Month: August 2023

Earlier this week, we wrote that the bursting of the AirBnB bubble will also pop the broader housing bubble, which has shown remarkable resilience in the face of the highest interest rates since Volcker, largely the result of a staggering divergence between effective mortgage rates (since almost everyone refinanced into a 30Y mortgage when rates were at record lows a few years back and is locked into a nice, low rate for a long, long time… or until they sell) and current 30Y mortgages, which at 7.5% nobody can afford.

So back to the coming AirBnB fiasco, today the real estate experts at RedFin wrote that investor home purchases fell 45% from a year earlier in the second quarter, outpacing the 31% drop in overall home sales. That’s the biggest decline since 2008 with the exception of the quarter before, when they dropped 48%.

The decline comes as this year’s relatively cool housing and rental markets makes investing in homes less attractive than it was during the pandemic-driven homebuying frenzy of 2021 and early 2022, when record numbers of AirBnB were purchased as hotel and lodging surrogates (Redfin defines an investor as any institution or business that purchases residential real estate).

The drop in purchases has brought the total number of homes bought by investors below pre-pandemic levels, which is a major concern for a market where investors remained the last remaining support pillar now that most average Americans seeking to buy their first home are simply unable to afford it and are stuck renting indefinitely.

Real estate investors bought roughly 50,000 U.S. homes in the second quarter, the fewest of any second quarter in seven years, with the exception of the start of the pandemic.

As Redfin notes, the plunge marks a retreat from a boom in investor activity during the pandemic, which was driven by record-low mortgage rates and huge homebuying and rental demand, creating opportunities for investors to make a lot of money.

“Offers from hedge funds have dried up; I haven’t received an offer from one in a long time, except unrealistically low offers,” said Las Vegas Redfin Premier agent Shay Stein. “From mid-2020 until early 2022 when interest rates started going up, hedge funds bought up a ton of properties and immediately turned them into rentals, pricing out local buyers. Now a big portion of our homes are owned by investors, but they’re not adding to their portfolios.”

In dollar terms, the drop in investor purchases is almost as big. Investors bought a total of $36.4 billion worth of homes in the second quarter, down 42% from a year earlier. That’s still above pre-pandemic levels, but dropping closer to it: Investors bought a total of $34 billion in the second quarter of 2018, and a total of $31.9 billion in the second quarter of 2019. The typical home purchased by investors in the second quarter cost $470,120, comparable with the $467,885 median price a year earlier. 

In terms of market share,  investors bought 15.6% of homes that were sold in the U.S. during the second quarter, down from 19.7% a year earlier and a record high of 20.4% in the beginning of 2022.

And while investors’ market share is still above pre-pandemic levels (15.6% compared with roughly 14% in the second quarters of both 2018 and 2019), real estate investors are steadily pulling back. Their market share has dropped or remained flat every quarter since it peaked at the start of 2022.

The outsized drop in purchases by investors helps explain why their market share is coming down: Investors backed off from the housing market faster than individual homebuyers in the second quarter. 

Stubbornly high home prices and mortgage rates, limited inventory and widespread economic uncertainty have dampened housing demand and suppressed overall home sales. Those factors are an even bigger deterrent for investors, because they’re in it purely for the potential to make money by flipping homes or renting them out. When housing demand is down, investors are less motivated. There’s always at least some demand from individual buyers who need to move, but the same isn’t true for investors. 

Additionally, investors themselves were deterred by high home prices and high interest rates. Roughly 7 of every 10 (71%) investor purchases were made in cash in the second quarter–down from 75% a year earlier–but they’re still impacted by high interest rates because they often use other types of loans to cover expenses. 

“Moving forward, the investors who do come back may be more focused on scooping up rental properties than flipping homes,” said Redfin Senior Economist Sheharyar Bokhari. “All signs point to the rental market remaining relatively strong. Home prices and mortgage rates are high enough to motivate would-be first-time homebuyers to continue renting. The typical U.S. asking rent remains quite high, just $16 shy of its all-time high, so investors who are landlords stand to earn money. Investor purchases of rental properties could be limited by some of them building new properties to rent out, though.” 

“Home flippers may be slower to come back,” Bokhari continued. “That’s mainly because mortgage rates are unlikely to decline significantly in the short term, which will keep homebuying demand relatively low and discourage flippers. Plus, investors have lower-risk places to park their money right now than real estate, with high yields in the bond market.” 

Even if investors’ market share does pick back up, their purchase volume is likely to remain low. Like other buyers, they’re limited by a severe lack of listings, with homeowners locked in by relatively low mortgage rates.

