidelity, the nation’s largest provider of 401(k) plans, reveals a troubling trend—Americans are increasingly tapping their retirement savings in the form of hardship withdrawals and loans.

The report shows that 2.3 percent of U.S. retirement plan participants took a hardship withdrawal in the third quarter of 2023, up from 1.8 percent in the third quarter of 2022.

Top reasons given for taking a hardship withdrawal were avoiding foreclosure or eviction and covering medical expenses.

Besides hardship withdrawals, there was also an increase in the number of Americans taking loans from their retirement savings accounts, with this share growing from 2.4 percent in the third quarter of 2023 to 2.8 percent in the comparable period in the prior year.

Inflation continued to be a major concern in the third quarter, with nearly three-quarters of employees indicating that inflation was causing them stress.

Meanwhile, less than one-third (29 percent) said their pay has kept up with or exceeded inflation this year compared to 33 percent last year, and 11 percent say they don’t know.

“The job market has lost some of its steam since the Federal Reserve began raising interest rates to quell inflation, but not much,” Bankrate analyst Sarah Foster told The Epoch Times in an emailed statement.

“The share of workers who got a raise in the past year is matching last year’s historic levels, and more Americans are getting raises today than they were before the pandemic. Even so, inflation remains painfully high for many households, eroding those gains.

“High inflation feels a bit like taking a pay cut in itself, and it might be one reason why Americans suggest the economy isn’t as strong as it looks on paper.”

The U.S. economy grew at a 5.2 percent annualized rate in the third quarter, a forecast-beating pace that some analysts said looks better on paper than in reality because, when looked at from the income side, the data suggests momentum has waned, and growth is slowing.

While gross domestic product (GDP) grew by 5.2 percent, gross domestic income (GDI) grew at a paltry pace of 1.5 percent in the prior quarter.

Market analyst Stephanie Pomboy took to X, formerly Twitter, to note that the difference between GDP and GDI in the third quarter was the widest on record.

“Don’t Believe the Hype,” she wrote. “Widest gap between GDI and GDP in history.”

“The numbers should match and do correlate over time. But the difference between the measures is stunning,” analyst Mike Shedlock wrote in a blog post, referring to the difference between GDP and GDI.

“The key takeaway from this release is the economy likely is not humming the way media and [President Joe] Biden present,” Mr. Shedlock added.

Inflation Fears Resurge

American consumers have grown more pessimistic as inflation concerns recently surged to a 22-year high, flashing a warning sign for the U.S. economy.

The University of Michigan’s closely watched consumer sentiment gauge fell by 4 percentage points in November to a reading of 61.3 percent.

The drop marks the fourth consecutive month of declines in the sentiment measure, with the deepening confidence slump coming as the twin geopolitical crises in Ukraine and Gaza show no sign of ending anytime soon.

Meanwhile, inflation expectations jumped for both the near and long term, reflecting consumer fears that the recent easing of price pressures would be short-lived.

U.S. consumers expect inflation to average 4.5 percent over the next 12 months and 3.2 in the next five years, according to the University of Michigan survey. That’s up from the 4.2 percent and 3 percent, respectively, that consumers predicted when asked in October.

In particular, the five-year inflation expectation reading is the highest in 22 years.

“Consumers appear worried that the softening of inflation could reverse in the months and years ahead,” Joanne Hsu, University of Michigan Surveys of Consumers director, said in a statement.

The jump in inflation expectations comes despite the fact that the consumer price index (CPI), a measure of inflation, fell to 3.2 percent in October from 3.7 percent in September.

A separate measure of consumer confidence, issued by The Conference Board on Nov. 28, shows a slight improvement in sentiment, with the gauge rising to 77.8 in November from 72.7 in October.

While there’s been some encouraging economic data since then, including on employment and inflation, it’s unlikely the numbers have changed all that much in the past two months—at least if JPMorgan CEO Jamie Dimon’s recent remarks are anything to go by.

Mr. Dimon recently warned that inflation could accelerate again and that a recession could well hit the country if the Federal Reserve raises interest rates in response to resurging price pressures.

