After leaving Washington, President Zelensky is in Canada, where entering the House of Commons alongside PM Justin Trudeau he was greeted to loud cheers of “Slava Ukraini”.

Trudeau said this marked a “pivotal moment in history” and said of Zelensky there’s “no better inspiration”. Amid these flowery displays of admiration, Trudeau on Friday announced C$650 million more in military aid to Ukraine, set for a three-year period.

Trudeau also informed parliament, “We are providing funding to support mental health care in Ukraine,” after which the assembly erupted in applause.

He then went after Putin, who he said has broken international norms which “protect our freedom”. He added that “Putin governs with violence and oppression,” but than Ukraine is mounting a fierce defense. “For a lasting peace we must oppose Putin,” he added.

“We are all seeing a rise in disinformation, some state sponsored, some politically motivated that twists facts and refuses evidence and science. In this era of uncertainty, rules are what will protect us,” Trudeau said.

Importantly, the Canadian leader then unveiled the “longer term multi-year commitment” to the value of 650m Canadian dollars ($482m), to included 50 armored vehicles.

He further said Canada’s military is committed to training F-16 pilots and plane technicians, fresh on the heels of the US recently announcing its own program at American bases. According to the itinerary of the rest of Zelensky’s trip: 

After addressing Parliament, Trudeau and Zelensky “will then travel to Toronto, where they will meet with Canadian business leaders to strengthen private sector investment in Ukraine’s future.” Canada has provided more than 8.9 billion Canadian dollars ($6.6 billion) since January 2022, in direct financial aid and military equipment, according to the office.

Ukrainian President Volodymyr Zelensky arrived in the House of Commons to the shout of “Slava Ukraini” and a long standing ovation and cheers.

He was accompanied by his wife, first lady Olena Zelenska, and Prime Minister Justin Trudeau.https://t.co/nLGDVjPPTj pic.twitter.com/AIRtcjYAxs

— The Globe and Mail (@globeandmail) September 22, 2023

Even though last year (Dec. 2022), Zelensky was able to address the US Congress in a major televised speech, he wasn’t given that opportunity this year, at a moment GOP resisters have voiced disapproval for issuing more unlimited Ukraine aid. But Zelensky was given the opportunity Friday to address Canadian lawmakers on Friday in a live televised event, so at least there’s that as a consolation… from Kiev’s perspective.

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

Wastewater COVID levels have shown a decline in recent weeks while the number of hospital admissions due to infections have seen an uptick.

The levels of SARS-CoV-2 virus, which causes the COVID-19 infection, has dropped by 5 percent in the two weeks between Aug. 30 and Sept. 13, according to data from Biobot Analytics, a platform that tracks COVID-19 through wastewater. The presence of the virus rose in the Northeast, Midwest, and West, but declined in the South.

Amy Kirby, team lead for the National Wastewater Surveillance System at the Centers for Disease Control and Prevention (CDC), said in February 2022 that 40 to 80 percent of people with COVID-19 shed viral RNA in their feces, making wastewater and sewage “an important opportunity for monitoring the spread of infection.”

According to data tracked by the CDC, wastewater sites where virus levels rose by 10 percent to 99 percent declined between Aug. 30 and Sept. 12. However, sites where the virus levels rose by 100 percent or more showed an uptrend. The CDC notes that data may be “subject to reporting delays.”

The decline in COVID levels as reported by Biobot and at some wastewater sites per the CDC comes amid a rise in hospitalizations from the infection.

For the week ending Sept. 9, there were 20,538 new COVID-19 hospital admissions across the United States, up from 17,397 admissions for the week ending Aug. 26. It is also more than three times the 6,314 admissions for the week ending June 24.

There was a similar surge in cases between June and September in 2021 and 2022, with the number of hospital admissions being higher at that time.

In an interview with ABC News, Dr. Graham Snyder, medical director of infection prevention and hospital epidemiology at the University of Pittsburgh Medical Center, pointed out that the impact of COVID-19 virus has been “much the same as it’s been for the last year plus.”

“There have been ups and downs throughout the pandemic … but with this uptick, we’re seeing that steady churn pattern again where there’s a mix of variants and the variants are constantly changing and reemerging.”

