Authored by Naveen Anthrapully via The Epoch Times,

The Texas legislature has subpoenaed investment firm BlackRock, together with its subsidiaries and affiliate entities in the state, for documents related to the institution’s promotion of environmental, social, and governance (ESG) policies.

The subpoena was issued by the Texas Senate Committee on State Affairs last month and asks the sergeant-at-arms for the committee or any peace officer of the state to summon BlackRock and associated entities to appear before the committee on Dec. 15. The summoned entities are expected to produce for committee inspection “books, papers, documents, or other tangible things in the said corporation’s possession, custody, or control” which are related to “ESG factors” or “ESG integration practices,” the subpoena stated.

“The reason the committee is requesting the production of documents is to evaluate the investment practices of a financial services firm with a presence in Texas and how those practices affect the state’s public pensions,” it said.

In a statement to Fox, Texas Republican state Sen. Bryan Hughes, chairman of the committee on state affairs, said that the subpoenaed documents are necessary to “uncover” the extent to which investment entities like BlackRock have been “playing politics using Texans’ hard-earned money.”

Back in August, the committee sent letters to BlackRock, as well as other investment firms like State Street, Vanguard, and Institutional Shareholder Services (ISS), to provide documents related to their ESG decision-making.

Hughes said that while each firm has produced documents, some have submitted “more than others.” But when it comes to BlackRock, the firm has “refused” to submit documents it deems as confidential or internal.

As a result, the committee had to issue a subpoena to BlackRock. “They have a legal duty to put their investors’ interests first, and we intend to make sure they do,” Hughes added.

The Epoch Times has reached out to BlackRock.

What’s ESG?

ESG investing advocates stakeholder capitalism instead of the conventional shareholder variant. Proponents of the ideology argue that traditional investments focus merely on maximizing profits, whereas stakeholder-centric ESG investing takes into consideration social advocacy, environment, and other progressive ideals which they claim will benefit society, and the company, in the long run.

ESG investing is one of the main reasons why many companies have drastically evolved in recent times. When previously businesses followed customer demand, nowadays they have mostly pivoted toward alternate goals and sacrificed profits for “green” and politically correct objectives.

Action Against BlackRock, ESG Investing Perils

BlackRock has been facing a series of actions from state authorities over its ESG investing practices. On Dec. 1, Florida Chief Financial Officer Jimmy Patronis announced that his state will begin pulling out $2 billion in assets from the investment firm.

The state intends to completely divest its investments from BlackRock and relocate them to other fund management firms beginning next year.

In October, Missouri announced plans to remove $500 million worth of pension fund investments in BlackRock.

Earlier, Louisiana had announced a pending removal of $794 million from the company, while Utah and Arkansas declared their intentions to remove $100 million and $125 million, respectively.

In a recent interview with Breitbart, Missouri Treasurer Scott Fitzpatrick equated ESG with leftist activism and pointed out that people’s money is being used by money managers to advance political and social causes that might not even be in the investors’ financial interests.

“ESG is just the latest acronym to describe what people want them to believe for good, well-intentioned advocacy [when] it’s really just political advocacy for things that the Democrats cannot get passed through the democratic process, and they’re using your money to do it,” he said.

President Biden on Wednesday renewed a push to ban so-called ‘assault weapons’ during remarks at the 10th Annual National Vigil for All Victims of Gun Violence.

While discussing his meetings with the families of Sandy Hook Elementary School victims, Biden said he was able to get “the most significant gun law passed in 30 years,” but that it was not enough.

“…Our work continues to limit the number of bullets that can be in a cartridge, the type of weapon that can be purchased and sold, the attempt to ban assault weapons, a whole range of things that are just common sense, just simple common sense,” he said. “But you know, we did it before, you may remember, in the nineties we did it…And guess what, it worked. The number of violent mass murders reduced were significant, a lot of people’s lives were saved. You know, we can do it again.”

