Month: January 2022

Authored by Thomas Buckley via AmericanThinker.com,

Tick, Tick, Tick…. Is the End Nigh?

The Prime Minister of the United Kingdom was facing an immediate political death sentence, so what did he do? He declared the pandemic over.

The question now on this side of the pond: Will Joe Biden—himself facing a political death sentence, though admittedly a few months away—learn anything from Boris Johnson?

As the already relatively-weak omicron variant wheezes towards its nadir, the calls to end COVID-related restrictions—to remove the elephant that has been sitting on the congested chest of the world—have grown louder and more insistent.

This increasing clamor has already appeared to cause an attitudinal shift amongst the denizens of the “caring-industrial complex,” with the groundwork to prepare the pandemic pathologicals amongst us for the upcoming change already begun. Reporting “with COVID” instead of “from COVID,” death rates instead of case rates now being referenced, and quarantine timings being shifted – all of these recent changes in media coverage and the CDC’s pronouncements are a hint of what is coming.

Looking at the evidence: Britain’s action, Denmark’s decision Wednesday to follow suit, massive public protests over the weekend, and a piece from The Lancet (the formerly well-respected science publication that unscientifically crushed the discussion of the COVID lab leak hypothesis) on the coming end of the pandemic. There can be no doubt a paradigm shift (in the actual meaning of the term) is underway.

All of this makes the argument within the administration even stronger for Biden to take the risk and claim victory by ending the pandemic. While it is true that Johnson—for political reasons—was unable to finesse the timing and had it thrust upon him (just as Marge Simpson’s sister, Selma, had celibacy thrust upon her), the decision can still be instructive to the Biden administration.

Image: Biden (edited in befunky). YouTube screen grab.

The Biden team will be watching the public reaction to the move intensely for it will allow them, to use a football analogy, a “free look at the defense” before they throw what could be seen as a political “Hail Mary.” Furthermore, they can now point to the U.K. and say “Hey, they did it and it worked out fine,” bolstering their own argument, reasoning, talking points, and the inevitable “no, this is obviously not political” claim. Finally, it will also put pressure on Biden to declare the pandemic over because keeping the status quo in the face of a “successful” end will become even more difficult. (If it’s a disaster, that’s a whole different cup of tea.)

Timing is still a serious and delicate issue, with a number of political observers on the left fuming over the possible end to their “emergency” powers, while observers on the right find it hard to believe that, due to the massive political advantage bestowed on the Democratic-entwined power brokers, the pandemic will ever end. But it should be noted that, while timing an announcement for Labor Day will leave people irritated for the entire summer, that scenario has one significant advantage: Due to its proximity to Election Day, it could be claimed that it would be too late to change the current “pandemic” voting systems.

That way, the pandemic is still officially over but the systemic edge—everyone gets mailed a ballot, drop boxes, harvesting, etc.—that has so indisputably and clearly benefited Democrats up and down the ballot could remain in place.

Declaring victory earlier could make for a more comfortable summer (spring, even?) and a nice bump in the polls, but it’s unknown how that would translate into November voter support, something Biden and his party desperately need. It would also mean that an even vaguely “legitimate sounding” (not actually real-life, honestly legitimate, just legitimate sounding) argument for keeping the systemic advantages in place would become far more difficult to make.

Finally, oddly for Biden, his calculation must consider, not so much his political opponents’ reaction, but that of his supporters. People who have been calling for this for months and years will simply shrug and wonder what took so long. People who have lived their lives in stunted fear and abject obedience could take a long time to return, kicking and screaming, to reality.

So happy Labor Day, My Felericans! (As Joe Biden would say.)

Despite an unexpected surge in new-home-sales, pending-home-sales puked in December, tumbling 3.8% MoM (after falling 2.3% MoM in November)…

Source: Bloomberg

That is the biggest MoM drop since Feb 2021 and pushed the YoY drop back into the red (down 6.64%).

“Pending home sales faded toward the end of 2021, as a diminished housing supply offered consumers very few options,” Lawrence Yun, NAR’s chief economist, said in a statement. 