On Sept. 11, the U.S. Food and Drug Administration (FDA) approved updated COVID-19 shots from Moderna and Pfizer, a decision that has been questioned by some experts. The new vaccines have been approved for use among Americans as young as 6 months old.

Dr. Peter Marks, a top FDA official, insisted that vaccination is “critical” for protecting against COVID-19 hospitalization and death.

However, Florida Surgeon General Dr. Joseph Ladapo questioned the new vaccines. During a press conference, Dr. Ladapo pointed out that there is “essentially no evidence” supporting the use of the updated vaccines.

“There’s been no clinical trial done in human beings showing that it benefits people, there’s been no clinical trial showing that it is a safe product for people. And not only that, but then there are a lot of red flags,” he said.

CDC Director Dr. Mandy Cohen defended the new COVID-19 vaccines, suggesting that comments such as Dr. Ladapo’s are “dangerous.”

“As we head into the fall and winter seasons, it is important that Americans get the updated COVID-19 vaccine. They are proven safe; they are effective, and they have been thoroughly and independently reviewed by the FDA and CDC,” she said in a statement, according to ABC News.

In the Senate, Mr. Vance called for unanimous consent for the act. However, Democrats blocked the motion, “sending a clear signal to the nation that Democrats support the return of mask mandates,” Mr. Vance said in a Sept. 7 statement.

“We cannot repeat the anxiety, the stress, and the nonstop panic of the last couple of years,” he said. “That’s what this legislation is about. End the mandates, end the panic, and let’s get back to some common sense.”

In January 2021, the CDC issued an order which mandated people to wear masks when using public transportation, including on planes. However, this mandate was struck down by a federal judge a year later.

On Sept. 12, Dr. Cohen told local news outlet WCNC that she doesn’t “see any need for mandates or those kinds of things right now.”

“But we have to keep watching this virus, seeing how it changes, and if we need to make other recommendations, we will.”

According to Bloomberg chief economist Anna Wong, online betting markets see a 69% chance of a federal government shutdown starting Oct. 1, when appropriations will lapse if lawmakers can’t agree on a funding bill (in reality, the odds of a shutdown are just about 100%, although after a few weeks all should go back to normal as it always does after people get bored with the theatrics).

What happens then?

According to Goldman, a government-wide shutdown would reduce quarterly annualized growth by around 0.2% for each week it lasted after accounting for modest private sector effects. Goldman’s baseline is that a shutdown could last for 2-3 weeks (the Trump government shutdown, the longest in history, lasted 35 days, from Dec 22, 2018 to Jan 25, 2019).

Meanwhile, Bloomberg Economics estimates a month-long government shutdown could temporarily push up the unemployment rate in October, triggering a popular rule for identifying the start of a recession.

And while the hit to unemployment and GDP growth will reverse once the funding impasse is resolved, Bloomberg’s baseline is for the shutdown to have a mild negative impact overall due to forgone economic activity and uncertainty.

Bloomberg also speculates that in an extreme tail event, the maximum hit to 4Q GDP would be a drag of 2.8% if the shutdown lasts for the entire quarter.

Considering that the current Bloomberg survey median sees just 0.4% GDP growth for 4Q, a shutdown that lasts all quarter would push 4Q growth deep into negative territory, something we first said on Tuesday. However, as noted above, past shutdowns have, on average, been much shorter. The eight government shutdowns since 1982 have lasted an average of two weeks. The longest one — in 2018 — lasted five weeks.

Assuming a two-week duration, the shutdown will knock 0.5% off annualized quarterly GDP growth while it’s ongoing, and raise the unemployment rate by 0.1% in October. The effects will mostly reverse within 4Q once the funding stalemate is resolved, but forgone economic activity and the uncertainty from the shock could produce a net drag of 0.1% on 4Q GDP.

In the scenario of a month-long shutdown — and assuming the unemployment rate remains at 3.8% in September — October’s unemployment rate could increase to 4.0%. That would meet the Sahm Rule threshold for identifying a recession.

At the same time, a shutdown also would affect the Bureau of Labor Statistics’ ability to collect real-time unemployment statistics — potentially affecting the accuracy of those data when they’re ultimately released with a delay (not like that matters since most BLS data is already highly manipulated and “goalseeked”), to wit:

A shutdown beginning Oct. 1 and lasting two weeks — well within the normal range based on government shutdowns over the past 30 years — would likely delay the October jobs report, due Nov. 3. That might tip the scales toward an extended hold for a data-dependent Fed that won’t have all the data in hand.

