DOJ Antitrust Head Set To Heighten Scrutiny On PE Firms Rolling Up Entire Industries The Department of Justice could be on its way to ending private equity's strategy of rolling up entire industries before hollowing them out and cashing out. For PE firms, the new scrutiny by regulators could arguably be coming at the worst time, as asset prices have started to plunge due to the Fed's new hawkish monetary policy stance.  Jonathan Kanter, head of the DoJ’s antitrust unit, told the Financial Times this week: “Sometimes [the motive of a private equity firm is] designed to hollow out or roll up an industry and essentially cash out. That business model is often very much at odds with the law, and very much at odds with the competition we’re trying to protect.” He said that buyouts were “an extremely important part of our enforcement programme,” FT reported. Kanter is "one of several progressive officials appointed by Joe Biden", the report notes.  Meanwhile, firms like Blackstone have come under fire in recent years for owning larger and larger portions of the U.S. economy. The industry has been red hot, with a record 14,730 deals taking place globally last year. This was nearly double the previous high and amounts to $1.2 trillion in transactions. The report notes that PE firms are starting to turn into the very same corporate giants they once assisted in breaking up.  FT predicts that Kanter is leading enforcement for PE down the same path that technology companies have gone down with regard to anti-trust scrutiny.  “Many of the mergers we’re confronting are as a result of [private equity] roll ups,” he said, noting that the DOJ will be looking at “interlocking directorates”, which is where PE executives sit on the boards of numerous companies in competition and/or in the same industry.  Kanter noted that this could be a violation of the 1914 Clayton Antitrust Act.  He continued: “Very often settlement divestitures [involve] private equity firms [often] motivated by either reducing costs at a company, which will make it less competitive, or squeezing out value by concentrating [the] industry in a roll-up.” “So in many instances, divestitures that were supposed to address a competitive problem have ended up fuelling additional competitive problems.” “If we’re going to be effective, we cannot just look at each individual deal in a vacuum detached from the private equity firm,” he concluded. “It’s important that we articulate a tractable, legally sound framework in the merger guidelines, but one that’s broad enough and flexible enough to address issues [including] private equity [or] technology.” Tyler Durden Thu, 05/19/2022 - 17:40.....»»

Border Patrol Union Leader Warns Of "Complete Control" By Cartels Once 'Title 42' Ends Authored by Rita Li via The Epoch Times (emphasis ours), The head of the Border Patrol union warned that drug cartels would seize “complete control” of the southern border, as a Trump-era public health order to expel illegal immigrants is to expire on Monday. “That we just don’t have anybody in the field, that we just can’t patrol the border,” National Border Patrol Council President Brandon Judd said during Fox News’ “America’s Newsroom,” after being asked about the “worst-case scenario” once the law ends on May 23. National Border Patrol Council President Brandon Judd at a border meeting in Del Rio, Texas, on July 18, 2021. (Charlotte Cuthbertson/The Epoch Times) He said the Border Patrol system is running out of capacity as overwhelmed border agents will be largely held up by processing asylum-seeking illegal immigrants, either refereeing their claims or expelling them back to their home countries. “When you look right now, we already start our shifts with 50 percent of our resources not even performing enforcement activities. They’re in administrative duties. Once this explodes, we’re going to have nearly 100 percent of our people doing administrative duties rather than enforcement duties.” “That’s going to give complete control to the cartels. That’s a scary situation to be in,” he added. Judd was referring to Title 42, a COVID-19-era policy implemented during the Trump administration in March 2020 to quickly expel illegal immigrants on public health grounds. The measure has so far blocked over 1.7 million illegal aliens at the U.S.–Mexico border in the past two years, yet is set to expire on May 23 under President Joe Biden, given that public health conditions have changed. According to a May 16 court document filing, U.S. border officials encountered more than 234,000 illegal immigrants at the U.S.–Mexico border in April, with 96,908 deported back to Mexico under Title 42. It topped March’s 22-year high of just over 221,000 illegal immigrants and marked the fourth time that monthly border encounters have topped 200,000 under Biden. The border crisis “clearly began” the time Biden took office in January 2021, according to Senate Minority Whip Sen. John Thune (R-S.D.). “If he ends Title 42 policies next week, we’re going to need a much taller chart,” he said in a May 18 Twitter post. “By empowering the Cartels instead of @CBP [Customs and Border Protection], Biden is actively threatening the health and safety of our communities,” said Rep. Glenn Grothman (R-Wis.), the ranking member on the National Security subcommittee, on May 17. Rep. Diana Harshbarger (R-Tenn.) said the same day that “only the cartels are happy” about the lift. The Biden administration has said it is preparing for scenarios of up to 18,000 encounters per day when the order lifts. Both Republicans and moderate Democrats, including those in tough races for November midterms, have warned about the lack of a comprehensive plan to tackle the potential immigrant inflow at the border once Title 42 lifts. During a visit to the southwest border in the Rio Grande Valley on May 17, Homeland Security Secretary Alejandro Mayorkas said his department is prepared for the ending of Title 42. “That does not mean that the border is open beginning on May 23,” Mayorkas said. “We continue to enforce the laws of this country. We continue to remove individuals who do not qualify for relief under the laws of this country.” The annual deportation has fallen dramatically under Biden. In the financial year 2021, just over 59,011 were deported, compared to about 185,884 in 2020 and 267,258 in 2019, according to data released by the U.S. Immigration and Customs Enforcement. Haitian migrants continue to cross across the U.S.–Mexico border on the Rio Grande as seen from Ciudad Acuña, Coahuila state, Mexico, on Sept. 20, 2021. (Paul Ratje/AFP via Getty Images) An April Convention of States Action and Trafalgar Group poll (pdf) said a majority of American voters, including nearly two-thirds of Hispanic voters, believe the Biden administration should close the southern border until a solution is reached. U.S. District Judge Robert Summerhays, a Trump appointee, had earlier granted a temporary restraining order blocking the administration from terminating the Title 42 emergency border powers. The Biden administration has requested the federal judge, according to judicial notice, to make a decision on the lawsuit by Friday “to avoid uncertainty that could pose operational challenges.” “The Biden administration is scrambling five days before their own deadline to end Title 42 because President Biden’s open border policies have created, in the words of Homeland Security Secretary Alejandro Mayorkas, an ‘unsustainable’ crisis for our country,” House Minority Leader Kevin McCarthy (R-Calif.) told Fox News in a statement. The Department of Homeland Security and the White House did not immediately respond to a request for comment. Tyler Durden Thu, 05/19/2022 - 18:00.....»»

