iftttwall

Authored By Kym Robinson via The Libertarian Institute, 

As the fiasco of US democracy shreds at any sense of dignity the world watches on and pretends that the health of the American empire is vibrant, the opinionated social media activist and the interested expert all find outrage in the moment.  Biden and Trump drips from the chanting lips of those who are storming the halls of political might. Far in distant lands, inside the obedient nations of the American empire heads of state read out words of support and condemnation. Outraged citizens from abroad criticize the ousted president, or they cheer for him to troll from the platform of twitter. The social media giants had long ago shown their loyalties as they ban and limit elements of some perspectives of very much the same political monstrosity. But in the end, does it change anything?

The outraged and protesting tug and pull for the reigns of rule. The mob that failed at the sort of works democracy now reveals itself as just that violent destructive blob of people who want more control, want more influence and want a government that does things for them often against others. Whether it is proud boys, ANTIFA, MAGA or BLM the government as it stands really does not change that much, perhaps ‘Amen’ is switched to ‘Awomen’ and pronouns are balanced with some sensitivity or maybe the jingoists get another minority group to blame for the decay of Western or American civilization. But in the end the empire is ever present abroad and at home.

For the rest of the world, we are forced to watch the melodrama of US politics, again. As though the United States is the center of the world, or universe. Perhaps the world should care less about what happens inside the US with as much concern as the average American seems to care about the rest of the world.

Millions of humans lead their lives despite the petty and often pathetic self importance of US partisan politics and yet somehow, the American empire finds them. Whether it is a drone hovering high above, visiting with random murder or a blockade of warships enforcing an almost ancient embargo, it is the American prevalence in all of our lives that seems to be destroying not only the US itself, but the wider world. And when a victor emerges, the world still gets war. Mostly American wars. These are not civil riots protests that waved a fist against state led bigotry, nor are they anti conscription riots over government forcing individuals to fight overseas in another war. Such past riots, have had limited impact in quelling the growth of government or in tempering its destructive might.

Journalist Julian Assange is held captive in legal purgatory, punished for revealing the crimes of war mongers and lifting the up the skirt of many governments. Ross Ulbricht a prisoner because he created a website, the details of his conviction would  make for an unbelievable fiction and yet it was all too real. Edward Snowden and Chelsea Manning are pariah patriots, believers in the religious texts that most Americans claim to uphold and yet most of the voting public and voted for rulers disregard the details of such a constitution and Bill of Rights. And millions of poor and desperate foreigners live and die in the frontiers of foreign policy, their homes and day to day ruined so that macho sounding politicians can profit by propping up tyrannies of maniacal madness. Inside the prisons of the US itself are thousands of convicts punished for victimless crimes, the prohibitions and regulations of a cancerous government that claims to be for freedom, when in fact it dissolves it at every chance. The protests are not for any of them.

A small child, perhaps now dead, coiled in infant agony, starved as its innocent eyes bulged in anguish fronted recent articles covering the desperate situation in Yemen. A situation that would be impossible if not for the aid and assistance of the US and it’s imperial allies. Neither Trump of Biden would save that baby and the many others like it. The Saudi kingdom, is a profitable friend. The protesters that support the two coins of US partisan politics do not care about the children of Yemen either. One needs not look too far to find the victims of foreign policy, recent and distant to see the true outcome of such actions, but it seems few actually care to. And should they be presented with such facts and terrible images, a religious fog washes across their eyes, allowing them to either dismiss or contextualize the murder and suffering. But a slob tweeting from the toilet or a hair sniffing buffoon are both credible enough to lead, and be despised because they are not the other.

Protests inspired by Greta Thunberg visited many cities across the planet, sort of serious protesters found more energy than the Kony2012 social media inspired activists. They chanted and spread hashtags, cheered for the Swedish teen to shame political masters and then as often is the case, the energy dissipated. Nature continues to suffer, but a new smart phone in the hand is more appealing than living inside a canvas tent among the trees. The fixation with taxing the problem away and regulating industry to ‘not pollute’ is one of often curiosity, ignoring the waste of government itself. Not to mention the destructive pollutant that is the war machine. There once was a time when green movements were anti-government and anti-war. Now many of the supposedly green champions are inside the cathedral of government and so long as biodegradable material is used to transport the depleted uranium shells or a tree is planted on a base somewhere as gas guzzling tanks trample trees in distant lands, then the message is sound.

