Just days after China unexpectedly eased covid zero restrictions, sending commodities across the globe soaring amid hopes that China’s covid crackdown may be finally ending, Bloomberg reported late on Saturday that Beijing has issued “sweeping relaxation measures on property and Covid controls”, in what the media outlet called the strongest signal yet that President Xi Jinping is now turning his attention on rescuing the economy.

Confirming that China is increasingly concerned about its sinking economy, not to mention the local property market which Goldman last year calculated was the world’s largest asset class…

… Bloomberg reported that Beijing issued its most extensive 16-point rescue package for the struggling real estate market, citing “people familiar with the matter”, marking a decisive effort to turn around an economy devastated by two years of Covid Zero curbs.

Specifically, the PBOC and the China Banking and Insurance Regulatory Commission on Friday jointly issued a notice to financial institutions laying out plans to ensure the “stable and healthy development” of the property sector. Unlike previous piecemeal steps which were purposefully vague, the notice included 16 measures that range from addressing the liquidity crisis faced by developers to loosening down-payment requirements for homebuyers.

As part of the rescue plan, developers’ outstanding bank loans and trust borrowings due within the next six months can be extended for a year, while repayment on their bonds can also be extended or swapped through negotiations, Bloomberg sources added.

The major policy shifts by Xi’s government, first on covid and now on property, will aid China’s growth outlook and add fuel to a market rally that sent a gauge of Chinese shares in Hong Kong up 17% in the past two weeks. It also ends a long period of policy paralysis before last month’s Communist Party congress when Xi jockeyed for a third term.

It’s also a stark reversal from the gloom that descended over markets in late October, after Xi’s elevation of close allies to the highest rungs of power stoked concern that ideology would trump pragmatism for the most powerful Chinese leader since Mao Zedong. The Hang Seng China Enterprises Index has now erased losses suffered in the immediate wake of the party congress, swinging from one of the world’s worst-performing stock gauges to among the best.

The economy still matters to Xi Jinping. He needs growth to gird China for competition with US. Having just adjusted covid response, Beijing is now pulling back from a years-long crackdown on property to shore up growth. w/@yifanxie @caocli
https://t.co/Nv77ikQkCR via @WSJ

— Lingling Wei 魏玲灵 (@Lingling_Wei) November 13, 2022

…restrictions aimed at curbing property developer debt and give lenders permission to extend loans to home builders in financial trouble. The new measures are “massive in scale,” said Dan Wang, chief economist at Hang Seng Bank China …

— Lingling Wei 魏玲灵 (@Lingling_Wei) November 13, 2022

“These property measures, on top of announcements of Covid loosening, are a clear indication that Beijing’s efforts to support growth are intensifying,” said @MichaelHirson

— Lingling Wei 魏玲灵 (@Lingling_Wei) November 13, 2022

“It’s a meaningful easing,” said Larry Hu, head of China economics at Macquarie. “It seems that the room for policy change has widened on various fronts after the Party Congress, including for the two major headwinds to the Chinese economy: Covid Zero and property.”

As part of its attempt to kickstart the economy, on Friday Beijing also issued a set of measures to recalibrate their pandemic response, publicly outlining a 20-point playbook for officials aimed at reducing the economic and social impact of containing the virus, although as Bloomberg was quick to note, “the changes by no means signal the end of Covid Zero” and indeed, a day after releasing the new parameters, officials were quick to clarify that Covid rules were being refined, not relaxed, and a strict attitude toward stamping out infections remains China’s guiding principle.

The proposed changes take place just before Xi is set to meet US President Joe Biden Monday on the sidelines of a G-20 summit, in the first head-to-head meeting between the two heads of state since the pandemic began. Bloomberg adds that Treasury Secretary Janet Yellen will seek information on China’s Covid lockdown policies and the troubled property sector during a meeting with central bank Governor Yi Gang this week, according to senior Treasury Department officials.

Meanwhile, even with the rescue package, investors of Chinese property dollar bonds are still likely facing massive losses.

“The extreme pessimism in markets has finally led to a key policy change on the two biggest overhangs over the economy,” said Shen Meng, a director at Beijing-based investment bank Chanson & Co. “It’s still hard to say whether this is going to be a turning point for the economy though.”

Authorities have sought to defuse the property crisis with a raft of (largely toothless) measures in the past few months, including cutting interest rates, urging major banks to extend 1 trillion yuan ($140 billion) of financing in the final months of the year, and offering special loans through policy banks to ensure property projects are delivered. None of those measures, however, have made any material dent in China’s rapidly slowing property market.  Last week, China also expanded a key financing support program designed for private firms including real estate companies to about 250 billion yuan, a move that could help developers sell more bonds and ease their liquidity woes.

One of the biggest policy changes in the latest notice is to allow a “temporary” easing of restrictions on bank lending to developers.  As a reminder, China began imposing caps on bank’s property lending in 2021, as authorities sought to tighten the reins on a bubble-prone industry and curb leverage at some of the nation’s largest developers. Banks not meeting the current restrictions will be given extra time to meet the requirement, said the people.

In addition, regulators encouraged lenders to negotiate with homebuyers on extending mortgage repayment, and emphasized that buyers’ credit scores will be protected. That may alleviate the risk of social unrest among homebuyers who have engaged in a widespread boycott on mortgage payments since July.

Meanwhile, China’s $2.4 trillion new-home market remains fragile and property debt defaults have surged, sparking increasingly concerns about social unrest. Price declines in the existing-home market were the most extreme in almost eight years in September, according to the latest official data. At banks, the proportion of bad loans related to property has surged to 30%, according to Citigroup estimates.

But while Chinese stocks have suffered depression-level declines in recent weeks, as a result of relentless home price declines, now in their second year…

… signs of easing property curbs and pandemic restrictions have led to a sharp rebound in China assets. A Bloomberg Intelligence gauge of Chinese developers’ stocks jumped a record 18% Friday, with Country Garden Holdings Co. surging 35%.

Still, Bloomberg cautions that the financial backstop is dwarfed by the looming debt maturities facing developers. China’s property sector has at least $292 billion of onshore and offshore borrowings coming due through the end of 2023. That includes $53.7 billion in borrowings this year, followed by $72.3 billion of maturities in the first quarter of next year.