President Joe Biden renews vows to secure a ban on assault weapons at a national vigil for victims of gun violence, as he turns up the heat on U.S. lawmakers https://t.co/l99MSDHuiQ pic.twitter.com/fxtfDpRwfe

— Reuters (@Reuters) December 8, 2022

Biden was referring to a 1994 ‘assault weapons ban’ authored by then-Senate Majority Leader Chuck Schumer (C), who was a congressman from Brooklyn. Schumer argued that the banned rifles were not made for hunting or target practice – but instead “they are made simply to kill as many people, people, people as possible. As fast as possible.”

The impact of the assault weapons prohibition was mixed.

The federal assault weapons ban was originally in effect between 1994 and 2004 as part of former President Clinton’s crime bill. Since its expiration, Democrats have been actively pushing for the ban to be reinstated. –Fox News

A top GOP Senator, however, says Democrats’ gun-grabbing ambitions may fall to the wayside.

“I don’t think that’s on the table,” said Sen. John Cornyn (R-TX) in a Wednesday statement to Fox News in response to a question about whether he thinks the assault weapon ban will gain any traction.

Seemingly confirming Cornyn’s comment was Democratic Senator Richard Blumenthal of Connecticut, who told Fox News that the Senate “has a lot on our plate,” when asked about the last-minute gun bill – noting that as of today, there are “probably not 60 votes” for the bill – meaning Democrats are unlikely to find 10 GOP senators willing to break a filibuster to allow the law to pass.

On Wednesday Blumenthal joined fellow Democrat Dick Durbin of Illinois and the anti-gun March Fourth Coalition, to host a press conference aimed at urging the Senate to pass an assault weapons ban in the lame-duck session.

As if a million merger arbs suddenly cried out in terror and were suddenly silenced.

Just before 2pm ET, the US Federal Trade Commission confirmed earlier rumors when it announced that it had voted 3-1 to sue to block Microsoft’s $69 billion acquisition of gaming giant Activision Blizzard, saying the tie-up between the Xbox maker and popular gaming publisher would harm competition in the gaming market.

The commission voted to proceed with the complaint, which will be filed in its in-house court Thursday, in a closed-door meeting, said two BBG sources.

The full statement is below:

FTC Seeks to Block Microsoft Corp.’s Acquisition of Activision Blizzard, Inc.

Agency alleges that maker of Xbox would gain control of top video game franchises, enabling it to harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals’ access to its popular content

The Federal Trade Commission is seeking to block technology giant Microsoft Corp. from acquiring leading video game developer Activision Blizzard, Inc. and its blockbuster gaming franchises such as Call of Duty, alleging that the $69 billion deal, Microsoft’s largest ever and the largest ever in the video gaming industry, would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.

In a complaint issued today, the FTC pointed to Microsoft’s record of acquiring and using valuable gaming content to suppress competition from rival consoles, including its acquisition of ZeniMax, parent company of Bethesda Softworks (a well-known game developer). Microsoft decided to make several of Bethesda’s titles including Starfield and Redfall Microsoft exclusives despite assurances it had given to European antitrust authorities that it had no incentive to withhold games from rival consoles.

“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, Director of the FTC’s Bureau of Competition. “Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”

Microsoft’s Xbox Series S and Series X are one of only two types of high performance video game consoles. Importantly, Microsoft also offers a leading video game content subscription service called Xbox Game Pass, as well as a cutting-edge cloud-based video game streaming service, according to the complaint.

Activision is one of only a very small number of top video game developers in the world that create and publish high-quality video games for multiple devices, including video game consoles, PCs, and mobile devices. It produces some of the most iconic and popular video game titles, including Call of Duty, World of Warcraft, Diablo, and Overwatch, and has a combined 154 million monthly active users around the world, according to the FTC’s complaint. Activision currently has a strategy of offering its games on many devices regardless of producer.

But that could change if the deal is allowed to proceed. With control over Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers.

The Commission vote to issue the complaint was 3-1, with Commissioner Christine S. Wilson voting no. A copy of the administrative complaint will be available shortly.

Having limped lower in recent weeks below where it had been trading around $80, already a wide discount to the $95 MSFT purchase price, ATVI stock slumped 2.5% to $74…

… while MSFT stock dropped about $2 from session highs some 2% higher on the session, to trade up just 0.9%.

The drop in MSFT promptly hammered the Nasdaq and sent shockwaves across the entire market, pushing spoos down more than 25 points to near session lows around 3950 having traded at session highs of 3975 just moments earlier.

