Month: December 2022

The final macro datapoint of 2022 just printed and it was better than expected with Chicago PMI bouncing from 37.2 to 44.9 (considerably better than the 40.0 expected), but remaining deep in contraction territory…

This is the worst December print for the Chicago PMI since 2015…

Under the hood, the headline index rose despite only four components rising versus last month:

• Prices paid rose at a slower pace; signaling expansion

• New orders fell at a slower pace; signaling contraction

• Employment fell at a faster pace; signaling contraction

• Inventories fell and the direction reversed; signaling contraction

• Supplier deliveries rose and the direction reversed; signaling expansion

• Production fell at a slower pace; signaling contraction

• Order backlogs rose and the direction reversed; signaling expansion

Stocks stumbled in true ‘good’ news is ‘bad’ news fashion…

But we suspect the 3835 level for the S&P 500 will prove critical today.

Authored by Katie Spence via The Epoch Times,

When discussing censorship, there are often “vague implications” on the effects of that restriction. But by censoring medical science and health policy, “you are killing people,” Dr. Scott Atlas firmly stated in an interview that aired on Newsmakers by NTD and The Epoch Times on Dec. 28.

“Censorship of the correct science and medical information, during this pandemic, absolutely killed people. It prevented people from making intelligent decisions. It prevented people from making the appropriate use of caution,” Atlas alleged of Twitter censoring doctors such as himself.

Furthermore, Atlas charged, Twitter’s censorship was particularly “harmful” and “shocking” because the United States was founded on freedom.

“This kind of censorship was, in my view, unheard of in the United States,” Atlas stated.

“It’s reminiscent of everything that we, as a free society and democracy, abhor about countries that are authoritarian, like China, the former USSR and now Russia, North Korea.

“This is the kind of censorship that occurs in those countries. And now it’s occurring in our country.”

Censorship Kills

According to Atlas, censorship at the government’s behest isn’t limited to social media and is far more insidious than first imagined.

“It’s not simply blocking information. It’s also—being less overt about it—it’s limiting the public’s access to information. It’s impugning people who are speaking correct information,” Atlas said.

In Atlas’s view, there was only one acceptable COVID-19 narrative at the height of the pandemic, and that was the one put forward by those in authority, specifically Dr. Anthony Fauci and Dr. Deborah Birx.

Dr. Anthony Fauci testifies in front of the U.S. Senate on Sept. 14. The director of the National Institutes of Allergy and Infectious Diseases, who became the face of the government’s response to the COVID-19 pandemic in the United States, announces on Aug. 22 that he plans to retire at the end of the year. (Drew Angerer/Getty Images)

Consequently, when other health authority figures, such as Atlas, advanced conflicting information, the above authorities enlisted help from the media to squash that dissent.

“Dr. Fauci, Dr. Birx, etc., went to their friends in the media and undermined people like me. Who, in fact, were saying what was correct, what has been validated as being correct this entire time.

“But the reality is, yes, the censorship of science kills people. And it killed people during this pandemic. There’s no doubt about that,” Atlas stated.

Calls for Accountability

According to the latest Rasmussen Reports, 63 percent of “Likely U.S. Voters” want Congress to investigate the FBI’s involvement with social media companies like Twitter.

Unfortunately, Atlas stated, he’s skeptical about any investigation “led by government officials.” Moreover, he doesn’t think a Congressional investigation is enough to fully uncover the collaboration between Big Tech and the government.

“Government investigations are usually political in nature. And even if they aren’t political, they will be perceived as having been political. And once something is perceived as political, you’ve lost a significant percentage of the public in terms of credibility,” Atlas explained.

Still, while Atlas doesn’t believe a Congressional investigation is enough, he thinks investigations are necessary to bring the truth about the government working with social media to light.

Plus, Atlas asserted that censorship and collusion would continue unchecked without an investigation.

“It’s necessary to do the investigations because we need the public to know the truth, and investigations are one way to do that,” Atlas said.

…

Read more here…

Believe it or not, now is a great time to be a farmer. Agricultural commodities are set to lock in another year of annual gains, the longest stretch in decades, prompting higher farm incomes. 

The Bloomberg Agriculture Spot Subindex, which tracks everything from corn, soybeans, and wheat to sugar and coffee, will lock in the fourth year of annual gains today.

