Category: zerohedge

In the latest sign that Beijing is warily eyeing the outbreak in India as it spills over its borders into neighboring Nepal, China has set up a “line of separation” at the summit of Mount Everest to prevent any climbers from the Nepal side from mingling with climbers from the Tibet side, Reuters reports. The decision comes as the Everest base camp on the Nepal side has struggled with a persistent COVID-19 outbreak since April.

To accomplish this, China is sending an expedition of climbers to install the line, though it’s not clear how they intend to enforce the boundary.

Starved of tourism revenue, the Nepalese government has refused to impose limits on tourists and climbers who come in droves to visit the legendary mountain. Beijing apparently doesn’t feel great about this.

As Reuters pointed out, it’s not clear how Beijing intends to enforce the border line in one of the most inhospitable environments for humans – the area surround the summit of Everest. The summit itself is about the size of a dining room table.

To install it, Beijing is dispatching a small team of Tibetan climbing guides – which will include 21 Chinese nationals – who will ascend Everest and set up the “line of separation” at the summit.

It’s also unclear whether the team of guides who will be setting up the line of separation will remain in the “death zone”, the area leading up to the summit where hundreds of travelers have died.

China hasn’t allowed any foreign climbers to ascend the mountain from the Tibetan side since the coronavirus pandemic began. Tourists are also banned from visiting the base camp on the Tibetan side.

So if you do happen to get infected with COVID-19 at 30,000 feet, you better just stay up there.

Authored by Michael Snyder via TheMostImportantNews.com,

If you like extremely high taxes, a ridiculously inflated cost of living, horrifying bureaucratic nightmares, rising crime rates, endless homeless encampments and “health restrictions” that make it nearly impossible to operate a small business successfully, then you are going to absolutely love California.  Vast hordes of people have fled the state over the past 12 months, and so that means that there is now plenty of room for more socialists to move in.  But before you come, you will want to make sure that you have completely discarded any lingering notions of “freedom” and “liberty” because they won’t be of any use to you once you arrive in California.

Over the past few years, California has gotten a bad rap for being an absolutely filthy place, but the truth is that authorities are going to great lengths to try to clean things up.

In fact, they just removed 180 pounds of feces from one homeless encampment alone…

This week, Echo Lake Park in Los Angeles California, the location of a former homeless encampment, received a much needed, and long overdue, deep cleaning.

The park was closed last month and since then, city officials have been working to clean and revitalize the park and have reportedly removed over 170 tents and other debris, the Los Angeles Times reported.

Among the 35 tons or 70,000 pounds of garbage, there were literal piles of poop, amounting to 180 pounds of feces and 564 pounds of urine according data from L.A. Sanitation & Environment workers. This did not include excrement collected from portable or permanent restrooms. Other hazardous waste like needles used for drugs, gasoline, and kerosene amounted to 300 pounds of the total trash collected, the LA Times noted.

Critics of California often focus on the worst parts of the state, and that is very unfortunate.

California is a state known for great natural beauty, and that natural beauty once attracted tourists from all over the globe.  Unfortunately, the pandemic has kind of killed tourism and many of the most iconic locations in the state have been marred by the “temporary” problems that the state is currently experiencing.  Venice Beach is just one example…

Residents of Venice Beach in Los Angeles say soaring crime rates and the exploding homeless population have made life in the elite beachside community unbearable.

A ‘catastrophic’ increase in homelessness in Los Angeles has seen hundreds of tents line the beach’s famous boardwalk.

Business owners say they are being forced to close their doors and longterm residents are afraid to leave their homes after dark after being subjected to violent attacks and intimidation.

Many Californians aren’t leaving their homes that much during daylight hours either because the price of gasoline has gotten so high.

At this point, the average price of a gallon of regular-grade gasoline in the United States has reached $3.02 per gallon.

That is not good, but in many parts of California the average price of a gallon of regular-grade gasoline is now hovering around four dollars a gallon, and in some locations a gallon of premium is almost five dollars a gallon.

