Month: August 2022

Powell’s “Put”: Out Of Money & Time

Powell’s “Put”: Out Of Money & Time

Authored by Michael Pento via PentoPort.com,

Despite all the fanfare and cheerleading you hear in the MSFM, the recent bounce in equity prices has just been a rather pedestrian bear market rally. Bull markets are not engendered by a faltering global economy, very high rates of inflation, and the most hawkish global central bank tightening cycle in history.

In spite of these dynamics, stock prices have now completely priced in a perfectly soft landing for the U.S. economy. How else would you characterize trading at 17.5 times 2023 S&P 500 ebullient earnings estimate of $245, according to FactSet. Keep in mind the $6 trillion of helicopter money ended in 2021 and earnings growth for Q2 2022 is negative 4 percent, excluding the energy sector. However, Wall Street is still projecting an increase of 50 percent for 2023 EPS from the pre-COVID level.

Nevertheless, the consumer still faces a barrage of negative shocks: A reverse wealth effect from falling equity and bond prices. The virtual complete shutdown of cash-out refinancing and the lower mortgage payments that come with it, which are down over 80 percent year over year. Anemic GDP and earnings growth. Falling real incomes. And in addition to all this, we still have to deal with aggressive fed rate hikes and a double-dosed pace of Quantitative Tightening (QT).

Wall Street is trying to convince you that peak inflation will lead to a ‘Powell Pivot’ towards dovishness. A dovish fed is one that is cutting rates back to zero percent and engaging in QE. But, peak inflation, which will still be 3-4 times higher than the target rate, should only cause the fed to reduce its hiking pace to 50 basis-point increments from 75 bps. In this age of redefining the meaning of recessions and bear markets, a dovish central banker is now being defined as one that wants to raise rates by “only” 50bp increments.

Meanwhile $95 billion of base money supply will get destroyed each month starting in September. This will happen in the context of a falling stock market, housing prices rolling over, and a potential spike in the unemployment rate. And, for those who still have a job, real incomes that continue to fall.

Lower bond yields and peaking inflation were a green light for higher stock prices in July. But that ebullience over an improving inflation rate should soon just become another signal of faltering economic growth.

Real Estate Prices to Follow Stock Prices Lower

The National Association of Realtors’ housing-affordability index, which factors in home prices, mortgage rates, and family income, fell to 98.5 in June. That is the lowest level of affordability in the past 33 years.

Mortgage costs are up 54 percent y/y in June. And the median existing-home price is $423,000 this June. It was just $94,000 33 years ago. But what else would you expect when you have unelected money printing maniacs in control of the money supply? In other words, a house that does nothing but decay closer back to the dirt over the years has gained 350 percent in value. That rate of appreciation has been many times greater than incomes over the decades.

A home is offered for sale in Chicago, Ill., on April 26, 2022. (Scott Olson/Getty Images)

The real estate market is dysfunctional and posing systemic risk once again. At 40 percent of core CPI, home price appreciation must be put back into a tractable situation for inflation to be tamed and that will require a hawkish Fed for many months to come.

Evidence of a Faltering Economy

The U.S. August Homebuilder Index fell to 49, which is in now contraction territory—the estimate from economists was for a reading of 54. Housing starts fell by 9.6 percent and single-family home construction dropped by 18.5 percent year over year.

We Have Seen This Movie Before

The last time the Fed hiked the Fed Funds Rates above 2.25 percent was Sept. 27, 2018. It was also doing just $45 billion per month of QT at the same time. That caused the S&P 500 to lose 20 percent and the Russell 2000 to lose 28 percent of their respective values by the end of year. During this timeframe, GDP growth was 3 percent. The carnage in markets was so sharp that Fed Chair Powell had to promise to stop hiking rates by the end of December. But then again, he could afford to pivot easily back then because CPI was just 1.9 percent.

Today, much like the fall of 2018, the Effective Fed Funds Rate is 2.3 percent and is heading towards 3.3 percent by year’s end. But unlike the strong economy seen in 2018, GDP growth was negative in the first half of this year and is projected to be just 1.6 percent in Q3, according to the Atlanta Fed.

Also, the pace of QT is more than double the rate it was back in 2018. In addition, the stock market is more expensive today and with more leverage in the economy than at any other time in history prior to the start of this year. And as for that much anticipated Powell Pivot, 8.5 percent consumer price inflation is a much bigger hurdle to overcome than any other time in the past 40 years. Powell’s equity “Put” is way out of the money and far out in time.

Therefore, rather than getting caught up in chasing the FOMO rally, it is much smarter and beneficial to your financial health to get positioned for what is happening next: a global recession, which pushes money into U.S. sovereign debt and the U.S. dollar; and out of equities. That is, at least until Powell has the cover to perform an actually pivot back to QE and ZIRP, which will then start to cause the dollar to tank and stagflation to run intractable.

Twenty dollar bills are counted in North Andover, Mass., in a file photo dated June 15, 2018. (Elise Amendola/AP Photo)

Some perma-bulls liken today’s market to that of 1982. This was also a time when inflation had peaked. Back then, Fed Chair Paul Volcker was cutting rates from 15 percent in March of ’82, to 8.5 percent by year’s end. The only salient similarity between 1982 and today is that inflation has peaked.

