Court Orders Unsealing Names of Non-Parent Sureties Who Put Up Bail for Samuel Bankman-Fried

From yesterday’s opinion in U.S. v. Bankman-Fried, decided by Judge Lewis Kaplan (S.D.N.Y.):

At defendant’s presentment on December 22, 2022, the government and defense jointly proposed a set of bail conditions. Those conditions required, inter alia, that defendant sign a $250 million personal recognizance bond to be co-signed by defendant’s parents. The joint proposal required also that two additional sureties, one of whom must be a non-family member, sign separate bonds in lesser amounts to be agreed upon by the government and the defendant (the “Individual Bonds”)…. The government and defense [later] agreed that the sureties would sign separate appearance bonds in the amount of $500,000 and $200,000, respectively….

Pursuant to my January 3, 2023 order, the News Organizations filed four separate applications to intervene for the purpose of seeking access to the sureties’ names….

In this case, the Individual Bonds — with or without names of non-parental sureties — did not exist when the magistrate judge approved the bail package. Indeed, neither their amounts nor the identities of the sureties yet had been agreed upon. Accordingly, it is at least arguable that the Individual Bonds, on the facts of this case, are not judicial documents [that are subject to a presumptive right of public access]. Nevertheless, no one disputes that they are judicial documents. I therefore so assume for purposes of this motion. In consequence, I assume that the presumption of accessability applies here and turn to the question of the weight to which it is entitled in this case….

 “[T]he weight to be given the presumption of access must be governed by the role of the material at issue in the exercise of Article III judicial power and the resultant value of such information to those monitoring the federal courts. Generally, the information will fall somewhere on a continuum from matters that directly affect an adjudication to matters that come within a court’s purview solely to insure their irrelevance.”

The presumption of access is strong for “documents that ‘directly affect an adjudication’ and play a significant role in ‘determining litigants’ substantive rights.'”  Moreover, documents that “are usually filed with the court and are generally available” enjoy a stronger presumption of public access than documents for which “filing with the court is unusual or is generally under seal.”  By contrast, “documents that ‘play only a negligible role in the performance of Article III duties’ are accorded only a low presumption that ‘amounts to little more than a prediction of public access absent a countervailing reason.'”

As indicated above, neither the Individual Bonds nor the non-parental sureties’ names played any role in the magistrate judge’s approval of defendant’s release pending trial. Those bonds did not then exist and the sureties’ names were not known, at least to the magistrate judge. The fact that the identities of the non-parental sureties played no role in the bail decision “appreciably” weakens the strength of the presumption. On the other hand, the fact that bonds signed by sureties and co-sureties, which include their names, routinely are filed in this Court and made available to the public cuts in the other direction.

At bottom, the strength of the presumption in this case, as it applies to the identities of the non-parental sureties, is not strong. The benefit to the public of knowing the identities of the non-parental sureties for the purposes of “monitoring the federal courts” is extremely limited at best despite the fact that there appears to be a lot of popular interest in who they are. Nevertheless, the presumption exists albeit it is entitled only to limited weight….

The conclusion that there is a modest presumption in favor of public access to this information is not the end of the analysis. Courts must consider whether the presumption has been overcome. Relevant factors include but are not limited to (i) “the danger of impairing law enforcement or judicial efficiency” and (ii) “the privacy interests of those resisting disclosure,”  including the “nature and degree of injury”  resulting from disclosure.

In this case, there does not appear to be any danger of impairing law enforcement. The identities of the non-parental sureties have no bearing on the government’s investigation, as evidenced by the fact that the government has taken no position with respect to the motions.

Second, the privacy interests of the non-parental sureties are limited. On the one hand, given the widespread popular interest in this case, many people appear to wish to know the names of the non-parental sureties. If the names of the non-parental sureties are disclosed, it is reasonable to assume that those individuals will become subject to publicity that they would prefer not to attract. That is entitled to some consideration, especially in a case which has the notoriety that this one has attracted. But that alone does not do the trick.

More serious is defendant’s claim that he and his parents “have become the target of … harassment[ ] and threats … including communications expressing a desire that they suffer physical harm.”  While there is no evidence to that effect before me, I have no reason to doubt the assertion. But it does not follow that the non-parental sureties “would face similar … threats and harassment ….”  Defendant’s parents were subject to intense public scrutiny for their close relationship with defendant and their involvement with FTX well before co-signing his bail bond.  Indeed, defendant’s father “was a paid employee of the company for nearly a year prior to FTX’s collapse, connected FTX with at least one major investor, and participated in FTX’s meetings with policy makers and officials.”  In contrast, the amounts of the Individual Bonds—$500,000 and $200,000 —do not suggest that the non-parental sureties are persons of great wealth or likely to attract attention of the types and volume of that to which defendant’s parents appear to have been subjected. Thus, defendant’s claim that the non-parental sureties “would face similar intrusions” is speculative and entitled only to modest weight.

Moreover, the information sought—i.e., the names of bail sureties—traditionally is public information. The non-parental bail sureties have entered voluntarily into a highly publicized criminal proceeding by signing the Individual Bonds. Accordingly, they do not have the type of privacy interests in their names that the Court of Appeals found to warrant confidential treatment with respect to “[f]inancial records of a wholly owned business, family affairs, illnesses, embarrassing conduct with no public ramifications, and similar matters.”