An update to the Climate Prediction Center’s official 8-14 day outlook for pre-Christmas forecasts more than two-thirds of the Lower 48 will be colder than average, with near-normal temperatures for the Mid-Atlantic and above-average temperatures for the Northeast. 

NOAA’s temperature outlook forecasts the West, Southwest, and Midwest, as well as parts of the Southeast (excluding coastal areas), will experience below-average temperatures between Dec.15-21. The forecast was issued on Dec. 7. As for the Mid-Atlantic, temperatures are expected to be around average, while temperatures in the Northeast will be above average. 

Lower 48 average temperatures are currently well above average. On Wednesday, the national average was 10 degrees above a 30-year mean, though forecasts show a cold pattern will begin at the end of this week and push temperatures down well below average through Dec. 21. 

Heating demand is expected to rise ahead of Christmas. 

Houston-based energy firm Criterion Research pointed out on Nov. 23, “The United States has officially flipped over to withdrawal season.” 

US natural gas futures bid yesterday after falling more than 27% since late November after weather forecasts for the US switched from cold to warm. Cold weather is finally on the way, which could put a bid under NatGas. 

As for the Northeast, The Washington Post said, “The Mid-Atlantic and Northeast still appear on track to turn more wintry during the second half of the month. As Christmas approaches, if you’re rooting for snow, waiting is often the hardest part.” 

Authored by Mike Shedlock via MishTalk.com,

Hello Pentagon, what do you think of Biden’s new and costly green mandates for weapons?

Thanks to president Biden, The Pentagon Marches Off to Climate War.

“As the U.S. military faces strained budgets and growing threats, climate will be a costly new priority in national defense. The People’s Liberation Army must be dumbfounded by its good luck.”https://t.co/Uau7nwOaHw via @WSJ

— Gwendolyn Johnson (@TrixieIvy4) December 8, 2022

A little-noticed rule-making proposed by the Department of Defense, NASA and the General Services Administration last month would require federal contractors to disclose and reduce their CO2 emissions as well as climate financial risks. The rule would cover 5,766 contractors that have received at least $7.5 million from the feds in the prior year.

For example, weapons manufacturers would have to quantify and disclose the amount of CO2 generated from their own facilities; manufacturers that produce steel, computer chips and motors used in their weapons; propellants and fuel; and even munition storage areas. It’s unclear if CO2 emissions will influence procurement decisions.

Large contractors would also have to publish an annual climate disclosure and develop “science-based targets” to reduce greenhouse gas emissions in alignment with the goals of the 2015 Paris agreement. That means contractors will have to aim to zero out emissions and possibly require their contractors to do so.

Will Lockheed Martin and Raytheon Technologies have to redesign weapons systems and aircraft to be powered by lithium-ion batteries? China mines and processes the critical minerals used in batteries and other green technologies that will be required to meet these “science-based targets.”

The proposed rule would also apply to non-defense contractors, including pharmaceutical, shipping and tech companies, though it curiously exempts universities, nonprofit research institutions and state and local governments.

No, that isn’t the Onion, I am quoting. It’s the Wall Street Journal. 

Well, that’s OK. 

It will add to inflation and bigger budgets. Who doesn’t want that? 

Besides, I expect an announcement soon that President Biden got Russia, China, and North Korea, to agree to the same rules so they are fair across the board. 

Hoot of the Day

Universities Exempt!

That is my hoot of the day.

— Mike “Mish” Shedlock (@MishGEA) December 8, 2022

Lead Question Answered

Hello Pentagon, what do you think of Biden’s new and costly green mandates for weapons?

Yes, the Pentagon loves it. Astute observation.

Q: Why?
A: Much bigger budgets and they will either ignore the targets or lie about meeting them.

— Mike “Mish” Shedlock (@MishGEA) December 8, 2022

Yes, the Pentagon loves it. Astute observation.

Q: Why?
A: They will get much bigger budgets but will either ignore the climate targets or lie about meeting them.

*  *  *

Like these reports? I hope so, and if you do, please Subscribe to MishTalk Email Alerts.

