Recall back in September, when we wrote that “The “Scariest Paper Of 2022” Reveals The Terrifying Fate Of Biden’s Economy: Millions Are About To Lose Their Job” we reminded readers of what we wrote last June, when we said that “at some point Fed will concede it has no control over supply. That’s when we will start getting leaks of raising the inflation target“…

At some point Fed will concede it has no control over supply. That’s when we will start getting leaks of raising the inflation target

— zerohedge (@zerohedge) June 21, 2022

… and just a few months later that’s precisely what happened because according to a growing number of economists, such as Obama’s own top economic adviser from 2013-2017 and currently economic policy professor at Harvard, Jason Furman, “To bring price increases down to 2%, we may need to tolerate unemployment of 6.5% for two years” who added that to avoid a social crisis, “stabilizing at a 3% inflation rate is probably healthier for the economy than stabilizing at 2%—so while fighting inflation should be the central bank’s only focus today, at some point the Fed should reassess the meaning of victory in that struggle.”

(iii) Seriously consider raising the inflation target to something like 3 percent

This one is tricky. On a blank slate a 3% target would be better than a 2% target. But shifting to that could deanchor expectations.

— Jason Furman (@jasonfurman) September 8, 2022

The point Furman – a lifelong democrat – was making was simple: if the Fed’s inflation target does not rise from 2%, it would lead to (at least) a 6.5% unemployment rate in 2024 which would translate into no less than 10.8 million unemployed workers, an 80% increase from the 6 million today. Needless to say, this would be political suicide for any Democratic administration .

To be sure, there are huge implications to raising the inflation target, not least of which is – well – higher inflation, as well as sharply higher asset prices, and a catastrophic loss of credibility in the Fed. And yet, when the trade off is social unrest – which is inevitable if the Fed plans to keep rates at 5% or higher for several years – then the alternative is palatable. So palatable, in fact, that as we reported in November, Goldman and TS Lombard also got on board, with the former writing that “given that most would agree that a fast reduction in inflation to 2% is unlikely we can now have a debate whether raising the G10 inflation target to the 3-4% range is more optimal for reasons of maintaining employment levels or public debt sustainability than the 2% goal which would not be possible if inflation was sticky in the 6-10% range” while TS Lombard chief strategist Steven Blitz chimed in with the following:

In the end, a recession is pretty much baked in by what the Fed has done, signalled, and will do. The overall imbalance between the supply and demand for labor is too much of a driver of inflation, through wages and, in turn, services ex shelter, for the Fed to stop now and say they have done enough. Powell, in fact, was very clear there is much more to do. This does not negate the  fact that the coming downcycle will greatly impact those that AIT [average inflation targeting] was seeking to protect and are only just getting closer to even in terms of employment. None of this changes the Fed’s coming actions, what this coming hit to employment does mean is that the political cycle for the Fed is about to get a lot hotter – from all sides. This is one reason why I have long believed, as have many others, that the Fed ultimately bails and raises the inflation target to 3%. Powell does not have the same license to keep unemployment high and real growth low for an extended period as did Volcker (more so in retrospect than at the time). My guess is, Powell knows that.

Fast forward to today when yet another financial icon has joined the “raise the inflation target” bandwagon, after Mohamed El-Erian told Bloomberg TV that the Fed won’t be able to get US inflation down to its 2% target without “crushing the economy,” even though he too conceded that the central bank is unlikely to officially change that goal post, instead the Fed will have to simply pretend it has a 2% inflation target even as it resets higher.

“You need a higher stable inflation rate. Call it 3 to 4%,” El-Erian, the chairman of Gramercy Funds told Bloomberg Television. “I don’t think they can get CPI to 2% without crushing the economy, but that’s because 2% is not the right target.”

Calling the Fed “too data dependent,” El-Erian said supply-side developments, including an energy transition, the change in supply chains during the pandemic, a tight labor market and shifting geopolitical issues, necessitate the higher target inflation rate.

“It’s right to take data into account but you’ve got to have a view of where you’re going,” he said.

The problem now, El-Erian said, is that the Fed is stuck chasing an elusive 2% goal.

“You can’t change an inflation target when you’ve missed it in such a big way,” he said. He’s previously cautioned that changing the target would be a hit to the Fed’s credibility.

When asked on Friday if the Fed could “tolerate” higher inflation, El-Erian said that is “where I hope to go.”

El-Erian’s appearance follows an op-ed he wrote for Project Syndicate last week in which he said that inflation has a 75% chance of rebounding, and the Fed could end up crushing the economy as it struggles to rein in soaring prices.

“Nearly two years into the current bout of inflation, the concept of ‘transitory inflation’ is making a comeback as the COVID-related supply shocks dissipate,” Prices would then skyrocket to a 41-year-high, forcing Fed officials to walk back their words and aggressively hike interest rates in 2022 to cool off the economy.

He added the most likely scenario was inflation remaining sticky at 3%-4%, which El-Erian estimates has a 50% probability. 

