After the Pentagon dispatched fighter jets to shoot down unidentified objects on February 10, 11, and 12 utilizing heat-seeking AIM-9X Sidewinder missiles at over $400,000 a pop, President Biden belatedly admitted that they could just be harmless weather balloons

“The intelligence community’s current assessment is that these three objects were most likely balloons tied to private companies, recreation, or research institutions studying weather or conducting other scientific research,” Biden said Thursday. But now an Illinois-based hobby group which uses $12 balloons with ham radios for a cheap high-altitude hobby says the object shot down over Yukon Territory on Feb. 11 likely belongs to them. NSA whistleblower Edward Snowden also sees this as the likely scenario…

please tell me the white house did not spend the month of february scrambling jets to fire $400,000 missiles at the local hobby club’s TWELVE DOLLAR BALLOON

lord have mercyhttps://t.co/4D7DaTncvT

— Edward Snowden (@Snowden) February 16, 2023

A report in Aviation Week profiles the Northern Illinois Bottlecap Balloon Brigade (NIBBB) to learn that the hobby club’s silver-coated “pico balloon” was last picked up via radio signal on Feb. 10 at 38,910 ft. off the west coast of Alaska, and that it was projected to float over central Yukon territory the following day. It disappeared around the time and in the general location of the Feb.11 F-22 shootdown of an ‘unidentified object’ ordered by the White House, which grabbed media headlines.

The report began somewhat hilariously enough: 

A small, globe-trotting balloon declared “missing in action” by an Illinois-based hobbyist club on Feb. 15 has emerged as a candidate to explain one of the three mystery objects shot down by four heat-seeking missiles launched by U.S. Air Force fighters since Feb. 10. 

The Pentagon’s own briefings had described a “small, metallic balloon with a tethered payload below it” – and yet still, as the search for debris continues in inclement arctic weather, there’s been no confirmation of exactly what it was shot out of the sky.

According to a further description of the team of hobbyists’ balloon that went missing: 

The descriptions of all three unidentified objects shot down Feb. 10-12 match the shapes, altitudes and payloads of the small pico balloons, which can usually be purchased for $12-180 each, depending on the type.

“I’m guessing probably they were pico balloons,” said Tom Medlin, a retired FedEx engineer and co-host of the Amateur Radio Roundtable show. Medlin has three pico balloons in flight in the Northern and Southern hemispheres.

What’s more is that the enthusiasts are so convinced that the Pentagon has been taking pot-shots at mere pico balloons (very expensive pot-shots at that), that some have contacted multiple federal agencies to inform authorities, but apparently to no avail. 

Below is an example of the type of transmitter, which is the “payload” dangling under the balloon, which accompanies the high-altitude flights:

“I tried contacting our military and the FBI—and just got the runaround—to try to enlighten them on what a lot of these things probably are. And they’re going to look not too intelligent to be shooting them down,” Ron Meadows, the founder of Scientific Balloon Solutions (SBS), told Aviation Week.

Behold the potential major “threat” which “required” advanced F-22 jets armed with Sidewinder missiles to be deployed last week…

This is a pico balloon, and it may be what your government shot down with heat-seeking AIM-9X Sidewinder missiles, which are worth over $400,000 each pic.twitter.com/c0Lb5EE2zE

— Dave DeCamp (@DecampDave) February 16, 2023

The publication itself, based on what it learned about the pico balloons flying high over North American skies, attempted to alert the FBI, NORAD, the National Security Council (NSC) and the Office of the Secretary of Defense while seeking comment. However, they too were given the runaround.

“The FBI and OSD did not acknowledge that harmless pico balloons are being considered as possible identities for the mystery objects shot down by the Air Force,” wrote Aviation Week.

Authored by Simon White, Bloomberg macro strategist,

The Fed has recently upped its hawkish resolve, but by how much depends on how you look at it. Nonetheless, liquidity conditions remain very tight which will keep a lid on risk-asset performance.

How we can objectively measure how hawkish the Fed is? The peak expected rate, implied from the fed funds futures curve deflated by inflation swaps, is one way. On this measure, the real peak rate is close to its cycle-highs, and is as positive as it has been since 2009.

How hawkish is the Fed relative to the market? In most of the decade-long existence of the Fed’s Dots (where FOMC members and Fed presidents project where the Fed rate will be), the market has persistently undershot where it thinks the target rate will be versus the Fed. But in recent months, the market’s expected peak rate is often ahead of the peak Dots rate, and is as high as it has yet been, apart from two brief periods in early 2022.

The market is now doing the Fed’s work. This paradoxically will eventually curtail the central bank’s hawkishness as the market is now transmitting and intensifying Fed policy, rather than inhibiting it.

An alternative way of looking at Fed hawkishness tries to incorporate “higher for longer” (H4L). The Fed has repeatedly stated it would like to raise rates to their peak, and keep them there for an “extended” period. The market has generally disagreed, with a consistent “Fed pivot” of rate cuts priced in soon after the peak is reached.

As the peak expected rate has risen, the pace of cuts has not significantly fallen, so the market continues to push back on H4L.

The chart below captures this by looking at how many months it would take to bring the expected peak rate down to zero, if it fell at the monthly pace implied by the cuts priced in after when the rate peaks. On this measure, the Fed was closer to H4L through most of last year than it is now.

The cuts priced in over 2024 and 2025 are currently keeping monetary conditions looser than they would be if the Fed was truly able get the market to believe in H4L. Forward guidance that’s not at the zero-bound doesn’t seem to work as well.

With liquidity conditions already very tight, the Fed pushing the market into fully pricing H4L may cause more problems than it solves.

US futures and global equities extended Thursday’s selloff as a global wave of risk aversion swept across the markets after two of the Fed’s most hawkish (nonvoting) policymakers – Loretta Mester and James Bullard – signaled they may favor returning to bigger, 50bps rate hikes in the future, while European Central Bank Executive Board member Isabel Schnabel also warned that markets may be underestimating inflation, and the risk that the ECB “may have to act more forcefully” against it. S&P 500 futures fell 0.7% as of 7:30 a.m. in New York as the risk-off tone continues with MegaCap Tech underperforming, Nasdaq 100 contracts slide 0.9%. The Bloomberg Dollar Spot Index traded near the day’s highs, pressuring all Group-of-10 currencies. Treasury yields climbed across the curve, mirroring moves in Europe and the UK. Commodities are mixed with base metals rallying, energy and ags weaker; oil and gold fall while Bitcoin slides for the first time in four days, retreating from the key $25,000 level. Otherwise, it’s a quiet end to the week with just import prices and leading indicators on deck; we also get two Fed speakers: Barkin abd Bowman.

Ahead of the 3-day weekend, today we also get a relatively modest $1.8 trillion option expiration (full preview here) in the form of $740bn SPX am, $600bn of ETF + SPX pm, and $380bn of single stock, and which will see dealers would lose a significant portion of their left tail “long gamma” positioning and which could present an opportunity for vol to go bid, i.e., VIX may spike from its recent subdued range.