Finnish President Pledges "We'll Commit To Turkey's Security" In Biden Meeting On Thursday Finnish President Sauli Niinisto and Swedish Prime Minister Magdalena Andersson met Joe Biden at the White House, where the US President hailed the "momentous" NATO applications of the once-neutral countries. "Today I’m proud to welcome and offer the strong support in the United States for the applications of two great democracies, and two close, highly capable partners to join the strongest, most powerful defensive alliance in the history of the world," Biden said while standing alongside the two leaders in the Rose Garden. Swedish PM Magdalena Andersson and Finish President Sauli Niinisto met with President Biden Thursday. Getty Images "They meet every NATO requirement and then some," Biden emphasized, adding "having two new NATO members in the high north will enhance the security of our alliance." The visit came as Turkey's Erdogan is still pledging to resist their path to membership. "We have told our relevant friends we would say 'no' to Finland and Sweden’s entry into NATO, and we will continue on our path like this," Erdogan stressed in fresh Thursday remarks. President Niinisto used the occasion of the Biden meeting as an attempt at calming Turkey's concerns. "Finland has always had proud and good bilateral relations with Turkey. As NATO allies, we will commit to Turkey's security, just as Turkey will commit to our security," Niinisto stressed. "We take terrorism seriously. We condemn terrorism in all its forms and we are actively engaged in combating it. We are open to discussing all the concerns Turkey may have concerning our membership in an open and constructive manner," he added, countering Turkey's assertions. Andersson, for her part, said that the Stockholm government is "right now having a dialogue with all NATO member countries, including Turkey, on different levels to sort out any issues at hand." President Biden had also in the press conference addressed Moscow's anger over Finland, which shares a lengthy border with Russia. "New members joining NATO is not a threat to any nation," Biden said. "It never has been.” Meanwhile NATO Secretary-General Jens Stoltenberg chimed in from Copenhagen, saying, "We are addressing the concerns that Turkey has expressed." He added: "Because when an ally, an important ally as Turkey, raises security concerns, raised these issues, then, of course, the only way to do that is to sit down and find ways to find a common ground and an agreement on how to move forward." Thus far Erdogan and top Turkish officials have said that Finnish and Swedish delegations shouldn't even bother coming to Turkey if they remain unwilling to stop 'supporting' the PKK and others that Ankara sees as terrorists. At the same time, we wonder what Putin might be offering the Turkish leader to entice him to maintain his veto over the 30-member alliance, which needs consensus if it hopes to admit the new members. Tyler Durden Thu, 05/19/2022 - 15:40.....»»

Bitcoin, Bonds, & Bullion Jump As Dollar Dumps After Dismal Data Another day, another set of shitty data piles on the "growth scare / recession" narrative and US Macro Surprise index plunges into negative territory, at its weakest since January... Source: Bloomberg Following their worst day since 2020, US equities roller-coastered once again, rebounding after overnight weakness in the European session but still whipsawing during the US session. Weakness in the last hour left only Small Caps in the green for the day... The S&P traded down to its Bear Market trigger level once again and bounced... There were 3 major swings in buying pressure today... Source: Bloomberg Broadly speaking, stocks are en route to their 8th straight weekly drop. Small Caps ramped up to unch on the week today, but faded back... To get some context, the market capitalization of FANG stocks is now down a stunning $2 trillion from its record highs in Nov 2021... Source: Bloomberg VIX fell today after spiking yesterday after VIX-piration at the open. We remind readers that there is a sizable OpEx tomorrow... Treasuries were bid today led by the short-end (2Y -6bps, 30Y -0.5bps). On the week, only 2Y is higher in yield with 10Y outperforming... Source: Bloomberg Yields tumbled on the weak Philly Fed and Jobless Claims and rebounded during the day session... Source: Bloomberg The dollar was clubbed like a baby seal today, back near FOMC day spike lows now... Source: Bloomberg Bitcoin rebounded dramatically from $29,000 to tag $30,500 at intraday highs today... Source: Bloomberg Also of note, Bitcoin decoupled from Nasdaq today... Source: Bloomberg As the dollar dumped, gold pumped higher, getting near $1850 intraday, extending gains after its bounce off $1800... Oil prices rebounded in the afternoon, with front-month WTI back up near $110... Finally, we note that US equities (cyclicals vs defensives) are now pricing in a dramatic slowdown in growth (ISM Manufacturing ~48)... Will Powell keep hiking to stem inflation as a recession strikes? That's why Stagflation is the central bankers' nemesis. Tyler Durden Thu, 05/19/2022 - 16:00.....»»

Biden Unveils $100 Million More In Weapons To Ukraine Literally Moments After $40BN Approved.....»»

"This Should Set Off Alarm Bells Across All Industries": House Passes Fuel Price-Gouging Bill.....»»

