By Peter Tchir of Academy Securities

Lies, Damned Lies, and Statistics

As we navigate through a month of partially staffed trading desks, it is more difficult than usual (and it is always difficult) to tell whether narratives are pushing markets or markets are pulling along the narratives.

Are bond yields rising because there are so many bearish views being expressed (with the data to back up those views)? Or was the data already there and when bonds started to sell-off, those headlines (and the bears) just gained prominence? Ditto for the recent shift in articles away from the “soft landing” scenario. A soft landing seemed like a “certainty” a few weeks ago, but now it seems to be losing a little bit of steam. Did that cause stocks to sell off (about 2% last week and almost 5% for the S&P 500 this month), or did the sell-off just highlight the risks (that had gotten buried on the back pages) to the forefront?

Making it even more confusing is how easy it is right now to pick and choose data to spin almost any narrative you want.
For this weekend’s report, after a great week in our San Diego office (where Bloomberg TV interviewed us primarily on China), we wanted to focus on some statistics that have caught our eye and can also be used to spin a variety of narratives.

China

You had me at China. If there is a country whose data fits the lies, damned lies, and statistics theme it is China. However, if Bitcoin was a country, it too might qualify, but it isn’t a country so it gets a pass for now.

We will come back to China, but I just wanted to use the line “you had me at China” before you got bored of reading the report, or it got buried below a bunch of charts.

The Consumer is Tapped Out

Despite retail sales (reported on Tuesday) crushing it (a 1% increase for the control group in July after a 0.5% increase in June), there is a narrative that the consumer is getting tapped out.

Fastest Ever Rate of Increase in Credit Card Debt!!

Credit card debt has been rising at what seems like an alarming rate.

Credit Card Delinquencies Gapping Higher!

This chart seems almost scary because it shows a rapid rise in delinquencies. While not quite “parabolic” it has increased by almost 50% in a little over a year! However, 0.8% to 1.15% seems a lot less scary than saying it has increased by 50% (which is why I tune out whenever anyone talks about credit spread moves in percentage terms).

Not only is credit card debt rising at an alarming rate, it is also coming just as delinquencies spike higher!

The Consumer is Normalizing

Let’s revisit the prior two charts but use a different time horizon.

Credit Card Debt Remains Below Trend

Credit card debt rose at a steady pace from 2013 until late 2019. Then COVID, stimulus, work from home, and supply chain issues all seemed to coalesce into an amazing drop in credit card debt. While we can question whether credit card debt should have been rising at the rate that it was before COVID (and whether it was sustainable or not), we should just accept that it was. Maybe population growth has changed (or it was some other factor), but if you “strip out” the COVID phenomenon, we are basically back to trend. I do think that credit card balances are an issue, but it is an issue that we seem to have dealt with in the past.

On credit cards, I completely ignore any impact from Fed hikes because credit card interest rates have always been very high relative to any other rate. What drives credit card balances doesn’t seem to be a thoughtful analysis of rates. It has always been (at least to some degree) about instant gratification.

Bottom line is that while the trend may not be sustainable, the recent rise just brings us back to trend, which takes some of the sting out of the fact that the consumer is in dire trouble.

Delinquencies are Below the 5 and 10-Year Averages!

So, delinquencies aren’t even back to pre-COVID levels. This data series averaged 1.5% for the 5 years prior to April 2020, and was 2.1% for the 10-year period before COVID (and let’s not even think about where it was post GFC).

I’m not all warm and fuzzy about the consumer, but I’m not alarmed either.

Auto Loans

Auto loans are a bit trickier. From the consumer’s point of view, they tend to be at a fixed rate and many were entered into when rates were low. In fact, if memory serves me correctly, the average maturity of auto loans extended in recent years allowing consumers to lock in low rates for longer (hopefully the lenders hedged their rate exposure on those auto loans).

Used Auto Prices are Receding

Used car prices are declining from record highs. That may pose problems to lenders who calculated too much residual value on loans and leases to consumers who thought that we were in a brave new world where even used cars went up in value.

Having said that, the prices for used cars remain robust and my understanding is that it is still extremely difficult to buy the most popular new models (and they often fetch a premium to NAV). Nothing like in the heyday of the supply chain issues, but something that should “normalize” over time.

Auto dealers benefited from a lack of inventory, and I will be curious to see if they can retain their sales with low levels of inventory and (ultimately) pass some of those efficiencies through to the consumer.

With autos being such an important part of the economy, it is something that I watch, but much like the story we heard in credit cards, a lot of the negatives that I’m reading about are simply a “normalization” which may be healthy for generating not just a soft landing, but a sustainable soft landing. However, the “slowing” is something to think about.

The Excess Savings Lie

I will spare you the agony of going through bank deposit charts on a short-term and long-term basis and just jump straight to the long-term chart. I used purple and orange arrows because I generally reserve green for good and red for bad and I’m not sure that these are “good” or “bad” deviations from trend.

Bank Deposits are Falling! But to Levels Still Around Trend.

I have argued that the “excess” in bank savings was never going to be put into the stock market (one of the bull cases, which may even still be floating around). I also think that there is a lot more than meets the eye about why there is so much in “excess” savings. Sure, without a doubt, COVID boosted savings. One thing that I “forgot” to mention earlier (or maybe I saved it on purpose) about the good things that happened to consumers during COVID is that there were many moratoriums placed on various types of debt service (i.e., student loans).