“A lot of things out there are dangerous and inflationary. Be prepared,” Mr. Dimon said at the 2023 New York Times DealBook Summit in New York on Nov. 29.

Mr. Dimon said that geopolitical tensions and the energy transition were prompting governments to ramp up spending, which is inflationary. If a new inflationary spike were to materialize, this would pressure the Fed to raise interest rates further, which could tip the economy into a downturn.

Submitted by QTR’s Fringe Finance

Hell hath no fury like a New York City limousine liberal full of self-guilt, ready to submit to their overlords in the government and media, even if it means blaming themselves (and everybody else) for problems that have absolutely nothing to do with them.

But, rather than try to deal with the mindset of those malleable enough to walk around accepting blame for problems others have created, I wanted to write this article to go right to the source. This weekend, that source was The Atlantic. Yes, the same publication that got down on its hands and knees and begged us for Covid amnesty after being part and parcel with an authoritarian group of psychopaths, who were happy to abscond with the civil rights of everybody around them, unilaterally now wants to blame us – everyday Americans – for inflation.

How do I know this? They wrote a f***ing article called “Inflation is Your Fault” and titled it in all capital letters, in the douchiest Serif font they could find:

The article’s subtitle, written in the same pretentious style that suggests it’s some type of peer reviewed scientific revelation, is: “If people are so mad about high prices, why do they keep buying so many expensive things?”

The irony here is widespread. First off, f***ing everything is expensive. So the answer to the question of “If people are so mad about high prices, why do they keep buying so many expensive things?” could be anything. It could be because people need to wipe their ass with something. It could be because people need bread to eat. It could be because they need to put gas in their car. It could be because they need laundry detergent, or a winter jacket. All of these are “expensive things” nowadays.

Second off, I don’t know anybody that takes their social cues from what people write in The Atlantic. A fancy typeface can only cover up so much inane, lobotomized bullshit, and the print over at The Atlantic has done about as much heavy lifting as it possibly can.

Third off, I can’t think of anybody less qualified to offer commentary on the state of the financial world than people on the left side of the aisle. Sure, Republicans contributed to our current inflationary crisis by helping unleash trillions of dollars in new money during Covid, but the Biden administration has also, over the course of the last four years, run the US national debt up to $34 trillion and shown zero semblance of fiscal discipline, spending restraint, or comprehension of the sovereign debt crisis that the country is heading toward.

And now, this same lot is not only going to explain to us why inflation is persisting, but also start casting blame on the American middle and lower class for it? The same middle and lower class who were disproportionately shit on by the same money printing that both caused inflation and widened the wealth inequality gap over the course of Covid?

I don’t think so.

As you would expect, the thesis of the entire Atlantic article is that because Americans are spending too much on items that are high-priced, inflation is persisting.

First, this is obviously a giant misunderstanding of where inflation comes from to begin with. Inflation is a monetary phenomenon that comes from the expansion of the money supply. We expanded the money supply by double digits over the years during Covid; hence, we find ourselves on the brink of a newfound inflation problem. See if you can spot where the M2 money supply took off:

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Second, most Americans aren’t chasing the price of discretionary items higher anymore. As credit card debt skyrockets and personal savings hit a trough, average Americans have been primarily focused on household goods and everyday items. To the extent that Americans are spending more on these items, it’s only out of necessity.

But this is hardly a ‘chicken and the egg’ conundrum. Prices started to skyrocket because the Federal Reserve unleashed trillions of dollars in new cash, disguised as loans and stimulus, during Covid. As usual, corporations reaped the biggest rewards, with billion-dollar companies like Target allowed to stay open while small businesses were forced to close. Remember when hedge funds were cashing in PPP loans while the everyday American just tried to keep food on the table and keep their job? I wonder if The Atlantic would tell us that government mandated shutdowns during Covid were our fault, too.

Remember, as Americans were spending like crazy prior to the Covid crisis, the main problem was that we didn’t have enough inflation. Central Bankers were telling us we couldn’t figure out how to generate inflation and we were scared that inflation would never happen again.

