Abbott Demand Answers From CenterPoint As 260,000 Texans Still Without Power

Authored by Naveen Athrappully via The Epoch Times,

Texas Gov. Greg Abbott demanded that utility firm CenterPoint Energy outline the steps it has taken to address power supply outages during extreme weather events, as hundreds of thousands of customers remain without electricity following Hurricane Beryl.

The hurricane hit southern Texas and Houston last week and disrupted the power supply to millions of customers, leaving people without air conditioning amid high temperatures. Though supply has been restored for many households, hundreds of thousands of residents remain without power.

Mr. Abbott criticized power companies during a July 14 press conference, calling the utility firms’ failure to provide power to customers “unacceptable.”

He specifically highlighted CenterPoint’s outage. More than 289,000 households in Texas were out of power as of 09:45 a.m. ET on Monday, out of which over 262,000 (approx. 90 percent) were CenterPoint customers.

“To help Texans in the Greater Houston area and to avoid a repeat of unacceptable power outages, I will give CenterPoint until the end of the month to provide my office with specific actions to address power outages and reduce the possibility that power will be lost during a severe weather event,” Gov. Abbott said.

“If CenterPoint fails to comply, I will issue an Executive Order to impose actions on the company that are geared to keep the power on.”

CenterPoint claims to have restored power to over 85 percent of impacted customers and that it is on track to hit the 90 percent restoration target on Monday, the company said in a July 14 news release.

Power to more than 1.9 million households has been restored and 14,000 crew members are working to bring electricity back to the remaining customers.

Responding to Mr. Abbott’s press conference, CenterPoint said it was “committed to working together with the State, local government, regulators, and community leaders both to help the Greater Houston area recover from Hurricane Beryl and to improve for the future.”

The company had prepared 3,000 crew members in the service territory ahead of the storm to tackle the fallout from the weather event, it said.

In a move to strengthen Greater Houston’s resilience against extreme weather, the firm doubled investments in electric systems, including modernization efforts, over the past five years, the company said.

CenterPoint also said it had 15,000 poles and more than 17,000 transformers going into the storm event. A little more than 2,100 poles have been used for restoration. Crews have removed more than 18,600 trees affecting transmission lines as part of restoring power supply.

Mr. Abbott asked CenterPoint to provide details on how it plans to remove all vegetation threatening power lines, how the company will prepare in advance to deal with tropical storms in the Gulf Coast, and what actions it plans on taking to prepare enough personnel to immediately respond to power outages during storms.

Restoration Work, Safety Precautions

During the press conference, Mr. Abbott also called on citizens not to interfere in the activities of the linemen working to restore power.

“In recent days, linemen have been physically threatened—sometimes attacked—while doing their jobs to get power back on. There’s no reason to EVER threaten someone’s life. Don’t interfere with those working to restore power. You’re slowing the process down,” he said in a July 15 post on social media.

CenterPoint advised people to follow safety measures while the power outage situation is being resolved. It recommended that citizens stay at least 35 feet away from a downed power line or damaged electric equipment. All equipment should be treated as energized.

The company asked people to be cautious around restoration crews and to give workers plenty of room to assess damages and make repairs.

The utility firm also warned that fraudsters could seek to take advantage of the situation, recommending that only workers who show a company identification badge be allowed inside homes for repairs.

“CenterPoint is currently experiencing longer than usual hold times across its region. The Customer Service team is only accepting calls for electric and natural gas emergencies at this time.”

Earlier on July 13, Texas announced that 17 counties were eligible for federal disaster assistance due to the impact of Hurricane Beryl.

The state has distributed more than 3.67 million water bottles, more than 472,000 ready-to-eat meals, and more than 127,700 ice bags to affected communities.

Tyler Durden Mon, 07/15/2024 - 11:05

Watch: New Video Shows Trump Shooter Climbing To Roof - People Warning Police

New video evidence confirms that security teams on the scene of the Trump rally in Butler, PA were warned well ahead of time that Thomas Crooks, the alleged would-be assassin, was climbing to the roof of the nearby AGR building.  As we noted yesterday, there is a long series of security failures that would have to take place in order for Crooks to approach the building with a rifle and climb to the top to take multiple shots on Trump's position only 140 yards away.  From the looks of things, Crooks had a clear path all the way to his perch.

Numerous security officials and former SWAT snipers agree that 140 yards is an easy shot, even for an amateur. (Images show the bullet vapor trail just glancing off of Trump's head; Crooks was almost successful despite being a poor marksman).  

The fact that the buildings were not secured by Secret Service planners with an overwatch presence as well as drone surveillance at 140 yards is unthinkable.  Whoever was in charge that day has some serious explaining to do.  Incompetence or laziness are not reasonable justifications for the SS violating nearly every protocol on their books.  In the meantime, more proof is surfacing that security had ample warning before the shooter was in position to pull the trigger. 

NEW - Trump Assassin video shows him crawling on the roof while multiple people point him out to police

They yelled about him for *almost an entire minute*

It’s insane how Secret Service allowed this amateur to almost kill Trump pic.twitter.com/CWfHBGzOCp

— DC_Draino (@DC_Draino) July 15, 2024

Bystanders in the crowd are seen pointing to Crooks on the rooftop as he crawled his way to the peak.  Crooks lays down on his side for a moment and appears to be doing something with his hands (possibly checking that his rifle is loaded).  He then nearly stands up becoming clearly visible, then lays back down and inches forward.  At least three police officers are on the ground around the building as the crowd yells at them to look on the roof.  

The time between Crooks being sighted and shots fired was reportedly around three minutes; more than enough opportunity for security personnel get on the radio and warn Secret Service agents on the stage to remove Trump and take him to safety.  This was apparently never done.

The number of violations of basic SS security rules are too many to be pure coincidence.  Nothing about the event makes any sense if one assumes the goal of the Secret Service leadership was to keep Trump alive.    

