Month: August 2022

Authored by Jonathan Turley via jonathanturley.org,

Below is my column in the Hill on the release of the affidavit leading to the raid on Mar-a-Lago. The redacted affidavit did confirm key points, but the most interesting elements could be what did not happen. That may change now that a federal judge has finally indicated that a special master may be appointed. Since the start of the controversy over the Mar-a-Lago raid, I have called for the release of a redacted affidavit and the appointment of a special master to sort through the seized material, including alleged attorney-client privileged material. Such an appointment could result in additional material being returned to the Trump team and a release of additional information on what was seized under this exceptionally broad warrant.

Here is the column:

With Friday’s release of the redacted affidavit from the FBI’s search of Mar-a-Lago, the largest Rorschach test in history seemed to play out on cable television. Instead of ink blots, pundits and politicians stared at pages of solid black lines and offered strikingly different “ah-ha” observations. Some called the matter effectively closed and that, with the redacted affidavit, we have now “finally seen enough. Donald Trump will be indicted by a federal grand jury.”

Likewise, for former Mueller top aide Andrew Weissmann, the affidavit meant one thing — that “the former president is going to be prosecuted.” (Of course, Weissmann once expressed certainty that Donald Trump would pardon himself by his last day in office.)

There already are a plethora of news and opinion columns focusing on the five things we learned from the redacted affidavit. Equally telling, however, is what did not happen with the affidavit’s release.

Due to a series of advance leaks from the government, we already knew some of the affidavit’s contents and the results of the search. The redacted affidavit did confirm important details on past communications and the documents that were previously retrieved from Mar-a-Lago, including the discovery of a large amount of classified documents, from the relatively mundane “confidential” to the highly classified “Top Secret/Sensitive Compartmented Information” (TS/SCI).

It also was clear that a criminal case could be brought on such allegations, though there is considerable factual and legal uncertainty about any conviction or appeal.

Not clear is whether the Justice Department intends to prosecute the former president. It is entirely possible that beneath the affidavit’s blacked-out lines lurks evidence that the government is building a case for prosecution. However, if one were to go by the unredacted portions, it is also possible this was just a heavy-handed effort to retrieve government material from Mar-a-Lago.

More striking are three things that did not happen.

The most remarkable thing that occurred on Friday is that nothing occurred on Friday. Only a week before, the Justice Department insisted that the court should not release a single line of the affidavit and that any substantive disclosure would unleash a parade of horribles, from damaging national security to sacrificing witnesses.

For those of us who have litigated cases against the Justice Department, it was an all-too-familiar claim by a department notorious for over-classification and over-redaction arguments.

For a week, media pundits mouthed the same exaggerated claims and challenged those of us who argued that it was clearly possible to release a redacted affidavit; liberals suddenly shuddered at the thought of doubting the Justice Department. Sites like Above the Law claimed that calls for greater transparency and a redacted affidavit were akin to “publishing the nuclear codes on the back of every milk carton.” Even after the judge agreed that a redacted affidavit could be released in the public interest, experts balked at the notion as dangerous in light of Justice’s earlier warnings.

As I noted earlier, affidavits contain background legal and factual sections that ordinarily can be unsealed without disclosing sensitive information. That is precisely what happened here. Pages of the affidavit were released that confirmed the legal claims as well as some of the factual allegations. In other words, the Justice Department misrepresented the contents of the affidavit and the dangers of redaction. As in other cases, it falsely claimed that no disclosures could be made without redacting so much as to make the document unintelligible. Yet, no one seemed to notice.

Something else did not happen. In rejecting Justice’s claims that nothing in the affidavit should be released, U.S. Magistrate Bruce Reinhart set out an appellate process by which he could overrule Justice in ordering disclosures beyond those proposed by the department. Given Justice’s well-documented history of over-redacting, it was a promising start.

Then, over the course of the week, media reported a series of leaks of information that clearly was part of the affidavit. At the same time that the government was demanding total secrecy, it was selectively leaking details seemingly designed to put Trump on the defensive.

Given that history, there was every reason for the court to be skeptical of the first cut of the redactions. Yet the court accepted the government’s redactions without question. It effectively found that the Justice Department hit the Goldilocks spot on the first try in getting the redactions just right to maximize disclosures.

This is where those black lines actually may tell us something. While there were key points disclosed, the redactions of the timeline of events notably ended exactly where the leaked information ended. Many of us had stated that the critical period of interest was between June 8 and after the raid on August 8. The June date involved a demand for greater security on the storage room at Mar-a-Lago, with which the Trump team complied. The redacted affidavit only added one day of new information in noting that on June 9, Trump’s counsel acknowledged the receipt of their letter. Then the black-out followed. That information could explain why a raid was needed, as opposed to a second subpoena or a more tailored warrant.

There is every reason to believe that what followed contained some facts that could be released on the FBI’s communications with the Trump team or the breakdown of such communications. After all, the Trump team already knows about that. Yet the government is saying that everything which occurred in that critical month cannot be disclosed in even the smallest detail.

The court could have pushed for additional disclosures but chose to call it a day, based on government representations that more would cause harm. Yet, this is the same department which maintained that all of the pages released this week could not be released without causing harm.

