Until the Very End, the Generals Wanted Biden to Leave 2,500 Troops in Afghanistan


spnphotosten455092

Military officials appeared before the Senate Armed Services Committee on Tuesday to discuss the conclusion of military operations in Afghanistan, as well as President Joe Biden’s handling of the extraction. Those present included Mark Milley, chairman of the Joint Chiefs of Staff; Lloyd Austin, secretary of defense; and Kenneth McKenzie, commander of the U.S. Central Command.

The session marked the first time that these top military officials had all appeared in front of Congress since the Kabul airport suicide bombing that killed 13 U.S. troops and dozens of fleeing Afghans. It was also the top brass’s first opportunity to comment on the drone strike that military officials initially insisted had killed only Islamic State militants. (It had, in fact, accidentally hit civilian targets.) For Milley, in particular, this was also his first visit to Congress since reporting revealed that he had reached out to his counterpart in the Chinese government to assure him that he would provide a warning before acting on any potentially aggressive orders from outgoing President Donald Trump.

In his testimony, McKenzie indicated that earlier this year, he recommended that Biden leave a residual force of 2,500 troops in Afghanistan, afraid that a complete withdrawal “would lead inevitably to the collapse of the Afghan military forces and, eventually, the Afghan government.” Milley confirmed that he agreed with the advice.

Immediately, Republicans seized on this admission: Sen. Ted Cruz (R–Texas) tweeted that the administration “ignored the advice from the military and mislead the American people,” and that had their advice been followed, “Biden’s botched Afghan withdrawal could have been prevented and American lives could have been saved.” Sen. Jim Inhofe (R–Okla.), who had asked the initial question, later tweeted a video in which he criticized the Biden administration for “not listening to his advisors” on the issue.

In response to a question from Sen. Elizabeth Warren (D–Mass.), Austin acknowledged that while there were “a range of possibilities” for what could have happened with a theoretical continued presence, “if you stayed there at force posture of 2,500, certainly, you’d be in a fight with the Taliban. And you’d have to reinforce yourself.”

This is the crux of the matter: There is no plausible scenario in which the U.S. could leave behind a permanent, or even indefinite, force of soldiers without incurring further casualties. The Doha Agreement negotiated under Trump set an end date by which all American forces would have left Afghanistan, barring any future Taliban violence; a new administration reneging on that deal would certainly have invited renewed bloodshed. And a force of 2,500 facing the entirety of a renewed Taliban would have necessitated further reinforcement. At that point, we would be right back to October 2001, facing an uncertain future and an even more uncertain end goal.

Nevertheless, some Republicans are asserting that McKenzie’s answer contradicted what the president had said during an August interview with ABC News host George Stephanopoulos, who asked whether Biden had been advised to leave 2,500 troops in Afghanistan. Biden’s answer was, at best, muddled and self-contradictory, saying both that he did not receive such advice, and that the advice was “split.”

In the most charitable interpretation of his response, a Washington Post fact check noted that Biden immediately pivoted to talking about how the Taliban, after agreeing to a U.S. withdrawal deadline and abiding by its stipulation against attacks on troops, continued to capture territory throughout Afghanistan, and any effort on the part of the U.S. to try to extend or even expand its presence within the country would not have been taken lightly by an emboldened Taliban now in near-complete control of the country.

The White House contends that this is what the president meant—that nobody advised him he could leave 2,500 troops without risking a return to direct conflict. Whether or not Biden was lying, equivocating, or simply forgetful, the fundamental point remains the same: For all the well-deserved scorn one can heap on Biden’s execution of the withdrawal, the only true alternative was not withdrawing at all, and that would have been far worse.

from Latest – Reason.com https://ift.tt/3mgv7Yc
via IFTTT

“It’s About To Get Wild…”

“It’s About To Get Wild…”

Via AdventuresInCapitalism.com,

A few years back, I was in NYC for meetings.

All of a sudden, it started to pour, absolutely Miami style rain.

Miraculously, an umbrella vendor popped out of nowhere (I’ve never understood how this works, but it is crazy how fast they can show up).

