Month: October 2024

Authored by Omid Malekan,

Bitcoin Has Plenty Of Utility

My co-author Ulrich Bindseil and his ECB colleague Jürgen Schaaf have written an intriguing paper on the distributional consequences of Bitcoin should it continue to appreciate in value. I disagree with their argument and want to hash out why.

In that paper, they make a creative argument that if Bitcoin was nothing more than a speculative asset with no other economic or social utility, then continued price appreciation will have negative consequences for the rest of society. I have no issue with their conclusion — it’s a thought out and robust argument. But their premise on the utility of Bitcoin is flawed, for two reasons.

First, they have an unnecessary focus on whether Bitcoin has lived up to the goals of its creator and early adopters. I think this observation is unimportant, even if true. The focus should be on whether Bitcoin has utility for society today. Second, they fall into the common trap of treating Bitcoin as just an asset, one that is independent of the novel infrastructure that powers it.

Put together, these mistakes lead Bindseil and Schaaf to miss Bitcoin’s appeal as a form of monetary insurance. Given the importance of savings and payments in society, this is the ultimate utility, financially and socially, and the simplest justification for Bitcoin having value.

Satoshi is Irrelevant

The best litmus test for any technology is whether it serves a useful purpose for society today or has the potential to do so in the future. The intentions of its creator are unimportant. A technology that finds utility beyond what its inventor envisioned is no less useful, or valuable.

The paper claims:

“The pseudonymous Satoshi Nakamoto published the whitepaper on Bitcoin in 2008, with the vision of a global digital currency by creating a structure for making payments without a trusted third party acting as intermediary. But Bitcoin’s conceptual design and technology appear to have prevented this vision to materialise”

Bindseil and Schaaf are correct in their observation that Bitcoin today is not used as “Peer to Peer” cash in the way some had hoped fifteen years ago. The cryptocurrency is seldom used for online purchases or simple peer to peer payments. But we shouldn’t read too much into the title and introduction of a (surprisingly) short white paper from an unknown author who disappeared over a decade ago or his adherents.

Whoever Satoshi Nakamoto was, they were a keen observer of the challenges of modern payment systems. Token money (in the form of coins and banknotes) has always offered desirable features like universal access, privacy, peer-to-peer payments, no fees, and instant settlement. But token money doesn’t work for large or long distance payments — and it certainly isn’t useful online — so society has migrated to ledger money, as intermediated by trusted third-parties like banks and FinTechs. Those intermediaries have their own flaws. They must charge fees to cover their costs, tend toward becoming a monopoly, and often discriminate against certain users, either for their own interest or because they are compelled to.

On this point, Bindseil and Schaaf focus too much on Nakamoto’s use of “mediating disputes” as a source of censorship in payment systems.

“The problem that Nakamoto (2008) believes to have identified seems however to start from a misunderstanding. In principle, financial institutions can avoid mediating disputes. Mediation is rather an optional service than a necessity. It is demanded by customers and charged by payment services providers. For example, PayPal does not offer any dispute mediation if payments are made in the “friend and family” mode; and these are free of charge. Likewise, credit transfers between bank accounts are not mediated, i.e. if an e-commerce delivery is paid in advance via credit transfer and the customer is unsatisfied with the good received, the bank will not mediate”

They are correct in pointing out that many payment systems don’t provide active mediation, but that argument misses the broader point that all trusted intermediaries are liable for every payment that they process. What if an aggrieved party to a fraudulent payment demands compensation? Or a government holds them responsible for illicit flows?

Traditional payment systems deal with these risks in three (non-exclusive) ways.

• Some, like credit cards, actually mediate disputes, then pass the cost on to their users. They do this presumably because users want them to, and merchants (who pay for the implicit insurance) tolerate the cost.

• Others, like bank-to-bank payments, actively censor customers and their activity via costly “know your customer” and “source of funds” compliance regimes. They do this due to a combination of laws (such as the Bank Secrecy Act in the US) and risk mitigation methods. At best, these regimes impose additional cost and friction on everyone. At worst they lead to discrimination against certain kinds of customers, customers who’ve done nothing wrong and should have access.

• Yet others, such as central-banks who run RTGS systems, drastically restrict access to an exclusive set of wholesale payment providers, then demand those clients restrict their customers as well. In each instance a trusted intermediary has to protect itself, leading to risk aversion across the board and growing censorship.

Evidence of Nakamoto’s insight on the direction of travel for payment intermediaries is all around us. The phenomenon of “de-risking”, where financial institutions cut ties with other institutions, specific categories of clients, or even entire economies, to reduce risk and avoid compliance issues, is so prevalent that the US Treasury Department now has a program to combat it. Cross-border payments remain stubbornly expensive, particularly for remittances, with compliance often cited as a major reason why. There are frequent media mentions of debanking, and legal businesses in “undesirable” industries such as sex work or cannabis have a hard time getting basic banking, even in developed nations. Ironically, the crypto industry itself has become the victim of a notorious censorship campaign from banking and payments in recent years.

Bitcoin is the first ever non-intermediated form of ledger money. It offers some of the desirable features of token money, such as universal access, but doesn’t suffer from the censorship that’s part and parcel for intermediated payments. The downside of this design is that Bitcoin can also be used for illicit activity — something that skeptics love to point out. In their paper Bindseil and Schaaf reference the popular critique that only criminals use Bitcoin as a medium of exchange.

I have two issues with this argument. The first is that traditional payment systems are also used for illicit activity, despite the onerous compliance regimes imposed on them. Indeed, from a cost benefit analysis, I consider the current approach to preventing illicit use in banking a failed regime.

More importantly, illicit use is a political construct, not an economic one. For example, many countries impose capital controls, preventing their citizens from diversifying exposure to what is likely a weakening currency. Violating those controls is therefore illicit. But in practice, wealthy and connected citizens almost always have access to foreign bank accounts and means of getting their money out, leaving the underprivileged to suffer. Similar moral dilemmas exist for economic sanctions.

Is it wrong for a Venezuelan citizen to use black market funds to purchase medicine, or for an Iranian expat to violate economic sanctions to support family back home? The law says yes, basic decency says absolutely not. We don’t know if Nakamoto ever saw these types of applications — which I’d classify as illicit yet moral — for Bitcoin. But that doesn’t impact its utility in both cases, and there is anecdotal evidence that per-capita adoption is highest in the kinds of places where these problems persist.

Bitcoin Is a Lot More Than Digital Gold

The rest of the paper focuses on Bitcoin as a digital version of gold. In the authors’ defense, this narrative is now also popular with many crypto advocates, particularly now that newly approved ETFs in the US make owning it (however indirectly) easier. But Bitcoin is fundamentally different from gold because gold doesn’t come with its own payment system. Bitcoin’s payment system preserves both its scarcity and its transferability.

The “digital gold” narrative derives from the basic fact that both Bitcoin and gold are scarce and — at least for now — used more for savings than payment. Neither is a unit of account. (Some Bitcoin proponents even argue that Bitcoin is better than gold as a store of value because its supply is knowable and finite). Despite these similarities, the two assets are more different than alike, for three reasons.

• First, the authenticity of bitcoins is cheaper and easier to verify. Anyone can keep their own copy of the bitcoin ledger on their computer and continuously verify both the “purity” of coins being sent to them and the current global stock, down to the smallest fraction of a unit. Gold requires expensive equipment to authenticate and the global stock can only be estimated.

• Second, bitcoins can be stored by anyone, anywhere, for minimal cost. Ownership is represented by a cryptographic key that is nothing more than an alphanumeric string. In practice, the bearer nature of bitcoins forces owners to deploy more sophisticated methods of custody, but the starting point is simple, and even the most sophisticated ways to hold bitcoin are more economical than the cheapest ways to store gold. The cost of storing gold can scale linearly with the amount (bigger warehouses, etc) but the cost of storing bitcoin does not.

