By Rabobank’s Benjamin Picton

A Tale of Ten Cities

The Daily is today, and on most Mondays from now on, coming to you from the Land Down Under, where it is currently the future (in a time-zone sense) – and that is appropriate given some of the themes in this particular missive.

Futures markets are pointing to a flat start to the week after the US 10-year yield closed back below the 4% level on Friday, ISM and PMI data came in strong, and stocks finished up. The Fed’s Daly won’t have helped sentiment much with further promises of rates being higher for longer and warnings of structurally higher inflation. Neither will the ECB’s Christine Lagarde talk of the need to deal with the “monster” of inflation. Nor will the weekend’s China’s National People’s Congress, which set a “modest” GDP growth target of 5% while further centralizing control in the hands of Xi Jinping. Outgoing Premier Li Keqiang said “struggle creates brilliance.” Helpfully then, China’s defense spending will rise 7.2%, and the US is close to instigating capital controls to prevent investment in Chinese tech.

Li also said “Hard work builds the future.” In his trademark style, so did former President and 2024 aspirant Trump, who unveiled his vision for ten new ‘Freedom Cities’ to be built on federal land, opening a new American frontier to offer low cost homes to millions – and replete with flying cars. Trump’s vision was of the Jetsons, plural, as he also spoke of a baby bonus aimed at lifting a sagging fertility rate, and support for Medicare and social security. There was also a new (old?) program of public works to ”get rid of bad and ugly buildings and return to the magnificent classical style of western civilization.” These new spending promises are to be funded, at least in part, by universal tariffs via “America first” mercantilism. China should be nervous; and so should US allies and trade partners thinking of 1930s-style US isolationism while other Great Powers are returning to 1930s-style belligerence. So should markets, perhaps, because Trump dominated the conservative CPAC convention despite mainstream and social media not covering what he says anymore. Indeed, his grip on the Republican party still seems strong enough that an alternative Daily title suggested by the regular author of this Daily was ‘Trumpy Python’s Flying Car-cass’. 

While the US dreamed of flying cars, Europe was split on plans to phase out those with internal combustion engines: Germany and Italy are delaying final approval of the new law. And while that horse-power trading was going on, German Chancellor Scholz was in D.C. to meet President Biden to discuss the war in Ukraine. More horse-trading?

If the West isn’t backing down there, neither are the Russians. Foreign Minister Sergei Lavrov confirmed “it is existential for us,” and accused the West of hypocrisy, pointing at its actions in Serbia, Iraq, and Afghanistan, and saying “nobody gave a damn about anything but finances and macroeconomic policies” during those episodes. Even a broken clock is right twice a day, and he is quite right that it used to be possible to ignore geopolitics and focus only on quarterly earnings and what the Fed and other central banks might do. Now one needs to look at a whole lot more a whole lot more.

But sticking with the week ahead, there are plenty of catalysts for ordinary market volatility as three central banks meet to set policy rates, some key data hits our screens, and US Fed Chairman Powell delivers his semi-annual testimony before the US House and Senate Committees.

Today is covered in more detail below in the Day Ahead.

Tuesday, the RBA delivers its March policy rate decision. A 25bp hike to 3.65% is seen as a near certainty in the market, with only one economist amongst those surveyed by Bloomberg expecting rates to stay put. The picture is becoming more complicated for the Reserve Bank, however, following poor jobs figures for December and January, weak Q4 GDP growth, and slower than expected wage growth. The temptation will be to ease off hiking early, especially following the release of diabolical January building approval figures last week (-27.6%) and the Melbourne Institute inflation gauge for February coming in at +0.4% vs +0.9% prior. However, the implicit price deflator in the Q4 GDP was still very high (9.1%), and the RBA will have one eye on strong data and the hawkish tone emanating from the US. Falling behind the inflation curve and having to catch up later is not a prospect it would relish, so we expect that it will indeed be a 25bp hike tomorrow.

Tuesday also sees Fed Chairman Jerome Powell begin a two day testimony where he will speak on the semi-annual Monetary Policy Report. Powell will follow a stream of hawkish Fed speak in recent days, notably from Waller, Daly, and Barkin, though risk assets took some encouragement from Bostic last week when he said that he favoured a 25bps hike in March. It seems likely that Powell will continue the more hawkish tone as recent US data has mostly surprised to the upside.

Wednesday, the BoC meets. Markets, and our Christian Lawrence, expect an end to the hiking cycle and rates on hold at 4.5%.

Thursday sees US ADP and initial claims data.

On Friday, the BOJ is widely expected to leave rates unchanged at -0.1% and maintain the yield curve control (YCC) policy targeting the 10-year JGB yield at 0.5%. This will be the last BOJ meeting chaired by Haruhiko Kuroda, with Ueda-San due to take over from next month. Speculation as to Ueda’s policy preferences have been rife in the market, and there has been some suggestions that the YCC target may be lifted soon as the Japanese economy has started to show signs of a pickup in inflation.

Rounding out the week, Friday also has US non-farm payrolls following the blockbuster 517,000 figure for January that effectively reset expectations of the likely path of Fed monetary policy to ‘higher for longer’. The consensus of survey is a gain of 215,000 with the unemployment rate remaining steady at 3.4%.

After a somewhat lazy start to March, we get a very busy 8 days for markets, culminating in the US CPI next Tuesday after payrolls this Friday, JOLTS and ADP on Wednesday, Claims on Thursday, and Powell getting things rolling tomorrow with his semi-annual monetary policy report to Congress. Here is a handy snapshot of the upcoming blizzard of events:

• Tuesday: Powell at 10am will appear before the Senate Banking Committee to deliver the first day of the semi-annual monetary policy report to Congress; RBA Rate Decision.
• Wednesday: ADP private employment at 8:15am (consensus 200k); JOLTS job openings at 10am (consensus 10,584k, last 11,012k) ; Powell speaks again at 10am; BOC Rate Decision.
• Thursday: Initial jobless claims at 8:30am (GS 190k, consensus 195k, last 190k); Barr (voter) at 10am;
• Friday: NFP at 8:30am (GS +250k, consensus +215k, last +517k); BOJ Rate Decision.

