Month: May 2021

Fed’s “Favorite” Inflation Indicator Explodes At Fastest Rate Since 1992 As Incomes Crash By Record

Fed’s “Favorite” Inflation Indicator Explodes At Fastest Rate Since 1992 As Incomes Crash By Record

While Americans’ income and spending is normally the headline-making data, this morning’s release will focus all eyes on The Fed’s favorite inflation indicator – the PCE Deflator.

The headline PCE Deflator rose 3.6% YoY, the fastest rate or price increases since 2008.

Even more notably, the Core PCE Deflator soared 3.1% YoY (hotter than the +2.9% YoY expected) and the hottest print since May 1992…

Source: Bloomberg

With the highest MoM rise in the core deflator since 9/11…

Source: Bloomberg

However, back in income and spending land, the picture was very mixed with incomes crashing 13.1% MoM and spending rising just 0.5% MoM after the stimmies run dry …

Source: Bloomberg

That is the biggest MoM crash in incomes ever which sent the savings rate plunging…

Source: Bloomberg

The consumer buffer is almost gone: personal savings rate plunges by 50% as Americans do what they do best: spend their savings.

So – let’s summarize – prices are rising at their fastest pace in almost 30 years and incomes just plunged by their most ever!

We’re gonna need more stimmies!

Tyler Durden
Fri, 05/28/2021 – 08:39

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New York Times COVID Reporter Says It’s “Racist” To Discuss Wuhan Lab Leak Theory

New York Times COVID Reporter Says It’s “Racist” To Discuss Wuhan Lab Leak Theory

Authored by Paul Joseph Watson via Summit News,

A New York Times reporter who specializes in COVID-19 coverage tweeted that it was “racist” to even talk about the Wuhan lab leak theory.

The lab leak issue has received a wave of attention following the Biden’s administration’s announcement that a 90 day investigation would be conducted into its veracity.

The NYT itself also reported yesterday that the U.S. intelligence community has been sitting on a “raft” of evidence pertaining to the Wuhan Institute of Virology.

However, Apoorva Mandavilli, who in her bio says she reports for the NYT “mainly” on COVID, asserted in a tweet that even discussing the issue was “racist.”

“Someday we will stop talking about the lab leak theory and maybe even admit its racist roots. But alas, that day is not yet here,” tweeted Mandavilli.

She faced immediate pushback and subsequently deleted the tweet.

“It damages the NYT’s reputation to have a key reporter on the most important story of the year say a valid news angle shouldn’t be discussed because it has “racist roots.” Aren’t they supposed to be in the news business?” asked Josh Barro.

“Oh my god: I didn’t realize what her job is,” remarked investigative journalist Glenn Greenwald. “Can someone explain to me why it’s racist to wonder if a virus escaped from a Chinese lab, but it’s not racist to insist that it infected humans because of Chinese wet markets? If anything, isn’t the latter more racist?” he asked.

For nearly a year, President Donald Trump was repeatedly smeared as a racist by the media merely for pointing out that the virus originated in China.

The World Health Organization also advised countries not to impose border controls in the early weeks of the pandemic so as to avoid the “stigmatization” of Chinese people.

This advice was taken by the British government, with Prime Minister Boris Johnson’s former chief adviser revealing earlier this week that Johnson didn’t want to shut down the border for fear of being labeled “racist.”

Apparently, not being called racist is more important than stopping a deadly pandemic or investigating the origin of where it came from.

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Tyler Durden
Fri, 05/28/2021 – 08:24

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California’s Costly Experiment With Online Community College Is a Textbook Example of Government Failure


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There are two basic ways to provide goods or services. The first is to let people sell whatever they choose as they seek profit (or do so on a nonprofit basis out of a sense of mission). Through a system of voluntary arrangements, businesses succeed or fail based on their talents, dumb luck and the fickle demands of consumers.

The second is to empower the government to extract money from the general population through taxes and fees. Instead of competing to lure consumers, public agencies provide goods and services at the direction of bureaucrats appointed by elected officials. “Customers” pay whatever they’re billed—and are stuck with whatever is offered.

Oddly, Americans increasingly believe that the second way best provides for the necessities of life even though it’s based on force and politics—rather than freedom and choice. Despite the ever-growing list of governmental failures, people want the government to offer healthcare and even educate our children.

Let’s take a small example from the world of public education. K-14 schools grab at least 40 percent of the state’s $267-billion general-fund budget. Private schools and publicly funded (but privately operated) charter schools handled the COVID-19 emergency with amazing efficiency and aplomb, by quickly transitioning to distance learning.

One need only read the news reports of the public schools’ disastrous attempts at online schooling—and at how the teachers’ unions dragged their heels on school re-openings. Despite these hard-to-ignore results, the Legislature is advancing legislation (Assembly Bill 1316) that clamps down on charter schools that specialize in distance learning. Bureaucracies really hate competition.

Meanwhile, the California State Auditor recently released a report about the state’s online charter school, known as Calbright. Created by former Gov. Jerry Brown in 2018, this state-run college has operated so incompetently that a Legislature that has never seen a government program it doesn’t like has been trying to shut it down.

The Legislature created Calbright because of a failure of the public community college system to provide adequate at-home learning for adults in the 25- to 34-year-old range who lack a college education. As usual, the reasons for creating a new government program were reasonable—but also, as usual, the resulting program is a disaster.

As the auditor explained, the college “did not develop a detailed strategy for how and when Calbright would spend the more than $175 million in state funding it expects to receive through June 2025 to accomplish key milestones. In the absence of such a plan, the purpose of its spending to date is unclear, and neither the Legislature nor the public can effectively assess its progress. The majority of its students have either dropped out or stopped making progress in their studies.”

If the first way were at work, a school that performed as poorly as Calbright would go out of business and students would choose a better alternative. With the government way, the state’s taxpayers lose tens of millions of dollars. In most cases of government incompetence, the agency might get even more tax money to address its problems.

The state legislature might actually shutter Calbright—but not because it is any more incompetent than other publicly run schools. In this case, unions and their supporters oppose Calbright’s existence because they want the money instead spent on more faculty for the brick-and-mortar community college system. None of this nonsense should surprise anyone.

Years ago, I attended a conference of government planners where a speaker mocked the first way, as epitomized by 18th century Scottish economist Adam Smith. “The rich,” Smith wrote, “are led by an Invisible Hand to make nearly the same distribution of the necessaries of life, which would have been made, had the Earth been divided into equal portions among all its inhabitants.”

The speaker thought it astounding that people still believe as Smith did—that allowing individuals to pursue their self-interest will lead to the greatest good for the vast majority of people. The Invisible Hand sounds incomprehensible compared to, say, letting experts direct the economy based on “science” and noble concepts of the “public good,” but it’s also the reason that we live in a relatively peaceful, productive and wealthy society.

Recently, I needed a specialized part to repair a bathroom faucet. I went to the hardware store and had several choices at minuscule cost. A planner in the California Department of Widgets didn’t figure out what plumbing assemblies should be produced and then sold at a neighborhood store. Instead, an invisible series of manufacturing, distribution, and retail arrangements accomplished that feat.

The same magical dynamic could work for education—and certainly for online schooling. Supporters of Calbright argued that the state needed to provide working students with an alternative to for-profit providers, but again we see that government direction never lives up to its grandiose promises.  How many Calbrights do we need before we understand that point?

This column was first published by The Orange County Register.

