While we don’t know the exact date that the recession will officially hit us nor do we know when the mainstream media will report the actual facts about the condition of the United States economy, we do know its decline is imminent. New data has come out that warns that the recession is not only imminent but could be right around the corner.
According to a report by Market Watch, you should “ignore this data at your peril.” According to Société Générale’s known bear Albert Edwards, who was schooling clients Thursday on an often-overlooked set of U.S. government numbers that reveal profits of all companies, including unlisted ones, published by the Bureau of Economic Analysis. Edwards says there is a recession right around the corner based on these data points released by the government.
Corporate profits are down by a lot. That’s nothing to sneeze at either. The corporate profit series (economic profits from current production in the second quarter) saw nearly 10% cut from the previous more upbeat 2019 first-quarter estimate, said Edwards.
“The latest revisions to U.S. whole economy profits – National Income and Product Account profits – were sufficiently large to suggest that the end of this record economic cycle is much closer than previously thought,” he said.
In sharp contrast to “booming stockmarket measures of profits,” the BEA’s NIPA data has been flatlining for a few years now, he said. That divergence is pretty normal just ahead of a recession, as those profits reveal the underlying trend.
“For it is at this late stage that we often see whole economy profits and margins declining sharply but this weakness does not usually appear in stock market reported profit measures until much later in the cycle – usually in the middle of ensuing recessions when companies sack their CEOs and write down years of inflated profits growth in one fell swoop,” said Edwards.
This is just one more piece of data showing that the U.S. economy is not as strong as we are being told.
Large sections of the economy are already in a recession, according to their data, and Americans are piling on debt at a record pace. If the economy was in such great shape, would there be a need to borrow excessive amounts of money when most debtors are already tapped out? Probably not. But hey, the stock market is good, and some people still have jobs, so there’s nothing to worry about!
Amazon Reportedly Changed Search Algorithm To Favor More Profitable Products
After publishing a steady stream of scoops about Amazon’s anti-competitive tendencies, the Wall Street Journal on Monday dropped one of the biggest media bombshells to rock the e-commerce giant in recent memory: That Amazon has deliberately tweaked its product-search algorithm to more prominently feature products that are more profitable for Amazon, including its own in-house brands.
Multiple sources from inside the company told WSJ last year that the company’s engineers were ordered to change the algorithm so that instead of just showing customers the most relevant listings to their search, or the best sellers on the platform, they would also see companies that would have the highest return for Amazon if sold.
The change followed a lengthy struggle between executives overseeing the company’s retail business in Seattle and its search team – also known as A9 – in Palo Alto. The search team reportedly opposed the move.
The news hasn’t had much of an impact on AMZN shares, but it will almost certainly be of interest to Congress, as well as the State AGs and federal agencies who are investigating anti-trust practices at the big tech giants – both in the US, and in Europe.
From WSJ’s description of how the project unfolded, it seems like Amazon’s retail execs ignored the company’s directive to put the company’s interests first, and tried to shape the changes in such a way that they wouldn’t trigger anti-trust concerns.
Amazon’s lawyers rejected an initial proposal for how to add profit directly into the algorithm, saying it represented a change that could create trouble with antitrust regulators, one of the people familiar with the project said.
The Amazon search team’s view was that the profitability push violated the company’s principle of doing what is best for the customer, the people familiar with the project said. “This was definitely not a popular project,” said one. “The search engine should look for relevant items, not for more profitable items.”
When approached by WSJ, Amazon denied that the changes to the algorithm were significant, but declined to further discuss the innerworkings of its algorithm.
Amazon said it has for many years considered long-term profitability and does look at the impact of it when deploying an algorithm. “We have not changed the criteria we use to rank search results to include profitability,” said Amazon spokeswoman Angie Newman in an emailed statement.
Amazon declined to say why A9 engineers considered the profitability emphasis to be a significant change to the algorithm, and it declined to discuss the inner workings of its algorithm or the internal discussions involving the algorithm, including the qualms of the company’s lawyers.
While re-imagining anti-trust standards for the tech age, some lawmakers have said that a company’s market share isn’t as important as the dominance of its platform. As we detailed recently, often arbitrary decisions made in Seattle can bankrupt small businesses who rely on Amazon’s platform to move their products.
This news shows how Amazon can leverage its platform to mislead customers and merchants, while further boosting its bottom line.
And to illustrate just how important it is for a product to appear on the first page of an Amazon search, WSJ showed that nearly two-thirds of all product clicks come from the first page.
What’s more, if this report is accurate, it would appear that Amazon’s counsel lied to Congress during a hearing in July.
During a House antitrust hearing in July, lawmakers pressed Amazon on whether it used data gleaned from other sellers to favor its own products. “The best purchase to you is an Amazon product,” said Rep. David Cicilline (D., R.I.). “No that’s not true,” replied Nate Sutton, an Amazon associate general counsel, saying Amazon’s “algorithms are optimized to predict what customers want to buy regardless of the seller.”