Investors’ share of new listings is falling–but those who are selling are seeing big gains

Homes owned by investors are making up a smaller share of new listings on the market. Investors owned 8% of new listings in March, down slightly from 9% a year earlier and down from a peak of 13% at the end of 2021. Investors listed 36% fewer homes than a year earlier, compared with a 24% drop in overall new listings. March is the most recent month for which this data is available.

Most investors who are still flipping homes are making money. The typical home flipper who sold a home in June  sold for 61% ($188,448) more than their initial purchase price. Though that’s a substantial gain, it’s down from a 69% ($199,946) premium a year earlier. 

Just 3% of homes sold by flippers sold at a loss in June, down from a peak of 29% in September 2022 and roughly on par with 4% a year earlier. 

“Investors aren’t helping to solve the country’s severe inventory shortage or its housing affordability crisis,” Bokhari said. “Flippers are putting far fewer homes on the market than they were during the same period in 2021 or 2022, and hardly any of them are taking a loss, which would at least give individual homebuyers a somewhat good deal. And the steady decline in investor purchases means they aren’t likely to replenish the housing market with newly renovated homes anytime soon.” 

In this section, “ flipper” refers to an investor who sold a home within nine months of buying it. Additionally, flippers selling at a higher price than they bought doesn’t necessarily equal profit because it doesn’t take into account the money they spent renovating it. 

Investors most commonly buy low-priced homes

Investors bought 23% of low-priced homes that sold in the second quarter, down from 25% a year earlier but still much higher than investors’ market share for more expensive homes. They bought 11% of mid-priced homes, down from 19% a year earlier, and 14% of high-priced homes, down from 16% a year earlier.

Investors are attracted to low-priced homes for the same reason as other homebuyers: They cost less, which is especially attractive when home prices and interest and mortgage rates remain elevated. Investors who are buying homes to flip and re-sell are doing so in hopes that they can buy low and sell higher. Small homes–those with 1,400 square feet or less–made up 39.2% of investor purchases in the second quarter, the highest share of any second quarter on record and down just slightly from the record high of 40.6% in the first quarter of 2023.

In that same vein, low-priced homes low-priced homes make up a substantial piece  of investors’ homebuying pie. Low-priced homes made up 46% of investor purchases in the second quarter, up from 39% a year earlier. High-priced homes made up 31% of investor purchases, up from 29% a year earlier.

The uptick for the most affordable and the most expensive homes has cut into the share of mid-priced homes. Mid-priced homes made up 23% of investor purchases, down from a near-record-high of 32% a year earlier.

Single-family homes represent nearly 7 in 10 investor purchases

Single-family homes made up 68% of investor purchases in the second quarter. That’s down from 73% a year earlier, but still the lion’s share of purchases by real estate investors. The decline is partly due to a lack of single-family homes for sale.

Next come condos, which made up 20% of investor purchases, up from 16% a year earlier and the highest share since 2018. Townhouses made up 7% of purchases, followed by multi-family properties, which accounted for 5%.

But in terms of market share, investors have the highest when it comes to multi-family properties. Real estate investors purchased 31% of multi-family properties that sold in the second quarter, just shy of 32% a year earlier. Investors make up a relatively high share of multi-family purchases because those buildings are typically expensive and used as rental properties.

Investors purchased 15% of single-family homes, down from 20% a year earlier. Investors bought roughly one out of every six condos and townhouses that sold, on par with last year.

