Futures Tumble On Disappointing JPM Earnings, Surging Geopolitical Risks

Futures are tumbling this morning, hit by disappointing earnings and outllook from the largest US bank, JPMorgan whose stock is down around 3% in a soggy launch to Q1 earnings season, while growing fears of an imminent conflict between Israel and Iran have sent oil surging and futures sliding. As of 8:45am, S&P futures are down 0.7%, at session lows with Nasdaq also dumping after reports China has asked its telecom carriers to start phasing out foreign chips. The drop comes as we see safe having flows move capital into TSYs with bond yields sliding up to 10bps this morning. That said, the USD is higher again with the euro and cable sliding sharply. Commodities are mixed: oil and gold rally amid Middle East tension; base metals are lower amid lower-than-expected China exports (-7.5% vs. -1.9% survey vs. 5.6% prior), while the gold explosion documented last night continues, with gold futures trading just above $2,400 and spot trading just below. Today, the main focus will be banks earnings (C, JPM, WFC). We will also receive Univ. of Mich. Sentiment data.

Bonds are bid also, 10Y -9bps...

In premarket trading, MegaCap tech are mostly lower: GOOG -45bp, TSLA -1.1%, while semis are lower amid headlines on China cutting American chip makers out of its telecoms systems (AMD -1.8%, INTC -1.7%, MU -94bp). Here are the most notable European movers:

• Applied Digital shares drop 11% after the data-center developer reported third-quarter adjusted diluted loss per share that was more than analysts had expected. The company also missed on revenue.
• Corteva shares slip 1.4% after a downgrade to neutral at JPMorgan, which says the agricultural products firm “has its work cut out” for it to reach its earnings guidance for 2024 amid falling crop chemicals prices.
• Coupang shares rise 4.4% after the e-commerce company said it would raise its monthly fee for “Wow” membership for new clients by 58%, starting on Saturday, according to emailed statement.
• DocuSign (DOCU US) shares gain 0.6% as UBS lifts its rating on the e-signature company to neutral from sell, with the stock now approaching fair value.
• Gitlab (GTLB US) shares climb after an upgrade to outperform at Raymond James, which sees the application software company ultimately exceeding $750 million in revenue for fiscal year 2025.
• Globe Life (GL US) shares are up 12%. The life insurance company said it intends to explore “all means of legal recourse against the parties responsible” after a short-seller report from Fuzzy Panda Research.
• Intel and AMD shares fall after the Wall Street Journal reported that China has asked its telecom carriers to start phasing out foreign chips.

The biggest highlight in premarket trading, however, was JPMorgan which dropped as much as 4.4% in premarket after its outlook for full-year net interest income missed expectations. Citigroup Inc. gained after its first-quarter profit topped estimates. Contracts for the S&P 500 fell 0.4%, while those on the Nasdaq 100 slid 0.5% after tech stocks jumped 1.7% Thursday. BlackRock rose in premarket after the world’s largest money manager reported a record $10.5 trillion in client assets. Wells Fargo shares retraced a slump after a miss on NII in its first-quarter report. State Street Corp. gained after its earnings beat estimates.

Separately, attention is also focused on the growing conflict between Iran and Israel where moments ago we got the following flashing red headline which hammered futures to session lows:

• *ISRAEL BRACING FOR POTENTIAL DIRECT ATTACK FROM IRAN IN DAYS

While there is nothing new there, we have heard that several times in the past few days, today the market is extra sensitive and it is sending oil surging, with WTI above $86 and Brent well into the $90.

European stocks were on course for their best day this month, with mining and energy shares leading gains amid a rally in oil and metals, however the gains have fizzled as geopol concerns emerge. The Stoxx 600 is up 0.6% after rising 1% earlier.

Earlier in the session, Asian equities slipped Friday with Hong Kong and South Korea leading the losses, as the region lacks positive momentum following a recent rebound. The MSCI Asia Pacific Index dropped as much as 0.2% in its third straight day of declines, the longest falling streak since early February. Chinese technology stocks including Alibaba and Tencent, as well as South Korea’s Samsung Electronics, were among the biggest contributors to the drop.Hong Kong markets underperformed, with the Hang Seng China Enterprises Index retreating after entering a so-called  technical bull market earlier this week. Sentiment has turned cautious after Chinese price data released Thursday underscored deflationary pressures, putting a dampener on budding optimism that the economy is recovering.    

In FX, the Bloomberg Dollar Index rises 0.4% while the euro sank to the weakest level against the dollar in five months as prospects grow that the European Central Bank will start cutting rates in June, well before the Federal Reserve can begin easing because of stubborn US inflation. Markets are pricing three rate cuts in the euro zone this year and fewer than two by the Fed. The Swedish krona is the worst performer among the G-10 currencies, falling 0.8% versus the greenback after CPI rose less than expected in March.

Treasuries rise after a steep two-day fall, with US 10-year yields dropping 8bps to 4.50% after surging 22 basis points in the previous two sessions. Data Thursday showed US producer prices in March increased less than forecast, sparking relief after consumer-price growth exceeded forecasts the previous day. German 10-year yields fall 9bps after ECB’s Stournaras said it is time for the ECB to diverge from the Fed.  The 10-year Treasury yield dropped seven basis points. Strategists at Bank of America Corp. said a rare rally in both tech stocks and commodities, combined with a jump in bond yields, has echoes of periods when bubbles are forming. The unusual price moves are consistent with bets that interest rates will stay higher for longer while economic growth remains strong — a so-called no-landing scenario.

While that narrative is “correctly in vogue,” there’s also a risk of higher inflation and an increased cost of capital, the strategists led by Michael Hartnett wrote. The price action is “typical of bubbly markets,” according to Hartnett, who makes a comparison with the pre-tech bubble period of 1999.

In commodities, WTI rises 2% to trade near $87 a barrel; spot gold rises 0.9% having earlier topped $2,400/oz for the first time while copper rises 2.3% to the highest since June 2022. Iron ore headed for its best week in two years on speculation that China’s economy may be on the mend, buoying the outlook for demand. A rally in industrial metals strengthened, with zinc rising to a one-year high on increased risks to supply.

To the day ahead now, and the Bank of England will release the Bernanke review on forecasting. Central bank speakers include the BoE’s Greene, the ECB’s Elderson, and the Fed’s Collins, Schmid, Bostic and Daly. Data releases include the UK GDP reading for February, and in the US there’s the University of Michigan’s preliminary consumer sentiment index for April. Finally, earnings releases include JPMorgan, Citigroup, Wells Fargo and BlackRock.

Market Snapshot

• S&P 500 futures down 0.7% at 5,207
• STOXX Europe 600 up 1.2% to 510.39
• MXAP down 0.5% to 175.54
• MXAPJ down 1.0% to 536.11
• Nikkei up 0.2% to 39,523.55
• Topix up 0.5% to 2,759.64
• Hang Seng Index down 2.2% to 16,721.69
• Shanghai Composite down 0.5% to 3,019.47
• Sensex down 0.9% to 74,399.41
• Australia S&P/ASX 200 down 0.3% to 7,788.08
• Kospi down 0.9% to 2,681.82
• Brent Futures up 1.2% to $91.36/bbl
• Gold spot up 1.0% to $2,396.87
• US Dollar Index up 0.35% to 105.65
• German 10Y yield little changed at 2.38%
• Euro down 0.4% to $1.0678

Top Overnight News

• China posts weak trade numbers for Mar, with exports slumping 7.5% Y/Y (vs. the Street -1.9%) while imports dip 1.9% (vs. the Street +1%). RTRS
• China’s push to replace foreign technology is now focused on cutting American chip makers out of the country’s telecoms systems. Officials earlier this year directed the nation’s largest telecom carriers to phase out foreign processors that are core to their networks by 2027, a move that would hit American chip giants Intel and Advanced Micro Devices. WSJ
• Japan’s finance minister reiterated his readiness to act on excessive FX moves as the yen held near a 34-year low. Intervention will probably happen outside Tokyo trading hours to weed out overseas speculators. BBG
• Israel is preparing for a direct attack from Iran on southern or northern Israel as soon as Friday or Saturday, according to a person familiar with the matter. A person briefed by the Iranian leadership, however, said that while plans to attack are being discussed, no final decision has been made. WSJ
• The IEA trimmed its forecast for 2024 oil demand growth on Friday, citing lower than expected consumption in OECD countries and a slump in factory activity. The Paris-based energy watchdog lowered its growth outlook for this year by 130,000 barrels per day (bpd) to 1.2 million bpd, adding that the release of pent-up demand by top oil importer China after easing COVID-19 curbs had run its course. RTRS
• The US has proposed raising tens of billions of euros in debt for Ukraine secured against the future profits generated by Russian state assets that have been frozen by western countries. The G7 group of nations has been split on what to do with €260bn worth of Russian assets put on hold by the west since Moscow launched its full-scale invasion of Ukraine in February 2022. FT
• Big bank earnings kick off with net interest income in focus as fewer rate cuts are expected. JPMorgan is attracting most speculation over whether it will raise NII guidance — which analysts argue is conservative at $90 billion. Adjustments for Wells Fargo and Citi will also be scrutinized. BBG
• Roaring equity markets and the popularity of a new spot bitcoin exchange traded fund powered BlackRock to record assets under management of $10.5tn and net income of $1.57bn that was up 36 per cent year on year. FT
• KKR, one of the pioneers of the $15tn private capital industry, is hastening plans to sell large investments or take them public after higher interest rates caused a two-year slowdown in takeovers and initial public offerings. FT
• Sweden’s underlying inflation rate fell more than expected in March, fueling expectations for the Riksbank to start cutting interest rates ahead of major peers next month. A closely followed measure that strips out energy costs and the effect of interest-rate changes increased 2.9% from a year ago, a 26-month low, according to a statement from Statistics Sweden. That was less than the 3.2% expected by economists surveyed by Bloomberg as well as the 3.3% that the Riksbank projected. BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed despite the gains on Wall St where softer-than-expected PPI eased some inflationary fears, while participants in the region were also cautious as they awaited the latest Chinese trade data. ASX 200 marginally declined as weakness in consumer-related sectors overshadowed the gains in gold miners. Nikkei 225 was underpinned on the back of a weaker currency and despite the selling pressure in Fast Retailing. Hang Seng and Shanghai Comp. were somewhat varied with underperformance in Hong Kong amid broad selling after the local benchmark index pulled back from the 17,000 level, while the mainland struggled for direction leading into the Chinese trade data.

Top Asian News

• US Senate Banking Committee Chair Brown urged for President Biden to permanently ban EVs produced by Chinese companies, according to a letter cited by Reuters.
• Japanese Finance Minister Suzuki said a weak yen has pros and cons, as well as noted that a weak yen could push up import prices and have a negative impact on consumers and firms. Suzuki reiterated that rapid FX moves are undesirable and that he is closely watching FX moves with a high sense of urgency, while he also repeated it is desirable for FX to move stably reflecting fundamentals and he won't rule out any steps to respond to disorderly FX moves.
• Bank of Korea kept its base rate unchanged at 3.50%, as expected, with the decision made unanimously, while it stated that it is premature to be confident that inflation will converge on the target level and it will maintain a restrictive policy stance for a sufficient period. BoK said it would monitor various factors including inflation slowdown, as well as financial stability and economic growth risks but noted the growth forecast is to be consistent with its earlier forecast or could be higher. BoK Governor Rhee said one in seven board members said the door for a rate cut should be open for the next three months and all 7 members said it is hard to predict policy decisions for H2. Furthermore, Rhee said the board is open to a rate cut if CPI slows in H2 although rate cuts might be difficult this year should inflation remain sticky and they have not signalled for a rate cut.
• Monetary Authority of Singapore maintained the width, centre and slope of the SGD NEER policy band, as expected. MAS said current monetary policy settings remain appropriate, while it added that the Singapore economy is expected to strengthen and that prospects for the Singapore economy should improve over the course of 2024.
• Chinese Cabinet issues guidelines to strengthen the supervision and prevent risks to promote development of its capital market; China to tighten supervision of stock market to control risks.
• Chinese Cabinet issues guidelines to strengthen the supervision and prevent risks to promote development of its capital market; China to tighten supervision of stock market to control risks.
• China March Trade (USD): Balance 58.55bln (exp. 70.2bln); Exports -7.5% Y/Y (exp. -2.3%); Imports -1.9% Y/Y (exp. -2.3%).
• China's Securities Regulator is proposing stricted differentiated regulatory requirements for high-frequency trading, plans to moderately increase requirements of operating income, net profit for Co's listed on Chinext.

European bourses, Stoxx600 (+1.1%), jumped higher at the open and continued to make session highs as the morning progressed, though upward momentum has slowed in recent trade as we await US bank earnings. European sectors are firmer across the board; Once again Basic Resources and Energy top the pile, lifted by gains in the commodities complex. Optimised Personal Care is found at the foot of the pile. US Equity Futures (ES U/C, NQ -0.1%, RTY U/C) are trading on either side of the unchanged mark, seemingly taking a breather following strong Stateside performance in the prior session; Intel (-1.8%) and AMD (-1.9%) pressured in the pre-market on China-related reports via the WSJ.

Top European News

• ECB's Kazaks says they will cut in June if nothing surprising occurs, via TV3; data will be clearer by then. Wage growth remains strong but inflation has decreased. The time for a cut is approaching.
• ECB's Stournaras says now is the time to diverge from the Fed; reiterates call for four rate cuts this year; there is a risk inflation will undershoot 2%.
• Riksbank's Breman says inflation has fallen from high levels but the risk of setbacks remains. Key factor is that household inflation expectations remain at a high level. Today's inflation figure shows we have a positive ground for inflation stabilising at 2%. Believe that household inflation expectations will also fall in the future as price increases slow; Co. pricing behaviour will be key.
• Goldman Sachs expects the ECB to cut rates four times this year in June, July, September & December

FX

• USD is stronger vs. most peers as Wednesday's CPI report has prompted a reassessment of the Fed's position vs. other major central banks in the easing cycle. Interim resistance comes via the 13th Nov high at 105.95 but broader focus is on a breach of 106 to the upside.
• EUR's descent vs. the Greenback has continued into today's session as emphasis on potential diverging Fed/ECB paths guides price action. EUR/USD hit a new YTD at 1.0676.
• GBP initially defended the 1.25 mark, before succumbing to the broader Dollar strength; An in-line UK GDP release has been vastly overshadowed by a broad reassessment of the relative BoE/Fed paths. GBP entered 2024 on the front foot amid expectations it would lag the Fed and ECB in cutting rates.
• JPY is holding up better than peers vs. the USD. Albeit, it has been a pretty painful week for the JPY following Wednesday's US CPI print which launched the pair from a 151 handle to 153+.
• Antipodeans are both softer vs. the USD to similar degrees amid light newsflow for both currencies. AUD/USD is below its 50 and 200DMAs at 0.6543 but holding above the weekly low at 0.6498.
• PBoC set USD/CNY mid-point at 7.0967 vs exp. 7.2365 (prev. 7.0968).

