Month: August 2024

Just over two weeks after the VIX almost touched 70, the market’s freakout is completely forgotten as futures continue rising and a global gauge of stocks approached a record high as traders are now convinced the Fed will deliver its first interest-rate cuts in more than four years, which will take place with both stock and housing prices at all time highs. One can only imagine what happens next. The MSCI’s All Country World index ticked up 0.1%, trading near its all-time record close on July 16. As of 7:45am, S&P futures were 0.2% higher with the index on pace to be up 10 of the past 11 days, while Nasdaq futures gained 0.3%. Europe’s Stoxx 600 index advanced 0.5% as Deutsche Bank AG rallied after predicting a boost to third-quarter results. US futures edged higher. The Bloomberg dollar index is up after rebounding from a 5 month low, while 10Y TSY yields are higher by 3bps to 3.83% after dropping 4 days. Oil is also higher after tumbling to the lowest price of 2024 yesterday. The macro calendar is busy with Initial and jobless claims, Chicago Fed and and existing home sales for July. The Jackson Hole symposium begins tonight with Powell’s highly expected speech due tomorrow at 10am.

In premarket trading, Charles Schwab shares fall 4.3% after Toronto-Dominion Bank has raised $2.5 billion in pricing the sale of Schwab shares at $61.65 each. Paramount Global shares rose 3.7% after media investor Edgar Bronfman Jr. raised his offer to take control of thee CBS parent to $6 billion, according to Bloomberg News. Here are some other notable premarket movers:

• Canadian Solar shares slip 4.2% after the company forecast revenue for the third quarter; the guidance missed the average analyst estimate.
• Estee Lauder shares rise 2.3% after an upgrade to overweight at Piper Sandler.
• SentinelOne shares rise 3.4% after an upgrade to overweight at Wells Fargo.
• Snowflake shares drop 9.6% after the software company reported its second-quarter results and gave an outlook. While the results beat expectations on key metrics, analysts flagged some concerns.
• Sprout Social shares slip 3.2% after receives its first ever sell-equivalent rating since its initial public offering in December 2019, after KeyBanc Capital Markets cut the company to underweight from sector weight and set a new Street low price target.
• Synopsys shares rise 2.4% after the electronic design automation software company reported third-quarter results that beat expectations and raised its full-year forecast.
• Urban Outfitters shares fall 11% after the apparel retailer reported second-quarter comparable retail segment sales growth that missed Wall Street expectations.
• Zoom Video Communications shares rise 3.5% after the video-conferencing software company reported second-quarter results that beat expectations and raised its full-year forecast as new AI and contact centers products continue to deliver. It also announced that CFO Kelly Steckelberg would resign.

Expectations for US rate cuts have completely erased the market slump at the start of August that was sparked by recession fears in the US and a rapid unwind of the yen carry trade. Now, investors are focused on Powell’s speech at the Jackson Hole economic symposium on Friday for further evidence a September cut is coming, but even without it, about 100 basis points of easing are already priced in this year after some -818,000 payroll revisions reinforced the case for lower rates.

“We’ve been long Treasuries for a week now — it’s quiet and yields can grind lower from here,” said Matt Amis, investment director at Abrdn Investment Management Ltd. “Jackson Hole is obviously all the market is waiting for. Powell is desperate to cut, we don’t see why he would want to push back on current market pricing for September.”

The Stoxx 600 rises 0.6%, led by retail and travel names. Retail is the strongest-performing sector, wihle basic resources stocks are the biggest laggards. Here are the most notable European movers:

• CTS Eventim shares rise 11% to an intraday record after the German events company’s first-half revenue beat estimates. The firm now expects significantly higher Ebitda and revenue for its ticketing segment compared with last year.
• Swiss Re advances as much as 3.8%, the most since May, after the Swiss insurance group reported first-half earnings where all its divisions outperformed expectations. Vontobel expects Swiss Re to surpass its FY guidance this year, bar any major large claims.
• JD Sports shares rise as much as 6.3% to hit their highest level since early June after the UK clothing retailer reassured investors with sales growth and increasing market share at a tough time for the broader retail space, according to analysts at Peel Hunt.
• Swiss Prime shares rise as much as 2.6% to hit their highest level since June 2022 after the real estate investor reported strong rental income growth, record-low vacancy rates, an improved valuation for its portfolio and a rosier outlook, according to analysts. The stock is trading at its highest level since June 2022.
• Bavarian Nordic shares rise as much as 13% after the Danish company forecast reaching the top end of its full-year guidance range following an order for its smallpox/mpox vaccine from a European country. Analysts see consensus expectations being increased for the year.
• HelloFresh shares rise as much as 8.5%, hitting the highest intraday level since March, after activist investor Active Ownership disclosed a stake.
• Meko gains as much as 13%, the most since May 2022, after the Swedish automotive parts retailer reported stronger-than-expected earnings, with operating income 41% ahead of Bloomberg-compiled consensus expectations.
• PKO Bank Polski shares gain as much as 3% after Poland’s biggest lender reported 2Q earnings beat on interest income that rose 15% Y/y despite fresh charges on mortgage moratoriums. Analysts praise also further reduction of cost of risk and see that PKO has potential to maintain high profits in the coming quarters.
• Aegon shares drop as much as 6.7% after the insurer’s first-half operating profit dropped on charges booked after the insurer updated its mortality assumptions. Analysts say this is a negative, but highlight underlying results were solid and that guidance has been reiterated.
• GN Store Nord shares drop as much as 10%, the most since August 2023, after the Danish hearing-aid and audio equipment firm reported weaker-than-expected earnings for the second quarter. Morgan Stanley analysts see “modest trims” to consensus estimates for the year.
• Orlen, Poland’s largest energy company, falls as much as 2.8% after it reported net loss in 2Q due to 6.3b zloty charges to finance the country’s household energy price caps. Analysts see Orlen’s plan to cut capex as well as rising profits from electricity segment as a positive signal.
• Instalco falls as much as 12%, the most since November 2022, after the Swedish electrical installations group reported its latest earnings, showing an organic contraction in the quarter of 6.4% vs. 5.5% growth a year earlier.

European data showed a mixed picture for the region’s economy, despite a surprise boost from the Paris Olympics. French services expanded at the fastest pace in more than two years, while in Germany a composite PMI added to evidence that the country’s recovery has fizzled out. Britain’s private sector companies reported their strongest growth in four months alongside cooling price pressures. In company news, shares of Deutsche Bank jumped more than 3%. The lender said it expects a €430 million ($479 million) boost to pretax profit in the third quarter after reaching agreements with more than 80 plaintiffs in a long-running dispute.

Earlier in the session, Asian stocks eked out small gains. The MSCI Asia Pacific Index rose as much as 0.4% after fluctuating in early trading. Tencent contributed the most to the gauge’s increase, while AIA Group also surged after the insurer’s new business value jumped to a record in the first half of the year. Equities in Hong Kong led the gains in the region, as several major companies including Xiaomi reported upbeat results. Those in the Philippines and Japan also advanced, partly helped by expectations of US rate cuts, which may provide support to shares ranging from technology companies to machinery makers. Indonesia and Taiwan markets declined. Bank of Japan Governor Kazuo Ueda, meanwhile, faces intense market scrutiny on Friday when he speaks to lawmakers, after the central bank’s hawkish signals contributed to the global market turmoil earlier this month.

In FX, the Bloomberg Dollar Spot Index is up 0.1% while the Japanese yen falls 0.3%; the pound has risen to the top of the G-10 FX pile, climbing 0.2% against the dollar after UK manufacturing and service PMIs topped estimates. The euro falls 0.1% after more mixed readings from the bloc – manufacturing was weak but services outperformed, in part due to the Paris Olympics. 

In rates, treasuries are under pressure in early US trading with the yield curve flatter as front-end yields are about 3bp higher on the day. US rates track a bigger selloff in core European bond markets sparked by August preliminary PMIs for France, Germany and euro-zone. Treasury yields are cheaper by at least 2bp across the curve with 2s10s, 5s30s spreads flatter by about 1bp on the day; 10-year is around 3.82% with comparable bunds and gilts cheaper by an additional 1.7bp and 1.5bp. German government bonds are lower and didn’t show much reaction to a slowdown in euro-zone wage growth in the second quarter.