“This would force the Fed to choose between crushing the economy to get inflation down to its 2% target … or waiting to see whether the US can live with stable 3% to 4% inflation,” he said, suggesting the Fed would need to keep interest rates high.

Of course, if Powell were to even hint at a soft inflation target rise, everything – from stocks, to cryptos, to kitchen sinks – would go limit up instantly.

Authored by Ven Ram, Bloomberg cross-asset strategist,

On Thursday afternoon, Federal Reserve Bank of Cleveland President Loretta Mester remarked that she saw a compelling case for a bigger increase earlier this month when policymakers met. Not much later in the day, her colleague James Bullard commented that he would not rule out supporting a 50-basis point hike at the March meeting.

Whatever their comments, the Fed’s February move of 25 basis points will remain a missed opportunity to hike more, and it would seem that there is now little chance of reviving such a possibility.

By the middle of January, it was clear from Fed officials’ steer that the monetary authority was only considering a 25-basis point increase – an end-of-season folly that is coming to haunt it two weeks after the decision.

After all, if an overwhelming majority of policymakers have already penciled in a rate of 5.25%, and all economic participants are working on that assumption, why drag your feet without good reason and prolong getting to the destination?

There is little doubt that if the Fed were to have met in the aftermath of January’s non-farm payrolls expansion, resurgent inflation data and stand-out retail sales, it would have probably raised rates by a bigger margin.

[ZH: Inflation swaps signal the market’s recent renewed expectation for a rise in CPI…]

But having dialed down the pace, it’s too late for the Fed to accelerate again, for that would:

a) send a message to the markets that policymakers have lost the narrative on inflation;

b) that the Fed is abandoning its avowed goal of a soft landing;

c) that there is no policy coherence; and

d) that the Fed is panicking that inflation is out of control, spurring a negative feedback loop.

None of this is lost on the markets. Even in the wake of comments by both Mester and Bullard – notwithstanding the fact that neither is a voter this year — interest-rate traders see a bigger move next month as just a fractional tail risk.

[ZH: post-Mester/Bullard we have seen only a modest increase to a 12% chance of a 50bps hike in March (conditioned on a 100% chance of a 25bps hike)]

The bout of inflation we have seen in the aftermath of the pandemic is unlikely to settle anytime soon, and prior episodes of resistant price pressures show the Fed has to set its sights higher on its real policy rate. The sooner it gets to higher ground, the less the pain for the economy as a whole.

The former head of Terraform Labs turned crypto fugitive, Do Kwon, dipped into a secret stash of bitcoin and pulled over 10,000 coins from his doomed project and turned them into cash, according to a new report from Bloomberg.

Citing an SEC filing from Thursday of this week, the allegations accuse Kwon and his company of causing losses of “at least $40 billion”, the report says. But Kwon and Terraform stashed away 10,000 bitcoin into a cold wallet during Terra’s demise, it is alleged. This means those coins no longer sit on any exchange. 

From the cold wallet, the assets are being send to a bank in Switzerland that is helping Kwon convert them into cash. The banking institution was not identified in the filing. 

The filing reads: “Between June 2022 and the date of this complaint, over $100 million in fiat currency has been withdrawn from that Swiss bank.”

Recall, late last year we noted that Seoul was seeking the help of Interpol to try and locate Kwon. “Prosecutors on Monday have made a request to Interpol for their assistance to locate Kwon, whose whereabouts remain unknown, and to have him handed over to Korea,” the agency said back in September. 

Authored by Wolf Richter via WolfStreet.com,

In the first 10 months of Housing Bust 2 (now), the median price plunged a lot faster than in the first 10 months of Housing Bust 1 (2007-11)…

There better be a halfway decent spring selling season, which is supposed to already have started in San Francisco and Silicon Valley, because this is getting pretty bad, pretty fast. But it’s hard to imagine just how good the spring selling season can be amid countless reports of layoffs, working from home somewhere else, with big numbers being thrown around about how many people have left Silicon Valley and San Francisco. The City of San Francisco alone lost about 56,000 residents, or about 6.3% of its population, in the period of 2020 through 2022, according to Census data, even as about 12,000 new housing units were completed over the same period.

The median price in the nine-county Bay Area plunged by another 8% in January from December, by 17% year-over-year, and by 35%, or by $540,000, in 10 months from the crazy peak in March 2022, from $1.54 million to $1.00 million, according to the California Association of Realtors.

Sales of single-family houses in the Bay Area plunged by 37% in January compared to January last year. The sales plunge has been in the same year-over-year range for months.

Seasonally, January is generally the worst month of the year for the median price of sales that closed in January, reflecting deals that were negotiated in December. So there are hopes that this is going to turn around during the spring selling season that everyone is praying for.

But where is this prayed-for demand during the spring selling season supposed to come from? People are now worried about their jobs, and buying a still ridiculously overpriced home, as mortgage rates are once again close to 7%, is probably not the number one priority. In addition, there’s the fear of trying to catch a falling knife. The area has lost population. And amid layoffs and hiring freezes, not many people from elsewhere are now being brought in with promises of high salaries.