Bloomberg’s bottom line: In the event of a protracted government shutdown, the FOMC will face a uniquely uncertain economic environment at the Oct. 31-Nov. 1 meeting — and that may convince officials to hold rates steady again rather than hike.

Authored by Steve Watson via Summit News,

Senator Rand Paul doubled down on his staunch opposition to further funding for the war in Ukraine Thursday, blasting the visiting President Zelensky as a leader of a corrupt regime “begging for more money.”

“It’s not even just going to armaments. You realize we’re funding the pension of their government workers and we complain about bloated government here. They’ve got bloated government and they’ve got corruption. And the American taxpayer, people are struggling in our country, are asked to fund it. I think it’s wrong. And I think most of the American people, frankly, are with me,” Paul said during a Fox Business interview.

Paul also noted that Zelensky has cancelled Democracy in the country.

“They’ve cancelled the elections. What kind of democracy has no election?” he noted, adding “next year, Zelensky said he’s not going to have an election because it would be inconvenient during the war and would be expensive.”

He continued, “if you don’t have elections, who in the world will be supporting a country that’s not a democracy? They’ve banned the political parties, they’ve invaded churches, they’ve arrested priests. So, no, it isn’t a democracy. It’s a corrupt regime.”

“The Russians are worse,” Paul noted, adding “But at the same time, we don’t always have to pick some side to be on. But the ultimate reason I’m against this is we don’t have the money. And when we borrow more money, it leads to more inflation, leads to more likelihood of recession in our country. And so we just can’t keep doing it.”

“We are about $1.5 trillion dollars in debt for this year. Over the last three months we’ve accumulated almost a trillion dollars in three months. The total is $33 trillion, so we don’t have like an extra rainy day fund or a surplus we can send them,” Paul further urged.

The Senator added, “We have to borrow the money from China to send to Ukraine, so no matter what your sympathies are in the war, and I am sympathetic to Ukraine fighting off the Russian aggressors, but at the same time I think it’s irresponsible to think about their country before I think about my country.”

Watch:

Earlier this week in the Senate, Paul said that he will hold up any spending bill to fund the government beyond September 30 to avert a shutdown if it includes aid to Ukraine, asking “When will the aid requests end? When will the war end? Can someone explain what victory looks like?” 

Several Biden officials provided answers to Paul’s questions Thursday, basically saying the funding will go on “as long as it takes.”

“One of the points that @JDVance1 raises is that it’s not clear what the exit strategy is — so can you speak to that?”

JOHN KIRBY: “We don’t have American troops in Ukraine”

“We are providing them military aid and obviously financial aid…”

KIRBY: “As long as it takes” pic.twitter.com/MQ0fJHTgHf

— RNC Research (@RNCResearch) September 21, 2023

“What are you telling congressional leaders about how much more aid is needed [for Ukraine]?”

National Security Advisor Jake Sullivan: “War is inherently unpredictable, of course, so I can’t look you in the eye … and predict exactly what’s going to happen” pic.twitter.com/XI9RISY7T9

— RNC Research (@RNCResearch) September 21, 2023

Biden National Security Advisor Jake Sullivan says he’s “not gonna stand here and give a precise figure” on exactly how much taxpayer funding has been spent on aid to Ukraine pic.twitter.com/1TNWSmogIb

— RNC Research (@RNCResearch) September 21, 2023

National Security Advisor Jake Sullivan on U.S. funding for Ukraine: “There’s not a single dollar dollar amount that is necessary for all time. We need funding to keep going” pic.twitter.com/zTKumrtY9i

— RNC Research (@RNCResearch) September 21, 2023

REPORTER: “President Zelenskyy, are you confident that Congress is gonna support your efforts to get this supplemental aid? Did you get any assurances?”

BIDEN: “There’s no alternative” pic.twitter.com/8oy3pte600

— RNC Research (@RNCResearch) September 21, 2023

*  *  *

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On Thursday, Fox News White House correspondent Peter Doocy asked White House press secretary Karine Jean-Pierre: “So, what do you call it here at the White House when 10,000 people illegally cross the border in a single day?”