There is still more that can be done by the court. One option is the special master requested, belatedly, by Trump’s team. I previously argued that Attorney General Merrick Garland should have proposed such an appointment to assure the public that this was not a pretextual search using sensitive documents as an excuse for a massive seizure. The scope of the warrant was ridiculously broad, allowing the seizure of virtually every document in the storage room and every document generated during Trump’s presidency. A special master could have sorted through this mass of material and separated privileged or immaterial documents. That would add to the legitimacy of an otherwise unlimited search.

That also did not happen. However, a special master could still serve the same interests of transparency and legitimacy. By dividing these documents into classified material, unclassified but defense-related information, and unclassified material, we would have a better understanding of scope and seriousness of any alleged crimes.

That is why the most curious thing about the redacted affidavit is what did not happen. In Sir Arthur Conan Doyle’s “Silver Blaze,” a police inspector asks Sherlock Holmes if anything about a crime scene bothered him. The brilliant detective responds, “To the curious incident of the dog in the nighttime.” When the confused inspector objects that “the dog did nothing in the night-time,” Holmes replies: “That was the curious incident.”

With even Zoltan Pozsar warning that Europe faces an apocalypse of sorts now that the Eurussia divorce is complete and energy prices in Europe are hitting fresh daily record highs every single day – just today, German 1Year  forward baseload electricity rose above €1000, or 10x where they were a year ago, before easing after European nat gas prices plunged the most since March after Germany said its gas stores are filling up faster than planned ahead of winter…

… moments ago the European Union appears to have finally realized that it faces an armed revolt this winter, or worse, when millions face freezing cold without power and heat (see “This Is Beyond Imagination”: Polish Homeowners Line Up For Days To Buy Coal Ahead Of Winter“), and announced that it was planning “urgent steps” to push down soaring power prices, Commission President Ursula von der Leyen said on Monday.

“The skyrocketing electricity prices are now exposing, for different reasons, the limitations of our current electricity market design,” von der Leyen said in a speech at the Bled Strategic Summit in Slovenia, pointing out what has been obvious for years to those who warned repeatedly that Europe should probably not take make its energy policy based on the idiotic ravings of a self-absorbed, petulant, Scandinavian teenager. “It was developed under completely different circumstances and completely different purposes.”

Ah yes, it’s the “circumstances and purposes” that are at fault, not Europe’s catastrophic “green” push over the past decade that left the continent at the mercy of Putin, very much as one Donald J Trump warned would happen… and speaking of Putin, maybe Europe can impose a few more self-destructive sanctions on Russian energy exports. But we digress…

Ursula then added “that’s why we are now working on an emergency intervention and a structural reform of the electricity market”, one which would look roughly like this.

The unprecedented spike in power prices, which have soared almost 10-fold in the past year, has fueled inflation, increased the economic burden on businesses and households recovering from the pandemic, and forced the ECB to aggressively hike rate in hopes of crushing demand into what is now a definite recession if not a depression. One could say that Putin couldn’t have planned his revenge on Europe better.

According to Bloomberg, more and more member states are calling for a price cap and the Czech Republic, which holds the rotating presidency of the EU, plans to convene an extraordinary meeting of energy ministers on Sept. 9.

In other words, while the ECB plans to crush demand with tighter monetary conditions, European governments will ease demand and inject fiscal stimulus to avoid an angry mob descending on various local parliaments.

Of course, being a harebrained European “plan” which doesn’t make any sense – just like anything else out of Europe  – the exact details of an EU intervention plan are still being developed, and EU diplomats said the EU’s executive arm could offer a detailed plan as soon as this week. Don’t hold your breath: after all, absent a massive ECB-funded stimulus – the proceeds of which will immediately go to Putin – unless Europe has somehow found brand new deposits of nat gas which are immediately accessible and don’t require tens of billions and years of development to be extracted, what Europe is doing is just the latest jawboning.

With Russia squeezing gas deliveries, power-plant outages further sapping supply, while droughts and lack of wind make a mockery of “green” energy sources, the pressure is growing on EU leaders to act quickly or risk social unrest and political upheaval. Czech Prime Minister Petr Fiala is seeking backing for his price-cap plan and plans to discuss possible limits with German Chancellor Olaf Scholz.

“High energy prices are a Europe-wide problem that we need to tackle at European level,” Fiala said on his Twitter account. “Ahead of the EU Energy Council we want to find a way to help people and businesses that we can agree on with other European leaders.”

Czech officials are proposing to cap prices of natural gas used for power generation, Industry and Trade Minister Jozef Sikela said on Monday.

“We may open the question of emission allowances, as some other member states have done in past, that also present a major part of the total price,” Sikela said. “We may open the question of the overall market regulation, total decoupling of the prices,” adding that the bloc cannot meddle too much with the market or fuel speculation.

Amusingly, EU member states have already earmarked about 280 billion euros (or roughly the same in USD now that we are at parity) in measures such as tax cuts and subsidies to ease the pain of surging energy prices for businesses and consumers, but the aid risks being dwarfed by the scale of the crisis. In other words, the ECB will be hiking rates even as it has to inject even more liquidity into the market to enable the latest helicopter money stimulus. Governments have also started to limit energy use, banning outside lighting for buildings in Germany and lowering indoor heating temperatures, to meet the EU voluntary target of cutting gas demand by 15%.