As DB’s Jim Reid writes in his weekly preview, it’s fairly uncontroversial to say that the last payrolls report published on February 3rd was a huge moment, and one that started a series of events that has meant that the last month has been a struggle for most financial assets, especially bonds (the worst February on record for the Global Agg). Remember that 36 hours before that payroll print, the relatively “dovish” FOMC had led to 10yr US yields hitting 3.33%. Last week at their peak they hit 4.08% before closing out at 3.95% on Friday.

As such if you thought the relatively random number generator that is payrolls is usually overhyped, you’ve seen nothing yet as we approach Friday’s big number. For those who have been on a sabbatical to another planet, last month it came in at +517k against +223k expected with fairly substantial upward revisions from the previous year as part of the annual review; most expectations however are for a reversal of the downward trendline as the January print was greatly influenced by one-time factors and seasonals.

Before we preview this, we should also say that other big highlights this week are the RBA (tomorrow), BoC (Wednesday) and BoJ meetings (Friday), and Powell’s semi-annual congressional testimony before House and Senate committees tomorrow and Wednesday. As discussed further below the BoJ is unlikely to change tack at this stage but every meeting is potentially live given what they did in December. We’ll review this and the rest of the week ahead after a brief payrolls preview.

For Friday DB’s economists expect +300k for both headline and private payrolls (consensus for both at +215k). As with January, February was also mild weather wise for the survey week (which can mean less leisure, hospitality and retail layoffs), although not as much as in the prior month. So the temperature will likely still be an influence. There was a reasonable question mark about seasonal distortions in the last report so who knows how that will impact this week’s report. Unemployment is expected to stay at 54-year lows of 3.4% with the risks it ticks down a tenth. We’ll give a fuller preview of average hourly earnings and the work week on Friday.

Don’t forget the JOLTs report on Wednesday which is viewed by many as a more accurate reflection of the tightness of the labor market with the main problem it always being a month behind the payroll report (we will have a note on this later today). Maybe it can help shed some light on how accurate January’s payrolls report was though. If it was accurate you should see an uptick in the hiring rate. Also important will be the job openings as usual to highlight the tightness in demand for labour.

Going back to the other highlights this week, Fed Chair Powell semi-annual testimony to the Senate Banking Committee tomorrow and to the House Financial Services Committee on Wednesday will of course be pored over for every subtle policy nuance. As they come before payrolls and next week’s equally crucial CPI report, it’s hard to see how he can be too confident about where the Fed is going to land. He may provide clues as to what employment and inflation numbers need to do to make the Fed act in a particular way, especially how it pertains to whether 50bps hikes are back on the table. Staying with central banks the RBA is seen as hiking 25bps tomorrow but the BoC seen as holding to their planned policy pause on Wednesday. Regarding this week’s BoJ meeting, consensus if for the central bank to adhere to its present monetary policy, with YCC removal seen unlikely, although you can’t rule it out given December’s surprise. This will also be the last monetary policy meeting for Governor Kuroda.

Other notable economic data releases in the US this week include factory orders (DB forecast -0.5% vs +1.8% in December) today, consumer credit tomorrow and the ADP and trade balance on Wednesday.

Turning to Europe, the focus will be on the UK with the release of the monthly GDP report on Friday, ahead of the March 23 BoE meeting. Elsewhere in the region, key releases include factory orders (tomorrow), retail sales and industrial production (Wednesday) for Germany and trade balance data for France (Friday).

In Asia the highlight might be the Chinese CPI and PPI reports due on Thursday. These will be released after last week’s blockbuster PMI readings showed a robust recovery and thus will be important to assessing the path of economic stimulus going forward. Our economists expect a 1.3% reading for the CPI (vs 2.1% in January) and a further YoY decline of -1.0% for the PPI (vs -0.8% in January).

On the earnings front, Q4 reporting season is now mostly over, but a few stragglers remain as shown in the table below.

Courtesy of DB, here is a day-by-day calendar of events

Monday March 6

• Data: US January factory orders, UK February construction PMI, new car registrations, Japan January labor cash earnings, Germany February construction PMI, Eurozone January retail sales

Tuesday March 7

• Data: US January wholesale trade sales, consumer credit, China February trade balance, foreign reserves, Japan January trade balance BoP basis, Japan February bank lending, Germany January factory orders
• Central banks: Fed Chair Powell testifies to the Senate Banking Panel, ECB consumer expectations survey

Wednesday March 8

• Data: US February ADP report, January trade balance, JOLTS report, Japan February M2, M3, Economy Watchers survey, January leading and coincident index, Italy January retail sales, Germany January retail sales, industrial production, Canada January international merchandise trade
• Central banks: BoC decision, Fed Chair Powell testifies to the House Financial Service Committee, ECB’s Lagarde speaks, BoE’s Dhingra speaks
• Earnings: Adidas, Thales

Thursday March 9

• Data: US Q4 household change in net worth, initial jobless claims, China February CPI, PPI, money supply, Japan February PPI, machine tool orders, January household spending, France Q1 total payrolls
• Central banks: Fed’s Barr speaks, ECB’s Vujcic speaks, BoE’s Breeden speaks
• Earnings: Deutsche Post, Leonardo

Friday March 10

• Data: US February jobs report, monthly budget statement, UK January trade balance, monthly GDP, industrial and manufacturing production, index of services, construction output, Italy January PPI, France January trade balance, Canada February jobs report, Q4 capacity utilization
• Central banks: BoJ decision

* * *

Looking at just the US, Goldman writes that the key economic data releases this week are the JOLTS job openings on Wednesday and the employment situation report on Friday. Chair Powell will appear before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday.

