Congress Scrambles To Avoid Friday Government Shutdown

Congress has until Friday to avert yet another government shutdown with a game of kick-the-can (via Continuing Resolution, or CR), and a bipartisan funding deal is nowhere in sight.

Here's where things stand; though no one expects the lights to actually go out in Washington, this week is shaping up to be a political circus.

According to House Speaker Mike Johnson (R-LA), a CR is "moving along, almost there," while Rep. Steve Scalise (R-LA) said "it's getting close to being closed out," and "hopefully" we'll see text today, Punchbowl News' Jake Sherman reports.

JOHNSON started the House Republican Steering Committee meeting late. He said he was tied up with last-minute CR negotiations.

So, the leadership still hasn't wrapped the CR, which needs to be passed by both chambers by Friday.

— Jake Sherman (@JakeSherman) December 16, 2024

Farm Bill Face-Off

The latest snag? A fight over economic assistance for farmers as part of a one-year extension to the farm bill. Originally, this was supposed to be a straightforward swap: redirect some Inflation Reduction Act (IRA) funds toward direct aid for farmers. But Johnson slammed the brakes, wary of touching IRA funds and ruffling feathers with President-elect Donald Trump, who has made dismantling the legislation a priority.

Sensing blood in the water, Democrats pounced. House Minority Leader Hakeem Jeffries (D-NY) and Senate Majority Leader Chuck Schumer (D-NY) rolled out a wishlist of demands in exchange for their cooperation, including:

– The federal government would pay 100% of the cost of rebuilding the Francis Scott Key Bridge in Baltimore. This could run to $2 billion or more.

– A trade deal that would allow duty-free access for Haitian apparel and textile imports.

– Reauthorization of the African Growth and Opportunity Act, which permits duty-free imports for hundreds of products from sub-Saharan African countries.

– Funding to build museums on the National Mall to honor women and Hispanics.

– The Second Chance Act, which aims to help the reentry of convicted criminals back into communities. -Punchbowl News

Also hanging in the balance is a sweeping health deal that would overhaul pharmacy benefit managers, extend Medicare telehealth flexibilities, and reauthorize the SUPPORT Act - a 2018 measure to address the opioid crisis. The pressure is on for Johnson to strike a deal, but he’s caught between pleasing Democrats and keeping his own party in line.

Running out of time

Johnson is running out of time to act... If Congress plans to release the funding bill today, the House won’t vote until Thursday, sticking to a 72-hour review rule. That leaves the Senate just enough time to pull off some of its famous "magic" and send the package to President Biden’s desk before the buzzer.

But Johnson’s problems go beyond logistics. He’s made it his mission to avoid the usual end-of-year “Christmas tree” legislation loaded with pork. Now, he’s staring down a continuing resolution (CR) that funds the government only until March, packed with goodies from every corner of Capitol Hill.

Johnson is banking on Democrats to help push the CR through, but the move could spark a rebellion among House Republicans. Expect fiery floor speeches and plenty of finger-pointing as Johnson fights to keep his party—and his speakership—intact.

Meanwhile, Senate Republicans and Trump have little appetite for a shutdown, preferring a smooth path into 2025.

Tyler Durden Mon, 12/16/2024 - 10:25

Romania's Constitutional Coup Is Meant To Buy More Time For NATO In Ukraine

Authored by Andrew Korybko via substack,

It was assessed late last month that “The Outcome Of Romania’s Presidential Election Could Spoil The US’ Potential Escalation Plans” if then-frontrunner Calin Georgescu, a populist conservative-nationalist that’s critical of NATO’s proxy war on Russian in Ukraine, had won the second round on 8 December. His first-round victory was annulled by the Constitutional Coup in a move that he condemned as a coup, however, on the pretext that his pre-election support on TikTok might have been due to foreign backing.

Nothing like this has ever happened before. Nobody alleges that the electoral process itself was fraudulent. The only claim is that classified evidence supposedly exists allegedly suggesting that the popularization of Georgescu’s content on TikTok might have been inorganic. When all was said and done, however, more voters still chose him over anyone else. This means that speculative degrees of separation between them and a foreign actor via social media was enough to annual the election.

This is a disturbing precedent that can easily be exploited by the West the next time that a populist conservative-nationalist with “politically incorrect” foreign policy views wins an election. At the time of writing, a redo hasn’t yet been scheduled, but it’s expected after the new pro-Western parliament convenes on 20 December. About that, their elections were held after the first presidential round, but no accusations of foul play followed. This is obviously due to the West receiving its desired result.

It remains unclear who’ll serve as Commander-in-Chief until the next one is elected, but whoever it is, nobody should anticipate them implementing any radical policies like Georgescu’s. Accordingly, more time has been bought for NATO to organize its reportedly planned peacekeeping mission in Ukraine, even if it’s carried out under a non-NATO mandate. Had Georgescu won the second round and been inaugurated later this month, he could have ruled out his country’s participation in this possible plan.

Romania isn’t as indispensable for NATO’s military logistics to Ukraine as Poland is, but it still borders Ukraine’s western and southwestern regions that are of strategic importance for the bloc. Even if Romania wouldn’t directly participate in any such mission, regardless of whether it’s carried out under the peacekeeper pretext, it could still let the alliance’s troops and equipment transit through its territory to Odessa for example. Georgescu, however, could have cut that off and greatly complicated their plans.

Keeping him out of office or at least delaying his victory, if he’s even allowed to run again that is (and the results aren’t annulled again or defrauded like they were in neighboring Moldova), is therefore of supreme Western importance in order to keep their military logistics options open.

Even if they succeed, there are still “10 Obstacles To Trump’s Reported Plan For Western/NATO Peacekeepers In Ukraine” that he’d have to overcome, which readers can learn about from the preceding hyperlinked analysis.

It might therefore turn out that all of this meddling was for naught if no such peacekeeping mission follows or if Romania doesn’t play a significant role therein. In any case, that’s the cost that the West was willing to pay simply to keep such options maximally open, thus showing how its leaders really feel about the democratic process. At the end of the day, Western democracy is just a process for legitimizing elite interests, and these same elites sometimes repeat the process until they get their desired result.

Tyler Durden Mon, 12/16/2024 - 10:05

US Manufacturing PMI Plunges As Services Soar To 38-Month-High, But...

Following Europe's mixed bag of PMIs (Manufacturing contracting harder as Services save the composites in France, Germany, & UK - but all still in contraction overall), S&P Global's US Manufacturing and Services were expected to decline modestly in preliminary December data released this morning.

Analysts were half right... as US Manufacturing PMI plunged to 48.3 (from 49.7 and below all expectations) but US Services soared higher (to 58.5 from 56.1, far above all expectations)

And that has all happened as 'hard' data has been serially outperforming...

Source: Bloomberg

The Services survey hits a 38-month high as US Manufacturing Output plummets to a 55-month low...

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

“Business is booming in the US services economy, where output is growing at the sharpest rate since the reopening of the economy from COVID lockdowns in 2021. The service sector expansion is helping drive overall growth in the economy to its fastest for nearly three years, consistent with GDP rising at an annualized rate of just over 3% in December.

“It’s a different picture in manufacturing, however, where output is falling sharply and at an increased rate, in part due to weak export demand.

Encouragingly, confidence in the 12-month outlook has lifted to a two-and-a-half year high, suggesting the robust economic upturn will persist into the new year and could also become more broad-based by sector.

However, Williamson notes that some of the high spirits seen after the election in the manufacturing sector have been checked over concerns surrounding tariffs and the potential impact on inflation resulting from the higher cost of imported materials.

December saw raw material prices spike sharply higher amid supplier-led price rises and higher shipping costs, in a reflection of busier supply chains in advance of threatened protectionism in the new year.”

So surging economy and rising prices... not exactly the recipe for more rate cuts this week?

Tyler Durden Mon, 12/16/2024 - 09:55

Key Events This Week: This Is The Way 2024 Ends, With A Central Bank Bang

As we enter the last full week of the year, the natural winding down of activity will be punctuated by bursts of activity, centered around the Fed (Wednesday), the BoJ (Thursday) and the BoE (also Thursday) meetings. In terms of data, the highlights are the global flash PMIs today, US retail sales (tomorrow) and inflation prints from the US (PCE on Friday), Canada (tomorrow), UK (Wednesday), and Japan (Friday).

Outside of that, today’s German government vote of no confidence should almost certainly pave the way for a February 23rd election and tomorrow’s CDU/CSU manifesto announcement will help shape the campaign (more later). Another thing to watch is France where Moody’s surprisingly cut France late on Friday night in a rare unscheduled move, albeit one that brings it in line with S&P and Fitch (also more below).

Let’s expand on some of these highlights now and start with the Fed. Our economists’ preview is here but in brief they expect a 25bps cut and then for them to be on hold for the entirety of 2025 as the SEP should show meaningful revisions to the 2024 economic forecasts, with growth and inflation revised higher and the unemployment rate lower. The median dot is likely to show three additional rate cuts but we think Powell will likely deemphasis this signal in the press conference and be as data dependant as he can be. Powell will also likely emphasise that it is still too early for officials to build any major policy changes from the new Trump administration into their outlook. The long-run dot will likely continue its upward migration, rising to 3.1%. Our economists' estimates of neutral are notably above the Fed’s and we think they will likely continue to move this higher.

The BoJ meeting on Thursday is more uncertain, but most economists expect no change and with only a 16% probability of a hike priced in. Our Chief Japan economist previews the meeting here and goes against consensus in seeing a rate hike as the most likely scenario. One of the reasons why a hike might wait until January though is that MP Ishiba is trying to push a stimulus plan through parliament this month and the BoJ may prefer to avoid political interference and delay the hike.

On Thursday our UK economist expects a BoE hold, with a 9-0 vote decision, keeping the rate at 4.75%. The full preview of the meeting is here. The Riksbank is expected to cut rates 25bps on Thursday in a busy last full week of the year for central banks.
For core PCE on Friday our economists believe it comes in a little soft at 0.16% mom versus 0.27% previously with subcomponents in last Thursday's PPI and Friday's import price data, that feed into this number, on the weaker side. However, the year-over-year rate for core PCE should still tick up from 2.8% to 2.9%.

In Germany, Chancellor Scholz's vote of confidence today is scheduled to start at 1:00 pm CET. The expected loss will likely clear the path to early elections on February 23. More importantly tomorrow sees the CDU/CSU publish their manifesto at 11.30 CET. According to current polls the CDU is likely to lead the next government, and the manifesto could give clearer signals on their economic policy priorities, even if the coalition agreement after the elections could result in policy compromises. The key question is whether the CDU will formally signal an openness to reforming the debt brake at this stage. Recently signalled openness by Merz to discuss reforms might just be intended to create optionality for potential compromises in coalition talks. However, a leaked draft of the CDU election manifesto late last week saw a continued commitment to the debt brake which at this stage is not unexpected and corroborates what our economists expected in their preview of this week's events in Berlin here.

Staying in Europe, the Moody’s downgrade of France late on Friday night to Aa3 from Aa2 with a stable outlook was unscheduled and will surprise many when European markets reopen this morning. Their commentary on future deficits is quite damning but the fact that it’s a stable outlook for now, and that this just brings the rating in line with S&P and Fitch, will likely mean that this is more headline grabbing than massively market moving for now. OAT futures are only a little lower in Asia trading. France’s new Prime Minister Francois Bayrou will meet with far-right leader Marine Le Pen and Jordan Bardella (head of National Rally) at 9am CET this morning to start the process of agreeing a budget. So we may see some headlines post the meeting.

For all the rest of the week's events, here is the full day-by-day week ahead courtesy of Deutsche Bank.

Monday December 16

• Data: US, UK, Japan, Germany, France and the Eurozone December flash PMIs, US December Empire manufacturing index, China November home prices, industrial production, retail sales, property investment, Japan October Tertiary industry index, Italy October general government debt, Eurozone Q3 labour costs, Canada November housing starts and existing home sales
• Central banks: ECB's Lagarde, Simkus, Guindos, Wunsch, Schnabel and Escriva speak

Tuesday December 17

• Data: US November retail sales, industrial production, capacity utilisation, December NAHB housing market index, New York Fed services business activity, October business inventories, UK October average weekly earnings, unemployment rate, November jobless claims change, Japan November trade balance (GMT time), Germany December Ifo survey, Zew survey, Italy October trade balance, Eurozone December Zew survey, October trade balance, Canada November CPI, October international securities transactions
• Central banks: ECB's Kazimir and Rehn speak
• Auctions: US 20-yr Bond (reopening, $13bn)

Wednesday December 18

• Data: US November building permits, housing starts, Q3 current account balance, UK November CPI, RPI, PPI, October house price index, Eurozone October construction output, New Zealand Q3 GDP
• Central banks: Fed's decision, ECB's Muller, Nagel and Lane speak
• Earnings: Lennar

Thursday December 19

• Data: US December Philadelphia Fed business outlook, Kansas City Fed manufacturing activity, November leading index, existing home sales, October total net TIC flows, initial jobless claims, Japan November national CPI (GMT time), Germany January GfK consumer confidence, France December manufacturing confidence, Italy October current account balance, EU27 November new car registrations, October ECB current account
• Central banks: BoJ's decision, BoE's decision, Norges Bank decision, Riksbank decision
• Earnings: Nike, FedEx, Accenture
• Auctions: US 5-yr TIPS (reopening, $22bn)

Friday December 20

• Data: US November PCE, personal income and spending, December Kansas City Fed services activity, China 1-yr and 5-yr loan prime rates, UK November public finances, retail sales, Germany November PPI, France November PPI, retail sales, Italy December consumer, manufacturing confidence, economic sentiment, November PPI, October industrial sales, Eurozone December consumer confidence, Canada October retail sales

* * *

Finally, looking just at the US, Goldman writes that the key data releases this week are the retail sales report on Tuesday and core PCE inflation on Friday. The December FOMC meeting is this week. The post-meeting statement will be released on Wednesday at 2:00 PM ET, followed by Chair Powell's press conference at 2:30 PM.