In commodities, oil prices are little changed, with WTI near $72 a barrel. Spot gold drops $8 to around $2,504/oz.

Bitcoin is flat and holds just beneath USD 61k, with Ethereum also rangebound just above USD 2.6k.

Looking at today’s calendar, the economic data includes July Chicago Fed national activity index and initial jobless claims (8:30am), August preliminary S&P Global US manufacturing and services PMIs (9:45am), July existing home sales (10am) and August Kansas City Fed manufacturing activity (11am). Fed speaker slate empty for the session

Market Snapshot

• S&P 500 futures little changed at 5,645.75
• MXAP up 0.3% to 185.14
• MXAPJ up 0.4% to 575.40
• Nikkei up 0.7% to 38,211.01
• Topix up 0.2% to 2,671.40
• Hang Seng Index up 1.4% to 17,641.00
• Shanghai Composite down 0.3% to 2,848.77
• Sensex up 0.2% to 81,091.03
• Australia S&P/ASX 200 up 0.2% to 8,026.96
• Kospi up 0.2% to 2,707.67
• STOXX Europe 600 up 0.4% to 516.16
• German 10Y yield little changed at 2.22%
• Euro little changed at $1.1148
• Brent Futures little changed at $76.12/bbl
• Gold spot down 0.4% to $2,503.09
• US Dollar Index up 0.13% to 101.17

Top Overnight News

• At least three banks managed to obtain key payroll numbers Wednesday while the rest of Wall Street was kept waiting for a half-hour by a government delay that whipsawed markets and sowed confusion on trading desks.
• Several Federal Reserve officials acknowledged there was a plausible case for cutting interest rates at their July 30-31 meeting before the central bank’s policy committee voted unanimously to keep them steady.
• The euro’s August gains have been relentless, taking it to a one-year high against the dollar on Wednesday, but a cautious tone from Powell on Friday could turn that momentum around.
• It’s arguably one of the last places you’d expect stock investors to turn as China’s economy struggles and its real estate crisis worsens.
• Australia’s second-best performing hedge fund is profiting from greater market swings during earnings seasons, saying investment bank research has failed to track the ups and downs of faster-evolving industries.
• French services expanded at the fastest pace in more than two years, driving Europe’s second-biggest economy as visitors from around the world flocked to Paris for the Olympic Games.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded with a mild positive bias after the gains on Wall St where a downward payrolls revision and the FOMC Minutes further supported the consensus for a September Fed rate cut. ASX 200 edged higher but with gains capped as participants digested a slew of earnings, while data showed an improvement across Australia’s flash PMIs although  manufacturing remained in contraction. Nikkei 225 marginally outperformed its peers and returned to above the key 38,000 level. Hang Seng and Shanghai Comp. wer e somewhat varied with notable strength in Hong Kong tech stocks after a solid earnings  report from Xiaomi, although pharmaceutical stocks and WuXi biologics were at the other end of the spectrum after the latter reported a 24% drop in H1 net, while the mainland remained lacklustre amid growth concerns, trade frictions and a net liquidity drain.

Top Asian News

• BoK kept its base rate unchanged at 3.50% as expected, with the decision made unanimously. BoK said it will examine the proper timing of rate cuts and said confidence is greater that inflation will converge on the target level, while it dropped the phrase ‘sufficient period of time’ in saying it will maintain a restrictive policy stance. BoK Governor Rhee said inflation conditions are appropriate for a cut and that four board members said room for a rate cut should remain open although Rhee also stated that rising financial stability risks warranted the BoK’s decision to hold rates today. Furthermore, Rhee said the pace and extent of an interest rate cut in South Korea will be smaller than that of the US and noted the BoK is communicating with markets using a three-month horizon forward guidance but also stated that forward guidance doesn’t guarantee a rate cut.
• Baidu Inc (BIDU) Q2 2024 (USD): EPS 2.89 (exp. 2.57), Revenue 4.669bln (exp. 4.7bln).
• NetEase Inc (NTES) Q2 2024 (USD): EPS 1.67 (exp. 1.69), Revenue 3.5bln (exp. 3.58bln).
• BoJ is considering adding wage-related items to the Tankan survey, according to Jiji News; aims to analyse wage trends in Tankan survey, reflects on monetary policy decision

European bourses, Stoxx 600 (+0.5%) began the session flat/modestly firmer. Indices were choppy following the various PMI releases, but ultimately trudged higher as the morning progressed. European sectors hold a positive bias, albeit with the breadth of the market fairly narrow. Retail takes the top spot, propped up by post-earning strength in JD Sports (+3.1%). Basic Resources lags, paring back some of the strength seen yesterday, in line with a pullback in metals prices. US Equity Futures (ES U/C, NQ U/C, RTY U/C) are flat/firmer, with traders mindful ahead of the beginning of the Jackson Hole Symposium and Fed Chair Powell’s speech on Friday.

Top European News

• UK Firms Report Faster Growth, Cooler Inflation in Boost for BOE
• Private Equity Fights for UK Tax Perk While Ducking Public Ire
• Norway’s Households Expect Near-Term Inflation to Accelerate
• Euro-Zone Economy Handed Surprise Boost by Paris Olympics

FX

• DXY is a touch higher but ultimately not showing enough of a resurgence to reverse the recent bearish run for the index. DXY went as low as 100.92 on Wednesday, but currently stands around 101.25.
• EUR is marginally softer vs. the USD in the wake of a slew of EZ PMI metrics which ultimately saw continued outperformance in the service sector vs. the manufacturing industry with the former helping the composite to gain a firmer footing above the 50 mark. Elsewhere, a decline in EZ Negotiated Wages for Q2 had little sustained follow-through into the EUR. For now, EUR/USD is contained within Wednesday’s 1.1098-1.1174 range.
• GBP is edging gains vs. both the USD and EUR with solid PMI metrics underpinning the pound. Cable has taken out yesterday’s 1.3119 high and therefore brought the 2023 high into view at 1.3142.
• JPY is trivially softer vs. the USD with markets awaiting two potentially key inflection points for the pair tomorrow. 1) Ueda’s appearance before Parliament and 2) Powell’s appearance at Jackson Hole.
• Antipodeans are both marginally firmer vs. the USD in quiet trade which is showing a mild pro-risk bias.

Fixed Income

• USTs moved in tandem with the net-hawkish move seen in Bunds/Gilts on their own metrics. Docket today sees US PMIs ahead of the commencement of the Jackson Hole Symposium. At a 113-19 base, support from the last few session’s lows at 113-14+, 113-03+ and 112-31.
• Bund price action today has been dictated by PMI releaes. Bunds were initially pressured by strong French PMIs, but the release is subject to extensive Olympic-related caveats, which led to the upside being mostly pared. Thereafter, German numbers were soft lifting Bunds to a 135.08 peak, spurred by the data erring towards another negative quarter and potential recession talk. Ultimately, Bunds are in the red and just below the knee-jerk base which printed on the initial French numbers.
• Gilts were moving in tandem with Bunds into its own release, which was stronger across the board. Overall, a hawkish reaction was seen with GBP picking up and Gilts probing below the earlier 99.87 base; current low of 99.81.

Commodities

• Relatively flat session for crude thus far following Wednesday’s losses. Brent Oct is trading within USD 75.77-76.21/bbl parameters.
• Mixed trade across precious metals with slight gains in spot palladium while spot gold and silver trade subdued in what has been a quiet morning this far, and with little move seen in the metals to EZ PMIs. Spot gold trades in a USD 2,514.69-2,499.18/oz range.
• Base metals are flat trade on Thursday, infitting with the broader tentative mood and following the prior day’s fluctuations, with markets seemingly on standby ahead of the Fed’s Jackson Hole symposium and Fed Chair Powell’s speech in the absence of any other macro impulses.
• Russia’s Novatek has postponed launched of third line at Artic LNG 2 project to 2028, according RBC citing source.
• Chinese crude steel output -9.0% Y/Y in July to 82.9mln tonnes; world steel output -4.7% Y/Y to 152.8mln tonnes.
• UBS continue to expect Brent to recover into a USD 85-90/bbl range over the coming months; Reiterate a step up in Gold ETF inflows required for next leg higher toward their mid-2025 gold target of USD 2700/oz
• OPEC Secretariat received updated compensation plans from Iraq and Kazakhstan.

