An update to the Climate Prediction Center’s official 8-14 day outlook for pre-Christmas forecasts more than two-thirds of the Lower 48 will be colder than average, with near-normal temperatures for the Mid-Atlantic and above-average temperatures for the Northeast.
NOAA’s temperature outlook forecasts the West, Southwest, and Midwest, as well as parts of the Southeast (excluding coastal areas), will experience below-average temperatures between Dec.15-21. The forecast was issued on Dec. 7. As for the Mid-Atlantic, temperatures are expected to be around average, while temperatures in the Northeast will be above average.
Lower 48 average temperatures are currently well above average. On Wednesday, the national average was 10 degrees above a 30-year mean, though forecasts show a cold pattern will begin at the end of this week and push temperatures down well below average through Dec. 21.
Heating demand is expected to rise ahead of Christmas.
US natural gas futures bid yesterday after falling more than 27% since late November after weather forecasts for the US switched from cold to warm. Cold weather is finally on the way, which could put a bid under NatGas.
As for the Northeast, The Washington Post said, “The Mid-Atlantic and Northeast still appear on track to turn more wintry during the second half of the month. As Christmas approaches, if you’re rooting for snow, waiting is often the hardest part.”
“As the U.S. military faces strained budgets and growing threats, climate will be a costly new priority in national defense. The People’s Liberation Army must be dumbfounded by its good luck.”https://t.co/Uau7nwOaHw via @WSJ
A little-noticed rule-making proposed by the Department of Defense, NASA and the General Services Administration last month would require federal contractors to disclose and reduce their CO2 emissions as well as climate financial risks. The rule would cover 5,766 contractors that have received at least $7.5 million from the feds in the prior year.
For example, weapons manufacturers would have to quantify and disclose the amount of CO2 generated from their own facilities; manufacturers that produce steel, computer chips and motors used in their weapons; propellants and fuel; and even munition storage areas. It’s unclear if CO2 emissions will influence procurement decisions.
Large contractors would also have to publish an annual climate disclosure and develop “science-based targets” to reduce greenhouse gas emissions in alignment with the goals of the 2015 Paris agreement. That means contractors will have to aim to zero out emissions and possibly require their contractors to do so.
Will Lockheed Martin and Raytheon Technologies have to redesign weapons systems and aircraft to be powered by lithium-ion batteries? China mines and processes the critical minerals used in batteries and other green technologies that will be required to meet these “science-based targets.”
The proposed rule would also apply to non-defense contractors, including pharmaceutical, shipping and tech companies, though it curiously exempts universities, nonprofit research institutions and state and local governments.
No, that isn’t the Onion, I am quoting. It’s the Wall Street Journal.
Well, that’s OK.
It will add to inflation and bigger budgets. Who doesn’t want that?
Besides, I expect an announcement soon that President Biden got Russia, China, and North Korea, to agree to the same rules so they are fair across the board.
The House Foreign Affairs Committee on Tuesday narrowly voted down a bill that would audit the tens of billions of dollars that Congress has approved to spend on the war in Ukraine. The bill was rejected by the Democrat-led panel in a vote of 26 to 22. The legislation was introduced by Rep. Marjorie Taylor Greene (R-GA) and a small group of Republicans who oppose US aid to Ukraine, but it received strong support from more hawkish Republicans.
Republican Reps. Thomas Massie (KY), Matt Gaetz (FL), Barry Moore (AL), and Andrew Clyde (GA) cosponsored Greene’s bill. Greene has said that she will reintroduce the measure in the next Congress when Republicans have a majority in the House. “It’s official the Democrats have voted NO to transparency for the American people for an Audit for Ukraine,” Greene wrote on Twitter after the vote. “But we take over in January! This audit will happen!”
Rep. Michael McCaul (R-TX), who is expected to head the House Foreign Affairs Committee in the next Congress, has come out in favor of the audit bill. “The era of writing blank checks is over,” McCaul said, according to The Washington Post.
McCaul has been critical of the Biden administration for not sending longer-range weapons to Ukraine and wants to encourage Ukrainian strikes on Crimea despite the risk of escalation. But he represents the mainstream Republicans who want to keep arming Ukraine but agree there should be more oversight.
