How Sri Lanka Landed in a Crisis and What It Means

Sri Lanka’s street protests over soaring inflation and lengthy power cuts have shaken President Gotabaya Rajapaksa’s hold on power, with government ministers resigning while the opposition called for fresh elections in the South Asian nation. The political turmoil is complicating efforts to manage the island’s foreign exchange crisis and secure more funds to keep its tourism-reliant economy running, having already been hit hard by the Covid-19 pandemic......»»

Category: topSource: washpostApr 4th, 2022

The Complexity Trap

The Complexity Trap Via The Consciousness of Sheep blog, Let’s talk about “value.”  Value, at its simplest, is merely the consequences of acting upon the world in a manner which “improves” (some might say despoils) some part of it.  If, for example, someone takes a pile of timber, a saw and some glue and nails, and then turns it into a table, they have added value.  The same is true of goods and services across the economy.  Wherever people act to improve the goods and services that we collectively consume, value is added… governments even attempt to tax that additional value via, well, Value Added Tax. Value also has a clear relationship to another key factor in the way an economy works – productivity.  We have all been brought up to understand that the simplest way of growing an economy is to improve productivity.  In effect, to do more for less, or to put it another way, to make the addition of value more efficient. In the coming months, as the western economies crater as a consequence of the follies of their elites, we are going to hear a great many siren voices urging us to improve our collective productivity in order to pull our stagnating economies out of the doldrums and to put an end to the cost-of-living crisis.  And yet, among the biggest mistakes made by almost all of us is the false attribution of value and productivity. For many on the political left, and at least some on the right, labour is the source of value – a view which can be traced back to classical liberal economists such as Adam Smith and David Ricardo.  In classic Marxist thinking, capitalism uses the payment of wages for workers’ time as a means of converting the surplus value they create into profit.  Politics in a capitalist economy then becomes an ongoing struggle over the respective shares of surplus value divided into the wages of workers and the profits of capitalists.  According to Ricardo: “The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labour which is necessary for its production…” Smith qualified this by arguing it was labour time rather than quantity which mattered: “If among a nation of hunters, for example, it usually costs twice the labour to kill a beaver which it does to kill a deer, one beaver should naturally exchange for, or be worth two deer. It is natural that what is usually the produce of two days’ or two hours’ labour, should be worth double of what is usually the produce of one day’s or one hour’s labour.” This line of thinking was flawed, since it allowed that the product of a bad or slow worker would have more value than the product of a good and fast worker.  Marx was to tidy the thinking up by insisting that it was “socially necessary labour time” which mattered.  The value of our wooden table was not the time our worker took to construct it, but rather the average time that a skilled carpenter would take to construct a wooden table.  The other useful line of thought offered by Marx was that there is a difference between exchange and use value.  This, for example, helps us understand why a Chippendale table might sell for a much higher amount than a plain utilitarian table.  In monetary terms, the value of an item is merely whatever someone is prepared to pay for it.  Nevertheless, there was something about socially necessary labour time which set a minimum value below which an item is neither worth selling nor even constructing. Labour, in its naked form, however, is an incredibly weak source of value.  And as Marx began to see later in his life – when Britain’s industrialisation had matured significantly – industrial machinery clearly added far more value than labour alone. (Although Marx refused to take this observation to its logical conclusion since it contradicted his class-based politics).  In any case, Marx was wrong.  It was not the machines themselves which were the source of value, but the coal-power which drove them.  Nobel Prize-winning chemist and contrarian economist Frederick Soddy arrived at the real source of value in the early 1930s: “Still one point seemed lacking to account for the phenomenal outburst of activity that followed in the Western world the invention of the steam engine, for it could not be ascribed simply to the substitution of inanimate energy for animal labour. The ancients used the wind in navigation and drew upon water-power in rudimentary ways. The profound change that then occurred seemed to be rather due to the fact that, for the first time in history, men began to tap a large capital store of energy and ceased to be entirely dependent on the revenue of sunshine. All the requirements of pre-scientific men were met out of the solar energy of their own times. The food they ate, the clothes they wore, and the wood they burnt could be envisaged, as regards the energy content which gives them use-value, as stores of sunlight. But in burning coal one releases a store of sunshine that reached the earth millions of years ago. In so far as it can be used for the purposes of life, the scale of living may be, to almost any necessary extent, augmented, devotion to the primitive ideas of the peoples of Kirkcaldy [i.e., Adam Smith and his followers] and Judea notwithstanding [i.e., economics is more religion than science]. “Then came the odd thought about fuel considered as a capital store, out of the consumption of which our whole civilisation, in so far as it is modern, has been built. You cannot burn it and still have it, and once burnt there is no way, thermodynamically, of extracting perennial interest from it. Such mysteries are among the inexorable laws of economics rather than of physics. With the doctrine of evolution, the real Adam turns out to have been an animal, and with the doctrine of energy the real capitalist proves to be a plant. The flamboyant era through which we have been passing is due not to our own merits, but to our having inherited accumulations of solar energy from the carboniferous era, so that life for once has been able to live beyond its income. Had it but known it, it might have been a merrier age!” Insofar as the physiocrats, living during the heyday of pre-industrial landed estates, saw the land as the source of value it is because of the way the plants which grow on the land are able to photosynthesize solar energy and convert it into hydrocarbons which can feed humans directly or feed the animals which humans consume for fat and protein.  In the same way, it was not so much the industrial machinery – still less the mass army of industrial workers – which provided the eighteenth and nineteenth century economy with massive quantities of surplus value so much as the fossilised solar energy locked up in the form of the coal which provided the energy behind the industrial economy. Soddy also pointed to what was then the future predicament of fossil fuel depletion.  Not only did we burn our way through the once-and-done “capital store” of accessible coal, but from the early twentieth century we set about the rapid depletion of oil and gas too.  It is the surplus useful energy (sometimes referred to as exergy) – the amount left over after we have obtained the energy to begin with – which is the source of the surplus value generated in the industrial economy.  And the huge quantities involved explain why a large part of the population of western states have enjoyed a standard of living which would be the envy of kings, and, indeed, why we are ruled over by a handful of godzillionaires whose wealth is so vast as to make the Gods of Olympus jealous…  which is something of a problem because the world recently passed peak exergy. That is, while there may be roughly as much fossil fuel in the ground as we have consumed in the course of three centuries of industrialisation, we also burned our way through the cheap and easy deposits first.  Consider this an issue of “socially necessary exergy” – nobody was going to buy or even extract oil from deep beneath the North Sea or from hydraulically fractured shale deposits while it was still possible to obtain all the oil you needed by knocking a pipe into the ground.  We will, of course, continue to extract ever more difficult and expensive fossil fuels, but their extraction will remorselessly consume an ever-greater part of the exergy previously available to the wider economy.  Which, in turn, means that the wider economy is going to shrink… and we have no economic theory to explain how we are going to handle this. What of productivity?  Surely – and visibly – technology adds value.  After all, we now have automated production processes which can manufacture goods with barely a human finger laid upon them.  But as with labour back in Adam Smith’s day, what the technology is achieving is the efficient conversion of exergy into value.  And while this can have massive results – there is a big difference, for example, between Trevithick’s 1804 steam locomotive trundling down the Taff valley at walking pace (and later having to be towed back up by horses) and Gresley’s Mallard achieving the world record for a steam locomotive of 126 mph in 1938 – there are both physical (thermodynamic) and economic limits to what can be achieved.  As with fossil fuels themselves, technological improvement – aka productivity gains, i.e., optimising the conversion of exergy into value – is cheap and easy to begin with but hard and expensive later on: There is a reason why Mallard still holds the speed record for a steam locomotive, and it is the same reason why nobody has replaced Concorde in providing supersonic commercial flight – it costs too much!  Indeed, Mallard and Concorde both turned out to be state-subsidised luxury passenger transport for the wealthy.  And in both cases, electorates – most of whom could not afford the ticket price – eventually refused to vote for any more corporate welfare. Although we like to pretend that the technology which surrounds us is novel and world-changing, as physicist Tom Murphy has shown, much of it would be recognisable to someone in the USA of the 1950s: “Look around your environment and imagine your life as seen through the eyes of a mid-century dweller. What’s new? Most things our eyes land on will be pretty well understood. The big differences are cell phones (which they will understand to be a sort of telephone, albeit with no cord and capable of sending telegram-like communications, but still figuring that it works via radio waves rather than magic), computers (which they will see as interactive televisions), and GPS navigation (okay: that one’s thought to be magic even by today’s folk). They will no doubt be impressed with miniaturization as an evolutionary spectacle, but will tend to have a context for the functional capabilities of our gizmos. “Telling ourselves that the pace of technological transformation is ever-increasing is just a fun story we like to believe is true. For many of us, I suspect, our whole world order is built on this premise.” The point is that most of these technologies have already reaped the cheap and easy, and, indeed, almost all of the hard and expensive improvements that are ever going to be made.  In this respect, we are entering a period similar to the early twentieth century when we hit the limits to coal-powered technologies.  The big difference today being that there is no even more energy-dense and easily available new energy source available to us to usher in a new suite of technologies in the way that oil-based technologies rapidly replaced coal in the years after World War Two. From this viewpoint, the smart thing to do today would be to simplify our way of life – and write-off a large part of the monetary claims on future exergy growth which will not be arriving – in order to bring our economies into line with the declining surplus energy available to us.  The paradox though, is that – even at today’s higher prices – energy does not appear to be the biggest problem before us.  For all of the complaints about the rapid and steep rise in fuel and electricity prices, they remain low in comparison to the benefits that we derive from them.  In the monetary economy, on the other hand, it is the cost of labour which looks like our biggest headache.  In almost every business, the wage bill is far and away the biggest cost.  And with the price of energy rising as a direct consequence of depleting exergy (and with few more productivity gains to be won) the greatest fear on the part of central bankers and policy-makers is that wage demands will begin to exceed price increases – a process compounded by labour shortages caused by two years of lockdown policies. Labour shortages in Britain in the aftermath of the Napoleonic Wars, were an essential part of why we had an industrial revolution to begin with.  The use of machinery to harness water and steam power rapidly out-produced craft workers, soon enough turning skilled artisans into mere machine-minders.  And with labour shortages appearing again, the complexity trap is that corporations turn to technological automation to fill the gap.  From supermarkets installing ever more self-service tills and automated farming to the end of High Street banking and the move to digital currencies, the trend toward technological fixes for our growing predicament is irresistible.  But without the exergy to make it all work, something – very likely something big – is going to break. The counter trend to technological automation can already be seen in less profitable sectors of the economy, where cheap labour has been used to replace increasingly unaffordable technologies such as the once ubiquitous automated car wash.  Add these to a growing list of things that ordinary people used to be able to afford but no longer can.  As the cost of necessities like food and temperature control continue to increase, the list will grow.  And this will cause huge problems for the corporations which are pursuing the automation route… and, indeed, those of us who rely upon them as the customer base shrinks. This loss of critical mass is one jaw of the complexity trap.  Much of the automation that corporations are pursuing is only cheaper if a mass of the population uses it.  As Netflix and Facebook have discovered recently, things go badly awry when people begin to unsubscribe.  The same is true for the energy companies themselves since they rely on our collective willingness to continue using electricity and gas even as the price spirals upward.  The problem, of course, is that we are not prepared to do this.  Instead, we seek ways of cutting our use, with those at the bottom disconnecting themselves entirely.  So much so that even that bastion of neoliberal austerity, the IMF, is now calling on states to subsidise energy and food…  Not, as establishment media outlets may pretend, out of some sudden desire to alleviate the plight of the poor, but because when we stop buying, their system gets flushed around the U-bend. Declining surplus energy is the other jaw of the trap.  The immanent, and partially self-inflicted, loss of firm – 24/7/365 – electricity, along with periodic shortages of diesel, gas and food, are going to render hi-tech automated processes unworkable in practice.  Your driverless tractor may plough the straightest furrows possible.  But without diesel to fill the tank, it is no more than an expensive art installation.  Digital currency is of little use when the servers are down and/or when the users have no electricity with which to transact.  Try shopping during a power cut – something that is happening more often in the UK these days.  You might want to pay, and the supermarket would be delighted to take your money.  But if the tills aren’t working, it can’t be done… not even if you still use notes and coins, because without electricity, the system can’t process them.  Oh, and as an aside, when the power goes off, the supermarket is legally bound to dump its frozen and chilled foods… even during a food shortage. Several decades ago, sociologist Joseph Tainter observed that collapsing civilisations have a habit of unconsciously entering into complexity traps, adding energy-intensive complexity in a desperate attempt to sustain themselves.  Our turn to energy-intensive automation in an attempt to overcome our growing woes and to maintain economic growth is likely repeating the same folly.  The difference – at least for those who see the economy as primarily an energy rather than a monetary system – is that we have the necessary knowledge to avoid our complexity trap if only we are prepared to actively simplify away from an economy based on mass consumption in favour of one based around material simplicity…  I’m not holding my breath though. *  *  * As you made it to the end…you might consider supporting The Consciousness of Sheep.  There are five ways in which you could help me continue my work.  First – and easiest by far – please share and like this article on social media.  Second follow my page on Facebook.  Third, sign up for my monthly e-mail digest to ensure you do not miss my posts, and to stay up to date with news about Energy, Environment and Economy more broadly.  Fourth, if you enjoy reading my work and feel able, please leave a tip. Fifth, buy one or more of my publications Tyler Durden Sat, 06/04/2022 - 21:30.....»»

Category: dealsSource: nytJun 4th, 2022

Why Gold Will Rise - The Financial System Has Changed

Why Gold Will Rise - The Financial System Has Changed Authored by Matthew Piepenburg via, Despite massive price volatility of late, gold will rise... The Perfect Gold Storm Not long ago, I wrote a piece on why gold was not rising. As I said then, and will repeat again now, gold’s then-yawning price moves in an otherwise ideal inflationary and negative real rate environment was just a momentary calm before the storm. In other words, gold’s rise –and perfect storm–was coming. Well, that storm is gathering strength and gold will rise—but not in a straight line. Despite inevitable (and extreme) volatility (war and inflation-driven) and legalized price fixing (including $100 intra-day price moves) from the increasingly discredited paper COMEX markets, gold will keep rising as CPI inflation hits 7.9%. Nearer term, gold’s price will gyrate depending on whether tensions in the Ukraine escalate or de-escalate. But as we discuss below, Western financial responses to the crisis in the Ukraine have just changed the global system—yet no one noticed. Longer-term, this bodes extremely well for gold and its potential to rise. But First: A Nod to Goldman’s Jeff Currie Although it’s easy to poke fun at Goldman Sachs (as I’ve done in the past, apologies to my daughter), I am pleased to confess that Jeff Currie, Goldman’s Global Head of Commodities Research, has correctly addressed what he calls “the perfect storm for gold.” That is, a near-perfect convergence of three key gold demand forces (or “weather fronts”) are in now in motion. The first of these weather fronts is the growing (and inflation/recession fear-based) retail investor demand for gold. ETF trade volume is ripping north and poised to increase by another 600 tones. The next weather front is coming from central bank gold buying, which is already up 750 tones for the year and marking an all-time record. China and Turkey, for example, are buying gold in a not-so-surprising move to de-dollarize (see below) as other nations, like Brazil and India, are buying gold to diversify. The third and final weather front is the spiking demand for physical gold, lead primarily by China and India—and let’s not forget Russia, whatever you may think of it… All three gold channels (retail, central bank and physical markets) are objectively the strongest they have ever been, stronger even than in 2010-2011 when gold rallied by 70%. Goldman’s price target for gold is now $2500—a substantial rise. We think it will go much higher… Why? Because regardless of what you think of Putin, Russia, the absolute horrors of war, the confusion of headlines or the wisdom of the West, the EU and Uncle Sam just shot themselves and the global financial system in its collective foot—and no one even seemed to notice. Weaponized Finance—Be Careful of the Safety Trigger Despite the fact that Putin had been warning the West for eight years to keep the Ukraine out of NATO with the same passion that Kennedy had warned the Soviets to keep missiles out of Cuba, the West somehow seemed shocked that “brilliant statesmen” like Kamala Harris could not outthink Putin. Despite nearly every U.S. State Dept official since the late 90’s warning that a Ukraine in NATO would be suicide, the West is feigning shock today. Rather than diplomatically addressing the Ukraine NATO alliance (which is about as obsolete in the post-Stalin era as a rotary dial phone), the Vice President (chosen for optics rather than experience) landed in Europe and doubled-down on a bad NATO hand (as well as embarrassing grasp of European geography). War rather than compromise quickly followed. But unlike Iraq, Syria, Libya or even Afghanistan (where US doubling down has been an epic failure), the great minds of the West decided to play chicken with a nuclear power, which, well complicates things, no? Given that conventional proxy wars aren’t so easy when dealing with a nuclear adversary, the West’s only viable option once the inevitable (Putin-pre-warned) invasion of the Ukraine occurred, was to weaponize finance rather than flirt with nuclear red buttons. But as anyone familiar with weapons knows, once you unlock the safety trigger, unforeseen risks emerge. And unbeknownst to almost everyone ingesting the main stream media’s daily pablum, the financial weapons unleashed by the West have dangerous consequences. In fact, and while most of us weren’t looking, the entire financial system of the last 4 decades (i.e., globalization, an artificial bond bull market and manipulated disinflation) just died, soon to be replaced by a multi-polar and multi-currency new inflationary world—all of which point toward a notable rise in gold price. How did this happen? Well, let’s ignore the politicians, the COMEX and standard headlines and examine cold reality. The Catalyst No One Sees As the holder of the global reserve currency and the almighty USD, Washington has been able to export inflation and bully little guys like Iran and Venezuela with all kinds of clever financial sanctions with relative impunity/effect for years. But when you start poking at Russian (and indirectly, Chinese) tails by freezing FX reserves, you unleash a world of mess and a domino chain of unintended (but obvious) consequences which are far too complex for the 30-something financial journalists at the NYT or CNN to grasp. Recently, and with all the chest-puffing of bringing a knife to a gun fight, the US and EU bravely announced that sovereign debt held as FX reserves outside one’s own national borders ($7-8T) is now subject to seizure by Uncle Sam and Aunt Marianne (i.e., the EU). Such bold financial saber rattling is impressive; but by totally discrediting sovereign debt as an FX reserve, the US and EU have effectively just announced to Russia (and the world) that they are killing the post-war financial system—which also means you should buy more gold… Such grossly misunderstood moves by the West are now forcing Russia (and soon China) to do what they’ve already been advocating for the last decade, namely forcing the global financial system toward a reserve neutral asset (gold) that floats in price in all currencies. After all, if the West can freeze Russian FX reserves (i.e., its accumulated trade savings) today, China now clearly knows the West can and will do the same to them tomorrow if they, for example, look sideways at Taiwan… An no, this doesn’t make me “Pro-Putin” or “Pro-China,” just pro candor. Even if the horrific war in the Ukraine de-escalates, the extreme financial moves made by the West since late February will never be forgotten. That genie can’t be put back into the bottle. Even the Swiss decision to abandon centuries of neutrality by joining “woke” (i.e., US-pressured) sanctions against Russia is the equivalent of a placing a massive, neon flashing sign atop the Matterhorn which reads: “Don’t buy CHF, Buy Gold.” In short, the financial world has now changed, and there’s no turning back. Let’s see why. De-Dollarization Coming Full Circle to Bite the West Russia, and soon China, must now turn to SWIFT alternatives which will not only alter the global payment systems, but undermine the USD’s global reserve status, which, well, kinda matters… This is not just my/our humble opinion, but warned as well by Citadel’s chief executive and JP Morgan’s Jamie Dimon. That is, the West has just forced Russia even further into the arms of China in more ways than one. Rather than look toward northern California for software solutions, for example, Russia will look toward China. But as Dimon warned, there are far greater consequences ahead as the USD becomes less “global” less of a “reserve” and less of a “currency.” Dimon’s concerns, moreover were shared by President’s Biden’s former boss in August of 2015, when President Obama accurately warned of the “unintended consequences” of a SWIFT/financial war: “We cannot dictate the foreign, economic and energy policies of every major power in the world. In order to even try to do that, we would have to sanction, for example, some of the world’s largest banks. We’d have to cut off countries like China from the American financial system. And since they happen to be major purchasers of our debt, such actions could trigger severe disruptions in our own economy, and, by the way, raise questions internationally about the dollar’s role as the world’s reserve currency. That’s part of the reason why many of the previous unilateral sanctions were waived.” In short, somewhere between 2015 and today, American common sense, leadership and options took a nose dive. What’s also about to take a nose dive is the American economy in general and markets in particular. Do you want to see why? The FED—No Where to Go but Crazy Dramatic words are not enough, so let’s stick to dramatic facts and a quick glance at a simple graph of the Fed’s embarrassing balance sheet… Although the media and headlines ignored the staggering repo crisis of September of 2019 as a minor “glitch in the plumbing,” it was, in fact, a neon flashing sign of a looming/brewing credit and (hence) financial crisis. When US commercial banks in the autumn of 2019 were staring down the barrel of a rising USD and rising (i.e., unaffordable) interest rates, they stopped trusting each other’s collateral to make over-night loans. As expected, the Fed stepped in as the lender of last resort and began mouse-clicking hundreds of billions of dollars out of thin air per month to backstop the bank(er)s who created the Fed back in 1913. Such money printing explains the parabolic (and fatal) move up and to the right of the balance sheet plotted above. That is, the Fed had to create money to buy its own Treasuries which foreign buyers no longer wanted. But what almost no one is noticing today is that the problem’s facing the Fed and Uncle Sam’s otherwise unloved and unwanted IOUs in 2019 have only been made exponentially worse. That is, the recent actions by the US and EU to Freeze Russian FX reserves for not towing the Western line is telegraphing to the rest of the world (i.e., China) not to trust US Treasuries. Needless to say, if US Treasuries are now the ugliest girl at the global dance, who else is gonna buy them, and with what money? The sad answer is simple: The Fed will buy them with more debased dollars created out of thin air. Crazy? Yep. Recession and Leverage Ahead—Will Gold Rise? Given the sad yet media-ignored fact that the US (with a debt to GDP ratio of 122%) is effectively broke yet spending like a teenager with Dad’s Amex card (nod to my son), the future, as well as policies ahead, are not hard to see. It’s worth asking how US spending for entitlements, defense and treasury outlays will be paid for. In short: Where will the money come from? Will Uncle Sam cut spending? Given that US spending accounts for 25% of its GDP, any spending cuts will put the US in recession for the simple reason that such cuts will send yields and rates up and hence bonds and stocks to the basement. Can the US raise taxes? This too would only slow growth and invite recession. Can the Fed raise rates to finance Uncle Sam’s deficits? No, because his bar tab is too high to stomach rising rates, and that too triggers a recession and a debt crisis. So, what can Uncle Sam do? As realists rather than paid (i.e., censored) journalists, we here see only one or two obvious yet sad options ahead, all of which make an equally obvious case for a rise in gold. First, it’s highly likely that the Fed will suspend SLR (Supplementary Leverage Ratios) previously imposed on commercial banks. In plain English, this just means banks will be allowed to use more leverage to buy Uncle Sam’s debt from within at no charge. No shocker there. As we’ve written elsewhere, governmental guarantees of commercial bank lending are already in play –and this just means more leverage, more debt, more risk and more autocratic rather than natural markets. In addition, expect more QE as well, which means the inherent value (as opposed to relative strength) of the USD, like all other fiat currencies, is getting weaker by each inflationary second, minute and hour. Got gold? Tyler Durden Thu, 03/17/2022 - 15:00.....»»