Geopolitics

MIDDLE EAST

• Ambrey reports a fire at sea approx. 58NM southwest of Salif, Yemen; likely related to the destruction of a suspected unmanned surface vessel
• Israeli forces besiege Tulkarm refugee camp east of the city in the West Bank, while it was also reported that the Israeli army launched raids on 10 areas in Lebanon.
• US officials said to believe that Iranian leaders have decided to postpone the response to Haniyeh’s assassination but fear that Tehran will urge Hezbollah to attack, according to The Washington Post.
• US military announced on Wednesday that the USS Abraham Lincoln entered the Central Command area of responsibility in the Middle East, according to Iran International.
• A fire broke out at a military facility in Russia’s Volgograd region after a drone crashed into it, according to Interfax.
• US Embassy within Kyiv says they see an increased risk of Russian drone/missile attacks in the coming days, due to Ukraine’s Independence Day on 24th August

US Event Calendar

• 08:30: Aug. Initial Jobless Claims, est. 232,000, prior 227,000
  • Aug. Continuing Claims, est. 1.87m, prior 1.86m
• 08:30: July Chicago Fed Nat Activity Index, est. 0.03, prior 0.05
• 09:45: Aug. S&P Global US Manufacturing PM, est. 49.5, prior 49.6
  • Aug. S&P Global US Services PMI, est. 54.0, prior 55.0
  • Aug. S&P Global US Composite PMI, est. 53.2, prior 54.3
• 10:00: July Existing Home Sales MoM, est. 1.3%, prior -5.4%
• 11:00: Aug. Kansas City Fed Manf. Activity, est. -9, prior -13

DB’s Jim Reid concludes the overnight wrap

Markets put in another decent performance yesterday, as the S&P 500 (+0.42%) posted a further advance that left it less than 1% beneath its record high from July. The gains happened despite some negative revisions to US payrolls, but given the widespread expectations that they’d be revised down anyway, the news didn’t lead to a big reaction among risk assets. Plus the revisions only affect the numbers up to March, and don’t change our understanding of the more recent figures, which is ultimately what the Fed cares about. Later on in the session, we then received some dovish-leaning minutes from the Fed’s July meeting, which along with the payrolls revisions helped to cement expectations that the Fed would cut rates pretty rapidly over the coming months, with over 100bps of cuts priced in by year-end again.

In terms of the details of those revisions, what we got yesterday was the preliminary estimate for the annual benchmark revisions, which included an -818k downward revision to the March payrolls number. In other words, that means the monthly payroll numbers would be -68k lower if you assume the revisions are spread evenly across the year. Before the revisions, nonfarm payrolls had been running at an average pace of +242k per month over the year to March, so a downward revision that  big would mean the pace was actually +174k instead. So these are still steady gains that are well clear of recessionary levels. But they’re noticeably less robust than previously thought, and the revisions have added to the narrative that the labour market is weakening, particularly after the jobs report at the start of the month.

The dovish mood then got a further boost from the minutes of the July FOMC meeting, which solidified the prospects of a September cut. Several FOMC participants even “observed that the recent progress on inflation and increases in the unemployment rate had provided a plausible case” for a 25bps cut at the July meeting. And while all of the FOMC supported the decision to keep rates unchanged in the end, a “vast majority” saw a September rate cut as appropriate if data came in as expected. There was also a shift in the economic assessment, as most of the FOMC “remarked that the risks to the employment goal had increased” and “some participants also noted the risk that a further gradual easing in labor market conditions could transition to a more serious deterioration”.

In response to the payroll revisions and Fed minutes, the most obvious market reaction was that investors dialled up their expectations for Fed rate cuts. For instance, futures are now pricing in 103bps of cuts by the December meeting (+4.3bps on the day). Bear in mind there’s only three meetings left this year, so that’s implicitly pricing in at least one meeting where they deliver a larger 50bp move. The chance of a 50bp move in September also ticked up from 34% to 36% by the close. Those growing expectations of a 50bp rate cut helped to weaken the dollar further, and the dollar index (-0.40%) fell back for a fourth consecutive session to its lowest since December. In turn, front-end Treasury yields moved noticeably lower with the 2yr yield (-5.3bps) down to 3.93%. This was accompanied by a sizeable steepening of the curve, with the 10yr yield (-0.6bps) down marginally and the 30yr (+1.7bps) higher on the day.

When it came to equities, there was a solid performance yesterday. The S&P 500 (+0.42%) saw a moderate but broad advance, with 80% of its constituents higher on the day and its equal-weighted version (+0.71%) posting a new all-time high. Target (+10.34%) was the second-best performer in the index after it reported that comparable sales were up +2% in Q2, ending a run of four quarterly declines. And it was a strong day for small-caps, with the Russell 2000 posting a +1.32% gain. However, there were a few signs of moderate stress, as the VIX index of volatility ticked up +0.39pts to 16.27pts.

Over in Europe it was a similar story, with moderate gains for the major equity indices that left the STOXX 600 up +0.33%. The broad dollar weakness also helped the Euro to strengthen for a fourth consecutive day, closing at a one-year high of $1.1146. At the same time, investors mirrored the US in dialling up their expectation of rate cuts from the ECB, and sovereign bond yields fell to their lowest in months across several countries. For example, yields on 10yr French OATs (-4.0bps) closed at 2.90%, their lowest since May, whilst yields on 10yr Italian BTPs (-3.4bps) closed at their lowest since December.

The dovish narrative about rate cuts got another boost from lower energy prices, which added to the sense that inflationary pressures were easing. For instance, Brent crude oil prices were down another -1.49% yesterday to $76.05/bbl, which is their lowest closing level since January. It now means that Brent crude is negative on a YTD basis again, and the effects have already been seen filtering through to lower gasoline prices. For example, the AAA’s daily tracker of US gasoline prices was down to $3.40 on Tuesday, which is its lowest level since March.

Overnight in Asia, markets have been trading more cautiously as investors look forward to Fed Chair Powell’s speech at Jackson Hole tomorrow. The Nikkei (+0.38%) has posted a decent gain, along with the Hang Seng (+0.40%). But elsewhere things have been more muted, and the CSI 300 (-0.13%), the Shanghai Comp (-0.04%) have both posted modest declines, whilst the KOSPI (+0.02%) has seen little movement after the Bank of Korea left their policy rate unchanged, in line with expectations. Looking forward, US and European equity futures are also pointing lower, with those on the S&P 500 (-0.14%) and the DAX (-0.08%) falling back slightly.

Elsewhere, one of the main highlights today will be the release of the August flash PMIs, which will offer an initial indication of how the global economy has been performing into this month. Overnight, we’ve already had some of those releases, which have painted a stronger picture so far. For instance, Australia’s composite PMI was back up to a three-month high of 51.4. And in Japan, the composite PMI was at a 15-month high of 53.0.

There was very little other data yesterday apart from the payrolls revisions. However, we did get the MBA’s weekly data on US mortgage applications. That showed the number of applications to purchase a home were down to their lowest since February, even though the contract rate fell to 6.50%, which is the lowest since May 2023.

To the day ahead now, and data releases include the August flash PMIs from Europe and the US. In addition, we’ll get the US weekly initial jobless claims and existing home sales for July, whilst in the Euro Area there’s the European Commission’s preliminary consumer confidence indicator for August. From central banks, the ECB will publish the account of their July meeting.

An unprecedented rail stoppage is underway after Canada’s largest railroads, Canadian National and Canadian Pacific Kansas City, locked out more than 9,000 union rail employees at 12:01 a.m. Eastern Time on Thursday. Simultaneously, the union declared a strike, escalating fears that this rail disruption could wreak havoc across North America’s complex supply chains. 

“Canadian National has formally locked out employees represented by the Teamsters Canada Rail Conference (TCRC) as of Aug. 22 at 00:01 ET, after the union did not respond to another offer by CN in a final attempt to avoid a labor disruption,” Canadian National wrote in an early AM press release.

Canadian National continued, “This offer improved wages and would have seen employees work less days in a month by aligning hours of service in the collective agreement with federally mandated rest provisions. The offer also proposed a pilot project for hourly rates and scheduled shifts on a portion of the network as CN continues to believe this is a better and more predictable framework for our employees,” adding, “Without an agreement or binding arbitration, CN had no choice but to finalize a safe and orderly shutdown and proceed with a lockout.” 