Democrats have been critical of the growing Republican calls for more oversight of the Ukraine aid. Rep. Adam Smith (D-WA), the head of the House Armed Services Committee, even dismissed the concerns as “Russian propaganda” and said the calls from Republicans to increase oversight “makes me a little crazy.”
Meanwhile also on Tuesday night, Congress unveiled the 2023 National Defense Authorization Act (NDAA), worth $858 billion, $45 billion more than what President Biden requested for the military spending bill. The House is expected to vote on the legislation this week, and it could be brought to the floor as soon as Thursday. Once the House approves the bill, it will be sent to the Senate, then to President Biden’s desk for his signature.
Biden’s initial defense budget request: $813 billion
House Armed Services Committee version: $839 billion
Senate Armed Services Committee version: $847 billion
Final version, just released: $859 billion
Oddly, this one budgetary process always seems to go in the same direction
The massive $858 billion bill represents an 8% increase from the 2022 NDAA, which was also larger than what Biden requested. The $858 billion includes $817 billion for the Pentagon, and the remaining funds go toward military spending for other departments.
Notable amendments packed into the NDAA include$10 billion in military aid for Taiwan that will be dispersed over five years. The aid is in the form of Foreign Military Financing, a State Department program that gives foreign governments funds to purchase US-made military equipment.
The NDAA also includes $800 million in the Ukraine Security Assistance Initiative, a program that allows the US government to purchase weapons for Ukraine. But the vast majority of spending on the Ukraine war will come through emergency funding, and the White House is hoping Congress approves a new $37.7 billion tranche of Ukraine aid during the lame-duck period.
Rep. Gerry Connolly was one of the Democrats who shut down @RepMTG’s resolution to audit the 80 billion+ taxpayer dollars flowing into the pockets of Ukrainian warlords.
“I support transparency and accountability,” Connolly claimed, “but not now.” pic.twitter.com/pkrPbU9vQY
The NDAA includes $11.5 billion in new investments for the Pacific Deterrence Initiative, a program to build up in the Asia Pacific to confront China. The Pentagon has identified China as its main focus, and the NDAA includes investment in new technology research and development that US military leaders say is meant to counter Beijing.
Saudi Crown Prince Behind Deal To Swap Griner For ‘Merchant Of Death’ In Curiously Timed “Breakthrough”
Update(1228ET): The Daily Mail is calling it a “deal soaked in blood” after the governments of Saudi Arabia, the UAE, and Russia confirmed that Brittney Griner’s release for notorious convicted arms trafficker Viktor Bout came via Saudi/UAE mediation efforts led by Crown Prince Mohammed bin Salman (MbS). Foreign ministry statements by both countries, hours after the now freed American and Russian walked past each other on a UAE airport tarmac, revealed the following per a leading Mideast regional news outlet:
Saudi Arabia’s Crown Prince Mohammed bin Salman and UAE President Sheikh Mohammed bin Zayed led mediation efforts that secured the release of two prisoners between the US and Russia, a joint statement issued by both countries’ foreign ministries said on Thursday.
“The ministries said the success of the mediation efforts was a reflection of the mutual and solid friendship between their two countries and the United States and Russia,” the statement said.
A senior administration official would not comment directly on MBS’s role but said the U.S. will ‘continue to lean on partners around the world’ to secure the release of unjustly detailed Americans.
The swap happened at Abu Dhabi airport, where Griner and Bout had to walked past each other to reach their respective parties on the airport tarmac, Russian state media reports.
The official said Griner was ‘all smiles’ on the tarmac as she approached the American delegation.
Amid the outrage that the Biden administration released a “big catch” notorious Russian criminal, also while leaving Paul Whelan behind to languish in a Russian penal colony, many are questioning the timing of all of this coming together a meretwo days after the US government dropped the Khashoggi lawsuit against the Saudi leader.
To review of the timeline and chain of possibly connected events, Biden recently gave MbS immunity for the Jamal Khashoggi murder ironically enough at a moment MbS was pushing production cuts through OPEC (which helped Putin and Russian interests)… and now the White House gets Griner back (and perhaps it will quickly be “forgotten” how the Saudis just humiliated the US administration on oil output).
Biden just traded the guy that inspired “Lord of War” for Brittney Griner, who didn’t even make the cut for “Space Jam 2” pic.twitter.com/eR9gQN7jRB
Update(8:50ET): During his announcement from the White House, with Griner’s family present, Biden spent a lot of time defending his administration from widespread accusations that Griner’s release was prioritized because of her fame while at the same time other detained Americans were left behind.
