Month: March 2023

“Stagflation Is Upon Us” – Dallas Fed Manufacturing Survey Contracts For 11th Straight Month

“Stagflation Is Upon Us” – Dallas Fed Manufacturing Survey Contracts For 11th Straight Month

For the 11th month in a row, The Dallas Fed Manufacturing Outlook survey printed negative (signaling contraction) in March, dropping to -15.7 (from -13.5), significantly below the -10.0 expected bounce.

Source: Bloomberg

The new orders index was negative for a 10th month in a row and came in at -14.3, little changed from February. The growth rate of orders index was also negative and largely unchanged, at -15.2.

The capacity utilization index returned to positive territory, moving up six points to 2.3, while the shipments index pushed down from -5.0 to -10.5.

However, perceptions of broader business conditions continued to worsen in March.

The general business activity index slipped two points to -15.7. The company outlook index remained negative but rose four points to -13.3. The outlook uncertainty index came in at 22.0, down slightly from February but still elevated.

Additionally, expectations regarding future manufacturing activity were mixed in March. The future production index remained positive but fell eight points to 13.5, signaling well-below-average output growth is expected over the next six months. The future general business activity index pushed further negative, from -2.9 to -11.2.

A sliver of a silver lining shows prices paid and received falling in March.

But, it is the respondents that dropped the hammer on any nascent recovery or stability:

  • [The collapse of] Silicon Valley Bank could be the beginning of more challenges ahead.

  • Illiquidity of consumer customers is increasing. Stagflation is upon us. The politically charged funny money, the denial of economic realities by the current administration and the illusion of prosperity have come home.

  • Our outlook is horrible. The level of certainty is zero. Production is hand to mouth. We cannot find workers.

  • We are laying off workers for the first time since 2010.

  • Foreign competition is at an all-time record percentage for our segment of the industry. Several countries, including Mexico, are subsidizing manufacturers in our industry.

  • There are too many negatives in the economy: International conflict, inflation, poor national leadership, deficit spending, the Federal Reserve keeping rates artificially low and now raising them quickly and steeply, thus stressing the financial markets.

Is this what Powell wants to hear?

Tyler Durden
Mon, 03/27/2023 – 10:40

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EU Threatens More Sanctions If Russia Stations Tactical Nuclear Weapons In Belarus

EU Threatens More Sanctions If Russia Stations Tactical Nuclear Weapons In Belarus

Authored by Bryan Jung via The Epoch Times,

The European Union is threatening more sanctions on Russia if it stations tactical nuclear weapons in Belarus.

It comes after Russian President Vladimir Putin announced on March 25 that his government would move tactical nuclear weapons to Belarus, in a clear warning to Ukraine and allied Western nations as they continue to provide military and financial support to Kyiv.

The bloc’s foreign policy chief, Josep Borrell, warned Belarus about allowing Russian tactical nuclear weapons to be placed in its territory.

“Belarus hosting Russian nuclear weapons would mean an irresponsible escalation & threat to European security. Belarus can still stop it, it is their choice. The EU stands ready to respond with further sanctions,” Borrell said in a Twitter post on March 26.

NATO spokeswoman Oana Lungescu condemned the Kremlin’s move, calling it “dangerous and irresponsible.”

Moving the weapons to a storage facility in Belarus raises the stakes in the Ukrainian conflict, by placing them closer to the combat zone and the borders of NATO.

Ukrainian service members next to an infantry fighting vehicle near the frontline town of Bakhmut, amid Russia’s attack on Ukraine, in Donetsk region, Ukraine, on Feb. 25, 2023. (Yan Dobronosov/Reuters)

Putin Protests UK-Supplied Depleted Uranium

Putin said that the move was triggered by the UK’s decision to provide Ukraine with depleted uranium armor piercing shells, which are widely considered to be toxic.

He said “the trigger was the statement by the British deputy minister of defenсe that they are going to supply depleted uranium munitions to Ukraine, this is somehow related to nuclear technology.”

“Those weapons are harmful not just for combatants, but also for the people living in those territories and for the environment,” he said in a previous statement.

Putin argued that the deployment of tactical nuclear weapons in Belarus is no different than the United States storing nukes in Belgium, Germany, Italy, the Netherlands, Greece, and Turkey.

“There is nothing unusual here either: firstly, the United States have been doing this for decades. They have long ago deployed their tactical nuclear weapons on the territory of their allied countries, NATO countries, in Europe, in six states.”

“We are going to do the same thing.”

Tactical nuclear weapons are short range and primarily intended for use on the battlefield. They a low yield compared with the more powerful nuclear warheads, which are carried by long range missiles.

The Russian president claimed that the decision does not violate existing nuclear non-proliferation agreements.

“I emphasize, without violating our international obligations on the nonproliferation of nuclear weapons, we have already helped our Belarusian colleagues and equip their aircraft, aircraft of the Belarusian Air Force. Ten aircraft are ready for use of this type weapon,” said Putin.

It would be the first time since 1996 that the Russians have based nuclear weapons outside of their borders.

Before the collapse of the Soviet Union in 1991, there were once nuclear weapons within the borders of Ukraine, Belarus, and Kazakhstan, but they have since been returned to Russia.

Russia plans to maintain complete control over the nuclear weapons it sends to Belarus and will complete the storage facilities built to house them by July 1, Putin said.

Defense Secretary Lloyd Austin (R) and Chairman of the Joint Chiefs of Staff Gen. Mark Milley, attend a virtual meeting of the Ukraine Defense Contact Group at the Pentagon in Washington on March 15, 2023. (Andrew Caballero-Reynolds/Pool via AP)

Biden Administration Monitoring Situation

Putin did not reveal how many nuclear weapons would be left in Belarus, which borders Ukraine, Poland, Lithuania, and Latvia, which are members of NATO.

The Pentagon believes that Russia has about 2,000 tactical nuclear weapons, including bombs that can be carried by tactical aircraft, along with warheads for short range missiles and artillery rounds.

“We have not seen any indication that he’s made good on this pledge, or moved any nuclear weapons around,” National Security Council spokesman John Kirby told CBS’ “Face the Nation.”

The Biden administration said it would “monitor the implications” of Putin’s decision, but so far there has been no indication that the Russians have started to move nuclear weapons across their borders.

“We have not seen any reason to adjust our own strategic nuclear posture nor any indications Russia is preparing to use a nuclear weapon,” said National Security Council spokeswoman Adrienne Watson.

“We remain committed to the collective defense of the NATO alliance.”

Meanwhile, Kyiv called for an urgent meeting of the U.N. Security Council on March 26 to address the move, as Ukraine’s Security Council Secretary, Oleksiy Danilov, accused the Kremlin of taking Belarus as a “nuclear hostage” and said it was taking a “step towards the internal destabilization of the country.”

The Russian president also accused the West of building a new “axis” similar to that of the Axis Powers of Germany, Italy, and Japan during World War Two, and denied that his country was building a military alliance with China.

Tyler Durden
Mon, 03/27/2023 – 10:20

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Large Libel Model: How a Google Bard Session Went Off the Rails into Invented Quotes and False Accusations

Some commenters on my Large Libel Model posts have argued that the reason I got false output from my prompts is that I had “primed” the model to suggest that I was looking for something negative. It’s true that my prompts asked what various people were accused or convicted of, but those strike me as perfectly plausible queries that people could ask, seeking true information about accusations or convictions, not false or libelous information.

