Category: zerohedge

What follows is our traditional payrolls preview post which looks at how Wall Street has established its latest consensus for the April print, but ahead of tomorrow’s jobs report – which could indeed be rather consequential if it is a significant outlier – the only question is what number would scare investors, one which we answered yesterday when we quoted Std Chartered’s Steven Englander who said that 2 million+ April job additions are needed for investors to see risk that the Fed changes its stance; Meanwhile, the widely expected whisper range of 1.0-1.5 million jobs “may not be enough for the Fed to shift, even if jobs exceed the 1mn consensus.”

Of course there is also the risk of a downside surprise: only 2 of 79 forecasts are below 800,000, so the consensus of 1 million could generate a modest bond rally and 650,000 or lower, quite a move down. Given the volatility of labor-market data, such a print might not extinguish optimism, but it would raise the possibility that the market is wrong in its hawkishness and the Fed is right in its dovish stance.

With that in mind, here is what Wall Street expects tomorrow, courtesy of Newsquawk:

Summary: Fed officials want to see a “string” of strong jobs reports before they begin the conversation on when to taper asset purchases. While the exact meaning of “string” is yet to be explicitly defined, one would assume that this entails a consecutive run of quite a few solid jobs reports since there are, after all, almost 8.5 mln Americans that remain out of work compared to the pre-pandemic period, as officials remind us frequently. Accordingly, analysts say that in the months ahead, insight on how the economy is eroding slack may be better evidenced in the participation rate, employment/population ratio, and underemployment rate metrics, rather than the headline unemployment rate. On price pressures, the Fed has warned us that inflation is expected to run above target in the near-term, due to pandemic base effects, crude prices, and some pent-up demand; however, this is not expected to be seen in the average hourly earnings metrics in April, which may in fact tilt negative; recall, this time last year, the wages measures actually rose as lower-paid employees fell out of the survey sample – this dynamic is expected to reverse as lower-paid Americans return. Labor market proxies have generally had a constructive tilt: initial jobless claims and continuing claims data fell in the survey window; business surveys were mixed, but noted tightening labor market conditions and challenges in attracting staff; ADP payrolls fell short of expectations, but still showed healthy gains, and has tended to underreport the NFP data in recent months; announced job cuts have declined significantly.

Consensus Expectations:

• Non-farm Payrolls (exp. 998k, prev. 916k);
• Private Payrolls (exp. 925k, prev. 780k);
• Manufacturing Payrolls (prev. 55k, prev. 53k);
• Government Payrolls (prev. 136k);
• Unemployment Rate (exp. 5.8%, prev. 6.0%);
• Participation Rate (prev. 61.5%);
• U6 Underemployment (prev. 10.7%);
• EPOP (prev. 57.8%);
• Average Earnings M /M (exp. 0.0%, prev. -0.1%);
• Average Earnings Y/Y (exp. -0.4%, prev. 4.2%);
• Average Workweek Hours (exp. 34.9 hrs, prev. 34.9hrs).

Payrolls: While consensus expects a 1 million print (with a handful of forecasts as high as 2 million or just above), Goldman believes that tomorrow’s number will be 1.3 million as mass vaccinations and the easing of business restrictions supported rapid job growth in virus-sensitive industries, including leisure and hospitality, retail, and education (public and private). Additionally, Big Data signals generally indicate job gains of 1mn or more in the month.

Unemployment Rate: The Fed has signaled that it will continue purchases of Treasuries and mortgage bonds at a rate of $120bln/month until “substantial further progress” has been made toward its maximum-employment and price stability goals. Officials have also been cautious in using the unemployment rate as a proxy for the level of slack in the economy, with many suggesting that the ‘real’ rate of joblessness is closer to the 10.0% mark, rather than the 6.0% headline unemployment rate. Accordingly, the focus will likely be on the U6 measure of “underemployment” (which stood at 10.7% in March), and the participation metrics; the latter is becoming increasingly important to judge the progress of slack erosion, and may offer better insight than the headline unemployment rate. In the March report, participation rose by one-tenth of a percent point to 61.5%, still off the 63.2% pre-pandemic level seen in February 2020. It is also worth paying attention to the little-reported Employment/Population ratio, which some Fed officials have recently referenced; that ratio stood at 57.8% in March, still 3.3ppts beneath the pre-pandemic level of 61.1%.