But officials in California are assuring us that higher taxes and absurd regulations are “only partly to blame” for why residents of California have to pay such high prices for gasoline…

Some industry observers insist the higher cost of gasoline in California is due to higher taxes and regulations on gas and carbon emissions statewide. State agencies and consumer advocates insist those factors are only partly to blame and that the largest manufacturers charge more in California simply because they can, while big oil companies have held back on ramping up supply, according to the New York Times, after seeing huge cuts to their profits and workforce last year because of the pandemic.

Of course the gasoline prices in California are not even worth comparing to the absurdly high housing prices in the state.

But the good news is that those housing prices have started to moderate a bit as hordes of former residents have stampeded out of the state over the past year.

Some suspect that rising crime rates may have something to do with the mass exodus.  After a huge increase last year, the murder rate in Los Angeles County is up almost 200 percent so far in 2021…

Murders in Los Angeles County have spiked nearly 200% so far this year compared to the same time in 2020, with at least one official blaming the “defund the police” movement and progressive law enforcement officials.

Apparently not satisfied with how fast crime is rising, California Governor Gavin Newsom has decided that now is a perfect time to start releasing tens of thousands of violent criminals back on to the streets…

California is giving 76,000 inmates, including violent and repeat felons, the opportunity to leave prison earlier as the state aims to further trim the population of what once was the nation’s largest state correctional system.

More than 63,000 inmates convicted of violent crimes will be eligible for good behavior credits that shorten their sentences by one-third instead of the one-fifth that had been in place since 2017. That includes nearly 20,000 inmates who are serving life sentences with the possibility of parole.

We are being told that California prisons will soon be a lot safer once all of those violent criminals are gone.

So if you plan on living in a California prison, that is really promising news.

As my regular readers already know, I really like to make fun of the state of California.

But the truth is that the entire country is slowly but surely becoming just like California, and there is nothing funny about that.

The state of California was once one of the most beautiful and most prosperous places on the entire planet.

Sadly, now socialism is transforming it into a dirty, filthy, crime-ridden bureaucratic hellhole.

The rest of the nation should be recoiling in horror from the cautionary tale that California has become, but instead both major political parties have deeply embraced socialism at this point.

The path that we are on does not lead anywhere good, and those that actually live in California should understand this better than any of us.

*  *  *

Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.

The guided-missile cruiser USS Monterey (CG 61) seized a massive shipment of illicit weapons last week that was being transited through international waters of the North Arabian Sea, according to the US Navy. 

A Sikorsky SH-60 Seahawk launched from the USS Monterey helped stopped the stateless dhow sailing vessel on May 6 as part of a routine operation to verify its registry. 

USS Monterey personnel worked with US Coast Guard Advanced Interdiction Team (AIT), boarded the vessel, and found the weapon stash. 

USS Monterey provided more than 36 hours of over watch and security for its boarding teams and the interdicted vessel throughout the two-day operation. pic.twitter.com/IIqA7qCKMO

— U.S. 5th Fleet (@US5thFleet) May 8, 2021

“The cache of weapons included dozens of advanced Russian-made anti-tank guided missiles, thousands of Chinese Type 56 assault rifles, and hundreds of PKM machine guns, sniper rifles and rocket-propelled grenades launchers. Other weapon components included advanced optical sights,” the Navy said. 

The illicit cargo was removed from the vessel and laid out on the rear of the flight deck of the 567-foot warship. 

Thousands of illicit weapons interdicted by guided-missile cruiser @USSMonterey (CG 61) from a stateless dhow in international waters of the North Arabian Sea on May 6-7.

Cache of weapons included advanced Russian-made anti-tank guided missiles & Chinese Type 56 assault rifles. pic.twitter.com/07Fv92vbrV

— U.S. 5th Fleet (@US5thFleet) May 8, 2021

Lt. Cmdr. Pete Pagano, a spokesperson for the Navy’s Fifth Fleet, told CNN in an email Monday, the weapons were likely bound for Houthi rebels in Yemen. He cited similar seizures by the Fifth Fleet over the years. 

“It comes amid tensions in Yemen and Iran’s attempt to support Houthi rebels there. However, it may be linked to other militant groups in Yemen or even the Horn of Africa or elsewhere,” said The Jerusalem Post. 