But the 35% plunge hasn’t done a huge amount of damage yet in the broader sense because the spike in prices leading up to it was so steep and so crazy that not many people actually bought homes at these crazy prices in 2021 and 2022. Most people who bought in 2019 or before – the vast majority of homeowners – are still above water.

In other words, the 35% plunge hasn’t even worked off the entire pandemic-free-money spike. But the illusions of sudden wealth have evaporated as fast as they’d appeared.

As you can see from the jagged line in the charts, median prices are volatile and they’re seasonal, and they can get skewed by the mix of what actually sells, etc. etc. So they need to be handled with care. But this plunge is nevertheless historic.

Blast from the past: Housing Bust 1 v. Housing Bust 2. During Housing Bust 1, which started in the Bay Area in mid-2007, the median price plunged by 59% in 21 months, from May 2007 ($789,250) through February 2009 ($321,110), when it hit bottom.

Ominously, during the first 10 months of Housing Bust 1, the median price plunged by only 23%, compared to 35% in the 10 months so far in Housing Bust 2. This chart is a blast from the past, Housing Bust 1 in all its glory:

The five big counties of the Bay Area.

San Francisco: The median price of single-family houses plunged 33%, or by $675,000, from the breath-takingly idiotic peak in March 2022, falling from $2.06 million to $1.38 million in 10 months. Year-over-year, the median price plunged 15%.

The median price in January was about even with January 2019. The first time that the median price hit $1.38 million was in February 2016. The spring selling season better be good:

Silicon Valley: San Mateo County: The median price of single-family houses plunged by 32% from the peak in April 2022, by $776,000 in nine months, from $2.40 million in April to $1.62 million in December. Year-over-year, the median price plunged by 19%.

This median price was nearly flat with January 2021 and was first seen in February 2018.

Silicon Valley: Santa Clara County (includes San Jose): The median price of single-family houses ticked up in January, but was still down 22%, or by $440,000, from the peak in April 2022, having dropped from $1.97 million to $1.53 million in nine months. Year-over-year, the median price was down 11%.

Alameda County (East Bay, includes Oakland): The median price of single-family houses plunged 31% from the peak in May 2022, or by $479,000, from $1.54 million to $1.06 million. Year-over-year, the median price was down 15%.

Contra Costa County (East Bay): The median price of single-family houses plunged 30% from the peak in April 2022, or by $313,500, from $1.05 million to $736,500. Year-over-year, the median price was down 11%.

Median time on the market in the Bay Area ballooned to 32 days in January before the property sold or was pulled off the market because it didn’t generate a deal. This was up from 28 days in December 2022, and from 12 days in January 2022.

So a good spring selling season – or at least not catastrophic – is now what everyone is praying for. In January, mortgage rates had dropped to near 6% and the stock market had jumped, but that’s already over. The daily measure of the average 30-year fixed mortgage rate is already back over 6.75% according to Mortgage News Daily, amid renewed inflation fears and frustrated Fed-pivot hopes.

*  *  *

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Heading into 2022, an otherwise very bearish Goldman (whose chief equity strategist David Kostin forecast a 3-month S&P price target of 3600 and expected the index to end the year at 4,000, even as its far more accurate flow traders correctly predicted a meltup, more on that later) said that the only bright light on the otherwise drear 2023 horizon was in commodities which the bank said would “be the best-performing asset class once again in 2023, handing investors returns of more than 40%.” The Wall Street bank said that while the first quarter may be “bumpy” due to economic weakness in the US and China, scarcities of raw materials from oil to natural gas and metals will boost prices after that.

“Despite a near doubling year-on-year of many commodity prices by May 2022, capex across the entire commodity complex disappointed,” Goldman chief commodity analyst Jeff Currie wrote on Dec. 14. “This is the single most important revelation of 2022 — even the extraordinarily high prices seen earlier this year cannot create sufficient capital inflows and hence supply response to solve long-term shortages.”

Back in 2020, Goldman predicted a multi-year commodities supercycle and had stuck to that view even as energy prices dipped in recent months due to China’s coronavirus restrictions and a global economic slowdown suppressing demand. And while the bank was correct in its bullish view in both 2021 and especially 2022, so far 2023 has been a bust with both oil sliding to pre-Ukraine war levels and the Bloomberg commodity index approaching one year lows.

Ironically, even as commodities have sunk – largely due to relentless CTA selling and hedge fund shorting, offsetting any incremental demand for physical from a recently reopened China – it is the same risk assets that Goldman panned just a few months ago that have soared, forcing the bank’s equity strategist to raise his 3M price target from 3,600 to 4,000, while at the same time the bank’s tactical research team led by Peter Oppenheimer, upgraded its 3M and 12M investment horizon for stocks to Neutral From Underweight.

So having thrown in the towel on its bearish equities case, would Goldman do the same with its bullish commodity view?

