Bonds, Stocks, Commodities, & Crypto Hit In ‘Hawkish’ August As Dollar Soared

Bonds, Stocks, Commodities, & Crypto Hit In ‘Hawkish’ August As Dollar Soared

August saw the landing narrative shift from ‘soft’ to ‘more aggressive’ as macro data serially disappointed as the month wore on – to make the biggest monthly decline since May 2022

Source: Bloomberg

Of course tomorrow’s payrolls print is all that matters now (until next week’s CPI), but this week saw the ‘core services’ inflation print at the second highest since 1985, while durable goods prices dropped most since 2017 MoM. GDP growth was revised lower (and is negative based on GDI). The labor market is clueless as JOLTS, ADP, Challenger-Gray, and Continuing Claims all worsened significantly while initial jobless claims fell to 2023 lows.

The last two months have seen ‘soft’ survey data improving while ‘hard’ data has disappointed…

Source: Bloomberg

Slowing growth and persistent inflation used to be the makings of a ‘stagflation’ scare and a reason to de-risk portfolios.

Source: Bloomberg

Nevertheless, despite the very recent dovish decline, rate-change expectations rose (hawkishly) on the month…

Source: Bloomberg

But the market is still pricing in 110bps of rate-cuts by the end of next year…

Source: Bloomberg

The slight hawkish bias sent the dollar higher – biggest monthly jump since Feb – but it has broadly speaking gone nowhere for the last two weeks…

Source: Bloomberg

And despite the rebound of the last few days, left stocks lower on the month (with Nasdaq suffering its worst monthly return since Dec 2022). Small Caps were the worst on the month…

Source: Bloomberg

The Energy sector was the only one to close green in August with Utilities weakest…

Source: Bloomberg

At one point in August, the S&P 500 was down almost 5% for the month as yields on 10-year US Treasuries hit 4.34% – their highest level since BEFORE the Great Financial Crisis – an event that ushered in a decade of ultra-low inflation and rates.

Spot the difference…

Source: Bloomberg

Most of the Treasury market was lower in price (higher in yield) on the month but, the short-end of the yield curve outperformed in August (2Y -2bps, 30Y +19bps)…

Source: Bloomberg

Commodities were broadly lower on the month with copper ugly, PMs weak, but energy was higher (with Nattie best and WTI managing to get green

Source: Bloomberg

It was an ugly month for cryptos with Bitcoin and Ethereum both down over 10% with an ugly day to close it out…

Source: Bloomberg

Today saw a wave of selling in Bitcoin, erasing the GBTC-SEC win spike, back down to $26k…

Source: Bloomberg

Finally, stocks remain decoupled from bank reserves at The Fed…

Source: Bloomberg

Maybe the consumer finally tapping out will bring the two back together again in September.

Tyler Durden
Thu, 08/31/2023 – 16:00

via ZeroHedge News Tyler Durden

Democrats Try To Whitewash Their Starring Role in School Closures

Joe Biden embraces American Federation of Teachers President Randi Weingarten at an AFT event in 2019 |  Bruce Cotler/ZUMAPRESS/Newscom

In what has become an annual tradition, Democrats and too many journalists are marking back-to-school season by trying to insist with a straight face that the COVID-era school closures from the autumn of 2020 all the way through 2022 were a bipartisan phenomenon, perhaps even mostly attributable to Republicans.

“Remember,” White House Press Secretary Karine Jean-Pierre said Monday, echoing an administration “fact sheet” released the same day, “when the president walked [into office], more than 50 percent of schools were shut down because of COVID, because the last administration didn’t have a plan—didn’t have a comprehensive plan—to deal with COVID and what it was doing to our economy and what it was doing to our kids. And because the president put…schools reopening and businesses reopening and making sure that people got shots in arms, made that a priority, we were able to open up the schools.”

There are several insufficiently factual assertions in that statement, beginning with the formulation that K-12 schools still shuttered as of January 20, 2021, remained so “because of COVID.” The pandemic was the stated reason, to be sure, but schoolhouse closure at that point was an active policy choice, one that had been rejected by a majority of European countries, American private schools, and the (Republican-run) states of Wyoming, Montana, Florida, Arkansas, South Dakota, Texas, and so on.

President Donald Trump may not have had what the Biden administration would characterize as a “comprehensive plan” to reopen schools (in part because K-12 education in the United States is still governed at the state and local level), but he did as of July 2020—when enough research and global experience had already demonstrated that children were overwhelmingly less likely to catch, transmit, and suffer from COVID-19—urge schools to “Get open in the fall.”

Republican governors such as Florida’s Ron DeSantis took Trump’s advice, as well as heaps of media/Democratic/teachers-union derision (some of which, defiantly, continues to this day). What did then-candidate Joe Biden say at the time?

“If we do this wrong, we will put lives at risk and set our economy and our country back,” the Democrat warned while unveiling a plan that conditioned reopening on $58 billion in additional federal aid. Also: “If you have the ability to have people wear masks and you have teachers able to be in a position where they can teach at a social distance—that, I think is one thing….But it costs a lot of money to do that. If you don’t have that capacity, I think it’s too dangerous to open the schools.”

