Month: August 2024

Authored by Jonathan Turley,

Special Counsel David Weiss appears to have finally made the long-awaited case exposing years of concealment and political corruption.

No, it is not the case against Hunter Biden. The allegations of tax fraud in California are obvious and unavoidable.

Weiss just made the case against the Justice Department and himself in protecting Hunter Biden from the most damaging charges of being an unregistered foreign agent. In a new filing, Weiss released evidence on Hunter taking money to advance the interests of a Romanian on United States policy.

I have previously testified on the Foreign Agents Registration Act and have previously written about the disturbing disconnect in the treatment of the President’s son as opposed to figures like Paul Manafort.

The charge was always one of the greatest fears of the White House. If Hunter Biden was a foreign agent, it would magnify the influence peddling scandal and further link his conduct to work of his father as vice president and later president.

What was previously known about millions received from China, Russia, and other countries made such a charge obvious. In the past, the Justice Department has used the charge early and often in high-profile cases to pressure defendants and force cooperation or plea agreements.

The reason is the definition:

A “foreign agent” is defined as “(1) any person who acts as an agent, representative, employee, or servant, or any person who acts in any other capacity at the order, request, or under the direction or control, of a foreign principal or of a person any of whose activities are directly or indirectly supervised, directed, controlled, financed, or subsidized in whole or in major part by a foreign principal, and who directly or through any other person— (i) engages within the United States in political activities for or in the interests of such foreign principal; (ii) acts within the United States as a public relations counsel, publicity agent, information-service employee or political consultant for or in the interests of such foreign principal; (iii) within the United States solicits, collects, disburses, or dispenses contributions, loans, money, or other things of value for or in the interest of such foreign principal; or (iv) within the United States represents the interests of such foreign principal before any agency or official of the Government of the United States; and (2) any person who agrees, consents, assumes or purports to act as, or who is or holds himself out to be, whether or not pursuant to contractual relationship, an agent of a foreign principal as defined in clause (1) of this subsection.”

For years, I have expressed alarm at the special treatment afforded to Hunter Biden on the charges.  Many of us have also criticized Weiss for allowing the most serious tax charges to expire despite being able to extend the statute of limitations. He has yet to offer a compelling reason why prosecutors would ever allow viable felony charges to expire when they could have extended that period.

Now, Biden is seeking to avoid conviction under the tax charges in California. He is repeating the claims that failed in his recent gun violation. He is claiming that he was an addict and not responsible for his criminal conduct, even though he was flying around the world collecting millions from foreign sources.

To rebut that claim, Weiss’ team said they plan to introduce evidence showing his sophisticated scheme to tap foreign sources interested in influencing the government and federal policy.

In the filing below, Weiss opposes the Biden team effort to exclude the evidence of working for the Romanians. the allegation in Biden’s federal tax case next month. The office revealed the information about the unnamed businessman in a filing that urged the court to reject Biden’s request to omit certain evidence that he believes is prejudicial against him.

Senior assistant special counsel Derek Hines writes in the filing that “[t]he evidence of what the defendant agreed to do and did do for [the businessman] demonstrates the defendant’s state of mind and intent during the relevant tax years charged in the indictment. It is also evidence that the defendant’s actions do not reflect someone with a diminished capacity, given that he agreed to attempt to influence U.S. public policy and receive millions of dollars pursuant to an oral agreement.”

That sounds a lot like the work of a foreign agent. Here is the language from FARA:

“The first category of evidence the defendant seeks to exclude is any “reference to allegations that Mr. Biden (1) acted on behalf of a foreign principal to influence U.S. policy and public opinion . . .” Motion at 3 (emphasis added). The government does not intend to reference allegations at trial. Rather, the government will introduce the evidence described above, including that the defendant and Business Associate 1 received compensation from a foreign principal who was attempting to influence U.S. policy and public opinion and cause the United States to investigate the Romanian investigation of G.P in Romania.” (emphasis added)

The other foreign dealings reportedly involved Hunter reaching out to government officials while his father was vice president. That includes the controversy over Joe Biden sudden decision to issue an ultimatum to the Ukrainian government.

In a 2018 interview at the Council on Foreign Relations, Biden bragged that he unilaterally withheld a billion dollars in US aid from the Ukrainians to force them to fire prosecutor general Viktor Shokin.

The Ukrainians balked, but Biden gave them an ultimatum: “I looked at them and said, ‘I’m leaving in six hours. If the prosecutor is not fired, you’re not getting the money.’ Well, son of a bitch. He got fired.”

However, a State Department memo is shedding disturbing light on that account and shredding aspects of Biden’s justification for the action. It directly contradicts Biden’s insistence that he took this extraordinary stand because there was little hope for the anti-corruption efforts in Ukraine if Shokin remained prosecutor.

The Oct. 1, 2015, memo summarizes the recommendation of the Interagency Policy Committee that was handling the anti-corruption efforts in Ukraine: “Ukraine has made sufficient progress on its reform agenda to justify a third guarantee.” One senior official even complimented Shokin on his progress in fighting corruption. So Biden was told to deliver on the federal aid but elected to unilaterally demand Shokin be fired.

In testimony from Devon Archer, a business associate of Hunter Biden, we learned that Burisma executives made the removal of Shokin a top priority and raised it with Hunter. He described how the need to neutralize Shokin was raised with Hunter and how “a call to Washington” was made in response. While Archer also said that “the narrative spun to me was that Shokin was under control,” he and others also heard concerns over Shokin and the risks of the investigation.

Other transactions directly requested intervention on matters being addressed by the Obama-Biden Administration.

So, now, the Justice Department is citing some of these dealings to show a conscious and premeditated effort to shake down foreigners to influence U.S. policy.

They have made more than the case against Hunter Biden.

They have made a conclusive and overwhelming case against themselves in slow walking and minimizing charges against the President’s son.

Here is the filing: gov.uscourts.cacd.907805.181.0

Multiple explosions erupted on a tanker off the coast of Indonesia’s Bali island on Wednesday, resulting in the deaths of five crew members and injuring 15 others.

AP News said tanker Elisabeth was hit with an explosion near the 21-person crew’s living quarters. This occurred while the vessel was transiting the waters near Bali’s Karangasem district, en route to West Nusa Tenggara province (on the western portion of the Lesser Sunda Islands).

Karangasem police Chief Nengah Sadiarta confirmed two explosions on Elisabeth. He said by the second explosion, the vessel had come to a complete stop.