Canadian Pacific Kansas City issued a similar press release, indicating it had “bargained in good faith, but despite our best efforts, it is clear that a negotiated outcome with the TCRC is not within reach.”

After Thursday’s deadline elapsed, TCRC wrote on X, “Members should now be manning the picket lines (0001 ET), and signs should indicate lockout/strike.” 

CPKC Bulletin 14https://t.co/osqoonDwin
Members should now be manning the picket lines (0001 ET), and signs should indicate lockout/strike. pic.twitter.com/i2U0Bp0Jqn

— Rail Conference (@TeamstersRail) August 22, 2024

‼️Despite months of good faith negotiations on the part of the Teamsters Canada Rail Conference, parties remain far apart, and both CN and CPKC have began their lockout of 00:01 today.#canlabhttps://t.co/rXR9QymzVW

— Teamsters Canada (@TeamstersCanada) August 22, 2024

A prolonged labor action could severely disrupt Canada’s complex rail network, sending shockwaves through the U.S. economy and potentially reigniting inflation. 

Bloomberg noted, “As a result, some cargo has been rerouted to ports on the US west coast, which are already dealing with container volumes approaching pandemic records.” 

Brendan LaCerda, a senior economist with Moody’s Analytics, wrote earlier this week that prolonged labor stoppages would disrupt supplies of grain, fertilizer, lumber, and steel, potentially raising food prices, construction materials, and autos. 

“Significant two-way trade and deeply integrated supply chains between Canada and the United States mean that any significant rail disruption will jeopardize the livelihoods of workers across multiple industries on both sides of the border,” U.S. Chamber of Commerce President Suzanne Clark wrote in a statement. 

Earlier this week, Goldman’s Jordan Alliger told clients, “While a longer strike duration period is a possibility, we think history makes the probability of a shorter strike period much more likely (i.e., less than a week and more likely a few days of work stoppage once strike occurs); that said, the ongoing phased network slowdowns, shipper diversions, potential for heightened supply chain congestion, and the inevitable time it will take for Canadian rails to fully reboot network operations will likely keep near-term performance muted.” 

Alliger said, “Using 2023’s total trade value figure of ~$6.7tn as a base proxy (transborder + US-international) would imply ~$67bn-$134bn of annually disrupted trade, which would mean potential trade disruptions of ~$180mn-$370mn per day should Canadian rail strikes ensue.” 

Authored by Irina Slav via OilPrice.com,

About a quarter of British households are so worried about their electricity bills they are considering spending next heating season without heat or hot water, a survey by Citizens Advice has suggested.

The concern follows plans by the national electricity market regulator to raise the cap on bills by another 9.2%, equal to 150 pounds or $195.

The Citizens Advice report said the percentage of those worried about the affordability of their electricity was substantially higher among households with children, where the percentage was 31%, and low-income households, where 39% were worried about the coming heating season.

The consumer advocacy group also reported that 48% of respondents in its survey had said they would have to turn down the heat or turn it off to survive winter financially.

Another 34% said it would be difficult for them to afford food, mortgage payments, or childcare this winter because of higher electricity prices.

Citizens Advice called on the authorities to find a way out of this situation, saying that “While plans to focus the energy market on renewables could reduce energy bills in the long term, households in desperate need can’t afford to wait until then.”

The specific move that the Keir Starmer government could make, according to the organization, was to increase the amount of state help for energy bills to low-income households.

Earlier this year, energy consultancy Cornwall Insight forecast that electricity costs in Britain this year will come in at an average 113 pounds per MWh—double the historical average, City AM reported in January.

This week, the BBC reported that Ofgem, the market regulator, was likely to raise the energy bill cap by 9%, citing Cornwall Insight as the source of the forecast as electricity suppliers’ wholesale costs rose by 20% over the last few months.

Ofgem will decide on the cap in October.

The management team of Foxconn Technology Group, formerly known as Hon Hai Precision Industry, the world’s largest contract electronics manufacturer, responsible for assembling Apple’s iPhones and artificial intelligence servers for tech giants like Amazon and Nvidia, shared valuable insights into AI server demand and potentially where the AI bubble is headed with Goldman analysts. 

Goldman analysts led by Allen Chang summarized the key takeaways from a call with Foxconn management on Wednesday. 

“Overall, management remains positive on the AI servers business, which continues to enjoy sequential revenue growth in 3Q24 and 4Q24,” Chang wrote in a note for clients. He said Foxconn plans to begin small-volume production of the full rack AI servers by the end of the year and enter mass production and shipment ramp-up in 2025. 

Chang said his team remains “positive” on Foxconn and “see its vertical integration, comprehensive customer base, R&D capability, strong balance sheet and global production sites as continuing to secure the company’s leading market position in AI servers.”

He added, “The EV business is also on track with the next passenger car production to start in 1H25. The company is also working with a Japanese car OEM on a MOU, targeting to finalize details of the contract by the end of 2024.” 

Foxconn is strategically positioned to capture 40% of the global AI server market. With the worldwide rise of AI applications, these new advanced servers are becoming one of the company’s primary growth drivers. Management’s optimistic outlook shared with Goldman analysts underscores that the AI bubble might not totally collapse this year or early next, though some argue that the valuations of some chip companies are exceedingly elevated.

The analysts penned the note titled “Mgmt Call takeaways: AI servers continue to ramp up in 2H24; still positive on liquid cooling and EVs”…

Here are the key takeaways from the call with management: 

1. AI servers business outlook: AI servers revenues contributed 40%+ of Hon Hai’s total server revenues in 2Q24, or 60%+ QoQ, or 100%+ YoY revenues growth in 2Q24. Management continues to expect sequential revenue growth of AI servers through 2024E. The full rack AI server timeline remains pretty much in line with Hon Hai’s previous expectation for small volume production by the end of 2024E, and to enter mass production and shipment ramp up in 2025E. Management remains confident Hon Hai will be the first supplier to ship out the full rack AI servers by the end of this year.

2. AI servers’ competitive edge: Hon Hai views one of its competitive strengths as its vertical integration, which includes GPU modules, baseboard, computing boards, switch boards, high speed switches, front-end (L6), back-end (L10-12), and liquid cooling. R&D capability is another key strength allowing the company to support customers in designing AI servers, and accelerate the product cycle. On the manufacturing side, Hon Hai provides high automation and global production sites to drive efficiency, onsite services for clients, and to meet clients’ needs to diversify production sites to reduce geopolitical risks.

3. Liquid cooling business outlook: Customers tend to go with high computing power solutions, and management remains confident in liquid cooling market demand. For customers, there are initial costs and running costs to consider together, and 30%+ of running costs come from power consumption, which depends on the cooling system. Air cooling could carry lower initial costs, but is less efficient in terms of running costs vs. liquid cooling. Hon Hai’s solutions across direct to chips and immersion cooling, including liquid to air solutions (Side Car), and liquid to liquid solutions (In Rou CDU). Cold plate, UQD, and manifold are the key components that Hon Hai aims to develop in house, while the company also leverages the supply chain at the initial stage. According to management, liquid cooling is not a new business to them, and customer feedback they’ve received on their solutions is positive.

4. AI servers capacity expansion: Hon Hai continues to invest in AI servers across L5 to L12; currently it has prepared capacity for demand in 2025, and will keep expanding based on the market demand dynamics. Capex was up 14% in 2023, and up 33% YoY in 1H24 to NT$63bn (US$2bn).

5. EV business update: Passenger car production in Taiwan is on track, per management. Full-year guidance of 10k+ units is unchanged, which could bring NT$10bn revenues to the company. The next passenger car production is also in the pipeline, aiming to start in 1H25. In the overseas market, Hon Hai signed an MOU with a Japanese car OEM, and targets to finalize details of the contract by the end of 2024. This will mark a key milestone for the company, demonstrating Hon Hai’s strong capability and scale advantages in EV production.

Given all this, the analysts have a 12-month price of NT$257, with nearly 38% upside from here. 

In a separate Goldman note, cloud capex at Microsoft, Google, Amazon, and Meta are expected to surge well into 2025. 

Nvidia’s yoy revenue growth forecast in data centers continues to be parabolic. 

