The “Everything Bubble” has jumped from hyperbole to literal truth in just a couple of years, as more and more assets enter “crazy expensive/extremely reckless” territory. The latest addition to the list is collateralized loan obligations (CLOs), which are created when a bank lends money to a less-than-creditworthy company and then bundles that loan with a bunch of similar loans into bonds for sale to yield-starved pension funds and bond funds.
There’s a legitimate place in the market for this kind of security, as long as everyone understands the risks. But in financial bubbles, banks’ insatiable hunger for fees combines with bond buyers’ desperate need for income to cloud everyone’s judgment. Lending standards slip, bond quality declines, credit rating agencies look the other way to keep the deals flowing, and buyers keep buying because they have no choice.
Record year
So far this year, issuance of new CLOs is on pace to easily exceed 2018’s record.
Part of this surge is, like so much else, catch-up from last year’s nationwide lockdown. But most is just your typical out-of-control financing fueled by way too much new currency being dumped into the banking system.
So how can bonds made up of below-investment-grade paper be investment grade? Through the magic of securitization. As the Wall Street Journal recently quoted CitiGroup:
Because CLOs’ loan holdings are diversified, the bonds can achieve higher credit ratings than the underlying loans, making them popular among institutions restricted to investment-grade debt, such as banks and insurers.
Meanwhile, the combination of a recovering economy and lots of lenders willing to finance pretty much anything is improving the prospects of financially challenged companies. Fewer of them are defaulting, which increases the confidence of the people buying CLO bonds. Moody’s Investors Service now expects the trailing 12-month default rate on CLOs to fall to 3.9% by the year-end, from 7.5% in March. And a growing number of firms are now being reviewed by rating agencies to have their CLOs upgraded.
Meanwhile, spreads relative to risk-free paper are shrinking:
Sounds promising, right? And, alas, also familiar. Here’s how CDOs, the previous bubble’s version of CLOs, worked just before the bottom fell out in 2008:
Perpetual motion machine
Once they really get going, asset-backed securities like CDOs and CLOs take on a kind of perpetual-motion-machine vibe in which easy money begets even easier money. To the extremely credulous, such a system looks capable of spinning right along forever. Unfortunately, this perception tends to become widespread just as some crucial cog in the machine is about to break.
Which cog will it be? Candidates abound. Interest rates might rise, stocks might tank, the government might realize its policies are stoking instability and try to “taper.” Some crazy geopolitical thing might happen (DO NOT look closely at Palestine, Ukraine, or Taiwan). It doesn’t matter which breaks first, as long as one eventually does.
Then the perpetual motion machine shifts into reverse, with rising defaults causing lower CLO bond ratings causing mass sales by panicked institutions. And so on, until whoever had the guts to short this market cashes out with epic gains.
Wholesalers Flood Poor Neighborhoods Looking For Distressed Homeowners
Wholesaling real estate is the process of finding a deeply discounted home and passing it along to an end investor. Bearing fast cash, wholesalers are flooding low-income neighborhoods, seeking distressed homeowners who want to sell quickly. Record low mortgage rates, low housing inventory, and a real estate frenzy have increased the amount of wholesaling conducted nationwide since the pandemic as many were lured in by YouTube tutorials.
The entire strategy behind wholesaling is finding a discounted property, get it under contract, and then flip it to an interested buyer for a quick profit. Bloomberg reports some wholesalers are using strong-arm tactics and misinformation to force sales. Wholesaling a house is a strategy unlike flippers, who obtain ownership of the home during the renovation period ahead of the eventual sale. A wholesaler negotiates with homeowners to find an investor (usually a cash offer).
“I don’t buy houses. I solve problems,” Scott Sekulow, who leads an Atlanta-area congregation of messianic Jews, told Bloomberg. He bills himself as the “Flipping Rabbi.” Many of his clients come to him who are distressed. Sekulow can find them an investor who will take over the property to flip for resale.
Sekulow said hedge funds are getting into the game. He told a conference of wholesalers: “When you can get in with them, they’re there paying stupid money.”
Wholesaling is entirely legal, but advocates for low-income areas say these folks are tricking sellers into deeply discounting their homes.
After residents in Illinois, Oklahoma, Arkansas, Kansas, and the city of Philadelphia, have been bombarded with wholesalers overrunning street corners with “We Buy Houses” signs, local governments have begun to crack down on these types of transactions.
“In my neighborhood in West Philly, I probably get three postcards a month from one of these guys,” said Michael Froehlich, an attorney with Community Legal Services of Philadelphia. “If you can get leads, you can dupe somebody into signing a contract for far less than fair market value, and you can make $30,000, $40,000, $50,000 on the house.”
Not too long, dozens of wholesalers, flippers, and investors gathered at a DoubleTree hotel in Roswell, Georgia, to meet for the Atlanta Real Estate Investors Alliance conference.
Mike Cherwenka, who was a panelist at the event, refers to himself as the “Godfather of Wholesaling,” told the audience:
“Cash is king, and when you can just offer people cash and close within a week, you’ve got leverage, right?” said Cherwenka. “People perk up and listen when you make an offer and you’ve got proof of funds right there.”
Brian Dally, whose Atlanta-based finance company, Groundfloor, estimates the firm will fund about $350 million in real-estate investments this year. Of that, 40% involve wholesalers.
However, complaints are beginning to mount against aggressive wholesalers who have flooded the industry since last year. Many of these folks are entry-level and don’t need real estate licenses which means regulators have very little power over them. Wholesalers say they don’t need a license because they’re arranging a sale or buying the home in a private transaction to flip to investors.
Froehlich alleges that some wholesalers trick low-income homeowners into believing their home needs tens of thousands in repairs to get a massive discount.
Meanwhile, Philadelphia cracked down on wholesalers last fall by issuing them licenses if they wanted to continue doing business in the metro area. Oklahoma this spring issued licenses for wholesalers. Arkansas and Illinois passed laws in the last couple of years that increases local government’s control over wholesaling. More recently, a bill in Kansas to regulate the industry died.
Wholesalers acknowledge they have some bad apples, but most want to revitalize low-income neighborhoods that have been neglected. Sure… it’s all about the quick money.
Davos really do think they are too clever by half. Despite prognostications to the contrary, negotiations with Iran over a new JCPOA are nearing completion which Biden/Obama will sign off on after putting up a bit more token resistance to lifting sanctions.
Why do I say this? Nordstream 2.
Biden backed down on Nordstream 2 and, at The Davos Crowd’s insistence, he will back down on the JCPOA.