So while Beijing’s move is welcome, much more will be needed to convince markets that systemic risk has been mitigated: “China developers are facing another peak in debt maturity next year, if regulators don’t make adjustments for property-related policies, developer liquidity will continue to deteriorate,” said Shen. “This will very likely trigger systemic financial risk.”

By Peter Tchir of Academy Securities

Was There an Election this Week?

There was an election this week. The results apparently suited the market. I use “apparently” because the final results are not in. I’ve lost the ability to figure out if this is due to people being extremely cautious about calling elections, the fact that the results are still too close to call because of all the remaining uncounted ballots, or because of the run-offs. Maybe you have found websites that explain the uncalled seats better than the ones that I’ve found. In any case, it looks like Republicans will win the House, which is enough to create some gridlock. There were no red, blue, or green waves.

But it wasn’t the elections that drove stocks, it was mostly the inflation story! CPI sparked a massive one-day rally in spite of the Michigan data (which a few weeks ago would have been viewed negatively) and the “demise” of FTX. Technically the phrase I’m looking for is “filed for bankruptcy,” but demise seems more appropriate.

Two Ways to Lose Money

We will dig into inflation and the Fed, but let’s start with FTX and what happened to crypto this week. I think that it is important because Crypto Crashes Impact the Economy & Markets. We will address that, but let’s start with the two ways to lose money:

1. You buy something that goes down in price (or short something that goes up). There are a myriad of ways to do this and 2022 has given us plenty of opportunities to lose money the “old-fashioned” way. Whether you bought bonds, stocks, or many other things (other than energy), it has been easy to lose money this year. Sometimes it is easy to figure out how you lost money (the Fed tightened a lot, earnings were weak, etc.). Sometimes you can assess “intrinsic” value (based on cash flow, property, plant, & equipment, etc.). And sometimes you just don’t have a clue! I don’t know what a Polkadot is or does, but it still has $6.5 billion of market value according to coinmarketcap.com, even with the price at $5.68 (down from a high of $52.20 on November 7th, 2021). Losing money in something where it is difficult to figure out the intrinsic value is a frustrating way to lose money. Making it even worse, it is even more difficult to figure out when people might step in and buy.

2. You trust your money (or asset) with a counterparty that doesn’t fully pay you back. You can make good or bad investment decisions, but if you cannot get your money (or asset) back, you have lost. This, to me, is the absolute worst way to lose money, because to a large degree, it is often preventable. Some amount of due diligence can help determine the counterparty’s ability and willingness to pay you back. Some analysis of corporate structure, domicile, etc., can help identify risks. Examining the character of the individuals may also help spot risks. I will never forget (and I’ve mentioned this before) the time that the Head of Credit at Bankers Trust spoke to the trainee program (mostly a bunch of derivative nerds) about credit. It seemed like a dull topic, but it was the only part of the training program that I remember (other than betting on Series 7 scores). He emphasized that the ability to pay is the “easy” part of credit analysis, but it is the “willingness” to pay that is difficult and often the more important. In hindsight, at least for those holding assets at FTX, there should have been more soul searching given what went on with Three Arrows Capital and Celsius. I expect a lot more scrutiny in the crypto space now.

When people lose money, they take measures to avoid it. On the asset side, maybe you sell to mitigate losses. Maybe you buy more to dollar cost average, which allows you to claw back a little extra money on any rebound. On the “custodial” side you can figure out a “safer” place to move your assets, assuming you decide not to sell them outright.

Will there be opportunities in crypto?

• Could we be oversold/have we over-reacted? That is possible, but I don’t think so. Remember, Lehman was NEVER a moment, it was just one part of a story that started playing out a year before they went bankrupt and played out for another 6 months or more after their bankruptcy. FTX is just too big and too mainstream (the list of investors in their seed rounds is a literal who’s who of the private equity space) to not have knock-on effects. I expect to see crypto struggle from here. Not that there can’t be bounces, but I’m looking for bitcoin to break $10,000 before year-end (this is not a new call – see Traditional versus Disruptive Portfolio Construction).

• Could some entities that offer the best transparency, audited financials, and possibly even regulation be big beneficiaries of the chaos? That is possible. I certainly expect “smart” investors in the crypto space to do more to “secure” their holdings! There are some companies that purportedly are much more diligent on custodial services, have better backing, and have better internal systems than others. They should benefit, but for me, the question is if they will just get a bigger market share of a market that is dying rapidly.

Does this mean anything for markets or the economy?

• Fortunately, it means less for MARKETS than it did even a few months ago. The “disruptive” portfolio has already had so much pain, the positioning is lower, and any use of leverage has decreased dramatically (ARKK as a metric for disruptive investing is down 57% YTD, 65% for one year, and 75% since its peak in February 2021). Crypto returns have been worse (in many cases) than that. It has been impossible to maintain leverage in the “disruptive” portfolio. More importantly (from my perspective) is that people have stopped equating disruptive stocks with crypto. Companies conduct business, have customers, cash flow, etc. These are the things that help investors put valuations on them. While some of those valuations may have been way off (many stocks are down 75% or more), at least there is a process to figure out what these companies might be worth. For the last six months or so (since the Disruptive Portfolio piece was published), investors have treated crypto very differently than stocks and that is a good thing for markets right now because crypto losses won’t have such an immediate impact on the broader stock market.

