Republican Senator Josh Hawley charged Wednesday that the Biden administration is purposefully allowing the migrant crisis to worsen, and that they are ‘executing their plan’ to completely dissolve the Southern border.
Hawley declared that he will refuse to support any amnesty plan as a trade off for promises of securing the border.
“The truth is, we shouldn’t have to trade anything to get the enforcement of our laws at our own southern border,” Hawley told Fox News’s Laura Ingraham.
“I just say, this Biden administration is getting exactly what they want at the southern border. This is a 14,000 a day illegal surge. They’ve known about this, they have known this would happen. This is what they want,” Hawley urged.
The Senator continued, “They don’t want a border. They don’t want there to be Customs and Border Patrol, they don’t want there to be I.C.E., they don’t want there to be immigration enforcement. This is their plan and they are executing it.”
“The Democrats are willing to turn over our sovereign southern border to the biggest human trafficking operation in the world,” Hawley added, referring to the cartels, and asserting “They’re willing to let them have it.”
“You’re concerned about kids. Well, the Democrats want to give the cartels, who are smuggling children, control of the border. You’re concerned about crime. The Democrats want to give the cartels control of the border,” Hawley declared.
Hawley also said that his state of Missouri is “awash in illegal drugs, with fentanyl, methamphetamine in our state. It’s not coming from inside Missouri. It’s coming across the border. That is all courtesy of Joe Biden.”
“And I tell you what,” Hawley further proclaimed, “It’s time to hold this guy accountable. And it’s time for the House of Representatives to do their job and to impeach (Homeland Security Secretary Alejandro) Mayorkas.”
Watch:
Hawley also expressed a desire to permanently extend Title 42 by statute, which would continue to allow CBP to turn back migrants based on health risks.
The Senator’s comments come after another week of intense activity at the border, with thousands of migrants attempting to cross every day:
This is a close-up look at the front of the very long line by the Rio Grande. Tensions were high at times as people tried to figure out who would be next to be let in by U.S. law enforcement. Temp was around 40 degrees with strong winds —> https://t.co/wXBVsvNMZspic.twitter.com/8I6lgWeSCy
Breaking! Over the weekend, the El Paso Sector experienced a major surge in illegal crossings, with a 3-day average of 2,460 daily encounters, primarily through the downtown area of El Paso. We will continue to keep the public informed as the situation evolves. pic.twitter.com/V2pOO6Y31N
NEW: A look at the situation in El Paso, TX right now, where a huge line of hundreds of migrants who have crossed illegally into the US are waiting to be taken into Border Patrol custody. Most expect to be released into the US. Many will be. CBP & local shelters overcapacity. pic.twitter.com/QDoyAzVRth
Those numbers are about to explode due to the scheduled ending of Title 42:
NEW: We went into Matamoros, the Mexican border city across from Brownsville, TX, where there are thousands of migrants waiting for Title 42 to drop in 8 days before they plan to cross into the US. We saw hundreds of migrants camped out on streets & in a public park. @FoxNewspic.twitter.com/G2TtKCvJyv
Biden isn’t bracing for anything. Biden is causing 14,000 migrants a day. This is a full invasion into the United States and the president is choosing to do nothing. https://t.co/ufH6oTSZfl
A recount of votes in a Massachusetts state House of Representatives race has placed a Democratic challenger ahead of a Republican incumbent by a single vote after the latter was initially leading following the Nov. 8 elections.
Democrat Kristin Kassner, a first-time candidate, is now leading her Republican opponent Lenny Mirra in the race for the newly redrawn North Shore district, a coastal region between Boston and New Hampshire.
Prior to the recount, Mirra, a five-term Republican, had led Kassner by 10 votes out of the 24,155 votes that were cast across the district, according to the original certified results from Election Day.
However, the 10-vote margin is within the legal threshold that allows for a recount, and Kassner later submitted a petition asking for a district-wide recount of the Nov. 8 election.
Secretary of State Bill Galvin agreed to the hand recount, which was ordered on Nov. 30, as well as another in the First Middlesex District race.