Tyler Durden Mon, 07/15/2024 - 10:45

Elon Musk Is Right: End The Online Censorship Racket

Authored by Jonathan Turley,

Few Americans have ever heard of the Global Alliance for Responsible Media, let alone understand how it shapes what they read and hear in news and commentary. That may soon change.

An alarming new report of the House Judiciary Committee details this organization’s work to censor conservative and opposing viewpoints in the media by targeting figures such as Joe Rogan and entire social media platforms such as X (formerly Twitter).

It is part of a massive censorship system that a federal court recently described as “Orwellian.” The sophistication of this system makes authoritarian regimes like China’s and Iran’s look like mere amateurs in censorship and blacklisting.

In my new book, “The Indispensable Right: Free Speech in the Age of Rage,” I discuss our history of speech crackdowns and how this is arguably the most dangerous anti-free speech period that we have faced as a nation. The reason is an unprecedented alliance of government, corporate, academic and media institutions supporting censorship and the targeting of largely conservative viewpoints.

As discussed in the book, there is a crushing irony to the current anti-free speech movement. During the Red Scare and the McCarthy period, it was the left that was targeted with blacklisting, censorship and arrests. It is now the left that has constructed a global censorship system that exceeds anything that Joe McCarthy even dreamt of in the control of news and commentary.

Through the years, I have testified repeatedly in Congress on this system supported enthusiastically by President Biden and his administration. It has proven to be a frustrating game of whack-a-mole for civil libertarians. The Democrats in Congress have uniformly opposed any investigation or action on censorship while denying for years that there was a coordinated effort between government and corporations. When we were successful in uncovering components of this system, they were often quickly shut down as the work shifted to other components and assets.

One of the most insidious efforts has been to strangle the financial life out of conservative or libertarian sites by targeting their donors and advertisers.  This is where the left has excelled beyond anything that has come before in speech crackdowns.

Years ago, I wrote about the Biden administration supporting efforts like the Global Disinformation Index to discourage advertisers from supporting certain sites. All of the 10 riskiest sites targeted by the index were popular with conservatives, libertarians and independents. That included Reason.org and a group of libertarian and conservative law professors who simply write about cases and legal controversies. The Global Disinformation Index warned advertisers against “financially supporting disinformation online.” At the same time, HuffPost, a far-left media outlet, was included among the 10 sites at lowest risk of spreading disinformation.

Once that index’s work and bias was disclosed, government officials quickly disavowed the funding. It was a familiar pattern. Within a few years, we found that the work had been shifted instead to groups like the Global Alliance for Responsible Media, which is the same thing on steroids. It is the creation of a powerful and largely unknown group called the World Federation of Advertisers, which has huge sway over the advertising industry and was quickly used by liberal activists to silence opposing views and sites by cutting off their revenue streams.

These censorship groups typically proclaim that they are merely trying to promote “brand safety” when they target for suppression the same sites that challenge the political and media establishment. The group states that it “unites marketers, media agencies, media platforms, industry associations, and advertising technology solutions providers to safeguard the potential of digital media by reducing the availability and monetization of harmful content online.”

That “harmful content” seems to be the very same sites long targeted by the Biden administration and its allies in business, the media and academia.

The internal communications of these censorship groups demonstrate their contributors’ underlying agenda. In one conversation between Global Alliance for Responsible Media co-founder Rob Rakowitz and individuals with an associated “GroupM,” two executives explained to Rakowitz how they identified sites that they did not like and simply monitored them until they could find something that crossed the line. An example is the Daily Wire, a site hated by liberals for its conservative viewpoints and critiques of mainstream media.

In describing how they work to bag such sites, John Montgomery, executive vice president of Global Brand Safety, explained: “There is an interesting parallel here with Breitbart. Before Breitbart crossed the line and started spouting blatant misinformation, we had long discussions about whether we should include them on our exclusion lists. As much as we hated their ideology and bulls–t, we couldn’t really justify blocking them for misguided opinion. We watched them very carefully and it didn’t take long for them to cross the line.”

In other words, they preselected the sites and then followed their every move like a patrol unit following a car to wait for them to go one mile per hour over the limit.

This is called “deplatforming,” a favorite term from higher education, whereby liberal groups organize to shout down and block speakers with opposing views. The Global Alliance for Responsible Media is too sophisticated to simply bullhorn groups into silence. Instead, it strangles them financially.

Those who do not yield, from Elon Musk’s X to mega-podcaster Joe Rogan, were quickly added to the list to be deplatformed. Musk is particularly dangerous because he was responsible for blowing the lid off the censorship system by releasing the “Twitter Files,” detailing coordination between government and social media companies to silence citizens and groups.

To this day, companies like Facebook continue to fight efforts to disclose their own censorship files.

Musk has threatened to sue in light of the report. “Having seen the evidence unearthed today by Congress, X has no choice but to file suit against the perpetrators and collaborators in the advertising boycott racket,” he said.

A lawsuit would be difficult to maintain. These groups have a right to organize to silence opposing views just as book burners have a right to burn books. However, deplatforming, book burning and blacklisting have long been anathema to free speech values. They are efforts to prevent opposing views from being heard rather than to respond to such views on the merits.

And Musk is right in describing this as a “racket.” There is now a disinformation cottage industry where a wide array of academic and private groups are raking in a fortune targeting individuals and other groups for blacklisting, banning and censorship.

There are other groups working in tandem in this effort. For example, Newsguard was created by to Chief Executive Officers Steven Brill and Gordon Crovitz to monitor and effectively blacklist media that they deemed misinformative or false. The site uses mainstream journalists to rate news sites, even though many of these sites have challenged the bias of the mainstream media.

Once again, the apparatus serves to shield that bias in targeting disfavored sites. The Biden administration has extended contracts with Newsguard to incorporate the system, and it is even being used in schools, despite complaints that it shows the very same pro-Democrat and left-wing bias.

There is a reason why projects such as the Global Disinformation Index have been largely concealed from public view.

There is a reason Facebook and other companies have fought mightily to conceal their own censorship files. The anti-free speech movement is not a popular movement.

A majority of the public continues to oppose censorship. This is a movement that came from higher education and has been pushed by the political and media establishment, not the public.