• Third, bitcoins can be transferred quickly and easily, often at minimal cost for medium to high value payments. At the time of writing, the average cost of a Bitcoin payment is $6. Notable, this fee is independent of the amount being sent, and would be charged for a $1B transfer alongside a $100 one. Gold is one of the hardest and most expensive assets to transfer. And unlike bitcoins, the cost of transferring gold climbs with the amount being sent and the distance. Bitcoin, by virtue of being virtual, doesn’t have this problem. The cost of paying it across the world is the same as across the room.

Some skeptics argue that Bitcoin’s transaction costs are still too high when compared to other kinds of electronic payments using fiat money. The authors share this belief as stated in the paper’s introduction:

Even 16 years after its inception, real Bitcoin payments, i.e. effectively “on chain”, are still cumbersome, slow and expensive

This critique requires more context. Slow and expensive compared to what? The types of fiat payments that are supposedly cheaper than Bitcoin — cards, instant payments, e-money transfers, etc — are highly limited in scope. They are almost always domestic (thus not cross-border), usually have transfer limits, may rely on deferred net settlement (ACH payments can take days to settle, cards even longer), and have hidden costs such as interchange fees (to merchants) and lost remuneration (for everyone).

A fairer comparison to Bitcoin are other types of large-value, cross-border, and gross-settled payments, such as the kind of bank-based wire transfers used for business-to-business and capital market activity. Except for rare periods of high-congestion, Bitcoin payments are often cheaper and faster. Bitcoin payments don’t scale with the amount being sent, operate 24/7, and usually settle within an hour, saving users fees, time, and lost interest. It’s unlikely that bank-based payments will offer these features — the costs and delays are fundamental to bank profitability. Bitcoin transfers are also fully transparent from start to finish, a feature banks can’t physically offer.

Most of all, Bitcoin payments are available to anyone with a device and access to the internet, a far larger set of economic agents than those with bank accounts. The most expensive payment is the one you can never make.

To be fair, Bitcoin’s efficiency in payments can best be realized for economic activity that is also denominated in bitcoins. The authors are correct in pointing out that this is not the case, except for the small niche of Bitcoin foreign-exchange transactions. Actual business-to-business payments or capital market activity is likely to take place in other currencies. Thus, counterparties hoping to settle those types of payments via Bitcoin would have to deal with the cost and delays of purchasing bitcoins to make the payment then selling them to return to fiat. Doing so would add significant costs and complexity. For corridors where bank-based wires are readily available, it’s unlikely Bitcoin would be a superior option from start to finish.

All of that said, greater acceptance and adoption of Bitcoin, even if only as a store of value, can spur greater economic activity denominated in it.

Bitcoin is Monetary Insurance

Put together, the previously mentioned features give Bitcoin utility that Bindseil and Schaaf miss. Just because something isn’t used on a day-to-day basis doesn’t mean that it is not useful. Bitcoin is a type of monetary insurance. It offers protection from dilution, confiscation, and censorship.

Unlike any fiat currency, there is no risk of excess printing or borrowing by the sovereign in charge. This sort of hard money isn’t always desirable for everyday activity, and there are valid reasons why most economics moved away from the gold standard long ago. But hard money is highly desirable as a hedge.

Also unlike fiat currency, which exists mostly inside the ledgers of regulated financial institutions with close ties to the government, Bitcoin exists on a decentralized ledger that is highly secure and very difficult to co opt. This makes bitcoins difficult to confiscate. Even gold is harder to hide or transport during a crisis. This feature is also argued to incentivise illicit use, but that, once again, is an oversimplification. In the event of a violent revolution or invasion by foreign aggressor, something like Bitcoin could be invaluable for the innocent parties affected.

This is not a purely hypothetical risk. When Russia initially invaded Ukraine, it communicated a desire to topple the government and control the entire country. It’s not clear what would have happened to people’s bank accounts if it had succeeded.

Lastly, Bitcoin is free of censorship. Anyone can generate their own cryptographic key and send payments to anyone else. This feature is increasingly desirable given the growing weaponization of access to bank and payment systems as a geopolitical tool. America’s freezing of Russian and Afghani dollar foreign exchange reserves, along with aggressive sanctions on countries such as North Korea, Iran and Venezuela, create an incentive for nations to seek an alternative.

Not just those nations, but all nations. We are entering a period of growing geopolitical tension, trade wars, and polarization. Given the importance of foreign-exchange reserves — and the ability to actually use them — most countries, along with their largest corporations and even citizens, will look to diversify. The problem is that there is no clear alternative inside the fiat system. But there is Bitcoin.

Notably, Bitcoin does not need to be used on a regular basis for the insurance analogy to hold. People who buy fire insurance don’t expect their property to imminently burn down — if they did they’d invest the money in fire extinguishers. Insurance is the kind of product that is always needed but seldom used. The protection it offers smoothes out the risk curve for economic agents, allowing them to pursue other types of economic activity they otherwise would not.

With sovereign debt levels at historical highs around the world, incidents of hyperinflation are increasingly likely. Over a third of the global population lives under some kind of capital control, and de-dollarization is slowly fragmenting global liquidity. The cost of insurance climbs as the likelihood of negative events does — one explanation for Bitcoin’s price appreciation in recent years.

A common pushback to this argument is the fact that many Bitcoin investors hold it via an intermediary — such as a FinTech app, cryptocurrency exchange, or ETF issuer — and cannot benefit from the properties of direct ownership discussed above. While valid, this criticism misses a basic economic principle. Those who hold Bitcoin indirectly are simply betting others will want to hold it directly, now or in the future. This is a rational economic bet that is commonplace in many markets. Lots of people speculate in oil futures without the intent (or even means) to deliver, or take delivery of, a barrel of oil.

In Conclusion

Bitcoin is a unique type of money that doesn’t analogize well with fiat currency or gold. The cryptocurrency’s unique properties make it appealing as a form of insurance. The fact that holders aren’t actively transacting it doesn’t mean they are not finding utility beyond price appreciation. If current financial, regulatory, and geopolitical trends continue, then many more nations, corporations, and individuals will want to hold some to protect their monetary downside, from inflation, confiscation, and censorship. This outcome will likely drive the price higher. Given all of its utility, that appreciation will benefit society.

60 Minutes has released a defensive statement after being caught deceptively editing their interview with Vice President Kamala Harris in order to make her appear intelligent.

Remember Kamala’s word salad answer about Israel on 60 Minutes? It’s gone.

This is what many Americans will now see. pic.twitter.com/H4w7btDv6x

— MAZE (@mazemoore) October 8, 2024

Trump Camp Calls for Transcript

“Why did 60 Minutes choose not to air Kamala’s full word salad, and what else did they choose not to air?” said Trump national press secretary Karoline Leavitt on Tuesday, adding “The American people deserve the full, unedited transcript.”

Now, nearly two weeks later, 60 Minutes has denied ‘deceitful’ editing of the interview in a new statement.

“Former President Donald Trump is accusing 60 Minutes of deceitful editing of our Oct. 7 interview with Vice President Kamala Harris. That is false. 60 Minutes gave an excerpt of our interview to Face the Nation that used a longer section of her answer than that on 60 Minutes. Same question. Same answer. But a different portion of the response,” the show said in a statement.

The way you know that 60 Minutes is 100% guilty and just pissed off about being caught is they released this pathetically defensive statement that almost immediately goes “but Trump” instead of releasing the full transcript of Kamala’s interview. https://t.co/2LtXz6HLZo pic.twitter.com/xAxCjDXEeN

— Greg Price (@greg_price11) October 20, 2024

The Trump campaign released a statement responding to the denial, saying “60 Minutes just admitted to doing exactly what President Trump accused them of doing. They edited in a different response – from another part of her answer – to make Kamala Harris sound less incoherent than she really was. Their statement is not a denial, it is an admission that they did exactly what they were accused of,” adding “This is another reminder of how hopelessly biased 60 Minutes is, and how correct President Trump was to decline their invitation to be subjected to their fake news hackery. Release the Transcript!“

Pressure Mounts

Former CBS News correspondent Catherine Herridge said on X that “Releasing the full unedited transcript is consistent with journalistic transparency and it stands behind the integrity of the entire Kamala Harris edit, not just the clips under scrutiny,” adding “CBS has the ability to immediately settle these questions and address merits of FCC complaint alleging “news distortion.””