It seems that since the emergence of COVID-19 that the Peoples Republic of China has become popular to despise. An authoritarian government that had bashed human rights since before its inception, a nation of growing power and influence, that with patience managed to take advantage of the laziness and complacency of modern Western culture. Many inside the West profited from and helped to cultivate the communist planners of China. But now supposedly courageous journalists and politicians criticize the communist state. Those who had their fingers inside the red cookie jar are ousted, the many honey traps are revealed but before COVID-19, few cared about the organ harvesting, mass executions, forced labor camps and surveillance state. It is hard to reveal those things as Chinese money flowed so lavishly.

The future unfortunately is China’s, not because of the billions of unique individuals of China but the regime itself. The culture of control, social credits, censorship, travel restrictions and surveillance. The nationalism of compromise communism that has developed in the decades since the death of Mao. It is a template by which other national governments may adopt, not by any devious design, but inevitable instinct. The protesters, voters and mobs that throw their violent tantrums do not stand opposed to that, unlike those in Hong Kong who feel the crushing tyranny grip them.  In the US and its partner nations, the coming tyranny is inevitable. It is often welcomed and it is one of elite insight, for your health, for your safety. The custodian government is here for the child citizen, and jobs, welfare will be available. Is that not Utopian?

Just as the war on terror normalized the security state, the war on drugs introduced no knock raids and intrusive searches, the war on the virus will bring with it the ever controlling health state. One that had already been creeping in. A health state of supposed benevolence for those nations of Public Health will continue to see grow, where an ideological health care system trumps choice and efficiency. Instead it gives careers and less care and a generic approach to solutions, that seldom suits the many individuals in need. Then the many regulations strangling society to ensure that the consumer, employer and employee are all directed and guided into one homogenized pattern. Choice, freedom, independence and individual responsibility are all deemed to be selfish. To be dependent, to have fewer or no choices and to be part of a collective is considerate, altruistic or even woke. For many of those protest, the public tantrum is about themes of the same controls, not ending them.

Whatever Americans think about their nation, whether they burn or worship their flag. How little or much that they know about their national history, it is insignificant to the perspective of those in foreign lands who understand the USA for what it actions reveal it to be. A war empire. When the mostly slave owners penned those words on that famous cannabis sheet it is unlikely that the republic that they envisioned would some day become greater than the British empire. And when the French sold lands on the North American continent, that never really belonged to them, to the young republic or when the British burned the capital building after defeating the US invaders of Canada it is unlikely that they could imagine their future dependence and partial obedience to mighty US empire. For those who have been visited by US warplanes, tanks and ships the rhetoric of freedom and liberty are bloody lies. Just as they are for most Americans. But that is not being protested about.

So now as social media waffles on over the calamity in the streets of US cities, will it change a thing? In a few months it would have been but one in many riots that have ravaged US streets. Riots that have claimed lives and destroyed property. None of which changed the perpetual nature of the US government, domestically or abroad. The outraged don’t really care about much other than the shrillness of the other side. The dead children in Yemen or Afghanistan, the burning lands of foreign wars don’t get that much concern, such scars and tears belongs to others. So when one side stands atop of the heaped mess as winner of the US government, the business of war will go on. The dignity of the individual will be bludgeoned and those who want nothing more but to control, to rule and to be taken care of, shall be victorious. But too few really cared enough to stop it. And those who do care, they are but whispers in the wind.

One month ago, we reported that SocGen’s bearish analyst Albert Edwards, who is traditionally well ahead of the curve, looked at charts of soaring food prices and was starting to “panic.”

Edwards’ research report concluded by urging his readers to “keep a very close eye as to whether we see a repeat of the 2010/11 surge in food prices” because “on the 10th anniversary of the start of the Arab Spring, and with poverty having already been made much worse by the pandemic, another food price bubble could well be the straw to break the very angry camel’s back.”

