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US Says Israel Has ‘Right’ To Expand Military Offensive To South Gaza

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US Says Israel Has ‘Right’ To Expand Military Offensive To South Gaza

Starting two days ago Israel warned that it would expand its military operation to the southern half of the Gaza Strip, which drew rebukes from some countries and human rights organizations. Such a warning is hugely controversial given that Israel told northern Gaza’s over one million civilians to flee south for safety in the first place. 

A Friday statement by Israel Defense Forces (IDF) spokesman said they are “determined” to push forward the offensive: “It will happen wherever Hamas exists, including in the south of the strip,” Rear Adm. Daniel Hagari said.

Palestinian ‘tent city’, Getty Images

A high-ranking White House official reacted on Sunday, telling CBS News’s “Face the Nation” that Israel has the “right” to expand its operations; however, he said the Biden administration still hopes such a plan is delayed while additional safeguards are put in place to avoid harming more civilians. 

US Deputy National Security Adviser Jon Finer said, “In the event that we believe that Israel is likely to embark on combat operations, including in the south, we believe both that they have the right to do that, but that there is a real concern, because hundreds of thousands of residents of Gaza have fled now from the north to the south at Israel’s request.”

“We think that their operations should not go forward until those people – those additional civilians – have been accounted for in their military planning. And so, we will be conveying that directly to them and have been conveying that directly to them,” Finer continued.

He didn’t convey any specifics related to this request for Israel to minimize civilian casualties. The administration has all the while refused to put any conditions on how Israel uses military aid, despite the death toll in Gaza having reached 13,000 since Oct.7, according to Palestinian sources.

The IDF in the last several days began dropping tens of thousands of leaflets over parts of the south, including neighborhoods of the major southern city of Khan Younis. Palestinians there have been told to flee to unspecified shelters. Palestinian and regional news sources have said that civilians have nowhere to go, also as the lone border crossing into Egypt has remain closed to all but certain foreign passport holders.

The US, and some European countries like France, have slowly begun to get more vocal about the immense civilian death toll in Gaza

As of Monday the widely reported hostages deal said to have been on the table has yet to materialize.

“U.S., Israeli and Hamas negotiators are closing in on a deal to release some of the hostages taken during the Oct. 7 terrorist attack in exchange for a pause in fighting, sources familiar with the negotiations told NBC News, though they caution nothing has been finalized yet,” NBC reports. US sources have suggested all sides (which includes Qatari mediation with Hamas) are “close”.

Tyler Durden
Mon, 11/20/2023 – 14:50

Do Or DEI? Federal Judge Finds Policies Are Mandatory And Unconstitutional In California Case

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Do Or DEI? Federal Judge Finds Policies Are Mandatory And Unconstitutional In California Case

Authored by Jonathan Turley,

Below is my column in The Hill on the recent victory of a California professor in challenging diversity, equity and inclusion (DEI) policies on free speech grounds.

It is a rare win for dissenting faculty as DEI policies become more expansive and mandatory. Here is the column:

From academia to corporations to the government, diversity, equity and inclusion (DEI) policies have expanded exponentially in the last 10 years.

At colleges and universities, administrators now monitor compliance with DEI on every level, from teaching to hiring to promotions.

And there is little subtlety or nuance in these programs. You object to DEI statements, priorities and training at your own peril.

This week, federal magistrate Judge Christopher Baker issued a major 44-page report finding that Bakersfield College in California violated the First Amendment rights of Professor Daymon Johnson with its DEI mandates for faculty.

If upheld, the report could be the foundation for a major free speech ruling.

The Johnson case is important because it challenges the claim of universities that DEI policies are simply guidelines and suggested practices. At the same time, universities have massively increased DEI offices and incorporated reviews in every aspect of academic life. The problem is that many DEI policies raise political, religious and academic values that some academics do not support. This can range from pronoun requirements to required perspectives taught in classrooms.

Johnson is one such dissenter.

The history professor found himself the subject of a five-month investigation by the college after he criticized a 2019 Facebook post of English Professor Andrew Bond in which Bond called the United States a “piece of s**t nation.” Bond had added, “Go ahead and quote me, conservatives. This country has yet to live up to the ideals of its founding documents.”

Johnson did quote him, with the caption: “Do you agree with this radical [social justice warrior] from BC’s English Department? Thoughts?” A commentator on Facebook later added “Maybe he should move to China, and post this about the PRC in general or the Chinese Communist Party and see how much mileage it gets him. I wonder, do they still send the family the bill for the spent round?’”

Bond responded in September 2021 by filing an administrative complaint against Johnson for harassment and bullying. Although Johnson was eventually cleared, the college issued a clear warning to him that it would “investigate any further complaints of harassment and bullying and, if applicable, [taking] appropriate remedial action including but not limited to any discipline determined to be appropriate.”

Johnson said that he has experienced retaliation and harassment due to his opposition to DEI policies. Judge Baker’s review of Bakersfield’s policies found that they are clearly mandates, not suggestions. He found that the college used mandatory “shalls” to state the expectations of faculty, including “teaching, learning, and professional practices that reflect DEIA and anti-racist principles, and in particular, respect for, and acknowledgement of the diverse backgrounds of students and colleagues to improve equitable student outcomes and course completion.”

