“Unexpected” Tropical Storm Forms Off South Carolina, May Disrupt July 4 Celebrations
An unexpected tropical storm formed near Myrtle Beach, South Carolina, early Saturday morning has become the third named storm of the 2022 Atlantic hurricane season.
As of 0800 ET, Tropical Storm Colin had maximum sustained winds of 40 mph and was located 25 miles west-southwest of Myrtle Beach, according to the National Hurricane Center. The storm is moving northeast at seven mph and isn’t expected to strengthen into North Carolina and off into the Atlantic by the end of the weekend.
5am EDT 2 July — Overnight surface obs, satellite, & radar data indicated Tropical Storm #Colin developed with 40 mph winds.
— National Hurricane Center (@NHC_Atlantic) July 2, 2022
Tropical storm conditions are expected in South Carolina on Saturday morning and into North Carolina through Sunday. Heavy rains in the Carolinas (mainly on the coasts) could disrupt Independence Day weekend activities.
Colin is a surprise and “rather unexpected,” Senior Hurricane Specialist Robbie Berg wrote.
The first month of the Atlantic hurricane season was very quiet as there have only been three named storms. That could all change as the National Oceanic and Atmospheric Administration recently forecasted this hurricane season will be “above normal.”
Fears are mounting that tropical disturbances are set to increase as above-average stormscould wreak havoc on oil/gas operations in the Gulf of Mexico and send gasoline and diesel prices at the pump to “apocalyptic” heights.
“The lull in the tropics has come to an end,” The Weather Channel warned days ago.
Bill Gates, who already owns close to 270,000 acres of land in the U.S., has been granted the legal authority to buy another 2100 acres in North Dakota despite protests by local residents.
Gates, already the largest farmland owner in the country, has secured the go ahead to buy the land for $13.5 million under his ‘Red River Trust’ company.
North Dakota’s Agriculture Commissioner, Republican Doug Goehring, previously said that many people feel they are being exploited by the ultra-rich who buy land but do not necessarily share the state’s values.
‘I’ve gotten a big earful on this from clear across the state, it’s not even from that neighborhood,’ Goehring told KFYR-TV. ‘Those people are upset, but there are others that are just livid about this.’
Bill Gates acquired six parcels of land in Pembina County. Tuesday, the office of the Attorney General sent out a letter asking the Red River Trust to confirm how the company plans to use the land and if it meets any of the exceptions to the North Dakota Corporate Farming Laws. pic.twitter.com/MGGFKV16mm
— DOCTOR FROM LONG ISLAND NEW YORK (@Doctorfromliny) June 22, 2022
Gates now owns 268,984 acres of multi-use land in 19 states:
As we have previously noted, Bill Gates and other billionaires have been buying up huge amounts of farmland while Americans are being told by neo-feudalist ‘Great Reset’ technocrats that the future is one without private property.
Gates is also intent on pushing 100% synthetic meat products while he buys up record amounts of farmland and monopolizes global food production.
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For each of the federal circuits from the 1st to the 11th, list the most and second most populous jurisdictions (states or territories) in the circuit. Bonus question: What’s the only circuit that has two jurisdictions that are among the 10 most populous in the U.S.?
For each of the federal circuits from the 1st to the 11th, list the most and second most populous jurisdictions (states or territories) in the circuit. Bonus question: What’s the only circuit that has two jurisdictions that are among the 10 most populous in the U.S.?
Delta Offered $10,000 To Flyers Willing To Give Up Seats On Oversold Flight
Confronted with an overbooked flight last week, Delta flight attendants channeled Vito Corleone and tried making boarded passengers an offer they couldn’t refuse: Give up your seat and receive the princely sum of $10,000 in cash, not flight credit.
The shock of that number is compounded by the fact that this wasn’t a long-haul international flight from Atlanta to Johannesburg or LAX to Sydney. We’re talking about a 90-minute hop from Grand Rapids to Minneapolis.
The episode first gained public attention via a tediously-written, first-person account by Inc. tech columnist Jason Aten. (Lured by a Buzzfeed-grade teaser headline—”On This Flight, Delta Just Did Something Unheard Of“—readers had to endure EIGHT paragraphs of nothingness* before actually finding out what the flying f— Delta had done on Aten’s flight.)
