Month: May 2024

Authored by Paul Thacker via The Disinformation Chronicle,

In a shot across the bow against Scientific American’s continued descent into unscientific twaddle, a BMJ investigation documented over a dozen social media posts by editor-in-chief Laura Helmuth promoting transgender care for children, despite scientific evidence showing such treatment has had “devastating consequences” for minors.

“Laws preventing trans kids from getting gender-affirming treatment are dangerous and abusive, as well as against all medical evidence,” Helmuth posted on X in late 2022, one of many examples that The BMJ sent to Scientific American and its publisher Springer Nature, asking them to explain Helmuth’s trans advocacy which runs contrary to medical evidence.

In other social media posts, Helmuth has labeled critics of dangerous trans gender medicine for children “biased,” “bigoted,” “antiscience,” “misinformation,” “cruel,” and compared them to Nazis.

Last year, Helmut promoted false news in Scientific American that argued, “The research is clear and all the relevant medical organizations agree: Gender-affirming care is evidence-based & medically necessary & leads to much better outcomes for trans kids than refusing them care.”

Six days later, The BMJ released an investigation of new research finding that the evidence for trans gender care for children lacked evidence and that medical authorities were urging caution.

England, Scotland, Wales, and Sweden have all ceased prescribing puberty blockers for children, except for research studies, and the Finnish psychiatrist who first founded the field of transgender care for children now calls it “dangerous.” Many countries’ medical authorities have concluded that studies promoting trans treatment for children were either biased or of low quality.

The BMJ’s targeting of Laura Helmuth was a warning, of sorts—an admonition that Helmuth should focus on science, cease the advocacy, and stop saying stupid things. But if you continue to read Scientific American, expect Helmuth to continue saying stupid things.

Last month, Harvard’s Steven Pinker labeled Helmuth a “woke fanatic” on X and promoted an article discussing Scientific American’s descent into progressive ideology. “Another noble American institution run into the ground when clueless trustees handed over the keys to a woke fanatic,” Pinker posted.

The article Pinker promoted appeared in City Journal (“Unscientific American”) and carefully documented the magazine’s decline into a political rag since Helmuth took the reins in early 2020. Other outlets have also cast a disapproving eye on Helmuth’s political crusades.

The Wall Street Journal noted that Helmuth tweeted last year that “sparrows have four different chromosomally distinct sexes,” forcing the community notes on X to correct Helmuth’s error.

“It’s just incredible how far @sciam — a periodical I admired — has fallen from its mission to provide accurate, clear, and vivid coverage of science,” Yale professor and physician Nicholas Christakis, posted on X.

“EXCLUSIVE: unScientific American! Popular magazine is slammed by experts over ‘woke’ article titled ‘Why Human Sex is Not Binary’,” reported The Daily Mail, a few months prior to Christakis’ criticism of Helmuth. Dr Carole Hooven, an evolutionary biologist at Harvard University, told The Daily Mail that Scientific American’s unscientific claims could put women in danger.

“On average, men are bigger and stronger than women, and commit the overwhelming majority of rapes and murders. Most men could kill most women with their bare hands,” Hooven explained. “These facts have informed the establishment of laws and social policies that protect female spaces, particularly those where women are in vulnerable positions such as where they sleep or shower (prison cells and locker rooms, for example).”

Chicago University emeritus professor of ecology and evolution, Jerry Coyne, has written several times about Helmuth promoting factually inaccurate claims in Scientific American, which he labeled “Scientific Pravda.”

Somebody called my attention to three new articles and op-eds in Scientific American that have no science in them, but are pure ideology of the “progressive” sort.  I agree with some of the sentiments expressed in them, as in the first one. But my point is, as usual, to show how everything in science, including its most widely-read “popular” magazine, is being taken over by ideology. Not only that, but it’s ideology of only one stripe: Leftist “progressive” (or “woke,” if you will) ideology, so that the “opinion” section is not a panoply of divergent views, but gives only one view, like a Scientific Pravda.  Remember that the editor refused when I offered to write an op-ed expressing different (but of course not right-wing) views.

In a previous City Journal article in 2022, science writer Nicholas Wade called Scientific American’s shift away from science a “new Lysenkoism” referring to the Soviet doctrine that forced biologists to ignore evolution and the genetics of plants to conform to political ideology.

And in an investigation I conducted for the BMJ(“The covid-19 lab leak hypothesis: did the media fall victim to a misinformation campaign?”) I noted that Helmuth harassed CDC Director Robert Redfield for telling CNN he thought the COVID virus may have come from a Wuhan lab:

The growing tendency to treat the lab leak scenario as worthy of serious investigation has put some reporters on the defensive. After Robert Redfield, former director of the Centers for Disease Control and Prevention, appeared on CNN in March, Scientific American’s editor in chief, Laura Helmuth, tweeted, “On CNN, former CDC director Robert Redfield shared the conspiracy theory that the virus came from the Wuhan lab.” The following day, Scientific American ran an essay calling the lab leak theory “evidence free.”

In short, Helmuth is a political fanatic who doesn’t care much for science, unless it’s science that fits her personal politics.

The BMJ’s investigation highlighted the Cass Review which found little evidence to support Helmuth’s claims that the puberty blockers or other trans therapy for children are safe, including surgery. Dr. Hilary Cass is a British physician and former president of the Royal College of Paediatrics and Child Health, who spent three years examining the evidence for treating gender questioning young people.

In a recent interview with the New York Times, Dr. Cass said that doctors in the United States are “out of date” with understanding trans care for children. “But what some organizations are doing is doubling down on saying the evidence is good,” Dr. Cass told the New York Times. “And I think that’s where you’re misleading the public.”

And in podcast for the BMJ, Dr. Cass noted that of the 100 studies for puberty blockers and hormone treatment, only two were of passable quality. She also dismissed claims by activists such as Helmuth that trans care lowers risk of suicide in children.

