Yesterday we reported that for the first time ever, US drillers spent more on share buybacks and dividends – some $128 billion – than on capital projects (understandably so, courtesy of a clueless administration which has sought to demonize and alienate the very corporations it needs to push key energy prices lower, while vowing to end energy demand as we know it: almost as if Hunter Biden is in charge of US energy policy).

Of course, energy companies would not have been able to return that kind of money to shareholders unless they generating comparable profits, and sure enough. according to a new report from Oliver Wyman, commodity traders – perhaps the most profitable subset of commodity companies – saw record gross margins of about $115 billion last year.

If confirmed by trading companies’ annual profit figures, this would reflect an increase of about 60% over the previous year.

Where did the record profits come from? In a nutshell, the Kremlin: the Ukraine invasion sent commodity prices from energy to metals and grains on a tear while sparking a record burst of volatility; that volatility, along with sanctions and export restrictions, created arbitrage opportunities for traders as the world’s energy and food supply maps were redrawn.

“Trading firms that spent years developing their portfolios, agile culture and expertise were well positioned to handle the disruption and keep commodities flowing,” the study said without listing individual firms.

According to the report, industry gross profit margins have roughly tripled from $36 billion in 2018, with those of independent trading houses now far outstripping others in the sector.

And, as Bloomberg notes, for the first time, the consultancy’s analysis split out hedge fund numbers into their own section, having merged them with others previously.

“Hedge funds more or less left commodities after 2010-2011, but over the last two to three years they’ve really built up their capabilities in a return to the market, and quite successfully so,” said Ernst Frankl, who leads Oliver Wyman’s global commodity trading and risk practice.

Authored by Irina Slav via OilPrice.com,

The European Union will make its first move as a buyers’ group on the international gas market next month as it launches the first tender for suppliers.

The tender follows months of discussions on how best to secure natural gas supplies for the 27-member bloc in such a way as to avoid some member states outbid other member states because of their deeper pockets.

The solution was found in what would effectively be a buyers’ cartel, shopping for gas as one. According to Bloomberg, the first offers, from gas suppliers in the United States, the Middle East, and Africa are to be signed in June.

Price will be the sticking point in that joint buying exercise. One of the purposes of the whole endeavor was to keep gas prices low by buying in larger volumes. Besides, natural gas prices are currently a lot lower than they were a year ago. Yet the EU needs to buy a lot of gas and such bulk buying may very well push prices higher.

The total gas needs of the EU plus four neighboring countries amount to 24 billion cubic meters over the next three years, according to European Commission Vice President Maros Sefcovic. This is a lot of gas to be sourced on the global spot market.

“We clearly need to turn the economic tide in Europe,” Sefcovic told Bloomberg in an interview.

“I believe we’re creating a new system that will increase competition and bring in new suppliers and push energy prices down. Since we started this exercise, there’s enormous interest from international suppliers.”

According to him, some 50 gas suppliers have expressed interest in participating in the EU’s joint gas buying. There is also interest in joint buying from large industrial gas consumers in the EU, Sefcovic also said.

Price, however, remains of crucial importance. Europe has been paying a lot more for its gas than the U.S., for instance, and China, according to Sefcovic. This needs to change if the bloc is to remain competitive on the world stage.

“What is increasingly important is that we have to deal with prices. We can’t power our economy at such a huge price differential compared with the US or China,” the official told Bloomberg.

As of Tuesday, a nationwide strike in France caused significant disruptions, such as halted trains, closed ports, empty schools, canceled and delayed flights, uncollected trash, and closed oil refineries. Over a million people participated in protests against President Emmanuel Macron’s proposal to raise the retirement age to 64. The strike is expected to continue through Wednesday. 

“The idea is to bring France to a standstill,” said Fabrice Michaud of the railway workers’ branch of the CGT trade union.

07.03.23 França.. desde as primeiras horas da manhã de hoje, trabalhadores de várias cidades francesas saíram às ruas em protestos contra as reformas previdenciárias propostas por Emanuel Macron.. pic.twitter.com/RW1DRVIcV8

— Fernanda MacMillan (@floresdepapel6) March 7, 2023

Aconteceram bloqueios em freeway, aeroportos, etc .. pic.twitter.com/oDcqeiqO5b

— Fernanda MacMillan (@floresdepapel6) March 7, 2023

Confrontos com a polícia francesa aconteceram que tentaram desbloquear ruas, rodovias e aeroportos pic.twitter.com/nWbC8mS2mo

— Fernanda MacMillan (@floresdepapel6) March 7, 2023

Unions have called for a nationwide day of strikes for the sixth time this year. “Many protest rallies attracted bigger crowds than those organized since mid-January, including in Marseille, one of France’s biggest cities,” The Guardian said. 

Marin Guillotin, an FO union representative at the Donges refinery in western France, emphasized:

“The real fight starts now.

“We haven’t been heard or listened to. We are using the only means we have left: it’s the hard strike … we are not going to give up.“

Macron’s proposition to prolong the retirement age has been met with considerable resistance from the public. The proposition seeks to raise the retirement age from 62 to 64 and increase the years of employment necessary to qualify for a full pension. Currently, it’s being deliberated in the French Senate. 

Authored by Conor Gallagher via NakedCapitalism.com,

Western officials are now openly admitting the war against Russia (and China) is worldwide and composed of competing blocs…

And then they wonder why much of the Global South is not bending backwards to support Ukraine.

The entitlement here is mind boggling. Typical colonial mindset. pic.twitter.com/JiZ6f3SRGE

— Dr. Prerna Bakshi (@bprerna) February 22, 2023

The colonial mindset comparison is apt as the West seeks to take control over African and Latin American resources. While this is nothing new, as the statements coming from the West make clear, countries that are friendly with Moscow and/or Beijing should expect even more concerted efforts at infiltration, sanctions, and any other means to restrict ties with the Russia-China bloc.

While some smaller states could benefit from being wooed by both sides, many will likely suffer as increased subversion and proxy conflicts are likely to play out in those countries. Take the comments from US officials to Bloomberg on Feb. 24 that the US, in year two of the war, is going to double down its efforts to “tighten the screws” on countries still keeping a foot in both camps.

This will be especially true in states that are resource rich – whether in oil, gas, or “green” commodities. These battles are already underway across Africa and are likely to intensify. North African countries have thus far been unwilling to help “isolate” Russia. The EU energy situation is still dire, which it is trying to remedy with a renewed push into Africa in search of oil and gas, as well as a race to control “green” resources. China does not want to give ground in Africa, and Russia, while seeking to prevent any isolation, can also sooner bring Europe to its knees if it throws a wrench in the EU-Africa energy plans.

Indeed, it’s hard to see how the West’s demand that states pick a side wouldn’t only isolate Europe further and exacerbate its energy woes, as I’ll discuss here regarding North Africa.

The Widening War in North Africa

The EU has set its sights on North Africa for a variety of reasons, summed up here by the European Council on Foreign Relations:

North Africa is also a promising place for the future production of green hydrogen, an energy source that is likely to be essential for the EU to fulfil its climate goals in hard-to-decarbonise sectors. And the region is also home to critical raw materials (CRMs) necessary for the energy transition, offering the EU the opportunity to further diversify its supply chains for clean energy technologies. North Africa’s young and well-educated workforce also offers the EU not only a potential workforce for technology manufacturing closer to home than Asian markets, but also the skills necessary for meaningful cooperation in areas such as research and development (R&D).

Algeria, just across the Mediterranean from Europe, is currently Africa’s largest oil and gas producer. It’s naturally a prime candidate to fill Europe’s gap in energy needs after the EU cut itself off from Russian supplies. Italy is trying to ramp up gas and energy imports and even locate electric vehicle industry in Algeria, but there are a myriad of problems.

First and foremost, the numbers just don’t add up. From GIS:

The entire African continent’s proven gas reserves are equivalent to 34 percent of Russian resources, and North Africa’s reserves equal only 10 percent of Russia’s. The African and North African gas production is 36 percent and 15 percent of Russia’s output, respectively. In 2020, total gas trade between Europe and Russia was nearly 185 bcm, about four and a half fold the trade with North Africa.

