Month: January 2022

Conference Board Confidence Slides In January As ‘Hope’ Fades

Conference Board Confidence Slides In January As ‘Hope’ Fades

After an unexpected rebound for the last three months, The Conference Board’s Consumer Confidence survey was expected to weaken in January amid surging cases of Omicron and higher-and-higher consumer prices. Analysts were right in direction – January Conf Board fell from 115.2 (revised lower) to 113.8, but that was notably above the 111.2 expectations.

In June 2021, The Conf Board confidence was almost back to pre-COVID-lockdown levels (driven by an explosive surge in ‘hope’), but this time expectations are sliding. The Conference Board’s expectations index fell from six-month high to 90.8, while the gauge of current conditions unexpectedly surged higher to 148.2 – its highest since Aug 2021.

Source: Bloomberg

For some reason, the respondents to The Conference Board seem far more optimistic than the respondents to The University of Michigan‘s survey? It wouldn’t be the first time the Conf Board completely decoupled only to crash back to reality…

Source: Bloomberg

The share of consumers who said jobs were “plentiful” relative to “hard to get” fell slightly in January, but continues to hover very close to its record highs in 2000…

Source: Bloomberg

And finally, and perhaps most importantly, inflation expectations slipped lower in January, but still hover near 13-year highs at 6.8%…

Source: Bloomberg

So Powell and his pals face weakening sentiment but worrisome inflation.

Tyler Durden
Tue, 01/25/2022 – 10:09

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

L.A. Schools Will Require Non-Cloth Masks (Even for Sports) and Vaccination Next Year


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Los Angeles Unified School District (LAUSD) is about to get even stricter with its COVID-19 mitigation requirements: The country’s second-largest public school district will force students to wear non-cloth masks that have a nose wire, even while they are outside or playing sports.

L.A. is also slated to add a vaccination requirement for all students, which will take effect January 1, 2023.

The district’s mask policy was updated on its website late last week. It states that  “masking will be required at all times, indoors and outdoors. It is required that all students wear well-fitting, non-cloth masks with a nose wire.” Staff will have to wear surgical grade masks.

The policy includes no exceptions—and no acknowledgment that masks have proven to be disruptive to various educational, social, and physical activities. In fact, the Centers for Disease Control and Prevention (CDC) has admitted that masks could make it more difficult for young children to learn how to read. Several months ago, the CDC quietly revised its masking guidance and encouraged schools to let these students wear cloth masks, or even transparent masks.

Many other students find it difficult to exercise and participate in sports while wearing masks. It makes little sense to require young people to keep masking up under these circumstances, when outside the school setting, there is practically zero expectation that people wear masks while exercising outdoors, even in highly COVID-19 cautious cities. Students are virtually alone in that their relevant authorities require vigorous, constant masking.

Even American Federation of Teachers President Randi Weingarten realizes that it can be difficult to understand what a person wearing a mask is saying, which is why she removed her mask in order to be heard at a conference in November.

Perhaps there are circumstances where students might have difficulty hearing their teachers or classmates. Reason‘s Lenore Skenazy recently interviewed a seventh grade health teacher about the toll that pandemic restriction have taken on her students: One of the main issues was that masks inhibited communication between the kids.

But non-cloth masks are not the only burden coming to L.A. schools: The district also has tentative plans to implement a vaccine mandate beginning next year after previously delaying its implementation in the face of widespread resistance. Legislation proposed by state Sen. Richard Pan (D–Sacramento) would require students throughout the state to get vaccinated. His bill expands upon a previous mandate and eliminates “personal belief” exemptions.

“Legislators have the ability to pass laws to make our communities safe, including increasing vaccination rates to keep schools open and safe,” he said in a statement.

Young people, however, are already by and large safe from the worst effects of COVID-19: severe disease and death. Getting vaccinated is the right choice for many students, but other families might have reasonable concerns in some cases.

Mandating that all students get the vaccine effectively takes this choice away from families, since the alternative—permanent remote education—is not acceptable for many kids. That’s really what the public education system, in California and elsewhere, is doing: Eliminating choice. The government has decided, contrary to practical considerations and the wishes of many parents, that students must be vaxxed and masked.

The proper solution is school choice: Parents who do not agree with these policies should be able take whatever public funding is budgeted for their kids and invest in an educational option that aligns with their needs. For some families, that could even be a school setting that follows stricter COVID-19 mitigation policies. But the decision should belong to families, not the government.

This week happens to be National School Choice Week, but the public education system’s utter failure to handle the COVID-19 pandemic in a manner that allows kids to actually attend school has provided a two-year-long example of why this policy change is desperately needed. If parents want to vaccinate their kids, they should do it. If they want to send their kids to schools that require masks, they should do that as well. But the millions of parents who want to make a different choice have rights, too.

The post L.A. Schools Will Require Non-Cloth Masks (Even for Sports) and Vaccination Next Year appeared first on Reason.com.

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Biden Blames Government’s Economic Failures on Big Business


covphotos198547

Biden continues to scapegoat American businesses for government-created problems. On Monday, President Joe Biden gave a public address during a meeting with his Competition Council, discussing an executive order he issued last July. Why now? Because inflation keeps getting worse, and the Biden administration needs somewhere to lay the blame.

Inflation has been hitting its highest levels in decades. In late December, for instance, gas prices were up 51 percent, beef prices up 20 percent, and furniture prices up 11 percent. Food prices are up. Clothing prices are up. Energy prices are up. Used car prices are up. Booze prices are up. And the list goes on.

