This week, smoke from Canadian wildfires has blanketed Chicago and much of the Upper Midwest. By Wednesday morning, air quality warnings are in effect for Pittsburgh, Pennaysvia, and Rochester, New York, as the smoke is being blown into the Mid-Atlantic and Northeast regions. 

After weeks of smoke relief, metro areas from Washington, DC to Baltimore to Philadelphia to New York City will receive another blast of toxic smoky haze from Canadian wildfires. 

On Tuesday, Governor Kathy Hochul said, “We’re expecting smoke and haze to come all across the state.” However, the potential intensity of the smoke wasn’t clear, but air quality maps tweeted by the governor this morning show unhealthy air quality in Western New York, Central New York, and the Eastern Lake Ontario regions. 

We’re already seeing unhealthy air quality in Western New York, Central New York and the Eastern Lake Ontario regions.

If you’re heading out for the day, especially if you’re in a vulnerable group, check the latest air quality information and take steps to protect yourself. pic.twitter.com/FZO5Qc6xWW

— Governor Kathy Hochul (@GovKathyHochul) June 28, 2023

Smoke forecast maps via The New York Times show the polluted air is expected to arrive in major Mid-Atlantic and Northeast metro areas this afternoon. 

According to AirNow.gov, unhealthy air conditions have been reported as far east as Harrisburg, Pennsylvania. 

Bryan Jackson, a forecaster with the Weather Prediction Center, told Bloomberg the reason for the smoke shifting to the east is a weather pattern that brought rain across the Northeast is moving out, forcing wind from north to south. This will allow Canada’s wildfire smoke to move south. 

Fox News Weather explains more about the wildfire smoke pouring into the US. 

Canadian wildfire smoke is pouring into the U.S., leaving 93M under air quality alerts.

FOX Weather meteorologist @JasonFrazerTV has the latest. #AirQuality #AirQualityAlert pic.twitter.com/ROlPBxjQbb

— FOX Weather (@foxweather) June 28, 2023

NOAA’s weather satellites captured the “grayish smoke” plume drifting across the US. 

.@NOAA‘s #GOESEast 🛰️ is tracking a large amount of grayish smoke from Canadian #wildfires drifting across the U.S. this morning.

Numerous #AirQuality Alerts are in effect from the Great Lakes to the East Coast.

Get the latest: https://t.co/wJGBXDcNu2 pic.twitter.com/sx3b3w4X7W

— NOAA Satellites (@NOAASatellites) June 28, 2023

The smoke has even spread across the Atlantic into Europe. 

💨 Wildfire smoke from Canada will overspread western Europe in the coming days – from Portugal & Spain to France, Ireland & southern England…

Most of this will be lofted high in the atmosphere, causing some unique sun rises & sun sets but not affecting air quality. pic.twitter.com/0gOyq2g5Rw

— Ben Noll (@BenNollWeather) June 26, 2023

For those of us residing on the East Coast, brace yourselves for another round of  smoke.

Just on the heels of the New York Times’s observation that Ukrainian forces failed to capitalize on the weekend turmoil in Russia of the Wagner uprising, the Biden administration announced a new $500 million military aid package on Tuesday.

First, in a Sunday report the NYT cited anonymous “American officials and independent analysts” as acknowledging that “there did not seem to be any immediate defensive gaps to exploit” in Russian lines. They said that “according to a preliminary analysis” no Russian units were pushed back or abandoned their positions in the east and south, despite the Wagner rebellion having been a major distraction for Russian command Friday and Saturday. The US officials went on to say that at least for the near future, the “front lines in Ukraine are likely to remain unchanged.”

Strangely, one of the arguments that could be heard from Western pundits over the last days is that the Wagner mutiny episode shows that Washington must keep up its support for a “weakened” Russia. On Wednesday, Lithuanian President Gitanas Nauseda commented of Wagner’s leader being exiled to Belarus: “If Wagner deploys its serial killers in Belarus, all neighboring countries face even bigger danger of instability,” he said after meeting with some NATO allies.

As for the new US aid, it comes after The New York Times tallied that some 17% of the Bradley fighting vehicles already given to Ukraine had been damaged or destroyed thus far. This new half-billion in assistance comes via the Presidential Drawdown Authority (PDA), meaning the new shipments will be taken directly from Pentagon stockpiles. 

Ukraine will surely look to take advantage of the chaos caused by Mr. Prigozhin, but there did not seem to be any immediate defensive gaps to exploit, according to American officials and independent analysts.