We can all agree that some amount of cash stayed in savings accounts because while savings accounts earned 0%, so did everything else. As people realized that they could earn more on their money market funds, some amount was going to be taken out of savings accounts paying little interest. Though, I do have to say that I was at the local bank branch a few weeks ago taking out money from the ATM and someone before me had left a receipt showing $99k in their bank account. I immediately thought “who does that?”, but there are obviously people who want bank accounts up to the FDIC limit.

My view has been (and will continue to be) that many people “earmarked” money that they would have to pay in the future and set it aside in a savings account. If you know moratoriums will end (and let’s not forget, these loans typically accrued interest during these periods), then it would be prudent to set aside some money for when those payments got turned back on.

If my theory is correct, you should see bank deposits decline faster as these moratoriums end and the money that was “earmarked” for certain payments is withdrawn to make those payments. Please see American Ingenuity.
Not great for the economy or spending, but is “normalization” really bad?

Generative AI

My intention is to use generative AI to help me do a report on “outliers”. This would include warning signs or positive things that the market may or may not be missing. After about an hour or so of brutally failed attempts this weekend, I gave up. I try to write these T-Reports with an estimate of how long it will take and how long the report will be but had absolutely zero clarity on whether the ChatGPT process would work. Hopefully I can make some interesting progress on the report early this week or I will declare it a failure. In any case, was Google trends (using generative AI) all you needed to buy or sell stocks successfully this year?

No one really cared about AI until February of this year. Yes, there were some searches, but very few. The Nasdaq 100 bounced in January, stagnated for a bit, and then started to do well from April until late July. It has sold off steadily since then. While not matching the trends in “generative AI” search, it might have been the best tool to use. The searches have stabilized and what will be interesting to see is if they peaked or if they increase as we end the summer and people are back at work fulltime across the board.

We will be focusing more on AI as Academy’s Advisory Board has grown the number of advisors with significant experience in the area and who are active today in the ongoing development of cyber and AI.

China

I promised that we’d get back to China, but for now I only want to highlight one chart. And, ironically, it is not a lie. It is the truth, and it is logical.

China’s Holdings of U.S. Treasuries

I highlight three periods.

• Post GFC. When the U.S. economy was in tatters and much of the world was struggling, China was able to (or was willing to) accumulate more and more Treasuries. There is a lot of chatter about the decoupling of our economy from China’s right now, which is logical and will continue (the friction is real between the two nations and not getting better). I did, however, find it interesting that China accumulated so many Treasuries in the aftermath of the GFC. Prior to the GFC, the trend seemed obvious (U.S. was growing and buying stuff from China).
• The tariffs sparked some discussion of potential retaliation from China, including the possibility that they would dump Treasuries. There was some decline in their holdings, but that could just as easily have been COVID related.
• Since the Russian invasion of Ukraine and the decision to freeze Russia’s dollar holdings, there has been a steady decline in China’s Treasury holdings.
  • Some of the decline is due to the weakness in China’s economy and their potential need to prop up the property market (and maybe even those overly exposed to the “shadow banking system”).
  • Not only did we freeze Russia’s holdings (which tells me that we can do it again), but we have also been going after China on a myriad of fronts (most notably high tech, but increasingly for rare earths and critical minerals).
  • Our own debt ceiling issues and ratings may not help, but I’d be shocked if that entered into China’s calculus.
  • What I cannot tell from this chart is if it is an indication that China is successfully generating trade globally in yuan and has less need for dollars. That would fit my “shifting from made in China to made by China” view to a tee, but I’d be lying if I said that I could support that on this chart! Maybe generative AI will help me find evidence supporting that theory in places that I haven’t thought to look.

One thing that I think supports Treasury market bears is that there will be less of a global interest in holding Treasuries (with China leading the way).

Jobs

So much to do here and with or without AI, I will add more charts related to jobs later this week.

We have covered some of these areas in the past such as discrepancies in JOLTS between job openings and hires and the Establishment versus Household gaps. The fact that all these reports come in with declining response rates is another issue. It is difficult (mathematically) to accept the continuity of a data series when the response rate is declining without a serious investigation into why the response rate might be declining.

While we haven’t discussed it recently, the annual revisions always seem to dramatically reduce the published data for the prior year (but weirdly it doesn’t seem to have a market impact).

Today, I just bring up one chart because I find it fascinating in the lies, damned lies, and statistics theme.

The “Almost” Unbelievable Pattern of New Company Formation

The birth/death model is an estimate of jobs created or lost as new companies are formed or go out of business (or at least close enough for our purposes).

I challenge you to find any other jobs data that looks this “perfect”. It is a beautiful sawtooth pattern that looks almost uninterrupted! For most jobs data, the COVID period makes long-term charts almost impossible to review. The job losses and subsequent job gains are so large relative to any prior periods (or current periods) that these charts look like straight lines on either side of COVID.

Yet this chart seems almost perfect. This is a symmetrical “beauty”, but it is just a “plug”. It is something that clearly relies heavily on seasonality and I find it almost impossible to believe that this is so “predictable” (which makes me wonder how many other “plugs” or adjustments might be meaningless after the COVID shock). Meaningless, but this data is still used to determine policy and drive markets.

Inflation

I couldn’t be bothered. Sure, I will dig into this more, but I really don’t think that despite some Fed jawboning, anything (other than a large/sustained change in inflation) will do much to the Fed’s decision (which means that it will do little for bond markets). I am prepared to be wrong on this and will delve into it this week (with help hopefully from friends at ChatGPT), but inflation is low on my radar screen. However, there is one exception – will companies be able to grow earnings in the current inflation environment where it seems to be more difficult to push through final product price increases while input costs remain elevated?