After officials recounted the votes on Dec. 8, the results flipped to put Kassner up 11,763 votes to Mirra’s 11,762.
Kassner picked up a total of 19 additional votes, including 10 in Ipswich, four in Rowley, three in Topsfield, one vote in Newbury, and one vote in Georgetown, according to data provided by Galvin’s office (pdf). Mirra, meanwhile, added five votes in Ipswich, three in Topsfield, and one in Newbury.
The Republican candidate also lost a single vote in Rowley, according to the data.
“Some [ballots] were filled out in pencil, some were filled out with different colored ink, some had stray marks. Some had a name written in the write-in and then an oval filled out,” Mirra said.
Kassner, however, told The Boston Globe that she believes the voting process “unfolded like it should,” adding that while the results show she’s leading in the race, a tight margin means it’s “hard to allow yourself to be too excited until the plane is landed.”
The Democrat also told CBS that she doesn’t believe anything suspicious took place with regard to the recount.
“[The recount] was just really just to ensure that, between humans and machines, we really caught every vote that was counted,” Kassner said. “We thank the tremendous outpouring of people that really got involved and mobilized to go through this process this weekend. It’s really a true test of democracy.”
‘Some Sort Of Sex Slave’? Son Of Paul Pelosi’s Attacker Breaks Silence, Fuels Speculation
The son of Paul Pelosi attacker, David DePape, says his father ‘is not evil,’ and is ‘hardly a right-wing conservative.’ He also implied that the 82-year-old Pelosi may have invited DePape over for sexual activities.
Speaking with the Daily Mail, Nebosvod ‘Sky’ Gonzalez said “He isn’t a danger to society, I don’t even know if he even attacked Mr. Pelosi. For all that we know he was some sort of sex slave, as Elon Musk pointed out.”
The 42-year-old DePape appeared before a San Francisco Superior Court Judge on Wednesday for a preliminary hearing, and will be arraigned on federal charges on Dec. 28, which include attempted murder, assault with a deadly weapon, elder abuse, false imprisonment of an elder, first-degree burglary and threatening the family member of a public official . He has pleaded guilty to all charges. He has also been charged in federal court.
When asked about first hearing of his father’s arrest, Gonzalez said he was in shock, and that “That’s not the type of person he is.”
Official reports about the attack have changed several times. First, an ‘unknown third party’ opened the door after police arrived at the Pelosi house – after which police witnessed DePape take a hammer from Pelosi and hit him with it. Then, it was that Pelosi and DePape were both struggling with the hammer, and DePape wrested it from Pelosi and beat him with it. Then, in a now-retracted report which has gotten veteran NBC reporter banished from the air, after being alone in the home for 30 minutes, Pelosi opened the door when police arrived. However, he did not try to escape or alert police to an emergency, and he instead walked to the police and back toward DePape.
NBC Report Contradicts Federal Charging Statement in Paul Pelosi Attack – And Paul Pelosi’s Actions
NBC reporter Miguel Almaguer reported on the Today Show that accused attacker David DePape and Paul Pelosi were alone in the Pelosi home for thirty minutes, #PaulPelosipic.twitter.com/X6RURvSMYJ
NBC News deleted the clip from their Twitter feed and scrubbed it from their website.
BREAKING: The @TODAYshow has now DELETED this clip and @NBCNews has scrubbed it from their website because it “did not meet” their “reporting standards.”
“I’m surprised about the whole thing. There is still a lot of info that hasn’t been given to the public. I have no clue what happened or how it happened. There are more questions than answers right now. Do we even know what really happened?” he told the Mail.
There is “almost no person on this planet that has gone through so much suffering,” the 19-year-old Gonzalez said. “If you look into his eyes, you can see he’s such a sad person.”
“He often told us he was raised in an abusive home and would be physically abused by his grandparents,” Sky continued, adding that DePape was bullied in school and didn’t have any friends.
Their mother, Oxane ‘Gypsy’ Taub, gave them the last name “Gonzalez” as a tribute to a Mexican family that allegedly saved her life several years ago.