Weighing the scales, with the presumption of public access on one scale and the countervailing factors on the other, there is not much weight on either side. The information at issue is entitled only to a weak presumption of access, yet the countervailing factors are not sufficiently persuasive to overcome even that presumption. In my view, the Individual Bonds should be on the public record.

The court also concluded that the First Amendment right of access doesn’t apply to these documents, though the common-law right of access does:

[A]ppearance bonds are neither “derived from” nor “a necessary corollary” of the capacity to attend a bail proceeding. As previously noted, the names of the non-parental sureties were not mentioned at that proceeding. Hence, they are not “necessary to understand the merits” of a bail proceeding and, therefore, “are [not] covered by the First Amendment’s presumptive right of access.”

The names will be unsealed by Feb. 7 at 5 pm, unless an appeal is filed.

Congratulations to Lacy H. Koonce, III (Klaris Law PLLC), Jeremy A. Chase and Alexandra Settelmayer (Davis Wright Tremaine LLP), and Dana R. Green (N.Y. Times), who represented the movants, and Matthew Russell Lee (Inner City Press), who represented himself as movant.

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Prestigious Liberal Watchdog Condemns New York Times’ Russiagate Coverage

Prestigious Liberal Watchdog Condemns New York Times’ Russiagate Coverage

The Columbia Journalism Review (CJR) has issued a scathing indictment of the New York Times for yellow journalism during the Trump-Russia saga.

In short, the hyper-partisan ‘paper of record’ was operating in bad faith.

It’s wasn’t just the Times either. CJR’s findings accurately reflect what most objective thinkers have known this whole time – they were all operating in bad faith.

That said, CJR aimed the majority of criticism towards the NYT.

“No narrative did more to shape Trump’s relations with the press than Russiagate. The story, which included the Steele dossier and the Mueller report among other totemic moments, resulted in Pulitzer Prizes as well as embarrassing retractions and damaged careers,” wrote CJR executive editor Kype Pope in an editor’s note.

The findings were published in a lengthy, four-part series. The first section begins with a story about then-New York Times executive editor Dean Baquet’s reaction when he found out Special Counsel Robert Mueller didn’t plan to pursue Trump’s ousting, telling his staff “Holy s—, Bob Mueller is not going to do it.”  –Fox News

“Baquet, speaking to his colleagues in a town hall meeting soon after the testimony concluded, acknowledged the Times had been caught ‘a little tiny bit flat-footed’ by the outcome of Mueller’s investigation,” according to Jeff Gerth – the author of CJR’s lengthy retrospective.

“That would prove to be more than an understatement,” he continued. “But neither Baquet nor his successor, nor any of the paper’s reporters, would offer anything like a postmortem of the paper’s Trump-Russia saga, unlike the examination the Times did of its coverage before the Iraq War.”

According to Gerth, the Times destroyed its credibility outside of its “own bubble.”

What’s more, the Times appeared to legitimize former British spy, Christopher Steele, who was indirectly paid by the Clinton campaign to fabricate the infamous ‘dossier’ that so much of the Russiagate coverage – and the DOJ’s sham investigation, was based on.

The Times appeared to legitimize Christopher Steele, the ex-British spy who authored the infamous dossier, claiming he had “a credible track record” while Steele’s so-called “primary” source was telling the FBI that Steele “misstated or exaggerated” in his report and that information stemming from Russia was “rumor and speculation.”

Part three offered examples of the Times’ slight-of-hand coverage against Trump in comparison to other hostile outlets. For example, Trump explained his decision to fire FBI Director James Comey, mentioning the “Russia thing” as being a “made-up story” to NBC’s Lester Holt but acknowledged the firing would likely “lengthen out the investigation.”

The media focused on the ‘Russia thing’ quote; the New York Times did five stories over the next week citing the ‘Russia thing’ remarks but leaving out the fuller context. The Post and CNN, by comparison, included additional language in their first-day story,” Gerth wrote.

In another instance, the Times avoided covering some of the more damning texts from Peter Strzok, who wrote “there’s no big there, there” shortly after the appointment of Special Counsel Robert  Mueller, something Gerth noted was covered by the Wall Street Journal and the Washington Post.  -Fox News

In closing, Gerth concluded that “the erosion of journalistic norms and the media’s own lack of transparency about its work” is responsible for the broad distrust in the media.

No kidding.

In January 2018, for example, the New York Times ignored a publicly available document showing that the FBI’s lead investigator didn’t think, after ten months of inquiry into possible Trump-Russia ties, that there was much there. This omission disserved Times readers. The paper says its reporting was thorough and ‘in line with our editorial standards,” wrote Gerth. “Another axiom of journalism that was sometimes neglected in the Trump-Russia coverage was the failure to seek and reflect comment from people who are the subject of serious criticism. The Times guidelines call it a ‘special obligation.’ Yet in stories by the Times involving such disparate figures as Joseph Mifsud (the Maltese academic who supposedly started the whole FBI inquiry), Christopher Steele (the former British spy who authored the dossier), and Konstantin Kilimnik (the consultant cited by some as the best evidence of collusion between Russia and Trump), the paper’s reporters failed to include comment from the person being criticized.

Tyler Durden
Tue, 01/31/2023 – 18:00

via ZeroHedge News Tyler Durden

Cardboard Box Demand Plunging At Rates Unseen Since The Great Recession

Cardboard Box Demand Plunging At Rates Unseen Since The Great Recession

By Rachel Premack of FreightWaves,

Demand and output for cardboard boxes and other packaging material fell sharply in the fourth quarter of 2022, according to data released by the American Forest & Paper Association and Fibre Box Association on Friday.

