After January’s disappointing ‘stall’ in the linear demise of inflation, consensus expectations were for a re-acceleration of the YoY decline in headline CPI (from 6.4% to 6.0%), and the actual print came in right on expectations (+0.4% MoM, +6.0% YoY). That is the lowest YoY CPI since Sept 2021…

Source: Bloomberg

Services dominated the headline CPI YoY shift with Shelter continuing to be a main driver…

On a MoM basis, Services and Shelter also dominated, with Used Car prices lower (which lags the real shift as Manheim prices have risen for two straight months)…

The index for shelter was the largest contributor to the monthly all items increase, accounting for over 70 percent of the increase, with the  indexes for food, recreation, and household furnishings and operations also contributing. The food index increased 0.4 percent over the month with the food at home index rising 0.3 percent. The energy index decreased 0.6 percent over the month as the natural gas and fuel oil indexes both declined.

Core CPI was expected to slow only marginally in February from 5.6% YoY to 5.5% YoY and it did – dropping to its lowest YoY print since Dec 2021…

Source: Bloomberg

The index for all items less food and energy rose 0.5 percent in February, after rising 0.4 percent in January.

• The shelter index continued to increase, rising 0.8 percent over the month. The index for rent rose 0.8 percent in February, while the index for owners’ equivalent rent increased 0.7 percent over the month. The index for lodging away from home increased 2.3 percent in February. The shelter index was the dominant factor in the monthly increase in the index for all items less food and energy.

• Among the other indexes that rose in February was the index for recreation, which increased 0.9 percent, and the index for household furnishings and operations which increased 0.8 percent.

• The airline fares index rose 6.4 percent, ending a string of four consecutive declines. The index for motor vehicle insurance, the index for apparel, the index for personal care, and the index for new vehicles also increased in February. In contrast, the index for used cars and  trucks fell 2.8 percent in February,  continuing a recent downward trend.

• The medical care index fell 0.5 percent in February, after falling 0.4 percent in January.

• The index for physicians’ services continued to decline, falling 0.5 percent after declining 0.1 percent in January. The hospital services index and the prescription drugs index were unchanged in February.

The costs of putting a roof over your head remains a critical factor for The Fed to deal with:

• Feb Rent Inflation 8.76% YoY, up from 8.56% In Jan; highest on record

• Feb Shelter Inflation 8.10% YoY, up from 7.88% in Jan; highest on record

There is some good news… egg prices appear to have peaked…

Increases in Transportation costs outweighed a drop in Medical Care costs…

Crucially, the core inflation measure Powell watches – core services excluding rents – went in the wrong direction. Up 0.5% versus 0.36% in January. The year-on-year rate came down slightly, to 6.15% from 6.22%.

Source: Bloomberg

Finally, this is the 23rd straight month where Americans cost of living has outpaced their wage growth with real average hourly earnings down 1.3% YoY…

Source: Bloomberg

Obviously the world is a different place after the SVB collapse and bailout, but The Fed still has a job to do.

Before the print, the market had priced in 17bps of hikes for March’s meeting next week

The first attempt to auction off SVB (or parts of the failed bank) was unsuccessful, but is shrouded with political questions, as The Wall Street Journal reports:

The Federal Deposit Insurance Corp. says it couldn’t find a private buyer for SVB, though a source tells us Treasury and the Federal Reserve favored one.

FDIC Chairman Martin Gruenberg nixed it owing to hostility to bank mergers.

But for venture capital firms – and the feds – if at first you don’t succeed, try, try again is the mantra, as The FT reports that several VC firms working on a long-shot plan to preserve parts of Silicon Valley Bank so it can keep serving clients in the technology sector, according to people briefed on the effort.

Since late last week a group of more than a dozen VC firms have been in talks about how to enable SVB to continue lending to, investing in and advising companies and executives in the sector.

Specifically, Bloomberg reports that Apollo Global Management and Blackstone have expressed interest in snapping up a book of loans held by SVB.

The bank had $73.6 billion of loans as of Dec. 31, 2022.

