Month: January 2023

Authored by Jack Phillips via The Epoch Times,

A U.S. court on Monday rejected pharmaceutical company Johnson & Johnson’s bankruptcy strategy to resolve billions of dollars in lawsuits that alleged the firm’s talc products cause cancer.

A decision handed down by the U.S. Third Circuit Court of Appeals in Philadelphia dismissed a Chapter 11 petition filed by a recently created J&J subsidiary LTL Management in October to address more than 38,000 lawsuits from plaintiffs alleging the company’s baby powder and other talc products caused cancer.

Before the bankruptcy filing, J&J faced costs from $3.5 billion in verdicts and settlements, including one in which 22 women were eventually awarded a judgment of more than $2 billion, according to court records.

“Applied here, while LTL faces substantial future talc liability, its funding backstop plainly mitigates any financial distress foreseen on its petition date,” wrote a three-judge panel on Monday.

They noted that “good intentions” like protecting the “J&J brand or comprehensively resolve litigation … do not suffice alone,” they wrote.

A spokesperson for the company, which manufactures Tylenol as well as a widely used COVID-19 vaccine, said J&J will appeal the decision. The spokesperson maintained that the company’s talc products are safe and don’t cause cancer.

“As we have said from the beginning of this process, resolving this matter as quickly and efficiently as possible is in the best interests of claimants and all stakeholders,” J&J spokeswoman Allison Fennell told news outlets in response to Monday’s ruling.

“We continue to stand behind the safety of Johnson’s Baby Powder, which is safe, does not contain asbestos, and does not cause cancer.”

The decision throws into doubt J&J’s long-planned strategy for disposing of talc litigation after it lost a bid to reverse a watershed verdict that eventually awarded more than $2 billion to 22 women who blamed their ovarian cancer on baby powder and other talc products.

Bottles of Johnson & Johnson baby powder line a drugstore shelf in New York, on Oct. 15, 2015. (Lucas Jackson/Reuters)

Attorneys for people who claim J&J’s products caused their cancers welcomed Monday’s ruling.

“The Third Circuit’s decision is a point-by-point rejection of J&J’s attempt to pervert the bankruptcy system and trample the constitutional right to a jury trial of all Americans harmed by deadly products,” Jon Ruckdeschel, a lawyer representing victims of mesothelioma, said in a statement to the Financial Times. 

“Bankruptcy courts are for honest companies in financial distress, not billionaire mega-corporations like J&J, 3M, and Koch Industries that seek to close courthouse doors to their victims.”

Last September, attorneys representing some 7,000 talc personal-injury claimants wrote (pdf) that “bankruptcy court relied on unsupported speculation and improper evidence” and “used unfounded estimates.”

A legal scholar with the University of Richmond told the paper that J&J will now have to appeal to the U.S. Supreme Court. “The only prospect left for J&J is an appeal to the Supreme Court,” Carl Tobias said, “which grants review in a minuscule percentage of appeals.”

A jury in Missouri ordered the New Jersey-based company to pay some $4.7 billion in damages to dozens of women who asserted their cancer was caused by the company’s talc products. The company appealed to cut the payout in half, but it has still paid more than $2 billion in damages.

More than 1,500 talc lawsuits have been dismissed without J&J having to pay anything, and the majority of cases that have gone to trial have resulted in defense verdicts, mistrials, or judgments for the company on appeal, according to the J&J subsidiary’s court filings.

Since the lawsuits prevailed, J&J has stopped selling its talc baby powder in the United States and Canada. It will phase out sales of those products around the world in 2023.

As of Monday’s close, J&J’s stock price was down nearly 4 percent on extremely high volume…

…it’s largest drop since June 2020.

The Japanese government has lashed out at Beijing, condemning an incident wherein a flotilla of Chinese government vessels breached Japan-claimed waters around the around the disputed Senkaku islands in the East China Sea.