It’s the latest indicator that consumer demand is eroding following the pandemic. Dwindling savings, inflation, rising interest rates and fears of a recession may all be swaying consumers to spend less. 

Such pressures would show up in the humble box industry, which serves as an excellent barometer for the larger economy. Practically everything we consume and use spends some time in a box, ranging from online orders to food sent to grocery stores.

Box shipments have plunged at a rate not seen since the Great Recession. (Source: Fibre Box Association, KeyBanc Capital Markets) 

U.S. box shipments fell by 8.4% in the fourth quarter, according to the Fibre Box Association. KeyBanc’s Adam Josephson, who leads the bank’s analysis of the packaging industry, wrote in a Sunday note that this was “the most severe quarterly decline since the Great Financial Crisis (2Q09).”

Inventories of containerboard in the U.S. are unusually high. (Source: American Forest & Paper Association, Fibre Box Association, KeyBanc Capital Markets) 

U.S. box operating rates fell to 80.9%, the Fibre Box Association said, which was also a low last seen in the first quarter of 2009. This means nearly 20% of the U.S. capacity to produce boxes was stagnant last quarter. Supply of containerboard, which is used to make corrugated boxes, stood at 4.3 weeks, according to the American Forest & Paper Association. That’s down from last quarter, but still historically high. 

Inventories of containerboard in the U.S. are unusually high. (Source: American Forest & Paper Association, Fibre Box Association, KeyBanc Capital Markets) 

The American Forest & Paper Association reported that another type of packaging material called boxboard had its lowest operating rate in its five-year record during 2022’s final quarter. Boxboard is typically thinner than cardboard and lacks air pockets.

Box bloodbath? Cardboard crisis?

Box demand normally sees modest upticks of 1% to 2% each year. But government stimulus and the shift from service to goods demand through 2020 and 2021 shocked box demand into some of its fastest growth in history. Prices rose as much as 55% through this time, Josephson said. 

A hangover after a yearslong cardboard carnival would be in order — and this one looks nasty.

To Josephson, the end of 2022 in the packaging world had “echoes of the Great Financial Crisis everywhere one looks,” he wrote in the Sunday note. What’s more, significant capacity — that is, more facilities that produce packaging materials — is set to enter the market through the next several years. It’s a tricky time for more packaging production to open up, given the shaky outlook for demand and falling consumer spending.

Consumer debt is growing at nearly the same pace it was prior to 2020. But that debt is more expensive as interest rates soar. (FreightWaves SONAR)



“Inflationary pressures on the consumers have also added to the problem by reducing the consumers’ discretionary spending capabilities,” said Thomas Hassfurther, executive vice president of corrugated products at WestRock, in a Thursday call to investors. WestRock is the No. 2 largest packaging company in the U.S.

“In addition, consumer behavior changed very quickly as we exited the extreme COVID period, resulting in more of a preference towards travel, entertainment and experience versus that of tangible goods,” Hassfurther said. “Containerboard and box demand continues to be negatively impacted from the deterioration in U.S. and global economic conditions, rising interest rates and a cooler housing market.”

However, WestRock executives maintained that demand in 2023 still appeared “healthy” compared to pre-COVID times. On the Thursday call, they forecast shipments to be 6% higher in first-quarter 2023 compared to the same period in 2019, on a per-day basis.

What goes up must come down … and down …

Many of the industries that saw wild demand during the pandemic are now crashing, like container shipping, used cars and home building

A downturn after a wild upswing isn’t particularly shocking. What’s troublesome is that executives grew or made plans to grow in response to this unprecedented demand. An increase in supply will further drive down already-plummeting prices.

In the cardboard world, for example, more than 2 million tons per year of additional containerboard output is coming to the North American market. Ocean carriers expect to add a record-breaking number of new container ships through the next two years. And nearly 60 real estate firms, most of which expanded payrolls during the pandemic, have already had to lay off more than 13,000 workers through 2022 and 2023, according to Insider.

It’s not all doom and gloom. Outbound requests for truckload services were slightly up in late January 2023, compared to the same period in 2019 and 2020. That’s a chipper indicator for goods demand. The Fed’s offensive on inflation has appeared to slow the rate of price increases without halting an unusually strong job market. Payrolls across the U.S. remain historically strong, with an unemployment rate of just 3.5%.

Tyler Durden
Tue, 01/31/2023 – 17:40

via ZeroHedge News Tyler Durden

Chicago Crime Rises 61% In 2023, Violent Offenses Spike While Governor Insists Crime “Coming Down”

Chicago Crime Rises 61% In 2023, Violent Offenses Spike While Governor Insists Crime “Coming Down”

Authored by Naveen Anthrapully via The Epoch Times,

The crime rate in Chicago has spiked by 61 percent in the first three weeks of 2023, with almost all crime segments registering an increase, with data coming at a time when the state’s governor insists that crime in the city is decreasing.

In the first 22 days of this year, the Chicago Police Department received 4,844 complaints related to crime, up 61 percent compared to the 3,013 complaints received in 2022, reveals data (pdf) from the department. This is also 97 percent higher than from the same period in 2021 and 81 percent higher than in 2020.