Herridge also notes that “there is ample precedent” for the network to release the full, unedited transcripts, citing interviews with both President Trump, former AG Bill Barr, and Fed Chair Jerome Powell.

This statement is an indicator @CBSNews hasn’t contained the fallout from its Kamala Harris @60Minutes edit.

Releasing the full unedited transcript is consistent with journalistic transparency and it stands behind the integrity of the entire Kamala Harris edit, not just the… pic.twitter.com/7HoBtTxQ33

— Catherine Herridge (@C__Herridge) October 21, 2024

Yes

— Elon Musk (@elonmusk) October 21, 2024

.@60Minutes and @CBSNews failure to release the @KamalaHarris transcript is particularly damning in light of their own precedent. https://t.co/NUuNGPnV4r

— Bill Ackman (@BillAckman) October 21, 2024

We’re guessing that won’t see the light of day before the election. 

Via Greg Hunter’s USAWatchdog.com,

Catherine Austin Fitts (CAF), Publisher of The Solari Report, financial expert and former Assistant Secretary of Housing (Bush 41 Admin.), gives her take on gold, Kamala, Trump, control, cash, murder and water. 

On gold’s rocket rise, CAF says, “Gold is very important…”

“We divide gold into two positions:  Your ‘core’ position and your ‘investment’ position… Right now, gold looks phenomenally attractive as a core position.  It is also attractive as an investment position.”

Why the big move up now? 

CAF says, “Part of it is the incredible monetary policies and the monetary inflation coming from the central banks. “

“The other is too many people are watching government implode in a variety of different ways, and people are saying I want a core position in gold...

We are also seeing the BRICs . . . and seeing states in the US move to put gold and silver in a position to be used as a currency. 

So, we are watching people put monetary reserves in gold and monetary liquidity in gold. 

That is happening steadily, and more and more people are saying they need a percentage of their assets in gold. . . . We are in a long-term bull market in gold.”

On Kamala Harris, the operative word is “meltdown.”  CAF says:

“Kamala is in, what we call in a campaign, a ‘meltdown.’  If you look at the current meltdown, I am baffled because why would somebody with her characteristics be made the nominee? 

You are talking about major donors putting major money behind her.  Why would they spend that much money if there were serious holes in her vetting and she is inclined to melt down this way?  It’s kind of baffling.”

On Trump, what is the first thing he should do if re-elected?  CAF says:

“He should stop the poisoning of the American people. 

This is one of the reasons we did this issue on water.  The American people are being poisoned…I travel a lot by car.  I see deterioration in the air, in the water, in the food–they are being poisoned.  And, of course, the big one is the CV19 vaccines.  Vaccines are poisoning Americans. 

There was just a big ruling against putting fluoride poison being added to municipal water supplies.  One of the things you can do is to march down to your city or county and tell them to stop wasting money on putting poison in your water.  If you reverse that, it is one important action you can take.”

The Deep State and central bankers want total control of your money and your life.  Fitts says this is why she started pushing the use of cash instead of digital transactions. 

She calls it “Make Cash Great Again.”

“If we don’t fix the finances from an actuarial standpoint, they are going to continue to delay benefits or lower life expectancy, and that is what they are doing.  They are balancing the books by lowering life expectancy.”

One way to lower life expectancy is to inject people with a so-called vaccine that is really a bioweapon that murders and disables people. 

That is exactly what happened with the CV19 vax, and the deaths or murders are still piling up.  CAF says,

“You can cut back on the fraudulent rackets, or you can cut back on the people.” 

They are cutting back on the people by any measure.

There is much more in the 54-minute interview.

Join Greg Hunter of USAWatchdog.com as he goes One-on-One with the Publisher of The Solari Report, Catherine Austin Fitts, for 10.19.24.

*  *  *

To Donate to USAWatchdog.com Click Here

There is a lot of free information on Solari.com.

A new Bloomberg analysis of 500 hedge funds tracked by Hazeltree, a data compiler in the alternative investment industry, finds an increasing number of Wall Street hedge funds are, on average, net short batteries, solar, electric vehicles, and hydrogen companies compared to those long green companies.

Data also shows that more funds are net long fossil fuels than shorting oil, natural gas, and coal. This comes despite the Western world and China deploying hundreds of billions of dollars in green stimuli packages to support these industries. Yet, considering some green industries are not sustainable in the short run, some speculative green tech firms have already imploded. 

Wall Street quickly realized in 2023 that clean energy and green tech investments wouldn’t deliver the fast returns they had banked on. Many were blinded by government and MSM’s climate crisis propaganda, pouring money into green companies that never had a chance in a high-interest-rate environment. 

The Bloomberg analysis provides a glimpse into misguided investments by much of Wall Street. Now, funds are primarily net short green tech while long fossil fuels. 

Readers were provided numerous notes on the worsening green energy bubble meltdown last year: 

• Green Energy Meltdown To Continue Next Year, Bloomberg Survey Finds

• There Is A Financial Crisis Brewing In Offshore Wind Energy

• US Clean Energy Stocks Have Lost $30 Billion In Value In The Last 6 Months

And the continuation into 2024:

• ESG Bubble Further Deflates As CEOs Ditch Green Lingo On Earnings Calls

• Another Green Energy Company Declares Bankruptcy, Thank Biden’s Tariffs

• Solar Firm Lumio Files For Bankruptcy After ‘Sharp Decline In Demand’

In markets, since peaking in 2021, the S&P Global Clean Energy Index has slid 60%, while the S&P Global Oil Index has jumped 70%. 

Impax Asset Management, a clean-energy transition fund that once had $50 billion valuation, has seen its value collapse by over half since 2021. 

Here’s more from Bloomberg:

Beyond the tougher macro-economic backdrop that green investors have had to contend with over the past few years — with higher interest rates upending capital-intensive projects like offshore wind farms, and limiting funding for emerging technologies — there continues to be a hostile political backdrop. Investment managers who remain full-throated in their embrace of green, sustainable or ESG (environmental, social and governance) strategies regularly have to defend themselves against US Republicans enraged by what they see as a “woke,” anti-capitalist conspiracy.

Then there’s the other, more consequential political risk. Most of the hedge fund managers Bloomberg interviewed pointed to an increasingly hostile geopolitical environment, with obstacles such as tariff wars leaving them unwilling to invest in classic green bets such as EVs or solar power. In fact, with much of the supply chain for green technology now depending on China, the risk of a full-blown trade war targeting its products has become a direct threat to the financial appeal of clean energy, they said.

“The energy transition is failing, and will fail,” Barry Norris, the founder and chief investment officer of UK hedge fund Argonaut Capital Partners LLP, told Bloomberg, adding fossil fuel will remain the top energy source for years to come.

All hope isn’t lost. From the beginning, we’ve told readers that the real green trade lies in nuclear energy: “Buy Uranium: Is This The Beginning Of The Next ESG Craze.” 

Authored by Jack Phillips via The Epoch Times,

The FBI and a federal agency dedicated to cybersecurity issued a warning on Oct. 18 about efforts by foreign actors trying to “spread disinformation” regarding the upcoming Nov. 5 election—with just over two weeks ago before the contest.

The FBI and the U.S. Cybersecurity and Infrastructure Security Agency (CISA) said they have “no information suggesting cyber activity against U.S. election infrastructure” that has “compromised the integrity of voter registration information, prevented an eligible voter from casting a ballot, impacted the integrity of any ballots cast, or disrupted the ability to count votes or transmit unofficial election results in a timely manner.”

But the two agencies said that foreign adversaries still might promote “false or misleading narratives” to sway the election or to undermine American confidence in its election systems and processes.

Specifically, the two agencies warned of election-related content produced by artificial intelligence (AI) that has lowered the guardrails for malicious or foreign actors to create more advanced schemes to influence the election.

“We are seeing foreign actors use these tools to develop and distribute more compelling synthetic media messaging campaigns and inauthentic news articles, as well as synthetic pictures and deepfakes (video and audio) at greater speed and scale across numerous U.S.- and foreign-based platforms,” their joint bulletin said.