Nomura: The 'Calmest Selloff Ever' Is Over, Brace For Turbulence Ahead Yesterday was different. Bond yields tumbled with stocks (they have tended to rise recently as stocks tanked)... ...and VIX spiked as stocks were spanked (it has been decoupling, exuding calmness for a few days until then)... The change was catalysed by two factors: 1) "Hard-Landing" / "Recession" narrative keeps gaining-steam, so bonds are beginning to "work" as a risk-asset hedge, and 2) Yesterday's VIX-piry (and tomorrow's Op-Ex) removed much of the overhang suppressing vol, crushing hopes for some form of 'stabilization' So given the 'change', what happens next? As Charlie McElligott warns, the bond short covering is only just beginning. Today's ugly Philly Fed miss and significant trend rise in jobless claims is leading to another wave of spastic short-covering / upside-buying in USTs (and USD weakness), as "Growth Scare >> Recession" meme-check builds further steam. In fact, while unwinds have begun, CTA Trend legacy “Short” positioning remains a significant source of “covering” risk instability And notably, McElligott points to Credit / Spread-Product / Long Duration demand from “asset allocators” and real money: "I just get the sense that as the market crystalizes on this (pre-emptive) move towards 'Contraction / Recession / Hard-Landing' that the market is gonna 'come hard' for this stuff." Shifting back to equity-land, the 'calmest selloff ever' is over following VIX-piration yesterday. As SpotGamma notes, yesterday's VIX expiration likely pulled forward expiration “rally fuel” but looked for more support around the 4000 level. However, terrible retail reports from the likes of WMT (-15%) & TGT (-20%) and now CSCO (-10% premarket) signal “recession”, and that comes into an environment with increasing interest rates. This likely triggered both natural & forced liquidations. As markets declined it was quite likely that options hedging flows sold, too, as large short dated put positions went from 2% out-of-the-money, to 2% in-the-money. The concentrated puts positions near 400SPY/4000SPX/300QQQ invoked “jump risk” as options rip higher in value. Shown below is the price of the 5/20exp 4000 strike put – note how its price shot higher as 9AM VIX settlement passed... Negative Gamma is dominating the market's intraday moves... ...which are at near record levels of turbulence. As Nomura's McElligott notes, this is the longest extended period of dealer "short gamma" seen for years, which implicitly has led to the most persistently violent intraday-day range period in recent history... The Nomura strategist offers one more inisght of note, that is that one of the challenges for Stocks now with regards to hopes of some form of stabilization and “finding friends” - at least from within the leveraged community (Equities L/S and M/N space) - is “tight-stops” in this type of VaR environment, where risk-allowances are punitively low due to so many sample days where both longs- and shorts- are consistently blowing through of risk-limits. Still room for more pain as traders are still not 'grabbing for crash-hedges', and tomorrow's OpEx has huge levels of Delta and Gamma set to come off: SPX / SPY will see 35% of the total $Gamma expire Friday ($16.7B of $48.3B), with -$74.5B (!!!) of associated front-week (Short) $Delta set to come-off QQQ will see 41% of the total $Gamma expire Friday ($1.15B of the $2.8B), with -$9.6B of associated front-week $Delta set to come-off IWM will see 42% of the total $Gamma expire Friday, with -$2.9B of associated front-week $Delta set to come-off HYG will see 55% (!!!) of the total $Gamma expire Friday, with -$3.8B of associated front-week $Delta set to come-off The current expiration period has been tracking April's expiration. VIX expiration seemed to lead to a decline in volatility that was released post-expiration. Here we have a relatively large stock OPEX which may provide a bounce into an overall trend lower. Finally, SpotGamma reiterates its recent point that rallies should be framed as short covering and subject to quick and violent reversals. We very strongly believe that a major market low will come with a quarterly OPEX+FOMC combo. Tyler Durden Thu, 05/19/2022 - 13:06.....»»

The Fed Has Destroyed Our Savings Authored by Michael Maharrey via SchiffGold.com, When I was about seven or eight years old, I remember my mom taking me to the bank to open a savings account. She explained that if I put some of my allowance in savings, that money would grow over time. Well, that doesn’t work anymore. In fact, if you put your money in a savings account, you’ll end up with less than you started with – at least in terms of real purchasing power. The last time a cash savings account yielded enough interest income to beat inflation was in 2007. This provides yet another example of how Federal Reserve monetary policy creates misallocations and distortions in the economy. Looking closely at the chart, you’ll notice that savings yields fall below the inflation level when the Fed engages in loose monetary policy. The first dip below the inflation level is in 2002 — in the wake of the bursting dot-com bubble. In 2001, the Fed began pushing interest rates down. It started at 6% in January 2001 and by January 2002, rates were pegged at 1.25%. We see the next plunge in savings yields in 2008, as the Fed dropped rates to zero and launched quantitative easing in response to the Great Recession. Since then, savings have never recovered. Cash accounts failed to generate enough income to beat inflation even during the “low inflation” years after the financial crisis. I often talk about the Federal Reserve creating “misallocations” in the economy. This is one example. Because it is impossible for people to generate a real return simply by sticking money in a savings account, they are forced to chase yield with more risky investments. In this day and age, you can’t put money in the bank and expect to retire in 30 years. You have to wade into the stock market, real estate, or other investments that come with more risk. It’s not so much that risky investments are bad. The problem is that people are forced to take risks they wouldn’t otherwise take. Artificially low interest rates, incentivize risk-taking behavior. Looking at the bigger picture, this incentivization of risk contributes to asset bubbles - that eventually pop. One way to protect your wealth over time is to buy gold. Gold doesn’t generate yield, but it also doesn’t tend to lose purchasing power as the dollar devalues over time. For instance, an ounce of gold bought a nice suit 100 years ago. Today, an ounce of gold will still buy a nice suit. And gold doesn’t carry a high level of risk. It is a physical asset you can hold in your hand. It is also liquid, meaning you can convert it into dollars quickly should the need arise. One thing is clear – sticking dollars in the bank isn’t a good investment strategy anymore — not while we have a central bank content to artificially manipulate interest rates and devalue the dollar. Tyler Durden Thu, 05/19/2022 - 13:20.....»»

