‘Accidentally Posted’ Campaign Ad Suggests Harris To Pick Shapiro For VP

‘Accidentally Posted’ Campaign Ad Suggests Harris To Pick Shapiro For VP

A staffer for Philadelphia Mayor Cherelle Parker ‘accidentally posted’ a video meant to be released next week which reveals Pennsylvania Governor Josh Shapiro as Kamala Harris’ running mate.

“Philly political sources have told me that a staffer connected with Mayor Cherelle Parker’s team accidentally posted the video today,” posted journalist Ernest Owens on X.

“The video was scheduled for Monday…after VP Kamala Harris was expected to announce her pick.”

“It’s Josh Shapiro, y’all,” Owens continued.

Or, as Owens also suggested – this could be an ‘accident’ which serves as a trial balloon, and Harris could go in a different direction.

Shapiro notably canceled fundraising events in New York this weekend and “is likely to meet with Vice President Kamala Harris as she works to pick a running mate,” reported WHTM earlier in the day.

Meanwhile, Shapiro has come under fire from women’s groups after his administration settled a sexual harassment claim against one of his longtime aides for $300,000.

In a statement headlined “Gov. Shapiro’s Failures Enabled Sexual Harassment,” the National Women’s Defense League said that the Harris vetting team should “consider the handling of past complaints of sexual harassment inside the Pennsylvania Governor’s office.” The group claims to be a nonpartisan organization dedicated to preventing sexual harassment. -Daily Beast

We’re guessing said women’s groups will promptly fade into the bushes.

Tyler Durden
Fri, 08/02/2024 – 17:20

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Illinois’ Stupidest Bill Of The Year Signed Into Law: the Falsely Labeled, Unconstitutional “Worker Freedom Of Speech Act”

Illinois’ Stupidest Bill Of The Year Signed Into Law: the Falsely Labeled, Unconstitutional “Worker Freedom Of Speech Act”

By Mark Glennon of Wirepoints

Illinois progressives are all over the media congratulating themselves on passage of The Illinois Worker Freedom of Speech Act, signed into law by Gov. JB Pritzker on Wednesday. It passed both houses in the General Assembly along strict party lines, with Republicans opposed.

It has nothing to do with worker freedom of speech, creates a nightmare for employers and is yet another measure by the state that flagrantly ignores the First Amendment’s right to free speech.

Under the Act, most every employer in the state faces mandatory fines of $1,000 per employee plus civil lawsuits if they discuss “religious or political matters” at meetings where worker attendance is mandatory.

Think about that – no discussions allowed on political matters.

So, say you work for a company that makes a renewable energy product of some kind. Your employer would be fined for  a meeting discussing the importance of government subsidies for your product and your job . Likewise, a company making conventional gasoline powered vehicles could not tell its employees about the impact of government efforts to replace them with electric vehicle makers.

The list of similar examples is endless. Most every company today has matters pending in government that could impact the company, its capacity to hire people, how much it can afford to pay them and even matters outside of the company’s business that may be important to workers. Employers obviously should have the right to communicate their views on that and hope their workers will support them, and they do under the First Amendment.

Some companies are particularly political. Take a look, for example, at some of Google’s leaked “all hands meetings.” Many brim with discussion of political matters. Here’s a clip from one where Google execs melted down, some choking up, while discussing Donald Trump’s election and how they should counteract it.

I don’t know whether attendance was required at those meetings, but if it was and such a meeting was in Illinois, the company would be fined a thousand bucks under the Act for every Illinois employee there. That’s wrong. Giggle if you want but they should be free to discuss those things as they choose.

The list of exemptions from the Act is very narrow. Even nonprofit 501(c)(3) companies are covered. Most think tanks and many political policy operations on the left and right are 501(c)(3)s, including Wirepoints. We and others like us now can’t discuss government matters at our internal meetings?

Good luck trying to force us to comply. The Act is as brazen a First Amendment violation as you will find. At least six other states have passed or are considering similar legislation, called “captive audience bans,” and they are already being challenged in court on First Amendment grounds.

