Record Household Debt, Jump In Delinquencies Signal "Worsening Financial Distress", Fed Warns

While the market remains focused on tomorrow's CPI print, and to a lesser extent the April retail sales reports, which will both be released at 8:30am on May 15. we should flag another important report that doesn’t typically get a lot of attention: the New York Fed’s Household Debt and Credit Report for 1Q 2024 which was just published, and where the latest data on credit card debt and delinquencies has recently been the most important part of the report.

While we already know that in the latest monthly consumer credit report published by the Fed last week and covering the month of March, total consumer debt hit a record high (despite a sharp slowdown in credit card growth) even as the personal savings rate plunged to an all-time low, hardly a ringing endorsement for the strength of the US consumer...

... today's report provided more granular details which however did not change the conclusion: the US consumer is getting weaker, and while not in a crisis just yet, will get there soon enough.

As the chart from the NY Fed shows, at the end of the first quarter, US household debt reached a record and more borrowers are struggling to keep up: overall US household debt rose to $17.69 trillion, the NYFed's Quarterly Report on Household Debt and Credit revealed (link here). That’s an increase of $184 billion, or 1.1%, from the fourth quarter.  

Consumers have added $3.4 trillion in debt since the pandemic, and that increased debt bears much higher interest rates.

And with both credit card rates and total credit at all time highs, the data corroborate the mounting financial pressures on American families in an age of elevated inflation. The persistent rise in the prices of essentials such as food and rent have strained household budgets, pushing people to borrow against their credit cards to pay for necessities.

Total credit card debt stood at $1.12 trillion in the first quarter of 2024, according to the report (the number diverges from the monthly print reported last week by the NY Fed and which was much higher), but an increasing number of borrowers are behind on credit card payments. While down slightly sequentially according to this data set (if not the NY Fed's other data set), the number in line with seasonal patterns of consumers paying debt incurred over the holidays. But as Bloomberg notes, credit card balances are up almost 25% from the first quarter of 2020.

“Credit card balances usually rise in the second and third quarters and then they really tend to spike around the holidays in Q4,” Ted Rossman, a senior analyst at Bankrate, wrote in a note to clients. “With inflation and interest rates likely to remain elevated, there’s a very good chance credit card balances will surge to new highs later in 2024.”

Meanwhile, in a blog post by NY Fed economists, they cautioned that "consumers facing a financial squeeze may be maxing out their credit cards and falling behind on payments" and added that “one observable factor that is strongly correlated with future delinquencies is a high credit card utilization rate.”

“In the first quarter of 2024, credit card and auto loan transition rates into serious delinquency continued to rise across all age groups,” said Joelle Scally, Regional Economic Principal within the Household and Public Policy Research Division at the New York Fed. “An increasing number of borrowers missed credit card payments, revealing worsening financial distress among some households.”

As of March, 3.2% of outstanding debt was in some stage of delinquency. That remains still 1.5% points lower than the fourth quarter of 2019, but delinquency transition rates increased for all product types, according to the Fed. And also interest rates before covid were about 5% lower.

In a separate post, economists at the St. Louis Fed pointed out that credit card delinquency rates are returning to historically more normal levels after pandemic-related government assistance programs pushed them to unusually low numbers. They added, however, that “present levels of credit card delinquency are greater than pre-pandemic levels, suggesting that a trend which began prior to the pandemic has accelerated.”

About 121,000 consumers had a bankruptcy notation added to their credit reports last quarter, and approximately 4.8% of consumers held some debt in third-party collections. What is remarkable is that those consumers currently in collection have the highest number on record in collection amounts. Which means that once the delinquency train finally leaves the station, and creditors start collecting in earnings, the amount of debt in 3rd party collections will be literally off the chart!

And the clearest hint that we are getting there, is that borrowers using more than 60% of their credit are falling into delinquency at a faster pace than before the pandemic, making up most of the increase in credit card delinquency rates. About a third of balances associated with borrowers using more than 90% of their credit became delinquent in the past year, compared to about 25% before the pandemic.

What is most remarkable here is that despite a so-called end to the student loan repayment moratorium, it appears that not only is nobody repaying their student loans, but that debt issuers aren't even bothering to make the delinquent debt as such (then again, it is difficult to determine how much of that debt is delinquent as missed federal student loan payments will not be reported to credit bureaus until the fourth quarter).

The data also show a wide range in credit card utilization rates. About one in six credit card users are using at least 90% of their available credit. And an additional 11% are using between 60% and 90% of their available credit.

The Fed researchers found younger borrowers and those with lower incomes are more apt to be financially stressed than older borrowers and those with higher incomes, who may have more credit available. “Millennials were the only group whose delinquencies exceeded their pre-pandemic rate,” New York Fed researchers wrote in a blog post.  

The Fed’s report showed 6.9% of credit card debt transitioned to serious delinquency last quarter, up from 4.6% a year ago. And for credit card holders aged 18–29, 9.9% of balances were in serious delinquency.  

Auto loan delinquencies are also higher as the average monthly car payment jumped to $738 in 2023. Close to 2.8% of auto loans are now 90 or more days delinquent — that equates to more than 3 million cars. Auto loans are the second-largest debt category following mortgage debt, with $1.62 trillion outstanding.

The biggest household debt holding is for housing. It accounts for more that 70% of the total. That debt is performing well, but homeowners are increasingly tapping their accumulated home equity in the form of a home equity loans, meanwhile new mortgage originations have tumbled near record low levels as a result of the soaring rates...

... which also means that foreclosures are starting to tick up.

Meanwhile, on the other side of the table, some $16 billion in additional home equity loans was originated — the biggest increase since 2008 — and $37 billion was added over the past year. Homeowners have about $580 billion in outstanding home equity credit available, the most in about 15 years.

So what to make of this information, especially when even the Fed is warning that the US consumer is in increasingly weak shape.

Well, credit card debt has increased sharply in recent quarters. When it surpassed $1.0tn for the first time in history in 2Q 2023, alarm bells went off in some circles, although according to Bank of America's (especially sanguine) economists, the surge in credit card debt is partly just a normalization, after consumers used their fiscal stimulus windfalls to pay down their balances in 2020-21. Moreover, they note that even setting aside the structural drift away from cash, credit card debt should scale up with the nominal economy. As a share of disposable income, total credit card debt in 4Q 2023 was still below its pre-pandemic level.

Instead of the total credit number, BofA urges clients to pay more attention to credit card delinquencies: the total amount of delinquent credit card debt stood at $110bn as of 4Q 2023, up 42%; that number grew even higher in Q1 2024.

To put these numbers in context, BofA offers two approaches: first, why you shouldn’t worry too much

• How much will surging delinquencies weigh on consumer spending? The good news is that credit cards make up only 6.5% of total consumer debt. Despite the recent increase, delinquent credit card debt accounts for only 0.5% of total disposable income.
• Meanwhile, mortgages make up 70% of consumer debt and are by far the biggest swing factor for total delinquencies. A large share of households is locked into low fixed-rate 30-year mortgages. This has kept mortgage delinquencies, and total delinquent debt, very low by historical standards, and made consumer spending more resilient to Fed hikes than in the past. Even when student loan delinquencies finally do normalize, that would not move the needle a great deal assuming mortgage debt remains stable.

And then, here is why you should worry:

• So far so good, but the picture gets a little more concerning at the lower end of the income distribution. Lower-income households are less likely to be homeowners, so they are benefiting less from low fixed mortgage rates. Meanwhile, they are more likely to also be delinquent on their credit cards. From this fact, one can conclude that credit card delinquencies appear to be higher among younger consumers (who would, on average, have lower income.

• Further, delinquencies might understate the issues consumers are facing due to credit card debt. There is likely a large group of consumers who are paying their minimum balances, and so are not delinquent, but are unable to pay the full balance, and so are paying high APRs (annual percentage rates) on the overdue amounts. APRs have risen significantly due to Fed hikes, increasing the strain on such consumers.

More in the full BofA note available to pro subscribers.

Tyler Durden Tue, 05/14/2024 - 18:00

Will Tariffs Outweigh CPI?

Authored by Peter Tchir via Academy Securities,

Markets shrugged off high headlines on PPI, for a variety of valid reasons.

Now we can move on to CPI (where I see the “whisper number” as a lower than expectations print).

I’m more focused on tariffs.

My recollection of tariffs was that far more economists reacted negatively to the initial round of tariffs imposed by President Trump in 2018.

I figured I’d check with ChatGPT if my perception was correct.

The media reaction to President Trump's tariffs in 2018 was largely negative, with widespread criticism from economists, business groups, and various sectors impacted by the tariffs.

1.  Economists' View: The vast majority of economists believed that the tariffs would harm the U.S. economy. In a March 2018 Reuters survey, almost 80% of economists stated that the steel and aluminum tariffs would be detrimental, with none predicting economic benefits​ (Wikipedia)​. Many economists and organizations, including over 1,000 who wrote a warning letter, compared the tariffs to historical policy mistakes like the Smoot-Hawley Tariff Act, which contributed to the Great Depression​ (Wikipedia)​.

2.  Economic Impact: Analyses indicated that the tariffs led to increased costs for U.S. consumers and businesses. A study found that by December 2018, the tariffs had reduced U.S. real income by $1.4 billion per month and increased consumer costs by $3.2 billion per month​ (Wikipedia)​. The prices of intermediate goods rose by 10% to 30%, and the tariffs were equated to a significant tax increase, potentially offsetting the benefits of Trump's 2017 tax cuts​ (Tax Foundation)​.

3.  Business and Industry Reaction: The Council on Foreign Relations highlighted the chaos and negative market reactions following the announcement of the tariffs. The Dow Jones Industrial Average fell significantly after the tariffs were announced, reflecting concerns about their impact on the global trading system and U.S. economic stability​ (Council on Foreign Relations)​.

4.  Agriculture Sector: U.S. farmers were particularly critical of the tariffs due to the retaliatory measures from other countries, which significantly hurt their exports. The Trump administration attempted to mitigate this by announcing $12 billion in emergency relief for farmers, but this was met with mixed reactions. Many farmers and legislators criticized the relief as insufficient and labeled it as temporary "welfare" rather than a solution to the underlying trade issues​ (DW)​.