That is why many of us in the free speech community are hoping that the 2024 election will become a referendum on censorship. Biden has given a full-throated endorsement of these efforts, even to the point of claiming that companies that do not censor American citizens are “killing people.” He presides over the most anti-free speech administration since John Adams.

So now, let him defend it with voters.

In 1800, that did not work out well for Adams, who was defeated by Thomas Jefferson.

Jefferson had run on restoring freedom of speech. The public can now flip the script. It is time to defund and deplatform America’s censors.

*  *  *

Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University. He is the author of “The Indispensable Right: Free Speech in an Age of Rage” (Simon & Schuster, June 18, 2024).

Tyler Durden Mon, 07/15/2024 - 10:35

MSNBC Yanks 'Morning Joe' Reportedly On Fears Of Inappropriate Trump Shooting Commentary

MSNBC has taken its celebrated "Morning Joe" off-air on Monday reportedly on fears that their well-known leftist hosts could say the wrong thing or something deeply insensitive about the Saturday Trump assassination attempt which could leave the network in a bind. The show is missing in action on this crucial day of the Republican National Convention in Milwaukee.

"The progressive news network confirmed the decision to preempt its influential and top-rated morning show after a CNN inquiry Sunday evening," CNN confirms. "The network said the show will resume airing Tuesday." 

As speculation abounds, and as some try to dubiously claim that it's 'normal' for Morning Joe to not air during a major political news event, NBC issued the following statement: "Given the gravity and complexity of this unfolding story, NBC News, NBC News NOW and MSNBC have remained in rolling breaking news coverage since Saturday evening," a spokesperson said.

The press release followed with: "As we continue to cover this story into the week, the networks will continue to cross simulcast, alternating between NBC News, NBC News NOW and ‘MSNBC Reports,’ so there is one news feed covering this developing situation."

CNN then admitted the following based on one of its sources:

A person familiar with the matter told CNN that the decision was made to avoid a scenario in which one of the show’s stable of two dozen-plus guests might make an inappropriate comment on live television that could be used to assail the program and network as a whole. 

Indeed there is a long history of show hosts Joe Scarborough and Mika Brzezinski making astounding and highly incendiary claims which leave network executives facing scrutiny and having to field difficult questions.

At the very least, the decision to pull the program on Monday displays lack of trust in the long-running program and hosts by top network leadership.

Conservative pundit Laura Loomer sounded off in wake of the decision, pointing out the following:

MSNBC has pulled Morning Joe off air this week because they don’t think their leftist hosts can control themselves from celebrating the attempted assassination of President Trump.

Let’s be honest. The rhetoric from MSDNC, CNN, WAPO, NY TIMES and Joe Biden is a contributing factor to why Donald Trump almost had a bullet in his skull this week.

They have been inciting violence against Trump for years, calling him Hitler, saying he’s a dictator and a “threat to democracy”. The shooter was probably even a Morning Joe viewer. I’d be willing to take that bet.

Stunning. On this uniquely impactful morning, #MSNBC pulls its signature show #MorningJoe, for fear that some jackwagon panelist would say something grotesquely inappropriate. Profoundly pathetic... and probably a wise move on their part. pic.twitter.com/JqqDSGfz9f

— Mark Davis (@MarkDavis) July 15, 2024

Ironically some on the Left are miffed at the display of obvious lack of trust, with Liberal journalist Jeff Jarvis questioning on X, "What the f---, MSNBC? You preempted your excellent weekend programming… and now you've silenced [Morning Joe] in favor of your anodyne streaming news cos-play called Now?"

"This is when we need the analysis and conversation these shows bring us (yes, with controversy; that is how public discourse works through it: with discussion)," he continued. "It is shocking that NBC/Comcast do not understand their own company's programs and raison d'etre."

But again, MSNBC has not alluded to any deeper reasons behind temporarily pulling the program other than to say it wishes to provide coverage via a single news feed.

* * *

Meanwhile, this kind of scrambling to reign in the narrative is on display at a number of other outlets too, Glenn Greenwald points out...

This is the magazine that just published a cover story explicitly depicting Trump as Hitler, complete with the Hitler mustache, Nazi fonts and a panel of "fascism experts" (e.g. the scholar @brianstelter).

Now they have to pretend to find the assassination attempt "despicable." https://t.co/FGJwEzofuM

— Glenn Greenwald (@ggreenwald) July 15, 2024

Tyler Durden Mon, 07/15/2024 - 09:20

The Four Factions Vying For Control Of America

Authored by Robert Arvay via AmericanThinker.com,

The Democrat party has three main factions vying for control.  

One of them is the Biden family.  

Another consists of so-called down-ballot Democrat office-holders.  

The third one is composed of the intelligence agency heads, leaders of the dark state.  

There is also a fourth faction. 

 Let’s glance at each of them.

The Biden family is a massive business that produces nothing except corrupt political influence.

It is exemplified in Joe Biden’s laughing boast that he successfully coerced the Ukrainian government to fire its prosecutor, who was exposing the crimes of Hunter Biden.  Hunter was a highly paid board member of the Ukrainian energy company Burisma.  Hunter Biden has zero expertise in the energy industry and contributed nothing of value to Burisma.  Joe Biden threatened Ukraine by promising to withhold a billion dollars in U.S. aid unless its prosecutor was promptly dismissed from his job.  He was.  Joe Biden publicly laughed, saying, “Well, son of a b----.”  It’s on video.

The down-ballot office-holders in the Democrat party are those who will likely lose their election or re-election campaigns if a Trump victory has the so-called “coattail” effect produced when voters do not split their votes between both major parties.

They fear that President Trump will win a second term in the Oval Office, and that voters who vote for him will also vote for Republicans who promise loyalty to his policies.  The strategy for down-ballot Democrats is to get Biden removed from the ticket and replaced by a Democrat who they hope will win, and whose coattails will carry them to victory.

Both of these factions are deeply opposed to each other and will strenuously fight for their interests.

