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Are We Closing In On Capitulation Levels For Chinese Stocks?

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Are We Closing In On Capitulation Levels For Chinese Stocks?

Authored by Simon White, Bloomberg macro strategist,

Equities in China are getting closer to a tradeable bottom, based on internal measures of breadth, improving liquidity conditions, and tentative signs the property market may be troughing.

Stocks in China continue to lag their global peers, with the MSCI China the third-worst performing index year to date, beating only the MSCI Hong Kong and Thailand indices.

There have been several false dawns since China lifted Covid restrictions, and we’re likely not quite there yet, but breadth in the country’s stocks is approaching the point where typically they have bottomed. That’s on top of further easing measures announced today, including a cut in stamp duty for Hong Kong stock trading.

The percentage of stocks in the CSI 300 trading above their 200-day moving average is now about 20%, and dropping fast.

Levels between 0% and 10% have often marked reversals in the index. The index itself is also well below its 200-day moving average.

The advance-decline ratio is flat-lining, showing that on net very few stocks are advancing. Similarly the net number of stocks making new 52-week lows is markedly negative. It also not yet at capitulatory levels, but is approaching them.

That also applies to the percentage of stocks whose 14-day RSI is below 30. This is at over 40%; previously when it has been more than 50% it has often marked at least a short-term bounce in price.

China is incrementally adding more liquidity, with PBOC net-repo injections at a series high on a 3-month summed basis.

Medium-term lending is also picking up, with one-year policy loans on track to make an all-time high.

Monetary loosening is being joined by increased fiscal easing, with the central government — less encumbered than local governments — stepping up issuance (as speculated previously). It was announced today that the budget deficit ratio will be raised (from 3% to about 3.8% of GDP), and additional sovereign debt of one trillion yuan is to be issued in the fourth quarter.

Crucial to a sustainable recovery in China is the real-estate market. Property developers continue to struggle with debt problems, most prominently Country Garden, which has been deemed to be in default on a dollar bond for the first time.

Stress will persist until the property market can be reanimated. There is a hint of an early recovery, with the growth rate of floor space on new houses steadily rising through this year.

Tyler Durden
Wed, 10/25/2023 – 18:20

Wall Street Vol Legend “50 Cent” Unveils His Top 2024 Trade With “Extraordinary Upside”

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Wall Street Vol Legend “50 Cent” Unveils His Top 2024 Trade With “Extraordinary Upside”

Jonathan ’50 cent’ Ruffer – infamous for his scooping up massive profits in front of the options market steamroller over the past few years – is back with a new trade for 2024: Japanic!

Jonathan ’50 cent’ Ruffer

Instead of snapping up VIX options priced at 50 cents (hence his nickname), he explains in his latest letter to investors that he has a “big position” in the Japanese Yen – betting that the currency will collapse “violently” some time soon (as a reminder, The BoJ meets next week).

“The yen has been moving lower for a long while. With currencies, it is always dangerous to try to anticipate a change of direction, even when the fundamentals cry out for it, and our performance has suffered accordingly. We believe the yen is oversold for technical reasons and that, when these dissipate, it is likely to move sharply higher. Moreover, when it does, it is likely to be concertinaed into a brisk uncontrollable move upwards. This happened, to our advantage, in 2008, and we believe that today’s backcloth will cause a repetition of that dynamic.”

Ruffer sees two factors working simultaneously to reinforce his trade: forced sellers of foreign currencies, and simultaneously, forced buyers of yen.

“The compulsion to buy yen will come from two diametrically opposite sources – one domestic, one international.

Local demand for yen will come about in the aftermath of Bank of Japan Governor Ueda’s increasing isolation in trying to hold the yields of the government bonds well below the international rate. The most likely way out of this impasse is for the authorities to compel domestic institutions to acquire such bonds at their current (anomalously expensive) prices. To do this, those institutions will have to sell down big holdings of foreign government bonds, denominated, of course, in foreign currencies. Many of those holdings have already been hedged into yen, but much of it will still be held in local currencies, with the conversion into yen telescoped into a short time window.

The international constituency of forced sellers are those foreigners who have borrowed in yen to enjoy a lower interest rate regime than the one in which the assets are purchased. That constituency is more aware of the double advantage of a low interest rate and a steadily diminishing value of their borrowings than they are of the dangers of a currency mismatch which, at the key moment, moves sharply against them.”

If these events occur in the course of a market dislocation, Ruffer says “the exchange rate could move as violently as it did in 2008 (up by 50% against sterling in short order).”

USDJPY has been battling with 150/USD for a while now, prompting various interventions…

However, nothing lasts forever, and as Ruffer explains, the market’s stability is an illusion, and everyone’s about to take the red pill…

“At the heart of our investment strategy is the belief that 2023 has seen fundamental truths – with their gravitational pulls on valuations – momentarily overwhelmed by market forces.

These forces can, in the short term, be very much stronger than a mere ‘gravitational pull’, but in the long term gravity always beats a good party.

So, never bet against gravity, as armchair philosopher Ruffer concludes:

“In summary, the world has more than a tinge of aurora borealis.

