Authored by Allen Zhong via The Epoch Times (emphasis ours),

Ron DeSantis’s biggest individual donor, hotel entrepreneur Robert Bigelow, warned that he will cut off donations if the Republican 2024 candidate doesn’t turn moderate.

“He does need to shift to get to moderates. He’ll lose if he doesn’t … Extremism isn’t going to get you elected,” Mr. Bigelow said during an interview with Reuters, adding that he had communicated these concerns to Mr. DeSantis’s campaign.

Mr. Bigelow, founder of Las Vegas-based Bigelow Aerospace, donated $20 million to the pro-DeSantis “Never Back Down” super PAC in March, which makes him the biggest donor to the group. The second-biggest individual donor to Never Back Down is venture capitalist Douglas Leone, who gave $2 million, according to campaign filings—a tenth of what Mr. Bigelow contributed.

When asked about which policies he doesn’t agree with, Mr. Bigelow specifically mentioned the six-week abortion ban Mr. DeSantis signed in April after the Florida legislature passed the bill.

The bill was signed after Mr. Bigelow made the massive donation.

However, Mr. Bigelow said he still supports Mr. DeSantis and agreed with most of his policies.

He said he would not donate more money for now.

“Not until I see that he’s able to generate more on his own. I’m already too big a percentage,” he said. “A lot of his donors are still on the fence.”

Mr. Bigelow’s comments may stoke perceptions that Mr. DeSantis, once a donor darling expected to put up a real fight against Republican front-runner former President Donald Trump, is in a downward spiral.

The DeSantis campaign didn’t respond to a request for comment from The Epoch Times.

In a statement to Reuters, a spokesperson for the DeSantis campaign, Bryan Griffin, said they were “grateful” to supporters and donors who gave them “the capacity to compete for the long haul,” without addressing Mr. Bigelow directly.

The Epoch Times reached out to Mr. Bigelow for comments.

DeSantis Trailing Trump

Mr. DeSantis’s campaign and Never Back Down had a combined $109 million in the bank at the end of June, well above the combined $53 million of Mr. Trump’s campaign and his allied super PAC, known as MAGA Inc., according to financial disclosures to the Federal Elections Commission.

However, Mr. DeSantis’s campaign finances have come under scrutiny in recent weeks after his campaign said it had let go of 38 employees, or over one-third of staff.

The campaign had a high cash burn rate, and most of the money raised came from donors who had contributed the maximum legal amount, suggesting more financial tensions ahead.

Mr. Bigelow’s move underscores donors’ concerns about the Florida governor’s struggling campaign, which has been unable to make a dent in Mr. Trump’s huge lead for the 2024 Republican nomination.

The latest Reuters/Ipsos poll showed he had slumped to 13 percent of support among Republicans against 47 percent for Mr. Trump.

Mr. DeSantis shrugged off the poll results as “narrative.”

“These are narratives. The media doesn’t want me to be the nominee. I think that’s very, very clear. Why? Because they know I’ll beat Biden. But even more importantly they know I will actually deliver on all these things. We will stop the invasion at the border, we’ll take on the drug cartels, we’ll curtail the administrative state, we’ll get spending under control. We’ll do all the things that they don’t want to see done,” he said during an interview with Fox News’ Marie Bartiromo in early July.

Parents, particularly mothers, will be his secret weapon during the primary, Mr. DeSantis claimed.

The underdog film “Sound of Freedom” – made on a shoestring budget of just $14.6 million – has raked in more than $156 million at the American box office as of Aug. 3, as the film prepares to go international.

The film follows the journey of former government agent Tim Ballard, played by Caviezel, as he embarks on a dangerous mission to rescue a young girl from the clutches of sex traffickers in the treacherous Colombian jungle. The movie was released in 2,634 theaters on July 4, which has increased to 3,411.

“Thank you for supporting Sound of Freedom! Thanks also for all the prayers for me. I’m feeling much better and am energized by all the awareness that we’ve brought to the issue of child trafficking,” said start Jim Caviezel in response.

