By Peter Tchir of Academy Securities

Central Banks are Truly Data Dependent

There are a few things that I knew about the military before I joined Academy Securities:

• Never fight a land war in Asia. Whether it was Montgomery, Eisenhower, or MacArthur who said it first, it was made famous by The Princess Bride.
• Don’t fight a war on two fronts. While this seems relatively obvious (unless you have overwhelming equipment, troops, morale, and logistics), the blunder has been made repeatedly.

While having nothing to do with war, I’ve found that over time (as a contrarian):

• Don’t fight consensus in December and August. Of the two, December is the most obvious to me. Whatever you think about the consensus always being wrong, consensus seems to be able to handle December remarkably well. August comes in a close second. There are plenty of reasons why this could be true (senior decision makers on vacation being high on the list) and I am reluctant to fight consensus in August.

We will explore this topic (briefly), but if it isn’t your cup of tea or if you want to really focus on the current geopolitical landscape, please read this month’s Around the World where the Geopolitical Intelligence Group provides their latest insights on:

• Russia and Ukraine.
• Taiwan presidential candidate’s trip to the U.S.
• Heightening tensions with North Korea.
• Sending forces to the Gulf to deter Iran.

Fighting Consensus

Academy had a busy media week where we got to discuss our market outlook for the coming weeks.

On Bloomberg TV they distilled our view to the simple headline – Commercial Real Estate to Squeeze Higher. The full interview starts at the 7:40 mark and talks about credit and central banks in addition to our broader market outlook.

Our view that high yield will continue to surprise to the upside was articulated in this piece. On this topic we have been fighting consensus because too many people are bearish. Also, we try to point out how expensive it is to short credit. We almost dragged out some examples showing how easy it is to conflate charts that show credit spreads widening and making money by being short. The historical spread charts tend to make it look easier to make money being short credit than it really is. Of note, the cost of carry, rolling down the curve, etc. are all “kind of” boring, but real when trying to time “credit crashes”. The BBB tranches of ABX CDS Indices were an incredibly unique opportunity (small spreads and 0 recoveries when they went).

This article captured some of the “don’t fight consensus” view that we currently have. It highlights both the enthusiasm and many of the risks/dangers facing the market. I wholeheartedly agree with the risks (especially with jobs at the forefront), but I’m not willing to fight it for now. Basically, the views put forth in Ch-ch-ch-ch-Changes seem even more relevant today than they did last weekend (when I also thought that they were quite relevant).

This brings me to another central theme.

Central Banks are Truly Data Dependent

We wrote Central Banks Taking a Backseat on Thursday morning and thestreet.com picked up on it. It is something that we repeated in other reports, but the main theme is:

• Central Banks are TRULY DATA DEPENDENT at the moment.
   
  • Not “data dependent” in a way that really means that “any sniff of strong data and we will hike”, but truly data dependent.
  • They will be weighing all sorts of data. From jobs, to inflation, to retail sales, to housing, to bank lending, to financial conditions, and measuring them all against each other. It will take real strength or extreme weakness across a variety of data for the Fed (or ECB) to act. No single data point means that much right now.
  • They will be looking for trends. One exceptionally high print (or low print) will be largely ignored. They want to think about where the data is heading. They might even, at least in private, use the word “anomaly” in regard to individual data releases. That is very different than their view over the past year where anything hinting at inflation was taken as “gospel truth” (while deflationary indicators could be ignored).
  • They have a high hurdle to hike and an incredibly high hurdle to cut in the coming months. That should reduce volatility in the rates market, which is supportive for risk assets.

The BOJ almost upset the apple cart as we got to discuss on Asia Daybreak (12:35 mark) on Thursday evening. Thursday’s sell-off seemed overdone as chatter circulated that the Bank of Japan would ease back on bond purchases and target higher yields across the curve. Yes, higher Japanese bond yields should put pressure on global bond yields (some Japanese buyers who bought foreign denominated bonds and hedged out the FX risk will just buy yen denominated bonds, but that seems like a relatively minor change in the grand scheme of things). If anything, Thursday’s sell-off gave bears a chance to reset shorts, which if I’m correct, will help fuel the next legs of this rally.