Bakersfield also requires that faculty “promote and incorporate culturally affirming DEIA and anti-racist principles to nurture and create a respectful, inclusive, and equitable learning and work environment.” Judge Johnson found that the claim of the college that these are merely “aspirational goals” is “disingenuous.”

This is not the first such free speech controversy for Bakersfield College. Another Bakersfield College history professor, Matthew Garrett, was previously fired for speaking out against social justice programs. He and other professors are now suing.

After that controversy, John Corkins, vice president of the Board of Trustees of the Kern Community College District Board (which oversees the college), declared, “We have to continue to cull” problem faculty. He added: “Got them in my livestock operation and that’s why we put a rope on some of them and take them to the slaughterhouse. That’s a fact of life with human nature and so forth, I don’t know how to say it any clearer.” He later apologized.

Law schools are also facing controversial mandates. In 2022, the American Bar Association required law schools to “provide education to law students on bias, cross-cultural competency, and racism: (1) at the start of the program of legal education, and (2) at least once again before graduation.” Many schools are now requiring faculty to annually confirm DEI or diversity components in teaching.

I have long incorporated race issues in my classes. I also teach critical race theory, alongside other (including opposing) legal theories to my first-year torts students. I do so because I want them to be familiar with these issues and theories in forming their own views and values. However, the increasing mandates raise serious questions about the free speech and academic freedom of faculty who do not share those views.

Often, schools will find alternative grounds for harassing or firing dissenting faculty.

Those efforts received a boost recently from the United States Court of Appeals for the Fourth Circuit, which rejected the free speech claims of North Carolina State University Professor Stephen Porter. The statistics professor had objected to what he considered the lower standards used by his school to hire minority faculty. When he sued over retaliation for his views expressed both publicly and to the faculty, the Fourth Circuit ruled that the school could discipline him for a lack of “collegiality.”

“Collegiality” was long used as an excuse to block promotion or hiring of women, minority and leftist faculty.

The decision in Porter v. Board of Trustees of North Carolina State University is pending before the Supreme Court for possible review. If allowed to stand, it would offer universities a ready-made excuse for cracking down on the dwindling number of dissenters.

For faculty, what are presented as suggestions are often treated as mandatory. 

Take the “indigenous land acknowledgment” created for faculty at the University of Washington. The school told professors that they could add such a statement to their course material to honor “all tribes and bands within the Suquamish, Tulalip and Muckleshoot nations.” Computer science Professor Stuart Reges disagreed with the factual and philosophical basis of the statement, so he posted a land acknowledgment stating that under “the labor theory of property the Coast Salish people can claim historical ownership of almost none of the land currently occupied by the University of Washington.”

He was told to remove his optional statement. The request was no longer optional. Dean Magdalena Balazinska explained that “[t]he statement Stuart Reges included in his syllabus was inappropriate, offensive and not relevant to the content of the course he teaches.”

However, the university’s land acknowledgment was somehow deemed entirely relevant and appropriate.

Bakersfield College continues to distinguish itself in these anti-free speech efforts.

The school may call itself “The Renegades,” but it has shown a lack of tolerance for any rebellious or dissenting faculty.

We may value renegades as mascots, but we increasingly abhor them as colleagues.

Tyler Durden
Mon, 11/20/2023 – 14:30

Xi Celebrates ‘Firm’ Ties With Russia After US Trip Marred By Biden’s Dictator Remark

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Xi Celebrates ‘Firm’ Ties With Russia After US Trip Marred By Biden’s Dictator Remark

Chinese President Xi Jinping has hailed “firm” ties between China and Russia just days after his trip to San Francisco where he met with President Biden and executives of major US tech companies. 

Xi said Monday that positive Russia ties will “inject more stability into the world,” according to China Central Television. He affirmed that Beijing stands ready to work with Moscow “resolutely” on bilateral relations and building a permanent friendship. His last Wednesday meeting with President Biden ended on a deeply negative note given that at a wrap-up press conference Biden called Xi a “dictator” in response to a reporter’s question.

President Putin at the same time sent Xi a congratulatory letter marking the 10th meeting of the dialogue mechanism between the ruling parties of China and Russia, per Bloomberg.

Getty Images

Xinhua summarized Putin’s letter as follows

Putin said in his congratulatory letter that the Russia-China comprehensive strategic partnership of coordination is at the highest level in history, and the two countries are working together to advance a number of large-scale cooperation projects in the fields of economy, transportation, energy and culture, among others.

The two countries are coordinating positions through bilateral channels and multilateral mechanisms such as the Shanghai Cooperation Organization and BRICS to resolve major international issues and promote the building of a more just and democratic international order.

While relations with Putin continue to deepen rapidly, it remains unclear the degree to which Biden’s dictator remark will overshadow any positive momentum gained during last week’s meetings in San Francisco. China’s foreign ministry had responded by saying it “strongly opposes” Biden’s words.

“This statement is extremely wrong and irresponsible political manipulation,” MFA spokesperson Mao Ning had said the day after.

