'Oral Argument Favored Defendants' - Supreme Court Just Ended Hearing Obstruction Case Affecting J6 Defendants

Authored by Jonathan Turley,

Today, the U.S. Supreme Court will take up Fischer v. United States, a case that could fundamentally change many cases of January 6th defendants, including the prosecution of former president Donald Trump. The case involves the interpretation of a federal statute prohibiting obstruction of congressional inquiries and investigations.

The case concerns 18 U.S.C. § 1512(c)(2), which provides:

“Whoever corruptly—(1) alters, destroys, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to impair the object’s integrity or availability for use in an official proceeding; or (2) otherwise obstructs, influences, or impedes any official proceeding, or attempts to do so, shall be fined under this title or imprisoned not more than 20 years, or both.”

Joseph Fischer was charged with various offenses, but U.S. District Judge Carl J. Nichols of the District of Columbia dismissed the 1512(c)2 charges. Judge Nichols found that the statute is exclusively directed to crimes related to documents, records, or other objects.

The D.C. Circuit reversed and held that Section 1512(c)(2) is a “catch all” provision that encompasses all forms of obstructive conduct. Circuit Judge Florence Pan ruled that the “natural, broad reading of the statute is consistent with prior interpretations of the words it uses and the structure it employs.” However, Judge Gregory Katsas dissented and rejected “the government’s all-encompassing reading.”

The Court will now consider the question of whether the U.S. Court of Appeals for the District of Columbia Circuit erred in construing 18 U.S.C. § 1512(c), which prohibits obstruction of congressional inquiries and investigations, to include acts unrelated to investigations and evidence.

The law itself was not designed for this purpose. It was part of the Sarbanes-Oxley Act of 2002 and has been described as “prompted by the exposure of Enron’s massive accounting fraud and revelations that the company’s outside auditor, Arthur Andersen LLP, had systematically destroyed potentially incriminating documents.”

Oral argument is today and Turley is be covering the arguments on X (Twitter)...

...Justice Sotomayor was quick out of the gate to pursue a tough line of questioning for the defense counsel on why the broader meaning is warranted...

...Justice Barrett continued the tough questioning by asking if the defendant can still be convicted for seeking obstructing by seeking to stop the certificates themselves. In this way, the Court could adopt a narrower meaning but still allow for possible prosecution...

...Justice Jackson has also questioned counsel closely on the use of "evidence" as a term since it does not appear in the actual provisions...

...Justice Sotomayor just said that this may be unique because no one tried to violently stop proceedings as on Jan. 6th...

The government is now up with its case...

...Chief Justice Roberts just delivered a haymaker for the Solicitor General by noting a recent decision and prior decisions that stress the need for narrow construction in this type of "otherwise" construction of provisions...

...Roberts is not buying the government's argument on getting around prior cases including one just issued on Friday. I have great respect for Prelogar but she is struggling on this point...

...The exchange has brought out Justice Gorsuch who is pressing on what "otherwise" really means under the government's view. Gorsuch is asking if a heckler at the State of the Union qualify. Ironically, that is precisely the hypothetical that we struggled with in my Supreme Court ask in discussing this case.

...“Would a sit-in that disrupts a trial or access to a federal courthouse qualify?” Justice Neil Gorsuch asked.

...Gorsuch also raised pulling a fire alarm in a reference to Rep. Jamaal Bowman of New York and asked if that was also a felony subject to 20 years...

...Gorsuch is carving up the government's argument on the lack of clear lines for protests and other examples...

...Now Justice Alito is raising an interruption of the Supreme Court. If that caused a delay of five minutes, would it also qualify as a violation of 1512(c)(2). Prelogar stumbled on this one. She tried to add an exception for a de minimus violation, but Alito notes that she was arguing plain meaning and this was qualify as a delay according to the plain meaning. Prelogar simply argues it would be hard to prove ...

...Prelogar fell back on saying how bad Jan. 6th was but that did not fly for good reason. The issue here is how to define this provision...

...Prelogar was a bit on the ropes and Justice Kagan stepped in with a breather question on what evidence they often use against J6 defendants.

...back to the oral argument, Prelogar admitted to Justice Alito that a minimal interference could potentially qualify, but questioned the likelihood of such a case. Alito hit her with how she would define minimal and said that the interruption of the Court "sounds minimal to me"...

...That is not going to satisfy the concerns of the justice as a type of "we know it when we see it" standard...

The Court just ended argument.

The three liberal justices offered support for the government and Justice Barrett seemed on the fence at points.

It is hard to tell where Barrett may end up.

However, there was clearly a skepticism from four justices, including Chief Justice Roberts.

The oral argument favored the defendants and could result in a wider impact on dozens of cases, including the prosecution of former President Trump.

The loss of the obstruction counts for Jack Smith would undermine his narrative (giving Trump new grounds to seek dismissal of two of the four counts in the federal prosecution against him for trying to overturn his 2020 election loss), but he could proceed on the remaining counts.

Tyler Durden Tue, 04/16/2024 - 13:20

Border Outranks Ukraine As Moderate Voter Priority In Swing States: Poll

Authored by Nathan Worcester via The Epoch Times (emphasis ours),

An April survey of swing, or moderate, voters in six battleground states suggests the impacts of an open southern border is concerning them more than events in Ukraine.

Federal law enforcement agents and officers keep watch as immigrants line up (R) to be transported from a makeshift camp between border walls between the U.S. and Mexico in San Diego, California, on May 13, 2023. (Mario Tama/Getty Images)

Commissioned by the conservative Heritage Foundation and executed by the non-partisan RMG Research, Inc., the poll revealed that 56 percent of those voters felt the $113 billion price tag for Ukraine support thus far was either too much or far too much. Just 14 percent thought the United States had not spent enough on military aid for Ukraine, while 16 percent rated the spending about right.

When asked to compare the importance of border security with that of Ukraine funding, 50 percent chose the border, while only 11 percent chose Ukraine; 29 percent said both were equally important.

“Heritage’s latest polling reveals that not only are moderate voters in battleground states more interested in securing our own borders, they believe we have already spent enough helping Ukraine—and rightfully so,” Kevin Roberts, the president of the Heritage Foundation, said in a statement accompanying the survey.

RMG interviewed 1,000 swing voters in Nevada, Georgia, Pennsylvania, Arizona, Wisconsin, and Michigan between April 2 and April 4.

Out of the voters surveyed, the majority—54 percent—were independent. 25 percent were Republicans and 20 percent Democrats.

“Swing voters were defined as likely voters who are either undecided on the presidential election, undecided on the generic congressional ballot, or expressed a different partisan preference on the presidential and congressional races,” a statement accompanying the survey read.

The voters RMG surveyed were tracking the border situation more closely than the conflict that heated up more than two years ago with Russia’s invasion of Ukraine.

Also, 22 percent reported following news from America’s southern border “very closely,” while just 10 percent described a similar level of attention to news from the Ukraine-Russia war.

The results come amid a fight in the legislative branch over further military aid to Ukraine. Republicans and conservatives have argued that additional funding for the country must be conditioned on additional border security spending.

“Most of House GOP WILL NOT vote for another dollar to Ukraine unless our border is SECURED,” Rep. Byron Donalds (R-Fla.) wrote on X, formerly Twitter, on April 11.

Rep. Byron Donalds (R-Fla.) during an interview with NTD at the Conservative Political Action Conference (CPAC) at Gaylord National Resort Hotel And Convention Center in National Harbor, Md., on Feb. 22, 2024, in a still from video released by NTD. (NTD)

A bipartisan group of lawmakers is pushing House Speaker Mike Johnson (R-La.) to advance a $95 billion aid package to Ukraine and Israel, citing Iran’s attack on Israel in their April 14 letter to the lawmaker. But some House Republicans have objected to the lack of border-related funding in that package, as well as the linkage of funding for Israel and Ukraine in the same bill.

“It’s antisemitic to make Israeli aid contingent on funding Ukrainian Nazis. These should be separate bills,” Rep. Marjorie Taylor Greene (R-Ga.) wrote on X on April 14.

In a recent press conference with Mr. Johnson, former President Donald Trump suggested Ukraine should be funded through a loan rather than aid.

The White House has rejected any standalone bill to fund Israel.

Republicans could be more likely to hold the line against the Biden administration and Democratic lawmakers if they perceive border funding as a winner, and Ukraine funding as a loser, among coveted swing voters. But the fight is far from over, with countervailing pressures on Mr. Johnson from his party’s Freedom Caucus and from top Democrats.

“The best way to help Israel against Iran and to help Ukraine against Russia is for [Speaker Johnson] and the House to pass the bipartisan, Senate-passed National Security Supplemental this week,” Senate Majority Leader Chuck Schumer (D-N.Y.) wrote on X on April 14.

Tyler Durden Tue, 04/16/2024 - 12:45

Brink Of Unrest? Migrants "Flood" NYC City Hall In Protest Of Losing Luxury Hotel Rooms 

New York City could be on the cusp of social unrest as hundreds of migrants have flooded the grounds of City Hall in Lower Manhattan to protest the scaling down of their luxury hotel accommodations (funded by us, the taxpayers). 

The Babylon Bee's Ashley St. Clair posted on X a disturbing photo of migrants "flooding NYC City Hall to protest being moved to shelters instead of the luxury hotels." 

Migrants are now flooding NYC City Hall to protest being moved to shelters instead of the luxury hotels. pic.twitter.com/Cy5L16MDP2

— Ashley St. Clair (@stclairashley) April 16, 2024

Elon Musk responded with "Wow," while another X user posted a video of angry migrants surrounding the City Hall complex building. Security is beefed up as the situation remains tense. 

Hundreds of migrants are in NYC City Hall Park to protest against being moved to Shelters instead of the LUXURY HOTELS pic.twitter.com/86zLiWENCh

— Rosy (@rose_k01) April 16, 2024

The migrant protest comes one day after pro-Palestinian groups shuttered critical infrastructure nationwide across various metro areas of the US, including the Brooklyn Bridge. 

EXCLUSIVE VIDEO:

This is the exact moment when “Free Palestine” pro HAMAS terrorist supporters charged the fence next to the Brooklyn Bridge yesterday in NYC, and stormed the bridge.

Many of the “protesters” got into physical altercations with NYPD and were arrested. pic.twitter.com/u73lY7SHCg

— Laura Loomer (@LauraLoomer) April 16, 2024

The risk of social instabilities nationwide is elevated as the Biden administration (through open southern borders), and a shadowy network of NGOs have facilitated the greatest invasion of illegal aliens this nation has ever seen. 

Allowing millions of unvetted people from third-world countries - some of which hate the United States - as well as are accustomed to violence - are ingredients to spark a perfect storm of social unrest if Democrats don't continue spending taxpayer funds on luxurious hotel rooms, fancy meals, and monthly stipends for illegals. 

Threats of migrant unrest are a national security threat that Democrats are too embarrassed even to acknowledge because their failed policies are sparking this mess. Democrats are risking the health and safety of law-abiding citizens and the nation as a whole to steal future elections and stack the Census. 

Tyler Durden Tue, 04/16/2024 - 12:25

Reflation Trade Is The New Bullish Narrative

Authored by Lance Roberts via RealInvestmentAdvice.com,

Economic “reflation” is becoming the next bullish narrative as equity valuation increases continue to outpace earnings gains, at least according to Gold Sachs and Tony Pasquariello.

“If GS is correct on the big calls, the macro backdrop is set to remain friendly: the US economy should continue to grow nicely above trend — picking up speed as the year moves along — with three adjustment rates cuts along the way.  to not obscure the moral of that story: the Fed is set to ease policy … into an upswing.  while Fedspeak this week had a somewhat hawkish bent, the house view for 2024 remains intact.”

Interest rates, gold, and commodity prices have increased in the past few months. Unsurprisingly, the bullish narrative to support that rise has gained traction. Interestingly, this “reflation” narrative tends to resurface by Wall Street whenever there is a need to explain the surge in commodity prices. Notably, the last time Wall Street focused on the reflation trade was in 2009, as noted by the WSJ:

“The most talked-about investing strategy these days isn’t stuffing money in a mattress, it’s the reflation trade — the bet that the world economy will rebound, driving up interest rates and commodities prices.”

While that “reflation trade” lasted for about two years, it quickly failed as economic growth returned to 2%-ish growth along with inflation and interest rates. As shown, oil and commodity prices have a very high correlation. The critical reason is that higher oil prices reduce economic demand. As consumption falls, so does the demand for commodities in general. Therefore, if commodity prices are to “reflate,” as shown, such will depend on more robust economic activity.

As such. The reflation trade hinges on a global resurgence of economic activity, usually associated with economies recovering from a recessionary period. However, the U.S. never experienced a recession. As discussed in “Deficit Spending,” despite numerous recessionary signals, like the inverted yield curve, manufacturing data, and leading economic indicators, the economy avoided recession due to massive governmental spending. To wit:

“One explanation for this has been the surge in Federal expenditures since the end of 2022 stemming from the Inflation Reduction and CHIPs Acts. The second reason is that GDP was so grossly elevated from the $5 Trillion in previous fiscal policies that the lag effect is taking longer than historical norms to resolve.”

While economists focus on the “reflation trade,” we must answer whether the support for more substantial economic growth exists. This is the sole determining factor in whether the “reflation trade” can continue.

Is Reflation Already Behind Us?