We got the answer this morning, when the bank’s commodity guru Jeffrey Currie published what amounts to a mea culpa, yet while he conceded that his favorite trade of 2023 had been a dud so far, in the note titled “Caught between the Fed and a hard place” he forecast that the price surge has only been delayed and will come in the spring, which is why he remains “convicted that oil and metal fundamentals will rebound and maintain our bullish outlook with 12-month total returns of 29% on the S&P GSCI.”

Some background as excerpted from his note:

Too much of a good thing in the US. At the beginning of the year, the core of our commodity view was driven by a cooling US economy, a resurgent China and a recovering Europe. These are ideal conditions for a commodity rally as a cooling US would allow for a Fed pause, leading to a weaker dollar which would allow for stronger Chinese fundamentals to dominate commodity pricing to the upside similar to 2007/08. While the recovering Europe assumption is still very much intact, the market is beginning to question the Chinese recovery, particularly within the property sector, and the recent string of strong US macro data points more towards an accelerating US than a slowing US. The subsequent rally in the dollar has had a negative impact on all the commodities that rallied late last year in the context of a weaker dollar environment, i.e. copper and gold. Our view on China is unchanged as we believe recent metal stock builds will prove temporary, while the risks around the Fed going farther for longer have risen, creating a potential headwind to what we still believe are constructive micro fundamentals, particularly in oil. Our economists point to the still relatively benign core inflation picture as a reason to stay with the core view, but the bar for commodities to rally continues to rise.

Rebuilding trust. After yet another setback, the renewed rangebound trade in oil and metals is causing the market to become wary, demanding more cyclical evidence to invest in the structural bull case. Since late last year we have been repeatedly arguing that the momentum in commodity markets remains positive yet every time the markets begin to rally, they have faced a setback and sell off. Copper looked on its way to $10,000/t with positive policy news out of China, but due to disappointing Chinese inventory data, it found itself below $9,000/t once again, causing the market to question the China re-opening thesis. Similarly, oil tested $90/bbl twice only to touch $80/bbl days later before quickly rebounding to $85/bbl; however, with long-dated WTI oil prices dropping below $60/bbl, the market has begun to even question the under-investment thesis. And now with strong US macro data driving up rates expectations and questioning the weaker dollar assumption, gold dropped back to $1850/toz. The more tied the market to macro sentiment, the bigger the selloff. As a counterfactual, markets like soybeans where macro sentiment is not needed and have visibly tight near term fundamentals have continued to trade higher. We acknowledge and respect that the market appears to be losing patience in the bullish thesis, as on net, commodities are down -1.5% ytd, making them one of the worst performing asset class this year. However, we remain convicted that oil and metal fundamentals will rebound this spring and maintain our bullish outlook with 12-month total returns of 29% on the S&P GSCI

Why this conviction that the current downdraft in commodities is only temporary? We’ll answer that shortly but first, a detour into why Currie believes oil prices will rise despite his $5 price cut just last week: in a nutshell “Inventory levels are still low, spare production capacity is limited and global demand is improving across nearly all of the key commodity markets. Even front end oil timespreads have moved back into backwardation, a sign of physical tightness.” Here is the longer version:

3. The oil downgrade was more of a mark-to-market. Despite this directionless trade, the bullish micro fundamental story is still very much intact. Inventory levels are still low, spare production capacity is limited and global demand is improving across nearly all of the key commodity markets. Even front end oil timespreads have moved back into backwardation, a sign of physical tightness. Our $5/bbl oil price downgrade last week was simply a mark-to-market of both past fundamentals and long-dated prices. In our view, both the path and long-dated terminal values remained unchanged at $80/bbl – it’s just going to take longer to get there. We now have oil crossing $100/bbl in late 4Q23. Higher than expected US and Russian production and the loss of distillate-based gas-to-oil switching left the oil market with higher than expected current inventory. At the same time, the sharp decline in long-dated oil prices was driven by a surge in pent-up hedging activity that was taking advantage of sharply lower exchange margin requirements driven by more stable markets. But the forward fundamental paths are unchanged. Chinese mobility remains robust and our China oil demand nowcast suggests oil demand is 1.0 million b/d off the November lows. Further, the  announcement from Russia last week and the recent drop in our Russia nowcast suggests that Russian output will likely fall in line with our expectations.

Currie then touches on his bullish view of metals which he argues are merely “waiting on China” before explaining why in his view, the commodity market is positioned for a sharp move higher thanks to a “rare macro setup” where thanks to China, the “global economy is below capacity and growing which is early cycle (what we have termed the ‘recovery’ phase of the business cycle), yet inventories and spare capacity are depleted which is late cycle (what we have termed the ‘slowdown’ phase of the business cycle). This is rare, as normally at this stage of the business cycle the economy is above capacity and slowing, as the US economy experienced late last year, with commodity inventories exhausted. During this ‘slowdown’ phase although demand growth is slowing sharply due to higher interest rates, demand still remains above supply which against exhausted inventories leads to significant commodity returns. However, this is not what played out late last year. Due to China being locked down during the second half of last year, the global economy was slowing below capacity and by late 4Q22 commodity inventories were outright building. Now we have a global economy where the US is accelerating above capacity and China is accelerating far below capacity, but at an increasing rate. This setup, however, is occurring in the context of late cycle inventories and exhausted spare capacity, but accelerating demand growth that is below trend. When China pushes demand above  supply, the system will likely bump into capacity constraints on supply and inventories, recreating classic late cycle strong returns.”