On Saturday, Belgian Prime Minister Alexander De Croo warned that the EU can’t continue resolving the problem of sky-rocketing energy costs by cutting taxes and called for a price cap instead. Should the bloc fail to reach an agreement, Belgium will consider national measures, he told VTM television.

France last week reacted skeptically to the idea of setting limits on power prices, saying its situation is different from other European countries thanks to government measures offering protection against inflation.

In kneejerk response, some European commodity prices dipped from all time highs, while US nat gas dipped to session lows amid expectations Europe’s “energy emergency” could mean fewer Us LNG exports. We doubt that, and in fact expect that Europe will double down begging for every last drop of US, Canadian, Qatari LNG it can find.

Authored by Tom Ozimek via The Epoch Times,

Tech entrepreneur Elon Musk told reporters in Norway on Aug. 29 that, while sustainable energy sources should be developed, the world must continue to extract oil and gas in order to sustain civilization.

Musk made the remarks to reporters ahead of the Offshore Northern Shore (ONS) conference in Stavanger, Norway, where Musk is scheduled to speak.

After Musk arrived at the conference venue, he told reporters he had come “in appreciation for the support of the Norwegian people for electric vehicles” and thanked them for their “tremendous support.”

The Tesla chief added that, at the conference, he was planning to provide “ideas for a transition to a sustainable energy world,” including the possibility of expanding wind power generation in the North Sea, the body of water between the UK and Norway.

“Places where it’s very windy, there might be potential for tremendous amount of wind power and when combined with stationary battery packs; this could be a very strong sustainable energy source in the winter,” Musk said.

‘We Need Oil and Gas’

Asked if he believes oil and gas should continue to be used, Musk replied in the affirmative.

“Realistically, we do need to use oil and gas in the short term because otherwise civilization will crumble,” he said.

“In order for civilization to continue to function, we do need oil and gas,” he continued, adding that “any reasonable person would conclude that.”

Not only should oil and gas should continue to be used to keep civilization running, Musk said that further exploration “is warranted at this time.”

Use of fossil fuels should continue at the same time as ongoing efforts around “accelerating the advance of sustainable energy,” he added.

Musk’s remarks about the continued need for fossil fuels in order to sustain civilization come as the oil and gas industry looks to the future with caution.

‘Starved for Capital’

American oil and gas producers face a shrinking supply of capital, a hostile regulatory environment, and shortages of materials and labor that altogether present significant hurdles against new drilling.

“Our industry is being starved for capital,” Anthony Gallegos, CEO of Independence Contract Drilling, told The Epoch Times in an earlier interview, noting that banks are increasingly unwilling to provide revolving lines of credit or asset-based lending facilities (ABLFs) to the oil and gas industry.

“There’s probably a third as many banks today that are willing to provide revolvers and ABLFs to [oil and gas] service companies compared to what there would have been six years ago,” he added.

Banks and investors have been cutting back financing for new fossil fuel projects, driven by both economic and political factors.

In line with the environmental, social, and governance (ESG) principles movement, over 100 banks that altogether represent 38 percent of global banking assets have signed the Commitment Statement of the U.N. Net-Zero Banking Alliance. In it, they pledge to transition their lending portfolios to reduce greenhouse-gas emissions and reach net-zero emissions by 2050 or sooner. A number of U.S. banks have signed on to the initiative.

…

Read more here…

Authored by Daniel Lacalle,

The hawkish tone of the Fed’s chairman Jerome Powell on Friday 26th was unequivocal. His most important sentence, in my view, was the following: “With inflation running far above 2% and the labour market extremely tight, estimates of longer-run neutral are not a place to stop or pause.”

What does this mean? The Fed will do what it takes to cut inflation if the labor market remains strong. These strong messages sent ripple effects to markets. Stocks and risky assets fell in unison and the US dollar relative strength created another widespread depreciation of weaker currencies.

The Fed knows that inflation is fundamentally a monetary phenomenon and that they must correct the mistake made in 2020 by increasing dramatically money supply and sending rates to even lower territory.

Inflation is the destruction of the purchasing power of a currency. One or two prices may rise due to an exogenous factor, but all prices cannot go up at the same time if the amount of money in the economy is unchanged. Other prices would fall with the same amount of currency.

However, the Federal reserve may be too complacent about the strength of the economy and dangerously optimistic about liquidity in markets.

It is impossible to create a monetary tsunami slashing rates and pumping trillions of newly printed dollars into the economy and expect it to correct with a small splash of water in the face. It is worse, it is impossible to create a soft landing with an overheated engine. The monetary excess of 2020-2021 was not just the Fed’s creation, but every single developed economy large central bank.

Therefore, it is even worse.

Powell needs to believe that multiple monetary tsunamis engineered at the same time are going to be controlled with no damage to a bloated and indebted economy.

The first challenge Powell faces is that rate hikes are not even enough to address inflation. Rate hikes reduce the growth in new money creation but does nothing to avoid all the excessive currency issuance coming from fiscal policy. While Powell may reign on the rate of inflation, the U.S. and European administrations are still consuming trillions of newly created currencies via deficit spending.