In the report, WSJ details the yearslong battle between the engineers responsible for tweaking the algorithm and Amazon’s retail division, who have been lobbying the engineers to give a boost to the company’s own products practically since the company first launched its in house brands.
But eventually, the retail guys won out, and the engineers were forced to include profitability as a variable in the algorithm alongside popularity and relevance.
One former Amazon search executive said: “We fought tooth and nail with those guys, because of course they wanted preferential treatment in search.”
Amazon retail executives, especially those in its private-label business, wanted to add a new variable for what the company calls “contribution profit,” considered a better measure of a product’s profitability because it factors in non-fixed expenses such as shipping and advertising, leaving the amount left over to cover Amazon’s fixed costs, said people familiar with the discussion.
Amazon’s private-label products are designed to be more profitable than competing items, said people familiar with the business, because the company controls the manufacturing and distribution and cuts out intermediaries and marketing costs.
Lawyers objected to this, believing it could anger regulators in Europe and lead to a find. So the engineers were tasked with finding a workaround – which they did. Now, when engineers bring proposed changes to the algorithm to an internal panel that must sign off on any changes, if the change lowers the impact of the profitability variable, it typically isn’t approved.
Though we imagine the company will come up with some defense of its actions before they’re dragged back in front of Congress for another round of hearings.
Three JPMorgan Traders Charged For “Massive” Gold Market Manipulation Fraud
Many readers wrote us off as conspiracy theorists when we reported on signs of manipulation in the precious metals market. But as it turns out, trading desks at some of the world’s largest banks were deeply involved in what the Department of Justice described as a “massive, multiyear scheme to manipulate the market for precious metals futures contracts and defraud market participants.”
In an indictment unsealed on Monday morning, the DoJ charged Michael Nowak, a JP Morgan veteran and former head of its precious metals trading desk and Gregg Smith, another trader on JPM’s metals desk, in the probe. Both men were put on leave over the summer as the DoJ’s investigation neared its conclusion, and Nowak was previously named in a civil suit brought by the CFTC.
A third trader named in the indictment, Christopher Jordan, traded precious metals at JPM until he left in December 2009. He later traded precious metals at two other banks, Credit Suisse and First New York.
In a press release accompanying the indictment, Assistant Attorney General accused all three men of scheming to manipulate the precious metals market while potentially harming their bank’s clients.
“The defendants and others allegedly engaged in a massive, multiyear scheme to manipulate the market for precious metals futures contracts and defraud market participants,” said Assistant Attorney General Brian A. Benczkowski. “These charges should leave no doubt that the Department is committed to prosecuting those who undermine the investing public’s trust in the integrity of our commodities markets.”
William Sweeney, the Assistant Director in Charge of the FBI’s New York Field Office, added that this manipulation likely impacted “correlated markets and the clients of the bank they represented.”
“Smith, Nowak, Jordan, and their co-conspirators allegedly engaged in a complex scheme to trade precious metals in a way that negatively affected the natural balance of supply-and-demand,” said FBI Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office. “Not only did their alleged behavior affect the markets for precious metals, but also correlated markets and the clients of the bank they represented. For as long as we continue to see this type of illegal activity in the marketplace, we’ll remain dedicated to investigating and bringing to justice those who perpetrate these crimes.”
According to Bloomberg, three other banks – Deutsche Bank, HSBC and UBS – agreed to pay $50 million (in total) to settle civil claims by the CFTC. Two former JPM employees who pleaded guilty and contributed evidence against their former colleagues that was used in the indictment.
“While at JPMorgan I was instructed by supervisors and more senior traders to trade in a certain fashion, namely to place orders that I intended to cancel before execution,” said one former trader John Edmonds during an October 2018 hearing after pleading guilty to commodities fraud and conspiracy, BBG reports.
The behavior dates back more than 10 years to 2009, according to chat logs that were shown in the indictment. The conversations exposed in the chat logs show just how blatant the manipulation was, and how little the traders did to conceal it.
One of the traders who participated in the chat shown above was Christian Trunz, who traded precious metals at Bearn Stearns before joining JP Morgan after the crisis. He told a federal judge last month that this type of behavior was openly encouraged on JPM’s trading desks for roughly a decade, and that other traders taught him how to do it. He pleaded guilty to federal fraud charges on Aug. 20, BBG reports.
Another trader said during a plea hearing that he was instructed to bid up the price of futures contracts by placing, then cancelling, bid orders (the literal definition of spoofing) that he never intended to fill.
“I was instructed that if a client wished to sell futures I should simultaneously place both bids and offers with the intent of canceling the bids prior to execution,” Edmonds said during his plea hearing.
Edmonds said the purpose was to falsely transmit liquidity and price information in order to deceive other market participants about the supply and demand so they would trade against the orders that JPMorgan wanted to execute.
