Category: zerohedge

Authored by Sven Henrich via NorthmanTrader.com,

Does a liquidity driven momentum market that seemingly does not care about valuations, risk, open gaps and technical extensions face any resistance at all? Are there technical limits for a market that goes up every day, every week and every month?

History teaches us that there are such limits and I’ll share a few charts to provide some context.

As it were this most recent OPEX week did what happens more often than not: Compress volatility further offering little to no 2 way price discovery exhibiting some of the most intra-day compressed price ranges ever:

The discussed repo and liquidity machine continues to relentlessly drive the market action:

As a result of the continuous one way action many individual stocks are not only historically valued, but also overbought.

These conditions have persisted for weeks, so little new on that front, but to give historic recognition its due a weekly chart of $AAPL showing a weekly 90 RSI has to be appreciated:

What’s the appropriate term here? Piling in? Buy till you die?

And yes I can’t resist but also show the same chart on a linear basis:

It is this point in time we get the FOMO treatment courtesy of Barron’s and Forbes:

#FOMO weekendhttps://t.co/HHlwj4qUNN

— Sven Henrich (@NorthmanTrader) January 18, 2020

Don’t be left behind, get on board. Reckless as far as I’m concerned, but nobody cares.

How do I know that nobody cares? Because demand for protection of any sort is scrapping at the bottom of the barrel.
See some of the put/call ratios:

Sometimes extreme complacency gets punished, sometimes it does not.

The faith in the Fed remains absolute, too strong is their influence on equity prices via their liquidity injections which do not appear to stop for months on end, so who’s to say when the dynamic shifts. Not until they withdraw liquidity is the conventional wisdom at the time.

Yes charts like $APPL leave little doubt that this market his very much overbought and reversion risk keeps increasing. Hence I maintain that the higher this market stretches without breathing the more dangerous it becomes.

So are there any signs of technical resistance?

Firstly recognize we have some of steepest and narrowest channels in history. One sizable down day or week and all of these patterns break to the downside with technical consequences:

$NYSE:

$NDX:

$NDX is of particular interest here as the furious rally has accomplished something very interesting on Friday:

$NDX futures tagged its 4 year trend line that has proven to be resistance time and time again. And $NDX has raced toward that trend line with a weekly RSI north of 81. Ironically an RSI not unlike the one seen in January 2018 when the index also tagged that very same trend line.

To expand on the historical rhyme $NDX components above their 200MA have reached 87 exceeding even the January 2018 level:

In 2017 readings of that magnitude did not mean the end of the bull run then, but these types of readings can clearly lead to trouble.

It is then the same measure for the 50MA that is of interest:

A negative divergence versus the year end highs in 2019.  These divergences can persist, but are an early signal that something is amiss.

Another signal indicator, the $BPNDX also has reached a level historically consistent with coming reversals:

All of these speak of resistance reached on the internal front.

Indeed its the cumulative advance/decline index for the Nasdaq that sends that same message clearly:

Not only overbought, but divergent as well.

All of these readings and signals are coming in context of a yearly chart for $NDX that has precisely zero price precedence in being able to sustain such a vast extension without ending in tears:

But don’t be left behind. Just jump on board they say.

No, it’s not different this time. This cycle is exactly like the previous ones. And hence it’ll end the same way as the previous ones: With bears being mocked while bulls being reckless and greedy throwing all caution to the wind.

We may not know the outcome for a while, but in the here and now markets are approaching some notable points of resistance while demand for protection is at a historic low.

Don’t be left behind? Don’t be left holding the bag more likely.

*  *  *

For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.

After a week which tragically witnessed a sudden uptick in refugee and migrant incidents and drowning deaths in the Mediterranean, a dramatic video has been published online showing the Turkish Coast Guard resorting to extreme measures while intercepting migrant boats. 

The video, which first appeared via a Middle East Telegram or other social media channel, shows a small crowded motor boat full of Syrian refugees being rammed by a much larger Turkish patrol boat. 

Turkish coastguard deliberately ramming a boat carrying Syrian refugees #Syria #Turkey pic.twitter.com/Hv0sCRmsKb

— CNW (@ConflictsW) January 19, 2020

The video appeared online and went viral on Sunday; however, it’s uncertain the precise date or location, but it likely took place in the Aegean Sea. 

Women and children can be heard screaming in the video while trying to get away from the fast-approaching Turkish vessel, after which the larger coast guard boat rams into the migrants at high speed. It’s unclear the extent of injuries suffered by those in the packed boat, and no one appears armed or to have been acting aggressively.

Turkey’s coast guard has long been accused of taking harsh measures to prevent an estimated 60,000 to new refugees attempting to traverse the Mediterranean. It’s hardly the first time migrant and refugee boats have been rammed during the dangerous trip; however, past incidents have involved human-trafficking boats or piracy-related groups and not state actors like in this case. 

Video leaked on social media shows a #Turkish coast guard boat ramming into a boat carrying #Syrian refugees in #AegeanSea preventing them from being trafficked into #Greece. Through this harsh measure, #Turkish Coast Guard prevented 60,000 Syrian refugees to go to #EU in 2019. pic.twitter.com/u2xFXr77yE

— Babak Taghvaee (@BabakTaghvaee) January 19, 2020

Meanwhile, Europe has documented a significant rise in migrants attempting to enter the EU via the eastern Mediterranean throughout 2019:

More than 82,000 migrants attempted to enter the EU from the eastern Mediterranean route in 2019, driven by the situation in Syria, and instability in Afghanistan, the Frontex Executive Director Fabrice Leggeri said in Brussels.