However, the Fed is not cutting rates at this juncture. As stated, Powell is only slowing the pace of rate hikes from 75 bps to 50bps. And unlike 40 years ago, the Fed is also engaged in the most destructive pace of money destruction in history—more than a trillion dollars per year for the next 2-2.5 years. Most importantly, the PE ratio of the S&P 500 was just 7.7 back in 1982—not the overvalued 21.5 PE ratio we see today. Also, the total market cap of stocks as a percentage of the underlying economy was just 34 percent 40 years ago, not the frothy 170 percent we witness now. And, there is no Ronald Reagan in office cutting taxes and reducing regulations.

There is no time in history that compares with today’s record-high inflation and overvalued stock, fixed income, and real estate markets.

This dysfunctional and deformed market is prone to 30 percent, or even 50percent+ plunges—as it has done in the past and is even more likely to do so in the future. Avoiding such a massacre in your retirement plans is a really good idea. Hence, successfully navigating these inflation/deflation cycles is the smartest way to invest.

Tyler Durden
Tue, 08/23/2022 – 12:26

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Two ‘Ringleaders’ Convicted In Whitmer Kidnapping Case

Two ‘Ringleaders’ Convicted In Whitmer Kidnapping Case

After a previous acquittal that triggered a mistrial, a federal jury in Grand Rapids, Michigan have convicted two men charged with plotting to kidnap Gov. Gretchen Whitmer.

Barry Croft Jr., left, and Adam Fox, via Kent County Sheriff’s Office

It was the second trial for the pair, Potterville resident Adam Fox and Delaware truck driver Barry Croft, after a jury in April was unable to reach a unanimous verdict. The pair face up to life in federal prison.

Two other men involved in the plot were acquitted, and two more pleaded guilty and turned state’s witness.

Jurors deliberated for around eight hours following the controversial trial – in which the defense raised concerns over FBI misconduct, and whether the accused plotters were entrapped, the Detroit News notes.

Prosecutors rested their case Thursday after seven days of testimony. An undercover FBI agent told jurors about a stop at a bridge near Whitmer’s northern Michigan cottage during a night ride by anti-government extremists to continue planning a kidnapping. 

Fox and Croft were portrayed by prosecutors as ringleaders of the plot.

They were convicted of kidnapping conspiracy and conspiracy to use a weapon of mass destruction. Croft also was convicted of possessing an unregistered destructive device, a 10-year felony. -Detroit News

The defendants were arrested in early October 2020 as part of a broader plot that involved over a dozen men. 

As Jonathan Turley wrote in April following the mistrial;

The problem is that the case — and the narrative — quickly fell apart after the election. A Michigan jury recently acquitted Daniel Harris and Brandon Caserta and hanged on the verdicts against Adam Fox and Barry Croft Jr. Fox is portrayed as a ringleader of the group and leader of the conspiracy.

While Fox and Croft can be retried, the acquittal raises an additional challenge. Harris and Caserta may feel fewer inhibitions in testifying. With the exception of perjury, they can safely take the stand to discuss their actions — and more importantly, the actions of the government.

The Michigan case stands as one of the most chilling examples of entrapment techniques used by the FBI. While Whitmer declared Trump “complicit” in her planned execution, the FBI increasingly appeared more “complicit” in the creation of a government-inspired, government-funded, and largely government-staffed plot.

The problem was that these guys seemed at points more interested in partying than conspiring. The FBI, therefore, decided to take control and get them serious about some major crimes. An informant known as “Big Dan” was paid over $50,000 to get the conspiracy going, including paying for the defendants to travel to Wisconsin to “train.”

Special Agent Jayson Chambers pushed Big Dan to get the men to take violent acts against Whitmer. The defendants reportedly resisted those entreaties. Dan pushed the alleged leader to fire a round into the window of Whitmer’s home and mail the casing to the news media. On Sept. 5, 2020, Chambers texted to remind Dan “Mission is to kill the governor specifically.“

The Whitmer conspiracy was a production written, funded, and largely populated by FBI agents and informants. At every point, FBI literally drove the conspirators and controlled their actions. In the end, a majority of the “conspirators” were actually FBI agents or informants.

As discussed earlier, various key FBI agents and informants were removed from the case due to their own legal problems.

Tyler Durden
Tue, 08/23/2022 – 12:07

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“I’m Shocked”: US Crop Tour Reveals Drought-Stricken Cornfields

“I’m Shocked”: US Crop Tour Reveals Drought-Stricken Cornfields

The size of North America’s upcoming crop harvest will have a meaningful impact on global supplies next year. Early signs from the US crop tour revealed that menacing heatwaves and drought this summer had damaged corn and soybean yields.

Corn futures in Chicago rose to a six-week high on Tuesday as crop tours show much of the Western crop belt is plagued with drought conditions, especially in parts of Nebraska and South Dakota where plants aren’t producing ears of grain. 

Both corn and soybeans were below average at the initial stops in South Dakota on the western leg of the four-day Pro Farmer Midwest Crop Tour. Corn yield potential was estimated at 118.6 bushels per acre, well below the three-year average of 161.8 bushels. Soybean pod counts stood at 792.5, below the 1,073 average. Some corn fields had been cut for silage, a sign of a poor-quality crop. — Bloomberg 

One Minnesota farmer and crop scout warned of the apocalyptic state of farmland while on tour: 

“I heard it was dry, but I’m shocked it’s as bad as it is.” 

Global ag traders are closely watching the US growing season to understand future harvest to see if it can produce enough corn and soybean to replenish dwindling supplies due to the Ukrainian war and drought across Europe and China. 

Crop scouts are forecasting yields lower than what the USDA is predicting. 