Thank you for supporting Sound of Freedom! Thanks also for all the prayers for me – I’m feeling much better and am energized by all the awareness that we’ve brought to the issue of child trafficking. God’s children are not for sale!

— Jim Caviezel (@reallycaviezel) August 3, 2023

In a candid interview with Fox News, Caviezel decried the media’s disturbing silence on the rampant issue of sex trafficking, with an estimated 300,000 children under the age of 18 falling victim to the practice in the United States alone each year, a staggering reality that mainstream media often fails to address adequately.

“300,000 children under the age of 18 were lured into the sex trafficking business in the United States. We are the biggest consumers of child trafficking and pornography in the world. The United States—the home of the free, land of the brave. This is ridiculous. And so the film is a threat,” Caviezel told the Epoch Times.

“Throughout our fourth weekend, audiences have continued to show up and support SOUND OF FREEDOM, and our theatrical partners have given us ample real estate to meet that continued demand,” according to Brandon Purdie, Head of Theatrical Distribution at Angel Studios, which made the movie, according to a July 30 press release.

A Battle Beyond the Screen

Caviezel’s call to action extends beyond his role in “Sound of Freedom.” The actor has cast a critical eye on those who choose to turn a blind eye to child predators, and has labeled them as “riding the fence.”

“You have good, and you have evil. It’s always been this way. But then you have the group in the middle that are riding the fence. The devil owns the fence,” he told the Times.

“I am so proud to be a part of this impactful film,” he said in an interview prior to the film’s release. “In fact, I’d say this is the second most important film I’ve done after ‘The Passion of the Christ.'”

Trump’s Support and the Fight for Justice

Former President Donald Trump has joined the ranks of those championing “Sound of Freedom,” posting on Truth Social to raise awareness about the film’s vital message. In a campaign video, Trump pledged to reinstate policies to combat human trafficking, including subjecting traffickers to the death penalty. He highlighted the devastating consequences of ending Title 42, a policy implemented during his administration to curb the exploitation of vulnerable women and children.

As “Sound of Freedom” continues to make waves in the United States, the film is set to go global – with an international rollout is slated to commence imminently. Screenings are currently scheduled in countries such as South Africa, Australia, New Zealand, and various Latin American nations. This international expansion aims to ignite a global conversation about child trafficking and raise awareness about this pressing issue on a worldwide scale.

Authored by Debra Heine via American Greatness,

House Judiciary Committee Chairman Jim Jordan on Monday accused the FBI of lying about a meeting with Facebook employees regarding Hunter Biden’s laptop before the 2020 election.

The “FBI LIED ABOUT MEETING WITH BIG TECH REGARDING NY POST’S HUNTER BIDEN LAPTOP STORY,” Jordan wrote on X,  formerly known as Twitter.

On November 29, 2022, FBI Special Agent Elvis Chan was deposed as part of the State of Missouri, Schmitt et al. v. Biden, et al lawsuit.

As revealed in Elvis Chan’s deposition, the FBI played a major role in working with Big Tech companies to censor speech. Actions ranged from weekly meetings with social media companies to demanding takedowns of specific accounts and facilitating suppression of certain stories. Chan observed that the platforms became far more aggressive in removing misinformation during the 2020 election cycle than in previous election cycles, and they have remained so.

The Ohio Republican said Internal Facebook documents indicate that Chan made false statements in his testimony regarding “the FBI’s role in the suppression of the Hunter Biden laptop story.”

Chan and Foreign Influence Task Force Section Chief Laura Dehmlow met with representatives from Facebook on Oct. 14, 2020, the same day the New York Post published its bombshell story on the Hunter Biden laptop.  Dehmlow and other members of the FBI task force spoke with Twitter employees by phone the same day.

When asked during that call whether the laptop was authentic, according to Dehmlow’s deposition, ”one of the FBI folks who was on the call did confirm that, ‘yes, it was,’ before another participant jumped in and said, ‘no further comment.’”