Overall, the media and expert reaction to Trump's tariffs in 2018 was predominantly negative, citing increased costs, economic disruption, and inadequate relief measures for affected industries.

ChatGPT (version 4o specifically) seems to “think” that my recollection was accurate.

I am not sure what it means that not only were the original tariffs kept in place long after the election (and are still in place), but we’ve now added to them?

While I agree, many of these are useful and necessary, I do think that we’ve been our own worst enemy in some cases like solar panels (see With “Exceptionalism” Like This, Who Needs Enemies).

• I am not sure how the tariffs won’t add to inflation and create some possible supply issues.

• I am not sure how easy it will be for China to get around these by utilizing facilities in countries like Mexico? If they can, and are more incentivized than they already have been, it will continue to slow on-shoring and near-shoring efforts (and make them more expensive to execute).

• I am not sure that China will come back with a “measured” response?

I think the risk of renewed serious inflation has been put back on the table. It isn’t going to impact CPI tomorrow, but in 3 months? 6 months?

I see the longer term benefits of creating an economy that is more secure (and am fully on board with that), but that doesn’t mean we haven’t created new and additional inflation risks.

Do I become bearish on yields today, or wait until after what seems to be a widely expected post CPI rally?

Tyler Durden Tue, 05/14/2024 - 17:00

WTI Rebounds Off Two-Month Lows After API Reports Crude Draw

Oil prices decline today as the last few day's rollercoaster continued after a hotter than expected PPI print, leaving WTI near nine-week lows.

Crude has been on a downward path since April, with the geopolitical risk premium from tensions in the Middle East largely evaporating. Refinery run cuts and narrowing timespreads have signaled a slightly softer market. Yet prices remain elevated for the year as OPEC and its allies restrict flows.

However, an OPEC report published Tuesday showed that OPEC+ members making extra output cuts pumped 568,000 barrels a day above their agreed limit last month. The alliance is widely expected to extend curbs at a meeting June 1.

API

• Crude -3.1mm (-1.1mm exp)

• Cushing -601k

• Gasoline -1.27mm (unch exp)

• Distillates +349k (+300k exp)

API reported a bigger than expected crude draw (and stockpiles at the Cushing hub also declined). Products saw gasoline stocks drop while distillates built...

Source: Bloomberg

WTI was hovering just above $78 - around two month lows - ahead of the API print and rallied on the data...

"(The) focus is turning to the US CPI release on Wednesday which will be a make-or-break release for the Fed and guide its next policy move," Saxo Bank noted.

Tyler Durden Tue, 05/14/2024 - 16:40

VDH: Has America Finally Had It With Joe Biden?

Authored by Victor Davis Hanson,

Joe Biden’s personal approval rating is at historic lows; almost all his policies do not poll fifty percent. He is behind Trump in almost all the swing states. And now he lies serially even to sympathetic interviewers. In short, finally Biden has been exposed for what he always was and represented.

Senator and Vice President Joe Biden was always sort of a buffoon. He is by nature a grandstander who handsomely profited from his office while posing as good ole Joe from Scranton.

He is a blowhard meddler, one who proverbially has been “wrong on nearly every major foreign policy and national security issue over the past four decades (Robert Gates),” from dissenting on the Bin Laden raid to his trisection of Iraq scheme.

He is a fabulist who believes that the more animated he misleads and slurs (“semi-fascists” “fat”, “lying dog-faced pony soldier”, “chumps”, “dregs of society”, etc), the more likely he is to get away with it. He is a confessed plagiarist. And he has also invented much of his biography, from would be star, college-scholarship athlete and brilliant law student to semi-truck driver and jailed civil rights activist. His uncle, we are instructed, was eaten by cannibals. Joe assures us that he was the first in his family to go to college.

And he is a racist with a repertory of racial taunts and smears unrivaled among modern politicians (“junkie”, “boy”, “you ain’t black”, “the first mainstream African-American who is articulate and bright and clean and a nice-looking guy”, “put y’all back in chains”, the Corn Pop and golden-leg hairs sagas, the “racial jungle” memes, the strange brag about Delaware as a “slave state” (e.g., "You don't know my state. My state was a slave state. My state is a border state.”), and his encomia for the old Democratic racists of the Senate from former Klansman Robert Byrd (Biden’s self-described “mentor” and “guide”) to segregationist James Eastland (“never called me boy”).

Biden has always had a mean streak that explains why for years he lied about the tragic, fatal auto accident of his first wife and child, using it to libel the truck driver, who was neither drunk nor culpable but smeared publicly for years by Biden as intoxicated and guilty. For years he ignored the pleas of the trucker’s family to please stop libeling an innocent driver.

Biden just told his greatest whopper that inflation was at 9 percent (actually 1.4 percent) when he took office and yet soon spiked to 9 percent due to his reckless deficit spending and money printing spree.

But recently Biden has reached a nadir and even the Left is resigned to him as a mere construct. After bragging after October 7 that his support for Israel was rock-solid he is now cutting off military aid as it attempts finally to end the Hamas murderous threat—a reversion to old Joe Biden who in his long past has previously threatened to cut off Israel while boasting later that anyone who did so was reprehensible. (Leveraging congressional mandated aid for political advantage is precisely the (false) allegation of politicking that the Democrats demagogued to impeach Trump—to the then cheers of Biden himself).

But his sell out of Israel is but a small tessera in his election pandering mosaic. He will again begin drawing down the strategic petroleum reserve to lower gas prices during the campaign. He has badgered Ukraine not to hit Russian oil facilities. He has illegally forgiven billions in student loan aid to regain the elite youth vote. And as the campaign season begins, so too Biden suddenly poses as a border enforcer—after letting in nearly 10-million illegal aliens.

Biden has always put the agendas of his own and his family above the national interest. We witnessed that when he bragged that he fired the Ukrainian prosecutor looking into his son’s Burisma skullduggery. The Biden consortium is corrupt and was enriched with over $25 million through foreign interests’ assurance that Senator and Vice President Joe Biden would deliver on their quid pro quo investments in him.

Any other major politician who habitually invaded the private space of women and preteens to blow on their hair, gobble their necks, squeeze and hug far too long, and be accused of sexual assault would have long since been cancelled by the left.

Add the old disturbing narrative of a naked Vice President Joe Biden exiting his pool in front of female secret service agents, the showering with his pre-teen daughter, the Frank Biden and Hunter naked selfies, and there seems something eerie among the Biden family.

Despite fierce denials, the entire lawfare scheme directed at Trump originated with the White House. Biden was always said to have been exasperated with Merrick Garland for not hastily enough going after Trump.

The misadventurous Georgia prosecutor Nathan Wade met with and was tutored by the White House counsel’s office. One of the top Biden DOJ prosecutors was dispatched to rescue the bungling Alvin Bragg farce.

Jack Smith, appointed by the Biden DOJ to go after Biden’s 2024 presidential rival, timed his indictments to coincide with the campaign season, even as Smith’s office mishandled classified files taken at Mar-a-Lago to bolster its prosecution—and then lied about it.

Hard-won American deterrence was destroyed by the humiliation in Afghanistan and the lies surrounding the disaster, the Chinese balloon flight and the misinformation about it, the wars in Ukraine, Gaza, and on the Red Sea, and the accompanying disinformation from the White House.

Such recklessness abroad is the bookend to the home front where massive borrowing, the destruction of the border, crippling inflation, spiraling crime, and the epidemic of “progressive” anti-Semitism on campuses have made American almost unrecognizable.

Again, at the heart of this Biden catastrophe is the Faustian bargain of 2020 when unelectable leftist candidates dropped out in unison to use a fumbling Biden as their more presentable veneer. So he was foisted upon the nation to serve as “moderate” cover to advance a radical, veritable Obama third-term. In that sense, his duties were ceremonial—as the hard-left channeled through him the most radical agenda in U.S. history, and found his debility and dementia advantageous—the country be damned.

If Biden makes it to and through the convention, he and his record remain indefensible. And so expect his campaign largely to be waged through lawfare against Trump, and massive infusions of leftist cash to ensure record mail-in and early voting. In the campaign Biden will become an afterthought, a ghost, vapor, as his party seeks to construct the entire election one of leftwing, blue-city prosecutors, judges, and juries versus serial defendant Trump.

But will Nemesis first catch up to Biden’s long record of hubris and dishonesty?

Tyler Durden Tue, 05/14/2024 - 16:20

Retail Wrecking Crew Hammers Hedgies Again; Stocks/Powell Shrug Off Stagflation Signals

Hot PPI initially spooked markets (yields and dollar up, stocks down) but that faded fast (on lower revisions) - but the stag-flation trend continues this week...

Source: Bloomberg

Powell did briefly spook stocks around 1030ET with the following comment:

"it's a possibility - but I dont think it will be the case - that the next action we take will be a rate hike... most likely we will stay the course...."

Between that comment (basically jawboning away any rate hikes) and the CPI-related components within PPI actually looking positive (well actually not positive and thus implying CPI may come softer), we actually saw rate-cut expectations rise today. 2024 now pricing in almost two cuts and 2025 now pricing in just over three cuts...

Source: Bloomberg

Goldman's John Flood noted that trading volumes finally tracking higher +31% vs the 20dma, with ETF’s capturing 25% of the overall tape.

Floor skews +106bps better to buy with HFs +100bps better to buy (squeezes in consumer discretionary + ETF buying driving this) while LOs -300bps better for sale (selling tech + industrials), but overall flows here feel muted.

Another big day for the 'meme stocks'...

Source: Bloomberg

...with AMC and SunPower (among others) joining GameStop

Source: Bloomberg

All of which means that 'indicative' hedge funds were clubbed like a baby seal for the second straight day - down a stunning 15% at the lows of the day...

And that meant several crowded longs (ABDE, V, SHOP) were hit as the squeeze in shorts forced de-grossing overall...

Source: Bloomberg

Small Caps were the winners today (and Dow was the laggard) but all the majors ended higher on the day. The Nasdaq closed at a record high...

The basket of MAG7 stocks broke out to new record highs today...