Flight attendants were looking for eight people to change flights to a later date. “If you have Apple Pay, you’ll even have the money right now,” Aten says one of them declared.
Another passenger, Todd McCrumb, told KTVB that Delta’s bid started at $5,000, a sum that likely would’ve generated headlines on its own if things had stopped there. He said the offer sounded so far-fetched he asked fellow passengers if the crew was joking.
The juicy offer came as the airline industry is beset with cancellations and delays driven by a shortage of pilots and understaffing at the FAA. Seeking to minimize problems during the July 4 weekend, Delta this week offered customers the option to rebook without change fees or even fare differences.
Apparently not wanting to show its cards to future travelers, Delta declined various media outlets’ requests for comment on the specific $10,000 offer. Speaking more generally, a spokesperson told CBS MoneyWatch, “The ability to provide compensation on full flights empowers our employees’ efforts to care for customers and get aircraft out on time.”
In 2017, CNBC reported that Delta had boosted the limit for enticements for “voluntary denied boardings.” At that time, the standard limit became $2,000, but the real maximum—subject to various rules and authorizations from management—grew to $9,950.
That Delta policy change came after a spectacular, reputation-bruising episode in which a seated United Airlines passenger, 69-year old Dr. David Dao, refused to relinquish his seat in favor of an airline employee who needed to fly. He was violently removed, with cell phone video capturing his bloody face and broken eyeglasses. According to his lawyers, Dao’s was concussed, had a broken nose and lost two teeth.
Dao, a lung specialist, told USA Today he refused because he was about to oversee the opening of a clinic he founded to serve veterans, as his way of expressing gratitude to service members: The U.S. Navy plucked Dao from the ocean as he fled Communist Vietnam some 44 years earlier.
At first, United’s CEO called Dao “disruptive and belligerent,” but apologized after public uproar. Dao sued and received an undisclosed settlement. We’re guessing it was far north of $10,000.
*You’re still here, Zero Hedge reader?Congratulations, you’ve unlocked a special July 4th Weekend BONUS FEATURE—an elaboration on Jason Aten’s aggravatingly exhausting essay at Inc.com about his first-hand experience of being offered $10,000 to change flights.
Don’t forget the clickbait title: “On This Flight, Delta Just Did Something Unheard Of“. Unlike our deeply respected Zero Hedge readers, the poor saps who read Inc. were being held in suspense deep into the article. (To our credit, we prefer to center our occasional clickbait indulgences on tastefully tempting imagery.)
How did Aten manage to fill EIGHT paragraphs before telling readers what remarkable thing Delta did on his flight? His feat started with providing Inc readers this deeply insightful crystallization of the airline business:
“You sell tickets on flights between cities based on some kind of schedule. People buy those tickets, and in exchange for the money they pay, they expect to end up on a plane flying to wherever it is they wanted to go.”
Across the nation, Inc readers’ jaws dropped in a shared moment of exhilarating clarity: At long last, they finally grasped the commercial air travel value proposition that had hitherto bewildered them.
Part of the excruciating journey to Aten’s $10,000 punch line included an explanation of the concept of overbooking. Apparently, Aten thinks that too is an alien concept to a business magazine readership with an average household income of $419,000.
Written as if he’s paid by the word, Aten’s lesson even included this elaboration on the concept:
“Obviously, a plane with 200 seats can’t hold more than 200 people. If you sold 210 tickets, and everyone who bought a ticket shows up for the flight, some of them aren’t going anywhere.”
By that point—not even realizing I was still five paragraphs from the revelation—I was yelling “What the f— did Delta DO?!” and wondering why my exceedingly well-read college chum would send me this article and subject me to Aten’s enhanced-interrogation-technique-level tedium.
By the time I finally saw the truly extraordinary Delta offer at the heart of the story, it was too late. I was a broken man…ready to tell Jason Aten that Saddam Hussein and I presented gift-wrapped, Nigerien, yellow cake uranium to Khalid Sheikh Mohammed in Muammar Gaddafi’s living room, our feet casually propped on high-strength aluminum tubes as we helped ourselves to the Colonel’s gilded snack bowls brimming with pre-genocide, recreational Viagra.
