Month: March 2023

After sparking a market rout on Wednesday and even prompting Bill Ackman to call her out for sparking a new bank run,  moments ago the senile, 76-year-old Treasury Secretary Janet Yellen emerged for her second day of testimony on the Hill and, realizing that blowing up the market in addition to sparking a recession and destroying the US banking system may not be the look her just as senile boss is going for, changed a key section of her testimony.

One day after her prepared remarks to the Senate Financial Services Committee sent stocks plunging when she said that she had neither considered nor examined the possibility of expanding federal insurance temporarily to all US bank deposits without congressional approval – as such a move would require legislation, although regulators were prepared to repeat depositor rescues if an individual bank failure threatened to provoke a wider contagion of bank runs –  in the process nullifying everything Powell said in hopes of stabilizing the relentless bank selloff, Yellen now plans to tell US lawmakers that regulators would be prepared for further steps to protect deposits if warranted, in new language that differs from her prepared remarks to the Senate a day earlier.

Here is the paragraph that graced her speech yesterday:

As I said last week, the U.S. banking system is sound. The federal government’s recent actions have demonstrated our resolute commitment to take the necessary steps to ensure that depositors’ savings remain safe.

Today, that entire paragraph has been deleted and replaced with the following:

“As I have said, we have used important tools to act quickly to prevent contagion. And they are tools we could use again. The strong actions we have taken ensure that Americans’ deposits are safe. Certainly, we would be prepared to take additional actions if warranted.”

The added comment, which she’s scheduled to deliver at 3 p.m. before a subcommittee of the House Appropriations Committee, comes amid close scrutiny of the Biden administration’s stance on bank deposits.

And while Yellen’s hope is that the market would focus on the addition of this section: “would be prepared to take additional actions if warranted” which it did indeed for about 2 minutes, it has since shifted its attention to what was deleted, namely “As I said last week, the U.S. banking system is sound.“

So in the span of 24 hours, did something change – besides Powell hiking 25bps of course – to make the banking system no longer demonstrably sound.

In any case, after plunging to session lows ahead of her speech, stocks kneejerked higher, only to drift lower again…

… with bank stocks now back near session lows as the market will keep pushing the clueless – now laughably so  – Fed and Treasury until they capitulate, guarantee all depositors, cut rates and launch QE.

Moscow this week warned that there remain “fewer and fewer steps” toward nuclear collision after the UK announced it is sending depleted uranium ammunition to the Ukrainians for use in their Challenger II main battle tanks. 

President Putin also in the wake of London’s decision said Russia will “respond accordingly” if the Ukrainians do indeed receive a “nuclear component”. On Wednesday the Kremlin followed by pointing to New START’s collapse, and that the nuclear treaty is unlikely to resume do to the “hostile actions” of the Untied States.

Deputy Foreign Minister Sergei Ryabkov said there’s really no point in resuming talks between the world’s biggest nuclear powers, describing its suspension as “almost inevitable” given the “cumulative circumstances of the destructive and hostile actions of the U.S.”

“I don’t think there’s any reason to discuss New START with the U.S.,” Ryabkov told Kommersant daily newspaper. The blunt remarks were given at a conference called “A World Without START: What Next?”

He also blamed NATO, asserting that “NATO is trying to change the balance of power in its favor with a claim to global dominance. We won’t let them do that. Hence, our deeper cooperation, including in the field of security, with China and hence our decision to suspend the START treaty,” he said. As for any remaining hope of reimplementation of the nuclear arms monitoring and reduction treaty, he explained:

“We have suspended the agreement, and…the return to its full implementation is only possible in a situation when the US demonstrates that it is abandoning its hostile course towards Russia.”

“There are no signs of this now, rather signs of an opposite approach, further aggravation, further escalation. There can be no question of reversing our position on the issue of suspension,” he stressed.

Ryabkov added that Moscow is at the moment not considering changing the treaty’s text in any way, but if “the impossible happened” and France and Britain would be willing to join the pact, “it would be a new situation, demanding a new evaluation and making new decisions.”

The comment about the UK and France possibly joining the pact is all the more interesting given the fresh controversy over the depleted uranium impending shipments to Kiev. 

In March 2021 the two sides renewed New START for a period of five years, and it will expire in February 2026 if it’s not continued – an increasing likelihood given US-Russia relations have deteriorated so fast over the Ukraine war they are near complete breaking point. But Putin declared essentially the final death knell in a late February announcement after the treaty’s fate was already extremely uncertain. The mutual monitoring missions called for under the treaty’s terms have been suspended since at least last summer.

