Month: January 2022

Authored by Tara Henley via Lean Out with Tara Henley (emphasis ours),

For months now, I’ve been getting complaints about the Canadian Broadcasting Corporation, where I’ve worked as a TV and radio producer, and occasional on-air columnist, for much of the past decade.

People want to know why, for example, non-binary Filipinos concerned about a lack of LGBT terms in Tagalog is an editorial priority for the CBC, when local issues of broad concern go unreported. Or why our pop culture radio show’s coverage of the Dave Chappelle Netflix special failed to include any of the legions of fans, or comics, that did not find it offensive. Or why, exactly, taxpayers should be funding articles that scold Canadians for using words such as “brainstorm” and “lame.”

Everyone asks the same thing: What is going on at the CBC?

When I started at the national public broadcaster in 2013, the network produced some of the best journalism in the country. By the time I resigned last month, it embodied some of the worst trends in mainstream media. In a short period of time, the CBC went from being a trusted source of news to churning out clickbait that reads like a parody of the student press.

Those of us on the inside know just how swiftly — and how dramatically — the politics of the public broadcaster have shifted.

It used to be that I was the one furthest to the left in any newsroom, occasionally causing strain in story meetings with my views on issues like the housing crisis. I am now easily the most conservative, frequently sparking tension by questioning identity politics. This happened in the span of about 18 months. My own politics did not change.

To work at the CBC in the current climate is to embrace cognitive dissonance and to abandon journalistic integrity.

It is to sign on, enthusiastically, to a radical political agenda that originated on Ivy League campuses in the United States and spread through American social media platforms that monetize outrage and stoke societal divisions. It is to pretend that the “woke” worldview is near universal — even if it is far from popular with those you know, and speak to, and interview, and read.

To work at the CBC now is to accept the idea that race is the most significant thing about a person, and that some races are more relevant to the public conversation than others. It is, in my newsroom, to fill out racial profile forms for every guest you book; to actively book more people of some races and less of others.

To work at the CBC is to submit to job interviews that are not about qualifications or experience — but instead demand the parroting of orthodoxies, the demonstration of fealty to dogma.

It is to become less adversarial to government and corporations and more hostile to ordinary people with ideas that Twitter doesn’t like.

It is to endlessly document microaggressions but pay little attention to evictions; to spotlight company’s political platitudes but have little interest in wages or working conditions. It is to allow sweeping societal changes like lockdowns, vaccine mandates, and school closures to roll out — with little debate. To see billionaires amass extraordinary wealth and bureaucrats amass enormous power — with little scrutiny. And to watch the most vulnerable among us die of drug overdoses — with little comment.

It is to consent to the idea that a growing list of subjects are off the table, that dialogue itself can be harmful. That the big issues of our time are all already settled.

It is to capitulate to certainty, to shut down critical thinking, to stamp out curiosity. To keep one’s mouth shut, to not ask questions, to not rock the boat.

This, while the world burns.

How could good journalism possibly be done under such conditions? How could any of this possibly be healthy for society?

All of this raises larger questions about the direction that North America is headed. Questions about this new moment we are living through — and its impact on the body politic. On class divisions, and economic inequality. On education. On mental health. On literature, and comedy. On science. On liberalism, and democracy.

These questions keep me up at night.

I can no longer push them down. I will no longer hold them back. This Substack is an attempt to find some answers.

I have been a journalist for 20 years, covering everything from hip-hop to news, food to current affairs. The through line has always been books, which I’ve engaged with at every stage of my career and at every outlet I’ve worked for. In 2020, I published my own book, Lean Out: A Meditation on the Madness of Modern Life, which was an instant bestseller in Canada.

Books have always opened new worlds for me, introduced me to new perspectives, and helped me to make sense of humanity. I need books now more than ever.

During lockdown, when I wasn’t covering COVID-19, I spent a lot of time interviewing authors for a new book I’m working on. Their boldness and insight and humour saved me from despair. These writers gave me ideas on how to move forward, and how to maintain hope. Most of all, they gave me the courage to stand up — and to speak out. 