In premarket trading, DoorDash advanced 6.7% after the food delivery company published results that showed resilient consumer appetite, with order growth exceeding expectations despite the cost-of-living squeeze. Moderna shares fall 6.5% after mixed results for its mRNA-1010 flu vaccine candidate. Analysts note the drug missed on the B-strains in the study and now all eyes will turn to upcoming efficacy data to give an indication on the approvability of the drug. Here are other notable premarket movers:

• Tesla shares slip in US premarket trading, leaving them set to extend Thursday’s losses after the electric-vehicle maker recalled hundreds of thousands of cars over a crash risk in its automated-driving software.
• DoorDash jumps 6.7% after the food delivery company published results that showed resilient consumer appetite, with order growth exceeding expectations despite the cost-of-living squeeze.
• Applied Materials shares edge 0.6% higher after the biggest maker of semiconductor- manufacturing equipment’s current quarter sales forecast beat expectations.
• Cryptocurrency-exposed stocks fall, as the price of Bitcoin declines amid jitters over a regulatory clampdown and hawkish comments from Fed officials. Coinbase (COIN US) -1.8%, Stronghold Digital (SDIG US) -5.8%, Bit Digital (BTBT US) -3.4%, Block (SQ US) -1.5%
• DraftKings shares rise 7.8% after the sports-betting company reported better-than-expected fourth- quarter revenue. Analysts responded positively to the beat, with many highlighting the structural improvements and strong customer trends as the main drivers.
• Watch Nvidia’s stock as its price target was raised to $280 from $220 at KeyBanc Capital Markets, which cited long-term growth opportunity in artificial intelligence and machine learning.

Risk assets were hammered after two of the Fed’s most hawkish policymakers signaled they may favor returning to bigger interest-rate hikes in the future. Their comments followed data that showed US producer prices rebounded in January by more than expected, following consumer price data earlier this week that didn’t slow by as much as forecast. The double whammy of higher prices and hawkish Fed speakers jolted markets that have been rebounding from 2022’s selloff. After leading the rally in 2023, US tech stocks led Thursday’s losses as bond yields advanced. On a longterm horizon, the relative level of US tech stocks still looks elevated even after last year’s brutal selloff. The Nasdaq 100 Index isn’t far off historic highs versus the S&P 500 Index and is still trading near the peak that marked the implosion of the dot-com bubble.

“We still think that interest rates will peak at a higher level than 5%. It’s going to be very data-dependent,” Frederique Carrier, head of investment strategy at RBC Wealth Management, said on Bloomberg TV. “We dont want to be victims to changes in sentiment, so we are positioned in a neutral way.”

The delayed arrival of a US recession will weigh on stocks in the second half of the year, according to Bank of America’s Michael Hartnett who says a resilient economy thus far means interest rates will stay higher for longer. Hartnett is predicting a scenario known as “no landing” in the first half of the year, where economic growth will stay robust and central banks will likely remain hawkish for longer. That will probably be followed by a “hard landing” in the latter part of 2023, they wrote in a note dated Feb. 16. Meanwhile, investors continued to shun US equities in the week through Feb. 15, with outflows totaling $2.2 billion, Hartnett said in the note, citing EPFR data. On the flip side, Europe saw inflows of $1.5 billion, while emerging-market stocks attracted $100 million.

“It’s taken a lot but it would appear investors’ eternal optimism is being shaken, with the latest PPI figures finally driving the message home that bringing the economy in for a soft landing will be extraordinarily challenging and there’ll likely be plenty of turbulence along the way,” said Craig Erlam, senior market analyst at Oanda Europe.

European stocks snapped a four-day winning streak, and retreated after rising to the highest level in a year yesterday, amid renewed concerns about bigger interest-rate hikes from the Federal Reserve. The Stoxx Europe 600 Index was 0.6% lower with technology and energy underperforming. Among prominent stock moves, NatWest Group Plc slumped after issuing 2023 guidance that disappointed, while Mercedes-Benz Group AG climbed as a share buyback and strong fourth-quarter earnings helped offset its outlook that earnings will decline slightly this year. Here are some other notable European movers:

• NatWest slides as much as 9.5% after the British lender reported higher costs and guided for profit below what some analysts had expected.
• Allianz falls as much as 3.6% with Citi noting the lack of a new buyback and saying that the new guidance from the German insurer is about in line with consensus.
• Hermes International slips as much as 2.1% from near-record levels, as Citi flags the group’s expensive valuation and a lack of special dividend despite a record cash position.
• GTT falls as much as 9.8% after the French engineering company’s forecast for profit this year missed the average estimate.
• Eutelsat shares fall as much as 7.1% to a record low after the satellite operator trimmed its revenue outlook, citing impact from sanctions against Russian and Iranian channels.
• NCAB falls as much as 21%, the most since its 2018 IPO, after the Swedish printed circuit- board maker reported a 5% drop in order intake year-on- year.
• Mercedes gains as much as 3.2%, the best performer on the Stoxx 600 Automobiles and Parts Index, after reporting strong fourth-quarter results that beat estimates.
• Air France-KLM advances as much as 9.8% after delivering a 4Q beat to consensus with a strong top-line boosting operating income and solid performance in unit revenue
• Kingspan rises as much as 7.4% in early trading after the Irish insulation and building-products maker reported full-year revenue in line with estimates.
• Segro gains as much as 4.7% after results, as analysts say the group remains well-positioned and will continue to deliver good rental growth, with its operational performance robust.

Earlier in the session, Asian stocks also dropped following a slump on Wall Street, as comments from two Federal Reserve officials weigh on the region’s tech shares. The MSCI Asia Pacific Index fell as much as 1.3%, set for a three-week decline that would be its longest losing streak since October. Hong Kong and South Korea were the region’s worst performers, with benchmarks for mainland China, Australia and India also falling.  Tech shares including TSMC and Tencent slid after Fed Bank of Cleveland President Loretta Mester said she had seen a “compelling economic case” for rolling out another 50 basis-point hike. St. Louis President James Bullard said he would not rule out supporting a half-percentage-point increase in March. “Markets in general have been too sanguine year to date in terms of the prospect of imminent Fed pivot,” Helen Zhu, managing director and chief investment officer at NH Trinity, said in an interview with Bloomberg TV.  Asia’s benchmark has fallen nearly 5% from a late-January peak, as concerns over higher rates and geopolitical tensions replaced optimism about China’s reopening. Speculation toward potential US rate cuts in the second half of this year was probably “overdone,” Zhu said, adding that Chinese equities may be worth buying on dips to build exposure for the rest of the year.  

Japanese stocks followed U.S. shares downwards after hawkish commentary from Federal Reserve officials.  The Topix Index fell 0.5% to 1,991.93 as of market close Tokyo time, while the Nikkei declined 0.7% to 27,513.13. Sony Group Corp. contributed the most to the Topix Index decline, decreasing 2.4%. Out of 2,163 stocks in the index, 715 rose and 1,331 fell, while 117 were unchanged. The Fed officials’ comments came after US producer prices rebounded in January by the most since June.  “Hawkish comments from Fed officials or economic indicators that concern the Fed would be negative for stock prices,” said Yasuhiro Kano, senior investment manager at Sompo Asset Management. 

Australian stocks posted  a second weekly loss amid bets for rate hikes; the S&P/ASX 200 index fell 0.9% to close at 7,346.80, weighed by losses in technology and mining shares. Australia’s labor market is “still very tight” and price pressures remain surprisingly strong, Reserve Bank Governor Philip Lowe said, making the case for further interest-rate increases. In New Zealand, the S&P/NZX 50 index fell 0.1% to 12,144.66.

In FX, the Dollar Index is up 0.6% leaving it poised for its third weekly advance; the greenback advanced against all of its Group-of-10 peers as traders rushed to add to the pricing of Fed hikes; the New Zealand dollar and Norwegian krone are the worst-performers among the G-10’s.