Some of Xi’s words given before US CEOs on foreign investment in China certainly suggested that Beijing is ready for a reset. Below is a section of Xi’s speech along with the analysis of entrepreneur and China observer Arnaud Bertrand [emphasis ZH]…

* * *

This part of Xi’s speech to US CEOs (full speech here) is interesting and worth reflecting on: “The number one question for us is: are we adversaries, or partners? This is the fundamental and overarching issue. The logic is quite simple. If one sees the other side as a primary competitor, the most consequential geopolitical challenge and a pacing threat, it will only lead to misinformed policy making, misguided actions, and unwanted results. China is ready to be a partner and friend of the United States,” President Xi began, and continued…

“The fundamental principles that we follow in handling China-U.S. relations are mutual respect, peaceful coexistence and win-win cooperation. Just as mutual respect is a basic code of behavior for individuals, it is fundamental for China-U.S. relations. The United States is unique in its history, culture and geographical position, which have shaped its distinct development path and social system. We fully respect all this.”

“The path of socialism with Chinese characteristics has been found under the guidance of the theory of scientific socialism, and is rooted in the tradition of the Chinese civilization with an uninterrupted history of more than 5,000 years. We are proud of our choice, just as you are proud of yours. Our paths are different, but both are the choice by our peoples, and both lead to the realization of the common values of humanity. They should be both respected.”

“Peaceful coexistence is a basic norm for international relations, and is even more of a baseline that China and the United States should hold on to as two major countries. It is wrong to view China, which is committed to peaceful development, as a threat and thus play a zero-sum game against it. China never bets against the United States, and never interferes in its internal affairs. China has no intention to challenge the United States or to unseat it. Instead, we will be glad to see a confident, open, ever-growing and prosperous United States.

“Likewise, the United States should not bet against China, or interfere in China’s internal affairs. It should instead welcome a peaceful, stable and prosperous China.”

In short he essentially argues against self-fulfilling prophecies, making the point that one’s view on the other defines your actions towards them, which in turn often validates your view even though it might have been wrong. As such the question “are we adversaries, or partners?” has no correct answer: if the US views China as an adversary it will lead them to “misinformed policy making [and] misguided actions”, which in turn will produce “unwanted results”, i.e. turning China INTO an adversary when it needn’t be.

He also explains why there is no empirical basis for considering China a “threat” or an “adversary”, and why it is therefore a question of perception:

1) Both countries’ “paths” are different (due to their respective “history, culture, geographical position” and political systems) but “both lead to the realization of the common values of humanity” (including peace, development, equity, justice, etc.) and as such both should be respected. In other words it isn’t because the road China is taking for its own development is different that it constitutes a threat. Each country’s development path is determined by its own context and this diversity should be respected, all the more because both countries fundamentally want the same thing (be at peace with each other, having a prosperous population, etc.).

2) He also says China “never bets against the United States, and never interferes in its internal affairs”. Which is also undeniably true, if there’s one cardinal principle of Chinese foreign policy it is the non-interference in other countries’ internal affairs. One cannot say for instance that there is a strong PRC lobby within, say, the U.S. congress, which is obvious from the overwhelming bipartisan consensus against China. In fact if anything there is a strong lobby against China… And it’s also undeniably true that over the past few decades China has bet ON the U.S. rather than against it, developing an extremely deep economic relationship.

More broadly Xi communicates an (unsurprisingly) very Chinese understanding of international relations, viewing them as a dynamic instead of a series of discreet events (which often tends to be the Western mindset). What needs to be treated is the underlying cause that sets the dynamic on a wrong path, which he identifies as the mindset one views the other with (“adversary” or “partner”).

What derails from this, often identified by the West as the problems in the relationship, are in facts symptoms of this deeper cause: working on solving these symptoms will not fundamentally solve the problem. This is profoundly true when you think about it. The “spy balloon” episode was a perfect example of this. The balloon wasn’t the problem per se, this whole episode was symptomatic of a mindset that tends to view the other through an almost insanely distorted adversarial lens.

Even if both countries agreed to somehow never have balloons drift in each others’ skies, it’d fundamentally solve nothing. The mindset was the issue and as such this is what needs working on. It also all agrees with a very important concept in international relations theory: the security dilemma, that says that one state’s increase in security measures (such as increasing its military strength) can lead other states to fear for their own security and therefore make them increase their own measures, leading to a non-ending spiral of escalation. The solution to this is mindset-changing measures, to increase mutual trust and de-escalate the situation.

For a very good definition of the security dilemma, see Stephen Walt’s article on it.

I thought this part of the speech was worth highlighting and I really hope that the U.S. will see the wisdom there. The first step to making a country a threat is to view them as one. And the first step to making them a friend is also to view them as one. It might all sound naïve and utopic to the cynics out there but at least China has the merit of extending its hand. Would it be so bad if the U.S. took it?

* * *

Xi’s full speech from last week starts a the 19-minute mark below:

Tyler Durden
Mon, 11/20/2023 – 14:10

Most OpenAI Staff Threaten To Quit, Join Microsoft Unless ‘Incompetent, Incapable’ Board Resigns

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Most OpenAI Staff Threaten To Quit, Join Microsoft Unless ‘Incompetent, Incapable’ Board Resigns

Update (1401ET):

The number of OpenAI employees considering resignation has surged to 700, with some estimates suggesting it is about 90% of all staff. 

Sam Altman posted on X:

  • We have more unity and commitment and focus than ever before
  • We are all going to work together some way or other, and I’m so excited
  • One team, one mission.

*   *   * 

Update (0920ET):

Tech blog Wired has reported that 490 OpenAI employees may quit and find jobs at the “newly announced Microsoft subsidiary run by Sam Altman and Greg Brockman” if the board does not resign. 