Hunter Biden Took In $11 Million Over 5 Years According To NBC Analysis Hunter Biden and his company brought in around $11 million over a five-year span, most of which was while his father was Vice President of the United States, according to an analysis by of his abandoned laptop by NBC News obtained through Rudy Giuliani. Perhaps most interesting is the harsh tone NBC takes with the first son... "Biden and his company brought in about $11 million via his roles as an attorney and a board member with a Ukrainian firm accused of bribery and his work with a Chinese businessman now accused of fraud." The documents and the analysis, which don’t show what he did to earn millions from his Chinese partners, raise questions about national security, business ethics and potential legal exposure. In December 2020, Biden acknowledged in a statement that he was the subject of a federal investigation into his taxes. NBC News was first to report that an ex-business partner had warned Biden he should amend his tax returns to disclose $400,000 in income from the Ukrainian firm, Burisma. GOP congressional sources also say that if Republicans take back the House this fall, they’ll demand more documents and probe whether any of Biden’s income went to his father, President Joe Biden. -NBC News $5.8 million of Biden's income - more than half his total earnings over the five years - came from two deals with Chinese business interests. The most lucrative of the two was a consulting relationship with a powerful (and now missing) CCP-linked Chinese businessman, Ye Jianming, who's company, CEFC, paid $4,790,375.25 to Biden's Owasco PC over the course of about one year. Jianming was accused by Chinese prosecutors of "economic crimes" in 2018, and hasn't been seen in public since he was detained. Ye Jianming "No government ethics rules apply to him," said Walter Shaub, a former director of the U.S. Office of Government Ethics who is now an ethics expert with the Project on Government Oversight, who added that "it’s imperative that no one at DOJ and no one at the White House interfere with the criminal investigation in Delaware." Shaub has previously raised questions over Hunter's lucrative 'art' sales being a method for laundering influence. And according to the FBI's former assistant director for counterintelligence, Frank Figliuzzi, there's a national security risk when the CCP can get close to people like Biden. "It’s all about access and influence, and if you can compromise someone with both access and influence, that’s even better," he said, adding "Better still if that target has already compromised himself." An analysis of Hunter's expenses reveal over $200,000 per month from October 2017 through February 2018 on everything from Porsche payments, dental work, cash withdrawals and luxury hotel rooms - which Biden has admitted he used on drugs and partying with strangers who often stole from him. Hunter also struggled to keep current on multiple mortgages, alimony, and child support payments to his ex-wife. Things got so bad that Hollywood attorney Kevin Morris, who began advising Hunter in 2020, arranged to pay off around $2 million owed to the IRS (which legal experts say doesn't let Hunter off the hook for criminal liability, or necessarily erase his debts). NBC News analyst Chuck Rosenberg, a former Justice Department official, said that Biden’s paying what he owes could even be seen as an admission of criminal violations. Not paying taxes for many years, rather than one or two, Rosenberg said, helps establish intent, which can otherwise be a struggle for prosecutors in white-collar cases. Paying the bill, Rosenberg said, might help Biden if he faced sentencing and “mitigate some of the damage, but it doesn’t undo the crime. That would be like returning money to a bank that you robbed. You still robbed the bank.” -NBC News According to a Senate GOP report on Hunter's finances, CEFC was one of three firms involved in certain transactions that were "among those identified as potential efforts to layer funds." The U.S. Treasury Financial Crimes Enforcement Network describes the layering of funds as “separating the illegally obtained money from its criminal source by layering it through a series of financial transactions, which makes it difficult to trace the money back to its original source.” But the report doesn’t say whether or not Hunter Biden was personally involved in any transactions that were suggested to involve “layering.” -NBC News Hunter also worked for Jianming associate Patrick Ho, who was convicted in US federal court of bribery in relations to oil deals in Chad and Uganda starting in September 2014. A jury found that Ho - while employed by CEFC - bribed or attempted to bribe officials to the tune of $2 million, and was sentenced to three years in prison on March 2019. Biden has denied any illegal activity and says he's "cooperating completely" with a federal investigation in Delaware. "And I’m absolutely certain, 100 percent certain," said Hunter, "that at the end of the investigation, I will be cleared of any wrongdoing." Tyler Durden Thu, 05/19/2022 - 13:41.....»»

Judge Denies Former Clinton Lawyer's Request For Mistrial Authored by John Haughey and Zachary Stieber via The Epoch Times (emphasis ours), A federal judge on May 19 denied a request for a mistrial from the former Hillary Clinton campaign lawyer who is on trial for allegedly lying to the FBI. U.S. District Judge Christopher Cooper, the Obama appointee overseeing the case, agreed to strike certain portions of testimony delivered Wednesday by Marc Elias but rejected the request for a mistrial. Michael Sussmann arrives at federal court in Washington on May 18, 2022. (Teng Chen for The Epoch Times) Attorneys for Michael Sussmann, the lawyer who allegedly lied to the FBI, said Elias—another former Clinton campaign lawyer—strayed into improper areas, prejudicing the defendant. When Elias was asked by the defense whether Sussmann took information on Clinton rival Donald Trump to the FBI on Sept. 19, 2016, on behalf of Clinton’s campaign, Elias said “from my standpoint, I would say no,” but also told the defense to ask Sussmann. “Portions of Mr. Elias’s answer—namely that ‘you’d have to ask Mr. Sussmann’ and ‘on behalf of’ is kind of like a subjective intent thing’—were nonresponsive and prejudicial. Although Mr. Sussmann was prejudiced even then, the defense declined to draw attention to the comment in the presence of the jury,” defense lawyers wrote in a motion filed later Wednesday. Under cross-examination by prosecutors with Special Counsel John Durham’s team, Elias was asked about the topic three times. Two defense objections were sustained and after the third time, Cooper directed prosecutors to move on to other questions. But the damage was already done, according to the defense. “Mr. Elias’s nonresponsive testimony on cross examination, as well as the repeated, improper questioning by the special counsel, directly suggested to the jury that in order to answer a key question in this case—whether Mr. Sussmann went to the FBI on September 19, 2016, on behalf of a client—Mr. Sussmann would need to testify,” defense lawyers said. “But as the special counsel and Mr. Elias are well aware, a defendant in a criminal trial has a constitutional right not to testify. And commenting, either directly or indirectly, on a defendant’s decision to testify or not testify is entirely improper.” Lawyers for Sussmann are asking for the court to strike the portions of Elias’s testimony dealing with the matter as well as the three questions prosecutors asked. They also want permission to give a transcript to the jury during closing arguments that shows the testimony “without the improper questions and answers.” Andrew DeFilippis, part of Durham’s team, had said that the government “was very careful” to avoid questions that would elicit an improper response, adding, “It wasn’t the government that prompted that response.” After Cooper agreed to strike portions of the testimony, Sean Berkowitz, one of Sussmann’s lawyers, said Sussmann has not yet decided whether he will testify during the trial. Sussmann is accused of lying when he told James Baker, who in 2016 was the FBI’s general counsel, that he was not bringing derogatory information about Trump to the bureau on behalf of any clients. Prosecutors say Sussmann brought the allegations on behalf of Rodney Joffe, a technology executive who hoped to score a position in a Clinton administration, and the Clinton campaign. Check back for updates... Tyler Durden Thu, 05/19/2022 - 12:05.....»»

