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It was just a little more than a month ago that we wrote that Elon Musk claimed he would be selling “almost all” of his physical possessions and had put his houses on the market. 

Now, he’s found a buyer for his Bel-Air mansion: a Chinese billionaire who seems to be happy forking over $29 million to Musk for the home. The buyer is tied to billionaire William Ding, according to Business Insider, who is the founder and CEO of NetEase.

Ignoring the fact that it’s odd for Musk to be offloading his assets at the same time Tesla’s valuation is at, or near, all time highs of ~$185 billion, Musk was able to cash out with a $12 million profit on this home (which he bought for $17 million 2012) in the midst of a real estate market that is enduring chaos from both the supply and the demand side as a result of the coronavirus pandemic. 

Even stranger was that we took the time to note in our early May writeup that according to Bloomberg: “Fewer buyers were coming from China, Russia and the Middle East amid international tensions, and limits on state and local tax deductions dampened the appeal of owning California homes for wealthy U.S. buyers.” 

So not only did Musk find himself a buyer from China, he found one that was willing to pay him a $12 million premium on his house to what it cost in 2012.

Recall, we also noted in 2019 that Musk took out $61 million in mortgages on five of his properties in California. Four of these properties were in the Bel Air neighborhood.

The loans were signed off on by Morgan Stanley and represented $50 million in new borrowing for Musk at the time. One loan was a refinancing on a 20,200 plus sq. foot property that Musk purchased in 2012 for $17 million. The initial $10 million loan he took on the property had turned into a $19.5 million debt, with a monthly payment of about $180,000.

Among the new revelations and interesting tidbits found in John Bolton’s now leaked pre-published edition of “The Room Where It Happened: A White House Memoir,” is that President Trump was said to be prepared to endorse an Israeli preemptive strike on Iran’s nuclear sites.

In a section which describes the “elusive search” for an Arab-Israeli peace deal, Bolton writes that Trump told him at a moment of increased Israeli concerns over Iran’s nuclear development: 

“You tell Bibi that if he uses force, I will back him. I told him that, but you tell him again.”

Though the significant revelation has barely made a dent in US media, it generated multiple headlines in Israel, where Prime Minister Benjamin Netanyahu has long held out the ‘option’ of a preemptive attack on Iranian nuclear facilities. 

But Israel’s political and defense establishment would likely never sign onto such a huge and aggressive military ‘first strike’ action without first securing Washington’s backing. Bolton’s book essentially says Tel Aviv has it under Trump. The former national security adviser even boasted he pushed a ‘military solution’ on Iran.

This as Israel perceives Iran is bent on developing nukes despite Tehran officials long assuring they are only interested in peaceful nuclear energy development. 

Oh no!! The pdf of Bolton’s book got leaked and people can download it and read it on the phones or iPads! That would mean he doesn’t get a royalty!! Oh no! The Room Where It Happened – John Bolton.pdf – Google Drive https://t.co/K7XgcQ63qT

— Ayelet Waldman (@ayeletw) June 21, 2020

In the section, which comes early in the book, Bolton reveals the following conversation with the president at the White House: 

“On Iran, I urged that he press ahead to withdraw from the nuclear agreement and explained why the use of force against Iran’s nuclear program might be the only lasting solution. ‘You tell Bibi [Israel’s Prime Minister Benjamin Netanyahu] that if he uses force, I will back him. I told him that, but you tell him again,’ Trump said, unprompted by me.” 

More recently Netanyahu has also claimed a ‘green light’ from the US administration to annex parts of the West Bank, including the Jordan Valley.

In related sections in Bolton’s book, various Syria conversations with Trump and among his security team are revealed, including details of chemical weapons incidents, the Kurds, Russian intervention in Syria, Turkey policy, and ‘Iranian expansion’. Some crucial sections from the book can be seen here compiled at the following Reddit thread.

NPR has altered an article after they were busted using a misleading photo of a ‘vehicle ramming’ in Louisville to make the claim that ‘right-wing extremists’ are targeting protesters with cars.