Monday, December 16

• 08:30 AM Empire State manufacturing survey, December (consensus +10.0, last +31.2)
• 09:45 AM S&P Global US manufacturing PMI, December preliminary (consensus 49.5, last 49.7); S&P Global US services PMI, December preliminary (consensus 55.8, last 56.1)

Tuesday, December 17

• 08:30 AM Retail sales, November (GS +0.5%, consensus +0.5%, last +0.4%); Retail sales ex-auto, November (GS +0.3%, consensus +0.4%, last +0.1%); Retail sales ex-auto & gas, November (GS +0.4%, consensus +0.4%, last +0.1%); Core retail sales, November (GS +0.3%, consensus +0.4%, last -0.1%): We estimate core retail sales expanded 0.3% in November (ex-autos, gasoline, and building materials; month-over-month SA), reflecting moderate spending increases at the start of the holiday season. We estimate a 0.5% increase in headline retail sales, reflecting lower gasoline prices but higher auto sales.
• 09:15 AM Industrial production, November (GS +0.3%, consensus +0.3%, last -0.3%); Manufacturing production, November (GS +0.5%, consensus +0.5%, last -0.5%); Capacity utilization, November (GS 77.1%, consensus 77.3%, last 77.1%): We estimate industrial production increased +0.1%, reflecting strong auto production partially offset by weak natural gas and mining production. We estimate capacity utilization was unchanged at 77.1%.
• 10:00 AM Business inventories, October (consensus +0.1%, last +0.1%)

Wednesday, December 18

• 08:30 AM Housing starts, November (GS +2.8%, consensus +2.4%, last -3.1%)
• 08:30 AM Current account balance, Q3 (consensus -$287.1bn, last -$266.8bn)
• 02:00 PM FOMC statement, December 17-18 meeting: As discussed in our FOMC preview, we expect the FOMC to deliver a 25bp cut at its December meeting. We suspect that the Committee will update the FOMC statement to add a gentle nod toward a slower pace of rate cuts ahead, and we expect the SEP to show a substantial increase in 2024 GDP growth and a bit more momentum in subsequent years, a flat 4.2% path for the unemployment rate, and a 0.2pp increase in the core PCE inflation path in 2024, 2025, and 2026. We expect the median dot to show 3 cuts in 2025 to 3.625%, 2 cuts in 2026 to 3.125%, and a flat path in 2027 at 3.125%. We also expect the median longer run or neutral rate dot to rise 0.125pp to 3% this week. We have revised our forecast for 2025 to eliminate a cut in January; we continue to expect cuts in March, June, and September next year, and now expect a slightly higher terminal rate of 3.5-3.75%.

Thursday, December 19

• 08:30 AM GDP, Q3 third release (GS +2.8%, consensus +2.8%, last +2.8%); Personal consumption, Q3 third release (GS +3.4%, consensus +3.7%, last +3.5%): We estimate no revision on net to Q3 GDP growth at +2.8% (quarter-over-quarter annualized), reflecting a downward revision to consumer spending (-0.1pp to +3.4%) due to softer public transportation and utilities details in the quarterly census survey (QSS), offset by upward revisions to residential investment and net exports.
• 08:30 AM Philadelphia Fed manufacturing index, December (GS 6.0, consensus 2.9, last -5.5)
• 08:30 AM Initial jobless claims, week ended December 14 (GS 230k, consensus 229k, last 242k); Continuing jobless claims, week ended December 7 (last 1,886k): We estimate initial jobless claims declined by 12k to 230k in the week ended December 14th, reflecting partial reversal of the seasonal distortions that boosted the prior two readings.
• 10:00 AM Existing home sales, November (GS +1.8%, consensus +3.0%, last +3.4%)

Friday, December 20

• 08:00 AM Personal income, November (GS +0.4%, consensus +0.4%, last +0.6%); Personal spending, November (GS +0.5%, consensus +0.5%, last +0.4%); Core PCE price index, November (GS +0.13%, consensus +0.2%, last +0.3%); Core PCE price index (YoY), November (GS +2.84%, consensus +2.9%, last +2.8%); PCE price index, November (GS +0.15%, consensus +0.2%, last +0.2%); PCE price index (YoY), November (GS +2.47%, consensus +2.5%, last +2.3%): We estimate personal income and personal spending increased by 0.4% and 0.5%, respectively, in November. We estimate that the core PCE price index rose by 0.13%, corresponding to a year-over-year rate of 2.84%. Additionally, we expect that the headline PCE price index increased by 0.15% from the prior month, corresponding to a year-over-year rate of 2.47%. Our forecast is consistent with a 0.16% increase in our trimmed core PCE measure (vs. +0.17% in October).
• 10:00 AM University of Michigan consumer sentiment, December final (GS 74.6, consensus 74.0, last 74.0): University of Michigan 5-10-year inflation expectations, December final (GS 3.1%, last 3.1%)

Source: Deutsche Bank, Goldman, Barclays

Tyler Durden Mon, 12/16/2024 - 09:45

Daniel Baldwin Claims There Are "Bidding Wars" In Hollywood Over Diddy Blackmail Sex Tapes

Authored by Steve Watson via Modernity.news,

Actor Daniel Baldwin has made extraordinary claims that Hollywood stars are involved in “bidding wars” to prevent copies of blackmail sex tapes filmed at the infamous Sean “Diddy” Combs’ freak off parties from falling into the wrong hands.

Appearing on the PBD podcast, Baldwin stated “He has videos of the parties… I’ve heard from friends that are attorneys… there’s a bidding war going on right now.”

The brother of Alec Baldwin continued, “They’re driving that price up because if you want your client and your famous actor to not be involved, a famous singer to not come out, here’s the price, and that they’re just selling to the individuals that are in those.”

“This is what I heard. They’re selling those videos,” he reiterated, claiming that some celebrities are buying them to try to save their own skins.

Baldwin compared the Diddy situation to Jeffrey Epstein’s alleged recordings of elites engaged in incriminating sex acts.

Watch:

Actor Daniel Baldwin (brother of Alec) makes an extraordinary claim that Diddy 'freak off' sex tapes are being peddled around Hollywood, sparking a "bidding war" as celebrities in the tapes try to buy them up to save their own skins. Full report here: https://t.co/Fjcehb8WfT pic.twitter.com/TE27gqvImQ

— m o d e r n i t y (@ModernityNews) December 16, 2024

Here’s the full podcast episode:

As we previously highlighted, a former bodyguard of Combs has claimed that the rapper has footage of not only celebrities, but elite politicians and state figures engaging in compromising activities.

The bodyguard, Gene Deal, says the secret footage was captured at Diddy’s various so called “freak off” parties, which are claimed to have involved victims being forced to engage in sex acts while Combs masturbated and recorded the events.

“I don’t think it’s only celebrities gonna be shook. He had politicians in there, he had princes in there. He also had a couple of preachers in there,” said Deal, adding that “he had every room bugged.”

One alleged victim of Combs has filed a lawsuit claiming that the rapper raped her when she was 13 years old while a male and female celebrity pair watched and joined in.

The suit claims that the male celebrity also raped her while the female and Diddy observed.

It has since been alleged by the victim that Jay Z was the male celebrity, a claim which the rapper vehemently denies. Attorneys for Jay z have called for the case to be dismissed on the grounds of inconsistencies in the testimony of the alleged victim.

Another witness in the ongoing case claims he has several sex tapes that allegedly feature “intoxicated” and “victimized” celebrities, including two who were underage.

During an interview with NewsNation, Courtney Burgess, who testified against Combs before a grand jury in Manhattan, claimed that he has in his possession flash drives featuring videos of eight celebrities with Diddy.

Since his indictment in New York, more than two dozen civil lawsuits have been filed against Combs, and if convicted, he could face a sentence of anywhere from 15 years to life in prison.

Combs has been denied bail twice on charges of racketeering, sex trafficking and transportation to engage in prostitution.

He remains in custody at the Metropolitan Detention Center in Brooklyn, and has repeatedly denied all allegations against him.

The trial is scheduled to begin on May 5, 2025.

*  *  *

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Mon, 12/16/2024 - 08:50

"Dire Situation" - Chinese Bond Yields Hit Record Low On Retail Sales "Big Disappointment"

China's retail sales increased just 3% in November from a year ago, falling short of forecasts for 5% growth by economists surveyed by Bloomberg.

The weakening in retail sales was surprising following strong sales of home appliances and cars a month ago thanks to government subsidies.

While sales for those two categories remained strong in November, a number of discretionary goods recorded a slump.

Cosmetics led the decline with a 26% plunge in sales from a year ago, while those of clothing, jewelry, beverages and tobacco and alcohol also decreased.

The November retail number “was the big disappointment of the month, as retail sales . . . came in well softer than both consensus and our forecasts”, said Lynn Song, chief economist for greater China at ING in a research note.

The data builds on traders’ disappointment last week when Beijing pledged to boost consumption but failed to offer details on fiscal stimulus.

The retail-sales data “is a reflection of the dire situation there and how the stimulus efforts have prioritized optics over delivering meaningful economic improvements,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore.

“Even for a tactical recovery, we need more after a series of false starts and the risk of tariffs ahead.”

As The FT reports, Beijing has struggled to boost confidence against the backdrop of a property slowdown, now entering its fourth year, and bouts of deflation.

The government unveiled a series of measures to boost stock markets in late September and to refinance local government debt last month.

Chinese stocks fell on the report and bond yields tumbled to a new record low...

Source: Bloomberg

“The Japanification of China bonds may be inevitable at some point,” said Stephen Miller, a four-decade markets veteran and consultant at GSFM, calling the recent stimulus a sugar hit.

“China’s issues are deep-seated structural issues. You can’t fully rule out the possibility of yields heading toward zero if these issues aren’t addressed,” he said.

“Bond yields at 0% are a possibility,” said George Boubouras, head of research at hedge fund K2 Asset Management Ltd.

He said the central bank will need to take an ‘anything goes’ approach to stimulus to avoid the economy sliding into a Japan-style balance sheet recession.

Indeed, China is already showing partial signs of a balance-sheet recession, said Yingrui Wang, China economist at AXA Investment Managers.

Households and corporations are curbing spending due to their rising debt burden, which has left the central government as a key source of demand, according to Wang.

China’s recent monetary easing pledges point to a continued decline in bond yields until fundamentals in the economy start to recover. Over recent months, the People’s Bank of China appears to have eased its control on bond yields,

“We forecast the 10-year CGB yield to reach around 1.6% by the end of 2025”, she said.

The damage to consumer confidence is deep-rooted and will require substantial effort to repair; China has yet to act decisively to stabilize its property market, although recent months have seen a shift in focus.

The government’s lack of effective action mirrors Japan’s early missteps, risking a prolonged downturn, and with China's 30Y yield plunging below that of Japan's, the market is clearly starting to believe the same...

Source: Bloomberg

Beijing hasn’t fully absorbed Japan’s lessons: The lack of decisive fiscal action despite pressure from the property market, local government debt, and declining confidence among consumers could worsen China’s economic challenges.

“The data show that the recovery in domestic demand has remained sluggish, while the stabilization in industrial production was likely due to some order front-loading ahead of US tariffs and is not sustainable,” said Michelle Lam, Greater China economist at Societe Generale SA.

As Mike Shedlock concludes, via MishTalk, facing debt deflation, China’s best bet would be to allow more bankruptcies, write down debt, and strengthen the yuan. But it is highly unlikely to do so.

US hypocrites led by then Fed Chair Ben Bernanke pleaded with Japan to do that, then failed to do so at our turn in the Great Recession.

Lower for longer will suppress the yuan. It’s one way China has of countering Trump’s tariff threats.

But it’s also counterproductive.

Lower for longer did not help Japan, and negative yields helped neither Japan nor the EU.

Unfortunately, the only thing China seems to understand is growth by exports but that means a weaker yuan.

Even more problematic for Beijing, a huge fight with Donald Trump is about a month away...

 

 

 

 

Tyler Durden Mon, 12/16/2024 - 08:37

US Futures Jump, Ignore Global Selloff While Focusing On Imminent Rate Cut

The last full week of 2024 started off with a burst of US exceptionalism which helped US equity futures shrug off downbeat performances in other global markets as traders prepared for a slate of interest-rate decisions by major central banks due later this week. S&P and Nasdaq futures both traded at record high, as did Bitcoin which hit a fresh all-time high of $106,000. As of 8:00am ET, S&P futures were 0.3% higher and Nasdaq futures gained 0.5% as the panic chase of momentum, which pushed the index at an all-time high on Friday, continued. MicroStrategy advanced more than 6% in premarket trading, fueled by its pending inclusion in the index following the software maker’s transformation into a leveraged bet on Bitcoin. Monday’s US stock performance stands in stark contrast with broad losses in Asia and Europe as weaker-than-expected retail data in China weighed on sentiment. A contraction in the euro-area’s private sector also dragged on European equities. Treasuries climb, pushing US 10-year yields down 2 bps to 4.38%. The Bloomberg Dollar Spot Index falls 0.1%. Oil dipped with WTI falling 0.9% to $70.60 a barrel. Today's key macro events are the Empire Fed Manfuacturing index and S&P Global PMI prints for the US.

In premarket trading, MicroStrategy leads fellow cryptocurrency-exposed stocks higher on optimism about the company’s upcoming inclusion of the company in the Nasdaq 100 Index. MicroStrategy (MSTR) +4%, Riot Platforms (RIOT) +2%, Mara Holdings (MARA) +2%. On the other end, Super Micro Computer tumbled 15% after the announcement that the stock is to be removed from the Nasdaq 100 in the annual reconstitution of the index. Here are some other notable premarket movers:

• Axon (AXON) rises 2% as the stock will be added to Nasdaq 100 Index in annual reconstitution of the index.
• Capri Holdings (CPRI) climbs 5% after Women’s Wear Daily reported that the fashion company is working with a bank to find buyers for its Versace and Jimmy Choo brands.
• Edgewise Therapeutics (EWTX) gains 23% after the company said its Phase 2 trial of sevasemten in individuals with Becker muscular dystrophy met its primary endpoint.
• Ford shares (F) falls 2% as Jefferies turns bearish on the automaker, citing concerns ranging from inventory overhang to looming strategic decisions on the company’s European presence.
• Honeywell (HON) advances 3% after saying it’s considering strategic options, including the possible separation of its aerospace business, a month after Elliott Investment Management called for a breakup of the industrial group.
• Red Cat (RCAT) rises 14% after the drone tech company announced a strategic partnership with Palantir Technologies.
• Teradyne, NetApp and Keysight Technologies all rise after JPMorgan upgraded the three tech hardware firms amid growing demand for their products.

An expected quarter-point rate cut from the Federal Reserve on Wednesday could add fresh support and extend US stocks’ outperformance. The S&P 500 has rallied 27% so far in 2024, with strategist expecting the rally to build further steam in anticipation of favorable economic policies under President-elect Donald Trump and strong earnings.

"Central banks have been helpful in 2024 as they start cutting interest rates when the economy was still strong," Marija Veitmane, senior multi-asset strategist at State Street Global Equities, told Bloomberg TV. Going forward, “what we need to rely on is earnings and where they can grow the fastest. In the US, we can still see solid growth.”

Wednesday’s Fed decision will be followed by peers in Japan, the Nordics and the UK over the following day. Swaps traders are now pricing in around three quarter-point rate cuts by the Fed over the next 12 months, whereas they’d seen better than 50/50 odds of a fourth one a week ago.