Part of this can be blamed on the pandemic, which has contracted the labor force, increased demand for certain sorts of goods, and caused disruptions in supply chains.

But government policies have made things much worse. There’s been absolutely massive amounts of new government spending—and printing more money to pay for it. (The “supply of dollars has increased by nearly 40 percent over the past 2 years, which is an off-the-charts record,” Reason‘s Nick Gillespie noted in December.) Meanwhile, Biden and Democrats just keep trying to spend more.

While raising interest rates is traditionally a way to try and keep inflation in check, “America’s high levels of debt make the maneuver more fraught because higher interest rates will reverberate through the government’s own debt,” Eric Boehm points out.

Biden energy policies and the Trump tariffs he’s continued may also be worsening inflationary woes.

With Americans feeling the pinch of rising prices all around, Democrats have been looking for somewhere to lay the blame that doesn’t implicate their own policies. They’ve coalesced around blaming big businesses—a sort of “killing two birds with one stone” strategy.

Passing “antitrust” laws that give government regulators more control over tech companies and U.S. markets at large has been big on Democrats’ recent agenda. Blaming big businesses for inflation lends give a good cover to this push.

Rather than come across as control freaks who want a say in how all U.S. companies run, they feign concern for consumer welfare, asserting that lack of competition is what’s causing rising prices. “Lack of competition costs the median American family household… $5,000 a year,” claimed Biden on Monday.

Don’t buy it.

These type of claims are based more in politics than economic realities.

“As the president’s economic approval ratings slipped, his aides fielded increasingly alarmed messages from Democratic operatives urging the White House to adopt a new message on inflation,” The Washington Post reported earlier this month:

In November and December, at least four Democratic polling experts told senior White House officials that they needed to find a new approach as public frustration over price hikes became widespread and highly damaging to Biden’s popularity, according to three people with knowledge of the private conversations.

“What we said is, ‘You need a villain or an explanation for this. If you don’t provide one, voters will fill one in. The right is providing an explanation, which is that you’re spending too much,'” one Democratic pollster who, like the others, spoke on the condition of anonymity to reflect private conversations, told The Washington Post. “That point finally became convincing to people in the White House.”

Corporate consolidation and corporate greed has become that villain. But economists across the spectrum are skeptical, including “some liberal economists in the administration’s orbit,” as the Post pointed out:

They point out that corporate consolidation is a phenomenon going back decades, so it is unlikely to explain this year’s sudden burst of inflation. …

“I don’t think corporate consolidation explains the jump in prices,” said Dean Baker, a liberal economist who endorsed Warren’s presidential candidacy in 2020. Baker said he had relayed this skepticism to the White House. “I don’t see a good story here in blaming inflation on concentration.”

Claudia Sahm, a liberal economist who worked at the Federal Reserve, added, “I don’t understand the strategy. It must have something to do with politics, but you’re not going to get many economists to back up the argument that it’s going to address inflation right now.”

The criticisms are even more pointed from less liberal economists. Larry Summers and Jason Furman, who both served in the Obama administration, have been dismissive of the notion that corporate consolidation explains the price hikes. But they said it makes sense for the administration to use price pressures to push their antitrust agenda.

This push was made clear by Biden’s meeting remarks yesterday. In addition to blaming businesses for rising prices, he touted his administration’s efforts to crack down on business mergers.

“Capitalism without competition is not capitalism. It’s exploitation,” he said.

Biden and his allies would like us to believe that only his preferred massive spending initiatives and economic policies can save Americans from rising prices. It may be good political messaging, but like so many American goods right now, the price of believing this is way too high.

FREE MINDS

Florida universities can’t bar professors from testifying in lawsuits against the state. A federal judge ruled against the University of Florida in a case brought by six professors at the school. “The stinging ruling, by Judge Mark E. Walker of U.S. District Court for the Northern District of Florida, accused the university of trying to silence the professors for fear that their testimony would anger state officials and legislators who control the school’s funding,” The New York Times reports.

“Judge Walker likened that to the decision last month by Hong Kong University to remove a 25-foot sculpture marking the 1989 massacre of student protesters in Beijing’s Tiananmen Square by the Chinese military, apparently for fear of riling the authoritarian Chinese government. If the comparison distressed university officials, he wrote, ‘the solution is simple. Stop acting like your contemporaries in Hong Kong.'”

FREE MARKETS

Businesses in the Netherlands find a way around COVID-19 restrictions? Dutch museums and theaters—which are ordered to remain closed—”are temporarily turning themselves into hair salons and gyms to protest against what they say are unfair coronavirus measures,” Bloomberg reports. “The Van Gogh Museum in Amsterdam is open to get a hair cut, and the Frans Hals Museum in Haarlem is being used for gym classes.”

QUICK HITS

• The Supreme Court will take on race in college admissions in cases concerning Harvard and the University of North Carolina. “The case against Harvard accused it of discriminating against Asian American students by using a subjective standard to gauge traits like likability, courage and kindness and by effectively creating a ceiling for them in admissions,” notes The New York Times. “In the North Carolina case, the plaintiffs [say] the university discriminated against white and Asian applicants by giving preference to Black, Hispanic and Native American ones.”

• Prosecutors in Kansas are using a stand-your-ground law to shield juvenile detention center employees from prosecution in a case involving the death of a 17-year-old in their custody, Cedric Lofton. A lawyer for the boy’s family said the self-defense rationale makes no sense since the boy was unarmed and 135 pounds.