Here at Substack, I will continue the work of thinking through the current moment, focusing on non-fiction writing from around the world. I will post an essay on a books related topic every Monday, and a podcast conversation with a heterodox author every Wednesday. This will be free to all. A third post on Fridays will round up the most contrarian, controversial or overlooked new books and essays, and will be available to paid subscribers.

This work is entirely independent and entirely free from editorial control, allowing me to say the things that are not being said, and ask the questions that are not being asked. Lean Out is solely supported by subscribers. If you care about the world of ideas and value open inquiry, as I do, please consider a paid subscription.

And stay tuned for the first episode of the Lean Out podcast this Wednesday, featuring my conversation with Newsweek’s Batya Ungar-Sargon, author of Bad News: How Woke Media is Undermining Democracy.

Auto sales data for 2021 is finally in the books and the year was marked by some major changes in the industry’s landscape while automakers struggled do deal with the Covid recovery and an ongoing semiconductor shortage. 

Of note on Tuesday are shares of Ford, which are up about 11% after the automaker announced its intentions to double capacity for its Electric F-150. 

For the first time, Toyota overtook General Motors as the U.S.’s top selling car company, the WSJ reported on Tuesday morning. Toyota outsold GM by roughly 114,000 vehicles, the report says, selling 2.3 million vehicles – a figure up 10% from 2020, which was mired by the effects of Covid. 

Despite the great years, Toyota’s sales fell 30% in the fourth quarter. Honda wasn’t far behind, with sales rising 9% for the year but down 21.5% for the fourth quarter. 

Toyota told Reuters it is “grateful” for its loyal customers, but “being No. 1 is never a focus or priority.”

GM spokesman Jim Cain also had a tongue-in-cheek response to the news, stating: “I wouldn’t rush out if I were (Toyota), and get a ‘We’re No. 1’ tattoo.”

GM’s numbers were less attractive, with the company’s sales plunging 13% to 2.2 million vehicles sold in 2021. The automaker’s sales were down an astonishing 43% in the fourth quarter due to chip shortages, Bloomberg reported. GM is forecasting 16 million vehicles sold for the upcoming year. 

Tesla, as we reported days ago, sold more than 900,000 vehicles globally for the year. 

Hyundai also had an impressive year, selling 738,081 vehicles in the year, marking a 19% rise in sales from the year prior. Overall, Toyota, Nissan, Honda and Hyundai all grew sales versus U.S. automakers, likely as a result of better access to semiconductor chips. 

In sum, almost 15 million vehicles were sold in the U.S. last year.

Thomas King, president of data and analytics at J.D. Power said about the coming year that prices would stay elevated: “Pent-up consumer demand will keep inventory levels near historical lows.”

Developing…

For a while it appeared that stocks, and especially giga-techs, were willing to ignore the plungefest in Treasuries and were riding the wave of new capital (some $125 billion according to Goldman) allocated to stocks of all stripes to start the new year. However, it wasn’t meant to last, and with yields suffering their biggest 2-day surge since the chaos in March 2020…

… high-duration names, which just happen to be the market’s all-important generals, are finally sliding which in a market with as little breadth as this one…

… is a very big problem because as Goldman warned a few weeks ago, a crack in the largest market leaders (the FAAMGs of course) could result in major pain: for those who forgot, the five most popular tech names – AAPL, MSFT, NVDA, TSLA, GOOGL – have contributed 51% of S&P 500 returns since April.

And what goes up can just as easily go down if rates rise high – and fast – enough. Which brings us to the big question: what’s behind the puke in Treasuries and will it persist?

From 30,000 feet, the catalyst for the selling in Treasuries is hardly a surprise: the Fed is all hawked up and with the accelerated taper, rate hikes are scheduled to take place potentially as soon as April, with some speculating that the Fed may hike more than 25bps at a time (we seriously doubt it absent inflation truly spiraling out of control in the coming weeks).