In Europe, the Stoxx 600 is down 0.3% in the wake of disappointing retail-sales data in China, while traders assess the impact of Moody’s Ratings’ France downgrade. Banks are the best performers while Novo Nordisk boosts healthcare stocks after announcing its Catalent deal got the go-ahead. Automakers and consumer goods are the biggest laggards. France's CAC 40 falls 0.7%, underperforming its regional peers after Moody’s cut the French credit rating on Friday. Here are some of the biggest movers on Monday:

• Novo Nordisk shares rise as much as 2.7% after the Danish drugmaker said it can advance with its acquisition of factories from contract development and manufacturing organization Catalent.
• Basilea shares rise as much as 9.2% after the Swiss pharma company entered into an exclusive distribution and license agreement with Innoviva for the commercialization of Basilea’s hospital anti-MRSA antibiotic Zevtera in the US.
• Johnson Matthey shares rise as much as 6.6%, the most since March, after its largest shareholder, Standard Investments, called on the chemicals company to refresh its board and launch a strategic review of the business following its underperformance in recent years.
• Galderma gains as much as 4.7%, the most since Aug. 6 and hitting a record high, after UBS upgraded the Swiss dermatology firm to buy from neutral.
• DKSH shares gain as much as 3.5%, the most since July, after the Swiss distribution group saw its recommendation raised to outperform from neutral at BNP Paribas Exane, seeing a “potent mix of margin expansion and balance sheet optimization” driving earnings momentum.
• Bunzl shares rise as much as 2.8% after the value-added distributor was upgraded by analysts at RBC Capital Markets, citing a dependable outlook and an undemanding valuation.
• Porsche Automobil Holding SE shares drop as much as 3.3% after the German firm withdrew its current year forecast due to the expected impairment of at-equity carrying amounts of its investments in Volkswagen and Porsche AG.
• Getlink shares drop as much as 3.6%, the most since June, after the travel infrastructure operator warned it has discovered a second fault on its interconnector between France and the UK.

Earlier in the session, Asian stocks also slumped, dragged lower by shares in mainland China after the country’s retail sales data came below expectations. The MSCI Asia Pacific Index declined 0.2%, with China Eastern Airlines and Australian miner Fortescue Ltd among the biggest losers. Hong Kong and mainland China were among the worst performing markets in the region, while the stock benchmark in Taiwan rose. China’s data dump on Monday showed retail sales for November rose 3% on-year, well below an expectation of a 5% gain. That weighed on sentiment at a time when Beijing has been touting more stimulus to support spending. Home prices fell for a third month in a row, although the decline is slowing. Chip makers Taiwan Semiconductor Manufacturing Co and SK Hynix were among the gainers. A gauge tracking Asian IT shares was up around 0.3%.

The retail-sales data “is a reflection of the dire situation there and how the stimulus efforts have prioritized optics over delivering meaningful economic improvements,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore. “Even for a tactical recovery, we need more after a series of false starts and the risk of tariffs ahead.”

“This data really verifies that the headwinds for consumers are still very very high,” said Johanna Chua, head of emerging market economics at Citigroup Global Markets in a Bloomberg TV interview.

In FX, the Bloomberg dollar index was little changed after six days of gains. Wall Street is starting to sour on the dollar as President-elect Donald Trump’s policies and the Fed’s interest-rate cuts will likely put pressure on the greenback in the latter portion of 2025. Roughly a half dozen sell-side strategists are now forecasting the world’s reserve currency will peak as early as mid next year before starting to decline. Euro-area PMIs were mixed and largely ignored with the euro little changed versus the dollar. The pound outperforms, rising 0.2% as investors seemed to focus on the services PMI beat rather than the manufacturing PMI miss.

In rates, treasuries hold small gains, tracking bigger rallies in bunds and gilts after mixed European PMI readings and recovering some of last week’s steep loss. US yields are richer by 1.5bp to 3bp across maturities with gains led by front-end and belly, steepening 5s30s spread by ~1bp. 10-year is back around 4.37% after topping 4.4% Friday for the first time since Nov. 22. OATs also lag their German counterparts, widening the 10-year yield spread to around 79 bps, after France was downgraded unexpectedly by Moody's on Friday. Treasury coupon auctions this week include $13 billion 20-year bond reopening Tuesday and $22 billion 5-year TIPS reopening Thursday. US session includes Empire manufacturing survey and US PMIs, with November retail sales ahead Tuesday before Wednesday’s Fed rate decision. Oil trades lower, also supporting Treasuries.  

In commodities, oil prices declined, with WTI falling 0.9% to $70.60 a barrel after rising 6.1% last week. Spot gold adds $12 to around $2,660/oz. Bitcoin rallies to a record high.

Today's US economic data calendar includes December Empire manufacturing (8:30am) and S&P Global US manufacturing and services PMIs at 9:45am

Market Snapshot

• S&P 500 futures little changed at 6,061.50
• STOXX Europe 600 down 0.1% to 515.69
• MXAP down 0.2% to 185.09
• MXAPJ down 0.2% to 584.05
• Nikkei little changed at 39,457.49
• Topix down 0.3% to 2,738.33
• Hang Seng Index down 0.9% to 19,795.49
• Shanghai Composite down 0.2% to 3,386.33
• Sensex down 0.4% to 81,777.79
• Australia S&P/ASX 200 down 0.6% to 8,249.48
• Kospi down 0.2% to 2,488.97
• German 10Y yield down 1 bp at 2.25%
• Euro up 0.1% to $1.0516
• Brent Futures down 0.7% to $73.97/bbl
• Gold spot up 0.4% to $2,657.85
• US Dollar Index down 0.19% to 106.81

Top Overnight News

• US DHHS nominee (under President-elect Trump) RFK Jr. is to attempt to win over the Senate by playing down the vaccine topic and sticking to Trump's messaging: WSJ
• Nasdaq announced that Palantir Technologies (PLTR), MicroStrategy (MSTR), and Axon Enterprise (AXON) will be added to the index, while Illumina (ILMN), Super Micro Computer (SMCI), and Moderna (MRNA) will be removed as part of the annual reconstitution of the Nasdaq-100 Index, which will become effective prior to market open on Monday, December 23rd: RTRS
• WSJ's Timiraos writes, ahead of this week's FOMC, "Investors widely expect a third-in-a-row rate cut this week. Officials are ready to slow—or even stop—lowering rates after that."
• A surprise retail slowdown in China highlighted the urgency for Beijing to further boost consumer spending. Sales growth slowed sharply last month, though industrial output improved. BBG
• China’s regulators pledged to boost efforts to stabilize the housing and equity markets, as well as conduct more effective fiscal policies. Several branches weighed in after a major leadership meeting last week ended in calls for greater stimulus. BBG
• Eurozone flash PMIs for Dec are mixed, with an inline manufacturing reading (45.2, flat vs. Nov and a tiny bit below the consensus of 45.3) and upside services number (51.4, up from 49.5 in Nov and above the consensus of 49.5). S&P
• The European Central Bank is likely to continue to lower its key interest rate as the threat of U.S. tariffs clouds already weak growth prospects, President Christine Lagarde said Monday. WSJ
• French stocks struggled after Moody’s downgraded the country’s credit rating. New PM Francois Bayrou met with Marine Le Pen, who felt “listened to” but is unsure if the talks were useful. BBG
• Apple plans to introduce new iPhones (including thinner models and foldable ones as well) as the firm prepares to offer more radical design changes to help accelerate growth. WSJ
•  
• Slumping office values are prompting smaller US banks to modify more CRE loans, Moody’s data show. About $500 billion of such mortgages are set to mature in the next year and many are expected to default. Potential losses and fire sales may further pressure property prices. BBG
• Bitcoin briefly topped $106,000 — a fresh record — buoyed by optimism about MicroStrategy’s inclusion in the Nasdaq 100. BBG
• Tesla (TSLA) has raised the price of the Model S to USD 79,990 from USD 74,990 in the US and the price of the Model S Plaid to USD 94,990 from USD 89,990, according to its website.
• Meta (META) has urged the California Attorney General to stop OpenAI (MSFT) from becoming for-profit: WSJ.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks saw an uninspiring start to the week following the mixed session on Wall Street on Friday and ahead of this week's risk events including the final FOMC, BoJ, and BoE meetings of the year. ASX 200 saw gold miners pressured by the recent pullback of the yellow metal towards USD 2,650/oz levels, with sentiment also weighed on by the downticks in prelim. Aussie PMIs. Nikkei 225 swung between modest positive and negative territory throughout the session as the index oscillated the 39,500 level, whilst the Japanese Flash PMI highlighted "stubborn inflation" with "anecdotal evidence placing particular emphasis on the impact of the weakness of the yen in relation to inputs sourced from abroad." KOSPI conformed to the broader risk tone with little sustained move after South Korean MPs successfully voted to impeach President Yoon in their second attempt. Hang Seng and Shanghai Comp fluctuated between modest gains and losses with little initial reaction seen to the Chinese activity data, which saw a marked miss in Retail Sales whilst Industrial Output saw a modest surprise uptick. Furthermore, Chinese markets failed to garner much support from weekend reports that China has room to further cut the RRR, according to PBoC officials on Saturday via CCTV.

Top Asian News

• IDC expects China's smartphone shipments to increase to 289mln in 2025, +1.6% Y/Y
• China has room to further cut the reserve requirement ratio (RRR), according to PBoC officials on Saturday via CCTV.
• China's Central Financial and Economic Affairs Commission deputy director said the country's GDP is expected to grow by about 5% this year, with foreign exchange reserves remaining above USD 3.2tln. He added that China's contribution to global economic growth is expected to be close to 30% and that employment and prices in China are expected to remain stable, according to Reuters.
• Chinese Stats Bureau stated that China is on track to achieve key economic targets in 2024, but more efforts are needed to promote continued economic recovery in 2025. It added the trend of recovery in consumption remained unchanged and that more policies would be implemented to expand domestic demand. It noted that while new policies had gained more traction, the external situation had become more complex and severe. The Bureau expects further improvement in the property market, emphasises the need to stabilise employment and increase incomes to boost consumption capacity, and anticipates that China's CPI will maintain modest increases. It also noted that China's economy is generally stable in November and sees increasing positive changes, according to Reuters.
• China Financial and Economic Affairs Commission says China will increase the size of government bonds, including local special bonds, in 2025, via Xinhua. Will promote stable household income growth next year through increasing direct fiscal support to consumers and improving social security. Will implement "appropriately loose" monetary policy to effective lower interest rate on local government debt. China still has big room for investment.
• PBoC injected CNY 753.1bln via 7-day reverse repos with the rate maintained at 1.50%.
• Moody's raised China's 2025 GDP growth forecast to 4.2% from 4.0%, according to Reuters.
• The US Treasury has told Nippon Steel (5401 JT) that the panel vetting its proposed acquisition of US Steel (X) has not reached a consensus on how to mitigate security risks, according to the FT.
• New Zealand NZIER Consensus Forecasts show that the economic growth outlook remains broadly unchanged relative to the previous release; GDP forecasts continue to suggest sluggish growth in the year to March 2025 before picking up to 2.2% in the following year.

South Korea News

• South Korean MPs have successfully voted to impeach President Yoon in their second attempt, amid backlash following his brief move to impose martial law, according to BBC. Yoon was suspended from official duties at 19:24 local time on Saturday while PM Han is to continue as acting president, according to Yonhap.
• South Korea's acting president Han vowed to leave no vacuum in state affairs, build a solid security posture, and ensure the cabinet works hard to maintain trust with the US, Japan, and other partners. He also pledged efforts to operate financial and forex markets smoothly, according to Yonhap. Acting President Han said the country will maintain preparedness to prevent North Korea from stirring up provocations, secure national interests ahead of the new US administration, and prioritise national security above all else, according to News1 and Yonhap.
• South Korea's opposition leader Lee Jae-myung said the party has decided not to proceed with the impeachment of acting president Han, according to Reuters.
• Bank of Korea stated it is necessary to respond more actively to the economic impact compared with past impeachment periods, given heightened challenges in external conditions. It also said it will use all available policy instruments, in conjunction with the government, to respond to and avert escalation of volatility in financial and forex markets, according to Reuters.
• South Korea's Finance Minister said the government will continue to swiftly deploy market-stabilising measures as needed, seek more support measures for vulnerable sectors, and actively communicate with parliament to keep the economy stable. The minister also confirmed that the bi-annual economic policy plan will be announced before the end of the year, according to Reuters.
• South Korea's financial regulator said it will expand market-stabilising funds if needed to boost liquidity in bond and short-term money markets and expects financial markets to stabilise as recent political events are temporary shocks, according to Reuters.

European bourses began the European session on a modestly mixed footing, with indices generally trading on either side of the unchanged mark. As the morning progressed, sentiment slipped a touch to display a slightly negative picture in Europe. Today's EZ PMIs strengthens the case for further ECB easing, but had little impact on the complex. European sectors hold a strong negative bias, with a clear defensive tilt given the risk tone. Healthcare takes the top spot, after heavyweight Novo Nordisk (+1.9%) gains after it announced regulatory approval for Catalent deal. Autos parks itself at the foot of the pile, weighed on by losses in Porsche SE (-1.7%) after the automaker withdrew guidance. US equity futures are very modestly on a firmer footing, with sentiment a little better vs in Europe. The NQ marginally outperforms vs peers.

Top European News

• Moody's cut France’s rating to "Aa3" from "Aa2", outlook stable, in an unscheduled rating revision, citing political fragmentation. Moody's said its view is that France's public finances will be substantially weakened over the coming years. The agency noted that France's political fragmentation is more likely to impede meaningful fiscal consolidation and said there is now a very low probability that the next French government will sustainably reduce the size of fiscal deficits beyond next year. However, France's local- and foreign-currency ceilings remain unchanged at AAA, according to Moody's.
• ECB Holzmann said it would be wrong to cut rates just to help the economy, according to Reuters.
• ECB's Lagarde says more rate cuts are to come and the direction of travel is clear, via Bloomberg; risks around inflation are two sided. "The ECB is also moving through its monetary policy cycle, and we are now at a stage where the darkest days of winter look to be behind us, and we can start to look forward instead."
• ECB's de Guindos says "our confidence that inflation will converge to target in 2025 is reflected in our monetary policy". US tariff increases could result in inflationary pressures.
• EU reportedly presses for new powers to combat threat of Chinese import surge and amid fears Brussels will struggle to fight back in a global trade war, according to FT.
• Norges Bank to purchase NOK and sell foreign currency to fund transfers to the government for FY24.
• SNB has adjusted the remuneration of sight deposits, lowers the threshold factor from 22 to 20 as of 1st February 2025.

