Almost exactly a month to the date of Elon Musk threatening to file a defamation lawsuit against the Anti-Defamation League (ADL), it appears the advocacy group has had a change of mind.

ADL alleged Mr Musk has failed to clamp down on hate speech on the social media platform since his takeover last year, allowing disinformation to proliferate – something Mr Musk strongly denies.

Our US advertising revenue is still down 60%, primarily due to pressure on advertisers by @ADL (that’s what advertisers tell us), so they almost succeeded in killing X/Twitter!

— Elon Musk (@elonmusk) September 4, 2023

Which left Musk with no choice…

To clear our platform’s name on the matter of anti-Semitism, it looks like we have no choice but to file a defamation lawsuit against the Anti-Defamation League … oh the irony!

— Elon Musk (@elonmusk) September 4, 2023

A month has passed and ADL has been quiet – even with the Canadian government cheering on an actual nazi.

But now, perhaps with the threat of discovery looming (and fighting a legal battle against the man with the deepest pockets in the world), ADL has made the decision to back down from the ‘Twitter is full of hate and no one should advertise there’ narrative to a ‘well, it’s not that bad and we are going to advertise to help save the world’ narrative.

ADL issued the following statement: (emphasis ours)

“In light of recent events, it feels like a useful moment to clarify the ADL position on X and its leadership.

“As we have noted in our research over the past several years, X – along with other social media platforms – has a serious issue with antisemites and other extremists using these platforms to push their hateful ideas and, in some cases, bully Jewish and other users.

“We appreciate X’s stated intent over the last few weeks to address antisemitism and hate on the platform. This has been useful; more needs to be done; and, as we have with other companies, in the spirit of collaboration, we are hopeful that we can continue to engage with X on this important matter.

“We want to do so because ADL fights antisemitism, hate, and extremism across all platforms and regardless of party or ideology. We attempt to work with each platform in a constructive manner. We engage with all of them routinely on how to make their platforms better.

“To be clear, any allegation that ADL has somehow orchestrated a boycott of X or caused billions of dollars of losses to the company or is “pulling the strings” for other advertisers is false.

Indeed, we ourselves were advertising on the platform until the anti-ADL attacks began a few weeks ago. We now are preparing to do so again to bring our important message on fighting hate to X and its users.

“A better, healthier, and safer X would be a win for the world. We’ve said that publicly and repeatedly, and we hope that company leadership shares that goal as well. As we do with all platforms, we will credit X as it moves in that direction, and we also will call it out when it has not.

“For over a century, ADL has worked across the political spectrum and with a wide range of companies and organizations to promote tolerance and religious freedom while challenging antisemitism and hate. We know that the vast majority of Americans share these goals.  By working collaboratively with X and other platforms, we endeavor to further this common mission while respecting the Constitutional right to free speech and religious liberty that belongs to all of us.”

So, the fact that ADL is restarting its advertising on the platform implies it is a ‘better, healthier, and safer’ place.

Furthermore, it will be hard for all the other members of the censorship industrial complex to now argue against advertising on X,since if it’s good enough for a group as virtuous as ADL, it must be good enough for everyone.

Elon Musk appears pleased with their decision…

Thank you for clarifying that you support advertising on 𝕏 https://t.co/OeFrumgYt3

— Elon Musk (@elonmusk) October 4, 2023

Authored by Victoria Churchill via RealClear Wire,

Immigration has emerged as a key wedge issue that may cost the Democrats the White House and their U.S. Senate Majority next fall.

According to a Harvard-Harris poll published earlier this month, 71% of registered voters think illegal immigration is getting worse. Democrats made up 37% of respondents to that poll, which means that a critical mass of President Biden’s base is dissatisfied with how his administration has handled the issue. Republicans comprised 36% of poll respondents, and 23% identified as independents. Of those who think illegal immigration is getting worse,12% did not identify as Republicans or independents. Even more damning, however, is the number of Democrats who said illegal immigration is getting worse, which was over half at 53%. 

Biden’s first term has been full of border blunders, from permitting the end of Title 42 to halting the construction of the wall on America’s southern border – even attacking Texas Gov. Greg Abbott for both trying to create physical barriers along the border as well as shipping migrants out of his state.

The number of monthly encounters reported by Customs and Border Protection has steadily increased throughout the Biden presidency, to the extent that the Center for Immigration Studies stated that the most recently available August 2023 border numbers revealed a border in freefall.

Just this week, one Eagle Pass, Texas, processing facility which has a capacity of 1,000 people reported “4,600 people inside waiting to be allowed into the U.S.”