If only Inc. had declared Aten’s column overbooked and offered me $4 to get off.
What is “money”? “Money” is a claim on the essentials of life. Ration cards are claims on essentials.
Many people expect “money” will soon be tied to commodities. Agreed. It’s called a ration card that grants the holder the right to buy a specific quantity of essential goods at a specified price.
This right is a form of “money” directly tied to the value of commodities.
Ration cards are the only fair way to distribute essentials in times of chronic scarcity. Markets work fine when there’s a substitute for whatever is scarce, but there are no substitutes for electricity, food, fuel or fresh water, the FEW essentials (Food, energy, water).
Leaving the distribution of scarce, no-substitutes essentials up to the market leads to the rich eating very well indeed and the poor going hungry. This leads to a little thing called the overthrow of the failed status quo and the destruction of a good chunk of its ruling class (Payback’s a witch, etc.). No bread? Let them eat iPhones.
We know ration cards work because a mass experiment in rationing essentials was conducted in World War II. Maybe fairness no longer matters (and if it doesn’t, then prepare for the overthrow of the failed status quo and the destruction of a good chunk of its ruling class), but if fairness matters–or the ruling elite wish to keep all their power and all their goodies–then rationing and the ruthless suppression of price gouging are as good as gold.
What is “money”? “Money” is a claim on the essentials of life. Ration cards are claims on essentials, enforced by the state to insure everyone has a minimum of the FEW resources. Beyond that minimum, the market will discover the price of extra goodies. But the point is that ration cards are a fair form of “money.”
With a little digital magic, ration cards can’t be counterfeited or used by anyone but the person to whom they were issued. If you get your ration and don’t need all of it, nobody’s stopping you from selling it to somebody else. But at least everyone got the same amount at the same price.
How valuable is ration-card “money”? Let’s put it this way: if you’re a wealthy, powerful member of the ruling elite, how much would you pay to avoid the overthrow of your regime? If creating ration-card “money” saves your bacon, then what other form of “money” has more value than that?
The other form of “money” that will be valuable isn’t even tangible. It’s called self-reliance. More on that later.
Russia Now Demands Rubles For Grain As World’s Largest Wheat Exporter
After threatening to do so for a couple months now, Russia has pulled the trigger on expanding the list of commodities for which it demands payment in rubles tonow include grain exports, effective Friday per a government legal website.
So now grain, sunflower oil and extracted meal are the next to follow the March decision to charge clients from “unfriendly” countries – including major customers in Europe – in rubles for natural gas instead of the normative dollars and euros.
On top of this move, recently Agriculture Dmitry Patrushev announced that Russia’s agricultural products will go to “friendly countries” only, and according to “who needs it most” – a hugely significant statement sure to continue sowing uncertainty and chaos for the global food supply.
Via Farmdocdaily: Russia and Ukraine account for 14% of global wheat production and rank 1stand 5threspectively. Both countries are prominent exporters, providing nearly 30% of global wheat exports. The EU, U.S., and Canada are also major producers and exporters of wheat. China and India are major wheat producers, but are net importers and provide relatively small shares of global wheat exports. Other countries with fairly large wheat export shares include Australia (8.4%), Argentina (6.6%), Kazakhstan (4.1%), and Turkey (3.4%).
Russian state media detailed further of the new decree published to a government law portal, “It also provides for a one-year extension of duties to be paid in the national currency in respect of exported sunflower oil and sunflower meal until August 31, 2023.”
And further, “As part of the new payment mechanism, the base price for calculating the export duty on wheat will be 15,000 rubles (over $267) per ton.”
While Russia has blamed Western sanctions aiming to punish and isolate the Russian economy for blowing back on the global food supply, and especially the Middle East and African countries already heavily reliant on Ukraine and Russia grain exports, G7 countries days ago at their summit in Germany blasted Moscow in a statement for what it called “a geopolitically motivated attack on global food security.”