Such fearmongering was routine for the types of teachers unions that First Lady Jill Biden belongs to. Union demonstrations against reopening in the fall of 2020, usually in Democratic-dominated cities, featured such subtle props as coffins, body bags, and gravestones; an American Federation for Teachers (AFT) anti-Trump ad that August claimed that “our kids are being used as guinea pigs.” The states that closed their schools most—Hawaii, Maryland, Washington, California, Oregon, New Jersey, Massachusetts—did not have in common levels of infection, or hospital capacity, or mortality; but rather that they each voted for Biden over Trump by double-digit margins.

DeSantis was right, Biden was wrong, and by now even NPR education reporters admit that the remote learning favored by Democratically governed jurisdictions has been a generational catastrophe, triggering a parental stampede out of free-of-charge, government-run schools.

The latest numbers from the Centers for Disease Control and Prevention (CDC) show that since the onset of the pandemic, just 1,689 of the 1,141,899 deaths attributed to COVID, or one out of every 675, were kids under the age of 18, and nearly half of those were under the kindergarten age of 5. K-12 teachers in the pre-vaccine year of 2020 had a lower COVID mortality rate than the average worker. Post-vaccination, the least likely pathway of in-school transmission has been from student to teacher. The one country in Europe that didn’t close its schools even in the spring of 2020 is the one that has had the lowest rate of excess deaths.

President-elect Biden vowed in December 2020, if conditionally, that a majority of K-12 public schools would be open within his first 100 days of office. On his first day in office, he quietly downgraded that promise to just K-8 schools. By week three, “open” was reinterpreted to mean “at least one day per week.”

There was a practical reason for such expectation-lowering. The administration and its teachers-union allies still wanted one last huge federal payout, in the form of the $1.9 trillion American Rescue Plan, which (after being passed one month later) directed $122 billion to K-12 schools (on top of the $70 billion in emergency federal school funding those schools had already received), as well as an additional $350 billion to state and local governments, which typically spend about 20 percent of their budgets on pre-collegiate education.

We need a Marshall Plan for our schools,” urged the school superintendents of New York, Los Angeles, and Chicago in a December 2020 Washington Post op-ed. (Only NYC of the three was even half-heartedly open.) The hostage-taking was not subtle; neither was the White House’s timing.

Just three days after redefining “open” as one day per week, and with the American Rescue Plan still hanging in the balance, the Biden administration unveiled its first major initiative affecting the pace of school reopening. And by “affecting,” I do mean “slowing down.” The CDC unveiled its long-awaited, allegedly science-based new guidance for how and when to fully reopen schools, and to the shock of epidemiologists, parents, and even some Democratic politicians—and in contradiction to the pre-CDC advice from new Director Rochelle Walensky—the ostensibly independent agency concluded schools should continue to enforce an average social distancing between students of 6 feet. For those many school districts, usually in heavily Democratic polities, that cut-and-pasted CDC guidelines as operational policy, that effectively meant hybrid and remote learning would extend into the indefinite future.

That was on February 12, 2021. On March 11, the American Rescue Plan was passed and signed into law, giving teachers their huge payday (very little of which, by the way, had anything to do with actual COVID-mitigation policies). Literally that same day came word that—ta-da!—the CDC was now considering revising the social-distance guideline to 3 feet after all, thus finally allowing the dwindling number of CDC-obedient districts to maybe fully reopen sometime.

“They are compromising the one enduring public health missive that we’ve gotten from the beginning of this pandemic in order to squeeze more kids into schools,” complained an ungrateful AFT President Randi Weingarten, whose paw-prints had been all over the original CDC guidance. “Even with the significant investment of American Rescue Plan money,” she wrote in a letter of protest to Walensky and Education Secretary Miguel Cardona, “districts lack the human resources and institutional planning ability to make changes like this quickly. Is this something that can be implemented in the fall, or perhaps the summer?”

You can understand why Joe Biden wants to falsely portray himself as a champion of reopening, just as you can see why—of all people—so does Randi Weingarten: Extended school closures, long after the survey data and global experience argued convincingly against them, constituted one of the most egregious public policy failures in modern American history, the aftereffects of which are still massively reshaping American kids, families, education systems, and cities. They are deservedly unpopular, with few people beyond opinion-journalism trolls still attempting to defend them.

What Biden delivered was not school reopening but a gargantuan transfer of federal tax money to local school districts right as their customer base was running away screaming, especially in cities and states that closed schools most. Occasionally, if grudgingly, reporters will note that spending several multiples of the Department of Education’s annual budget just on COVID relief to schools didn’t exactly make the schools much better ventilated. (“Among the reasons,” New York Times pandemic-beat writer Apoorva Mandavilli wrote on Sunday, include “a lack of clear federal guidance on cleaning indoor air, no senior administration official designated to oversee such a campaign, few experts to help the schools spend the funds wisely, supply chain delays for new equipment, and insufficient staff to maintain improvements that are made.”)

But sometimes the president himself will let slip what the school-relief bill was really all about: more jobs for an otherwise shrinking industry.

