Month: April 2022

Authored by Wolf Richter via WOLF STREET,

The wealthy got immensely wealthier. Everyone else paid for it via rampant inflation…

The Fed’s own data on the distribution of wealth in the US is a quarterly report card on the Fed’s official policy goal of the “Wealth Effect.” It has now released the data for Q4. The Fed uses monetary policies, such as QE and interest rate repression, to create asset price inflation and make a relatively small number of large asset holders vastly wealthier so that they might spend more. This has been explained in numerous Fed papers, including by Janet Yellen back when she was still president of the San Francisco Fed.

The Fed’s wealth distribution data divides the US population into four groups by wealth: The “Top 1%,” the “2% to 9%,” the “next 40%,” and the “bottom 50%.” My Wealth Effect Monitor divides this data by the number of households in each category, to obtain the average wealth per household in each category. Note the immense increase in the wealth for the 1% households after the Fed’s money-printing scheme and interest rate repression started in March 2020:

As you can see from the steep curve of the red line, the “Top 1%” households were the primary beneficiaries of the Fed’s policies since March 2020. These policies were designed to inflate asset prices, and only asset holders benefited from that. The more assets they held, the more they benefited.

The Census Bureau defines a household by address. Each address is one household, whoever lives there, whether they’re a three-generation family, four roommates, a married couple, or a single person.

So here is the average wealth (= assets minus debts) per household, by category in Q4, 2021:

• “Top “1%” household (red): $36.2 million.

• The “2% to 9%” household (yellow): $4.68 million.

• The “next 40%” household (purple): $775,000.

• The “bottom 50%” household (green): $59,000.

But wait… durable goods.

The Fed includes durable goods in this wealth. Durable goods are motor vehicles, boats, furniture, electronics, etc. They’re consumables – unless they’re art, antiques, or classics – and their value will ultimately go to zero. For the “bottom 50%,” their durable goods account for nearly 20% of their total assets and for nearly 50% for their total wealth (assets minus debts).

The Billionaire Class got more billions.

The Fed doesn’t provide separate data on the truly rich (the 0.01%) and the Billionaire Class, a distinct royalty-like class in American society whose names often have the royal title of “billionaire” in front. They’re the biggest beneficiaries of the Fed’s monetary policies.

The top 30 US billionaires have a total wealth of $2.12 trillion, sliced into 30 slices for a wealth of $70.8 billion per billionaire, according to the Bloomberg Billionaires Index.

Compare that to the bottom half of the US population – the “bottom 50%” – who have a combined wealth of just $3.7 trillion, sliced into 165 million slices for each individual. For them, the inflated real estate prices just mean higher housing costs.

Reckless usage of percentages can kill someone.

If I give my favorite homeless guy $5, and he already has $5 in his pocket, I increased his wealth by 100%, which is a huge percentage jump in wealth. But he’s still homeless and still doesn’t have any wealth.

Percentage increases are regularly touted to show that the wealth at the bottom increased, when in fact, it increased by only minuscule amounts of dollars because the bottom 50% have so little that even a big percentage increase still amounts to nearly nothing in dollar terms, compared to the billionaire class.

When the wealth of the bottom 50% increases by 5%, they gain about $3,000. And when the average wealth of the top 30 billionaires increases by 5%, they on average gain $3,500,000,000. And the wealth disparity just blew out.

Greatest economic injustice committed in recent US history.

Since March 2020, the Fed printed $4.9 trillion and repressed short-term interest rates to near-zero in order to inflate asset prices so that the asset holders would get immensely more wealthy, in line with its doctrine of the Wealth Effect.

This act has produced the greatest economic injustice committed in recent US history.

My “Wealth Disparity Monitor” tracks that economic injustice on a quarterly basis by showing the difference in average wealth between the top 1% and the bottom 50%, per household, based on the Fed’s own data.

In 1990, the wealth disparity between the average “top 1%” household and the average “bottom 50%” household was $5 million. In Q4 2021, it ballooned by another $1.2 million from the prior quarter, and by $5.1 million year-over-year, to $36.2 million.

