Authored by Andrew Moran via The Epoch Times (emphasis ours),

U.S. oil and gas sector activity advanced at a strong pace, although the rate of expansion decelerated in the third quarter, according to the Federal Reserve Bank of Dallas Energy Survey for the third quarter.

The business activity index, a measurement of conditions facing energy companies in the region, fell to 46.0 in the July-to-September period from the second quarter’s record of 57.7.

Executives at exploration and production (E&P) firms noted that crude oil and natural gas production increased at a solid rate of 31.7 and 35.6, respectively.

Costs continue to remain elevated for the seventh consecutive quarter as the index for input costs clocked in at 83.9. None of the 58 oilfield services firms that participated in the regional central bank’s quarterly survey recorded a drop in input costs. In addition, the indexes for finding and development costs and lease operating expenses for E&P entities eased slightly to 64.7 and 70.2, respectively.

“Oilfield service inflation has increased, uncertainty has increased and oil prices have decreased. This is a recipe for lower to flat industry spending in 2023,” one E&P executive stated.

Supply chain disruptions and labor shortages continue to be enormous challenges for the oil and gas industry. Supplier delivery times still lagged and remained above the industry average. While there was robust growth in employment, wages, and hours executives noted that it’s difficult to attract talent.

Businesses are struggling to obtain critical parts for hydraulic fracturing, drilling rigs, and other crucial tools. But executives revealed that they also find it hard to hire oilfield service workers and truckers amid limited worker availability.

“The labor issue will provide a restraint on any major increase in oil and gas production for the domestic market―this, as well as the regulations from the present administration as they chase green energy policy,” an E&P executive remarked in the report.

“The biggest challenge for us is adding employees. We are trying to add qualified staff, with little success, and that will negatively impact growth. Second is the rising cost of services,” another executive noted.

Overall, optimism diminished last quarter, with the outlook uncertainty index soaring to 35.7 from 12.4. At the same time, there was a divergence of uncertainty among oilfield services firms and E&P organizations: 17.8 compared to 45.2.

“The uncertainty over future inflation and/or a recession weighs heavily upon us,” one E&P executive commented in the survey.

But one oil and gas support services firm executive suggested that President Joe Biden and his administration are against the energy industry.

“The administration is holding us back, with no love of oil,” the person said.

When it comes to crude oil and natural gas prices, opinions were mixed. Some suggest that White House policies and a paucity of capital for E&P firms could be “wonderful news for long-term prices.” Others contend that global economic uncertainty and recession fears could send prices lower.

According to data from the Energy Information Administration (EIA), crude oil production remains approximately 1 million barrels below the pre-pandemic level of 13.1 million barrels. Overall, domestic crude output is expected to average roughly 11.9 million barrels in 2022.

‘Phasing Out the Use of Oil’

This week, the Biden administration proposed new rules on the national oil and gas sector.

The Interior Department’s Bureau of Land Management (BLM) released a proposal on Monday that imposes monthly limitations on gas flaring on federal lands. If companies are caught exceeding those limits, they will be charged fees. The measure, which regulators say would prevent waste and boost efficiency, also mandates energy firms to improve the detection of methane leaks.

“This proposed rule will bring our regulations in line with technological advances that industry has made in the decades since the BLM’s rules were first put in place, while providing a fair return to taxpayers,” said Interior Secretary Deb Haaland in a statement.

Critics assert that this is another example of the administration’s war on the oil and gas industry. But John Kirby, the National Security Council Coordinator for Strategic Communications, pushed back against some of these criticisms.

“The president has issued 9,000 permits for drilling on U.S. federal lands … 9,000 of them being unused. There are plenty of opportunities for oil and gas companies to drill here in the United States,” he told reporters during a White House press briefing on Monday.

However, Amos Hochstein, the Special Envoy and Coordinator for International Energy Affairs and top Biden energy advisor, told CNBC on Wednesday that “we’re going to be phasing out the use of oil.”

On Nov. 26, the Treasury Department announced that it would permit Chevron to resume pumping crude from Venezuela’s oil fields. One of the world’s largest energy companies will be allowed to extract oil in a joint partnership with the national oil firm, Petróleos de Venezuela.

Since the 2020 presidential election, Biden has vowed to end the fossil fuel industry, announcing in November 2020 that his administration would be “banning new oil and gas permitting on public lands and waters” to stop climate change.

Speaking at a campaign event in New York for Gov. Kathy Hochul, President Biden told a climate protester that “there is no more drilling. I haven’t formed any new drilling.”

A superficial take of today’s jobs report would note that both jobs and earnings “blew past expectations, flying in the face of Fed rate hikes”, and while that is accurate at the headline level, it couldn’t be further from the truth if one actually digs a little deeper in today’s jobs numbers.

Recall that back in August, September, and October we showed that a stark divergence had opened between the Household and Establishment surveys that comprise the monthly jobs report, and since March the former has been stagnant while the latter has been rising every single month. In addition to that, full-time jobs were plunging while part-time jobs were surging and the number of multiple-jobholders soared.

Fast forward to today when the inconsistencies not only continue to grow, but have become  downright grotesque.

Consider the following: the closely followed Establishment survey came in above expectations at 263K, above the 200K expected – a record 7th consecutive beat vs expectations –  and down modestly from last month’s upward revised 284K…

… numbers which confirm that at a time when virtually every major tech company is announcing mass layoffs…

… the BLS has a single, laser-focused political agenda – not to spoil the political climate at a time when Democrats just lost control of the House as somehow both construction (+20K) and manufacturing (+14K) added jobs according to the BLS, when even ADP now reports that these two sectors combined shed more than 100,000 workers in November.

Alas, there is only so much the Department of Labor can hide under the rug because when looking at the abovementioned gap between the Household and Establishment surveys which we have been pounding the table on since the summer, it just blew out by a whopping 401K as a result of the 263K increase in the number of nonfarm payrolls (tracked by the Household survey) offset by a perplexing plunge in the number of people actually employed which tumbled by 138K (tracked by Household survey). Furthermore, as shown in the next chart, since March the number of employed workers has declined on 4 of the past 8 months, while the much more gamed nonfarm payrolls (goalseeked by the Establishment survey) have been up every single month.

What is even more perplexing, is that despite the continued rise in nonfarm payrolls, the Household survey continues to telegraph growing weakness, and as of Nov 30, the gap that opened in March has since grown to a whopping 2.7 million “workers” which may or may not exist anywhere besides the spreadsheet model of some BLS (or is that BLM) political activist. In fact, one look at the chart below confirms all one needs to know about BLS “data integrity.”

Showing this another way, there were 158.458 million employed workers in March 2022… and 158.470 million in November 2022 an increase of just 12,000 over 8 months, a period in which the number of payrolls (which as a reminder is the number the market follows) reportedly increased by 2.7 million!

As an aside, it appears this is not the first time the “apolitical” Bureau of Labor Statistics has pulled such a bizarre divergence off: it happened right before Obama’s reelection:

And then again: right before Hillary’s “100% guaranteed election (because one wouldn’t want a soft economy to adversely impact her re-election odds).

It gets better: digging in even deeper into the far more accurate and nuanced Household Survey, we find that the November drop in Employment was the result of a plunge in part-time workers, more than offsetting the modest increase in part-time workers which had declined in 3 of the past 4 months heading into November.

Further to this point, as shown below, since March, the US has lost 398K full-time employees offset by amodest gain of 190K part-time employees, while a whopping 291k workers were forced to get more than one job over the same period.