“There, unfortunately, is not evidence that gender affirming treatment in its broadest sense reduces the suicide risk,” Dr. Cass said, during The BMJ podcast.

Below are several social media posts by Laura Helmuth crusading for trans care for kids—many of them dangerous messages for children, all lacking quality medical evidence.

To find the latest quality medical evidence on trans care for children, please read The Cass Review, which NHS England commissioned to improve NHS gender identity services, and ensure that children and young people who are questioning their gender identity or experiencing gender dysphoria receive a high standard of care, that meets their needs, is safe, holistic and effective. 

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The week following Russia holding tactical nearly drills in its southern military district, near Ukraine, the Kremlin is alleging that NATO is secretly engaged in drills which seek to prepare for a potential nuclear strike on Russian territory.

General Vladimir Kulishov, First Deputy Director and Head of Russia’s Federal Security Service’s (FSB) Border Service has said the military has observed increase NATO military activity near Russia, which includes fresh nuclear drills.

He stated in an interview with state Ria Novosti news that “Near the Russian border, NATO’s reconnaissance activities are increasing, the intensity of operational combat training of the alliance’s troops is growing, during which scenarios for conducting combat operations against the Russian Federation, including the launch of nuclear strikes on our territory, are being worked out.”

Kulishov added: “The situation requires taking appropriate steps to protect and secure our borders.”

NATO itself has not confirmed that it is engaged in ‘nuclear drills’ near Russia, and it is unclear the degree to which Gen. Kulishov was merely speculating or perhaps ‘reading into’ things based on the serious threats from the West that Moscow currently perceives.

Putin’s Press Secretary, Dmitry Peskov, has also said separately “that NATO is flirting with military rhetoric, increasing the degree of escalation and falling into military ecstasy.”

At the same time, and to be expected, France’s Emmanuel Macron has added his voice to the growing chorus of NATO leaders who want to see restrictions lifted on Ukraine’s use of long-range weapons supplied by the West.

Macron said that his government’s position is that “we think we must allow (Ukraine) to neutralize the (Russian) military sites from which the missiles are fired.”

“If we tell (the Ukrainians) you do not have the right to reach the point from which the missiles are fired, we are in fact telling them that we are delivering weapons to you, but you cannot defend yourself,” he had explained late Tuesday while on an official visit to Germany.

On Monday NATO chief Jens Stoltenberg said the same. The increasing momentum for this policy change could culminate in Washington making an official announcement. Already some Biden admin officials have strongly hinted they’d be OK with Kiev using American weapons to strike inside Russia. Likely this is already happening, at least on a covert level.

Authored by Daniel Lacalle,

The long-term forecast for higher interest rates, according to Treasury Secretary Janet Yellen, makes it more difficult to control US borrowing needs, which emphasizes the significance of raising revenue in the forthcoming budget talks with Republican lawmakers. There is only one problem. She is wrong.

According to the Congressional Budget Office (CBO) baseline, which does not assume a single year of recession and already counts with record tax revenues, the 2025 primary deficit will reach $851 billion, while net interest outlays will rise to $951 billion. Furthermore, the minimum expected primary deficit from 2025 to 2034 will be a staggering $676 billion with $1.2 trillion of net interest outlays, while the average annual deficit will likely be above $700 billion. The accumulated figures are even more concerning. The CBO estimates that the aggregate primary deficit in the 2025–2034 period will reach a brutal $7.4 trillion, with accumulated interest expenses of $12.4 trillion. We must remember that the CBO baseline estimates no recession and constantly rising tax receipts above the record 2024 level.

If the CBO’s optimistic estimates lead to the conclusion that deficits and interest expenses are going to soar in a booming economy, it is evident that no revenue measure is going to end this disastrous trend.

Those who say that revenue measures will cut the deficit have a problem with mathematics and reality. There is no revenue measure that will generate $700 billion in additional receipts every year. Furthermore, there is no revenue measure that will generate those additional annual revenues, regardless of the economic cycle. A single year of recession could destabilize the administration’s optimistic estimates.

The United States’ unsustainable budget deficit is a problem, and interest expenses are rising because the government rejects any form of budget discipline.

The administration believes that all expenses are necessary but too low, and that your hard-earned money is excessive and should be subject to higher taxes.

Deficits are always a spending problem. Only interventionist bureaucrats assume that revenues are the issue. Tax revenues are cyclical, and expenditures consolidate and rise faster than revenues because the administration never gets enough.

When the economy soars, governments spend more, and when the economy weakens, they spend even more, making deficit spending a burden on the economy that leads to discontent in recessions and expansion periods.

We are witnessing a deadly proposal for the U.S. economy. The government rejects any possibility of administering and balancing the budget. The unsustainable deficit is printing money, resulting in higher taxes and likely persistent inflation. You are poorer, and the government becomes larger every year.

Keynesianism is the destruction of the middle class. By printing money and bloating deficits and spending, the size of government in the economy rises faster than the private and productive sectors. The size of the government increases during recessions by increasing expenditure to combat them, and it also increases during economic downturns by hiking taxes and creating inflation, which is a hidden tax.

What we are witnessing is a slow nationalization of the economy. Small businesses and families are suffering from higher rates because the government has created inflation and driven deficits to unsustainable levels, and the government demands more tax revenues.

The trick, as always, will be to deceive us by claiming that taxes will only be imposed on the wealthy. An unfair taxation system is no less unfair if it affects only a small proportion of citizens. However, it does not even matter. There is no way in which the government can boost revenues without passing a massive burden to the middle class via inflation, a hidden tax, and higher direct and indirect taxes.

According to Yellen, the government will not compromise on spending, and you will pay with inflation and higher taxes. This is the danger of letting Keynesianism reign. They start by presenting the government as the solution, and they always impoverish the middle class.