• The euro fell to a six-week low of $1.0630 despite hawkish repricing of the ECB after Executive Board member Isabel Schnabel said she saw risks that markets will underestimate inflation. Investors rushed to offload German bonds and money markets amped up rate-hike wagers
• The pound shrugged off data showing that UK retail sales unexpectedly rose 0.5% last month after post-Christmas discounting brought people into stores. Economists had expected a drop of 0.3%
• The yen fell to 135.03, its weakest level in almost three months; the currency’s volatility term structure peaks on the three-week tenor that captures the next Bank of Japan meeting, yet one-week implieds turn bid Friday
• Australian and New Zealand dollars traded fell to six-week lows on the back of a stronger greenback. Aussie yields rose both in sympathy with Treasury moves and after a hawkish senate testimony from Reserve Bank Governor Philip Lowe
• Sweden’s krona extended declines in the European session even after data showed the adjusted unemployment rate fell back to 7.3% in January, from a revised 7.4% in December, increasing the likelihood that the country’s central bank will continue raising rates in response to soaring inflation. The median estimate in a Bloomberg survey of economists was 7.5%

In rates, treasuries extend losses with yields cheaper by 3bp-5bp across the curve vs Thursday’s closing levels. 10-year Treasury yields were around 3.88%, cheaper by ~3bp on the day but outperforming bunds and gilts by 0.5bp and 2bp in the sector; US front-end underperforms on the curve, flattening 2s10s spread by ~1bp. Bunds and gilts are firmly in the red, with 10-year yields in both countries rising 5bps. Core European rates lead the selloff following hawkish comments from ECB’s Schnabel and German PPI data.  Germany’s front-end lags as traders fully price a 3.75% ECB rate peak for the first time after Executive Board member Isabel Schnabel said she saw risks that markets will underestimate inflation.

In commodities, Crude futures decline with WTI down 2.4% to trade near $76.60. Qatar Energy set April-loading Al-Shaheen crude term price at a premium of USD 2.58/bbl above Dubai quotes, according to traders cited by Reuters. Russian President Putin says demand for natural gas will increase; half of the demand will come from APAC, mainly China. China’s Dalian Commodity Exchange says price fluctuations of commodities, including iron ore, are relatively huge; alerts investors to participate rationally. Base metals are slumping on the USD’s upside with spot gold down to a sub-1820/oz trough and LME Copper falling further below USD 9k/T..

In crypto, the SEC filed a securities fraud lawsuit against Terraform Labs and founder Do Hyeong Kwon which alleged that the defendants perpetrated a fraudulent scheme that led to at least USD 40bln of losses in market value, according to Reuters. Senior BoJ official Uchida said the BoJ decided to launch a pilot program this April on a CBDC which aims to test technical feasibility, as well as utilise skills and insights of private businesses.

Looking at the day ahead, data releases include Import price index and the Leading Index. Central bank speakers include the ECB’s Villeroy, and the Fed’s Barkin and Bowman.

Market Snapshot

• S&P 500 futures down 0.5% to 4,079.25
• MXAP down 1.2% to 162.48
• MXAPJ down 1.3% to 529.74
• Nikkei down 0.7% to 27,513.13
• Topix down 0.5% to 1,991.93
• Hang Seng Index down 1.3% to 20,719.81
• Shanghai Composite down 0.8% to 3,224.02
• Sensex down 0.6% to 60,963.95
• Australia S&P/ASX 200 down 0.9% to 7,346.77
• Kospi down 1.0% to 2,451.21
• STOXX Europe 600 down 0.6% to 462.23
• German 10Y yield little changed at 2.55%
• Euro down 0.1% to $1.0658
• Brent Futures down 1.4% to $83.91/bbl
• Gold spot down 0.7% to $1,823.73
• U.S. Dollar Index up 0.45% to 104.32

Top Overnight News from Bloomberg

1. China on Friday delivered the largest one-day cash injection into the economy since record keeping started in 2004 as it works to meet rising liquidity needs for the post-COVID economic rebound. SCMP
2. China’s top tech banker Bao Fan went missing, unnerving the finance industry. Bao’s been out of contact with China Renaissance for about two days, a person familiar said. His family was told he’s assisting an investigation. Shares plunged 28%. Meanwhile, China is said to be poised to name regulatory veterans known for strict campaigns against financial wrongdoing as new heads of the banking and securities watchdogs. BBG
3. One of the ECB’s most senior officials said that investors risk underestimating the persistence of inflation, and the response needed to bring it under control. “We are still far away from claiming victory,” Executive Board member Isabel Schnabel said in an interview with Bloomberg, citing the strength of underlying price pressures and faster wage increases. The economy’s reaction to interest-rate increases may prove weaker than in prior episodes, and if that transpires, “we may have to act more forcefully.” BBG
4. Germany’s PPI comes in above the St consensus for Jan (+17.8% vs. the St +16.4%), the latest hot inflation number out this week. RTRS
5. UK retail sales rose unexpectedly last month after post-Christmas discounting brought people into stores. The volume of goods sold in stores and online rose 0.5% in January after a 1.2% decline in December, the Office for National Statistics said Friday. Economists had expected a drop of 0.3%. BBG
6. The SEC accused crypto fugitive Do Kwon and his Terraform Labs of fraud. It alleged they offered and sold unregistered securities, including the failed TerraUSD stablecoin, and carried out a scheme that erased at least $40 billion of market value. In the Mt Gox bankruptcy, the top creditor opted for an early payout in Bitcoin rather than fiat currency, avoiding years of litigation, a person familiar said. BBG
7. GIR is adding another 25bp in June to our fed baseline following firmer growth & inflation news: Yesterday’s PPI marked the 3rd beat in a string of strong US data prints this week (along with CPI, Retail Sales), which taken together have suggested that the Fed’s work is still not finished, and that the risks of a longer cycle are rising. Tuesday’s CPI report confirmed that underlying inflation remains elevated, and the retail sales report was strong evidence of robust US consumer demand. We had noted that a fading drag from Fed tightening on growth and tight labor market had left greater upside risks to our Fed path, and with comments from the Fed yesterday (Mester in particular, Bullard too) biased in the same way, our economists have added a further 25bp rate hike to their forecasts, now expecting 3 more 25bp hikes in March, May & June for a peak funds rate of 5.25-5.5. GIR
8. Deere reported strong FQ1 results, and they raised the net income guidance for the year. EPS came in at 6.55 (a full $1 ahead of the St consensus) while the revenue beat was more modest ($11.4B vs. the St $11.22B). Results benefited from ongoing demand strength, coupled with improved operating/supply chain conditions. RTRS
9. The United Arab Emirates’ national energy company plans to sell a stake of about 4% of its natural-gas business in an initial public offering that it hopes will raise $2 billion, as Middle East petrostates increase plans to supply Europe. WSJ
10. Yen traders looking to navigate a smooth handover of power at the Bank of Japan face an added complication from fiscal year-end flows which traditionally weigh on the currency
11. An economy Putin once wanted to make one of the world’s five biggest is on a path to lose $190 billion in gross domestic product by 2026 relative to its prewar trajectory, according to Bloomberg Economics, roughly the equivalent of the entire annual GDP of countries like Hungary or Kuwait

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded negatively as the regional bourses took their cues from the weak performance stateside after firmer-than-expected PPI data and hawkish Fed rhetoric. ASX 200 was dragged lower by weakness in tech following the underperformance of the Nasdaq in the US and with sentiment also dampened as the RBA Governor Lowe reiterated the view for higher rates. Nikkei 225 suffered from the tech rout and as earnings began to quieten, although Bridgestone was among the best performers after a jump in revenue and forecasts for a 12% increase in FY23 profits. Hang Seng and Shanghai Comp. declined with Hong Kong pressured by tech losses and with frictions stoked after China unveiled sanctions against US firms related to Taiwan arms sales, while the mainland initially bucked the trend after a substantial liquidity injection by the PBoC.