Category: blogSource: zerohedgeMar 17th, 2022

Futures Drift Lower After Kremlin Dashes Ukraine Peace Hopes; Curve Inversion Persists

Futures Drift Lower After Kremlin Dashes Ukraine Peace Hopes; Curve Inversion Persists After yesterday's explosive session, which saw stocks trade in violent kneejerk response to conflicting headlines out of Ukraine at first, only to post the biggest ever post FOMC reversal, as markets realized that the Fed's overly hawkish ambitions are too great and doom the rapidly slowing economy to an accelerated recession, overnight trading has been positively subdued with emini S&P futs trading in a tight 20 point range between 4,340 and 4,360 until 6 am ET, when European stocks turned negative and US equity futures suddenly dropped as much as 0.5%, after the Kremlin said reports of major progress in Ukraine talks are "wrong" and Kremlin spokesman Dmitry Peskov dismissed reports that the warring parties are moving toward a settlement, blaming Kyiv for slowing the negotiations, crippling any hope for a quick ceasefire deal and adding to worries about the outlook for economic growth as the Federal Reserve’s campaign against inflation gets underway. Futures were already wavering as the bond market flagged a growing risk that the Fed’s efforts to rein in prices could trigger an economic downturn with the 5s10s curve inverting. Ominously, Brent jumped more than $5/bbl after tumbling below $100 yesterday. Contracts on the Nasdaq 100 dipped 0.4% by 7:30 a.m. in New York, while S&P 500 futures were 0.34% lower. The benchmark S&P 500 on Wednesday posted its best two-day rally since April 2020 as the Fed hiked interest rates by a quarter point and Chair Jerome Powell signaled the economy could weather tighter monetary policy. Gold and 10Y yields dropped to session lows, and bitcoin was modestly lower on the session. Europe was slightly green while Asia stocks closed higher, led by the Hang Seng which rose 7% On Wednesday, the Fed raised borrowing costs by a quarter percentage point and signaled hikes at all six remaining meetings in 2022, while projecting an "above-normal" policy rate at 2.8% by the end of 2023. Chair Jerome Powell said the U.S. economy is “very strong” and can handle monetary tightening. Treasuries advanced, while a portion of the bond curve - the gap between 5- and 10-year yields - inverted for the first time since March 2020, a sign investors expect recession. The Fed also said it would begin shrinking its $8.9 trillion balance sheet at a “coming meeting,” without elaborating as Biden breathes down Powell's neck to get inflation under control. Meanwhile, the commodity shock from Russia’s war in Ukraine is continuing to aggravate price pressures and economic risks, portending more market volatility. “It won’t be easy -- rarely has the Fed safely landed the U.S. economy from such inflation heights without triggering an economic crash,” Seema Shah, chief strategist at Principal Global Investors, said in emailed comments. “Furthermore, the Russia-Ukraine conflict, of course, has the potential to disrupt the Fed’s path. But for now, the Fed’s priority has to be price stability.” “This type of normalization policy does not always end well,” said Nicolas Forest, global head of fixed income at Candriam Belgium SA. “While the Fed began its tightening cycle later than usual, at a time when inflation has never been so high, financial conditions could also harden, making the 2.80% target ambitious in our view. In this context, it is easy to understand why the U.S. curve has flattened.” In the latest Ukraine war developments, Russia continued to “hammer” cities like Kharkiv and Cherniyiv with bombardments and rocket systems and isn’t acting like it wants to settle, Pentagon spokesman John Kirby said in an interview with Bloomberg TV. Meanwhile, Russia’s Finance Ministry said a $117 million interest payment due on two dollar bonds had been made to Citibank in London amid mounting speculation that the country is heading for a default. Russia had until the end of business Wednesday to honor the coupons on the two notes. The ruble gained for a sixth day in Moscow trading, while the country’s stock market remains shut. Here are some more headlines courtesy of Newsquawk: Ukrainian President Zelensky said talks with Russia are challenging but are still ongoing. He added that Russia has the advantage in the air and already crossed all red lines, while he hopes for assistance from allies. Russian Foreign Minister says that discussions with Ukraine are continuing via video link with the sides discussing humanitarian and political issues. Ukrainian Defense Minister says so far there is nothing to satisfy us in negotiations with Russia; a peaceful solution can be reached with Russia, but "on our terms". Russian Kremlin says their delegation is putting colossal energy into Ukraine peace talks, conditions are absolutely clear. Agreement with Ukraine with clear parameters could very fast stop what is going on; on the recent FT report re. peace talk progress said this is not right, elements are correct but the entire peace is not true. A rebound in China stocks listed on U.S. exchanges also cooled a day after they soared the most since at least 2001 on a pledge from Beijing to keep its stock market stable. American depository receipts of Alibaba were down 2% in premarket trading following their biggest gain since their trading debut in September 2014, while Baidu dropped 5.7%. Here are some other notable premarket movers: Shares in Marrone Bio (MBII US) jumped 20% premarket after announcing a merger pact with Bioceres Crop Solutions (BIOX US), which falls 5.9%. Williams-Sonoma (WSM US) gained 6.2% in extended trading Wednesday after the home-goods retailer reported adjusted fourth-quarter earnings that beat the average analyst estimate. The company also raised its dividend and announced a share buyback authorization. In Europe, the Stoxx 600 index gained, nearly erasing losses that were sparked by Russia’s invasion of Ukraine. The index then dipped on the abovementioned news out of the Kremlin which said reports of major progress in Ukraine talks are “wrong”, only to bounce back into the green. DAX and FTSE MIB lag, slipping ~1%. Banks, autos and personal care are the worst performing sectors. Energy, real estate and tech outperform.  Here are some of the biggest European movers today: Deliveroo shares rise as much as 9.8% after reporting full-year results, with Barclays (equal-weight) saying the food-delivery company’s mid-term margin commentary was “helpful.” Grenke shares jump 16%, the most since May, after the company reported dividend per share that beat the average analyst estimate. EQT shares rise as much as 9.5%, extending Wednesday’s 12% gain following the acquisition of Baring Private Equity Asia for $7.5 billion in what is the biggest takeover of a private equity firm by another in the sector. Atos shares jump as much as 7.4% after BFM Business reported that Airbus has been mulling a possible takeover of the French IT firm’s cybersecurity unit. Atos reiterated that its BDS cybersecurity business is not for sale. DiaSorin shares soar as much as 9.7%, their best day in nearly one year as analysts upgraded the Italian diagnostics company following results, with the firm reporting net income for the full year that beat the average analyst estimate. Verbund shares rise as much as 7.7% after 2021 profit beats estimates and Austria’s biggest utility forecasts higher profit next year. Thyssenkrupp shares fall as much as 11% after the company suspended its full-year forecast for free cash flow. The move is a disappointment, given the FCF focus in the steel company’s equity story after years of cash burn, Deutsche Bank says. Asian stocks extended their rebound through a second day after Chinese shares rallied again on a vow of state support and the Federal Reserve expressed confidence in the U.S. economy.  The MSCI Asia Pacific Index rallied as much as 3.6%, lifted by technology and consumer-discretionary shares. Japan and Hong Kong benchmarks led the way, with the Hang Seng Index surging 17% over two days, its biggest back-to-back advance since the Asian financial crisis in 1998, and the Topix jumping 2.5%.  A combination of China’s pledge to stabilize markets, Fed comments on the U.S. economy’s strength after the expected quarter-point interest rate hike by the central bank, and hopes for progress on Russia-Ukraine talks have put Asian stocks on track to end four consecutive weekly losses. “Following recent corrections, markets have reached a point that prices in, or presumes, a fair amount of rate hikes and economic stress,” said Ellen Gaske, lead economist for G-10 economies at PGIM Fixed Income. “It would not be surprising to see investors begin to inch back into the market in search of yield.” Japanese equities rose for a fourth day, as investors were cheered by comments from the Federal Reserve on U.S. economic growth and China’s moves to support its market. Electronics and machinery makers were the biggest boosts to the Topix, which rose 2.5%, to the highest level since Feb. 21. All 33 industry groups advanced. Fast Retailing and Tokyo Electron were the biggest contributors to a 3.5% rise in the Nikkei 225. The yen extended its losses against the dollar after weakening 3.4% over the previous eight sessions. The Fed raised interest rates by a quarter percentage point and signaled hikes at all six remaining meetings this year, while saying “the American economy is very strong” and able to handle tighter policy. Global stocks got a lift Wednesday after Beijing vowed to keep its stock market stable. “The FOMC dot plot clearly shows that the number of interest rate hikes will be reasonable, and the stock market is pleased that the risk of accelerating long-term interest rates rising due to monetary policy following has decreased,” said Kazuharu Konishi, head of equities at Mitsubishi UFJ Kokusai Asset Management. In domestic news, a magnitude-7.3 earthquake struck near Fukushima prefecture late Wednesday, killing four and injuring dozens of people, as well as derailing a bullet train and disrupting power India’s benchmark stocks index rose, tracking regional peers, as lenders drove gains. The S&P BSE Sensex climbed 1.8% to 57,863.93, in Mumbai. The measure added 4.2% this week, and with local markets closed for a holiday Friday, it is the biggest weekly advance for the index since February 2021. With today’s gains, it completely recovered all losses that followed Russia’s invasion of Ukraine.   Mortgage lender Housing Development Finance Corp. rose 5.4%, its biggest jump in over a year and was the best performer on the Sensex, which saw all but two of 30 shares advance. Seventeen of 19 sectoral sub-indexes compiled by BSE Ltd. gained, led by a gauge of realty companies. The NSE Nifty 50 Index added 1.8% to 17,287.05 on Thursday. China’s pledge to support its markets, the prospect of progress on Russia-Ukraine cease-fire talks and the U.S. Federal Reserve’s comments on America’s economic strength boosted sentiment. Brent crude, a major import for India, down to $100 a barrel from $127.98 last week, also eased concerns. The Fed announcement was on expected lines for the market and they rallied in relief, Nishit Master, portfolio manager at Axis Securities wrote in a note.  “Despite the recent rally, the markets will continue to remain volatile in the near future on the back of tightening of liquidity conditions globally. One should use this volatility to increase equity allocation for the long term.” In rates, the post-Fed flattening move has extended as investors continue to digest expectations on latest policy path, with some strategists calling for a top in yields. 10-year yields around 2.12%, richer by ~6bp on the day and outperforming bunds and gilts by  4.5bp and 3bp; 2s10s spread is flatter by ~4bp on the day.  US TSY yields are richer by as much as 7bp across long-end of the curve, flattening 5s30s by a further 2.4bp with the spread dropping as low as 24.2bp;  the 5s10s was again inverted, trading fractionally in the red after first inverting yesterday during Powell's FOMC presser. In FX, the Bloomberg Dollar Spot Index pared a loss and the greenback traded mixed after earlier sliding against all of its Group- of-10 peers apart from the Swedish krona, as risk aversion gave rise to a haven bid. The euro snapped a three- day advance after the news out of Kremlin dampened sentiment; short-dated European benchmark bond yields were little changed while they contracted longer out on the curve. The pound advanced and gilts rose, led by the long end before the Bank of England looks all but certain to take interest rates back to their pre- Covid level. The Australian dollar still outperformed G-10 peers after the nation’s February unemployment rate falls to the lowest since 2008, boosting bets of earlier interest-rate hikes. The yen inched up amid risk aversion, but still held near its lowest level in six years as Bank of Japan Governor Haruhiko Kuroda vowed to continue with monetary stimulus even after the Federal Reserve kicked of its rate hike cycle Wednesday. In commodities, WTI crude futures climb near $99.50 while Brent rallies through $102; spot gold adds ~$16 to trade around $1,944. Base metals are mixed; LME nickel falls 8% to maximum limit while LME aluminum gains 1.8%. Bitcoin is modestly softer but remains well within yesterday's parameters and retains a USD 40k handle. Looking at the day ahead now and housing starts, building permits, initial jobless claims and industrial production are due. We will also hear from ECB's Lagarde, Lane, Knot, Schnabel and Visco. Earnings releases include Accenture, Enel, FedEx, Dollar General and Verbund. Market Snapshot S&P 500 futures down 0.3% at 4,337.00 STOXX Europe 600 up 0.4% to 450.44 MXAP up 3.5% to 178.08 MXAPJ up 4.0% to 582.21 Nikkei up 3.5% to 26,652.89 Topix up 2.5% to 1,899.01 Hang Seng Index up 7.0% to 21,501.23 Shanghai Composite up 1.4% to 3,215.04 Sensex up 2.1% to 58,014.18 Australia S&P/ASX 200 up 1.1% to 7,250.80 Kospi up 1.3% to 2,694.51 German 10Y yield little changed at 0.38% Euro up 0.2% to $1.1057 Brent Futures up 3.0% to $100.97/bbl Gold spot up 0.7% to $1,940.77 U.S. Dollar Index down 0.42% to 98.21 Top Overnight News Russia’s Finance Ministry said a $117 million interest payment due on two dollar bonds had been made to Citibank in London amid mounting speculation that the country is heading for a default Rates and currency markets are skeptical of the Bank of England’s ability to tame inflation without triggering an economic slowdown. Policymakers may undo tightening as soon as next year, swaps contracts suggest After the Federal Reserve raised interest rates and signaled hikes at all six remaining meetings this year, a section of the Treasury curve -- the gap between five- and 10-year yields -- inverted for the first time since March 2020. Meanwhile the flattening trend between two- and 10-year yields continued Hungary’s central bank kept the effective interest rate unchanged after a rally in the forint eased pressure on policy makers to further hike the European Union’s highest key rate Commodities trader Pierre Andurand sees a path for crude oil to get to $200 by the end of the year as historically tight markets struggle to ramp up production and replace lost supply from Russia A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks gained post-FOMC while Chinese tech remained euphoric on support pledges. ASX 200 was led higher again by outperformance in tech and following strong jobs data. Nikkei 225 rallied after recent currency weakness and despite the deadly earthquake in Fukushima. Hang Seng and Shanghai Comp. continued to benefit from China’s recent policy support pledges which  lifted the NASDAQ Golden Dragon China Index by 33% and with the PBoC boosting its liquidity efforts. Significant gains were also seen amongst developers after reports that China is not planning to expand its pilot property tax reform this year. Top Asian News China Affirms Friendship With Ukraine, Promise to ‘Never Attack’ Indonesia Holds Rates While Monitoring Inflation, War Risks War in Ukraine Triggers Slew of Shelved IPOs in Japan: ECM Watch Strong Quake Hits Japan, Killing Two and Halting Factories European bourses are predominantly negative, Euro Stoxx 50 -0.4%, after a relatively constructive open post Wall St./APAC handover. Initial upside faded as updates on Russia/Ukraine are downbeat overall and push back further on some of Wednesday's more constructive updates. US futures are lower across the board, ES -0.4%, after yesterday's upbeat close post a hawkish-FOMC. Top European News Raiffeisen CEO Says Bank is Considering Exit From Russia UBS, Mitsubishi Sell Japan Realty Unit to KKR for $2 Billion Russia’s Ruined Gameplan for Ukraine Is Visible in the South Diageo Rises; JPMorgan Lifts to Overweight on U.S. Position In FX, the dollar flips after hawkish Fed hike and more aggressive dot plot before unwinding all and more upside in buy rumor, sell fact reaction; DXY almost 100 ticks down from pre-FOMC peak and just off 98.000. Aussie outperforms following upbeat labour data and Kiwi lags on the back of sub-forecast GDP, AUD/USD eyeing Fib ahead of 0.7350, AUD/NZD back up over 1.0700 and NZD/USD capped into 0.6850. Sterling firm awaiting confirmation of 25 bp hike from the BoE and vote split plus MPC minutes for further guidance; Cable close to 1.3200 at best and EUR/GBP sub-0.8400. Euro clears 1.1000 again, while Yen extends decline to cross 119.00 line. Lira looks ahead to CBRT with high bar for any direct support in contrast to Real that got a full point hike from BCB and signal of more to come. Brazilian Central Bank raised the Selic rate by 100bps to 11.75%, as expected, while the decision was unanimous and it considered it appropriate to advance monetary tightening significantly into even more restrictive territory. In commodities, crude futures continue to nurse recent wounds, with Brent May back around USD 102.50/bbl while WTI April inches toward USD 100/bbl. Upside occurred, picking up from initial choppy action, amid the most recent geopolitical developments from the Kremlin and Ukrainian Defence Ministry. India may purchase up to 15mln bbls of oil from Russia with state-run oil firms preparing to  purchase heavy volumes of Russian crude that's going at a deep discount to help ease the margin pressure oil refiners. China is to increase gasoline prices by CNY 750/ton and diesel by CNY 7220/ton as of March 18th, according to the NDRC via CCTV. Italy is considering blocking the export of raw materials, according to the Deputy Industry Minister. Spot gold/silver are firmer given geopolitical-premia., while LME Nickle hit the new adj. limit down of 8% after the reopen. In fixed income, debt derives impetus from downturn in risk sentiment as Russia and Ukraine deny major strides towards ceasefire deal. Bond curves remain flatter following Fed's hawkish dot plots. Bonos and OATs soak up Spanish and French supply. US Event Calendar 8:30am: March Initial Jobless Claims, est. 220,000, prior 227,000; March Continuing Claims, est. 1.48m, prior 1.49m 8:30am: Feb. Building Permits, est. 1.85m, prior 1.9m; Building Permits MoM, est. -2.4%, prior 0.7%, revised 0.5% 8:30am: Feb. Housing Starts, est. 1.7m, prior 1.64m; Housing Starts MoM, est. 3.8%, prior -4.1% 8:30am: March Philadelphia Fed Business Outl, est. 14.8, prior 16.0 9:15am: Feb. Industrial Production MoM, est. 0.5%, prior 1.4% Capacity Utilization, est. 77.9%, prior 77.6% Manufacturing (SIC) Production, est. 1.0%, prior 0.2% DB's Jim Reid concludes the overnight wrap After I press send today I’ll be venturing back on a plane for the first time in two years this morning. I'm off to give a speech at a conference in Cannes just at the time when all the tabloid papers here say that London is going to be hotter than Greece and the Costa Brava in a rare March warm spell here in the UK. Rarer than a warm spell in the UK in March, we now have the start of only the fourth Fed hiking cycle in 27 years. We saw a wild ride in markets after the decision as initially the hawkish dot plot led to a big sell off in rates, and an S&P 500 that fell nearly -1.5% from pre announcement levels and into negative territory for the session. However markets completely turned on Powell’s comments in the press conference that the probability of recession was "not particularly elevated" and that the "economy is very strong" and can handle tighter policy. The S&P closed +2.24%, completing its biggest 2-day move in 23 months, while the Nasdaq climbed +3.77%. The big winners were mega cap tech stocks, with the FANG+ index putting in its best day on record, climbing +10.19%. The latter were almost certainly helped by earlier news that China would “actively introduce policies that benefit markets” and take steps to ease the most spartan lockdown measures. The FANG index includes Baidu and Alibaba that were up nearly +40% yesterday. To be fair the Fed meeting and the surrounding price action makes sense. Although I think the risks of a US recession by late 2023 / early 2024 are increasingly elevated I'm not convinced that the risks are particularly high in 2022. The start of the hiking cycle isn't historically the problem point for the economy or for that matter equities. Further to this, in my CoTD yesterday (link here) I showed that on average it takes around three years from the first Fed hike to recession. However the bad news is that all but one of the recessions inside 37 months (essentially three years) occurred when the 2s10s curve inverted before the hiking cycle ended. With all the recessions that started later than that, none of them had an inverted curve when the hiking cycle ended. In fact, hiking cycles that ended with the curve still in positive territory saw the next recession hit 53 months on average after the first rate hike, whereas the next recession for hiking cycles that ended with an inverted curve started on average in 23 months, so just under two years. As a reminder, none of the US recessions in the last 70 years have occurred until the 2s10s has inverted. On average it takes 12-18 months from inversion to recession. The problem is that all but one of the hiking cycles in the last 70 years have seen a flatter 2s10s curve in the first year of hikes. The exception saw a very small steepening. So these are the risks. Indeed the yield curve flattened after the Fed with 2s10s moving from just under +31bps to +21bps an hour later. It closed at +23bps. 10yr yields rose 6bps after the announcement but reversed most of this into the close and ended +4.1bps on the day at 2.18%. We are at 2.137% this morning. The rise in 2 years was more durable at +8.9bps on the day with a -2.4bps reversal this morning to 1.912%. At one point yesterday this was +15bps on the day and at a hair's breadth below 2%. The tighter policy path meant that breakevens declined and real rates increased; 10yr Treasury breakevens fell -5.5bps to 2.80%. Digging into the meeting itself. Two years to the day after cutting rates to the zero lower bound, the Fed raised rates by 25 basis points yesterday, and communicated a much tighter path of policy to come (our US econ team’s full recap here). Yesterday’s meeting came with an updated Summary of Economic Projections, and the dots were much more hawkish. The median dot showed expectations for 7 hikes in 2022, including yesterday and in line with what our US economics team is expecting, and which would represent a hike at every meeting for the rest of the year. The median dot reaches 2.75% next year, above the Fed’s long-run estimate for the fed funds rate, signaling policy will need to get to a restrictive stance. Indeed, the dots actually showed the long-run neutral fed funds rate fell, so a restrictive stance will come even sooner. These were just the medians. There was considerable variance in the dots, and Chair Powell noted the risks to inflation were to the upside, suggesting rates could be even higher than what the hawkish medians are suggesting. On the balance sheet, the Fed noted that QT would start at a coming meeting. Chair Powell signaled it could start as early as May, noting the Committee made excellent progress on the parameters of balance sheet runoff, even if they did not provide more details yesterday. Chair Powell noted the minutes from this meeting would have more details around runoff parameters. Elsewhere in the press conference, the Chair noted that every meeting was live, and that the Fed would move more quickly if appropriate, which ostensibly means +50bp hikes are on the table, but also said the Fed’s expected QT program will equate to approximately one more hike, which is in line with our team’s expectations for QT this year. Indeed, each of the next few meetings is pricing a meaningful chance of a +50bp hike. He noted the Fed would be evaluating month-over-month inflation readings when determining the pace of policy tightening and that financial conditions needed to be tighter. In all, a hawkish meeting, which was expected, with little for doves to cling to. After yesterday’s Fed hike, it is the Bank of England turn to raise rates with the decision scheduled for 12pm London time. A preview from our UK economist is available here. Our team expects a +25bps hike to bring the key rate to its pre-pandemic level of 0.75%. They also added a +25bps June hike to their projections for the path of the monetary policy in 2022, which would bring the benchmark rate to 1.5% by the end of this year. Beyond 2022, they see another hike in February 2023 that would bring the key rate to 1.75%, their projected terminal rate. More on their economic outlook for the UK can be found in the UK Macro Handbook here. As of this morning, the market is pricing in slightly less than 70bps of hikes by the end of 2022. Turning to geopolitics, net net, more positive news flow came out of Russia-Ukraine talks, as a neutrality model that would allow Ukraine to preserve its army seems to be among options on the negotiations table. While comments were otherwise scarce, the head of Russian delegation Vladimir Medinsky said that the talks were going slowly and strenuously. Meanwhile, Russia was officially excluded from Council of Europe yesterday. Putin’s address on Russian TV was pretty hawkish but he was talking to a domestic audience. An FT report that suggested significant progress in the talks contributed to the optimism that fuelled European shares higher as the STOXX 600 gained +3.06%, although an earlier catalyst for the rally was China’s announcement of economic support. Country-level stock markets like Germany’s DAX (+3.76%) and France’s CAC 40 (+3.68%) have notched even stronger gains. The former is now just 1.30% below its pre-invasion close on February 23rd. On that China story, the news was that Shanghai would not implement a strict lockdown in response to the recent outbreak but would instead encourage working from home helped support risk sentiment. Arguably more impactful for markets, top economic ministers noted that the government would introduce policies to benefit markets after the recent volatility, which was a boon to equities. Following on from this, Asian stock markets have surged higher for a second day. The regional sentiment remains buoyant as a rally led by the Hang Seng (+5.79%), CSI (+3.19%) and Shanghai Composite (+2.59%) came after a blistering surge in tech stocks over the last 24 hours as a top Chinese official in his comments yesterday stated that the administration will introduce market friendly policies. Elsewhere, the Nikkei (+3.14%) is sharply higher this morning, extending the gains in the previous two sessions while the Kospi (+1.77%) is also surging. US stock futures are fairly flat. Prior to the Fed’s decision, European yields rallied after Sweden’s Riksbank governor did not rule out a possibility of a hike as early as this year – a significant shift from its previous 2024 projections. Swedish yields marched higher across the curve in response, with 10y rising by +7.2bps and hitting the highest level since January 2019 and the 2s10s curve steepening (+1.3bps), while the krona rose by +1.73% against the dollar in what was an overall down day for the greenback as the Bloomberg USD index declined by -0.35%. The British pound (+0.48%) rose as well ahead of the BoE decision and the yield on gilts (+5.3bps) reached the highest level since November 2018. Together with aforementioned geopolitical developments, these news fuelled risk appetite and bond yields rose across most of the Eurozone before we even got to the Fed. Moves in bunds (+6.0bps), OATs (+4.2bps) and BTPs (-0.3bps) were accompanied by sizeable declines in underlying breakevens, with those on bunds (-5.1bps) and BTPs (-5.1bps) edging lower. Inflation expectations were partially muted by a rather calm day for major commodities. Both Brent (-1.89%) and WTI (-1.45%) dipped although this has been reversed so far this morning. There were more fun and games in nickel after a week of no trading due to last week’s massive spike. This time trading was suspended as prices dropped below the new daily threshold and a technical glitch occurred. Despite relative calm in oil markets, other Russia-related commodities continued to slide, especially so in Europe. The Dutch TTF futures for April delivery fell by -10.73% yesterday and around -70% since their intra-day peak on March 7th. Meanwhile, E.ON, German energy supplier, announced it will stop new purchases of gas from Russian companies, although the firm has no long-term contracts. Soft commodities like corn (-3.69%) and wheat (-7.36%), export of which was recently sanctioned by Russia, also declined. In yesterday’s data releases, US retail sales came in at +0.3%, below +0.4% expected, with gasoline spending (+5.3%) driving the advance. The NAHB index also disappointed (79 vs 81 expected), dropping to a six month low. To the day ahead now and housing starts, building permits, initial jobless claims and industrial production are due from the US. We will also hear from ECB's Lagarde, Lane, Knot, Schnabel and Visco. Earnings releases include Accenture, Enel, FedEx, Dollar General and Verbund. Tyler Durden Thu, 03/17/2022 - 07:58.....»»