Of course, problems that come across our southern border don’t end there and instead spread all over the country – to the extent that law enforcement officials from across the nation have been saying that every county is now a border county.

Democrat-led states and cities are not immune from the effects of Biden’s border crisis, and regular voters, as well as prominent elected Democrats, are catching on to this. Mayor Eric Adams of New York City – someone who, on paper, should have a great relationship with the president – has distanced himself from Biden on the issue of illegal immigration.

Despite his best attempts to portray a diplomatic and nuanced perspective, Adams has flip-flopped. He has called on the Biden administration to do more to secure the border. So, obviously, he sees the issue as one that is best addressed at the federal level. At the same time, however, he has defended NYC’s sanctuary city status. Under his leadership, his city does not comply with federal immigration enforcement efforts.

Overall, Adams seems to be having a hard time convincing both himself and other New Yorkers that being a “sanctuary city” is indeed worth it.

It looks like the mayor has finally caught on that the influx of tens of thousands of foreign nationals into his city is a bad deal for NYC. Now, he wants to see the Right to Shelter law changed to protect his city from the flood of migrants. Adams doesn’t seem to be on great terms with Biden. The mayor was absent from all public events during the president’s visit to New York last week. Fox News reported at the time that he had not spoken to the president since earlier this year.

Biden is reportedly on better terms with New York Gov. Kathy Hochul, as the two of them did meet last week, yet even she bore the brunt of Biden’s border crisis in her own state when she deployed 150 members of the New York National Guard to help the Big Apple process an unprecedented influx of migrants earlier this week.

During a press conference announcing the move, Hochul, of course, publicly cast blame on congressional Republicans for not making a deal on comprehensive immigration reform, but if polling data is indicative, Americans of all political affiliations are seeing through the spin.

Joe Biden’s approval rating on immigration is 36%, which is 6% less than his overall approval rating of 42%, showing that his immigration record is less popular than his legislative record overall.

If you can’t win over the likes of Eric Adams and Kathy Hochul with your policies, your chance of winning over the rest of your party and expanding beyond your base to swing voters seems particularly slim.

Victoria Snitsar Churchill is a journalist, commentator, and Young Voices contributor. She currently resides with her husband in Northern Virginia. Follow her on X @snits_churchy and keep up with her latest work at American Liberty News.

Authored by Phil Wegmann via RealClear Wire,

Confident and relatively unscathed through two debates, Florida Gov. Ron DeSantis looked and acted like former President Trump’s leading challenger for the Republican nomination. All that is missing now is the frontrunner himself.

Trump skipped the first two debates, and his campaign announced that he will be a no-show at a third, prompting DeSantis to accuse Trump of being “missing in action” and, perhaps even worse in the eyes of Republicans, of following the example of President Biden.

“With all due respect to Donald Trump,” DeSantis told Maria Bartiromo on Fox News last Sunday, “we’re not going to beat the Democrats by adopting Joe Biden’s basement strategy.”

The governor was deliberately refurbishing one of Trump’s favorite attacks, namely that Biden hid from voters and the press during the pandemic, setting up shop in his basement rather than stepping into the spotlight for scrutiny. “I got a guy who stays in his damn basement all day long,” the former president lamented in front of a brimming Virginia crowd in September 2020, “and I’m doing this.”

While the rallies remain a staple, Trump is now the one who will not meet his critics or rebut their criticism “mano a mano,” leaving the DeSantis campaign with the distinct impression that the former president might not be the same debate brawler who so easily bullied the last GOP field. They think he may have lost a step. They clearly hope to prod him into a showdown. Mostly, though, they say voters deserve to hear Trump defend his record directly.

“Whether Donald Trump getting on the stage ends up being good electorally for him or it hurts him in places like Iowa and New Hampshire is kind of irrelevant,” David Polyansky, DeSantis’ deputy campaign manager, told RealClearPolitics. “The larger issue is that every candidate should be held accountable.”

The Trump campaign responded by noting that the Republican frontrunner leads DeSantis in both national and early primary state polling and saying that the former president “is barnstorming the country” while the Florida governor has not visited Iowa in “more than two weeks.”

“He used to be Tiny D, and now DeSanctus [sic] is Micro D. His campaign is going nowhere, as everyone thinks sweater vests with your name on them suck,” senior Trump advisor Jason Miller told RCP in an apparent reference to the sartorial choices of the governor which include name-brand merch.

DeSantis has sharpened his attacks on Trump in recent weeks, reminding a conservative electorate of promises made and promises not kept. Trump may have given an opening when he seemed to admit that his lofty 2016 rhetoric about “Mexico paying for the wall” was never realistic.