Fixed Income

• USTs off lows with newsflow light into a number of Fed speakers. USTs have bounced by around 10 ticks from today's 108-00+ base, but remain much closer to the week's trough of 107-27+ than the 109-26+ peak.
• Bunds are bid as markets digest the ECB's read-between-the-lines guidance towards a June cut with sources and ECB speakers since outlining this more explicitly, guidance which contrasts with hawkish Fed re-pricing. Bunds have been lifted back towards this week's 132.86 peak, currently 132.44, whilst the German 10yr yield sits comfortably below 2.40%.
• Gilts gapped higher by around 30 ticks given the above EGB action, and remained near session highs at around 97.87. A slightly stronger UK GDP print will give the BoE scope to continue to traverse the Table Mountain; Bernanke forecast review due shortly.

Commodities

• Crude is firmer on the session, given the heightened geopolitical environment and despite the firmer Dollar. Brent June trades within a USD 90.04-64/bbl parameter thus far.
• Precious metals are surging across the board despite the rise in the Dollar with the geopolitical landscape underpinning the havens ahead of weekend risk and a potential Iranian offensive against Israel; XAU tested USD 2,400/oz to the upside at fresh ATHs.
• Base metals are also soaring despite the stronger Dollar and downbeat headline Chinese trade data, with the internals revealing a Y/Y increase in copper imports.
• Shanghai Gold Exchange will raise margin requirements for some gold futures contracts to 9% from 8% effective from the settlement on April 15th and will raise daily trading limits for some gold futures contracts to 8% from 7%.
• MMG 's (1208 HK) Las Bambas copper mine in Peru and protestors reached a deal on lifting the road blockade near the mine, according to sources cited by Reuters.
• Japanese aluminium premiums for April-June shipments at USD 145-148/T, +61-64%, via Reuters citing sources.
• IEA OMR: World oil demand growth forecast -130k BPD to 1.2mln BPD; 2025 demand growth seen at 1.1mln due to sub-par economic outlook; China's 2023 post-COVID release of pent-up demand has effectively run its course. Sustained output curbs by the OPEC+ alliance mean that non-OPEC+ producers, led by the Americas, will continue to drive world oil supply growth through 2025. Robust production from non-OPEC+ coupled with a projected slowdown in demand growth will lower the call on OPEC+ crude by roughly 300 kb/d in 2025.

Geopolitics: Middle East

• "The (Israeli) army and the Mossad approved plans to target the heart of Iran if Israel (is) bombed from inside Iranian territory", via Al Jazeera citing Yedioth Ahronoth.
• Hamas sources: "The organization's leadership informed the mediators that it is not interested in further discussions about the deal, as long as there is no progress in its demands...", according to journalist Kais citing Hezbollah-affiliated press.
• "US official to Al-Arabiya: We will participate in the response if Iran escalates with an appropriate response", according to Al Arabiya
• Israel is prepared for an Iranian strike from its territory in the next 48 hours, according to WSJ. Israeli army said Iran is preparing its proxies in the region to attack them, according to Al Arabiya.
• Israeli Defence Minister Gallant told US Defense Secretary Austin that a direct Iranian attack on Israeli territory would compel Israel to respond in an appropriate way against Iran, according to Axios.
• Iran reportedly signalled to Washington it will respond to Israel's attack on its Syrian embassy in a way that aims to avoid major escalation and it will not act hastily, according to Reuters citing Iranian sources. Furthermore, a source familiar with US intelligence was not aware of the message conveyed but said Iran has been very clear its response would be controlled and non-escalatory, and planned to use regional proxies to launch a number of attacks on Israel.
• US President Biden's administration officials judge that Iran is planning a larger-than-usual aerial attack on Israel in the coming days which will likely feature a mix of missiles and drone strikes, according to two US officials cited by Politico.
• US official said the US expects an attack by Iran against Israel which they think will be calibrated to be bigger than usual but not so big it would draw the US into war, while US officials have also been in touch with regional partners to discuss efforts to manage and ultimately reduce further risks of escalation.
• US said it had restricted its employees in Israel and their family members from personal travel outside the greater Tel Aviv, Jerusalem and Be'er Sheva areas amid Iran's threats of retaliation against Israel.
• US State Department senior official said a robust conversation with Iraq is likely to lead to a second US-Iraq joint security cooperation dialogue later this year.

Geopolitics: Other

• US President Biden warned that any attack on Philippine vessels in the South China Sea would invoke their mutual defence treaty.
• China's top legislator Zhao Leji and North Korean counterpart discussed promoting exchange and cooperation in all fields, according to KCNA.
• Four drones shot down overnight near Russia's Novoshakhtinsk in a town in near proximity to an oil refinery

US Event Calendar

• 08:30: March Import Price Index MoM, est. 0.3%, prior 0.3%
• 08:30: March Import Price Index ex Petroleu, est. 0.1%, prior 0.2%
• 08:30: March Import Price Index YoY, est. 0.3%, prior -0.8%
• 08:30: March Export Price Index YoY, est. -1.2%, prior -1.8%
• 08:30: March Export Price Index MoM, est. 0.3%, prior 0.8%
• 10:00: April U. of Mich. 5-10 Yr Inflation, est. 2.8%, prior 2.8%
• 10:00: April U. of Mich. Expectations, est. 78.0, prior 77.4
• 10:00: April U. of Mich. Current Conditions, est. 81.3, prior 82.5
• 10:00: April U. of Mich. 1 Yr Inflation, est. 2.9%, prior 2.9%
• 10:00: April U. of Mich. Sentiment, est. 79.0, prior 79.4

Central Bank Speakers

• 09:00: Fed’s Collins Appears on Bloomberg TV
• 13:00: Fed’s Schmid Gives Speech on Economic Outlook
• 14:30: Fed’s Bostic Gives Speech on Housing
• 15:30: Fed’s Daly Participates in Fireside Chat

DB's Jim Reid concludes the overnight wrap

It’s been a volatile 24 hours in markets, with bonds continuing to struggle thanks to concerns about inflation, whilst equities saw a tech-led rebound that meant the NASDAQ (+1.68%) closed at an all-time high. To be fair, front-end yields did stabilise after Wednesday’s dramatic selloff, as the US PPI release was softer than many feared, and the ECB added to the signals that they might cut rates at the next meeting. But ultimately, the big picture is that inflation is still proving more resilient than expected, whilst the chance of a Fed rate cut in H1 is seen as increasingly remote. Alongside that, several geopolitical concerns remain in the background, and gold prices (+1.65%) closed at a record high yesterday of $2,372/oz.

With that in mind, yesterday brought another bond selloff on both sides of the Atlantic, and 10yr yields across several countries hit their highest level since late-2023. In the US, the 10yr yield was up +4.3bps to 4.59%, which is its highest level since November, although overnight there’s been a -1.6bps pullback to 4.57%. This was driven by a fresh rise in real yields, with the 10yr real yield (+4.8bps) also up to a post-November high of 2.18%. Meanwhile at the front end, yesterday saw a modest decline in the 2yr yield (-1.2bps) to 4.96%, but that comes in the context of a +23bps increase the previous day, leaving it up by more than +20bps relative to its pre-CPI levels.

That pullback in front-end yields was in large part down to the PPI inflation print for March, with the 2yr yield having momentarily traded at 5% immediately before the release. That showed headline PPI at +0.2% on a monthly basis (vs. +0.3% expected), which meant the year-on-year measure rose to +2.1% (vs. +2.2% expected). Although it was only slightly beneath expectations, monthly moves in PPI components that feed into core PCE inflation came in on the weaker side, including airfares (-1.8%) and healthcare services (0.0%). So a big relief to investors after the upside surprise in CPI the previous day. It also meant futures raised the chance the Fed would still cut rates by July, which moved up from a 50% to a 56% chance after yesterday’s session, with a further rise this morning to 58%.

When it came to Fed officials themselves, their remarks yesterday signalled they weren’t in a hurry to cut rates. For instance, New York Fed President Williams said “There’s no clear need to adjust policy in the very near term”. Meanwhile, Boston Fed President Collins said that the recent data “implies that less easing of policy this year than previously thought may be warranted.” And Richmond Fed President Barkin said that “We’re not yet where we want to be” when it came to inflation.

In light of recent developments, DB’s US economists have now materially adjusted their Fed view for this year. They now only expect one rate cut at the December FOMC meeting, followed by modest further reductions in 2025. Beyond that, they expect the Fed to guide the policy rate back towards a neutral level, that is likely just below 4% by the end of 2026. And although a rate cut in July is still possible, their view is that it would need a string of more favourable inflation prints than they forecast, as well as some softening in the labour market and tightening in financial conditions. See the report here for more details on their latest forecast.

Speaking of central banks, we had the latest ECB decision earlier in the day, who left their deposit rate at 4% as expected. However, their statement suggested that they were moving closer to rate cuts, as it said “If the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction.” So a clear signpost that rate cuts could be near, and investors raised the chance of a cut by the June meeting from 82% to 87% by the close. Our European economists see the ECB as having a clear but conditional baseline of a June cut, while keeping its options open beyond this. They note that Lagarde’s expression of a “dialling down cycle” may be more consistent with gradual rate cuts. See their reaction note here for more.

The ECB’s decision helped to bring down 2yr yields on German (-0.4bps) and French (-0.6bps) government bonds. However, at the long end it was a different story, and yields moved noticeably higher across the continent, including on 10yr bunds (+2.8bps), OATs (+3.6bps) and BTPs (+6.8bps). Meanwhile for gilts, the 10yr yield (+5.5bps) closed at a post-November high of 4.20%. That came as investors continued to dial back the chance of a Bank of England rate cut by June, with overnight index swaps lowering the probability from 56% to 41% by the close. That followed comments from the BoE’s Greene in the FT we mentioned yesterday, who said that UK rate cuts “should still be a way off”.

Although bonds continued to sell off, a renewed tech rally saw equities recover in the latter half of the US session ahead of the earnings season kicking off in full today. The S&P 500 advanced +0.74%, with the NASDAQ (+1.68%) and the Magnificent 7 (+2.25%) strongly outperforming and closing at new all-time highs. All of the Magnificent 7 posted gains, with Apple (+4.33%) leading the way amid news that it plans to overhaul its line of Macs with new AI-focused chips. However, equity gains were limited outside tech, with more than half of S&P 500 constituents actually down on the day. And earlier in the day Europe saw fresh losses, with the STOXX 600 (-0.40%), the DAX (-0.79%) and the CAC 40 (-0.27%) all falling back. That came as European natural gas futures (+8.40%) rose following Russian attacks on energy facilities in Ukraine, including those for natural gas storage.

Overnight in Asia, most of the major equity indices have lost ground this morning, with losses for the Hang Seng (-1.73%), the CSI 300 (-0.28%), the Shanghai Comp (-0.04%) and the KOSPI (-0.80%). Japanese equities have been the main exception however, where the Nikkei is up +0.33%. And looking forward, US equity futures are slightly higher, with those on the S&P 500 up +0.05%. Elsewhere in Asia, the Bank of Korea kept its policy rate unchanged at 3.5%, marking its 10th consecutive decision to hold since it last hiked in January 2023.

To the day ahead now, and the Bank of England will release the Bernanke review on forecasting. Central bank speakers include the BoE’s Greene, the ECB’s Elderson, and the Fed’s Collins, Schmid, Bostic and Daly. Data releases include the UK GDP reading for February, and in the US there’s the University of Michigan’s preliminary consumer sentiment index for April. Finally, earnings releases include JPMorgan, Citigroup, Wells Fargo and BlackRock.

Tyler Durden Fri, 04/12/2024 - 09:01

"A Matter Of Economic And National Security": Sen. Brown Urges Biden To Ban Chinese EVs In US

U.S. Senator Sherrod Brown (D-OH) has urged President Biden to ban Chinese-made electric vehicles to safeguard Ohio autoworkers and address the economic and national security risks from Chinese automakers.

In a letter to President Biden this week, Brown highlighted that these companies, backed by the Chinese government, threaten the U.S. auto industry and argued that tariffs are not enough to counter this government-led challenge.

“Chinese electric vehicles are an existential threat to the American auto industry. Ohio knows all too well how China illegally subsidizes its companies, putting our workers out of jobs and undermining entire industries, from steel to solar manufacturing. We cannot allow China to bring its government-backed cheating to the American auto industry. The U.S. must ban Chinese electric vehicles now, and stop a flood of Chinese government-subsidized cars that threaten Ohio auto jobs, and our national and economic security,” Brown wrote. 
 

Brown expressed concerns that government subsidies for Chinese automakers would prevent American companies and workers from competing fairly, potentially devastating the United Autoworkers and their ability to secure higher wages and benefits. He also noted the national security risks of Chinese electric vehicles due to the technology used and the potential for data access by the Chinese government.

In a letter to President Biden, Brown wrote: "Chinese electric vehicles (EVs) threaten our economic and national security, and the entire American auto industry. Allowing these automobiles into the United States would harm American manufacturing, American workers, American consumers, and American security. Chinese EVs, highly subsidized by the Chinese government, could decimate our domestic automakers, harm American workers – many of whom are represented by the United Autoworkers (UAW) – and give China access to sensitive personal data."

"There are currently no Chinese EVs for sale in the United States, and we must keep it that way. I implore you to take bold, aggressive action and to permanently ban EVs produced by Chinese companies or whatever subsidiaries they establish to conceal their origins. Further, I urge you to work with our allies to address these concerns in a wholistic manner that supports American jobs and innovation."

