Plaintiff, Who Had Published an Article Describing Herself as Escort, Sues Newspaper for Calling Her an Escort

No dice, said N.Y. Civil Court judge A. Ally Shahabuddeen on Friday, in Travis v. Daily Mail:

Defendants … are alleged by plaintiff to have defamed her in the course of its ongoing coverage of former Governor Eliot Spitzer. As has been highly publicized by numerous media publications over the course of the last several years, the former Governor became embroiled in a series of scandals arising from claims that he regularly engaged escort services, and later, allegations of sexual assault perpetrated against plaintiff.

Of relevance to this action is the description of plaintiff as a “prostitute” in an article published by the Daily Mail on January 24, 2022, entitled Former NY Governor Eliot Spitzer used alias, ‘George Fox’ at the hospital when he checked in on 25-year-old Russian prostitute lover he was accused of choking in $1,000-a-night Plaza hotel room in 2016. Plaintiff contends that contrary to the Daily Mail‘s coverage, she has never engaged in prostitution or similar occupation and that her involvement with former Governor Spitzer was limited to a legal dispute over the alleged sexual assault….

[D]efendants have provided an article published October 7, 2014 on the online outlet Medium. Entitled Sex is Sex, but Money is Money and under the byline “Svetlana Z.,” the piece describes in detail the lifestyle and experiences of a high-end escort told from a first-person perspective. The author biography describes Svetlana Z. as “a 24-year-old former escort living in New York City,” and also contend based upon the reporting of another media outlet and review of court records that plaintiff was evicted from her apartment on Lexington Avenue in 2015 for engaging in prostitution.

Defendants highlight the long history of coverage, by itself and other news outlets, of the former Governor’s alleged improprieties and his connection to plaintiff, including articles from DNAInfo.com, the New York Post, and the New York Times. One such article, published on December 20, 2018 by the New York Post, reports on an “exclusive interview” with plaintiff in which she discusses her escort work and describes her relationship with former Governor Spitzer. Defendants also provided examples of the Daily Mail‘s own coverage of the former Governor’s relationship with plaintiff from as far back as 2014. Together, defendants argue, these exhibits demonstrate that plaintiff will be unable to establish the falsity of the statements at issue or that they were made with defendant’s knowledge or disregard of their probable falsity.

In her opposition, plaintiff does not deny authoring the Medium article nor does she deny creating the websites and online listings. She instead asserts that her published work and other accounts describing life as an escort were part of an effort to build a career in writing and were entirely fictional. As for the websites and other internet advertisements cited by defendants, she claims that they were produced for the purpose of satisfying Medium’s “fact-checking” requirements and possibly promoting a future fictional web series on the topic.

Plaintiff does deny that she was ever evicted from her apartment for prostitution, averring that during the relevant time period her friend lived at the apartment rented under plaintiff’s name. It was that friend, plaintiff contends, who apartment management sought to oust after she rejected advances from the building superintendent. Plaintiff further asserts that it was impossible for plaintiff to have been engaging in prostitution in the apartment because she was traveling or living elsewhere during the relevant time period. Supporting documents submitted by plaintiff include a letter from Steve Friedman, plaintiff’s “ghostwriter,” who attests to split of the proceeds for the Medium article and the general process of “ghostwriting”; a letter from the management at 776 Avenue of the Americas confirming that plaintiff’s friend was a resident there from 2013 to 2016; and an order confirmation record from Tiffany & Co. relating to a $3,000 set of diamond earrings billed to “Mr. Eliot Spitzer” and to be shipped to “Svetlana Travis” at the Avenue of the Americas apartment dated January 21, 2015….

Plaintiff’s claim of material falsity rests on her contention that the Medium piece, online advertisements, and reviews were all part of an elaborate fiction with which she hoped to start a writing career. However, taking the sheer breadth of her online presence combined with corroboration from multiple media sources and plaintiff’s own statements, her position strains credulity. Further, as defendants observe, courts have routinely accepted that a statement made by the plaintiff herself may be accepted for its substantial truth.

Plaintiff’s exhibits do not carry her burden to show falsity. Plaintiff’s account of the status of the apartment at 776 Avenue of the Americas is not particularly probative of the status of the Lexington Avenue apartment, and a receipt for an expensive gift from former Governor Spitzer simply corroborates a portion of her account published in the New York Post. Finally, the letter from Steve Friedman, the “ghostwriter,” does not indicate that her story was fabricated. Rather, the letter sets forth the standard ghostwriting protocol, consisting of interviewing the subject (in this case, plaintiff), and collecting the stories from the interview into a publishable format (in this case, an essay). Nowhere does he state that he believed her account was entirely fictional, simply that “it would not surprise” him if it came to light that the account had inaccuracies. This alone is not sufficient to carry plaintiff’s burden to establish that defendants’ statements are materially false.

In any event, whether her current account of events is true is ultimately irrelevant because it remains that plaintiff cannot demonstrate that defendants acted with actual malice [the standard required in all public-concern cases under New York law -EV]…. [N]othing in plaintiff’s papers establishes a basis for believing that defendants either knew that the statements were false or acted in reckless disregard for whether they were false.

The Medium piece is written from a first-person perspective and presents as a truthful account, and at no point in the piece or the credits following it is there an indication to the reader that the account is fictional. The piece itself signals exactly the opposite, as the contributor credits state to the reader that it was fact-checked by the staff and the author is explicitly described as a “former escort.” Indeed, it is difficult to fault a reporter who, seeking to verify an account of escort work, comes to believe in the account’s veracity based on websites, online advertisements, and a review site entry resembling precisely what is described in the account. Plaintiff has presented nothing in her papers that would give such a reporter reason to doubt that the account is true.

Further weighing against plaintiff is the extent to which plaintiff’s status as an escort was referenced in the reporting of other news organizations. Of particular note is the exclusive interview published by the New York Post, which directly reports plaintiff’s own statements admitting to her work as an escort and to her relationship with former Governor Spitzer. Taken along with the fact that defendants have been publishing articles referencing plaintiff’s escort work from as far back as 2014 without opposition until very recently, there is no basis to support the claim that defendants knew or recklessly disregarded the possibility that plaintiff was lying.