In the second half of the week, the crop scouts will inspect farmland across Illinois, Indiana, Iowa, Nebraska, and Minnesota. 

“There’s been so much heat and extremes this growing season, I don’t think the story is over about potential yield declines,” Kevin McNew, chief economist at agriculture-technology firm Farmers Business Network, said.

Nationally, USDA estimates that 55% of US corn is in good or excellent shape, down from 60% last year. The concerning factor is the farmland affected by disasters, including drought and flooding — has more than tripled from last year to 6.4 million acres. 

“The evolution of crop conditions remains an important element to follow, especially as the counts in the US fields show a lower yield potential than last year,” farm adviser Agritel told clients in a note. 

With Europen crops damaged by summerlong heatwaves and Argentina hit by drought, an underwhelming size of North America’s crops could result in shortfalls globally next year. 

Crop scout’s disappointing assessment so far adds to concerns tight supplies could keep global food inflation elevated well into 2023. 

Tyler Durden
Tue, 08/23/2022 – 12:05

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No Money for a Pure Jane Doe: Totally Unidentified Defendant Can’t Recover Sanctions and Attorney Fees

Allison Publications, LLC v. Doe, decided last week by the Texas Court of Appeals (Fort Worth), in an opinion by Justice Brian Walker, joined by Justice Wade Birdwell and Judge Ruben Gonzalez, involves a rare libel lawsuit by a publisher:

Allison publishes regional and specialty publications in Texas, such as D Magazine. According to Allison, in April 2021, three of its advertisers received phone calls from a person who identified herself as a journalist named “Maya” or “Maya Pembledon.” The caller allegedly told the advertisers that Allison is a racist publisher and encouraged them to cease advertising with Allison. The advertisers expressed concerns to Allison after receiving the calls, and at least one decided not to renew its advertising contract with Allison.

More specifically, according to the amended petition (cf. this post, where I criticized the original petition, which was much vaguer):

While the total number of Doe’s false and disparaging calls to Plaintiff’s advertisers is not yet known, Plaintiff has learned of the following calls beginning in April 2021: (a) Doe called a real estate agency that advertises with Plaintiff, falsely accused Plaintiff of being a racist organization, and stated that the agency should never spend money with Plaintiff and should avoid being associated with Plaintiff; (b) Doe called a photographer that advertises with Plaintiff, falsely accused Plaintiff of being a racist organization, and suggested that the photographer should no longer advertise with someone Doe had accused of being racist; and (c) Doe repeatedly called a financial advisory firm that advertises with Plaintiff and falsely accused Plaintiff and its editor of being racists.

Allison then sued Doe, and sought to use discovery to identify her, but Texas’s Anti-SLAPP statute (the Texas Citizens Protection Act, TCPA) came into the picture:

On June 29, 2021, someone declaring to be the “Jane Doe” named in the petition filed a special appearance and a motion to dismiss under section 27.003 of the TCPA[,] … anonymously and without any identifying information…. [T]hey attached a “Declaration of Jane Doe”—bearing the signature “Jane Doe”—through which she asserted the need to preserve her anonymity to protect against “reprisals” such as Allison’s lawsuit and to allow her reporting to “stand on its own.” Doe claimed to be a journalist who sought information from certain of Allison’s advertisers for a project investigating an alleged lack of diversity and inclusion of racial minorities at publications located in major U.S. cities….

So this is pure anonymity, in which Doe seeks to be unknown from everyone, including the plaintiff (and indeed even the court and her own lawyer), rather than being known to the plaintiff or at least the plaintiff’s lawyers but not to the public. The court also granted Doe’s TCPA motion, concluding that her speech was constitutionally protected opinion (for more on that generally, see this post, including the last two paragraphs), and awarded Doe “$10,650 in attorneys’ fees and $10,000 in sanctions,” to be paid to her lawyer who would then somehow distribute it to her. It also denied discovery, since TCPA motions are usually supposed to be conducted without discovery.

Now the court of appeals has concluded that Texas law prohibits the award of affirmative relief, such as fees and sanctions, to an entirely unidentified party:

Invoking the anonymous speech protections of the First Amendment, Doe attempts to pave a road for recovery that, in our view, has never been paved in the history of American jurisprudence: whereby a wholly unidentified, unnamed person may invoke a court’s authority to obtain affirmative, merits-based, and dispositive relief against another litigant….

[Doe argues] that plaintiffs are often permitted to proceed pseudonymously if “the injury litigated against would be incurred as a result of the disclosure of the plaintiff’s identity.” … But Doe’s argument and the authority on which it relies are irrelevant to our case—chiefly because Doe conflates judicially-facilitated pseudonymity [where a party’s] {name and identity were known to the trial court and also to the opposing party} with total anonymity.…

[T]he TCPA’s purpose is … twofold: to (1) protect a person’s First Amendment rights, and also to (2) “protect the rights of a person to file meritorious lawsuits for demonstrable injury.” … The second TCPA protection would be improperly subordinated to the first if a TCPA movant was entitled to merits-based relief as an anonymous party because a non-movant could never proffer a meaningful defense against an unknown foe….

Questions of party identification inherently bear upon a court’s subject matter jurisdiction…. To establish standing, a party must allege facts sufficient to show that it—rather than a third party or the public at large—was personally injured and has a sufficient relationship with the lawsuit to have a justiciable interest in its outcome. Such injury must be “concrete and particularized, actual or imminent, [and] not hypothetical.”