Davos needs cheap energy into Europe. That’s ultimately what the JCPOA was all about. The basic framework for the deal is still there. While the U.S. will kick and scream a bit about sanctions relief, Iran will be back into the oil market and make it possible for Europe to once again invest in oil/gas projects in Iran.
Now that Benjamin Netanyahu is no longer going to be leading Israel, the probability of breakthrough is much much higher than last week. The Likudniks in Congress and the Senate just lost their raison d’etre. The loss of face for Israel in Bibi’s latest attempt to bludgeon Gaza to retain power backfired completely.
U.S. policy towards Israel is shifting rapidly as the younger generations, Gen-X and Millennials, simply don’t have the same allegiance to Israel that the Baby Boomers and Silent generations did. It is part of a geopolitical ethos which is outdated.
So, with some deal over Iran’s nuclear capability in the near future, Europe will then get gas pipelines from Iran through Turkey as well as gain better access to the North South Transport Corridor which is now unofficially part of China’s Belt and Road Initiative.
Russia, now that Nordstream 2 is nearly done, will not balk at this. In fact, they’ll welcome it. It forms the basis for a broader, sustainable peace arrangement in the Middle East. What’s lost is the Zionist program for Greater Israel and continued sowing dissent between exhausted participants.
But the big geopolitical win for Davos, they think, is that by returning Iran to the oil markets it will cut down on Russia’s dominance there. That the only reason Russia is the price setter in oil today, as the producer of the marginal barrel, is because of Trump taking Iranian and Venezuelan oil off the market.
With these negotiations ongoing and likely to conclude soon I’m sure the thinking is that this will help save Iranian moderates in the upcoming elections. But with Iran’s Guardian Council paving the way for Ebrahim Raeisi to win the election that is also very unlikely(H/T to Pepe Escobar’s latest on this) :
So Raeisi now seems to be nearly a done deal: a relatively faceless bureaucrat without the profile of an IRGC hardliner, well known for his anti-corruption fight and care about the poor and downtrodden. On foreign policy, the crucial fact is that he will arguably follow crucial IRGC dictates.
Raeisi is already spinning that he “negotiated quietly” to secure the qualification of more candidates, “to make the election scene more competitive and participatory”. The problem is no candidate has the power to sway the opaque decisions of the 12-member Guardian Council, composed exclusively by clerics: only Ayatollah Khamenei.
I have no doubt that Iran is, as Escobar suggests, in post-JCPOA mode now and will walk away from Geneva without a deal if need be, but Davos will cut the deal it needs to bring the oil and gas into Europe while still blaming the U.S. for Iran’s nuclear ambitions because they’ve gotten what they actually wanted, Netanyahu out of power.
Seeing the tenor of these negotiations and the return of Obama to the White House, the Saudis saw the writing on the wall immediately and began peace talks with Iran in Baghdad put off for a year because of Trump’s killing Soleimani.
The Saudis are fighting for their lives now as the Shia Crescent forms and China holds the House of Saud’s future in its hands.
Syria will be restored to the Arab League and all that ‘peace’ work by Trump will be undone quickly. Because none of it was actually peaceful in its implementation. Netanyahu is gone, Israel just got defeated by Hamas and now the rest of the story can unfold, put on hold by four years of Jared Kushner’s idiocy and U.S. neoconservatives feeding Trump bad information about the situation.
The Saker put together two lists in his latest article (linked above) which puts the entire situation into perspective:
The Goals:
Bring down a strong secular Arab state along with its political structure, armed forces, and security services.
Create total chaos and horror in Syria justifying the creation of a “security zone” by Israel not only in the Golan but further north.
Trigger a civil war in Lebanon by unleashing the Takfiri crazies against Hezbollah.
Let the Takfiris and Hezbollah bleed each other to death, then create a “security zone,” but this time in Lebanon.
Prevent the creation of a Shia axis Iran-Iraq-Syria-Lebanon.
Break up Syria along ethnic and religious lines.
Create a Kurdistan which could then be used against Turkey, Syria, Iraq, and Iran.
Make it possible for Israel to become the uncontested power broker in the Middle-East and force the KSA, Qatar, Oman, Kuwait, and all others to have to go to Israel for any gas or oil pipeline project.
Gradually isolate, threaten, subvert, and eventually attack Iran with a broad regional coalition of forces.
Eliminate all centers of Shia power in the Middle-East.
The Outcomes:
The Syrian state has survived, and its armed and security forces are now far more capable than they were before the war started (remember how they almost lost the war initially? The Syrians bounced back while learning some very hard lessons. By all reports, they improved tremendously, while at critical moments Iran and Hezbollah were literally “plugging holes” in the Syrian frontlines and “extinguishing fires” on local flashpoints. Now the Syrians are doing a very good job of liberating large chunks of their country, including every single city in Syria).
Not only is Syria stronger, but the Iranians and Hezbollah are all over the country now, which is driving the Israelis into a state of panic and rage.
Lebanon is rock solid; even the latest Saudi attempt to kidnap Hariri is backfiring. (2021 update: in spite of the explosion in Beirut, Hezbollah is still in charge)
Syria will remain unitary, and Kurdistan is not happening. Millions of displaced refugees are returning home.
Israel and the US look like total idiots and, even worse, as losers with no credibility left.
The net result is everyone in the region who were aggressors are now suing for peace. This is why I expect some kind of deal that returns Iran to the global economy. There’s no way for Germany’s shiny new trade deal with China to work without this.
Trump’s hard line against Iran was always a mistake, even if Iran’s nuclear ambitions are real. But with the Open Skies treaty now a dead letter the U.S. has real logistical problems in the region and they only multiply if Erdogan in Turkey finally chooses a side and gives up his Neo-Ottoman ambitions, now very likely.
But when it comes to economics, as always, Davos has this all backwards vis a vis oil. They still think they can use the JCPOA to drive a wedge between Iran and Russia over oil. They still think Putin only cares about oil and gas sales abroad. It’s clear they don’t listen to him because the policy never seems to change.
So, to Davos, if they bring 2.5 to 3 million barrels per day from Iran back online and oil prices drop, this forces Russia to back down militarily and diplomatically in Eastern Europe. With a free-floated ruble the Russians don’t care now that they are mostly self-sufficient in food and raw material production.
None of that will come to pass. Putin is shifting the Russian economy away from oil and gas with an announced ambitious domestic spending plan ahead of this fall’s State Duma elections. Lower or even stable prices will accelerate those plans as capital no longer finds its best return in that sector.
This carrot to Iran and stick to Russia approach of Brussels/Davos is childish and it will only get worse when the Greens come to power in Germany at the end of the year. Unless the German elections end in a stalemate which is unforeseen, the CDU will grand coalition as the junior partner to the Greens, just as Davos wants it.