The latest anti-inflation plan precisely shows this. An anti-inflation program that will be financed with debt and newly created currency. Fascinating. It is even more fascinating to read that the recently announced student loan forgiveness program will be “fully financed” by deficit reduction. How can something be “fully funded” by a “deficit reduction” that easily means a half a trillion US dollar deficit anyway? Are we insane?

Powell and the Fed officials should be concerned by a tightening of monetary policy that will perpetuate bloated government spending and the productive sector, families, and businesses, will be the only ones suffering the normalization.

Powell’s second challenge is liquidity. While money supply globally remains stable, the depreciation of key currencies against the US dollars is creating two negative flows: Faster destruction of purchasing power of currencies and outflows of capital from global economies and into the US dollar.

Within this second challenge comes another problem. Central banks that cannot be hawkish enough and even when they are the vacuum effect of the U.S. dollar continues. This is caused by years of excessive and careless money creation.

In the eurozone, for example, money supply (M2) growth remains much higher than in the “Draghi bazooka” years yet liquidity is vanishing rapidly in the riskier asset classes, high yield, and non-secured loans.

Liquidity limits to bank lending are already evident in an economy that still needs two trillion US dollars in reverse repo programs. Reuters warned that “the trillions of dollars in overnight cash tucked away daily at the Federal Reserve could turn into a major headache for banks that could squeeze their balance sheets and impair their ability to lend.”

The Fed should be aware that massive reverse repo programs are not a sign of an adequate function of markets, but a warning sign of lack of confidence that can create a credit crunch in what continues to be a sea of liquidity.

Can you imagine? Vanishing liquidity for the credit system due to previous excess liquidity created by years of money printing.

Powell and the Fed may also be too complacent about the global and U.S. economy. The manufacturing PMI (purchasing manager’s index), both in the United States and in the European Union, show weakness. Furthermore, the global manufacturing PMI has been falling since March, and close to contraction. The United States is at 51.3 points, being 50 the level of contraction, and the Euro Area at 49.7, already in contraction.

The OECD leading indicator of economic activity has also been in contraction for three months in the European Union and the United States.  In the United States the University of Michigan consumer confidence has only bounced from a very low level.

If we look at all leading indicators for the U.S. economy, they show weakness and elevated inflation.

Powell cannot perform miracles.

There is no way in which rate hikes alone will solve the inflation problem if governments continue to spend new currency as I nothing has changed.

The current path of normalization means that the burden of tightening will be fully paid by families and small businesses while government size continues to expand in the economy, and that means less growth, more taxes and probably more persistent inflation for longer.

Market sentiment has only deteriorated after Friday’s sharp post-Powell/ECB dump, and investors started the week with the bear market rally in tatters after the world’s biggest central banks huddled around a simple message in Jackson Hole this weekend: they are ready to fight runaway inflation with higher interest rates, even if it does some damage (in other words they want to crush demand, even as Biden’s debt relief plan and Inflation Reduction Plan hopes to stimulate demand). Powell quashed the idea of an early dovish Fed pivot (ensuring a much more forceful one later once all EMs fully blow up on the back of the soaring USD) and also said on Friday that the road ahead will “bring some pain to households and businesses” in the US, an “unfortunate cost of bringing down inflation” while ECB’s Isabel Schnabel said she and her colleagues had “little choice” but to continue tightening even if Europe’s economy tips into recession, which is becoming increasingly likely. As expected, Senator Liz Warren said she was worried the central bank will tilt the US economy into a recession, but for now Biden still thinks that soaring inflation polls worse than recession and/or global depression.

In any case, Powell’s signal of higher-for-longer interest rates rocked market on Friday and then followed through in Asia and Europe on Monday, sinking stocks and equity futures. S&P 500 futures slipped 1% as of 715 a.m. New York time, while Nasdaq futures tumbled 1.3%, as swaps traders boosted their expectation for where the Fed rate will be a year from now to 3.82%, from 3.68% a week ago.

Some more dismal data: the S&P 500 just posted its worst week since July and virtually all members tumbled Friday. Major indexes dipped below their 100-day price averages, which could indicate the potential for more losses. And the one-month percentage price change for all major indexes is negative. As Bloomberg puts it, the message is clear: interest rates will stay higher for some time, reducing the possibility of a soft landing.

Amid the rate back-up, 2Y Treasury yields rose to the highest since 2007, stopping just shy of 3.50%…

… as Bonds in Europe also tumbled with Germany’s 10-year yield rising above 1.5% after a string of European Central Bank officials also stressed over the weekend the need to act more forcefully to quash record inflation, effectively assuring that Europe will be pushed into recession or worse. The Bloomberg Dollar Spot Index pushed toward the record hit last month as investors sought a haven from spiking volatility. Commodity-linked currencies as well as the yen, the pound and the offshore yuan were under pressure. Bitcoin broke below the $20,000 level some view as a marker of a deeper slide in investor sentiment. Gold retreated, but oil made gains on supply risks.