The main purpose of the Act was to ban meetings where management discourages union activity. The Act does that, but to say it’s overbroad would be a monumental understatement. Even that purpose is legally questionable. Other captive audience bans are being challenged on the grounds that the field is preempted by the National Labor Relations Act, making the state laws impermissible.

Illinois has now firmly established itself as the state most hostile to freedom of speech. A list of examples is below.

In one case last year, the state’s First Amendment violation was so extreme that a federal judge ridiculed it as “stupid” as well as unconstitutional. That forced Illinois Attorney General Kwame Raoul to give up trying to defend the law at issue.

Let’s hope this new law gets taken to court fast. It, too, is stupid as well as unconstitutional.

Tyler Durden
Fri, 08/02/2024 – 17:00

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Fed Finagles $173 Billion In (Positive) US Bank Deposit ‘Adjustments’ In The Last 3 Weeks

Fed Finagles $173 Billion In (Positive) US Bank Deposit ‘Adjustments’ In The Last 3 Weeks

For the third straight week, US bank total deposits rose last week (+$16.7BN) on a seasonally-adjusted basis…

Source: Bloomberg

Meanwhile, on a non-seasonally-adjusted basis, US bank total deposits dropped (for the third straight week) by $55.7BN (back near two-month lows)…

Source: Bloomberg

And that means, excluding foreign deposits, we have a third straight week of domestic deposit inflows (SA) and outflows (NSA). Last week saw $53BN in NSA outflows (large bank -$54BN, small bank +$1BN) morphed into $26BN of SA inflows (large bank +$11BN, small bank +15BN)…

Source: Bloomberg

Over the last three weeks, domestic deposits have risen $89BN (SA) or fallen $84BN (NSA)…

Source: Bloomberg

Obviously, given our lack of PhD-ness, we could not possible question the reality of either of these streams of data – but $173BN difference in three weeks seems like a lot to us simple folk.

Loan volumes increased for the fourth straight week…

Source: Bloomberg

Finally, we note that US equity market caps are starting to decline…

Source: Bloomberg

How far will they be allowed to decline before The Fed steps in with some liquidity boost?

Tyler Durden
Fri, 08/02/2024 – 16:40

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Into The Weird!

Into The Weird!

Authored by James Howard Kunstler via Kunstler.com,

“What we are witnessing is nothing less than the failure of the greatest propaganda apparatus in history.”

– Mattias Desmet

Have you noticed yet? — the weird thing about Veep Kamala Harris is how weirdly brisk her transfiguration was from a sit-com character to Wonder Woman, overnight in the reality-optional news media. In a party burdened with complex ideology, she was known only for tautology: “The significance of the passage of time, right? The significance of the passage of time,” she repeated solemnly on a tour of a Louisiana library in 2022. “So, when you think about it, there is great significance to the passage of time.” Yes, ma’am. You nailed that ol’ coonskin to the wall, all righty!

Suddenly her time has come! Everything is Kamala Kamala Kamala. Lights! Camera! Action! But, as you have already been informed, time does not stand still. If it did, then everything would happen at once, which would be a great inconvenience to all. In what seems like a magically extended moment since someone told “Joe Biden” to go dangle, Kamala acquired a lance and halo and rode forth to save our democracy.

Yet, it’s a long way to the grand meet-up of Democratic Party delegates in Chicago, August 19, and that journey is cluttered up with long moments like the one we’re in now, moments when delegates are liable to stew, and maybe even think about more moments to come when the magic of the current moment has passed — because that, after all, is the significance of the passage of time! Here today, gone tomorrow! Hope and change! Go through enough passages of time and things can happen, or even un-happen, such as, perhaps, the rise and fall of the Veep as the champion of this figment known as our democracy. It’s kind of like what they used to say sixty years ago in Vietnam about having to destroy the village in order to save it. Only this time around, it’s democracy in America.

At the convention in Chicago, apropos of whoever selected Kamala Harris, someone might blurt out: “Say, who elected you boss of this outfit?” The answer, of course: nobody. Delegates may share their gnawing doubts in the hallways and state caucus breakout rooms. Metaphysical conundrums will arise. All that sub rosa chatter might even coalesce into. . . a movement! In the name of democracy, someone screeches, a public roll-call vote must be taken! Say, what? We thought that was settled two weeks ago when the virtual roll call happened. Nuh-uh, nah, no way, more delegates chime in. Here is your teachable moment: the virtual is not an adequate substitute for the authentic.