• President Joe Biden’s competition remarks yesterday weren’t all bad. For instance, he touted regulatory changes that allow hearing aids to be sold over the counter:

• Biden was overheard on a hot mic calling a reporter a “stupid son of a bitch.”

• An interesting new study looks at how declining U.S. mobility affects American culture in other ways:

• Fight Club gets a new ending:

• In Baldwin County, Alabama, people “are routinely forced to wear ankle monitors while out on bail even though they haven’t been convicted of crimes,” and pay $10 per day for these monitors, AL.com reports.

• New York’s statewide mask mandate has been struck down.

• A new bill in California would require all schoolchildren to be vaccinated against COVID-19.

• “A Wisconsin appeals court has temporarily blocked a judge’s order that would have banned the use of absentee ballot drop boxes in the swing state,” reports NPR.

• “We talk a lot in my business about how younger, more diverse generations are changing politics and culture. But we often forget to think about the corollary: Older, Whiter generations disproportionately make up our workforce, and our customers,” writes The Washington Post‘s Megan McArdle. “If we don’t account for those generational effects when designing diversity initiatives, we’re setting ourselves up for frustration, or worse.”

The post Biden Blames Government's Economic Failures on Big Business appeared first on Reason.com.

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IMF Slashes Global GDP Growth To 4.4% In 2022, Warns On Aggressive Fed Tightening

IMF Slashes Global GDP Growth To 4.4% In 2022, Warns On Aggressive Fed Tightening

Looking for more proof that the global economy is slowing fast? Then look no further than today’s latest quarterly World Economic Outlook publication from the IMF, which slashed its global economic growth forecast for 2022 from 4.9% to 4.4%, as the Covid-19 pandemic enters its third year, citing weaker prospects for the U.S. and China along with persistent inflation. The downgrade was across the board, with the monetary fund slashing its GDP forecast for the US, Eurozone, UK, Japan, China and emerging markets. The IMF also downgraded its view on global trade from 6.7% to 6.0%.

The U.S. saw its forecast cut on the imploding outlook for President Joe Biden’s spending agenda and China, the second-biggest, on challenges in real estate. Some more details:

  • The fund slashed its forecast for growth in the U.S. by 1.2 percentage points to 4%. The revision reflects removal of assumptions for a positive impact from Biden’s Build Back Better social-spending plan, which died in Congress; earlier withdrawal of Federal Reserve support; and continued supply-chain bottlenecks
  • The IMF trimmed China’s growth forecast by 0.8 point to 4.8%, citing disruptions caused by the pandemic, the nation’s zero-tolerance policy for Covid-19 and disruption in the housing sector.
  • The IMF cut its growth forecasts for Brazil and Mexico by 1.2 percentage points to 0.3% and 2.8%, respectively, with the fight against inflation already prompting tighter monetary policy that will weigh on domestic demand
  • India will see the fastest growth among major economies at 9% from 8.5%, due to credit-growth improvements

Looking even forward, which is a silly exercise as nobody can anticipate what happens between now and year-end 2023, IMF sees more slowdown, with global growth dropping to 3.8%, which however was a 0.2% increase from its previous forecast, but the cumulative expansion for the two years will still be 0.3% less than previously forecast.

According to the IMF, the world economy expanded 5.9% last year the most in four decades of detailed data. That followed a 3.1% contraction in 2020 that was the worst peacetime decline in broader figures since the Great Depression.

“The last two years reaffirm that this crisis and the ongoing recovery is like no other,” Gita Gopinath, who became the fund’s No. 2 official this month after three years as its chief economist, wrote in a blog accompanying the report.

“Policy makers must vigilantly monitor a broad swath of incoming economic data, prepare for contingencies, and be ready to communicate and execute policy changes at short notice,” Gopinath said. “In parallel, bold, and effective international cooperation should ensure that this is the year the world escapes the grip of the pandemic.”

According to Bloomberg, while the IMF sees the omicron variant weighing on growth in the first quarter, it expects the negative impact to fade starting in the second quarter, assuming that the global surge in infections abates and the virus doesn’t mutate into new variants that require more restrictions on mobility.

Supply-chain disruptions – which like inflation is proving to be anything but transitory – are spurring more broad-based inflation than anticipated, with the annual rate projected to average 3.9% in advanced economies this year, up from a prior 2.3% estimate, and 5.9% in emerging and developing nations.

The good news is that the IMF sees surging inflation easing gradually later this year, assuming price expectations remain well anchored, as shipping bottlenecks ease and major economies respond with interest-rate increases.  

Advanced economies raising interest rates may create risks for financial stability and emerging-market and developing economies’ capital flows, currencies and fiscal positions after debt levels increased, the IMF said. International cooperation will be needed to preserve nations’ access to cash and facilitate orderly debt restructuring where needed, the fund said.

The projections assume that bad health outcomes from Covid-19 recede to low levels in most countries by the end of this year, vaccination rates improve and treatments become more available. Risks are tilted to the downside, with new variants threatening to extend the pandemic.

Bringing the pandemic to an end depends on ending vaccine inequality, the IMF said. The fully vaccinated share of the population is about 70% for high-income countries but less than 4% for low-income nations. Eighty-six nations, accounting for 27% of the world’s population, fell short of the 40% vaccination level for the end of last year that the IMF estimates is needed to curb the pandemic.