Jean-Pierre responded, “So, what do you call it, Peter, when [the] GOP put forth a — wait, no, no, no, no, no, you can’t.” 

Doocy then attempted to refine the question as she added without answering the initial question: “We’re moving on.” 

Doocy: “What do you call it when 10,000 illegals cross the border in a single day.”

Jean-Pierre: “What do you call it when republicans…”

Doocy: You’re not answering

Jean-Pierre: “We’re moving on”
pic.twitter.com/rvKDTDLUt9

— Greg Price (@greg_price11) September 21, 2023

Doocy’s question comes as the union representing the US Border Patrol warned: 

“From Sept 1st through 20th the Biden Admin ordered the release of more than 100,000 illegal border crashers-enough to double the population of cities like Yuma, AZ.

“Think about what Biden is doing to this country with his out-of-control border policies. How many millions more?” 

From Sept 1st through 20th the Biden Admin ordered the release of more than 100,000 illegal border crashers-enough to double the population of cities like Yuma, AZ.

Think about what Biden is doing to this country with his out-of-control border policies. How many millions more?

— Border Patrol Union – NBPC (@BPUnion) September 21, 2023

The White House and major left-leaning corporate media outlets have been rush-rush about the worsening border crisis.

Earlier this week, Elon Musk managed to shift national attention to the border crisis after he posted on X, “Strange that there is almost no legacy media coverage of this.” He quoted Fox News’ Bill Melugin’s post that included footage of a “total free fall al in Eagle Pass, Texas, right now.” 

Strange that there is almost no legacy media coverage of this.

About 2 million people – from every country on Earth – are entering through the US southern border every year.

The number is rising rapidly, yet no preventive action is taken by the current administration. https://t.co/EF7HTS1ktT

— Elon Musk (@elonmusk) September 20, 2023

This week’s footage of the worsening border crisis is something progressive media and the Biden administration do not want the American people to see ahead of the presidential election cycle. 

AFRICANS SPILLING INTO MEXICO LIKE WORLD WAR Z ###
pic.twitter.com/hhAabno74V

— The_Real_Fly (@The_Real_Fly) September 22, 2023

If you aren’t aware, the Southwest Border is beyond blowing up. The 2nd train full of illegals arrived – and no one is stopping them.

Biden is inviting illegals to surge the border by providing them special status and ID cards.

He is entirely responsible for this crisis. pic.twitter.com/MnVh1v2Ygf

— 👑💥 Serenity 💥👑 (@polishprincessh) September 22, 2023

Thousands of migrants continue to flood into Eagle Pass, Texas, after the Biden administration was filmed removing razor wire intended to deter illegal crossings.

The mayor of Eagle Pass has declared a state of emergency and is “pleading for help.”pic.twitter.com/hlnZI10djO

— KanekoaTheGreat (@KanekoaTheGreat) September 21, 2023

Texas National Guard soldiers are on the ground in Eagle Pass replacing razor wire the Biden Admin cut yesterday.

Texas will NEVER give up on our efforts to secure the border.#OperationLoneStar pic.twitter.com/yBywlBa8iv

— Mike Banks (@TexasBorderCzar) September 21, 2023

Eagle Pass TX yesterday! How many women and children do you see? This is going to get much worse and our Federal Government is doing nothing about it! And we, the taxpayers will foot the bill for this as well as dealing with the rise in crime if not worse….🤬🤬🤬🤬 pic.twitter.com/3QIrHw31wA

— ⚔Dennis⚔ (@clovis1931) September 21, 2023

Get ready NYC and Chicago! Here’s the next train headed to U.S, this will add to the more than 7K that crossed into Eagle Pass, Texas in last 72hrs. pic.twitter.com/aQIi8ADhfX

— Randy Clark (@RandyClarkBBTX) September 20, 2023

On Wednesday, Texas Governor Greg Abbott declared an “invasion” on the southern border amid the massive influx of illegal migrants.   

I officially declared an invasion at our border because of Biden’s policies.

We deployed the Texas National Guard, DPS & local law enforcement.

We are building a border wall, razor wire & marine barriers.

We are also repelling migrants.