Shares of Nvidia are back at the highs. 

The AI boom has shifted attention to contract electronics manufacturers of AI servers as a key gauge of where we are in the AI bubble cycle. It seems the AI bubble may still have room to expand, provided a deep recession doesn’t force big tech to halt its massive capex AI spending spree.

Via Middle East Eye

The Israel Diamond Exchange has reported a drop in its exports and membership in 2024, according to Israel media outlet Ynet news.

The exchange president, Nissim Zuaretz, said that for the first time in its history, the annual number of retirees has exceeded the exchange’s new members. “In the best years of the industry, we received 200 new members a year, in the past year only 30,” Zuaretz said.

The Israel Diamond Exchange, in the city of Ramat Gan, is the world’s largest, encompassing about 3,100 members. The country is the fifth largest global exporter of cut and uncut diamonds.

In 2024, Israel’s net exports of rough diamonds saw a six percent decrease compared to the same period in 2023, while the export of polished diamonds in the first seven months of 2024 dropped by 33 percent compared to the corresponding period in 2023.

In July 2024 alone, exports decreased by almost half compared to the previous year.

In February, the former Diamond Exchange president, Boaz Moldawsky, cited Israel’s ongoing war in Gaza and a global downturn that predated 7 October as factors driving the slump.

He said that in the weeks following October 7, the diamond market in Israel was “completely paralyzed,” but that it then returned to normal operations.

However, amid Israel’s ongoing Gaza war, buyers stopped visiting Israel, with the annual International Diamond Week in Israel, scheduled for early April, cancelled. 

But according to the Rapaport Group, the slump is mainly driven by a slowdown in sales to the US and China, and collapsing diamond prices in 2023, which tumbled about 20 percent due to slowing consumer demand.

Moldawsky estimated that 80 percent of the trade’s difficulties were due to the global slump, and 20 percent to the war on Gaza.

The 1 million square foot office building just blocks from City Hall at 18th & Market streets in Philadelphia, saw its appraisal value crushed 25% from $282.1 million in 2021 to $211.3 million this year, according to a new report from Bisnow.

Citing Morningstar, the report notes that Shorenstein Properties’ office space, about 80% occupied, has been in special servicing for a year, with another property at 1700 Market St. added earlier this year.

A Kroll Bond Rating Agency report reveals Philadelphia’s office market had a 52% stress rate in Q1, the fourth-highest in the nation.

David Putro, a senior vice president at Morningstar, told Bisnow: “We’re seeing New York, Chicago and San Francisco’s offices with 70% drops from the original appraisal over time to the reappraisal. So, it’s not the end of the world.”

Mike Brotschol, a managing director at KBRA Analytics, however, said: “We have concern with the future performance of roughly 52% of the $4.77B in Philadelphia office CMBS.” 

Bisnow continued, writing that Chicago leads in CMBS office stress at 75%, followed by Denver at 65% and Houston at 57%. The stress rate reflects loans in default or at high risk of default.

Philadelphia’s 1818 Market isn’t the only troubled office property on the city’s main business corridor. Others face challenges, with varying prospects for recovery, according to the report. 

1515 Market St. and 1500 Market St. have fallen to 73% occupancy and into receivership, respectively. 1515 Market St. is on a loan watchlist as Temple University, which occupies a quarter of the space, decides on renewal.

Putro concluded: “In those spaces, financial services, professional services like those, tend to be the ones that are really evaluating their space needs. So it’s not a particular tenant, but it’s sort of just the evolution of what is ‘back to work’ as a whole.”

Speaking about 2400 Market St, which remains 99% occupied, Putro added: “That building’s 2023 net cash flow was off by about 2% from the time [its loan was] underwritten. I think most office owners at this moment would love to have a building that’s only 2% down over three years.” 

Authored by Paul Craig Roberts,

We can add Richard Medhurst to Tulsi Gabbard, Scott Ritter, Amb. Craig Murray, Julian Assange, and many others who are harassed, arrested, imprisoned by police state authorities in the US, UK, EU, and Canada for practicing the disappearing profession of journalism.

When Richard Medhurst can be arrested in a London airport for “expressing an opinion or belief that is supportive of a proscribed organization,” we know freedom is dead and journalism no longer exists. All that Western journalists are permitted to do today is to support the official lies in the official narratives that are used to construct the false reality in which we live.

We no longer have the BBC, the New York Times, the London Times, ABC, NBC, CBS to hold government accountable. What we have are propaganda ministries that support official narratives.

The job of the Western media is to lie to the people in behalf of the establishment that rules them.

As the growing intimidation of alternative media makes clear, the ability to express truth is rapidly disappearing in the Western world. Soon we will be locked into The Matrix, only there will be no superhuman opposition.

It has been years since we could believe one word that we hear from the New York Times, Washington Post, NPR, CNN, Fox News, ABC, CBS, NBC, the London Times, Telegraph, The Guardian, or the main European media sources.

The notion that the West is free is a joke. When there is no free expression there is only tyranny. And that is what the Western world is. A tyranny.

The reason the Western governments have no difficulty supporting the Nazi governments in Ukraine and Israel is that they are Nazis themselves.

Medhurst describes his arrest. It reminds me of Franz Kafka’s book, The Trial, a story of a man who is arrested by an unaccountable authority who prosecutes him without ever revealing the crime for which he is being punished. This is what happened to Julian Assange who lost a decade of his life to pure tyranny, tyranny supported by American conservatives who are so utterly stupid that they were convinced by official narratives that he was a Russian spy against America.

How does a people this stupid survive. They don’t. The police state that they fell for is now closing around them.

Here is Richard Medhurst to tell you about it:

I Was Arrested at Heathrow Airport as a “Terrorist” for My Journalism

August 20, 2024

I was arrested at Heathrow Airport under the Terrorism Act, Sec 12 because of my reporting.

6 police officers were waiting for me at the entrance of the aircraft.

I was held for almost 24 hours and questioned.

I believe I’m the first journalist to be arrested under this… pic.twitter.com/pbf6q5dXIf

— Richard Medhurst (@richimedhurst) August 19, 2024

My name is Richard Thomas Medhurst.

I am an internationally accredited journalist from the United Kingdom.

On Thursday, as I landed in London Heathrow airport, I was immediately escorted off the plane by 6 police officers who were waiting for me at the entrance of the aircraft.

They arrested me—not detained—but arrested me under Section 12 of the Terrorism Act of 2000 and accused me of allegedly “expressing an opinion or belief that is supportive of a proscribed organization” but wouldn’t explain what this meant.

One officer took my bags, and when I asked why he was still back in the aircraft, I was told “look mate, you can get nicked right here in front of everyone, or in there. Your choice.”
I was taken to an adjacent room, patted down, my phone confiscated.

I was not allowed to inform my family.

Despite being calm and cooperative, I was handcuffed with something that placed my shoulders in an awkward position, and my wrists on top of, rather than next to each other. The handcuffs were extremely tight. Despite the police loosening them, they left marks on me for two days.

The police took me down onto the runway and put me in a police van; essentially a mobile cage and informed me everything was being recorded.

The van was cramped. I had to struggle the entire time to keep my balance and try not to fall over as we drove to the police station.

Once inside the station, they searched me again for the 2nd time in 10 minutes.

I was told to sit on a bench, remove my shoes; remove my socks. I was told to turn my socks inside out and hold them up for the officers to inspect.

They also made me hold up my feet for them to check.

The officers took me to a room with UV lights, which they told me is used to catch burglars sprayed with something—I have no idea why they did this, since they just removed me off a plane.

My suitcase was then opened in the lobby and ransacked; all my journalistic equipment and devices were seized, including phones, sim cards, wireless microphones, microphones and headphones. Even my shoelaces.

They later took my DNA, fingerprints, palmprints, and photographed me.

I was placed in solitary confinement, in a cold cell that smelt like urine. There was barely any light, and the bed—if you can even call it a bed—was a small concrete ledge, with a paper thin mattress.

The cell had no windows. No heating. No toilet paper.

I was recorded 24/7, with audio and video— even when going to the toilet.

I had to eat food with a piece of cardboard, that you’re supposed to fold in two in order to scoop up the meal.

The police said I have the right to inform someone I’m locked up. So I said, ok I want to call my family. And then they’d go: “well, your calls are withheld because of the nature of the alleged offense”.