And while none of the above is really new – we have documented the record divergence between payrolls and employment for half a year now – there were two new developments: first, to facilitate its rigging of the data, the BLS has resorted to the oldest trick in the book, boosting the core goal-seek factor, the business “birth death” adjustments, which in October hit a record high 455K, and although it has since dipped to 14K in November, the trend in speculative BLS assumptions about the viability of the US economy (more businesses are created than are shut down only when there is economic solid growth) is clearly visible in the chart below.

One final point: a former Fed staffer Julia Coronado points out, we have reached the absurd part of the business cycle when average hours are declining in certain sectors even as hourly earnings are rising, prompting her to wonder if we are not in fact seeing a spike in hourly income courtesy of lump-sump severance payments.

Looks like we are getting a possible boost to average hourly earnings from severance pay–jobs and hours are declining in transportation and warehousing yet AHE jumped 2.5% m/m pic.twitter.com/ac8aHdEuXV

— Julia Coronado (@jc_econ) December 2, 2022

So what’s going on here?

The simple answer: as shocking as this may sound, there has been no change in the number of people actually employed in the past 8 months, but due to deterioration in the economy, more people are losing their higher-paying, full-time jobs, and switching into much lower- paying, benefits-free part-time jobs, which also forces many to work more than one job, a rotation which picked up in earnest some time in March and which has only been captured by the Household survey. Meanwhile the Establishment survey plows on ahead with its politically-motivated approximations, seasonal adjustments, and other labor market goalseeking meant to make the Biden admin look good and provide the Fed with ammo to keep rates high (thus forcing even more real layoffs, which unfortunately the BLS is incapable of capturing due to political reasons).

And since the Establishment survey is far slower to pick up on the nuances in employment composition, while the Household Survey has gone nowhere since March, the BLS data engineers have been busy goalseeking the Establishment Survey (with the occasional nudge from the White House especially now that the Biden admin needs something to hang its hat on after the GOP recaptured the House) to make it appear as if the economy is growing strongly, when in reality all they are doing is applying the same erroneous seasonal adjustment factor that gave such a wrong perspective of the labor market in the aftermath of the covid pandemic (until it was all adjusted away a year ago). In other words, while the labor market is already cracking, it will take the BLS several months of veering away from reality before the government bureaucrats accept and admit what is truly taking place.

As an aside, here we admit we were wrong: back in August we said that “we expect that “realization” to take place just after the midterms, because the last thing the Biden administration can afford is admit the labor market is crashing in addition to the continued surge in inflation.” Little did we know just how stubborn and intent the White House is to stick to the broken narrative that all is well in the US.

Or, putting it otherwise as BofA’s Michael Hartnett did earlier today (and as we will discuss in a subsequent post) – “unemployment in ’23 will be as shocking to Main St consumer sentiment as inflation in ’22.”

We’re gonna need another ‘dovish’ Powell speech to calm this market down.

This morning’s hotter than expected payrolls print (and reaccelerating wage growth) is not what the market or The Fed wanted to see to keep the ‘pause/pivot’ dream alive and rate-hike expectations are spiking and rate-cut hopes are tumbling…

This sent TSY yields soaring, led by the short-end…

And slammed stocks lower…

And spiked the dollar…

As Peter Tchir notes, the big news is earnings! Last month was up 0.5% instead of original 0.4% and this month was up a whopping 0.6% (versus 0.3% expected). Fed will not like that.

Establishment showing 263k jobs, with an upward revision of 23k to last month, but negative 46k the prior month (almost like we overstate jobs and claw back a bit over time). Household survey showed 138k job losses (with 328k lost last month). Why do we bother with two surveys?

Unemployment rate held steady at 3.7% but only because the labor force participation rate dropped – again!

We should give up some of this week’s gains (on rates, spreads and equities) and jobs, once again seems to be the strongest part of the economy (though Establishment survey seems to see more jobs than ADP or Household, but c’est la vie).

The pre-FOMC blackout period closes and leaves the market on its own to create a narrative that the pause is still alive…

It was supposed to be the lowest payrolls report since December 2020 and… it was, but not how the market expected. With consensus expecting a 200K print (and whisper predicting much lower amid the mass tech layoffs), virtually nobody – not even Goldman – expected anything resembling a beat. And while we did in fact get the weakest print since Dec 2020 (and tied with March 2021), the report was a completely unexpected beat to expectations, coming in at +263K, this was a huge beat to expectations of 200K (the 7th consecutive beat) and just barely a drop compared to the upward revised 284K last month.

The change in total nonfarm payroll employment for September was revised down by 46,000, from +315,000 to +269,000, and the change for October was revised up by 23,000, from +261,000 to +284,000. With these revisions, employment gains in September and October combined were 23,000 lower than previously reported

Monthly job growth has averaged 392,000 thus far in 2022, compared with 562,000 per month in 2021. In November, the biggest job gains occurred in leisure and hospitality (bartenders and waiters), health care, and government. Employment declined in retail trade and in transportation and warehousing.

As noted, this was the 7th consecutive payrolls beat of expectations in a row!

The unemployment rate was unchanged at 3.7% in November, in line with expectations, and has been in a narrow range of 3.5% to 3.7% since March. The number of unemployed persons was essentially unchanged at 6.0 million in November.  Among the major worker groups, the unemployment rates for adult men (3.4 percent), adult women (3.3 percent), teenagers (11.3 percent), Whites (3.2 percent), Blacks (5.7 percent), Asians (2.7 percent), and Hispanics (3.9 percent) showed little or no change over the month. (See tables A-1, A-2, and A-3.)

Both the labor force participation rate, at 62.1 percent, and the employment-population ratio, at 59.9 percent, were little changed in November and have shown little net change since early this year.

But what was the most troubling update is that wages came in red hot again, with average hourly earnings for all employees on private nonfarm payrolls rising by 18 cents, or 0.6%  to $32.82, double the expected 0.3% growth . Over the past 12 months, average hourly earnings have increased by 5.1% which was also above the 4.6% expected.

Here is Cornerstone Financial’s Cliff Hodge on the earnings data: “While the headline payrolls number was strong, the wage data is going to be eye-popping for the Fed. The 0.6% month-over-month wage growth number matched the highest level all year. Higher wages feed into higher inflation, which will no doubt keep pressure on the Fed and should increase expectations for the terminal rate. We got no help from the participation rate, which continues to move in the wrong direction and will keep competition for labor high until the economy inevitably rolls over sometime next year.”

In November, the average workweek for all employees on private nonfarm payrolls declined by 0.1 hour to 34.4 hours. In manufacturing, the average workweek for all employees decreased by 0.2 hour to 40.2 hours, and overtime declined by 0.1 hour to 3.1 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 33.9 hours.

Some more details:

• Among the unemployed, the number of permanent job losers rose by 127,000 to 1.4 million in November. The number of persons on temporary layoff changed little at 803,000.
• The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.2 million in November. The long-term unemployed accounted for 20.6 percent of all unemployed persons.
• The number of persons employed part time for economic reasons was about unchanged at 3.7 million in November. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.
• The number of persons not in the labor force who currently want a job was little changed at 5.6 million in November and remains above its February 2020 level of 5.0 million. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.
• Among those not in the labor force who wanted a job, the number of persons marginally attached to the labor force held at 1.5 million in November. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, was 405,000 in November, little changed from the previous month.