Authored by Dave DeCamp via AntiWar.com,

The House Foreign Affairs Committee on Tuesday narrowly voted down a bill that would audit the tens of billions of dollars that Congress has approved to spend on the war in Ukraine. The bill was rejected by the Democrat-led panel in a vote of 26 to 22. The legislation was introduced by Rep. Marjorie Taylor Greene (R-GA) and a small group of Republicans who oppose US aid to Ukraine, but it received strong support from more hawkish Republicans.

Republican Reps. Thomas Massie (KY), Matt Gaetz (FL), Barry Moore (AL), and Andrew Clyde (GA) cosponsored Greene’s bill. Greene has said that she will reintroduce the measure in the next Congress when Republicans have a majority in the House. “It’s official the Democrats have voted NO to transparency for the American people for an Audit for Ukraine,” Greene wrote on Twitter after the vote. “But we take over in January! This audit will happen!”

Rep. Michael McCaul (R-TX), who is expected to head the House Foreign Affairs Committee in the next Congress, has come out in favor of the audit bill. “The era of writing blank checks is over,” McCaul said, according to The Washington Post.

McCaul has been critical of the Biden administration for not sending longer-range weapons to Ukraine and wants to encourage Ukrainian strikes on Crimea despite the risk of escalation. But he represents the mainstream Republicans who want to keep arming Ukraine but agree there should be more oversight.

Democrats have been critical of the growing Republican calls for more oversight of the Ukraine aid. Rep. Adam Smith (D-WA), the head of the House Armed Services Committee, even dismissed the concerns as “Russian propaganda” and said the calls from Republicans to increase oversight “makes me a little crazy.”

Meanwhile also on Tuesday night, Congress unveiled the 2023 National Defense Authorization Act (NDAA), worth $858 billion, $45 billion more than what President Biden requested for the military spending bill. The House is expected to vote on the legislation this week, and it could be brought to the floor as soon as Thursday. Once the House approves the bill, it will be sent to the Senate, then to President Biden’s desk for his signature.

Biden’s initial defense budget request: $813 billion
House Armed Services Committee version: $839 billion
Senate Armed Services Committee version: $847 billion
Final version, just released: $859 billion

Oddly, this one budgetary process always seems to go in the same direction

— Michael Tracey (@mtracey) December 7, 2022

The massive $858 billion bill represents an 8% increase from the 2022 NDAA, which was also larger than what Biden requested. The $858 billion includes $817 billion for the Pentagon, and the remaining funds go toward military spending for other departments.

Notable amendments packed into the NDAA include $10 billion in military aid for Taiwan that will be dispersed over five years. The aid is in the form of Foreign Military Financing, a State Department program that gives foreign governments funds to purchase US-made military equipment.

The NDAA also includes $800 million in the Ukraine Security Assistance Initiative, a program that allows the US government to purchase weapons for Ukraine. But the vast majority of spending on the Ukraine war will come through emergency funding, and the White House is hoping Congress approves a new $37.7 billion tranche of Ukraine aid during the lame-duck period.

Rep. Gerry Connolly was one of the Democrats who shut down @RepMTG’s resolution to audit the 80 billion+ taxpayer dollars flowing into the pockets of Ukrainian warlords.

“I support transparency and accountability,” Connolly claimed, “but not now.” pic.twitter.com/pkrPbU9vQY

— Max Blumenthal (@MaxBlumenthal) December 7, 2022

The NDAA includes $11.5 billion in new investments for the Pacific Deterrence Initiative, a program to build up in the Asia Pacific to confront China. The Pentagon has identified China as its main focus, and the NDAA includes investment in new technology research and development that US military leaders say is meant to counter Beijing.

Update(1228ET): The Daily Mail is calling it a “deal soaked in blood” after the governments of Saudi Arabia, the UAE, and Russia confirmed that Brittney Griner’s release for notorious convicted arms trafficker Viktor Bout came via Saudi/UAE mediation efforts led by Crown Prince Mohammed bin Salman (MbS). Foreign ministry statements by both countries, hours after the now freed American and Russian walked past each other on a UAE airport tarmac, revealed the following per a leading Mideast regional news outlet: 

Saudi Arabia’s Crown Prince Mohammed bin Salman and UAE President Sheikh Mohammed bin Zayed led mediation efforts that secured the release of two prisoners between the US and Russia, a joint statement issued by both countries’ foreign ministries said on Thursday.