As these “attack on food supply” charges against Russia from the West have been persisting especially within the last couple months as Ukraine’s grain exports have remained blocked at war-torn ports, the Kremlin has also blamed Ukraine’s military mining its own coastline for blocking grain ships’ safe passage. The so-called “Putin price hike” – as the White House has dubbed it – has also been a central talking point in discussing rising inflation fears.
In statements last Friday, Russian President Vladimir Putin laid blame on the “irresponsible actions” of G7 countries themselves. He said at the time, according to a Russian media translation:
“The sharp increase in inflation did not happen yesterday – it is the result of… many years of irresponsible macroeconomic policy of the G7 countries,” Putin said during the BRICS Plus meeting.
“We are certainly ready to continue to fulfill in good faith all our contractual obligations for the supply of agricultural products, fertilizers, energy carriers and other critical products,” Putin stressed. He further took a swipe at what Western leaders often refer to as Russia’s flouting of the ‘rules-based order,’ questioning sarcastically: “What rules? Who made those rules up?”
Farmdocdaily: Ukraine and Russia are the leading producers and exporters of sunflower oil which comprises a 9% production share and nearly a 2% export share for the world vegetable oil market. Nearly 60% of world sunflower oil production occurs in Ukraine and Russia, and the two countries account for over 75% of world exports.
Meanwhile The New York Times earlier in the summer assessed just where things stand on the US-EU efforts to inflict severe and lasting damage on the Russian economy, writing, “Russia’s invasion of Ukraine triggered global condemnation and tough sanctions aimed at denting Moscow’s war chest. Yet Russia’s revenues from fossil fuels, by far its biggest export, soared to records in the first 100 days of its war on Ukraine, driven by a windfall from oil sales amid surging prices, a new analysis shows.”
“Russia earned what is very likely a record 93 billion euros in revenue from exports of oil, gas and coal in the first 100 days of the country’s invasion of Ukraine, according to data analyzed by the Center for Research on Energy and Clean Air, a research organization based in Helsinki, Finland,” the report continued, based on the study.
Anatomy Of A Bear Market: Even The Fed Can’t Rescue Market If Earnings Tank
By Nicholas Colas of DataTrek Research
If you were trading/investing from 2000 – 2002, today’s stock market action likely gave you a sense of déjà vu. It certainly did for us. The current bear market has taken as much out of the S&P 500 in 6 months as was the case in the first 12 months during the early 2000’s downturn. Also, recall that the Fed shifted to an aggressive easing stance in early 2001 and that did nothing to end the bear market because of uncertainty around corporate earnings, which fell by 32 pct. Bottom line: bear markets always end, but we remain cautious/defensive.
* * *
This week’s disappointing equity price action got us thinking once again about the 2000 – 2002 bear market, and that is the subject of today’s “Markets” section. To be clear, we are not predicting US equities will lose half their value from the early January 2022 highs, as they did from peak to trough in the early 2000s. The point here is to understand the contours and narratives of a lengthy bear market, and for that there is no better case study in the modern era than 2000 – 2002.
There is a chart at the end of this section with a comparison of the S&P 500’s price action from the March 2000 highs to the lows in October 2002 and the index’s price performance from the early January 2022 highs to today.
Here are 4 points we see in that data:
#1: US large caps have declined much more quickly in 2022 than at the start of the early 2000s bear market:
At this point in 2000 (day 122 of that bear market), the S&P was only off 4 percent from its March highs.
As of today’s close, the index is off 20.3 percent from its January 2022 highs of 4,797.
If you were trading or investing in markets back in 2000, you know the reason for this difference: back then, it was the NASDAQ that first fell dramatically from its March 2000 highs. Investors cycled into more traditional names to play defense against the rout in tech shares. That put a temporary bid under the S&P 500. Some of the same thing happened earlier this year, but its effect only lasted through Q1. The S&P ended the first quarter only down 5.6 percent on the year. Since then the selloff has been much more widespread, as would be the case later in the 2000 – 2002 bear market.
Takeaway: the S&P 500 of 2022 is running the 2000 – 2002 bear market playbook at an accelerated rate. It took the index a year to drop by 20 percent in 2000 – 2001, and we’ve done that in 6 months this time now. A combination of geopolitical issues and their effect on oil prices as well as Fed rate policy are the central reasons for this more precipitous decline.