In 2018, 55,900 unauthorised entries were detected from the same route, while three years ago, at the height of the migrant crisis, there were 885,386.

This after the peak of the migrant crisis in 2015 and 2016. Turkey’s President Erdogan has recently warned a flood of refugees could impact Greece and other EU states if more is not done to help Turkey stave off the crisis, even lately voicing it as a “threat” if the EU doesn’t support Ankara’s Syria plans.

Many are predicting 2020 could mark a return to the worst of the past five year crisis, given the ongoing Turkish military incursion in northern Syria and a resumed Russia-Syria military offensive against jihadist militants in Idlib province. 

Authored by Lance Roberts via RealInvestmentAdvice.com,

Market Continues Euphoric Advance

In last week’s missive, I discussed a couple of charts which suggested the markets are pushing limits which have previously resulted in fairly brutal reversions. This week, the market pushed those deviations even further as the S&P 500 has now pushed into 3-standard deviation territory above the 200-WEEK moving average.

There have only been a few points over the last 25-years where such deviations from the long-term mean were prevalent. In every case, the extensions were met by a decline, sometimes mild, sometimes much more extreme. 

The defining difference between whether those declines were mild, or more extreme, was dependent on the trend of financial conditions. In 1999, 2007, and 2015, as shown in the chart below, financial conditions were being tightened, which led to more brutal contractions as liquidity was removed from the financial system. 

Currently, the risk of a more “substantial decline,” is somewhat mitigated due to extremely easy financial conditions. However, such doesn’t mean a 5-10% correction is impossible, as such is well within market norms in any given year. 

This is particularly the case given how extreme positioning by both institutions and individual investors has become. With investor cash and bearish positions at extreme lows, with prices extremely extended, a reversion to the mean is likely and could lean toward to the 10% range.

One of the other big concerns remains the concentration of positions driving markets higher. Lawrence Fuller analyzed this particular extreme in the market. (H/T G. O’Brien)

“One similarity between the Four Horseman of 2000 and the mega-caps of 2020 is their tremendous influence on the overall market, as can be seen below by their cumulative weightings. The weighting of today’s top five names is now 17.3%. I’m not suggesting that history is going to repeat itself, but often it rhymes.

If you lived and invested through the 1990s, as I did, then you’ll understand what I am talking about when I say that the dot-com boom was a sentiment-driven rally. I’m starting to see the same explanation for the current rally, as there really haven’t been any concrete fundamental developments to explain or validate it. The momentum stocks are rising in price day after day on hopes and expectations, and Wall Street analysts are happy hop on board for the ride, as usual.”

Lawrence is correct. There has not been a fundamental improvement to support the rise in the market currently. As shown in the chart below, S&P just released its 2021 estimates for the S&P 500, which is estimated to come in at $171/share. 

What you should notice is that estimates for 2021 are now $3 LOWER than where estimates for the end of 2020 stood in April 2019. Importantly, between April 2019 and present, as earnings estimates were continually ratcheted lower, the S&P 500 index rose by 17.5%

While Apple, which we own, is the “cheapest” of the “4-horseman” currently, it is only “cheap” because of rather aggressive share repurchases. Here are some interesting stats:

In the 5-years from 2015:

• Earnings per share (EPS) grew by just $2.69 per share or $0.53 per share annually.

• Sales only grew by $26.45 billion or $5.29 billion/year.

• Shares outstanding, however, declined by 1.13 billion

However, during that same 5-year period, Apple’s share price has risen by 210%.  

The only reason Apple “appears” to be cheap is because of the massive infusion of capital used to reduce the number of shares outstanding. As a business, it is a great company, but it is a fully mature company, which is struggling to grow revenues. With a P/E of 27 and price-to-sales (P/S) ratio of 5.36, investors are grossly overpaying for the earnings growth and will likely be disappointed with future return prospects. 

So why do we still own Apple? Because “fundamentals don’t matter” currently as the momentum chase, fueled by the Fed’s ongoing liquidity interventions, has led to a “runaway train.” But, understanding that eventually fundamentals will matter, is why we have taken profits out of our position twice since January 2019.

Just remember, “price is what you pay, value is what you get.”

Next Stop, 3500

As noted last week, in July of 2019, we laid out our prognostication the S&P 500 could reach 3300 amid a market melt-up though the end of the year. On Friday, the S&P 500 closed at 3329, with the Dow pushing toward 29,350.

With the Federal Reserve continuing to pump liquidity into the market currently, we are raising our 2020 estimate for the S&P to 3500 as “the mania” goes mainstream. There is absolutely NO FUNDAMENTAL basis for raising the target; it is ONLY a function of the momentum chase.

This urgency to take on “risk,” as investors pile into “passive indexes” under a “no market risk” assumption, can be seen in the extreme lows of the put/call ratio.

With the Federal Reserve’s ongoing “Not QE,”  it is entirely possible the markets could continue their upward momentum towards S&P 3500, and Dow 30,000. Clearly, the “cat is out of the bag” if CNBC even realizes it’s the Fed:

“On Oct. 11, the central bank announced it would begin purchasing $60 billion of Treasury bills a month to keep control over short-term rates. The magnitude of the purchases resembles the quantitative easing program the Fed conducted during and after the financial crisis.”