Interest rates and inflation have ticked up recently, driving investors into gold and commodities. However, the surge in precious metals and commodities is more of a function of speculative exuberance rather than an economic resurgence. As discussed in “Speculative Warnings,”

“In other words, the stock market frenzy to “buy anything that is going up” has spread from just a handful of stocks related to artificial intelligence to gold and digital currencies.“

Notably, the gold, commodities, and interest rate surge corresponded with more robust economic growth beginning in the third quarter of last year. That uptick in economic growth defied economists’ expectations of a recession. Such was because of the massive flood of monetary support from Government spending programs. However, that monetary impulse is now reversing.

As far as the “reflation trade” is concerned, as that monetary impulse recedes, so will economic growth, as shown. Even if the economy continues to grow at 2-2.5% annualized each quarter, the annual rate of change in growth will continue to slow.

Importantly, this assumes that the Government will keep “spending like drunken sailors” over that same period. However, if they don’t, the economic growth rate will slow even more quickly without increasing monetary spending.

It is important to remember that increasing debts and deficits do not elicit stronger long-term economic growth. As debt levels rise, economic growth rates will slow as money diverts from productive investment into debt service.

That reality should be unsurprising, as this is not the first time the Government has gone “all in” on a reflation trade. As noted above, following the Financial Crisis, the Government intervened with HAMP, HARP, TARP, and a host of other spending programs to “reflate” the economy.

Let’s review what happened with interest rates, inflation, and gold and commodity trade.

Past May Be Prologue

As noted in 2009, following the “Financial Crisis” and recession, the Government and the Federal Reserve engaged in various monetary and fiscal supports to repair the economy. While the economy initially recovered from the recessionary lows, inflation, economic growth, and interest rates remained subdued despite ongoing interventions.

That is because debt and artificially low interest rates lead to malinvestment, which acts as a wealth transfer mechanism from the middle class to the wealthy. However, that activity erodes economic activity, leading to suppressed inflation and a surging wealth gap.

During that same period, commodities and precious metals rose initially as the “reflation expectation” was widespread. However, debt-driven realities quickly undermined that assessment and those investments languished relative to equities, as the flood of liquidity and low rates made equities far more attractive to investment.

While the relative performance of precious metals and commodities has picked up in recent months, this is more likely a function of “irrational exuberance” in the financial markets. As discussed previously, the surge in speculative investment activity is not uncommon to markets, and currently, many asset classes are becoming highly correlated.

However, while there is a compelling narrative around gold and precious metals from an investment perspective, those chasing that trade have had many years of terrible underperformance. While this time could be different, the “reflation narrative” will most likely fall prey to the realities of excessive debt, which will pressure Governments to cut rates once again.

If the past is potentially prologue, likely, the bullish narrative of “reflation” may once again find future disappointment. Such is particularly the case as the economics of debt and poor policy choices continue to erode the middle class further.

Tyler Durden Tue, 04/16/2024 - 11:50

This Unhappy Global Dynamic Will Lead Markets And Market Analysis For Years To Come

By Michael Every of Rabobank

Non Ducor, Duco

Who/what leads and who/what is led? That’s the question you should be asking yourself again today - even as most in markets think what they are paid to look at leads all rather than accept that life has (changeable) hierarchies.  

Yesterday saw a surprise leap in US retail sales: 0.7% m-o-m vs. 0.4% expected; ex-autos 1.1% vs. 0.5%; ex-gas and autos 1.0% vs. 0.3%; and the control group 1.1% vs. 0.4%. That followed Friday’s rise in the Michigan survey consumer inflation expectations from 2.9% to 3.1% (1-year) and 2.8% to 3.0% (5-year) and eclipsed the big dip in the Empire PMI. What leads/is led?

The New York Fed’s SCE labour market survey shows people want $81,800 to change jobs, up around $10,000 since March 2021. While those saying they were now unemployed vs. four months ago rose, so did the percentage who plan to retire early. What leads/is led?

The retail report pushed US bond yields much higher intra-day before partially reversing: there was almost a test of 5% in 2-years, while 10-years hit 4.66% and are still over 4.60%, a 2024 high, and +70bp since the start of a year which promised a rate-cuts frenzy. Indeed, Bloomberg reports one investment bank which had started 2024 flagging 275bps of Fed cuts and had trimmed that to 50bps, is sticking to that call while now making the case for the Fed to HIKE by 50bps – it’s not just Larry Summers anymore. Is that leading or being led?

In Asia, JPY is 154.3 (-9.4% year-to-date) with muttering of worse; KRW 1,391 (-7.8%) following the JPY lead; CNY 7.23 (-2.0%) with questions over how long it can continue to hold up if JPY and KRW fall down; IDR 15,848 (-2.9%), close to a record low; INR 83.45 (-0.3%), also close to a record low; THB 36.81 (-7.4%); PHP 56.89 (-2.7%); and MYR 4.79 (-4.2%). In EM space only MXN --its own entity, as Christian Lawrence regularly points out-- is at 16.72 (+1.5%). In other crosses, EUR/USD is just holding on to 1.06 (-3.8%), GBP to 1.24 (-2.3%), CAD testing 1.38 (-4.2%), AUD 0.64 (-5.7%), and NZD is already under 0.59 (-6.7%). Clearly, the dollar will keep leading others.       

However, Politico claims: ‘Trump trade advisers plot dollar devaluation’, “which could juice US exports but also fuel inflation.” Reportedly, this policy could shift, but for now they may “weaken the dollar unilaterally or through negotiations… using the threat of tariffs”. Yet Trump’s Wall Street faction is opposed to a weak dollar because it would hurt asset values, and his national security camp fear it would undermine global sanctions and the US dollar’s reserve status. So, who leads after the US election, and within a hypothetical Trump White House?

A Treasury Secretary can’t just lead the dollar lower in markets. They can jaw-bone, but if the Fed has higher rates than others, they are pushing a balloon underwater (and if inflation picked up further, how would the Fed not hike more?) The US can threaten tariffs, but they would push the dollar up. The US can’t lead a new global Plaza Accord because while some of the BRICS+ might like a weaker dollar (and higher commodity prices), Russia wants NO global dollar; and China will never allow a repeat of Japan 1985 - it won’t allow CNY higher to pivot to consumer-led growth. The article also notes everyone may run their own counter-policies anyway. Logically, Lighthizer might have to impose inbound capital controls, which Wall Street would hate, but the article is wrong in that moneymen love a weaker dollar, as all assets rise on it. And on the national security side, you have to enforce sanctions first (**cough** Iran **cough**). But if you can’t see our current dynamic leads towards the breakdown of the global system, you are misled.

Chinese data underline they won’t shift to consumer led growth, and CNY may be led lower. New home prices were -0.3% m-o-m, used home prices -0.5%, property investment -9.5% y-o-y and residential sales -30.7%. Industrial production was 4.5% y-o-y vs. 6.0% consensus; retail sales just 3.1% vs. 4.8%; and fixed investment 4.5% vs. 4.0%. Yet Q1 GDP was 1.6% q-o-q and 5.3% y-o-y, far higher than 4.8% expected, probably partly due to negative deflators pushing up real growth rates. 

From China to geopolitics, which continues to lead the headlines. Markets did what markets do best yesterday, shrugging off complex matters which they don’t understand in the hope that all will end well. Yet today, as I stressed would be the case in yesterday’s Global Daily, we are again at a moment of high geopolitical tension.

Israel will respond to Iran’s unprecedented attack on it with “clear and decisive” retaliation. We just don’t know when or how. The US has reportedly not opposed this but won’t join in, and the Israeli move may not be fully coordinated with it. Positively, Israel says it doesn’t aim to escalate to a regional war, and reports suggest it will minimize casualties while exacting significant damage: that implies a blow in the economic sphere, from a major cyberattack to a physical one on industrial (drones), nuclear, port (or energy) facilities(?) While energy remains a fat tail risk, it’s exactly the tactic Ukraine is using, despite White House anger. An Iranian official stated: “We do not want war, but we are ready for it if it is imposed on us, and our options are wide. We have the full will to respond militarily to Israel again, but in a stronger way and with weapons that have not been used previously.” In short, regional escalation risks remain. Oil is moving slightly higher again today; and were it to spike due to geopolitics, central banks would likely be led by it.

Ultimately, this crisis won’t be resolved until either Israel or Iran leads the other to accept their opposing redlines: either Israel can attack Iran whenever Iran’s proxies attack it, so the latter don’t; or Israel can never respond to Iran directly, so Iran’s proxies will attack it more freely. It’s hard to see how that gets settled without more violence, or the biting sanctions on Iran/the IRGC that nobody talking about de-escalation has yet offered as alternative. As the US leads on physical defence, it remains paralyzed on any offense despite the two being linked in any successful geostrategy.

As I continue to stress, that unhappy global dynamic will increasingly lead markets, and market analysis, in the years to come. Non ducor, duco.

Tyler Durden Tue, 04/16/2024 - 11:10

BofA Stock Slammed As Humans Actually Read Earnings Report, Notice Soaring Charge-offs

Update (1110ET): Just as we warned below, it seems the human-traders actually read the MS earnings report and saw chargeoffs soaring.

Bottom line: Bank of America managed to game expectations and reported numbers which mostly came just above estimates, which is also why the stock is higher premarket.

However, it is only a matter of time before the market notices that BofA is starting to take aggressive losses on its CRE/credit card exposure and it is unclear how much more of this lies ahead.

As such, don't be surprise if what is a modest move higher in the stock premarket reverses in the coming hours.

And sure enough, those early algo-driven gains quickly evaporated...

Which in context, pushed BofA down to almost two-month lows...

We hate to say 'we told you so' but "we told you so!"

*  *  *

With JPM, Citi and Wells already in the books, moments ago the last "big 4" money-center bank, Bank of America reported Q1 earnings which for the most part, were stronger than expected, however there were several troubling footnotes, including a sizable, $700MM FDIC special assessment and an unexpected surge in Commercial Real Estate net charge offs driven by the bank's long overdue recognition of Office losses.

Starting at the top, here is what Bank of America reported for the first quarter:

• Total Revenue, net of interest expense, $25.82BN, down 2% from the $26.3BN reported a year ago, but also beating the $25.43BN estimate
  • Trading revenue excluding DVA $5.18 billion, beating the estimate $5.02 billion
    • FICC trading revenue excluding DVA $3.31 billion, beating the estimate $3.3 billion
    • Equities trading revenue excluding DVA $1.87 billion, beating the estimate $1.71 billion
  • Wealth & investment management total revenue $5.59 billion, beating the estimate $5.34 billion
• Net income was $6.7 billion, down 12% from the $8.2 billion reported a year ago
• This translates to Adjusted EPS of 83c, a 12% drop from the 94c a year ago, but beating the 77c estimate;
  • Worth noting here that BofA's effective tax rate hit about 8%, which is ridiculously low, and was thanks to tax credits, “primarily related to investments in renewable energy and affordable housing.” Without those, the ETR would have been about 26%. (The FDIC special assessment “and other discrete tax items” brought the tax rate down by another 1%, the bank adds).
• Net interest income FTE rose to $14.19 billion, beating estimates $13.95 billion.

Also the bank said that results included a $700 million pretax “FDIC Special assessment" which reduced earnings by $0.07 per common share. 

Digging a little deeper into the asset quality we find the first rotten apple: a spike in charge offs to $1.5 billion as a result of the usual suspects: credit card losses and commercial real estate office weakness. Meanwhile, nonperforming loans increased $398 million to $5.9 billion from the fourth quarter, driven also primarily by the office segment of commercial real estate. More details below:

• Provision for credit losses $1.32 billion, below the estimate $1.4 billion
  • Net charge-offs (NCOs) of $1.5BN increased compared to 1Q23 and 4Q23, driven primarily by credit card and commercial real estate office
    • Credit card loss rate of 3.62% in 1Q24 vs. 3.07% in 4Q23
    • Commercial net charge-offs of $470MM increased $191MM, driven by commercial real estate office
  • Net charge-off ratio of 58 bps vs. 32 bps in 1Q23 and 45 bps in 4Q234
  • Why were credit losses below the amount of charge-offs? Because like JPM, BofA reported a reserve release of $0.2B vs. net reserve build of $0.1B in 1Q23 and net reserve release of $0.1B in 4Q23
  • Nonperforming loans (NPLs) of $5.9B increased $0.4B from 4Q23, driven primarily by commercial real estate office. The bank also said that 61% of Consumer NPLs are contractually current... which means that 39% of Consumer NPLs are not current.
  • Commercial reservable criticized utilized exposure of $24.5B increased $1.2B from 4Q23

Here it is visually:

One can see the dramatic surge in commercial real estate charge offs in the next chart: it appears that banks are finally starting admit the CRE reality.

The bank was also kind enough to break down its Office exposure.

As for the weakness in consumer, the surge in credit card 30+ days past due is hardly inspiring confidence.

Before we dig deeper, here is a snapshot report of some other headline metrics:

• Return on average equity 9.35%, beating the estimate 9.31%
• Return on average assets 0.83%, matching the estimate 0.83%
• Return on average tangible common equity 12.7%, below the estimate 13.1%
• Basel III common equity Tier 1 ratio fully phased-in, advanced approach 13.4%, below the estimate 13.5%
• Standardized CET1 ratio 11.8%, matching the estimate 11.8%
• Non-interest expenses $17.24 billion, estimate $16.66 billion
• Compensation expenses $10.20 billion, above the estimate $9.99 billion
• Net charge-offs $1.50 billion, higher than the estimate $1.26 billion

Commenting on the quarter, CEO Brian Moynihan said in the earnings release that "we reported a strong quarter as our businesses performed well, adding clients and deepening relationships. We reached 36.9 million consumer checking accounts, with 21 consecutive quarters of net checking account growth. Our Wealth Management team generated record revenue, with record client balances, and investment banking rebounded. Bank of America’s sales and trading businesses continued their strong 2023 momentum this quarter, reporting the best first quarter in over a decade.”

