Category: zerohedge

Authored by Aaron Maté via RealClearInvestigations.com,

The cybersecurity firm CrowdStrike rose to global prominence in mid-June 2016 when it publicly accused Russia of hacking the Democratic National Committee and stealing its data. The previously unknown company’s explosive allegation set off a seismic chain of events that engulfs U.S. national politics to this day. The Hillary Clinton campaign seized on CrowdStrike’s claim by accusing Russia of meddling in the election to help Donald Trump. U.S. intelligence officials would soon also endorse CrowdStrike’s allegation and pursue what amounted to a multi-year, all-consuming investigation of Russian interference and Trump’s potential complicity.  

With the next presidential election now in its final weeks, the Democrats’ national leader, House Speaker Nancy Pelosi, and her husband, Paul Pelosi, are endorsing the publicly traded firm in a different way. Recent financial disclosure filings show  the couple have invested up to $1 million in CrowdStrike Holdings. The Pelosis purchased the stock at a share price of $129.25 on Sept. 3. At the time of this article’s publication, the price has risen to $142.97. 

Drew Hammill, spokesman for Pelosi, said:

“Speaker Pelosi is not involved in her husband’s investments and was not aware of the investment until the required filing was made.  Mr. Pelosi is a private investor and has investments in a number of publicly traded companies.  The Speaker fully complies with House Rules and the relevant statutory requirements.”

The Pelosis’ sizeable investment in CrowdStrike could revive scrutiny of the company’s involvement in the Trump-Russia saga since the Democrats’ 2016 election loss.  

Dmitri Alperovitch: The CrowdStrike co-founder reportedly was thanked by a senior U.S. official “for pushing the government along” in its DNC hacking probe. CrowdStrike.com

After generating the hacking allegation against Russia in 2016, CrowdStrike played a critical role in the FBI’s ensuing investigation of the DNC data theft. CrowdStrike executives shared intelligence with the FBI on a consistent basis, making dozens of contacts in the investigation’s early months. According to Esquire, when U.S. intelligence officials first accused Russia of conducting malicious cyber activity in October 2016, a senior U.S. government official personally alerted CrowdStrike co-founder Dmitri Alperovitch and thanked him “for pushing the government along.” The final reports of both Special Counsel Robert Mueller and the Senate Intelligence Committee cite CrowdStrike’s forensics. The firm’s centrality to Russiagate has drawn the ire of President Trump. During the fateful July 2019 phone call that would later trigger impeachment proceedings, Trump asked Ukraine’s Volodymyr Zelensky to scrutinize CrowdStrike’s role in the DNC server breach, suggesting that the company may have been involved in hiding the real perpetrators. 

Pelosi’s recent investment in CrowdStrike also adds a new partisan entanglement for a company with significant connections to Democratic Party and intelligence officials that drove Russiagate.

DNC law firm Perkins Coie hired CrowdStrike to investigate the  breach in late April 2016. At the outset, Perkins Coie attorney Michael Sussmann personally informed CrowdStrike officials that Russia was suspected of breaching the server. By the time CrowdStrike went public with the Russian hacking allegation less than two months later, Perkins Coie had recently hired Fusion GPS, the opposition research firm that produced discredited Steele dossier alleging a longstanding conspiracy between Trump and Russia.

Shawn Henry: Behind closed doors, the CrowdStrike president admitted under oath in December 2017 that his firm “did not have concrete evidence” that Russian hackers actually stole any emails or other data from the DNC servers. “There’s circumstantial evidence, but no evidence that they were actually exfiltrated.”  CrowdStrike.com

CrowdStrike President Shawn Henry, who led the team that remediated the DNC breach and blamed Russia for the hacking, previously served as assistant director at the FBI under Robert Mueller. Since June 2015, Henry has also worked as an analyst at MSNBC, the cable network that has promoted debunked Trump-Russia innuendo perhaps more than any other outlet. Alperovitch, the co-founder and former chief technology officer, is a former nonresident senior fellow at the Atlantic Council, the Washington organization that actively lobbies for a hawkish posture toward Russia.

Campaign disclosures also show that CrowdStrike contributed $100,000 to the Democratic Governors Association in 2016 and 2017. 

The firm’s multiple conflicts of interest in the Russia investigation coincide with a series of embarrassing disclosures that call into question its technical reliability. 

In early 2017, CrowdStrike was forced to retract its allegation that Russia had hacked Ukrainian military equipment with the same malware the firm claimed to have discovered inside the DNC server.

During the FBI’s investigation of the DNC breach, CrowdStrike never provided direct access to the pilfered servers, rebuffing multiple requests that came from officials all the way up to then-Director James Comey. The FBI had to rely on CrowdStrike’s own images of the servers, as well as reports that Justice Department officials later acknowledged were delivered in incomplete, redacted form. James Trainor, who served as assistant director of the FBI’s Cyber Division, complained to the Senate Intelligence Committee that the DNC’s cooperation with the FBI’s 2016 hack investigation was “slow and laborious in many respects” and that CrowdStrike’s information was “scrubbed” before it was handed over. Alperovitch, the former CTO, has claimed that CrowdStrike installed its Falcon software to protect the DNC server on May 5, 2016. Yet the Democratic Party emails were stolen from the server three weeks later, from May 25 to June 1.

Yet the most damaging revelation calling into question CrowdStrike’s Russian hacking allegations came with an admission early in the Russia probe that was only made public this year. Unsealed testimony from the House Intelligence Committee shows that Henry admitted under oath behind closed doors in December 2017 that the firm “did not have concrete evidence” that Russian hackers actually stole any emails or other data from the DNC servers.

“There’s circumstantial evidence, but no evidence that they were actually exfiltrated,” Henry said.

“There are times when we can see data exfiltrated, and we can say conclusively. But in this case it appears it was set up to be exfiltrated, but we just don’t have the evidence that says it actually left.”

The Henry testimony was among a trove of damning transcripts released by House Intelligence Committee Chairman Adam Schiff only after pressure from the then-acting Director of the Office of the Director of National Intelligence, Richard Grenell.

As RealClearInvestigations reported last month, Henry’s House testimony also conflicts with his testimony before the Senate Intelligence Committee two months prior, in October 2017. According to the Senate report, Henry claimed that CrowdStrike was “able to see some exfiltration and the types of files that had been touched,” but not the files’ content. Yet two months later, Henry told the House that “we didn’t see the data leave, but we believe it left, based on what we saw.” 

Adam Schiff: CrowdStrike testimony was released by the House Intelligence Committee chairman only after pressure from the then-acting  Director of National Intelligence, Richard Grenell. AP Photo/Alex Brandon

Notably, Henry’s acknowledgment to the House that CrowdStrike did not have evidence of exfiltration came only after he was interrupted and prodded by his attorneys to correct an initial answer. Right before that intervention from CrowdStrike counsel, Henry had falsely asserted that he knew when Russian hackers had exfiltrated the stolen information: 

Adam Schiff: Do you know the date in which the Russians exfiltrated the data from the DNC?  