#2: The 2000 – 2002 bear market had its start as the result of Federal Reserve monetary policy, but even when the Fed shifted its stance stocks continued to drop:
The Fed had been increasing interest rates since June 1999 by 25 basis points at 2 meetings that year and at the first 2 meetings in 2000. It then bumped rates by 50 basis points at the May 16th, 2000 meeting. This was the last rate hike of that tightening cycle.
Starting in early January 2001, the Fed began cutting rates aggressively. There was an unscheduled (“emergency”) rate cut on January 3rd of 50 basis points, followed by another 50 bp reduction at the regularly scheduled January 31st meeting. The FOMC then went on to reduce rates by 50 basis points again at the March and May meetings, with another emergency cut on April 18th as well.
The second half of 2001 saw the Fed cut interest rates at every regularly scheduled meeting by 25 basis points, except for the October meeting where it reduced rates by 50 basis points. This was a follow-on step after the emergency cut of 50 bp on September 17th, just after the 9-11 terror attacks.
The last rate cut of the 2000 – 2002 bear market came on November 6th, 2002, another 50 basis points.
From May 2000 to November 2002, Fed Funds went from 6.5 percent to 1.25 percent.
Takeaway: the lesson for today is that a change in Fed policy alone is no guaranty of a stock market rally. Even as the Federal Reserve was busy reducing interest rates through the first 8 months of 2001, the S&P 500 fell by 14.1 percent. Moreover, 10-year Treasury yields fell throughout the entire 2000 – 2002 bear market. They peaked at 6.8 percent in January 2000 and troughed in October 2002 at 3.6 percent. As with Fed monetary policy, that was not enough to support equity valuations.
#3: Corporate earnings declined from 2000 – 2001 because of the March – November 2001 recession, and the bear market lows came AFTER the lows for earnings power:
S&P 500 earnings power on a quarterly basis peaked in Q2 2000 at $14.88/share, just after the March 2000 highs.
Quarterly earnings bottomed at $9.02/share in Q2 2001, 39 percent lower than the prior year peak.
Earnings had already recovered to $11.61/share in Q3 2002, 28 percent off the lows, before the S&P 500 made its bottom in October of that year.
Annualized S&P earnings power fell by 32 percent from peak to trough during 2000 – 2002, on the low side of the typical 25 – 50 percent decline in earnings power typical during a recession.
Takeaway: 2002 was a rare case when stocks ignored a very visible increase in earnings power after a recession since geopolitical risk remained an overhang in the year after the 9-11 terror attacks. As much as earnings drive stock prices, geopolitics – especially those centered on the Middle East and tied to oil-producing states – can trump those over long enough periods to matter to investors. The October 2002 lows occurred the same week as Congress’ approval for military action against Iraq, an odd catalyst for a bear market low, but it did have the effect of removing any uncertainty about the future course of American foreign policy. One secondary issue worth noting is that investors were growing concerned about a “double dip” recession in 2002.
#4: Wrapping up with 3 lessons for today’s market:
The chart below shows what investors are coming to realize about the 2022 bear market: short term rallies can and do occur. They can seem like turning points, even when they are not.
Let’s be careful with the idea that a change in Fed monetary policy alone can mark a turning point for the direction of stocks. This was certainly not the case in 2001 because of rising uncertainty related to corporate earnings as recession took hold. Such is the case again now, with S&P earnings near their peak at present ($55/share) but there is little visibility about where they go in the second half of the year and into 2023 if Fed policy has the desired effect of cooling the US economy.
A confluence of events created the 2000 – 2002 bear market, and we are experiencing similar issues in 2022 at an accelerated pace and without the chance of any near-term support from the Federal Reserve. The logical response to that setup is to invest defensively and bide one’s time until there is more clarity.
Nearly 8,000 Flights Delayed On Friday As July 4th Weekend To Be Hell
Thousands of flights were delayed, and hundreds canceled Friday evening amid pilot and crew shortages, as industry experts warned of travel chaos this Independence Day holiday weekend.