"The Invasion Of Iraq... I Mean Of Ukraine" - George W. Bush Makes Mother Of All Gaffes.....»»

Wells Fargo CEO Warns "No Question" Worst Is Yet To Come For Americans Authored by Jack Phillips via The Epoch Times (emphasis ours), The CEO of Wells Fargo warned Tuesday that there is “no question” that the U.S. economy is going to get worse before it gets better. “It’s going to be hard to avoid some kind of recession,” CEO Charles Scharf said during a Wall Street Journal event. Charles Scharf, CEO of Wells Fargo speaks at the 2021 Milken Institute Global Conference in Beverly Hills, Calif., on Oct. 18, 2021. (David Swanson/Reuters) The Federal Reserve has already raised interest rates twice so far in 2022 in a bid to cool the economy to deal with rampant inflation. Federal data shows that inflation rose 8.3 percent from April 2021 to April 2022, reaching 40-year highs. With the spike in interest rates and inflation, some analysts and economists have questioned whether the United States is careening toward a recession. But Scharf, during the event, stressed that the recession will likely be only mild, noting that consumers are still spending at healthy levels. “The fact that everyone is so strong going into this should hopefully provide a cushion such that whatever recession there is, if there is one, is short and not all that deep,” Scharf said. Federal Reserve Chairman Jerome Powell said there may be some “pain” that is “associated” with higher interest rates, which would, according to him, reduce inflation and curb demand. Powell, however, said that there is no recession on the horizon, saying that strong labor markets and consumer spending are high points. “It will be challenging, it won’t be easy. No one here thinks that it will be easy. Nonetheless, we think there are pathways … for us to get there,” Powell told the Marketplace business news website last week. “Whether we can execute a soft landing or not, it may actually depend on factors that we don’t control,” he added. Powell said in the interview that price increases are, in part, due to supply chain issues, although he didn’t delve into specifics about why. “What we can control is demand, we can’t really affect supply with our policies,” he told the website. “And supply is a big part of the story here. But more than that, there are huge events, geopolitical events going on around the world, that are going to play a very important role in the economy in the next year or so. So the question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control.” Nonetheless, top business leaders such as Tesla CEO Elon Musk and Amazon founder Jeff Bezos have recently issued warnings about inflationary pressures on the economy, with both flagging the Biden administration’s policy decisions and Congress-passed trillion-dollar spending packages. Tyler Durden Thu, 05/19/2022 - 12:45.....»»

Treasuries Start New Norm Between Inflation And Recession Fears By Garfield Reynolds, Bloomberg Markets Live analyst and reporter There’s an alarming lack of conviction in the way markets are flip-flopping all over the place, and that’s a tribute to the epoch-making transformations occurring across the global economy. In case you think that’s an exaggeration, consider what’s been going on in Treasuries, often cited as the world’s deepest market and a potential haven for investors panicked into prizing return of capital over returns on capital. The past two days saw the benchmark 10-year yield jump 10 basis points and then drop by the same amount, as traders gyrated between inflation and recession fears. This sort of action is now the norm, with Wednesday marking the 50th trading day this year when the range for 10-year yield was at least 10 basis points. That’s already more than for any full year since 2015, and puts us on pace for more than 130 such days. The only years to exceed that mark this century are 2008 and 2009. Tyler Durden Thu, 05/19/2022 - 07:20.....»»