“Well, there was no legal mechanism,” Trump told an Iowa crowd, recalling how “I said they are going to fund this wall” before musing, “How do you go to a country and say, ‘by the way, I’m building a wall, hand us a lot of money.’”

DeSantis quickly countered that there was a way to force the southern neighbor to fund the border security of the United States. “Impose fees on remittances sent to Mexico (and other countries) by illegal aliens,” the governor wrote on Twitter, promising that he would do exactly that if elected. “No more bluster,” he added. “Results are all that matter!”

The Trump campaign has swatted away much of that criticism as if it were little more than an annoyance, and while Trump himself once joked that he would watch the debates to scout for a running mate, he now calls on the Republican National Committee to cancel the contests altogether. His senior advisors, Chris LaCivita and Susie Wiles, released a statement late Monday urging the RNC to do as much “in order to refocus its manpower and money on preventing Democrats’ efforts to steal the 2024 election.”

The electorate hasn’t balked at Trump’s unwillingness to debate yet, and with each indictment and arraignment, his standings in the polls have improved. He now leads DeSantis and the rest of the field in the RealClearPolitics Average by more than 40 points,despite never having stepped on a debate stage with any one of them.

Trump has traveled from California to Iowa in recent weeks, and on Monday the former president chose to attend the civil fraud trial against him in New York, even though he was not required to be there in person. A senior DeSantis campaign aide told RCP that Trump was “using the courtroom as a campaign stop.”

Building out the comparison to Biden, who seldom opens his campaign stops up to questions from voters, the DeSantis campaign insisted that the Trump show had grown stale. Crowds listen to the same old “prepackaged” stories from his time in the White House, a DeSantis aide said, as the former president sends “smoke signals” about what he would do with a second term, rather than “answering questions about his record or facing challenges about where he stands today.”

The Biden campaign, meanwhile, prepares to meet a new Trump candidacy the way they defeated the old one. The previous strategy included painting Trump as a chaotic extremist unfit for the presidency. The playbook has been updated to cast Trump as a threat to democracy itself. Biden told ProPublica that he believes “Trump has concluded that he has to win” and that in 2024, MAGA Republicans “will pull out all the stops.”

This kind of criticism from the left is well known by now and little regarded by the right. To the chagrin of his challengers, Trump has not had to face a conservative critique, though. That is, at least not in person. Among other things, DeSantis has hammered the frontrunner for following the advice of Dr. Anthony Fauci during the pandemic and for running up the national debt for four years.

The governor now urges voters not to take a second chance on Trump, arguing that he is unlikely to defeat Biden and that he would be unable to meet the existential challenges the nation faces. If the former president disputes that, DeSantis seems to say, then he is welcome to defend himself on a debate stage. In fact, the DeSantis campaign says, voters deserve nothing less.

“This isn’t something you mail in. This isn’t something you just get. You have to earn our party’s nomination,” Polyansky told RCP. “And if you can’t, or you are unable or unwilling, there’s no way we’re going to win in 2024, and everything we hope to accomplish, not just as a party, but for the country, is defeated. That’s why this is so important.”

Authored by Bobbie Anne Flower Cox via The Brownstone Institute,

If you have not yet read the book 1984 by George Orwell, you absolutely must. 

I loathed that novel when I read it as a teen, because I hated the entire idea of an authoritarian government controlling its people so deftly. The dystopian world it described was just so depressing, so wrong, from the first page to the last. And yet, here we are, almost 75 years after Orwell first penned the book, and we see how that hellish science fiction novel is now playing out before us.

Even the left-leaning Wikipedia describes the book as a “cautionary tale” whose theme centers on “the consequences of totalitarianism, mass surveillance and repressive regimentation of people and behaviours within society.” Modeled on the authoritarian states of Stalin’s Soviet Union and of Nazi Germany, the book takes a deep dive into the role of truth within a society, and the ways in which truth and facts can be manipulated by government to control the population.

What you saw and heard with your own eyes and your own ears, the government denied and demanded you cast it aside and not believe it.

“The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.” 

― George Orwell, 1984

Through the Ministry of Truth, the government (referred to in the book as “Big Brother” or “the Party”) engages in endless propaganda, intense surveillance, and the open and obvious negating of historical fact. Individual thought, and questioning of authority led to immediate persecution. Why deny facts and rewrite history? Well, as Orwell says in the book, 

“Who controls the past controls the future. Who controls the present controls the past.” 

― George Orwell, 1984

Now let’s fast-forward to the present day. I will begin with this profound statement that keeps churning over in my head:

They must really think we are stupid!