Source: Bloomberg

Treasury yields kneejerked higher on the PPI print then swiftly reversed to all end lower on the day by 3-4bps...

Source: Bloomberg

The dollar drifted back to the week's lows - after a brief spike higher on PPI...

Source: Bloomberg

The dollar's loss was gold's gain...

Source: Bloomberg

Bitcoin erased yesterday's gains which erased Friday's losses...

Source: Bloomberg

The roller-coaster in crude prices continues - today was back down again, with WTI finding support at $78...

Source: Bloomberg

Copper closed at a record high today...

Source: Bloomberg

Finally, spot the odd one out - Nasdaq at record highs while US macro data at its weakest in two years...

Source: Bloomberg

Financial Conditions are as easy as they've been in years...and Fed Funds are at 23 year highs...

Source: Bloomberg

...will you be the greater fool?

Tyler Durden Tue, 05/14/2024 - 16:00

Tesla Re-Hires Some Of The 500 Workers It Laid Off Its Supercharging Team

It looks as though Elon Musk may have slightly overshot the mark with cost cutting at Tesla.

The company, which saw layoffs number in the tens of thousands so far this year, is now hiring back some of the 500 workers from its Supercharger team it let go, according to Autoblog/Bloomberg. 

Max de Zegher, the director of charging for North America, has returned to his role, according the report. This move follows the termination of Rebecca Tinucci, the senior director, and most of the charging team by Elon Musk last month.

The electric vehicle industry was shaken by Musk's abrupt dissolution of the charging team, as Tesla’s Superchargers have been considered one of the company's most strategic assets.

Since the introduction of its first Superchargers in September 2012, Tesla has expanded its network to include over 6,200 stations and 57,000 connectors globally. The extent of rehiring laid-off workers remains unclear, and both Musk and de Zegher have not commented on the matter.

As we have written about extensively, over the past year, Tesla has successfully persuaded competitors to adopt its charging plugs as a standard and has formed partnerships with major global manufacturers to allow access to its charging network.

Musk committed last week to invest more than $500 million this year to expand Tesla's charging network. Prior to this commitment, he had indicated a plan to slow down the addition of new chargers, focusing instead on the maintenance and efficiency of existing sites.

On May 10, the @TeslaCharging account on X — a social media platform owned by Musk — posted a message expressing gratitude to charging site hosts and suppliers for their patience during the company’s restructuring. De Zegher echoed this sentiment by reposting the message.

As Bloomberg notes, this isn't the first time Musk has "overdone it" with layoffs. In 2019, he reversed a decision to close most of Tesla's retail stores and move sales online after facing resistance from landlords, subsequently raising vehicle prices. A similar reversal occurred at Twitter in late 2022 when, after laying off about half of the workforce, Musk asked dozens of employees to return.

Recall, Tesla announced in April it was cutting over 10% of its 140,000-strong global workforce to prepare for a new phase of growth, according to CNBC.

Details on the layoffs were sparse, but in a company memo, Elon Musk said the move was part of a strategic shift towards robotaxi development, stepping away from plans for a more affordable electric vehicle.

Tyler Durden Tue, 05/14/2024 - 15:45

Over Half Of Illegal Aliens In US Are Unemployed: Report

Authored by Eric Lundrum via American Greatness,

A new report reveals that over half of the population of illegal aliens that have come into the United States under Joe Biden’s watch are unemployed, thus creating an even greater strain on the country.

As reported by Breitbart, the report from the Center for Immigration Studies (CIS) released on Monday revealed that only 46% of illegals who came to the U.S. “in 2022 or later” were employed at the start of 2024.

“Immigration clearly adds workers to the country, but it just as clearly adds non-workers who need to be supported by the labor of others,” said CIS researchers Steven Camarota and Karen Zeigler in the report.

“This was the case in the past, it is true today, and it will surely be the case for immigrants who arrive in the future. Those who simply see immigration as a source of labor need to understand it is also a source of school children, retirees, and many other non-workers.”

The numbers in CIS’s report appear to debunk one of the most common arguments used by advocates of mass migration and open borders, who claim that illegals must be brought into the country to fill jobs that American citizens will not do.

Furthermore, CIS reported that the population of illegals in the U.S. has risen by at least 6.6 million since Joe Biden first took power in January of 2021. As of March of this year, there are over 51.6 million foreign-born illegals in the country, an increase of approximately 5.1 million since 2022. This accounts for at least 15.6% of the entire population of the United States.

“Many advocates for the unauthorized argue they should be given work permits so they can support themselves while they await a court date,” the report noted.

“Of course, others worry that this would only incentivize more illegal immigration. In 2024, a larger share of new arrivals were unauthorized relative to prior years due to the ongoing border crisis.”

CIS previously released a study debunking the Biden Administration’s attempts at claiming that it has overseen job growth in recent years, as many of the new jobs created were filled by illegals rather than American citizens; the number of employed Americans has actually decreased under Biden’s watch, falling even below pre-COVID levels.

Tyler Durden Tue, 05/14/2024 - 15:25

Another "Behemoth Solar Flare" Sparks Radio Blackout Across North America

After a weekend of the strongest solar storms to rock the planet in years, producing aurora across Europe, the United States, and as far as New Zealand, there is news the sun just burped its largest solar flare of Solar Cycle 25, according to space weather website Solarham. 

"The largest solar flare of the current solar cycle 25, and largest since 2017 was just observed around deparing AR 3664 off the west limb. The X8.7 event peaked at 16:51 UTC (May 14) causing a strong R3 level radio blackout directly over North America," Solarham wrote.

Solarham continued: "A filament located in the northeast quadrant erupted earlier today and produced a light bulb shaped CME. So far the blast appears to be headed mostly north of the Sun-Earth line. A further update will be provided whenever necessary."

NOAA's Space Weather Prediction Center wrote this solar flare was the largest of the cycle cycle (and the 17th most intense solar flare ever recorded). They said the flare was a "behemoth X8.7-class flare let loose from the very infamous parting Active Region 3664. It is the most intense flare seen since 2017."

The largest solar flare of the current solar cycle (and the 17th most intense solar flare ever recorded!) occurred momentarily ago as a behemoth X8.7-class flare let loose from the very infamous parting Active Region 3664. It is the most intense flare seen since 2017. #spacewx pic.twitter.com/WBp5DvQooB

— Space Weather Watch (@spacewxwatch) May 14, 2024

SWPC highlighted some good news: the solar flare was not directly facing Earth.

No, and that’s the interesting thing—it may have been even more intense if it wasn’t partially eclipsed. Storms launched from this region aren’t very likely to get Earth but the radiational / X-ray piece still is

— Space Weather Watch (@spacewxwatch) May 14, 2024

One X user responded to SWPC:

"If this happened when this group was earth-facing, during all the other craziness, this could have been remarkably bad." 

If this happened when this group was earth facing, during all the other craziness, this could have been remarkably bad

— Michael Puscar (@michaelapuscar) May 14, 2024

About one year ago, solar physicist Alex James at the University of College London warned that the sun's increase in solar activity was a sign that the solar maximum could arrive much sooner than anticipated. 

All this evidence suggests that Solar Cycle 25 is "going to peak earlier, and it's going to peak higher than expected," James said. 

Here is a graph of Solar Cycle 25.

In 2016, the federal government became increasingly serious about potential grid-down events produced by solar storms with an executive order signed by the Obama Administration titled "Coordinating Efforts to Prepare the Nation for Space Weather Events."

While the nation's power grid, SpaceX's Starlink satellite constellation, and other communication networks involving space-based transmission all survived the weekend solar blast, some disruptions were reported, including GPS and short-wave radio. 

Sigh... 

Tyler Durden Tue, 05/14/2024 - 15:00

Peter Schiff: All Inflation Has One Source

Via SchiffGold.com,

Last week, Peter appeared on This Week in Mining with Jay Martin. Jay and Peter discuss the state of the economy, the government’s assault on sound money, and why the mining sector constitutes a good investment.

Early on in the interview, Peter lays out the dilemma the Federal Reserve will face in the near future:

“Inflation is going to get much stronger as the economy weakens and enters recession... Then the Fed has to choose, and it’s going to be at the point where it’s damned if it does and damned if it doesn’t. But it’s going to have to make a choice, a very unpopular choice. Does it fight inflation, which means much higher rates than the rates we have now (the rates we have now are not high enough)?

Does the Fed hike rates even though there’s a recession and even though the hikes will make this recession worse and potentially cause a massive financial crisis?

...Or will the Fed ignore the inflation problem and try to rescue the economy by creating more inflation?”

As the government continues to grow and encroach on individual liberty, Peter explains what would happen if gold is ever outlawed, as it was in the 1930s:

“There always will be a market. If it’s illegal, then there’s a black market. People sell all kinds of drugs in this country, and they’re not legal. But there are plenty of buyers. It just means the market is underground, and of course, even if it’s illegal in America, that doesn’t mean it’s going to be illegal in every country, so there will be plenty of legal gold markets. If they ever make it illegal to own gold, the one thing you want to own is gold. They’re not going to make it illegal because nobody wants it and the price is really low, right? They’re going to make it illegal because everybody is buying gold and it’s really expensive.”

They also discuss central bank digital currencies, the latest fad in authoritarianism:

“The more power you give to the government to interfere with the economy, the worse the economy is going to be, because you don’t want the government to interfere at all. The smaller the government, the better. But central bank digital currencies are just a way to make government a lot bigger and a lot more powerful and a lot more intrusive and a lot more oppressive, and so I don’t want it! Actually, ideally, I don’t want the government involved in money at all. I think it should just be created by the private sector.”

It’s important that citizens recognize the true cause of inflation:

“People don’t realize that the government is the source of inflation. And Wall Street and academia helped fool the public by talking about inflation as if it were rising prices. And they talk about ‘food price inflation,’ ‘healthcare inflation,’ ‘housing inflation,’ right? All this stuff is designed to push the blame for inflation onto the farmer, onto businesses, onto labor unions. All inflation has only one source, and that’s government.”