Before pressing ahead with any bid, the group is asking regulators for more information on the state of the bank, according to one of the people.

“It’s still premature but I’m hopeful it could come together in the next few days,” said one of the people involved in the discussions.

The loan portfolio is seen as an attractive buy and was not a contributing factor in the bank run that caused Silicon Valley Bank’s demise, the people said.

“It has a long-established track record in the sector which supports its expertise, conservative underwriting, and better than peer asset quality performance,” ratings agency Moody’s Investors Service said last week as it downgraded the debt of the SVB Financial Group, the bank’s parent company.

The size of the loan book Apollo and Blackstone are interested in couldn’t immediately be determined. Blackstone is also looking at other assets it may purchase from the bank, one of the people said. 

“The deal might be wholesale or piecemeal, but it is clear there needs to be financial capital providers that step into the breach… as there are scenarios here where large banks won’t get [to agreements with regulators over the potential liability of buying SVB],” according to a senior executive at a leading venture capital firm directly involved in the discussions.

Other firms involved in discussions, according to The FT’s sources, include General Catalyst, KKR, Andreessen Horowitz, Khosla Ventures, and CSFB.

Credit Suisse Group AG published its annual report, slated for release last Thursday but was delayed by the US Securities and Exchange Commission over “material weaknesses” in its internal controls over financial reporting. 

In the annual report on Tuesday, the embattled Swiss lender said, “management did not design and maintain an effective risk assessment process to identify and analyze the risk of material misstatements in its financial statements.”

Credit Suisse disclosed last week, after a last-minute call from the SEC it would delay its annual report. The issues, described as “technical,” were related to cash flow statements going back to 2019. 

Shares of the Swiss lender fell 4%. The stock trades at a new all-time low in European trading. 

Despite initiating a campaign to regain clients, Credit Suisse reported that client deposit outflows continued this month. As a consequence of the outflows, the bank also admitted that it had utilized its liquidity buffers. It warned these circumstances have “exacerbated and may continue to exacerbate” liquidity risks. 

Chief Executive Officer Ulrich Koerner told investors at a conference hosted by Morgan Stanley on Tuesday that he wants to rebuild what was lost following the restructuring, “and once we are there, we go beyond and grow the business again.”

As part of the ongoing restructuring aimed at restoring profitability, the bank proposed granting equity to senior managers in its investment banking arm, CS First Boston, which is due to be spun off imminently. Under the plan, staff members could own as much as 20% of shares in the venture. 

Via SchiffGold.com,

The failure of Silicon Valley Bank and Signature Bank reminds us of a very important truth — if you can’t hold it in your hand, you don’t really own it…

That’s why it’s wise to hold at least some of your wealth in hard assets like gold and silver that are in your direct possession or at least stored in a secure, allocated, segregated, and insured storage facility.

The FDIC insures bank deposits up to $250,000. If you have more than that in a financial institution, you could lose everything above that limit if a bank fails.

Depositors at SVB and Signature Bank lucked out. The government has made provisions to cover uninsured deposits. But there’s no guarantee that will happen when the next bank goes under.

And even if you don’t have more than $250,000 in the bank, you could easily find yourself locked out of your account. Just last week, a computer glitch caused money in some Wells Fargo accounts to disappear.

There are also more nefarious reasons you could lose access to funds. The Nigerian central bank recently limited bank withdrawals in order to incentivize people to use its new central bank digital currency. In 2017, India faced cash shortages when the government declared that 1,000 and 500 rupee notes would no longer be valid with just a four-hour notice. And during its crisis, the Greek government shuttered banks and seized some bank deposits.

Most people assume “that can’t happen here” in the US. But as we saw over last week, the US banking system is vulnerable to collapse.

The dirty little secret is US banks don’t hold your money in their vaults. They loan it out to other people. In the US fractional reserve banking system, financial institutions only have enough cash on hand to cover a fraction of their deposits. If too many people show up at the bank to demand their money at the same time, the bank will not have enough funds available to cover all of the withdrawals. This is why bank runs are so dangerous. They can cause a bank to go under.

