Category: zerohedge

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

Did you happen to catch the most important political speech of the last six years?

It would have been easy to miss given everything going on.  In fact, I almost did, and this speech sits at the intersection of nearly all of my areas of intense study.

The annual World Economic Forum took place last week via teleconference, what I’m calling Virtual Davos, and at this year’s event, of course, the signature topic was their project called the Great Reset.

But if the WEF was so intent on presenting the best face for the Great Reset to the world it wouldn’t have invited either Chinese Premier Xi Jinping or, more importantly, Russian President Vladimir Putin.

And it was Putin’s speech that brought down the house of cards that is the agenda of the WEF.

The last time someone walked into a major international forum and issued such a scathing critique of the current geopolitical landscape was Putin’s speech to the United Nations on September 29th, 2015, two days before he sent a small contingency of Russian air support to Syria.

There he excoriated not only the U.N. by name but most importantly the U.S. and its NATO allies by inference asking the most salient question, “Do you understand what you have done?” having unleashed chaos in an already chaotic part of the world?

As important as that speech was it was Putin’s actions after that which defined the current era of geopolitical chess across the Eurasian continent.   Syria became the nexus around which the resistance to the “ISIS is invincible” narrative unraveled

And the mystery of who was behind ISIS, namely the Obama administration, was revealed to anyone paying attention.

President Trump may have taken credit for beating ISIS, but it was mostly Putin and Russia’s forces retaking the Western part of Syria which allowed that to happen, while our globalist generals, like James Mattis, did as much damage to Syria itself and as little to ISIS as possible, hoping to use them again another day.

And regardless of whether you agree or disagree with the U.S.’s policy in Syria, which I most definitely do not, it is hard to argue that Russia’s intervention there fundamentally changed the regional politics and conflicts for the foreseeable future.

It was the beginning of the voluntary disconnection of China, Russia and Iran from the West.

For standing athwart U.S. and European designs on consolidating power in the Middle East, Russia has been vilified in the West in ways that make the indoctrination I received as a kid growing up in the Cold War look like vacation advertisements for spending the summer in Crimea.

But it is that strength of purpose and character that has defined Putin’s two decades in power. He’s done wonders in rebuilding Russia. 

He’s made many mistakes, mostly by first trusting American Presidents and second by underestimating just how arrogant and rapacious the leadership in Europe is.  

That said, he’s now reached his limit, especially with Europe, and he’s set a firmly independent path for Russia regardless of the short-term costs.

And that’s why his speech at the World Economic Forum was so important. 

Putin hadn’t spoken there for nearly a decade.  In a time when WEF-controlled puppets dominate positions of power in Europe, the U.K., Canada and now the U.S., Putin walked into Virtual Davos and dumped his coffee on the carpet.

In terms I can only describe as unfailingly polite, Putin told Klaus Schwab and the WEF that their entire idea of the Great Reset is not only doomed to failure but runs counter to everything modern leadership should be pursuing.

Putin literally laughed at the idea of the Fourth Industrial Revolution – Schwab’s idea of a planned society through AI, robots and the merging of man and machine. 

He flat-out told them their policies driving the middle class to the brink of extinction over the COVID-19 pandemic will further increase social and political unrest while also ensuring wealth inequality gets worse.

Putin’s no flower-throwing libertarian or anything, but his critique of the hyper-financialized post-Soviet era is accurate. 

The era dominated by central banking and the continued merging of state and corporate powers has increased wealth inequality across the U.S. and Europe, benefiting millions while extracting the wealth of billions.

Listening to Putin was like listening to a cross between Pat Buchanan and the late Walter Williams.  According to him the neoliberal ideal of “invite the world/invade the world” has destroyed the cultural ties within countries while hollowing out their economic prospects.  Putin criticized zero-bound interest rates, QE, tariffs and sanctions as political weapons.

But the targets of those weapons, while nominally pointed at his Russia, were really the West’s own engines of vitality, as the middle classes have seen their wages stagnate, and access to education, medical care, and the courts to redress grievances fall dramatically.

Russia is a country on the rise, so is China.  Once their ties are embedded deeply enough to stabilize its economy, so too will Iran rise.

Together they will lead the central Asian landmass out of the nineteenth-century quagmire that exists thanks to British and American intervention in the region.  Putin’s speech made it clear that Russia is committed to the process of finding solutions to all people benefiting from the future, not just a few thousand holier-than-thou oligarchs in Europe.

In a less confrontational address, Chairman Xi said the same thing. 

He gave lip service, like Putin, to climate change and carbon neutrality, focusing instead on pollution and sustainability. 

Together they basically told the WEF to stuff the Great Reset back into the hole in which it was conceived. 

I’ve followed Putin closely for nearly a decade now.  I got the feeling that if he was speaking to a college-level political science class and not a convocation of some of the most powerful people in the world he would been laughed in their faces.

But, unfortunately, he understands better than any of us having been the object of their aggression for so long, he had to treat them seriously as their grasp of reality and connectedness to the people they ruled was nearly severed.

At the end of his planned remarks, Klaus Schwab asked Putin about Russia’s troubled relationship with Europe and could it be fixed.  Putin pulled no punches. 

If we can rise above these problems of the past and get rid of these phobias, then we will certainly enjoy a positive stage in our relations.

We are ready for this, we want this, and we will strive to make this happen. But love is impossible if it is declared only by one side. It must be mutual.

I don’t get the sense from anything I’ve seen from the Biden Administration or the European Commission in Brussels that anyone heard a word he said.

*  *  *

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On Thursday we noted that the biggest winners from the upcoming $1.9 trillion stimulus would be a family of four making up to $150,000 per year, which would entitle them to $12,800 in federal income support over the next 15 months.

Part of this is of course the $1,400 (not $2,000) in direct payments – which just cleared a key hurdle on Thursday when the House Ways and Means Committee passed legislation which also included tax credits for children that will be sent to households on a monthly basis, according to Bloomberg.