FX

• DXY is flat and has been trading within a very tight 106.75-92 range for much of the European morning. As it stands the index currently trades towards the bottom end of Friday’s 106.71-107.18 range; and quite a bit away from its 21 DMA at 106.47. US Flash PMIs due later.
• EUR is flat vs the Dollar, with price action fairly choppy as traders react to a slew the EZ PMI metrics dotted throughout the morning. ECB President Lagarde spoke today, with her commentary very much in-fitting with her remarks made at her press conference. EUR/USD traded choppily to the French figures, but ultimately edged a little higher on the German release. Since, the upside has been pared to reside around 1.05.
• JPY is essentially flat, but is the G10 laggard thus far. Overnight, the Japanese PMI release showed manufacturing rebounding and services improving. USD/JPY sits in a very tight 153.31-96 range, a touch above Friday’s 153.79.
• GBP is on a stronger footing, in reaction to the region’s PMI release which saw the Services figure above expectations and further into expansionary territory, while Manufacturing was a touch softer. Cable currently trades at the top end of today’s 1.2609-72 range, with today’s peak coinciding with its 21 DMA at 1.2670.
• Antipodeans are marginally firmer vs the Dollar; the Kiwi outperforms vs the Aussie. AUD currently trades at the mid-point of a 0.6348-82 range, and just within Friday’s confines. NZD/USD on the other hand, has topped the best from Friday and currently trades just off the day’s best at 0.5786.
• Norges Bank said it is to purchase NOK and sell foreign currency to fund transfers to the government for FY24. This helped to strengthen the NOK, with EUR/NOK slipping from 11.7440 to 11.7130 over the course of eight minutes; thereafter, extended to a session low of 11.7030 before paring almost the entire move.
• S&P affirmed Mexico "BBB" foreign currency and "BBB+" local currency long-term rating; Outlook remains Stable.
• Brazilian President Lula has been discharged from the hospital and has recovered well and can resume normal work activities but is to avoid long-haul flights, according to the medical team.
• PBoC set USD/CNY mid-point at 7.1882 vs exp. 7.2769 (prev. 7.1876)

Fixed Income

• USTs are rangebound in a tight 109-27+ to 109-31+ band ahead of Flash PMIs from the US but with the focus firmly on Wednesday’s FOMC. Given contained action for the benchmark yields are also relatively steady but are lower across the curve, which itself is marginally flatter.
• Bunds are pressured, but yet to deviate significantly from the unchanged mark in a tight 134.43-73 band. PMIs sparked modest two way action with the net read being bearish as the German economy fares better than expected in some areas. Into the EZ-wide release, Bunds edged a little higher but the poor manufacturing situation saw Bunds pare back those gains. As it stands, Bunds reside just in the red as the dust settles post-PMIs and remarks from ECB speakers thus far are yet to move the dial; ahead, the often influential Schnabel is scheduled.
• OATs are softer and moved in tandem with EGBs on the German metrics after being relatively unreactive to their own PMIs which focused firmly on political uncertainty. As a reminder, and weighing, Moody's downgraded France a notch with the outlook stable, due to increased political uncertainty and a low probability that the gov’t will succeed in reducing the deficit.
• Gilts are a touch firmer but little changed overall into the UK Flash PMI release, which was mixed but in a delayed reaction weighed on Gilts, given services strength and inflationary internals, pressuring them from a 94.50 high back towards but not testing earlier 94.24 lows.

Commodities

• WTI and Brent began the session modestly in the red before slipping further as the European session got underway given the tepid risk tone for the region. Brent'Feb 2025 sits just shy of USD 74/bbl.
• Gold is firmer and at the top-end of parameters for today. XAU found itself under pressure in APAC trade and slipped to a USD 2643/oz base before bouncing back and residing at USD 2662/oz highs.
• Base metals are mostly on the back foot, given the risk tone; Copper is a little more contained, not really deriving any direction from the morning’s PMIs or before than from China activity data and commentary.
• Marathon's Detroit refinery (140k BPD) union workers voted to ratify a pay deal following a three-month strike, according to a union post on X.
• Damage to two tankers in the Black Sea caused an oil products spill, according to Interfax.
• Nigeria's maritime agency reported an oil spill at the Shell loading terminal in Nigeria's Delta region after a pipeline ruptured, according to Reuters.
• Libya's NOC declared force majeure at its Zawiya facility following clashes, according to Bloomberg.
• Nornickel CEO Potanin said the company will move to positive free cash flow in 2025 and, until then, shareholders will need to be patient with dividends, according to Russian media RBC.
• Some Japanese aluminium buyers agree to a January-March premium of USD 228/t, +30% from the current quarter, according to Reuters sources.

Geopolitics: Middle East

• "Progress in the negotiations of the exchange deal and may be completed after the Jewish holidays at the end of this month", according to Al Jazeera citing an informed source via Israeli press.
• US President-elect Trump and Israeli PM discussed the Gaza hostage deal bid and Syria on Sunday, according to Reuters.
• Israeli PM Netanyahu’s government approved a plan to expand settlements on Israeli-occupied Golan Heights. The statement said Netanyahu acted “in light of the war and the new front facing Syria” and out of a desire to double the Israeli population on the Golan, according to Reuters.
• Russia is pulling back its military in Syria but is not withdrawing from its main military bases, Syrian sources say, according to Reuters.
• Trump's Middle East envoy has met with the Saudi crown prince, according to Axios.
• "Syrian media: Strong explosions in the countryside of Tartous and Latakia resulting from an Israeli attack" according to Asharq News. Note: Russia has two bases in Syria – a naval base in Tartous and the Khmeimim Air Base near the port city of Latakia..
• "US sources to Alarabiya English: US army carried out strikes against Houthi sites in Yemen", according to Al Arabiya.

Geopolitics: US-China

• US Treasury Secretary Yellen said the Treasury continues to warn China about the potential for bank sanctions over transactions aiding Russia's war effort in Ukraine and will not rule out sanctions on Chinese banks. She noted that the largest Chinese banks are wary of the consequences. Yellen also said the US aims to reduce Russia's energy revenues, with options such as lowering the oil price cap and imposing more sanctions on 'dark fleet' tankers being considered. She emphasised the need for clear communication channels at all levels between the US and China, stating that leader-to-leader discussions alone are insufficient. Yellen added that the next US Treasury Secretary is likely to continue pushing back on currency manipulation if evidence is found.

Geopolitics: Other

• Russian President Putin says "is concerned about US development and deployment of short and medium-range missiles"; "we are not brandishing nuclear weapons, it a policy of nuclear deterrence".

US Event Calendar

• 08:30: Dec. Empire Manufacturing, est. 10.0, prior 31.2
• 09:45: Dec. S&P Global US Services PMI, est. 55.8, prior 56.1
• 09:45: Dec. S&P Global US Composite PMI, est. 55.1, prior 54.9
• 09:45: Dec. S&P Global US Manufacturing PM, est. 49.5, prior 49.7

DB's Jim Reid concludes the overnight wrap

This morning we will publish our 2025 survey results with lots of interesting answers. Your two favourite Xmas films are quite violent though so that's the demographic of the responses! Long-time readers of the EMR will be wondering where time is going when I tell you that our belovedly wayward dog Brontë, who used to play a starring role in the EMR, was 10 over the weekend. Brontë is the most affectionate, good natured, people dog you can imagine but has zero recall. So in the first 2-3 years when we were trying to get used to having a dog, with extensive gun dog training included, we lost her on probably 7 or 8 occasions on walks. One of which was followed by my wife uttering (or shouting) the word "divorce" when I lost her on a motorway service station in France in the dark while my wife was feeding a very young baby around 8 years ago. She was seen crossing the motorway at one point before returning to the petrol pumps tired, bedraggled, and hungry two hours later. Since then she's not been off the lead, and I saved my marriage by having our garden fortified. As she gets older, the calmer she doesn't get. Happy birthday Brontë.

As we hit the last full week of the year, the natural winding down of activity will be punctuated by bursts of activity, centred around the Fed (Wednesday), the BoJ (Thursday) and the BoE (also Thursday) meetings. In terms of data, the highlights are the global flash PMIs today, US retail sales (tomorrow) and inflation prints from the US (PCE on Friday), Canada (tomorrow), UK (Wednesday), and Japan (Friday). Outside of that, today’s German government vote of no confidence should almost certainly pave the way for a February 23rd election and tomorrow’s CDU/CSU manifesto announcement will help shape the campaign (more later). Another thing to watch is France where Moody’s surprisingly cut France late on Friday night in a rare unscheduled move, albeit one that brings it in line with S&P and Fitch (also more below).

Let’s expand on some of these highlights now and start with the Fed. Our economists’ preview is here but in brief they expect a 25bps cut and then for them to be on hold for the entirety of 2025 as the SEP should show meaningful revisions to the 2024 economic forecasts, with growth and inflation revised higher and the unemployment rate lower. The median dot is likely to show three additional rate cuts but we think Powell will likely deemphasis this signal in the press conference and be as data dependant as he can be. Powell will also likely emphasise that it is still too early for officials to build any major policy changes from the new Trump administration into their outlook. The long-run dot will likely continue its upward migration, rising to 3.1%. Our economists' estimates of neutral are notably above the Fed’s and we think they will likely continue to move this higher.

The BoJ meeting on Thursday is more uncertain, but most economists expect no change and with only a 16% probability of a hike priced in. Our Chief Japan economist previews the meeting here and goes against consensus in seeing a rate hike as the most likely scenario. One of the reasons why a hike might wait until January though is that MP Ishiba is trying to push a stimulus plan through parliament this month and the BoJ may prefer to avoid political interference and delay the hike.

On Thursday our UK economist expects a BoE hold, with a 9-0 vote decision, keeping the rate at 4.75%. The full preview of the meeting is here. The Riksbank is expected to cut rates 25bps on Thursday in a busy last full week of the year for central banks.
For core PCE on Friday our economists believe it comes in a little soft at 0.16% mom versus 0.27% previously with subcomponents in last Thursday's PPI and Friday's import price data, that feed into this number, on the weaker side. However, the year-over-year rate for core PCE should still tick up from 2.8% to 2.9%.

In Germany, Chancellor Scholz's vote of confidence today is scheduled to start at 1:00 pm CET. The expected loss will likely clear the path to early elections on February 23. More importantly tomorrow sees the CDU/CSU publish their manifesto at 11.30 CET. According to current polls the CDU is likely to lead the next government, and the manifesto could give clearer signals on their economic policy priorities, even if the coalition agreement after the elections could result in policy compromises. The key question is whether the CDU will formally signal an openness to reforming the debt brake at this stage. Recently signalled openness by Merz to discuss reforms might just be intended to create optionality for potential compromises in coalition talks. However, a leaked draft of the CDU election manifesto late last week saw a continued commitment to the debt brake which at this stage is not unexpected and corroborates what our economists expect.

Staying at the centre of Europe, the Moody’s downgrade of France late on Friday night to Aa3 from Aa2 with a stable outlook was unscheduled and will surprise many when European markets reopen this morning. Their commentary on future deficits is quite damning but the fact that it’s a stable outlook for now, and that this just brings the rating in line with S&P and Fitch, will likely mean that this is more headline grabbing than massively market moving for now. OAT futures are only a little lower in Asia trading. France’s new Prime Minister Francois Bayrou will meet with far-right leader Marine Le Pen and Jordan Bardella (head of National Rally) at 9am CET this morning to start the process of agreeing a budget. So we may see some headlines post the meeting. For all the rest of the week's events, see the full day-by-day week ahead at the end as per usual.

Asian equity markets are falling this morning with Chinese stocks weak after disappointing retail sales data (more below). As I check my screens, the Hang Seng (-0.75%) and the CSI (-0.51%) are lower with the S&P/ASX 200 (-0.56%) and the Nikkei (-0.18%) also dipping. Elsewhere, the KOSPI (-0.39%) has erased its opening gains following the impeachment of President Yoon Suk Yeol over the weekend. In overnight trading, US equity futures are flat with 10yr UST -1.5bps lower.

Coming back to China retail sales unexpectedly slowed in November, rising +3.0% y/y (v/s +5.0% expected) and marking a sharp slowdown from the +4.8% growth in October. November industrial production rose by +5.4% from a year ago, accelerating from a climb of +5.3% in the prior month and in line with expectations. Fixed asset investment (Ex rural), reported on a year-to-date basis, rose by +3.3% through November on an annual basis, missing the forecast of 3.5%. The figure had risen by +3.4% in the period from January to October. However, new-home prices "only" fell -0.2%, the smallest decrease in 17 months, indicating a fragile stabilisation in China’s real estate market. Values of used homes dropped -0.35%, the least since May 2023. Yields on 10yr Chinese government bonds are -5.1bps lower, trading at a record low of 1.72% with longer-tenor yields also tumbling.

Looking back at last week now, markets struggled to keep up their momentum thanks to the combination of underwhelming data and an ECB decision that whilst dovish was less so than many hoped for. That meant risk assets slipped back, with the S&P 500 falling -0.64% last week (-0.003% Friday to be very precise), whilst the STOXX 600 fell -0.77% (-0.53% Friday). In fact for both indices, the moves ended a run of three consecutive weekly gains, although Japan was a relative outperformer as the Nikkei rose +0.97% (-0.95% Friday). In a remarkable metric of the weakening breadth of momentum in US equities, Friday marked the tenth session in a row that more stocks fell than rose within the S&P 500, the longest such run since 1996.

US inflation data didn’t really help matters, as it raised fears that inflation might be proving sticky above the Fed’s target. To be fair, it wasn’t so bad as to prevent a December rate cut in investors’ eyes, but the longer-term trends were of concern. Indeed, US monthly core CPI has been running at +0.3% for four consecutive months, so it doesn’t look like a temporary blip anymore, and the 3m annualised pace of core CPI now stands at +3.7%. In the meantime, headline PPI inflation also surprised on the upside, with the year-on-year rate moving up to +3.0% for the first time since early 2023. As we mentioned in the core PCE preview above, some of the sub components were weak but we're about to enter the more seasonally unfavourable H1 period for US inflation so there are concerns that inflation hasn't behaved well enough in the seasonally dovish H2 period this year.

Concerns about the inflation outlook contributed to a selloff among US Treasuries last week, with the 10yr yield up +24.4bps last week to 4.40% (+6.9bps Friday). That’s its biggest weekly jump since October 2023, and the 2yr yield was also up +14.2bps (+5.4bps Friday) to 4.25%. Over in Europe, government bond yields also moved higher after the ECB’s latest decision. They cut rates by 25bps as expected, but there was some disappointment among investors that the tone wasn’t more dovish, as President Lagarde described inflation risks as “two-sided”. In fact yields on 10yr Italian BTPs were up +20.0bps (+4.3bps Friday), in their biggest weekly jump since July 2023. And yields on 10yr bunds were up +15.0bps (+5.2bps Friday) in their biggest rise since March.

Although equities and bonds both struggled last week, there was a stronger performance among several commodities. For instance, Brent crude oil prices rose +4.74% (+1.47% Friday) to $74.49/bbl, and gold prices were up +0.56% (-1.42% Friday) to $2,648/oz. Meanwhile in the FX space, it was another good week for the US Dollar, with the dollar index moving up for the 10th time in the last 11 weeks.

Tyler Durden Mon, 12/16/2024 - 08:27

New Jersey Receives Report Radioactive Medical Device "Lost In Transit"

While everyone, including local, state, and federal authorities, is desperately searching for answers, there has been a notable lack of disclosure regarding what is actually happening in the skies above New Jersey—some of the most restricted airspace in the world.

One theory points to drones equipped with payload sensors designed to detect radioactive material, given ongoing and heightened Al-Qaeda threats on the East Coast. Others believe this could be part of a large psyop aimed at pushing through new drone legislation in Washington, DC. Additional theories suggest that Iranian or Chinese operators may be deploying drones to spark mass hysteria.