When you put your money in a bank, you create “counterparty risk.” In a nutshell, it is the risk that a person or institution on the other side of a transaction might not fulfill its obligation – i.e. the bank doesn’t have the money to return your deposit.

Even if you pull all of your money out of the bank and stuff it under your mattress, you still have counterparty risk, as Mises Institute president Jeff Deist explained.

Even if you managed to withdraw all of  ‘your’ money in physical cash from banks tomorrow and put it in your well-guarded safe at home, you are still a creditor to the Fed & Treasury. You still hold IOU paper with risk of loss.”

In fact, you’ve suffered significant losses in the value of your dollars over the last two years thanks to rampant price inflation.

Gold and silver carry no counterparty risk. They are tangible assets that you can hold in your hand. They can be bought and sold all over the world. Their value is recognized globally. While the price of gold or silver may fall, it will never fall to zero. Precious metals can’t default on their payments, they can’t commit fraud, and they can’t go bankrupt.

Of course, it’s impossible to lower risk to zero. If you store your gold and silver at home, you could get robbed. If you vault your precious metals, it is possible for that third-party storage entity to commit fraud, get robbed, or be destroyed by an act of God. Nevertheless, the counterparty risk introduced by storing your gold and silver is relatively low compared to the risk of a bank failure or rapidly depreciating fiat currency — especially in the current financial situation.

President Andres Manuel Lopez Obrador, also known as AMLO, highlighted during a Monday press briefing that the growing number of Americans choosing to visit or live in cities such as Cancun and Mexico City validates their perception that Mexico is a ‘safe’ country.

According to AMLO, Americans have been flooding Mexico City, and their presence has been associated with rising shelter inflation. In addition, he pointed out that the number of tourists visiting Cancun is soaring, which he believes is evidence that negative reports about the country’s safety are baseless and a product of ‘malicious media manipulation.’

The Mexican president added the states of Campeche and Yucatan are safe to travel to, despite the US government saying otherwise. 

While AMLO’s view on the motivations behind Americans relocating or traveling to Mexico may have some merit, the primary reason behind this trend is the willingness of some folks to compromise on safety for the sake of securing their wealth, given the highest US inflation in four decades. In addition to a more affordable cost of living, Mexico also offers warm weather and beautiful beaches. 

The latest warning that traveling and/or living in Mexico might not be the best idea came after a Mexican drug cartel’s violent kidnapping of four Americans last week. Two of those Americans were killed, and two others were found alive days after. 

👀WHAT’S REALLY GOING ON HERE: shocking video above shows 4 US citizens kidnapped and forced into back of pickup truck after getting caught in crosshairs of cartel-related shootout shortly after driving across Mexico’s border from Texas.Later 2 found and 2 dead pic.twitter.com/01Mv4ZkGyM

— Kevin smith (@KJ00355197) March 11, 2023

World Bank figures show Mexico has a far greater murder rate than the US — at about 28 deaths per 100,000 people, compared with 7 per 100,000 in the US.  

In early 2021, we were the first to report that the beach resort town of Tulum was in a state of crisis due to cartel presence and tourists being targeted by violence. Later that year, the Mexico National Guard deployed 1,500 troops to provide security for high-end resorts located throughout the Yucatan Peninsula.

In August 2022, a violent conflict between two rival cartels in the border city of Tijuana resulted in mass chaos. All US government employees were instructed to shelter in the town until the surge in violence subsided. 

Here is further evidence indicating that Mexico is a dangerous country.

• Mexico Sets Homicide Record As Country Descends Into Chaos
• US State Department Issues Kidnapping Advisory For Americans In Mexico
• “It’s Too Dangerous”: Texas Officials Issue Travel Warning After Latest Mexico Kidnappings

AMLO might be confused about the reason Americans are coming to Mexico. It’s certainly not a reflection of safety; instead, they’re escaping the inflation-plagued US. 