Taking a closer look at the income statement, BofA reported net interest yield of 1.99%, up from a cycle low of 1.97% in Q4 and also beating the estimate 1.97%. That said, the NII yield was down 21bps YoY, and the actual NII print of $14.0, decreased notably $0.4B YoY, as higher deposit costs more than offset higher asset yields, higher NII related to Global Markets (GM) activity, and modest loan growth. Additionally, BofA noted that as of March 31, 2024, a +100 bps parallel shift above the interest rate yield curve was estimated to benefit NII by $3.0B over the next 12 months; a -100bps parallel shift was estimated to decrease NII by $2.9BN.

Turning to non-interest income, the bank’s trading unit was particularly strong in Q1 with Global Markets bringing in revenue of $5.88 billion — higher than the previous quarter and Q1 of last year. There was a similar pattern in BofA’s wealth management arm. The other two units — banking and its huge consumer arm — both brought in lower revenues than this time last year.

Looking at Global Markets, we find the following:

• Revenue of $5.9B increased 5% from 1Q23, driven by higher investment banking fees and sales and trading revenue
• Sales and trading revenue of $5.1B increased less than 1% from 1Q23; excluding net DVA, up 2%3
  • FICC revenue decreased 6% (ex. DVA, down 4%),3 to $3.2B, driven by a weaker trading environment in macro products, partially offset by improved trading in mortgages
  • Equities revenue increased 14% (ex. DVA, up 15%),3 to $1.9B, driven by strong trading performance in derivatives
• Noninterest expense of $3.5B increased 4% vs. 1Q23, driven by investments in the business, including technology

Of note here is that equities traders at Bank of America just posted one of their best quarters on record, with a $1.87 billion revenue which was " driven by strong trading performance in derivatives". That’s a solid up-arrow for them from $1.62 billion this time last year.

Markets in summary:

Next up is Bank of America’s mighty US consumer banking arm, which as BBG notes, vies for the top spot with JPMorgan Chase, accounts for about 40% of the company’s revenue. It’s a massive operation and really the bank’s bread and butter. Here, total revenue of $10.2 billion was a decrease on this time last year, and deposits are down again.

However, the bank highlights a rise in combined credit and debit card spending of 5%. That’s similar to what we’ve heard from other banks like Citigroup, where the card-bolstered personal banking unit helped propel it to a beat on Friday.

As for BofA's Global Wealth and Investment management, it made $1 billion of net income from $5.6 billion of revenue; the bank cited another first for the unit: “Record client balances” hit almost $4 trillion, up 13% thanks to “higher market valuations and positive net client flows.” (AUM flows for the quarter hit $25 billion).

Turning to the balance sheet, total loans rose 1% YoY but dipped sequentially to $1.05 trillion, missing estimates of  $1.06 trillion...

... while total deposits of $1.946 trillion, came just above the estimate of $1.93 trillion.

Some more details from the balance sheet:

• CET1 ratio of 11.8% increased 4 bps vs. 4Q234
  • CET1 capital of $197B increased $2B from 4Q23, driven by net income, partially offset by capital distributions to shareholders
  • Standardized RWA of $1,660B increased $9B from 4Q23
• Book value per share of $33.71 improved 7% from 1Q23; tangible book value per share of $24.79 improved 9% from 1Q233
• Average Global Liquidity Sources of $909B increased $12B, or 1%, from 4Q232

Bottom line: Bank of America managed to game expectations and reported numbers which mostly came just above estimates, which is also why the stock is higher premarket. However, it is only a matter of time before the market notices that BofA is starting to take aggressive losses on its CRE/credit card exposure and it is unclear how much more of this lies ahead. As such, don't be surprise if what is a modest move higher in the stock premarket reverses in the coming hours.

The full invest presentation is below  (pdf link).

Tyler Durden Tue, 04/16/2024 - 11:05

House Managers To Deliver Mayorkas Impeachment Articles To Senate

Authored by Mark Tapscott via The Epoch Times (emphasis ours),

U.S. Secretary of Homeland Security Alejandro Mayorkas at the U.S. Capitol, on April 10, 2024. (Samuel Corum/Getty Images)

Two counts of impeachment against Secretary of Homeland Security Alejandro Mayorkas, approved on Feb. 13 by the House of Representatives, are to be formally presented to the U.S. Senate today.

Eleven House members previously named as impeachment managers will walk from the lower chamber through Statuary Hall in the Capitol and then to the Senate in a brief ceremony that has been repeated only 17 times since the first Congress in 1789. House Democrats did so twice after impeaching former President Donald Trump in 2020 and 2021.

Eight of the 17 Senate impeachment trials resulted in convictions, while nine ended without convictions. A two-thirds majority of the Senate is required to convict an impeached officer of the federal government. Neither former President Donald Trump, former President Bill Clinton in 1998, nor President Andrew Johnson in 1868 were convicted.

Senate rules require the House managers to read the two counts in the Senate chamber. Then Senate Senate President Pro Tempore Patty Murray (D-Wash.) will swear the senators in as jurors. A written summons will be issued to Mr. Mayorkas for him to appear, which he may or may not choose to heed.

The senators will then have an opportunity to adopt rules governing how the trial will be conducted. The rules adopted by the Senate in 1986 were in place for the Clinton and Trump trials.

Senate Majority Leader Chuck Schumer (D-N.Y.) is expected to enter a motion either to dismiss or table the two impeachment counts against Mr. Mayorkas. Earlier this year, Mr. Schumer described the House impeachment action as a “sham.”

With public anger over the more than 8 million illegal immigrants allowed to enter the country under President Joe Biden, Mr. Schumer is determined to avoid a public trial during which the House managers can be expected to present evidence demonstrating Mr. Mayorkas acted at the direction of the chief executive.

Senate Republicans, led by senators Ted Cruz of Texas, Mike Lee of Utah, John Kennedy of Louisiana, Ron Johnson of Wisconsin, Eric Schmitt of Missouri, and Roger Marshall of Kansas will attempt to bring multiple points of order against Mr. Schumer’s motion.

If any one of the GOP points of order is approved by a simple majority of the Senate, the motion will be defeated and the trial will commence. But Ms. Murray is not obligated under Senate rules to recognize any of the senators offering points of order, so none of their objections may be heard on the Senate floor.

Should the Senate trial go forward, the House managers will present their evidence, and defenders of Mr. Mayorkas from among the Senate Democratic majority will respond. At some point thereafter, a rollcall vote will be taken, which is expected to fail to reach the required two-thirds for conviction.

At that point, Mr. Mayorkas will be able to continue performing his duties but he will go into the history books as only the second presidential cabinet member to be impeached.

The first was Secretary of War William W. Belknap, who resigned in 1876 after the House passed five counts of impeachment against him. The Senate failed to convict Mr. Belknap, who was appointed by President Ulysses S. Grant.

Article I of the measure accuses Mr. Mayorkas of a “willful and systemic refusal to comply with the law” and claims that “in large part because of his unlawful conduct, millions of aliens have illegally entered the United States on an annual basis with many unlawfully remaining in the United States.”

“His refusal to obey the law is not only an offense against the separation of powers in the Constitution of the United States, it also threatens our national security and has had a dire impact on communities across the country,” it reads.

Article II accuses Mr. Mayorkas of breaching the public’s trust by having “knowingly made false statements, and knowingly obstructed lawful oversight of the Department of Homeland Security, principally to obfuscate the results of his willful and systemic refusal to comply with the law.”

Senate Majority Leader Chuck Schumer (D-N.Y.) speaks to the press after the Democratic Party's weekly luncheon at the U.S. Capitol, on March 6, 2024. (Mandel Ngan/AFP via Getty Images)

The 20-page impeachment resolution contains two articles with multiple examples of laws Mr. Mayorkas is alleged to have ignored or refused to enforce and illustrations of his blocking congressional oversight, including not producing requested copies of documents.

Democratic House impeachment managers, led by Rep. Jamie Raskin (D-Md.), walk out of the Senate Chamber in the Capitol, on Feb. 13, 2021. (J. Scott Applewhite/AP Photo)

The House managers, all Republicans, include Mr. Green, House Foreign Affairs Committee chairman Reps. Mike McCaul of Texas, Andy Biggs of Arizona, Clay Higgins of Louisiana, Ben Cline of Virginia, Michael Guest of Mississippi, Andrew Garbarino of New York, August Pfluger of Texas, Harriet Hageman of Wyoming, Marjorie Taylor Greene of Georgia, and Laurel Lee of Florida.

ZeroPointNow Tue, 04/16/2024 - 10:30

"Only Good For WW3": Slovakia To Oppose Ukraine's NATO Membership Bid

Last October saw a significant shift in Slovakia's trajectory related to its stance on the Ukraine war, after the populist left-wing party Smer took the most votes in the country's national election. Its head, who ascended to his fourth term as prime minister, Robert Fico, advanced a platform of pursuing peace in Ukraine rather than continuing to pour weapons into an increasingly hopeless campaign to evict Russian forces from the country's eastern provinces. 

In the wake of US Secretary of State Antony Blinken earlier this month controversially declaring "Ukraine will become a member of NATO" - Slovakia under PM Fico is pushing back. He said in fresh comments at a press conference that Slovakia will stand firmly against any efforts to pursue Ukraine's accession into NATO.

via EPA

"Ukraine may say: ‘We want to join NATO.’ This will be their own decision. We are saying that we will not ratify [the documents on Ukraine’s accession to NATO] in parliament because Slovakia needs a neutral Ukraine. Slovakia’s interests will be threatened if Ukraine becomes a NATO member," Fico said.

However, while rejecting the idea of Ukraine being in NATO, he did say that Slovakia supports Ukraine's bid to become a member of the European Union. "The Slovak prime minister expressed hope that Brussels and Kiev begin talks on launching this process as soon as possible," Russian media indicated.

In separate comments days ago he explained that "Ukraine’s membership in NATO is only good for World War III. An independent Ukraine is enough for us."

Those remarks were made in a weekend radio interview, where he went on to explain of his plans for relations with Moscow: "In the aftermath of conflict, there’s a keen interest in re-establishing normalcy in relations with Moscow," he said.

"I want to pursue a policy of good, friendly relations with anyone interested in such a policy," Fico affirmed while highlighting the small country of Slovakia's geography.

Back in September, just ahead of his becoming prime minister again, Fico said that "Peace is the only solution" and explained,  "I refuse to get criticized and labeled as a warmonger just for talking about peace, whereas those who support war and killing are being called peace activists. We have it all messed up in our heads. We will not send a single bullet to Ukraine from the state stocks.”

Fico has also said the Ukraine war didn't start in 2022: "I say it loud and clear and will do so: The war in Ukraine didn’t start yesterday or last year. It began in 2014, when the Ukrainian Nazis and fascists started to murder the Russian citizens in Donbas and Luhansk."

A March opinion poll found that 51% of Slovakians think the West and/or Ukraine are responsible for the conflict. Half also said the United States posed a security threat to their country. Fico's opposition to arming Ukraine and his support for an immediate, negotiated peace echoes the stance of neighboring Hungary, led by Prime Minister Viktor Orban. Both countries have borders with Ukraine.    

Tyler Durden Tue, 04/16/2024 - 10:10

Johnson Unveils Separate Israel, Ukraine Funding Bills That MTG Calls A "Scam"

After months of pushback over packages to send US-taxpayer-funded foreign aid to Israel and Ukraine, House Speaker Mike Johnson unveiled a plan Monday evening to hold four different votes on bills which would decouple aid by country, including Taiwan. Johnson will also put forth a House-approved bill that could ban TikTok from the US, and a measure aimed at satisfying Republican foreign policy demands.

According to WaPo, a draft of Johnson's plan mirrors a Senate bill, but may not include humanitarian aid for Gaza. In February, the Senate approved a bill which allocates $95.3 billion in supplemental spending, including $60 billion for Ukraine, $14 billion for Israel, $9 billion to Gaza, and $5 billion towards Indo-Pacific allies against Chinese threats.

And while Johnson pretended that the Senate bill would be a 'non-starter' in the House without border security measures, there's zero in there for border security demanded by House Freedom Caucus Republicans as a condition of approving foreign aid.

After promising he would secure the border before sending billions to foreign nations, Mike Johnson has banned amendments to secure the border and is holding Israel hostage to get more money for Ukraine. https://t.co/1zGDa9KyEt

— Sean Davis (@seanmdav) April 16, 2024

"I hate this, that [Johnson’s] saying it and not following through with it, that the hill to die on was the border and he would not put Ukraine up without the border. Looks like that’s going down the tubes," said Rep. Ralph Norman (R-SC) following the meeting.

Johnson said after the meeting that "Every member ultimately will be able to vote their own conscience on all of these matters and everybody have the opportunity to weigh in," Johnson said following a Monday GOP conference meeting. "I think the final product will be something that everybody can take confidence in because they got to vote their district."

During Monday's meeting, Rep. Matt Gaetz (R-FL) suggested passing a rule that would instruct the Senate to take up a measure known as H.R.2 approved by House Republicans last year which would severely restrict migrant entry into the US, before taking up any House-passed national security package.

A seemingly defeated Rep. Chip Roy (R-TX) left Monday's meeting speechless, saying "It's just what it is."

That said, WaPo reports that it's possible Johnson may work in border security measures to the fourth bill, which is essentially a GOP wish list, or through an amendment process.