More than 7,800 flights were delayed within, into, or out of the US, and 586 canceled, according to FlightAware.
As of Saturday morning at 0930 ET, 373 delays and 66 cancelations have already been reported, with the bulk of disruptions across airports in New York City and Washington–Baltimore metropolitan regions.
Independence Day holiday weekend is one of the busiest travel periods of the year. Auto club AAA anticipates 3.5 million air travelers this holiday weekend as airlines struggle to keep up with the soaring demand amid labor shortages.
“We’re now going into the Independence Day Holiday weekend and are concerned that our customers’ plans will be disrupted once again,” Captain Jason Ambrosi, Chairman of the Delta Master Executive Council (MEC), a unit of the Air Line Pilots Association, said in a statement.
Ambrosi continued: “The perfect storm is occurring. Demand is back, and pilots are flying record amounts of overtime but are still seeing our customers being stranded and their holiday plans ruined.”
We expect flight disruptions will increase throughout the day as travel demand surges.
Maybe Transportation Secretary Pete Buttigieg will act tough and tweet at airlines for the misery they’re creating. However, airline industry group Airlines for America recently blamed Federal Aviation Administration’s understaffing for “crippling” East Coast air traffic. To us, this looks like finger-pointing.
Mexico’s steel metal market recently saw a slowdown, leading experts to believe that Mexico’s industrial metal market may soon turn bearish. Flat steel prices, along with long steel prices, have been dropping over the past several weeks. In fact, Mexico’s steel prices have been in steady decline since April. However, in mid-May, prices dropped sharply and remain bearish. This is a dramatic change from March of 2022, when Mexico’s steel metal market was following an unquestionably-bullish path.m
Experts note that the Mexican metals industry has not seen such erratic fluctuations since the end of 2020. Recently, Banxico, one of Mexico’s benchmark banks, increased national interest rates. Like the US, this was an attempt to stifle dramatic inflation rates. Indeed, steep inflation has plagued the US and Mexican metal markets all year. With a looming recession in the US, increasing steel exports from Mexico may not be possible.
Fear of a US Recession Grows While Industrial Metal Prices Fall
While supply chain issues remain a problem around the globe, metal prices in the US are being impacted by a looming recession. In fact, The Bloomberg Commodity Index fell about 10% in the past week alone. And though many experts speculate that the US could avoid a recession, investors and buyers remain skeptical. Tin and copper have hit their lowest point in years, and aluminum prices are quickly following suit.
With commodities, in particular, experts have reason to believe that these downturns will continue, putting the immediate future of metal distributors and metal producers in question. Of course, the war in Ukraine has also impacted commodity prices, supply, and distribution. In recent months, the demand for coal has gone back up, and prices have increased, especially in Europe.
All in all, one thing remains certain: big changes are coming to the global commodities market.
China Cutting Down Industrial Metal Manufacturing
With metals hitting bearish numbers not seen since the Great Recession of 2008, manufacturing and exports from countries like China are being cut back. To add injury to insult, sanctions on Russia for the invasion of Ukraine continue to impact global metal supply. As one might expect, construction and industrial equipment are the two markets most heavily impacted by the change.
Indeed, some experts speculate that this could severely stagger money spent on automobiles and the use of metal in heavy construction. After all, a looming recession means less spending, both by businesses and consumers. If it does happen, markets will need to adjust rapidly.
Europe and India’s Metal Markets Slide Along with the US’
Several major global metal exchanges are sliding alongside the US’. In Europe, for instance, metal distributors are stuck with massive amounts of inventory they can’t unload. Upon reaching a high point in the European metals market in March, European distributors purchased at an alarming rate. It was a logical move at the time, as many feared prices would continue to climb. Now with a possible global recession on the horizon, supply chains are sitting on inventory they can’t turn around.
In India, where metal stocks have slid by as much as 30%, industrial metal commodities are not fairing much better. India’s central bank system has taken actions similar to Mexico and the US, trying to stifle inflation along with unprecedented commodity prices. Clearly, even the world’s largest democracy is wary of the impacts of sliding metal prices.
Even so, the question remains: will the recession hit in 2022? Moreover, perhaps bracing for a global recession doing just as much damage?