Me: I’ll take a large umbrella.

Him: That will be $50.

Me: WTF!!! That’s a 2 dollar piece of Chinese crap. It probably breaks before I even get to my meeting.

Him: Son, you’re short an umbrella and I’m long. Pay me or get soaked.

Me: (looking at my suit, realizing my meeting is more important than haggling). How bout $20??

Him: $50 firm.

Me: Fine!! (argggh)

Moral of the story?? Sometimes it’s better to get filled than to go without.

Credit to Winston Miles from Eight Capital for sending…

We’ve just moved onto a new phase of the Biden/Fink Energy Crisis.

It isn’t about the price you pay, it’s about not running out.

Let that sink in.

No one wants to get scammed by the umbrella guy, but it’s even worse to show up at an important meeting soaked…

*  *  *

If you enjoyed this post, subscribe for more at http://www.adventuresincapitalism.com 

Tyler Durden
Thu, 09/30/2021 – 12:32

via ZeroHedge News https://ift.tt/3zWvb48 Tyler Durden

US Equity Markets Just Broke Key Technical Support

US Equity Markets Just Broke Key Technical Support

After another energetic session of buying in Asia, US futures began fading as Europe opened and accelerated lower as US opened…

Critically, this push lower has sent all the major US equity indices below key technical supports:

  • S&P broke below its 100DMA

  • Nasdaq broke below its 100DMA

  • Dow broke below its 100DM

  • Russell 2000 broke below its 200DMA

Will these levels be support?

It’s different this time.

Tyler Durden
Thu, 09/30/2021 – 12:21

via ZeroHedge News https://ift.tt/2Y6N7M8 Tyler Durden

Politico Reporter Narcs On Family Of Fallen Marine For No-Mask Tour Of Capitol

Politico Reporter Narcs On Family Of Fallen Marine For No-Mask Tour Of Capitol

Hours after a maskless President Biden signed baseballs in the Democratic dugout of the Congressional Baseball Game, Politico‘s Heather Caygle narc’d on a family of fallen Marine Sgt. Nicole Gee for not wearing masks during a tour of the Capitol. McGee was one of the 13 service members killed in the attack at Kabul airport on August 26, after the Biden administration botched the US pullout from Afghanistan.

“Masks requirement in the House

Tours not allowed

Yet here we are — group of 9, only 2 in maskstweeted Caygle, drawing a sharp reaction for being ‘terrible human being’ of the day, and earning quite the ratio as of this writing.

We seem to have missed Caygle’s tweets on the dozens of Democratic politicians spotted without masks on over the last year. Why she chose to pick on the family of a fallen marine is anyone’s guess.

Tyler Durden
Thu, 09/30/2021 – 12:05

via ZeroHedge News https://ift.tt/3AZ3GrZ Tyler Durden

“Tax The Rich” Mantra Is Rooted In Sociology, Not Economics

“Tax The Rich” Mantra Is Rooted In Sociology, Not Economics

Authored by Gonzalo Schwarz via RealClearPolitics.com,

Alexandria Ocasio-Cortez’s recent Met Gala dress sparked a renewed conversation on the perceived fairness of “the rich” paying their “fair share” in taxes.

This leads to questions about who decides “fairness,” and how much that “fair” amount should be.

Before going further, we need to consult the facts, according to the nonpartisan Congressional Budget Office: “In 2018, households in the highest quintile received 55 percent of income before transfers and taxes and paid 70 percent of federal taxes [emphasis added]. Households in the lowest quintile received 3.8 percent of income before transfers and taxes and paid about 0.01 percent of federal taxes, on net.” The share of federal taxes paid by the highest earning 20% of Americans has increased from 55% in 1979 to 70% in recent years. Is this too little to be considered fair?