Category: blogSource: zerohedgeMar 17th, 2022

Luongo: How Scared Of November Are The Democrats?

Luongo: How Scared Of November Are The Democrats? Authored by Tom Luongo via Gold, Goats, 'n Guns blog, Since the day she announced she wouldn’t be running for re-election in 2020 I knew Tulsi Gabbard was distancing herself from the Democratic Party for a potential Presidential run in 2024.   Gabbard is supposed to be everything the Democrats want.  A strong, ‘progressive’ female of ‘color’ who backed Bernie Sanders’ runs for the nomination, implying she’s a useful Commie.  She was groomed early on as a WEF Future Leader and put on important House Committees which landed her default invitations to CFR meetings, while also being a member of the Democratic National Committee. It was clear she was being schmoozed by the DNC and Davos to become a major player from the moment she was first elected to Congress in 2012.  But something happened on the way to Gabbard’s ascension to the top of the U.S. political scene, her conscience got the better of her.  I’ve followed Gabbard for years and watched her carefully, knowing full well about her past associations with Davos. Now, for the New Statesman to run a schlocky piece about her as a GOP Dark Horse last week at a pivotal moment in the shifts in Congress against the Democrats’ domestic policy is telling of just how scared the Democrats and Davos are of the 2024 vote getting split along populist lines. She’s fostered a cult of personality among her supporters, who either refuse to acknowledge that Gabbard holds right-wing positions or, more often, go on to adopt those positions themselves. Lately, Gabbard’s pivot to cancel-culture pundit, complete with undertones of worries about anti-white “racism”, has inspired her followers to take on the same pet issues. They’ve gone from iconoclastic left-leaning upstarts to “American patriots” without a blink.  And here I thought she was a Davos stalking horse to lead stupid libertarians away from the GOP because she’s hawt and anti-war? It gets so confusing to keep the narrative straight anymore, but, asking for consistency from the loony left is like asking Joe Biden to remember what he had for breakfast yesterday, The rest of the article is nothing more than a hit piece to smear Gabbard through guilt-by-association to keep control over the soccer mom set from jumping from the sinking ship that is the Democratic Party. It’s that same ship Gabbard was two years ahead of everyone else in leaving I remind you. The Populism Problem is that it’s Popular Remember, folks, populists are the new Nazis in the New Normal and everyone not ‘down with the Commintern’ has to be painted with that brush as often as possible. The Department of Justice just told us this is the case. They’ve created a new specialized unit to combat ‘Domestic Terrorism’ which amounts to spending non-existent tax money on investigating and intimidating pretty much anyone reading this blog post. This response from the DoJ is just part of the fallout from the false flag operation that was January 6th, 2021.  Even a milquetoast like Jonathan Turley can see what’s happening here and is now concerned about it. The Democrats know they have zero chance of retaining the House or the Senate in the fall and what they are doing now is using 1/6 as the means by which to limit who can and cannot run for office this fall and beyond. If you can’t win at the ballot box then create a permanent arm of the bureaucracy to stifle dissent.  It’s the new version of “nuts and sluts,” folks.   I wrote about this during the Kavanaugh hearings. “Nuts and Sluts” is easy to understand.  Simply accuse the person you want to destroy of being either crazy (the definition of which shifts with whatever is the political trigger issue of the day) or a sexual deviant. This technique works because it triggers most people’s Disgust Circuit, a term created by Mark Schaller as part of what he calls the Behavioral Immune System and popularized by Johnathan Haidt. The disgust circuit is also easy to understand. It is the limit at which behavior in others triggers our gut-level outrage and we recoil with disgust. So, today there are multiple political issues conflated to create one big tent under which to house all the challengers to Davos and the demons running the DNC. From being unvaccinated against COVID-9/11, supporting Trump still, to questioning any part of the benevolent government’s narratives about race, sex, COVID-9/11, election fraud, false flag operations, Russians, the filibuster etc. It doesn’t matter what it is. If Davos is against it and it will hurt the Democrats’ chances this November then you are a dangerous domestic terrorist. Full stop. And woe to anyone who strays from the political orthodoxy. They will be denied basic protections under the rule of law, because they are sub-humans who don’t respect civil society enough to enjoy its benefits. It’s as clumsy and dangerous as it is insane. But it is also, sadly, reality. So, into this mess New Statesman, probably paid for by the Hildebeast herself, runs a hit piece on Gabbard to trigger the disgust circuit in every squishy mid-wit in the burbclaves of the rapidly draining cities of Blue States. The main reason they are doing this is to bring charges against Donald Trump so he can’t run again in 2024.   But, I also think it’s deeper than that. Crying Wolf Creates Natural Narrative Immunity Davos is losing the war of the narratives.  Support for 1/6 as some kind of ‘insurrection’ is failing as more people realize this is just another ridiculous bit of divisive politics, the kind which Gabbard has been outspoken about since leaving Congress. As they clumsily pivot off COVID-9/11 Davos is in dire need of a new existential threat to society. By the fall all they’ll have left in the U.S. is their control over legacy media, which is hemorrhaging audience faster than Germany is burning through its natural gas supplies, and their operatives in the various alphabet agencies. They will lose substantial support in Congress as the country now has ‘crisis fatigue’ to the point where even another virus outbreak would get half the effect it got with COVID, regardless of its lethality. That’s because they have cried wolf too many times now.  What was a strategy for destroying our confidence in our political system has now morphed quickly into reflexive distrust of everything all politicians say, to the point where it’s impossible to use public health’ as a means to political control. It’s early days of this emerging shift in the zeitgeist, but it’s palpable.   I assure you it’s real. If my instincts on this are correct then what we’re seeing now with the 180 degree shift away from “OMG Omicron! is teh killarz of all the lil’ childrens!” by Bill Gates and company is a form of political desperation as the mood of the country turns ugly against those that stole more than two years of our lives. And there is nothing more indicative of this fear than them running an extended trial balloon on resurrecting the Hildabeast as their savior going forward.   And that brings me back to Gabbard.  Remember it was Hillary stealing the nomination in 2016 that pushed Gabbard off the Davos career track.  It’s why she resigned  from the DNC and set her squarely at odds with Hillary. Once you cross Hillary there is no going back.  And if Davos is looking to Hillary to try and salvage what’s left of Biden’s first term then they also have to be positioned against her. So this article in the New Statesman tells me two things.  1) Hillary is definitely in the mix as the Democrats’ Hail Mary because Hillary would have commissioned this piece to keep the Progressives from jumping ship. 2) Davos is terrified of what comes in 2022, because they may not be able to split the Republican vote come 2024. Consistency Sells I just can’t see Gabbard now as the Trojan House to fulfill #2. Her past involvement with these folks is what holds lot of people back from supporting her, and I’m more than okay with them remaining skeptical. Trust, but verify and all that. But, if anything, looking at the political landscape and her consistently attacking the Democrats on core issues where they have betrayed the country and put it in those terms, she’s more likely to split the Democrats even further. Sanders is done. He played ball, got the paycheck and is now dead to Progressives. These people are turning on AOC now. And the purity spiral will only get worse. Ace Clinton strategies Paul Begala is now, right on cue, blaming Democrat voters, because it’s hard to do any self-reflection when you don’t cast one in a mirror. Gabbard wants none of that crowd and she’s laying a foundation for a campaign outside of either party that reaches across all the right issues to build a real following. That’s the dominant theme in this New Statesman article, fear that there is no hope for their 2024 strategies to be successful. They are all but admitting now they have no chance in 2022 and are hoping with the Fed going on a strong tightening cycle that they can blame the recession and/or financial crisis which emerges on Congressional Republicans. If the GOP was smart, as big an ‘if’ if there ever was one, they would begin the process of saying this recession is regrettable but necessary. Embrace it and build on the anger at Brandon for screwing everyone in the wake of COVID. They can see Gabbard coming in to pull centrist votes from Hillary (or whomever) back towards the GOP or worse, advocating for real fiscal and foreign policy reform in D.C. as she runs as a kind of John Anderson figure against Jimmy Carter. In fact, the more I think about this the more likely John Anderson is the best analogue for her role in 2024.  She’s the sane Democrat who’s interested in practical solutions, pulling in a very important 5-7% of swing voters tired of the outright lying, the destruction of communities and leadership turning a blind eye to violence and the coming rape of those same suburbs by Larry Fink and Blackrock. If you go one step further and revisit the actions of FOMC Chair Jerome Powell, the set up is there for him to morph into the second coming of Paul Volcker. The GOP candidate, possibly Ron DeSantis, then becomes the analogue of Ronald Reagan.   Gabbard running as an independent siphoning off the centrist Democrats who just can’t pull the lever for a Republican would be enough to ensure there’s no chance of a DNC steal in 2024. Anderson got 5% of the vote in 1980.  He ensured that Reagan won states he wouldn’t have otherwise.  With the Libertarian Party fully neutered and stuck in logic traps of their own devising, there’s room for a real, honest populist to build a bipartisan ticket with Gabbard and a libertarian type strong on non-interventionist foreign policy and fiscal reform (read; Social Security and Medicare) that would get a lot of votes. It’s what Bernie Sanders promised but never intended to deliver on. If Davos keeps pushing for a potential hot war with Russia and/or China, which is still a real possibility, and Biden succumbs to this, or worse, they install Hillary mid-term to pull it off, then a populist of Gabbard’s anti-war but strong patriotic bona fides is a real threat to the future of the DNC long term. I find the timing of this article very very interesting as much for that as to what it actually says.  Because what it says is “Fear Tulsi Gabbard.” *  *  * Join My Patreon if you fear the reapers at the DNC BTC: 3GSkAe8PhENyMWQb7orjtnJK9VX8mMf7ZfBCH: qq9pvwq26d8fjfk0f6k5mmnn09vzkmeh3sffxd6rytDCR: DsV2x4kJ4gWCPSpHmS4czbLz2fJNqms78oELTC: MWWdCHbMmn1yuyMSZX55ENJnQo8DXCFg5kDASH: XjWQKXJuxYzaNV6WMC4zhuQ43uBw8mN4VaWAVES: 3PF58yzAghxPJad5rM44ZpH5fUZJug4kBSaETH: 0x1dd2e6cddb02e3839700b33e9dd45859344c9edcDGB: SXygreEdaAWESbgW6mG15dgfH6qVUE5FSEAVAX: 0xAf2e0F22307269BE3d936d7E5DbCaEEe8a42e851 Tyler Durden Fri, 01/21/2022 - 18:20.....»»

