Red States Fight Growing Efforts To Give "Basic Income" Cash To Residents

By Kevin Hardy of Stateline

South Dakota state Sen. John Wiik likes to think of himself as a lookout of sorts — keeping an eye on new laws, programs and ideas brewing across the states.

“I don’t bring a ton of legislation,” said Wiik, a Republican. “The main thing I like to do is try and stay ahead of trends and try and prevent bad things from coming into our state.”

This session, that meant sponsoring successful legislation banning cities or counties from creating basic income programs, which provide direct, regular cash payments to low-income residents to help alleviate poverty.

While Wiik isn’t aware of any local governments publicly floating the idea in South Dakota, he describes such programs as “bureaucrats trying to hand out checks to make sure that your party registration matches whoever signed the checks for the rest of your life.”

The economic gut punch of the pandemic and related assistance efforts such as the expanded child tax credit popularized the idea of directly handing cash to people in need. Advocates say the programs can be administered more efficiently than traditional government assistance programs, and research suggests they increase not only financial stability but also mental and physical health.

Still, Wiik and other Republicans argue handing out no-strings-attached cash disincentivizes work — and having fewer workers available is especially worrisome in a state with the nation’s second-lowest unemployment rate.

South Dakota is among at least six states where GOP officials have looked to ban basic income programs.

The basic income concept has been around for decades, but a 2019 experiment in Stockton, California, set off a major expansion. There, 125 individuals received $500 per month with no strings attached for two years. Independent researchers found the program improved financial stability and health, but concluded that the pandemic dampened those effects.

GOP lawmakers like Wiik fear that even experimental programs could set a dangerous precedent.

“What did Ronald Reagan say, ‘The closest thing to eternal life on this planet is a government program’?” Wiik said. “So, if you get people addicted to just getting a check from the government, it’s going to be really hard to take that away.”

The debate over basic income programs is likely to intensify as blue state lawmakers seek to expand pilot programs. Minnesota, for example, could become the nation’s first to fund a statewide program. But elected officials in red states are working to thwart such efforts — not only by fighting statewide efforts but also by preventing local communities from starting their own basic income programs.

Democratic governors in Arizona and Wisconsin recently vetoed Republican legislation banning basic income programs.

Last week, Texas Attorney General Ken Paxton sued Harris County to block a pilot program that would provide $500 per month to 1,900 low-income people in the state’s largest county, home to Houston.

Paxton, a Republican, argued the program is illegal because it violates a state constitutional provision that says local governments cannot grant public money to individuals.

Harris County Attorney Christian Menefee, a Democrat, called Paxton’s move “nothing more than an attack on local government and an attempt to make headlines.”

Meanwhile, several blue states are pushing to expand these programs.

Washington state lawmakers debated a statewide basic income bill during this year’s short session. And Minnesota lawmakers are debating whether to spend $100 million to roll out one of the nation’s first statewide pilot programs.

“We’re definitely seeing that shift from pilot to policy,” said Sukhi Samra, the director of Mayors for a Guaranteed Income, which formed after the Stockton experiment.

So far, that organization has helped launch about 60 pilot programs across the country that will provide $250 million in unconditional aid, she said.

Despite pushback in some states, Samra said recent polling commissioned by the group shows broad support of basic income programs. And the programs have shown success in supplementing — not replacing — social safety net programs, she said.

The extra cash gives recipients freedom of choice. People can fix a flat tire, cover school supplies or celebrate a child’s birthday for the first time.

“There’s no social safety net program that allows you to do that.” she said. “ … This is an effective policy that helps our families, and this can radically change the way that we address poverty in this country.”

Basic Income Experiments

The proliferation of basic income projects has been closely studied by researchers.

Though many feared that free cash would dissuade people from working, that hasn’t been the case, said Sara Kimberlin, the executive director and senior research scholar at Stanford University’s Center on Poverty and Inequality.

Stanford’s Basic Income Lab has tracked more than 150 basic income pilots across the country. Generally, those offer $500 or $1,000 per month over a short period.

“There isn’t anywhere in the United States where you can live off of $500 a month,” she said. “At the same time, $500 a month really makes a tremendous difference for someone who is living really close to the edge.”

Kimberlin said the research on basic income programs has so far been promising, though it’s unclear how long the benefits may persist once programs conclude. Still, she said, plenty of research shows how critical economic stability in childhood is to stability in adulthood — something both the basic income programs and the pandemic-era child tax credit can address.

Over the past five years, basic income experiments have varied across the country.

Last year, California launched the nation’s first state-funded pilot programs targeting former foster youth.

In Colorado, the Denver Basic Income Project aimed to help homeless individuals. After early successes, the Denver City Council awarded funding late last year to extend that program, which provides up to $1,000 per month to hundreds of participants.

A 2021 pilot launched in Cambridge, Massachusetts, provided $500 a month over 18 months to 130 single caregivers. Research from the University of Pennsylvania found the Cambridge program increased employment, the ability to cover a $400 emergency expense, and food and housing security among participants.

Children in participating families were more likely to enroll in Advanced Placement courses, earned higher grades and had reduced absenteeism.

“It was really reaffirming to hear that when families are not stressed out, they are able to actually do much better,” said Geeta Pradhan, president of the Cambridge Community Foundation, which worked on the project.

Pradhan said basic income programs are part of a national trend in “trust-based philanthropy,” which empowers individuals rather than imposing top-down solutions to fight poverty.

“There is something that I think it does to people’s sense of empowerment, a sense of agency, the freedom that you feel,” she said. “I think that there’s some very important aspects of humanity that are built into these programs.”

While the pilot concluded, the Cambridge City Council committed $22 million in federal pandemic aid toward a second round of funding. Now, nearly 2,000 families earning at or below 250% of the federal poverty level are receiving $500 monthly payments, said Sumbul Siddiqui, a city council member.

Siddiqui, a Democrat, pushed for the original pilot when she was mayor during the pandemic. While she said the program has proven successful, it’s unclear whether the city can find a sustainable source of funding to keep it going long term.

States look to expand pilots

Tomas Vargas Jr. was among the 125 people who benefited from the Stockton, California, basic income program that launched in 2019.

At the time, he heard plenty of criticism from people who said beneficiaries would blow their funds on drugs and alcohol or quit their jobs.

“Off of $500 a month, which amazed me,” said Vargas, who worked part time at UPS.

But he said the cash gave him breathing room. He had felt stuck at his job, but the extra money gave him the freedom to take time off to interview for better jobs.

Unlike other social service programs like food stamps, he didn’t have to worry about losing out if his income went up incrementally. The cash allowed him to be a better father, he said, as well as improved his confidence and mental health.

The experience prompted him to get into the nonprofit sector. Financially stable, he now works at Mayors for a Guaranteed Income.

“The person I was five years ago is not the person that I am now,” he said.

Washington state Sen. Claire Wilson, a Democrat, said basic income is a proactive way to disrupt the status quo maintained by other anti-poverty efforts.

“I have a belief that our systems in our country have never been put in place to get people out of them,” she said. “They kept people right where they are.”

Wilson chairs the Human Services Committee, which considered a basic income bill this session that would have created a pilot program to offer 7,500 people a monthly amount equivalent to the fair market rent for a two-bedroom apartment in their area.

The basic income bill didn’t progress during Washington’s short legislative session this year, but Wilson said lawmakers would reconsider the idea next year. While she champions the concept, she said there’s a lot of work to be done convincing skeptics.

In Minnesota, where lawmakers are considering a $100 million statewide basic income pilot program, some Republicans balked at the concept of free cash and its cost to taxpayers.

“Just the cost alone should be a concern,” Republican state Rep. Jon Koznick said during a committee meeting this month.

State Rep. Athena Hollins, a Democrat who sponsored the legislation, acknowledged the hefty request, but said backers would support a scaled-down version and “thought it was really important to get this conversation started.”

Much of the conversation in committee centered on local programs in cities such as Minneapolis and St. Paul. St. Paul Mayor Melvin Carter, a Democrat, told lawmakers the city’s 2020 pilot saw “groundbreaking” results.

After scraping by for years, some families were able to put money into savings for the first time, he said. Families experienced less anxiety and depression. And the pilot disproved the “disparaging tropes” from critics about people living in poverty, the mayor said.

Carter told lawmakers that the complex issue of economic insecurity demands statewide solutions.

“I am well aware that the policy we’re proposing today is a departure from what we’re all used to,” he said. “In fact, that’s one of my favorite things about it.”

Tyler Durden Tue, 04/16/2024 - 22:20

Where Highly Educated Migrants Come From

Voters in India are getting set to head to the polls this weekend, in what has been dubbed the world’s biggest election.

Nearly 1 billion people are eligible to determine whether Narendra Modi, leader of the Bharatiya Janata Party (BJP), will rule the country for a third consecutive term.

Statista's Katharina Buchholz reports that,according to data from a Statista Consumer Insights survey, one of the major challenges facing the country right now  is that of unemployment.

This will be a major sticking point for younger voters.

With often better opportunities abroad, the country is losing valuable talent. And it’s not alone, as OECD data reveals. In fact, in 2015/2016 - the latest year on record - 40 million highly educated migrants were living in OECD member countries. While skilled migrants are certainly welcomed by labor markets in most developed nations especially in times of falling birth rates, the migration of the educated can also have a detrimental effect on their home countries - often described as brain drain.

You will find more infographics at Statista

As seen in the numbers, China and India had sent the most highly skilled migrants abroad as of the latest available date.

Yet, compared to the size of their populations, the numbers are comparably low. Other major brain drain locations have lost many more talented workers in relative terms, for example the Philippines, Poland, Mexico and Russia.

The Philippines have been known for supplying the world with health care professionals, especially nurses. Many of these highly skilled professionals emigrate to the U.S., forming the third-most important skilled labor emigration corridor of the OECD behind Mexican and Indian migration to the United States.

As a result, 14.3 percent of highly skilled Filipinos had emigrated to the OECD as of 2015/16. This rate is even higher in small or isolated developing economies.

In Caribbean state Guyana, almost 71 percent of the highly educated had left for the OECD, compared with 66 percent in Trinidad and Tobago and 63 percent in Mauritius.

Tyler Durden Tue, 04/16/2024 - 22:00

California's 'Rape Club' Federal Prison To Close

Authored by Beige Luciano-Adams via The Epoch Times,

Just weeks after a seventh prison employee was sentenced in a wide-ranging sex abuse scandal that has plagued a federal women’s correctional facility in the City of Dublin, about 35 miles southeast of San Francisco, officials announced April 15 they would close the prison.