Given these facts, it seems reasonable to ask whether the “tax the rich” mantra has more to do with sociology than with economics. Perhaps the notion that income inequality itself is inherently bad is an example of a “luxury belief.” In a seminal article, Rob Henderson introduced that term, which means “ideas and opinions that confer status on the rich at very little cost, while taking a toll on the lower class.” For example, many affluent people will publicly signal their belief that inequality is inherently bad, including business leaders like Jamie Dimon, billionaires-turned-nonprofit-leaders like Chris Hughes, and even religious leaders like Pope Francis. They are signaling that they care about those at the lower end of the income spectrum and are willing to “tax the rich” to close the gap.

According to the Tax Foundation, the corporate income tax is among the most economically harmful ways to raise revenue: “Higher corporate taxes reduce output, productivity, and wages in the long run, while making the United States less competitive.” Proposed tax increases on capital gains, corporations, and income would be so high that they would discourage employment, on net, by 300,000 jobs and reduce economic growth by 1% over a decade. The poor and middle class — not the rich — would be hardest hit by those policies.

Ironically, expressing support for a certain policy and going through with it are two different things. As “Dream Hoarders” author and Brookings Institution senior fellow Richard Reeves has pointed out, plans to reinstate the state and local tax (SALT) deduction would effectively erase any recent tax hikes for the top 1%.

Generally speaking, though, many policies put forth to address income inequality, such as minimum wage hikes or higher taxes, don’t affect the rich much. They are not working in minimum wage jobs so the jobs that disappear because of those artificially higher wages will not affect them. They’re not using the boosted unemployment benefits that disincentivize quickly finding a new job. They wouldn’t be at risk of becoming dependent on welfare if universal programs create too much dependency. And, when it comes time to really solve the issues that generate inequality, there is precious little discussion, let alone action, on those issues, including NIMBY zoning lawsoccupational licensure, the importance of family structure to develop the necessary skills to climb the income ladder, and even school choice.

Rather than sloganeering among their ultra-wealthy peers, policymakers should take the perspective of the poor into account. When polled on questions around income inequality, people earning less than $30,000 per year did not express a belief that closing the gap would help them the most. Barely 20% of people earning less than $30,000 say that the most important public policy goal should be to reduce the gap between the rich and the poor, compared with 26% of those earning more than $100,000. A plurality of people in the under-$30,000 group (39%) say our top priority should be ensuring that everyone has a fair chance of achieving success.

Among people in the under-$30,000 bracket, only 8% say the most important precondition for climbing the income ladder is a low level of income inequality, compared with 31% claiming it is economic growth and a strong labor market.

As Mr. Henderson tells us, people care a lot about social status, with respect and admiration from people in our social circles ranking higher than money for our sense of well-being. Even though the evidence suggests that merely shrinking income inequality by “taxing the rich” would not meaningfully improve the lot of the poor, this view is routinely and publicly expressed by some of America’s wealthiest people or prominent policymakers.

It’s important to recognize that taxing the rich is not a panacea to solve America’s problems, even if it is luxurious to believe that it is.

Tyler Durden
Thu, 09/30/2021 – 12:00

via ZeroHedge News https://ift.tt/3F4Kv2C Tyler Durden

Smith & Wesson Ditches Massachusetts Over Pending Legislation, Moves Headquarters To Tennessee

Smith & Wesson Ditches Massachusetts Over Pending Legislation, Moves Headquarters To Tennessee

Less than six months after gunmaker Kimber Mfg. moved from New York to Alabama due in part to ‘gun and business-friendly support’ from the red state, Smith & Wesson is moving out of Massachusetts – and will relocate its headquarters to Maryville, Tennessee in 2023, according to Bloomberg.

The nation’s largest gun manufacturer cited restrictive legislation currently under consideration in Mass., which if enacted, would prohibit the company from manufacturing certain guns in the state they’ve called home for nearly 170 years.

These bills would prevent Smith & Wesson from manufacturing firearms that are legal in almost every state in America and that are safely used by tens of millions of law-abiding citizens every day exercising their Constitutional 2nd Amendment rights, protecting themselves and their families, and enjoying the shooting sports,” said SWBI CEO Mark Smith.