The American Rescue Plan, Biden said last week at a teacher-of-the-year celebration, provided “historic funding for schools to reopen safely so teachers could get back to the classroom, doing what they do best. Before the American Rescue Plan, only 46 percent of schools were open and in-person. Today, that’s now 100 percent. Plus, that law has delivered critical support for schools, including funding for after-school programs, summer programs; hiring more teachers, counselors, and school psychologists….Thanks to that law, the number of school social workers is up 48 percent. The number of school counselors is up 10 percent. The number of school nurses is up 42 percent. And since I took office, we’ve added nearly 80,000 additional public-school teachers—80,000.”

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Why Efforts to Invoke Section 3 of the 14th Amendment to Keep Donald Trump Off the Ballot May Fail

Claims that Donald Trump is inelgibile to run again for President under Section 3 of the Fourteenth Amendment have prompted extensive discussion. (See, e.g., these posts by Steve Calabresi and Josh Blackman, Judge Michael Luttig’s Twitter account, and this paper by Will Baude and Michael Paulsen.)

Over at the Election Law Blog, Professor Derek Muller explains why these claims face serious challenges and are not likely to keep Trump off the ballot. He writes:

Challenges to presidential candidates’ eligibility are not new. There were extensive challenges to Barack Obama and Ted Cruz (among others) in administrative tribunals and courts. Most of these challenges never reached the merits stage of whether the candidate was a “natural born citizen” because they failed to clear some other hurdle.

The bulk of challenges right now are doing exactly the same thing and making the same mistakes, or are on pace to do the same.

As Muller notes, there is no clear, established mechanism for keeping candidates off of the ballot. Such questions are generally controlled by state law and administered by state officials. As he notes,

If challenges are not using this specific, pre-existing mechanisms to address presidential qualifications challenges, which are contoured to each state’s specific law, the challenges are likely doomed to fail.

Election officials hold no unilateral power to exclude candidates from the ballot–and, frankly, we are fresh off a cycle where election officials purporting to take unilateral action without a statutory authorization to do so have been routinely losing challenges in mandamus.

Some have hypothesized that other candidates—Chris Christie? Asa Hutchinson?—could try and sue to keep Trump of the ballot, but there are serious obstacles here as well including (again) that much ballot access is a matter of state law, which could cause federal courts to abstain from reaching the issue.

The bottom line is that a silver bullet to prevent the re-election of Donald Trump remains hard to find. Those who oppose his re-election may have to do things the old fashioned way: Ensure their candidates get more votes.

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Court Also Strikes Down “Public Health Warning” for Porn Sites

From today’s long decision in Free Speech Coalition, Inc. v. Colmenero, by Judge David Alan Ezra (W.D. Tex.) (see here for excerpts from the part of the decision that strikes down the separate age-verification requirement):

In addition to the age verification, H.B. 1181 requires adult content sites to post a “public health warning” about the psychological dangers of pornography. In 14-point font or larger, sites must post:


Pornography is potentially biologically addictive, is proven to harm human brain development, desensitizes brain reward circuits, increases conditioned responses, and weakens brain function.


Exposure to this content is associated with low self-esteem and body image, eating disorders, impaired brain development, and other emotional and mental illnesses.


Pornography increases the demand for prostitution, child exploitation, and child pornography.

Although these warnings carry the label “Texas Health and Human Services,” it appears that the Texas of Health and Human Services Commission has not made these findings or announcements.

Finally, the law requires that websites post the number of a mental health hotline, with the following information:


The court held that these requirements were unconstitutional speech compulsions.

Although H.B. 1181 targets for-profit websites, the speech it regulates is likely non-commercial [in the sense of not just being commercial advertising -EV]…. “[S]exual expression which is indecent but not obscene is protected by the First Amendment.” At the outset, then, doctrines surrounding commercial speech disclosures likely do not apply, because the law regulates First Amendment-protected activity beyond “propos[ing] a commercial transaction.” …

{Speakers who promote the regulated subject matter must … place disclosures on [both] their advertisements and landing pages.} Defendant is on slightly stronger footing as to the requirements for advertisements, but the Court still finds them to be inextricably intertwined with non-commercial speech….

Volokh v. James (S.D.N.Y. 2023) is helpful. There, the court dealt with a requirement that certain online platforms create a mechanism to file complaints about “hateful speech” and disclose the policy for dealing with the complaints. The court found that the disclosures did not constitute commercial speech because “the policy requirement compels a social media network to speak about the range of protected speech it will allow its users to engage (or not engage) in.” The court noted that “lodestars in deciding what level of scrutiny to apply to a compelled statement must be the nature of the speech taken as a whole and the effect of the compelled statement thereon.” “Where speech is ‘inextricably intertwined with otherwise fully protected speech, it does not retain any of its potential commercial character.'” Like Volokh, the law targets protected speech based on its content outside of commercial applications. The lessened commercial speech standard does not apply.