Bottom Line

I cannot say that I like valuations, that consensus hasn’t turned bullish, or that recession risks are being too readily dismissed. However, I can say that right now doesn’t seem to be the time to fight it.

Market resiliency will force the last bits of money on the sidelines into the markets (and I think that many will chase the laggards more than the Magnificent Seven).

Look for rates volatility to decline and 2s vs 10s to become less inverted (mostly through 2-years rallying).

Credit should grind tighter. I want out of that trade. It has been a good one, but I think that August could see another leg tighter given a lack of supply, too many bears, and lower volatility across asset classes.

Sticking with long the laggards and a marginally overall bullish bias on equities.

Stay cool, hydrate, and wear sunscreen (a fun graduation speech/song).

Despite a wave of negative criticism from mainstream outlets like (Rolling Stone and Bloomberg) targeting the anti-child trafficking movie “Sound of Freedom,” the independent film is defying expectations by increasing its nationwide screening count. The film’s earnings have exceeded $140 million, and there are plans to expand its reach to over 20 countries in Central and South America, the United Kingdom and Ireland, Australia, and South Africa. 

The film’s production company Angel Studios tweeted, “Sound of Freedom is on its way around the world.” 

You ask, we answer. “Sound of Freedom” is on its way around the world.

Find international showtimes at https://t.co/tUytCofxfr .#SoundOfFreedom #AngelStudios pic.twitter.com/fOCIZ7od1p

— Angel Studios (@AngelStudiosInc) July 26, 2023

On Friday, Angel Studios released a statement, “SOUND OF FREEDOM enters its fourth-weekend screening in 3,411 theaters, and is crossing the total booking threshold of over 4,000 screens and topping $130M in box office revenue.” 

“Everyone in the industry knows that films are generally supposed to lose screens week-over-week, not add them. And yet, the incredible word-of-mouth driving SOUND OF FREEDOM continues to spread. In response, we are continuing to expand our offering in theaters this weekend,” said Brandon Purdie, Angel Studios Head of Theatrical. 

According to Box Office Mojo, the movie that only had a budget of $14.5 million has earned $140 million as of Friday since being released on July 4 — and remains in the top five hottest movies at theaters. 

Geesey told Newsweek, “Since Sound of Freedom launched in the U.S., demand has been building around the world in dozens of regions and languages. Child trafficking is a global issue, and we hope to build on the incredible momentum here in the States and share the film’s powerful message worldwide.”

He told Variety: “Sound of Freedom has become the people’s movie. This is the opposite of the top down system developed by Hollywood gatekeepers. We are empowering people to be part of choosing, funding, and sharing stories that amplify light and impact culture.”

The film, which stars Jim Caviezel, is based on the true story of Tim Ballard, a former Homeland Security agent who battles against human trafficking. 

“A MAJOR MOTION PICTURE MASTERPIECE THAT EVERYONE MUST SEE!”

“An inspiring, life-changing film that captured my heart and changed the way I think about everything.”
See showtimes at https://t.co/JEKL04lTRB #2MillionFor2Million pic.twitter.com/iCjrweVSxl

— Angel Studios (@AngelStudiosInc) June 30, 2023

At the end of the film, a message reads, “Human trafficking is a 150 billion-dollar-a-year business. The United States is one of the top destinations for human trafficking and is among the largest consumers of child sex. There are more humans trapped in slavery today than [at] any other time in history—including when slavery was legal. Millions of these slaves are children.” 

No matter how much corporate media bashes the movie as nothing more than ‘QAnon conspiracy theories,’ the horrors of child trafficking are very real, and the popularity of it continues to expand worldwide. 

Authored by Jesse Felder via The FelderReport.com,

Investors have now gone “all in” on the soft landing narrative, just like they did in 1989, 2000 and 2007.