Bottom Line

Seems like we are back to an “inflection” point where the debate between soft landing and “something less fun” is back on the table. The lag effect is regaining credibility (it always should have).

There are cases to be made for a variety of economic outcomes as we head into September and that is exciting from my seat!

I do think that we are in a period where price action drives what narratives we see: continued downward pressure on stocks will bring out more and more negative reports. One more short squeeze and suddenly AI, soft landing, and praise for Powell is all that we will see.

“Pathetic.” “Discouraged.” “Pessimistic.”

Those are some of the sentiments shared by non-whites who were recently asked to share their feelings about the economy under President Biden, Politico reports. 

Liberal polling firm HIT Strategies hosted a focus group of eight non-white voters last week, and found them uniformly unimpressed with President Biden’s handling of the economy. HIT uses “research and data to understand and communicate with hard-to-reach and underrepresented voters.”

A new Quinnipiac University poll found 58% of all Americans give Biden a thumbs-down on the economy. In a worrisome stat for Democratic Party officials gearing up for the 2024 election, 35% of blacks give him a failing grade, as do 50% of Hispanics. The latest Emerson poll has a nationwide Biden-Trump contest as a dead heat, with Biden at 44.4% and Trump at 44.0%. 

Some in the “people of color” focus group said they preferred the economy under Trump. “Our economy is the lowest it’s been in God knows how long,” said a Hispanic from New Jersey. “We keep [sending] money to Ukraine and other countries rather than helping ourselves.”

“We don’t know what’s going to happen,” said an Asian American or Pacific Islander participant. “They’re kind of like saying that there possibly is going to be a soft landing, but they’re also expecting a recession of some sorts. It’s kind of a mixed message.”

Some long for an alternative beyond Trump and Biden. “I’m definitely not happy with where America was when Trump was president,” said a black man from Cleveland who’s a registered Democrat. “And I’m not happy with where America is, now that Biden’s president. We’ve already had years of both of them being president and with no kind of good results. So I’m hoping there’s some other you know, candidate or alternative besides these two.”

While members of the focus group said their economy was their number-one concern, they also hammered Biden on crime and management of the border. 

Beyond individual candidates, focus group participants also expressed exasperation with America’s two principal parties. “I don’t feel like Democrats really have my back … or Republicans, you know?” said a Los Angeles black-and-Latino man. He gave Trump credit on the economy, however. “Trump got in there and he changed stuff.”

Asked about indictments against Trump and accusations that he fosters white nationalism, the black-and-Latino man shrugged it off: “If you’re getting the job done, I can’t really hate on that.”

Authored by Patricia Tolson via The Epoch Times (emphasis ours),

While the release of the new Snow White movie is still a year away, the son of the man who animated and directed the original version has called the new concept a “disgrace” and labeled the “woke things” they’ve made up as “insulting.”

David Hand—son of the animator and director of the original version who was known by the same name—issued a harsh rebuke of the remake, telling the Telegraph on Aug. 18 that Disney’s “woke” version is an insult to his father’s work.

“It’s a whole different concept, and I just totally disagree with it, and I know my dad and Walt would also very much disagree with it,” Mr. Hand said.

He said he disagrees with the entire concept, calling it a “disgrace,” suggesting that Disney is “trying to do something new with something that was such a great success earlier.”

“Their thoughts are just so radical now,” he said, noting how the Disney of today feels compelled to “change the stories” and “change the thought process of the characters.”

Disney’s live-version remake of the animated film, “The Little Mermaid,” cast a black actress named Halle Bailey in the role of Ariel—originally portrayed as a white redhead became another box office flop that cost Disney $1 billion.

“They’re making up new woke things, and I’m just not into any of that. I find it quite frankly a bit insulting,” he added, suggesting that what Disney has done “with some of these classic films” provides evidence that there is “no respect” for what Walt’s Disney and people like his father envisioned and created.

“I think Walt and he would be turning in their graves,” Mr. Hand said.

The original film, “Snow White and the Seven Dwarfs,” was released in 1937. It was Disney’s first full-length feature film. Along with “Pinocchio,” which was released in 1940, “Snow White and the Seven Dwarfs” is heralded as Disney’s greatest film achievement.

The Original Snow White

The original film was hailed as a masterpiece, drawing worldwide acclaim and winning several awards from both the New York Film Critics Circle and The Academy of Motion Pictures Arts & Sciences.

The budget for the movie, initially set at $250 thousand, exploded to $1.5 million due to various delays. The film, which included over 2 million sketches and 250,000 drawings, took about three years to produce.

Ward Kimball, another animator, nearly quit after two of his main sequences were cut.

Certain of the film’s demise, critics gave Snow White and the Seven Dwarfs the nickname “Walt Disney’s Folly.”

In 1989, Snow White and the Seven Dwarfs was among the first 25 featured films to be preserved in the National Film Registry with the Library of Congress. In 2008, Snow White and the Seven Dwarfs was named the Greatest Animated Film of All Time by the American Film Institute.

The Story of Snow White

The storyline of “Snow White and the Seven Dwarfs” is loosely based on the famous fairy tale, which had been passed down orally long before it was set to paper by the Brothers Grimm in 1812 under the German title “Schneewittchen” or “Little Snow White.”

The plot of the story is set into motion when the heroine’s stepmother—a vain, wicked queen—consults her magical mirror. For many years, the mirror tells the wicked queen that she is “the fairest in the land,” until one day, the mirror tells her that Snow White now bears the title.