“The process through which you terminated Sam Altman and removed Greg Brockman from the board has jeopardized all of this work and undermined our mission and company,” the employees wrote in the letter, adding, “Your conduct has made it clear you did not have the competence to oversee OpenAI.”

The latest data from The Information indicates OpenAI has more than 700 employees. A potential mass exodus could spark disastrous consequences for OpenAI. 

Here’s the letter to the board where the employees mention that if they choose to resign, they will immediately have employment opportunities at Microsoft:

To the Board of Directors at OpenAI,

OpenAI is the world’s leading AI company. We, the employees of OpenAI, have developed the best models and pushed the field to new frontiers. Our work on AI safety and governance shapes global norms. The products we built are used by millions of people around the world. Until now, the company we work for and cherish has never been in a stronger position.

The process through which you terminated Sam Altman and removed Greg Brockman from the board has jeopardized all of this work and undermined our mission and company. Your conduct has made it clear you did not have the competence to oversee OpenAI.

When we all unexpectedly learned of your decision, the leadership team of OpenAI acted swiftly to stabilize the company. They carefully listened to your concerns and tried to cooperate with you on all grounds. Despite many requests for specific facts for your allegations, you have never provided any written evidence. They also increasingly realized you were not capable of carrying out your duties, and were negotiating in bad faith.

The leadership team suggested that the most stabilizing path forward – the one that would best serve our mission, company, stakeholders, employees and the public – would be for you to resign and put in place a qualified board that could lead the company forward in stability.

Leadership worked with you around the clock to find a mutually agreeable outcome. Yet within two days of your initial decision, you again replaced interim CEO Mira Murati against the best interests of the company. You also informed the leadership team that allowing the company to be destroyed “would be consistent with the mission.”

Your actions have made it obvious that you are incapable of overseeing OpenAI. We are unable to work for or with people that lack competence, judgement and care for our mission and employees. We, the undersigned, may choose to resign from OpenAI and join the newly announced Microsoft subsidiary run by Sam Altman and Greg Brockman. Microsoft has assured us that there are positions for all OpenAI employees at this new subsidiary should we choose to join. We will take this step imminently, unless all current board members resign, and the board appoints two new lead independent directors, such as Bret Taylor and Will Hurd, and reinstates Sam Altman and Greg Brockman.

The countdown to OpenAI’s demise has begun. 

*   *   * 

Microsoft shares climbed 2.7% in premarket trading, approaching a new record high, following the announcement that OpenAI co-founders Sam Altman and Greg Brockman will head a new cutting-edge AI research division for the tech giant. This development is particularly surprising given that Altman was dismissed from OpenAI just last week, with Emmett Shear, the co-founder of Twitch, a video streaming platform, stepping in as the interim CEO overnight, The Wall Street Journal reported. 

Shear’s appointment as OpenAI’s interim CEO marks the second leadership change in three days, following the board’s decision to terminate Altman on Friday and technology officer Mira Murati shortly after. 

“I took this job because I believe that OpenAI is one of the most important companies currently in existence,” Shear wrote on social media platform X. He continued, “I want to do everything in my power to protect it and grow it further.”

On Sunday afternoon, Altman returned to OpenAI’s headquarters, holding a guest pass. The former CEO said, “First and last time I ever wear one of these.”

Co-founder, chief scientist, and board member Ilya Sutskever – who fired Altman – told employees about Shear joining the company late Sunday. 

On a side note, Elon Musk has come to the defense of Sutskever’s role in former CEO Sam Altman’s ouster.

“Ilya has a good moral compass and does not seek power,” Musk wrote in a post on X, the platform formerly known as Twitter, on Sunday.

“He would not take such drastic action unless he felt it was absolutely necessary,” Musk continued.

Early Monday morning, Microsoft chief executive Satya Nadella wrote in a post on X, “Excited to share the news that Sam Altman and Greg Brockman, together with colleagues, will be joining Microsoft to lead a new advanced AI research team.”

“The mission continues,” Altman wrote on X, commenting on Nadella’s message.

Elon Musk commented on Altman’s post, “Wild Times.” 

Bloomberg noted some OpenAI employees posted their resignations on X after hearing the news. 

OpenAI developer Logan Kilpatrick wrote on the social media, “This has been an utterly devastating last 3 days.”

The abrupt shake-up at the maker of viral chatbot ChatGPT echoes a classic Silicon Valley story: the rift between founders and their board. Some have warned parting with Altman could be disastrous: 

And this… 

Shares of Microsoft in premarket trading were up as much as 2.7% on the news. The tech giant has an agreement with Open AI valued at around $13 billion (which has not all been spent and includes not just cash but cloud service credits – all of which could be yanked out from under OpenAI now if terms of the agreement are not met). However, a statement from Microsoft on Friday – after Altman’s initial ouster – confirmed it remains committed to its partnership with OpenAI. 

Analysts, commenting after Altman’s shock exit, were deeply concerned: 

“Train wreck situation at OpenAI might be one of the biggest debacle decisions in the history of Silicon Valley,” Wedbush’s Dan Ives wrote in a note. 

