Month: July 2024

Authored by Wanjiru Njoya via The Mises Institute,

In her essay “Racism,” Ayn Rand argues that racism – which she describes as “the lowest, most crudely primitive form of collectivism” – is incompatible with capitalism and can only be defeated through capitalism. She defines capitalism as “a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.” She explains that a defense of private property and laissez-faire capitalism is the only way to defeat racism:

“There is only one antidote to racism: the philosophy of individualism and its politico-economic corollary, laissez-faire capitalism. … It is capitalism that gave mankind its first steps toward freedom and a rational way of life. It is capitalism that broke through national and racial barriers, by means of free trade. It is capitalism that abolished serfdom and slavery in all the civilized countries of the world.”

Walter Williams adopts a similar view of the role of capitalism in defeating racism. He argues that only in a capitalist system, where economic gains are made through free market exchange and not by seeking political preferences and protections, can minorities make economic progress:

“Free-market resource allocation, as opposed to allocation on political grounds, is in the interests of minorities and/or less preferred individuals. … The market encompasses a sort of parity nonexistent in the political arena, where one person’s dollar has the same power as anyone else’s.”

Williams’ point is that a racist seller of course wishes to sell his produce; therefore, he will not reject black buyers as he values their dollars as much as the dollars of white buyers. Most sellers would not consider it worth losing the sale simply to be true to their racist beliefs. Even in the case of a racist seller who is willing to pay a price for his desire not to transact with other races, a point is likely to come where his costs mount to a degree that he no longer considers it worthwhile to continue rejecting sales purely on racist grounds. This explains why even in the segregated states, many whites entered into commercial transactions with blacks. Williams writes:

“The fact that some blacks were able to earn a comfortable living and indeed become prosperous — in both the antebellum South, in the face of slavery and grossly discriminatory laws, and in the North, where there was at best only weak enforcement of civil rights — gives strong testament to the power of the market as a friend to blacks.”

Williams defends “free markets and the profit motive” against the charge that they reduce economic opportunities for victims of racism. He argues that on the contrary, even disadvantaged people can enjoy an advantage in free markets, based on the principle that “customers prefer lower prices to higher prices, and businessmen prefer higher profits to lower profits.” For example, a disadvantaged person could choose to work for a lower wage than his competitors in the labor market and thereby avoid both unemployment as well as the need to rely on the charity or largesse of others.

Williams acknowledges that in the absence of mandatory pricing, some may be charged higher prices than others for the same product based on their race. For example, a landlord may charge a higher rent to black tenants than to white tenants. In this case, we can stipulate that it is unfair for anyone to have to pay a higher rent than someone else based purely on his race. However, we must go further and ask: Unfair compared to what? What are the available alternatives? Williams points out that a black tenant may prefer to pay a higher rent than his white neighbor if the only alternative is to go without housing altogether. While the state can seek to equalize everyone’s rental payments and can even seek to force landlords to rent to all comers regardless of race, the state cannot force people to build or supply housing for rent, nor can the state itself undertake to house the entire population to “protect” them from having to encounter a racist landlord. Even the Soviet Union at the height of its power, when the state owned most of the housing stock and undertook to construct housing for the entire population, could not achieve that.

The risk of suffering unfairness in a free market must therefore be weighed against the hazards of marching down the path to communism in a misguided attempt to create “fair” conditions for everyone. In an argument echoed by Thomas Sowell in “The Quest for Cosmic Justice,” Williams argues that sound economic policy cannot be derived from a utopian desire to promote fairness for everyone: For example, it may be “unfair” that anyone works for less than $20 an hour, but it does not follow that working for that sum should be prohibited. Nor is it “unfair” to work for less than someone else is prepared to work for. Minimum wage legislation may seem “fair” as it guarantees that nobody earns below the set wage, but it raises the overall level of unemployment, which leaves the most disadvantaged out of work altogether. As Williams puts it, the real minimum wage is zero. His view is that “economic theory as such cannot answer questions of fairness. However economic theory can predict the effects of not permitting some people to charge lower prices for what they sell and higher prices for what they buy. … They will be worse off than otherwise would be the case.”

Williams argues that the reduction in economic opportunities, as seen for example in unemployment rates, is not due to free market exchange but to “policies, regulations, and restrictions emanating from federal, state, and local governments” as well as “the power of vested groups to use, as a means to greater wealth, the coercive powers of government to stifle market competition.” He shows that interventions designed to eradicate “racism” often leave people worse off. The solution lies in promoting capitalism, which in turn creates opportunities for economic advancement.