Average Hourly Earnings: Some warn that the Y/Y metrics may be dragged into negative territory in April. Recall, a year ago, as the pandemic began to bite and economies were shuttered, lower-wage workers were the first to be benched, and fell out of the data sample; this artificially buoyed the earnings metrics (pushing them higher), and the unwinding of this effect is expected to exert influence this month. The consensus therefore expects the Y/Y average hourly earnings measure to be negative for the first time on record. However, some desks are hopeful that not only will this return to positive territory quickly, but also that wages could begin rising as many surveys have alluded to: the Fed’s April Beige book noted that wages increased further over the reporting period, with employers in sectors that reported difficulties in attracting and retaining workers also highlighting tight wage competition, especially for hourly workers; the report also cited some employers lifting salaries in order to attract more workers (it points out that the ability to attract and hire employees varied considerably among contacts, depending on the industry).

ADP Payrolls: ADP payrolls disappointed expectations, printing 742k against an expected 800k; some made the point that this was better than was implied by the Homebase employment data, which tends to focus on smaller businesses, and suggests that big companies have been proactive in reopening e-forts. As always, caveat that ADP’s data has understated that of the official BLS numbers in recent months, so desks were not revising down their NFP forecasts in wake of the release.

Initial Jobless Claims: In the BLS survey period that coincides with the weekly unemployment claims data, initial jobless claims fell from 678.75k to 655.75k, while continuing claims declined from 3.71mln to 3.68mln, boding well for the April BLS data.

Business Surveys: The ISM surveys gave a mixed assessment of the labor market, with the Employment subindex falling 4.5 points in the manufacturing report, to 55.1, remaining in expansion for the fifth consecutive month; however, panelists continued to note significant difficulties in attracting and retaining labor at their companies’ and suppliers’ facilities. The employment sub-index in the services report saw a rise of 1.6 points to 58.8, the fourth straight month in expansion, and the highest level since September 2018. The services report also noted the competition for labor as more restaurants began easing restrictions and returning to normal levels of activity, and all levels of the business were increasing personnel.

Challenger Job Cuts: Challenger reported that job cut announcements fell from 30,603 in March to 22,913 in April, the lowest monthly figure since June 2000, and -96.6% Y/Y. Challenger said that, so far this year, employers have announced plans to cut 167,599 jobs from their payrolls, down 84% from the 1,017,812 jobs eliminated through the same period last year. The report said that employers were no longer undergoing massive cuts, and consumers were beginning to feel safe traveling and spending, and the number of job openings is edging higher. However, the report also noted a labor shortage despite the millions of Americans remaining out of work. Challenger added that the ongoing impact of increased vaccinations and the American Rescue Plan will be reflected in the April job numbers, with a likely decline in both the unemployment rate and weekly initial jobless claims and an increase in job openings.

Arguing for a better-than-expected report:

• Reopening. Despite flattish case counts, US fatalities continued to trend down in the spring. And more importantly from the perspective of tomorrow’s report, the severity of business restrictions eased further between the March and April survey period. Reflecting this, restaurant seatings on OpenTable rebounded to -24% in April from -32% in March, albeit with a lull in the week following the payroll survey period.

• Big Data. High-frequency data on the labor market generally indicate accelerating employment in April, with four of the six measures Goldman tracks indicating job gains of 1 mn or higher, and generally stronger gains among the more reliable datasets.

• Employer surveys. The employment components of both our services (+3.8pt to 55.9) and manufacturing (+1.7pt to 59.9) survey trackers increased to the highest level since 2018.
• Job availability. The Conference Board labor differential—the difference between nthe percent of respondents saying jobs are plentiful and those saying jobs are hard to get — surged to +24.7 in April (from +8.0 in March) and is now at 2018 levels.
• Job cuts. Announced layoffs reported by Challenger, Gray & Christmas fell by 22% in April after declining by 25% in March (mom, SA by GS). Layoffs were at the lowest level since 2000.
• Jobless claims. Initial jobless claims declined during the April payroll month, averaging 656k per week vs. 752k in March. Across all employee programs including emergency benefits, continuing claims fell by 1.3mn between the payroll survey weeks.

Neutral/mixed factors:

• ADP. Private sector employment in the ADP report increased by 742k in April, below consensus expectations but above the pace in March. As usual, the ADP panel methodology likely undercounted workers returning to their previous employers, and this would argue for a larger gain in tomorrow’s report.

Market Reaction: Observing the handful of data releases seen in the month of May, Rabobank’s analysts note that yields rose in wake of a weak ADP report, which might indicate a shift in the market reaction function that we have been accustomed to in recent months; now, weak data is providing a negative impulse for bonds, which Rabo says is a function of the market interpreting that the bad data implies centrist Democrat lawmakers would be less likely to try and water down President Biden’s stimulus plans (while resistance is more likely to rise if the data tone improves, which would reduce the need for any bumper fiscal spending). Rabo also notes that Eurodollar futures’ reaction supported the ‘bad news is bad news’ playbook, with the rationale being that, as the market assigns a greater probability to fiscal stimulus, it must therefore give a greater chance that the Fed will scale back its support too.