“While we are hopeful that this arbitrary and damaging legislation will be defeated in this session, these products made up over 60% of our revenue last year, and the unfortunate likelihood that such restrictions would be raised again led to a review of the best path forward for Smith & Wesson,” he added.

The move will bring 750 jobs to Maryville, along with a $125 million investment, according to the Wall Street Journal, citing the Tennessee Department of Economic & Community Development.

Lower cost of living was also a factor in the move, according to Smith.

Smith & Wesson 5″ 44 magnum revolver (screenshot via Beretta9mmUSA review)

Springfield Mayor Domenic Sarno said in a statement that the move will cost the city 550 job, which he described as ‘devastating’ for the families involved. The city said they would attempt to work with the gunmaker to try and retain 1,000 remaining jobs.

According to a person familiar with the move, the company will keep some production in Springfield.

Smith & Wesson was founded in 1856 by Horace Smith and Daniel Wesson in New England – eventually settling in Springfield. In addition to manufacturing some of the most legendary firearms in US history – including the .44 magnum, they have supplied weapons to the US military and police departments across the country.

Tyler Durden
Thu, 09/30/2021 – 11:40

via ZeroHedge News https://ift.tt/3D5BHYB Tyler Durden

S. Ct. Agrees to Hear “Christian Flag” / Government Speech Case

It’s Shurtleff v. City of Boston; here’s an excerpt from the decision below, which the Court will now review:

The case has its genesis in a suit filed by plaintiffs Harold Shurtleff and Camp Constitution in which they complained that the defendants — the City of Boston and Gregory T. Rooney, in his official capacity as Commissioner of Boston’s Property Management Department (collectively, the City) — trampled their constitutional rights by refusing to fly a pennant, openly acknowledged by the plaintiffs to be a “Christian Flag,” from a flagpole at Boston City Hall. The district court granted summary judgment in favor of the City. Concluding, as we do, that the government speech doctrine bars the maintenance of the plaintiffs’ free speech claims and that their remaining claims under the Establishment Clause and the Equal Protection Clause lack bite, we affirm….

The City owns and manages three flagpoles in an area in front of City Hall referred to as City Hall Plaza. The three flagpoles are each approximately eighty-three feet tall and are prominently located in front of the entrance to City Hall — the seat of Boston’s municipal government. Ordinarily, the City raises the United States flag and the POW/MIA flag on one flagpole, the Commonwealth of Massachusetts flag on the second flagpole, and its own flag on the third flagpole. Upon request and after approval, though, the City will from time to  time replace its flag with another flag for a limited period of time….

In a twelve-year period (from June 2005 through June 2017), the City approved 284 flag-raising events that implicated its third flagpole. These events were in connection with ethnic and other cultural celebrations, the arrival of dignitaries from other countries, the commemoration of historic events in other countries, and the celebration of certain causes (such as “gay pride”). The City also has raised on its third flagpole the flags of other countries, including Albania, Brazil, Ethiopia, Italy, Panama, Peru, Portugal, Mexico, as well as China, Cuba, and Turkey. So, too, it has raised the flags of Puerto Rico and private organizations, such as the Chinese Progressive Association, National Juneteenth Observance Foundation, Bunker Hill Association, and Boston Pride. Broadly speaking, we group these approvals as approvals for “the flags of countries, civic organizations, or secular causes.”

Against this backdrop, we introduce the plaintiffs. Camp Constitution is an all-volunteer association that seeks “to enhance understanding of the country’s Judeo-Christian moral heritage.” Shurtleff is the founder and director of Camp Constitution. In July of 2017, the plaintiffs emailed Lisa Menino, the City’s senior special events official, seeking leave to fly their own flag over City Hall Plaza. In their words, the proposed event would “raise the Christian Flag” and feature “short speeches by some local clergy focusing on Boston’s history.”

At the time of this request, the City had no written policy for handling flag-raising applications. What is more, Rooney had never before denied a flag-raising application. On this occasion, though, the plaintiffs’ request “concerned” Rooney because he considered it to be the first request he had received related to a religious flag.