Williams’ analysis shows the importance of understanding economic theory as a prerequisite to understanding economic events. The economic progress among the disadvantaged races that he documents is not attributable to the policies, regulations and restrictions that people consider to be the source and guarantee of prosperity but is instead attributable to voluntary exchange. Robert Higgs, who has also documented prosperity and progress among black people in the U.S., reminds us that it is to human endeavor that we owe economic progress and not to the state:

“In any event, society’s positive, productive forces always resided within the people themselves. All the genuine peace, cooperation, production, and order the society enjoyed sprang from them. So the state was never a solution to a problem the people could not solve for themselves, but itself a problem masquerading as the only solution to problems whose real solutions already lay close at hand, if they existed at all.”

It isn’t just in Europe and the U.S. where the EV industry is seeing jolting effects of Chinese EVs entering their respective markets.

It looks like the industry in Thailand has accidentally also set off chaos in their home market by offering subsidies to Chinese EV makers, a move that Nikkei Asia reports is “wreaking havoc” in Thailand. 

The unintended consequences of EV subsidies have also affected supply chains, with at least a dozen parts producers shutting down as subsidized Chinese EV makers avoid buying from most of them.

Since the Thai government introduced the EV subsidy scheme in 2022, 185,029 EVs have been imported. However, new EV registrations stand at 86,043, indicating an oversupply of around 90,000 vehicles.

EVAT President Krisda Utamote, noting more Chinese EV makers are now investing in Thai production, said: “We are experiencing an EV oversupply as plenty of EVs imported from China over the past two years [remain in dealer] inventories.”

The EV subsidy program, initiated in 2022 under the ASEAN-China Free Trade Agreement, aimed to make EVs more affordable by offering up to 150,000 baht ($4,130) per vehicle and eliminating tariffs on Chinese imports, provided the manufacturers produce an equivalent number in Thailand. Manufacturing was required to begin this year.

Nikkei Asia reports that BYD, China’s largest EV maker, aggressively cut the price of its Atto model by 37%, while Neta reduced its V-II model price by 9%. When fully operational, Chinese EV makers in Thailand will have the capacity to produce about 750,000 vehicles annually.

These subsidies have impacted the Thai automotive sector, which employs over 750,000 workers and contributes 11% to the GDP. The automotive sector is the fourth-largest economic contributor, following tourism (18%), retail (16%), and ahead of agriculture (8.6%).

Sales of fossil fuel vehicles have declined since the subsidies, significantly affecting Japanese automakers who produce 90% of these vehicles in Thailand. Additionally, economic weaknesses have led consumers to cut back on expensive purchases, with vehicle sales in the first five months of the year down 23% from the same period in 2023, the lowest in a decade, according to the article. 

Recall, we have extensively covered how the EU is attempting to tariff their way out of oversupply problems and what the Union sees as a price distortions as a result of China’s contributions to the industry. 

As we noted earlier this summer, SAIC is being hit with a 38.1% tariff and BYD is being hit with a 17.4% tariff, the report says. Geely Auto will face a 20% tariff and all tariffs are on top of the EU’s existing 10% tariff. 

EV-makers that cooperated with the probe but weren’t in the three-company sample will face an additional 21% duty, while uncooperative ones will incur the full 38.1%. European brands like Mercedes-Benz, BMW, and Renault, which export China-assembled EVs, will also face extra tariffs, according to Caixin.

China’s Ministry of Commerce criticized the decision, stating the EU ignored facts, WTO rules, and objections from China and EU member states. Beijing vowed to protect Chinese companies’ rights.

Authored by Ethan Huff via NaturalNews.com,

The medical establishment is teeing up for the launch of another “pandemic,” this one centering around H5N8 Influenza, also known as avian influenza or bird flu.

The American Medical Association (AMA) made a few changes this past week to its Current Procedural Terminology (CPT) system, described as “the leading medical terminology code set for describing health care procedures and services.” One change is the creation of a new CPT code for H5N8 Influenza virus “vaccine” candidates that “receive emergency use authorization (EUA) from the U.S. Food and Drug Administration (FDA).”

You may recall that during the Wuhan coronavirus (COVID-19) “pandemic,” the FDA granted EUA to the lineup of injections unleashed through Operation Warp Speed. Now, for the first time since COVID, the medical establishment is readying itself for what appears to be the next scamdemic: bird flu.

To ensure that health care systems across the United States are up to date with the codes in their electronic systems, the AMA is updating its CPT system right away “in advance for the potential FDA authorization,” which appears imminent.

“The new CPT code is a vital preparatory step in response to the potential danger to humans from a highly infectious avian influenza disease,” commented AMA President Dr. Bruce A. Scott, M.D.

“A CPT code that clinically distinguishes the avian influenza vaccine allows for data-driven tracking, reporting, and analysis that supports planning, preparedness, and allocation of vaccines in case a public health response is needed for avian flu prevention.”

If Trump wins, a bird flu “pandemic” is likely

Attorney Tom Renz commented on the development after Ohio Advocates for Medical Freedom (OAMF) – Ohio is the state where Renz is based – warned that bird flu is more than likely the next scamdemic coming down the pike.