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Microsoft Claims It Has Found Evidence Of Another Russian-Backed Government Hack

Microsoft Claims It Has Found Evidence Of Another Russian-Backed Government Hack

Hackers have made some serious strides in their ability to circumvent corporate system protections in recent years, which is one reason we have seen so many high-profile incidents, including the Colonial Pipeline hack (which further emboldened shadowy criminal groups around the world after the company paid a nearly $5 million ransom). But while the world waits for the US government to hold the shadowy group, known as Darkside, accountable, Microsoft warned in a blog post published Friday morning that it has discovered evidence of another massive government hack that’s already underway.

In a blog post published Friday, Microsoft Vice President Tom Burt said this past week’s attack (which is still ongoing) has granted access to about 3K email accounts at more than 150 organizations by infiltrating a digital marketing service used by the US Agency for International Development (USAID) called Constant Contact.

The hackers distributed phishing emails, among them “Special Alerts,” declaring that former President Trump had published new documents on election fraud, and inviting users to view them.

The hackers that infiltrated software vendor Solarwinds succeeded in what Microsoft described as one of the worst data breaches ever to hit the US government. Now, this new cyberattack has infiltrated more than 150 government agencies, think tanks and other organizations. And according to Microsoft, it was carried out by the same people.

This group, which Microsoft calls “Nobelium” is believed to be linked to the same Russian government agency that backed the Solarwinds attack, though Microsoft didn’t say much about their reasons for arriving at this conclusion.

While there was no ransomware component to the Solarwinds hack, Microsoft said that at least 25% of the targets of this week’s attacks were involved in international development, humanitarian, and human rights work, across at least 24 countries. This suggests the group is more interested in “intelligence gathering efforts” than corporate sabotage.

“These attacks appear to be a continuation of multiple efforts by Nobelium to target government agencies involved in foreign policy as part of intelligence gathering efforts,” the company said.

The US government said last month that SolarWinds was the work of SVR, the Russian foreign intelligence service, and said it also went by the names of APT29, which UK intelligence says spent much of last year hacking foreign governments for vaccine research, and Cozy Bear, which was allegedly involved in the 2016 hack of the DNC.

Read Microsoft’s complete blog post below:

This week we observed cyberattacks by the threat actor Nobelium targeting government agencies, think tanks, consultants, and non-governmental organizations. This wave of attacks targeted approximately 3,000 email accounts at more than 150 different organizations. While organizations in the United States received the largest share of attacks, targeted victims span at least 24 countries. At least a quarter of the targeted organizations were involved in international development, humanitarian, and human rights work. Nobelium, originating from Russia, is the same actor behind the attacks on SolarWinds customers in 2020. These attacks appear to be a continuation of multiple efforts by Nobelium to target government agencies involved in foreign policy as part of intelligence gathering efforts.

Nobelium launched this week’s attacks by gaining access to the Constant Contact account of USAID. Constant Contact is a service used for email marketing. From there, the actor was able to distribute phishing emails that looked authentic but included a link that, when clicked, inserted a malicious file used to distribute a backdoor we call NativeZone. This backdoor could enable a wide range of activities from stealing data to infecting other computers on a network. You can read more about the technical aspects of these attacks in this blog post from the Microsoft Threat Intelligence Center (MSTIC).

Many of the attacks targeting our customers were blocked automatically, and Windows Defender is blocking the malware involved in this attack. We’re also in the process of notifying all of our customers who have been targeted. We detected this attack and identified victims through the ongoing work of the MSTIC team in tracking nation-state actors. We have no reason to believe these attacks involve any exploit against or vulnerability in Microsoft’s products or services.

These attacks are notable for three reasons.

First, when coupled with the attack on SolarWinds, it’s clear that part of Nobelium’s playbook is to gain access to trusted technology providers and infect their customers. By piggybacking on software updates and now mass email providers, Nobelium increases the chances of collateral damage in espionage operations and undermines trust in the technology ecosystem.

Second, perhaps unsurprisingly, Nobelium’s activities and that of similar actors tend to track with issues of concern to the country from which they are operating. This time Nobelium targeted many humanitarian and human rights organizations. At the height of the Covid-19 pandemic, Russian actor Strontium targeted healthcare organizations involved in vaccines. In 2019, Strontium targeted sporting and anti-doping organizations. And we’ve previously disclosed activity by Strontium and other actors targeting major elections in the U.S. and elsewhere. This is yet another example of how cyberattacks have become the tool of choice for a growing number of nation-states to accomplish a wide variety of political objectives, with the focus of these attacks by Nobelium on human rights and humanitarian organizations.

Third, nation-state cyberattacks aren’t slowing. We need clear rules governing nation-state conduct in cyberspace and clear expectations of the consequences for violation of those rules. We must continue to rally around progress made by the Paris Call for Trust and Security in Cyberspace, and more widely adopt the recommendations of the Cybersecurity Tech Accord, and the CyberPeace Institute. But, we need to do more. Microsoft will continue to work with willing governments and the private sector to advance the cause of digital peace.

Tyler Durden
Fri, 05/28/2021 – 08:10

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Review: A Quiet Place Part II


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The 2018 A Quiet Place was a movie about family values—chief among them, don’t die a painful and horrifying death. It was also a film with a title that was fully warranted: The first 38 minutes of its 90-minute runtime were entirely wordless.

A Quiet Place Part II, the new sequel (or continuation of the story, as writer-director-actor John Krasinski has been putting it), is considerably noisier. This may upset more fastidious viewers but will probably be fine with those who are basically in the mood for a full-roar monster movie.

The noise kicks in right at the start, with a spectacular opening scene that takes us back to the day the space creatures invaded. It’s a sunny small-town afternoon, with a Little League baseball game underway. Then there’s a ball of fire streaking through the sky; then complete chaos and terror erupt. Krasinski is already a master of this stuff (there’s a shot involving an out-of-control bus that should go directly into the oh-my-God hall of fame). But he also knows the importance of moving things along (this film is only seven minutes longer than the last one). So in a flash we find ourselves back at the end of the first movie. Krasinski’s character, rurally inclined engineer Lee Abbott, has just sacrificed his life to save his children, the deaf Regan (played by the extraordinary deaf teen actor Millicent Simmonds) and her younger brother Marcus (Noah Jupe). Now they and their wrung-out but undauntable mother, Evelyn (Emily Blunt), are trudging away from their wrecked homestead into a dark future. (Also along for the journey is the infant Baby Abbott, a nipper so newly born that no one has even bothered to give him a name yet—welcome to the world, kid!)

Krasinski is also attentive to the needs of pacing. Something is always going on, and it’s not always monster mayhem. The snap of a closing bear trap. A nerve-frazzling rescue inside an abandoned train. A clot of feral human strangers whom we’d really rather not meet. But it’s the creatures—tall and toothy and altogether off-putting—who own the movie’s several showpiece scenes. There’s a wonderfully well-shot attack at a marina, with uncannily nimble creature movements, and an island invasion that spoils everybody’s summery day in the most violent possible way.

An especially laudable aspect of the movie is the amount of effort it devotes to not being a retread of the first film. We see more of the monsters this time (although not so much that they begin to bore us). And since Krasinski is only a fleeting part of the cast now (in that opening flashback), his place is well-filled by a dad-like new character, a reluctantly helpful neighbor named Emmett (winningly played by Cillian Murphy).

Some things remain unchanged, of course. The creatures are still blind and rely entirely on their hyper-acute sense of hearing to wreak havoc. And they lose their tiny minds at the sound of electronic feedback—a fact that Regan discovered with her cochlear implant in the first film and now puts to excellent use with the help of a small guitar amplifier.