Of course, some of the flags that the City had raised contained religious imagery. The Portuguese flag, for instance, contains “dots inside blue shields represent[ing] the five wounds of Christ when crucified” and “thirty dots that represent[ ] [sic] the coins Judas received for having betrayed Christ.” As another example, the Turkish flag situates the star and crescent of the Islamic Ottoman Empire in white against a red background. Indeed, the City’s own flag includes a Latin inscription, which translates as “God be with us as he was with our fathers.” None of the flags that the City had previously approved, however, came with a religious description.

Mulling the plaintiffs’ application, Rooney conducted a review of past flag-raising requests and determined that the City had no past practice of flying a religious flag. He proceeded to deny the plaintiffs’ flag-raising request. In response to the plaintiffs’ inquiry into the reason for the denial, Rooney responded that the City’s policy was to refrain respectfully from flying non-secular third-party flags in accordance with the First Amendment’s prohibition of government establishment of religion. Rooney offered to fly some non-religious flag instead. The plaintiffs spurned this offer….

The record is pellucid that the City is not receptive to any and all proposed flag designs. As we previously indicated, the City controls which third-party flags are flown from the third flagpole. A flag-raising is approved only after Rooney “screen[s]” a proposed flag for “consisten[cy] with the City’s message, policies, and practices” and provides his final approval. Furthermore, all 284 flags previously flown were flags of countries, civic organizations, or secular causes. That the City had not rejected prior requests is insufficient to conclude that the City accepts any and all flags because the record shows that the City had criteria for approval that limited flagpole access and that all flags flown satisfied those criteria. Here, the City’s permission procedures evince selective access to the third flagpole, and “[t]he government does not create a designated public forum when it does no more than reserve eligibility for access to the forum to a particular class of speakers, whose members must then, as individuals, `obtain permission.'” The City’s restrictions demonstrate an intent antithetic to the designation of a public forum, and those restrictions adequately support the conclusion that the City’s flagpole is not a public forum.

That ends this aspect of the matter. Because the City engages in government speech when it raises a third-party flag on the third flagpole at City Hall, that speech is not circumscribed by the Free Speech Clause. The City is therefore “entitled” to “select the views that it wants to express.” This entitlement includes both the right to decide not to speak at all and the right to disassociate itself from speech of which it disapproves….

from Latest – Reason.com https://ift.tt/3mbmFJY
via IFTTT

S. Ct. Agrees to Hear “Christian Flag” / Government Speech Case

It’s Shurtleff v. City of Boston; here’s an excerpt from the decision below, which the Court will now review:

The case has its genesis in a suit filed by plaintiffs Harold Shurtleff and Camp Constitution in which they complained that the defendants — the City of Boston and Gregory T. Rooney, in his official capacity as Commissioner of Boston’s Property Management Department (collectively, the City) — trampled their constitutional rights by refusing to fly a pennant, openly acknowledged by the plaintiffs to be a “Christian Flag,” from a flagpole at Boston City Hall. The district court granted summary judgment in favor of the City. Concluding, as we do, that the government speech doctrine bars the maintenance of the plaintiffs’ free speech claims and that their remaining claims under the Establishment Clause and the Equal Protection Clause lack bite, we affirm….

The City owns and manages three flagpoles in an area in front of City Hall referred to as City Hall Plaza. The three flagpoles are each approximately eighty-three feet tall and are prominently located in front of the entrance to City Hall — the seat of Boston’s municipal government. Ordinarily, the City raises the United States flag and the POW/MIA flag on one flagpole, the Commonwealth of Massachusetts flag on the second flagpole, and its own flag on the third flagpole. Upon request and after approval, though, the City will from time to  time replace its flag with another flag for a limited period of time….