Authored by Dave DeCamp via AntiWar.com,

According to numbers released by Taiwan’s Ministry of National Defense, Chinese military flights through Taiwan’s air defense identification zone (ADIZ) doubled in April compared to the previous two months, which coincides with increased US military activity in the region.

While there is much hype surrounding these flights, the ADIZ is not Taiwanese air space, and the Chinese planes usually pass through the southwest corner of the ADIZ, far from the island of Taiwan. An ADIZ is an airspace where a country requires foreign aircraft to identify themselves. The ADIZ concept is not covered under any international treaties and has no international regulations.

The US created the first ADIZs in the 1950s and established Taiwan’s ADIZ, as well as ones for Japan, South Korea, and the Philippines. Taiwan now claims an ADIZ that covers parts of mainland China, although the Defense Ministry does not publicize flights from China’s People’s Liberation Army on the Chinese sign of the median line, which separates the Taiwan Strait. China created an ADIZ in 2013 over the East China Sea, which the US has challenged with B-52 bombers.

Taiwan’s Defense Ministry said there were 117 incidents of Chinese warplanes flying through Taiwan’s ADIZ in April, which more than doubled the totals from February and March. The previous high was in January, which saw 81 ADIZ sorties, which fell to 40 in February and 54 in March.

Because the Chinese planes almost always fly through the southwest of the ADIZ, it’s likely they are going to or returning from drills in the South China Sea, where the US has significantly stepped its military presence in recent years. President Biden has stepped up provocations in the region even more. China said that since Biden came into office, operations had increased by more than 20 percent for US warships and 40 percent for military aircraft in waters claimed by Beijing.

The US is also boosting diplomatic ties with Taiwan as part of its strategy to counter China. In April, the Biden administration announced a new policy to “encourage” contacts between US and Taiwanese officials.

Last Friday, the top US and Taiwanese diplomats in France held a public lunch meeting, drawing sharp condemnation from Beijing.

Iranian state media has again put out a hugely provocative clip depicting an imagined attack on its foreign enemies, which is clearly intended as a threat and “warning”. On Wednesday we detailed that just days earlier a propaganda video set to Iranian patriotic music featured Iran’s military launching a missile on Washington D.C., which resulted in an imagined direct hit on the Capitol Building. The clip briefly showed shocking footage of the Capitol bursting into flames as the lyrics praised the “avengers” who will “liberate Jerusalem” and defeat the Islamic Republic’s enemies.

And now on Thursday state-controlled Islamic Republic of Iran Broadcasting (or IRIB) has issued another similar video, this time depicting an aerial missile strike on Dimona nuclear reactor in southern Israel.

New video from #Iran‘s IRIB threatening a strike on #Dimona nuclear reactor in #Israel ahead of #QudsDay. pic.twitter.com/QBooLSQwgx

— Jason Brodsky (@JasonMBrodsky) May 6, 2021

The brief clip simulates the vantage point of a fighter jet or a drone hovering over what clearly appears to be the large Dimona facility, after which a missile is fired down upon it, but then the footage cuts to an hour glass, suggesting time is “running out” for Israel. 

Interestingly, just weeks ago on April 22 (in the overnight hours) what was widely described as an “errant” Syrian missile (as Damascus defenses had been responding to an Israeli raid) had fallen close to the Dimona nuclear reactor facility. 

“A Syrian missile exploded in southern Israel on Thursday, the Israeli military said, in an incident that triggered warning sirens near the secretive Dimona nuclear reactor and an Israeli strike in Syria,” Reuters had reported at the time. 

The Shimon Peres Negev Nuclear Research Center, commonly referred to as the Dimona complex:

The whole incident had been somewhat mysterious, given the length the missile traveled to within the general vicinity of one of Israel’s most secure and sensitive sites, leaving many to speculate that the “errant” surface missile fired from Syria was actually an intentional “message” to the Israelis. 

Below is the IRGC propaganda clip which had been released this past weekend…

In Broadcast Leading to Khamenei’s Speech, Iran TV Airs Nationalist Song Depicting Capitol Hill Being Destroyed by a Missile #Iran #JCPOA pic.twitter.com/1Z9onUPMPM

— MEMRI (@MEMRIReports) May 5, 2021

Perhaps seizing on this capability of Iran or its regional allies to potentially hit an Israeli nuclear rector, which would cause untold severe damage to the whole surrounding area in southern Israel, Tehran appears to be putting Israel “on notice” over the latest string of Israeli covert sabotage incidents, most notably the April 11 Natanz attack which damaged Iranian centrifuges. 