Category: blogSource: zerohedgeJan 21st, 2022

Inside the epicenter of America"s Great Resignation: Kentuckians lay out the 4 forces driving the state"s labor shortage — and explain why it"s here to stay

How to solve the labor shortage? For business, it's hiring three workers instead of six. For workers, it's holding out for the right job. Kentuckians like Katie Rubin are quitting their jobs left and right as problems swell in the Bluegrass state.Natosha ViaJoselin Ingram spent her days listening to the stories of travelers. As the front desk agent of a hotel in Erlanger, Kentucky — a small city about a 15-minute drive from Cincinnati, Ohio — she was guests' ear for everything from complaints to adventurous tales.At 27 years old, she enjoyed meeting people from around the world. But she said she soon became overwhelmed with picking up slack for the hotel, which was suffering from a staffing shortage.It was early 2021."There were times when I'd get off work, come home, and sleep for a few hours, then have to get back to work because we didn't have a shuttle driver and someone needed to be at the desk," she told Insider. "No one else would do it."Joselin Ingram, 27, left her hotel desk job behind in search of a better work-life balance.Joselin IngramFeeling like she was holding the hotel together, Ingram asked to be promoted to manager, but was passed over for an external hire. In mid-July, she got fed up and quit, becoming one of the millions to join the Great Resignation. In 2021 so far, there have been over 38 million quits, a record high.Nationwide, there were 3.9 million fewer nonfarm payroll workers in November 2021 than right before the pandemic in February 2020. The ratio of unemployed workers to job openings in the US reached a low of 0.67 in October, meaning there were three job openings for every two unemployed workers. It's too soon to say why the so-called labor shortage keeps raging on with no end in sight, but a few theories have emerged. Childcare is keeping people home. More retired early. Workers haven't returned yet because there's a mismatch between the jobs open and the ones they want, and some are permanently rethinking what work means to them. In the background, the climate crisis is reshaping the economy.Then there's Kentucky, where all of these national trends have crash-landed into what the Kentucky Chamber Foundation calls a "workforce crisis." But if the rest of the country is shocked by this year's labor shortage, Kentucky's is decades in the making. The state's quit rate has been especially high compared to most other states during the pandemic, but it was higher than the national average long before. !function(){"use strict";window.addEventListener("message",(function(e){if(void 0!["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in["datawrapper-height"])for(var r=0;r.....»»

Category: topSource: businessinsiderDec 21st, 2021

Trumpworld"s new nemesis is the most important Justice Department official you"ve never heard of

Matt Graves, the Biden-appointed US attorney in DC, has brought charges against Bannon and leads the January 6 cases. Mark Meadows could be next. US attorney Matt Graves (left) and Steve BannonUS attorney's office in Washington; Anna Moneymaker/Getty Images Matt Graves brought contempt charges against Steve Bannon just a week after becoming US attorney. His office is handling January 6 prosecutions and is expected to receive more referrals from Congress. Former colleagues say he brings experience with high-profile cases involving public figures. The federal prosecutors knew that, if they didn't bring charges, Republicans would accuse the sitting Democratic administration of protecting one of its own. So the decision could not have a whiff of politics.It was late in the Obama presidency, and House Republicans had referred a top IRS official to the Justice Department in a scandal over whether the tax agency had improperly targeted conservative groups. The IRS official, Lois Lerner, invoked the 5th Amendment to avoid answering questions from the House, but Republicans argued that she had waived her constitutional rights against self-incrimination and should be charged with contempt of Congress.The Justice Department declined to pursue a case but stressed, in a 2015 letter, that career prosecutors had carefully reviewed the Republicans' criminal referral. Among the career prosecutors was Matt Graves, then a senior official in the US attorney's office in Washington, DC.Six years later, Graves is now the face of that US attorney's office and grappling once more with politically-charged contempt referrals from the House. A week after being sworn in as US attorney in Washington, DC, Graves signed the indictment charging Donald Trump ally Steve Bannon with contempt of Congress over his defiance of the January 6 inquiry. In the weeks since, the January 6 committee has only turned up the heat with recalcitrant Trump world figures, recommending that the full House vote to hold former White House chief of staff Mark Meadows and Jeff Clark, a onetime top Justice Department official, in contempt of Congress.In a 222-208 vote late Tuesday, the House held Meadows in contempt and referred him to the Justice Department for prosecution."As with all criminal referrals, we will evaluate the matter based on the facts and the law, and the principles of federal prosecution," a spokesman for the US attorney's office, Bill Miller, said Wednesday.The referrals of Bannon and Meadows have landed on the doorstep of the US attorney's office in Washington at a time when it is also handling the deluge of prosecutions stemming from the January 6 attack on the Capitol. More than 700 prosecutions have arisen out of the January 6 investigation, which federal authorities have described as unprecedented.The cases have put the US attorney's office at the forefront of the Justice Department's dealings with Congress as the House January 6 committee looks to contempt prosecutions to bolster its aggressive push for answers about the Capitol attack.Former colleagues of Graves described the Reading, Pennsylvania, native as unflappable and almost uniquely made for the moment with his experience in an uncomfortable area for the Justice Department: the intersection of politics and prosecutions."He's not a novice to these issues. To have someone who has firsthand knowledge of the law, on the sort of issues you have to grapple with, it's huge. He would have picked it up anyway because he's a bright guy, but his past experience gave him an upper hand to be able to hit the ground running," said Channing Phillips, who served as the acting US attorney from March until Graves took office in early November.Rep. Liz Cheney (R-Wyoming) heads to the House floor to vote at the US Capitol on February 3, 2021.Tasos Katopodis/Getty ImagesCheney floats a big fish: Trump  It remains unclear how many Trump figures the House will refer to the Justice Department for prosecution out of the congressional inquiry into January 6 — though one big fish has come up in recent days for Graves' office to potentially consider.Late Monday, as the House committee investigating January 6 voted to recommend holding Meadows in contempt, Rep. Liz Cheney of Wyoming appeared to raise the possibility that the congressional inquiry could prompt the Justice Department to prosecute Trump over his conduct during the Capitol breach. Cheney, the committee's Republican vice chair, said text messages to Meadows were "further evidence of President Trump's supreme dereliction of duty during those 187 minutes." "And Mr. Meadows testimony will bear on another key question before this Committee: Did Donald Trump, through action or inaction, corruptly seek to obstruct or impede Congress's official proceeding to count electoral votes? Mark Meadows' testimony is necessary to inform our legislative judgments," she said. Her comments made waves in legal circles in no small part because it sounded like she was reading straight from the federal criminal statute.In spite of attention surrounding his office, Graves has so far kept a low-profile in his first month as US attorney. He's made no comment about a potential Trump prosecution, which shouldn't be a surprise for someone of his position except for the fact one of his recent predecessors had publicly suggested such a case was under consideration during a controversial interview with CBS's "60 Minutes" back in March. Shortly after his Senate confirmation, Graves delivered remarks at an annual gathering of current and former prosecutors in the US attorney's office. But he has not given any public interviews or held press conferences since then. A spokesman for his office declined to comment for this article.Former colleagues said Graves' early approach is in keeping with his measured, mild-mannered style. But he could begin to step out in coming months as Bannon goes to trial next summer and criminal proceedings pick up against January 6 defendants."He won't seek the limelight but won't shy away from it either," said Ron Machen, a partner at the law firm Wilmer, Cutler, Pickering, Hale and Dorr who served as the US attorney in Washington under the Obama administration.In his current job, Graves is the face of the largest US attorney's office in the country — a size owed, in part, to its unique role as a federal and local prosecutor for the District of Columbia. Graves could adopt a more public-facing posture as the nation's capital confronts a year in which it recorded 200 homicides, a level of deadly violence it has not seen since 2003.Graves previous stint as a prosecutor was highlighted by a case against former Rep. Jesse Jackson Jr.Mark Wilson/Getty Images)Jesse Jackson Jr. and Roger ClemensGraves previously served in the US attorney's office from 2007 to 2016, a period in which he rose to become a top public corruption prosecutor. His nearly decade-long tenure was highlighted by the prosecution of former Rep. Jesse Jackson Jr. of Illinois, a onetime rising star in Democratic politics who pleaded guilty in 2013 to making lavish purchases and other personal expenditures with campaign funds.Jackson's guilty plea and 30-month prison sentence marked a triumph for the US attorney's office in a high-profile, politically-sensitive case against the son of the influential civil rights leader. But Graves also witnessed earlier in his tenure the failed prosecution of the former baseball star Roger Clemens on charges he lied to Congress in insisting that he never used steroids during his long career.Graves was not personally involved in the case, but former officials in the US attorney's office said the verdict underscored the challenges and pitfalls of politically-fraught prosecutions. Former officials said Graves is likely to draw on those experiences as closely-watched cases connected to the Trump era continue coming to the US attorney's office."He's not somebody who is going to be influenced one way or the other. I think he really will do the right thing, regardless of whether it's a referral with pressure from Democrats. "And, if the tables turn in 2022, who knows what referrals are going to come then?" said Matthew Solomon, a former top official in the US attorney's office who once supervised Graves. "In these kinds of cases, it's like brain surgery, and you have to have the judgment," he added. "You have to have an understanding of history, of what's happened in the past with these cases, and of political dynamics. And of course the touchstone is, in the end, doing what is right – but that often means cutting through a lot of noise and that takes force of personality as well as finesse.The Securities and Exchange Commission headquarters in Washington, DCAndrew Kelly/ReutersFirepower from the SECAs Graves has settled in as US attorney, he is also reconnecting with a former colleague from his time as a career prosecutor.Graves has recruited Bridget Fitzpatrick, a former federal prosecutor now serving as the Securities and Exchange Commission's chief litigator, to return to the US attorney's office as his top deputy, according to multiple people familiar with his pick. Fitzpatrick is expected to join the office later this month or in early 2022 after completing a background process.In her more than five-year tenure as a public corruption prosecutor, Fitzpatrick helped convict a sitting member of the District of Columbia's city council on charges he embezzled more than $350,000 earmarked for youth programs. She left the US attorney's office in late 2012 to join the SEC as the commission pushed to bring in more trial expertise in the aftermath of the financial crisis.In 2013, she won a court decision finding the former Goldman Sachs trader Fabrice Tourre — the self-proclaimed "Fabulous Fab" — liable for fraud. Tourre had become a symbol of Wall Street's role in the financial meltdown.The January 6 cases and contempt referrals from Congress will dominate the headlines of Graves and Fitzpatrick's tenure. But with their combined experience, Graves and Fitzpatrick have a chance to reinvigorate an office that was demoralized in the final year of the Trump administration as Justice Department leaders intervened in prosecutions to the benefit of the then-president's political allies, former officials said."Yes, they have to see through the January 6 cases. Yes, they have to deal with the congressional referrals. But, to me, I think a big project for them is also going to be rebuilding a significant white collar portfolio in that office," said Solomon, who served as the SEC's chief litigation counsel following his stint in the US attorney's office and recruited Fitzpatrick to the commission.Solomon said they have the "full package, which is incredibly rare, of being incredibly hard-working, having really good white-collar instincts and being very, very intelligent and also very good trial lawyers."Graves represented Ben Carson, a former Trump cabinet official, while in private practice.Chris Kleponis-Pool/Getty ImagesBen Carson, Nike & GEGraves joined the law firm DLA Piper as a partner after stepping down in 2016 as the chief of the fraud and public corruption unit within the federal prosecutor's office. His role at the Justice Department put him in charge of the team that reviewed referrals from Congress and other cases involving well-known figures.In private practice, his work continued to feature public figures and closely-watched cases.Among his clients was Ben Carson, a former 2016 Republican presidential candidate who served in the Trump administration as secretary of housing and urban development. Graves' roster of corporate clients included Nike, General Electric and the news outlet Al-Jazeera, according to his financial disclosure.Public court filings show that Graves represented Al-Jazeera in litigation involving the professional baseball players Ryan Zimmerman and Ryan Howard, who sued the news outlet over a documentary alleging that they used performance-enhancing drugs. Graves withdrew from the case in July after President Joe Biden nominated him for the US attorney role.In recent years, he has also represented the oil-rich state of Qatar, T-Mobile and the Bank of Palestine, amassing a client roster that has concerned good-government advocates who have raised alarm over the private sector ties of Biden appointees.But former leaders of the US attorney's office said the defense-side perspective will only help Graves as he makes closely-scrutinized decisions in the political crucible."He'll game it out, he's methodical. He'll look at the case law precedent and weigh the pros and cons. He's not just a career prosecutor but has been on the defense side and represented individuals and organizations as well," Machen said. "The ability to understand both sides of an issue rather than view the matter through only one type of lens is critical in these sorts of high-profile matters," added Machen, who held Graves' job from 2010 to 2015. "You have to be able to see the whole playing field and he has got the experience to do that and to do it effectively."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 15th, 2021

The cost of electronics, clothes, and furniture is set to jump more than 10% next year because of the supply chain squeeze, UN report says

Shoppers should brace themselves for a more expensive shopping experience in 2022 if supply chain issues aren't resolved. Clothes shopping could be more expensive in 2022.Artur Widak/NurPhoto via Getty Images Electronics, clothes, furniture could soar in price next year because of the supply chain crisis.  Rising freight costs are putting pressure on businesses to raise prices.  Some firms are spending up to ten times more than before the pandemic to ship items by sea. Electronics, clothes, and furniture could jump in price next year if supply chain costs remain high, a new UN report said. According to the United Nations Conference on Trade and Development (UNCTAD), prices of these products could rise by more than 10% globally on account of higher shipping costs. Consumer prices in the US could increase by 1.2% overall as a result of increased freight rates, it said. A breakdown in the freight supply chain - caused by a surge in consumer demand since the end of 2020, combined with labor shortages - has created delays and traffic jams at seaports across the globe. As companies scramble to find a space on a ship, they're being forced to pay top dollar for it.Some businesses are spending as much as ten times more than they would pre-pandemic to ship items across the ocean. Businesses shipping low-cost and bulky goods, such as furniture or toys, are more vulnerable to these price increases, experts say. These items take up more room in containers and have smaller margins to absorb rising costs. Gary Grant, founder of UK toy shop The Entertainer, previously told Bloomberg that in his 40 years in the industry he has "never known such challenging conditions from the point of view of pricing."He said that he has had to stop selling some items, including giant teddy bears imported from China, because his company would have to double the price for shoppers to make up for higher freight costs. "If they are bulky products it means you can't get very many in the container and that will have a significant impact on the landed price of the goods," he told Bloomberg.UNCTAD Secretary General, Rebeca Grynspan, said in a statement Thursday that to bring shipping costs back to normal levels, there would need to be more investment in the supply chain infrastructure to improve its efficiency.Read the original article on Business Insider.....»»