“The $600 rebates that Congress delivered in December didn’t do enough,” said Rep. Suzan DelBene (D-WA) during the Ways and Means Committee debate on Thursday. “This is critical relief to help families weather this crisis.”

The measures, which passed along party lines 24-18, were just one component of different elements of the Biden stimulus, while eleven other House committees are working on their own measures for the package which are slated for completion on Friday – with the full house voting the week of Feb. 22 on the overall package.

Democrats eventually want the monthly tax-credit payments to become a permanent annual feature in future legislation.

Meanwhile, low-income workers and families footing the bill for childcare or adult care will receive expanded tax credits, while benefits for health care and paid sick leave will also receive a boost, along with employers – who will receive extended incentives to keep workers employed.

Democrats say the payments are critical to help bolster household income amid the elevated unemployment rate and additional costs burdening American families. Republicans have criticized the proposal, saying it includes many items Democrats have championed before the pandemic and that many higher-income households that aren’t struggling would benefit.

The Internal Revenue Service is planning to issue the stimulus payments as quickly as possible if the legislation is signed into law.

Households would get the child tax credit in the form of a $300 a month payment for children five and under or $250 a month for those six and older starting in July. That amounts to a $3,600 benefit for younger children or $3,000 for older ones — an increase from the current $2,000 maximum credit. The tax break is currently paid out as a tax refund, rather than in monthly payments. –Bloomberg

Households making up to $91,000 per year will receive approximately two-thirds of the benefits, according to the Urban-Brookings Tax Policy Center, while around 11% would go to the top 20% of taxpayers – those making $164,000 or more.

In addition, multi-employer pension plans on the verge of collapse would be bailed out under the House-approved legislation – allowing for insolvent plans which have collective bargaining agreements to obtain loans in order to maintain distributions.

Single-employer pensions, meanwhile, will receive more time to make up losses – and will receive a few new loopholes to calculate their liabilities, “which are inflated while interest rates remain low,” according to the report.

Authored by James Bovard via The Mises Institute,

“Tyranny in form is the first step towards tyranny in substance,” warned Senator John Taylor two hundred years ago in his forgotten classic, Tyranny Unmasked. As the massive National Guard troop deployment in Washington enters its second month, much of the media and many members of Congress are thrilled that it will extend until at least mid-March. But Americans would be wise to recognize the growing perils of the militarization of American political disputes.

The military occupation of Washington was prompted by the January 6 clashes at the Capitol between Trump supporters and law enforcement, in which three people (including one Capitol policeman) died as a result of the violence. Roughly eight hundred protestors and others unlawfully entered the Capitol, though many of them entered nonviolently through open doors and most left without incident hours later.

The federal government responded by deploying twenty-five thousand National Guard troops to prevent problems during President Joe Biden’s swearing-in—the first inauguration since 1865 featuring the capital city packed with armed soldiers. Protests were almost completely banned in Washington for the inauguration.

Instead of ending after the muted inauguration celebration, the troop deployment was extended for the Senate impeachment trial.

Senator Chris Murphy (D-CT) declared:

“So long as Donald Trump is empowered by Senate Republicans, there is still the chance that he is going to incite another attempt at the Capitol.”

But the Senate vote on Senator Rand Paul’s (R-KY) motion labeling the trial as unconstitutional signaled that the trial will be anticlimactic because Trump is unlikely to be convicted. The actual trial may be little more than a series of pratfalls, alternating between histrionic Democratic House members and wild-swinging, table-pounding Trump lawyers. A pointless deluge of political vitriol will make a mockery of Biden’s calls for national unity.

Then the troop deployment was extended into at least mid-March because of unidentified threats made to members of Congress. Acting Army Secretary John Whitley announced last week:

“There are several upcoming events—we don’t know what they are—over the next several weeks, and they’re concerned that there could be situations where there are lawful protests, First Amendment–protected protests, that could either be used by malicious actors, or other problems that could emerge.”

“We don’t know what they are” but somebody heard something somewhere, so the military deployment will continue. Threats have occurred in waves toward members of Congress at least since the farm crisis of the 1980s, but prior menacing did not result in the occupation of the capital city.

Perpetuating the troop deployment is also being justified by melodramatic revisionism. In congressional testimony last week, Capitol Police acting chief Yogananda Pittman described the January 6 clash at the Capitol as “a terrorist attack by tens of thousands of insurrectionists.” Apparently, anyone who tromped from the scene of Trump’s ludicrous “I won by a landslide” spiel to the Capitol was a terrorist, or at least an “insurrectionist” (which is simply “terrorist” spelled with more letters). Is “walking on the Mall with bad thoughts” sufficient to get classified as a terrorist in the Biden era? 

Placing thousands of troops on the streets of the nation’s capital could be a ticking time bomb. The longer the National Guard is deployed in Washington, the greater the peril of a Kent State–caliber catastrophe. The Ohio National Guard’s volley of fire in 1970 that killed four students and wounded nine others was a defining moment for the Vietnam era. 

Forty years later, the Cleveland Plain Dealer published an investigation of the Kent State shooting based on new analyses of audio recordings from the scene. The Plain Dealer concluded that an FBI informant who was photographing student protestors fired four shots from his .38-caliber revolver after students began threatening him. That gunfire started barely a minute before the Ohio National Guard opened fire. Gunshots from the FBI informant apparently spooked guard commanders into believing they were taking sniper fire, spurring the order to shoot students. The informant denied having fired, but witnesses testified differently. (The FBI hustled the informant from the scene and he later became an undercover narcotics cop in Washington, DC.) Though there is no evidence that the FBI sought to provoke carnage at Kent State, FBI agents involved in COINTELPRO (the Counterintelligence Program) in the 1960s and 1970s boasted of “false flag” operations which provoked killings.