In other words, this ‘missing inflation’ gave monetary policy ‘experts’ carte blanche to pull whatever strings they thought they had access to during Covid, and now we’re reaping the results of what we have sown. And by ‘we’ have sown, I don’t mean the everyday American — I mean the hundreds of PhD economists at the Fed that collectively still can’t figure out when a recession is coming, why market cycles take place, why they’re necessary and generally what the fuck is going on at any given point in time

But trillions in money printing didn’t stop some faux-intellectual, professor-like liberal from donning their spectacles and putting pen to paper on an article that makes the blame for the government’s inflation problem communal.

Get this: the same group that flips out when privatizing profits and socializing losses happen on Wall St. is now running the same exact scam for the government. They claim victory when the government does something good, but it’s everybody else’s fault when the government does something wrong. Just more cruel irony.

And of course, the mother of all irony is still to come. You see, this idiocy from The Atlantic this weekend is coming at potentially the worst possible time. If you have been paying attention to the money supply versus CPI, you might be of the mindset that inflation is actually about to peter out. Here’s a chart from Zero Hedge that I put in one of my recent articles:

If the rubes over at The Atlantic can’t look at this and figure out that inflation is tied directly to the money supply, I don’t know what is going to do it for them.

But regardless, when you combine the contraction of the money supply with what I believe is going to be the economy grinding to a halt, and a massive rush to deleverage, there is a very real case for us being on the precipice of a deflationary depression. This all hinges on whether or not the Federal Reserve chooses to respond by printing more money. If they do, we will avoid a deflationary depression at the cost of inflation that starts skyrocketing once again. There is really no easy way out of this Catch-22, and all I can say is I look forward to watching it unfold, no matter how it is going to take place.

If the former situation (deflation) takes place, it’ll be easy to further ridicule this weekend’s article. If the latter (inflation, printing) takes place, you’re just going to have to remind The Atlantic one more time that we are part of a broken, fucked-up system involuntarily – we aren’t the one pulling the strings at the Federal Reserve or the Treasury. We’re just along for the read.

Hilariously, I’m more than certain that the author of this Atlantic article probably rubs elbows with people at dinner parties that her criticism would be far more appropriately directed at. The ones that do pull the strings. But we couldn’t write an article blaming them — that would fuck up this weekend’s dinner plans at Martha’s Vineyard.

So, who are you going to trust? Me, a tattooed, single, 40-year-old man living in a studio apartment driving a car badly in near of a side view mirror — or the geniuses that brought you the ‘groundbreaking’ ideas that the deficit is really a myth and we can print a trillion dollar coin to solve all of our problems?

—

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In what we’re sure will be  a blow to the bottom lines at Uber Technologies Inc., DoorDash Inc. and Grubhub Inc., all three companies now have to pay New York food delivery workers at least $17.96 an hour.

The new rule comes as a result of the companies failing to win their case on appeal to block the minimum pay rule for their workers, Bloomberg reported last week. 

An appellate court in the state, on Thursday, upheld a previous ruling from September by a judge, despite attempts by the companies to overturn it. The decision had been on hold pending the court’s ruling and, as a result, delivery services are now mandated to pay their couriers either a standard hourly wage or an alternative payment of approximately 50 cents per minute per delivery.

As Bloomberg notes, this mandate for increased compensation is part of a broader initiative by New York and other major cities to regulate digital platforms offering ride-sharing, food delivery, and short-term rental services, which have seen a surge in use.

Obviously, for cost reasons, gig delivery companies have actively resisted such regulations, including legal challenges against limits on the fees they can charge restaurants and mandates to disclose customer data to the restaurants they work with.

“This minimum pay rate will guarantee our delivery workers and their families can earn a living and keep our city’s legendary restaurant industry going strong,” Mayor Eric Adams said. 

Josh Gold, Uber’s senior director of public policy and communications, said that the higher wage: “eliminates jobs, discourages tipping, and forces couriers to go faster and accept more trips.”

A Doordash spokesperson also spoke out against the ruling: “The sad truth is that the court has chosen to ignore the harmful consequences such a misguided minimum pay rule will cause. We will continue to explore all paths forward to ensure these minimum pay rules work for everyone who uses these platforms in New York City.”