On Feb. 9, the cruiser USS Normandy seized missile components from a dhow sailing vessel in the Arabian Sea. 

The seizure of the weapons was around the time the Biden administration lashed out at Yemen’s Iran-backed Houthi rebels last Friday for refusing to meet with senior UN officials to address plans to wind down the country’s devastating war and increase humanitarian relief to suffering civilians. President Biden has also announced the end of operations in the Yemen War. 

There was some good news for the (transitorily hyper–)inflation-ravaged US economy today when copper, wheat and lumber futures all fell after days of surging – in the case of the latter, the first drop in 13 days…

… pushing the Bloomberg commodity index lower after six straight days of gains.

Yet while today’s boiling-off in commodities may have been a faint validation of the Fed’s claim that this inflation is “transitory”, inflation pressures are unmistakably building, with Bloomberg’s Vince Cignarella noting that the five-year/five-year inflation swap is above 2.5% and rising: “that’s the highest since January 2018 and just 10 basis points below levels we saw in January 2017.”

Why is this important? As Cignarella explains, “Inflation swaps are used by financial professionals to mitigate/hedge the risk of inflation and are considered reasonably accurate estimates for the break-even rate for the period in question. They’re also helpful to central banks and dealers who are trying to determine the market’s future inflation expectations.”

In short, the market is looking at all the signals and is growing convinced that whatever “this” is, it is not transitory.

And it’s not just finance pros who are calling the Fed’s bluff: according to the New York Fed’s survey of consumer expectations, median 1-year and 3-year inflation expectations by ordinary Americans jumped to a multi-year high of 3.4% and 3.1% respectively, the highest since September 2013.

Digging through the details reveals an even more alarming picture: over the next year consumers anticipate gasoline prices jumping 9.18%, food prices gaining 5.79%, medical costs surging 9.13%, the price of a college education climbing 5.93%, and rent prices increasing 9.49%!

This is hardly a “transitory inflation” expectation, to the contrary – expectations for sharply higher inflation are become firmly ingrained.

But wait, there’s more: the CPI report on Wednesday is also expected to show price pressures leaped in April, and not just on a distorted year-over-year basis (where the base effect makes readings meaningless). The 0.3% core CPI M/M increase will be the highest print this century!

It gets worse: one week after we showed that mentions of “inflation” on company earnings calls have now quadrupled YoY; and have jumped nearly 800% YoY…

… as companies now openly freak out about soaring costs which they generously pass on to consumers, prompting BofA to conclude that “on an absolute basis, [inflation] mentions skyrocketed to near record highs from 2011, pointing to at the very least, “transitory” hyper-inflation ahead.”

Maybe the hyperinflation will be transitory – if so, it would be the first time in history – but the soaring prices have clearly sparked a panic amid the broader population as the following chart of google searches of “inflation” shows.

And so, with most assets now “fixed” by the Fed, with bonds having lost all their inflationary signaling as they now trade in a world of implicit yield curve control, and with stocks already in a massive bubble, is there any wonder why the chart of the latest crypto darling du jour – Ethereum – which so far has not been “micromanaged” by the Fed (unlike the central bank’s old nemesis, gold), looks the way it does…

… when increasingly more see the crypto asset class as one of the few remaining hedges for inflation, as even Bloomberg’s John Authers recently admitted.

Speaking at a Vatican-organized conference meant to promote “open dialogue”, Chelsea Clinton called for a global effort to crack down on all “anti-vax” social media posts, or anything that’s ‘skeptical’ of the official narrative.

The statement, made in a pre-recorded segment that featured questions for the erstwhile first daughter, Clinton was asked to respond to a query about “vaccine hesitancy” and what can be done to encourage wider vaccine adoption.

Clinton chose to opine about limiting freedom of speech and cracking down on social media posts, but didn’t touch the issue of access and the ongoing debate about waiving IP protections for COVID-19 vaccines, something the White House recently said it would support, even as much of the developed world opposes the plan (even if the EU signaled that it’s open to discuss it).

“I personally very strongly believe there has to be more intensive and intentional and coordinated global regulation of the content on social media platforms,” she said.