Metro-level highlights: Investor activity

The highlights below are for the second quarter of 2023, unless otherwise noted  

•  
• Metros where investor market share dropped most. Investors bought roughly 17% of homes sold in Phoenix, down from 32% a year earlier, the biggest decline of the metros in this analysis. The next-biggest drops were in Las Vegas and Atlanta, where roughly 18% of homes were bought by investors, down from about 33%. Jacksonville, FL (19%, down from 32%) and Charlotte, NC (16%, down from 29%) round out the top five. Investor market share–and investor purchases (see below)–fell most in the Sun Belt and Florida because those places had an even bigger boom in homebuying demand and investor activity than the rest of the country in 2021 and 2022. Now investors are pulling back quickly as those markets cool. Plus, several of those metros were popular among the iBuyer type of investor, many of which have now ceased operations. 
• Metros where investor market share increased most. Investor market share fell in 25 of the metros in this analysis, and rose in the other 14–all modest increases. The biggest increase was in New York, where investors bought 18% of homes sold, up from about 16% a year earlier. Next come Seattle (11%, up from about 9%), Cleveland (20%, up from about 18%), Chicago (11%, up from about 10%) and Riverside, CA (19%, up from about 18%). 
• Metros where investor purchases dropped most. Investor purchases dropped most in the same places where market share declined most. They dropped 65% year over year in Las Vegas, Jacksonville and Phoenix, the biggest declines of the metros in this analysis. They’re followed closely by Atlanta (-64%) and Charlotte, NC (-62%). 
• Metros with the smallest declines in investor purchases. Investor purchases fell in all the metros Redfin analyzed, but they had the smallest year-over-year declines in Chicago (-13%), Providence, RI (-22%), West Palm Beach, FL (-23%), Seattle (-23%) and Cleveland (-25%). 
• Metros with the highest market share. Investors had the highest market share in Miami, where they made 30% of home purchases. Next come three California metros: San Diego (22%), Anaheim, CA (21%) and San Francisco (21%). Cleveland (20%) rounds out the top five. Miami’s market share is high and holding steady (it’s down just 1 percentage point year over year) because it remains popular with both U.S. and foreign investors as its housing market has stayed relatively hot throughout this downturn. 
• Metros with the highest median sale price of investor-bought homes. The median price of homes bought by investors in both San Francisco and San Jose was $1.8 million, by far the highest of the metros in this analysis. Next come three other California metros: Anaheim ($1.2 million), Oakland ($1.1 million) and Los Angeles ($1 million). 
• Metros with the highest share of investor-owned new listings (March 2023): Miami (15%), Fort Lauderdale (12%) and Los Angeles (11%). 
• Metros with the lowest share of investor-owned new listings (March 2023): Seattle (4%) and Providence, RI (4%). 
• Metros with the highest share of investor-owned properties selling at a loss (June 2023): Detroit (14%), Phoenix (13%), San Francisco (12%) and Las Vegas (11%). 
•  Metros with the lowest share of investor-owned properties selling at a loss (June 2023): Columbus, OH (1%), San Diego (2%) and Miami (2%).

More in the full report from Redfin

By Rystad Energy, via Oilprice.com

The reinvestment rate of US shale oil producers hit its highest level in three years in the second quarter of 2023, but the recent trajectory will not last, according to Rystad Energy research. Our analysis focuses on a peer group of 18 public companies, excluding majors, that collectively accounted for about 40% of total US shale oil output in 2022.

The group’s reinvestment rate was 72% in the second quarter of the year, up from 58% in the first quarter and the highest since the 150% seen in the second quarter of 2020. The reinvestment rate is the ratio between capital expenditure and cash flow from operations (CFO).

In years gone by, reinvestment rates often exceeded 100% and served as a clear indicator of the industry’s willingness to spend freely to rapidly grow volumes, a key driver of the early stages of the shale revolution. However, in the current era of capital discipline, public shale companies prioritize shareholder value and exercise caution over a gung-ho investment strategy. As a result, the reinvestment rate only tells part of the story.

Inflation has been pushing up drilling and completion costs and contributing to a rise in capital expenditure, while muted oil prices are dampening cash flow. Capital expenditure among the peer group has risen for 10 straight quarters, reaching $9.7 billion in the second quarter of this year, up from $7.8 billion over the same period in 2022. Meanwhile, the group’s CFO fell to $13.5 billion, continuing its steady decline since the third quarter of 2022, when it peaked at $24.6 billion, around the same time that oil prices spiked on the back of Russia’s invasion of Ukraine.

However, we expect this trend to reverse by the end of 2023. As inflation eases and global oil prices tick up due to ongoing tight supply, our forecasts predict a declining reinvestment rate before we reach 2024. The vast majority of operators have spent more than 50% of their guided 2023 budgets during the first two quarters, with several having only 45% or less to invest. Earnings call guidance from management also suggests that cost deflation across the board is imminent.

At first glance, a rising reinvestment rate might point to a return to the old days of aggressive capital expenditure and rapid production growth. However, discipline is the name of the game for public shale companies now, which ensures this trend will not last. As inflationary pressures ease in the coming quarters and oil prices rebound, this spike will be a short-term anomaly instead of a shift of strategy.

The peer group has shrunk due to recent merger and acquisition activity and is likely to shrink further as consolidation continues, and the number of public upstream companies dwindles. Ranger Oil Corporation was excluded from the peer group recently following the completion of its acquisition by Baytex Energy. Chevron’s recent deal to buy PDC Energy and Permian Resources’ acquisition of Earthstone will further reduce the peer group.