Grubhub said it was “disappointed with the judge’s decision and are evaluating our next steps.”

This new regulation also includes a provision for a further wage increase to nearly $20 per hour by April 2025 for the city’s estimated 60,000 app-based delivery workers, Bloomberg wrote. Currently, these workers earn an average of about $11 per hour, considering tips and expenses, in contrast to the city’s minimum wage of $15 per hour. 

Authored by Megan Redshaw via The Epoch Times (emphasis ours),

Pharmaceutical giant Moderna is policing what it calls “vaccine misinformation” online through its disinformation department aimed at shutting down dissenting voices and anything that might undermine COVID-19-related policies, such as lockdowns, vaccine passports, and mass vaccination.

According to an exclusive report by investigative journalists Lee Fang and Jack Poulson published on Nov. 20 in UnHerd, Moderna isn’t just manufacturing COVID-19 vaccines; it has an entire team dedicated to monitoring a wide range of social media platforms, government agencies, and news websites in the name of addressing the “root cause of vaccine hesitancy” by identifying and “shutting down misinformation” that may negatively affect the vaccine debate.

The internal documents show a “sprawling effort to monitor basically everything said online, on social media, and in the news media about vaccine policy, COVID policy, about Moderna, and other vaccine companies,” Mr. Fang told The Hill.

Monitoring Team of Former FBI, Secret Service, and Pharma-Funded NGOs

Moderna’s monitoring team includes its Global Intelligence division, run by Nikki Rutman, who was involved in compiling internal company misinformation reports of “high-risk” celebrities critical of vaccine mandates, including unvaccinated tennis star Novak Djokovic, Elon Musk, and actor Russell Brand, according to the investigative report.

Before joining “Moderna’s corporate security team” in 2022, Ms. Rutman worked as an intelligence analyst in the U.S. intelligence community for nearly 19 years, most of which was spent with the Federal Bureau of Investigation (FBI). According to the report, Ms. Rutman was working from the FBI’s Boston office during the COVID-19 pandemic and “Operation Warp Speed,” which involved weekly cybersecurity meetings with Moderna, also headquartered in Boston.

Before her role with the FBI, Ms. Rutman worked for the Director of National Intelligence as an “adviser on terrorism to a mission manager” and as a counterintelligence analyst with the Defense Intelligence Agency.

Ms. Rutman is only one of many former law enforcement agents working on Moderna’s monitoring team, along with a drug industry-funded NGO called the Public Good Projects (PGP) and Talkwalker, an artificial intelligence firm that uses its technology to monitor vaccine-related discussions across 150 million websites in nearly 200 countries.

According to Mr. Fang, PGP is an “anti-misinformation NGO” financed through a $1,275,000 donation from the Biotechnology and Innovation Organization—lobbyists representing Pfizer and Moderna—that works closely with social media platforms, government agencies, and news websites to classify and combat alleged vaccine misinformation.

“We know from a separate batch of documents—the Twitter files—that I reported earlier this year, that the same partners that are working with Moderna—PGP and some of these other NGOs—had a direct line to Twitter’s executives, and they also worked with Google and Facebook to shape content moderation policies,” Mr. Fang told The Hill.

These Moderna-funded NGOs were pressuring social media companies to change their content moderation policies and delete and “de-amplify” specific tweets critical of coercive vaccine policies, Mr. Fang said. “They were actually sending entire Excel documents with tweets they wanted censored,” he added.

Talkwalker’s website states it is a “social listening and consumer intelligence platform” that helps pharmaceutical businesses by providing an array of services, including “above brand monitoring” and “misinformation detection.” Neither PGP nor Talkwalker has publically disclosed how they define “misinformation” or who determines that one’s speech falls into this category. However, Mr. Fang and Mr. Poulson say these organizations, along with marketing executives and former FBI and Secret Service analysts, provide misinformation alerts to Moderna.

“None of the reports that we have seen makes any attempt to dispute the claims made,” Mr. Fang and Mr. Poulson wrote. “Rather, the claims are automatically deemed “misinformation” if they encourage vaccine hesitancy.”