I tried to ask: well what’s the point of a right if you can randomly withdraw it? Why tell me that I have this right at all?

And one of them said something along the lines of: “well it’s not an absolute right. It can be waived”.

Similarly, they said I had the right to know why I was being detained. So I asked (again), and the police would say something like: “we’re just the arresting officers, we don’t really know”, or, “this will be explained to you during the interview”, or some other generic response.

Despite the police officers’ civility and cheerfulness, I felt the whole process was designed to humiliate, intimidate, and dehumanize me; to treat me like a criminal, even though they must have been aware of my background and that I am a journalist.

I was under surveillance almost the entire time, from the moment I was arrested until I was released, be it in the police van, the station, the cell—all of it. No privacy whatsoever.
Many of my requests were also delayed or outright ignored.

When I was detained, I asked for water several times. The police would always say “sure”, but I ended up waiting hours for a tiny cup of water.

I asked if I could have my own clothes because I was in a t-shirt, it was cold and couldn’t sleep. They said they’d give me a pullover but never did. Although one guard did give me a 2nd blanket.

See, you have to nag and nag for the most basic things. This is why I was afraid they weren’t even going to call a solicitor for me.

I was able to see the nurse on one occasion. But on three other occasions when I asked to see the nurse, they’d say “yes”, then nothing.

For many hours, no one in the world knew what had happened to me or where I was.

Only the police could call a solicitor for me. I had to ask 4-5 different guards for several hours until I finally received a call.

Some of my solicitor’s calls did not get through or were not answered. One of the calls, my solicitor was told would be monitored and so they simply refused to take it.

I asked to speak to them afterwards when that happened but was not allowed to.

In total, I spent almost 24 hours in detention. At no point, whatsoever, was I allowed to speak to a family member or friend.

After waiting 15 hours, I was finally interviewed by two detectives. The interview lasted just about an hour, an hour and a half.

So there was clearly no need to hold me there this entire time.

But I believe that this was done on purpose to try to rattle me psychologically.

That failed.

I categorically and utterly reject all the accusations by the police.

I am not a terrorist. I have no criminal record.

Prior to this incident, I’d never been detained in my entire life.

I’m a product of the diplomatic community and I’m raised to be anti-war.

Both my parents won Nobel Peace Prizes for their work as United Nations peacekeepers. They had a tremendous effect on my worldview and outlook, and instilled in me the importance of diplomacy, international law and peace.

I myself, am a victim of terrorism. When I attended the British school in Islamabad, the Egyptian embassy adjacent to my school was blown up in a double bombing.
I categorically and unequivocally condemn terrorism.

I am a Medhurst. My family goes back 1000 years in this country. I come from a long line of public servants. My father served in the London Metropolitan Police, before entering the UN. He is an expert and an authority on counterterrorism who taught me much. My grandfather was in the Royal Air Force during WWII, and his father before him in the British Army in WWI.

I perhaps don’t have the same career paths as them, but I consider my journalism to be a public service and my way of doing my bit for the country, by providing a counterweight to mainstream media.

I love my country and respect its laws and legal institutions.

I get the feeling, nevertheless, that those like myself who are speaking up and reporting on the situation in Palestine are being targeted.

I had booked my ticket to London on the same day. Yet an entire team of police were mobilized to arrest and question me. This is why I felt that it was a pre-planned, coordinated arrest.

Many people have been detained in Britain because of their connection to journalism. Sometimes under the Terrorism Act, sometimes not.

I think of Julian Assange, Craig Murray, Kit Klarenberg, David Miranda, Vanessa Beeley.

However, as far as I’m aware, I’m the only journalist to have been arrested, and held for up to 24 hours under Section 12 of the Terrorism Act.

Keep in mind the conditions I outlined previously: the psychological element that you’re made to wait endlessly, you’re not told what you’re accused of, nor when you’ll be questioned.
Despite being released unconditionally, I do not feel that my bail is truly unconditional.

I am effectively in limbo, not knowing if I will be charged in 3 months, or if I will go to prison.

Journalism is my livelihood. I have an ethical and moral responsibility toward the general public to inform. But I feel that a muzzle has been placed on me.

I simply do not know if or how I can work at all during the next months. Palestine—the humanitarian crisis in Gaza— remain the most pressing news story in the world, however, it seems that any statement, no matter how innocent, factual, and well-intentioned, can be skewed and twisted into an offense of the highest order.

This is precisely the danger and absurdity of the Terrorism Act that I have always sought to impress upon the public, long before I ever became a victim of it myself.

It is out of control and has no place in a democracy.

Counter terrorism laws should be used to fight actual terrorism, not journalism.

We cannot call ourselves a democracy as long as reporters are dragged off of planes and detained and treated like murderers.

I am disgusted that I am being politically persecuted in my own country.

As I do not know if I can still report as a journalist for the next months, I kindly ask for your support during these times.

Freedom of the press, freedom of speech really are under attack. The state is cracking down and escalating, to try and stop people from speaking out against our government’s complicity in genocide.

Please stand not just with me, but with the others who are still inside. I know what they are going through, and the best relief is to know that people on the outside are rooting for you, and doing everything they can to get you out.

Thank you.

Richard Medhurst

Authored by RFE/RL via OilPrice.com,

• The EU and G7 are exploring ways to use frozen Russian assets to financially support Ukraine, potentially through a $50 billion loan backed by these assets.

• The EU is considering either open-ended immobilization of Russian assets or extending sanctions by up to 36 months to provide legal certainty for the plan.

• The EU has officially launched a visa liberalization dialogue with Armenia, which could eventually allow Armenians visa-free travel to most EU countries.

The European Union and the Group of Seven (G7) leading industrialized nations are slowly gearing up new legislation that will allow a $50 billion loan to go to Ukraine by the end of the year.

The political decision for that loan was already agreed when the G7 met in Italy for its annual summit on June 13-15. In the communique from the meeting, it was stated that “we decided to make available approximately $50 billion leveraging the extraordinary revenues of the immobilized Russian sovereign assets, sending an unmistakable signal to President Putin.”

There are roughly $282 billion worth of Russian frozen assets in G7 countries after these resources were targeted by sanctions in early 2022, mostly in the EU. And while no one is keen yet to face the legal consequences of actually confiscating the money — as fears persist it could dissuade other countries from investing in the eurozone and thus undermine the euro — there is momentum now to get creative in using the funds to financially support Kyiv.

The G7 declaration stated as much by noting that “Russia must end its illegal war of aggression and pay for the damage it has caused to Ukraine. These damages now exceed $486 billion, according to the World Bank. It is not right for Russia to decide if or when it will pay for the damage it has caused in Ukraine. Russia’s obligations under international law to pay for the damage it is causing are clear, and so we are continuing to consider all possible lawful avenues by which Russia is made to meet those obligations.”

Deep Background: 

Most Russian money located in the EU, the onus is on Brussels. EU leaders, including more Ukraine-skeptic nations such as Hungary and Slovakia, endorsed the G7 outcome at a summit in Brussels just a week after. They unanimously agreed on conclusions that urged the European Commission to take the work forward on this and added, “Subject to EU law, Russia’s assets should remain immobilized until Russia ceases its war of aggression against Ukraine and compensates it for the damage caused by this war.”

It should be recalled that the bloc already has a mechanism in place to send the annual windfall profits from the frozen Russian assets to Ukraine. This is estimated to generate some 3 billion euros a year ($3.2 billion), with 90 percent of it going to military equipment and the rest for reconstruction.

The first tranche of this money was disbursed over the summer.

This new G7 initiative, however, goes a step further, bringing the interest proceeds from frozen assets via a loan that is guaranteed by the G7 countries.

The preliminary division is that the EU and the United States will back this up with $20 billion each, and Japan and the United Kingdom will guarantee the remaining $10 billion between them. But a lot of nitty-gritty legal groundwork is still needed.

Drilling Down

• The item was discussed for the first time by EU ambassadors at the end of July with the European Commission providing a one-page outline, seen by RFE/RL, of what the options are. The idea is that the commission will present a fully fleshed-out legal proposal at the end of August with EU ambassadors discussing the text on September 4. But from the one-pager it is already clear that there are essentially just two avenues available to take.