The biggest increase in crime in the past year was in motor vehicle theft, which rose by 165 percent year to date until Jan. 22, 2023, when compared to the year-ago period.

Aggravated battery jumped 31 percent, robbery 26 percent, theft, 24 percent, criminal sexual assault 12 percent, and burglary 11 percent. Murder fell by 9 percent, while shooting incidents declined 1 percent.

The data come as Illinois governor J.B. Pritzker has been trying to paint a positive picture of Chicago’s crime incidents.

“Crime is coming down gradually in the city and across the state. It’s going to take a little while. These things don’t come down immediately. But it’s getting better,” he said in an interview with CNBC this month.

Chicago Mayor Lori Lightfoot recently attracted criticism after a mayoral debate on Jan. 9 during which she suggested that street vendors “not use money, if at all possible, using other forms of transactions to take care of themselves” so as to ensure that their money is safe.

“To combat crime in Chicago, Mayor @LoriLightfoot says ‘not use money, if at all possible, (use) other forms of transactions to carry…’ What’s next? Laws demanding ‘cash control’?” conservative talk radio host Larry Elder said in a tweet on Jan. 23.

Businesses and Citizens Looking to Exit City

The high crime rate in Chicago is affecting businesses operating in the city, with some of them choosing to leave. In October 2022, Tyson Foods, for example, announced plans to relocate staffers from the Chicago area and South Dakota to Arkansas. In May, Boeing had announced plans to shift its headquarters out of Chicago.

In a speech to the Economic Club of Chicago in September, McDonald’s CEO Chris Kempczinski revealed that he has received multiple offers from governors and mayors from other states who want him to shift the company’s headquarters from Chicago.

“While it may wound our civic pride to hear it, there is a general sense out there that our city is in crisis,” Kempczinski said.

“We have violent crime that’s happening in our restaurants … We’re seeing homelessness issues in our restaurants. We’re having drug overdoses that are happening in our restaurants.”

survey published this month by nonprofit AARP found that 88 percent of Chicago voters over 50 years of age have considered leaving the city in the past year. They wanted to move to a community with a lower crime rate.

Among respondents, 89 percent said that a candidate’s position on violence and crime is “very important” when it comes to deciding the next mayor.

Cashless Bail

One of the main reasons contributing to ongoing crime is a lax approach to enforcing the law while approving measures that cut down severity of punishments related to lawlessness.

A controversial law, the SAFE-T Act, was set to go into effect on Jan. 1, 2023, in Illinois. But on Dec. 31, the state supreme court placed on hold a portion of the bill that would have eliminated cash bail for certain crimes.

Last month, a Kankakee County judge had ruled that cashless bail violated Illinois’ constitution and couldn’t be applied in counties where lawsuits have been filed to block it.

Republican leaders had earlier raised alarm bells about the SAFE-T act, warning that it would result in a rapid rise in crime in Illinois, including Chicago. The city frequently registers over 700 homicides annually.

State Senator John Curran, a Republican, pointed out that SAFE-T’s cashless bail raises the risk of releasing dangerous criminals back into the streets. Multiple law enforcement officials had also warned about the cashless bail provision.

According to real estate platform Property Club, Chicago is ranked number six on the list of most dangerous cities in the United States.

Tyler Durden
Tue, 01/31/2023 – 17:00

via ZeroHedge News Tyler Durden

SNAP Implodes Again After Forecasting First Ever Revenue Decline

SNAP Implodes Again After Forecasting First Ever Revenue Decline

For the fifth quarter in a row, SNAP stock craters after the company reports devastating earnings. But this one really hurts, because by now even the bears expected that all the bad news had been flushed out. Boy, were they wrong.

Having plunged six months ago after projecting its worst revenue growth on record, a shock revelation which took the stock some 25% lower, and tumbling again three months ago ago when the company reported another ugly quarter, SNAP is down double digits once again, tumbling from the mid-$11s to just below $10 after the former “growth” company forecast its first ever revenue decline.

Which is not to say that its historical data was any good. Here is how the company did in yet another catastrophic quarter:

  • Revenue $1.30 billion, +0.1% y/y, missing the estimate $1.31 billion

    • North America revenue $880.3 million, -5.6% y/y, estimate $923.5 million

    • Europe revenue $218.6 million, +4.6% y/y, estimate $201.4 million

    • Rest of the world revenue $200.9 million, +28% y/y, estimate $180 million

  • Adjusted EPS 14c vs. 22c y/y, beating the estimate 11c

  • Adjusted EBITDA $233.3 million, -29% y/y, beating the estimate $207 million

  • There was some good news in the daily active users, which at 375 million, or up +18% y/y, actually beat estimate 374.7 million, but not thanks to North America:

    • North America daily active users 100 million, +3.1% y/y, missing estimate 100.9 million

    • Europe daily active users 92 million, +12% y/y, estimate 89.7 million

    • Rest of world daily active users 183 million, +31% y/y, estimate 184.7 million

  • Free cash flow $78.4 million, -51% y/y, estimate negative $5.81 million

Tragically, in a time when tech companies are firing everyone, SNAP still uses the same colorblind graphic designer.

