Month: July 2023

The Department of Justice is pushing a federal judge to jail former Hunter Biden witness Devon Archer just days ahead of his hotly anticipated congressional testimony, court documents reveal.

On Saturday, Manhattan federal prosecutors filed a letter asking a judge to set a date for Archer to begin his one-year sentence in a fraud case which is unrelated to Hunter’s various scandals. The request came less than a week after the Second Court of Appeals upheld Archer’s 2018 conviction on two felony charges for his role in a conspiracy to defraud a Native American tribe.

Archer is scheduled to testify on Monday in front of the House Oversight Committee.

Here’s Oversight Committee Chairman James Comer on @MariaBartiromo #Sundaymorningfutures describing this letter as “obstruction of justice” and decrying “the lengths to which the Biden legal team has gone to try to intimidate our witnesses, to coordinate with the DOJ and… https://t.co/8a25tsSOAQ

— Miranda Devine (@mirandadevine) July 30, 2023

As the NY Post notes;

Archer — who is set to deliver closed-door testimony to the House Oversight Committee on Monday about Biden — had been challenging the conviction.

His attorney, Matthew Schwartz, said he would be filing a formal response to the request from the US Attorney’s Office by Wednesday — and noted that his client would still testify as planned despite allegations the DOJ letter was an intimidation tactic.

…

Back in 2009, Archer, Biden, and Christopher Heinz co-founded investment and advisory firm Rosemont Seneca Partners, which the first son used as a vehicle for many of his overseas business endeavors.

Archer is expected to testify that Hunter Biden would dial-in his father, then-Vice President Joe Biden during various meetings with overseas partners, as The Post exclusively reported.

“We are aware of speculation that the Department of Justice’s weekend request to have Mr. Archer report to prison is an attempt by the Biden administration to intimidate him in advance of his meeting with the House Oversight Committee,” said Archer’s attorney, Matthew Schwartz, adding that his client will testify as planned despite allegations that the DOJ letter was an intimidation tactic.

“To be clear, Mr. Archer does not agree with that speculation,” Schwartz added. “In any case, Mr. Archer will do what he has planned to do all along, which is to show up on Monday and to honestly answer the questions that are put to him by the Congressional investigators.”

Blatant obstruction of a congressional investigation by the DOJ but the media ignores it. pic.twitter.com/MzzGk51XEi

— RedVirgo🔥Stacy 🔥 (@stacy_redvirgo) July 30, 2023

Devon Archer has just been threatened 💥

“And I am receiving calls from the Southern District of New York from the U.S. Attorney himself.
My best friend in business Devon… has named me as a witness without telling me, in a Criminal case… and my Father without telling me.” pic.twitter.com/GL0NxV3kbo

— Joni Job (@jj_talking) July 30, 2023

This shows how scared they are – which tells you they know they are in real trouble – which tells you he is guilty…. https://t.co/BzsXf7ZXrq

— Lara Logan (@laralogan) July 30, 2023

Authored by Travis Gillmore via The Epoch Times,

With some of the most expensive rent prices in the nation, Californians pay a disproportionate share of income for housing, and with evictions now returning after nearly three years of moratoriums in certain locations, some property owners and renters are finding themselves in difficult predicaments.

More than 768,000 households are behind on rent in the Golden State, with debts totaling more than $5 billion, putting approximately 721,000 children at risk of eviction, according to the National Equity Atlas—a collaborative data and analytics tool founded by Oakland-based Policy Link and the University of Southern California Equity Research Institute.

Residents in the City of Los Angeles are facing a deadline of Aug. 1 to repay all rental debt accrued between March 2020 and September 2021, with that from October 2021 to January 31, 2023, due by February 2024.

With the first deadline imminent, Mayor Karen Bass and the city council are working to assist overburdened renters with a series of programs allowing applicants to request financial aid.

Renters and housing advocates attend a protest to cancel rent and avoid evictions amid the Coronavirus pandemic in Los Angeles on Aug. 21, 2020. (Valerie Macon/AFP via Getty Images)

Renters make up nearly half of the state’s population, with an estimated 17 million people leasing their homes out of 39.5 million residents, and rising prices are impacting their ability to make ends meet, according to Legislative analyses.

Average rent prices in California are $2,902 across all sizes and property types, according to online real estate listing company Zillow as of July 21.

Based on current listings in many areas like Orange, San Diego, Santa Clara, or San Francisco counties, homes with three bedrooms and space to accommodate a family cost at least $4,000 a month to rent.