“We know that the most popular video across all of Latin America for the last few weeks that now has tens of millions of views is just an anti-vax, anti-science screed that YouTube has just refused to take down.”

Clinton added that anti-vaccine content created in the US “flourishes” acround the world due to social media like YouTube and Facebook.

“We know that – because I have tried – that appealing to the leadership of these companies to do the right thing has just not worked, and so we need regulation.”

Clinton said that the Clinton Foundation has been doing what it can to convince the “vaccine hesitant” and the “vaccine refusers” to accept doses of the COVID-19 vaccines. She believes it is important to differentiate between people who are “hesitant” and those in the “refusal group.” The “hesitant” have questions that she can answer, for instance regarding the speed at which the vaccines were developed, their ingredients, and “conspiracies about microchips.”

Recently, those who have questioned aspects of the COVID-19 rollout in the US (most notably, Joe Rogan, who was recently forced to apologize for vaccine-skeptic musings on his show), have been attacked by a growing chorus of critics including the mainstream press while being de-platformed by everyone from Facebook to PayPal.

If Clinton wants to start setting standards for what content should be banned on social media, she should probably start by being more specific about what constitute’s being “anti vax”. For example, are the Norwegian health officials who recommended rejecting both the AstraZeneca and J&J jabs over safety concerns “anti vaxx”? How about the other European public health officials who came to similar conclusions?

And what about the CDC, with its increasingly byzantine guidelines about when and where masks are appropriate, what types of precautions must still be taken by those who have been “fully vaxxed” and whether or not Americans can expect to receive a booster dose.

Of course, if Clinton wants to improve adoption rates for COVID-19 vaccines, maybe she should focus on broadening access in the developing world.

A hugely significant weakness and set-back for the Chinese Navy and particularly its submarine capability was featured in recent Nikkei analysis, which found that its coastal system already has geography working against it, while at the same time giving Japan and Taiwan a significant edge.

“When you look at China’s submarine bases, every single one of them has a fair bit of shallow water that their submarines have to transit through in order to get to deep water,” former US Navy submariner Tom Shugart explained to Nikkei Asia.

A key issue is that submarines are much easier for rival nations to search out and track as they traverse shallow water, while in deep sea waters identity and defensive action against subs becomes extremely difficult. 

What’s more is that US allies Japan and Taiwan are much less constrained by these “chokepoints” which are more characteristic of China’s shallower coastal waters. This gives the Japanese and Taiwanese navies the ability to deep dive a submarine fast, and quickly drop off their east coasts. 

“A fast take a look at Google Earth reveals that China’s coast is surrounded by mild blue — which displays shallow seas — in distinction to the darkish blue deep waters that instantly drop off from the east coasts of Taiwan and Japan,” Nikkei observes. 

And another defense expert was cited on what this means for China and more importantly for Pentagon planning as follows:

“For them to move from China’s near seas to the open ocean, they’re going to have to transit through different chokepoints and straits in the island chains,” mentioned Shugart, an adjunct senior fellow on the Center for a New American Security assume tank.

“That will provide opportunities for an adversary — the U.S. and our allies’ submarine forces — to monitor more closely and try to intercept them if we were involved in a conflict, or in the run-up to a conflict.”

The US Department of Defense as well as closely affiliated think tank Rand Corp. is said to be studying “chokepoint management” in the region, given that any future potential US and allies conflict with China in the East and South China seas would put the US side at a distinct advantage when it comes to submarine warfare. 

US Defense Defense Secretary Lloyd Austin recently signaled that Japan and other regional allies will be essential in establishing ‘integrated deterrence’ against China based on deeper collaboration.

Map of South China Sea and Beijing’s expansive claims…

The rest of the full Nikkei Asia analysis can be found here.

Egypt’s Suez Canal Authority (SCA) offered to drop $300 million from its compensation claims against the owners of the Ever Given containership, according to Egypt Today. 

The Panama-flagged Ever Given containership, owned by Japan’s Shoei Kisen Kaisha, blocked the Suez Canal for six days in late March. SCA initially requested $916 million in damages for the blockage and continues to impound the ship 30 miles up the channel in the Great Bitter Lake. 