“I expect the next pandemic after Donald Trump gets back into office unless he finds a way to shut it down,” Renz wrote. “That said – can you imagine another plandemic with a Kamala Harris president? No way.”

OAMF noted that the AMA’s CPT codes cover both adults and children who will be expected to take not just a “first” bird flu shot but also “each additional vaccine,” this referring to so-called boosters.

“Mandates will come,” OAMF warned.

Ohio could become the first state in America to pass protective legislation for conscientious and religious objections to adult vaccination, the group further revealed, which is good news for everyone who lives there – but what about the rest of the country?

“This is just further confirmation that the next control pandemic is in route,” OAMF said. “We’re all focused on the election, but we need to pay attention to what they’re doing in the dark!”

Renz also had a few things to say to Elon Musk and the other controllers of X concerning the apparent censorship still taking place on the social media platform.

“Why is it that the pics on this threat keep being hidden and the thread does not appear in any searches for mRNA or elsewhere?” Renz asked after observing what he believed to be shadow-banning and other censorship actions occurring on his thread about all this.

“Obviously it is being discussed and trending but – much like many other items on my feed – the pics are continually suppressed and the post cannot be found in a search. I never get a response and simply do not understand why this keeps happening on a free speech-based platform. Elon Musk is pushing for free speech – is the staff @X listening?”

It looks as though bird flu is scheduled to be the next COVID.

Learn more at Plague.info.

Nearly every American teen has access to a smartphone or tablet and actively uses multiple social media platforms, including TikTok, Snapchat, and Instagram. In recent years, the number of social media challenges has skyrocketed and become increasingly dangerous, such as the “Tide pod challenge” and “Benadryl challenge.” Some teens are engaging in risky stunts and even orchestrating events in the real world that pose significant risks to themselves and others—all to get the clicks. 

A 17-year-old Nebraska teenager has been slapped with two felony counts of criminal mischief after he was accused of derailing a BNSF Railway freight train while filming the incident for a YouTube video. 

Here’s more from NBC News:

The 17-year-old was charged in Lancaster County Juvenile Court on Wednesday, but prosecutors have filed a motion to have the case transferred to adult court.

An investigator with BNSF Railway said in court documents that the teenager alerted authorities to the derailment and asked the investigator who arrived what caused the crash.

He is accused of tampering with a rail and causing two locomotives and five loaded BNSF cars to jump the rails in Bennet on April 21.

Under the YouTube account “Capitol City Rail Productions,” the teen uploaded this five-minute video titled “Loaded BNSF Arbor COLLIDES and DERAILS in Bennet, NE! MOST INSANE VIDEO I’VE EVER TAKEN!” 

It’s evident that the title’s wording was crafted in a way to drive clicks on social media.

“Join us as we delve into the dramatic events that unfolded when a falsely set switch altered the course of destiny. Unbeknownst to the crew of the loaded arbor coal train, a parked deflective coal car lay in wait on the wrong track, setting the stage for disaster,” the description in the video read. 

The derailment caused approximately $350,000 in damages after the freight train smashed into an empty coal car, causing two locomotives and five loaded BNSF cars to derail. 

The teen has denied trespassing on the tracks and tampering with the switch. However, investigators wrote in court documents that he knew where the switch was. They also noted a padlock that was supposed to be on the switch was missing. 

Authored by Peter St.Onge via The Brownstone Institute,

Canada’s standard of living is on track for its worst decline in 40 years, according to a new study by Canada’s Fraser Institute. 

The study compared the three worst periods of decline in Canada in the last 40 years – the 1989 recession, the 2008 global financial crisis, and this post-pandemic era. 

They found that, unlike the previous recessions, Canada is not recovering this time. Something broke. 

In fact, according to the Financial Post, since 2019 Canada’s had the worst growth out of 50 developed economies. Inflation-adjusted Canadian wages have been flat since 2016.

So, yes, something broke.

And it’s nowhere near over: Canada’s per-person real GDP is still falling and with a looming US recession – the US is 75% of Canada’s exports – Canada could crash again before it ever recovered.

Trudeau’s Canada in Decline

In previous videos, I’ve talked about the disaster that is Justin Trudeau’s Canada. In short, incomes are West Virginia-level, house prices are at the Los Angeles level, and Canadian taxes are halfway to the Soviet Union. 

It’s not rare for a middle-class family in Canada to pay half their income in taxes. 

Meanwhile, since the pandemic, Canada’s official food inflation is up 25%, and energy is up 30% – partly thanks to a carbon tax. 

And keep in mind sales tax in most Canadian provinces is 13 to 15 percent on everything you buy. 

While Canadians post TikToks about trying to stretch a loaf of rye bread through the week or selling off their possessions to afford groceries, the cost of living is hitting harder with time. 