Shawn Henry:  I do. I have to just think about it. I don’t know. I mean, it’s in our report that I think the Committee has. 

Schiff:  And, to the best of your recollection, when would that have been? 

Henry: Counsel just reminded me that, as it relates to the DNC, we have indicators that data was exfiltrated. We do not have concrete evidence that data was exfiltrated from the DNC, but we have indicators that it was exfiltrated. 

Henry then improbably argued that, in the absence of evidence showing the emails leaving the DNC server, Russian hackers could have taken individual screenshots of each of the 44,053 emails and 17,761 attachments that were ultimately put out by WikiLeaks.

Keeping Henry’s admission under wraps for nearly four years was highly consequential. The allegation of Russian hacking was elevated to a dire national security issue, and anyone who dared to question it – including President Trump – was accused of doing the Kremlin’s bidding. The hacking allegation also helped plunge U.S.-Russia relations to new lows. Under persistent bipartisan pressure over allegations of Russian meddling, Trump has approved a series of punitive measures and aggressive policies toward Moscow, shunning his own campaign vow to seek cooperation.

Meanwhile, during the several years that CrowdStrike’s own uncertainty about its hacking allegation was kept from the public, the firm has enjoyed a stratospheric rise on Wall Street. In 2017, one year after lodging its Russia hacking allegations, CrowdStrike had a valuation of $1 billion. Three years later, after going public in 2019, the firm’s valuation was set at $6.7 billion, and soon hit $11.4 billion. Just over a year later, its market cap was  $31.37 billion. CrowdStrike has more than doubled its revenue on average every year, going from $52.75 million in 2017 to $481.41 million in 2020.

CrowdStrike and Fusion GPS, which spread Trump-Russia collusion allegations via the Steele dossier, are not the only private companies to play a critical and lucrative role in the Trump-Russia saga.

The firm New Knowledge, staffed by several former Democratic Party operatives and intelligence officials, authored a disputed report for the Senate Intelligence Committee that accused a Russian troll farm of a sophisticated social media interference campaign that duped millions of vulnerable Americans. Ironically, the company itself took part in a social media disinformation operation in the 2017 Alabama Senate race to help elect the ultimate victor, Democratic candidate Doug Jones. Just as the Democratic Party’s impeachment proceedings were in full swing a year ago, another cybersecurity firm with Democratic Party ties, Area One, accused the Russian spy agency GRU of hacking into the Ukrainian company Burisma with the aim of uncovering dirt on Joe Biden. Graphika, a firm with extensive ties to the Atlantic Council and the Pentagon, has recently put out reports  accusing Russians of impersonating left-wing and right-wing websites to fool hyper-partisan American audiences.  

Having generated the seminal Russian hacking allegation, CrowdStrike sits at the top of what has become a booming cottage industry of firms and organizations to help shape the multi-year barrage of Russia fear-mongering and innuendo. And with her new investment in CrowdStrike, Nancy Pelosi — the highest-ranking elected official of a party that has promoted Russiagate above all else — is already profiting from its success. 

The bureaucrat/scientists who have been guiding the American response to the coronavirus – even Dr. Fauci acknowledges that the Trump Administration has accepted most of his recommendations (even if Trump hasn’t always followed them on a personal level).

JUST IN: Dr. Fauci clarifies answer to “hypothetical question” where he said earlier mitigation would have saved more lives.

“That was taken as a way that maybe somehow something was at fault,” Fauci says, adding that Trump followed the advice of doctors. https://t.co/P9xId2OutH pic.twitter.com/5OVyfzBccK

— ABC News (@ABC) April 13, 2020

Many who have been closely following coverage of the 2nd wave of the virus hammering Europe have heard Europe’s leaders explain to indignant reporters how their lockdown-free approach differs from an outright ‘herd immunity’ strategy question, as well as the growing acceptance of lockdown-free approaches to tackling the coronavirus (even as Sweden imposes new restrictions as Europe’s second wave looms). Just yesterday in the UK, London Mayor Sadiq Khan said a return to ‘lockdown’ status within London was “inevitable”, even as London’s infection rate lags the hot spots in northern England (in and around Manchester, as well as a few other areas) by a sizable margin.

Leaders in Europe have all warned that returning to a national lockdown would be an absolute last resort, as their economies struggle to recover from the springtime mass closures that wrought unprecedented havoc on the real economy (even if it hasn’t always translated over to the market).

But an even bigger threat to the status quo engineered by Dr. Fauci, Dr. Birx and their colleagues around the world is the sudden emergence in academia of a credible, and vocal, chorus of dissent, as researchers who are luminaries in their field speak out against lockdowns.

Since the spring, libertarians have criticized governors and even President Trump for following in the footsteps of communist China, which clearly allowed the virus to spread unchecked for weeks, or even months, before stepping in. Fewer than 100k cases have been confirmed in China – a figure that many observers suspect is far short of the real number.

But we digress. As many of the springtime hotspots from around the world – densely populated areas like Madrid and Paris – suffer through second waves that are equally, if not more, punishing than the first round, more laypeople are starting to question: what was this all for?

And whatever happened to Dr. Fauci saying that the goal was to “flatten the curve” so hospitals aren’t overwhelmed? Not force businesses to close for longer than 6 months, destroying the livelihoods of millions, as we hope and pray for the FDA to expedite approval of a vaccine.

Well, on Oct. 4, a group of scientists from Oxford, Harvard, Stanford and other distinguished academic institutions from around the world published the Great Barrington Declaration, a brief statement offering an alternative public policy approach. Instead of mandating business closures, lockdowns should be lifted, and a shift to “focused protection” should be implemented. Resources should be focused to protect the vulnerable (the elderly and those with CDC-designated risk factors). The young and health population should be allowed to live normally, with the hope that they would eventually build up immunity.

Critics have attacked the statement’s recommendations, but their criticisms are mostly superficial or easily addressable. The most salient, in our view, is the notion that we don’t yet know how long immunity from COVID-19 lasts, now that confirmed cases of reinfection have been found around the globe. To be sure, those cases are few and far between, and there’s a substantial amount of anecdotal and scientific data suggesting that health care workers have developed lasting immunity.

But since the approach challenges the status quo in the US, a position that Democrats have embraced at risk of their political reputations, big tech has rallied to try and censor the Great Barrington Declaration. First Reddit buried discussion of the declaration; now Google has “memory holed” the declaration, as one Twitter user explains.

Here’s the thread, courtesy of @boriquagato:

from the “make orwell fiction again” files:

google has memory holed the great barrington declaration

not only have they wiped it from the top results, they have salted it with false claims about “climate denial”

it’s pure, simple propaganda

here’s bing (who plays it straight) pic.twitter.com/kTdhH8zXia

— el gato malo (@boriquagato) October 10, 2020

He continues:

Simple, right?  Here’s the declaration, and here’s the wiki page.