In premarket trading, markets are honing in on the possibility of an economic slowdown: cyclical companies such as Freeport McMoran, Dow, Nucor and Ford are among the bigger decliners while shares of major US technology and internet stocks such as Tesla and Amazon.com also sharply lower with the group on track to extend a sharp selloff from Friday. Apple and Amazon each fall 1.3%, Nvidia 1.2%, Meta Platforms -1.1%, Microsoft -1%, Alphabet -1%.

• Cryptocurrency-exposed stocks may be active on Monday after Bitcoin extended its drop below $20,000 as part of a wider market retreat, amid concern about the Federal Reserve’s rate- hike path. Keep an eye on Marathon Digital (MARA US), MicroStrategy (MSTR US), Coinbase (COIN US), Bit Digital (BTBT US), Ebang (EBON US), Riot Blockchain (RIOT US), and Silvergate Capital (SI US)
• VBI Vaccines (VBIV US) is down 9.7% in US premarket trading after entering into a sales agreement for possible offering of up to $125 million in shares from time to time via Jefferies on Friday.
• Watch Walmart (WMT US) stock as the retailer proposed to buy all of the shares in its South African unit Massmart it doesn’t already own for 62 rand apiece, a 53% premium to the last closing price.
• Minerva Neurosciences (NERV US) shares rise 2.6% in US premarket trading after gaining more than 150% last week as it applied to the FDA for approval of its schizophrenia drug candidate and Point72 Asset Management disclosed an 8.8% passive stake in the stock.

“We maintain our view that the Fed will raise rates by another 100 basis points by year-end, with risks for more if inflation does not slow in line with our forecasts,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “With rates likely to stay higher for longer, our base case is for further volatility, earnings downgrades, and higher-than-expected default rates over the course of the next year.”

European equities also tumbled on Monday, adding to last week’s selloff amid concerns about the economic impact from further central bank tightening, which officials embraced in Jackson Hole. The Stoxx Europe 600 slid 1.2% with technology stocks underperforming as bond yields rose. Utilities also fell after comments from French Prime Minister Elisabeth Borne over the weekend heightened unease that a windfall tax could be imposed on “super profits.” UK markets were shut for a holiday. The benchmark has slumped to the lowest since July 21, breaking below its 50-day moving average, as worries about a downturn intensified after central bank officials said they are ready to follow through with higher interest rates, even if it does some damage. The region already faces a flurry of other headwinds, such as the prospects of gas rationing and political turmoil in Italy and the UK.  Here are some of the biggest European movers today:

• Utilities are among the worst performing sub-sectors in Europe after comments from French Prime Minister Elisabeth Borne over the weekend heightened windfall tax concerns on “super profits”
• Technology stocks underperform all other sectors in the Stoxx 600 after central bank officials signaled they’re ready to follow through with higher interest rates, and as bond yields rose
• Bavarian Nordic falls as much as 15% after White House monkeypox coordinator Robert Fenton said after market close on Friday that the US has nearly all the monkeypox vaccines it needs
• Cryptocurrency-exposed stocks suffer on Monday after Bitcoin extended its drop below $20,000 as part of a wider market retreat, amid concern about the Federal Reserve’s rate- hike path
• BW LPG shares fall as much as 13.2% after the Norwegian LPG published 2Q results. Analysts note a soft report with a miss on adjusted Ebitda, and some exposure to prices on the 3Q spot market
• SAS shares slide as much as 17% after DNB cut its PT for the ailing Scandinavian airliner to SEK0.05 from SEK0.10, seeing “significant dilution” on the back of its Chapter 11 proceedings

Tech firms led losses for Asian equities, while progress in the US-China delisting spat helped to cushion Chinese stocks. Emerging-market stocks dropped and a gauge of major developing-nation currencies slumped by the most in more than two months.

In FX, the Bloomberg Dollar Spot Index rose to six-week high as the greenback advanced versus all of its Group-of-10 peers, and pushed toward the record hit last month as investors sought a haven from spiking volatility. The euro fell a second day but remained in its recent $0.99-1.00 range. The euro is trading close to its cycle lows, yet options show that bearish sentiment for the common currency is becoming steadily lower. The yen tumbled as much as 1% back toward the 140 per dollar level as the impact of hawkish Federal Reserve comments at Jackson Hole weighed on Japan’s currency. Signs from the option market suggested a renewed bias toward yen weakness on the part of asset managers, who boosted their net-short position by the most on record in the week to Aug. 23. Australia’s dollar fell for a second day as momentum accounts price in a more hawkish Fed after Jerome Powell’s speech at Jackson Hole. Sovereign bonds declined. Australian retailers powered further ahead in July, suggesting cashed-up households are coping well with rapid interest-rate increases. The yuan weakened to fresh two-year lows after Powell signaled higher-for-longer interest rates, prompting China’s central bank to set a stronger-than-expected fixing to cap the currency’s drop.  South Korea’s won led declines, falling 1.4%, while the Thai baht slipped 1%. “The market has not been hawkish enough on the Fed’s path,” says Stephen Chiu, chief Asia FX & rates strategist at Bloomberg Intelligence in Hong Kong. “Last week’s deluge of Fed speakers including Powell basically told the market to retune their view. But we believe still not enough hawkishness is priced in. So the dollar may continue to rise versus Asian currencies.” Bank of Korea Governor Rhee Chang-yong said he would join the Fed in focusing on inflation if prices remain out of control, keeping the door open for another outsized rate hike