It is a dystopian world where everyone is a victim, the central authorities in the West buy off every dissatisfaction with money they haven’t got, and a new order awaits its time, still to come.

If you know where to look, there are eternal truths that are observable by eternal pieces of evidence.

In the field, it is rheumatism in the knee which heralds the change from father to son; in the West, it’s the day that the cost of paying the interest on a nation’s borrowings overtakes the (sharply rising) defence budget.

Just as with the yen, we’ve seen this all before, and we know how it ends, but that doesn’t mean the journey won’t be bumpy along the way.”

Ruffer’s view is not that out-of-consensus, but there is something unique:

In my experience, it is unusual to find two separate constituencies of forced buyers – to find a single one is enough. It is the strong possibility of an extraordinary upward move in the Japanese currency which provides us with the stamina to withstand the general day-to-day attrition of the yen. If the net result produces merely a satisfactory ultimate return, we will be disappointed.”

His timing could be perfect as we noted earlier in the week, there is a sense of immediacy coming out of the Bank of Japan with regards to its curve-control experiment, just hours after the central bank intervened in the bond market, including:

Bank of Japan officials “are likely to monitor bond yield movements until the last minute before making a decision on whether to adjust the yield curve control program.”

Implicit in that wording is the suggestion that the central bank may be ready to adjust its curve control before next week’s decision, should push come to a shove.

That may be especially so should the functioning of the bond market worsen.

There comes a point in any intervention where the tipping point is determined not by the amount of money spent in defense of a policy but by the dislocations that it spawns.

And the BOJ sources story suggests that the pain threshold is near, if not already reached.

While an end to negative rates may still be away, a shift in curve control may come sooner than markets reckon, especially given Ruffer’s “firm conviction that inflation is in an inexorable up-cycle. We do not put timings on it, but two factors will prove more powerful at stoking rising prices than the single force pulling the other way – the impact of central bank tightening.”

With vols so low…

…maybe it’s to jump on the Japanic trade!

Read Ruffer’s full letter to investors here…

Tyler Durden
Wed, 10/25/2023 – 18:00

Facebook Jumps After Beating Estimates, Cuts Expense, CapEx Guidance

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Facebook Jumps After Beating Estimates, Cuts Expense, CapEx Guidance

Following up on our preview of hedge-fund darling Meta’s Q3 earnings, we note that the last few months have been quite positive for the company: last quarter Meta rebounded from a digital ad slump, beating expectations and hitting double-digit revenue growth for the first time in 18 months. Expectations will be high after the company forecast revenue growth of as much as 20% for the quarter and after Snap and Alphabet both topped expectations for ad revenue.

Meanwhile, as Bloomberg notes, Meta – like all gigatech peers – has been all in on AI since last quarter, introducing AI chatbots for Instagram, Facebook and WhatsApp; launching new tools for marketers to create ads using AI; and releasing a free version of coding software similar to Microsoft GitHub. Meta is betting that AI-recommended content will help keep users on Facebook and Instagram. The company is especially focused on Reels, short-form videos that are similar to TikTok’s. I’ll be listening for how much time users spent on Reels videos and whether that translated into more ad dollars.

Additionally, Bloomberg Intelligence analyst Mandeep Singh says Meta’s continuation of high-teens growth for 3Q and into 2024 may hinge on a sharp positive inflection in ad pricing, which has been declining the past six quarters: “Though the company’s Reels momentum has aided above-consensus impressions growth across its Instagram and Blue apps, we think ad loads and engagement growth are likely to plateau in the near term,” Singh said in a recent note. On the other end, Reality Labs segment losses for 2024 will be a primary focus, given the company’s recent launch of Quest 3 and Ray-Ban AR glasses.

And so, as we get the numbers of Q3, here is a snapshot of where we stand: Meta shares fell 4.2% Wednesday, its worst daily performance since July; that said, the company is still up nearly 150% in 2023 although it is expected to be volatile: as noted earlier, the options market is signaling that Meta shares should move 8% in either direction, that’s less than the average 15% move over the past two years, suggesting that post-earnings volatility may be subdued this quarter.

With all that in mind, moments ago Meta reported Q3 earnings which beat on the top and bottom line, and guided to Q4 revenues whose midline is right on top of the consensus estimate:

  • EPS $4.39 vs. beating exp. $3.63 and more than 100% higher YoY vs $1.64 a year ago
  • Revenue $34.15 billion, +23% y/y, beating estimate $33.51 billion
    • Advertising rev. $33.64 billion, +24% y/y, beating estimates $32.94 billion
    • Family of Apps revenue $33.94 billion, +24% y/y, beating estimates $33.08 billion
    • Reality Labs revenue $210 million, -26% y/y, missing estimates $313.4 million
    • Other revenue $293 million, +53% y/y, beating estimates $212.7 million
  • Facebook daily active users 2.09 billion, +5.6% y/y, beating estimate 2.07 billion
  • Facebook monthly active users 3.05 billion, +3% y/y, in line with estimate 3.05 billion
  • Ad impressions +31% vs. +17% y/y, beating estimates +29.6%
    • Average price per ad -6% vs. -18% y/y, beating estimates -8.94%
  • Operating margin 40% vs. 20% y/y, beating estimates 33.9%
  • Family of Apps operating income $17.49 billion, +87% y/y, beating estimate $15.23 billion
  • Reality Labs operating loss $3.74 billion, +1.9% y/y, beating estimate loss $3.94 billion
  • Average Family service users per day 3.14 billion, +7.2% y/y, beating estimate 3.09 billion
  • Average Family service users per month 3.96 billion, +6.7% y/y, beating estimate 3.88 billion