“These efforts to develop content are designed to undermine voter confidence and to entice unwitting consumers of the information to discuss, share, and amplify the spread of false or misleading narratives.”

In one example of AI-aided content produced by foreign actors ahead of the election, the agency said that Russian groups have “created and deliberately designed” web pages “to look like legitimate mainstream news websites” such as The Washington Post or Fox News.

“Russian malign influence actors also created fake social media profiles posing as U.S. citizens to direct users to these fake news websites and purchased social media advertisements to drive traffic to the specific fake articles on the fake news site,” the two agencies cautioned.

The PSA highlights specific examples of tactics we have seen used by Russia and Iran during the 2024 election cycle to target all Americans. These include things from mimicking national level media outlets like The Washington Post and Fox News and creating inauthentic news sites posing as legitimate media organizations to using paid influencers to hide their hand.

In late September, three Iranian government employees were charged and identified by the Department of Justice for a wide-ranging hacking conspiracy that targeted both current and former U.S. officials as well as political campaigns.

The bulletin was referring to an indictment that was returned last month that accused Masoud Jalili, Seyyed Ali Aghamiri, and Yasar Balaghi of trying to hack the campaign of a presidential candidate, without providing names. But in a news conference last month, Attorney General Merrick Garland confirmed that they were targeting the campaign of former President Donald Trump.

Iran-backed hackers who breached the Trump campaign in June and July sent emails with hacked campaign materials to people associated with President Joe Biden’s campaign as well as various media outlets, said the FBI, CISA, and the Office of the Director of National Intelligence last month.

But the agencies said that the the campaign of Biden, who suspended his presidential bid in late July, was not interested in the hacked materials. There is also no evidence the Biden campaign even responded to the emails, which were described by the intelligence and cybersecurity agencies as unsolicited.

“It is important for voters to critically evaluate information sources, particularly as disinformation campaigns evolve to use AI-generated content,” both CISA and the FBI said in a news release accompanying the bulletin. “Both agencies urge the American public to rely on trusted information from state and local election officials and to verify claims through multiple reliable sources before sharing them on social media or other platforms.”

US stock futures drop to start the week, trading near session lows as investors looked to a busy week of company earnings for further signs on the strength of the economy. Oil climbed and gold touched another record on mounting tensions in the Middle East. As of 8:00am, S&P futures are down 0.3% after the index capped its longest run of weekly gains this year, while futures for the tech-heavy Nasdaq 100 fell 0.5% while Nasdaq futures slide 0.6%, with megacap tech stocks all mostly lower: TSLA -0.7%, AMZN -0.3%, AAPL -0.3% pre-market after last week’s furious rally. 10-year Treasury yields rise five four basis points to 4.13% and the dollar edged higher. Commodities are higher led by oil and base metals after a bigger-than-expected China LPR rate cut announcement. Over the weekend, BA achieved a tentative settlement of the strike; BA is up +3.8% pre-market. This week, the key catalyst will be PMIs on Thursday. On earnings,  more than a fifth of the S&P 500 is due to report this week with Tesla Inc., Boeing Co., General Motors Co. and Coca-Cola Co. in the lineup. Approximately 40% of Industrials (including GE, LMT, MMM, BA, UPS, HON, UNP) and 30% of Materials companies will report. In addition, VRT (Wed pre-mkt; focus on data center), IBM and TXN will provide further color on tech and semis. Also keep an eye on DHR (Tue pre-mkt; housing), KO (Wed pre-mkt; consumer trends), TSLA (Wed aft-mkt; first Mag 7 earnings).

In premarket trading, Boeing rose 3% after union workers struck out a tentative agreement with the planemaker that raises pay by 35% over four years. The workers are set to vote on Wednesday. Kenvue jumped 8% after the Wall Street Journal reported activist investor Starboard Value has built a stake in consumer-products company, seeking changes that would boost the Tylenol maker’s stock price. Here are some other notable movers:

• Humana (HUM) gains 4% as Cigna revives efforts to combine with its smaller rival, according to people familiar with the matter. The talks between the health insurers fell apart last year over price. Shares of  Cigna (CI) are down 3%.
• Piedmont Lithium (PLL) drops 5% after JPMorgan downgraded the stock to underweight as market price declines are set to eat into earnings despite management’s focus on cash efficiencies.
• SolarEdge Technologies (SEDG) slip 2% after TD Cowen cut the stock to hold citing deteriorating demand in Europe.
• Spirit Airlines (SAVE) jumps 38% after the carrier reached an agreement with U.S. Bank National Association to extend a deadline by which the airline must extend or refinance its 2025 bonds to maintain its credit-card processing agreement with the bank.

US stocks are unlikely to sustain their above-average performance of the past decade as investors turn to other assets including bonds for better returns, Goldman Sachs strategists said. This year’s 23% bounce has been concentrated in a handful of the biggest technology stocks.

“Optimism about a soft-landing abounds, but that narrative is much more relevant for the US,” said Daniel Murray, chief executive officer of EFG Asset Management in Switzerland. “The European macro backdrop is much more vulnerable, and that is weighing on investor sentiment towards European stocks.”

Speaking of Europe, the Stoxx 600 index dropped 0.5% with gains in energy shares unable to offset losses elsewhere as another busy earnings week is gaining momentum. European companies have so far delivered fewer positive earnings surprises than usual, Barclays strategists said at the end of last week. JDE Peet’s shares jumped after an investor said it would acquire Mondelez’s stake in the coffee producer. SGS and Intertek are among the biggest laggards in the index after RBC downgraded both firms. DNB Bank ASA will acquire all the shares of rival Swedish firm Carnegie Holding AB for about 12 billion kronor ($1.1 billion) in what is the latest step of banking consolidation in the Nordic market. JAB agreed to buy Mondelez’s 86 million shares in JDE Peet’s for €25.10 per share, according to a statement. Here are some of the other notable European movers:

• Forvia shares rise as much as 10% after the car parts manufacturer reported third quarter sales that beat estimates. Analysts say the print is encouraging after September’s guidance cut
• European miners are outperforming the broader market on Monday as iron ore and base metals rose after Chinese banks cut their benchmark lending rates; gold-related shares also rise
• Hensoldt shares rise as much as 5.7%, the most intraday since mid July, after Bank of America upgraded the German defense electronics manufacturer to buy, citing an appealing valuation
• Yellow Cake rises as much as 3.9% as Citi starts coverage with a buy recommendation, saying the stock is a “unique vehicle” for exposure to physical uranium
• PureTech Health shares rise as much as 4.4% in London after its portfolio company Seaport Therapeutics closed a $225m Series B financing round that was oversubscribed
• Future rallies as much as 6.4% on Monday, following a 19% slump for the media company’s shares on Friday after it announced that CEO Jon Steinberg plans to step down
• Getinge shares drop as much as 3.1% after Nordea downgrades its recommendation on the stock to sell following the Swedish health-care firm’s third-quarter earnings that missed expectations
• SGS and Intertek both fall after being respectively downgraded to underperform sector perform at RBC, being more cautious on the testing, inspection and certification (TIC) sector into 2025
• Munich Re shares decline as much as 2.7% to be the worst performer in the Stoxx 600 Insurance Index, after Jefferies downgraded the reinsurer to hold from buy, seeing limited further upside
• Midwich shares fall as much as 18% to a 2017 low, as the IT services company warns that a deterioration of market conditions is expected to persist for the rest of the year
• REC Silicon shares fall as much as 24%, the most since February, after the Norwegian silicon manufacturer said its testing of ultra-high purity polysilicon material has been delayed

Earlier in the session, Asian stocks failed to hold on to their initial gains on Monday, dragged down by losses in Hong Kong-listed Chinese shares. The MSCI Asia Pacific Index fell as much as 0.6%, with financials and consumer discretionary sectors being the worst performers. Equities in India and most Southeast Asian markets also edged lower. While Chinese stocks onshore managed to eke out a small gain after banks cut their benchmark lending rates, the Hang Seng China Enterprises Index — a gauge of the nation’s shares listed in Hong Kong — slid almost 2%. The divergence in performance on Monday underscores a shift in investor preference in favor of Chinese equities traded on the mainland, which are seen benefiting more from Beijing’s policy support measures.