On the oil front, the same story that’s played out elsewhere is occurring in North Africa, which buys up Russian crude and increases supplies to Europe as a sanctions workaround. But back to gas: Europe, and Italy more specifically in its bid to transform into an EU energy hub, is trying to up imports from Algeria, but again there are infrastructure issues. During a Meloni trip to Algiers in January, Italy and Algeria signed agreements, including for the study and construction of an additional pipeline, as well as an underseas power cable, but those are years away. More from Natural Gas Intelligence:

To reduce dependency on Russian gas supplies following the invasion of Ukraine as others across Europe are doing, Algeria’s Sonatrach and Eni agreed to a supply deal in April. Algeria would deliver an additional 9 Bcm of gas in 2023 and 2024 via the Transmed Pipeline.

But the Transmed system connecting Algeria and Italy is not operating at full capacity. Algeria has had production issues. The country has not invested in new infrastructure to increase production in the past three decades, and it needs to divert gas to meet increasing domestic demand for electricity.

“The additional 9 Bcm from Algeria by 2023 is unrealistic, especially considering that Algerian supplies to Italy increased by 80% between 2020 and 2021, Giuli said.

Giuli said a large increase by 2023 can only occur if there is a diversion of flows from Spain to Italy. Algeria’s relations with Spain have been strained because Spain has sided with Morocco over a land conflict in the Western Sahara.

North Africa Pipelines to Europe. Source: Global Energy Monitor

So Italy is able to siphon off a little more gas because the flow to Spain has dwindled, but obviously this does nothing for Europe as a whole. The situation with Spain hints at the array of geopolitical issues that complicate efforts to turn North Africa into Europe’s new primary source of energy. More cross-border cooperation and energy trade (especially third-party pipeline access)  would be beneficial to both North Africa and Europe, but the region is racked by divisions. NATO destroying Libya in 2011 certainly didn’t help matters, as Egypt is effectively cut off from its North African neighbors, but Algeria and Morocco also have their own rivalry. From the Barcelona Center for International Affairs:

Combined with Algeria’s traditional rivalry with Morocco, this has resulted in the closure of the pipeline which until last autumn carried Algerian gas to the Iberian Peninsula via Morocco, even as Medgaz has remained open, which carries Algerian gas directly to Spain. This closure was effective well before Spain’s change of position on the eventual status of the disputed territory of the Western Sahara [backing Morocco]. Algeria expressed its displeasure at the Spanish move but continues to value Spain as its second-largest gas client.

Spain, which has roughly twice the regasification capacity its domestic market requires, will only be able to contribute more to the EU’s overall gas security when France’s nuclear lobby lifts its longstanding veto on increasing the 7 bcm capacity of the gas line that carries gas northward across the Pyrenees. The Iberian corridor will then come into its own. Meanwhile, flows in the Maghreb–Europe pipeline restarted on June 28th 2022, with reverse flows of gas using the pipeline that closed on November 1st 2021 when Algeria cut off supplies to Morocco. The largest German energy company RWE has won the contract that allows Morocco to access Europe’s largest LNG market.

Meanwhile Morocco is developing other energy links beyond the EU with the United Kingdom. Energy tech pioneer Octopus Energy Group, in partnership with Xlinks, last May contracted to build the world’s largest subsea power cable to deliver renewable energy from Morocco to Devon in the southwest of the United Kingdom. This project fits with Morocco’s longstanding ambition to become a world leader in solar energy.

Currently Morocco is a net importer of energy, the majority of which comes from coal, but it could become a transfer point for the energy resources from further south in the Sahel. There are also big plans to make Morocco (and to a lesser extent, Tunisia and Egypt) a major supplier of green energy to the EU.

Beyond Natural Gas

Morocco’s Noor and Egypt’s Benban solar farms, two of the largest in the world, were originally meant to reduce the countries’ reliance on coal. But both (and many more solar farms and wind projects across North Africa) are now set to send their energy to Europe.

Additionally, both Egypt and Morocco are also planning to manufacture “green” hydrogen and ammonia, made with renewable power, for export to Europe. These plans don’t come without major environmental and social consequences for North African countries.

The “clean” power is destined for Europe rather than domestic or regional use in Africa. Desert ecosystems will be destroyed. Nomadic tribes will lose land and routes for their livestock pastures. The projects will also use up what little water resources are available in the areas they take root. The wider areas also typically become militarized with surveillance towers to guard the sites and the water. More from Yale Environment 360:

Atman Aoui, president of the Moroccan Association for Mediation, an NGO, sees large renewable projects such as the Noor solar park as part of a wider attempt to take control of desert regions that have previously been the domain of tribal groups. The sheer scale of the projects is “challenging assumptions that a low-carbon energy transition is inherently progressive,” he says.

Noting the scheme’s use of large amounts of water, he adds, “The irony that a project intended to mitigate climate change is only worsening the effects of climate change in one of Morocco’s poorest and most water-stressed regions is not lost on residents.”

Much like Algeria and Italy, Morocco has been negotiating with European electric vehicle battery manufacturers to set up a plant in the country, aiming to exploit its cobalt and phosphate resources. A large share of Morocco’s natural resources are located in the disputed territory of Western Sahara.

Citroen plans to double its production capacity Morocco within two years from 50,000 supermini electric cars. Morocco is home to production plants of Renault and Citroen parent company Stellantis with a current combined production capacity of 700,000. Plans are in the works to increase that number to one million. According to Reuters, Morocco’s automotive manufacturers and part makers were the country’s top exporters over the past seven years surpassing phosphate sales.

You can start to see how the Brussels brain is spinning: The clean energy comes in, and the  and industry goes out where it’s joined by the mining – a better delineation of the garden-jungle boundaries, as EU foreign policy chief Josep Borrell likes to describe it. More on that thought process from the European Council on Foreign Relations:

The European Green Deal aims to scale up the commercial application of breakthrough clean technology innovation. By diversifying supply chains in this sector, the EU hopes to reduce its reliance on the dominant players, including the United States and China. North Africa’s skilled labour force gives countries there the potential to become important partners in this endeavour. Europeans should seek to build secure, cost-effective, ethical, and sustainable supply chains for transition-related technologies under a common umbrella framework.

Horizon Europe, the EU’s research and innovation programme, could also be an important instrument to support R&D in North Africa. It contains a focus on climate change and the UN Sustainable Development Goals, and offers a separate funding stream for research and innovation.

Using European funds to relocate industry outside the EU? That should play well with the proles.

Russia and China Involvement in North Africa

Russia has long standing close ties with Algeria, and Beijing and Algiers have also grown closer. Foreign Policy:

China has been the main exporter to Algeria since 2013, displacing former colonial power France, and the pair signed a second five-year strategic cooperation pact earlier in November. Meanwhile, Russia supplies around 80 percent of Algeria’s weapons, making Algeria Russia’s third-largest arms importer, after India and China. Algiers and Moscow held joint military exercises near the Moroccan border in November.

Algeria also applied in November to join the BRICS shortly after signed up to extend Belt and Road Initiative projects with China on infrastructure, energy, and space exploration.

Moscow has kept quiet on the increase in Algeria’s gas production for Europe, but many European MPs and US congress members are calling for sanctions on Algeria as a result of its ties with Russia. To do so would likely cut off another of Europe’s energy sources, however.

The US, fearful of Russia’s influence in Algeria, is planning to build a military-industrial base in Morocco. Additionally, the US announced a $1 billion arms sale agreement with Morocco in 2020 that included drones and precision-guided munitions, signed a 10-year military cooperation deal, and last year, the US sent wireless tactical and ground control systems to Rabat.

Still, Morocco is trying to maintain a foot in both East and West camps. Rabat abstained during a recent UN General Assembly vote to condemn Russian aggression, and ignored US efforts to join the western camp. The arrangement has benefits for Morocco. Middle East Eye explains:

Chtatou, the professor at Mohammed V University, told MEE that Morocco’s friendly relations with Russia were economically driven.