Since the Fed’s crazed money printing binge and interest rate repression started in March 2020, the wealth disparity between the average “top 1%” household and the average “bottom 50%” household has exploded by $11.2 million per household.

More wealth for the wealthy, paid for by crushing inflation for the rest.

The Fed’s policy of the Wealth Effect operates by creating asset price inflation through money printing and interest rate repression.

The bottom 50% of Americans — who spend all or nearly all their income on housing, transportation, food, healthcare, etc. — hold practically no stocks, no bonds, and very little real estate, according to the wealth distribution data from the Federal Reserve. When the Fed purposefully inflates those assets that only some people in society hold, it says F-U to the rest.

And this money-printing binge has now created the worst inflation in 40 years. Inflation destroys the purchasing power of the dollar, and it destroys the purchasing power of labor denominated in dollars. Just to get by, the bottom 50% spend all, or nearly all, of their income on consumer items – such as housing, transportation, and food. And they got mauled by this rampant consumer price inflation that this money printing has triggered. And they’re the ones paying for this act of the Fed to enrich the asset holders.

So average wages and salaries went up a lot, but by only a fraction of the amount that rents, and the prices of houses, used and new vehicles, gasoline, groceries, etc. shot higher. And the worker bees in this economy now have to tighten their belts further even as richest asset holders got vastly wealthier, thanks to the Fed’s policies.

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The United States is moving to suspend Russia’s from the United Nations Human Rights Council amid allegations that Russian troops have committed a massacre in the town of Bucha, which is on the outskirts of Kiev. Ukraine has alleged that 410 bodies have been found, many which had their hands tied behind their backs and were shot execution-style.

America’s ambassador to the UN Linda Thomas-Greenfield confirmed on a Monday statement that she’ll work with allies to suspend Russia from the body. “In close coordination with Ukraine, European countries and other partners at the UN, we are going to seek Russia’s suspension from the UN Human Rights Council,” she said.

She further said it was a “farce” to allow Putin’s Russia a seat on the council during remarks in Bucharest on Monday. “And it is wrong, which is why we believe it is time the U.N. General Assembly vote to remove them,” Thomas-Greenfield added.

For the US to get Russia booted from the UN HRC, two-thirds of the United Nations’ 193 member countries would have to vote in favor of the move. It must be remembered (in light of the UN HRC is being pointed to as a farce) that China and Venezuela have a seat on the council, and Saudi Arabia has in past years. 

Over the weekend soon after Ukrainian forces took back possession of Bucha, a flood of social media videos – many of them filmed by Ukrainian troops – came out purporting to show the extent of civilian atrocities. This has driven outrage among political officials and in Western media. 

Russia for its part is urging an emergency session of the UN Security Council over the Bucha allegations, saying that the Kremlin is ready to demonstrate they are being made over ‘staged provocations’. 

On Monday President Zelensky went to the town amid a heavy international media presence…

Volodymyr Zelenskyy visited Bucha today. His face says it all. pic.twitter.com/IWOmIdnnVT

— Kateryna_Kruk (@Kateryna_Kruk) April 4, 2022

“The Russian Defense Ministry on April 3 dismissed the Kiev regime’s charges its forces had allegedly killed civilians in the community of Bucha, the Kiev Region,” an explanation in Russian state media begins based on the foreign ministry statements.

“The ministry recalled that Russian forces left Bucha on March 30 while faked evidence of alleged killings was presented four days later, when Ukrainian security service SBU agents arrived in the locality,” TASS writes. “The Russian Defense Ministry also said that on March 31 Bucha’s Mayor Anatoly Fedoruk said in a video address that there were no Russian soldiers in the community. Nor did he mention any locals allegedly shot on the streets.”

Authored by Lance Roberts via RealInvestmentAdvice.com,

“Anatomy of a Bear Market” by Russell Napier is a “must-read” manuscript. Given current market dynamics, a review seems timely. As my colleague, Richard Rosso, CFP, previously penned:

“A mandatory study for every financial professional and investor who seeks to understand not only how damaging bear markets can be but also the traits which mark their bottoms.