More likely, however, the recent yield spike is tactical (flow/positioning/liquidity-driven), and so we go to one of the most fastidious market tacticians, Nomura’s Charlie McElligott who in his morning notes today does a post-mortem of the selloff that started yesterday and has continued for much of Tuesday.

According to Charlie, the selloff in US Rates and Treasuries turned violent by the US midday on the first day of the new PNL year as bearish bets were re-engaged (with UST 10Y Yields now cleanly through 50, 100 and 200 DMA’s to the upside, while 30Y Yields are nearing a test of the 200 DMA themselves), and shares the following thesis checklist as a list of the drivers behind the move:

1. Inflation “stuck” and currently unrelenting at multi-decade highs, with more Omicron supply-chain snarls further squeezing prices
2. Still above multi-year trend growth in US (Atlanta Fed GDPNow @ 7.641% last)
3. US Employment pushing “near full” again (4.2% U-Rate back to levels last seen pre-COVID)
4. Imminent (obvious) Fed tapering commencement, but now, with actual balance-sheet runoff (QT) potential thereafter in UST and MBS being socialized by some Fed members, all of which would mean the need for actual (gasp) price-discovery for “private side” buyers–including convexity hedgers in Mortgages. Translation: we may very soon discover what the true yield of TSYs should be.
5. Start-of-year resumption of heavy Corp debt issuance calendar @ ~ $11.25B of paper (Street expectations of ~$140B for the full-month of January), with a particularly duration-heavy (> 10 years) WAM seen in yesterday’s paper (note: more of the same today, with another 7 deals early, mostly Financials)
6. Last but not least, we have seen the shift to the market not just pricing-in 3 full FOMC hikes this year, but pulling the liftoff forward almost every day, with the March meeting now ~ 72% “priced”

These key drivers behind persistent Treasury weakness were not lost on the market, and as Charlie writes, there was lumpy Duration selling in both Cash and Futs on Monday (especially a notable late-day WN block seller ~ $1.1mm in DV01), which was matched by “particularly aggressive options flows”, including what McElligott calls “an eye-wateringly ENORMOUS buyer of TY downside, where HUGE prem was spent on 71k of the TYH2 127 Puts (~1.95% yield target by mid-Feb exp) at nearly ~$5.5mm bp dv01″ (here he notes that this was an ADD to a view, with OI on Dec 31st at 161k, but now 231k as of Jan 3rd). The move has led to Treasuries posting their worst start to the year since 2009, sending ripples through markets from Australia to the U.K.

Adding to this, and in agreement with point 1 above, Bloomberg adds that Treasury traders “are betting the rapid spread of the omicron variant will increase inflationary pressures in the U.S. economy, rather than weaken them.” Specifically, the article looks at 10-year breakeven rates which climbed to as high as 2.66% on Tuesday, the most since November, and up from as low as 2.36% on Dec. 14. Even real rates jumped from as low as -1.13% at the end of 2021 to -0.96% today.

“Inflation continues to be the major theme of the market given life with the coronavirus,” said Makoto Noji, chief currency and foreign bond strategist at SMBC Nikko Securities Inc. in Tokyo. There is speculation that “the widening spread of the virus will lead to a decline in labor participation and supply constraints,” he wrote in a research note.

So how has this rate puke impacted stocks? Well, as McElligott continues, yesterday there was an outright “Momentum Shock” in the US Equities factor space, with the “Long-Term Momentum” factor absolutely “rekt” -3.5%, a 1d -3.1 std dev move over the past 1Y window and the largest drawdown in the factor since the peak of the meme stock / HF unwind on 1/27/21!

Furthermore, the Nomura quant writes that the rally/short-squeeze in “Low Quality/High Vol” stocks seen yesterday – i.e. “Leverage” and “Short Interest” factors booming – was a stark contrast to the recent theme of the grab into “Quality” (high over low), “Size” (large over small), “Low Risk” (over high vol).