Both Jay and Peter see opportunity in the mining sector, especially if gold stays on its current trajectory:

“If all of a sudden a lot of gold that is unprofitable to mine at, let’s say even $2300 an ounce, when gold is $5000, $10000, wherever it’s going to be, even though the costs of mining will have gone up, they’re not going to go up anywhere near that proportion. So I think [gold] reserves that may be valued at zero are going to be worth billions of dollars on the books of these companies. So I think that’s a huge call option that’s free in these gold mining stocks.”

Royalty companies like Franco-Nevada offer investors additional protection from rising costs in the mining sector at the expense of reduced exposure to the price of gold:

“Look at the leader, Franco-Nevada. I mean look at where Franco-Nevada was 10 years ago, and look at where it’s at today. It’s a huge gain! But then look at Barrick and Newmont and all these other stocks— they’re lower than they were 10 years ago. Why? Because they got killed by rising costs. But Franco-Nevada didn’t have to deal with the costs. They just got the benefit of the rising price.”

Listeners interested in the mining sector will especially enjoy this interview, so make sure to watch the entire program at VRIC Media.

Tyler Durden Tue, 05/14/2024 - 14:40

Clearing Demand

By Ahmed Bin Sulayem

Since its establishment in 2005, the Dubai Commodities Clearing Corporation (DCCC) has been the central counterparty for clearing and settlement services to the Dubai Gold & Commodities Exchange (DGCX). Emerging as the largest clearing house in the MENA region by volume, DCCC is now poised to play a far more multinational role in line with the transition of economic power from west to east, while providing a broader range of products and services.

Why the DCCC?

As a wholly owned subsidiary of DGCX, which in turn is a wholly owned subsidiary of Dubai Multi Commodities Centre, DCCC’s success may have started out of functionality, but has since expanded to provide a streamlined mechanism for its members with numerous competitive advantages. Outside of providing guaranteed settlement and reduced counterparty risk, DCCC also offers the advantages of transacting and clearing business within the UAE, thus benefiting from a strong and safe business and regulatory environment. For greater transparency and predictability, DCCC also operates a simplified fee structure that applies to all clearing members, including identical margins regardless of commercial or non-commercial status. Overlapping across Asian, European and U.S. trading hours, DCCC’s robust regulation, under the Securities & Commodities Authority (SCA), recognition by the Monetary Authority of Singapore (MAS), the Bank of England, and Abu Dhabi Global Market (ADGM) and membership of CCP Global have further minimised systemic risk, while enhancing efficiency for its clients. Providing clearing and settlement services for derivative contracts across four asset classes, namely base and precious metals, hydrocarbons, currencies, and equities, DCCC’s consistent investment in state-of-the-art risk management systems, such as ActiveRisk, have enhanced its regulatory compliance in line with the Principles for Financial Markets Infrastructure (PFMI) and technical standards under European Market Infrastructure Regulation (EMIR). As a result, DCCC has achieved several notable milestones since its launch, including clearing 175,690,385 contracts between 2005 – 2023, while becoming one of the most prominent offshore exchanges for INR Futures and the first Shari’ah-compliant spot gold contract exchange. By working with a list of approved clearing banks, DCCC trades an extensive list of currency pairs that require physical delivery on all open positions, with most currencies being settled in USDs. As an additional transparency measure, delivery of the Shari’ah Spot Gold contract takes place through DMCC’s Tradeflow, a dedicated online platform for registering ownership of commodities and their subsequent transfers.

A Change In Economic Supply and Demand

As the world’s reserve currency for almost eighty years, DCCC’s historic default for settling contracts in U.S. dollars has always made sense. As a functional currency in most economies, even heavily sanctioned ones such as Russia, the U.S. dollar remains a stalwart for trade and commerce, however, in recent years its influence has waned through a culmination of geopolitical and geostrategic shifts, particularly in the currency and oil & gas markets.

According to Meera Chandan, Co-Head of the Global FX Strategy research team at J.P. Morgan, “Overall dollar usage has declined, but it remains within long-run ranges and its share remains elevated compared to other currencies. The dollar’s transactional dominance remains top-of-class despite secular declines in U.S. trade shares. On the other hand, de-dollarization is evident in FX reserves, where the dollar’s share has declined to a record low of 58%.”

Twilight of the Petrodollar

Where oil & gas is concerned, J.P. Morgan’s Head of Global Commodities Strategy, Natasha Kaneva commented, “The U.S. dollar, one of the key drivers of global oil prices, appears to be losing its once powerful influence.” Highlighting how oil & gas has continued to follow the path of least resistance, Kaneva went on to say, “Crucially, Russian oil is now either sold in the local currencies of the buyers or in the currencies of countries that Russia perceives as friendly.” Supporting Kaneva’s position, a J.P Morgan de-dollarisation report went on to say, “Major Russian commodity producers have started issuing bonds in yuan. In September 2022, state-owned oil company Rosneft made a public offering of 10 billion yuan in bonds, followed by a second tranche of 15 billion yuan in March 2023.”

As a movement that is by no means limited to Russia, other countries appear to be following suit. As illustrated in the same report: “Some Indian refiners have begun paying for Russian oil purchased via Dubai-based traders in dirhams, while others are considering doing so in yuan. Saudi Arabia is reportedly exploring the acceptance of payments in other currencies.”

While some may identify de-dollarisation as a recurrent, post-war theme, there is growing sentiment that the carrot of seizing some measure of inflationary control and the stick of sanctions means a complete incentivisation for nations to follow through for an alternative. Not only are there widespread concerns about the United States’ reckless domestic policies on printing money, but its treatment of Russia as a cautionary tale of the sort of disruption less resource-rich, dollar dependent nations could face. As highlighted by Thomas Fazi, the freezing of Russia’s foreign exchange reserves, “violated an almost sacred principle: the neutrality of international reserves”. Even more indicatively, many countries didn’t follow suit in applying sanctions, but instead “quietly started strengthening their ties with Russia and China in an effort to reduce their dependence on the dollar-centric system”. Good examples include Bolivia, Brazil, and Argentina, which since July 2023, have been paying for imports and exports using Chinese renminbi, or Indian Oil’s rupee payment for a million barrels from Abu Dhabi National Oil Company in the same month.

Return of the Gold Rush

As a further indicator of global sentiment, the en masse gold rush of the world’s central banks, particularly in the face of a strong dollar and falling inflation expectations, would suggest many macroeconomies believe now is a good time to hedge. Led by China, which has been stockpiling gold for 17 consecutive months, other nations including Singapore and Poland have also been buying in large quantities, propelling the price to USD 2,430 per ounce, with many gold bugs anticipating highs beyond USD 3,000 before the next business cycle shift. Amid the global uncertainty, those buying gold are also cautious about where it should be kept. Again, driven by the U.S.-led sanctions against Russia, “an increasing number of countries are repatriating gold reserves as protection against the sort of sanctions imposed by the West on Russia”, according to an Invesco survey of central bank and sovereign wealth funds published in July last year. As a result, the survey showed a “substantial share” of central banks were concerned by the precedent that had been set with 68 per cent of respondents stating they will be keeping their reserves at home, compared to 50 per cent in 2020.

A Centralised, Trustworthy, Apolitical Ecosystem

With the global economies in a state of transition, the UAE has emerged as a centralised destination for people and businesses. Whether through companies establishing trading hubs, or HNWIs hedging their assets and or liabilities in a transparent jurisdiction, the UAE has achieved a state of global neutrality, while offering considerable advantages for its residents and investors. As illustrated by H.E Abdulla bin Touq, the UAE’s Minister of Economy, "The UAE has established itself as a leading global financial hub that offers all enablers for success for the business sector, investors, and start-ups from around the world. This was made possible by a resilient economic legislative ecosystem, a competitive, attractive, and stable business environment and the further development of infrastructure to be among the best globally." Commenting on the back of the announcement that UAE business licenses linked to creative activities alone had reached 932,000 registrations by the end of H1 2023, similar figures were echoed throughout the UAE’s free zone communities. DMCC achieved record growth with 2,692 new companies joining its community, accounting for 11 per cent of Dubai’s total FDI inflows in 2023, while DCCC cleared a total value of more than USD 115bn.

A Catalyst for Change

As a result, DCCC finds itself in the unique position of being the only regional institution that can transparently handle the clearing and settlement services for bullion, oil & gas, and currency pairs, while retaining the ability to create new products in line with both local and international demand. A great example of this being the recent launch of the GCC’s first Shari’ah compliant Silver Spot Contract. With many different global banks and brokerage houses already listed as clients, DCCC’s highly regulated environment also means significant advantages and or opportunities for its members, specifically across the asset classes mentioned. Most importantly, however, DCCC has no restrictions when it comes to creating any number or types of product for any market, providing the necessary localised permissions are granted. As a result, it offers a significant advantage over its peers when it comes to creating versatile, market-led products that may fall into high demand in the short to mid-term. 

For gold, DCCC not only provides the clearing and settlements services, but by extension a secure and accessible destination in which to keep it. Home to the MENA region’s largest vault and several of the world’s largest refiners, DMCC also works closely with logistical operators such as Brinks and Transguard, while Dubai’s two international airports mean fast and direct access either for import or export purposes. Supported by its Tradeflow system, Dubai is already home to 25 per cent of the world’s gold trade, while the volume of gold contracts cleared through DCCC exceeded USD 4.97bn in 2023.

For currencies, as mentioned, DCCC has zero restrictions in creating new currency products, meaning its ability to launch new pairings, with the express permission of each sovereign state and the necessary, regulatory approvals. This could further extend to provide investment opportunities for either gold-backed currencies in the future or even a basket of currencies made of the BRICS+ nations, which could be priced in accordance with GDP.

For oil & gas, as already illustrated through India’s accelerating CEPA-based relationship with the UAE, DCCC is also ready for countries to purchase hydrocarbon products to be settled in their domestic currencies, thereby cutting transaction costs by eliminating dollar conversions.

A Business-First Environment

While much of the world has continued towards greater uncertainty, the UAE has worked on creating greater security through a highly regulated, safe, and secure destination that upholds the traditional requirements of transparent business under the rule of international law. Since departing FATF’s grey list earlier this year, business has continued to surge, while its international ranking for safety and trustworthiness continues to rise. This includes its recognition as one of the most trusted countries in the world according to the 2023 Edelman Trust Barometer Global Report.