There is no way in which the administration can fill a structural annual $700 billion budget hole with “taxes on the rich.” Therefore, when they talk of compromise, what they mean is that the middle class and small businesses will continue to suffer.

Government spending has already reached $3.82 trillion from January to May, a 6% increase over the same period in 2023, according to the Treasury’s Fiscal Data website. Only if we consider the year-on-year increase so far, $208 billion, there is no revenue measure that would have collected that amount from the rich, from corporations, or from anyone, for that matter.

Considering that Yellen and the Biden administration are unwilling to even moderate the insane government spending trend, the Federal Reserve finds itself in the position of trying to curb the cost of debt by slowing the path of balance sheet normalization. This means that the Fed abandons its fight against inflation because fiscal policy fails to reduce inflationary pressures. In doing so, the Fed is unwillingly passing the entire burden of policy normalization and higher rates to the productive sector, while the Treasury looks at the enormous deficit and thinks, “Well, we must collect more revenues.” You pay.

There is only one way to save the US dollar from losing more purchasing power and the US from becoming a stagnant and unproductive economy: reduce the size of government. If you believe the government is too small, be prepared to be poorer by losing your real wage and ability to make ends meet. If you want more government, you will have it. And you will overpay for it. Inflation, higher taxes, and lower wages are the price of more state control. Always.

Authored by Michael Snyder via TheMostImportantNews.com,

The World Health Organization was hoping that there would be a vote on the global pandemic treaty at the World Health Assembly at the end of this month, but now that is not going to happen.  Negotiations that were supposed to result in a final draft of the treaty have completely broken down, and that is great news because the treaty would have transferred a tremendous amount of authority to the World Health Organization.  But if dengue fever continues to rip across the globe like it has been, or if H5N1 mutates into a form that can spread easily from person to person, fear of what is coming next could potentially revive the negotiations.

On Friday, the WHO publicly admitted that negotiations had ended without producing a final draft of the treaty.  The following comes from ABC News…

On Friday, Roland Driece, co-chair of WHO’s negotiating board for the agreement, acknowledged that countries were unable to come up with a draft. WHO had hoped a final draft treaty could be agreed on at its yearly meeting of health ministers starting Monday in Geneva.

“We are not where we hoped we would be when we started this process,” he said, adding that finalizing an international agreement on how to respond to a pandemic was critical “for the sake of humanity.”

Driece said the World Health Assembly next week would take up lessons from its work and plot the way forward, urging participants to make “the right decisions to take this process forward” to one day reach a pandemic agreement “because we need it.”

At one time, WHO Director-General Tedros Adhanom Ghebreyesus had such high hopes for the treaty, and he still insists that “anything is possible”…

Addressing a sullen final day of negotiations, the WHO chief insisted, “This is not a failure.”

“We will try everything — believing that anything is possible — and make this happen because the world still needs a pandemic treaty,” he said.

Since the treaty is dead for now, this means that the WHO will not be running the show when the next global pandemic arrives.

And we should be very thankful for that.

But it is just a matter of time before there are renewed calls for a treaty, because we are already seeing some very chilling things happen all over the globe.

In areas that have tropical climates, dengue fever is spreading at an unprecedented rate.

This disease is also known as “bone crusher fever”, and there have already been millions of confirmed cases in 2024…

Australian travellers are being warned of a sharp increase in a potentially deadly virus, commonly known as the ‘bone crusher fever’ — with more than five million people now contracting the condition – and cases almost doubling in 2024 alone.

According to the World Health Organisation (WHO) and  1Cover Travel Insurance, dengue fever — a potentially fatal acute infectious disease caused by a virus and transmitted by the bite of an infected mosquito — has seen a rise likely due to increased post-Covid travel and the El Niño climate cycle.

Earlier this week, the Department of Foreign Affairs and Trade (DFAT) reported that dengue fever outbreaks are happening globally, with a “higher-than-usual number of cases” being witnessed in Africa, Asia, Central and South America and The Pacific.

We have never seen an outbreak of dengue fever on this scale before.

And it is here in the United States too.

In fact, Miami has become the “epicenter” for the spread of dengue fever in this country…

Miami’s role as the gateway to Latin America has also made it the US epicenter of dengue fever.

Cases of the mosquito-borne illness in Florida have more than doubled this year compared with the same period in 2023, as unsuspecting travelers have carried the virus back from the Caribbean and Southern Hemisphere. Now, authorities are working to keep the disease from infecting the local mosquito population before this summer’s heavy rains turbocharge the risks.

Malaria is another disease that is spread by mosquitos that is causing major problems all over the world this year.

Could it be possible that researchers that have been purposely breeding tens of millions of mosquitos have made a huge mistake?

The bird flu is also making lots of headlines right now.

At the end of last week, officials at the CDC warned that they are bracing themselves for the “possibility of increased risk to human health”…

The Centers for Disease Control and Prevention said in a summary on Friday that it is preparing for the “possibility of increased risk to human health” from bird flu following an outbreak among dairy cows and two confirmed human cases.

H5N1 has already resulted in the deaths of hundreds of millions of birds over the past couple of years, but as long as it wasn’t affecting humans most people weren’t too concerned.

Well, now it has been infecting cows all over the country, and 19 of 23 wastewater sites in Texas recently tested positive for the virus…

In Texas, for example, 19 out of 23 wastewater sites were found to contain traces of the virus between early March and the end of April, according to Texas Wastewater Environmental Biomonitoring. Meanwhile, the state has some 400 dairy farms, and just 14 herds have tested positive for bird flu to date, according to the US Department of Agriculture.

The bird flu has also been showing up in grocery store milk from coast to coast, but experts insist that we should not be concerned because the virus is killed by the pasteurization process.

But officials are warning us not to drink raw milk because they believe that it could “make you very sick”…

As the avian influenza virus, type A H5N1, continues to spread to an unknown number of dairy cows, health experts are informing the public milk and other dairy products are still safe to consume – with one major exception.