In FX, the Bloomberg Dollar Spot Index rose 0.2%. There was a spike of demand for the dollar last week which is likely to be linked to the US election, according strategists at JPMorgan. CFTC data showed non-commercial market players including hedge funds, asset managers and others cut aggregate bearish bets on the dollar to some $1.4 billion as of Oct. 15. That’s the least negative on the US currency since traders turned short in August, according to data compiled by Bloomberg.

In rates, treasuries trade lower into early US session, following losses in European rates as supply pressure weighs. The rebound in oil futures, up 2.2%, also adds to upside pressure on Treasury yields as investors monitor risk to supplies from Middle East warfare. 10-year Treasury yields are up 5 bps to 4.13%. Bunds are underperforming their US and UK peers, with German 10-year yields rising 5 bps to 2.23%.

In commodities, oil rebounded from last week’s 8% rout; Brent crude traded above $74 per barrel, rising almost 2% on the session. In the Middle East, Israel is discussing its attack on Iran after a Hezbollah drone exploded near Prime Minister Benjamin Netanyahu’s private home at the weekend. Investors are also boosting gold holdings ahead of what’s expected to be a tight US presidential election. Spot gold has picked up where it left off on Friday, rising $15 to another record high.

Looking at today’s calendar, the lone item of note is the September Leading index at 10am. Fed members scheduled to speak include Logan (8:55am), Kashkari (1pm), Schmid (5:05pm) and Daly (6:40pm).

Market Snapshot

• S&P 500 futures little changed at 5,903.25
• STOXX Europe 600 little changed at 525.17
• MXAP down 0.5% to 190.51
• MXAPJ down 0.4% to 608.41
• Nikkei little changed at 38,954.60
• Topix down 0.3% to 2,679.91
• Hang Seng Index down 1.6% to 20,478.46
• Shanghai Composite up 0.2% to 3,268.11
• Sensex up 0.2% to 81,378.37
• Australia S&P/ASX 200 up 0.7% to 8,344.39
• Kospi up 0.4% to 2,604.92
• Brent Futures up 1.0% to $73.81/bbl
• Gold spot up 0.4% to $2,731.75
• German 10Y yield up 4.3 bps at 2.23%
• Euro down 0.1% to $1.0851
• Brent Futures up 1.0% to $73.80/bbl
• US Dollar Index up 0.15% to 103.65

Top Overnight News

• China unveiled some of its biggest cuts to benchmark lending rates in years as the government stepped up efforts to reboot the economy and hit its year-end target of about 5 per cent GDP growth. The PBOC said on Monday that the country’s one-year loan prime rate would be reduced to 3.1 per cent from 3.35 per cent, the biggest reduction on record, and the five-year LPR would be cut to 3.6 per cent from 3.85 per cent. FT
• More than 20 Chinese listed companies have announced plans to tap special central bank lending for share purchases, according to exchange filings, days after the PBOC kicked off the $42 billion funding scheme. The PBOC launched the relending program on Friday, allowing listed companies or their major shareholders to borrow cheaply to fund share buybacks or holding increases. The scheme is worth 300 billion yuan ($42.24 billion) initially. RETRS
• Saudi Aramco is “fairly bullish” on China’s oil demand especially in light of the government’s stimulus package which aims to boost growth, the head of the state-owned oil giant said on Monday. RTRS
• UK gov’t preparing bond markets for GBP80B in extra borrowing over the next 5 years (a formal announcement is set to arrive on 10/30), a sum investors say can be absorbed without sparking a Lizz Truss-like panic so long as specific details are provided. London Times  
• Israel extended its bombing campaign in Lebanon, targeting financial institutions it says help fund Hezbollah. PM Benjamin Netanyahu met with top aides to discuss the next attack on Iran after a Hezbollah drone exploded near his home. BBG
• US banks are considering aggressive cuts to interest payments for corporate depositors as they seek to protect their profit margins after the Federal Reserve cut benchmark lending rates. FT
• Harris continued her blistering fundraising streak in Sept, with her campaign and allied committees raising more than $359M last month (vs. $160M for Trump). NYT
• Boeing has reached a tentative deal with its striking union workers that would increase compensation by 35% over four years (which is up from its original offer of 25%), with a union vote scheduled for Wednesday. WSJ
• Jefferies is the subject of a WSJ profile article detailing the aggressive headcount expansion undertaken by the firm over the last several years as it looks to become a top 5 investment bank by revenue (Jefferies is holding an analyst meeting Monday). WSJ

A more detailed look at global markets courtesy of Newsquawk

 

Top Asian News

 

European bourses, Stoxx 600 (U/C) began the session with a slight negative bias, and generally opened just below the unchanged mark. Stocks attempted to tilt higher soon after the cash open, but have since dipped off best levels to display a generally negative picture in Europe. European sectors are mixed and with the breadth of the market fairly narrow. Energy takes the top spot, alongside Basic Resources. Insurance is found at the foot of the pile. US Equity Futures (ES U/C, NQ -0.2%, RTY +0.2%) are mixed, with very slight underperformance in the NQ. Catalysts today have been light and the docket ahead remains thin.

Top European News

• ECB’s Holzmann said on Friday they are on track to getting inflation under control and that the rate decision in December will depend on the data.
• ECB’s Villeroy said they are on a good way to defeating inflation which is good news and there may be some temporary rebounds in the coming months although this would be due to technical effects, while he added that there will probably be more rate cuts and they will decide depending on the data.
• ECB’s Vasle said that back-to-back rate cuts are no indication of future ECB action, according to the FT.
• ECB’s Simkus says if disinflation becomes entrenched, rates could go below the natural level.
• ECB’s Kazaks says inflation is continuing to decline whilst the economy is weak; rates will continue to decline as inflation declines. ECB rate cuts cannot bring sustainable growth. Rates are still inhibiting economic growth.
• S&P affirmed the UK’s rating at AA; Outlook Stable, while Fitch affirmed Sweden at AAA: Outlook Stable, affirmed Sweden at AAA; Outlook Stable and affirmed Italy at BBB: Outlook revised to Positive from Stable.

FX

• USD is broadly stronger vs. peers; for now, the index is below Friday’s 103.80 peak which coincides with the 200DMA.
• EUR a touch softer vs. the USD after what has been a bruising run for the pair as of late, given a dovish ECB repricing, more hawkish Fed pricing and markets leaning towards a potential Trump presidency. EUR/USD hit resistance at its 200DMA at 1.0871 and has since drifted to a low at 1.0847.
• GBP is softer against the USD and to a lesser extent the EUR. Docket ahead is quiet, but a slew of BoE speakers are due throughout the week. For now, Cable is tucked within Friday’s 1.3008-71 range.
• JPY is softer vs. the USD. However, USD/JPY remains sub-150 after venturing as high as 150.31 last week.
• Antipodeans are both softer vs. the broadly firmer USD in quiet newsflow. AUD/USD has failed to sustain a move above the 0.67 mark and has since slipped below its 100DMA at 0.6695 and Friday’s 0.6692 trough.
• PBoC set USD/CNY mid-point at 7.0982 vs exp. 7.0990 (prev. 7.1274).

Fixed Income

• USTs are modestly lower but holding at a 112-00 trough which equals last Thursday’s base with support at 111-31 and 111-29+ below that.
• Bunds are softer despite experiencing a modest tick higher to a 134.18 session peak on cool German producer price metrics for September. The upside ultimately proved fleeting, with Bunds slipping to a current trough of 133.61. ECB speak today has had little impact on prices.
• Gilts gapped lower at the open and continued to extend losses, in tandem with weakness seen across the complex. Gilts are currently trading at a session trough of 97.61.