“This was not a choice of which American to bring home,” Biden said while vowing to continue working on freeing detained US Marine veteran Paul Whelan. 61-year old teacher Marc Fogel is also languishing in Russian prison.
You left a Marine to rot so you could get Twitter likes for freeing a celebrity who hates America. https://t.co/XKJxiNrxXK
An understandably very frustrated and “devastated” Whelan family has issued the following statement upon the White House announcement of Griner’s release:
Despite the possibility that there might be an exchange without Paul, our family is still devastated. I can’t even fathom how Paul will feel when he learns. Paul has worked so hard to survive nearly 4 years of this injustice. His hopes had soared with the knowledge that the US government was taking concrete steps for once towards his release. He’d been worrying about where he’d live when he got back to the US. And now what? How do you continue to survive, day after day, when you know that your government has failed twice to free you from a foreign prison? I can’t imagine he retains any hope that a government will negotiate his freedom at this point. It’s clear that the US government has no concessions that the Russian government will take for Paul Whelan. And so Paul will remain a prisoner until that changes.
We just traded “The Merchant of Death” Viktor Bout, a man who sold arms to warlords, for Brittney Griner, a WNBA player.
In a huge and unexpected development, Russia has released into US custody WNBA star Brittney Griner, after in October her 9-year prison sentence was upheld by a Russian court. She had already spent weeks in a harsh penal colony some 300 miles southeast of Moscow.
She was freed in a prisoner exchange which took place in Abu Dhabi Airport on Thursday. In return the Biden administration agreed to give up notorious international arms dealer Viktor Bout. US officials speaking to CBS say the deal had been reached by last Thursday, with the logistics details having been hammered out since then. Biden is imminently expected to address Griner’s release and the prisoner exchange at 8:30eastern. Watch Live:
“To secure Griner’s release, the president ordered Bout to be freed and returned to Russia. Mr. Biden signed the commutation order cutting short Bout’s 25-year federal prison sentence,” CBS reports.
But the report underscores, “Notably, the Griner-for-Bout exchange leaves retired U.S. Marine Paul Whelan imprisoned in Russia. Whelan has been in Russian custody for nearly four years. He was convicted on espionage charges that the U.S. has called false.”
When Russian state media began first signaling that the Kremlin will pursue getting Bout back, and Secretary of State Antony Blinken starting over the summer hinted the administration was actually entertaining the possibility, it unleased a wave of controversy, especially given Griner’s own recent public displays which some interepreted as “anti-US”… most notably refusing to stand for the national anthem and even staying in the locker room during its playing.
One commenter previously had this to say in summary of the controversial exchange for Bout:
“It took nearly 10 years for US to apprehend Viktor Bout, and close to 3 more years to convict him for terrorism and arms trafficking. Allegedly, thousands of civilians in multiple African countries, were injured and killed by weapons supplied by Bout. Fair trade for Griner?”
It’s likely that the Department of Justice had been vigorously arguing against releasing Viktor Bout, considering it took a significant extradition process (from Thailand) to even get him into US custody over a decade ago.
Before his just-announced release, he was serving a 25-year sentence in federal prison after being convicted in the Southern District of New York for conspiring to kill Americans and conspiring to provide material support to terrorists.
Already there’s brewing anger that Paul Whelan, as well as another American locked up in Russia, 61-year old teacher Marc Fogel, over the widespread perception that they’ve been left behind.
Readers have been well informed that the used car market bubble popped earlier this year (read: here). Cox Automotive reported that its Manheim Used Vehicle Value Index, which tracks the auction prices of used cars, plunged 14.2% from a year ago. The index has also slid to the lowest point since August 2021 as used-car sales tumbled 10% in November.
November’s monthly decline on a year-over-year basis of 14.2% was the largest ever on Manheim’s data.
The index fell to 199.4 last month, below the 200 mark for the first time since August 2021, and is down 15% from the peak in January. However, the index is still 58% higher since the start of the pandemic.
A combination of new car supply and soaring borrowing rates have been the drivers of deflating the bubble. Cox chief economist Jonathan Smoke explained more:
“New inventory is finally starting to build, and that’s producing momentum in new retail sales, but that momentum appears to be at the expense of used retail. Especially it’s the traditionally used car buyer that’s most impacted by payment affordability.”