“The increase in the Fed’s balance sheet has been in near lockstep with the stock market’s climb. The balance sheet has expanded 10% since October, while the S&P 500 shot up 12%, including notching its best fourth quarter since 2013.”

With the Federal Reserve continuing to “ease” financial conditions, there is little to derail higher asset prices in the short-term. However, we continue to see cracks in the “economic armor,” like Friday’s plunge in “job openings,” continued deterioration in earnings estimates, weaker growth rates in employment, and negative revisions to data, like wages, which suggest the market is well ahead of the economy. (Last week, negative revisions wiped out all the wage growth for the bottom 80% of workers.)

But, as I said, “fundamentals” don’t matter currently. As CNBC noted:

“The problem front and center is how investors are looking past the continuous earnings rout, betting on a snapback as soon as the first quarter of 2020. S&P 500 earnings are expected to drop by 0.3% in the fourth quarter of 2019, marking the first back-to-back quarterly decline since 2016, according to Refinitiv.”

While “fundamentals” may not seem to matter much currently, eventually, they will.

A mere days ago the American public was still being told there were no American casualties as a result of Iran’s Jan.8 ballistic missile attack on an Iraqi base hosting US forces. 

And over a week ago, days following the attack, Secretary of Defense Mark Esper said there was only damage to property at Al-Asad air base, going so far as to underscore: “Most importantly, no casualties, no friendly casualties, whether they are US, coalition, contractor, etc.,” according to an official statement at the time.

But after on Friday it was revealed that eleven US soldiers were injured in the attack — some of them significantly given they were flown out of Iraq to be treated for head injuries — belatedly confirmed by US officials, the Pentagon is now pretending there was never a discrepancy in its clearly shifting accounts. Eight were actually flown all the way to medical facilities in Germany for advanced treatment, with three flown to Kuwait.  

“The Pentagon said on Friday there had been no effort to play down or delay the release of information on concussive injuries from Iran’s Jan. 8 attack on a base hosting U.S. forces in Iraq, saying the public learned just hours after the defense secretary,” Reuters reports. 

And then of course the gratuitous implication that anyone claiming otherwise has a conspiracy theory agenda: “This idea that there was an effort to de-emphasize injuries for some sort of amorphous political agenda doesn’t hold water,” Pentagon spokesman Jonathan Hoffman said.

Even CNN flatly charges that “Official US reports about the attack have shifted since it occurred.” This much is obvious to anyone regardless on both sides of the aisle, whether supporters of Trump’s Iran policy or not:

Asked about the apparent discrepancy, a Defense official told CNN, “That was the commander’s assessment at the time. Symptoms emerged days after the fact, and they were treated out of an abundance of caution.”

Now the Pentagon’s explanation appears to be that Esper wasn’t even informed of the eleven injured personnel until Thursday, as “only a certain set of injuries” are required to be reported to the Defense Secretary’s office, according to CNN.

“Immediate reporting requirements up to the Pentagon are for incidents threatening of life, limb or eyesight, so actually (Traumatic Brain Injury) wouldn’t rise to that threshold,” Pentagon spokesperson Alyssa Farah said on Friday.

In summary, the Pentagon wants you to believe that the biggest military attack on US forces in the Middle East in years via Iranian ballistic wasn’t really that closely monitored for casualties… as if the entire upper echelons of the DoD chain of command had better and “more important” things to do than to closely monitor and assess injuries from the strike.

Next we’ll be informed there was some innocuous and casual Netflix binge-watching in Pentagon offices the days following Iran’s major ballistic missile attack on American forces. When you’ve lost even CNN and the entire mainstream, you’ve most definitely lost the plot. 

Authored by Frank Shostak via The Mises Institute,

The global economy is heading towards a “liquidity trap” that could undermine central banks’ efforts to avoid a future recession according to Mark Carney, governor of the Bank of England. In a wide-ranging interview with the Financial Times (January 8, 2020), the outgoing governor warned that central banks were running out of ammunition to combat a downturn:

If there were to be a deeper downturn, more than a conventional recession, then it’s not clear that monetary policy would have sufficient space.

He is of the view that aggressive monetary and fiscal policies will be required to lift the aggregate demand.

What Is a Liquidity Trap?

In the popular framework that originates from the writings of John Maynard Keynes, economic activity is presented in terms of a circular flow of money. Spending by one individual becomes part of the earnings of another individual, and spending by another individual becomes part of the first individual’s earnings.

Recessions, according to Keynes, are a response to the fact that consumers — for some psychological reasons — have decided to cut down on their expenditure and raise their savings.

For instance, if for some reason people become less confident about the future, they will cut back their outlays and hoard more money. When an individual spends less, this will supposedly worsen the situation of some other individual, who in turn will cut their spending. A vicious cycle sets in. The decline in people’s confidence causes them to spend less and to hoard more money. This lowers economic activity further, causing people to hoard even more, etc.

Following this logic, in order to prevent a recession from getting out of hand, the central bank must lift the growth rate of the money supply and aggressively lower interest rates. Once consumers have more money in their pockets, their confidence will increase, and they will start spending again, reestablishing the circular flow of money, so it is held.