This latest clip was issued on the occasion of Quds Day, which is an Iranian Islamic holiday that specifically commemorates the expected “liberation of Jerusalem” and which falls every year on the last Friday of Ramadan.

Via South Front,

On May 5th, the US State Department announced that it had reached a $13 million settlement with defense contractor Honeywell.

The settlement is over allegations it exported technical drawings of parts for the F-35 fighters and other weapons platforms to China, Taiwan, Canada and Ireland, according to the Bureau of Political-Military Affairs’ charging document.

“Honeywell voluntarily disclosed to the Department the alleged violations that are resolved under this settlement.  Honeywell also acknowledged the serious nature of the alleged violations, cooperated with the Department’s review, and instituted a number of compliance program improvements during the course of the Department’s review.  For these reasons, the Department has determined that it is not appropriate to administratively debar Honeywell at this time.”

The State Department alleged some of the transmissions harmed national security, which Honeywell acknowledges with the caveat that the technology involved “is commercially available throughout the world. No detailed manufacturing or engineering expertise was shared.”

Overall, the materials pertained to the F-35 Joint Strike Fighter, the B-1B Lancer long-range strategic bomber, the F-22 fighter, the C-130 transport aircraft, the A-7H Corsair aircraft, the A-10 Warthog aircraft, the Apache Longbow helicopter, the M1A1 Abrams tank, the tactical Tomahawk missile; the F/A-18 Hornet fighter, and the F135, F414, T55 and CTS800 turboshaft engines.

Honeywell would only pay its fine, essentially, and keep working for the US government, because it voluntarily admitted to violating national security.

Between 2011 and 2015, Honeywell allegedly used a file-sharing platform to inappropriately transmit engineering prints showing layouts, dimensions and geometries for manufacturing castings and finished parts for multiple aircraft, military electronics and gas turbine engines. Its first disclosure of violations to the government came in 2015.

“The U.S. Government reviewed copies of the 71 drawings and determined that exports to and retransfers in the PRC [People’s Republic of China] of drawings for certain parts and components for the engine platforms for the F-35 Joint Strike Fighter, B-1B Lancer Long-Range Strategic Bomber, and the F-22 Fighter Aircraft harmed U.S. national security,” the charging document read.

In a statement, Honeywell said it has since taken steps to ensure there are no repeat incidents.

“Under an agreement reached with the State Department to resolve these issues, Honeywell will pay a fine, engage an external compliance officer to oversee the Consent Agreement for a minimum of 18 months, and will conduct an external audit of our compliance program,” Honeywell’s statement on the matter reads in part.

“Since Honeywell voluntarily self-reported these disclosures, we have taken several actions to ensure there are no repeat incidents. These actions included enhancing export security, investing in additional compliance personnel, and increasing compliance training.”

Interesting enough, the US was concerned that the F-35 flying disaster’s secrets would be shared through Turkey’s purchase of an S-400 missile defense system.

Turns out, a US corporation simply sold the secrets to China and others, simply for profit.

But it is all well, since it apologized after the fact, reinforcing the notion that it is much simpler to ask for forgiveness than it is to ask for permission.

It appears we were overly cynical when we said just an hour ago that we won’t be holding our breath to find out if any other state will join Montana in ending many unemployment benefits in response to the unprecedented worker shortage.

Just moments after we published that post, perhaps emboldened by the daring example set by his republicans peers in Montana, South Carolina Governor Henry McMaster today became the second state to end the people’s addition to government handouts, and directed the S.C. Department of Employment and Workforce to terminate South Carolina’s participation in all federal, pandemic-related unemployment benefit programs, effective June 30, 2021.

Governor McMaster directed the agency to take the action in a letter to DEW Executive Director Dan Ellzey.

“South Carolina’s businesses have borne the brunt of the financial impact of the COVID-19 pandemic. Those businesses that have survived – both large and small, and including those in the hospitality, tourism, manufacturing, and healthcare sectors – now face an unprecedented labor shortage,” governor McMaster wrote.

“This labor shortage is being created in large part by the supplemental unemployment payments that the federal government provides claimants on top of their state unemployment benefits. In many instances, these payments are greater than the worker’s previous pay checks. What was intended to be a short-term financial assistance for the vulnerable and displaced during the height of the pandemic has turned into a dangerous federal entitlement, incentivizing and paying workers to stay at home rather than encouraging them to return to the workplace.”

