Month: April 2024

With ever-present fears, Tehran could launch a missile or drone attack against Israel to avenge the deaths of three commanders and four officers of the Iranian Armed Forces, taken out by a precision Israeli airstrike at the Iranian embassy compound in Damascus earlier this week. New data suggests that GPS jamming across Israel is likely related to prudent defensive efforts to counter such an attack. 

On Thursday, Reuters journalists and Tel Aviv residents said GPS service deteriorated and, in some cases, entirely disrupted as an attempt by the military to prevent guided missiles and drones from hitting critical high-value targets deep within the nation. 

Many bombs, drones, and other weapons use GNSS (global navigation satellite systems) for increased accuracy. Signs of GNSS signals disrupted are more evidence Israel is on the defensive as it awaits missile attacks from Iran. 

Data from the GPS interference website “GPSJAM” shows large swaths of Israel have high levels of GPS interference. 

Other signs the conflict in the Middle East is broadening and entering a new dimension are reports that the Israeli military halted leave for all combat units on Thursday. 

“The IDF is at war, and the deployment of forces is under continuous assessment according to requirements,” the military told Reuters in a statement. 

In a separate report, Israel’s military said it was strengthening its aerial defense system with reserve soldiers:

“It was decided to increase manpower and draft reserve soldiers to the IDF (Israel Defense Forces) Aerial Defense Array.” 

This follows the deaths of some of the highest-ranking leaders in the Quds Force, who were in charge of Iran’s covert intelligence and military operations across Syria and Lebanon on Monday. The strike was among the deadliest for the Iranian military in years (read: “ZH Geopolitical Week Ahead: This Is A Declaration Of War”). 

By Tuesday, Ayatollah Ali Khamenei, Iran’s supreme leader, vowed revenge against Israel:

“The evil regime will be punished by the hands of our brave warriors … and will make them regret this crime and the like by God’s grace.”

In markets, Brent, the global crude benchmark, is nearing a five-month high as geopolitical risks from Russia to the Middle East are finally being priced in. 

As of Thursday morning in New York, Wall Street is on edge as a response is guaranteed. The question now is whether the Iranians target Israel or use proxy fighters in the Middle East to attack US bases. Houthis could also threaten more disruptions in the Southern Red Sea. 

Any escalation from here is terrible news for the Biden administration (read: here), as Brent prices inch closer and closer to triple digit ahead of the presidential elections. 

Authored by Catherine Yang via The Epoch Times,

Fulton County Superior Court Judge Scott McAfee has denied former President Donald Trump’s motion to dismiss charges under the First Amendment, noting that the way the challenge was brought limited the arguments that could be made.

“Without foreclosing the ability to raise similar as-applied challenges at the appropriate time after the establishment of a factual record, the Defendants’ motions based on First Amendment grounds are denied,” the judge wrote in an April 4 order.

President Trump is being charged along with 14 others of violating Georgia’s Racketeer Influenced and Corrupt Organizations (RICO) Act for their actions in challenging the 2020 election results.

He had brought a First Amendment as-applied challenge, arguing that everything he said listed in the indictment was protected by the First Amendment.

But when such a challenge is made before trial, the only record of facts that can be used is the indictment itself. The allegations must be accepted as fact at this stage.

Much of President Trump’s speech is cited as part of the RICO charge, in which legal acts and truthful speech can be listed in order to show that an “operation” was in place, prosecutors explained.

The First Amendment does not protect speech “integral to criminal conduct, fraud, or speech presenting an imminent threat that the government can prevent,” the judge wrote.

Political speech is protected, as is communication to government officials, but protection “does not extend to allegedly fraudulent petitions,” the judge wrote.

In the indictment, prosecutors allege all included speech was tied to criminal conduct and the furtherance of a conspiracy.

Defense attorney Steve Sadow had argued that President Trump’s speech could not be prosecuted for falsity, but the judge found that prosecutors did not bring charges because the speech was “false” but because President Trump allegedly “knowingly” and “willfully” acted in a way that “impacted matters of governmental concern.”