Karangasem Police posted on X.

“It was found that there was a fire in the engine room. The crew gathered at the muster station, but there were five people who did not join and were found dead,” Sadiarta said, adding three members suffered severe burns and 12 others were treated for minor injuries. He noted the captain was reported to be safe. 

Local law enforcement is investigating the cause of the explosions.

Authored by Peter Tchir via Academy Securities,

Did VIX Really Hit 65 on Monday?

Without a doubt, the official VIX calculation reported a level of 65.73 on Monday at 8:34 am EST. That level was posted and is now being used by many people to justify long positions in equities. The theory seems to be that we had an “epic” spike in volatility indicating panic, and that panic has since receded – hence creating a buying opportunity. Notice, that we chose to use the word volatility here, partly because many seem to use VIX and Vol interchangeably – which is not accurate.

In any case, normally we’d just leave this around, but the fact that so many people are taking comfort in the “fact” (quotations used to indicate it isn’t really a fact) that we had a vol spike and it is over, makes me incredibly nervous. We will explain why.

Background on VIX

Let’s go back to September 2017, when the Wall Street Journal published Could Some VIX-Related Funds Go “Poof” in a Day? It was one of the most interesting articles I’ve worked on. We were quite alone on the view and the author received major pushback, particularly from the ETF providers. Their main argument boiled down to:

• VIX has never risen so much in a day, so it is impossible.

Our argument was quite simple

• VIX, historically had been a calculation and the products were based on VIX futures. The nature of turning something from an “observation” to a “tradeable product” introduces dynamics (like stop/loss on VIX itself) to the ecosystem, rendering historical data on when it was merely an observation less relevant.

• The exchange traded products (if memory serves, I think one was an ETF and one was an ETN) created the need to buy or sell contracts between 4 and 4:15 pm (I think that was the window) to rebalance their leverage. While traders might not discern whether there were inflows or outflows that day (which would affect the end of day need to buy or sell), it was easy to calculate the amount needed to buy or sell based on the daily change if the share count remained the same. That meant that if we had a large move, there would be large demand (far greater than normal volumes available to trade) that would occur in that window – which traders could take advantage of.

• The VIX calculation itself is quite easy to manipulate and people trying to “bust the VIX ETPs” could use that to help their efforts along with buying the futures themselves to benefit.

On March 4th 2018 the WSJ published A VIX-Related Fund Did Go “Poof’.

We got that right, partly because we had spent a lot of time on VIX calculations as TF Market Advisors had built a series of VIX calculations for fixed income (the F in TF did the heavy lifting).  We had built out HYG and JNK “vix” calculations as an additional tool to monitor fixed income markets and ETFs.

We used the CBOE VIX – Volatility Index Methodology as our guide. It is not for the faint of heart.  What struck us at the time was:

• The calculation uses the entire option chain – including very illiquid options, which seemed odd to us as it allows some largely irrelevant options could skew the entire VIX calculation.

• Increases in the bid/offer spread impacted the calculation. It would be one thing to use traded prices, but since most of the deep out of the money contracts (lottery tickets) rarely trade, the calculation can use a midpoint (I think it is more complex than that, but think that is close enough for the argument we are making). So a deep out of the money option that is quoted 1 cent on the bid side and 1 cent of the offer side and never trades is counted. If, on a volatile day, the algos making the option prices (and most of the out of money options are quoted by algos rather than humans for small size), decide to widen bid offer spread and now make the market 1 cent bid vs 5 cents offered, they just impacted the VIX significantly. PAUSE. It doesn’t take a traded value to move VIX. The seemingly “innocuous” effort for algos to avoid getting picked off (wider bid/offer spreads) on something that rarely trades, moves VIX. This is a big part of my issue with the 65 print on Monday morning.

I spent some time with Robert E. Whaley, the creator of VIX. He was generous with his time, in part because he was (and is) a Professor at the Vanderbilt University, which I also attended. It was very helpful and one factoid that I enjoyed very much was that the original name was going to be REW (his initials), but another exchange owned that ticker so they went with VIX (would a rose by another name smell as sweet?).

There is one final piece to the VIX 65 puzzle that we have been discussing here in the past. VIX only includes options expiring between 23 and 37 days. So, as the market has gravitated to 0DTE options, a much smaller percentage of total option trades involves trades that impact VIX. While daily and weekly options might be fun to punt around (they clearly are dominating in terms of flows), it left us concerned that when real hedging needs occur, and traders want longer dated options, the rush from zero day to vix eligible options could cause distortions.

That is the background on much of the thought process behind questioning basing any decision on VIX posting a 65 level.

Fear, but No Panic

There was fear, we concede that, but we will argue (and hopefully demonstrate) there was no panic.

Calculation versus Reality

Traded price, in size, is always the best mark to market. Observations, calculations, etc., no matter how sophisticated are rarely better (or more useful) than actual live traded prices. Even think to elections on how many people now prefer to look at betting markets than polls?

Here we examine the front VIX futures contract versus the VIX calculation. What we see is that moist of the time time, the front futures contract follows the VIX calculation reasonably closely. The deviations are likely easily explained (future mechanics, etc.) and are pretty negligible in the grand scheme of things.

The VIX calculation hit a high around 8:35 am EST. It was going higher in a straight line from 4am until 8:30 am. The VIX futures contract, where people risk actual money, barely budged during that period.

VIX futures hit a local high around that same time, but it was only 34.2, up from 21.8 on Friday’s close. So, I’m supposed to trust a calculation rather than a traded price?

Let’s go further.

As the U.S. stock market opens we see the VIX calculation drop rapidly. The gap between traded volatility (VIX futures) and some calculated amount dissipates rapidly!

The S&P futures did hit their low at 8:30 am, at a level of 5120. That market recovered as we neared the open and was at 5182 just after 10 am. So maybe, the fear in the markets subsided as we didn’t see “panic” selling on the open, but the moves in the VIX futures seem much more in line with what was occurring in the stock market than the VIX calculation.

Many of the people we communicate with are avid options traders. They were all complaining about abysmal liquidity in options that morning!

As discussed above, wider bid/offer spreads affect the calculation. Maybe relying on VIX calculation based on options markets before the U.S. cash markets officially open for the week is an issue? Pre-open (especially on Sunday night/Monday morning) and post-close markets can be thin and incredibly volatile (SMCI popped from roughly 620 to 727 to 550 in less than an hour after it released earnings Tuesday).