Brown writes: "The level of subsidization and resulting sale price differential between an EV produced by a Chinese entity and those manufactured in the U.S. using union labor presents extreme challenges to enforcing a level playing field. Currently, Chinese-built cars are subject to an extra 25 percent tariff on top of the regular 2.5 percent import duty that generally applies to imported vehicles."

"But Chinese automaker BYD, now the world’s largest producer of electric cars, sells an electric hatchback named the 'Seagull' for the equivalent of less than $10,000 USD. In addition to China’s heavily-subsidized, artificially low vehicle pricing, Chinese automakers are finding new ways to cheat by establishing factories in Mexico."

The letter adds: "Lastly, allowing Chinese EVs on our roads could pose risks to our national security. The technology in EVs includes apps, sensors, and cameras. China should not have access to the data these technologies can collect – whether it be information about traffic patterns, critical infrastructure, or the lives of Americans. China does not allow American-made electric vehicles near their official buildings."

"To allow their vehicles freedom to travel throughout the United States would be foolish and highly dangerous. I appreciate the Department of Commerce’s initiation of an investigation into the technology embedded in EVs from China, but we must act expeditiously to ban these vehicles from the United States," Brown argues.

"The automotive sector is undergoing rapid, dramatic changes. As these market- and technology-driven changes arise, it is imperative that American companies innovate and lead in the technologies of the future. American companies cannot compete against Chinese companies that are heavily subsidized. For this reason, the United States must ban Chinese-made EVs as soon as possible. This is a matter of economic and national security."

Tyler Durden Fri, 04/12/2024 - 08:45

Cyclical Rally Could Look Very Different From Here

By Michael Msika, Bloomberg Markets Live reporter and strategist

A months-long rally in European cyclicals has left some stocks looking outright expensive, raising risks for them as the earnings season is about to start.

Cyclical sectors such as autos, industrials and financials have beaten the overall market hands down so far this year, with a 9% gain. Since the end of October, the Stoxx 600 Cyclical index has added 26%, beating defensive sectors by nearly 20 percentage points. That’s put them into the danger zone for profit-taking, amid signs the group is hitting overbought levels.

JPMorgan strategist Mislav Matejka notes cyclicals have in fact outperformed defensives for 18 months and trade at a significant premium. Other than energy, which he sees as a good hedge against elevated geopolitical risk, Matejka is neutral or bearish on most cyclical shares. “Defensives could look better from here, especially if the overall market starts to weaken, and if earnings growth acceleration expectations do not materialize,” he says.

Not all cyclicals are in the same boat, though. Gains on energy and mining shares follow a long period of underperformance and are driven by geopolitics as well as a brightening world economy. Nor do share valuations seem excessive for commodities and banking shares.

This segment of cyclicals is likely to outperform, according to Goldman Sachs strategists Peter Oppenheimer and Sharon Bell. They recently upgraded banks and energy to overweight and miners to neutral. However, they cut their view on industrials, citing expensive valuations.

Trading at nearly 20 times forward earnings —  a 40% premium to the broader market and in the 90th percentile relative to their history — European industrials do look pricey. They also appear to have seriously overshot the recovery in PMIs — the last time the sector traded at such levels was just after the pandemic when European manufacturing was expanding rapidly. The fear is that companies pricing so much good news risk punishment if they disappoint in the upcoming earnings season.

Bank of America strategists are among those sticking to a very cautious stance. Wary of recent winners such as capital goods, BofA’s Sebastian Raedler sees scope for rotation into beaten-down defensives such as as food and beverages, though he remains overweight miners and chemicals. “Cyclicals overall are priced for sharp EPS upgrades,” he adds.

Cyclicals still have their fans, who point out the recent outperformance was driven by improved earnings estimates and that the overall group only trades at slightly above-average valuations compared with defensives. With interest-rate cuts due to kick off in the coming months, cyclical shares could enjoy further gains, many strategists, including at Barclays and Natixis, expect.

“Don’t fight the soft-landing narrative,” say Natixis strategists Florent Pochon and Emilie Tetard. They like European cyclicals tactically, in anticipation of a pick-up in European and Chinese economic growth, and the first European Central Bank rate cut in June.

Tyler Durden Fri, 04/12/2024 - 08:25

JPMorgan Slides After Dimon Warns On Net Interest Income, Outlook Disappoints

Q1 earnings season officially opened moments ago when JPM became the first mega bank to reports results, and even though JPM beat on across the board - and even unexpectedly released reserves instead of setting money aside for yet another quarter - the stock is lower by ~3% after Jamie Dimon had some gloomy words about the bank's net interest income (which dropped in Q1) and the bank's NII outlook for 2024 missed estimates. But before we get to all that, let's start with the Q1 historicals which were solid across the board:

• Q1 Net Income of $13.4 billion, up 6% from $12.6 billion a year ago and stronger than the median estimate, which translated into EPS of $4.44 (and $4.21 ex the impact of First Republic), beating estimates of $4.15; JPM clarified that “excluding a $725 million increase to the FDIC special assessment," net income would have been $14 billion or $4.63 a share.

• The EPS of $4.44 would be the second highest in the company's history, and the highest in three years, going back to Q1 2021 when JPM reported a record $4.50.

• Q1 Adjusted revenue $42.55 billion, +8.2% y/y, and beating the estimate of $41.64 billion
  • FICC sales & trading revenue $5.30 billion
  • Equities sales & trading revenue $2.69 billion
  • Investment banking revenue $1.99 billion
  • CIB Markets total net revenue $7.98 billion, estimate $7.71 billion
    • Advisory revenue $598 million
    • Equity underwriting rev. $355 million
    • Debt underwriting rev. $1.05 billion
    • Corporate & investment bank IB fees $2.00 billion
• Net charge-offs $1.96 billion, up from $1.1 billion a year ago, but below the estimate $2.2 billion
• Provision for credit losses $1.88 billion, lower by 17% y/y, and far below the estimate $2.78 billion, thanks to a reserve release of $72 million, vs a $1.1 billion reserve build in Q1 2023.

Needless to say, the reserve release was a very favorable swing factor in the company's bottom line: a year ago, the reserve build was substantially higher, and rightfully so: charge offs have nearly doubled since then, rising from $1.1BN to $2.0BN.

Going down the release, we find that the first unpleasant data, with JPM reporting that managed net interest income was $23.20 billion, just missing the estimate of $23.22 billion, with compensation expenses rising to $13.12 billion, and also above the estimate of $12.62 billion. There was some mode bad news in JPM's net yield on interest-earning assets which came at 2.71%, missing the estimate 2.75%. The silver lining: JPM reported total non-interest expenses $22.76 billion, which were below the estimate of $22.99 billion.

Summarizing all the Q1 headline results we get the following:

It wouldn't be a JPM report if the bank did not have a slide about its "fortress balance sheet" and this quarter was no difference as the bank reported Standardized CET1 ratio 15%, above the estimate of 14.9%, boasting standardized risk-weighted assets of $1.716 trillion, and a "total loss-absorbing capacity” of $520 billion.

For the quarter, ROE hit 17% — or ROTCE at 21%.

There was more disappointment in the bank's balance sheet where loans came in at $1.31 trillion, flat QoQ and missing the estimate $1.33 trillion, while total deposits were also flat at $2.43 trillion, above the estimate $2.4 trillion.

Before we continue, let's take a closer look at Jamie Dimon's brief but intense statement. As usual, he starts off with the bragging: he calls Q1 a “strong” first quarter, touts last month’s 10% boost to the dividend, calls the bank’s capital ratio “exceptionally high” and says its “peer-leading returns” gives “capacity and flexibility” for reinvestment and returning capital. (He also mentions that “fortress” balance sheet, as he always does.)

But - and this may explain the drop in the stock price - he also mentioned net interest income’s 4% decline, and that “as expected” NII excluding markets “declined 2% sequentially due to deposit margin compression and lower deposit balances, mostly in CCB.” He’s playing it cool as he adds: “Looking ahead, we expect normalization to continue for both NII and credit costs"

It wasn't immediately clear what Dimon means by "deposit margin compression" with Bloomberg speculating that this is JPM's way of saying deposits are going to be more expensive and that net-interest income will fall, something which the bank's disappointing NII outlook confirms (see below).

We continue reading Dimon’s statement, where he next goes on to boast about the “strong underlying performance” in the units. First up is CCB, where “client investment assets were up 25% excluding First Republic" but what he doesn’t say is that average deposits were down 7%. The bank is being a little tricky by cushioning the news this way: “Average deposits down 3%, or down 7% excluding First Republic", which of course is to be expected in a time of shrinking Fed reserves, which as we have shown countless time show up immediately in bank deposit balances. (On the flip side, Bloomberg notes that those client investment assets were up 46% when you’re not “excluding” First Republic.)

Dimon then turns to the Corporate and Investment Bank, where “IB fees increased 21%, reflecting improved DCM and ECM activity.” There was more good news: “In CB, we saw strong growth in Payments fees,” and Dimon adds that there was “a significant number of new client relationships.” Lastly, Dimon looks at AWM, where “asset management fees were up 14% with continued strong net inflows.”

Digging further into investment banking: Total IB fees came in at $2 billion this quarter, up 21% YoY, "driven by higher debt and equity underwriting fees, partially offset by lower advisory fees." The strength came from debt underwriting results:

• Advisory: $598 million (missing estimates of $775M),
• Equity Underwriting: $355 million for equity underwriting (beating estimates of $342M)
• Debt Underwriting: $1.05 billion (beating estimates of $778 million)

Elsewhere, we also read in the earnings presentation find the following detail:

• Payments revenue of $2.4B, down 1% YoY, driven by deposit margin compression and higher deposit-related client credits, largely offset by fee growth and higher deposit balances
• Lending revenue of $130mm, down 51% YoY, predominantly driven by mark-to-market losses on hedges of the retained lending portfolio

Digging a little bit deeper into the Bank's CIB division, we find JPM's "crown jewel", sales and trading, where Q1 trading revenue was nearly $8 billion, down 7% YoY but up from the $7.71 billion analysts expected for the first three months of 2024.

And summarizing the results:

Going back briefly to Dimon's statement we find another "stormy weather" forecast, which is worth a closer look:

“Many economic indicators continue to be favorable,” the CEO said, but he says the firm is “alert to a number of significant uncertain forces.” What are they?

"First, the global landscape is unsettling – terrible wars and violence continue to cause suffering, and geopolitical tensions are growing.

Second, there seems to be a large number of persistent inflationary pressures, which may likely continue.

And finally, we have never truly experienced the full effect of quantitative tightening on this scale.

We do not know how these factors will play out, but we must prepare the Firm for a wide range of potential environments to ensure that we can consistently be there for clients.”

Maybe Dimon has a reason to be gloomy and it was revealed on the last page of the investor presentation where the JPM revealed its 2024 NII forecast of $90BN - a number which is "market" dependent, excluding markets the NII may be even lower at $89BN - both of which came in below the market consensus of $90.7BN (the market was expecting JPM would further increase its guidance here), a rare miss for the bank which still continues to derive all sorts of benefits from last year's First Republic gift courtesy of the FDIC.

Putting it all together, and the market reaction was one of a rare disappointment, because while JPM beat on most metrics as it usually does, the decline in Net Interest Income, the miss in total Loans, and especially the disappointing Net Interest Income, and you get a stock that dropped as much as 3.7% premarket (it has since trimmed losses a bit).  A key focus for analysts heading into earnings was the company’s net interest income outlook for the full year, and there’d been optimism from some analysts that the lender would boost its guidance on the metric.

The full earnings presentation is below (pdf link).

Tyler Durden Fri, 04/12/2024 - 08:14

Intel, AMD Slide After Beijing Tells Telecoms To Phase Out Foreign Chips

The newest phase of the technology war between the US and China involves Beijing's plan to eliminate American-made semiconductor chips from Chinese telecommunications systems by 2027. This strategy is expected to impact US chip manufacturers such as Intel and Advanced Micro Devices, according to The Wall Street Journal, citing people familiar with the matter. 

China's Ministry of Industry and Information Technology, the regulator responsible for overseeing wireless, broadcasting and communication industries, is leading the current effort to replace American-made core chips in China's telecom infrastructure. The regulator ordered state-owned mobile operators to inspect networks and provide a timeline for when the foreign chips would be replaced. 

Beijing's move to eliminate American chips from its telecommunications systems comes amid a worsening tech war with Washington. In the US, lawmakers on Capitol Hill have banned Chinese chips from telecom equipment over national security risks and have restricted AMD and Nvidia from selling advanced chips to China. 

In late March, China introduced new guidelines for phasing out Intel and AMD chips from government computers and servers. 

This escalation in the chip war between the two superpowers, in the form of stricter government procurement guidance, also aims to eliminate Microsoft's Windows operating system and foreign-made database software in favor of domestic options. It runs alongside a parallel localization drive underway in state-owned enterprises. 

Beijing's move to rid critical systems and infrastructure of foreign technology is part of a national strategy for technological independence in the government, state sectors, and military that has become known as xinchuang or "IT application innovation". Regulators have told state-owned enterprises to transition technology to domestic providers by 2027. 

The creeping ban on US-made chips and software is terrible news for US companies, such as Intel and AMD, that are heavily exposed to Chinese markets. China was Intel's largest market last year, providing 27% of its $54bn in sales and 15% of AMD's $23bn in sales. Microsoft does not reveal Chinese sales, but president Brad Smith last year told the US Congress that the country provided 1.5% of revenues

The continued localization push sent AMD and Intel shares down around 2% in premarket trading in New York. 

Meanwhile, Peter Tchir of Academy Securities recently wrote that he is "worried that as we restrict things for China, it will make them better at it. I think that we've asked before how China is making so many phones with 7 nanometer chips, when there have been restrictions in place on chips thinner than 10 nanometers." 

And it's not just Beijing phasing out US tech. There is also a nationalist push among consumers in the largest handset market in the world to abandon Apple iPhone products for Huawei Technologies Co.'s Mate 60 series smartphone. 

While Beijing's desire to wean off American chips ramps up, the US is rebuilding its semiconductor manufacturing base to wean off Chinese chips and chips made in Asian countries that could experience disrupted supply chains in conflict. The world is continuing to fracture into a dangerous multi-polar state. The tech war between the world's largest superpowers is evidence of this. 