“The ministries said the success of the mediation efforts was a reflection of the mutual and solid friendship between their two countries and the United States and Russia,” the statement said.

And according to details of the exchange:

A senior administration official would not comment directly on MBS’s role but said the U.S. will ‘continue to lean on partners around the world’ to secure the release of unjustly detailed Americans. 

The swap happened at Abu Dhabi airport, where Griner and Bout had to walked past each other to reach their respective parties on the airport tarmac, Russian state media reports.

The official said Griner was ‘all smiles’ on the tarmac as she approached the American delegation. 

Saudi Crown Prince brokered deal to swap WNBA star Brittney Griner for Merchant of Death arms dealer https://t.co/avmWY2EUwA pic.twitter.com/9uDDWTZdBh

— Daily Mail US (@DailyMail) December 8, 2022

Amid the outrage that the Biden administration released a “big catch” notorious Russian criminal, also while leaving Paul Whelan behind to languish in a Russian penal colony, many are questioning the timing of all of this coming together a mere two days after the US government dropped the Khashoggi lawsuit against the Saudi leader.

To review of the timeline and chain of possibly connected events, Biden recently gave MbS immunity for the Jamal Khashoggi murder ironically enough at a moment MbS was pushing production cuts through OPEC (which helped Putin and Russian interests)… and now the White House gets Griner back (and perhaps it will quickly be “forgotten” how the Saudis just humiliated the US administration on oil output).

Biden just traded the guy that inspired “Lord of War” for Brittney Griner, who didn’t even make the cut for “Space Jam 2” pic.twitter.com/eR9gQN7jRB

— Harrison (@HarrisonKrank) December 8, 2022

* * *

Update(8:50ET): During his announcement from the White House, with Griner’s family present, Biden spent a lot of time defending his administration from widespread accusations that Griner’s release was prioritized because of her fame while at the same time other detained Americans were left behind.

“This was not a choice of which American to bring home,” Biden said while vowing to continue working on freeing detained US Marine veteran Paul Whelan. 61-year old teacher Marc Fogel is also languishing in Russian prison. 

You left a Marine to rot so you could get Twitter likes for freeing a celebrity who hates America. https://t.co/XKJxiNrxXK

— Sean Davis (@seanmdav) December 8, 2022

An understandably very frustrated and “devastated” Whelan family has issued the following statement upon the White House announcement of Griner’s release:

Despite the possibility that there might be an exchange without Paul, our family is still devastated. I can’t even fathom how Paul will feel when he learns. Paul has worked so hard to survive nearly 4 years of this injustice. His hopes had soared with the knowledge that the US government was taking concrete steps for once towards his release. He’d been worrying about where he’d live when he got back to the US. And now what? How do you continue to survive, day after day, when you know that your government has failed twice to free you from a foreign prison? I can’t imagine he retains any hope that a government will negotiate his freedom at this point. It’s clear that the US government has no concessions that the Russian government will take for Paul Whelan. And so Paul will remain a prisoner until that changes.

We just traded “The Merchant of Death” Viktor Bout, a man who sold arms to warlords, for Brittney Griner, a WNBA player.

This may be the worst trade deal in history.

— Collin Rugg (@CollinRugg) December 8, 2022

* * *

In a huge and unexpected development, Russia has released into US custody WNBA star Brittney Griner, after in October her 9-year prison sentence was upheld by a Russian court. She had already spent weeks in a harsh penal colony some 300 miles southeast of Moscow.

She was freed in a prisoner exchange which took place in Abu Dhabi Airport on Thursday. In return the Biden administration agreed to give up notorious international arms dealer Viktor Bout. US officials speaking to CBS say the deal had been reached by last Thursday, with the logistics details having been hammered out since then. Biden is imminently expected to address Griner’s release and the prisoner exchange at 8:30eastern. Watch Live: 

“To secure Griner’s release, the president ordered Bout to be freed and returned to Russia. Mr. Biden signed the commutation order cutting short Bout’s 25-year federal prison sentence,” CBS reports.