As for proving out that intent, that was a matter for trial, he added.

“The allegations that the Defendants’ speech or conduct was carried out with criminal intent are something only a jury can resolve,” the order reads.

Kyle Becker shared some thoughts on X:

McAfee rejected the argument that Trump’s efforts to legally challenge the 2020 election were protected under the First Amendment.

“The defense has not presented, nor is the Court able to find, any authority that the speech and conduct alleged is protected political speech,” McAfee wrote in his order.

The Democratic Party has sought to “overturn” the results of presidential elections in 2000, 2004, and 2016.

Democrats argued both Bush and Trump were “illegitimate” presidents and claimed the elections were “stolen.”

The radical left’s incendiary rhetoric about Trump led to interruptions of the electoral college proceedings in 2017 and incited violent riots on J20 during Trump’s inauguration.

Not a single, solitary Democrat has EVER been charged for seeking to “overturn” the results of an election.

This is ELECTION INTERFERENCE posing as a legal case. It has nothing to do with the law and it has nothing to do with justice.

The powerful earthquake which struck Taiwan Wednesday is being widely acknowledged as the island’s strongest one in 25 years. It killed at least ten people and injured at least 1,000, but many hundreds more have been reported stranded in inaccessible places following giant mudslides in mountainous areas, or else trapped under rubble.

The Associated Press has noted that the quake struck during morning rush hour, “sending schoolchildren rushing outdoors and families fleeing their apartments through the windows. The ground floors of some buildings collapsed, leaving them leaning at precarious angles.”

One resident of hard-hit Hualien City described, “The road below my feet suddenly turned into what felt like waves on water.”

Some 200 Hualien residents are still in temporary shelters, with major roads still closed; however, there are widespread reports that things across the self-ruled island have already by and large returned to normal. Train services near the epicenter are also back.

Additionally, Taiwan Semiconductor Manufacturing Co, among the world’s largest and most important manufacturers of computer ships, has restarted operations after a temporary pause out of caution. 

Social media videos showing the power of the earthquake have continued to emerge on social media…

Jeeeze, another video reportedly from the M7.4 earthquake in Taiwan. I can’t imagine being shaken around like that 😱

I’ve done a reverse image search and the clock stacks up. Just wondering why the Christmas tree is still up.pic.twitter.com/6r9U0KsmVK

— Volcaholic 🌋 (@volcaholic1) April 3, 2024

There’s a widespread perception that Taiwan did remarkably well and is bouncing back faster than expected a mere day after the major natural disaster. One analyst, professor Daniel Aldrich Northeastern University, observed that “It is quite remarkable that given an earthquake of this magnitude, we have seen so few reported causalities.”

He described that by comparison, “India and Haiti faced less powerful earthquakes but had far more casualties and Taiwan has managed to have so few.”

OMG! Another dashcam video from the M7.4 earthquake in Taiwan. 😱👀pic.twitter.com/8S6bICYpHD

— Volcaholic 🌋 (@volcaholic1) April 3, 2024

However, some very expensive military hardware did not escape unscathed. Taiwan’s government and defense ministry have said that the earthquake damaged eight combat aircraft at Hualien Air Force Base, southeast of Taipei.

A statement by the Taiwanese Ministry of National Defense (MND) indicated the earthquake resulted in “sliding contact” damage to six Lockheed Martin F-16V aircraft and two Northrop F-5 Tigers. According to more via Janes:

According to the MND and state-owned media, the earthquake caused boarding ladders affixed to the side of aircraft on readiness to vibrate and slide across the front of the aircraft. “This resulted in minor surface abrasions,” the MND said. “The aircraft were inspected, and it was determined that the airframe could be repaired immediately. The damage will not affect the combat readiness of the aircraft.”

Hualien, which was where the earthquake was most destructive, is home to one of two airbases on Taiwan’s east coast.