After that, the FBI was careful to say “no comment” when asked if the laptop was authentic even though the Bureau had possessed the laptop since 2019 and knew it was authentic.

“They refused to admit it wasn’t Russian disinfo so the story would get suppressed—hiding the truth from voters,” noted Rep. Rep. Ben Cline (R-Va.).

The FBI had for months been warning social media companies behind the scenes of a possible Russian “hack and dump” operation involving Hunter Biden, although, according to Dehmlow, it was fairly common knowledge within the FBI that the laptop was real.

During his deposition, Chan was asked if he had taken part in other meetings with Facebook other than the Oct. 14 meeting, and he responded that he was confident that he had not been “a party to” any other meetings with social media companies regarding Hunter Biden’s laptop.

Chan was then asked if the FBI had any meetings with companies, other than the Facebook meeting, about the Hunter Biden story?

Chan responds that he is “confident” that he was not part of any meetings with Big Tech about Hunter Biden. pic.twitter.com/yMKnExtKMm

— Rep. Jim Jordan (@Jim_Jordan) August 7, 2023

When asked again whether he was aware of any other communications between anyone at Facebook and anyone at the FBI related to the Hunter Biden’s laptop, Chan replied “no.”

“COMPLETELY FALSE,” Jordan wrote on Twitter. The chairman shared a recently obtained internal Facebook document showing that Chan took part in a follow-up call on October 15, 2020—the very next day. Chan said during the call that there wasn’t currently evidence proving “a foreign connection or direction” to the laptop leak. Of course, the FBI knew by this point that there was no foreign connection—Russian or otherwise— to the laptop.

COMPLETELY FALSE.

The Committee has recently obtained an internal Facebook document PROVING that Agent Chan had a secret “follow up” call with Facebook about the Hunter Biden laptop story on October 15, just one day after the @nypost story and the first Facebook meeting! pic.twitter.com/fPkUQzDIy4

— Rep. Jim Jordan (@Jim_Jordan) August 7, 2023

Jordan said Chan made another inconsistent statement when he claimed that he’d had “no internal knowledge” of the FBI’s investigation, when according to a Facebook employee, the agent had indicated that he was “up to speed of the current state of the matter within the FBI.”

But the Facebook employee, an ex-FBI agent, wrote—the day after the story broke—that “Chan advised that he was up to speed on the current state of the matter within the FBI.”

Chan also told FB that “there was no current evidence to suggest any foreign connection…of the leaks.” pic.twitter.com/LTJ28OhFwy

— Rep. Jim Jordan (@Jim_Jordan) August 7, 2023

“Is there any wonder why the Biden DOJ has so far stonewalled the Committee’s efforts to interview Agent Chan?” Jordan wrote. “Our investigation remains ongoing and we will continue to update the public with our findings as we prepare and consider legislation to fight the censorship-industrial complex and protect the First Amendment.”

After weeks of relative quiet, the Syrian capital of Damascus was rocked by Israeli missile strikes in the early Monday morning hours, resulting in the deaths of four Syrian soldiers and several more wounded, according to state agency SANA.

The attack also caused unspecified “material damage” – while multiple inbound projectiles were reportedly intercepted by Syrian air defense. Videos which emerged in the aftermath appeared to show intercept explosions above the city in the overnight hours.

“At around 02:20 am on Monday, the Israeli enemy carried out an aerial act of aggression from the direction of occupied Syrian Golan, targeting some sites in Damascus,” SANA described.

“Our air defenses intercepted the missiles and shot down some of them, and the aggression resulted in the martyrdom of four army personnel and the injury of four others, in addition to causing some material damages,” the local report added.

The Associated Press cited an anti-government group based in the UK to claim that the fresh attack “targeted weapons and munitions warehouses and positions of Iran-backed militias around Damascus.” And yet, the Syrian government is saying only its soldiers were among the dead, not Iranians. 