Commodities

• Crude oil is modestly firmer with geopolitical tensions remaining in full focus as we await a response from Israel following Iran’s attacks; elsewhere, over the weekend, tensions have been exacerbated by a reported drone attack on the (empty) residence of Israel PM Netanyahu. Brent’Dec currently towards the upper end of a USD 72.80-73.99/bbl range.
• Gold is in the green, gleaning support from the above geopolitical tensions. At a USD 2733/oz peak, which marks yet another ATH for the yellow metal.
• Base metals are firmer owing to the move higher seen in mainland China on the back of the (widely expected) PBoC LPR cut with the metals also seeing strength in APAC hours owing to the tone from Friday.
• Saudi Aramco’s CEO said the world must accelerate the development of new energy sources and lower carbon technologies that can compete on price and performance, while he added that they are fairly bullish on China and oil demand, as well as see some more demand for jet fuel and NAPTHA, especially for crude to chemical projects.
• IEA’s Birol said more than 25% of global energy demand growth is to come from SE Asia in the next 10 years.
• Shell (SHEL LN) said there was an oil leak from a pipeline at Shell Energy and Chemicals Park in Singapore and it activated emergency response specialists to help manage the situation.
• Turkmenistan signed a deal with Iraq to supply 20mln cubic metres of gas daily.

Geopolitics: Middle East

• Israeli PM Netanyahu said a drone attack which targeted his home in northern Israel was a “grave mistake”, while he and his family were not at their house when the drone attack struck on Saturday and there were no casualties.
• Israeli PM Netanyahu spoke with former US President Trump and told him that Israel considers the issues the US administration raises but will make decisions based on its national interests.
• Israel’s military said it attacked Hezbollah’s intelligence HQ and weapons storage facilities in the southern suburbs of Beirut on Saturday. It was also reported that Israel conducted a fresh raid on the southern suburbs of Beirut on Sunday, as well as targeted the city of Tyre and the towns of Bir al-Salasil and Homine al-Fawqa in southern Lebanon.
• Israeli military spokesperson had warned on Sunday that they would conduct targeted strikes on sites belonging to Hezbollah’s financial arm across Lebanon and urged Lebanese residents to evacuate areas near those facilities, while it was later reported that Israeli strikes hit branches of Hezbollah-linked bank in Beirut and Beqaa Valley, according to Times of Israel.
• Hezbollah announced it conducted a rocket barrage at Beit Hillel base, while it was separately reported that Iraqi armed factions announced the targeting of an Israeli military site in the Golan with drones.
• Israel gave the White House its demands for ending the war in Lebanon, while US President Biden’s envoy Amos Hochstein will visit Beirut on Monday to discuss a possible diplomatic solution with Lebanese officials, according to Axios. The report noted one Israeli demand is that IDF be allowed to engage in “active enforcement” to ensure Hezbollah doesn’t rearm and Israel also demands its air force have freedom of operation in Lebanese airspace, although a US official said it is highly unlikely Lebanon and the international community would agree to Israel’s conditions.
• Iran’s Supreme Leader said Hamas leader Sinwar’s death will not halt the axis of resistance and Hamas will live on.
• Iranian Foreign Minister Araghchi alluded to the US and warned that anyone who knows how and when Israel will attack Iran will be held accountable, according to Reuters.
• US House Speaker Johnson said on Sunday that there would be a classified briefing related to leaked US intelligence on Israel-Iran, according to Reuters.
• US Defence Secretary Austin said he would like to see Israel scale back on some of its strikes in and around Beirut, while he raised the issue about UNIFIL security with Israel’s Defence Minister Gallant. Furthermore, Austin reviewed the US defence posture and said he is relieved that PM Netanyahu is safe, while he said he couldn’t confirm reports that North Korean troops are in Russia and readying for combat in the Ukraine war, according to Reuters.
• UN peacekeeping force UNIFIL said an Israeli army bulldozer demolished a watchtower and fence surrounding the UN site in southern Lebanon on Sunday, according to Reuters.
• G7 defence ministers reaffirmed the importance of supporting UNIFIL and the Lebanese armed forces in their role of ensuring the stability and security of Lebanon, while they called on Iran to refrain from providing support to Hamas, Hezbollah, Houthis and other non-state actors. Furthermore, they called on Houthis to immediately cease their escalatory measures that increase regional instability and immediately release the vessel Galaxy Leader and its crew.

Geopolitics: Other

• Russia’s Kremlin say informal meeting between Putin and UAE president went on until midnight. “North Korea is our close neighbour, our partner and we are developing relations in all areas”. Kremlin do not comment on claims that North Korea is sending troops to Russia. “Ties with North Korea are not directed against other countries”.
• Ukrainian President Zelensky thanked countries that ‘do not close their eyes’ to North Korean involvement in Ukraine’s war with Russia and seeks a normal, honest and strong reaction from them, according to Reuters.
• Russian Foreign Minister Lavrov said recent statements by US President Biden on being ready for nuclear talks with Russia without preconditions are deception and he does not see signs at this moment that Moscow and Washington will return to talks on equal terms after the US presidential election, according to RIA.
• G7 defence ministers expressed deep concern at China’s support to Russia which is enabling Russia to maintain its illegal war in Ukraine, while the defence ministers said they support Ukraine on its irreversible path to full Euro-Atlantic integration including NATO membership.
• North Korean Foreign Minister said the new US-led sanctions monitoring team is unlawful, according to KCNA.

US Event Calendar

• 10:00: Sept. Leading Index, est. -0.3%, prior -0.2%

Central Bank Speakers

• 08:55: Fed’s Logan Speaks at SIFMA Annual Meeting
• 13:00: Fed’s Kashkari Participates in Townhall Event
• 17:05: Fed’s Schmid Speaks on Economic and Monetary Policy Outlook
• 18:40: Fed’s Daly Speaks in Moderated Discussion

DB’s Jim Reid concludes the overnight wrap

It doesn’t feel like its going to be the most exciting week ahead of us. Although with earnings season now in full throttle and with a seemingly extremely tight US election just two weeks tomorrow there is undoubtedly plenty to think about and react to.

Having said the election is tight, over the last two weeks the probability markets have been shifting back towards Trump. PredictIt has moved from a 45% probability of a Trump win on September 20th to 56% this morning. At the start of October a Republicans sweep was a 28% probability on Polymarket.com but that’s now shifted to a 42% chance. A Democrats sweep has fallen from 21% to 14%. Outside of the tax and spending implications, Mr Trump last week said that “the most beautiful word in the dictionary is tariff”. So that should have reminded markets that he is serious on this matter if he gets elected. In terms of fiscal, you’ll remember from last week that our US economists believe that the deficit will be between around 7 to 9% from 2026-2028 whatever political configuration we have in the White House.

Staying on debt we do have the IMF and World Bank annual meetings in Washington from today and across the rest of the week. There is expected to be a focus on the unsustainability of global debt in these meetings but that is probably more of a medium-term concern rather than anything markets will latch on to this week. There are plenty of central bankers speaking at the various Washington events but in particular watch out for ECB President Lagarde and BoE’s Governor Bailey (both tomorrow). Ahead of that, today sees quite a bit of Fedspeak. There is also the BRICS summit held in Kazan, Russia from tomorrow to Thursday hosted by Putin. China’s President Xi and India’s Prime Minister Modi are expected to attend.

In terms of data, the main highlight is probably the round of global flash PMIs (Thursday). Walking through the data day-by-day, the other highlights are German PPI, French retail sales and the US leading index today, the US Phili Fed tomorrow, US existing home sales, the Beige book, Eurozone consumer confidence and the Bank of Canada meeting on Wednesday, US initial jobless claims on Thursday, and US durable goods, Tokyo CPI, and the German Ifo on Friday. Recent strikes and storms will likely distort US claims and durable goods so it will be tough to get a clean data read at the moment. The Beige book may give us a bit more insight into current economic momentum.

In corporate earnings, the main highlights are SAP (today), Texas Instruments, GE, and GM (tomorrow), and Tesla, IBM, and Boeing (Wednesday). We list others in the day-by-day calendar at the end.