Interestingly, at the time the earthquake struck, China’s PLA Navy reportedly had several ships as well as aerial assets near the island. Going back years, there have been weekly Chinese military incursions of Taiwan’s Air Defense Identification Zone, resulting in Taipei frequently scrambling its US-made fighter jets in response.

Authored by Ryan Morgan via The Epoch Times,

Former President Donald Trump is cheering an effort, led by Republicans in Nebraska, to switch the state’s electoral college system to a purely winner-take-all contest.

Nebraska is currently one of two U.S. states that award some of their presidential electors to the winner of district-level contests, with Maine being the other state to follow a similar model. The 48 other states prefer a system where all presidential electors are awarded to the candidate who garners the most votes state-wide.

Last year, Republican Nebraska state Sen. Loren Lippincott introduced a bill, LB 764, that would move Nebraska back to a purely winner-take-all electoral college system.

Mr. Lippincott’s legislation now appears to be gaining momentum. On Tuesday, Republican Nebraska Gov. Jim Pillen released a statement throwing his support behind LB 764, urging the state’s unicameral legislature to support its passage.

“I am a strong supporter of Senator Lippincott’s winner-take-all bill (LB 764) and have been from the start. It would bring Nebraska into line with 48 of our fellow states, better reflect the founders’ intent, and ensure our state speaks with one unified voice in presidential elections,” Mr. Pillen’s statement reads.

“I call upon fellow Republicans in the Legislature to pass this bill to my desk so I can sign it into law.”

Nebraska’s legislature is officially nonpartisan, but Republicans comprise a majority of its members.

President Trump, the 2016 and 2020 Republican presidential nominee and prospective 2024 Republican nominee, also threw his support behind Nebraska’s efforts to adopt a winner-take-all electoral college system.

“Governor Jim Pillen of Nebraska, a very smart and popular Governor, who has done some really great things, came out today with a very strong letter in support of returning Nebraska’s Electoral Votes to a Winner-Take-All System. Most Nebraskans have wanted to go back to this system for a very long time, because it’s what 48 other States do—It’s what the Founders intended, and it’s right for Nebraska,” President Trump said in a post on his Truth Social account on Tuesday.

“Thank you Governor for your bold leadership. Let’s hope the Senate does the right thing. Nebraskans, respectfully ask your Senators to support this Great Bill!”

Republicans Could Benefit From Reform

Under the U.S. electoral college system, states are given a number of electors equal to the number of U.S. Senators and House members from that state’s delegation. Senators are elected in state-wide contests, while House members are selected in district-level contests.

Nebraska’s electoral college method assigns two of its presidential electors based on the state-wide winner of the presidential election. Nebraska’s three remaining presidential electors are awarded in contests that take place within its three U.S. House districts.

Republican presidential candidates have historically won the majority of votes in state-wide contests in Nebraska. In fact, the Republican presidential candidate has won a clear majority of Nebraska voters in every presidential election since 1968.

While Republicans have historically been the clear favorite in Nebraska’s state-level contests, Nebraska’s 2nd Congressional District has sometimes presented itself as more of a battleground. Republicans have swept all of Nebraska’s district-level elector contests in all but two presidential elections since 1968.

President Barack Obama won the presidential elector from Nebraska’s 2nd Congressional District in the 2008 election, while Republican presidential candidate and senator John McCain won the state-wide contest and the district-level elector contests in Nebraska’s 1st and 3rd Congressional Districts.

Voters in Nebraska’s 2nd Congressional District swung back to the Republican presidential candidate in the 2012 and 2016 elections, allowing those Republicans to win a clean sweep of the state’s electors during those two presidential elections.

While President Trump swept all of Nebraska’s electoral contests in 2016, President Joe Biden won the electoral contest in Nebraska’s 2nd Congressional District during the 2020 election.