The treaty is intended to limit and reduce nuclear arms on either side, setting a limit of no more than 1,550 deployed warheads and 700 missiles. START I began in 1991, with New START signed under the Obama and Medvedev administrations in 2010 as a successor agreement.

Authored by BTCCasey via BitcoinMagazine.com,

Ted Cruz has joined a myriad of politicians in demonstrating their contempt for CBDCs in America… but what about pro-Bitcoin legislation?

Texas Governor Ted Cruz has joined a growing group of politicians who have come out in support of anti-CBDC bills, reintroducing legislation to the Senate that would prohibit a direct to consumer Federal Reserve-issued CBDC.

Recent weeks have seen several U.S. state politicians at the center of these actions. The trend was seemingly kicked off by the introduction of Congressman Tom Emmer’s “CBDC Anti-Surveillance State Act,” a bill that would prohibit the Federal Reserve from issuing a CBDC directly to anyone.

This was followed by South Dakota Governor Kristi Noem’s decision to veto House Bill 1193, which would have amended the provisions of the Uniform Commercial Code in the state. “The bill adopts a definition of ‘money’ to specifically exclude cryptocurrencies. But these revisions do include Central Bank Digital Currencies as money. These developments concern me for several reasons,” Governor Noem explained.

Subsequent to this, Florida Governor Ron Desantis held a press conference in which he stood at a podium labeled “Big Brother’s Digital Dollar,” proclaiming that Florida shall be a CBDC-free state.

But, in a recent article written for the Bitcoin Policy Institute titled “In Attempt to Stop CBDCs, States Are Rejecting Ostensibly Pro-Bitcoin Legislation,” Yaël Ossowski described how the House Bill 1193 blocked by Gov. Noem would actually have been a benefit for bitcoin, not a net negative. In his opinion, the response to House Bill 1193 did not consider the full respects of the changes to the Uniform Commercial Code, and he cautions politicians that they should be careful to not block bills that could potentially benefit bitcoin.

“The bill in question — based on an update to the Uniform Commercial Code — not only expands definitions and protections for Bitcoin, but actually creates a legal mechanism for recognizing self-custody and for the protocol’s inclusion in traditional lending, insurance, and commercial transactions,” he writes.

“To have CBDC-bashing as the latest litmus test for conservative politicians is indeed revolutionary, and from the point of view of individual and economic freedom that Bitcoin provides, is a positive phenomenon. But why is the battle being played out in rudimentary state commercial codes that have nothing to do with Central Bank Digital Currencies?”

Ossowski described how, for conservatives, this bill represents “a backdoor for a CBDC and for eventual federal government control of economic freedom.” Because it gives a precise definition of money that excludes Bitcoin, it is assumed that a CBDC is what the government will qualify as money. This, however, is not necessarily a given, and the leaving out of bitcoin within that definition is actually a positive, according to Ossowski. “Not being defined as money means that Bitcoin transactions are not recognized as money transmission, which would otherwise require various licenses, permissions, and legal registrations,” he wrote.

“Overall, that keeps the Bitcoin protocol outside the regulatory scope of restrictive rules that apply to legal tender like the US dollar.”

Ossowski also cites the “Catawba Digital Economic Zone, a self-dubbed Web3 special economic zone enabled by laws of the Catawba Indian Nation of the Carolinas.” In August of 2022 it became the first quasi-jurisdiction to adopt Article 12 of the Uniform Commercial Code.

They estimate that this bill gives them better legal footing for bitcoin, not worse. 

“Unlike previous attempts to integrate digital assets under existing law, the amendments define them directly within the UCC. This provides greater certainty, simplicity, and uniformity. The Amendments as approved on July 15th also address all the major concerns with other associated attempts, including the issues of security control, perfection, priority, and custodianship. The Amendments are forward looking, and technology neutral.”‍— “Catawba Digital Economic Zone Approves Uniform Law Commission’s Digital Asset Amendments to the Uniform Commercial Code”

Ossowski does conclude, though, that it is understandable why Gov. Noem vetoed the bill. “While her understanding of the bill was flawed, her instincts were correct,” he said. “The same applies to DeSantis’ mission to snipe CBDCs before they ever reach Florida’s shores.”

He recommends that state lawmakers who grasp Article 12’s benefits for Bitcoin, and who desire to politically pronounce their opposition to CBDCs, should simply write that statement within their version of the bill.