With 2024 tipped not just as an election year, but “perhaps the election year” according to Time, the fact that 64 nations, plus the European Union all head to the polls will indisputably lead to greater volatility. This, coupled with the ongoing conflicts in Ukraine and Gaza, has already resulted in more countries and institutional investors seeking not just a place to weather the storm but prepare for what lies ahead. In this capacity, DCCC and its parent companies represent one of the last safe harbours that are prepared for business-as-usual, no matter the outcome.  

Tyler Durden Tue, 05/14/2024 - 14:00

Cocoa Market Hit With Second Crash In Weeks As Liquidity Evaporates 

Cocoa futures in New York crashed for the second time in just days as liquidity evaporated, and a new weather forecast points to improved weather conditions for top producers of the bean in West Africa.

The most active cocoa contract in New York plunged 19% on Monday, recovering some losses on Tuesday, up about 5%. This followed the cocoa crash on May 1 of 18%. 

Cocoa prices are retracing at the 61.8% Fibo level from this year's record surge from $4,000 a ton to $12,000. The rollercoaster price action continues to propel 60-day historical volatility higher.

Bloomberg said the driver in the latest cocoa crash was due to a weather forecast of increased "rainfall boosting the outlook for crops" and "low open interest in cocoa markets." 

Donald Keeney, senior meteorologist at Maxar Technologies, said rains "should improve conditions quite a bit" across Ghana, the world's second-biggest grower, and Indonesia. He said the top producer, Ivory Coast, will also receive rainfall, adding that more precipitation is needed to reverse arid conditions across the world's top-producing cocoa farms. 

More from Bloomberg: 

A lack of moisture in top West African cocoa producers has weighed on supply in a market already hit by aging trees and disease. Prices saw a 9% recovery last week, with money managers boosting their net-bullish bets to a three-week high. Still, some expect that a record price set in mid-April will mark the peak of the historic rally.

Producers in Ivory Coast are worried that thunderstorms may pluck off the few flowers on trees and hamper plant growth. The mid-crop harvest is small in southeast Ivory coast compared with last year. Rains are making it difficult to transport beans to Ivorian cities, while smuggling is still taking place across the border to take advantage of better prices. In Cameroon, bean theft is an increasing problem. That's prompting farmers to dry beans for a shorter period, which may impact quality. In southeast Nigeria, the rains have ensured that the soil is getting its moisture back. In the southwest, trees are yet to respond to the rains. The delay in flowering is the result of the use of the wrong anti-fungal chemicals by farmers in previous years, one grower in Ondo state said.

Days ago, Rabobank analyst Paul Joules said cocoa prices have likely peaked: 

"A combination of weakening global demand and production responses, particularly from countries without a fixed farmgate price, will help alleviate the pronounced uncertainty baked into current futures pricing," Joules said. 

Still, "it's likely that inflated cocoa prices will stick around for the next few years," he noted, adding prices are unlikely to return to "normal" levels quickly but have passed their peak. 

Remember what Bloomberg's Javier Blas warned about last month:

Liquidity in cocoa markets is quickly evaporating.

The number of outstanding contracts (open interest) in New York and London combined has tumbled 40% since mid-January. NY open interest is at a 12-year low.#cocoa #chocflation

— Javier Blas (@JavierBlas) April 9, 2024

Meanwhile, commodity trader Pierre Andurand stands by his $20,000 price target for later this year. 

Tyler Durden Tue, 05/14/2024 - 13:40

'Good News Is Bad News' Is The Worst News For Stocks

Authored by Simon White, Bloomberg macro strategist,

We’re back in a “bad news is good news” regime for stocks, where weak economic data prompts higher prices. That’s typically a supportive backdrop for equities, but investors should be alert for when stocks fail to rally on good news as this signals the economy is potentially in or about to be in a recession, with the stock market poised to see its worst returns.

“Bad news sells best. ’Cause good news is no news,” says Kirk Douglas’s journalist in Billy Wilder’s Ace in the Hole. But bad news isn’t just a boon for newspapers; stocks also frequently rally on news that intuitively should see them selling off.

Blame central banks for this perverse state of affairs, with their implicit backstop for markets.

Stocks have recently been rallying on the back of weaker economic data points, such as payrolls and the ISM.

But the “bad news is good news” shorthand used by the market needs a more rigorous foundation.

• First, define exactly that we mean by statements like “bad news is good news”;

• second, define the different regimes based on our definition;

• and third, look at how the market has performed through the regimes.

Claude Shannon - the father of information theory which forms the basis of modern communication - invented the idea that information is surprise. The utility in information comes not from what is expected, but what is unexpected. That’s typically how markets behave with economic data, reacting not to the information itself, but by how much it surprises to the upside or downside.

Economic surprise indexes capture the number of surprises on a cumulative basis. When they are positive, economic data is on net beating expectations, and vice-versa when they are negative. Therefore we can define four regimes based on how stocks are changing in relation to economic surprises:

• Good news is good news (stocks and eco surprises rising together)

• Bad news is good news (stocks rise when eco surprises fall)

• Good news is bad news (stocks fall when eco surprises rise)

• Bad news is bad news (stocks fall when eco surprises fall)

I have used the Bloomberg surprise indexes, which are separated out by economic type, such as survey data and labor data. I took the median of these indexes, excepting those that have a negative relationship with the S&P over the whole sample period (we would expect a positive relationship overall, e.g. positive surprises causing the market to rally).

The chart above shows the S&P color-coded for the different regimes. As we can see, the market not long ago went back into a bad news is good news regime. Most of the S&P’s advance since October 2022 has either been in that regime, or the good news is good news regime. These two are typically dominant when the market is in a strong bullish trend – no wonder when stocks go up on good or bad news!

There’s no significant difference if we restrict the sample to the post-GFC period when Federal Reserve support for markets became more explicit, with the percentage of the time when bad news was good for stocks only rising marginally to 26% from 23%.

The market rallying on any news is what you would expect to see more often, given that the market generally rises over time. But if there were no Fed it’s a strong bet that stocks would rise less of the time overall as they would not be as insulated from bad news.

This is all quite interesting, but what does it tell us about stock performance? The table below shows the one, three, six and 12-month average forward returns of the S&P when in each regime, along with the whole-sample average returns for the same time periods.

We can see when stocks are rallying on good or bad news (top two rows in table), forward returns on all time horizons are above average. Thus the current regime is historically consistent with the S&P returning a little above its average over the coming months.

When stocks are selling off on bad news, that’s not great for forward returns, but when stocks can’t even rally when the news is good is when investors need to be most wary (bottom row in table).

It is in this regime that stocks consistently come in below average, performing poorly over the next one, three, six and 12 months.

By what avenue does disappointing data cause stock prices to rise? One way is bad data triggering a flight-to-safety bid in bonds, or a lowering in Fed rate expectations, and the resulting lower yields boosting stock prices. We find that this “bad news is good news” regime is more likely when the stock-bond correlation is positive (on a rolling one-year basis) versus when it is negative.

But that’s not the only way. Positioning can mean stocks can rally as investors sell the rumor of weaker-than-expected data, and then buy the fact when the data comes in.

Nonetheless, in the current environment there are more days when stocks and bonds are positively correlated versus when they are not, increasing the likelihood the bad news is good news dynamic can persist for now.

That will help stocks as they face potential headwinds from an economy that may soon begin to look more recessionary. Unsurprisingly, during recessions even good news is bad for stocks, and it’s best to be out of the market altogether.

Tyler Durden Tue, 05/14/2024 - 12:40

Biden Administration Quadruples Tariffs On Chinese EVs

Authored by Terri Wu via The Epoch Times,

The Biden administration announced on Tuesday that it will impose a 100 percent tariff—quadrupling the current 25 percent—on electric vehicles imported from China in 2024. In addition to EVs, the White House has significantly increased tariffs on Chinese steel and aluminum products, lithium-ion batteries, and solar cells.

“China’s using the same playbook it has before to power its own growth at the expense of others by continuing to invest despite excess Chinese capacity and flooding global markets with exports that are underpriced due to unfair practices,” Lael Brainard, director of the National Economic Council, told reporters at a call ahead of the announcement.

“China’s simply too big to play by its own rules.”

She added that the tariff increases are consistent with President Joe Biden’s China policy of “responsibly managing competition with China.” “We are working with our partners around the world to address our shared concerns about China’s unfair practices,” Ms. Brainard said.

The administration will make further adjustments to these tariffs as it obtains feedback from the private sector, consumers, allies, and China, according to a senior administration official on the call.

Chinese EVs Are Cheap and in Excess

EVs have been a strategic priority for both the United States and China.

For the White House, EVs are a centerpiece of its climate-related initiatives—achieving half of new car sales as EVs by 2030—and “Made in America” policy to boost the country’s auto manufacturing industry, a vital sector of the American economy.

After setting EVs as one of its priority industries a decade ago, the Chinese Communist Party doubled down at its annual plenary meeting concluded in March, calling EVs one of the “new productive forces.” Instead of changing its economy from investment-led to consumption-led, Beijing seems to be poised to export its way out of its current economic slump.

BYD electric cars for export waiting to be loaded onto a ship at a port in Yantai, in eastern China's Shandong Province, on April 18, 2024. (STR/AFP via Getty Images)

Heavy subsidies have driven China’s EV industry into overcapacity. Their prices are cheap, too.

China handed out $29 billion in EV subsidies between 2009 and 2022. Although the subsidies officially ended before 2023, other programs without “EV” in their names effectively continue the incentives. For example, Chinese media reported BYD snatching a third, or $1 billion, of the 2024 emission reduction subsidies from the Ministry of Finance.

As a result of 15-year-long subsidies, cheap Chinese cars have posed an “extinction-level” challenge to America’s auto industry, according to the Alliance for American Manufacturing, an advocacy group representing unionized steelworkers and other companies in the auto supply chain.

Driven by subsidies, China’s cheap EVs are also in excess.

Based on local government plans for the five years between 2021 and 2025, the China Center for Information Industry Development (CCID), an institution under China’s Ministry of Industry and Information Technology, expects Chinese EV production capacity to reach 36 million in 2025.