Hearing this, the wicked queen becomes angry. She calls upon a woodsman and orders him to kill Snow White. For proof, the queen ordered the woodsman to bring back her heart. But the woodsman is unable to commit the murder. Instead, he helps the princess escape by taking her deep into the forest where the wicked queen would never find her. To fool the queen, the woodsman returns with the heart of a pig.

Safe in the forest, Snow White discovers a cottage inhabited by seven dwarfs—Bashful, Doc, Dopey, Grumpy, Happy, Sneezy, and Sleepy—who earn their living as miners. After she offers to earn her keep by cleaning their home and cooking for them, the dwarfs offer her to stay.

The queen, however, learns that Snow White lives.

Assuming the guise of an old hag, the queen tricks her stepdaughter into taking a bite of a poisoned apple. Snow White then falls into a deep, death-like sleep. It is a spell which can only be broken by a kiss of true love.

When the dwarfs return from the mine they discover Snow White. Believing she is dead, they are heartbroken. They find the queen, who was attempting to flee back to her castle. They chase her to a cliff, where she falls to her death. To honor Snow White, they create a case to keep her body, standing guard over her. One day, a handsome prince comes upon Snow White and instantly falls in love. With a kiss of true love, he restored her to life and they lived “happily ever after.”

The New Version

While the new version isn’t expected to be released until March 2024, its plot and the actress cast to portray the new princess have already become sources of hot debate on social media.

One obvious difference between the new live-action version of Snow White film and its hand-drawn, animated predecessor is apparent in the title itself, which eliminates “the seven dwarfs.” Moreover, those seven diminutive, white male characters—which have themselves become beloved, worldwide icons—have been replaced by a set of what Disney bills as “magical creatures” of varied colors, sizes, shapes, and genders.

Prince Charming is cast as a “bumbling idiot.”

The new Snow White is no longer white. She’s Cuban, played by Rachel Zegler, who also starred in Steven Spielberg’s remake of “West Side Story,” which was a massive flop.

Ms. Zegler has been publicly critical of the original version.

In a video on social media, Ms. Zegler dismissed the storyline of the classic version as old-fashioned, saying, “The original cartoon came out in 1937, and very evidently so.”

“There’s a big focus on her love story with a guy who literally stalks her,” Ms. Zegler said. “Weird! Weird. So, we didn’t do that this time.”

Instead, Ms. Zegler explained that the more progressive version took “a different approach to what a lot of people will, I’m sure, assume is a love story just because we cast a guy in the movie, Andrew Burnap, great dude.”

Also gone is the romance between the pair. In fact, the prince has all but been eliminated from the story.

“It’s really not about the love story at all, which is really, really wonderful,” Ms. Zegler shared. “And whether or not she finds love along the way is anybody’s guess until 2024. All of Andrew’s scenes could get cut, who knows? It’s Hollywood, baby.”

Authored by Kyle Anzalone via AntiWar.com,

According to the Washington Post, the US intelligence community has assessed that Ukraine’s Spring counteroffensive will fail to meet its core objectives. Western officials said their war games had predicted massive Ukrainian losses, but that Kyiv would remain committed to the operations and gain the upper hand on the battlefield.

The Post reports it spoke with Western and Ukrainian officials familiar with the intelligence assessment. Washington declined to offer an official statement on the bleak outlook for Ukrainian forces.

Washington hoped Kyiv’s forces would recapture Melitopol, a Ukrainian city near the Sea of Azov in the country’s south. However, Moscow has several layers of defenses and minefields defending the town.

Western countries helped Kyiv conduct simulations of the counteroffensive, which began in early June, for several months prior to the operations. The US and UK concluded that Ukrainian forces would suffer massive losses but believed Kyiv would ignore the losses and maintain the offensive at full scale.

“In the first week of fighting, Ukraine incurred major casualties against Russia’s well-prepared defenses despite having a range of newly acquired Western equipment, including US Bradley Fighting Vehicles, German-made Leopard 2 tanks and specialized mine-clearing vehicles,” WaPo explained.

The report added, “Joint war games conducted by the US, British and Ukrainian militaries anticipated such losses but envisioned Kyiv accepting the casualties as the cost of piercing through Russia’s main defensive line, said US and Western officials.”

Retired Lt. Col. Daniel Davis wrote earlier this week that Kyiv lacked the military equipment needed to conduct a successful counter-offensive. “Ukraine also suffers from a chronic lack of air defense capacity, inadequate numbers of howitzers and artillery shells, insufficient electronic warfare systems, a dearth of missiles, and perhaps most crucial of all, barely 25 percent of the de-mining capacity needed,” he explained in 19FortyFive on Tuesday. 

“When Ukraine launched its offensive across a broad front on June 5th, it should have surprised no one in Kyiv, Washington, or Brussels that they ran into a Russian buzzsaw.”

More proof that US sees Ukrainians as cannon fodder:

US-UK helped formulate a battle plan that “anticipated” Ukraine taking heavy losses. US-UK officials “envisioned Kyiv accepting the casualties as the cost of piercing through Russia’s main defensive line.”

Instead, after… pic.twitter.com/sDKWElhYVO

— Aaron Maté (@aaronjmate) August 18, 2023

Last month, the Wall Street Journal spoke with Western officials who drew a similar conclusion as Davis. “When Ukraine launched its big counteroffensive this spring, Western military officials knew Kyiv didn’t have all the training or weapons – from shells to warplanes – that it needed to dislodge Russian forces.” The report continues, “But they hoped Ukrainian courage and resourcefulness would carry the day. They haven’t.”