If some malicious group wanted to plunge this nation into chaos and fear, National Guard troops at a checkpoint would be an easy target—at least for the first moments after they were fired upon (most of the troops do not have ammo magazines in their rifles). The sweeping reaction to January 6 might be far surpassed if troops are gunned down regardless of whether the culprits were right-wing extremists, Antifa, or foreign infiltrators. An attack on the troops would likely perpetuate the military occupation and potentially spur Biden to declare martial law.

Last spring, when riots erupted after the killing of George Floyd in Minneapolis, President Trump warned that “the Federal Government will step in and do what has to be done, and that includes using the unlimited power of our Military and many arrests.”

Many activists were justifiably appalled at the specter of Trump seizing dictatorial power over areas wracked by violent protests.

But the danger remains regardless of who is president.

Martial law is the ultimate revocation of constitutional rights: anyone who disobeys soldiers’ orders can be shot. There are plenty of malevolent actors here and abroad who would relish seeing martial law declared in Washington, the paramount disgrace for the world’s proudest democracy.

Unfortunately, Biden would have plenty of support initially if he proclaimed that violence in Washington required him to declare martial law. As the Washington Post noted in 2018, a public opinion poll showed that 25 percent of Americans believed “a military takeover was justified if there were widespread corruption or crime.” The Journal of Democracy reported that polls showed that only 19 percent of Millennials in the US believed that it would be illegitimate “in a democracy for the military to take over when the government is incompetent or failing to do its job.” But trusting to military rule for Millennial wish fulfillment would be the biggest folly of them all. Support for martial law is the ultimate proof of declining political literacy in this nation.

Regardless of the risks, some politicians are clinging to the presence of the troops in Washington like Linus clutching his “security blanket” in a Peanuts cartoon. Will we now see regular alarms from a long series of politicians and political appointees working to “keep up the fear”?

History is littered with stories of nations scourged by “temporary” martial law that perpetuated itself. Anyone who believes America is immune should recall Senator Taylor’s 1821 warning against presuming “our good theoretical system of government is a sufficient security against actual tyranny.”

The American-made Standard Manufacturing DP-12 is a modern bullpup pump-action shotgun that looks and feels like a futuristic weapon but lacks high-tech systems embedded within the firearm. That’s where Russia comes in, with legendary Kalashnikov Group, now planning to manufacture a “gadget-packed shotgun” for hipsters. 

According to AFP, Kalashnikov, the AK-47 assault rifle maker, has developed and is set to series manufacture a semi-automatic 12-gauge shotgun called the “MP-155 Ultima.” The high-tech shotgun features a built-in computer that teaches users how to become better shooters. 

“It’s the first gadget weapon. The task is to attract that part of the audience who was born with gadgets and cannot imagine themselves without them,” Kalashnikov’s director Dmitry Tarasov told RBK business daily.

“Classic hunting today is becoming more rare, even outlandish. Therefore, I would like to involve … hipsters, Generation Z,” Tarasov said, referring to those born from the mid-1990s onwards.

“I really want people to own weapons responsibly and at the same time get a kick out of it,” he added. 

The MP-155 Ultima will retail for 100,000 roubles ($1,354) or about the same cost as an American-made DP-12. 

“It can be adapted with gadgets including a compass and a video camera,” Tarasov said.

… and perhaps all it will take to get the younger generation into firearms is add a computer chip to it. 

Though we must say, youngsters are more intrigued by printing their own guns. 

Authored by Michael Snyder via The End of The American Dream blog,

Big Brother is watching you.  Sadly, most people don’t realize how extensive the surveillance grid has now become.  As you drive to work or to school, license plate readers are systematically tracking where you travel.  In major cities, thousands of highly advanced security cameras (many equipped with facial recognition technology) are monitoring your every move.  If authorities detect that you are doing something suspicious, they can quickly pull up your criminal, financial and medical records.  Of course if they want to dig deeper, your phone and your computer are constantly producing a treasure trove of surveillance data.  Nothing that you do on either one of them is ever private.

In the past, compiling all of that information would take a great deal of time.  But now tech giants such as Microsoft, Motorola, Cisco and Palantir are selling “fusion systems” to governments all over the planet.  These “fusion systems” can instantly integrate surveillance data from thousands of different sources, and this has totally transformed how law enforcement is conducted in many of our largest cities.

Arthur Holland Michel is a senior fellow at the Carnegie Council for Ethics in International Affairs, and he was given a tour of a “fusion system” that is used by the city of Chicago called Citigraf…

He clicked “INVESTIGATE,” and Citigraf got to work on the reported assault. The software runs on what Genetec calls a “correlation engine,” a suite of algorithms that trawl through a city’s historical police records and live sensor feeds, looking for patterns and connections. Seconds later, a long list of possible leads appeared onscreen, including a lineup of individuals previously arrested in the neighborhood for violent crimes, the home addresses of parolees living nearby, a catalog of similar recent 911 calls, photographs and license plate numbers of vehicles that had been detected speeding away from the scene, and video feeds from any cameras that might have picked up evidence of the crime itself, including those mounted on passing buses and trains. More than enough information, in other words, for an officer to respond to that original 911 call with a nearly telepathic sense of what has just unfolded.

But these systems are not just used to track down criminals.

In fact, they can be used to investigate literally anyone.

On another occasion, Arthur Holland Michel got the opportunity to test out the “fusion system” that Microsoft had built for New York City…

The NYPD official showed me how he could pull up any city resident’s rap sheet, lists of their known associates, cases in which they were named as a victim of a crime or as a witness, and, if they had a car, a heatmap of where they tended to drive and a full history of their parking violations. Then he handed me the phone. Go ahead, he said; search a name.

A flurry of people came to mind: Friends. Lovers. Enemies. In the end, I chose the victim of a shooting I’d witnessed in Brooklyn a couple of years earlier. He popped right up, along with what felt like more personal information than I, or even perhaps a curious officer, had any right to know without a court order. Feeling a little dizzy, I gave the phone back.