“We created market activity which artificially drove the sale price up and induced other market participants to purchase at an inflated price,” he said. Edmonds entered into a cooperation agreement with the CFTC in July.
Since the crisis, regulators around the world have cracked down on manipulation in rates, forex and government bond markets, so it’s not exactly a surprise that this type of behavior was also happening in precious metals. But the brazenness with which traders engaged in such manipulation suggests that they didn’t know what they were doing was illegal or wrong, which, in at least some cases, is probably true.
What was “possible” yesterday is now a low-cost proven capability, and the consequences are far from predictable.
Predictably, the mainstream media is serving up heaping portions of reassurances that the drone attacks on Saudi oil facilities are no big deal and full production will resume shortly. The obvious goal is to placate global markets fearful of an energy disruption that could tip a precarious global economy into recession.
The real impact isn’t on short-term oil prices, it’s on asymmetric warfare: the coordinated drone attack on Saudi oil facilities is a Black Swan event that is reverberating around the world, awakening copycats and exposing the impossibility of defending against low-cost drones of the sort anyone can buy.
(Some published estimates place the total cost of the 10 drones deployed in the strike at $15,000. Highly capable commercially available drones cost around $1,200 each.)
The attack’s success should be a wake-up call to everyone tasked with defending highly flammable critical infrastructure: there really isn’t any reliable defense against a coordinated drone attack, nor is there any reliable way to distinguish between an Amazon drone delivering a package and a drone delivering a bomb.
Whatever authentication protocol that could be required of drones in the future–an ID beacon or equivalent–can be spoofed. For example: bring down an authenticated drone (using nets, etc.), swap out the guidance and payload, and away it goes. Or steal authentication beacons from suppliers, or hack an authenticated drone in flight, land it, swap out the payload–the list of spoofing workaround options is extensive.
This is asymmetric warfare on a new scale: $20,000 of drones can wreak $20 million in damage and financial losses of $200 million–or $2 billion or $20 billion, if global markets are upended.
If it’s impossible to defend against coordinated drone attacks, and impossible to differentiate “good” drones from “bad” drones, then the only reliable defense is to ban drones entirely from wide swaths of territory.
So much for the lightly regulated commercialization of drones.
What sort of light bulbs are going off in the minds of copycats? It doesn’t take much imagination to see the potential for mayhem–and without sacrificing your own life. I won’t elaborate on the possibilities here, but they’re obvious to us all.
The range and payload of low-cost drones is limited. The big drones can fly hundreds of miles and carry hundreds of pounds of weaponry, but these can be targeted by radar and conventional ground-to-air missiles. So-called hobby drones skimming over the rooftops (or deserts or forests) are difficult to shoot down, especially if the attack is coordinated to arrive from multiple directions.
Small hobby drones may only carry 3 KG (roughly 6 pounds), but how much damage can 3 KG of high explosives cause? The answer is “considerable” if the target is flammable, or lightly shielded electronics.
Larger commercially available drones can carry up to 20 KG or 40 pounds–more than enough explosive capacity to take out any number of targets.
Defense and intelligence agencies have no doubt war-gamed the potential for coordinated drone attacks, and the world’s advanced militaries are already exploring the potential for self-organizing “drone hordes” of hundreds or even thousands of drones overwhelming defenders with sheer numbers. The success of the oil facilities attack proves the effectiveness of much smaller scale drone attacks.
Put yourself in the shoes of those tasked with securing hundreds of miles of pipelines carrying oil and natural gas around the world. What’s your defense against drone attacks? A.I.-controlled or remote-operated gun towers every few hundred yards, along thousands of miles of pipelines? Human patrols covering the entire pipeline 24/7? The cost of such defenses would burden the defenders with enormous costs without providing 100% reliable security. (Guards can be bribed, remotely operated guns can be overwhelmed by an initial wave of cheap unarmed hobby drones, etc.)
It’s obvious there are no low-cost, effective defenses of thousands of miles of pipelines. (Recall that the Saudis depend on seawater being piped hundreds of kilometers into the desert to inject into oil wells to maintain production. Taking out these water lines and pumps would cripple production, too.)
The only effective way to limit drone attacks is to ban all drones and institute a shoot-on-sight policy in restricted areas. But that will not negate the potential for coordinated drone strikes or drone attacks on remote facilities.
The mainstream media will be under permanent pressure to downplay the consequences of this attack, but the cat is out of the bag: the Black Swan is a drone. What was “possible” yesterday is now a low-cost proven capability, and the consequences are far from predictable.
This unpredictability alone should unsettle markets, as the risk of future asymmetric warfare drone strikes just increased to a degree that is difficult to measure or hedge.
Traders Buy Stocks, Dump Bonds & Bullion As War Rhetoric Rises
Makes perfect sense.