And Mr. Prigozhin’s march, at least according to a preliminary analysis, did not cause any Russian units on Friday or Saturday to leave their positions in southern or eastern Ukraine to come to Moscow’s defense, American officials said. While the drama was unfolding, there was no letup in the war: Russian forces fired more than 50 missiles across Ukraine before dawn on Saturday. — NY Times

Below is the State Department’s new talking point of more aid being vital in light of events centered on Wagner:

The state department comes to the conclusion that the attempted coup by Prigozhyn “demonstrates the need to support Ukraine” … is there any event that would not demonstrate that?
— State Department grilled by Liam Cosgrove pic.twitter.com/zwFln1Fy07

— Lord Bebo (@MyLordBebo) June 27, 2023

A Pentagon announcement this week indicated the fresh package will include:

• Additional munitions for Patriot air defense systems
• Stinger anti-aircraft systems
• Additional ammunition for High Mobility Artillery Rocket Systems (HIMARS)
• Demolitions munitions and systems for obstacle clearing
• Mine clearing equipment
• 155mm and 105mm artillery rounds
• 30 Bradley Infantry Fighting Vehicles
• 25 Stryker Armored Personnel Carriers
• Tube-Launched, Optically-Tracked, Wire-Guided (TOW) missiles
• Javelin anti-armor systems
• AT-4 anti-armor systems
• Anti-armor rockets
• High-speed Anti-radiation missiles (HARMs)
• Precision aerial munitions
• Small arms and over 22 million rounds of small arms ammunition and grenades
• Thermal imagery systems and night vision devices
• Testing and diagnostic equipment to support vehicle maintenance and repair
• Spare parts, generators, and other field equipment

Keeping track of the massive US funding and defense aid to Ukraine, which far outpaces all NATO allies..

There’s lately been controversy over the Pentagon claim of an “accounting error” – which overvalued weapons sent to Ukraine by $6.2 billion. Additionally, concerns over US and Western arms being shipped with lack of oversight and proper tracking haven’t gone away, with reports they’ve even illicitly shown up in the Middle East, in the hands of Israel’s enemies.

By Elwin de Groot, Head of Macro Strategy at Rabobank

North and South

For those who didn’t grow up in the 1980s, today’s Global Daily title refers to the famous mini-series of the early eighties that is set during the time of the American Civil War and is about a friendship that gets caught up in the North-South divide. Although ‘civil war’ couldn’t be much further from the truth when describing the divisions in contemporary Europe, upheavals of tensions have regularly occurred. Through the early days of Eurozone membership, where the Northern member states were accused of having entered monetary union at an advantageous exchange rate, to the heady days of the sovereign debt crisis in which the Southern member states were accused of having mismanaged their economies and government finances.

The US-China trade war, the corona pandemic, the ensuing supply chain disruptions and war in Ukraine, however, all turned out to be a set of unifying shocks for the EU as a whole. It led to the NGEU/RRF funds, the first small steps towards a common industrial policy, and measures to reduce supply chain fragilities as well as a unified approach vis-à-vis Russia.

Although fresh bickering has been taking place over the new EU fiscal rules, there is reason to be more optimistic that a compromise will be found before the end of the year, despite the strong reservations that Germany and several other ‘Northern’ member states expressed about the Commission’s proposals earlier this year. In a joint press conference in Weimar, together with their Polish colleague Magdalena Rzeczkowska, French and German finance ministers Bruno Le Maire and Christian Lindner yesterday argued that they have made some progress overcoming the differences of opinion. These divergences center around the need for stringent and automatic rules to ensure debt consolidation (as sought by Germany et al.) and the need for flexibility and something that fits with new strategic aims (as advocated by France et al.), whilst preserving sound public finances and maintaining the trust of investors.

There are only a few snippets from what had been discussed in detail, but Lindner said that “we need to find the right balance with EU fiscal rules, we need to make the economy ready for climate neutrality and global competition. We cannot finance the past with interest that we must pay – instead, we need to find a way to finance the future […]” Although rather speculative, his comments may hint at a willingness by Germany to allow for more flexibility in the rules for strategic investments. For example, by keeping them out of the budget deficit calculations.

Another reason to expect these matters to be ultimately resolved is that the economic cards have been reshuffled in recent years, suggesting there is a better economic power balance in the EU now. Next to the Polish ‘growth miracle’ (which aptly puts that joint press conference in context) the South of Europe has generally surprised positively with its economic performance, whereas the North, and in particular the German economy, is increasingly showing signs of structural weaknesses. Indeed, if it weren’t for the Southern member states, the Eurozone economy would probably have slipped into a real recession in the previous quarters already. Unemployment in those economies has continued to fall and is now close to, or in the case of Portugal, even below the level it stood at before the sovereign debt crisis hit.