What happens next is that retail prices will start to decrease because of the high correlation to wholesale prices. The used car bubble has possibly, claimed the first victim: Carvana, whose stock imploded Wednesday after its creditors formed a pact as bankruptcy risks soar.
And like we’ve told readers, wait until 2023 for deals as it’s a process from the time the Federal Reserve hikes interest rates to shooting up borrowing costs for consumers to curbing the demand side while supply side snarls alleviate; all of this are the perfect ingredients for lower prices moving forward.
‘Not a single mutual fund — not one — managed to beat its benchmark regularly and convincingly over the last five years. These results are even worse than those of 2014 and 2015, when I last examined this subject closely.’ https://t.co/X2Ytbku1B6
Fans of passive investing clearly take this as validation of their preference for simply allocating their capital as the index dictates.
However, I think that may be too convenient of a conclusion to derive from this. In fact, it may be looking at things backwards.
If you take a moment to think about the factors that might be behind this statistic, it starts to become far more interesting. Flows to passive funds over the past five years have been massive and accelerating while just about five years ago active funds began to lose assets, a phenomenon which has also accelerated in the years since.
Is it possible, likely even, that this dramatic outperformance of the index over active funds was driven largely by flows rather than the lack of skill of active managers or some other explanation?
In other words, could it be that the popularity of passive investing explains its success more than its success explains its popularity?
Furthermore, if it is true that the performance of the index has largely been driven by flows over the past five years, rather than the collective opinion of educated active investors, then how efficient is the market truly?
Is it possible that the popularity of passive investing has helped to inflate another stock market bubble?
‘The stock market losses that we’ve observed year-to-date are merely a give-back of the frothiest segment of the recent market bubble. Our most reliable valuation measures still match the extremes we observed in 1929, 2000 and the 2020 pre-pandemic high.’ https://t.co/oGPiHws6xCpic.twitter.com/KoV4FHE9HC
Remember, passive investing is founded upon the idea that the markets are efficient and thus investors mirroring the index will realize the collective returns generated by the underlying businesses. But should the market become divorced from its underlying fundamentals due to the dominance of price-insensitive buying, what then should passive investors expect?
Biden Mulling Transfer Of Internationally Banned Cluster Bombs To Ukraine
This is not The Onion, but CNN, which produced a whole report in effect arguing that internationally banned weapons are OK if given to Ukraine for the ‘good cause’ of fighting Russia…
“Ukrainian officials and lawmakers have in recent months urged the Biden administration and members of Congress to provide the Ukrainian military with cluster munition warheads, weapons that are banned by more than 100 countries but that Russia continues to use to devastating effect inside Ukraine.”
BUT, the mainstream outlet writes, “For Ukraine, cluster munitions could address two major issues: the need for more ammunition for the artillery and rocket systems the US and others have provided, and a way of closing Russia’s numerical superiority in artillery.”
And never mind those pesky ‘statutory restrictions’ and the greater likelihood of killing innocent civilians…
CNN continues: “The Biden administration has not taken the option off the table as a last resort, if stockpiles begin to run dangerously low. But sources say the proposal has not yet received significant consideration in large part due to the statutory restrictions that Congress has put on the US’ ability to transfer cluster munitions.”
“Those restrictions apply to munitions with a greater than one percent unexploded ordnance rate, which raises the prospect that they will pose a risk to civilians,” the publication then admits, before noting:
“President Joe Biden could override that restriction, but the administration has indicated to the Ukrainians that that is unlikely in the near term.”
CNN’s sources further underscored that at this point President Biden has not rejected the potential transfer of cluster munitions outright. All “options” continue to be on the table… international bans and human rights guidelines be damned, apparently.
Very early following the Feb.24 Russian invasion, Russia’s military stood accused of using banned cluster bombs, for which it received international condemnation – including from US officials and media.
* * *
According to a historical review of cluster bombs in We Are the Mighty, cluster munitions kill indiscriminately, and their widespread use in multiple 20th and early 21st century conflicts eventually led to an international treaty banning their use by nation-states…
“Cluster munitions are explosives that detonate in the air, dispersing bomblets or submunitions across a vast area to destroy several targets simultaneously. These were commonly used before a 2008 treaty forbidding the use of cluster bombs was formulated. Thousands of civilian lives have been lost due to the bomb’s nature. Despite many countries resisting the treaty back then, the majority had their say, and the use of these bombs is now illegal.”