Saudis agree with US that “Iran did it”, the US president says the military is “locked and loaded” and what do markets do – bid stocks, buy USDollar, and dump safe-havens like bonds and gold…
The dollar is soaring…
Source: Bloomberg
And the machines ramped the S&P back above 3,000 to confirm everything is awesome…
Markets have become entirely unglued from reality.
NYT Forced To Issue Major Correction To Kavanaugh Hit-Piece; Trump Says ‘They Should Be Sued!’
The New York Times was forced to issue a major correction to an article about alleged sexual misconduct by Supreme Court Justice Brett Kavanaugh, after the two journalists who wrote it failed to include evidence from their own anti-Kavanaugh book which significantly undercuts their argument.
NYT’s Robin Pogrebin and Kate Kelly
While digging into an unsupported allegation by a woman named Deborah Ramirez that Kavanaugh waved his penis in her face during the 1983-1984 academic year at Yale, the Times‘s Robin Pogrebin and Kate Kelly claimed to have uncovered another alleged incident in which Kavanaugh’s penis was thrust into a female student’s hand.
A classmate, Max Stier, saw Mr. Kavanaugh with his pants down at a different drunken dorm party, where friends pushed his penis into the hand of a female student. Mr. Stier, who runs a nonprofit organization in Washington, notified senators and the F.B.I. about this account, but the F.B.I. did not investigate and Mr. Stier has declined to discuss it publicly. (We corroborated the story with two officials who have communicated with Mr. Stier.) –New York Times
The only problem – which Pogrebin and Kelly omitted from their NYT article, yet is contained in their new book “The Education of Brett Kavanaugh: An Investigation.”– is that the woman has no memory of the incident.
NYT Reporters’ essay about a supposed second Yale incident omitted their own book reporting that completely undercuts it: alleged victim denies any memory of it. Journalistically indefensible, though gullible additional reporters are spreading it of course.
After The Federalist‘s Mollie Hemmingway and others pointed this out, the Times issued a major correction to what the National Review‘s John McCormack called “one of the worst cases of journalistic malpractice in recent memory.”
An earlier version of this article, which was adapted from a forthcoming book, did not include one element of the book’s account regarding an assertion by a Yale classmate that friends of Brett Kavanaugh pushed his penis into the hand of a female student at a drunken dorm party. The book reports that the female student declined to be interviewed and friends say that she does not recall the incident. That information has been added to the article. -NYT
President Trump on Monday had Kavanaugh’s back in a series of tweets:
“The New York Times walks back report on Kavanaugh assault claim.” @foxandfriends The one who is actually being assaulted is Justice Kavanaugh – Assaulted by lies and Fake News! This is all about the LameStream Media working with their partner, the Dems.
“What’s happening to Justice Kavanaugh is a disgrace. This guy is not a good man, he is a great man. He has to go to his church with his family while these terrible reports are being written about him, a disgrace!” Dan Bongino @foxandfriends
Trump has also suggested that Kavanaugh should sue the times.
Just Out: “Kavanaugh accuser doesn’t recall incident.” @foxandfriends DO YOU BELIEVE WHAT THESE HORRIBLE PEOPLE WILL DO OR SAY. They are looking to destroy, and influence his opinions – but played the game badly. They should be sued!
Meanwhile, the office of Sen. Chuck Grassley (R-IA) – who was mentioned in the article, tweeted several items of note to address the original claims by Ramirez:
1. Senate Judiciary staff “proactively contacted Ms. Ramirez’ lawyers soon after the New Yorker story broke.”
2. “Despite 7 attempts by staff, Ms. Ramirez’ lawyers declined to provide documentary evidence referenced in the article/witness accounts to support the claims. They also declined invitations for Ms. Ramirez to speak with committee investigators or to provide a written statement”
3. Nonetheless, our investigators spoke to and reviewed material from several Yale classmates of Ms. Ramirez and Justice Kavanaugh in order to assess the claim. You can read the committee’s 414-page investigative summary here: http://bit.ly/30nwLKG
4. The committee’s review found no verifiable evidence to support the claims. The @nytimes’ own reporting at the time noted that it couldn’t find anyone with firsthand knowledge & that Ms. Ramirez told friends she couldn’t be sure Kavanaugh was involved:
4. The committee’s review found no verifiable evidence to support the claims. The @nytimes‘ own reporting at the time noted that it couldn’t find anyone with firsthand knowledge & that Ms. Ramirez told friends she couldn’t be sure Kavanaugh was involved: https://t.co/e1B4ckSGhrpic.twitter.com/Wj1g9dCleo
5. Ultimately, Ms. Ramirez’ team agreed only to contact the FBI with the claims. She was reportedly interviewed by the FBI during its supplemental background investigation. More on those background investigations here:
5. Ultimately, Ms. Ramirez’ team agreed only to contact the FBI with the claims. She was reportedly interviewed by the FBI during its supplemental background investigation.
More on those background investigations here:https://t.co/nGQfCovkPb
“Sand, Sand and more Sand.. no wonder they are so grumpy.. ”
Just like comedy, the secret of a market-jarring global shock is TIMING..