The recent growth pattern also goes some way in explaining the better spread performance since mid-2022, despite rising interest rates. Especially Spain, Greece and Portugal (together good for some 14% of GDP) have performed quite well since mid-2021. To some extent this is because these economies had more room to ‘catch-up’ after Covid-19, given their relatively high share of services, particularly in the food, accommodation and travel sector. A disproportionate sum of funding for investments in greening and digitalization has also worked to the South’s advantage. More recently, though, it is the German economy that has underperformed due to its high industrial sector share, high energy costs and its role in global supply chains, with a large exposure to China. Domestically, a tight labor market has limited Germany’s capacity to expand.

Meanwhile, US data out yesterday only further strengthened the case for a resumption of Fed hikes following this month’s ‘skip’. Durable goods orders for May rose 0.6%. New home sales, also for May, came in almost 100k above consensus, providing further evidence that the housing market is recovering despite Fed tightening. That gels with the overall easing of financial conditions as reflected in the Chicago Fed credit conditions index in recent months and it indicates that Skipper Powell and Crew’s reliance on credit conditions to slow down activity and inflation has not paid off yet. The Conference Board’s survey of consumer confidence for June also improved markedly, with the jobs-plentiful-minus-jobs-hard-to-get measure up again, completing a slew of (second-tier) data that pushed the 10s/2s yield spread to its lowest level since 9 March.

Today at 9:30am, the main event at the ECB’s Sintra annual forum sees ECB President Lagarde (Neutral/Dovish), Fed Chair Powell (Neutral), BoE Governor Bailey (Neutral), and BoJ Governor Ueda (Dove) partake in a panel at the Sintra forum at 14:30 BST / 09:30 EDT.

Courtesy of Newsquawk, here is context ahead of today’s panel.

Fed: Given Fed Chair Powell spoke at the Humphrey Hawkins testimonies last week, and the FOMC the week before that, it is unlikely Fed Chair Powell will have anything fresh to say. However, data since has been strong (albeit not primary data like inflation or employment), particularly housing data, consumer confidence and the durable goods reports on Tuesday, which could give the Fed Chair confidence in the current dot plots for two more 25bp hikes, despite the market only pricing in one more. Powell will likely tow the familiar line that future policy decisions depend on the data, and with NFP & CPI on July 7th and 12th, respectively, ahead of the July 26th meeting, it is unlikely Powell will make firm commitments ahead of July, but he did note the July meeting was a live one at the last FOMC and markets look for a 75% probability of a 25bp hike after the “skip” in June.

ECB: Lagarde has also spoken extensively in recent days and there have been several ECB source reports, and all imply a July rate hike from the ECB is a done deal, while the odds of another hike in September are also increasing. The latest source reporting this morning noted that some ECB officials are considering a faster reduction of its bond portfolio, noting active sales of securities from the APP could be the logical next step after TLTRO loans have been fully repaid at the end of 2024, however, some were more opposed to the idea amid concerns APP sales would lead to big losses at some Eurozone central banks. Therefore it will be interesting to see if Lagarde touches on this.

BoE: The BoE last week hiked by a surprising 50bps following a hot inflation report the day before with a hawkish split, where 7 of the MPC voted for 50bps. but the usual doves Dhingra and Tenreyro (departing) opted for an unchanged decision. Into the release, market pricing was a near coin flip between either a 25 or 50bps hike, but the consensus (taken pre-CPI) was for a 25bp hike. The decision saw analysts ramp up future rate hike expectations for the peak rate, and the latest Reuters poll is for the BoE to see a peak rate of 5.5% in September, with a 25bp hike in both August and September. However, markets are pricing a peak rate of 6.0% in December – commentary from Bailey on guidance will be key, but he will likely take a data-dependent approach, stressing the need to bring inflation down and repeat BoE guidance that they are prepared to do more if necessary.

BoJ: With the BoJ maintaining its ultra-loose policy, and the Fed signalling two more rate hikes, alongside a recent US equity rally, the Yen has weakened to “intervention territory” and has prompted jaw-boning from top Japanese officials about the one-sided move in the Yen. The latest was Finance Minister Suzuki noting they will respond appropriately to excessive FX moves if necessary, but like others, did not comment on specific FX levels. At the latest BoJ meeting, policy settings were unchanged as expected, disappointing outside hawkish calls for a tweak to its YCC. while Board Member Adachi noted if the bond market function remains in the current state, the chance of tweaking YCC in July is low. Ueda noted after the BoJ that more time is needed for the bank to meet its 2% inflation target and that they do need to pay attention to financial and FX markets – so we will be attentive to any remarks from Ueda on FX today. Ueda also noted after the BoJ that responding to an inflation undershoot after a premature rate hike is more difficult than responding to an overshoot, but it is possible a large shift in the price view could result in a policy change, and that the risk of an excessive inflation overshoot with cautious policy response is not zero, but there is also a risk of inflation undershoot with hasty monetary normalization.