“Morocco has no choice but to remain neutral,” Chtatou said. “Basically, the country is an ally of the West but it also has good relations with Russia and China. As much as the country needs the U.S. and Europe for investment, it also needs the eastern world for technology and trade, so neutrality can pay.”

As Western countries limited their imports of Russian fossil fuels, Morocco increased its own. In 2022, the kingdom imported 735,000 tonnes of diesel fuel from Russia, 11 times more than in 2021.

International sanctions have also complicated the ability of Russia, the world’s largest exporter of fertiliser in 2020, to sell this crucial product. Morocco, the fourth-largest exporter that year, responded with plans to up its production of phosphates by 10 percent.

The Western Sahara Issue

Where the opposing blocs, the North African countries, and control of green energy resources really comes together is in Western Sahara. Morocco is increasingly extracting resources and erecting wind and solar farms beyond its southern border in Western Sahara despite the territory not being internationally recognized as part of Morocco. More from Yale Environment 360:

Morocco has already installed three large wind farms and two solar farms in Western Sahara, all hooked up to the Moroccan grid. The largest wind farm, comprising 56 giant turbines erected onshore by a Scottish company close to the coastal fishing village of Aftissat, is now to be doubled in size to more than 400 megawatts, following an agreement signed in 2021 by Morocco with a subsidiary of General Electric.

A war for liberation continues in Western Sahara, waged by guerillas at least partly based in Algeria, where many refugees live in camps. Despite its historic military and economic partnership with Algeria, Russia, is trying to placate all sides. While calling for  a “just” and “mutually acceptable” solution to the conflict in Western Sahara, it is also seeking detente with Rabat. Morocco is not on Moscow’s list of pro-Atlantic states and continues to receive annual imports of wheat from Russia.

In recent years, the US got fully behind Morocco despite such a stance flying in the face of the “rules-based international order.” The details from The Progressive:

Western Sahara — formally known as the Sahrawi Arab Democratic Republic (SADR) — has been recognized at various points in time by 84 countries and is a full member state of the African Union. Morocco invaded that nation, then known as Spanish Sahara, just prior to its scheduled independence from colonial rule in 1975.

The United Nations Security Council, the U.N. General Assembly, and the International Court of Justice have all gone on record asserting Western Sahara’s right to self-determination. For decades, no international body or foreign governments have recognized Western Sahara as part of Morocco.

However, in his final weeks in office, former President Donald Trump formally recognized Moroccan sovereignty over the occupied country, including roughly 25% of Western Sahara still under the control of the SADR government. The Biden administration has rejected bipartisan calls to reverse Trump’s decision and the United States remains an international outlier.

Washington is now joined in its support of Morocco by other European countries such as Germany and Spain. The backing for Rabat comes despite UN legal counsel that exploiting the region’s region’s natural resources “in disregard of the interests and wishes of the people of Western Sahara would be in violation of the principles of international law”.

Hey sometimes the “rules-based international order” has just gotta do what it’s gotta do.

🇪🇺🇺🇸🏴‍☠️💥🛢️🇷🇺”US is “very well” cooperating with Europe on the issue of replacing Russian oil and gas.” – Victoria Nuland

— AZ 🛰🌏🌍🌎 (@AZgeopolitics) February 23, 2023

Assuming she’s talking about anything beyond the LNG profiteering, maybe this is part of the US promise to lend a helping hand to Europe after blowing up the Nord Stream pipelines.

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The World Health Organization’s new chief scientist made a crucial change to an influential 2020 paper that claimed it was “improbable” that COVID-19 came from a laboratory, a newly disclosed email shows.

Jeremy Farrar, the chief scientist, was credited in one message with helping guide the paper about the origin of COVID-19, according to one email released by the U.S. House select subcommittee on the coronavirus pandemic on March 5.

“Thanks for shepherding this paper. Rumors of bioweaponeering are now circulating in China,” Dr. Ian Lipkin, a Columbia University professor, wrote to Farrar in the message.

“Yes I know and in US – why so keen to get out ASAP. I will push nature,” Farrar responded.

In the early 2020 paper, Lipkin and four co-authors claimed: “It is improbable that SARS-CoV-2 emerged through laboratory manipulation of a related SARS-CoV-like coronavirus.”

SARS-CoV-2 is the virus that causes COVID-19.

A draft of the manuscript, published by Nature, included a different word, the House panel found.

“Sorry to micro-manage/microedit! But would you be willing to change one sentence?” Farrar wrote to Kristian Andersen, who co-authored the paper, in an email just one day before publication.

Farrar asked to insert “improbable” in place of “unlikely,” the email showed.

“Sure,” Andersen responded.

The paper also stated that “SARS-CoV-2 is not a laboratory construct” and that the authors “do not believe that any type of laboratory-based scenario is plausible.”

“This evidence suggests that Dr. Farrar was more involved in the drafting and publication of Proximal Origin than previously known and possibly should have been credited or acknowledged for this involvement,” the panel said.

Asked for a comment from Farrar, the World Health Organization (WHO) told The Epoch Times via email he hasn’t yet started in his new position.

The British scientist was, at the time of the messages, at the helm of the Wellcome Trust, which controls millions of dollars in funding for research in the UK.

The WHO announced on Dec. 13, 2022, that Farrar would be the next new chief scientist and that he would start in the second quarter of 2023. Wellcome, which didn’t respond to a request for comment, has stated that Farrar was due to leave in 2023.

Secret Teleconference

Farrar helped arrange a secret Feb. 1, 2020, teleconference with Dr. Anthony Fauci, head of the U.S. National Institute of Allergy and Infectious Diseases, to discuss the origin of COVID-19, previously released emails show.

Some of the participants said details of SARS-CoV-2 indicated it didn’t originate from nature, though others favored the natural origin theory.

Read more here…

Authored by Yves Smith via NakedCapitalism.com,

A vivid scene came in my first year Harvard MBA course, Business, Government and the International Economy, taught in my section by George C. Lodge, son of Henry Cabot Lodge, Jr. George Lodge said he still remembered the day in 1968 when he realized there were limits to US power, that we could not fight a war on poverty, send a man to the moon, and fight a ground war in Asia at the same time.

The lack of that insight still seems widespread inside the Beltway, with belief in American omnipotence renewed by the fall of the USSR and then the further decline of Russia in the 1990s.

Under a story initially published with a page-wide banner headline, The US is Not Yet Ready for the Era of “Great Power’ Conflict. The article curiously omits that it is the US that has been fomenting these clashes. And even though the URL banner on the article proper reads, The US is Not Yet Ready for the Era of “Great Power’ Conflict with China and Russia, the piece treats Russia dismissively, in passing, and treats escalating with China as a perfectly reasonable thing to do, not just now. We’ll turn to Russia in due course, particularly in light of Ukraine deciding Monday to try to break into the Bakhmut cauldron.

If you read the article carefully, you’ll see the reverse, that any meaningful improvement in US preparedness against China is based on hopium, like the US developing, manufacturing, and deploying new weapons that are on the drawing board or in early stages. Similarly, it fails to admit a huge weakness in the US dealing with China: that our Navy is badly overinvested in the floating pork known as aircraft carriers. Informed observers like Scott Ritter has said China has the capability to take them out without too much difficulty if they get within menacing range. Sinking only one aircraft carrier would result in roughly 6000 deaths, a humiliation the US would not tolerate. Ritter has long worried that our response would be to fire a tactical nuke at the Chinese hinterlands. Ritter is certain that China would immediately light up the entire US West Coast.

By: Investing TrendsChina has nearly complete control over the cobalt, lithium and rare earths supply chain. From raw material extraction to processing operations. Read This Special Report Before Wall Street Does

The point of this article may be to provide cover for a minor US de-escalatory move with China: that rather than having new House Speaker stir the Taiwan independence pot as Nancy Pelosi did with a visit to the island, the Taiwanese leader will instead come to the US to meet McCarthy.