Drilling down into the BLS’s establishment survey fabulation we get the following ridiculous modeled “data”:

• Leisure and hospitality added 88,000 jobs in November, including a gain of 62,000 in food services and drinking places. Leisure and hospitality has added an average of 82,000 jobs per month thus far this year, less than half the average gain of 196,000 jobs per month in 2021.
• In November, employment in health care rose by 45,000, with gains in ambulatory health care services (+23,000), hospitals (+11,000), and nursing and residential care facilities (+10,000).
• Government added 42,000 jobs in November, mostly in local government (+32,000). Government employment has increased by an average of 25,000 per month thus far this year, compared with 38,000 per month in 2021. Since February 2020, government employment is down by 461,000, or 2.0 percent.
• In November, employment in the other services industry rose by 24,000, as personal and laundry services added 11,000 jobs over the month. Other services employment has increased by an average of 15,000 per month thus far this year, compared with 24,000 per month in 2021. Employment in other services is below its February 2020 level by 186,000, or 3.1 percent.
• Employment in social assistance increased by 23,000 in November and has returned to its February 2020 level. Within social assistance, employment in individual and family services increased by 17,000 in November. Job growth in social assistance has averaged 18,000 per month thus far in 2022, compared with an average of 13,000 per month in 2021.
• Construction employment continued to trend up in November (+20,000), with nonresidential building adding 8,000 jobs. Construction has added an average of 19,000 jobs per month thus far this year, little different from the 2021 average of 16,000 per month.
• Employment in information rose by 19,000 in November. Employment in the industry has increased by an average of 14,000 per month thus far this year, in line with the average of 16,000 per month in 2021.  
• Manufacturing employment continued to trend up in November (+14,000). Job growth has averaged 34,000 per month thus far this year, little different from the 2021 average of 30,000 per month.
• In November, employment in financial activities continued its upward trend (+14,000). Job gains in real estate and rental and leasing (+13,000) and in securities, commodity contracts, and investments (+6,000) were partially offset by a decline in credit intermediation and related activities (-9,000). Employment in financial activities has increased by an average of 12,000 per month thus far this year, the same as in 2021.
• Employment in retail trade declined by 30,000 in November. Job losses in general merchandise stores (-32,000), electronics and appliance stores (-4,000), and furniture and home furnishings stores (-3,000) were partially offset by a job gain in motor vehicle and parts dealers (+10,000). Retail trade employment has fallen by 62,000 since August.
• Employment in transportation and warehousing declined by 15,000 in November and has decreased by 38,000 since July. In November, job losses in warehousing and storage (-13,000) and in couriers and messengers (-12,000) were partially offset by a job gain in air transportation (+4,000).  
• Employment in professional and business services changed little in November (+6,000). Within the industry, professional and technical services added 28,000 jobs, while business support services lost 11,000 jobs. Monthly job growth in professional and business services has averaged 58,000 thus far in 2022, down from 94,000 per month in 2021.

And a visual heatmap of jobs courtesy of Bloomberg:

Needless to say this report, clearly politically motivated in light of everything else taking place in the economy, has put the Fed in a corner: while most other economic indicators scream recession, Biden’s last economic silver lining – the labor market – continues to come in far hotter than expected, and as such it forces Powell to keep tightening until such time as the bottom falls out of the economy and the US goes straight from expansion to depression, skipping recession completely.

Matt Maley, chief market strategist for Miller Tabak agrees: “The number one issue for the Fed has been wage inflation. Today’s much higher than expected data on average hourly earnings shows that it is still a big problem. This will prolong the Fed’s current tightening policy.”

As BBG economist Anna Wong notes, “The robust November jobs report reinforces a point Fed Chair Jerome Powell made in his Nov. 30 speech: Signs that wage growth is moderating are only ‘tentative.’ The resurgence of average hourly earnings growth shows labor shortages are still pressuring inflation, pushing back against the idea — supported by a few Fed officials, as indicated in the November FOMC minutes — that wage growth is cooling fast. Given the slow adjustment in the labor market, Fed officials will likely have to raise their terminal-rate forecast from what they wrote down in the September dot plot.”

And in keeping with the market reaction matrix we shared earlier, the kneejerk reaction for all risk assets – stocks, TSYs, gold, and crypto – is uniformly lower.

Authored by Steve Watson via Summit News,

Senator Rand Paul asserted Thursday that Anthony Fauci is directly responsible for funding dangerous research that likely killed millions of people, and that he “won’t get away.”

“Likely there is no public health figure who has made a greater error in judgement than Dr Fauci,” Paul declared in a Fox News appearance, adding “the error of judgement was to fund gain of function research in a totalitarian country.”

Fauci funded “research that allowed them to create super viruses, that in all likelihood leaked into the public and caused seven million people to die,” Paul declared.

“This is right up there with decisions, some of them malevolent or military to kill millions of people,” The Senator further urged.

Watch:

The Senator made the comments after Fauci appeared in a fawning Washington Post interview, where he was labeled a “hero,” complained about being a victim, and couldn’t think of anything he did wrong.

Fauci: “I didn’t do a study on it, but from what I’m seeing … the people who are spreading misinformation & disinformation, seem to be relentless … It’s almost as if we’re outgunned by the people who are spreading disinformation.” pic.twitter.com/Pb1Pei7C7x

— Tom Elliott (@tomselliott) December 1, 2022

Paul further noted that “It goes to judgement, talk about errors, you think he might apologise to the world… to support that kind of research then look the other way and say nothing to see here, and to cover it up.”

“For the last two years he’s been covering his tracks, but we’ve caught him red handed and he won’t get away,” Paul asserted, adding “historically [Fauci] will be remembered for one of the worst judgments in the history of modern medicine.”

Paul also commented on efforts he is leading to overturn the Biden Administration’s COVID vaccine mandate for military personnel.

“They deserve to have their religious freedom, as well as their medical choices and freedom to decide what goes into their body,” Paul noted.

He continued, “We know this, and this is a scientific fact, the vaccine does not prevent you from getting an infection, it doesn’t prevent you from transmitting an infection, and for young people there isn’t significant evidence to show that it reduces the severity or hospitalisation.”

“The military has become so ‘woke’ and they’re demanding you get a vaccine that you don’t need, so something’s got to change,” the Senator further urged.

*  *  *

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US stock futures were muted, trading in a narrow 5 point range and unchanged for the second day in a row after a blistering post-Powell rally, as investors awaited the latest jobs report for clues around the strength of the domestic economy (with consensus expecting a +200K print, it will be the weakest monthly gain since Dec 2020) as well as its impact on the outlook for rate hikes. Contracts on the Nasdaq 100 and the S&P 500 were little changed 745 a.m. ET. The underlying indexes were also subdued Thursday after a sharp rally that was fueled by signals from Federal Reserve Chair Jerome Powell that the central bank could slow the pace of rate hikes at this month’s meeting.