Of course, with (just barely) more users than expected yet missing on revenue, it meant just one thing: the monetization disappointed and sure enough, ARPU of $3.47, was not only 15% lower vs 2021, but missed estimates of $3.49

  • North America average revenue per user $8.77, -8.5% y/y, estimate $9.16

  • Europe average revenue per user $2.38, -6.3% y/y, estimate $2.25

  • Rest of world average revenue per user $1.10, -1.8% y/y, estimate 99c

But while historical data was bad, it’s what the company disclosed about the present and, worse, the future that shocked markets: specifically, while the company disappointed  quarter-to-date revenue is already down about 7% Y/Y, the final straw before everyone hit the sell button is that the company’s forecast assumes revenue will decline between -10% to -2% in the first quarter.

Not only is that below the average analyst estimate for growth of 1.48%, but it is Snapchat’s first every quarterly negative revenue guidance.

Knowing that its stock would soon be in the single digits, it barely tried to put lipstick on a pig and instead just gave token lip service to Q1 guidance, saying that “given the work we have completed to reprioritize our cash cost structure, we believe we have a path to adjusted EBITDA breakeven in Q1.”

Whatever. Meanwhile, the company is now a melting ice cube, and the stock reflects it with SNAP plunging back into the single digits after hours.

Tyler Durden
Tue, 01/31/2023 – 16:47

via ZeroHedge News Tyler Durden

WTI Holds Gains After API Reports Across-The-Board Inventory Builds

WTI Holds Gains After API Reports Across-The-Board Inventory Builds

Oil prices rallied on the day, with WTI rebounding back above $79 as factors ranging from the end of the Fed’s (dovish) rate increases to swelling demand in China give bulls more ammunition.

“The main driver for oil lately has been the potential for a resurgence of oil demand out of China, which may continue into February considering how Chinese economic momentum picked up in the overnight PMI reports,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

The nationwide ‘deep freeze’ has clearly been impacting the inventory data over the last few weeks. We suspect today could be the first ‘clean’ indication…


  • Crude +6.33mm (-1mm exp)

  • Cushing +2.72mm

  • Gasoline +2.73mm

  • Distillates +1.53mm

Crude inventories built for a 5th straight week (despite expectations for a small draw) with Cushing stocks soaring once again. On the product side, we also saw notable builds (with Distillates biggest rise since the first week of December)…

Source: Bloomberg

Additionally, AlphaBBL data suggests that crude inventories at Cushing climbed 2.1 million barrels in the last week.

WTI was trading around $79 ahead of the API print and managed to hold those gains despite the builds…

The OPEC-plus group including Russia meets tomorrow and while most analysts don’t expect major policy shifts, energy investors are always slightly on edge ahead of OPEC gatherings. 

Tyler Durden
Tue, 01/31/2023 – 16:43

via ZeroHedge News Tyler Durden

AMD Rallies After Top- & Bottom-Line Beat, In-Line Forecast

AMD Rallies After Top- & Bottom-Line Beat, In-Line Forecast

Relative to Intel’s epic-fail, AMD stepped up to the plate after the bell and hit the ball out of the park.

AMD’s headline Q4 revenue figure beat expectations at $5.6 billion (vs $5.52 billion consensus) and EPS beat at 69c (vs 67c consensus).

But, growth across its embedded and data center segments was partially offset by lower client and gaming segment revenue.

And notably, the company’s operating expenses jumped to $2.56 billion from $1.22 billion a year earlier.

But crucially, unlike Intel’s big guide lower, AMD’s guide was only very marginally lower than consensus:

Revenue will be as much as $5.6 billion in the period, AMD said in a statement Tuesday, compared with an average analyst prediction of $5.56 billion.

Though a less severe drop than expected, the outlook represents the company’s first year-over-year quarterly sales decline since 2019, ending a growth streak that elevated AMD into the upper ranks of the chip industry.

“2022 was a strong year for AMD as we delivered best-in-class growth and record revenue despite the weak PC environment in the second half of the year,” said AMD Chair and CEO Dr. Lisa Su.

“We accelerated our data center momentum and closed our strategic acquisition of Xilinx, significantly diversifying our business and strengthening our financial model. Although the demand environment is mixed, we are confident in our ability to gain market share in 2023 and deliver long-term growth based on our differentiated product portfolio.”

AMD’s share prices are surging after-hours, back near December highs…

Lisa Su dunks on Pat Gelsinger…

Tyler Durden
Tue, 01/31/2023 – 16:33

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We Just Witnessed An Economic Sign That Hasn’t Happened Since The Peak Of The Great Depression In 1932

We Just Witnessed An Economic Sign That Hasn’t Happened Since The Peak Of The Great Depression In 1932

Authored by Michael Snyder via The Economic Collapse blog,

Economic conditions are much worse than you are being told.  Throughout the past year, prices have been rising much faster than most of our incomes have.  As a result, our standard of living has been rapidly declining.  It has become increasingly difficult for U.S. households to make it from month to month, and as you will see below, more than a third of all U.S. adults are actually relying on their parents to pay at least some of their bills at this point. 

But even more alarming is what has been happening to real disposable income.  According to Fox Business, the most recent GDP report revealed that the decline in real disposable income that we witnessed in 2022 was the largest that has been measured since 1932…

The most troubling information in the GDP report is the precipitous drop in real disposable income, which fell over $1 trillion in 2022.

For context, this is the second-largest percentage drop in real disposable income ever, behind only 1932, the worst year of the Great Depression.

Just think about that for a moment.

The last time real disposable income declined this quickly was literally during the peak of the Great Depression.

And as our incomes get squeezed tighter and tighter, more Americans are starting to fall behind on their bills.