Put simply, Doe existed as a legal fiction to the trial court and thus she has not alleged sufficient facts to show that she is the true defendant with a connection to this case. It follows, then, that Doe’s injury as alleged in her TCPA motion bore the same fictional quality and could not yet be shown for standing purposes to be concrete, particularized, and actual. Without knowing Doe’s identity, the trial court was powerless to answer the most fundamental of questions: Who is Jane Doe? Being unable to answer this question, the trial court could not have reasonably determined that the real person standing behind the Jane Doe curtain was the actual defendant who had a personal stake in the case….

Without knowing Doe’s name or identity, it was impossible for the trial court to render a judgment as to her TCPA motion that was sufficiently definite to have any practical legal effect. The trial court’s attempt at a final judgment highlights why this is true. It is captioned as “Allison Publications, LLC, Plaintiff, v. Jane Doe, Defendant,” and it contains no identifying or contact information for Doe. Additionally, it directs Allison to make all payments to a trust account held by Doe’s attorney—who himself admits to not knowing Doe’s name and cited at the motions hearing his “fiduciary duty” to Doe as the only mechanism available to ensure that payment of the final judgment award would make its way to Doe.

Thus, by its very terms, the trial court’s judgment sought to protect Doe’s identity from the entire world, which invariably precludes a ministerial officer or the trial court itself from effectuating the judgment. A ministerial officer tasked with execution would be unable to ascertain exactly whose rights it was seeking to protect.

And, relatedly, the judgment’s silence as to Doe’s identity would render any future competent court incapable of parsing certain post-judgment matters. For instance, if an issue of res judicata arose, what would stop Doe—or another person claiming to be the true Jane Doe—from bringing a new action related to the same subject matter? Or, how would a court navigate an application for a turnover order, a temporary restraining order to prevent the secreting of assets, or a writ of garnishment to impound Allison’s nonexempt property? A future court looking to the trial court’s final judgment devoid of Doe’s identity could not reliably rule on any of these matters.

Tellingly, Doe agrees that her anonymity rendered the trial court impotent to enter a binding order against her, stating in her response to Allison’s motion for identifying information that

it is unclear what would be the purpose or effect of holding an anonymous defendant in contempt …. Indeed, issuance of a bench warrant calling for the arrest of “Jane Doe” would be quite a farce …. [And] it is again unclear what would be the purpose or effect of assessing a $50 fine against an anonymous defendant, or how the court would expect to collect $50 from “Jane Doe.”

Thus, Doe seeks to have her anonymity and wield it, too. This runs afoul of the principle that a party not bound by a judgment is barred from asserting that another is bound by it, and the well-worn prohibition against the offensive use of certain privileges or immunities. See, e.g., Ginsberg v. Fifth Ct. of Appeals (Tex. 1985) (“A plaintiff cannot use one hand to seek affirmative relief in court and with the other lower an iron curtain of silence against otherwise pertinent and proper questions which may have a bearing upon his right to maintain his action.”) (internal quotations omitted); cf. Reata Const. Corp. v. City of Dall. (Tex. 2006) (“[W]e believe it would be fundamentally unfair to allow a governmental entity to assert affirmative claims against a party while claiming it had immunity as to the party’s claims against it.”)….

For these reasons, we conclude that Doe did not allege sufficient facts for the trial court to make the threshold determinations regarding standing and mootness to establish subject matter jurisdiction. However, because this does not present an incurable defect, Doe should be given the opportunity to plead additional facts as necessary to establish that jurisdiction.

Accordingly, we reverse the trial court’s final judgment and remand for further proceedings below, to include giving Doe the opportunity to provide any facts necessary to establish the court’s jurisdiction to decide her TCPA motion.

The court didn’t reach the challenges to the district court’s substantive decision to dismiss the case under the TCPA, or to its refusal to allow discovery of Doe’s identity. As I understand it, the case will now go back to the trial court, where either Doe will have to identify herself (in which case she can refile her TCPA motion and try to get the case dismissed on the merits) or the court will have to again consider whether—with the TCPA motion now out of the picture—Allison can get discovery aimed at identifying Doe.

The post No Money for a Pure Jane Doe: Totally Unidentified Defendant Can't Recover Sanctions and Attorney Fees appeared first on Reason.com.

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Iran Slams US For Procrastinating On Nuclear Deal

Iran Slams US For Procrastinating On Nuclear Deal

By Irina Slav of OilPrice.com

Iran has accused the United States of procrastinating on the nuclear deal that the two are trying to negotiate with the help of the European Union.

“The Americans are procrastinating and there is inaction from the European sides. … America and Europe need an agreement more than Iran,” Nasser Kanaani, a spokesman for the Iranian Foreign Ministry, told media as quoted by Reuters.

Washington has denied the accusation, with State Department spokesman Ned Price saying, “The notion that we have delayed this negotiation in any way is just not true.”

The two sides are currently mulling over a final proposal submitted to them by the European Union earlier this month. Some of the sticky points appear to have been resolved, with Iran seemingly ready to drop a demand for the U.S. to remove the Islamic Revolutionary Guard Corps from its terrorist organization list.

However, not all of these points have been resolved, and both sides have indicated that a deal is still as uncertain as it has been for the last 16 months that the EU-brokered negotiations have been going on.

“That’s [Iran dropping its demand] part of the reason why a deal is closer now than it was two weeks ago. But the outcome of these ongoing discussions still remains uncertain as gaps do remain,” Reuters quoted Ned Price as saying.