Syria says four soldiers killed in alleged Israeli airstrike on Damascus
Another four wounded and property damage reported in first apparent strike since July 19 #Syria #israel #Damasco pic.twitter.com/vDSdlF1qwu

— Agencia AJN (@AgenciaAJN) August 7, 2023

Over the past couple of years these kinds of Israeli attacks have been semi-regular, often coming weekly, but lately have been less so.

For example, the last significant missile attack on Damascus was on July 19, and it killed three pro-government fighters and injured multiple others. There has been an estimated 20 Israel attacks on Syria so far this year alone.

Another reported [yet unconfirmed] video from #IAF 🇮🇱 airstrikes on Damascus last night. #Syria 🇸🇾 pic.twitter.com/pBMWOTX2HX

— Aleph א (@no_itsmyturn) August 7, 2023

The New York Times has detailed of the July attacks:

Last month, Israeli forces attacked seven targets in Damascus, according to Israeli reports. They were said to include warehouses used by Hezbollah, the Lebanese armed group, which, along with Iran, has supported the government of President Bashar al-Assad in the Syrian civil war.

Currently there are also rising tensions between the US and Russia in Syrian skies, given the recent dangerous aerial intercepts which have taken place, involving Russian fighter jets and American drones.

Militias described as ‘pro-Iranian’ groups have also been increasingly active in pressuring US occupation forces in the oil and gas rich northeast. US forces have been cutting Damascus (and the Syrian population) off from its own resources.

The absence of counter-ISIS operations by the US and partner forces at Tanf is not a surprise.

As both Bolton and Pompeo boasted in their memoirs, US forces remained at Tanf to counter Iran, not ISIS. 5/n pic.twitter.com/bU8ZqWDmNH

— Brian Finucane (@BCFinucane) August 3, 2023

There are also early signs suggesting Syrian and Russian forces could be planning for a future major operation to liberate Idlib province in Syria’s northwest, which since 2015 has been in the hands of West-backed jihadists, including Al Qaeda groups. 

Washington has long maintained it is engaged in ‘counter-ISIS’ operations in Syria, but it was always really about weakening and cutting off the Tehran-Damascus-Hezbollah axis.

Readers have been well informed about the deteriorating state of the commercial real estate sector, with reports from major banks showing a downturn amid high-interest rates and tightened credit, which has pushed up borrowing costs and forced a rise in defaults.

The latest data from Trepp, which tracks commercial mortgage-backed securities (CMBS) securities market data, shows the delinquency rate of commercial property loans packaged up by Wall Street jumped again in July, with four of the five major property segments posting increases. 

The #CMBS delinquency rate rose 51 basis points to 4.41% in July 2023. That is the highest level since December 2021.https://t.co/AVMQZ2LZmK

— Trepp (@TreppWire) August 4, 2023

“While the rest of the US economy has seen relief in terms of higher equity prices, better-than-expected corporate earnings, and falling inflation numbers, the commercial real estate (CRE) market continues to be left behind,” Trepp wrote in the report. 

Trepp data found the delinquency rate rose 51 basis points to 4.41% last month — the highest level since December 2021. Office delinquencies increased by 46 basis points to 4.96% — up more than 350 basis points since the end of 2022. The deterioration in the office segment is intensifying at an alarmingly rapid pace. 

A broad overview of the US CMBS market shows the delinquency rate increased to 4.41%, a 51bps rise compared to the previous month, but still significantly lower than the 10.34% rate recorded in July 2012. The rate peaked at 10.32% in June 2020 during the government-forced Covid lockdowns. 

Here are more highlights from the report:

• Year over year, the overall US CMBS delinquency rate is up 135 basis points.

• Year to date, the rate is up 137 basis points.

• The percentage of loans that are seriously delinquent (60+ days delinquent, in foreclosure, REO, or non-performing balloons) is now 3.92%, up 20 basis points for the month.

• If defeased loans were taken out of the equation, the overall headline delinquency rate would be 4.64%, up 51 basis points from June.

• One year ago, the US CMBS delinquency rate was 3.06%.

• Six months ago, the US CMBS delinquency rate was 2.94%.