Authored by Thomas Brooke via Remix News,

So far this year, the Mediterranean route has been the most popular for migrants trying to reach Europe…

The number of illegal border crossings from North Africa into Italy more than doubled in the first two months of the year, compared to the same period in 2022.

A total of 11,951 crossings via the Central Mediterranean migratory route were detected in January and February, up 118 percent over the same period last year and accounting for two of every five irregular border crossings into the European Union so far this year.

According to the European Union’s border agency, Frontex, the top three nations of origin for migrants arriving via the Mediterranean are Ivory Coast, Guinea, and Pakistan.

In total, 28,130 border crossings have been detected into the European Union so far for 2023, a figure Frontex says is “roughly in line with the same period last year.” The 13,800 new arrivals in February alone is a slight increase over the same month in 2022.

The Western Balkan route, which was reported as being the most frequently used by migrants into Europe last year, has seen the number of new arrivals drop by 28 percent over the same period last year, while migrant landings on the Spanish Canary Islands and mainland Spain have also decreased by 68 percent and 38 percent, respectively.

Irregular border crossings from Belarus into Poland, Lithuania and to a lesser extent Latvia have increased the most percentage-wise, with 856 crossings so far this year, up 145 percent.

Meanwhile, the number of migrants leaving the European mainland to reach Britain is also up 82 percent, with 5,622 irregular border crossings detected across the English Channel in the first two months of 2023. The British government recently introduced new legislation vowing to detain and deport anyone who enters the country illegally using this route.

The increased frequency in the use of the Central Mediterranean route will place further pressure on Giorgia Meloni’s administration in Rome, which is attempting to implement a policy to crack down on people smugglers and deter migrants from making the journey.

The Italian government announced last week harsher penalties for convicted people smugglers, who could now serve up to 30 years in prison if small-boat migrants die on their watch. The new legislation comes after last month’s tragedy in the Ionian Sea, which saw dozens of migrants die in rough waters.

A recent Italian intelligence report suggested the presence of NGO search-and-rescue vessels in the Mediterranean is encouraging more migrants to make the journey to Europe, knowing they only need to effectively get halfway across until they are likely picked up and escorted to shore.

The report accused NGOs of providing “a logistical advantage for the criminal organizations that manage migrant trafficking, allowing them to adapt their modus operandi according to the possibility of reducing the quality of the vessels used, correspondingly increasing illicit profits, and exposing the people on board to a more concrete risk of shipwreck.”

The data, published by Frontex on Friday, shows a likelihood of illegal immigration continuing to remain at high levels for this year, running at a similar rate to 2022 when 330,000 irregular border crossings were detected, the highest figure since the migration crisis of 2016.

This, however, only tells part of the story, with almost 1 million asylum applications being made across the European Union in 2022, a figure that excludes almost 5 million Ukrainian refugees.

Authored by Kyle Anzalone via The Libertarian Institute,

The Department of Defense granted Wayne State University $750,000 to attempt to give ferrets “Havana Syndrome.” Earlier this month, the intelligence community concluded the illness is not caused by a weapon. 

American officials in Havana, Cuba reported hearing loud noises and experiencing headaches in late 2016. Once the Donald Trump administration came into power in 2017, the White House claimed the symptoms were caused by a mysterious weapon directed at American officials. Trump would go on to roll back the increased diplomatic and economic ties his predecessor, Barack Obama, put in place with Cuba. 

A scientific analysis of the noise alleged to be a sonic weapon was dismissed as the sound of local crickets. 

In 2020, Julia Ioffe wrote an article alleging that American officials in Russia were coming under attack from the same weapon that was used in Cuba. Ioffe claimed Moscow was behind the attacks on Americans. 

After Ioffe’s story, dozens of American officials around the world claimed to be victims of Havana Syndrome. Congress passed funding to compensate the victims. The intelligence officials who spoke with Ioffe and members of Congress ignored a 2018 report by a scientific board that found the alleged symptoms experienced by victims were not caused by a microwave or ultrasound weapon.