Note the article repeats the CIA claim that China intends to invade Taiwan by 2027. Ex CIA analyst Larry Johnson has warned that the agency has outsourced a tremendous amount of its purported intelligence-gathering, which in Ukraine has resulted in the government retailing Ukraine propaganda. There’s no reason to think China will invade even it decides it has had enough. A blockade would do. That would also put the US, in the eyes of the international community, as being the aggressor were it to try to do anything about it, since just about no one recognizes Taiwan.

The belief among cynics was the CIA (or its pro-Taiwan sources) focused on 2027 as close to the end of the window when the US could challenge China over Taiwan, in light of the growth of the Chinese economy and among other things, its ship-building capability. But this piece implicitly throws cold water on this timeline and keeps hammering at the idea that the US can surpass China, when there’s no reason to think we can create and deploy a whole bunch of new-gen systems and upgrade our forces too.

The article is also heavily anecdotal, generally not a good sign in a story on a “hard” topic like geopolitics. It start with an Air Force lieutenant general realizing as a result of 2018 wargames that China had enough missiles to do serious damage to US bases in the region. It ominously continues:

Five years ago…the U.S. started tackling a new era of great-power competition with China and Russia. It isn’t yet ready, and there are major obstacles in the way….

Corporate consolidation across the American defense industry has left the Pentagon with fewer arms manufacturers. Shipyards are struggling to produce the submarines the Navy says it needs to counter China’s larger naval fleet, and weapon designers are rushing to catch up with China and Russia in developing superfast hypersonic missiles.

When the Washington think tank the Center for Strategic and International Studies ran a wargame last year that simulated a Chinese amphibious attack on Taiwan, the U.S. side ran out of long-range anti-ship cruise missiles within a week.

The military is struggling to meet recruitment goals, with Americans turned off by the long conflicts in Iraq and Afghanistan, potentially leaving the all-volunteer force short of manpower. Plans to position more forces within striking range of China are still a work in progress

Yet it lards that sober message with faith in eventual success via vaporware or hopium:

The U.S. military is still more capable than its main adversaries. The Chinese have their own obstacles in developing the capability to carry out a large-scale amphibious assault, while the weaknesses of Russia’s military have been exposed in Ukraine….

New tactics have been devised to disperse U.S. forces and make them less of an inviting target for China’s increasingly powerful missiles.

The Pentagon’s annual budget for research and development has been boosted to $140 billion—an all time high. The military is pursuing cutting-edge technology it hopes will enable the military services to share targeting data instantaneously so that U.S. air, land, sea and space forces, operating over thousands of miles, can act in unison, a current challenge….

Many of the cutting-edge weapons systems the Pentagon believes will tilt the battlefield in its favor won’t be ready until the 2030s, raising the risk that China may be tempted to act before the U.S. effort bears fruit.

We’ll interrupt this recap to point out that the US bizarrely assumes it will be able to gain meaningful ground on China, that China will either stand still or not progress as quickly. Yet if you look at the ASPI critical technologies study we cited yesterday, you will see China dominates in categories relevant to military hardware and battlefield coordination: advanced materials and manufacturing; artificial intelligence, computing and communications; defense, space, robotics, and transportation.

Back to the Journal:

Deterring China from invading Taiwan, a longstanding U.S. partner that Beijing claims as Chinese territory, defines the challenge….The U.S. needed to demonstrate it could prevent Beijing from seizing the island in the first place—a requirement included in the Biden administration’s National Defense Strategy issued in 2022…

A more recent wargame conducted by the Pentagon’s Joint Staff showed the U.S. could stymie a Chinese invasion of Taiwan and force a stalemate if the conflict was fought later in the decade, although high casualties on both sides would result. That simulation assumed that the U.S. would have the benefit of new weapons, tactics and military deployments that are currently being planned at the Pentagon.

So the US will only be able to fight China to a draw if US new wunderfaffen become operational soon enough and the US succeeds in executing a major revamp too.

More on capability-building:

The Army, which saw its electronic warfare, short-range air defense and engineering capabilities atrophy amid budget pressures and the previous decades’ wars, is moving to develop a new generation of weapons systems that can strike targets at much longer ranges. It is planning to deploy a new hypersonic missile in the fall though its utility against Chinese forces will depend on securing basing rights in the Pacific.

The Navy, which is confronting budget pressures, personnel shortages and limits to American shipbuilding capacity, is currently planning to expand its fleet to at least 355 crewed ships, a size still smaller than China’s current navy. In the near term, the U.S. will have around 290 ships.

A CBO report dated January 31, 2023 is much less bullish about hypersonic missiles, including their combat-ready date:

CBO reached the following conclusions:

Technological challenges must still be overcome to field hypersonic missiles. The fundamental remaining challenge involves managing the extreme heat that hypersonic missiles are exposed to by traveling at high speeds in the atmosphere for most of their flight (unlike cruise missiles, which fly in the atmosphere at lower speeds, or ballistic missiles, which mainly fly above the atmosphere). Shielding hypersonic missiles’ sensitive electronics, understanding how various materials perform, and predicting aerodynamics at sustained temperatures as high as 3,000° Fahrenheit require extensive flight testing. Tests are ongoing, but failures in recent years have delayed progress.

Both hypersonic and ballistic missiles are well-suited to operate outside potential adversaries’ antiaccess and area-denial (A2/AD), or “keep-out,” zones. The Department of Defense has developed a strategy to use accurate, long-range, high-speed missiles early in a conflict to neutralize the A2/AD zones being developed by potential adversaries, such as China and Russia. Both hypersonic missiles and ballistic missiles equipped with maneuverable warheads could provide the combination of speed, accuracy, range, and survivability (the ability to reach a target without being intercepted) that would be useful in the military scenarios CBO considered. However, many missions do not require such rapid strikes. For those missions, less costly alternatives to both hypersonic and ballistic missiles exist, including subsonic cruise missiles. Hypersonic weapons would mainly be useful to address threats that were both well-defended and extremely time-sensitive.

Again to the Journal:

The general [Clint Hinote] has pushed to equip cargo planes with cruise missiles to boost allied firepower, the use of high-altitude balloons to carry sensors and electric “flying cars” to carry people and equipment throughout the Pacific island chains—ideas that have led to experiments but so far no procurement decisions.

He thinks a future Air Force could rely more on autonomous, uncrewed aircraft and deploy fewer fighters.

Mind you, Russia went down that path a long, long time ago, resulting its layered offensive missiles and its best-in-breed air defense systems.

The cheery closing thought, from Hinote:

“I think we’ve got a recipe for blunting” a Chinese attack, he said. “I just think you have to reinvent your force to do it.”

Now if this article isn’t worrisome enough merely based on a careful reading for relying on magic technological saves or massive operational improvements, another big red flag is its few, scathing mentions of Russia. The article does acknowledge the danger of China and Russia cooperating and Russia’s strong capabilities in hypersonic missiles. But the references to Ukraine are dismissive:

…the weaknesses of Russia’s military have been exposed in Ukraine….

A conflict in the Western Pacific might also give Russia’s military, which has been badly battered in Ukraine, the confidence to carry out President Vladimir Putin’s goals of reviving Russian power in what it believes to be its traditional sphere of influence in Central and Eastern Europe.

Mind you, I do not believe this take is entirely or even mainly the result of Pentagon spokescritters hewing to the party line. My impression is most of them believe it. We discussed the latest Defense Intelligence Agency’s Worldwide Threat Assessment, particularly regarding its underestimation of Russia. If we can’t get that right, when we’ve been trying to gin up a war with them since 2014, why should we have any more confidence in our assessment of China?

The US is managing to talk itself into a different type of delusion with respect to Russia. Remember the Anthony Blinken interview with the Washington Post’s David Ignatius, which was widely depicted as presenting a peace plan? In fact it did no such thing. It was a formula for keeping the conflict going, just at a lower boil. As we wrote:

The Blinken/State vision seems to be:

US and NATO support Ukraine > *Magic* > War ends > US and NATO support Ukraine

We and others have speculated that Blinken’s peace gestures are insincere, merely to appease various constituencies that want to see the war end and also intended, if possible, to depict Russia as not interested in negotiating.