Among notable movers in premarket trading, Marvell Technology dropped after the US chipmaker issued a tepid sales forecast for the fourth quarter. Zscaler Inc. also slumped after the cloud security company gave a forecast for calculated billings that fell slightly short of the average analyst estimate at the midpoint. Here are all the notable premarket movers:

• Marvell Technology shares drop 7% in premarket trading after the US chipmaker issued a tepid sales forecast for the fourth quarter. Analysts note that weakness stemmed from the company’s data-center business, as well as a broad softening in demand from China. This indicates that the decline in demand for chips continues to spread outside of the computer and smartphone industries, they said.
• Opendoor shares fall as much as 2.2% in premarket trading, after the real estate platform provider’s CEO Eric Wu stepped down to become president of its marketplace business to be replaced as CEO by Carrie Wheeler. Analysts said that the CEO change came as a surprise and raised questions around its timing amid a tough backdrop for the real estate market.
• Zscaler shares are down 9% in premarket, after the cloud security company gave a forecast for calculated billings that fell slightly short of the average analyst estimate at the midpoint. Analysts noted that revenue and billings growth decelerated as macro headwinds intensified.
• Asana shares slumped as much as 17% in premarket, after the software firm’s revenue forecast for the fourth quarter disappointed, with analysts cautious on the stock given its greater exposure to job losses in the technology industry, which could put pressure on future growth.
• Veeva shares drop 4.2% in postmarket trading after the company’s adjusted EPS and billings guidance for the fourth quarter missed Street estimate.
• Smartsheet’s strong quarterly results beat across the board and set the work-management software firm up well to deliver durable growth into next year, analysts say. Shares in the firm were up more than 9% in after-hours trading.
• Samsara rose 20% postmarket after the software company boosted its year revenue outlook. The company also posted 3Q sales that topped expectations and delivered a narrower-than-expected loss

US stocks have rallied since mid-October, with the S&P 500 posting its first two-month gain since August 2021, on bets that inflation has peaked. The blue-chip Dow is back in a technical bull market, but market strategists have warned equities could see further declines in the first half of next year amid the specter of a recession. Data from Bank of America, citing EPFR Global, showed US stock funds had their biggest outflows since April in the week through Nov. 30. US large cap funds had the largest redemptions at $14.5 billion. Among sectors, utilities and health care attracted inflows, while $600 million exited financials.

All eyes today are on the November non-farm payrolls report, with economists expecting it to show signs that labor demand is ebbing. Still, they say a bigger slowdown is needed to bring that more in line with labor supply in order to contain the wage growth that’s helped fuel inflation. We have posted a full preview here, but the median estimate for November jobs report’s employment change is 200k; crowd-sourced whisper number is 187k. Nonfarm payrolls change has exceeded the median estimate for seven months running; 2-year yield’s YTD high 4.799% was reached on Nov. 4 following October jobs report. 

In terms of the market’s reaction to the headline jobs print, this is what Goldman expects:

• >261k (aka higher than last print) S&P down at least 2%
• 175k – 261k S&P down 1 – 2%
• 125k – 175k S&P up 50bps – 1%
• 0 – 125k S&P up 1 – 2%

Many economists reckon Friday’s employment report may fall short of the turning point Fed officials are seeking in their battle to beat back inflation. The median projection in a Bloomberg survey calls for payrolls to rise 200,000 in November, cooling only slightly from the previous month. Other market watchers point to signs that steep rate hikes will tip more economies into a downturn.

“Nervous Fed-watchers will be hoping that the non-farms number comes in somewhat below consensus to strengthen the case for a moderation of aggressive rate hikes so far,” said Richard Hunter, head of markets at Interactive Investor. “On the other hand, a stronger-than-expected reading, while positive for the economy, would be damaging for that case in another example of good news being bad news for investors.”

“Consensus is that recession is coming but equities cannot bottom before it starts, inflation won’t fall quickly so central banks can’t blink, China reopening will be a messy process, and Europe remains tricky,” Barclays Plc strategist Emmanuel Cau wrote in a note.

And speaking of that, recession concerns have become more pronounced after data on Thursday showed November factory activity sliding in a range of countries, with American manufacturing contracting for the first time since May 2020. Recent company reports also hint at mounting pressure on company earnings, and companies, ranging from Amazon.com to Ford Motor Co., have announced thousands of job cuts.

In Europe, the Stoxx 50 is little changed before the release of US payroll data.  Here are the top European movers:

• Credit Suisse shares rise as much as 6.9%, halting a 13-day losing streak, as Chairman Axel Lehmann said the bank has mostly stemmed the huge outflow of client assets.
• AJ Bell jumps as much as 12% to its highest level in a year after Jefferies upgraded its rating to buy from hold, praising the strategy of the firm’s trading platform.
• Goldman Sachs upgrades both AB Foods and H&M to neutral. AB Foods shares rise as much as 4.3%, touching the highest since August, while H&M gains as much as 3.1%.
• Separately, Morgan Stanley sees a “perfect storm” ahead for apparel retail as revenue and cost pressures collide, in a note putting an overweight rating on AB Foods, equal-weights on Next and Inditex and underweight on H&M.
• Trigano hits the highest level since April, rising as much as 3.6% in a third straight day of gains since the French caravan maker announced results on Tuesday evening.
• Sanofi is the worst performer across France’s SBF 120 index on Friday, losing as much as 2.5%, after the French pharmaceutical group confirmed that any offer it would make for Horizon Therapeutics would be solely in cash.
• PolyPeptide falls as much as 37%, the most since July, after the Swiss peptides maker issued its second profit warning of 2022. The update casts a “very negative shadow” on the company’s strategic alignment and management, ZKB says, downgrading the stock to underperform from market perform.
• Kerry Group falls as much as 3.8% in Dublin, heading for a seventh daily drop, after Citi downgraded to neutral from buy, expecting the food company to face volume headwinds in 2023 as customers reduce inventory levels.
• DOF shares drop as much as 53% in Oslo, the most since 2016, after the firm said it will petition for reconstruction proceedings with Hordaland district court.

Earlier in the session, Asia stocks fell, trimming their weekly gain, as investors sold off some positions ahead of a key jobs report in the US. The MSCI Asia Pacific Index declined as much as 0.9%, with most sectors in the red, led by energy and utility stocks. Benchmarks in Japan and South Korea were among the worst performers as investors await more signs of China’s reopening and economic policy at an upcoming meeting of the country’s top leaders. Chinese stocks edged lower. Read: China Watchers See Shift to Growth at Politburo Meeting (1) All eyes will also be on the payrolls and employment data due in the US Friday. 

“The US job report will be the key risk event today,” said Jun Rong Yeap, market strategist at IG Asia in a note. “Current expectations are pointing to job gains of 200,000, which is a step closer to pre-Covid levels.” The Asian measure is poised to advance more than 2% this week, set for its fifth weekly gain. Bullish indicators are growing, with the index testing its 200-day moving average for the first time since September 2021, as global funds dip back into the region. Foreign funds pumped about $15.7 billion into emerging Asia shares outside China last month, the biggest inflows in two years, Bloomberg-compiled data shows.

Japanese stocks dropped as investors weighed data showing US manufacturing contracted in November for the first time since May 2020 and as the yen strengthened against the dollar.  The Topix fell 1.6% to close at 1,953.98, while the Nikkei declined 1.6% to 27,777.90. The Japanese currency slightly extended against the greenback, up nearly 3% on the week. Daiichi Sankyo Co. contributed the most to the Topix decline, decreasing 4.2%. Out of 2,164 stocks in the index, 201 rose and 1,919 fell, while 44 were unchanged. The yen has been gaining strength against the dollar and investors are cautious ahead of the monthly US employment report, creating a double-whammy for stocks, said Ercan Serdar Armutcu, head of electronic trading at Mita Securities. 

Australian stocks snapped a 3-day rally: the S&P/ASX 200 index fell 0.7% to close at 7,301.50, taking a breather after three consecutive days of advances. Banks and some commodity stocks dragged the benchmark most.  Still, the index posted a weekly advance of 0.6%, ending a second week in the green. In New Zealand, the S&P/NZX 50 index fell 0.1% to 11,641.85.

