Category: zerohedge

Authored by Michael Snyder via The Economic Collapse blog,

In the social media era, public displays of wealth have become a way to show the world that you are “somebody”.  Of course our value as human beings has absolutely nothing to do with how much money we have, but it is undeniable that those that have tremendous wealth are often idolized in our culture.  Just think of how much we fawn over Bill Gates, Elon Musk and countless social media “influencers” that have become household names.  Sadly, this has created an environment in which people increasingly feel a need to flaunt their wealth, and that is extremely unfortunate.

Since the beginning of the COVID pandemic, 8 million more Americans have fallen into poverty, 10 million more Americans are now in danger of being evicted from their homes, and more than 70 million new claims for unemployment benefits have been filed.  With so many people deeply suffering, it is extremely insensitive to publicly flaunt your wealth, but many rich people are doing it anyway.

Recently, social media influencer Kylie Jenner has gotten a lot of attention for photos that she has been posting to Instagram.  In one, her daughter poses with a $1,390 designer bag in front of a $225,000 Lamborghini…

Kylie, 23, posted a new picture of her toddler today, as the two enjoyed the Calabasas sun.

The Instagram model showed off Stormi’s outfit, consisting of gray sweatpants, a matching tank top, colorful sneakers, and a $1390 mini tan Prada bag.

As if the high-end bag wasn’t enough of a flash of wealth, the photo was taken in front of Kylie’s $225K bright orange Lamborghini.

The caption “chill days w mommy” was posted under the photo.

How are the millions of Americans that have had to wait in line for hours at local food banks supposed to feel when they see something like that?

Another way that wealth is being flaunted is through the purchase of NFTs.  On Monday, a tech executive paid 2.9 million dollars for an NFT of Jack Dorsey’s very first tweet…

Twitter CEO Jack Dorsey’s first tweet, offered for sale as a nonfungible token, was sold on Monday for 1,630.58 ether, a cryptocurrency. That’s equivalent to about $2.9 million based on ether’s price at the time of sale.

The tweet, which said “just setting up my twttr,” was first published on March 21, 2006. It was listed for sale as an NFT on March 6. By March 9, the highest offer was from Sina Estavi, CEO of Bridge Oracle. Estavi won the auction, though his bid was worth about $2.5 million it was placed.

Of course Sina Estavi doesn’t actually own Jack Dorsey’s first tweet now.

All he owns is a digital collectible that memorializes Jack Dorsey’s first tweet.

How ridiculous is that?

Even worse, someone recently spent 69 million dollars for an NFT “work of art” that was created by a digital artist named “Beeple”…

Last week, the auction house Christie’s announced the artist Beeple sold a piece of artwork for more than $69 million, the third highest price for a living artist.

But “Everydays: The First 5000 Days” isn’t a physical work of art. It’s all digital.

The work was sold through an NFT, a burgeoning technology that could potentially change how we own everything from art work and concert tickets to our homes.

If you want to know how to get rich quick in America these days, just change your name to something really stupid like “Beeple” and start pumping out NFT “artwork”.

You don’t even have to paint anything, and you can make millions of dollars in the process.

Meanwhile, about two-thirds of all Americans are living paycheck to paycheck and are just trying to survive from month to month.

The gap between the wealthy and the poor has never been greater, and there is a tremendous amount of resentment building toward the ultra-rich right now.

In such an environment, you would think that religious leaders would be extremely cautious about flaunting wealth, but in many instances they are some of the most brazen examples of all.

A man named Ben Kirby started the @PreachersNSneakers Instagram account in 2019, and today it has more than 210,000 followers.  For more than a year, he has been posting photos of some of the most famous preachers in America wearing extremely expensive designer clothes…

On his feed, Kirby has showcased Seattle pastor Judah Smith’s $3,600 Gucci jacket, Dallas pastor T.D. Jakes’s $1,250 Louboutin fanny pack and Miami pastor Guillermo Maldonado’s $2,541 Ricci crocodile belt. And he considers Paula White, former president Donald Trump’s most trusted pastoral adviser who is often photographed in designer items, a PreachersNSneakers “content goldmine,” posting a photo of her wearing $785 Stella McCartney sneakers.