Some more details on the company’s ad business:

  • Family daily active people (DAP) – DAP was 3.14 billion on average for September 2023, an increase of 7% year-over-year.
  • Family monthly active people (MAP) – MAP was 3.96 billion as of September 30, 2023, an increase of 7% year-over-year.
  • Facebook daily active users (DAUs) – DAUs were 2.09 billion on average for September 2023, an increase of 5% year-over-year.
  • Facebook monthly active users (MAUs) – MAUs were 3.05 billion as of September 30, 2023, an increase of 3% year-over-year.
  • Ad impressions and price per ad – In the third quarter of 2023, ad impressions delivered across our Family of Apps increased by 31% year-over-year and the average price per ad decreased by 6% year-over-year.
  • Revenue – Revenue was $34.15 billion, an increase of 23% year-over-year, and an increase of 21% year- over-year on a constant currency basis.

Looking ahead, the company forecast Q4 revenue in the range of $36.5-40 billion, whose midline is smack on top of the Wall Street consensus of $38.76BN. The guidance assumes currency tailwind of approximately 2% to year-over-year total revenue growth in the fourth quarter, based on current exchange rates

Also from its guidance, Facebook slashed its total expenses by $2 billion for the full year 2023, which it now sees in the range of $87-89 billion, lowered from the prior range of $88-91 billion. This outlook includes approximately $3.5 billion of restructuring costs related to facilities consolidation charges and severance and other personnel costs. The company also expects Reality Labs operating losses to increase year-over-year in 2023.

And in a move which AI peers like NVDA and ANET are hardly excited about, Meta also trimmed its CapEx guidance, which it now expects to be in the range of $27-29 billion, updated from the prior estimate of $27-30 billion. Which means less spending on AI chips and chatGPT algos. In kneejerk response, both NVidia and Arista slumped on the capex guidance cut, although that may be premature since META noted that CapEx growth will be “driven by investments in servers, including both non-articial intelligence (AI) and AI hardware, and data centers as we ramp up construction on sites with the new data center architecture we announced late last year.”

In the earnings release, Chief Executive Officer Mark Zuckerberg called out the company’s work in AI and its new virtual reality headset, the Quest 3, and Ray-Ban smart glasses.

Meanwhile, two years after its ridiculous rebranding, Meta still plans to lose money in Reality Labs, the division that builds metaverse tech. I’m not sure how much more patience investors will have for those losses.

Bloomberg Intel’s Mandeep Singh tells Bloomberg TV that the flagship Blue app is almost half of revenue, and “that revenue is sort of flat. Instagram is the growing portion.”

“They have spent $50 billion on Reality Labs. We still don’t have a product that is margin-accretive. they are losing money on every headset they are selling. We don’t know what ecosystem they can create.”

In kneejerk response META stock jumped as much as 3% but has since eased back erasing much of its after hour gains, and ensuring that anyone who expected an outsized move using options is about to see a total loss.

Earnings presentation below:

Tyler Durden
Wed, 10/25/2023 – 16:43

The Toxic Brew That Is Going To Create Endless Chaos In The Streets Of America

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The Toxic Brew That Is Going To Create Endless Chaos In The Streets Of America

Authored by Michael Snyder via TheMostImportantNews.com,

Really bad policies lead to really bad consequences, and our leaders have been making absolutely disastrous decisions for decades. 

As a result, the streets of America are now teeming with thieves, drug addicts, prostitutes, violent criminals and sexual predators.  We have raised an entire generation of young Americans that has no moral foundation whatsoever, and every day we are adding even more immigrants from third world countries to the mix.  Many of those immigrants have no intention of following our laws, and they are fueling the explosive growth of criminal gangs all over the nation.  On top of everything else, the war in the Middle East threatens to spark an unprecedented wave of domestic terror attacks here in the United States.  Millions of radical Muslims now live in this country, and when the time comes many of them will not hesitate to commit acts of violence.

I have been writing about the social decay in our major cities for many years, but in all that time I have never come across a story quite like this one

We all know that San Francisco has a terrible, awful, horrible, homeless problem with homeless people sleeping everywhere. One homeless man set up camp across from a Catholic grade school. It would have been a curiosity except for the signs he hung outside of his tent.

“Free fentanyl 4 new users” and “Meth for stolen items.”

Joseph Adam Moore served six years for unlawful sex with a 12-year-old girl and was accused of having sex with a 15-year-old girl just a month after getting out of prison. But his probation deal did not include staying away from schools. So he camped directly across from Stella Maris Academy and began to host parties of stoners — much to the neighborhood’s dismay.

This young man checks almost all of the boxes.

He is a convicted felon, he is a drug addict, and he is a sexual predator.