When a cow is infected with bird flu, high amounts of the virus can be detected in its milk. However, the pasteurization process kills off or inactivates the virus, the Food and Drug Administration says.

Raw milk, on the other hand, is not pasteurized. “Raw milk can be contaminated with harmful germs that can make you very sick,” the CDC says on its website.

Many scientists are worried that it could be just a matter of time before the bird flu mutates into a form that can spread very easily among humans.

Let us hope that is not true, because more than 50 percent of the humans that have tested positive for H5N1 since 2003 have ended up dead.

We live at a time when it has become so easy for just about anyone to monkey around with a deadly disease and release it into the public.

Personally, I am entirely convinced that deadly diseases will play a major role in reshaping society during the apocalyptic era that is ahead of us.

Our ability to create deadly diseases now far surpasses our ability to control them, and the fear that global outbreaks create will be used by those that wish to accumulate power for themselves.

*  *  *

Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

Once upon a time, we joked that Goldman had become a veritable incubator for future central bank heads: from NY Fed’s Bill Dudley, to BOC’s Mark Carney, to ECB’s Mario Draghi, to disgraced Dallas Fed daytrader Robert Kaplan, and Minneapolis Fed “chump” Neel Kashkari, it seemed that anywhere one looked one would find a money printing tentacle of the vampire squid.

Then things went silent around the time Goldman decided to lose its trading luster and focus on issuing credit cards to subprime consumers, a venture which as we warned at the time, ended up in absolute disaster. And just as the bank’s income statement was in shambles for the period from 2018 to 2023, so was its central bank incubator reputation.

But things are starting to change: having ditched its catastrophic effort to cater to consumers, and refocusing on its prop trading  principal investing roots, the bank managed to send its stock to all time highs as it managed to restore much of its lost reputation. And the confirmation came moments ago when after a several years hiatus, the Celeveland Fed announced that former Goldman executive and member of the notorious Treasury Borrowing Advisory Committe, Beth Hammack, will become the next president of the regional Fed.

Hammack, 52, spent three decades at Goldman, where she served as global treasurer during the Covid-19 pandemic. Most recently, she was co-head of the bank’s global financing group.

Just as importantly, she served as the chair of the Treasury Borrowing Advisory Committee, or TBAC, a group of Wall Street executives who advise the U.S. Treasury on debt issuance, from 2018 to 2023.

The Cleveland Fed president has a turn voting on the Fed’s rate-setting committee this year. Hammack will start on Aug. 21, meaning she will participate in monetary policy meetings beginning in September.

According to the WSJ, Hammack’s appointment could beef up the committee’s expertise on financial markets, where it has been light in recent years.

As noted above, other current Goldman alums at the Fed include Minneapolis Fed President Neel Kashkari. Robert Kaplan, who announced his resignation as Dallas Fed president in September 2021, was hired as vice chairman at Goldman Sachs earlier this month. He previously spent two decades at Goldman.

The Cleveland bank’s current leader, Loretta Mester, assumed her role in 2014 and will leave at the end of June, when she reaches a mandatory retirement age. She is set to participate at the Fed’s next meeting, June 11-12. During her tenure, Mester was regarded as a vocal hawk and Fed watchers will be keen to learn which way her replacement leans.

The presidents of the Fed’s 12 quasi-private reserve banks are chosen by the individual banks’ boards of directors, whose members are typically business or nonprofit executives. The selections are subject to approval by the Fed’s board of governors in Washington. The Cleveland Fed district includes Ohio and parts of Pennsylvania, West Virginia and Kentucky.

Goldman’s return to the regional Fed scene comes at a time when speculation is rife that when Trump becomes president he may appoint a dovish lackey to head the central bank, effectively stripping the Fed of what little fake independence it has left in a move that could have dire consequences for the dollar’s “reserve” status.

By Michael Every of Rabobank

An older, anxious, mildly paranoid analyst

US Treasury yields spiked higher yesterday after strong consumer confidence data and weak bond auctions, pushing the dollar up. The Fed’s Kashkari said the FOMC hasn’t entirely ruled out further rate hikes, but the odds are “quite low”. But how does one assess the risks of a shock like that? Market pricing just shows you what all uniformed people think, so zooms around wildly, e.g., shifting expectations for 2024 rate cuts over the past six months. Data means you have to forecast them right. Fundamentals, perhaps – but which? And, ultimately, fundamental psychology.

On which, because I don’t get all my news from financial or mainstream media –a deliberate epistemology– I stumbled on a report for the Israeli army by psychologist Ofer Grosbard explaining why it disastrously failed to anticipate October 7. It applies equally to those who didn’t expect Russia to invade Ukraine, and to a host of other problems right in front of us now.

In summary, Israeli intelligence was too optimistic. They ignored repeated warning signs, including a copy of the Hamas invasion plan, believing Hamas didn’t mean it or had no desire or ability to attack. That should be clear unless you believe in conspiracy theories, so need a psychiatrist.

The follow-on conclusion is intelligence services –and those running market risk– need experts who can spot patterns or subtle clues of possible emerging threats in geopolitics, human behavior and psychology. That’s clear.

However, data show older, pessimistic, and anxious, mildly paranoid or mildly depressed people are better placed for this kind of thinking as their outlook is more analytical and “fosters a heightened sense of vigilance” and “a cautious approach, ensuring all possibilities, no matter how unlikely, are considered and prepared for.” By contrast, younger optimists say, “Buy all the things,” or “rate cuts!”, or “I see no ships.”

Crucially, however, most institutions promote the assertive, confident, and optimistic to senior roles: then hubris meets nemesis. One hopes new Dutch Prime Minister (Hendrikus Wilhelmus Maria) Dick Schoof, with an intelligence background, is a gloomy individual.