You can see the authors, kulldorf, gupta, bhattacharya’s names and know this this was written by medical professors at harvard, stanford, and oxford.

there’s no slant, not editorializing, it’s primary source info.

now let’s have a look at google.

pretty different looking results, huh?  not only do they not lead with the declaration itself or its authors, they lead with dishonest hit pieces.

they try to tie it to climate denial and fake science.

um, no.  this is “fake search.”

the google results for “great barrington declaration” are simply not search results at all.

it’s a propagandistic hit piece ducking the science, ignoring the credentials of the authors, failing to show the declaration, and spinning it as some kind of fringe cabal of “deniers.”

it’s staggeringly blatant once you see it, but will anyone?

or will they be fooled by this because it’s subtle and you think google is a search engine, not a radicalized editorial column.

and it’s now EVERYWHERE.

Reddit will not allow users to see it.

OMG 😯
– reddit has censored discussion of The Great Barrington Declaration
– and Google has removed it from their search engine results (can only see articles about it now, as they cannot censor those

1984 is here?

Sign up here: https://t.co/lBaMxnQD1xhttps://t.co/1decFrnoCs

— Ivor Cummins (@FatEmperor) October 10, 2020

know what a man fears by watching what he tries to silence.

these groups know they have lost the debate.

they know that the facts and the science are not on their side.

and now they want to win by lying.

what choice have they left themselves?

when you have hitched your wagon to “credentialism” from buffoons like fauci and brix and ding and topol and then the REAL credentialed crowd shows up and calls you out, what can you do?

you’re cornered by your own argument. so you have to hide this fact. it’s fatal to you.

and oh how they are going to try to hide it.

at the risk of sounding tinfoil hatty: big tech has become an apparatus of totalitarian fascism.

this is what that looks like. you push a government line and “right-think” while politicizing all things.

When social media lies: @Facebook is throwing up a “fact check”, saying that these COVID-19 survival rates are “false information”:@Lyle_Genyk @FatEmperor @AlexBerenson pic.twitter.com/V6rVmqwFhc

— Tucker Goodrich (@TuckerGoodrich) October 9, 2020

government and business in the same bed to shape society for “it’s own good.”

that’s what fascism is.

“Everything in the State, nothing outside the State, nothing against the State.”

when mussolini said that, he meant it as a positive.

“totalitarian” was a complement.  and make no mistake, big business LOVES this.

it’s profitable and certain and protects your market position and entrenches oligopoly.

big business does not like free markets. it likes “less competition and a thumb on the scale.”

they LOVE fascism.  this fascism is always and everywhere a leftist youth movement. it’s not right wing, it’s left. (yes, i know what wikipedia says, it’s wrong. read your history on where these parties came from. they all emerged from socialist parties)

now it comes from san francisco.  and this is the part we need to understand:

they thought they were the good guys. hitler, stalin, mussolini, all of them

they thought there were the way forward to a greater society, a more perfect nation, justice, & progress.

and the companies that helped them thought so too  they are not sitting around twirling their moustaches in sinister fashion plotting the the downfall of the world.

it’s far worse.

they honestly believe that they are the anointed whose great wisdom & intellect gives them a right & a duty to tell the benighted masses how to live

they have convinced themselves that calling fascism “antifa” means they are the good guys

but make no mistake, this is an attempt to rule you and it’s showing its true colors now

they, like all despots, believe that they will be benign.

history is not kind to that presumption.

we seem to be at a crossroads.

we can either see this for the power play that it is and seek out new ways to get information and communicate and take back our data and our speech, or we can fall under this spell and become lost in this propagandistic house of mirrors.

search and social media do not have to be like this.

the can be peer to peer, open source, and provide personal agency.

remember that you are not google’s customer, nor twitter’s.

you are their product.

they sell you to their customers.

did you not ask who pays the bills?

but this can change and will change.

the more they adulterate and censor, the more incentive there is to leave their walled gardens and find a better way.

this is going to be the awkward adolescence of internet and social media.

but it needs to happen.

it’s time to grow up.

* * *

Source: @boriquagato

Submitted by Chris Whalen of the Institutional Risk Analyst

Watching the talking heads pondering the next move in US interest rates, we are often amazed at the domestic perspective that dominates these discussions. Just as the Federal Open Market Committee never speaks about foreign anything when discussing interest rate policy, so too most observers largely ignore the offshore markets. Yen, dollar and euro LIBOR spreads are shown below.

Zoltan Pozsar, the influential money-market strategist at Credit Suisse (NYSE:CS), warns that the short-end of the US money markets are likely to be awash in cash over the end-of-year liquidity hump. Unlike the unpleasantness in 2018, for example, we may see instead a surfeit of lending as banks scramble for yield in a wasteland bereft of duration. Would that it were so.

The Pozsar view does not exactly fit well with the rising rate, end of the world scenario popular in some corners of the financial media ghetto. The 10-year note is certainly rising and with it the 30-year mortgage rate. Indeed, Pozsar reminds CS clients that yen/$ swaps are now yielding well-above Treasury yields for seven years. Hmm.

We believe short-term rates will remain low in the US, even as offshore demand for dollars soars. If the 10-year Treasury backs up much further, then we’d look for the FOMC to act on some calls by governors to buy longer duration securities. That is, a very direct and large scale increase in QE and particularly on the long end of the curve.

We expect that Chairman Powell knows that underneath the comfortable blanket of low interest rates lie some truly appalling credit problems ahead for the global economy, the US banking sector and also for private debt and equity investors. We expect the low interest rate environment to drive volumes in corporate debt and residential mortgages, even as other sectors like ABS languish and commercial real estate gets well and truly crushed.

“The pandemic is putting unprecedented stress on CMBS markets that even the Fed is having difficulty offsetting,” writes Ralph Delguidice at Pavilion Global Markets.

“Limited reserves are being exhausted even as rent collection and occupancy levels remain serious issues… Bondholders expecting cash are getting keys instead, and in our view, ratings downgrades and significant losses are now only a formality.”

We noted several months ago that the resolution of the credit collapse in commercial mortgage backed securities or CMBS will be very different from when a bank owns the mortgage. As we discussed with one banker this week over breakfast in Midtown Manhattan, holding the mortgage and even some equity in a prime property allows for time to recover value.

Delguidice rightly identifies that “extend and pretend” by consuming reserves is the first and, frankly, wrong strategy. The agencies have flagged this tendency since the summer, but now comes the reckoning. When the cash is exhausted, then comes the actual default and foreclosure. Meanwhile, no funds are left for maintenance of the asset.