Every bear awakes from hibernation for different reasons. However, when studying the four great bottoms of bears in 1921, 1932, 1949, and 1982, there are several common traits to these horrendous cycles.”

Not surprisingly, after 12-years of Fed interventions, seemingly impenetrable markets, and low yields, investors have become overly complacent. Such is despite repeated warnings to the contrary,

“Every financial crisis, market upheaval, major correction, recession, etc. all came from one thing – an exogenous, unanticipated, event.

Such is why bear markets are always vicious, brutal, devastating, and fast. It is the exogenous event, usually credit-related, which sucks the liquidity out of the market causing prices to plunge.

As prices fall, investors panic-sell driving prices lower. Such forces more selling in the market until, ultimately, it exhausts the sellers.

It is the same every time.

While investors insist the markets are currently NOT in a bubble, it would be wise to remember the same belief existed in 1999 and 2007.

Throughout history, financial bubbles are only recognized in hindsight when their existence becomes ‘apparently obvious’ to everyone.

Of course, by that point it was far too late to be of any use to investors and the subsequent destruction of invested capital.

This time will not be different. Only the catalyst, magnitude, and duration will be.” – “No More Recessions,”May 2019

Of course, just 10-months later, the market plunged by 35%.

However, therein lies the lessons from of the “Bear Market Anatomy” and Russell Napier.

Bears Tend To Die On Low Volume

“Low volume represents a complete disinterest in stocks. Keep in mind this contradicts the tenet, which states that bears end with one act of massive capitulation – a  downward cascade on great volume. Those actions tend to mark the beginning of a bear cycle, not the end.

A rise in volume on rebounds, falling volumes on weakness would better mark a bottoming process in a bear market.”

Using that analysis, we can see volume did pick up during the recent decline. However, volume is far below the 2020 “bear market bottom,” suggesting investors remain complacent.

Bears Are Tricky

“There will appear to be a recovery, an ‘all-clear’ for stock prices. It will suck investors back into the market, only to financially ravage them once again.

Anecdotally, I know this cycle isn’t over as I still receive calls from people who are anxious to get into the market and perceive the current market a buying opportunity. At the bottom of a bear, I should hear great despair and a disdain for stock investing.”

Also Read: 5-Signs Investors Are Too Bullish

Bears Can Be Tenacious

“They refuse to die or, at the least, quickly return to hibernation. The 1921 move from overvaluation to undervaluation took over ten years. Bear markets, where three-year price declines make overvalued equities cheap, are the exception, not the rule.

As of this writing,  the Shiller P/E is at 35x – hardly a bargain.  At the bottom market cycle of the Great Recession, the Shiller CAPE was at 15x. There is still valuation adjustment ahead.”

Also Read: Grantham: We’re In An Epic Bubble

Bears Can Depart Before Earnings Recover

“Investors who wait for a complete recovery in corporate earnings will arrive late to the stock-investment party. 

Most likely, it will take a while (especially with the debt burden), for the majority of U.S. companies to reflect healthy earnings growth. CEOs who employ stock buybacks to boost EPS will be considered pariahs and gain unwanted attention from Congress and even the Executive Branch.

A savvy investor should look to minimize indexing, and select individual stocks with strong balance sheets, low debt, and plenty of free cash flow. A focus on sectors and industries that are nimble to adjust to the global economy post-crisis will be an added benefit.”

Also Read: 2022 Estimates Are Still Too Bullish

Bear Market Damage Can Be Inconceivable

“The bear market of 1929-32 was characterized by an 89% decline. The average is 38% for bear markets;  however, averages are misleading. I have no idea how much damage this bear ultimately unleashes. The closest comparison I have is the 1929-1932 cycle.

However, with the massive fiscal and monetary stimulus (and I don’t believe we’ve seen the full extent of it yet),  my best guess is a bear market contraction somewhere between the Great Depression and Great Recession. At the least, I believe we re-test lows, and this bear is a 40-45% retracement from the highs.”

Also Read: A 50% Decline Will Only Be A Correction

Bear Markets End On The Return Of General Price Stability

“In 1949, as in 1921 and 1932, a return of general price stability coincided with the end of the equity bear market. The demand for, and price stability of, selected commodities augured well for general price stabilization.