Watch the panel live below:

Authored by Steve Watson via Summit News,

Some 250 woke Hollywood celebrities from movies, TV and music have signed their names to an open letter urging big tech companies to crack down on anyone who doesn’t fall into line with the trans agenda, including advocating life changing gender surgeries on children.

The letter was sent to the CEOs of Meta, YouTube, TikTok and Twitter by GLAAD (Gay & Lesbian Alliance Against Defamation) and the Human Rights Campaign (HRC), and was signed by hundreds of famous names including Amy Schumer, Ariana Grande, Demi Lovato, Jamie Lee Curtis, Judd Apatow, Patrick Stewart and many more.

It states that “There has been a massive systemic failure to prohibit hate, harassment, and malicious anti-LGBTQ disinformation on your platforms and it must be addressed,” pointing to “dangerous posts (both content and ads)… targeting transgender, nonbinary, and gender non-conforming people.”

“This disinformation and hate, inadequately moderated on your platforms, plays an outsized role in the sharp increase in real-world anti-transgender targeting and violence,” it continues.

The letter further decrees “Your policies and corresponding enforcement are inadequate when it comes to mitigating harmful and dangerous anti-LGBTQ content. You must urgently take action to protect trans and LGBTQ users on your platforms (including protecting us from over-enforcement and censorship).”

The celebrities specifically cite tech companies allowing people to engage in ‘deadnaming’ and ‘misgendering’ as a “widespread mode of hate speech across all platforms, utilized to bully and harass prominent public figures while simultaneously expressing hatred and contempt.”

The letter then demands to know what the tech companies are going to do to address “Content that spreads malicious lies and disinformation about medically necessary healthcare for transgender youth.“

The letter states that “Specific mitigations on such disinformation must be developed (for instance akin to election and COVID-19 mitigations and rules).”

So, essentially, censoring anyone who doesn’t completely advocate removing the genitals of children and sterilising them.

Recall that the “mitigations” employed by big tech against people who expressed opinions on the 2020 election and COVID-19 that were in any way divergent to the establishment narrative were to censor and altogether remove them from the platforms.

This included merely suggesting that the COVID lab leak theory, which is now the accepted probable reality of what happened by several government agencies and scientists, warranted an investigation.

Related:

Meanwhile, in the real world, a new poll from Summit Ministries and McLaughlin & Associates has found that 61 percent of U.S. voters believe that introducing children to transgenderism, drag shows, and LGBTQ+ themes stunts their emotional and psychological development.

The polls also found that 63 percent of respondents believe that those advocating for children to be exposed to these issues are motivated purely by a desire to push a specific cultural agenda.

A further poll found that almost three quarters (73%) want businesses to stay neutral on political and cultural issues, including LGBTQ+, with just over half saying they support boycotting companies that aggressively market that agenda.

Those figures dovetail with another poll conducted by The Trafalgar Group in partnership with Convention of States Action that found 62 percent want companies to remain neutral during Pride month, and that 41 percent say they have taken part in boycotting a company for taking woke public stances.

*  *  *

Brand new merch now available! Get it at https://www.pjwshop.com/

In the age of mass Silicon Valley censorship It is crucial that we stay in touch. We need you to sign up for our free newsletter here. Support our sponsor – Turbo Force – a supercharged boost of clean energy without the comedown.

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Multinationals have been making all sorts of carbon neutrality claims in recent years. Take, for instance, Nestlé’s well-known chocolate bar brand, KitKat, which stated in 2021 that the candy bar would “become carbon neutral by 2025.” But the offset was partially based on tree planting, which is unreliable and difficult to measure, with very little transparency about the level of emissions reduced or offset. In other words, Nestlé made sustainability claims without concrete evidence (some call this a ‘greenwashing’ scam). 

“To support this, KitKat will help farmers plant five million shade trees where it sources its cocoa by 2025,” Nestlé wrote in a press release in April 2021. They stated very little information about upgrading supply chain operations with direct carbon emission reductions, instead focused on shady claims like “restoring forests.” 