When I was growing up in the 1970s, I never heard of this sort of thing happening.

In those days, preachers wore very conservative suits and ties, and they were usually not paid very well at all.

But now a new brand of “celebrity preacher” has emerged, and they are often treated like rock stars…

In his book, Kirby writes that these pastors who have enormous social media followings aren’t simply pastors anymore, he writes. Often they are motivational speakers, corporate coaches and leadership consultants. Kirby said he has heard of churches where a volunteer was designated solely for the purpose of carrying the pastor’s Bible. Often, he writes, these pastors have private entrances, reserved parking spaces, security details and a gaggle of personal assistants or handlers. And, often, they promise blessings from God to their followers if their followers bless the church.

“Like Hollywood — a world so often criticized by the pietistic — these institutions and their leaders celebrate and reward the ‘blessing’ of fame, popularity and influence,” he writes. “Pastors function like ‘talent’ performing for an audience or like a spokesman for the church’s ‘brand.’ ”

If this is how corrupt our churches have become, what hope is there for the nation as a whole?

Flaunting wealth and throwing money around recklessly might be fun for a while, but there will be a price to pay.

Even as I write this article, the resentment that the “have nots” are feeling toward the “haves” is growing.

When things get bad enough in this country, a breaking point will come, and the “have nots” will be looking to extract some revenge.

*  *  *

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

Vail Resorts announced a “bold price reset of its Epic Pass products” that will provide skiers and snowboarders limitless fun at its ski resorts starting at $583, a 20% markdown from the past five years, for the 2021-22 season.

News of the Epic Local Pass now available for $583 (down from $729 last season), and the full Epic Pass priced at $783 (down from $979 last season) sent shares of Vail down more than 8% in premarket. 

Vail said, “this reset takes these products back to prices last seen during the 2015/16 season.” 

The price reduction applies to Vail’s entire North American ski resorts portfolio for the 2021/22 winter season. 

“The ski industry, our company and skiers and riders everywhere just navigated the most challenging season we have ever encountered. Because of the growth and loyalty of our pass holders, we were able to ensure this season was a success, with full operations across our 34 North American resorts, even amid a pandemic,” said Rob Katz, chairman and chief executive officer of Vail Resorts.

Diving into the fine print, the $583 pass offers access to what Vail Resorts calls its 29 “Local” resorts, including Keystone, Crested Butte, Heavenly, Northstar, Stowe, and Hunter Mountain. For unlimited skiing and snowboarding at the company’s entire North American ski resorts portfolio, the highest-tier Epic Pass is selling for $783 (rather than last year’s $979, making it 20% cheaper). 

A spokesperson told Bloomberg the strategy is a “price reset” rather than a flash sale or temporary discount. Vail believes the price reduction should drive competition industrywide.

Usually, Vail Resorts’ ticket prices rise as the season approaches, but with next season’s passes already on sale, it appears the company could be desperate for money. 

Update (1030ET): The suspected gunman charged in the shooting at a Boulder, Colorado grocery store was previously known to the FBI, a New York Times report revealed.

SaraACarter’s Annaliese Levy reports that, according to the report, Ahmad Al Aliwi Alissa, a 21-year-old from the Denver suburb of Arvada, was previously known to the FBI because he was linked to another individual under investigation by the bureau, according to law enforcement officials.

In 2018, Alissa was convicted of a misdemeanor assault against another student at Arvada West High School. Fellow classmates recall him as having a “fierce temper” that would flare in response to setbacks or slights, The Times report said.

Alissa’s brother described him as “mentally ill, paranoid and antisocial,” to the Daily Beast.