This morning, Asian equity markets are mostly trading higher. The Shanghai Composite (+0.82%), and the KOSPI (+0.67%) are leading the gains with the Nikkei (+0.33%) also higher. The Hang Seng is -0.55%, with US equity futures and US Treasuries pretty flat.

Focusing in on China, the PBOC has reduced the one-year loan prime rate (LPR) by 25 basis points to 3.10% from 3.35%, and the five-year LPR by the same margin to 3.6% from 3.85%. This is at the upper end of the 20-25bps of cuts expected with the consensus going for 20bps.

In the commodities market, gold continues its march higher (+0.33%) and to a fresh record high of $2,731 amid reports of Israel contemplating retaliation against Iran following Tehran’s recent missile attacks. Tensions have escalated further with news of a Hezbollah drone explosion near Prime Minister Benjamin Netanyahu’s residence on Saturday. The family weren’t home at the time but questions are being asked about how the drone was able to penetrate the defence systems and also what the response will be. Against that backdrop, Brent crude prices have slightly rebounded, trading +0.45% higher at $73.39/bbl.

Looking back at last week now and markets continued to advance, as the combination of strong US data, solid earnings, and another ECB rate cut buoyed investors. In particular, the S&P 500 posted a 6th consecutive weekly advance for the first time in 2024, and the latest weekly gain means it’s still experiencing its strongest performance at this point in the year since 1997. In terms of the details, the S&P 500 was up +0.85% over the week (+0.40% Friday), whilst small-cap stocks did particularly well, with the Russell 2000 up +1.87% (-0.21% Friday). It was a similar story in other countries, with Europe’s STOXX 600 up +0.58% for the week (vs. +0.21% Friday). However, emerging market equities lost ground for a second week running, with the MSCI EM Index down -0.38%, despite a +1.76% rebound on Friday led by Chinese stocks.

That strength was evident across multiple asset classes. For instance, in credit there were several milestones, with US IG credit spreads falling to just 79bps on Thursday, which was their tightest level since 2005, before rising +2bps on Friday. Similarly, Euro IG credit spreads ended the week at just 105bps, their tightest since February 2022. That spread tightening also happened among sovereign bonds, with the gap between the 10yr Italian yield over bunds down -11.9bps last week to 118bps, which is their tightest level since November 2021.

Among sovereign bonds themselves, there was also a modest rally last week, with yields on 10yr Treasuries down -1.7bps (-0.8bps Friday) to 4.08%. And those on 10yr bunds came down by a larger -8.3bps (-2.6bps Friday) to 2.18% helped by the back-to-back cut by the ECB. Bonds were also helped by a noticeable decline in commodity prices, and Brent crude fell by -7.57% over the week to $73.06/bbl. But even as oil prices fell, gold prices climbed to another all-time high on Friday of $2,721/oz, having risen by +2.44% last week (+1.08% Friday).

Authored by Charles Hugh Smith via OfTwoMinds blog,

And so here we are, exhausted by the divisions, the frustration, the rage and our loneliness in a sea of madness few even see.

Isn’t it obvious? Of course it is. So what’s obvious? That there are sharply different views on what’s obvious.

Psychiatrist-author R.D. Laing noted back in 1967 as the Vietnam War raged that what was obvious to President Lyndon Johnson–that the war had to be prosecuted lest the Democratic party lose congressional seats in the 1968 election for being “soft on Communism”–was not obvious to those paying the price of the war as the collateral damage for the all-important political jockeying in Washington D.C.

As historian Peter Turchin has documented, the cycle of socio-economic-political disintegration-integration runs around fifty years, and so here we are. Turchin caught some flak for predicting the handbasket would start its slide into Heck in 2020, and voila.

A great many things are obvious, yet equally obvious is the chasm separating what’s obvious to each of us. The chasm is literally bottomless, and there are no bridges across it, no common ground, and so friendships–the glue of sociability, the foundation of our well-being–are tossed into the chasm with infuriated abandon–how dare you!

Having lived through the last cycle of tumult, discord and disintegration, that we’re in another such cycle is obvious to me, but not to others. That the end of the Debt-Speculation Super-Cycle is upon us is obvious to many of us, but hotly denied by the multitudes counting on The Everything Bubble never popping.

That mass media and social media have merged is obvious to me, but not to others. The source of income for all media players / content creators is now the same, and so the competition for “engagement” (i.e. attention, eyeballs, emotional vesting) is Darwinian on a heretofore unimaginable scale, a power-law scale in which the few winners at the very apex collect the vast majority of the winnings and the 99% trail off in the long tail, collecting the coins that roll off the table of the few.

By way of example, data collected by the Department of Justice on the 58,000 books published in a year revealed that 96% of books sell less than 1,000 copies, and 50 percent of all titles sold less than a dozen copies. (Source.) That’s one heck of a long tail: 30,000 books–most infused with the hopes and dreams of the authors–each sold 12 or less copies.

This aligns with the Pareto Distribution, the 80/20 rule, which distills down (80% of 80% = 64% and 20% of 20% = 4%) to the 64/4 rule: the top 4% scoop up two-thirds of the winnings, and the 96% brawl over the remaining third.

In social media, as in the rest of the economy, the percentages are even less favorable: the top 0.1% amass the vast majority of the gains. The top influencers rake in millions, the selfie-posting multitudes pick up pennies–if they’re lucky.

So what are the tools needed to win this Darwinian competition? Addiction, clickbait, emotional lassos and echo chambers: make the devices and endless scrolling addictive: you’re a winner. Feature sensationalized clickbait headlines: you’re a winner. Snare the unwary with emotional lassos: you’re a winner. Espouse shared beliefs to fellow true believers with ecstatic enthusiasm: you’re a winner.

So isn’t it obvious where this is going? Put another way: is this savage arena a healthy environment? Or is it deranging to all who wander in and are lassoed with such ease? What happens to those lassoed, addicted, ensnared? This chart of loneliness illuminates the inevitable result of making derangement the most profitable activity under the sun.

As others have insightfully pointed out, every individual who tries to walk past the arena has 100,000 well-paid, smart, highly motivated hawkers cajoling them into enter the arena. Hey pal, craving a dopamine hit? Come on in, we got dopamine hits galore inside. You’re gonna love it.

And so here we are, exhausted by the divisions, the frustration, the rage and our loneliness in a sea of madness few even see. Fortunately, I have the perfect antidote for you: click here, and you’ll be delighted by an endless scroll of adorable kids playing with puppies and kittens. Your dopamine levels are going to low-Earth orbit, you’re gonna love it.

Or if you have super-human powers, walk past the arena and keep walking.

*  *  *

Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

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

A California court dismissed class action certification for a lawsuit filed by a former employee that accused Twitter of not paying laid off workers bonuses that were allegedly promised.

Mark Schobinger, the plaintiff, was Twitter’s senior director of compensation during 2022–23, a time when the company was in the process of being acquired by Elon Musk, according to an Oct. 16 order issued by the U.S. District Court, Northern District of California.

At the time, Schobinger was a member of a group of employees eligible to receive annual bonuses in early 2023. However, the company was under no obligation to pay, a fact that is “undisputed” under the terms of the bonus, the order noted. Paying the bonus was “a matter of discretion” for the firm.

Schobinger alleged that the company promised employees in April, May, and August of 2022 that it would pay the bonus provided the workers stayed with the firm throughout the acquisition. The plaintiff claimed he did stay during this phase because of the promise. He filed the lawsuit after not getting paid, and sought class certification.

On Wednesday, U.S. District Judge Vince Chhabria denied Schobinger’s motion, noting he is unfit to act as a class representative.

The judge pointed out that the plaintiff had argued against Twitter paying the bonus while he was under employment with the firm.

In November 2022, months after Twitter’s bonus promise, Schobinger sent a message to the company’s “Head of People Experience,” stating that whether to pay the bonus was purely dependent on the “discretion” of Musk. Schobinger also wrote that he recommended not to pay the bonus.

In February 2023, the plaintiff sent a “white paper” to several executives on the issue, stating that “not paying a bonus would be prudent.” Evidence also points to Schobinger telling Musk in a meeting a month earlier that the firm need not pay the bonus, the order stated.