Not politically motivated
Gonzalez, who says he hasn’t seen his father in several years, told the Mail that the attack wasn’t likely to have been politically motivated.
“My father had a lot of political views and told me about a lot of different things, but he didn’t subscribe to either political party, Democrat or Republican,” adding that the two parties ‘are just covers and colors.’
“What matters are the policies of each individual person. Each individual person is unique, and it isn’t about right or left. That’s just a distraction,” he continued.
“My father had progressive views. He believed in human rights, equality, and justice. He was against the war, he was a peace activist, hardly a right-wing conservative, as he has been branded.“
Mental Illness
Shortly after DePape’s arrest, Taub – who is currently imprisoned for the attempted abduction of a 14-year-old boy, told ABC30 that her former partner was “mentally ill,” and that he disappeared for a year in the mid 2010s.
“He came back in very bad shape. He thought he was Jesus. He was constantly paranoid, thinking people were after him,” she said, adding “And it took a good year or two to get back to, you know, being halfway normal.”
“When I met him, he was only 20 years old and he didn’t have any experience in politics, and he was very much in alignment with my views and I’ve always been very progressive.”
“I absolutely admire Nancy Pelosi,” she added.
According to Gonzalez, “We all deserve to know what happened, especially in such a high-profile case,” adding “But we don’t know what happened. I don’t know whether or not my father did what he’s been accused of. So far, what we know doesn’t make any sense.“
Below is my column in the New York Post on the potential liability of the parents of Sam Bankman-Fried. It is not uncommon for federal prosecutors to go after family members to induce a plea by a defendant. In this case, the reported involvement of the parents in some of operations or payments magnifies that risk.
Here is the column:
As Sam Bankman-Fried faces an eight-count indictment for his alleged massive crypto-fraud, his case could take a sudden turn toward resolution. The prosecutors may have the ultimate inducement for a plea to dangle over Bankman-Fried — actually two: Bankman and Fried.
SBF, as he’s known, is not the only person at risk here, particularly with prosecutors making repeated references to unnamed “co-conspirators.” Two at risk could prove his parents, Joseph Bankman and Barbara Fried. While there’s no proof of criminal acts on their part, Bankman-Fried surprisingly involved his parents in aspects of his alleged fraudulent operation.
If so, the case could bring new meaning to the doctrine of in loco parentis, when people act “in place of a parent” or “instead of a parent.” Federal prosecutors are notorious for targeting family members as a quarry’s vulnerability; do they see such an opening in Bankman-Fried’s parents’ role in litigating this massive alleged fraud?
Both parents of SBF and his close associate and ex-girlfriend, Alameda Research head Caroline Ellison, 28, are professors at leading universities. Ellison’s parents are Massachusetts Institute of Technology professors; Bankman-Fried’s parents are Stanford Law professors. Both children are obviously bright, precocious “fac brats” who spoke of using investments for good deeds. Ellison has said she had only one job before moving over to Alameda and finding herself making huge decisions.
Ellison is an obvious target for a cooperation agreement, and her counsel may be moving quickly to get her a chair before the music stops on the next round of indictments.
The more intriguing prospect, however, is using SBF’s parents as his most vulnerable pressure point. The Justice Department has previously targeted family members, as in the Michael Flynn case, to muscle defendants into pleas. While we’ve seen Justice give targets sharply different treatment in past cases, there’s ample reason for the parents to be concerned.
Joseph Bankman, a longtime Stanford Law School tax professor, was a paid employee of his son and helped promote the company. He spent considerable time in the Bahamas with Sam during the critical periods of alleged fraud. He and his wife may have benefited from some of the lavish expenditures the Justice Department cited in its indictment, including staying in a $16.4 million house in Old Fort Bay, a gated community in Nassau.
Stanford Law prof Barbara Fried didn’t appear to work for the company but reportedly used money from her son in her Democratic political-advocacy network. Fried, 71, resigned last month as board chairwoman of a political-donor network, Mind the Gap, which she’d helped start to support Democratic campaigns and causes.