In 2022, the CIA concluded the supposed phenomenon was not “the result of a sustained global campaign by a hostile power.” Two weeks ago, the Washington Post reported another assessment from five US intelligence agencies concluding that Havana Syndrome was “highly unlikely” to be the work of a foreign power. 

The Pentagon-sponsored animal testing will move forward in the face of several US government findings that Havana Syndrome does not exist. Politico reported the grant was awarded in September but confirmed the Department of Defense will not rescind it.

PETA has since gotten involved…

The spy community has debunked the link between directed-energy weapons & Havana Syndrome, which undercuts the Army’s justification for irradiating animals to study this illness.

PETA is urging the Army to end its weapon-wounding tests on animals now. ⬇️ https://t.co/RivZfjGuFE

— PETA (@peta) March 10, 2023

The Pentagon hopes the Wayne State researchers will use the $750,000 to mimic the symptoms of Havana Syndrome. The study “will develop and test a novel laboratory animal model to mimic mild concussive head injury.” DoD spokesperson Lt. Cmdr. Tim Gorman told Politico, “behavioral, imaging, and histological studies will determine if the model is comparable to the abnormalities seen in humans following concussive head injury.”

North Korea’s to be expected muscle-flexing has begun in response to the US and South Korea going ahead with recently announced joint military exercises, expected to be one of the largest joint drills between the allies in recent history.

On Sunday North Korea fired at least one missile from the Sea of Japan. Notably it was from a submarine, which is a rarity given the past year’s spate of land-based launches. The Hill notes that “North Korea claimed to have fired two missiles from a submarine in the sea, but South Korean military officials said they only tracked one missile fired from the submarine near the North Korean port city of Sinpo.”

The sub-fired missile serves as a warning in conjunction with this week’s kick-off of 11 days of US-South Korea joint military exercises dubbed ‘Freedom Shield‘. T

The drills have been previewed as being the largest in a half-decade. The launch came within less than 24 hours of the start of the US drills. CNN details:

North Korea launched two missiles from a submarine in waters off its east coast over the weekend, according to state media, and vowed to take “the toughest counteraction” against the largest joint military drills by the United States and South Korea in years that kick off Monday.

Pyongyang’s official KCNA news agency said the “strategic cruise missiles” were launched on Sunday morning from a “8.24 Yongung” submarine in the Sea of Japan, also known in Korea as the East Sea. The same vessel was used to test North Korea’s first submarine-launched ballistic missile in 2016, CNN previously reported.

North Korean leader Kim Jong Un has lately warned of “unprecedented strong responses” to the joint drills if they go ahead, while his sister, Kim Yo Jong, warned that “the frequency of using the Pacific Ocean as our shooting range depends on the nature of the US military’s actions,” according to a prior statement posted on the state-run Korean Central News Agency.

So at a moment the war in Ukraine’s east continues to intensify, and as Beijing is flexing its muscle over Taiwan reunification, yet another conflict theatre could open up where Washington is on the ‘defensive’ as hawks try take a stand in bolstering US allies. 

Authored by Paul Joseph Watson via Summit News,

The Welsh government says that statues of “old white men” such as Admiral Nelson should be removed or even destroyed because they may be “offensive” to Britain’s increasingly multicultural population, with de facto shrines to diversity set to replace them.

The guidance, which is set to be finalized by the end of the month, argues that the memorials fuel the “perception that the achievements that society considers noteworthy are those of powerful, older, able-bodied white men.”

The government asserts that such statues “can be offensive to people today who see them in a different light,” including as “aggressors who conquered peoples to expand the British Empire.”

Any statue of any historical individual that far-left activists have accused of being embroiled in slavery or colonialism is now at risk of being toppled, including General Arthur Wellesley and admiral Horatio Nelson, who are both celebrated by most for their victories against Napoleon.

The guidance states that authorities and cultural institutions must adopt the new outlook in order to “take action” to set “the right historical narrative.”

The potential destruction of such monuments literally fulfils George Orwell’s 1984 dystopia, in which, “Every record has been destroyed or falsified, every book rewritten, every picture has been repainted, every statue and street building has been renamed, every date has been altered.”