*  *  *

As Summit News’ Paul Joseph Watson detailed earlier,

The gunman in Boulder who killed 10 people at a supermarket would routinely threaten his classmates with threats of filing fake hate crime charges after violently attacking them, eyewitnesses told the media.

As we highlighted yesterday, Ahmad Al-Issa would typically be described as an “anti-racist activist,” with his Facebook page having featured criticism of Donald Trump, advocacy for refugees and Muslim immigrants.

Despite the gunman’s family telling the Daily Beast that the reason for his rampage was as a result of him being the victim of “bullying” in high school, Al-Issa’s classmates say the opposite is true.

A Fox 31 report reveals that Al-Issa once punched a classmate and continued to hit him as he lay on the ground.

Al-Issa tried to justify the attack by claiming the victim “had made fun of him and called him racial names weeks earlier,” although no other classmates could corroborate this.

The shooter’s wrestling team classmate Dayton Marvel also told the Denver Post that in Al Issa’s senior year, “during the wrestle-offs to see who makes varsity, he actually lost his match and quit the team and yelled out in the wrestling room that he was like going to kill everybody.”

“Nobody believed him. We were just all kind of freaked out by it, but nobody did anything about it,” said Marvel.

“He would talk about him being Muslim and how if anybody tried anything, he would file a hate crime and say they were making it up,” he added.

Given this history and the fact that Al-Issa was an avid reader of mainstream media, questions now must be asked about his real motivation given that all the gunman’s victims were white and whether he was radicalized by anti-white racism that has been institutionalized by the press.

Photographs of the 10 people killed by suspect Ahmad al-Issa in #Boulder, Colo. I was told a few days ago that the race of victims in shootings matter even if there is no evidence of race playing a role in the attack. pic.twitter.com/fxiG4jGbdM

— Andy Ngô (@MrAndyNgo) March 24, 2021

*  *  *

In the age of mass Silicon Valley censorship It is crucial that we stay in touch. I need you to sign up for my free newsletter here. Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown. Also, I urgently need your financial support here.

China’s benchmark stock index extended losses for a second day, closing at a new low for the year after breaching the key 5,000 point threshold. The CSI 300 Index fell 1.6% to close at 4,928.69 points, the lowest level since December 11. It was headed for its steepest monthly loss in more than two years. The drop took losses from this year’s peak to more than 15% amid broader weakness in Asian markets as setbacks to the pandemic recovery weighed on riskier assets.

Materials stocks plunged as much as 5.3%, extending a four-day losing streak on news that China is considering selling aluminum from state reserves to cool prices. Zhejiang Huayou Cobalt declined as much as 8.3%, while Aluminum Corp of China was down 6.1%. Elsewhere, China Fortune Land slumped 8.2% while Yihai Kerry Arawana dropped 6.5%.

The CSI 300 Index has hovered around 5,000 points for much of the past two weeks after it entered a correction. The gauge had consolidated after Chinese state funds stepped in to buy shares during the National People’s Congress. However, China’s Plunge Protection team has been largely missing ever since authorities had moved to soothe investor concerns recently, as what started the year as a world-beating rally unraveled amid official warnings of market excess and the prospect of tighter liquidity, Bloomberg reported.

“The market sentiment has been weak since the Lunar New Year holiday and any bad news would add selling pressure,” said Amy Lin, an analyst at Capital Securities. Concerns over weak sentiment also came against the backdrop of heightened political tensions between Chinese officials and their U.S. and E.U. counterparts.

But while domestic buyers have stepped away from local markets in the absence of explicit backstops from the National Team, foreign investors returned to buying onshore stocks again, scooping up a net $767 million worth of shares via trading links on Wednesday according to Bloomberg calculations.

That said, both domestic and foreign traders offloaded stocks sensitive to the local economy such as Macau casino shares and Hong Kong property developers.