Low valuations (not there yet), when combined with a return to normalcy in the general price level, may provide the best opportunity for future above-average equity returns. We are not there.”

With prices for commodities still spiking due to economic disruption, the bear market anatomy suggests that until those prices return to normal, the risk is not over.

Bear Markets That Don’t Decline On Bad News Is Positive

“The combination of short positions in conjunction with a market that fails to decline on lousy news was overall a positive indicator of a rebound in 1921, 1932 and 1949. Also, limited stock purchases by retail investors may be considered an essential building block for a bottom.

The worst economic data is still forthcoming, which suggests expectations for the continued market, and economic recovery may be misplaced.” 

Also Read: Bob Farrell’s 10-Rules For A QE Market

Not All Bear Markets Lead The Economy By 6-9 Months.

“Generally, markets lead the economy. However, this tenet failed to hold true for the four great bears. At extreme times, the bottoms for the economy and the equity market were aligned and in several cases, the economy LED stocks higher! 

It’s unclear whether this bear behaves similarly only because of massive fiscal and monetary stimulus. We’re not done with stimulus methods either. If anything, they’ve just begun! I know. Tough to fathom.”

Also Read: The 4-Phases Of A Full Market Cycle

Don’t Discount The Bear Market Anatomy

Throughout history, individuals repeatedly jump into the more speculative stages of the financial market under the assumption that “this time is different.”

Of course, as we now know with the benefit of hindsight, 1929, 1972, 1999, 2007, and 2020, were not different – they were just the peak of speculative investing frenzies.

However, the massive surge in monetary and fiscal stimulus took market speculation to an entirely new level since the pandemic-driven lows.

There are a select group of investors who are revered for their knowledge and success. While we idolize these investors for their respective “genius,” we can also save ourselves time and money by learning from their wisdom and their experiences.

That wisdom was NOT inherited but birthed out of years of mistakes, miscalculations, and trial-and-error. Most importantly, what separates these individuals from all others was their ability to learn from those mistakes, adapt, and capitalize on that knowledge in the future.

Experience is an expensive commodity to acquire, which is why it is always cheaper to learn from the mistakes of others.

We have compiled a collection of those rules, axioms, and pearls of wisdom here: Part 1and Part 2.

We hope you find something useful in them to you navigate whatever comes next.

Over the past two years, staffers working for Vice President Kamala Harris have described her as a “soul-destroying bully” whose office is a “dysfunctional” mess.

Now – Harris’s deputy chief of staff Michael Fuchs is becoming the latest in a long list of departures from the VP’s staff, according to Reuters, citing a leaked internal staff memo.

Fuchs, who served as a foreign policy advisor to former President Bill Clinton and worked in senior roles at the U.S. State Department under former President Barack Obama’s administration, advised Harris on domestic and international issues, helped manage staff and often accompanied her on foreign trips. -Reuters

Fuchs will remain in the office for approximately another month in order to “ensure a smooth transition,” according to the memo. 

“Fifteen months later, it’s almost difficult to recall the magnitude of the challenges we faced when we came in, from an unprecedented pandemic to historically difficult economic circumstances,” wrote Fuchs.

Word of Fuchs’ departure follows a March 21 announcement that Harris’s National Security Adviser Nancy McEldowney was stepping down from her role, while her communications team – which had several high-profile screwups in their first year – has also seen several high-profile departures.

Jamal Simmons, the vice president’s communications director, said Harris “is grateful for Michael’s tireless work, leadership and the many miles he traveled domestically and internationally … our entire team will miss Michael as he begins this next chapter.” Simmons did not comment on staff departures. -Reuters

In other news, White House Press Secretary Jen Psaki decided to stop bailing water out of the rowboat as well – an has announced that she’ll be leaving her position in coming weeks despite having no obvious replacement. 

Also, Biden COVID-19 response coordinator Jeff Zients will be leaving after 14 months on the job, while National Security Council spokeswoman Emily Horne left on March 25.

“This period before the midterms is a common time for officials to depart,” said one anonymous White House official.