In rates, Treasuries remained under pressure but are off the cheapest levels of the session; the US 2-Year yield, sensitive to expectations around Fed policy, hit 3.47% in Asian trading, the highest since the global financial crisis. The 10-year yield climbed to about 3.10%. UK markets are closed for bank holiday. US yields higher by 4bp-8bp, 10-year by ~6bp at 3.10%, with most euro-zone 10-year yields higher on the day by at least 9bp. 2-year rose as much as 8.4bp to 3.48%, highest since 2007, exceeding its June 14 high by about 3bp. In early US trading, swaps referencing Fed meeting dates once again give higher than 50% odds to another 75bp rate hike at September meeting. European bonds lead the selloff following hawkish rhetoric from ECB officials over the weekend. while paring odds of rate cuts in 2023. IG credit issuance remains moribund, with lull expected to last through US Labor Day holiday Sept. 6.

Bitcoin tumbled below $20,000 amid broader tightening fears; in addition, Reuters reported that the Monetary Authority of Singapore is considering further measures to reduce the harm to consumers from cryptocurrency trading and MAS will issue public consultation on new measures by October.

In commodities, gold retreated, but oil made gains on supply risks.  WTI and Brent contracts have been choppy on the first trading day of the week; gains are capped by risk aversion. Spot gold remains pressured under its 21 DMA (1,766/oz), 50 DMA (1,763/oz) and 10 DMA (1,749/oz). Copper declined in APAC hours, whilst the LME is closed today due to the UK bank holiday. Meanwhile, European natural gas prices plunged the most since March after Germany said its gas stores are filling up faster than planned ahead of winter.

It’s a quiet start to the week, with just the Dallas Fed report due at 10:30am.

Market Snapshot

• S&P 500 futures down 0.8% to 4,025.25
• STOXX Europe 600 down 1.0% to 421.91
• MXAP down 2.2% to 157.01
• MXAPJ down 1.9% to 515.30
• Nikkei down 2.7% to 27,878.96
• Topix down 1.8% to 1,944.10
• Hang Seng Index down 0.7% to 20,023.22
• Shanghai Composite up 0.1% to 3,240.73
• Sensex down 1.2% to 58,132.18
• Australia S&P/ASX 200 down 2.0% to 6,965.49
• Kospi down 2.2% to 2,426.89
• German 10Y yield lup 13 bps to 1.52%
• Euro down 0.4% to $0.9924
• Brent futures up 0.2% to $101.24/bbl
• Gold spot down 0.9% to $1,721.81
• US Dollar Index up 0.53% to 109.38

Top Overnight News from Bloomberg

• Top officials from the world’s biggest central banks coalesced around a simple message in Jackson Hole this weekend: They are ready to follow through with higher interest rates, even if it does some damage
• Federal Reserve Chair Jerome Powell’s stern message at Jackson Hole has made it clear for Bank of Japan Governor Haruhiko Kuroda that the weaker yen, a major source of concern for Japan’s economy, won’t be going away anytime soon
• The ECB is prepared to at least repeat the half-point increase in interest rates it delivered last month, with an even bigger move not to be excluded as inflation nears yet another record. That’s the message from ECB officials who joined the Federal Reserve’s annual Jackson Hole symposium, which wrapped up Saturday
• The rally that’s bolstered risk assets over the past month was just a blip in a bear market that’s likely to worsen from here. That’s the view of investors who seem to be finally getting the message that a resolutely hawkish Federal Reserve and central bank peers are planning to raise interest-rates at all costs to combat the hottest inflation in a generation
• German Power for next year, the European benchmark, broke through 1,000 euros ($993) for the first time as the region’s energy crisis intensifies
• Poland’s central bank may end or at least pause its series of interest-rate increases as early as the next week’s policy meeting, Governor Adam Glapinski said, adding that a turning point is near
• The Swedish Debt Office has decided to wind up a strategic position in the Swedish krona against the euro as “major changes” have occurred in the global economy, which has altered the conditions for the position in terms of cost and risk
• Swedish housing prices will continue falling until the middle of next year as the share of household income that goes toward mortgage interest payments is set to double, economists at the Nordic region’s largest bank said in a new forecast
• China is enforcing lockdown restrictions in areas around Beijing more intensively, and will mass test the nearby port city of Tianjin, stepping up its quest to wipe out Covid-19 ahead of a key meeting of the Communist Party’s top leaders

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks took their cue from Friday’s sell-off on Wall St amid higher yields and following hawkish central bank rhetoric from Jackson Hole including from Fed Chair Powell. ASX 200 was pressured as underperformance in tech led the declines across all sectors and with better-than-expected Retail Sales doing little to brighten the mood. Nikkei 225 gapped beneath the 28K level and shed around 800 points despite a weaker currency and reports of a potential further easing of COVID restrictions. Hang Seng and Shanghai Comp declined at the open although losses in the mainland were stemmed after Sichuan resumed power to most industries and participants digested a deluge of earnings releases, while the US and China reached a preliminary agreement on audit inspections. Agricultural Bank of China (1288 HK) – H1 2022 (CNY): net profit 128.95bln vs. prev. Y/Y 122.3bln. Will support local government efforts to complete construction of properties.