Meanwhile, the MSCI Hong Kong gauge dropped as much as 2.4% to the lowest since Feb, while Hong Kong’s Hang Seng Index entered a technical correction as the city’s temporary suspension of BioNtech vaccinations fueled worries over the pace of its recovery from the pandemic.

Commenting on the recent sharp weakness in the key Asian markets, Bloomberg’s Wes Goodman writes that – surprise – the PBOC and the BOJ may be behind the weakness in Asia stocks.

As Goodman notes, China hasn’t been this frugal in its cash offerings to banks in almost a year, with the People’s Bank of China avoiding net injections of short-term liquidity into the financial system since late last month, increasing concern that access to funds is becoming more difficult.

Meanwhile, the weakness in Japan’s Nikkei which fell for a fourth straight day, was also attributed to the central bank, after the BOJ said last Friday that it’s scrapping its annual target for stock purchases, and would focus its buying on the Topix while leaving the benchmark Nikkei225 alone.

As Goodman concludes, “stocks in both China and Japan had gotten used to these forms from the central banks. Now this backing, while not going away, is ebbing, and that could mean less central bank handholding for equities.”

It was belatedly revealed late Tuesday that North Korea had fired two short-range cruise missiles off its west coast into the sea on Sunday morning, according to confirmation by South Korea’s Joint Chiefs of Staff (JCS).

The details given are as follows: “Sunday morning, the 21st, [authorities] spotted two suspected cruise missiles in the Onchon, South Pyongan area,” the military said, underscoring that it knew about the test in real-time. Though it’s the first such missile test during the Biden administration, all sides appeared to downplay it, including the White House which dubbed it “normal activity”. A senior administration official told the press, “We see this action in the category of normal activity.”

Describing the unusual scenario of the information not being made public about the ‘mysterious test’ ABC News writes:

Curiously, neither North Korea nor South Korea had acknowledged the firing of the two missiles immediately on Sunday as is routinely done by both countries. North Korea typically discloses launches to promote its technological advances, while South Korea provides quick updates to highlight their provocative nature.

It also could be that given the White House is busy ratcheting tensions with China and Russia via a series of sanctions – and even pre-announced cyberattacks – the US administration is content to look the other way for now and not open up yet another foreign policy row .

Downplaying is precisely what the above-cited admin official sought to do, saying further, “North Korea has a familiar menu of provocations when it wants to send a message to a U.S. administration,” but that “Experts rightly recognized what took place last weekend as falling on the low end of that spectrum,” according to ABC.

President Biden himself appeared to laugh it off when asked by a reporter Wednesday: “Do you consider that to be a real provocation by North Korea?”

“No, according to the Defense Department, it’s business as usual.”

“There’s no new wrinkle in what they did” 

When asked if it impacts diplomacy, Biden simply laughed at the question and walked away. 

REPORTER: On North Korea: Do you consider that to be a real provocation by North Korea?

BIDEN: No. According to the Defense Department, it’s business as usual. There’s no new—there’s no new wrinkle in what they did.

REPORTER: Will it affect diplomacy at all?

BIDEN: *Laughs* pic.twitter.com/sc1sHjhwZV

— JM Rieger (@RiegerReport) March 24, 2021

It was only a little over a week ago that Pyongyang had also issued its first direct threat against Washington since Biden entered office. The powerful sister of Kim Jong Un, Kim Yo Jong, warned the United States it must “refrain from causing a stink” if it desires to “sleep in peace” over the next four years.

“If it wants to sleep in peace for coming four years, it had better refrain from causing a stink at its first step,” she was cited as saying in state media. 

After a brief dip, extending yesterday’s losses, on the surprise crude build reported by API overnight, but anxiety over the Suez canal blockage potentially taking days to fix sent prices notably higher overnight.

Ten tankers carrying 13 million barrels of crude could be affected after a container ship that ran aground in the Suez Canal blocked vessels passing through the waterway, oil analytics firm Vortexa said on Wednesday.

The approximate rate of backlog is about 50 vessels a day and any delays leading to re-routings will add 15 days to a Middle East to Europe voyage, Vortexa added.