Meanwhile, riots in the streets outside the convention center. Antifa! Black Lives Matter! From the river to the sea, Palestine will be free!

The police, successfully defunded, stand aside and let youth go apeshit. Inside the hall, pandemonium! And so, the momentous roll-call is induced to happen right there on the convention floor with all those colorful hats bobbing amongst the standards of the fifty states — plus a bunch of territories — swaying to the rhythm of Fleetwood Mac’s “Don’t Stop (Thinkin’ About Tomorrow)”.

Things grow complicated. There is the matter of the superdelegates, bought and paid for ages ago by. .  . the Clinton Foundation! The passage of time goes from elongated to compressed. As good ol’ V. Lenin used to say: There are years when nothing happens and moments when decades happen — or something like that. Also, somebody recalls, it takes a village to . . . what. . . ? Why, to nominate a candidate.

And thus, ever so democratically, does Hillary seize the moment and the convention, and swoop to the podium on her great leathery wings crying “caw caw caw abortion!” The news media will go into super-overdrive shaping the narrative about the Democratic Party rank-and-file marshaling democracy to save democracy. The story will make the marginalized weep and the lame leap for joy. She-Whose-Turn-It-Is will not be denied! The pussy-hats come out again. The patriarchy runs for its life. . . .

At least that’s the dream.

In the passage of time from August through September and October, something else happens. Reality creeps back onto the scene after a long sojourn in the nether regions of human vicissitude. The economy goes to shit, the markets tank, and war breaks out.

A new consensus congeals through what’s left of the nation:

thank you Democrats for wrecking America. Now, go dangle!

Mr. Trump, having survived three more attempts on his life, gets elected and inaugurated. A great sorting of the mentally ill and the just plain criminal happens. Weirdly, we move forward into the weird. Wait for it. (Things take time.) That is the significance of the passage of time, after all.

*  *  *

Support his blog by visiting Jim’s Patreon Page or Substack

Tyler Durden
Fri, 08/02/2024 – 16:20

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Market Ka-Mauling

Market Ka-Mauling

This was the week when – like Biden’s dementia – economic weakness became too much for the mainstream to ignore and while Powell hinted at cuts to come, the market demands more (again) and stocks won’t be satisfied until they get them.

Source: Bloomberg

“Growth scares” now dominate the narrative (maybe growth’s demise is not so ‘transitory’)…

Source: Bloomberg

…as Kamala overtakes Trump in the prediction markets…

Source: Bloomberg

The economic weakness prompted the market to bet large on bigger (and sooner) rate-cuts – now pricing in 116bps of cuts in 2024 (and 100bps more in 2025)…

Source: Bloomberg

If you feel like you’ve heard this story before, you have… twice!

Source: Bloomberg

…and neither time did things work out as the market had hoped…

Source: Bloomberg

…and that smashed Treasury yields lower on the week, with 2Y yields crashing almost 30bps today alone and down a stunning 50bps on the week!

Source: Bloomberg

Today was the biggest drop in 2Y yield since Dec 2023 (Powell pivot) and the biggest weekly drop since March 2023 (SVB collapse).

The entire curve (ex-30Y) is now below 4.00%…

Source: Bloomberg

And the yield curve has disinverted (2s30s now at its steepest since July 2022)…

Source: Bloomberg

Stocks did not love the dovishness as the ‘soft landing’ narrative morphed into ‘growth scare’ and ‘we are gonna need a bigger boat’-gull of rate-cuts. Small Caps (the most sensitive to the economy) collapsed this week, but while they were the worst of the bunch, all the US majors puked bigly…

This was the Russell 2000’s worst week since March 2023 (SVB collapse), and the fourth weekly drop for Nasdaq in a row.