In March, numerous reports showed Russia’s use of cluster bombs in Ukraine, sparking outrage.
A new NYT report says Ukraine used cluster bombs on one of its own villages, prompting denunciations from human rights groups:https://t.co/TvJz7ctYi7
“When the Treaty on Cluster Munitions came into effect, it marked a huge step forward in safeguarding civilians during and after a military confrontation. The international agreement outlaws cluster munitions completely and mandate member states to clean up regions polluted by cluster munition remains within 10 years (after the convention), dismantle their stockpiles in eight years, and aid sufferers.”
“…Bomblets from a cluster munition can strike anywhere and anyone. This makes cluster bombs especially dangerous dealing with innocent lives. Only the main warhead will detonate on the specified targets when a cluster bomb is launched from an airplane. The bomblets, which automatically separate themselves from the main bomb, can land anywhere.”
Transportation capacity continued to grow at a high rate during November with prices falling at the fastest rate on record, according to a monthly survey of supply chain executives released Tuesday.
The Logistics Managers’ Index (LMI) displayed a capacity reading of 71.4 in November, 1.7 percentage points lower than the all-time high established in October. The 12-month forward-looking expectation for the subindex is 65.7.
A reading above 50 indicates expansion while one below that indicates contraction.
A new low for the transportation prices subindex was set during the month. A 37.4 reading was 4.8 points lower than October and “the sharpest rate of contraction we have read in the history of the LMI,” the report said. Contraction was more pronounced among downstream respondents, or those in the supply chain that are closer to the end consumer. That group returned a 28.1 reading.
Expectations for prices one year from now stood at 42.1 as “the transportation market continues to fall from the dizzying heights that had become the norm during 2021.”
Transportation utilization was down 2.8 points to a neutral reading of 50. Responses captured in the second half of November were “slightly more negative,” meaning utilization “may be seeing the beginning of a contraction period” after expanding every month since May 2020.
The overall LMI stood at 53.6 in November, 3.9 points lower sequentially and the second-lowest level captured in the data set’s six-year history. The all-time low was recorded in April 2020 during the height of pandemic-related lockdowns.
FreightWaves’ National Truckload Index, a measure of TL spot rates, remains well off all-time highs established earlier in the year. However, spot rates are potentially bottoming, up nearly 10% from mid-November lows.
Inventory growth rates throughout the supply chain slowed significantly during the month. After average readings of 69.6 this year, 62.7 in 2021 and 58.4 in 2020, the subindex fell 10.7 points to 54.8 in November, with respondents at the wholesale level seeing slower growth.
“Inventory levels have decreased significantly, particularly for upstream respondents,” the report said. “This is likely indicative of goods being positioned downstream for the holiday season and, more importantly for supply chains, being purchased by consumers.”
The inventory levels subindex was neutral at 50 in the back half of November, which “suggests that many firms have successfully threaded the needle and worked through the bulk of the goods that have plagued them through the year.”
The report cautioned that when the inventories subindex falls significantly, there is usually an increase in the following period. “So, there is a chance the inventory level index will bounce back up somewhat, post-holiday,” according to the report.
The forward-looking expectation for inventory levels was 47.2.
“The bullwhip effect was probably inevitable, given the sharp oscillations in supply and demand experienced over the last few years,” the report read. “The key now will be to observe whether supply chains have finally now right-sized their inventories, or if they have overcorrected back into a mild shortage.”
Inventory costs (73.4) continued to grow but at a rate 7.5 points lower than in October as warehousing prices (74.4) remained firmly in expansion territory. Higher warehousing costs were driven by contracting capacity (46.8) and growing utilization rates (56.8).
“It will be crucial to observe whether or not transportation metrics begin to bounce back at all in the new year, once the glut of inventory has been wound down further,” the report said.
The LMI is a collaboration among Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University and the University of Nevada, Reno, conducted in conjunction with the Council of Supply Chain Management Professionals.
