“Who’s The Next Incremental Buyer?” – Options Market Signals Doubts Rising Over AI Bubble
With Melius Research (who?) writing a note this week asking (and answering) “Dare We Say Nvidia Is Now Cheap?”, we couldn’t help but get that feeling that investors may have jumped the shark on the AI bubble (now that NVDA’s Q2 earnings are behind us).
Of course, there are plenty of superlatives surrounding the AI new world order:
“OpenAI is currently on pace to generate more than $1 billion in revenue over the next 12 months from the sale of artificial intelligence software and the computing capacity that powers it. That’s far ahead of revenue projections the company previously shared with its shareholders, according to a person with direct knowledge of the situation,” according to The Information.
That’s quite a jump from the $28 million in revenue that OpenAI generated last year (before it started charging for its groundbreaking chatbot, ChatGPT), and the billion-dollar revenue figure means that the recent $27 billion valuation does not look that crazy anymore.
However, a quick glance at publicly-traded companies benefiting from this trend shows – at a minimum – the fervor of future spend is being pulled forward.
As every CEO and his pet rabbit drops the two most important letters – A and I – in talks with investors and media.
We went from ~500 mentions of AI on earnings calls in 2015 to ~30,000 this year and we still have 4 months left.
But, dare we say it, the froth may be coming off that soy, non-fat, skinny vanilla cappuccino as Bloomberg reports the heavy call-buying of high-flying technology stocks has tapered off, ushering in a more normal options-market dynamic for the biggest names in artificial intelligence.
The regime-change is most clearly seen in the so-called options-skew (difference between the cost of upside and downside bets) for a number of the highest profile AI-beneficiaries.
As excitement mounted in June and July, AI-mania flipped the norm (of puts costing more than calls) on its head with the cost of calls on MSFT, AMZN, NVDA,TSLA, and META generally rising more than put options (gren shaded box), according to data from Nations Indexes.
However, in recent week, things are looking a bit more normal, and calls are back to a discount for most of those companies.
“Tech was in a mini bubble, and AI was in a legitimate full-on bubble in June and July,” said Scott Nations, president of Nations Indexes.
“Now, people realize that we’ve seen bubbles before.”
There is an exception – Nvidia. Calls still cost more than puts, but the gap is narrowing, signaling that the mania over the S&P’s top gainer of 2023 is subsiding, at least a little.
In fact, since the chip giant’s blowout earnings spike, it has been unable to extend gains (most notably stalling at its call-wall around $500)…
Indeed, tech might be running out of buyers.
As Amy Wu Silverman, head of derivatives strategy at RBC Capital Markets, warns, chatter of clever chatbots may not fuel stock rallies forever. Eventually, investors will look for signs of progress.
“Unless some other incremental AI news happens, I’m curious who the next incremental buyer is,” Silverman said.
“Retail was actually on this relatively early and had always been on this and then got the institutions – who had started this year fairly bearish and worried – essentially capitulate and have to go in. The bar is higher because who else has to go in now?”
In other words, the retail bagholder is not there for the pros to dump it to – because everyone’s already filled their boots… which explains why puts are suddenly more bid than calls.
The U.S. Treasury and the IRS have proposed new reporting requirements for digital asset brokers like cryptocurrencies and NFTs in an attempt to “crack down on tax cheats” and help citizens assess tax dues arising from such asset transactions.
Regulations “would require brokers of digital assets to report certain sales and exchanges,” the U.S. Treasury said in an Aug. 25 press release. The proposed regulations “is part of a broader effort at Treasury to close the tax gap, address the tax evasion risks posed by digital assets, and help ensure that everyone plays by the same set of rules.”
Brokers would be required to report on the sale and exchange of digital assets in 2026 for activities that took place during the prior year.
In an Aug. 25 press release detailing the new proposed regulations, IRS Commissioner Danny Werfel said that a critical part of the rules is that it “fits in with the larger IRS compliance focus on wealthy taxpayers.”
“We need to make sure digital assets are not used to hide taxable income, and the proposed regulations are designed to provide a clearer line of sight into activities by high-income people as well as others using them,” he said.
“We want to make sure everyone pays what they owe under the tax laws, and our research and experience demonstrate that third-party reporting improves compliance.”
A Barclays analysis released last year estimated that the IRS could be missing out on more than $50 billion annually due to crypto traders not paying their taxes.
The new rules will also help taxpayers in filing their returns, the Treasury stated.
Under current laws, citizens owe tax on gains made on the sale or exchange of digital assets and can deduct losses on such activity. However, “for many taxpayers it is difficult and costly to calculate their gains.”
The proposal would require that digital asset brokers “provide a new Form 1099-DA to help taxpayers determine if they owe taxes, and would help taxpayers avoid having to make complicated calculations or pay digital asset tax preparation services in order to file their tax returns.”