And while it’s not quite the spring of 2011 just yet (give it a few months) it’s getting dangerously close.

As Rithesh Jain from the World out of Whack blog writes, citing an article in the Reuters, “Vietnam, the world’s third biggest exporter of rice, has started buying the grain from rival India for the first time in decades after local prices jumped to their highest in nine years amid limited domestic supplies.”

“For the first time we are exporting to Vietnam,” B.V. Krishna Rao, president of the Rice Exporters Association, told Reuters on Monday. “Indian prices are very attractive. The huge price difference is making exports possible.”

Dwindling supplies and continued Philippine buying have lifted Vietnamese rice export prices to a fresh nine-year high.

Vietnam’s 5% broken rice is offered around $500-$505 per tonne, significantly higher compared to Indian prices of $381-$387.

This means that, as we have been warning for the past few months, food inflation is indeed back with a vengeance:

The purchases underscore tightening supplies in Asia, which could lift rice prices in 2021 and even force traditional buyers of rice from Thailand and Vietnam to switch to India – the world’s biggest exporter of the grain.

Indian farmers and exporter are big beneficiary.

In December, the world’s biggest rice importer China started buying Indian rice for the first time in at least three decades due to tightening supplies from Thailand, Myanmar and Vietnam and an offer of sharply discounted prices.

What happens next? Nothing good:

Chronic and acute hunger is on the rise, impacting vulnerable households in almost every country, with the COVID-19 pandemic reducing incomes and disrupting supply chains, according to the World Bank.

As Jain concludes, “food inflation is here and unlike base metals, agricultural items can be substituted leading to rise in the entire agri basket.” The following charts from Goldman show just how close we are to a rerun of the global “Arab spring” we are again.

Authored by Drew Van Voorhis via The Epoch Times,

The fate of about 1,800 Orange County inmates remains unclear as legal proceedings continue into whether the prisoners should be released amidst an ongoing pandemic.

During a Jan. 8 court hearing, the Orange County Sheriff’s Department (OCSD) answered questions regarding its plans to reduce a CCP (Chinese Communist Party) virus outbreak among its prison populations. The hearing ultimately resulted in the court ordering future hearings to obtain more information.

The case began last year, when Sheriff Don Barnes received a Dec. 11 court order requiring county jails to reduce populations by 50 percent. It was a move Barnes has warned could result in large consequences for the community.

Barnes appealed the court order, but was denied Dec. 29. He filed another appeal, which led to the Jan. 8 hearing, overseen by Superior Court Judge Peter J. Wilson.

County attorneys Kayla Watson and Kevin Dunn, as well as American Civil Liberties Union (ACLU) lawyer Corene Kendrick, were in attendance. Barnes was not.

During the hearing, Wilson asked county attorneys a list of pre-written questions about the precautions the department has taken to reduce the outbreak. Inquires related to jail inspections, available prison footage, and more.

OCSD spokesman Sgt. Dennis Brecker told The Epoch Times via email that the jail’s COVID-19 numbers reduced by hundreds of cases Jan. 8 due to a backlog of tests being processed.

“Our [positive case] numbers in the jail just went down by the hundreds, now at 465 [cases],” Breckner said. Just the day before, the department was reporting 1,062 cases.

He continued, “The website is up to date and the explanation for the drastic decrease was simply that the number of tests being administered created a backlog for [Orange County Health Care Agency] and they are now catching up.  We anticipate the number continuing on a downward trend because of the mitigation efforts that we have put in place.”

During the hearing, Kendrick offered to bring in a person the ACLU has worked with before as a court-appointed expert to go through the 34 boxes of inmate files the sheriff’s department transferred to Wilson to review on who to safely release, based on individual inmates’ records.

Watson noted large disagreement with this.

“I just want the record to be clear that we, on behalf of the sheriff’s department, strongly object to the appointment of any expert to perform the sheriff’s statutory duties,” Watson said.

“We have not been given an opportunity to present current evidence on the ground, despite our repeated requests.”

The court adjourned with the next court hearing being held January 19, where there will likely be more experts to testify.

Barnes issued a statement on the Jan. 8 hearing.