Some widely asked questions also remain. Like, what do these creatures eat? We see their huge razor-like teeth and claws capable of ripping through the side of a car. But we never see them ripping through a tasty human. Also, why are the family members all running around barefoot, even on the jagged crushed rocks of a railroad track bed? Have they already forgotten Evelyn’s nail-pierced foot in the first movie? And what about Baby Abbott—how likely is it that he could survive tucked away in a wooden box with nothing but an oxygen nose clip to breathe through?

But let’s not pick nits. Maybe these and other questions will be answered in A Quiet Place III, which is already in development. (You figured that, right?)

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Futures Jump, Meme Stocks Soar Ahead Of Key Inflation Print

Futures Jump, Meme Stocks Soar Ahead Of Key Inflation Print

S&P futures rose on Friday after solid economic data and Joe Biden’s leaked $6 trillion federal budget plans spurred a Wall Street rally in cyclical shares ahead of a closely watched inflation report offsetting recent worries about a spike in prices put the S&P 500 on course for its smallest monthly gain since February. At 7:15 a.m. ET, Dow e-minis were up 177 points, or 0.5%, S&P 500 e-minis were up 16 points, or 0.38%, and Nasdaq 100 e-minis were up 48 points, or 0.35%. Treasuries were steady and the dollar strengthened. Markets will be shut on Monday for Memorial Day holiday

In a continuation of yesterday’s retail buying frenzy, meme stocks GameStop and AMC Entertainment were set for a fifth day of gains, soaring 4.1% and 21.8% respectively, extending gains on the back of a social media-led rally that helped double the value of AMC’s stock this week. Here are some of the other biggest U.S. movers today:

  • HP shares (HPQ) drop 5% in U.S. premarket trading after beating Wall Street estimates but warning that the ongoing computer chip shortage could impact its ability to meet demand for laptops this year. This prompted concerns strong PC sales have peaked. Morgan Stanley sees the pullback as a buying opportunity, calling the supply chain risks “manageable.”
  • Salesforce.com (CRM) rose 4.9% after raising its full-year forecast for revenue and profit, helped by increased demand for its cloud-based software during the pandemic.
  • Iterum Therapeutics (ITRM) jumps 27% in premarket trading after saying the FDA doesn’t deem an advisory committee meeting as necessary as it reviews the co.’s new drug application for sulopenem etzadroxil/probenecid.
  • Stocks exposed to cryptocurrencies such as Marathon Digital (MARA) and Riot Blockchain (RIOT) decline as Bitcoin falls as much as 5.2% against the dollar.
  • Boeing Co fell 1% after reports said it halted deliveries of its 787 Dreamliners, adding fresh delays for customers following a recent five-month delivery suspension due to production problems.
  • Salesforce.com Inc added 4.9% premarket after raising its full-year forecast for revenue and profit, helped by increased demand for its cloud-based software during the pandemic.

The Fed’s favorite inflation metric – the core PCE index – will be released at 8:30 a.m. ET, and is expected to have risen 0.6% in April after a 0.4% increase in March. A big beat could give credence to fears of an overheating economy and prompt the central bank to reconsider its accommodative monetary policy.

Biden is reportedly set to unveil a budget that would take federal spending to $6 trillion in the coming fiscal year. Investors will watch data on personal spending and the Federal Reserve’s preferred inflation measure later Thursday for further clues on the outlook for prices.

Global stocks are set to climb for a fourth month, supported by the frenzied economic rebound from Covid-19, while comments from Federal Reserve and global central bank officials have helped temper fears that inflation could spark a faster-than-expected reduction in stimulus. Treasury Secretary Janet Yellen said she sees the burst in prices as temporary, though likely to last through the end of 2021.

“Between now and year end, we see a little more room for stocks to move up from where they are today and the highs they already achieved earlier this year,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets LLC, wrote in a note. “But we don’t think that the path to get there will be smooth and think a short-term pullback before the year is up remains likely.”

European stocks reached a fresh record high, boosted by expectations that the European Central Bank won’t hit the brake on stimulus measures next month. The Euro Stoxx 50 rose 0.6% to best levels of the week. DAX outperformed slightly, with Insurance, financial services and industrial names the leading sectors, while miners and autos are slightly in the red. Here are some of the biggest European movers today:

  • Marimekko shares jump as much as 14% to a record after the Finnish design company announced a debut collection with Adidas, “marking the first-ever sports apparel collaboration from Marimekko.”
  • Cattolica gains as much as 12% and is the day’s second-best performer on the FTSE Italia All-Share Index after reporting 1Q results that Equita called “solid.”
  • Solutions 30 advances as much as 30%, a third session of gains after the stock crashed 71% on Monday when the company said Ernst & Young couldn’t give an opinion on its 2020 financial statements.
  • Banco Sabadell drops as much as 4.3% after unveiling its new strategic plan that includes cost savings that “may require additional convincing,” according to Jefferies.
  • Corbion falls as much as 6.3% after Barclays downgrades to equal-weight from overweight, citing cost headwinds in raw materials.

Earlier in the session, the MSCI Asia Pacific Index added 0.8% while Japan’s Topix index closed 1.9% higher. Chinese stocks fell for the first time in five days, as foreign investors ended their buying spree after the nation’s central bank signaled the yuan’s recent gains have been too fast. The CSI 300 Index shed 0.3%, driven by declines in healthcare and technology firms. Still, the benchmark recorded its best week in more than three months with a 3.6% advance, mainly fueled by Tuesday’s jump that was the most since July last year. The People’s Bank of China set a weaker-than-expected daily reference rate for the yuan Friday, following its statement the previous day warning against one-way bets. The Chinese currency hit a five-year high against a basket of trading partners this week, prompting overseas investors to pile into local assets including stocks.

Foreigners became net sellers of mainland shares for the first time this week, reflecting jitters caused by the PBOC’s latest moves on the currency. They trimmed 526 million yuan worth of holdings Friday, paring net purchases this week to 46.8 billion yuan.

In Australia, the S&P/ASX 200 index rose 1.2% to 7,179.50, surpassing its previous record from May 10. The benchmark was supported by gains among miners and energy stocks. The gauge climbed 2.1% for the week, its best since April 9. Inghams was the best performing stock on Friday after saying its forecast earnings may exceed current consensus for the FY21 period. Nuix was the biggest laggard after ending a consultancy pact. In New Zealand, the S&P/NZX 50 index fell 0.5% to 12,182.25. The benchmark dipped back into technical correction territory after dropping over 10% from its Jan. 8 record.

In rates, the 10-year U.S. Treasury yield hovered above 1.60% amid growth optimism and concerns of more debt supply to fund spending. Yield curves bear steepen, long end gilts underperform, trading ~1bps cheaper to bunds. Following a slate of U.S. economic data including April personal income and spending, focus is likely to shift to month-end rebalancing, at 2pm ET for Bloomberg Barclays Treasury Index, conforming to Sifma’s early close recommendation ahead of U.S. holiday weekend. In Europe, semi-core and peripheral spreads are mixed, BTPs are steady despite softer auction metrics. Cash USTs hold a narrow range ahead of a round of economic data and an early close at 2pm New York ahead of Monday’s Memorial Day holiday.