“These regulations align tax reporting on digital assets with tax reporting on other assets, and, as a result, avoid preferential treatment between different types of assets,” the treasury stated.
The agency cited figures from the Joint Committee on Taxation (JCT) which estimated that the new rules could raise almost $28 billion in revenues for the government over a decade.
Taxpayers and Crypto Holdings
In addition to digital asset brokers, the proposed regulations would also require those engaged in real estate activity, including brokers, title companies, and mortgage lenders to report the use of digital assets as payment in real estate transactions. The rule will apply to transactions that close on or after Jan. 1, 2025.
The newly proposed regulations come as the IRS has been increasing its focus on digital assets. In recent years, the agency has asked taxpayers filing 1040 forms about their crypto holdings.
“At any time during 2022, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, gift or otherwise dispose of a digital asset (or a financial interest in a digital asset)?” the IRS asked on the form for the 2022 tax year.
The questions had a “yes” or “no” option.
The IRS insisted that the question “must be answered by all taxpayers, not just those who engaged in a transaction involving digital assets in 2022.”
The proposed regulations stem from the Biden administration’s $1 trillion Infrastructure Investment and Jobs Act of 2021, which included a provision aimed at boosting tax reporting requirements of brokers who transact in digital assets.
The Treasury and the IRS are welcoming comments and feedback on the proposed regulations that will be accepted until Oct. 30, 2023. A public hearing has been scheduled for Nov. 7, 2023, with a second hearing on Nov. 8.
Industry Experts React
The new requirement has attracted mixed reactions from industry experts.
“If done correctly, these rules could help provide everyday crypto users with the necessary information to accurately comply with tax laws,” Blockchain Association CEO Kristin Smith said in an Aug. 25 statement.
However, “the rules must be tailored accordingly and not capture ecosystem participants that don’t have a pathway to compliance,” she added.
Lawrence Zlatkin, the Vice President of Tax at cryptocurrency exchange platform Coinbase, criticized the proposal.
“The sheer magnitude of this data requirement would be hundreds of times more than the annual reported transactions of any major brokerage—and goes well beyond the scope of pursuing wealthy tax cheats,” he said in a statement, according to Bloomberg.
“The practicality of the IRS’s requirement to report—let alone enforce—this incredible minutia of taxpayer data is questionable at best.”
Miles Fuller, head of government solutions at crypto tax software company TaxBit, pointed out that there will be an “immediate investment cost” that digital asset brokers will have to shoulder in order to implement the proposed regulation.
“But the longer term outlook in my view, is good for the industry because it’ll help bring more mainstream adoption.”
US Consumers Paid For July Spending Spree By Burning Through $150BN In Savings
Ahead of the August consumer debacle which saw – and continues to see – most retailers report dismal earnings and plunge by double digits on the back of dreadful “recent trends” commentary…
“This is about credit card balances. This is about student loans, which we know is going to come into focus in the next month or two, auto loans, mortgages,” said Adrian Mitchell, who is Macy’s chief financial officer and chief operating officer. “So we just believe that the customer is coming under pressure because these are new realities that they have to continue to deal with as we get through the back half of this year and move into next year.” – Macy’s Crashes As Consumer Situation Deteriorates
… July was a blockbuster month for retail names, or as Goldman put it “the best month for the quarter“, with the Dept of Commerce reporting stellar retail sales data, including the biggest monthly increase since January, largely on the back of Amazon’s record sales on Prime Day.
What we didn’t know is where all the purchasing power to fund this blow-off top spending spree had come from: recall that at the start of the month, we reported the latest consumer credit data showed that in the month of June, there was a shocking reversal in credit card spending (in fact, consumers were net paying down their credit card debt for the first time in two years) which suggested that US consumers had just maxed out their credit cards and would no longer be able to fund their purchases on credit, which prompted us to caution that households are now aggressively tapping into their savings.
We were right: as today’s household income and spending data showed, in July the US household savings rate collapsed by a whopping 0.8% from 4.3% to 3.5%, the biggest one-month drop since the start of 2022.
In dollar terms, the total amount of personal savings collapsed by almost $150BN from $852BN to $706BN SAAR, the biggest one month drop since Jan ’22.
Worse, this rapid savings depletion comes at a time when according to JPMorgan the “excess savings” from the post-covid stimmy bonanza, all $2.1 trillion of them, have finally been depleted.
In our kneejerk comment on the data, we said that “this is where the July spending spree came from: US Savings rate COLLAPSED from 4.3% to 3.5% in July, lowest since Nov 22, and biggest drop since Jan 22.”
Two hours later, Obama’s top economist Jason Furman echoed what we said, tweeting that “Falling real disposable income and rising consumption in July are reconciled by a step down in the saving rate. I like to smooth over 3 months, is still quite low.”