Top Asian News

• Chinese authorities informed the US Department of Agriculture that Chinese customs will suspend meat imports transported by Tyson Fresh Meat (TSN) from Monday after its pig trotters failed inspection, according to Global Times.
• Huaqiangbei, China has been ordered to shut between Monday and Thursday to contain a new COVID outbreak, via SCMP.
• Moody’s affirms China at A1, maintains Stable outlook. Driven by assessment that core strengths of the credit profile are likely to remain in the medium-term.

European bourses are under pressure amid the weekend’s central bank hawkishness, Euro Stoxx 50 -1.5%; note, FTSE 100 away for a Bank Holiday. US futures are similarly subdued, ES -1.0%, in tandem with Europe as specific updates are somewhat limited ahead of a packed week of data. Qualcomm (QCOM) – USD 991mln fine against the Co. which was rejected by an EU court will not be appealed by EU antitrust regulator, according to Reuters sources

Top European News

• UK Tory leadership frontrunner Truss is reportedly mulling cutting the 20% VAT by 5% across the board to help ease the cost-of-living pressures under a nuclear option, while other options include a more modest 2.5% reduction, according to a source cited by The Telegraph. Furthermore, Truss is under renewed pressure to outline the cost-of-living support with Tory MPs voicing increasing concerns regarding the impact of higher energy prices on households and small businesses, according to FT.
• A senior economist warned that UK Foreign Secretary and Tory leadership front runner Truss’s plan to cut tens of billions of pounds in VAT would crash public finances, according to The Times citing the Institute of Fiscal Studies Director.
• UK corner shops are calling for government support to offset energy costs and have warned that thousands risk going out of business if the government doesn’t provide support, according to FT.
• Goldman Sachs sees the UK economy entering a recession in Q4 and said the recession will be mild, while it lowered its 2022 GDP forecast to 3.5% from 3.7% and the 2023 GDP forecast to 0.6% from 1.1%.
• S&P affirmed Austria at AA+; Outlook revised to Stable from Positive.

Central Banks

• ECB’s Schnabel said both the likelihood and the cost of current high inflation becoming entrenched in expectations are uncomfortably high and said that central banks need to act forcefully in this environment, according to Reuters.
• ECB’s Villeroy said a significant rate increase is needed in September and that they should get rates to neutral by year-end with neutral somewhere between 1.00%-2.00%, according to Reuters.
• ECB’s Kazaks said the ECB should discuss 50bps and 75bps hikes in September and that a 50bps rate increase is the least the bank should do, while he added that Euro zone recession risk is substantial and a technical recession is likely, according to Reuters.
• ECB’s Rehn said its action time for the ECB with a weak Euro a key point and that a ‘significant’ hike in interest rates is needed in September, while he added it is too early to publicly discuss quantitative tightening, according to Bloomberg.
• SNB’s Jordan said there is no need to adjust the definition of price stability or broaden SNB’s mandate, while he added they are prepared to act decisively if price stability is at threat and that unconventional monetary policy instruments are likely to continue to have an important part to play in Switzerland, according to Reuters.
• BoJ Governor Kuroda reiterated the view regarding transitory inflation in Japan in which he stated they have 2.4% inflation but is almost wholly caused by rising international commodity and food prices, while they expect inflation to approach 2% or 3% by year-end but decelerate again to 1.5% next year.
• BoK Governor Rhee said it is premature to say inflation has peaked and that rates will increase until it is clear that inflation is falling. Rhee also commented they will intervene in FX markets if speculative forces are seen and that the KRW’s movement is in line with EUR and other major currencies, while he noted that a weakening KRW from the rally in USD is a bad factor for inflation and that BoK policy tightening is unlikely to end before the Fed, according to Reuters.

FX

• DXY printed a fresh YTD peak just shy of 109.50 overnight as APAC players reacted to the Jackson Hole Symposium, but the index then pulled back below 109.
• G10s are pressured to varying degrees but EUR/USD has been trimming losses though remains under parity as the DXY wanes.
• JPY is the clear laggard as the widening FOMC-BoJ pricing lifted USD/JPY to test 139.00 to the upside, ahead of the YTD peak at 139.39.
• The Yuan was in focus in APAC hours as USD/CNH topped 6.9000 before finding resistance around 6.9300.

Fixed Income

• EGBs slump following weekend Central Bank updates from ECB officials which follow on from and continue the tone of Friday’s hawkish sources
• At worst, Bunds lower by over 200 ticks while USTs have stabilised somewhat near lows of 116.26+ with yield curves elevated but somewhat mixed directionally.

Commodities

• WTI and Brent contracts have been choppy on the first trading day of the week; gains are capped by risk aversion.
• Spot gold remains pressured under its 21 DMA (1,766/oz), 50 DMA (1,763/oz) and 10 DMA (1,749/oz).
• Copper declined in APAC hours, whilst the LME is closed today due to the UK bank holiday.
• Austrian Chancellor Nehammer called for an EU-wide cap on power prices and said they must decouple the price of electricity from the gas price and bring it closer to actual production costs, while he added that they must finally stop the madness that is occurring in energy markets and cannot let Russian President Putin determine the European power price, according to Reuters.
• US temporarily waived truck driver hours of service rules to transport fuel to Illinois, Indiana, Michigan and Wisconsin following the unanticipated shutdown of BP’s Whiting refinery, according to Reuters.
• Ukraine PM Shmyhal said Ukraine will permit merchant sailors to leave Ukraine if they receive approval from their local military administrative body, according to Reuters.
• UN Coordinator for the Black Sea Grain Initiative said Ukrainian silos are still stocked with millions of tonnes from previous harvests and that much more grains need to shift to provide room for the new harvest, according to Reuters.