Would he have predicted risks to “rate cuts!” optimism now repeated in a Financial Times deep-dive into the Deep Ship EU ports are in due to the Houthi Suez Canal blockade? As we said months ago, if West Med ports run at 100% capacity as trans-shipment conduits to the East Med in peak pre-Xmas retail season, firms build higher inventories to compensate for longer delivery times, and consumer spending picks up as rates fall — that first ECB cut is in June — then supply-side inflation shocks can be expected. Things may also get worse as Israel enters the heart of Rafah, the Houthis try to hit the East Med, Iran is closer to a nuke, and the $320m Biden Gaza aid pier drifts off and breaks apart, a metaphor for the how the broader region sees the US.

In Australia, with reluctant RBA talk of another rate hike, April monthly CPI weighted to goods was 3.6% y-o-y vs. 3.4% consensus and 3.5% in March. Housing was 4.9% with rents 7.5%; food and beverages 3.8%; alcohol and tobacco 6.5%; transport 4.2% with fuel 7.4%; insurance and financial services 8.2%, education 5.2%, and only holidays -6.2%: if you don’t eat or drive on one. Our house forecast is two more hikes unless the RBA is hoodwinked by the budget artificially supressing CPI with subsidies. Which, optimists will say is the case: the market is only pricing around a 25% chance of a September rate hike despite inflation well over the 2-3% target, a stimulatory budget, and the global backdrop being inflationary again, not disinflationary.

But do you really need to be older, pessimistic, anxious, mildly paranoid or mildly depressed to see how large the structural problems that we face are?

In the UK, one headline just said, ‘Rishi Sunak winning back 2019 Tory voters after announcing snap election’. The polls say it’s 2,019 Tory voters. The Labour Party, with “secureonomics” at its pledge, is ruling out further tax increases after extending the windfall tax on energy companies’ profits, imposing VAT on private school fees, and ensuring private equity bonuses are “taxed appropriately”. Yet it faces a large fiscal deficit and wants to spend more to transform the UK economy: something doesn’t add up. One hopes for the best, but paranoid political risk types are not looking at the upcoming election, which seems a given, but at the one after that; they are wondering what the backlash to a failed Labour government might look like, as well as how far right the post-defeat Tories shift.

In the US, all eyes are on the New York court that is likely the only Donald Trump trial that will come to a conclusion before the November election – and as many legal and political commentators have pointed out, it’s been a clown show likely to be turned over on appeal even if a guilty verdict is returned, and which has boosted Trump’s electoral prospects. Those of a more paranoid mindset had thus correctly already been factoring in what hypothetical higher US tariffs might mean for inflation and the world economy.

In Canada, we got a headline which runs true everywhere in the West, and much of the world outside China: ‘Trudeau says real estate needs to be more affordable, but lowering home prices would put retirement plans at risk’. Yes, homes need to be more affordable. No, prices can’t come down, “because Boomers.” Can rates come down? No, “because inflation” and “further house-price inflation.” Can wages go up? NO! “Because inflation > rates > Boomers > markets.”

Let’s be frank: thinking high house prices were a good way to juice the economy was an idiot plan at its inception to those with functioning brains, not just ones with mild paranoia or depression. The socioeconomic-political (neo-feudal) and geopolitical trends emerging because young, idiot, optimist economists didn’t tell their bosses those risks when they started to blow this bubble are now enough to give everyone severe paranoia and depression. For example, Al Qaeda are expressing their appreciation to Western Ivy League student protestors, after Osama Bin Laden went viral on TikTok a few months ago. They might even pick up a percentage of the vote if they ran in some countries’ elections.

Then again, are we surprised no optimistic young economists told their bosses not to juice house prices (again) when the American Economic Review reviews the reproducibility of 17 of its own papers from 2013 onwards, and finds that “many of the results are not robust, with no improvement over time”, while “a sample of economists (n=359) overestimates robustness reproducibility, but predictions are correlated with observed reproducibility.” In other words, economists believe their own hype even when they can’t reproduce any of the ‘results’ they claim. Then those same individuals set policy for governments or central banks.

And where economics meets national security, some in China are pushing it to adopt a Green Marshall Plan to deal with its overcapacity by sending vast sums to the Global South to accelerate transition, which could be transformative for the global economy, if it happens. By contrast, parts of the West are excited about an ECB rate cut in eight days, and Germany is –again– backing off any serious martial plan even as it gets marginally cheaper to fund: it now won’t be adopting conscription after all. Because the other side has no desire or ability to fight, right?

It gives me no pleasure to say I tick all the Grosbard boxes for the characteristics needed for better risk analysis methodology; but then not getting a lot of pleasure from things is sadly part of the whole deal.

North Korea is literally sending sh*t ballons across the border into South Korea. Hundreds of balloons were spotted Wednesday drifting into South Korean territory, some of them with the word “excrement” written on them.

This is because the balloons were loaded with feces and other rubbish as they drifted over the heavily fortified border. Seoul released photos of the aftermath of some balloons having popped on city streets, releasing their foul contents all over heavily trafficked streets.

“We sternly warn the North to immediately stop its inhumane and low-class actions,” a statement by the south’s Joint Chiefs of Staff said. It added that the North’s actions “clearly violate international laws and seriously threaten the safety of our people.”

Both sides have long used balloons to physically transport propaganda messages to the other side. A Sunday statement by North Korea forewarned that “mounds of wastepaper and filth” would soon be sent to the South as “tit-for-tat action” after “dirty things” were previously flown into the north.

The South Korean government has gone so far as to deploy HAZMAT teams to deal with the clean-up as the crap-filled balloons descended with their payloads:

The military’s explosives ordnance unit and chemical and biological warfare response team were deployed to inspect and collect the objects, and an alert was issued warning residents to keep away and report any sightings to authorities.

South Korea’s military starting Tuesday night had detected “large amounts of balloons” arriving from the North, and over 150 were observed as of Wednesday morning. There could be up to hundreds more. The BBC subsequently said there were at least 260 balloons.