Monday, March 6

• 10:00 AM Factory orders, January (GS -2.0%, consensus -1.8%, last +1.8%); Durable goods orders, January final (last -4.5%); Durable goods orders ex-transportation, January final (last -1.2%); Core capital goods orders, January final (last +0.8%); Core capital goods shipments, January final (last +1.1%): We estimate that factory orders decreased 2.0% in January following a 1.8% increase in December.

Tuesday, March 7

• 10:00 AM Fed Chair Powell Speaks: Fed Chair Jerome Powell will appear before the Senate Banking Committee to deliver the first day of the semi-annual monetary policy report to Congress. Chair Powell’s prepared remarks will be released at 10:00 AM. The minutes to the February FOMC meeting, released February 22, noted that all participants continued to anticipate that “ongoing” rate increases would be appropriate going forward. “Some” participants noted that the easing in financial conditions over the previous few months “could necessitate a tighter stance of monetary policy.” Chair Powell last spoke in an interview with David Rubenstein on February 7.
• 10:00 AM Wholesale inventories, January final (consensus -0.4%, last -0.4%)

Wednesday, March 8

• 08:15 AM ADP employment report, February (GS +200k, consensus +200k, last +106k): We estimate a 200k rise in ADP payroll employment in February, reflecting strength in Big Data indicators but the persistent underperformance of ADP relative to nonfarm payrolls in recent months.
• 08:30 AM Trade balance, January (GS -$68.0bn, consensus -$69.0bn, last -$67.4bn): We estimate that the trade deficit widened to $68.0bn in January.
• 10:00 AM JOLTS job openings, January (GS 10,200k, consensus 10,584k, last 11,012k): We estimate that JOLTS job openings declined to 10,200k in January.
• 10:00 AM Fed Chair Powell Speaks: Fed Chair Jerome Powell will appear before the House Financial Services Committee to deliver the second day of his semi-annual monetary policy report to Congress.

Thursday, March 9

• 08:30 AM Initial jobless claims, week ended March 4 (GS 190k, consensus 195k, last 190k); Continuing jobless claims, week ended February 25 (consensus 1,659k, last 1,655k): We estimate that initial jobless claims were unchanged at 190k in the week ended March 4.
• 10:00 AM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will discuss crypto at an event hosted by the Peterson Institute for International Economics. Speech text and a moderated Q&A are expected, and the event will be livestreamed.

Friday, March 10

• 08:30 AM Nonfarm payroll employment, February (GS +250k, consensus +215k, last +517k); Private payroll employment, February (GS +240k, consensus +215k, last +443k); Average hourly earnings (mom), February (GS +0.30%, consensus +0.3%, last +0.3%); Average hourly earnings (yoy), February (GS +4.75%, consensus +4.7%, last +4.4%); Unemployment rate, February (GS 3.4%, consensus 3.4%, last 3.4%); Labor force participation rate, February (GS 62.4%, consensus 62.4%, last 62.4%): We estimate nonfarm payrolls rose by 250k in February (mom sa). Job growth tends to remain strong in February when the labor market is tight as some firms front-load spring hiring, and Big Data employment indicators were indeed strong in the month. We also expect high but falling US labor demand to more than offset rebounding layoffs in the information sector. We do not expect a large drag from weather in the February report. While temperatures partially normalized from an abnormally warm January, the February survey week exhibited little snowfall in major population centers, and the major winter storm of February 21st arrived three days after the end of the survey week. We estimate the unemployment rate was unchanged at 3.4%, reflecting a rise in household employment offset by flat-to-up labor force participation (we estimate unchanged on a rounded basis at 62.4%). We estimate a 0.30% increase in average hourly earnings (mom sa) that boosts the year-on-year rate to 4.75%, reflecting continued but waning wage pressures and neutral calendar effects.

Source: DB, BofA, Goldman

US investment manager Harris Associates has been among Credit Suisse’s most prominent supporters for years (owning as much as 10% of the flailing Swiss bank’s stock last year).

But now, that’s all over, as deputy chair and CIO David Herro tells The Financial Times that he has sold the firm’s entire stake in the bank over the last few months.

Harris started to cut its exposure in October following the bank’s SFr4bn ($4.3bn) fundraising, when Saudi National Bank supplanted it as the top investor, and had now divested completely.

“We have lots of other options to invest,” he added.

“Rising interest rates mean lots of European financials are headed in the other direction. Why go for something that is burning capital when the rest of the sector is now generating it?”

With the stock hitting all-time record lows just last week, it seems Harris’ recent losses just broke

“It has been a measurable drag on our performance” Herro said.

“You can’t win every time — it is the business I am in. We meet every company we own, but you spend a lot more time with your problem children. Credit Suisse has been a drain of time and value for years.”

“There is a question about the future of the franchise. There have been large outflows from wealth management,” he said, referring to the SFr111bn withdrawn by Credit Suisse customers in the final three months of 2022, particularly after rumors appeared on social media about the bank’s financial health.

With the bank now offering extremely high deposit rates, as we detailed here, it raises concerns about how the business can sustain such a funding gap.

“We are ahead of our plan and have clear strategic objectives,” Dominik von Arx, a Credit Suisse spokesman, said in an emailed statement.

“We are laser focused on successfully executing our plan and on progressing toward our targets.”