In a memo to Governor McMaster, Executive Director Ellzey outlined existing federal unemployment programs and what will change when the governor’s directive goes into effect on June 30.

Those programs include the following:

• Pandemic Unemployment Assistance (PUA)
• Pandemic Emergency Unemployment Compensation (PEUC)
• Federal Pandemic Unemployment Compensation (EPUC)
• Mixed Earners Unemployment Compensation (MEUC)
• Emergency Unemployment Relief for Governmental Entities and Nonprofit Organizations
• Temporary Federal Funding of the First Week of Compensable Regular Unemployment for States with No Waiting Week

In conclusion, McMaster says that following termination of participation in these federal programs, DEW shall return to normal operation of the State’s unemployment insurance program, including enforcing the requirement that claimants demonstrate active efforts to seek employment in order to remain eligible for benefits.

In response, Dan Ellzey wrote that “at the current time, there are 81,684 open positions in the state of South Carolina. The hotel and food service industries have employee shortages that threaten their sustainability. However, no area of the economy has been spared from the pain of a labor shortage.”

The Director of the S.C. Department of Employment and Workforce Director continued: “While the federal funds supported our unemployed workers during the peak of COVID-19, we fully agree that reemployment is the best recovery plan for South Carolinians and the economic health of the state. Last week’s initial claims numbers were the lowest since the pandemic began, and employers around the state are eager to hire and anxious to get South Carolina back to business.”

With 2 states down and 48 to go, or 49 – we are not sure if Washington D.C. is now officially part of the USSA – one can only hope that more states will follow in this example, although as with all things, we expect that the final breakdown will be by party lines with people in red states working and while people in blue state are paid to smoke pot and do nothing.

McMaster’s full note below (pdf link):

Authored by Paul Joseph Watson via Summit News,

CNN’s Michael Smerconish says that people who don’t take the vaccine should be socially ostracized and shunned by their friends and family.

During a segment on his show, Smerconish discussed a suggestion made by prosecutor Michael Stern in a USA Today opinion piece about vaccination uptake.

“We’ve gotta shun folks, we’ve gotta shun people into getting vaccinated,” said Smerconish, agreeing that businesses should make getting the vaccine mandatory as a condition of employment.

However, he also asserted that family members and friends should socially ostracize those who choose not to take the vaccine.

CNN’s ⁦@smerconish⁩ says it’s time for people to “shun” friends and family who aren’t vaxxed pic.twitter.com/OfzuDhTbTq

— Jack Posobiec (@JackPosobiec) May 5, 2021

Continuing to quote Stern’s article, Smerconish stated, “People should require friends to be vaccinated to attend the barbeques and birthday parties they host – friends don’t let friends spread COVID.”

Smerconish then proudly revealed the results of a poll on his website which found that 73% of respondents thought it was “time to shun.”

“Doesn’t @Smerconish realise we absolutely want to be shunned by people like him and his viewers,” remarked Raheem Kassam.

“That’s literally the dream.”

“This isn’t going to end well,” commented Donald Trump Jr.

Smerconish and his ilk are not encouraging others to shun “anti-vaxxers” because they care that much about incentivizing more people to take the vaccine (take up rates are already very high), they’re shaming them so as to legitimize the brutal discrimination that will be metered out later on down the line to those who don’t take it.

Meanwhile, the ‘sane’ people who insist everyone must take the vaccine are walking around behaving like this…

History will look back in awe. pic.twitter.com/jxx02xqe4l

— Paul Joseph Watson (@PrisonPlanet) May 5, 2021

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On Wednesday the US Air Force was moments away from a planned test of an unarmed nuclear Minuteman III intercontinental ballistic missile but aborted prior to launch, according to an official statement. 

It was supposed to happen in the early morning hours at Vandenberg Air Force Base in California, but “experienced a ground abort prior to launch,” the Air Force Global Strike Command said. No further explanation was given as to why the test launch was shut down, other than the service indicating that the “cause of the ground abort is currently under investigation.”

The news release did however note that ballistic missiles are only launched when “all safety parameters with the test range and missile are met,” according to the news release. The launch is expected to be rescheduled pending the results of the investigation. 

As a report in The Hill highlights, a debate is currently raging on Capitol Hill and in the halls of the Pentagon over the near-future viability of the program. “The failed test comes as lawmakers debate whether to proceed with the program to replace the aging Minuteman III missiles or try to extend the life of the missiles,” The Hill writes.