For now, all eyes are on US crude stocks as analysts expect a draw.

API

• Crude +2.927mm (-900k exp)

• Cushing -2.282mm

• Gasoline -3.728mm

• Distillates +246k

DOE

• Crude +1.912mm (-900k exp)

• Cushing -1.935mm

• Gasoline +204k

• Distillates +3.806mm

Official data confirmed API’s crude build surprise but it is the build in products that is most notable

Source: Bloomberg

Total crude stocks are back near their highest since August…

Source: Bloomberg

While US rig counts have risen steadily, crude production remains “disciplined” for now amid higher prices…

Source: Bloomberg

WTI was hovering between $59.50 and $60 ahead of the official data and dipped lower after…

Finally, we note that overseas buying isn’t expected to recover any time soon. China, the largest customer for U.S. oil, slowed its intake after purchasing heavily in recent months. Local producers are also competing with traders that have amassed large quantities in storage across the world and are looking to offload their supplies since it doesn’t pay now to store oil and sell in the future.

Following yesterday’s relatively sleepy testimony before the House Financial Services Committee, Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen are answering questions from members of the Senate Banking Committee.

The hearing started at 1000ET, but the early part of the hearing involved them reiterating prepared statements. But yesterday’s hearing was marred by persistent technical difficulties (though it concluded on time), so it’s possible sparks could fly during today’s Q&A.

Watch the Q&A below:

Readers can find Yellen’s written testimony, which we first shared in our coverage of yesterday’s hearing, below:

Hhrg 117 Ba00 Wstate Yellen…

And here’s Powell’s testimony, which was published on the Fed’s website…

Chairwoman Waters, Ranking Member McHenry, and other members of the Committee, thank you for the opportunity to discuss the measures we have taken to address the hardship wrought by the pandemic.

I would like to start by noting the upcoming one-year anniversary of the CARES Act (Coronavirus Aid, Relief, and Economic Security Act). With unanimous approval, Congress provided by far the fastest and largest response to any postwar economic downturn, offering fiscal support for households, businesses, health-care providers, and state and local governments. This historically important legislation provided critical support in our nation’s hour of need. As the virus arrived in force, our immediate challenge was to limit the severity and duration of the fallout to avoid longer-run damage. At the Fed, we also acted with unprecedented speed and force, using the full range of policy tools at our disposal.

Today the situation is much improved. While the economic fallout has been real and widespread, the worst was avoided by swift and vigorous action—from Congress and the Federal Reserve, from across government and cities and towns, and from individuals, communities, and the private sector. More people held on to their jobs, more businesses kept their doors open, and more incomes were saved. But the recovery is far from complete, so, at the Fed, we will continue to provide the economy the support that it needs for as long as it takes.

As we have emphasized throughout the pandemic, the path of the economy continues to depend on the course of the virus. Since January, the number of new cases, hospitalizations, and deaths has fallen, and ongoing vaccinations offer hope for a return to more normal conditions later this year. In the meantime, continued social distancing and mask wearing will help us reach that goal.

Indicators of economic activity and employment have turned up recently. Household spending on goods has risen notably so far this year, although spending on services remains low, especially in sectors that typically require in-person gatherings. The housing sector has more than fully recovered from the downturn, while business investment and manufacturing production have also picked up.

As with overall economic activity, conditions in the labor market have recently improved. Employment rose by 379,000 in February, as the leisure and hospitality sector recouped about two-thirds of the jobs it lost in December and January.

The recovery has progressed more quickly than generally expected and looks to be strengthening. This is due in significant part to the unprecedented fiscal and monetary policy actions I mentioned, which provided essential support to households, businesses, and communities.

However, the sectors of the economy most adversely affected by the resurgence of the virus, and by greater social distancing, remain weak, and the unemployment rate—still elevated at 6.2 percent—underestimates the shortfall, particularly as labor market participation remains notably below pre-pandemic levels.