It is not just lower saving rates but other measures of consumer stress are worsening: higher borrowing, more delinquencies. I keep expecting real consumer spending growth to slow more than it has–but so far is holding up remarkably well.
The bigger problem, as we have repeatedly warned, and as Furman also echoed is that “It is not just lower saving rates but other measures of consumer stress are worsening: higher borrowing, more delinquencies. I keep expecting real consumer spending growth to slow more than it has–but so far is holding up remarkably well.”
Indeed, however once consumers realize they have to spend several hundred dollars each month on their student loans which are again due and payable, expect all hell to break loose as soon as next month.
GOP presidential candidate Vivek Ramaswamy spoke in length recently about his opinions on the deep state and how he would go about opposing it, calling U.S. politicians “puppets” and “hollowed out husks” serving a ‘globalist machine‘.
During the podcast appearance with Shawn Ryan, Ramaswamy noted “It’s a machine that we’re up against. If we think it is individual, person-to-person combat, like: ‘We found the bad guys of the globalist cabal, we got ’em smoking cigars in the back room,’ that is the wrong mental model. That’s how it worked in the old world.”
“What we have today going on in the U.S. is a modern 1775 moment,” he explained, adding “In the old world, there were a group of people who got together in the back of palace halls and determined what was right for the rest of society. The old world vision, and it is rearing its head again in this country today.”
Ramaswamy emphasized that the attitude of that vision is that “We The People can not be trusted to sort out our differences through free speech and open debate in a constitutional republic, on how we fight climate change or racial injustice. It has to be decided in the back of palace halls by an enlightened elite.”
“We fought a revolution to say hell no to that vision, that yes, We The People in this constitutional republic decide how we self-govern, thank you very much,” he continued.
“Now that old monster is rearing its head again, except now they say it is in the back of palace halls like a three-letter government building in Washington D.C. But you show up there and it isn’t quite right, there’s no smoking cigars,” Ramaswamy added.
“So you say, maybe it is the corner office of BlackRock in their C-suite on Park Avenue. It is woven into a machine of a horizontal managerial class composed of people in three-letter agencies in government, the people who professionally sit on corporate boards, the associate deans of god knows what universities, the ambassadors to some second-tier nation in Europe who was a donor to some political party, it is the same managerial class that makes it very hard to identify because it pervades multiple institutions both within and without of government. That’s what we’re up against,” Ramaswamy asserted.
“The real divide in the country is not between Republicans and Democrats… It is between the managerial class and the citizens,” he further urged.
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The U.S. Centers for Disease Control and Prevention (CDC) has responded to speculation that the agency could be bringing back mask mandates on public transportation or in federal officials.
A spokesperson for the CDC told The Epoch Times on Aug. 29 that COVID-19 hospital admission levels “are currently low for more than 96 percent” of the United States, but that the agency recommended that transportation workers, travelers, passengers, and others get the COVID-19 vaccine “before they travel.”
“Anyone may choose to wear a mask in crowded or poorly ventilated indoor areas, including on public transportation and in transportation hubs at any time,” the CDC spokesperson said.
The agency also doesn’t currently have any mandate in effect, and the “CDC’s advice for individual and community actions around COVID-19 are tied to hospital admission levels,” the spokesperson said.
Earlier this week, a CDC spokesperson told NBC News that there have been no agency discussions about bringing back mask mandates, which comes as a handful of hospitals and offices around the country started reimposing them this month. There has also been speculation that federal officials may bring back mandates or even push for lockdowns, similar to what happened in 2020.
At the same time, the CDC hasn’t issued any updated guidelines regarding mask mandates on its website.
About a week ago, a report from Alex Jones’s InfoWars claimed that a high-level Transportation Security Administration (TSA) official, who wasn’t named, informed him that lockdowns and mandates would be coming back in the fall. That person cited discussions among agency officials as the basis for his claims.
However, a spokesperson for the TSA told The Epoch Times on Aug. 25 that those claims are false and that the agency “does not have any new requirements and there has not been any meeting on the topic.”
While the “TSA has authority to impose mask-related requirements to implement mask orders from the CDC related to transportation systems,” the “TSA is not imposing mask-related requirements at this time,” the agency stated.
Benjamin Haynes, a spokesperson for the CDC, told The Associated Press at about the same time that reports of upcoming lockdowns are “utterly false.”
Over the past several weeks, COVID-19 hospitalizations have been on the rise across the country, according to CDC data. Despite the increase, it’s among the lowest levels of hospitalization recorded since the start of the pandemic in early 2020.
“An upswing is not a surge; it’s not even a wave,” Dr. Shira Doron, the chief infection control officer for Tufts Medicine, told ABC News last week.