Don’t miss the significance of the policy bifurcation either when it comes to oil. The Biden administration is trying to make energy as expensive as possible in the U.S. — no Keystone Pipeline, Whitmer trying to close down Enbridges’s Line 5 from Canada into Michigan, etc. — while Europe gets Nordstream 2 from Russia and new, cheap supplies from Iran.
This is what had Trump so hopping mad when he was President. This is part of why he hated the JCPOA. Israel and the EastMed pipeline was what should have been the U.S. policy in his mind.
Now, those dreams are dead and the sell out of the U.S. to Davos is in full swing. Seriously, Biden/Obama are going to continue on this path of undermining U.S. energy production until they are thrown out of office, either by the overwhelming shame of the election fraud lawsuits which recall Senators from Arizona, Georgia and Michigan, the mid-term elections which brings a more pro-Trump GOP to power or by military force. That last bit I put a very low probability on.
Bottom line, for now global oil prices have likely peaked no matter what drivel comes out of John Kerry’s mouth.
The Brent/WTI spread will likely collapse and go negative for the first time in years as Iran’s full oil production comes online over the next two years while U.S. production falls. We’ll see rising oil prices in the U.S. while global supply rises, some of which China is getting at a steep discount from who? Iran.
Meanwhile Russia continues to hold the EU to account on everything while unmasking the not just the latest Bellingcat/MI6/State Dept. nonsense in Belarus surrounding the arrest of Roman Petrosovich, but also filling the void diplomatically left by a confused and incompetent U.S. policy in the Middle East.
If I’m the Bennett in Israel, the first phone call I make after taking office is to no one other than Putin, who now holds the reins over Iran, Hezbollah and a very battle-hardened and angry Syria who just re-elected Assad because he navigated the assault on the country with no lack of geopolitical skill.
Because it is clear that Biden/Obama, on behalf of Davos, have left Israel out to twist in the wind surrounded by those who wish it gone. We’ll see if they get their wish. I think the win here is clear and the days of U.S. adventurism in the Middle East are numbered.
The oil wars aren’t over, by any stretch of the imagination, but the outcome of the main battles have decisively shifted who determines what battles are fought next.
US Military Plans To Harvest Solar Energy In Space, Beam It To Earth
The US Air Force (USAF) is experimenting with the idea to harvest space solar power that will be beamed back to Earth as usable energy.
The US Air Force Research Laboratory (AFRL) shared a video on YouTube describing how the solar power satellite Arachne would work.
AFRL Director Brig. Gen. Heather Pringle, quoted by Breaking Defense, said the critical design review of Space Solar Power Incremental Demonstrations and Research Project (SSPIDR) would be conducted this summer.
SSPIDR aims to use an Arachne satellite that would convert energy generated from the sun to radio frequency and beam it down to a land-based antenna. Once the radio frequency hits the antenna, it will be converted to useable power.
If SSPIDR is successful, it could one day give the US military a great advantage on the modern battlefield and an unlimited source of energy for forward operating bases. This will also allow for bases to power future weapons, such as lasers and rail guns.
At the moment, the military requires massive supply chains and convoys to receive not just energy power generation equipment but also fuel to power generators at remote bases.
“Ensuring that a forward operating base maintains reliable power is one of the most dangerous parts of military ground operations. Convoys and supply lines are a major target for adversaries,” the narrator of a new AFRL video said.
Well, this appears to be one way the military is attempting to “go green.”
Ransomware has seeped into the mainstream consciousness thanks to the recent shutdown of the Colonial Pipeline. Crippled by a ransomware attack, Colonial ended up paying a $4.4 million ransom in bitcoins to free itself from its attackers. In the meantime, the U.S. Eastern Seaboard suffered from gasoline shortages.
What is ransomware? It is malicious software that takes control of a computer, say, by encrypting files or threatening to publicly expose data. The ransomware operator only releases that control after receiving a ransom payment, usually Bitcoin but sometimes Monero.
While Colonial’s attack grabbed headlines, the ransomware problem has been growing for years. In a recent survey by Sophos of 5,400 heads of IT at corporations and government agencies around the world, 6.6% reported paying a ransom in 2020. The average price? That would be $170,000, which works out to tens of billions, if not hundreds of billions of ransoms paid!
In an opinion piece for the Wall Street Journal, Lee Reiners suggests banning cryptocurrency in order to get rid of ransomware. His argument is that cryptocurrencies like bitcoin don’t have any social purpose apart from speculation. And so getting rid of it would make the world better off.
I think a ban is overkill. There are ways to go about attacking ransomware that have a smaller blast radius.
Bitcoin’s link to ransomware
First, let’s cover where Reiners and I agree. He explicitly links the ransomware phenomenon to cryptocurrencies like bitcoin when he says that “Ransomware can’t succeed without cryptocurrency.”
He’s right. No bitcoin, no ransomware boom. But I’d add a caveat. Only large-ticket ransomware relies on cryptocurrency. Small-ticket stuff never required it.
According to security writer Danny Palmer, the first strain of ransomware emerged in 1989. It asked for payment in bank drafts, cashiers’ check, or money orders to a P.O. Box in Panama. But a check is an awfully risky way for a criminal to extract ransom.
Ransomware gangs eventually moved on to centralized payments processors to extort money from victims. Ransom-A, a 2006 strain of ransomware, froze victims’ computers and would only release them when $10.99 had been transferred by remittance company Western Union. Another ransomware strain in 2011 impersonated the FBI and required a $100 payment via MoneyPak, a prepaid card product offered by Green Dot Bank.
But, as you can see, this is all small-ticket ransomware. A gang couldn’t lock down, say, a large bank and ask for a $250,000 ransom via Western Union or MoneyPak.
The other problem with Western Union and MoneyPak (from a criminal’s perspective) is that these systems are plastic—they can be updated. Thanks to pressure from law enforcement and politicians, Western Union and MoneyPak eventually modified their payments processes to make it tougher for criminals to use them for extracting ransoms.
Ransomware gangs then turned to gift cards. Alpha Ransomware, which debuted in 2016, would encrypt your data and demand $400 in iTunes gift cards for a decryption key. But a criminal can’t extract large ransoms with gift cards—most stores don’t sell cards with face values above $500.
With cryptocurrencies, ransomware gangs have discovered the perfect payment rail. No need to provide one’s identity to use cryptocurrencies such as Bitcoin or Monero. Users can remain pseudonymous. Unlike Western Union or MoneyPak, these systems cannot exclude users. They are not plastic; they cannot be recoded. To boot, a ransomware gang can sit on their cryptocurrency stash knowing that law enforcement has no ability to freeze their balances. And, unlike gift cards and MoneyPaks, there is no maximum value to a bitcoin transaction.