Scam!

Rep. Marjorie Taylor Grene, who's been threatening to introduce a measure to oust Johnson, called the plan a "scam" that she's "firmly" against. That said, she hasn't said yet whether she'll move against Johnson over concerns that it could jeopardize the Republican majority in the House.

"I support the majority and I want it next time. So I’m being careful," said Greene. "He’s definitely not going to be speaker next Congress if we’re lucky enough to have the majority."

Johnson responded to Greene, saying "I don’t spend my time worrying about motions to vacate. We’re having to govern here and we’re going to do our job. I don’t know how that shakes out."

Rep. Jim Jordan (R-OH) told Punchbowl News Monday night that he's opposed to the package of four bills, saying he received no clarity from Johnson over his intentions.

Rep. Jim Jordan says he is opposed to tying foreign aid together in one package.

Jordan said he asked Johnson about his plans during conference, but did not get clarity on the speaker’s intention.

He wouldn’t commit to supporting a rule if it’s all tied together.

— Mica Soellner (@MicaSoellnerDC) April 16, 2024

As Punchbowl further reports:

House Majority Whip Tom Emmer and his whip team are going to have quite the job of neutralizing conservative opposition. Johnson, Emmer and House Majority Leader Steve Scalise only have 72 hours to assemble a coalition to pass the rule and underlying bill — perhaps even using different groups of GOP lawmakers to do so.

There's no indication of when the bill text would be ready, however once it's unveiled House rules provide 72 hours for members to read it before voting. Complicating matters is a week-long break the House is scheduled to take on Thursday, while Johnson said the earliest the House could consider the bills is Friday if legislative text is released by Tuesday (today).

If the bills advanced to floor debate but the House still can't agree to pass them, Johnson may be out of options. To that end, House Democrats are collecting signatures for a petition which could trigger a vote on the Senate bill - which currently has the backing of 194 Democrats and one Republican.

Tyler Durden Tue, 04/16/2024 - 09:30

US Industrial Production Is Flat YoY In March

US Industrial Production rose 0.4% MoM in March - as expected - which was... wait for it... the same rise as in February after that data was revised notably higher. However, even with the revision and the subsequent rise, Industrial Production remains unchanged YoY...

Source: Bloomberg

We can't help but see the irony that after we highlighted the serial downward revisions in data last month, that all of a sudden February's Industrial Production data is revised drastically higher...

Source: Bloomberg

Capacity Utilization ticked modestly higher (from a downwardly revised 78.2% to 78.4% (below expectations)...

Source: Bloomberg

US Manufacturing also saw February's data revised higher (from +0.8% to +1.2% MoM) and March rose 0.5% MoM (better than the 0.2% rise expected). That lifted YoY Manufacturing up by 0.8%...

Source: Bloomberg

Soft and Hard manufacturing data in agreement that things are turning up...

Nothing but blue skies here for The Fed to cut rates into... not!

Tyler Durden Tue, 04/16/2024 - 09:27

Futures Rebound On Strong Earnings Even As Global Market Mood Remains Dismal

S&P futures traded modestly in the green, erasing earlier losses and signaling a recovery after the S&P 500 fell more than 1% in the past two sessions, following stronger than expected earnings from index heavyweight UnitedHealth Group which soared 6% after reporting first-quarter profit that beat Wall Street’s expectations and affirmed its outlook for the year, despite the costs associated with a cyberattack on one of its subsidiaries that has roiled the health-care industry; other reporters such as Bank of America and Morgan Stanley also gained. of 8:45am, S&P futures gained 0.3%, after trading down 0.2% earlier this morning; Nasdaq futures also reversed an earlier loss and traded about 0.2% higher. Meanwhile, loans continued their ascent, with 10Y yields rising as highas 4.65% before modestly reversing, while 2-year Treasuries approached 5%. The dollar advanced for a fifth day, its longest run since January.

In premarket trading, Tesla fell as much as 2.6% in premarket trading as two of the electric carmaker’s top executives left in the carmaker’s largest-ever round of job cuts. Morgan Stanley rose 3% in the premarket after reporting wealth management net revenue for the first quarter that beat the average analyst estimate. Its equities trading revenue was also ahead of consensus. Here are some other notable premarket movers:

• UnitedHealth Group rises 6% after reporting first-quarter profit that beat Wall Street’s expectations and affirmed its outlook for the year, despite the costs associated with a cyberattack on one of its subsidiaries that has roiled the health-care industry.
• Hims & Hers declines 5% after Jefferies downgraded the telehealth firm to hold, saying expectations on the stock are now at a “more appropriate level.”
• Intra-Cellular Therapies climbs 18% after posting positive top-line results from a late-stage trial of its investigative treatment for depression.
• Live Nation drops 9% after Bloomberg reported that the Department of Justice was preparing to file an antitrust complaint against the company over its Ticketmaster business, citing three people familiar with the matter.
• Macatawa Bank jumps 38% following a deal that will see Wintrust Financial acquire it for about $510.3m, or $14.85 a share, in an all-stock transaction.
• Morgan Stanley rises 2% after posting a 1Q revenue beat.

Markets have slumped in recent days as economic data continues to underscores US economic strength, while conflict in the Mideast fans the risk of higher energy prices and inflation, frustrating hopes for imminent Federal Reserve interest rate cuts. With earnings season underway, there’s growing concern that the mega-cap leaders will struggle to justify their steep valuations.  

“Markets are looking for an excuse to take a breather and the combination of rising geopolitical risk alongside inflation fear and Fed anxiety is providing some decent ground for that,” said Florian Ielpo, head of macro research at Lombard Odier Asset Management.

As noted yesterday, traders are no longer fully pricing in a Fed rate cut before November, while UBS Group AG strategists warned there may be no pivot at all and that US policymakers will instead embark on a hiking cycle. Treasury 10-year yields have spiked more than 10 basis points to 4.65% since the start of the week. With stocks and bonds coming under pressure, the dollar pushed higher as investors piled into haven assets.

Recent data “has given the Fed pause for thought and the market has repriced quite significantly,” said Daniel Loughney, head of fixed income at Mediolanum International Funds. “We have a powerful dynamic whereby US growth and inflation dynamics are mingling with big-picture commodity and supply chain-related inflationary pressures.”

Meanwhile on the geopolitical front, top Israeli military officials have vowed to respond to Iran’s missile attack despite diplomatic calls for restraint.  

This year’s record rally has left markets especially vulnerable to a pullback, according to top Wall Street strategists. A survey from Bank of America Corp. found that investor allocation to equities is at the highest in over two years. Citigroup strategists counted $52 billion of long positions on the S&P 500, 88% of them loss-making. "Should the market turn negative, the move could be faster and larger due to the large, long positions already in the red," Citigroup strategist Chris Montagu wrote in a note.

Stocks outside the US were trading in the red, with equities in Europe tumbling 1% and Asian peers down 2%.

European stocks tumbled out of the fate, tracking losses in their Asian counterparts with the prospect of a higher-for-longer Federal Reserve, rising Middle East tensions and patchy Chinese economic data all playing their part. They have, however, since regained some losses. The Stoxx 600 is down 1.0%, after earlier sliding 1.4% and looking at its largest fall this year. All 20 sectors are in the red but basic resources are the worst performers after Chinese retail sales and industrial production rose less than expected in March. US equity futures are slightly lower.

Earlier in the session, Asian stocks dropped by the most in eight months, as worries deepened that US monetary policy will remain tighter for longer and the latest slew of data from China failed to spark hopes of an economic recovery. The MSCI Asia Pacific Index slid more than 2%, the most since Aug. 2. Tech hardware stocks including chipmakers TSMC and Samsung were the biggest drags on the benchmark, which was poised for its fifth-straight daily loss, the worst losing streak since August.

In FX, the Bloomberg Dollar Spot Index rises 0.2% to its highest since November, adding to Monday’s post retail-sales gain. The greenback has also bulldozed its way through emerging-market currencies, weakening many through closely-watched levels that forced some officials to step in to stem the losses. The pound is flat after the UK unemployment rate rose unexpectedly. Asian currencies are in focus after China’s fixing surprise paved a way for the yuan to weaken to key 7.30 level, while USD/JPY continues to trend toward 155.

In rates, treasuries fell with US 10-year yields rising 4bps to 4.64% while the UK February jobs report sent 10-year yields to highest levels since November. Fed Chair Powell is slated to participate in a moderated discussion with Tiff Macklem, Governor of the Bank of Canada at 1:15pm New York time, with no text expected. Treasury coupon sales this week include $13b 20-year bond reopening Wednesday and $23b 5-year TIPS new issue Thursday

In commodities, oil prices erased an earlier gain with WTI crude oil futures down ~0.5%, extending retreat from last week’s highs reached amid escalation of Middle East conflict; Israel has said it will respond to Iran’s weekend attack. Spot gold falls 0.5% to $2,370/oz.

US economic data slate includes March housing starts/building permits, April NY Fed services business activity (8:30am) and March industrial production (9:15am). Fed speakers include Jefferson (9am), Williams (12:30pm), Barkin (1pm), Powell (1:15pm) and Collins (4:30pm)

Market Snapshot

• S&P 500 futures little changed at 5,100.00
• STOXX Europe 600 down 1.4% to 498.77
• MXAP down 2.0% to 169.96
• MXAPJ down 2.0% to 518.74
• Nikkei down 1.9% to 38,471.20
• Topix down 2.0% to 2,697.11
• Hang Seng Index down 2.1% to 16,248.97
• Shanghai Composite down 1.6% to 3,007.07
• Sensex down 0.7% to 72,898.76
• Australia S&P/ASX 200 down 1.8% to 7,612.49
• Kospi down 2.3% to 2,609.63
• German 10Y yield little changed at 2.44%
• Euro little changed at $1.0614
• Brent Futures up 0.2% to $90.26/bbl
• Gold spot down 0.5% to $2,371.27
• US Dollar Index up 0.12% to 106.33

Top Overnight News

• China’s March economic data disappoints, including retail sales (+3.1% Y/Y vs. the Street +4.8%) and industrial production (+4.5% Y/Y vs. the Street +6%), although GDP for Q1 ran ahead of expectations. RTRS 
• China’s President Xi Jinping met German Chancellor Olaf Scholz in Beijing on Tuesday, saying China’s exports were easing global inflation and the clean energy transition at a time of tension with the EU over trade and the war in Ukraine. FT
• UK wage growth was higher than expected in the three months to February, despite a weaker jobs market in which unemployment edged up, vacancies fell and more people chose not to work or look for work. The Office for National Statistics said average earnings, including bonuses, were 5.6% higher over the period than a year earlier, the same annual growth rate as in the three months to January. Analysts had expected annual growth to slow to 5.5%. FT
• Israel’s response will “send a message”, but not cause casualties (options include hitting a facility in Tehran or launching a cyberattack). WaPo
• Speaker Johnson will put four separate bills on the House floor this week (funding for Ukraine, Israel, Taiwan, and a ban of TikTok) and a draft of the legislation largely mirrors what was already passed in the Senate. NYT
• UBS’s capital needs may rise by around $20 billion to reach new requirements the government is proposing in the wake of Credit Suisse’s collapse. BBG
• International Paper agreed to buy UK rival DS Smith for £5.8 billion, creating a global leader in packaging. BBG
• The Fed’s Mary Daly stressed there’s no urgency for rate cuts given “remarkable” US growth, a resilient labor market and still-elevated inflation. The “worst thing” the Fed can do is move unnecessarily fast, she said. Jerome Powell and Tiff Macklem speak on the North American outlook later. BBG
• MSFT will invest $1.5B in the UAE AI firm G42, the latest example of the software giant providing capital throughout the AI industry. WSJ

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were lower across the board with global risk appetite sapped by geopolitical concerns related to a potential 'imminent' response by Israel against Iran, while markets also digested mixed key releases from China. ASX 200 retreated with selling across all sectors and consumer discretionary front-running the declines. Nikkei 225 was among the worst hit and fell beneath the 38,500 level with the index shedding over 800 points. Hang Seng and Shanghai Comp. conformed to the downbeat mood despite better-than-expected Chinese GDP for Q1 which was negated by disappointing Industrial Production and Retail Sales data, while property sector woes persisted after home prices further deteriorated and with developer Times China (1233 HK) facing a winding-up petition filed by Hang Seng Bank.

Top Asian News

• Chinese President Xi told German Chancellor Scholz during their meeting in Beijing that bilateral ties will continue to develop as long as both sides respect each other and seek common ground, while he added that they must view and develop bilateral relations in an all-round way from a long-term and strategic perspective.
• China's stats bureau said economic conditions are still not stable and the external environment is complex, while it added that uncertainty is increasing and that consumer inflation will recover mildly. China's stats bureau also stated that China's property market is still in the middle of adjustments.
• Japanese Chief Cabinet Secretary Hayashi said won't comment on forex levels or currency intervention and reiterated that it is important for currencies to move in a stable manner reflecting fundamentals, while he added that excessive FX volatility is undesirable and is prepared to take all measures on FX.
• Fitch revises outlook for Chinese state banks to Negative from Stable; affirms ratings

European bourses, Stoxx600 (-1.4%), are entirely in the red, continuing the price action seen in Wall St. from the prior session and following a negative handover from APAC trade as geopols remain in focus and China data was mixed. European sectors are lower; Telecoms was initially propped by post-earning strength in Ericsson (+3.5%), though this ultimately faded. Basic Resources underperforms, given weakness in metals prices. For Luxury names, LVMH due to report after the European close. US equity futures (ES -0.1%, NQ -0.1%, RTY -0.3%) are lower, albeit to a lesser magnitude than European counterparts. A busy earnings slate will provide direction for markets today; United Health, UAL, Bank of America & Morgan Stanley are all due.