The Swiss Connection: How Russia Is Weathering Tough Sanctions Authored by Alex Kimani via OilPrice.com, Continued oil and gas exports as well as a propped-up ruble, have allowed Moscow to weather Western sanctions. JPM has backtracked on its earlier forecasts of a 35% contraction in Russian GDP in the second quarter. The lion's share of Russian raw materials is traded via Switzerland and its nearly 1,000 commodity firms. A couple of weeks ago, Putin went on record calling the war in Ukraine a "tragedy" and claiming that economic sanctions imposed on his country had "failed."  Turns out he wasn't exactly bluffing. Three months into the most severe and coordinated sanctions by Western governments, Russia's economy is proving to be a hard nut to crack. Continued oil and gas exports as well as a propped-up ruble, have allowed Moscow to weather the West's sanctions much better than expected.  In a note to clients dated last week and made public on Monday, JPMorgan Chase says business sentiment surveys from the country "are signaling a not very deep recession in Russia, and therefore imply upside risks to our growth forecasts. The data at hand therefore do not point to an abrupt plunge in activity, at least for now". JPM has also backtracked on its earlier forecasts of a 35% contraction in Russian GDP in the second quarter and 7% for all of 2022, now predicting that the recession will be far less severe. The bank did, however, note that Russia will certainly feel the impact of current and potential sanctions, adding that the Russian economy would be in much better shape if the country had not invaded Ukraine. Rouble Recovers To Pre-War Levels Perhaps an even more impressive demonstration of the resilience of Russia's economy is how quickly the country's currency has recovered from its early-year crash. Defying a plethora of energy and financial sanctions, the rouble, Russia's national currency, has staged a surprising rebound and even managed to return to pre-war levels. The rouble crashed spectacularly in the days immediately after President Vladimir Putin ordered a full-scale invasion of Ukraine, falling as much as 30% against the U.S. dollar. The currency appeared doomed as Western countries slapped Moscow with an increasingly harsh set of sanctions, including measures to restrict the Russian Central Bank's ability to access its vast pool of foreign reserves. Indeed, a cross-section of analysts warned of an inevitable default as Russia ran out of dollars. However, the rouble was not down for the count for long, and started to bounce back just weeks after its biggest crash. By the end of March, the rouble began to gradually recover; by mid-April, its value hit 1 RUB = 0.013 USD, a level last seen on the eve of the invasion. Currently, the ruble is exchanging for 0.016 USD, a level it last touched in January 2020. What explains this recovery? Putin's demand for buyers of Russian gas to pay in rubles was a masterstroke. After initial resistance, western gas buyers are increasingly toeing the line, with one of Germany's largest natural gas importers, VNG, recently opening an account with Gazprombank for payments for Russian gas under Moscow's terms. According to Maria Demertzis, deputy director at Bruegel, a Brussels-based economics think tank, EU payments for Russian pipeline gas have been playing a big role in propping up the currency. For all the tough talk about abandoning Russian energy commodities, Russia is still managing to sell a good amount of its oil and gas, thanks to the fact that some of the world's biggest commodity traders have little compunction against financing Putin's war machine. Indeed, Oleg Ustenko, economic adviser to Ukrainian president Volodymyr Zelensky, has written to the four companies demanding that they stop trading Russian hydrocarbons immediately since export revenues are funding Moscow's purchase of weapons and missiles.  According to ship tracking and port data, Switzerland's Vitol, Glencore, and Gunvor as well as Singapore's Trafigura, have all continued to lift large volumes of Russian crude and products, including diesel. Vitol has pledged to stop buying Russian crude by the end of this year, but that's still a long way from today. Trafigura said it would stop buying crude from Russia's state-run Rosneft by May 15th, but is free to buy cargoes of Russian crude from other suppliers. Glencore has said it wouldn't enter any "new" trading business with Russia. But the reality is that while the G7 has committed to banning or phasing out Russian oil imports, and while the U.S., Canada, the UK, and Australia have imposed outright bans, the EU is still unable to move forward, with Hungary holding a ban hostage. Meanwhile, India and China are making up for much of the losses for Russia.  Switzerland's Golden Calf A lot of the blame falls on Switzerland. The lion's share of Russian raw materials is traded via Switzerland and its nearly 1,000 commodity firms. Switzerland is an important global financial hub with a thriving commodities sector, despite the fact that it is far from all the global trade routes and has no access to the sea, no former colonial territories, and no significant raw materials of its own.  Oliver Classen, media officer at the Swiss NGO Public Eye, says that "this sector accounts for a much larger part of the GDP in Switzerland than tourism or the machinery industry". According to a 2018 Swiss government report, commodity trading volume reaches almost $1 trillion ($903.8 billion).  Deutsche Welle has reported that 80% of Russian raw materials are traded via Switzerland, according to a report by the Swiss embassy in Moscow. About a third of the raw materials are oil and gas, while two-thirds are base metals such as zinc, copper, and aluminum. In other words, deals signed on Swiss desks are directly facilitating Russian oil and gas to continue flowing freely. With gas and oil exports coming in as the main source of income for Russia, accounting for 30 to 40% of the Russian budget, Switzerland's role cannot be overlooked in this war-time equation.  In 2021, Russian state corporations earned around $180 billion (€163 billion) from oil exports alone. Again, unfortunately, Switzerland has been handling its commodities trade with kid gloves. According to DW, raw materials are often traded directly between governments and via commodities exchanges. However, they can also be traded freely, and Swiss companies have specialized in direct sales thanks to an abundance of capital. In raw materials transactions, Swiss commodity traders have adopted letters of credits or L/Cs as their preferred instruments. A bank will give a loan to a trader and, as collateral, receive a document making it the owner of the commodity. As soon as the buyer pays the bank, the document (and ownership of the commodity) is transferred to the trader. The system gives traders more credit lines without their creditworthiness having to be checked, and the bank has the value of the commodity as security. This is a prime example of transit trade, where only the money flows through Switzerland, but actual raw materials usually do not touch Swiss soil. Thus, no details about the magnitude of the transaction land on the desk of the Swiss customs authorities leading to highly imprecise information about the flow volumes of raw materials.  "The whole commodities trade is under-recorded and underregulated. You have to dig around to collect data and not all information is available," Elisabeth Bürgi Bonanomi, a senior lecturer in law and sustainability at Bern University, has told DW. Obviously, the lack of regulation is very appealing to commodity traders--especially those that deal with raw materials mined in non-democratic countries such as the DRC.  "Unlike the financial market, where there are rules for tackling money laundering and illegal or illegitimate financial flows, and a financial market supervisory authority, there is currently no such thing for commodity trading," financial and legal expert at Public Eye David Mühlemann told the German broadcaster ARD. But don't expect things to change any time soon. Calls for a supervisory body for the commodities sector based on the model of the one for the financial market by the likes of Swiss NGO Public Eye and Swiss Green Party proposal have so far failed to bear fruit. Thomas Mattern from the Swiss People's Party (SVP) has spoken out against such a move, insisting that Switzerland should retain its neutrality, "We do not need even more regulation, and not in the commodities sector either." Tyler Durden Thu, 05/19/2022 - 03:30.....»»