In FX, the Bloomberg Dollar Spot Index gave up an early Asia session gain as the greenback traded mixed versus its Group-of-10 peers.

• The euro rose to touch $1.0545, the highest level since June, and its volatility skew shifted higher as leveraged desks unwind long-term bearish bets.
• The yen led G-10 gains. The Japanese currency briefly strengthened beyond 134 per dollar and is set for its longest rising streak since April 2021. BOJ’s new board member Naoki Tamura said “it would be appropriate to conduct a review at the right time, including the monetary policy framework and inflation target”.
• Australian and New Zealand bonds rally as a drop in stocks boosts demand for haven assets and ahead of the key US employment report later Friday. Scandinavian currencies were the worst G-10 performers

In rates, treasuries twist-steepened, with the 2-year yield falling around 4bps and the 30-year yield rising by about 2bps; the 2- to 5-year yields declined to lowest levels in several weeks; 2s10s approaches Wednesday’s high.  Front-end yields are richer by 2bp-3bp curve, 10-year cheaper by ~1bp at 3.51%, steepening 2s10s by ~3bp; bunds outperform by 4bp, gilts by 6bp in the 10-year sector.  Bunds outperform in bull-steepening price action. Bund and gilt curves bull steepen. Peripheral spreads widen to Germany with 10y BTP/Bund narrowing 1.1bps to 187.2bps.  Dollar issuance slate empty so far, while no issuers announced bond sales on Thursday; December is expected to be slow for issuance with just $20b expected vs November tally of $102b

In commodities, oil headed for its biggest weekly gain in almost two months, benefiting from looser Chinese curbs, calls by the Biden administration to halt sales from US strategic reserves and an OPEC producers’ group decision to cut crude supply by the most since 2020. Crude futures were steady. WTI trades within Thursday’s range at near $81.22. Most base metals trade in the green. WTI and Brent futures are subdued in early European hours as market participants await the next catalyst, and with the clock ticking down to the US jobs report.  The G7 price cap coalition official said they are ‘very very close’ to an agreement on a USD 60/bbl price cap for Russian oil exports and there is some flexibility in determining the market price of Russian crude for the price cap. The official said oil markets seem pretty comfortable with a cap mechanism and noted uncertainty on how Russia will react to a USD 60/bbl cap but added that Russia has no good options, according to Reuters. Spot gold is flat in pre-NFP trade and probes the USD 1,800/oz mark with the 200 DMA today at USD 1,795/oz. Base metal futures are similarly flat/mixed with 3M copper off session highs of around USD 8,418/t and closer to session lows.

To the day ahead now, and the main highlight will be the US jobs report for November. Otherwise, we’ll get data on French industrial production and Euro Area PPI for October. Elsewhere, central bank speakers include ECB Vice President de Guindos, the ECB’s Villeroy and Nagel, along with the Fed’s Barkin and Evans.

Market Snapshot

• S&P 500 futures down 0.1% to 4,076.75
• STOXX Europe 600 down 0.1% to 443.62
• MXAP down 0.5% to 158.53
• MXAPJ down 0.6% to 513.09
• Nikkei down 1.6% to 27,777.90
• Topix down 1.6% to 1,953.98
• Hang Seng Index down 0.3% to 18,675.35
• Shanghai Composite down 0.3% to 3,156.14
• Sensex down 0.7% to 62,851.92
• Australia S&P/ASX 200 down 0.7% to 7,301.46
• Kospi down 1.8% to 2,434.33
• German 10Y yield down 1.2% to 1.79%
• Euro little changed at $1.0520
• Brent Futures little changed at $86.82/bbl
• Gold spot down 0.1% to $1,801.49
• U.S. Dollar Index down 0.13% to 104.59

Top Overnight News from Bloomberg

• ECB President Christine Lagarde said inflation expectations need to remain anchored and that the public needs to know price gains will be brought back to target
• The global economy may be headed for a new era of volatile inflation, making it even more crucial to anchor expectations for where prices are headed, central bank governors warned Friday
• There’s been a “significant” improvement in relations between the European Union and UK, and a landing zone in their Brexit negotiations is possible in the next few weeks, Ireland’s foreign minister said, even though there has been “no major breakthroughs” over the Northern Ireland Protocol
• Italy will meet all its second semester objectives for the Next Generation EU program by the end of this year, Economy and Finance Minister Giancarlo Giorgetti said
• Option traders are growing less concerned about potential dollar strength as the drivers of the US currency’s world-beating rally fade away
• A rush by Japan’s life insurers to protect themselves against a stronger yen may have the paradoxical effect of accelerating gains in the currency
• Central banks are facing their first test in a new world of more variable inflation that they must pass in order to re-establish confidence in the community, Reserve Bank of Australia Governor Philip Lowe said
• South African President Cyril Ramaphosa’s allies closed ranks behind him as the governing party’s top leaders prepared to discuss his fate over an independent panel’s findings that there may be grounds for his impeachment. The rand rallied and government bond yields fell

A more detailed look at global markets courtesy of Newsquawk

Asian stocks were subdued following the uninspired lead from the US where the major indices took a breather from the Powell-induced rally and finished relatively flat amid soft data releases and ahead of the looming NFP jobs report. ASX 200 was pressured as weakness in real estate, energy and the top-weighted financials sector overshadowed the resilience in defensives. Nikkei 225 underperformed and fell back below the 28,000 level, while there were notable comments from BoJ’s Tamura who called for a review of the BoJ’s ultra-easy monetary policy framework. Hang Seng and Shanghai Comp were indecisive but with downside stemmed following the recent slight easing of China’s COVID rules.

Top Asian News

• China’s top leaders will likely signal a more reasonable approach to COVID controls at the upcoming meeting of the CPC’s Politburo which usually takes place in early December, according to economists cited by Bloomberg.
• China’s Beijing City to allow passengers without a 48-hour COVID nucleic acid negative certificate to take buses and subways from Monday; busses and subways cannot reject people with no COVID test results, according to Bloomberg.
• PBoC Governor Yi said the forecast for China’s inflation in 2023 is in a moderate range, while he noted the current focus is on growth and that monetary policy has been pretty accommodative.
• Chinese Finance Minister Liu Kun said they will keep the economy within a reasonable range and strive to realise better results, while Liu added that China’s economy will keep growing at a reasonable speed with stable employment and prices, according to Reuters.
• China’s top four banks intend to issue offshore loans for domestic developers overseas debt repayments, via Reuters citing sources.

Equities in Europe are mostly mildly softer with the ranges particularly narrow ahead of the US jobs report; US futures in-fitting. DXY is under pressure with peers modestly firmer and JPY outpacing given yield differentials and Tamura’s remarks. Bunds are modest bid but failed to breach 143.00 with USTs essentially unchanged pre-NFP. Crude benchmarks similarly contained awaiting oil cap/OPEC+ developments. Beijing City is to ease its COVID travel restrictions from Monday while reports indicate the Politburo could signal a more reasonable approach. Looking ahead, highlights include US & Canadian Jobs Reports, Speakers from ECB’s de Guindos, Fed’s Barkin & Evans.