More: https://t.co/dEivr1lL2n pic.twitter.com/hzCl6ouTVJ

— Greg Abbott (@GregAbbott_TX) September 20, 2023

An alleged video shows Border Patrol agents possibly breaking ranks while some say it’s “hard to defend the constitution.” 

Border Patrol Agents ARE BREAKING RANKS!! They Are Questioning Why Isn’t Leadership UPHOLDING THE CONSTITUTION ‼️
‌
Border Patrol Chief “We stay focused we continue to do the job and the mission that we signed up for. We all signed up for it, we all raised our hand.”
‌
BRAVE… pic.twitter.com/yLmzFqwKMg

— Wall Street Apes (@WallStreetApes) September 21, 2023

Biden’s open border policies are not what the majority of voters want and have sparked migrant chaos across major metro areas like New York City. 

It seems as if the fringe progressive minority of elites continue to impose their unpopular and disastrous policies on the majority. 

By Russell Clark of the Capital Flows and Asset Markets substack

Has the Federal Reserve fucked up?

Markets were a bit unsure of what the decisions would be from the Federal Reserve. Looking at monetary policy history, they would have seemed wise to pause interest rates increases. Looking at the US bond market, with it deeply inverted, this has typically been seen as a sign of “over-tightening” by the Federal Reserve. The 2 year to 10 year spread is its most negative since the 1970s, and previous bouts of yield inversion have preceded financial problems.

And if you look around, there are loads of indicators that show the economy is beginning to roll over. US quits rates is one, but you have a huge choice in indicators to choose from to be honest. And with lag in monetary policy effects, it is easy to understand why the Federal Reserve chose caution over action.

The economics and the back testing all tell you, now is the time to buy long dated bonds. Many market commentators also recommend bonds. And the market has responded. Inflows into TLT have been huge, even as TLT itself has been poor.

The problem with this analysis is not the economics, but the politics. If you think the US government is fully ok with rising unemployment, and/or constrained by fiscal deficits, and will act to reduce these deficit, then buying bonds is completely rational. The problem is that you know that the next Presidential election will be contested between Trump and Biden. Both are proven spenders. There is no more austerity in US politics because Trump proved it’s a losing electoral strategy, just as Reagan and Thatcher proved austerity in the 1980s could be an election winning strategy. In a new pro-labor world, central banks have to act as a restraint, and when they don’t the bond market rebels. You can see despite the pause, the 30 year US treasury yield hit new highs.

This is of course a problem, as the US housing market feeds directly off the yield on the 30 year Treasury. The Fed “pause” actually will do nothing much for the economy. I am fairly convinced we have moved back to a big-government, pro labor world, which puts the long end of the yield curve in a bear market. Buying at 4.5% makes very little sense to me. In reality, long dated Treasuries are a structural short, and I read steep inversion as a sign that it is a good time to short! An inverted yield cure, means you can sell a 30 year Treasury, put the proceeds in cash, and make a positive spread!

When I think about interest rate policy, the pressure not to increase rates must be intense. The amount of wealth that has been built on transforming credit to equity is vast, and where there is money, there is political power. But the votes are no longer with the wealthy, they are with the poor, so policy is pro-labor for as far out as I can see. My preferred trade of long GLD/Short TLT also took out new highs on the Fed pause.

One other trade I recommended for a new pro-labour world was Japanese banks. They continue to steam ahead. Historically speaking they have tended to act as deflationary canaries in the mine. Japanese banks are not point to an imminent slowdown requiring interest rate cuts!

In the new political environment, central banks need to be aggressive to keep inflation under control. The pause is already been seen as a mistake by bond markets. I expect the Fed to resume raising rates shortly. I ultimately suspect treasury yields get back to double digits.

Russia’s Defense Ministry (MoD) has confirmed that the headquarters of its Black Sea Fleet in Sevastopol was damaged in a Ukrainian attack Friday.

The MoD said the strike was conducted by multiple missiles, but that anti-air defenses intercepted the majority of them. There was damage to the “historic building” which houses the navy HQ, but few other details were given. One military service member remains missing, according to the initial statement. This suggests there were potentially multiple casualties, but the MoD statement didn’t give these details.

“The serviceman was not killed, but is missing,” the statement said as a search is underway, as presumably there’s debris and wreckage being investigated. 