• I’m more worried about the ECONOMY. Many of the crypto haters are so dismissive that they don’t give crypto the credit that it is due! Cryptocurrencies grew to as much as $3 trillion and are well under $1 trillion now. This is my best estimate after taking a look at CoinMarketCap and seeing that bitcoin is down to $350 billion. That is an immense loss in a relatively short period of time! That should (must) affect some spending! At a time when people could quite literally make a living waiting for NFTs to “drop” so they could sell them, there was a lot of “free” money available to be spent. Do not underestimate the fact that much of the inflationary pressure we felt in 2021 was attributable to people making money in cryptocurrencies and NFTs. But that is only one part of the equation. The second part of the equation is the companies in the space. FTX allegedly raised over $1.5 billion in various funding rounds (the Crunchbase stories came up high enough in my searches for FTX funding rounds and seem in line with other stories I’ve read). How much of that money went into buying technology? At its heart, FTX was a technology company that presumably needed servers (not just so Sam could play Lord of Legends with minimal lag), cloud services, etc. What were they spending on ads? They got an arena in Miami named for them, but presumably that was just a small portion of their ad spending. Who knows how much was paid to promoters. How much energy were they using? FTX spent money on technology, ads, and paying people and they likely were significant users of energy. That might actually help decrease energy usage (though watching hash rates, this might not come down for a bit). In any case, companies involved in the crypto space have raised and spent a lot of money (billions) that won’t be spent going forward! In addition to the tightening of purse strings by virtually every private company that now needs to avoid funding at what they view as extremely low valuations, mega-caps like META have had several headlines related to cost cuts recently. The spending that was generated by crypto and disruptive tech was a big part of the inflationary (easy money) push post-COVID and will be greatly diminished (in fact, it is already greatly diminished). Those who benefited from the spending (often big tech of all types) could face pressure and it looks like that already happened in last quarter’s earnings for a lot of big tech companies. That could further slow spending in the economy because when one’s customers suffer, you often also have to take steps to cut costs.

In the coming days and weeks, I am less worried about how crypto will affect markets, but I am EXTREMELY worried that we’ve only seen the beginning of spending cuts related to crypto wealth and crypto/disruptive companies! That will be bad for the economy and it will bleed into certain stocks if I’m correct.

Five More Weeks!

We have almost 5 weeks until the next FOMC meeting and presser on December 15th. Plenty of time for the Fed to Stop Seeing Dead People. There is one more jobs report and a few more inflation prints (including another CPI print).

On jobs, you know that we’ve questioned the disparity between the Household and Establishment data, questioned the potential overstatement of JOLTS data (I’ve been seeing some interesting work in this space), and even questioned the birth/death model adjustments (which is something some serious economists are also questioning). Jobs may remain strong, and it is the one thing that the Fed can use to justify its hawkish stance (though it would be nice to declare victory on inflation and not force Americans into the unemployment lines.)

On inflation:

• See Inflation Dumpster Dive and More Inflation Dumpster Diving.

• If you skipped the previous section, all you need to know is that I believe crypto and NFT profits and spending by disruptive companies fueled inflation (tech/semiconductors, various services, advertising, and even energy usage) and that trend has abated and may be reversing. This was a really big contributor to spending that was largely off the radar of mainstream economists (crypto deniers in particular) and is now helping the case for deflation. If you didn’t model it as inflationary before, you won’t pick it up as deflationary now, but two wrongs don’t make a right and won’t help you find inflection points!

• The rent calculations in CPI are absurd. Talk about two wrongs not making a right! Using data that is “knowingly” lagged (amongst other potential flaws) to determine current policy is so wrong that it continues to make my head hurt! A month ago we sent out OER Seems Crazy. The only thing that I could bring myself to send regarding Thursday’s CPI print was from the BLS Report:

“The index for all items less food and energy rose 0.3 percent in October, following a 0.6-percent increase in September. The shelter index continued to increase, rising 0.8 percent in October, the largest monthly increase in that index since August 1990. The rent index rose 0.7 percent over the month, and the owners’ equivalent rent index rose 0.6 percent.”

• Are they trying to tell me that October rents experienced the biggest monthly gain since 1990 and the second highest gain was in September? That is just unbelievable! If you told me that last summer (when we were still doing QE with rates at 0) was out of control on the rent front and the worst in 3 decades, I would have believed you, but now?

• On the bright side, even the erroneous data will start picking up the smaller increases that started late last year (and early this year) in the real world as opposed to the BLS world.

• On the commodity side (see chart below), we might see some month-on-month upticks, but the annual data will look great for many commodities!

A few weeks ago, I was asked to do a yield forecast for a client (though I’m really more about figuring out the next few months or big moves). What I sent at the time seemed almost outlandish, but it feels like it has some hope now as we get more (non-inflationary) inflation data! Yes, my “base case” is “too far too fast”! The India inspired commodity boon is also an interesting possibility in 2023.

While the Fed is likely to jawbone to the hawkish side, I fully expect 5 more weeks of data to weaken the case for more hikes rather dramatically!

Other “Stuff”

I feel obligated to discuss a few other “things” that could impact the market in the coming weeks:

• Seasonality. Seasonality could help the market as we head into the holiday season. Recent upward price action could be enough to chase some money off of the sidelines. My sense of “sentiment” is that it remains heavily skewed towards inflation, the Fed, and higher bond yields/lower stock prices despite some chatter about seasonality. Basically “fade the move” still dominates the “seasonality” chatter, but I think that will reverse.

• Russia. Our Geopolitical Intelligence Group expects little change in the war (Russia will make another push west once the rivers freeze, but Ukraine will defend itself well with all their weapons). However, there is a chance that with the midterm elections behind us and new and more severe energy related sanctions starting to approach (which will hurt the West more than Russia), we could see attempts to cobble together some sort of a deal. China also seems to be gently nudging (if not pushing) Russia in that direction.

• China COVID 0.1 policy. China is unlikely to back off COVID 0 until after the winter, but with our demand down (and potentially shrinking further) the inflationary supply pressures are receding anyway! Baltic Dry (one measure of international shipping costs) has been receding again and it is down 56% in the past 6 months.

Bottom Line

Let the “everything” rally play out a bit longer.

• For stocks, I think somewhere between the middle of August and the middle of September levels are a good target. On SPX, we were at 4,305 on August 16th and 4,110 on September 12th, which I guess is a complex way of saying the S&P target is 4,200. This also seems to be the right stopping point if we breach the 200-day moving average of 4,080 (causing a wave of panic buying).

• On rates, look for bull steepeners! All yields should come down, but the front-end should respond extremely well if I’m correct on the inflation and jobs data and what that means for the Fed.

And there it is: the final curve inverted – Powell’s personal favorite, the 3M-3M18M fwd.

And now we go all-in steepeners pic.twitter.com/43BVckRdGM

— zerohedge (@zerohedge) November 12, 2022

• Credit should rip tighter here, with high yield poised to do extremely well as credit risk gets priced out of the market, even with an overhang of some big deals that banks will want to offload on any strength (ideally ahead of year-end).