As Washington scrambles for face-saving evidence to pin on Iran, there are some pretty fundamental questions to be asked about the weekend precision strikes on Saudi’s oil facilities.
There are the obvious market effects to consider: While production might be swiftly repaired and resumed – the price spike is going to change behaviours dramatically in terms of energy trading and hedging. While there is capacity to cover lost production short-term, raising the threat level will change price expectations long-term. How quickly can the globe shift supply from the Middle East if this brews up into a full regional conflict? How could China scrabbling for new oil sources impact prices? The attack begs questions about oil inflation, global resilience to an oil shock, and has every analyst scribbling about his compares to previous oil shocks. And an oil shock in the week the Fed meets to discuss another US rate cut? Interesting….
The success of the strike, (taking out the production facilities has been tried before, but never with such stunning success), cast doubts on both US and Saudi intelligence and competence. In terms of timing the attackers chose their moment spectacularly well.
It was a precision attack on Saudi’s regional credibility – and by extension on Trump and the US. The competence of Trump’s buddy, de-facto ruler Crown Prince MBS is on the line. Saudi is the third highest defence spending nation at $69 bln, and ranks highest global spender in terms of 8.8% of GDP! So why is Saudi doing so badly in the conflict with supposedly unsophisticated Houthi tribesmen? Someone should probably be asking questions about what the recently arrived US forces sent by Trump and their Patriot missiles were up to.
Clobbering Aramco just days after Crown Prince MBS effectively sacked the respected oil industry veteran Khalid al-Falih and replaced him with a political ally and head of the Saudi SWF, looks almost prescient. Without the proceeds of the Aramco sale – Saudi is in trouble trying to balance reform, growth and sentiment. It’s a gift to any internal Saudi dissent. This is a Morning Porridge I wrote earlier this year on Saudi and Aramco – bit out of date, but sums up the issues.
Even more interesting is going to be the reaction in Washington. Trump immediately authorised the use of the Strategic Reserve, but politically, it’s been chaotic. The Saudi’s have not said it was Iran, yet Mike Pompeo beat Trump with an immediate Tweet pinning the blame on Tehran. He’s slimed and oozed his way to become Trump’s closest advisor. Now’s he’s trying to fill uber-hawk’s John Bolton’s shoes (the National Security Advisor sacked last week).
Let’s assume it was the Iranians – and they know just how dysfunctional the White House has become. Brilliant timing – unbalance Trump as he stumbles trying to replace Bolton. Moments after he sacked Bolton, Trump had been tweeting about meeting Iran’s leaders in NY at the UN meeting. Now he claims the US is “locked and loaded” and will act when it’s verified – which means Pompeo’s claims were premature. The Iranian’s will be betting Trump will talk tough and do nothing.
All eyes on Oil Prices today, and what comes out of Washington. Messy doesn’t begin to describe it.
Elsewhere I was going to write about the slowing Chinese economy – worst industrial production numbers in years, and the risks of fiscal reflation in Europe.. but these can wait for tomorrow.
Meanwhile… back in the UK….
Boris goes to Luxembourg to meet Jean-Claude Juncker. What a treat for them both.
I found myself watching the Last Night of the Proms on Saturday Night. Great fun. What was very interesting was the flag ratio in the Albert Hall. Lots of entitled sorts in the front rows and on the floor, wearing European Union hats and waving European Union flags. I’d say they outnumbered the Union Jacks about 3:1. Then the scene went to the Proms in the Park from London and Swansea – and the ratios must have been at least 10:1 in favour of the Union Jack. Nary a European flag to be seen. 6000 posh folk paying £100s for their tickets in the Albert Hall want to remain, while the 120,000 mere commoners attending the free concerts are happy to wave the flag of their country…
No point in mentioning Scotland – a sea of Saltires (The White on Blue St Andrew’s Cross).
Retail Apocalypse: 2019 Store Closures Already Surpass 2018
As the economy cycles down through fall, there is new, alarming data by professional services firm BDO USA LLP, first reported by The Wall Street Journal, that indicates retail bankruptcies continue to rise as store closures have already outpaced all of 2018.
BDO warned that the recent acceleration of the retail apocalypse was primarily due to last year’s weak holiday shopping season.
The rate of bankruptcy filings and store closures this year have jumped to crisis levels, expected to continue into 2020.
David Berliner, who leads business restructuring at BDO, said the trend is rather alarming but could slow into late 2019. “I don’t think the pace of the bankruptcy filings will be as large as it was in the first half,” he added.
BDO found many retailers are dealing with massive debt loads, over expansion due to cheap money, private equity-ownership pressures, and changing consumer behavior. It was the weak consumer in the 2018 shopping season that led to the acceleration of store closures in 2019.
Retail sales in 1H19 were lackluster, due to smaller tax refunds for consumers, trade war uncertainties and tariffs, and inclement weather, which forced many retailers to offer significant discounts, according to BDO.