Fried, who retired this year from Stanford, is an expert on the intersection of law and philosophy. She has notably written about effective altruism, the charitable movement her son and Ellison embraced. SBF pursued effective-altruism models while studying at MIT and later co-founded Alameda. The left heralded Bankman-Fried as showing that effective altruism had “real and growing political power, and an increasing ability to noticeably change the world.”
The inclusion of a federal election campaign financing charge only magnifies questions over Fried’s work. It’s not clear if the alleged use of false donor names included Mind the Gap donors or if Fried was aware of such alleged unlawful efforts. The couple’s spokesperson denied any involvement in the underlying matters relevant to the indictment.
The parents have the misfortune of looking like the type of low-hanging fruit prosecutors find irresistible. In an ordinary case, they would be on top of the targets list. Reports the parents are concerned they could be financially ruined by legal costs may only increase the interest in using them to pressure their son.
Other family members could also be subject to investigation, including Bankman’s sister, Barbara Miller, who works in Florida as a Democratic political consultant.
Again, it’s not clear if Justice will prove as aggressive in pursuing such collateral figures as it did with defendants like Michael Flynn. But it would likely take little to induce a plea given the weight of the evidence against Bankman-Fried.
One benefit is that a plea would make fast work of the case without a messy, drawn-out criminal process. That, however, could draw closer scrutiny. The timing of the indictment remains curious.
The Justice Department charged Bankman-Fried just before he was going to testify under oath for hours on every detail of the case. That is ordinarily a prosecutor’s dream: a potential windfall of self-incriminating statements that are fully admissible at trial. It only needed to wait a few hours but elected to stop the congressional testimony shortly before it was to start.
Pressuring his parents could be the final straw for Bankman-Fried, who is looking at a high likelihood of conviction on counts that can individually bring up to 20 years in prison. While offenses are likely to run concurrently, he can count on little sympathy from a sentencing court if convicted.
That is why a plea “in place of his parents” may be the one prospect SBF has to eke out an “effective altruistic” element to his criminal charges. This movement is based on the notion of “using evidence and careful reasoning to work out how we can do the most good with our limited resources.”
Bankman-Fried reportedly claims he is down to just $100,000 of cash in his bank. His “limited resources” may be reduced to his ability to assume the costs for others, particularly his parents. After wheeling and dealing in billions, SBF has become his own sole remaining asset. That is why the Justice Department just might offer him one final “effective altruistic” moment.
Get Woke, Go Broke: Washington Post Staff Meeting Erupts Into Chaos As Layoffs Announced
After losing more than half a million subscribers in the past two years, did the far-left writers and employees at the Washington Post really think they would avoid any consequences?
It would appear that they are exactly as oblivious as many people suspected.
A recent hidden camera video has surfaced of the latest Washington Post employee “town hall” meeting, in which CEO Fredrick Ryan delivers the bad news that the company will be executing worker layoffs after subscription revenues plummeted.
Not surprisingly, the employees (presumably made up primarily of journalists) erupted into a mass chatter of squawking chickens, demanding answers as well as job guarantees.
The Washington Post has long operated as a mouthpiece/bullhorn for establishment propaganda, and has functioned as an attack dog against conservatives for years rather than an accurate news source. Specifically, the outlet’s use of fraudulent “fact checking” has contributed to a considerable decline in public trust, and this habit accelerated after Jeff Bezos acquired the Post in 2013. Amazon must not be doing so great this holiday season, and funds are drying up.
The corporate media is facing a reckoning this year going into 2023. Their audience numbers are in steep decline and have been since before the covid pandemic. While PPP loans and stimulus measures may have kept some of these outlets afloat, even that life raft is now disappearing along with ever shrinking ad revenues. The real culprit behind the fall of these companies, though, is themselves.
Woke zealotry does not sell. This is a fact proven time and time again, even more so in the past two years. When a media edifice chooses to cater to a tiny percentage of the population, many of them younger zennials with little to no money, it is only a matter of time before they face a profit collapse. The Washington Post is a victim of its own elitist ideology, and many of the employees are just as guilty as the leadership. Get woke, go broke.