• Don’t touch crypto, but also don’t expect weaker crypto to drag stocks down!

Ultimately, I think that this all ends with risk-off trading taking us to much lower yields AND lower stock prices, but it is too early to bet on that as we first need to get through the “lower yields are good for stocks” phase!

The United States and Russia were unable to agree on language for a joint statement following the multilateral ASEAN summit in Cambodia, making it unlikely that G20 nations will achieve a consensus this week in Indonesia, Bloomberg reports.

According to Russian Foreign Minister Sergei Lavrov, America and its allies are to blame for a lack of communique at the 19-nation summit, claiming on Sunday that the US “insisted on absolutely unacceptable language regarding the situation in Ukraine.”

Russia refuses to describe its invasion of Ukraine as a war, and insists on it being recognized as a “special military operation.”

Lavrov also accused the US of dividing the 10-member Association of Southeast Asian Nations and criticized NATO for stepping up activity in the region. His comments on NATO echo a growing concern of China, even though the US alliance system in Asia doesn’t include NATO’s collective defense agreements. -Bloomberg

“NATO is no longer saying that this is a purely defensive alliance,” said Lavrov, who was dressed like an Indonesian Klingon. “There is a clear trend on militarization of the region through coordination of efforts of local US allies such Australia, New Zealand, Japan with NATO enlargement.“

On Monday, US President Biden – who accidentally thanked Colombia instead of Cambodia for hosting the ASEAN summit, will meet in person with Chinese President Xi Jinping – Russia’s most crucial diplomatic partner.

Indonesia, which currently holds the rotating G-20 presidency, has sought to strengthen ties between Russia and G-7 countries, however in the days leading up to the summit, hope was dwindling that the two sides could reach a joint communique.

Ahead of the summit, a Japanese government official told reporters that G-7 nations were insisting on mentioning Russia’s invasion in any communique. While Indonesia was seeking some middle ground, and Japan wanted to support the efforts of the Southeast Asian nation, ultimately the G-7 needed to maintain its principles on Russia, the official said. -Bloomberg

“On this particular paragraph related to war maybe there will be no agreement, but we’re still trying,” said Indonesian Finance Minister Sri Mulyani Indrawati in a Sunday statement to Bloomberg TV, adding that the G-20 can still deliver “very tangible and concrete deliverables” when it comes to things like climate change and Covid-19, even without a joint agreement.

Amid growing speculation of his whereabouts, Bloomberg reports that Sam Bankman-Fried was interviewed by Bahamian police and regulators on Saturday, although Bloomberg was quick to add that in the Bahamas, law-enforcement inquiries don’t necessarily mean someone will be arrested or charged with a crime.

In a separate report, Bloomberg also notes that the Bahamian police said they’re working with the Bahamas Securities Commission to investigate whether there was any criminal misconduct in the collapse of the crypto exchange FTX (narrator: there was).

“In light of the collapse of FTX globally and the provisional liquidation of FTX Digital Markets Ltd., a team of financial investigators from the Financial Crimes Investigation Branch are working closely with the Bahamas Securities Commission to investigate if any criminal misconduct occurred,” a police spokesperson said in a statement Sunday.

Separately, CoinTelegraph adds that in addition to SBF, the low profile FTX co-founder Gary Wang and director of engineering Nishad Singh are also said to be in the Bahamas and are “under supervision” by the local authorities. A source familiar with the matter told Cointelegraph that the three former FTX executives, as well as Alameda Research CEO Caroline Ellison, are looking for ways to flee to Dubai. While the plan was made assuming that the United States “doesn’t have any extradition treaties” with the UAE, the nations signed a mutual legal assistance treaty (MLAT) back on Feb. 24, 2022, to work against criminals.

“Right now three of them, Sam, Gary, and Nishad are under supervision in the Bahamas, which means it will be hard for them to leave,” said the CT source, who asked to remain anonymous. The source has also revealed that Ellison is currently in Hong Kong, adding that means “she might be able to get to Dubai.” However, community member coinbureau cited his source in the U.S. government to confirm that FTX members attempting to reach Dubai will get detained at the airport and sent straight back to the United States.

A similar theory was discussed as part of a 16-hour-long Twitter Space by The Crypto Roundtable Show host Mario Nawfal, with a guest speaker claiming “trusted sources” have witnessed Bankman-Fried “in a locked space” with authorities in Albany Tower — a luxury resort located in New Providence in The Bahamas. An unverified rumor also suggests that Bankman-Fried is currently joined by his father, Joseph Bankman.

Rumors that Bankman-Fried had been arrested on the tarmac at The Bahamas Airport made the rounds on Nov. 10 with evidence suggesting that Bankman-Fried’s private jet had been grounded for 40 minutes while on the way to Miami from Nassau.

On Nov. 12, rumors then pointed to Bankman-Fried having landed in Buenos Aires in the early hours of the day after Twitter users tracked the coordinates of his private jet using the flight tracking website ADS-B Exchange.

Later in the day, Bankman-Fried in a text message to Reuters denied speculation that he had fled to Argentina, claiming that he was still in The Bahamas.

The former FTX CEO is at the center of one of the industry’s biggest scandals: the Department of Financial Protection and Innovation (DFPI) in the state of California announced on Nov. 10 that it will open up an investigation as to the “apparent failure” of the exchange. Bloomberg and WSJ have reported that SBF is also dealing scrutiny from the Securities and Exchange Commission over whether he broke securities rules.

On Saturday, the WSJ reported that there was a video conference in which Alameda Research head, Caroline Ellison admitted that she, Bankman-Fried and two other FTX executives, Nishad Singh and Gary Wang, were aware of the decision to send customer funds to Alameda, effectively making the prosecution’s case a slam dunk.

But maybe not: in his latest jab at the corrupt US system, Elon Musk – who is now a bigger non-grata persona with the US left than even Donald Trump – tweeted that Sam Bankman Fried was a major Democrat donor, “so no investigation.”

SBF was a major Dem donor, so no investigation

— Elon Musk (@elonmusk) November 13, 2022

As a reminder, SBF was the #2 Dem donor after Soros…

… which is to say that Musk is not wrong.