• The main issues to ensure are legal certainty and predictability. And that means that Russian assets remain frozen for a longer period. Brussels is looking to either agree on an open-ended immobilization of Russian assets or prolong this sanction by a longer period of up to 36 months. It’s worth noting that all types of economic sanctions against Russia that Brussels has imposed currently are rolled over via consensus by the 27 member states every six months, with the latest prolongation confirmed on July 22.

• According to diplomats familiar with the initial discussion, the overwhelming majority favor an open-ended immobilization. The option paper says this option will still be “reviewed by the Council at regular intervals (e.g. 12 months), on the basis of clear predefined criteria (i.e. the end of the war of aggression and assurances of nonrepetition, the payment of compensation by Russia, etc. as set out by the EUCO – European Council).”

• It also adds that “ending the immobilization of the CBR (Central Bank of Russia) assets would require a new Council act, based on a report by the High Representative (EU foreign policy chief)/Commission assessing that the criteria for lifting are fulfilled.”

• The question is, however, whether Hungary has the appetite to agree on this. So far, EU leaders have never threatened not to roll over the sanctions but at the same time they haven’t been militantly against moving away from an extension beyond the six months mark. Budapest might go against both options outlined in the paper, and that would mean there isn’t much of the legal certainty and predictability that the EU seeks.

• If the EU can ensure this, the question is whether the United States, in the middle of its election period, is ready to give a green light. The U.S. Congress needs to approve this loan, and if there are any fears that Hungary (or any other EU member states, for that matter) might threaten to block the renewal a couple of times a year, the whole scheme risks unraveling.

• That’s why the United States initially wanted the EU to guarantee most, if not all, of the $50 billion and why most member states would prefer an open-ended immobilization. The diplomatic wrangling on this is likely to continue throughout the autumn.

Looking Ahead

The EU and NATO are still on the beach this week, but look out for two interesting visits on August 21. First German Chancellor Olaf Scholz is due in Chisinau in what is a symbolic show of solidarity from the EU’s most powerful member state to Moldova, which will hold a crucial presidential vote later this autumn and a referendum on whether the country should aim to join the EU.

That same day Indian Prime Minister Narendra Modi is due in Warsaw and will travel to Kyiv from there. The West has attempted to woo India for a long time and is hoping the country will be more vocal and practical in its support for Ukraine and opposition to Russia’s invasion.

Authored by Chris Morrison via DailySceptic.org,

Earlier this month the Met Office declared the hottest day of the year so far in the U.K. with the temperature reaching 34.8ºC in Cambridge. The Met Office claimed it was only the eleventh time since 1961 that the temperature had reached that level, with six of these occasions having been recorded in the last 10 years. Needless to say, missing from the account was a note that the station in Cambridge’s National Institute for Agricultural Botany (NIAB) is located just metres from a massive heat-generating electricity sub-station complex.

Electricity sub-stations give off so much heat into the surrounding atmosphere there are even plans to trap it for commercial use.

The Cambridge station at Histon has recently benefitted from a £5 million upgrade including the installation of a third heat-pumping transformer.

It is difficult to think of a worse place to locate an instrument to accurately measure nearby uncorrupted air temperatures, other than favoured Met sites at international airports and solar farms.

Cambridge NIAB crops up regularly in the Met Office’s local daily ‘records’. Last year it claimed a recording at this site was the highest measured in the eastern region during September since 1949. The World Meteorological Office (WMO) rates Met Office sites from class 1 to 5 and Cambridge NIAB is said to have a pristine class 1 designation with no temperature ‘uncertainties’ due to local natural and unnatural influences. But how reliable is this superior rating? The view from Google Earth suggests that questions about its validity can legitimately be asked.

WMO guidelines state that any heat source in class 1 sites must be at least 100 metres away. But the google map above suggests that 100m is a very generous distance between the Histon grid and the red Met station marker. An even nearer straight line path or road might also not be considered helpful in taking an uncorrupted measurement. Recent expansion at Histon has added a third heat-pumping transformer to help increase capacity.

Electricity sub-stations release huge amounts of heat into the nearby surroundings. There have even been plans to capture the output from these ‘boilers’ for commercial use. In 2021, SSE Energy Solutions and the National Grid unveiled plans to use the heat generated to produce hot water and space heating for domestic and industrial premises. As Nathan Sanders, managing director at SSE, noted: “Electric power transformers generate huge amounts of heat as a by-product when electricity flows through them. At the moment, this heat is just vented directly into the atmosphere and wasted.”

Not entirely wasted, the cynical might observe. It serves to boost temperatures – highly useful for spreading political Net Zero panic and alarm – across the entire U.K. Met Office measuring network. As regular readers will know, this network is composed of largely junk stations in class 4 with WMO ‘uncertainties’ of 2ºC, and super-junk class 5 with possible errors up to 5ºC. Almost eight in 10 stations across the 380-strong network are labelled class 4 and 5. Many of these stations, such as the urban heat furnace that is Heathrow airport, produce regular daily ‘records’. Incredibly, the overall data is used by the Met to claim it can measure air temperature across the four countries of the U.K. down to one hundredth of a degree centigrade.

The Daily Sceptic is obliged to citizen journalist Ray Sanders for drawing our attention to the obvious corruptions at Cambridge NIAB. Ray is a frequent contributor to Paul Homewood’s blog, an excellent online publication that has long drawn attention to the obvious and widespread problems at the Met Office sites. Earlier this year, the Daily Sceptic broke the story that revealed most of the stations are junk following a freedom of information request. Interest in this scientific scandal is now widespread on social media, but it remains of little concern to mainstream media. Most writers captured by the lazy Net Zero narrative continue to tout the heat corrupted figures and ‘records’. To date, the Met Office has failed to respond to the growing critical interest in its obviously flawed temperature readings.

Heat corruptions caused by electricity sub-stations can be found at other locations used by the Met Office. Ray has also drawn our attention to the ‘notorious’ Bingley No 2 site, in use since 1972.

Again, it is just metres away from a major city sub-station. Unsurprisingly, in this case it has a class 4 junk designation.

The final meteorological horror show can be seen at Amersham where temperatures at this class 4 site are again taken just a few metres away from the area’s main sub-station. This site is a new one, having been established in 2015. It begs the question why the Met Office continues to locate scientific measuring stations in such unsuitable places. Another recent FOI request has revealed that over eight out of 10 of the 113 stations opened in the last 30 years are in classes 4 and 5. Worse, 81% of the stations started in the last 10 years, including Amersham, are junk, as are eight of the 13 new sites in the last five years.

Authored by John & Nisha Whitehead via The Rutherford Institute,

“When a population becomes distracted by trivia, when cultural life is redefined as a perpetual round of entertainments, when serious public conversation becomes a form of baby-talk, when, in short, a people become an audience, and their public business a vaudeville act, then a nation finds itself at risk; culture-death is a clear possibility.” 

– Neil Postman

What you smell is the stench of a dying republic.

Our dying republic.

We are trapped in a political matrix intended to sustain the illusion that we are citizens of a constitutional republic.

In reality, we are caught somewhere between a kleptocracy (a government ruled by thieves) and a kakistocracy (a government run by unprincipled career politicians, corporations and thieves that panders to the worst vices in our nature and has little regard for the rights of American citizens).

For years now, the government has been playing a cat-and-mouse game with the American people, letting us enjoy just enough freedom to think we are free but not enough to actually allow us to live as a free people.

In other words, we’re allowed to bask in the illusion of freedom while we’re being stripped of the very rights intended to ensure that we can hold the government accountable to abiding by the rule of law, the U.S. Constitution.

We’re in trouble, folks.

This is no longer America, land of the free, where the government is of the people, by the people and for the people.

Rather, this is Amerika, where fascism, totalitarianism and militarism go hand in hand.

Freedom no longer means what it once did.

This holds true whether you’re talking about the right to criticize the government in word or deed, the right to be free from government surveillance, the right to not have your person or your property subjected to warrantless searches by government agents, the right to due process, the right to be safe from militarized police invading your home, the right to be innocent until proven guilty and every other right that once reinforced the founders’ commitment to the American experiment in freedom.

Not only do we no longer have dominion over our bodies, our families, our property and our lives, but the government continues to chip away at what few rights we still have to speak freely and think for ourselves.

My friends, we’re being played for fools.