Is it also common when approval ratings are in the toilet?

Authored by Katabella Roberts via The Epoch Times,

A senior Russian government official has threatened to limit exports of agriculture products to “friendly” countries only amid sanctions from Western nations in response to its invasion of Ukraine.

Dmitry Medvedev, who previously served as Russia’s president from 2008 to 2012 and is now deputy secretary of the country’s security council, took to Telegram on April 1 where he warned of the potential move.

Medvedev said that many counties depend on supplies of food from Russia, a major global wheat exporter, writing: “It turns out that our food is our quiet weapon. Quiet but ominous,” according to Breitbart.

“The priority in food supplies is our domestic market. And price control,” he continued.

“We will supply food and crops only to our friends (fortunately, we have a lot of them, and they are not at all in Europe and not in North America). We will sell both for rubles and for their national currency in agreed proportions.”

He then explained that Russia would not supply products and agricultural products to those countries it deems as “enemies.”

“And we won’t buy anything from them (although we haven’t bought anything since 2014, but the list of products prohibited for import can be further expanded),” he continued.

Russia previously imposed a ban on imports of certain agricultural products from the EU and other Western countries in 2014 after its annexation of Crimea.

Farmers harvest with their combines in a wheat field near the village Tbilisskaya, Russia, July 21, 2021. (AP Photo/Vitaly Timkiv)

Russia serves as a major global exporter of several commodities, including sunflower oil, barley, and wheat; the latter of which it mainly supplies to Africa and the Middle East.

It is the world’s largest exporter of wheat, according to the Observatory of Economic Complexity, having exported $10.1B in wheat in 2020 alone, despite the global COVID-19 pandemic and various supply chain issues.

The European Union and Ukraine are its main competitors in the wheat trade, which manifests as items such as pasta, bread, cereal, and fried foods for consumers.

A ban on exports of certain agriculture products to so-called “unfriendly” countries could put further pressure on those nations that are already bracing for potential food shortages resulting from the Kremlin’s invasion of Ukraine and subsequent western sanctions.

Speaking of possible shortages, U.S. President Joe Biden said during a press conference at the White House on March 24 that “it’s going to be real,” noting that “the price of these sanctions is not just imposed upon Russia, it’s imposed upon an awful lot of countries as well, including European countries and our country as well.”

Biden said the United States and Canada may need to boost their food production to avoid shortages in Europe and other places.

However, it is unlikely that the United States would likely experience any significant shortages, whereas European countries that are more dependent on Russia for imports, as well as less economically developed nations, could see fewer products on supermarket shelves.

Medvedev’s remark comes after Russian President Vladimir Putin set a deadline for customers from “unfriendly” countries, which includes all member states of the European Union, to start paying for Russian gas deliveries in roubles or face being cut off.

Multiple European buyers of Russian energy have so far refused to comply with the demand. However, Slovakia’s minister of the economy on Sunday said his country is willing to do so.

We have perhaps seen the end of the recent meltup as Nomura warns markets are suffering from some “macro fatigue”…

…and BofA confirmed in a trading desk note this morning that “our model’s S&P 500 short could be fully covered…” adding that “we are in the late-stages of a short-cover-rally as the implied vol spike in heavily-shorted names has started to fade…”

This is important since, as Nomura’s Charlie McElligott has detailed in recent weeks, the Equities ‘recovery’ has been “funded” on three fronts:

1) the liquidation of crowded, short-dated Index / ETF option downside hedges as spot rallied / vol hammered into a massive “Positive Delta” thrust around- and out-of the March Op-Ex;

2) the ensuing impulse re-allocation of Longs from Systematic funds of large $magnitude on said “spot rally, vol crash” dynamic; and

3) resumption of highly-speculative Retail “YOLO’ing” behavior via the Options complex, buying short-dated / highly-convex deep OTM upside in “meme” stock favorites in attempted “Gamma squeezes” via Options Dealer hedging flows.