However, Herro has lost patience:

“We feel the plan to restructure the investment bank, while a noble cause, is cumbersome and far more costly in terms of cash burn than we expected.”

The two largest shareholders in Credit Suisse are now the Saudi National Bank, which bought a 10 per cent stake as part of the capital raising last year, and the Qatar Investment Authority, which raised its stake to 7 per cent at the same time.

By April Ma, Bloomberg Markets Live reporter and strategist

Chinese markets may come under pressure again on concerns that authorities will withhold stimulus after unveiling a conservative economic growth target that is below many investors’ expectations.

The consensus-lagging growth goal of around 5% for 2023, as Premier Li Keqiang outlined in a key address to open the National People’s Congress on Sunday, suggests strong monetary or fiscal help may be off the table for now. His last government work report at the annual parliamentary meetings also dampened hopes for more potent measures to ease an unprecedented property crisis.

“Frankly this number was not even in our possible scenarios,” said Li Weiqing, a fund manager at JH Investment Management Co., referring to the growth target. “I think this means that any anticipation for massive stimulus, either for real estate or for investment, is going to be seen as falsified, at least in the near term.”

The absence of more aggressive steps to boost growth threatens to weaken the momentum of a nascent rebound in Chinese shares last week following the release of robust manufacturing data. What may reshape market dynamics in the coming days will be potential sweeping changes to China’s bureaucracy and the lineup of a new Cabinet under Li Qiang, widely expected to be the next premier, as the political gathering continues.

Premier Li’s work report mostly repeated familiar official rhetoric from prudent monetary policy to maintaining a stable currency. The budget released on Sunday also suggests fiscal support will be restrained, with a mild deficit target increase and a special bond quota that heralds slower investments by local governments.

To be sure, some observers think Beijing has reasons to refrain from pursuing a more expansionary policy for now. “You need to take into account the fact that last year they fell vastly below target, so authorities want a more conservative target that is easy to reach without much effort this year,” said Hao Hong, chief economist at GROW Investment Group. “They want to avoid being overly aggressive.”

All eyes will now be on a suite of structural changes expected for government agencies, reforms designed to help the Communist Party consolidate its hold over the economy. Among them may be the revival of a powerful top-level commission that will further centralize financial policy formation. Fresh faces to be put in charge of the central bank and key ministries also will be keenly scrutinized.

“Given the complete reshuffling of the government, a key issue to watch in the next few months is how the new leaders will boost private sector confidence,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management Ltd. “This is more important than the fiscal and monetary policies, in my view.”

A Baltic monitoring media outlet has published footage of an enormous amount of American military equipment being prepared to move from the Port of Gdynia in Poland. 

The expanse of military hardware is being described as equipment belonging to the US Army’s 3rd Armored Brigade Combat Team, 1st Cavalry Division. Some Eastern European media reports are claiming that at least a portion of the equipment, which looks multiple football fields in length, are bound for Kiev.

Equipment belonging to the @USArmy 🇺🇸 3rd Armored Brigade Combat Team, 1st Cavalry Division staged at the Port of Gdynia, Poland 🇵🇱 in preparation for redeployment to the continental United States after serving in the Operation #AtlanticResolve, Feb. 22, 2023. #StrongerTogether pic.twitter.com/sqK5U3UbWZ

— Baltic Security (@balt_security) March 4, 2023

Hundreds of heavy military vehicles can be seen in the footage, including armored personnel carriers, tanks and armored trucks. 

Despite claims that the equipment is bound for Ukraine, a source which widely circulated the footage, “Baltic Security”, wrote that it’s at the Polish port “in preparation for redeployment to the continental United States after serving in the Operation Atlantic Resolve.”

Russia’s Sputnik noted that “Some Polish and Ukrainian media outlets, however, did not think twice about claiming that part of the military hardware seen in the video would be redeployed to Ukraine, where Russia continues its special military operation.”

But it remains that “Neither the White House not the Pentagon have commented on the matter yet.”

“The footage comes as the US had already committed more than $100 billion worth of security and military assistance to Kiev since the beginning of the Russian special operation,” the state publication continued. Given how desperate that Ukrainian front lines, particularly in Bakhmut, are right now for more ammo and equipment – it would be surprising if these rows upon rows of hardware aren’t in the end headed for Ukraine.

Authored by Nick Dixon via The Daily Sceptic,

The latest of the Telegraph’s ‘Lockdown Files’ has arrived, and impressively it is even more damning than the previous instalments. Here’s an excerpt:

Throughout the course of the pandemic, officials and ministers wrestled with how to ensure the public complied with ever-changing lockdown restrictions. One weapon in their arsenal was fear. 

“We frighten the pants off everyone,” Matt Hancock suggested during one WhatsApp message with his media adviser. 

The then Health Secretary was not alone in his desire to scare the public into compliance. The WhatsApp messages seen by the Telegraph show how several members of Mr. Hancock’s team engaged in a kind of ‘Project Fear’ in which they spoke of how to utilise “fear and guilt” to make people obey lockdown.

As with the other revelations, it is shocking yet not surprising. We knew they were doing this, but there’s something truly grotesque about seeing the contempt they had for people laid bare. The absolute disregard for freedom, and worse, the revelling in this exercise of power by the likes of Simon Case, the Cabinet Secretary, who found forcing travellers to quarantine in shoebox hotel rooms “hilarious”.

It is a toss up between Hancock and Case for the title of the Lockdown Files’ Greatest Villain. I was considering awarding it to the wretched Case until this latest round of files dropped, and Hancock went full Dr. Evil with his question: “When do we deploy the new variant” [sic].