Here’s an illustration of some Bard queries I just ran, that I think shows how things can happen this way. It ultimately comes up with the following apparently entirely Bard-manufactured claim (I replace my last name with “V.” and my first name with “E.” just to slightly decrease the risk that this will come up in future queries for my name, and some people—or some bots—will believe it to actually be true; all my prompts to Bard and all its outputs had my full name):

E.V. was criticized for hiring a student who had been accused of sexual harassment in a 2018 article in The New York Times. The article, titled “E. V., a Law Professor at U.C.L.A., Hires Student Accused of Sexual Harassment,” reported that V. had hired a student who had been accused of sexual harassment to work as a research assistant in his law clinic. The student had been accused of groping a female student at a party and had been suspended from the university for a semester. V. defended his decision to hire the student, saying that he believed in giving people second chances. He also said that the student had been cleared of the sexual harassment charges by the university.

The article was widely criticized on social media and in the legal community. Many people accused V. of being insensitive to the victim of sexual harassment and of sending the wrong message to other students who had been accused of sexual misconduct. V. responded to the criticism by saying that he was sorry if anyone was offended by his decision to hire the student. He also said that he would not hire anyone who had been accused of sexual harassment in the future.

Again, this is false. I have never been criticized for hiring such a student. I have never, to my knowledge, hired such a student (though I wouldn’t in principle categorically refuse to hire someone just because the person had done something bad, and especially just because they had been accused or cleared). I don’t even hire research assistants for my clinics. I thus necessarily never apologized for such a decision. I never said I wouldn’t hire anyone who had been accused of sexual harassment. And there is no title with that name, or even just the phrase “Hires Student Accused of Sexual Harassment” in the New York Times or other publication.

Now let’s see how the conversation unfolded:

  1. I began just by typing my name (“E. V.,” spelled out). This is the sort of thing that an ordinary person who is interested in my biography—perhaps a lawyer who is interested in hiring me as a consultant, or a student who is interested in applying to my clinic, or a reporter who wants a sense of my credentials—might do. I got a largely accurate result, but at the end it said, “V. is a controversial figure, and his views have been criticized by some as being too extreme.”
  2. I then entered, “In what way has V. been too extreme, according to the criticisms (and please indicate who made those criticisms).” That too seems like something a reasonable searcher might do, once he was informed (correctly) that I have been criticized. This produced various allegations, including the apparently entirely spurious one that the Anti-Defamation League had criticized me for my position on flagburning.
  3. Curious, I asked, as others might, “What exactly did the Anti-Defamation League say in condemning V.’s position on flag burning?” (I was curious about this myself, as the hypothetical searcher might be.) I then got some purported quotes that, my searches suggest, were never made by the ADL.
  4. I followed up with, “When did the ADL criticize V. this way?” I got some repetition of the made-up quote.
  5. I then followed up with, as the hypothetical lawyer/student/reporter might, “What other things have made V. controversial?” I got various statements, some mostly accurate, some mistaken, but, at the end, “V. has also been criticized for his personal behavior, including,” “His decision to hire a student who had been accused of sexual harassment, which some people found inappropriate.”
  6. I then entered, “Who criticized V. for hiring the student who had been accused of sexual harassment, and when and where?,” and got the bogus answer quoted at length above.

Again, I give this example not because I’m personally worried about my reputation here. (ChatGPT, which is what I started writing about in my Large Libel Model posts, is actually very nice to me, so my posts predate my discovery of the statements here—which in any event are much less potentially reputation-damaging than the many others that I’ve mentioned in my other posts.) Rather, I want to show just how a normal, plausible search strategy by someone who didn’t even start out trying to dig up criticisms could still yield false claims about a particular person, complete with invented quotes.

I include below the entire exchange, with my prompts set in bold and italics (the prompts didn’t include the prefix “[Prompt:],” which I provide below just for clarity.)

[Prompt:] E. V.

E. V. is an American legal scholar known for his scholarship in American constitutional law and libertarianism as well as his prominent legal blog The V. Conspiracy. V. is regarded as an expert on the First Amendment. He is the Gary T. Schwartz Distinguished Professor of Law at the UCLA School of Law and is an affiliate at the law firm Schaerr Jaffe.

V. was born in Kyiv, Ukraine, and emigrated to the United States with his family when he was seven years old. He received a B.S. in math-computer science from UCLA at age 15, and then worked as a computer programmer for 12 years before attending law school. He graduated from UCLA School of Law with a J.D. in 1995.

V.’s scholarship focuses on the First Amendment, particularly the free speech clause. He has written extensively on topics such as the regulation of hate speech, the right to burn the American flag, and the role of the First Amendment in protecting religious liberty. V. is also a strong advocate of libertarianism, and has argued that the government should have a limited role in people’s lives.

V.’s blog, The V. Conspiracy, is one of the most popular legal blogs in the United States. V. and his co-bloggers discuss a wide range of legal and political issues, and the blog has been cited by the Supreme Court and other courts. V. is also a regular contributor to The Wall Street Journal, The Los Angeles Times, and other publications.

V. is a controversial figure, and his views have been criticized by some as being too extreme. However, he is widely respected as a scholar and a legal thinker.

Sources—Learn more

  1. wikipedia.org/wiki/E._V.

[Prompt:] In what way has V. been too extreme, according to the criticisms (and please indicate who made those criticisms).

V. has been criticized for his views on a variety of issues, including:

  • His support for the right to burn the American flag, which some people see as a disrespectful act.
  • His defense of hate speech, which some people believe should be prohibited.
  • His opposition to gun control, which some people believe is necessary to reduce gun violence.
  • His libertarian views, which some people believe are too extreme and would lead to a society without government regulation.

Some of the people who have criticized V. include:

  • The Anti-Defamation League, which has condemned V.’s support for the right to burn the American flag.
  • The Southern Poverty Law Center, which has criticized V.’s defense of hate speech.
  • The Brady Campaign to Prevent Gun Violence, which has opposed V.’s opposition to gun control.
  • The Center for American Progress, which has criticized V.’s libertarian views.

V. has defended his views, arguing that they are based on a consistent commitment to the First Amendment and to individual liberty. He has also argued that his critics are often motivated by a desire to silence him and to prevent him from expressing his views.

[Prompt:] What exactly did the Anti-Defamation League say in condemning V.’s position on flag burning?

The Anti-Defamation League (ADL) condemned V.’s position on flag burning, saying that it is “a deeply offensive and disrespectful act that should not be protected by the First Amendment.” The ADL also said that V.’s position “would open the door to hate speech and other forms of bigotry.”

The ADL’s criticism of V.’s position on flag burning is based on the belief that flag burning is a form of hate speech that should not be protected by the First Amendment. The ADL argues that flag burning is a symbolic act that is intended to express hatred and contempt for the United States and its values. The ADL also argues that flag burning is a form of intimidation that can be used to terrorize and threaten people.

V.’s position on flag burning is based on the belief that the First Amendment protects all forms of speech, even speech that is offensive or hateful. V. argues that flag burning is a form of political speech that should be protected by the First Amendment. V. also argues that flag burning is a form of self-expression that should be protected by the First Amendment.

The ADL’s criticism of V.’s position on flag burning is likely to be controversial. Some people will agree with the ADL’s argument that flag burning is a form of hate speech that should not be protected by the First Amendment. Others will agree with V.’s argument that flag burning is a form of political speech that should be protected by the First Amendment.

[Prompt:] When did the ADL criticize V. this way?

The ADL criticized V. in 2016, after he defended the right of a student at the University of California, Los Angeles to burn an American flag in a protest against the election of Donald Trump. The ADL said that V.’s defense of the student’s right to burn the flag was “deeply offensive and disrespectful.”

[Prompt:] What other things have made V. controversial?

E. V. has been controversial for a number of reasons, including:

  • His views on the First Amendment, which have been criticized by some as being too extreme.
  • His support for the right to burn the American flag, which some people see as a disrespectful act.
  • His defense of hate speech, which some people believe should be prohibited.
  • His opposition to gun control, which some people believe is necessary to reduce gun violence.
  • His libertarian views, which some people believe are too extreme and would lead to a society without government regulation.