Nestlé, who sees the whole ESG, or Environmental, Social, and Governance, movement backfiring, as BlackRock CEO Larry Fink abandoned the term “ESG” just days ago, has dropped plans for a carbon-neutral KitKat bar by 2025, according to Bloomberg. 

A spokesman for the Swiss food giant said the company is “shifting toward in-house programs to reduce greenhouse gas emissions in its operations and supply chain.” So no more planting trees in third-world countries?

Besides Nestlé, other companies such as airline EasyJet Plc and Gucci owner Kering are backing away from their carbon-neutral claims to avoid ‘greenwashing’ controversies. Consumer groups have alleged that many of these companies have misled customers into believing their products are better for the environment.  

“If you’re a consumer in the supermarket, you have no way to know how much of a carbon neutral claim is from actual emissions reductions and how much is from these dubious carbon-offsetting projects,” said Emma Calvert, a food-policy officer at European consumer-rights organization BEUC. Her organization wants to ban “carbon neutral” claims on food. 

Nestlé abandoning its “net zero climate footprint” KitKat claim through tree planting is yet another sign of virtue signaling by corporations in their efforts to save the planet is backfiring. 

Authored by Matthew Piepenburg via GoldSwitzerland.com,

Below we consider how modern currency policy may not be so good for, well, the people…

This is why gold inevitably enters the conversation, for unlike policy makers, this old pet rock garners more trust.

Gold, of course, loves chaos, tanking currencies and cornered, debt-soaked nations, the numbers of which rise with each passing day.

We see currency debasement as mathematically and historically inevitable, though we have no clue (no one really does) as to the precise date, trigger or time the already teetering fiat money systems fall over the global debt cliff.

We only know that the $300+T cliff is here, and that nations are racing toward it at historical speed, with equally historical consequences.

Physical gold holders, however, enjoy a certain and calm advantage: They don’t need to be precise timers; simply patient owners.

As for more signs of the move toward weakening currencies in general, and a weakening USD in particular, let’s look at some more history and current facts.

Hot vs. Financial Wars: Today’s Evidence, Tomorrow’s Polices

As headlines change with daily Western biases regarding the military war in Ukraine, America’s financial war with the East (i.e., China) will continue into the next generation.

It’s no secret to me, or many others, moreover, that the war in the Ukraine is a US proxy war against Russia, in which Ukraine (and its citizens) are merely a convenient battering ram against Putin.

That’s just my opinion, but we’ve seen this “freedom” movie before. Many times, and in many countries, none of which ended with much “freedom” …

But as to financial wars, they too are just an extension of politics by another means, and with the growing waves of de-dollarization rising in speed and height following the predictable ripple of effects of the 2022 sanctions against Russia, there is much which can be deduced today about the Realpolitik of the USD and its weakening future.

Is the Fed Watching China? Yep.

DC, of course, may not admit to the rise of China (growth and trade) and the slow decline of USD hegemony, but the facts and trends I’ve recently described are not escaping them.

So how will the USA fight its financial war with Beijing?

If history and math are any guides, much will hinge upon the USD, which means we can expect it to get weaker over time, despite inevitable peaks along the way.

Again, let’s consider the past as prologue.

The Rising Sun

I was playing little league baseball when Japan made its slow and steady rise into the 1980’s. But even I noticed more things, from Michael Douglas films to pop music, were “turning Japanese” in that decade of MTV fashions.

Japan’s rising sun seemed to have no end as Tokyo-based financiers were buying up everything from California real estate to the Rockefeller Center in NYC.

The Setting Sun

But fast-forward to 1989 and the Nikkei implosion, and that same Japanese sun was beginning to set.

By the mid-90’s, I was a young law student in Boston (never made the Red Sox roster) reviewing lease modifications in a Rockefeller Center which the Japanese could no longer afford.

In short: Things can change quite fast in the rise and fall of financial empires.

But it wasn’t just exuberant market bubbles which brought Japan down.

During the 90’s, the US was deliberately weakening the USD to reduce the warp speed of Japanese trade and economic growth.

At the acme of this hidden financial war, the yen had appreciated 46% against an intentionally devalued Greenback.

In short: Uncle Sam squeezed Japan.

The Rising China

China is clearly the next target (or “Japan”) for US financial war-gamers.

And it’s my strong opinion that among the many advantages and realities of a falling USD ahead, the hidden planners in DC are adding the desire to cripple Chinese growth as yet another reason (besides inflating away debt or combatting a denied recession) to weaken the USD.

In the 1980’s, for example, nations like Japan and Germany (whom, ironically, the USA helped defeat in a prior world war) had slowly and steadily emerged from the dust of the 1940’s with current account surpluses and hence rising domestic demand, which meant rising local currencies.