These statements make Schobinger “not an adequate class representative,” Chhabria wrote.

“At his deposition, Schobinger offered a convoluted explanation for how he could possibly have believed he was entitled to the bonus while simultaneously advocating that the company not pay it. It seems likely that Schobinger’s explanation is untrue,” the judge said.

“But even if he is telling the truth, that’s beside the point for purposes of this motion. Because even if he is telling the truth, his conduct makes him the worst possible candidate to serve as a litigation representative for the other Twitter employees who didn’t get a bonus.”

The court also highlighted a major issue with the motion—a “large number” of proposed class members signed arbitration agreements with Twitter, some of which also waived off class action lawsuits against the company.

Based on these observations, the judge denied the motion.

Employee Lawsuits

Twitter faces multiple lawsuits related to employee layoffs. After Musk took over Twitter in 2022, the company cut down its workforce.

In August, U.S. District Judge Araceli Martínez-Olguin dismissed a lawsuit brought by former employees with disabilities who were fired after the takeover.

Dmitry Borodaenko, an ex-employee, argued that the terminations violated Americans with Disabilities Act as the layoffs treated disabled people differently.

After Musk’s acquisition, the firm reversed work-from-home policies and said that employees who remained with the company would have to work for long hours, according to the complaint.

Martínez-Olguin pointed out that the plaintiff did not back his claims with proof. “Borodaenko fails to show how employees with disabilities were treated differently by Twitter’s broad return-to-the-office policy and increased workload,” the judge wrote in her ruling.

“Borodaenko’s theory improperly relies on the assumption that all employees with disabilities necessarily required remote work as a reasonable accommodation.”

In July, a California judge sided with Twitter in another case related to mass firing of staff members. The plaintiffs sought at least $500 million as severance pay for around 6,000 terminated workers.

The lawsuit alleged that Twitter promised a favorable severance plan that resulted in the employees staying longer at the firm than they would have. When they were let go, they received less severance pay than expected, it said.

The judge in the case noted that after Musk took over, Twitter notified staff members that they would get lower severance payouts when laid off, thus dismissing the complaint.

More than ever, attending an NFL game is becoming a luxury commodity.

In 2023 alone, average ticket prices jumped 8.6% to $120. Driving up costs are new stadiums, which are being built with fewer seats as luxury boxes and premium seats take up more space. The newly-built Allegiant Stadium, for instance, which hosted last year’s Super Bowl in Las Vegas, has 65,000 seats—one of the lowest in the league.

This graphic, via Visual Capitalist’s Dorothy Neufeld, shows the rising cost of attending an NFL game, based on data from Team Marketing Report via FinanceBuzz.

How Much Have NFL Game Costs Increased?

Below, we show the cost increase of an average NFL ticket, parking, beer, and hot dog since 2013:

Over the last decade, NFL game costs have risen by 39%, surpassing the rate of inflation.

The Las Vegas Raiders, with their new stadium and relocation, have experienced the most significant price hikes. Compared to 2013, attending a game is $103 more expensive. The Allegiant Stadium, costing a staggering $1.9 billion to build, is one of the most expensive in the world.

Meanwhile, attending a Cleveland Browns game is nearly double the cost compared to 2013.

The Kansas City Chiefs’ Super Bowl victories have contributed to higher ticket costs in particular, rising 103% over the past decade. On the resale market, Chiefs tickets were the second-highest in the league in 2023, with home tickets costing $468, on average.

In stark contrast, Dallas Cowboys game costs declined 1% compared to a decade ago. Despite being the world’s most valuable sports team, game costs remain fairly stable, at $160 in 2023 versus $162 in 2013. For context, the Cowboys had the highest game costs in 2013, while costs are slightly above the NFL average today.

Like the Cowboys, the New York Jets and New England Patriots have seen among the lowest price hikes overall.

To learn more about this topic from an earnings perspective, check out this graphic on the top NFL teams by revenue.

Authored by Malcom Davis via RealClearDefense,

SpaceX took a big step towards full reusability of space launchers on 13 October, a step towards a transformation in accessing space far more cheaply, frequently and with big payloads.

The remarkably successful fifth test flight of the Starship launcher on that day saw a spectacular recovery of the rocket’s 300-ton first stage, Super Heavy, into the arms of the launch pad gantry. The second stage, also called Starship, meanwhile climbed and accelerated to almost orbital velocity and splashed down precisely in the targeted Indian Ocean location off Western Australia. This took the company closer to landing second stages for re-use.

The full reusability of Starship will dramatically reduce launch costs. That means it’s possible to consider new types of activity in space that simply were not viable technologically or were too expensive with past launch architecture.

Most of the envisaged applications are civilian, but possible military applications include launching surveillance and other satellites far more cheaply, and therefore in greater numbers, and even urgent delivery of large payloads across Earth with suborbital flights.

Once SpaceX achieves the capability for one Starship to take fuel from others in orbit, a single mission will be able to deliver up to 100 metric tons or 100 people to the Moon, to Mars and potentially beyond.

The cost of launch matters. Only the first stage of SpaceX’s existing Falcon launcher returns for re-use, yet that rocket has driven launch costs down to U.S.$2720 per kilogram from the U.S.$25,000 per kg that users paid for NASA Space Shuttle flights. The total cost of a Falcon launch is about U.S.$67 million.

Because no hardware will be lost on a Starship flight, the only costs will be fuel, maintenance and use of the pad: U.S.$10 million or less per launch for a future Starship version and, according to SpaceX CEO Elon Musk, eventually U.S.$2 million to U.S.$3 million. That suggests a launch cost of U.S.$100 to U.S.$200 per kg.

Compare this with NASA’s Space Launch System (SLS) rockets, which will be fully expended on each mission, except for their Orion crew capsules. They will initially cost U.S.$4 billion per launch and may end up around U.S.$2.5 billion. NASA will launch only one SLS per year, at best.

Starship’s capacity means it will be able to launch large numbers of satellites on each mission, further reducing cost and rapidly deploying mega constellations, such as Starlink. Alternatively, it will be able to carry very large payloads into orbit—as much as 200 metric tons in a future version of Starship.

At its Boca Chica launch site in Texas, SpaceX is establishing what it calls the Starfactory, an assembly line that will be able to build a Starship a week, up from three a year now. With two more launch sites at Cape Canaveral, there is a suggestion of up to 44 flights a year from this location. Add in the launch facilities at Boca Chica, and the launch rate can exceed that of Falcon 9, currently one every 2.7 days.

Low cost, high payload to orbit and a fast launch cadence open up new opportunities for radically different purposes, particularly when in-orbit refueling is proven.

The most important role for Starship is supporting NASA’s Artemis program to get humans back to the Moon in preparation for human missions to Mars. SpaceX is developing a special lunar-landing version of Starship. Musk has suggested flying uncrewed Starships to Mars by 2026, and potentially crewed missions there by 2028, with his goal being the establishment of a permanent human presence on the planet’s surface.

Low-cost launches by Starship could also support a permanent human presence on the Moon that could then establish an in-space economy and manufacturing capability based on the use of lunar resources. All indications are that the Moon has substantial ice deposits in its regolith around the south pole, where humans will land first. If the water can be used for a base and in making rocket fuel for Starship launches from weak lunar gravity, the Moon will become a launch pad for exploration and resource exploitation across the inner solar system. That’s more important than Mars colonisation in coming decades.

The establishment of a permanent human base on the Moon, and the utilisation of lunar resources opens up a next step in human space activities. This will include construction of large space-based solar power satellites that could solve much of Earth’s energy challenges for the 21st century and beyond. Another option will be large commercial space platforms to replace the International Space Station at the end of its life in 2030. Robotic space manufacturing using lunar resources and 3D printing would create the possibility of an in-space industry that could foster technological innovation in the 2030s and 2040s.

Starship’s promise of low-cost and frequent space access opens up this new golden era of space exploration and resource exploitation.

Malcolm Davis is a senior analyst with ASPI.