In a twelve-year period (from June 2005 through June 2017), the City approved 284 flag-raising events that implicated its third flagpole. These events were in connection with ethnic and other cultural celebrations, the arrival of dignitaries from other countries, the commemoration of historic events in other countries, and the celebration of certain causes (such as “gay pride”). The City also has raised on its third flagpole the flags of other countries, including Albania, Brazil, Ethiopia, Italy, Panama, Peru, Portugal, Mexico, as well as China, Cuba, and Turkey. So, too, it has raised the flags of Puerto Rico and private organizations, such as the Chinese Progressive Association, National Juneteenth Observance Foundation, Bunker Hill Association, and Boston Pride. Broadly speaking, we group these approvals as approvals for “the flags of countries, civic organizations, or secular causes.”

Against this backdrop, we introduce the plaintiffs. Camp Constitution is an all-volunteer association that seeks “to enhance understanding of the country’s Judeo-Christian moral heritage.” Shurtleff is the founder and director of Camp Constitution. In July of 2017, the plaintiffs emailed Lisa Menino, the City’s senior special events official, seeking leave to fly their own flag over City Hall Plaza. In their words, the proposed event would “raise the Christian Flag” and feature “short speeches by some local clergy focusing on Boston’s history.”

At the time of this request, the City had no written policy for handling flag-raising applications. What is more, Rooney had never before denied a flag-raising application. On this occasion, though, the plaintiffs’ request “concerned” Rooney because he considered it to be the first request he had received related to a religious flag.

Of course, some of the flags that the City had raised contained religious imagery. The Portuguese flag, for instance, contains “dots inside blue shields represent[ing] the five wounds of Christ when crucified” and “thirty dots that represent[ ] [sic] the coins Judas received for having betrayed Christ.” As another example, the Turkish flag situates the star and crescent of the Islamic Ottoman Empire in white against a red background. Indeed, the City’s own flag includes a Latin inscription, which translates as “God be with us as he was with our fathers.” None of the flags that the City had previously approved, however, came with a religious description.

Mulling the plaintiffs’ application, Rooney conducted a review of past flag-raising requests and determined that the City had no past practice of flying a religious flag. He proceeded to deny the plaintiffs’ flag-raising request. In response to the plaintiffs’ inquiry into the reason for the denial, Rooney responded that the City’s policy was to refrain respectfully from flying non-secular third-party flags in accordance with the First Amendment’s prohibition of government establishment of religion. Rooney offered to fly some non-religious flag instead. The plaintiffs spurned this offer….

The record is pellucid that the City is not receptive to any and all proposed flag designs. As we previously indicated, the City controls which third-party flags are flown from the third flagpole. A flag-raising is approved only after Rooney “screen[s]” a proposed flag for “consisten[cy] with the City’s message, policies, and practices” and provides his final approval. Furthermore, all 284 flags previously flown were flags of countries, civic organizations, or secular causes. That the City had not rejected prior requests is insufficient to conclude that the City accepts any and all flags because the record shows that the City had criteria for approval that limited flagpole access and that all flags flown satisfied those criteria. Here, the City’s permission procedures evince selective access to the third flagpole, and “[t]he government does not create a designated public forum when it does no more than reserve eligibility for access to the forum to a particular class of speakers, whose members must then, as individuals, `obtain permission.'” The City’s restrictions demonstrate an intent antithetic to the designation of a public forum, and those restrictions adequately support the conclusion that the City’s flagpole is not a public forum.

That ends this aspect of the matter. Because the City engages in government speech when it raises a third-party flag on the third flagpole at City Hall, that speech is not circumscribed by the Free Speech Clause. The City is therefore “entitled” to “select the views that it wants to express.” This entitlement includes both the right to decide not to speak at all and the right to disassociate itself from speech of which it disapproves….

from Latest – Reason.com https://ift.tt/3mbmFJY
via IFTTT

China Orders Top Energy Firms To “Secure Supplies At All Costs”; Oil Surges

China Orders Top Energy Firms To “Secure Supplies At All Costs”; Oil Surges

China is officially panicking.

Now that the global energy crisis has slammed China’s economy, leading to the first contractionary PMI since March 2020 as a result of widespread shutdowns of factory and manufacturing, not to mention hundreds of millions of Chinese residents suffering from periodic blackouts, Bloomberg reports that China’s central government officials “ordered the country’s top state-owned energy companies to secure supplies for this winter at all costs.”