The Iranian side, meanwhile, seems insistent on receiving guarantees that a potential deal would outlast the U.S. administration that seals it.

“We seek a good agreement which would … be long-lasting,” Kanaani said. “We won’t be bitten twice.”

A deal with Iran will lift U.S. sanctions and allow the country to resume exports of crude oil in greater volumes at a time when Europe is scrambling to find a replacement for Russian crude. Instead, Europe has been raising the volumes it buys from Russia to stock up ahead of the embargo due to enter into effect later this year.

Tyler Durden
Tue, 08/23/2022 – 11:45

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White House Nears Decision On $10K Student Loan Forgiveness

White House Nears Decision On $10K Student Loan Forgiveness

The White House is nearing a decision over whether it should cancel up to $10,000 in student debt for millions of American borrowers. And despite “close allies feuding” over the decision according to the Washington Post, the Biden administration penciled in a Wednesday ‘student loan debt relief’ announcement.

In recent days, White House officials revived (pre-midterm) discussions over the issue – with an August 31 deadline fast approaching, when payments are set to resume following a pandemic-driven pause.

According to the report, internal White House discussions have revolved around a temporary extension in the payment pause until December, alongside the $10,000 per borrower forgiveness.

That said, forgiving the debt will cost between $300 billion and $980 billion over 10 years – and the majority of relief will go to borrowers in the top 60% of earners, according to a Bloomberg, citing a new analysis by Penn Wharton, whose budget model was released Tuesday ahead of President Biden’s long-anticipated decision.

The Penn Wharton budget group, based out of the University of Pennsylvania and run by a top former Treasury official under Republican President George W. Bush, is influential with key Capitol Hill lawmakers, including Democratic Senator Joe Manchin.

The group estimated that between 69% and 73% of any debt forgiven would accrue to households that rank in the top 60% of the US’s income distribution.

Biden allies and debt-relief advocates expect the administration to extend its current pause on student loan repayment through the end of the year, while also announcing plans to forgive as much as $10,000 in student debt for borrowers whose income falls below $125,000 a year. -Bloomberg

In recent weeks, Biden administration officials have been discussing forgiving a higher amount of debt for low-income borrowers who received Pell grants. Previous discussions included forgiveness for Americans who made less than $150,000 in the previous year, or $300,000 for married couples filing jointly.

The issue has sharply divided Democratic lawmakers and policy experts who are influential in the administration – with advocates saying Biden should fulfill a campaign promise, and critics who are concerned that it will exacerbate inflation while mostly benefiting high-income college graduates who don’t need the help.

During his 2020 Presidential run, Biden urged Congress to forgive $10,000 in student loan debt – while far-left lawmakers such as Elizabeth Warren, and advocacy groups such as the NAACP, have pressured Biden to push for at least $50,000 in forgiveness.

The topic has become a tricky one for the White House, which is trying to appeal to young voters, while also trying to hold themselves out as fiscally responsible.

Administration officials must choose between canceling substantial debt — potentially giving Republicans a new talking point ahead of the midterm elections — and infuriating young voters and racial justice organizations whose support they also need at the polls.

Officials have studied for months whether canceling student loans could alienate voters who had already paid theirs off, and polling results have been mixed, said a third person familiar with the matter, who also spoke on the condition of anonymity to reflect private conversations. -WaPo

“It’s a deep political problem,” said Bill Galston, a former top aide in the Clinton White House. “The fact they have hesitated for so long to put their chips down on the table suggests they’re fully aware of the potential economic and political implications of taking a major step in this direction.“

Tyler Durden
Tue, 08/23/2022 – 11:29

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Blain: This Crisis Is Going To Deepen

Blain: This Crisis Is Going To Deepen

Authored by Bill Blain via MorningPorridge.com,

“Laughing Shall I Die!”

Pretty bleak headlines this morning –  sentiment is crashing. Excellent! In crisis there is opportunity. Where and what are they? For clues, look to how the authorities can address the looming crisis!

Extra points to anyone who got this morning’s quote!

Ragnar Lothbrok was right! Sometimes the only thing left to do is laugh.. and smile at foolishness of it all.

Remember Blain’s Market Mantra no 3 – Things are never as bad as you fear, but never as good as you hope. When everyone else is losing the will to live – time to stop, think and seize opportunities. Look for sensible bargains. Look for long-term themes. Arbitrage the inevitable policy mistakes. Sectors like power, energy, utilities, logistics, coal and drink – stronger the better – are the things we need.

On the face of it, there isn’t much to smile about this morning…. Any economic snapshot would be bleak indeed.

Citicorp economists predict UK inflation will hit 18.6% in January.

Even as Europe scrambles to build winter reserves, gas prices spiked after Russia announced unscheduled pipeline maintenance – raising fears it won’t be switched back on again. (Imagine building a massive castle to defend Europe, but leaving the water wells in Russia…)

Stocks and Bonds took their first major spanking since mid-July as players panicked about hints of tighter monetary policy to be announced by a hawkish Fed at Jackson Hole later this week. (Which means if Jay Powell gives the merest hint of accommodative policy, there will, no doubt, be a massive relief rally – but let’s see if we make it to Friday first…) Value stocks are an oxymoron.

JP Morgan’s CEO Jamie Dimon has told the bank’s uber-clients there is a greater than 20% chance the US economy is moving into “something worse” than a hard recession – which is a 30% chance. Ouch. He’s thinking about all the obvious easy to spot stuff – interest rates, quantitative tightening, oil, energy, China, Ukraine and War.