I am highly skeptical that the options prices going into the calculations for VIX were even remotely accurate (away from the biggest, most active contracts) and that is why VIX spiked to seemingly incredibly levels (because they were incredible – in the not real sense) while VIX futures seemed to behave much more like the market felt.

Apparently, I don’t have access to tick data on the futures contract going back to 2020. But in back at the COVID PEAK PANIC, the difference between VIX at 82 and VIX futures at 73 seems pretty reasonable. Maybe something will show up if I’m able to get tick data, but I think we can argue that VIX and VIX futures were much more in line back during COVID, both showing real fear. The fear was extended over days as well! They both spent a number of days at high levels. Also, fwiw, they spiked on the 12th, receded dramatically on the 13th and “re-spiked” on 16th and didn’t get back to levels seen on the 13th until 23rd.

The behavior “this time” was different and I do not believe that is a “good” thing!

ETF Flows – Greed, Not Panic

QQQ, a large Nasdaq 100 ETF had inflows on Monday (and has more shares outstanding than it did on last Thursday). SPY (S&P 500) had solid inflows on the Monday. TQQQ, a triple leveraged long Nasdaq 100 has had small outflows on Monday (was above where it started the month) and has had steady inflows since. SQQQ (inverse 3x Nasdaq 100 ETF) had outflows Monday (profit taking and people getting less short). ARKK, my proxy for “disruption” had inflows on Monday (it has since given up those flows). Finally, NVDL, the leveraged ETF based on a single stock had inflows on Monday, again on Tuesday and even more yesterday).

Show me the panic?

Bottom Line

There was no panic on Monday (nor should there have been).

As a current bear and a contrarian, it would have been nice to see panic.

People are saying there was panic and are buying the market based on that.

That scares the heck out of me! I’m going to stick with my argument that VIX futures and ETF flows tell the real story – some fear, and a decent amount of greed.

We are always looking for positioning to be offside. For narratives that are widely accepted to be fraught with issues. I think the “complacency” that the worst is behind us, is dangerous and is setting us up not only to test/re-test 200 day moving averages (likely triggered by auctions, earnings and/or economic data).

Back at “peak covid fear” we were bullish. That was real fear. Real panic. Was underestimating what the Fed could do (and they did a lot including agreeing to buy new issues and ETFs despite not having the mechanics even in place). Discounts to NAV on ETFs were all over the place. Fear was palpable.

Other than pointing to what is largely a bogus VIX calculation (based on time and knowledge of how it is calculated) where was the fear?

Despite the BOJ trying to slow the alleged yen carry unwind (by saying they wouldn’t hike while markets were volatile) the Nasdaq 100 closed lower yesterday than it did on Monday.

With, in my opinion, no de-risking, a bunch of new longs based on a VIX thesis that I think doesn’t reflect reality, we are still overbought and overleveraged and prone to more selling given the right trigger (I’m less concerned about the “yen carry trade” than the plain and simple leverage that is in the system).

Garbage In, Garbage Out, is a constant theme in T-Reports, and I think the VIX 65 print is a garbage piece of data and you use it in your investing at your own peril.

On one positive note, it seems unlikely that we fade into the close today, because even my mother has noticed that trend 

Even as I’m back to full bearish (we too enjoyed the Monday afternoon/Tuesday morning bounce) we are deathly afraid of limited liquidity, in both directions!  Small and nimble is appropriate.

Authored by Paul Joseph Watson via Modernity.news,

Head of the Met Police Sir Mark Rowley has warned that “keyboard warriors” could be hit with terrorism charges for inciting riots online, even if they are living abroad.

Rowley made the comments in response to waves of rioting that unfolded across the UK following the murder of three young girls at a Taylor Swift dance class in Southport by a 17-year-old of Rwandan migrant origin via his parents.

Asserting that the “full force of the law” would be used against offenders, Rowley made it clear that this included not just people physically involved in the riots, but those who make inflammatory comments about them on social media.

Head of the Met Police Sir Mark Rowley warns even people abroad will be arrested for mean posts. He seems to infer also @elonmusk.

With the First Amendment I don’t think an extradition request it’d get past the most under qualified lawyer. pic.twitter.com/buX0Tmc82V

— David Atherton (@DaveAtherton20) August 8, 2024

“And whether you’re in this country committing crimes on the streets or committing crimes from further afield online, we will come after you,” Rowley threatened.

A Sky News reporter than mentioned Elon Musk as a ‘high profile figure’ who was “whipping up hatred,” when in fact Musk merely asked Prime Minister Keir Starmer, “Why aren’t all communities protected in Britain?”.

“What are you considering when it comes to dealing with people who are whipping up from behind a keyboard and maybe is in a different country,” the reporter asked Rowley.

“Being a keyboard warrior does not make you safe from the law, you can be guilty of offences of incitement, of stirring up racial hatred, there are numerous terrorist offences regarding the publishing of material, all of those offences are in play if people are provoking hatred and violence on the streets and we will come after those individuals just as we will physically confront on the streets the thugs and the yobs who are causing the problems for communities,” said Rowley.

As we highlighted yesterday, authorities have warned Brits that merely retweeting information about the riots could lead to criminal charges.

Stephen Parkinson, the Director of Public Prosecutions, told Sky News that people do not even need to personally post the content themselves to be deemed to be committing an offence.

Parkinson said social media users could be guilty of “incitement to racial hatred” if they post “insulting or abusive” content that is “likely to stir up racial hatred.”

‘We do have dedicated police officers who are scouring social media to look for this material, and then follow up with arrests.’

The director of public prosecutions of England and Wales warns that sharing online material of riots could be an offencehttps://t.co/PYaeP7gPAQ pic.twitter.com/kOGWDPrlyz

— Sky News (@SkyNews) August 7, 2024

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Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

The number of Americans filing for jobless benefits for the first time fell from 12-month highs at 249k to 233k last week…

Source: Bloomberg

The non-seasonally-adjusted claims data plunged and is basically unchanged over one and two years…

Source: Bloomberg

…as it appears the Texas storm impact is fading…

Source: Bloomberg

With Michigan and Texas dominating the drop in initial claims…

But, continuing jobless claims rose to 1.875mm Americans – the highest since Nov 2021…

Source: Bloomberg

…and smoothing for the week to week noise – the 4-week moving average of initial claims also reached a new cycle high.