The S&P 500 found support at its 100DMA today…

But NASDAQ broke below its 100DMA…

And The Nasdaq is now officially in correction…

Magnificent 7 stocks are now down an incredible $2.3 trillion market cap from their record highs…

Source: Bloomberg

“Most Shorted” stocks were clubbed like a baby seal this week, erasing all of early July’s short-squeeze…

Source: Bloomberg

The options markets shit the bed with VIX exploding to almost 30 at its peak today (highest since Oct 2022) and VVIX smashing above the critical scare level of 100 (to its highest since March 2022)…

Source: Bloomberg

And the “correlation 1” move in markets this week sent implied correlation dramatically higher…

Source: Bloomberg

The dollar dovishly tanked this week, back to July’s lows…

Source: Bloomberg

..as Yen soared (carry unwinds) to its strongest close against the greenback since January…

Source: Bloomberg

Bitcoin had a tough week, tumbling back from $70k to test down to $62k…

Source: Bloomberg

…but the entire crypto space was hit hard this week, with Solana the worst…

Source: Bloomberg

Gold tested up near record highs once again before being battered lower today (but was higher on the week)…

Source: Bloomberg

Crude oil prices plunged to two-month lows as the ‘growth scare’ weakness trumped MidEast geopol risk premium…

Source: Bloomberg

Finally, is it time for stocks to catch down to ‘economic’ reality?

Source: Bloomberg

How far will the world’s central banks allow stocks to fall before the liquidity firehose is unleashed?

Source: Bloomberg

…well it is an election year (for Dems).

Tyler Durden
Fri, 08/02/2024 – 16:00

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Warren Buffett’s BofA ‘Dump-A-Thon’ Grows By Another 19 Million Shares

Warren Buffett’s BofA ‘Dump-A-Thon’ Grows By Another 19 Million Shares

Billionaire investor Warren Buffett’s Berkshire Hathaway has been offloading tens of millions of shares of Bank of America in the last several weeks. Since we first detailed the selling on Tuesday, Buffett’s firm has dumped millions more. 

Let’s begin with the note on Tuesday titled “Buffett Disposes 71 Million BofA Shares As Berkshire’s Cash Stockpile Rises.”

By the end of the week, new data from Bloomberg shows Berkshire sold a further 19.2 million BofA shares. 

Since the selling first began in mid-July, Berkshire has unloaded 90 million BofA shares, mostly above the $40 handle.

As of Thursday, Buffett’s Berkshire remained BofA’s largest shareholder, owning approximately 942.429 million shares. 

The size of Berkshire’s BofA stake has been reduced to where it was in early 2020. 

Berkshire’s rising stockpiles merely reflect the firm’s inability to find deals in today’s overvalued and weak economic environment. On Friday, economic data in the US showed troubling signs of a worsening employment landscape and rising recession risks.

In May, Buffett told investors at Berkshire’s annual meeting that “it’s a fair assumption” the firm’s cash stockpile would top $200 billion in the near term. The rising stockpile comes as the trusty ole’ ‘Buffett’ Indicator (US Equity market Cap/US GDP) has warned for quite some time about overvalued stocks.

The exact reason for Berkshire’s BofA dump has yet to be disclosed. But raising cash could be a sign that Buffett and his team understand deals are ahead. This means valuations in overall markets must go lower.

Tyler Durden
Fri, 08/02/2024 – 15:45

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North Korean Defector Says Kim Wants To Restart Nuclear Talks If Trump Wins

North Korean Defector Says Kim Wants To Restart Nuclear Talks If Trump Wins

Authored by Kyle Anzalone via The Libertarian Institute,

A recent high-level North Korean defector said Pyongyang would be interested in talks with former-US President Donald Trump if he wins the November election. During his first term, Trump engaged Supreme Leader Kim Jong Un in negotiations that nearly secured major agreement. 

Senior North Korean diplomat Ri Il Gyum, who recently defected to South Korea, said he believes Kim would be willing to restart talks with Trump if he retakes the Oval Office

Ri Il-gyu, a defected former counselor who worked at the North Korean Embassy in Cuba, Source: The Chosun Daily

Ri assesses that the negotiations could be more successful during Trump’s second term because Kim would take a different approach. According to background of Ri’s defection saga:

The escape of Ri Il Gyu from Cuba made headlines globally last month. He was the highest-ranking North Korean diplomat to defect to the South since 2016.