Bloomberg said this would be the “longest stretch of annual gains since at least the early 1990s as drought and war cut production and erode inventories, keeping global food inflation simmering.” 

High prices for crops and livestock indicate boom times for the US farm belt, making farmers, ranchers, and agricultural firms all winners after a decade of sliding net farm income. 

According to the latest US Department of Agriculture forecast, US net farm income is expected to jump to $160.5 billion this year. If realized, farm income would be at the highest level since 1973 in inflation-adjusted dollars, which would be a significant reversal from the agricultural recession that crushed farmers in the last decade. 

Kenneth Zuckerberg, a senior economist at agricultural lender CoBank, told WSJ that farm income for the current cycle has probably peaked but will remain high in 2023. He said, “there’s no way it’ll be as good as 2022.” 

Perhaps all those millennials who were told “learn to code” only to be fired this year in a Federal Reserve-induced downcycle in tech might find more opportunity in farming. 

Authored by Bill Blain via MorningPorridge.com,

“The difficulty, the extraordinary, is not to score 1,000 goals like Pele – it’s to score one goal like Pele.”

I was going to take the whole of this week off, but I could not resist a final comment on this, the very last business day of 2022…

2022 has been an … “interesting” year. What’s the main lesson we’ve learnt?

• That interest rates don’t stay low for ever?

• Inflation is real?

• Real events overcome hopes and expectations?

• All Ponzis are uncovered – sooner or later?

Or,

• Financial markets are largely driven by idiots, shysters, charlatans and fools?

I suspect the final one contains a sizable element of truth.

Markets are just enormous voting machines calculating the opinion of every participant, therefore no single “idiot” can drive them.. but they can certainly influence how the other participants vote.

A few months ago I mentioned one of my favourite Sci Fi authors, John Scalzi. I’ve been reading him for years. He’s written some very clever series including Old Man’s War, and the off-the-wall Kaiju Preservation Society. He also written fantastic tales for the Netflix series Life, Death and Robots – with some very unsubtle digs at big tech barons! This week a client posted me this fascinating and insightful comment by Scalzi: The Worthless Billionaires of 2022

It is spot on.

Scalzi debunks the whole mythos of the assumed competence and virtue of billionaires with style and aplomb. He focuses on the implosion of value-bunkum across crypto and big-tech, and is particularly scathing about the self-immolation of Elon Musk. He warns on the danger of believing billionaires come with inherent virtue. Believe that, and it’s easy to follow dangerous ideological concepts like trickle-down economics – which simply doesn’t exist, btw!

Scalzi can be quite blunt: 

“Billionaires do not deserve your respect simply for being rich, and that fact that people gave them respect because of that money allowed them to cover for their other and continuing ethical and moral deficiencies, of which there are many, and which continue to damage our society.”

The thing is… Billionaires are the not the only folk we should probably not be unquestioningly listening to.

It’s a false assumption to think people in positions of power know what they are doing or understand what they are saying. 2022 has been an extraordinary year for seeing our idols exposed as mere craven images.

If there is one lesson from this difficult year, it’s the realisation most folk are not that clever. Understand that, and suddenly everything becomes clearer in terms of how markets are driven by behaviour.

Behavioural economics: understanding why markets function the way they do by understanding why participants act in the ways they do…

Markets tend to follow the noise. Trading floors are absolutely littered with people who believe they are bone-fide geniuses – and loudly tell us just how clever they are. Typically, the successful ones might have been dealt a lucky hand or make a fortunate throw and ascribe their success to smarts. In reality, most don’t have a breeze about what they are doing, or the damage they could inflict upon us all. They got lucky – but think they are clever. Danger, Danger, Will Robinson, Danger!

Herd stupidity is a problem, but it’s also an opportunity. When you realise that its ok to question, disagree, argue and counter the propositions of the consensus (which is often built around luck and stupidity), then markets start to get interesting again! Understand why others are wrong, and you are halfway to grasping why you might be right.

2022 has been extraordinary for the sheer scale of mistakes people have made. The volume of miscalculations, most of which are then reinforced and magnified by denials and rebuttals after the initial mistakes have clearly been made, has been staggering.