Supply and demand are to blame, with less housing available than is needed fueling a progressive increase in rental prices, according to economists.

Rent increase limits for existing tenants were established with the passage in 2019 of Assembly Bill 1482, known as the California Tenant Protection Act, setting a 5 percent plus the cost of inflation or 10 percent, whichever is lower, as the highest adjustment allowed.

New leases are not subject to the same protection, thus further incentivizing landlords to evict slow or non-paying and at-fault tenants, according to experts.

A “For Lease” sign is posted in front of a house available for rent in Los Angeles on March 15, 2022. (Mario Tama/Getty Images)

Meanwhile, stakeholders on both sides of the rental equation have raised questions about various regulations instituted during the pandemic.

Some landlords report dealing with stressful moments when renters were not paying, and they had no legal recourse to evict for non-payment, yet their mortgage payments continued to be due monthly.

“It put all the headache on the property owner,” John Morgan, owner of multiple rental properties in Northern California, told The Epoch Times.

“I understand some tenants were unable to pay. But some of these situations we saw across the state were people taking advantage of the moratorium. They just stopped paying and used the money to fund a better lifestyle.”

The California Apartment Association has brought attention to the matter by filing lawsuits to limit renter protection mandates, lobbying lawmakers, and presenting stories of landlords that were owed significant sums—one more than $108,000—in back rent from families that simply chose to stop paying because they could not be evicted.

Now with the state COVID moratoriums rescinded in June 2022 and municipal protections slowly coming to a close—with the exception of San Francisco, which is extending its policies for some low-income residents—evictions are starting to climb.

“We don’t ever want to evict anyone, but we have bills to pay, and when they’re mounting up, it weighs on our family,” Mr. Morgan said.

“If I can’t pay the mortgage, I don’t have a house to offer for rent.”

Dozens of people hold up signs protesting against an eviction moratorium while a property owner sitting in a wheelchair continues his hunger strike in Oakland, Calif., on Feb. 26, 2023. (Xue Mingzhu/The Epoch Times)

On the other hand, renters are faced with inflationary pressures and an uncertain economic future, with layoffs occurring in high-paying technology and finance fields in the state this year, and some rural areas experiencing economic upheaval with mounting losses reported by many businesses involved in the cannabis industry.

“It’s been tougher to find a job and steady income this year than at any time since I moved here in 2009,” Maria Aguilera, a restaurant employee and mother of two living in Mendocino County, told The Epoch Times.

“Everything is changing, people have less money to spend, so we’re making less in tips. Most of my money goes to rent and utilities because housing is so expensive.”

Recognizing the issues facing renters in the state, a group of lawmakers—themselves renters—formed the Renters Caucus, a bicameral group of five Democrats dedicated to addressing rental-related housing concerns.

Chaired by Assemblyman Matt Haney (D-San Francisco), the caucus includes fellow Assemblymembers Alex Lee (D-Milpitas), Isaac Bryan (D-Culver City), Tasha Boerner (D-Carlsbad), and Sen. Aisha Wahab (D-Fremont).

Several proposals were introduced this year to strengthen renters’ protection, with one such measure, Senate Bill 567—authored by Sen. María Elena Durazo (D-Los Angeles) and designed to limit rent increases to 5 percent annually—finding itself watered down in the legislative process. With price caps now stripped from its text, the bill will next be considered by the Assembly Appropriations Committee.

Apartments in Santa Ana, Calif., on Feb. 10, 2021. (John Fredricks/The Epoch Times)

Assembly Bill 12, introduced by Mr. Haney, the renters’ caucus chair, would reduce the amount of security deposit allowable from two months’ rent for an unfurnished dwelling and three months’ for furnished to the amount equal to one month’s rent for any new residential lease.

The bill passed the Assembly and all Senate committees and will be debated on the Senate floor once legislative meetings resume in August following the summer recess.

The author notes the importance of the bill in the analysis provided to the Legislature, as high up-front costs prevent some residents from obtaining housing, citing statistics that show average deposits of $8,000 in Los Angeles and $10,000 in San Francisco. Most landlords require first and last month along with a deposit when securing a lease.

“While many families are able to afford their monthly rent, the requirement for two or three months’ rent solely for a security deposit places a financial burden on many who cannot afford it,” Mr. Haney argued in support of the bill in the Assembly’s analysis. “As a result, many families have to choose between acquiring more debt to afford their security deposit or not being approved for their much-needed housing.”