Even Washington Post's Josh Rogin called out the feds for "the lack of disclosure is damaging public trust." He added it's time for the feds "to come clean." 

If these really are Defense Department drones doing radiation sniffing for possible dirty bombs, one could understand why they wouldn’t want to admit that & panic people. But at this point, the lack of disclosure is damaging public trust. Time to come clean.

— Josh Rogin (@joshrogin) December 15, 2024

What may seem like a mere coincidence is worth noting: reports of drone sightings began in mid-November, and on December 2, the US Nuclear Regulatory Commission disclosed that a medical device containing radioactive material was "lost in transit" in New Jersey.

Nazha Cancer Center reported to the New Jersey Department of Environmental Protection (NJDEP) on December 3 that an "Eckert & Ziegler model HEGL-0132, with the current approximate activity of 0.267 mCi sent for disposal has been lost in transit on December 2." 

"The shipping container arrived at its destination damaged and empty. The licensee has filed a claim with the shipper. If the source is not located within the 30 days, the licensee will follow up with a full written report to include root cause(s) and corrective actions," the email from the cancer center located in Newfield continued. 

Here's a website image of the missing Eckert & Ziegler model HEGL-0132 medical device: 

NJDEP noted, "THIS MATERIAL EVENT CONTAINS A 'Less than Cat 3' LEVEL OF RADIOACTIVE MATERIAL." 

The agency explained more:

Sources that are "Less than IAEA Category 3 sources," are either sources that are very unlikely to cause permanent injury to individuals or contain a very small amount of radioactive material that would not cause any permanent injury. Some of these sources, such as moisture density gauges or thickness gauges that are Category 4, the amount of unshielded radioactive material, if not safely managed or securely protected, could possibly - although it is unlikely - temporarily injure someone who handled it or were otherwise in contact with it, or who were close to it for a period of many weeks.

It had not occurred to us that cancer centers could cause radiation threats... 

It remains unclear whether the purported drone sightings in NJ/NY airspace were even equipped with sniffing tech to even search for the missing radioactive medical device (or other devices). The government's undeniable lack of disclosure at all levels has fueled panic. Perhaps even the feds have no idea what's truly happening.​

Tyler Durden Mon, 12/16/2024 - 07:45

Economic Indicators And The Trajectory Of Earnings

Authored by Lance Roberts via RealInvestmentAdvice.com,

Understanding the trajectory of corporate earnings is crucial for investors, as these earnings significantly influence stock valuations and market performance. Economic indicators such as Gross Domestic Product (GDP), the Institute for Supply Management (ISM) Manufacturing Index, and the Chicago Fed National Activity Index (CFNAI) provide valuable insights into the economic environment that shapes company profitability. These indicators can also help investors evaluate whether Wall Street’s earnings estimates are realistic.

During raging bull markets, exuberance about the market can detach from the underlying economic fundamentals. During these periods, it is not uncommon for Wall Street analysts to continually increase forward estimates on the hopes that the economy will catch up to reality. However, there is a symbiotic relationship between economic indicators and the trajectory of earnings that we will explore.

Let’s start with the economy itself.

Gross Domestic Product (GDP)

GDP measures the total value of goods and services produced within a country. It is a reliable gauge of overall economic health. A growing GDP indicates increased economic activity, typically driving higher corporate earnings due to greater consumer spending and business investment. Conversely, a contracting GDP suggests an economic slowdown, often dampening corporate profits.

That data supports this concept. Historically, GDP growth has closely correlated with corporate earnings growth. Data from the Federal Reserve shows that, since 1948, a 1% increase in real GDP growth has translated to roughly a 6% increase in S&P 500 earnings on average. This relationship underscores why GDP is a cornerstone for assessing earnings trends. We can also see this visually.

“Since 1947, earnings per share have grown at 7.7% annually, while the economy expanded by 6.40% annually. That close relationship in growth rates should be logical, particularly given the significant role that consumer spending has in the GDP equation.” – Market Forecasts Are Very Bullish

A better way to visualize this data is to look at the correlation between the annual change in earnings growth and inflation-adjusted GDP. There are periods when earnings deviate from underlying economic activity. However, those periods are due to pre- or post-recession earnings fluctuations. Currently, economic and earnings growth are very close to the long-term correlation.

However, as we discussed previously, there is also a high correlation between the market and the corporate profits to GDP ratio. As is the case currently, markets can detach from underlying economic realities due to momentum and psychology for brief periods. However, those deviations are unsustainable in the long term, and corporate profitability, as discussed, is derived from underlying economic activity.

The ISM Composite Index can also give us clues as to where earnings will likely be in 2025.

ISM Manufacturing Index

The ISM Manufacturing Index is a widely followed leading indicator of economic activity in the manufacturing sector. It surveys purchasing managers on critical metrics like new orders, production levels, and employment.

• A reading above 50 signals expansion, which tends to support earnings growth.
• A reading below 50 suggests contraction, often foreshadowing economic weakness and declining corporate profits.

As of late 2024, the ISM Manufacturing Index has been consistently below 50, marking a manufacturing recession. This data aligns with declining new orders and softer demand, raising concerns about corporate earnings resilience in 2025. However, while manufacturing only accounts for about 20% of U.S. GDP, it has a outsized influence that extends across supply chains, amplifying the impact on broader economic activity.

As shown, corporate earnings growth, which correlates with economic indicators like the ISM Manufacturing index, suggests some caution in the more optimistic Wall Street estimates. However, even if we include the services side of the index, which comprises the bulk of economic growth, and weight it accordingly, we see that the stock market has far outpaced underlying economic activity. Historically, such outsized returns were unsustainable as earnings growth could not meet expectations.

However, one of the better economic indicators to pay attention to is the Chicago Fed National Activity Index, which is a very broad measure of the economy but does not receive much attention.

Chicago Fed National Activity Index (CFNAI)

The CFNAI aggregates 85 monthly economic indicators from four categories:

1. Production and income.
2. Employment, unemployment, and hours worked.
3. Personal consumption and housing.
4. Sales, orders, and inventories.

A CFNAI reading above zero indicates above-trend economic growth, while below zero suggests below-trend growth. In October 2024, the CFNAI registered at -0.15, reflecting subdued economic activity. Prolonged readings in negative territory often signal a rising risk of recession. Notably, the employment measure suggests that the annual rate of change in employment will continue to decline, industrial production will slow, and personal consumption will moderate lower.

The CFNAI’s broad scope provides a nuanced view of how various economic forces combine to affect corporate earnings. With production and employment metrics deteriorating, the outlook for robust earnings in 2025 appears increasingly strained. As shown, a high but volatile historical correlation exists between the CFNAI and corporate earnings.

While these are the major indicators to pay attention to heading into 2025, there are others.

• Consumer Spending: This accounts for nearly 70% of U.S. GDP. Recent data shows retail sales growth has slowed, indicating cautious consumer behavior amid inflationary pressures and higher interest rates. Lower spending reduces revenue prospects for consumer-focused companies.
• Labor Market Trends: While the unemployment rate remains low, job openings and wage growth are moderating. A weakening labor market could hinder disposable income growth, further challenging consumer-driven earnings.
• Corporate Margins: Rising costs for raw materials, labor, and borrowing are compressing profit margins. If these trends persist, corporate earnings in 2025 could be weaker than anticipated.

Wall Street Earnings Estimates for 2025

Currently, Wall Street analysts project record corporate earnings for 2025. The bottom-up earnings-per-share (EPS) estimate for the S&P 500 stands at $268.94, reflecting an annual growth of over 10%. If realized, this would mark the highest EPS in history.

However, historical patterns suggest caution: analysts tend to overestimate earnings by roughly 30% (the median) one year in advance. With economic data signaling a slowdown, these estimates may be overly optimistic. Current trends in leading indicators like ISM Manufacturing and CFNAI support a more conservative outlook.

One key risk lies in valuation metrics. The S&P 500 trades at approximately 22.43 times forward earnings, well above the historical average of 15.8 times. If earnings fall short of estimates, stocks could face downward pressure as investors reassess valuations.

Based on current economic data, it seems likely that Wall Street’s earnings estimates for 2025 are higher than expected. Subdued manufacturing activity, slowing GDP growth, and cautious consumer behavior all point to an economic environment less supportive of aggressive earnings growth. As such, investors must carefully navigate the disconnect between high Wall Street expectations and softening economic conditions. Here are some strategies to consider:

• Diversification: Spread investments across sectors to mitigate risks tied to specific industries, particularly those heavily reliant on consumer spending or manufacturing.
• Focus on Quality: Prioritize companies with strong balance sheets, consistent cash flows, and defensible market positions. Quality companies tend to weather economic slowdowns better than their peers.
• Monitor Leading Indicators: To anticipate earnings revisions, pay close attention to ISM Manufacturing, CFNAI, and consumer spending trends.
• Prepare for Volatility: Elevated valuations leave little margin for error. If earnings fall short of expectations, expect heightened market volatility.

If these headwinds persist, corporate earnings may grow much slower or even contract slightly compared to Wall Street’s current projections. For investors, this scenario could mean lower returns from equities, particularly in high-growth sectors more sensitive to earnings disappointments.

We will continue to monitor these data points, as well as credit spreads, for increases in market risks. However, bullish optimism and extreme consumer confidence in high stock prices dominate market dynamics. While that can remain the case for much longer than logic suggests, that complacency will eventually give way to economic fundamentals.

While we cannot consistently effectively “time the market” over long periods of time, we can manage portfolio risk by paying attention to what drives markets. Sentiment, credit spreads, earnings, and real-time economic data will provide the clues needed to navigate the markets effectively.

*  *  *

We will continue to report on these variables and provide actionable advice tailored to current market conditions at RealInvestmentAdvice.com. Explore our resources to help you build a resilient portfolio and stay informed about the trends shaping the investment landscape.

Tyler Durden Mon, 12/16/2024 - 07:20

Feds Have Limited Authority To Shoot Down Drones Seen Over New Jersey, Mayorkas Says

Authored by Jack Phillips via The Epoch Times (emphasis ours),

The Secretary of the Department of Homeland Security (DHS), Alejandro Mayorkas, provided an update Sunday on a rash of apparent drone sightings in the New Jersey region, saying the federal government will take action to address concerns but signaled that officials don’t have the authority to shoot them down.

Homeland Security Secretary Alejandro Mayorkas speaks during a Senate Homeland Security and Governmental Affairs committee hearing on the department's budget request on Capitol Hill in Washington on April 18, 2024. Andrew Harnik/Getty Images

Over the past several weeks, residents and local officials have reported drones flying over New Jersey, drawing intense speculation and scrutiny in the past week. Some federal lawmakers have called on the drones to be shot down or captured, while federal officials have not disclosed the source of the unmanned aerial vehicles.

“There’s no question that people are seeing drones,” Mayorkas told ABC News’ “This Week” anchor George Stephanopoulos on Sunday morning. “I want to assure the American public that we in the federal government have deployed additional resources, personnel, technology to assist the New Jersey State Police in addressing the drone sightings.”

Mayorkas added that the sightings are “in fact” of drones, but some are “manned aircraft that are commonly mistaken for drones,” echoing previous statements made by the FBI, DHS, and the White House. He did not provide further details.

“But there’s no question that drones are being sighted,” the secretary said, adding that there are “thousands” of drones that are flown every day in the United States, including commercial and recreational vehicles. He also pointed out that in September 2023, the Federal Aviation Administration changed federal rules that allow drones to fly in the evening.

“I want to assure the American public that we are on it. We are working in close coordination with state and local authorities,” Mayorkas said. “And it is critical, as we all have said for a number of years that we need from Congress additional authorities to address the drone situation. Our authorities currently are limited, and they are set to expire. We need them extended and expanded.”

Elaborating, he called on Congress to allow state and local officials to have broader latitude in dealing with drones “under federal supervision.”

When asked by Stephanopoulos about whether the drones should be shot down, as suggested by President-elect Donald Trump in a social media post over the weekend, Mayorkas signaled that the U.S. government has limited capacity in that regard.

Several local New Jersey elected officials, including Rep. Chris Smith (R-N.J.), said in a Saturday news conference that that government should take down the drones and have them inspected by federal officials. “Why can’t we bag at least one drone and get to the bottom of this?” Smith asked.

Mayorkas said Sunday that the U.S. government is “limited in our authorities” in taking down a drone, noting that there are more than 8,000 drones being flown each day across the country.

“We have certain agencies within the Department of Homeland Security that can do that, and outside our department,” he added, “but we need those authorities expanded as well.”

The Homeland Security secretary then stressed that U.S. officials have not seen evidence that the drones are being operated by a foreign adversary, echoing statements made by the White House and FBI. He also suggested that the drones have not been flown over any sensitive or restricted areas.

“When a drone is flown over restricted air space, we act very, very swiftly,” said Mayorkas, who is due to leave office on Jan. 20, 2025. “And, in fact, when an individual in California flew a drone over restricted air space, that individual was identified, apprehended, and is being charged by federal authorities. And so we act as swiftly as possible when an individual does fly a drone over restricted air space and violates the rules.”

He was making reference to an incident earlier this month in which a Chinese national living in the United States was flying a drone near Vandenburg Air Force Base in Southern California.

The suspect, Yinpiao Zhou, was arrested at the San Francisco International Airport right before he was set to board a flight back to China on Dec. 9, officials have said.

Tyler Durden Mon, 12/16/2024 - 06:20

Profits At Commodity Trader Trafigura Tumble Amid Mongolia Fraud

By Charles Kennedy of OilPrice.com

Trafigura saw its net profit for the financial year 2023/2024 ended on September 30 plunge by 62% as the commodity trading giant recorded a loss of $1.1 billion related to serious misconduct by individuals in its Mongolian oil business.

Trafigura booked a net profit of $2.8 billion for FY2024, down from a $7.3 billion profit in FY2023 and $6.8 billion for FY 2022, the oil and metals trading house said on Friday.

The underlying performance was strong, with strong contributions from all three core businesses – Oil and Petroleum Products; Metals, Minerals, and Bulk Commodities; and Gas, Power, and Renewables, said outgoing chief executive Jeremy Weir.

He is stepping down from the CEO role in January 2025 after ten years. Weir will be chairman of Trafigura’s board as of next year and will be succeeded by Richard Holtum as CEO, effective 1 January 2025.

Commenting on the FY2024 performance, Weir said that the strong business performance was “marred by the extremely disappointing discovery of serious misconduct by individuals in our Mongolian oil business, involving deliberate manipulation of data and documents and concealment of overdue receivables.”

Trafigura publicly disclosed in October 2024 that it had recorded a total loss of $1.1 billion on the discovered fraud in the Mongolian business. Of this loss, $358 million is reflected in the FY2024 results.

“An external investigation remains ongoing. We have reviewed other higher-risk offices and lines of business, and we are confident that these issues are isolated to a self-contained operation in Mongolia,” Weir said.

In accordance with International Accounting Standards (IAS 8), Trafigura has also restated prior year comparative figures to account for the exposure provisions for the Mongolian business.