Administration officials denied to the Washington Post that giving Ukraine additional arms would have changed the result of the offensive. “The problem remains piercing Russia’s main defensive line, and there’s no evidence these systems would’ve been a panacea,” a senior US official told the Post.

The lack of success by Ukrainian forces is creating political issues for the White House. The Post reports that some Republicans are turning against approving Joe Biden’s proposed $24 billion aid package to Ukraine after they learned of the grim intelligence assessment.

NYT: “American officials say they fear that Ukraine has become casualty averse, one reason it has been cautious about pressing ahead with the counteroffensive.”

Ukrainians fear heavy casualties; US proxy warriors fear Ukrainians fearing heavy casualties. pic.twitter.com/RQocbJCnGx

— Aaron Maté (@aaronjmate) August 18, 2023

The failed counteroffensive has ignited a blame game that extends outside of Washington. Western officials told the Post that had Kyiv massed forces in specified locations, then Ukrainian forces could have broken Russian lines. Meanwhile, Ukrainian Foreign Minister Dmytro Kuleba lashed out at critics of Kyiv’s military operations on Thursday. He encouraged critics of the offensive to “go and join the foreign legion.”

Canada’s Foreign Affairs Minister Melanie Joly said last week that the country is considering a “game plan” on how to respond if the United States “takes a far-right, authoritarian shift” (read: elects a Republican) in 2024.

While the rest of the world deals with actual problems, like wars, famine and human trafficking, Canada seems keen on spending its time creating “scenarios” on what it would do if the United States winds up electing anybody other than President Biden in 2024. 

During an interview with a Montreal radio station last week, Joly commented: “We are certainly working on scenarios”. She said Ottawa “must certainly prepare several scenarios” because of the country’s close political and economic ties to the United States. 

As National Post wrote this past week, the “plan” is so secretive and so important, Joly offered up little to no reasoning or detail as to why it exists or what it hopes to accomplish in the first place. 

“In general, there is our game plan, precisely to be able to manage what could be a rather difficult situation,” she vaguely remarked. “I will work with my colleagues and with the mayors, the provincial premiers, with the business community, with the unions, with everyone in the country, so that we are ready regardless of the election outcome.”

One nod she did make was toward President Trump’s limiting of trade between the two countries. With Trump as the frontrunner for the GOP in the 2024 election and promising “retribution” toward his political opponents, Joly could be preparing for a more cantankerous trade relationship between the two countries.

But if that’s the case, she didn’t let on in her comments – and Ottawa didn’t expound on them, either. “The U.S. embassy in Ottawa declined to comment on Joly’s remarks,” National Post wrote. 

One of her countryfolk, University of Ottawa national-security professor Thomas Juneau, seemed to notice the alarm as much ado about nothing, telling National Post that “Canadians might find it far-fetched to talk about Washington falling drastically out of step with Canada”, but also noting there has “been an extreme rise in global volatility in recent years”.

Sigh. We miss the good ole’ days when engineered worries about nothing just included climate change, the patriarchy and DEI requirements.

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Ford CEO Jim Farley admitted he underwent a “reality check” when he tried to make a cross-country road trip in the Ford electric F-150.

“Charging has been pretty challenging,” Mr. Farley said in a video on X, formerly known as Twitter. “It was a really good reality check of the challenges of what our customers go through and the importance of fast charging and what we’re going to have to do to improve the charging experience.”

In California, Mr. Farley said he encountered slow charging times. When using a low-speed charger, it took about 40 minutes for it to charge the electric F-150’s battery to 40 percent.

According to Ford, the company has said it partnered with Telsa to allow Ford customers to use the more than 12,000 Tesla Superchargers next year. Other electric vehicles have also announced partnerships with Tesla.

“Long hauling in an electric truck is an act of pioneerism, not because it’s hard or dangerous, but because it’s a new way to experience America,” Mr. Farley wrote in a LinkedIn post on Aug.  7. “Shifting from fueling stations to charging stations requires new behaviors and opens new possibilities.”

Another Charging Issue

It comes after a Canadian man told news outlets that he was forced to abandon his Ford electric truck after suffering charging failures during a road trip. Dalbir Bala of La Salle, Manitoba, said he left his Lightning in Minnesota last month after he couldn’t charge its battery at two different stations.

He then continued his drive in a rented gas-powered vehicle instead, he said.  His wife and three children joined him for the trip to Wisconsin and Chicago, setting out with three scheduled stops to recharge on the trip.

“It was really a nightmare frustration for us,” Mr. Bala told CBC News.

His first stop was in Fargo, North Dakota, roughly 350 kilometers south of Winnipeg. He paid $56 to charge his vehicle’s battery from 10 percent to 90 percent capacity.

The problems began at his next stop in Albertville, Minnesota, when he received a “faulty connection” message in his truck after he plugged in the charger. He dialed the number on the charger for assistance but received no response.

“It was in [the] shop for 6 months. I can’t take it to my lake cabin. I cannot take it for off-grid camping. I cannot take for even a road trip,” he added. “I can only drive in city—biggest scam of modern times.”

In response, Ford Motor Co. told news outlets that it is “looking into this individual customer’s case.” No other details were given.

“This customer’s experience highlights the urgent need to rapidly improve access to public charging across the U.S. and Canada,” Ford’s statement also said. “Ford’s EV-certified dealers will install public-facing DC fast chargers at their dealerships by early 2024, providing alternative charging options to those available today. Ford was also the first in the industry to gain access to over 12,000 Tesla Superchargers for Ford drivers.”