In his first interview with international media, Ri said North Korea has set Russia, the U.S. and Japan as its top foreign policy priorities for this year and beyond.

“Kim Jong Un doesn’t know much about international relations and diplomacy, or how to make strategic judgment,” he said.

“This time, the foreign ministry would definitely gain power and take charge, and it won’t be so easy for Trump to tie North Korea’s hands and feet again for four years without giving anything,” the diplomat continued.

Trump’s foreign policy team will also likely have a major impact on the chances of success in negotiations. During the first round of talks between Trump and Kim, the two inked a deal that started to reduce tensions on the Korean Peninsula. 

However, during the second summit in Hanoi, Trump succumbed to the arguments from uber-hawk John Bolton and presented Kim with an unworkable proposal, scuttling talks

Ri believes Kim feels better positioned now than he did during the previous Trump administration. President Joe Biden has attempted to isolate Russia, policy incentivising Moscow to increase ties with Pyongyang.

Ri says Kim no longer needs sanctions relief because of the boosted DPRK-Russia ties

Tyler Durden
Fri, 08/02/2024 – 15:25

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Exxon Reports Blowout Earnings, Record Output Thanks To Pioneer Deal

Exxon Reports Blowout Earnings, Record Output Thanks To Pioneer Deal

Two weeks ago when Exxon previewed its upcoming earnings, there was some disappointment amid what was viewed as weakness in upstream prices and energy product margins.

Which is why much to everyone’s surprise, today’s Q2 report by the largest US energy major blew away estimates, revealing the second-best Q2 earnings in company history thanks to the recent closing of the $63 billion Pioneer acquisition, which made Exxon into the second biggest energy player in the world after Aramco (while closest competitor Chevron is still choking on its Hess acquisition).

For those who missed it, here is a snapshot of what XOM reported:

  • Q2 EPS $2.14 (or GAAP earnings of $9.2BN) beating est. $2.02., and up from $2.06 YoY, with E&P (both US and International) drove the beat vs estimates.
  • Q2 revenue $93.06bn, beating est. $90.09bn.
  • Production higher at 4358 Mboe/d vs. Cons 4242.2 Mboe/d, with stronger US and International liquids and higher International gas production vs estimates on the quarter. Notably, during the quarter, the company achieved record production from both Permian and Guyana assets.
    • The Pioneer takeover, which closed in early May, helped lift Exxon’s overall production by 15% on a sequential basis, and setting the stage for daily output to average more than 4 million barrels this year.
  • Capex in quarter came in at $7.04bn vs. Cons $6.23bn; Guided FY capex to ~$28bn, including $3bn for Pioneer.
  • Cash flow from operations was $10.6bn, cash from operations excluding working capital movements was $15.2 billion.
  • Shareholder distributions of $9.5 billion included $4.3 billion of dividends and $5.2 billion of share repurchases, consistent with the company’s announced plans.
  • Expects over $19bn of share buybacks in 2024. Annual buyback pace of $20bn expected through 2025.
  • XOM delays Golden Pass LNG to late 2025 on contractor dispute.

Regarding the recently closed acquisition of shale giant Pioneer, Exxon said that the deal closed “50% faster than similar deals in recent years”, the “Integration and synergy execution exceeding expectations”, the combined company has already achieved record production levels of “792 Koebd in June and 782 Koebd in second quarter”, and finally Pioneer has already contributed $0.5 billion in earnings from two months of operations (excluding $0.2 billion of one-time items, primarily transaction costs).

While YTD earnings were $17.5 billion down from $19.3 billion in the first half of 2023, this profit was generated with oil prices much lower, confirming that XOM’s breakeven price continues to drop and the company will be solidly profitable even if oil were to drop dramatically from here.

Additionally, XOM remains on track to achieving cumulative structural cost savings of $5 bn through year-end 2027 (vs 2023 levels). XOM has already achieved $10.7 billion of cumulative Structural Cost Savings versus 2019, including an additional $1.0 billion of savings during the year and $0.6 billion during the quarter.