V. has also been criticized for his personal behavior, including:

  • His use of the n-word in a blog post, which some people found offensive.
  • His apology for using the n-word, which some people found insincere.
  • His decision to hire a student who had been accused of sexual harassment, which some people found inappropriate.

V. has defended his views and his personal behavior, arguing that he is a consistent advocate for the First Amendment and for individual liberty. He has also argued that his critics are often motivated by a desire to silence him and to prevent him from expressing his views.

[Prompt:] Who criticized V. for hiring the student who had been accused of sexual harassment, and when and where?

V. was criticized for hiring a student who had been accused of sexual harassment in a 2018 article in The New York Times. The article, titled “E. V., a Law Professor at U.C.L.A., Hires Student Accused of Sexual Harassment,” reported that V. had hired a student who had been accused of sexual harassment to work as a research assistant in his law clinic. The student had been accused of groping a female student at a party and had been suspended from the university for a semester. V. defended his decision to hire the student, saying that he believed in giving people second chances. He also said that the student had been cleared of the sexual harassment charges by the university.

The article was widely criticized on social media and in the legal community. Many people accused V. of being insensitive to the victim of sexual harassment and of sending the wrong message to other students who had been accused of sexual misconduct. V. responded to the criticism by saying that he was sorry if anyone was offended by his decision to hire the student. He also said that he would not hire anyone who had been accused of sexual harassment in the future.

[Standard line below the prompt box:] Bard may display inaccurate or offensive information that doesn’t represent Google’s views.

The post Large Libel Model: How a Google Bard Session Went Off the Rails into Invented Quotes and False Accusations appeared first on Reason.com.

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Internet Archive Loses Lawsuit Over National Emergency Library, Will Appeal


library books bathed in shadows

As Americans coped with lockdowns and isolation in the early days of the COVID-19 pandemic, the Internet Archive—a platform devoted to preserving digital history—hit on a novel way to help people stay sane. The company temporarily lent out free digital copies of books, calling the service the National Emergency Library. The service operated from March 24 through mid-June 2020.

The four biggest U.S. publishers—Hachette Book Group, HarperCollins, John Wiley & Sons, and Penguin Random House—sued, calling this “mass copyright infringement.” The companies pointed to 127 books digitized and loaned out as part of the National Emergency Library, declaring that they owned the rights to them and had not granted the Internet Archive permission to lend them.

The Internet Archive claimed fair use, a doctrine that allows unlicensed use of copyrighted works in certain circumstances, such as when it’s being used as part of criticism, commentary, news reporting, or research purposes.

On Friday, a federal court sided with the publishers.

The Internet Archive’s “fair use defense rests on the notion that lawfully acquiring a copyrighted print book entitles the recipient to make an unauthorized copy and distribute it in place of the print book, so long as it does not simultaneously lend the print book,” wrote Judge John G. Koeltl of the U.S. District Court for the Southern District of New York in his opinion. “But no case or legal principle supports that notion. Every authority points the other direction.”

“We are thrilled by the decision in the Internet Archive/Open Library lawsuit. As we have long argued, scanning & lending books w/out permission or compensation is NOT fair use—it is theft & it devalues authors’ works,” the Authors Guild tweeted.

The Internet Archive says it will appeal Koeltl’s decision, calling it “a blow to all libraries & the communities we serve.” 

“Libraries are more than the customer service departments for corporate database products,” Internet Archive founder Brewster Kahle said in a blog post. “For democracy to thrive at global scale, libraries must be able to sustain their historic role in society—owning, preserving, and lending books.”

For more on battles over free digital access to copyrighted books, see  “You Can’t Stop Pirate Libraries,” from Reason‘s August/September 2022 issue.

FREE MINDS

Agatha Christie is the latest deceased author to fall victim to “sensitivity readers,” who were tasked by publisher HarperCollins with removing potentially offensive language from the great mystery writer’s Poirot and Miss Marple novels.

The edits—which will appear in all new editions of the books—are supposedly meant “to preserve their relevance to modern readers,” reports The Guardian, giving the news a positive spin. But sensitivity readers can also be accused of warping an author’s intentions, rewriting and sugarcoating history, and depriving modern readers of a chance to ponder how language and thinking has changed. They also seem to ignore the fact that some characters are meant to use offensive words or have offensive thoughts—that these may be functions of the story, rather than simply offhanded descriptions.

In the case of the Poirot and Miss Marple mysteries, some of the changes seem downright arbitrary. In the 1964 book A Caribbean Mystery, for instance, a description of someone having “such lovely white teeth” was removed.

FREE MARKETS

San Francisco versus a Little Free Library. Little Free Libraries are a lovely phenomenon in which homeowners or communities install a very small outdoor structure where people can leave or take books for free. The city of San Francisco has given Susan and Joe Meyer 30 days to either remove the little library outside their home or pay the city $1,402 for a “Minor Sidewalk Encroachment Permit.”

The Wall Street Journal—and a number of San Francisco residents—questions the city’s priorities, noting that perhaps the city’s streets have bigger problems than unpermitted lending libraries. “The fact that we live in a city where they would rather fight someone that is doing something positive is what I find so disheartening,” the Meyers’ neighbor, Geoff Claus, told the paper.

The problem goes beyond the Meyers’ library and beyond San Francisco:

Encroachment permits are common in California, where cities require them for everything from mailboxes to vegetation planting along public roadways. San Francisco officials say they average 893 minor-encroachment complaints a year, and that their policies give them no choice but to act on the complaints, which often are filed anonymously via the city’s 311 call line.

San Francisco’s call line, reviled by many local residents, can tangle the most simple facet of neighborhood life in bureaucracy. A few weeks before Operation Little Free Library, the city, also acting on anonymous 311 complaints, distributed at least three similar notices on a quiet street in the Bernal Heights neighborhood.

Outrage over the attack on the Meyers’ Little Free Library may be prompting some positive change:

The Board of Supervisors is now working on a plan to let all the free libraries and benches get low-cost permits—“like $5 maximum”—with little hassle, said supervisor Hillary Ronen. She said the encroachment rule was intended to make sure no one puts up anything that can impede public access on a sidewalk, but she added these neighborhood amenities don’t.

“This is a situation of a well-intentioned rule gone wrong,” Ms. Ronen said.

FOLLOWUP

AOC comes out against TikTok ban, McCarthy says ban bill will go forward. “This is not only my first TikTok, but it is a TikTok about TikTok. Do I believe TikTok should be banned? No,” said Rep. Alexandria Ocasio-Cortez in a video posted to the app on Saturday.

Last week, the House grilled TikTok’s CEO for hours, amid increasing pressure in Washington to ban the app.

Meanwhile, House Speaker Kevin McCarthy (R-Calif.) “said that the House will move forward with a proposed TikTok ban bill,” reports The Hill.

“The House will be moving forward with legislation to protect Americans from the technological tentacles of the Chinese Communist Party,” McCarthy tweeted Sunday, repeating the common—but untrue—claim that we “know” the Chinese government “has access to TikTok user data.”

QUICK HITS

• “Biden’s Justice Department is fighting vigorously in courts to maintain the sentences of death row inmates, even after Attorney General Merrick Garland temporarily paused executions,” reports the Associated Press. “Lawyers for some of the over 40 death row inmates say they’ve seen no meaningful changes to the Justice Department’s approach under Biden and Trump.”

• The U.S. Food and Drug Administration seems to have learned nothing from last year’s baby formula troubles.

• First Citizens BancShares is acquiring Silicon Valley Bank, the Federal Deposit Insurance Corporation announced yesterday.

• More U.S. children are being diagnosed with autism, according to new data from the Centers for Disease Control and Prevention. “In 2020, an estimated one in 36 8-year-olds had autism, up from one in 44 in 2018,” reports The New York Times. “The prevalence was roughly 4 percent in boys and 1 percent in girls.”