The latter claim is to a fair degree true, but that is due to the now-clear Western position that the most it is prepared to do is stop a hot war but continue arming Ukraine so as to restart at a convenient time. Russia recognized that it is at war with NATO and it needs a durable solution. Given the West’s stated lack of interest in a lasting peace, plus its pride over its duplicity, Russia has no choice but to keep going until it has prostrated NATO or alternatively, increased pressure on major fault lines (for instance, Douglas Macgregor has said NATO would fracture if Poland were to enter Ukraine).

Consider this section from a February Wall Street Journal story, in which NATO plans to make Ukraine an official, as opposed to de facto, NATO-lite member:

Germany, France and Britain see stronger ties between NATO and Ukraine as a way to encourage Kyiv to start peace talks with Russia later this year, officials from the three governments said, as some of Kyiv’s Western partners have growing doubts over its ability to reconquer all its territory.

U.K. Prime Minister Rishi Sunak last week laid out a blueprint for an agreement to give Ukraine much broader access to advanced military equipment, weapons and ammunition to defend itself once the war ends…

A British official said another goal of the NATO pact would be to change the Kremlin’s calculus. If Moscow sees that the West is prepared to scale up its military assistance and commitments to Ukraine over time, it could help persuade Moscow that it can’t achieve its military objectives.

This must be one of the British officials that also believes (per British MoD press reports) that Russia has committed 97% of its armed forces to Ukraine and Wagner forces in Bakhmut are fighting with shovels

The West is completely open that it plans to keep arming Ukraine no matter what. It expects Russia to agree to a peace deal despite Ukraine being a ticking time bomb by design. It further expects Russia to negotiate when it’s becoming obvious that the US/NATO ability to supply enough artillery and equipment will drop off even further come sometime in the summer. Recall that the press has reported that Ukraine’s daily ammo fire has dropped from 3,000 to 4,000 shells to more like 2,000 and Ukraine is demanding 250,000 shells a month. Not only can the West not provide that, but even that is not enough to match Russia’s estimated 600,000 shells a month.

In addition, and due to the pressure of time, I was not able to confirm the sourcing, but in recent broadcast, Alexander Mercouris, citing a Western source (perhaps the BBC?) said Ukraine had only 300 artillery platforms, which he noted was down from about 1000 when the war started. If that it true, you can stick a fork in Ukraine. We pointed out that Russia had recently deployed a very effective counter-battery device called the Penicillin, which allowed Russia to detect the location of artillery fire using sound waves and ground impact. Unlike radar, the Penicillin does not put out signals that can be read, so it can’t be located and destroyed.

Since the Penicillin was put into production, various commentators have pointed out that Russia has been taking out many more weapons platforms. My impression from Dima at Military Summary is that the average is over 2 a day.

Even if only 2 a day, 60 platforms in a month is 1/5 of what Ukraine is alleged to have left. And as Brian Berletic has repeatedly documented, US weapons deliveries and the dollars attached to them keep falling, to the degree that the US has stopped disclosing the numbers of what it is sending, merely naming the type of weapon or support.

And so the delusion produces confused messages. Again from the February story:

President Emmanuel Macron of France and Chancellor Olaf Scholz of Germany told Ukrainian President Volodymyr Zelensky that he needed to start considering peace talks with Moscow when the three leaders met in Paris earlier this month, people familiar with the conversation said….

While London, Paris and Berlin see the possibility that Kyiv may have to seek talks with Russia after an expected counteroffensive this spring that could help it regain more territory, other Ukraine backers think there should be no negotiations as long as Russian troops remain on Ukrainian soil

Ukraine’s backers are acting like gamblers hoping they can wager their way out of big losses. No, Ukraine is not to sue for peace now. It’s to settle after a win, even if it were to prove to be a modest win, mainly for the sake of the face of its funders.

And how is that supposed to happen?

Russian officials have reported that Ukraine is massing more troops, up from 25,000 to now over 30,000 in Zaporzhizhia, presumably to try an offensive to the south, aimed either at Melitopol or Mariupol. The wags speculate that Ukraine will assemble 40,000 and perhaps as many as 60,000 men, with the target time expected to be late March/early April.

But these troops will be short on tanks, ammo, and air cover. And Russia has been building major fortifications in the region since Surovkin took over in October, and per Alexander Mercouris, has about 90,000 there now. If an attack looked likely, Russia would almost certain increase its force level there.

And while Ukraine is supposedly preparing for its big, last ditch counter-offensive, it is also wasting more men and materiel in Bakhmut. Russia has achieved operational encirclement. Men can’t get out without serious survival risk. But Ukraine announced Monday it is still contesting Bakhmut, most experts believe by attempting to force open a transportation route. But even if they succeed, to what end? If they can get enough troops out to recover the cost of forcing open a corridor, that might be a worthy gamble. But if they think they can do more than further delay the full capture of Bakhmut, it’s more evidence they have lost their minds.

For much more detail on the grim state of play in Bakhmut, see Moon of Alabama’s new post Why Bakhmut Is Falling.

Now of course wars are uncertain, and perhaps Russia will make a spectacular blunder. But absent that, it’s hard to see any reason for Russia to end the war before its aims are met. And the US and NATO keep feeding more cannon fodder into the Russian killing machine.

A scathing new op-ed in the Washington Examiner this week calls for Democratic voters in Philadelphia to offer up an apology to the rest of the city for helping usher in what is being called the city’s “worst violent crime surge in three centuries of its history”. 

The piece was written by Christopher Tremoglie and published yesterday. It opens by calling Philadelphia’s criminal justice policies and reforms “radical” and “incompetent”:

It’s no secret that Philadelphia’s voters elected a mayor and district attorney so incompetent that the city has experienced its worst violent crime surge in three centuries of its history. This is mainly because of the radical (and incompetent) left-wing criminal justice policies and reforms that were put into effect during their terms. Nor is it a secret that Philadelphia is one of the worst poverty-stricken cities in the nation. It is consistently ranked as the “poorest” of the country’s biggest cities.

Tremoglie writes: “As a lifelong resident of the City of Brotherly Love, its continued allegiance to Democrats boggles my mind. No matter the horrors of the reality of living in the city, Philadelphians overwhelmingly continue to vote for Democrats who just keep making things worse. Something has to change. It’s time, well beyond time really, for Philadelphia’s Democratic voters to apologize to the rest of the city for the mess they have caused.”

He says that “Crime, poverty, and corruption are the hallmarks of cities under Democratic control, and it has been since there was an Elvis Presley (the last Republican mayor was elected in 1948). The city’s voters are to blame because they never learn.”

The op-ed also pointed out recent corruption among the ranks of the city government:

“Last week, a former Democratic City Council member was sentenced to three-and-a-half years in prison after being convicted on bribery and fraud charges. Among his crimes was his involvement in a scheme in which he tried to force the Children’s Hospital of Philadelphia to use labor unions to install MRI machines. Bobby Henon attempted to extort a hospital dedicated to helping terminally ill children to make money. There were other crimes too, but this was the most egregious.”

“Henon won his most recent election in November 2019. During the campaign, it became public knowledge that he was under federal indictment for the crimes mentioned above, including the shakedown of the children’s hospital. Yet the voters still elected him. His opponent at the time, a local community organizer named Pete Smith, tried to warn residents about Henon’s corruption. They didn’t care — they knowingly voted for a crook,” the op-ed concludes.

“Philadelphia’s voters are harming their communities. At some point, people will have to admit that those in cities like Philadelphia who routinely vote to keep the status quo deserve the crime, poverty, and other misfortunes that result from their decisions.”

Meanwhile, as the city crumbles in the background, Philadelphia Mayor Jim Kenney has famously all but gone on record in stating that he “hates his job as mayor”, as was reported late last year. To those who live in Center City Philadelphia and have spoken to waitstaff that have served Kenney, it appears to be an open secret that he does not, in fact, like his job.