Canadian bankruptcy filings jumped 40% last year, while CIBC reports nearly half of Canadians have zero emergency savings. 

According to StatsCan Canada’s violent crime rate is up 40% since 2014. 

An Ipsos poll found 7 in 10 Canadians agree that “Canada is broken” – rising to 8 in 10 of those between age 18 and 34. 

Angus found fully 42% of Canadians are considering moving to another country.

What Changed

This is all a shock because it happened so fast – it’s night and day from the last crisis in 2008, which Canada weathered much better than America. 

What changed? Justin Trudeau. Specifically, his campaign to convert Canada from a mixed economy like the US into a government-dominated economy like the sick men of the European Union.

Under Trudeau, business investment has plunged by a third. While government spending nearly doubled to almost half of GDP. 

Government workers in Canada are growing almost four times faster than the private sector, and one in three Canadians now work for the government, raking in 30% more in salary and benefits than the taxpayers they lord over. Another 1.7 million Canadians – roughly 1 in 10 households – are on welfare.

Of course, that makes it very difficult to win an election in Canada on a small-government platform: You’re up against the government-provided livelihoods of 40% of voters. Meaning you’ve got to win, what, 80% of everybody else.

What’s Next

Near-term things will get worse because Canadians are stuck with Trudeau through the next election in 2025.

Conservative Pierre Poilievre is ahead in the polls for now, but Canada’s government-funded media is doing everything they can to destroy him so the lead’s already narrowing.

That means more inflation, more decline, more mass migration, and rising crime in what was once a paradise.

Republished from the author’s Substack

President Nicolas Maduro alarmed and riled his enemies as well as Washington and its allies by declaring just ahead of Sunday’s elections: “If you don’t want Venezuela to fall into a bloodbath, into a fratricidal civil war, due to the fascists, let’s ensure the greatest success and greatest victory in the electoral history of our people.”

Many pundits are taking this as a warning that he’ll refuse to give up power in the unlikely event he loses his bid for six more years in office, which would be his third term. While there are eight names total on the ballot as Venezuelans wait in long lines to vote Sunday, 74-year old opposition candidate and former diplomat Edmundo González Urrutia is considered the only real contender who has a chance of defeating Maduro.

González is basically the surrogate candidate for María Corina Machado, who has organized the opposition and has become wildly popular, even recently gaining name recognition abroad and in US media.

Maduro and his United Socialist Party of Venezuela (PSUV) have ruled over the central American country since 2013, after he took over following the death of his mentor, far-left icon Hugo Chavez.

Millions of desperate citizens have already left their country in search of work and opportunities abroad amid a crushed economy and rampant accusations of corruption against Maduro government officials. Millions more may leave if his power is extended for another term.

Polls have seen massive queues since they opened at 6am, but already there are reports of barriers in pro-opposition areas and stories of black-clad, masked men blocking voting stations, as The New York Times has alleged. “The destiny of Venezuela depends on our victory,” Maduro has proclaimed at campaign rallies, while decrying efforts of a hidden imperialist foreign hand to thwart his aims, as well as longtime US-led sanctions.

Both the United States and Brazil have issued messages of “we’re watching closely”:

Asked in a press briefing whether Maduro was likely to rig Sunday’s vote, John Kirby, White House national security spokesperson, said it was difficult to know how the situation would play out but that the U.S. wanted “to make it clear to Mr. Maduro that we’re watching, we’re watching closely.”

Brazil’s President Luiz Inácio Lula da Silva has also urged Maduro to respect the results, telling international news agencies that he was “scared” by the Venezuelan’s recent remarks, Reuters reported.

Brazil’s president added that Maduro “needs to learn that when you win, you stay; when you lose, you leave.”

Very, very long queues to vote in Venezuela’s election today. Here’s a timelapse #VenezuelaVOTA #venezuela pic.twitter.com/l3jMQ4hZJH

— Catherine Ellis (@Cat_lucy1) July 28, 2024

Some analysts expect some degree of unrest and violence to break out no matter who emerges victorious, with either side set to contest.

“On the basis of their own exit polls, the opposition will probably declare victory and push for regime change, ushering in a period of heightened political tension and uncertainty ahead of the inauguration,” Andre Masuko, a research analyst with the Economist Intelligence Unit, stated to CNBC.

President Nicolas Maduro ahead of Sunday’s elections: “If you don’t want Venezuela to fall into a bloodbath, into a fratricidal civil war, due to the fascists, let’s ensure the greatest success & greatest victory in the electoral history of our people.” pic.twitter.com/rao45c0NIC

— Vera Bergengruen (@VeraMBergen) July 24, 2024

“However, we do not expect the Maduro regime to be overthrown. His strict control over the country’s institutions, including the security forces, the judiciary and the electoral national council (CNE), will be instrumental in helping him to stay in power,” he underscored.