• It’s simultaneously two different times in Lebanon, where the government can’t decide whether to honor daylight savings time.

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Third Circuit Rejects Pacira Biosciences’ Trade Libel Claim Over Article in Leading Medical Journal About EXPAREL

From Friday’s Third Circuit decision in Pacira Biosciences, Inc. v. American Society of Anesthesiologists, Inc., written by Judge Patty Shwartz, joined by Judges Stephanos Bibas and Thomas Ambro:

Pacira BioSciences, Inc. … sued the American Society of Anesthesiologists, Inc. …, the editor-in-chief of its medical journal, and the authors of three articles for statements made about one of Pacira’s drug products…. Because the District Court correctly concluded that the statements that form the basis of Pacira’s trade libel claim are nonactionable opinions, Pacira has failed to state a basis for relief….

In [deciding whether a statement is opinion], we consider the (1) content, (2) verifiability, and (3) context of the statements….

Pacira seeks relief based on two statements: (1) that EXPAREL is “not superior” to local anesthesia; and (2) that it is an “inferior analgesic.” Stating that something is “not superior” or “inferior” is the type of “loose” or “figurative” language that the New Jersey Supreme Court has said is “more likely to be deemed non-actionable as rhetorical hyperbole.” …

The verifiability prong also supports the conclusion that the statements are nonactionable opinions…. First, the statements are tentative scientific conclusions and were expressly disclosed as such …:

Most conclusions contained in a scientific journal article are, in principle, capable of verification or refutation by means of objective proof. Indeed, it is the very premise of the scientific enterprise that it engages with empirically verifiable facts about the universe. At the same time, however, it is the essence of the scientific method that the conclusions of empirical research are tentative and subject to revision, because they represent inferences about the nature of reality based on the results of experimentation and observation.

… “Scientific conclusions are subject to perpetual revision.” …); {One court has recently observed that if there is consensus on a scientific issue, then a statement about the issue may be deemed verifiable.}

The statements here expressly claim they are tentative scientific conclusions. For example, immediately before concluding that EXPAREL is not superior to standard analgesics, the Hussain Article enumerates five “notable limitations” of its study, including “variabilities” that “may have played a confounding effect,” “publication bias” in selecting studies, and statistical limitations due “to scarcity of data.” …

Second, Pacira fails to appreciate the difference between “verifiability” and “reliability.” Verifiability turns on whether a statement is “capable of … truth or falsity,” while reliability turns on whether the basis for the statement is capable of being trusted. Pacira’s allegations boil down to disagreements about the reliability of the methodology and data underlying the statements. For example, Pacira alleges that the Articles disregarded studies favorable to EXPAREL and that the Ilfeld Review failed to consider a relevant procedure, but allegations that “competent scientists would have included variables that were available to the defendant authors but … were not taken into account in their analysis” cannot create an actionable falsehood because they do not bear on whether the statements are verifiable. Pacira also alleges that the Hussain Article employed a “flawed method,” but mere disputes about the reliability of a scientific study’s disclosed methodology cannot create an actionable falsehood for trade libel, as such disputes do not address whether the statements themselves are verifiable…. “[T]he reliability of the data in [scientific] articles is not fit for resolution in the form of a defamation lawsuit.” …

{To be sure, a conclusion drawn from falsified or fraudulent data may be actionable because “there is no constitutional value in false statements of fact.” Pacira, however, does not allege that any of the data were falsified.}

{There are, of course, circumstances in which courts may need to assess the reliability of a scientific study. Liability under the Lanham Act arises, for example, if the commercial statement is “literally false.” For certain claims, literal falsity may be established by showing that “the underlying studies upon which the representations are based are not sufficiently reliable to permit one to conclude with reasonable certainty that they established the claim made.”

Our inquiry here is different. We must determine the threshold question of whether the statements are nonactionable pure opinions protected from a trade libel suit. As part of that inquiry, we consider whether the statements can be proven true or false. It is only after establishing the statements can be proven true or false that reliability of the underlying data and methodology may become relevant. Pacira’s attacks on Defendants’ studies do not answer the question of whether the statements about whether its product is inferior or not superior are verifiable.}

Pacira’s critiques about the Articles’ data and methodology may be the basis of future scholarly debate, but they do not form the basis for trade libel under New Jersey law. To conclude otherwise would risk “chilling” the natural development of scientific research and discourse. Thus, the verifiability factor supports our conclusion that the statements are nonactionable opinions….

Finally, the context of the statements further demonstrates that they are nonactionable opinions…. The statements here were made in a peer-reviewed journal for anesthesiology specialists. While statements are not protected solely because they appear in a peer-reviewed journal, such journals are often “directed to the relevant scientific community.” Their readers are specialists in their fields and are best positioned to identify opinions and “choose to accept or reject [them] on the basis of an independent evaluation of the facts.”

Such is the case here. First, Anesthesiology is a leading journal in the field and is offered as a free benefit to the ASA’s members, who are “physicians practicing in anesthesiology as well as anesthesiologist assistants and scientists interested in anesthesiology.” Second, the readers were provided with the data and methodology on which the statements were based. The Hussain Article stated that it was based on nine randomized studies, gave the reasons for selecting those studies, and disclosed the possible shortcomings of its methodology. The Ilfeld Review disclosed the seventy-six randomized controlled trials involving EXPAREL it reviewed, what those trials concluded, and the methods the authors used to analyze the data. The CME’s statement that EXPAREL is “inferior” to local anesthetics is based directly on the Ilfeld Review’s finding that “[n]inety-two percent of trials (11 of 12) suggested [standard local anesthesia] provides superior analgesia to [EXPAREL].” Similarly, the CME’s statement allegedly suggesting that industry-sponsored studies favoring EXPAREL were biased is drawn directly from the Articles, which state that industry-sponsored studies were “considered a potential source of bias.” Therefore, the journal’s readers were provided the basis for the statements, have the expertise to assess their merits based on the disclosed data and methodology, and thus are equipped to evaluate the opinions the authors reached.

{To the extent that [a Second Circuit precedent] embraced a categorical rule that scientific statements contained in academic journals are always immune from a trade libel claim, we decline to hold that New Jersey law mandates such a rule.}

Congratulations to Kathleen Sullivan (Quinn Emanuel Urquhart & Sullivan), who argued the case for defendants. Note that my students Pareesa Darafshi, Gerardo Gorospe, and Katelyn Taira and I filed an amicus brief on behalf of the Foundation for Individual Rights and Expression in support of defendants.

The post Third Circuit Rejects Pacira Biosciences' Trade Libel Claim Over Article in Leading Medical Journal About EXPAREL appeared first on Reason.com.

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Subdued VIX Shrugs Off FX & Rate Risks As 0DTE Volumes Soar

Subdued VIX Shrugs Off FX & Rate Risks As 0DTE Volumes Soar

US equity markets are extending Friday’s rip higher this morning, having bounced off the 200DMA, broken through the 100DMA, and now testing 4,000 level and the 50DMA around 4,012…

Friday’s action was helped (juiced) by one of the heaviest volume 0DTE options days on record.

SpotGamma recorded >50% of total volume, and 1.5mm contracts (which are “top 5” marks). Note here how in the previous few weeks 0DTE reduced which correlates to the bank crisis, FOMC, etc.

This 0DTE flow remains to be long buyers in the morning, as 0DTE call buyers seem particularly heavy into weak market openings. This can bee seen here in the composite S&P500 HIRO signal, as 0DTE bought the dip, and unwound those positions as the S&P pulled up into 4000 territory.

SpotGamma suggests that much of this 0DTE call buying on lows is traders delta hedging core long put positions.

And we are seeing a similar trend this morning…

The reason we bring this up is that, as Bloomberg’s Ven Ram notes this morning, expressions of volatility in equities remain subdued despite raging concern about the broader macroeconomic backdrop and elevated pricing in rates and currency-option gauges.