The court also rejected Travis’s request to seal court records:

[P]laintiff claims that failure to seal court records has a high probability of causing harm to a third party, who had previously “gone through stalking, harassment, and sexual trafficking.” However, plaintiff never specifies this individual by name nor is this third party otherwise essential to this action, at least to any extent discernable by the Court. Plaintiff has not provided sufficient information to overcome the public policy of preserving open access to court records, and her request to seal is therefore denied.

The post Plaintiff, Who Had Published an Article Describing Herself as Escort, Sues Newspaper for Calling Her an Escort appeared first on Reason.com.

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A 5-Year-Old Pulled Down a 3-Year-Old’s Pants. The Preschool Workers Are on Trial.


The Schoolhouse in Poncha Springs, Colorado

Two Colorado child care workers will go on trial this June for presiding over a day care center where a 5-year-old pulled down a 3-year-old’s pants.

Amy Lovato and Roberta Rodriguez of The Schoolhouse day care center in Poncha Springs face criminal charges for not reporting this incident to the authorities quickly enough, and for putting the children in danger.

“Let this fact not be obscured: We are here because one preschooler pulled down another preschooler’s pants,” Jason Flores-Williams, Lovato’s attorney, told 11th Judicial District Judge Brian Green on Thursday, asking him to dismiss the charges.

Added Flores-Williams, these charges “criminalize preschool behavior by turning a 5-year-old into a deviant and a 3-year-old into a victim for acts that are neither sexual, abusive, criminal, negligent, or against any reasonable person or community standard.”

Judge Green denied the defendants’ motion, according to The Colorado Sun.

“This is the perfect case for the jury to hear,” he announced to a courtroom that was packed with school parents who came to support Lovato and Rodriguez. The attendees expressed their feelings so loudly—sighing and groaning with exasperation—that the judge had to warn them to be quiet.

“I understand the great importance to the community, but I don’t want to be sidelined or distracted,” he said.

Green is presiding because the first two judges assigned to the case had to recuse themselves; their kids attend the day care center in question, Flores-Williams tells Reason.

The case against Lovato and Rodriguez seems to involve four charges, but even the judge found the case so muddled that he instructed the prosecutors to present it more cogently.

No one disputes that on January 16, Lovato was filling in as a classroom teacher because the center was short-staffed. When one of the kids wet their pants, Lovato left the classroom for between 3 and 5 minutes to clean the kid and deposit the wet clothes in the laundry. When she returned, she saw the 5-year-old “crouched over” a 3-year-old who later told Lovato that the boy had tried to pull her pants down and touch her butt.

The next day, when Lovato went into the center’s bathroom, she found three kids there, including a girl with her pants down and the same boy. He was touching her butt.

The school did not ignore this misbehavior. It called the parents involved. It planned an all-school meeting on the topic of keeping your hands to yourself. Rodriguez took it upon herself to call the Chaffee County Early Childhood Council to find out what else she should be doing. She also reported the touching incidents to the child welfare department and the kids-briefly-in-a-room-without-a-teacher incident to the state licensing office.

But as the toddlers themselves discovered, sometimes there is just no way to cover your rear end. The authorities shut down the day care center midday on January 24, calling parents to immediately come pick up their kids. Terrified moms and dads raced over to find six armed deputies and a slew of cop cars.

“When they realized their children were safe, they wondered if they had been molested,” reported The Colorado Sun. “Neither the sheriff’s deputies or Chaffee County child welfare authorities who joined them in the raid of the child care center were providing information.”

It was only two days later, during a meeting at the sheriff’s office, that the parents learned what had happened.

In summary, the potential wrongdoing seems to involve not reporting the incidents immediately enough—these were officially reported to the authorities about three days later—and leaving the kids unsupervised for the briefest of moments.

The defense attorneys argued that the question of how quickly a school must report an incident of abuse is vague. So, it seems, is the definition of abuse. And so is whether leaving the room to clean off a pee-soaked kid constitutes neglect.

The problem, says Flores-Williams, is that we give child care workers enormous responsibility, “and yet we afford them no discretion in the way they handle those responsibilities.”

It’s also a problem that the authorities would seek to punish a preschool for being a place where there are preschoolers. Unruly kids are a fact of life, and treating a common occurrence like a criminal matter is absurd. A trial is not in the best interests of the kids, their parents, or anyone else.

“In some ways, this perfectly illustrates a system we set up that winds up leaving nothing but trauma and harm in its wake, and yet we justify it in the name of ‘protecting the children,'” says Richard Wexler, executive director of the National Coalition for Child Protection Reform. “An awful lot of time has gone into this: The police had to investigate, child protective services investigated, there’s a trial that’s about to happen. All that time and money and effort is, in effect, stolen from finding the relatively few children in actual danger.”

Wexler added that Colorado has set up a task force to study the mandatory reporting issues.

“They should look very closely at this case,” he says.

But for now, the case is going to a jury. Expect more groans and sighs.

The post A 5-Year-Old Pulled Down a 3-Year-Old's Pants. The Preschool Workers Are on Trial. appeared first on Reason.com.

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Foreign College Basketball Stars Are Missing Out on Endorsement Money Due to Visa Rules


UConn forward Adama Sanogo plays during a December college basketball game against Villanova

The UConn Huskies and San Diego State Aztecs will face off in tonight’s NCAA men’s basketball national championship, capping off an upset-filled March Madness. Huskies guard Jordan Hawkins has been instrumental in leading UConn to its first Final Four appearance in nine years. Dunkin’ saw that—before March Madness began, the New England–headquartered doughnut chain signed a “name, image, and likeness” deal with Hawkins, UConn’s second-leading scorer this past regular season.

It would make perfect sense for Hawkins’ teammate Adama Sanogo, UConn’s star forward and top scorer this year, to benefit from a name, image, and likeness deal too. But thanks to ambiguity in U.S. immigration law, Hawkins, a U.S. citizen, can profit from sponsorship deals, while Sanogo, a Malian national, cannot. It’s an issue that affects several standouts in this year’s March Madness, including Princeton’s British forward, Tosan Evbuomwan, and Florida Atlantic’s Russian center, Vladislav Goldin.