We welcome this progress, but will not lose sight of the millions of Americans who are still hurting, including lower-wage workers in the services sector, African Americans, Hispanics, and other minority groups that have been especially hard hit.

The Federal Reserve’s response has been guided by our mandate to promote maximum employment and stable prices for the American people, along with our responsibilities to promote the stability of the financial system.

When financial markets came under intense pressure last year, we took broad and forceful actions, deploying both our conventional and emergency lending tools to more directly support the flow of credit. Our actions, taken together, helped unlock more than $2 trillion in funding to support businesses large and small, nonprofits, and state and local governments between April and December. This support, in turn, has helped keep organizations from shuttering and put employers in both a better position to keep workers on and to hire them back as the recovery continues.

Our programs served as a backstop to key credit markets and helped restore the flow of credit from private lenders through normal channels. We deployed these lending powers to an unprecedented extent last year. Our emergency lending powers require the approval of the Treasury and are available only in very unusual circumstances.

Many of these programs were supported by funding from the CARES Act. Those facilities provided essential support through a very difficult year. They are now closed, and the Federal Reserve has returned the large majority of the Treasury’s CARES Act equity, as required by law. Our other emergency lending facilities are following suit imminently, although we recently extended the PPPLF (Paycheck Protection Program Lending Facility) for another quarter to continue to support the PPP (Paycheck Protection Program).

Everything the Fed does is in service to our public mission. We are committed to using our full range of tools to support the economy and to help assure that the recovery from this difficult period will be as robust as possible on behalf of communities, families, and businesses across the country.

Thank you. I look forward to your questions.

…along with the written testimony, Powell and the Fed provided an update on the various Fed-administered lending programs created by CARES.

While both Powell and Yellen have made many public appearances as of late, investors will be watching for any troublesome questions about spending, inflation the labor market and anything new they can glean about the outlook for monetary policy.

Authored by Jonathan Turley,

Below is my column in the Hill on introduction of Elizabeth Warren’s wealth tax.  The bill contains two notable addition: a massive increase in the size of the IRS and what I call a “captivity tax” to try to keep the wealthy from fleeing. The odds are that Democratic leadership will see some of the same problems with this bill, but the danger is that such legislation will be difficult to oppose due to its public appeal. Moreover, there is a lack of honestly about the constitutional and practical issues surrounding a “wealth tax.” Such details are lost as Warren pledges to go after the “Rembrandts … diamonds and … yachts”  of the wealthy.

Here is the column:

For the purveyors of identity politics, there is no surer bet than leading the masses against the “super rich.” Since philosopher Jean Jacques Rousseau spoke of “eating the rich” before the start of the Reign of Terror, politicians have had an insatiable appetite for class warfare politics.

In her “wealth tax” legislation, Senator Elizabeth Warren insists she is merely nibbling on the rich but still can seize $3 trillion over the next decade, a figure challenged even by one Biden administration economist. Warren has also included an “exit tax” to stop the rich from fleeing. Not surprisingly, it is wildly popular outside of super rich circles. It also is arguably unconstitutional and manifestly impractical. Yet, in Washington, bad policy often makes for good politics.

Warren would impose a 2 percent annual tax on the net worth of households and trusts above $50 million and a 1 percent surtax on the net worth of those above $1 billion. She is not the only politician pledging to soak the rich. Some state legislators have proposed their own versions.

The difference between the federal and state proposals is that express language of the Constitution would seem to bar a wealth tax. Article One permits Congress to “lay and collect taxes, duties, imposts and excises.” However, it requires that these “be uniform throughout the United States.” The next section says “no capitation or other direct tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.”

A wealth tax is a “direct tax.” While James Madison and Alexander Hamilton disagreed on the constitutionality of such a tax, they agreed a direct tax under the Constitution would include a wealth tax. Hamilton agreed with Madison that a direct tax could be a tax “on the whole property of individuals or on their whole real or personal estate.”