The third faction is exemplified by the fifty-one intelligence agency heads who signed a letter falsely insinuating that Trump is the favored candidate of the Russian dictatorship.  

They successfully deceived much of the voting public in the 2020 election and are credited with handing Biden the White House.

Because they operate in secret, the intelligence agencies (which include the FBI and the CIA) have enormous powers, both constitutional and otherwise.  As Democrat Chuck Schumer famously warned, if you cross the agencies, they have “six ways from Sunday” of getting you.  It is not an idle threat.  The intelligence agencies have lethal weapons at their disposal, and they operate with impunity when their self-interest is credibly threatened.  It is no mere conspiracy theory to characterize them as the puppeteers of government.

Make no mistake: the dark state will not tolerate any serious imposition on its power.  None. 

What will it do?  

Simply, whatever it deems necessary.  If it cannot influence the outcome of an election to serve its interests, it can prevent the election from taking place at all.  To accomplish this, a national emergency can be contrived, whether it is a plague, a war, a spate of terrorist attacks, or any other devious method.

The three factions are poised, each to attack the others. 

 If any of them wins, the outcome cannot favor the republic.

The fourth faction is you.

Tyler Durden Mon, 07/15/2024 - 08:25

Here Are The Markets Moving Higher As Trump's Election Odds Rise

"I'm not supposed to be here, I'm supposed to be dead," former President Trump told the New York Post on Sunday while traveling to Milwaukee for the Republican National Convention, adding, "The doctor at the hospital said he never saw anything like this, he called it a miracle." 

The miracle, or as Navy Seal and Blackwater founder Erik Prince explained, "Donald J Trump is alive today solely due to a bad wind estimate by an evil would be assasin [sic]." 

This chilling graphic illustrates how close we came. 100% divine intervention. pic.twitter.com/wkxQ3jp2ks

— End Wokeness (@EndWokeness) July 14, 2024

The assassination attempt on Trump has boosted his odds of winning the US election, according to PredictIt data.

This has pushed traders to pile into stocks and industries that stand to benefit from a red wave.

"Donald Trump shifted his campaign focus to unity after being wounded in an assassination attempt, asking his onetime primary rival Nikki Haley to attend the RNC in Milwaukee," Goldman's John Flood told clients this morning. 

Flood said, "Trump odds making new highs as are Republican sweep odds in the wake of Trump's assassination attempt." 

The analyst continued with several themes that work under a Trump presidency: 

"Simple breakdown is good for US equities (tax cuts/deregulation), bad for intl export exposed equities (tariffs), good for dollar (tariffs/bad for mxn) and bad for rates (bear steepener). Domestic-facing US stocks have outperformed those with foreign sales..."

Treasury yields are higher and the 2s30s curve has uninverted this morning...

David Mazza, CEO at Roundhill Financial, said,

 "The unprecedented nature of the attack will boost volatility and in the immediate could see investors seek out safety in the 2024 defensives — mega-caps, but also adds support for stocks that do well in a steepening yield curve, especially financials."

In premarket trading in New York, shares of gun companies to private prison operators are soaring:

• Private prison stocks GEO Group Inc. and CoreCivic Inc are up 9.1% and 6.7% respectively

• Gun stocks Smith & Wesson Brands and Sturm Ruger & Co. are also up; SWBI +4.6%, RGR +2.5%

• In the health-care sector, managed care companies are rising with UnitedHealth up 2.1%, Humana +3.1%, and CVS Health Corp, which owns insurer Aetna, gains 2.1%

• Crypto names are also higher: Coinbase Global +5.8%,  Marathon Digital Holdings +5.2%,  Riot Platforms +5.9%

• In the technology sector, Trump Media & Technology Group Corp surges as much as 76% in early trading

• Phunware, a software firm that worked on Trump's 2020 reelection campaign, jumps 41%

• Rumble, a conservative video network, gains 11%

• Separately, renewable energy and green energy focused stocks are underperforming in premarket trading

Shares of Trump Media & Technology Group Corp jumped as much as 50%. 

Bloomberg provided a further breakdown of the industries that should benefit under a Trump presidency: 

Private Prison Operators

• Private prison stocks GEO Group Inc. and CoreCivic Inc. will benefit in a Republican sweep, as Trump has a tough stance on immigration

• Trump is expected try to provide as many resources as possible to both the public and private sector when it comes to border security, with a focus on physical detention, Wedbush said

Crypto

• Trump's ardent courting of Bitcoin miners and his enthusiastic stance on cryptocurrency has made this group a bet on his presidency

• 

• Stocks to watch include Coinbase Global Inc., Marathon Digital Holdings Inc., Riot Platforms Inc., Cleanspark Inc., MicroStrategy Inc. and Cipher Mining Inc., as well as the Bitwise Crypto Industry Innovators ETF

Gun Stocks

• Conversations about access to firearms are likely to dominate conversations after the attack, and Republicans are seen as better for this sector

• Watch Smith & Wesson Brands, Sturm Ruger & Co. as well as retailers who sell guns, such as Walmart Inc.

Financials

• Regulation-heavy sectors, such as financials, can rise on Monday as a Republican presidency is expected to be more lenient than a Democratic one

• Watch big bank stocks, funds such as the Vanguard Financials ETF, as well as credit card companies like Discover Financial Services, Capital One Financial Corp., Synchrony Financial

Healthcare

• Healthcare is yet another regulation-heavy group, that may face easier rules under Republicans, and may outperform Monday

• Watch managed care companies UnitedHealth Group Inc., Humana Inc.  and CVS Health Corp, which owns insurer Aetna

Fossil Fuels

• Traditional energy names can do well given Trump's general pro-oil stance

• Watch Exxon Mobil Corp., Halliburton Co., Devon Energy Corp., EQT Corp., Chevron Corp., as well as the S&P 500 Energy Index

Trump Media

• Shares of the Truth Social parent may be volatile as the former President owns a majority stake in the firm

• The stock swung wildly in the trading day following the June debate between Biden and Trump, seeing gains and losses of as much as 8.8% and 14% respectively

Technology

• A Bernstein basket looking at tech names that can do well under a Trump presidency includes Live Nation Entertainment Inc., Uber Technologies Inc., Lyft Inc., Charter Communications Inc., Etsy Inc., New York Times Co., Warner Bros Discovery Inc., Paramount Global, DoorDash Inc., Instacart parent Maplebear Inc., Comcast Corp.  and Wayfair Inc.