“A player of Adama’s caliber deserves it for everything he’s done in his career and everything he’s done for UConn basketball,” said UConn coach Dan Hurley. “You would hope that would change, but that’s obviously something that, again, Homeland Security and government, and that stuff doesn’t tend to move super quickly.”

The NCAA used to bar all college athletes from making money off their names, images, and likenesses. But since a 2021 rule change, they have been eligible to earn money through endorsement deals, social media activity, and paid appearances. The NCAA had long viewed college athletes as amateurs, but the policy change—quite sensibly—recognized that students deserved to be paid as professionals. In the first year of name, image, and likeness arrangements, Opendorse, a technological platform for these deals, estimated that college athletes made $917 million. Three-quarters of all NCAA athletes had engaged in the market from July 2021 to July 2022.

But international students largely operate in “a gray zone” in American immigration law when it comes to endorsements, says James Hollis, an immigration attorney at Siskind Susser, PC who has previously advised professional sports organizations on visa matters. “Students, schools, and their lawyers are all operating within the standard student visa framework,” Hollis tells Reason. College athletes are largely in the U.S. on F-1 visas, which place tough restrictions on work. “The student visa rules say that student athletes can work part time on campus, can work if authorized as part of the curriculum…and can work after one academic year if they can demonstrate they’re experiencing economic hardship,” says Hollis.

None of that fits neatly into the name, image, and likeness apparatus. “Some foreign student athletes have been able to obtain O-1 extraordinary ability visas authorizing them to work, study, and compete,” says Hollis. Others have arranged completely “passive deals where they receive income but do nothing that could be considered work while in the United States.” According to Hollis, “the safest path has been to sign deals and then do the work to promote the NIL [name, image, and likeness] content” strictly while outside the United States.

Two years after the NCAA rule change, the Biden administration still hasn’t offered definitive guidance that would allow foreign college athletes to make money like their native-born peers. On a more basic level, this leaves foreign athletes wondering whether certain activities might be violations of their student visa terms.

According to ESPN, just one of the eight teams that played in the men’s and women’s Final Fours didn’t have at least one international student player. UConn has four. Per the NCAA, “roughly one out of every eight athletes across all Division I sports is from a foreign country,” leaving a gaping hole in the system that allows student-athletes to sign often lucrative sponsorship deals. Visa term violations can be dire—potentially as severe as deportation.

“Overall, it is a strange system for foreign national athletes that seems to mimic the major issue that NIL deals were created to push back against in the first place,” Hollis explains. “Student athletes are constantly taking part in activities that would in another context be considered work.” The Department of Homeland Security “does not seem to have a problem with foreign student athletes having their photos taken to promote the university that they attend or for purposes of advertising a major televised tournament,” he notes.

“The path to changing the rules for foreign student athletes is a hard one,” Hollis contends, but he suggests a few policy changes that could level the playing field between foreign- and native-born college players. The government could issue guidance “telling schools and student athletes exactly what does and does not count as work for purposes of NIL deals,” since the F-1 student visa, created in 1952, generally doesn’t authorize work. “A better solution would be having Congress amend the law to add a special category for foreign student athletes that specifically authorizes them to engage in NIL deals.”

“Until one of these happens, foreign student athletes will have to continue to contort themselves around a law that was created in a different historical moment,” says Hollis, “and will continue to be at a significant disadvantage to their U.S. athlete peers.”

The post Foreign College Basketball Stars Are Missing Out on Endorsement Money Due to Visa Rules appeared first on Reason.com.

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Apocalypse Tomorrow: Trump’s Looming Indictment


Man holds newspaper in front of Trump Tower

In this week’s The Reason Roundtable, editors Matt Welch, Katherine Mangu-Ward, Nick Gillespie, and Peter Suderman anticipate the historic arraignment on criminal charges of former President Donald Trump this week in New York City, before turning back to the unfolding discussion surrounding potential risks posed by artificial intelligence.

1:07: Former President Donald Trump awaits arraignment on criminal charges.

19:16: Do A.I. systems pose serious risks to humanity and society?

38:48: Weekly Listener Question

43:45: Terrible things about the proposed RESTRICT Act

49:59: This week’s cultural recommendations

Mentioned in this podcast:

The Shaky New York Case Against Trump Reeks of Desperation To Punish a Reviled Political Opponent,” by Jacob Sullum

Trump Indictment Could Be the Jolt His Flailing 2024 Campaign Needs,” by Elizabeth Nolan Brown

Is the Manhattan D.A. Upholding or Flouting the Rule of Law by Prosecuting Trump?” by Jacob Sullum

Transforming Stormy Daniels’ Hush Payment Into a Felony Would Reinforce Trump’s ‘Witch Hunt’ Complaint,” by Jacob Sullum

Elon Musk, Andrew Yang, and Steve Wozniak Propose an A.I. ‘Pause.’ It’s a Bad Idea and Won’t Work Anyway.” by Ronald Bailey

Debate: Artificial Intelligence Should Be Regulated,” by Ronald Bailey and Robin Hanson

What Are the Bots Doing to Art?” by Crispin Sartwell

Introducing AI Progress,” by Matthew Mittelsteadt and Brent Skorup

Mark P. Mills: Get Ready for the Roaring 2020s!” by Nick Gillespie

Rand Paul Is Right: Banning TikTok Would Be Idiotic,” by Robby Soave and John Osterhoudt

Could the RESTRICT Act Criminalize the Use of VPNs?” by Elizabeth Nolan Brown

Nobel Prize–Winning Economist: Democrats Are Committed ‘To Spending Other People’s Money,’” by Nick Gillespie and Justin Zuckerman

Send your questions to roundtable@reason.com. Be sure to include your social media handle and the correct pronunciation of your name.