“The court is holding additional hearings to obtain information from experts regarding the conditions of the jail,” he said.

“We will continue to highlight our efforts to mitigate COVID-19 in our jails and keep dangerous inmates out of the community,” he noted.

Around 6,000 National Guard troops have been activated from multiple states. They are expected to arrive in the Washington Metropolitan Area within the next 48 hours to beef up security around the US Capitol complex, according to AP. 

Update: They have started to arrive…

Buses of National Guard troops still filing into the Capitol tonight. We’re seeing them stationed every few feet along new barricades installed around key buildings. @ABC7News pic.twitter.com/g9dkWipyJg

— Carl Willis (@CarlWillisTV) January 10, 2021

Deployment of Guard troops come in the wake of deadly riots at the Capitol building on Wednesday and ahead of the Presidential Inauguration on Jan. 20 that could incite another wave of violence. 

AP has learned defense officials are reviewing restrictions on whether Guard troops will be allowed to carry weapons in the coming days as new threats materialize. 

Army Secretary Ryan McCarthy told AP Friday that intelligence on potential threats continues to evolve. He said some Guard troops could carry M4 Carbines, but a final decision may come next week. 

The review reflects concerns about the safety of Guard troops in the wake of the deadly riots. 

“We’ll be looking at the intelligence and decide over the next day or so,” McCarthy said. “It’s just going to require us to get better intel, and then we’ll have to take a risk assessment.”

This past week, Guard troops have been unarmed and will continue to be once a decision is made. So far, they’ve been tasked with guarding the Capitol building behind steel walls that limit them from directly contacting violent protesters. 

About 850 Guard troops have been deployed to Capital grounds, working 12 hours shifts at more than 90 checkpoints. 

Over the weekend, videos have emerged of Guard troops stationed around the Capitol complex.

Guard troop presence increasing in DC. 

HUGE military presence in Washington DC right now. pic.twitter.com/X9dieF4oDK

— Jeremy Kappell (@JeremyKappell) January 10, 2021

Guard troops patrolling perimeter fence around Capitol. 

Guard troops patrolling buildings around the Capitol. 

AFP shows several scenes of Guard troops outside the perimeter fence of the Capitol. 

Considering top militia leaders have said they have placed “armed” members around DC to prevent a steal of the 2020 presidential election from President Trump – it’s likely some Guard troops will be armed as perhaps the last of the violence isn’t over. 

A few days ago, a union of flight attendants called on US airlines to permanently ban all participants in the Capitol Hill riot from flying amid reports that planes full of Trump supporters traveling to Washington DC caused disturbances during flights. Now, as prosecutors across the country hunt down the participants of Wednesday’s Capitol riot, the FAA and its members are taking disciplinary matters into their own hands.

According to Bloomberg, the FAA is vowing “strong enforcement” of any further violations tied to supporters of President Trump. In other words, if you wear a red baseball cap on a plane, well, you might as well yell “bomb!”…

FAA Chief Steven Dickson issued a statement Saturday saying the agency will take any further “unruly” actions by passengers extremely seriously.

“The FAA will pursue strong enforcement action against anyone who endangers the safety of a flight, with penalties ranging from monetary fines to jail time,” said Dickson, himself a former airline pilot.

Passengers on aircraft must obey safety commands from flight attendants and pilots, and the FAA monitors reports of violations, Dickson said. “This includes unruly passenger behavior, which can distract, disrupt and threaten crew members’ ability to conduct their key safety functions,” he said.

Numerous other incidents on flights were reported on social media as travelers visited Washington and flew home after Wednesday’s events. Flight attendant unions have also issued press releases condemning the behavior.

Flight attendants with American Airlines were forced to confront passengers who were harassing others for their political views on one particularly difficult flight, according to Julie Hedrick, president of the Association of Professional Flight Attendants.

“This behavior is unacceptable, and flight attendants should not have to deal with these egregious incidents,” Hedrick said in a press release.

So, what’s the solution? Will Republicans no longer be allowed to travel to rallies and other events?