Perhaps the most interesting comment came from Gopinath who said that any miscommunication fof the Fed policy changes may provoke flight to safety and trigger capital outflow from Emerging Markets.

How will less accommodative monetary policy in the United States affect global financial conditions? With inflation on the rise and still large pent-up demand in the system in part due to the pandemic recovery program, US monetary policy will have to tighten. But how far and fast is not yet clear. The WEO forecast is conditioned on an end to asset purchases in March 2022 and three rate increases in both 2022 and 2023—consistent with what will be needed to bring inflation back down to the 2 percent medium-term goal. But there are upside risks. Inflation could turn out higher than expected (if, for instance, supply disruptions persist and wage pressures feed into inflation). A different policy stance will be required if circumstances change. Communicating such changes will be a delicate task and risks prompting strong market reactions that could, in turn, result in tighter financial market conditions. Markets’ reactions to (actual or perceived) changes in Federal Reserve policies will govern how less-accommodative policy in the United States spills over to other countries, particularly emerging markets and frontier economies. Any miscommunication or misunderstanding of such changes may provoke a flight to safety, raising spreads for riskier borrowers. This may put undue pressure on emerging market currencies, firms, and fiscal positions

Is Jamie Dimon still sticking with “six or seven” rate hikes?

Tyler Durden
Tue, 01/25/2022 – 09:45

via ZeroHedge News https://ift.tt/3fWfJO3 Tyler Durden

Police Launch ‘Partygate’ Probe As No. 10 Insists Report On Illicit Gatherings Will Arrive In Days

Police Launch ‘Partygate’ Probe As No. 10 Insists Report On Illicit Gatherings Will Arrive In Days

Following the revelation of yet another ‘illegal’ party at 10 Downing Street (this time, a truncated lockdown-busting birthday celebration for the PM attended by his wife and interior decorator, along with the usual office staff), London’s Metropolitan Police have decided to insert themselves into the biggest scandal to rock British politics in years.

According to the New York Times, Metropolitan Police Commissioner Cressida Dick confirmed on Tuesday that the police are investigating “a number of events that took place at Downing Street and Whitehall in the last two years in relation to potential breaches of COVID regulations” although she declined to give further details. In response to the news, PM Boris Johnson told reporters that no details from the police investigation will be included in the report produced by the Sue Gray investigation.

Other officials said earlier on Tuesday that they expect the results of the Gray investigation, which is being led by a longtime civil servant Sue Gray (deemed a figure of public trust), to be released during the coming days. BoJo has repeatedly exhorted his fellow MPs to withhold their judgment until the release of the Gray report, which many expect will be scathing, given Gray’s reputation as somebody who doesn’t really pull punches. A spokesman for the PM later said that at least some of the details from the report would be made available in the coming days.

Before the Metropolitan Police disclosed the existence of the investigation, some had speculated that the involvement of the police could delay the Gray report potentially by a week, or even weeks. This could create serious problems for BoJo in his quest to “Save Big Dog” by putting the issue behind him.

As the NYT explains, “[p]olice officers who guard the Downing Street complex are in a particularly good position to monitor the comings and goings of staff members.” But the notion that the police involvement would truly spell trouble for the PM probably still seems remote to many.

At this point, an unknown number of Conservative lawmakers have submitted confidential letters demanding a vote of confidence in the prime minister. If the number of letters exceeds 54 – a fate that unfortunately befell Johnson’s predecessor, the previous Conservative PM Theresa May – BoJo would face a potentially crippling vote of confidence.

We noted earlier that public anger surrounding what the Brits are calling “Partygate” (it has involved nearly a dozen parties) seems to have reached a fever pitch. BoJo’s Wikipedia article has been repeatedly altered as a result to change his job title to “Chief Party Planner”.

That’s bad news for a formerly PM, although it hasn’t stopped him from finally rolling back the last of England’s “Plan B” COVID restrictions.

Tyler Durden
Tue, 01/25/2022 – 09:30

via ZeroHedge News https://ift.tt/33MVBvj Tyler Durden

Biden Blames Government’s Economic Failures on Big Business


covphotos198547

Biden continues to scapegoat American businesses for government-created problems. On Monday, President Joe Biden gave a public address during a meeting with his Competition Council, discussing an executive order he issued last July. Why now? Because inflation keeps getting worse, and the Biden administration needs somewhere to lay the blame.

Inflation has been hitting its highest levels in decades. In late December, for instance, gas prices were up 51 percent, beef prices up 20 percent, and furniture prices up 11 percent. Food prices are up. Clothing prices are up. Energy prices are up. Used car prices are up. Booze prices are up. And the list goes on.

Part of this can be blamed on the pandemic, which has contracted the labor force, increased demand for certain sorts of goods, and caused disruptions in supply chains.

But government policies have made things much worse. There’s been absolutely massive amounts of new government spending—and printing more money to pay for it. (The “supply of dollars has increased by nearly 40 percent over the past 2 years, which is an off-the-charts record,” Reason‘s Nick Gillespie noted in December.) Meanwhile, Biden and Democrats just keep trying to spend more.

While raising interest rates is traditionally a way to try and keep inflation in check, “America’s high levels of debt make the maneuver more fraught because higher interest rates will reverberate through the government’s own debt,” Eric Boehm points out.

Biden energy policies and the Trump tariffs he’s continued may also be worsening inflationary woes.