Soft Landing Optimism Is Everywhere. That’s Happened Before. https://t.co/k1CX8VVg76 by @jeannasmialek pic.twitter.com/5tmLjYW9oE

— Jesse Felder (@jessefelder) July 27, 2023

Funny how they forget each time that “it’s all about the lags.”

‘During the tightening cycle, the economy typically expands at its fastest pace, as it feeds off the lagged effects of the prior period of policy accommodation. It slows down precipitously in the two years that follow the END of the Fed tightening cycle.’ https://t.co/VJs8z01qL9

— Jesse Felder (@jessefelder) July 27, 2023

But there’s one group that clearly hasn’t forgotten and that’s the folks in the c-suite.

‘As a percentage of companies for which there has been any insider activity, those with net insider buying dropped to 12%. That percentage is lower than for any other month over the past decade.’ https://t.co/bYRrhlnlNd

— Jesse Felder (@jessefelder) July 26, 2023

And there are indications within the markets that suggest their caution could be warranted.

‘There are very few conditions in which we have any specific expectations for near-term action. One exception is when the market is strenuously overextended in a “trap door” situation combining rich valuations with unfavorable internals.’ https://t.co/mX7CMUP9tT by @hussmanjp pic.twitter.com/dsJDhrxuXB

— Jesse Felder (@jessefelder) July 24, 2023

Longer-term, there may be cause for greater economic volatility than the “soft Landing” narrative would suggest.

“It’s this paradox where we are investing massive amounts of capex in every possible sector; from biotech, to healthcare, to industrials, to new materials, except in commodities which you need to accomplish all these other goals.” https://t.co/qrzRxhGkk1

— Jesse Felder (@jessefelder) July 23, 2023

Thanks for reading and have a great weekend!

*  *  *

Click here to subscribe to our free weekly newsletter and get this post delivered to your inbox each Saturday morning.

A long-suppressed dread disease appears to be taking up permanent residence in America’s Southeast, with Florida emerging as a principal hot spot. 

That disease is leprosy, also known as Hansen’s disease. Caused by slow-growing bacteria, it can affect nerves, skin, eyes, and nasal lining. While early treatment can be highly effective, a neglected case can lead to crippling disfigurement, paralysis and blindness.  

Cases in America most recently peaked in 1980, followed by a dramatic decline. Since 2000, however, cases have been gradually rising, and have doubled in the southeastern states, according to the Centers for Disease Control and Prevention. Central Florida accounts for nearly a fifth of all cases in the United States. 

The numbers themselves aren’t alarming yet — eight cases in Florida in 2023. However, what’s particularly concerning is that recent infections don’t appear to have originated from foreign travel to high-risk countries like India, Brazil and Bangladesh.

“Florida has witnessed an increased incidence of leprosy cases lacking traditional risk factors. Those trends, in addition to decreasing diagnoses in foreign-born persons, contribute to rising evidence that leprosy has become endemic in the southeastern United States,” say the authors of a CDC report. “Endemic” describes a disease that regularly occurs in a given region. “Travel to Florida should be considered when conducting leprosy contact tracing in any state.”

In 2020, six states accounted for 69% of the country’s 159 cases of leprosy: Florida, California, Louisiana Hawaii, New York and Texas. The CDC spotlights the case of a 54-year-old man who contracted leprosy in 2022, with painful lesions and swelling: 

“He denied any domestic or foreign travel, exposure to armadillos, prolonged contact with immigrants from leprosy-endemic countries, or connections with someone known to have leprosy. He has resided in central Florida his entire life, works in landscaping, and spends long periods of time outdoors.”

You read that right: where the spread of leprosy is concerned, the CDC says contact with armadillos could play a role. “A high percentage of unrelated leprosy cases in the southern United States were found to carry the same unique strain of M. leprae as nine-banded armadillos in the region, suggesting a strong likelihood of zoonotic transmission,” say the CDC report authors. A Colorado State University study suggests that handling and eating armadillo meat is far more risky than casual contact. 