BofA found that retail sales ex-autos fell 0.5% MoM in August, which reversed the 0.9% gain in July, and was not only the first monthly contraction since February this year, but was also the biggest monthly drop in 2019.
Aggregated credit card data for August showed 5 out of the 14 sectors increased, led by strength in cruises and airlines. But it was home goods stores, home improvement stores, sporting goods stores, furniture stores, department stores, and clothing stores that posted YoY losses.
In 1H19, 14 retailers with 25 or more stores filed for bankruptcy, including Payless ShoeSource Inc., Gymboree Group Inc., and Charlotte Russe Holdings Corp., BDO determined. That is up from 13 with 20 or more stores in 1H18.
In the last several months, Charming Charlie Holdings Inc., Barneys New York Inc., A’Gaci LLC, and Avenue Stores LLC have also filed for bankruptcy protection.
BDO said 19 retailers have already announced 7,000 store closures in 1H19 – has already exceeded all of 2018. Payless, Gymboree and Charlotte Russe accounted for at least 3,700 of those closings.
In an earlier report, we detailed how Coresight Research forecasted 12,000 stores would close in 2019.
“If the economy does stumble a little bit, things can get painful,” Berliner said.
“That can have a devastating effect on the weak retailers who can’t afford that sales dip in the holiday season.”
And with that being said, the consumer is unlikely to deliver a blockbuster holiday season for retailers this year. This would mean the retail apocalypse could continue into the 2020 election year, could have negative impacts for President Trump.
I didn’t watch the last Democratic presidential primary debates because I figured that without Tulsi Gabbard in there shaking things up it would be a boring, vapid parade of insubstantial verbal foam, and I love myself too much to go through such a horrible ordeal. By all accounts my prediction was correct, but I did miss one thing that’s been making the rounds in video clips for the last couple of days which I find absolutely bizarre.
Most of you have probably heard about Biden’s infamous “record player” comment by now, but for those of you who missed it, Biden was asked by debate moderator Linsey Davis to defend some comments he made about America’s problems with racism in the 1970s, and he responded by essentially saying that Black people don’t know how to raise their kids so they need to be taught how by social workers. Biden has been receiving mainstream criticism for his racist and paternalistic position, along with plenty of mockery for saying that parents need to be told to “make sure you have the record player on at night” so that kids hear enough words in early childhood.
It is pretty clear that Biden was trying to communicate an idea that is premised on a deeply racist and condescending worldview, so it’s to be expected that people would want to talk about that. It’s also to be expected that people would be making jokes about how the cute old man said “record player” like a grandpa. But what isn’t being discussed nearly enough is the fact that what Biden said was also a barely coherent, garbled word salad stumbling out of a brain that is clearly being eaten alive by a very serious neurological disease.
I’ve typed out a transcript of what Biden actually said, verbatim. There are no typos. I’ve also noted where Biden closes his eyes, probably to concentrate, which he does whenever he seems to be struggling especially hard to string words together. Try to read through it slowly, word-for-word, resisting the instinct to mentally re-frame it into something more coherent:
“Well they have to deal with the — Look, there is institutional segregation in this country. And from the time I got involved I started dealing with that. Redlining. Banks. Making sure that we’re in a position where — Look, talk about education. I propose that what we take is those very poor schools, the Title 1 schools, triple the amount of money we spend from 15 to 45 billion a year. Give every single teacher a raise that equal [closes eyes] raise to getting out — the sixty-thousand dollar level.
“Number two: make sure that we bring into the help the — [closes eyes] the student, the, the teachers deal with the problems that come from home. The problems that come from home. We need — We have one school psychologist for every fifteen hundred kids in America today. It’s crazy. The teachers are reca — Now, I’m married to a teacher. My deceased wife is a teacher. They have every problem coming to them. [Closes eyes briefly] We have make sure that every single child does in fact have three, four, and five year-olds go to school — school, not daycare. School. We bring social workers into homes of parents to help them deal with how to raise their children. It’s not that they don’t wanna help, they don’t want — they don’t know quite what to do. Play the radio, make sure the television, [closes eyes tightly] the — ‘scuse me, make sure you have the record player on at night, the-the-the-the phone, make sure the kids hear words. A kid coming from a very poor school, [closes eyes] a very poor background, will hear four million words fewer spoken by the time they get there.”
Notice how it gets more garbled the longer he speaks. The response I transcribed was about eighty seconds in length. That was just one small part of a debate in which the former vice president performed no better and forgot three of his fellow candidates’ names.