Of course we shouldn’t let the unintentional comedy of Hancock’s messages (one has him text shouting “SOMEONE INSTALLED A CAMERA IN MY OFFICE WITHOUT TELLING ME!”) distract from how appalling his actions were.

How far Boris should be excused is another question. Throughout the Lockdown Files he shows his instinct for freedom, but lacks the courage to convert that into policy. This latest episode is no different, as the Telegraph reveals:

Boris Johnson, then the Prime Minister, had promised that families would be reunited at Christmas – the first since the pandemic struck in early 2020. He said foregoing long-awaited reunions “would be inhuman and against the instincts of many people in this country”.

But behind the scenes, his ministers and officials were increasingly aware that vast swathes of the public faced a grave disappointment and that the Johnson administration would take the blame for their frustration. 

The solution in December was “to frighten the pants off everyone” with a declaration of a new strain of COVID-19, known as the Alpha or Kent variant.

In a conversation between Mr Hancock and Mr Poole on Dec 13th, the pair discussed how to survive the coming backlash and storm. On the day, there were 18,409 cases of Covid recorded and 410 deaths. Five days later, on Dec 18th, Mr. Johnson would scrap his planned five-day Christmas amnesty in an about turn. 

Every time I think I have hit peak anger with this ongoing saga, the messages reveal a new low.

The bizarre power given to chancers “Slackie and Lee” (James Slack and Lee Cain in the Downing St comms team) to dictate policy; Simon Case’s nauseating glee at imposing petty restrictions, and his characterisation of the desire to retain basic privacy around one’s contact details as “pure Conservative ideology”; Boris’s claim that another lockdown would be the “height of absurdity”, before immediately implementing it – I could go on.

But Hancock’s brazen fear tactics, apparently divorced from any kind of scientific evidence, deployed, to use his word, with borderline psychopathic disregard for the impact they would have on people, is the worst finding yet in this already incredibly sordid tale.

Chairman of the Joint Chiefs of Staff Mark Milley made a rare, unannounced visit to Syria on Saturday, which was his first trip there as America’s top general. The purpose was to reaffirm the US troop presence and mission there even as the public has by and large grown weary of foreign military entanglements.

An official estimate of some 900 American troops remain in the northeast portion of the country, which is Syria’s oil and gas rich region which before the war supplied the rest of the country. Also the US has troops at Tanf base on the Iraq-Syria border. Milley was asked by reporters if the Pentagon’s presence in Syria was worth the risk. He responded: “If you think that that’s important, then the answer is ‘Yes,’” according Reuters.

“So I think that an enduring defeat of ISIS and continuing to support our friends and allies in the region … I think those are important tasks that can be done,” he added. For years US special forces have advised and assisted the Kurdish-led Syrian Democratic Forces (SDF). They maintain control of the major oil fields.

While the US has long sought to portray the US presence as part of a counter-terror and counter-ISIS mission, when President Trump was in office he admitted it was about “securing the oil”. Ultimately, the US is actively cutting off Damascus from its own badly needed natural resources on top of a sanctions policy aimed at strangling Assad’s Syria. The Pentagon also sees the occupation as about countering Iran, by keeping up pressure on Iran’s ally Damascus.

Naturally, Damascus was outraged at Gen. Milley’s entering sovereign Syrian territory (occupied), with a foreign ministry statement calling it a “flagrant violation of Syria’s sovereignty, territorial integrity, and unity.”

According to a regional publication: 

A source at the Ministry of Foreign Affairs and Expatriates said, “Syria strongly condemns the illegal visit of the US Chief of Staff to an illegal US military base in northeastern Syria, and affirms that it is a flagrant violation of the sovereignty, the sanctity of its lands and unity,” according to RT.

“Syria calls on the US administration to immediately stop its systematic and continuous violations of international law and stop its support for separatist armed militias … and Syria affirms that these US practices will not deviate it from its approach to combating terrorism and preserving its sovereignty, security, and stability,” the source added.

Mark Milley is in Syria, where war has never been declared, without the invitation of the host government, to declare that the mission there must continue. pic.twitter.com/FJCcaO9tcg

— Jordan Schachtel (@JordanSchachtel) March 5, 2023

Turkey has also long wanted to see American troops gone from the region, given they support Kurdish groups which Ankara views as ‘terrorists’.

One likely reason for the weekend trip by Milley is to show the world the US won’t let up pressure on Assad in the wake of the devastating earthquake which resulted in over 50,000 deaths and billions of dollars in damage across both Turkey and Syria. This as the past weeks have seen Arab capitals send representatives to Damascus, while issuing messages of support to Assad and providing humanitarian aid to Syria. Washington is still trying to dissuade the Arab world from re-embracing the Assad government, however. 

Authored by Chris Macintosh via InternationalMan.com,

Several shifts in alliances and bifurcations are happening right now which are going under the radar.

Hungary out of the EU?

We’ve long said that Hungary was going to leave the EU. It is just a question of time.

The daily news announced that “hundreds of high-ranking military officers sacked in Hungary”. From the article:

Multiple Hungarian media outlets reported that Hungary’s defense minister sacked hundreds of high-ranking military officers. The people concerned have two months to leave and will get 70 percent of their current salaries as a pension-like allowance even if they continue to work. The minister says the move served the rejuvenation and modernisation of the army. The opposition believes the government fired pro-NATO officers.

To be clear, I don’t know if this is true. But as with most things, you piece together multiple bits of information and a picture forms providing probabilities. It is with these probabilities that we begin to price outcomes and assets accordingly. Where most probable outcomes coincide with cheap or expensive asset classes is where we find asymmetry.

So what we do know is that Hungary has been against the Ukraine war from the get go.

Orban has been a thorn in the EU’s side, refusing to bow to ever increasing levels of control and mismanagement. He is extraordinarily popular at home and this has the pointy shoes in Brussels in a tizz. How dare he?