Top Asian News

• PBoC injected CNY 835bln via 7-day reverse repos at 2.00% for a CNY 632bln net injection.
• RBA Governor Lowe said high inflation is damaging and that they will do what is necessary to make sure inflation returns to the target range, while he noted the Board expects that further increases will be needed over the months ahead. Lowe also reiterated that they are not on a predetermined path on interest rates and have an open mind but their assessment is that they have to go up further on rates. Furthermore, he added that they will slow down on rates if needed and that rates could start to come down next year if they get on top of inflation but a few things would have to go right for that to happen.

European bourses & US futures are pressured amid a myriad of hawkish factors, Euro Stoxx 50 -1.0% & ES -0.8%, with more Fed officials scheduled. Sectors are predominantly in the red, with only Autos bucking the trend following earnings from Mercedes-Benz while Tech slumps on elevated yields. Stateside, futures are all in the red and given the session’s action has been driven by hawkish developments, the NQ -1.0% is underperforming.

Top European News

• ECB’s Schnabel says it is not easy to say if policy is already restrictive, via Bloomberg. Wage growth is up strongly, may be more persistent; risk markets will underestimate inflation. QT could be sped up after June, nothing has been decided yet. The broad disinflation process has not even started yet. 50bp hike in March is needed under virtually all scenarios. Weaker transmission may require more forceful action.
• Diplomats in Brussels suggest a deal on the Northern Ireland Protocol “isn’t quite there, yet”, according to BBC’s Parker; Northern Ireland Alliance party leader says that after meeting UK PM Sunak, it seems that “things are gradually moving towards a protocol deal”, though adds “We are not over the line yet – there is still heavy lifting to do,”
• Allianz’s Muted Outlook Takes Shine Off Dividend, Record Profit
• European Bonds Drop Sharply as ECB Peak Bets Close In on 3.75%
• Ex-Warburg Banker’s Cum-Ex Suit Rejected by Top German Court
• KBW More Bullish on Italian Banks, Upgrades Intesa, BAMI

FX

• The USD is bolstered with multiple hawkish factors in play, DXY holding just under 104.50 within 104.15-104.51 parameters.
• As such, peers are lower across the board with Antipodeans lagging given the double-whammy of USD and commodities weighing; AUD/USD near 0.68 and NZD/USD sub 0.62.
• Additionally, the comparatively lower-yielding nation’s FX are towards the bottom of the pile with CHF and JPY above 0.93 and 135.0 respectively vs the USD.
• Next up, and despite domestic hawkish factors, EUR and GBP are lower though faring much better than their aforementioned peers given some of the USD’s upside has been offset by ECB’s Schnabel/German PPI and UK Retail Sales.
• PBoC set USD/CNY mid-point at 6.8659 vs exp. 6.8674 (prev. 6.8519)

Fixed Income

• Core benchmarks are under marked pressure as Bullard, German PPI and Schnabel weigh ahead of Fed’s Bowman and Barkin.
• Specifically, Bunds down to a 133.67 trough post-Schnabel while Gilts slipped and pricing for a 25bp BoE hike in March lifted slightly on Retail Sales.
• Similarly, the EGB periphery is downbeat and interestingly the action has seen the BTP-Bund spread widen to near 190bp, the widest for several weeks given Schnabel’s overt hawkishness.
• Stateside, USTs slump as Bullard and GS’ latest FFR call continue to weigh, yields elevated across the curve which is slightly flatter given the short-term implications of the referenced drivers; Bowman & Barkin ahead.

Commodities

• The commodity complex is under pressure given the above risk tone and as the USD picks up.
• WTI and Brent are subdued with the benchmarks at the lower end of circa. USD 2/bbl parameters and Nat Gas contracts are lower both side of the pond.
• Qatar Energy set April-loading Al-Shaheen crude term price at a premium of USD 2.58/bbl above Dubai quotes, according to traders cited by Reuters.
• Russian President Putin says demand for natural gas will increase; half of the demand will come from APAC, mainly China.
• China’s Dalian Commodity Exchange says price fluctuations of commodities, including iron ore, are relatively huge; alerts investors to participate rationally.
• Similarly, metals are slumping on the USD’s upside with spot gold down to a sub-1820/oz trough and LME Copper falling further below USD 9k/T.

Geopolitics

• Pentagon’s top China official Michael Chase will visit Taiwan in the coming days, according to FT sources; subsequently, clarified that Chase has arrived in Taiwan.
• Ukrainian President Zelensky has ruled out giving up any of Ukraine’s territory in a potential peace deal with Russia, according to the BBC.
• North Korea said planned US-South Korean military drills will lead to increased tensions in the region and warned that the US and South Korea will face an unprecedently strong response if they go ahead with planned military drills, while it will also consider additional military action in protest against US pressure at the UN Security Council, according to KCNA.
• Chinese Foreign Ministry, on President Biden suggesting he will speak to his Chinese counterpart Xi, says the US cannot ask for communications and dialogue while escalating the crisis.
• Japan, US, Australia, and India are to hold a foreign ministers’ meeting in March, according to Japanese press Sankei.

US Event Calendar

• 08:30: Jan. Import Price Index ex Petroleum, est. -0.2%, prior 0.8%
• 08:30: Jan. Import Price Index MoM, est. -0.1%, prior 0.4%
• 08:30: Jan. Import Price Index YoY, est. 1.4%, prior 3.5%
• 08:30: Jan. Export Price Index YoY, est. 2.8%, prior 5.0%
• 08:30: Jan. Export Price Index MoM, est. -0.2%, prior -2.6%
• 10:00: Jan. Leading Index, est. -0.3%, prior -0.8%

Fed Speakers

• 08:30: Fed’s Barkin Discusses the US Labor Market
• 08:45: Fed’s Bowman Speaks at Banking Conference

DB’s Jim Reid concludes the overnight wrap

Markets took a knock over the last 24 hours, with rates rising and equities selling off thanks to strong inflation data and hawkish central bank rhetoric, as some Fed officials even floated the prospect they might resume 50bp hikes. That saw the S&P 500 shed -1.38%, with sharp losses into the close, whilst the 10yr Treasury yield rose another +5.6bps to 3.86%, which is its highest level so far in 2023. Indeed, the 10yr yield is now up by +46.8bps over the last 10 trading sessions, marking the fastest increase over two weeks since September. All these moves show how we’ve seen a significant change in the market narrative since the jobs report, with much stronger-than-expected numbers on inflation and the economy raising the prospect that the Fed will keep hiking rates for some time yet.

This narrative got a fresh boost from the latest data on US producer prices in January, which surprised well on the upside of expectations. For instance, the monthly headline number came in at a 7-month high of +0.7% (vs. +0.4% expected), which meant that the year-on-year total only declined to +6.0% (vs. +5.4% expected). The core numbers didn’t look promising either, with the total excluding food and energy and trade services up by a 10-month high of +0.6% (vs. +0.3% expected). So purely based on the January numbers, we’ve now seen inflation accelerate on both the CPI and PPI measures relative to where things stood in Q4.