To better understand what might come next for the CRE market, Kiran Raichura, Capital Economics’ deputy chief property economist, recently warned in a note to clients that the office segment might experience a 35% plunge in values by the second half 2025 and “is unlikely to be recovered even by 2040.” 

According to swipe data from Kastle Systems, the US office occupancy rate is less than 50%. The figure has plateaued since September, indicating a new reality of remote work. 

One major hurdle for CRE space is that “more than 50% of the $2.9 trillion in commercial mortgages will need to be renegotiated in the next 24 months when new lending rates are likely to be up by 350 to 450 basis points,” Lisa Shalett, chief investment officer for Morgan Stanley Wealth Management, wrote in a note to clients. 

Shalett expects a “peak-to-trough CRE price decline of as much as 40%, worse than in the Great Financial Crisis.” 

Bank of America analysts expect challenges in the CRE space but noted, “They are manageable and do not represent a systemic risk to the US economy.” 

Meanwhile, analysts at UBS warned: 

“About $1.3 billion of office mortgage loans are currently slated to mature over the next three years.

“It’s possible that some of these loans will need to be restructured, but the scope of the issue pales in comparison to the more than $2 trillion of bank equity capital. Office exposure for banks represents less than 5% of total loans and just 1.9% on average for large banks.” 

We’ve already seen major building owners returning their office towers and malls to lenders in California (here & here) and elsewhere (here). This will result in an uptick in CMBS delinquencies moving forward.  

… and remember what we wrote during the regional bank crisis earlier this year — the note was titled “Nowhere To Hide In CMBS”: CRE Nuke Goes Off With Small Banks Accounting For 70% Of Commercial Real Estate Loans. 

Authored by James Howard Kunstler via Kunstler.com,

Normies Awake!

“The West can’t do diplomacy in general, it can’t run its cities or countries except into the ground, its high-tech projects fail almost as a rule, its infrastructure is crumbling, its economies are crumbling, and all public policies seem to have a civilizational suicide as a final goal.”

– Gaius Baltar

So-called Normies might be musing, this month of approved mental languor, whether the mighty efforts to suppress news of all kinds, about everything, have concealed the true tendings of our wayward country – leading them to wonder whether it is even possible to be a Normie in such an abnormal time and place.

What news is suppressed?

That the USA is worse than dead broke.

That the people were poisoned, apparently on-purpose.

That the spectral “Joe Biden” sold out our country.

That the war we started in Ukraine, on purpose, for no good reason, is about to be lost, and with it our standing around world.

That there actually is such a criminal organism as the Blob at large in our government, responsible for the astounding abnormality immersing us.

But never mind all that… for now, just go see Barbie. Have a clam roll, a dip in the ocean, another margarita…. September will be here soon enough.

Eventually, the official perversion of money – especially of borrowing an awesome lot of it with no intention of ever repaying – leads to the unhappy circumstance of money disappearing until nobody has any money. And by such, the broke-ness of the government transmogrifies to a whole land full of broke people. Many banks go broke as well. Even the high-fliers who hoarded things that purport to represent money go broke. Then, nobody has the means to buy anything. Businesses that can’t sell anything stop being businesses. After a while, no activity is meaningful except grubbing in the soil to grow some food, or stealing it from those who grubbed and grew it. By then, you can barely even call it a society.

By September, we’ll have some idea where all that is heading. The bond market is wobbling because the government can’t stop increasing its spending. America issues more and more bonds to borrow ever more money, but to the world’s bond-buyers (a.k.a. lenders), what used to be considered virtually risk-free now looks like a bad bet. So, the enticement to buy, which is called the interest rate, has to go up. But as it goes up, the cash value of existing bonds goes down (who wants the older bonds when the newer ones pay more?)