For example, the proportion of subprime auto borrowers that are at least 60 days behind on their payments has just surged to the highest level that we have seen since 2008

In December, the percentage of subprime auto borrowers who were at least 60 days late on their bills climbed to 5.67% — a major increase from a seven-year low of 2.58% in April 2021, according to Fitch Ratings. It marks the steepest rate of Americans struggling to make their car payments since the 2008 financial crisis.

We are already beginning to witness the largest tsunami of repossessions that we have seen since the “Great Recession”, and it is only going to get worse in the months ahead.

One woman in San Antonio that knows that her vehicle could be repossessed at any time has decided that hiding it is the best strategy for now

For some, however, the only lesson is to try and outsmart the repo man: hardly the best long-term strategy. Take San Antonio native Zhea Zarecor who is currently trying to negotiate with her lender so her 2013 Honda Fit won’t get repossessed. In the meantime, she’s hiding it.

The 53-year-old, who is currently in school for her bachelor’s in information technology (and raking up massive student loans for an education she should have had some 35 years ago) splits the monthly bill for the car — about $178 — with her roommate. But then the roommate lost his job, and with prices for groceries and everyday items increasing, there just wasn’t enough for the car payments.

Zarecor is trying to make extra money with odd jobs like contract secretarial work and participation in medical studies, but it often feels hopeless, she said. “Our money doesn’t go as far as it used to,” she said. “I don’t see prices going down, so the only relief I see is when I get my degree.”

Sadly, most of the country is just barely scraping by at this juncture.

As I discussed in a previous article, one recent survey discovered that 57 percent of Americans cannot even afford to pay a $1,000 emergency expense right now.

And a different survey has found that a whopping 35 percent of all U.S. adults are still relying on Mom and Dad to pay at least some of the bills…

More than one third of adults (35%) admit they still have at least one bill on their parents’ tab. According to a new poll of 2,000 Americans, the top three expenses their parents still pay for are rent (19%), groceries (19%), and utilities (16%). In fact, almost one-quarter (24%) of millennials say their parents cover their rent.

Are things really this bad?

Unfortunately, economic conditions are only going to get even worse in the months ahead as countless more Americans lose their jobs.

On Monday, I was quite saddened to learn that electronics giant Philips will be giving the axe to another 6,000 workers

Philips announced Monday that it’s cutting another 6,000 jobs worldwide as it works to boost profitability.

The workforce reduction will occur over the next two years with the first 3,000 cuts taking place this year, the Dutch consumer electronics and medical equipment maker said on Monday. In its earnings report, the company revealed it suffered a net loss of 1.6 billion euros in 2022, which is down from a net profit of 3.3 billion euros last year.

And it is also being reported that one of my favorite toymakers has decided to eliminate approximately “15% of its global full-time workforce”.

I could go on and on if you would like.

In fact, every day I could fill up my articles with nothing but job loss announcements.

We have entered a very painful economic downturn, and one prominent Wall Street economist is warning that the full impact of this crisis will not be felt until the second half of 2023

According to one Wall Street economist, a looming recession this year will feel more like the 1970s than a 2008-07 slump.

“People are too focused on ‘08 and 2020. This is more like 1973, 74 and 2021,” Piper Sandler chief global economist Nancy Lazar said on “Mornings with Maria” Monday.

Lazar predicted feeling the full impact of a recession in the second half of 2023 as lag effects from the Federal Reserve’s rate hikes take hold.

Actually, it would be quite wonderful if her seemingly gloomy forecast is accurate.

Because I don’t believe that we are heading into a slowdown like we experienced during the early 1970s.

Rather, I see all sorts of evidence that indicates that we are in the very early stages of the economic equivalent of “the Big One”.

I believe that things will be very rough this year, and I believe that the long-term outlook is even worse.

Our leaders assured us that everything would be okay even as they were flooding the system with money and engaging in the greatest debt binge in all of human history.

Now a day of reckoning has arrived, and we will get to suffer the consequences of their very foolish decisions.

*  *  *

It is finally here! Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.

Tyler Durden
Tue, 01/31/2023 – 16:20

via ZeroHedge News Tyler Durden

Big-Tech, Bitcoin, & Bullion Best January In Decades; Yield Curve Crashes To Record Inversion

Big-Tech, Bitcoin, & Bullion Best January In Decades; Yield Curve Crashes To Record Inversion

January saw the return of the “QE trade”… or more appropriately, a de-hawking of The Fed as the narrative rapidly shifted from hyped-inflation and growth scares to ‘soft landing’ and Fed-Pause/Pivot… and everything’s awesome.

Overall January saw macro surprise data flat in January as ‘soft’ survey data tumbled (along with weaker ‘hard’ industrial data) but offset by a number of questionably strong labor market indications

Source: Bloomberg

However, despite the narrative shift, January saw rate expectations barely budge… terminal rate dropped around 4bps while rate-cut exp fell 3bps…

Source: Bloomberg

The market is locked-and-loaded for a 25bps hike tomorrow by The Fed, it also prices an 83% chance of a 25bps hike in March and 42% odds of a 25bps hike in April

Source: Bloomberg

But that never stopped stocks from fully embracing the dovish hope, with Nasdaq soaring over 10% in January. The Dow lagged with a meager 2.4% return…

Source: Bloomberg

Stocks melted up into today’s month-end close (on a massive MOC buy), erasing all of yesterday’s selling pressure from the open…

Nasdaq soared to its best January since 2001…

Source: Bloomberg

Who could have seen that coming!!??