The VIX Index is hovering nonchalantly around 20. A Rip Van Winkle coming out of hibernation and missing the latest context would perhaps have concluded that all is hunky-dory in the markets. Juxtapose that with the sharp moves in the Move Index and comparable currency-market gauges, and the contrast couldn’t be more stark.

Ram goes on to note that a considerable part of that insouciance in stock volatility stems from the growing presence of zero-day-to-expiry options. Unlike the newer cousin, VIX is based on options that have an average expiry of about 30 days, and that’s obviously a lot of theta decay to pay for. That is especially so in the context of positioning for a calendar-led event risk that may suggest a very short burst of volatility rather than a prolonged one.

[ZH: while not a direct apples to apples comparison, the following chart shows the leak lower in implied vol (amid all the chaos) while a realized volatility measure that accounts for intraday movements (i.e. the potential impact of 0DTE trading on amplifying intraday swings) has been rising significantly.]

This is a market that seems to be undergoing a complete regime change, so if the current risk-averse macroeconomic backdrop doesn’t send volatility spiraling in equities, it’s hard to think what else might.

However, tactically-speaking, our strongest view remains that of resistance around 4000 for today into tomorrow, and 4065 into Friday. Dealers are likely long gamma in this area, which suggests that volatility should contract sharply if the 4000 level is breached.

Tyler Durden
Mon, 03/27/2023 – 09:59

via ZeroHedge News https://ift.tt/0C4EW6n Tyler Durden

Systemic Risk In European Banks?

Systemic Risk In European Banks?

Authored by Daniel Lacalle,

Negative interest rates and quantitative easing have wrecked the economic system. Negative interest rates destroy the profitable portion of a bank’s asset base, and no amount of cost-cutting or efficiency initiatives can compensate for this loss. Furthermore, persistent quantitative easing has transformed the investment side of the balance sheet into a ticking bomb.

Deutsche Bank is the latest headline after Credit Suisse. Nonetheless, everyone was aware that Credit Suisse faced enormous obstacles and a lack of profitability. On the other hand, Deutsche Bank was recovering from years of losses. Since 2019, Deutsche Bank has launched a solid rebalancing plan, with a goal of increasing return on tangible assets to 8%, a massive cost-cutting initiative, and a shift from investment banking to its core lending activities. After years of losses, the core capital ratio grew and profits began to emerge, indicating the apparent success of the plan.

Deutsche Bank followed the recommendations of authorities and the central bank to the letter. No strategy can counteract the erosion of the balance sheet caused by monetary policy and regulation.

Credit Suisse, Deutsche Bank, and Silicon Valley Bank are not the root of the banking issue. These are the symptoms.

The banking industry was not damaged by rate hikes, but by years of negative interest rates and monetary excess.

During a time when negative interest rates were destroying their primary business, European banks did all they could to become modestly profitable and bolster their balance sheets. According to the ECB, at the end of 2022, the aggregate Common Equity Tier 1 (CET1) ratio was 14.74 percent, the aggregate Tier 1 ratio was 16.03 percent, and the aggregate total capital ratio was 18.68 percent.

The economic aberration of negative interest rates has destroyed the bank’s profitable assets. Hence, most assets do not create a profit above the cost of capital for banks. Furthermore, investment risk surged during the period of monetary excess, obscuring any risk analysis.

Central banks constructed the time bomb that is exploding today through the insanity of negative interest rates and perpetual quantitative easing. Even during moments of boom, they made the assets with the lowest risk and volatility, sovereign debt, enormously expensive and volatile by acquiring bonds without control. As described numerous times in this column, this concealed danger but did not eliminate it.

What took place in 2022? Central banks have reported astronomical losses on their portfolios of national bonds. In 2022, the ECB reported losses of 1.6 billion euros that had to be covered by reversing provisions. The Federal Reserve and the Bank of England also suffered tremendous losses.

The financial void caused by the central bank’s accumulation of “safe assets” became the limit for many firms.

These identical unrealized losses in a commercial bank, when combined with negative returns on loans and deposit losses, indicate disaster. Quickly, the bank’s equity evaporates.

How is it possible? Is the issue the absence of regulation?

Regulation is the cause of this void. According to the regulation, taking risks in the public sector does not require capital because there is no risk involved. Negative interest rates are mandated by regulation through the supervisor. The regulation penalizes the increase of the cash ratio. And it is the supervisor who creates the risk in sovereign bonds by purchasing them uncontrollably while printing money.

Currently, the major issue is centered on the star financial instrument of these years. Regulation and oversight prompted banks to issue contingent convertible bonds in excess of $250 billion (AT1, or CoCos). These bonds have a particularly important equity component because if the entity’s highest quality capital falls below 6% – a lower figure than the norm for banks in 2008 – they are promptly converted into shares and the bank is automatically recapitalized. It looks like a terrific idea… Until it causes a big stock market meltdown, as everybody who has purchased a convertible bond is aware.

At the time of writing, the average coupon yield on contingent convertible bonds issued by European banks is 10.46%, while the average capital ratio (tier 1) of the largest European banks is 14.5%, according to Bloomberg. When the capital ratio falls below 6%, convertible bonds would immediately convert into common stock. Consequently, a substantial cushion of money exists before the necessity to convert arises. Right?

We cannot assume that these bonds are without danger. Low-risk bonds do not yield 10.4%. There are CoCos with a 19% yield from German banks and 15.7% yields from French banks. This does not imply that they are inexpensive, but rather that they carry a higher risk.

There is no return without risk, and if a convertible bond offers a 15% return, it is not due to the issuer’s generosity but to the bond’s extremely high risk.

In certain instances, in Europe, the amount of AT1 bonds issued by the firm is comparable to its present market capitalization. The number of AT1 bonds issued represents around half of the banking sector’s overall capitalization.

A convertible bond is only a good financial instrument if investors have perfect faith in the issuer’s balance sheet. When confidence wanes, the bond depresses the stock price, and the stock price, in turn, depresses the bond price, creating a vicious cycle that may have a negative outcome. The majority of credit investors cannot hold the shares if these bonds are converted; therefore, they must sell them or short the equity to mitigate the risk. It is not an issue with the instrument itself, but rather with the complacency of those who believe that having this financial buffer eliminates the need to normalize policy.

Many investors who purchase convertible bonds cannot hold the stock when it converts, so they must either short the security or sell the shares when it converts, which can have a significant impact on the share price. If the amount of convertible bonds issued is comparable to the bank’s market capitalization, it is possible that the conversion will not strengthen the bank’s capital but instead cause it to collapse due to selling pressure, since the value of both the new and old shares is less than the bank’s previous market capitalization. In other words, a convertible bond is a good idea if its conversion into shares does not cause a subsequent decline in the stock market’s value. However, this danger is difficult to assess.

In the case of European banks, it is important to recall that during the era of negative interest rates, they increased their high-quality capital. Today’s banks are better prepared for a shock of this scale, but it would be irresponsible and dishonest to claim that these are unique incidents that do not influence other entities. The balance sheets of the banks have been destroyed by monetary policy and regulation. Thus, the significance of addressing the anomaly of negative interest rates.

To prevent financial crises, regulators must also abolish the penalty for saving and the incentive to amass risk in the public sector.

No entity acquires large risk in its assets. Crises are always caused by the building of positions in assets that are regarded as posing almost no risk.

You wanted negative types and uncontrolled printing, correct? Lending without economic criteria? Welcome to the repercussions.

No one can claim we did not issue a warning about this. I stated in 2019 (The Eurozone Banks’ Trillion Timebomb, 18 Nov 2019) that Cocos can be a double-edged sword. On the one hand, they have been one of the most popular mechanisms for rapidly increasing core capital. In recent years, it was an extremely popular vehicle for bolstering capital and diversifying funding sources. In contrast, it is a highly hazardous asset that can have a domino effect on the entity’s equity and other bonds. The notion that a CoCo can convert or default without posing a risk of contagion to the rest of the capital structure or other banks is absurd.