Assuming you don’t eat armadillos, you’re far more likely to catch leprosy from a human: “Prolonged person-to-person contact through respiratory droplets is the most widely recognized route of transmission,” says the CDC.

Prompt treatment with antibiotics is highly effective. The Health Resources & Services Administration says “patients become noninfectious after taking only a few doses of medication and need not be isolated from family and friends.” 

Thankfully, that means that, unlike what was done in previous times, lepers need not be exiled to colonies, as dramatized in the 1973 Steve McQueen movie, Papillon: 

Authored by Efthymis Oraiopoulos via The Epoch Times (emphasis ours),

The family of one of the 13 fallen U.S. Marines in the 2021 Afghanistan withdrawal was asked to pay $60,000 to transfer her body to Arlington National Cemetery, according to her family.

Rep. Cory Mills (R-Fla.) was the first to make this known after contacting the fallen Marine Corps Sgt. Nicole Gee’s family, Fox reported.

Mr. Mills told Fox that he was “enraged to learn that the Department of Defense had placed a heavy financial burden” on Gee’s family.

Because of a change in legislation, the Department of Defense (DOD) is no longer obliged to pay for the transfer of fallen service members, according to Mills’s office.

Christin Shamblin, Gee’s mother-in-law, told Fox that the DOD paid to transfer her body to Sacramento, California, Gee’s place of residence and recruitment station, where services were held. When Gee’s family wanted to transfer her body to Arlington National Cemetery, they learned that the cost was $60,000, according to Gee’s husband.

As her husband was trying to find a solution, a nonprofit, Honoring Our Fallen, contacted him offering to transfer the body with a private flight.

Gee’s family wasn’t clear on how to move her body to Arlington, saying the process was complicated.

Mr. Mills said the responsibility should fall on the DOD and not burden the family of the fallen with a “staggering $60,000” bill.

“It is an egregious injustice that grieving families were burdened to shoulder the financial strain of honoring their loved ones. This is an unacceptable situation that demands immediate rectification,” he said.

A Pentagon spokesperson told Fox:

“Through the transfer of remains process, Marine Corps casualty assistance officers were in direct communication with Sgt. Gee’s family, and they remain in contact today. In the case of Sgt. Gee, the Marine Corps stayed consistent with its policy that all costs associated with internment be borne by the government. At this time, we have no record of any incurred charges or any pending requests for reimbursement associated with the transportation of Sgt. Gee’s remains to Arlington National Cemetery. The Marine Corps takes very seriously the transfer of remains of our Marines—they never leave a Marine behind, and they care for the families of their fallen Marines.”

Honoring Our Fallen founder Laura Herzog said she was “honored to work directly with Sgt. Nichole Gee’s family after she was killed in Afghanistan.”

“The Marine Corps flew her remains to California so the people of Sacramento could pay her their respect,” Ms. Herzog said. “Sgt Gee’s family then decided they wanted her interred in Arlington National Cemetery. To avoid having Sgt. Gee’s remains be transported via a commercial airline, I personally secured an in-kind donation of a flight in a private aircraft. Sgt. Gee’s family accepted the donation of a flight, and Honoring Our Fallen, as a nonprofit 501 (c3), accepted the in-kind donation.”

She noted that no “monies were exchanged or expected to be paid by our organization or the family.”

“This was a donation made by a veteran who donated this service to us to assist us in honoring Sgt. Gee,” Ms. Herzog said. “We are proud of our support to Sgt. Gee and her family. It takes a village, and I am proud of our communities that came together to honor and support her sacrifice.”

Read more here…

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

The U.S. Centers for Disease Control and Prevention (CDC) said that red meat allergies caused by certain types of ticks is an “emerging public health concern” after two studies found that the phenomenon is on the rise.

Alpha-gal syndrome, or AGS, is a serious and potentially life-threatening allergic reaction that comes after people eat red meat or consume products that have alpha-gal, a type of sugar found in most mammals, according to the CDC.