So censorship-resistant payments networks like Bitcoin have opened the field to industrial scale ransomware attacks in the range of $10,000 to $50 million. Nonetheless, a prohibition on ransomware goes too far.
Who uses bitcoin?
Reiners dismisses most licit cryptocurrency usage as speculative. And he’s right. Most people who buy bitcoin are just betting on its price.
But I’m not sure that we can use “it’s just speculation” to write off an entire industry. After all, we’ve chosen to keep Las Vegas and the gambling industry legal, and gambling is 100% speculative. Games of chance don’t serve a crucial societal need. But they are a form of entertainment.
Apart from criminals and gamblers, there are two other groups of cryptocurrency users worth mentioning. Outsiders, like salvia divinorum retailers, who have been cut off from centralized services for engaging in legal but unfashionable activities may turn to cryptocurrencies to make payments. Another group of licit nonspeculative users is hobbyists who oppose centralization.
These are not large groups, but they do exist. Banning cryptocurrencies would mean depriving these two groups, and potentially others, of services they value.
The status quo
An alternative to a ban is to maintain the status quo. Just let law enforcement agencies such as the FBI, INTERPOL, and RCMP do what they normally do: catch the bad guys.
But there’s a problem with this approach. Most ransomware activity originates from Russia. The Russian government turns a blind eye to ransomware gangs, on the condition that these operators don’t attack Russian companies or agencies. And so ransomware operates outside of the reach of traditional Western law enforcement.
The status quo also involves continued pressure on cryptocurrency exchanges to set up anti-money laundering defenses. Exchanges are the most liquid venues for buying and selling cryptocurrencies. By universalizing anti-money laundering measures, ransomware gangs would be cut off from selling their proceeds.
Again, the problem here is Russia. Russian cryptocurrency exchanges serve as venues for laundering and will continue to do so as long as local authorities sanction their behaviour.
Which gets us to an embargo on ransom payments.
A penalty for paying a ransom
Industry groups and other umbrella organizations, such as the U.S. Conference of Mayors, already exhort their members not to pay ransoms. So does the FBI.
They have good reasons for trying to set up an informal embargo. Sending a ransom encourages ransomware gangs to continue attacks. If everyone suddenly stopped paying, the ransomware industry’s income would be smothered and it would soon collapse.
But these “do not pay” exhortations don’t really work without a good coxswain, someone who makes sure that everyone is following the same rhythm. Individual companies or agencies have a big incentive to defect from the no-ransom optimum. If they quietly pay their attacker, they can get a decryption key and avoid the hassles of downtime and rebuilding systems from scratch.
What is needed is an authority who can enforce the embargo by calling out defectors and disciplining them for paying a ransom. A few state governments, including North Carolina and New York, are trying to take on this role by introducing anti-ransom payment legislation. (To date, none of this legislation has passed.)
But to be effective, the coxswain needs to be a much bigger actor than a state government. The U.S. Treasury already has an agency at its disposal for sanctioning bad actors: the Office of Foreign Assets Control (OFAC). To implement a ransom payment embargo, OFAC could announce that within a specified time period, say nine months, it will start to add all ransomware gangs to its list of specially designated nationals (SDN).
When OFAC designates an organization as an SDN, it becomes illegal for a U.S. citizen to do business with it. So paying a ransom to any gang on OFAC’s list would be prohibited. Corporations and agencies would quickly shift to the ideal “do not pay” equilibrium. And, with revenue drying up, ransomware gangs would exit the business.
Pre-announcing a policy of adding gangs to the SDN list would give enough lead time to corporations and agencies to build up their IT lines of defense. After all, once gangs are on the SDN list, organizations that are attacked by these gangs won’t have the easy out of a ransom payment.
This is just a sketch of a potential solution, of course. A well-designed embargo would require much more attention to detail. But, with OFAC as coxswain, an embargo might achieve everything that a ban on cryptocurrency promises to achieve without depriving gamblers, outsiders, and hobbyists of a product they utilize. It would also be more effective than the status quo, which is not capable of stopping criminals who operate with impunity from noncompliant jurisdictions.
Putin Dismisses Ryanair Incident Fallout As “Outburst Of Emotions” From Hypocritical West
Capping off a week wherein both Belarus and its powerful ally Russia are once again in a diplomatic and sanctions battle with the EU, this time involving flight paths being blocked following last Sunday’s Ryanair forced diversion incident, Russian President Vladimir Putin met with his Belarusian counterpart Alexander Lukashenko in Sochi.
Putin reportedly welcomed Lukashenko to the Friday meeting with the remarks: “Thank you for coming here, as we agreed even before the current outburst of emotions,” He emphasized further, “Yes, it is an outburst of emotions,” before saying, “But we have topics to discuss without these developments.”
European carriers have been avoiding Belarusian airspace after widespread condemnation of what was dubbed “state hijacking” after Belarusian MiG fighters escorted the Lithuania-bound flight to Minsk where authorities grabbed anti-Lushenko activist and journalist Roman Protasevich and his girlfriend. But by mid-week Russia began blocking European carriers into its airspace which were observed intentionally flying around Belarus’ airspace.
The whole saga and unusual fallout of tit-for-tat flight bans (including Belarusian state carrier Belavia being banned this week in EU airspace) is what’s being dismissed by Putin and Lukashenko as a mere “outburst of emotions” by the West.
Putin’s official press release following the meeting with Belarus’ president, who’s ruled the former Soviet nation for 27 years, also called out the West for its hypocrisy and double standards, specifically highlighting the 2013 Edward Snowden case. As TASS details of Putin’s statements:
“The plane of the Bolivian president was forced to land once. The president was led out of the plane and nothing, silence,” the head of state said during the discussion of a Ryanair flight landing in Minsk.
On July 2, 2013, the plane with Morales aboard, who was the president of Bolivia at the time, returning from Moscow’s Gas Exporting Countries Forum, was forced to make an unscheduled landing in Austria’s capital. This happened after several European countries – Spain, Italy, Portugal and France – recalled the plane’s permit to cross their airspace.
It was thought his aircraft was secretly transporting Snowden to Latin America where he might be offered asylum, and safety outside the reaches of US authorities which were seeking him across the globe after he’d fled Hong Kong. Of course, he ended up in Russia and gained asylum.