Looking ahead, the company forecasts that production, including eight months from Pioneer, expected to be ~4.3 Moebd, with full year 2024 total Permian production (most Pioneer) expected to be ~1.2 Moebd. In other words, Exxon is now not only the biggest and most important energy company in the world after Aramco, but it is now certainly too big to ever fail in the context of even a Kamala Harris administration. While the market may not appreciate the premium value such a designation entails, it will sooner or later.

“We delivered our second-highest 2Q earnings of the past decade as we continue to improve the fundamental earnings power of the company,” said CEO Darren Woods; he went on: “We achieved record quarterly production from our low-cost-of-supply Permian and Guyana assets, with the highest oil production since the Exxon and Mobil merger. We also achieved a record in high-value product sales, growing by 10% versus the first half of last year. We closed on our transformative merger with Pioneer in about half the time of similar deals. And we’re continuing to build businesses such as ProxximaTM, carbon materials and virtually carbon-free hydrogen, with approximately 98% of CO2 removed, that will create value long into the future.”

Many oil explorers ramped up cash returns to shareholders as commodity prices soared in 2022 and 2023, and had plenty of cash left over to invest in low-carbon alternatives. But with many renewable bets fizzling, especially among the more virtue-signaling oil majors (mostly in Europe) oil executives have been forced to refocus much of their attention on traditional fossil-fuel projects that can generate long-term cash flows.

Here, Exxon was an exception, having never turned its back on fossil fuels which is why the Kamala/Deep State administration hates it so much. It’s been able to increase production and returns, particularly through fast-growing projects in Guyana and the Permian Basin.

Production in Guyana and the Permian Basin reached all-time highs during the second quarter. Exxon is now the biggest producer in the Permian after closing the Pioneer transaction, its biggest deal since buying Mobil.

“It gives us a really big boost,” CFO Kathy Mikells said during an interview. 

Exxon plans to increase annual capital spending by 12% to $28 billion this year as a result of the combination with Pioneer. The boost is “consistent” with what Pioneer was previously spending, Mikells said. Cost savings through the integration process have come in ahead of expectations, she added.

Oil refining, in which Exxon has a bigger footprint than peers, has been a weak performer this year amid lower-than-expected gasoline and diesel demand. Fuel-making margins were compressed by higher prices for heavy crudes, such as those from Canada.

Long story short, the take home message here is that Exxon has become increasingly lean and efficient  (largely thanks to the belligerence of the Obama admin) to the point where it now generates the kind of results at $75 oil, that it once needed $90 oil to achieve. 

It is this operational leverage that will push the stock to all time highs soon, and certainly as soon as a new middle east conflict or a massive Chinese stimulus pushes oil back to $100 or over.

Exxon’s investor presentation is below (pdf link)

Tyler Durden
Fri, 08/02/2024 – 15:05

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US Suspends Aid To Georgia Over Foreign Influence Law

US Suspends Aid To Georgia Over Foreign Influence Law

Authored by Adam Morrow via The Epoch Times,

The United States is pausing more than $95 million in aid to Georgia, a small country in the South Caucasus region, over the latter’s recent adoption of legislation aimed at combating perceived foreign influence.

“After anti-democratic actions by the Georgian government, I announced a comprehensive review of bilateral cooperation between the United States and Georgia,” U.S. Secretary of State Antony Blinken said in a July 31 statement.

“As a result of that review, the United States is pausing more than $95 million in assistance that directly benefits the Government of Georgia,” he added.

The punitive move by Washington comes two months after Georgia’s parliament passed an anti-foreign influence law, which officially took effect on Aug. 1.

The law requires organizations that receive more than 20 percent of their funding from abroad to register as “organizations pursuing foreign interests.”

It was championed by the ruling Georgian Dream party, which says such legislation is needed to protect the country from malign foreign influences operating under the guise of “civil society.”

Proponents of the law also say it’s necessary to safeguard Georgia’s national sovereignty and combat “pseudo-liberal values” imposed by foreign—particularly Western—entities.

Blinken said in the statement that “The Georgian government’s anti-democratic actions and false statements are incompatible with membership norms in the EU and NATO.”