In his writings, however, Keynes suggested that a situation could emerge when an aggressive lowering of interest rates by the central bank would bring rates to such a level from which they would not fall further. As a result, the central bank would not be able to revive the economy. This, according to Keynes, could occur because people might adopt the view that interest rates have bottomed out and that rates should subsequently rise, leading to capital losses on bond holdings.

As a result, people’s demand for money will become extremely high, implying that people would hoard money and refuse to spend it no matter how much the central bank tries to expand the money supply. As Keynes wrote,

There is the possibility, … that, after the rate of interest has fallen to a certain level, liquidity-preference may become virtually absolute in the sense that almost everyone prefers cash to holding a debt which yields so low a rate of interest. In this event the monetary authority would have lost effective control over the rate of interest.

Keynes suggested that once a low–interest rate policy becomes ineffective, authorities should step in and spend. The spending can be on all sorts of projects — what matters here is that a lot of money must be pumped to boost consumers’ confidence. With a higher level of confidence, consumers will lower their savings and raise their expenditure, thereby reestablishing the circular flow of money.

Is There Too Little Spending?

In the Keynesian framework, the ever-expanding monetary flow is the key to economic prosperity. What drives economic growth is monetary expenditure, and when people spend more of their money, it implies that they save less.

Conversely, when people reduce their monetary spending in the Keynesian framework, it is viewed as a sign of increased saving. In this way of thinking, saving is considered bad news for the economy — the more people save, the worse things become. (The liquidity trap comes from too much saving and a lack of spending, so it is held.)

Observe, however, that people do not pay with money but rather with the goods that they have produced. The chief role of money is as a medium of exchange. Hence, the demand for goods is constrained by the production of goods, not the amount of money. (The role of money is to facilitate the exchange of goods.)

To suggest that people could have almost an unlimited demand for money that supposedly leads to a liquidity trap is to suggest that people do not exchange money for goods anymore.

Obviously, this is not a realistic scenario, given the fact that people require goods to support their lives and well-being. People demand money not merely in order to accumulate it but to employ it in exchange.

Money can only assist in exchanging the goods of one producer for the goods of another. The medium of exchange service that it provides has nothing to do with the production of final consumer goods. This means that it has nothing to do with real savings, either.

What permits the increase in the pool of real savings is the increase in capital goods. With more capital goods, i.e., tools and machinery, workers’ ability to produce more goods and of an improved quality is likely to increase. The state of the demand for money cannot alter the amount of final consumer goods produced — only the expansion in the pool of real savings can boost the production of these goods.

Likewise, an increase in the supply of money does not have any power to grow the real economy.

Contrary to popular thinking, a liquidity trap does not emerge in response to a massive increase in consumers’ demand for money but comes as a result of very loose monetary and fiscal policies, which inflict severe damage to the pool of real savings.

The Liquidity Trap and the Shrinking Pool of Real Savings

According to Mises in Human Action,

The sine qua non of any lengthening of the process of production adopted is saving, i.e., an excess of current production over current consumption. Saving is the first step on the way toward improvement of material well-being and toward every further progress on this way.

As long as the growth rate of the pool of real savings stays positive, productive and nonproductive activities can be sustained.

Trouble erupts, however, when, on account of loose monetary and fiscal policies, a structure of production emerges that ties up much more consumer goods than it releases. That is, the consumption of final goods exceeds the production of these goods. The excessive consumption relative to production of consumer goods leads to a decline in the pool of real savings. This in turn weakens the support for individuals that are employed in the various stages of the production structure, resulting in the economy plunging into a slump.

Once the economy falls into a recession due to the falling pool of real savings, any government or central bank attempt to revive the economy must fail. Not only will these attempts fail to revive the economy, they will deplete the pool of real savings further, prolonging the economic slump.

The shrinking pool of real savings exposes the erroneous nature of the commonly accepted view that loose monetary and fiscal policies can grow an economy. The fact that central bank policies become ineffective in reviving the economy is due not to a liquidity trap, but to the decline in the pool of real savings. This decline emerges due to loose monetary and fiscal policies. To stave off personal bankruptcy, individuals are likely to increase their holdings of money — cash becomes king in such a situation.

The ineffectiveness of loose monetary and fiscal policies to generate the illusion that the central authorities can grow an economy has nothing to do with a liquidity trap. The policy ineffectiveness is always relevant whenever the central authorities are attempting to “grow an economy.” The only reason why it appears that these policies “work” is because the pool of real savings is still expanding.

As various pro-gun rights groups prepare to gather at Virginia’s state capitol in Richmond on Monday in what’s expected to be one of the largest pro-gun rallies in recent memory, Democratic Gov. Ralph Northam has declared a state of emergency, police are busy setting up barricades and temporary holding pens – and one lawmaker has even arranged to spend most of the day in a safe house, according to the Washington Examiner.

The rally is expected to draw tens of thousands, and fears about Charlottesville-style violence are prompting police to scour the web for any signs of a violent plot.

Already, the FBI has arrested three alleged members of a violent white supremacist group who were planning on attending the rally.

As Republicans battle for the hearts and minds of the people against a state government that is unilaterally controlled by Democrats, Todd Gilbert, Virginia’s House Republican leader, warned on Saturday that white supremacist groups trying to spread “hate, violence, or civil unrest” would not be welcome at a pro-gun rally in the state’s capital on Monday, according to Reuters.