“Mortgage rates have climbed steadily the last several weeks, which unfortunately will ultimately push aside marginal buyers.”

Sales dropped in every region:

• Northeast fell 1.2% m/m; Nov. fell 0.1%

• Midwest fell 3.7% m/m; Nov. fell 6.1%

• South fell 1.8% m/m; Nov. fell 1%

• West fell 10% m/m; Nov. fell 2.1%

This may be a big problem for Powell as pending home sales are often looked to as a leading indicator of existing-home purchases given properties typically go under contract a month or two before they’re sold

Who could have seen this coming?

And that is as the market prices in an 80% chance of 5th rate-hike this year (and a 30% chance of a 50bps hike in March)…

Do traders realy think the stock market can bear that?

By Michael Every of Rabobank

Fedestroika

I have long made black humor comparisons between the structural malaise of the West and the late-stage Soviet economy. The latter could see things weren’t working even in the 1970s but drifted through a “novy normalny” of slower growth and rising shortages, with the easiest answer always to build yet another statue of Marx or Lenin, talk about the proletariat, and hope things somehow turned around. Today the easiest answer is always to build another high-end condo or business center, talk about the proletariat, and hope things somehow turn around. The USSR eventually opted for the shock of glasnost (openness) and perestroika (reform) – which led to total collapse. The Fed appears to have just opted for ‘Fedrestroika’, which is going to cause lots of apparatchiks to get nervozny.

After all, as @S_Mikhailovitch correctly sees on Twitter, “Today’s Fed is our version of the 1980’s Soviet Politburo. They say and do whatever may help sustain the unsustainable. That’s the game. There is no other.” As someone replied, “To paraphrase that old Soviet joke ‘They pretend to have inflation under control, and markets pretend to believe them.’”

Now our commissars are promising a series of rate hikes to try to save the system from itself – Chair Powell ironically adding “I think there’s quite a bit of room to raise interest rates without threatening the labor market.” They also released a document called ‘Principles for Reducing the Size of the Federal Reserve’s Balance Sheet’ when we know that they cannot sustainably reduce the balance sheet. It doesn’t get any more Soviet sounding than that, and if you can’t see that you’ve been in said system too long, or a true apparatchik.  

My fellow Fed refusenik Philip Marey thinks they will hike four times this year. He also thinks it’s a deep irony they opted to reaffirm the equally-Soviet ‘Statement on Longer-Run Goals and Monetary Policy Strategy’ –with the sentence “the Committee seeks to achieve inflation that averages 2% over time, and therefore judges that, following periods when inflation has been running persistently below 2%, appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time.” — as the adoption of this strategy is why the Fed has fallen so far behind the curve in the first place. That and the need to build high-end condos or business centers, talk about the proletariat, and hope things somehow turn around.

The market reaction to Powell’s Q&A was huge: 2-year Treasury yields leaped from 1.02% to 1.15%, while 10s went from 1.77% to 1.86%, flattening the curve further when we won’t get the first hike until March; stocks gave up all the ‘party-insider’ gains of the day; and the dollar rallied.

So, can Fedrestroika last? As our Rates Strategy team sees it, the Fed belatedly realizes there is nothing they can do about the supply-chain shortages and high inflation that plague the economy. (Yes, the US could repress inflation by fixing prices, but that would just make its shelves look more Soviet if they don’t also move the means of production home.) As such, the Fed has two choices: do nothing and risk inflation really sinking in; or raise rates knowing that if markets collapse they can then pivot back to zero rates/QE, building high-end condos or business centres, talking about the proletariat, and hoping that things somehow turn around. They know how to do the latter. In fact, it’s all they know.

One wonders how long this dialectic can be peddled before the proletariat prefers a different kind of dictatorship: but that’s a matter for samizdat (or Twitter) rather than the market media and apparatchiks, who all want to keep their lovely dachas.  