Tyler Durden Fri, 04/12/2024 - 07:45

Sound Money Vs. Fiat Currency: Trade And Credit Are The Wild Cards

Authored by Charles Hugh Smith via OfTwoMinds blog,

We need to start thinking outside the current system, which has no solutions.

Our convictions about money are quasi-religious: heretics are burned at the stake. I'm not sure which stake I'll be tied to, because all the conventional choices--fiat currency, sound money (gold, Bitcoin) or debt-free currency (a.k.a. MMT)--are all fatally flawed.

To understand why, consider the wild cards in any monetary system: global trade and credit. Let's start with credit, which as David Graeber explained in his book Debt: The First 5,000 Years, has been an integral component of monetary arrangements since the dawn of civilization.

Taxes must be paid and seed purchased for the next crop, and so credit in some form--notched sticks, bills of sale, purchase orders, loans--is the lifeblood of commerce and state revenues. Credit naturally divides into short-term commercial credit--credit extended until the goods or payment are delivered--and longer term credit secured by collateral.

In traditional economies in which gold and silver are money, credit was generally limited to commerce, as credit based on loaning surpluses of gold and silver was limited by the scarcity of those metals. But the demand for credit did not diminish; rather, it increased, which is why small banks (that often went bust) emerged in the 1820s in America to meet the demand from small enterprises for credit to expand.

In an economy in which gold is the only money, credit is limited to a percentage of gold held in reserves, as much of the reserves must be held to fund customer redemptions / withdrawals. This limits the availability of credit.

In a fractional reserve banking system such as ours, one ounce of gold held in reserve is sufficient collateral for a loan 10 times the value of the reserve: $2,300 in gold enables the issuance of $23,000 in new money, i.e. a loan of $23,000, as every loan is new money created by the act of issuance.

What happens to "gold-backed money" when credit expands the supply of money expands 10-fold? The gold reserves are now spread over a much larger sum of money. The actual value of the gold backing each unit of money declines to a fraction of its initial value.

In other words, if credit is allowed to create money, then the "gold-backed" valuation of each unit is massively diluted. If credit is limited to surplus gold/silver loaned at interest, the sum of credit is a tiny fraction of all money in circulation.

Ancient Rome offers an example of a system in which only gold-silver were money. 

When the empire's silver mines in Spain were depleted, the supply of new money dried up and scarcity forced authorities to shave the actual silver content of coinage, the older higher-value coinage was quickly hoarded and left circulation: this is Gresham's law, that bad money drives good money out of circulation.

Rome also offers an example of trade's impact on money. 

Rome's wealthy--who naturally ended up with most of the empire's "sound money" wealth--spent freely on luxuries from foreign trade with Africa, India and distant China: silks, incense, gemstones, etc. This trade drained the empire of gold and silver, which was transferred overseas to buy the luxuries.

In other words, trade imbalances drain importers of their gold/silver. 

President Nixon didn't end the convertibility of the US dollar to gold on a whim; due to rising US trade deficits, America's gold would have been drained to zero in a few years. That's what happens to "sound money" when trade deficits cannot be controlled: those running the trade deficits run out of gold-silver and cease importing goods.

Nixon's hand was forced by the requirements of a global reserve currency, the US dollar. What is often overlooked in discussions of money is the necessity for reserve currencies to be "exported" to the global economy at scale so there's enough units floating around to fund commerce and credit.

If there is insufficient currency available in the global system, the currency cannot function as a reserve currency due to its scarcity. As the global economy increased in size, the sums of US dollars required also increased, requiring permanent trade deficits as the means to "export" the currency into the global financial system.

Many feel that getting rid of the USD's reserve status would be a plus, but those mercantilist nations exporting to the US would disagree, as once trade dries up their gravy train ends. Also unsaid is the reality that many nations must import food and energy, and their trade deficits are thus unavoidable.

A global economy with severely limited credit and trade will be a very different economy than the one we have now, undoubtedly better in terms of reduced consumption but this may not be entirely welcome or usher in an era of stability. The ideal system would be one that enables a transition to a new global economy that doesn't impoverish the bottom 90%.

Interestingly, convertibility to gold didn't restrain the ravages of inflation. Look at the chart of the USD's purchasing power since 1900 and note the value dropped from $25 to $5 during the period that the USD was convertible to gold.

The influx of New World gold and silver via Spain in the 1500s and 1600s also deflated the value of precious metals in Europe.

The larger point is the purchasing power and price of everything is set by global markets: the relative value of precious metals, currencies, commodities, labor, risk, credit--all are set by global markets. Any nation-state which presumes to anchor a price that suits its policy makers only creates a black market for whatever they are attempting to control.

Fiat currencies arose to escape the limitations of "sound money" generated by credit and trade. The problems of fiat currencies are well-known: the temptation to create more currency is irresistible. If currency is simply printed, per Modern Monetary Theory (MMT), a.k.a. debt-free currency, we end up with billion-dollar bills because the increase of currency above and beyond the increase in production of goods and services reduces the value of each unit of currency.

Borrowing money into existence by selling Treasury bonds serves to limit the collapse of currencies, but it imposes interest payments (mostly paid to the wealthy who own 90% of the nation's financial wealth) which drain the economy of vitality, leading to stagflation / decline.

We need to start thinking outside the current system, which has no solutions: debt-free money leads to billion-dollar bills, "sound money" (gold or bitcoin, it doesn't matter) ends up in the hands of the wealthy and borrowing money into existence leads to stagnation as soaring interest sucks the economy dry.

I have explored money in two books:

Money and Work Unchained and A Radically Beneficial World, which proposes a system that creates new money at the bottom of the wealth-power pyramid rather than at the top. Yes, I understand this is wildly impractical in the current zeitgeist, but all conventional monetary systems run aground on their intrinsic limits / flaws, we'll have to start somewhere other than the status quo.

*  *  *

Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

Tyler Durden Fri, 04/12/2024 - 07:20

Biden Admin Tells Congress Famine Is Underway In Gaza For First Time

A top Biden administration official has for the first time declared that famine now exists in parts of the Gaza Strip, more than five months after the Israel-Hamas war began. 

USAID Director Samantha Power said it is "credible" to assess that famine is already occurring. Her testimony was issued at Wednesday's House Foreign Affairs Committee hearing, where in her introductory statement she laid out that "nearly the entire population" of Gaza is "living under the threat of famine."

The United Nations defines famine as when there is widespread malnutrition as well as hunger-related deaths due to a lack of access to food in a locale or country.

According to more from Power's testimony before Congress:

USAID Administrator Samantha Power, a well-known liberal interventionist and the author of a famous book on American leaders' failure to act in the face of genocide, answered in the affirmative after U.S. Rep. Joaquin Castro (D-Texas) asked whether "famine is already occurring" in Gaza, which is under a suffocating Israeli siege and relentless bombing campaign.

"Yes," said Power. "In northern Gaza, the rate of malnutrition prior to October 7th was almost zero, and it is now one in three—one in three kids."

"USAID teams have been working day and night to address the catastrophic humanitarian crisis," Power added. "Food has not flowed in sufficient quantities to avoid this imminent famine in the south and these conditions that are giving rise already to child deaths in the north," she described.

The following three conditions must be present for a crisis to be deemed famine, according to more from the United Nations definition:

• At least 20 per cent of the population in that particular area are facing extreme levels of hunger;
• 30 per cent of the children in the same place are wasted, or too thin for their height; and
• The death – or mortality – rate has doubled, from the average, surpassing two deaths per 10,000 daily for adults and four deaths per 10,000 daily for children.

USAID Director Power and other Biden admin officials have been center of increased outrage among progressive Democrats over their pro-Israel policies.

The very hearing that Power testified in was at one point interrupted activists who shouted denunciations at the USAID chief for "not using her power and influence to end" the assault. Progressive activist group Code Pink led the protests...

At Samantha Power's hearing with the House Foreign Affairs Committee. SAMANTHA POWER IS COMPLICIT! pic.twitter.com/jCGWoV2uHy

— Medea Benjamin (@medeabenjamin) April 10, 2024

The protesters pointed out the contradiction in Biden's policy - on the one hand it decries famine and a humanitarian disaster in Gaza, but on the other continues arming Israel, and all the while is unwilling to attach conditions on defense aid.

Tyler Durden Fri, 04/12/2024 - 06:55

EU Parliament Refuses Decision On Budget Until Ukraine Gets More Patriots From Member States

The latest intense Russian bombardment of Ukraine has resulted in the European Parliament taking the unprecedented decision to delay approval of the council budget until EU leaders get fully on board with approving additional Patriot air defense systems for Ukraine. 

"What I find scandalous is that Europe, which is opening the door for Ukraine, and the European Council are not even capable in such an urgency to decide to send a number of anti-missile systems to Ukraine," Guy Verhofstadt, a former Belgian Prime Minister, said in a fiery speech from the parliament floor.

Image: Ukraine Foreign Ministry

The decision to refuse discharge of the EU Council's budget was supported by 515 MEPs, with 62 voting against it—however, the effort will ultimately prove little more than symbolic and as but theatrics. European countries are still first and foremost worried about their dwindling defense stockpiles at home, especially as the specter of possible future major NATO-Russia war rises.

Russia's overnight missile attacks, which reportedly included hypersonic missiles and drones sent against a number of power plants and natural gas facilities, resulted in a new urgent plea from President Volodymyr Zelensky, who post on X: "We need air defense systems and other defense assistance, not just turning a blind eye and having lengthy discussions." 

Russia's President Putin on Thursday told national news agencies that Russia is obliged to strike Ukrainian energy sites in response to Kiev's ongoing cross-border attacks against Russia's own energy infrastructure. He also said these strikes on Ukraine's energy sites aim to "demilitarize" the country.

MEP Verhofstadt's appeal was met with applause in the European parliament session:

Verhofstadt reminded that the EU's chief diplomat, Josep Borrell, told the MEPs that EU states have 100 Patriot air defense systems, while Ukraine asks for seven of them.

"We, Europeans, we invite them to come to the European Union, but we are not capable to do so," Verhofstadt added.

The MEP proposed to withdraw the discharge of the EU Council's budget from the agenda until a decision is taken to provide Ukraine with seven air defense systems.

Meanwhile, here's how a fresh Washington Post interview began:

Ukrainian Foreign Minister Dmytro Kuleba wants the West’s extra, idle Patriot air defense batteries. And he’s not asking nicely anymore.

"Nice and quiet diplomacy didn’t work," Kuleba, Kyiv’s top diplomat, told The Washington Post in an interview this week.

Below: Thursday's scene inside European parliament...

‼️ The European Parliament has refused to approve EU Council funding until Ukraine is given new Patriots, - MEP, former Belgian Prime Minister Guy Verhofstadt

The European Parliament's decision is called "unprecedented". It was supported by 515 MPs, against 62. pic.twitter.com/Lz5bzhoSnj

— NEXTA (@nexta_tv) April 11, 2024

He told the newspaper that ultimately the country would need 26 Patriot batteries to secure the airspace over the whole country, but that an initial seven would go a long way in meeting the most pressing needs.

"I'm sorry to spoil the birthday party, but who can believe that the mightiest military alliance in the world cannot find seven batteries of Patriots to provide them to the only country in the world that is fighting ballistic attacks every day?" he questioned provocatively.

Tyler Durden Fri, 04/12/2024 - 05:45

Stuck On Failure At The WHO

Authored by Kevin Roberts and Robert Redfield via The Epoch Times (emphasis ours),

Four years have passed since the onset of COVID-19 and the global mishandling of its spread. Now, the same governments and international organizations that lied about the last pandemic are negotiating a new pandemic agreement and amendments to the International Health Regulations (IHR) at the World Health Organization (WHO).

The sign of the World Health Organization (WHO) at its headquarters in Geneva on March 5, 2021. (Fabrice Coffrini/AFP via Getty Images)

The main culprit hasn’t changed. Although the Chinese Communist Party (CCP) has never been held accountable for its complete refusal to adhere to previous IHR agreements or its ongoing obstruction of a thorough investigation into the virus’s origins, Beijing is now collaborating with the Biden administration on this new accord.

So naturally, the new agreement advances China’s interests. Successive drafts focus on everything, from sending taxpayer dollars overseas to weakening intellectual property rights and empowering the WHO over the national sovereignty of the United States. Yes, that’s the same WHO that failed to insert a team of global experts in the first few weeks of the COVID-19 outbreak in China (as required by IHR), instead capitulating to the CCP and allowing it to define the international response.

The latest version of the agreement even mandates that parties provide financial and technical assistance to developing countries. Of course, the United States has a long, robust history of providing such assistance—President George W. Bush’s President’s Emergency Plan for AIDS Relief (PEPFAR) is one good example—but such assistance has always been voluntary, not obligatory.

Unsurprisingly, China stands to benefit from these provisions intended to help “poor” countries. Despite having the second-largest economy in the world, the United Nations considers China to be a “developing country.” That’s right. The country that started the COVID-19 pandemic will not only suffer zero consequences for its actions but, should the United States sign this agreement, stand to benefit from mandatory transfers of funds from U.S. taxpayers.

China would also benefit from other provisions in the agreement that push governments to promote “sustainable and geographically diversified production” of pandemic-related products (like vaccines), invest in developing country capacity and access to proprietary research, use the “flexibilities” of the Agreement on Trade-Related Aspects of Intellectual Property Rights to override patents, and encourage rights holders to forego or reduce royalties and consider time-bound waivers of intellectual property rights.

China, notorious for its theft of intellectual property, would be sure to exploit this privilege.

All this would severely curtail future investment in health research—exactly the opposite incentive that should be applied if we are to be prepared for a future pandemic. And to make matters worse, the agreement almost entirely ignores addressing the countless shortcomings of current international processes in responding to pandemics, such as obligating governments to grant immediate access to international health expert teams to assess the threat of suspected outbreaks and to provide full and timely disclosure of genomic data.

Of course, overseeing sustainable and geographically diversified production, massive transfers, and distribution of up to 20 percent of diagnostics, therapeutics, or vaccines during a pandemic comes with a hefty price tag. The exact amount is not specified, but it is sure to include several commas.