If only there were signs… pic.twitter.com/J9Z9ZC35Zs

— zerohedge (@zerohedge) November 12, 2022

Authored by Terri Wu via The Epoch Times (emphasis ours),

Instead of a “red wave,” the midterm election results look more like “a red ripple” scenario, with Republicans appearing to be headed to a narrow majority in the House.

And for the three Virginia competitive races generally perceived as national bellwethers for GOP performance, Republicans won one out of the three.

In the military-heavy 2nd Congressional District in the Virginia Beach area, Republican challenger state Sen. Jen Kiggans unseated incumbent Rep. Elaine Luria (D-Va.).

In both the 7th and 10th Congressional Districts in exurban areas outside Washington and a few solid red rural counties, Republican challengers fell short of flipping the seats. Prince William County Supervisor Yesli Vega lost to Rep. Abigail Spanberger (D-Va.) by a narrow margin in the 7th District. And in the 10th District, retired Navy captain Hung Cao trailed Rep. Jennifer Wexton (D-Va.) by more than five percent of the vote.

Analysts summarized that the reasons for the Republican underperformance as a combination of inflated expectations, underestimation of the strength of the abortion issue, performance in diverse communities, and the Youngkin and Trump factors.

Inflated Expectations Met Reality in Northern Virginia

“Republicans had tremendously inflated expectations about the Wexton race,” Richmond-based veteran political analyst Bob Holsworth told The Epoch Times. “Republicans have not been running well in Northern Virginia. And that district, even though it includes some Republican areas, is centered in Loudoun, where the Democrats have been running very well.

“They [Republicans] watched Fox News that Loudoun is becoming a Republican county. It’s going the other way. It’s a Democratic county.”

For the Spanberger–Vega race, Holsworth said the quality of the candidate was a significant factor.

“[Spanberger] had been rated to be one of the more bipartisan members of Congress,” he said.

And the endorsement from the U.S. Chamber of Commerce and Rep. Liz Cheney (R-Wyo.) mattered, according to Holsworth.

He summarized Spanberger’s election results as a solid performance in Democrat-leaning areas, noting that the congresswoman was able to reduce Vega’s margin in more Republican-leaning areas, such as Stafford, Spotsylvania, and Orange counties, compared to Republican Virginia Gov. Glenn Youngkin’s gubernatorial race last year.

“You had a situation where this was a district [the 7th Congressional District] that Biden won by seven, Youngkin won by five, and now Spanberger won it by four to five,” Holsworth said, noting that Spanberger was an “extraordinarily energetic candidate” who raised a lot of money.

Abortion Issue and Getting Votes from Diverse Communities

Ron Wright, cofounder of the Suburban Virginia Republican Coalition, told The Epoch Times that Republicans “underestimated the strength of the abortion issue” and didn’t do well in diverse communities, such as black, Hispanic, and Asian communities.

“In Florida, I think they’ve done a great job in reaching out to the Hispanic community and building a strong base there. I think the Republican Party of Virginia needs work,” he said.

Wright said the growth in northern Virginia is in Loudoun and Prince William counties, the exurban areas outside Washington. And those communities are diverse.

“The Republican Party is not reaching the diverse communities,” he said.

Holsworth agreed that Republicans underestimated the abortion issue.

“There’s no doubt about that nationally,” he said. “And here, it’s a 60–40 issue in Virginia in the Democrats’ favor.”

As for the Spanberger–Vega race, Wright thought Spanberger won by doing well in diverse communities and having raised much more money to pay for door-knocking to drive the turnout.

According to the Federal Election Commission, Spanberger outraised Vega by three times as of Oct. 19. With the disbursements by Oct. 19 and their final vote counts, Spanberger’s cost per vote is about three times as much as Vegas’s: $60 per vote for Spanberger compared to about $20 per vote for Vega.

Both ran an equal amount of negative ads on each other, as shown by data collected by the Virginia Public Access Project.

‘Each Election Is Its Own’

Wright didn’t think there was complacency on Vega’s part due to having Youngkin’s support but acknowledged that “big rallies don’t always turn into large votes.”

While stumping for Republican candidates in and outside Virginia, Youngkin repeatedly told the crowd that the red movement that propelled his gubernatorial win was “happening again” and attributed Virginia as the “headwaters.” On Election Day, Youngkin released a video called “This is the moment,” anticipating a red wave across the nation.

Authored by Lily Zhou via The Epoch Times,

Deaths from COVID-19 remain “extremely rare” in people under the age of 20, according to a study of follow-up data in the UK.

Between March 2020 and December 2021, while there were 185 deaths in England among children and young people (CYP) within 100 days of a lab-confirmed COVID-19 infection, fewer than half died directly because of the virus, the study found.

The peer-reviewed study, published on Nov. 8 on the PLOS Medicine Journal website, was conducted by researchers from the UK’s Health Security Agency (UKHSA). Studying the 22-month follow-up data on all 6,790 under-20s deaths, the team corroborated findings from a number of previous analyses that looked at data from a shorter period of time.

20 Healthy CYP Died From COVID-19

Excluding two stillbirth/intrauterine deaths, 81 (43 percent) deaths were attributed to COVID-19.

It accounts for 1.2 percent of all-cause CYP deaths, with a COVID-19 infection fatality rate of 7 per million (using estimated infections number) and an overall mortality rate of 6 per million (estimated CYP population).

Of the 81 deaths from COVID-19, one in four (20) were otherwise healthy, while 61 had “significant underlying health conditions,” including neuro-disability, immunocompromising conditions, Down syndrome, Edward syndrome, chronic heart disease, and four premature birth, meaning the COVID-19 mortality rate for otherwise healthy CYP was 1.5 per million.

COVID-19 deaths were also clustered among older teens and infants, with more than half (47) occurring among those aged between 16 and 19, and 22 under a year old.

Eight children from the 1- to 4-year-old group died from COVID-19, along with 12 children aged between 5 and 11, and 15 children aged between 12 and 15.

More than half (45) of the COVID-19 deaths occurred when the Delta variant of the novel coronavirus was dominant, while 21 died during the wild-type-dominant period, and 15 died during the Alpha wave.

But the Delta variant was the least deadly in terms of infection mortality rate (6 per million) compared to Alpha (8 per million), and the wild-type (10 per million) as it was more infectious than the previous variants.