“Any group that comes to Richmond to spread white supremacist garbage, or any other form of hate, violence, or civil unrest isn’t welcome here,” he said. “While we and our Democratic colleagues may have differences, we are all Virginians and we will stand united in opposition to any threats of violence or civil unrest from any quarter.”

Organized by the Virginia Citizens Defense League, a group that annually lobbies the state legislature against new gun-control laws, this year’s rally is simply a much larger manifestation of the group’s annual gun-rights rally at the capitol.

As the Dems who control the state government plot a slew of new gun control measures in a state that has historically been more permissive about gun rights, Virginia has transformed into ground zero in the fight over gun rights in America. Already, gun owners across the state have been scrambling to buy up as many guns as they can before the new legislation takes effect, fostering a boom among gun sellers.

The tension even prompted President Trump to weigh in with a tweet on Friday: “That’s what happens when you vote for Democrats, they will take your guns away.”

Your 2nd Amendment is under very serious attack in the Great Commonwealth of Virginia. That’s what happens when you vote for Democrats, they will take your guns away. Republicans will win Virginia in 2020. Thank you Dems!

— Donald J. Trump (@realDonaldTrump) January 17, 2020

One NRA member approached by a Washington Examiner reporter while rallying outside a legislative building earlier this week said gun-rights advocates in the state wouldn’t stand by idly while their rights are stripped away.

“We’re not going to be quiet anymore. We’re going to fight them in the courts and on the ground. The illegal laws they’re proposing are just straight up unconstitutional,” said Timothy Forster, of Chesterfield, Virginia, an NRA member who had one handgun strapped to his shoulder and another tucked into his waistband as he stood outside a legislative office building earlier this week. VCDL president Philip Van Cleave said he’s heard from groups around the country that plan to send members to Virginia, including the Nevada-based, far-right Oath Keepers, which has promised to organize and train armed posses and militia.

While the rally has attracted a substantial amount of media attention, Virginia’s gun-rights activists have identified another strategy to try and subvert the state legislature’s authority. As the New York Times reports, gun-control activist Philip Van Cleave and others are pushing municipalities around the state to pass or consider “2A Sanctuary” legislation that would in effect preserve certain gun rights in towns across the state.

Anyone planning on the attending the rally should keep this in mind: Dems have permanently banned guns inside the Capitol building, and Gov. Northam has declared a temporary state of emergency to ban all weapons from Capitol Square during the rally – a plea for the state SCOTUS to rule these measures unconstitutional was rejected on Friday – to prevent “armed militia groups storming our Capitol.”

Of course, even though organizers have taken pains to block far-right militias and outright white supremacists from attending the rally, we imagine these efforts will be lost on MSNBC, which should waste no time declaring every participant a dangerous gun nut.

Authored by Irina Slav via OilPrice.com,

Germany, the poster child for renewable energy, sourcing close to half of its electricity from renewable sources, plans to close all of its nuclear power plants by 2022. Its coal-fired plants, meanwhile, will be operating until 2038. According to a study from the U.S. non-profit National Bureau of Economic Research, Germany is paying dearly for this nuclear phase-out–with human lives.

The study looked at electricity generation data between 2011 and 2017 to assess the costs and benefits of the nuclear phase-out, which was triggered by the Fukushima disaster in 2011 and which to this day enjoys the support of all parliamentary powers in Europe’s largest economy. It just so happens that some costs may be higher than anticipated.

The shutting down of nuclear plants naturally requires the replacement of this capacity with something else. Despite its reputation as a leader in solar and wind, Germany has had to resort to more natural gas-powered generation and, quite importantly, more coal generation. As of mid-2019, coal accounted for almost 30 percent of Germany’s energy mix, with nuclear at 13.1 percent and gas at 9.3 percent.

The authors of the NBER study have calculated that “the social cost of the phase-out to German producers and consumers is $12 billion per year (2017 USD). The vast majority of these costs fall on consumers.” 

But what are these social costs–exactly?

“Specifically,” the authors wrote, “over 70% of the cost of the nuclear phase-out is due to the increased mortality risk from local air pollution exposure as a consequence of producing electricity by burning fossil fuels rather than utilizing nuclear sources.”

The culprit is coal. According to the study, some 1,100 people die because of the pollution from coal power generation every year. This, the authors say, is a lot worse than even the most pessimistic cost estimates of so-called “nuclear accident risk” and not just that: 1,100 deaths annually from coal-related pollution is worse even when you include the costs of nuclear waste disposal in the equation.

The results of the study, which used machine learning to analyze the data, surprised the authors. The cost of human lives had not been expected to be the largest cost associated with the nuclear phase-out.

“Despite this, most of the discussion of the phase-out, both at the time and since, has focused on electricity prices and carbon emissions – air pollution has been a second order consideration at best,” one of the authors, economist Steven Jarvis, told Forbes.

Just two decades ago, air pollution was a top concern for many environmentalists. Now, carbon emissions and their effect on climate seem to have taken over the environmental narrative and, as the research from NBER suggests, this is leading to neglecting important issues. Meanwhile, there are voices—and some of them are authoritative voices—that are warning a full transition to a zero-emission economy is impossible without nuclear power, which is virtually emission-free once a plant begins operating.