By Ye Xie, Bloomberg Markets Live commentator

Three things we learned last week:

1. Trump is keeping the pressure on China amid Washington turmoil.

Secretary of State Michael Pompeo provoked Beijing when he said that the U.S. will remove decades-old restrictions on how its diplomats approach Taiwan. The move raises tensions over the One China policy — a red line for Chinese leaders.

It suggests that the Trump administration isn’t done taking on China, even as the president is besieged following a violent insurrection by his supporters at the Capitol. Lawmakers are pushing for him to be impeached, and a number of administration officials have resigned. Further hostility toward Beijing in his final days in office could set up more hurdles for Joe Biden to deal with China.

While Alibaba and Tencent were left off an updated U.S. Treasury list of Chinese companies considered to be tied to the military, it doesn’t necessarily mean that the tech giants are off the hook. And more state companies, including oil firms, could be added to the list and kicked off of the U.S. exchanges. The risk of sanctioning a major Chinese bank also remains.

2. Foreign investors cannot get enough Chinese stocks.

Overseas investors bought a record net 21 billion yuan worth ($3.2 billion) of Chinese shares through the north-bound stock connection last week, as the CSI 300 hit a 13-year high. South-bound flows from mainland investors to Hong Kong also reached a record. China Mobile, which is excluded from major indexes and due to be delisted by the NYSE on Monday, was the most bought stock in the southbound program Friday. It looks like there are plenty of Chinese happy to take advantage of the forced selling from U.S. investors.

3. Reflation trades are all rage.

MSCI’s global stock benchmark notched records as the Democratic sweep of Congress increases the odds for another round of stimulus in the U.S. Ten-year U.S. Treasury yields climbed above 1.1% and narrowed a gap with Chinese bonds. That didn’t kept the yuan from rallying further, prompting Chinese policy makers to take more steps to slow inflows.

Authored by Robert Wright via The American Institute for Economic Research,

Thirty shots rang out in the U.S. Capitol around 2:30 pm. Bullets struck five House Reps, all of whom survived, thanks in part to the valiant response of House Pages.

If that sounds different from news accounts of the events of 6 January 2021, it is because the event briefly described above occurred on 1 March 1954, when four Puerto Rican nationalists fired the shots from the visitors’ gallery while unfurling the Puerto Rican flag. The assailants were all eventually apprehended, tried, and convicted and were serving long prison sentences commuted by President Jimmy Carter in 1978 and 1979. 

The three men and one woman who gave half their lives were heroes to Puerto Rican nationalists and anti-imperialists but vile, failed assassins to those who wanted to maintain U.S. hegemony over the island it had taken from the Spanish Empire in 1898. Importantly, most of those who had given little thought to Puerto Rico’s status and likely could not find the island on a map also deprecated the attack because of the level of violence unleashed.

Of course the people who some Americans still proudly call Patriots were nothing more than nationalist rebels to the Tories. Had the Patriots lost the Revolutionary War, they would have at best suffered the same fate as the Confederate Johnny Reb. George Washington would be remembered today as a scoundrel and an enslaver and his sidekick Alexander Hamilton would have never spawned a hit musical. (Recent rumors of Hamilton’s slaveholding, incidentally, remain empirically baseless.) 

Today, obviously, matters are no different. If you think you will gain from the actions that some group takes, you will tend to rationalize its tactics and call its members good names. If you think the group’s actions will hurt you, then you will tend to oppose it and its tactics and call its members bad names. 

“Praise and blame” historians call it. One partisan’s hero is another partisan’s zero.

That is why it is so important for true supporters of “law and order” like myself to identify and reduce the causes of political violence before it becomes too late. In mid-March, I predicted rebellions if lockdowns continued for too long and many mass demonstrations, some quite violent, occurred throughout 2020 in many nations including, of course, our own. I also warned in December that trouble would ensue if the Supreme Court refused to hear the Texas election lawsuit … and here we are. If only the Capitol police had heeded my warnings they could have taken more effective precautions.

It isn’t terribly difficult, actually, to see trouble brewing. All it takes is a little theory and some empathy. Theory, like one laid out by Eric Hoffer, suggests that frustration breeds violent protest. Frustration isn’t measurable precisely but if you listen to what people — real people not TV pundits — say, and think about how you would feel in a similar situation, you can start to get a sense for genuine frustration.