Here’s more of what Wall Street analysts are saying (list courtesy of Bloomberg):

Evercore ISI

  • Analyst Kirk Materne says the weekend has been full of back and forth regarding the OpenAI drama, but “for Microsoft investors, it ended in a good place with the news”

  • “While it remains to be seen how much ‘brain drain’ there will be at OpenAI, we think the fundamental risk to Microsoft is largely contained with Altman and team on board”

Bloomberg Intelligence

  • Altman’s departure could open the way for other foundational models like Meta’s Llama and Google’s Gemini to attract more interest

  • “The popularity in those open-source large language models may grow if Altman’s exit was related to ChatGPT’s roadmap,” analyst Mandeep Singh writes

RBC Capital Markets

  • While OpenAI’s management changes can cause some concerns for Microsoft, OpenAI remains a leader, writes analyst Rishi Jaluria Macquarie

  • Microsoft’s relationship with OpenAI remains intact, analyst Frederick Havemeyer writes, adding that there should be little impact for its Azure business

What a dizzying weekend! 

Tyler Durden
Mon, 11/20/2023 – 14:01

The White House Does Not Expect Arab States To Weaponize Oil

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The White House Does Not Expect Arab States To Weaponize Oil

By Tsvetana Paraskova of OilPrice.com

The United States is confident that the Arab states will not use oil supply as a weapon as they have done in the past, White House energy security adviser Amos Hochstein told the Financial Times in an interview published this weekend.

“Oil has been weaponised from time-to-time since it became a traded commodity, so we’re always worried about that, working against that, but I think so far it hasn’t,” Hochstein told FT.

According to the Biden Administration’s top energy adviser, the U.S. and the global oil market are managing the double geopolitical jeopardy of the past year – the Russian invasion of Ukraine and the Israel-Hamas war – “fairly well.”

“We have two active wars in the world, one involving the world’s third-largest producer [Russia], the other in the Middle East where missiles are flying near where oil is produced, and yet prices are near the lower point of the year,” Hochstein told FT.

Last week, Hochstein said that the United States would tighten sanctions on Iran’s oil industry amid the Israel-Hamas conflict, aiming to bring Iranian exports down by more than 1 million bpd.

In the early days of the conflict, the Arab states and the OPEC+ production group dismissed Iran’s call for Islamic countries to impose an oil embargo on Israel and its supporters over the war with Hamas in Gaza.

However, market speculation is intensifying that the OPEC+ ministers could decide to make deeper production cuts beginning next year when they meet in the November 25-26 weekend.

The key reason for a possible deeper cut would be the most recent price slide to $80 a barrel Brent, market participants and analysts speculate. Growing anger at the Israeli bombardment of Gaza could also play a part in an OPEC+ decision to withhold more supply from the market, some analysts argue.

At any rate, Saudi Arabia – the world’s top crude oil exporter and OPEC+ leader – is expected to attribute any extra cuts to the oil market situation, not the conflict in Gaza, sources close to Saudi Arabia’s thinking have told FT.

Tyler Durden
Mon, 11/20/2023 – 11:10

Trump “Has To Be Eliminated”: Another Dan Goldman Gaffe, Or Call For Assassination?

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Trump “Has To Be Eliminated”: Another Dan Goldman Gaffe, Or Call For Assassination?

Trust fund stock guru Rep. Dan Goldman (D-NY) can’t stop saying stupid things.

Or lying.

And so when Adam Schiff’s budget mini-me piped up over the weekend to say that former President Donald Trump “has to be eliminated,” eyebrows were raised over exactly what he meant.

“His rhetoric is really getting dangerous. More and more dangerous. And we saw what happened on January 6th, when he uses inflammatory rhetoric. Now, in his recent Truth Social posts, is incredibly, incredibly scary for anyone uh, that, might be trying to work in government – and, it is just unquestionable at this point that that man can not see public office again. He is not only unfit, he is destructive to our democracy, and he has to be eliminated,” Goldman told MSNBC‘s Jen Psaki.

Watch:

Goldman’s comments drew strong criticism on X;

Tyler Durden
Mon, 11/20/2023 – 10:50

‘This Will Not End With A Soft-Landing Whimper’ – Rubino Warns “Only A Matter Of Time Before Everyone Realizes There’s No Fix”

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‘This Will Not End With A Soft-Landing Whimper’ – Rubino Warns “Only A Matter Of Time Before Everyone Realizes There’s No Fix”

Via Greg Hunter’s USAWatchdog.com,

Analyst and financial writer John Rubino has a new warning about being fooled into thinking the economy is improving because inflation and interest rates have fallen some recently

Rubino says, “If the U.S. government is running crisis level deficits, which it is right now, borrowing money and paying interest on it means we are in a financial death spiral…”

“The debt goes up, the interest on the debt goes up and that raises the debt even further, and you just spiral out of control. 

We are there right now.  The official U.S. debt is $33.5 trillion.  It’s growing by $1.7 trillion a year, and $1 trillion of that is interest costs. 

Interest costs are rising as the overall debt goes up.  Then throw in this incredibly reckless military spending in the guise of foreign aid, and you get a society that has completely lost control.

That’s where we are now. 

We are in the blowoff stage of a 70-year credit super-cycle. 

Those things do not end with a whimper, and they certainly do not end with a soft landing.  They end with a bang, and the bang is going to be centered on the currency. 

People are going to look at this and say, ‘Do I really want to hold the currency or bonds of a country that is destroying its finances at this trajectory and this scale?’  The answer will be ‘No.’ 