Tokyo has lodged a formal diplomatic complaint after a Japanese-registered private vessel operating within Japanese-controlled waters was approached by four Chinese Coast Guard ships in the early morning hours of Monday. Tokyo says its coast guard patrols forced the Chinese ships to depart the area.

The encounter was tense, based on the description given to US military news outlet Stars & Stripes, which recounted that “The first Chinese ship approached Minamikojima from the southeast and entered the 12-mile limit at 2:47 a.m., according to the coast guard spokesman. He said the vessel appeared to be armed with a deck-mounted machine-gun.”

Three more Chinese ships followed the first armed patrol, after which “A contingent of Japan Coast Guard vessels positioned themselves between the Chinese and Japanese ships and warned the Chinese vessels to leave the area,” according to Japanese officials. “The first Chinese vessel departed the waters south of Uotsurijima at 12:35 p.m.”

As for the Chinese side, which doesn’t recognize Japanese sovereignty over the islands or the surrounding waters, its Marine Police spokesperson Gan Yu said it responded to multiple Japanese ships “illegally” entering the waters of the the Diaoyu islands (China’s recognized name for the Senkakus).

“We urge the Japanese side to immediately stop all illegal activities in these waters and ensure that similar incidents will not happen again,” Gan said.

The Chinse incursion near the islands was the second this year, after a Jan.10 incident. The longtime dispute has helped to worse Japan-China relations, also at a moment Tokyo’s deepened military cooperation with Washington has angered Beijing.

Starting last year the US began pledging military support to Japan in the event of a Chinese attack on the Senkakus. The Biden White House position, recently reaffirmed to Japanese Prime Minister Fumio Kishida, is that the islands fall under Article V of the Japan-US Security Treaty, which is the basis for mutual defense.

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Thanks to the latest release of the “Twitter Files,” we now know without a doubt that the entire “Russia disinformation” racket was a massive disinformation campaign to undermine US elections and perhaps even push “regime change” inside the United States after Donald Trump was elected president in 2016.

Here is some background. In November, 2016, just after the election, the Washington Post published an article titled, “Russian propaganda effort helped spread ‘fake news’ during election, experts say.”

The purpose of the article was to delegitimize the Trump presidency as a product of a Russian “disinformation” campaign.

“There is no way to know whether the Russian campaign proved decisive in electing Trump, but researchers portray it as part of a broadly effective strategy of sowing distrust in US democracy and its leaders,” wrote Craig Timberg.

The implication was clear: a Russian operation elected Donald Trump, not the American people.

Among the “experts” it cited were an anonymous organization called “Prop Or Not,” which in its own words claimed to identify “more than 200 websites as peddlers of Russian propaganda during the election season, with combined audiences of at least 15 million Americans.”

The organization’s report was so preposterous that the Washington Post was later forced to issue a clarification, even though the Post provided a link to the report which falsely accused independent news outlets like Zero Hedge, Antiwar.com, and even my Ron Paul Institute as “Russian disinformation.”

The 2016 Washington Post article also featured “expert” Clint Watts, a former FBI counterintelligence officer who went on to found another outfit claiming to be hunting “Russian disinformation” in the US, the “Hamilton 68” project. That project was launched by the Alliance for Securing Democracy, a very well-funded organization containing a who’s who of top neocons like William Kristol, John Podesta, Michael McFaul, and many more.

Thanks to the latest release of the “Twitter Files,” Matt Taibbi reveals that the Hamilton 68 project, which claimed to monitor 600 “Russian disinformation” Twitter accounts, was a total hoax. While they refused to reveal which accounts they monitored and would not reveal their methodology, Twitter was able to use reverse-engineering to determine the 600-odd “Russian-connected” accounts. Twitter found that despite Hamilton’s claims, the vast majority of these “Russian” accounts were English-speaking. Of the Russian registered accounts – numbering just 36 out of 644 – most were employees of the Russian news outlet RT.