Putting this together, this end-of-’21 “up in Quality” dynamic noted above was a large part of the blow-up in “Unprofitable Tech/Highly Speculatives” trade seen since the start of Nov ’21 into year-end (as the “short” leg of the trade), but yesterday, all of that “high spec” stuff really squeezed higher again, according to McElligott, as it looks like short books were de-grossed in a major way, while some too simply were taking discretionary punts on “high beta” to play for the January effect raising all boats, but particularly in the stuff which has just been the most beaten-down and ripe for O/P.

Of course, this “Momentum shock” reversal (lower in Size, Quality, Low Risk “longs” vs the squeeze in “junk” Leverage / High Vol / Cyclical Value) also meant a frustrating day for hedge fund long & short “Crowding” proxies on the first day of the year, as both suffered outsized losses:

• Hedge Fund Crowding Factor -0.8% (-1.3 z-score)
• Hedge Fund L/S Proxy -1.5% (-1.8 z-score)

Adding to the confusion, while hedge funds were clearing out their 2021 short-book leftovers, CTA/vol control funds were mechanistically rushing back into stocks, leading to the overall market ramp. According to McElligott’s calculations, the Nomura QIS CTA model showed +$16.4B of fresh buying in Global Equities on the day (particularly focused in Asia with the Nikkei signal flipping from “-49% Short” to “+100% Long”—notionally buying +$15.6B, on top of +$800mm in US and and +$100mm in European equity futs).

In the US, Nomura’s Vol Control model estimated another +$3.8B of S&P futures buying as 1-month Realized Vol continued its collapse with a 6th straight day of buying, and now +$23.3B over the past 2 weeks (take a look at where the VIX is and compare it a month ago (spoiler alert: it has been cut in half).

So what happens next? Well, as the Nomura strategist reminds us, next week should see the concentration of the forward buying – with particular focus on tomorrow (he is projecting a 1.0% chg = +$7.8B buying; 0.5% chg = +$14.5B buying; 0.0% chg = +$16.9 buying).

Yet mechanistic buying aside, the risk is that with Index Options Gamma- and Delta getting longer/more positive, McElligott warns that we are slowly inching nearer towards “potential for a pullback” territory, and as usual Nomura’s clients are urged again to focus on the monthly Op-Ex as the “unclench” catalyst there later mid-month January

• QQQ $Delta back to $13.2B, 94.9%ile
• SPX / SPY $Delta back to $291.6B, 80.1%ile

In conclusion, the Op-Ex tied “window for a pullback” also corresponds with again “stress-y” vol signals as spot indices trade to new highs, and with “Skew” and “Put Skew” flashing again – but particularly noting that “Term Structure” is screening “extreme” and to the point made at the top of the note on the heavy selling of Vol / optionality. 

Translated to plain English, what all of the above means is that instead of waiting until Friday to see where this week’s op-ex chips may fall, the market is trading more or less as it should, and high duration giga-techs are dumping as yields are spiking… just as one would expect. The only question is whether this “logical” behavior will continue – one look at the chart below shows that the Nasdaq has a ways to drop if indeed it is allowed – or alternatively, if the remarkable bounceback from every op-ex makes another appearance, and spoos trade solidly back over 4,800 on their way to fresh all-time highs.

A group of 35 Navy Seals who sued the Biden Administration, Pentagon, and US Navy over the service-wide Covid vaccine mandates has won a key decision, The Washington Post reports Tuesday, after a US District Court judge in Texas blocked the Pentagon from punishing the particular Navy personnel in the case who reject the vaccine. 

The decision is expected to have significant reverberations throughout all branches, as Pentagon spokesman John Kirby said Monday night the DoD is reviewing the decision in light of how it will impact its continuing policy of discharging all servicemembers not in conformity. US District Judge Reed O’Connor ruled that the pandemic “provides the government with no license to abrogate” the individual liberties of any American. 