With CMBS, the “AAA” tranche is first in line, thus the seniors have no incentive to make nice with the subordinate investors. The deals will liquidate, the property will be sold and the junior bond investors will take 100% losses. But as Delguidice and others note with increasing frequency, this time around the “AAA” investors are getting hit too. More to come.

Meanwhile, over in the relative calm of the agency collateral markets, large, yield hungry money center banks led by Wells Fargo & Co are deploying liquidity to buy billions of dollars in delinquent government loans out of MBS pools.

The bank buys the asset and gives the investor par, with a smidgen of interest. Market now has more cash, but less cash than it had before buying the mortgage bond in the first place. Why? Because it likely took a loss on the transaction. Buy at 109. Prepayment at par six months later. You get the idea.

In fact, if you look at the Treasury yield curve, rates are basically lying flat along the bottom of the chart out to 48 months. Why? Because this nice fellow named Fed Chairman Jerome Powell, along with many other buyers, are gobbling up the available supply of risk free assets inside of five years.

Spreads on everything from junk bonds to agency mortgage passthroughs are contracting, suggesting that the private bid for paper remains strong. When you look at the fact that implied valuations for new production MBS and mortgage servicing rights (MSR) have been rising since July, this even though prepayment rates are astronomical, certainly implies that there is a great deal of cash sitting on the sidelines.

Remember that the price of an MSR is not just about cash flows and prepayments, but it’s also about default rates and the relationship with the consumer. We described in our last missive for The IRA Premium Service (“The Bear Case for Mortgage Lenders”), that a rising rate environment could generate catastrophic losses for residential lenders, particularly in the government loan market. We write:

“For both investors and risk professionals operating in the secondary mortgage market, the next several years contain both great opportunities and considerable risks. We look for the top lenders and servicers to survive the coming winter of default resolution that must inevitably follow a period of low interest rates by the FOMC. The result of the inevitable consolidation will be fewer, larger IMBs.”

Don’t get distracted by the rising rate song from the Street. We don’t look for short or medium term interest rates to rise in the near term or frankly for years. Agency 1.5% coupons “did not find a place in the latest Fed’s purchase schedule. It is possible (they) are included in the next update,” writes Nomura this week. This seems a pretty direct prediction of lower yields. But as one veteran mortgage operator cautions The IRA: “Not just yet.”

We don’t think that the Fed is going to take its foot off the short end of the curve anytime soon, in part because the system simply cannot withstand a sustained period of rising rates. In fact, we note that our friends at SitusAMC are adding 1.5% MBS coupons to forward rate models this month. But that does not necessarily mean that mortgage rates will fall any time soon.

Some worry about whether there will ever be liquidity in 1.5% coupon agency MBS, but fear not. We’ve seen this movie. If you build that Ginnie Mae or conventional mortgage bond with a 1.5% coupon, Jay will come and buy it. And he’ll remit the interest earned on that mortgage bond to the US Treasury, less the Fed’s operating expenses of course.

We hear that the Fed of New York has bought a few 1.5s in recent days, but supply is sorely lacking. You see, the mortgage industry is not quite ready to print many new 1.5% MBS coupons and will not do so anytime soon. As the chart above suggests, mortgage rates are in fact rising. Why? Is not the FOMC in charge of the U.S mortgage market?

No, the market rules. Today you can make more money selling a new 1-4 family residential mortgage into a 2.5% coupon from Fannie, Freddie or Ginnie Mae at 105. You book a five point gain on sale and are therefore a hero. And a year from now, after the liquidity does in fact migrate down to 1.5s c/o the beneficence of the FOMC, you can again be a hero.

Specifically, you call up that same borrower and refinance the mortgage into a brand new 1.5% Fannie, Freddie or Ginnie Mae at 105. You take another five point gain on sale. Right? And who paid for this blessed optionality? The Bank of Japan, Peoples Bank of China, and PIMCO, among many other fortunate global investors.

These multinational holders of US mortgage bonds may not like negative returns on risk free American assets, but that’s life in the big city. And thankfully for Chairman Powell, it’s not his problem. Many years ago, a friend in the mortgage market said of loan repurchase demands from Fannie Mae: “What do you want from me?”

Summary:

• Global daily cases just shy of record high
• Russia reports record cases
• Pelosi warns on vaccines
• Iran imposes new restrictions

* * *

Earlier this week, the Chinese Communist Party joined a WHO vaccination global effort – remember when President Xi promised to vaccinate the developing world a penance for unleashing SARS-CoV-2? – that is working, with the support of the Gates Foundation, to provide vaccines to every person who needs one.

During Friday press briefing in Geneva, WHO Director-General Dr. Tedros urged the west to contribute to the effort to “vaccinate all in all countries, not all in some countries,” arguing that “sharing and solidarity is in the interest of each and every nation on earth”.

Globally, the world is reporting record numbers of daily cases. On Friday, the world reported 360,685 new cases, missing the record tally from Sept. 24 by 1,000 cases.

Despite the surge in infection, deaths have remained relatively steady since May. Yesterday, Johns Hopkins counted 6,163 deaths.

For the past four months, Dr. Fauci and a legion of scientists in Europe and elsewhere have warned about an impending surge in deaths as the northern hemisphere enters the winter months, even as all available evidence seems to suggest that improving treatment strategies have helped to permanently reduce the virus’s mortality. Again on Saturday, Bloomberg published a story entitled “Covid’s Comeback Is Bigger But Less Deadly, at Least for Now”.

The story included a handy chart showing how the locus of the global outbreak has shifted since March.

In Europe, public health officials have largely blamed reckless young people packing into parties and illegal dance clubs, while families who traveled during the summer months “let down their guard”. Yesterday, in France, daily cases surged to a new record.

France expanded localized COVID-19 rollbacks to more cities after Marseille and Paris both saw their alert levels raised to the max as pubs and restaurants and other non-essential businesses were closed. Over the past month, France has reported 340,000 new cases, roughly half its cumulative total, though deaths have risen by less than 1,800, a rate of roughly 0.5%. Many of the hotspots from the Spring are seeing a second wave, while countries that saw only muted outbreaks in the spring – Poland, and the Czech Republic, which have reported record numbers in recent days as their outbreaks spiral out of control – have seen numbers soar for the first time

As the CDC reaffirmed in the latest update to its guidance, the virus is most often spread in poorly ventilated areas indoors. As the flu season kicks in, doctors are worrying about the impact on people cross-infected with COVID-19 and the flu.

“It is a problem that we know this thing gets transmitted by going inside, with large crowds, for prolonged periods,” said Ezekiel Emanuel, vice provost for global initiatives at the University of Pennsylvania. “And the winter months are all about going inside for prolonged periods of time.”

Across the US, many fear what might happen as college students head home for the Thanksgiving holiday next month, as campuses have become veritable petri-dish breeding grounds for the virus (mortality has been practically zero, fortunately). However, even in Europe, where infections in some hot spots matched or surpassed levels from the spring, largely thanks to a surge in testing, daily deaths remain roughly 1/10th their levels from the spring. The UK has increased testing 10-fold from the spring, when only the symptomatic were likely to be tested.