Russia hawks were angered by casual scenes of the two leaders getting chummy and relaxing by the Black Sea, as in the below example…
Putin and Lukashenko bro-ing out in Sochi today, enjoying some dolphins from the deck of the Russian president’s yacht. Meanwhile, dozens of political prisoners caught up in their crackdowns are languishing in Russian and Belarusian jails. pic.twitter.com/Xc9D1iCkRo
— Christopher Miller (@ChristopherJM) May 29, 2021
Currently the EU is mulling an expanded package of new sanctions against the Lukashenko government, something the US is also said to be preparing in coordination. But at the same time, Putin pledged that the two countries will pursue “closer ties” while sitting alongside Belarus’ leader.
Finally, after a week of false starts, the “buy signals” kicked in, and the markets mustered a rally. As we stated last week:
“With markets deeply oversold on a short-term basis and with signals at levels that generally precede short-term rallies, the rally on Thursday and Friday was not unexpected. Notably, the S&P 500 held support at the 50-dma and rallied back into the previous trading range.
On Wednesday, the Nasdaq triggered its short-term “buy signal,” which will likely provide some relative outperformance over the S&P 500. It will be important for the Nasdaq to hold above the 50-dma into next week“
The good news is that we did indeed get the rally we were expecting. The not-so-good news is that the rally already consumed a majority of the “buy signal.” Such does not mean the market is about to correct; it does suggest that upside remains limited near term.
However, the S&P 500 buy signal has a bit more room to run. Such suggests we may see some relative performance pickup between the S&P 500 and the Nasdaq over the next week or so.
Our more significant concern remains the weekly “sell signal.” Historically, these weekly signals typically denote periods of more significant volatility swings or corrections. The biggest correction risk comes when the daily and weekly signals align.
Importantly, these weekly sell signals do not always resolve into a correction. However, by the time you realize a correction has started, it is often too late to do much about it. Therefore, we tend to take these weekly signals at face value and adjust our risk exposures accordingly.
Still Expecting A Bigger Correction
As discussed over the last few weeks, we still expect a more extensive correction this summer. Currently, the markets are in an exceptionally long stretch in the market without a 5% pullback, so the odds are rising.
Importantly, as noted in this week’s “3-Minutes” video below, the one thing we continue to watch very closely is interest rates.
Wall Street analysts continue to ratchet up earnings at one of the fastest paces on record. For earnings to meet these rather lofty expectations, economic growth must sustain a very high growth rate into 2022. However, interest rates peaked a couple of months ago suggesting economic growth will weaken in the months ahead.
If rates are sniffing out slower economic growth as stimulus fades from the system, the earnings are at risk of fairly significant downward revisions. In the market figures this out, a repricing of assets is likely.
Such is why we continue to suspect a 5-10% correction is a higher probability than most think.
Inflation Is Likely Transient
We previously discussed that inflation might indeed be more transitory given the impacts creating increased prices were artificial. (i.e., stimulus, semi-conductor shortages, and pandemic-related shutdowns.)To wit:
“Inflation is and remains an always ‘transient’ factor in the economy. As shown, there is a high correlation between economic growth and inflation. As such, given the economy will quickly return to sub-2% growth over the next 24-months, inflation pressures will also subside.”
“Significantly, given the economy is roughly comprised of 70% consumption, sharp spikes in inflation slows consumption (higher prices lead to less quantity), thereby slowing economic growth. Such is particularly when inflation impacts things the bottom 80% of the population, which live paycheck-to-paycheck primarily, consume the most.”
However, another important factor behind inflationary pressures is an individual’s own actions. As noted last week by Société Générale’s Albert Edwards:
“Surveys suggest that inflation fears have become investors’ number one concern. But why look at it that way? We could equally say it is investors’ own bullishness on the strength of this economic cycle that is driving prices sharply higher in the most cyclically exposed equity sectors and industrial commodities.”
“In inflation, as in many other areas of economic life, perceptions can form reality, and that is certainly true of inflation. The University of Michigan monthly survey of consumers’ expectations perennially shows shoppers foreseeing more inflation than will in fact arrive. The important factor here is the direction of travel. If they are more worried about inflation, they will do more to guard against it, which will tend to push up prices.”
China Drives Inflation
Such is an important point, as Albert notes:
“When investors pile into commodities as an investment vehicle to benefit from rising inflation, they create substantial upstream cost pressures. Beyond the cascading effect of upstream commodity price pressures, headline CPIs are also quickly impacted as food and energy prices rip higher.”
In other words, investors cause inflation by their actions. However, this is where Albert keys in on another critical driver of inflation.
“In addition to this, the observation by investors that industrial commodity prices are rising only serves to reaffirm their belief about cyclical strength and rising inflation, most especially ‘Dr. Copper.” Many investors see copper as extremely sensitive to economic conditions.
The circular, or as George Soros terms it, ‘reflexive’ nature of financial markets makes them extremely vulnerable to being whipsawed. Yet because of the current extreme momentum, it would take a very heavy weight of evidence to convince this market to reverse direction.
We continue to highlight that commodity prices are at high risk of a major reversal because of the steep downturn in the Chinese Credit Impulse. We have highlighted this before and we are not alone. Julien Bittel of Pictet Asset Management posted the following chart.”
“When commodity prices do start to fall, expect a major reversal in inflation sentiment. Furthermore, expect momentum to become as self-reinforcing and reflexive on the way down just as it was on the way up.”
As we discussed previously, this is what the bond market is already pricing in.
Yields Need A New Narrative
While investors expect surging inflation, the bond market continues to price in weaker future economic growth. As noted in “No, Bonds Aren’t Over-Valued.”
“The correlation between rates and the economic composite suggests that current expectations of sustained economic expansion and rising inflation are overly optimistic. At current rates, economic growth will likely very quickly return to sub-2% growth by 2022.”
Note: The “economic composite” is a compilation of inflation (CPI), economic growth (GDP), and wages.
Currently, as shown in our opening commentary, yields have remained range-bound between 1.5-1.6%. Such suggests that expectations for price pressures have moderated.
While the markets wonder when the Fed will start to talk more about tapering the bond purchases, yields are currently suggesting inflation may not be the real “risk.”
The most considerable risk is a divergence among Fed policymakers which possibly leads to a policy mistake of tapering too quickly or even hiking rates.
The majority of the inflation and economic growth pressures are artificial, stemming from the stimulus injections over the last year. However, with those inputs fading as year-over-year comparisons become more challenging, the “deflationary” impact could be more significant than expected.
There is also one other point about the Fed tapering the purchases. As shown in the chart below, rates rise during phases of QE as money rotates from bonds to stocks for the “risk-on” trade. The opposite occurs when they start to taper, suggesting a decline in rates if “taper talk” increases.
Earnings Yields Are A Problem
Switching from economics to equities, the recent spike in inflation has caused a drop in the “earnings yield” into negative territory.