And there are countless others just like him all over the country.

For example, the other day parents attacked a naked man inside a JCPenney store near Seattle after that naked man “attempted to inappropriately touch their children”

A shocking video shows a naked man being attacked by parents at a JCPenney store near Seattle after he allegedly attempted to inappropriately touch their children.

The person recording the clip explains that they’re on the first floor of the kids’ department of the location, as the man is attempting to evade people chasing him wearing nothing but socks.

‘He’s like, holding the kid,’ the recorder claims, suggesting that the unidentified man was trying to touch two kids that he had with him in the store.

Good for those parents.

If I had been there, I would have gone after him too.

Unfortunately, our entire society is now descending into an abyss of sexual degradation.

Thanks to a new law that was recently signed by California Governor Gavin Newsom, the city of Los Angeles has essentially been transformed into a giant brothel at this point…

Emboldened by new California laws that make it nearly impossible for cops to bust prostitutes, sex workers in Los Angeles’ red light district stalk for business wearing no more than thongs, G-strings and high heels in broad daylight.

A 40-block area of Figueroa Boulevard in South LA sees hundreds of prostitutes, some barely out of their teens, plying their trade since Gov. Gavin Newsom passed the controversial Safer Streets for All Act, which decriminalized loitering with the intent to work as a prostitute in January.

“Before, this type of activity only happened at night where most citizens wouldn’t see it, but now it’s 24/7,” one source told The Post.

Needless to say, the enormous tsunami of migration that we have been experiencing during the Biden administration has greatly contributed to our social problems.

According to brand new numbers that have just been released, the number of migrants that our border patrol officers encountered during the month of September set a brand new all-time record high for a single month…

United States Customs and Border Protection reported the final month of southwest border encounters for fiscal year 2023, revealing yet another record-setting month and year under the Biden administration.

Official numbers totaled 269,735 encounters for September 2023, a new monthly record, which sets fiscal year 2023 at a record-setting 2,475,669.

The yearly total eclipses 2022’s record encounters by nearly 100,000, marking yet another terrible year for President Biden’s border control.

How many others were able to enter this country successfully without being encountered by border patrol officers at all?

Protecting our borders is one of the very few things that the federal government is actually required to do, and under the leadership of Joe Biden the federal government is failing at that task spectacularly.

And now we are being warned that members of Hamas and Hezbollah may try to come over our southern border

The San Diego Field Office Intelligence Division of Customs and Border Protection (CBP) has warned in a memo that members of terrorist groups — namely Hamas, Hezbollah, and Palestinian Islamic Jihad (PIJ) — could be encountered at the porous southern border. The warning comes weeks after the Palestinian terrorist group Hamas attacked Israel, murdering 1,400 individuals and taking many more hostage on October 7.

The Daily Caller News Foundation first obtained and shared the October 20 memo, which warned that “individuals inspired by, or reacting to, the current Israel-Hamas conflict may attempt to travel to or from the area of hostilities in the Middle East via circuitous transit across the Southwest border.”

I have a message for whoever wrote that memo.

Hezbollah is already here.

In fact, Hezbollah has been very active in North America for a long time.

Of course those that have ties to Hezbollah are just a small subset of the rapidly growing population of radical Muslims in this country.

And now that war has erupted in the Middle East, many of those radical Muslims are protesting in the streets.

On Sunday, a pro-Hamas mob took over an entire section of the city of Minneapolis…

A pro-Palestine mob on Sunday took over a street in Minneapolis, swarmed an elderly driver, chased after him, and harassed him.

The mob blocked traffic for several hours on Hennepin Avenue near the Walker Art Center, according to Crime Watch Minneapolis.

The militants surrounded an elderly man in a white sedan, beat on his car, and chased him down.

Once upon a time, Minneapolis was such a nice city.

But now those days are long gone.

Eventually, the radical Muslims may completely take over Minneapolis just like they have done in Dearborn, Michigan.

For a long time, I have been warning my readers that our immigration policies will lead to complete and utter madness in the streets of America.

Once the war in the Middle East really gets going, we are going to see things happen in this nation that many people thought that they would never see in their entire lifetimes.

But things didn’t have to turn out this way.

If we would have protected our borders and would have implemented common sense immigration policies, much of the coming chaos in our streets could have been prevented.

*  *  *

Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.

Tyler Durden
Wed, 10/25/2023 – 16:20

Nukes & Pukes: Bullion, Black Gold, & Bitcoin Jump As Bonds & Big-Tech Dump

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Nukes & Pukes: Bullion, Black Gold, & Bitcoin Jump As Bonds & Big-Tech Dump

Delayed invasions in Gaza (in order to move more US air defense hardware into place) and Russia training for nuclear strikes were not a great background for buying stocks (even after MSFT’s earnings, and despite GOOGL’s disappointment) and ‘strong’ housing data didn’t help any dovish cases.

No safe-haven bid in bonds as the dollar, gold, and crypto rallied and oil jumped after some early weakness on the nuke sabre-rattling.