Category: smallbizSource: nytNov 19th, 2021

10 Things in Politics: Inside the Kamala Harris campaign diaspora

And Elon Musk slams Democrats' possible billionaire tax. Welcome back to 10 Things in Politics. Sign up here to receive this newsletter. Plus, download Insider's app for news on the go - click here for iOS and here for Android. Send tips to's what we're talking about:Inside the Kamala Harris campaign diaspora: Here's where 52 of the vice president's former staffers are nowElon Musk slams Democrats' possible billionaire taxThese are the 5 government decisions lobbyists say could soon shake up cryptoP.S.: The Atlanta Braves' Ozzie Albies stole a base last night. That means free tacos on November 4.With Phil Rosen. Vice President Kamala Harris. Evelyn Hockstein/AFP via Getty Images 1. THE WHITE HOUSE: Only three of Vice President Kamala Harris' campaign staffers are working on her White House team. But the key people who helped position Harris for her historic election are not far away either. Many former campaign staffers now have top administration jobs.Here's a look at where some of the top Harris alums have landed:Laphonza Butler, president of EMILY's List: Butler is the third president in the 36-year history of EMILY's List and the first Black woman and mother to lead it. She previously led California's biggest union, SEIU Local 2015, and was a senior advisor to Harris during her campaign.Emmy Ruiz, White House director of political strategy and outreach: Ruiz previously worked on Hillary Clinton's 2016 presidential campaign in Colorado and Nevada. She was a senior advisor to Harris' presidential campaign.Ian Sams, deputy assistant secretary for public affairs at HHS: Harris' former national press secretary in 2020 now leads all Health and Human Services Department communications on COVID-19.Joyce Kazadi, director of scheduling and advance at USAID: When she worked for Harris in 2020, Kazadi was the first Black woman to serve as the director of advance on a major presidential campaign. Now, she oversees the daily operations and trip planning for the US Agency for International Development's administrator, Samantha Power.Check out Insider's entire list of where 52 former Kamala Harris staffers are now.2. Elon Musk slams Democrats' possible billionaire tax: Musk ripped the idea, arguing it was the start of a new campaign from Democrats to redistribute wealth from the richest Americans. "Eventually, they run out of other people's money and then they come for you," he wrote on Twitter. Democrats are considering a plan that would impose taxes on tradable assets like stocks held by about 700 billionaires to fund an expansion of healthcare and childcare and to renew President Joe Biden's beefed-up child tax credit. Here's what else you need to know about the billionaire tax.Such a tax would need congressional approval: Sen. Joe Manchin, one of two key Senate swing votes, has told colleagues he has deep concerns about the billionaire tax, Axios reports. More on Manchin's misgivings. Federal Reserve Chairman Jerome Powell, the US Capitol Building and President Joe Biden. Kevin Dietsch/Getty Images,DANIEL SLIM/AFP via Getty Images, Michael M. Santiago/Getty Images 3. These five decisions could shake up crypto: Lobbyists tell Insider they're paying particularly close attention to Congress, the Treasury Department, and White House executive orders regarding digital assets. One of the issues they are closely tracking is whether Biden will issue an executive order requiring more regulation and oversight of cryptocurrencies. Read more about what crypto lobbyists are closely tracking in Washington.4. FDA moves closer to OKing a COVID-19 vaccine for younger kids: A coronavirus vaccine for elementary-school-age children is closer than ever to reality after a Food and Drug Administration expert panel voted in support of offering Pfizer-BioNTech's shot to 5- to 11-year-old children. The vaccine would be the first authorized for younger children, though the Centers for Disease Control and Prevention still has to sign off too. Experts disagreed on whether every child should get the shot or whether it should be targeted to more at-risk kids. President Donald Trump with Dr. Deborah Birx, the White House coronavirus response coordinator, and Dr. Robert Redfield, the director of the Centers for Disease Control and Prevention, in April 2020. Photo by Jabin Botsford/The Washington Post via Getty Images 5. Former top advisor says Trump could've saved 130,000 lives that were lost: Dr. Deborah Birx, the former White House COVID-19 response coordinator, testified to lawmakers that President Donald Trump's approach to the coronavirus pandemic led to a massive number of preventable deaths. She also suggested the 2020 election distracted Trump and took attention away from the US's pandemic response.6. UN trashes lackluster global climate efforts: UN Secretary-General António Guterres said in a speech that countries were "utterly failing" to address the climate crisis. Guterres based his dismal view on a UN report that found countries' pledges to reduce carbon emissions were falling significantly short of targets. "The emissions gap is the result of a leadership gap," Guterres told reporters. World leaders are set to meet in a highly anticipated UN climate summit in Glasgow, Scotland, next week.7. Lawmakers are expected to subpoena the lawyer who told Pence he could overturn the election: Rep. Bennie Thompson, the chair of the House select committee investigating the insurrection, said his panel would subpoena the conservative lawyer John Eastman, The Washington Post reports. Eastman, in now-infamous memos, made the case that Pence had the power to unilaterally overturn the election results when Congress met to certify them on January 6, a position Pence ultimately rejected. More on the news.ICYMI: Lawmakers in lockdown on January 6 say they didn't realize how 'bad' the insurrection was until 'much later'8. America is in store for an expensive Thanksgiving: "Nearly every component of the traditional American Thanksgiving dinner, from the disposable aluminum turkey roasting pan to the coffee and pie, will cost more this year, according to agricultural economists, farmers and grocery executives," The New York Times reports. There's no single reason to blame for turkey day gobbling up more of your wallet, though supply-chain issues and inflation are part of the problem.9. Trump endorses Brazilian President Jair Bolsonaro: Trump announced his endorsement of Bolsonaro just hours after the incumbent had criminal charges recommended against him by a Brazilian Senate committee for his pandemic response. A six-month inquiry into Bolsonaro's response found he had repeatedly promoted dangerous, false claims about COVID-19 and had tried to stop the nation's Congress from introducing public-health mandates around masks. "Brazil is lucky to have a man such as Jair Bolsonaro working for them," Trump said. A composite image of M51 with X-rays from Chandra and optical light from NASA's Hubble Space Telescope. X-ray: NASA/CXC/SAO/R. DiStefano, et al.; Optical: NASA/ESA/STScI/Grendler 10. Astronomers may have found a planet beyond the Milky Way: If true, this would be the first planet discovered in another galaxy. A global team of astronomers used NASA's Chandra X-ray telescope to study what is either a black hole or a neutron star in a distant galaxy. Something appeared to pass in front of that object, suggesting a planet might be orbiting it. The breakthrough offers early evidence that this X-ray technique could be used to find planets in other galaxies.Today's trivia question: The Atlanta Braves took a one-game lead in the World Series with a 6-2 opening win against the Houston Astros. Speaking of the Fall Classic, who was the first president to attend a World Series game? Email your answer and a suggested question to me at's answer: Prime Minister Winston Churchill once claimed he saw the ghost of President Abraham Lincoln at the White House. Churchill was a bit embarrassed about his close encounter because he had just finished taking a bath. Here are some other White House ghost stories.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 27th, 2021

The 5 Best Credit Cards For Seniors And Retirees In 2022

Choosing the right credit card as a senior or retiree can sometimes be tricky. There are many options available, and it’s essential to find one that offers the best benefits for your current needs. Unfortunately, those needs and our preferences change as we age, so the card that was our ideal fit in our twenties […] Choosing the right credit card as a senior or retiree can sometimes be tricky. There are many options available, and it’s essential to find one that offers the best benefits for your current needs. Unfortunately, those needs and our preferences change as we age, so the card that was our ideal fit in our twenties or thirties is probably not the best fit for us today. This article will highlight five of the best credit cards for seniors and retirees in 2022. I’ll also explain why these cards stand out from the competition. So whether you’re looking for a new card to add to your stack or just starting to plan for retirement, read on for my top picks. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more #1 The best travel credit card for retirement: The Chase Sapphire Preferred Card If we were to do a poll asking all of America’s retirees or soon-to-be retirees what the top ten items on their bucket list are, traveling around the world or, at the very least, visiting another country is almost sure to be high on the list. But unfortunately, many people either don’t have the money or the time to travel as much as they would like when they’re young, so they always leave fulfilling that dream for their golden years. If that is your case and you plan to travel frequently in retirement, perhaps to visit your children or grandchildren or simply to be a tourist in a faraway land, then having a good travel rewards credit card is a must. Travel rewards cards are great for people who love to travel, obviously. But they’re also great for retirees and seniors who might not be able to travel as often as they’d like. Why? Because most travel cards offer valuable perks and benefits that can save you a ton of money on your travels if used correctly. Key perks of the Chase Sapphire Preferred Card The Chase Sapphire Preferred Card is one of the best travel cards out there, and it’s an ideal choice for seniors and retirees who love to explore the world. The first significant perk is a whopping 60,000 points welcome bonus after spending $4,000 on purchases from account opening in the first three months. This bonus alone is worth anywhere from $600 to $750, depending on how you redeem them. After the first year, you’ll receive an annual $50 statement credit for hotel stays as long as you booked them through Chase Ultimate Rewards. After you add travel insurance (trip cancellation/interruption, baggage delay, and trip delay insurance, as well as auto rental collision damage waiver and travel and emergency assistance services) and the other benefits with partners like Lyft, DoorDash, and Gopuff, you’re looking at close to $900 worth of benefits. What makes this a great travel card is that: You can redeem your points for travel at a valuation of 1.25 cents per point through Chase Ultimate Rewards. You can transfer points at a 1:1 rate to many popular airline loyalty programs, where you can get even more benefits. The card doesn’t add foreign transaction fees. Additionally, the card’s rewards on travel purchases are also great. You get 5x points on travel booked through Chase Ultimate Rewards (saving you close to 5% off the purchase price), 3x on dining, online grocery purchases, and select streaming services, and two points on all other travel purchases, and one point on everything else. #2 The best premium benefits credit card for retirement: The Platinum Card from American Express If you’re looking for hands down one of the best travel experiences, you don’t have to look much further than The Platinum Card from American Express. American Express is one of the best-known credit card brands globally, and it’s almost sure to be accepted everywhere your travel takes you. Amex offers different versions of the Platinum credit card for other countries, such as the American Express Platinum Card for Canadians. These cards all bring very similar perks, but the US version (“The Platinum Card”) is hands down the best. Keep in mind that this is a premium credit card, so it comes with a hefty annual fee of $695. However, the welcome bonus offsets the fee several times over during the first year, and the long list of rewards, statement credits, and travel perks makes this a sweet deal even after that. Key perks of The Platinum Card The statement credits alone offset the annual fee. With this card, you get $200 back on hotel stays of more than two nights booked through American Express Travel. In addition, you can save $200 in airline fees, $240 on select streaming and entertainment services, $155 on Walmart+ memberships, $200 on Uber, and more. In terms of luxury or premium travel, besides all the travel insurance you can think of, you get access to the Platinum Travel Service, which works similar to a concierge service that helps you set up custom-tailored itineraries every time you hop on a plane to your next destination. You also get access to the American Express Global Lounge Collection that will make layovers and your pre-flight waiting times an absolute pleasure in more than 1,400 airport lounges worldwide. You can also breeze through airport security with a $189 statement credit on a CLEAR membership and even more credit for Global Entry and TSA Precheck services. Once you’re approved for this card, you’ll also receive an instant upgrade in elite status on two of the most important hotel chains in the world. You’ll receive Marriott Bonvoy Gold Elite Status and Hilton Honors Gold Status just for owning this card. In addition, this can grant you complimentary hotel room upgrades and other on-site perks. If you have a big budget set up for travel during retirement, having The Platinum Card from American Express will stretch that budget further than you thought possible, and it will help you enjoy your travels much more. #3 The best credit card for a retiree’s grocery purchases: Blue Cash Preferred® Card from American Express There are few contenders to the Blue Cash Preferred Card for grocery purchases in the US. This card makes rewards simple: it’s a cashback card that offers four everyday-spending categories focusing on grocery purchases. Key perks of the Blue Cash Preferred® Card The biggest perks of the Blue Cash Preferred card are the card’s cashback rates, which are off the charts. For example, this card pays you back 6% on grocery purchases in select US supermarkets (with a cap of $6,000 per year) and an additional 6% on select US streaming services. Besides these two categories, you get 3% back on transit and gas and the standard 1% cash back on all other purchases. This card even brings car rental loss and damage insurance, which can offset a good portion of your car rental costs if you ever need to rent a vehicle. But, while this perk comes with most premium cards, the key here is that the Blue Cash Preferred Card doesn’t carry an annual fee. That means you’re getting this benefit for free. So, if you’re planning to settle down during your golden years to live a laid-back lifestyle, binge-watching your favorite shows, and take a road trip to visit friends and family, this may be the perfect card for you. #4 Best business credit card for senior entrepreneurs: Ink Business Cash® Visa Retirement is a great time to start a business. You can take advantage of your experience, budget, and know-how to increase your chances of success compared to younger entrepreneurs. If you don’t feel like getting up early and commuting to work anymore (after all, you did retire), you can always start a remote business. Hire a virtual mailbox service to handle all your incoming business mail, and handle everything else yourself from the comfort of your home. Suppose starting a business is on your to-do list, or you already have a business up and running. In that case, a business credit card is a great tool to help you manage your business finances and earn rewards on business expenses. One of the seniors’ best business credit cards is the Ink Business Cash® Visa from Chase. Key perks of the Ink Business Cash® Visa Perks start with a handsome welcome bonus of $750 in cash back after spending $7,500 in the first three months of opening your account. This is equivalent to an extra cashback rate of 10% on top of the standard cash back rates you’ll earn whether or not you’re a new Ink Business Cash card holder. With this card, you can get 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on cell phones, landlines, internet, and cable. This means this card can help you save up to $1,250 on office supplies and communications annually. You’ll also earn 2% on the first $25,000 spent on gas and restaurants, plus 1% on everything else. So if you’re starting your business and require significant purchases, you can take advantage of the 0% intro APR for the first 12 months of account opening. Add in free account management software to easily track business expenses and additional cards for your employees at no extra cost, without an annual fee, and you’re laughing. #5 The best credit card for medical expenses: The AARP® Essential Rewards Mastercard from Barclays® You would only expect that an AARP co-branded credit card would make it to the top spots on the list of the best credit card for retirees. After all, AARP’s mission is to “enhance the quality of life for all as we age, leading positive social change and delivering value to members through advocacy, service, and information.” In collaboration with AARP, Barclays crafted the AARP® Essential Rewards Mastercard, specially designed to help seniors and retirees save on medical expenses. And the best part is that it’s free; there’s no annual fee. Key perks of the AARP® Essential Rewards Mastercard Besides not having an annual fee, the AARP® Essential Rewards Mastercard brings home a $100 cashback welcome bonus that you’ll get after charging $500 worth of purchases in the first three months of card membership. Apart from the welcome bonus, this cashback card also gives you an unlimited 3% cash back rate on gas and drug store purchases and an unlimited 2% cashback rate on medical expenses. While this may not seem like much for a healthy adult in their prime, it can add up significantly if you have any chronic health condition that requires regular medication or doctor’s visits. The AARP® Essential Rewards Mastercard can also help you save on travel expenses with a 0% APR introductory offer on balance transfers for 15 months (17.49%-26.49% variable APR after that). Finally, by applying for this card, you support AARP because Barclays donates $10 to the AARP Foundation for every new account opened and 1% of all eligible purchases made by cardholders. The bottom line: Do I need a new card for retirement? You might be thinking, “I’ve had the same credit card for years, and it’s working just fine. Do I really need to get a new one for retirement?” The answer is maybe. It depends on your circumstances and what you’re looking for in a credit card. If you already have a rewards card with thousands of points begging to be redeemed on a trip to Hawaii but are still short by a few thousand points, by all means, keep using your current card (although signing up for one of the options mentioned above and earning a juicy welcome bonus could give you the points you’re missing in record time). The key is to identify how your spending habits and preferences have changed or will likely change in the future and compare those against your current rewards card (or cards) and a likely candidate from this list to determine if you will do better by applying to the new card. Article by Jordan Bishop, Due About the Author Jordan Bishop discovered the power of credit cards at a young age. His first splash into travel hacking came with the wildly viral launch of Yore Oyster, which landed him national media attention and more than a million frequent flyer miles. He leveraged that opportunity to help tens of thousands of people save millions of dollars on flights, all while globetrotting the world. Updated on Jul 1, 2022, 3:47 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJul 1st, 2022

Blain: "Markets Are Still In Denial/Fool-Themselves Mode"

Blain: "Markets Are Still In Denial/Fool-Themselves Mode" Authored by Bill Blain via, “Cheer up my lads ‘tis to glory we steer, to add something new to this wonderful year…” Stocks tumbled 20% in H1, but Central Banks are fixated on Inflation as the No 1 priority with higher interest rates nailed on. Supply chain issues remain difficult, meaning corporate earnings will remain under pressure. The market is setting up for further weakness through H2. It’s the last day of June, the end of the 2nd Quarter of this inglorious year, and the headlines sum up the mood: Banks are warning of recession, Tesla is laying off staff from its Autodrive division (really? I thought that was what justified it’s 100 times P/E?), petrol prices at the pump are putting on a new high. Or how about Morgan Stanley warning the price of Carnival Cruise could tumble to zero if recession triggers a major demand shock.. High probability then… Will things get any better in the second half of the year? Probably not. Jay Powel said it all: The process is highly likely to involve some pain, but the worst pain would be from failing to address this high inflation and allowing it to become persistent” Inflation is Central Banks number one concern – not addressing the market declines we’ve seen in the first half. We’re expecting a series of large hikes in interest rates through the summer – even the ECB! Yet, Markets are still in denial/fool-themselves mode. Markets tend to accentuate the positive and, in doing so remain largely unaware of reality. But at some point reality and inflated hopes tend to collide. Usually painfully. I’m guessing, but I have a gut-feeling the coming July earnings season could be the straw that triggers the next leg down. The results news-flow will be subtle, and its unlikely to be a succession of disastrous results – just a stream of not-quite-as-good-as-expected numbers. Cumulatively, the news trend will confirm companies are struggling more than anticipated with the consequences of high staffing costs and low availability, high inventories and the need to discount, falling demand on the back of the inflation shock, and ongoing supply chain issues. Listen very closely to what CEO’s are really saying, and strip out what they want you to hear. Get past the corporate blandishments and it could reverse years of blithe expectations. It’s going to highlight just how badly the real world is still misfiring. (There is a developing sub-text to the corporate outlook – the increasing untenability of highly levered Zombies.. the first, like Revlon have already stumbled.) Think back to the Pandemic. When it began in March 2020 the stock market took a massive dip. And then it went steadily higher and higher – fuelled by expectations of swift recovery once Covid was beaten. Positive news – like vaccine tests, airports reopening or falling infections were each greeted by rallies. Traders and professional investors talked about how the wall of pandemic savings would create a post-pandemic boom. The real question to ponder is… why were markets so wrong? Now we look headed for recession. It’s not just the Ukraine energy and food inflation stocks. Much of it boils down to still broken global supply chains. One of the surprising things I’ve learnt over nearly 40 years about the business of finance is how little investment bankers actually know about the real world. They experience little real “friction” in the business of moving assets around an electronic balance sheet, or calculating returns on a laptop. This morning I have experienced friction because my Laptop had a hissy fit. I was about to punch it before our IT guy bravely stepped in…. In the real world there is tremendous friction in every single part of all transactions – loading a ship, putting cargo on a plane, getting goods shifted from A to B, waiting for parts, waiting for payments, dealing with customers, building products and selling them. It’s difficult. Yet, friction played little part in the markets analysis of the pandemic. Analysts straight out of Investment Management school have diddly-squat idea about the real world. Even now I don’t think the “market” understands the real economy. It’s still poised for a buying opportunity – looking for signals the bottom has passed and it’s time to buy. I read loads of research about why markets may go up, and look at pages of overweight recommendations and just a few lines of underweight. The market remains highly biased to the upside. That’s the real divergence in the economy – what the market thinks is happening, and what actual people on the ground actually see… Let me digress for a moment and try to explain the divergence: For the first 20 years of my inglorious career in finance I spent 99% of my time speaking to fellow finance professionals – traders, salesmen, economists all pushing whatever the investment banking line was. I then relayed these perspectives to my clients in the debt capital markets; Bank Treasurers, CEOs, Investment Firm Economists and Strategists, Portfolio Managers and funding bosses. I existed in a groupthink bubble comprising entirely financial market participants. I thought, acted and behaved like a financial professional clone. It took me years to realise just how conditioned I had become. I was lucky. Writing the Morning Porridge since 2007 – and being a natural cynic – has helped. I was lucky to retain just enough disbelief to realise how fundamentally broken financial markets were by the Global Financial Crisis in 2008. My blinkers over investment banking were lifted after the bank I’d led from zero to top 3 in the Financial Institutions business sacked me for “not fitting in.” I perceived just how distorted markets became as a result of regulation, monetary experimentation and QE. I broke out the bubble. As financial markets became more and more distorted, I started to look for opportunities in real assets rather than financial assets. It’s been fascinating. Since 2009 I’ve been fortunate to spend an increasing amount of my time talking to real people with real jobs in the real economy. I chat to real entrepreneurs and businesses looking for finance and meeting a whole range of executives, engineers, marketing managers, retail leaders, designers and guys who actually make stuff. A brush with illness brought me to Earth, meeting doctors able to explain not only why I wasn’t working, but the issues with heath provision. Talking to real nurses, brickies, chippies, and artisans has been extraordinary. I now find it’s difficult to take all finance professionals seriously. It’s been a learning curve about friction. Pandemic reality slows and there still aren’t enough ships, lorry drivers, pilots, baggage handlers… As shortages bite, inflation rises, we get further exogenous shocks, and a cost-of-living crisis develops. Firms suddenly find themselves with over-ambitious inventories, and suddenly there is talk of companies dumping stock, meaning they miss margins. As interest rates soar to address inflation, zombie companies that leveraged themselves up to buy back their own stock suddenly find themselves busting. (There just is not enough worry about how the junk sector is likely to fare.) And supply chains are not fixed. Speak to real economy professionals and they will tell you rising labour costs, rising energy costs, rising logistical costs, rising transport costs, ongoing shortages of key parts, longer lead times for parts, ongoing supply disruptions, rising inventory levels, rising tariffs and barriers to trade, increasing red-tape, geopolitical uncertainty, right down to their simply not being enough space to store components in what was once a just-in-time based factory… and it’s all a recipe for a broken economy. Compare and contrast to what the market expected and believed would happen – a frictionless reopening of the post-pandemic economy, and what we actually have: ongoing supply chain disruption and friction. All it takes is a few missing containers, a delayed ship (because it slowed down because fuel costs soared), or a container pork blocked because there aren’t enough lorry drivers. One pebble quickly becomes a landslide. Real businesses are addressing it – they are solving problems ranging from storage space, using smart data, communications, planning and new supply chain approaches. If a particular chip is unavailable and irreplaceable, they find a work around – even it means delaying deliveries. Its tough. They know it may take years because it’s not just supply chains that are changing – its terms of trade, trade routes and costs. Markets assume it will just happen – probably tomorrow or the day after. No it won’t. And ongoing supply chain crisis is just one aspect of what markets aren’t grasping in terms of the economic reality out there… The inflation shocks from Energy, Food and now Wages. These are real and long-term. They were never transitory. One of the aspects of the coming Carnival Lines dunking will be its coming liquidity crisis on the back of rising interest rates and crashing customer demand. Morgan Stanley point out it has $30 bln of debt and “unsustainably” high leverage. As its’ stock prices continues on a downwards spire, then raising new equity will be dilutive and costly. You can bet its not the only firm in trouble! Tyler Durden Fri, 07/01/2022 - 11:05.....»»