“What we’re seeing is a very gradual and small upward trajectory of cases and hospitalizations, without deaths really going along, which is great news.”
On Jan. 29, 2021, the CDC issued an order requiring people to wear masks on public transportation, including airplanes, and in transportation hubs that was implemented and enforced by the TSA. A federal judge in Florida struck down the mandate on April 18, 2022, finding that the CDC failed to justify the order and that it didn’t follow proper rulemaking procedures.
Mandates
Over the past two weeks, a handful of hospitals across the United States have started to reinstate mandates, although some have required masks only for staff, nurses, and doctors, while patients and visitors are exempt from the rule. However, a few have made masking mandatory for anyone who goes into the facility.
In Massachusetts, UMass Memorial Hospital confirmed in a statement on Aug. 24 that it would reimpose masking for staff. Patients and visitors are exempt from the mandate, it stated.
“We have continued to see a dramatic increase in the number of COVID-19 positive employees over the past two weeks, which has led to exposures of both fellow caregivers and patients,” the statement read.
“In response to this, as a protective measure for our staff and patients, effective immediately we are requiring mandatory caregiver masking for all patient encounters in all licensed clinical areas.”
In New York, several upstate hospitals have required masking for anyone who goes into the facilities. They include United Health Services in Binghamton, Auburn Community Hospital in Auburn, and University Hospital in Syracuse.
In California, a Kaiser Permanente facility in Santa Rosa said it would reimpose its mask mandate, but it then issued a statement several days later saying it only applied to staff.
“Our intent was to communicate that as of Tuesday, we have expanded the masking requirement for our employees and physicians to medical offices and clinic settings; we apologize for any confusion among Press Democrat readers,” the hospital’s updated statement to local media said.
Other than hospitals, Lionsgate studios in Southern California and a college in Atlanta also announced the return of masking. But as with Kaiser Permanente, Lionsgate later said that it won’t be requiring masks and it suggested that the company was being pressured by the Los Angeles Department of Health.
“The LA County Department of Public Health notified us yesterday that we could lift the mask requirements, effective immediately, and we have,” the studio told TheWrap. The statement added that “Lionsgate never changed its own mask policy. The LA County Department of Health ordered us to institute the temporary masking requirement after we reported a cluster of COVID cases to them and we have an obligation to comply with their orders.”
DOJ And SEC Target Elon Musk Over Alleged Plans To Use Tesla Funds To Build Glass House
Diverting their attention from President Trump for a split second, it now appears that Manhattan Federal Prosecutors have set their sights on Elon Musk.
Prosecutors are investigating whether or not Tesla used company funds on a “secret project” described as a “house” for CEO Elon Musk, the Wall Street Journal reported yesterday.
The U.S. Attorney’s Office for the Southern District of New York is looking into a “spacious glass structure” potentially to be built in the Austin, Texas area. The project internally was known as “Project 42”.
Additionally, the SEC is looking into the project and is “seeking information from the company”, the report says. The investigations are still in their “early stages”, the Journal writes.
Employees had been working on Project 42 last year, which called for a glass building near Tesla’s headquarters. The shape of the building was to be a twisted hexagon, the report says.
Employees became concerned about how the company would use millions of dollars in specialized glass that it ordered, the report says. Company lawyers and Board Members then scrutinized the project.
However, the Journal was unable to confirm the status of the project or if any specialized glass had even been ordered.
The report says that Musk and employees of his companies had a vision for a “utopia” along the Colorado River. Musk’s Boring Company has even explored the idea of incorporating a nearby town so Musk could set his own regulations.
Musk has been moving himself and his company to Texas over the last several years, defecting from California due to its overregulation and overtaxation.
Tesla now makes its Model Y in Austin.
In a post on X, Musk responded that he wasn’t building a house of any kind, “let alone a glass one”.
“Where is this house?” Musk asked on X early this morning. “Metaphors don’t count!”
This is one of the funniest things I’ve ever heard 🤣🤣
When U.S. Acting Deputy Secretary of State Victoria Nuland traveled to South Africa on July 29, her reputation as a blunt instrument of Washington’s hegemonic interests preceded her.
According to a veteran South African official who attended meetings with the senior U.S. diplomat in Pretoria, however, Nuland and her team were demonstrably unprepared to grapple with recent developmentson the African continent — particularly the military coup that removed Niger’s pro-Western government hours before she launched her multi-stop tour of the region. “In over 20 years working with the Americans, I have never seen them so desperate,” the official told The Grayzone, speaking on the condition of anonymity.
Pretoria was well aware of Nuland’s hawkish reputation, but when she arrived in Pretoria, the official described her as “totally caught off guard” by winds of change engulfing the region. The July putsch that saw a popular military junta come to power in Niger followed military coups in Mali and Burkina Faso that were similarly inspired by mass anti-colonial sentiment.