If this is what is going on in major cities such as Chicago and New York, can you imagine the technology that the alphabet agencies of the federal government must now possess?

Of course this isn’t just happening in the United States.

On the other side of the Atlantic, a joint European surveillance project known as ROXANNE is causing a great deal of concern…

An acronym for Real time netwOrk, teXt, and speaker ANalytics for combating orgaNized crimE, it was announced in November the Republic’s involvement in the project currently being developed in Switzerland.

A biometrics based platform ostensibly to monitor and crack down on organised crime, an additional application of ROXANNE which its creators advertise freely is the ability to monitor those guilty of alleged hate speech and political extremism.

Strict new laws against “hate speech” and “political extremism” are being instituted all over Europe, and this new tool will help to track down “thought criminals”.

In particular, this new tool will be heavily monitoring “social media sites such as Facebook, YouTube as well as normal telecommunications platforms”…

A product of the EU funded Horizon 2020 to foster new surveillance technology, ROXANNE works across social media sites such as Facebook, YouTube as well as normal telecommunications platforms to identify, categorise, and track faces and voices enabling authorities to paint a more in depth picture of the network being investigated, whether it be in relation to criminal activity or those deemed politically extreme.

Enabling authorities to draw on raw data from a variety of sources and platforms in order to recognise common speech patterns, facial features, and geolocation, the end result is both to identify suspects and paint an intricate picture of the networks being put under the microscope.

So if you live in Europe and you think that you might be guilty of “thought crime” at some point, you might want to get rid of your phone and your computer.

Seriously.

Things really have gotten that bad over there, and it is just a matter of time before the madness gets to the same level in the United States, because we are going down the exact same road.

Here in the U.S., more political voices are being “deplatformed” with each passing day.  Progressive reporter Jordan Chariton originally cheered when conservatives were being deplatformed, but at this point he regrets his calls for censorship now that YouTube has taken down one of his videos…

However, after YouTube pulled video from his own channel featuring footage of the January 6 riot for violating the platform’s policies against “spam and deceptive practices,” the Chariton reversed his position.

“With time to reflect, & seeing Silicon Valley’s censorship onslaught, I regret this tweet made in [the] heat of moment,” the progressive journalist wrote. “Whether certain cable/YouTube outlets mislead audiences w/ dishonest claims lacking real evidence, they shouldn’t be targeted.”

It is all fun and games when it is happening to “the other side”, but when it happens to you suddenly it becomes real.

They really do want to control what all of us do, say and think, and the Big Brother surveillance grid is becoming more suffocating with each passing year.

If we do not put limits on this technology while we still can, it is just a matter of time before our society becomes a dystopian nightmare far more horrible than anything than George Orwell ever dared to imagine.

*  *  *

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

The US Supreme Court is set to rule on a Fourth Amendment case which will determine whether police or any other government official can enter one’s home with a warrant to seize guns under limited exceptions.

The Fourth Amendment protects citizens from unreasonable searches and seizures, and requires authorities obtain a search warrant supported by probable cause.

There are a few limited exceptions to this right, according to Forbes contributor Evan Gerstmann:

There is an “exigent circumstances” exception. If a police officer looks through a home’s window and sees a person about to stab another person, the officer can burst through the door to prevent the attack. There is also the “emergency aid” exception. If the officer looked through the same window and saw the resident collapsing from an apparent heart attack, the officer could run into the house to administer aid. Neither of these cases violates the Fourth Amendment and few would argue that it should be otherwise. 

However, there is a broader cousin to these exceptions called the “community caretaking” exception. It derives from a case in which the police took a gun out of the trunk of an impounded vehicle without first obtaining a warrant.

 The Supreme Court previously held that there is a community caretaking exception since police perform “community caretaking functions, totally divorced from the detection, investigation, or acquisition of evidence relating to the violation of a criminal statute,” and that police activity conducted under this exception don’t violate the Fourth Amendment as long as they are done in a “reasonable” manner.

Notably, the community caretaking exception isn’t limited to immediate emergencies like the first two exceptions.

All three exceptions allow for warrantless searches as long as an officer acts “reasonably,” a legal standard which is ‘significantly lower’ than “probable cause,” which is required to obtain a warrant, according to the report.

“As long as an officer might reasonably think that a warrantless search will alleviate a danger to the community, the search is considered constitutional.” -Forbes

Now, the Supreme Court has announced that it will hear arguments next month in Caniglia v. Strom, in which Mr. Caniglia was arguing with his wife, when he placed an unloaded gun on the table and told her to “shoot me now and get it over with.”

His wife called a non-emergency police line, resulting in several officers being dispatched to the residence. The police disagreed over whether MCaniglia was acting “normal” or “agitated,” but he agreed to go to a local hospital for evaluation via ambulance. While en route, his wife told police that he kept two handguns in the house – prompting the officers to search his home without obtaining a warrant.

According to Forbes, Mrs. Caniglia’s consent to have the police search their home was legally negated “because the police untruthfully told her that her husband had consented to the seizure of any guns.”. Mr. Caniglia sued the police, claiming a violation of his Fourth Amendment right to privacy as well as his Second Amendment right to keep handguns in the home for self-protection.

The case has worked its way through the legal system, finally ending up at the Supreme Court:

The 1st Circuit Court of Appeals (which is the federal court just below the Supreme Court in Caniglia’s jurisdiction) sided with the police. The court wrote: “At its core, the community caretaking doctrine is designed to give police elbow room to take appropriate action when unforeseen circumstances present some transient hazard that requires immediate attention. Understanding the core purpose of the doctrine leads inexorably to the conclusion that it should not be limited to the motor vehicle context. Threats to individual and community safety are not confined to the highways.”