“The Federal Bureau of Prisons ...  has taken unprecedented steps and provided a tremendous amount of resources to address culture, recruitment and retention, aging infrastructure—and most critical—employee misconduct [at the facility],” Bureau of Prisons Director Collette S. Peters said in a statement.

But such measures, Ms. Peters said, have not been effective, and the prison—the Federal Correctional Institution, Dublin—was not meeting “expected standards.”

Somewhat cryptically, the director indicated the facility’s uncertain future.

“The closure of the institution may be temporary but certainly will result in a mission change,” Ms. Peters said in the statement, offering no further details about whether or when it might reopen.

Politicians and activists lauded the move as a victory in the fight against systemic abuse of incarcerated women.

“Every American deserves basic human rights and dignity within the criminal justice system,” Rep. Judy Chu wrote on social media platform X, suggesting the closure was a “significant step forward in ensuring the Bureau of Prisons provides a safe environment for incarcerated people and staff.”

The abrupt announcement came just as independent oversight was about to begin.

Last month, a U.S. District judge issued a scathing order, calling the prison a “dysfunctional mess,” and appointed a special master to implement reforms.

The years-long scandal at Dublin, which included high-profile lawsuits, investigations, and several turnovers of management, was a public relations nightmare for the Washington D.C.-based Bureau of Prisons—and points to a broader problem of chronic sexual abuse of female inmates in the federal system.

In 2022, an investigative arm of the Department of Homeland Security reviewed “non-public” whistleblower documents regarding the prison bureau, as well as interviews with more than two dozen senior leaders within the agency, whistleblowers, and survivors, and came to “deeply disturbing” conclusions.

Employees had sexually abused female prisoners in at least two-thirds of federal prisons nationwide over the previous decade, and officials had failed to detect, deter, and stop recurring abuse at several institutions, according to the investigation.

But even in that context, the low-security Dublin prison—which houses 505 inmates at its main facility and 101 at an adjacent minimum security camp including those convicted of drug and other nonviolent crimes—stood out.

In 2022, former Dublin Warden Ray J. Garcia, who federal investigators said “oversaw a toxic culture [at the facility],” was convicted by a jury of sexually abusive conduct against three female victims and sentenced to 70 months in prison. A former chaplain, James Highhouse, pleaded guilty to sexual assault and lying to authorities and was sentenced to 84 months in prison.

Last year, Dublin abuse survivors filed a class action lawsuit against guards and officials, alleging abuse continued even after earlier charges were filed.

The lawsuit claimed the nature of the exploitation was systemic, implicating the entire Bureau of Prisons (BOP) system in which “officers at every level literally watched as other officers assaulted incarcerated people and helped to keep survivors silent through retaliation,” a lawyer representing the eight clients in the suit told local media.

Bureau of Prisons officials said the “deactivation” of the Dublin facility is currently ongoing, but did not give a completion date. No employees will lose their jobs as a result of the closure, and inmates currently housed at the prison will be transferred to other facilities.

Tyler Durden Tue, 04/16/2024 - 17:00

WTI Rally Stalls On Crude Build, White House Hints At SPR Release

Oil prices fell for the second day in a row (albeit very modestly today) as the 'WW3-on / WW3-off' headline-swings (supply) are wearing on traders, and less-and-less dovish expectations for The Fed weigh on demand expectations

"Oil traders are hunkering down as bears are increasingly afraid to bet on lower prices," Phil Flynn, senior market analyst at the Price Futures Group, told MarketWatch.

At the same time, "bulls are pulling in their horns until they get clarity on what the Israeli response may be."

Oil traders are waiting to see how the "diplomatic push for Israel to show restraint pays off," said Flynn.

Traders are expecting another crude build (the fourth in a row, albeit small), and a return to gasoline draws...

API

• Crude +4.09mm (+600k exp)

• Cushing -169k

• Gasoline -2.51mm (-1.0mm exp)

• Distillates -427k (-400k exp)

API reported a much bigger than expected crude build (and offset that with a large gasoline draw)...

Source: Bloomberg

WTI was hovering around $85.3 ahead of the API print and was thoroughly unimpressed by the mixed inventory data...

However, Joe and Jerome have a problem as pump-prices just keep going higher...

Source: Bloomberg

President Biden “wants to keep the price of gasoline affordable, and we’ll do what we can to make sure that that happens,” White House senior adviser John Podesta says at the BloombergNEF Summit in New York, responding to a question about a potential release of oil from the nation’s Strategic Petroleum Reserve amid forecasts that already rising prices at the pump will spike this summer.

• JOE BIDEN'S APPROVAL RATING FALLS TO 38% FROM 40% IN MARCH - REUTERS/IPSOS POLL

Source: Bloomberg

Who could have seen that coming?

And there it is

SENIOR WHITE HOUSE ADVISOR: US COULD RELEASE MORE SPR OIL TO KEEP GAS PRICES LOW https://t.co/AzEQ5K9XFY

— zerohedge (@zerohedge) April 16, 2024

'Strategic' - "you keep using that word... I do not think it means what you think it does."

Tyler Durden Tue, 04/16/2024 - 16:40

The Fundamental Unraveling Of America

Authored by Albin Sadar via American Greatness,

By now, it must be overwhelmingly apparent to every American citizen that what candidate Barack Obama promised on the campaign trail back in 2008 has come to pass. Obama touted a “fundamental transformation of America” if elected president and, once elected, he proceeded to accomplish that one huge goal.

It can certainly be argued that the country experienced a slow boiling of the frog during the eight years of Obama’s presidency and that, during that period, the pot neither got to boil too long nor did the frog feel the heat intensely enough to hop out. Hillary Clinton was anointed by the Democrats to follow Obama to continue the unraveling of America’s constitutional republic, replacing it with their own interpretation of a “democracy.”

But somehow, out of nowhere, a wrecking ball named Donald J. Trump collided with the original fundamental-transformation plan. However, that, as we all experienced, was only a temporary setback. Once the 2020 election was successfully rigged and stolen and a hand-puppet-Biden government was installed, Obama and his global handlers continued stirring and reheating the pot to the required boiling point.

As it turned out, this time around, turning up the heat also necessitated putting a lid on the pot because there was a real chance that the frog might finally catch on and attempt to jump out.

So, where are we now?

The pot continues to frantically boil, with the frog finally awakening to its fate - but trapped inside the pot.

And the only one capable of removing the lid is that same old why-won’t-he-just-go-away-already Trump.

Even with the onslaught of tactics straight out of the Jussie Smollett playbook (i.e., if you can’t find a crime, make one up), resulting in New York- and DC-style “fair” trials and verdicts, Trump continues to generate his own heat, resulting in the heads of Democrats boiling—and sometimes even exploding.

What is it about Trump and, more importantly, about the movement that he has inspired? One could say that the MAGA movement is the Tea Party supercharged. The latter was pushback against Obama’s early years in office, with a large portion of the country saying we see what “fundamental transformation” really means—pitting poor against rich, black against white, women against men, children against parents—and we say these are not the ideals upon which our country was founded nor for which it fought.

Can anyone stand in a cemetery and thoughtfully observe rows upon rows of simple, small, white crosses heading hundreds of graves which mark fallen soldiers and not reflect upon their noble sacrifices? Did these overwhelmingly young men and women not go off to war to fight tyranny overseas to preserve the God-given freedoms we peacefully enjoy here at home? What would any of them say today about their sacrifices? Would they really have gone off to fight to preserve the unraveled, fundamentally- transformed country in which we now find ourselves?

A country of:

• wide-open borders, allowing an overwhelming influx of unvetted foreigners, along with human traffickers, drug-pushers, killer gangs, and dangerous diseases,

• males claiming to be females to win swimming meets and track races against girls,

• graphic sex literature being made available to kindergarten and young elementary school children,

• boys and girls told they can medically and surgically change their sex if it “feels right,” even without parental consent,

• Election Day becoming Election Season, where one party can keep counting ballots until they have manufactured their desired outcome

• (and to round out this partial list),

• vilifying, even jailing, the opposition party with whom your party disagrees,

Whenever Democrats and the far left in general talk about Trump supporters, they always sneer when saying the name “MAGA.” In other words, they never say the words for which the letters refer. Why not? They do not want people to hear that the opposition to what their leftist views are doing to this country comes from people who want to “make America great again.”

If you love this country, why would you not want to see it great, now and in the future? And the opposite is also true. If you do not love this country, why would you not want to change it or progress in a whole other direction, thus the need to manufacture a transformation?

When you marry someone, after you say, “I do,” do you then say, “Now that I have you, I want you to transform, to be a totally different person? I don’t love you per se; I love the person I can now turn you into.”

If you don’t love this country and don’t want to leave it, you will stay and fundamentally transform it. And to do so, you would have to unravel the very foundations upon which the country was built. Unravel the unity of We the People; unravel the belief of Nature and Nature’s God; unravel limited government—since these three principles alone are key to the true freedom made possible within self government.

This year’s election is our final wake-up call.

Good men and women need to be ever-vigilant to make sure that the Democrats, the Deep State, the RINOs, and the globalists do not have even the slightest chance to solidify their scheme to fundamentally transform this great nation by completely unraveling its foundations.

*  *  *

A version of this article appeared previously at AmericanThinker.com.

Tyler Durden Tue, 04/16/2024 - 16:20

Dollar & Yields Soar As Fed-Fears Trump WW3-Worries

Mixed data overnight out of China (GDP beat, Retail sales & Industrial production miss) was matched by an equally divergent day of macro in the US with ugly housing data but strong industrial production, but once again the markets were ping-ponged by Fed fears (rate-cuts-off - Fed Vice-Chair Jefferson and Powell both sang from the same 'higher for longer' hymnsheet with the latter finally admitting that "recent [inflation] data have clearly not given us greater confidence and instead indicate that is likely to take longer than expected to achieve that confidence") and MidEast tensions (WW3-on, but not yet - Israeli war cabinet plan is 'keep Iran guessing').

All of which pushed 2024 rate-cut expectations lower in the US...

Source: Bloomberg

In fact, the majority of investors now see 2 rate-cuts this year...

The odds of a June rate- cut have tumbled to just 15%...

Source: Bloomberg

...and 2025 rate-cut expectations plunged today - in a crescendo-like surge in volume that suggests stop-outs... (h/t @EdBolingbroke)

Source: Bloomberg

...and pushed the 2Y yield back above 5.0% for the first time since November...

Source: Bloomberg

Treasury yields were 5-6bps higher overall today (together) but on the week, for now, the short-end is slightly outperforming...

Source: Bloomberg

In fact, it's been a wild ride for all yields...