From Liz Truss establishing herself as the least competent UK leader of all time, Putin beggaring Europe and Russia through the invasion of Ukraine, Musk buying Twitter, fund managers seeking bargains in big-tech, crypto-shills telling us this is the buy-moment before a new crypto-spring, to the man who is putting everything on Red because it’s come up Black the last three rolls (clue – its still a 50/50 discrete call), 2022 has been revelatory.

I suspect there are good reasons why 2022 represented “peak-silliness” in markets. We had a whole series of macro “behavioural” forces coinciding:

• The end of the speculative era of easy QE money distorting markets

• The instability in global systems from Covid, Supply Chains, Ukraine, Taiwan, etc

• The growing income inequality caused by QE

• Growing voter disenchantment and new generations feeling unwanted

• FOMO (Fear of Missing Out) becoming a driver of wealth hopes

• The rise of social media, fake news and news manipulation, and a pandemic of conspiracy theories..

Put all these trends/themes together, and its no wonder behaviours changed, people began to accept the unlikely as probable, and unquestioningly believed a pocketful of pixels was worth more than gold…

The bottom line is markets, and the factors that influence them, are full of idiots. They range from politicians making fundamental mistakes, fund managers dramatically mispricing risks, central bankers studiously miscalculating economic shifts, company boards focusing on all the wrong things, right the way down to investors who really did believe what the Reddit Boards told them.

It’s a skill to listen. Its even more skilful to question.

And on that piece of blindingly obscure advice….  Have a Guid and Prosperous New Year!

I will be back on Tuesday with my big worry for 2023 – The Bond Market!

*  *  *

Subscribe to Blain’s Morning Porridge here…

We already know that 2022 was a torrid year for markets – but the extent of the damage to the top 500 richest people in the world has finally been quantified, and the damage is nothing short of massive. 

According to Bloomberg, the richest 500 people in the world – consisting of names like Elon Musk, and even Sam Bankman-Fried, lost a stunning $1.4 billion throughout the course of the year as Russia’s war on Ukraine and inflation catalyzed an ugly year for equity markets. 

Musk, in addition to Jeff Bezos, Changpeng Zhao and Mark Zuckerberg, saw a combined $392 billion in paper wealth evaporate over the course of the year. For Musk, the damage was considerable – he’s worth $138 billion less than he was when the year started, Bloomberg reported. 

But it wasn’t all losses for the super rich throughout the year. The report noes that the Kochs and the Mars families both saw an uptick in their fortunes. Bloomberg also reported that sports franchises also became more valuable in 2022 than they were the year prior. 

The report broke down the biggest losses on a per-month basis for 2022. 

In January, Musk lost $25.8 billion when Tesla warned about its business due to supply challenges. In February, Russian oligarchs saw $46.6 billion in wealth evaporate as a result of Western sanctions due to the war in Ukraine. In March, China was the victim when $64.6 billion due to “trenuous Covid-containment efforts, a buckling property market, heightened scrutiny of the tech industry and trade tensions with the US.”

In April, Musk started what would become his eventual bid for Twitter, making a plan to borrow up to $21 billion in cash to finance the purchase. In May, soccer team Chelsea is bought for $5.25 billion – the highest price ever paid for a sports team. Shortly thereafter, in June, the Denver Broncos sells for $4.65 billion. 

Heading into the summer, pain for Chinese homebuyers continued, causing Yang Huiyan to lose the title of Asia’s wealthiest woman. By the time the fall came around, Mark Zuckerberg’s net worth is down $71 billion on the year. He’ll eventually fall 19 ranks on the Bloomberg wealth index, the report says. 

In November, FTX collapsed after its liquidity crisis, causing Sam Bankman-Fried’s once $26 billion net worth to go to zero. Binance CEO Zhao saw his wealth fall by about $84 billion in the same month, while anyone with bitcoin exposure felt the sting of FTX’s collapse. 

You can read Bloomberg’s full feature here. 

Authored by Helen Partz via CoinTelegraph.com,

SBF has allegedly cashed out $684,000 from a crypto exchange in Seychelles while being under house arrest, according to an on-chain investigation…

FTX founder Sam Bankman-Fried is reportedly cashing out large amounts of cryptocurrency soon after being released on bail, on-chain data suggests.

SBF has cashed out $684,000 in crypto to an exchange in Seychelles while being under house arrest, according to the on-chain investigation by DeFi educator BowTiedIguana.