In addition, the agreement would take a sledgehammer to American First Amendment free speech rights. The willingness of governments to use the pandemic to clamp down on unpopular ideas and opinions to “protect” public health and safety has proven durable. And this new agreement instructs governments to “cooperate, in accordance with national law, in preventing misinformation and disinformation.” China and Russia need no encouragement to censor speech. However, such language in an international agreement will encourage those in free countries who similarly wish to suppress unpopular opinions under the guise of countering misinformation and disinformation.

Indeed, the WHO itself seems offended by criticism. Earlier this year, Director-General Tedros Adhanom Ghebreyesus said that negotiations were occurring in a very difficult environment, facing a “torrent of fake news, lies, and conspiracy theories.” Ironically, this argument was the same one used against conservatives who subscribed to the increasingly credible lab leak theory.

In short, the new pandemic agreement should alarm all Americans. It is far more focused on redistributing income, transferring technology, and weakening intellectual property than on preventing, detecting, and responding to pandemics in the first place. It failed to address the elephant in the room—the total lack of enforcement in the IHR—and as written, it is nothing short of a power grab by the CCP-controlled WHO.

Our government must wholly reject it.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Fri, 04/12/2024 - 05:00

German Defense Chief Compares Putin To Hitler

Amid the recent days of stepped-up major Russian attacks on Ukraine's energy infrastructure, which the Kremlin on Thursday said is necessary in response to Ukrainian forces' own cross-border attacks on Russian oil refineries, the rhetoric out of Europe is becoming unhinged.

In but the latest example of this, German Defense Minister Boris Pistorius has compared Putin and his war in Ukraine to Nazi leader Adolf Hitler’s annexation of Czechoslovak territory in 1938. 

Via The Moscow Times

Pistorius echoed the assumption that Putin is waging an expansionist war and seeks to take more territory even beyond Ukraine, which remains unfounded and with zero evidence. Still, the defense chief urged Europe to prepare for large-scale Russian attack.

"Putin will not stop once the war against Ukraine is over," Pistorius said late Wednesday. Somewhat ironically, the provocative comments were issued at an event unveiling a new biography of Britain’s wartime leader Winston Churchill.

"He has also said that clearly," Pistorius continued. "Just as clearly as Hitler, who also always said that he would not stop."

"We have to put this country back in a position where it can defend itself," Pistorius said at the book event, as cited in Bloomberg. "We have to decide now whether we want to prepare for a genuine threat from Putin to materialize or whether we want to make it easy for him."

In February, Pistorius announced that Germany might seek to increase defense spending by as much 3.5% of economic output, though he also conceded that finding the funds would be tough.

NATO officials and connected think tanks have long assumed that Putin seeks to erect a new Russian 'empire' - given that in a number of speeches he's made positive references to Czar Peter the Great while speaking of "returning historically Russian lands."

But so far at least, there have been no actions of the Russian military directly threatening other states outside Ukraine. Recently Moldova has been a big concern of Western planners, with some reports claiming that the Kremlin is seeking to destabilize the small former Soviet republic which neighbors Ukraine and Romania.

Not so original: the whole 'Putler' trend and Hitler comparison has been a worn-out talking point of Western officials and media headlines going back years...

Putin is an illegitimate President who is afraid of real elections because he is afraid of his people.

To defeat him, bring victory to Ukraine, and freedom to the Russian people we need a bold coalition, similar to the one Allies created to defeat Hitler. @EPPGroup pic.twitter.com/Mg9d8zEkhX

— Rasa Juknevičienė (@RJukneviciene) April 10, 2024

In light of this latest "Putin is Hitler!" commentary out of Germany's defense minister, the below essay entitled Don’t Depict Putin, Kim, Assad And Others As Cartoon Villains by Mila Ghorayeb at The Maple is worth revisiting...

* * *

Despite knowing better, people’s conception of a government or even an entire country often rests on the image of its leader. People thinking of the Canadian government, for example, now fixate on Prime Minister Justin Trudeau. Americans fixate on leaders as well, often using terms like “Trump’s America” to tie the climate of social relations to their president. The head of state becomes the state itself.

But it goes even further with countries that the governments of the United States and Canada are unfriendly with. In these cases, mainstream media, pop culture and politicians speak of their leaders not only like they are the country, but as though they’re cartoon villains.

Former Libyan leader Muammar Gaddafi, famously called the “mad dog of the Middle East” by then U.S. President Ronald Reagan, had a documentary released about him post-mortem by the same name. Syrian President Bashar al-Assad is a “butcher” gone wild who supposedly unleashed chemical weapons on an area his government had nearly retaken just because he’s full of bloodlust. Magazines are riddled with covers depicting leaders, such as Russian President Vladimir Putin, as people that simply want to watch the world burn.

As a result, those involved in political discourse lose sight of basic international relations analysis. These leaders aren’t treated as rational actors that, in turn with other members of their government, act based on strategy. They are portrayed as being motivated merely by destruction.

Part of the reason for this is that some think “rational” has a positive value judgment attached to it. That is, if we acknowledge behaviour as motivated by a strategic rationale, we’re excusing it. But it also fits into a long line of colonial tropes, reminiscent of standards of civilization posited by European colonialists: the Global South is chaotic and uncivilized, giving Europeans entitlement to colonize these areas for their own good.

Today, the media portrays the good hegemons as democratic actors that solve their problems with level-headed strategy. Their enemies, meanwhile, are portrayed as erratic, hostile and rogue figures that will unexpectedly unleash violence simply because they can. As such, they can be portrayed as animals that need to be “tamed” or put down.

None of this is to say that these leaders are good. You’d be hard-pressed to find politicians that have not (albeit in varying degrees) done gravely immoral things. But we should care about our ability to point out that these leaders aren’t just acting to cause chaos, because politics and journalism should be concerned with the truth. We need to confront things as they really are.

Unfortunately, many conversations about foreign policy don’t discuss anything real at all, instead becoming theatrical gestures of moral grandstanding: There’s a villain that needs to be slain in order to fix a country’s problems, and that’s that. One of the reasons for this is to conceal who are really the victims of war and sanctions. Few Canadians would enthusiastically support sanctions against Iran or Syria, for example, if they knew they’d deeply deprive ordinary citizens of basic needs. As a result, sanctions are portrayed as targeting someone cartoonishly evil enough that the visceral response is to want to put them down with whatever method the state department insists will work.

For example, a Gallant Foundation study, reported on by the Yale Review of International Studies (YRIS) in 2018, found that U.S. print media compared Iraqi President Saddam Hussein to Adolf Hitler at least 1,035 times between August 1990 and February 1991, the period leading up to the Gulf War and through to its end. YRIS notes that the media narrative portrayed then-U.S. President George Bush as a brave hero confronting a “monster,” “beast” and “madman,” garnering American support for their government to attempt to remove Hussein from power.

North Korea is another case where cartoonishness is not only frequent, but the standard of reporting. Major outlets make baseless, often contradictory, claims, such as that all students in the country are required to get the same haircut as Kim Jong Un, or that no one is allowed to. These claims inevitably get debunked, yet leave the lasting impression that Kim is keeping an entire population subjugated not for any rational political motive, but to satiate absurd and borderline insane whims.

Of course, this kind of reporting is intended to do more than just entertain. If Kim is an unhinged monster that can’t be reasoned with, approaching North Korea with the utmost amount of aggression becomes justified. It makes Kim seem like a ticking time bomb that needs to be urgently confronted rather than diplomatically addressed. These efforts have worked, as an alarming amount of Americans, for instance, support a nuclear strike that would kill a large chunk of North Korean civilians.

This narrative has also created widespread worry about Kim having access to nuclear weapons, with American leaders and analysts publishing doom fantasies of an impending nuclear war. Some of this analysis will admit that Kim isn’t an irrational participant, but then still rests on a conception of him as a man with an unsatiated God-complex ruling over brainwashed individuals.

However, North Korea in recent history watched as Libya gave up its nuclear program only to have its government be overthrown shortly after, with Gaddafi being brutally sodomized and then murdered. North Korea saw and learned from this. As such, their nuclear program is a deterrent action by a rational state. This doesn’t make it a good government, but just means it’s capable of understanding state relations and making judgement calls for survival.

Further, mainstream media, pop culture and politicians need to stop oversimplifying the relationship between leaders our governments dislike and the citizens of their countries. The Communist Party of China, for instance, enjoys relatively high levels of support. Instead of careful reflection about what kind of policies make the party popular, along with other informative political metrics, it’s common to simply dismiss the Chinese population’s support for their government as a product of mass brainwashing. It’s hard for the media and onlookers to admit that the governments they demonize can simply enjoy popular support in a way that isn’t the result of a conspiracy.

Syria is another such case, where popular support for its oft-demonized leader is swept under the rug. To attempt to understand this support is met with accusations of apologism for Assad’s government. But there are factors relevant to Assad’s level of support that don’t revolve around his personality: the prevalence of terrorism, the potential ‘rally around the flag’ effect he may enjoy in the context of a war or the lack of a multi-sect opposition.

Admitting there are complex relationships between leaders and their population helps us ensure that we’re talking about something real in our political discourse.

I bring this up not because we need to praise or rehabilitate the personalities of world leaders. The intent is, rather, to point out that we place far too much emphasis on their personalities to begin with rather than the incentive structures that they, or their supporters, may be responding to. The solution is to instead strategically approach these incentive structures.

To be sure, the personalities of these individuals will play a role in their interactions with other leaders, but to make them the centrepiece is to obscure the conversation. We need to be able to talk about state behaviour and interactions without resorting to caricature, speculation and outright falsehoods.

To try and demystify what’s happening and wade through media sensationalism is not to exalt the media’s, or government’s, target. Rather, it’s an attempt to see things as they really are so that we can think for ourselves and come to organic conclusions.

Tyler Durden Fri, 04/12/2024 - 04:15

'Automated Assassination': Israel Lets AI Decide Who Dies In Gaza

Authored by Will Porter via The Libertarian Institute, 

The Israeli military has employed yet another AI-based system to select bombing targets in the Gaza Strip, an investigation by +972 Magazine has revealed. The new system has generated sweeping kill lists condemning tens of thousands of Palestinians, part of the IDF’s growing dependence on AI to plan lethal strikes.

Citing six Israeli intelligence officers, the Tel Aviv-based magazine said the previously undisclosed AI system, dubbed ‘Lavender,’ has played a “central role in the unprecedented bombing” of Gaza since last October, with the military effectively treating its output “as if it were a human decision.”

“Formally, the Lavender system is designed to mark all suspected operatives in the military wings of Hamas and Palestinian Islamic Jihad (PIJ), including low-ranking ones, as potential bombing targets,” the outlet reported, adding that “during the first weeks of the war, the army almost completely relied on Lavender, which clocked as many as 37,000 Palestinians as suspected militants—and their homes—for possible air strikes.”

However, while thousands have been killed in the resulting air raids, the majority were “women and children or people who were not involved in the fighting,” the officers told the magazine, noting that Israeli field commanders often rely on the AI system without consulting more substantial intelligence.

“Human personnel often served only as a ‘rubber stamp’ for the machine’s decisions,” one source said, adding that many commanders spend a mere “20 seconds” reviewing targets before approving strikes—“just to make sure the Lavender-marked target is male.”

Human input has been relegated to such a minor role in the decision-making process that Lavender’s conclusions are often treated as “an order” by Israeli troops, “with no requirement to independently check why the machine made that choice.”

Such decisions are made despite well-known system errors which result in misidentified targets in at least 10% of cases. Nonetheless, the AI has “systematically” selected the homes of suspected militants for strikes, with IDF bombings frequently carried out late at night, when entire families are more likely to be present.

In targeting lower-level Hamas fighters in the early stages of the war, the military largely resorted to the use of unguided ‘dumb bombs,’ concluding it was permissible to “kill up to 15 or 20 civilians” in such operations, the intelligence sources added. Senior militants, meanwhile, could warrant the deaths of “more than 100 civilians” in some cases.

“You don’t want to waste expensive bombs on unimportant people,” one officer said.

Automated Assassination

Lavender is far from the first AI program used to direct operations for Israel’s military. Yet another system unveiled by +972 mag, known as ‘Where’s Daddy?’, has also been used “specifically to track the targeted individuals and carry out bombings when they had entered their family’s residences.”

An unnamed intelligence officer told the outlet that homes are considered a “first option” for targeting, observing that the IDF is “not interested in killing [Hamas] operatives only when they [are] in a military building or engaged in a military activity.”

As of April, Israeli bombings have damaged or destroyed a staggering 62% of all housing units in Gaza—or nearly 300,000 homes—leaving more than 1 million people internally displaced, according to United Nations estimates. The territory’s housing sector has borne the brunt of the Israeli onslaught, representing well over two-thirds of the destruction in Gaza to date.

Earlier reporting has shed further light on Israel’s AI-driven “mass assassination factory,” with another program, ‘the Gospel,’ used to automatically generate massive target lists at a rate vastly exceeding previous methods. Under the guidance of that tool, Israeli forces have increasingly struck what they call “power targets,” including high-rise residential structures and public buildings. Such attacks are reportedly part of an effort to exert “civil pressure” on Palestinian society—a tactic clearly prohibited under international law as a form of collective punishment.

What War by A.I. Actually Looks Like - The Israel Defense Forces’ offensive in Gaza is an ominous hint of the military future Via @nytimes: https://t.co/mHVTuP2zbu

— Olav Mitchell Underdal (@omunderdal) April 10, 2024

The IDF has long relied on extensive “target banks” in planning operations in Gaza and the West Bank, gathering a long list of suspected militant command posts and installations. In recent years, however, those lists have swelled to include thousands of potential targets as the military outsources decision-making to automated systems.

Adding to the litany of AI programs used to deliver death in Gaza and beyond, Israel’s ‘Fire Factory’ system helps to automatically calculate munitions payloads and assign targets to particular aircraft or drones once they are selected. “What used to take hours now takes minutes, with a few more minutes for human review,” an IDF colonel said of the system in comments to Bloomberg.

Artificial intelligence and AI-powered facial recognition tech have similarly taken a greater role in policing the border between the occupied territories and Israel proper—as well as West Bank checkpoints—with the IDF deploying a litany of new systems to identify, surveil and arrest Palestinians in recent years.

Tyler Durden Fri, 04/12/2024 - 03:30

Southeast Asia's Preferred Ally Switches In Favor Of China

If Southeast Asian countries had to choose a strategic partner, slightly more would now prefer to align with China than the United States.