One key thing to note that we warned about…

One thing to note: the unemployment rate of 4.3% was boosted 0.2% by people on temporary layoff which increased by 249,000. This is mostly due to Hurricane Beryl, so expect the unemp rate to slide back to ~4.1% next month.

— zerohedge (@zerohedge) August 2, 2024

Is this bad news or good news?

Stocks seem to think ‘good’ news.

Imagine what happens next week if CPI is hotter than expected?

Authored by Stephen Katte via The Epoch Times,

A Massachusetts District Court Judge has dismissed Mexico’s $10 billion lawsuit against six out of the eight named American gun manufacturers that the country argues are responsible for firearms flooding south across the U.S.-Mexico border.

Initially filed in 2021, Mexico argued that the U.S. companies, all of which have denied wrongdoing, were undermining Massachusetts’s strict gun laws by selling weapons they knew had a chance of being smuggled across the border.

As a result, the Mexican government argued the defendants should be held responsible for a significant portion of the country’s crime—many in which the criminals employed the use of U.S.-made guns. This, in turn, has led to declining investment, economic activity, and higher spending on law enforcement, Mexico said.

The government said more than 500,000 guns are illegally trafficked annually to Mexico from the United States, more than 68 percent of which are made by companies being sued.

In the ruling, U.S. District Judge Dennis Saylor found that Mexico had not shown enough evidence to prove that the activities of six defendant companies in Massachusetts were connected to gun crime in Mexico, citing jurisdictional problems.

As a result, he dismissed the lawsuit against Sturm Ruger & Company, Barrett Firearms Manufacturing, Glock, Colt’s Manufacturing Company, Century International Arms, and Beretta U.S.A. Corp. Two defendants remain: Smith & Wesson Brands and wholesaler Witmer Public Safety Group.

Smith & Wesson Brands and Witmer Public Safety Group have not responded to a request for comment at the time of publication.

According to Saylor, the core question for jurisdictional purposes is whether Mexico’s claims against the six moving defendants “arise” from their business transactions in Massachusetts.

However, he says the connection to Massachusetts, in this case, is “gossamer-thin at best” because Mexico’s government is “obviously not a citizen of Massachusetts,” and none of the defendants operate or have a principal place of business in the state.

“None of the alleged injuries occurred in Massachusetts. No Massachusetts citizen is alleged to have suffered any injury,” Saylor said in the ruling.

“And plaintiff has not identified any specific firearm, or set of firearms, that was sold in Massachusetts and caused injury in Mexico.”

Saylor also dismissed the argument that, statistically, it was likely that some firearms sold in Massachusetts were eventually illegally trafficked to Mexico.

Steve Shadowen, a lawyer representing Mexico, responded on behalf of the Mexican government, saying it was disappointed with the decision and would be considering alternative legal options such as appealing or refiling the case in other courthouses.

Mexico’s Foreign Relations Department said in a statement that the ruling would allow the lawsuit to proceed against the two remaining defendants while other options are considered for the defendants who were dismissed.

Lawrence Keane, general counsel of industry trade group National Shooting Sports Foundation, welcomed Saylor’s decision to reject Mexico’s “obvious forum-shopping,” and expressed optimism that the U.S. Supreme Court would toss the rest of the case.

A Glock 17 9 mm (L) and a Sig Sauer P322 .22-caliber handgun are propped up by stands on a glass countertop in front of a wall of rifles in Lawful Defense in Gainesville, Fla., on April 19, 2023. (Nanette Holt/The Epoch Times)

After the case was filed in 2021, six of the U.S. arms manufacturers filed to dismiss Mexico’s claims based on a 2005 U.S. law, the Protection of Lawful Commerce in Arms Act (PLCAA). The legislation shields gun manufacturers from damages “resulting from the criminal or unlawful misuse” of a firearm.

In 2022, a federal judge ruled to dismiss the case on those grounds. However, Mexico appealed the ruling and in January, the U.S. First Circuit Court of Appeals in Massachusetts revived the lawsuit on the basis that the PLCAA does not apply in this instance.

After three rollercoaster days of wild, brutal swings, futures are flat ahead of the Thursday open, erasing overnight losses if still below the all-important CTA threshold level of 5255 which trigger billions in sales by systematic funds. Asian and European stocks declined, prolonging the soaring volatility that has gripped global markets for days after the BOJ effectively steamrolled the carry trade last week when it unexpectedly hiked rates, only to U-turn just days later when the Nikkei suffered its biggest one day crash since Black Monday. As of 7:4am S&P futures were unchanged at 5,228 while Nasdaq futures were fractionally in the green, with Mag7 and semis providing support despite the continued selling by Supermicro. Treasuries yields are lower ahead of US jobless claims data, with US 10-year yields falling 2bps to 3.93% as European bonds also gain. Keep an eye on bonds as yesterday’s 10Y auction was weak but that could have been negatively impacted by elevated Credit issuance; today is the 30Y auction. The USD is weaker and commodities are lower across all 3 complexes as WTI dips below $75, but precious metals catch a bid. Today’s macro data focus is on jobless claims; a spike there preceded a weaker NFP that coincided with the carry unwind so the market may have heightened sensitivity to the print. Elsewhere, both Goldman and JPMorgan raised their recession odds, from 10% to 25% and from 25% to 35%, respectively.

In premarket trading, Warner Bros shares plunged after the parent of CNN and TNT posted a $9.1 billion charge write-down on the value of its traditional TV networks. Monster Beverage shares slid after the energy-drink maker missed second-quarter profit estimates. Here are all the notable premarket movers:

• Amneal rises 6% after the drug maker received US FDA approval for its extended-release capsules for the treatment of Parkinson’s Disease, named Crexont.
• Bumble plunges 41% after the dating company slashed its annual revenue outlook, suggesting that an overhaul of the brand’s flagship app has failed to meaningfully reignite growth.
• Dutch Bros slumps 22% after the drive-through coffee chain tempered its store growth outlook.
• Lilly rises 10% after lifting its 2024 sales outlook for the second time this year as its blockbuster weight-loss drug Zepbound outsold expectations.
• JFrog sinks 26% after the application software company cut its full-year forecast.
• Klaviyo jumps 18% after the company boosted its revenue guidance for the year.
• Monster Beverage falls 8% after growth in the energy-drink maker’s revenue and drink volumes slowed to its worst rate since the start of the Covid-19 pandemic.
• SolarEdge tumbles 15% after the renewable energy firm’s revenue forecast for the 3Q came in well below the average analyst estimate.
• Under Armour rises 7% as management raised its guidance as the sports gear brand restructures under returning founder Kevin Plank.