Though Washington has so far refused to characterize developments in the Nigerien capital of Niamey as a coup, the South African source confirmed that Nuland sought South Africa’s assistance in responding to regional conflicts, including in Niger, where she emphasized that Washington not only held significant financial investments, but also maintained 1,000 of its own troops. For Nuland, the realization that she was negotiating from a position of weakness was likely a rude awakening.
Serving Both Parties & Advancing Empire, One Regime Change at a Time
Throughout the past decade and a half, Victoria Nuland has established herself as one of the most heavy-handed – and effective – agents of Western-directed regime change ops within the State Department. As the wife of the arch-neoconservative strategist, Robert Kagan, who advised both Republican presidential contender, Mitt Romney, and Democrat, Hillary Clinton, Nuland embodied the interventionist consensus that prevailed across both parties in the pre-Trump era. In fact, her first high-level job came under the watch of Vice President Dick Cheney, when he appointed her to serve as his deputy chief of staff.
When Nuland returned to government as a Russia specialist in President Barack Obama’s State Department, she spearheaded the covert campaign to destabilize Ukraine, driving the 2014 Maidan Coup that sparked the country’s ensuing civil conflict and, ultimately, a Western proxy war with Russia that rages to this day.
“Since Ukraine’s independence in 1991, the United States has supported Ukrainians as they build democratic skills and institutions,” Nuland, then Assistant Secretary of State for European Affairs, boasted during a December 2013 talk before the U.S.-Ukraine Foundation in Kiev, flanked by a promotional panel for the Chevron corporation.
“We’ve invested over five billion dollars to assist Ukraine in these and other goals,” she continued, articulating Washington’s support for what she described as Ukraine’s “European aspirations.”
Nuland repeated the unintentionally revealing boast during a 2014 interview with CNN’s Christiane Amanpour. Days before her address, she and then-U.S. ambassador to Ukraine, Geoffrey Pyatt, distributed “freedom cookies” to Ukrainians occupying Kiev’s Maidan Square in protest of President Viktor Yanukovych’s decision to, in Nuland’s words, “pause on the route to Europe.”
Who really started the war in Ukraine?
April 2014
Victoria Nuland: “US has invested some $5 billion in Ukraine, since 1991… That money has been spent on supporting the aspirations of the Ukrainian people to have a strong, democratic government that represents their interests.” pic.twitter.com/D6FnC8i786
Roughly three months later, the prolonged campaign of riots in the Maidan successfully dislodged Yanukovych’s government, resulting in the installation of a decidedly pro-EU (and openly pro-Nazi) regime in Kiev that would promptly win the title of “most corrupt nation in Europe.” Days before Yanukovych’s ouster, leaked audio revealed that Nuland and Ambassador Pyatt were actively selecting the opposition figures that would assume power in Kiev in the event of Maidan’s success.
“Fuck the EU,” she infamously remarked during the Feb. 7, 2014 phone call, an apparent response to European leaders opposed to her government’s destabilization effort in Ukraine.
Nearly a decade since Nuland’s Kiev campaign, however, Washington’s ability to dictate the sovereign policy of foreign states is increasingly limited — particularly in South Africa and the surrounding region.
In Africa, the Sun Sets on the Unipolar World
The emergence of a new global order was on bold display when heads of state from Brazil, India, China, and South Africa convened for the 15th annual BRICS Presidential Summit in Johannesburg throughout the week of Aug. 21. While Western media highlighted Russian President Vladimir Putin’s absence from the summit as evidence of deep divides within BRICS (Foreign Minster Sergey Lavrov attended the summit in Putin’s place), the bloc ultimately issued a unanimous Aug. 24 declaration that it would extend full membership to Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates.
“BRICS is a diverse group of nations,” South African President Cyril Ramaphosa, who chaired the summit, tweeted after announcing the results of BRICS’ landmark Johannesburg 2 Declaration before a room packed with international press. “It is an equal partnership of countries that have differing views but a shared vision for a better world.”
Indeed, BRICS leaders stressed the importance of the group’s function as a “consensus-based” organization built on the foundation of multilateralism and a commitment to principles enshrined in the U.N. Charter. This stands in stark contrast with alliances like the G20, which, while ostensibly committed to multilateral exchange, are viewed by Washington and its allies as a forum through which to impose their own worldview.
Western hubris was particularly palpable upon India’s assumption of the G20 presidency in 2023, when U.S. and European officials waged a futile campaign to pressure New Delhi into excluding Russia from group meetings despite Moscow’s permanent member status.
‘We Should Not go Back Go Back to a Cold War’
On the sidelines of the BRICS summit, I spoke with South Africa’s Minister for Trade, Industry, and Competition, Ebrahim Patel, about BRICS’ purpose.