It is certainly true that the police need a good deal of discretion in carrying out their varied, complex, and sometimes dangerous duties. But they are also powerful agents of the government and their power is supposed to be restrained by the Bill of Rights. The Fourth Amendment is supposed to protect the home above all other places. And whatever one’s views on gun control may be, the Supreme Court has clearly held that the right to keep handguns in the home is at the core of the Second Amendment. -Forbes

Gerstmann makes a great point – that unlike “exigent circumstances” and “emergency aid” exceptions, the “community caretaking” exemption is not limited to time-sensitive circumstances where there is no time to apply for a warrant.

“The question of what sort of caretaking falls under this exception is extremely vague. Will the police be able to use it, for example, to conduct warrantless searches of political protesters’ homes to make sure they aren’t planning on violent behavior at their next political rally?“

One look at the price of nat gas in the central states and you’d think it was a pennystock with a 1000% short interest: behold the price of Southern Star nat gas spot (Texas, Oklahoma, Kansas). It just hit $38 and is normally $2. Other spot prices for the same region are more than twice as high as we explain below.

Why the stratospheric increase in prices?

As S&P Global Platts explains, the Midcontinent led the surge in US gas prices in Feb. 11 trading as a sharp rise in heating demand met a sudden collapse in supply due to regional production freeze-offs, significantly tightening balances across the much of the Central US, where many places found themselves with virtually no nat gas.

In morning trading, cash prices at hubs in Kansas, Oklahoma and eastern Arkansas hit levels not seen since 2014, with select locations hitting record highs, ICE data showed.

At One Oak Gas Transmission, Southern Star and Enable Gas, spot prices reached record highs around $85, $45 and $30/MMBtu, respectively.

At other hubs, including ANR Oklahoma, Panhandle and NGPL Midcontinent, prices hit their highest in seven years, topping $16, $14 and $12/MMBtu, respectively.

The culprit behind this unprecedented supply/demand imbalance: freezing cold.  During the upcoming holiday weekend, the Midcontinent population-weighted temperature is forecast to dip below 0 degrees Fahrenheit before slowly thawing to above freezing by the following weekend.

As heating demand from homes and businesses rises, topping 5 Bcf/d on Feb. 11, colder temperatures have also prompted wellhead freeze-offs, cutting production receipts just when they’re most needed. Mid-continent gas production was estimated at 5.5 Bcf/d, down about 800 MMcf/d, or 13%, compared with the prior 30-day average, S&P Global Platts Analytics data shows.

So as regional production gets squeezed and hub prices rise, Midcon markets have sharply reduced net gas transmissions to neighboring markets – most notably Texas and the Southeast. On Feb. 11, net volumes leaving the Midcon fell by a whopping 90% to about 335 MMcf/d – down from an average 2.9 Bcf/d in the 30-days prior.

Other markets across the US – particularly those supplied by the Midcon – saw a similar, though less pronounced, uptick in gas prices in Feb. 11 trading.

Texas

In neighboring Texas, the cash price for Houston Ship Channel increased $6.26/MMBtu on the day to $10.796/MMBtu – its highest level since July 2008. Across the state, the population-weighted average temperature is expected to fall from 15 degrees F below normal Feb. 11 to 37 F below normal by Feb.15, Platts Analytics data showed.

Texas demand sat at 15.5 Bcf on Feb. 11 and was forecast to tick higher to 23.6 Bcf as temperatures continue to fall. As Texas keeps more gas at home to meet the higher demand, net outflows fell by 1 Bcf on Feb. 11 to 10.6 Bcf/d.

Rockies & West

Spot gas prices in the Rockies soared to levels rarely seen in the last 10 years. Cheyenne Hub was trading $9.07 higher at $14.70/MMBtu – the highest price since February 2014. CIG, Rockies saw a similar upward trajectory, trading $8.45 higher to $13.28/MMBtu.

Heightened demand for Rockies gas in other regions comes just as local demand hits seasonal highs. The average temperature in the Rockies was forecast to fall to 19 F on Feb. 12, plunging to 6 F on Feb. 14. Frigid temperatures pose additional upside risk for prices amid possible production freeze-offs. Cash gas prices in the Permian Basin, another production region which has seen increased competition for supply, also surged in Feb. 11 trading. Waha Hub was trading $5.88 higher at $10.42/MMBtu – also the location’s highest since February 2014.

Midwest

Prices gains in the upper Midwest were muted in comparison to the Midcontinent. At Chicago city-gates, prices spiked to new highs reaching $8.11/MMBtu, up $4.13 from the day prior, to its highest level since March 2019. The spread between Chicago city-gates and Henry Hub reached a $2.19 premium, the first time a premium has been this high since January 2019, S&P Global Platts data showed.

Across the entire central US, including the Midcon and Upper Midwest, demand is projected to hit 49.5 Bcf/d on Feb. 15, an all-time high since Platts began recording data in 2005. Heating demand, meanwhile, is expected to reach its highest level since 2019 at 42.5 Bcf/d, about 29 Bcf higher than the five-year average, analytics data shows.

Northeast

Historically the most volatile region for gas prices, the Northeast remained comparatively insulated from the Feb. 11 market surge. At Algonquin city gates, prices rose $1.57 to $12.67/MMBtu; Iroquois Zone 2 rose $2.12 to $12.49/MMBtu. Both locations marked their highest prices since December 2019. According to the US National Weather Service, Boston temperatures are expected to reach a low of 11 degrees F on Feb. 12, while New York City temperatures are forecast to reach a low of 21 F – both adding upward pressure to gas prices on the day.

Frigid weather is expected to persist throughout the next week, continuing to evaporate storage inventories and likely keeping spot gas prices elevated across the region.

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Needless to say, if anyone was short any midcontinent nat gas,  they just experienced a short squeeze orders of magnitude worse than the one that almost destroyed Melvin Capital. May they rest in peace.

Unlike dozens of other industries across the globe, cannabis experienced significant growth as a result of the COVID-19 pandemic, and in recent days has seen a renewed trading interest, thanks to WallStreetBets.