The Greatest Risk Next Year Is That The Fed Gets Its Way
Authored by Simon White, Bloomberg macro strategist,
The market’s view for next year is now pretty consistent:
inflation will keep falling at its current pace;
the Fed will exercise a relatively large pivot later next year and into 2024;
the economy will avoid a recession (even though most forecasters expect one);
and stocks will remain in a bear market.
The main unpriced risks are that:
inflation stops falling as quickly as it has been and the Fed pushes through its “higher-for-longer” agenda, which would lead to sharp falls in stocks and bonds, and higher equity volatility; or
we get a recession, and this happens much faster than expected.
The first is unlikely.
Fixings from inflation swaps (as inferred by Bloomberg calculations) show that monthly y/y headline CPI prints should steadily fall all next year to under 2.5% by November, which accords with several other leading indicators.
Secondly, this year the Fed has stated its desire that rates will remain restrictive for some time, but to no avail. Generally the market has heeded the Fed’s calls for a higher peak Fed Funds, but then it has implied that the Fed will have to make an even deeper and faster about-turn.
This is the greatest “unexpected”, endogenous risk facing markets: that the Fed is able to ram home its “higher for longer” preference. However, without a sudden change to the expected inflation path next year, it’s hard to see how the Fed will be able to do this. Still, its unexpectedness means this is where the greatest trading opportunities lie — i.e. much weaker stocks than current bearish expectations, rising equity volatility, and higher bond yields and steeper curves.
The more likely risk, but one still not yet fully priced, is if we get a recession.
The market continues to infer the anticipated Fed pivot (about 180 bps of cuts over 2023/24) is enough to dodge a recession, with equities currently behaving as if they are in a bear market that does not coincide with one.
A final downside risk facing markets is that recessions tend to come on abruptly, leading to a much deeper and faster Fed pivot than is now priced.
Costco will be increasing membership fees as early as next year, CFO Richard Galanti confirmed during an earnings call last week. Galanti hinted at the increases earlier this year in an earnings call, when he responded to a UBS analyst who asked about the possibility of a membership hike this year, and noted the move might come “especially in light of companies like Amazon and Netflix raising their fees.”
That said, Galanti suggested that Costco “look[s] less at what others do,” and more about the intervals between Costco’s previous increases.
The hike may come as early as January 2023, but he said the company was in no rush.
“We feel that we’re in a very strong competitive position right now,” he said, adding “If we have to wait a few months or several months, that’s fine,” Galanti said, adding that he believes in the loyalty of Costco members – who have remained members throughout previous increases in fees regardless of inflation.
Right now Costco’s executive memberships cost $120 per year, for which members earn a 2% reward on some purchases. These constitute around 45% of of memberships, but represent around 73% of worldwide sales according to Galanti. Business and Gold Star members pay $60 per year.
Costco earned around $1 billion in membership fees between July and the end of September.
The company has 847 warehouses worldwide – including 583 in the US and Puerto Rico. Outside the US, Costco has a presence in Canada, Mexico, Japan, the UK, South Korea, Taiwan, Australia, Spain, France, China, Iceland, New Zealand, and Sweden. The company opened 24 locations this year, and hopes to increase that to 30 per year over the next 5-10 years.
“Certainly, we have a lot of activity going on,” he said, adding that the company has tried to keep prices as low as possible as inflation spiked during the year.
“As commodity costs are mostly coming down, whether it’s corn flour, sugar, and butter or even some things like steel, a few things are up. But overall, we’re seeing a little bit of a trend,” he told investors.
In October, competitor Sam’s Club raised its membership fees for the first time in a decade, from $45 to $50 per year for Club members, and from $100 to $110 per year for Plus members.
The major left leaning U.S. news networks have spent only 14 minutes between them covering Elon Musk’s ongoing release of the Twitter files, which have highlighted a policy of censorship based on the partisan political alignment of woke former company executives and employees.