Category: blogSource: zerohedgeJul 1st, 2022

"…And Then?"

"…And Then?" By Michael Every of Rabobank "... And Then?" Thursday was another down day in most markets, with staggering moves in some. US stocks closed down (-0.9% S&P) and had their worst H1 since 1970. How many Wall Street analysts had that pencilled in? Bonds rallied. US 10s breached the key 3% level, which had been establishing itself as a floor vs. a 3.50% ceiling, but were back above it at time of writing. European bonds have seen a staggering two-day move, with German 5s down 35bp in just two days, apparently only the third time that has happened in 20 years, and 10s down 29bps. That was despite Reuters suggesting that the ECB would buy Italian, Greek, Portuguese, and Spanish bonds with the proceeds from German, French, and Dutch bonds. Yet overall bonds still had an H1 for the ages too – in a bad sense. Commodities got smacked again and are all well down from their 2022 peaks. Base metals have given up all their Ukraine war gains. Yet oil as the key benchmark is still up 48% year-to-date. Javier Blas from Bloomberg also picks up the Banque de France flagging concerns about global commodity trading, which it calls an "oligopolistic market", with "potentially systemic importance and moral hazard", and where "more extensive work still needs to be done on the regulation." This is red flag that has been waved by the Fed before. Bitcoin crumbled further below $19,000. The US dollar once again was up sharply, then down again, with the DXY at 104.7, having been at 105.5. If we see another spike that is held even as everything else starts to collapse,… well, fasten your seatbelts. Fed swap lines will be needed. In short, if you bought stocks in H1, you lost; if bonds, you lost; if commodities, you were doing great until recently; if crypto you lost; if the US dollar, you were fine. Some of the extreme moves we have seen recently were likely exacerbated by end-month and end-quarter flows/repositioning. So, now on to Q3 and H2. We kick off with the Atlanta Fed Q2 GDP tracker being revised down to -1.0%, meaning the US *is* already in recession even before we have to worry about one ahead. At least that clears the picture a little. Except that supply chain chaos may be easing at sea in some places, but worsening in others. As Freight Waves puts it, “The jaws of the supply chain vise are squeezing trade so tight that the headache it is creating will be a whopper for logistics managers this peak season. Port congestion is growing again as a result of labour and equipment inefficiencies.”  More, properly-focused workers are needed urgently, is their conclusion. Indeed, alongside airport chaos, American Airline pilots are getting a 17% pay rise to try to keep things running. Yes, 17%, not 1.7%. In short, some pipeline deflation is evident – but not in energy: and pockets of structural inflation remain that cannot be resolved by the stroke of any central bank pen. Listening to recent commentary, the market appears madly focused on the idea that for all of the calamites unfolding around us there is one simple solution - the Fed cuts rates, and soon. Making that call is important, and particularly because it means ignoring what the Fed, every central bank, and the BIS, just said loudly and clearly – that rates are going up a lot anyway. However, let’s presume the Fed and every central bank is wrong (which is a healthy place to start) and the market is right (which isn’t), and a Fed pivot is imminent (which may be true). My key question is: “…and then?” Most of the market doesn’t seem to have an answer in terms of the big picture. It doesn’t even want to try to think of one. Fed cuts will apparently make all our issues go away. Yes, a logical near-term response is “go long stocks; long bonds; long commodities; short the US dollar; long crypto; and long risk”. However, my question is still: “…and then?” What about Inequality? Energy prices? The food crisis? Regulation of commodity markets? Geopolitics? National security? The war? The climate? How does this all join up, and where are we going even if we do get lower rates? I cannot tell you how few market commentators are willing to even begin to answer those questions holistically: because it’s hard; and because “go long stocks; long bonds; long commodities; short the US dollar; long crypto; and long risk”, makes lots of people lots of money. So, they will keep peddling their threadbare wares, and I will keep saying “…and then?” until I get some answers like the annoying voice at the Chinese restaurant in that avantgarde arthouse US film ‘Dude, Where’s My Car?’ And ‘wonton soup’, while nice, is not going to be one of them. To make my point, yesterday saw another huge US Supreme Court ruling: this time to roll back the “administrative state” - as Justice Thomas had flagged in an interview. Specifically, it ruled the Environmental Protection Agency has limits to its regulation of carbon emissions. As with Roe vs. Wade, elected officials now have to make decisions on crucial matters, this time federal not state. “…and then?” Which regulator will be next, and which key legislation will then be added to the pile for a dysfunctional Congress that has a narrow Democrat majority now, but which is likely to see a larger Republican (and MAGA) one after the November mid-term elections? “…and then?” To repeat another point I had made on Monday, if you extend the logic of the ruling, the Fed may get nervous. I’m not sure exactly what case somebody might be able to bring against the 1913 Federal Reserve Act --perhaps being egregiously harmed by QE?-- but if they can, we might find out if this Court thinks the Fed also has de facto executive power, enforcement power, and adjudication power outside of the constitution. The ECB dealt with similar issues in their German constitutional court case in recent years and emerged even more powerful – but then Europe generally likes centralized regulation a whole lot more than US conservatives do. Yet one wonders how the ECB will fare politically if it starts selling core bonds to buy peripherals, and once we eventually find out how its much-vaunted but even more controversial Anti-Fragmentation Tool (AFT) actually works --or doesn’t-- in practice. “…and then?” Who knows? But more volatility surely. Does the Fed get to keep control when other elements of the administrative state fade away? Or does the Fed gain greater power via regulation of commodity markets and expanded dollar swap lines (for friends only),… and then do central governments gain greater powers over central banks to ensure national security needs are met? “…and then?” We have to look bigger picture. Turkey is to get new US F-16s, and so Greece is to get new US F-35s (partly paid for by the ECB via German, French, and Dutch bonds). “…and then?”   Not too far away, and despite the utopian prognostications of the EU’s foreign policy bumblebee Borrell, the word on the street is the Iranians are playing hard ball in the latest indirect US-Iran talks because a powerful clique in Tehran is not sure if they want to bother with the pretense of the nuclear deal or not. People are really talking about the “last chance” for any agreement. “…and then?” New Zealand agreed a trade deal with the EU. Yet PM Ardern’s warning at the recent NATO summit --also attended by Australia, Japan, and South Korea-- that China is becoming more assertive, has drawn a sharp rebuke, as did the summit’s focus on China as well as Russia. Beijing has noted Ardern’s “misguided,” “wrong,”, and “regrettable” accusations.     “…and then?” In the US, Senate Minority Leader McConnell has now threatened to withhold support on the until-now bipartisan US COMPETES Act aimed at helping to onshore semiconductor production, if the bill also includes items not related to the issue at hand. Relatedly, just published a look at the potential for ‘friend-shoring’ of supply chains from China to others (‘Friends Reunited’). The simple conclusion is that were this to happen on even the limited scale we project relative to China’s total labour force, it could transform global trading patterns; moreover, China’s trade surplus would swing to a deficit, leading to lower GDP growth and an inability to use fiscal and monetary policy to compensate without a balance of payments and FX crisis. Obviously, China will do all that it can to retain its trade ‘MySpace’ as a result. “…and then?”   “…and theeen?”  “…and theeeeeen?” “…So, we think the Fed will cut rates…”  Happy Friday, July, Q3, and H2. Tyler Durden Fri, 07/01/2022 - 11:45.....»»

Category: blogSource: zerohedgeJul 1st, 2022

BIS To Allow Member Banks To Hold 1% Of Their Reserves In Bitcoin

BIS To Allow Member Banks To Hold 1% Of Their Reserves In Bitcoin It might seem like a rather odd move for the Bank for International Settlements (BIS) to make after Bitcoin has lost around 60% of its value in only six months, but the globalist institution is now allowing member banks to hold 1% of their reserves in the cryptocurrency (around $1.8 trillion total).  Is this about recognition of Bitcoin as a viable trade mechanism, or is there an agenda afoot?   The BIS is known as the “central bank of central banks” for a reason; it has a long and notorious history as a kind of control hub, handing down orders to national central banks including the Federal Reserve.  Many times over the past decade we have seen central banks in various countries act in tandem with each other.  Even those banks that would normally be at odds politically still enact complimentary fiscal and monetary policies.  If you have noticed that many central banks around the world seem to be closely cooperating with each other, that is because they are.   The BIS, a foreign body that is not elected, essentially dictates central bank decisions well outside the purview of individual governments.  This is not a conspiracy theory, it is a fact known for decades. While many globalist institutions have sordid pasts, the history of the BIS is particularly ugly.  The banking outfit was exposed after WWII as a money laundering outfit for the Nazi regime.  They also smelted and hid stolen gold in cooperation with the Third Reich.  The exposure led to little action as the scandal was swept under the rug.  The IMF was formed in the place of the BIS and took over the role as the public face of global economic centralization, but the BIS remains a powerful institution to this day. The interest of the BIS in Bitcoin is particularly fascinating as it follows a strange pattern among global banks, which is to vocally criticize cryptocurrencies in the media while quietly investing millions or billions of dollars into crypto technology and infrastructure.  This has been true of major banks from JP Morgan to Goldman Sachs along with numerous central banks including the Federal Reserve.  With the general public at least acclimated to the idea of crypto, it appears that many central banks are moving to capitalize on the trend.  Not so much by throwing heavy support behind individual coins or blockchain products, but by investing in infrastructure while creating their own versions of the technology.   CBDCs (Central Bank Digital Currencies) are now being developed widely by a host of central banks as well as the IMF and BIS.  Their quiet support of crypto may be a way for them to pave a path toward their own fully centralized cryptocurrencies in the future.   Though the privacy of most blockchain products is highly questionable, you can be certain that CBDCs will be the least private means of trade ever devised, with every single transaction tracked and cataloged.  It is also likely that central banks will retain the power to simply freeze digital accounts at will, thus depriving targeted citizens of their money and ability to survive in the normal economy.  With the removal of paper money, the last vestiges of anonymity in consumer trade will be lost (except for the black market).   The rapid decline of Bitcoin and other coins actually serves the interests of the BIS, IMF and central banks very well.  The common argument among globalists is that the market value of crypto is far too unstable for the technology to act as a true currency and store of value.  Fiat money is hardly much better, of course, but they argue that central bank currencies have the benefit of “government promises.”  In other words, when a government backs a currency, this is supposed to create public faith in that currency's trade value. With many normal currencies starting to lose public faith because of inflation, central banks will have to present some kind of alternative system in the near term to maintain economic authority.  Hence, the subtle but expanding shift to CBDCs and blockchain technology.   The “solution” that the BIS, IMF and other groups offer to currency devaluation is usually a basket system – A mechanism that locks multiple currencies into a single framework and homogenizes their values.  The IMF has been talking about doing this with paper currencies for many years using their Special Drawing Rights (SDR) basket.  It would not be surprising if they announced a similar plan for the large number of cryptocurrencies on the market also.  That is to say, they will claim that the best way to stabilize the buying power of cryptocurrencies like Bitcoin will be to collect all the major coins under a single umbrella along with CBDCs, and the bankers will no doubt control that umbrella. This might sound like a far off development; something that would happen decades from now.  But many analysts are greatly underestimating the speed at which enormous economic changes are being made behind the scenes as inflationary crisis strikes.  The BIS taking on Bitcoin and allowing it to be held in reserves might seem like a small thing, but it has implications which are far reaching.    Tyler Durden Fri, 07/01/2022 - 08:55.....»»

Category: blogSource: zerohedgeJul 1st, 2022

Sierra Grimes wanted to be the next Thurgood Marshall before ditching law for a career in aviation. Now she"s helping shape the future of flight.

Before stumbling into aviation, Grimes dreamed of being on the Supreme Court saying, "I thought I was Ketanji Brown before there was a Ketanji Brown." Grimes leads government affairs for NBAA, advocating for legislation that will enhance the business aviation industry.National Business Aviation Association Grimes dreamed of becoming a Supreme Court justice, and never thought she'd land in aviation. After 'stumbling into aviation,' she now helps shape government policy for the industry. Grimes says she 'caught the bug' for aviation and doesn't plan on leaving any time soon. While most kids grow up idolizing pop stars and movie stars, as a child growing up in a small town in southern Virginia, Sierra Grimes looked up to Thurgood Marshall. "I was just like, 'Oh, my goodness, this man is the holy grail. And guess what? This third grade girl, I'm going to be him. I'm gonna be the first Black female Supreme Court justice,'" Grimes told Insider. "So, I thought I was Ketanji Brown before there was a Ketanji Brown."She followed in Marshall's footsteps, attending Howard University in Washington, DC, in 2006 to study political science. But during a college internship with Congresswoman Jo Ann Davis, she realized she didn't want to go to law school. A call with a recruiting agency in 2012 led her to an interview with the National Business Aviation Association, at a time when she wasn't sure what "business aviation" meant (the term generally means the use of an airplane for business purposes, such as moving equipment or getting to a meeting)."The night before, I'm looking up 'What the heck is business aviation?' because when I think aviation at that time, all I knew was getting on a commercial flight to go on vacation with family," Grimes said. Despite her lack of aviation expertise, Grimes landed a job as a registration assistant for NBAA, the leading trade group representing roughly 11,000 companies that rely on aviation to make their businesses run. After climbing the ranks, she was named senior manager of government affairs for NBAA in March 2021. "I'm one of those people that truly stumbled into aviation, and have caught the bug and loved it and plan to stay as long as I can," Grimes told Insider. Fostering the future of business aviation The NBAA was founded in 1947 with the mission to foster growth of business aviation. As senior manager of government affairs, Grimes handles policy work, looking to help pass legislation to enhance the business aviation industry. In 2014, just two years into her tenure at NBAA, Grimes helped found its Young Professionals in Business Aviation, or YoPro, program, which helps to recruit and retain the next generation of professionals coming into business aviation. The program started off with networking and providing young people with professional development opportunities, and now includes an advocacy leg meant to foster the importance of advocating for NBAA's mission on the Hill. "I've been able to be seen as a thought leader for the next generation and for workforce development, and for diversity, equity, and inclusion, not only in the sense of being a young, Black female working in an industry that's male dominated, but also just coming from different backgrounds and not having the traditional aviation background," Grimes said. Ushering in change for aviation Grimes' favorite part of the job is getting involved with innovation taking place in aviation, such as advanced air mobility, she told Insider. NBAA is helping to get legislation passed and working with regulators to make sure everything is in place for the nascent industry.Though she's certainly faced obstacles in her career, she said she doesn't tend to look at them that way."I'm really big on perspective. And so an obstacle to me doesn't really mean defeat or failure," she said. "I don't really see a lot of things as an obstacle." Aviation is 'begging and pleading' for diversity Looking to the future, Grimes said she plans to focus on honing her skills as a government affairs professional. "I think that switching over to the government affairs side has opened up a new pathway with so much room for growth," she said. For young people looking to carve out their own path in aviation, Grimes said now is the time."Whenever I'm talking to young people nowadays, specifically people of a diverse background, I tell them that this is the time to get into this industry. I would say that right now, this industry is literally begging and pleading for diversity," Grimes said. Her biggest piece of advice for landing a job in aviation: persistence. "You don't have to have the background, per se, in it. But, just go after it," Grimes said. "Be persistent. Have a goal and go after it."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJul 1st, 2022

ECB Will Buy Italian, Greek Bonds Using Proceeds From German, French Bonds To Avoid Crash

ECB Will Buy Italian, Greek Bonds Using Proceeds From German, French Bonds To Avoid Crash Not that long ago we joked that the ECB's cunning "market fragmentation" plan - which became critical after Italian bonds crashed when markets realized that QT is not, in fact, QE and without the ECB backstopping worthless European paper said paper would trade down to its "fair value" - would consist of fighting inflation on even days with higher rates and no QE, and then fighting bond market fragmentation and soaring Italian yields on odd days with NIRP and QE. The ECB will fight inflation on even days with higher rates and no QE, and fight bond market fragmentation and soaring Italian yields on odd days with NIRP and QE. — zerohedge (@zerohedge) June 15, 2022 It turns out we were not that far off, because instead of splitting QE and QT into odd and even days, the ECB will pursue bond buying vs selling broken down by geography. Reuters reports that the European Central Bank will buy bonds from Italy, Spain, Portugal and Greece with some of the proceeds it receives from maturing German, French and Dutch debt in a bid to cap spreads between their borrowing costs. The central bank has divided the euro zone's 19 countries into three groups - donors, recipients and neutrals - based on the size and speed of a rise in their bond spreads in recent weeks, according to conversations with a half a dozen people at the ECB's annual forum in Sintra, Portugal. The spreads are gauged against German bonds, which serve as a de-facto benchmark for the single currency area. In short, the ECB will buy worthless bonds with money from maturing viable bonds (those of Germany, France and Netherlands). Which, while clearly not QT, at least has a chance of working because as we explained, only explicit bond buying by the ECB will prevent a collapse in Italian bonds. Well, that's precisely what the ECB is doing, even if it means it can't claim with a straight face that it is pursuing Quantitative Tightening. A lot of steaming BS has been written about the ECB's "anti fragmentation tool." Bottom line: either the ECB backstops the bonds through actual, not hypothetical (although it would like that) buying and they surge, or it does not, and they tumble. The rest is noise — zerohedge (@zerohedge) June 29, 2022 The ECB will kick off this "rebalancing" on Friday to prevent financial fragmentation among euro zone countries from getting in the way of its plan to raise interest rates - with an additional scheme due to be unveiled next month. The lists of donor and recipients countries, which will be reviewed monthly, mirror the division between peripheral (insolvent) and core (solvent) countries that emerged at the time of euro zone's first debt crisis a decade ago.  Recipients include a handful of countries perceived by investors as riskier due to their high public debt or meagre growth, such as Italy, Greece, Spain and Portugal, the sources said. Still, there is a glitch: while redemptions in July and August are substantial, the ECB knows that merely reinvesting of the proceeds will not be enough to calm investors. So the central bank has sped up work on a new tool that will allow it to make new purchases where they are needed if a country meets certain conditions. Needless to say, this is not QT. It is however, QE, and is not just a violation of Europe's deficit funding limitations, but worse, is a targeted violation, one which will infuriate "donor" nations as soon as the next bond crisis sends core yields soaring while keeping Italian spreads artificially low. The ECB's new tool may be ascertained by the European Commission, based on its fiscal rules or economic recommendations, or by the ECB itself via a debt-sustainability assessment, as it did with Greece a few years ago, sources have told Reuters. The former option would keep the ECB above the fray but make it dependent on another institution. The latter would give central bankers a greater say but open them to accusations of getting involved in politics. The ECB may then drain cash from the banking system to offset its bond purchases, most likely via special auctions at which banks can secure more favourable interest rates if they park funds at the central bank. read more Policymakers have yet to decide whether to announce the size of the scheme, as they hope its mere announcement will stabilize markets and they may not have to use it. Tyler Durden Thu, 06/30/2022 - 14:05.....»»