What could possibly be worse than a hard recession? I can think of a few things. Ask me again once Liz Truss is in office. I just can’t wait to hear her plans to deal with an uncontrolled chain reaction of rising pay-demands as wage-inflation goes critical, exploding personal and business default rates, surging unemployment and a winter of increasing discontent and power cuts. The likelihood her government will be overwhelmed is high and confidence in her competence is low. She might surprise us – anyone want to take that bet? Thot not.

A chum has already shuttered his manufacturing business – soaring energy costs killed him, but wages, a dearth of available skills, and supply costs meant it just wasn’t worth fighting anymore. Across Europe, businesses – from restaurants to SMEs are simply giving up – beaten down by a howling gale of inflation, energy costs, business bureaucracy and a dearth of anyone prepared to work for peanuts in increasingly marginal looking jobs.

Household incomes are in terminal free fall. My daughter just started a great new job, but is ever more broke as her monthly bills race ahead of her salary. “Forget grandkids– I have to eat first,” she told us. Apparently, Europe’s population is set to half in the next 100 years as young people can’t get on the property ladder young enough, or make enough disposable income to afford runaway childcare costs to raise their families. Kids are more a luxury good than a gold-plated sports-car. (Yesterday the lead story on our local news programme was a young trainee nurse having to give up her studies because the teaching university could not afford to keep the creche open..)

Surging mortgage rates, and banks increasingly unwilling to lend, leave my son trapped in a zero-sum rental trap – struggling to find a new place to live as rents for increasingly dismal accommodation in London have gone stratospheric. Despite a great job and a deposit, no bank will lend him the 5 times salary he would need for a London (actually 30 miles out in the burbs) shoebox.

As Bloomberg points out: London’s soft power and attractiveness as Europe’s defacto capital will crash as everything closes on the back of zero discretionary spending by the bright young things that made it such a wonderful (and cripplingly expensive) place. London will soon be as grey as Paris and as boring as Frankfurt.

And just to show I am on the right (ie left) side of the radical divide; Tory MPs fulminate at the temerity of workers demanding wage hikes to cope and keep their families fed, while counting the billions they made from their VIP access to pandemic supply contracts. (Straight out of Private Eye: take a look at the number of MPs with links to gambling.. and wonder why, like me, you voted for them… oh yes… Jeremy Corbyn, but he’s gone now!)

And remember – things can always get worse!

It’s rarely something foreseen that crashes markets or crushes economic activity. Let’s chuck a few no-see-ums into the mix:

  • What happens if the new avian flu currently killing millions of wild birds in Europe and Asia jumps into humans? (It is already infecting other mammals.) Its increasingly clear the payback on Coronavirus is greatly increased non-covid deaths and economic instability – yet global authorities are adopting a “No one is safe till everyone is safe” approach, arguing lockdown overkill is better than risking the Swedish solution – “we might not be so lucky next time.” I was recently reminded Spanish flu killed on a scale multiple times worse than Covid – and that’s the kind of thing pandemic scientists are still expecting.

  • Super volcanos – apparently we dodged a bullet last year when the biggest blast in decades occurred out in the Pacific, took out Tonga, yet didn’t trigger a “year without summer” – which could become a decade if Yellowstone was to erupt.

  • Or how about a China Blockade of Taiwan, effectively killing the Global Chip market?

  • Or Donald Trump MAGA surrogates winning the Midterms and impeaching Biden and his team early next year. (I mentioned this yesterday and received a death threat from a 63 year old American who told me he was a good Christian… Whatever.)

On the other hand… we are an inventive species, we have a history of coping with ice ages, biblical floods, war, famine and plague. We survived the last financial crisis – and we shall survive this one. The trick will be coming out of it financially intact and healthy.. And that means getting radical in terms of what is dross and what isn’t. As I’ve said before – value stocks are not. Warren Buffet just did his best ever deal at the age of 1000+ buying Occidental.. What will attract support, and what won’t?

We will need growth to recover. Priorities are already changing. ESG is being superceeded by a renewed race for Growth and Prosperity. Rich economies that can afford the luxury of a clean environment is an excellent long-term goal – but we need to get back on track by sorting out the basics, the fundamentals of state. That means some radical solutions are required at a time when political systems in the west are ill-prepared to deliver what is required.

How are the authorities likely to cope? Figure that out – and arbitrage them!

This crisis is going to deepen. It will require action both in terms of monetary and fiscal measures. It will require a rebuild of the state. Central banks may be a little more careful, and avoid the massive income inequality issues trigged by the response to the 2008 Global Financial Crisis. Politicians will be keen to avoid the kind of endemic fraud that went with their pandemic bailout schemes.. But the bottom line is this is turning into a massive global financial crisis which will force action.

What needs to be fixed – its a long list, but here are a few priorities:

  • Power & Energy Security

  • Heath

  • Social Security

  • Utilities and Infrastructure

  • Defence

Invest accordingly..! More on this later this week..

Tyler Durden
Tue, 08/23/2022 – 11:08

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D.C. Circuit Divides on Level of Scrutiny for Regulation of Filming on Federal Property

Today, in Price v. Garland, a divided panel of the U.S. Court of Appeals for the D.C. Circuit rejected a constitutional challenge to federal regulations imposing permit and fee requirements for filming within the National Park System.