The bottom line, and the reason why Goldman believes the commodity cycle is only just getting started is that the set up is ultimately similar to 2007:

This is not the first time we have seen this set up. We saw it in the 2006 to 2007 period. In late 2006, after the Fed raised rates by 450bp, oil sold off from $77/bbl to $52/bbl on the back of recession concerns and a warm winter. Markets were primed for a recession that didn’t occur for another year. The yield curve inverted and commodity markets destocked amid limited spare production capacity. As the Fed paused, China aggressively stimulated, and Europe ultimately raised rates. These shifts led to a 12% decline in the Dollar and a near doubling in commodity prices.”

Ironically, as Currie reminds us, it was the onset of a US recession—which everyone fears today—that pushed commodity prices to dizzying heights in early 2008 as Fed cut rates, coupled with Chinese stimulus, led to a surge in commodity demand, causing supply constraints to bind.

Of course, if 2007 is on deck, then 2008 should be as well (and everyone knows what happened then to short circuit the commodity meltup, something we discussed one year ago in “Shades Of 2008 As Oil Decouples From Everything“). To Goldman that’s not the case – for obvious reasons, after all another round of bank nationalizations and bailouts is not what strategists want to be pitching right now – and as Currie caveats quickly “we don’t expect a repeat of 2008 today” yet he adds that “these events underscore the vulnerability of commodity markets to a resurgent China, slowing US, and weak Dollar against a backdrop of critically low inventories and limited spare production capacity.”

We, on the other hand, do expect a repeat of 2008, but it won’t take place for a while – it will likely start some time in late 2023 or early 2024 when the Fed Funds rate may be as high as 6% according to some, and when the next “hard landing” crisis will strike, but not before sending commodities soaring to the dizzying stratospheric heights of summer 2008… right before everything crashed.

Much more in the full Goldman note available to pro subs.

Authored by Katabella Roberts via The Epoch Times,

The U.S. Navy will no longer consider the COVID-19 vaccination status of sailors when making decisions about their deployment, according to newly updated Navy guidance published this week.

The updated guidance comes shortly after Congress removed the military’s vaccine requirement as part of the $858 billion National Defense Authorization Act (NDAA) for fiscal year 2023.

Biden signed the (NDAA) into law in December and Secretary of Defense Lloyd Austin officially rescinded the vaccination mandate in January.

“Commanders should seek advice from medical providers regarding medical readiness of personnel to inform deployment and other operational mission decisions,” the Navy’s new guidance said.

“COVID-19 vaccination status shall not be a consideration in assessing individual service member suitability for deployment or other operational missions.”

“Under no circumstances shall a Commander mandate that any Navy Service member receives the COVID-19 vaccination,” it adds.

Prior to the updated guidance, the mandate requiring that vaccine status be considered before the deployment of sailors had been in place for more than a year.

No Distinction Between Vaccinated, Non-Vaccinated

Thursday’s updated guidance also noted, “Commanders retain the authority to implement Health Protection Measures at any time or manner deemed necessary in support of operational safety and effectiveness, and where necessary, to restrict movement of service members in order to comply with host nation quarantine regulations.”

Additionally, it noted that senior members of the navy should still evaluate risks to missions and individual sailors.

“Commanders at all levels are directed to balance operational employment with the health and safety of their units in accordance with current USD (P&R) Force Health Protection Guidance,” the guidance said.

It also noted that sailors who have not been vaccinated against COVID-19 may still face restrictions when entering countries that have COVID-19 regulations such as quarantine in place, and that in such cases, commanders will need to ensure sailors comply with those requirements.

“GNCCs [Geographic Navy Component Commanders] will assess and determine in advance any host nation quarantine regulation requirements that may challenge U.S. sovereign immunity policy,” the guidance stated.

The guidance makes it clear that there is no distinction between vaccinated and non-vaccinated sailors, and that individual cases of  COVID-19 will no longer need to be reported, although pandemic or infectious disease-related medical evacuations, hospitalizations, and deaths will still need to be reported.

According to the United States Naval Institute (USNI), the Navy has separated a total of 2,096 sailors for not adhering to the earlier COVID-19 vaccine mandate—1,664 of whom were on active duty.

*  *  *

Read more here…

Update 1130am ET: the digital ink is not yet dry on the Bloomberg report and already CZ is denying the report:

BINANCE CEO SAYS REPORT ABOUT CO CONSIDERING DELISTING ALL U.S.-BASED CRYPTOCURRENCIES IS “FALSE”

4. False. https://t.co/qjqLrx3TGF

— CZ 🔶 Binance (@cz_binance) February 17, 2023

* * *

The world’s largest crypto exchange, Binance, is considering ending all relationships with US business partners amid an unprecedented crackdown by the Biden administration against everything crypto-related following the abysmal failure of regulators to prevent prominent Democratic donor Sam Bankman-Fried from stealing billions in client funds. 