One big unpredictable scenario of huge consequence is whether the US would throw its support behind any opposition allegations claims of widespread election abuse and fraud.

Meanwhile, the usual Neocon suspects in Congress are alleging a ‘stolen’ national election before the ballots are even in…

If the election in #Venezuela today is legitimate Maduro will lose by 40 points

But the election commission that counts the votes is controlled by the Maduro regime and they will do everything they can to try and steal it pic.twitter.com/EhxzGZjb1j

— Marco Rubio (@marcorubio) July 28, 2024

Washington weighing in too forcefully would set the stage for another anti-opposition crackdown by Maduro government security services.

By Peter Tchir of Academy Securities

Baby Pool Closed for “Maintenance”

Anyone who ever got that notice from a town or community pool knows exactly what happened. It feels like some of that has gone on in our markets of late, ensuring that this is an “adult swim.” For those who have had their vacations disrupted or are about to experience that as market volatility continues, we feel your pain!

The Nasdaq 100 has had some wild swings, and the S&P 500 broke a long string of trading days without dropping 2%. Stocks ended the week strong on Friday and we got to continue to examine de-grossing, rotations, and de-risking. Last weekend we delved into these subjects in Know When to Fold ‘Em and we refined our views on Thursday morning in A Lot Going On.

Here we are, once again attempting to navigate through what is likely going to be another “interesting” week to say the least. But, before diving into the week ahead, we saw lots of evidence of rotation/de-grossing:

• The Nasdaq 100 was down 2.6% while the Russell 2000 gained 3.5%.

• The S&P 500 was down 0.8% while the equal weight version was up 0.8%.

• Energy, which we like as our favorite hedge against geopolitical risk, was mixed (XLE was down a smidge, while OIH was up 1.6%).

• The 2s vs 10s spread on the Treasury side of things got as low as -14 and ended the week less inverted than when it started. For now, we will put this on the rotation/de-grossing side of the ledger and expect it to continue.

Questions remain about how much de-risking has occurred?

• Sure, QQQ has had some outflows of late, but it actually had inflows last week, while IWM (Russell 2000 ETF) had another week of strong inflows – which feels more like a rotation than de-risking.

• When I look at the “frothier” end of things, I see little evidence of de-risking. TQQQ (a triple leveraged Nasdaq 100 ETF) had inflows, and SQQQ (3x inverse Nasdaq 100) had outflows. That looks like risk is being added. Similarly, NVDL (1.5x NVDA) had inflows. NVDS (-1.5x NVDA) had outflows, but it is tiny. I truly don’t understand the need for single stock ETFs (call me old fashioned), but those flows give some sense of the underlying tone out there. While I don’t understand why they exist, NVDL at $4.2 billion of AUM with an expense ratio of 1.15% is on a roughly $50,000,000 annual fee run-rate, which is pretty darn impressive for the creators!

What really “seals the deal” for me on my view that we are not done de-risking (but likely will be) is the view of the Fed.

• We’ve gone from being “out there” for saying that the Fed should cut in July, to being a more or less consensus view that the Fed should be cutting, but won’t cut until September.

• According to Bloomberg’s WIRP function, based on futures contracts, the market is now pricing in 1.13 cuts at the September meeting and 3.4 cuts by the end of the January meeting. We’ve been in the camp that the Fed is late to the easing cycle, the real rates are too high, the economy is slowing, and inflation pressures have abated, but the market may be getting ahead of itself again. The current pricing is just a bit more aggressive than our view (from having been more conservative), which leads us to wonder if the Fed isn’t already priced in? Or, and this is becoming our base case, the Fed will have to ease at this pace or faster, only because economic conditions won’t support anything resembling tight monetary policy.

With a lack of fear (even VIX has scaled back), some aggressive fund flows, and conviction that the Fed is going to announce the start of rate cuts driving this market, there still seems to be far more downside risk than upside risk.

Maybe the weakest hands have played out their de-grossing strategy and the rotation that remains (which still makes sense to us) will happen in an “overall rising” market. The data could support that.

We have four reasons to expect that we have not seen the summer lows yet:

1. The Fed is fully priced in.

2. The jobs data this week will be extremely disappointing. But not so disappointing that the Fed can pivot to “full-on dovish” given the Fed’s fears of an inflation resurgence. The pendulum swinging from no landing, to soft landing, to a possible bumpy landing could be the catalyst for more downside risk, especially since the Fed will likely feel the need to be restrained for the coming months.

3. Earning and AI. There is no longer an automatic 5% pop in your stock price just for saying “AI” on your earnings call (I’m being facetious, but….). What is the cost of AI? The price to implement AI has soared. How good is the AI you are getting? The best analogy, that I have heard on many fronts, is that the “large language models” are like reading a really good newspaper or magazine. The articles on subjects that you know little about make a lot of sense. However, you find a lot of issues with the articles about your area of expertise. Yes, LLMs are only one part of AI. Even in that subset, there are different ones, and some have very specific training to overcome that rather generic analogy of reading articles. Will today’s models (or more accurately, the perception of what the cost benefit analysis will yield in a couple years) be able to justify today’s current valuations? Given positioning and some of what we have seen in some recent earnings, that might prove difficult and be a catalyst for de-risking.