This was posted last Dec when the 10Y was 3.84%. It is now 4.66% https://t.co/rsXhk7MpqV

— zerohedge (@zerohedge) April 16, 2024

Stocks were volatile today amid the surge in yields and Powell's comments, with Small Caps lagging in the red along with a small loss for the S&P and Nasdaq unch. The last minute saw a big sell program hit to ruin most people's day...

Goldman's trading desk summed it up as follows: "Overall feels quiet though market volumes look elevated...skewed around -3% better for sale with LO’s leading more of the supply. "

MS rallied on earnings but BAC did not, with C catching down to GS...

Source: Bloomberg

MAG7 stocks went nowhere today...

Source: Bloomberg

Month-to-date, there seems like differentiation between what's being sold - Defensives and Cyclicals both down equally...

Source: Bloomberg

The dollar was the only other notable mover - rising for the fifth straight day to fresh highs since November - forming a 'Golden Cross' (50DMA crossing above the 200DMA)

Source: Bloomberg

Oil ended unchanged...

Source: Bloomberg

Gold managed small gains...

Source: Bloomberg

...ending at a new record closing high...

Source: Bloomberg

Crypto was oddly quiet...

Source: Bloomberg

Finally, Joe and Jerome have a problem...

Source: Bloomberg

Get back to work Mr. SPR!

Tyler Durden Tue, 04/16/2024 - 16:00

Aussie Govt Orders Facebook And X To Remove Muslim Knife Attack Video

Parishioners and live stream audience members for the Christ The Good Shepherd Church in Sydney, Australia were enjoying a sermon by popular conservative Bishop Mar Mari Emmanuel when a young male Muslim assailant entered the church and stabbed him repeatedly with a knife.  The live stream clip was immediately shared far and wide on social media with X and Facebook being the easiest sites to view the video.

Bishop Mari Mari Emanuel stabbed by a muslim shouting "allah akbar" in Sydney apparently for previously stating that following mohammed or any religion other than Christianity will send you to hell which is the truth. Islam teaches the extermination of all non muslims. Evil lie. pic.twitter.com/4qjpGLm8jX

— Lincoln Russ (@LincolnTDRuss) April 15, 2024

Bishop Mar Mari Emmanuel is a leader of the Assyrian Orthodox sect who has a global following. He has expressed stalwart conservative views on Islam, the LGBT community, and was vocal in his sermons against lockdowns and vaccinations during COVID-19.  Four other member of the church were injured while subduing the attacker; the young man also reportedly cut off some of his own fingers during the struggle. 

The Australia government through their "E-Safety Commissioner" has voiced concerns over the spread of the clip and has "ordered" Facebook and X to remove if from public access within 24 hours on the grounds that it will "make people emotional" and "cause disharmony."  How much power Australia's E-Safety Commissioner actually has to follow through on her threats remains to be seen. 

Australia has issued formal notices to Facebook and X, ordering them to remove the vision of the teenager stabbing the Bishop within 24 hours. The demand is from the E-Safety Commissioner who has voiced grave concerns about recent online content that once seen can't be unseen. pic.twitter.com/s2G3L8SGmK

— 7NEWS Sydney (@7NewsSydney) April 16, 2024

The identity of the attacker has yet to be revealed by authorities, but he is allegedly 16-years old and was recorded smiling after stabbing the Bishop while praising Allah.  Once again, westerners have been treated to a lesson in cultural diversity. 

The smirking face of the man who stabbed a bishop several times in Sydney whilst shouting Allahu Akbar. Pure evil. https://t.co/a8lUA4gKyS

— Darren Grimes (@darrengrimes_) April 15, 2024

The motivation behind Australia's effort to have the event removed from social media is blatantly transparent.  If the attack involved anyone other than a Muslim it is unlikely they would have an interest in censoring the video.  However, such horrifying incidents involving potential migrants create growing opposition to the open border policies of western progressive governments.  So, rather than addressing the root of the problem (mutually exclusive cultures), officials have decided it's better to hide it instead.  

Public outcry over the attack has led to protests in the streets of Sydney with many Australians becoming angry and tired of the special protections allotted to people with the "right beliefs" and ethnic background.  To their credit, the Sidney police have labeled the stabbing a terrorist attack with adequate evidence of religious motivation.  This, though, does not help if the attack is simply allowed to fade into the background until the next time the third world decides to force itself onto the western public. 

Tyler Durden Tue, 04/16/2024 - 15:45

Democracy Dies In Primaries

Authored by Nick Troiano via RealClear Wire,

Hillary Clinton recently told voters unhappy with the two 2024 presidential candidates this year: “Get over yourself.” With that comment, she not only dismissed the tens of millions of voters who had no say in choosing Biden and Trump, but also the two-thirds of voters overall who are frustrated with a rematch they do not want.

There’s an exhausted majority of voters eager for something different, yet our broken system simply doesn’t allow it. Look no further than No Labels, whose attempt to field a bipartisan presidential ticket collapsed because no candidate was willing to be a “spoiler” in an election system that disadvantages, even prevents, new competition.

The real problem isn’t who we’re electing, it’s how we’re electing them. 

Not only did the vast majority of us have no say in choosing the two presidential candidates, a similarly tiny fraction of voters is deciding most of Congress. So far in 2024, nearly a third of U.S. House seats have already been decided by only 3% of eligible votes in the eight states that have held primaries for offices other than the presidency. In 2022, 8% of voters elected 83% of Congress.

Primaries have long been low-turnout affairs dominated by the extremes of both parties. But shockingly, millions of voters don’t have the right to vote in them – even though their taxpayer dollars fund them. In 22 states this year, 23.5 million independent voters are disenfranchised by closed primaries for president or state offices. 

Nationwide, there are more independents than Democrats or Republicans. Nearly half of veterans identify as politically independent, as do a majority of young people. Because of our primary system, we’re telling those who fought for our country and those who are the future of our country that their voices don’t matter.

The reason our elected leaders don’t seem to represent us is because, quite literally, most of us don’t elect them. 

How do we fix this broken system? With two powerful changes: One, allow all eligible voters – including independents – to cast ballots for any candidate, regardless of party, in every taxpayer-funded election. Two, require candidates to secure a majority of votes to win an election. 

Consider how the 2024 election might have been different had these principles been in effect. First, had the GOP required a majority winner in the 2016 primaries, Donald Trump might not have become the nominee with only a plurality (45%) of the vote. Second, without Trump’s victory that year, there would likely be no Biden rematch in 2024, and therefore no efforts to run candidates like Dean Phillips off primary ballots. Third, majority-winner elections using ranked choice voting would level the playing field for independent and third party candidates rather than dismissing them out of hand as spoilers.

Primary elections have evolved dramatically over the past century – leaving behind party bosses nominating candidates in private, smoke-filled rooms to embrace the ballot box. It’s time to continue that great American tradition. 

Nearly half a dozen states have already adopted some version of these two principles for either their presidential or statewide elections – a move that is supported by nearly three in four voters nationwide.

In 2020, Alaska voters approved an all-candidate primary that advances four candidates to the general election, where an instant runoff produces a majority winner. In 2022, this reform led to the election of a conservative governor, moderate Republican senator, and moderate Democratic representative in 2022 – all on the same ballot. Overall, the state saw a 60% increase in the number of voters who cast ballots in competitive elections where their vote actually mattered.

California’s top-two primary system – enacted more than a decade ago under then-Gov. Arnold Schwarzenegger – has also infused more competition into its elections than would otherwise exist, meaning more Californians are casting meaningful votes.  

This fall, citizen initiatives to open primaries are underway in Nevada, Arizona, Colorado, Idaho, Montana and South Dakota because voters want a functional, representative government.

The way we “get over” the frustrations of our current presidential rematch is by following the example of voters in these states who are demanding a better system that lives up to our nation’s ideals as a Democratic republic. 

Tyler Durden Tue, 04/16/2024 - 15:25

Blackstone CEO Jumps On 'The Next AI Trade' 

US power grid regulators and utilities are warning about energy shortfalls. Projections for US electricity demand growth over the next five years have doubled from about one year ago, primarily because of the expected explosion of artificial intelligence data centers, federally subsidized manufacturing plants, and the government-fueled electric vehicle transition. 

Source: NERC - 2022 Long-Term Reliability Assessment (as of December-2022). Grid Strategies - The Era of Flat Power Demand is Over (as of December-2023).

In recent months, Wall Street has received the memo about the tidal wave of new electricity demand from data centers powering technology like generative AI. We recently outlined to readers investment opportunities in powering up America for the digital age in "The Next AI Trade."

On Tuesday, Blackstone Chief Executive Officer Steve Schwarzman appeared to have also received the memo as Wall Street whistles the same tune about the AI boom threatening to overload the nation's power grid and the urgent need for an upgrade. 

Schwarzman told the audience at the Asia Pacific Financial and Innovation Symposium in Melbourne that a massive "land rush" is underway to build AI data centers.  

"This is like something I've never seen," he said via webcast, who was quoted by Bloomberg, adding, "The amount of money being invested in this area is breathtaking. It's happening now all over the world."

The co-founder and chairman of the world's largest alternative asset manager warned, "Different states in the US are starting to run out of electricity" and "the lack of capacity in the electric grids in the industrial world with AI and EVs is creating enormous investment opportunities."

In 2021, Blackstone purchased QTS Realty Trust, a company with more than 25 data centers in its portfolio across North America and Europe, for $10 billion. 

"You'll be able to create 20% returns building these data centers with 30-year contracts," he said, adding, "This is pretty amazing."

Schwarzman should also consider investment opportunities in the nuclear power plant space. Last month, we showed how a nuclear renaissance is underway in a note titled "In Historic Reversal, US To Restart A Shut Down Nuclear Power Plant For The First Time Ever." 

In "The Next AI Trade," we explain what equity exposure is needed to capitalize on powering up America for the digital age. 

Tyler Durden Tue, 04/16/2024 - 15:00

What If The Fed's Hikes Are Actually Sparking US Economic Boom?

Authored by Ye Xie via Bloomberg,

As the US economy hums along month after month, minting hundreds of thousands of new jobs and confounding experts who had warned of an imminent downturn, some on Wall Street are starting to entertain a fringe economic theory.

What if, they ask, all those interest-rate hikes the past two years are actually boosting the economy? In other words, maybe the economy isn’t booming despite higher rates but rather because of them.

It’s an idea so radical that in mainstream academic and financial circles, it borders on heresy — the sort of thing that in the past only Turkey’s populist president, Recep Tayyip Erdogan, or the most zealous disciples of Modern Monetary Theory would dare utter publicly.