“I’ll be happy when I’m not here,” Kenney said back in summer 2022. “When I’m not mayor and I can enjoy some stuff”. 

BREAKING/LISTEN: “I’m waiting for something bad to happen all the time. I’ll be happy when I’m not here. When I’m not mayor and I can enjoy some stuff.” @CoconnellFox29 follow-up question “You’re looking forward to not being mayor?” @PhillyMayor “Yeah.” @FOX29philly pic.twitter.com/yC1f96Uhw9

— Steve Keeley (@KeeleyFox29) July 5, 2022

“F- you,” Kenney more recently responded to Brian Tierney, previously the editor of The Inquirer and Daily News, at a late 2022 event, when questioned about whether or not he liked his job. 

Tierney responded: “That’s a terrible mayor. He says he doesn’t like his job. stop it Go ahead and do something different.”

Authored by Joseph Lord via The Epoch Times (emphasis ours),

A Chicago dad who found himself on a watchlist after opposing pornographic content in his kids’ school says he faced further harassment this weekend from the Transportation Security Administration (TSA) on the way to and from the Conservative Political Action Committee (CPAC) conference in Maryland.

Terry Newsome of Chicago, found out in December 2022 that he had been placed on a terror watch list when he tried to fly from O’Hare Airport to Phoenix. On March 1, Newsome attempted to fly to Washington’s Ronald Reagan National Airport and learned that, despite positive signs to the contrary, his name remained on the watch list.

Though he is still permitted to fly, having his name on the list—which federal law enforcement agencies have not explained—means invasive and embarrassing extra screening for Newsome.

In spite of his efforts to have his name removed from the list, Newsome continues to wrangle with the labyrinthian bureaucracies of the Department of Justice, Department of Homeland Security, FBI, and TSA.

Ongoing Battle With Cancer

Since learning that he had been placed on the list, Newsome has worked incessantly to restore his good name even as he was undergoing “brutal” radiation therapy for stage four cancer.

“A week and a half ago, I finished like seven weeks of intense radiation five days a week,” Newsome told the Epoch Times in an interview.

The treatment left his immune system weakened and left him fatigued, he said, adding that he was worried about flying with his immune system so compromised by the radiation therapy.

“I really shouldn’t have went anywhere because my immune system is pummeled from the radiation, right?” Newsome said.

Despite his usual opposition to masks—quipping “I’m a Republican” to explain—Newsome said he took precautions and wore a mask on the plane to protect his health.

Though the journey made him nervous, Newsome said he felt he had to go to CPAC as part of his ongoing mission to clear his name. Thus, despite his weakened state—and defying his family’s wishes that he not go—Newsome boarded a plane to Washington last week to attend CPAC, where he hoped to find more assistance with his TSA problem.

Invasive Screening

On his arrival at Chicago’s O’Hare on March 1, Newsome learned that his ticket still carried the “quad-S” (SSSS) designation, despite his being a Transportation Security Administration (TSA) pre-check-approved flier for over a decade before.

Earlier, the TSA had responded to a query by Newsome, indicating at the time that he would go through “standard screening protocol” moving forward.

In addition to much more rigorous screening of bags, SSSS fliers are typically on the receiving end of a full-body pat down. They also have their hands (and sometimes, according to some reports) their feet swabbed to check for explosives.

Just how invasive this search can be depends on circumstances, but fliers with the SSSS designation can also expect to be prodded on questions like whether they packed their own bag, where they’re headed, why they’re going there, and so on.

Newsome said that the specifics of SSSS screening are minor on their own, but that the inconveniences add up.

On Feb. 28, 24 hours before his flight was due to take off, Newsome attempted to check in for his flight on the American Airlines app.

As an American Platinum Flier, Newsome is entitled to several cushy benefits, including the chance for his seat to be bumped up to first class depending on availability. When he tried to check in, however, Newsome realized he couldn’t—the first indication that his flight status had not been resolved.

Upon arriving at the airport on March 1, Newsome found that he was still having trouble printing his ticket. As it happened in December, he was required to get federal approval before the airline could print his ticket.

“For me, it’s not like I’m just an enhanced security whatever else it is,” Newsome said. “I can’t even—not only can I not enhance [my ticket], I can’t even get a boarding pass until there’s somebody from the government to give American Airlines the approval to print the ticket.”

Realizing that he was still on the list, Newsome decided simply to check his bag in order to avoid the embarrassment of having all his clothing, medicines, and personal items taken out of his bag in front of everyone.

After checking his bag and receiving his ticket, Newsome proceeded to the TSA checkpoint.

When TSA agents began going through the line examining other fliers’ boarding passes, Newsome knew they were looking for him and told the TSA agents as much. At that point, he was pulled from the line and brought to an empty line for enhanced screening.

Newsome described his experience, citing how embarrassing the extra screening was even knowing he had done nothing wrong.

“They stopped the whole line,” Newsome said. “They actually made everybody get out … And they had supervisors come and took me through the enhanced screening. All these people were watching.”

Newsome and his bag were brought through a metal detector and X-ray scanner, as is the norm for most fliers.

However, they required much more of Newsome: “I had to take off my shoes. Then they take my bags and everything else and I stand there while they go through everything.” Newsome also had his crotch area patted down in view of other fliers.

Newsome added later, “They swabbed everything for bombs.”

Just 30 minutes later, a similar scene played out as Newsome was trying to board his flight.

The TSA announced over a loudspeaker near his gate that they would be checking everyone’s passports, IDs, and boarding passes before they could get on the plane. At the same moment, several TSA agents, joined by what appeared to be an undercover agent wearing sunglasses and coordinating security procedures with the TSA agents, began screening all boarders’ documents.

“I just knew it was for me,” Newsome said.

Thus, he drew attention to himself, telling a TSA agent, “It’s me, I’m the quad-S.”

Newsome was pulled out of line at this point for further screening. Depriving him of yet another American Airline Platinum Flier benefit, Newsome was the last person to board; his ticket entitled him to be in the second group of boarders.

Newsome said this was even more embarrassing for him than the first screening, as that could have been written off as a standard random search.

‘Anti-Porn, Not Anti-Gay’

Earlier, Newsome had been politically active in his school district after learning about sexually explicit images in a book at his children’s school library—activities which Newsome believes may be responsible for his placement on the list in the first place.

Newsome had never been involved in school board meetings or politics until mid-2021, when he attended a district school board meeting after his then-eighth-grade son came home and said his teacher had told him that “there is no American dream.”

Newsome, a descendant of Italian immigrants who himself had lived the American dream, was shocked to hear that. He called his children’s principal to discuss the issue, and suspected that these issues would only get worse when his kids, fraternal twins, got to high school.

In July 2021, Newsome attended his first school board meeting at Downers Grove’s Community High School.

Newsome immediately began a crusade on several hot-button topics, ranging from mask mandates to critical race theory, becoming the unofficial spokesman for several concerned mothers who were more hesitant to speak out.

“The moms are so happy to have an aggressive, type-A-personality father to join them. They had mostly fought this battle alone, against the giant system of public schools,” Newsome told The Epoch Times.

Newsome’s most controversial activism came with his opposition to the book “Gender Queer” by Mia Kobabe, a book containing sexually explicit images that teaches children about oral sex and controversial notions of gender identity.

Selections from the book show a biological female adolescent struggling over her “gender identity.” The girl is also depicted wearing a device known as a “binder,” a tight-fitting brassiere-like garment meant to reduce breast size. At some points in the book, the girl is shown engaging in oral sex with another biological female identifying as male.

Newsome’s opposition to the book led to his receiving a litany of ad hominem attacks from left-wing agitators in the Chicago area. However, he has insisted throughout his activist work that he and other parents are “anti-porn, not anti-gay or homophobic.”

Newsome has coordinated events in his area with Gays Against Groomers, an organization made up of homosexual and transsexual people who have been outspoken against inundating minors with gender ideology.