Treasuries puked hard with yields higher across the curve with the long-end significantly underperforming (30Y +15bps, 2Y +5bps). All yields are now higher on the week…

Source: Bloomberg

30Y yield ramped back above 5.00%

Source: Bloomberg

Stocks were nuked as even a better than expected new home sales print (which means homebuilder margins must be getting monkeyhammered) did not help. Higher rates hammered the longest duration equities with Nasdaq the biggest loser. The Dow was the prettiest horse in today’s glue factory with S&P and Small Caps ending down around 1-1.5%…

Worst day for Nasdaq since Dec 2022.

As Goldman’s Chris Hussey noted, unfortunately for stocks today, the strong housing market is likely contributing to a higher rate environment. Yields on 10-year Treasuries are up 13bp to 4.95%. While yields rose much more steeply a year ago (when 10-year Treasuries rose to 4.2% from 1.4% in 2022), the latest move up in yields is coming alongside a growing assumption that yields are unlikely to return to the ultra-low post-GFC levels that markets enjoyed for over a decade leading up through the pandemic. Today’s housing report, for example, is unlikely to provide any reason for the Fed to think that it has raised rates too high. And this higher-for-longer yields environment is weighing on a host of stock valuations.

The S&P 500 broke below its 200DMA to its lowest close since May…

After yesterday’s big squeeze higher, today saw ‘most shorted’ stocks clubbed like a baby seal…

And 0-DTE Put-buyers piled on all day (as Call-Deltas remained relatively flat)…

Consumer Discretionary and Tech tankled today as Energy, Staples, and Utes rallied. Bank stocks dumped and pumped…

5 of the 7 Mega Cap tech stocks (MSFT, TSLA, META, AMZN, GOOGL) will have reported earnings by the end of this week, and we note that while the group’s valuation is well off its high, mega-cap Tech still trades at a significant premium to the other 493 stocks in the S&P 500…

VIX surged back up to a 20 handle…

Oil rallied hard off earlier spike lows to close green as Russian nuke test headlines helped…

…and those same headlines lifted gold (futures) back up towards $2000…

…and Bitcoin back to $35,000…

Source: Bloomberg

And that all happened as the Dollar Index rallied (Loonie and JPY weakness)…

Source: Bloomberg

Finally, we note that USA Sovereign credit risk continues to push higher…

Source: Bloomberg

It seems clear what ‘Bidenomics’ was really about after all.

Tyler Durden
Wed, 10/25/2023 – 16:00

Jim Grant: The Fed Needs Some Grounding In Financial History & Common Sense

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Jim Grant: The Fed Needs Some Grounding In Financial History & Common Sense

Via SchiffGold.com,

Will the Federal Reserve raise interest rates again? Or is this hiking cycle over? Will it really hold rates higher longer, or will it cut in the near future? Everybody in the financial world is trying to predict the central bank’s next move.

Fed members insist they are data-dependent and will go where the numbers lead them. But in an interview on CNBC, financial analyst Jim Grant said data alone isn’t enough. You need to put the data into context.

The whole “data-dependent” canard is questionable to begin with. How long did Jerome Powell and other central bankers insist that inflation was “transitory” despite the data indicating otherwise?

When the Federal Reserve could no longer pretend price inflation was “transitory,” finally launched a war on inflation and rapidly hiked interest rates. Currently, rates are at between 5.25 and 5.5%. Many people in the mainstream think the hiking cycle is over. Paul Krugman even went so far as to say the war was over, and he declared, “We won.”

But if you believe the data, price inflation might be down, but it isn’t out.

So, has the Fed done enough?

Jerome Powell delivered a speech last week at the Economic Club of New York. Grant said like every “Delphic prophet,” the Fed chair was “just ambiguous enough.”

During the speech, Powell claimed that interest rates are currently restrictive. Grant said this “isn’t born out by what the Fed likes to call the data.”

There are four or five indices of financial conditions, and four of the five say that notwithstanding this rise in rates and QT and the like, conditions in finance are generally accommodative. It makes you wonder what stringency would feel like because certainly on kind of a tactile basis it does feel as if things are rather taut.”

Grant noted that these indices were flashing “tight” when the Fed went to battle with the inflation of the 1970s.

Peter Schiff recently said the real problem isn’t the 5% interest rates of today. It was the zero percent interest rates the Fed maintained for more than a decade. That precipitated a “decade of reckless spending financed by debt.” Not only has the federal government run up a massive debt, so have corporations and American households.

“Everybody has gorged themselves on this debt fest that was served by the Federal Reserve,” Schiff said.

Grant put it another way, saying the long run of artificially low interest rates “introduced a fragility in the economy that 5% is now testing,” and he said we’re now seeing the characteristic consequences of very low, “money grows on trees” interest rates.

As an example, Grant pointed out the Bezos/Gates-backed trucking company Convoy that shuttered operations. In April 2022, Convoy was valued at over $3.5 billion. The Convoy CEO Dan Lewis cited contractionary credit markets as one of the reasons for the shutdown.

Grant said we’re not seeing this kind of situation far and wide, “but it is beginning to happen.”

I think as time goes on, you’ll see much more of it.”

Meanwhile, the Fed keeps insisting that it is “data dependent.” But the data is always backward-looking. And as Grant pointed out, it is also subject to revision.