In FX, Bloomberg Dollar index was little changed, trading near the best levels of the week. The yen fell as Japan recommended extending a state of emergency that includes Tokyo to curb infections. The euro was steady around $1.22 after earlier dipping to a one- week low. The pound inched lower, retreating from Thursday’s rally, with concerns growing that the U.K. won’t be able to fully re-open its economy later in June; traders were also reconsidering a speech from Bank of England policy maker Gertjan Vlieghe on Thursday, which pushed up the pound and gilt yields. Sweden’s krona fell, paring some of yesterday’s gain, but stayed within its recent range versus the greenback. The Australian dollar rose over its New Zealand peer on short- covering from funds ahead of Tuesday’s RBA policy meeting. China signaled the yuan’s recent appreciation is too rapid, with a weaker-than-expected reference rate. NZD and SEK were the worst G-10 performers. TRY weakens to a record low against USD.

In commodities, crude futures drift off the lows, WTI regains a $67-handle, Brent holds above $69.50. Spot gold holds a narrow range, finding support around Thursday’s lows near $1,890/oz. Most base metals are in the green with LME tin rallying sharply on production concerns.

Bitcoin slipped toward the $35,000 level, wiping out most of this week’s advance as Bank of Japan Governor Haruhiko Kuroda warned about token’s volatility and speculative trading. The digital currency lost 7% to trade around $35,700, recalling levels seen in last week’s crypto meltdown. Bitcoin is now flat for the week after a run that’s seen prices swing between $33,000 and $39,000.

Looking at the day ahead now, additional data highlights from the US include April’s data on personal income and personal spending, the MNI Chicago PMI for May, and the preliminary wholesale inventories for April. From central banks, the ECB’s Villeroy will be speaking, while there’s also a virtual meeting of G7 finance ministers and central bank governors.

Market Snapshot

  • S&P 500 futures up 0.3% to 4,212.25
  • STOXX Europe 600 up 0.43% to 448.36
  • MXAP up 0.9% to 208.34
  • MXAPJ up 0.5% to 698.91
  • Nikkei up 2.1% to 29,149.41
  • Topix up 1.9% to 1,947.44
  • Hang Seng Index little changed at 29,124.41
  • Shanghai Composite down 0.2% to 3,600.78
  • Sensex up 0.7% to 51,497.16
  • Australia S&P/ASX 200 up 1.2% to 7,179.51
  • Kospi up 0.7% to 3,188.73
  • Brent Futures little changed at $69.49/bbl
  • Gold spot down 0.2% to $1,892.44
  • U.S. Dollar Index little changed at 90.02
  • German 10Y yield rose 0.2 bps to -0.170%
  • Euro little changed at $1.2197

Top Overnight News from Bloomberg

  • ECB Executive Board member Isabel Schnabel played down concerns over rising borrowing costs as policy makers prepare for their next meeting, saying that higher bond yields reflect an improving economy
  • The latest repricing in currency volatility skews shows how investors are placing their bets on which central bank moves first away from extraordinary stimulus. Leveraged and institutional names alike have added positions lately that use the likes of the euro, the yen and the Swiss franc as funding currencies in carry trades versus emerging market and cyclical ones, a Europe-based trader says
  • The Bank of Japan will consider climate change in its monetary policy discussions, Governor Haruhiko Kuroda said in his clearest signal yet that the central bank is looking to support the battle against global warming
  • France’s statistics agency cut its estimate of economic output at the start of the year, showing the euro area’s second largest economy slipped into a recession for the second time in the Covid pandemic
  • China has dialed up its rhetoric about surging commodity prices and a strong currency with almost daily commentary by officials and in state media in the past two weeks, a sign authorities are becoming more uncomfortable with recent gains
  • China is signaling that the yuan’s recent appreciation is too rapid, with steps that are likely to slow — but not reverse — its gains after the currency soared tomulti-year highs against that of trading partners
  • U.K. firms are more upbeat about the economy than at any time since 2016, buoyed by a further easing of coronavirus restrictions in May, the Lloyds Bank Business Barometer shows
  • Gold stored at the Bank of England has been selling for unusually high premiums recently, signaling that central banks may be back in the market buying
  • The Japanese government recommended extending a state of emergency that includes Tokyo and other major cities, in a last-ditch effort to rein in Covid infections ahead of the capital hosting the Olympics in less than two months

Quick look at global market news courtesy of Newsquawk

Asian equity markets traded mostly higher as the region improved upon the slight positive tilt seen on Wall St. and US equity futures also marginally extended on the prior day’s late ramp-up on what was otherwise a choppy session following mixed data releases and heading into month-end. ASX 200 (+1.2%) was underpinned by continued outperformance in the mining-related sectors amid strength in underlying commodity prices and with risk appetite also spurred by potential M&A reports including BetMakers Technology’s proposal to acquire Tabcorp’s wagering and media business for AUD 4.0bln, while KKR and Domain Holdings partnered on a surprise AUD 3bln bid for PEXA that boosted shares in Link Administration which the largest shareholder in PEXA with a 44% stake. Nikkei 225 (+2.1%) outperformed as exporters cheered the recent currency weakness and with the BoJ said to consider a 6-month extension to the September deadline for the pandemic-relief program as soon as the next policy meeting on June 17th/18th. Hang Seng (+0.1%) and Shanghai Comp. (-0.2%) were mixed with focus in Hong Kong on JD Logistics which jumped over 10% on its debut and which was the 2nd largest IPO for the city so far this year, although the mainland lagged following the recent strengthening of the CNY to a 5-year high against a basket of currencies and amid lingering tensions with the US after the bipartisan bill to counter China received enough support to advance in the US Senate. Finally, 10yr JGBs tracked the recent declines in T-notes with demand hampered by the outperformance of Japanese stocks which pressured prices in the 10yr benchmark beneath 151.50, while the central bank’s presence in the market for over JPY 1.1tln of JGBs heavily concentrated in 3yr-10yr maturities did little to spur a rebound.

Top Asian News

  • Traders Grapple With Grief While India’s Markets Keep Rising
  • Survivors Tell a Harrowing Tale of Lapses in India Sea Disaster
  • Vaccine Progress, Weak Yen a Reprieve for Japan’s Lagging Stocks
  • Japan Widens Vaccine Center Access as Thousands of Slots Remain;
  • Kuroda Says BOJ Will Mull Climate in Monetary Policy Discussions

Equities in Europe hold onto the modest gains seen at the cash open and some more (Euro Stoxx 50 +0.5%), following on from mixed trade seen across APAC and on Wall Street, with the tone somewhat tentative ahead of US PCE and looming month-end. As a reminder, US and UK markets will be closed on Monday due to public holidays. US equity futures meanwhile have been grinding higher since the start of European trade despite a distinct lack of news flow as markets approach the summer period, whilst global central bank officials continue to stress the need for current levels of support and hold the view that inflationary pressures are transitory and not secular. Back to Europe, sectors are mostly positive with the earlier cyclical bias fading to a more broad-based/themeless picture with some idiosyncratic outliers. Banks top the chart amid the favourable yield environment, whilst Autos and Basic resources lag, with the latter seeing renewed pressure as China continues to jawbone commodity prices. Individual movers are relatively scarce, but SAP (+0.3%) has ultimately failed to glean much tailwind from its US peer Salesforce rising +4% post-earnings. Airbus (+2.4%) meanwhile remains firm following yesterday’s production upgrade alongside a positive broker move by JPM today.