While speculative activity in “meme” stock Options has too only accelerated, (“Weaponized Gamma” bellwether / absolute leader of the “Options tail wagging the Index dog” TSLA has seen a shocking +$19.0B of Call prem spent over the past two weeks ALONE, vs +$7.9B of Put prem), McElligott notes that the S&P is now modestly “Long Gamma and Long Delta”, while critical “Growth Tech” bellwether QQQ is also “Long Gamma vs Spot”…

Additionally, we are starting to see a shift from the recent trend with the re-emergence late last week of some pretty sizeable “Negative Delta” flows in Index / ETF options – predominately through the return of downside hedging (Puts and Put Spread buying in Equities themes, downside in Credit / HY ETFs, downside in Inflation / TIPS ETFs, upside in VIX), but also seeing a touch of “upside” monetization (e.g. Call selling in XLF) as well—Take a look at Macro / Index / ETF flows from Friday ALONE (h/t Alex Kosoglyadov):

• EFA: Buyer of 40k May 60 Puts for $0.20

• FXI: Buyer of 7.5k May 32/27 Put Spreads for $0.80

• HYG: We saw multiple Put Spread buyers on our desk and away (Buyer of 20k May 78/75 Put Spreads for $0.24, Buyer of 20k Apr 80.5/78 Put Spreads for $0.21, Nomura client bought 3k Jun 78/74 Put Spreads, Nomura client bought the May 79/74 Put Spreads 5k x 7.5k)

• IWM: Buyer of ~30k May 6th 165 Puts for $0.35

• TIP: Buyer of Sep 120/117/113 Put Tree, paid $0.05 for 20k  

• VIX: Nomura client bought 14k May 30/40 Call Spreads for $1.08

• XLU: Over 53k Puts traded on the day, flow incl a buyer of 7.5k May 71/68 Put Spreads 5k x 7.5k

• XLF: Seller of 124k Apr 29th 39.50 Calls at $0.34. Also, Nomura client bought 6.4k May 36/32 Put Spreads for $0.47

Given all of that, SpotGamma notes that the S&P is in a “void” of sorts while prices are near 4550.

4600 is our Call Wall level, which is where we see significant resistance and the top of our range. 4500 is where gamma flips to negative. We expect the market to shift to one of these levels by tomorrow, which sparks the next “cycle”.

These cycles are driven by feedback loops.

 

By Craig Fuller, CEO At FreightWaves

The most polarizing term in trucking is the “driver shortage.”

To drivers, the term often gets them fired up and angry – it makes them feel as if they are a commodity.

The trucking industry is one of the most cyclical industries on the planet; it goes through booms and busts.

Until just a few weeks ago, the industry was dealing with a significant capacity shortage. This occurs when there aren’t enough trucks available for dispatch to match all of the freight in the market. In 2021, there was a massive capacity shortage. In the first half of 2018, there was a massive capacity shortage.

From the looks of things, we are headed for a capacity glut. In other words, there will be too many trucks available for dispatch compared to the total amount of freight available. In the last week, I have written twice about the industry’s pending capacity glut. (You can read those articles here and here.)

To an industry professional who doesn’t drive, but has to figure out how to recruit and retain drivers, the term provides some comfort in knowing that everyone else is struggling with the same problem.

The struggle is real.

Recruiters and fleets invest a significant amount of resources trying to get trucks “seated.” When the employment market is very competitive, trucking companies feel the pain even more than most other employers. Driving a truck is a hard job and often is a job of last resort for many. When alternatives to truck driving include working in construction, driving an Uber, or sorting packages at an Amazon warehouse, the task can feel daunting.

FreightWaves sits at the intersection of the industry and the broader public. While FreightWaves is the largest media outlet serving the supply chain and trucking industry, over 70% of our traffic comes from people that don’t work in the supply chain, but are interested in supply chain topics. Members of Congress, The White House, regulators, Wall Street firms, the CIA (not sure why they don’t mask their IP address – but we welcome our intelligence services as our guests), and the general public all consume our content regularly because it is so comprehensive.

Often, FreightWaves is the first media outlet chosen by the general public when something happens in freight markets.

Because of this, we have a unique role – explaining how the industry works to outsiders, but also explaining how the industry works to highly knowledgeable professionals who often know more about their corner of the industry than we ever will.