He asserted and defended service members’ right for religious exemption – crucially which in branches like the Marines have been subject of blanket denials of late, according to widespread reports. Judge O’Connor wrote as part of his 26-page injunction that “loss of religious liberties outweighs any forthcoming harm to the Navy” and that “even the direst circumstances cannot justify the loss of constitutional rights.”

“This Court does not make light of COVID-19′s impact on the military. Collectively, our armed forces have lost over 80 lives to COVID-19 over the course of the pandemic,” O’Connor wrote Monday.

The Washington Post details the background of the lawsuit as follows:

The troops — a group that included Navy SEALs and other members of Naval Special Warfare Command — filed suit against President Biden, Defense Secretary Lloyd Austin, Navy Secretary Carlos Del Toro and the Defense Department to challenge the Navy’s vaccination requirement in November. The troops cited Christian beliefs that they should not take a vaccine developed from aborted fetal cell lines and saw a modification of their bodies as an “affront to their Creator.”

Mike Berry, general counsel for the First Liberty Institute which is representing the Seals, said in the aftermath of the judge’s order to halt punishments from military commanders over the vaccine mandate: “Forcing a service member to choose between their faith and serving their country is abhorrent to the Constitution and America’s values,” Berry said. “Punishing SEALs for simply asking for a religious accommodation is purely vindictive and punitive. We’re pleased that the court has acted to protect our brave warriors before more damage is done to our national security.”

“..Court..issued a preliminary injunction against Biden’s military mandate prohibiting the Pentagon from forcing 35 Navy SEALs to receive a COVID-19 vaccine. The injunction only applies to the servicemen involved in the lawsuit, not to the mandate in general.” pic.twitter.com/RJtTcBapgt

— Mike_Muffler (@mike_muffler) January 4, 2022

Recall that last month the military admitted it is denying religious exception requests almost across the board: 

Marine Corps spokesman Capt. Ryan Bruce told Fox News that as of Thursday, 3,080 of the 3,192 requests for religious accommodation concerning the COVID-19 vaccine mandate had been processed and zero had been approved, adding that “no religious accommodations have been approved for any other vaccine in the past seven years.” 

Likely the order could open up an avalanche of similar successful lawsuits against the Biden administration and the DoD. For now, however, “The order prevents the Navy from applying its vaccine mandate and administrative discharge policy on the 35 sailors involved in the lawsuit.”

There are similar lawsuits to halt the military’s ability to punish unvaccinated personnel currently in process across various parts of the country, working their way through civil courts.

Authored by Steve Watson via Summit News,

Texas Senator Ted Cruz announced that he is of the opinion that the Republican party could bring impeachment proceedings against Joe Biden, should the GOP win control of the House again in the mid terms.

During his own Podcast, titled “The Verdict,” Cruz said “I do think there is a chance of that,” reasoning that “Whether it’s justified or not… the Democrats weaponized impeachment.”

Cruz continued, “They used it for partisan purposes to go after Trump because they disagreed with him. And one of the real disadvantages of doing that… is the more you weaponize it and turn it into a partisan cudgel.”

“You know what’s good for the goose is good for the gander,” Cruz urged.

“I said at the time when we had a Democratic president and a Republican House, you can expect an impeachment proceeding. That’s not how impeachment is meant to work, but I think the Democrats crossed that line,” the Senator added.

Expanding on exactly what the GOP would seek to impeach Biden on, Cruz said “I think there are potentially multiple grounds to consider for impeachment.”

“I think there will be enormous pressure on a Republican House to begin impeachment proceedings,” Cruz said, adding “Probably the most compelling is the utter lawlessness is President Biden’s refusal to enforce the border — his decision to just deify immigration laws and allow 2 million people to come in here unimpeded in direct contravention of his obligation under Article 2 of the Constitution to take care that the laws be faithfully executed. That’s probably the strongest grounds right now for impeachment, but there may be others.”

“And because Democrats decided this is just another tool in the partisan war chest, I think there is a real risk that turnabout will be fair play,” Cruz further emphasised.

Watch:

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