Translation: Beijing is no longer willing to risk social anger and going forward China will be subsidizing coil and nat gas, which will lead to even higher prices, which will lead to even higher prices for other “substitute” commodities such as oil, which is why oil surged on the news.

The news follows a report on Wednesday that China will allow soaring coal prices to be passed on to factories in electricity prices. But prepare for a surge in PPI, which will likely not be allowed to be passed on to CPI due to ‘common prosperity’. Which logically means margin collapse, and shutting down – so even more structural shortages. Unless we get state subsidies of some sort, or differential pricing for the foreign and domestic market. There used to be a name for that kind of economy. Wall Street used to pretend it didn’t like it.

According to Bloomberg, the order came directly from Vice Premier Han Zheng, who supervises the nation’s energy sector and industrial production, and was delivered during an emergency meeting earlier this week with officials from Beijing’s state-owned assets regulator and economic planning agency. The bottom line, according to Bloomberg sources, is that “blackouts won’t be tolerated.”

Which simply means that the supply chain bottlenecks are about to get even worse since China will muscle in even more aggressively for what little coal and LNG supply there is. It is unclear if it also means that Beijing is about to give up on its laughable pursuit of decarbonization.

The emergency meeting underscores the critical situation in China. A severe energy shortage crisis has gripped the country, and several regions have had to curtail power to its industrial sector and some residential areas have even faced sudden blackouts.

In a sign of how worried Chinese officials are, Premier Li Keqiang vowed overnight that every effort will be taken to maintain economic growth. China will ensure the needs of basic livelihoods are met and will keep industrial and supply chains stable, Li was cited as saying by China National radio during a meeting with foreign diplomats Thursday.

The bottom line is that China finally hit the limit of how much slowdown it is willing to tolerate and Beijing is about to unleash a monetary and fiscal stimulus tsunami.

Tyler Durden
Thu, 09/30/2021 – 11:23

via ZeroHedge News https://ift.tt/39UrDVw Tyler Durden

Latest PMI Data Confirms China “Entering Period Of Stagflation”

Latest PMI Data Confirms China “Entering Period Of Stagflation”

Just days after Goldman slashed its Q3 GDP estimate for China to 0%, predicting no growth in the world’s second largest economy, overnight Beijing confirmed that the Chinese economy has indeed stalled, with the September Mfg PMI contracting in September for the first time since the COVID-19 outbreak, even as the non-Mfg PMI rebounded after the end of the recent Delta outbreak.

Commenting on the contraction in mfg PMI, Goldman attributed it to the production cuts caused by energy constraints with both the output sub-index and the new orders sub-index in the NBS manufacturing PMI survey decreasing in September. However, Goldman warned that the numbers may not capture full impact of energy restrictions as the NBS survey was taken around 22nd-25th of the month.

Key highlights:

  • Mfg PMI contracted in September for the first time since the COVID-19 outbreak on the back of weaker production. The headline reading declined by -0.5pp from August to 49.6, overriding the seasonality, weaker than market expectations of 50. PMI dropped by -1.5pp to 49.7 for medium sized firms and by -0.7pp to 47.5 for small ones but edged up 0.1pp to 50.4 for large enterprises. NBS indicated the industry divergence remained significant in September – the production and new order indexes of high energy intensity industries fell below 45.0, likely due to the production cuts caused by energy constraints, while the production and new order indexes of high-tech manufacturing were above 54.0, suggesting continued expansion.
    • Production declined by a significant -1.4pp to 49.5. The abrupt power cuts and the “dual energy control” already started to show the impact.
    • New orders lost -0.3pp to 49.3, with new export orders down by -0.5pp to the 15-month low at 46.2. Imports pulled back by a larger -1.5pp to 46.8. Both domestic and external demand seemed to have weakened further.
    • Purchasing price and producer price indices rose by 2.2pp to 63.5 and by 3pp to 56.4, respectively. The energy outages and supply disruptions kept up industrial prices.
    • Finished goods inventory slid -0.5pp to 47.2 as production waned, while raw materials inventory climbed 0.5pp to 48.2.
    • Mfg employment dropped by -0.6pp to 49, showing a deterioration of the labor market condition.
    • The new export order sub-index fell to 46.2 in September vs. 46.7 in August, and the import sub-index fell to 46.8 in September (vs. 48.3 in August).
  • Non-Mfg PMI rebounded after the end of the earlier Delta outbreak. Following a -7.3pp slump in August, it recovered 5.7pp to 53.2, way above market consensus at 49.8. All sub-indices improved, with new business up 6.8pp to 49 and employment up 0.8pp to 47.8. Sector-wise, PMI almost returned to the pre-Delta level, up 7.2pp to 52.4, for services. In contrast, PMI printed -3ppt lower at 57.5 for construction, likely due to the property slowdown.