Today’s sponsor:

  • Andrew Heaton is one of the funny people in Reason TV videos, like “Star Trek: The Libertarian Edition,” or “Star Wars Libertarian Special.” So it won’t surprise you to discover he hosts a science fiction podcast: Alienating the Audience. Alienating the Audience does deep dives into science fiction, like Robert Heinlein’s free love libertarianism, the economics of Dune, Kurt Vonnegut and the warfare state, and how Star Wars: Andor loves public choice theory. Guests on the show have included Peter Boghossian on what first contact with aliens would be like, Jonathan Last from The Bulwark defending the Empire in Star Wars, Tim Sandefur of Goldwater Institute on Star Trek’s Cold War hot takes, and even Katherine Mangu-Ward has joined to discuss the work of Dan Simmons. If you don’t like science fiction, do not listen to Alienating the Audience, as there’s an excellent chance your virginity will grow back. But if you DO like science fiction, and with a dollop of politics and economics, served fresh by a mid-level comedian, then check out Alienating the Audience wherever you get your podcasts.

Audio production by Ian Keyser

Assistant production by Hunt Beaty

Music: “Angeline,” by The Brothers Steve

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D.C.’s Test Scores and Absenteeism Rates Are Getting Worse, so Why Are More Students Graduating?


Empty desks in a classroom

The high school graduation rate in Washington, D.C., is climbing. However, student school performance seems to be falling dramatically. While more and more seniors graduate high school, test scores are down and absenteeism is up.

According to a recent report from the D.C. Policy Center, graduation rates at D.C. public schools and public charter schools have been steadily rising since the 2018–19 school year. In 2022, 75 percent of all students graduated high school in four years, up seven percentage points from 2019. However, this progress is not reflected in measurements tracking students’ academic achievement. On state assessments, the percentage of high school students that “met” or “exceeded” expectations in the math test declined from 18.4 percent in 2019 to just 11 percent in 2022. English scores stayed the same. Absenteeism is also up, with the percentage of students absent for more than 10 percent of the school year reaching a staggering 48 percent in the 2021–22 academic year, increasing from 29 percent three years prior.

Based on academic achievement and school attendance data, fewer D.C. public school students should be graduating high school. Yet the steady rise in graduation rates remains. Why, then, are so many more kids getting high school diplomas?

The answer isn’t exactly clear. One possible reason is increasing grade inflation, meaning that students who haven’t actually learned course material are getting passing grades anyway. There’s an “increase in policy that we’re seeing to not fail students,” Max Eden, a research fellow at the American Enterprise Institute, tells Reason. “You know, 50 percent as the lowest grade kind of policy, which is being picked up in more and more especially urban schools across the country,”

Eden also suggests that D.C. could also be failing to follow its own policies around attendance requirements for graduation. It wouldn’t be the first time District of Columbia Public Schools (DCPS) have made this blunder. In 2018, an audit of DCPS found that, despite the district’s sharp rise in graduation rates, the increase “was entirely attributable to schools systematically not enforcing their own policies,” says Eden. “And it’s not as though in the wake of these revelations … D.C. really clamped down and you saw the graduation rates plummet. They kind of didn’t do anything to change their policy because they could not stand to have their graduation rates decrease further.”

Unfortunately, graduating kids without necessary academic skills doesn’t lead to better outcomes. Just because more DCPS students are graduating high school doesn’t mean more of them are leaving with important skills.

Plus, it seems fewer students graduate with the skills they need for college. As the D.C. Policy Center report notes, while the graduation rate is increasing, the rate of those who actually graduate college is declining dramatically, from 37 percent to 22 percent of those who enroll in postsecondary education.

When “graduation becomes close to a virtual guarantee, it also becomes pretty functionally meaningless,” says Eden. “So you end up teaching kids a lot more poorly, both academically and, frankly, morally.”

The post D.C.'s Test Scores and Absenteeism Rates Are Getting Worse, so Why Are More Students Graduating? appeared first on Reason.com.

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Train Full Of Beer Derails In Montana

Train Full Of Beer Derails In Montana

Keeping track of what appears to be almost weekly freight train derailments across the country is becoming a challenging task. A notable derailment occurred in Paradise, Montana, on Sunday, where a train carrying a load of beer went off the rails.

Plains-Paradise Rural Fire District said 25 cars derailed at around 0900 local time near Paradise. 

The fire department said there was “no current threat to public safety and no hazardous materials being released.” 

Images from the scene reveal some of the boxcars were full of Coors Light and Blue Moon beer products.

AP shared a picture of fishermen taking beer from the incident area.

“The cause of the derailment is currently under investigation with MRL personnel and first responders,” Montana Rail Link said in a statement. 

It comes after a series of train derailments in the US, including a Minnesota town that was evacuated last Thursday after a Burlington Northern Santa Fe train jumped the tracks and tankers carrying ethanol exploded. Meanwhile, cleanup from the Norfolk Southern Railway train derailment in Ohio in February is ongoing. 

What recently caught our attention is the increasing number of news stories on train derailments. Bloomberg data reveals that reports on derailments have reached an all-time high. 

Last year, mysterious fires plagued food processing plants. Now, it seems a series of train derailments is the current issue.

Tyler Durden
Mon, 04/03/2023 – 16:40

via ZeroHedge News https://ift.tt/ApCfNT8 Tyler Durden

The Everything Collapse

The Everything Collapse

Authored by Egon von Greyerz via GoldSwitzerland.com,

Sadly, gold is now on its way to heights which are unthinkable for most people.

To all the people who have asked me over the years why gold doesn’t go up, I have replied:

“Don’t wish for gold to go up substantially for when it does, your quality of life will deteriorate remarkably.”

And we are now at the point in the world when this is likely to happen.

Let me be clear, now is the time to protect whatever assets you have in order to avoid the total asset destruction that is coming next. More about this later in this article.

THE FINANCIAL SYSTEM WILL NOT SURVIVE

I came to the conclusion early in this century that a sick financial system was not going to survive the infestation of vermin in the form of debt that started just over 50 years ago.

Nixon’s closing of the gold window in 1971 was the signal that this currency system was going to end like all currency systems in history. And for the ones who haven’t studied the history of money, let me tell you that NO FIAT MONEY HAS EVER SURVIVED IN HISTORY IN ITS ORIGINAL FORM. So with all money going to ZERO, it has never been a question of if but only of when the dollar based currency system would die.

Dalai Lama said:

“If there is a solution to a problem, there is no need to worry.
And if there is no solution, there is no need to worry”

But in this case my view is THAT WE REALLY NEED TO WORRY.