In fact, as Visual Capitalist’s Katie Jones notes, with consumption for both medical and recreational products on the rise, 2020 was a record-breaking year for the industry.

After years of investor uncertainty, analysts are predicting a continued bull market in 2021, with several new and exciting developments on the horizon.

Here are nine things cannabis investors need to know.

1. Cannabis Stocks on the Rise

While asset prices took a dip during the initial stage of the COVID-19 outbreak in March, the cannabis sector recovered swiftly after reporting impressive numbers.

Even though cannabis investors have experienced some ups and downs in the last several years, 2021 looks more hopeful.

2. COVID-19 and Cannabis

Cannabis has become an attractive option for people spending more time at home, both as a means of entertainment, and to reduce stress and anxiety associated with the pandemic.

As a result, cannabis sales are soaring. In Canada, monthly sales reached an all-time high of $270 million (CAD) in October 2020, a dramatic increase from $180 million just six months earlier.

3. Cannabis Black Market No More?

For millions of U.S. citizens who live in states where the sale of cannabis is still restricted, the illicit market continues to be their only option.

But with loosening restrictions and legal cannabis becoming more widely available, legal sales are predicted to reach $50 billion by 2026 while illegal sales will plummet to less than $1 billion by the same year.

 

4. Political Change Driving Market Growth

 

Almost 70% of Americans now support the full legalization of cannabis—the highest figure ever recorded.

States where cannabis is legal are now paving the way for cannabis sales, with California expected to pull in over $6 billion by 2021 alone. If federal legalization comes to fruition over the next several years, the already booming U.S. market could see further growth.

5. All Eyes on the European Cannabis Market

The European cannabis market has been on investors’ radar for several years, and with good reason—it is one of the largest cannabis markets in the world.

Driven primarily by medicinal products, the market will be valued at over $39 billion by 2024, with countries like Germany—Europe’s largest economy—leading the way.

In late 2020, the market experienced its biggest breakthrough yet, with the European Union ruling that products containing CBD (one of the most active ingredients in cannabis) are no longer listed as narcotics.

6. Making History in Mexico

Mexico is another market that is piquing the interest of investors and cannabis companies the world over. That’s because it could soon be the third country in the world to legalize recreational cannabis by court order.

With a total addressable market of $2 billion and the potential to support up to 75,000 jobs, these new regulations could change the dynamic of the global market for the better.

7. Most Popular Cannabis Products

Given the flurry of product innovation in the market, consumption of cannabis is quickly changing.

Relatively new products such as edibles and oils are gaining traction, while consumption of flower appears to be declining. This could be due in part to oral products being perceived as a healthier alternative to smoking.

8. CBD Products are Moving into the Mainstream

Although CBD was once considered a niche product that could only be found in dispensaries, growing awareness of the benefits and safety of these products are causing companies operating in the consumer packaged goods industry to take notice.

The cannabis compound is a new addition to a wide range of products such as skincare, makeup, and supplements that can now be purchased almost anywhere—from ecommerce sites to local grocery stores.

9. The New Cannabinoids on the Block

Beyond CBD, scientists have discovered over 100 rare, or minor cannabinoids such as CBG and CBN, that could have even more significant benefits than their major cannabinoid counterparts.

For example, preliminary research shows that CBG could inhibit cancer growth, help treat glaucoma, bladder dysfunction, and kill drug-resistant bacteria.

These discoveries are not only attracting huge attention from the cannabis industry, but from the pharmaceutical industry as well.

Milestones in the Making

With all of these exciting developments coming to the fore, it’s safe to say 2021 could be one of the cannabis industry’s most transformative years to date.

Authored by Dylan Grice via TheMarket.ch,

In late 2019, we published a report and recommended an exposure in the oil and especially the oil services sector. Down by over a third since we first did our research back in December of 2019, and down by as much as 70% during the March crash, it has been our worst performing idea by a wide margin. Hence, we felt it was high time for an update.

We’ll start by retracing our original idea. Then we’ll try to understand what was missing from it, and why it went so badly for us. We’ll end by bring the idea up-to-date and in so doing, make the case that the oil industry has an essential role to play for coming generations.

Yes, energy transition is real and, for what it’s worth, something we are completely in favour of. The question is when it happens, not if it happens, but the implications from it taking several decades rather than several years vary enormously. The cornerstone of our thesis is really that the oil industry is being written off prematurely. From that premise, everything else follows.

A shortage of capital

In very simple terms, writing in December 2019, as the first reports of a mysterious virus circulating in the Chinese city of Wuhan reached Europe, we felt that the energy slump was behind us. The excesses which had led to the shale crash were being worked out, bankruptcies had soared, and capacity had been reduced. Yet the world still needed oil, and the oil majors were beginning to sanction large projects again. There was a shortage of capital, not opportunity.

We also liked the people driving capital allocation in the energy market. In particular, we liked that experienced and successful investors like Sam Zell and John Fredriksen were moving in, self-made billionaires who’d made their fortunes partly by buying things that no one else wanted over the years. On the other side, the «sellers», were politicians, bureaucrats and other non-economically motivated players (primarily ESG-driven investors).

We were comfortable that the energy transition was real but concluded that this was a) glacially moving, and importantly, b) a widely understood shift. Oil was still needed in the meantime, and so «low-risk» oil extraction from relatively low-risk short-cycle projects which could be quickly ramped up was more than merely viable, it was essential.

Only shale-oil players and the shallow-water projects fit this bill, but we’d had terrible experiences with shale oil producers in the past – they are hopelessly drill-addicted capital misallocators. Shallow-water drillers and servicers were our sweet spot by default. Given the near-term uncertainty in the space, we felt those with strongest balance sheets were best positioned to ride out any remaining volatility. We gave Tidewater and Standard Drilling as examples.

What happened?