Top European News

• ECB's Rehn says future rate decisions will ensure that policy rates will remain sufficiently restrictive for as long as necessary. If June assessment confirms inflation convergence towards target, could lower rates. Cut assumes there will be no further setbacks in geopolitics or energy prices. At the moment, there is a divergence between the US and European economy; naturally may take different kinds of decision in the coming period; ECB does not pre-commit to any rate path.
• BoE's incoming Deputy Governor Lombardelli says decline in inflation is likely to be bumpy; sees two-sided risks. Evidence suggests that Brexit has had a negative economic impact via investment and trade. Inflation may rove more persistent than expected. Wage growth is slowing but remains high. Joins the MPC on July 1st, replacing Broadbent.
• EU leaders are set to revive their capital markets union plan in search for defence funding, according to FT.
• Morgan Stanley expects the ECB to deliver 75bps interest rate cuts in 2024 (prev. 100bps expected)
• Deutsche Bank expects ECB to deliver 75bps of interest rate cuts in 2024 (prev. forecast 125bps)

FX

• USD is firmer vs. all peers as the hawkish Fed repricing/strong US data continues to provide support. DXY has been as high as 106.43 with the next target via the 2nd Nov'23 peak at 106.51.
• EUR/USD clinging onto 1.06 status after printing a 1.0603 low. In a week lacking in key EZ data and ECB speakers continuing to talk up a June cut, it is not obvious to see how price action can reverse.
• GBP is flat vs. the USD and holding up better-than-peers with this morning's wage metrics potentially overshadowing a larger-than-expected increase in the unemployment rate. 1.2409 is the base for now.
• 154.60 is the high watermark for the USD/JPY as the Fed/BoJ divergence play remains the key guiding force. 155 is the perceived line in the sand for the MoF and speculation continues to mount over an intervention by Tokyo.
• The current risk environment is continuing to act as a drag for the antipodes. AUD/USD is managing to hold above the 0.64 mark with not too much follow-through at the time from Chinese data.
• PBoC set USD/CNY mid-point at 7.1028 vs exp. 7.2475 (prev. 7.0979).
• South Korean FX authority says closely monitoring FX market with caution on currency movement, supply and demand; excessive herd-like behaviour in FX market is undesirable.

Fixed Income

• USTs are contained in a narrow nine tick band that is entirely within Monday's 107-18 to 108-22 parameters. Newsflow limited thus far as we await Israel's response to Iran, though the docket ahead is filled with several Fed speakers.
• Bunds have been directionally in-fitting with USTs. Following the German ZEW data, Bunds were pressured by around 15 ticks to a new 131.55 session low, taking it below Monday's 131.58 base.
• Gilts gapped lower by 18 ticks at the open following the latest labour/wage data, with focus on the hotter wage components; benchmark briefly pared as the internals were digested before ZEW hit and pressured the space again. Overall, Gilts continued to drift to a 96.44 base which marks a contract low and has seen the 10yr yield peak at 2.78%.
• UK sells GBP 1.5bln 0.75% 2033 I/L Gilt: b/c 3.4% (prev. 2.97x) and real yield 0.440% (prev. 0.634%)

Commodities

• Crude is subdued and off best levels, but still underpinned by geopolitical risks after reports of a potential 'imminent' response by Israel against Iran; Brent June trades between USD 89.82-90.84/bbl range.
• Softer trade across precious metals amid a lack of retaliation by Israel thus far whilst the Dollar also edges higher; XAU sits in a USD 2,363-92/oz range.
• Base metals are lower across the board amid the risk aversion and stronger Dollar. Chinese data overnight was mixed in which Chinese GDP for Q1 topped expectations, but was negated by disappointing Industrial Production and Retail Sales data.
• El Nino weather event has ended, according to the Australian Bureau of Meteorology.

Geopolitics: Middle East

• "Israel sent a message to the countries of the region that responding to the Iranian attack will not endanger the stability of these countries", according to Sky News Arabia.
• The Israeli war cabinet is weighing a response to the recent Iran attacks; and is to meet again on Tuesday for a third straight day, via the FT
• Iran's Foreign Minister said in a call with China's Foreign Minister that Iran is willing to exercise restraint and has no intention of further escalating the situation, according to Chinese state media.
• US officials expect a possible Israeli response to Iran’s attack over the weekend to be limited in scope and most likely involve strikes against Iranian military forces and Iranian-backed proxies outside Iran, according to four US officials cited by NBC News.
• Iraqi PM confirmed Iraq's interest in obtaining expertise and arms from the US, as well as keenness on security partnership during a meeting with US Defense Secretary Austin, according to Reuters.
• Saudi Arabia acknowledged that it helped defend Israel against Iran whereby Saudi Arabia's royal family posted on its website about the country's role in defending Israel against the Iranian barrage, according to Jerusalem Post.

Geopolitics: Other

• US judges North Korea to have the capability to manufacture biological weapons through genetically modified weapons, according to Yonhap.

US Event Calendar

• 08:30: March Housing Starts 1.321m, est. 1.49m, prior 1.52m
• 08:30: March Housing Starts -14.7% MoM, est. -2.4%, prior 10.7%
• 08:30: March Building Permits 1.458m, est. 1.51m, prior 1.52m, revised 1.52m
• 08:30: March Building Permits -4.3%MoM, est. -0.9%, prior 1.9%, revised 2.4%
• 09:15: March Capacity Utilization, est. 78.5%, prior 78.3%
• 09:15: March Manufacturing (SIC) Production, est. 0.2%, prior 0.8%
• 09:15: March Industrial Production MoM, est. 0.4%, prior 0.1%

Central Banks

• 09:00: Fed’s Jefferson Speaks at Monetary Policy Forum
• 12:30: Fed’s Williams Moderates Event w/ François Villeroy de Galhau
• 13:00: Fed’s Barkin Speaks on Economic Outlook
• 13:15: Fed’s Powell Participates in Moderated Q&A
• 16:30: Fed’s Collins Gives Speech on Economy

DB's Jim Reid concludes the overnight wrap

I picked an eventful couple of weeks in markets to be on holidays. The highlights of my trip were 1) accidentally mixing up my ski pass with one of my twins (he has the same name as me) which nearly caused us both to be booted off the slopes after the cameras picked up a six-year old on a lift with a 49-year old’s pass; 2) it going from freezing to boiling on the same day; 3) a Saharan dust storm covering the skies and slopes with orange sand; and 4) all three kids passing the “first star” stage at ski school albeit via two not passing initially and me having to pay for a couple of extra private lessons to ensure parity and less arguments and fighting within the family. In fact it's lovely to be back at work and to leave sibling rivalry behind me for a bit.

That said, my first 24 hours back have been far from quiet, with the S&P posting its weakest 2-day run since the regional banking stress last March (-1.20% yesterday after -1.46% on Friday). Equities had initially opened higher in the absence of any immediate escalation in the Middle East, but sentiment turned amid renewed concerns over Israel’s response to Iran’s weekend attack, with the rise in rates also weighing. The sell-off in sovereign bonds received extra momentum from a strong US retail sales print, which took the 10yr Treasury yields (+8.0bps) to their highest level in five months at 4.60%, despite a decent rally later in the US session from a 4.66% peak.

By contrast, when I left for my hols at Easter 10yr US yields were 4.20%. In fact, since 2007 they’ve only been higher than the current level for around 6-weeks straddling October last year. Alongside this we’ve moved from pricing in 2.9 Fed hikes this year just before Easter to only 1.75 as I type this morning. Powell speaks today so we'll see if he changes anything here.

I continue to believe that it’s going to be incredibly difficult to smoothly land this US economic cycle given we’ve moved from the biggest increase in money supply since WWII to the biggest contraction since the 1930. All with the associated lags. The least likely scenario was always likely to be US growth and inflation moving to trend with anything close to the 6.7 Fed cuts priced in at one point in January. Last year I believed the recession was the most likely outcome but as I said at the start of this year when we changed our view, I think I underestimated the true scale of the stock of stimulus/money still in the system even when the flow turned negative with the tightening of policy. Looser financial conditions since October have exaggerated this and contributed to a boost in activity, inflation and markets this year.

So it's possible that stimulus/liquidity is still working its way through the system and you can see that with Peter Sidorov’s recent work on credit conditions here and here. Peter’s work suggests that the US has benefited from more muted transmission of rate hikes but that there could still be an air pocket of US liquidity later in the year when we return nearer to the long-term money supply trend and finally remove the excesses created. If that’s correct then maybe cutting rates in preparation of that is actually the correct thing to do. However faced with inflation that is currently accelerating that would be very very difficult for the Fed to communicate and be comfortable doing. The lag of policy is incredibly difficult to assess in real time. So the most likely scenario is that rate cuts are delayed ( DB only have one cut in December for 2024 now. See here for more) but that in itself creates risks that rates will be left restrictive at the point where the boost from the earlier liquidity overhang runs out.

So a textbook perfect soft landing will still be very difficult to achieve in my opinion. Obviously a no landing but with decent economic growth could be fine for equities while it lasts so the above isn't meant to sound near-term negative but simply to outline the uncertainties that I still think are very large.

The added complication at the moment is the heightened uncertainty in the Middle East. This dominated the wires yesterday, as we saw multiple countries warn Israel against an escalation. For instance, French President Macron said that “We’re going to do everything we can to avoid flare-ups, and try to convince Israel that we shouldn’t respond by escalating, but rather by isolating Iran”. Similarly, UK Foreign Secretary Cameron said that “We’re saying very strongly that we don’t support a retaliatory strike.” And US President Biden said the US “is committed to Israel’s security” and “to a ceasefire that will bring the hostages home and prevent the conflict from spreading beyond what it already has”. Nevertheless, market pricing of geopolitical risk premium began to rise again following an Axios report that Israel’s defence minister Yoav Gallant told US Defence Secretary Lloyd Austin that Israel couldn’t allow ballistic missiles to be launched against it without a response. Later on, CNN reported that Israel’s war cabinet reviewed military plans for a potential response in a meeting on Monday, without clarity on whether a decision had been taken. Oil prices followed the shifting geopolitical sentiment, with Brent crude initially falling more than 1% to below $89/bbl intra-day, but rising to back above $90 by the close, and trading at $90.56 as I type.

Risk assets came under increased pressure following the Axios report, with the S&P 500 down -1.20% by the close. The heightened sense of alert saw the VIX index of volatility spike by another +1.9pts to 19.2, seeing its sharpest two-day rise since the regional banking stress last March. In Israel itself, equities posted further declines, with the TA-35 index down -1.23%, following a modest +0.27% gain on Sunday. By contrast, gold benefited in the risk-off mood (+0.55%), closing at a new record high of $2,357/oz.

The equity decline was led by tech stocks, with the NASDAQ down -1.79% and the Magnificent 7 (-2.44%) seeing its worst day since January. Tesla (-5.59%) extended its YTD decline to -35% amid news that it will cut over 10% of its workforce. But the broad turn in sentiment also saw the three largest mega caps – Microsoft (-1.96%), Apple (-2.19%) and Nvidia (-2.48%) – all post sizeable declines. Amid the outperformers, Goldman Sachs gained +2.92% after its earnings beat expectations. European markets had closed before the worst of the equity sell off, with the STOXX 600 (+0.13%) a little higher on the day. There was a divergence between the UK’s FTSE 100 (-0.38%), and other indices including Germany’s DAX (+0.54%) and France’s CAC 40 (+0.43%). Euro Stoxx futures are -1.40% this morning as I type with S&P 500 (-0.28%) and NASDAQ 100 (-0.26%) futures lower but not accelerating the losses too much.

Stocks had started Monday on the front foot, in part thanks to a strong US retail sales print that offered a fresh reminder about the strength of the US consumer. It showed retail sales were up +0.7% in March (vs. +0.4% expected), and the previous month was also revised up three-tenths. This also revived fears about a “no landing” though, leading investors to dial back the chances of rate cuts this year. The amount of cuts priced by the Fed’s December meeting came down by -1.8bps to 45bps, and it had moved as low as 37bps intra-day prior to the souring of the geopolitical sentiment.

The retail sales data exacerbated the bond selloff, and the 10yr Treasury yield (+8.0bps) closed at 4.60%, its highest level since November and is further +1bps higher overnight. At the front end, the 2yr yield was up +2.3bps to 4.92%, having been as high as 4.99% at its intraday peak. There were also fresh signs of concern about inflation, with the 2yr US inflation swap (+1.8bps) up to a one-year high of 2.65%.

This morning in Asia equity markets are extending declines. The KOSPI (-2.45%), Nikkei (-2.11%), S&P/ASX 200 (-2.12%) and the Hang Seng (-1.87%) are all seeing major losses. Chinese stocks are also slipping with the CSI (-1.02%) and the Shanghai Composite (-1.42%) lower after some mixed data.

The Chinese economy did make a stronger than expected start to the year, offering some relief to officials after they've unveiled a raft of fiscal and monetary policy measures to boost the economy. Q1 GDP grew at a +5.3% annual pace, beating analysts’ forecasts of +4.8% and relative to a +5.2% expansion in the previous quarter. On a quarter-by-quarter basis, GDP grew +1.6% in the first quarter (v/s +1.5% expected) following an upwardly revised growth of +1.2% in the prior quarter. However, industrial output for March grew +4.5% y/y missing Bloomberg expectations for a +6.0% increase while retail sales advanced +3.1% y/y, less than market expectations for +4.8% growth. C hinese house prices continued to fall in March, dropping - 2.7% from a year earlier and worse than a -1.9% drop in February, indicating that the nation’s property market is struggling to find a bottom. In addition, the PBoC unexpectedly weakened its yuan defense as it cut the yuan’s fixing by 49 pips to 7.1028 per dollar, its weakest level since March this year amid dollar strength.