“Pushed to this political juncture, we can’t fault governors and legislators for wanting to plant an anti-CBDC flag,” he wrote. “We should remind them, however, that technical updates to commercial legal codes that would benefit Bitcoin are desirable and necessary.

Ideally, states would adopt a more sound model policy that would help advance the cause of decentralized digital cash in the form of Bitcoin while forever keeping CBDCs off the table. But our work has only begun.”

Over the next three months, hundreds of workers at five Walmart warehouses handling e-commerce orders will be laid off. This situation could be a worrisome indication that consumers are tapped out. 

A Walmart spokesperson told Reuters about 200 warehouse workers in Pedricktown, New Jersey, and hundreds of others at Fort Worth, Texas; Chino, California; Davenport, Florida; and Bethlehem, Pennsylvania locations were asked to find new jobs before summer due to the need to reduce headcount. 

“We recently adjusted staffing levels to better prepare for the future needs of customers,” Walmart said in a statement. 

Layoffs at Walmart are considered an indicator of retail trends due to its size in the retail space, and might serve as a warning sign of potential economic turbulence ahead. 

Earlier this month, we noted “consumers hit a brick wall” as credit demand – function of soaring interest rates – slumped amid a surge in tightening lending standards. 

We’ve shown readers consumers have racked up insurmountable credit card debts while draining personal savings to near-record-low levels. 

While the 23rd straight month where Americans cost of living has outpaced their wage growth… 

Earlier this week, Goldman’s consumer retail trader Scott Feiler informed clients that the first signs of a slowdown among low-income earners have surfaced. 

Bottom line: US consumer is 70% of the US GDP, and the Walmart layoffs are yet another sign that the 2023 GDP is set to take a tumble. 

After flirting with the “nice, round number” earlier this week, Gold – which soared by $150 in the past two weeks amid the relentless bank crisis – has just topped $2000 for the first time since March 2022 and then, since the Covid crash before it, when the Fed unleashed $10+ trillion in emergency liquidity.

The latest surge comes just hours after none other than Goldman Sachs raised its price target on gold from $1950 to $2050 overnight in a note titled “Fear is contagion” (full note available to pro subs).

We excerpt several key sections from the note below:

Gold has rallied by over $150/toz over the past two weeks on the back of banking stress, captured by US 2-year yields recording the largest decline since 1987, which triggered a significant risk appetite reversal. The speed at which markets repriced a Fed pivot from 100bp tightening to 50bp in rate cuts by year-end has been unprecedented, leading to a spike in rates volatility to levels last seen in the depth of the 2008 financial crisis. During the sell-off, gold outperformed risk assets such as equities or credit, turning it into an effective hedge in the risk-off rotation. Cyclical commodities like oil and base metals fell sharply, largely on a liquidity shock as opposed to any change in underlying micro fundamentals that have, if anything, strengthened. Financially, this was a VaR shock that started in rates as SVB’s collapse forced a rethink on the path of the Fed Funds Rate.

Gold has oscillated between growth and inflation risks for some time, with the first quarter of this year only highlighting the fickleness of market sentiment. Initially, a ‘goldilocks’ scenario of fast recovering ex-US growth on China’s reopening and a lower USD lifted gold to $1950/toz, before strong US macro and core inflation data quickly changed the narrative, pushing gold back down again. With concerns around the stress in the US banking system now looking to persist as a result of higher rates, and policymakers forced to intervene to ensure financial stability before price stability, gold has re-aligned with real rates, the USD and credit risk more broadly. Put differently, the sharp spike in gold prices through our 12-month target of $1950/toz is, in our view, almost entirely explained by an increase in fear-related demand for gold, in line with the fall in 10-year real rates.

As we have said before, ‘fear’ is the key medium to short-term driver for gold. While there is a close link to growth expectations, many risk factors are relevant in this context. In addition to real rates, debasement risks, sovereign balance sheet risks, geopolitical risk and other market tail risks matter because gold is a safe haven asset. As uncertainty rises, preference shifts towards more gold in the portfolio, driving prices higher. Generally, we have found in our framework that fear is a far more important driver of gold investment demand than the opportunity cost of holding gold, as measured by short-term US rates.