As the evidence for at least an impeachment inquiry into President Joe Biden mounts, Sen. Ted Cruz (R-TX) and co-host Ben Ferguson discussed the latest bombshell – 170 suspicious activity reports (SARs) from six banks over the past few years – on their podcast with House Oversight Chairman James Comer (R-KY).

As Townhall reports, these SARs are submitted and sent to the Treasury Department when banks “have a strong suspicion” that a crime has been committed, so as to protect the bank.

As Comer emphasized, these are submitted “very seldom.”

If someone were to have two, the chairman explained, it would be hard for that person to open up a bank account.

Submitting an SAR, Comer added, also is “inviting the regulators to come in and regulate,” which is the last thing banks want.

The 170 reports are thus quite significant. 

To paint the scene here, Comer explained that what might trigger an SAR is “a large transaction that comes out of the blue.”

BREAKING🚨 Rep. James Comer says six banks, including JP Morgan, Bank of America, and Wells Fargo, submitted over 170 suspicious activity reports to the Treasury Department regarding the Biden family, alleging their involvement in money laundering, human trafficking, and tax… pic.twitter.com/62WcXaITeM

— KanekoaTheGreat (@KanekoaTheGreat) July 27, 2023

As @KanekoaTheGreat lays out in his detailed tweet: (emphasis ours)

BREAKING🚨 Rep. James Comer says six banks, including JP Morgan, Bank of America, and Wells Fargo, submitted over 170 suspicious activity reports to the Treasury Department regarding the Biden family, alleging their involvement in money laundering, human trafficking, and tax fraud.

The American banks also raised concerns about wire transfers received by the Bidens from foreign state-owned entities, notably from the Chinese government, allegedly for the purpose of money laundering and tax evasion.

The foreign wires were found to be directed towards Biden’s business associates before being funneled through 20 shell companies associated with the Bidens. Subsequently, the funds were distributed among various Biden family members.

SARs are vital documents that financial institutions must file with the Financial Crimes Enforcement Network (FinCEN) when they suspect any cases of money laundering or fraudulent activities.

Rep. Comer highlighted one specific SAR linked to a $3 million wire from China to Biden’s business partner, Rob Walker.

This money was received in an inactive account that had maintained a $50,000 balance for ten years before the significant wire transaction from China.

Within just 24 hours of receiving the wire, Walker initiated incremental payments to several Biden shell companies, eventually disbursing funds to four different Biden family members.

Comer explained that concealing the source of money through the use of shell companies to deceive the IRS is considered money laundering and racketeering. 

He noted that if the funds were intended for legitimate purposes, they could have been wired directly to Hunter Biden, but instead, they were routed through business partners and various companies with no clear legitimate purpose.

Senator Ted Cruz asked, “So the Chinese Communist government was sending the money?”

Rep. Comer replied, “Yes.”

“If Hunter Biden was doing something legitimate for China, they could have just wired the money to Hunter Biden, but they didn’t,” he explained. 

“They sent it to a company called Robinson Walker. Then they wired it to a company called Owasco. Then they wired it to another company called Bohai. These companies don’t do anything with the money.”

Senator Cruz responded, “It’s just a bucket to pour the water in, then a bucket to pour it into somewhere else?” 

Rep Comer said, “That’s exactly what it is and it was organized. This is like organized crime.”

When the corporate media foolishly asks where is the evidence that the Bidens committed crimes?

American banks have submitted hundreds of suspicious activity reports on the Biden family, alleging their involvement in human trafficking, money laundering, and tax fraud. 

Congressional investigators have obtained bank account records and wire transfer statements on twenty shell companies owned by the Bidens, which were allegedly used for laundering illegally obtained money from China, Russia, Ukraine, Romania, and Kazakhstan as unregistered foreign agents. 

This evidence is supported by hundreds of thousands of emails, tens of thousands of text messages, photographs, audio recordings, calendar statements, and ten years of data from Hunter Biden’s laptop, which the FBI took into its possession in 2019. @MarcoPolo501c3 published a comprehensive “Report on the Biden Laptop,” documenting 459 alleged crimes involving the Biden family and their associates, including 140 business crimes, 191 sex crimes, and 128 drug crimes.

A $1,000 reward is offered for any verifiable corrections, but thus far, no crimes have been disputed.