Many Patriots, for example, felt that British policymakers were unresponsive to their concerns about how Imperial tax and monetary policies had led to the impoverishment and hence imprisonment of many colonists following the French and Indian War. They beseeched London elites not to tack the Stamp Act onto their many woes but were met with disdain. They won that one, with some violence and many threats, but the British soon piled on additional regulations. The colonists responded with remonstrances, trade embargoes, and so forth, but after the Boston “Massacre” (Patriot propaganda of course) and the mob insurrection against tea in Boston Harbor (British propaganda), violence soon escalated into full blown war.

Puerto Rican nationalists were also frustrated. The island had gained some de jure independence from Spain in 1897, the year before the Yankee empire invaded and claimed jurisdiction over it. It took over half a century for the United States to grant limited autonomy to Puerto Rico, a reform that did not go far enough for nationalists, who in late October 1950 openly rebelled in several important towns and cities, including San Juan. Puerto Rican police and troops, bolstered by US military forces, quelled the uprisings, which resulted in scores of casualties. On 1 November, two Puerto Rican nationalists attacked President Truman in the Blair House, his temporary residence while the White House was being renovated. One LEO was killed in the attack, as was one of the attackers, while the other was captured, convicted, and imprisoned. 

Unscathed in the attack, Truman supported a plebiscite on Puerto Rico’s status but, crucially, independence was literally not on the ballot. Nationalists boycotted the election, which overwhelmingly endorsed commonwealth status for the island. From their perspective, the election had been stolen even before it was held.

None of that background excuses the 1954 attack but it does explain why some nationalists were frustrated enough to resort to violence.

The same could be said of the small minority of peaceful protestors who attempted to overrun the White House in early June 2020. As I then wrote, those calling for redistribution of resources away from the police were rightly frustrated by continued state violence against poorer Americans, especially those of color, and offered a path toward reducing governmental power without encouraging criminal chaos.

As for the events of 6 January, every politico lays blame on somebody else and moralizes instead of admitting their own role in causing, or at least not allaying, the frustrations that undergirded the attack. (All federal politicians should resign and donate their entire net worths to the Treasury because all are abject failures … but I won’t hold my breath on that.)  

I have bad news — much like my news that 2021 would not necessarily be better than 2020 — things could get much, much worse. If you thought recent events were scary, imagine a million or more armed Americans storming the federal zone in DC and burning it to the ground regardless of upgraded security measures. (Vide the apparently insufficient 2017 upgrade.) That is not yet a prediction, and is certainly not a wish, but the probability of such an event is palpably higher than it was just a year ago.

To reduce the probability of such a horror, America needs real statesmen (leaders of any gender who seek to implement rational policies instead of engaging in constant partisan pandering) to emerge from this mess.

Real leaders should:

1. Not use the attack on the Capitol as an excuse to further erode civil liberties. In fact, they should encourage frustrated individuals to engage in peaceful protest, like burning effigies, that is more cathartic than mere virtue signaling via haberdashery or social media posts.

2. Stop lying about Covid-19. Read the Covid-related posts on this website for the last year for details.

3. Lay bare the fact that most policy proposals redistribute resources from one group to another and encourage open debate about the tradeoffs involved.

4. Focus policy on reducing frustration, even if that means cutting the power of corporate or party monopolies and duopolies, unions, and the government itself. 

5. Chastise every media outlet that engages in partisan hyperbole and encourage the reestablishment of trusted, nonpartisan news sources.

6. Chastise politicians who call for metaphorical “wars” on everything and anything (including viruses!) and constantly use martial words like “fight” when they really mean “work on behalf of.”

7. Pass reforms that reestablish trust in elections. (I have long advocated a Constitutional amendment to tie representation in the House [and hence Electoral College weight too] to the number of people who cast ballots rather than on the number of residents, which frankly is already a tricky concept that will get trickier as online work becomes more common. This would give states incentives to encourage voting but also implicate the Census Bureau as a federal check. But other possible reforms abound.)