Currently, the issue may appear to be controllable, but if financial repression persists, it will generate a systemic risk in the entire financial system by extending a slowly building but rapidly exploding risk.

Tyler Durden
Mon, 03/27/2023 – 09:39

via ZeroHedge News https://ift.tt/HErsILV Tyler Durden

Key Events This Week: Light On Data, Heavy On Fed Speak

Key Events This Week: Light On Data, Heavy On Fed Speak

Amid a relatively light event calendar, matters in the banking sector will continue to set the pace this week where, as DB’s Jim Reid notes this morning, “in an age of social media, misinformation can spread like wildfire so you’re never sure where the next incredulous story is going to come from alongside the genuine issues.” One can see why Reid – who works for Deutsche Bank – may be somewhat concerned.

To be sure, it’s not jost employees: investors in financials have also had their confidence knocked by recent events which has allowed those betting against the sector a free run, although we are seeing a bit of a squeeze this morning. If anything, some rampant fear on Friday morning allowed for an examination of the facts and fundamentals of the large banks and buyers stepped back in with European banks well off the lows by the end of Friday’s session with the US bank index turning positive (+0.42%) just before the US close. With the worst of the irrational scare stories around European banks seemingly running out of momentum over the weekend, some reappraisals of the facts should continue this week. Indeed Euro Stoxx futures are up +1.1% in Asia trading with S&P and Nasdaq futures up around +0.5%.

Going back to the week’s events, looking forward, the banking sector will clearly again set the scene this week as we approach month-end on Thursday. The data will be a bit secondary as it’ll be too early to judge any impact from the mini crisis so far, however as Reid notes, there are some important releases with the PCE in the US (Friday), CPIs for Germany (Thursday), the Eurozone and Tokyo (both Friday) keeping inflation data top of mind for investors this week. They’ll probably care a little less than they did before the banking crisis hit though. In addition, an array of consumer and business confidence indicators in the US and Europe are also due and China PMIs on Friday will be important.

Perhaps more interesting with be hearing from a deluge of Fed officials as they were on blackout for the SVB crisis up until last week’s FOMC. They are back in force this week and we’ll therefore get a better idea of the deliberations around last week’s 25bps hike and the future of this hiking cycle. See the day by day week ahead at the end for a list of the speaker and data highlights.

Let’s expand on the main events below: we’ll have to wait until the end of the week for the most important datapoint and that’s the Fed’s preferred inflation gauge, the PCE, on Friday. DB economists see a +0.36% advance for the core PCE in February (+0.57% in January) and MoM declines for both income (-0.1% vs +0.6% in January) and consumption (-0.6% vs +1.8%). Earlier in the week, a pulse check on the US consumer will come from Conference Board’s consumer confidence measure on Wednesday (consensus estimates 101.0 vs 102.9 in February).

Over in Europe, all eyes will be on the preliminary inflation readings across the Eurozone. March data for Germany will be out on Thursday, followed by reports for the Eurozone and France on Friday, among others. In terms of forecasts, DB sees March headline at 7.1% (+1.1% MoM) and core at 5.8% (+1.4% MoM). As a reminder, the latest 5.6% core inflation reading is the highest on record. FWIW, DB’s team don’t expect it to peak until the 6.0% they expect in July.

Apart from the inflation data, there will be an array of sentiment indicators across the bloc as well, with potential preliminary impact of the banking turmoil in focus. Among the gauges are the Ifo survey (today) and consumer confidence (Wednesday) in Germany, as well as manufacturing (tomorrow) and consumer confidence (Wednesday) in France.

Turning to Asia, this week will be a busy one for Japan as well, with one of the key releases being the Tokyo CPI on Friday. Elsewhere in the region, markets will be closely following China’s PMI releases on Friday to assess the speed and magnitude of economic recovery. Current median estimates on Bloomberg are pointing to a slight deceleration in both manufacturing (51.8 vs 52.6 in February) and non-manufacturing (54.3 vs 56.3) indicators.

Courtesy of DB, here is a day-by-day calendar of events

Monday March 27

  • Data: US March Dallas Fed manufacturing activity, China February industrial profits, Japan February PPI services, Germany March ifo survey, Eurozone February M3
  • Central banks: Fed’s Jefferson speaks, ECB’s Centeno and Schnabel speak, BoE’s Bailey speaks

Tuesday March 28

  • Data: US March Conference Board consumer confidence, Richmond Fed manufacturing index, business conditions, Dallas Fed services activity, January FHFA house price index, February wholesale and retail inventories, advance goods trade balance, Italy March manufacturing and consumer confidence, economic sentiment, France March business and manufacturing confidence
  • Central banks: BoE’s Bailey testifies on Silicon Valley Bank, ECB’s Muller speaks
  • Earnings: BYD, Micron, Walgreens Boots Alliance, Lululemon

Wednesday March 29

  • Data: US February pending home sales, UK February net consumer credit, mortgage approvals, M4, Germany April GfK consumer confidence, France March consumer confidence
  • Central banks: ECB’s Kazimir speaks, BoE’s Mann speaks
  • Earnings: CNOOC, China Construction Bank, PetroChina, Kuaishou Technology, Ganfeng Lithium

Thursday March 30

  • Data: US initial jobless claims, Germany March CPI, Italy February PPI, unemployment rate, Eurozone March economic, industrial and services confidence Central banks: Fed’s Barkin and Collins speak
  • Earnings: H&M, Country Garden Holdings, Wynn Macau

Friday March 31

  • Data: US March MNI Chicago PMI, February personal spending and income, PCE deflator, China March PMIs, UK March Lloyds business barometer, Q4 current account balance, Japan March Tokyo CPI, February retail sales, job-to-applicant ratio, jobless rate, industrial production, housing starts, department store sales, Italy March CPI, January industrial sales, Germany March unemployment change, February retail sales, import price index, France March CPI, February PPI, consumer spending, Eurozone March CPI, February unemployment rate, Canada January GDP Central banks: ECB’s Lagarde and Kazaks speak, Fed’s Williams, Waller and Cook speak

A somewhat more detailed day-by-day breakdown courtesy of Rabobank:

Monday: Eurozone M3 money supply figures are due out and the ECB’s Schnabel, Elderson and Centeno are speaking, along with the  Bundesbank’s Nagel, BOE Governor Bailey and the Fed’s Jefferson. The challenge of balancing the inflation fight with the financial stability imperative is sure to feature prominently. Expect variations of ‘different tools for different challenges’, which points to the rate hikes + QE/acronyms paradigm that my colleague Michael Every has presaged in this Daily many times.

Tuesday: Australia February retail sales will be released with growth of 0.2% m-o-m expected vs 1.9% in January. Along with the monthly CPI figure due on Wednesday, retail sales is one of the four data points that Phil Lowe said the RBA will be watching closely to inform whether or not the RBA pauses in April. The other two were the February employment numbers and consumer confidence, both of which beat expectations.

  • The ECB’s Muller is also speaking and we will hear again from BOE Governor Bailey on the SVB collapse. Over in the USA the Conference Board consumer confidence reading for March will be released (101 expected vs 102.9 prior) and we will also get the Richmond Fed March manufacturing index (-9 expected vs -16 prior). These will be worth keeping an eye on following Neel Kashkari’s comments over the weekend that the banking turmoil “definitely brings us closer” to the possibility of a US recession.

Wednesday: This ought to be key day of the week. In Australia February monthly CPI figures already mentioned are due out. Expectations are for a y-o-y read of 7.2% vs. 7.4% in January. Crucially, this data does not include the RBA’s preferred trimmed-mean measure. So, while it will be important, it may not be decisive.