The data drops, which have also revealed that former Twitter execs, were regularly meeting with U.S. intelligence officials and policing content at their behest, have been almost completely ignored by the likes of CNN, NBC, ABC and CBS.
Let’s see which mainstream media outlets cover the “Twitter files”
Fox News reports that Grabian’s analysis of news transcripts shows the term “Twitter files” has only been used six times by anchors.
The report notes that “CNN covered the story for three minutes, only on Dec. 9, while MSNBC spent two minutes on the story the same day, as well as five minutes on Dec. 11 and four minutes on Dec. 12.”
“CBS News, ABC News, and NBC News have not discussed the Twitter files in the last week,” it adds.
MSNBC’s coverage basically consisted of hosts Mehdi Hasan and Joe Scarborough dismissing the bombshell revelations as nothing of any importance.
“Do the Twitter files show evidence of left-wing bias on Twitter?,” Hasan asked rhetorically, answering “No. In fact, the whole Twitter-discriminates-against conservatives-line that Elon or his spin merchants, conservative journalists, like to spout, is literally the opposite of the truth.”
According to the legacy media, despite concrete proof, it’s still a ‘conspiracy theory’ that Twitter was shadow banning and blacklisting accounts of conservatives.
As we highlighted last week, Musk announced that he thinks it is likely that some data that was contained in files on Twitter servers has been hidden and deleted since he vowed to make everything public.
Musk’s comments came in the wake of the ‘exiting’ of James Baker, the FBI affiliated Twitter Deputy General Counsel who was revealed to have vetted the first round of files without Musk’s knowledge, before they were sent to journalist Matt Taibbi.
In the age of mass Silicon Valley censorship It is crucial that we stay in touch. We need you to sign up for our free newsletter here. Support our sponsor – Turbo Force – a supercharged boost of clean energy without the comedown. Also, we urgently need your financial support here.
“Anyone Who Thinks This Is A Pivot Is Wrong”: ECB Doubles Down On Hawkish Signals As it Hikes Into Recession
Here are the top five takeaways from the hawkish ECB policy decision and Lagarde’s even more hawkish press briefing (via BBG).
The ECB opted for a 50 basis-point rate hike, following in the footsteps of the Fed and BOE with a slower pace of tightening
Yet Lagarde and other officials set out to send a more hawkish message, stressing the ECB’s intention to raise rates significantly at a steady pace. “Anyone who thinks the ECB is pivoting is wrong”, she said.
The reason is a significant increase in inflation forecasts, with even core inflation seen above target in 2025.
The euro reversed losses to hit a six-month high versus the dollar; euro-area bonds dropped, German two-year yields surged by 28 basis points. The Euro has since dropped and reversed almost all gains, however.
The ECB also gave an overview of how it expects to begin reducing its balance sheet, saying it will start in March at a “measured and predictable pace” amounting to €15 billion per month on average until the end of the second quarter
After successive hikes of 75 basis points, the ECB lifted the deposit rate more slowly on Thursday, to 2%, as economists expected. But there was little dovishness elsewhere: pledging to push borrowing costs “significantly” higher, officials widened efforts to tame prices with a decision to shrink their €5 trillion ($5.3 trillion) bond portfolio.
“Anybody who thinks that this is a pivot for the ECB is wrong,” Lagarde told a news conference. “We should expect to raise interest rates at a 50 basis-point pace for a period of time.”
“We have more ground to cover, we have longer to go and we are in for a long game,” she said adding that “we will sustain a course, it will not be enough to hit and withdraw, we will sustain the course because we want those levels of inflation to remain at those restrictive levels long enough so that we can be confident that inflation returns to target.”
And speaking of inflation, here is the ECB’s latest forecast.
Similar to the Fed, the ECB raised its inflation projections for the euro zone on Thursday and said price growth would remain above its 2% target throughout a projection horizon that now extends to 2025. Which is funny, because the ECB has persistently underestimated inflation over the past two years, and the bank has raised interest rates at four successive meetings to tame unexpectedly persistent price pressures. So it has gone from overly dovish to overly hawkish, and inflation will tumble long before the 2025 bogey.