At that point, it is game over for a deeply indebted economy.  We are headed that way fast, and these wars are taking us that way even faster.”

If the Fed keeps raising interest rates, the economy tanks, but you protect the dollar.  If you cut interest rates, you spike inflation even more, and the U.S. dollar tanks. 

Rubino says in the end, we get a “massive reset,” and the everything bubble explodes.

Rubino says the dollar is going to decline and, at some point, it starts to go into freefall in terms of buying power.  Rubino explains,

“If a currency starts to decline in a disorderly way, then you have a massive financial crisis on your hands. 

That is definitely where Japan is right now.  The U.S. is headed that way fast. 

So, once we reach that point, there is no fix. 

Then it is only a matter of time that everybody realizes that there is no fix, and they just bail on the whole experiment, and that’s where we are headed.”

Rubino talks about plunging home prices, more trouble coming in the commercial real estate market and why you need gold and silver as core assets during a currency reset.

There is much more in the 40-minute interview.

Join Greg Hunter as he goes One-on-One with financial writer John Rubino and his new enterprise called Rubino.Substack.com for 11.18.23.

*  *  *

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John Rubino is a prolific financial writer, and you can see some of his work for free at Rubino.Substack.com.  There is even more cutting-edge original information and analysis if you subscribe.

Tyler Durden
Mon, 11/20/2023 – 10:30

Key Events This Holiday-Shortened Week: Nvidia Earnings, Durables, Claims

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Key Events This Holiday-Shortened Week: Nvidia Earnings, Durables, Claims

The holiday-shortened week will mean a quiet second half of the week for markets but there is still a reasonable number of planned events throughout the week. As DB’s Jim Reid previews the week’s main events, Nvidia’s earnings tomorrow will be fascinating, as will the saga at OpenAI where CEO, and Artificial Intelligence pioneer, Sam Altman was ousted on Friday night by the board and was hired overnight by Microsoft. The OpenAI board also hired a new CEO. So a big week for AI. As Reid reminds us, “Nvidia’s Q1 earnings in May was probably the event that catapulted AI into the stratosphere in terms of being an important macro topic so the pace of their success will be a key driver in how rapidly AI infiltrates our daily lives.”

In the US this week, jobless claims has been brought forward to Wednesday due to the holiday, and this week’s data corresponds to the survey week for payrolls so given this and the fact that it has been edging up (albeit slowly) in recent weeks makes it one of the key data points at the moment. If the DB economists’ forecast of +236k is correct, then the 4-week moving average will be ~10% above where it was for the October survey week. So while predicting payrolls is more difficult than guessing what the weather will be this time next week here in the UK, this will be an input into models.

Elsewhere in the US durable goods are also due on Wednesday with DB expecting core orders to fall slightly in the first month of Q4 after two strong months at the end of Q3. On the same day the final University of Michigan consumer sentiment survey will bring any revisions to what were high inflation expectations in the first read. 5-10yr expectations were at 12-year highs of 3.2%. There’s usually a bit of a bias to downward revisions in the second read.

Before that, today sees the latest US leading indicator index which has been negative every month since January 2022. Tomorrow sees existing home sales alongside the last FOMC minutes. We will see if it was as dovish as the market interpreted at the time. Powell’s subsequent speech was deemed to be a bit less dovish so maybe he was trying to slightly alter the market’s interpretation of the meeting. With financial conditions being important to the Fed at the moment, and with them swinging about of late, the bias for the committee can change over time so the minutes will already be a bit out of date as financial conditions have loosened notably since partly due to the Fed’s concerns about them. So all a bit circular. Staying on the theme the ECB account of their last meeting will be out on Thursday .

Widening out from the US, the global flash PMIs will be out on Thursday (Europe) and Friday (US and Japan). Germany has its PPI today and a breakdown of Q3 GDP and the latest Ifo survey on Friday. The Dutch have a General Election on Wednesday the same day as the UK autumn statement where there is some talk of a few selected tax cuts around 14 months on from the infamous mega-tax cutting budget of the Liz Truss regime. In Asia Japanese inflation on Thursday will be the key release. See the day-by-day calendar at the end for a full preview of the week.

On the earnings side, only one company matters when it reports after the close tomorrow: Nvidia.

Courtesy of DB, here is a day-by-day calendar of events

Monday November 20

  • Data: US October leading index, Germany October PPI, Eurozone September construction output
  • Central banks: ECB’s Vujcic, de Cos and Villeroy speak, BoE’s Bailey speaks, China 1-y and 5-y loan prime rates
  • Earnings: Agilent Technologies, Zoom
  • Auctions: US Treasury 20y bond

Tuesday November 21

  • Data: US October existing home sales, Chicago Fed national activity index, November Philadelphia Fed non-manufacturing activity, UK October public finances, France October retail sales, EU27 October new car registrations, Canada October CPI
  • Central banks: FOMC meeting minutes, ECB’s Lagarde, Schnabel and Centeno speak, BoE’s Bailey testifies to UK Parliament
  • Earnings: Nvidia, Analog Devices, Baidu, Lowe’s, Medtronic
  • Auctions: US Treasury 2y FRN, 10y TIPs

Wednesday November 22

  • Data: US October durable goods orders, initial jobless claims, Eurozone November consumer confidence
  • Earnings: Deere
  • Politics: General election in the Netherlands, and UK Chancellor Hunt delivers Autumn Statement

Thursday November 23

  • Data: UK, Germany, France, Eurozone November PMIs, Japan October national CPI, France November manufacturing confidence
  • Central banks: ECB’s Account of October Policy Meeting
  • Earnings: Adevinta
  • Other: US Thanksgiving holiday

Friday November 24

  • Data: US and Japan November PMIs, UK November GfK consumer confidence, Germany Q3 GDP details, November Ifo survey, Canada September retail sales
  • Central banks: ECB’s Lagarde, Guindos and de Cos speak

Finally, turning to just the US, the key economic data release this week is the durable goods report on Wednesday. Richmond Fed President Barkin will give an interview on Monday and the minutes from the November FOMC meeting will be released on Tuesday.