Time will tell how this plays out, but in the meantime we got another round of hawkish commentary from Fed officials yesterday. In fact, Cleveland Fed President Mester said that she even “saw a compelling economic case for a 50 basis-point increase” at the most recent meeting, when they opted to downshift hikes back to 25bps. Furthermore, she said that 25bps were not inevitable and that “we can move faster, and we can do bigger at any particular meeting.” That was then followed up by St Louis Fed President Bullard, who said he wouldn’t rule out supporting a 50bp hike in March as well, and said that his judgement was “it will be a long battle against inflation.”

On the back of those comments, investors moved to price in a growing probability that the Fed might choose to move by more than 25bps at the next meeting in March. Indeed, looking at Fed funds futures, a +28.2bps hike is now priced in for the next meeting, which is the highest to date, and means at least a small chance is priced that they might opt for a bigger move. On top of that, expectations of the terminal rate now stand at their highest to date, at 5.29% in July. That said, we’ve still got plenty of data coming out before that next decision, including the jobs report and CPI print for February, so all eyes will be on those releases.

Against this backdrop, Treasuries struggled once again, with the 10yr yield up +5.6bps to 3.86%, which has been followed up by a further +2.3bps increase overnight to 3.88%. Higher inflation breakevens have been the driver over the last couple of sessions, with the 10yr breakeven up +3.2bps yesterday to 2.38%, whilst the 2yr breakeven was up another +0.4bps to 2.87%. The 2yr breakeven had closed as low as 2.04% as recently as January 18, so it’s clear that investors are moving to reappraise the near-term inflation profile in light of the recent data.

Elsewhere, US equities had a rough session of their own yesterday, although the S&P 500 was initially down as much as -1.36%, before recovering to only be down -0.27%, before then falling sharply following the Bullard comments to close -1.40%. The declines were pretty broad-based, with every sector group in the S&P losing ground. Other indices also struggled too, including the NASDAQ (-1.78%) and the Dow Jones (-1.26%).

Those equity declines followed a bunch of data that painted a more downbeat view on the rest of the US economy. For instance, housing starts fell by more than expected to an annualised rate of 1.309m in January (vs. 1.356m expected). That takes them to their lowest since June 2020, when the economy was still recovering from the initial Covid-19 wave, and means that housing starts have fallen for 5 consecutive months for the first time since 2009. Elsewhere, we also had the Philadelphia Fed’s business outlook, which fell down to -24.3 (vs. -7.5 expected). Bear in mind as well that in available data back to 1968, the index has never been this low without a recession following within months.

Over in Europe however, the picture has remained comparatively upbeat. In fact the STOXX 600 (+0.19%) closed at a one-year high yesterday, with its YTD gains now standing at +9.50%, albeit that was before the Bullard comments. It was a similar story for some of the other indices, with the DAX (+0.18%) and the CAC 40 (+0.89%) also closing at one-year highs of their own, whilst the UK’s FTSE 100 (+0.18%) reached an all-time high as it closed above the 8,000 mark for the first time.

Whilst European equities put in a decent performance, sovereign bonds lost a bit of ground like in the US. For instance, yields on 10yr bunds saw a modest +0.3bps increase to close at their highest level of 2023 so far, at 2.47%, and yields on 2yr German debt hit a post-2008 high. That followed a collection of ECB speakers across the hawk-dove spectrum. For instance, the Executive Board’s Panetta (a dove) said that “we now need to take into account the risk of overtightening alongside the risk of doing too little”, and also that “we face so much uncertainty in both directions, I would consider it unwise to move very fast”. But on the other hand, Bundesbank President Nagel said that “I can’t see that we’re in restrictive territory right now”. As in the US though, there was evidence that inflation expectations were creeping higher, since the 5y5y forward inflation swap for the Euro Area (which looks at inflation over the 5 years starting in 5 years’ time) hit its joint highest closing level since May yesterday, at 2.41%.

Staying on Europe, next week DB Research’s CEEMEA team will be hosting a webinar on the war in Ukraine next week. They’ll be joined by Michael Kofman, the Research Director of the Russia Studies Program at the CAN, and will be discussing the latest developments in the conflict, the likely next steps in the war effort, the implications of recent sanctions, the prospects of a peace agreement, and the risks of escalation. That’s taking place on Tuesday at 1pm London time, and the link to sign up is here.

Overnight in Asia, equity markets are under pressure this morning, following up those overnight losses on Wall Street. As we go to press, the KOSPI (-0.77%), the Nikkei (-0.64%), the Hang Seng (-0.58%), the CSI (-0.48%) and the Shanghai Composite (-0.16%) have all lost ground. And on the FX side, the Japanese Yen has weakened to 134.71 per US Dollar, its weakest level since the BoJ’s surprise move to adjust their yield curve control policy in December. That comes amidst firming expectations the Fed will stick to their hawkish stance, and the broader dollar index is also at its strongest since early January. Elsewhere, the S&P/ASX 200 (-0.78%) is trading lower after the Reserve Bank of Australia’s Governor Lowe reiterated warnings of inflation risks while pointing to further rate hikes in coming months. This negative sentiment is being seen elsewhere too, with US stock futures indicating further losses today, including those for the S&P 500 (-0.50%) and NASDAQ 100 (-0.68%).

To the day ahead now, and data releases include UK retail sales and German PPI for January, whilst in the US there’s also the Conference Board’s leading index for January. Otherwise, central bank speakers include the ECB’s Villeroy, and the Fed’s Barkin and Bowman.

Authored by Heritage Falodun via BitcoinMagazine.com,

Following an unsuccessful CBDC launch, Nigeria’s central bank is now trying to cut off cash. Bitcoin can help Nigerians find sovereignty…

Nigeria, Africa’s most populous country, introduced a central bank digital currency (CBDC), the eNaira, into its financial system in late 2021, an action that paved the way for different sets of financial policies, regulations and restrictions from the country’s central bank.

In an attempt to drive consumers toward alternative options, like its CBDC, the Nigerian government has now put restrictions on the amount of cash that can be withdrawn. It has limited cash withdrawal from banks to about $225, which is around 100,000 naira per week, with a daily limit of about $45. This is another example of how Nigeria’s financial terrain has been a rollercoaster of economic sabotage since the launch of the eNaira.

Source: 21st Century Chronicle

In the words of Godwin Emefiele, the governor of the Central Bank of Nigeria, the whole point of the CDBC is “to ensure that more people in this country are financially included. If you see, a lot has happened in terms of the evolution of money from commodity to metallic, then paper, to plastic and now we are talking of digital. And so, we need to be at pace with where the world is moving.”

In his view, Nigerians should have found that the CBDC is the solution to their financial predicaments such as inflation, monetary censorship, rigorous payment rails, epileptic cross-border payment channels and rigid access to foreign exchange, among others. Not surprisingly, the reverse has been the case, as the situation on the ground in Nigeria right now is gradually moving from “banking the unbanked” to “un-banking the banked.”

On February 2, 2023 — just two days after the initial January 31, 2023 deadline set by the Central Bank of Nigeria for all Nigerians to return the old naira denomination of 200, 500 and 1,000 notes — a Nigerian named Oluwasegun Kosemani tweeted, “I just spent 1000 Naira from my Naira @Mastercard by @gtbank to buy 10,000 Naira cash from a @palmpay_ng POS. The Nigerian government is intentionally forcing its citizens into a cashless Keynesian economy while they position their surveillance CBDC – eNaria as final destination.”