It was all a lie and the latest Twitter Files release confirms that even the “woke” pre-Musk Twitter employees could smell a rat. But the hoax served an important purpose. Hiding behind anonymity, this neocon organization was able to generate hundreds of media stories slandering and libeling perfectly legitimate organizations and individuals as “Russian agents.”

It provided a very convenient way to demonize anyone who did not go along with the approved neocon narrative.

Twitter’s new owner, who has given us a look behind the curtain, put it best in a Tweet over the weekend: “An American group made false claims about Russian election interference to interfere with American elections.”

The whole “Russia disinformation” hoax was a shocking return to the McCarthyism of the 1950s and in some ways even worse.

Making lists of American individuals and non-profits to be targeted and “cancelled” as being in the pay of foreigners is despicable.

Such fraudulent actions have caused real-life damages that need to be addressed.

Former president of Brazil Jair Bolsonaro has been residing near Orlando, Florida while in the US on an A-1 visa, only issued to diplomats and heads of state, ever since losing to Luiz Inácio Lula da Silva in a hotly contested presidential election last fall. Pressure regarding his legal status in the country has grown, particularly after the early January unrest in Brazil’s capital which saw his supporters storm government buildings, decrying an unfair and ‘stolen’ election. Very quickly Lula’s government branded pro-Bolsonaro protesters as “rioters” and “terrorists” – and blamed the former president himself for fueling the unrest. But now his A-1 visa status is in question, and his options for staying in the US are growing narrower by the day.

In the US, a group of progressive Democratic lawmakers ran with the rhetoric coming out of Brazil’s new far left government, and demanded that Bolsonaro be booted from the US. With his situation perilous due to the firestorm of controversy within his home country, and now facing multiple criminal investigations, the clock is ticking given also he may now technically be residing in the US on an expired visa.

He entered the United States on Dec.30 on the A-1 visa. But now, formally out of official government office and just a private Brazilian citizen, his 30-day A-1 visa ‘grace period’ has come to an end. The State Department’s Ned Price explained to reporters earlier this month, “If an A visa holder is no longer engaged in official business on behalf of their government, it is incumbent on that visa holder to depart the U.S. or to request a change to another immigration status within 30 days.”

FT reports Monday that he’s seeking to extend his stay via a tourist visa. FT writes that he submitted application for a six-month visitor visa and that it was “received by US authorities on Friday, according to his lawyer, Felipe Alexandre, who has advised the former president not to leave the country while it is being processed — a period that could last several months.” 

FT cites an immigration lawyer to paint a picture of a political and legal status limbo of sorts: 

“I think Florida will be his temporary home away from home,” said Alexandre, founder of AG Immigration. “Right now, with his situation, I think he needs a little stability.” Bolsonaro is facing multiple investigations in Brazil — both for alleged wrongdoing during his four-year presidential term and to determine whether he was to blame for an insurrection in Brasília earlier this month launched by supporters who have rejected his electoral defeat.

But a group of 41 Democratic members of Congress have sent a letter to the Biden White House demanding action against the former Brazilian president.

“We must not allow Mr Bolsonaro or any other former Brazilian officials to take refuge in the United States to escape justice for any crimes they may have committed when in office,” the lawmakers wrote.

The Washington Post summarizes his legal predicament back home under the Lula government, and amid an ongoing crackdown on pro-Bolsonaro officials who stand accused of fueling violent protests:  “The 16 electoral cases against him are being investigated under Brazil’s electoral court. Six criminal cases are being investigated by the Supreme Court,”

Oh no, they got Jair Bolsonaro with the fried chicken https://t.co/HVmA20qou5 pic.twitter.com/jaJKbDVG1J

— Andy (@andy_eastfield) January 9, 2023

The Post notes that “The electoral court is led by the crusading Supreme Court justice Alexandre de Moraes, who has sought for years to check Bolsonaro’s anti-democratic impulses.” Interestingly, anti-Bolsonaro protests have even sprung up outside the resort community in which Bolsonaro is residing. He’s expected to lie low for at least the next couple months while his tourist visa application is being decided.