In oil and petroleum products, “prices periodically disconnected from physical market fundamentals because of factors including the conflict in the Middle East, disruptions to shipping in the Red Sea and the ongoing war in Ukraine,” Trafigura said.

Separately, Trafigura and three other defendants earlier this month went on trial in Switzerland’s top criminal court over allegations of bribery. Trafigura has been charged for failing to take all reasonable measures to prevent payment of more than $5 million in bribes to an Angolan oil official in exchange for oil and shipping contracts more than a decade ago.

Tyler Durden Mon, 12/16/2024 - 05:45

Realtor Association Reveals Top 10 Hottest US Housing Markets For 2025

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

The National Association of Realtors (NAR) listed housing markets in the United States expected to perform well next year, noting that financing conditions in these regions are “favorable” for buyers.

A for sale sign displayed in front of a home in Miami, Fla., on Feb. 22, 2023. Joe Raedle/Getty Images

Among the top 10 housing markets for 2025, the southern United States led with four markets, and the Midwest with three, according to a Dec. 12 statement from the group.

“Important factors common among the top performing markets in 2025 include available inventory at affordable price points, a better chance of unlocking low mortgage rates, higher income growth for young adults, and net migration into specific metro areas,” said Lawrence Yun, chief economist at NAR.

Hottest markets for 2025, according to the company:

• Boston-Cambridge-Newton, Massachusetts-New Hampshire
• Charlotte-Concord-Gastonia, North Carolina-South Carolina
• Grand Rapids-Kentwood, Michigan
• Greenville-Anderson, South Carolina
• Hartford-East-Hartford-Middletown, Connecticut
• Indianapolis-Carmel-Anderson, Indiana
• Kansas City, Missouri-Kansas
• Knoxville, Tennessee
• Phoenix-Mesa-Chandler, Arizona
• San Antonio-New Braunfels, Texas

“All areas offer a favorable financing environment—either with lower proportions of locked-in homeowners or lower mortgage rates. In addition, most of these markets outperform the national average in at least six of NAR’s 10 criteria,” the association said.

“Locked-in” refers to homeowners with low mortgage rate loans and are disincentivized from selling properties amid the current higher rates.

NAR expects mortgage rates to be around 6 percent next year, becoming the “new normal” that triggers more buyers to enter the market. Home prices are predicted to grow by a slower 2 percent rate. Inventory levels are expected to increase.

“Home buyers will have more success next year,” Yun said. “The worst of the affordability challenges are over as more inventory, stable mortgage rates, and continued job and income growth pave the way for more Americans to achieve homeownership.”

Top 10 Markets

The cities of Boston, Cambridge, and Newton, located in Massachusetts and New Hampshire are expected to see “significant benefits from stabilizing mortgage rates,” according to NAR. The region has fewer locked-in homeowners. As such, when mortgage rates stabilize at 6 percent, more owners may be willing to sell, thereby easing the supply situation.

The cities of Charlotte, Concord, and Gastonia in North Carolina and South Carolina have seen “impressive 10 percent job growth over the last five years and strong migration gains,” the NAR said.

“More than 11 percent of the households are set to reach the age of 35 to 40 within the next five years, ensuring sustained demand for housing.”

Housing demand in Grand Rapids and Kentwood, Michigan, are expected to be strong given that more than one-third of millennial renters are financially able to buy homes. Plus, 12 percent of households are calculated to enter “prime homebuying age” over the coming five years.

The cities of Greenville and Anderson in South Carolina are seeing a “strong” net migration rate. The affordability situation is also favorable to buyers, with the average mortgage rate last year “well below the national average,” the association noted.

The financial situation in Connecticut’s Hartford, East Hartford, and Middletown areas is “favorable.” The region had an average mortgage rate of 6.5 percent in 2023, which NAR noted was “one of the lowest among the top markets.”

More than 40 percent of housing stock in the cities of Indianapolis, Carmel, and Anderson in Indiana costs less than $236,000, making the location attractive for young families and individuals seeking to buy their first home. The area also has fewer “locked-in” owners compared to the national average.

Kansas City, which straddles Missouri and Kansas, benefits from two key factors—lower proportion of “locked-in” homeowners and lower average mortgage rate. One in three millennial renters are able to afford homes in this area, NAR said.

Strong migration trends favor Knoxville, Tennessee, with almost 50 percent of new movers seeking to buy a house. Moreover, fewer borrowers in the region have properties with mortgage rates below 6 percent, diminishing the lock-in effect.

The Phoenix, Mesa, Chandler metro area in Arizona is a key destination for people moving out of California, given the region’s “comparatively lower cost of living and housing affordability,” NAR said.

Last year, borrowers in San Antonio and New Braunfels, Texas secured mortgages at rates of 6.4 percent, well below the national average. “This suggests that buyers in the area benefit from a combination of local market dynamics that lead lenders to assess lower risk in this area,” NAR said. The area also has seen strong job growth.

Mortgage Rate Challenge

The average weekly rate on a 30-year fixed-rate mortgage has remained above 6 percent for more than two years, according to data from Freddie Mac. For this year, rates peaked at 7.22 percent in May and had come down to 6.08 percent by late September, only for it to rise once again.

Presently, rates are hovering at 6.6 percent, after declining for the third consecutive week. “The combination of mortgage rate declines, firm consumer income growth, and a bullish stock market have increased homebuyer demand in recent weeks,” said Sam Khater, chief economist at Freddie Mac.

“While the outlook for the housing market is improving, the improvement is limited given that homebuyers continue to face stiff affordability headwinds.”

In a recent commentary, Lisa Sturtevant, chief economist at research company Bright MLS, said it would have “seemed preposterous” to expect homebuyers to be enthusiastic about interest rates being at mid-6 percent. However, “expectations are being reset.”

“For a long time after mortgage rates bottomed out in 2021, consumers’ expectations had been anchored to the notion of a mortgage rate somewhere in the 3s.”

But since interest rates have largely moved around the 7 percent level this year and the chances of rates coming down to 3 percent any time soon is “zero,” prospective homebuyers are now much more open to rates at the mid-6 percent level, she said.

However, “affordability is still a major constraint for moderate-income buyers,” Sturtevant noted. “With home prices expected to rise and rates projected to remain in the 6s through 2025, many of those buyers will still be priced out.”

On the plus side, consumer sentiment regarding housing is improving, according to a Dec. 9 statement from Fannie Mae. In November, a “new record-high share” of respondents said they expect mortgage rates to dip over the next 12 months.

Mark Palim, Fannie Mae senior vice president, said that a growing share of consumers expect to be financially better off next year. In addition, more consumers as well as some of Fannie Mae’s experts predict the growth in home prices to slow down.

This “may help ease some of the affordability burden and incentivize some households, especially those who have been waiting in the wings, to finally act on their home purchase decision,” he said.

The 10 criteria looked at various critical factors which affect property prices in a market. This included home price appreciation, the share of households that hit homebuying age over the next five years, growth in jobs, and the proportion of millennials who rent homes and are in a financial position to purchase a home.

Tyler Durden Mon, 12/16/2024 - 05:00

Trump May Use Bitcoin As US Reserve Asset On 'Day One'

Authored by Yashu Gola via CoinTelegraph.com,

Donald Trump will likely issue an executive order on his first day in office to designate Bitcoin BTC$102,801 as a United States reserve asset, according to Jack Mallers, CEO and founder of Strike.

A 200K Bitcoin buy order is coming in January 2025?

In a podcast interview with YouTuber Tim Pool, Mallers explained that the president-elect could rely on provisions within a so-called "Dollar Stabilization Act," which grants him considerable authority to protect the US dollar.

“There’s potential to use a day-one executive order to purchase Bitcoin,” Mallers stated, adding:

“It wouldn't be the size and scale of 1 million coins but it would be a significant position."

The Bitcoin Act of 2024, introduced by pro-crypto Senator Cynthia Lummis in July, proposes that the Treasury and Federal Reserve purchase 200,000 BTC annually over five years, accumulating 1 million BTC.

The reserve will be held for at least 20 years, thereby taking 5% of Bitcoin’s total supply (of 21 million tokens) from circulation.

These speculations have resulted in some lofty new BTC price targets for 2025 and beyond.

Bitcoin price may hit $800,000 by 2025’s end

According to Perianne Boring, founder of The Digital Chamber, Bitcoin’s capped supply could lead to significant price appreciation, especially if Trump successfully implements many of his proposed crypto policies.

“If Donald Trump is successful in putting forth a lot of the proposals that he's proposed to the [crypto] community, the sky is the limit because Bitcoin has a fixed supply,” Boring stated in an interview with Fox Business.

She pointed to the stock-to-flow model, which forecasts Bitcoin’s price to exceed $800,000 by the end of 2025. Such a surge would push Bitcoin’s market capitalization to around $15 trillion, up from its current valuation of over $2 trillion.

PlanB, the creator of the stock-to-flow model, meanwhile predicts Bitcoin to average around the $500,000 valuation across 2025. However, he believes that the price may go as high as $1 million.

Source: PlanB

BlackRock suggests 1-2% portfolio allocation to Bitcoin

The stock-to-flow model's Bitcoin price prediction hinges on the assumption that demand for BTC will continue to grow.

The US Treasury theoretically accumulating 200,000 BTC every year reinforces the idea of stronger demand in coming years, since it’ll likely force other counties to consider a strategic Bitcoin reserve of their own.

BlackRock, which manages over $10 trillion worth of assets, has already recommending investors to allocate 1-2% of their portfolio to Bitcoin.

"We see a case for investors with suitable governance and risk tolerance to include Bitcoin in a multi-asset portfolio," the firm’s four senior executives, including Samara Cohen, chief investment officer of ETFs and Paul Henderson, senior portfolio strategist of BlackRock Investment Institute, said in a report published Dec. 12.

To put this into perspective, the total global reserve assets are valued at approximately $900 trillion. A 2% allocation to Bitcoin from this pool would, in theory, drive the cryptocurrency's price to around $900,000 per unit.

Tyler Durden Mon, 12/16/2024 - 04:15

China Looks To Build The Largest Human-Made Object In Space

By Alex Kimani of Oilprice.com

Two months ago, we reported that Baiju Bhatt, one of the co-founders of the investing app Robinhood, debuted space solar power company Aetherflux. The startup plans to build a constellation of Low-Earth Orbit (LEO) satellites that will use infrared lasers to transmit power to small ground stations on Earth.

The startup notes that space solar power can revolutionize energy distribution, especially where delivering power is expensive, challenging, or dangerous. Powering hard-to-reach places like remote military bases, islands, or areas hit by disasters unlocks new capabilities and advantages for our country. 

Although rarely discussed, harnessing solar power from space is hardly a new concept. In 1941, writer Isaac Asimov introduced the world to space solar power. Back in the 1970s, NASA explored space solar power, with its approach requiring massive, billion-dollar structures in space, using radio waves for power transmission. Unfortunately, NASA quickly abandoned the idea. However, the attractions of beaming solar power from space are obvious: Unlike on Earth, sunlight in space is more powerful, available day and night, and unaffected by weather.

And now China is looking to upend the U.S. in yet another futuristic energy technology: China is charging ahead with plans to build a prototype Space Based Solar Power (SBSP) device by 2030 that would become the largest human-made object in space. 

“China will be producing this in less than 20 years, and we’ll be buying from them,” Peter Garretson, a leading SBSP expert and fellow at the American Foreign Policy Council, warned congressional staff during a recent briefing.

The stakes are high: energy represents roughly 10% of global GDP, meaning the first country to successfully build out SBSP infrastructure will potentially control a multi-trillion-dollar marketspace. The global SBSP infrastructure and manufacturing industry is expected to exceed $1 trillion by 2040. An ambitious U.S.-led space-based solar power project would translate to thousands of high-paying engineering and support services jobs right here on Earth.

As David Steitz, former Deputy Associate Administrator for Technology at NASA, has warned, America risks losing the space solar power race to China as it has done with conventional solar power unless it acts immediately. Steitz says what the U.S. is lacking is national coordination and commitment, noting that, unlike China’s focused national program, U.S. efforts are fragmented among NASA, the Department of Energy and the Department of Defense--each of which expects someone else to take the lead.  

China Wins Fusion Race

But it's not just the SBSP race that the U.S. is likely to lose to China. According to Jean-Paul Allain, who leads the U.S. Energy Department’s Office of Fusion Energy Sciences, Beijing has been pumping in ~$1.5 billion annually into nuclear fusion research, nearly double Washington’s fusion tab at $800 million a year. China has been making rapid progress over the past decade, and now owns more fusion patents than any country according to industry data published by Nikkei. 

“To me, what’s more important than the number, it’s actually how fast they’re doing this,” Allain told CNN.    

Interestingly, a small, relatively unknown Chinese fusion startup has been able to achieve what even France-based International Thermonuclear Experimental Reactor (ITER), funded and run by seven countries since 2006, has been unable to pull off. Shanghai-based Energy Singularity has effectively completed the engineering feasibility verification of high-temperature superconducting for its Honghuang 70 (HH70) tokamak device, giving China a first-mover advantage in the critical field of high-temperature superconducting magnetic confinement fusion. Energy Singularity has also become the world's first commercial company to build and operate an all-superconducting tokamak.

"The design work of the device began in March 2022, and the overall installation was completed by the end of February this year, setting the fastest record for the research and construction of superconducting tokamak devices worldwide," Yang Zhao, Energy Singularity's Chief Executive Officer, has revealed.

So, how did this little-known Chinese company manage to pull off in two years what ITER has failed to achieve in nearly two decades? 

According to Yang, using high-temperature superconducting materials can reduce the volume of a device to about 2 percent of that of traditional low-temperature superconducting devices, allowing the construction period of the device to be shortened from ~ 30 years to just 3-4 years.

According to Yang, the company owns independent intellectual property rights of HH70, with a domestication rate of over 96 percent, adding that all of the device's magnet systems are constructed using high-temperature superconducting materials. Despite its commendable success, Energy Singularity is not resting on its laurels, with Yang revealing the company plans to complete the next generation high magnetic field high-temperature superconducting tokamak device dubbed HH170 with a deuterium-tritium equivalent energy gain (Q) greater than 10 by 2027. In nuclear fusion parlance, the Q value reflects the energy efficiency of the fusion reactor, that is, the ratio of the energy generated by the device to the energy input required to sustain the fusion reaction. Q values greater than 1 means the reactor generates more energy than what it consumes, which is essentially what fusion research has been trying to achieve in a commercial reactor for decades. Currently, the greatest Q factor that scientists have achieved is just 1.53.

Meanwhile, Deven, Massachusetts-based Commonwealth Fusion Systems is collaborating with MIT to build their small fusion reactor. Dubbed Sparc, the reactor is ~1/65th the volume of ITER's reactor. The experimental reactor is expected to generate about 100 MW of heat energy in pulses of about 10 seconds - bursts big enough to power a small city. However, its first commercial reactor is at least a decade away.