• Meanwhile companies Meta Platforms Inc., Google-parent Alphabet Inc. and Snap Inc. are expected to fare worse under Republicans and may underperform Monday

Also, the industries that should underperform...

China Exposed Stocks

• Stocks across sectors with high exposure to China will likely be volatile

• A JPMorgan index of companies with heavy exposure to the country includes Air Products and Chemicals Inc., Celanese Corp., BorgWarner Inc., Otis Worldwide Corp., Agilent Technologies Inc., IPG Photonics Corp. and Jabil Inc.

Renewable and Green Energy

• Renewable energy and green energy focused stocks may underperform, as Democrats are widely seen as more friendly toward this industry

• Watch First Solar Inc., Maxeon Solar Technologies Ltd., Sunnova Energy International Inc., Sunrun Inc., SunPower Corp., Enphase Energy Inc., Plug Power Inc., as well as the Invesco Solar ETF

Electric Vehicle Industry

• The Biden administration's strong push toward electrification of transportation and Trump's claim that he will entirely reverse Biden's EV policy has put the industry in the midst of election rhetorics

• While experts say that entirely throwing out the provisions of the Inflation Reduction Act is not very likely, there is a risk that EV makers, battery developers and other infrsatructure companies such as charging station operators may see benefits from the act narrow or slow down

• Stocks that may move include Tesla Inc., Rivian Automotive Inc. and Lucid Group Inc., charging network operators such as ChargePoint Holdings Inc., Beam Global, Blink Charging Co.

 

Tyler Durden Mon, 07/15/2024 - 08:05

Futures Jump As Trump Assassination Attempt Boost Yields, Dollar And Supercharges Market Rotation

US equity futures are stronger with the Russell/small caps again outperforming as the market rotation was supercharged over the weekend after Trump's assassination attempt, sending both yields and the dollar higher, and is pushing a broadening that is extending July’s gains. Futures on the S&P 500 rose 0.4% at 6:35ET am in New York, while Nasdaq 100 contracts traded 0.5% higher. Pre-mkt, Mag7 and Semis are stronger with TSLA +4.9%, AAPL +2.1% standing out. Bank earnings continue this morning. The yield curve is twisting steeper and the USD rises, as soaring odds of Trump winning the US election spurred a climb in Treasury yields, led by the long end, and revived risk appetite as US equity futures climbed, outperforming European peers. In commodities there is general weakness but some strength in base with crude leading the Energy complex. As the market shifts its focus toward earnings to search for fundamental support for the nascent broadening, the macro keys this week are Retail Sales, Housing Starts, and at least ten Fed speakers including Jerome Powell today.

In premarket trading, Apple jumped 2.1% after the tech giant was named a “top pick” at Morgan Stanley, which said its artificial intelligence platform is a “clear catalyst” to boost iPhone and iPad shipments, according to Morgan Stanley. Baxter International and Staar Surgical dropped after Morgan Stanley downgraded both companies to underweight from equal-weight. Trump Media surged 50% after a failed assassination attack over the weekend boosted the former US president’s bid to return to the White House.

After a historic weekend, investors weighed the market implications of the attack on Donald Trump that threatened to upend the US election.  The attempted assassination threatened to shatter the calm that’s lately pushed the S&P 500 Index from one record to the next, causing traders who have been focused on Federal Reserve policy and economic resiliency to also consider political implications.  While traders generally don’t expect the assassination attempt to derail the stock market’s trajectory, a pick-up in near-term price swings is likely, especially since Trump is now virtually guaranteed to win unless the deep state tries to whack him again and succeeds. They’ll also contend with the start of earnings season and fresh economic data that could help determine the Fed’s policy path. The assassination attempt also sent shockwaves through the nation and spurred figures on both sides of the aisle to call for leaders to rise above the political fray and attempt to heal national divisions which of course nobody will do.

While the Saturday shooting grabbed headlines in an already tumultuous political season, investors are left assessing the attack’s impact on Trump’s chances of reclaiming the presidency. Among the industries most likely to trade on his chances of re-eletion are prison operators, Bitcoin miners and firearms companies, traders said. The shooting also added a layer of uncertainty for anyone already weighing the prospect of interest-rate cuts in the world’s largest economy at the same time that equity valuations remain elevated relative to history.

“While this was a horrific event, equity futures are likely steady because investors remain very focused on Fed policy and the probability of interest-rate cuts still coming later this year,” said Yung-Yu Ma, chief investment officer at BMO Wealth Management.

A Deutsche Bank AG gauge of equity exposure among rules-based and discretionary investors jumped to the 96th percentile of historical observations last week. From a contrarian standpoint, such optimism suggests little buying power in the future.

“The assassination attempt reminds investors there are always potential unknowns which can potentially affect markets,” said Stephen Solaka, co-founder of Belmont Capital Group. “If anything, it will create a floor on volatility moving forward, but how much of a rise, if any, will be a reflection of movement in the market.”

“Equities will continue to be driven by earnings, not these events, at the index level,” said Michael Purves, chief executive officer at Tallbacken Capital Advisors. “That said, some stocks will get an added boost if Trump is perceived to be the winner in November.”

Besides political uncertainty, investors will remain focused on an earnings season that’s ramping up in the US this week with reports from Netflix Inc., Johnson & Johnson and State Street Corp., among others.