As this example shows, the well-informed Nigerians youth, which happens to be about 70% of Nigeria’s population, understand that these regulations are mostly about financial control. They are about pushing a cashless policy in which the government has complete control over all citizens while having the luxury of tracking every single transaction.

Source: Twitter

Judging with the less than 0.5% adoption rate on the eNaira since its launch about 16 months ago, it seems that only government actions, such as the cash restrictions that Nigerians are battling with right now, will force people toward using the CBDC.

Nevertheless, the Nigerians disposition is visible to the blind and audible to the deaf as the country regularly tops lists for the highest bitcoin and crypto exposure.

HOW NIGERIANS ARE ADAPTING TO NEW FINANCIAL REALITIES

To learn more about the balance between Bitcoin adoption and being forced toward the eNaira, I spoke with a few business owners in Nigeria. Eric Ogbekene, who works in the media and tech industry there and also runs a bespoke men’s fashion business on the side, said, “The cash swap policy has been ridiculous, to say the least. Today, February 4, 2023, alone, you could not get any physical cash in the entire Garki ultra modern market in Abuja, Nigeria. People are unable to take care of little business deals, like cash for services, transportation, etc. It’s so bad because even the traditional banking applications seem to be overwhelmed by the sudden surge in transactions and cannot cope.”

I interviewed an over-the-counter bitcoin liquidity provider named Oluwatimilehin Kayode, popularly known as “Pander” by his customers and merchants.

“How have you been coping with business amidst this new policy and cash shortage?” I asked.

“Bro, e no dey easy like that oo, but we dey push am, if I will be honest with you,” he responded in Nigerian dialect. “It’s crazy, it affected our P2P dealings a bit on exchanges as most transactions keep showing bank network errors and also there are limits on transactions and high charges. But as you know, Bitcoin will always find a way out for us amidst all restrictions. Although we had low access to cash over the counter, we keep pulling the P2P transactions through with Bitcoin and Tether using our existing, conventional ways.”

Mary Imasuen, a Bitcoin podcast host, has tweeted that, “If vendors were open to accepting bitcoin payments, we wouldn’t have to deal with the craziness happening in the country right now.”

Sharing her odyssey amid the cash and transaction struggles, Imasuen has experienced people withdrawing 20,000 naira with 3,000 naira as the charge being paid to the merchants. She has stated that “money is being sold for money right now.”

Nigeria has always been a cash-based society and with the current issues, people can’t get cash from banks or ATMs. Those who do get cash must pay for it at a premium and the prices for things have skyrocketed.

Source: Twitter

Perplexed as I am by the government’s actions, I feel that Nigerians are resilient. It’s no wonder that Ray Youssef, the CEO of Paxful, has written that “The youth of Nigeria taught me to think beyond the financial systems of the West and look into alternative payments to buy Bitcoin.”

Nigerians need to know right now that the CBDCs are here and that, slowly but surely, the government will continuously restrict their access to cash until it’s gone and it has fully taken away everyone’s financial freedom.

Proffering sustainable solutions, the best bet and only solution for Nigerians toward attaining a decentralized, cashless economy is through Bitcoin, which is fundamentally different from the cage of financial slavery spearheaded with CBDCs. Bitcoin’s blockchain democratizes finance with proof of work by enabling transactions in a distributed, open and transparent ledger, while CBDCs offers a centralized and closed-source fabric which gives full control and issuance to the government.

Until Nigerians decide to intrinsically separate money from State actors, the masses will remain slaves to central authorities. Ultimately, this is more of an opportunity for Nigeria to opt out and break the shackles of financial restrictions with Bitcoin.

President Alexander Lukashenko on Thursday warned that if his country comes under threat or attack, the Belarusian army is ready to fight alongside its Russian ally.

“I am ready to fight with the Russians from the territory of Belarus in only one case: If even one soldier comes onto the territory of Belarus to kill my people,” he told a news conference, according to state-run Belta news agency.

“If they commit aggression against Belarus, the response will be the most severe, and the war will take on a completely different nature,” he added.

Already Belarus is under US and EU sanctions for the role it’s played thus far in assisting the Russian invasion, particularly since it served as a launching pad for Russian troops ahead of the initial invasion.

Ukrainian officials have for months now warned that Belarus is preparing to formally join the war, and have alleged that Belarus is allowing Russian drones to be launched from its territory, which have pummeled Ukraine’s national energy infrastructure and terrorized cities.

But still, Lukashenko appeared to stress in his fresh remarks that Belarus will join the attack on Ukraine “only” if attacked first. “This applies to our other neighbors,” Lukashenko said. “If they commit an aggression against Belarus, our response will be the most cruel. The most cruel!”

He said that for now, “I do not plan to send my people, my soldiers (there)” to Ukraine. According to Moscow Times, “Belarus still hosts an undeclared number of Russian troops but Lukashenko has promised not to send his forces — estimated at between 60,000 and 70,000 — over the southern border to Ukraine.”

Meanwhile, the Kremlin has announced that Putin and Lukashenko will engaged in talks concerning the ongoing strategic partnership between the two allies, including further integration within the ‘Union State’, expected for Friday.

Authored by Michael Kern via OilPrice.com,

A Spanish city on the northern coast of Africa between the Mediterranean and the Atlantic Ocean, notorious for being a drug-trafficking hub, has become a major new hub of ship-to-ship transfers of Russian oil and illicit activities aimed at obscuring the origin of the crude, maritime consultancy Windward Ltd said in a report carried by Bloomberg.

Waters around the Spanish city of Ceuta in North Africa have become the scene of an increasing number of ship-to-ship transfers since the Russian invasion of Ukraine.

The activity is clearly linked to Russia, according to Windward.   

Russia is believed to be looking to mask tanker routes and locations amid the rising use of a vast “dark fleet” to evade Western sanctions and the price caps on Russian oil and products.

According to Windward, port calls in North Africa have seen a 147% jump in tankers, mostly crude oil tankers, from Russia. STS transshipment and dark activities in the Black Sea have also soared since the Russian invasion of Ukraine. The dark activities are mainly being carried out by tankers registered in countries such as Panama, Malta, Liberia, or Cameroon, Windward says.

An unusually large number of tankers have changed ownership in recent months in what analysts and shipping industry officials believe is a push from Russia to continue shipping large volumes of its crude and entities willing to profit from the Russian oil trade in a sanctions regime. The ‘dark’ or ‘shadow’ fleet of oil tankers is growing to now include tankers not only shipping sanctioned Iranian and Venezuelan oil, but also increasingly larger volumes of Russian oil and products.

Meanwhile, loadings of Russia’s flagship Urals crude using ship-to-ship (STS) transfers in the Mediterranean surged eight times in January from December to a record in the first full month in which the EU banned seaborne imports of Russian oil. STS loadings, used by traders to move the crude from smaller tankers onto larger ones to make the journey to Asia profitable, have soared since the EU ban came into effect on December 5, according to data from Refinitiv Eikon cited by Reuters earlier this month.

Authored by James Rickards via DailyReckoning.com,

In yesterday’s issue, I addressed the biggest and most complex topic on the geopolitical landscape today — China.

But today I’m discussing what is by far the most alarming topic on the geopolitical landscape today. That’s the war in Ukraine and the dangers of escalation.