On paper, we may be technically free.

In reality, however, we are only as free as a government official may allow.

We only think we live in a constitutional republic, governed by just laws created for our benefit.

Truth be told, we live in a dictatorship disguised as a democracy where all that we own, all that we earn, all that we say and do—our very lives—depends on the benevolence of government agents and corporate shareholders for whom profit and power will always trump principle. And now the government is litigating and legislating its way into a new framework where the dictates of petty bureaucrats carry greater weight than the inalienable rights of the citizenry.

With every court ruling that allows the government to operate above the rule of law, every piece of legislation that limits our freedoms, and every act of government wrongdoing that goes unpunished, we’re slowly being conditioned to a society in which we have little real control over our lives.

As Rod Serling, creator of the Twilight Zone and an insightful commentator on human nature, once observed, “We’re developing a new citizenry. One that will be very selective about cereals and automobiles, but won’t be able to think.”

Indeed, not only are we developing a new citizenry incapable of thinking for themselves, but we’re also instilling in them a complete and utter reliance on the government and its corporate partners to do everything for them—tell them what to eat, what to wear, how to think, what to believe, how long to sleep, who to vote for, whom to associate with, and on and on.

In this way, we have created a welfare state, a nanny state, a police state, a surveillance state, an electronic concentration camp—call it what you will, the meaning is the same: in our quest for less personal responsibility, a greater sense of security, and no burdensome obligations to each other or to future generations, we have created a society in which we have no true freedom.

Government surveillance, police abuse, SWAT team raids, economic instability, asset forfeiture schemes, pork barrel legislation, militarized police, drones, endless wars, private prisons, involuntary detentions, biometrics databases, free speech zones, etc.: these are mile markers on the road to a fascist state where citizens are treated like cattle, to be branded and eventually led to the slaughterhouse.

Freedom, or what’s left of it, is being threatened from every direction.

The threats are of many kinds: political, cultural, educational, media, and psychological. However, as history shows us, freedom is not, on the whole, wrested from a citizenry. It is all too often given over voluntarily and for such a cheap price: safety, security, bread, and circuses.

This is part and parcel of the propaganda churned out by the government machine.

That said, what we face today—mind manipulation and systemic violence—is not new. What is different are the techniques used and the large-scale control of mass humanity, coercive police tactics and pervasive surveillance.

We are overdue for a systemic check on the government’s overreaches and power grabs.

By “government,” I’m not referring to the highly partisan, two-party bureaucracy of the Republicans and Democrats. Rather, I’m referring to “government” with a capital “G,” the entrenched Deep State that is unaffected by elections, unaltered by populist movements, and has set itself beyond the reach of the law.

For years now, we have suffered the injustices, cruelties, corruption and abuse of an entrenched government bureaucracy that has no regard for the Constitution or the rights of the citizenry.

We have lingered too long in this strange twilight zone where ego trumps justice, propaganda perverts truth, and imperial presidents—empowered to indulge their authoritarian tendencies by legalistic courts, corrupt legislatures and a disinterested, distracted populace—rule by fiat rather than by the rule of law.

Where we find ourselves now is in the unenviable position of needing to rein in all three branches of government—the Executive, the Judicial, and the Legislative—that have exceeded their authority and grown drunk on power.

We are the unwitting victims of a system so corrupt that those who stand up for the rule of law and aspire to transparency in government are in the minority. This corruption is so vast it spans all branches of government.

The predators of the police state are wreaking havoc on our freedoms, our communities, and our lives. The government doesn’t listen to the citizenry, it refuses to abide by the Constitution, which is our rule of law, and it treats the citizenry as a source of funding and little else.

The American kleptocracy has sucked the American people down a rabbit hole into a parallel universe in which the Constitution is meaningless, the government is all-powerful, and the citizenry is powerless to defend itself against government agents who steal, spy, lie, plunder, kill, abuse and generally inflict mayhem and sow madness on everyone and everything in their sphere.

This dissolution of that sacred covenant between the citizenry and the government—establishing “we the people” as the masters and the government as the servant—didn’t happen overnight. It didn’t happen because of one particular incident or one particular president. It is a process, one that began long ago and continues in the present day, aided and abetted by politicians who have mastered the polarizing art of how to “divide and conquer.”

Unfortunately, there is no magic spell to transport us back to a place and time where “we the people” weren’t merely fodder for a corporate gristmill, operated by government hired hands, whose priorities are money and power.

Our freedoms have become casualties in an all-out war on the American people.

Through every fault of our own—our apathy, our ignorance, our intolerance, our disinclination to do the hard work of holding government leaders accountable to the rule of law, our inclination to let politics trump longstanding constitutional principles—we have been reduced to this sorry state in which we are little more than shackled inmates in a prison operated for the profit of a corporate elite.

If we continue down this road, there can be no surprise about what awaits us at the end.

For there to be any hope of real change, we must change how we think about ourselves, our fellow human beings, freedom, society, and the government.

The following principles may help any budding freedom fighters in the struggle to liberate themselves and our society.

First, we must come to grips with the reality that the present system does not foster freedom. The government’s primary purpose is maintaining power and control. It’s an oligarchy composed of corporate giants wedded to government officials who benefit from the relationship. In other words, it is motivated by greed and exists to perpetuate itself.

Second, voting is no guarantee of liberty. Voting is a way to keep the citizenry pacified. That’s why the government places so much emphasis on the reassurance ritual of voting. It provides the illusion of participation while maintaining the status quo. As Jordan Michael Smith, writing for the Boston Globe, concludes about the American government, “There’s the one we elect, and then there’s the one behind it, steering huge swaths of policy almost unchecked. Elected officials end up serving as mere cover for the real decisions made by the bureaucracy.”

Third, question everything. Don’t assume anything the government does is for the good of the citizenry. As James Madison warned, “All men having power ought to be distrusted to a certain degree.” Power corrupts, and absolute power corrupts absolutely.

Fourth, there is little hope for any true resistance if you are mindlessly connected to the electronic concentration camp. Remember, what you’re being electronically fed by those in power is meant to pacify, distract, and control you.

Fifth, be wise and realize that there is power in numbers. Networks, coalitions, and movements can accomplish much—especially if their objectives are focused, practical and nonviolent—and they are very much feared by government authorities.

Sixth, as always, change must start with “we the people.” I’ve always advised people to think nationally, but act locally. Yet it can be hard to make a difference locally when the local government is as deaf, dumb and blind to the needs of its constituents as the national government.

Seventh, local towns, cities and states can nullify or say “no” to federal laws that violate the rights and freedoms of the citizenry. When and if you see such federal laws passed, gather your coalition of citizens and demand that your local town council nullify such laws. If enough towns and cities across the country would speak truth to power in this way, we might see some positive movement from the federal governmental machine.

Clearly, it’s time to clean house at all levels of government.

We have been saddled with the wreckage of a government at all levels that no longer represents the citizenry, serves the citizenry, or is accountable to the citizenry.

“We the people” are not the masters anymore.

It doesn’t matter whether you’re talking about the federal government, state governments, or local governing bodies: at all ends of the spectrum and every point in between, a shift has taken place.

“We the people” are not being seen, heard or valued.

We no longer count for much of anything beyond an occasional electoral vote and as a source of income for the government’s ever-burgeoning financial needs.

Everything happening at the national level is playing out at the local level, as well: the violence, the militarization, the intolerance, the lopsided governance, and an uneasy awareness that the citizenry have no say in how their communities are being governed.

So, what’s the answer?

For starters, stop tolerating corruption, graft, intolerance, greed, incompetence, ineptitude, militarism, lawlessness, ignorance, brutality, deceit, collusion, corpulence, bureaucracy, immorality, depravity, censorship, cruelty, violence, mediocrity, and tyranny. These are the hallmarks of an institution that is rotten through and through.

Stop holding your nose in order to block out the stench of a rotting institution.

Stop letting the government and its agents treat you like a servant or a slave.

You’ve got rights. We’ve all got rights. This is our country. This is our government. No one can take it away from us unless we make it easy for them.

You’ve got a better chance of making your displeasure seen and felt and heard within your own community. But it will take perseverance and unity and a commitment to finding common ground with your fellow citizens.

As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, we’re making it way too easy for the police state to take over.

So, stop being an accessory to the murder of the American republic.