Here’s some more COVID-19 news from Saturday morning and overnight:

Nancy Pelosi has said that the US should not approve a Covid-19 vaccine based on data from British trials, amid fears that the Trump administration is planning to rush out an inoculation before election day. The Democratic speaker of the House of Representatives on Friday cast doubt on the British system for testing and approving medicines, further politicising the race to develop a vaccine for Covid-19 (Source: FT).

Russia’s coronavirus cases rose by 12,846 on Saturday, a new daily record since the start of the outbreak early this year. The latest figures pushed the overall total number of infections in the country to 1,285,084. The previous record of 12,126 new cases was registered on Friday. Russia’s coronavirus crisis centre said 197 more deaths were confirmed in the last 24 hours, bringing the official death toll to 22,454 (Source: AJ).

Iran has imposed additional restrictions for capital Tehran and set penalties for people flouting the rules as coronavirus cases continue to surge in the country. A partial shutdown implemented in Tehran a week ago was extended on Saturday until October 16 as the authorities classified the city as red in a colour-coded scale denoting the severity of the pandemic (Source: AJ).

In a rather stunning admission of malarkey, Joe Biden told a group of so-called ‘reporters’ this week, “You’ll know my opinion on court-packing when the election is over.” 

But, we already know Joe’s “opinion” on packing the courts – he thinks it’s a “bonehead idea.”

As David Harsanyi reminds us, via RealClearPolitics, President Franklin Roosevelt revived a Woodrow Wilson plan to arbitrarily place political allies into the courts, one for every judge over 70 years old, which would have meant 50 additional political allies on the federal bench, and six additional Supreme Court justices. Like today’s Democrats, he first softened up the public by attempting to delegitimize the Court — claiming, for instance, that the justices were incompetent geriatric cases incapable of performing their duties. (It is somewhat ironic that the most reliably pro-New Deal justice at the time, Louis Brandeis, was the only octogenarian on the Court.)

In those days, there were still enough politicians who valued the separation of powers to stop him.

Of the 10 members of the Senate Judiciary Committee who signed a document opposing FDR’s scheme, seven were Democrats.

They didn’t merely maintain that FDR was wrong or misguided; they argued that the court-packing plan was an “utterly dangerous abandonment of constitutional principle,” a transparent scheme to punish justices whose opinions diverged from the executive branch, and “an invasion of judicial power such as has never before been attempted in this country.”

If enacted, the senators wrote, court-packing would create a “vicious precedent which must necessarily undermine our system.” They concluded that the plan “should be so emphatically rejected that its parallel will never again be presented to the free representatives of the free people of America.”

FDR, whose popularity would plummet to historic lows after the court-packing threat, ultimately went on to appoint eight justices, and to largely have his way in fundamentally changing American governance. But he was prevented from destroying the Court as an institution, and modern-day Democrats are now seeking to finish that job.

Wit that as background, fast forward to a 1983 Senate Judiciary Committee hearing on whether to allow President Ronald Reagan to replace members of the Commission on Civil Rights.

Specifically, as The Washington Free Beacon detailed, Biden opposed the nominated commissioners not because he viewed them as unqualified, but because he thought Reagan’s takeover of the commission would damage its legitimacy.

He compared it to Roosevelt’s court-packing push, which he called a “terrible, terrible mistake.”

“President Roosevelt clearly had the right to send to the United States Senate and the United States Congress a proposal to pack the Court,” Biden said during the hearing. “It was totally within his right to do that—he violated no law, he was legalistically absolutely correct.”

“But it was a bonehead idea. It was a terrible, terrible mistake to make, and it put in question, for an entire decade, the independence of the most significant body—including the Congress in my view—the most significant body in this country, the Supreme Court of the United States of America.”

In his own words…

Of course, the real question is – especially given Pelosi’s unveiling of a 25th Amendment-seeking panel this week – will a President Joe Biden have anything to do with the decision to pack the courts as he is ousted for a leftist revolution and one of the gravest threats to the constitutional order in modern American history?

“We are on the verge of a crisis of confidence in the Supreme Court,” Kamala Harris said last year following the Justice Kavanaugh hearings.

“We have to take this challenge head on, and everything is on the table to do that.”

As Andrew Wynne ominously concluded, forgive us if we’re rightfully skeptical that Biden will stand up to the radical left when they ram through Congress an institution-crumbling, court-packing scheme.

Authored by Lance Roberts via RealInvestmentAdvice.com,

There is currently much hope for another fiscal stimulus package to be delivered to the economy from Congress. While President Trump recently doused hopes of a quick passage, there a demand for more stimulus by both parties. While most hope more stimulus will cure the economy’s ills, it will likely disappoint due to the “2nd derivative effect.”

Let me explain.

In March, as the economy shut down due to the pandemic, the Federal Reserve leaped into action to flood the system with liquidity. At the same time, Congress passed a massive fiscal stimulus bill that expanded Unemployment Benefits and sent checks directly to households. As shown in the chart below of the upcoming expected GDP report, it worked. (We estimated GDP to increase by 30% from the previous quarter.)

That expected 30% surge in the third quarter, and surging stock market to boot, directly responded to both the fiscal and monetary stimulus supplied. The chart below adds the percentage change in Federal expenditures to the chart for comparison.

The spike in Q2 in Federal Expenditure was from the initial CARES Act. In Q1-2020, the Government spent $4.9 Trillion in total, which was up $85.3 Billion from Q4-2019. In Q2-2020, it increased sharply, including the passage of the CARES Act. Spending for Q2 jumped to $9.1 Trillion, which as a $4.2 Trillion increase over Q1-2020.

Those are the facts as published by the Federal Reserve. From this point forward, we have to start making some estimates and assumptions.

Assuming CARES-2

During Q3-2020, not much happened as the Government was fighting over the next round of stimulus. As such, spending fell back to a more normal level of increase. However, if we assume that a second CARES Act is passed some time in Q4, and we apply a price tag of $2 Trillion to the package, it would represent a roughly 25% increase in Government spending over Q3-2020.

Such is the “second derivative” effect we mentioned previously.

“In calculus, the second derivative, or the second-order derivative, of a function f is the derivative of the derivative of f.” – Wikipedia

In English, the “second derivative” measures how the rate of change of a quantity is itself changing.

I know, still confusing.

Let’s run an example:

As Government spending grows sequentially larger, each additional round of spending will have less and less impact on the total. Going back to 2016, not including the CARES Act, the Government increased spending by roughly $50 billion each quarter on average. If we run a hypothetical model of Government expenditures at $50 billion per quarter, you can see the issue of the “second derivative.”

In this case, even though Federal expenditures are increasing at $50 Billion per quarter, the rate of change declines as the total spending increase.