Here’s what actually happened – the driver of the car, a woman with dreadlocks, was attacked by the ‘peaceful’ protesters, one of whom reportedly pulled a gun on her – and another who was struck as she accelerated to escape:

Here’s a fuller video of what you’re calling a “right-wing extremist attack” … a driver is harassed by a group of people, tries to get away, is then attacked by a larger group… and uses their vehicle to defend themselves and get away.

This story is leftist bullshit. pic.twitter.com/771gEebiqg

— Tim Young (@TimRunsHisMouth) June 21, 2020

The driver of the vehicle came forward and won’t face charges, while two of the protesters have been arrested.

The incident near 6th and Liberty streets during the Wednesday morning rush was captured on a real-time crime camera.

Police said protesters had blocked the intersection, standing in front of the woman’s car with a megaphone.

During a verbal altercation between the driver and the protesters, someone ripped out one of the driver’s dreadlocks.

When someone pulled a gun, the driver sped off and struck a protester.

When she stopped at a red light a block later, someone pointed a gun at her.

Police said that man was 21-year-old Darius Anderson, who allegedly passed the gun off to 19-year-old Brioanna Richards.

Both are charged with rioting, disorderly conduct and obstructing a highway. –WAVE3

NPR deleted their tweet and changed the photo in the article to a 3-year-old image of the Charlottesville vehicle ramming.

The article is still up, but they changed the picture to Charlottesville… because that’s all they have.https://t.co/OtwCFz1MRl

— Tim Young (@TimRunsHisMouth) June 21, 2020

So – while NPR claims at least ’50 vehicle-ramming incidents’ since late May, and tried to pass off a photo of a victim fleeing a potentially deadly situation, the liberal news network was unable to find a single photo of a recent ramming incident by ‘said extremists.’

Note: A previous version of this post and story included a photo of a protester being struck by a car in Louisville, Kentucky. The photo, chosen by editors, does not appear to be an example of the assaults described in the story, and has been replaced. pic.twitter.com/mDIzyoLmPO

— NPR (@NPR) June 21, 2020

Authored by Anthony Mueller via The Mises Institute,

While it is relatively easy to predict that the post-corona economy will suffer from high unemployment, the outlook for price inflation is not so certain. On the one hand, there will be high government deficits and more public debt; on the other hand, given the weak economy, consumers and companies may refrain from taking on new debt and could begin to lower their debt burden.

Monetary Expansion Doesn’t Always Lead to Price Inflation

In contrast to common usage, the correct use of the term “inflation” refers to the money supply. Rising prices are not the cause, but the result of monetary expansion. However, not every rise of the money supply turns into price inflation. It can happen that the so-called price level remains stable when there are drastic shifts in the demand for goods and services that impact differently on their prices. The average will be deceiving when rising and falling prices cancel each other out and when certain goods and service vanish from the statistical basket because prices have risen so much that the demand has collapsed.

Due to the immense disruptions caused by the lockdown of the economy and because of social distancing, fundamental structural changes in business life are going on. More goods and services will be removed from the official price statistics than usual, and for those products that remain in the basket, prices may vary widely.

Problems with Measures of Price Inflation

Even more than in the past, the statistics of the price index will send wrong signals about the extent of price inflation. If the prices for some goods rise exorbitantly and, accordingly, there is less demand, they go into the statistical shopping basket with a lower weight, and these goods can drop out completely if they are hardly in demand because they have become too expensive for normal consumers. Even more than in the past, price inflation, measured by the statistical price index, will no longer be a reliable guide for monetary policy—if this has ever been the case.

Inasmuch as modern central banks follow the policy concept of “inflation targeting,” they will lose a reliable compass. Central bankers set the interest rates as if blindfolded.

More than in the past, depending on their personal demand structure, each individual will have a price inflation rate that differs from that of their fellow consumers. Different social groups will not only be affected differently by unemployment, but also by the price changes. The so-called price level stability directive is becoming less and less meaningful as an indicator of monetary policy. The same applies to official unemployment numbers. The upheavals that the lockdown has brought about affect the segments of the labor market in different ways. When persons leave the labor market for good, they no longer show up as unemployed.