Monday, November 20

  • There are no major economic data releases scheduled.
  • 12:00 PM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Thomas Barkin will be interviewed on Fox Business. On November 14th, President Barkin said that he was “just not convinced that inflation is on some smooth glide path down to 2%,” arguing that “the inflation numbers have come down, but much of the drop has been partial reversal of Covid-era price spikes, which were driven by elevated demand and supply shortages.” President Barkin noted that services inflation remains “higher than historic levels,” and that recent data “shows an economy that seems remarkably resilient.”

Tuesday, November 21

  • 10:00 AM Existing home sales, October (GS -2.5%, consensus -1.5%, last -2.0%)
  • 02:00 PM Minutes from the October 31 – November 1 FOMC meeting: At its November meeting, the FOMC left the target range for the fed funds rate unchanged at 5.25-5.50%. We saw the meeting as dovish at the margins, as Chair Powell clarified that above-potential growth on its own would not be enough to warrant another rate hike and downplayed the 1pp jump in one-year Michigan inflation expectations. Since the FOMC’s November meeting, job growth slowed by more than expected in the October employment report and inflation was softer than expected in the October CPI report, while retail sales proved stronger than expected despite the resumption of student loan payments and a temporary auto production setback from the UAW strike.

Wednesday, November 22

  • 08:30 AM Initial jobless claims, week ended November 18 (GS 230k, consensus 226k, last 231k); Continuing jobless claims, week ended November 11 (GS 1,890k, consensus 1,875k, last 1,865k): We estimate that initial jobless claims were roughly unchanged at 230k. We estimate that continuing claims increased to 1,890k, reflecting continued upward pressure from seasonal distortions.
  • 08:30 AM Durable goods orders, October preliminary (GS -1.8%, consensus -3.2%, last +4.6%); Durable goods orders ex-transportation, October preliminary (GS +0.2%, consensus +0.1%, last +0.4%); Core capital goods orders, October preliminary (GS +0.4%, consensus +0.2%, last +0.5%); Core capital goods shipments, October preliminary (GS +0.3%, consensus +0.1%, last +0.1%): We estimate that durable goods orders fell 1.8% in the preliminary October report (mom sa), reflecting a pullback in commercial aircraft orders. We forecast firmer details however, including a 0.4% rise in core capital goods orders and a 0.3% rise in core capital goods shipments. Industrial production of business equipment rebounded in the month, and East Asian industrial activity has improved.
  • 10:00 AM University of Michigan consumer sentiment, November final (GS 61.9, consensus 61.0, last 60.4); University of Michigan 5–10-year inflation expectations, November final (GS 3.1%, consensus 3.2%, last 3.2%): We estimate the University of Michigan consumer sentiment index increased to 61.9 in the November final report. We also estimate the report’s measure of long-term inflation expectations will be revised down one tenth to 3.1%, reflecting the further decline in gasoline prices and a sequential reduction in public focus on the Israel-Gaza conflict, as indicated by internet search volumes.

Thursday, November 23

  • Thanksgiving holiday. NYSE closed. SIFMA recommends bond markets also close.

Friday, November 24

  • NYSE will close early at 1:00 PM. SIFMA recommends an early 2:00 PM close to bond markets.
  • 09:45 AM S&P Global US manufacturing PMI, November preliminary (consensus 49.9, last 50.0); S&P Global US services PMI, November preliminary (consensus 50.2, last 50.6)

Source: DB, Goldman

Tyler Durden
Mon, 11/20/2023 – 10:20

US Leading Indicators Tumble For 19th Straight Month, Worst Streak ‘Since Lehman’

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US Leading Indicators Tumble For 19th Straight Month, Worst Streak ‘Since Lehman’

The Conference Board’s Leading Economic Indicators (LEI) continued its decline in October, dropping 0.8% MoM (worse than the 0.7% decline expected).

  • The biggest positive contributor to the leading index was building permits at +0.03

  • The biggest negative contributor was ISM N new orders and average consumer expectations both at -0.22

This is the 19th straight MoM decline in the LEI (and 18th month of 19) –  the longest streak of declines since ‘Lehman’ (22 straight months of declines from June 2007 to April 2008)

“The US LEI trajectory remained negative, and its six- and twelve-month growth rates also held in negative territory in October,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.

“Among the leading indicators, deteriorating consumers’ expectations for business conditions, lower ISM® Index of New Orders, falling equities, and tighter credit conditions drove the index’s most recent decline.

After a pause in September, the LEI resumed signaling recession in the near term.

The Conference Board expects elevated inflation, high interest rates, and contracting consumer spending – due to depleting pandemic saving and mandatory student loan repayments – to tip the US economy into a very short recession.