US Event Calendar

• 10:30: Aug. Dallas Fed Manf. Activity, est. -12.7, prior -22.6
• 14:15: Fed’s Brainard speaks at a FedNow workshop

Authored by Chris Macintosh via InternationalMan.com,

Are you hungry? Good, according to the central planners.

The folks over at the UN stopped destroying the world for a brief few minutes to publish a piece (snapshot below) justifying their behavior and explaining the “benefits” of the famine they’ve engineered.

Not making this up.

The article remained on the UN website for a day or so before being deleted after it went viral on social media, with people horrified at the truly unbelievable evil. The good thing about this is that as they continue with their predictive programming and NLP (seriously, look into both and it promises to blow your mind), more and more people wake from their trance. Once woken, they realize the incredible danger they are all in. And that is a good thing because you can’t fight an enemy until you understand one exists.

The “great reset” requires a populace beholden to the government and nobody else. As the central planners pursue their agenda of getting there, this is bound to be fraught with an awakening and a lot of angst.

The Great Awakening of the Average Joe

While Joe Sixpack doesn’t understand most of these, he doesn’t actually need to.

What Joe does care about is when he can’t afford groceries and when his electricity bill now suddenly wipes out his entire annual disposable income.

And that is enough to provide both pushback and an increasing ability to awaken to the horrors of what comes for him if this communist agenda masquerading as a plan to “save us from climate change” is NOT stopped in its tracks.

And with this realization will come politicians — many who themselves are parasites but doing what comes naturally to them: sensing a shift in the winds and rushing to get in front of it, champion it, and gain support.

Here, take a look. According to France24, Giuseppe Conte, the head of Five Star, said:

I have a strong fear that September will be a time when many families will face the terrible choice of paying their electricity bills or buying food. We are absolutely willing to dialogue, to make our constructive contribution to the government, to Draghi, (but) we are not willing to write a blank cheque.

He’s not wrong, of course, but this is a thug who was a massive contributor to the problems our proverbial “Joe” now faces.

Take a look at this.

And as we’ve been continuously saying: energy underpins EVERYTHING. Which is why Eurozone CPI looks like it just mainlined viagra.

And this is saying something because as you know the way they measure CPI is, of course, complete hogwash and roughly half the real rate. Check out John Williams’ Shadowstats, where inflation in the US is calculated based on the methodology used back in the 80’s (pre-fraud). It just hit 17.3%. That’s a tad more than the 9.1% print they just tried to trick you with.

The other thing “Joe” cares about is when the government — under the guise of “saving the planet” — begins the process of stealing up to 50% of the farms in the Netherlands.

Reducing Nitrogen Emissions

Under a ridiculous narrative of “reducing nitrogen omissions” the Dutch government are proceeding with a blatant land grab of 30% of the Farmland. It is worth pointing out that air is 78% nitrogen. These morons have literally decided that air is dangerous.

Anyway, the farmers are having none of it and have blockaded roads, airports, and distribution centers. The fishermen have joined in and blocked the ports.

Domestically the Dutch farmers have massive support. Gratefully, people seem to intuitively understand that without them there will be no food. The propaganda is no longer having the desired effect on the populace. What a shame!

Every day a few more people wake to reality, and once you wake, you can’t unsee what you’ve seen. The existing political parties’ credibility is severely damaged. I’ve thought for some years now that if there is to be a shift, it will likely come from third parties. This is true across the Western world, and not uniquely a Dutch thing.

The Farmer–Citizen Movement in the Netherlands is now gaining momentum and size faster than any other.

Over in France, the Marxist agenda gathers momentum.

France plans full nationalization of power utility EDF

France will fully nationalise EDF (EDF.PA), Prime Minister Elisabeth Borne said on Wednesday, in a move that would give the government more control over a restructuring of the debt-laden group while contending with a European energy crisis.

It is at this point that we should review a little history.

The last head of a European government to be killed and eaten by a mob was Dutch Johan de Witt in 1672, who was mutilated, hung, and had his liver roasted and digested by Orangists in the Hague.

Davos man deserves at least as much.

In the meantime, Europeans are going to be cold and hungry. Winter is just a few short months away now which brings us to investment implications. The stampede will begin in earnest for food and all those banned products like fertilizer.

*  *  *

Disturbing economic, political, and social trends are already in motion and now accelerating at breathtaking speed. Most troubling of all, they cannot be stopped. The risks that lie ahead are too big and dangerous to ignore. That’s why contrarian money manager Chris Macintosh just released the most critical report on these trends, What Happens Next. This free special report explains precisely what’s coming down the pike and what it means for your wealth and well-being. Click here to access it now.