4. Politics and Geopolitical Risks.

Political first. There is a real risk that as both parties start campaigning on their policies, the market will get nervous about where we are headed on the deficit and inflation. How we get the bigger deficit and inflation risks posed by each parties’ policies will be different, but I think the risks are similar and currently not being priced in. This is why we expect to see less inversion and even “normal” yield curves as term premium gets put back into the market.

Geopolitical. On Thursday we published a SITREP as Chinese AND Russian Bombers were Intercepted Off the Alaskan Coast. While intercepting bombers is “normal,” this was the first time (that we are aware of) that planes from these two countries took off from the same base and operated together near North America.

This comes on the heels of our monthly Around the World piece, published on Wednesday. It is longer than usual, as there is so much going on. The Geopolitical Intelligence Group provides an updated assessment on the War in Gaza and the risk of escalation with Hezbollah. Next, it addresses what might change and what is likely to remain the same following Iran’s election of a reformist president. Next, it identifies how Russia is enhancing its partnerships to support its war in Ukraine and some problems that are coming up in discussions about what any sort of peace might look like. Finally, we address the Increased Tensions with China in the South China Sea! While for most people, Taiwan is the main area of concern, but there is also an increased concern about China’s intentions regarding some “disputed” reefs with the Philippines. “Disputed” is in quotes, as the international courts have ruled in favor of the Philippines, so away from China’s view, there is little to dispute.

This seems like a good time to update our Geopolitical Risk vs Perception Heatmap, last published in June.

While the events of July 19th were not CYBER related, we have inched up the risk of a real cyber threat.

We’ve reduced the risk of a trade war as it seems that China is content to wait until after the election to respond to our most recent round of tariffs against them. While the real risk is reduced, the perception of risk has declined almost as fast, leaving this as a potential problem for markets.

While nothing has specifically happened with Russia, current signals, messages, and chatter warrant increasing the risk of some activity on their part, which helps support commodities.

Far and away is the risk of some “wildcard” event. The potential opportunities for a geopolitical event somewhere around the globe seem to be on the rise. We currently have a President who is not running for re-election, parties that seem as happy to attack and divide to win as they are to win on policies alone, and an entire media industry geared towards elections at the expense of reporting on the rest of the world. Maybe Russian and Chinese planes flying together near Alaska is all that we will get? Or maybe that is a snippet of our enemies/adversaries/competitors (take your pick) trying to analyze how much they can get away with?

Bottom Line

The Fed is not enough to “end the risk of de-risking.” The rotation trades should continue to work (though the move has already been quite extreme), but look for it to occur in a falling market. Look for some form of “not so good” landing to make its way back into the lexicon in the coming weeks.

• Energy remains a favorite sector.

• For banks (both KRE and KBE have been doing very well) the risk is that we get data indicating stretched consumers and unrealized problems in some segments of commercial real estate (such as office space in some specific cities). That could put some pressure on banks. The outlook is good, unless the data starts coming in worse than our already mildly bearish view, which isn’t our base case, but it seems more likely than surprising to the upside.

• Credit. If we are correct and equities face more pressure, it will translate into some pressure on spreads, but nothing to be too concerned about as equities are far more about valuations in certain areas and positioning rather than overall economic concerns that would directly affect the creditworthiness of most borrowers. However, it would be helpful if the calendar slowed, giving everyone a little time to tuck away the recent issues. Finally, if we get a scenario that puts banks under any pressure (not our view, but something to think about for the first time in a while), that would impact credit spreads more materially.

The worst might be behind us in risk assets, but the view here is that we have more trouble to come and August, often a “trend-following month,” will follow the trend of choppiness and losses for stocks.

Good luck and for those of you who swim as poorly as I do, put on the water wings, because the adult swim is likely going to continue!

July has been a super quiet month in what has been expected to be a very active hurricane season, but that could all soon change with a new disturbance developing in the Atlantic Basin. 

The National Hurricane Center reported a tropical development over the central tropical Atlantic Ocean. It is expected to interact with an approaching tropical wave early next week.

Here’s more from NHC’s latest report:

“Near the Leeward Islands and Greater Antilles: An area of disturbed weather over the central tropical Atlantic Ocean is expected to interact with an approaching tropical wave during the next several days. Environmental conditions are forecast to become conducive for some development in a day or two, and a tropical depression could form around midweek while the system is near or over the northern Leeward Islands, Greater Antilles, or the southwestern Atlantic Ocean.”