Our thesis was coming good as we started 2020. The majors were increasing their capex targets. Our belief that the lower-risk shallow water deposits would be prime production targets was panning out too, with the number of jack-ups (shallow-water drillers) which were active globally clearly trending higher, in contrast to the activity of floaters (mid-to-deep water drillers) which remained stagnant.

Saudi Aramco awarded a string of contracts to Shelf Drilling, the majority of which were for ten years (maturities not seen since the heydays of the offshore drilling boom).

But then COVID hit, and the global lockdown led to a cessation of nearly all physical economic activity. There’s no need for us to expand upon just how ugly the macro data was during that time. Weekly US initial jobless claims rising by 244 standard deviations in the middle of March says it all. As far as the energy markets went, the collapse in world oil demand was more muted. The fall from 100 million barrels per day (mbd) to 80 mbd in the three months to April was only a 10 standard deviation event…

The world’s energy infrastructure wasn’t designed with such a sudden decline in demand in mind. The physical market was turned on its head as refineries turned away crude oil, as did storage facilities which had no capacity. Financial markets behaviour was even more chaotic with the WTI contract (which is for physical delivery) turning negative in case any of you had forgotten.

It seems as though the WTI-tracking ETFs which mechanically roll their futures at the end of each month weren’t paying attention, and as expiry approached, they were the only holders of the May contract.

It wasn’t so much panic selling by ETF funds that drove prices into negative territory (although it’s hard to imagine there wasn’t plenty of that too), it was that there were literally no buyers left in the market for that contract. It’s the most concise way we can think of for conveying how utterly chaotic those days were for everyone involved in the oil market. Despite the recovery from those lows, we can still see the effects of the trauma today.

The financial panic also reached boardroom level for the oil majors. According to Rystad Energy, 20 bn $ was cut from projected E&P capex by the majors, as the following chart shows. Activity in the jack-up and floater markets also tracked lower once more.

Crude prices expected in the medium term, as measured by the rolling sixty-month-out WTI contract, averaged 53 $ before COVID, but have averaged only 45 $ since. And if we look further out, at the rolling one-hundred-twenty-month out WTI contract (i.e. the market’s ten year expectation) prices have fallen by around 5 $ in the last few months. That’s only a few dollars higher than the March 2020 liquidity puke. The crude oil market’s verdict is clear: COVID has permanently impaired it.

Meanwhile, the market capitalization of Tesla is today roughly the same size as that of the entire S&P 500 Oil sector, which includes the majors, the independents, the drillers, the service companies AND the refiners.

So the equity market’s view seems similarly equivocal: oil has no future, the energy transition is here.

Three reasons why the oil market has an investable future

Except that it isn’t. Or at least according to Bloomberg, which in its annual Electric Vehicle Outlook summary projects that Electric Vehicles (EVs) will only make up around 8% of the total fleet of passenger cars by 2030. Bloomberg expect the number of cars to rise from today’s 1.2 billion vehicles to 1.4 billion, but only for 110 m of them to be EVs. So the number of oil-consuming Internal Combustion Engine (ICE) vehicles on the road by then will still be around 1.3 bn, which is a forecast rise of around 0.7% per year.

Moreover, while passenger vehicles contribute around 60% of the global demand for crude oil, the rest comes from heavy duty vehicles, aviation and the petrochemicals industry for which there are as yet, few alternatives.

We’re not saying this is a good thing or that it’s something we’re especially happy about, but as investors our job is to allocate capital according to the way we think the world is, not the way we want it to be. And it’s obvious to us that the oil market will continue to play a central role in the global economy in the coming decades.

A second fact we think is important to understand is that the transition to EVs is a risk which is widely recognised and understood. BP has gone further than most in pivoting away from hydrocarbons, and very few oil executives are carrying on as normal, or are under any delusion about the reality of their industry.

The question isn’t whether or not oil demand peaks, the question is when. Project appraisals and capital allocation factor this in before sign-off. The general trend within the industry is very understandably that of moving towards a perfectly rational risk-aversion.

Lower-risk shorter-cycle projects, such as those we already mentioned, in shallow waters or in shale formations are clearly more attractive and easier to sign off on than those in deep waters, even if that’s where the largest deposits are ordinarily expected to be found.

Even the gunslingers of the shale patch seem to have gotten this memo. Scott Sheffield, CEO and co-founder of Pioneer Natural Resources, the largest owner of Spraberry acreage in the Permian, told attendees at a recent Goldman Sachs investor call that he didn’t expect much increase in Permian or wider US shale over the next several years, and that the Bakken and Eagle Ford shale regions might never see growth again. As for his own company, the message was clear: «I never anticipate growing above 5% under any conditions. Even if oil went to $100 a barrel and the world was short of supply».

The CEO of Devon echoed the sentiments, «I have a hard time seeing the need for U.S. producers over the next several years to get back to double-digit growth. For this management team, if we really think about 2021, let’s keep it flat.»

Which brings us neatly to the third point. Global production outside of shale oil has been flat since 2015. All incremental growth was driven by shale. Yet oddly enough, it’s still not quite clear how profitable that growth was. According to Deloitte, the shale industry registered net cumulative free cash flows of negative $300 billion since 2010, impaired more than 450 bn $ of invested capital, and saw more than 190 bankruptcies. Indeed, companies accounting for nearly 50% of shale output are so operationally and financially weak that Deloitte considers them «superfluous».

If Deloitte are right, and the shale patch’s newfound aversion to excessive risk sticks, global oil production may well surprise on the downside in coming years.

Arguably, the outlook is more bullish for oil today than it was pre-COVID. Regardless, the energy transition isn’t going away. Low-risk, short-cycle barrels will be in relatively higher demand, which argues not only for the higher quality shale assets, but the shallow water players. Which brings us back to where we started: shallow water services.