Citing Crimean Governor Sergei Aksyonov, one report details: 

Video shared by anonymously run channels on the Telegram messaging app showed charred columns and smoke coming out of a building identified as the Russian Navy’s headquarters.

Razvozhayev said emergency crews were fighting to put out the fire that broke out at the headquarters, but added that no civilian infrastructure in the area had been damaged.

The governor has told area residents to be on the alert given that more attacks could be coming. In the hours after the attack, the movement of public transport was restricted in Sevastopol.

Video of the smoke from the strike recorded in Sevastopol pic.twitter.com/RyfS9UWACk

— Dmitri Alperovitch (@DAlperovitch) September 22, 2023

TASS indicated that wreckage after the missile attack is scattered over hundreds of meters, and a large emergency response followed.

Ukraine’s military is owning up to this fresh attack on Crimea, in a rare acknowledgement accompanies with the threat of more to come:

In an apparent acknowledgement of Ukraine’s responsibility for the barrage, the country’s air force commander posted a video of air sirens blazing and smoke rising from the building along with a message thanking the pilots.

“We promised that ‘there will be more,'” Lt. Gen. Mykola Oleschuk said.

Despite the attack doing nothing to change the reality of the front-line situation, Kiev’s supporters are also hailing a ‘victory’:

In 10 days, Ukraine:
1. Destroyed a submarine and a warship by hitting a Sevastopol dry dock
2 . Reopened unilateral commercial shipping to Odesa
3. Hit a Sevastopol bunker with the back-up Black Sea Fleet HQ
4. Struck the main HQ in central Sevastopol. https://t.co/6YgmhaoTJU https://t.co/D9USYzvlUw

— Yaroslav Trofimov (@yarotrof) September 22, 2023

Ukrainian sources have previously suggested there’s a psychological operations component to these attacks – to keep the population in fear and in turn increase pressure on the Kremlin.

Crimean authorities have urged people in the Sevastopol area to “Please remain calm” and have assured “The situation is under the control of the emergency services.”

By Benjamin Picton, Senior Macro Strategist at Rabobank

How Often Do You Think About The Empire?

There is big news today that ex-Australian media titan Rupert Murdoch is stepping down as Chairman of News Corp. He is to be succeeded by son Lachlan who, having served the longest apprenticeship since Prince Charles, will take over as sole Chair of News Corp and continue on as Executive Chair and CEO of Fox Corporation. The Murdoch family’s grip on the legacy media landscape lives rent-free in the heads of many, and speculation over the eventual passing of the baton has even spawned an Emmy award-winning TV series. So, how often do you think about the Empire?

The question has become a light-hearted social media sensation, but in a world of geopolitical fragmentation, empires matter. Wannabe Tsar (a derivative of ‘Caesar’) Vladimir Putin raised eyebrows in June last year by comparing himself to Peter the Great. “It seems it has fallen to us, too, to reclaim and strengthen” he said. The process of “reclamation” continues as the war in Ukraine grinds on, and Putin fired a new shot at the West overnight by imposing a ban on exports of diesel and petrol. This saw front month European gasoil futures surge by 4.5% yesterday, but they have fallen back again by around 2.7% in early trade today. The Russian ban compounds the problem of an already tight market for refined products that has been driven by hot weather, reduced refining capacity and Western embargoes on Russian crude supplies.

The timing of the ban coincides with the decision by erstwhile Imperial institution the Bank of England yesterday to leave the official bank rate unchanged yesterday for the first time since November 2021. A majority of analysts surveyed by Bloomberg had expected the Bank to lift rates by 25bps to 5.50% but the Monetary Policy committee ultimately voted 5-4 against a hike. The decision probably swung on the softer than expected CPI inflation figures for August that were released earlier this week. Those numbers saw core inflation fall to 6.2% YoY and the headline number decelerate to 6.7% after a merciful fall in food price inflation. Motor fuels were the largest upward pressure on the headline number though, and Russia clearly isn’t helping on that score.

The BOE hold followed a decision earlier in the week from the US Federal Reserve to leave the upper bound of the Fed Funds rate unchanged at 5.50%, a move widely expected by surveyed analysts (including us). Despite holding at this meeting, the Fed upgraded its dot plot forecasts on the trajectory of interest rates and has maintained its bias towards another hike in 2023. The median of the FOMC dot plot is now well north of the OIS curve for 2024 and 2025, and the prospect of higher rates has been received poorly by equity markets. The S&P500 has lost 115 points so far this week as the higher for longer narrative gets priced in and increased geopolitical tensions threaten to roll back the frontiers of the empire of American capital.