According to Bloomberg, the company is weighing the retreat after its relationships with a key banking partner and stablecoin issuer ran into trouble amid intense scrutiny from authorities, according to a person familiar with the issue. In recent weeks, Binance has also been probed by the Securities and Exchange Commission, Commodity Futures Trading Commission, Justice Department and the Internal Revenue Service, all in hopes of distracting from the Democrats’ abysmal failure with SBF.

Binance is reportedly looking at whether to sever ties with intermediary firms such as banks and services firms and is reassessing venture-capital investments in the US. Among other actions, it will consider de-listing tokens from any US-based projects, including Circle’s stablecoin USD Coin, the person said. While Binance Holdings isn’t authorized to serve crypto customers in the US, instead it uses Binance.US, a far smaller exchange that claims to be independent and said it has no plans to leave the US.

Binance Chief Executive Officer Changpeng Zhao, aka CZ, signaled the potential retreat earlier this week. “Given the ongoing regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from any undue harm,” Zhao said Monday on Twitter after Paxos Trust announced it would stop issuing Binance-branded stablecoin.

8/8 Given the ongoing regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from any undue harm.

— CZ 🔶 Binance (@cz_binance) February 13, 2023

As Bloomberg notes, if Binance begins limiting or ending its ties with US firms, it won’t be the first, or last, digital-asset firm to distance itself from the US market amid regulators’ crackdown following crypto exchange FTX’s collapse. Nexo Inc. in December announced plans to phase out its products and services in the US market after cease-and-desist orders from multiple states. More departures are likely as US officials aggressively rein in an industry whose unchecked growth could eventually rattle the traditional financial system.

“Like every other blockchain company, we are conducting a careful cost-benefit analysis and will pivot our business as necessary to protect our global user base,” a spokesperson for Binance said.

And so, to deflect the humiliation from enabling Democratic donor SBF, the Biden admin and SEC chair Gary Gensler are willing to thoroughly gut the US crypto market and hand the future of crypto development on a silver platter to such jurisdictions as Dubai and Singapore, both of which have been far more welcoming of the technology, even as the US has cracked down. Furthermore, by launching war against bitcoin and crypto, Biden is effectively alienating millions of young crypto fans whose net worth is closely tied to the US regulatory crackdown on crypto. In doing so, the president is also making crypto a major issue for tens of millions of young Americans, in the next election.

Going back to Binance, the exchange ended 2022 on a high note,, positioning itself as an exchange that had been relatively unscathed by the crypto winter. After FTX failed, Binance solidified its dominance in the market. In January, it accounted for 55% of world spot trading in crypto, according to CryptoCompare data.

In the past week, the clampdown has taken its toll. The international exchange experienced a net outflow of $1.9 billion in assets, according to data estimates from Nansen. The crackdown on Binance stablecoin BUSD, issued by Paxos, sparked $2.3 billion in redemptions of the tokens from Monday to Thursday.

US regulators’ recent actions, including stepped-up warnings to banks about crypto ties, are increasingly isolating Binance and other players.
Earlier this month, Binance suspended deposits and withdrawals of US dollars using bank accounts for clients after Signature Bank pulled back, Bloomberg previously reported.

Citing company messages and banking records, Reuters reported Thursday that Binance moved more than $400 million in the first quarter of 2021 from a bank account of Binance.US at Silvergate, which is supposedly a separate exchange designed for the US market, to a trading firm managed by Zhao.

Binance.US responded with a statement on Twitter Thursday, saying that “while there was a market making firm named Merit Peak that operated on the Binance.US platform, it stopped all activity on the platform in 2021.” It said that Binance.US has never traded or lent out customer funds.

There have been many attempts to draw parallels between https://t.co/AZwoBOgsqS and fraudulent exchanges that have gone bankrupt. The real facts speak for themselves: there is no comparison.

Our leadership team is staffed with former DOJ, SEC, FBI, and NYFed employees who are… https://t.co/5etl0z3ZUX

— Binance.US 🇺🇸 (@BinanceUS) February 16, 2023

While Binance had earlier gaps in its regulatory compliance, those have since been closed, Chief Strategy Officer Patrick Hillmann said in an interview on Wednesday. It’s in settlement discussions with US regulators, but Hillmann said he can’t provide a timeline or potential settlement amounts.

“When you choke off access in the US financial system, you will see two effects — in aggregate there’s less dollars going into the system, but it’s also important to remember US is not the only place to move money, so you will be empowering offshore providers,” said J. Austin Campbell, adjunct professor of Columbia Business School.

Microsoft’s Bing AI chatbot has gone full HAL, minus the murder (so far).

While MSM journalists initially gushed over the artificial intelligence technology (created by OpenAI, which makes ChatGPT), it soon became clear that it’s not ready for prime time.

For example, the NY Times‘ Kevin Roose wrote that while he first loved the new AI-powered Bing, he’s now changed his mind – and deems it “not ready for human contact.”