Statista's Katharina Buchholz reports that a poll conducted by the Institute of Southeast Asian Studies found that 50.5 percent of respondents in the ten ASEAN member countries would choose the Asian power in 2024, while 49.5 percent would pick the United States.

This has changed from 38.9 percent and 61.1 percent, respectively, just one year ago.

You will find more infographics at Statista

The change is largely due to respondents from Laos, Indonesia and Malaysia favoring China more strongly at an increase of between 20 to 30 percentage points each since 2023.

In Cambodia, support increased by around 18 percentage points, but remained below 50 percent overall.

The picture in similar in Thailand and Myanmar at increases of around 10 percentage points each and with support for China in Thailand reaching 52 percent.

Countries that would still strongly prefer to partner with the United States are the Philippines (83.3 percent in favor of the U.S.), Vietnam (79 percent) and Singapore (61.5 percent).

In all three countries, support for the U.S. was relatively stable compared to 2023.

Tyler Durden Fri, 04/12/2024 - 02:45

How Turkish Sanctions Against Israel Will Impact Bilateral Trade

Via Middle East Eye

Turkey’s decision to halt the export of 54 products to Israel in response to its war on Gaza isn’t likely to have far-reaching results, since both countries' economies are complementary in nature rather than central to each other.

The Turkish trade ministry announced earlier this week that Ankara would continue to implement the restrictions as long as Israel denies uninterrupted flow of humanitarian aid to Gaza Strip, citing UN Security Council decisions and an International Court of Justice (ICJ) preliminary judgment against Israel’s conduct in the coastal enclave. The export restrictions encompass items such as aluminium wire, steel, cement, construction materials, granite, chemicals, pesticides, engine oils, jet fuel and bricks.

Israel's Haifa commercial shipping port in the Mediterranean Sea, NurPhoto

Before the war, Turkish-Israeli ties had been steadier than they had been for years. After years of tensions over Palestine, the two normalized relations in 2022. Yet, while Turkey and Israel quarreled over the past decade, and even stopped cooperating with each other, trade had never been interrupted. In fact, it flourished over time.

The Turkish public has been outraged at Israel’s actions in Gaza, where reportedly more than 33,000 Palestinians have been killed in six months. Lists of ships carrying goods to Israel circulated on social media as Israel's onslaught grew. People also highlighted companies close to the Turkish government that continued commercial relations with Israel during the war.

Even though there is no evidence to back claims that Turkey sold weapons to Israel, the controversy was stoked by a small quantity of hunting gear or hunting equipment parts being found among the exports. They were broadly classified by the Turkish Statistical Institute (TUIK) as “weaponry”. 

In response to this domestic pressure and serious setbacks for the ruling Justice and Development Party (AKP) in local elections last month, the government decided to act against Israel.

Ties have been cut on the Israeli side, too. In October, several Israeli supermarket chains halted imports from Turkey in response to Ankara’s critical stance on the Gaza war. Israeli food company Strauss in December changed the packaging for one of its most well-known products, Elite Turkish coffee, adding an Israeli flag and patriotic slogans.

An important market

But is the trade between the two countries vital? Many say no, but Israel is nonetheless an important export market for Ankara. Turkey’s exports to Israel were worth $5.4bn in 2023, or 2.1 percent of its total exports, according to official data.

Although bilateral trade has dropped by 33 percent since the October 7 Hamas-led attack, it has nonetheless continued and exports to Israel have increased each month in 2024 so far. Both countries have had a free trade deal in place since 1996 and there have been no tariffs on certain products since 2000, which has enabled major increases in bilateral trade, largely favouring Turkey.

From 2009 to 2023, trade between the two countries nearly tripled. By the end of that period, Turkey had become the fifth-largest supplier of imported goods to Israel, while Israel ranked as Turkey's tenth-largest export market, based on data from the Central Bureau of Statistics.

Turkey exported steel, automotive industry products, chemicals, ready-made clothing and apparel, electricity and electronics, cement, glass, ceramics and soil products, furniture, paper, and forestry to Israel, according to a report published by the Turkey Exporters Assembly covering the period between 2011 and 2020.

“The economies are complementary but not intertwined,” Gallia Lindenstrauss, a senior research fellow at the Institute for National Security Studies (INSS), told Middle East Eye. “Turkey can find also substitutes to what it imports from Israel, and anyhow, of the bilateral trade, three-quarters are Turkish exports to Israel and only one-quarter is Israeli exports to Turkey.”

Trade with Israel has traditionally been highly advantageous for Turkey, which enjoyed a trade surplus of $3.9bn last year. Israel serves as a significant market for Turkish steel, purchasing 726,000 tonnes last year. This figure constitutes over 20 percent of Turkey's total steel exports. The ban is expected to significantly affect these exports.

In terms of dependence on imports, Israel heavily relies on Turkish cement, with imports from Turkey making up 29 percent of Israel's total cement imports last year. Additionally, Turkish imports represent about 11 percent of Israel's total plastic and rubber products, and around 10 percent in textiles.

Sources familiar with the construction industry told Israeli news outlet Mako that the new restrictions were expected to increase the prices of apartments and rent in the country if they are implemented. “In terms of long-term repercussions, the fact the Turkey halts construction materials when these are needed to repair damaged houses in the south and north of Israel because of rockets and other damage will likely taint relations also in the future,” Lindenstrauss said.

“Also, while anyhow there were question marks regarding a possible gas pipeline between Israel and Turkey, these export restrictions in a time of war will be a big warning sign not to proceed with the pipeline idea.”

Impact on Palestine

Turkey’s decision to restrict exports to Israel likely has an impact on Palestine as well. “Israel has complete control over the border crossings as Palestinian imports arrive at Haifa or Ashdod seaports, and the goods are then transported to Palestinian territories via trucks," Rashad Yousef, director of policies and planning at the Palestinian Ministry of National Economy, told Anadolu Agency.

Yousef added that Palestinian-Turkish trade volume in 2022 exceeded $900m, representing a 12 percent increase over 2021. He also said that the main Turkish exports to Palestine are iron, wood, vegetable oil, tobacco, food products and items from the plastic industries.

"If we exclude Israel, Turkiye is the largest source of goods and products in the Palestinian market," Yousef said. However, there are ways to continue to trade with Israel by rerouting trade through third countries, as the Ukraine war has proved following western sanctions on Russia.

Israeli importers are mulling bringing in Turkish goods via Slovenian ports Koper or Ljubljana, according to an Israeli report. “But still, the economic relations were what kept the relations going even in times of political crisis, so it is regrettable we have reached this point,” adds Lindenstrauss. 

“And despite it having been a painful step, I don't see it in itself changing Israel's policy - the pressures from the White House are much more significant.”

Tyler Durden Fri, 04/12/2024 - 02:00

Ukraine's Drone Strikes Against Russian Oil Refineries Complicate Biden's Re-Election Bid

Authored by Andrew Korybko via Substack,

CNN published a detailed piece on Tuesday about how “Ukraine’s AI-enabled drones are trying to disrupt Russia’s energy industry. So far, it’s working”. Although an unnamed source close to the program told them that “The flights are determined in advance with our allies, and the aircraft follow the flight plan to enable us to strike targets with meters of precision”, there are reasons to believe that the US is against these sorts of attacks. Not least among them is what CNN itself reported in that same piece.

According to them, “Ukrainian strikes on refineries have caused global oil prices to rise, with Brent crude up nearly 13% this year, leaving politicians in the United States worried about their potential economic impact in an important election year.” They also cited an expert who claimed, “That was the deal with Ukraine: We will give you money, we will give you weapons, but stay away from the export facility, stay away from Russian energy, because we don’t want a massive energy crisis.”

That individual added in reference to the Congressional deadlock on Ukraine aid that “If they’re not getting the weapons and money that they were promised, what is their incentive to abide by that deal with Washington?” This aligns with what Zelensky himself hinted in an interview with the Washington Post late last month when he revealed that “The reaction of the US was not positive on [us attacking Russian oil refineries]…(but) We used our drones. Nobody can say to us you can’t.”

Secretary of State Blinken echoed that sentiment in a joint press conference with his French counterpart on Tuesday when he said in response to a question about these oil refinery strikes that “we have neither supported nor enabled strikes by Ukraine outside of its territory.” He was asked about this after a Ukrainian drone strike targeted Russia’s third-largest refinery in the Republic of Tatarstan, which is located in the country’s heartland a full 800 miles away from the front lines.

When reflecting on Blinken’s statement, CNN’s report, and Zelensky’s earlier words, it certainly appears to be the case that the US doesn’t want Ukraine striking Russian oil refineries out of fear that the massive energy crisis that this could catalyze would capsize Biden’s re-election bid.

If that’s indeed its position, then it raises the question of which allies are determining the flight paths of these drones and why Zelensky would risk Trump returning to power when he’s much less pro-Ukrainian than Biden is.

It might very well be the case that there are divisions emerging within NATO over these strikes exactly as RT editorialized when drawing attention to how Blinken’s French counterpart seemed to support the latest attacks in his response to the question that they were asked during Tuesday’s press conference. France might therefore be providing this sort of assistance, which could also be complemented by the UK’s and other countries’ complementary contributions, whether on their own or as part of a joint effort.

As for why Zelensky would want to rankle Biden and risk Trump’s return, he might have a “god complex” after being promoted so heavily as a Churchillian leader over the past two years, which could have become part of his identity despite the media souring on him since last summer. In his mind, Biden will do his bidding in somehow getting the Republicans to approve more Ukraine aid under pain of him unleashing a massive energy crisis by taking out more of Russia’s refining and export capabilities.

Biden would have already gotten the Republicans to do this if he was able to so it’s delusional for Zelensky to imagine that holding his re-election bid hostage will make a positive difference. If anything, wider awareness his thuggish tactics among the Republicans could further solidify their resistance to approving more Ukraine aid since Zelensky isn’t just holding Biden’s re-election bid hostage, but the entire American economy as well and therefore also threatening the US’ objective national interests.

Should he authorize a series of strikes that catalyzes the massive energy crisis that the Biden Administration fears, then the most hawkish anti-Russian deep state faction that’s responsible for artificially perpetuating this conflict might lose the influence that it exerts over policymakers. Their comparatively less hawkish rivals could replace their dominant role in that scenario and possibly convince the Biden Administration to finally agree to a pragmatic compromise for ending the conflict.

Zelensky’s decision to hold Biden’s re-election bid hostage by threatening to unleash a massive economic crisis as revenge for the Congressional deadlock on Ukraine aid might be his downfall. He’s not only biting the hand that feeds his regime on the taxpayers’ dime but also threatening the US’ objective national interests.

The desperation that his forces feel on the battlefield is driving him to “go rogue”, but his patrons might soon tire of this and decide to replace him after his term expires on 21 May.

Tyler Durden Thu, 04/11/2024 - 23:45

Nearly 20% Of Recent San Francisco Home Sales Were Underwater

Nearly 20% of homes sold in San Francisco during the three months ending Feb. 29 sold at a loss. What's more, the typical SF homeowner took $155,500 less than they bought it for, which is 400% more in dollar terms than the nationwide median loss of $39,912 over the same period, Redfin reports, citing an internal analysis of county records and MLS data across the US.

San Francisco home sellers are far more likely than sellers in the rest of the country to lose money because home prices there have dropped dramatically since the pandemic homebuying boom. Still, the Bay Area is home to the most expensive real estate market in the U.S.

San Francisco’s median sale price peaked at $1.66 million in April 2022, and has since fallen 15% ($250,000) to $1.41 million as of February. The typical person who bought in San Francisco at nearly any point in 2021 or 2022, when the housing market was red hot due to ultra-low mortgage rates, would have taken a loss if they sold during the first few months of this year. -Redfin

"Home prices have fallen from their peak, especially when it comes to condos," said real estate agent Christine Chang. "It’s not just because mortgage rates are high. San Francisco has lost some of its appeal post-pandemic. A lot of tech employers and big-name retailers have moved out of the city, and some of my clients have reported they’re leaving the area because they don’t feel as safe as they used to."

Meanwhile...

According to the same report, Detroit came in second in terms of homes selling at a loss (10.8%) during the three months ending February 29, followed by three other Rust Belt and Midwestern metros: Cleveland (8.2%), St. Louis (8.1%) and Chicago (7.9%).

Sellers in those places are more likely than most to lose money because, like in San Francisco, home prices have fallen quite a bit from their pandemic peak. In Detroit, for instance, the median sale price is down roughly 20% from its pandemic peak.

Additionally, housing markets in Detroit and Chicago have suffered because they’re typically among the U.S. metros homebuyers are most likely to leave. -Redfin

Least likely to take a loss?

Homeowners in New England and Southern California were least likely to sell at a loss - with just 1.2% of homeowners who sold during the same period losing money.

This is followed by Boston, Anaheim, CA, Fort Lauderdale, FL, and San Diego, where roughly 2% of homes sold for less than the seller originally paid in each of those metros.

That said, the vast majority of sellers are still profitable on their home sales - even in San Francisco, where 82% of sellers took in more than they paid - with the typical seller banking $482,000 more than their cost basis over the period analyzed. Nationwide, 96% of sellers are postive on their sales, with a median gain of $196,016 thanks to the national media home price sitting just 5% below the all-time high set in mid-2022.

Tyler Durden Thu, 04/11/2024 - 23:20

Biden Admin Finalizes Controversial Rule To Expand Background Checks On Gun Sales

Authored by Michael Clements via The Epoch Times (emphasis ours),

The Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) has submitted the final version of a controversial rule to change the definition of what it means to be “Engaged in the Business” of dealing in firearms.

Weapons seized in federal law enforcement actions are displayed at the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) field office in Glendale, Calif., on April 18, 2022. (Robyn Beck/AFP via Getty Images)

The U.S. Attorney General says the change, required by the Bipartisan Safer Communities Act enacted June 25, 2022, will save lives by requiring anyone who “devotes time, attention, and labor to dealing in firearms as a regular course of trade or business or predominately earns a profit through the repetitive purchase and sale of firearms” to obtain a Federal Firearms License.

“Under this regulation, it will not matter if guns are sold on the internet at a gun show or at a brick-and-mortar store: if you sell guns predominately to earn a profit, you must be licensed, and you must conduct background checks,” Attorney General Merrick Garland wrote in a statement on the ATF website.