“BRICS want to stand for a world in which everybody benefits, this is not about trying to get into a new Cold War,” Patel commented.
“The Cold War was not a good moment for humanity,” Patel, who chaired the BRICS Business Forum in Johannesburg, continued when asked whether the U.S. and Europe could ever accept multilateral exchange as anything other than an attack on Western hegemonic interests. “We should not go back to a Cold War with two polarizing blocs, but we do need the voices of the Global South to be out there helping to shape the architecture of governance and the way in which human beings interact.”
Gabon’s former President Omar Bongo had 70 bank accounts, 39 apartments, 2 Ferraris, 6 Mercedes Benz cars, 3 Porsches and a Bugatti in France.
“There will be many instances of misinterpretation, but we stand for a world that is united, recognizing that countries and firms will compete,” Patel explained. “That’s healthy, and underpinning that competition must be a deep collaboration and cooperation between nations.”
Asked what makes BRICS’ commitment to multilateralism different from blocs such as the G20, Patel offered a window into how BRICS truly operates.
“When the heads of state sit together, they say, ‘okay, how can we move the dial forward?’ Consensus building is a slow process. It’s an uneven process. But it does mean that the decisions that are taken have solid support.”
After two days of deliberations in Johannesburg, during which delegates considered membership applications from roughly two dozen nations, BRICS reached the consensus to admit six states that will drastically expand its share of the international economy and resource market.
Following the new members’ formal induction into the bloc next February, BRICS will include 6 of the world’s top 10 oil producers, 50 percent of the world’s natural gas reserves, and 37 percent of global GDP adjusted for purchasing power parity (PPP). The G20’s share of global GDP currently sits at 30 percent. With the addition of Argentina and Saudi Arabia, BRICS will also count six permanent G20 nations among its own membership bloc.
“It is that slow, time consuming process of building consensus,” Minister Patel reflected on BRICS success. “But it’s more solid. It lasts longer.”
Thanks to BRICS, Robert Kagan’s notorious blueprint for the U.S. to serve as a “benevolent’ global hegemon may be overtaken by the developing world’s vision for a century that honors the political independence, self-determination, and territorial sovereignty of all states. Will the generation of U.S. officials that comes after Nuland accept Washington’s place in this multipolar world, or will they insist on going down fighting?
Dollar General Plunges On Missed Earnings, Outlook Slashed; A Warning Sign Consumer Cracks
Dollar General Corp. shares plummeted in the New York premarket trading following a weaker-than-expected second-quarter earnings report. The discount retailer faces its first annual decline and has lowered its profit forecast for the second quarter in a row amid “softer sales trends.” Troubles at Dollar General mirrors challenges faced by other retail businesses, pointing to the potential cracking of low/mid-tier consumers.
The discount retailer posted earnings of $2.13 a share on revenue of $9.8 billion. Analysts surveyed by FactSet forecasted $2.47 a share on sales of $9.9 billion. Same-store sales declined .1%, while analysts were expecting a .9% rise, driven by a slowdown in consumer traffic.
Dollar General’s second-quarter highlights:
Comparable sales -0.1% vs. +4.6% y/y, estimate +0.92%
EPS $2.13 vs. $2.98 y/y
2-year same-store sales stack +4.5% vs. -0.32% y/y, estimate +5.37%
Net sales $9.80 billion, +3.9% y/y, estimate $9.91 billion
Gross margin 31.1% vs. 32.3% y/y, estimate 31.7%
SG&A as a percentage of revenue 24% vs. 22.6% y/y, estimate 23.5%
Operating profit $692.3 million, -24% y/y, estimate $785.1 million
“This gross profit rate decrease was primarily attributable to lower inventory markups and increased shrink, markdowns, and inventory damages, as well as a greater proportion of sales coming from the consumables category, which generally has a lower gross profit rate than other product categories,” Dollar General said.
CEO Jeff Owen wrote, “While we are not satisfied with our overall financial results, we made significant progress in the second quarter improving execution in our supply chain and our stores, as well as reducing our inventory growth rate and further strengthening our price position.”
The retailer slashed its fiscal 2023 outlook as it takes “certain actions to accelerate the pace of its inventory reduction efforts and making additional investments in targeted areas, such as retail labor, to further elevate the in-store experience and better serve its customers.” It noted, “softer sales trends and an increase in expected inventory shrink for the second half of 2023” are some of the reasons for revising its outlook for fiscal year 2023 that was last provided on June 1 (read: here).
Shares crashed as much as 16% in the premarket session.
What’s alarming about the “softer sales trends” comment from the retailer is that 40% of its customer base earns less than $40,000 a year. This clearly indicates that no matter how much the White House tries to spin the ‘best economy ever ‘ — ‘Bidenomics’ is failing the working poor.