Currently some 400 three-state Minuteman III missiles form the critical land-based ‘last defense’ element in the US nuclear triad, and were first deployed in 1970 with an initial expected 10-year service life. But after undergoing multiple life extensions the Air Force has long argued for their complete replacement, but this would come at a hefty $1.2 trillion or more price tag.

US Strategic Command chief Adm. Charles Richard, who oversees America’s nuclear arsenal, has been pushing for the Ground-based Strategic Deterrent (GBSD) program to immediately replace the ageing systems.

“We simply cannot continue to indefinitely life-extend Cold War leftover systems,” Richard told Congress last month. “I do not see an operational reason to even attempt to do that.”

Authored by Mark Jeftovic via BombThrower.com,

The Jackpot Chronicles Scenario #4: Atlas Shrugged

Never mind The Great Reset. Here comes The Great Reject.

It occurred to me that I never did finish the final instalment of last summer’s Jackpot Chronicles, wherein I posited four possible post-Covid scenarios.

For a quick refresher, The Jackpot is concept I cribbed from William Gibson. It’s a term he uses across a few of his near-future cyberpunk novels that describes a series of rolling global catastrophes that set in sometime around 2016 (his stories span multiverses, and timelines, but the common theme is that somewhere around 2016, some kind of irrevocable glitch in the matrix occurred that put a permanent end to normalcy as it has been understood up until that point).

If there was a Jackpot, whatever it was, it could arguably have happened at many points throughout the 20th century, or if we wanted to confine our speculation to the 21st century then, 9/11 or the GFC would do. Everything after that being symptomatic as opposed to causal.

And then… 2020 and COVID hit. That’s when the fabric of time cleaves us into the before times and The Jackpot.

The other post-pandemic scenarios from the rest of my Jackpot series were:

1. Force Majeure: The wheels come off completely and the system comes unglued. Mad Max.

2. Tin Foil Hat: It really is one Big Conspiracy and we’re into a New World Order.

3. The Great Bifurcation: The middle class gets wiped out and we get a two-tier society

I had thought the fourth scenario would be the one themed Deglobalization, and to a certain extent it still is. In the original outline I described that Deglobalization:

“Is where multi-national corporations, so shaken from this Near Death Experience, realizing their error of betting the farm on just-in-time supply chains, labour cost arbitrage and having zero buffers, begin pulling manufacturing back home.

The smart ones start building cushions and shock absorbers into their business logic, and they begin to eschew leverage after being on the wrong side of a series of cascading liquidity implosions. In other words, businesses begin to transition themselves into what I called “Transition Companies” as posited in the inaugural posting for [this blog]”.

I also went on to say that I considered this one most desirable yet least likely. My view on this scenario has changed somewhat, and I also think that the staggering government ineptitude and duplicity at all levels in all jurisdictions (with few notable exceptions) has made our regeared “4th scenario” more likely given that it’s in progress. Mass demonstrations, mass exoduses, crypto-currencies are symptoms of a Great Reject, or as I’ve renamed this scenario “Atlas Shrugged“.

The TL,DR of the novel, Atlas Shrugged is that once the institutional sclerosis of the ruling class was understood to be both incorrigible and irreversible, the only other option was a global opt-out. There was no Great Reset in Atlas Shrugged. They got The Great Reject instead.

Under the Atlas Shrugged scenario, deglobalization is just one of numerous motivating factors, but it’s mainly an outcome of a larger dynamic where all non-ruling factions in society lose faith in the prevailing structure of Neoliberal Globalism (a.k.a “Mr. Global”). With Mr. Global’s viability in question, people begin to look for the exits.

This begins to occur on two fronts. What Vilfredo Pareto called “the non-governing elites” begin to realize that the system which used to accommodate them, even rely on their tacit support, is now becoming hostile toward them. At the very least, the ruling elites are undermining their interests. This is part of the dynamic of Peter Turchin’s “elite overpopulation” that we looked at recently.

The other front is the comparatively powerless underclass, which, in pace with Pareto’s Theory of Elite Cycles, lose their moorings and standing within the system they are expected to adhere to. The social contract no longer seems to be a matter of middle-class protections and living standards but instead becomes starkly authoritarian and one-sided. What is clear is that the existing institutions are now functioning to defend the position of the overclass, not to uphold the rights and liberties of the underclass.

The culmination of multiple super-cycles (Pareto’s Elite Cycles, Turchin’s long term dynamics of sociopolitical instability, debt, a Fourth Turning, and a Maunder Minimum for good measure) combined with an accelerated onslaught of technological innovation: Internet, crypto-currencies …biotech? Nanotech? Micro nuke? Fusion? Quantum computing? We have all the necessary components for a complete breakdown of existing institutions and the total loss of legitimacy of the current governing elite class.