Compare this befuddled, incoherent mess with footage of a younger Biden, like his famous quip about how Rudy Giuliani only ever mentions “a noun and a verb and 9/11” in a sentence, or this clip where he said if Israel didn’t exist America would have to invent it to protect its interests in the Middle East. Biden has always been notoriously gaffe-prone, but he was also sharp, alert, and articulate enough to deliver a punchline. As journalist Michael Tracey has been pointing out, what we’re consistently seeing over and over again from the former vice president now are not “gaffes”, but clear signs of cognitive decline. Contrast the difference between Biden’s younger footage and what was seen at the last debate with footage of Bernie Sanders throughout the decades, who has remained virtually identical save for appearance and hoarseness. Age does not account for this difference. Biden’s brain is dying.
It is certainly understandable that people are concerned about the presidential frontrunner having a racist worldview. But what’s really weird and creepy is how few people are discussing the obvious fact that the presidential forerunner is also clearly suffering from the early stages of some kind of dementia. The brain that spouted the gibberish transcribed above would probably score poorly on a basic test for the early stages of Alzheimer’s disease, yet discussion of his inability to complete a coherent sentence is relegated to the margins of political discourse. This is someone who is campaigning to have access to the nuclear codes, yet we’re only talking about how he’s kind of racist and not about the fact that his brain is turning into Swiss cheese right before our eyes. It’s freaky.
It’s freaky, but it kind of makes sense. One common difficulty in getting early treatment for people with Alzheimer’s disease is that those suffering from it often go to great lengths to hide their impairments, and another difficulty is that their families are often deeply in denial about their loved one’s mental decline. According to the Mayo Clinic, “Some people hide their symptoms, or family members cover for them. That’s easy to understand, because Alzheimer’s dementia is associated with loss, such as loss of independence, loss of a driving privileges and loss of self.”
I think we’re seeing precisely this happening, both with Biden, and with his supporters. Biden himself is clearly doing everything he can to feign mental competency, and as a powerful politician aiming to accomplish a lifelong ambition to become the US president he’d certainly have a lot egoically invested in doing so. His supporters seem to be doing all kinds of denial mental gymnastics around his cognitive decline as well; just check out the responses to this Washington Post tweet for its article about Biden’s “record player” response.
Biden: “Make sure the record player is on at night” so kids hear more words https://t.co/szcq0vjVPP
“Don’t pretend you didn’t understand what he was saying.”
“Actually, I recently saw a turntable for sale at Best Buys & vinyl records are back on the market. Try to keep up, WaPo.”
“My 22 year old son and all his friends play records on record players these days. If you’re insinuating that Joe is out of touch, you’re out of touch.”
“Actually currently, there are some people playing record players because they find the vinyl record has better sound quality. I think you are just picking and choosing who to go after.”
“He was saying they not hearing enough words. We did. We were read to. We listened to children’s albums. We had conversations. He was trying to get at the importance of those things. He didn’t do a great job on communicating it but he was right.”
“Twitter snark aside, there are studies to back up that claim.”
“He got 80% of the way through the debate without an embarrassing gaffe that highlights his age. Of course, Trump couldn’t get halfway through a debate without threatening his opponent with imprisonment.”
“Honestly…so what. I got the sentiment.”
“Not sure why people are being so condescending. Vinyl outsold CD last year, so, you know, record players are everywhere these days. You could say he’s stuck in the past or you could say he’s trending. Be kind.”
We saw this same impulse to protect and compensate for Biden’s mental decline from audience members during the debate, who gasped out loud when Julian Castro suggested that Biden had forgotten what he’d said two minutes ago. Many rank-and-file Democrats are so desperate for an end to an administration that is making them increasingly anxious and neurotic that they find it cognitively easier to compartmentalize away from the obvious fact that Biden is in a state of mental decline than to turn and face that reality. So they make excuses and pretend that his demented word salads are perfectly rational, hip references to the resurging popularity of vinyl records.
The only people who are absolutely acutely aware of Biden’s cognitive decline and yet still want him to become president are his handlers. There is no way his consistent pattern of verbal unintelligibility has gone unnoticed by those who are responsible for facilitating his election, and indeed The Hill reports that his “allies” have been floating the idea of scaling back his campaign appearances and scheduling them for earlier in the day when he’s not tired to help minimize his “verbal flubs”. These people are aware that Biden is losing his mind, but they are pushing him toward the White House anyway.
If Biden supporters were really intellectually honest with themselves about what’s going on, they’d see that they don’t actually want Joe Biden to be president, they want his unelected, unaccountable handlers to be president. From a position of intellectual honesty they’d be taking the position of arch neocon Bill Kristol, who once said he’d “prefer the deep state to the Trump state.”
And of course that wouldn’t be a first among US presidents even in recent history. Ronald Reagan had early signs of Alzheimer’s disease during his presidency according to his own son, and George W Bush was infamously just a puppet of his handlers like Dick Cheney. Indeed it would be possible to have an actual, literal Jim Henson puppet as president of the United States without America’s unelected power establishment skipping a single beat.