Critics of the change say the rule will effectively end private transactions, possibly including the inheritance of firearms within families.

According to the ATF statement, President Joe Biden issued Executive Order 14092 on March 14, 2023, which directed Mr. Garland to clarify the definition of who is engaged in the business of dealing in firearms. The plan immediately drew criticism from gun rights activists.

“The ATF is using the [Bipartisan Safer Communities Act] BSCA to substantially revise all regulations governing who and what constitutes a ‘dealer’ and how such dealers may conduct business. This proposal advances a radical left-wing agenda that will undermine the Second Amendment and the Constitutional rights of all Americans,” Rep. Bob Good (R-Va.) wrote in a Dec. 7, 2023, letter to ATF Director Steen Dettelbach.

Mr. Garland signed the new rule on April 10, and it will become effective May 10, 2024.

According to the 466-page rule, the only requirement for determining whether a person is engaged in the business of selling guns is whether the person is trading to “predominately earn a profit” rather than to earn a “livelihood.”

Critics claim that under the new rule, the transfer of a single gun between private citizens would require the seller to have an FFL and to perform a check through the National Criminal Instant Background Check System (NICS). This would effectively end all private firearm sales and could even subject parents to federal prosecution for trying to pass family heirlooms along to their children.

“Once again, the Biden Administration is weaponizing every tool in their tool box to intimidate, harass, and criminalize gun owners with unlawful executive actions. This Backdoor Universal Registration Check rule is nothing more than a move to criminalize the sale of a single gun without a background check,” Aidan Johnston, Director of Federal Affairs for Gun Owners of America wrote in a statement to The Epoch Times.

But the new rule states that is not the case.

“Individuals may continue to engage in intrastate private sales without a license, provided that such individuals are not ‘engaged in the business’ and the transactions are otherwise compliant with law,” the rule reads.

In an ATF press release, Mr. Dettlebach stated that the rule is about closing an avenue by which criminals obtain guns.

“Today’s final rule is about ensuring compliance with an important area of the existing law where we all know, the data show, and we can clearly see that a whole group of folks are openly flouting the law,” Mr. Dettlebach is quoted as saying. “That leads to not just unfair, but in this case dangerous consequences.”

But Second Amendment advocates say the new rule is the next step in the Biden Administration’s plan to implement gun control measures through administrative action that it can’t get through the legislative process.

“The government hopes to ensure that they are fully involved in every firearm transfer, and eventually the records of all those transfers will end up in their records database. Just last month ATF executed an airport executive in Arkansas during a pre-dawn raid because he was ‘engaged in the business’ without one of ATF’s licenses. This could quickly become the new normal, so liberty-loving Americans are right to be concerned,” Mr. Johnston’s statement reads.

Tyler Durden Thu, 04/11/2024 - 22:55

In Latest Humiliation For Biden Admin, Russian Oil Is Trading Above The G7 Price Cap Everywhere

Back in late 2022, when "Western democracies" bombastically unveiled theatrical sanctions against Putin, capping the price at which imports of Russian oil were permitted to no higher than $60, we said that this was one of the biggest farces in modern history, not only because it was an optical play that was made entirely for public consumption (as nobody in the west actually wanted to curtail Russian oil exports as the outcome would be a devastating surge of inflation as Biden now realizes), but also because there was no enforcement mechanism to cap the price at $60 and no more.

We were right, again, and today Bloomberg reports that "Russian oil is trading far in excess of a Group of Seven price cap that’s supposed to deprive Moscow of revenue for its war in Ukraine, suggesting significant non-compliance with the measure", which anyone with half a working brain would have expected to happen, which of course excludes virtually all "democratic" bureaucrats who implemented this idiotic sanction (which only ended up making the Vitol oil traders billionaires).

According to data from Argus Media, whose price assessments are followed by some G-7 nations involved in the cap, Russian flagship Urals grade oil is now selling for $75 a barrel at the point it leaves ports in the Baltic Sea and Black Sea. A Treasury official told Bloomberg that US officials are tracking the price increase, which they attribute to broader geopolitical dynamics, as the alternative - admitting they are idiots, would be a bit too introspective.

As a reminder, the Russian embaro cap requires that any western company involved in transporting Russian oil receives a so-called attestation, a document vouching that the cargo cost $60-a barrel or less. If it doesn’t, they’re not allowed to provide their services. The fact that Argus’s prices are so far above that level creates what Bloomberg called a "dissonance", but what we would call, a giant slap on the face of the Biden administration which nobody takes seriously any more.

While Urals has been above $60 almost all year, this month’s surge to well above $70 will stretch the credibility of those attestations for traders wanting to keep using western services. Not like anyone actually thought those attestations had any credibility to begin with since the governments enforcing them were so clearly interested in having everyone ignore them.

Bloomberg data showed that in March, 23% of the nation’s crude oil shipments had insurance against spills and collisions provided by members of the International Group of P&I Clubs. That means traders would have vouched that the cargoes cost well below where Argus assessed the Urals price to be, which was clearly not the case, and means that at least a quarter of Russian oil shippers are fabricating data. A smaller proportion moved on Greek tankers, all of which had cover from IG clubs, also requiring attestation.

Hilariously, the idiots in the Biden admin told Bloomberg that the cap is still having its intended effect, reducing the amount of money the Kremlin receives from oil sales by forcing the commodity to either be sold under the cap via western services, or through Russia’s shadow fleet. Which, of course, is absolutely not the case and Putin is currently rolling in the cash from selling oil to the same European nations that are supplying Ukraine with their most modern weapons which Putin then handily blows up and reverse engineers. The US plans to continue the enforcement of the cap by sanctioning vessels operating in the shadow fleet, but will not do so in response to any specific market moves, the official said, requesting anonymity to discuss internal deliberations, and for the reason that it would be extremely embarrassing if his name were to become public.

A European Commission spokesperson said the bloc is aware of the risk of the price cap being dodged, and is committed to steps that deprive Russia of revenue while simultaneously “supporting global energy market stability.” It’s also constantly reviewing existing measures to enforce the cap and prevent its violation or circumvention, the spokesperson said, adding that such measures require unanimity among member states. In other words, Europe knew from day one that the Russian oil embargo was not going to work, and now, a year and a half later, is blame the lack of "unity" for this farce.

The bloc’s most recent sanctions package was aimed at tighten the cap’s enforcement, the spokesperson said; clearly the package did not achieve the "desired outcome."

Of course, it's not just Russia that is rolling in dough: by the time Urals cargoes get to India, the grade is trading at $88 a barrel — just $3.80 below than the global benchmark for physical cargoes, Dated Brent, Argus data show. When the nation’s ESPO crude leaves the port of Kozmino in eastern Russia, it is at $84 a barrel. It hasn’t been close to the price cap for about a year.

Bloomberg concludes that since last October, "the US Treasury has shown it’s prepared to punish companies for breaches of the price cap that happened in the past" however, given its desire to avoid any actions that disrupt the flow of crude — and risk higher prices — the rally in headline Brent futures to around $90 a barrel may temper any push to do so at this time.

In other words... well, this:

Tyler Durden Thu, 04/11/2024 - 22:30

GODL! Precious Metal Soars Above $2,400 After Sudden Gap Higher

Crypto bulls - at least those who didn't betray their "laser eyes" PFP and sell previously - have had their day in the sun for the past 3 months as bitcoin and most other digital fiat alternatives soared, making it clear why, despite the difficult, it can be so very profitable to HODL, especially with the US is approaching the Minsky Moment of issuing $1 trillion in debt every 100 days, and interest on US debt, now at $1.1 trillion, is set to surpass Social Security spending and become the single largest government outlay before the end of the year.

Now that rate cuts are off the table, interest on US debt - currently the second biggest government outlay at $1.1 trillion - will surpass social security and become the single biggest US expense before the end of 2024 at $1.6 trillion. pic.twitter.com/OQYjHhOks9

— zerohedge (@zerohedge) April 11, 2024

And now, it's time for GODL!

Stupid jokes aside, while bitcoin was rampaging higher, goldbugs stared in disgust, wondering why their non-fiat god had forsaken them... after all, when the collapse of the dollar, and fiat in general, finally arrives gold will be one of the very few currency alternatives still standing. Alas, ETF flows have not provided any respite, because while bitcoin ETFs soaked up most money in the past 3 months, aggregate gold flows continued to shrink.

And yet, starting in the beginning of March, gold finally broke out from the black hole gravitational attraction of the Bank of International Settlements trading desk, and has soared some $300 dollars in just 6 weeks, its fastest ascent in decades.

Fast forward to tonight when, with most other assets quiet, gold suddenly surged higher, and after closing at an all time high, the precious metals spiked by another $15 in a matter of seconds, a move which for the otherwise hyperlethargic assets, is the equivalent of turbo boost.

And while it's now just a matter of hours if not minutes, before spot rises above $2,400, gold futures are already there: the active, June contract just hit a new all time high of $2,406.9 moments ago around the time Chinese buy orders started rolling in...

... and contrary to speculation that this is just a fat finger, or a another one-off buy orders, gold future volumes are solid, especially given volumes would have already been very high in the last few days. GCM4 volumes are now 23.5k lots vs. 5-day average of 17.85k lots.

While it wasn't clear what sparked the buying frenzy, UBS' trading desk notes that "gold futures gapped up $10 as they traded through Thursday's high on what felt like stop losses being triggered; 0.5moz of futures volume were behind the move."

What happens next is also unclear, although as we showed moments before the breakout, the current divergence between gold prices and 10Y real rates, suggests that something awful is about to happen...

this is not normal pic.twitter.com/mv0uLsDs7R

— zerohedge (@zerohedge) April 12, 2024

... a dismal outlook proposed last week by none other than BofA CIO Michael Hartnett, who in his latest Flow Show report noted that investors are looking beyond the "here and now", realizing that there is no way markets or the economy can sustain 5% nominal and 2% real rates, and are hedging two things: i) the risk that the Fed cuts as CPI accelerates, and ii) and more ominously, the "endgame of Fed Interest Cost Control ("ICC"), Yield Curve Control (YCC) and QE to backstop US government spending."

In short, something big is about to break, and if the surge in gold leads to a spike in yields, start the countdown to one of two things: i) QE and/or ii) YCC, because if the bond market sniffs out the endgame that gold is currently smelling, it will be up to Powell to once again prevent a catastrophic financial collapse.

For those wondering how far gold can rise, we excerpt from the latest note from BofA commodities strategist Michael Widmer (available to professional subscribers), who writes that...

Gold and silver are among our most preferred commodities, with the yellow metal pushed up by central banks, China investors and, increasingly, Western buyers on a confluence of macro factors, including an end to hiking cycles. Accordingly, we see the yellow metal rally to US$3,000/oz by 2025. Silver benefits from that too, with prices also boosted by stronger industrial demand. This could take prices above US$30/oz within the next 12 months.

And some charts.

And here is UBS, predicting that the price of the precious metal could double from here (note also available to pro subs):

The recent move in gold reminds me of a famous quote: “There are decades where nothing happens, and there are weeks where decades happen.” Looking at history, gold price can stay in the doldrums for a long time but when it does breakout, the surge is usually fast and furious. In deciding whether to chase or fade the recent gold rally, it might be useful to draw some inspiration from past breakout episodes. Here I define a "breakout" to be when the gold prices move 10% above the previous historical peak.

Should history repeat itself, it is not too late to participate in the current gold rally. An investor with a two to three-year view could expect to see gold potentially double from here to more than $4,000. The take-profit signal is when real rates turn negative and when there is a full-blown recession. Today with real rate still high and a recession seemingly faraway, it is too early to call the end of the ongoing gold rally. Gold breakout can be seen as an ominous signal, and it is not difficult to imagine a range of geopolitical risk scenarios. As for markets, many things look mispriced today with a two to three-year lookout, ranging from incredibly low credit spreads, elevated equity valuation to subdued volatility. It's fair to say that the gold market has fired its warning shot.

Much more in the full report from BofA and UBS available to professional subs in the usual place.

Tyler Durden Thu, 04/11/2024 - 21:56

Texas Nat Gas Prices Turn Negative As Drillers Chase Oil Sales

Nat gas prices at the Waha hub in the Permian basin in Texas slumped to a negative price of -$2.00 per million British thermal units (MMBtu) this week as the recent rise in oil prices prompts producers to bring drilled but uncompleted wells online, OilPrice reported.

As the U.S. benchmark oil price, West Texas Intermediate, hit $85 per barrel—the highest level in nearly six months, Texas producers keep pumping crude, but their wells also produce gas, which basically has nowhere to go.  

While producers are chasing higher realizations for the crude they pump, they are depressing further an already depressed U.S. natural gas market, which has been oversupplied for months due to a milder winter and lower demand for heating and electricity.  

Producers in West Texas are hit by the negative price of natural gas at the Waha hub, which means that they have to pay for someone to take that gas. But demand just isn’t there.

“They’re bringing these drilled, uncompleted wells online because the price of oil is higher,” Dennis Kissler, senior vice president for trading at BOK Financial Securities, told Bloomberg.

“It’s flooding the market with gas, and you’ve got no demand,” Kissler added.

Yet, signs have started to emerge that the natural gas glut may have started to hold back drilling in parts of the Permian basin.

U.S. oil producers are not in a rush to significantly boost crude production despite oil prices hovering at a six-month high, as multi-year low natural gas prices and higher costs are weighing on the industry, analysts and executives told Reuters earlier this month.

Oil producers in America are also mindful of the investor demands for higher returns, not necessarily higher production.  

“Natural gas is currently pricing at or below costs of production,” an executive at an exploration and production company said in comments in the latest quarterly Dallas Fed Energy Survey released at the end of March.

Tyler Durden Thu, 04/11/2024 - 21:40

How Ivermectin Trials Were Designed To Fail

Authored by Yuhong Dong via The Epoch Times (emphasis ours),

The use of ivermectin to treat COVID-19 is an ongoing debate. The central conflict is that while many doctors have reported success in using ivermectin, some studies published in major journals suggest it is in fact ineffective.

(eloresnorwood/Shutterstock)

Even as the FDA recently has been removing misinformation it posted about ivermectin, the agency has maintained its original position regarding its effectiveness, namely that there isn’t evidence.