In addition, credible IRS whistleblowers have accused the Justice Department of obstructing the Hunter Biden investigation by blocking felony charges, search warrants, and interviews while preventing any investigation of the President and his family.

Furthermore, just yesterday, a judge highlighted an unprecedented lenient deal offered by the Justice Department to Hunter Biden, which would result in no felony charges or jail time for tax fraud and lying on a gun form.

This DOJ deal would have also granted protection to the First Son from any future prosecution related to illegally obtained money from foreign nations as an unregistered foreign agent.

What is more corrosive and destructive to our nation than a politicized Justice Department that applies different legal standards depending on whether one’s last name is Trump or Biden?

With Hunter Biden’s sweetheart plea-deal now eviscerated, will the mainstream media find any of this “suspicious activity”, suspicious enough to warrant a report?

Authored by Amaka Nwaokocha via CoinTelegraph.com,

According to a July 28 court filing, the United States Department of Justice (DOJ) is seeking the revocation of Sam Bankman-Fried’s (SBF) bail, accusing him of attempting to tamper with witnesses and leaking Caroline Ellison’s diary to The New York Times.

The DOJ notes that SBF was released on a bond on Dec. 22, 2022, but later requested multiple bail modifications. According to the filing, on Jan. 15, 2023, the defendant reached out to the current general counsel of FTX US via email and the encrypted messaging application, Signal.

In the communication, SBF expressed a desire to reconnect and explore the possibility of establishing a constructive relationship.

He inquired about the potential of using each other as resources or providing mutual input on various matters.

Screenshot of the DOJ’s filing. Source: CourtListener.

SBF also allegedly used Signal for obstructive purposes, with the app’s auto-deletion feature complicating the investigation. The court expressed concerns regarding the potential risk of witness tampering in light of the defendant’s behavior.

According to John Reed Stark, former U.S. Securities and Exchange Commission’s Office of Internet Enforcement chief, Judge Lewis Kaplan has several options. He could view SBF’s actions as an effort to improperly influence witnesses and choose to either make further modifications to his bail conditions or revoke his bail entirely.

He argued that Kaplan would face a tough decision in this case. If SBF is permitted to stay free, the judge will likely reiterate his previous warnings.

The written submission comes after a July 26 hearing in a Manhattan court. U.S. Attorney Danielle Sassoon requested the revocation of SBF’s bail based on allegations he used his freedom to intimidate Ellison, his former romantic partner and colleague. Sassoon informed the judge that SBF attempted to “intimidate” Ellison and made around 100 calls to an NYT reporter.

In a July 20 complaint, the DOJ also leveled accusations against SBF for leaking Ellison’s diary, accusing him of trying to publicly discredit a government witness by sharing her personal writings with a reporter.

Authroed by Joshua Trott via RealClear Wire,

On paper, the Inflation Reduction Act was a big win for America’s infrastructure and energy future: $550 billion in federal spending, with nearly $400 billion earmarked for energy projects aimed at reducing our carbon emissions by the end of the decade. But money alone, even half a trillion dollars in federal funding, can’t solve the biggest problems facing the energy industry as it works to meet global demand today while building toward a more sustainable tomorrow. 

So much of the conversation focuses on the tired and misleading narrative about Oil & Gas villains vs. Renewable heroes. The true enemy of our sustainable energy future is the nation’s broken infrastructure policy. We could greenlight every renewable project in development today and innovate every piece of technology needed to meet our climate goals, and it wouldn’t matter because we lack the ability to utilize and store the energy we create.

Take the West Virginia pipeline finally approved after years of stalled progress. It’s getting done not because of new funding or policy innovation, but thanks to pork barrel politics in Capitol Hill’s debt ceiling negotiations. The Mountain Valley Pipeline highlights the shortcomings of our fragmented infrastructure policy, which threatens to derail even the costliest, best-executed, and most well-intentioned energy transition plans. The stakes have never been higher, and the situation is growing more precarious by the day. 

A Broken System

There’s a massive gap between our efforts to transition to sustainable energy and our ability to make it happen. Countless examples and data points bear this out. Here are just a few:

• At the end of 2022, there were over 10,000 projects in the U.S., most of them wind, solar, and batteries, waiting for permission to connect to the grid, up from 8,100 the year before, according to researchers at Lawrence Berkeley National Laboratory. In 2021, backlogged projects sitting in the queue represented 1,300 gigawatts of solar, wind, and battery projects – technically enough to supply about 80% of the country’s electricity demand. 