8. Insist that any other reforms, say of SCOTUS, be completely nonpartisan by, for example, having any additional justices chosen by the next administration or, better yet, a random draw from a qualified group.

Do any such real leaders exist in 2021 America? I doubt it, but sometimes existential threats birth greatness.

With Chinese stocks soaring in recent weeks, and the blue chip CSI 300 index surpassing its 2015 Chinese stock bubble highs..

… momentum chasers investors from around the world are predictably once again poking around in Chinese markets (especially amid the recent confusion surrounding the bilateral crackdown on Alibaba, and the US-led sanctions on Chinese telecom and various megacap stocks), which is why Goldman’s top China strategist Kinger Lau writes that amid the “extensive client conversations” he had in recent days, investor interests and questions have revolved around ten particular topics. Here are the Top 10 China FAQs by Goldman clients, from the latest Goldman “China Musings” report:

1. Upside and drivers? China rallied 26% in 2020. Strong EPS growth (21%/15% for 21E/22E) on stable PEs (GSe: 15.6x vs 15.5x now) will drive 17% total returns for MXCN this year. Goldman expects a more balanced return profile (New vs.Old China) and prefers China A tactically given its higher macro cyclicality and lower sensitivity to external and Internet policies.

2. GDP growth and vaccine? China’s output has surpassed its pre-Covid levels. (GSe: 2%/8% GDPg in 20/21), with consumption being a key growth driver in2021. The first Chinese vaccine has been approved last week but should have only moderate growth impulse.

3. Is China tightening? Policy stimulus should fade this year as growth recovers. However, the recalibration should be gradual and growth-dependent, and, in what may be the most laughable statement in modern history, Goldman claims that “moderating policy support doesn’t always deflate equity returns.” Brilliant.

4. Industry regulation? Antitrust and FinTech regulations are top policy priorities for 2021, but unlike in 2018, regulatory oversight isn’t tightening across the board although it may pressure valuations for certain companies/sectors.

5. US restrictions on Chinese stocks? Clarity has recently emerged for ADR de-listing risks but uncertainty remains regarding the Executive Order, notably the scope of restriction, index exclusion, and forced de-listing. 

6. Rotating from Growth to Value? Goldman stays structurally positive on Growth, but have been scaling up cyclical exposures, instead of pure Value, in its allocation.

7. Themes and sectors for 2021? Following the 14th Five Year Plan as the anchor for thematic investing, Goldman favors a hybrid of Growth and Cyclicals sectors to start 2021.

8. Is China crowded? No, in fact, positioning is at all-time lows according to GS, which expects robust inflows on decent growth, continuing market reforms, and an appreciating Rmb.

9. HSI revamp? More New China, less Old China and HK representation are likely after the index rebalancing in Mar.

10. Risks? Sino-US tensions, private sector policy, leverage, and property tightening:

• The developments of US-China relationship under a new US administration;
• Over tightening in China property which contributes to around 20% of GDP via direct and indirect channels;
• China leverage, which is at all-time highs with rising number of defaults;
• POE regulation tightening which my present upside risk to equity risk premia.

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

President-elect Joe Biden on Jan. 8 promised to “defeat” the National Rifle Association while he’s in office.

Biden’s official Twitter account was responding to former Rep. Gabby Giffords (D-Ariz.), who was among 14 people wounded in a shooting rampage by Jared Lee Loughner in Tucson in 2011; six people died in the attack. Giffords had recounted how her life and community “changed forever.”

“But the attack did not break me—or the people I represented in Congress. We came together, turned pain into purpose, and found hope in each other,” she wrote, adding that she continues to work to “achieve a safer America.”

Biden responded, saying: “Your perseverance and immeasurable courage continue to inspire me and millions of others. I pledge to continue to work with you—and with survivors, families, and advocates across the country—to defeat the NRA and end our epidemic of gun violence.”

The NRA, which has more than 5 million members, seeks to protect and educate people about their Second Amendment rights.

While the association didn’t immediately respond to a request for comment on Biden’s post, its lobbying arm recently published an article that says Biden would “begin a concerted attack on the rights of American gun owners” after being inaugurated.