But the new converts — along with a handful who confess to being at least curious about the idea — say the economic evidence is becoming impossible to ignore. By some key gauges — GDP, unemployment, corporate profits — the expansion now is as strong or even stronger than it was when the Federal Reserve first began lifting rates.

This is, the contrarians argue, because the jump in benchmark rates from 0% to over 5% is providing Americans with a significant stream of income from their bond investments and savings accounts for the first time in two decades. “The reality is people have more money,” says Kevin Muir, a former derivatives trader at RBC Capital Markets who now writes an investing newsletter called The MacroTourist.

These people — and companies — are in turn spending a big enough chunk of that new-found cash, the theory goes, to drive up demand and goose growth.

In a typical rate-hiking cycle, the additional spending from this group isn’t nearly enough to match the drop in demand from those who stop borrowing money. That’s what causes the classic Fed-induced downturn (and corresponding decline in inflation). Everyone was expecting the economy to follow that pattern and “slow precipitously,” Muir says. “I’m like no, it’s probably more balanced and might even be slightly stimulative.”

Muir and the rest of the contrarians — Greenlight Capital’s David Einhorn is the most high profile of them — say it’s different this time for a few reasons. Principal among them is the impact of exploding US budget deficits. The government’s debt has ballooned to $35 trillion, double what it was just a decade ago. That means those higher interest rates it’s now paying on the debt translate into an additional $50 billion or so flowing into the pockets of American (and foreign) bond investors each month.

That this phenomenon made rising rates stimulative, not restrictive, became obvious to the economist Warren Mosler many years ago. But as one of the most vocal advocates of Modern Monetary Theory, or MMT, his interpretation was long dismissed as the preachings of an eccentric crusader. So there’s a little sense of vindication for Mosler as he watches some of the mainstream crowd come around now. “I’ve been certainly talking about this for a very long time,” he says.

Muir readily admits to being one of those who had snickered at Mosler years ago. “I was like, you’re insane. That makes no sense.” But when the economy took off after the pandemic, he decided to take a closer look at the numbers and, to his surprise, concluded Mosler was right.

‘Really Weird’

Einhorn, one of Wall Street’s best-known value investors, came to the theory earlier than Muir, when he observed how slowly the economy was expanding even though the Fed had pinned rates at 0% after the global financial crisis. While hiking rates to extremes clearly wouldn’t help the economy — the blow to borrowers from a, say, 8% benchmark rate is just too powerful — lifting them to more moderate levels would, he figured.

Einhorn notes that US households receive income on more than $13 trillion of short-term interest-bearing assets, almost triple the $5 trillion in consumer debt, excluding mortgages, that they have to pay interest on. At today’s rates, that translates to a net gain for households of some $400 billion a year, he estimates.

“When rates get below a certain amount, they actually slow down the economy,” Einhorn said on Bloomberg’s Masters in Business podcast in February. He calls the chatter that the Fed needs to start cutting rates to avoid a slowdown “really weird.”

“Things are pretty good,” he said. “I don’t think that they’re really going to help anybody” by cutting rates.

(Rate cuts do figure prominently, it should be noted, in a corollary to the rate-hikes-lift-growth theory that another camp on Wall Street is backing. It posits that rate cuts will actually push inflation further down, not up.)

To be clear, the vast bulk of economists and investors still firmly believe in the age-old principle that higher rates choke off growth.

As evidence of this, they point to rising delinquencies on credit cards and auto loans and to the fact that job growth, while still robust, has slowed. 

Mark Zandi, chief economist at Moody’s Analytics, spoke for the traditionalists when he called the new theory simply “off base.” But even Zandi acknowledges that “higher rates are doing less economic damage than in times past.”

Like the converts, he cites another key factor for this resilience: Many Americans managed to lock in uber-low rates on their mortgages for 30 years during the pandemic, shielding them from much of the pain caused by rising rates.

(This is a crucial difference with the rest of the world; mortgage rates rapidly adjust higher as benchmark rates rise in many developed nations.)

Bill Eigen chuckles when he recalls how so many on Wall Street were predicting catastrophe as the Fed began to ratchet up rates. “They’ll never go past 1.5% or 2%,” he intones, sarcastically, “because that will collapse the economy.”

Eigen, a bond fund manager at JPMorgan Chase, isn’t an outright proponent of the new theory. He’s more in the camp of those who sympathize with the broad contours of the idea. That stance helped him see the need to refashion his portfolio, loading it up with cash — a move that’s put him in the top 10% of active bond fund managers over the past three years.

Eigen has two side hustles outside of JPMorgan. He runs a fitness center and car repair shop. At both places, people keep spending more money, he says. Retirees, in particular. They are, he notes, perhaps the biggest beneficiaries of the higher rates.

“All of a sudden, all of this disposable income accrues to these people,” he says. “And they’re spending it.”

Tyler Durden Tue, 04/16/2024 - 14:40

Rate-Cut Hopes Plunge As Fed Chair Powell Admits "Lack Of Further Progress On Inflation"

Update (1330ET): In his most direct comments about The Fed's expected path for rates, Chair Powell just admitted that "recent data show lack of further progress on inflation" and the market did not like it much...

And 2Y yield tops 5% for first time since November...

With 2024 rate-cut expectations tumbling and a major volume crush in SOFR spreads for 2025 as it appears someone capitulated...

Powell added that it "will likely take longer for confidence on inflation" and in the meantime it "is appropriate to  let policy take further time to work."

*  *  *

Fed Chair Jerome Powell is scheduled to speak this afternoon and the big question is how many times will he said the word "patience", "confidence", and/or "we must get Biden re-elected."

Powell has been less hawkish than many of his peers on the FOMC - leaving all doors open for cuts 'at some point' this year, merely needing a little more confidence that they are really winning the inflation war.

The problem is - they are not anymore. As the following chart shows, inflation data has been surprising significantly to the upside for four months... and US macroeconomic data has also been surprising to the upside...

Source: Bloomberg

Neither of which provide any rate-cutting-leg to stand on for Powell and his pals.

Powell's comments today come after Fed Vice Chair Philip Jefferson suggested this morning that the central bank's key rate may have to remain at its peak for a while to bring down persistently elevated inflation.

Specifically, Jefferson's remarks to a Fed research conference excluded key phrases about gaining "confidence" in lower inflation and then cutting rates, but noted the central bank was facing a strong economy and little recent progress on the pace of price increases.

"if incoming data suggest that inflation is more persistent than I currently expect it to be, it will be appropriate to hold in place the current restrictive stance of policy for longer. I am fully committed to getting inflation back to 2%."

As Reuters reports, whether or not Powell follows in a similar vein, outside analysts and investors have been steadily marking down the likelihood and timing of Fed rate cuts as policymakers struggle to reconcile a gravity-defying economy with their assessment that monetary policy is "restrictive" and inflation likely on its way down.

The market has made its mind up - slashing expectations for 2024 to just 1.5 rate-cuts (half what The Fed's Dot-Plot is expecting)...

Source: Bloomberg

Of course, Biden has also expressed his opinion that there will be rate-cuts this year (by the election?)...

“Well, I do stand by my prediction that, before the year is out, there’ll be a rate cut,” Biden said last Wednesday at a White House press conference alongside Japanese Prime Minister Fumio Kishida, adding that today's CPI report could delay a rate cut by at least a month...

Will Powell feel the need to reiterate the importance for 'Fed independence' that he was spouting on about in his speech two weeks ago at Stanford Business School...

The Fed has been assigned two goals for monetary policy - maximum employment and stable prices.

Our success in delivering on these goals matters a great deal to all Americans. To support our pursuit of those goals, Congress granted the Fed a substantial degree of independence in our conduct of monetary policy. Fed policymakers serve long terms that are not synchronized with election cycles.

Our decisions are not subject to reversal by other parts of the government, other than through legislation.

This independence both enables and requires us to make our monetary policy decisions without consideration of short-term political matters.

Such independence for a federal agency is and should be rare. In the case of the Fed, independence is essential to our ability to serve the public.

And finally...

“One of Chair Powell’s responsibilities is to protect the public standing of the Fed,” said Vincent Reinhart, chief economist at Dreyfus and Mellon.

“The closer the FOMC acts to the election, the more likely it is that the public will question the Fed’s intent.”

Watch Fed Chair Powell speak live here (due to start at 1315ET):

Tyler Durden Tue, 04/16/2024 - 13:35

Israel War Cabinet Decides On Military Response To Iran Even As Blinken Pleads 'Not In Anyone's Interest'

Update(1325ET): Israel's war cabinet has just decided on a response to Iran's weekend attack, according to a breaking report by the country's Kan public broadcaster. At this point it seems a matter of if not when - even as the US (and European countries) leans on Israel not to escalate. Below is the Hebrew media statement at the conclusion of Tuesday's high-level meeting (machine translation): 

Israel has decided how to respond to Iran's missile attack. This was reported Tuesday evening on Kan 11 evening news. Israel is now waiting to "seize an opportunity." The agreement came against the backdrop of significant disagreements in the Israeli leadership over the timing and nature of the response. Some ministers demanded to wait for agreement on the international coalition, while others thought it was necessary to respond immediately.

Axios at the same time is reporting that US Secretary of State Blinken just told a group of American Jewish leaders that the White House wants to see no further escalation, essentially signaling the Washington position that a return to status quo before the Saturday massive Iranian attack is desirable. 

The report cites Blinken as saying that "further escalation with Iran is not in the interests of either the U.S. or Israel, three people who attended the meeting told Axios." According to more details:

• The U.S. assessment is that Iran would respond to any significant, overt Israeli strike on Iranian soil with a new round of missile and drone attacks, a senior U.S. official told Axios.
• "We think it will be very hard to replicate the huge success we had on Saturday with defeating the attack if Iran launches hundreds of missiles and drones again — and the Israelis know it," another U.S. official said.

And via Al Jazeera Arabic: The Israeli Broadcasting Authority, according to a source: Ministers asked Netanyahu to slow down and wait for the formation of an alliance in the region against it.

This puts Biden in an interesting dilemma (largely of his own making): while the US military intercepted dozens of the drones and ballistic missiles which rained down over Israel on Saturday night, US pleadings to go ahead and "take the win" (as Biden put it to Bibi in a weekend phone call) are falling on deaf ears.

At the moment Iran is in the driver's seat, but Israel feels it must not let Tehran off 'scot-free' (in the words of the IDF spokesman). 