Here’s the current location of the containership as of 0645 ET.

The reduction of compensation claims was announced by the SCA Chairperson Admiral Osama Rabie on Friday. He told the MBC Masr channel that Egypt would continue to impound the vessel until the fine is paid. We’ve noted the court battle between SCA and the vessel owners could be a long-drawn-out process. 

Egyptian business tycoon Naguib Sawiris tweeted that SCA’s fine is “exaggerated and unrealistic,” stating it’s not a good image for the country. 

There have been instances where commercial vessels involved in international disputes take months or even years to resolve. There’s still no timeline when Ever Given’s owners will pay the fine, but the prolonged legal battle is not good luck for SCA. 

By Steve Englander, head global G10 FX research at Standard Chartered bank

Summary:

• We see sampling issues and child-care concerns as the most likely drivers of the NFP weakness
• We are skeptical of the work disincentives explanation as the number of UI benefit recipients and of long-term unemployed dropped sharply
• Seasonality was normal, so this does not seem to have been a major issue
• We doubt the Fed will change its stance, even if an abnormal May bounce offsets the April shortfall

Work disincentives likely a future issue, but not in April

There is a lot of discussion on the big forecast miss of April non-farm payrolls (NFP). The consensus was for around 1mn jobs, our forecast was 1.5mn and the outcome was 266,000 (Bloomberg even called it “literally shocking data“). Against much commentary in recent days, we doubt that the generosity of unemployment insurance (UI) benefits played an important role in April, but we do not underestimate its future impact. We suspect sampling issues in the survey were the main source of the miss but find evidence that child-care issues played an important but secondary role. The run-up in average hourly earnings seems abrupt but is consistent with anecdotal reports of labor shortages.

We see the main takeaway for markets as USD weakness, accompanied by an upward drift in breakevens and commodity prices. Manufacturing wages lagged other sectors but were still up 0.6%. Labor shortages and wage growth in sectors open to competition add up to lost competitiveness, absent USD weakness. If disincentives to work grow in importance there will likely be added depreciation pressure. We think investors may be uncertain on how literally to take the disappointing NFP outcome but see the cost pressures as persistent. The consensus forecast for April core CPI is 0.3% m/m, the first time the consensus has been above 0.2% in the 21st century!

April disincentive effect was probably exaggerated

Many analysts have cited the potential impact on the labor supply of generous unemployment benefits. However, if these disincentives to work were the driver, we probably would not have seen the number of those receiving benefits drop as sharply as they did in March and April (Figure 2). It is hard to believe that NFP are capturing an unemployment effect invisible in claims and UI expenditure data. In addition, in the household survey the number of long-term unemployed continued to fall, while the number of those unemployed five weeks or less rose. We would expect the disincentives to show in the long-term unemployed hanging onto benefits.

A separate Bureau of Labor Statistics survey of the impact of COVID-19 indicates that 1.7mn fewer workers were unable to work in April than in March because their employers closed or lost business due to COVID-19. While it is hard to link this survey directly to the Current Employment Survey from which NFP are derived, it does seem as if workers are going back to work once COVID-19 constraints are removed. We dismiss the supply-side impact in April because the data do not support it, but see risk that it becomes a bigger factor down the road.

Tentative evidence that chid-care constraints matter

Employment in the BLS household survey increased 326,000, but employment of women dropped 8,000. Only women aged 16-19 years showed an appreciable employment increase. This is consistent with the possibility that child-care responsibilities may have limited women’s ability to accept jobs. The drop from March to April in the category ‘Did not look for work in the last 4 weeks because of the coronavirus pandemic’ was steeper for men than for women and steeper for those without children under 18 than for those with; but the differences were not big enough to explain the shortfall in job gains.

What makes this driver tentative is that women’s job gains over the past year have exceeded men’s. It is possible that child-care constraints increased in April but we are not sure why this would have happened as reopening extended.

Note also that even had women’s employment gone up as much as men’s, the outcome would still be disappointing (we assume that men’s ability to accept employment was far less constrained).