We forecast that real GDP will expand by just 0.8 percent in 2024.”

Despite ‘soft landing’ hype, the LEI is showing no signs at all of ‘recovering’, tumbling back in line with the peak in March 2006…

And on a year-over-year basis, the LEI is down 7.6% (down YoY for 16 straight months) – close to its biggest YoY drop since 2008 (Lehman) outside of the COVID lockdown-enforced collapse…

The annual growth rate of the LEI continues to be negative, but may have reached a bottom…

The trajectory of the US LEI continues to signal a recession over the next 12 months

Is this the cleanest view of The Fed’s tightening impact on the US economy? Certainly doesn’t look like a ‘soft’ landing…

Tyler Durden
Mon, 11/20/2023 – 10:12

Twin Crisis Rocks Bayer, Shares Crash Most On Record, Hitting Levels Not Seen Since GFC

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Twin Crisis Rocks Bayer, Shares Crash Most On Record, Hitting Levels Not Seen Since GFC

Bayer shares in Germany experienced their largest-ever intra-day crash, tumbling as much as 21% to lows not seen since the Great Financial Crisis, following a double whammy of news:

  • First, Bayer AG’s Monsanto unit was ordered by a Missouri jury to pay more than $1.5 billion damages to three former users of its Roundup weedkiller on Friday.

  • Second, on Sunday, the German agropharmaceutical giant halted the development of an experimental drug because of a lack of efficacy. 

Over the weekend, we explained that Monsanto’s largest trial loss in the five-year litigation over Roundup weedkiller was devastating. There appears to be no end as the company faces a second wave of lawsuits. It has already set aside $16 billion for the Roundup lawsuits. Also, this is a historic value destruction, who purchased Monsanto for $63 billion five years ago. 

Meanwhile, Bayer said Monday its pharma division halted the primary study of its top experimental drug because of a lack of efficacy. 

Bayer wrote in a statement that in a Phase III trial, its experimental anticoagulant asundexian was inferior to Pfizer and Bristol-Myers Squibb’s Eliquis drug in preventing strokes in high-risk patients. 

Bayer was positioning asundexian to replace revenue from blood thinner Xarelto, one of its biggest sellers, which will lose protection from European patents in two years. 

Jefferies analyst Charles Bentley said, “This is a significant blow to the Bayer Pharma pipeline… Overall, this setback increases challenges facing its new CEO [Bill Anderson] — pipeline weakness and needing investment while leverage is high and beset by litigation.” 

As a result of the two crises, Bayer shares in Germany crashed as much as 21% to the lowest levels since March 2009. Around 0800 ET, shares recovered some losses but were still down 19%. 

Here’s what other Wall Street analysts are saying about the crisis at Bayer (list courtesy of Bloomberg):

JPMorgan, Richard Vosser (neutral)

  • Calls asundexian stroke-prevention trial failure a “significant disappointment,” removing an asset possibly worth as as much as €11.7 a share
  • Says failure makes it “even harder for Pharma business to grow following the Xarelto and Eylea patent expiries in 2026/2027 and 2025”
  • On Roundup trial, says that while damages are likely to be reduced in appeals process, it highlights Bayer “still has work to do” related to remaining Roundup litigation

Barclays, Emily Field (equal weight)

  • Cuts recommendation on Bayer to equal weight as a consequence of asundexian trial failure as drug was key reason in April 2022 upgrade to overweight; says news comes as “total surprise”
  • “Removing asundexian from our model suggests significant challenges ahead for the company’s Pharma business,” Field writes; does, however, flag there is potential for strategic optionality ahead of Bayer’s March 5 capital markets day

Citi, Peter Verdult (buy)

  • Sees a “double whammy” for the Bayer investment case 
  • Says trial setback will “also likely raise concerns about Healthcare being able to return to top line revenue growth post Xarelto/Eyelea”
  • Flags that US rival asset from Bristol-Myers Squibb and Johnson & Johnson is currently in late-stage Phase III trial investigating milvexian and risk of stroke

Morgan Staney analyst Thibault Boutherin (equal-weight)

  • Says halting main study for asundexian is a “meaningful” negative; asundexian was Bayer’s key pipeline drug, and the trial was for main indication
  • Removing indication from MS’s estimate would suggest €2/4% impact to €52/share PT; flags that secondary stroke prevention trial continues, although is a smaller opportunity
  • In a separate note on Roundup trial, says adverse ruling is an incremental negative, even if the $1.5b in punitive damages to three plaintiffs in the latest trial is reduced
  • Notes it’s the fourth Roundup trial Bayer has lost

Jefferies, Charlie Bentley (buy)

  • Calls trial halt a “significant blow” to Bayer’s pharmaceutical pipeline; news limits firm’s factor-XI asundexian program, originally slated to replace key drug Xarelto, which is facing a patent cliff
  • Setback adds to challenges facing new CEO, others being another glyphosate trial loss, continued drug pipeline weakness and investment needs amid high leverage

Bloomberg Intelligence, Holly Froum (no rating)

  • Calls asundexian trial failure a “major setback” ahead of Xarelto and Eylea’s upcoming patent cliffs; adds that while there is another study for asundexian use in stroke, atrial fibrillation represented a “significant percentage” of sales potential

Tyler Durden
Mon, 11/20/2023 – 09:15