If Nebraska’s state-wide trend of support for Republican presidential candidates continues, and if Mr. Lippincott’s bill becomes law, Republican presidential candidates could expect to win an additional elector going forward.

Recently we covered the exposure of leftist activist run “consulting firms” that have been discreetly involved in the widespread wokification of the video games industry.  These firms have been know to operate on a protection racket-like model:  They threaten video game developers with the cancel-culture mob unless they hire said firm to “fix” their games for them.  This fixing usually involves a host of DEI requirements, from forced diversity to the inclusion of LGBT related propaganda for the kiddies.

The reason these consulting outfits exist is singular – They do not care about games, gaming or gamers.  In fact, they seem to hate game consumers with a passion.  Their only purpose is to inject as much woke ideology as possible into an industry they know has immense influence on the next generation.  Leftists see video games as a platform to manipulate the collective thinking of the future.

One agenda which has been incredibly important to them is their war on the “male gaze” and western beauty standards in general.  The reasons for this are varied. 

Some activists believe that men should not be allowed to set standards for women in any form, even though women set standards frequently for men.  Biological imperatives and inherent attractions for men are treated as “toxic aggression” that needs to be snuffed out.

Other activists argue that beauty representations in popular media are “unattainable” and cause young girls and women to have a negative sense of self worth.  In reality, many beauty standards are perfectly attainable through self improvement, but this is a violation of the “beauty at any size” cult as well as claims by feminists that attractiveness is nothing more than a social construct.

Perhaps traditional beauty is attainable for most women – It’s just not attainable for feminists.

Then there are those people that want to completely subvert what it is to be a woman.  The trans movement is distinctly aware of depictions of women in pop culture and they have sought to make females appear more masculine wherever possible.  Why?  Maybe because they believe this will speed up the acceptance of trans women (men) as “real women.”  If movies or video games are saturated with manly looking women then the concept of natural femininity could be lost, at least in theory.   

This problem in particular has become pervasive in video games, with ugly female characters becoming the mainstay.  The trend has not been overlooked by the gaming community, though anyone asking for more attractive women in games is immediately attacked for “misogyny.”  

The proof that this is an agenda is revealed not only the the horse-like faces of modern female game characters but the way in which activists attack companies that choose not to follow the trend and make attractive characters instead.  This has been the case with the impending launch of a new version of a classic Sony Playstation title called Stellar Blade.  

South Korean developer Shift Up produced the game which includes a busty female protagonist complete with pleasant feminine facial features and “jiggle physics.”  Social Justice Warriors responded with outrage and leftist gaming journalists including those at IGN France suggested that the character was the “sexualized” fantasy of “someone who has never seen a woman”.

IGN was forced to apologize to Shift Up after it was revealed that the character was in fact designed by a woman.

The cult of ugly is obviously not limited to gaming.  The recent announcement of a new film version of Romeo and Juliet revealed final casting decisions, including Tom Holland and Amewudah-Rivers.  Decide for yourself which one will play Romeo and which one will play Juliet.

The progressive takeover of pop culture and the decision to erase femininity from media is not only an exercise in subverting the male gaze and adding “variety” to depictions of women; it’s also an exercise in subverting consumer demand and the free market.  If this was only about representation, then they would not be so hostile to the occasional female character that fits the traditional mold of attractiveness.  However, they can’t tolerate even one girl with jiggle physics.  The existence of Stellar Blade, for them, is unacceptable. 

They believe that consumers should not be allowed to dictate the market.  Rather, they think they should be the arbiters of everything we see and hear.  And for some reason activists really want to surround us with as much ugly as possible.

Authored by Martin Armstrong via ArmstrongEconomics.com,

Investors’ curiosity has peaked as central banks are increasing their gold purchases.

We are not going back to a Bretton Woods type situation and that is not the issue.

You must understand that gold is neutral. Central banks are buying gold because the Neocons have weaponized the dollar.

Russia was removed from the SWIFT system, and private citizens’ assets were confiscated.