Residents of the northern Gyeonggi and Gangwon provinces have been warned to not go near the “unidentified objects” and have even been advised against outdoor activities. The Joint Chiefs of Staff statement cited the risk of “damaging residential areas, airports and highways.”

North Korea’s Vice Minister of National Defense said this is a natural response to nefarious cross-border activities the north had already long been engaged in. “Scattering leaflets by use of balloons is a dangerous provocation that can be utilized for a specific military purpose,” said Kim Kang Il as cited in KCNA.

Some of the balloons and what they were carrying are quite large, according to local footage…

North Korea sent more than 150 balloons with garbage to South Korea – Yonhap

Inside the bags tied to the balloons were plastic bottles, batteries, shoe parts and even manure.

North Korea has previously said it intends to scatter “mountains of waste paper and dirt” in border… pic.twitter.com/X3HqAXn2xb

— NEXTA (@nexta_tv) May 29, 2024

He charged South Korea with “psychological warfare”. Apparently the Kim Jong Un government believes sh*t balloons are a natural response.

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

This article follows Part One, which discusses the massive investment dollars that will be spent expanding and modernizing the power grid to facilitate demand from AI data centers and EV users. With the macro investment theory laid out, we explore which industries and companies may benefit from the power grid expansion. Part Two focuses on the traditional energy suppliers that will fuel the power grid. We do not present the industries and companies in any particular order.

As you read, please consider that picking the “right” power grid stocks is difficult. In the short run, money flows into and from stocks and sectors align with the popular narratives of the day, regardless of whether they prove correct. Narratives and the sentiment they spur can grossly distort a stock or industry’s valuations and create overbought or oversold conditions. However, over the long term, profits supersede narratives.

This article presents a longer-term view.

Before starting, we address a reader’s question regarding the electricity Bitcoin miners require.  

Bitcoin Mining

After reading Part One, a reader asked if Bitcoin mining contributes to the need to expand the power grid. The answer is mixed. Bitcoin mining requires a lot of electricity. However, as a percentage of total power usage, it’s not nearly as much as AI data centers and EVs will consume.

To put perspective on the amount of electricity that bitcoin miners use, we share some excerpts from a recent report by Paul Hoffman at Best Brokers.

Currently there are 450 Bitcoins mined daily and this costs the mining facilities a whopping 384,481,670 kWh of electrical power. This comes at 140,336 GWh yearly and is more than the annual electricity consumption of most countries, save for the 26 most power-consuming ones.

When this power expenditure was resulting in 340.82 BTC mined up until 20 April 2024 before the halving, it was still economically feasible to mine Bitcoin in the U.S. by using grid power entirely. This is no longer the case and the fact the U.S. mining facilities are still operational points to the notion that they are relying mostly on their own renewable energy sources and/or have special deals with suppliers.

From his report, the first pie chart below shows that the US accounts for over a third of the global power consumption used to mine for Bitcoin. While we are the most significant power user for mining, it is a relatively minor percentage of our total power consumption. To wit, Bitcoin miners use 1.34% of domestic electricity. While a small percentage, it is still a tremendous amount of electricity, as the second graphic shows. However, it is not single-handed enough to warrant the mass expansion of the grid.

Natural Gas- “The Fuel That Keeps The Lights On“

Per the EIA, natural gas accounted for 43.1% of domestic utility-scale electricity generation in 2023. No wonder they call it “the fuel that keeps the lights on.”

Natural gas is abundant in the US. As a result, its price is near 30-year lows, as shown below. In addition to being cheap, burning natural gas is cleaner than burning coal or petroleum products. It’s a win-win energy source for utility companies.

The increase in natural gas reserves over the last fifteen years is primarily the result of shale oil fracking. About three-quarters of the nation’s natural gas comes from shale wells.

According to Wells Fargo analyst Roger Read, the demand for natural gas could increase by 10 billion cubic feet daily by 2030. If correct, that is a nearly 30% increase from what is currently used for electricity generation in the US.

The graphic below, courtesy of the Williams Company, illustrates the roles of the upstream and midstream participants who get natural gas downstream to our homes, schools, and businesses. 

Upstream Producers

The largest US natural gas producers, aka upstream, are listed below. Of these, EQT, SWN, AR, and CNX predominantly drill for natural gas. The remaining companies have significant interests in other types of fuels as well as natural gas.

EQT, SWN, AR, and CNX share prices correlate highly with natural gas prices. Conversely, the other stocks are not nearly as connected to natural gas prices. Given the high correlation, EQT, SWN, AR, and CNX will benefit the most if natural gas prices rise. However, natural gas is plentiful in the US. Accordingly, prices could stagnate near current levels if the supply keeps pace with growing demand.

Unless they are estimating the supply of natural gas, we do not think this sector will benefit overly from the increased use of natural gas to fuel our growing power grid.

Midstream

Natural gas distributors, referred to as midstream, will benefit proportionately from the increased demand. These companies transport natural gas via pipelines from the wells (upstream) to the end users (downstream).

Think of these companies as toll-takers on the energy highway. The more natural gas moves through their pipelines, the more revenue they make. Unlike producers, midstream stock prices are less correlated with natural gas prices and more so by the volume of energy transported.

Many midstream companies pay high dividends, which can fluctuate with profits. Some are organized as limited partnerships with unique tax reporting obligations.

Kinder Morgan (KMI) owns the nation’s largest natural gas network, accounting for approximately 40% of the natural gas consumed. Other large companies include Cheniere Energy (LNG), The Williams Companies (WMB), Energy Transfer LP (ET), Enterprise Products Partners LP (EPD), and Enbridge (ENB). Other than KMI, these companies also derive revenue from different energy sources.

Kinder Morgan (KMI), ONEOK (OKE), and Targa Resources (TRGP) are principally natural gas and liquid gas transporters.