Biden Explains Why He Swapped Russian ‘Merchant Of Death’ For WNBA Star
Update(8:50ET): During his announcement from the White House, with Griner’s family present, Biden spent a lot of time defending his administration from widespread accusations that Griner’s release was prioritized because of her fame while at the same time other detained Americans were left behind.
“This was not a choice of which American to bring home,” Biden said while vowing to continue working on freeing detained US Marine veteran Paul Whelan. 61-year old teacher Marc Fogel is also languishing in Russian prison.
An understandably very frustrated and “devastated” Whelan family has issued the following statement upon the White House announcement of Griner’s release:
Despite the possibility that there might be an exchange without Paul, our family is still devastated. I can’t even fathom how Paul will feel when he learns. Paul has worked so hard to survive nearly 4 years of this injustice. His hopes had soared with the knowledge that the US government was taking concrete steps for once towards his release. He’d been worrying about where he’d live when he got back to the US. And now what? How do you continue to survive, day after day, when you know that your government has failed twice to free you from a foreign prison? I can’t imagine he retains any hope that a government will negotiate his freedom at this point. It’s clear that the US government has no concessions that the Russian government will take for Paul Whelan. And so Paul will remain a prisoner until that changes.
We just traded “The Merchant of Death” Viktor Bout, a man who sold arms to warlords, for Brittney Griner, a WNBA player.
In a huge and unexpected development, Russia has released into US custody WNBA star Brittney Griner, after in October her 9-year prison sentence was upheld by a Russian court. She had already spent weeks in a harsh penal colony some 300 miles southeast of Moscow.
She was freed in a prisoner exchange which took place in Abu Dhabi Airport on Thursday. In return the Biden administration agreed to give up notorious international arms dealer Viktor Bout. US officials speaking to CBS say the deal had been reached by last Thursday, with the logistics details having been hammered out since then. Biden is imminently expected to address Griner’s release and the prisoner exchange at 8:30eastern. Watch Live:
“To secure Griner’s release, the president ordered Bout to be freed and returned to Russia. Mr. Biden signed the commutation order cutting short Bout’s 25-year federal prison sentence,” CBS reports.
But the report underscores, “Notably, the Griner-for-Bout exchange leaves retired U.S. Marine Paul Whelan imprisoned in Russia. Whelan has been in Russian custody for nearly four years. He was convicted on espionage charges that the U.S. has called false.”
When Russian state media began first signaling that the Kremlin will pursue getting Bout back, and Secretary of State Antony Blinken starting over the summer hinted the administration was actually entertaining the possibility, it unleased a wave of controversy, especially given Griner’s own recent public displays which some interepreted as “anti-US”… most notably refusing to stand for the national anthem and even staying in the locker room during its playing.
One commenter previously had this to say in summary of the controversial exchange for Bout:
“It took nearly 10 years for US to apprehend Viktor Bout, and close to 3 more years to convict him for terrorism and arms trafficking. Allegedly, thousands of civilians in multiple African countries, were injured and killed by weapons supplied by Bout. Fair trade for Griner?”
It’s likely that the Department of Justice had been vigorously arguing against releasing Viktor Bout, considering it took a significant extradition process (from Thailand) to even get him into US custody over a decade ago.
Before his just-announced release, he was serving a 25-year sentence in federal prison after being convicted in the Southern District of New York for conspiring to kill Americans and conspiring to provide material support to terrorists.
Already there’s brewing anger that Paul Whelan, as well as another American locked up in Russia, 61-year old teacher Marc Fogel, over the widespread perception that they’ve been left behind.
The number of Americans filing for jobless claims for the first rose to 230k last week (higher than the 226k the prior week) but it is the ongoing rise in continuing jobless claims that should be a worry for Americans (and ‘cheer’ for The Fed?).
On a non-adjusted basis, initial jobless claims surged to the highest since January…
Notably, not one state saw claims drop (on an NSA basis) last week…
1.671 million Americans are filing for jobless claims on a continuing basis – the most since February…
Source: Bloomberg
This is the largest rise in continuing claims since the peak of the COVID lockdowns in June 2020.
So the labor is still “tight”?
The 10 straight weeks of increasing continuing claims suggests that Americans who are losing their job are having more trouble finding a new one.
Perhaps the Establishment survey is completely decoupled from reality…
Source: Bloomberg
With claims and the household survey both signaling weakness in American jobs… ‘great news’ for The Fed?!