The syndrome is caused by the lone star tick, which can transfer alpha-gal into an individual’s body. As a result, the body can develop an immune system response to the sugar whenever one consumes it.

The lone star tick, or Amblyomma americanum, can be found across the southeastern and eastern United States as well as Mexico and parts of Canada. The tick has a single spot on its back, earning it the “lone star” name. It’s also known as the northeastern water tick or the turkey tick.

Unlike deer ticks, the lone star tick has a smaller chance of transmitting Lyme disease. However, it can transmit a range of other diseases to people such as monocytotropic ehrlichiosis, tularemia, and southern tick-associated rash illness. There have also been reports that it is a vector the heartland virus.

The tick generally lives in wooded areas, namely where white-tailed deer reside. It can also be found in areas between grassy and forested ecosystems, using thick underbrush or high grass to attach to its victim—like the deer tick or other ticks.

“The number of suspected AGS cases in the United States has increased substantially since 2010, and states with established populations of lone star ticks are most affected, although suspected AGS cases were also identified in areas outside of this tick’s range,” the CDC said in a report this week.

As for the AGS meat allergy, it can manifest as anaphylaxis—or a life-threatening allergic reaction characterized by a sudden constriction of airways and a drop in blood pressure, according to the National Institutes of Health. Researchers say that unlike allergic reactions to other foods, which are generally immediate, AGS reactions can occur three to six hours after eating red meat.

AGS symptoms can include a rash, hives, nausea, vomiting, diarrhea, shortness of breath, stomach pain, and heartburn. Symptoms can be mild to severe, officials have said.

“The burden of alpha-gal syndrome in the United States could be substantial given the large percentage of cases suspected to be going undiagnosed due to non-specific and inconsistent symptoms, challenges seeking healthcare, and lack of clinician awareness,” Dr. Johanna Salzer, an author with two CDC studies, said in a statement. “It’s important that people who think they may suffer from AGS see their healthcare provider or an allergist, provide a detailed history of symptoms, get a physical examination, and a blood test that looks for specific antibodies (proteins made by your immune system) to alpha-gal.”

Between 2010 and 2022, about 110,000 cases of AGS have been officially identified, it said. But the actual number of AGS cases in those 12 years or so might be as high as 450,000, said the CDC.

Read more here…

“Ye,” the musician and designer formerly known as Kanye West, was freed from ‘Twitter jail‘ on Saturday evening after social media platform “X” (formerly known as Twitter) reinstated his account after an eight-month ban. 

In early December, Ye tweeted an image of a swastika embedded with a star of David that was immediately removed by Twitter police and led to the suspension because the social media platform said it was “inciting violence.” 

As of Sunday morning, Ye had yet to tweet since having his account reinstated. 

The Wall Street Journal reported Ye “won’t be eligible to monetize his account on X, and advertisements won’t appear next to his posts,” citing a statement from the social media platform. 

The report continued, “X reinstated West’s account after receiving reassurance that he wouldn’t use the platform to share antisemitic or otherwise harmful language, a person familiar with the matter said.” 

Elon Musk, X’s owner, calls himself a free speech absolutist, previously reinstated former President Trump’s account after polling platform users. Trump has yet to tweet but continues to post on the platform Truth Social. 

Authored by Michael Snyder via The Economic Collapse blog,

Central bank digital currencies are feverishly being developed all over the globe, and this is something that should deeply alarm all of us. 

For a moment, I would like for you to imagine a world where the government instantly knows whenever you buy or sell something.  No transaction would ever be truly private, not even your most personal or embarrassing ones.  In addition, your money would not be truly your own under such a system.  Your access to the digital currency system would be a privilege which could potentially be suspended or revoked with the click of a mouse.  All of a  sudden you would not be able to buy or sell anything and you would become an outcast from society.  Under no circumstances should any government ever be given such power.

Unfortunately, the CBDCs are coming, and they are going to radically change how commerce gets done.