With Covid helicopter cash evaporated, personal savings drained, insurmountable credit card debt, and the lack of financial safety nets, the average consumer in the Biden era has been crushed after two years of negative real wages.
Amid chatter about the possible return of COVID-19 mask mandates, at least one governor said that they will not return to his state under any circumstances.
“Mississippians will not and should not submit to fear again,” Mississippi Gov. Tate Reeves, a Republican, said in a recent statement.
“In the early days of COVID, there was understandable uncertainty. We did not yet know what we were facing. As the months unfolded, it became clear that there were two pandemics. A disease that was easy to spread and that was deadly for many vulnerable people, and a pandemic of fear stoked by ‘the expert class’ that demanded total subjugation.”
He added that the “simple answer” to mandates is “no,” adding, “We will not return to widespread masking or COVID rules.” That statement was issued as he pointed to a CBS News report that asked if mask mandates are coming back.
There has been a small uptick in COVID-19 cases across the United States, according to data provided by the U.S. Centers for Disease Control and Prevention (CDC). But the increase is a considerably smaller than previous so-called COVID-19 “waves” since 2020.
“An upswing is not a surge; it’s not even a wave,” Dr. Shira Doron, the chief infection control officer for Tufts Medicine, told ABC News last week. “What we’re seeing is a very gradual and small upward trajectory of cases and hospitalizations, without deaths really going along, which is great news.”
The federal government, including the CDC and Transportation Security Administration (TSA), do not currently have any mask mandates in effect. A TSA spokesperson told The Epoch Times several days ago that rumors suggesting mask mandates or lockdowns will come back later in the fall are false, while the CDC told NBC News that there have been no discussions to bring back masks.
But some businesses have reimplemented mask mandates in recent days—namely hospitals in California and New York. Several hospitals have made masking mandatory for anyone entering the premises, including visitors and patients, while several have only implemented mask-wearing for staff, nurses, and physicians.
In one instance, Kaiser Permanente’s location in Santa Rosa, California, said it would mandate masks for anyone coming into the hospital. However, several days later, the hospital told a local paper the statement was erroneous and that the rule only applies to staff, not patients or visitors.
“Our intent was to communicate that as of Tuesday, we have expanded the masking requirement for our employees and physicians to medical offices and clinic settings; we apologize for any confusion among Press Democrat readers,” the hospital’s updated statement said.
“Visitors, patients, and members are strongly encouraged to also wear masks in these settings,” it continued. “We have not changed our masking requirements in the hospital, which have been in effect since April: employees and physicians are required to wear masks and we ask visitors to wear masks when in the hospital.”
Meanwhile, a historically black college in Atlanta as well as Hollywood studio Lionsgate said they, too, would re-implement mask mandates. However, Lionsgate said it had rescinded its mandate this week, saying that it was the Los Angeles Department of Health that forced its hand.
“The LA County Department of Public Health notified us yesterday that we could lift the mask requirements, effective immediately, and we have,” the Hollywood film studio told news outlets over the past weekend.
The statement also said: “Lionsgate never changed its own mask policy. The LA County Department of Health ordered us to institute the temporary masking requirement after we reported a cluster of COVID cases to them and we have an obligation to comply with their orders.”
Meanwhile, on Monday, Mr. Reeves said that if people want to, they have the right to put on masks in the state of Mississippi.
“If you want to take extraordinary measures to protect yourself from getting sick, God bless you. That is your right and you should do what you think is best,” the governor said.
“Maybe you’re the smartest of all of us. But we’re never going back to 2020.”
Other than Mr. Reeves, some Republican lawmakers have expressed concern about reports of masks coming back. Among them, Sen. Ron Johnson (R-Wisc.) said in a recent interview that “it’s alarming that the mandates are kicking in again” and again said that masks “didn’t work, particularly for children.”
The comment also comes as President Joe Biden on Aug. 25 told reporters that he signed a proposal “to present to Congress a request for additional funding for a new vaccine that is necessary, that works.” He did not provide any further details about the plan.
The Biden administration is fraying relations with some allies and generating pushback from Congress by spending millions of taxpayer dollars to promote the woke ideology abroad that has stirred controversy at home since President Biden took office.
In a “national security memorandum” shortly after his swearing-in, Biden ordered all federal agencies with dealings abroad not only to protect LGBT rights in the face of discrimination and violence but to actively advance them. His State Department has said one of its goals is to “embed intersectional equity principles into diversifying public diplomacy and communications strategies” in relations with other nations.
U.S. ambassadors around the world have translated those words into action, championing LGTB rights in countries that oppose them; funding performances that feature drag queens; and holding diversity, equity and inclusion (DEI) seminars.