Tyler Durden Mon, 12/16/2024 - 03:30

Permitting Reform: A Strategic Imperative For U.S. National Security And Global Competitiveness

Authored by Michelle Howard and Paul Segal via RealClearEnergy,

Permitting reform has swiftly risen to the forefront in Washington as a pressing national security priority. The United States is grappling with the dual challenges of escalating energy demand and mounting global competition, particularly from China. Despite the critical role of our nation’s energy infrastructure, the U.S. is ensnared in a permitting process that can prolong vital projects by several years—or even decades. SAFE’s Center for Grid Security underscores that overhauling the procedures for approving and constructing energy infrastructure is not just a matter of efficiency—it is a matter of national urgency in the face of escalating global power competition.

Most Department of Defense (DoD) installations rely on the civilian power grid, but the growing strain on our power system is increasingly impacting installations and essential military operations, intensifying the consequences for our national defense. Military installations depend on the grid for command centers, communication networks, and intelligence gathering to maintain operational readiness. The Energy Permitting Reform Act of 2024 (EPRA), currently under consideration in the Senate, would significantly expedite critical upgrades, ultimately ensuring that installations are equipped to handle potential disruptions.

The transition to a GOP-controlled Congress in January will likely challenge the passage of EPRA as Republicans may well decide to wait, with a blank slate in the new Congress. However, given the urgency of the situation, policymakers should move now to begin the essential work of building the grid our military and economy deserve. As SAFE CEO Robbie Diamond has articulated, “America must be prepared for a surge in power demand as the incoming administration accelerates our reindustrialization. Delaying these needed reforms, even by a few months, will hold us back—let’s pass EPRA now to lay the foundation for growth and implement further reforms as needed.” This pragmatic strategy balances the urgency of reform with a phased approach, ensuring progress while laying the groundwork for broader changes.

The vulnerabilities within the power grid extend beyond national security and have significant implications for economic competitiveness. High-tech and defense-critical industries, such as artificial intelligence (AI) and semiconductor manufacturing, rely on abundant and affordable energy from a secure and resilient grid. Without reform, there is a real risk of losing these vital industries to competitors with more dependable infrastructure. EPRA aims to streamline permitting processes for projects that enhance grid resilience, positioning the U.S. as a leader in technological advancement and promoting the on-shoring of defense-critical supply chains.

Furthermore, the current system incurs hidden costs for the DoD, which is compelled to allocate resources to backup power solutions, such as diesel generators or microgrids, in case of grid failures—resources that could otherwise be directed toward frontline defense efforts. While microgrids have the potential to provide cost savings to the DoD compared to the continued use of diesel generators, they still represent a cost burden on the defense budget.

Severe weather events further underscore the vulnerabilities inherent in the power grid. Protracted outages can disrupt mission-critical operations at military installations and adversely affect the economy, leading to billions of dollars in lost productivity. The National Guard has increasingly been engaged in addressing these grid-related emergencies, stretching its resources and impeding its focus on critical missions such as disaster response and homeland defense. EPRA would prioritize projects designed to establish a more resilient and interconnected grid, thereby mitigating risks and bolstering security for both military and civilian infrastructure.

In comparison to our near-peer competitors, China's energy policy is characterized by a strong emphasis on national interests and swift action. China views robust energy infrastructure as a critical necessity that demands immediate attention and implementation.  So should we!

For the incoming administration, prioritizing permitting reform for both transmission and domestic critical mineral development is essential for safeguarding America's future. Energy infrastructure reform transcends reducing bureaucratic delays; it is an essential component in reinforcing national security, enhancing economic resilience, and maintaining global leadership. In an era characterized by Great Power Competition, ensuring a secure and resilient grid is fundamental to preserving the U.S.’ status as a global leader.

Admiral Michelle Howard, 38th Vice Chief of Naval Operations; Commander, US Naval Forces Europe, US Naval Forces Africa, and Allied Joint Force Command Naples (Ret.), and Paul Segal, CEO of LS Power, are the co-chairs of the SAFE Center for Grid Security

Tyler Durden Mon, 12/16/2024 - 02:00

The Democratic Party Changed While We Stayed In Place

Authored by Josh Stylman via The Brownstone Institute,

Let me start by saying I loathe politics. I’ve always been drawn to liberal ideas—individual freedom, protecting the vulnerable, questioning authority, and the fundamental belief that consenting adults should be free to live their lives however they choose as long as they’re not harming others. These aren’t political positions to me; they’re basic human principles. But the game of politics itself repulses me. What I’m about to share isn’t about politics; it’s about our shared reality and how we’ve lost touch with it.

The Mindvirus

What’s truly mind-numbing to me is how people don’t see what’s happening right in front of them. The media has devolved into nothing more than a propaganda mouthpiece for the establishment, programming people to react rather than think. I’ve experienced this firsthand: When I drew historical comparisons between vaccine mandates and 1933 Germany’s early authoritarian policies, I was instantly labeled an extremist and cancelled by my NYC community. Yet now, these same people casually call everyone at Trump’s MSG rally Nazis. The irony would be funny if it weren’t so tragic.

My Liberal Foundation

I still believe deeply in core liberal principles:

• Genuine free speech, not the controlled corporate version we see today
• Standing against establishment overreach
• Opposing unchecked corporate power
• Fighting against unnecessary wars
• Complete bodily autonomy – your body, your choice, in ALL contexts
• Defending individual rights consistently, not selectively

These aren’t just political positions—they’re principles about human dignity and freedom.

The Democratic Party’s Transformation

The Democratic Party’s drift from these values didn’t happen overnight. Many of us, exhausted by Bush’s brutal wars, lies about weapons of mass destruction, and the Patriot Act’s assault on civil liberties, invested our hopes in Obama’s promise of change. But instead of the transformation we sought, we got what felt like Bush’s third and fourth terms.

Under Obama, we watched as corporate influence grew stronger, not weaker. The Snowden revelations exposed massive surveillance programs. The housing crisis devastated ordinary Americans while Wall Street got bailouts. Rather than challenging institutional power, the Democratic establishment became increasingly entangled with it.

The betrayal of liberal values became even clearer with Bernie Sanders. Like Trump, Bernie tapped into something real—a deep frustration with a system that had left ordinary Americans behind. Both men, from vastly different perspectives, recognized that working people were suffering while elites prospered. But the Democratic establishment couldn’t allow an actual progressive challenger. They used every trick in the book—from media manipulation to primary shenanigans—to block him from the nomination. Most disappointing was watching Bernie himself bend the knee to the same establishment he had railed against, leaving millions of supporters feeling betrayed and politically homeless.

When Hillary Clinton emerged as the nominee, we were told rejecting her meant rejecting women’s leadership. But we weren’t rejecting female leadership—we were rejecting warmongering and corporate cronyism. What we needed was a leader embodying the feminine divine: qualities of compassion, understanding, nurturing wisdom, and the ability to truly listen. Instead, we got another hawk in the corporate establishment’s pocket. And when that failed, they doubled down on cynical identity politics with Harris.

Today, the situation relating to Robert F. Kennedy, Jr. perfectly exemplifies how far the party has fallen. Here was a lifelong Democrat, a member of the party’s most popular family, who wanted to challenge these corrupting influences—and they wouldn’t even let him on the debate stage. I firmly believe that had they given him the opportunity, he could have united the country and beaten Trump.

But that reveals the truth: this was never about beating Trump. It was about ensuring they maintained control by installing another establishment stooge who wouldn’t challenge their power structure. His departure from the party isn’t just about one candidate; it’s the culmination of a long betrayal of liberal principles.

The Politics of Distraction vs. Real Issues

Take abortion rights. This is an incredibly nuanced issue with deeply held convictions on all sides. I’ve spoken with several constitutional lawyers who’ve explained that overturning Roe was legally sound—not a political decision but a constitutional one about federal versus state authority. That makes it even more telling that Democrats, when they had a supermajority, chose not to codify these protections into federal law. Instead, they’ve kept this issue unresolved, using it as a reliable tool to drive voter turnout every four years.

While abortion access matters deeply to many Americans, we’re facing multiple crises that threaten the very foundation of our republic: inflation is crushing working families while Wall Street posts record profits; government surveillance of citizens has reached dystopian levels; and our regulatory agencies—the FDA and CDC—have been completely captured by corporate interests, approving one toxic product after another while our children are being poisoned by processed foods, environmental toxins, and experimental drugs.

The climate crisis (or what some see as deliberate geoengineering) threatens our very survival. Our border is in complete chaos—while we send billions to foreign conflicts most Americans barely understand. All this while our own infrastructure crumbles and our nation grows more divided than ever.

The hypocrisy around women’s rights is particularly telling. The same party that claims to champion women’s bodily autonomy pushed for mandatory experimental medical interventions, despite documented evidence of mRNA vaccines affecting women’s reproductive cycles and fertility. These effects were known from early trials, yet raising concerns got you labeled as “anti-science.” Meanwhile, they’ve insisted that biological males have access to women’s spaces—including locker rooms, bathrooms, and sports competitions—prioritizing fashionable ideologies over women’s safety and fair competition.

The Democrats permanently lost any moral authority on bodily autonomy the moment they advocated for mandatory medical procedures—yet they continue to lecture us about it without a hint of self-awareness. Liberal principles aren’t a Chinese menu where you get to pick and choose which freedoms matter.

Take Kamala Harris—she literally campaigned on “My body, my choice” while simultaneously mandating experimental Covid shots for her own campaign staff. You can’t claim to champion bodily autonomy in one breath and deny it in the next based on political convenience. Either you believe in individual liberty and bodily autonomy, or you don’t. There’s no à la carte option when it comes to fundamental human rights.

The Corporate-State Fusion

What we’re seeing today aligns disturbingly well with Mussolini’s definition of fascism: the merger of state and corporate power. Look at Klaus Schwab’s World Economic Forum promoting “stakeholder capitalism,” where corporations and governments form partnerships to control various aspects of society. The WEF’s corporate membership reads like a who’s who of Democratic Party megadonors: BlackRock, which donated millions to Biden’s campaign while pushing ESG policies that benefit their bottom line; Pfizer, which poured over $10 million into Democratic coffers while securing massive government contracts; Google and Meta, which not only donate heavily but actively suppress information challenging Democratic narratives.

This isn’t a coincidence; it’s coordination. These same companies shape policy that enriches them: BlackRock advises on financial policy while managing government assets, Pfizer helps write drug approval guidelines while selling mandatory vaccines, and Big Tech collaborates with federal agencies to control information flow. We saw this play out in real time: from day one of the Biden administration, they created backdoor channels into social media companies to censor Americans’ speech about Covid, the 2020 election, and other sensitive topics.

This isn’t a theory—it’s documented fact. Every major policy decision seems to benefit these corporate partners: vaccine mandates, digital currency initiatives, censorship programs, climate policies—all funneling money and power to the same corporations that fund the Democratic machine. When corporations and government work together to control information and behavior, that’s precisely the corporate-state fusion that classical liberals once fought against. The Democratic Party has become the party of corporate fascism while claiming to fight against it.

The Democratic Facade

The current administration embodies everything wrong with our system. Look at Kamala Harris—she dropped out of the 2020 presidential race before any primary, polling below 1%. Biden then selected her solely because he limited his pool to black women—not because of her qualifications, but because of identity politics. Her record as Senator was abysmal—she sponsored zero significant legislation and missed 84% of votes during her brief tenure. Then as Vice President, her role as border czar has been an unprecedented disaster—one the administration now tries to pretend never happened.

And here’s the ultimate irony: this is the party screaming loudest about “threats to democracy,” yet they literally installed Harris as their candidate when nobody voted for her—she dropped out before a single primary vote was cast due to dismal polling. They wouldn’t even let their own members participate in primary debates. They’re lecturing us about democracy while actively suppressing democratic processes within their own party. When they say “democracy is on the ballot,” what they really mean is their controlled version of democracy where they pick the candidates and we’re supposed to fall in line.

Nobody voted for her, and honestly, nobody really likes her—they just hate Trump more. They could prop up a steaming pile of manure as a candidate, and people would vote for it just to vote against Trump. But here’s the real question: If Trump is truly the democracy-ending threat they claim, why didn’t democracy end during his first term? And if Harris is the solution to our problems, why hasn’t she fixed anything while in office?

The Trump Enigma

My view on Trump has evolved, though not in the way many might expect. I didn’t vote for him in 2016 or 2020. Growing up in this region, I knew him only as a second-generation real estate developer—Woody Guthrie had written those critical lyrics about his father, “Old Man Trump.” At the time, I thought Donald was just another entitled heir who happened to opportunistically tap into something real. 

But there’s so much more to this story. His connections to secret societies and the occult run surprisingly deep. His Trump Tower penthouse is essentially a Masonic temple, designed as a replica of Versailles with deliberate esoteric symbolism throughout. His mentor was a 33° Scottish Rite, and Roy Cohn’—master of blackmail and dark arts—shaped his early career. Most intriguingly, his uncle John Trump was the MIT scientist tasked with reviewing Nikola Tesla’s papers after his death—papers that allegedly contained world-changing technologies, from free energy to more exotic possibilities. I don’t know what it all means, but there’s clearly more to this story than the “orange man bad” narrative we’re fed.

At this point, I see only three possibilities:

1. He’s playing his part in a grand political wrestling match (WWF style)
2. He’s a dueling bad guy (genuinely a thorn in the establishment’s side)
3. He’s actually the hero of this story (which would be the most hilarious plot twist imaginable from the vantage point of someone like me)

The Path Forward

Candidly, I don’t know and at this point, any of these seem plausible. What I do know is what the blue team represents—their actions have made that crystal clear. But Trump remains a bit of a mystery to me. I have a hard time believing any politician could be our savior—real change has always come from the bottom up, not the top down. But something interesting happened that gave me a glimmer of hope: RFK, Jr. jumping on board.

The RFK, Jr. situation is fascinating. Here’s a Kennedy—essentially Democratic royalty—teaming up with Trump after being shut out by his own party. This isn’t just any political alliance. RFK, Jr.’s deep understanding of the administrative state, from public health institutions to regulatory agencies, combined with his proven track record of exposing corporate capture and fighting pharmaceutical corruption, makes this particularly intriguing. Maybe, just maybe, this alliance could protect our children from harmful policies and unnecessary wars?

I struggle with what comes next because I understand the gravity of our situation. Our republic is incredibly fragile—more fragile than most people realize. The Founders knew this, warning us about the difficulty of maintaining a democratic republic. But I refuse to give up on dialogue, even when it feels hopeless. If people don’t see what’s happening by now—the censorship, the mandates, the war-mongering, what appears to be intentional schismogenesis (I wrote about this idea here)—will they ever?

The powers that profit from our division; they’ve mastered the art of keeping us fighting each other so we don’t look up to see who’s really pulling the strings. These aren’t just political issues—they’re existential challenges that require reasonable people to discuss complex solutions. Your neighbor who voted differently isn’t your enemy—they likely want many of the same things you do: safety, prosperity, freedom, and a better future for their children. They might just have different ideas about how to get there.