European stocks trimmed losses after weak economic data from China and as disappointing updates from Swatch and Burberry weighed on luxury shares. Miners also underperform while media and travel stocks outperform. Here are the most notable performers:

• Orkla gains as much as 6.7% after the Norwegian consumer-products group reported earnings that DNB says beat expectations on several metrics.
• Burberry shares drop as much as 17% after the British luxury label said its first-quarter performance for 2025 was “disappointing” and suspended its dividend. The group also replaced CEO Jonathan Akeroyd.
• Swatch shares drop as much as 12%, after the Swiss watchmaker reported disappointing 1H results on weak China demand and FX effects.
• Europe’s luxury stocks follow Burberry and Swatch lower, with Kering and Richemont both down at least 2.8%.
• Ocado shares slump as much as 12% after Bernstein downgraded the online grocery company to underperform, citing a slow demand take-up for its automated warehouse.
• Nordex shares fall as much as 5.2% after the wind-turbine company’s second quarter orders experienced a sharp drop from the prior year.
• BayWa shares fall as much as 35%, the most on record, after the German agricultural firm commissioned a restructuring opinion in response to “a strained financing situation.”
• TomTom shares drop as much as 9.3% after the navigation technology company said it now expects full year group and location technology revenues at the lower end of guidance ranges due to lower automotive operational revenues.
• Gjensidige shares fall as much as 9% after the Norwegian insurance group’s 2Q earnings broadly missed estimates.
• Ionos shares falls as much as 7.5% after analysts at Oddo BHF cut the German cloud solutions provider to neutral from outperform following its 1H results that included reduced sales targets for 2024-2025.

Earlier in the session, Asia stocks dropped as losses in Hong Kong offset gains in other markets after China’s economic growth disappointed. The MSCI Asia Pacific ex-Japan Index slipped 0.2%, with Chinese tech names including Tencent and Alibaba among the biggest drags. A gauge of Chinese stocks trading in Hong Kong fell the most in more than two weeks. Mainland shares edged higher with eyes on the Third Plenum underway. Traders assessed disappointing economic data from China and a ramp-up of the so-called Trump trades after an assassination attempt on the former president. Growing expectations that Donald Trump may win the US elections are also raising worries over escalating tariffs on exports from Asia’s largest economy. 

In FX, the dollar rose while the Mexican peso lagged major peers, declining more than 1% on Monday. Yen traded around 157.89 per dollar with Japan out on holiday.

In rates, treasuries trade off session lows, although yields remain cheaper by up to 5bp across long-end of the curve following rising odds of Donald Trump winning the US presidential election after he survived an assassination attempt on Saturday. Short-end yields are little changed, steepening 2s10s and 5s30s curves by ~4bp on the day; 10-year at 4.22% is cheaper by 4bp vs Friday’s close with bunds and gilts in the sector little changed. Treasuries lagged core European bonds, which trade slightly richer on the day. In Europe, bund and gilt yields fell, led by the front end. US session focus includes comments from Fed Chair Powell, slated to speak during US afternoon.  Treasury coupon issuance for the week includes $13b 20-year reopening (Wednesday) and $19b 10-year TIPS (Thursday)

In commodities, WTI drifts 0.2% higher to near $82.39. Spot gold falls roughly $3 to trade near $2,409/oz.

Bitcoin rose to $62,692 as markets reacted to the Trump assassination attempt which boosted the odds of his re-election; the former President is seen as being pro-crypto.

Looking at the calendar, US economic data slate includes July Empire manufacturing at 8:30am; retail sales, industrial production and housing starts are ahead this week. Fed members scheduled to speak include Powell at 12:30pm (no text, Q&A expected) and Daly (4:35pm)

Market Snapshot

• S&P 500 futures up 0.4% to 5,687.50
• STOXX Europe 600 down 0.2% to 523.16
• MXAP down 0.1% to 187.71
• MXAPJ down 0.2% to 586.07
• Nikkei down 2.4% to 41,190.68
• Topix down 1.2% to 2,894.56
• Hang Seng Index down 1.5% to 18,015.94
• Shanghai Composite little changed at 2,974.01
• Sensex up 0.3% to 80,776.63
• Australia S&P/ASX 200 up 0.7% to 8,017.62
• Kospi up 0.1% to 2,860.92
• German 10Y yield -2bps at 2.47%
• Euro little changed at $1.0907
• Brent Futures little changed at $85.06/bbl
• Gold spot down 0.1% to $2,409.37
• US Dollar Index little changed at 104.10

Top Overnight News

• Donald Trump shifted his campaign focus to unity after being wounded in an assassination attempt, asking his onetime primary rival Nikki Haley to attend the RNC in Milwaukee. Trump odds making new highs as are Republican sweep odds in the wake of Trump's assassination attempt. Simple breakdown is good for US equities (tax cuts/deregulation), bad for intl export exposed equities (tariffs), good for dollar (tariffs/bad for mxn) and bad for rates (bear steepener). Domestic-facing US stocks have outperformed those with foreign sales.
• Meta has decided to lift restrictions on Donald Trump’s Facebook and Instagram accounts, even as the Republican presidential candidate has escalated his rhetoric against its chief executive Mark Zuckerberg. The social media company said in a post on Friday that Trump would “no longer be subject to the heightened suspension penalties” as it believes “that the American people should be able to hear from the nominees for president on the same basis”. FT
• China’s economic data is mixed, with a miss on Q2 GDP (+4.7% vs. the Street +5.1% and down from +5.3% in Q1) and June retail sales (+2% vs. the Street +3.4% and down from +3.7% in May) while industrial production for June came in slightly ahead (+5.3% vs. the Street +5%, but down from +5.6% in May). RTRS
• China withdrew cash from its banking system for a fifth consecutive month amid caution toward monetary easing as currency depreciation pressures mount. The PBOC drained a net 3 billion yuan ($414 million) of cash via its medium-term lending facility on Monday, while holding the interest rate on its one-year policy loans at 2.5%, as the Third Plenum gets underway in the nation’s capital. The twice-a-decade meeting of China’s top leadership has at times marked pivotal policy shifts. BBG
• Apple's annual sales in India hit a record of almost $8 billion, underscoring a rapidly growing market where the iPhone maker now assembles more of its devices and operates two flagship stores. The India revenue jumped about 33% in the 12 months through March from $6 billion a year earlier, according to a person familiar with the matter. Apple’s pricey iPhones accounted for more than half of the sales. BBG
• Hamas denied it’s pulling out of cease fire talks, a day after an Israeli air strike on Gaza aimed at killing two top Hamas officials left at least 90 people dead and 300 injured. BBG
• The DOJ is considering whether to pursue additional changes in how the residential real estate market functions (the DOJ is concerned the current settlement over broker fees may not go far enough). WSJ
• Luxury stocks fell after Burberry suspended dividends and replaced its CEO, and Swatch earnings disappointed. RTRS
• Allstate's CEO notes that the rate of auto insurance price increases is cooling, but he doesn’t see it falling below the overall CPI for the next 10 years. Barron's
• Google parent Alphabet is in talks to buy cybersecurity startup Wiz for as much as $23 billion, a person familiar said. It would be the company’s largest acquisition. BBG