After Newsome began speaking out against the book and the left-wing ideology that had inundated his children’s schools, he began facing attacks from all corners, ranging from threats by Antifa to opposition by Rep. Sean Casten (D-Ill.).

Two days after the publication of an Epoch Times article about his activism, Newsome found threatening messages against him on a locally run Twitter account called Antifascist Rumor Mill.

“Action items announced soon in regard to Terry Newsome—time to Drop Pops and his hateful agenda,” the tweet read, referencing Newsome’s nickname “Pops.”

“Terry trying to make a name for himself, look at his stupid face in the Epoch Times, the extreme #disinformation rag that echoed all the lies, the Big Lie, the ‘Plandemic’ lie, etc.,” said another tweet from the account.

Newsome told The Epoch Times that many of those who have spoken against him and threatened him, including members of the school board, are in league with Casten.

“The school board and the superintendent are all controlled by radical, radical leftists … that are very vocal in the Downers Grove Community and all supportive of Sean Casten,” Newsome said. “So anybody that speaks out with a different opinion is brutally attacked on social media and called racist, homophobic, and so forth, no matter the truth.”

“To make a point, I’ve said it from the very beginning, through now: Me and the other parents are not anti-gay or homophobic—we’re anti-porn,” Newsome said.

Judith Rose, communications director for the group “Gays Against Groomers,” told the Epoch Times that opposing gender ideology being imposed on children is not homophobic or bigoted.

Rose explained that the goal of the organization, a group made up of gay and transgender people, is to protect children from sexual content.

“Our goals involve getting legislation put in place to make education more appropriate for children to keep adult material away from children [and] to classify drag shows like a burlesque or strip club type situation where they have to be away from children,” Rose explained.

Asked about Newsome’s situation, Rose called it “heartbreaking.”

“I think it’s really heartbreaking, that there’s this wedge being formed between parents and schools,” she said. “And I just think it’s awful what’s happening, trying to classify parents as terrorists for standing up for how they want their kids to be raised or educated. Sometimes it’s not always an option to homeschool your kids.”

Rose argued that the gender push on children was also bad for LGBT adults, saying “it creates an even bigger wedge between our community and people who don’t necessarily approve of us,” Rose said. “I respect their beliefs; I understand.

“However, I really wish that more people could see that it’s time to put our differences aside for the children—Gays Against Groomers represents a part of the LGBT community that understands not everyone is going to accept us or wants to accept us. They have their religious beliefs, whatever it is. We respect that,” she said.

Rose continued, “We don’t want kids to be raised in an environment where they’re heavily saturated with ‘queer ideology’ or ‘queer culture.’ And every parent deserves the right to know what’s going on with their children.”

“We have people on the far left and people on the far right who don’t like us. We’re trying to find that middle ground—that’s really all we want to do,” she stated.

“At the end of the day, it’s about the kids: it’s not about us, or our feelings or our identities even. It’s about making a safe environment for children.”

Jan. 6 Rally

Some of Newsome’s critics have in the past pointed out that he was present at the Jan. 6, 2021, “Stop the Steal” rally.

Newsome candidly admits that he attended the rally, but said he had no bad intentions and broke no laws that day.

“I went to January 6, with my friend, a retired police officer,” Newsome said.

According to Newsome, the FBI previously investigated his friend who attended the event, a retired Cook County police officer, and had cleared him of any wrongdoing.

The officer, who asked that his name be excluded from the story, has been Newsome’s friend for decades.

Asked whether he had observed Newsome committing any act that could be construed as a crime, he quickly said he had not, and that the two were together “100 percent of the time” in DC.

Additionally, Newsome was undergoing immunotherapy for cancer at the time, leaving him in a weakened state.

The day before, Newsome noted, “I had been on the IV for my cancer.”

While, at the time, Newsome was undergoing immunotherapy rather than radiation treatments, he was nevertheless weakened by the treatments. He said at one point he felt so exhausted he had to lie down on the sidewalk for a few minutes before he could continue to the rally.

Newsome and his friend said their only reason for attending the rally was to hear President Donald Trump speak and to ensure people were safe.

“We went down there for two things, one to see our president speak. Two, because we’re both still big guys even though we’re older,” Newsome said. “We saw in November, December, families, parents overly attacked by Antifa [and] BLM in front of their hotels.”

Newsome said he had left by the time order broke down at the rally. As proof, he provided time-stamped photos.

Newsome’s companion backed up his story: “When the alleged insurrection happened we were already gone,” he said. “We were halfway to our hotel, which was approximately three quarters to a mile away. Halfway during the course of our walk, we saw a bunch of squad cars, lights and sirens on, going in the direction of the Capitol.”

It was not until after the two men returned to their hotel that they learned about the Capitol breach, they said.

Newsome’s photos and time stamps from that day show that he did not trespass on Capitol grounds and was gone before the breach ensued.

Newsome said that he and his friend would not have attended the rally if they had known about the bad intentions some had that day.

“It’s not a crime to have been in DC on Jan. 6, whatever the Nancy Pelosis and Liz Cheneys would like you to believe,” Ed Martin, a top attorney for Jan. 6 defendants, told the Epoch Times. “The American people are so disgusted by this stuff.”

“If anyone that was there in Washington on Jan. 6 committed a crime in so doing, that’s a mockery of what America’s about. That’s not the standard and that’s not America.”

Ambivalent Replies

Newsome has gotten lukewarm or ambivalent replies, or none, from the federal agencies with which he has discussed the issue.

Following his experience in December, Newsome sent a Freedom of Information (FOIA) request to the FBI, seeking more information about his newly discovered status as an alleged terror risk.

The FBI refused to discuss details with Newsome.

The FBI letter Newsome received in response to his request, says in part: “The U.S. Government can neither confirm nor deny whether a particular person is on any terrorist watch list. Maintaining the confidentiality of government watch lists is necessary to achieve the objectives of the U.S. Government, as well as to protect the privacy of individuals who may be on a watch list for a limited time and later removed. If the U.S. Government revealed who was listed on any government watch list, terrorists would be able to take actions to avoid detection by government authorities. Thus, the FBI neither confirms nor denies the existence of your subject’s name on any watch lists pursuant to FOIA exemption.”

Because the federal government refuses to so much as acknowledge that Newsome has been placed on a list, it is unclear why Newsome’s name was flagged for enhanced screening.

Newsome told the Epoch Times that he thinks the addition of his name to the list may be in response to his past political activities.

In their response to an Epoch Times inquiry about Newsome, the FBI’s press office insisted that the agency does not open investigations solely on the grounds of protected First Amendment activity.

“The FBI can never open an investigation based solely on protected First Amendment activity,” the agency wrote.

Told about this reply, Martin immediately pointed out the key word in that reply: “solely.”

“The wiggle word is ‘solely,’ so that means they have to say something else,” Martin explained. “So it’s not solely because you asked about the pornography, it’s because you got a speeding ticket when you were 18 that wasn’t resolved, or because you were in January 6.

“So it’s not ‘solely’—[the FBI is saying they] would never do it solely on constitutionally-protected grounds,” Martin said, adding that the FBI had effectively named itself “the judge of what adds up to something dramatic.”

The FBI reply continued: “We cannot and do not investigate ideology. We focus on individuals who commit or intend to commit violence and criminal activity that constitutes a federal crime or poses a threat to national security.”

After hearing this reply, Martin made another observation of what he called a “wiggle” phrase: “intend to commit.”

“[The FBI is] saying here that they’re gonna read minds, and they’re gonna tell us who is intending to commit a crime,” Martin said. “They didn’t say ‘a propensity for crime.’ At least with a ‘propensity’ you can look at some factors—if you have a previous conviction, if you have were arrested multiple times, and others—so with the word ‘propensity’ you can at least make an argument.

“They’re gonna be the mind readers? They’re gonna read the minds of the American people? That’s insanity,” Martin ruled.

The spokesperson expressly refused to answer questions relating to the process of placing someone on a watch list, including questions about oversight of the FBI’s ability to place Americans on flight watch lists.