There was a point of difference in the world of central banking this week from the Rijksbank and Norges Bank. Both central banks hiked rates by 25bps, following a similar decision by the ECB last week. Rijksbank projections suggest that Swedish rates may have now peaked at 4%, but there is a slight tightening bias implied by the projected peak in the rate path of 4.10%. The Norges Bank was more explicit, raising the outlook for the peak in its policy rate from the current policy level of 4.25% to 4.5% through 2024. Here again the “higher for longer” narrative applies.

Higher for longer is undoubtedly an unpopular meme, and financial markets remain slow to accept it if rates curves are any guide. Even so, we are now seeing 10-year treasury yields at the highest levels this side of Western capitalism’s near death experience 15 years ago, leaving the “rate cuts soon!” brigade of equity managers and real estate spruikers asking “Quo Vadis?” while overleveraged governments and households say “et tu, Brute?”

How sustainable is this with the immense debt loads that we are currently carrying? What will happen once US student loan repayments resume next month for the first time in 3 years? Can equity and real estate valuations continue to defy the most rapid rate tightening cycle in living memory? In so many ways it feels like the barbarians are at the gates.

Undoubtedly, the unpopularity of higher rates is the main reason why they are the exclusive domain of an unelected technocracy. Central bankers are a modern breed of Optimates, while Tribunes of the Plebeians like former President Trump burnish their Populares credentials by promising to force rates lower. In this respect, as with all things, life boils down to the basic question: are you for Caesar? Or the Senate?

Think about that.

Update (1021ET):

United Auto Workers boss Shawn Fain said, “Today at noon Eastern time, all of the parts distribution facilities of GM and Stellantis are being called to stand up and strike.” He said there will be strikes at 38 locations across 20 states. 

*   *   *

Update (1018ET):

United Auto Workers boss Shawn Fain said, “Ford is serious about reaching a deal,” but “It’s a different story at GM and Stellantis.” 

*   *   *

Update (1004ET):

United Auto Workers boss Shawn Fain is set to speak with union members momentarily.

Fain is expected to “announce progress at the bargaining table with Ford Motor Co., an indication the union may not expand its strike targeting the automaker,” according to Bloomberg, citing sources. 

As for the other automakers, Fain is expected to target six more General Motors and Stellantis plants (in Michigan). 

*   *   *

The head of United Auto Workers, Shawn Fain, warned General Motors Co., Ford Motor Co., and Stellantis NV earlier this week that strikes would expand on Friday – if offers for a new four-year labor contract were not increased to ‘satisfying levels.’ 

Fast forward to Friday morning, UAW boss Fain is expected to address all 146,000 members via Facebook Live event around 1000 ET. He is expected to reveal the union’s next steps in broadening strikes at automakers’ manufacturing plants.

“Either the Big Three get down to business and work with us to make progress in negotiations, or more locals will be called on to stand up and go out on strike,” Fain said on Monday. 

A Deutsche Bank note shows the automakers have offered around 20% pay hike increase over a new four-year labor contract. There have been no new offers by automakers this week. UAW pay hike demands are still around 36%, indicating a very large gap in talks. 

Bloomberg noted, “An expanded strike could ratchet up pressure on the carmakers to reach a deal. Fain’s strategy has been to keep the companies guessing about his next move. But more members walking on also poses a risk to the union in the form of a diminished strike fund.” 

Deutsche Bank shows the union’s strike fund had $825 million at the start of the strike one week ago. 

The pressure is on for automakers and the union to find common ground at the bargaining table. Morgan Stanley’s auto strategist, Adam Jonas, revealed in a note to clients this week, “The value of N. American light production of the D3 (F, GM, STLA collectively) is approximately $750mm per day (approx. 15k units per day). Applying slightly more than a 30% decremental (yes, mix is that high) implies around $250mm of lost profit per day (assuming 100% of production impacted).”

We’ve pointed out that automakers have already responded with layoffs of non-striking workers (see here & here). 