Top European News

• ECB President Lagarde said monetary policy is complicated by three uncertainties including the global economy and CPI outlook, while she added that all policies need to act in concert for sustainable growth.
• US President Biden and French President Macron made major progress in talks on how to alleviate the impact of the Inflation Reduction Act on Europe in which the US could use executive orders to give European allies the same level of exemptions on local content as countries with a free-trade deal, according to a source at the French Finance Ministry
• EU Commissioner Breton withdrew from EU-US Trade and Technology Council discussions and believed that talks will not provide enough space to EU concerns, according to Politico.

Fixed Income

• Modest overnight Bund pressure proved shortlived and appeared more of a pause for breath rather than a concerted pullback.
• Instead, the German benchmark has tested but failed to breach 143.00 while USTs are essentially unchanged in 10tick parameters pre-NFP.
• NFP aside, newsflow has been limited and of insufficient magnitude thus far to impact the above price action.

Commodities

• WTI and Brent futures are subdued in early European hours as market participants await the next catalyst, and with the clock ticking down to the US jobs report.
• Spot gold is flat in pre-NFP trade and probes the USD 1,800/oz mark with the 200 DMA today at USD 1,795/oz.
• Base metal futures are similarly flat/mixed with 3M copper off session highs of around USD 8,418/t and closer to session lows.
• G7 price cap coalition official said they are ‘very very close’ to an agreement on a USD 60/bbl price cap for Russian oil exports and there is some flexibility in determining the market price of Russian crude for the price cap. The official said oil markets seem pretty comfortable with a cap mechanism and noted uncertainty on how Russia will react to a USD 60/bbl cap but added that Russia has no good options, according to Reuters.
• Just one of these three ministries/ministers handling the oil price cap is yet to okay it, according to WSJ’s Norman’s sources.
• Turkish media says a fire broke out in the port of Samsun due to the explosion of an oil depot, according to Al Arabiya.
• India will continue to buy oil from wherever possible, including Russia, according to a source cited by Reuters; adds that India will continue to get oil, even beyond January 19th.

FX

• DXY sees another session of early European weakness for the broader Dollar and index as the JPY continues to strengthen.
• JPY is again the marked outperformer with gains fuelled by further narrowing yield differentials post-Powell, and with BoJ’s board member Tamura yesterday striking somewhat of a hawkish tone; USD/JPY down to 133.64 at worst.
• NZD, AUD, CHF, EUR, GBP are all modestly firmer against the USD and to varying degrees, whilst the CAD lags ahead of the Canadian jobs report.
• PBoC set USD/CNY mid-point at 7.0542 vs exp. 7.0563 (prev. 7.1225)
• Chairman of South Africa’s ANC has denied that President Ramaphosa has considered resigning.

Geopolitics

• Military analysts claimed that satellite images suggested Russia is planning an ‘imminent’ large-scale missile strike on Ukraine, according to Sky News Australia.
• Belarusian border guards shot down a Ukrainian march that conducted reconnaissance and photographing operations over the border areas with Ukraine, according to Al Jazeera.
• US imposed additional North Korea-related sanctions on three individuals and Japan imposed additional sanctions on 3 entities and 1 individual from North Korea, while South Korea imposed sanctions on 8 individuals and 7 agencies over North Korea’s weapons programme, according to Reuters.

US Event Calendar

• 08:30: Nov. Change in Nonfarm Payrolls, est. 200,000, prior 261,000
  • Change in Private Payrolls, est. 185,000, prior 233,000
  • Change in Manufact. Payrolls, est. 18,000, prior 32,000
  • Unemployment Rate, est. 3.7%, prior 3.7%
  • Underemployment Rate, prior 6.8%
  • Labor Force Participation Rate, est. 62.3%, prior 62.2%
  • Nov. Average Weekly Hours All Emplo, est. 34.5, prior 34.5
  • Average Hourly Earnings MoM, est. 0.3%, prior 0.4%
  • Average Hourly Earnings YoY, est. 4.6%, prior 4.7%

Central Bank Speakers

• 09:15: Fed’s Barkin Speaks in Richmond
• 10:15: Fed’s Evans Speaks at Event on Financial Regulation
• 14:00: Fed’s Evans Gives Welcome Remarks at Economic Symposium

DB’s Jim Reid concludes the overnight wrap

After the massive surge on Wednesday following Fed Chair Powell’s speech, the rally in risk assets stalled out yesterday thanks to weak US data that sparked growing concern about the state of the economy. There were lots of releases to digest, but in many ways the most notable was the ISM manufacturing print, which fell into contractionary territory for the first time since May 2020, coming in beneath expectations at 49.0, and crucially beneath the 50-mark that separates expansion from contraction. The sub-components didn’t look too promising either, with the employment reading at 48.4, and new orders down to 47.2.

Of course, we should add the usual caveats this is just one data release, but it fits into a declining trend for the ISM over the last year, and only added to fears about a potential recession. In addition, it comes on the back of some other pretty negative data over recent days. For instance, last week’s flash PMIs for November were also in contractionary territory, and Wednesday’s Chicago PMI release came in at levels that have historically been consistent with recessions.

This gloomy backdrop meant that investors once again put increasing emphasis on a dovish pivot from the Fed. Indeed, terminal rate pricing fell back to 4.86%, which is the lowest it’s been in a couple of weeks and is noticeably beneath the 5% levels before Powell’s Wednesday speech. In turn, this led to a further rally in Treasuries, with the 10yr yield coming down by a sizeable -10.1bps on the day to 3.50%, which is its lowest level in a couple of months, although we’ve had a slight +3.4bps pullback this morning. Bear in mind that the 10yr Treasury yield hit an intraday peak of 4.34% in late-October, so we’re now down by around -80bps from those levels. Furthermore, the decline yesterday was driven by real yields, with the 10yr real yield down -10.7bps on the day to 1.14%.

Those hopes for a dovish pivot from investors were given added support by the latest PCE inflation data for October, which is the measure the Fed officially target. That showed the month-on-month numbers coming in beneath expectations, with headline PCE up +0.3% (vs. +0.4% expected), and core PCE up +0.2% (vs. +0.3% expected). There were also signs that inflationary pressures were waning in the ISM release, since the prices paid indicator fell to 43.0 (vs. 45.9 expected), marking the lowest level for that reading since May 2020.

Whilst this environment proved a great backdrop for Treasuries, equities had a tougher time yesterday, with the S&P 500 (-0.09%) ending the session modestly lower as investors considered the tough outlook. Banks (-1.77%) were one of the worst-performing sectors as bond yields continued their decline, but tech was a relative outperformer and the FANG+ index (+0.55%) of megacap tech stocks even hit a 2-month high. Over in Europe the major indices advanced for the most part, but that was more a reflection of them catching up to the previous day’s rally following Powell’s speech. That saw the STOXX 600 (+0.89%) hit its highest level in nearly 5 months, with the index now on track for a 7th consecutive weekly advance.

As investors mull over the prospects for a dovish Fed pivot, attention today will turn to the US jobs report, which is out at 13:30 London time. Our US economists expect that growth in nonfarm payrolls will have slowed to +200k in November, which is in line with consensus and would mark the weakest number since December 2020. That should still be enough to lower the unemployment rate by a tenth to 3.6%, but clearly a downside surprise would only add to the jitters in markets given the negative survey data for November that we’ve already had.