* * *

Israel's war cabinet reportedly met for several hours on Tuesday, and widespread speculation persists over a possible Israeli military response to Iran, but with few clear answers or indicators as yet revealed concerning what's coming next. What is clear is that the Netanyahu government is planning on 'something' big to hit back for the unprecedented Saturday night ballistic missile and drone attack launched from Iranian soil.

IDF spokesman Rear Adm. Daniel Hagari has told reporters Tuesday that Iran will not get off "scot-free". He said additionally, "We cannot stand still from this kind of aggression" and that "We will respond in our time, in our place, in the way that we will choose." The US and other Western allies are still publicly lobbying for restraint and a return to the status quo. This dangerous spiral was kicked off when Israeli flattened Iran's consulate in Damascus on April 1st, an unprecedented act of aggression on a diplomatically protected location.

Via Reuters: Israel's military displays what they say is an Iranian ballistic missile which they retrieved from the Dead Sea after Iran's attack.

Starting Monday US officials were cited in various media outlets offering their view that Israel won't strike Iran directly, but will launch significant operations against their proxies instead.

On Tuesday a senior Biden administration official reiterated what he said is the White House expectation that the coming Israeli response will be "limited" in scope. Another official said it is still possible that Israel will strike inside Iran directly, but not in a way that triggers all-out war, as cited in CNN:

There is US intelligence to suggest Israel is weighing a narrow and limited strike inside Iran because they feel like they have to respond with a kinetic action of some kind given the unprecedented scale of the Iranian attack, the second source said.

The sources have indicated the Biden administration has not been given forewarning or been briefed on Israel's exact plans. "We would hope that they would give us some warning so that we're prepared to protect our personnel, not just military but diplomatic throughout the region," the senior admin official said.

"But there's no guarantee they will give us they will give us a heads up and they know when they give us a head’s up, we're likely to again register our objection to whatever they're about to conduct," the official added to CNN.

If there is no Israeli response, then the US is "confident that there will be de-escalation" - but it remains that "any additional move now opens up a series of other possibilities, some of which are quite frightening," the official added.

Meanwhile there are claims that the US has signaled Iran that it should allow a 'symbolic' Israeli strike so that the situation can return to the status quo...

EXCLUSIVE: "An Iranian military security official has revealed that the US contacted the Islamic Republic, asking the nation to allow Israel 'a symbolic strike to save face' following Iran's retaliatory drone and missile barrage this weekend." https://t.co/eKF7DO79C6

— Sharmine Narwani (@snarwani) April 16, 2024

Tehran has continued to warn it is ready to hit back stronger and harder, with Ali Bagheri Kani, Iran's deputy foreign minister for political affairs, saying that should Israel retaliate then the response speed from Iran "will be less than a few seconds."

* * *

Below are some of the latest Israel-Iran related statements and headlines...

• "Israel sent a message to the countries of the region that responding to the Iranian attack will not endanger the stability of these countries", according to Sky News Arabia.
• The Israeli war cabinet is weighing a response to the recent Iran attacks; and is to meet again on Tuesday for a third straight day, via the FT
• Iran's Foreign Minister said in a call with China's Foreign Minister that Iran is willing to exercise restraint and has no intention of further escalating the situation, according to Chinese state media.
• US officials expect a possible Israeli response to Iran’s attack over the weekend to be limited in scope and most likely involve strikes against Iranian military forces and Iranian-backed proxies outside Iran, according to four US officials cited by NBC News.
• Iraqi PM confirmed Iraq's interest in obtaining expertise and arms from the US, as well as keenness on security partnership during a meeting with US Defense Secretary Austin, according to Reuters.
• Saudi Arabia acknowledged that it helped defend Israel against Iran whereby Saudi Arabia's royal family posted on its website about the country's role in defending Israel against the Iranian barrage, according to Jerusalem Post.

Tyler Durden Tue, 04/16/2024 - 13:25

'Oral Argument Favored Defendants' - Supreme Court Just Ended Hearing Obstruction Case Affecting J6 Defendants

Authored by Jonathan Turley,

Today, the U.S. Supreme Court will take up Fischer v. United States, a case that could fundamentally change many cases of January 6th defendants, including the prosecution of former president Donald Trump. The case involves the interpretation of a federal statute prohibiting obstruction of congressional inquiries and investigations.

The case concerns 18 U.S.C. § 1512(c)(2), which provides:

“Whoever corruptly—(1) alters, destroys, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to impair the object’s integrity or availability for use in an official proceeding; or (2) otherwise obstructs, influences, or impedes any official proceeding, or attempts to do so, shall be fined under this title or imprisoned not more than 20 years, or both.”

Joseph Fischer was charged with various offenses, but U.S. District Judge Carl J. Nichols of the District of Columbia dismissed the 1512(c)2 charges. Judge Nichols found that the statute is exclusively directed to crimes related to documents, records, or other objects.

The D.C. Circuit reversed and held that Section 1512(c)(2) is a “catch all” provision that encompasses all forms of obstructive conduct. Circuit Judge Florence Pan ruled that the “natural, broad reading of the statute is consistent with prior interpretations of the words it uses and the structure it employs.” However, Judge Gregory Katsas dissented and rejected “the government’s all-encompassing reading.”

The Court will now consider the question of whether the U.S. Court of Appeals for the District of Columbia Circuit erred in construing 18 U.S.C. § 1512(c), which prohibits obstruction of congressional inquiries and investigations, to include acts unrelated to investigations and evidence.

The law itself was not designed for this purpose. It was part of the Sarbanes-Oxley Act of 2002 and has been described as “prompted by the exposure of Enron’s massive accounting fraud and revelations that the company’s outside auditor, Arthur Andersen LLP, had systematically destroyed potentially incriminating documents.”

Oral argument is today and Turley is be covering the arguments on X (Twitter)...

...Justice Sotomayor was quick out of the gate to pursue a tough line of questioning for the defense counsel on why the broader meaning is warranted...

...Justice Barrett continued the tough questioning by asking if the defendant can still be convicted for seeking obstructing by seeking to stop the certificates themselves. In this way, the Court could adopt a narrower meaning but still allow for possible prosecution...

...Justice Jackson has also questioned counsel closely on the use of "evidence" as a term since it does not appear in the actual provisions...

...Justice Sotomayor just said that this may be unique because no one tried to violently stop proceedings as on Jan. 6th...

The government is now up with its case...

...Chief Justice Roberts just delivered a haymaker for the Solicitor General by noting a recent decision and prior decisions that stress the need for narrow construction in this type of "otherwise" construction of provisions...

...Roberts is not buying the government's argument on getting around prior cases including one just issued on Friday. I have great respect for Prelogar but she is struggling on this point...

...The exchange has brought out Justice Gorsuch who is pressing on what "otherwise" really means under the government's view. Gorsuch is asking if a heckler at the State of the Union qualify. Ironically, that is precisely the hypothetical that we struggled with in my Supreme Court ask in discussing this case.

...“Would a sit-in that disrupts a trial or access to a federal courthouse qualify?” Justice Neil Gorsuch asked.

...Gorsuch also raised pulling a fire alarm in a reference to Rep. Jamaal Bowman of New York and asked if that was also a felony subject to 20 years...

...Gorsuch is carving up the government's argument on the lack of clear lines for protests and other examples...

...Now Justice Alito is raising an interruption of the Supreme Court. If that caused a delay of five minutes, would it also qualify as a violation of 1512(c)(2). Prelogar stumbled on this one. She tried to add an exception for a de minimus violation, but Alito notes that she was arguing plain meaning and this was qualify as a delay according to the plain meaning. Prelogar simply argues it would be hard to prove ...

...Prelogar fell back on saying how bad Jan. 6th was but that did not fly for good reason. The issue here is how to define this provision...

...Prelogar was a bit on the ropes and Justice Kagan stepped in with a breather question on what evidence they often use against J6 defendants.

...back to the oral argument, Prelogar admitted to Justice Alito that a minimal interference could potentially qualify, but questioned the likelihood of such a case. Alito hit her with how she would define minimal and said that the interruption of the Court "sounds minimal to me"...

...That is not going to satisfy the concerns of the justice as a type of "we know it when we see it" standard...

The Court just ended argument.

The three liberal justices offered support for the government and Justice Barrett seemed on the fence at points.

It is hard to tell where Barrett may end up.

However, there was clearly a skepticism from four justices, including Chief Justice Roberts.

The oral argument favored the defendants and could result in a wider impact on dozens of cases, including the prosecution of former President Trump.

The loss of the obstruction counts for Jack Smith would undermine his narrative (giving Trump new grounds to seek dismissal of two of the four counts in the federal prosecution against him for trying to overturn his 2020 election loss), but he could proceed on the remaining counts.

Tyler Durden Tue, 04/16/2024 - 13:20

Border Outranks Ukraine As Moderate Voter Priority In Swing States: Poll

Authored by Nathan Worcester via The Epoch Times (emphasis ours),

An April survey of swing, or moderate, voters in six battleground states suggests the impacts of an open southern border is concerning them more than events in Ukraine.

Federal law enforcement agents and officers keep watch as immigrants line up (R) to be transported from a makeshift camp between border walls between the U.S. and Mexico in San Diego, California, on May 13, 2023. (Mario Tama/Getty Images)

Commissioned by the conservative Heritage Foundation and executed by the non-partisan RMG Research, Inc., the poll revealed that 56 percent of those voters felt the $113 billion price tag for Ukraine support thus far was either too much or far too much. Just 14 percent thought the United States had not spent enough on military aid for Ukraine, while 16 percent rated the spending about right.

When asked to compare the importance of border security with that of Ukraine funding, 50 percent chose the border, while only 11 percent chose Ukraine; 29 percent said both were equally important.

“Heritage’s latest polling reveals that not only are moderate voters in battleground states more interested in securing our own borders, they believe we have already spent enough helping Ukraine—and rightfully so,” Kevin Roberts, the president of the Heritage Foundation, said in a statement accompanying the survey.

RMG interviewed 1,000 swing voters in Nevada, Georgia, Pennsylvania, Arizona, Wisconsin, and Michigan between April 2 and April 4.

Out of the voters surveyed, the majority—54 percent—were independent. 25 percent were Republicans and 20 percent Democrats.

“Swing voters were defined as likely voters who are either undecided on the presidential election, undecided on the generic congressional ballot, or expressed a different partisan preference on the presidential and congressional races,” a statement accompanying the survey read.

The voters RMG surveyed were tracking the border situation more closely than the conflict that heated up more than two years ago with Russia’s invasion of Ukraine.

Also, 22 percent reported following news from America’s southern border “very closely,” while just 10 percent described a similar level of attention to news from the Ukraine-Russia war.