Such speech compulsions related to the content of speech (and not just of commercial advertising), the court held, had to be judged under “strict scrutiny,” a very demanding constitutional test; and they failed such scrutiny:

They require large fonts, multiple warnings, and phone numbers to mental health helplines. But the state provides virtually no evidence that this is an effective method to combat children’s access to sexual material. The messages themselves do not mention health effects on minors. And the language requires a relatively high reading level, such as “potentially biologically addictive,” “desensitizes brain development,” and “increases conditioned responses.” Quite plainly, these are not disclosures that most minors would understand. Moreover, the disclosures are restrictive, impinging on the website’s First Amendment expression by forcing them to speak government messages that have not been shown to reduce or deter minors’ access to pornography.

The court also held that the compulsions would be unconstitutional even if viewed as focused on commercial speech, in part because:

[T]he relaxed standard for certain compelled disclosures applies if they contain “purely factual and uncontroversial information.” … [But] the disclosures are deeply controversial….

The Court assumes, at the preliminary injunction stage, that the health disclosures—as opposed to the mental health hotline—are “purely factual.” Regardless of their accuracy, the health disclosures purport to show scientific

findings. The mental health line, however, is not factual. It does not assert a fact, and instead requires companies to post the number of a mental health hotline. The implication, when viewers see the notice, is that consumption of pornography (or any sexual material) is so associated with mental illness that those viewing it should consider seeking professional crisis help. The statement itself is not factual, and it necessarily places a severe stigma on both the websites and its visitors.

Much more seriously, however, is the deep controversy regarding the benefits and drawbacks of consumption of pornography and other sexual materials. Just like debates involving abortion, pornography is “anything but an uncontroversial topic.” Defendant’s own exhibit admits this. (Principi article, Dkt. # 27, at 2 (“Scientific evidence supporting the negative effects of exposure to [sexually explicit internet material] is controversial, and studies addressing this topic are difficult because of important methodological discrepancies.”)). As a political, religious, and social matter, consumption of pornography raises difficult and intensely debated questions about what level and type of sexual exposure is dangerous or healthy. The intense debate and endless sociological studies regarding pornography show that it is a deeply controversial subject. The government cannot compel a proponent of pornography to display a highly controversial “disclosure” that is profoundly antithetical to their beliefs.

Beyond the differing moral values regarding pornography, the state’s health disclosures are factually disputed. Plaintiffs introduce substantial evidence showing that Texas’s health disclosures are either inaccurate or contested by existing medical research. Dr. David Ley, for example, is a clinical psychologist in the states of New Mexico and North Carolina who specializes in treating sexuality issues. As Ley states, “There currently exists no generally accepted, peer-reviewed research studies or scientific evidence which indicate that viewing adult oriented erotic material causes physical, neurological, or psychological damage such as ‘weakened brain function’ or ‘impaired brain development.'”  Included in Ley’s declaration are more than 30 psychological studies and metanalyses contradicting the state’s position on pornography.

Moreover, Ley points out that the mental health hotline number is unsupported because the standard manual of classification of mental disorders, the DSM-5-TR, does not consider pornography addiction as a mental health disorder, and in fact, explicitly rejected that categorization as unsupported in 2022. (Finally, the hotline, which links to the Substance Abuse and Mental Health Services Administration helpline, will be of little to no aid because they are likely not trained to deal with pornographic use or addiction.)

Defendant, meanwhile, introduces evidence suggesting that pornography is dangerous for children to consume. One study of boys in Belgium, for example, suggests that “an increased use of Internet pornography decreased boys’ academic performance six months later.” Another meta-analysis suggests that pornography is harmful to adolescents but encourages parental intervention alongside content filtering to mitigate these harms. These studies, however, are inapplicable to the compelled disclosures, which make no mention of the effects on children and are primarily targeted at adults.

Each portion of the compelled message is politically and scientifically controversial. This is a far cry from cigarette warnings. Unlike cigarettes, pornography is the center of a moral debate that strikes at the heart of a pluralistic society, involving contested issues of sexual freedom, religious values, and gender roles. And the relevant science, shows, at best, substantial disagreement amongst physicians and psychologists regarding the effects of pornography….

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It’s Time To Re-Examine Your US Recession Playbook

It’s Time To Re-Examine Your US Recession Playbook

Authored by Simon White, Bloomberg macro strategist,

The next US downturn is primed to wrong-foot investors as stocks, bonds and commodities trade markedly differently than in a regular, non-inflationary recession.

Stocks and commodities lower, bonds higher.

That’s probably what most people would expect to happen in a slump.

But historically in inflationary recessions, nominal returns of stocks mask the true damage done to equity portfolios; bonds rise in nominal terms, but in real terms they start selling off long before the recession begins; and commodities don’t fall in price, they rally.

Life without heuristics would be ferociously complicated. Trying to figure out each situation from scratch without reference to previous experience would slow us down to the point of paralysis. That’s why heuristics – mental shortcuts – are essential.

But when they are not tweaked to sufficiently suit the current situation they can become counter-productive, or worse when it comes to investing: highly detrimental to your (or your clients’) wealth.

  • First of all, the market continues to underestimate the likelihood of a recession. Manufacturing, GDI, slumping services, weak leading economic indicators, and jobs data subject to significant downwards revisions are either already recessionary or looking more so.