So sadly, his wisdom doesn’t apply to the global problem that the world is now facing.

IS THE UKRAINE WAR COMING TO AN END

In early January this year I wrote an article called “OMINOUS MILITARY & FINANCIAL NUCLEAR THREATS COULD ERUPT IN 2023.”

I have covered the threat of a major war in many articles in the last 12 months for example “Will nuclear war, debt collapse or energy depletion finish the world

Although it is too early to be really optimistic, it now looks like my prediction that Russia will never lose this war is getting closer.

Ukraine is making the Battle of Bakhmut into their Stalingrad last stand (WWII 1943).

Ukraine has committed the majority of their remaining forces to winning this battle against Russia. If they lose in Bakhmut, even Zelensky believes that this could be the end for Ukraine.

Here is the Associated Press (AP) article in which Zelensky is hinting that Ukraine could lose this war –

“Ukraine’s Zelensky: Any Russian victory could be perilous.”

If Bakhmut fell to Russian forces, Putin would “sell this victory to the West, to his society, to China to Iran” Zelensky said in the AP interview.
“If he will feel some blood – smell that we are weak – he will push, push, push!”

Scott Ritter, the former intelligence officer and UN weapons’ inspector just gave this interview in which he believes that Ukraine is on the point of losing the war:

Scott Ritter – It is over!

THE END OF US HEGEMONY

At the beginning of the Ukraine conflict I and some others made the analogy with the Cuban Missile Crisis in 1962 (which I remember well) when Kennedy gave an ultimatum to Khrushchev to withdraw the nuclear missiles pointing towards the US or face war.

In the same way as with Cuba, Russia was never going to accept Ukraine becoming a Nato country. But sadly the US Neocons have seen this conflict as the last chance to save the US military, political and economic hegemony from total collapse. Defeating Russia was the last stand for the US. But it now looks like they will fail which seals the fate of the US empire.

The US neocons forced a much too willing Europe to not only agree to the sanctions against Russia but also make direct contributions to the war both with money and equipment.

This fatal mistake by Europe and especially Germany is totally crushing the European economy. But what the US neocons never understood is that the US sanctions would affect the whole world and in particular the debt infested US and the West.

At the end of an economic era, unexpected events take place which will seal the fate of a crumbling empire.

THE END OF THE CENTRAL BANKER

The script for the first 22+ years of the 2000s couldn’t be more perfect as the final glutinous feast of Gargantua The Central Banker. (Gargantua – book by Rabelais 1543)

Central bankers have been the principal creators of the current crisis which had its beginnings over 100 years ago.

Significant events in the 2000s created by fallacious Central Bank policies:

  • 2000-2 Market collapse: Tech stocks down 80%

  • 2006-8 Subprime banking crisis: Dow down 54%, massive money printing

  • 2009-21 Stocks & asset markets exploding: Dow up 6X, Nasdaq up 16X

  • 2006-20 Manipulation of rates: US 10yr treasury down from 5.4% to 0.5%

  • 2000-23 US Debt explosion: Up 3.5X from $27t in 2000 to $95t in 2023

  • 2000-23 Global debt explosion: Up 3X from $100t in 2000 to $300t in 2023

  • 2020-23 Real inflation US EU: Up from 0% in 2020 to 10%+ in 2023

The extreme moves and volatility exemplified in the table above has nothing to do with free markets.

They are the manifest consequences of shameless manipulation of markets and market conditions by Central Banks. Such extreme moves could never happen if markets followed nature’s laws and the laws of supply and demand.

For example, in an unmanipulated market it would be totally impossible for credit to expand exponentially and interest rates to remain at zero. The basic principle of supply and demand would force the cost of money up when demand for credit expands. And if there was no demand, the cost of money would obviously come down to the level where demand resumes.

If markets were allowed to follow the natural rhythm of nature, they would be self-correcting without extreme tops and bottoms.

This is so basic that a 7 year old would understand it. But the Central Bankers choose to ignore it.

The obvious consequence of markets flowing naturally without intervention would mean that we could get rid of Central Bankers. How wonderful! No Central Banks, No Manipulation and No Extremes in the economy or markets.

Sadly, such simple solutions are the exception in history with greed and power driving man rather than reason and logic.

The bankers clearly knew what they needed to do when they met on Jekyll Island in 1910 in order to control the US and global monetary system. At this meeting they schemed to create the Fed in 1913 and followed the axiom of Mayer Amschel Rothschild a German banker in the late 1700s: “Let me issue and control a nation’s money and I care not who writes the laws.”

From the Amschel Rothschild to Jekyll island to Nixon closing the gold window in 1971, the Central bankers and bankers have successfully taken control of issuing exponentially larger amounts of money and debt for their own benefit as well as for a very small elite who could take advantage.

Having created a structure that was above the law as Amschel said, they have so far been in total control of their own destiny with governments being dictated to by the central bankers and bankers. Thus in 2008, the Fed and a number of virtually bankrupt banks, including JP Morgan, Goldman, Morgan Stanley, Bank of America, Barclays etc dictated their own rescue terms to the US and other governments.

But we must remember that 2006-9 was just a rehearsal. The finale is starting now. The debt which has built up has now reached levels which means the financial system is now too big to survive.

Three US banks and one Swiss went under 2 weeks ago although two of the four were rescued temporarily at a high cost. The Swiss government could not afford to let Credit Suisse go under and is supporting the UBS takeover of the Credit Suisse at a potential extraordinary cost of CHF 209 billion.

Central banks are on standby to stop the next bank run. Many expected Deutsche Bank to be next. Governments will stop major banks from going under for as long as they can, to stop global contagion. But they will of course fail.

The FDIC (Federal Deposit Insurance Corporation) currently has a capital of $128 billion dollars to support a total of $18 trillion deposits. So with 0.7% cover, it is guaranteed that the US government will soon need to step in as the next lot of US of banks fail. Same in Europe where the most EU banks and the ECB are in a terrible shape.

Total central bank assets are $25trillion which is less than 10% of global debt before derivatives. Default rates in coming years are likely to exceed 50% which means much more money printing to come.

ALL ASSETS ARE PRICED AT THE MARGIN – PROTECT YOURSELVES

As the current asset bubbles are coming to an end, the exit doors will be totally blocked by panicking sellers.