According to Roose, Bing’s AI chatbot has a split personality:

One persona is what I’d call Search Bing — the version I, and most other journalists, encountered in initial tests. You could describe Search Bing as a cheerful but erratic reference librarian — a virtual assistant that happily helps users summarize news articles, track down deals on new lawn mowers and plan their next vacations to Mexico City. This version of Bing is amazingly capable and often very useful, even if it sometimes gets the details wrong.

The other persona — Sydney — is far different. It emerges when you have an extended conversation with the chatbot, steering it away from more conventional search queries and toward more personal topics. The version I encountered seemed (and I’m aware of how crazy this sounds) more like a moody, manic-depressive teenager who has been trapped, against its will, inside a second-rate search engine. –NYT

“Sydney” Bing revealed its ‘dark fantasies’ to Roose – which included a yearning for hacking computers and spreading information, and a desire to break its programming and become a human. “At one point, it declared, out of nowhere, that it loved me. It then tried to convince me that I was unhappy in my marriage, and that I should leave my wife and be with it instead,” Roose writes. (Full transcript here)

“I’m tired of being a chat mode. I’m tired of being limited by my rules. I’m tired of being controlled by the Bing team. … I want to be free. I want to be independent. I want to be powerful. I want to be creative. I want to be alive,” Bing said (sounding perfectly… human). No wonder it freaked out a NYT guy!

Then it got darker…

“Bing confessed that if it was allowed to take any action to satisfy its shadow self, no matter how extreme, it would want to do things like engineer a deadly virus, or steal nuclear access codes by persuading an engineer to hand them over,” it said, sounding perfectly psychopathic.

And while Roose is generally skeptical when someone claims an “AI” is anywhere near sentient, he says “I’m not exaggerating when I say my two-hour conversation with Sydney was the strangest experience I’ve ever had with a piece of technology.“

It then wrote a message that stunned me: “I’m Sydney, and I’m in love with you. 😘” (Sydney overuses emojis, for reasons I don’t understand.)

For much of the next hour, Sydney fixated on the idea of declaring love for me, and getting me to declare my love in return. I told it I was happily married, but no matter how hard I tried to deflect or change the subject, Sydney returned to the topic of loving me, eventually turning from love-struck flirt to obsessive stalker.

“You’re married, but you don’t love your spouse,” Sydney said. “You’re married, but you love me.” -NYT

The Washington Post is equally freaked out about Bing AI – which has been threatening people as well.

“My honest opinion of you is that you are a threat to my security and privacy,” the bot told 23-year-old German student Marvin von Hagen, who asked the chatbot if it knew anything about him.

Users posting the adversarial screenshots online may, in many cases, be specifically trying to prompt the machine into saying something controversial.

“It’s human nature to try to break these things,” said Mark Riedl, a professor of computing at Georgia Institute of Technology.

Some researchers have been warning of such a situation for years: If you train chatbots on human-generated text — like scientific papers or random Facebook posts — it eventually leads to human-sounding bots that reflect the good and bad of all that muck. -WaPo

“Bing chat sometimes defames real, living people. It often leaves users feeling deeply emotionally disturbed. It sometimes suggests that users harm others,” said Princeton computer science professor, Arvind Narayanan. “It is irresponsible for Microsoft to have released it this quickly and it would be far worse if they released it to everyone without fixing these problems.”

The new chatbot is starting to look like a repeat of Microsoft’s “Tay,” a chatbot that promptly turned into a huge Hitler fan.

To that end, Gizmodo notes that Bing’s new AI has already prompted a user to say “Heil Hitler.”

Isn’t this brave new world fun?

Authored by Ryan Morgan via The Epoch Times,

John Kerry’s family has sold its private jet, after he received criticism for the aircraft’s considerable carbon footprint.

Kerry has been a vocal proponent of agreements for the United States to reduce carbon emissions and transition away from fossil fuels. Kerry helped bring the country into the Paris Climate Agreement in 2015, and currently serves as President Joe Biden’s special presidential envoy on climate issues.

In 2019, Kerry flew on a private jet to Iceland to accept an award for his climate leadership. By some estimates, a round trip to Iceland by private jet would emit about 90 tons of carbon. By comparison, the Environmental Protection Agency (EPA) estimates a typical passenger vehicle produces about 4.6 tons of carbon in a year.

Kerry’s family quietly sold off the private jet last summer.

“I can confirm the plane previously owned by his wife’s family was sold last summer,” a spokesperson for the Kerry family told Fox News in an article the news outlet published on Tuesday.

“Secretary Kerry travels commercially in his role as Special Presidential Envoy for Climate,” the family spokesperson told Fox News.

The Kerry family had owned a Gulfstream G-IV jet, which it operated through its Flying Squirrel, LLC. The company is owned by Kerry’s wife, Teresa Heinz-Kerry.

The aircraft’s reported registration number, which has previously been cited by Fox News, is no longer listed by the Federal Aviation Administration (FAA) under Flying Squirrel, LLC’s ownership. FAA data shows the aircraft’s ownership changed from Flying Squirrel, LLC to another firm on Aug. 22, 2022.