With 15 million Chinese EV sales forecast for 2025, excess Chinese EVs will reach 20 million next year.

China knew about the overcapacity problem and had planned a way out. In a December 2022 report, CCID mapped out exporting cars to the European market. However, it also recommended building factories in Latin America to take advantage of the local incentives there to further expand China’s global EV market share.

In March, BYD, a Chinese EV maker, introduced the BYD Seagull, a mini EV hatchback. The starting price is 69,800 yuan in China, or about $9,650. In Mexico, the price is 358,800 pesos, or about $20,990. It’s still much cheaper than the cheapest EV—about $30,000—in the United States. The average EV price in the United States is about $54,000.

Overcapacity Becomes the Core Issue

Nazak Nikakhtar, former assistant secretary for Industry and Analysis at the Department of Commerce during the Trump administration, said that more would be needed to curb China’s overcapacity problem.

“The dynamic with the Chinese EVs is that they’re not coming directly into the United States. They’re flooding global markets,” Ms. Nikakhtar told The Epoch Times.

Currently, Chinese-brand EVs are not sold in the U.S. market. The Volvo brands owned by Geely, a Chinese company, had a market share of 2 percent in 2023. However, American brands lost a 15 percent home market share in the past three years, according to Kelly Blue Book, a vehicle valuation and automotive research company. The lost share was taken up by German and South Korean brands, and Swedish brands owned by Chinese.

U.S. Electric Vehicle Brand's Domestic Market Share

 

Chart: The Epoch Times  Source: Cox Automotive (Kelly Blue Book)

 

Who Gained from American EV Brand's Lost Share at Home?

 

Chart: The Epoch Times  Source: Cox Automotive (Kelly Blue Book)

“It’s the classic—China distorts all the other markets, and then they export their stuff into the United States in those import surges,” Ms. Nikakhtar said, adding that Washington needs to negotiate with Europeans, South Koreans, and Japanese to implement volume limits on their exports to the United States.

 

Last October, the European Commission began its anti-subsidy investigation on Chinese EVs to find ways to protect EV makers in the European Union.

During her trip to China last month, Treasury Secretary Janet Yellen discussed the overcapacity issue, especially in green-energy sectors. She announced new dialogues with China’s Ministry of Finance and said the United States would “underscore the need for a shift in policy by China” in those talks.

Since then, Chinese media outlets have made coordinated attacks on U.S. concern over China’s excessive production capacities, calling it “protectionism.”

Other Tariff Increases

The Biden administration has levied new tariffs on Chinese port cranes and certain medical products. It will also triple tariffs on Chinese lithium-ion batteries, steel, and aluminum products to 25 percent this year and double the tariff on Chinese semiconductors to 50 percent by next year. The decision comes weeks after the White House called for tripling Chinese steel and aluminum tariffs.

These tariffs, initially put in place by the Trump administration in 2020, are up for review after four years, according to the “phase one” trade agreement between the United States and China. These “Section 301 tariffs” were imposed according to Section 301 of the Trade Act of 1974, which authorized U.S. presidents to impose tariffs to counter international trade violations.

In a press call, a senior administration official said that upon review, the Office of the United States Trade Representative recommended no tariff reduction because “China has not eliminated many of the forced technology transfer policies and practices, and instead has even become more aggressive in some of those actions, including through cyber intrusions and cyber theft that harm American workers and businesses.”

In addition to commercial considerations, President Biden has also expressed national security concerns over Chinese cars. In February, he asked the Department of Commerce to investigate whether Chinese vehicles pose data or infrastructure risks to the United States.

Ms. Brainard at the National Economic Council highlighted the benefit of increased tariffs in two battleground states—Michigan and Pennsylvania—but a senior White House official said that the decision had nothing to do with election-related considerations. According to White House senior officials on the press call, because the tariff decisions were a follow-up on the Section 301 review, the Biden administration has not considered an outright ban on Chinese EVs.

The officials assured that these tariff increases will not affect inflation as they are “a very targeted set of tariffs on specific sectors.”

Tyler Durden Tue, 05/14/2024 - 12:00

Zelensky Thanks Americans For Billions In Aid, But Pleads For More Patriot Systems

Secretary of State Antony Blinken has made another trip to Ukraine, appearing in Kiev alongside Ukraine's President Volodymyr Zelensky on Tuesday, and the US top diplomat vowed that some of the US aid from Biden's recently approved $60 billion for Ukraine is "now on the way".

But Zelensky immediately pivoted to begging for Patriot missiles amid Russia's new Karkhiv assault, saying that "of course we are very thankful for this to Americans, to American people" but that "We need, really we need today two Patriots for Kharkiv, for Kharkiv region because people there are under attack, civilians and warriors, everybody there is under Russian missiles." As we noted earlier of this perhaps awkward moment...

Ukraine has entered the "where is the money, Lebowski" phase https://t.co/llv6KOmUGb

— zerohedge (@zerohedge) May 14, 2024

Blinken did not say that Patriots are on the way, instead he simply offered: "We know this is a challenging time"... words which are unlikely to be of much comfort to Zelensky.

And even while there's near universal consensus that Ukraine frontlines are crumbling especially in the north, Blinken claimed that the new military aid from Washington will "make a real difference against the ongoing Russian aggression on the battlefield."

Blinken while in Kiev described that he is discussing "battlefield updates, the impact of new U.S. security and economic assistance, long-term security and other commitments, and ongoing work to bolster Ukraine’s economic recovery."

It marks his fourth unannounced trip to the war-ravaged country since the start of the Russian invasion in February 2022. But this particular trip is set amid more sober, bleaker Western media reports regarding Ukraine's chances on the battlefield.

Late last month, the Pentagon said it was seeking to "rush" patriot missiles to Ukraine, amid an intensified Russian air campaign which has especially targeted Ukraine's energy and power infrastructure, and which has left swathes of the country in darkness.

European countries have also been scrambling to rush Patriots to Ukraine, with Spain and Germany being the latest to donate.

Greece has also been under pressure to 'do more' with EU leaders recently lecturing Athens while claiming it doesn't really need its own Patriots for self-defense at this moment. Greece has still ruled it out, likely with an eye on the Turkey threat in its own backyard.

Meanwhile cross-border attacks among both sides have been ongoing, with massive Ukrainian shelling of Russia's Belgorod city on the border having resulted in 16 Russian civilians killed after an apartment building was struck and collapsed.

The moment of the projectile's impact and the collapse of the entrance of the building in Belgorod. pic.twitter.com/T5STi3wUl7

— Russian Market (@runews) May 12, 2024

Some reports have also said it was a Ukrainian missile, with sections of the building having collapsed upon projectile impact, and after as emergency services were on the scene.

Tyler Durden Tue, 05/14/2024 - 11:40

Entrepreneurs Face Major Headwinds Due To Big Government Policies

Authored by Alfredo Ortiz via RealClearPolicy,

The specter of stagflation has returned. On April 25th, The Bureau of Economic Analysis announced that GDP only grew by 1.6% in the first quarter of this year, well below expectations. 

Consumer spending on goods actually declined in the quarter as ordinary Americans are financially tapped out. The report also showed inflation remains stubbornly high, continuing a recent trend of resurgent inflation running about twice the Federal Reserve's target rate. 

American small businesses are the biggest victims of the stagflationary economy, which is being weighed down by big government policies. This was the most important storyline coming out of this Month’s National Small Business Week. 

President Biden is claiming a small business "boom" under his administration. The reality is entrepreneurs grapple with a triple threat: a decelerating economy, soaring inflation, and escalating credit expenses due to his bad policies. 

American consumers have a record $1.2 trillion of credit card debt. They are experiencing declining real wages and face a cost-of-living crisis. They can't afford to keep up their discretionary spending, which small businesses rely on to survive and thrive. 

It now costs the average American family $12,000 more to enjoy the same living standards as before President Biden took office. 

Since Biden's inauguration, wholesale costs for small businesses have risen by 20%. To maintain their slim profit margins, entrepreneurs are forced to raise prices, alienating loyal customers  and reducing demand. Commentators and the media don't understand that there's only so much customers are willing to pay for nonessential goods and services. 

To contend with outrageous inflation, the Fed raised interest rates to a 22-year high. High credit costs have dried up access to capital, making it impossible or prohibitively expensive for small businesses to expand or even continue operating. 

The Fed was supposed to start cutting interest rates soon, but as I predicted, given resurgent inflation, they have no other choice but to maintain today's elevated levels, continuing the credit crunch. 

Given these headwinds, it's no surprise that Job Creators Network's national poll of small businesses finds two-thirds of respondents say the current economic climate may force them to close their doors. Most businesses say the price hikes they are facing are more than the official inflation numbers suggest. One-third say elevated neighborhood crime is reducing their earnings. Small businesses are whimpering, not booming. 

Coverage of National Small Business Week was no surprise – the mainstream media refuses to admit that big government policies are why small businesses are suffering. Consider the reckless spending fueling inflation's fire. The annual deficit is on track to surpass $2 trillion this year, and the nation adds another $1 trillion to the national debt every three months. This money printing is rapidly devaluing the value of the dollar, hurting small businesses and consumers. 

The Biden administration is also in the midst of a regulatory onslaught that's hitting small businesses hard. It recently issued rules expanding overtime pay, banning noncompete contracts, mandating electric vehicle use, and regulating internet access. According to the American Action Forum, the Biden administration has issued more than $1 trillion of regulations – 30 times more than under President Trump. 

Biden's biggest threat to small businesses is still to come. He recently promised that if he's reelected, he will dramatically raise taxes on small businesses by letting the Tax Cuts and Jobs Act expire in 2025 as scheduled. That means small businesses would face a 20% tax hike, the end of bonus depreciation, and higher tax brackets on their earnings. This massive tax hike would throw today's stagflationary economy into recession. 

Here's the real message of National Small Business Week: Biden and Democrats are waging a war on small businesses that won't end until they've been voted out of office.

Alfredo Ortiz is CEO of Job Creators Network, author of "The Real Race Revolutionaries," and co-host of the Main Street Matters podcast.