Judge Ginsburg wrote for the Court, joined by Judge Henderson. Judge Tatel dissented.  Judge Henderson also wrote a brief concurrence.

Judge Ginsburg’s opinion for the Court begins:

Gordon Price is an independent filmmaker. He filmed parts of a feature film on
land administered by the National Park Service (NPS) without having obtained the requisite permit and having paid the requisite fee. The Government charged him with a
misdemeanor but later dismissed the charge. Price then sued for declaratory and injunctive relief, arguing the permit-and-fee requirements are facially unconstitutional under the First Amendment to the Constitution of the United States. The district court agreed with Price, holding the permit-and-fee requirements do not satisfy the heightened scrutiny applicable to restrictions on speech in a public forum.

We hold that regulation of filmmaking on governmentcontrolled property is subject only to a “reasonableness” standard, even when the filmmaking is conducted in a  public forum. Because the permit-and-fee requirements are reasonable, we reverse the order of the district court.

And here is a key part of Judge Ginsburg’s analysis:

The United States argues that  . . . not every activity the First Amendment protects as speech benefits from the strict, speech protective rules of a public forum. Because a filmmaker does not seek to communicate with others at the location in which he or she films, the filmmaker does not use the location as a “forum.” Therefore, the United States argues, the district court’s forum analysis was misplaced. Price counters that the district judge had it right: There is no basis to distinguish between filmmaking and other activities protected by the First Amendment.

We think the Government is correct. Based upon the historical underpinnings of forum analysis, the evolution of this analytical framework, and the cases in which the Supreme Court has applied it, we are convinced that it would be a category error to apply the speech-protective rules of a public forum to regulation of an activity that involves merely a noncommunicative step in the production of speech. Although
that activity warrants solicitude under the First Amendment, that solicitude does not come from the speech-protective rules of a public forum. In reaching this conclusion we are buoyed by the Supreme Court’s warning against extending the public forum doctrine “in a mechanical way” to contexts that meaningfully differ from those in which the doctrine has traditionally been applied.

Judge Tatel saw the issues quite differently. Here is how his dissent begins:

Federal law prohibits anyone from engaging in “commercial filming activities” in the
national parks without first obtaining a permit and paying a fee. 54 U.S.C. § 100905(a)(1). Even though our court recently struck down similar restrictions on speech in national parks as “overbroad” and “antithetical to . . . core First Amendment principle[s],” Boardley v. United States Department of Interior, 615 F.3d 508, 511 (D.C. Cir. 2010), the court today upholds these restrictions on grounds untethered from our
court’s precedent and that of our sister circuits. Because the permit and fee requirements penalize far more speech than necessary to advance the government’s asserted interests, they run afoul of the First Amendment.

And how he concludes:

Under today’s sweeping holding, regulation of filming on government property is no longer subject to heightened scrutiny, even when the filming occurs in traditional public forums where “the rights of the [government] to limit expressive activity are sharply circumscribed” or designated public forums that the government “has opened for use by the public as a place for expressive activity.” . . .  Before standing outside Yosemite National Park’s visitor center using a cell phone to record commentary on our national parks that will air on an advertisement-supported YouTube channel, an individual must obtain a permit and pay a fee. Before filming a protest on the National Mall, tourists must obtain a permit and pay a fee if they have any inkling that they might later make money from this footage on social media. And when the filming is
spontaneous, these individuals will be criminally liable and face up to six months in prison even though they could not possibly have obtained a permit ahead of time. See 18 U.S.C. § 1865; 36 C.F.R. §§ 1.3, 5.5(a). By stripping public forum protection from filming, my colleagues—for the very first time—disaggregate speech creation and dissemination, thus degrading First Amendment protection for filming, photography, and other activities essential to free expression in today’s world. . . . I respectfully dissent.

The post D.C. Circuit Divides on Level of Scrutiny for Regulation of Filming on Federal Property appeared first on Reason.com.

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D.C. Circuit Divides on Level of Scrutiny for Regulation of Filming on Federal Property

Today, in Price v. Garland, a divided panel of the U.S. Court of Appeals for the D.C. Circuit rejected a constitutional challenge to federal regulations imposing permit and fee requirements for filming within the National Park System.

Judge Ginsburg wrote for the Court, joined by Judge Henderson. Judge Tatel dissented.  Judge Henderson also wrote a brief concurrence.

Judge Ginsburg’s opinion for the Court begins:

Gordon Price is an independent filmmaker. He filmed parts of a feature film on
land administered by the National Park Service (NPS) without having obtained the requisite permit and having paid the requisite fee. The Government charged him with a
misdemeanor but later dismissed the charge. Price then sued for declaratory and injunctive relief, arguing the permit-and-fee requirements are facially unconstitutional under the First Amendment to the Constitution of the United States. The district court agreed with Price, holding the permit-and-fee requirements do not satisfy the heightened scrutiny applicable to restrictions on speech in a public forum.

We hold that regulation of filmmaking on governmentcontrolled property is subject only to a “reasonableness” standard, even when the filmmaking is conducted in a  public forum. Because the permit-and-fee requirements are reasonable, we reverse the order of the district court.

And here is a key part of Judge Ginsburg’s analysis:

The United States argues that  . . . not every activity the First Amendment protects as speech benefits from the strict, speech protective rules of a public forum. Because a filmmaker does not seek to communicate with others at the location in which he or she films, the filmmaker does not use the location as a “forum.” Therefore, the United States argues, the district court’s forum analysis was misplaced. Price counters that the district judge had it right: There is no basis to distinguish between filmmaking and other activities protected by the First Amendment.