Speaking of the Fed, yesterday we heard from a few officials, including New York President Williams, who said “I still think we have a ways to go” on raising rates. He added that he felt “we need to get the federal funds rate above the inflation rate”, and the two still remain some way apart even with the recent series of 75bp hikes. Remember as well that today is the last opportunity for FOMC officials to comment before their blackout period begins ahead of the next meeting, so these comments are some of the last clues we’ll get ahead of the next decision and the December dot plot. Elsewhere, we also heard that the new Chicago Fed President would be Austan Goolsbee, a former chair of the Council of Economic Advisers under President Obama. Goolsbee will have a vote on the FOMC in 2023, and has previously said on October 31 that a peak fed funds rate around 5% “kind of makes sense to me.”

Back in Europe, sovereign bonds rallied alongside US Treasuries as investors caught up with Chair Powell’s speech and priced in a more dovish outcome for the ECB as well. For instance, the hike priced in for this month’s meeting fell to 54.1bps, which is the lowest since mid-September as investors became increasingly sceptical that the ECB will continue to hike at a 75bps pace. That triggered a big rally across the continent, with yields on 10yr bunds (-11.7bps), OATs (-14.0bps) and BTPs (-17.6bps) all moving lower on the day. In the meantime, the continued weakness for the US Dollar meant that the Euro surpassed the $1.05 mark in trading for the first time since June, yesterday, where it remains this morning.

Overnight in Asia, equity markets have continued that trend lower from the US, with the Nikkei (-1.72%), the KOSPI (-1.45%), the Hang Seng (-0.60%), the CSI 300 (-0.49%) and the Shanghai Composite (-0.24%) all trading lower. The moves came in spite of further signs of waning inflationary pressures, with South Korean CPI falling to +5.0% in November (vs. +5.2% expected). That’s been echoed by US futures, with those on the S&P 500 (-0.19%) and the NASDAQ 100 (-0.33%) both in negative territory ahead of today’s jobs report.

Finally, with all the data releases yesterday, there were plenty of numbers that got relatively less attention than usual, but still told an interesting story. First, the Nationwide house price index in the UK saw a monthly drop of -1.4% in November, which is the steepest decline since early 2009 if you exclude the pandemic months of April and May 2020. Second, the Euro Area unemployment rate fell to a record low of 6.5% in October (vs. 6.6% expected). And back in the US, the weekly initial jobless claims came in at 225k in the week ending November 26 (vs. 235k expected).

To the day ahead now, and the main highlight will be the US jobs report for November. Otherwise, we’ll get data on French industrial production and Euro Area PPI for October. Elsewhere, central bank speakers include ECB Vice President de Guindos, the ECB’s Villeroy and Nagel, along with the Fed’s Barkin and Evans.

Kanye West, who now calls himself “Ye,” has been suspended from Twitter and accused of “inciting violence” over offensive tweets — just a few months after the last ban.

On Thursday evening, Ye tweeted an image of a swastika embedded with a star of David, which was immediately removed by Twitter police. The tweet was swapped out with a message that read this post violated Twitter’s terms of service. A link to the social media platform’s policy page explained more about enforcement actions. 

Twitter’s new boss Elon Musk was asked by one user to “fix Kanye.”

Musk tweeted: “I tried my best. Despite that, he again violated our rule against incitement to violence. Account will be suspended.”

I tried my best. Despite that, he again violated our rule against incitement to violence. Account will be suspended.

— Elon Musk (@elonmusk) December 2, 2022

Ye was one of the most high-profile Twitter users, besides former President Trump, to just recently be reinstated on the social media platform after Musk took over as owner. 

Hours before the rapper was booted off Twitter. Ye’s deal to purchase Parler, the rightwing social media network, was terminated by the company. And before the Parler news, fully masked Ye appeared on Alex Jones’ Infowars show and doubled down on antisemitic comments he made months ago. 

In October, Ye was initially suspended from Twitter and Instagram for posting antisemitic messages. Addidas and a handful of other companies terminated contracts with the rapper over the comments. 

Ye’s last tweet read, “Let’s remember this as my final tweet,” posting an image of half-naked Musk on the stern of a superyacht.  

Late Thursday night, Twitter users pointed out Ye began posting on Truth Social, the social media platform created by Trump. 

Ye is currently posting on Truth Social, he is either shadowbanned or the boomers running it can’t code a proper search function pic.twitter.com/TbYUzBwBqH

— Punished Spinach 🥗 (@basedspinach) December 2, 2022

Ye is suspended for 12 hours on Twitter. He is now posting on Truth Social 😂 pic.twitter.com/fvOOCTF8F8

— Ye Streams (@kanyestreams1) December 2, 2022

We’ve already written this month about how the “tax break” incentive to buy an EV is starting to vaporize into thin air in places like Japan and the U.K.. Now, the irony continues, as rising costs of energy in Europe, helped along by “green” energy policies, are making industrial projects like battery cell factories “unfeasible”. 

Volkswagen brand CEO Thomas Schaefer said this week that investments in German and EU projects will no longer make financial sense if “policy makers fail to control ballooning energy prices in the long-term”, according to the Times. 

In a post on LinkedIn, Schaefer said: “Unless we manage to reduce energy prices in Germany and Europe quickly and reliably, investments in energy-intensive production or new battery cell factories in Germany and the EU will be practically unviable. The value creation in this area will take place elsewhere.”

Last week, French and German economy ministers proposed an outline for policy cooperation that Schaefer claims “falls short in crucial areas and does not address the envisaged priorities”, the report says. 

“Outdated and bureaucratic state-aid rules” fail to focus enough on “the short-term ramp-up, scaling and industrialisation of production,” he said. 

The report says that EU officials are focused on responding to President Joe Biden’s Inflation Reduction Act, which they say “violates World Trade Organisation rules and discriminates against non-US companies.”

Meanwhile, Volkswagen is in the process of putting 6 battery factories in operation across Europe by the year 2030, the report says. The company’s lead plant in Germany broke ground this July and already has a €3bn (R53bn) joint venture with Umicore in place for cathode material production. 

Recall, just days ago, we reported that the UK was looking to raise more tax revenue from electric vehicles, shattering the years-long assumption that if you contributed to “helping the environment” by buying an EV, you’d be entitled to subsidies and tax credits.

Now Japan’s internal affairs ministry is reportedly weighing whether or not to raise taxes on electric vehicles in order to make up for a shortfall in income from taxes on traditional gas powered cars.

And so it’s turning out that the economics of an industry pivot set into motion almost solely due to government subsidization may not entirely make sense. Who would have figured?

Authored by John Cody via Remix News,

Germany just got done lecturing Qatar on human rights during the World Cup only to sign a 15-year gas deal with the Sharia-run country…

The entire German political establishment went into a rage after FIFA banned the pro-LGBT “OneLove” armband at the World Cup. Germany’s economics minister, Robert Habeck of the Green Party, told the German national team they should defy the threat of sanctions and wear the armband anyway. Various government officials protested the move, including Interior Minister Nancy Faeser, who wore a OneLove armband during the opening game while cheering on the German national team.

Now, immediately after the “scandal,” Germany is proudly announcing a new gas deal with none other than Qatar — a deal Habeck has labeled as “super.” The deal may represent an energy coup for the new government, but perhaps just as important is that the deal demonstrates the German left-liberal establishment’s raw political and social engineering power — the amazing ability to virtue signal and then completely contradict that same virtue signaling a week later with zero repercussions.

It is important to remember that European foreign and energy policy is value-based, and while Qatar’s actions last week were abominable, Germany is forward-looking. Yes, Sharia-run Qatar is still known for its persecution of women and LGBT groups, and sure, Qatar has a far more oppressive, non-democratic system than Russia, and yes, there are still plenty of instances of outright slavery in Qatar, but in the words of Habeck, “15 years is great.”