I know this is heavy stuff. You might disagree with everything I’ve said, and that’s okay. What’s not okay is letting these disagreements destroy our relationships and communities. The choice isn’t just about who we vote for—it’s about how we treat each other, how we discuss our differences, and whether we can find common ground in our shared humanity.

The way forward isn’t through hatred or fear. It’s through understanding, open dialogue, and most importantly, love. We might be living through the death throes of the American experiment, or we might be witnessing its rebirth. Either way, we’re in this together, and our strength lies in our ability to work through these challenges as a community, as neighbors, and as friends. Let’s choose wisdom over reaction, understanding over judgment, and love over fear. Our future depends on it.

Republished from the author’s Substack

Tyler Durden Sun, 12/15/2024 - 23:20

Federal Officials Will Deploy High-Tech System To New York After Drones Shut Down Airport, Governor Says

By Jack Phillips of The Epoch Times

New York Gov. Kathy Hochul announced that the federal government will send a “a state-of-the-art drone detection system” to her state after a number of drone sightings across New York and New Jersey in recent days.

While she did not elaborate on the system that will be deployed, it “will support state and federal law enforcement in their investigations,” she said in a statement on the morning of Dec. 15.

“I am grateful for the support, but we need more. Congress must pass a law that will give us the power to deal directly with the drones,” the governor wrote on social media platform X around the same time. She urged Congress to pass the Counter-UAS Authority Security, Safety, and Reauthorization Act that will give states “the authority and resources required to respond to circumstances like we face today.”

It’s not clear whether the federal government sent a similar system to New Jersey, where most of the drone sightings have occurred, or in other states. Over the weekend, swarms of drones were spotted in other states along the East Coast, including Maryland.

On Dec. 14, Hochul said that a drone sighting shut down Stewart International Airport, a small airport located in Orange County within the Hudson Valley.

“Last night, the runways at Stewart Airfield were shut down for approximately one hour due to drone activity in the airspace,” the governor said in a statement. “This has gone too far.”

Hochul then called on the federal government to provide assistance in dealing with the unmanned vehicles, adding that federal rules make it difficult for the state to deal with drones.

“Extending these powers to New York State and our peers is essential,” the governor also said. “Until those powers are granted to state and local officials, the Biden administration must step in by directing additional federal law enforcement to New York and the surrounding region to ensure the safety of our critical infrastructure and our people.”

Federal officials in the past week have stressed that there is no evidence the drones pose a security or public safety threat to the United States, while also asserting the drones are not being operated by a foreign adversary such as Iran or China.

On the morning of Dec. 15, Homeland Security Secretary Alejandro Mayorkas suggested in an ABC News interview that the drones also were not flying around sensitive military sites.

Despite the assurances from federal officials, multiple elected officials have called on the government to shoot the drones down.

“Can this really be happening without our government’s knowledge,” President-elect Donald Trump wrote on social media over the weekend. “I don’t think so! Let the public know, and now. Otherwise, shoot them down.”

Continue reading at The Epoch Times

Tyler Durden Sun, 12/15/2024 - 22:10

Suspicious OpenAI Whistleblower Death Ruled Suicide

The November death of former OpenAI researcher-turned-whistleblower, 26-year-old Suchir Balaji was ruled a suicide, the San Jose Mercury News reports.

According to the medical examiner, there was no foul play in Balaji's Nov. 26 death in his San Francisco apartment.

Balaji had publicly accused OpenAI of violating US copyright law with ChatGPT. According to the NY Times;

He came to the conclusion that OpenAI’s use of copyrighted data violated the law and that technologies like ChatGPT were damaging the internet.

In August, he left OpenAI because he no longer wanted to contribute to technologies that he believed would bring society more harm than benefit.

“If you believe what I believe, you have to just leave the company,” he said during a recent series of interviews with The New York Times.

The Times named Balaji a person with "unique and relevant documents" that the outlet would use in their ongoing litigation with OpenAI - which claims that the company, and its partner Microsoft, are using the world of reporters and editors without permission.

In an October post to X, Balaji wrote: "I was at OpenAI for nearly 4 years and worked on ChatGPT for the last 1.5 of them. I initially didn't know much about copyright, fair use, etc. but became curious after seeing all the lawsuits filed against GenAI companies. When I tried to understand the issue better, I eventually came to the conclusion that fair use seems like a pretty implausible defense for a lot of generative AI products, for the basic reason that they can create substitutes that compete with the data they're trained on. I've written up the more detailed reasons for why I believe this in my post. Obviously, I'm not a lawyer, but I still feel like it's important for even non-lawyers to understand the law -- both the letter of it, and also why it's actually there in the first place."

He then made a lengthy post on his personal blog outlining why he thinks OpenAI violates Fair Use. Four weeks later he was dead.

Balaji, who grew up in Cupertino, California, studied computer science at UC Berkeley - telling the Times that he wanted to use AI to help society.

"I thought we could invent some kind of scientist that could help solve them," he told the outlet.

But in 2022, after two years with OpenAI, Balaji grew concerned over the data he was assigned to gather for the company's GPT-4 program, which was trained on virtually the entire internet. He told the Times that this violated US "fair use" laws.

"Microsoft and OpenAI simply take the work product of reporters, journalists, editorial writers, editors and others who contribute to the work of local newspapers — all without any regard for the efforts, much less the legal rights, of those who create and publish the news on which local communities rely," the Times said in its lawsuit.

OpenAI has refuted the claims, saying all of its work is covered under fair use.

"We see immense potential for AI tools like ChatGPT to deepen publishers’ relationships with readers and enhance the news experience," the company said.

Tyler Durden Sun, 12/15/2024 - 21:35

Cold Shoulder: Democrats Ignore Tulsi Gabbard's Request To Meet

Authored by Phillip Wegmann via American Greatness,

The return of Tulsi Gabbard to Capitol Hill began with breakfast in the Senate dining room courtesy of Iowa Sen. Joni Ernst, followed by back-to-back meetings with other Republicans, all of whom were happy to welcome the former Hawaii Democrat and discuss her nomination to lead the U.S. intelligence community.

But members of her old political party, including one-time House colleagues, largely ignored her. It’s still early in the process, but Gabbard has been unable to schedule a single meeting with Democrats on the Senate Intelligence Committee.

Virginia Sen. Mark Warner, outgoing chairman of the committee, has not responded to her requests for a meeting, according to a source directly familiar with Gabbard’s efforts. Others have replied to her outreach but remain hesitant about putting anything on the books. At least one Democrat scheduled a sit-down this week only to abruptly cancel.

The cold shoulder comes nearly a month after President-elect Donald Trump picked Gabbard to be his director of national intelligence, two years after she quit a Democratic Party that she called “an elitist cabal of warmongers,” and immediately after the fall of President Bashar al-Assad’s regime in Syria.

Gabbard met with the now-deposed dictator twice in 2017 while on a “fact-finding mission” to the war-torn country. These meetings proved to be an impediment when she ran for the Democratic Party’s presidential nomination in 2020.

“What do you say to Democratic voters who watched you go over there, and what do you say to military members who have been deployed repeatedly in Syria, pushing back against Assad?” Kasie Hunt asked two years later during an MSNBC interview.

Gabbard replied that U.S. troops deployed there “without understanding what the clear mission or objective is.”

Gabbard added that Assad was “not the enemy of the United States because Syria does not pose a direct threat to the United States.” Hillary Clinton promptly accused Gabbard, then a major in the Hawaii National Guard, of being a “Russian asset.”

The Republicans who will control the Senate next year do not see the meeting with Assad eight years ago as disqualifying or insurmountable. Despite the suggestion of Democrats such as Sen. Tammy Duckworth, who recently worried that Gabbard “couldn’t pass a background check,” Republicans point out that as a lieutenant colonel in the U.S. Army Reserves, Gabbard already has a top-secret security clearance. More than 250 military veterans co-signed a letter published Monday endorsing her as “a warrior whose vote cannot be bought.”

Trump remains unbothered by the meeting with Assad. Asked by NBC News if the meeting “compromises her,” the president-elect all but rolled his eyes. “I met with Putin,” he said of the Russian president now sheltering the Syrian dictator. “I met with President Xi of China. I met with Kim Jong-un twice. Does that mean that I can’t be president?”

Nonetheless, Gabbard will be grilled about her Syria meeting. Defense hawks, Republicans and Democrats alike, are expected to press her for details in committee and challenge her foreign policy views that some have described as “isolationist.” Allies of the president-elect prefer the term “America First.” And it is increasingly the new orthodoxy among a GOP base wary and weary of overseas entanglements.

There is some evidence that skepticism of a muscular foreign policy has gained traction among younger Democrats and independents in the last four or five years. When Hillary Clinton questioned Gabbard’s logic and loyalty, Gabbard punched back. In a series of tweets, she called the former secretary of State and 2016 Democratic presidential nominee “the queen of warmongers” and “personification of the rot that has sickened the Democratic Party.”

Upstart presidential candidate Andrew Yang took Gabbard’s side. “Tulsi Gabbard deserves much more respect and thanks than this,” Yang tweeted. “She literally just got back from serving our country abroad.”

As Gabbard made the rounds Monday, the nominee mostly ignored shouted questions from reporters. The only public statement Gabbard made was a reiteration of the Trump policy announced over the weekend that the U.S. would stay out of Syria.

“My own views and experiences have been shaped by my multiple deployments and seeing firsthand the cost of war and the threat of Islamist terrorism,” Gabbard said.

“It’s one of the many reasons why I appreciate President Trump’s leadership and his election where he is fully committed, as he has said over and over, to bringing about an end to wars, demonstrating peace through strength, and putting the national security interests and the safety, security, and freedom of the American people, first and foremost.”

Gabbard would oversee a vast intelligence apparatus if confirmed, a role of tremendous influence and significant authority over presidential intel briefings and issues of declassification. Sympatico with Trump, she has already earned support from very different corners of the GOP. Kentucky Sen. Rand Paul, a skeptic of foreign intervention, endorsed her last month as did the much more hawkish South Carolina Sen. Lindsey Graham, who previously served in the same Army reserve unit with the nominee.

She still holds out hope for Democratic support. The Senate Intelligence Committee, which prides itself on bipartisanship, unanimously advanced the nomination of Avril Haines, President Biden’s director of national intelligence, before the Senate confirmed her 84-10.

But Gabbard isn’t starting from scratch. She knows at least one member of the committee already. New York Sen. Kristen Gillibrand, who now sits on the intel committee, once campaigned on behalf of Gabbard and called the then-little-known Hawaii politician “a rising star.”

Republicans now lay claim to the lapsed Democrat, and the president-elect sees in Gabbard an opportunity to cement the political “realignment” that he heralded after winning the election.

While Trump locked down the Republican faithful, he won the election by expanding his base to include what his longtime pollster John McLaughlin calls “disaffected Democrats.” These voters jumped ship, like Gabbard, and became MAGA converts, also like Gabbard. The question as Trump begins his second term, and as Republicans look to the next election without him atop the ticket, is whether the GOP can keep them.

“Right now, these Trump voters, the Republican Party is just renting them,” McLaughlin told RealClearPolitics. Putting an ex-Democrat like Gabbard in a Republican cabinet, he said, would go a long way toward making those voters “permanent.”

Tyler Durden Sun, 12/15/2024 - 21:00

Trump Considers Privatizing US Postal Service That Lost $9.5 Billion In FY2024

Donald Trump is fired up about finally giving the money-losing US Postal Service its long-overdue shove into the private sector, according to three sources who talked to the Washington Post. 

Trump is said to have discussed the idea with Howard Lutnick, who's co-chairing his transition team and who's been tapped to serve as Commerce secretary in the new administration. He also held a meeting with various transition officials to exchange thoughts on privatization of the huge organization. Separately, the Department of Government Efficiency, led by Elon Musk and Vivek Ramaswamy, has held its own discussions about drastic action. 

After watching generation after generation pour taxpayer dollars into the rolling dumpster fire that is the USPS, Trump wants to finally make it someone else's problem (KJAS.com via Beech Grove Fire Department)

Last month, USPS disclosed that it posted a net loss of $9.5 billion for the 2024 fiscal year -- a loss that was 46% worse than the service's $6.5 billion deficit in 2023. The plunge came alongside a slight uptick in revenue enabled by the latest annual increase in postage rates, pursuant to the 2021 Delivering for America plan. That program was supposed to help the perennially-profitless behemoth "achieve financial sustainability and service excellence." The service also has a crummy balance sheet, with nearly $80 billion in liabilities. 

The USPS "profit" in 2022 was a mirage resulting from the repeal of a requirement to prepay future retiree health benefits, and the cancellation of past-due prefunding obligations (chart via Washington Post)

After reviewing the numbers, Trump stated his opinion that the Postal Service shouldn't be subsidized by the government, the Post's sources said. Casey Mulligan, a University of Chicago economics professor who served on Trump's Council of Economic Advisers, tells the Post it's time for a major change:  

“The government is slow, slow, slow — decades slow on adopting new ways of doing things, and there’s a lot of [other] carrier services that became legal in the ’70s that are doing things so much better with increased volumes and reduced costs. We didn’t finish the job in the first term, but we should finish it now.”

USPS recorded a 40.7% year-over-year decline in priority mail volume during the third quarter of the 2024 fiscal year

The Postal Service is politically powerful -- starting with its raw headcount: While you may not guess it given the long lines that typify a visit to a post office, USPS has a staggering 650,000 employees, who become  very active whenever privatization gains momentum. It's also popular among Americans -- 72% view it favorably, compared just 21% who view it unfavorably, according to a 2024 Pew Research poll. 

Meanwhile, though a belief in small government is supposedly a GOP cornerstone, the postal service is particularly valued by people living in rural, Republican districts. Earlier this month, Missouri Republican Sen. Josh Hawley angrily confronted Postmaster General Louis DeJoy over a plan to save costs by slowing delivery for some mail, something that would affect rural areas more than urban ones. "I hate this plan and I’m going to do everything I can to kill it,” said Hawley in a Senate hearing.   

USPS workers held a preemptive Pittsburgh protest in 2018 to ward off a potential privatization move by Trump's first administration (Pittsburgh Post-Gazette)

In addition to having GOP control of the Senate and the House in the next legislature, Trump is positioned to fill three vacancies on the Postal Service's 11-member board. (Biden has submitted nominees, but you can expect the Senate to ignore them through Jan 20.) Of the incumbents, three are Republicans, with two of them appointed by Trump in his first term. 

Even if privatization doesn't happen, Trump's mere threat of pursuing it could help drive changes to the organization. As the Lexington Institute's Paul Steilder tells the Post... 

“At the end of the day, the Postal Service is going to need money, it’s going to need assistance, or it’s going to have to come up with some radical, draconian measures to break even in the near term. That gives both the White House and Congress an awful lot of power and an awful lot of leeway here.”

Sound good on paper...but, as evidenced by the "profit"-and-loss chart above, Congress has long shown a lack of urgency about seeing the USPS "break even in the near term." Even with a president who's fired about it -- for now -- we're not convinced it will be any different this time. 

Tyler Durden Sun, 12/15/2024 - 20:25