None other than the International Energy Agency—a staunch supporter of renewables—said in a report last year that the phase-out of nuclear capacity not just in Germany but everywhere could end up costing more than just increased carbon emissions as the shortfall in electricity output would need to be filled with fossil fuel generation capacity, just like it is filled in Germany. 

Why can’t renewables fill the gap? Here’s what the IEA had to say:

“If other low-carbon sources, namely wind and solar PV, are to fill the shortfall in nuclear, their deployment would have to accelerate to an unprecedented level. In the past 20 years, wind and solar PV capacity has increased by about 580 gigawatts in advanced economies. But over the next 20 years, nearly five times that amount would need to be added. Such a drastic increase in renewable power generation would create serious challenges in integrating the new sources into the broader energy system.”

Translation: we are not adding wind and solar fast enough and we can never add them fast enough without risking a grid meltdown.

Even Germany’s fellow EU members recognize the importance of nuclear power. Leaving aside France, where it is the single largest source of energy, accounting for 60 percent of electricity generation, the EU members agreed in December to include nuclear power in their comprehensive climate change fighting plan, which the union voted on at the end of the year.

“Nuclear energy is clean energy,” the Czech Prime Minister, Andrej Babis, said at the time. “I don’t know why people have a problem with this.”

The reason so many people have a problem with nuclear is, of course, obvious. Actually, there are two reasons: Chernobyl and Fukushima. One might reasonably argue that two accidents for all the years nuclear power has been used for peaceful purposes by dozens of nuclear plants make the risk of a full meltdown a small one, but statistics is one thing–fear is an entirely different matter.

The problem with nuclear plants, in most opponents’ minds, is that a meltdown may be rare, but when it does happen, it is far more disastrous than a blackout caused by a slump in solar energy production, for example. 

There is no way to remove the risk of a nuclear reactor meltdown entirely. Reactor makers are perfecting their technology, enhancing safety features, and making sure the risk will be minimal, but the risk remains, deterring politicians–those in the ultimate decision-making position–to make a pragmatic decision that, as the NBER research suggests, could actually save lives.

Internal emails from Boeing staff members working on the 737 MAX were made public earlier this month have revealed new safety problems for the company’s flagship 777X, a long-range, wide-body, twin-engine passenger jet, currently in development that is expected to replace the aging 777-200LR and 777-300ER fleets, reported The Telegraph.

Already, damning emails released via a U.S. Senate probe describes problems during the MAX development and qualification process. The emails also highlight how Boeing employees were troubled by the 777X – could be vulnerable to technical issues. 

Emails dated from June 2018, months before the first MAX crash, said the “lowest ranking and most unproven” suppliers used on the MAX program were being shifted towards the 777X program. 

The email further said the “Best part is we are re-starting this whole thing with the 777X with the same supplier and have signed up to an even more aggressive schedule.”

Another Boeing employee warned about cost-cutting measures via selecting the “lowest-cost suppliers” for both MAX and 777X programs.

“We put ourselves in this position by picking the lowest-cost supplier and signing up to impossible schedules. Why did the lowest ranking and most unproven suppliers receive the contract? Solely based on the bottom dollar. Not just the Max but also the 777X! Supplier management drives all these decisions.”

Like the MAX, the 777X is an update of an outdated airframe from decades ago, which is an attempt by Boeing to deliver passenger jets that are more efficient and provide better operating economics for airlines. 

Back in September, we noted how the door of a new 777X flew off the fuselage while several FAA inspectors were present to evaluate a structural test. 

Boeing’s problem could stem from how it used the “lowest-cost suppliers” to develop high-tech planes on old airframes to compete with Airbus. The result has already been devastating: two MAX planes have crashed, killing 346 people, due to a malfunctioning flight control system, and 777X failing a structural ground test. 

Boeing’s C-suite executives push for profitability (at the apparent expense of safety) has, by all appearances, been a disaster; sacrificing the safety of the planes to drive sales higher to unlock tens of billions of dollars in stock buybacks – that would allow executives to dump their stock options at record high stock prices.

Authored by Jim O’Neill via Project Syndicate,

Whether or not the 2010s were a “lost decade,” one thing is clear: many countries fell short of their potential, possibly squandering their last best shot of registering strong GDP growth. In the decade ahead, demographic realities will catch up to China and the West, and the world will need a productivity miracle to offset the effects.

At the start of a new decade, many commentators are understandably focused on the health of the global economy. GDP growth this decade most likely will be lower than during the teens, barring a notable improvement in productivity in the West and China, or a sustained acceleration in India and the largest African economies.

Until we have final fourth-quarter data for 2019, we won’t be able to calculate global GDP growth for the 2010-2019 decade. Still, it is likely to be around 3.5% per year, which is similar to the growth rate for the 2000s, and higher than the 3.3% growth of the 1980s and 1990s. That slightly stronger performance over the past two decades is due almost entirely to China, with India playing a modestly expanding role.

Average annual growth of 3.5% for 2010-2019 means that many countries fell short of their potential. In principle, global GDP could have increased by more than 4%, judging by the two key drivers of growth: the size of the workforce and productivity. In fact, the 2010s could have been the strongest decade of the first half of this century. But it didn’t turn out that way. The European Union endured a disappointing period of weakness, and Brazil and Russia each grew by much less than in the previous decade.