Now that all eyes are on the Treasury General Account (or TGA, also known as Treasury cash parked at the Fed) which is viewed as an offset to Fed tightening – if only until the debt limit D-day is hit some time in August, as a rapid drain in Treasury cash offsets (i.e., adds liquidity) the Fed’s QT which hopes to tighten financial conditions by draining both high-powered (reserves) and low-powerered (overnight repo) money equivalents as it shrinks its balance sheet (as explained in detail in “How The Coming Debt Ceiling Debacle Blew Up The Fed’s QT, And What Happens Next“)…

… today’s quarterly announcement by the Treasury announcing its Marketable Borrowing Estimates was of particular interest as it showed what the most likely Trajectory of treasury cash balances will be over the next two quarters.

Cutting to the chase, here is the Treasury’s sources and uses table…

… for the January – March 2023 and April – June 2023 quarters, and it shows the following:

• During the January – March 2023 quarter, Treasury expects to borrow $932 billion in privately-held net marketable debt, assuming an end-of-March cash balance of $500 billion.  The borrowing estimate is $353 billion higher than announced in October 2022, primarily due to the lower beginning-of-quarter cash balance ($253 billion), and projections of lower receipts and higher outlays ($93 billion).
• During the April – June 2023 quarter, Treasury expects to borrow $278 billion in privately-held net marketable debt, assuming an end-of-June cash balance of $550 billion.

Before digging into these numbers, a quick look at what the Treasury did in the just completed fiscal Q1 2023 quarter:

During the October – December 2022 quarter, Treasury borrowed $373 billion in privately-held net marketable debt and ended the quarter with a cash balance of $447 billion. In October 2022, Treasury estimated borrowing of $550 billion and assumed an end-of-December cash balance of $700 billion. The $177 billion difference in privately-held net market borrowing resulted primarily from the lower end-of-quarter cash balance, somewhat offset by lower net fiscal flows.

With that in mind, what is most notable about the numbers above is that all else equal, the Treasury expects a March cash balance of $500BN, followed by a $50BN build cash build in the Apr-Jun quarter which would be a material difference from assumptions of a rapid cash drain. There is just one problem: both those numbers are now meaningless as the Treasury itself admits in a footnote to the financing estimates…

Treasury cash balance Sources and Uses, footnote 3 which the so-called experts always miss: “The end-of-March and end-of-June cash balances assume enactment of a debt limit suspension or increase”.

— zerohedge (@zerohedge) January 30, 2023

… to wit:

The end-of-March and end-of-June cash balances assume enactment of a debt limit suspension or increase. Treasury’s cash balance may be lower than assumed depending on several factors, including constraints related to the debt limit. If Treasury’s cash balance for the end of either quarter is lower than assumed, and assuming no changes in the forecast of fiscal activity, Treasury would expect that borrowing would be lower by the corresponding amount

In other words, today’s financing estimates are devoid of any actual debt-limit signal, which – as the case may be – is the $32 trillion elephant in the room. So in lieu of that, we will instead go back to our preliminary analysis and update it for the recent spike in the TGA balance which has surged from $310BN when we looked at it last two weeks ago, to $568BN as of Friday’s print. The jump is thanks to the various extraordinary measures – i.e., replacing non-marketable Treasuries in federal employee retirement funds with instruments that do not count toward the debt limit, or simple IOUs – and according to Goldman there is a total of $300BN or so in measures, meaning that the TGA may hit $650 billion by March. At that point, the Treasury would need to run down its cash balance to shrink bills outstanding. This sequence of events is shown in the chart below…

… and amounts to roughly ~$110 billion in liquidity added by the Treasury and offsetting the Fed’s QT until the September debt ceiling D-Day.