People who trust ivermectin claim the studies showing ineffectiveness are fraudulent, while people who are skeptical of its use for treating COVID-19 view it as an anti-science conspiracy theory.

As a professional with decades of research experience conducting dozens of clinical trials on antiviral drugs, I decided to dive deep into the studies purporting ivermectin’s ineffectiveness. What I found shocked me.

Legacy Media Report Ineffectiveness

Numerous preclinical studies have found that ivermectin has a broad range of effects on COVID-19, spanning from its initial impact on viral infection to the pathological changes the virus causes in our bodies.

Ivermectin inhibits the entire life cycle of SARS-CoV-2 in our cells from attachment, spreading, and replication (1, 2, 3).

Moreover, ivermectin is anti-inflammatory and organ-protective, which can potentially protect against severe COVID-related lung damage and acute respiratory distress syndrome, heart-related complications, and blood clots.

Ivermectin exceeds the approved antiviral effects of other medications, including Paxlovid, molnupiravir and remdesivir, which only target the virus and lack anti-inflammatory and organ-protective effects. Monoclonal antibodies have to be constructed specific to each variant and are very expensive.

In the pharmaceutical industry, clinical trials are commonly used to evaluate the efficacy and safety of drugs once their mechanism is demonstrated. There are two types of clinical trials: observational and interventional.

Observational studies are often conducted by doctors in clinical, hospital, or community settings to analyze the effects of drugs. The data is collected as observed in clinical practice with minimal interference.

Many doctors have observed the positive effects of ivermectin on their patients. An observational study conducted in Brazil with over 88,000 patients showed that ivermectin reduced the rates of infection, mortality, and hospitalization by 49 percent, 92 percent, and 100 percent, respectively, compared to nonusers.

Pharmaceutical companies are required to conduct interventional studies that meet the approval standards set by the U.S. Food and Drug Administration (FDA). Randomized clinical trials (RCTs) are frequently utilized to fulfill these requirements. This type of study is considered the gold standard and involves randomly assigning one group of patients to receive a specific drug while the other group does not receive it, then comparing the outcomes.

Legally and medically, ivermectin can be prescribed off-label to treat COVID-19 since it has already been approved by the FDA for other diseases.

Although many doctors have observed the positive effects of ivermectin in treating their patients, the media has specifically highlighted data from a few selected RCTs that have concluded it is ineffective in treating COVID-19.

However, some critical aspects were overlooked in those RCTs.

Improper Dosing

A drug’s therapeutic effects can only be observed when it reaches the appropriate concentration in the body and remains there for a few days, allowing sufficient time to work.

Improper dosing was a major issue in the RCTs that found ivermectin ineffective.

Recommended Dosage

According to Merck’s package insert for ivermectin (brand name Stromectol), a single oral dose of 0.2 mg/kg was officially recommended for treating parasitic diseases. There is no official dose for COVID-19.

The recommended dosage of ivermectin for treating COVID-19 is based on the clinical experiences of physicians worldwide.

The Front Line COVID-19 Critical Care Alliance (FLCCC) guidelines recommend taking 0.4 mg/kg of ivermectin daily, immediately after exposure. Once a cumulative dose in excess of 200 mg is reached, the risk of acquiring COVID-19 has been shown to be nearly zero.

It is common for a drug with multiple indications to have different doses for different diseases.

Moreover, ivermectin should be given with food, as it has a 2.6-fold higher bioavailability when taken with food rather than on an empty stomach. The Merck package insert (revised May 2022) also supports this and states: “Administration of 30 mg ivermectin following a high-fat meal resulted in an approximate 2.5-fold increase in bioavailability relative to administration of 30 mg ivermectin in the fasted state.”

FLCCC guidelines also recommend taking ivermectin “with or just following a meal for greater absorption.”

Yet this important dosing information is not reflected in the commonly used drug prescribing resource known as the Prescribers’ Digital Reference or PDR which states: “Take the number of tablets your doctor has prescribed all at the same time with water on an empty stomach. Do not eat any food within two hours before or after taking the tablets.”

So if a person takes the dose while fasting, they are getting only 40 percent of the recommended dose. For patients with a higher body weight, the effects of underdosing could be even more significant.

RCT Studies Used Inappropriate Dosing

In the most recent PRINCIPLE trial published in March, ivermectin was used at 0.3 mg/kg for only three days. Moreover, it was designed to dose the ivermectin without food: “Participants were advised not to eat two hours before or after taking ivermectin.”

In another RCT ACTIV-6 published in JAMA in October 2022, ivermectin was dosed in a fasting status, as the protocol stated: “Ivermectin should be taken on an empty stomach with water (30 minutes before a meal or 2 hours after a meal).”

Ivermectin was reported as dosed at 0.4 mg/kg for three days—a much shorter time period than it should be. However, in the protocol Table 4 in Appendix 16.3.3, the precise dosing was as low as 0.269 mg/kg, and 0.4 mg/kg is actually only the upper dose limit—not the real dose.

According to the worldwide recognized study guideline ICH Good Clinical Practice, clinical trials must adhere to ethical principles. Failure to do so would be considered study misconduct or fraud and would violate the principle of integrity.

Another JAMA study published in March 2021 repeated the same mistake in mild COVID-19 patients by suggesting they take 0.3 mg/kg for five days on an empty stomach.

An RCT study known as TOGETHER, published in March 2022 in the New England Journal of Medicine, underdosed ivermectin with 0.4 mg/kg for only three days and did not mention dosing with food.

Nevertheless, even at this low dose, the ivermectin still reduced hospitalization rates, death, and the need for mechanical ventilation compared to a placebo.

Clinical Improvement Despite Underdosing

It is inappropriate to conclude that ivermectin was ineffective based on these RCT studies with major design flaws.

Despite the poor study design, ivermectin showed clinical benefits and saved lives.

In the PRINCIPLE study, self-reported recovery was shorter in the ivermectin group than usual care, with a median decrease of 2.06 days. The statistical analysis showed that it met the predefined superiority criteria.

Furthermore, the analysis showed that ivermectin effectively reduced COVID-19-related hospitalizations and deaths. Only 1.6 percent of 2,157 patients in the ivermectin group experienced hospitalizations or deaths, compared to 4.4 percent of 3,256 patients in the usual care group.

Even a low dose of ivermectin has demonstrated the potential to save lives. However, the authors concluded, “Ivermectin for COVID-19 is unlikely to provide clinically meaningful improvement in recovery, hospital admissions, or longer-term outcomes.”

Meanwhile, the report’s appendix includes dozens of recorded clinical benefits in patients treated with ivermectin, such as the time it took to alleviate all symptoms, general unwellness, muscle aches, and headaches. The improvement of symptoms was also sustained, and the severity was reduced. Surprisingly, the source PDF was removed from the website during the writing of this article.

There are additional examples. Although the previously mentioned 2021 JAMA study underdosed patients, treatment with ivermectin reduced recovery time by two days. In the ACTIV-6 study, only one venous blood clot event was reported in 817 ivermectin-treated patients, compared to five events in 774 placebo-treated patients.

Statistical Failures

It is important to note that the definition of treatment effects in an RCT can differ from those discussed in real-life observational studies.

Sometimes, even if the results of a clinical trial demonstrate a clear effect, the conclusion may still be interpreted as ineffective due to the statistical definition of effectiveness.

Interpreting statistics can be challenging as they usually involve complicated mathematical models and numerical data that can be manipulated to support a specific agenda. Nevertheless, for the purpose of this discussion, let’s presume that all research is carried out conscientiously and without manipulative intent.

In a randomized, double-blind, placebo-controlled clinical trial with mild to moderate COVID-19 patients, none of the 55 patients in the ivermectin group died, whereas four of 57 in the placebo group died. This resulted in a comparison of zero percent versus 7 percent. Moreover, only 1.8 percent of ivermectin-treated patients needed invasive ventilation compared to 8.8 percent in the placebo group.

In other words, ivermectin reduced the risk of death by 100 percent and the need for ventilators by 80 percent.

However, the article did not provide the p-value (probability value) for the death rate comparison or the invasive ventilation of 0.102 (Table 2), which is higher than the 0.05 threshold considered to be a significant statistical difference.

P-values are commonly used to test and measure a “null hypothesis,” which states that no differences exist in the effects being studied between two groups. A finding is considered statistically significant and warrants publication when the p-value is 0.05 or less.

The p-values in this study were deemed insignificant because they were more than 0.05. Accordingly, the authors wrote that this difference was statistically insignificant and concluded that ivermectin “had shown only marginal benefit.”

How could a 100 percent reduction in death or an 80 percent reduction in ventilation be interpreted as “marginal” effects?

In the I-TECH study published in JAMA Internal Medicine in 2022, the patients treated with ivermectin had a lower mortality rate of 1.2 percent compared to 4 percent in the comparator group.

The same conclusion was made as the previous study because the p-value was 0.09 and higher than 0.05.

If the 7 million patients reported to have died from COVID-19 had been treated with ivermectin, an estimated 4.9 million lives could potentially have been saved based on the 70 percent reduced mortality rate from the I-TECH study; or 4.5 million lives could have been saved based on the 64 percent reduction of mortality in the PRINCIPLE study.

The life-saving potential of ivermectin has been hindered by the unnecessary statistical threshold. The problem of statistical significance is widespread and frequently causes confusion among scientists.

A 2016 Nature article raised concerns about the misuse of p-values. A 2019 comment in the same journal stated that “The misuse of statistical significance has done much harm to the scientific community and those who rely on scientific advice.”

The authors called for abandoning the use of statistical significance to draw conclusions regarding the effectiveness of drugs, such as stating that “drug Y does not work,” and cautioned that such conclusions may result in the dismissal of potentially life-saving drugs.

The authors also wrote: “Let’s be clear about what must stop; we should never conclude there is ‘no difference’ or ‘no association’ just because a P value is larger than a threshold such as 0.o5.”

Selection Bias

Many people, including physicians, may not be aware that interventional studies, particularly RCTs, are are prone to numerous biases, with selection bias being one of the most significant. Excluding potentially eligible individuals due to their anticipated group allocation can lead to selection bias.

It’s common knowledge that early treatment of COVID-19 is crucial for effective results. The earlier the treatment starts, the more effective it is. These approved antivirals for COVID-19 are used shortly after COVID-19 infection and usually within a few days after symptom onset.

For example, Paxlovid and molnupiravir registration trials treated patients within only three to five days of symptom onset.

Early treatment is critical for COVID-19. Efficacy declines rapidly with treatment delay. (c19early.com)

However, in the PRINCIPLE trial, ivermectin was used for patients within 14 days of symptom onset, while ACTIV-6 treated patients an average of six days after infection.

Patients with severe kidney disease are normally excluded from phase 3 studies, as they are less likely to respond to antiviral treatment. This approach has been taken by remdesivir (protocol), molnupiravir (protocol), and Paxlovid (protocol). However, such standard exclusion criteria were not taken by the ACTIV-6 or PRINCIPLE study protocols.

Why was ivermectin treated so unfairly in these clinical trials?

It is well known that when an RCT is sponsored by Big Pharma, there is often a financial conflict of interest, as the research institutions are usually hired or funded by the pharmaceutical company. In a world where wealth often competes with ethics, how many can resist financial temptation and stay true to moral principles?

“Hidden agenda bias” occurs when a trial is conducted to demonstrate a desired outcome, rather than to answer a question. In other words, “Don’t do a trial if it won’t show you what you want to find.”

Proven Without a Profit Motive

Conducting an RCT to get a drug approved by the FDA requires money. Every drug must be managed by a professional team composed of doctors, database managers, and assistants. Professionals must secure funding, recruit a lead investigator, and find hospitals to conduct the study. An operational team must perform the study, analyze the data, and gain FDA approval.

Since ivermectin is a generic drug that lacks profitable marketing and a pharmaceutical sponsor, it’s challenging to organize and systematically manage its new application with health authorities, data, and customers.

Nevertheless, doctors worldwide have been using ivermectin to help patients and have collected valuable data.

The website c19ivm.org has compiled data on 102 clinical trials proving ivermectin’s consistent effectiveness in treating COVID-19. Studies with negative conclusions about ivermectin are also included, such as the the four RCTs with recognized design flaws.

Since the beginning of the analysis, ivermectin has consistently shown efficacy. This meta-analysis provides a thorough and transparent real-time analysis of all eligible ivermectin studies.

The trials were conducted by 1,139 doctors or scientists from 29 countries with 142,307 patients. Out of the total studies, 86 have been peer-reviewed with 128,787 patients, and 49 were randomized controlled trials with 16,847 patients.

In the studies with comparative groups, ivermectin was shown to reduce the risk of COVID-19 infection by 81 percent, mortality by 49 percent, ICU admission by 35 percent, ventilation usage by 29 percent, and hospitalization by 34 percent.

In comparison to the control groups, the use of ivermectin as a preventive measure before infection reduced the most severe clinical outcomes of COVID-19 by 85 percent. When used in the early stage of COVID-19, ivermectin decreased the severity of the disease by 62 percent, and when used in late stages, it reduced the clinical severity by 39 percent. Clinical severity is measured by death, ventilation, disease progression, or hospitalization.

Ivermectin treatment effects in COVID-19 patients, based on a meta-analysis of 102 clinical trials. (c19ivm.org) Considering the Entire Picture

It’s difficult to believe that the designers of these studies were unaware of the dosing of ivermectin. Despite all of the above analyses, the reasoning behind the ivermectin underdosing or unfavorable study design may be linked to factors beyond science.

A new drug or vaccine cannot achieve an Emergency Use Authorization (EUA) status if there is an existing viable therapeutic available. This fact alone may have impacted many decisions.

The NIH website lists only those RCTs that I found to have design flaws (or potential fraud) to justify its recommendation against the use of ivermectin in the treatment of COVID-19.

Peer-reviewed studies showing the efficacy of ivermectin in treating COVID-19 have been retracted without explanation, and doctors have been demonized, censored, and doxxed for speaking the truth.

Legacy media, including The New York Times and CNN, reported incomplete and improperly interpreted trials that failed to present an accurate representation of ivermectin’s effects.

It’s important to keep an open mind and consider the entire picture when examining the ivermectin issue, rather than dismissing it as conspiracy or misinformation. This can lead to more informed decisions that could ultimately save lives.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Thu, 04/11/2024 - 21:15