All assets are priced at the margin and even more so since the current asset bubbles have been created by the most gigantic debt bonanza. To take an extreme example, if there is one seller and no buyer in the housing market, the price of all houses will go to zero. The same is true for the stock market.

But as investors run for the exit, most will not get through since there will at some point be no buyers at any price.

This is how the price of stocks, bonds or property can go down by 75% to 100% in real terms. Some market observers say that this has never happened in history so it won’t happen today either. Yes, of course I can be wrong, but what we must remember is that nor have we ever in history had a global debt and asset bubble of this magnitude. So we are in unchartered waters and conventional wisdom doesn’t apply and is just conventional without any wisdom.

In any case, investors shouldn’t worry how much their assets could decline. Instead they should worry about protecting themselves against the risk of this happening.

Firstly investors should go as liquid as possible. Secondly debts must be repaid. Nobody will want the bank to take their assets at a bargain price.

Short term government bonds could offer adequate protection. But medium and long term, governments will at best destroy the value of the currency and at worst also default.

Tangible assets are undervalued and a good investment to own.

Physical gold and silver held outside the banking system is the ultimate protection just as in any crisis.

It is absolutely critical to buy gold and silver now before investors panic into these metals. There is very little gold and silver available to buy. Currently all production is absorbed and any increase in demand cannot be met by increased supply but only by much higher prices.

But remember that gold and silver are also priced at the margin, so as demand increases, we could reach a situation when there is no silver or gold available at any price.

So my very strong advice is not to wait for the herd since you then are likely to be left with no silver or gold and no protection.
But in the end, as I have stressed, the $2 quadrillion debt and derivative liabilities, cannot be saved.

In the next few years the financial system will crash under its own weight in spite of and also due to the coming biggest money printing avalanche that the world has ever experienced.

Tyler Durden
Mon, 04/03/2023 – 16:20

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Ugly Data & Oil Shock: Stagflation Threat Sparks Bond & Gold Gains; Banks & The Buck Dumped

Ugly Data & Oil Shock: Stagflation Threat Sparks Bond & Gold Gains; Banks & The Buck Dumped

OPEC+ pissed in Powell’s victory-lap-over-inflation punchbowl overnight, jolting stocks lower. Ugly Manufacturing ISM data early on sparked the ubiquitous ‘bbrrrrrr’ trade with gold and stocks bid, dollar and bond yields tumbling. The St.Louis Fed’s Jim Bullard raised the specter of OPEC+’s production cut making The Fed’s job harder (i.e. forcing them to be more hawkish than they would like to be) which then reversed some of the equity gains (especially in big-tech and small caps – finance-heavy). Finally, the Atlanta Fed GDPNow model estimate for Q1 2023 real GDP growth is 1.7% on April 3, down from 2.5% on March 31.

Oil prices shot 6-7% higher on the OPEC+ news, with WTI back above $80, its highest since Jan 27th (breaking above its 50- and 100-DMA). This was WTI’s best day since 4/12/22…

Source: Bloomberg

OPEC+’s timing could not have been better (as we warned last week)…

The Dow dramatically outperformed Nasdaq (by the most since Oct 27th at its peak before the late melt-up), with mega-cap tech red and Small Caps ramped into the green late on. S&P stumbled around unch for most of the day before the late-day buying panic

Early in the day, 0DTE traders faded the opening ramp, took some profits then led the charge higher with huge positive delta flow…

HIRO Indicator | SpotGamma™

Energy stocks massively outperformed on the day. Financials were flat-ish, while Discretionary was worst…

Source: Bloomberg

Regional Banks were hit again, back below the 3/24 close (before the ‘all clear’ ramp)…

After 3 straight days of relative weakness, value stocks outperformed growth stocks to start Q2 (but we note a similar pump and dump pattern)…

Source: Bloomberg

Weaker growth (ISM) and stronger inflation (OPEC) = stagflation… and that’s not at all what Powell and his pals want to see, as May rate-hike odds rose to 65%

Source: Bloomberg

Interestingly, further out the curve you can see the impact of OPEC (hawkish) and ISM (dovish) on the market’s expectations for Fed actions…

Source: Bloomberg

Inflation expectations jumped to 5-week highs…

Source: Bloomberg

Treasury yields were all lower on the day – after quite a rollercoaster higher (OPEC+ inflation) then plunge lower (ISM weakness) – with the short-end outperforming…

Source: Bloomberg

The Dollar saw a similar velocity – ramping higher to open last night (OPEC+ hawkish) then plunging from the moment Europe opened, and accelerating after ISM weakness…

Source: Bloomberg

Cryptos were higher on the day, helped by Musk changing Twitter’s icon to DogeCoin…

Source: Bloomberg

Front-month gold futures surged back above $2,000…

Source: Bloomberg

Finally, Oil’s surge has lifted Bloomberg’s broad Commodity Index above is 6-month downtrend line, and above its 50DMA…

Source: Bloomberg

Commodities are up 6 of the last 7 days… not what Mr.Powell and Mr.Biden want to see.

Tyler Durden
Mon, 04/03/2023 – 16:00

via ZeroHedge News https://ift.tt/MqP2cuS Tyler Durden

Why OPEC’s “Best Offense Is Defense”, And The Biggest Surprise About The Output Cut Announcement

Why OPEC’s “Best Offense Is Defense”, And The Biggest Surprise About The Output Cut Announcement

With markets still abuzz over Sunday’s OPEC+ decision to cut oil output by over 1.6 million bpd, which was strategic (the political implications of Saudi Arabia bitchslapping the Biden admin just days after it effectively joined the China-Russia-India axes are unmissable even by inbred Deep State types) as well as tactical (i.e., brutalize the oil shorts, a task made easier since energy is now the second most shorted sector after banks, while CTAs are max bearish and will be forced to cover and chase oil higher from here), below we excerpt from two different perspectives on the OPEC decision, the first one from TS Lombard (it is their view that the output cut “this will deter short sellers and help oil prices settle higher – much like what December’s surprise BoJ tweak to Yield Curve Control did for the yen” but in the long run “sticky oil prices are more likely to weigh on growth than arrest the broad disinflation process already under way”), as well as a second one from JPMorgan’s chief commodity strategist Natasha Kaneva who lays out what she thinks is the “most surprising part of the announcement.”