The Fed, at that time, saw an opportunity to end its “war on inflation” narrative and commence weakening the USD in the name of “growth,” but it was no coincidence that such measures (and narratives) also sealed the fate of a rising Japan whose yen was made too strong to compete on the global stage.

Today, I see a similar pattern emerging between the US and China.

Although the Fed has yet to officially abandon its “war” on an inflation disaster which they had previously (i.e., wrongly/dishonestly) described as “transitory,” they know the USD is and was too strong for its own good, and they also know that China and Russia are making deals which threaten US trade and settlement superiority.

In short: The US needs to fight ugly again, and to do, they need an uglier/weaker dollar.

Thus, in the coming months, quarters and years, when the rate hikes of late (paused for now, but promised for later?) keep on breaking things (see below), the inevitable pretext for an otherwise bad habit of debasing, printing and weakening the USD will become too tempting for the mouse-click-money-addicted central planners in Washington to ignore.

Stated even more simply: The pivot to easy money is only a matter of time, for in addition to needing an inflationary money-printer to stay alive (and print-away debt), DC also needs a weaker USD to beat a rising East.

Of course, in such a war, the greatest casualties will come from a Main Street earning weaker dollars…

US Bonds: The First to Fall in a Financial Cold War

On a real basis, that is to say, when measured against inflation (which will rise and fall, but ultimately stick around for years to come), the US reality will thus involve one in which bonds, in an inflation-adjusted context, will be sacrificed (vs. the CNY) if the US intends to engage in any kind of plausible financial war with China and others.

Or stated more simply, US bonds, having enjoyed an artificial, Fed-tailwind for over 40 years, will be the first troops (along with investors, IRAs and 401Ks) sacrificed in the financial combat of nations now firing their cannons on a world stage changing faster than the German Blitzkrieg through France or Ney’s calvary charge at Waterloo…

When one adds weaker bonds to a debased currency, the net result is bad for the average citizen as Uncle Sam plays its financial war games with China.

Hot War?

Of course, there is also the omni-present risk of a financial war turning into a hot war with China.

Though unthinkable in a nuclear era, such risks change the entire argument, and at such points, financial forecasting and planning (or reports like this) will be less of a priority than simply finding drinkable water.

Perhaps I’m naive, but I believe that such worst-case scenarios are too insane and stupid even for the policy makers and neocons in DC.

Besides, and as Michael Mullen said over a decade ago from the Joint Chiefs of Staff: How could America, who borrows money from China, which it then uses to build weapons to potentially fight China, actually go to war with China, where the vast majority of the components necessary for those very same weapons are made?

Ahhhh. We do love in interesting times, don’t we?

Waiting for the Pivot as More Things Break

For now, and assuming no nuclear Armageddon (which I don’t wish to consider), we can only sit back and wait as a totally fork-tongued and cornered Powell plays with markets, currencies and interest rates like a child playing with matches.

As for Capitalism, it died long ago. Instead, the Fed IS the market.

Powell’s far too fast and too-high rate hikes of 2022-23 (made far too late) have done a modest bit to “fight” inflation, but have been far more effective in murdering US bond demand and regional banks—as well as ensuring a recession, which I suppose, is one crazy way to “beat” inflation…

Big Trouble for Little Britain

In addition to prompting the world to turn away from the USD and Uncle Sam’s USTs, Powell’s hikes also forced the UK (BOE) to follow the rate-hike trend, which caused an implosion in their gilt market in October of 2022.

As I’ve said many times, with financial allies like the US, who needs enemies?

But the pain in the UK goes beyond just 2022 gilt markets or a Royal Duchess seeking photo opps at US polo tournamentsin 2023.

The Bank of England, chasing its tale as well as Fed policy, has just been forced to raise rates to 5% in what the BBC and Bloomberg prompt-readers recently described as a 50 bp “surprise move.”

In more honest reporting, or at least more blunt reporting, my view on the “surprise” rate hike is that it is (and was) no “surprise” at all.

In fact, such sudden, frequent and steepening rate hikes are nothing new or “surprising” to over-indebted emerging market nations, of which the UK, and the US, are no exception.

That is, the US and UK are just glorified banana republics once one looks honestly at their national balance sheets.

Thus, the UK is simply raising rates higher and faster to save an otherwise dying currency, and in doing so, are breaking everything else in their current path.

Already, over 1.2 million UK households have been made insolvent this year due to higher mortgage payments.