A more detailed  look at global markets courtesy of Newsquawk

APAC stocks traded mixed as participants reflected on the Trump assassination attempt over the weekend and a slew of Chinese data including disappointing GDP, Retail Sales and House Prices, while Japanese markets remained closed for Marine Day. ASX 200 rose above the 8,000 level for the first time with tech and telecoms leading the gains across sectors. Hang Seng and Shanghai Comp. were mixed with the former dragged lower by losses in tech, property and consumer stocks amid mostly weak Chinese data, while the mainland just about remained afloat despite the disappointing releases in which GDP and Retail Sales missed forecasts, while House Prices further deteriorated but Industrial Production topped estimates. Furthermore, the PBoC maintained its 1-year MLF Rate and injected funds through 7-day reverse repos, while top Chinese Communist Party officials kicked off the third plenum.

Top Asian News

• PBoC conducted a CNY 100bln (CNY 103bln maturing) 1-year MLF operation with the rate kept unchanged at 2.50%, as expected.
• China's stats bureau said China's economic operations were generally steady in H1 but the external environment is complex and external demand is still not sufficient, while it added that the economic recovery foundation still needs to be consolidated. The stats bureau also said 5% GDP growth in H1 was 'hard won' and Q2 economic growth was affected by short-term factors such as extreme weather and flooding. Furthermore, it stated the Chinese economy's medium- to long-term improving trend remains unchanged but it faces increasing external uncertainties and many domestic difficulties and challenges in H2, while it noted the property market is still in the process of adjustments.
• Goldman Sachs cuts China's 2024 GDP growth forecast to 4.9% (prev. view of 5.0%).
• JPMorgan cuts China's 2024 GDP growth forecast to 4.7% (prev. view 5.2%).

European bourses, Stoxx 600 (-0.2%) are almost entirely in the red, with sentiment hit following negative updates from Luxury names Burberry (-15%) and Swatch (-10%), alongside the downbeat Chinese data overnight. European sectors hold a strong negative bias; Media takes the spot alongside Travel & Leisure; Consumer Products is dragged down by the Luxury sector amid post-earning losses in Burberry & Swatch, with weak Chinese growth data also not helping; data which has also weighed on Basic Resources. US Equity Futures (ES +0.4%, NQ +5%, RTY 1%) are entirely in the green, with clear outperformance in the RTY, a continuation of the rotation play seen following US CPI last week; significant strength in Bitcoin is also helping.

Top European News

• BoE's Dhingra said on The Rest is Money podcast that demand is too soft for inflation to rise sharply and now is the time to start normalising interest rates so we can finally stop squeezing living standards.
• UK PM Starmer is expected to introduce an AI bill as part of 35 bills to be included in the King’s Speech on Wednesday, according to FT. It was reported by Bloomberg that Starmer will use the upcoming King’s Speech to showcase his government’s efforts to spur economic growth in the UK. Furthermore, the UK government said it will strengthen the role of the Office for Budget Responsibility and enforce new spending rules in the legislative agenda in the week ahead, according to Reuters.
• Airbus (AIR FP) upgrades 20yr demand forecasts led by wide-body craft.
• Germany Economy Ministry monthly report says budget deal lays the foundation for reliable politics which should build confidence in H2.
• Italy has reportedly voted in favour of EU tariffs on Chinese EVs via written procedure, according to a diplomatic source via Reuters

FX

• DXY is pressured again and down as low as 104.09 but holding above last Friday's 104.04 trough, and seemingly fading some of the initial strength overnight as the markets digested an assassination attempt on former President Trump.
• EUR/USD is oscillating around the 1.09 mark and respecting Friday's 1.0862-1.0911 range. Focus will be on the ECB this week, however, the gathering is set to be a non-event with officials set to sit on their hands and most likely wait until September to enact further policy easing.
• GBP is marginally softer vs. the USD in what was an impressive run for Cable last week. 1.2990 was the high from last week with 1.30 yet to be breached.
• Steady trade for the USD/JPY after an eventful last week which was dominated by suspected intervention by Japanese officials. The pair currently holds around 157.80.
• Antipodeans are mixed with the Kiwi the laggard of the two, losing on the AUD/NZD cross which has climbed above 1.11.
• PBoC set USD/CNY mid-point at 7.1313 vs exp. 7.2548 (prev. 7.1315).

Fixed Income

• USTs were pressured overnight after the attempted assassination of former President Trump and the strengthening of his betting odds for the November election; USTs went as low as 110-24+, but were then lifted alongside a bid in EGBs in the European morning.
• Bunds were initially subdued, in tandem with the UST weakness, but has since lifted across the board with Bunds leading and approaching Friday's 132.08 peak, a turnaround which has seemingly been driven by poor European equity performance and an easing of selling price and wage pressures in an ECB survey on Access to Finance of Enterprises.
• Gilts are firmer and following Bunds/EGBs with specifics light, but ahead of a busy data-driven docket. Gilts in a 98.07-98.32 band, unable to extend convincingly above Friday's 98.31 peak with resistance thereafter at 98.53.