Formation odds:

• Formation chance through 48 hours was low or near 0 percent.

• Formation chance through 7 days was medium or 40 percent

Good Sunday morning! As we head through the rest of the week, we’ll be watching for the potential for a tropical depression to form near the Leeward Islands, Greater Antilles, or southwestern Atlantic.

Continue to monitor https://t.co/tW4KeGdBFb for the latest info on this… pic.twitter.com/DGRwAu6Wro

— National Hurricane Center (@NHC_Atlantic) July 28, 2024

“Overnight 00z ensembles here on weathernerds. GFS still only has a few. EURO more aggressive and more east. Nothing expected to form until near the islands. NHC remains at 40% chance,” Mike’s Weather Page wrote on X. 

Overnight 00z ensembles here on https://t.co/j6cXc9Fom0. GFS still only has a few. EURO more aggressive and more east. Nothing expected to form until near the islands. NHC remains at 40% chance. Their new update at 8am ET. https://t.co/Hk3pbO7x8H pic.twitter.com/wKiUSVkHPl

— Mike’s Weather Page (@tropicalupdate) July 28, 2024

AccuWeather Lead Hurricane Expert Alex DaSilva noted that the hurricane season will soon be entering the point where more “systems take hold and organize into tropical depressions, storms, and even hurricanes under the right conditions.” 

July brought a lull in tropical development, which will likely change as August quickly approaches. Plan those East Coast and Gulf Coast trips accordingly.

Authored by Michael Snyder via The Economic Collapse blog,

If you are still able to afford a decent home, you should consider yourself to be incredibly blessed, because vast numbers of Americans do not have a permanent place to live at this point.  Homelessness in the United States is at the highest level ever recorded, and it has been growing at the fastest pace ever recorded.  The homeless encampments that have been popping up all over our major cities have been making lots of headlines in recent years, but many of the homeless live and die in very isolated places far from public view.  What I am about to share with you should deeply sadden all of us.

Way back in the woods in southwest Florida, trails that have been made out of discarded carpets lead to absolutely enormous homeless encampments where hordes of homeless people have made homes for themselves.

One man was able to find these infamous “carpet trails”, and he posted footage of them on his YouTube channel…

Coastal areas of southern Florida are very popular among the homeless because the nights never get too cold even during the winter.

But there are plenty of other hazards, and just trying to stay alive can be a real struggle.

Of course the west coast is dealing with an even greater crisis.

In Portland, homeless encampments have taken over vast stretches of the city and nobody seems to have any solutions.

KATU recently visited one of the most notorious homeless encampments, and they discovered that it has gotten even bigger since the last time they visited it…

This is what a collapsing society looks like.

Poverty and hunger are spreading like wildfire, and the deplorable conditions in many of our core urban areas are being openly mocked all over the globe.

In fact, in China they are actually “producing documentaries on the collapse of American cities”…

The Chinese are now producing documentaries on the collapse of American cities. What this showcases is the grim aftermath of decades of deindustrialization, disastrous progressive policies, and an opioid crisis—ironically fueled by China.

“Chinese are making documentaries about ultra-extreme poverty and decaying cities since they don’t exist in China anymore,” X user S.L. Kanthan wrote in a recent post, accompanied by a short clip from the documentary highlighting the implosion of Oakland, California.

Since the video was narrated in Chinese, X user TranslateMom translated some of the captions, which said, “Everywhere is garbage … People don’t live in places. There are wanderers everywhere.”

One of the primary reasons why so many people are forced to live in the streets is because housing has become ridiculously unaffordable.

If you can believe it, there are now 237 U.S. cities where “buyers will find a price tag of $1 million or more on the typical starter home”…

A million-dollar price tag no longer means lavish and luxurious living. In more than 200 U.S. cities, buyers will find a price tag of $1 million or more on the typical starter home, a new Zillow® analysis finds.

The typical “starter home” — defined for this analysis as being among those in the lowest third of home values in a given region — is worth at least $1 million in 237 cities, the highest number of cities ever. Five years ago, there were only 84 such cities.

That is nuts!

Who can afford to pay a million bucks for a “starter home”?

This is what rampant inflation has done to us.

It has absolutely eviscerated our standard of living, and ordinary Americans such as you and I are feeling a tremendous amount of pain right now.

According to Zillow, California, New York and New Jersey are the states that have the most cities where a typical “starter home” costs at least a million dollars…

Exactly half of all states have at least one city with a typical starter home worth $1 million or more. There are 117 such cities in California, well ahead of New York (31) and New Jersey (21), which have the second- and third-highest numbers. Florida and Massachusetts round out the top five with 11 each.

Among metropolitan areas, the New York City metro, which includes parts of New Jersey and Pennsylvania, has the most cities with million-dollar starter homes at 48. The San Francisco metro has the next highest count at 44, followed by Los Angeles (35), San Jose (15), and Miami and Seattle, each with eight. Irvine, with a population of more than 300,000, is the biggest city with $1 million starter homes.