When Russian assets were removed from SWIFT, a threat to the world was issued to say, “Hey, if you don’t do what we tell you to do, we will take you out of SWIFT.”

This is not the end of the dollar.

Money continues to pour into US equities, particularly the Dow. Why? When the drum of war is beating, major institutions rush to move their money into a safe haven, which happens to be the US at this point in time.

The big money is not purchasing start-up equities on the Nasdaq, for example, as they will not take that risk. Our computer model indicates the Dow will continue rising into 2032 as it remains one of the last safe havens.

The West has become extremely aggressive in its geopolitics. You simply do not buy the debt of your enemy. Central banks are buying gold because the USD is political.

There is a stark difference between short-term and long-term bonds.

The central banks have zero control over the short-term and that is how this whole QE fiasco began as central banks began purchasing long-term debt in an attempt to reduce long-term interest. Why would you buy long-term when war, the primary driver of inflation, is looming?

This is a serious situation that the neocons who have weaponized the dollar simply do not understand.

Marjorie Taylor Greene (R-GA) suggested that House Speaker Mike Johnson is being “blackmailed” because of his “complete departure” from Republican concerns, saying the Louisiana Republican “has completely changed his character.”

“Mike Johnson has completely changed his character in a matter of about five months after he has become speaker of the House,” Greene told Tucker Carlson in a recent episode of Tucker Carlson Uncensored.

Carlson pointed to Johnson’s meeting with Ukraine’s President, Volodymyr Zelensky – after which Johnson said that the second congressional recess ends, “his number one priority at a moment when the U.S. is being invaded” is to ” send that $60 billion to Ukraine, possibly as a loan.”

According to Carlson, Johnson won’t come on his show to explain, while Zelensky also refused to discuss his position:

They’re not grateful now. So we sent a message to the speaker of the House and asked him to come on and explain why, when the majority of the Republicans he represents both the voters and members of Congress, opposes why he would join with Democrats to do the one thing that Americans don’t think we should do, which is send another $60 billion to pay the pensions of Ukrainian bureaucrats and fund a doomed war. Why are you for that? And of course, he hasn’t responded. We also sent multiple requests to Zelensky himself for an interview to explain his position. Of course, he ignored that as well.

Greene echoed Tucker’s concerns, saying “It’s outrageous.”

When you saw Zelenskyy right there on that interview talking about, oh, we’re going to lose territory. Oh, we really need this money. This $60 billion should have been approved yesterday. Let me tell you, we are losing our country to the illegal invasion that’s happening every single day at our southern border. And I am so pissed off about it because the American people are pissed off about it. And while our so-called Republican speaker of the House is only working with Chuck Schumer and Hakeem Jeffries and Ukraine First Mitch McConnell and the white House and Jake Sullivan, who he talks to on the phone all the time. We are angry and people have had it.

Greene said this “needs to end,” but Johnson “has has made a complete departure of who he is, and what he stands for and to the point where people are literally asking, is he blackmailed?“

When Carlson asked her to expound, Greene said that she has “no idea” if that’s the case, but asks: “What radically changes a man. I mean, if we break down the the second part of basically an omnibus, let’s let’s break that down.”

Greene cited Johnson’s funding of “full term abortion clinics” despite being pro-life, doing “nothing for the southern border” – particularly on the heels of Laken Riley’s murder at the hands of an illegal, which followed “a video that was running on loop on social media, where illegal aliens had rushed our border, ran over Texas National Guard.”

“He did nothing to secure the border. It’s the number one issue in the world. He completely changed who he was. Funded the FBI, gave them a brand new building, fully funded the Department of Justice that is persecuting everyone on the right and actually targeting our presidential candidate, for for election this year. Literally trying to put him in jail the rest of his life. We don’t know who Mike Johnson is anymore. So there’s no, I can’t comprehend it,” Greene continued.