Seasonality was typical

Non-seasonally-adjusted NFP were up 1.089mn, but the seasonal adjustment reduced the gains to 266,000. At first glance this looks like an aggressive seasonal adjustment, but in fact this is pretty typical for the pre-COVID-19 period.

The non-seasonally adjusted April NFP average over 2015-19 was 1.1mn jobs that the seasonal adjustment reduced to 215,000. For the seasonal factor to be relevant there would have to be an argument that seasonal effects were distorted; for example, that seasonal layoffs in Q1 were less than normal, so April rehiring was similarly less than normal. We do not see these as easy arguments to make.

Sampling error

We put forward sampling error as an explanation with caution, as the temptation to resort to sampling error after a big forecasting miss is significant. We see three arguments for considering sampling error seriously:

• The supplementary BLS shows continuous easing of COVID-constraints on working. For example the number of people teleworking dropped by almost four million from March to April (Figure 5). This drop cannot be mapped directly into NFP gains but indicates improving conditions. Almost by definition, the ramping up and easing of COVID-19 related constraints should not be seasonally adjusted away.
• The BLS birth and death model that adjusts for firms (re-)opening and shutting down may be particularly imprecise under current circumstances. The BLS has adjusted its estimation procedures, but it is unclear how much their revised adjustment captures.
• Most other labor-market indicators were showing robust conditions. There is no direct link between the BLS surveys and these other indicators, but the lackluster BLS releases are at odds with the ISM, other surveys and other labor-market indicators.

Hedge funds had another rough week according to Goldman’s Prime Brokerage, with the GS Equity Fundamental L/S  Performance Estimate falling -1.68% between 4/30 and 5/6 (vs MSCI World TR -0.33%), driven by alpha of -1.11% – the worst weekly alpha in two months – and to a lesser extent beta of -0.57% (from market exposure and the market sensitivity factor combined). As a result, global fundamental equity L/S hedge funds lost almost two-thirds of their YTD gains in just the past week, bringing their total YTD return to just 0.97% in what is setting up as another dismal year for the 2 and 20 crowd.

What is remarkable is just how sensitive to overall market beta the hedge fund space has become, and there is a reason for that: according to Goldman Prime, overall book Gross leverage rose +1.7 pts to 247.1%, the highest on record, while Net leverage fell -0.9 pts to 88.2% (not quite an all time high, but still 87th percentile).

Looking at the composition of hedge fund purchases, the overall GS Prime book was modestly net bought again in the past week (+0.15 SDs), driven by risk-on flows as long buys outpaced short sales. Specifically, single Names were net bought while Macro Products (Index and ETF combined) were net sold. North America and to a lesser extent Europe were net bought driven by long buys, while DM Asia and EM Asia were net sold driven by short sales. 8 of 11 global sectors were net bought led in $ terms by Consumer Disc, Health Care, Staples and Real Estate, while Info Tech, Materials, and Financials were net sold.

Meanwhile, continuing the trend first observed last week when we noted that hedge funds shorted tech shares for 9 of the previous 10 days, Goldman notes that Info Tech saw the largest net selling in nine months as managers reduced exposure for a third straight week. And in a surprise reversal to months of bullishness on IT, GS Prime points out that hedge funds are currently Underweight Info Tech stocks by -1.4% vs. the MSCI World, the lowest level since last November and in the 3rd percentile vs. the past five years.

Some more details from the Goldman reports:

• Info Tech, the worst performing sector this week, was also by far the most net sold sector on the GS Prime book driven by short sales outpacing long buys 7 to 1.
• Info Tech stocks were net sold for a third straight week and saw the largest week/week $ net selling since last August (-1.6 SDs). Net trading flow diverged on a subsector level – Semis & Semi Equip, Software, and Electronic Equip were the most net sold, while Comm Equip and IT Services were the most net bought.
• Hedge funds are currently U/W Info Tech stocks by -1.4% vs. the MSCI World, the lowest level since last November and in the 3rd percentile vs. the past five years.
• From an industry group standpoint, hedge funds are still O/W Software & Svcs by +4.7% (28th percentile) and U/W Semis & Semi Equip and Tech Hardware by -1.6% (13th percentile) and -4.3% (18th percentile), respectively

And while hedge funds shorted tech, the Goldman US Consumer Discretionary sector saw the largest net buying in three months driven by E-Commerce stocks. As a result, the GS Prime book is now O/W US Consumer Discretionary by +3.3% vs. the S&P 500, which is in the 9th percentile vs. the past year and in the 50th percentile vs. the past five years.