Decentralized finance (DeFi) analyst BowTiedIguana took to Twitter on Dec. 29 to report on a series of obfuscated wallet transactions allegedly linked to SBF, suggesting that the former FTX CEO could have violated release conditions to not spend more than $1,000 without permission from the court.

According to BowTiedIguana’s analysis, SBF’s public address (0xD5758) on Dec. 28 sent all remaining Ether to a newly created address (0x7386d). BowTiedIguana noted that SBF took over the address that was originally owned by Sushiswap creator from Chef Nomi in August 2020.

When SBF agreed to take over control of the Sushiswap exchange from anonymous founder Chef Nomi in August 2020, he asked for ownership to be transferred to his Ethereum addresshttps://t.co/nE9z9tLd2n pic.twitter.com/vask9WqSHd

— BowTiedIguana (@BowTiedIguana) December 30, 2022

Within hours, 0x7386d received transfers totaling $367,000 from 32 addresses identified as Alameda Research wallets, with an additional $322,000 coming from other wallets. All funds were sent to a centralized crypto exchange in Seychelles and to the crypto bridge RenBridge, according to the DeFi analyst.

0x7386d sent a total of 519.5 Ether, or around $629,000, to 0x64e9B, which also received funds from addresses labeled as Alameda Research. BowTiedIguana also identified five separate transactions of less than 51 ETH ($61,000) that were used to move funds to newly created wallets and then “onwards to a Seychelles-based exchange.”

Additionally, the SBF-linked wallet 0x64e9B sent three tranches of 200,000 Tether (USDT) to the FixedFloat exchange.

“As the Ethereum blockchain is an immutable public ledger, this on-chain evidence is permanently available to law enforcement and the courts,” BowTiedIguana stated, calling attorneys from the United States Securities and Exchange Commission to look at the issue.

Confirmed to be related to SBF or not, the transactions do not necessarily mean that FTX founder has violated bail release conditions, according to some industry enthusiasts.

“I don’t know that this necessarily qualifies as ‘spending’ money. They’re his assets already,” one industry observer suggested.

A number of online commenters also speculated that SBF himself was Chef Nomi, the anonymous co-founder of Sushiswap. Coinbase head of strategy Conor Grogan stressed that many of the recent SBF-linked transactions were heavily related to early Sushiswap activity. “These wallets — assuming they all belong to him — were heavily involved with LPing Sushi early on, well before Chef Nomi handed off the project to SBF,” Grogan stated.

SBF himself claimed in September 2020 that he didn’t have anything to do with building Sushiswap.

6) I didn’t build sushi. I was called in and I’m trying my best to do what’s right for it.

But a lot of people seem to have gotten sidetracked fighting against those trying to fix it.

And I’m not the only one who feels that way.

— SBF (@SBF_FTX) September 15, 2020

The alleged SBF-linked transactions occurred about a week after SBF was granted bail with a $250 million bond secured by SBF’s parents paid with the equity in their house. SBF previously claimed that he only had $100,000 in his bank account after the collapse of FTX.

The news comes soon after the government of Bahamas officially announced that local authorities seized $3.5 billion worth of crypto from FTX on Nov. 12. The authorities claimed that the action was taken in order to avoid a risk of “imminent dissipation” of funds after SBF warned about cyberattacks on FTX in mid-November.

US equity-index futures slumped on Friday, tracking European stocks lower, after Wall Street’s best session of the month and denting hopes that Santa Claus would make a late appearance on the last trading day of the year and ease the pain for investors as global stock markets are about to close the books on their worst annual performance since the global financial crisis in 2008.

Similarly to European bourses, US tech led the decline – after leading yesterday’s gain – with contracts on the Nasdaq 100 down 0.7% at 5:26 a.m. in New York. The tech-heavy index enjoyed a 2.6% jump during the previous session, thanks in large part to a sharp bounce-back in Tesla shares. The Nasdaq has lost a third of value this year as tech stocks emerged as some of the most vulnerable to rising rates. Optimism spurred by weaker than expected continuing job claims data signaling some easing in tight US labor markets faded overnight, taking contracts on the S&P 500 about 0.5% lower, and appears to be headed for that infamous JPM Collar strike of 3835.

Add bonds and you get a $36 trillion loss in market value, the largest ever.

The dollar extended declines against major peers, with the Bloomberg Dollar Spot Index heading for its lowest level since June. Treasury yields inched higher and the yen rallied even as the Bank of Japan unveiled an unprecedented third day of unscheduled bond purchases.