With Americans feeling the pinch of rising prices all around, Democrats have been looking for somewhere to lay the blame that doesn’t implicate their own policies. They’ve coalesced around blaming big businesses—a sort of “killing two birds with one stone” strategy.

Passing “antitrust” laws that give government regulators more control over tech companies and U.S. markets at large has been big on Democrats’ recent agenda. Blaming big businesses for inflation lends give a good cover to this push.

Rather than come across as control freaks who want a say in how all U.S. companies run, they feign concern for consumer welfare, asserting that lack of competition is what’s causing rising prices. “Lack of competition costs the median American family household… $5,000 a year,” claimed Biden on Monday.

Don’t buy it.

These type of claims are based more in politics than economic realities.

“As the president’s economic approval ratings slipped, his aides fielded increasingly alarmed messages from Democratic operatives urging the White House to adopt a new message on inflation,” The Washington Post reported earlier this month:

In November and December, at least four Democratic polling experts told senior White House officials that they needed to find a new approach as public frustration over price hikes became widespread and highly damaging to Biden’s popularity, according to three people with knowledge of the private conversations.

“What we said is, ‘You need a villain or an explanation for this. If you don’t provide one, voters will fill one in. The right is providing an explanation, which is that you’re spending too much,'” one Democratic pollster who, like the others, spoke on the condition of anonymity to reflect private conversations, told The Washington Post. “That point finally became convincing to people in the White House.”

Corporate consolidation and corporate greed has become that villain. But economists across the spectrum are skeptical, including “some liberal economists in the administration’s orbit,” as the Post pointed out:

They point out that corporate consolidation is a phenomenon going back decades, so it is unlikely to explain this year’s sudden burst of inflation. …

“I don’t think corporate consolidation explains the jump in prices,” said Dean Baker, a liberal economist who endorsed Warren’s presidential candidacy in 2020. Baker said he had relayed this skepticism to the White House. “I don’t see a good story here in blaming inflation on concentration.”

Claudia Sahm, a liberal economist who worked at the Federal Reserve, added, “I don’t understand the strategy. It must have something to do with politics, but you’re not going to get many economists to back up the argument that it’s going to address inflation right now.”

The criticisms are even more pointed from less liberal economists. Larry Summers and Jason Furman, who both served in the Obama administration, have been dismissive of the notion that corporate consolidation explains the price hikes. But they said it makes sense for the administration to use price pressures to push their antitrust agenda.

This push was made clear by Biden’s meeting remarks yesterday. In addition to blaming businesses for rising prices, he touted his administration’s efforts to crack down on business mergers.

“Capitalism without competition is not capitalism. It’s exploitation,” he said.

Biden and his allies would like us to believe that only his preferred massive spending initiatives and economic policies can save Americans from rising prices. It may be good political messaging, but like so many American goods right now, the price of believing this is way too high.

FREE MINDS

Florida universities can’t bar professors from testifying in lawsuits against the state. A federal judge ruled against the University of Florida in a case brought by six professors at the school. “The stinging ruling, by Judge Mark E. Walker of U.S. District Court for the Northern District of Florida, accused the university of trying to silence the professors for fear that their testimony would anger state officials and legislators who control the school’s funding,” The New York Times reports.

“Judge Walker likened that to the decision last month by Hong Kong University to remove a 25-foot sculpture marking the 1989 massacre of student protesters in Beijing’s Tiananmen Square by the Chinese military, apparently for fear of riling the authoritarian Chinese government. If the comparison distressed university officials, he wrote, ‘the solution is simple. Stop acting like your contemporaries in Hong Kong.'”

FREE MARKETS

Businesses in the Netherlands find a way around COVID-19 restrictions? Dutch museums and theaters—which are ordered to remain closed—”are temporarily turning themselves into hair salons and gyms to protest against what they say are unfair coronavirus measures,” Bloomberg reports. “The Van Gogh Museum in Amsterdam is open to get a hair cut, and the Frans Hals Museum in Haarlem is being used for gym classes.”

QUICK HITS

• The Supreme Court will take on race in college admissions in cases concerning Harvard and the University of North Carolina. “The case against Harvard accused it of discriminating against Asian American students by using a subjective standard to gauge traits like likability, courage and kindness and by effectively creating a ceiling for them in admissions,” notes The New York Times. “In the North Carolina case, the plaintiffs [say] the university discriminated against white and Asian applicants by giving preference to Black, Hispanic and Native American ones.”

• Prosecutors in Kansas are using a stand-your-ground law to shield juvenile detention center employees from prosecution in a case involving the death of a 17-year-old in their custody, Cedric Lofton. A lawyer for the boy’s family said the self-defense rationale makes no sense since the boy was unarmed and 135 pounds.

• President Joe Biden’s competition remarks yesterday weren’t all bad. For instance, he touted regulatory changes that allow hearing aids to be sold over the counter:

• Biden was overheard on a hot mic calling a reporter a “stupid son of a bitch.”

• An interesting new study looks at how declining U.S. mobility affects American culture in other ways:

• Fight Club gets a new ending:

• In Baldwin County, Alabama, people “are routinely forced to wear ankle monitors while out on bail even though they haven’t been convicted of crimes,” and pay $10 per day for these monitors, AL.com reports.

• New York’s statewide mask mandate has been struck down.

• A new bill in California would require all schoolchildren to be vaccinated against COVID-19.