Tyler Durden Tue, 05/14/2024 - 11:20

I've Got A Bad Feeling About This

By Michael Every of Rabobank

Ideally, I would have written this on May 4th not 14th, but I am going to talk Star Wars.

I was a fan in 1977, kept the flame alive when only battered VHS cassettes of the original trilogy existed, and was delighted to get prequels. Until the opening crawl announced, “The taxation of trade routes to outlying star systems is in dispute.” I recall thinking, “This is my job - boring!” But the prequels were better than the sequels and all the TV shows I don’t watch. Indeed, the prequels’ clunky theme of democracy crumbling into autocracy, dispute over trade routes, then war, seems even more prescient than my 2016 ‘Thin Ice’ report, which underlined how the 21st century could echo the 20th, and our more detailed fragmented ‘World in 2030’ report in 2020.

In just the last week: the IMF warned the world risks splitting into walled-off FX/trade blocs; The Economist stated “The liberal international order is slowly coming apart,” with “a worrying number of triggers that could set off a descent into anarchy”; Germany flagged conscription for all 18-year olds and spending over 3% of GDP on defence; China introduced military training for all High School students; Biden raised tariffs on Chinese EVs to 102.5%, and Trump said he would make it 200%, with tariffs on used cooking oil likely next; Bloomberg warned “The US, China, Russia are in a spiral towards war”; the manager of the Hong Kong trade office in London was arrested for spying; and, as some underline Russia has shifted to a full war economy that incentivises the martial, my prediction that markets will serve national security going forwards came true in Putin firing his defence minister to appoint an economist to the role instead.

Moreover, former US Trade Representative and potential Trump Treasury Secretary Lighthizer (or Lightsabre, having been advised by the Obi-Wan Kenobi of Godley balance sheets, Michael Pettis) argued the US --and all countries save those with natural advantages-- should, over time, run balanced trade where they export only in order to import rather than to accumulate trade surpluses. He believes, correctly, that comparative advantage is movable via industrial policy and FDI, which Ricardo assumed could never happen in his free trade theory.

Lighthizer/sabre says tariffs are not the best single way to achieve this; a weaker dollar to do so would require interfering with the Fed to slash rates, which he’s not enthusiastic about – though Trump may be; and the bluntest method --a certificate of export needed to purchase an import-- is incompatible with a free economy; so that leaves capital controls and/or hefty taxation on capital inflows into US assets to prevent foreign parties parking dollars earned from trade there. Logically, if you remove the capital account inflow, the current account outflow (i.e., the trade deficit) also disappears.

Such an outcome is a proton torpedo down the global-trade-and-market Death Star’s exhaust shaft. If the US runs balanced trade, the flow of dollars to the offshore Eurodollar system grinds to a halt. Those tens of trillions of debts will need to be serviced with the 7-ish trillion of dollar FX reserves, or new *offshore* credit, or Fed swap-lines, granting it new Force powers. FX would swing wildly (as some already call dollar strength vs. EM “sinister”). Global supply chains would be up-ended from the Light to the Dark side. Current practices in financial markets would naturally blow up. And all of this is advocated by a former USTR --a role selling more free trade to the world until 2016-- because it’s the only logical way for the US exit a global system that is weakening it in many fundamental regards, even if a few prosper mightily from it.

Padmé Amidala bewails in one of the Star Wars prequels, “So this is how liberty dies, with thunderous applause,” and there is a lot of that happening too. But so far neoliberal market liberty dies to thunderous snores. The vast majority working in markets are paying no attention to this global backdrop at all. Which brings me back to Star Wars again in a different sense.

There is an 18-year movie-time chronological gap between the last Star Wars prequel and the first Star Wars from 1977. In that short timeframe, everyone in the galaxy who’d witnessed Jedis running round performing miracles for much of their lives forgot what lightsabres and Jedi were. That much is clear from Han Solo’s dismissive comments about the Force to Luke Skywalker in Episode IV. I had always thought that was just bad scriptwriting.

However, perhaps everyone in Star Wars knew what a Jedi was, but didn’t want to lose their jobs: likewise, the systemic risks to markets in our global backdrop are not fit for polite conversation among central banks and their watchers. These aren’t the droids (or trades) you are looking for. Move along.

Or, maybe people forgot because nobody in Star Wars reads. People in the movies look at screens, but you never see a book except the Jedi Scrolls, of which even Yoda says, “page-turners, they are not.” The Star Wars universe is thus post-literate, which would explain why a population sending real-time holograms across the galaxy are unable to remember something important that happened very recently. Today, financial markets are also full of screens, but rarely books. They have all information possible, but nobody can remember classical economics, or what happened last month, let alone 18 years ago. Where was Fed Funds in 2006? What was happening in markets? What did the Republic look like? Were there disputes over the taxation of trade routes? Were Jedi strolling around? “Who knows? I’m buying all the things!”

Indeed, GameStop looks like it’s going to happen again, for those who can’t recall how it ended last time; “May the Market Forces be with you” – until you are manipulated by a hidden Sith somewhere. Moreover, the Aussie budget yesterday had much lower government inflation forecasts than the RBA’s Statement on Monetary Policy just before it - so, ‘rate cuts are coming!’ again. Of course, this political Jedi mind trick suggests we are about to get more subsidies for consumers to artificially depress some elements of CPI while actually juicing the economy: as always on fighting inflation, it is “Do, or do not. There is no try.”   

To conclude, a long time ago on a trading floor far, far away I was asked for my simplest forecast for our future: I said in the best case, Star Trek --united mankind working together-- and in the worst case, Star Wars. And here we are.

“I’ve got a bad feeling about this,” to put it mildly. So do the IMF, The Economist, some at Bloomberg, the German defence minister, and Xi Jinping.

Tyler Durden Tue, 05/14/2024 - 10:40

Unfixable: Michael Cohen Faces Reckoning Of Biblical Proportions On Cross Examination

Authored by Jonathan Turley,

Below is my column in the New York Post on the first day of the examination of Michael Cohen. He is expected to start his cross examination today. How bad will it be? After lying to Congress, courts, banks, and most everyone else, it will be bad. Years ago, Cohen threatened a journalist and told him “what I’m going to do to you is going to be f—ing disgusting.” Well, that bad. On cross examination, Cohen faces a reckoning of biblical proportions.

Michael Cohen apparently wants a reality show but, if his testimony Monday is any indication, reality is about to sink in for not just Cohen but the prosecutors and the court.

In stoking interest in his own appearance, the former Trump counsel promised the public that they should be “prepared to be surprised.”

Thus far, however, Cohen has offered nothing new and, more importantly, nothing to make the case for Manhattan District Attorney Alvin Bragg.

Just before he took the stand, the New York Post revealed that Cohen has been peddling a reality show called “The Fixer,” including working with Colin Whelan, who helped create “Joe Exotic: Tigers, Lies and Cover-Up.” Whelan appears interested to stay within that genre.

The Cohen pitch came with a cheesy promo video where he promised viewers, “I am your fixer.”

His first post-Trump client, Bragg, may have to disagree.

Cohen had only one advantage for Bragg: His notoriously flexible morals and ethics, which allows him to say most anything to support his sponsors.

With the prosecution’s case almost over, Bragg needed Cohen to clearly state that Trump intentionally committed fraud to conceal some still poorly defined crime.

The problem is that Cohen only confirmed that Trump knew he was going to pay for the nondisclosure agreement and that it would be buried before the election. None of that is unlawful.

On his reality show promo, Cohen tells viewers that he is now there to fix their problems because “the little guy doesn’t usually have access to people with my particular set of skills.”

Those skills seem to have escaped all of the witnesses who were compelled to work with him.

Witnesses detailed how Cohen was ridiculed as someone “prone to exaggeration” and unprofessional.

Former Trump associate Hope Hicks said that Cohen was constantly trying to insinuate himself into the campaign and that he “used to like to call himself Mister Fix It, but it was only because he first broke it.”

Cohen only succeeded in confirming that he put together this payment and advised Trump to go forward with it.

He assured him that it would effectively kill the story before the election.

None of that is illegal. The “Fix it man” assured Trump that he fixed it and now wants Trump to go to jail for following that advice.

In the course of that representation, Cohen also admitted to taping his client without his knowledge, a breathtaking breach of trust and confidentiality.

This is the man who, according to Stormy Daniels’ attorney, Keith Davidson, expected to be Trump’s Attorney General.

Davidson said that Cohen was “depressed and despondent” and “I thought he was going to kill himself” when he realized that he would not be made a cabinet member.

Cohen contradicted Davidson and insisted that he only wanted to be Trump’s personal lawyer.

He also admitted that he was unaware that the publisher of National Enquirer, David Pecker, had long killed negative stories about Trump and other celebrities for decades.

Cohen has yet to fix the problem for Bragg.

More importantly, he has added to the problem for Judge Juan Merchan. Many of us have ridiculed this case as devoid of any criminal act.

Indeed, Merchan has allowed the prosecutors to proceed without clearly stating what crime was being concealed.

It is not even clear why paying one’s lawyer a lump sum for his services and costs (including the NDA payment) was not a “legal expense” or how it was supposed to be entered on a business ledger.

Absent a sudden epiphany in his final testimony on Tuesday, Merchan should rule in favor of a directed verdict — that is, throwing the case out before it goes to a jury. If he instead sends this farcical case to the jury, it is Merchan, not Cohen, who may have a better claim to a reality show as the ultimate “Fixer.”

Tyler Durden Tue, 05/14/2024 - 10:05

Watch Live: Will Fed Chair Powell Admit He Can Now See The 'Flation'?

Squeezed in between today's (hotter than expected) PPI and tomorrow's CPI, Fed Chair Jay Powell will join The ECB's Dutch Central Banker Klaus Knot at the annual general meeting of the Foreign Bankers' Association.

After PPI - and a wave of higher prices across various indicators - will Powell admit that he can now see the 'flation'?

...and if not, will he explain why he is so desperate to start cutting rates (before November?)...

Watch Powell speak live here (due to start at 10amET)... (FBA has blocked playback on all other sites except YouTube, so no embed: click on the image to link to the YouTube stream)...