Shallow water drillers in the sweet spot

We don’t want to go into too much detail here. But since we discussed Tidewater in our original piece in December 2019, let’s consider it again. You may recall that having acquired Gulfmark it is now the largest listed Offshore Service Vessel (OSV) player and has been through a savage restructuring (G&A reduced by 45%, fleet reduced by 24%). It has an EV of around $500 million, of which net debt is $60 m, no maturities due until August 2022, and expects to generate free cashflow in 2020 of $42 m.

The combined EBITDA for Tidewater and Gulfmark in 2014 was $590 m, since then $60 m of cost synergies have been extracted. So call it $650 m peak EBITDA. If they can recover to just half of that, they’ll be at a normalized EBITDA of $325 m. Historically, their EV/EBITDA averaged 7x, but let’s assume that we’re wrong on the relative attractiveness of anything operating in shallow waters, and that anything oil can only expect to trade at a 50% discount compared to its former glories, given the perception that oil is now a permanently shrinking industry.

Let’s put that new EBITDA on an EV multiple of 3.5x. That implies an EV of $1.14 bn, which assuming a constant net debt of $60 m implies an equity value of just under $1.1 bn, compared to today’s $440 m. That’s around 2.4x. Of course, if we’re right about the attractiveness of shallow waters, EBITDA could surprise on the upside, and the market could reappraise its view on the sector’s longevity, which would translate into a significant rerating. It’s not difficult to see 4-8x returns here in the coming years.

And what happened to the supposed «smart money» which was buying in late 2019? Well, at the risk of stating the obvious, it shows that while skin-in-the-game might be important, it’s not a guarantee of success. Nevertheless, in an interview with CNBC in March of last year – during the teeth of the market rout – Sam Zell said he’d been adding to his energy holdings: «We think the energy space is really cheap … what helps is we were not in the energy space before.»2 John Fredriksen, who has been in the energy space before, remains fully committed, and has recently appointed Tor Andre Svelland to run his interests.

The smart money, it seems, is still invested.

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Dylan Grice is co-founder of Calderwood Capital Research, an investment company specialising in portfolio construction and alternative investments. 

All does not seem to be well in the world’s largest auto market – especially now as the ongoing global semiconductor shortage is hitting the country where it hurts. 

China’s industry ministry said this week that it met with automotive and chip manufacturers to try and help ease what is now being called a “crisis” of a shortage in global semiconductors. 

The country’s Ministry of Industry and Information Technology has told companies to “place high importance on” and “increase production capacity allocation” for China’s auto market, according to Reuters. 

The Ministry also urged companies to improve logistics and supply chain coordination to support China’s auto industry. 

As if any of that needed to actually be said at this point…

The auto industry has been struggling with the shortage in semi chips for weeks now, as we have been reporting. Major manufacturers like Toyota, Nissan and GM have all felt the sting of the shortage, with many automakers shutting down shifts and slowing production as a result. 

In fact, just yesterday, General Motors noted that the chip shortage was going to cost the company $1 billion to $2 billion in earnings in 2021. And it isn’t just the auto industry that is feeling the pain. 

We also wrote that Taiwan Semiconductor was rushing to build infrastructure to try and meet demand. TSMC is one of the biggest suppliers of chips to company like Apple, Google and Qualcomm. As a result of a worldwide shortage in chips that was brought on due to the pandemic, they are now rushing to try and get a new factory in the southern Taiwanese city of Tainan built. It’ll be “the world’s most advanced 3-nanometer chip production plant,” according to Nikkei. The company is also building a research and data center in Hsinchu. 

Construction the new facility will take place throughout 2021, with completion expected in 2022. 

One executive said of TSMC’s expansion: “We received a notice from TSMC that it is giving 4,000 New Taiwan dollars ($145) a day as an extra bonus for every worker willing to come during the Lunar New Year… that is literally at least double the average daily wage for front line workers. Even if that’s only roughly a few extra days of building time [during the holiday], they don’t want to fully stop at all. That shows their commitment to speed up construction and development and confidence for future demand.”

Recall, we wrote days ago that the shortage is being referred to as the “most serious shortage in years”, with Qualcomm’s CEO saying two weeks ago that there were now shortages “across the board”, according to Bloomberg. 

But it isn’t just Qualcomm executives speaking out: other industry leaders have warned in recent weeks that they are susceptible to the shortages. Apple said recently that its new high end iPhones were on hold due to a shortage of components. NXP Semiconductors has also warned that the problems are no longer just confined to the auto industry. Sony also said last week it may not be able to to fully meet demand for its new gaming console in 2021 due to the shortage. Companies like Lenovo have also been feeling the crunch.

Neil Mawston, an analyst with Strategy Analytics, said: “The virus pandemic, social distancing in factories, and soaring competition from tablets, laptops and electric cars are causing some of the toughest conditions for smartphone component supply in many years.” 

Mawston says that prices for some smartphone components are up as much as 15% the last 6 months. 

To make matters worse, Huawei is being blamed for hoarding components in 2020 (almost as if they knew this was going to happen). This set off other manufacturers to do the same. According to the report:

Industry executives also blame excessive stockpiling, which began over the summer when Huawei Technologies Co. — a major smartphone and networking gear maker — began hoarding components to ensure its survival from crippling U.S. sanctions. Led by Huawei, Chinese imports of chips of all kinds climbed to almost $380 billion in 2020 –– making up almost a fifth of the country’s overall imports for the year.

Rivals including Apple, worried about their own caches, responded in kind. At the same time, the stay-at-home era spurred sales of home appliances from the costliest TVs to the lowliest air purifiers, all of which now come with smart, customized chips. TSMC executives said on its two most recent earnings calls that customers have been accumulating more inventory than normal to hedge against uncertainties, a maneuver they see persisting for some time.

“There’s a chip stockpiling arms race,” said Will Bright, co-founder and chief product officer at Drop. Analyst Mario Morales of IDC said: “A lot of it can be traced back to the second quarter of last year, when the whole world basically shut down. Many auto companies shut down manufacturing and their suppliers re-prioritized. Not until the second half will we see relief for some of these markets.