• Most energy storage projects never get built. A Clean Energy Group report found that “lengthening wait times and rising interconnection costs dramatically restrict the rate at which renewable generation and energy storage resources are installed.” This creates obstacles to hitting so many goals, including emissions reduction targets, renewable generation and energy storage procurement targets, and grid modernization plans.

• California’s big three utilities may need to invest up to $50 billion by 2035 to upgrade their grids in order to meet the state’s ambitious electric vehicle goals. That’s a staggering sum, what is arguably the greenest and most forward-looking state regarding renewables, and it highlights the needs every state will face when tackling energy infrastructure investment.

• The IR Act included hundreds of billions of dollars for solar panels, wind turbines, electric vehicles, and other technologies to tackle climate change. Yet if we can’t build new transmission at a faster pace, around 80% of the emissions reductions expected from that bill might not happen, according to researchers at Princeton University’s REPEAT Project.

Infrastructure isn’t top of mind for most people, but it has gotten more attention in recent years, particularly after Congress passed the massive $1 trillion infrastructure bill in 2021. The legislation included funding for everything from airport repairs to clean drinking water. It also contained the largest investment in clean energy transmission and the electric grid in U.S. history – $65 billion – to be used for new transmission lines for renewable energy, advanced transmission and distribution technologies, and research hubs for next-generation technologies, including carbon capture and clean hydrogen.

But what good are new transmission lines and next-gen technologies if they never make it past the black hole of red tape, interminable delays, supply-chain problems, and exploding costs that derail so many energy projects? 

The Interconnection Crisis

The demand for investment far outpaces the industry’s speed and capacity to build. In the past decade, only about 23% of all projects in interconnection queues have ultimately been able to plug into the grid and start operations. The total capacity of energy projects in the nation’s queues is growing fast and increased by 40% year-over-year in 2022, according to a recent report from the Berkeley Lab.  

This surge of development, largely a response to government climate resilience incentives, is good news for the energy transition – in theory. But to be able to build the infrastructure needed to meet our targets, development and construction timelines must be radically shortened.

Some more sobering statistics: The combined solar and wind capacity currently actively seeking grid interconnection roughly equals the installed capacity of the entire U.S. power plant fleet. And just 21% of projects (and 14% of capacity) seeking connection from 2000 to 2017 had been built as of the end of 2022.

Not surprisingly, bad wait times are only getting worse. The typical duration from connection request to commercial operation increased from less than two years for projects built from 2000 to 2007 to nearly four years for those built from 2018 to 2022. When companies do finally get projects reviewed, they often face another hurdle: Local grids are at capacity, so they are required to spend much more than they planned for new transmission lines and other upgrades.

The mission-critical priority is not the ability to build energy resources. It’s the infrastructure and ability to absorb and leverage those energy resources. Forget about politics, policy, and money – if you don’t have the infrastructure to support the new technology, nothing else matters.

Aging Grid, Growing Problems 

This New York Times headline from February sums up the issue well: “The U.S. Has Billions for Wind and Solar Projects. Good Luck Plugging Them In.”

Much of the U.S. grid was built in the 1960s and 1970s, and over 70% of it is currently more than a quarter-century old. But age isn’t the grid’s only problem. The U.S. power infrastructure was built to bring energy from where fossil fuels are burned to where the energy will be used. The nation’s electricity industry, meanwhile, grew via a patchwork of local utility companies whose targets were to meet local demand and maintain grid reliability.

Emissions-free energy sources like sun and wind are, by nature, intermittent. They’re abundant only in places where the sun is shining or the wind is blowing, and therefore need to be stored and transmitted to other locations where there is demand for power. 

Along with the need for new ways to transmit and store sustainable energy, the existing grid will need a major upgrade as demand for electricity rises to meet the needs of electric vehicles, heat pumps, and other replacements for conventional energy sources. A modernized and expanded grid “will be the backbone of the energy transition – and a requirement of any realistic decarbonization pathway,” according to a 2022 report by McKinsey & Company.

A recent Department of Energy draft analysis cited “a pressing need for additional electric transmission,” especially between different regions. The McKinsey study framed it more dramatically: The U.S. grid will need to expand by 60% by 2030, and doing so would require “a mind-boggling acceleration of the typical ten-year capital project timeline. It is, arguably, a century of work to do in less than a decade.” 