The Omicron variant, which became dominant this year, wasn’t included in the study. Dr. Shamez Ladhani, pediatric infectious disease consultant at St. George’s Hospital London and consultant epidemiologist at the UKHSA who co-authored the study, told The Telegraph that “emerging data suggest that the Omicron variant is even less fatal in children compared to previous variants.”

Vaccination Status

Young adults and children over 12 years old were offered COVID-19 vaccines in staggered groups since June 2021. Under-12s weren’t offered vaccination during the studied period.

Less than a third (59) of CYP who died within 100 days of a lab-confirmed COVID-19 infection were eligible to receive COVID-19 vaccination.

Among COVID-19 deaths, 22 were eligible and two were vaccinated, one with one dose and the other with two doses.

Among non-COVID-19 deaths, 37 were eligible for COVID-19 vaccination, 10 received one dose and six had two doses.

Maternal vaccination status for infant deaths wasn’t included in the study. In an email to The Epoch Times, Ladhani said maternal vaccination wasn’t a focus of the study as it’s “very difficult to derive any robust conclusions from the small numbers of infants” included in the paper.

The UKHSA previously published an analysis saying vaccinated women had similar birth outcomes compared to unvaccinated women between January and August 2021, with slightly lower rates of stillbirth and low-birthweight babies and a slightly higher rate of premature births.

A decisive new batch of ballots from Las Vegas’ Clark County has prompted the Associated Press and many other outlets to declare that Nevada incumbent Democrat Catherine Cortez Masto has defeated Adam Laxalt, assuring another two years of Democratic control of the U.S. Senate. 

With the win, Democrats will have at least 50 seats plus the vice presidential tiebreaker vote — just as they do today — with an opportunity to secure another seat in the Dec. 6 Georgia runoff pitting Republican Herschel Walker against incumbent Raphael Warnock. With Senate control no longer at stake, it seems likely that already-dull Republican enthusiasm for Trump-backed Walker will sag even more. 

The Arizona governor’s race remains tight, however. Unlike Friday night’s update — Saturday’s new tally brought some good news for the GOP, as Kari Lake trimmed Democrat Katie Hobbs’ lead to 34,129 votes. Hobbs is up 50.7% to 49.3%. 

There are still about 300,000 votes yet to be counted in Arizona, with the great majority coming from two counties: Maricopa, which is home to Phoenix, and Pima County, where Tucson is found.  

Appearing on CNN Saturday evening, Arizona Assistant Secretary of State Allie Bones said rural counties are largely done, and that Maricopa County will give more tallies on both Sunday and Monday. She said it was unclear if Pima will release any more results until Monday. 

Maricopa figures especially heavy. So far, Hobbs is leading Maricopa 52.1% to 47.9%. However, the Saturday batch favored Lake 51.8% to 48.2%, and her campaign hopes the next batches lean harder in her direction to push her to a dramatic 11th-hour victory.  

85,656 late early ballots were counted in Maricopa today. They were spread out all over the county, but many this time did come from GOP strongholds in north loop 101 and the southeast valley. pic.twitter.com/0FBeO3ReCu

— The AZ – abc15 – Data Guru (@Garrett_Archer) November 13, 2022

That may very much be the case. According to Arizona pollster and data analyst Landon Wall, the sequence by which Maricopa has been counting ballots means that tallies are increasingly coming from more Republican-friendly Phoenix suburbs and exurbs.  

According to Bones, of the outstanding Arizona votes, the vast majority are so-called “late earlies” — early-voting ballots that voters completed but then brought to a polling station on Election Day rather than mailing them in. Trump won that particular flavor of Maricopa votes in 2020.  

“It’s not a question that [Republicans] will win the next batches. Only a question of how much,” tweeted ABC15 political analyst Garrett Archer, a former elections analyst for the Arizona secretary of state.   

There are 255,000 uncounted early ballots in Maricopa County. Why are Republicans anticipating that these will break their way? Because 68% of these are in Republican leaning Legislative Districts and they were dropped off on election day rather than mailed which Trump won in ’20 pic.twitter.com/nFgisun3Ct

— Landon Wall (@LandonWall_) November 12, 2022

The Arizona race isn’t the only remaining drama: The House of Representatives is still in play too, with each party trying to hit the 218 seats needed to control the chamber. As of Saturday evening, most outlets put Republicans at 211 seats and Democrats at 204. There are 20 seats still uncalled, and each party has a lead in 10 of them. That makes GOP control likely but still far from certain.  

In one closely-watched but uncalled race, incumbent Colorado firebrand and gun-slinging Trump enthusiast Lauren Boebert, who’d surprisingly trailed her challenger in earlier counting, now has a 1,122-vote lead with 99% of ballots counted. If the lead remains that narrow, it would trigger an automatic recount under Colorado law.

By failing to flip the Senate, Republicans will now have to watch as Biden proceeds to populate the federal judiciary with more leftists. GOP senators also lose the much-anticipated opportunity to proceed with a variety of investigations, from the origins of the Covid-19 virus, to the government’s pandemic decision making, Hunter Biden’s influence-peddling, and more.  

Those investigations can still happen in the House — perhaps, on Covid, that could mean substituting double-MIT-degreed Rep. Thomas Massie for Dr. Rand Paul. 

On Friday, the top Republican on the House Oversight and Reform Committee told CBS he’s ready to subpoena Hunter Biden and his business records: 

“What Joe Biden said is, ‘Our son is innocent.’ If I were Hunter Biden, I’d want to come clear my name and make some Republicans look bad,” said Rep. James Comer. “So we’re gonna ask Hunter Biden to come before the committee. If he refuses, then I suspect that he would receive a subpoena.” 

…but that and other inquiries all hinge on the GOP’s ability to reach 218 seats in the coming days. 

Authored by Burak Bekdil via The Gatestone Institute,

• In 2008, the “flawless democrat” Putin invaded Georgia. The West was shocked. Putin critics… were shocked that the West was shocked. In 2014, Putin invaded the Crimean Peninsula, sovereign Ukrainian territory. The West remained shocked. In February 2022, Putin invaded Ukraine and annexed parts of the sovereign state. Was the West still shocked? It should not have been.