Beyond identifying and attempting to censor subjectively determined vaccine misinformation, Moderna has provided talking points and advice to a network of 45,000 healthcare professionals—unbeknownst to their patients—on “how to respond when vaccine misinformation goes mainstream,” according to an email from Moderna.

Dr. Jay Bhattacharya, co-author of the Great Barrington Declaration and professor of medicine at Stanford University, said Mr. Fang and Mr. Poulson’s report is “absolute fire.”

“Moderna, thru the Public Goods Project, pays thousands of health professionals to attack and defame vaccine critics and push social media to censor anyone who says things, true or false, that reduce profits,” Dr. Bhattacharya posted on X.

Moderna Censors Legitimate Discussion About Vaccines

Moderna isn’t just flagging “misinformation” it considers a “danger to public health.” It’s flagging legitimate discussion of vaccine-related issues and mere criticism of vaccine companies, according to Mr. Fang and Mr. Poulson.

For example, Moderna’s misinformation reports rate news surrounding Novak Djokovic as “high risk.” Mr. Djokovic acquired natural immunity from SARS-CoV-2 infection and refused to get vaccinated, preventing him from competing in the 2022 US Open. He returned in 2023 when mandates had been lifted and won the Moderna-sponsored competition. Moderna said vaccine opponents were celebrating his win, and social media users were “mockingly” pointing out that Moderna was a US Open sponsor.

The Moderna internal report entitled “Djokovic Crowned Anti-vaccine Hero after US Open Win” stated the “optics of Djokovic” bolsters “anti-vaccine claims that vaccines—and mandates—are unnecessary.”

Mr. Musk, CEO of SpaceX, Tesla, Inc., and owner of “X,”  was also classified as “high risk” because he mocked the media and government officials who erroneously claimed COVID-19 vaccines were 100 percent effective against the virus. Moderna’s report didn’t identify any false statements. Still, it raised concerns that pointing out the “deception by health authorities and health care providers during the pandemic” would “lay the groundwork to sow distrust in credible sources on vaccine safety and effectiveness.” In other words, Moderna wasn’t flagging the video because it was wrong but because it negatively shaped public discourse around COVID-19 vaccines.

Although some tweets flagged by Moderna’s disinformation team were legitimate misinformation, many were “genuine points of disagreement around coercive vaccine policy,” such as vaccine passports and mandates, Mr. Fang told The Hill.

Another Moderna report flagged an Oct. 5 post on X that expressed Mr. Musk’s opposition to vaccine mandates. The report states: “Musk has one of the largest platforms in the world—literally and figuratively. He increasingly uses that platform to elevate fringe vaccine opponents and conspiracy theorists.”

“These mandates were not successful in increasing vaccination rates. It got tens of thousands of Americans fired or pushed out of their jobs. These were controversial policies that were eventually overturned by the Supreme Court,” Mr. Fang said.

“This is not an area of misinformation that needed to be censored. This was a legitimate area of public debate around the very controversial and novel application of public policy that benefited just a small number of corporations,” he added. “Basically, the government forcing you to buy a certain product and to use it in your body. This is a bodily autonomy issue—a public health area that deserved more scrutiny, not less.”

Russell Brand, a critic of pharmaceutical companies, was also flagged for his claim that Moderna and Pfizer made $1,000 of profit every second from the pandemic because his views are “circulated in anti-vaccine spaces where he is viewed as a truth-teller and threat to authority,” the report said.

“Where this is potentially problematic is that if you look closely at these misinformation reports, they are clearly blurring the line between fighting actual disinformation—intentional lies—and classifying legitimate points of discussion around vaccine policy as dangerous misinformation,” Fang told The Hill. “They’re taking kind of a broad brush and painting any kind of criticism of their company vaccines as dangerous misinformation.”

According to Moderna emails, other misinformation alerts have centered around drug industry profits, vaccine hesitancy, competitor issues, and discussions of Pfizer. Moderna also closely tracks elected officials against coercive vaccination policies and laws restricting vaccine mandates. “Politicians attempting to ban COVID-19 mandates—or at least claiming to—signals growing resistance to COVID-19 mitigations,” reads one of the Moderna alerts.