Since midstream company profits depend more on the volume of gas being transported versus upstream producers who rely more on natural gas prices, we prefer midstream. The graph below compares the correlations of the four upstream and three midstream natural gas stocks versus the price of natural gas over the last two years.

Nuclear Energy

Nuclear energy is back in vogue. After being out of favor following Chernobyl and, more recently, Fukushima, countries are rediscovering its benefits. As the graph below from Our World in Data shows, nuclear energy is not only one of the safest energy sources but the cleanest.

The graph below, courtesy of Statista, shows that nuclear power production has stagnated for over 20 years.

There are three main ways to invest in nuclear energy: uranium miners, constructing and maintaining nuclear power plants, and the utilities engaged in generating nuclear power.

According to the World Nuclear Association (WNA), 60 reactors are under construction, and another 110 are planned, 13 of which are in the US. For context, there are about 440 nuclear reactors in the world. Notably, some of the growth will replace old plants being retired. If the world truly embraces nuclear power, the number of new reactors will likely grow substantially.

While natural gas is now being liquified and shipped internationally, most natural gas is and will be distributed within the US. On the contrary, uranium miners and nuclear construction companies can benefit more from expanding power grids globally.

Uranium Producers

The graph below from Cameco shows that the price of uranium has tripled in the last few years but is still below its record highs.

Uranium production peaked in the US about forty years ago. Per the EIA, Canada and Kazakhstan now account for over half of our imports.

The four biggest uranium producers trading on US exchanges are BHP (BHP), Cameco (CCJ), NexGen Energy (NXE), and Uranium Energy (UEC). CCJ, UEC, and NXE primarily produce uranium. BHP, on the other hand, produces a wide variety of commodities.

Since 2021, when uranium prices started to increase aggressively, shares of the three pure uranium producers have grossly outperformed BHP. Given these significant returns, investors should exercise caution in the short run despite optimistic long-term predictions for more nuclear facilities.

Nuclear Reactor Construction and Maintenance

Coming online later this year, Unit four of the Nuclear Plant Vogtle in Georgia expects to generate more than 1,100 megawatts of energy. This follows unit three, which went online in 2023. Construction of both units started in 2009. The total cost of the two units will exceed $34 billion. In the construction process, the lead contractor, Westinghouse, went bankrupt.

We share this because building a new reactor is time-consuming and very expensive, and as Westinghouse investors found out, it can be risky. Further, the permitting and approval process can take years. But if done correctly, it can be very profitable.

Brookfield Renewable Partners (BEP) and Cameco (CCJ) now own Westinghouse. 

In addition to Brookfield, other companies can profit from constructing new plants. One such company is GE Vernova (GEV), which owns GE Hitachi Nuclear Energy (GEH). Per their website:

GEH combines GE’s design expertise and history of delivering reactors, fuels, and services globally with Hitachi’s proven experience in advanced modular construction to offer customers around the world the technological leadership required to effectively enhance reactor performance, power output, and safety.

Quanta Services (PWR) is another beneficiary of the growth in the number of nuclear plants. They are certified by the NRC to repair nuclear plant substations and switchyards.

We think GEV and PWR potentially offer investors promising long-term returns, as they are involved in nuclear facilities and a wide range of traditional power generation operations.

Nuclear Power Generation

Many utilities source electricity from nuclear plants. Some of the largest include Duke, Dominion, NRG, Southern Company, and Constellation. While their expenditures to build and service nuclear facilities are extensive, the benefits of this clean and safe energy will pay future dividends. Investors must carefully weigh the initial capital expenditure of building a nuclear facility versus its long-term benefits.

The graph below from the Nuclear Energy Institute (NEI) shows the US has 93 nuclear reactors of which the large majority are in the eastern half of the nation.

Summary

Part Three will cover alternative energy sources and summaries of other industries and companies that may benefit from the expansion and modernization of the power grid. 

The US-constructed pier off Gaza is officially done – for the time being at least. It is out of commission indefinitely after a series of problems and setbacks, the latest being inclement weather and heavy seas which have literally broken it apart.

The damage from heavy seas has been enough to suspend its operations indefinitely, bringing to an end the short-lived American-led effort to establish a maritime humanitarian aid corridor to reach Gazans.

The pier was “damaged and sections of the pier need rebuilding and repairing,” Pentagon deputy press secretary Sabrina Singh confirmed Tuesday. The vital causeway portion was completely broken off and will have to be transferred and repaired at the Israeli port of Ashdod.

“The pier will be removed from its location on the Gaza coast over the next 48 hours and taken to the Israeli port of Ashdod,” Singh explained, indicating further that the repairs will take at least a week. Aid trucks were only able to roll off of it with maritime-delivered aid over a period of a handful of days before it broke.

This comes a few days after the last disaster involving a section of the pier having broken off and drifting ashore an Israeli beach, which also saw at least two US naval support vessels get beached as well in a somewhat embarrassing moment for the costly project.

As of Tuesday, the Pentagon said the vessels were still stranded. “I believe most of our soldiers were able to remain on the vessels and still are currently on them,” Singh said during the press briefing. “And … within the next 24 or 48 hours, the Israeli Navy will be helping push those vessels back and hopefully they’ll be fully operational by then.”

CNN has described that the pier can only safely sustain operations in waves that don’t go over three feet and so long as winds are less than 15 miles per hour. In essence conditions have to be ideal for aid to move from the sea to land.

Because of this, even if the pier is repaired within a week, it might be weeks more before an attempt can be made to move it back to its docking position. CNN writes that “Heavier sea conditions delayed the deployment of the pier for several weeks, as the system sat docked in the Israeli port of Ashdod waiting for favorable conditions.”

This is a $350 million project which has already long been beset by controversy. Critics have pointed out the grim irony and contradictions which abound in that the Biden administration has very publicly criticized the way that Israel’s military is waging war in Gaza (and especially the high civilian death toll) while simultaneously Washington is funding the same war effort, ultimately to the tune of billions.