• “A Wisconsin appeals court has temporarily blocked a judge’s order that would have banned the use of absentee ballot drop boxes in the swing state,” reports NPR.

• “We talk a lot in my business about how younger, more diverse generations are changing politics and culture. But we often forget to think about the corollary: Older, Whiter generations disproportionately make up our workforce, and our customers,” writes The Washington Post‘s Megan McArdle. “If we don’t account for those generational effects when designing diversity initiatives, we’re setting ourselves up for frustration, or worse.”

The post Biden Blames Government's Economic Failures on Big Business appeared first on Reason.com.

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ARK Changes How Its Innovation Fund’s Returns Show Up On Its Website

ARK Changes How Its Innovation Fund’s Returns Show Up On Its Website

Submitted by QTR’s Fringe Finance

Cathie Wood continues playing it fast and loose with how she presents her ETF’s projected – and now past – performance.

The most recent example of Wood pulling the ole’ switcheroo has come in the form of how Wood markets her flagship ARK Innovation ETF (ARKK) on its website.

As Twitter user @commandentesd pointed out over the weekend, Wood’s website used to track ARKK on its site using its YTD return. An archived version of ARK’s site from December 2021 shows at YTD return of -15.1%.

Ah, yes. The ole’ YTD metric. Let’s see how that should stand for ARKK so far in 2022.

The fund has started off the year -24%, underperforming its benchmark by -13%.

Image

But now, all of a sudden, ARKK’s webpage shows the same other three boxes, but its “return” box has switched from a YTD return to a 5 year (annualized) return as of 12/31/2021.

The reasons for the switch could be obvious: the fund’s YTD return in 2022 has been horrific and its annualized 5 year return as of the end of 2021 is a much friendlier looking +38.38% number.

This is now the second time in as many months ARK appears to be picking and choosing numbers that are convenient for them.

My readers already know that it was only weeks ago that I wrote an article called “Cathie Wood Is Playing With Fire”, wherein I detailed how ARK’s Cathie Wood took liberties with language she used in a recent blog post about her projected future performance.

If you remember, Wood’s December 17, 2021 blog post, via Wayback Machine, projected that her “flagship strategy” – widely accepted to be her ARK Innovation Fund ETF (ARKK) – could deliver a “40% compound annual rate of return during the next five years.”

Wood then updated her December 17, 2021 blog post after her projections were mocked on social media and even questioned in the financial media. The same section of the letter now reads:

Cathie Wood’s December 17, 2021 Letter, as it stands today

The change is explained in a footnote where Wood says it didn’t apply to “any particular product or fund”, despite the fact that she references their “flagship strategy” in the first example:

In addition, the newer version of the letter had realigned Wood’s expectations from “40%” to “30-40%” and added a lot of qualifier language, not the least of which was directing the return expectations away from ARK’s “flagship strategy” and onto – well, some vague benchmark of ARK Invest, in general.

Cathie Wood’s December 17, 2021 Letter, as it stands today

In other words, in 48 hours, Wood went from an expectation of 40% from her “flagship” fund to a 30-40% expectation of her “strategies broadly”.

There’s only so much an asset manager can do when they’re underperforming.

The right thing to do is level with your LPs or ETF holders and tell that your strategy simply isn’t working and that it’s potential time to reconsider the fund’s holdings and/or fall on your proverbial sword and perform the Japanese “long bow” while asking for forgiveness.

You know, like Mt. Gox CEO Mark Karpales did after $500,000,000 in bitcoin disappeared at his hands.

Chicago court freezes US assets of Mt. Gox CEO, companies - TechCentral.ie

The wrong thing to do, in my opinion, is to tee up a rolodex of shitty excuses:

  • December 9, 2021: Cathie Wood “Soul Searching” But Staying The Course

  • December 20, 2021: Cathie Wood: My Stocks Are Now ‘Deep Value’

  • December 29, 2021: Cathie Wood says inflation will ‘unwind pretty quickly’ and that stocks will probably be fine

  • January 19, 2022: Cathie Wood: ‘In our view, the real bubble could be building in such so-called “value” stocks’

  • January 19, 2022: Cathie Wood: “The disconnect between valuations for innovative companies in the public vs. private markets is as wide as I ever have seen. The arbitrage opportunity is enormous.”

…and then start turning knobs and dials to try and window dress shitty performance to look like slightly less shitty performance.

But rather than embrace the pain and usher in a sense of calm, despite the losses, Wood is instead toying with her ARKK marketing materials – and while the changes likely don’t constitute anything illegal, they certainly seem to be heading down a path away from consistent transparency and towards a panicked fund manager worrying about optics.

If the NASDAQ continues its tumble heading into late January and early February, I’ll be interested to see what other convenient changes in ARK written materials may take place.

–

If you don’t already subscribe to Fringe Finance and would like access, I’d be happy to offer you 20% off. This coupon expires in 48 hours: Get 20% off forever

Disclaimer: I own and have owned and will continue to own ARKK, QQQ, IWM, TSLA puts at various strikes and time horizons. I currently own long dated ARKK puts. I also have nominal exposure on the long side to some ARK names in a a longer-term focused dividend portfolio. I may add any name mentioned in this article and sell any name mentioned in this piece at any time. None of this is a solicitation to buy or sell securities. These positions can change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I get shit wrong a lot. 

Tyler Durden
Tue, 01/25/2022 – 09:17

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Authoritarian Governments Ban Bitcoin Mining. The U.S. Shouldn’t Join Them.


bitcoinmining_1161x653

If you are a government that wants to stop bitcoin, what can you do? Can you make people think it is killing the planet?