In premarket trading, travel and leisure stocks are under pressure as a surge in Covid-19 cases in China has prompted authorities to consider flight and travel restrctions. Technology shares are also under the spotlight after a volatile week, notably for Apple Inc. and Tesla. Here are some other notable premarket movers:

• China Securities Regulatory Commission will ask Futu Holdings and UP Fintech Holding to correct illegal acts in cross-border securities business, according to a statement from the regulator. Futu shares fall 25% in premarket trading.
• Sesen Bio rises 27% in US premarket trading after the company said it will increase a previously announced one-time special dividend following its merger with Carisma Therapeutics, to around $0.34 per share from as much as $0.12 per share.

With low visibility on the Federal Reserve’s monetary policy path, the surge in Covid cases in China or the war in Ukraine, strategists are being cautious in calling the direction of travel for the next few weeks.

“On equities, I expect a choppy first few weeks of the year, while central banks keep their hawkish tone, but then a more positive second quarter and onwards as inflation declines,” said Rajeev De Mello, a global macro portfolio manager at GAMA Asset Management.

The market’s uncertain direction sapped hopes for a rally to close out 2022, a year when inflation reasserted itself to wipe a fifth in value from global stocks, the worst run since the financial crisis. Bonds lost 16% of value, the biggest decline since at least 1990 for one leading measure, as central banks raced to slow rising consumer prices by hiking interest rates around the world.

European stocks dropped 0.7%, and was trading at session lows, as technology and telecommunications shares led a broad-based decline in the Stoxx Europe 600 index, which is heading for its worst year since 2018. The gauge held a decline even after data showed Spanish inflation slowed for a fifth straight month in December as energy costs continue to decline in the euro zone’s fourth-largest economy.

Earlier in the session, Asian stocks headed higher on their last session for 2022 as shares in China advanced on mobility figures that showed economic activity rebounded in several of the nation’s cities where infections have likely peaked. The MSCI Asia Pacific Index climbed as much as 0.8%, the most in a week, with most markets in the region gaining. US data allayed fears of a supercharged jobs market that would support a more aggressive policy path. Bourses in South Korea and the Philippines were closed Friday. Despite the gain, Asian stocks are down almost 20% this year in their worst slump since the 2008 financial crisis. Vietnam and South Korea were the region’s worst performers in 2022, with both losing at least a quarter of their value. India and Indonesia were among the world’s top gainers. The annual loss for Asia is in line with the drop in global and US equities.

While investors remain concerned about the supply-chain impact from China’s Covid infection surge ahead of its Lunar New Year holiday in January, the reopening of the nation’s economy has helped support sentiment.  Expect Asia’s “discount to intrinsic value to narrow across the region in 2023 due to an improvement in sentiment on the back of China’s reopening and US rate hike expectations plateauing,” said Sukumar Rajah, director of portfolio management at Franklin Templeton Emerging Markets Equity.

Emerging-market stocks  were set for the first weekly advance in three as the benchmark index remained on track for a decline of more than 20% in 2022.

In FX, the Bloomberg Dollar Spot Index fell as much as 0.3%; the pound underperformed, losing ground against the greenback which dropped to the lowest level since June. The yen rose against all G-10 currencies even after the BOJ announced unscheduled bond purchases for the third day. USD/JPY fell more than 1% to 131.55 after dropping 1.1% on Thursday. The combination of additional fixed-rate and fixed amount purchases announced Friday have boosted BOJ’s buying this month to about 17 trillion yen, a monthly record, according to data compiled by Bloomberg

“Our view is that the BOJ’s yield curve control policy is on borrowed time and the central bank will have to eventually let go of the policy — this is one key factor why we see USD/JPY heading toward 120 per dollar in 2023,” said Rodrigo Catril, senior FX strategist at National Australia Bank Ltd. in Sydney. “JPY flow implications are also likely supporting the yen with Japan domestic yields starting to look more appealing for Japanese insurance companies as well as any offshore investor with FX hedged positions”

In rates, treasuries were under pressure as the last US trading session of the year gets under way, with yields higher by 2bp-3bp across the curve, inside weekly ranges. 10-year TSY yields were higher by 2.4bp at 3.84%, near the highest level since mid-November and above 50-DMA level; German 10-year is up ~7bp on the day; Bunds and most other euro-zone bond markets underperformed after bearish Spanish inflation data. Treasuries may draw support into month-end index pricing at 1pm New York time. Sifma recommended a 2pm close for cash bonds.  Global market focus remains on the impact of China’s unwind of Covid restrictions, with the nation facing as many as 25,000 deaths a day later in January, according to estimates.