But that’s exactly the point: having a real human being in there with even a semi-functional mind can put some inertia on the most sociopathic impulses of America’s unelected permanent government. Both Trump and Obama are of course horrible presidents who have continued and expanded the Bush administration’s most evil agendas, but Obama slowed down the push to arm Ukraine against Russia and slammed the brakes on a full-scale bombing campaign on Syria, while Trump was unable to get along with John Bolton and is losing interest in Venezuela while resisting the push to start new wars. Despite all their flaws, they’ve resisted the permanent government’s worst impulses in some key ways. If it’s just Biden’s handlers and the unelected power establishment, there’s no humanity anywhere near the brake pedal.
Joe Biden thanks his longfriend timefriend who’s a friend and has been a friend in and out of public life. pic.twitter.com/EoUWZeW0an
So this makes sense to talk about no matter how you look at it. But we’re not. In mainstream discourse we’re speaking as though this is just a charmingly gaffe-prone old man who makes a few controversial statements from time to time but would still make a fine president, when really he shouldn’t even be allowed a driver’s license.
And I just find that really creepy and uncomfortable. As someone who’s never been able to leave elephants in rooms alone, the fact that the leading presidential contender is neurologically incapable of speaking coherently for eighty seconds sticks out like dog’s balls and it’s absolutely freakish that this isn’t front and center of our political discourse right now. Biden’s dementia should be the very first thing we discuss whenever his name comes up, not the last.
Saudis Considering Delaying Aramco IPO As Output Recovery Expected To Take Longer
On Saturday, Saudi Arabia promised that it would provide much needed information about the scope and severity of its damaged facilities within 48 hours, yet has so far failed to do so, leaving commodity traders scrambling and dependent on rumors and innuendo, to evaluate just how long the output shortage would last and how much oil would be taken offline for at least a few days (and potentially as long as months).
In retrospect, it now appears that we won’t be getting a detailed update any time soon because as the WSJ reports, the Saudis themselves have no idea what is going on, and are seeking “clarity on damage.” As a result, Saudi Arabia – which last week was said to be fast tracking its Aramco IPO after numerous delays – is once again said to be considering a delay for the IPO of the world’s most valuable company (its market cap is said to be $1.5-$2 trillion when it goes public), as the attacks have added “a fresh element of risk for international investors hoping to take part in Aramco’s initial public offering of stock”, the WSJ reports.
Separately, Bloomberg reports that Aramco officials “are growing less optimistic that there will be a rapid recovery in oil production after the attack on the giant Abqaiq processing plant”, although here too there is no official disclosure but rather “a person with knowledge of the matter” is the source.
All eyes are on how fast the kingdom can recover from the weekend’s devastating strike, which knocked out roughly 5% of global supply and triggered a record surge in oil prices. Initially, it was said that significant volumes of crude could being to flow again within days, but it may now take longer than previously thought to resume operations at the plant, the person said, asking not be named before an official announcement. The company is scheduled to provide an update later today.
While Aramco has been gearing up for a two-part IPO, in which it hopes to first sell a sliver of itself to investors on the local Saudi exchange, and then list shares internationally, the weekend attack puts into focus another new risk, unusual for most companies planning an IPO: the threat of more attacks that might bottle up production by cutting revenue and profit, or otherwise shake investor confidence in Aramco’s longer-term investment value.
The Aramco delay would also be a disastrous start to the new Saudi energy minister, MbS’s older brother, Abdulaziz bin Salman, or AbS, who as we reported last weekend, unexpectedly replaced Khalid al Falih as the Kingdom’s top energy official:
The attack also comes at a sensitive time for Aramco leadership. Khalid al Falih, who until recently led both Aramco, as chairman, and the country’s oil sector, as energy minister, was earlier this month relieved of those positions. Two officials untested by crises of this kind are now in charge: Yaser Rumayyan, who leads Saudi Arabia’s main sovereign-wealth fund, now heads Aramco and Crown Prince Mohammed bin Salman ’s older brother, Abdulaziz bin Salman, is just days into his new job as energy minister.
A delay is also bad news for all the banks that were recently tapped to prepare the market for the monstrous IPO.
Aramco’s valuation has been a point of contention between Prince Mohammed, who runs the kingdom’s day-to-day affairs, and some bankers. The crown prince and his banking advisers expect the IPO could value the company at roughly $2 trillion and finance an ambitious program to diversify the economy beyond oil. Other bankers and several Aramco executives say the company should be valued at closer to $1.5 trillion. A key metric had long been the price of oil.
Yet while an Aramco delay may be tactical, the strategic victory would be if the market reprice oil notably higher due to the return of geopolitical risk premium. To be sure, while a modest delay may be in the works, Riyadh will be more than happy to accept it if it means going public with Brent at $70, and thus with an Aramco valuation closer to $2 trillion, than Brent at $60 or lower, and the company struggling to make $1.5 trillion.
In other words, if all it takes to boost the company’s valuation by $500 billion is a brief delay, then Saudi Arabia will be delighted to take it.