As it did with the blow that came with the oil price shock in 1973, the economy after the lockdown confronts stagflation. When stagnation and recession show up together with price inflation, macroeconomic policy has hit the wall. Using Keynes as the guide for fighting the downturn of the economy after the lockdown would give an additional blow to the economy, which has already been weakened by the lockdown. The lockdown of the economy has also severely hurt the global system of supply chains that had been a major source of keeping prices low. Additionally, with the rupture of the trade with China that concerns not only the United States, the impact of cheap goods from overseas that had dampened global price inflation will recede. One of the consequences of more home production instead of global free trade will be higher production costs.

Monetary authorities have released a huge amount of money in the form of central bank money to mitigate the consequences of the economic slowdown and social isolation. Such a policy has already been implemented in response to the 2008 financial crisis and has been practiced as a so-called quantitative easing.

QE Forever?

In response to the 2008 crisis, the assets of the balance sheet of the Federal Reserve System have expanded from $870 billion in August 2007 to $4.5 trillion in early 2015. The later attempts to trim the central bank’s asset sheet only slightly brought down the amount of assets to $3.8 trillion until August 2019, when monetary policy became expansive again. Beginning in September 2019, the assets of the Fed began to rise again, reaching over $4 trillion before an additional big boost due to the lockdown lifted the total assets to over $7 trillion dollars in June 2020.

The lockdown brought the economies all over the world almost to a standstill and affected production and supply chains. The International Monetary Fund currently expects global production to shrink by 3 percent in 2020. While the US government has refrained from an economic outlook for the rest of 2020 on the grounds that the preview is too uncertain, the Congressional Budget Office predicts a fall in the real GDP of 12 percent during the second quarter and an unemployment rate close to 14 percent.

In the face of the economic consequences of lockdown, the Fed is about to expand the scope of assets that it may buy. While in the past the range of assets that central banks were able to buy was limited to government bonds, the range of asset categories is in the process of being extended to go beyond public debt titles—not to mention the possibility of direct financing of government spending.

A Credit Contraction—until the Dam Breaks

What has happened so far is a steep increase of the money supply in the form of the so-called monetary base. This increase does not necessarily mean that the newly created money will end up in the hands of businesses and consumers. If the demand for credit is low and the commercial banks assume an increased risk of default, or if they are already in a precarious state, they will use the money offered by the central bank as a liquidity cushion instead of lending it. In this way, the commercial bank’s lending capacity exists only as potential and is not yet actually executed.

This phenomenon of a credit contraction emerged also in the 2008 financial crisis. Despite the massive monetary policy stimulus from the central banks, global price inflation failed to materialize. The base money did not flow into the production economy and the demand for goods, but remained largely in the financial sector and served as a reserve for commercial banks. The most significant effect of the monetary expansion in the wake of the crisis of 2008 was the hefty price increases for bonds and shares.

Even after the lockdown, the effects of the central bank’s creation of base money over a longer period of time may not show up as lending, thus boosting aggregate demand. However, the current expansionary monetary policy harbors the danger that what has hitherto existed as mere potential could, as it were, become an avalanche overnight that swamps the real economy with liquidity. Until the dam breaks, it may appear to the superficial observer and to large sections of the population that there is nothing to fear and that the heads of the central banks have the situation under control.

One must fear that the national debt of the United States, which reached 107 percent of the nation’s gross domestic product in 2019, will rise sharply in 2020 and in the years thereafter. Deficit financing goes along with an increase of the money supply. Here, it comes in handy that the so-called modern money theory (MMT) explicitly provides a justification for direct government financing through the government’s own creation of money. Under the MMT model, a country’s central bank would become part of the Treasury. It does not take much effort to explain that following this theory of monetary mismanagement opens the door to hyperinflation and that it will be impossible to close this door once it has been opened.

The Importance of Sound Economics

Before the flood breaks loose, the central bank’s money creation may not significantly affect the real economy in terms of production, nor may it drive price inflation right away. A possible scenario could be that the central banks continue following their current policy model of “inflation targeting” and increase the money supply even further under the deception of an apparently “stable” price level. This way, the monetary authorities would ignore the inflationary potential and neglect the risk that hyperinflation exists as a clear and present danger. The monetary potential of price inflation that has accumulated in the past twelve years is so great that control has become unattainable once the avalanche starts.