Authoritarian governments try. The Chinese Communist Party—ever the tree-huggers—clamped down on cryptocurrency last year in part because of environmental concerns. Russia is entertaining major controls on cryptocurrency because of the supposed threats to financial stability and Mother Earth. Both countries have been major mining centers, so energy usage is a convenient scapegoat to justify doing away with something that is good for the people but bad for the ruling party.

The United States leads the world in bitcoin mining. America absorbed many of the miners who fled the Chinese crackdown. We should expect Russian miners to tag along if their government follows through on these threats.

Is Uncle Sam far behind? Last week, a subcommittee of the House Committee on Energy and Commerce held a troubling hearing called “Cleaning Up Cryptocurrency: the Energy Impacts of Blockchains.” As the title indicates, the ruling party sees bitcoin’s energy use as a problem to be solved rather than an input to a liberating technology.

The politicians at the hearing might not have known much about bitcoin mining, but most of them know they don’t like it. For example, Rep. Frank Pallone intoned that “we cannot bring retired fossil fuel plants back online or delay the retirement of some of our oldest and least efficient plants in support of energy-intensive crypto mining.”

This is a bizarre statement to make about bitcoin mining considering that roughly two-thirds of its energy inputs come from sustainable power sources. (The United States as a whole boasts half as much).

Anyway, bitcoin mining constitutes some 188 terawatt-hours of the world’s 154,620 terawatt-hours, a measly 0.12 percent. Is this really our most pressing energy concern, or might there be ulterior motives?

Bitcoin allows peer-to-peer exchange by replacing a third party like a bank with a decentralized network of validators, called miners. Miners contribute computing power to run the network using a technique called “proof of work” (POW). They are incentivized to contribute as much energy as possible so they have the highest chance of receiving new currency units. The lower the energy cost, the higher the profit for individual miners. More total energy, or a higher “hashrate,” means fewer backlogs and a stronger network.

Is bitcoin mining economically efficient or wasteful? That depends on a concept called opportunity cost, or the value of the most highly valued alternative forgone. What are miners giving up to give energy to bitcoin? The great thing about mining is the prices are clear and the market is competitive. Miners have made an economic calculation that this is the most valuable thing on which they can expend energy—if it wasn’t, they would be losing money by not putting their energy elsewhere. Even better for us, that “thing” is good for society, too.

“Using energy” is value neutral. If we use energy to save lives or improve standards of living, that is a good thing. If we use energy to destroy wealth or immiserate others, that is a bad thing. Bitcoin improves lives by giving people access to a financial system without inflation, confiscation, or control. It is good that we expend energy to give people this freedom.

As with most debates over bitcoin, the topic of mining and the environment had been hashed out and settled over a decade ago. As Satoshi himself put it in 2010: “The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used. Therefore, not having Bitcoin would be the net waste.”

But many bitcoin critics don’t think financial freedom is good. Any amount of energy we use on bitcoin is therefore bad. But it does not sound great to say you don’t think people should be able to save their wealth or freely transact. So they will disingenuously point to bitcoin’s energy expenditures as a problem in itself.

It is not surprising to see government agents take this approach. But it is very disappointing to see members of the cryptocurrency community promote bad energy rhetoric to tilt the policy field in their favor.

This is the unfortunate tack chosen by some advocates for a consensus mechanism called “proof of stake.” POS systems do not operate as a blind energy lottery like bitcoin does. Rather, the network is maintained by the people who own the most coins on the system. The theory is that stakeholders do not have an incentive to undermine their own network and therefore their own net worth.

POS advocates, like one of the witnesses at the hearing, maintain that POS systems are better for the environment and therefore superior to bitcoin. The implication, sometimes openly stated, is that POW systems like bitcoin should be suppressed or manipulated into adopting a POS model.

But everything has a cost. POS systems are more susceptible to capture by insiders. They may have an incentive to not completely tank the network, but they could make changes to benefit themselves in subtle ways. In that regard, POS systems do not sound so different from the dominant monetary mechanics we live with today. With a POW system, energy usage is protective against such insider subversion.

Perhaps POS systems can overcome these vulnerabilities. But if they do become dominant, it shouldn’t be because POS advocates convinced the government to clamp down on POW competitors. All those who care about cryptocurrency and freedom should condemn such attacks as they arise.

If we don’t, we could one day see a bitcoin mining “ban,” with American characteristics. The U.S. may not outright prohibit the use or validation of cryptocurrency networks. Rather, it could promote POS systems and engage in public campaigns against POW systems like bitcoin. It could lean on regulated entities and investors to favor POS systems over POW. It could pass environmental, social, and, governance rules that are de facto anti-bitcoin. No one is “banning” cryptocurrency! We are just “nudging” society to make the “green” choice.

This cannot be allowed to happen. Bitcoin would be fine, and miners would move to more hospitable countries. Some of them would stay in the U.S. too, as have the underground miners back in China. But the U.S. would miss out on an incredible opportunity to build a fast growth industry that is good for America and all people who want to use this technology for freedom.

Bitcoin critics don’t have much of a leg to stand on when it comes to mining and energy. Bitcoin mining is efficient, allows energy companies to limit waste, and is far more sustainable than other uses of energy.