“It’s just stupid, ya know?” Newsome said of the reply. “Clearly I already know I’m on the list, that’s why I’m writing to you.”

Additionally, Newsome also reached out to the TSA.

In his query, Newsome requested information and tried to get back on the TSA pre-check list.

In its reply, the TSA said he was no longer eligible for its pre-check list, but suggested that Newsome would no longer be subject to enhanced screening. Newsome thought after receiving the letter that he had been removed from the list before his most recent flight.

“As a result of recurrent checks and based on a comprehensive background check, TSA was unable to determine that you pose a sufficiently low risk to transportation and national security to continue to be eligible for expedited airport security screening through the TSA Pre-[Check] Application Program,” the reply said. “As a result, TSA has determined that you are no longer eligible to participate in the TSA Pre-[Check] Application Program.

“This eligibility determination for the TSA Pre-[Check] Application Program is within the sole discretion of TSA,” the letter added. “Although you have been found ineligible to continue your participation in the TSA Pre-[Check] Application Program, you will continue to be screened at airport security checkpoints according to TSA standard screening protocols.”

Told about these replies, Martin sighed, “The bureaucrats will all say ‘It’s not me, it’s not me.’ At this point do we even know who has the oversight for this? Part of the problem with this government is now, when an official says ‘I’m not in charge of that,’ we can’t believe it.”

Newsome has been in contact with other legal and political figures as well, and remains committed to clearing his name.

Powell’s remarks today led to the biggest jump in the dollar since November…

… and a1.5% selloff in SPX, reversing almost of the gains from last Friday’s rally, and with eminis now back below 4000 all three CTA “threshold” levels are on the verge of being broken to the downside.

The reason for the market spasm is that the terminal rate was repriced 16bp higher to 5.63% as Powell put 50bp back on table.

As JPM’s chief economist Michael Feroli explains (in a delightfully titled note available to pro subs), the Fed chair did so by once again jeopardising the Fed’s credibility: “whereas the plan prior to that data round was to hike by 25bps until there was more evidence of disinflation, Chair Powell indicated today that they are prepared to throw out that playbook if the February data don’t reverse some of the January strength.”  In other words, yet another painful U-turn by a Fed which after ripping up the forward guidance book, is clearly even more clueless now what is going on.

To JPM’s head of market intel, Andrew Tyler, Powell’s speech today indicates that the “Fed will heavily depend on near-term data for upcoming rates decisions. With January’s macro data mostly printing on the hawkish side, NFP Friday and CPI next Tuesday are the most critical catalysts for Fed’s decision between 25bp and 50bp. Keep in mind that the Fed will start its blackout period this Saturday so CPI will be released during the blackout period, so data itself will be more impactful in absence of guidance from Fedspeeches.” And also recall that last June, having set market expectations for a 50bps hike, the Fed was reduced to using its WSJ mouthpiece, Nick Timiraos, to alert the market 75bps was coming.

Some more from Feroli’s full note:

The strength of the January data seems to have spooked the Fed Chair. Whereas the plan prior to that data round was to hike by 25bps until there was more evidence of disinflation, Chair Powell indicated today that they are prepared to throw out that playbook if the February data don’t reverse some of the January strength: “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.” The phrase “totality of the data” has in the past indicated that data dependency didn’t mean just one month’s data: in this context it apparently means two months’ data. Less surprising was the Chair’s previewing that the March dots are likely to move higher: “…the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated.”

At several points, Powell made note of monetary policy lags, such as, “In light of the cumulative tightening of monetary policy and the lags with which monetary policy affects economic activity and inflation, the Committee slowed the pace of interest rate increases over its past two meetings.” That reasoning, however, seems to have less sway now (hard to say how much that reflects the departure of Vice Chair Brainard).

So, what does this mean for March and beyond? Prior to today, remarks from the centrists suggested 25bp was the base case, so that the data just needed to return to the trend prevailing prior to the January round to stick with that plan. Now that Powell has opened the door to 50bp, the bar now has likely changed such that the February data need to reverse some of the January strength to stay at 25bp. If the data push them to 50bp at the March meeting, what does that mean for the May meeting? Either they embrace the sort of hyper-data dependency that then-Governor Stein cautioned against ten years ago, or 50bp is the new incumbent, in which case they could be on a path to getting off three 50s just as the economy heads into the debt ceiling crisis in mid-summer. For now, we are sticking with 25bp for the March meeting, though that is now obviously much more contingent on what the next two weeks of data deliver.

Bottom line: the Fed is looking to accelerate its tightening just as the US economy plaxicos itself, with a debt ceiling crisis on top.  Not for nothing Michael Hartnett said that the bear market will end with a credit event in the second half.

And until we wait for the next collapse, here is an excerpt from JPM’s ultra bearish technician Jason Hunter (full note also available to pro subs) on how Powell’s comments could impact the market in the coming days:

The S&P 500 Index slides to retest the key confluence of levels near 3900 after rejecting 4060-4089 tactical pattern resistance. We believe a break through the 3900 inflection can lead to accelerated selling pressure, as that area has acted as a bifurcation for the index from May 2022. It also currently aligns with several trend-following trigger levels for momentum-based strategies. We see the 3760-3764 area as an initial target for a breakdown.

Our base-case forecast that looked for a 1H23 3500 Oct 2022 low retest to set the bottom for the cycle was in part leaning on the fact that the 5s/10s UST curve had already bottomed in Sep 2022. In the supply-constrained period of the 1970s when the sequence of inflation shocks dominated the macro environment, the equity market became positive correlated with the yield curve and bottomed within a 1–5-month period after the curve set the cycle lows. With the recent hawkish repricing pushing the curve through the Sep 2022 trough, that countdown needs to restart whenever the curve bottoms in the future. As such, we think the probability for a deeper S&P 500 Index slide to next support near 3200 and a bottom later within the first half of 2023 has increased.

That takes care of JPMorgan, what about Goldman? In his market wrap analysis, Goldman’s John Flood writes that “Powell said the US central bank is prepared to increase the pace of hikes if data warrant, and sees the ultimate peak Fed rate likely to be higher than expected. In prepared testimony before the Senate Banking Committee, he said the process of getting inflation back to 2% “has a long way to go and is likely to be bumpy.”

Some more from Goldman trader Michael Nocerino on today’s market reaction:

Today’s commentary possibly opens the door for a 50bps hike at the next meeting. This morning the market was pricing in a 22% chance of 50bps hike…post the statement market is now pricing 63% chance.

Yesterday felt like a build up into today and it disappointed for the bulls. Another round of hawkish commentary from Powell and hotter than expected Manheim data (wholesale used vehicle prices rose 4.3% in February (the largest for the month since 2009) spurred a largely risk off session. Off the back of the Powell commentary, rates spiked (especially on the front end, 2yr @ highest level since ’06, 2s10s most inverted since summer of ’80 ), markets rolled and investors are now bracing for the possibility of 50bps at the March meeting (higher for longer getting louder). Surprisingly, the response on the desk was muted (5 out of 10) and when taking a look at our PB the gross up in risk has been swift – investors willing to ride this out until we get more data? Asset Managers had a -19% sell skew which was highest since 2/20/23 and 92nd percentile vs previous 52 weeks. HFs had a -542bp sell skew highest since 2/16/23. All eyes are now on this Friday’s NFP, but a watchful eye remains on JOLTS where GS estimates 10,200k openings vs. 10,500 consensus.

Putting it all together, Goldman Research added 25bps to their forecast: “Whether the FOMC hikes by 25bp or 50bp, we now expect that the median dot in the March Summary of Economic Projections will rise by 50bp to a peak of 5.5-5.75% in 2023. One reason for this is that even if FOMC participants decide on a 25bp hike in March but are split on the pace, they might compromise by engineering a 50bp increase in the peak funds rate shown in the dot plot. We have raised our own forecast of the peak fed funds rate by 25bp to 5.5-5.75% as well by adding a 25bp hike in July.”

Much more in the full notes available to professional subs.