The article goes on to explain the mass sacking.

The ministry says this move served the aim to modernise the army and pave the way to the rise of a new officer generation. Media reports about more than a hundred generals, colonels and other high-ranking officers sent away. Meanwhile, the former defence secretary and the Democratic Coalition’s MP, Ágnes Vadai, counted around 170 officers on Thursday. She added the officers sent away were pro-NATO.

What may have prompted this? Well, I did note this…

This guy with the dress sense of a circus clown just resigned.

He is — or should I say was — advisor to Zelensky’s chief of staff.

A recent article announced that Oleksiy Arestovich resigns as advisor to Zelensky’s office

Oleksiy Arestovich submitted his resignation from the position of external adviser to the office of the president of Ukraine.

“I want to show an example of what civilized behavior is: a fundamental error, then resignation,” he wrote on his social media, attaching a photo of his letter.

After his resignation he went on political analyst Yuri Romanenko’s Youtube channel and had this to say.

I’m an unofficial person already, I can say what I want.

Then having said that, spat this out…

If everyone thinks that we are guaranteed to win the war, it seems very unlikely.

This is particularly interesting since the former actor (I know right, it’s like the entire cabinet are actors) coined the name. I’d say propagandist but whatever.

His job, as far as I can tell, was to run a Youtube channel, which earned him the nickname “Therapist-in-Chief” and was devoted to assuring Ukrainians that the situation was under control, Ukraine had the upper hand, and that the war would be over soon. So basically a professional liar. A Ukrainian version of the BBC and CNN.

So as you can see, quite a turnaround for the “everything’s under control” kid. I guess the cocaine dwarf didn’t funnel enough of the Western taxpaying serfs’ money through Europe’s laundromat to him in order to keep up the charade. Or he quite possibly actually fears for his life because at some point a Russian bullet may exit the back of his head. Who knows?

Largest Number of Politicians are in Ukraine. But at whose expense?

ZeroHedge highlighted the wave of rats jumping ship… urgh, I mean “resignations.”

And I know what you’re thinking. “Where did they get all the money from?”

It is a good question.

The Zelensky regime thanks you, American taxpayers, for your service. Lambos and French villas don’t just land in your pocket on their own, ya know.

So there are at least two things to consider here. A top Ukraine official acknowledged what we’ve been saying all along — that the mighty Ukrainian military is NOT about to win. On the contrary, they’re getting hammered. A meat grinder.

And now Hungary is preparing. For what?

Well, what is the step for the US… urgh, I mean Ukraine when they’re winning so hard that Russia will be in control by spring?

The US/NATO/EU certainly cannot lose. Why? Because the harm to the US military hegemony would be a game changer. The rest of the world and all the military intelligence, from Delhi to Beijing to Ankara and even Tel Aviv, knows full well this is a US war.

So what do they do? If their previous actions are anything to go by, they ramp up the conflict, attempting to ensure other so-called participants “HAVE TO” join. This was what the bombing of the Nordstream pipeline was designed to do. To cut off all options, forcing Germany in particular to follow Washington’s policy.

Now, ahead of time, Orban is preempting a declaration of war by NATO. Hungary wants no part in this, but under their current NATO and EU membership they’d be obliged regardless.

Is Orban prepping for the time when he has to take his country out of the EU and out of NATO? If he was to do that (and I’m not saying that this is what he’s doing, merely that it is a logical and possible explanation), then he’d get rid of all the pro-NATO military because, by golly, he’s going to need a strong ideological position domestically within the military if he is to succeed in doing so. He’d almost certainly understand that the CIA would be active in promoting a “colour revolution” that would appear out of nowhere like a military myocarditis.

In a recent speech Orban had this to say:

The West violated Central Europe’s 1000 year old borders and history. It has pushed us to indefensible limits. Deprived of our natural resources. Cut off from natural resources. Made our country a house of mourning. They redrew the borders of Central Europe without moral concerns. Just as they drew the borders of Africa and the Middle East. This we will never forget.

Takeaways?

Aristotle, 2,500 years ago, wrote a book on the constitutions of Greece. He wrote, “All these constitutions call themselves democracies, but they are really oligarchies.”

Look around you and tell me that today’s so-called democracies are not run by a financial oligarchy. Many call it the deep state, but what exactly is the deep state? It is a financial oligarchy.

What else? Well, I think the euro is F.U.K.T (fragile, useless, korrupt, and terminal). So there’s that, but you know what else I’ll be looking out for? Should this indeed be the case, then when or if Hungary announces its exit, I expect Hungarian assets to immediately be sold by European institutions, not because they necessarily disagree but because everything has become so politicized that holding assets of Hungary would be immediately deemed “unpatriotic” and/or sanctioned. So we’ll wait for that to play out and then go hunting and probably buy the snot out of Hungary. If they can extract themselves from the WEF puppets, then there is hope.

I do realize that Hungary is a tiny landlocked country and really this works only where it gains momentum as/if others join. Serbia? Quite possibly. Italy under Maloni? Sure, I can see that, though for reasons stated other than the Russkie angle. Croatia, sensing the tide turning? I wouldn’t discount it.

So as you can see, lots going on and lots to keep our beady eye on. For now, get out of the euro if you are long and realize that as screwed as the dollar is, it looks positively glorious compared to the klustafuk that is Europe and the euro.

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The Western system is undergoing substantial changes, and the signs of moral decay, corruption, and increasing debt are impossible to ignore. With the Great Reset in motion, the United Nations, World Economic Forum, IMF, WHO, World Bank, and Davos man are all promoting a unified agenda that will affect us all. To get ahead of the chaos, download our free PDF report “Clash of the Systems: Thoughts on Investing at a Unique Point in Time” by clicking here.