He is, after all, referring to the fact that the LNG contract will begin running in 2026 and end in 2041.

German Football Federation (DFB) President Bernd Neuendorf, left, talks to German Interior Minister Nancy Faeser, right, wearing the One Love armband on the tribune prior to the World Cup group E soccer match between Germany and Japan, at the Khalifa International Stadium in Doha, Qatar, Wednesday, Nov. 23, 2022. (AP Photo/Matthias Schrader)

How will Germany respond to future violations of human rights by Qatar? Will Germany pick up its gas in rainbow-colored tankers? Will it print special edition rainbow-colored euros to send to Qatari banks? Of course, this is all a bit of mockery, but the meaningless sentiment behind the “OneLove” armband is in essence the same strategy, and in reality, one could imagine such stunts at least being proposed by the “Twitter class” running PR for Germany’s current government.

The left is aided by the fact that the majority of German population continuously fails to process any contradiction in the German government’s smug support for “OneLove” armbands in Qatar while at the same time signing a gas deal with Qatar worth billions. While there may be some isolated grumblings in German media and the political classes, nobody in the left-liberal establishment, especially anyone with any real power among the Social Democrats or Greens, will truly dare to call out this absurdity.

The same element is at work as when the liberal darling Justin Trudeau crushing the trucker protests in Canada by literally freezing protesters’ bank accounts and seizing their property or when Gavin Newsom dined at California’s finest restaurant without a mask in violation of lockdown rules while calling those protesting lockdowns as dangerous and heartless. These politicians, just as the left-liberals in Germany, can blatantly violate the standards and values they pretend to promote because they can — because Big Tech, the media, academia, and the West’s various cultural establishments have created a force field around, rendering them nearly impervious to being held accountable for their hypocrisy.

As N.S. Lyons writes, “Hypocrisy… is simply a display of power, so the more blatant it is the better. Hypocrisy is a concrete demonstration of living without having to fear consequences.”

In this photo released by the Qatari Amiri Diwan, German Economy and Climate Minister and Vice Chancellor Robert Habeck shakes hands with the Emir of Qatar Sheikh Tamim bin Hamad Al Thani, in Doha, Qatar, Sunday, March 20, 2022. (Amiri Diwan via AP)

The reality is the gas deal with Qatar is an example of hypocrisy, but also realpolitik, even if the left-liberals would never admit it.

Germany needs gas, but it cannot obtain the amount it needs without violating its own so-called moral standards, which is why it is reaching out to all those “detestable” countries such as Qatar, which are extremely anti-gay, but also quite Brown, a combination which creates a great deal of confusion in the German mind. Interestingly, the realpolitik deal with Qatar was necessitated by Germany actually ignoring realpolitik and abandoning Russian resources, but Russians are unapologetically White and not very happy about gay people, which is far easier for the German mind to process.

Overall, there is a remarkable lack of realpolitik from the German political establishment, and some German industrial leaders, watching their fortunes potentially slip away, understand this. They may have been the ones whipping the inept Habeck to do something, anything, to secure Germany’s energy supply. However, this one act of realpolitik with Qatar will not save Germany, and a general inability to pursue national interests across a Europe still beholden to not only U.S. interests but also America’s cultural hegemony, is costing Europe dearly.

Russia and its resources are still there, and while what has happened to Ukraine is a tragedy, there are still those begging Europe to reverse course. If Germany’s Qatar gas deal flies in the face of the “liberal values” Germany portends to promote, then what real moral basis does Germany have for extending sanctions against Russia? It is a fair question. In Qatar, after all, they do not even bother with elections, and as independent opinion polls have historically shown, Putin is truly a popular leader who is legitimately elected time after time — far more popular than many of the leaders in Europe’s “liberal democracies.”

The reality is that Germany could, for the most part, avert its entire economic crisis by reverting to cheap Russian energy and resources. Hungarian Prime Minister Viktor Orbán has been ridiculed for calling an end to sanctions on Russia, arguing that Europeans are suffering more than Russians due to these sanctions. In light of the Qatar deal, Germany has little in terms of moral ground to stand on when it comes to its criticisms against Hungary, but it will continue to pretend like it does. In fact, it will likely double down on trying to remove Orbán from office. Deflection can do wonders in politics.

What is now quite clear is that Russia is not even capable of taking over Ukraine, let alone invading Germany or any other NATO country, and this war has proven it. Armed with this incredible knowledge, and with Russia’s glaring weakness on display, now would be the opportune time to press for peace and restore economic relations. Deals with Russia may not be in Europe’s “moral” interest, but neither are deals with Qatar. The U.S. has long partaken in illegal invasions of other countries, coup plots, and false flag operations, and all of this has never been a basis for Europe to stop doing business with the U.S.

Of course, the U.S., and in turn, the German media, would fight tooth and nail against such a dramatic foreign policy turnaround vis-à-vis Russia, even if some within Germany’s political establishment are secretly hoping for the war to come to an end without Ukraine necessarily pushing the Russians back to their border.

For now, moral grandstanding trumps raw national interest across Europe, and the German and European populations, even with gas deals from Qatar and the United States, will continue to pay for this new paradigm.

Kyiv’s mayor is warning residents that there’s real potential of a total blackout across the capital city of about three million people. This as Ukraine braces for more expected Russian airstrikes on its national energy infrastructure. 

“The temperature in the apartments may not differ much from the outside temperature,” Mayor Vitaliy Klitschko announced at a local security forum at a moment when temperatures have dipped below freezing, or -4 degrees Celsius (25 degrees Fahrenheit). “I appeal to the people…to have a supply of technical water, drinking water, durable food products, warm clothing,” he emphasized.

Authorities have scrambled to set up warming centers in various hard-hit cities across the country, also warning that some portions of cities may have to evacuate if the energy crisis worsens. Despite utility crews scrambling, an estimated 40% of the entire national energy infrastructure remains degraded or destroyed. 

Klitschko in his appeal told people that they must consider moving in with family or friends who have remained less impacted by the power cuts on the outskirts of Kyiv.

The Kremlin has meanwhile defended its strategy of targeting Ukrainian energy as “legitimate”. According to a New York Times update: 

As Ukrainian officials warned that Moscow was preparing to launch yet another wave of missile strikes aimed at destroying the nation’s energy grid, Russia’s foreign minister on Thursday defended Moscow’s attacks, calling infrastructure a legitimate military target despite warnings by the United Nations that they could amount to war crimes.

Sergei V. Lavrov, Russia’s foreign minister, spoke at a news conference hours after Ukrainian officials said that Russian attacks had disabled the power grid in the southern city of Kherson and six million people across the country were still without power after previous assaults.

Drawing on familiar Kremlin themes framing the Ukraine war as a battle with the West, Mr. Lavrov said that Russia is hitting targets that are used to replenish Ukrainian forces with weapons provided by Western nations and that the Ukrainian forces rely on to operate. He did not elaborate.

US Secretary of State Antony Blinken during a meeting of NATO ministers in Bucharest, Romania condemned the “barbaric” Russian actions. 

“As Ukraine continues to seize momentum on the battlefield, President Putin continues to focus his ire and his fire on Ukraine’s civilian population,” he said. “Heat, water, electricity — for the children, for the elderly, for the sick — these are President Putin’s new targets. He’s hitting them hard. This brutalization of Ukraine’s people is barbaric.”