As with CFO, all other metrics declined in the second quarter. Earnings before interest, tax, depreciation and amortization (EBITDA) for the peer group fell by about half from its peak of $30.7 billion a year ago, while headline net income dropped for the third consecutive quarter. Both EBITDA and net income were down in the quarter for nearly every company in the group. Free cash flow was slightly more than $4 billion, the lowest level since 2020 and a measly 25% of the $16 billion in the third quarter of 2022.

Shareholder payouts for the group also fell during the second quarter, although the ratio of returns to capital expenditure remained extremely high in the historical context for both buybacks and dividends. Dividends as a ratio to capital spending was 28% in the second quarter, down from a high of 75% in the third quarter of 2022. Still, operators issued over $2.7 billion in dividend payments in the three months. To put that value in perspective, the sector had never paid more than $1 billion in dividends in a single quarter prior to the third quarter of 2021.

Stock repurchases were also down, at $1.7 billion, equal to 17% of capital expenditure. Investors have grown used to the previously unthinkable level of cash returns being provided by operators, a centerpiece of the re-branded public shale business model. Yet, they have also been generally understanding of the market conditions that have thus far inhibited further cash generation, and thus payouts. As many operators have bound themselves to cash return pledges and issued modest guidance for organic growth, investors have largely aligned their expectations to market conditions.

Authored by Steve Watson via Summit News,

During an interview with Glenn Beck, President Trump vowed that if he is reelected he will ‘lock up’ those who are trying to politically destroy him despite being completely corrupt themselves.

Referring to Hillary Clinton, Beck noted “You said in 2016, you know, ‘lock her up.’ And then when you became president, you said, ‘We don’t do that in America.’ That’s just not the right thing to do.”

The host continued, “That’s what they’re doing. Do you regret not locking her up? And if you’re president again, will you lock people up?”

Trump responded in the affirmative and noted “Well, I’ll give you an example. Uh, the answer is you have no choice because they’re doing it to us.”

Trump continued, “I always had such great respect for the office of the president and the presidency… And I never hit Biden as hard as I could have. And then I heard he was trying to indict me and it was him that was doing it.”

“I don’t think he’s sharp enough to think about much, but he was there and he was probably the one giving the order,” Trump continued, adding “But he was, you know, hard to believe that he even thinks about that because he’s gone. But then I said, well, they’re actually trying to indict me because every one of these indictments is him, including Bragg.”

“I don’t know if you know this, he put his top person into the office of the Manhattan district attorney. They’ve been in total coordination with Fani Willis,” Trump further asserted, adding “The woman that I never met, that they accused me of rape, that’s being run by a Democrat, a Democrat operative, and paid for by the Democrat party.”

“You know, so many these days, I have a couple of other lawsuits all funded against me by the Democrats. But these are sick people. These are evil people,” Trump concluded.

Watch:

.@glennbeck: “Do you regret not locking her up, and if you’re president again will you lock people up?”@realDonaldTrump: “The answer is you have no choice because they’re doing it to us.” pic.twitter.com/L1G6zCGQtL

— TheBlaze (@theblaze) August 29, 2023

Trump’s comments come after he issued an ultimatum to Congressional Republicans Sunday, to either impeach Joe Biden or “fade into oblivion.”

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Warner Bros. Discovery has appointed Mark Thompson as the next CEO and chairman of CNN, and will take the reins just as the 2024 presidential race kicks into high gear.

On Wednesday, the company announced that Thompson, who was knighted by Jimmy Savile pal King Charles earlier this year, will replace outsted CEO Chris Licht – who oversaw the mass firings of various woke talking heads in an attempt to restore credibility to the Russiagate hoax-peddling propaganda outlet.

“There isn’t a more experienced, respected or capable executive in the news business today than Mark, and we are thrilled to have him join our team and lead CNN Worldwide into the future,” said Warner CEO David Zaslav in a Wednesday press release. Thompson will report to Zaslav, while a leadership team that has been in place since Licht’s departure will continue in their roles, Deadline reports.

He will face immediate pressing issues, including CNN’s latest attempt to venture into streaming with the pending debut of CNN Max. That portal, to be part of the WBD streaming service Max, will feature the CNN International live feed as well as new programming from CNN talent. The network has made several previous dives into the streaming arena, and will be trying to catch up to its rivals. MSNBC had a hub on Peacock’s premium tier, while Fox News has the subscription streaming service Fox Nation. All of the major broadcast networks also have their own ad-supported services.