The prospects for the coming decades are not as strong.

China’s labor-force growth is now peaking, and the populations of Japan, Germany, Italy, and other key countries are aging and in decline. True, some countries and regions that underperformed in the teens could now catch up; but much will depend on the realization of several positive developments.

For example, given the EU’s demographics, it would take a significant improvement in productivity to boost the rate of GDP growth. More expansionary fiscal policies in many countries – including, possibly, Germany – could produce a temporary acceleration this year and perhaps through 2021. But it is hard to see how a stimulus-driven expansion could be sustained much beyond that point. Europeans can talk all they want about “structural reform.” But without effective productivity-enhancing measures, the EU’s growth potential will remain in decline.

As for Brazil and Russia, it would be highly disappointing if both countries were to register the same weak growth of the past decade. Yet, to get from around 1% annual growth to 3.5-4% annual growth would probably require another commodity-price boom, in addition to major productivity enhancements. Given that both countries tend to eschew reform whenever commodity prices are booming – a classic symptom of the “commodities curse” – it is doubtful that either will reach its potential this decade (though, if one had to bet, Brazil has a better chance than Russia).

In China, a further deceleration in trend GDP growth is highly likely, owing to demographic realities. When I offered my earlier assessment of the BRICs (Brazil, Russia, India, and China) at the start of this century, it was already clear that by the end of the 2010s, China would be feeling the growth-constraining effects of a peaking workforce. Accordingly, I estimated that its real (inflation-adjusted) annual GDP growth in the 2020s would be around 4.5-5.5%. To achieve growth above that range would require a significant increase in productivity. In light of China’s investments in technology and shift to more domestic consumption, productivity certainly could improve. But whether that will be enough to overcome China’s other well-known challenges remains to be seen.

For its part, the United Kingdom could achieve stronger growth this decade, but it could also suffer a slowdown, depending on how it deals with Brexit and its aftermath. In any case, the country’s influence on global GDP is likely to be modest.

Then there is the United States, where annual growth potential appears to be just over 2%. Without more fiscal stimulus and an indefinite continuation of ultra-easy monetary policies, it is difficult to see how the US could exceed this rate. Moreover, it has been more than a decade since the US experienced a recession. Were that to happen in the months or years ahead, the US would have an even smaller chance of reaching its growth potential for the 2020s.

Last but not least are the still-smaller economies with enormous growth potential. While countries such as Indonesia (and perhaps Mexico and Turkey) are becoming more relevant in an assessment of global GDP, it is India that promises to have the largest influence in the 2020s and beyond. The country’s demographics will remain in an economic sweet spot for at least another decade.

Were the Indian government to adopt the right mix of growth-enhancing reforms, it could easily achieve annual growth in the range of 8-10%. And, because India is already close to being the world’s fifth-largest economy, that would have a significant influence on global GDP growth. The problem, of course, is that the current government has shown no indication that it will pursue positive reforms. On the contrary, it has launched a debilitating new culture war.

That leaves Africa. As matters stand, no African economy is large enough to influence global GDP on its own. But, as a region, Africa’s GDP is close to that of India, which means that if enough of its major economies can achieve strong growth, the effects will be felt more broadly. The rise of Africa seems both desirable and inevitable to me. Whether the continent can drive global GDP growth will be a key question for the coming decade.

Authored by Robert Bridge via The Strategic Culture Foundation,

Following a protest against a ‘drag queen story time’ at a library in Australia, Wilson Gavin, 21, the president of the University of Queensland Liberal National Club, was found dead the next morning at a train station.

Local media, while going out its way to portray Gavin and his fellow protesters as hell-raisers, has yet to ask any serious questions with regards to the young man’s alleged suicide – at a time when he was reportedly house-sitting for a Liberal National Party Senator.

If ever there was a story that epitomizes exactly how low Western media has sunk, the story involving the events leading up to the tragic death of Wilson Gavin would have to rank very high.

On Sunday, Gavin and about fifteen members of the University of Queensland’s Liberal National Club (UQLNC) walked into the Brisbane Square Library where a ‘Drag Queen Story Hour’ event for children was in full swing. Gavin went face-to-face with the star of the show, drag queen Johnny Valkyrie, aka Queenie, as the group began to chant “drag queens are not for kids.” No violence, no broken chairs, just a group of university students expressing their displeasure with a controversial event that is sponsored by the local government, i.e. the taxpayers.

What happened next was as predictable as winter in Russia. Social media lit up with thousands of people providing their personal commentary on the incident. An extra big log was tossed on the fire as the popular Australian band, The Veronicas, shared footage of the incident on Instagram, with the smug remark, ‘bigotry is alive in Brisbane today.’

The New Zealand Herald described the social media backlash that ensued against Wilson Gavin by quoting a friend, who wished to remain anonymous (“out of fear of becoming a target” too, the paper explained): “Gavin was relentlessly trolled with vile insults and taunts, and … received some messages with an encouragement that he die.”

“Some members of his family, classmates and friends were tracked down and contacted, while his school, The University of Queensland, was publicly encouraged to kick him out.”

The between-the-line message here seems to be, ‘see what happens to people who protest too much?’