Here in the United States, the Federal Reserve Bank of San Francisco has posted a job listing for a “Senior Crypto Architect” to work on the development of a digital dollar.

U.S. Representative Warren Davidson is very upset about this, because he believes that a CBDC issued by the Federal Reserve would be the “financial equivalent of the Death Star”…

The job description specified that the Federal Reserve seeks a technologist to “perform central bank digital currency (CBDC) research and development.”

The expert will work to “ensure the Federal Reserve is well-positioned to design, develop, and implement technology to support a CBDC as may be required by the Board of Governors.”

Although the job listing shows that the Federal Reserve is only working on CBDC research, Rep Davidson believes it is a sign of what is to come and described it as the “financial equivalent of the Death Star.”

Davidson added that CBDC would turn money into a tool of coercion and control.

Sadly, he is right on target.

Once “digital dollars” issued by the Federal Reserve become the dominant form of currency in our nation, whoever has power over that system would truly have an unprecedented “tool of coercion and control”.

So we must not allow this to happen.

Sadly, CBDCs are now in development all around the world.

For example, the UK has been moving toward the development of their own CBDC…

The de facto head of His Majesty’s Treasury announced this week that the Bank of England has begun consultations on implementing a Central Bank Digital Currency (CBDC) that could usher in the globalist vision of a cashless society in which all transactions are traceable by the government.

Chancellor of the Exchequer Jeremy Hunt revealed that, as a part of his ‘Edinburgh Reforms’ of Britain’s financial services, the Bank of England will begin consultations on the design of a Central Bank Digital Currency (CBDC) which would act as a digital version of the pound sterling.

Meanwhile, the EU is looking at creating a digital version of the euro.  The following comes from the official website of the European Central Bank…

We are working with the national central banks of the euro area to investigate whether to introduce a digital euro. It would be a central bank digital currency, an electronic equivalent to cash. And it would complement banknotes and coins, giving people an additional choice about how to pay.

A CBDC is currently being tested in Brazil, and it turns out that it has hidden backdoor features that would actually allow the government “to freeze people’s funds and adjust their balances at will”…

Brazil, like most other masters, seeks to control the population with a central bank digital currency, or CBDC. Its pilot program made it possible for the ruling class to have complete control over the money of the slaves.

The new system contains hidden backdoor features allowing the Brazilian government to freeze people’s funds and adjust their balances at will.  Even though these features are “hidden”, there is no secret as to why these sociopaths all so desperately need people to accept their enslavement through a CBDC scheme.

According to a blockchain developer by the name of Pedro Magalhaes, founder of the Web3 consulting firm Iora Labs, the ruling class will have access to every single slave’s bank account once they roll out the CBDC system.

Magalhaes claimed that he reverse-engineered the code behind Brazil’s CBDC program, which led him to this shocking discovery.

And in Russia, the “digital ruble” is already here.

Just a few days ago, Vladimir Putin signed “the digital ruble bill” into law…

Russia’s president Vladimir Putin signed the digital ruble bill into law today, allowing the country’s central bank to issue its own digital currency.

The digital ruble, which the Bank of Russia has long been mulling over, will be used for payments along with other methods, according to the new amendments to Russia’s Civil Code. The digital ruble accounts will be managed by the central bank, the law says. The bill passed its third, final hearing on July 11 and had been waiting for the president to be signed.

Digital ruble is a CBDC project the Bank of Russia has been working on since 2020, when the Bank of Russia published its first analytical report on the topic. Later, the regulator updated the report including the feedback from Russian banks and other financial market participants. The regulator announced it stared piloting the system with a number of Russian banks in February 2022, shortly before the country started a war in Ukraine.

This was a historic development.

So why did we barely hear anything about it in the news?

Overall, it is being reported that 130 different countries are now interested in potentially developing their own CBDCs…

Out of 195 countries in the world, 130 nations are moving towards building their Central Bank Digital Currency (CBDC).

Wow.

Our world is changing so rapidly now.