One shouldn’t be utterly dependent on them [data]. Jay Powell at his summertime speech in Jackson Hole said something like, ‘The Fed is navigating by the stars under cloudy skies,” which I think is most apt.”

Data alone isn’t sufficient without a framework or a theory in which to contextualize it.

I would submit to you that a common sense approach might be helpful. For example, you can reason that if you’ve been repressing interest rates, you being the central banks collectively worldwide, but suppressing them for the better part of 10 years, and if at one point, an extreme point, some $16 trillion of securities were priced to yield less than nothing – the lowest rates in 4,000 years of recorded rate history – in those circumstances, you’d expect that the proverbial beach ball held underwater would pop up again and not just stop at the surface, but rather shoot a little bit up in the air.”

Grant concluded that one can’t be a prisoner to data.

You have to have some grounding in financial history and some grounding in common sense.”

Tyler Durden
Wed, 10/25/2023 – 15:40

Texas AG Sues Biden Administration For Cutting Razor Wire At Southern Border

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Texas AG Sues Biden Administration For Cutting Razor Wire At Southern Border

Authored by Eric Lundrum via American Greatness,

On Tuesday, Texas Attorney General Ken Paxton (R-Texas) filed a lawsuit against the Biden Administration over federal agents cutting away razor wire barriers that had been set up along the southern border by the state government.

As Fox News reports, Paxton’s lawsuit, filed in the U.S. District Court for the Western District of Texas, targets the Department of Homeland Security (DHS) and Customs and Border Protection (CBP), accusing the federal agencies of interfering with state efforts to secure the border by actively cutting away the razor wire barriers that had been set up by the state of Texas.

“By cutting Texas’s concertina wire, the federal government has not only illegally destroyed property owned by the State of Texas; it has also disrupted the State’s border security efforts, leaving gaps in Texas’s border barriers and damaging Texas’s ability to effectively deter illegal entry into its territory,” the lawsuit states.

“Texas brings this lawsuit to end this ongoing, unlawful practice which undermines its border security efforts,” the suit continues.

“This Court can and should enjoin the federal defendants from continuing to destroy and damage private property that is not theirs—without statutory authority and in violation of both state and federal law.”

Due to the Biden Administration’s deliberate refusal to enforce federal immigration laws, the state of Texas has taken upon itself numerous measures to secure its southern border with Mexico. In addition to the razor wire installed in such locations as Eagle Pass, the state has also set up a massive wall of buoys along the Rio Grande River to deter illegal aliens from crossing the river.

Last month, Governor Greg Abbott (R-Texas) posted a video showing Border Patrol agents cutting away a portion of razor wire, deliberately allowing through a crowd of illegals. Abbott subsequently had the ruined wire replaced.

Federal officials have tried to justify such actions by claiming that illegal aliens can still be on American soil even if they are on the other side of such barriers, and that Border Patrol will still arrest them.

When asked about the lawsuit, a DHS spokesman simply said “we do not comment on pending litigation.”

“Generally speaking,” the spokesman continued, “Border Patrol agents have a responsibility under federal law to take those who have crossed onto U.S. soil without authorization into custody for processing, as well as to act when there are conditions that put our workforce or migrants at risk.”

Paxton released his own statement after the lawsuit was announced: “Americans across the country were horrified to watch Biden’s open-border policy in action: agents were physically cutting wires and assisting the aliens’ entry into our state. This is illegal. It puts our country and our citizens at risk.”

“The courts must put a stop to it,” Paxton added, “or Biden’s free-for-all will make this crushing immigration crisis drastically worse.”

Tyler Durden
Wed, 10/25/2023 – 15:00

Yes, Hamas Is Legally, Morally, & Factually A Terrorist Organization

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Yes, Hamas Is Legally, Morally, & Factually A Terrorist Organization

Authored by Jonathan Turley,

Below is my column in the New York Post on the Associated Press guideline for reporters to avoid calling Hamas a terrorist organization. Voice of America and other media outlets have made the same decision. This is not about supporting the Palestinian cause. It is about correctly describing a group that commits terrorist attacks as a terrorist organization.

Here is the column:

Confucius once said that “the beginning of wisdom is the ability to call things by their right names.”

That does not appear the approach of the Associated Press this week after the media organization told its reporters not to call Hamas fighters “terrorists” after they massacred civilians, raped women, and took a couple hundred hostages from Israel on Oct. 7.

The Voice of America issued its own instruction to avoid calling Hamas “terrorists.”

According to the AP, these fighters are to be called “militants” because the term “terrorist” has “become politicized.”

But there is nothing “politicized” in recognizing that Hamas intentionally targeted civilians, including mowing down unarmed participants at a peace concert.

They burned civilians alive in their homes and raped women.

They intentionally and systemically took civilian hostages, including children and the elderly.

The acts defined the actors. These were terrorist acts and those who committed them were by definition terrorists.

The International Convention for the Suppression of the Financing of Terrorism defines terrorism as “any … act intended to cause death or serious bodily injury to a civilian, or to any other person not taking an active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population, or to compel a government or an international organization to do or to abstain from doing any act.”