  • Secondly, there are several indications that inflation will soon begin rising again. Thus not only is there a much better-than-even chance of a near-term recession, it is likely to be the first one for decades accompanied by elevated and rising inflation. Unfortunately, recency bias is liable to lead many to reach the conclusion the next recession will not be that much different to the downturns of recent years (ex the very singular pandemic recession).

But in inflationary recessions, money illusion obscures what is really happening.

For stocks, in nominal terms they typically sell off more through an inflationary recession. Yet within a few years, nominal returns in inflationary and non-inflationary recessions become indistinguishable.

In real terms, though, when inflation is elevated stocks sell off more before the recession and after it. Further, real returns continue to lag the real returns in non-inflationary recessions several years after the downturn’s onset. You’re poorer for longer.

Bonds typically rally in a recession. But again, differentiating between nominal and real returns is crucial. In nominal terms, bonds perform the same over the first 9-12 months after either type of recession begins, but thereafter rise by more in inflationary recessions.

Why? When inflation is elevated, bonds start to become more attractive relative to equities, as the coupon on a bond can be re-negotiated on the maturity date, unlike a stock which is de facto of infinite duration. In other words, when inflation is high investors start to prize greater certainty, which a bond has increasingly more of the closer you approach the repayment day.

Nonetheless, money illusion once again makes returns look better than they really are. In real terms, bonds typically sell off before the inflationary recession begins, and continue to sell off after it. It takes several years before an investor recovers their real losses, even though nominally they have had made money.

Commodities, too, are unlikely to behave the same way in the next recession. Typically in downturns caused by a commodity shock, the shock to growth causes commodities to sell off before the recession, easing the ultimate impact on the economy.

But commodities are sensitive to the level of demand, not its rate of growth, therefore they can rally if the recession is less bad than feared. We can see from the chart below this is historically what has happened.

The commodity shock in 2020-22 will be the ultimate cause of the next downturn. We may have already experienced the pre-recessionary selloff in the 23% fall in commodity prices we have seen since last summer.

Either way, commodities have been rallying, boosted by supportive conditions in excess liquidity. A recession – if the past is a guide – won’t be enough to stop them from continuing to do so.

This is not just a nominal phenomenon; commodities typically are the best-performing asset class in real terms when inflation is elevated. Through the 1970s – a decade pock-marked with high inflation, stagnant growth and a deep recession – commodities were the only major asset class to deliver a significantly positive real return.

As someone once quipped, the past is a foreign country, they do things differently there. One of which is not treating real and nominal returns as synonymous.

If present-day investors wish to preserve the (real value) of their wealth, they need to do likewise, and jettison heuristics that will likely prove to be outmoded in the next recession.

Tyler Durden
Thu, 08/31/2023 – 14:20

via ZeroHedge News Tyler Durden

FSB Says It Killed & Captured Ukrainian Sabotage Group Which Entered Russia

FSB Says It Killed & Captured Ukrainian Sabotage Group Which Entered Russia

Russia’s Federal Security Service (FSB) says it has thwarted and captured a team of Ukrainian commandos who were conducing a cross-border sabotage operation in the Bryansk border region.

FSB said the men were “carrying an impressive arsenal” – including US-made automatic rifles with silencers, along with other NATO equipment such as grenades and night-vision goggles. A subsequent video of the aftermath showed the group’s arsenal laid out.

Image source: RT/FSB stillframe, handout

The FSB statement said two of the Ukrainian commandos were killed, and three wounded, with five more captured.

Security services along with state media said the group was engaged in carrying out “a series of high-profile terrorist acts targeting objects of military and energy infrastructure.”

Meduza describes, summarizing the official statements:

Bryansk governor Alexander Bogomaz posted nearly the exact same statement on his Telegram channel, and said that the “saboteurs” possessed American-made automatic rifles with silencing devices, powerful explosive devices, a large number of NATO standard grenades and ammunition, and night vision devices.

Early in the war these cross-border ground attacks didn’t happen, or were very rare, but there’s been an uptick of late, also amid an increase in drone attacks across many parts of Russia.

The biggest ground incident was when last May a group calling itself Liberty of Russia Legion attacked Belgorod region for many hours, and “invaded” with US armored vehicles, claiming to have “liberated” one or more villages before many in the group were killed by Russian forces.

Video of recovered arms released by the FSB on Thursday:

Moscow has continued blaming the West for these brazen attacks. On Wednesday Russian Foreign Ministry spokeswoman Maria Zakharova said the spate of drone attacks on Russian territory would not be possible without help from Kiev’s Western backers.

“Zakharova stressed that the Ukrainian unmanned aerial vehicles (UAVs) would not have been able to travel such a distance without information feeds from Western satellites,” TASS reported.

Wednesday saw no less than six regions come under aerial attack with in the same span of time. Zakharova said the attacks were against “peaceful civilian targets.” The same day, Russia sent a number of rockets against Ukrainian cities and locations in apparent retaliation.