In FX, the Japanese yen remains under pressure as it fell to its weakest level since June 1990 yesterday, crossing the 154 mark against the dollar despite repeated warnings from the government over potential currency market intervention. It's stable overnight however.

Looking back now at yesterday’s other data from the US, the Empire State manufacturing survey came in at -14.3 (vs. -5.2 expected), and there was also an upward move in the prices paid indicator, which rose to an 11-month high of 33.7. Otherwise, the NAHB’s housing market index remained at 51 in April, in line with expectations.

To the day ahead now, and central bank speakers include Fed Chair Powell, Fed Vice Chair Jefferson, the Fed’s Williams and Barkin, BoE Governor Bailey, the ECB’s Rehn, Villeroy and Vujcic, and Bank of Canada Governor Macklem. Data releases include US industrial production, capacity utilisation, housing starts and building permits for March, Canada’s CPI for March, UK labour market data for March, and the German ZEW survey for April. Today’s earnings releases include Johnson & Johnson, Bank of America and Morgan Stanley. Finally, the IMF will be releasing their latest World Economic Outlook.

Tyler Durden Tue, 04/16/2024 - 09:16

NSA "Just Days Away From Taking Over The Internet" Warns Ed Snowden

Authored by Tom Mitchelhill via CoinTelegraph.com,

The United States National Security Agency (NSA) is only days away from “taking over the internet” with a massive expansion of its surveillance powers, according to NSA whistleblower Edward Snowden.

In an April 16 post to X, Snowden drew attention to a thread originally posted by Elizabeth Goitein — the co-director of the Liberty and National Security Program at the Brennan Center for Justice — that warned of a new bill that could see the U.S. government surveillance powers amplified to new levels.

Source: Edward Snowden

The bill in question reforms and extends a part of the Foreign Intelligence Surveillance Act (FISA) known as Section 702.

Currently, the NSA can force internet service providers such as Google and Verizon to hand over sensitive data concerning NSA targets.

However, Goitein claims that through an “innocuous change” to the definition of “electronic communications surveillance provider” in the FISA 702 bill, the U.S. government could go far beyond its current scope and force nearly every company and individual that provides any internet-related service to assist with NSA surveillance.

“That sweeps in an enormous range of U.S. businesses that provide wifi to their customers and therefore have access to equipment on which communications transit. Barber shops, laundromats, fitness centers, hardware stores, dentist’s offices.”

Additionally, the people forced to hand over data would be unable to discuss the information provided due to hefty gag order penalties and conditions outlined in the bill, added Goitein.

Source: Elizabeth Goitein

The bill initially received heavy pushback from privacy-conscious Republicans but passed through the U.S. House of Representatives on April 13.

Part of the pushback saw the bills’ proposed spying powers time-frame cut from five years to two years, as well as some minor amendments to the service providers included under the surveillance measures.

However, according to Goitein, the amendment did very little to reduce the scope of surveillance granted to the NSA.

In her view, the amendment could even see service providers such as cleaners, plumbers and IT service providers that have access to laptops and routers inside people’s homes be forced to provide information and serve as “surrogate spies,” claimed Goitein.

The bill has seen strong pushback from both sides of the political aisle, with several government representatives claiming the bill violates citizen’s constitutional rights.

Democratic Senator Ron Wyden described the bill as “terrifying” and said he would do everything in his power to prevent it from being passed through the Senate.

“This bill represents one of the most dramatic and terrifying expansions of government surveillance authority in history.”

Republican Congressperson Anna Paulina Luna, who voted against the bill in the House of Representatives, said Section 702 was an “irresponsible extension” of the NSA’s powers. Luna added that if government agencies wanted access to data, they must be forced to apply for a warrant.

The bill is slated for a vote on April 19 in the U.S. Senate.

Tyler Durden Tue, 04/16/2024 - 08:15

Morgan Stanley Shares Rebound On Strong Revenues

Morgan Stanley shares are quickly recovering from last week's mauling (after WSJ reported regulatory probes of how the bank handles wealth management clients “who are at risk of laundering money"), this morning after reporting Q1 wealth management and equities trading revenue that beat expectations.

Net revenue $15.14 billion, estimate $14.46 billion (Bloomberg Consensus)

• Wealth management net revenue $6.88 billion, estimate $6.69 billion (Net new assets in the division, a key metric tracked by Morgan Stanley watchers, were $95 billion, higher than the previous two quarters combined and in excess of what the bank needs to meet the target it has sought to grow the business).

• Equities sales & trading revenue $2.84 billion, estimate $2.65 billion (less than Goldman Sachs' $3.31 billion in the same period).

• FICC sales & trading revenue $2.49 billion, estimate $2.33 billion

• Institutional Investment Banking revenue $1.45 billion, estimate $1.34 billion

• Advisory revenue $461 million, -28% y/y, estimate $510.1 million, due, of course, to “lower completed M&A transactions.”

• Equity underwriting rev. $430 million vs. $202 million y/y, estimate $326.3 million

• Fixed Income Underwriting revenue $556 million, +37% y/y, estimate $505.8 million

Under the hood, equity net revenues were up 4% from a year ago thanks to “solid results across business lines and regions, with notable strength in derivatives against a constructive market backdrop.”

On the flip side, fixed income’s net revenues fell 4% from a year ago “on lower client activity in macro and credit, partially offset by higher revenues in commodities.”

But overall, traders liked what they saw, sending MS shares up around 3% in the pre-market...

Additionally the firm delivered what it calls "strong" ROTCE of 19.7%.

“In the first quarter of 2024 Morgan Stanley generated net revenues of $15 billion and earnings of $2.02 per share for a 20% return on tangible equity," said freshly appointed CEO Ted Pick.

"As a result of strong net new asset growth, the Firm has reached $7 trillion of client assets across Wealth and Investment Management. Institutional Securities also saw strength across the markets and underwriting businesses. The Morgan Stanley Integrated Firm model is delivering durable results.”

But, net interest income fell, “driven by changes in deposit mix,” though that was “partially offset by the impact of interest rates.”

As a reminder, the bank’s stock has been the worst performer among the biggest US banks so far this year after outpacing rivals through much of the previous decade.

Tyler Durden Tue, 04/16/2024 - 08:04

Central Banks Are Wrong About Rate-Cuts

Authored by Daniel Lacalle,

When we talk about monetary policy, people do not understand the importance of interest rates reflecting the reality of inflation and risk. Interest rates are the price of risk and manipulating them down leads to bubbles that end in financial crises, while imposing too high rates can penalize the economy. Ideally, interest rates would flow freely and there would be no central bank to fix them.

A price signal as important as interest rates or the amount of money would prevent the creation of bubbles and, above all, the disproportionate accumulation of risk. The risk of fixing rates too high does not exist when central banks impose reference rates, as they will always make it easier for state borrowing—artificial currency creation—in the most convenient—what they call “no distortions”—and cheap way.

Many analysts say that central banks do not impose interest rates; they only reflect what the market demands. Surprisingly, if that were the case, we wouldn’t have financial traders stuck to screens on a Thursday waiting to decipher what the rate decision is going to be. Moreover, if the central bank only responds to market demand, it is a good reason to let interest rates float freely.

Citizens perceive that raising interest rates with high inflation is harmful; however, they do not seem to understand that what was really destructive was having negative real and nominal interest rates. That’s what encourages economic agents to take far more risks than we can take and to disguise excess debt with a false sense of security. At the same time, it is surprising that citizens praise low rates but then complain that home prices and risky assets rise too fast.

Inflation is a huge advantage for the currency issuer. It blames everyone and everybody for the rise in prices, except for the only thing that makes aggregate prices go up, consolidate that increase, and continue to rise, even at a more moderate rate: printing much more currency than the private economy demands and setting rates well below the real risk levels.

The benefit of statism is that it puts the blame for high interest rates on banks, just as it blames supermarkets for consumer prices.

Who prints currency and disguises risk?

Of course, we look at the ECB and the Fed, who dictate the increase in money supply through repurchases and fixed interest rates. However, central banks do not buy back state assets, print money, or impose negative real interest rates because they are evil alchemists. They do so because the state’s deficit—which is artificial monetary creation—remains unsustainable, public debt is atrophied, and state solvency is worsened by imbalanced public accounts. The central bank is not responsible for implementing fiscal policy. Thus, the state is the one that prints money out of nowhere and passes the imbalance to the citizens through inflation and taxes.

Banks, in an open economy, do not create money out of nowhere; they lend to real projects that are expected to be repaid with interest, and those loans have collateral. If commercial banks created money out of nowhere, none of them would go bankrupt. They only create money out of nowhere when regulation imposes risk-disconnected rates and eliminates the need for capital to sustain the government by accumulating its bonds and loans under the false construction that they are “no-risk assets.” Thus, the castle of cards built under the disguise of public sector risk always creates inflation, financial crises, secular stagnation, and liquidity traps. The amount of money created goes to unproductive expenditure, destroys the purchasing power of the currency, impoverishes citizens, and at the same time decapitalizes the most fragile companies, SMEs (small and medium enterprises). That’s what they call the social use of money. Seriously.

The ECB has announced a possible interest rate cut in June that is in danger of being premature and wrong. First, because money supply, credit demand, and supply are rebounding, inflation remains persistent and above the 2% target. Furthermore, the underlying trend is a much higher inflation level than the ECB’s target, even after two changes in the CPI calculation. After a 20% accumulated consumer price level since 2019, calling victory on inflation after two changes in the calculation of CPI and still elevated core inflation is insane. If we see the rise in non-replaceable goods prices, we can understand why citizens are angry. Real non-replaceable goods’ CPI is probably closer to 4-5% per year.

The ECB rate hikes are signaled by many market participants as the cause of the euro zone’s stagnation, but curiously, no one mentions that the euro area was already experiencing massive stagnation due to negative interest rates. Besides, if you need to have real negative rates to “grow,” you’re not growing but accumulating toxic risk. The ECB knows that the base effect, which played in favor of year-on-year inflation in 2023, will not be supportive in 2024. They also know that monetary aggregates were down a few months ago but are rebounding, and that the supply of credit has not collapsed. The ECB, like the Federal Reserve, knows that inflation is a monetary phenomenon and that there is no cost-push inflation, “greedflation,” or similar statist excuses. None of those factors can cause aggregate prices to soar, consolidate, or continue to rise; it is only the destruction of the currency’s purchasing power that causes inflation.

Of course, no central bank will acknowledge that inflation is its fault, among other things, because no central bank increases the money supply at will but to finance an unsustainable public deficit. However, no central bank will challenge a financial structure that is based on the myth that public debt is risk-free. Central banks know that inflation is a monetary phenomenon, which is why they attack rising consumer prices with rate hikes and money supply reductions. They just do it mildly because governments benefit from inflation.

The problem of lowering interest rates now, when there is no evidence of having controlled inflation and achieved a target that already erodes the purchasing power of the currency by 2% annually, is to fall into the narrative that the eurozone is in a poor economic situation because of monetary policy when it is due to the wrong fiscal policy, the disaster of the Next Generation EU Funds, whose failure is already only comparable to the forgotten Juncker Plan, a shortsighted and destructive energy, agricultural, and industrial policy, and a taxation system that shifts innovation and technology to other countries.

The ECB is aware that interest rates are not high and that the system’s money supply has not decreased as expected. In fact, it continues to repurchase outstanding bonds and will not carry out a significant reduction in its balance sheet in real terms until the end of the year. Lowering interest rates now includes the risk of depreciating the euro against the dollar and thus increasing the euro area’s import bill in real terms, reducing the inflow of reserves into the eurozone, and further encouraging public spending and government debt that has not been contained in countries like Italy and Spain, which boast of “growing” by massively increasing debt and where inflation, moreover, is not under control. All this reminds us of the mistakes of the past when Greece boasted to be the EU’s growth engine, and many said that Germany was Europe’s “sick member.”

The ECB cannot pretend to be the Bank of Japan for two reasons: the eurozone lacks the luxury of Japanese society’s dollar savings structure or its iron citizen discipline, and, above all, because the failure of Japan’s ultra-Keynesianism has brought the yen to a 35-year low against the dollar.

To those who say that the euro and the ECB are the problem, I recommend that you exercise your imagination of what Spain, Portugal, or Italy would be with their own currency and populist governments printing as if Argentina were Switzerland. You don’t have to imagine it; remember when these countries had an inflation rate of 14–15% and they destroyed savings and real wages with the falsehood of “competitive” devaluations? Not that long ago.

Don’t be fooled. The eurozone is not weak due to monetary policy. The eurozone is weak even with monetary policy.

Tyler Durden Tue, 04/16/2024 - 07:20

These Are The Largest US Corporations By Number Of Employees

Revenue and profit are common measures for measuring the size of a business, but what about employee headcount?

To see how big companies have become from a human perspective, Visual Capitalist's Marcus Lu visualized the top U.S. companies by employees. These figures come from companiesmarketcap.com, and were accessed in March 2024. Note that this ranking includes publicly-traded companies only.

Data and Highlights

The data we used to create this list of largest U.S. corporations by number of employees can be found in the table below.