As the media went to great lengths to demonstrate the public wrath Gavin had incurred for daring to speak his mind at a library event (The Herald exhausted the bulk of its article discussing the “dangers of mob rule” on social media and “public shaming”), it failed to show the tremendous outpouring of support that he and his fellow students had received. The comments on social media were divided into two camps, which is normally the case involving any controversial subject. After all, millions of people are vigorously opposed to the idea of drag queens reading stories to children at public libraries, or at any other venue for that matter. Yet the media seriously downplayed that side of the debate, pushing the idea that “public shaming” led to Gavin’s decision to end his life. More on that later.

As current State patron of the UQ LN Club, I’m deeply saddened to hear of the death of Wilson Gavin. Wilson & his friends took a principled stand to protect children from inappropriate sexualisation & gender fluid ideology. For that he was treated terribly. Wilson, RIP!

— Mark Robinson MP (@MarkRobinsonMP) January 13, 2020

Another particularly inexplicable aspect about the media coverage is that every single publication sympathized with the drag queens and their ‘storytelling’ to very young children, as if nothing could be more natural. What books were the queens reading from? We are never told, but somehow I doubt it was Jack and Jill, unless one or both of them had undergone a sex-change operation along the way. But I digress.

The main message the media strove to deliver was that the young protesters were mean brutes, intimidating the performers and frightening staff and children, as if the sight of well-dressed college students chanting a slogan was the worst possible thing that could happen to them. Meanwhile, there was zero discussion about the possible psychological effects a child may experience when confronted with drag queens, as well as their personal choice of fine literature. No discussion as to why there needs to be a Drag Queen Story Time for children – paid for out of the public purse – in the first place. No comments provided by respectable psychologists about the possible mental side effects these children could face down the road. Instead, the media pushed the ridiculous narrative that the families suffered the very worst ordeal.

ABC Australia, for example, interviewed Jenny Griffin, a mother of two children, ages 6 and 8, who commented, “I was worried, I was concerned for my kids’ safety,” she said. “This was their first introduction to this more violent homophobia.”

Valkyrie, aka Queenie, said, “There were children crying, families distressed and of course, [fellow drag queen] Diamond (whose full stage name is ‘Diamond Good-rim,’ a clear allusion to a sexual act that should be considered inappropriate for children) and I were victim to vilification, harassment and nuisance.”

After several minutes of publicly expressing their criticism, the Queensland students peacefully exited the building, escorted by a single security guard.

End of story? Unfortunately not.

Early the next morning, Wilson Gavin was found dead at a train station as the result of “critical injuries.” Within a matter of hours the media was calling his death a suicide. Before continuing, a few necessary words about Mr. Gavin.

Wilson Gavin, as president of the LNC at his university, courted controversy on numerous occasions in the course of his short life. At the age of 19, Gavin, and despite being homosexual, voiced his opposition to gay marriages by organizing a ‘You Can Say No’ rally and making several appearances on national television.

On another occasion, Gavin brilliantly defended the British monarchy on an episode of “Outsiders,” a political talk show.

“I’m a lover of all things traditional. I’m a lover of all things beautiful,” he said on the show.

“And there’s nothing more traditional in this country than the monarchy.”

.@Austmonarchist’s Wilson Gavin: I’m a lover of all things traditional, all things beautiful, and there’s nothing more traditional in this country than the monarchy. It’s a tremendous asset.

MORE: https://t.co/Qbf8WwZ0WK #outsiders pic.twitter.com/wSmxJJsswB

— Sky News Australia (@SkyNewsAust) May 24, 2018

Judging by Gavin’s extremely confident demeanor in those past interviews, and at the library protest, he did not come across as a person who could be easily upset by hurtful remarks over social media. Indeed, just the opposite. He seemed to relish the opportunity to prove his detractors wrong. In short, he was a young intelligent man with a successful future ahead of him, and that fact may have unsettled his enemies. Although it is impossible to know what is going on inside of any person’s head, the fact that Gavin’s alleged suicide has shocked so many people is telling.

According to the Star Observer (“Setting Australia’s LGBTI agenda since 1979,” it declares in its masthead), “Gavin was found dead at Chelmer Railway Station this morning at 7:07am. Ambulance officers who attended say he died from critical injuries, but have provided no further details.”

On Thursday, The Guardian provided one short sentence regarding police accounts of the death: “Police did not treat his death as suspicious.”

In place of hard-hitting questions, the article provided the number for a suicide hotline as if the case was already closed. While a nice gesture that is not the sort of information the public needs from the media. Journalists need to be asking how a young man met his early demise at a train station in the wee hours of the morning following a protest that triggered a lot of controversy on social media. The public deserves to know more about the circumstances of the alleged suicide considering the context of events prior to that tragic moment Why is the possibility of foul play not mentioned – not even within the context to deny it, as if this were some sort of impossibility – as a matter of protocol in such a case?

One more note. As mentioned earlier, on the weekend of his death, Gavin had been minding the home of a politician, who has been identified as federal Liberal National Party Senator Paul Scarr, the Daily Mail Australia reported. Yet Liberal National politicians have said they have been disaffiliated from the UQLNC that Gavin headed since last month. Now, considering how media rarely shies away from sensational stories, the fact that it is not following up on this bit of information is, at the very least, strange.

Since the death of Wilson Gavin and the protest he organized, two petitions have been started on Brisbane City Council’s website to ban the Drag Queen Story Time events.