US, Japan Prepare Statement Pledging To Jointly "Deter" China Militarily.....»»

"They Shut Us Down": Michigan Businesses Sue Whitmer For Losses Due To COVID Lockdowns Authored by Steven Kovac via The Epoch Times (emphasis ours), A coalition of five bowling alleys and family entertainment centers is suing Michigan’s Gov. Gretchen Whitmer, a Democrat, for losses incurred due to her mandatory COVID-19 shutdowns in 2020. Michigan Gov. Gretchen Whitmer listens to Democratic presidential candidate Sen. Kirsten Gillibrand (D-N.Y.) in Clawson, Mich., on March 18, 2019. (Paul Sancya/AP) Michigan Dept. of Health and Human Services director Robert Gordon is also a defendant in the case. The plaintiffs allege that the shutdowns imposed by Whitmer and Gordon were a “taking” of their businesses without just compensation in violation of both the state and the U.S. Constitution. The case has been winding its way through the federal courts since January 2021. Fred Kautz runs the lane oiler at Kautz Shore Lanes in Lexington, Mich., on May 13, 2022. (Steven Kovac/The Epoch Times) The coalition lost the first round of the legal battle when the U.S. District Court for the Western District of Michigan ruled against it. Oral arguments were recently held before a three-judge panel of the US Court of Appeals Sixth Circuit. Plaintiff’s chief counsel David Kallman told The Epoch Times after the appeals court hearing, “The oral arguments from both sides were vigorous. The judges asked a lot of questions. It was the kind of proceeding that makes you proud to be a lawyer. “Even the defense acknowledges that we are presenting ‘novel’ arguments. “Michigan is the only state in the nation where a governor’s public health emergency powers were overturned as unconstitutional. “If we lose in the court of appeals, we will take this case to the U.S. Supreme Court.” Scott Bennett, executive director of the Independent Bowling and Entertainment Centers Association, told The Epoch Times, “The governor’s actions were devastating to our industry. “Things went from ‘two weeks to slow the spread’ to indefinite shutdowns.” Bennett said that the forced closures were not based on solid scientific proof that bowling alleys and family entertainment centers would spread the virus any more than the Walmart stores or the GM plants that were allowed to remain open. “They were allowed to operate with hundreds and even thousands of people in them but we had to shut down. We feel our industry was unfairly singled-out. “We cannot stand for a repeat of such arbitrary treatment and don’t want the people of Michigan to forget what was done to them.” With the recent uptick in COVID cases and the approaching mid-term elections, Bennett said his members that survived the 2020 shutdowns feel like it can happen all over again. “It’s like operating day-to-day with a hammer held over your head. The uncertainty is altering business plans. The value of our businesses is dropping through the floor,” Bennett said. Brian and Mindy Hill work the counter at their bowling alley in Imlay City, Mich. on May 13, 2022. (Steven Kovac/Epoch Times) Fred Kautz, the proprietor of Kautz’s Shore Lanes in Lexington, Michigan, started working in the family business when he was 13. The business has 12 bowling lanes, a bar, an arcade, a restaurant, and living quarters upstairs. “We’ve owned this place for 42 years. For me and my family, it’s more than a place to work. It’s a way of life. And it has become an institution in our community—a real gathering place,” said Kautz. He said he is still smarting from what happened after Whitmer’s executive actions were ruled unconstitutional by the Michigan Supreme Court in the fall of 2020. “We got a little reprieve. We thought we were in the clear until she came back with another round of forced closures, this time under the authority of the Michigan Department of Public Health. “The first 30 days knocked us right on our butts. But we were willing to cooperate, to do our part. We were all scared and we did not want to see harm come to anybody. “We lost a lot of money at the time. We are coming back slowly, but our overall revenue is still down 20 percent from pre-pandemic days. That’s hard to make up. “In the spring of 2020, I tried to do what was recommended and go along. Never again! “If my Dad was still alive, he’d have never closed at all,” said Kautz. Brian and Mindy Hill, owners of I.C. Strikes, a 16-lane bowling alley, bar, and snack bar in Imlay City said their business was hit hard by the shutdowns. Brian was the town barber for 25 years, before purchasing the bowling alley where he learned to bowl as a child. “We took over in December 2018. We’d saved up money to buy this place and make some upgrades. When COVID hit, we were forced to close down. It took all the money we saved for improvements just to survive,” said Brian. The Hills said they never thought they’d see the day when their own government could do something like that to them. Mary Bacon, assistant manager of Jump City, a family recreation center, cleans an arcade machine in Imlay City, Mich., on May 13, 2022. (Steven Kovac/The Epoch Times) “They shut us down. They took away our livelihood with no end date in sight. Then they wanted to loan us money. Think about that. They first put us in a situation where we had zero income to pay our previous debt. And then they wanted to loan us more money. “Lots of small business people lost their businesses but kept their debt. It ruined them,” said Brian. The Hills did apply for and receive a Small Business Administration loan at 3.25 percent interest for 30 years, and they participated in the Paycheck Protection Program which helped their business survive. Up the road from the Hill’s bowling alley is Jump City, a large indoor recreation center offering an array of bouncy houses and arcade games for children. Assistant manager Mary Bacon told The Epoch Times, “We lost a lot of business. We were forced to close for 15 months and had to make our payments with no income.” Bacon remembers the morning of March 16, 2020, when many area businesses were gearing up for big St. Patrick’s Day celebrations. “By afternoon everybody had to close. All that food went to waste. “The shutdown was supposed to be for a couple of weeks. Nobody foresaw it would drag on for a year and three months. “Oh, they said we could open again, but they so severely restricted the number of customers that we lost all of our big birthday parties. With so few kids allowed in, we couldn’t operate. We were losing too much money.” Bacon said people are coming back to the center but are still scared, even though the games and bouncy houses are continuously cleaned and sanitized. Navaeh Smalstig, 8, climbs out of a bouncy house at Jump City in Imlay City, Mich., on May 13, 2022. (Steven Kovac/The Epoch Times) Before the pandemic, Danny Brown owned a roller rink in Grand Blanc and Owasso, two south-central Michigan towns. “The lockdowns forced us to sell the Owasso rink for less than half of what we paid for it. We will be trying to make up our loss for years to come.” Brown, who is a plaintiff in the lawsuit, told The Epoch Times, “To keep going I had to decide to triple our debt. Since the shutdown, I am three-quarters of a million dollars deeper in debt. “Small businesses put everything on the line. All of our personal and family money. I am personally responsible for our debt. If I die my children will have to pay it.” Brown said Michigan’s government acted without a real understanding and regarded the state’s small businesses as “nonessential throwaways.” “One of the reasons we filed suit is to push the government to think differently,” he said. According to Brown, family entertainment centers like skating rinks, bowling alleys, arcades, pool halls, miniature golf, and go-cart tracks have been nearly wiped out. “A few years ago, there were 3,500 roller skating rinks in the United States. Now there are 700. There were five rinks in Genesee County, now there are two.” he said. Brown attributes the decrease to years of ongoing government mandates and interference that led up to the COVID-19 lockdowns. “They took, they stole our businesses!” he said. Donn Slimmen, another plaintiff in the case, owns Spartan West Bowling in the west Michigan resort town of Ludington. “The lockdown just about killed us. It was 14 to 15 months of agony. Our bank payments and utility bills didn’t stop. We went from being two to three months behind to more months behind. “We entered into survival mode. We ate a lot of pork and beans and hotdogs. We’re still trying to work ourselves out of the hole. By the end of this summer, we might be solvent again. “We were lucky to survive. We are still hanging on by threads,” said Slimmen. Along with 16 bowling lanes, Slimmen operates a full-service restaurant. “It’s never come back. Pre-pandemic, we’d serve 200 customers at an ordinary Friday fish fry. Now our best night is 100. “Our restaurant went from a thriving seated-guest business to a take-out operation grossing only two to three percent of the seated sales. “We were spending $400 to take in proceeds of $100. “The politicians and bureaucrats don’t understand. They never cleaned a toilet seat or climbed into a bowling machine to fix it,” said Slimmen. Slimmen blames Gov.Gretchen Whitmer for the plight of his community and the state. “You didn’t see Republican governors closing businesses. Their states did so much better. “Drive through downtown Ludington or Muskegon and look at all the boarded-up storefronts. So many places are out of business. Michigan is in terrible shape,” Slimmen said. The Tomassoni family has been in the bowling business for 84 years in the western Upper Peninsula town of Iron Mountain, Michigan. “We had to close bowling and our banquet facility a total of 161 days in two different periods of time in 2020. After the second shutdown, we could operate at 25 percent occupancy and only during restricted hours. No wedding receptions, no special events. It was a disaster. “It ripped my heart out. I am so bitter towards my government,” said owner Pete Tomassoni. Tomassoni’s business suffered further because of its proximity to Wisconsin which is only minutes away. “Wisconsin closed for just 30 days. For the most part, they were wide open. That really hurt us. “Our governor was picking and choosing which of our state’s businesses could operate. To force a business to close with no notice and without proven science is straight out wrong. “I think that she came down so hard on small business because we, by and large, lean to the right. “The state dangled the threat of yanking business licenses to keep people in line. “Some of our businesses tried to defy the state and stayed open Tyler Durden Wed, 05/18/2022 - 21:25.....»»