“Every record has been destroyed or falsified, every book rewritten, every picture has been repainted, every statue and street building has been renamed, every date has been altered”

Wales: Orwell called it https://t.co/CbFITY7rw8

— Martin Daubney 🇬🇧 (@MartinDaubney) March 12, 2023

Street names and buildings that cause offense will also be subject to change, with officials recommending that those responsible for the statues “discretely box monuments or enclose them creatively in new artworks.”

The document complains that diversity is “hardly visible at all in public commemorations,” suggesting shrines to mass migration and multiculturalism could possibly be erected in place of historical statues in order to combat “racist colonial myths about white superiority.”

“Labour are intent on rewriting our history here in Wales,” said Andrew RT Davies, leader of the Conservative Party in Wales, adding they “have been captured by a hard-Left, anti-British mob who want nothing more than to topple our statues, tear up the works of classic authors and cancel our great orators, all in the name of virtue signalling.”

“Statues may well offend some people, but that does not make them any less a part of Wales’ rich history. What happened to remembering the mistakes of the past and learning the lessons?” he added, a weak response that some critics will only see as accepting the logical premise of manic iconoclasts who wish to ethnically cleanse British history.

As we previously highlighted, even statues of white men who were involved in abolishing slavery, such as former Prime Minister Charles, 2nd Earl Grey, have been identified for elimination.

A statue of Winston Churchill in London, who routinely tops polls as the most revered and respected British historical figure, has also repeatedly been targeted by vandals and has been previously covered up by authorities.

A statue of Edward Colston was torn down by Black Lives Matter supporters in Bristol during the George Floyd riots in chaotic scenes that could now be replicated in Wales.

Demented far-left revolutionaries literally want to erase history as they seek to build a new woke order based on vitriolic, institutionalized racist hatred of white people.

Watch as the ‘Black Lives Matter’ protesters pull down the statue of EDWARD COLSTON in #Bristol this afternoon

The statue was erected in 1895

NO POLICE TO BE SEEN !! 🤬 pic.twitter.com/eUxRMj19yp

— 𝐒𝐭𝐞𝐩𝐡𝐞𝐧 🇬🇧 (@LFC_blano) June 7, 2020

*  *  *

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The Latvian government last month approved a plan to donate cars seized from drunk drivers to Ukraine, in what it says is a creative scheme (or else we could say publicity-seeking scheme) to help the war effort there.

The first collection of cars have been shipped, as last week BBC confirmed that “Eight seized vehicles left a car pound in the capital, Riga, on Wednesday and are due to cross the border soon.”

The cars will reportedly go to the Ukrainian military as well as hospitals. Vehicles in Latvia had previously been impounded at high rates due to the country having among the worst drunk driving problems in Europe, based on the size of the population.

It was only last year that lawmakers attempted a severe crackdown on the problem, changing the law to create the possibility of vehicle seizures in instances where a driver is found to have three times the legal limit of alcohol in their system. 

“No-one expected that people are drunk-driving so many vehicles,” the NGO’s founder [Twitter Convoy], Reinis Poznaks, told Reuters news agency. “They can’t sell them as fast as people are drinking. So that’s why I came with the idea – send them to Ukraine.”

Since the confiscation law went into effect, some two hundred cars have been taken from drunk drivers. Many if not all of these will now go to Ukraine. 

Latvian Finance Minister Arvils Aseradens said of the program to ship them to Ukraine, “We are ready to do practically anything to support Ukrainians.”

Cars confiscated from drunk drivers in Latvia are ending up in Ukraine as government donations to hospitals and troops. pic.twitter.com/g8UmPClfLg

— DW News (@dwnews) March 10, 2023

Last week, a group of police officers closed down an entire road in Riga in order to do mass drinking and driving checks, but the dragnet reportedly came up with nothing after traffic was stopped for at least half an hour.

Likely such inconveniences to motorists will only increase, given the recent media attention and gimmicky linkage to the Ukraine situation. Some officials and pundits are actually calling for the program to be implemented more broadly in Europe.