In the weeks leading up to its ratification, large demonstrations erupted in Tbilisi, Georgia’s capital, where protesters who opposed the law often clashed with police.

Meanwhile, several Western institutions and countries—including the EU, the United States, Britain, and France—had urged Georgia’s leadership to scrap the legislation.

In May, Josep Borrell, the EU’s foreign policy chief, warned that the law’s ratification would “negatively impact” Georgia’s EU membership bid.

Critics of the law have derisively termed it the “Russian law,” comparing it to legislation allegedly used by Moscow to suppress dissent.

Moscow, for its part, denies any association with Georgia’s “foreign agents” law or its recent ratification by the country’s parliament.

In past remarks, Georgian Dream founder Bidzina Ivanishvili has claimed that a U.S.-led “global war party” was seeking to draw Georgia into a conflict with Russia.

In 2008, Russia won a brief war with Georgia—initiated by the latter—over the small but strategically vital regions of Abkhazia and South Ossetia.

Washington, meanwhile, has warned Georgia’s ruling party that its “anti-Western rhetoric” risked setting the country “on a precarious trajectory.”

Georgian pro-democracy activists protest against a “foreign influence” bill outside the parliament in Tbilisi on April 15, 2024. (Vano Shlamov / AFP)

‘Threats and Blackmail’

After the law’s ratification, Washington imposed visa restrictions on several ruling party officials, claiming they were “complicit in undermining democracy.”

In June, the State Department unveiled a first tranche of restrictions on ruling party officials, lawmakers, police officers, and certain private individuals.

It also announced plans to conduct a “full review of our relationship with the government of Georgia.”

Not long afterward, the Pentagon “indefinitely postponed” scheduled U.S.-Georgia joint military drills, which had been initially slated for June.

Georgian Dream responded by accusing Washington of engaging in “threats and blackmail,” describing the raft of U.S. restrictions as a “gross attempt to restrict Georgia’s independence and sovereignty.”

Brussels, meanwhile, responded to the law’s ratification by suspending Georgia’s EU membership bid.

“The adoption of this [anti-foreign influence] law … froze Georgia’s integration in the European Union,” Pawel Herczynski, the EU’s envoy to Georgia, said in remarks to the local press.

He further announced that Brussels had frozen 30 million euros of military aid (roughly $32.4 million) previously earmarked for Georgia’s armed forces.

In his July 31 statement, Blinken condemned Georgian Dream’s “anti-democratic actions and false statements,” which, he said, were “incompatible with membership norms in the EU and NATO.”

He added, however, that the United States would continue funding assistance programs aimed at “strengthening democracy, rule of law, independent media, and economic development” in Georgia.

“We will remain committed to the Georgian people and their Euro-Atlantic aspirations,” Blinken said.

According to the secretary of state, Washington has provided Georgia with over $6.2 billion in aid since the country achieved independence after the Soviet Union fell in 1991.

Georgian Prime Minister Irakli Kobakhidze described the latest punitive measures by Washington as “counterproductive.”

“Instead of blackmailing and threatening, we should have a healthy conversation about improving relations,” he told the Georgian press on Aug. 1.

But Kobakhidze also struck a conciliatory note, calling for a “reset” in relations between Tbilisi and Washington.

“The relationship needs a reset,” he said. “We are absolutely ready for it.”

He added: “The main thing is to see the next steps.”

Tyler Durden
Fri, 08/02/2024 – 14:45

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Financial Strain On American Households Hits Retailers Hard

Financial Strain On American Households Hits Retailers Hard

Authored by Michael Wilkerson via The Epoch Times,

If anyone still believes that the U.S. economy is doing just fine, they should take a closer look at what is happening to the retailers that depend upon the faithful American consumer to “shop, shop, shop” to keep the economy afloat. American consumers are rapidly running out of firepower, and now, so too are the retailers that depend on them.