In commodities, oil rose after a three-day run of declines on worries about a rise in crude stockpiles and concerns that rising Covid-19 infections in China would slow demand in one of the world’s top oil importers.

The only economic datapoint on the last trading day of the year is the Chicago PMI which is expected to bounce modestly to 40.0 from 37.2.

Market Snapshot

• S&P 500 futures down 0.5% to 3,853.75
• STOXX Europe 600 down 0.5% to 428.18
• MXAP up 0.5% to 155.91
• MXAPJ up 0.3% to 506.39
• Nikkei little changed at 26,094.50
• Topix down 0.2% to 1,891.71
• Hang Seng Index up 0.2% to 19,781.41
• Shanghai Composite up 0.5% to 3,089.26
• Sensex down 0.6% to 60,775.99
• Australia S&P/ASX 200 up 0.3% to 7,038.69
• Kospi down 1.9% to 2,236.40
• German 10Y yield little changed at 2.52%
• Euro little changed at $1.0660
• Brent Futures up 0.1% to $83.55/bbl
• Brent Futures up 0.1% to $83.55/bbl
• Gold spot up 0.1% to $1,816.85
• U.S. Dollar Index little changed at 103.88

Top Overnight News from Bloomberg

• The Bank of Japan announced an unprecedented third day of unscheduled bond purchases as it fights back against speculation it is about to end its super-accommodative monetary policy
• European and US equity futures edged lower and Asian shares were mixed on the final trading day of a brutal year in financial markets that has dragged stocks and bonds to their worst annual run in more than a decade.
• China will extend the trading hours for the onshore yuan as the government pushes ahead with plans to internationalize the currency
• No novel Covid-19 variants have emerged in China, according to a global consortium that’s tracking coronavirus mutations
• China appointed its ambassador to the US, Qin Gang, as the new foreign minister, as the Asian nation shows signs of moving back to a lower-key diplomatic strategy after a growing backlash against its confrontational style

US Event Calendar

• 09:45: Dec. MNI Chicago PMI, est. 40.0, prior 37.2

Southwest Airlines’ operational meltdown for the past week appears to be normalizing on Friday with minimal disruptions. 

As of 0645 ET, only 39 of Southwest’s flights had been canceled, according to the flight-tracking service website FlightAware. 

Thursday appears to be the last day of the Southwest crisis when about 2,350 flights, or 60% of the airline’s schedule, were canceled. FlightAware shows the budget airline scrapped more than 15,000 flights over the past week, stranding tens of thousands of passengers at airports across the country. 

The company issued numerous apologies for the worst operational mishaps in its five decades of existence. The latest apology was released Thursday: 

We know even our deepest apologies – to our Customers, to our Employees, and to all affected through this disruption – only go so far.

We’ve set up a page at Southwest.com/traveldisruption for Customers to submit refund and reimbursement requests for meals, hotel, and alternate transportation; as well as to connect Customers to their baggage.

We have much work ahead of us, including investing in new solutions to manage wide-scale disruptions.

We aim to serve our Customers and Employees with our legendary levels of Southwest Hospitality and reliability again very soon.

The systemwide chaos started last week when the airline declared a “state of operational emergency” at its Denver Airport hub after “an unusually high number” of employee absences ahead of Christmas. 

A combination of staffing shortages, the winter storm, an antiquated crew-scheduling system, and a network that allowed cancellations in one region to spread throughout all other airports led to the travel mess. 

On Thursday, Chief Commercial Officer Ryan Green told reporters that disruptions “would certainly impact the fourth quarter.” A similar incident in October 2021 cost the airline $75 million. Meanwhile, Cowen analyst Helane Becker told Bloomberg TV on Wednesday that the fourth quarter hit could be “in the hundreds of millions of dollars range.” 

Southwest faces significant customer service challenges. First, it must repair trust with customers. But even before that, lawmakers on Capitol Hill have signaled that they will investigate Southwest.