The United Nations Security Council specifically includes with this definition “criminal acts, including against civilians, committed with the intent to cause death or serious bodily injury, or taking of hostages.”

Nevertheless, the Associated Press reportedly issued an “Israel-Hamas Topical Guide,” which noted that “terrorism and terrorist have become politicized, and often are applied inconsistently.” Thus “the AP is not using the terms for specific actions or groups, other than in direct quotations.”

This isn’t the first time the AP has made strikingly artificial language choices.

For example, AP reporters were told to avoid using the word “surge” to describe the record number of migrants crossing the border.

Likewise, when there was violence and looting in various cities after the George Floyd killing, AP told its reporters to use “milder terms” like “unrest” rather than “riots.”

Yet when it came to January 6, AP routinely referred to the riot as an “insurrection” (hereherehere).

Notably, in one article titled “Riot? Insurrection? Words Matter in Describing the Capitol Siege,” the AP noted that other mainstream media were using “riot” but also raised the possible terms “sedition” and “coup attempt.”

For the record, I criticized President Donald Trump’s Jan. 6 speech while he was still giving it and wrote that his theory on the election and the certification challenge was unfounded.

I denounced the riot as a desecration of our constitutional process. However, it was not an insurrection, in my view. It was a protest that became a riot.

AP and some other outlets do not want to call it a riot not because it isn’t accurate, but because it is not sufficiently vilifying.

Conversely, the media are often eager to avoid “riot” as too judgmental.

Reporters actually told a chief of police not to use the word “riot” in reference to violence by protesters against police.

Similarly, as billions in property damages were occurring in various cities, Craig Melvin, an MSNBC host and co-anchor of “Today,” tweeted a “guide” that the images “on the ground” were not to be described as rioting but rather “protests.”

He noted, “This will guide our reporting in MN. While the situation on the ground in Minneapolis is fluid, and there has been violence, it is most accurate at this time to describe what is happening there as ‘protests’ — not riots.”

Polls have shown that most of the public view January 6 as a riot.

CBS poll showed that 76% viewed it for what it was, a “protest gone too far.” The view that it was an actual “insurrection” was far less settled, with almost half rejecting the claim, a division breaking along partisan lines.

Obviously, people can disagree, but this would seem an obvious example where the AP would refrain from using the most loaded term of “insurrection” given the legal and factual contradictions in such usage.

The concern is that AP is showing bias in the use of such terms. Journalism schools now teach young reporters to follow an advocacy model in “leaving neutrality behind.”

Likewise, Stanford journalism professor Ted Glasser insisted that journalism needed to “free itself from this notion of objectivity to develop a sense of social justice.”

Recently, former executive editor for the Washington Post Leonard Downie Jr. and former CBS News president Andrew Heyward released their survey of leading journalists and outlets and also concluded that objectivity is now considered reactionary and even harmful.

Emilio Garcia-Ruiz, editor-in-chief at the San Francisco Chronicle, said it plainly: “Objectivity has got to go.”

Downie explained that news organizations now “believe that pursuing objectivity can lead to false balance or misleading ‘bothsidesism’ in covering stories about race, the treatment of women, LGBTQ+ rights, income inequality, climate change and many other subjects.

“And, in today’s diversifying newsrooms, they feel it negates many of their own identities, life experiences and cultural contexts, keeping them from pursuing truth in their work.”

That view was echoed by Kathleen Carroll, former executive editor at the Associated Press, who declared, “It’s objective by whose standard? … That standard seems to be White, educated, and fairly wealthy.”

The response of the public has been consistent and clear: Trust in the media is at an all-time low.

Roughly 40% of the public has zero trust in the media. Likewise, 50% of Americans believe that the media lie to them to advance their own agendas.

Much of that distrust has occurred over what were viewed as false descriptions.

The best example was the “Let’s Go Brandon” incident.

In that case, NBC reporter Kelli Stavast was doing an interview with race car driver Brandon Brown after he won his first NASCAR Xfinity Series race.

During the interview, Stavast’s questions were drowned out by loud-and-clear chants of “F—k Joe Biden.” Stavast quickly declared, “You can hear the chants from the crowd, ‘Let’s go, Brandon!’ ”

“Let’s Go Brandon” has become a type of Yankee Doodling of the media by the public. It reflected an exasperation with framing and revisionism by the media in describing events.

There is no greater disconnect than describing an attack killing hundreds of unarmed civilians and taking hundreds of hostages as the acts of “militants.”

There is wisdom that comes from calling things by the right name. This was terrorism.

Tyler Durden
Wed, 10/25/2023 – 13:00

‘Apocalypse Proof’ Assets Gold & Crypto Jump As Russia Confirms Major Strategic Nuclear Forces Drill

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‘Apocalypse Proof’ Assets Gold & Crypto Jump As Russia Confirms Major Strategic Nuclear Forces Drill

The supposed “Apocalypse proof” assets gold and Bitcoin jumped on a Wednesday nuclear headline that hit the wires quoting Russia’s defense minister who confirmed that Russia will initiate training on nuclear strikes.