It goes without saying, that should there be no deal after the drop dead date, and we don’t mean a trillion dollar platinum coin…

… then all bets are off.

Establishment mouthpiece CNN – an integral part of both the Russiagate hoax and the Hunter Biden laptop coverup, has dropped to just 444,000 average primetime viewers between January 16 and January 22, according to Nielsen.

Of those, just 93,000 were in the all-important 25-54 news demographic.

This is the first time since May of 2014 that the network has failed to reach 450,000 viewers, The Wrap reports.

By comparison, during the same period Fox News drew 1.4 million viewers and 176,000 in the demo while MSNBC notched 629,000 total viewers and 69,000 in the demo. In primetime, Fox News had 2 million viewers, 256,000 in the demo and MSNBC had 943,000 viewers and 91,000 in the demo.

Some especially troublesome news out of this week’s Nielsen numbers is that Licht’s primary programming move, “CNN This Morning,” also suffered the lowest week since its launch just three months ago. It averaged just 331,000 viewers while “Fox & Friends” had nearly 1 million and “Morning Joe” drew 760,000. -The Wrap

As Glenn Greenwald notes, CNN’s downfall is “so well-deserved and good for the country.”

Just look at this alone:

Everyone who works at CNN knows it spread an outright lie before the 2020 election: the Biden laptop was “Russian disinformation.”

Not one ever told their audience it was false or they spread it, let alone apologized for it:https://t.co/kjLH42pIZN

— Glenn Greenwald (@ggreenwald) January 30, 2023

According to CNN insiders, hosts of the network’s rebooted morning show, Don Lemon, Poppy Harlow and Kaitlan Collins, “seem to be growing frustrated” over the direction of the network.

“The show can’t decide strategically what exactly it is, so it’s trying to be everything which can create whiplash for a viewer when segments seem off-brand in tonality,” said one insider. “The audience for morning news on network TV is different than the cable news audience and since we’re not gaining new viewers we definitely need to retain our legacy ones.”

More on the network’s reputational suicide from Greenwald:

As with the lie about the laptop being “Russian disinformation” – it was so obvious at the time: I quit the Intercept because they spread it and wouldn’t let me write about it – *not one* media outlet that used Hamilton68 to shape “news” has acknowledged Taibbi’s reporting.

— Glenn Greenwald (@ggreenwald) January 30, 2023

Authored by Jack Phillips via The Epoch Times (emphasis ours),

After the Internal Revenue Service issued several releases warning about potentially lower tax refunds this filing season, some analysts say that it could put strain on some families who may have anticipated an expanded child tax credit.

Analysts Sound Off

Financial expert Lynnette Khalfani-Cox told NPR on Jan. 22 that there are “four main reasons” that cause will cause 2022’s returns to be smaller.

“The first is: no more stimulus checks. The second is that what was called the enhanced child credit—that’s gone,” she noted. A third reason is that a pandemic-era tax break for charitable deductions was killed for this year, she said, noting that the fourth reason is because some individuals might face taxes on investment gains.

Joe Buhrmann, a financial planner and senior financial planning consultant at eMoney Advisor, told CNBC on Friday that the smaller refunds this season and relatively high inflation could be a “double whammy” and “nasty surprise” for some people, namely families.

Tax breaks that were implemented for 2021’s taxes have returned to prior levels, the Internal Revenue Service (IRS) has said. The child tax credit dropped back to a maximum of $2,000 per child.

The Consumer Price Index, a key metric used to measure inflation, went up by 5 percent in December 2022, according to the Department of Labor’s latest statistics published last week. That’s down from the 5.5 percent year-over-year increase that was seen in November of last year.

“That’s money out of refunds right there,” Buhrmann noted, referring to the child tax breaks.

“But a whole bunch of taxpayers actually received what’s called a recovery rebate credit,” Khalfani-Cox also said. “And they got $1,400 per person on their 2021 taxes,” plumping their tax refund or lowering their bill. “But now that’s gone,” she remarked.