I am often asked by non-trucking people about the “driver shortage.”

My answer: “The trucking industry does not have a driver shortage and it never will. The ‘industry’ doesn’t hire truck drivers, trucking companies do.”

Therefore, trucking companies can and often do have “driver shortages.”

This occurs when there aren’t enough drivers to fill the trucks that a fleet owns. In other words, a trucking company has “unseated” trucks. If a trucking executive uses the term “driver shortage” to explain his fleet’s problems to a room full of drivers, then be warned, it is going to rightfully offend them.

Every fleet is different, with different pay scales, incentives, cultures and freight networks.

In addition, our industry pretends that truck drivers are not a “number.”

I know much of this is semantics. “Driver shortage” is so much easier to say – but it makes drivers feel like a commodity.

As long as we refer to the humans who drive the trucks that haul our freight in the same language we use for fuel, we are going to have problems recruiting and retaining them.

Shares of DWAC, better known as President Trump’s Truth Social competitor to Twitter, have been hammered by reports that the app has been experiencing technical issues that have rendered it non-functional (despite promises that it would be up and running smoothly by now). 

Compounding the bad news, Reuters reported Monday that two of the company’s top executives, both of whom had become “central players” in the business, have abruptly decided to quit.

Here’s more from RTRs:

Josh Adams and Billy Boozer – the company’s chiefs of technology and product development – joined the venture last year and quickly became central players in its bid to build a social-media empire, backed by Trump’s powerful brand, to counter what many conservatives deride as “cancel culture” censorship from the left.

Less than a year later, both have resigned their senior posts at a critical juncture for the company’s smartphone-app release plans, according to two sources familiar with the venture.

Their departures followed the failed launch of the company’s iPhone app on Feb. 20. More than a month later, many users are still on the waiting list and unable to access the platform., despite promises from former Rep. Devin Nunes that the app would be operational by the end of March.

Another obstacle to growth is the fact that the company has an app for iPhones, but no app for Android phones, which means more than 40% of American consumers won’t be able to access it.

While Reuters said it couldn’t determine the exact reasoning behind why the executives decided to quit, without them, sources familiar with the company’s operations warned that “all bets are off”.

The exit of two executives critical to the app-launch efforts could imperil the company’s progress as it tries to prove it can compete with mainstream platforms such as Twitter, said two people familiar with the company. Like Twitter, Trump’s platform offers users the chance to connect and share their thoughts.

“If Josh has left… all bets are off,” one of those sources said of tech chief Adams, calling him the “brains” behind Truth Social’s technology.

Another source familiar with the venture said that Boozer also had a major leadership role as product chief, running management across technology infrastructure, design and development teams.

Reuters could not determine the specific circumstances behind the executives’ resignations, or whether they have been replaced or their duties reassigned. It also remains unclear whether Adams and Boozer still work on the venture in a different capacity after quitting their executive posts.

It’s also not clear how the company is currently funding itself. What’s more, the company revealed last year that the SEC is investigating the SPAC merger that created the publicly-listed company. As part of that deal, investors have pledged $1 billion to TMTG but they won’t hand over that money until the DWAC deal closes.

Another open question is how TMTG is funding its current growth. The company is planning to go public through a merger with blank-check firm Digital World Acquisition Corp (DWAC) . The deal is under scrutiny by the Securities and Exchange Commission and is likely months away from being finalized.

DWAC disclosed in a regulatory filing last December that the SEC was probing the deal. The SEC has not addressed the nature of the inquiry and did not respond to a request for comment on Sunday.

Downloads of the app have declined sharply from 866,000 during the week of its launch to 60,000 the week of March 14.

Another issue facing the company, per Reuters, is that its “political bent” has “limited its hiring pool”. Another obstacle facing the app is Elon Musk’s decision to force Twitter to reconsider its censorship of conservative voices (something that even Jack Dorsey now ‘regrets’), all the pro-”free speech’ competitors might soon find themselves without a raison d’etre if Musk succeeds in forcing major changes to the platform’s censorship policies (then again, it’s also possible that Musk’s stake in Twitter might be a short-term play to reap profits at the platform’s expense).