The January shift in the growth and inflation outlooks have helped support a laggards-to-leaders (dash for trash) trade within the S&P 500

At the stock level, 9 of the 10 best performing stocks in January also underperformed the S&P 500 over the last 12 months – also highlighting a laggard-to-leaders trade.

And if you needed more evidence of the ‘quality’ of the rally, “most shorted” stocks soared 19% in January – the biggest monthly short squeeze since January 2021 – which marked the record high in stocks…

Source: Bloomberg

And all that exuberance pushed financial conditions to their loosest since June (when Fed Funds were 350bps lower)…

Source: Bloomberg

That is the 3rd month of ‘easing’ financial conditions in the last four, after financial conditions reached their tightest since 2016…

Source: Bloomberg

Is that the “unwarranted easing” that The Fed warned about in its latest Minutes?

Treasury yields ended the month of January significantly lower with the short-end lagging (2Y -22bps) and the belly outperforming (5Y -37bps)…

Source: Bloomberg

That is the second biggest monthly drop in the 5Y yield since March 2020 (the peak of Fed intervention amid the COVID lockdowns)…

Source: Bloomberg

The yield curve collapsed further in January with Fed Chair Powell’s favorite signals (3m spot – 18m fwd 3m bill yield spread) crashing to its most inverted ever right as the dot-com boom busted…

Source: Bloomberg

The dollar fell for the 4th straight month in January, with the greenback sparking a ‘death cross’…

Source: Bloomberg

…with one of the largest 3mo declines in the world’s reserve currency in history…

Source: Bloomberg

Gold surged for the 3rd straight month in a row, back above $1900 (to its highest since April 2022 and notably above the 2011 highs)…

Source: Bloomberg

up 18%, its best such move since August 2011

Source: Bloomberg

Bear in mind that gold has dramatically decoupled from the resurgence in real yields…

Source: Bloomberg

Bitcoin saw its best start to a year since 2013, up almost 40% in January…

Source: Bloomberg

Bitcoin is back above $23,000, erasing all the losses from the FTX FUD, now testing back to the Terra-LUNA / 3AC / Voyager collapse chaos…

Source: Bloomberg

Solana (hammered hard during the FTX debacle) was the massive outperformer though in crypto and we note that Bitcoin outperformed Ethereum (which still had a stellar 33% gain on the month)…

Source: Bloomberg

Oil prices had a quiet January ending marginally lower (WTI rangebound between $78 and $82), which followed a quiet December (which ended practically unchanged in a narrow range)…

January saw the biggest drop in NatGas prices since January 2001, with Henry Hub crashing to its lowest since April 2021, back below $3.00

Source: Bloomberg

Finally, circling back to the start, the last time the Nasdaq soared as much as this in January, it didn’t end well…

Source: Bloomberg

This time is obviously different though… because inflation remains extremely high, govt debt is exponentially higher, and The Fed balance sheet remains ridiculously high.

Tyler Durden
Tue, 01/31/2023 – 16:00

via ZeroHedge News Tyler Durden

US Job Opening Far Lower Than Reported By Department Of Labor, UBS Finds

US Job Opening Far Lower Than Reported By Department Of Labor, UBS Finds

When it comes to labor market data (or rather “data”), Biden’s labor department is a study in contrasts (and pats on shoulders). One day we get a contraction in PMI employment (both manufacturing and services), the other we get a major beat in employment. Then, one day the Household survey shows a plunge in employment (in fact, there has almost been no employment gain in the past 9 months) and a record in multiple jobholders and part-time workers, and the same day the Establishment Survey signals a spike in payrolls (mostly among waiters and bartenders). Or the day the JOLTS report shows an unexpected jump in job openings even as actual hiring slides to a two year low. Or the straw the breaks the latest trend in the labor market’s back, is when the jobs report finally cracks and shows the fewest jobs added in over a year, and yet initial jobless claims tumble and reverse all recent increases despite daily news of mass layoffs across all tech companies, as the relentless barrage of conflicting data out of the Bureau of Labor Statistics (which is the principal “fact-finding” agency for the Biden Administration and a core pillar of the Dept of Labor) just won’t stop, almost as if to make a very political point.

But while one can certainly appreciate Biden’s desire to paint the glass of US jobs as always half full, reality is starting to make a mockery of the president’s gaslighting ambitions, as one by one core pillars of the administration’s “strong jobs” fabulation collapse. First it was the Philadelphia Fed shockingly stating that contrary to the BLS “goalseeking” of 1.1 million jobs in Q2 2022, the US actually only added a paltry 10,000 jobs (just as the Fed unleashed an unprecedented spree of 75bps rate hikes).

Then, it was Goldman’s turn to make a mockery of the “curiously” low initial jobless claims, by comparing them to directly reported state-level WARN notices (mandatory under the Worker Adjustment and Retraining Notification (WARN) Act) which no low-level bureaucrat and Biden lackey can “seasonally adjust” because there they are: cold, hard, fact, immutable and truly representative of the underlying economic truth, and what they show is that – as the Goldman chart below confirms – layoffs are rising far faster than what the DOL’s Initial Claims indicates.