The “they” is our government (federal and state). The “we” is you and me, and the other 300+ million Americans across our country.

Alas, here we are, entering the final quarter of 2023, and we have the United States government, and many state governments (including New York’s former Governor Andrew Cuomo, current left-wing Governor Kathy Hochul, and the super-majority Dem legislature) proclaiming for all to hear that they did not force anyone to do anything detrimental these past 3.5 years. UNBELIEVABLE! Did you hear this? They are actually saying with straight faces that they didn’t force you to wear a mask, or lock down and shutter your businesses, or choose between taking an experimental drug or losing your job… Nope! They did none of that. And you – well, you are flat out crazy if you think they did. You are lying. You are exaggerating and totally overreacting. 

Unfortunately for Big Brother, ooops, I mean unfortunately for our 100 percent reliable, never-lies-to-us government, we have actual documents (including lawsuits), news stories, social media posts, and videos of the government at all levels mandating and forcing us to do all of those things, and more. Here’s just one example of Biden himself, the “Big Guy,” mandating the C19 shot:

Biden is not alone. No, no. His entire administration is right there with him. His head of OSHA, Douglas Parker, is also now lying through his teeth about the OSHA mandate that REQUIRED (not suggested) that all employers in the entire nation with 100 or more employees force their employees to get the C19 shot, otherwise they had to wear a mask and test constantly for C19. (That OSHA mandate was struck down by SCOTUS last year because it was unconstitutional, by the way). Then there’s the head of HHS, Xavier Becerra, saying there was never a mask mandate. What?! Another blatant lie. 

Please take the 2 minutes to watch this Congressman Kevin Kiley clip. You truly won’t believe your ears with the bullsh#* these Biden agency heads are spewing! As Congressman Kiley says in the video, the government is trying to tell us that “2 + 2 doesn’t equal 4.” You don’t get much more Orwellian than that!

The Biden Administration is rewriting the history of COVID. Today, the head of OSHA claimed “we didn’t demand that anyone be fired” despite issuing a worker vaccine mandate for 84 million Americans that was struck down by the Supreme Court.

Previously, HHS Secretary Becerra… pic.twitter.com/Pi3O8oUgtt

— Kevin Kiley (@KevinKileyCA) September 27, 2023

Why are they backtracking now? 

Easy answers: 1) they didn’t have the authority to do any of it (all of it was unconstitutional) so they can’t justify and defend it now, and 2) if they can convince you they didn’t do it before, then you won’t mind as much when they do it again. 

This should make your blood boil. It’s particularly infuriating to those of us who were speaking out from basically day one trying to tell people that the lockdowns, the masking, the shots, the limited number of people at your wedding or at your Thanksgiving table were all violations of the Constitution and our basic human rights! My colleague, Jeffrey Tucker, who is the founder and President of Brownstone Institute, where I am a Fellow, wrote an article the other day on this topic. At the end of it, he concluded:

The major media is tacitly conspiring with the political establishment, the corporate sector, and the administrative state to pretend like that fiasco was completely normal and also entirely forgettable, not even worth naming. We did the best we could with the information we had so just stop complaining about it! 

This is not going to work. It is too close to living memory for this level of gaslighting to be effective. The more these official institutions engage in this crazy form of denialism, the more they discredit themselves.

Bobbie Anne, a 2023 Brownstone Fellow, is an attorney with 25 years experience in the private sector, who continues to practice law but also lectures in her field of expertise – government over-reach and improper regulation and assessments.  

Oil prices are plunging overnight as worsening sentiment across markets over the last few days, spurred by a higher-for-longer outlook for global interest rates, has trumped any physical tightness fears even as Saudi Arabia and Russia reaffirmed that they will continue output curbs until the end of the year.

API

• Crude -4.21mm (unch exp)

• Cushing +705k

• Gasoline +3.95mm (+300k exp)

• Distillates +349k (-400k exp)

DOE

• Crude -2.22mm (unch exp)

• Cushing +132k

• Gasoline +6.48mm (+300k exp)

• Distillates -1.27mm (-400k exp)

Crude inventories fell for the 3rd strauight week but stocks at the Cushing hub rose (+132k) for the first time in 8 weeks. Gasoline stocks soared by almost 6.5mm barrels – the biggest weekly build since Jan 2022…

Source: Bloomberg

The Biden admin returned to refilling the SPR last week – adding 300k barrels after the prior week’s drain…

Source: Bloomberg

Stocks at the Cushing hub rose very marginally, keeping ‘tank bottom’ fears at bay for one more week…

Source: Bloomberg

US Crude production was flat at 12.9mm b/d (pre-COVID highs) as the rig count continues to tumble…

Source: Bloomberg

BUT, Gasoline demand continues to plunge, breaking well below 2022 seasonal levels on both a weekly and four-week average basis last week.