Markets have been extremely volatile since poor jobs data last week fueled worries that Federal Reserve policy is risking a deeper slowdown. Coupled with a rate hike by the BOJ, the carry trade has suffered a historic unwind which according to JPM is about 75% done. Thursday’s US jobless claims figures are in sharper focus than ever after last week’s flimsy payrolls numbers. Investors are also bracing for the US and Japanese central banks to potentially move interest rates in opposite directions in the coming months, putting further strain on the yen-funded carry trade.

This is a “consolidation period before any new trend, given how volatile the market has been,” said Kerry Goh, chief investment officer at Kamet Capital Partners Pte. “Investors probably will stay sidelined until new data appear. The next couple of days will be crucial — either calm returns, or we see a new bout of volatility emerge.”

Meanwhile, as discussed last night, the divergence in US and Japanese central bank monetary policy is set to undermine the yen’s role as a cheap source of funding for financial assets. A Thursday summary of the minutes from last week’s Bank of Japan meeting showed that authorities didn’t see last months surprise rate hike as policy tightening. However, just days later, and following an epic Japanese stock rout, Deputy Governor Shinichi Uchida yesterday said the BOJ won’t raise interest rates when financial markets are unstable, a reassurance that helped buoy stocks and sent the yen lower.

Three-quarters of the carry trade has been unwound as the recent slump wiped out all positive year-to-date returns, according to strategists at JPMorgan while Goldman analysts believe that positioning in the yen is now net long, suggesting most of the carry trade has been unwound.

The carry strategy, which involves borrowing at low rates to fund purchases in higher-yielding assets elsewhere, has been wobbling for months. Carry trades were pummeled over the past week as global market volatility jumped amid fears of rapid Fed rate cuts and after the Bank of Japan’s larger than expected rate hike. The unspooling of the carry trade has further room to run, according to Quincy Krosby at LPL Financial. “A softer dollar, driven by the market’s perception that the Fed will soon initiate an easing cycle, should help support a stronger yen — a negative for the trade.”

Elsewhere, debate about the path of the US economy continues. JPMorgan now sees a 35% chance that the US economy tips into a recession by the end of this year, up from 25% as of the start of last month. The bank’s new calculation for recession risks followed just hours after a similar step by Goldman, which now sees a 25% probability of a recession in the next year.

Other investors, however, argue that the data still point to a soft landing. “I’m not that worried for the US economy. Yes, unemployment is a concern but it’s not dramatic, it’s just a slowdown,” said Francois Rimeu, a strategist at La Francaise Asset Management in Paris. “I take the view that this was just a volatility episode like we’ve experienced in the past during the summer.”

Europe’s Stoxx 600 index reversed much of Wednesday’s advance, dragged lower by technology and mining shares. The is Estoxx 50 down 1%, tech and industrials underperforming. Siemens shares dropped after the manufacturer said it sees group revenue growth and returns in its key industrial unit at the lower end of forecasts. Zurich Insurance Group AG shares fell after the company reported a rise in losses atit property and casualty arm, driven in part by “higher catastrophe losses and weather events.” Allianz SE climbed after second-quarter profit rose on stronger earnings from its life-health insurance and asset management businesses. Deliveroo Plc rallied after reporting stronger customer orders and saying earnings for the year will be on the higher end of its forecast. Entain Plc soared after the UK gambling firm got an earnings boost from this summer’s European Football Championship.

Earlier in the session, Asian equities first rose but eventually dropped, halting a two-day rally, as Japanese shares reversed an early gain after a volatile trading session. The MSCI Asia Pacific Index fell as much as 0.9%, weighed by tech shares including TSMC, Samsung and Keyence. Japan’s Topix Index declined, as technology firms tracked their US peers lower. Exporters also took a hit after the yen strengthened against the dollar. Benchmarks retreated in Taiwan, South Korea and Australia. Chinese stocks in Hong Kong and the mainland were broadly steady amid the selloff in Asia, burnishing the markets’ appeal as a foil to the ongoing global volatility while investors seek value. Sentiment in the region remained fragile in one of the most tumultuous weeks for stocks in recent memory. The Asian gauge is headed for its fourth successive week of losses as investors reassess the outlook for the US economy and the nation’s interest rate trajectory.

In FX, the Bloomberg Dollar Spot Index falls 0.2%. The Swiss franc tops G-10 peers and the Japanese yen also rises in a haven bid. The Australian dollar climbs after more hawkish rhetoric from the RBA.

In rates, Treasuries hold small gains in early US trading. Yields are richer by 1bp-2bp across the curve with inverted 2s10s around -3.5bp after closing at YTD high -2.1bp Wednesday; new 10-year is around 3.93%, lagging bunds in the sector and outperforming gilts. Supply remains in focus as auction cycle concludes with $25b 30-year bond sale and at least a couple of corporate offerings are expected to follow Wednesday’s deluge of almost $32 billion. Yesterday’s unexpectedly weak 10Y auction which tailed by 3.1bp, a notably poor result, as it drew the lowest yield in a year and spooked markets and precipitated a cross-asset selloff.  The When Issued on the 30-year yield is at ~4.225% is ~17bp richer than last month’s, which tailed by 2.2bp

In commodities, oil steadied after its biggest advance in a week, with traders still glued to fluctuations in wider markets and tensions in the Middle East. Spot gold rises $13 to around $2,396/oz.

Bitcoin rises 3.7% after Ripple framed the recent SEC ruling as a win for the company.