I’ve written extensively about two facets of the war in Ukraine that you don’t hear from legacy media in the United States or U.K.

The first is that Russia is actually winning the war.

U.S. outlets such as The New York Times (a channel for the State Department) and The Washington Post (a channel for the CIA) report endlessly about how Russian plans have failed, about how incompetent they are about how the Armed Forces of Ukraine (AFU) have pushed back Russians in the Donbass, and how NATO weapons such as U.S. Abrams tanks, U.K. Challenger tanks and German Leopard tanks will turn the tide against Russia soon.

This is all nonsense. None of it is true.

Reality Check

First off, the Ukrainian advances that took place in late summer were against lightly defended positions that the Russians quickly conceded to conserve forces. The Russians were willing to give up the land so that they wouldn’t lose valuable men and materiel.

The Russians withdrew to more defensible positions and have been badly mauling Ukrainian attacking forces ever since. Ukraine has wasted incredibly large amounts of men and equipment in these futile and ill-advised attacks.

In all, credible reports indicate that AFU casualties are nearing 500,000 and are increasing at an unsustainable rate. On the other hand, reports of 100,000 Russian dead are almost certainly wild exaggerations put out by Ukraine. The BBC attempted to verify these numbers and could only find about 20,000 confirmed Russian dead based on extensive searches on funeral notices, public records, etc.

Send in the Tanks — Eventually!

What about the tanks NATO is supposedly sending? Well, the tanks have not been delivered yet and most won’t be for months or longer. Our own M1 Abrams tanks might not even arrive for a year or more.

We actually have to custom build these tanks so that they don’t have the special armor and other advanced systems that our own M1s have. The Pentagon doesn’t want them falling into Russian hands if they’re destroyed or captured. Besides, we’re only sending 31 tanks anyway.

When the NATO tanks do arrive, they’ll likely quickly be destroyed by Russian artillery, anti-tank weapons and precision missiles. They’re good tanks, but far from invincible. For decades, the Russians have been developing powerful weapons specifically designed to destroy these NATO tank models. The Russians aren’t particularly worried about them.

Aside from that, tanks rely on effective air cover for protection, which Ukraine lacks. They’ll be sitting ducks on the battlefield. It doesn’t really make sense to send tanks to Ukraine unless you send combat aircraft to give them cover (more on that below).

Russia’s Winning on the Battlefield

Meanwhile, Russian forces have nearly encircled the city of Bakhmut, which is a major transportation and logistics hub, with several key roads and rail lines passing through it. It’ll probably fall to the Russians within weeks.

Losing Bakhmut will be a major blow to Ukraine, despite claims in the western media that it really isn’t very important. Ukraine’s entire 800-mile defensive line would probably begin to crumble, and they don’t have heavily fortified positions to fall back on. Ukrainian troops, while brave and competent soldiers, are exhausted and running out of supplies as it is.

On top of that, it appears likely that Russia is preparing a devastating offensive with massive amounts of men, tanks, armored personnel carriers, artillery, helicopters, drones and fixed-wing aircraft.

This Russian army is not the same army that invaded Ukraine a year ago. It’s much better trained, led and equipped. It’s learned from the mistakes it made during its initial invasion last February. Ukraine shouldn’t expect them to repeat those mistakes.

Does all this mean I’m cheering on a Russian victory in Ukraine? No, I’m just observing the facts on the ground and consolidating them to perform an objective analysis.

That analysis leads me to believe that Russia will win the war militarily. Western military assistance may prolong the fighting but won’t affect the ultimate outcome. It’ll just delay the inevitable and get a lot more people needlessly killed.

The Much Greater Risk

The second facet of this war not reported in the media, or at least downplayed, is the growing risk of nuclear war.

This risk increases with every escalatory step by both sides. The U.S. is the leader in reckless escalation by supplying long-range artillery, Patriot anti-missile batteries, intelligence, surveillance, and now the tanks. Russia responds at each step.

There’s a number of steps before the two sides arrive at the nuclear level, but neither shows a willingness to step back.

By the way, Russia has every legal right to attack those NATO countries supplying arms to Ukraine. By supplying arms to a party to the conflict, they’ve given up their neutrality and have become, in effect, combatants. Russia hasn’t done this because it doesn’t want to bring NATO directly into the fight. But legally, it can.

Gimme, Gimme, Gimme

Ukraine’s demands on the U.S., UK and the rest of NATO for advanced weapons to fight Russians know no limits. The West began by supplying Ukraine with cash, intelligence and anti-tank weapons such as the Javelin missile. Soon we were supplying long-range artillery, drones, and more cash.

As Russian advances continued, Zelensky demanded and got Patriot anti-missile batteries that can destroy incoming Russian missiles. The U.S. artillery was aimed at Russian Crimea. Several drones struck inside Russia at sensitive air bases with nuclear weapons nearby.

The next demand for more weapons involved advanced tanks that are in the process of being supplied by the U.S., UK, Germany, and Poland. In the latest move, that comes as no surprise, Ukraine is now demanding F-16 fighter jets from the U.S., one of the most advanced aircraft in the world.

But Russia has the most sophisticated air defense system in the world and is very capable of shooting down F-16s in large numbers.

Biden has denied Zelensky’s request so far, but he previously ruled out sending tanks before finally giving in. The same thing will probably happen with the planes. But they won’t turn the tide against Russia.

Once these advanced systems show they can’t help, what’s the Ukrainian’s next demand? Russia can escalate just as quickly and lethally as the U.S.

This entire scenario is a long slow march toward nuclear war or the complete disintegration of Ukraine.

Is Anyone Really Prepared for This?

The U.S. won’t end the weapons deliveries because Joe Biden is afraid of losing face and his closest advisors such as Victoria Nuland have an irrational hatred for Russia and are total warmongers.

Now, we can add a new danger, resulting from desperation. This is the fact that the U.S. itself may be the biggest loser in the war.

As Ukraine disappears under a massive Russian onslaught, the U.S. will grow increasingly desperate. Its credibility is on the line after committing so much money, materiel and moral weight to Ukraine’s defense.

The Biden administration has essentially turned the war in Ukraine into an existential crisis for the U.S. and NATO, when it never should have been. Ukraine has never been a vital U.S. interest. But the war is existential for Russia, and won’t give up.

Is the U.S. just going to throw up its hands and concede Russian victory? NATO may actually disintegrate in the face of such spectacular failure. So, we’ll probably double down.

Maybe a desperate Biden orders troops into western Ukraine as a buffer against a complete Russian takeover of the country. You can imagine what could go wrong. That situation may quickly devolve into a direct war between the U.S. and Russia rather than the proxy war that it is now.

The American people and investors in particular are not prepared for any of this. They should be. It’s becoming increasingly likely.

After Louisiana required porn websites to verify users are 18 or older last month, several states are considering introducing age-verification measures so minors cannot access sites. 

In Louisiana’s case, verification can be done using a government-issued ID. Websites like Pornhub prompt users in the southern state with a “check my age” verification page before accessing the main site. 

According to Free Speech Coalition, a non-profit trade association of the adult industry, their ‘Age Verification Bill Tracker‘ shows Arkansas, Virginia, Florida, South Dakota, West Virginia, Kansas, and Mississippi are quickly moving toward passing age-verification laws. 

Oregon, Texas, South Carolina, Minnesota, Utah, Oklahoma, Missouri, and Arizona have introduced or planned to introduce age-verification laws. 