But the report underscores, “Notably, the Griner-for-Bout exchange leaves retired U.S. Marine Paul Whelan imprisoned in Russia. Whelan has been in Russian custody for nearly four years. He was convicted on espionage charges that the U.S. has called false.”

Moments ago I spoke to Brittney Griner.

She is safe.
She is on a plane.
She is on her way home. pic.twitter.com/FmHgfzrcDT

— President Biden (@POTUS) December 8, 2022

When Russian state media began first signaling that the Kremlin will pursue getting Bout back, and Secretary of State Antony Blinken starting over the summer hinted the administration was actually entertaining the possibility, it unleased a wave of controversy, especially given Griner’s own recent public displays which some interepreted as “anti-US”… most notably refusing to stand for the national anthem and even staying in the locker room during its playing. 

One commenter previously had this to say in summary of the controversial exchange for Bout:

“It took nearly 10 years for US to apprehend Viktor Bout, and close to 3 more years to convict him for terrorism and arms trafficking. Allegedly, thousands of civilians in multiple African countries, were injured and killed by weapons supplied by Bout. Fair trade for Griner?”

It’s likely that the Department of Justice had been vigorously arguing against releasing Viktor Bout, considering it took a significant extradition process (from Thailand) to even get him into US custody over a decade ago.

Before his just-announced release, he was serving a 25-year sentence in federal prison after being convicted in the Southern District of New York for conspiring to kill Americans and conspiring to provide material support to terrorists.

Already there’s brewing anger that Paul Whelan, as well as another American locked up in Russia, 61-year old teacher Marc Fogel, over the widespread perception that they’ve been left behind.

Readers have been well informed that the used car market bubble popped earlier this year (read: here). Cox Automotive reported that its Manheim Used Vehicle Value Index, which tracks the auction prices of used cars, plunged 14.2% from a year ago. The index has also slid to the lowest point since August 2021 as used-car sales tumbled 10% in November. 

November’s monthly decline on a year-over-year basis of 14.2% was the largest ever on Manheim’s data. 

The index fell to 199.4 last month, below the 200 mark for the first time since August 2021, and is down 15% from the peak in January. However, the index is still 58% higher since the start of the pandemic. 

A combination of new car supply and soaring borrowing rates have been the drivers of deflating the bubble. Cox chief economist Jonathan Smoke explained more: 

“New inventory is finally starting to build, and that’s producing momentum in new retail sales, but that momentum appears to be at the expense of used retail. Especially it’s the traditionally used car buyer that’s most impacted by payment affordability.” 

What happens next is that retail prices will start to decrease because of the high correlation to wholesale prices. The used car bubble has possibly, claimed the first victim: Carvana, whose stock imploded Wednesday after its creditors formed a pact as bankruptcy risks soar. 

And like we’ve told readers, wait until 2023 for deals as it’s a process from the time the Federal Reserve hikes interest rates to shooting up borrowing costs for consumers to curbing the demand side while supply side snarls alleviate; all of this are the perfect ingredients for lower prices moving forward. 

Authored by Jesse Felder via The Felder Report,

I came across an interesting factoid the other day:

‘Not a single mutual fund — not one — managed to beat its benchmark regularly and convincingly over the last five years. These results are even worse than those of 2014 and 2015, when I last examined this subject closely.’ https://t.co/X2Ytbku1B6

— Jesse Felder (@jessefelder) December 2, 2022

Fans of passive investing clearly take this as validation of their preference for simply allocating their capital as the index dictates.

However, I think that may be too convenient of a conclusion to derive from this. In fact, it may be looking at things backwards.

If you take a moment to think about the factors that might be behind this statistic, it starts to become far more interesting. Flows to passive funds over the past five years have been massive and accelerating while just about five years ago active funds began to lose assets, a phenomenon which has also accelerated in the years since.

Shift from active to passive funds is accelerating, JPMorgan says https://t.co/c5jALPSXpm pic.twitter.com/136Oak78ht

— Jesse Felder (@jessefelder) December 6, 2022

Is it possible, likely even, that this dramatic outperformance of the index over active funds was driven largely by flows rather than the lack of skill of active managers or some other explanation?