More Leads To Less

The next chart shows how the “second derivative” is already undermining both fiscal and monetary stimulus. Using actual data going back to the Q1-2019, Federal Expenditures remained relatively stable through Q1-2020, along with real economic growth. However, in Q2-2020, with our estimates for Q3 and Q4, Federal Expenditures will almost double. However, the economy will not return to positive growth.

The chart below shows the inherent problem. While the additional fiscal stimulus may help stave off a more in-depth economic contraction, its impact becomes less over time.

However, this is ultimately the problem with all debt-supported fiscal and monetary programs.

Still In A Recession

As I stated above, even assuming a $2 Trillion fiscal relief package by the end of October, which I suspect may not come, the relative impact on GDP growth will fall short of expectations.

Take a look at the next chart. These are our current estimates for GDP growth over the next 3-quarters. These estimates dovetail reasonably nicely with mainstream consensus.

At first glance, it appears that after one negative quarter of GDP, the economy is well back on track to normalcy. However, such an assumption would be incorrect. Given that we measure economic growth on an annualized basis, the three-quarters of positive change following such a steep decline still leaves the economy in a recession.

Yes, add a couple of more quarters of economic growth, and you will eventually be back into positive territory. However, therein lies an even bigger problem.

Dollars Of Growth Deteriorate

As noted above, it requires increasing levels of debt to generate lower rates of economic growth. The chart below shows the previous and estimated CARES Acts and their impact on GDP growth.

To understand this better, we can view it from the perspective of how many dollars does it require to generate $1 of economic growth. Following the economic shutdown, when economic activity went to zero, each dollar of input had a more considerable impact as the economy restarted. However, in Q4, economic activity has already recovered and begun to stabilize at a slightly lower level than seen previously.

High-frequency data like credit card spending and main-street activity indicators tell us this is the case.

Given that stabilization of activity, it will require more dollars to generate economic growth in the future. As shown, it will require $8.80 of debt-supported expenditures to create $1 of economic growth.

Here is the exciting part. That is NOT a new thing. As I discussed just recently “The One-Way Trip Of American Debt:”

The “COVID-19″ crisis led to a debt surge to new highs. Such will result in a retardation of economic growth to 1.5% or less, as discussed recently.Simultaneously, the stock market may rise due to massive Fed liquidity, but only the 10% of the population owning 88% of the market benefits. In the future, the economic bifurcation will deepen to the point where 5% of the population owns virtually all of it.

As I noted previously, it now requires $7.42 of debt to create $1 of economic growth, which will only worsen as the debt continues to expand at the expense of more robust rates of growth.

You Can’t Use Debt To Create Growth

As noted above, more debt doesn’t lead to stronger rates of economic growth or prosperity. Since 1980, the overall increase in debt has surged to levels that currently usurp the entirety of economic growth. With economic growth rates now at the lowest levels on record, the change in debt continues to divert more tax dollars away from productive investments into the service of debt and social welfare.

Another way to view the impact of debt on the economy is to look at what “debt-free” economic growth would be. In other words, without debt, there has actually been no organic economic growth.

The economic deficit has never been greater. For the 30 years from 1952 to 1982, the economic surplus fostered a rising economic growth rate, which averaged roughly 8% during that period. Such is why the Federal Reserve has found itself in a “liquidity trap.”

Interest rates MUST remain low, and debt MUST grow faster than the economy, just to keep the economy from stalling out.

The deterioration of economic growth is seen more clearly in the chart below.

From 1947 to 2008, the U.S. economy had real, inflation-adjusted economic growth than had a linear growth trend of 3.2%.

However, following the 2008 recession, the growth rate dropped to the exponential growth trend of roughly 2.2%. Unfortunately, instead of reducing outstanding debt problems, the Federal Reserve provided policies that fostered even greater levels of unproductive debt and leverage.

Coming out of the 2020 recession, the economic trend of growth will be somewhere between 1.5% and 1.75%. Given the amount of debt added to the overall system, the ongoing debt service will continue to retard economic growth.

A Permanent Loss 

As noted by Zerohedge, the permanent loss in output in the U.S. was shown by BofA previously. The bank laid out the pre-COVID trend growth and compared it to is base case recovery.

Such aligns closely with our analysis shown above. Given the permanent loss in output and rising unproductive debt levels, the recovery will be slower and more protracted than those hoping for a “V-shaped” recovery. The “Nike Swoosh,” while more realistic, might be overly optimistic as well.

However, this is the most critical point.

The U.S. economy will never return to either its long-term linear or exponential growth trends.

Read that again.

Spit-Balled Solutions

If you read between the lines, policymakers are “spit-balling” solutions and making potentially erroneous monetary policy decisions on unreliable data. However, given Central Banks’ only policy tool is more liquidity, it is a “shoot first, ask questions later” response. 

The problem is those policy measures continue to erode economic prosperity. Such is evident when the CBO’s own long-term economic growth potential projections fall below 2%.

Due to the debt, demographics, and monetary and fiscal policy failures, the long-term economic growth rate will run well below long-term trends. Such will ensure the widening of the wealth gap, increases in welfare dependency, and capitalism giving way to socialism.

“So for the Federal Reserve to intervene and support those asset prices, is creating a little bit of moral hazard in a sense you’re encouraging people to take on more debt.” – Bill Dudley

What policymakers haven’t come to grip with is the “second derivative” effects of more debt.

At some point, you have to realize that you can’t get out of a “debt hole” by piling on more debt.

Eventually, you have to stop digging.

In what is likely anybody’s nightmare scenario, Robinhood users who have experienced theft from their accounts say they have nobody at the company to call and are not being attended to in a timely fashion, a new report from Bloomberg says. 

Soraya Bagheri is one such example. She had 450 shares of Moderna liquidated from her account and saw that $10,000 in withdrawals were pending. She tried to alert Robinhood, but instead got an email back saying the company would investigate and respond within “a few weeks”. In the interim, her money is gone. 

The article notes that at least 4 other users have had similar situations and, because Robinhood doesn’t have an emergency phone number to call, users had to sit back and “watch helplessly as their money vanished”. 

Bagheri says she contacted the SEC and FINRA alongside of three other users who had a similar problem. Two of the four users have said that the SEC has sought more information from them. 

Another user, Pruthvi Rao, said his Netflix shares were liquidated from his account and $2,850 was withdrawn from it. He says he has sent “more than a dozen” email to Robinhood and has tried to even message some of the brokerage’s executives on LinkedIn. His account was frozen by Robinhood due to the activity and has since been reinstated. 

Rao said: “I’m in tremendous mental stress right now because this is all of my savings.”

From Robinhood, he got a boilerplate response: “We understand the sensitivity of your situation and will be escalating the matter to our fraud investigations team. Please be aware that this process may take a few weeks, and the team working on your case won’t be able to provide constant updates.”