Looking at today’s calendar, US economic data slate includes weekly initial jobless claims (8:30am) and June wholesale inventories (10am). Scheduled Fed speakers include Barkin at 3pm

Market Snapshot

• S&P 500 futures up 0.1% to 5,231
• STOXX Europe 600 down 1.1% to 490.56
• MXAP down 0.3% to 173.35
• MXAPJ down 0.4% to 544.49
• Nikkei down 0.7% to 34,831.15
• Topix down 1.1% to 2,461.70
• Hang Seng Index little changed at 16,891.83
• Shanghai Composite little changed at 2,869.90
• Sensex down 0.6% to 79,019.95
• Australia S&P/ASX 200 down 0.2% to 7,681.98
• Kospi down 0.5% to 2,556.73
• Brent Futures down 0.4% to $78.02/bbl
• Gold spot up 0.5% to $2,394.27
• US Dollar Index down 0.21% to 102.98
• German 10Y yield -3 bps at 2.24%
• Euro up 0.1% to $1.0938

Top Overnight News

• BOJ summary of opinions shows the central bank discussed further rate hikes at last month’s meeting, but officials also believe policy remains accommodative despite modest tightening measures. RTRS  
• China’s regional banks are under fresh scrutiny from regulators for snapping up treasury notes amid an extended rally in Chinese government bonds that’s drawn alarm from the central bank. WSJ
• The PBOC may have more room for rate cuts if the Fed eases aggressively. Some economists say China’s surprise cut last month could now be followed by another two such moves in 2024 — easing on a scale unseen in years. BBG
• Taylor Swift has cancelled three concerts in Vienna after Austrian authorities said they had uncovered an Islamist terror plot to attack the singer-songwriter’s fans in the city this week. Austrian police arrested a 19-year-old Austrian citizen on Wednesday morning and a second individual of undisclosed age and nationality in the afternoon. FT
• Italy has doubled a flat tax on the foreign income of new residents, in a blow to rich expats seeking to flee the prospect of higher levies elsewhere in Europe. Prime Minister Giorgia Meloni’s cabinet on Wednesday approved a rise in the annual levy on overseas income for new tax residents in Italy to €200,000. FT
• US consumers are reining in spending on travel and leisure, hitting businesses including Disney theme parks, Airbnb home rentals and Hilton hotels as questions grow about the health of the economy. FT
• Major cryptocurrencies ticked upward after Ripple was ordered by a US court to pay a $125 million penalty, just a fraction of what the SEC had sought. “The SEC’s headwinds against the whole of the XRP community are gone,” Ripple CEO Brad Garlinghouse said on X. BBG
• Ukraine launched rocket and drone attacks as its forces expanded their operation inside Russia’s Kursk region, on the second day of a bold incursion that has forced Moscow to redeploy troops from the Ukrainian front. FT
• Google and Meta made a secret deal to target advertisements for Instagram to teenagers on YouTube, skirting the search company’s own rules for how minors are treated online. FT

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed after the weak handover from Wall St where the major indices fumbled early gains and finished in the red amid soft earnings and geopolitical risks. ASX 200 was dragged lower amid underperformance in the commodity-related stocks including BHP which is reportedly planning to sell Brazilian copper and gold assets it acquired in the takeover of Oz Minerals. Nikkei 225 slumped in early trade with losses of as much as 2.5% before briefly staging a full recovery. Hang Seng and Shanghai Comp. pared opening losses with the former making its way back towards the psychological  17,000 level, while the mainland also pared early losses but kept within a narrow range amid light catalysts.

Top Asian News

• BoJ Summary of Opinions from the July 30th-31st meeting stated one member said they must be mindful of upside risks to inflation and a member said a tight labour market and rise in import prices from a weak yen will likely keep inflation under upward pressure. There was also the opinion that it is appropriate to raise the interest rate given that the economy and prices are moving in line with forecasts and there is a need for vigilance to upside inflation risk. Furthermore, a member said there is no change to the fact that the BoJ is supporting the economy even upon raising rates as a nominal rate of 0.25% is very accommodative, while one member said given the environment surrounding inflation, it is good time to consider small rate hike and a member also said the BoJ should eventually raise rates to levels deemed neutral to economy, which is likely at least around 1%.
• RBA Governor Bullock said they are vigilant to inflation risks and will not hesitate to hike if needed, while she added the board considered a hike on Tuesday and current rates are still deemed to meet the inflation mandate. Bullock said core inflation is not expected to return to the 2–3% target range until the end of 2025 and based on current information, the RBA does not anticipate rates coming down quickly. Furthermore, she said the RBA does not react to individual economic numbers and if the economy declines faster than expected, the RBA would consider cutting rates but sees the need for more evidence to alternate the rate stance.
• RBI kept the Repurchase Rate unchanged at 6.50%, as expected, while it maintained the stance of remaining focused on the withdrawal of accommodation in which 4 out of 6 members voted in favour of the rate decision and policy stance. RBI Governor Das said India’s growth remains strong and inflation is broadly on a declining trajectory. Furthermore, Das said they want inflation to progressively align with the target and noted the food component of inflation remains stubborn but added that going forward, the base effect on inflation will wear out.
• Earthquake in Japan’s southern region, prelim. magnitude of 6.9 (rev. to 7.1 at 08:57BST), via NHK; Tsunami warning has been issued for Miyazaki and Kochi, then broadened to Kagoshima and Ehime

European bourses are lower across the board, Euro Stoxx 50 -1.2%, as the downbeat sentiment from Wall St. reverberated into APAC trade and continued. Macro newsflow light, earnings driving sectoral differences with Travel & Leisure underpinned by Entain numbers, Telecoms supported by Deutsche Telekom. Stateside, US futures are lower across the board but only modestly so with losses shallow than those seen in Europe, ES -0.4% & NQ -0.3%. Ahead, a handful of earnings due.

Top European News

• Turkey Keeps Year-End Inflation Outlook on Slowing Demand
• Siemens to Hit Low End of Forecasts on Slow Automation Sales
• Duerr Surges on Earnings Beat and Improved Order Intake Outlook
• Deliveroo Orders Grow as Demand Picks Up Across Markets
• Turkish Central Bank Keeps Year-End Inflation Outlook Unchanged
• Anti-Racism Protesters Give UK Respite After Days of Riots

FX

• DXY is softer intraday after mild gains on Wednesday, with a lack of specific catalysts thus far into US data and supply; holding just 103.00.
• JPY unreactive to a Japanese earthquake and tsunami; USD/JPY just above the 146.00 mark and softer on the session with overall action much more contained than that seen recently.
• EUR underpinned by the mentioned soft USD, but only modestly so with specifics light; similar story for Sterling, though Cable has slipped below the 1.2700 mark.
• Antipodeans are firmer, outperformance once again for the AUD after comments from the RBA Governor. Kiwi kept afloat despite softer inflation expectations which have increased the odds of an RBNZ cut next week.
• PBoC set USD/CNY mid-point at 7.1460 vs exp. 7.1821 (prev. 7.1386).

Fixed Income

• Fixed benchmarks bid, specific drivers light and the action overall well within recent parameters.
• Complex is essentially in a holding pattern ahead of US weekly data and then a 30yr auction which follows the soft 10yr on Wednesday.
• Bunds at the mid-point of c. 50 tick parameters with Gilts in-fitting but in even narrow ranges while USTs are inching toward Wednesday’s 113-37 best having pared the late-doors auction-driven downside.