Top European News

  • Europe’s Top Stock in 2015 Stakes Revival on Payment Cards
  • U.K. Considers Carbon Border Tax to Protect Domestic Industry
  • Germany Plans to Expand Coronavirus Vaccinations to Children
  • Danske Bank Veteran Chief Analyst Leaves for Banking Circle

In FX, far from all change or hero to zero, as the Kiwi remains firmly on track to record healthy gains vs the Greenback and Aussie on diverging Central Bank policy outlooks following the hawkish RBNZ shift to signal a September 2022 OCR lift-off on Wednesday. However, Nzd/Usd has retreated through 0.7250 from around 0.7317 at best and Aud/Nzd has bounced just over 50 pips from a whisker above 1.0600 amidst what appears to be profit taking and a technical correction more than anything fundamental given that Aud/Usd remains heavy after failing to retain hold of the 0.7800 handle and subsequently not sustaining momentum beyond the half round number below. Meanwhile, the Buck is also struggling to build on recovery gains even though month end factors are mildly supportive/constructive, especially against the Yen and US Treasury yields are off recent lows ahead of potentially key data and surveys, like PCE inflation, advanced trade and Chicago PMI, on top of President Biden’s Budget presentation. Indeed, the DXY has not extended much further having regained 90.000+ status before waning again within a 90.163-89.987 band and falling fractionally short of the w-t-d high posted yesterday.

  • EUR/GBP/JPY- The Euro got a somewhat unexpected boost from ECB’s Schnabel delivering a more upbeat assessment of the Eurozone economic recovery, and crucially no concern whatsoever about the recent leg-up in yields as in her view this reflects the improving outlook and is desirable. She also believes that financing conditions remain favourable, in contrast with distinctly dovish midweek commentary from Panetta and others of late. Hence, Eur/Usd is still keeping 1.2200 in sight and averting attempts to test/trigger stops that are anticipated to be sitting circa 1.2160 (double bottom from last week), though may find it hard to revisit 1.2250+ peaks as heavy option expiry interest resides between 1.2200-10 (1.6 bn), 1.2215-25 (1 bn) and 1.2265-75 (1 bn). Similarly, Sterling has continued its revival from worst levels in wake of hawkish BoE vibes from Vlieghe on Thursday, albeit with less impetus via Haldane who is also due to leave the MPC shortly and already dissented this month in favour of a Gbp 50 bn APF Gilt reduction – see 10.00BST and 9.27BST posts on the Headline Feed for more. Nevertheless, Cable has peered over 1.4200 again and Eur/Gbp remains sub-0.8600. Elsewhere, the Yen may actually rescued from a worse fate by option expiries at the 110.00 strike (2 bn) as its strives to contain losses and arrest a slide into month end, and with some market observers also flagging the prospect that Japanese exporters could be buyers at the level for hedge purposes to offset the tide of rebalancing flows.
  • CHF/CAD – Both on the backfoot against their US counterpart, with the Franc not drawing much encouragement from a significantly stronger than expected Swiss KOF indicator as it hovers near 0.9000, while the Loonie seems equally unimpressed with a firm revival in crude prices, but may be cushioned by unusually large option expiries running off at the 1.2100 strike later (1.5 bn for the NY cut).

In commodities, WTI Jul and Brent Aug trade relatively flat with an upside bias, in line with the cautiously positive risk tone, with the former on either side of USD 67/bbl (vs 66.74-67.45 range) and the latter just north of USD 69/bbl (vs 69.01-64 range). News flow for the complex has remained light after the gains seen yesterday as Biden’s USD 6tln 2022 budget proposal energised the bulls, with eyes still on the Iranian nuclear deal discussions – with the noise surrounding this much quieter this week vs the last. “However, if and when there is a breakthrough, we would expect it to lead to some immediate downward pressure on the market. We expect any weakness to be short-lived, however, given that the medium-term fundamentals are still supportive.” ING suggests, whilst also citing the upcoming summer driving season. Elsewhere, spot gold and silver have been uneventful and mildly pressured by the firmer Buck and yields. Spot gold has dipped back below USD 1,900/oz with the level acting as overnight resistance. Turning to base metals, Dalian iron ore continued to recover overnight from its recent losses, but the focus remains on Beijing’s commodities crackdown with China’s Securities Journal re-running similar reports to last week regarding the crackdown of speculatively driven price fluctuations. Further, sources note that several Chinese commodity firms pared back their bullish futures bets at the request of the government. LME copper has been subdued but holds onto its USD 10,000/t. Goldman Sachs said the fundamental path for key commodities including oil, copper and soybeans remains oriented towards incremental tightness in H2 with scant evidence that supply response is enough to derail the bull market, while it added that the bullish thesis in commodities is not about Chinese speculators nor is it growth in Chinese demand, but is about scarcity and a DM-led recovery.

US Event Calendar

  • 8:30am: April Personal Spending, est. 0.5%, prior 4.2%
  • 8:30am: April Personal Income, est. -14.2%, prior 21.1%
  • 8:30am: April PCE Deflator MoM, est. 0.6%, prior 0.5%; PCE Deflator YoY, est. 3.5%, prior 2.3%
    • 8:30am: April PCE Core Deflator MoM, est. 0.6%, prior 0.4%; PCE Core Deflator YoY, est. 2.9%, prior 1.8%
  • 8:30am: April Retail Inventories MoM, est. -2.0%, prior -1.4%
    • 8:30am: April Wholesale Inventories MoM, est. 0.7%, prior 1.3%
  • 8:30am: April Advance Goods Trade Balance, est. -$92b, prior -$90.6b
  • 9:45am: May MNI Chicago PMI, est. 68.0, prior 72.1
  • 10am: May U. of Mich. Current Conditions, prior 90.8
  • 10am: May U. of Mich. Sentiment, est. 83.0, prior 82.8; 1 Yr Inflation, prior 4.6%; 5-10 Yr Inflation, prior 3.1%

DB’s Jim Reid concludes the overnight wrap

Yesterday was the first day in about 6 weeks that I ventured outside in just a short sleeve shirt. Summer is arriving at last and now looks pretty set fair for the next couple of weeks. Famous last words. I’m celebrating tomorrow by playing a 36 hole golf tournament, then an 18 hole one on Sunday, Legoland on Bank Holiday Monday and then I’m taking a day’s holiday on Tuesday to play another 36 hole golf tournament. Any guesses as to which one of those days I’m looking forward to least? My aim is to go on as few (preferably zero) stomach churning rollercoasters as possible.

With the sun out at least in this little corner of the world, global cyclical equities posted a decent performance yesterday after generally positive data releases and further good news on the pandemic helped to support risk appetite. Next week’s ISM numbers and US jobs report will be more important to sentiment but for now optimism has edged the S&P 500 (+0.12%) back to within 0.8% of its all-time high. Meanwhile Europe’s STOXX 600 (+0.27%) advanced for a 6th successive session to a new record.

US capital goods (+1.86%) and banks (+1.45%) led the moves higher for the S&P, while small-cap stocks also performed strongly as the Russell 2000 index advanced +1.06%. Pandemic outperformers lagged once again with tech hardware (-0.93%) and software (-0.68%) among the poorest performing industries. In Europe it was much the same story of cyclicals leading the charge, which included the STOXX Banks index rising +2.18% to another post-pandemic high.

In term of the catalysts, the weekly initial jobless claims from the US proved to be better than expected for the week through May 22, coming in at a post-pandemic low of 406k (vs. 425k expected). In turn, this raised hopes further that next week’s jobs report will prove that the underwhelming April release of just a +266k increase in nonfarm payrolls was a blip rather than a trend. Our own economists are expecting a decent bounce back with an +800k increase in nonfarm payrolls, which would be the best number since last August given the revisions to the previous data. Other numbers also proved stronger than expected, with core capital goods orders rising by +2.3% in April (vs. +1.0% expected), even if the broader headline durable goods orders unexpectedly fell -1.3% (vs. +0.8% expected).