Moderna Ramps up Marking Efforts as Profit Dwindles

Now that demand for COVID-19 vaccines has dwindled, so have Moderna’s earnings. Unlike Pfizer, Moderna was a 2010 startup company without an approved product before the COVID-19 pandemic. With the creation of its COVID-19 vaccine, it transformed from a struggling biotech company to a “household name” valued in 2021 at over $100 billion. The pandemic also created five new billionaires at Moderna alone, Mr. Fang told The Hill.

According to company financial reports, Moderna made $18.5 billion in 2021 and $19.3 billion in total revenue in 2022. Through the third quarter of this year, it has only made $3.9 billion.

In addition to lost profits and reduced demand, Moderna must now make royalty payments to the National Institute of Allergy and Infectious Diseases (NIAID), formerly run by Dr. Anthony Fauci, because NIAID scientists collaborated with Moderna to develop its COVID-19 vaccine. As a result, Moderna raised the price of its vaccine from $15–$26 per dose to $130 per dose, the investigative report said.

The European Patent Office also recently invalidated one of Moderna’s European patents on mRNA vaccine technology. Moderna, in 2022 filed a patent infringement lawsuit in Germany, alleging Pfizer and BioNTech had copied its mRNA vaccine technology. The company requested a payout based on vaccine sales during the pandemic—sales of which topped $35 billion in 2022 alone. However, Pfizer and BioNTech countersued Moderna and won. Although Moderna intends to challenge the ruling, a payout would have been substantial.

With evaporating profits, Moderna is relying on a “flashy new marketing campaign” highlighting its mRNA technology and its ability to unlock cures for all sorts of diseases and efforts to rebrand its COVID-19 vaccine as a symbol of a healthy lifestyle.

“The most important thing for Moderna is that people keep having their jabs. Smart ads are part of that. But more important is to push back aggressively against any prevailing anti-vax narrative and engage where possible in any discussions around vaccine policy,” wrote Mr. Fang and Mr. Poulson. “That’s where the Moderna disinformation department comes in.”

The Epoch Times has reached out to Moderna for comment.

Authored by Frank Fang via The Epoch Times,

Former national security adviser John Bolton on Saturday criticized the Biden administration for its attempts to extend the truce in Gaza, calling them “objectively pro-Hamas.”

“I think with the initial pause now behind us, I think Israel’s best judgment here is simply to proceed militarily to achieve the objective it says it wants, which is the elimination of Hamas,” Mr. Bolton told News Nation.

“I think the second-guessing by the Biden administration, the efforts to prolong the pause to turn it into a full ceasefire, are objectively pro-Hamas because it denies Israel the self-defense right it has to eliminate the terrorist threat.”

Israel’s war with the Hamas terrorist group resumed on Friday after a weeklong truce brokered by Egypt, Qatar, and the United States, during which Hamas freed 110 hostages in exchange for 240 Palestinian prisoners.

A day before the truce ended, Secretary of State Antony Blinken urged for a longer truce on Thursday. He said, “Our immediate focus is working with our partners to extend the pause so that we can continue to get more hostages out of Gaza and more assistance in.”

Also on Friday, the White House blamed Hamas for ending the truce.

“It’s because of Hamas that this pause ended,” National Security Council spokesman John Kirby said, per USA Today.

“They were just simply unable, failed to produce a list of hostages that could help enable that pause extending,” Mr. Kirby added.

“The onus is on Hamas to be able to produce a list of hostages that that they can get out so that we can try to get this pause back in place.”

Mr. Bolton criticized President Joe Biden for trying to limit what Israeli Prime Minister Benjamin Netanyahu can do. The national security adviser had previously criticized the truce as a “very bad deal for Israel.”

“I think the administration is weak. I think it’s weak on Ukraine, it’s weak on China. It’s weak on Iran, it’s weak on North Korea, and it’s weak on the terrorist threat that Israel faces,” Mr. Bolton said.