Retail and Logistics Top the List

Companies like Walmart, Target, and Kroger have a massive headcount due to having many locations spread across the country, which require everything from cashiers to IT professionals.

Moving goods around the world is also highly labor intensive, explaining why UPS has half a million employees globally.

Below the Radar?

Two companies that rank among the largest U.S. corporations by employees which may be less familiar to the public include Concentrix and Cognizant. Both of these companies are B2B brands, meaning they primarily work with other companies rather than consumers. This contrasts with brands like Amazon or Home Depot, which are much more visible among average consumers.

A Note on Berkshire Hathaway

Warren Buffett’s company doesn’t directly employ 383,000 people. This headcount actually includes the employees of the firm’s many subsidiaries, such as GEICO (insurance), Dairy Queen (retail), and Duracell (batteries).

If you’re curious to see how Buffett’s empire has grown over the years, check out this animated graphic that visualizes the growth of Berkshire Hathaway’s portfolio from 1994 to 2022.

Tyler Durden Tue, 04/16/2024 - 06:55

Transport Minister Threatens Germans With "Indefinite Weekend Driving Ban" To Meet Mandated Emissions Targets

Via Eugyppius.com,

This story has even made it into the Anglophone press, so you know it’s a big deal: “German transport minister warns of weekend driving ban,” says The Telegraph. “German minister threatens ‘indefinite driving bans’ on weekends,” proclaims Politico. “German transport minister under fire for weekend driving ban threat,” declares Reuters.

Volker Wissing does not really want to ban driving.

But no, despite the headlines, they are not going to take away our cars.

Amazingly, not even the Greens want to do that. For once the story is not about German authoritarianism, or woke insanity or anything like that.

Rather, it’s about how nobody can really bring himself to care about the climate anymore – not even our forward-thinking, progressively minded, environmentally responsible political establishment.

For the backstory, we must go all the way back to the pre-Covid era, when aggressive climate legislation was popular even with centre-right CDU voters, and before the electorate had a taste of what Green policies like the draconian home heating ordinances really feel like on the ground.

Back in those halcyon days, when the child saint Greta Thunberg was cutting class to save the earth, Angela Merkel’s government passed the Climate Protection Act. The law mandates a 65% reduction in CO2 emissions compared to 1990 levels by 2030, an 88% reduction by 2040, and an utterly unrealisable carbon neutrality by 2045. In the near term, the Climate Protection Act also establishes maximum annual emissions levels for various economic sectors. Should a given sector exceed its maximum, the responsible Ministry must submit an ominous “action programme” to bring things back on target.

The Climate Protection Act is archetypal climate nonsense. Politicians like to take credit for Doing Something about the climate, but because Doing Something amounts to massive economic restrictions and drastic interventions in daily life, they would prefer not to Do that Something themselves. Far better is to pass legislation committing future governments to Do Something and let them deal with the mess. Then you can reap the short-term rewards of being tough on carbon emissions, without bearing direct responsibility for all the chaos that actually being tough on carbon emissions would unleash. Alas, time marches forwards at a steady pace. I am sure that 2030 sounded like an unimaginably distant date when it was floated at the Paris Accords in 2015, but now it is a mere six years away. That is becoming a big, big problem for the climatists.

You could say that Merkel’s Climate Protection Act bequeathed the hapless Scholz government a small collection of ticking time bombs, which they’ve developed a considerable interest in defusing. One way to do this, is to revise the Climate Protection Act and remove its strict sector-based emissions limits before anybody is forced to field a climate-saving “action programme.” In the meantime, they’ve been studiously ignoring the requirements, which is why our Minister of Economic Destruction Robert Habeck could be found complaining back in June that no cabinet ministers were complying with Climate Protection Act emissions limits.

The fly in the ointment is the Green Party, who are as crazy as their oblivious out-of-touch upper middle-class urbanite constituents, and who have thought it best to block government efforts to (however temporarily) defang Merkel’s odious law.

In a fit of frustration, the liberal Transport Minister Volker Wissing therefore warned that if no Climate Protection Act reforms were possible, he might be forced to impose “drastic interventions” on motorists:

In the dispute over a reform of the Climate Protection Act, Federal Transport Minister Volker Wissing (FDP) has warned of drastic cuts for motorists – including weekend driving bans. This is according to a letter from Wissing to the heads of the SPD, Green and FDP parliamentary factions. It was made available to the Deutsche Presse-Agentur on Thursday …

The letter states that if the amended Climate Protection Act does not come into force before 15 July, the ministry will be obliged under the current law to present an action programme to ensure compliance with the annual emission levels for the transport sector in the coming years.

And just like that, the climatists are falling all over themselves to reassure Germans that no, don’t worry, driving is fine, nobody wants to take away your cars:

The Federal Environmental Agency believes [driving bans are] unnecessary. “Of course we don’t need driving bans. Nobody is even discussing such a ban; this is frightening people for no reason,” said [Green-affiliated] President Dirk Messner. Instead, he once again suggested a general speed limit on German motorways …

There is more, there is always more:

The SPD also criticised the proposal: “Scaremongering with far-fetched proposals won’t help climate protection in the transport sector at all, quite the contrary,” SPD Bundestag faction leader Detlef Müller said … “The proposal does not further our common goal of reducing CO2 emissions, but to unnecessary uncertainty for people in our country.” The SPD Bundestag faction clearly rejects driving bans for cars and lorries. Such manoeuvres would hardly advance the ongoing deliberations on the Climate Protection Act in the Bundestag, said Müller.

I like this paragraph so much that I’ve read it five times.

It’s just so entertaining to read some right-thinking lunatic like Müller insisting up and down that literally banning driving “does not further our common goal of reducing CO2 emissions.”

Along with the Green Party and Greenpeace, the environmental organisation BUND has also criticised Wissing’s statements on the threat of driving bans. BUND transport expert Jens Hilgenberg said:

“It fits the picture that this minister, of all people, who blocks every measure, no matter how easy to implement, such as a speed limit on motorways, is now playing on people’s fears.”

He is only doing so to further increase the pressure on the coalition partners, Hilgenberg says. “This is a shabby tactic.”

We must add avoiding political suicide to the long and growing list of things – from the rights of Palestinians to the threat posed by “disinformation” to third-world poverty – that are more important than climate change. This is becoming a very long list indeed.

So what are the solutions, if we’re not going to ban driving on weekends, and the Greens insist on blocking reforms to the Climate Protection Act? Well, aside from the speed limit, which has the same attraction for the left in Germany as banning guns does for the left in the United States (and about equal chances of achieving any of the stated goals), the experts have nothing but the same tired nostrums: We need more public transit! We need more electromobility! We need more expansions to the electric vehicle charging networks! The problem is not only that none of this amounts to an “action programme” to sink vehicle emissions posthaste; it is also that there is no money for any of this. Electric vehicle subsidies have been withdrawn since the courts blew a 60 billion dollar hole in the government’s budget. Far from expanding public transit, we’re fighting to maintain the decaying rail network we already have. And nobody believes that more charging stations will save the planet.

This is late-stage climatism and it will linger for a long time.

There await years if not decades of haggling over the ambitious goals set by past governments, years of fig leafs and excuses, years of relaxing restrictions in elaborate ways so we can pretend we’re still doing something.

It is going to be very tedious, but also, I suspect, occasionally entertaining.

Tyler Durden Tue, 04/16/2024 - 06:30

The Best And Worst Countries For LGBTQ+ Travelers

In order to help LGBTQ+ tourists travel safely, the German portal Spartacus started publishing the Gay Travel Index in 2012. In the 2024 edition, the ranking compared 213 countries and territories based on the situation of lesbian, gay, bisexual, transgender, intersex and queer people in each location.

As Statista's Anna Fleck reports, according to the index, last year’s leading destination Malta is joined at the top by Spain, Canada, New Zealand and Portugal as the safest and most open places for LGBT+ travelers in 2024, with each of these five countries receiving 12 points.

You will find more infographics at Statista

According to the report, Estonia made the greatest improvements in the past year, obtaining 6 points (in contrast to the previous index’s 2 points). This was thanks to the approval of the law in 2023 to legalize equal marriage. The first Latin American country to appear in the 2024 ranking is Uruguay, sharing the third position along with Denmark, Iceland, Germany and Norway, with 10 points each.

At the other end of the spectrum come Saudi Arabia, Iran, the Republic of Chechnya in Russia and Afghanistan, all with a score of -21 points, signaling that they are dangerous countries for LGBT+ travelers, where homosexuals are persecuted and killed. Russia too features far down this list (-17 points), having once again “significantly tightened its anti-LGBT+ legislation and equates the movement with extremist organizations."

To develop the index, the creators looked at 18 categories ranging from marriage for all to the death penalty for LGBTQ+ people. The creators focus on political decisions affecting queer people, the legal framework and whether there are episodes of violence against them, among other parameters.

According to the authors of the report, the index is intended with all kinds of travelers in mind, including those looking to travel to countries where the LGBT+ community is an accepted and loved part of society as well as for those consciously looking to travel to a country in order to enter into a dialogue with the oppressed local queer community.

Tyler Durden Tue, 04/16/2024 - 05:45

US Says Over 90 Missiles & Drones Were Launched From Yemen In Past 48 Hours

New statements from the Pentagon issued Monday have said the Houthis fired over 90 ballistic missiles and drones - most of which were intercepted by US and allied forces over the past 48 hours, once the Iranian attack kicked off in the overnight hours of Saturday.

US Central Command described that at one point during the attack the Houthis fired an anti-ship ballistic missile directly against US Navy and commercial ships in the Gulf of Aden. "There were no injuries or damage reported by US, coalition, or commercial ships," CENTCOM said.

Getty Images

Of the 90 total projectiles fired, the CENTCOM says its forces intercepted over 80 drones and at least six ballistic missiles total.

"Iran’s continued unprecedented, malign, and reckless behavior endangers regional stability and the safety of US and coalition forces," CENTCOM said the the statement.

"CENTCOM remains postured to support Israel’s defense against these dangerous actions by Iran. We will continue to work with all our regional partners to increase regional security," it added.

The Houthis are expected to launch another phase of intense attacks in the scenario that Israel hits back at Iran. On Monday Israel's leadership in the war cabinet appears to have greenlighted such a retaliation attack.

On Monday it has also been coming to light to huge degree to which the US and Western allies were key in helping Israel repel the Iranian attack. According to The Wall Street Journal:

Saturday’s Iranian strike on Israel was huge by any standard. Tehran launched more than 170 explosive-laden drones, around 120 ballistic missiles and about 30 cruise missiles, according to Israel. The damage could have been catastrophic. As it turned out, almost all were intercepted.

That success was due to a combination of Israel’s sophisticated air-defense system and critical assistance provided by the U.S. and other Western and Arab partners. American, British and Jordanian warplanes played an especially important role in downing drones. Most of the Iranian drones and missiles were destroyed before they even reached Israeli airspace.

At this point the Middle East is bracing for a potential bigger Israel-Iran war which would likely spread to include Syria, Hezbollah in Lebanon, and the Houthis in Yemen.

This is why the US and European leaders are busy urging restraint for Israel. A bigger war would also send the price of oil soaring, worsening Biden's reelection chances.

Tyler Durden Tue, 04/16/2024 - 02:45

Security Ramped-Up In Germany After Jihadists Threaten Drone Strikes At Euro 2024

Authored by Thomas Brooke via ReMix News,

An offshoot terror cell affiliated with Islamic State has published propaganda encouraging jihadists to target German football stadiums during this summer’s European Championships.

In the latest issue of the “Voice of Khorasan” magazine, a publication run by ISKP, or Islamic State — Khorasan Province, the terror organization called for jihad at Europe’s flagship football tournament, which runs for a month in Germany from June 14 until July 14.

Against a backdrop of an explosive drone flying across a football stadium, the publication used the headline, “If they restrict and oppress you on the ground, then attack them from the sky.”

“Run over the infidels with your car, hit them with a knife, with poison, or blow out their brains with bullets and set fire to their houses,” it further wrote.

German security services are understood to be treating the message as a credible threat. They are ramping up surveillance and implementing measures to combat any attempts to use drone strikes against stadiums hosting the event, which is expected to be attended by hundreds of thousands of football fans from across Europe.

The threat is the latest in a long line of menacing imagery published by terror cells to inflict fear across the continent.

Earlier this month, images circulated online of jihadists vowing to target the UEFA Champions League quarter-final games, prompting the authorities to bolster defenses at stadiums across Western Europe.

“The main question is whether these are free riders or a serious threat,” a high-ranking state security officer told Focus.

Authorities, however, are unwilling to take a risk on security and will treat the threat as credible.

“It is to be feared that other terrorist organizations such as Al Qaeda will also use their PR channels to agitate for an attack offensive in Europe and Germany,” the source added.

The Afghan splinter group of Islamic State has grown in stature in recent months to become the primary organization of concern for security officials across Europe.

A major counter-terror operation took place in the German city of Cologne before Christmas after security services in Austria, Germany, and Spain received intelligence of jihadists affiliated with the group planning to carry out several attacks at Christian landmarks including Cologne Cathedral.

Last month, two Afghan nationals with ties to the U.N.-proscribed terror cell were arrested in Germany on suspicion of planning a terror attack near the Swedish parliament to avenge the permittance of Koran-burning demonstrations in the country.

Several individuals are understood to have exploited the migratory route from Ukraine to enter the European Union to plan attacks, with Tajikistan and Turkmenistan nationals arrested in Germany in July last year having entered Western Europe from the war-torn country.