In any case, the bank now sees inflation in the 19-country currency bloc at 6.3% next year, compared with expectations for 5.5% made in September. Its 2024 forecast was raised to 3.4% from 2.3% while, in its first estimate for 2025, the ECB sees inflation then at 2.3%. Initially driven by post-COVID supply chain bottlenecks – which the ECB had some control over – inflation has been surging on sky-high energy prices – which the ECB has no control over – but food and services costs are now becoming increasingly prominent, making price growth relatively broad.
Economic growth will meanwhile suffer badly next year as a result of Russia’s war in Ukraine, particularly the impact of high energy prices. The ECB now sees GDP growth at 0.5% next year – the same as the Fed does for the US and hints at a recession next year – compared with 0.9% forecast in September, while in 2024, it is projected at an unchanged 1.9%. In 2025, the ECB sees growth at 1.8%.
Traders added to rate-hike bets, pricing a deposit-rate peak of 3% next year, compared with 2.93% earlier. The Stoxx Europe 600 Index dropped as much as 2.5%, sinking to the lowest level in a month and the most in nearly two months as rates-sensitive sectors like technology and retailers slumped.
Lagarde said financial markets hadn’t adequately accounted for the amount borrowing costs would need to rise to quell inflation.
Earlier:
Expectations of a 50bps hike were pretty much locked in – so no surprise there at all from The ECB’s decision today (to hike 50bps), but the timing of the start of quantitative tightening is what most traders are eyeing with expectations for a ‘grey’ ‘first quarter of 2023’ range being expected (kicking the decision can down the road).
The 50bps follows the Fed, SNB, and Boe decisions in the last 24 hours, and the guidance that interest rates “will still have to rise significantly at a steady pace” sounds pretty hawkish.
Additionally, The ECB to continue to be flexible in its PEPP reinvestment (as needed) and added that QT will begin in March at a “measured, predictable pace”, with the average monthly decline in bonds will amount to 15 billion euros until the end of the second quarter.
🇪🇺 The ECB hikes rates by 50bp as expected, but gives *very* hawkish guidance, based on the “substantial upward revision” to inflation, noting that interest rates will still have to rise “significantly at a steady pace” to reach levels that are sufficiently restrictive. pic.twitter.com/uKT6PYsg85
The ECB raised its inflation expectations and notably it remains above 2.0% targets into 2025…
ECB Sees Inflation at 6.3% in 2023, 3.4% in 2024, 2.3% in 2025
Sees Inflation Ex-Food, Energy at 4.2% in 2023; Prior 3.4%
Sees Inflation Ex-Food, Energy at 2.8% in 2024; Prior 2.3%
Sees Inflation Ex-Food, Energy at 2.4% in 2025
And cut 2023’s GDP forecast (while hiking 2022):
ECB Sees GDP at 3.4% in 2022; Prior Forecast 3.1%
ECB Sees GDP at 0.5% in 2023; Prior Forecast 0.9%
ECB Sees GDP at 1.9% in 2024; Prior Forecast 1.9%
The Euro has fallen on 5 of the last 7 ECB meeting days and while options implied this would be one of the quietest ECB days since April, there was still lots of room for volatility. For now the initial reaction is a small rebound in the Euro…
German 2Y yields spiked on the news…
Watch Lagarde live here (due to start at 0845T):
Full ECB Statement:
Monetary policy decisions
The Governing Council today decided to raise the three key ECB interest rates by 50 basis points and, based on the substantial upward revision to the inflation outlook, expects to raise them further. In particular, the Governing Council judges that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target. Keeping interest rates at restrictive levels will over time reduce inflation by dampening demand and will also guard against the risk of a persistent upward shift in inflation expectations. The Governing Council’s future policy rate decisions will continue to be data-dependent and follow a meeting-by-meeting approach.