There are good faith arguments that a wealth tax would be constitutional, and there are cases on both sides of that issue. Estate taxes and other forms of taxation can be cited to challenge the bright-line meaning of these terms. However, the problem does not end with Article One. When the 16th Amendment was ratified, it allowed for federal income taxes, and only income taxes: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

Putting aside the dubious constitutionality of Warren’s tax, there are even greater practicality problems. Valuing wealth from real estate to luxury items would require a massive increase in the Internal Revenue Service and a huge increase in reporting responsibilities. Warren seems to acknowledge how much of a bureaucratic increase is needed: The bill mandates a breathtaking $100 billion increase in IRS funding over the next ten years.

Even with a massive increase for 2021, the IRS annual budget is just over a tenth of that figure, at $11.92 billion. Warren also seeks to mandate a greater number of annual audits for this engorged IRS to conduct: Each year, one third of those covered would be audited, on everything from cars to art. Such calculations would require establishing not just their purchase price but their current market value.

Then there is the practical problem that billionaires are mobile — not fixed — tax sources. Put simply, they can leave. That is what happened in other countries pursuing a wealth tax, which found the practical enforcement of such taxes was more difficult than assumed. France lost 12,000 millionaires per year and later reversed course with tax cuts, to try to lure back the wealthy. Only a handful of countries are still trying to make such taxes work.

Warren believes she has a solution to that, too. It is another tax, of course. Call it a “captivity tax.” If you decide you do not want to be the subject of what liberal tax expert Josh Bivens calls the “very big experiment,” Warren threatens to hit you with a confiscatory tax of 40 percent of your net worth (above $50 million). Thus, if you accumulated stuff worth $500 million, Warren would make you leave more than $180 million as the price to be free of her tax regime — it is pay or pray.

Of course, not only will many consider leaving before such a tax is imposed, but many billionaires are likely to have second thoughts about coming to the United States (and investing here) if they will be captive to the Warren tax like some money mastodon stuck in a tax tar pit. The promise of being audited for everything you own every three years down to your last Cartier watch is not very appealing.

The captivity tax highlights the wealth-redistribution mindset underlying Warren’s “experiment.” Warren thrilled audiences for years by telling the rich she was coming after “your Rembrandts, your stock portfolio, your diamonds and your yachts.” In one Democratic debate, she got applause by rubbing her hands together after saying she would take some of the wealth of fellow candidate John Delaney, a self-made millionaire worth $65 million. She has now made good on that threat.

Warren and most of her colleagues have, of course, not made such fortunes. But where others make wealth, her skill is taking wealth from others, and she believes she has achieved the holy grail of the taxing set: Preventing flight with a captivity tax. She hopes to now pursue Delaney and others for their art and diamonds and they won’t be able to escape, even on their now-fully-audited yachts. It is like a tax version of a canned hunt.

Biden administration officials like Treasury Secretary Janet Yellen recently said they are considering this option and other tax increases to help pay for trillions in new spending. But the problem with a Rousseauian diet is that it is as addictive as it is rich. It relieves politicians of responsibility for uncontrolled spending by fueling a type of class warfare. It all may collapse in court, but that is years — and trillions of dollars — down the road.

A volatile overnight session in the S&P 500 has left in the middle of a range between 3900 and 3950.

If you look at SpotGamma‘s total S&P500 profile you can see the “box” the market is in, and whats curious is that this picture has remained the same for the past several sessions. In other words, its not “filling in”.

As SpotGamma notes, “there is a sense of decay or attrition happening on the call side.”

Call-option buy-to-open premiums are sliding (less demand)…

And call volumes are down hard… A daily average of 23 million contracts has changed hands on U.S. exchanges over the past five days — down from more than 30 million in February.

Source: Bloomberg

And the put-call ratio is on the rise again…

Source: Bloomberg

Elevated call volumes “stood out to us as being the best indicator of the public’s intensity of affection for the equity markets,” said BTIG chief equity and derivatives strategist Julian Emanuel.