Of course California is also being overwhelmed by homeless encampments right now too.

Progressive policies have resulted in a chronic shortage of affordable housing, and that isn’t going to change any time soon.

Sadly, conditions are only going to get worse all over the nation because our economic momentum is rapidly taking us in the wrong direction.

For example, we just learned that credit card delinquency rates have risen to the highest level ever recorded…

A growing number of Americans are falling behind on their monthly credit card payments as they continue to battle high inflation and interest rates.

New data published by the Federal Reserve Bank of Philadelphia shows that credit card delinquency rates in the first quarter of 2024 rose to the highest level since 2012, when the Fed began tracking the data. All stages of credit card delinquency — 30, 60 and 90 days past due — rose during the first three months of the year.

And another major retailer just went bankrupt and is closing lots of stores…

Home goods retailer Conn’s HomePlus filed for Chapter 11 bankruptcy protection Tuesday and announced plans to close at least 70 locations across 13 states.

On its website, Conn’s says it will close 18 locations in Florida, nine in Texas and seven in Arizona. Other states that will see stores close include Virginia, Colorado, Mississippi and Oklahoma, among others.

Everywhere you look, there is suffering.

But for the moment, those at the very top of the economic food chain are still thriving.

In fact, the wealthiest one percent have actually gotten 42 trillion dollars wealthier during the past decade…

The world’s richest one percent increased their fortunes by a total of $42 trillion over the past decade, Oxfam said Thursday, ahead of a G20 summit in Brazil where taxing the super-rich tops the agenda.

Despite this windfall, taxes on the rich had plummeted to “historic lows”, the NGO added, warning of “obscene levels” of inequality with the rest of the world “left to scrap for crumbs”.

A day of reckoning is coming for them too.

In fact, a day of reckoning is rapidly approaching for the entire planet.

Our system is fundamentally flawed, and decades of really bad decisions have brought us to a breaking point.

So please don’t look down on those that have lost their homes and have no place to live, because lots more people will be joining them soon.

*  *  *

Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

Leftist corporate media can’t blame this wildfire on climate change…

Park Fire reminders:

– The fire was started by a man pushing a burning car into a ravine.

– There’s been no warming in the area where the fire started. https://t.co/sySTanbgughttps://t.co/hoE0xiCQMx pic.twitter.com/jNMVmR9SUq

— Steve Milloy (@JunkScience) July 28, 2024

The massive wildfire raging in northern California, now America’s largest active blaze and the seventh-largest in the state’s history, has an official cause according to local officials: The Park Fire was ignited on Wednesday afternoon when a man pushed a flaming car down a hill into the dried brush in Chico’s Bidwell Park. 

On July 25, 2024, NOAA’s JPSS Program satellites captured imagery of a smoke plume from the #ParkFire, located north of Sacramento, CA.

Images show a burn scar and intense heat, marked by yellow and red dots from the VIIRS Active Fire Product.

Image credit: @CIRA_CSU/@NOAA pic.twitter.com/k1yCfX3Z76

— Joint Polar Satellite System (JPSS) (@JPSSProgram) July 26, 2024

Since then, Park Fire has exploded in size, growing to more than 350,000 acres with only 12% contained as of early Sunday.

The California Department of Forestry and Fire Protection said the Park Fire is now number seven on the list of the state’s top ten Largest Wildfires.

“Extreme fire conditions continue to challenge firefighters as the blaze has now grown to over 350,000 acres. Every effort is being made to combat this devastating fire,” the state agency said. 

A #Firenado in the #ParkFire shows how wildfire conditions can suddenly change and move across roads. pic.twitter.com/B6OcPLK8bH

— R. Scott Ernst, CPA, J.D. (@ScottErnstDSV) July 28, 2024

Cal Fire Incident Commander Billy See told reporters on Saturday morning the out-of-control wildfire had been “growing 5,000 acres an hour since the inception or the ignition of this incident started,” adding, “Okay, just to put that into perspective, we’re looking at almost 8 square miles an hour this thing is taking out. … It’s going to be another dynamic day.”

Amazing footage of the #ParkFire from the Colby Mt camera on 7/26 pic.twitter.com/OGTDvQ2uck

— Hijo de Puttis (@hijodeputtis) July 27, 2024

Local paper SFGate said there has been a “continuous stream of evacuations in Butte and Tehama counties, and more recently, Shasta County.” At least 4,400 people have been evacuated from unincorporated Butte County, and about 400 people have been evacuated in Chico. 

“The entire town of Paradise has fallen under an evacuation warning. Paradise was devoured by the 153,336-acre Camp Fire in 2018; the devastating blaze destroyed more than 18,000 structures and killed 85 people,” SFGate noted.