So it goes in our Atlas Shrugged scenario. Various interests of many forms and myriad factions, from dissident states (like Florida), to decentralized and virtual companies, emergent DAO’s, all the way to individuals and cultural tribes all begin to experience these moments of clarity in their own way. From there they will act in their own rational self-interests and cooperate with others doing the same in order to navigate the breakdown of Mr. Global.

In spite of this, Mr. Global’s prevailing policymakers and governance structures will frantically maneuver and spin narratives of fear and fantasy in order to keep the existing system on the rails.

They walked back the second one, but not the first one.

That is what The Great Reset really is: it’s an attempt at a zeitgeist-level rationalization that doubles-down on institutional failure on the part of the entire governance structure of Mr. Global, and gives them a new lease on life to remain in charge. Reimagined by the Davos crew, amplified by the mainstream media, lubricated by Big Tech.

The antidote to all of this are crypto-currencies, smart contracts and decentralization.

That antidote also brings significant upside regardless of which one of our four possible scenarios plays out.

When I listen to people who are complete denial about crypto, I realize that there is a common thread in their objections (what made me think about all this today was listening to Michael Pento’s criticisms of Bitcoin on George Gammon’s Rebel Capitalist. Pento’s 2012 book on the inevitable bursting of the bond bubble is a must read. That book helped be form the basis on what I think is the funds flow that is actually putting a floor under crypto. I don’t begrudge Pento for not seeing it, because as I’ll explain, he’s looking at it through the wrong lens)

We could go on for hours about how most of these people haven’t really delved into the technology or what it means, how their criticisms at the defects around Bitcoin apply even more accurately to US dollars (“backed by nothing”, “infinite supply”, “uses too much energy”, et al). But what they all have in common is that they all posit that whether Bitcoin and cryptos succeed or fail is premised on whether the existing establishment will permit it.

What will the Fed do? What if the government bans it? Won’t the World Bank just create their own CBDC?

This is completely inverted. They have it backwards. It’s not up to the existing system, because the existing system is over. That’s the part they don’t get.

The existing system should be looking for its place in the new reality of network states, not pontificating how it will run the new landscape. The coming system will be multipolar in not just the geopolitical dimension, but across cyberspace and the network dimensions as well.

Instead, the incumbent system is busy banning menthol cigarettes, imposing negative interest rates and undergoing mass conversion to a peculiar new religion called Wokeness.

It won’t work, and it brings to mind a particularly vivid example I once heard about a balloon disaster that still makes me cringe when I think of it:

A group of people were embarking on a balloon ride and as they were just a foot or two off the ground, the burner erupted into flames. The balloon pilot realized immediately what this meant and he leapt from the gondola which was still only a few feet off the ground.

One or two of the passengers were quick witted enough to realize what this meant and followed him. This set off a feedback loop: as the fire expanded, its hot air forcing the balloon higher, combined with the weight reductions as the first few people bailed out, the situation very quickly escalated past a point of no return.

The balloon had accelerated very rapidly to heights from which it was no longer possible to leap safely. The unfortunates who had hesitated and were trapped in a gondola being propelled higher by a fireball, to their inevitable doom.

That’s what our entire situation feels like today. The balloon is still hanging a foot or so above the ground, the canopy is on fire, and the people who have figured out what this means are bailing out while they can and in doing so they are accelerating the ultimate burn-then-crash of the entire system.

In Rand’s book they went to a hidden valley called “Galt’s Gulch” and used their skills and their resources to restore new communities while the old systems imploded. If this scenario plays out we’d be looking for people creating a decentralized, network of gulches. Seeking each other out who are pursuing this same goals, creating open protocols to to rebuild civil societies and autonomous communities built on the ageless principles of free markets, liberty and prosperity.

*  *  *

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China’s 2019 greenhouse gas emissions exceeded those of the United States and the rest of the developed world combined, according to CNBC, citing a Thursday report by the Rhodium Group – a New York-based advisory group founded in 2003 by China expert Daniel H. Rosen.

According to the study co-authored by a former Obama admin climate policy official, energy modelers and emissions experts (just go with it), China is now responsible for 27% of total global emissions – more than the combined total produced by the United States (11%), India (6.6%) and the 27 EU member nations together (6.4%).