Other Issues

A report from the American Automobile Association (AAA), released in June, found that the vehicle’s battery range drops significantly when it is hauling heavy cargo—possibly jeopardizing the vehicle’s usage as a work truck. That includes hauling items like tools, toolboxes, equipment, and other items.

“In the case of battery electric pickups used as work vehicles, permanent loads (such as equipment racks, toolboxes, and equipment trays built into the vehicle) will reduce the range at all times, even without additional cargo,” the AAA said.

The AAA noted that potential buyers should note what type of driving they will be doing before making the purchase, adding that EVs are better suited for urban driving.

“Our testing revealed a significant range reduction, but it’s important to note that the Lightning was loaded to near its maximum capacity,” Greg Brannon, director of AAA’s automotive engineering unit, stated in a news release. “Most buyers will likely use their Lightning with a lighter load, resulting in a much smaller range reduction.”

Prices Slashed

Last month, meanwhile, Ford slashed prices on the F-150 Lightning, including a 17 percent cut for the base model, as it aims to boost its share of an EV market dominated by Tesla.

The Detroit-based automaker, which had raised Lightning prices earlier this year, said it was able to cut prices following improvements in scale and battery raw material costs.

The move comes amid a price war started by Tesla a few months ago, which has seen EVs of legacy automakers piling up at dealers as sales slow.

“The Ford Lightning is a good vehicle, just somewhat expensive, especially given the high interest rates these days for any kind of loan,” Tesla CEO Elon Musk said in a post on X last month.

Angel Yuan and Reuters contributed to this report.

Russia’s defense ministry (MoD) has described a fresh Sunday major drone attack from Ukraine on four separate regions, as Kiev has continued to step up attacks on Russian territory even as its counteroffensive is a widely acknowledged failure. 

The MoD identified that attacks targeted Russia’s Kursk, Rostov and Belgorod regions, all of which border Ukraine, and which caused commercial flights be temporarily halted at the Vnukovo and Domodedovo airports.

An enemy drone was also reported inbound in the Moscow region, but which reportedly was brought down by electronic countermeasures. The military said it was able to successfully intercept some of the cross-border drones.

“At about 2:00 p.m. Moscow time on August 20, the Kiev regime’s attempted attack on facilities on Russia’s territory with two plane-types unmanned aerial vehicles was thwarted. Russian air defense systems destroyed the unmanned aerial vehicles over the Belgorod Region,” the military said, and emphasized no casualties in the attack on the capital.

The defense ministry also described the Belgorod region happened at about 2:40 pm Moscow time. “Russian air defense system shot down the plane-type unmanned aerial vehicle over the Belgorod Region,” the MoD said.

According to further statements cited in Reuters, at least a dozen drones have targeted Belgorod region on Sunday:

The Kursk region’s governor said five people had been injured and a fire had broken out when a drone hit Kursk city’s railway station. Rostov’s governor said no injuries or damage had occurred.

Later on Sunday, Russia’s Defense Ministry said it had prevented two separate drone strikes on Belgorod region, the border province most regularly attacked by Ukraine. The local governor said on Telegram that 12 airborne targets had been downed on the approaches to Belgorod city.

The Kursk train station attack reportedly saw most people injured through falling glass and debris, with the Russian foreign ministry saying it “strongly condemns” the attack. Kursk lies some 150 km (or 93 miles) from the Ukrainian border.

Russia’s Defense Ministry says another drone “launched by the Kyiv regime” was shot down over the Belgorod region. pic.twitter.com/erLzyu0LTz

— Belsat in English (@Belsat_Eng) August 20, 2023

Ukraine has not taken responsibility for the attacks, and rarely does, but Kiev officials still often express approval for such strikes, which have grown riskier and riskier, given the Kremlin in turn retaliates with airstrikes on ‘decision-making centers’.

Unverified photos show a parked Russian long-range bomber burning in the aftermath of a Saturday drone attack on an airfield in Novgorod…

⚡️Russian Tu-22M3 bomber burning at the Soltsy airfield in the Novgorod region, which was attacked by a Ukrainian drone yesterday. pic.twitter.com/piHVdHLTdV

— War Monitor (@WarMonitors) August 20, 2023

On Saturday an Russia airfield was hit by a drone, and significantly it lies deep inside Russia, in the northwestern Novgorod region, between Moscow and St. Petersburg.

Authored by Jeffrey Tucker via The Epoch Times,

There is a tendency in the world of ideas to divide thinkers into saints and witches. Some are singled out for a hagiographic treatment. When others discover issues with their thoughts or lives, the switch is flipped and they become worthy of being burned. They are either valorized or demonized. This has happened to countless intellectuals: Voltaire, Jefferson, Darwin, Marx, Freud, Heidegger, and thousands more.

It’s all quite infantile. The better approach is one born of maturity. Read everything and everyone and learn what you can and toss out what’s wrong. Of course this requires work and thought. In fact, the saint/witch dichotomy is merely a mask for laziness. It’s a way of finding a fast track to truth that dispenses with the arduous task of actual research.

Few have been victimized by this habit as much as the novelist and philosopher Ayn Rand. People might encounter her work in high school and decide to adopt it as a personal credo, only to find out later in life that the world is more complicated than she describes and they turn against her.

This is all unfortunate. She was a singularly insightful intellectual from whom there is a vast amount to learn.

And yes, she is guilty too of ridiculous excesses, as brilliant minds are.

That said, there are precise contributions she has made that make her writings an indispensable guide to understanding modern life, both the problems and many of the answers.