More importantly, Goldman also found that WARN notices also track the JOLTS layoff rate: WARN notice counts remained elevated in late 2020 even as the layoff rate declined, but this likely reflects unusual reporting delays during the pandemic and the exclusion of layoffs at closing establishments in the JOLTS survey, which WARN notices capture provided firms remain in business. Not surprisingly, Goldman’s tracking estimate based on December and January WARN notices for the large states covered not only shows that the recent drop in initial claims is unlikely, but that it is also consistent with a layoff rate of around 1.1%, higher than the 0.9% in the November JOLTS report.

And now, another core pillar of the US labor market is being dismantled, and it has to do with the Fed’s favorite labor market indicator: the JOLTS report of job openings.

As UBS economist Pablo Villaneuva writes in a recent report by the bank’s Evidence Lab group, Job openings in the JOLTS survey have not declined much since the March peak. Indeed, the BLS reports that openings were only 12% below the March 2022 peak in November and remain 48% above the pre-pandemic, 2019 average. This slight move downward has, as we noted recently, led to only a small decline in the vacancies-to-unemployment ratio, from 1.99 in March to 1.74 in November, still well above the 2019 average of 1.19.

Of course, such a high level of job openings is alarming to the Fed for the simple reason that it means Powell has failed at his mission at cooling off what appears to be a red hot jobs market; no wonder the Fed Chair has frequently flagged the high level of job openings as a sign of ongoing strength in the labor market. The bottom line, as UBS notes, is that “the BLS measure, although it has declined, remains historically high.”

However, as in the abovementioned case of unexpectedly low jobless claims, there may be more here than meets the eye. According to Villanueva, “a range of other measures of job openings suggest normalization in the labor market—softening much more convincingly, often to pre-pandemic levels” – translation: whether on purpose or accidentally, the BLS is fabricating data. Also, the UBS economist flags, job openings are not a great indicator of current labor market conditions—they lagged the last two downturns in the labor market.

So what’s the real story?

Well, as usual there is BLS “data” and everyone else… and as UBS cautions, other measures of openings tell a very different story: “Our UBS Evidence Lab data on job listings is weekly and more timely than the BLS series. The last datapoint is for the week of December 31. It shows openings down 30% from the March 2022 peak and only 25% higher than the 2019 average.”

While BLS bureaucrats and Biden sycophants can argue UBS data is inaccurate, other longer dated series also indicate weaker openings. Take for example the NFIB Small Business Survey includes labor market measures that have correlated strongly with the JOLTS data over time but have weakened more sharply than the JOLTS measure in recent months. The percentage of small firms unable to fill open positions has a correlation of 0.95 with JOLTS openings since 2000. This series has declined 20% relative to the peak in May 2022 and is only 13% above the 2019 average. The NFIB series on percentage of firms with few or no qualified applicants tells a similar story.

Finally, the “Opportunity Insights” measure of openings (see here) is also below pre-pandemic levels.

So what’s going on here?

As the UBS economist puts it, “in short, other surveys of job openings generally suggest that the BLS measure may be overstating labor market tightness. One reason to think the accuracy of the JOLTS data may have declined is that the sample shrank noticeably at the start of the pandemic. In 2019, the survey response rate was 60%. In December, it was 30%.

Or perhaps it’s not gross BLS incompetence (or propaganda): maybe it’s just a data quirk at key economic inflection points. As UBS observed in August, job openings tend to lag other labor market indicators. Ahead of the 2001 recession, the private sector job openings rate was still rising as private employment peaked and started printing negative. Again in 2007, as job openings were peaking, payroll employment in the revised data had slowed considerably, and job openings remained near their peak as employment was beginning to contract outright.

Whatever the reason for the discrepancy in this latest labor series, the bigger picture is getting troubling.

  1. We already knew that the employment as measured by the Household survey has been flat since March even as the Establishment survey signaled 2.7 million job gains since then. Shortly thereafter the Philadelphia Fed found that contrary to the BLS “goalseeking” of 1.1 million jobs in Q2 2022, the US actually only added a paltry 10,000 jobs in the second quarter of 2022. As such, the validity and credibility of the US nonfarm payrolls report is suspect at best.
  2. A few weeks ago, Goldman also put the credibility of DOL’s weekly jobless claims report under question, when it found that initial claims as measured at the state level without seasonal adjustments or other “fudge factors” were running far higher than what the DOL reports every week.
  3. And now, we can also stick a fork in the JOLTS report, whose accuracy has just been steamrolled by UBS with its finding that job openings – a critical component of the US labor market and the Fed’s preferred labor market indiator – are far lower than what the Dept of Labor suggests.

Bottom line: while it is obvious why the Biden admin would try hard to put as much lipstick as it can on US jobs data, the same data when measured with alternative measures shows a far uglier picture, one of a US labor market on the verge of cracking and hardly one meriting consistent rate hikes by the Fed.

Which, considering that in less than 24 hours the Fed will hike rates by another 25 bps, is extremely important, and we wish that we weren’t the only media outlet to lay out the facts as the negative impact of continued policy error and tightening by the Fed will impact tens of millions Americans, not to mention the continued errors – whether premeditated or accidental – by the US Department of Labor. Alas, as so often happens, since nobody else in the “independent US press” is willing to touch the story of manipulated jobs data with a ten foot pole, it is again up to us to explain what is really going on.

The full UBS report available to pro subs.

Tyler Durden
Tue, 01/31/2023 – 15:43

via ZeroHedge News Tyler Durden