So far, that expedited timeline looks like a pipe dream. PJM Interconnection, the largest electrical grid operator in the U.S., has been so inundated by connection requests that last year, it announced a freeze on new applications so it can work through a backlog of thousands of interconnection requests, mostly for renewable energy.

Upgrading the grid is the single most important thing we must do to enable a successful energy transition. Without policy change, this problem won’t get solved. 

Washington: We Need Action Now 

There is no silver bullet to fix this complex set of issues. But it’s clear we need a strategic approach to infrastructure investment, and fast. Part of that investment needs to come from Washington in the form of comprehensive policy and regulatory reform, which is the single biggest blocker to private investment and healthy competition in the energy sector. 

Simply put, building energy projects is complicated. Who pays for what is even more complicated, as processes, permitting, payment, and incentivization are all misaligned. Current policy doesn’t support the buildout we need; in fact, it slows it down and exacerbates the problem. Without policy and regulatory reform, we’ll continue to pay more and more to maintain our quality of life. Even worse, we’ll never reach the finish line in the race to a sustainable energy future.

If we want such a future, we must completely retool our approach to building infrastructure. We must support the resourcing we need in ways that maintain reliability while also furthering our climate goals. We need improved processes for addressing state and federal permitting, with a focus on timely conflict resolution. And we need incentive structures that promote large-scale infrastructure investment and improve cross-sector collaboration.

Pitting Oil & Gas vs. Renewables is a false choice that ignores the perilous state of our country’s infrastructure policy and sidesteps the sizable obstacles to overhauling it. Solving these issues should galvanize everyone who cares about the transition to a sustainable energy future. It also should unite the energy industry behind a clear and urgent mission: to understand the challenges posed by our grids and infrastructure, to intelligently invest in solutions that are both profitable and deliver results for society, and to ring the bell loudly about the regulatory reform that is needed to deliver on our goals.

Saudi Arabia is now deigning to play peace-maker in Ukraine, having issued an invitation to several developing nations in order to woo them into Kiev and the West’s corner on the conflict. This has included an invite for China, India, Brazil and South Africa to come to Jeddah in early August. 

Ukrainian government representatives will reportedly also be there, but have yet to publicly confirm the plans, reported by The Wall Street Journal over the weekend. A top level White House official is also expected to represent the United States. 

However, as The Associated Press cites, “Planning for the event is being overseen by Kyiv and Russia is not invited, the official said.”

The summit, described as having as a vital focus the exploration of ways to achieve peace, is scheduled for Aug.5 and 6, and is to include representatives from some 30 countries total. The initial reporting stated the hosts hope to frame the basis for future peace negotiations with Russia toward Ukraine’s favor.

And once again, fence-sitting China appears to be in the diplomatic crosshairs. “Western diplomats said that Saudi Arabia was picked to host the second round of talks partly in hopes of persuading China, which has maintained close ties to Moscow, to participate,” wrote WSJ on Saturday.

“Riyadh and Beijing maintain close ties. Earlier this year, China helped negotiate a recent thaw between Saudi Arabia and its regional foe, Iran, months after the Saudis hosted Chinese President Xi Jinping at an Arab summit,” the publication noted. 

Of course, there’s significant and dark irony in Saudi Arabia’s ‘bone saw’ prince playing host to a summit supposedly all about achieving ‘peace’.

His relations with Washington and the West have been strained since 2018, but also after not cooperating with the US on energy, as months ago Riyadh defiantly cut oil production and thereby raised prices.

Meanwhile, in NATO-land…

Andrew Bacevich: “Kyiv’s fate has always been an afterthought. The real goal is reinvigorating NATO and, by extension, US primacy.” https://t.co/ejBQV1tlUR

— Sophia (@les_politiques) July 29, 2023

As for peace plans, President Putin has recently reiterated in public comments that he always stands ready to negotiate in good faith, but both side continue to blame the other for thwarting any hope for ceasefire. 

By Peter Tchir of Academy Securities

Central Banks are Truly Data Dependent

There are a few things that I knew about the military before I joined Academy Securities:

• Never fight a land war in Asia. Whether it was Montgomery, Eisenhower, or MacArthur who said it first, it was made famous by The Princess Bride.
• Don’t fight a war on two fronts. While this seems relatively obvious (unless you have overwhelming equipment, troops, morale, and logistics), the blunder has been made repeatedly.