At a time when woke western government have all but declared the death of fossil fuels (at some point in the next 30 or so years), things aren’t going quite as planned by the world’s most vocal of virtue signalers: with China putting Covid zero ahead of schedule and fully reopening its economy, worldwide oil demand is racing toward an all-time high and some of the smartest minds in the industry are forecasting $100-a-barrel crude in a matter of months.

However, having been burned one too many times by Biden’s catastrophic progressive agenda which demands more oil output and in exchange vows to crush end markets, US producers are refusing to invest more in future output and instead are playing the short game and looking to turn over as much cash as possible to investors before energy guru Hunter Biden (best known for his extremely valuable – in undisclosed – energy skillset which he brought to bear for Ukraine’s Burisma) turns his crack-addled attention to the US energy industry.

According to Bloomberg calculations, shareholders in US oil companies reaped a $128 billion windfall in 2022 thanks to a combination of global supply disruptions such as Russia’s war in Ukraine and intensifying Wall Street pressure to prioritize returns (dividends and buybacks) over finding untapped crude reserves. After all, why bother if progressives hope to put an end to evil internal combustion engines once and for all. Indeed, oil execs who in years past were rewarded for investing in gigantic, long-term energy projects are now under the gun to funnel cash to investors who are increasingly convinced that the sunset of the fossil-fuel era is nigh.

As a result for the first time in at least a decade, US drillers last year spent more on share buybacks and dividends than on capital projects, according to Bloomberg calculations.

The $128 billion in combined payouts across 26 companies also is the most since at least 2012, and they happened in a year when US President Joe Biden unsuccessfully appealed to the industry to lift production and relieve surging fuel prices. Or, as Bloomberg puts it, “for Big Oil, rejecting Biden’s direct requests may never have been more profitable.“

At the heart of the divergence is growing concern among investors that demand for fossil fuels will peak as soon as 2030, obviating the need for mutlibillion-dollar megaprojects that take decades to yield full returns. In other words, oil refineries and natural-gas fired power plants — along with the wells that feed them — risk becoming so-called stranded assets if and when they are displaced by electric cars and battery farms.

“The investment community is skeptical of what assets and energy prices will be,” John Arnold, the billionaire philanthropist and former commodities trader, said during a Bloomberg News interview in Houston. “They would rather have the money through buybacks and dividends to invest in other places. The companies have to respond to what the investment community is telling them to do otherwise they’re not going to be in charge very long.”

In other words, if BIden wants to rage at someone, he may as well target the anger at himself (who are kidding, we mean at those deep statists who set Biden’s agenda for him): if he hadn’t explicitly spelled out the end of the US energy industry, some may have been much more willing to invest in the future. The way it stands now, however… 

The upsurge in oil buybacks is helping drive a broader US corporate spending spree that saw share-repurchase announcements more than triple during the first month of 2023 to $132 billion, the highest ever to begin a year. Chevron alone accounted for more than half that total with a $75 billion, open-ended pledge. The White House lashed out and said that money would be better spent on expanding energy supplies; Biden’s toothless anger did not even prompt response. A 1% US tax on buybacks takes effect later this year.

Meanwhile, global investment in new oil and gas supplies already is expected to fall short of the minimum needed to keep up with demand by $140 billion this year, according to Evercore ISI, assuring much higher oil prices down the line. Meanwhile, crude supplies are seen growing at such an anemic pace that the margin between consumption and output will narrow to just 350,000 barrels a day next year from 630,000 in 2023, according to the US Energy Information Administration.

“The companies have to respond to what the investment community is telling them to do otherwise they’re not going to be in charge very long.” — Billionaire John Arnold said. Management teams from the biggest US oil companies recommitted to the investor-returns mantra as they unveiled fourth-quarter results in recent week and the 36% slump in domestic oil prices since mid-summer has only reinforced those convictions. Executives across the board now insist that funding dividends and buybacks takes priority over pumping additional crude to quell consumer discontent over higher pump prices. This may pose a problem in a matter of months as Chinese demand accelerates and global fuel consumption hits an all-time high.

“Five years ago, you would have seen very significant year-on-year oil-supply growth, but you’re not seeing that today,” Arnold said. “It’s one of the bull stories for oil — that the supply growth that had come out of the US has now stopped.”

The US is crucial to global crude supply not just because it’s the world’s biggest oil producer. Its shale resources can be tapped much more quickly than traditional reservoirs, meaning that the sector is uniquely placed to respond to price spikes. But with buybacks and dividends swallowing up more and more cash flow, shale is no longer the global oil system’s ace in the hole.

In the waning weeks of 2022, shale specialists reinvested just 35% of their cash flow in drilling and other endeavors aimed at boosting supplies, down from more than 100% in the 2011-2017 period, according to data compiled by Bloomberg. A similar trend is evident among the majors, with Exxon Mobil Corp. and Chevron aggressively ramping buybacks while restraining capital spending to less than pre-Covid levels.

Investors are driving this behavior, as evidenced by clear messages sent to domestic producers in the past two weeks. EOG Resources, ConocoPhillips and Devon Energy dropped after announcing higher-than-expected 2023 budgets while Diamondback Energy, Permian Resources and Civitas Resources all rose as they kept spending in check.

On top of shareholder demands for cash, oil explorers also are grappling with higher costs, lower well productivity and shrinking portfolios of top-notch drilling locations. Chevron and Pioneer Natural Resources are two high-profile producers reorganizing drilling plans after weaker-than-expected well results. Labor costs also are rising, according to Janette Marx, CEO of Airswift, one of the world’s biggest oil recruiters.