One additional notable data highlight was US Q1 core PCE, which was revised up two tenths to 2.5%, which in turn lifted the YoY estimates for Q1 to 1.61% from 1.55%. That is the second highest quarterly uptick in core PCE since 2012, with only Q3 of last year (the initial reopening) being higher. This will have inflation-watchers even more focused on today’s April core PCE deflator print and the final reading on the University of Michigan May consumer sentiment. Our economists expect an large increase (+0.77% forecast vs. +0.36% previously), given the outsized strength in the April CPI and PPI data. If their expectations bear out, it would bring the YoY growth rate up from 1.8% to 3.1%, with half of that due to base effects rolling off of the calculation. For the University of Michigan’s consumer sentiment index (83.0 final vs. 82.8 preliminary), the attention will be on revisions to the median 5 – 10 year inflation expectations series. The preliminary release showed a 40bp surge to 3.1% – the highest since August 2008. This number can be heavily revised so definitely one to watch as we think expectations are going to be key to whether inflation takes a foothold.

Another reflationary headline was regarding President Biden’s budget for fiscal year 2022, which is set to be unveiled today. The New York Times reported that it would include a call for $6tn of federal spending in the 2022 fiscal year. Furthermore, over the decade it would take federal spending to its highest sustained levels since WWII according to the report, with the government spending more each year as a percentage of GDP than at any time since WWII, with the exception of 2020 and 2021 during the coronavirus recession and response.

Though US budgets are more aspirational documents that still have to be worked out in Congress, Treasury yields moved higher, with the 10yr yield up +3.1bps to 1.606%. The increase was as a result of a mix of higher real yields (+1.7) and inflation expectations (+1.2bps), with the latter only rising twice in the last eight sessions now. The 7yr auction seemed to go ok which took yields off their highs (1.623%) for the day. Remember it was a bad 7yr auction at the end of February that led to one of the biggest intra-day moves higher in yields we have seen for some time.

European yields also moved higher, with those on bunds (+3.4bps), OATs (+3.1bps) and BTPs (+1.5bps) all rising. Meanwhile the spread of 10yr Greek debt over bunds fell yet again to 104.8bps, its tightest level since 2008.

One of the more outsized moves came from gilts yesterday, with 10yr yields up +5.8bps following comments from Gertjan Vlieghe of the BoE’s Monetary Policy Committee. He said that his “central scenario” was that the economy evolved similarly to the MPC’s May projections, but with “somewhat more slack”. Under this scenario, his view was that “the first rise in Bank Rate is likely to become appropriate only well into next year”. Nevertheless, a 2022 hike was more aggressive than markets were previously pricing, and he also said that under an upside scenario, then it would be in Q1 2022 that there’s “a clear view of the post-furlough unemployment and wage dynamics, so a rise in Bank Rate could be appropriate soon after”, so an even quicker pace potentially. The comments also helped sterling to be the top-performing G10 currency yesterday, strengthening +0.59% against the US Dollar.

Asian markets have largely taken Wall Street’s cyclical lead this morning with the Nikkei (+2.23%), Hang Seng (+0.63%), and Kospi (+0.88%) all up with Japanese equities boosted by a weaker Yen. Chinese bourses are trading without any direction though with the Shanghai Comp flat, the CSI (-0.09%) down and the Shenzhen Comp (+0.22%) up. In Fx, the Chinese yuan is up +0.23% to 6.3688, to the strongest level since May 2018 and is now up +2.89% since March 31st. Elsewhere, Australia’s 10y yields are up +6.5bps to 1.688% as markets begin to price in a more hawkish RBA outlook following the RBNZ meeting on Wednesday. Outside of Asia, futures on the S&P 500 are up +0.34% while metal prices have also gained with DCE iron ore up +3.33% and SHF steel rebar up +3.42%.

On the pandemic, the improving picture at the global level has seen the rate of new weekly case growth come down by more than a third since its peak a month ago, according to data from John Hopkins University, though we’re still some way above the recent trough in mid-February. Nonetheless, the Covid-19 related concerns remain with the Japanese government indicating overnight that the state of emergency would be extended in Tokyo and other regions to June 20, a little more than a month before the Tokyo Olympics start. PM Suga is expected to announce the formal decision later today and the decision to extend the state of emergency will affect almost half of Japan’s population. In the UK, there were continued concerns over the spread of the Indian variant, as cases rose to a fresh 6-week high of 3,542 yesterday, and Health secretary Hancock said to MPs that the lifting of restrictions on June Y21 would only take place “if it’s safe.” The hope is that the relatively advanced vaccination programme in the UK will help to blunt the link between cases to hospitalisations and deaths, with more than 73% of the adult population now having received a first vaccine dose, and more than 45% having had a second one. The German government announced that the country will start vaccinating children 12 and older starting June 7 on a voluntary basis. Lastly there was good news in the US, where a Quinnipiac poll showed 72% of Americans have either gotten a vaccine shot or are planning on getting one, this up from a mid-April iteration of the survey which measured it at 68%. Those who said they would not get vaccinated dropped 4pp to 23%. This comes as vaccination rates have slowed in recent weeks as over 50% of the adult population is now fully vaccinated according to the White House. On the topic of returning to normality, 73% of those polled said their Memorial Day Weekend plans (this weekend for our non-US readers) are similar to those pre-pandemic.

Looking at yesterday’s other data, the second estimate of Q1 GDP for the US maintained the annualised rate of growth at +6.4%, contrary to expectations for a +6.5% reading. Meanwhile pending home sales for April unexpectedly fell -4.4% (vs. +0.4% expected), and the Kansas City Fed’s manufacturing activity index for May also underperformed with a 26 reading (vs. 30 expected). In Europe, the German GfK consumer confidence for June underwhelmed at -7.0 (vs. -5.2 expected), though Italy’s consumer confidence index from Istat increased to a post-pandemic high of 110.6 in May (vs. 104.0 expected).

To the day ahead now, and additional data highlights from the US include April’s data on personal income and personal spending, the MNI Chicago PMI for May, and the preliminary wholesale inventories for April. Over in Europe, there’s also the preliminary French CPI reading for May, as well as the Euro Area’s final consumer confidence for May. From central banks, the ECB’s Villeroy will be speaking, while there’s also a virtual meeting of G7 finance ministers and central bank governors.

Tyler Durden
Fri, 05/28/2021 – 07:56

via ZeroHedge News https://ift.tt/3p0FQqY Tyler Durden

California’s Costly Experiment With Online Community College Is a Textbook Example of Government Failure


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There are two basic ways to provide goods or services. The first is to let people sell whatever they choose as they seek profit (or do so on a nonprofit basis out of a sense of mission). Through a system of voluntary arrangements, businesses succeed or fail based on their talents, dumb luck and the fickle demands of consumers.

The second is to empower the government to extract money from the general population through taxes and fees. Instead of competing to lure consumers, public agencies provide goods and services at the direction of bureaucrats appointed by elected officials. “Customers” pay whatever they’re billed—and are stuck with whatever is offered.

Oddly, Americans increasingly believe that the second way best provides for the necessities of life even though it’s based on force and politics—rather than freedom and choice. Despite the ever-growing list of governmental failures, people want the government to offer healthcare and even educate our children.

Let’s take a small example from the world of public education. K-14 schools grab at least 40 percent of the state’s $267-billion general-fund budget. Private schools and publicly funded (but privately operated) charter schools handled the COVID-19 emergency with amazing efficiency and aplomb, by quickly transitioning to distance learning.