“Biden’s rhetorical support initially was quite strong. But when he put his arm around Netanyahu, he kept his arm around Netanyahu, and they really are trying to constrain what Israel is doing.”

“Maybe it’s for political reasons,” Mr. Bolton added.

“I think the administration is scared to death of the left wing of the Democratic Party.”

On Nov. 28, the House voted 412–1 to pass a resolution affirming Israel’s right to exist and calling for Hamas to release its hostages. Rep. Thomas Massie (R-Ky.), a libertarian, was the only lawmaker to vote against the resolution.

Rep. Rashida Tlaib (D-Mich.), who has a history of anti-Semitism, was the only lawmaker who voted “present.” All other members of the far-left group “The Squad,” including including Rep. Ilhan Omar (D-Minn.), voted in favor of the resolution.

Mike Pompeo, the former secretary of state during the Trump administration and a senior counsel for global affairs at the American Center for Law and Justice, published an article on Dec. 2 calling on President Biden to “stop caving to Far Left ceasefire calls.”

“Make no mistake: A long-term ceasefire is exactly what Hamas wants,” Mr. Pompeo wrote.

“Pressuring Israel to now sign a long-term ceasefire would only encourage future attacks like those we saw on October 7. It would be a green light to Hezbollah and other Iranian proxies that America will not have Israel’s back, making the region far less safe for Israelis and Americans alike.”

“We know why the Biden Administration is now pushing for a long-term ceasefire,” Mr. Pompeo added.

“It is an attempt to placate its political base, which is increasingly dominated by antisemitic, anti-Israel activists.”

“Supporting Israel right now isn’t about politics. It’s about enabling the triumph of good over true evil,” Mr. Pompeo stated. 

Authored by Mike Fredenburg via The Epoch Times (emphasis ours),

On Nov. 25, Russia launched some 75 drones at key military and infrastructure targets in Kyiv. As per usual, the Ukrainian military reported that its air defense systems had been incredibly successful—shooting down all but one of the drones (74 out of 75)—about a 98 percent kill rate.

But that feat is chump change compared to the claims made on May 16, 2023, by the commander-in-chief of Ukraine’s armed forces, Valeriy Zaluzhnyi, “that his forces had intercepted the six Kinzhal missiles launched from aircraft, as well as nine Kalibr cruise missiles from ships in the Black Sea and three Iskanders fired from land,” according to Reuters.

If true, this was a very impressive feat indeed.

But Russia has also been making some extraordinary claims. On Aug. 26, Russian media reported that Russia detected 42 drones and then eliminated 33 of them via electronic warfare and shot down the remaining nine using its air defense systems—a 100 percent success rate. On Nov. 26, Russia claimed to have shot two S-200 missiles and 24 drones over three different areas of Russia.

The above are just a few out of the many dozens of reports by Ukraine and Russia claiming extraordinarily high success rates in shooting down enemy missiles and drones. These claims are problematic for two primary reasons.

The first is that both Russia and Ukraine have been engaged in propaganda efforts designed to make themselves look more powerful and competent while making their opponent look weaker and less competent—and clearly this is an important part of that narrative. But the other reason comes out of the history of air defense development and its real-world success rate and finds that such high success rates are highly problematic and thus more likely to be propagandistic exaggerations.

It has long been known that the estimated success rates for intercepting rockets and missiles established by testing vary greatly from those seen in the real world. For example, that Russia’s vaunted S-400 surface-to-air missile (SAM) apparently never failed a test strongly suggests that Russia wasn’t being transparent about all the unsuccessful test results that came before the successful one. Consequently, it may not be reliable when it comes to reporting on real-world stats. That doesn’t mean the S-400 isn’t effective, but that it likely isn’t as effective as reported by Russia.

However, if Russian and Ukrainian reports are to be believed, Ukrainian and Russian defense systems are regularly outperforming Israel’s much-vaunted Iron Dome System despite going up against much more sophisticated targets such as maneuvering drones that can use terrain to cover their approach, stealthy cruise missiles, and very fast ballistic and maneuvering semi-ballistic missiles. But even the Iron Dome’s estimated real-world success rates have been hotly debated.