At The New York Times, where served as president and CEO from 2012 to 2020, Thompson is credited with dramatically increasing digital subscriptions and more than doubling digital revenues, as the media outlet became one of the success stories of the transition from print. Among other things, the Times established digital brands like the podcast The Daily and features content like Wirecutter. -Deadline

Thompson, a 40-year news veteran, has had quite the interesting career path, hopping from the BBC to the Guardian, and then to the NY Times, where he served as its CEO from 2012 to 2020.

“I couldn’t be more excited about the chance to join CNN after years of watching it and competing against it with a mixture of admiration and envy. The world needs accurate trustworthy news now more than ever and we’ve never had more ways of meeting that need at home and abroad. Where others see disruption, I see opportunity. I can’t wait to roll up my sleeves and get down to work with my new colleagues to build a successful future for CNN,” Thompson said in a statement.

We can’t wait to see what he does with the Fake News Network…

By Stefan Koopman, Senior Macro Strategist at Rabobank

Jolly JOLTs

The first headline that caught my eye when I started writing today’s Global Daily was a rather perplexing one. Bank of Japan board member Naoki Tamura said that even if the Bank of Japan were to abandon negative interest rates, it shouldn’t be viewed as monetary tightening or a rate hike. His logic? Monetary conditions would stay loose regardless. This twisted reasoning left me scratching my head – if a rate hike isn’t a rate hike, then why do I bother analyzing rate hikes at all? (And why does this board member have a job?)

Wondering whether up is down and down is up in the upside-down world of central banking, I then stumbled upon a column arguing that with cooling jobs data, central bankers should move past their “fleeting and misguided infatuation” with labor market flows due to data quality issues. Traders were already known to dismiss the JOLTS figures as delayed, second-rate data. Why wait almost a month on JOLTS when the payrolls are coming out first Friday? And now central bankers are advised to look away as well? Why am I looking at numbers at all?

Yet, last time I checked, a rate hike is a rate hike, and central bankers are swearing by data-driven decisions. They have elevated relatively novel metrics like the V/U ratio as key data points, so there got to be at least a grain of importance in these numbers. So, perhaps against better judgement, let’s dive into those jolly JOLTs.

The headline was a sharp drop in vacancies to 8.83 million in July – the lowest since early 2021 and the sixth decline in seven months. The decline is accelerating. Over the past three months, 1.49 million openings have vanished, signalling rapidly falling labor demand. The labor market might be cooler still if you believe the number overstates real demand by including fake job openings. It has been reported that some companies post cheap online ads they might not really be trying to fill. That said, that V/U ratio of openings to unemployed has retreated to 1.51, down from almost 2 earlier this year.

Another measure points to normalization as well. The quits rate, which measures voluntary job leavers as a share of total employment, fell to 2.3%, the lowest since early 2021 and equaling the pre-pandemic average. The “Great Resignation”, or, better, the “Great Reshuffling”, with millions more workers quitting their jobs to take on better-paying jobs elsewhere is over. This reduced job-hopping suggests cooling wage growth in coming quarters, as employers feel less pressure to attract and retain workers.

The reduction in openings and quits is happening at the same time as layoffs remain at around all-time lows. This is a necessary ingredient for a soft landing. So that’s good news, but of course a soft landing is not secured. Given the monetary lags and a lot of policy pain still in the pipeline, there is no guarantee these labour market dynamics will suddenly stabilise at rates that are consistent with roughly 3% pay growth and 2% inflation. Indeed, in recent weeks the economic surprise index has been rolling over pretty quickly, taking place just as Wall Street went all-in on the soft landing thesis.

Coincidence or not, the Conference Board’s consumer-confidence index showed a renewed deterioration in sentiment. The headline rate fell to 106.1 in August from 114.0 in July. Crucially, the sub-index that measures how hard it is to get a job ticked up to 14.1, the highest since April 2021 – indeed, right before the Great Reshuffling – while the sub-index of those saying that jobs are plentiful fell to 40.3 from 43.7. This 26.2 point labour differential is a fresh low for this cycle and consistent with an increase in the unemployment rate. So, when consumers are telling the same tale, the JOLTS figures aren’t as flawed as some would suggest.

Shares of the world’s largest offshore wind farm developer crashed in Copenhagen trading on Wednesday after it warned: “The situation in US offshore wind is severe.” 

Orsted A/S was hit with a massive 16 billion Danish kroner ($2.3 billion) impairment on its US portfolio due to snarled supply chains, soaring interest rates, and easy money tax credits drying up — a warning sign the green energy revolution bubble is in trouble. 