Category: worldSource: nytJun 30th, 2022

Five Benefits Leaders Will See With A New Mindset About Employee Accountability 

With consumers besieged by high inflation, soaring gas prices and rising interest rates, more businesses may start feeling the brunt of these economic pressures, which makes getting the best results they want out of their employees as important as ever. But how can leaders hold their teams accountable in ways that drive performance without driving […] With consumers besieged by high inflation, soaring gas prices and rising interest rates, more businesses may start feeling the brunt of these economic pressures, which makes getting the best results they want out of their employees as important as ever. But how can leaders hold their teams accountable in ways that drive performance without driving people away? After all, during the Great Resignation, droves of people left their jobs because they were unhappy with leadership and the work culture. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more How leaders think about accountability is how leaders tend to do accountability. Accountability often is perceived as a negative word, but shifting the focus from “results first” to “relationships first” can benefit businesses and workers in the long run, says Jennifer T. Long, a Certified Master Coach and ForbesBooks author of Own Up!: How To Hold People Accountable Without All The Drama. “The cultural mindset around accountability is frequently associated with consequences and retribution and punishment,” Long says. “While results are what keeps a business viable and profitable, that approach doesn’t reflect how people are wired to be most productive, most innovative, and most willing to give discretionary effort. “An accountability mindset change on the part of leaders is needed. An accountability conversation focusing primarily on business results removes the personal connection and fails to leverage the power of human effort. Taking a relationship-first perspective is far more effective than a results-first approach. The problem is convincing some managers and leaders that this is the case. And to drive accountability by putting relationships first means leaders must first take ownership of their own expectations and experiences and approach every conversation with curiosity, not judgment.” The Benefits Of A Relationships-First Accountability Mindset Long says some benefits of adopting a relationships-first accountability mindset include: Learning and growth. Rather than trying to fix people by focusing on their deficits, skills gaps and weaknesses, leaders focus instead on learning and growth. “We are already in an era of strengths-based development,” Long says. “Accountability is opportunity. Think of having accountability conversations as an easy, everyday launching point for ongoing change and development. A relationship-first approach to performance, with its emphasis on ownership and trust, yields employees who are much more willing to change and challenge themselves.” Critical thinking and co-created problem solving. Another shift in mindset comes from valuing discovery around the performance problems your employees or peers may have, as well as the discovery in how to solve problems together. “The ability to ask questions that probe areas of concern as well as reveal how others think and make decisions is the heart of knowing and trusting others,” Long says. Being reflective and clear. “When you approach accountability from a place of clarity, you stop making assumptions,” Long says. “You reflect on your real expectations, and you inquire about what’s actually driving your employees’ behaviors.” Too many managers, she says, in trying to solve problems quickly make assumptions about why things are happening and about the intentions and abilities of others. Ownership and solution-building. Shame and blame, Long says, come from a place of fear, and some work cultures tolerate these behaviors “as if they were the only solutions to performance problems.” And when people don’t trust company leadership or other divisions of the company, they operate from what she calls a place of self-protection. “By contrast,” Long says, “empowerment and engagement come when you can easily address your own choices as well as an employee’s or teammate’s choices without fear, anxiety or drama.” Continuous and daily practice. “Accountability is a way of being, not a tool to leverage only in times of crisis,” Long says. “When we are accountable for all our choices, behaviors and results, we become empowered human beings who are learning, changing and growing together. “Continuous and daily practice of accountability makes the moments of failure far fewer and less damaging, and transforms those moments into opportunities for growth and change.” Long says if you’re going to do accountability well, leaders must be able to do it well when the chips are down. “If leaders don’t shift their mindset, they’re likely to default to old behavioral tendencies when operating at speed and under pressure,” she says. “The trick is to replace those outdated and oft-negative tendencies with productive ones that bring out the best in everyone.” About Jennifer T. Long Jennifer T. Long is a Certified Master Coach and the ForbesBooks author of Own Up!: How To Hold People Accountable Without All The Drama. Also a Master Trainer, Long is the CEO of Management Possible, a leadership development company providing coaching for leaders and managers across various disciplines. She hosts the Organizational Transformation Kung Fu podcast with Sandi Verrecchia at Along with her nearly four decades working with leaders, Long spent 10 years as a theater director, an experience that helped inform her methodology – elevating the idea that conversation and relationships are the prime movers of impact and culture. Updated on Jun 30, 2022, 11:43 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 30th, 2022

Why impact investing needs to be "decolonized" to help the people most affected by climate change and inequity

People are seeing impact investing and ESG principles as vehicles for solving some of the world's biggest problems, but it's important to not exclude the groups it was designed to help. Kazi Awal/InsiderWomen and children carry drinking water after collecting drinkable water from a pond at the coastal Khulna, Bangladesh on March 21, 2022Kazi Salahuddin Razu/NurPhoto via Getty Images Impact investing doesn't always help the people impacted most by inequity and climate change, according to Durreen Shahnaz, founder and CEO of Impact Investment Exchange.  Recognizing the power and importance of the "Global South" is necessary for inclusive social innovation. This article is part of the "Financing a Sustainable Future" series exploring how companies take steps to set and fund sustainable goals. The author is a member of the series' advisory council.  Right before the pandemic, I spoke at an impact investing conference in New York. As the founder and CEO of Impact Investment Exchange, I've seen how much actual impact impact investing can have — and how it can reinforce old, problematic norms.As usual, I was among the few women of color invited to speak alongside an otherwise white male panel. And as is typical for women of color at these conferences, I had to endure input on my choice of attire — being asked to avoid wearing an ethnic dress (a saree in my instance) — as well as the casual dismissals of my remarks and the general fawning over "distinguished white men." My speech — in which I cautioned against allowing the industry to be overtaken by massive private equity funds looking for ways to own the future profits of entrepreneurs' ideas and labor in the Global South — did not sit well with Bill McGlashen, then still a private equity executive. He took a moment of his time on stage to insinuate that elite groups of venture capitalists turned ethical would wield the power of impact investing, not do-gooders like myself looking to equalize the playing field.That equation of money with power eventually landed McGlashen in the spotlight when he was sent to federal prison for his role in the Varsity Blues admissions scandal. [ed. note. McGlashen is currently appealing his conviction]. McGlashen's involvement in both the scandal and the world of impact investing is not merely a coincidence. The same privilege and arrogance that someone like McGlashen displayed is rampant throughout the sector.It's colonialism by another name.Power imbalances matterImpact Investment Exchange; Edited by Kazi Awal/InsiderWith increasing numbers of people seeing impact investing and ESG principles as vehicles for solving some of the world's biggest problems — such as climate change and inequality — we can't afford to exclude the very groups that the field was designed to help. The geography is lopsided. Today, 79% of impact investing organizations are based in North America and Europe. Only 30% of the volume of impact funds is raised for projects in emerging markets. This means that impact investing in Asia, Africa, and Latin America is coming from the Global North and with it, the power of how impact investing should go. These structures of power take on a new significance outside of the US, where money overwhelmingly flows from developed countries to developing countries — and back out again. It is no wonder that those of us in the Global South are discussing new neocolonialism through impact investing. Ironically, the impact investing space that I helped to create over a decade ago was supposed to counter the very colonial relations that pervaded development aid. The dream was to empower people of color and the Global South with investment so that we could change our shared futures together by investing in each other. While companies like IIX are all about the Global South investing in each other, we are the minority. Familiar with how colonialism manifests itself, we work hard and unapologetically against it to balance power asymmetries. With a firm belief that women at the last mile are the backbone of their communities' health, economies, success, and climate action, we continue to roll up our sleeves to put gender equality front and center of everything we do so they can transform their environment, the climate, and the world.Impact Investment Exchange (IIX)'s  Women's Livelihood Bond series - the world's first listed gender-lens, impact investing security — has to date mobilized over US $78 million from global investors, empowering over 1 million women across Asia Pacific at the last mile to become agents of change and enabling them to maintain sustainable livelihoods.Recognizing that fostering equity and inclusion at scale requires all hands on deck, IIX has also convened a global coalition – the Orange Bond Initiative – to launch the world's first asset class by and for the Global South and the 99%, that will mobilize the multi-trillion bond market for the empowerment of 100 million women and girls as solutions to achieve the UN's 17 SDGs and build a more inclusive, climate-resilient future for all. To democratize impact investing, IIX has also developed digital offerings — a digital impact assessment and verification platform that effectively measures the social and environmental impact of an investment and gives value to the voices of the underserved (IIX Values); and the world's largest crowdfunding platform for impact investing (Impact Partners) — which will help to address the fundamental challenges the space faces: accessibility, credibility and knowledge.Recognizing the value of the Global SouthOur dedication towards connecting the backstreets to Wall Street through our work is driven by our belief that underserved women and communities need to be liberated. They need their voices heard to make global social justice a possibility.Given the residue of our colonial mentality in the Global South, the rich still take their cue from the rich in the Global North, continuing to place them on a pedestal like in colonial days. This is no different to how many of the Royals from the Indian sub-continent readily complied with workings of the British Raj to 'fit' in with the colonial powers, undermining their fellow country people.We need to look towards a global future where capital distribution is harmonized for the greater good of the world. Where markets recognize the value of the Global South — with the nexus of finance and development enabling the financial system to work for the "99%" (that represent most of the Global South); and where the rich and backstreets of the South embrace the responsibility to stand united in supporting each other to build an equitable, sustainable future.In this world, borders are not drawn, blocks to social innovation are removed and more effective collaborations for inclusive social innovation processes and systems are in place. To live up to our promise of using finance for good, we cannot repeat the history of structures that have relied on the labor of people of color to benefit the few. It's not enough to redistribute capital.Durreen Shahnaz is the founder and CEO of Impact Investment Exchange. @media (min-width: 960px) { #piano-inline-content-wrapper .content-header .figure.image-figure-image { min-width: 100%; margin-left: 0; } }  Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJun 30th, 2022

We"ve skipped a key phase in the typical real-estate cycle — and next up is a recession

The home price crash of the mid-2000s was triggered in part, by a surplus of housing supply. Experts say that's not likely to happen this time around. Home prices are still rising in several pockets of the country — and that means demand exhaustion is just getting started.Getty Images. A typical real-estate cycle has four phases: expansion, hyper supply, recession and recovery.   In the current housing market, hyper supply is missing from the equation. An expert says "demand exhaustion" has instead taken its place. The homebuying game is changing. Pandemic-era mortgage deals are over and affordability has plummeted for many potential buyers. However, despite waning demand, home prices remain high in housing markets across the country — and it's caused many Americans to wonder what comes next. A typical real-estate cycle occurs in four phases: expansion, hyper supply, recession and recovery. But what happens when a factor is missing from the equation? Todd Metcalf, the senior economist at Moody's Analytics, told Insider, that the nation's lack of available housing inventory is throwing the entire cycle for a loop. "In the typical narrative the "hyper supply" is because construction companies over-build, and there becomes a glut of housing units," Metcalf said. "This occurred during the housing bubble preceding the Great Recession. However, at the national level we still see a severe housing shortage."During the housing bubble of the mid-2000s, a mixture of cheap debt, predatory lending practices, and complex financial engineering led to many borrowers being placed into mortgages they could not afford. When the bubble burst, it gave rise to a foreclosure crisis among homeowners, as well as a credit crisis among the investors who owned bonds backed by these underwater mortgages. This caused a surplus of homes to flood the market, sent home prices plummeting, and contributed to the recession. But in 2022 things are much different. Residential construction has fallen to its slowest pace since April 2021 and the housing market needs to build millions of homes to meet buyer demand. Metcalf says in place of hyper-supply, the housing market is now entering "demand exhaustion." In this phase, home prices don't fall due to a surplus of inventory, they instead decline as buyers' ability to afford them wanes. "This occurs not because the demand for housing has gone away, but because rising interest rates have made it so that many people can no longer afford to buy a new home," he said. This sort of buyer burnout doesn't lead to dramatic price drops but instead modest declines — and that means home prices aren't tanking like they did in 2008."Builders will continue building, but they have not been building at the levels of the housing bubble when overbuilding created a hyper supply," he said. "That glut of housing was part of what led to the dramatic price drops."Mike Larson, a senior analyst at financial research company Weiss Ratings, agrees that this time around, home prices will take a longer time to fall across the board.  "I doubt we'll see very sharp, very sudden declines in the official price statistics over the next several months," Larson said. "But as conditions soften this year, it will gradually become apparent to buyers and sellers alike that the latest, greatest housing boom is kaput."Although 19.1% of home sellers dropped their listing price during the month of May — the highest level since October 2019 — the median asking price of newly listed homes increased 18% year-over-year to a new all-time high of $418,000.So while the pace of growth is slowing, home prices are still rising in several pockets of the country — and that means demand exhaustion is just getting started. While it's too early to call the next phase of the housing cycle, Larson says the housing market is likely to remain challenged for the rest of this year and well into 2023."Given the magnitude of the rise in house prices during the boom, and the extended period that mortgage rates will likely remain high relative to 2020-2021 levels, a recovery isn't likely any time soon," he said. "It's going to take quite some time for incomes, prices, demand, and supply to come back into balance."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJun 30th, 2022