1. Economic Freedom. 

Have you heard that so much of our times reminds one of “Atlas Shrugged”? Indeed it is uncanny. In the novel, the state exercises overweening power and attempts to centrally manage economic life in all aspects big and small. Rand explains with evocative detail the cascading effects of such bureaucratic control and how it wrecks supply chains, demoralizes workers, puts aside innovations on behalf of incumbent technologies, and puts lives in grave danger. It forces a growing impoverishment on society by curbing the exercise of human ingenuity. Lesser minds rule great ones, spreading ignorance and brutality far and wide.

In one of my favorite sections, a leading industrial bureaucrat, Wesley Mouch, frustrated that production and inflation are not under control, issues an edict (Directive 10-289) to force everyone and everything to be exactly this year like it was last year. This included enough exceptions to win the loyalties of select industrialists who could later be blackmailed. Yep, it is all a pretty good approximation.

In her book, she imagines that there is a strike by the owners of capital who gather in a sanctuary that they have created to be safe from the crumbling that ensues throughout the society. There they share wisdom about freedom and rights and make plans to rebuild society after the final collapse.

The book contains passages of brilliance that take your breath away. It also has many pages that will have you rolling your eyes in frustration. Yes, it is a mix of tremendous insight plus painful pedanticism. Because it includes both, it has uncritical champions on one side and vicious critics on the other. This is all rather silly. It is a brilliant and flawed book in equal measure. Why can’t we live with that tension?

2. Envy. 

One of the seven deadly sins that was preached in the Middle Ages was envy. This is not just jealousy of another’s good fortune. It is the desire to plot destruction of the successful. It is taking satisfaction from the ruination of one’s betters. Sounds pretty ghastly, doesn’t it? Surely it is rare in society.

Actually, as you age and experience a wide enough range of professional life, you encounter envy everywhere. It is not rare. It is lurking around every corner. With every good fortune, you will recruit killers around you, people who smile to your face while waiting with a knife for you to turn your back.

I’m unaware of any author who has such a profound understanding of the personal and social evil of envy in the world. It’s odd because it is hardly written about at all. This is a major reason Rand is so valuable. Her works put a bead on the entire subject and help you prepare for something that you will deal with throughout your entire life. I would say, in fact, that this feature of her work is the most profound and impactful.

3. Moral Courage. 

In popular understanding, Rand was a champion of “selfishness.” I’ve always wondered if her deployment of this term was due to her sometimes obtuseness about the subtleties of a language that was not hers by birth. It seems like that really meant a more classical understanding of self-interest: namely that there is no inconsistency between what’s good for the individual and what is good for society.

No doubt that if she heard me say that, she would violently disagree. However, when we look at the behavior of her heroes in the book, each of them makes profound personal sacrifices to stand up for moral principles. Indeed, the ethical obligation to exercise painful degrees of moral courage is a major theme in her writings. Similarly, many of her most grotesque villains do only what is in their short-term self-interest regardless of the impact on others. It’s a bit of an odd feature of her writing that we can get a better picture of her true ethical opinions by the actions of her characters than her own attempt to codify an ethical system in her non-fiction work.

4. Personal example.

 I’ve heard it said often that she had great writings but her personal life was a disaster. And so they admire her as an intellectual but not as a human being. It’s hardly news that she was flawed. I’m rather tired of the shock that comes when discovering that. Plus, if we are looking for people who exercise profound moral courage in their lives, she certainly qualifies. She was born in Russia and slated to live under the Bolsheviks. Instead, she plotted her way out with a clever scheme to visit the United States to study film. She defected, penniless. She lived for a time with relatives in Chicago but felt stifled so she took a bus to Hollywood where, not knowing anyone, climbed her way up to become an important script writer. Then she started writing wonderful novels and eventually became a best-selling author and one of the biggest intellectual influencers of the century. That strikes me as a heroic life. People who want to deny her credit for her own achievements are mostly to be ranked among the envious.

5. Dystopia. 

One of the most brilliant features of her dystopias is just how realistic they truly are. The total state does not create a world of amazing technology but just the opposite. It is a world of material and moral impoverishment that is always going backwards in time. If you don’t have time for “Atlas Shrugged,” consider her beautiful novelette called “Anthem.” It is short but to the point: the state in this book has banned the light bulb. When I first read that, I thought that was impossible. But here we are today with a just-implemented light bulb ban, not to mention electrical outages, and coming restrictions on meat eating and so on. She understood something others miss about the state: it is ultimately a reactionary institution.

These are good times to read and understand Ayn Rand. No need to valorize every aspect of her work, much less denounce her for inaccuracies, exaggerations, and excesses. Her aggressive atheism in particular strikes me as a pointless diversion—and she would certainly disagree with me in that judgment.

Even given all that, she has so much to offer. Contrary to the usual line that her writings are only compelling for kids in their late teens and early twenties, her contribution is best understood by mature thinkers who can take the good and the brilliant with the mistakes and missteps along the way. She deserves a high place in the canon of mighty literary contributions toward realistically understanding the world around us.

Authored by Charles Hugh Smith via OfTwoMinds blog,

Unexpected things tend to happen when the real source of problems are papered over and then suddenly reality intrudes.

What an interesting juncture we’ve reached. We’re constantly assured all is well with what matters–the economy–as the all-powerful Federal Reserve has managed not just the hoped-for “soft landing” but a resurgence of growth: yowza, no recession.

The list of good things is striking: unemployment is low, wages are rising, the wealth effect from explosive increases in housing prices has fattened the home equity of households and the soaring stock market has pushed the economy to giddy heights of wealth and confidence.