Watch:

NEW: Marjorie Taylor Greene Speculates Speaker Johnson Is “Being Blackmailed” — “What Do They Have On Him?”

GREENE: But now Mike Johnson has made a complete departure of who he is and what he stands for, and to the point where people are literally asking, is he blackmailed? What… pic.twitter.com/trjGjYUqpZ

— KanekoaTheGreat (@KanekoaTheGreat) April 3, 2024

And watch the entire interview below:

Ep. 88 Is Speaker of the House Mike Johnson being blackmailed to do the bidding of the left? It certainly seems that way. His colleague, Marjorie Taylor Greene, explains pic.twitter.com/r60v1XQusY

— Tucker Carlson (@TuckerCarlson) April 3, 2024

Meanwhile, you can support Tucker Carlson by subscribing to the Tucker Carlson Network if you haven’t done so already. 

Authored by Martin Young via CoinTelegraph.com,

Bitcoin futures funding rates – periodic payments made between short and long traders – may be signaling a potential price correction for Bitcoin in the future, which could present “prime buying opportunities,” according to market analysts. 

In a post shared on X on April 3, an analyst from on-chain analytics firm CryptoQuant reported that record-long positive Bitcoin futures funding rates are signalling “strong bullish sentiment.”

Futures funding rates are the periodic payments that traders pay each other based on the difference between the price of the perpetual futures contract and the spot price of bitcoin.

If the Bitcoin futures prices trade above the spot prices, longs pay shorts the funding rate. Conversely, if the futures price trades below the spot, shorts pay longs the funding rate.

Bitcoin funding rates. Source: Crypto Quant

However, “historically, such optimism precedes price corrections,” said analyst’ Crypto SunMoon,’ before adding:

“A subsequent drop may offer a prime buying opportunity.”

CryptoQuant analyst ‘Maartunn’ also observed a rising Coinbase Premium, which he said was “a sign of U.S. institutions actively buying Bitcoin.”

This premium is the price difference between Coinbase compared to global exchanges.

[ZH: Related to this funding rate is the fact that Hedge funds and CTAs currently hold record bearish wagers (in futures) on the bitcoin price…

This is going to be fun pic.twitter.com/7XiK6xGJhP

— zerohedge (@zerohedge) April 4, 2024

The record buildup in short positions likely reflects hedge funds’ renewed interest in the carry trade, according to Markus Thielen, CEO of 10x Research.

“There is a massive demand from hedge funds to put on carry trades. Despite bitcoin’s -10% decline from the all-time high, the futures premium has remained in double digits, and hedge funds are taking advantage of these high rates,” Thielen told CoinDesk in an interview.

That said, CoinDesk notes that some hedge funds may have taken outright bearish bets as recent robust U.S. economic data and hawkish comments from the Fed officials weakened the case for rapid-fire interest-rate cuts in the near term.

Still, while the massive short-length of hedge funds is unprecedented, the record-long-length of institutional investors is just as remarkable…

Who has the most leverage to unwind if things turn against them?

Additionally, bitcoin’s market dynamics appear to have fundamentally changed with the advent of US spot BTC ETFs…]

…and that could shift the market’s perceived reaction the upcoming ‘halving’.]

Earlier this week, crypto derivatives tooling provider Greeks Live said that Bitcoin’s continued decline was “driving the crypto market down significantly, with panic spreading across the market and futures premium levels falling.”

BTC has fallen around 9% over the past week, hitting a low just below $65,000 on April 2. It currently stands 10.5% below its March 14 all-time high of $73,738 and it could drop further, according to IG market analyst Tony Sycamore.

In an April 4 post on X, the analyst predicted a drop to support at around $60,000, or possibly lower.

“Tuesday’s sell-off increases the likelihood that BTC is undertaking another leg lower (into support at $60/58k) to complete a three-wave correction from the $73,794 high before the uptrend toward $80,000 resumes.”