Tyler Durden
Thu, 08/31/2023 – 14:00

via ZeroHedge News Tyler Durden

Hunter Biden’s Firm And Vice President Biden’s Office Exchanged Over 1,000 Emails

Hunter Biden’s Firm And Vice President Biden’s Office Exchanged Over 1,000 Emails

Authored by Eric Lendrum via American Greatness,

New records released by the National Archives and Records Administration (NARA) reveal that Hunter Biden’s firm, Rosemont Seneca Partners, exchanged over 1,000 emails with the office of then-Vice President Joe Biden during the Obama Administration.

As the New York Post reports, the records were released by NARA on Wednesday after a request from the conservative legal advocacy group America First Legal (AFL). At least 861 emails were sent or received by the Office of the Vice President during the period of time between January of 2011 and December of 2013, and over 200 more emails remain hidden due to the Biden White House citing executive privilege.

“Release would disclose confidential advice between the President and his advisors, or between such advisors,” NARA claimed in its statement responding to AFL.

The emails that were released show that Rosemont Seneca was given direct lines of communication to Joe Biden’s office, and were often given crucial information regarding various White House social events in order to seek audiences with government officials. Among the information shared with Hunter’s business partners were White House guest lists, seating arrangements, and guest biographies for numerous official events, such as the 2012 United Kingdom State Dinner, the 2013 Turkey State Luncheon, and the 2014 France State Dinner.

In one such example, lobbyist Doug Davenport frantically begged for a last-minute ticket to the 2013 White House Christmas tour.

“Hey guys……I am in a bad spot. I have a guy from Apple who is dying to take his 4 colleagues on a REGULAR WH Tour…see the tree, etc…..this Friday,” Davenport’s email reads. “I know it is WAY short notice, but I would owe you my life if you could tell me any way possible to get my hands on some public tour tix for this Friday? Or am I just way out of line???”

Hunter’s business partner Eric Schwerin then forwards the email and asks a Rosemont Seneca employee to “check with our friends over there” and get Davenport and his colleagues to “the front of the line.”

This report comes after additional reporting confirmed that Joe Biden used at least three secret email addresses as vice president, using them to communicate with Hunter and his business partners to discuss Hunter’s foreign business dealings. Joe Biden has repeatedly, and sometimes aggressively, denied any involvement with or knowledge of his son’s overseas business deals, a claim which has been debunked with mounting evidence in recent months.

*  *  *

More via America First Legal:

The latest documents reveal a staggering number of emails between Rosemont Seneca and the Office of the Vice President, revealing further evidence that there was no separation between Hunter’s private business dealings and the official business of the Obama-Biden White House. Rosemont Seneca frequently used the Biden name to gain access to and favors from the White House.

The documents also reveal further evidence of Hunter’s influence in the official Office of the Vice President. Hunter had the ability to direct correspondence, plan guest lists for State dinners and receptions, and bring people into the White House at his discretion. This evidence further calls into question Joe Biden’s claims that he was never involved with, never discussed, and did not know about Hunter’s business dealings, and it raises questions as to the propriety of the massive payments Hunter was receiving while he was commanding such influence in the Office of the Vice President. 

  1. “Rosemont Seneca” was merely the private arm of Joe Biden’s Office of the Vice President: 

The sheer volume of emails exchanged between Hunter and his associates at Rosemont Seneca and the Office of the Vice President is telling in itself. Just since AFL’s last release, NARA has processed another 861 emails sent or received between January 2011 and December 2013 that contained the name of Hunter Biden’s company, “Rosemont Seneca.”

The vast majority of these emails consisted of direct communications between Rosemont Seneca employees, including Hunter Biden, and the Office of the Vice President. Contrary to Joe Biden’s claim that there is an “absolute wall between the personal and private, and the government,” the White House asserted executive privilege to withhold 200 emails in their entirety because “Release would disclose confidential advice between the President and his advisors, or between such advisors.”

2. Hunter Biden used his family name to leverage access to the White House:

Emails obtained by AFL reveal the broad access Hunter Biden enjoyed to the official government channels while his father was Vice President. Below are just a few examples of how Hunter Biden had free reign in directing the use of official government resources. 

Hunter Biden played a role in planning high-profile White House events

Even though Hunter had no official role in the Obama-Biden Administration, he was intimately involved in planning for high-profile White House events, including the January 2011 China State Luncheon, the June 2011 State Arrival Ceremony for German Chancellor, the March 2012 United Kingdom State Dinner and Visit, the May 2013 Turkey State Luncheon, and the 2014 France State Dinner.

Read the rest here…

Tyler Durden
Thu, 08/31/2023 – 13:40

via ZeroHedge News Tyler Durden

“Who’s The Next Incremental Buyer?” – Options Market Signals Doubts Rising Over AI Bubble

“Who’s The Next Incremental Buyer?” – Options Market Signals Doubts Rising Over AI Bubble

With Melius Research (who?) writing a note this week asking (and answering) “Dare We Say Nvidia Is Now Cheap?”, we couldn’t help but get that feeling that investors may have jumped the shark on the AI bubble (now that NVDA’s Q2 earnings are behind us).

Of course, there are plenty of superlatives surrounding the AI new world order:

“OpenAI is currently on pace to generate more than $1 billion in revenue over the next 12 months from the sale of artificial intelligence software and the computing capacity that powers it. That’s far ahead of revenue projections the company previously shared with its shareholders, according to a person with direct knowledge of the situation,” according to The Information.