“Earnings yield has been the cornerstone of the ‘Fed Model’ since the early ’80s. The Fed Model states that when the earnings yield on stocks (earnings divided by price) is higher than the Treasury yield, you should invest in stocks and vice-versa.”
The problem here is two-fold.
You receive the income from owning a Treasury bond, whereas there is no tangible return from an earnings yield. For example, if we purchase a Treasury bond with a 5% yield and stock with an 8% earnings yield, if the price of both assets remains stable for one year, the net return on the bond is 5% while the return on the stock is 0%.
Unlike stocks, bonds have a finite value. At maturity, the principal gets returned to the holder along with the final interest payment. However, stocks have price risk, no maturity, and no repayment of the principal feature.The risk of owning a stock is exponentially more significant than holding a “risk-free” bond.
If we look at periods of exceptionally low earnings yields compared to the market, we find a better correlation to corrections and outright bear markets.
As shown, there is a reasonable correlation between low earnings yields and low forward returns. Historically speaking, with an earnings yield of 2.66%, forward returns over the next decade should somewhere between +2% and -5%.
But what about the NEGATIVE yield?
Negative Real Yields Are A Bigger Problem
An interesting note this past week from Sentiment Trader discussed the outcomes for markets when inflation-adjusted earnings yields are negative.
“Until recently, one of the main arguments for stocks was that even though they weren’t yielding much, at least they were earning more than Treasuries, even after accounting for inflation. Now that there has been a spike in inflation gauges, the earnings yield on the S&P 500 has turned negative. This is not a condition that investors have had to tackle much over the past 70 years.
When an investor in the S&P adds up her dividend check and share of earnings, then subtracts the loss of purchasing power from inflation, she’s barely coming out even. This is a record low, dating back to 1970, just eclipsing the prior low from March 2000.”
“If we ignore dividends, then there have been five other times when the S&P 500’s inflation-adjusted earnings yield turned negative. You may want to close one eye and use the other to look askance at the table because it’s not pretty.”
The issue of negative earnings yield tells you three things:
The market is hugely overvalued relative to the strength of underlying earnings.
Expectations for future earnings growth are unlikely to match current expectations leading to a future repricing of risk.
Bond yields are confirming that both economic and earnings growth has likely peaked.
A JPMorgan Icon Quits, And Has Some Parting Words About Cryptocurrencies
For the better part of the past decade, Wall Street traders would end their week with at least a casual glance at JPMorgan’s closely-followed cross-asset report written every week by the bank’s top x-asset strategist, John Normand. But not any more: as Normand wrote in his May 21 note published last Friday, “this is my last research note and video, as I am moving on after 24 years.” In his note, Normand discusses lessons “learned in over two decades with JPM Research, covering cross-asset strategy/asset allocation, Currencies, Commodities and Fixed Income” a period “which covers four business cycles, three US/global recessions and four financial crises (that didn’t cause US recessions), plus hundreds of weekly reports and client meetings.”
To be sure, the 13-page note is a useful reference for finance professionals, and covers various topics including:
What makes cross-asset strategy most useful. (“Cross-asset strategy is an approach to alpha generation involving four elements: (1) a outlook and trade recommendations that span all asset classes and geographies, with an investment horizon of up to one year; (2) a mixture of high-conviction themes and recommendations from asset class specialists, combined with relative value judgments of a generalist; (3) a set of common macroeconomic and policy assumptions and standardized factor models that create internal consistency within a multi-asset model portfolio; and (4) opportunistic research around emerging macroeconomic, political or structural themes that could amplify the baseline view for multiple asset classes, or inform a downside risk scenario.”)
How to time mostly efficient markets (“Tactical position-taking assumes one can time the market to outperform the benchmark, due to some combination of these factors: (1) markets are partially efficient; (2) some institutions have access to broader information sources than others; and (3) some analysts are better arrangers of a mosaic of even fully public information.”)
Portfolio construction beginning with global themes rather than asset classes. (“Examples of core themes from which I choose in any given year include: (1) the macroeconomic regime defined by growth, corporate profits, inflation and monetary/fiscal policy, which has extensions to cross-asset factors such as Value, Momentum and Size; divergences in regime across regions matters too; (2) Commodities supply stress, as a price driver independent of the macro regime; (3) political/geopolitical opportunities and risks, because there is at least one material election somewhere annually; (4) China decoupling, because its credit, regulatory and investment cycles haven’t been fully synchronized with the DMs since the Global Financial Crisis”)
The risk of overly-simplistic market narratives. (“This is a potential pitfall of narratives: they can be too simple for an environment that is much more complex, and where more analytic effort should be spent exploring the nuance and the aberrations than in reiterating the storyline in the face of changing facts.”)
The balance between models and discretion. (“start with a theory based on Economics/Finance; test it against the data and over multiple business cycles, if possible; model asset prices on more stable fundamentals rather than on other volatile and sentiment-driven asset prices; and overlay judgment on statistics.”)
The balance between traditional and alt-data.(“Altdata is useful in cross-asset investing only episodically than consistently. The conceptual issue is the representativeness of Big Data. The practical issue is the resource allocation to analyzing data sets which may only have a shelf life of a few months.”)
The uses and abuses of the consensus. (“Focusing on non-consensus recommendations seems like a useful investment hook, because less crowded positions should move more when fundamentals change. This framing entails three shortcomings, however. One is that the consensus is actually correct directionally on some markets the majority of the time, as in Equities.Another is that consensus sell-side views are not always mirrored by investor positioning, which adjusts more slowly for large asset managers due to operational constraints. The third is that consensus itself drifts over time as the business cycle and policy evolve, in turn creating multi-quarter momentum in flows and prices.”)
The limits of flow and positioning data.(“Flow and positioning data are useful in mapping market vulnerabilities, but these data can also mislead due to coverage gaps and reporting lags. Even where granular data are available by investor type and/or asset class, there is conceptual problem in assuming that any subset systematically leads or lags the broader market, given how the balance of participation shifts every cycle. In Bonds and Currencies, for example, non-US central banks led trends pre-GFC due to their reserve accumulation and diversification policies then, but are less influential now. In Equities, retail participation was influential in the late 1990s (dot-com era) and currently (meme stock trading), whereas quant funds and passive ETFs flows dominated in between.”)
Valuing analysts for frameworks more than forecasts. (“All strategists have conscious or unconscious biases in how they formulate and express views, including: the factors they track; how they weight those factors mentally; what size market move they target over what horizon; and whether they attempt to manage drawdown around a baseline view. I still derive considerable value from engaging both perma-bulls and bears across various asset classes, because I am more interested in the factors they track and how they weigh them than in their point forecasts or specific recommendations. I can stress-test a factor or change mental weights to develop a risk scenario, whereas point forecasts are simply not malleable”)
While there is much more “big picture”, philosophical and even educational themes in his parting report, with Normand closing out with “thoughts for the younger generation”, which not surprisingly gravitate around bitcoin…
… the now former chief x-asset strategist couldn’t resist giving his perspective on a tactical topic, which in a few months will be long forgotten, namely “what phase best describes the market” – spawned by all the recent declarations that we are in a mid-cycle market, and linked to that what strategy should accompany it, and the risk of a market drawdown.