And ‘Back in the USSR’, both fog of war and diplomacy swirl in the air. A senior Russian politician says Moscow rejects US proposals responding to its security demands as “fantasies”, with their foreign minister threatening “retaliatory measures”. The press says the US response only covered arms controls rather than US support for Ukraine’s right to pursue NATO membership, the red line for Moscow. Some military strategists point out the number of Russian troops on the border is not enough for a full invasion; others that the amount of equipment is, and that the extra troops only need to arrive at the last minute. (With some then wondering if it would be before, during, or after the Beijing Olympics.) Moreover, two dozen Russian embassy staff were just told to leave D.C. Neither development bodes well.

While Russia’s goal may still be to divide Ukraine, with the huge market tail risks we have already covered, it is assuredly to divide the West, with equally large tail risks over time – and here it is already winning. As the New York Times puts it: “Putin’s goal is to split the Europeans, and then split Europe and the US. If the impression prevails that Germany is not fully committed to a strong NATO response, he will have succeeded in paralyzing Europe and dividing the alliance.” While Berlin has just agreed to sell 5,000 helmets to Ukraine, that is not getting any hat tips given what everyone else is doing. Indeed, Chancellor Scholz appeared physically uncomfortable and reticent at a recent press conference when discussing Russia’s actions and what he would be prepared to do about them, which hardly builds confidence.

Meanwhile, Germany is fighting a two-front surrender, as Politico reports Berlin is “working behind the scenes to undermine a common position against China”. Chancellor Scholz’s office allegedly fears the EU is becoming too aggressive in its defense of Lithuania against Beijing’s economic coercion, after France last week said Beijing had gone too far with its attacks on the single market, and is “calling everyone who speaks German in the Commission” to tone down the pressure on China – which is not coercion when Berlin does it. ‘Coincidentally’, Reuters reports Lithuania may now consider backing down over its Taiwan stance: Slovenia next? And isn’t it nice to be able to tell smaller eastern European countries what to do?

Clearly, something needs to change: the issue is what (or who)?

On which, Italy –also being wooed by Russia– still does not have a president. Today sees round four of voting, and while a successful candidate needed a two-thirds majority in the first three rounds, today that threshold is lowered to an absolute majority. Then it reduces every day going forwards until by March it is the first person to put their hand up. I joke: see here for proper analysis from Marnix Arendshorst, which underlines the potential market impact.

Yet I am not joking that the best defense supporters of British PM BYO can muster against accusations of him having attended an illegal birthday party under lockdown are that the PM was “ambushed by a cake”: cue Twitter memes such as a line of cakes with the captions “Can you identify your attacker from this line-up, sir?” Also cue more letters of no confidence and a likely leadership challenge, and GBP volatility. The one-rule-for-me-and-another-for-you is again very Soviet. The fact that there was a cake to go with the alcohol isn’t. Future historians will note while Europe was close to being carved up, the UK was preoccupied by slices of cake; yet it still played a more proactive role than Brezhnevian Germany, which was trying to have its cake and eat it.

As previously reported, Russia on Wednesday received a hand-delivered written response from the United States to the security proposals Moscow submitted earlier this month to both Brussels and Washington. Russia’s central demand has remained that it needs legal security guarantees of no further NATO expansion eastward. 

In a fresh statement, Russian Foreign Minister Sergey Lavrov confirmed that Moscow is reviewing the document, but suggested that the core issue Russia is demanding has been sidestepped in the US document. “There is no positive reaction on the main issue in this document,” Lavrov described to reporters. 

“The main issue is our clear position that further NATO expansion to the east and the deployment of strike weapons that could threaten the territory of the Russian Federation are unacceptable,” the top diplomat explained. 

“The content of the document – there is a reaction that allows us to count on the start of a serious conversation, but on secondary issues,” Lavrov added.

He charged Washington with deliberately avoiding the central security issue, while still holding out that it was at least a basis on which to further dialogue: 

“The principle that one should not strengthen one’s security at the expense of the security of others is deliberately avoided. Neither the Istanbul nor the Astana declarations are mentioned by our Western partners in the discussions on European security that are currently taking place… We cannot accept this,” Lavrov said.

However, Lavrov said that the next moves will be determined by President Vladimir Putin, who is being briefed on the US response. “After an interdepartmental consultation, we will brief the president, and the president will decide on our next steps,” he explained.