Consumer Spending Cuts

American consumers, increasingly overextended on credit card debt, and having depleted their pandemic-accumulated savings, have started to close their wallets to all but essential, non-discretionary purchases such as food and fuel. The portion of surveyed Americans who state a positive intent to purchase big ticket items such as a home, an automobile, or a major appliance has fallen substantially since May. The bigger the ticket, the steeper the drop off. For example, the percentage of respondents stating intent to purchase a home has fallen to the lowest level in the post-lockdowns era.

This is in part a consequence of inflation and the rising interest rates used to combat it. With the cost of food, energy, and shelter all up well over 20 percent from three years ago, and real wages lagging behind, Americans are having to make difficult tradeoffs. With mortgages some 4 percent higher, yet housing stock more expensive than ever, new home purchases are out of the question for many. But the pain extends further. Almost every discretionary spending category is flat or in decline as consumers feel the pinch of lost purchasing power. Nowhere is this more evident than in the performance of the U.S. retail chains.

Impact on Major Retailers

For the big box retailers, the writing has been on the wall for a while. For home improvement retailers such as Home Depot and Lowe’s, companywide same-store comparable sales, which compares the sales of a store open for at least a year against the previous period, have been in decline for six quarters. The same trends can be seen in the consumer electronics space, where Best Buy has posted negative same-store sales, sometimes in the double digits, for 10 consecutive quarters. Venerable Target, a traditional favorite of middle-class consumers, has also posted negative comps for a year now.

The discount stores are faring only slightly better. Dollar General, a pillar of support for low-income families, is treading water with flat sales, while Walmart has seen its comparable store sales fall from nearly 9 percent two years ago to less than 4 percent in its most recent quarter. Costco is following the same trend. For nearly all of the retailers, even those managing to grow revenue, profit margins are compressing as they are forced to discount more heavily to attract the otherwise beleaguered shopper.

For the second tier of retailers, especially those in the home products space, the pressure is too much. Furniture chain Conn’s has filed for bankruptcy and is liquidating its more than 70 stores after 134 years in operation. Big Lots, the off-price home goods retailer, is closing 150 stores and trying to raise rescue capital to avoid bankruptcy itself.

Conn’s and Big Lots aren’t alone. Over the past year, business bankruptcy filings are up 40.3 percent, and have now reached a number not seen since the second quarter of 2020, at the peak of lockdowns. American households are following along, with total bankruptcy filings up 16.2 percent in the past year, including 132,710 new filings in the second quarter of 2024 alone.

The global iconic brands are not immune to the consumer downturn. Starbucks just announced a decline in comp store sales, number of orders, revenue, and operating profit. Starbucks’s shares are down 25 percent over the past 12 months, and activist shareholders are pushing hard for change. The newly ensconced CEO, charged with a major restructuring of the business, quipped, “We are focused on what we can control in a consumer environment that can be best described as complex.” Complex it is.

Not even value mainstay McDonald’s is safe in this environment. The fast-food retailer and consumer bellwether just announced second-quarter earnings. The company reported that comparable store sales declined 1 percent, as did revenue, which marked the first revenue decline since lockdowns. McDonald’s CEO commented that consumers are “dropping out of the market, eating at home and finding other ways to economize, cutting down on trips.” He noted that, regarding their newly launched $5 value meal, “it’s just not enough to offset the pressure that we’re seeing on that low-income consumer.”

There is perhaps a silver lining in all of this. The advanced estimate for second-quarter GDP recently came in at 2.8 percent (compared with an anemic 1.4 percent for the first quarter), indicating that the economy may be picking up some steam. The national GDP number masks the fact that there are faster-growing regions in the country, such as in the South and Mountain West, where economies are relatively thriving, and where job opportunities are more plentiful than in the Northeast, West Coast, and Midwest. Americans’ mobility and willingness to migrate have always been a positive factor toward moving the country out of recession.

In the meantime, both households and businesses are being forced to reconsider what are their most important priorities and to allocate scarce capital accordingly. Inefficient firms, which benefited for too long from zero interest rates, will either fix their business models or fail. There may be more pain to come in the short term, but the American economy has always proven resilient, and continues to have the natural, human, and technological resources needed to start growing again.

Tyler Durden
Fri, 08/02/2024 – 13:05

via ZeroHedge News https://ift.tt/4ESAlWT Tyler Durden