In fact, that actually puts it at lowest seasonal level since 1997 and nearly 1 million barrels a day below the 5-year average.

Sky high pump prices are clearly weighing on demand…

WTI was trading just below $87 ahead of the official data and slid lower after…

“Eventually it will be time to ‘sell the recession news’ in oil as demand tends to fall off sharply amid the onset of an economic downturn, but the evidence does not definitively suggest we are at that point just yet,” said Tyler Richey, co-editor at Sevens Report Research.

Jim Jordan (R-OH), the man who said he didn’t want the job, is running for House Speaker to replace Kevin McCarthy (R-INO).

A firebrand Congressional investigator (or angry letter-sender, depending on how you define progress), Jordan was reportedly having conversations with House GOP allies, and will reportedly throw his hat in the ring, Politico reported on Tuesday.

Jordan, who once challenged McCarthy for the speakership before becoming his biggest defender among conservative hardliners, has grown in popularity with the conference in recent years, but some centrists and rank-and-file members may be cool to the idea of his ascension given his role in helping force out former Speaker John Boehner (R-Ohio). -Politico

“We’ve had a lot of people reach out to us, asking me to do it, because I think we can. We’ll see if that happens, but I think I can,” Jordan said Wednesday morning after leaving the Speaker’s Office.

JIM JORDAN coming out of Speaker’s Office, responds to possible speakership bid: “I’ve had a lot of people reach out to us, asking me to do it, because I think we can. We’ll see if that happens, but I think I can.”

— Cami Mondeaux (@cami_mondeaux) October 4, 2023

Jordan has the support of Rep. Thomas Massie (R-KY).

My first choice if he will run:https://t.co/J45HbBnIle

— Thomas Massie (@RepThomasMassie) October 4, 2023

Did talk of ‘Speaker Trump’ convince Jordan to go for the job?

Sean Hannity says Donald Trump has been contacted about possibly being an “interim Speaker of the House” and asks Congressman Jim Jordan if that is a reality. pic.twitter.com/Gy86UjDnRI

— ALX 🎃 (@alx) October 4, 2023

Another name floating around is Rep. Steve Scalise (R-LA), who’s considered a top contender to replace McCarthy.

After July’s 2.1% MoM plunge, US Factory Orders rebounded in August (+1.2% MoM vs +0.3% exp), which managed to pull the year-over-year change in orders into the green (+0.5% YoY)…

Source: Bloomberg

Core factory orders rose even more impressively, jumping 1.4% MoM (vs just +0.2% MoM exp). That’s the biggest MoM jump since Jan 2022, but left core factory orders down 0.9% YoY…

Source: Bloomberg

Excluding Defense, orders grew at only 0.8% MoM as Defense orders jumped 18.6% MoM…

What would America’s economy do without war?

By Michael Every of Rabobank

Yesterday saw chaos in markets. The 10-year US Treasury yield soared 12bp to 4.80%, the highest since June 2007. We were 4.85% this morning, so up 55bp in a month and 97bp in 2023: another month like that and it will hit a high not seen since 2001. Bonds were of course smashed up and down the curve and all around the world, although many markets missed late US selling, which will no doubt carry over into today’s session. Stocks were, unsurprisingly, lower. FX saw EUR sub 1.05 (to think it was 1.12 this summer!) and JPY hit 150, rally, then fade, as the former ‘Mr Yen’ stated it could go to 155 before the BOJ really act, but if it does and the Fed don’t, it could hit 130 – a 25 big figure trading range(!) Oil rose through the session, though at $91 Brent is well below its recent high.

The editorial of our Monthly Outlook is “Errrrr… for longer”, underlining we are both higher and less certain for longer. Indeed, our Rates Strategy team argues bond metrics (2024 Fed Funds pricing, swap spreads, break-even inflation rates, and term premia – now +22bps after years of being negative) overall say uncertainty is at play. Ironically, can we be certain though when these series don’t go back far enough to show this heuristically? (i.e., they haven’t shown what they do when the inflation regime changes upwards, as in the 70s, rather than downwards, as from the 80s, and they failed to predict the sharp falls of 2008 and 2020.) Indeed, why so much sudden ‘uncertainty, and at what point does it mean you sell and run screaming? Isn’t that called ‘panic’?