The key ECB interest rates are the Governing Council’s primary tool for setting the monetary policy stance. The Governing Council today also discussed principles for normalising the Eurosystem’s monetary policy securities holdings. From the beginning of March 2023 onwards, the asset purchase programme (APP) portfolio will decline at a measured and predictable pace, as the Eurosystem will not reinvest all of the principal payments from maturing securities. The decline will amount to €15 billion per month on average until the end of the second quarter of 2023 and its subsequent pace will be determined over time.
At its February meeting the Governing Council will announce the detailed parameters for reducing the APP holdings. The Governing Council will regularly reassess the pace of the APP portfolio reduction to ensure it remains consistent with the overall monetary policy strategy and stance, to preserve market functioning, and to maintain firm control over short-term money market conditions. By the end of 2023, the Governing Council will also review its operational framework for steering short-term interest rates, which will provide information regarding the endpoint of the balance sheet normalisation process.
The Governing Council decided to raise interest rates today, and expects to raise them significantly further, because inflation remains far too high and is projected to stay above the target for too long. According to Eurostat’s flash estimate, inflation was 10.0% in November, slightly lower than the 10.6% recorded in October. The decline resulted mainly from lower energy price inflation. Food price inflation and underlying price pressures across the economy have strengthened and will persist for some time. Amid exceptional uncertainty, Eurosystem staff have significantly revised up their inflation projections. They now see average inflation reaching 8.4% in 2022 before decreasing to 6.3% in 2023, with inflation expected to decline markedly over the course of the year. Inflation is then projected to average 3.4% in 2024 and 2.3% in 2025. Inflation excluding energy and food is projected to be 3.9% on average in 2022 and to rise to 4.2% in 2023, before falling to 2.8% in 2024 and 2.4% in 2025.
The euro area economy may contract in the current quarter and the next quarter, owing to the energy crisis, high uncertainty, weakening global economic activity and tighter financing conditions. According to the latest Eurosystem staff projections, a recession would be relatively short-lived and shallow. Growth is nonetheless expected to be subdued next year and has been revised down significantly compared with the previous projections. Beyond the near term, growth is projected to recover as the current headwinds fade. Overall, the Eurosystem staff projections now see the economy growing by 3.4% in 2022, 0.5% in 2023, 1.9% in 2024 and 1.8% in 2025.
Key ECB interest rates
The Governing Council decided to raise the three key ECB interest rates by 50 basis points. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 2.50%, 2.75% and 2.00% respectively, with effect from 21 December 2022.
Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP)
The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP until the end of February 2023. Subsequently, the APP portfolio will decline at a measured and predictable pace, as the Eurosystem will not reinvest all of the principal payments from maturing securities. The decline will amount to €15 billion per month on average until the end of the second quarter of 2023 and its subsequent pace will be determined over time.
As concerns the PEPP, the Governing Council intends to reinvest the principal payments from maturing securities purchased under the programme until at least the end of 2024. In any case, the future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance.
The Governing Council will continue applying flexibility in reinvesting redemptions coming due in the PEPP portfolio, with a view to countering risks to the monetary policy transmission mechanism related to the pandemic.
Refinancing operations
As banks are repaying the amounts borrowed under the targeted longer-term refinancing operations, the Governing Council will regularly assess how targeted lending operations are contributing to its monetary policy stance.
The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation returns to its 2% target over the medium term. The Transmission Protection Instrument is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.
US Industrial Production Annual Growth Slowest Since March 2021
After a slew of weak data, US Industrial Production did not do anything to help matters as it fell 0.2% MoM (worse than the 0.0% expected) – its weakest MoM drop since Sept 2021.
Source: Bloomberg
On a YoY basis, the +2.5% growth is the weakest since March 2021.
Manufacturing also tumbled in November, dropping 0.6% MoM – also the worst since Sept 2021…
Source: Bloomberg
Overall capacity utilization dropped further in November to 79.66% – the lowest since Feb 2022…
Source: Bloomberg
Is this what Powell wants to see? Is monetary policy’s long and variable lag finally catching up to the real economy?