Tyler Durden Tue, 05/14/2024 - 09:55

US Army Major Quits Intel Agency Over 'Unqualified' US Support Of Israeli 'Ethnic Cleansing'

A US Army officer has resigned from his post at the Defense Intelligence Agency (DIA) to protest Washington's "nearly unqualified support for the government of Israel" -- support that's facilitated "the killing and starvation of tens of thousands of innocent Palestinians." Mann describes himself as a "descendent of European Jews" who was raised to be "particularly unforgiving" where "responsibility for ethnic cleansing" is concerned. 

When Major Harrison Mann left DIA in April, he sent a two-page letter to a group of his colleagues there, saying he felt they were owed an explanation for his "relatively abrupt departure." On Monday, Mann shared the letter with the public, via a post to his LinkedIn page. 

Army Major Harrison Mann condemned "unqualified" US government support of the State of Israel (LinkedIn)

His post targets others in government who are feeling morally conflicted by performing duties that support the Israeli Defense Forces (IDF) rampage in Gaza. The apparent catalyst for going public now: the start of  IDF attacks on the southern Gaza city of Rafah, where more than a million Palestinians have sought refuge after being forced to evacuate other areas of the 25-mile-long strip.   

"I cannot justify staying silent any longer...It is clear that this week, some of you will still be asked to provide support -- directly or indirectly -- to the Israeli military as it conducts operations into Rafah and elsewhere in Gaza...I am sharing [my letter] now in the hope that you too will discover you are not alone, you are not voiceless, and you are not powerless.

In the April letter explaining his departure, Mann describes how his growing misgivings grew as the IDF's retaliation for the Oct. 7 Hamas invasion of southern Israel continued, with US government help: 

"Each of us signed up to serve knowing we might have to support policies that we weren't fully convinced of. Our defense institutions couldn't function otherwise. However, at some point it became difficult to justify the outcomes of this particular policy. At some point -- whatever the justification -- you're either advancing a policy that enables the mass starvation of children, or you're not." 

A malnourished 6-year-old being treated at a field hospital in Rafah, Gaza (via Human Rights Watch)

In April, UNICEF said one in three Gaza children under two years old are acutely malnourished. When Israel began retaliating after Oct. 7, Defense Minister Yoav Gallant declared, "I have ordered a complete siege on the Gaza Strip. There will be no electricity, no food, no fuel, everything is closed. We are fighting human animals and we are acting accordingly." 

Mann described how imagery emanating from Gaza made him feel increasingly guilty about the DIA's role in "directly execut[ing] policy" that supported the IDF-inflicted mass misery:

"The nearly unqualified support for the government of Israel...has enabled and empowered the killing and starvation of tens of thousands of innocent Palestinians...The past months have presented us with the most horrific and heartbreaking images imaginable -- sometimes playing on the news in our own spaces -- and I have been unable to ignore connection between those images and my duties here. This has caused me incredible shame and guilt." 

The IDF has unleashed mass destruction of civilian infrastructure, as seen here in the vicinity of Al-Shifa hospital (France24)

The William & Mary graduate said he'd hoped for a quick end to the war. As it continued, he tried to rationalize his continued service to the DIA and, by extension, the IDF: 

I told myself my individual contribution was minimal, and that if I didn't do my job, someone else would, so why cause a stir for nothing? I told myself I don't make policy and it's not my place to question it. Above all, I was afraid. Afraid of violating our professional norms. Afraid of disappointing officers I respect. Afraid you would feel betrayed. 

Mann said his resignation was ultimately sparked by "moral injury" -- a term that Syracuse University's Moral Injury Project defines as "damage done to one’s conscience or moral compass when that person perpetrates, witnesses, or fails to prevent acts that transgress one’s own moral beliefs, values, or ethical codes of conduct." Moral injury is considered to be one factor contributing to the high rate of suicide observed in military veterans. 

Mann also explained how his upbringing affected his moral calculus: 

"As the descendant of European Jews, I was raised in a particularly unforgiving moral environment when it came to the topic of bearing responsibility for ethnic cleansing — my grandfather refused to ever purchase products manufactured in Germany — where the paramount importance of ‘never again’ and the inadequacy of ‘just following orders’ were oft repeated. 

I am haunted by the knowledge that I have failed those principles. But I also have hope that my grandfather would afford me some grace; that he would still be proud of me for stepping away from this war, however belatedly."

In addition to objecting to Israel's mass harm to civilians, Mann noted that "[America's] unconditional support also encourages reckless escalation that risks wider war.” Mann was originally commissioned as an infantry officer and later became a foreign area officer focused on the Middle East. Along the way, he earned a master of public administration degree from the Harvard Kennedy School. 

The Red Crescent said six Palestinians were killed when the IDF bombed this ambulance in January; Israel denied responsibility (ABC Australia) 

Mann's resignation-in-protest strikes us as much better and more effective choice than the one made by Air Force Airman Aaron Bushnell, who fatally self-immolated at the Israeli embassy in Washington. In another high-profile resignation, the State Department's Josh Paul in October quit his job in a role that supported arms transfers to Israel. Speaking at Amherst, he cited the lack of consideration for the consequences: “[There was] no interest in debating: Are the weapons that we are providing going to be used appropriately? … Should we be having conversations with the government of Israel about what they're doing?” 

According to the latest estimates reported by the UN Office for the Coordination of Humanitarian Affairs, more than 34,000 Palestinians have died since Oct. 7. Of the identified dead, 32% are children and 20% are women. In April, Speaker of the House Mike Johnson collaborated with Senate Majority Leader Chuck Schumer to push through another $14.3 billion in aid to the State of Israel. 

Mann said that after distributing his letter to his DIA colleagues in April, he received "an unexpected outpouring of support." As his protest now reaches a far larger audience, some may say this Army officer should have just kept following orders and serving as a cog in the empire's machine, keeping his concerns about America's unqualified support of Israel to himself. Safe to say that George Washington would think otherwise. 

Tyler Durden Tue, 05/14/2024 - 09:40

Supreme Court Justices Thomas And Alito Issue Warnings About State Of America

Authored by Tom Ozimek via The Epoch Times (emphasis ours),

In separate remarks at two different events on Friday, Supreme Court Justices Clarence Thomas and Samuel Alito issued warnings about the state of affairs in America today, including support for freedom of speech “declining dangerously” and the nation’s capital becoming a “hideous” place where cancel culture runs rampant.

Supreme Court Associate Justices Elena Kagan (L), Clarence Thomas ((2L), Samuel Alito (2R) and Chief Justice John Roberts (R) arrive for services for former President George H.W. Bush at the U.S. Capitol in Washington, on Dec. 3, 2018. (Pablo Martinez Monsivais/AP Photo)

Justice Thomas spoke at a conference of the U.S. Court of Appeals for the Eleventh Circuit in Point Clear, Alabama, while Justice Alito delivered a commencement address at the Franciscan University of Steubenville, a Catholic college in Ohio, with both of the conservative-minded judges painting a dark picture—while encouraging action and offering hope.

At the Alabama event, Justice Thomas was asked to comment by the moderator—U.S. District Judge Kathryn Kimball Mizelle—about what it’s like to work “in a world that seems meanspirited.”

“I think there’s challenges to that,” Justice Thomas said. “We’re in a world and we—certainly my wife and I the last two or three years it’s been—just the nastiness and the lies, it’s just incredible.”

Justice Thomas has faced heavy fire from Democrats who accuse him of skirting disclosure rules, of corruption in general, and of being too cozy with wealthy Republicans. They have not been able to point to any specific court cases in which the justice has misbehaved. Some activists have even pushed for Justice Thomas’s impeachment.

By contrast, over 100 former Supreme Court clerks signed an open letter last year defending Justice Thomas’s integrity, calling him a man of “unwavering principle” whose independence is “unshakable.” They called various critical stories that have targeted him as “malicious” and “perpetuating the ugly assumption that the Justice cannot think for himself.”

“They are part of a larger attack on the Court and its legitimacy as an institution,” the letter also stated. “The picture they paint of the Court and the man for whom we worked bears no resemblance to reality.”

Public opinion polls suggest public trust in the Supreme Court recently fell to new lows.

Addressing the criticism, Justice Thomas said at the Alabama conference that Washington had become a “hideous” place where “people pride themselves in being awful,” while characterizing America beyond the Beltway as a place where regular people “don’t pride themselves in doing harmful things.”

Justice Thomas also expressed concern that court writings have become inaccessible to the average person, engendering a sense of alienation.

“The regular people I think are being disenfranchised sometimes by the way that we talk about cases,” Justice Thomas said, while expressing hope that this could change.

‘It’s Rough Out There’

Justice Alito warned graduates at the Catholic college in Ohio that freedom of speech and religion were both being assailed in today’s America, while expressing hope that young people would take up the mantle and fight for positive change.

In his address, Justice Alito made a reference to pop culture, namely to a graduation speech delivered by the character Thornton Melon (played by Rodney Dangerfield) in the movie “Back to School.”

He jokingly cited Mr. Melon’s advice to graduates, which was not to go out into the world after graduating because “it’s rough out there” and instead move back in with their parents, let them pay all the bills, and “worry about it.”

“As Mr. Melon said, it is rough out there,” Justice Alito said. “It’s probably rougher out there now than it has been for quite some time. But that is precisely why your contributions will be so important.”

Justice Alito said that, outside the walls of the campus, “troubled waters are slamming against some of our most fundamental principles,” referring to freedom of speech.

“Support for freedom of speech is declining dangerously,” he continued, noting that this problem is especially acute on college campuses, which he said are places where the exchange of ideas should be most protected.

“Very few colleges live up to that ideal. This place is one of them … but things are not that way out there in the broader world,” Justice Alito said.

He also raised the issue of freedom of religion being “imperiled,” noting that graduates may find themselves in jobs or social settings where they will be pressured to renounce their beliefs or adopt ones they find morally objectionable.

“It will be up to you to stand firm,” he said.

Notably, Justice Alito authored the 2022 ruling that overturned Roe v. Wade and handed the matter of deciding on abortion rights to states.

Tyler Durden Tue, 05/14/2024 - 09:20