• Apparently the “flawless democrat” Putin is hoping to weaponize winter and force Europe to surrender, but giving in to the Kremlin would be disastrous.

• The EastMed pipeline project was designed to improve Europe’s energy security by diversifying its routes and sources and providing direct interconnection to the production fields while reducing dependence on Russian gas supplies…. U.S. President Joe Biden stepped in with a historic strategic miscalculation that came with a strategic cost: appeasing NATO’s pro-Putin, part-time ally Turkey and jeopardizing Europe’s energy security.

• Only a few weeks before Russia invaded Ukraine in February, Biden surprised the EastMed partners by abruptly withdrawing U.S. support for the pipeline, thereby effectively killing the project, preventing a diversified energy supply to Europe, and further assuring Putin’s energy blackmail against Europe.

• The White House said the $6.7 billion project was antithetical to its “climate goals.” Biden presumably hopes no one will actually still be using fossil fuels by 2025, the date for the planned completion of the EastMed pipeline. The Biden administration also cited a supposed lack of economic and commercial viability, even though a 2019 study financed by the EU confirmed that “the EastMed Project is technically feasible, economically viable and commercially competitive.”

• If the Europeans freeze this winter or must pay sky-high bills, they should drink a toast to the likes of Schroeder and Biden.

The story goes back to early 2000’s when German’s then Chancellor Gerhard Schroeder decided to develop strategic relations between Berlin and Moscow. He went so far as to offer partnership to Russia in EADS, a multinational European defense and aerospace powerhouse. In November 2004, Schroeder called Russian President Vladimir Putin a “flawless democrat.” Unsurprisingly, in 2004, Schroeder hailed Turkey’s Islamist autocrat, then prime minister (now president) Recep Tayyip Erdoğan as a “great reformer.”

On the evening of December 9, 2005, seventeen days after Schroeder left office as chancellor, he got a call from his friend Putin. Since leaving public office, Schroeder has worked for Russian state-owned energy companies, including Nord Stream AG, Rosneft, and Gazprom, for a salary of $1 million a year. On March 8, 2022, German’s Public Prosecutor General initiated proceedings related to accusations against Schroeder of complicity in crimes against humanity due to his role in Russian state-owned corporations.

In 2008, the “flawless democrat” Putin invaded Georgia. The West was shocked. Putin critics, including this author, were shocked that the West was shocked. In 2014, Putin invaded the Crimean Peninsula, sovereign Ukrainian territory. The West remained shocked.

In February 2022, Putin invaded Ukraine and annexed parts of the sovereign state. Was the West still shocked? It should not have been.

In 1972, natural gas exports from the Soviet Union accounted for around 4% of European gas consumption. By 2021, Russia was providing almost 40% of Europe’s gas. As Moscow’s market share has gradually increased, so has its ability to manipulate prices and trigger crises. Most Europeans now acknowledge that this reliance on Russia represents a major strategic blunder. Too late. Europe’s “green energy transition” features one major flaw: it relies on Russian gas imports.

Back to the future. This will be an extremely difficult winter for all Europeans, whether they face blackouts or heating issues and sky-high energy bills. Apparently the “flawless democrat” Putin is hoping to weaponize winter and force Europe to surrender, but giving in to the Kremlin would be disastrous.

Back to the past. In 2017, the governments of Italy, Greece, Cyprus and Israel signed a declaration to confirm their support for the development of the East Mediterranean Pipeline (EastMed), a $6.7 billion, 1,900-km natural gas pipeline project to connect the gas reserves of Israel and Cyprus to Greece and onward to Europe. The pipeline would have an initial capacity to transport 10 billion cubic meters per year (bcm/y) of gas to Greece, Italy and other southeast European countries. The capacity would then be increased to a maximum of 20 bcm/y in the second phase. The project was confirmed as a “Project of Common Interest” (PCI) by the European governments.

The EastMed pipeline project was designed to improve Europe’s energy security by diversifying its routes and sources and providing direct interconnection to the production fields while reducing dependence on Russian gas supplies. It would provide an opportunity for European Union member state Cyprus to connect to the European gas network, which would further enhance gas trading in southeast Europe.

Turkey, after a punishing international isolation following several diplomatic crises with Israel, threatened militarily to challenge EastMed. In contrast, other countries in the region such as Egypt, Jordan, Lebanon and the Gulf states supported what later became the EastMed group, also favored by the EU and United States. So far so good. But wait.

As the past several years saw the East Mediterranean turning into a slow-fuse time bomb sitting over rich hydrocarbons that are claimed questionably by Turkey as a stand-alone regional force, versus an alliance of Greece, Cyprus and Israel, U.S. President Joe Biden stepped in with a historic strategic miscalculation that came with a strategic cost: appeasing NATO’s pro-Putin, part-time ally Turkey and jeopardizing Europe’s energy security.

Only a few weeks before Russia invaded Ukraine in February, Biden surprised the EastMed partners by abruptly withdrawing U.S. support for the pipeline, thereby effectively killing the project, preventing a diversified energy supply to Europe, and further assuring Putin’s energy blackmail against Europe.

The White House said the $6.7 billion project was antithetical to its “climate goals.” Biden presumably hopes no one will actually still be using fossil fuels by 2025, the date for the planned completion of the EastMed pipeline. The Biden administration also cited a supposed lack of economic and commercial viability, even though a 2019 study financed by the EU confirmed that “the EastMed Project is technically feasible, economically viable and commercially competitive.”

Biden’s miscalculation must have caused much laughter and substantial champagne consumption in the Kremlin. “Welcome to the brave new world where Europeans are very soon going to pay €2.000 for 1.000 cubic meters of natural gas!” tweeted Dmitry Medvedev, deputy chairman of Russia’s Security Council, and the country’s former president and prime minister, on February 22, 2022.

Even if Putin was hesitant about making Ukraine his new war theater in January, Biden’s mistake assured him that he was on the right track. If the Europeans freeze this winter or must pay sky-high bills, they should drink a toast to the likes of Schroeder and Biden.

Authored by Pepe Escobar via The Cradle,

The meeting this week between two Eurasian security bosses is a further step toward dusting away the west’s oversized Asian footprint…

Two guys are hanging out in a cozy room in Tehran with a tantalizing new map of the world in the background.