Pornhub owner MindGeek, who also operates Brazzers, YouPorn, and Redtube, is required under the law to ask Louisiana-based users to verify their age.

“Louisiana law now requires us to put in place a process for verifying the age of users who connect to our site from Louisiana. The privacy and security of the Pornhub community is our priority, and we thank you for your cooperation,” the Pornhub website tells Louisiana-based users. 

Hello from the surveillance state of Louisiana. People in Louisiana have to use their drivers license to go to pornhub. This is truly wild. Under his eye. https://t.co/uji6Jo3Tde pic.twitter.com/pVKEeVcCGw

— Public Defendering (@fodderyfodder) January 2, 2023

The movement to protect children appears to be driven by social conservatives. Rep. Laurie Schlegel pushed Louisiana’s age-verification law. In December, she tweeted:

“Online pornography is extreme and graphic and only one click away from our children. This is not your daddy’s Playboy. And if pornography companies refuse to be responsible, then we must hold them accountable. This law is a first step.” 

Finally, lawmakers are stepping up a campaign to block unfettered access porn websites. But shouldn’t the minor’s parents be responsible for internet-blocking software on devices? 

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

The NFL Players’ Association is being urged to offer players cardiac screening in light of the growing concern over COVID-19 vaccines causing heart inflammation.

The Health Freedom Defense Fund urged the association in a recent letter to implement screening because the vaccines can cause myocarditis, a form of heart inflammation. Young males are the most at risk.

Most NFL players received a COVID-19 vaccine under pressure from teams and the league.

“Safety signals illustrate that the near and long-term health outcomes of the COVID-19 vaccines remain uncertain,” Leslie Manookian, president and founder of the fund, told DeMaurice Smith, executive director of the association (NFLPA), in the missive.

“A multitude of adverse reactions to these injections, including myocarditis, are wide ranging and confirmed, and as such, prudence dictates that the NFLPA investigate the extent to which the COVID-19 shots may have resulted in injury, compromised health or death of players,” Manookian said.

She pointed out that Damar Hamlin, a safety for the Buffalo Bills, suffered a cardiac arrest on the field during a Monday Night Football game in January. The reason for the incident remains unknown; Hamlin declined to convey what his doctors told him during a recent televised interview. Former NFL players have also suffered heart attacks and strokes following vaccination.

The NFLPA should introduce “a testing and screening program to determine whether players have been adversely affected by the injections and to develop a set of functional medical protocols and treatments in order to address and heal any deleterious effects of the vaccines,” Manookian said.

The NFLPA declined to comment to The Epoch Times.

The association has not responded to the letter, which was sent via email and regular mail, Manookian told The Epoch Times.

Former NFL player Ken Ruettgers, who started the Voices for Medical Freedom podcast, previously warned an associate who works for the NFLPA of post-vaccination cardiac events and offered to connect the group with doctors with knowledge of the issues.

The associate thanked Reuttgers but did not accept the offer, Reuttgers told The Epoch Times.

“The challenge is, it’s almost like a fighter pilot that, ‘I don’t want to be tested because if I come up positive, I don’t want to be grounded,’” Reuttgers said.

Read more here…

Authored by Terrence Keeley via RealClear Wire,

“Nothing so focuses the mind,” Samuel Johnson once wrote, “as the sight of the gallows.” Perhaps this explains why political leaders repeatedly fabricate existential crises in lieu of governing responsibly. Without the sword of Damocles overhead, policymakers just can’t seem to get the adulation they so desperately crave.

Take the fake debt ceiling crisis.

The U.S. federal debt cap was first enacted in 1917 when our national debt stood at $5.7 billion. Congress has since raised it more than 90 times with broad bipartisan support. There is ZERO chance they won’t do so again, yet we are told we must quiver and quake until they do. For some reason, a $31.4 trillion limit just isn’t enough to run the greatest country on earth properly.

Or better yet, consider the much-ballyhooed “Net Zero by 2050” time bomb. There was no science behind its selection of the 1.5 degree above pre-industrial temperature target. It was intentionally contrived so politicians and pundits could insist we spend hundreds of trillions of dollars reconfiguring every personal and industrial process to mute it, possibly by a degree or two. Anthropogenic activities are clearly taxing our air, water, and lands. Depending upon tradeoffs like affordability and reliability (and what China, India, and Russia decide to do), less carbon-intensive energy sources may well be preferable, too. Convincing our younger generation they will all die unless the globe urgently reduces its net carbon footprint to zero is another matter altogether. Being more mindful about our consumption patterns while preparing our communities for the probability of more violent weather would be too simple. Better to scare everyone out of their wits so we can get on with doing witless things.

Great societies thrive on consistent policy competence. Failing ones lurch from crisis to crisis. Contriving catastrophic scenarios all but ensures hysteria will supplant sober, reasoned analysis.  

Some will argue extreme threats are needed to force modest, salutary changes. After all, a handful of U.S. debt ceiling votes brought about useful policy changes, like the Gramm-Rudman-Hollings breakthrough and the Balanced Budget Act of 1997. Similarly, threats of impending climate doom have led many individuals and corporations to examine their energy use, seek cleaner alternatives, and eliminate unnecessary waste.

But have these modest advances been worth the price of the abject delirium that has accompanied them? And are recurrent, contrived catastrophes somehow producing better policy outcomes?

Evidently not. Three essential U.S. social programs – Social Security, Medicare, and Medicaid – are barreling along towards insolvency. Just as the retirement age in France must rise to reflect longer life expectancies and taxation tipping points, so too must U.S. retirement programs respect demographic realities. Maintaining peace through strength in an increasingly dangerous world requires that the U.S. spend more on defense, not less. Unless the current debt ceiling crisis leads to an honest reckoning about our most urgent tax and spending priorities, heightened hysteria serves no useful end. Worse, all the faux debt ceiling dynamics convince politicians they’ve somehow done their jobs when instead, they’ve abrogated them entirely.

Similarly, we speak about an “energy transition,” but no realistic projection of future fossil fuel consumption shows any meaningful decline in the century to come. Rising populations, improved living standards, reliability needs for the three billion humans who are still energy insecure, and the first order demands of national security reveal oil and gas will remain crucial sources of our energy mix for as far as the eye can see. The most logical response would be to prioritize energy reliability while recalibrating our emissions mitigation spending towards more climate adaptation priorities. Why spend $100 trillion or more on something that has been entirely contrived and is all but certain to fail when you can spend $50 trillion or less on something that would demonstrably save human lives while improving their livelihoods?

History is festooned with countless ruses about the end of time, some more disruptive than others. They include those of French Bishop Martin of Tours in 375 A.D., and Jim Jones in 1967. Many thousands believed the so-called Y2K cliff would crash every computer, triggering global economic ruin and the rise of the Antichrist. Yet, remarkably, here we all still are, higher in number than ever.

In time, trillions of dollars of investment products now priced against Net Zero 2050 deadlines will need to be abandoned. Similarly, the U.S. debt ceiling will be lifted multiple times before responsible members of both parties finally put our tax and spending trajectories into sustainable balance. Panic, like blackmail, compromises sensible thinking. Calm acceptance of measurable risks and their reasonable mitigation are the essence of wise decision-making.

The next time a politician tells you Armageddon is nigh, remind them it’s their only job to make sure it isn’t. If you’ve got the patience for it, you can also show them how easy it would be to avoid.