Separately on Thursday, Kremlin spokesman Dmitry Peskov echoed the same charge:

“The numerous statements that our colleagues made yesterday make it clear that as for the major aspects of the draft agreements that we earlier presented to other parties, we can’t say that they took our concerns into account or showed any readiness to take our concerns into consideration.”

Blinken, for the US side, said Wednesday he hopes to discuss the US response directly with Foreign Minister Sergey Lavrov in the coming days. But on the central issues of Russia’s requirement that NATO issue legal guarantees vowing no further expansion eastward, Blinken vowed the Western military alliance won’t budge, making clear that…

“From our perspective. I can’t be more clear — NATO’s door is open, remains open, and that is our commitment,” Blinken said.

Meanwhile, Russian media has continued to charge US mainstream media with hyping and stoking tensions…

Amid allegations by US intelligence of an impending “Russian invasion” of Ukraine, @cnn has already altered the country’s borders, labeling the eastern city of Kharkov, the second largest after Kiev, a part of Russia. pic.twitter.com/rhJiwp1uVt

— Bryan MacDonald (@27khv) January 26, 2022

“There will be no change,” Blinken emphasized further. However, the written response could still serve to at least keep things on the diplomatic and negotiating playing field, as opposed to stoking further military build-up by both sides. 

At the same time, Russia has reiterated its stance that currently soaring military tensions will be lessened if NATO removes forces from Eastern Europe. This after a limited number of NATO jets and ships earlier this week were deployed toward the region, including a half dozen F-15 jets which landed in Estonia. The White House has cited a “sacred obligation” to protect what press secretary Jen Psaki called “our eastern flank”.

Authored by Joseph Lord via The Epoch Times (emphasis ours),

A bipartisan group of more than two dozen lawmakers in the House is demanding that Speaker of the House Nancy Pelosi (D-Calif.) allow a vote on a bill that would bar members of Congress from trading on the stock market, which critics say is inappropriate due to Congress’ inside knowledge on financial and political affairs.

The demand was made in a Jan. 24 letter spearheaded by Rep. Jared Golden (D-Maine). A total of 27 lawmakers signed Golden’s petition, including 25 Democrats and two Republicans.

In the letter’s opening line, the coalition demands that Pelosi “swiftly bring legislation to prohibit members of Congress from owning or trading stocks.” Two bills that would do just that, the “Ban Conflicted Trading Act” and the “TRUST In Congress Act,” have been sitting in congressional limbo.

The responsibility to bring them out of this limbo lies largely with Speaker Pelosi, but she has thus far made no effort to bring either bill to the floor for a vote.

Golden argued that such a ban would be a “common sense measure” that is “supported by Americans across the political spectrum.”

A recent poll vindicates this latter claim.

The poll, conducted by the conservative group Convention for States Action in conjunction with Trafalgar, found that more than three-fourths of Americans believe that lawmakers have an “unfair advantage” over others in the stock market.

Speaking on the poll results, Mark Meckler, president of Convention of States Action, said, “Congress has a history of passing laws that make it appear as if they are behaving ethically, while continuing to do things that are not honest nor ethical. This issue has received a lot of attention, and this data verifies the American people want this practice to end once and for all.”

This issue has a storied history in Congress.

In 2012, Congress passed the STOCK Act, a bill that required members of Congress to publicly disclose their financial transactions. However, a recent investigation by Insider found that a laundry list of lawmakers in both the House and Senate had violated the provisions of that law.

In view of this, the lawmakers write, “It’s clear the current rules are not working.”

In another recent example of potential insider trading, several members of Congress allegedly sold off stock ahead of the crash precipitated by the CCP (Chinese Communist Party) virus. These members had received nonpublic briefings on the developing virus, leading many to believe that their sudden stock sales were carried out on the basis of this knowledge.

“The law prohibits only those stock trades that members of Congress make or direct because of their nonpublic knowledge,” Golden explains in his letter.

“But it can be nearly impossible to determine what counts as ‘nonpublic knowledge’ or how personally involved members are in their stock trades.”

“Instead,” the lawmakers demand, “Congress should close these loopholes by simply banning members from owning or trading individual stocks while in office.”