But we shouldn’t allow ourselves to get lost in arguing over these weeds. Bitcoin is a good thing, and it’s good that we spend energy on it. We don’t have to apologize for freedom.

The post Authoritarian Governments Ban Bitcoin Mining. The U.S. Shouldn't Join Them. appeared first on Reason.com.

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US Home Prices Decelerate For 4th Straight Month

US Home Prices Decelerate For 4th Straight Month

For the fourth straight month, US home prices decelerated in the nation’s 20 largest cities. The 20-City Composite rose 18.29% YoY in November (below October’s 18.46% pace but it did print above the expected +18.00% YoY.

Source: Bloomberg

Nevertheless, home price appreciation remains near record highs…

Source: Bloomberg

“We continue to see very strong growth at the city level. All 20 cities saw price increases in the year ended November 2021, and prices in 19 cities are at their all-time highs,” according to Craig J. Lazzara, Managing Director at S&P DJI

Phoenix, Tampa, and Miami reported the highest year-over-year gains among the 20 cities in November but Washington is seeing prices decelerate dramatically, rising just 11.1% YoY (below Minneapolis)…

And all this is before Powell has hiked one rate or stopped buying MBS?

Tyler Durden
Tue, 01/25/2022 – 09:10

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

JPM Trading Desk: Odds Not Looking Good For A Continued Bounce Today

JPM Trading Desk: Odds Not Looking Good For A Continued Bounce Today

While we’ve done our best to capture the sheer insanity of yesterday’s market action, perhaps the most eloquent summary belongs to DB’s Jim Reid who this morning writes that “at one point yesterday it felt like we were in a full blown crisis let alone a recession. At Europe closed their laptops down the S&P was as much as -3.98% lower, which would have been the worst daily return since June 2020. The NASDAQ was -4.90% lower, the worst potential close since September 2020. However at that point Manic Monday turned and remarkably the S&P 500 (+0.28%) and NASDAQ (+0.63%) closed higher. The volatility continues this morning though with S&P 500 futures down -1.1% and Nasdaq futures -1.4%. Note that earning season starts to get going with some momentum today. The highlights of those reporting are in the day ahead at the end but Microsoft is probably the biggest and most important.”

Of course, sometimes a picture has more impact than one thousand poetic words, and we believe that the following chart of Nasdaq new 52 week lows may it: it shows that on Monday, there were 1,353 new 52-week lows in the Nasdaq. This was the third highest on record, only surpassed by the March 2020 implosion and the global financial crisis.

So no matter how one describes it, yesterday’s market even was truly historic.

But what traders want to know is whether the crash is over or will today see more pain? Unfortunately, for those who care about the opinions of the trading desk at the world’s largest commercial bank, we have some bad news. According to JPM’s Andrew Tyler who does the bank’s daily trading desk recap (where unlike JPM’s permabullish Marko Kolanovic, people actually put their money where their mouth is), it’s not looking too good because when looking at history, after a furious reversal such as yesterday, “the following day, markets were down 4 of the previous 6 times, with an average return of -1.6%.” Of course, what really matters for stocks is not what they will do today, but what the Fed will say tomorrow, so we reserve judgment for the next 24 hours.

In any case, here is JPM’s take.

Yesterday, we saw significant reversals in the 3 major indices. Focusing on the NDX, a 5% reversal is an uncommon occurrence.  If you exclude March 2020, yesterday was the 7th 5%+ NDX reversal since GFC. The following day, markets were down 4 of the previous 6 times, with an average return of -1.6%. In 2000 – 2002 and in 2008, there are many more observations of 5% reversals, occurring 194 times during those time periods.

Overall, intraday reversals of this magnitude seems to suggest more volatility rather than a directional change. This hypothesis appears to be playing out in futures this morning.

Finally, answering the all important question, “how much more downside exists?”, Tyler writes that the answer to that depends on the combination of MSFT earnings today, the Fed tomorrow, and AAPL on Thursday. “The Fed is most important for market direction while the Tech behemoths could allow the NDX to rally alongside the other major indices.” And speaking of the Fed, here is what JPM thinks will happen during tomorrow’s meeting “which should be a non-event”:

With the Fed meeting tomorrow, what should be a non-event now has investors questioning (i) will the Fed end QE next week; (ii) is next week a live meeting or does liftoff begin in March; and, (iii) is the first rate hike 25bps, 50bps, or more.

The US Market Intelligence view is:

(i) No – while the economy does not really need additional stimulus there is noticeable impact from Omicron without a clear answer as to when Omicron fully dissipates.

(ii )The JPM view is that liftoff begins in March. With a 6- 9 month lag between Fed action and economic impact, pulling forward liftoff to January does not have a material impact on the economy and the bond market, and thus financial conditions, reaction would potentially be negative enough to derail the Fed’s attempt at a soft landing.

(iii) 25bps. While we have seen the Fed cut 50bps or more, we have not seen the Fed hike inthose increments. While Powell seems the most likely Fed chair to attempt this, it seems unlikely. That said, we could see the Fed accelerate their hike schedule form an assumed once per quarter to once per meeting. Even that aggressive of an approach is not being price into markets and would seemingly violate Powell’s preferred data-driven approach.

The silver lining: Monday’s near crash showed the Fed just how bad things will get for him and for his boss, if the Fed continues to push with a blind, and very hawkish narrative.

Tyler Durden
Tue, 01/25/2022 – 08:51

via ZeroHedge News https://ift.tt/3Iz4GGO Tyler Durden