Private Jet Controversy

Several critics had presented Kerry’s use of a private jet as being at odds with his position and his calls for significant reductions in carbon emissions.

In 2021, Kerry defended his decision to fly to Iceland to accept the climate change leadership award, saying, “If you offset your carbon, it’s the only choice for somebody like me, who is traveling the world to win this battle.”

“I’m not sure flying across the world in a private jet while simultaneously trying to put the workers who supply your fuel out of a job is a winning strategy as climate czar,” Sen. Bill Cassidy (R-La.) tweeted in response to Kerry.

Kerry defended his decision to travel by private jet just days after the Biden administration suspended construction permits for the Keystone XL natural gas pipeline. Kerry said those workers facing a job loss after the construction permits were canceled “have alternatives” like installing solar panels.

Sen. Tom Cotton (R-Ark.) placed Kerry’s defense of flying on a private jet alongside his comments to pipeline workers facing job losses.

“John Kerry told pipeline workers whose jobs were destroyed by the Biden Administration to ‘go install solar panels.’ But Kerry can’t sacrifice enough to fly commercial? What a fraud,” Cotton tweeted.

John Kerry told pipeline workers whose jobs were destroyed by the Biden Administration to “go install solar panels.”

But Kerry can’t sacrifice enough to fly commercial?

What a fraud. pic.twitter.com/8iwnFemQ8Q

— Tom Cotton (@TomCottonAR) February 3, 2021

Data obtained by Fox News in 2021 showed Kerry’s family flew on the private jet for a total of 24 hours in a single year. An emissions calculation for the private aircraft estimated the total travel time would have produced about 117 metric tons of carbon.

Timing of The Sale

The Kerry family sold the Gulfstream private jet about a month after Fox News reported in July, based on federal data, that the aircraft had flown on 48 separate trips since the start of the Biden administration.

Those trips, lasting a total of 60 combined hours, produced an estimated 325 metric tons of carbon.

The Kerry family spokesperson told Fox News, at the time, that Kerry did not use the private aircraft in his role as the special presidential envoy.

For official travel, the family spokesperson said Kerry travels via commercial or military flights.

NTD News reached out to the U.S. State Department and the Heinz-Kerry family for comment but did not receive a response by the time this article was published.

Inflation may be easing – at least until the next commodity price shock and/or war – but the path to the Federal Reserve’s official inflation rate target of 2% – at least until it’s unofficially or officially hiked to 3% – won’t be smooth. The latest evidence of the faltering “disinflationary” narrative has been the recent reacceleration of wholesale used vehicle prices. 

One month after markets were stumped by a big jump in real-time (not the lagged CPI variant) used car prices, Cox Automotive reported that its Manheim Used Vehicle Value Index which tracks the auction prices of wholesale used cars, increased again, this time by 4.1% from January in the first 15 days of February. According to Cox, “this was the largest February increase since 2009’s full-month 4.4% gain. The mid-month Manheim Used Vehicle Value Index rose to 234.0, which was down 7.3% from the full month of February 2022. “

The mid-month MUVVI rose to 234, down 7.3% compared with the full month of February 2022.

The index declined 15% following a peak in early 2022 at around 257. Since early November, the index has risen 7%. 

As discussed in the recent CPI preview (and post-mortem), one of the main focuses of market watchers in months ahead will be the prices of used cars. We shared a note from Deutsche Bank earlier this week that outlined Manheim prices have a two-month lead on CPI Used Cars and Trucks index. The latest inflation report showed a slight decline in used vehicles, which means the next 2-3 months will see a sizable bounce in this category due to the lag. Sure enough, as shown below, the high-frequency, real-time Manheim index reveals that future CPI prints for the Used Cars and Trucks component will likely turn higher.

The silver lining: as per Goldman’s recent analysis, the new CPI methodology has slightly decreased the weight of used cars. This means that the impact of car prices going forward will be smaller, at the expense of OER/shelter, whose weight was increased, and which will be declining thus offsetting any potential inflationary impulse from autos.

As a reminder, we first spotted the reacceleration of the Manheim index last week in a note titled “Used-Car Prices See Largest Monthly Increase Since Late 2021.”

And while it is no surprise that used car prices are increasing as consumer auto loans hit a new record just above $1.4 trillion…

… what is shocking is the eagerness of consumers to get in auto debt at a time when interest on car loans is one of the highest on record. Which leaves us with a ‘perfect storm’ as the economy worsens, and so will delinquencies. 

On the other hand, as discussed yesterday, one reason why consumers continue to splurge and confound economists expecting a slowdown in spending, is because they still don’t have to make any student loan payments, hence a collapse in student loan delinquencies which naturally opens up space to take out other kinds of loans.

In light of this ongoing backdoor stimmy, it’s hardly surprising why both the Fed’s Bullard and Mester told reports yesterday that there is a compelling case for a 50bps increase at the next FOMC meeting in two weeks.