The pier took two months and $320m to build, lasted 12 days, and delivered less than 60 trucks’ worth of food (most of which was stolen after it reached Gaza) before it broke and had to be towed away for repairs. https://t.co/2ds72Wiu73

— Gregg Carlstrom (@glcarlstrom) May 29, 2024

So the US is providing the very the weapons used to execute the war and simultaneously pushing high-risky, unlikely to succeed projects like the US Army-built pier for the sake of delivering humanitarian aid. All the while, there have been aid corridors available via land routes, but the Israeli Army has blocked them. In other instances, Israeli settlers have raided aid trucks in order to deprive Palestinians.

In short the US taxpayer is on the hook for both the bombs and humanitarian aid, even as all parties have seemed to essentially give up on finding a political solution or reaching a truce deal.

Authored by Mike Maharrey via Money Metals,

Are the central bankers at the Federal Reserve just winging it? 

It sure seems that way if you step back and take a long view of their decision-making.

Fed officials project this aura of authority. You might imagine them as hyper-intelligent experts in the field of economics and finance making carefully calculated monetary policy decisions based on a thorough understanding of all the dynamics in the economy. After all, they must have risen to these important positions at the Fed based on their economic acumen, right?

Or maybe they are just politicians making stuff up as they go along.

A more accurate word picture would probably be a bunch of people wearing expensive suits throwing darts at a dartboard.

Current Fed Thinking

We just got the minutes from the most recent FOMC meeting held on April 30 and May 1. As you may recall, the committee elected to hold rates steady at 5.25 to 5.5 percent. But the messaging that came out of that meeting was relatively hawkish after several previous CPI reports showed stubbornly sticky price inflation.

In its official statement, the Committee conceded that rates will remain at this level into the foreseeable future.

“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

During the post-meeting press conference, Powell admitted that he and his fellow central bankers don’t have a clue when that might happen.

“I would say my personal forecast is that we will begin to see further progress on inflation this year. I don’t know that it will be enough, sufficient. I don’t know that it won’t. We’re going to have to let the data lead us on that.”

The May meeting minutes reveal that the FOMC members were even more hawkish behind closed doors.

They lamented the lack of progress on the price inflation front.

“Participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee’s 2 percent objective. The recent monthly data had showed significant increases in components of both goods and services price inflation.”

And with price inflation still running hot, “The market-implied path for the federal funds rate through 2024 increased markedly, and federal funds futures rates suggested that market participants were placing lower odds on significant policy easing in 2024 than they did just before the March FOMC meeting.“

In fact, according to the minutes, “Various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.”

In other words, as of May 1, the central bankers at the Fed weren’t thinking about rate cuts and they put further rate hikes back on the table.

What a Difference Six Weeks Makes

Now let’s take a trip back into the deep recesses of time known as March.

After the March FOMC meeting, the committee released its “dot plot” projecting the expected trajectory of interest rates over the next several years.  

Based on the dot plot, the FOMC indicated that it still planned to cut interest rates three times this year. If it moved in typical 25-basis point increments, that would lower rates to between 4.5 and 4.75 percent by the end of the year.

The committee projected additional cuts in 2025, dropping rates to around 3 percent.

Now, stop and think about this. Six weeks ago, the FOMC was convinced that three rate cuts were the appropriate trajectory of monetary policy.

Six weeks later, we might need rate hikes. 

Did I mention this flip-flop happened in just six weeks?

This doesn’t exactly inspire confidence that these people know what they’re doing, does it?

Now, you might say, “Well, Mike, monetary policy is a complex business. You can’t expect them to get it right every time.” And that might be a fair assessment. The problem is it doesn’t seem like they ever get it right.

Comparing the actual trajectory of rate cuts with the projections bear this out. 

How bad is their track record?

Fund manager David Hay analyzed past dot plots and found the FOMC only got interest rate projections right 37 percent of the time. And as Hay pointed out, “They control interest rates!”

In other words, the people who set interest rates would make better guesses about where interest rates are heading by flipping a coin.

For instance, in March 2021, the FOMC projected the interest rate would still be zero in 2022. The actual 2022 rate was 1.75 percent. And in 2023, the vast majority of FOMC members thought the rate would still be at zero. The actual rate was over 5 percent.

If the FOMC members didn’t have coins handy, maybe they should try throwing darts at a chart.

My point is we don’t have a good reason to believe anything Powell & Company said or to think their musings tell us anything about the central bank’s next moves.

I can’t help but think of other Fed predictions that were wildly wrong. 

Do you remember when inflation was “transitory?”

Or how about back in 2007 when they emphatically assured us that the subprime mortgage problems were “contained.”

A year later, then Fed Chair Ben Bernanke told Congress that quantitative easing was a “temporary emergency measure” and once the crisis passed, the central bank would quickly shed the bonds it was buying from its balance sheet. He insisted that the Fed was not engaged in debt monetization. Sixteen years later, most of those assets are still on the books.

I’m just going to throw this out there – given the track record, maybe the mainstream should stop with the knee-jerk reactions every time words fall out of Jerome Powell or some other Fed official’s mouths. 

After the minutes came out, stocks tanked and gold sold off, because we’re hawkish again. Just a week ago, stocks set new records and gold rallied because the CPI report was good (even though it wasn’t) making everybody think the Fed people would jump back on the rate cut train. 

The fact of the matter, it’s all just wild guesses and speculation.

Instead of obsessing over the Fed’s open-mouth operations (doing monetary policy by talking), people would do better to look at the underlying fundamentals of the economy. Consider the massive levels of debt, the stagnating growth, the amount of money creation the central bank engaged in, and the fact that the economy runs on easy money, and then place all of this into the context of a higher interest rate environment. You’ll almost certainly come closer to anticipating the future than you will by listening to Fed officials blah, blah, blah.

Or you could just throw darts.