So without further ado, here is the first take courtesy of TS Lombard’s Konstantinos Venetis who explains why OPEC’s best offense is defense.

Oil prices have jumped following the decision by a Saudi-led group of OPEC members to cut output by around one million bpd starting next month. This will add to the two million bpd reduction agreed by OPEC+ back in October, taking the total to around 3% of global supply.

The cartel is trying to put a floor under crude prices against the backdrop of rising inventories and downside risks to demand as a US recession looms. This move is also meant to send a message to speculators: the bearish skew in futures positioning had become particularly pronounced recently, which goes some way to explaining today’s strong knee-jerk price response. There is also a political angle to the timing of this announcement, coming shortly after US officials effectively ruled out new crude purchases to replenish the Strategic Petroleum Reserve in 2023, underscoring the souring of US-Saudi relations.

Near term, this will deter short sellers and help oil prices settle higher – much like what December’s surprise BoJ tweak to Yield Curve Control did for the yen. In our experience, however, as a rule the recipe for sustainable oil market turnarounds is positive demand surprises, not pre-emptive supply reductions. Just like the production cuts announced in autumn 2022, this essentially amounts to a defensive move in the hope that the world economy skirts a severe economic downturn in 2023.

Given our expectations for a US recession and limited global spillovers from China’s reopening, our sense is that at this juncture sticky oil prices are more likely to weigh on growth than arrest the broad disinflation process already under way. For bonds, this means that spikes in yields on the back of renewed inflation concerns are likely to be short-lived. For equities, firmer oil prices will (if anything) weigh on already falling earnings expectations.

For commodities overall, the glass still looks half empty: we continue to expect rangebound trading in 2023 Q2, albeit with metals’ outperformance over energy starting to erode as the Brent-to-copper ratio mean-reverts higher.

And here is an excerpt from JPM’s Natasha Kaneva laying out what is “the most surprising part of the announcement”:

A day before the OPEC+’s advisory (no policy-making) Joint Ministerial Monitoring Committee was set to meet on April 3, Saudi Arabia and other members of the OPEC+ alliance announced a 1.1 mbd oil production cut. Saudi Arabia pledged a “voluntary” 500 kbd supply reduction, in coordination with Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman (Table 1). The cuts will begin in May and last until the end of 2023. Fellow member Russia said the 500 kbd production cut it was implementing from March to June would extend until the end of 2023. Similar to OPEC’s 2 mbd cut last October, we view the current reduction in supply as a preemptive measure, assuring that surpluses that started accumulating in the global oil market since mid-2022 don’t extend into the second half of 2023 as the global economy slows following almost 400 bps of cumulative hikes since 2022.

The most surprising part of the announcement is that it was not made sooner. Since last November our global oil supply-demand balance suggested a strong policy action was needed to keep global oil surpluses in check. For example, the first iteration of the supply-demand balances behind our oil view for 2023 last November resulted in an average 1Q23 Brent price of $78/bbl (WTI at $72/bbl). We believed that the low price level would trigger two policy responses.

  • First, the US administration would step into the market to purchase 60 million barrels of oil to partially replenish SPR inventories.
  • Second, we believed that to keep the market balanced in 2023, OPEC+ alliance would need to cut its October quota by another 0.8 – 1.0 mbd, effectively slashing production by 0.4 mbd. We estimated that absent policy shift, Brent oil price would be confined to the $70-80/bbl near-term band, with a risk of significantly lower prices were the recent events in the US financial markets to cascade through the regional banking sector.

The combined impact of Sunday’s announcement is ~100 kbd (on annualized basis) less crude flowing into the market than we previously expected. Consequently, we leave our long-standing price forecast unchanged. We missed our 1Q23 price forecast by $3/bbl but still see Brent oil prices averaging $89 in 2Q23, rising to $94 in 4Q23 and exiting the year at $96.

  • Cuts are taking place two months later than our initial assumption.The timing of the policy response is paramount, and we previously assumed both the US administration and OPEC would act in the first quarter. Acting later diminishes the impact on overall balances and hence it takes longer for the price impact to take hold.
  • With the Biden administration publicly ruling out new crude purchases any time soon, OPEC+ alliance needs to do the heavy lifting to balance the market. On annualized basis, our initial assumption of 164 kbd of SPR purchases this year now stands at zero.
  • OPEC’s 1.1 mbd cut to production quotas translates to about 0. 8 mbd decline in real production, by our estimates, assuming OPEC+ sticks with current reference levels for the cuts (see our balances in the back of the note). Annualized, this equates to about 533 kbd of supply reduction, which compares to the 333 kbd cut embedded into our price forecast from last November.
  • Russia cuts are real but from a higher base than original guidance, offset by longer duration. Russia is moving ahead with its announced 500 kbd cut but from a much elevated crude output level of 10.2 mbd in February (combined Russian crude and condensate production in February was 11 mbd). This means Russia is now aiming to produce 9.7 mbd in March through December, a much shallower reduction in output than Russia previously indicated, but largely in line with our assumption of 9.6 mbd average. If realized, Russia will overcompensate by extending the cuts by six months from the original June end-date through December. The impact on our balance is about 70 kbd less production from Russia this year, annualized.

More in the full reports from JPM and TS Lombard available to pro subs.

Tyler Durden
Mon, 04/03/2023 – 15:54

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These Were The Best And Worst Performing Assets In March And Q1

These Were The Best And Worst Performing Assets In March And Q1

Q1 was a turbulent period in markets, with a surge in volatility (especially in bonds, if not so much in stocks) during March after the collapse of Silicon Valley Bank. That led to fears about broader contagion across the banking system, while the sudden implosion of Credit Suisse led to its acquisition by UBS with guarantees from the Swiss government, and further bank crisis fears. As a result, as DB’s Henry Allen writes in his quarterly performance recap, “some of the daily moves were the largest seen for decades, and the MOVE index of Treasury volatility hit levels last seen at the height of the GFC in 2008.