The catalyst for the current rise in ‘fear’ was not only banking and funding stress, to levels last seen in March 2020, but also a sharp rise in the market-implied probability of a US recession in the next year. With bank deposits at smaller regional banks now declining at speed and risks of this capital flight persisting, there is a direct pass-through to the real economy via higher funding costs that is hard to ignore. Our US economists commensurately shaved their growth projections for 2023 Q4/Q4 by 0.3pp on a pullback in lending that reduces capex, and raised the probability of the US moving into recession within 1 year to 35%, from 25% previously. The structure of the Credit Suisse resolution further raises the risk of a lingering effect of higher bank funding costs on the European economy. While the situation remains fluid, fear is contagious, and has led to a spike in COMEX net speculative positions in gold as the USD fell (on latest data up to 14 March when gold was at $1907/toz). We expect this Friday’s CFTC report to show a further jump in speculative buying for gold, coming from historically low levels. The fact that macro markets have become unusually fragile or ‘gappy’ in the recent period, likely driven by policy uncertainty, positioning risk and illiquidity, could further fuel fear-driven demand for gold, suggesting this may be a slow grind higher for gold prices. In particular, uncertainty over when central banks will eventually pivot in the face of record macro data volatility may prevail, fueling the risk of sharp, hard-to-anticipate and uncharacteristically large moves in asset prices.

In this particular case Goldman is right of course, and the chart below shows the dramatic disconnect between gold and various now failed bank stocks.

Finally, here is the justification for Goldman’s price target:

On net, these factors suggest gold is poised to move higher, although it may be more of a slow grind than continued spike. While gold has struggled over the past year in a macro environment lacking ‘fear and wealth’, we believe both factors are stacked in this favor this year. We introduce a new flat target for gold of $2050/toz versus our previous 3/6/12m forecast of $1850/1950/1950/toz. In our view, it will be challenging for gold to move sustainably above $2100/toz without a Fed cutting rates in a US recession scenario that sees it pivot towards growth support.

What slow grind? What “challenging $2100”? At this rate Gold will be at a new all time high of $2,100 in a few days as the market discounts the absolute sheer panic that will follow shortly once a handful more banks fail; that price target will be reached even faster when, not if, the Treasury finally capitulates and unleashes uniform deposit insurance, something which as we explained earlier will be the beginning of the end for the US dollar.

Full Goldman note available to pro subs here.

Via Greg Hunter’s USAWatchdog.com,

Dr. Chris Martenson holds a PhD in toxicology from Duke University, is a futurist and economic researcher. 

He is also a Wall Street Journal best-selling author with his new revised book called “Crash Course.”  Martenson said in August 2021 on USAWatchdog that the FDA approval of Pfizer’s CV19 vaccine named Comirnaty was “actually a fraud.”  He was right. 

Now, Martenson is warning that medical, financial and war troubles abound and people need to get ready to deal with a reality that no human has ever seen before.  Martenson starts with the medical disaster called the CV19 vax and explains,

“As you give these (CV19 injections) to people, their immune system gets worse and worse and worse.  That’s what is about to come through with common knowledge.  You can see them fighting it, but people are starting to notice, hey, my friend who is quadruple jabbed is getting sick all the time now with colds, Covid, whatever.  It is very clear this is the single most disastrous medical intervention in all of human history.”

In short, the death and disabilities from the CV19 so-called vaccine will continue and be a huge drag on the economy and society.

Then there is the debt-based economy that is in the process of collapsing under a mound of unpayable debt.  The problem was started with 0% and negative interest rates that went on for almost a decade.  When interest rates went up, the value of the debt went way down.  Dr. Martenson says,

“Now, they are sitting on huge, massive losses… That is a small example of what happened to Silicon Valley Bank (SVB).  In 2019, there were $19 trillion in negative interest rate bonds.  The bonds are not just under water, there are trillions of dollars in losses, and the question is who is going to eat those losses?

…We don’t just have a banking crisis.  This is just a reflection of the monetary sickness because we were led by idiots or intentionally harmful individuals. . . .

Zero percent interest rates caused damage every year it was done, and now the damage is already done.  To me, a very long period of very stupid monetary policy is now about to erupt.”

Martenson says, “People need to be ready for a vast punishing return of inflation . . .  and a decade of shortages on everything because of years of price suppression.”

Martenson also says we have been lied to about the Ukraine war.  Russia has been winning and not losing.  Martenson predicts it will not end well for NATO.

On the political front, Martenson says a Trump indictment signals banana republic time, and that will “guarantee Trump will win in a landslide in 2024.”

There is much more in the 54-minute interview.

Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Dr. Chris Martenson, founder of PeakProsperity.com, and best-selling author of the revised book called “Crash Course” for 3.21.23.

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