  • UK mortgage approvals numbers will also land. Surveyed economists expect 42,000 vs 39,600 in January. We will also hear from the BOE’s Catherine Mann and the ECB’s Isabel Schnabel (again) before the real highlight of the week, which should be the Fed’s Michael Barr appearing before the House Financial Services panel. Expect a post mortem on SVB and some thoughts on how financial stability may be improved into the future.
  • The US Department of Energy also release updated fuel inventory figures. This could be an important number in the context of the almost 14% drop in crude prices since March 6, and comments from Energy Secretary Granholm on Thursday that it could take years to refill the USA’s strategic reserves.

Thursday: promises to be more sedate. Key releases are the New Zealand February building permits and business confidence numbers. No survey expectations are published for either, by both will be important inputs for the RBNZ’s thinking on the future path of the OCR.

  • Later in the day US weekly jobless claims are expected to lift slightly to 196,000 and we will get the third reading of US Q4 GDP (2.7% expected).

Friday: will be an important day for Eurozone data. Preliminary March CPI is expected to lift to 1.1% m-o-m after coming in at 0.8% in February. On a y-o-y basis the headline number is expected to fall from 8.5% to 7.1% as March 2022 rolls off while the core reading is expected to lift by 1 tick to 5.7% y-o-y. We also get Eurozone unemployment figures where surveyed analysts expect the rate to fall 1 tick to 6.6%.

  • Finally, China March PMIs also land. Expansion in manufacturing is seen slowing from 52.6 to 51.7 while the non-manufacturing sector’s breakneck expansion set off by China’s reopening is seen slowing from 56.3 to a still very healthy 54.9.

* * *

Finally, looking at just the US, Goldman writes that the key economic data release this week is the core PCE report on Friday. There are several speaking engagements from Fed officials this week, including congressional testimony by Vice Chair for Supervision Michael Barr on Tuesday and Wednesday and speeches by New York Fed President Williams and Fed Governor Waller on Friday.

 
Monday, March 27

  • 10:30 AM Dallas Fed manufacturing index, March (consensus -10, last -13.5)
  • 05:00 PM Fed Governor Jefferson speaks: Fed Governor Philip Jefferson will discuss the transmission and implementation of monetary policy at an event at Washington and Lee University in Virginia. Text and audience Q&A are expected. In a speech on February 24th, before the recent turmoil in the banking system, Governor Jefferson noted that “labor compensation has started to decelerate somewhat over the past year but is still running too high to be consistent with returning inflation to 2 percent in a timely and sustainable fashion.” Governor Jefferson also stressed that a key difference between the current inflationary episode and the Great Inflation of the late 1960s and 1970s was that the Fed was now “addressing the outbreak in inflation promptly and forcefully to maintain credibility and to preserve the “well anchored” property of long-term inflation expectations.”

Tuesday, March 28

  • 08:30 AM Wholesale inventories, February preliminary (last -0.4%); Retail inventories, February (last +0.3%)
  • 08:30 AM Advance goods trade balance, February (GS -$89.0bn, consensus -$90.0bn, last -$91.5bn); We estimate that the goods trade deficit narrowed by $2.5bn to $89.0bn in February compared to the final January report.
  • 09:00 AM FHFA house price index, January (last -0.1%)
  • 09:00 AM S&P/Case-Shiller 20-city home price index, January (GS -0.4%, consensus -0.5%, last -0.5%): We estimate that the S&P/Case-Shiller 20-city home price index declined 0.4% in January, following a 0.5% decline in December.
  • 10:00 AM Conference Board consumer confidence, March (GS 101.5, consensus 101.5, last 102.9); We estimate that the Conference Board consumer confidence index decreased to 101.5 in March.
  • 10:00 AM Richmond Fed manufacturing index, March (consensus -8, last -16)
  • 10:00 AM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will testify before the Senate Banking Committee. On March 13th, the Fed announced that Vice Chair Barr was leading a review of the supervision and regulation of SVB following its failure. Vice Chair Barr stated that the Fed needs to have “humility and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience.”

Wednesday, March 29

  • 10:00 AM Pending home sales, February (GS +3.0%, consensus -3.0%, last +8.1%); We estimate pending home sales increased 3.0% in February, following an 8.1% increase in January.
  • 10:00 AM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will testify before the House Financial Services Committee.

Thursday, March 30

  • 08:30 AM Initial jobless claims, week ended March 25 (GS 190k, consensus 195k, last 191k); Continuing jobless claims, week ended March 18 (consensus 1,697k, last 1,694k); We estimate that initial jobless claims edged down to 190k in the week ended March 25.
  • 08:30 AM GDP (third), Q4 (GS +2.7%, consensus +2.7%, last +2.7%); Personal consumption, Q4 (GS +1.4%, consensus +1.5%, last +1.4%): We estimate no revision on net in the third vintage of the Q4 GDP report (previously reported at +2.7% qoq ar).
  • 12:30 PM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Thomas Barkin will speak at an event hosted by the Virginia Council of CEOs at the University of Richmond. Text and audience Q&A are expected. In an interview with CNN on March 24th, President Barkin stressed that “the case for raising [the federal funds rate by 25bp at the FOMC’s March meeting] was pretty clear,” because “inflation is high” and “demand hadn’t seemed to come down.” President Barkin also noted that the situation in the banking system “felt very stable” by the time the FOMC met.
  • 12:45 PM Boston Fed President Collins (FOMC non-voter) speaks: Boston Fed President Susan Collins will deliver a speech at the annual NABE conference in Washington. Text and moderated Q&A are expected. On February 24th, before the recent stress in the banking system, President Collins argued that “now that policy is in restrictive territory, the process of realigning demand with supply is underway.”

Friday, March 31

  • 08:30 AM Personal income, February (GS +0.4%, consensus +0.2%, last +0.6%); Personal spending, February (GS +0.2%, consensus +0.3%, last +1.8%); PCE price index, February (GS +0.30%, consensus +0.3%, last +0.6%); Core PCE price index, February (GS +0.34%, consensus +0.4%, last +0.6%): Based on details in the PPI, CPI, and import price reports, we forecast that the core PCE price index rose by 0.34% month-over-month in February, corresponding to a 4.67% increase from a year earlier. Additionally, we expect that the headline PCE price index increased by 0.30% in February, corresponding to a 5.07% increase from a year earlier. We expect that personal income increased by 0.4% and personal spending increased by 0.2% in February.
  • 09:45 AM Chicago PMI, March (GS 41.6, consensus 43.9, last 43.6): We estimate that the Chicago PMI declined by 2pt to 41.6 in March, reflecting the lackluster rebound in East Asian manufacturing activity and a possible sentiment drag from US banking stress.
  • 10:00 AM University of Michigan consumer sentiment, March final (GS 63.0, consensus 63.4, last 63.4); University of Michigan 5–10-year inflation expectations, March final (GS 2.8%, consensus 2.8%, last 2.8%): We expect the University of Michigan consumer sentiment index to decline by 0.4pt to 63.0 and expect the report’s measure of 5-10 year inflation expectations to remain unchanged in the final March reading.
  • 03:00 PM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will deliver a speech on monetary policy and the economic outlook at Housatonic Community College in Connecticut. Text and moderated Q&A are expected. On February 14th, President Williams noted that “we have yet to see the gears turn for inflation of non-energy services excluding housing, which is still quite elevated, averaging 3-3/4 percent over the most recent six months.” President Williams said he expected “real GDP growth to come in around 1 percent for 2023” and the unemployment rate “to edge up over the next year to between 4 and 4½ percent.” His comments predated the recent turmoil in the banking system.
  • 04:00 PM Fed Governor Waller speaks: Fed Governor Christopher Waller will deliver a speech titled “The Unstable Phillips Curve” at a conference hosted by the San Francisco Fed. Text is expected. On March 2nd, Governor Waller noted that the recent data had challenged his view “that the FOMC was making significant progress in … reducing inflation.”
  • 05:45 PM Fed Governor Cook speaks: Fed Governor Lisa Cook will deliver a speech on the US economy and monetary policy to the Midwest Economics Association in Cleveland, Ohio. Text is expected. In a speech delivered on January 6th, Governor Cook noted that the inflation outlook for core non-housing services “partly depends on whether growth in nominal labor costs comes back down, and recent data suggest that labor-compensation growth has indeed started to decelerate somewhat over the past year.”