The State Department would not provide a list of initiatives and programs connected to these goals or how much money it is spending. Recent reports estimate nearly $5 million has been spent abroad on LGBT programs alone, and U.S. senators including Republican J.D. Vance of Ohio are holding up appointments of new ambassadors over concerns about exporting “woke” ideology.
Vance criticized what he called the “injecting” of “personal politics” into the U.S. foreign service, saying: “You can call it ‘extreme left,’ ‘woke.’ To me it’s leaning toward cultural progressivism in a way that alienates half of our country and, frankly, it probably alienates about 80 percent of the countries these guys are going to represent us in front of.”
American LGBT and black advocacy groups concerned with foreign policy and diplomacy declined to respond to RealClearInvestigations’ inquiries about the State Department programs. The groups are Gays and Lesbians in Foreign Affairs Agencies (GLIFAA) and the Thursday Luncheon Group, which was founded “to increase the participation of African Americans in the formulation, articulation, and implementation of United States foreign policy.”
Among the State Department initiatives are a $10,000 grant to a Portuguese LGBT activist group to finance a film festival featuring drag performances, incest, and pederasty. It also provided $20,000 to support a series of drag shows in Ecuador.
A $300,000 State Department grant to Botswana aimed “to promote greater social acceptance of LGBTQI+ persons, including among influential religious groups and traditional groups” who preach or teach that homosexuality is immoral: Roman Catholics, most evangelical Christians, Muslims, and Orthodox Jews. Earlier this year, Republican scrutiny pressured the State Department to cancel drag shows it had been hosting on U.S. military bases.
Conservative governments, including those of predominantly Muslim nations, are similarly negative. Kuwait, for example, sharply criticized the acting chargé d’affaires of the U.S. embassy for promoting Pride month in June via official channels on Twitter. In an official statement, Kuwait’s Ministry of Foreign Affairs stressed to the U.S. “the need for the embassy to respect the laws and regulations in force in the State of Kuwait,” where public morality laws ban same-sex sexual activity.
In Hungary, Foreign Minister Péter Szijjártó clashed with U.S. Ambassador David Pressman, who is openly gay and publicly criticized the Hungarian government over LGBT issues. “[I]f he wishes to use his stay in Hungary to criticize the actions of a government elected by a clear majority of the Hungarian people and legitimized by the Hungarian people,” the foreign minister said, “he will have a very difficult job in working effectively to improve cooperation between the two countries.”
Elsewhere, the U.S. ambassador to Poland, Mark Brzezinski, and some 30 staffers participated in Warsaw’s Pride parade, despite Poland’s constitutional ban on both same-sex marriage and civil unions. In South Korea, where same-sex marriage is illegal, the U.S. Ambassador, Philip S. Goldberg, promoted Pride month and spoke at a “Queer Culture” event in Seoul.
The U.S. embassy to the Holy See posted its Pride flag on social media, disregarding the Catholic Church’s longstanding position against homosexuality. Criticized for, in the words of Republican Rep. Warren Davidson of Ohio, “flying flags that are hostile to the doctrine of the Catholic Church,” Ambassador Gina Abercrombie-Winstanley, the State Department’s top DEI officer, defended the decision, saying the embassy did not need to coordinate with or seek the Vatican’s permission: “We are a sovereign nation and we make our own decisions.”
According to a tally by RealClearInvestigations, 118 U.S. embassies tweeted or retweeted posts celebrating Pride Month in June.
But the promotion of LGBT ideology is only one part of the State Department’s broader push for DEI abroad. When State Department DEI officers managed a Pride event at the U.S. embassy in Trinidad and Tobago, Ambassador Candace Bond said one of the conference’s goals was to establish “an inclusive DEI framework within their [Trinidad’s] organizations.” To that end, the State Department funded a three-day DEI training program.
In Kuwait, the American Chamber of Commerce and the U.S. embassy hosted a “Diversity & Inclusion Diwaniya,” a Middle Eastern term for a business gathering. The U.S. embassy to the Netherlands signed a charter formalizing a DEI council. Ambassador Razdan Duggal said, “The U.S. State Department officially supports the creation of DEIA Councils at its diplomatic posts abroad.”
The State Department’s DEI emphasis extends far beyond just events hosted and charters signed. Last year, the department announced it was completely reorganizing its hiring process for foreign service officers, deemphasizing a key test on written and language skills as well as world history and U.S. history. Eric Rubin, president of the American Foreign Service Association, blasted the decision, saying it would politicize the hiring process and “risks being seen as excessively subjective and subject to partisan influence.”
Republican Rep. Alex Mooney of West Virginia concurred, telling RealClear, “Taxpayer dollars should not be spent promoting woke cultural Marxist ideology in the United States or abroad.”