Another example of a missile defense system with much-debated performance is the Patriot Air Defense System, of which Ukraine has received at least two. Each Patriot system costs over $1 billion. As is often the case, both the service who purchased the system (the U.S. Army) and the Patriot supplier, Raytheon, have been guilty of overestimating its effectiveness, with claims of 100 percent effectiveness being downwardly revised first to 52 percent and then to 10 to 20 percent effective. Along with the Patriot, at the start of the war Ukraine had around 100 operational Soviet/Russian S-300 SAM systems. While the S-300 is highly effective against relatively large jet fighters, when going up against tactical ballistic missiles, according to Russian tests it will fail an estimated 30 percent of the time. And as is the case with the Patriot Missiles System, the S-300 isn’t designed to take on low-flying UAVs that use terrain to mask their approach.

Of course, Ukraine has short- and medium-range air defense systems that are much better against drones, such as the IRIS-T and the NASAM, etc., but they too can be fooled, suppressed, jammed, and overwhelmed. Russia’s air defense systems are also subject to being fooled, suppressed, jammed, and overwhelmed. Consequently, when considering the complex and hostile engagement environments in which these air defense systems operate, continuous claims of them being 70 to 100 percent effective should be viewed with a healthy skepticism.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Authored by Steve Watson via Modernity.news,

On the same day as Biden Administration ‘climate czar’ John Kerry warned of out of control global warming at the UN climate conference in Dubai, the entirety of Europe is experiencing an unprecedented deep freeze.

Kerry called on the world to “judge with our own eyes what science is telling us” and warned that the arctic, the antarctic and the permafrost are in danger of melting.

John Kerry at every global warming conference he takes a private jet to. https://t.co/R45gCYX6Oq pic.twitter.com/nnFdrcEqA6

— Citizen Free Press (@CitizenFreePres) December 3, 2023

Dunno John, it looks pretty f*cking cold everywhere:

Europe hasn’t seen a snow cover like this since 2010—60% is blanketed in white! ❄️ pic.twitter.com/zuDB1GfkxM

— Xavi Ruiz (@xruiztru) December 1, 2023

OK, in reality it froze on the runway in Munich and tipped backwards after more than 40 centimetres (16in) of snow fell overnight on Friday into Saturday. pic.twitter.com/hKFaR6aXc6

— m o d e r n i t y (@ModernityNews) December 3, 2023

What Munich Airport traffic usually looks like on a Saturday afternoon compared to today as the airport has closed due to heavy snowfall. MUC is expected to reopen tomorrow at 0500 UTC.

Nearly 600 flights at MUC canceled today. pic.twitter.com/1sVaeqSiWr

— Flightradar24 (@flightradar24) December 2, 2023

With 44 cm left on the ground this morning, Munich, Germany has officially experienced its biggest December snowstorm on record.
pic.twitter.com/qMqEHoQiLj

— Nahel Belgherze (@WxNB_) December 2, 2023

UK weather: Temperatures plunge to -12C as snow disrupts travel https://t.co/OpdyE8Cer7

— BBC South Scotland (@BBCSouthScot) December 3, 2023

Quite extraordinary November cold today in northernmost Europe. A high temperature of -30.1C at Salla located in Finnish Lapland. Absolutely brutal cold, must be at or near record levels for this early, official winter has not yet started in Northern Hemisphere. pic.twitter.com/wRKl6yuGZd

— London & Southeast 🔆 (@TheSnowDreamer) November 27, 2023

Good morning Europe, this dawn was cold! pic.twitter.com/J8T22Xt2u4

— Giulio Betti (@Giulio_Firenze) November 26, 2023

But of course, when it snows and is freezing that is also because of global warming, got it?

As the global temperature rises the climate is breaking down unleashing chaotic weather. #Munich #MunichAirportpic.twitter.com/rTF4Szvfre

— Extinction Rebellion Global (@ExtinctionR) December 3, 2023

It’s not winter, it’s a weakened polar vortex weak jet stream pattern that unlocks cold air… or something, you idiot:

How convenient…global warming makes the planet colder

— Lacko (@Lacko_party_pak) December 3, 2023

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