The ball is in Fain’s court today. 

By all accounts, Zelensky came away from his Washington visit with nothing new. Biden did announce a fresh $325 million aid package for Ukraine from already committed funds, but the hoped-for long range missile approval never came (however, more cluster bombs are being sent). And as we detailed Thursday, House Republican leadership once again failed to move forward on a mere procedural vote for the Pentagon funding bill, due in large part to GOP members rejecting Biden’s proposed $24 billion more in Ukraine aid.

Thursday’s package announced by Biden, as Zelensky visited the White House and Capitol Hill, was run-of-the-mill and entirely to be expected. “Today I approved the next tranche of U.S. security assistance to Ukraine including more artillery, more ammunition, more anti-tank weapons and next week, the first U.S. Abrams tanks will be delivered to Ukraine,” Biden said.

As for the earlier in the day (Thurs.) meeting with Congressional leaders, House Speaker Kevin McCarthy explained when asked why the Ukrainian leader’s request to address Congress was denied, “Zelensky asked for a joint session, we just didn’t have time. He’s already given a joint session.”

Instead in a closed-door meeting, Zelensky later acknowledged he discussed with lawmakers “the battlefield situation and priority defense needs.”

But if there is any level of consolation for Kiev, it’s seen in the Pentagon announcement which came late in the day Thursday. Facing potential US government shutdown on Oct.1st, given at this point Congress is not expected to pass the 12 appropriations bills needed to fund government operations before next fiscal year, the Pentagon has said it will exempt its operations supporting Ukraine from a shutdown. 

The military typically suspends any activities not deemed vital to national security during government shutdowns, thus the DoD is in effect saying Ukraine aid remains “vital to national security”. 

“Operation Atlantic Resolve is an excepted activity under a government lapse in appropriations,” Pentagon spokesman Chris Sherwood told Politico, in reference to the operational name still used for actions supporting Kiev.

But Politico points out a potential shutdown would still negatively impact US support to Ukraine:

Sherwood noted that while DOD’s activities related to Ukraine will continue, furloughs and other activities halted under the shutdown could still have a negative impact.

“Training would happen, but depending on whether or not there were certain personnel that were not able to report for duty, for example, that could have an impact,” said Pentagon spokesperson Brig. Gen. Patrick Ryder on Thursday.

This Pentagon exemption to keep Ukraine-related support active during a government shutdown seems to be the only significant thing Zelensky came away with. 

Zelensky visited the US in person, made a speech at the UN, and came home with an amount of ammo so small the Pentagon won’t give numbers and a handful of the worst air defense systems currently in use by a major power.

In the Army we called this “getting thrown under the bus.” pic.twitter.com/f8hFVstDud

— Armchair Warlord (@ArmchairW) September 22, 2023

It appears to have been the main object of discussion when Zelensky met with Secretary of Defense Lloyd Austin in Washington during the trip. The Pentagon said this was “to reaffirm the steadfast US support for Ukraine.”

Meanwhile, Bloomberg takes note of Zelensky “showing the strain” amid increasing divisions among allies:

The Ukrainian president allowed a dispute with one of his biggest allies to spin out of control at the United Nations General Assembly this week, and that’s just a hint of the tensions building behind the scenes.

Zelenskiy has been leading his country through Russia’s brutal assault for 19 months, all the time fighting on another front to wring the weapons and finance he needs from his US and European supporters. Now he suspects that President Joe Biden’s commitment is wavering and other leaders may be taking their cue from the US, according to a person who met with him recently.

He grew very emotional at times during that discussion, the person said, and was scathing in his criticism of nations that he said weren’t delivering weapons quickly enough.

Washington’s lackluster greeting of Zelensky this week (compared to how he was received in December 2022) came simultaneous to Poland declaring it will no longer arm Ukraine, amid a fierce diplomatic spat over blockage of Ukraine grain imports by Warsaw, to protect Polish farmers.

The Economist is also taking note of the significant mood shift among Western allies…

A “long war” indeed… given a G7 leader from a European country has told reporters this week that the West is prepared for a years-long war, something likely to last some six or seven years, according to the quote.

“A senior official from one European G-7 country said the war may last as much as six or seven more years and that allies need to plan financially to continue support for Kyiv for such a long conflict,” Bloomberg wrote.