Once a “digital currency” is introduced where you live, how will you keep your “digital wallet” safe?

After all, someone could just steal your “digital wallet” and spend all of the “digital currency” that you have saved up.

Well, one German economist is warning that eventually we could see “digital wallets” actually get implanted under the skin…

A well-known German economist has revealed that central banks around the world are planning to introduce central bank digital currencies (CBDCs) in the form of microchips implanted under the skin. This technology will enable complete government control over personal finances of its citizens.

“I was taught by a central banker [that] the CBDCs look like a small grain of rice that they want to put under your skin,” said Richard Werner in an interview with podcaster Ivor Cummins. Werner is known for developing the now commonly used bank practice of quantitative easing.

Let us hope that nothing like that happens any time soon.

But we truly are living in unprecedented times, and they are only going to get crazier with each passing year.

If we are going to object to the implementation of CBDCs, the time is now.

Hopefully we can get a lot more people in the general population to wake up, because the clock is ticking.

*  *  *

Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.

Authored by Andrew Thornebrooke via The Epoch Times (emphasis ours),

Chinese technology is driving Russia’s ongoing war in Ukraine and helping Moscow to evade international sanctions, a new government report says.

China’s communist regime is helping Russia to evade sanctions and likely providing Russia with military and dual-use technology for use in Ukraine, according to a newly released unclassified report (pdf) compiled by the Office of the Director of National Intelligence (ODNI).

“[China] is providing some dual-use technology that Moscow’s military uses to continue the war in Ukraine, despite an international cordon of sanctions and export controls,” the report says.

“The customs records show [China’s] state-owned defense companies shipping navigation equipment, jamming technology, and fighter jet parts to sanctioned Russian Government-owned defense companies.”

China and Russia Continue to Unite Against US, Allies

The Chinese Communist Party (CCP), which rules China as a single-party state, denies sending any military equipment to Russia. However, the two authoritarian powers have vowed to uphold a “no-limits” partnership throughout the war, up to and including strategic coordination.

The burgeoning alliance between the CCP and the Kremlin has been a growing concern to Western officials since CCP General Secretary Xi Jinping and Russian President Vladimir Putin first announced their partnership on Feb. 4 last year.

Since then, Mr. Xi hasn’t joined in international sanctions on Russia for the invasion of Ukraine, and the CCP has consistently taken the position that global financial actions against Russia are invalid, thus providing Russia with a vital economic lifeline in Chinese markets.

Despite Beijing’s claims to the contrary, however, multiple reports have suggested that the regime could be funneling lethal aid to Russia through proxies in the Middle East.

According to a February report by German media outlet Der Spiegel, the Chinese regime falsified shipping documents to disguise military aviation equipment bound for Russia as civil in nature and used intermediaries in the United Arab Emirates to deliver dual-use drones to Russia.

Similarly, the White House has acknowledged that Chinese companies have directly supported Russia’s war in Ukraine and issued sanctions on Chinese entities accused of backfilling Russia’s defense industry but stopped short of saying that such support amounts to state-directed lethal aid.

The new ODNI report builds on that by saying that the CCP has become “an even more critical partner” to Russia over the course of the war in Ukraine.

The report also says that China and Russia are increasing the share of bilateral trade between them that is settled in China’s yuan currency, boosting it against the dollar, and China is further increasing its importation of Russian energy exports, including oil and gas that it reroutes from Europe.

Still, the report is not without its shortcomings. ODNI says that much of the information cited is owed to either media reports or other open-source intelligence, raising the concern that even the nation’s intelligence community is struggling to understand the CCP regime’s inner workings.

“The Intelligence Community lacks sufficient reporting to assess whether Beijing is deliberately inhibiting United States Government export control end-use checks, including interviews and investigations, in [China],” the report says.

Report Raises Alarm on Chinese Aid to Russia

The Biden administration has raised the alarm that communist China may deliver lethal aid for Russia’s war of conquest against Ukraine, and is reportedly considering declassifying and releasing intelligence about the issue.

Read more here…