In other words, could it be that the popularity of passive investing explains its success more than its success explains its popularity?

Furthermore, if it is true that the performance of the index has largely been driven by flows over the past five years, rather than the collective opinion of educated active investors, then how efficient is the market truly?

Is it possible that the popularity of passive investing has helped to inflate another stock market bubble?

‘The stock market losses that we’ve observed year-to-date are merely a give-back of the frothiest segment of the recent market bubble. Our most reliable valuation measures still match the extremes we observed in 1929, 2000 and the 2020 pre-pandemic high.’ https://t.co/oGPiHws6xC pic.twitter.com/KoV4FHE9HC

— Jesse Felder (@jessefelder) November 21, 2022

Remember, passive investing is founded upon the idea that the markets are efficient and thus investors mirroring the index will realize the collective returns generated by the underlying businesses. But should the market become divorced from its underlying fundamentals due to the dominance of price-insensitive buying, what then should passive investors expect?

This is not The Onion, but CNN, which produced a whole report in effect arguing that internationally banned weapons are OK if given to Ukraine for the ‘good cause’ of fighting Russia…

“Ukrainian officials and lawmakers have in recent months urged the Biden administration and members of Congress to provide the Ukrainian military with cluster munition warheads, weapons that are banned by more than 100 countries but that Russia continues to use to devastating effect inside Ukraine.”

BUT, the mainstream outlet writes, “For Ukraine, cluster munitions could address two major issues: the need for more ammunition for the artillery and rocket systems the US and others have provided, and a way of closing Russia’s numerical superiority in artillery.”

And never mind those pesky ‘statutory restrictions’ and the greater likelihood of killing innocent civilians…

CNN continues: “The Biden administration has not taken the option off the table as a last resort, if stockpiles begin to run dangerously low. But sources say the proposal has not yet received significant consideration in large part due to the statutory restrictions that Congress has put on the US’ ability to transfer cluster munitions.”

“Those restrictions apply to munitions with a greater than one percent unexploded ordnance rate, which raises the prospect that they will pose a risk to civilians,” the publication then admits, before noting:

“President Joe Biden could override that restriction, but the administration has indicated to the Ukrainians that that is unlikely in the near term.”

CNN’s sources further underscored that at this point President Biden has not rejected the potential transfer of cluster munitions outright. All “options” continue to be on the table… international bans and human rights guidelines be damned, apparently.

Very early following the Feb.24 Russian invasion, Russia’s military stood accused of using banned cluster bombs, for which it received international condemnation – including from US officials and media.

* * *

According to a historical review of cluster bombs in We Are the Mighty, cluster munitions kill indiscriminately, and their widespread use in multiple 20th and early 21st century conflicts eventually led to an international treaty banning their use by nation-states…

“Cluster munitions are explosives that detonate in the air, dispersing bomblets or submunitions across a vast area to destroy several targets simultaneously. These were commonly used before a 2008 treaty forbidding the use of cluster bombs was formulated. Thousands of civilian lives have been lost due to the bomb’s nature. Despite many countries resisting the treaty back then, the majority had their say, and the use of these bombs is now illegal.”

In March, numerous reports showed Russia’s use of cluster bombs in Ukraine, sparking outrage.

A new NYT report says Ukraine used cluster bombs on one of its own villages, prompting denunciations from human rights groups:https://t.co/TvJz7ctYi7

— Glenn Greenwald (@ggreenwald) April 18, 2022

“When the Treaty on Cluster Munitions came into effect, it marked a huge step forward in safeguarding civilians during and after a military confrontation. The international agreement outlaws cluster munitions completely and mandate member states to clean up regions polluted by cluster munition remains within 10 years (after the convention), dismantle their stockpiles in eight years, and aid sufferers.”

“…Bomblets from a cluster munition can strike anywhere and anyone. This makes cluster bombs especially dangerous dealing with innocent lives. Only the main warhead will detonate on the specified targets when a cluster bomb is launched from an airplane. The bomblets, which automatically separate themselves from the main bomb, can land anywhere.”