Even more interesting is that Rao says he had set up two-factor authentication on his account and Begheri said she was “certain” she had a unique password for her Robinhood account. 

Their accounts showed their money went to a receiver at Revolut, which is a money transfer and exchange app. “Revolut has been made aware of the issue and is investigating urgently,” the app said.

Bill Hurley, who lost $5,000 from the same type of hack, simply said Robinhood has “had more than enough time to deal with this”. 

Mark Arena, CEO of security firm Intel 471, said: “Unfortunately, it’s a common occurrence that online accounts of monetary value are bought, sold and traded by cyber-criminals. This shows the importance of people practicing common information-security hygiene such as not re-using the same password across multiple accounts and enabling two-factor authentication.”

Robinhood also issued a statement to Bloomberg: “A limited number of customers appear to have had their Robinhood account targeted by cyber criminals because of their personal email account (that which is associated with their Robinhood account) being compromised outside of Robinhood. We’re actively working with those impacted to secure their accounts.”

“They don’t have a customer service line, which I’m quite shocked about,” Bagheri concluded.

Via InternationalMan.com,

Doug Casey’s Note: I consider Shan’s article – as radical sounding as some may think it is – to actually be conservative. For one thing, gold at $35 in 1971 was artificially low, suppressed in price for years by the government. And in addition to M-1 and M-2, there are tens of trillions of dollars held outside the US that will come home to roost if we have the Misesian “Crack-Up Boom” that he discusses. It’s an important point that’s not mentioned very often. But it will be a real factor in the not-so-distant future.

By Shanmuganathan Nagasundaram

As spot gold prices zipped past $2,000 per ounce recently, it portended a historical moment that implies a lot more than a nice round number on the price of a commodity.

As I will explain, what lies ahead is a disorderly change in the world’s monetary system and one that will eventually bring back gold as the lynchpin around which world commerce functions. For more than 100 years, gold was viewed as a barbaric relic—but we will see gold rise like a phoenix from the ashes of the US dollar and other fiat currencies.

Many commentators have pointed out the similarities between what is happening today and what occurred during the stagflationary seventies (1971–1981) and the Great Depression of the thirties (1929–1946). But what we will experience is a combination of the two.

Consumer price inflation is going to be much higher when compared to the 1970s, and the GDP contractions are going to be more pronounced than what we witnessed during the 1930s. In fact, the 2019 US GDP of $21.4 trillion will not be eclipsed, in real terms, at least for another decade, if not for a much longer time span.

What lies ahead for the US economy is not a V- or a W- or an L-shaped recovery but a long, downward-inclined staircase which could lead to an abyss. With our current trajectory, that is not only a possibility but the most probable outcome. Barring dramatic changes to monetary and fiscal policies—which is the exact opposite of what has been pursued in a bipartisan manner over the last few decades—the US dollar would not only lose its status as the world’s reserve currency but would more than likely meet the fate of the Continental.

The Misesian “Crack-Up Boom”

The underpinnings of the above scenario can be best described by the “crack-up boom” that Ludwig Von Mises postulated. As he explains in his book, Human Action:

“[I]f once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that, consequently, the prices of all commodities and services will not cease to rise, everybody becomes eager to buy as much as possible and to restrict his cash holding to a minimum size. For under these circumstances, the regular costs incurred by holding cash are increased by the losses caused by the progressive fall in purchasing power.”

In other words, there are two specific pre-conditions for an economy to undergo a crack-up boom:

1. Create an excessive increase in the monetary base toward the end of a normal business cycle in order to sustain boom-time malinvestments (i.e., asset bubbles).

2. As these asset bubbles reach a point of an impending implosion, the central banks have to choose between the two stark alternatives:

   1. Refrain from the creation of further credit leading to a disorderly fall in asset prices through business bankruptcies resulting in a disinflationary recession.

   2. Accelerate the expansion of the money supply in order to sustain the business cycle and delay the recession. In the face of this continuous credit expansion, consumers’ inflation expectations accelerate to a point where the price rate increases outstrip the rate of the central bank’s monetary expansion. This necessitates an even greater use of the monetary spigots until the end stage of hyperinflation makes the currency worthless.

The Crack-Up Boom is no longer a forecast. In fact, the US Fed Crossed the Rubicon of choosing Option B (i.e., accelerate the expansion of money supply) when it started the rate cuts in July 2019 (referred to as “insurance cuts” by Powell) and QE4 (“not QE” according to Powell). All of this happened pre-COVID. All that COVID did was provide an impetus to the expansion. COVID provided a very academically convenient cover.

Had COVID really been a giant pandemic (and I do not subscribe to this view at all– but that’s a different discussion altogether) as is being claimed by the WHO, CDC, and governments around the world, then the appropriate response should have been a contraction of the money supply not an expansion of the money supply. It is only under the perverse perceptions of Keynesian economics that every issue in the world requires monetary easing.

So what are the signs that prove we are living through a Crack-Up Boom? By definition, it would be a steep expansion in the money supply. But even the bond vigilantes no longer seem interested in tracking that number these days. The most likely mainstream indicator is going to be the recognition of a double-digit Misery Index (inflation + unemployment) within a 12-to 18-month window. Measured accurately, both inflation (i.e., “16% trimmed-mean CPI” instead of CPI or core-CPI) and unemployment (“U6” instead of “U3”) would each likely be in double digits in that time window. The Fed has been clamoring for inflation for the last few years, and the markets are about to give them a poignant reminder of “Be Careful What You Wish For.”

US Fed in Full Throttle

If ever one was dismissive about the possibility of a Crack-Up Boom, a glance at the money supply chart would eliminate any lingering doubt. From its inception in 1913 to the beginning of 2020, the Fed’s M1 had reached $4 trillion dollars. Before the end of this year, it will likely hit $6 trillion dollars. That means 50% of the money it has created in all of its 107-year history would be created in just this calendar year.

Below is the history of M1 growth since the creation of the Fed and the acceleration over the last few months:

1st trillion—80 years (1913–1993)

2nd trillion—18 years (1994–2011)

3rd trillion—5 years (2012–2016)

4th trillion—4 years (2017–2020)

5th trillion—4 months (Feb 2020–May 2020)

While the COVID crisis played a large role in this acceleration, now that the bubble has been pricked, there is no going back. The dominoes that are lined up—housing bubble 2.0, auto bubble, student loan bubble, NASDAQ 2.0 bubble, junk bond bubble—will ensure constant infusions of monetary heroin by the Fed to keep the zombie economy afloat. The number of bailouts that will be required over the next few months pretty much guarantees that the M1 growth will stay on the current trajectory. This is a bipartisan issue. It makes no difference whether Trump or Biden becomes president in 2021.

Is Gold Cheaper at $2000 an ounce in 2020 than it was at $35 in 1971?