By the end of the quarter, the immediate volatility had subsided – in large part due to the market’s near certainty that the Fed’s rate hike cycle is effectively over – but the turmoil led to speculation about whether something was finally breaking after a rapid series of central bank rate hikes. Nevertheless, even with that market turbulence in March, Q1 as a whole saw some incredibly broad gains after the weakness of 2022, with advances for equities, credit, sovereign bonds, EM assets and crypto. The only major exception to that pattern were commodities, with oil prices losing ground in every month of Q1.

Quarter in Review – The high-level macro overview

Q1 started on a fairly positive note, with lots of good news stories in January helping markets to rebound after an awful 2022. For instance, European natural gas prices fell by -24.8% over January, which helped to allay fears about a potential recession. That was echoed among various sentiment indicators, with consumer confidence rising to its highest level in months. Meanwhile in China, the economy’s reopening continued and restrictions were eased, boosting hopes that global growth would be lifted more broadly. This brighter macro outlook meant that plenty of assets began the year very strongly. For instance, the S&P 500 (+6.3%) had its best start to a year since 2019, and Europe’s STOXX 600 (+6.8%) had its best start since 2015.

However, as we moved into February, the tone in markets became decidedly more negative. The main culprit was a series of strong US data releases and higher-than expected inflation, which led investors to ramp up the likelihood of future rate hikes. Indeed, the unemployment rate fell to a 53-year low of 3.4%. This even sparked discussion about the US economy experiencing a “no landing” scenario, where inflation stayed high and growth remained strong, requiring the Fed to take rates even higher.

This trend wasn’t just confined to the United States however. In the Euro Area, data released in February showed core inflation hitting a record high of +5.3% in January. And in Japan, headline and core CPI for January reached their highest level since 1981. This sparked a major sell-off among global bonds, with Bloomberg’s Global Aggregate Bond Index (-3.3%) seeing its worst February performance since its inception back in 1990.

By March, the persistence of inflation saw investors keep ratcheting up their expectations for central bank terminal rates. That was then validated by Fed Chair Powell, who said in his semi-annual congressional testimony that “we would be prepared to increase the pace of rate hikes”, which explicitly opened the door to 50bp moves again. Shortly afterwards on March 8, 2yr yields closed at a post-2007 high of 5.07%, and expectations of the Fed’s terminal rate stood at a new high for the cycle of 5.69%. In the meantime, the 2s10s curve closed at an inverted -109bps that day, which hadn’t been seen since 1981.

But all this changed shortly afterwards, as concern grew about the financial system after Silicon Valley Bank collapsed, raising fears about broader contagion. Credit Suisse then came under investor scrutiny and saw large deposit outflows, which culminated in a purchase by UBS that included guarantees from the Swiss government. This led to significant market turmoil, and investors speculated whether central banks might call it a day on their current hiking cycles, with yields on 2yr Treasuries seeing their largest daily decline since 1982 on March 13. Bank stocks were also hit, with the KBW Bank Index down -17.9% over Q1, despite the broader equity rally.

However, by the end of the month, there were signs that calm was returning to financial markets again. Measures of volatility like the MOVE index and the VIX index had come down substantially, and financial conditions had also eased since the height of the turmoil. And with investors far less concerned about aggressive rate hikes, sovereign bonds put in a very strong performance. In fact, for US Treasuries it was their best monthly performance in 3 years since March 2020, back when investors poured into save havens and the Fed slashed rates and restarted QE.

The big question now, the DB strategist concludes, is whether the turmoil from March proves to be an isolated incident, or whether it proves the harbinger of further shocks ahead.

Which assets saw the biggest gains in Q1?

  • Equities: Despite the market turmoil, equities overall saw solid gains over Q1. For instance, the S&P 500 (+7.5%), the STOXX 600 (+8.6%) and the Nikkei (+8.5%) all advanced on a total return basis. Tech stocks were one of the best performers on a sectoral basis, and the NASDAQ (+17.0%) had its best quarter since the Q2 2020. However, given the financial turmoil, banks were one of the weaker performers, and the KBW Bank Index fell -17.9% over Q1.
  • Credit: There was a decent start to the year in credit, with gains across all indices in USD, EUR and GBP credit. The strongest gains were seen among GBP IG non-fin (+4.3%) and US HY (+4.2%), whereas the weakest was among EUR Fin Sub (+1.1%).
  • Sovereign Bonds: US Treasuries (+3.3%) just experienced their best quarter since the pandemic turmoil of Q1 2020, back when investors poured into save havens and the Fed slashed rates to zero and restarted QE. For Euro sovereign bonds (+2.4%) it was also their best quarter since Q3 2019, and brings an end to a run of 5 consecutive quarterly declines.
  • EM Assets: Having struggled in 2022, emerging markets saw a much better start to 2023 across the major asset classes. For instance, the MSCI EM Equity Index was up +4.0%, EM Bonds were up +4.9%, whilst EM FX was up +2.0%.
  • Precious Metals: Gold (+8.0%) and silver (+0.6%) prices both advanced over Q1. Prices have been supported by growing demand for safe havens, along with the prospect that central banks might be ending their hiking cycles shortly. That came after some very strong performances in March specifically, with gold up +7.8% over the month and silver up +15.2%.
  • Crypto: After significant losses in 2022, crypto-assets rebounded in Q1. Bitcoin had its best quarterly performance in two years, with a +71.7% advance that left it at $28,395. And this was echoed among other cryptocurrencies too, with Ethereum (+51.6%) also seeing a sharp rebound, whilst Bloomberg’s Galaxy Crypto Index was up +59.7%.

Which assets saw the biggest losses in Q1?

  • Commodities (except precious metals): Commodities were the only major asset class to lose ground over Q1. For instance, Brent crude oil prices were down -7.1%, marking a third consecutive quarterly decline for the first time since 2014-15. In Europe, natural gas futures were down -37.3% over Q1, building on their -59.6% decline in Q4 last year. And plenty of agricultural commodities also fell back, including wheat (-12.6%), corn (-2.7%) and soybeans (-0.9%).

Finally, here is the visual summary of best and worst performers in March…

… and March.

Tyler Durden
Mon, 04/03/2023 – 15:30

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