We think the Government is correct. Based upon the historical underpinnings of forum analysis, the evolution of this analytical framework, and the cases in which the Supreme Court has applied it, we are convinced that it would be a category error to apply the speech-protective rules of a public forum to regulation of an activity that involves merely a noncommunicative step in the production of speech. Although
that activity warrants solicitude under the First Amendment, that solicitude does not come from the speech-protective rules of a public forum. In reaching this conclusion we are buoyed by the Supreme Court’s warning against extending the public forum doctrine “in a mechanical way” to contexts that meaningfully differ from those in which the doctrine has traditionally been applied.

Judge Tatel saw the issues quite differently. Here is how his dissent begins:

Federal law prohibits anyone from engaging in “commercial filming activities” in the
national parks without first obtaining a permit and paying a fee. 54 U.S.C. § 100905(a)(1). Even though our court recently struck down similar restrictions on speech in national parks as “overbroad” and “antithetical to . . . core First Amendment principle[s],” Boardley v. United States Department of Interior, 615 F.3d 508, 511 (D.C. Cir. 2010), the court today upholds these restrictions on grounds untethered from our
court’s precedent and that of our sister circuits. Because the permit and fee requirements penalize far more speech than necessary to advance the government’s asserted interests, they run afoul of the First Amendment.

And how he concludes:

Under today’s sweeping holding, regulation of filming on government property is no longer subject to heightened scrutiny, even when the filming occurs in traditional public forums where “the rights of the [government] to limit expressive activity are sharply circumscribed” or designated public forums that the government “has opened for use by the public as a place for expressive activity.” . . .  Before standing outside Yosemite National Park’s visitor center using a cell phone to record commentary on our national parks that will air on an advertisement-supported YouTube channel, an individual must obtain a permit and pay a fee. Before filming a protest on the National Mall, tourists must obtain a permit and pay a fee if they have any inkling that they might later make money from this footage on social media. And when the filming is
spontaneous, these individuals will be criminally liable and face up to six months in prison even though they could not possibly have obtained a permit ahead of time. See 18 U.S.C. § 1865; 36 C.F.R. §§ 1.3, 5.5(a). By stripping public forum protection from filming, my colleagues—for the very first time—disaggregate speech creation and dissemination, thus degrading First Amendment protection for filming, photography, and other activities essential to free expression in today’s world. . . . I respectfully dissent.

The post D.C. Circuit Divides on Level of Scrutiny for Regulation of Filming on Federal Property appeared first on Reason.com.

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Oil Surges To Day High After OPEC+ Leaks It Will Cut Output If Iran Production Returns

Oil Surges To Day High After OPEC+ Leaks It Will Cut Output If Iran Production Returns

Two months ago, we said that with oil tumbling from its post-Ukraine war highs, it’s only a matter of time before OPEC+ makes a mockery of the Biden-MBS “amicable” fistbump…

… and resumes cutting output.

And then, just 2 weeks ago, we followed up with the clearest hint yet that OPEC is about to cut output in “OPEC Sets The Stage For Output Cuts, Sees Oil Market Tipping Into Surplus In Clash With IEA Forecast“

We were, of course, proven right last night when Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman echoed what we discussed back in July in “Inside The Oil Market’s Jekyll-And-Hyde Moment“, when he said that the “extreme” volatility and lack of liquidity mean the futures market is increasingly disconnected from fundamentals and OPEC+ may be forced to cut production.

“The paper and physical markets have become increasingly more disconnected,” he said in response to written questions from Bloomberg News.

The news was enough to spark a powerful reversal in the increasingly disconnected from reality paper price of oil, which had tumbled amid the now daily bullshit reports of an “imminent” Iran deal (narrator: there will be no new Iran/JCPOA deal) but finally soared from a post-Ukraine war low of $85 earlier this week…

… and Brent is on the verge of rising back over $100.

Fast forward to today when moments ago WTI hit a fresh session high over $94 when Bloomberg’s OPEC+ output cut story was reaffirmed, this time from Reuters, which moments ago reported that OPEC+ would lean toward an oil output cut  when and if Iranian production returns. In other words, OPEC+ will promptly offset any incremental production from Iran, which of course, is a non-starter, since Iran already sells all of its production to China and instead all that will happen is that Iran’s 50mm barrels of offshore storage will hit the market in a one time event.

Furthermore, as noted above, there will not actually be an Iran deal as both sides benefit from an indefinite stalemate (as Goldman explained), but the mere risk has caused oil to tumble about $20. Well no more, as it is now clear that Saudi Arabia wants a Brent price in the triple digits, and it will easily achieve it one way or another, whether through incremental increases in Chinese demand – which will come back sooner or later – or through a decline in supply.

The funniest thing about the above, is just how much of a non-factor Biden’s demands for more output will prove to be. Yes, OPEC+ agreed to its smallest every production boost last month. But it is Biden’s push for an Iran deal that has prompted OPEC+ to leak the news that any more progress on an Iran deal will not be tolerated by OPEC+ which will more than offset  any incremental Iran output gains.

Bottom line: we have seen the lows for oil, and with the US SPR drain almost over, we are looking at far higher oil and gas prices from here.

 

Tyler Durden
Tue, 08/23/2022 – 10:52

via ZeroHedge News https://ift.tt/NKVQxeg Tyler Durden