CEO Mads Nipper warned investors on a conference call: “The situation in US offshore wind is severe.” 

Shares in Denmark-listed green energy giant crashed 25%, the largest daily decline since it went public in early 2016. 

Bloomberg explained more about the headwinds plaguing Orsted: 

The company’s Ocean Wind 1, Sunrise Wind, and Revolution Wind projects in the US are being hurt by supplier delays, which could lead to writedowns of up to 5 billion kroner, it said late Tuesday. High interest rates could also add another 5 billion. In addition, the developer is still in talks with federal stakeholders to qualify for additional tax credits, which haven’t progressed as expected. If unsuccessful, it could lead to impairments of as much as 6 billion kroner.

Analysts at Bernstein warned clients in a note: “Today’s announcement flags risks in the US portfolio and does not do anything to improve the downbeat investor sentiment on the stock.” 

“While the bulls could argue many of these issues related to the impairment are already known, the announcement is unlikely to bode well for an already-weakened Orsted share price,” Citigroup Inc. analyst Jenny Ping told clients. 

Analysts across the board were overwhelmingly pessimistic about the news (list courtesy of Bloomberg):

BNP Paribas Exane (cut to neutral from outperform)

• The potential write-down of DKK16b dwarfs the DKK2.5b impairment announced in January, analyst Harry Wyburd writes in a note
• Investor confidence will probably be “compromised” for some time

UBS (buy)

• Sam Arie puts the focus on which targets will remain valid in this context
• Says today’s announcement is a negative and somewhat of a surprise 
• Adds investors may be concerned in the change in tone since the June CMD where management seemed more confident in regulatory changes that would help to protect the return profile of these US projects

Jefferies (buy)

• The update is a “clear negative,” analyst Ahmed Farman (buy) writes in a note
• The impairments are equivalent to as much as ~7% of the Danish power generator’s market capitalization
• Still, Jefferies says recent share price weakness suggests the market hasn’t priced in “much value” in the company’s near- term US offshore pipeline

RBC (sector perform)

• Alexander Wheeler also calls it a clear negative, with further doubt cast on the overall outlook for US projects, which many believed had been resolved at the capital market day
• With ~$4bn invested in the US projects to date, the impairment of up to DKK 16bn ($2.4bn) represents just over half of the overall value 
• The DKK5b supplier charge is believed to be the maximum number, while on interest rates, if rates stay at current levels then the DKK 5b will be the impact booked at 9M

We ought to label Orsted’s crash as the ‘Green Panic.’ Bulls eager to ride the climate energy revolution might want to rethink their mid-term views.

Authored by Dave DeCamp via AntiWar.com,

The Biden administration is working to reach a deal with Ukraine for long-term military support to keep backing the war with Russia that would be difficult for a future president to exit, The Wall Street Journal reported on Tuesday.

The effort is part of a commitment made by G7 nations at the recent NATO summit in Vilnius to negotiate their own bilateral security deals with Ukraine. Besides the G7 nations, 18 other countries have agreed to provide long-term military support for Kyiv.

The idea of the long-term commitment is to show Russia that it can’t wait out the Biden administration. The Journal report reads:

“Western officials are looking for ways to lock in pledges of support and limit future governments’ abilities to backtrack, amid fears in European capitals that Donald Trump, if he recaptures the White House, would seek to scale back aid.”

Trump, who escalated US involvement in Ukraine during his term by taking the step to provide Javelin missiles, has said he would end the Ukraine war within “24 hours” if elected in 2024. The former president is the current frontrunner for the Republican nomination.

The Journal report acknowledged that the Biden administration could not legally bind a future president from exiting a deal with Ukraine, but Republican hawks in Congress could make it difficult.

During his time as president, Trump withdrew from the Iran nuclear deal, but the majority of Republicans in Congress supported exiting the agreement.

A US official told the Journal that one proposal being considered for Ukraine would be a memorandum of understanding (MOU), which would not require congressional approval. President Biden has previously floated the idea of an “Israel model” for Ukraine.

Public opinion in Poland and the United States is turning against the Ukraine war.

The battle cry running up to the Polish elections is Poland first!

Make peace you fools!pic.twitter.com/uFMWRlCu7M

— Douglas Macgregor (@DougAMacgregor) August 12, 2023

The US provides Israel with $3.8 billion in military aid each year under a 10-year MOU but does not provide mutual defense guarantees. The Journal report said that French officials have suggested military aid commitments for Ukraine should be over a four-year period.