BTC/USD with 200-day SMA. Source: Tony Sycamore

Analyst and trader ‘Moustache’ told his 112,000 followers on X “It’s completely normal that we see some correction around the ATH of BTC.”

It was the same in 2020, he said before adding, “After that, the ATH was broken with force and a legendary bull run continued.”

BTC pulled back around 17% dropping to around $61,500 a week after its all-time high, it then recovered to reclaim $71,500 in late March, before retreating again in April.

If Tesla has demand worries as a result of its poor Q1 2024 delivery numbers, it sure isn’t showing it.

Instead the company is reported to be looking to expand even further geographically, with FT reporting this week that Tesla is eyeing India as a potential site for its next electric vehicle factory, with an investment estimate ranging from $2 billion to $3 billion.

The company is set to explore locations in states like Maharashtra, Gujarat, and Tamil Nadu, known for their existing automotive infrastructure. This move aligns with Prime Minister Narendra Modi’s push to strengthen domestic manufacturing, according to CNBC and FT. 

The report notes that last month, India reduced import tariffs on select EVs for automakers willing to invest at least $500 million and initiate local manufacturing within three years, as part of a broader effort to promote India as a manufacturing hub for cutting-edge electric vehicles.

A scheme approved by the Indian government aims to attract investment in manufacturing, facilitating the production of advanced e-vehicles within the country, CNBC and FT wrote. This initiative gained momentum after Modi’s meeting with Tesla CEO Elon Musk in June, where Musk was encouraged to explore investment opportunities in India’s EV sector.

India’s push to boost domestic production aligns with its 2021 approval of a production-linked incentive scheme for automobiles and auto components, backed by a budget of $3.1 billion over five years. This scheme, extended by a year starting January 1, aims to enhance domestic manufacturing capabilities and reduce reliance on imports.

Canalys analyst Ashwin Amberkar commented: “Tesla is the most attractive electric vehicle maker for India due to its large appetite for investment in global expansion appetite and its ability to develop the EV production ecosystems. The new Indian EV policy offers increasing incentives, making it a prime opportunity for Tesla to establish a strong position in the country.”

Recall, shares of Tesla slumped to start the week after the automaker, now facing stiff competition in China from BYD and new entrant Xiaomi, posted Q1 deliveries that were far below estimates. 

Tesla produced over 433,000 vehicles and delivered 387,000. It marks the first annual Q1 delivery decline for the automaker since 2020. 

Tesla’s exact delivery number for the quarter was 386,810 vehicles, far below Bloomberg estimates of 449.080.

By Michael Every of Rabobank

The bigger ‘Bigger Picture’

Fed Chair Powell noted the FOMC will wait for a clearer signal from the data before starting rate cuts, which he continues to expect to begin “at some point this year.” In particular, he said that recent inflation data have not “materially changed” the bigger picture.

Battered bonds liked that message, bull flattening the curve; the US dollar, however, continues to batter many EM (and DM) FX, requiring higher, not lower, rates in response. Gold shone slightly brighter at a brief new high of $2,300, while Brent just failed to get back to a 9 handle at $89 and change at its intra-day high.

The latest data Powell dismissed were mixed. ADP employment was 183K vs. 150K expected, with a 10% y-o-y wage gain seen for job switchers: I recall a bond bull telling me in 2021 that they would believe inflation was back only if we got real pay-rises. Yet the ISM services survey was softer than expected and its prices paid component dipped to its lowest for four years and the employment sub-index remained below 50, showing job losses. That’s as goods inflation seemed to loom according to this week’s US ISM manufacturing survey.

To summarize, there was no material change to a US big picture which doesn’t make a lot of sense to many observers. Meanwhile, in Europe the opposite above-target CPI dynamic was confirmed, where services were stubbornly high at 4% y-o-y and the only crutch was goods deflation in food (not energy, which often drives food prices with a lag), and some industrial products (i.e., imports from China). Yet despite that big picture, the ECB has been even more dovish than the Fed in its recent statements.