“Russia has conducted a major exercise aimed at testing its strategic nuclear forces,” the Kremlin announced, per state media. While this doesn’t mean a nuclear test per se has happened, it does come at this ultra-sensitive moment where major powers have their fingers on the trigger related to the escalating Gaza crisis. US and Israeli defense officials have just said the Pentagon is sending additional anti-air defenses to protect American troops stationed across the Middle East.

Illustration: Coinbase 

And now this from Russia’s military: “The drills involved all three components of the nuclear triad: intercontinental ballistic missiles, nuclear-armed submarines, and strategic bombers, the statement said.”

An explanation of the drills was explained in RT as follows: 

The test also aimed to evaluate the readiness of the military leadership, and its ability to command the strategic nuclear forces, the Kremlin said. All forces involved “followed through” with their tasks, it added.

In the background, the last major post-Cold War era nuclear treaty between Moscow and Washington is on the brink of collapse: New START, with the formal name of Measures for the Further Reduction and Limitation of Strategic Offensive Arms.

Currently, Russia is drafting a bill to revoke its prior ratification of the treaty which banned all nuclear testing. In follow up, Russia’s foreign ministry has stipulated that the military would only resume full-on nuclear tests should the US do the same. Per Interfax, the statement added however that the Russians have “seen signs that the US is making preparations for nuclear testing in Nevada.”

Now with Russia talking nuclear tests sprinkled into the dramatically rising geopolitical tensions surrounding the Middle East, this has sent Bitcoin charging higher, as has been the trend in the last several days of “WW3-style” headlines and punditry…

Gold also gained amid the increased safe haven trend…

According to more from Reuters on the Russian nuclear forces test

“Practical launches of ballistic and cruise missiles took place during the training,” the statement said.

State TV showed Defence Minister Sergei Shoigu talking to Putin about the exercise.

The same Kremlin statement said a Yars intercontinental ballistic missile had been fired from a test site in Russia’s far east, that a nuclear-powered submarine had launched a ballistic missile from the Barents Sea, and that Tu-95MS long-range bombers had test-fired air-launched cruise missiles.

And finally a note from Rabobank, which observes how easily things could go boom [emphasis ZH]…

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There is really so much that can go wrong when several powerful states are playing chess against each other on three different chess boards around the globe. Let’s just hope that none of the participants in this game is on psychedelic mushrooms and tries to pull “both emergency shut off handles, because they think they are dreaming and just wanna wake up”.

Russian Ministry of Defense: The Yars ballistic rocket is launched during the strategic deterrence force drills in Russia on Wednesday.

Tyler Durden
Wed, 10/25/2023 – 12:45

Trump Warns US Is “More Vulnerable From Inside Terror Attacks Than Ever”

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Trump Warns US Is “More Vulnerable From Inside Terror Attacks Than Ever”

Authored by Steve Watson via Summit News,

Donald Trump warned Tuesday that America is more at risk from terror attacks from within than ever before in the history of the country owing to the wide open Southern border.

“With the millions of people that Crooked Joe Biden has allowed into the United States through his ridiculous Open Borders Policy, mostly young men, and large numbers of TERRORISTS, the U.S. is more vulnerable from inside terror attacks than at any time in its history, BY FAR! MAGA,” Trump wrote on Truth Social.

Trump’s comments come after Customs and Border Patrol (CPB) Data revealed the highest ever number of encounters with illegal immigrants attempting to cross into the country was recorded, with close to 2.5 MILLION having crossed the border this fiscal year.

169 probable terrorists were encountered, more then all previous years combined, but with 1.6 million ‘gotaways’, how many just slipped across unnoticed?

The San Diego Field Office Intelligence Division of Customs and Border Protection also released a memo warning that Hamas, PIJ and Hezbollah terrorists are likely crossing into the country:

Data requested by the House Homeland Security Committee’s Republican leadership has also revealed that CBP granted admission to immigrants who were not refugees in 95% of cases:

“Secretary Mayorkas has utterly abused the CBP One app in his quest for open borders,” said Chairman Mark Green (R-TN) in a statement, adding “These numbers are proof that Mayorkas’ operation is a smokescreen for the mass release of individuals into this country who would otherwise have zero claim to be admitted.”

“At a time when global tensions are rising, and our enemies are growing bolder, releasing tens of thousands of these people into our communities — especially when they have not received adequate, if any, vetting — is irresponsible,” Green further urged.

Texas Senator Ted Cruz echoed Trump’s warning of terror attacks Tuesday, noting that “This open border is an invitation for terrorists to come.”

Earlier this week Trump vowed to “keep radical Islamic terrorists the hell out of our country,” adding that he will “immediately restore and expand the Trump travel ban” and “halt all of the refugee settlements to the United States” on “day one” back in office.

“They want to come in, they want to bring the same people that are shooting rockets at Israel, they want to come into the United States. I don’t think a lot of good things are going to happen,” Trump continued, adding “I will implement strong ideological screening of all immigrants. If you hate America, if you want to abolish Israel, if you don’t like our religion — which a lot of them don’t — if you sympathize with jihadists, then we don’t want you in our country and you are not getting in.”

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Tyler Durden
Wed, 10/25/2023 – 12:25