The holders of bonds are mainly big institutions: banks, pension funds, insurance companies, sovereign wealth funds (other countries). They put their large holdings into bonds because in normal times they are safe and dependable investments. But these are abnormal times. When the value of their bonds goes down a lot, the value of their reserves goes down. And when those reserves get reduced too much in relation to the institutions’ liabilities (what they owe), the institutions go bankrupt. When that happens, the people who are vested in those institutions lose their money, too, and end up having to sell stocks and other property to meet their obligations. This ends up looking like what we call “a crash.” It will get Normies’ attention.

How’s it going with the poisoning of America? Since Elon Musk bought Twitter (now “X”), the app has developed a beefed-up immune system against censorship aimed at it by the FBI, CIA, DHS, and the White House. Twitter is once again a popular medium of information exchange, where news flows pretty freely these days. Even news of previous censorship and cancellation is getting out – and with interesting possibilities for consequences.

The many brave doctors who questioned the “vaccine” story, are being heard now. Other entrepreneurial analysts on Twitter — e.g., Edward Dowd, The Unity Project, “The Ethical Skeptic,” “Chief Nerd”— regularly publish data and charts showing America and the rest of the world just how much damage the mRNA shots did to millions of people, how many have been disabled and killed by them. By September, the awareness of what has been done, and the psychopathic degree of official lying about it, could pass that threshold beyond which everybody knows and the great crime is revealed. Expect a major American political attitude adjustment.

There is surely enough publicly-seen evidence to make an impeachment case against “Joe Biden.” The process seems to move slowly, given the traditional lassitude of Congress, but momentum is building as all these other national fiascos careen toward criticality due to abysmal executive leadership. That evidence shows the Biden Family engaged in an international racketeering scheme to peddle “JB’s” influence when he was vice-president. That’s bribery and the very word is in the short passage of our Constitution describing the grounds for sacking a high official.

Rep. Comer’s House Oversight Committee has already dug up voluminous suspicious activity reports in Biden family bank accounts and has promised more, including information of offshore hidden accounts. Jim Jordan’s preliminary impeachment inquiry has drawn up its first witness list which includes the shadowy “JB” aide Michael Carpenter, and the slippery Trump impeachment “whistleblower,” CIA agent Eric Ciaramella — who essentially accused Mr. Trump of attempting to look into the very bribery crimes of the Biden family lately exposed, a pungent irony. When the impeachment process gets underway in earnest this fall, I expect “Joe Biden” will resign, leaving Ms. Harris to be managed by the shadow-president Barack Obama. That in itself will become a crisis of its own.

Our country has vested its prestige and treasure — but not our blood, at least yet — in the preposterous Ukraine proxy war, completely misjudging every element of it. The Russiaphobia of so many Blob officials was amplified by their own dishonest efforts to blame Russia for all the self-created ills of our own national life. The dirty secret of the Ukraine war is that we are no longer in control of events. The Russians are going to settle things there and that poor palooka of a country will be wrested back into their traditional sphere-of-influence, no more to be a troublemaker. I doubt that our puppet, Mr. Zelensky will be in power by Halloween. NATO will cease to exist and each nation of Europe will then struggle to settle its own sovereign hash without much of an industrial economy left. Expect governments to fall.

In the meantime, enjoy the clam rolls, the surf, the corn-dogs at the fair, and all the other blessings of languorous August. Rest up for what’s coming when Normies awake!

*  *  *

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After the worst week in months, it’s perhaps no surprise that we got a little BTFD today in stocks, but bonds kept doing more of the same – bear-steepening – the max-pain trade for markets right now. As Goldman noted this morning:

It’s a trade that hurts real money both from a curve and level perspective.

The rates macro Hedge Fund community didn’t have it on as it’s still reeling from the March VaR shock.

It hurts anyone who had a conditional view, that is anyone in the bull steepening camp.

In 2022, we also saw a lot of banks move their mortgages into Held-to-Maturity portfolio as the Fed started hiking.

These moves will amplify the losses already accumulated.

Finally when you look at more recent MBS vintages, the negative convexity will be painful here. (Side note: older vintages have actually turned positive convexity so those MBSs should be much better off). 