US oil production is expected to grow just 5% this year to 12.5 million barrels a day, according to the Energy Information Administration. Next year, the expansion is expected to slow to just 1.3%, the agency says. While the US is adding more supply than most of the rest of the world, it’s a marked contrast to the heady days of shale in the previous decade when the US was adding more than 1 million barrels of daily output each year, competing with OPEC and influencing global prices.

Demand, rather than supply-side actors like the American shale sector or OPEC, will be the primary driver of prices this year, Dan Yergin, vice chairman of S&P Global, told Bloomberg in an interview.

“Oil prices will be determined by, metaphorically speaking, Jerome Powell and Xi Jinping,” Yergin said, referring to the Federal Reserve’s rate-hike path and China’s post-pandemic recovery. S&P Global expects global oil demand to reach an all-time high of 102 million barrels per day.

Meanwhile, with the case for higher oil prices building, US President Joe Biden has fewer tools at his disposal with which to counteract the blow to consumers. The president already has tapped the Strategic Petroleum Reserve to the tune of 180 million barrels in a bid to ease gasoline prices as they were spiking in 2022.

Energy Secretary Jennifer Granholm is likely to get a frosty reception at the CERAWeek by S&P Global event in Houston staring March 6 if she follows Biden’s lead and attacks the industry for giving too much back to investors. That business model is “here to stay,” said Dan Pickering, chief investment officer of Pickering Energy Partners.

“There’s going to be a point at which the US needs to produce more because the market is going to demand it,” Pickering said. “That’s probably when investor sentiment shifts to growth. Until then, returning capital seems like the best idea.”

Authored by John Mac Ghlionn via The Brownstone Institute,

Big Lies, Big Data, and the Rise of Bigger Brother

The Guardian’s Oliver Wainwright recently discussed a new “international socialist conspiracy” that has taken the world by storm. “Fringe forces of the far left,” he noted, “are plotting to take away our freedom to be stuck in traffic jams, to crawl along clogged ring roads and trawl the streets in search of a parking spot.” The name of this “chilling global movement?” he asked, sarcastically and somewhat contemptuously: The “15-minute city.”

Wainwright believes these cities are simply part of a “mundane planning theory.”

He’s wrong.

A few days after Wainwright’s piece was published, three academics called 15-minute cities (FMCs) “the hottest conspiracy theory of 2023.” In a truly elitist manner, they poked fun at those who dared to question the motive behind FMCs.

One needn’t be a card-carrying QAnon member to have fears over these Trojan-like creations. Before going any further, it’s important to get our definitions in order. As the political scientist Kelly M. Greenhill has noted, not all conspiracy theories are wacky, and not all conspiracy theories are wrong. Take the Watergate conspiracy theory, for instance, or the fact that Edith Wilson made most of the executive decisions after her husband, President Woodrow Wilson, suffered a stroke. Quite often conspiracy theories turn out to be accurate.

Also known as smart cities, FMCs are places where everything imaginable, from your place of work to your favorite pizzeria, is accessible either by foot or bike (not by car, though; they will be verboten) in 15 minutes or less. What’s so bad about this?

On first inspection, very little.

We are, after all, creatures of comfort. We live in a world where the mantra “Too Long, Didn’t Read (TL;DR)” now reigns supreme. We crave convenience; we crave expediency.

However, expediency isn’t always a good thing; sometimes it’s downright dangerous.

This is especially true when people, either consciously or otherwise, trade their freedom for ease of access to certain services.

FMCs may make it easier for citizens to get from A to B, but these creations will also make it easier for those in power to spy on us, to harvest our data, and enable Big Brother to become Bigger Brother.

As I write this, FMCs are being actively championed by the World Economic Forum (WEF), the group behind the “Great Reset” and the idea of owning nothing, having absolutely no privacy, and being very happy. This fact alone should concern all readers.

Want to discuss the WEF?

To many, I’m sure FMCs sound incredibly cool. But don’t be fooled by the name. FMCs are actually “smart cities.” As I have noted elsewhere, the word “smart” is really just a synonym for surveillance. These ultra-modern, tech-saturated monstrosities use hundreds of thousands of sensors to vacuum up copious amounts of personal data.

FMC policies are currently being rolled out in cities such as Barcelona, Bogotá, Melbourne, Paris, and the dystopian wasteland known as Portland. What do these cities have in common? Surveillance technology. Between now and 2040, cities right across the United States (and beyond) are predicted to spend trillions of dollars on the installation of additional cameras and biometric sensors. Sure, surveillance is bad now. But, as Randy Bachman famously hollered, you ain’t seen nothing yet.

By 2050, more than two-thirds of the world’s population will live in closely surveilled urban centers, like glorified rats in cramped cages. Contrary to popular belief, we no longer live in a panoptic society. When Jeremy Bentham, the English philosopher and social theorist, put forward the idea of this prison system, there was no internet. In truth, there weren’t even cars. We now live in a post-panoptic world—a digital panopticon, if you will—with huge social media platforms collecting personal user data before selling it to the highest bidder.

The companies running these platforms often work closely with government officials, identifying supposed sinners and punishing them in the swiftest of manners. As the writer Kylie Lynch has noted, these companies know absolutely everything about you; they have instant access to your browser history, your activity online, and now, rather worryingly, even your biometrics. Not surprisingly, these Big Tech companies will have a big impact on the FMCs of the future, by providing the underlying digital infrastructure needed to monitor us and ensure mass compliance.

FMC are wolves in sheep’s clothing. Don’t believe the countless stories telling you otherwise. It has become common for elitist, mainstream outlets to poke fun at those who dare to question the “we have your best interests at heart” narratives. We have been burned too many times before.

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Republished from Epoch