Here, Normand has some good and bad news:
“The good news is that this cycle is barely a year old in terms of simple age (chart 18), except to those who consider it an extension of the 2009-2020 expansion. I consider this expansion to be a new one, because Fed policy is ultra-loose rather than tight; output gaps are generally negative rather than positive; and profit margins are above rather than below average (chart 19).”
“The bad news is that Equity and FICC markets have never been so broadly expensive this early in an expansion (chart 20), which thus leaves little risk premium to be earned as the cycle matures and provides little cushion for disappointment or random shocks. When real policy rates are positive and profit margins falling, we can properly use terms like late-cycle and implement the quite drastic portfolio rotations that are required to generate alpha”
The “bad news” is probably why Normand sees a “moderate” risk of a “meaningful” 10% drop in the MSCI’s all-world index which is “better preempted by holding a range of trades that benefit from a hawkish Fed (short DM duration, long USD, short Gold, long Value vs Growth, long MSCI EMU vs S&P) than by reducing Equity exposure overall.” So “If the catalyst will be a hawkish Fed due to rising inflation in the context of still-strong growth, the better risk-reward would be sell Fed-sensitive assets (bonds, gold, non-USD currencies, growth stocks) rather than to sell cyclically-sensitive ones (equities overall).”
Naturally, no JPMorganite could ever leave off on a bearish note which explains why even as Normand admits it will get ugly soon, he can’t bring himself to tell his clients to sell. One place where can do that, however, is in the asset class that has emerged as JPMorgan’s bogeyman in the past 5 years – cryptos, whose unprecedented eruption higher has made a joke out of Jamie Dimon’s infamous 2017 words when he said that bitcoin is a fraud and the CEO would “fire” any JPMorgan employee caught trading it.
Dumber words have never been spoken by a man as allegedly smart as Dimon, about an asset class that made millionaires and billionaires out of countless people (certainly not JPMorgan employees) who went against everything that Dimon had to say.
So yes, in keeping with JPMorgan’s party line – which is to publicly bash cryptos before the general public while privately accumulating them for its own prop desk – now that JPM traders no longer face termination for doing so especially in light of JPM’s recent expansion into cryptos as the bank launches its own actively managed bitcoin fund (what a change from Dimon’s idiotic 2017 words), Normand – who couldn’t bring himself to tell clients to sell stocks had no such qualms with bitcoin:
“… while I can believe that unrealistic expectations are often build (sic) into single securities, sectors and themes, I am less minded to believe that collective irrationality at the asset-class level is endemic. If I had to avoid any of the very expensive market now it would be Cryptocurrencies, because it entails two characteristics other rich markets lack: a penchant for high investor leverage, and a questionable investment these (sic) about the utility and efficiency of private money compared to legal tender.”
He concludes, “I am very comfortable investing in expensive equity markets. I am not comfortable investing in expensive crypto markets.”
And yet, toward the very end of the note, even the (former) high-priest of legacy asset picking at the largest US commercial bank could not stop himself from admitting what the real reason is to accumulate cryptos: simple, comprehensive insurance against a systemic collapse.
I see no value in hedging too little growth or too much inflation through Cryptocurrencies, due to issues with their intrinsic value. Unlike Bonds (or even Credit), they are not central bank policy targets in recessions. Unlike the dollar or the yen, Crypto is not a funding vehicle, so will not be bought back in times of market stress caused by either too little growth or too little inflation. If, however, one’s risk scenario is of the Thunderdome variant characterized by the simultaneous collapse of a currency and its payments system, then there is no better hedge than private, digital money.
Without going into too much detail how it is precisely the fact that central banks will not target crypto in a recession (can one imagine where the S&P would be if central banks had not injected $30 trillion in global markets to prop up stocks? And yes, central banks will never stabilize, bail-out or prop up crypto, and yet it is trading at levels that just a year ago would have seemed laughable to anyone but the most fervent bulls. In fact, as Normand admits bitcoin has now emerged as the most manipulation and intervention-free market in the world and yet in our centrally-planned society that is somehow a bad thing) that is what makes this fiat-alternative so attractive, we completely agree with Normand: there is no better hedge to the “simultaneous collapse of a currency and its payment system“… and the reason why we are confident we are just years away from this “Thunderdome” scenario is because the central banks themselves are now in a full-blown rush to come up with their own digital currencies as they all prepare to leave fiat behind after the next systemic crash, which not even the Fed’s open-market purchases of stocks will reverse.
It is this “scenario”, which even the high-priests of conventional economics and monetary finance, tacitly admit is coming, that is the reason why anyone selling cryptos just to convert them back into a fiat currency (albeit at a much higher price) that won’t exist in a few years, is as delusional as those who read Normand’s final note and concluded that he said “sell it.”
In a significant and strategic development for monetary metals, the Government of the Russian Federation has just introduced legislation which will allow Russia’s giant National Wealth Fund (NWF) to invest in gold and other precious metals. The NWF is Russia’s de facto sovereign wealth fund, and has assets of US$185 billion.
Introduced as a resolution to the procedures for managing the investments of the National Wealth Fund and signed off by the Russian prime minister Mikhail Mishustin on Friday 21 May, the changes will allow the National Wealth Fund to buy and hold gold and other precious metals with the Russian central bank, the Bank of Russia.
Gold as Diversification and Protection
In a note accompanying the gold announcement, the Russian government refers to gold as a traditional protective asset, and says that the move to add gold will introduce more diversification into NWF’s investment allocation, while promoting overall safety and profitability for the fund.
The full resolution (Resolution of May 21, 2021 No. 765) can be seen here, in Russian, in pdf form.
Up until now, the National Wealth Fund, through its 2008 investment management decree has been allowed to allocate funds to all main financial asset classes, such as foreign exchange, debt securities of foreign states, debt securities of international financial organizations, managed investment funds, equities, Russian development bank projects, and domestic bank deposits. The latest amendment now adds gold and precious metals to that list.
While Russia’s National Wealth Fund is sizable (at US$ 185 billion), it is not that widely known internationally. So here’s a quick recap. In its current structure, the National Wealth Fund emerged in February 2008 when its precursor, the Stabilization Fund of the Russian Federation, was split into two parts, namely a Reserve Fund and a Future Generations’ Fund (later renamed the National Wealth Fund).