The spot of bother with inflation has receded and everyone anticipates interest rates will soon follow inflation back towards zero. China has entered a rough patch but it won’t affect us. And so on.

Despite all this uniformly good news, something about the situation is setting off alarms: I have a very bad feeling about this.

Perhaps the root of the feeling that danger is far closer than we discern is the universal confidence that finance can always fix any and all real-world problems. Whatever the problem, central banks can solve it by lowering interest rates and flooding the financial / banking system with liquidity, i.e. monetary easing, making it easier and cheaper for enterprises and households to borrow more money.

On the government-spending side, the central state can fix any and all problems by borrowing and spending however many trillions are needed–fiscal stimulus.

In other words, we don’t need to suffer any inconvenient sacrifices or systemic changes, we simply need to borrow more and spend more. This is certainly a tidy solution to all problems: borrow more and spend more. Everything in the real world can be fixed with monetary and fiscal easing and stimulus.

What’s interesting about this solution is there is no feedback at all: it’s a clean trajectory: borrow and spend more, and real-world problems go away. There is never any feedback from the real-world–for example, borrowing and spending don’t actually solve the problem— nor is there any consequence for continually borrowing more and spending more: we can keep borrowing and spending more without any limit or consequence.

But does this confidence in financial fixes actually map reality? In actual lived experience (as opposed to happy narratives and cherry-picked data), there are problems that aren’t solved via borrowing more and spending more, and consequences of borrowing more and spending more.

But the real-world consequences of relying on finance to fix everything are given short shrift in the “everything’s wunnerful” narratives and policies. In the real world, flooding failing systems with trillions in borrowed money doesn’t actually solve problems, it makes them worse–much worse. Insiders are incentivized not to fix the problems but to skim the “free money” and keep the problem active, so the ‘free money” keeps flowing.

Throwing more money at the problem generates diminishing returns and unintended consequences as the endless flood of “free money” distorts incentives and extinguishes the discipline of scarcity required to force actual solutions rather than paper them over with PR.

Complexity is easily added–more layers of management, more compliance, more regulations–and throwing more money at this source of inefficiency and decaying productivity only causes it to expand even more.

Then there’s the funny thing that comes with borrowing: interest payments. The more we borrow, the mnore interest we have to pay as the hill of debt grows into a mighty mountain. This rising cost of debt service crowds out other spending, forcing us to borrow even more (perish the thought of tightening our belts and cutting expenses!) and to invest less and consume less.

In other words, relying on borrowing more so we can spend more eventually makes us poorer. That’s impossible, of course, because all this borrowing and spending is “investment” that magically “grows the economy” so we “grow our way out of debt.” It’s a very pleasant thought, but as the borrowed money increasingly goes to paying interest and consumption rather than investment in productivity, the economy stagnates rather than grows.

The “one weird trick” to solve this problem is to lower interest rates to near-zero so debt service takes only a modest slice of income. But all this ever-expanding borrowing more and spending more eventually generates inflation, i.e. money and wages lose purchasing power. Once inflation arises from its slumber, the “one weird trick” goes from being a solution to the source of the problem.

Then there are the perverse incentives generated by reliance on easy money and deficit spending: credit-fueled asset bubbles inflate as most of this “free money” flows to the top of the pyramid, where the top 10% use the low-cost money to buy assets that will increase in value as more and more stimulus is dumped into the economy. As assets soar in value, the not-yet-wealthy are outbid and left in the dust as neofeudal serfs.

This asymmetric distribution of the easing and stimulus straps a rocket booster under wealth and income inequality. Since those who’ve become much, much richer run the economy, this strikes them as a remarkably positive result.

But beneath the happy-story surface (since I’m doing great, everyone must be doing great), soaring wealth and income inequality is dismantling the foundations of society: the social contract, the ladders of upward mobility, the legitimacy of the government and financial system (it’s all rigged to benefit the few at the expense of the many), and the legitimacy of the media and institutions that are supposed to be objective (if we tell you everything’s wunnerful, then believe us, because your compliance benefits us.)

The rich not only get richer and the slice of the wealth owned by the poor shrinks, moral hazard is optimized: since there will always be more “free money” available, there’s no incentive to limit risk, as the consequences of higher risk will always be offset by more central bank / central state “saves,” stimulus, backstops, etc.

So go ahead and make incredibly risky bets, and leverage up those bets: if you win, the winnings are yours to keep (with a slice deducted for taxes, of course); and if you lose, the Fed and / or government will bail you out. What’s not to like?

These distortions become problems that borrowing more and spending more only accelerate. The supposed “solution” becomes the “problem” that the “solution” cannot solve.

Unexpected things tend to happen when the real source of problems are papered over and then suddenly reality intrudes. One thing that always surprises the top 10% who own 90% of the income-producing assets is markets suddenly crashing after years or decades of lofting higher on the endless easing and stimulus. After all, everyone knows that assets never go down for long, they only loft higher.

This is true until the easing and stimulus that inflated the assets become the problem. The feedback loops that were ignored or diminished with financial trickery suddenly become self-reinforcing, and all the tricks that worked for decades now push the system into instability and chaotic collapse.

So by all means, retain supreme confidence in the empire of debt and deception and its one “solution,” borrow more, spend more. Some of us have a very bad feeling about this, and we’re no longer kneeling at the altar of the Fed or mumbling prayers to the false idols of easing and stimulus. When the idols fall, the world they supposedly rule crashes around them.

An economy that’s dependent on financial “fixes” is fatally distorted. Beneath the artifice, it has lost the capacity to actually solve real-world problems.

*  *  *

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