Commodities

• Crude is subdued but holds onto the bulk of yesterday’s gains, complex is focussed on geopols as we await a Iran/Lebanon retaliatory strike against Israel with potential Hezbollah action also a point of focus.
• WTI Sep trades within a USD 74.78-75.70/bbl range while Brent Oct trades within a USD 77.80-78.70/bbl band.
• Nat Gas benchmarks began with marked gains, bolstered by reports of Ukrainian troops launching an attack on the Kursk, Russia region; however, the situation in Kursk has, according to somewhat mixed Russian reporting, seemingly stabilised a touch and has caused a pullback from best.
• Metals are mixed, precious peers supported by the geopolitical landscape but in narrow ranges while base metals are near-unchanged, though LME Copper attempting to pare some of Wednesday’s hefty pressure.
• Russia’s Gazprom is continuing shipping gas to Europe via Ukraine, Thursday’s volume at 37.3MCM (prev. 39.4MCM on Wednesday and 42.3MCM on Tuesday).
• China’s NDRC to cut the retail gasoline and diesel price by CNY 305/T and CNY 290/T respectively as of 8th August.

Geopolitics: Middle East

• Iran’s UN envoy said Tehran’s “priority is to punish the aggressors” responsible for Haniyeh’s assassination in Tehran and preventing the repetition of terrorist attacks by Israel. This follows a report that US officials said Iran may be rethinking launching a multi-pronged attack on Israel, while they do anticipate an Iranian response to the Haniyeh killing but think Tehran seems to have recalibrated and the US does not expect an imminent attack.
• Hezbollah reportedly looks increasingly like it may strike Israel independent of whatever Iran may intend to do, according to two sources familiar with the intelligence cited by CNN.
• Israeli officials think the target for Hezbollah’s response could be the IDF headquarters in the centre of Tel Aviv or the Mossad headquarters and other key intelligence bases in northern Tel Aviv, according to Axios’s Ravid.
• Israel told the US if Hezbollah harms Israeli civilians as part of its retaliation for the assassination of its top military commander, the Israel Defense Force’s response would be disproportionate, according to two officials cited by Axios.
• Saudi Deputy Foreign Minister said Haniyeh’s assassination is considered a ‘blatant violation’ of Iran’s sovereignty.

Geopolitics: Other

• Russia’s Medvedev said Russia must press on to Odesa, Kharkiv, Dnipro, Mykolaiv, Kyiv, and further, while he added that Russia will stop only when it finds it acceptable and beneficial.
• Russia’s Defence Ministry says Russia is thwarting Ukraine attempts to break through deeper into Russia’s Kursk region, according to agencies.

US Event Calendar

• 08:30: July Continuing Claims, est. 1.87m, prior 1.88m
• 08:30: Aug. Initial Jobless Claims, est. 240,000, prior 249,000
• 10:00: June Wholesale Trade Sales MoM, est. 0.3%, prior 0.4%
• 10:00: June Wholesale Inventories MoM, est. 0.2%, prior 0.2%
• 15:00: Fed’s Barkin Speaks in Fireside Chat

Nassau County Republicans passed the “Mask Transparency Act” on Monday, making it a misdemeanor for anyone 16 and older to wear a face mask in public spaces except for health and religious reasons. This move aims to curb criminals or violent protesters who exploit mask-wearing to conceal their identities. 

Nassau County Legislator Mazi Pilip proposed the Mask Transparency Act after one of her constituents was attacked by a mask-wearing protester.

“Having them covering their faces, thinking they can do whatever they want. This is absolutely unacceptable,” Pilip told NBC New York.

Nassau County Executive Bruce Blakeman shared a similar view… 

“Unless someone has a medical condition or a religious imperative, people should not be allowed to cover their face in a manner that hides their identity when in public.” 

Violators of the bill could be slapped with a fine of up to $1,000 and even jail time. The bill had unanimous support from all 12 Republican legislators in Nassau County. 

It’s official: Mask ban in Nassau County, New York passes along party lines, 12-0 (7 abstentions). It makes wearing a mask a misdemeanor (with unclear health and religious exceptions) and gives police the power to fine people wearing a mask $1,000 and sentence them to jail time. pic.twitter.com/wgcXQhCC1u

— Dr. Lucky Tran (@luckytran) August 5, 2024

Far-left protesters, including Antifa, Black Lives Matter, and some pro-Palestinian protesters, have favored masks to conceal their identities.

Meanwhile, criminals emboldened by failed progressive laws in New York City have had a field day with mask-wearing policies, utilizing them to their advantage. From smash-and-grabs to robberies to subway attacks, it’s widely known that criminals wear masks.  

Even Democratic New York Gov. Kathy Hochul has considered banning masks in NYC over “antisemitic acts” and other crimes. 

The New York Civil Liberties Union criticized the bill, calling the exceptions “wholly inadequate.” 

“Nassau County police officers are neither health professionals nor religious experts capable of deciding who needs a mask and who doesn’t,” NYCLU wrote on X. 

Democrats are likely going to freak about this new bill because now their ‘agents of change’ – or far-left professional protestors will actually have to show their faces or risk being arrested.  

Here’s a bold move for Republican lawmakers nationwide… Replicate the Mask Transparency Act across your metro areas to stop the spread of criminals and violent protests.

Authored by Mike Maharrey via Money Metals,

I’ve been watching the commercial real estate (CRE) sector as a potential catalyst for the next financial crisis. So far, it has managed to hold together, but there is still trouble brewing under the surface.

The story of one commercial real estate investment by UBS Group is a microcosm of the commercial real estate market.

In 2006, an investment fund managed by a division of UBS bought the Sports Illustrated Building in Manhattan for $332 million. It purchased the land under the 925,000-square-foot building in 2012 for $279 million. 

Seven years later, UBS sold the land to Safehold for $285 million. Safehold specializes in land leases, and at the time of the sale, UBS inked a long-term ground lease with the company to retain control of the building.

According to Wolfstreet, UBS likely held onto the building in 2019 because there was an office shortage in Manhattan, and rents were sky-high. 

“In theory, UBS could draw income from the building – the office rents, on their way to the moon, would hopefully exceed the costs of the ground lease and other expenses – while it had drawn $285 million in cash out of the property.”