Nothing to see here? On the contrary. These two Eurasian security giants are no less than the – unusually relaxed – Russian Security Council Secretary Nikolai Patrushev and Ali Shamkhani, the Secretary of Iran’s Supreme National Security Council.

And why are they so relaxed? Because the future prospects revolving around the main theme of their conversation – the Russia-Iran strategic partnership – could not be more exciting.

This was a very serious business affair: an official visit, at the invitation of Shamkhani.

Patrushev was in Tehran on the exact same day that Russian Minister of Defense Sergey Shoigu – following a recommendation from General Sergey Surovikin, the overall commander of the Special Military Operation – ordered a Russian retreat from Kherson.

Patrushev knew it for days – so he had no problem to step on a plane to take care of business in Tehran. After all, the Kherson drama is part of the Patrushev negotiations with US National Security Advisor Jake Sullivan on Ukraine, which have been going on for weeks, with Saudi Arabia as eventual go-between.

Besides Ukraine, the two discussed “information security, as well as measures to counter interference in the internal affairs of both countries by western special services,” according to a report by Russia’s TASS news agency.

Both countries, as we know, are particular targets of western information warfare and sabotage, with Iran currently the focus of one of these no-holds-barred, foreign-backed, destabilization campaign.

Patrushev was officially received by Iranian President Ebrahim Raisi, who went straight to the point: “The cooperation of independent countries is the strongest response to the sanctions and destabilization policies of the US and its allies.”

Patrushev, for his part, assured Raisi that for the Russian Federation, strategic relations with Iran are essential for Russian national security.

So that goes way beyond Geranium-2 kamikaze drones – the Russian cousins of the Shahed-136 – wreaking havoc in the Ukrainian battlefield. Which, by the way, elicited a direct mention later on by Shamkhani: “Iran welcomes a peaceful settlement in Ukraine and is in favor of peace based on dialogue between Moscow and Kiev.”

Patrushev and Shamkhani of course discussed security issues and the proverbial “cooperation in the international arena.” But what may be more significant is that the Russian delegation included officials from several key economic agencies.

There were no leaks – but that suggests serious economic connectivity remains at the heart of the strategic partnership between the two top sanctioned nations in Eurasia.

Key in the discussions was the Iranian focus on fast expansion of bilateral trade in national currencies – ruble and rial. That happens to be at the center of the drive by both the Shanghai Cooperation Organization (SCO) and BRICS towards multipolarity. Iran is now a full SCO member – the only West Asian nation to be part of the Asian strategic behemoth – and will apply to become part of BRICS+.

Have swap, will travel

The Patrushev-Shamkhani get together happened ahead of the signing, next month, of a whopping $40 billion energy deal with Gazprom, as previously announced by Iranian Deputy Foreign Minister Mahdi Safari.

The National Iranian Oil Company (NIOC) has already clinched an initial $6.5 billion deal. All that revolves around the development of two gas deposits and six oilfields; swaps in natural gas and oil products; LNG projects; and building more gas pipelines.

Last month, Russian Deputy Prime Minister Aleksandr Novak announced a swap of 5 million tons of oil and 10 billion cubic meters of gas, to be finished by the end of 2022. And he confirmed that “the amount of Russian investment in Iran’s oil fields will increase.”

Barter of course is ideal for Moscow and Tehran to jointly bypass interminably problematic sanctions and payment settlement issues – linked to the western financial system. On top of it, Russia and Iran are able to invest in direct trade links via the Caspian Sea.

At the recent Conference on Interaction and Confidence Building Measures in Asia (CICA) summit in Astana, Kazakhstan, Raisi forcefully proposed that a successful “new Asia” must necessarily develop an endogenous model for independent states.

As an SCO member, and playing a very important role, alongside Russia and India, in the International North-South Transportation Corridor (INSTC), Raisi is positioning Iran in a key vector of multilateralism.

Since Tehran entered the SCO, cooperation with both Russia and China, predictably, is on overdrive. Patrushev’s visit is part of that process. Tehran is leaving behind decades of Iranophobia and every possible declination of American “maximum pressure” – from sanctions to attempts at color revolution – to dynamically connect across Eurasia.

BRI, SCO, INSTC

Iran is a key Belt and Road Initiative (BRI) partner for China’s grand infrastructure project to connect Eurasia via road, sea, and train. In parallel, the multimodal Russian-led INSTC is essential to promote trade between the Indian subcontinent and Central Asia – at the same time solidifying Russia’s presence in the South Caucasus and the Caspian Sea region.

Iran and India have committed to offer part of Chabahar port in Iran to Central Asian nations, complete with access to exclusive economic zones.

At the recent SCO summit in Samarkand, both Russia and China made it quite clear – especially for the collective west – that Iran is no longer going to be treated as a pariah state.

So it is no wonder Iran that is entering a new business era with all members of the SCO under the sign of an emerging financial order being designed mostly by Russia, China and India. As far as strategic partnerships go, the ties between Russia and India (President Narendra Modi called it an unbreakable friendship) is as strong as those between Russia and China. And when it comes to Russia, that’s what Iran is aiming at.

The Patrushev-Shamkhani strategic meeting will hurl western hysteria to unseen levels – as it completely smashes Iranophobia and Russophobia in one fell swoop. Iran as a close ally is an unparalleled strategic asset for Russia in the drive towards multipolarity.

Iran and the Eurasian Economic Union (EAEU) are already negotiating a Free Trade Agreement (FTA) in parallel to those swaps involving Russian oil. The west’s reliance on the SWIFT banking messaging system hardly makes any difference to Russia and Iran. The Global South is watching it closely, especially in Iran’s neighborhood where oil is commonly traded in US dollars.

It is starting to become clear to anyone in the west with an IQ above room temperature that the Joint Comprehensive Plan of Action (JCPOA, or Iran nuclear deal), in the end, does not matter anymore. Iran’s future is directly connected to the success of three of the BRICS: Russia, China and India. Iran itself may soon become a BRICS+ member.

There’s more: Iran is even becoming a role model for the Persian Gulf: witness the lengthy queue of regional states aspiring toward gaining SCO membership. The Trumpian “Abraham Accords?” What’s that? BRICS/SCO/BRI is the only way to go in West Asia today.