Our US Strategist Philip Marey argues a Dynamic Nelson Siegel model of three US scenarios —the FOMC’s macro projections; one of higher inflation, and one of stagnation— sees the 10-year:

• Rising to over 5% in 2024, followed by a gradual decline below 4% in the coming years, while staying stuck over 3% for several more;

• Peaking at almost 6.1% in December, then sliding back slowly to about 4.5% – with a projected Fed Funds rate of 7%; or

• Falling alongside Fed Funds, ending at 1%.

That’s “quite the bandwidth”. So, uncertainty, yes: and risks to the upside absent stagnation, as US job openings soar above expectations and initial claims remain stubbornly low.

Or, listen to Rick Santelli arguing we could see the 10-year at 13%(!) due to out of control US federal spending (receipts -5% y-o-y despite inflation, spending +50% from pre-Covid), while stressing it would take a collapse in stocks to get markets to run back to bonds and stay there, as in past decades. (The long-run fiscal dynamic is also dreadful in almost every major economy: even in lucky Australia, see here from Ben Picton.) That this view was aired on US market TV is remarkable. Then again, so is so much else around us – and it justifies the ‘uncertainty’ in markets.

In politics, Republican US House Speaker McCarthy was toppled by a Republican putsch led by Rick Santelli fans. Acting Speaker McHenry could be replaced by Majority Leader Scalise, but the pack of wild cards in a political system that already has impeachment and criminal charges swirling around the sitting president and his most likely 2024 challenger continues to build. This should be setting off fire alarms, but some members of Congress are doing that anyway.   

In geopolitics, there are allegations Iran has been running high-level influence operations on US and German foreign policy, shocking everyone who doesn’t know anything about the Middle East or geopolitics. Ray Dalio warns China-US relations are ‘on the brink of red lines‘, and US tech restrictions parallel the oil embargo on Japan pre-WW2. The UK admits it has no more spare arms to send to Ukraine. Imagine if (another) war starts, as London considers sending its troops to train Ukrainians there, and Russia says they will be targets if so; the US warns Serbian troops to pull back from the border with Kosovo; and others wonder where Azerbaijan might set its sights next, having seized Nagorno-Karabakh. And India is expelling Canadian diplomats, underlining Justin Trudeau’s status as Canada’s Angela Merkel.

In geoeconomics, the BIS argues global value chains (GVCs) are “in the midst of a far-reaching realignment”, which impacts on the price of everything: and up, not down. Detailed data show supply chains are lengthening across the board, with some onshoring, and the US and China drifting apart. However, there still hasn’t been much real diversification yet, and on the risks of a far-reaching fragmentation of the global trading system, the BIS says the entire system being pulled apart –a 1930’s or Cold War Iron Curtain scenario– is “highly implausible.” However, it is still “something we will need to watch carefully.” And given the fat tail risks, markets should too.

Especially when the EU released a list of core technologies it intends to protect for itself (from China), including advanced semiconductors; AI; quantum; and biotech; and EVs(!) Even the freest of free traders is embracing industrial policy and mercantilism, as the Financial Times warns ‘China’s electric vehicles threaten to leave Europe in the dust’, drawing comparisons with the collapse of US firms in the 70s when Japanese cars flooded the market. (On which, please see ‘Europe should prepare for a bumpy ride’, which follows work we earlier in the year arguing Europe underestimated its risks of geopolitical deindustrialisation, leading to stagflationary outcomes.) The US, ahead on that protectionist path, is about to tighten its tech controls vs. China even further, as a political storm rises in Taipei (and DC) after Bloomberg reports Taiwanese firms are helping China’s Huawei evade US sanctions.

That’s all inflationary at the margin as well as lifting ‘uncertainty’ – in one direction. Yet the threads between politics, geopolitics, geoeconomics, and markets can run in unexpected directions, creating more chaos. For example, Japan is now talking about using its official foreign exchange special account (i.e., selling US dollar assets) in order to fund a huge increase in defence spending in the years ahead.

However, try to remain Jung at heart in heeding that psychologist when he notes: “In all chaos there is a cosmos, in all disorder a secret order.”

Without delving into secret realms of unity or the “unus mundus” of absolute knowledge, talking about the Eurodollar vs. BRICS commodities as the base of a global collateral pyramid, pondering what the White House might want that’s different from the Fed, or thinking any line on a screen that doesn’t have much long-run history can predict how history unfolds, it’s easy to see why things are so ‘uncertain’ all over:

The global “collective unconscious” is of every economy being angry and/or wanting things to change – and not by going back to the post-2008 New Normal. That’s the kind of experienced synchronicity and “meaningful coincidence” Jung stressed. Call it term premia if you want though.