The 2022 Market Disaster... More Pain To Come

The 2022 Market Disaster... More Pain To Come Authored by Matthew Piepenburg via, If you think the current market disaster hurts; it’s gonna get worse despite recent dead cat bounces in U.S. equities. The Big 4: Dead Bonds, Rising Yields, Tanking Stocks & Stagflation For well over a year before fantasy-pushers and politicized, central-bank mouth pieces like Powell and Yellen were preaching “transitory inflation,” or hinting that “we may never see another financial crisis in our lifetime,” we’ve been patiently and bluntly (rather than “gloomily”) warning investors of the “Big Four.” That is, we saw an: 1) inevitable liquidity crisis which would take our 2) zombie bond markets to the floor, yields (and hence interest rates) to new highs and 3) debt-soaked nations and markets tanking dangerously south into 4) the dark days of stagflation. In short, by calmly tracking empirical data and cyclical debt patterns, one does not have to be a market timer, tarot-reader or broken watch of “doom and gloom” to warn of an unavoidable credit, equity, inflation and currency crisis, all of which lead to levels of increasing political and social crisis and ultimately extreme control from the top down. Such are the currents of history and the tides/fates of broke(n) regimes. And that is precisely where we are today—no longer warning of a pending convergence of crises, but already well into a market disaster within the worst macro-economic setting (compliments of cornered “central planners”) that I have ever experienced in my career. But sadly, and I do mean sadly, the worst is yet to come. As always, facts rather than sensationalism confirm such hard conclusions, and hence we turn now to some equally hard facts behind this market disaster. The Ignored Hangover For well over a decade, the post-2008 central bankers of the world have been selling the intoxicating elixir (i.e., lie) that a debt crisis can be solved with more debt, which is then paid for with mouse-click money. Investors drank this elixir with abandon as markets ripped to unprecedented highs on an inflationary wave of money printed out of thin air by a central bank near you. In case you still don’t know what such “correlation” looks like, see below: But as we’ve warned in interview after interview and report after report, the only thing mouse-click money does is make markets drunker rather than immune from a fatal hangover and market disaster. For years, such free money from the global central banks ($35T and counting) has merely postponed rather than outlawed the hangover, but as we are seeing below, the hangover, and puking, has already begun in a stock, credit or currency market disaster near you. Why? Every Market Crisis is a Liquidity Crisis Because the money (i.e., “liquidity”) that makes this drunken fantasy go round is drying up (or “tightening”) as the debt levels are piling up. That is, years and years of issuing IOU’s (i.e., sovereign bonds) has made those IOU’s less attractive, and the solution-myth of creating money out of thin air to pay for those IOUs is becoming less believable as inflation rises like a killer shark from beneath the feet of our money printers. The Most Important Bond in the World Has Lost Its Shine As we’ve warned, the UST is experiencing a liquidity problem. Demand for Uncle Sam’s bar tab (IOU’s) is tanking month, after month, after month. As a result, the price of those bonds is falling and hence their yields (and our interest rates) are rising, creating massive levels of pain in an already debt-saturated world where rising rates kill drunken credit parties (i.e., markets). Toward this end, Wall Street is seeing a dangerous rise in what the fancy lads call “omit days,” which basically means days wherein inter-dealer liquidity for UST’s is simply not available. Such omit days are screaming signs of “uh-oh” which go un-noticed by 99.99% of the consensus-think financial advisors selling traditional stocks and bonds for a fee. As the repo warnings (as well as our written warnings) have made clear since September of 2019, when liquidity in the credit markets tightens, the entire risk asset bubble (stocks, bonds and property) starts to cough, wheeze and then choke to death. Unfortunately, the extraordinary levels of global debt in general, and US public debt in particular, means there’s simply no way to avoid more choking to come The Fed—Tightening into a Debt Crisis? As all debt-soaked nations or regimes since the days of ancient Rome remind us , once debt levels exceed income levels by 100% or more, the only option left is to “inflate away” that debt by debasing (i.e., expanding/diluting) the currency—which is the very definition of inflation. And that inflation is only just beginning… Despite pretending to “control,” “allow” and then “combat” inflation, truth-challenged central bankers like Powell, Kuroda and Lagarde have therefore been actively seeking to create inflation and hence reduce their debt to GDP ratios below the fatal triple digit level. Unfortunately for the central bankers in general and Powell in particular, this ploy has not worked, as the US public debt to GDP ratio continues to stare down the 120% barrel and the Fed now blindly follows a doomed policy of tightening into a debt crisis. This can only mean higher costs of debt, which can only mean our already debt-soaked bond and stock markets have much further to go/tank. Open & Obvious (i.e., Deadly) Bond Dysfunction In sum, what we are seeing from DC to Brussels, Tokyo and beyond is now an open and obvious (rather than pending, theoretical or warned) bond dysfunction thanks to years of artificial bond “accommodation” (i.e., central-bank bond buying with mouse-click currencies). As we recently warned, signals from that toxic waste dump (i.e., market sector) known as MBS (“Mortgage-Backed Securities”) provide more objective signs of this bond dysfunction (market disaster) playing out in real-time. Earlier this month, as the CPI inflation scale went further (and predictably) up rather down, the MBS market went “no bid,” which just means no one wanted to buy those baskets of unloved bonds. This lack of demand merely sends the yields (and hence rates) for all mortgages higher. On June 10, the rates for 30-year fixed mortgages in the U.S. went from 5.5% to 6% overnight, signaling one of the many symptoms of a dying property bull as U.S. housing starts reached 13-month lows and building permits across the nation fell like dominoes. Meanwhile, other warnings in the commercial bond market, from Investment Grade to Junk Bonds, serve as just more symptoms of a dysfunctional “no-income” (as opposed to “fixed income”) U.S. bond market. And in case you haven’t noticed, the CDS (i.e., “insurance”) market for junk bonds is rising and rising. Of course, central bankers like Powell will blame the inevitable death of this U.S. credit bubble on inflation caused by Putin alone rather than decades of central bank drunk driving and inflationary broad money supply expansion. Pointing Fingers Rather than Looking in the Mirror Powell is already confessing that a soft landing from the current inflation crisis is now “out of his hands” as energy prices skyrocket thanks to Putin. There’s no denying the “Putin effect” on energy prices, but what’s astounding is that Powell, and other central bankers have forgotten to mention how fragile (i.e., bloated) Western financial systems became under his/their watch. Decades of cramming rates to the floor and printing trillions from thin air has made the U.S. in particular, and the West in general, hyper-fragile; that is: Too weak to withstand pushback from less indebted bullies like Putin. But as we warned almost from day 1 of the February sanctions against Russia, they were bound to back-fire big time and accelerate an unraveling inflationary disaster in the West. The West & Japan: Overplaying the Sanction Hand As we warned in February, Russia is squeezing the sanction-makers with greater pain than history-and-math-ignorant “statesmen” like Kamala Harris could ever grasp. From here in Europe, Western politicians are beginning to wonder if following the U.S. lead (coercion?) in chest-puffing was a wise idea, as gas prices on the continent skyrocket. In this backdrop of rising energy costs, Germany, whose PPI is already at 30%, has to be asking itself if it can afford tough-talk in the Ukraine as Putin threatens to cut further energy supplies. In this cold reality, the geniuses at the ECB are realizing that the very “state of their European Union” is at increasing risk of dis-union as citizens from Italy to Austria bend under the weight of higher prices and falling income. As of this writing, the openly nervous ECB is thus inventing clever plans/titles to “fight fragmentation” within the EU by, you guessed it: Printing more money out of thin air to control bond yields and cap borrowing costs. Of course, such pre-warned and inevitable (as well as politicized) versions of yield curve controls (YCC) are themselves, just well…Inflationary. Even outside the EU, the UK’s Prime Minister is discussing the idea of handing out free money to the bottom 30% of its population as a means to combat inflating prices, equally forgetting to recognize that such handouts are by their very nature just, well…Inflationary. (By the way, such monetary policies are an open signal to short the Euro and GBP against the USD…) Looking further east to that equally embarrassing state of the union in Japan, we see, as warned countless times, a tanking Yen out of a Japan that knows all too well the inflationary sickness that a non-stop money printer can create. Like the UST, the Japanese JGB is as unloved as a pig in lipstick. Prices are falling and yields are rising. As demand for Japanese IOU’s falls, yields and rates are rising, compelling more YCC (i.e., money printing) from the Bank of Japan as the now vicious (and well…inflationary) circle of printing more currencies to pay for more debt/IOUs spins/spirals fatally round and round. By the way, and as part of our continued warning and theme of the slow process of de-dollarizationwhich the sanctions have only accelerated, it would not surprise us to see Japan making a similar “China-like” move to buy its Russian oil in its own currency rather than the USD. Just saying… Don’t Be (or buy) a Dip As indicated above, trying to combat inflation with rate hikes is not only a joke, it creates a market disaster when a nation’s debt to GDP is at 120%. To fight inflation, rates need be at a “neutral level,” (i.e., above inflation), and folks, that would mean 9% rates at the current 8%+ CPI level. That aint gonna happen… At $30T+ of government debt and rising, the Fed can NEVER use rising rates to fight inflation. End of story. The days of Volcker rate hikes (when public debt was $900B not $30T) are gone. But the fickle Fed can raise rates high enough to kill a securities bubble and create “asset-bubble deflation,” which is precisely what we are seeing in real time, and this market disaster is only going to get worse. In short, if you are buying this “dip,” you may want to think again. As June trade tapes remind, the Dow dipped below 30000, and the S&P 500 reported an ominous 3666, already losing more than 20% despite remaining grossly over-valued as it slides officially into bear territory. As for the NASDAQ’s -30% YTD loss, well, it’s embarrassing… Many, of course, will buy this dip, as many forget the data, facts and traps of dead-cat bounces. Toward this end, it’s worth reminding that 12 of the top 20 one-day rallies in the NASDAQ occurred after that market began a nearly 80% plunge between 2000 and 2003. Similarly, the S&P saw 9 of its top 20 one-day rallies following the 1929 crash in which that market lost 86% from its highs. In short: These bear markets are not even close to their bottom, and today’s dip-buy may just be a trap, unless you think you can time a one-day rally amidst years of falling assets. Markets won’t and don’t recover from the bear’s claws until spikes are well above two standard deviations. We are not there yet, which means we have much further to fall. Capitulation in U.S. stocks won’t even be a discussion until the DOW is below 28,400 and the S&P blow 3500. Over the course of this bear, I see both falling much further. As we’ve warned, mean-reversion is a powerful force and we see deeper lows/reversions ahead: Toward that end, we see an SPX which could easily fall at least 15% lower (i.e., to at least 1850) than the “Covid crash” of March 2020. Based upon historic ranges, stocks won’t be anywhere near “fair value” until we see a Shiller PE at 16 or a nominal PE of 9-10. Index bubbles have been driven by ETF inflation which followed the Fed liquidity binge—and those ETF’s will fall far faster in a market disaster than they grew in a Fed tailwind. And if you still think meme stocks, alt coins or the Fed itself can save you from further market disaster, we’d (again) suggest you think otherwise. Looking at historical data on prior crashes from 1968 to the present, the average bear crash is at around -33%. Unfortunately, there’s nothing “average” about this bear or the further falls to come. The Shiller PE, for example, has another 40% to go (down) before stocks approach anything close to “fair value.” In the 1970’s, for example, when we saw the S&P lose 48%, or even in 2008, when it lost 56%, U.S. debt to GDP levels were ¼ of what they are today. Furthermore, in the 1970’s the average consumer savings rate was 12%; today that rate is 4%. Stated simply, the U.S., like the EU and Japan, is too debt-crippled and too GDP-broke to make this bear short and sweet. Instead, it will be long and mean, accompanied by stagflation and rising unemployment. The Fed knows this, and is, in part, raising rates today so that will have something—anything—to cut in the market disaster tomorrow. But that will be far too little, and far too late. And, Gold… Of course, the Fed, the IMF, the Davos crowd, the MSM and the chest-puffing sanction (back-firing) West will blame the current and future global market disaster on a virus with a 99% survival rate and an avoidable war in a corner of Europe that neither Biden nor Harris could find on a map. Instead, and as most already know, the real cause of the greatest market bubble and bust in the history of modern capital markets lies in the reflection of central bankers and politicians who bought time, votes, market bubbles, wealth disparity and cancerous inflation with a mouse-click. History reminds us of this, current facts confirm it. For now, the Fed will tighten, and thereby unleash an even angrier bear. Then, as we’ve warned, the Fed will likely pivot to more rate cuts and even more printed (inflationary) currencies as the US, the EU and Japan engage in more inflationary YCC and an inevitable as well as disorderly “re-set” already well telegraphed by the IMF. In either/any scenario, gold gets the last laugh. Gold, of course, has held its own even as rates and the USD have risen—typically classic gold headwinds. When markets tank and the Fed pivots, yields on the 10Y could fall as global growth weakens—thus providing a gold tailwind. Furthermore, the USD’s days of relative strength are equally numbered, as is the current high demand for US T-Bill-backed collateral for that USD. As the slow trend toward de-dollarization increases, so will the tailwind and hence price of gold increase as the USD’s credibility decreases. In the interim, the fact that gold has stayed strong despite the temporary spike in the USD speaks volumes. In the interim, Gold outperforms tanking stocks by a median range of 45%, and when the inflationary pivot to more QE returns, gold protects longer-term investors from grotesquely (and increasingly) debased currencies. And when (not if) the re-set toward CBDC (central bank digital currencies) finally arrives, that blockchain eYen and eDollar will need a linkage to a neutral commodity not to an empty “faith & trust” in just another new fiat/fantasy with an electronic profile. As we’ve been saying for decades: Gold Matters. Tyler Durden Thu, 06/30/2022 - 07:20.....»»

Category: blogSource: zerohedgeJun 30th, 2022

Oil Markets Could Face A Doomsday Scenario This Week

Oil Markets Could Face A Doomsday Scenario This Week Authored by Cyril Widdershoven via, Expect lots of oil price volatility in the coming months as markets finally discover just how much spare capacity OPEC members really have. Oil production outages in Libya and the continued impact of Russia’s invasion of Ukraine are going to push oil prices higher if new supply isn’t found. While some analysts are predicting oil demand destruction in the near future, there is little evidence to back up those claims. Global oil markets are going to be very volatile in the coming months if news emerging from OPEC’s main producers about production capacity constraints turns out to be true. OPEC will be meeting again in the coming days to discuss its export agreements, while today the oil group is presenting its Annual Statistical Bulletin (ASB) 2022. While the media is likely to be focused on rumors in the next 24 hours of a possible change in the export strategy of OPEC+, the real focus should be on whether or not the oil cartel is even capable of substantially increasing its production.  For years, OPEC producers have been the main swing producers in oil markets. With a presumed spare capacity of more than 3-4 million bpd, Saudi Arabia and the UAE have always been seen as a point of last resort in case of a major crisis in oil and gas markets. During the former global oil glut, it seemed nothing could threaten the oil market, even when major conflicts emerged in Libya, Iraq, or elsewhere. The re-opening of the global economy after COVID-19, however, has brought fear back into the market that leading oil producers, including the USA and Russia, are unable to supply adequate volumes to the market. OPEC kingpins Saudi Arabia and the UAE are now being looked upon to increase production to historically high levels and bring oil prices down. Russia’s war against Ukraine, removing a possible 4.4 million bpd of crude and products in the coming months, has thrown this spare capacity problem into sharp relief.  This week, a possible doomsday scenario could emerge in oil markets, based not only on OPEC+ export strategies but also due to increased internal turmoil in Libya, Iraq, and Ecuador. Possible other political and economic turmoil is also brewing in other producers, while US shale is still not showing any signs of a substantial production increase in the coming months.  Global oil markets have long believed that OPEC has enough spare production capacity to stabilize markets, with Saudi Arabia and the UAE just needing to open their taps. There is ,however, no real evidence to suggest that OPEC has increased production capacity in place in the short term. A research note by Commonwealth Bank commodities analyst Tobin Gorey already noted that OPEC’s two leaders are producing at near-term capacity limits. At the same time, UAE Minister of Energy Suhail Al Mazrouei put even more pressure on oil prices as he stated that the UAE is producing near-maximum capacity based on its quota of 3.168 million barrels per day (bpd) under the agreement with OPEC and its allies. That comment could still indicate that there is some spare capacity left in Abu Dhabi, but the remarks were made after French President Emmanuel Macron had stated to US president Biden during the G7 meeting that not only is the UAE producing at maximum production capacity, but also that Saudi Arabia only has another 150,000 bpd of spare capacity available.  Macron stated that UAE’s president Mohammed bin Zayed (MBZ) told him that the UAE is at maximum production capacity while claiming that Saudi Arabia can increase production by another 150,000 bpd. Macron also claimed that Saudi Arabia won’t have a huge additional capacity within the coming six months. The official figures for both OPEC producers counter this narrative, however. Saudi Arabia is producing at 10.5 million bpd, with official capacity between 12-12.5 million bpd. The UAE is producing around 3 million bpd, claiming to have a capacity of 3.4 million bpd. The two countries’ spare production is still officially slated to be around 3.9 million bpd combined. Most analysts, however, have been questioning these figures for years.  Looking at OPEC+'s own production targets, the group has not been producing at agreed levels for months. At the Middle East and North Africa-Europe Future Energy Dialogue in Jordan, UAE’s Al Mazrouei said that OPEC+ was running 2.6 million barrels a day short of its production target. That means a potential shortage in the market, which could increase even further if internal turmoil causes further production decreases. For July-August, OPEC+ agreed to increase output by another 648,000 bpd, which would mean that the total output cut during COVID-19 pandemic of 5.8 million bpd has been restored. Whether or not OPEC+ is able to reach that level in the coming weeks remains very uncertain.  Pressure will build in the coming days, as Al Mazrouei’s remarks seem to rebuke claims of a spare capacity shortage, but as always “where there is smoke, there is a fire”.  A possible spare production capacity shortage, or non-availability at all, combined with an expected force majeure of Libya’s NOC in the Gulf of Sirte, and a suspension of Ecuador’s oil output (520,000 bpd) in the coming days due to anti-government protests, are likely to lead to an oil price spike.  There is still some optimism in markets about a real demand-supply crunch, as high inflation levels and a possible global economic slowdown could lead to lower demand. Until now, however, that optimism has not materialized at all, demand is still increasing, even though gasoline and diesel prices are breaking historical price levels. The re-opening of the Chinese economy, a natural gas shortage globally, and higher temperatures in the coming weeks, combined with the normal peak in demand due to the US and EU driving season, all look set to push oil prices higher. OPEC’s future is at stake if spare production capacity really has run out. For years, analysts (including myself) have been warning about a lack of investment in upstream worldwide. That has already led to lower production capacity of independent oil companies, such as most IOCs, and for national oil companies, the situation appears to be similar. Even though Saudi Aramco, ADNOC, and some others, have been keeping their upstream (and downstream) investments level during the last decade (even during COVID), other main OPEC producers have seen dwindling investment budgets or even full-scale crises. Most OPEC producers could increase their overall production still, but only for a limited period of time. Where most spare production capacity is short-term based, partly to avoid damaging reserves in the long run, the current oil crisis is a much more prolonged long-term issue. Western sanctions on Russia, combined with existing sanctions on Venezuela and Iran, will hurt markets for years to come.  There is no quick-fix solution to the current oil market crisis, even the lifting of sanctions on Venezuela or Iran will not result in substantial volume increases. At the same time, increased Western political interference in the already struggling market will hit volumes too. The growing call in the USA, UK, and EU, to put a windfall tax on oil and gas companies will not only constrain further investments in upstream but will also lead to higher prices at the pump. Consumers are not going to feel any positive price effects and can expect steadily increasing energy bills in the coming months.  No statements made by OPEC in the coming two days are going to be able to remove the worries in the market. OPEC’s future depends fully on its power to stabilize markets. At present, there appear to be no options available to the cartel. Without new oil production hitting markets soon, OPEC leaders MBZ and Crown Prince Mohammed bin Salman need to try to maintain the illusion of spare capacity. If spare production capacity is revealed to be under 1.5-2 million bpd, the future of both OPEC and oil markets would be bleak. Tyler Durden Wed, 06/29/2022 - 14:05.....»»

Category: blogSource: zerohedgeJun 29th, 2022

White House Is Quietly Modeling For $200 Oil "Shock"

White House Is Quietly Modeling For $200 Oil "Shock" While the Biden administration is hoping and praying that someone - anyone - will watch the comical "Jan 6" kangaroo hearsay court taking place in Congress and meant to somehow block Trump from running for president in 2024 while also making hundreds of millions of Americans forget that the current administration could very well be the worst in US history, it is quietly preparing for the worst. As none other than pro-Biden propaganda spinmaster CNN reports, when it comes to what really matters (at least according to Gallup), namely the economy, and specifically galloping gasoline prices, the White House is in a historic shambles. For an administration that ended last year forecasting a leveling off of 40-year high inflation and eager to tout a historically rapid recovery from the pandemic-driven economic crisis, there is a level of frustration that comes with an acutely perilous moment. Asked by CNN about progress on a seemingly intractable challenge, another senior White House official responded flatly: "Which one?" The suspects behind the historic implosion are well known: "soaring prices, teetering poll numbers and congressional majorities that appear to be on the brink have created no shortage of reasons for unease. Gas prices are hovering at or around $5 per gallon, plastered on signs and billboards across the country as a symbolic daily reminder of the reality -- one in which White House officials are extremely aware -- that the country's view of the economy is growing darker and taking Biden's political future with it." "You don't have to be a very sophisticated person to know how lines of presidential approval and gas prices go historically in the United States," a senior White House official told CNN. A CNN Poll of Polls average of ratings for Biden's handling of the presidency finds that 39% of Americans approve of the job he's doing. His numbers on the economy, gas prices and inflation specifically are even worse in recent polls. What CNN won't tell you is that Biden is now polling well below Trump at this time in his tenure. The CNN article then goes into a lengthy analysis of what is behind the current gasoline crisis (those with lots of time to kill can read it here) and also tries to explains, without actually saying it, that the only thing that can fix the problem is more supply, but - as we first explained - this can't and won't happen because green fanatics and socialist environmentalists will never agree to boosting output. Which brings us to the punchline: as CNN's Phil Mattingly writes, "instead of managing an economy in the midst of a natural rotation away from recovery and into a stable period of growth, economic officials are analyzing and modeling worst-case scenarios like what the shock of gas prices hitting $200 per barrel may mean for the economy." Well, in an article titled "Give us a plan or give us someone to blame", this seems like both a plan, and someone to blame. But unfortunately for Biden - and CNN which is hoping to reset expectations - it's only going to get worse, because as we noted moments ago, while nobody was paying attention, Cushing inventories dropped to just 1 million away from operational bottoms at roughly 20MM barrels. This means that the US is officially looking at tank bottoms. But wait, there's more... or rather, it's even worse, because as even Bloomberg's chief energy guru Javier Blas notes, over the last 2 weeks, the US gov has drained 13.7 million barrels from the SPR, "and yet, commercial oil stockpiles still fell 3 million barrels over the period." Just imagine, Blas asks rhetorically, "if the SPR wasn't there. Or what would happen post-Oct when sales end." OIL MARKET: Over the last 2 weeks, the US gov has injected 13.7 million barrels from the SPR into the market. And yet, commercial oil stockpiles still fell 3 million barrels over the period. Just imagine if the SPR wasn't there. Or what would happen post-Oct when sales end #OOTT — Javier Blas (@JavierBlas) June 29, 2022 And here is the punchline: at the current record pace of SPR drainage, one way or another the Biden admin will have to end its artificial attempts to keep the price of oil lower some time in October (or risk entering a war with China over Taiwan with virtually no oil reserve). This means that unless Putin ends his war some time in the next 5 months, there is a non-trivial chance that oil will hit a record price around $200 - precisely the price the White House is bracing for - a few days before the midterms. While translates into $10+ gasoline. And while one can speculate how much longer Democrats can continue the "Jan 6" dog and pony show as the entire economy implodes around them, how America will vote in November when gas is double digits should not be a mystery to anyone. Tyler Durden Wed, 06/29/2022 - 13:05.....»»

Category: blogSource: zerohedgeJun 29th, 2022