As you can guess, things didn’t turn out that way.

Not anticipating COVID-19, UBS pumped even more money into the building, with approximately $76 million in renovations.

When construction was completed in early 2021, the building was leased to about 40 percent of capacity. At the time, UBS had invested about $408 million in the property.

Of course, by this time, the CRE market was in the midst of a freefall. Building occupancy quickly fell to 35 percent. 

UBS faced a double-whammy of falling occupancy and declining rents. Rental income could no longer cover the ground lease. As WolfStreet put it, “The whole thing had turned into a money-suck.”

UBS put the tower on the market. It almost managed to cobble together a deal, but it fell through. Eventually, the investment bank sold the building via online auction for a paltry $8.5 million.

Putting it all together, UBS paid $332 million for the building and then invested another $76 million in renovations for a total of $408 million.  Then it sold the building for $8.5 million, a massive $399.5 million loss.

It did manage to eke out a $6 million gain on the land, dropping the total loss to $393.5 million – a 43 percent loss on the investment.

The loss won’t look as bad on the books because accounting rules allow UBS to depreciate the value of the building, but accounting tricks don’t mitigate an actual loss.

Now, multiply this scenario hundreds of times and you can see why there is worry about the CRE market.

Today, the CRE sector faces the triple whammy of falling prices, falling demand, and rising interest rates. The post-pandemic rise of telecommuting and work-at-home programs crushed demand for office space. Vacancy rates in commercial buildings have soared.

This has put significant stress on commercial real estate companies. The biggest bankruptcy in 2023 was the failure of the Pennsylvania Real Estate Investment Trust. The company had loaded up with more than $1 billion in liabilities.

The collapse of the commercial real estate market could easily spill over into the financial sector. That’s because a lot of loans are coming due.

According to the Mortgage Bankers Association, around $1.2 trillion of commercial real estate debt in the United States will mature over the next two years.

According to Trepp (a real estate data provider), $2.56 trillion in commercial real estate loans will mature over the next five years, with $1.4 trillion held by banks.

All of that debt will have to be refinanced. That’s a big problem for debtors who face much higher interest rates to borrow money on buildings with much lower values.

And as the UBS example shows us, selling the buildings doesn’t offer a solution.

Three huge concerts by superstar pop singer Taylor Swift have been cancelled in Vienna after authorities on Wednesday announced they’d arrested two men alleged to have been plotting a terrorist attack. Three more suspects are reportedly at large. 

“Both [arrested] suspects had become radicalized on the internet and had taken concrete preparatory actions for a terrorist attack,” said Austria’s interior department in a press release. As is so frequently the case in Europe, details on the suspects — and especially their demographics — are scarce at this point. Officials did say that one suspect is a 19-year-old Austrian citizen who’d recently made an online pledge of allegiance to the Islamic State terror group. 

“During our investigations, we identified preparatory actions and noted that the 19 year-old suspect had a particular focus on the Taylor Swift concerts in Vienna,” said Austrian director general for public security Franz Ruf at a press conference. He added that police who raided the man’s home in Ternitz — about 80 miles south of Vienna — found chemical substances, though it’s not clear what they were or if they were to be used in an attack. 

While the suspected plot against Swift has been neutralized, local media reports that three more men are wanted by police, who remain on an elevated state of alert. “The concrete threat, as you’ve heard, has been minimized, but there remains an abstract increased threat,” said Vienna State Police president Gerhard Pürstl. 

“The Taylor Swift concert plot fits ISIS-K’s modus operandi perfectly,” Colin Clarke, a counterterrorism analyst at the Soufan Group told the New York Times. “A high-profile soft target which, if successfully attacked, would result in massive civilian casualties while generating worldwide publicity.” As an example, he pointed to the 2017 bombing of an Arianda Grande concert in England that killed 22 attendees. 

The first of three concerts was scheduled for Thursday night. Together, the trio of event was expected to see almost 200,000 fans pack into Ernst Happel Stadium, which is also used for major outdoor sporting events and previously hosted the Rolling Stones. Each night, they expected 65,000 people inside the stadium and another 15,000 hanging around outside it. 

 “With confirmation from government officials of a planned terrorist attack at Ernst Happel Stadium, we have no choice but to cancel the three scheduled shows for everyone’s safety,” said Austrian concert promoter Barracuda Music in an Instagram post. The firm assured that tickets would be automatically refunded within 10 business days. Fans — throngs of whom had already begun gathering around the stadium to socialize and buy souvenirs and swag — were crushed. 

News of the alleged terror plot in Austria comes little more than a week after a children’s dance workshop centered on Swift’s music was attacked in England, with a knife-wielding 17-year-old of Rwandan descent murdering three children and injuring nine more. 

“These were just little kids at a dance class,” Swift wrote on Instagram. “I am at a complete loss for how to ever convey my sympathies to these families.” In the aftermath of the attack, England has witnessed huge riots, with violence alternatingly unleashed by people fed up with mass, third-world immigration, and by immigrants themselves.  

#JIHADITERROR : Three Taylor Swift concerts are cancelled after ISIS fanatics target Vienna stadium & cops hunt terror cell.

Suspects allegedly had detailed plans on how to carry out a mass attack#TaylorSwift #TourVienna #ISIS #taylorswiftconcert #Austria #terrorattack… pic.twitter.com/jBoUToMApl

— upuknews (@upuknews1) August 7, 2024

In July, Austria’s Interior Ministry announced new requirements to be imposed on asylum seekers throughout the country. As EuroNews explained, the program is meant to “strengthen the integration of refugees and provide them with a clear grounding in Austrian values and social mores.” 

The “catalogue of requirements” includes mandatory charitable work for the government, or nursing service or homeless shelters. At the same time, a “benefits card” is being tested, to facilitate giving the migrants spending money. “If you don’t do any charitable work, your pocket money will be reduced from €40 to €20,” Interior Minister Gerhard Karner said. “That is one of the clear consequences.” Migrants will also have to “receive information about Austrian culture, values and social etiquette, as well as equality, democracy and anti-Semitism,” reports EuroNews.

Karner claimed in July that more restrictive immigration policies are helping to ease pressure on Austrian society — but Wednesday’s news of a suspected terror plot seems to show there are still alarming implications. While rioting probably isn’t in the cards in Austria, we can imagine that the cancellation of the highly-anticipated Swift concerts in Vienna might sour some local “Swifties” on the whole “diversity is our strength” mantra.