The original Stabilization Fund, which was established in 2004, was launched so as to stabilize the Russian federal budget and insulate it against the volatility of international oil prices and oil export earnings.
The Reserve Fund then grew into a general fund to top up the federal budget, while the National Wealth Fund was designated as a fund to support the Russian Federation pension fund, for co-financing the state pension fund, and to guarantee the long-term stable functioning of the pension system. Then in early 2018, the Reserve Fund was rolled into the National Wealth Fund.
When active, the Reserve Fund had an investment remit of investing in low-yield securities, while the National Wealth Fund then and now invests in a broader set of asset classes. While the National Wealth Fund is managed by the Russian Ministry of Finance based on investment procedures and terms established by the Russian Government, the operational investment of the NWF is carried out by the Bank of Russia.
The NWF is financed in the following way. Each year, the Russian Federation earns oil and gas revenues (from production taxes and duties on oil and gas), a portion of which are then applied to finance the federal budget, and the remainder of these oil and gas revenues are transferred to the National Wealth Fund. As its basically a multi-asset investment fund, the National Wealth Fund also increases in size based on positive returns from the existing assets that it manages.
Gold – More Sustainable than Financial Assets
As the NWF soon will begin to buy and hold gold as part of its investment remit, it will be interesting to watch the NWF’s asset allocation reports, which can be found in the statistics section of the NWF pages of the Russian Ministry of Finance website here.
If this recent news about the NWF investing in gold look familiar, that’s because it is. Back in November 2020, the Russian government proposed a plan to allow the NWF to buy and hold gold, at the time introducing draft legislation for that purpose. It is this draft legislation which has now been signed into law on 21 May by Prime Minister Mikhail Mishustin.
However, nearly a year earlier in December 2019, Russia’s Finance Minister Anton Siluanov had originally raised the idea that the National Wealth Fund should invest in gold, saying at the time that he saw gold “as more sustainable in the long-term than financial assets.”
It’s therefore interesting that following more than a decade of aggressively buying of domestic gold mine production and boosting Russia to one of the largest sovereign gold holders in the world, the Russian central bank stopped buying gold in April 2020, saying that it had suspended gold purchases in the domestic market.
With the central bank stepping out as a regular gold buyer in early 2020, this left Russian gold miners (and the Russian commercial banks) to sell Russian gold on the export market, and Russian gold exports have ramped up since then, particularly Russian gold exports to the West via London. See here, here, and here for examples.
The last time the Russian central bank bought gold was in March 2020 when it added 18.7 tonnes to its gold reserves, to give a grand total of 2299 tonnes. Since then it has made no gold purchases, but has made two small sales, each for 100,000 ozs (in January 2021 and again in April 2021), leaving the Russians with 2292 tonnes currently.
Still, this leaves Russia as the fifth largest sovereign gold holder in the world (just behind the claimed gold holdings of France and Italy). Russia’s gold reserves also comprise 22% of total Russian reserve assets, and since 2020 gold has been a larger component of Russian reserve assets than US dollar denominated assets, as the Russian state continues to de-dollarize its exposure in light of sanctions risk.
Note also that Russia operates a “State Fund of Precious Metals and Precious Stones” called the Gosfund which is managed by state organization ‘Gokhran’ which reports to the Ministry of Finance. This Gosfund can also buy and hold gold, but it does not publish any details of what it holds, and they confirmed to BullionStar in 2016 that:
“Gokhran does not publish information about the amount of gold reserves in the Russian Gosfund and data about precious metal operations”.
But you can assume that the Gokhran is probably also buying gold.
Conclusion
When at the end of March 2020, the Russian central bank announced that it would suspend purchases of gold in the domestic market, it also said that “subsequent decisions on gold purchases will be made subject to financial market developments.“
One of these decisions now seem to be the Russian state / central bank putting on another ‘hat’ (of the National Wealth Fund), and returning to the gold market in tag team style (following a plan that began at the end of 2019), with the National Wealth Fund now able to continue where the Bank of Russia left off in early 2020. Any NWF gold buying will also mean less Russia gold for export, but maybe this is the intention, especially in light of heightened sanctions risk on Russia from the US and EU and the risks of overseas asset freezes.
Physical gold, as all gold owners will know, has no counterparty risk and no credit risk, so is the ultimate monetary asset for a national state to hold when worried about the sanctions risk of other countries.
As Dmitry Tulin, first deputy governor and board member of the Bank of Russia said in 2016 when commenting on the Bank of Russia’s gold purchases, “Russia is increasing its gold holdings because gold is a reserve asset that is free from legal and political risks.“
With the arrival of the massive Russian sovereign wealth fund NWF as a new gold buyer, it now looks like Russia is involved in a grand game of geo-political and monetary chess with golden pieces, and indeed a game of 4D chess.
Two people are dead, and up to 25 people were shot in a mass shooting outside a banquet hall in South Florida.
“I am at the scene of another targeted and cowardly act of gun violence, where over 20 victims were shot and 2 have sadly died. These are cold-blooded murderers that shot indiscriminately into a crowd and we will seek justice. My deepest condolences to the family of the victims,” tweeted Miami-Dade police director Alfredo Ramirez III.
A white Nissan Pathfinder pulled up to the El Mula Banquet Hall in northwest Miami-Dade County between 2400 ET Saturday and 0100 ET Sunday. Three people stepped out of the vehicle with assault weapons and handguns and indiscriminately fired into the crowd at the banquet, which at the time, was rented out for a music concert.
Miami-Dade police have no suspects and are asking the public for more information about the shooters.
Here are scenes from the incident area:
#BREAKING — 20-25 people shot, 2 confirmed dead in NW Miami Dade. This happening at El Mula Banquet Hall in the Country Club Shopping Center. pic.twitter.com/979UhADfsR
– MDPD: “targeted act of violence”
– 20-25 people shot, 2 dead
– Happened at El Mula Banquet Hall. Concert was happening
– 3 ppl pulled up & started shooting
– Police looking for white Nissan Pathfinder @WPLGLocal10pic.twitter.com/2nyw3P1vzS
#BREAKING — 20-25 people shot, 2 confirmed dead in NW Miami Dade. This happening at El Mula Banquet Hall in the Country Club Shopping Center. pic.twitter.com/92hN9kTCB8
Last weekend, nonprofit research group Gun Violence Archive (GVA) reported at least 12 mass shootings were reported across the country. Here’s a map of mass shootings so far this year.
As for President Biden’s utopian dreams of “unity,” there appears none of that this year as the country continues to descend into a socio-economic disaster.