“It’s not quite as elevated as it was in January, because frankly I think there’s a portion of the public that is sitting on losses in these meme stocks since that time.”

SpotGamma warns that while a few data points certainly do not make a trend, but if you are of the belief that rampant call buying was a key catalyst for markets then this is some cause for concern. We stress that this doesn’t imply the market crashes, but it does suggest less upside fuel.

Finally, we know the reason why call-buying is fizzling out: Daytraders are learning and adapting, and instead of amplifying their returns with leverage (call-buying overlays), they are hedging their positions… which removes one more marginal enabler of the meltup.

And unless Powell and his pals accelerate the buying once more, we suspect the markets will really throw a tantrum.

Source: Bloomberg

Get back to work Mr.Powell. The market will never be satiated as former Dallas Fed president Richard Fisher’s previously warned:

“[The Fed] cannot live in fear that gee whiz the market is going to be unhappy that we are not giving them more monetary cocaine.“

“Does The Fed really want to have a put every time the market gets nervous? …Coming off all-time highs, does it make sense for The Fed to bail the markets out every single time… creating a trap?”

“The Fed has created this dependency and there’s an entire generation of money-managers who weren’t around in ’74, ’87, the end of the ’90s, and even 2007-2009.. and have only seen a one-way street… of course they’re nervous.”

“The question is – do you want to feed that hunger? Keep applying that opioid of cheap and abundant money?”

“…but we have to consider, through a statement rather than an action, that we must wean the market off its dependency on a Fed put.”

Those words were spoken almost exactly a year ago!

Despite ongoing weakness in ‘hard’ data, preliminary US ‘soft’ survey data from Markit showed that both the Manufacturing and Services side of the economy improved (albeit marginally) in March.

• The Services PMI registered 60.0 in March, up from 59.8 in February to signal the strongest service sector output expansion since July 2014.

• The Manufacturing PMI printed 59 in March, up from 58.6 in February, just below January’s cycle high.

Source: Bloomberg

On the manufacturing side, new orders rise to 60.8 vs 57.4 in Feb. (the highest reading since June 2014) and the ninth consecutive month of expansion.

But the big headlines were all about inflation… and its catastrophic:

Service Costs Soaring:

Reports of ongoing supply chain issues led to marked hikes in input costs across the service sector during March.

The rate of input price inflation was the sharpest since data collection began in late-2009. Firms were able to partially pass higher costs through to clients, however, as selling prices rose at the fastest pace on record.

Manufacturing Costs Soaring:

Amid substantial supplier shortages and input delays, manufacturing firms registered the fastest rise in input costs for a decade in March.

At the same time, firms sought to partially pass greater input prices through to clients, with the rate of charge inflation the sharpest on record. 

Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit, said:

“Another impressive expansion of business activity in March ended the economy’s strongest quarter since 2014. The vaccine roll-out, the reopening of the economy and an additional $1.9 trillion of stimulus all helped lift demand to an extent not seen for over six years, buoying growth of orders for both goods and services to multi-year highs.

“Producers were increasingly unable to keep pace with demand, however, due mainly to supply chain disruptions and delays. Higher prices have ensued, with rates of both input cost and selling price inflation running far above anything previously seen in the survey’s history.”

Adjusted for seasonal factors, the IHS Markit Flash U.S. Composite PMI Output Index posted 59.1 in March, down slightly from 59.5 in February, to signal the second-fastest private sector upturn for six years.

Finally, it is increasingly clear that stagflation is here:

“firms sought to partially pass greater input prices through to clients, with the rate of charge inflation the sharpest on record.“

“firms commonly reported slower output growth due to a lack of raw materials to fulfil new orders. The rate of production growth was the slowest since last October.”

Of course, The Fed will shrug this off as “transitory” – it’s not, as we detailed here – or merely blame it on climate change!?