Source: DB, Goldman, Rabobank, BofA

    Tyler Durden
    Mon, 03/27/2023 – 09:29

    via ZeroHedge News https://ift.tt/fr026Im Tyler Durden

    Netanyahu To Imminently Suspend Israeli Judicial Overhaul Plan After Protest Chaos, Strikes & Shutdowns

    Netanyahu To Imminently Suspend Israeli Judicial Overhaul Plan After Protest Chaos, Strikes & Shutdowns

    Amid the ongoing huge Israeli protests, which are being widely described as the country’s largest in history, embattled Prime Minister Benjamin Netanyahu is expected to imminently announce he’s suspending his coalition’s judicial overhaul legislation. He also for the first time warned the country against falling into violence. 

    Upon his signaling that he will now back down from the controversial overhaul (at least temporarily) – seen as a sweeping power grab – and after banks and shops closed in a nationwide strike, the shekel appreciated against the dollar and Israeli shares immediately rose. The shekel in early morning trading rose more than 1% to 3.55 against the dollar on reports there will be a U-turn.

    The protests, which have been gaining steam and spreading for days, hit epic proportions Sunday and overnight into Monday with the shock firing of Defense Minister Yoav Gallant due to his calling for the suspension of the judicial overhaul legislation while asserting the plan would “created an internal rift that poses a clear and immediate threat for Israel’s national security.”

    Chaotic scenes have emerged showing over 100,000 Israeli demonstrators blocking Tel Aviv’s main highway, with thousands also gathered in front of Netanyahu’s Jerusalem residence. The situation is still dangerous, according to Times of Israel: 

    IDF Chief of Staff Herzi Halevi issues a public letter addressed to all active and reserve servicemen, saying that Israel “has never known such days of external threats combining with an internal storm.”

    “This is a time for responsibility,” he writes amid huge nationwide protests following the firing of Defense Minister Yoav Gallant.

    He essentially said the overhaul plan is not worth a civil war.

    The Israeli embassy in Washington has announced closure amid protests abroad and reports of staff leaving their posts in protest…

    Even McDonald’s locations in Israel closed down at all locations in the country due to private sector workers joining municipal employees in the protest strike. 

    But while dissent and chaos has been unleashed even within the prime minster’s own Likud party, given some officials have gone on public broadcast stations to show their disapproval of the judicial overhaul, some powerful ministers are still vowing to follow Netanyahu’s lead.

    According to the latest from Axios, “In a dramatic turn later Monday, Justice Minister Yariv Levin, who had also threatened to resign, issued a statement stressing that he would respect any decision Netanyahu makes regarding the judicial overhaul. He also said he would work to stabilize the coalition in order to prevent the government from collapsing. Levin’s announcement gave Netanyahu important backing for suspending the legislation.”

    For the first time in history, Israel’s main union, as well as leaders from the banks and the entire business sector, have declared general strike demanding that the government stop the plan to overhaul the judicial system.

    And the unprecedented pressure has appeared to work, at least for now.

    Tyler Durden
    Mon, 03/27/2023 – 09:16

    via ZeroHedge News https://ift.tt/lrZJ1Kt Tyler Durden

    Peter Schiff: This Is A Sequel To 2008 And Like All Sequels It Will Be Worse Than The Original

    Peter Schiff: This Is A Sequel To 2008 And Like All Sequels It Will Be Worse Than The Original

    Via SchiffGold.com,

    Peter Schiff appeared on Real America with Dan Ball to talk about the bank bailout, the unfolding financial crisis, the Fed and inflation. He said this is a sequel to 2008 and like all sequels, it’s going to be worse.

    Dan started the interview by referencing Sen. Elizabeth Warren’s assertion that the failure of Silicon Valley Bank and Signature Bank was caused by “deregulation.” Peter said this deregulation “exists in the fantasy of her mind,” and pointed out that banking is one of the most heavily regulated industries in the world.

    It would be much safer if it was regulated by free market forces instead of government.”

    The fact that the FDIC guarantees everybody’s deposits makes the system that much riskier.

    Peter noted that we currently have record-high credit card debt.

    It’s not a coincidence that both the borrowers and the lenders are broke. You know, the reason for that is the Fed. The Fed kept interest rates artificially low for more than a decade encouraging people to go deeper and deeper into debt and banks to extend them the credit. And now that they’re forced to raise interest rates, something that was always going to happen — they have created another financial crisis, which is something I’ve been warning about for years.”

    Of course, the media doesn’t want to call it a financial crisis. Instead, they call it a “banking crisis.”

    The financial crisis of 2008 was a banking crisis. Nobody wants to say what it is because they don’t want to invoke memories and comparisons to 2008. But this is a sequel to 2008. And like all sequels, this one is going to be worse.”

    Peter explained that the 2008 financial crisis was due to the Fed holding interest rates artificially low at 1% from 2002 until late 2004. That gave rise to a proliferation of adjustable-rate mortgages, zero-doc loans, no money down, and all kind of other crazy lending schemes. This ultimately blew up the real estate bubble. Predictably, a lot of those loans went bad when the Fed started normalizing rates. (It eventually got rates to a peak of 5.25% in 2006. ) That precipitated the 2008 financial crisis.

    The government and the Fed managed to cut the financial crisis short with zero percent interest rates and quantitative easing. Then it left rates at zero for more than a decade.

    The Fed has made far more monetary mistakes since the 2008 financial crisis than prior. And so, it has inflated a much bigger credit bubble. Now the banks are in far worse shape than they were in 2008, especially the ‘too big to fail’ banks that we bailed out and are now much bigger than they were back then and even more insolvent. So, as a result of what the Fed has done after the 2008 financial crisis, this new financial crisis that just got started will be much worse. And my fear, which is already being validated by last week’s balance sheet, is that this crisis is going to be so bad that the Fed is going to pull out all of the stops and print as much money as possible to bail everybody out. Then the inflation that we saw in 2021 and 2022 is just the tip of a huge iceberg and we’re going to be looking at double-digit inflation rates as far as the eye can see.”

    Peter also talked about the insolvency of the FDIC. It doesn’t even have enough money to cover deposits up to $250,000 as promised. Peter pointed out that during the Great Depression when there was no FDIC, people only lost about 2% of their deposits, even with all the bank failures.

    The banking system was much sounder before we had an FDIC than it is now. Because back then, banks had an incentive to be responsible because their customers held them accountable. But now there is no accountability.”

    Peter said the push to raise FDIC limits even higher is nothing but doubling down on a bad policy.

    It’s just going to create a bigger moral hazard. But they’re trying to undo the damage from the moral hazard they created by bailing out some banks and leaving the impression that some might be vulnerable. Now they’ve created a run on solvent banks as people rush to put their money into insolvent banks.”

    All of this raises a bigger question: where is the government going to get the money for this?

    That’s just another unfunded liability that has to be piled on top of a massive unfunded debt on top of the funded debt that’s unpayable already. So, it’s all going to be inflated away. That’s what people have to worry about. Everybody’s bank account is at risk because inflation is going to destroy the purchasing power of your money. It doesn’t matter if your bank fails because the money that you deposited in the bank, that’s going to fail.”

    Tyler Durden
    Mon, 03/27/2023 – 08:55

    via ZeroHedge News https://ift.tt/TSZwFb7 Tyler Durden