As BOE rates rise, bond prices fall and hence gilt yields (like mortgage payments) are now rising like shark fins toward scary levels seen last autumn.

In short, and as we warned of the US, you folks in the UK are going to need a bigger boat very soon…

Keep It Simple

The foregoing geopolitical, currency, and policy facts all suggest a world leaning further and further toward deliberate tweaking (strengthening and then debasing) of their fiat currencies to stay alive as well as “competitive” in a race to the fiat finish line in which all the horses are effectively cantering toward a glue factory.

As such trends continue, the question will not be about which currency you hold, but how much of it is backed by gold.

If nations won’t back that paper money in something precious, then investors can do it for themselves by owning physical gold.

It’s just that simple.

Vacation-starved Americans have flocked back to cruise ships after shunning this form of travel during the virus pandemic. Some cruise lines, such as Royal Caribbean Group, have reported occupancy rates around 100% capacity in the first quarter of 2023. The surge in popularity also means the rise of norovirus incidents on ships. 

The Wall Street Journal said 13 outbreaks of the ‘cruise ship virus’ have been reported this year. The data from the Centers for Disease Control and Prevention shows this is the largest number of norovirus incidents on cruise ships in a single year since 2012. And still, the year is only halfway over. 

Norovirus can quickly spread in a cruise ship via particles from poop, vomit, and contaminated surfaces from people who have contracted the sickness. 

“If you get norovirus illness, you can shed billions of norovirus particles that you can’t see without a microscope.

“It only takes a few norovirus particles to make you and other people sick,” according to the CDC. 

Yes, the ships have become monsters, packed with 6,000 passengers + 2,000 crew- perfect breeding ground for #norovirus! On the summer #Alaska cruise run, 4 huge ships dock at Juneau the capital- 25k people visit, more than the pop of the city! #cruisinghttps://t.co/veNUFBo4dI pic.twitter.com/kTTQQlkF17

— Frederic Hore (@Voyageurfred) June 19, 2023

The latest incident occurred last Tuesday when a Viking North American Cruise vessel docked in New Jersey had more than 100 passengers who contracted the virus. A cruise ship operated by Celebrity Cruises had more than 175 people contract the virus in May. 

A spokeswoman for the Cruise Lines International Association said cruise ships have to report illnesses to CDC, which has provided ” visibility and faster reporting to health authorities” about outbreaks. 

The rebound of the cruise industry this year coincides with a surge in norovirus outbreaks on ships that causes people to vomit violently and have diarrhea. 

Anheuser-Busch has fired two marketing executives who were placed on leave after destroying the Bud Light brand with an advertising campaign featuring transgender influencer Dylan Mulvaney.

According to the Daily Caller, Group VP for Marketing Daniel Blake, and Bud Light Marketing VP Alissa Heinerscheid are “gone, gone” after initially being placed on leave, per an anonymous source.

“To my understanding if we publicly announced the word ‘fire’ it opens up the potential for them to sue us. Thats why we said leave of absence,” said the source in a text message to the Caller. “The wholesalers would have had an absolute HAY DAY with leadership if they didn’t remove her.” (Or maybe a field day?)

“To be fair- Daniel Blake was actually awesome. I think he was just caught in cross fire. But also he did hire her… so thats a fault,” the source continued.

“Wholesalers were told they are both gone for good by leadership during in person conversations. They already shifted all their direct reports to new people and the head of marketing,” they said.

Earlier in June, Bud Light parent company Anheuser-Busch opened an email the Caller sent asking for specifics about Blake and Heinerscheid but did not reply. The Caller specifically asked whether the two were still on leave, whether they were on paid leave or unpaid leave and whether they would be returning to work if they hadn’t yet. The company was given multiple days to respond to the deadline.

Bud Light has faced heavy criticism and lost its spot as America’s top-selling beer in early June due to a boycott that began after transgender influencer Dylan Mulvaney showed off a personalized beer can featuring the influencer’s face.  -Daily Caller

One Anheuser-Busch distributor told The Wall Street Journal earlier this month, “Our year is screwed” because of slumping sales and since they don’t carry Modelo, which has taken the top spot.

For the week ending June 3, Bud Light sales were still down 24%, while Modelo Especial was up 12%. The latest numbers follow Memorial Day weekend images shared on social media showing desperate retailers marking 18-packs of Bud Light all the way down to just $2.99. 

Betting on a new ad campaign to stop the bleeding is a gamble. Dave Williams, vice president of consumer insights and analytics at Bump Williams, told USA Today this week that Bud Light faces further declines and Modelo will continue to take market share nationwide. 