Indeed, it’s hard to see how the world becomes more ‘certain’ ahead –i.e., low inflation, rates, yields, and high stocks. That’s the case if you think we are higher for longer; or if we are errrr for longer, or even if central banks are going to err for longer, because the resulting socio-political storm that will follow a policy error on that scale will wash many things we take for granted away.

“There is no coming to consciousness without pain,” as Jung also warns. Take that to heart too.

Authored by Michael Maharrey via SchiffGold.com,

We keep hearing about a “soft landing.” According to government officials, central bankers, and mainstream financial media pundits, the US economy has dodged a recession.

So why are recession warning signs still flashing?

Most major financial institutions and high-profile economists have abandoned or significantly downgraded their recession projections. Those that still still forecast an economic downturn predict it will be short and shallow.

For instance, during the last FOMC meeting, the Federal Reserve upped its economic forecast, characterizing economic activity as “expanding at a solid pace.” It increased its GDP projection for 2023 to 2.1%, more than double its 1% projection in June. Fed economists do expect growth to slow to 1.5% next year, but any talk of a recession is completely out of the discussion.

But one major financial institution still sees a recession in America’s future – Deutsche Bank.

The German bank was the first major financial institution to project a recession in the US, and it’s sticking to its guns.

Deutsche Bank isn’t just making a calculated guess. It has solid data to back up its projection. The bank’s head of global economics and thematic research Jim Reid and a team of economists recently analyzed 34 US economic downturns dating back to 1854 and identified four macroeconomic “triggers” common to past recessions.

Bad news — all four are flashing red.

In its analysis, the Deutsche Bank team calculated the percentage of times these four events led to a recession. They call this the “hit ratio.” Based on their analysis, they determined that no single trigger can predict a recession. Nevertheless, all four of the triggers most commonly associated with US recessions are in play now.

Reid cautioned that it’s impossible to accurately predict every recession using macro triggers.

But it’s fair to say that the most significant ones [triggers] have been breached this cycle and that the US tends to be more sensitive to these historically.”

The Four Triggers

Following are the four triggers identified by the Deutsche Bank team and their hit rates.

An Inflation Spike (77%) — There’s no question that this trigger is in play. Price inflation soared to a four-decade high in the summer of 2022. While it has cooled in recent months, the CPI began creeping up again in July and continued to rise in August.

Reid said the US economy “seems to have the most sensitivity to inflationary spikes.” Since 1854,  a 3% rise in price inflation over a 24-month period caused a recession within three years 77% of the time.

Note that there can be a significant lag in time between the initial inflation shock and the recession.

And while price inflation might be down, it isn’t out. During a recent podcast, Peter Schiff said, “It’s obvious to anybody who opens their eyes that inflation is not topped out and coming down. It’s bottom out and going up. And the people who are blind to this, who are asleep, they are in for a rude awakening.”

An Inverted Yield Curve (74%) —Typically, longer-term bonds offer higher yields than short-term bonds. A 10-year Treasury generally features a lower yield than a 30-year. This is because investors typically factor in more risk on a longer-term loan. When this flips and short-term bonds start yielding more than long-term bonds, it’s called a yield curve inversion.

The US Treasury yield curve has been inverted since July 2022.

Yield curve inversions have preceded a recession 74% of the time since 1854. If you consider a more modern period since 1953, the hit rate increases to 79.9%.

A Rapid Rise in Interest Rates (69%) — To fight price inflation, the Federal Reserve has hiked rates by more than 5% in just 18 months.

Since 1854, a 2.5% increase in short-term interest rates over a 24-month period led to a recession 69% of the time. As Reid put it, interest rate hikes haven’t ended well for the economy. He said, “The US seems to have the most sensitivity to interest rates. The US cycle has historically been more boom and bust than others in the G7.”

That’s likely because the US economy runs on borrowing and spending. It can’t function for very long in a high interest rate environment. Schiff summed it up in another podcast.

The economy is built on a foundation of cheap money. It’s not just the economy; it’s every facet of it. The government, the deficits, the government budget is built on cheap money. And it’s not just the federal government that’s been gorging on this cheap money. A lot of the state governments, municipalities — they’ve all issued a tremendous amount of debt over the last 15 years.”

The last time rates were at this level was in 2006. We know how that ended. But there’s a big difference between then and now. There is even more debt in the economy. Consider that in 2006, the national debt pushed above $10 trillion for the first time. Today, it is more than three times that level.

Oil Price Shock (45%) — The price of Brent crude has spiked by about 33% since June. This has thrown cold water on the “disinflation” narrative.

When oil prices have spiked 25% over a 12-month period, the US economy has gone into a recession 45.9% of the time.