The only cohorts that seem to have the right trade are cross over accounts that hedged against higher rates and CTAs – trend following Hedge Funds – that were picking the carry by shorting the frontend and selling the backend. 

2s30s is back at its least inverted since May…

Source: Bloomberg

The short-end of the curve and stocks benefited from NYFed’s Williams dovish comments to NYT that the need for more rate hikes is “an open question,” … And if the inflation rate keeps falling, the central bank may need to lower interest rates in 2024 or 2025 to ensure that real interest rates don’t rise further.

“Monetary policy is in a good place – we’ve got the policy where we need to be,” Williams said in an Aug. 2 interview with the New York Times that was published Monday.

“Whether we need to adjust it in terms of that peak rate – but also how long we need to keep a restrictive stance —  is going to depend on the data.”

In equity-land, Small Caps were the day’s laggard (ending around unch) while The Dow led the gains…

Notably, 0-DTE traders pushed back against the rebound in the S&P (buying Puts while Calls were flat)…

Source: SpotGamma

AAPL down for the 5th straight day – down around 10%, its biggest such drop since Nov 2022 (and back below the Jan 2022 prior record highs)…

TSN also tumbled but dip-buyers put some lipstick on that pig…

VIX (and VVIX) slid lower today (but remain elevated from last week’s lows)…

Source: Bloomberg

But bear in mind, VIX seasonality is not an equity bull’s friend…

US Treasuries were mixed today with the short-end outperforming and long-end sold (2Y unch vs 30Y +6bps)

Source: Bloomberg

The yield on 30-year German bonds rose nine basis points to 2.72%, the highest since early 2014…

Source: Bloomberg

The dollar ended basically unchanged on the day, selling off vs its fiat peers during the US session after overnight gains…

Source: Bloomberg

Bitcoin ended unchanged, bouncing back from morning weakness, back below $29,000…

Source: Bloomberg

Gold ended the day marginally lower, bouncing off pre-payrolls levels from Friday…

Oil also sank to pre-payrolls levels and bounced…

Finally, the rebound in Fed repo balances has stalled the Q2 meltup in stocks…

Source: Bloomberg

What happens next?

Authored by Jonathan Turley,

When Russia invaded Ukraine, we discussed how various Russian artists, athletes, and performers were blacklisted or fired for not publicly condemning the invasion or Vladimir Putin. Artists and athletes turned on their colleagues and forced them to change their political views as a condition for singing, playing or writing.

Now, Soprano Anna Netrebko is suing the Metropolitan Opera and its general manager Peter Gelb for defamation, breach of contract and other violations linked to her termination.

Netrebko’s termination followed the invasion in 2022 after Gelb had demanded she repudiate Russia President Vladimir Putin.

If true, Gelb should himself be fired.

Conditioning performances on adhering to a political viewpoint is an outrageous denial of free speech and artistic freedom.

Indeed, it is precisely the type of abuses that define the authoritarianism of Putin and his regime. For centuries, artists have fought for the freedom to create regardless of their political viewpoints.

Gelb is accused of doing precisely what studios and companies did to socialists and communists in the 1950s in demanding that they renounce their political beliefs if they wanted to write, sing, or act.

None of this seems to matter to the Met’s loyal supporters in New York. The American Guild of Musical Artists filed a grievance on Netrebko’s behalf and the arbitrator found that the Met violated the union’s collective bargaining agreement when it canceled her contracts to appear in Verdi’s “Don Carlo” and “La Forza del Destino” and Giordano’s ”Andrea Chénier.” She was awarded  $209,103.48.

Yet, Gelb was retained as general manager of the Met.

Netrebko now alleges ”severe mental anguish and emotional distress” that included “depression, humiliation, embarrassment, stress and anxiety, and emotional pain and suffering.”

She says that she is being blackballed due to her refusal to adhere to the political viewpoints of Gelb and the Met. She alleges that  Gelb and the Met fueled protests against her and destroyed her reputation.

The loss is to the art world.