Regardless of the differences in their details, the politically influential macroeconomic schools are interventionist. These doctrines are attractive to politicians, because they assume that the market economy is permanently dependent on government control. For these economists, the economy always needs leadership, control, and guidance. By declaring the market economy to be permanently ill, the interventionist economists are taking on the role of scientifically proven saviors. These social engineers then find coveted and highly paid jobs at the central banks and in the various ministries and regulatory bodies.

Austrian economics has a different perspective. For these thinkers, the economy is dynamically self-regulating. Consumers strive to improve their situation and entrepreneurs are vigilant in pursuit of these needs. In a competitive market, the price system provides control and guidance from consumers. Extensive intervention by the government and its central bank is not only not necessary, but harmful to prosperity.

More Intervention Will Bring Even More Economic Damage

Governments—not only in the United States—are about to make the same errors that were made in the 1930s, when economic policies deepened and prolonged the crisis. As Rothbard explained, America’s Great Depression came about because the policymakers encouraged the maintenance of high wage rates and implanted measures to stabilize the price level. They actively fought deflation through direct interventions. Instead of encouraging savings, the political decision-makers tried to stimulate consumption and discourage savings. Instead of promoting laissez-faire, policymakers expanded and deepened interventionism.

A new round of zero and negative interest rate policies (ZIRP and NIRP) would further deviate the price of financial assets from the fundamentals and sharpen wealth inequality at a time when social tensions have reached a revolutionary degree. What is needed in the face of an economic downturn is not more, but less government spending, and not more, but less monetary and interest rate stimuli.

The lockdown has resulted in the destruction of capital. The challenge ahead requires rebuilding the capital structure. This requires more savings and investment and less consumption. The government, Rothbard recommends, can only help positively if it lowers “its relative role in the economy, slashing its own expenditures and taxes, particularly taxes that interfere with saving and investment.” Stimulating consumption will prolong the time required to return to a prosperous economy.

Laissez-faire means freeing the multitude of economic actors from government impediments so that they can actively seek to improve their lives. Not more interventionism, but less taxes, less public debt, less inflation, less bureaucracy, and less regulations will open the way for entrepreneurial creativity and thus for the country’s prosperity. Getting the country out of the slump is not done with more alms, but with more productivity.

Conclusion

The lockdown of the economy and the imposition of social isolation have led to large-scale economic disruptions. Not only have jobs been destroyed, capital has also been consumed and the political measures have caused many cracks in the delicate network of the division of labor.

After the big mistake made with the ineffective lockdown, now another, maybe even larger mistake—not only in the United States but in Europe, too—is being made. The implementation of expansionary economic policies will mean that after the blow of the disease, and the smash of the lockdown, economic life will receive another major hit. More government spending and still lower interest rates will not accelerate the upswing but will paralyze the economy after a short flash in the pan.

The upcoming challenge requires the reconstruction of the capital structure and the restoration of global cooperation. This objective does not require more consumption but more savings and new investments. In order to overcome the economic impact of the lockdown, the Austrian school of economics recommends the opposite of the official economic policy that is in effect today. Instead of trying to get the economy going again with the futile means of low or negative interest rates, economic policy should provide a policy environment that promotes savings, encourages innovation, and gives room for private initiative.

For once, the spreadbetting estimate of where Dow futs would be on Sunday was correct, and with IG expecting a drop of -230 points several hours ahead of the market open…

… that’s precisely what we got at 6pm ET when Dow futs opened down 250, Spoos were -30 and the Naz -80.

Why the early encounter with gravitation? Because as Amplify Trading writes, the market still remains wary of a second wave of coronavirus with nationwide cases in the US up 15% in the last two weeks and cases rising in 18 states across the South, West and Midwest, according to the NYT. Over the weekend, new cases in California rose by a record (4,515) and Florida infections up 3.7% from a day earlier, compared with an average increase of 3.5% in the previous seven days.