Fundamental to this comparison is the recognition that gold is money and that the Fed’s notes that circulate today have value only because they represent a claim against money. For a relative comparison of gold prices between today and 1971, we can ignore the various technical factors that ought to be used to value gold—like, should we use M1 or M2, or what percent backing should be considered?

If we compare the money supply ratios M12020 / M11971 or M22020 / M21971, we can see that these are up about 30 times. Gold prices, on the other hand, are up about 60 times, so it looks relatively fairly valued. But what this comparison ignores are some critical differences between then and now—i.e., the future direction of money supply growth, the political will to tolerate higher interest rates, and a relatively strong US economy that could afford the higher interest rates.

• Between 1971 and 1981, the money supply in the US doubled. We know for sure, however, that the growth in the money supply between 2020 and 2030 is going to be substantially higher than doubling. For starters, M1 has grown by about 35% in the last few weeks.

• When Paul Volcker set short-term interest rates at 20%—even while his effigies were burned on the streets—Reagan unequivocally backed him. Compare that to today, in which Trump threatened to remove Powell for attempting to maintain interest rates at only 2%.

• The US economy today is floating on a number of asset bubbles—equities, housing, and bonds. All these bubbles not only need ultra-low interest rates, but they also need continuous infusions of capital to prevent them from bursting. So, it is impossible to raise rates to even 1% in the foreseeable future without causing a complete implosion.

If we account for these factors, one could make a rational claim that gold at $2,000 an ounce in 2020 is cheaper than $35 an ounce in 1971.

Regarding the valuation of gold itself, today’s fractional reserve banking system makes the old, but important, distinctions between demand (checking) and time (savings) deposits quite fungible. Therefore, whether M1 or M2 has to be backed by money becomes a debatable issue. Besides, historically, a 40% backing of currency in circulation by money provided a “relatively” stable monetary system. Of course, it can be rightfully argued that anything less than a 100% backing constitutes inflation by definition, which is theft.

Let’s take the case of M1, which is about $5 trillion. If this were to be backed 100%, then the 261.5Moz of gold held by the US government would have to be valued at about $20,000/ounce or about 10x the current price. Depending on the various combinations of percentage backing and M1/M2 for our calculations, we could get a multiple of anywhere between 4 and 30x.

So, at a minimum, gold prices have to go up at least 4x. Of course, the biggest tailwind behind gold prices is the future inflation that will be created by the Fed. It’s conservative to conclude that the money supply will go up only 5x during the 2020 to 2030 decade (or about 18% CAGR). In the context of recent events, such a conservative assumption should be considered naïve, and even bordering on stupidity.

What combination would I use to value gold? 100% backing of M1 would be the base case scenario, in my opinion. What I can safely say is that the world will witness at least a 5-digit price of gold this decade, in which the first digit will not be “1”.

Gold prices today mean a whole lot more than just a number. They indicate a tumultuous future of monetary breakdown with tremendous social and economic upheavals.

*  *  *

The recent breakout in the price of gold is just the beginning. Gold is set to skyrocket in the months ahead. That’s why legendary speculator Doug Casey just released this urgent new video which outlines exactly how he is positioned to profit from a rare opportunity, and how you could join him in making enormous profits. Even a small amount of money put into the right stocks today could deliver life-changing rewards. Click here to watch it now.

North Korea held a rare predawn military parade on Saturday, marking the 75th anniversary of the country’s ruling party, reported Reuters.

Tens of thousands of spectators waved mini-North Korean flags and cheered when the country’s leader, Kim Jong Un, emerged from a building between Friday midnight and the early hours of Saturday morning to give a speech. 

While much of Kim’s speech has yet to be translated, The Guardian says Kim told the audience he was grateful “not a single person” in the county has contracted COVID-19. 

South Korea’s joint chiefs of staff said “large crowds and equipment” had been mobilized to the Pyongyang region ahead of the event. 

“There was a sign that North Korea conducted a military parade this morning at Kim Il Sung Square, mobilizing large scale equipment and personnel,” it said in a statement.

“South Korea and U.S. intelligence authorities are closely monitoring developments, including for the possibility that it was the main event.”

Outside observers (N.K. Pro Analyst Ankit Panda and Oryx analyst Joost Oliemans, as well as N.K. News journalists Chad O’Carroll and Jeongmin Kim), streamed the event with commentary on Saturday. They said North Korea unveiled the latest weapons that would concern Washington and its allies in the region. 

The event was a show of force ahead of the U.S. presidential elections on Nov. 03, as denuclearization with the Trump administration has stalled. 

Reuters said a “previously unseen new intercontinental ballistic missile (ICBM) was at a military parade in Pyongyang on Saturday.” 

“Edited footage shown on state television showed an ICBM on a transporter vehicle with at least 22 wheels, larger than anything previously displayed by the nuclear-armed country. It was the first time since 2018 that North Korea has shown ICBMs at a military parade,” Reuters said. 

Reuters also noted “commercial satellite imagery” in recent weeks has shown thousands of North Korean soldiers mobilizing in the area.

The last time North Korea broadcasted a military parade was in 2017 when President Trump and Kim were at each other’s throats. 

A shaky temporary ceasefire appears to possibly be holding between Armenia and Azerbaijan which began at noon local time (08:00 GMT), however BBC reports that each side has already accused the other of breaking it after barely an hour in.

The truce came in to being following ten hours of Russia-sponsored talks in Moscow after which the Armenian and Azerbaijani foreign ministers signed a joint document initiating the ceasefire to allow for an exchange of prisoners and recovery of bodies in the Nagorno-Karabakh region where fighting has raged since late last month.

“A ceasefire is declared to begin on October 10 at 12:00 with the humanitarian aim of exchanging prisoners of war and other captured persons as well as to exchange bodies of victims with the facilitation of the International Committee of the Red Cross and in line with its regulations,” Russian Foreign Minister Sergei Lavrov announced early on Saturday.

Multiple hundreds have died and thousands displaced after war in the breakaway ethnic Armenian region, but which is internationally recognized as within Azerbaijan’s borders, began on September 27. 

Lavrov further indicated that the temporary truce will lead to the two sides immediately engaging in “substantive” talks, with the ceasefire expected to hold only as long as it takes for the Red Cross and other aid workers to recover bodies. 

One of Armenia’s sticking points which is said to be making talks difficult is its demand for regional and international recognition of Nagorno-Karabakh as an independent state.

Iran welcomes cessation of hostilities in Nagorno-Karabakh as step toward peace.

We urge our neighbors 🇦🇿 and 🇦🇲 to engage in substantive dialogue based on respect for international law and territorial integrity.

We appreciate constructive efforts of our Russian neighbors.

— Javad Zarif (@JZarif) October 10, 2020

International observers hailed the pause in fighting as a major development in the right direction, and encouraged Russian efforts, specifically Iran which shares a border with both countries and has a very large ethnic Azeri population, as well as a sizeable minority of Armenians in northern Iran.