This not only bars a talented artist, but embraces the same intolerance from the Red Scare period. It is an all-too-familiar story as many on the left embrace censorship and blacklists to silence those with opposing views. They support one of the great artistic institutions in the world, but now effectively support a political litmus test for artists.

Two months ago when both revolving credit (i.e., credit card debt) and interest charged on credit cards hit a record high, we said that this trajectory was unsustainable and it was only a matter of time before the debt-funded US consumer hit a brick wall. One month later, the first brick wall was hit, when in May US consumer credit grew by a paltry $7.24BN, down more than 50% from the downward revised $20.3BN in April; and while revolving credit posted a healthy increase of $8.5 billion, the shocker was in the non-revolving segment, also known as student and auto loans, and which unexpectedly dropped by $1.3 billion, the first negative print since April 2020

Amusingly, in our commentary last month we also said that “with non-revolving credit now shrinking, the final straw will be the reversal in (record) credit card debt. With credit card interest rates also at a record 22.16%, we won’t have long to wait.”

We were right as we had to wait just one month, because fast forwarding to today’s release of the latest Fed consumer credit report at 3pm ET, moments ago we had another shocker, this time on the other side of the credit spectrum, because while non-revolving credit jumped by a whopping $18.5 billion, up from last month’s drop (which was revised to a tiny positive print this time) a jump which will promptly reverse once the student loan repayment moratorium ends on Sept 1…

… it was the revolving credit that was the jawdropper this month, because after several months of solid increases, including a near-record $14.8 billion in April, in June credit card debt actually dropped by $0.6 billion – the first negative print since April 2021 when the US consumer was still in shock from the post-covid reality and was aggressively saving money, money which has now been long spent – as Americans actively paid down their debt, something they only do when a recession looms!

Needless to say, a drop in revolving credit is a stunner because outside of a crisis, this is usually indicative of an end-of-cycle recession, when US consumers – traditionally responsible for 70% of US GDP with their debt-fueled purchases – go into hibernation and start to repay their bloated credit card bills, which as of today are accruing a mindblowing 22% average interest (see below).

Adding across these two categories, the total June consumer credit print was +$17.85BN which as noted above, was entirely thanks to the $18.5BN increase in non-revolving (student and auto loans) credit.

Drilling deeper into the non-revolving credit print reveals that not all is well here either, because while in Q2 auto loans increased by a healthy, if hardly, blockbuster $17.6 billion (to be expected when rates on 60-month auto loans are at all time high), student loans actually shrank by $9.1 billion, the first decline since Q2 2022, and at a time when most student borrowers are still in forebearance.

And once repayment of student loans resumes by mandate in two months, watch out below.

Meanwhile, with average credit card interest rates rising above 22% to a new record high…

… this month’s drop in credit card debt was just the beginning…

Tesla shares are slipping this morning after the unexpected departure of the company’s Chief Financial Officer (and, as the company’s 8-K wryly notes, Master of Coin), Zach Kirkhorn. 

Shares were down almost 4% in morning trading on Monday.

Kirkhorn had been with the company for 13 years. Tesla filed an 8-K Monday morning which stated that “Kirkhorn stepped down as of August 4, after a thirteen-year tenure with the company, the last four years of which he has served as Master of Coin and Chief Financial Officer.”

The company “appointed Vaibhav Taneja as Chief Financial Officer in addition to his current role as Chief Accounting Officer, to succeed Zachary Kirkhorn,” the regulatory filing reads. Taneja is 45 years old. 

Taneja has experience working for Tesla and Musk, having previously worked as “Tesla’s Chief Accounting Officer since March 2019, as Corporate Controller from May 2018, and as Assistant Corporate Controller between February 2017 and May 2018”.

He also “served in various finance and accounting roles at SolarCity Corporation from March 2016”, the filing concludes. 

Traders will be on watch as to how the market perceives the departure, since no detail has been given as to why Kirkhorn stepped down. We are left to wonder how unplanned the departure was as, generally, when CFOs depart a company, they do so with a succession plan in place and the company telegraphing their move well in advance so as to not surprise the street.