$87.8 Million Bel Air Mansion Horribly Flops At Auction Crashed crypto markets, plunging stocks and bonds, looming housing market meltdown, interest rate shock, and the threat of a recession have spooked speculators, including ones bidding on a massive Bel Air mansion that flopped at auction, according to CNBC.  The mood among 'movers and shakers' is sheer pessimism as financial markets are stuck in a doom loop of turmoil thanks to the Federal Reserve embarking on one of the most aggressive tightening cycles in decades, if not ever.  So the timing of dermatologist-turned-developer Alex Khadavi to auction off 777 Sarbonne Road, located in a residential neighborhood on the Westside of Los Angeles, was particularly bad. Though listing the modern mansion wasn't his choice considering he filed for Chapter 11 bankruptcy protection before listing the mansion last year.  Khadavi owes several creditors tens of millions of dollars. The mansion sat on the market for a year and was just auctioned off with Concierge Auctions. He was hoping for $87.8 million, though the highest bid came in just under $45.8 million, falling short of the $50 million reserve. The bankruptcy court will now decide if the highest bid is an acceptable offer and determine if the home sale will move forward in early June. The sale would help Khadavi satisfy his debt with creditors.  Despite controversy between Khadavi and the auctioneer for not starting the bid at the reserve, Concierge's president, Chad Roffers, said: "After a spirited auction, the bidding is closed and the high bid is in the hands of the Trustee. With over 80 qualified showings in the last 60 days, we are confident market value was delivered."  Co-listing agent, Aaron Kirman of Compass, said he wasn't pleased with the highest bid, though, "at the end of the day, the highest bidder is the highest bidder." It just so happens it's a 50% haircut from the initial list price one year ago.  The auction results suggest a souring mood among wealthy elites generally viewed as smart money. Perhaps this is an example of the shifting tide in real estate markets and how a broader market cooling is just ahead.  Tyler Durden Wed, 05/18/2022 - 21:45.....»»

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