What the IRS Says

In a recent news release, the IRS said that some taxpayers should expect a smaller refund due to the expiration of pandemic-related stimulus payments and changes to child credits.

For example, the child tax credit is one benefit that will shrink when parents file their 2022 taxes. Normally, parents get about $2,000 for each of their children, but in 2021, the benefit increased to $3,600 for every child under 6 and $3,000 for minor children aged 6 and older.

The IRS has already issued notices about potentially smaller tax refunds, noting in November that “taxpayers will not receive an additional stimulus payment with a 2023 tax refund because there were no economic impact payments for 2022.”

Additionally, the agency said, it will be more difficult to claim a deduction for a charitable contribution on a 2022 tax return.

“The IRS cautions taxpayers not to rely on receiving a 2022 federal tax refund by a certain date, especially when making major purchases or paying bills,” the agency said. “Some returns may require additional review and may take longer.”

How to Get the $2,000 Child Tax Credit

Families can still claim the full $2,000 child tax credit when they file their 2022 return. However, only up to $1,500 of the credit is refundable, noted TurboTax in a recent release. The increased child tax credit was fully refundable under 2021’s rules.

For 2022’s tax year, a “child must have been under age 17 (i.e., 16 years old or younger) at the end of the tax year for which you claim the credit,” the tax company says. And the child has to be either your own child, an adopted child, a stepchild, or a foster child.

The parent or guardian has to claim that child—who must either be a U.S. citizen or U.S. resident alien—as a dependent on the 2022 tax return. The child must have lived with the parent for more than six months, be under the age of 19 or under the age of 24 and a full-time student or disabled, and the child cannot have provided more than half of his or her own financial support during the tax year.

As The Fed gets ready to drop its headline bomb on the market’s head, we note a significantly hawkish drift in the market’s expectations for the Terminal rate (still below 5.00% though) and more so in rate-cut hopes (now 15bps less than a week ago)…

Source: Bloomberg

Chinese markets reopened after being closed for the Lunar New Year and from their gap higher, were sold pretty much non-stop…

Source: Bloomberg

US Stocks ended lower on the day After drifting down overnight, we saw the ubiquitous panic-bid at the cash-open, which quickly gave way (after The Dow broke into the green) back to the lows of the day, bounced into the European close and then selling continued…and accelerated in the last few minutes. The Dow was the prettiest horse in today’s glue factory (-0.8%) and the Nasdaq was clubbed like a baby seal (down over 2%)…

Today’s weakness erased all of the gains from Friday’s cash-open melt-up and then some…

There was very little positive in today’s TICk data…

Source: Bloomberg

Nasdaq remains on pace for its best start to a year since 2001…

Source: Bloomberg

The Nasdaq closed back below its 200DMA…

After Friday’s melt-up short-squeeze, today looked like a re-laod of the shorts…

Source: Bloomberg

It has been quite the squeeze YTD for shorts…

Source: Bloomberg

Before we leave equity land, we thought it was worth looking at ARKK (which fell today) as it remains on pace for best month ever (up 25%)… if that doesn’t sum up this market fever we don’t know what does…

Source: Bloomberg

Treasuries were sold across the curve with the long-end outperforming, belly underperforming (30Y +3bps, 5Y +6bps). NOTE bonds were dumped at the European open…

Source: Bloomberg

The dollar rallied back to the upper end of its recent very narrow range…

Source: Bloomberg

Bitcoin was hit twice in the last few hours after falling just short of tagging $24k on Sunday evening…

Source: Bloomberg

Oil tanked on the day, despite concerns over stability in the Middle East following a drone attack on an Iranian weapons factory, with WTI back to a $77 handle (its lowest close in almost 3 weeks)…

Gold drifted modestly lower…

Finally, bear in mind that January has been nothing less than a massive ‘dash for trash’…

Is that really what The Fed wants?