“We came to Congress to serve our country, not turn a quick buck,” the lawmakers continue.

“While there are many difficult questions facing Congress, this is an easy one,” the letter concludes. “Members of Congress should not be allowed to own or trade individual stocks. Let’s get this done.”

The letter is a rare show of bipartisanship, including a very unlikely alliance of America First conservatives and left-wing progressives.

The Democrat roster includes prominent progressives like Reps. Rashida Tlaib (D-Mich.) and Pramilla Jayapal (D-Wash.), who have both been outspoken in favor of sweeping institutional reforms and pricey social spending bills.

The two Republican signatories are Rep. Matt Gaetz (R-Fla.), a Trump-adjacent Floridian who has fought against government measures that give an unfair advantage to major corporations or the ultra-wealthy, and Rep, Brian Fitzpatrick (R-Pa.), a longtime moderate who joined Democrats in passing the $1.2 trillion infrastructure bill in late 2021.

Speaking on the letter, Gaetz quipped that “Rashida Tlaib and I don’t often agree. But when we do,” he added, “America should totally go that direction.”

However, not all lawmakers feel the same way about a stock market ban.

Most prominently, Speaker Pelosi made it recently clear that she thinks lawmakers should have access to the market.

During a mid-December press conference, just after Insider released its report on violations of the 2012 STOCK Act among members of Congress from both parties, Pelosi was asked whether a stock ban for members of Congress would be appropriate.

“No,” Pelosi responded quickly. “We have a responsibility to report [our trades] … [and] if people aren’t reporting, they should be.”

Further pressed to explain her “no,” Pelosi argued, “Because we’re a free market economy. [Members of Congress] should be able to participate in that.”

Pelosi has had her own scandals in regards to trading by her husband Paul Pelosi.

In 2008, Paul Pelosi bought $2 million of stock in Visa at the same time that Congress was considering a bill that would have seriously undercut the debit and credit card giant’s profits. Though the bill had gained momentum, it inexplicably stalled and died in the House.

Because Pelosi was speaker at the time many, including NBC’s 60 Minutes in a 2011 episode, speculated that there was a connection between Pelosi’s trade and the bill’s sudden collapse.

More recently, Paul Pelosi made a bullish bet in favor of Google parent company Alphabet, just as a bill designed to undercut tech monopolies was gaining significant momentum in the House. While others pulled out over fears about the antimonopoly bill, Pelosi’s unlikely bet paid off, netting the Pelosis a cool $5 million.

In fact, Pelosi’s portfolio has seen such spectacular returns that would-be investors on the Chinese-owned social media platform TikTok began to follow Pelosi’s releases and emulate his trades.

Rep. Dan Crenshaw (R-Texas) has also defended stock trading by sitting members of Congress.

According to a report by Unusual Whales, Crenshaw received the fifth-highest returns of any member of Congress for his stock trading in fiscal year 2021. During an appearance on the All American Savage Show podcast, Crenshaw discussed the returns and his position on congressmen trading on the stock market.

The host asked Crenshaw whether he thought that sitting members of Congress should be allowed to go into the stock market.

“I think it would be fine if you banned individual stock trading,” Crenshaw said, before clarifying, “Notice I said ‘individual stocks.’”

The Texas Republican explained that while he would accept bans on buying and selling individual stocks, he thinks that congressmen should still be allowed to invest in ETFs and similar stock collections.

“I’m kinda neutral on it,” Crenshaw continued. But if such a ban were put in place, Crenshaw claimed, “no one would run for Congress because you have no way to better yourself.”

Ultimately, the decision to bring a stock trading ban to the floor lies with Speaker Pelosi.

Still, the bipartisan support for Golden’s Monday letter indicates that members on both sides of the aisle remain committed to moving the agenda forward.

If brought to the floor, either of the two bills proposed to address the situation would represent the most substantial stock market reforms for a decade.

However, the coalition behind the reforms remains small, and more support in both the House and Senate, plus Pelosi’s acquiescence to bring either bill to the floor, will be needed for the reform to have a shot at making it to President Joe Biden’s desk.