Conclusion

As you can see, all four of these triggers are in play today. This is yet another reason to question the mainstream’s sanguine view of the economy.

As Schiff explained, most people in the mainstream don’t seem to grasp the gravity of the situation. They don’t realize that we are at the beginning of the end of this whole phony economy. He said Fed chair Jerome Powell could put off the implosion in the short run by doing something drastic to change the narrative. That would entail at least hinting at interest rate cuts.

Otherwise, this is going to happen. Whether it’s tomorrow, the next day, or the next week is hard to tell. But what seems apparent to me is that we’re about to go over a cliff. I just don’t know how much more distance there is between where we are now and the edge of that cliff. But we’re going there.”

Pope Francis has once again sparked immense controversy with his widely perceived liberalizing policies and ambiguity related to hotly contested moral issues, this time angering conservative Catholics by appearing to soften the Vatican’s longtime ban on blessing gay couples, as a Wall Street Journal headline revealed this week.

The shift has unleashed a significant degree of confusion within the Roman Catholic world, with some leading conservative clerics and pundits accusing Francis of paving the way for eventual full ‘recognition’ of same-sex unions.

“Pope Francis softened the Vatican’s ban on blessing same-sex couples, saying that priests may use their discretion in giving such blessings, so long as they don’t imply a same-sex union is equivalent to a heterosexual marriage,” the WSJ wrote Monday.

“The pope’s statement, in a letter released by the Vatican on Monday, marks a significant shift in the Catholic Church’s stance on blessing gay relationships. Its release comes on the eve of a major Vatican meeting that will consider possible changes to church teaching and practice on matters such as homosexuality and women’s ordination.” The letter was actually written in July in response to questions privately posed by a group of prominent Cardinals, but has only been revealed this week.

Pope Francis suggested that priests or bishops may possibly bless same-sex couples (which some are interpreting as akin to Catholic recognition of a ‘civil union’) based on “pastoral prudence” and in “certain circumstances”. According to the text: 

But he said that priests, acting out of pastoral charity and not as “judges who only deny, reject, exclude,” should aim to discern “whether there are forms of blessing, requested by one or more people, that do not convey a misconception of marriage.” He added that such pastoral charity should apply even in situations “that from an objective point of view are not morally acceptable.”

The pope suggested that such blessings should remain an unofficial practice, writing that such exercises of “pastoral prudence in certain circumstances need not be transformed into a norm.” 

So for now the pope has articulated that any such “blessing” of same-sex couples should not be interpreted as the equivalent of church-recognized marriage; however, the ambiguity of the language, and fact that it is now being construed as an unprecedented reversal of prior Vatican moral teaching and practice, has outraged the more traditional wing of the Catholic Church which tends to see these subtle shifts articulating ‘openness’ as the proverbial camel’s nose under the tent for major changes and compromise to come.

For example, the prominent American Catholic conservative publication Church Militant has sounded the alarm over the looming change, reporting that multiple doctrines are set to be overturned or at least are “open” to further “study”, including the prohibition against women priests…

POPE FRANCIS OPENS DOOR TO BLESSING SAME-SEX UNIONS — Pontiff allows study on women’s ordination, validity of Anglican orders

Confirmed in newly-published Vatican Papal response to the July dubia https://t.co/kU1vhsJBns

— Church Militant (@Church_Militant) October 3, 2023

The Catholic publication noted that a ban on same-sex blessings was formally reaffirmed as recently as 2021 under his own pontificate: “In what could be a historic watershed, some believe Pope Francis has opened the door to blessing the union of homosexual couples in the Roman Catholic Church, which calls into question a ban on same-sex blessings issued by his own doctrinal watchdog in 2021,” the report says.

Controversy had already been raging for years due in large part to the liberal German Catholic bishops. They have bucked official Vatican teaching and have instead been practicing blessings of same-sex couples. Conservative bishops and priests have meanwhile sought clarification from Rome on the issue. But instead of definitively halting or cracking down on the practice, Pope Francis’ letter has introduced new confusion, and could actually be positively encouraging it.

One commentator on religious affairs has noted in wake of the news, “We have learned through secular experience that the first move is to allow for something but give it a different name, then give it parity, then define it as equally valid or the same thing, then finally make speaking against it illegal.”

And in an similar vein, a prominent Catholic author and commentator Taylor Marshall called it “weaponized ambiguity”. He explores the issue further in the below:

Did Pope Francis just approve Same-Sex Blessings? https://t.co/vhG8gNiDGt

— Dr Taylor Marshall™️ (@TaylorRMarshall) October 3, 2023