In 2019, China’s emissions not only eclipsed that of the US—the world’s second-largest emitter at 11% of the global total—but also, for the first time, surpassed the emissions of all developed countries combined (Figure 2). When added together, GHG emissions from all members of the Organization for Economic Cooperation and Development (OECD), as well as all 27 EU member states, reached 14,057 MMt CO₂e in 2019, about 36 MMt CO₂e short of China’s total. -Rhodium Group

In short, Chinese President Xi Jinping stole Greta Thunberg’s childhood.

That said, the Rhodium Group also gives China somewhat of a pass for their climate sins – noting that since it’s home to over 1.4 billion people, they’re not quite so evil per capita.

To date, China’s size has meant that its per capita emissions have remained considerably lower than those in the developed world. In 2019, China’s per capita emissions reached 10.1 tons, nearly tripling over the past two decades (Figure 3). This comes in just below average levels across the OECD bloc (10.5 tons/capita) in 2019, but still significantly lower than the US, which has the highest per capita emissions in the world at 17.6 tons/capita. While final global data for 2020 is not yet available, we expect China’s per capita emissions exceeded the OECD average in 2020, as China’s net GHG emissions grew around 1.7% while emissions from almost all other nations declined sharply in the wake of the COVID-19 pandemic.

…

While China exceeded all developed countries combined in terms of annual emissions and came very close to matching per capita emissions in 2019, China’s history as a major emitter is relatively short compared to developed countries, many of which had more than a century head start. A large share of the CO₂ emitted into the atmosphere each year hangs around for hundreds of years. As a result, current global warming is the result of emissions from both the recent and more distant past. Since 1750, members of the OECD bloc have emitted four times more CO₂ on a cumulative basis than China (Figure 4). This overstates the relative role of OECD emissions in the more than 1 degree Celsius increase in global temperatures that has occurred since before the industrial revolution because a large share of annual CO₂ emissions is absorbed in the earth’s carbon cycle in the decades after release. But China still has a way to go before surpassing the OECD on a cumulative contribution basis.

So of course, historically speaking, China has polluted far less – a point we’re still trying to understand.

As CNBC notes, “The findings come after a climate summit President Joe Biden hosted last month, during which Chinese President Xi Jinping reiterated his pledge to make sure the nation’s emissions peak by 2030. He also repeated China’s commitment to reach net-zero emissions by midcentury and urged countries to work together to combat the climate crisis.”

“We must be committed to multilateralism,” said Xi during brief remarks at the summit. “China looks forward to working with the international community, including the United States, to jointly advance global environmental governance.”

Xi also said that it would ‘control its coal-fired generation projects and limit increases in coal consumption over the next five years.’

As we noted on Tuesday, this means China needs to shutter 600 coal plants to meet its emissions goals of net zero greenhouse emissions by 2060. If they don’t meet that goal, we’re sure the virtuous masters of the universe will surely refuse to conduct further business with Beijing.

Is China aware that Blackrock, Bridgewater and Goldman will never, ever invest in it unless it shuts 600 coal-fired plants to hit its climate target?

Oh wait…

— zerohedge (@zerohedge) May 3, 2021

Authored by Alex Hamilton via AmericanThinker.com,

Joe Biden is in a pickle.  

He wants to continue to convince Americans they should get the experimental biological agent (AKA “the vaccine”), but, as Tucker Carlson pointed out last week, the administration and the CDC have offered no explanation as to why you need to continue to wear a mask after you have taken “the vaccine.” 

 Why would they want us to doubt the efficacy of the vaccine?  Why would any sane person who is not in a high-risk group contemplate becoming a lab experiment subject if you are not allowed (yes, our rights are now derived from government and will be doled out based on compliance) to burn your mask and return to a pre-pandemic way of life?  

That’s just bad salesmanship…until you think about the alternative.

Think about what would happen if they allowed (there’s that word again) people not to wear masks after being vaccinated.  

Here’s a typical scenario.  

The vaccinated test subject enters the supermarket.  

The vigilante mob of leftists can’t wait to accost and demand compliance to their edict, using physical violence if necessary.  

The test subject then proclaims that he has put his mask in his pocket.  

A short time later, the test subject hears the man claim the same immunity.

In this fictional example, you can begin to see what the ramifications of this policy would be.  

Within weeks, the majority of Americans would stop wearing masks.  

(Along with social distancing, and lockdowns, and getting the vaccine).  

People would actually begin to associate non-masking people with safety, while mask-wearing people would signal danger.  The danger of the unvaccinated.

The government has just lost all control.  

Do you really think these people will give up their newfound power so easily?  I’m afraid not.  

I imagine that their Big Tech partners are working furiously building a mandatory vaccine passport system as you read this.  

Until that is up and running, you can expect the regime to continue requiring all people to wear masks, especially those who have been “vaccinated.”