That’s quite a jump from the $28 million in revenue that OpenAI generated last year (before it started charging for its groundbreaking chatbot, ChatGPT), and the billion-dollar revenue figure means that the recent $27 billion valuation does not look that crazy anymore.

However, a quick glance at publicly-traded companies benefiting from this trend shows – at a minimum – the fervor of future spend is being pulled forward.

As every CEO and his pet rabbit drops the two most important letters – A and I – in talks with investors and media.

We went from ~500 mentions of AI on earnings calls in 2015 to ~30,000 this year and we still have 4 months left.

But, dare we say it, the froth may be coming off that soy, non-fat, skinny vanilla cappuccino as Bloomberg reports the heavy call-buying of high-flying technology stocks has tapered off, ushering in a more normal options-market dynamic for the biggest names in artificial intelligence.

The regime-change is most clearly seen in the so-called options-skew (difference between the cost of upside and downside bets) for a number of the highest profile AI-beneficiaries.

As excitement mounted in June and July, AI-mania flipped the norm (of puts costing more than calls) on its head with the cost of calls on MSFT, AMZN, NVDA,TSLA, and META generally rising more than put options (gren shaded box), according to data from Nations Indexes.

However, in recent week, things are looking a bit more normal, and calls are back to a discount for most of those companies.

“Tech was in a mini bubble, and AI was in a legitimate full-on bubble in June and July,” said Scott Nations, president of Nations Indexes.

“Now, people realize that we’ve seen bubbles before.”

There is an exception – Nvidia. Calls still cost more than puts, but the gap is narrowing, signaling that the mania over the S&P’s top gainer of 2023 is subsiding, at least a little.

In fact, since the chip giant’s blowout earnings spike, it has been unable to extend gains (most notably stalling at its call-wall around $500)…

Indeed, tech might be running out of buyers.

As Amy Wu Silverman, head of derivatives strategy at RBC Capital Markets, warns, chatter of clever chatbots may not fuel stock rallies forever.  Eventually, investors will look for signs of progress.

“Unless some other incremental AI news happens, I’m curious who the next incremental buyer is,” Silverman said.

“Retail was actually on this relatively early and had always been on this and then got the institutions – who had started this year fairly bearish and worried – essentially capitulate and have to go in. The bar is higher because who else has to go in now?”

In other words, the retail bagholder is not there for the pros to dump it to – because everyone’s already filled their boots… which explains why puts are suddenly more bid than calls.

Is it really different this time?

Tyler Durden
Thu, 08/31/2023 – 13:20

via ZeroHedge News Tyler Durden

Digital Asset Sales To Come Under Increased IRS-Treasury Scrutiny

Digital Asset Sales To Come Under Increased IRS-Treasury Scrutiny

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

The U.S. Treasury and the IRS have proposed new reporting requirements for digital asset brokers like cryptocurrencies and NFTs in an attempt to “crack down on tax cheats” and help citizens assess tax dues arising from such asset transactions.

Department of Treasury building in Washington on April 10, 2023. (Madalina Vasiliu/The Epoch Times)

Regulations “would require brokers of digital assets to report certain sales and exchanges,” the U.S. Treasury said in an Aug. 25 press release. The proposed regulations “is part of a broader effort at Treasury to close the tax gap, address the tax evasion risks posed by digital assets, and help ensure that everyone plays by the same set of rules.”

Brokers would be required to report on the sale and exchange of digital assets in 2026 for activities that took place during the prior year.

In an Aug. 25 press release detailing the new proposed regulations, IRS Commissioner Danny Werfel said that a critical part of the rules is that it “fits in with the larger IRS compliance focus on wealthy taxpayers.”

We need to make sure digital assets are not used to hide taxable income, and the proposed regulations are designed to provide a clearer line of sight into activities by high-income people as well as others using them,” he said.

“We want to make sure everyone pays what they owe under the tax laws, and our research and experience demonstrate that third-party reporting improves compliance.”

A Barclays analysis released last year estimated that the IRS could be missing out on more than $50 billion annually due to crypto traders not paying their taxes.

The new rules will also help taxpayers in filing their returns, the Treasury stated.

Under current laws, citizens owe tax on gains made on the sale or exchange of digital assets and can deduct losses on such activity. However, “for many taxpayers it is difficult and costly to calculate their gains.”

The proposal would require that digital asset brokers “provide a new Form 1099-DA to help taxpayers determine if they owe taxes, and would help taxpayers avoid having to make complicated calculations or pay digital asset tax preparation services in order to file their tax returns.”

“These regulations align tax reporting on digital assets with tax reporting on other assets, and, as a result, avoid preferential treatment between different types of assets,” the treasury stated.

The agency cited figures from the Joint Committee on Taxation (JCT) which estimated that the new rules could raise almost $28 billion in revenues for the government over a decade.

Taxpayers and Crypto Holdings

In addition to digital asset brokers, the proposed regulations would also require those engaged in real estate activity, including brokers, title companies, and mortgage lenders to report the use of digital assets as payment in real estate transactions. The rule will apply to transactions that close on or after Jan. 1, 2025.