One need only read the news reports of the public schools’ disastrous attempts at online schooling—and at how the teachers’ unions dragged their heels on school re-openings. Despite these hard-to-ignore results, the Legislature is advancing legislation (Assembly Bill 1316) that clamps down on charter schools that specialize in distance learning. Bureaucracies really hate competition.

Meanwhile, the California State Auditor recently released a report about the state’s online charter school, known as Calbright. Created by former Gov. Jerry Brown in 2018, this state-run college has operated so incompetently that a Legislature that has never seen a government program it doesn’t like has been trying to shut it down.

The Legislature created Calbright because of a failure of the public community college system to provide adequate at-home learning for adults in the 25- to 34-year-old range who lack a college education. As usual, the reasons for creating a new government program were reasonable—but also, as usual, the resulting program is a disaster.

As the auditor explained, the college “did not develop a detailed strategy for how and when Calbright would spend the more than $175 million in state funding it expects to receive through June 2025 to accomplish key milestones. In the absence of such a plan, the purpose of its spending to date is unclear, and neither the Legislature nor the public can effectively assess its progress. The majority of its students have either dropped out or stopped making progress in their studies.”

If the first way were at work, a school that performed as poorly as Calbright would go out of business and students would choose a better alternative. With the government way, the state’s taxpayers lose tens of millions of dollars. In most cases of government incompetence, the agency might get even more tax money to address its problems.

The state legislature might actually shutter Calbright—but not because it is any more incompetent than other publicly run schools. In this case, unions and their supporters oppose Calbright’s existence because they want the money instead spent on more faculty for the brick-and-mortar community college system. None of this nonsense should surprise anyone.

Years ago, I attended a conference of government planners where a speaker mocked the first way, as epitomized by 18th century Scottish economist Adam Smith. “The rich,” Smith wrote, “are led by an Invisible Hand to make nearly the same distribution of the necessaries of life, which would have been made, had the Earth been divided into equal portions among all its inhabitants.”

The speaker thought it astounding that people still believe as Smith did—that allowing individuals to pursue their self-interest will lead to the greatest good for the vast majority of people. The Invisible Hand sounds incomprehensible compared to, say, letting experts direct the economy based on “science” and noble concepts of the “public good,” but it’s also the reason that we live in a relatively peaceful, productive and wealthy society.

Recently, I needed a specialized part to repair a bathroom faucet. I went to the hardware store and had several choices at minuscule cost. A planner in the California Department of Widgets didn’t figure out what plumbing assemblies should be produced and then sold at a neighborhood store. Instead, an invisible series of manufacturing, distribution, and retail arrangements accomplished that feat.

The same magical dynamic could work for education—and certainly for online schooling. Supporters of Calbright argued that the state needed to provide working students with an alternative to for-profit providers, but again we see that government direction never lives up to its grandiose promises.  How many Calbrights do we need before we understand that point?

This column was first published by The Orange County Register.

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Review: A Quiet Place Part II


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The 2018 A Quiet Place was a movie about family values—chief among them, don’t die a painful and horrifying death. It was also a film with a title that was fully warranted: The first 38 minutes of its 90-minute runtime were entirely wordless.

A Quiet Place Part II, the new sequel (or continuation of the story, as writer-director-actor John Krasinski has been putting it), is considerably noisier. This may upset more fastidious viewers but will probably be fine with those who are basically in the mood for a full-roar monster movie.

The noise kicks in right at the start, with a spectacular opening scene that takes us back to the day the space creatures invaded. It’s a sunny small-town afternoon, with a Little League baseball game underway. Then there’s a ball of fire streaking through the sky; then complete chaos and terror erupt. Krasinski is already a master of this stuff (there’s a shot involving an out-of-control bus that should go directly into the oh-my-God hall of fame). But he also knows the importance of moving things along (this film is only seven minutes longer than the last one). So in a flash we find ourselves back at the end of the first movie. Krasinski’s character, rurally inclined engineer Lee Abbott, has just sacrificed his life to save his children, the deaf Regan (played by the extraordinary deaf teen actor Millicent Simmonds) and her younger brother Marcus (Noah Jupe). Now they and their wrung-out but undauntable mother, Evelyn (Emily Blunt), are trudging away from their wrecked homestead into a dark future. (Also along for the journey is the infant Baby Abbott, a nipper so newly born that no one has even bothered to give him a name yet—welcome to the world, kid!)

Krasinski is also attentive to the needs of pacing. Something is always going on, and it’s not always monster mayhem. The snap of a closing bear trap. A nerve-frazzling rescue inside an abandoned train. A clot of feral human strangers whom we’d really rather not meet. But it’s the creatures—tall and toothy and altogether off-putting—who own the movie’s several showpiece scenes. There’s a wonderfully well-shot attack at a marina, with uncannily nimble creature movements, and an island invasion that spoils everybody’s summery day in the most violent possible way.

An especially laudable aspect of the movie is the amount of effort it devotes to not being a retread of the first film. We see more of the monsters this time (although not so much that they begin to bore us). And since Krasinski is only a fleeting part of the cast now (in that opening flashback), his place is well-filled by a dad-like new character, a reluctantly helpful neighbor named Emmett (winningly played by Cillian Murphy).

Some things remain unchanged, of course. The creatures are still blind and rely entirely on their hyper-acute sense of hearing to wreak havoc. And they lose their tiny minds at the sound of electronic feedback—a fact that Regan discovered with her cochlear implant in the first film and now puts to excellent use with the help of a small guitar amplifier.

Some widely asked questions also remain. Like, what do these creatures eat? We see their huge razor-like teeth and claws capable of ripping through the side of a car. But we never see them ripping through a tasty human. Also, why are the family members all running around barefoot, even on the jagged crushed rocks of a railroad track bed? Have they already forgotten Evelyn’s nail-pierced foot in the first movie? And what about Baby Abbott—how likely is it that he could survive tucked away in a wooden box with nothing but an oxygen nose clip to breathe through?

But let’s not pick nits. Maybe these and other questions will be answered in A Quiet Place III, which is already in development. (You figured that, right?)

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Ideas Aren’t Enough—Freedom Needs Good Stories


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Having spent most of my career engaged in political debate—as a writer, teacher, organizer, and think tank president—I’d like nothing better than to counter the grave threats currently facing American liberty with the standard tools of public policy. 

Are politicians meddling more and more in markets? Then let’s publish rigorous empirical research, powerfully written books, and attention-grabbing articles to convince them of their folly. Is the progressive quest for equity threatening equality under the law? Then let’s explain, patiently and persuasively, how such goals are best accomplished by eliminating barriers and embracing individualism rather than redistribution and collectivism. Are professors and students being “cancelled” for expressing impolitic ideas? Then let’s strengthen First Amendment protections on campus. Is the practice of American government increasingly at odds with the principles of federalism, separation of powers, and the rule of law? Then let’s pass new laws or constitutional amendments to restore the ideals of the American Founding.

The strategy is familiar and inviting. It fits like a comfortable shoe. I’d like to believe it would kick the ball hard enough to score a goal, but experience has convinced me otherwise. While such activities are necessary to the defense of classical liberalism, they fall far short of being sufficient.

Most Americans don’t think about politics and government very much. For the most part, that’s a trait worth celebrating. Their daily lives aren’t consumed with legislative procedure or partisan bickering. They vote but they don’t obsess about it. They answer poll questions about specific policies, but their answers are often more artificial than insightful, reflecting more the choice of terms and limited range of options presented than what they really think. Even within the political class—by which I mean not just elected officials but also the people who staff their offices, run and fund their campaigns, and try to sway their decisions—abstract concepts and abstruse arguments fail to explain much of what people say and do.