The results come amid a fight in the legislative branch over further military aid to Ukraine. Republicans and conservatives have argued that additional funding for the country must be conditioned on additional border security spending.

“Most of House GOP WILL NOT vote for another dollar to Ukraine unless our border is SECURED,” Rep. Byron Donalds (R-Fla.) wrote on X, formerly Twitter, on April 11.

Rep. Byron Donalds (R-Fla.) during an interview with NTD at the Conservative Political Action Conference (CPAC) at Gaylord National Resort Hotel And Convention Center in National Harbor, Md., on Feb. 22, 2024, in a still from video released by NTD. (NTD)

A bipartisan group of lawmakers is pushing House Speaker Mike Johnson (R-La.) to advance a $95 billion aid package to Ukraine and Israel, citing Iran’s attack on Israel in their April 14 letter to the lawmaker. But some House Republicans have objected to the lack of border-related funding in that package, as well as the linkage of funding for Israel and Ukraine in the same bill.

“It’s antisemitic to make Israeli aid contingent on funding Ukrainian Nazis. These should be separate bills,” Rep. Marjorie Taylor Greene (R-Ga.) wrote on X on April 14.

In a recent press conference with Mr. Johnson, former President Donald Trump suggested Ukraine should be funded through a loan rather than aid.

The White House has rejected any standalone bill to fund Israel.

Republicans could be more likely to hold the line against the Biden administration and Democratic lawmakers if they perceive border funding as a winner, and Ukraine funding as a loser, among coveted swing voters. But the fight is far from over, with countervailing pressures on Mr. Johnson from his party’s Freedom Caucus and from top Democrats.

“The best way to help Israel against Iran and to help Ukraine against Russia is for [Speaker Johnson] and the House to pass the bipartisan, Senate-passed National Security Supplemental this week,” Senate Majority Leader Chuck Schumer (D-N.Y.) wrote on X on April 14.

Tyler Durden Tue, 04/16/2024 - 12:45

Brink Of Unrest? Migrants "Flood" NYC City Hall In Protest Of Losing Luxury Hotel Rooms 

New York City could be on the cusp of social unrest as hundreds of migrants have flooded the grounds of City Hall in Lower Manhattan to protest the scaling down of their luxury hotel accommodations (funded by us, the taxpayers). 

The Babylon Bee's Ashley St. Clair posted on X a disturbing photo of migrants "flooding NYC City Hall to protest being moved to shelters instead of the luxury hotels." 

Migrants are now flooding NYC City Hall to protest being moved to shelters instead of the luxury hotels. pic.twitter.com/Cy5L16MDP2

— Ashley St. Clair (@stclairashley) April 16, 2024

Elon Musk responded with "Wow," while another X user posted a video of angry migrants surrounding the City Hall complex building. Security is beefed up as the situation remains tense. 

Hundreds of migrants are in NYC City Hall Park to protest against being moved to Shelters instead of the LUXURY HOTELS pic.twitter.com/86zLiWENCh

— Rosy (@rose_k01) April 16, 2024

The migrant protest comes one day after pro-Palestinian groups shuttered critical infrastructure nationwide across various metro areas of the US, including the Brooklyn Bridge. 

EXCLUSIVE VIDEO:

This is the exact moment when “Free Palestine” pro HAMAS terrorist supporters charged the fence next to the Brooklyn Bridge yesterday in NYC, and stormed the bridge.

Many of the “protesters” got into physical altercations with NYPD and were arrested. pic.twitter.com/u73lY7SHCg

— Laura Loomer (@LauraLoomer) April 16, 2024

The risk of social instabilities nationwide is elevated as the Biden administration (through open southern borders), and a shadowy network of NGOs have facilitated the greatest invasion of illegal aliens this nation has ever seen. 

Allowing millions of unvetted people from third-world countries - some of which hate the United States - as well as are accustomed to violence - are ingredients to spark a perfect storm of social unrest if Democrats don't continue spending taxpayer funds on luxurious hotel rooms, fancy meals, and monthly stipends for illegals. 

Threats of migrant unrest are a national security threat that Democrats are too embarrassed even to acknowledge because their failed policies are sparking this mess. Democrats are risking the health and safety of law-abiding citizens and the nation as a whole to steal future elections and stack the Census. 

Tyler Durden Tue, 04/16/2024 - 12:25

Reflation Trade Is The New Bullish Narrative

Authored by Lance Roberts via RealInvestmentAdvice.com,

Economic “reflation” is becoming the next bullish narrative as equity valuation increases continue to outpace earnings gains, at least according to Gold Sachs and Tony Pasquariello.

“If GS is correct on the big calls, the macro backdrop is set to remain friendly: the US economy should continue to grow nicely above trend — picking up speed as the year moves along — with three adjustment rates cuts along the way.  to not obscure the moral of that story: the Fed is set to ease policy … into an upswing.  while Fedspeak this week had a somewhat hawkish bent, the house view for 2024 remains intact.”

Interest rates, gold, and commodity prices have increased in the past few months. Unsurprisingly, the bullish narrative to support that rise has gained traction. Interestingly, this “reflation” narrative tends to resurface by Wall Street whenever there is a need to explain the surge in commodity prices. Notably, the last time Wall Street focused on the reflation trade was in 2009, as noted by the WSJ:

“The most talked-about investing strategy these days isn’t stuffing money in a mattress, it’s the reflation trade — the bet that the world economy will rebound, driving up interest rates and commodities prices.”

While that “reflation trade” lasted for about two years, it quickly failed as economic growth returned to 2%-ish growth along with inflation and interest rates. As shown, oil and commodity prices have a very high correlation. The critical reason is that higher oil prices reduce economic demand. As consumption falls, so does the demand for commodities in general. Therefore, if commodity prices are to “reflate,” as shown, such will depend on more robust economic activity.

As such. The reflation trade hinges on a global resurgence of economic activity, usually associated with economies recovering from a recessionary period. However, the U.S. never experienced a recession. As discussed in “Deficit Spending,” despite numerous recessionary signals, like the inverted yield curve, manufacturing data, and leading economic indicators, the economy avoided recession due to massive governmental spending. To wit:

“One explanation for this has been the surge in Federal expenditures since the end of 2022 stemming from the Inflation Reduction and CHIPs Acts. The second reason is that GDP was so grossly elevated from the $5 Trillion in previous fiscal policies that the lag effect is taking longer than historical norms to resolve.”

While economists focus on the “reflation trade,” we must answer whether the support for more substantial economic growth exists. This is the sole determining factor in whether the “reflation trade” can continue.

Is Reflation Already Behind Us?

Interest rates and inflation have ticked up recently, driving investors into gold and commodities. However, the surge in precious metals and commodities is more of a function of speculative exuberance rather than an economic resurgence. As discussed in “Speculative Warnings,”

“In other words, the stock market frenzy to “buy anything that is going up” has spread from just a handful of stocks related to artificial intelligence to gold and digital currencies.“

Notably, the gold, commodities, and interest rate surge corresponded with more robust economic growth beginning in the third quarter of last year. That uptick in economic growth defied economists’ expectations of a recession. Such was because of the massive flood of monetary support from Government spending programs. However, that monetary impulse is now reversing.

As far as the “reflation trade” is concerned, as that monetary impulse recedes, so will economic growth, as shown. Even if the economy continues to grow at 2-2.5% annualized each quarter, the annual rate of change in growth will continue to slow.

Importantly, this assumes that the Government will keep “spending like drunken sailors” over that same period. However, if they don’t, the economic growth rate will slow even more quickly without increasing monetary spending.

It is important to remember that increasing debts and deficits do not elicit stronger long-term economic growth. As debt levels rise, economic growth rates will slow as money diverts from productive investment into debt service.

That reality should be unsurprising, as this is not the first time the Government has gone “all in” on a reflation trade. As noted above, following the Financial Crisis, the Government intervened with HAMP, HARP, TARP, and a host of other spending programs to “reflate” the economy.

Let’s review what happened with interest rates, inflation, and gold and commodity trade.

Past May Be Prologue

As noted in 2009, following the “Financial Crisis” and recession, the Government and the Federal Reserve engaged in various monetary and fiscal supports to repair the economy. While the economy initially recovered from the recessionary lows, inflation, economic growth, and interest rates remained subdued despite ongoing interventions.

That is because debt and artificially low interest rates lead to malinvestment, which acts as a wealth transfer mechanism from the middle class to the wealthy. However, that activity erodes economic activity, leading to suppressed inflation and a surging wealth gap.

During that same period, commodities and precious metals rose initially as the “reflation expectation” was widespread. However, debt-driven realities quickly undermined that assessment and those investments languished relative to equities, as the flood of liquidity and low rates made equities far more attractive to investment.

While the relative performance of precious metals and commodities has picked up in recent months, this is more likely a function of “irrational exuberance” in the financial markets. As discussed previously, the surge in speculative investment activity is not uncommon to markets, and currently, many asset classes are becoming highly correlated.

However, while there is a compelling narrative around gold and precious metals from an investment perspective, those chasing that trade have had many years of terrible underperformance. While this time could be different, the “reflation narrative” will most likely fall prey to the realities of excessive debt, which will pressure Governments to cut rates once again.

If the past is potentially prologue, likely, the bullish narrative of “reflation” may once again find future disappointment. Such is particularly the case as the economics of debt and poor policy choices continue to erode the middle class further.

Tyler Durden Tue, 04/16/2024 - 11:50

This Unhappy Global Dynamic Will Lead Markets And Market Analysis For Years To Come

By Michael Every of Rabobank

Non Ducor, Duco

Who/what leads and who/what is led? That’s the question you should be asking yourself again today - even as most in markets think what they are paid to look at leads all rather than accept that life has (changeable) hierarchies.  

Yesterday saw a surprise leap in US retail sales: 0.7% m-o-m vs. 0.4% expected; ex-autos 1.1% vs. 0.5%; ex-gas and autos 1.0% vs. 0.3%; and the control group 1.1% vs. 0.4%. That followed Friday’s rise in the Michigan survey consumer inflation expectations from 2.9% to 3.1% (1-year) and 2.8% to 3.0% (5-year) and eclipsed the big dip in the Empire PMI. What leads/is led?

The New York Fed’s SCE labour market survey shows people want $81,800 to change jobs, up around $10,000 since March 2021. While those saying they were now unemployed vs. four months ago rose, so did the percentage who plan to retire early. What leads/is led?