“We must be ready for the onslaught,” the post reads, adding that a Biden administration, if officials get their way, “will ban and confiscate the most-commonly-owned rifle in the United States” and “will arbitrarily limit the number of guns that can be bought per month,” among other measures.

Biden’s website says he has a plan to end “our gun violence epidemic” and boasts that he has taken on the NRA twice and won, referring to his help passing the Brady Handgun Violence Prevention Act in 1993 and in passing a 10-year ban on some weapons and magazines the following year.

“As president, Joe Biden will defeat the NRA again,” the site states.

Some of the proposals include banning the manufacture and sale of so-called assault weapons and high-capacity magazines, restricting the number of guns one person may buy per month to one, and prohibiting people convicted of hate crimes from owning guns.

In late December, in our recap of a “year like no other” for credit markets, we showed a stunning chart which perhaps best summarized the “insanity unleashed by central banks.” The chart in question showed that a record-high number of European IG (investment grade) bonds were trading with negative yields. To wit, as of December 15, 41% of the EUR IG iBoxx index yields in sub-zero territory; a level that matches the previous record in August 2019.

Even more impressive: more than 10% of the index now yields below -0.25%, and as Goldman concluded, “negative yields are likely remain a fixture of the EUR IG corporate bond market in 2021, even if bund bond yields back up in response to solid growth next year. Combined with the decent demand tailwind from ECB purchases, this would keep search for yield motives strong.”

Fast forward a few weeks, when it’s not just the EU where the corporate bond market is trading at absurd levels.

As Goldman’s credit strategist Michael Puempel writes, in early December, real yields on USD IG corporate bonds turned negative for the first time in history, against a backdrop of all-time high duration.

As Goldman elaborates, the relentless march lower of real yields to negative territory “reflects the combined effects of the material decline in nominal corporate bond yields and the back-up in inflation expectations.”  The next chart shows how widespread negative real yielding corporate debt in the USD market is, with more than 25% of issues, representing more than 30%of index-eligible par value, priced with a real yield below -0.5%.

This means that a large portion of IG-rated corporations are expected to be paid, on an inflation-adjusted basis, to borrow in the USD market today, according to Goldman. And although all-time high duration comes with its own risks, negative real yields will likely skew incentives for corporate issuers – encouraging them to issue even more debt – while at the same time mechanically increase risks for investors.

A quick look at these two key factors starting with…

Skewed incentives for issuers

There is always competing interests between equity- and debt-holders when it comes to corporate issuance and the uses thereof. This tension will be exacerbated for corporates that can issue at very low, i.e. negative, real yields. Specifically, the lower the yield at which a corporation can issue debt, the higher the incentives are to return capital to shareholders, via either debt-funded M&A or share repurchases (or, more recently, by purchasing bitcoin). Meanwhile, Goldman forecasts that negative real yields for such a large portion of the IG universe has elevated the risk that “the significant increase in gross balance sheet leverage, which was meant to be a temporary response to the sudden stop in the economy, ends up being permanent.”

Elevated risks for investors

The risks for investors in this environment, as it relates to negative real yields is two-fold:

First, and the most acute, is that investor returns are now very susceptible to even the slightest unexpected uptick in the inflation. While traded breakeven inflation is not a perfect proxy for expected inflation, as it embeds a risk premium, positive real yields have historically provided, at least to some degree, a cushion with respect to an unexpected inflation shock. This is no longer the case, because even if realized inflation falls below market expectations, it may not be enough to push ex-post real yields back into positive territory given current levels.

The second risk for investors is related to the second-order effect of low yields; re-leveraging risk. That is, if firms take the “opportunity” presented by yields at historic lows to increase the size of their capital structures even further, this could in Goldman’s words, “manifest itself in heightened fallen angel/downgrade risk under a scenario in which the earnings recovery of highly levered issuers do not rebound at a pace commensurate with expectations.”

While these risks should be manageable in the near-term given improving growth expectations for 2021 on the back of massive stimulus, as the economy reverts back to full-capacity, Goldman concludes that “it will be crucial for both corporate bond issuers and investors to shift their decision-making frameworks to account for real, as opposed to nominal, outcomes.”