Authorities in neighboring France are also concerned about the threat of terror attacks during Paris’ hosting of the summer Olympic Games this year, and its organizers have devised a “Plan B” in case terror threats jeopardize the event’s opening ceremony.

“There is no terrorist threat to the Olympics and Paralympics today, but we will continue to monitor the situation,” Oudéa-Castéra told France 2 earlier this month.

“Just because we don’t talk about it, just because we don’t mention Plan B, doesn’t mean that it doesn’t exist.”

The terror alert level in France remains at the highest possible due to concerns over Islamic radicals and fears of retaliation against the West because of the war in Israel.

Read more here...

Tyler Durden Tue, 04/16/2024 - 02:00

The WHO's Road To Totalitarianism

Authored by Bert Olivier via The Brownstone Institute,

Several articles on the proposed amendments to the World Health Organization’s (WHO) international health regulations have appeared here on Brownstone, such as this excellent introduction. Consequently, there is no need to repeat this information in a similar format. What I would like to do instead is to pursue the question, what the implications would be for people worldwide if this organisation were to be successful in getting the representatives of member countries to accept the proposed amendments. More specifically, what are the likely consequences in terms of the concept and practice of totalitarianism?

To understand this, one has to get to grips with the mode of rule called totalitarian government, of course, but I doubt whether most people have an adequate grasp of full-fledged totalitarian rule, despite recently experiencing it to a certain degree under “pandemic” conditions. Should the amendments proposed by the WHO be accepted in May, the citizens of the world would be subjected to unadulterated totalitarianism, however, so it is worthwhile exploring the full implications of this “anonymous” mode of governance here.

This is done in the hope that, if representatives of the people—which is what they are supposed to be—in legislative bodies around the world were to read this article, as well as others related to the same topic, they would think twice before supporting a motion or bill which would, in effect, grant the WHO the right to usurp the sovereignty of member nations. The recent developments in the state of Louisiana in the United States, which amount to the rejection of the WHO’s authority, should be an inspiration to other states and countries to follow its example. This is the way to beat the WHO’s mendacious “pandemic treaty.”

On her website, called Freedom Research, Dr. Meryl Nass has described the WHO’s notion of “pandemic preparedness” as a “scam/boondoggle/Trojan horse,” which aims (among other things) to transfer billions of taxpayer dollars to the WHO as well as other industries, in order to vindicate censorship in the name of “public health,” and perhaps most importantly, to transfer sovereignty regarding decision-making for “public health” globally to the Director-General of the WHO (which means that legally, member countries would lose their sovereignty).

In addition, she highlights the fact that the WHO intends to use the idea of “One Health” to subsume all living beings, ecosystems, as well as climate change under its own “authority”; further, to acquire more pathogens for wide distribution, in this way exacerbating the possibility of pandemics while obscuring their origin, and in the event of such pandemics occurring, justifying the development of more (mandatory) “vaccines” and the mandating of vaccine passports (and of lockdowns) globally, thus increasing control (the key term here) over populations. Should its attempt at a global power grab succeed, the WHO would have the authority to impose any “medical” programme it deems necessary for “world health,” regardless of their efficacy and side-effects (including death).

In the preceding paragraph I italicised the word “control” as a key term. What should be added to it is the term “total”—that is, “total control.” This is the gist of totalitarian rule, and it should therefore be easy to see that what the WHO (together with the WEF and the U.N.) strives for is total or complete control of all people’s lives.

No one has analysed and elaborated on totalitarianism from this perspective more thoroughly than the German-born, American philosopher, Hannah Arendt, and her monumental study of this phenomenon—“The Origins of Totalitarianism” (1951 and in enlarged format, 1958) still stands as the authoritative source for the understanding of its historical manifestations. The latter, focused on by Arendt, are 20th-century Nazism and Stalinism, but it is not difficult to perceive its lineaments in what we have been living through since 2020—although a strong case could be made that 2001 marked its identifiable beginning, when (in the wake of 9/11) the Patriot Act was passed, arguably laying the authoritarian groundwork for totalitarian rule as clearly perceived by Henry Giroux.

Arendt (p. 274 of the Harvest, Harcourt edition of “The Origins of Totalitarianism,” 1976) singles out “total terror” as the essence of totalitarian government, and elaborates as follows:

“By pressing men against each other, total terror destroys the space between them; compared to the condition within its iron band, even the desert of tyranny [which she distinguishes from totalitarianism; B.O.], insofar as it is still some kind of space, appears like a guarantee of freedom. Totalitarian government does not just curtail liberties or abolish essential freedoms; nor does it, at least to our limited knowledge, succeed in eradicating the love for freedom from the hearts of man. It destroys the one essential prerequisite of all freedom which is simply the capacity of motion which cannot exist without space.”

Reading this evocative characterisation of totalitarianism in terms of “total terror” makes one realise anew, with a start, how fiendishly clever the perpetrators of the so-called “pandemic” emergency were—which was no real pandemic, of course, as the German government recently admitted. It was the thin edge of the wedge, as it were, to insinuate “total terror” into our lives by means of curtailing our access to free movement in space. “Lockdowns” are the signature tool for implementing restrictions of free movements in space.

It may not, on the face of it, appear to be the same as, or similar to, the incarceration of prisoners in the concentration camps under Nazi rule, but arguably the psychological effects of lockdowns approximate those experienced by inmates of these notorious camps in the 1940s. After all, if you are not allowed to leave your house, except to go to the shop to buy food and other essentials before you hurry back home—where you dutifully sanitise all the items you bought (a concrete reminder that venturing out in space is “potentially lethal”)—the imperative is the same: “You are not allowed out of this enclosure, except under specified conditions.” It is understandable that the imposition of such strict spatial boundaries engenders a pervasive sense of fear, which eventually morphs into terror.

Small wonder the pseudo-authorities promoted—if not “commanded”—“working (and studying) from home,” leaving millions of people cloistered in their houses in front of their computer screens (Plato’s cave wall). And banning meetings in public, except for a few concessions as far as the numbers of attendees at certain gatherings were concerned, was just as effective regarding the intensification of terror. Most people would not dare transgress these spatial restrictions, given the effectiveness of the campaign, to instil a dread of the supposedly lethal “novel coronavirus” in populations, exacerbating “total terror” in the process. The images of patients in hospitals, attached to ventilators, and sometimes looking appealingly, desperately at the camera, only served to exacerbate this feeling of dread.

With the advent of the much-hyped COVID pseudo-“vaccines,” another aspect of generating terror among the populace manifested itself in the guise of relentless censorship of all dissenting views and opinions on the “efficacy and safety” of these, as well as on the comparable effectiveness of early treatment of COVID by means of proven remedies such as Hydroxychloroquine and Ivermectin. The clear aim of this was to discredit contrarians who raised doubts over the official valorisation of these supposedly miraculous cures for the disease, and to isolate them from the mainstream as “conspiracy theorists.”

Arendt’s insight into the indispensable function of space for human movement also casts the WEF’s plans to create “15-minute cities” worldwide in a disturbing new light. These have been described as “open-air concentration camps,” which would eventually become a reality by prohibiting movement outside of these demarcated areas, after an initial period of selling the idea as a way of combating climate change by walking and cycling instead of using carbon-emitting motor cars. The WEF and WHO’s “concern” with climate change as a putative threat to global health offers further justification for these planned variations on prisons for the thinly disguised incarceration of millions of people.

The pertinence of Arendt’s thinking on totalitarianism for the present does not end here, though. Just as relevant as the manner in which it cultivates terror is her identification of loneliness and isolation as prerequisites for total domination. She describes isolation—in the political sphere—as “pre-totalitarian.” It is typical of the tyrannical governments of dictators (which are pre-totalitarian), where it functions to prevent citizens from wielding some power by acting together.

Loneliness is the counterpart of isolation in the social sphere; the two are not identical, and the one can be the case without the other. One can be isolated or kept apart from others without being lonely; the latter only sets in when one feels abandoned by all other human beings. Terror, Arendt sagely observes, can “rule absolutely” only over people who have been “isolated against each other” (Arendt 1975, pp. 289–290). It therefore stands to reason that, to achieve the triumph of totalitarian rule, those promoting its inception would create the circumstances where individuals feel increasingly isolated as well as lonely.

It is superfluous to remind anyone of the systematic inculcation of both of these conditions in the course of the “pandemic” through what has been discussed above, particularly lockdowns, the restriction of social contact at all levels, and through censorship, which—as remarked above—was clearly intended to isolate dissenting individuals. And those who were isolated in this way, were often—if not usually—abandoned by their family and friends, with the consequence that loneliness could, and sometimes did, follow. In other words, the tyrannical imposition of COVID regulations served the (probably intended) purpose of preparing the ground for totalitarian rule by creating the conditions for isolation and loneliness to become pervasive.

How does totalitarian government differ from tyranny and authoritarianism, where one may still discern the figures of the despot, and the sway of some abstract ideal, respectively? Arendt writes that (p. 271–272):

“If lawfulness is the essence of non-tyrannical government and lawlessness is the essence of tyranny, then terror is the essence of totalitarian domination.

“Terror is the realization of the law of movement; its chief aim is to make it possible for the force of nature or of history to race freely through mankind, unhindered by any spontaneous human action. As such, terror seeks to ‘stabilize’ men in order to liberate the forces of nature or history. It is this movement which singles out the foes of mankind against whom terror is let loose, and no free action of either opposition or sympathy can be permitted to interfere with the elimination of the ‘objective enemy’ of History or Nature, of the class or the race. Guilt and innocence become senseless notions; ‘guilty’ is he who stands in the way of the natural or historical process which has passed judgement over ‘inferior races,’ over individuals ‘unfit to live,’ over ‘dying classes and decadent peoples.’ Terror executes these judgements, and before its court, all concerned are subjectively innocent: the murdered because they did nothing against the system, and the murderers because they do not really murder but execute a death sentence pronounced by some higher tribunal. The rulers themselves do not claim to be just or wise, but only to execute historical or natural laws; they do not apply [positive] laws, but execute a movement in accordance with its inherent law. Terror is lawfulness, if law is the law of the movement of some suprahuman force, Nature or History.”

The reference to nature and history as suprahuman forces pertains to what Arendt (p. 269) claims to have been the undergirding beliefs of National Socialism and Communism, respectively, in the laws of nature and of history as being independent, virtually primordial powers in themselves. Hence the justification of terror being inflicted on those who seem to stand in the way of the unfolding of these impersonal forces. When read carefully, the excerpt, above, paints a picture of totalitarian rule as something predicated on the neutralisation of people, as human beings, in society as potential agents or participants in its organisation or the direction in which it develops. The “rulers” are not rulers in the traditional sense; they are merely there to ensure that the suprahuman force in question is left unhindered to unfold as it “should.”

It takes no genius to perceive in Arendt’s perspicacious characterisation of totalitarian domination—which she relates to Nazism and Stalinism as its historical embodiments—a kind of template which applies to the emerging totalitarian character of what first manifested itself in 2020 as iatrocracy, under the subterfuge of a global health emergency—something well known to all of us today. Since then other features of this totalitarian movement have emerged, all of which cohere into what may be described, in ideological terms, as “transhumanism.”

This, too, fits into Arendt’s account of totalitarianism—not the transhumanist character, as such, of this latest incarnation of the attempt to harness humanity as a whole to a suprahuman power, but its ideological status. Just as the Nazi regime justified its operations by appealing to nature (in the guise of the vaunted superiority of the “Aryan race,” for example), so the group of technocratic globalists driving the (not so) “Great Reset” appeals to the idea of going “beyond humanity” to a supposed superior (non-natural) “species” instantiating a fusion between humans and machines—also anticipated, it seems, by the “singularity” artist called Stelarc. I emphasised “idea” because, as Arendt observes (p. 279–280),

“An ideology is quite literally what its name indicates: it is the logic of an idea. Its subject matter is history, to which the ‘idea’ is applied; the result of this application is not a body of statements about something that is, but the unfolding of a process which is in constant change. The ideology treats the course of events as though it followed the same ‘law’ as the logical exposition of its ‘idea.’”

Given the nature of an ideology, explicated above, it should be evident how this applies to the transhumanist ideology of the neo-fascist cabal: the idea underpinning the historical process has supposedly always been a kind of transhumanist teleology—allegedly the (previously hidden) telos or goal of all of history has constantly been the attainment of a state of surpassing mere Homo and Gyna sapiens sapiens (the doubly wise human man and woman) and actualising the “transhuman.” Is it at all surprising that they have claimed to have acquired god-like powers?

This further explains the unscrupulousness with which the transhumanist globalists can countenance the functioning and debilitating effects of “total terror” as identified by Arendt. “Total terror” here means the pervasive or totalising effects of, for example, installing encompassing systems of impersonal, largely AI-controlled surveillance, and communicating to people—at least initially—that it is for their own safety and security. The psychological consequences, however, amount to a subliminal awareness of the closure of “free space,” which is replaced by a sense of spatial confinement, and of there being “no way out.”

Against this backdrop, reflecting on the looming possibility that the WHO may succeed in getting compliant nations to accept the proposed amendments to their health regulations, yields greater insight into the concrete effects this would have. And these aren’t pretty, to say the least. In a nutshell, it means that this unelected organisation would have the authority to proclaim lockdowns and “medical (or health) emergencies,” as well as mandatory “vaccinations” at the whim of the WHO’s Director-General, reducing the freedom to traverse space freely to ironclad spatial confinement in one fell swoop. This is what “total terror” would mean. It is my fervent hope that something can still be done to avert this imminent nightmare.

Tyler Durden Mon, 04/15/2024 - 23:40