Central banks are obviously determined to cut – or to make you think they are going to cut. It’s hard not to notice that rococo gilded frame if you take a step back to take it all in – which gold is very obviously doing. Yet the bigger ‘big picture’ is arguably that short of an economic downturn that no central bank expects, cutting rates could perhaps risk triggering a material, inflationary move higher in asset and commodity prices. Indeed, if real demand is going to pick up, which is the point of lower rates; and if financial speculation is going to pick up, which is why the market is focused on lower rates; and if the supply of some key goods and commodities is going to be an issue, then how does that rate-cuts = higher supply-side inflation backdrop not risk transpiring?

It would cause a major market shock if rate cuts didn’t happen; or if rates were cut anyway “because reasons/debt sustainability/populism slash elections.” But just because central banks can’t say this, as it would show the limits of what they can and can’t do in the real world, and those in markets who want higher asset prices obviously won’t, doesn’t mean it can’t hypothetically be the case. Indeed, the real world is still out there, and it’s very real right now.

• Nick Timiraos, the Wall Street Journal Fed Whisperer, shares otherwise obscure Dallas Fed research (‘Lower interest rates don’t necessarily improve housing affordability’) showing housing affordability would also have worsened since 2022 if the Fed hadn’t hiked, because home prices would have gone up more: so while higher rates made unaffordability even worse, the alternative, via lower rates, is still going to be higher house prices – which is inflationary in multiple ways. And you heard that argument here first, every few weeks for the past few years, by the way – and it applies to all Western economies, not just the US. (**cough** Australia ** cough**)
• US Treasury Secretary Yellen told China the US is going to “shield new industries” against it. So, US protectionism / mercantilism / industrial policy, another long-time call here, which is inflationary even before we get any ‘Trump Tariffs’.
• Relatedly, The Hill has a (very political/lobby-friendly) op-ed underlining government regulation, however well-intended, can be inflationary: in this case, they suggest recent measures to remove ‘forever chemicals’ from US water supplies could push up the price per household by $3,000 annually.
• China’s restrictions on exports of gallium are pushing prices up to the highest since 2011.
• Taiwan’s earthquake has disrupted chip production at TSMC: this may only be a blip, but it underlines how despite talk of supply-chain resilience, some key products still flow from very few hands.
• In the Middle East, talk is of the risks of war between Israel and Hezbollah, and that Iran might respond to the recent attack on its Damascus consulate with an outright attack on Israel from its own territory, triggering a response in kind. Israel is now calling up reservists to its air defence units, underlining the perceived threat. Such inflationary fat tails would wag many central banks if seen.
• On oil, OPEC+ supply restrictions are to stay; reports say 14% of Russia’s refining capacity has been taken out by Ukrainian attacks so far; and the US has had to back off plans to refill its Strategic Petroleum Reserve because prices are now too high – so it doesn’t have much of an SPR the next time it might need it.
• Cocoa continues to be the new crypto, as Arabica coffee is trying to copy its beverage friend short term, with very low world stocks.

Finally, in a related bigger picture of far more importance to central banks and financial markets than either wants to admit, the US is hardly inspiring geopolitical shock and awe in those willing to deliberately restrict supply of key goods and commodities to ensure the West can’t play the ‘low-rates/QE, and you give us your stuff’ game again. US President Biden’s on/off frailties are hardly news, but now…

US National Security Adviser Sullivan has postponed a planned trip to Saudi Arabia to discuss Saudi normalization with Israel, because he cracked his own rib in a “minor accident of his own” which “was not caused by anybody.” Which sounds like the kind of things that the White House press secretary keeps having to say.

US Secretary of State Blinken was forced to abandon his Boeing 737 plane due to another technical issue with it, and instead take a long drive to a key NATO meeting. Our Fed-watcher Philip Marey, as sharp with his wits as he is with his Fed calls, quipped that perhaps reporters are stealing parts from official White House planes now, not just memorabilia.