The retail report pushed US bond yields much higher intra-day before partially reversing: there was almost a test of 5% in 2-years, while 10-years hit 4.66% and are still over 4.60%, a 2024 high, and +70bp since the start of a year which promised a rate-cuts frenzy. Indeed, Bloomberg reports one investment bank which had started 2024 flagging 275bps of Fed cuts and had trimmed that to 50bps, is sticking to that call while now making the case for the Fed to HIKE by 50bps – it’s not just Larry Summers anymore. Is that leading or being led?

In Asia, JPY is 154.3 (-9.4% year-to-date) with muttering of worse; KRW 1,391 (-7.8%) following the JPY lead; CNY 7.23 (-2.0%) with questions over how long it can continue to hold up if JPY and KRW fall down; IDR 15,848 (-2.9%), close to a record low; INR 83.45 (-0.3%), also close to a record low; THB 36.81 (-7.4%); PHP 56.89 (-2.7%); and MYR 4.79 (-4.2%). In EM space only MXN --its own entity, as Christian Lawrence regularly points out-- is at 16.72 (+1.5%). In other crosses, EUR/USD is just holding on to 1.06 (-3.8%), GBP to 1.24 (-2.3%), CAD testing 1.38 (-4.2%), AUD 0.64 (-5.7%), and NZD is already under 0.59 (-6.7%). Clearly, the dollar will keep leading others.       

However, Politico claims: ‘Trump trade advisers plot dollar devaluation’, “which could juice US exports but also fuel inflation.” Reportedly, this policy could shift, but for now they may “weaken the dollar unilaterally or through negotiations… using the threat of tariffs”. Yet Trump’s Wall Street faction is opposed to a weak dollar because it would hurt asset values, and his national security camp fear it would undermine global sanctions and the US dollar’s reserve status. So, who leads after the US election, and within a hypothetical Trump White House?

A Treasury Secretary can’t just lead the dollar lower in markets. They can jaw-bone, but if the Fed has higher rates than others, they are pushing a balloon underwater (and if inflation picked up further, how would the Fed not hike more?) The US can threaten tariffs, but they would push the dollar up. The US can’t lead a new global Plaza Accord because while some of the BRICS+ might like a weaker dollar (and higher commodity prices), Russia wants NO global dollar; and China will never allow a repeat of Japan 1985 - it won’t allow CNY higher to pivot to consumer-led growth. The article also notes everyone may run their own counter-policies anyway. Logically, Lighthizer might have to impose inbound capital controls, which Wall Street would hate, but the article is wrong in that moneymen love a weaker dollar, as all assets rise on it. And on the national security side, you have to enforce sanctions first (**cough** Iran **cough**). But if you can’t see our current dynamic leads towards the breakdown of the global system, you are misled.

Chinese data underline they won’t shift to consumer led growth, and CNY may be led lower. New home prices were -0.3% m-o-m, used home prices -0.5%, property investment -9.5% y-o-y and residential sales -30.7%. Industrial production was 4.5% y-o-y vs. 6.0% consensus; retail sales just 3.1% vs. 4.8%; and fixed investment 4.5% vs. 4.0%. Yet Q1 GDP was 1.6% q-o-q and 5.3% y-o-y, far higher than 4.8% expected, probably partly due to negative deflators pushing up real growth rates. 

From China to geopolitics, which continues to lead the headlines. Markets did what markets do best yesterday, shrugging off complex matters which they don’t understand in the hope that all will end well. Yet today, as I stressed would be the case in yesterday’s Global Daily, we are again at a moment of high geopolitical tension.

Israel will respond to Iran’s unprecedented attack on it with “clear and decisive” retaliation. We just don’t know when or how. The US has reportedly not opposed this but won’t join in, and the Israeli move may not be fully coordinated with it. Positively, Israel says it doesn’t aim to escalate to a regional war, and reports suggest it will minimize casualties while exacting significant damage: that implies a blow in the economic sphere, from a major cyberattack to a physical one on industrial (drones), nuclear, port (or energy) facilities(?) While energy remains a fat tail risk, it’s exactly the tactic Ukraine is using, despite White House anger. An Iranian official stated: “We do not want war, but we are ready for it if it is imposed on us, and our options are wide. We have the full will to respond militarily to Israel again, but in a stronger way and with weapons that have not been used previously.” In short, regional escalation risks remain. Oil is moving slightly higher again today; and were it to spike due to geopolitics, central banks would likely be led by it.

Ultimately, this crisis won’t be resolved until either Israel or Iran leads the other to accept their opposing redlines: either Israel can attack Iran whenever Iran’s proxies attack it, so the latter don’t; or Israel can never respond to Iran directly, so Iran’s proxies will attack it more freely. It’s hard to see how that gets settled without more violence, or the biting sanctions on Iran/the IRGC that nobody talking about de-escalation has yet offered as alternative. As the US leads on physical defence, it remains paralyzed on any offense despite the two being linked in any successful geostrategy.

As I continue to stress, that unhappy global dynamic will increasingly lead markets, and market analysis, in the years to come. Non ducor, duco.

Tyler Durden Tue, 04/16/2024 - 11:10

BofA Stock Slammed As Humans Actually Read Earnings Report, Notice Soaring Charge-offs

Update (1110ET): Just as we warned below, it seems the human-traders actually read the MS earnings report and saw chargeoffs soaring.

Bottom line: Bank of America managed to game expectations and reported numbers which mostly came just above estimates, which is also why the stock is higher premarket.

However, it is only a matter of time before the market notices that BofA is starting to take aggressive losses on its CRE/credit card exposure and it is unclear how much more of this lies ahead.

As such, don't be surprise if what is a modest move higher in the stock premarket reverses in the coming hours.

And sure enough, those early algo-driven gains quickly evaporated...

Which in context, pushed BofA down to almost two-month lows...

We hate to say 'we told you so' but "we told you so!"

*  *  *

With JPM, Citi and Wells already in the books, moments ago the last "big 4" money-center bank, Bank of America reported Q1 earnings which for the most part, were stronger than expected, however there were several troubling footnotes, including a sizable, $700MM FDIC special assessment and an unexpected surge in Commercial Real Estate net charge offs driven by the bank's long overdue recognition of Office losses.

Starting at the top, here is what Bank of America reported for the first quarter:

• Total Revenue, net of interest expense, $25.82BN, down 2% from the $26.3BN reported a year ago, but also beating the $25.43BN estimate
  • Trading revenue excluding DVA $5.18 billion, beating the estimate $5.02 billion
    • FICC trading revenue excluding DVA $3.31 billion, beating the estimate $3.3 billion
    • Equities trading revenue excluding DVA $1.87 billion, beating the estimate $1.71 billion
  • Wealth & investment management total revenue $5.59 billion, beating the estimate $5.34 billion
• Net income was $6.7 billion, down 12% from the $8.2 billion reported a year ago
• This translates to Adjusted EPS of 83c, a 12% drop from the 94c a year ago, but beating the 77c estimate;
  • Worth noting here that BofA's effective tax rate hit about 8%, which is ridiculously low, and was thanks to tax credits, “primarily related to investments in renewable energy and affordable housing.” Without those, the ETR would have been about 26%. (The FDIC special assessment “and other discrete tax items” brought the tax rate down by another 1%, the bank adds).
• Net interest income FTE rose to $14.19 billion, beating estimates $13.95 billion.

Also the bank said that results included a $700 million pretax “FDIC Special assessment" which reduced earnings by $0.07 per common share. 

Digging a little deeper into the asset quality we find the first rotten apple: a spike in charge offs to $1.5 billion as a result of the usual suspects: credit card losses and commercial real estate office weakness. Meanwhile, nonperforming loans increased $398 million to $5.9 billion from the fourth quarter, driven also primarily by the office segment of commercial real estate. More details below:

• Provision for credit losses $1.32 billion, below the estimate $1.4 billion
  • Net charge-offs (NCOs) of $1.5BN increased compared to 1Q23 and 4Q23, driven primarily by credit card and commercial real estate office
    • Credit card loss rate of 3.62% in 1Q24 vs. 3.07% in 4Q23
    • Commercial net charge-offs of $470MM increased $191MM, driven by commercial real estate office
  • Net charge-off ratio of 58 bps vs. 32 bps in 1Q23 and 45 bps in 4Q234
  • Why were credit losses below the amount of charge-offs? Because like JPM, BofA reported a reserve release of $0.2B vs. net reserve build of $0.1B in 1Q23 and net reserve release of $0.1B in 4Q23
  • Nonperforming loans (NPLs) of $5.9B increased $0.4B from 4Q23, driven primarily by commercial real estate office. The bank also said that 61% of Consumer NPLs are contractually current... which means that 39% of Consumer NPLs are not current.
  • Commercial reservable criticized utilized exposure of $24.5B increased $1.2B from 4Q23

Here it is visually:

One can see the dramatic surge in commercial real estate charge offs in the next chart: it appears that banks are finally starting admit the CRE reality.

The bank was also kind enough to break down its Office exposure.

As for the weakness in consumer, the surge in credit card 30+ days past due is hardly inspiring confidence.

Before we dig deeper, here is a snapshot report of some other headline metrics:

• Return on average equity 9.35%, beating the estimate 9.31%
• Return on average assets 0.83%, matching the estimate 0.83%
• Return on average tangible common equity 12.7%, below the estimate 13.1%
• Basel III common equity Tier 1 ratio fully phased-in, advanced approach 13.4%, below the estimate 13.5%
• Standardized CET1 ratio 11.8%, matching the estimate 11.8%
• Non-interest expenses $17.24 billion, estimate $16.66 billion
• Compensation expenses $10.20 billion, above the estimate $9.99 billion
• Net charge-offs $1.50 billion, higher than the estimate $1.26 billion

Commenting on the quarter, CEO Brian Moynihan said in the earnings release that "we reported a strong quarter as our businesses performed well, adding clients and deepening relationships. We reached 36.9 million consumer checking accounts, with 21 consecutive quarters of net checking account growth. Our Wealth Management team generated record revenue, with record client balances, and investment banking rebounded. Bank of America’s sales and trading businesses continued their strong 2023 momentum this quarter, reporting the best first quarter in over a decade.”

Taking a closer look at the income statement, BofA reported net interest yield of 1.99%, up from a cycle low of 1.97% in Q4 and also beating the estimate 1.97%. That said, the NII yield was down 21bps YoY, and the actual NII print of $14.0, decreased notably $0.4B YoY, as higher deposit costs more than offset higher asset yields, higher NII related to Global Markets (GM) activity, and modest loan growth. Additionally, BofA noted that as of March 31, 2024, a +100 bps parallel shift above the interest rate yield curve was estimated to benefit NII by $3.0B over the next 12 months; a -100bps parallel shift was estimated to decrease NII by $2.9BN.