As a reminder, on Friday stocks slumped after Apple said that it will again close almost a dozen stores in the US because of a recent rise in coronavirus infections in the South and West, and although the tech giant can still operate effectively online the move was an ominous sign for brick and mortar retailers across America and a dent to the optimism that the US recovery is in full swing.

A number of Fed officials also remained cautious with Fed’s Rosengren (non-voter) stating on Friday “this lack of containment could ultimately lead to a need for more prolonged shut-downs, which result in reduced consumption and investment, and higher unemployment”, with Neel Kashkari adding “unfortunately, my base case scenario is that we will see a second wave of the virus across the US, probably this fall.”

Two other noteworthy developments on the virus come from Germany where the infection rate has shot up to its highest level for weeks after more than 1,300 abattoir employees tested positive for the virus. The country’s R-naught rate soared to 2.88 on Sunday, from 1.06 on Friday. Meanwhile, China blocked some US poultry imports over clusters at Tyson Foods plants.

What to expect this week

According to Amplify, one of the most important data sets this week is the latest flash PMI data due on Tuesday. While a rising headline number may give some cheer that confidence is returning the data in itself is forward looking which brings about two interesting points.

• It could be highly subject to change depending on the developments of a second wave virus (a la Apple on Friday).
• As analysts at ING note, looking at other data, including Google’s mobility index, the economy still appears to be operating well below its pre-virus level.

Finally, here is a calendar of the week’s events courtesy of NewsSquawk

Monday

•     Data: EZ Consumer Confidence US Existing Home Sales
•     Events: China LPR, US & Russian Army Talks; Chinese, Russian & Indian Foreign Minister meeting
•     Speakers: ECB’s de Guindos & Lane, Fed’s Kashkari, RBA Lowe

Tuesday

•     Data: EZ, UK & US PMIs (Flash)
•     Supply: UK, German & US

Wednesday

•     Data: German Ifo
•     Events: RBNZ Rate Decision, BoJ Summary of Opinions
•     Speakers: ECB’s Lane, Fed’s Evans & Bullard, EU Commission Draft 2021 Budget presentation
•     Supply: UK, German & US

Thursday

•     Data: German GfK, US Durable Goods, GDP (Final), PCE Prices (Final), Initial Jobless Claims
•     Speakers: ECB’s Schnabel & Mersch, BoE’s Haldane
•     Supply: US

Friday

•     Data: Japanese CPI, US PCE Price Index, Personal Income & University of Michigan Sentiment (F)
•     Speakers: ECB’s Schnabel

Egypt and Turkey have long been on opposite sides of the raging battle for the fate of Libya, with Turkey providing major military support and backing for the UN-recognized Government of National Accord (GNA) in Tripoli, and with Egypt backing Gen. Khalifa Haftar.

The situation escalated over the weekend, amid a pullback of pro-Haftar forces from Tripoli after being defeated in the bid for the capital, when Egypt’s President Sisi announced from an airbase near the Libyan border that the Egyptian Army stands ready to intervene in Libya on behalf of Haftar.

Sisi declared that if GNA forces attempt to enter Haftar-controlled Sirte, pushing deeper into central Libya, this would be a ‘red line’ for Egypt, forcing it’s intervention.  Crucially both Tripoli and its main ally Turkey on Sunday condemned what they called Sisi’s “declaration of war”.

Turkish state media recorded the GNA statement as follows: “This is a hostile act, direct interference, and amounts to a declaration of war” – in condemnation of Sisi’s statements. It added that for the Libyan state, “interference in its internal affairs, attacks on its sovereignty, whether by declarations… like those of the Egyptian president or by support for putschists, militias, and mercenaries, is unacceptable.”

The heated rhetoric, and with Egypt potentially beefing up forces and military hardware along its border with Libya, has some regional sources saying that Turkey and Egypt are headed for direct war in a rapidly intensifying situation.

“Now Egypt’s president is signaling possible red lines in Libya,” The Jerusalem Post writes. “This line could keep the Turkish-backed GNA from Sirte and a strategic airfield at Jufra. The country would be split down the middle. Egypt has a massive army, but it is also an army mostly untested on foreign battlefields.”

Tripoli is now calling on the international community, especially the UN, to step in should Egypt’s army get involved. 