Ideas do have consequences. But those consequences are contingent on factors beyond the substance and soundness of the ideas themselves. They depend on context, on timeliness, on presentation. Among elites and masses alike, ideas have the greatest consequences when embedded in narratives.

Human beings aren’t calculating machines. We’re storytellers. Our facility for language has helped enable learning, planning, cooperation, and exchange, propelling our species to success. As my friend and former Duke colleague Frederick Mayer explained his 2014 book Narrative Politics, social and political movements need something more than shared goals and concepts to thrive: They must inspire costly, time-consuming behavior by busy human beings whose default setting is to take no notice or action. “Facts are great, analysis is important, but if the goal is political mobilization, a shared story is essential,” Mayer says. “You cannot beat a story without another story. Politics often revolves around a contest of stories.”

Champions of liberty have been repeating this wisdom to each other for years. That’s why we are quicker to spotlight a particular student harmed by ineffective schools, or a particular professor harmed by speech codes, or a particular entrepreneur shackled by regulation, rather than just citing empirical studies or presenting philosophical arguments.

But even case studies and anecdotal leads are insufficient. Ideas assume tremendous narrative power when expressed in novels, shows, films, and art. “All stories are fictions,” Mayer observes, “yet some fictions are essentially true.”

There may be no truer description of government tyranny than the scene in Robert Heinlein’s The Moon Is a Harsh Mistress when the protagonist, Mannie, reflects on what he and other residents of Luna left behind on Earth: “Do this. Don’t do that. Stay back in line. Where’s tax receipt? Fill out form. Let’s see license. Submit six copies. Exit only. No left turn. No right turn. Queue up and pay fine. Take back and get stamped. Drop dead—but first get permit.”

Generations of young people gained their deepest understanding of totalitarianism not from lectures or textbooks about the Soviet Union but by reading George Orwell. Many heard their first full-throated defense of markets and individualism not from economists or historians but from Ayn Rand’s characters. And for many, their first introduction to the seductions of power—and to the qualities it takes to resist them—came from watching the hobbit Sam become a ringbearer in J.R.R. Tolkien’s The Return of the King: “Already the Ring tempted him, gnawing at his will and reason. Wild fantasies arose in his mind; and he saw Samwise the Strong, Hero of the Age, striding with a flaming sword across the darkened land, and armies flocking to his call as he marched to the overthrow of Barad-dûr. And then all the clouds rolled away, and the white sun shone, and at his command the vale of Gorgoroth became a garden of flowers and trees and brought forth fruit. He had only to put on the Ring and claim it for his own, and all this could be.” But “deep down in him lived still unconquered his plain hobbit-sense: he knew in the core of his heart that he was not large enough to bear such a burden, even if such visions were not a mere cheat to betray him. The one small garden of a free gardener was all his need and due, not a garden swollen to a realm; his own hands to use, not the hands of others to command.”

Young (and not-so-young) readers also encountered a key passage about the abuse of power in The Magician’s Nephew, by Tolkien’s friend C.S. Lewis. The nephew in question, Digory, had just called his uncle “rotten” for breaking a promise to trick another character, Polly, into transporting away:

“Rotten?” said Uncle Andrew with a puzzled look. “Oh, I see. You mean that little boys ought to keep their promises. Very true: most right and proper, I’m sure, and I’m very glad you have been taught to do it. But of course you must understand that rules of that sort, however excellent they may be for little boys—and servants—and women—and even people in general, can’t possibly be expected to apply to profound students and great thinkers and sages. No, Digory. Men like me, who possess hidden wisdom, are freed from common rules just as we are cut off from common pleasures. Ours, my boy, is a high and lonely destiny.”

As he said this he sighed and looked so grave and noble and mysterious that for a second Digory really thought he was saying something rather fine. But then he remembered the ugly look he had seen on his Uncle’s face the moment before Polly had vanished: and all at once he saw through Uncle Andrew’s grand words. “All it means,” he thought to himself, “is that he thinks he can do anything he likes to get anything he wants.”

Such classics are still popular today, as are more-recent works by liberty-minded writers and artists. But there aren’t nearly enough of them, I would submit, to sustain a rich culture of freedom. Large swaths of today’s popular entertainment cast business as the villain, government as the hero, and everyone else as helpless victims. They exalt “social justice” over freedom, expediency over truth, and the collective over the individual. We can and should rebut these calumnies with facts and arguments. But we must also tell many more stories of our own — in print, audio, video, and art. A few may break through to become bestsellers or cultural touchstones. But such an outcome isn’t required to accomplish the task. In today’s splintered marketplace, producing a large number of works with discrete audiences and themes is likely to be more effective than placing a few big bets and hoping for a blockbuster.

The defense of American liberty and the renewal of American institutions cannot be accomplished without patient capital invested in intellectual infrastructure. I believe in the value of scholarship, policy analysis, journalism, leadership development, and academic programs. But in the “contest of stories” that forms the substance of most political disagreements, lovers of liberty must use all the tools at our disposal.

To quote a character in Mountain Folk, my novel of the Revolutionary War: “Glory is a lonely man. Best marry him to Victory.”

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Boeing Shares Fall As Dreamliner Deliveries Halted Again

Boeing Shares Fall As Dreamliner Deliveries Halted Again

Another day, another “surprise” for Boeing shareholders: the aerospace giant has again halted deliveries of the wide-body 787 Dreamliner due to new FAA requests about the company’s strategy to address previously disclosed production issues that emerged in early September 2020, according to WSJ. 

“We continue to work closely with the FAA in a transparent and timely manner,” Boeing said. “There is no impact on the in-service fleet.”

FAA regulators are said to demand more information about how the Chicago-based plane manufacturer would address quality control issues of components within the 787 Dreamliner fuselage which previously led to a five-month halt in deliveries. It was not immediately clear how long the pause in deliveries might last. 

Shares of Boeing dropped more than 1% following the news. 

According to an Aug. 31 FAA memo, quality-control lapses at Boeing 787 Dreamliner production lines located in South Carolina found certain parts failed to meet even Boeing’s own “design and manufacturing standards.” 

Many of the 787 quality lapses are small gaps where the plane’s fuselage and body are joined together. Other problems have developed, including the vertical fin and horizontal stabilizer at the tail. Such gaps open up a can of worms for Boeing because the aircraft are prone to premature airframe fatigue, eventually requiring extensive repairs. 

Boeing has yet to satisfy the FAA. The agency has required it to perform widespread inspections of Dreamliners. This process is timely, labor-intensive, and expensive.  Aviation data firm Ascend by Cirium shows Boeing delivered a total of 12 Dreamliners in the two months since deliveries resumed on Mar. 26, after a five-month halt to address production problems. 

Last month, CEO David Calhoun said Dreamliner deliveries are expected to fall short of expectations as the manufacturer planned to deliver 10 to 12 planes each month. The temporary halt in deliveries seems to throw a monkey wrench in Calhoun’s 2021 projections. 

Dreamliner woes could also pressure Boeing’s finances even more. The company has sustained tremendous financial damage following two fatal accidents of its narrow-body 737 MAX.

Reuters quoted Boeing as saying it’s working to provide the FAA with additional verification for undelivered Dreamliners. The company said there is no impact on the in-service fleet of the planes. 

Tyler Durden
Fri, 05/28/2021 – 07:17

via ZeroHedge News https://ift.tt/3fRNH5N Tyler Durden