• In $ terms, Consumer Discretionary was the most net bought US sector on the GS Prime book this week, driven by risk-on flows with long buys outpacing short sales 4 to 1.
• The sector’s aggregate long/short ratio (MV) on the GS Prime book ended the week at 2.53, which is in the 2nd percentile vs. the past year and in the 77th percentile vs. the past five years. The GS Prime book is now O/W US Consumer Discretionary stocks by +3.3% vs. the S&P 500, which is in the 9th percentile vs. the past year and in the 50th percentile vs. the past five years.

The US Department of Agriculture (USDA) has warned against a megadrought approaching dangerous levels in the southwestern US. Wildfire conditions have been ripe across the region as Red Flag Warnings have been sprouting up from California to Texas. 

Arid conditions in Arizona appear to have sparked a duo of wildfires burning in the state, forcing thousands of folks to flee as firefighters struggle to contain the blazes. 

One of the fires rages just south of Prescott National Forest, located in north-central Arizona. Mandatory evacuations orders forced thousands from their homes in Minnehaha, Fort Misery, and Horsethief Basin, while Crown King was placed on alert Sunday. The fire has been dubbed the Tussock Fire.

PHD- Update: #TussockFire near Crown King was mapped at 2,448 ac and has reached Prescott NF. Due to lack of moisture, hot, dry and windy conditions and rugged terrain, a Type 1 IMT has been ordered and will take over fire command this evening.
(Photo:BLM Weaver Mtn)
#AZFire pic.twitter.com/KuyBCZbCEp

— BLM Arizona Fire (@BLMAZFire) May 9, 2021

“There is significant danger to you, gather necessary items and go,” read a Facebook post operated by the Arizona Bureau of Land Management (BLM). The Facebook page continued to say the Tussock Fire is “approximately 3,500 acres; 0% containment.” 

The second wildfire is approximately 2,560 acres and stood at 35% contained as of Sunday evening. The fire is called Copper Canyon Fire and is burning 3 miles northeast of Globe in Gila County, located in the state’s central part. 

#CopperCanyonFire NE of #Globe – 2,652 acres & 35% contained. Add’l growth due to Saturday night’s burning ops as part of suppression efforts. NE side active Sunday as fire consumed unburned island of fuel w/n perimeter of fire. US 60 remains closed in area. #AZFire #AZForestry pic.twitter.com/lmKiDZClUv

— AZ State Forestry (@azstateforestry) May 10, 2021

The US Drought Monitor as of last week shows more than 40% of the country is in drought coverage. Most of the “extreme” to “exceptional” drought is in the southwestern US. 

“There have only been four times in the history of the drought monitor that we have seen more than 40% US drought coverage as we come into early May,” said USDA Meteorologist Brad Rippey. “The current US drought coverage is 46.6% of the lower 48 states in drought. That is a 2.6% increase from what we saw five weeks ago.”

Fears of another 1930s Great Depression-style drought are quickly materializing in the southwestern US. 

Utah and Nevada recorded their driest years in more than 126 years in 2020, while Arizona and Colorado had their second driest and New Mexico its fourth. The Southwest, plagued with “severe,” “extreme,” and “exceptional” drought conditions, suggests similarities to the Great Depression’s Dust Bowl of the 1930s (read: “Return Of The Dust Bowl? The “Megadrought” In The Southwest Is Really Starting To Escalate”). 

Besides escalating wildfires and water shortages, farmers in the western half of the country are frightened of a significant agricultural disaster this growing season as the drought rages. The exceptional dryness could result in crop failures that would ultimately send agricultural prices even higher. So much for that “transitory” inflation, the Federal Reserve continues to squawk about… 

Now Dust Bowl conditions have returned, wildfires begin to break out, and farmers are panicking about crop failures. But don’t worry, the Federal Reserve will just print more money in the name of climate change.