A Bitcion mock-up on Jan. 12; 2022. (John Fredricks/The Epoch Times)

The newly proposed regulations come as the IRS has been increasing its focus on digital assets. In recent years, the agency has asked taxpayers filing 1040 forms about their crypto holdings.

At any time during 2022, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, gift or otherwise dispose of a digital asset (or a financial interest in a digital asset)?” the IRS asked on the form for the 2022 tax year.

The questions had a “yes” or “no” option.

The IRS insisted that the question “must be answered by all taxpayers, not just those who engaged in a transaction involving digital assets in 2022.”

The proposed regulations stem from the Biden administration’s $1 trillion Infrastructure Investment and Jobs Act of 2021, which included a provision aimed at boosting tax reporting requirements of brokers who transact in digital assets.

The Treasury and the IRS are welcoming comments and feedback on the proposed regulations that will be accepted until Oct. 30, 2023. A public hearing has been scheduled for Nov. 7, 2023, with a second hearing on Nov. 8.

Industry Experts React

The new requirement has attracted mixed reactions from industry experts.

“If done correctly, these rules could help provide everyday crypto users with the necessary information to accurately comply with tax laws,” Blockchain Association CEO Kristin Smith said in an Aug. 25 statement.

However, “the rules must be tailored accordingly and not capture ecosystem participants that don’t have a pathway to compliance,” she added.

Lawrence Zlatkin, the Vice President of Tax at cryptocurrency exchange platform Coinbase, criticized the proposal.

The sheer magnitude of this data requirement would be hundreds of times more than the annual reported transactions of any major brokerage—and goes well beyond the scope of pursuing wealthy tax cheats,” he said in a statement, according to Bloomberg.

“The practicality of the IRS’s requirement to report—let alone enforce—this incredible minutia of taxpayer data is questionable at best.”

Miles Fuller, head of government solutions at crypto tax software company TaxBit, pointed out that there will be an “immediate investment cost” that digital asset brokers will have to shoulder in order to implement the proposed regulation.

“But the longer term outlook in my view, is good for the industry because it’ll help bring more mainstream adoption.”

Tyler Durden
Thu, 08/31/2023 – 13:00

via ZeroHedge News Tyler Durden

US Consumers Paid For July Spending Spree By Burning Through $150BN In Savings

US Consumers Paid For July Spending Spree By Burning Through $150BN In Savings

Ahead of the August consumer debacle which saw – and continues to see – most retailers report dismal earnings and plunge by double digits on the back of dreadful “recent trends” commentary…

This is about credit card balances. This is about student loans, which we know is going to come into focus in the next month or two, auto loans, mortgages,” said Adrian Mitchell, who is Macy’s chief financial officer and chief operating officer. “So we just believe that the customer is coming under pressure because these are new realities that they have to continue to deal with as we get through the back half of this year and move into next year.” – Macy’s Crashes As Consumer Situation Deteriorates

… July was a blockbuster month for retail names, or as Goldman put it “the best month for the quarter“, with the Dept of Commerce reporting stellar retail sales data, including the biggest monthly increase since January, largely on the back of Amazon’s record sales on Prime Day.

What we didn’t know is where all the purchasing power to fund this blow-off top spending spree had come from: recall that at the start of the month, we reported the latest consumer credit data showed that in the month of June, there was a shocking reversal in credit card spending (in fact, consumers were net paying down their credit card debt for the first time in two years) which suggested that US consumers had just maxed out their credit cards and would no longer be able to fund their purchases on credit, which prompted us to caution that households are now aggressively tapping into their savings.

We were right: as today’s household income and spending data showed, in July the US household savings rate collapsed by a whopping 0.8% from 4.3% to 3.5%, the biggest one-month drop since the start of 2022.

In dollar terms, the total amount of personal savings collapsed by almost $150BN from $852BN to $706BN SAAR, the biggest one month drop since Jan ’22.

Worse, this rapid savings depletion comes at a time when according to JPMorgan the “excess savings” from the post-covid stimmy bonanza, all $2.1 trillion of them, have finally been depleted.

In our kneejerk comment on the data, we said that “this is where the July spending spree came from: US Savings rate COLLAPSED from 4.3% to 3.5% in July, lowest since Nov 22, and biggest drop since Jan 22.”

Two hours later, Obama’s top economist Jason Furman echoed what we said, tweeting that “Falling real disposable income and rising consumption in July are reconciled by a step down in the saving rate. I like to smooth over 3 months, is still quite low.”

The bigger problem, as we have repeatedly warned, and as Furman also echoed is that “It is not just lower saving rates but other measures of consumer stress are worsening: higher borrowing, more delinquencies. I keep expecting real consumer spending growth to slow more than it has–but so far is holding up remarkably well.”

Indeed, however once consumers realize they have to spend several hundred dollars each month on their student loans which are again due and payable, expect all hell to break loose as soon as next month.

Tyler Durden
Thu, 08/31/2023 – 12:40

via ZeroHedge News Tyler Durden