Turning to non-interest income, the bank’s trading unit was particularly strong in Q1 with Global Markets bringing in revenue of $5.88 billion — higher than the previous quarter and Q1 of last year. There was a similar pattern in BofA’s wealth management arm. The other two units — banking and its huge consumer arm — both brought in lower revenues than this time last year.

Looking at Global Markets, we find the following:

• Revenue of $5.9B increased 5% from 1Q23, driven by higher investment banking fees and sales and trading revenue
• Sales and trading revenue of $5.1B increased less than 1% from 1Q23; excluding net DVA, up 2%3
  • FICC revenue decreased 6% (ex. DVA, down 4%),3 to $3.2B, driven by a weaker trading environment in macro products, partially offset by improved trading in mortgages
  • Equities revenue increased 14% (ex. DVA, up 15%),3 to $1.9B, driven by strong trading performance in derivatives
• Noninterest expense of $3.5B increased 4% vs. 1Q23, driven by investments in the business, including technology

Of note here is that equities traders at Bank of America just posted one of their best quarters on record, with a $1.87 billion revenue which was " driven by strong trading performance in derivatives". That’s a solid up-arrow for them from $1.62 billion this time last year.

Markets in summary:

Next up is Bank of America’s mighty US consumer banking arm, which as BBG notes, vies for the top spot with JPMorgan Chase, accounts for about 40% of the company’s revenue. It’s a massive operation and really the bank’s bread and butter. Here, total revenue of $10.2 billion was a decrease on this time last year, and deposits are down again.

However, the bank highlights a rise in combined credit and debit card spending of 5%. That’s similar to what we’ve heard from other banks like Citigroup, where the card-bolstered personal banking unit helped propel it to a beat on Friday.

As for BofA's Global Wealth and Investment management, it made $1 billion of net income from $5.6 billion of revenue; the bank cited another first for the unit: “Record client balances” hit almost $4 trillion, up 13% thanks to “higher market valuations and positive net client flows.” (AUM flows for the quarter hit $25 billion).

Turning to the balance sheet, total loans rose 1% YoY but dipped sequentially to $1.05 trillion, missing estimates of  $1.06 trillion...

... while total deposits of $1.946 trillion, came just above the estimate of $1.93 trillion.

Some more details from the balance sheet:

• CET1 ratio of 11.8% increased 4 bps vs. 4Q234
  • CET1 capital of $197B increased $2B from 4Q23, driven by net income, partially offset by capital distributions to shareholders
  • Standardized RWA of $1,660B increased $9B from 4Q23
• Book value per share of $33.71 improved 7% from 1Q23; tangible book value per share of $24.79 improved 9% from 1Q233
• Average Global Liquidity Sources of $909B increased $12B, or 1%, from 4Q232

Bottom line: Bank of America managed to game expectations and reported numbers which mostly came just above estimates, which is also why the stock is higher premarket. However, it is only a matter of time before the market notices that BofA is starting to take aggressive losses on its CRE/credit card exposure and it is unclear how much more of this lies ahead. As such, don't be surprise if what is a modest move higher in the stock premarket reverses in the coming hours.

The full invest presentation is below  (pdf link).

Tyler Durden Tue, 04/16/2024 - 11:05

House Managers To Deliver Mayorkas Impeachment Articles To Senate

Authored by Mark Tapscott via The Epoch Times (emphasis ours),

U.S. Secretary of Homeland Security Alejandro Mayorkas at the U.S. Capitol, on April 10, 2024. (Samuel Corum/Getty Images)

Two counts of impeachment against Secretary of Homeland Security Alejandro Mayorkas, approved on Feb. 13 by the House of Representatives, are to be formally presented to the U.S. Senate today.

Eleven House members previously named as impeachment managers will walk from the lower chamber through Statuary Hall in the Capitol and then to the Senate in a brief ceremony that has been repeated only 17 times since the first Congress in 1789. House Democrats did so twice after impeaching former President Donald Trump in 2020 and 2021.

Eight of the 17 Senate impeachment trials resulted in convictions, while nine ended without convictions. A two-thirds majority of the Senate is required to convict an impeached officer of the federal government. Neither former President Donald Trump, former President Bill Clinton in 1998, nor President Andrew Johnson in 1868 were convicted.

Senate rules require the House managers to read the two counts in the Senate chamber. Then Senate Senate President Pro Tempore Patty Murray (D-Wash.) will swear the senators in as jurors. A written summons will be issued to Mr. Mayorkas for him to appear, which he may or may not choose to heed.

The senators will then have an opportunity to adopt rules governing how the trial will be conducted. The rules adopted by the Senate in 1986 were in place for the Clinton and Trump trials.

Senate Majority Leader Chuck Schumer (D-N.Y.) is expected to enter a motion either to dismiss or table the two impeachment counts against Mr. Mayorkas. Earlier this year, Mr. Schumer described the House impeachment action as a “sham.”

With public anger over the more than 8 million illegal immigrants allowed to enter the country under President Joe Biden, Mr. Schumer is determined to avoid a public trial during which the House managers can be expected to present evidence demonstrating Mr. Mayorkas acted at the direction of the chief executive.

Senate Republicans, led by senators Ted Cruz of Texas, Mike Lee of Utah, John Kennedy of Louisiana, Ron Johnson of Wisconsin, Eric Schmitt of Missouri, and Roger Marshall of Kansas will attempt to bring multiple points of order against Mr. Schumer’s motion.

If any one of the GOP points of order is approved by a simple majority of the Senate, the motion will be defeated and the trial will commence. But Ms. Murray is not obligated under Senate rules to recognize any of the senators offering points of order, so none of their objections may be heard on the Senate floor.

Should the Senate trial go forward, the House managers will present their evidence, and defenders of Mr. Mayorkas from among the Senate Democratic majority will respond. At some point thereafter, a rollcall vote will be taken, which is expected to fail to reach the required two-thirds for conviction.

At that point, Mr. Mayorkas will be able to continue performing his duties but he will go into the history books as only the second presidential cabinet member to be impeached.

The first was Secretary of War William W. Belknap, who resigned in 1876 after the House passed five counts of impeachment against him. The Senate failed to convict Mr. Belknap, who was appointed by President Ulysses S. Grant.

Article I of the measure accuses Mr. Mayorkas of a “willful and systemic refusal to comply with the law” and claims that “in large part because of his unlawful conduct, millions of aliens have illegally entered the United States on an annual basis with many unlawfully remaining in the United States.”

“His refusal to obey the law is not only an offense against the separation of powers in the Constitution of the United States, it also threatens our national security and has had a dire impact on communities across the country,” it reads.

Article II accuses Mr. Mayorkas of breaching the public’s trust by having “knowingly made false statements, and knowingly obstructed lawful oversight of the Department of Homeland Security, principally to obfuscate the results of his willful and systemic refusal to comply with the law.”

Senate Majority Leader Chuck Schumer (D-N.Y.) speaks to the press after the Democratic Party's weekly luncheon at the U.S. Capitol, on March 6, 2024. (Mandel Ngan/AFP via Getty Images)

The 20-page impeachment resolution contains two articles with multiple examples of laws Mr. Mayorkas is alleged to have ignored or refused to enforce and illustrations of his blocking congressional oversight, including not producing requested copies of documents.

Democratic House impeachment managers, led by Rep. Jamie Raskin (D-Md.), walk out of the Senate Chamber in the Capitol, on Feb. 13, 2021. (J. Scott Applewhite/AP Photo)

The House managers, all Republicans, include Mr. Green, House Foreign Affairs Committee chairman Reps. Mike McCaul of Texas, Andy Biggs of Arizona, Clay Higgins of Louisiana, Ben Cline of Virginia, Michael Guest of Mississippi, Andrew Garbarino of New York, August Pfluger of Texas, Harriet Hageman of Wyoming, Marjorie Taylor Greene of Georgia, and Laurel Lee of Florida.

ZeroPointNow Tue, 04/16/2024 - 10:30

"Only Good For WW3": Slovakia To Oppose Ukraine's NATO Membership Bid

Last October saw a significant shift in Slovakia's trajectory related to its stance on the Ukraine war, after the populist left-wing party Smer took the most votes in the country's national election. Its head, who ascended to his fourth term as prime minister, Robert Fico, advanced a platform of pursuing peace in Ukraine rather than continuing to pour weapons into an increasingly hopeless campaign to evict Russian forces from the country's eastern provinces. 

In the wake of US Secretary of State Antony Blinken earlier this month controversially declaring "Ukraine will become a member of NATO" - Slovakia under PM Fico is pushing back. He said in fresh comments at a press conference that Slovakia will stand firmly against any efforts to pursue Ukraine's accession into NATO.

via EPA

"Ukraine may say: ‘We want to join NATO.’ This will be their own decision. We are saying that we will not ratify [the documents on Ukraine’s accession to NATO] in parliament because Slovakia needs a neutral Ukraine. Slovakia’s interests will be threatened if Ukraine becomes a NATO member," Fico said.

However, while rejecting the idea of Ukraine being in NATO, he did say that Slovakia supports Ukraine's bid to become a member of the European Union. "The Slovak prime minister expressed hope that Brussels and Kiev begin talks on launching this process as soon as possible," Russian media indicated.

In separate comments days ago he explained that "Ukraine’s membership in NATO is only good for World War III. An independent Ukraine is enough for us."

Those remarks were made in a weekend radio interview, where he went on to explain of his plans for relations with Moscow: "In the aftermath of conflict, there’s a keen interest in re-establishing normalcy in relations with Moscow," he said.

"I want to pursue a policy of good, friendly relations with anyone interested in such a policy," Fico affirmed while highlighting the small country of Slovakia's geography.

Back in September, just ahead of his becoming prime minister again, Fico said that "Peace is the only solution" and explained,  "I refuse to get criticized and labeled as a warmonger just for talking about peace, whereas those who support war and killing are being called peace activists. We have it all messed up in our heads. We will not send a single bullet to Ukraine from the state stocks.”

Fico has also said the Ukraine war didn't start in 2022: "I say it loud and clear and will do so: The war in Ukraine didn’t start yesterday or last year. It began in 2014, when the Ukrainian Nazis and fascists started to murder the Russian citizens in Donbas and Luhansk."

A March opinion poll found that 51% of Slovakians think the West and/or Ukraine are responsible for the conflict. Half also said the United States posed a security threat to their country. Fico's opposition to arming Ukraine and his support for an immediate, negotiated peace echoes the stance of neighboring Hungary, led by Prime Minister Viktor Orban. Both countries have borders with Ukraine.    

Tyler Durden Tue, 04/16/2024 - 10:10