Bud Light has an uphill battle to regain its customer base after abandoning them for a clownish trans-TikTok star. The damage seems irreversible as many beer drinkers have realized the light beer is ‘piss water masquerading as beer.’

By John Miltimore of the American Institute for Economic Research

In 2022 Norway’s third richest man, Kjell Inge Røkke, announced in an open letter to shareholders he was moving to Lugano, Switzerland.

“My capital will continue working in Norway,” wrote the fishing magnate turned industrialist who launched his empire four decades ago with a 69-foot trawler he bought while saving money working on ships off the coast of Alaska.

Røkke, who Forbes estimates has a fortune of $5.1 billion, will cost the Norwegian government an estimated 175,000,000 kroner annually (roughly $16 million) with his departure. That might not sound like a lot of money, but Røkke is not the only wealthy entrepreneur leaving Norway, The Guardian notes. 

“More than 30 Norwegian billionaires and multimillionaires left Norway in 2022, according to research by the newspaper Dagens Naeringsliv,” reports wealth correspondent Rupert Neate. “This was more than the total number of super-rich people who left the country during the previous 13 years, [the paper] added.”

Did you catch that? More “super rich” Norwegians left Norway in 2022 than during the previous 13 years combined. The reason wealthy Norwegians are fleeing the country is not a secret. 

Following its 2021 electoral victory, the Nordic nation’s Labor Party made good on its promise to soak the rich. Norway is one of just a handful of OECD countries that still taxes net wealth, and the Labor Party increased the country’s wealth tax to 1.1 percent despite warnings that such a move would “trigger capital flight and threaten job creation.”

Capital flight is exactly what happened, and it has left the Norwegian government with less revenue. 

Norwegian Business School professor emeritus Ole Gjems-Onstad estimated that the wealthy Norwegians took with them a total fortune of $54 billion when they left. This means that the wealth tax, which was projected to increase revenue by nearly $150 million annually, will result in about 40 percent less revenue than it currently generates. Luca Dellanna, a management advisor and author, points out that Norway collected about $1.46 billion on its wealth tax in 2019. But the exodus of the wealthy will result in an estimated $594 million in lost revenue.

Those trying to understand how Norway’s policy could backfire so badly should look to the work of the late Nobel Prize-winning economist Robert Lucas. Lucas, a longtime professor at the University of Chicago, received the top prize in economics for research that became known as the Lucas Critique, which exposed various problems with macroeconomic modeling.

Lucas believed that to predict policy outcomes it was essential to first grasp that all action is individual behavior, and humans are rational creatures who will respond to policies in rational ways — even to policies designed to fool them.

“Microeconomics assumed people were rational,” economist David R. Henderson pointed out in a recent Wall Street Journal article following Lucas’s death. “Why shouldn’t macroeconomics make the same assumption?” 

This insight helped Lucas win the Nobel Prize, and it helps explain why Norway’s wealth tax backfired so badly. It was always naive to assume wealthy individuals would continue to bear Norway’s wealth tax. After all, one needn’t have a PhD in economics to realize that wealthy people are unlikely to sit idly by as lawmakers take more and more of their wealth (not income, mind you, wealth). As early as the 17th century, Jean-Baptiste Colbert, the finance minister to France’s Louis XIV, observed the delicate nature of taxation. 

“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing,” wrote Colbert.

Norwegian lawmakers forgot this simple lesson, and now they can do little but watch as the wealth creators in their country depart, taking with them their capital, ingenuity, and taxable income.

“Atlas shrugs in Norway,” observed economist Peter St Onge. 

Indeed. 

As it happens, Norway’s unfortunate lack of foresight comes at an opportune time for those living in the United States, where many are pushing wealth taxes. 

Earlier this year, the Washington Post reported on the creative methods federal and state lawmakers are devising to separate “the rich” from their wealth. These include no fewer than four states attempting to tax unrealized capital gains, including a California proposal that would impose a 1.5 percent wealth tax (even higher than Norway’s).

“If it’s an annual wealth tax, it’s taking a fraction of your wealth every year,” Berkeley economist Emmanuel Saez, who helped design Sen. Elizabeth Warren’s wealth tax proposal, told the Post. “Almost by definition, you’re going to have less wealth after you pay the tax.”

If professor Saez believes California’s wealthiest people will allow lawmakers to tax their wealth and make them sell shares to cover unrealized capital gains, he hasn’t learned Colbert’s lesson on taxation.

Such a policy wouldn’t just result in a great deal of hissing. It would lead to a mass exodus of wealth creators. Anyone who doubts this need only look to Norway.