Yet as the manufacturing economy contracted, price indicators in the NBS manufacturing survey suggest inflationary pressures escalated somewhat with the input cost sub-index rising to 63.5 (vs. 61.3 in August), and the output prices sub-index also jumped to 56.4 (vs. 53.4 in August). NBS mentioned the input cost sub-indexes of petroleum, coal and other fuels, chemical materials and products, and smelting and pressing of ferrous metal were above 69.0 in September, suggesting a sharp rise of input costs. The output prices sub-index of smelting and pressing of ferrous metal was above 70.0 in September. By enterprise size, PMI of large enterprises edged up to 50.4 (vs. 50.3 in August), while PMI of medium and small enterprise fell to 49.7 and 47.5, respectively, (vs. 51.2 and 48.2 in August).

It’s also notable that the construction PMI fell in September to 57.5 (vs. 60.5 in August). NBS mentioned the employment and business expectation sub-indexes of construction rose to 52.6 and 60.1 in September (vs. 50.6 and 58.4 in August), suggesting improved labor market conditions and confidence in the construction sector. Expect much more weakness as the fallout from the Evergrande saga affects a bigger share of the property market.

Looking at the latest data, Citi’s China economists conclude that “China seems to be entering into at least a short period of “stagflation” adding that when the “supply constraints are largely binding, it is not appealing to forcefully boost (investment) demand via broad-based stimulus for now. Instead, we see more targeted policy efforts in the near term.”

Some more details from Citi:

  • We recently trimmed our growth forecasts to 4.9% for 21Q3 and 4.5% for 21Q4 and downgraded the full-year projection to 4.9% for 2022 on the Evergrande spillover. Rising production cuts for the power outages and/or the “dual control” post a downside risk ~0.5ppt to our Q4 projection.
  • While relief measures are possible, we see no quick fix to the power shortages throughout the winter. The need to ensure blue skies for Beijing’s Winter Olympics would constitute an extra reason for the government to limit  the production of raw materials in northern China.
  • In the meantime, the supply disruptions in the peak season should outweigh the demand weakness induced by the property down-cycle, backing energy and industrial prices. We expect PPI inflation to stay >9% toward the year-end.
  • With CPI muted on the sluggish consumption catch-up, the deep PPI-CPI divergence would squeeze the profit margin of mid/downstream sectors, especially SMEs. When the supply constraints are largely binding, it is simply not appealing to forcefully boost (investment) demand via broad-based stimulus.

Looking ahead, Citi – like Morgan Stanley recently – sees more targeted support in the near term, and the anticipated 50bp RRR cut may be advanced to October. The PBoC’s new credit facilities to support decarbonization will likely start to operate soon. Regulators can also bring forward a part of the 2022 mortgage quota to Q4 to support non-speculative housing demand. The back-loaded local bond issuance and fiscal resource deployment will facilitate the climb, if not rebound, of infra investment.

Finally, when supply constraints ease after the winter, Citi expects much more aggressive policy actions to arrest the property-led slowdown.

Tyler Durden
Thu, 09/30/2021 – 11:08

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