While having nothing to do with war, I’ve found that over time (as a contrarian):

• Don’t fight consensus in December and August. Of the two, December is the most obvious to me. Whatever you think about the consensus always being wrong, consensus seems to be able to handle December remarkably well. August comes in a close second. There are plenty of reasons why this could be true (senior decision makers on vacation being high on the list) and I am reluctant to fight consensus in August.

We will explore this topic (briefly), but if it isn’t your cup of tea or if you want to really focus on the current geopolitical landscape, please read this month’s Around the World where the Geopolitical Intelligence Group provides their latest insights on:

• Russia and Ukraine.
• Taiwan presidential candidate’s trip to the U.S.
• Heightening tensions with North Korea.
• Sending forces to the Gulf to deter Iran.

Fighting Consensus

Academy had a busy media week where we got to discuss our market outlook for the coming weeks.

On Bloomberg TV they distilled our view to the simple headline – Commercial Real Estate to Squeeze Higher. The full interview starts at the 7:40 mark and talks about credit and central banks in addition to our broader market outlook.

Our view that high yield will continue to surprise to the upside was articulated in this piece. On this topic we have been fighting consensus because too many people are bearish. Also, we try to point out how expensive it is to short credit. We almost dragged out some examples showing how easy it is to conflate charts that show credit spreads widening and making money by being short. The historical spread charts tend to make it look easier to make money being short credit than it really is. Of note, the cost of carry, rolling down the curve, etc. are all “kind of” boring, but real when trying to time “credit crashes”. The BBB tranches of ABX CDS Indices were an incredibly unique opportunity (small spreads and 0 recoveries when they went).

This article captured some of the “don’t fight consensus” view that we currently have. It highlights both the enthusiasm and many of the risks/dangers facing the market. I wholeheartedly agree with the risks (especially with jobs at the forefront), but I’m not willing to fight it for now. Basically, the views put forth in Ch-ch-ch-ch-Changes seem even more relevant today than they did last weekend (when I also thought that they were quite relevant).

This brings me to another central theme.

Central Banks are Truly Data Dependent

We wrote Central Banks Taking a Backseat on Thursday morning and thestreet.com picked up on it. It is something that we repeated in other reports, but the main theme is:

• Central Banks are TRULY DATA DEPENDENT at the moment.
   
  • Not “data dependent” in a way that really means that “any sniff of strong data and we will hike”, but truly data dependent.
  • They will be weighing all sorts of data. From jobs, to inflation, to retail sales, to housing, to bank lending, to financial conditions, and measuring them all against each other. It will take real strength or extreme weakness across a variety of data for the Fed (or ECB) to act. No single data point means that much right now.
  • They will be looking for trends. One exceptionally high print (or low print) will be largely ignored. They want to think about where the data is heading. They might even, at least in private, use the word “anomaly” in regard to individual data releases. That is very different than their view over the past year where anything hinting at inflation was taken as “gospel truth” (while deflationary indicators could be ignored).
  • They have a high hurdle to hike and an incredibly high hurdle to cut in the coming months. That should reduce volatility in the rates market, which is supportive for risk assets.

The BOJ almost upset the apple cart as we got to discuss on Asia Daybreak (12:35 mark) on Thursday evening. Thursday’s sell-off seemed overdone as chatter circulated that the Bank of Japan would ease back on bond purchases and target higher yields across the curve. Yes, higher Japanese bond yields should put pressure on global bond yields (some Japanese buyers who bought foreign denominated bonds and hedged out the FX risk will just buy yen denominated bonds, but that seems like a relatively minor change in the grand scheme of things). If anything, Thursday’s sell-off gave bears a chance to reset shorts, which if I’m correct, will help fuel the next legs of this rally.

Bottom Line

I cannot say that I like valuations, that consensus hasn’t turned bullish, or that recession risks are being too readily dismissed. However, I can say that right now doesn’t seem to be the time to fight it.

Market resiliency will force the last bits of money on the sidelines into the markets (and I think that many will chase the laggards more than the Magnificent Seven).

Look for rates volatility to decline and 2s vs 10s to become less inverted (mostly through 2-years rallying).

Credit should grind tighter. I want out of that trade. It has been a good one, but I think that August could see another leg tighter given a lack of supply, too many bears, and lower volatility across asset classes.

Sticking with long the laggards and a marginally overall bullish bias on equities.

Stay cool, hydrate, and wear sunscreen (a fun graduation speech/song).