Surveying the prospects for major war between Turkey and Egypt over Libya, The Jerusalem Post explains further: 

On paper Turkey’s armed forces and Egypt’s are well matched. Both have F-16s and hundreds of fighter aircraft. Egypt’s army is the 9th strongest in the world on paper with thousands of tanks. Turkey’s armed forces are thought to be the 11th strongest in the world. Both countries use western weapons systems linked to the US or NATO. Turkey’s work with NATO likely makes it more effective than Egypt.

Both countries are bogged down in counter-insurgency campaigns. Egypt is close to Libya and can easily move an armored brigade or troops to the frontline. Turkey would have to fly them in and it likely prefers using Syrian rebel mercenaries to do its dirty work. 

In short, the Libya situation – a country on fire since Gaddafi’s toppling and death due to the 2011 US-NATO military intervention, or what many have called “Obama’s Iraq” – is set to get a lot messier. 

There are already unverified reports that Egypt may be sending jets to Haftar airbases in eastern Libya in support of his LNA.

If so, Turkey will certainly increase its own aerial patrols, which has already involved ample use of drone warfare in and around Tripoli. But no doubt this would give Erdogan greater excuse to get Turkish fighter jets involved.

Authored by Jack Phillips via The Epoch Times,

Nine people have been killed, including four under the age of 18, and 47 more were injured in shootings across Chicago on Father’s Day weekend, police said.

Two teenage boys, a 3-year-old, and a 13-year-old girl are among those who were killed, officials told ABC7 in Chicago.

The 3-year-old’s death was also confirmed by Chicago Mayor Lori Lightfoot, who wrote that “our city’s collective heart breaks to hear the unfathomable news of a 3-year-old boy who was shot and killed tonight on Chicago’s West Side.”

“There are simply no words to describe such a heinous, unconscionable act of cowardice to shoot at a toddler,” Lightfoot wrote.

According to the Chicago Sun-Times, officials said the toddler was identified as Mekay James, who was struck in the back when a suspect approached his father’s black SUV before firing several rounds.

Our city’s collective heart breaks to hear the unfathomable news of a 3-year-old boy who was shot and killed tonight on Chicago’s West Side. There are simply no words to describe such a heinous, unconscionable act of cowardice to shoot at a toddler.

— Mayor Lori Lightfoot (@chicagosmayor) June 21, 2020

In one incident in the Austin neighborhood, two teenage boys were sitting on a porch when one noticed a laser being pointed at him, according to police. Gunshots then erupted, injuring the two boys, who are in good condition. However, a 13-year-old girl who was inside the home was shot in the neck during the incident and later died.

The Chicago Sun-Times, citing the Cook County medical examiner’s office, identified the teen girl as Amaria Jones.

Officials said that in a separate incident, a 16-year-old boy and a 17-year-old male were killed in an alley in South Chicago’s South Luella Avenue. A male suspect approached the two and opened fire.

A running tally compiled by the Chicago Tribune says that 227 more people have been shot across Chicago this year, compared with the figures in 2019. So far, nearly 1,300 people have been shot.

On Memorial Day weekend, which saw violent unrest in the wake of George Floyd’s death, more than 50 people were injured in shootings across the city. Ten people were fatally shot, marking the deadliest Memorial Day weekend in five years.

The weekend violence came as Chicago aldermen announced a plan last week to remove police officers from city schools amid growing outcry for police reforms.

Protesters take to the streets of Chicago, Ill., on June 6, 2020. (Natasha Moustache/Getty Images)

The proposal ending the city’s $33 million deal with the Chicago Police Department follows similar action in Minneapolis and Seattle. Proponents say police in schools can be intimidating to students and criminalize student behavior in Chicago’s public schools.

Alderman Roderick Sawyer, a sponsor, said historically police were called to schools to protect from outside threats.

“Now our students are being criminalized for being students at CPS and that’s not right,” he said at a news conference. “We want to make sure that our children have every opportunity to learn and grow from children to young adults and police officers in schools is not the answer.”

The plan, to be introduced Wednesday for a vote next month, requires the police chief to end the contract within 75 days.