Commodities

• Crude has been choppy and off best levels overnight in the aftermath of the below-forecast Chinese GDP metrics. Since, a slight pickup has been seen in the complex, in tandem with recent Dollar weakness. Brent September trades on either side of USD 85/bbl.
• Precious metals are lower but with the downside limited amid a lack of newsflow during the European morning. XAU/USD resides in a narrow USD 2,401.40-2,414.03/oz range.
• Base metals are lower across the board as a function of the downbeat Chinese data overnight which saw GDP miss forecasts after the disappointing inflation and import metrics last week.
• Iraq’s crude oil production was above the agreed quota by 184k bpd in June, while it will adhere to the required production level in the agreement, which is 4mln bpd, for July and the coming months, according to the Iraqi Oil Minister. Furthermore, the Oil Ministry stated that Iraq will compensate for any overproduction since the beginning of the year during the compensation period that extends until the end of September 2025.
• Kuwait Petroleum Corporation announced a new ‘giant’ oil discovery with oil reserves exceeding 3bln barrels and said the newly discovered oil field’s reserves are equivalent to the country’s entire production in three years.
• India's June Gold imports up at USD 3.06bln (prev. 3.33bln M/M), via Trade Ministry

Geopolitics: Middle East

• Two Egyptian sources said Gaza talks have stopped until the Israeli side demonstrates that it is serious, while a senior source cited by Egypt’s Al Qahera News TV stated that Egypt called for Israel to not obstruct ongoing Gaza ceasefire negotiations and not to put forward new principles that contradict what was previously agreed upon. Furthermore, a senior source claimed Israel is wasting time in formal meetings to lure the Israeli public opinion away from reaching a deal, while a Hamas senior official cited by Al Jazeera said that Hamas awaits a response from mediators on proposals introduced to Israel.
• Israeli strikes on Gaza City killed at least 17 and wounded 50, according to health officials. It was also reported that at least 71 Palestinians were killed and 289 injured in an Israeli attack on Khan Younis which targeted Hamas military chief Mohammed Deif. Furthermore, Hamas said that those killed in Khan Younis were civilians and the attack was a grave escalation, while it added that the attack showed Israel wasn’t interested in reaching a ceasefire agreement.
• Israeli military official said it was still verifying the result of a strike on Hamas military chief Mohammed Deif, while Hamas denied the killing of its top commander. It was later reported that the Israeli military said Khan Younis Brigade commander Rafa Salama was killed on Saturday by the Israeli strike on Gaza and Israel’s military chief said Hamas is trying to hide the results of the strike on its armed wing commander Deif.
• Syrian army said one soldier was killed and three others were injured in Israeli strikes on military sites and a residential building in Damascus.
• Yemen’s Houthis said they conducted military operations in the Gulf of Aden and Israel’s Eilat.
• US State Department announced on Friday new sanctions targeting Iran's chemical weapons research and development.

Geopolitics: Other

• Kremlin spokesman Peskov said Russia is able to respond to the US deploying long-range missiles in Europe, while he warned that European capitals could be victims of the US placing long-range missiles in Europe, according to TASS.
• Chinese and Russian naval fleets recently conducted the 4th joint sea patrol in the western and northern Pacific Ocean, according to Chinese state media.
• China Maritime Safety Administration issued a navigational warning barring entry into some waters of the South China Sea where military exercises will be held from 12:00 local time on July 16th to 11:00 local time on July 17th.
• North Korean Defence Ministry condemned a joint statement by South Korea and the US on nuclear guidelines, according to KCNA.

US Event calendar

• 08:30: July Empire Manufacturing, est. -8.0, prior -6.0

Central Bank Speakers

• 12:30: Fed’s Powell Interviewed by David Rubenstein
• 16:35: Fed’s Daly Speaks in Q&A on Economy, Tech

DB's JIm Reid concludes the overnight wrap

I'm actually taking the day off today, after this goes to press, as I've been ordered to join the family at a Theme Park. I hate, hate, hate rollercoasters so nothing would give me more pleasure than being at work instead. I'm going to be shattered too as I was up late watching England lose the final of the Euros last night. I'm used to such occurrences but one of my 6yr old twins was in floods of tears for an hour after the game. I had to comfort him while trying not to say "get used to it son". Interestingly the other identical twin who is equally obsessed with sport didn't bat an eyelid.

I'll avoid all rollercoaster cliches but the week starts off with the financial world assessing what the failed assassination attempt on Donald Trump means for the Presidential race and for markets. Real Clear Politics has the probability of a Trump victory increasing from around 55% on Friday to around 65% as we type. On a state basis, the shooting took place in Pennsylvania, one of the three most important battleground states and one Biden almost certainly needs to win to be President given where current polling is. Before the weekend Trump was around 3.5% ahead in the state in the latest poll of polls. When Biden performed poorly in the debate 2 and a half weeks ago, Treasuries sold off 20bps in a couple of sessions as markets looked to price in a more fiscally loose Trump clean sweep. Since then there has been positive inflation data which has reversed that sell-off. With Japan closed overnight there is no US bond trading but Treasury futures are falling and are giving up much of the gains seen after Thursday's weak CPI print so expect yields to open a handful of basis points higher. S&P 500 (+0.19%) and NASDAQ 100 (+0.26%) futures are edging higher along with the dollar index (+0.12%).

Outside of the Presidential race, the most consequential event of the week could come today as Fed Chair Powell is interviewed at the Economic Club of Washington DC at 5pm London time. Will his tone take a notably dovish shift given the soft CPI print last week. Our economists new Fed forecasts would suggest he might as they now expect three cuts in the remainder of 2024 (Sep, Nov, Dec) as a mid-cycle adjustment before three more from September 2025. See "Keeping the expansion alive with 75(bps) before '25" for more. Eight other FOMC voters will also be on the radar this week (see them detailed in the diary at the end) so we'll have a good idea of whether the Fed are moving direction by the end of the week. Interestingly, our economists point out that back in December 2023 and March 2024 the Fed median forecasts from the SEP expected 75bps of cuts this year with unemployment at 4.0-4.1% and core PCE inflation 2.4-2.6% by year-end. Recent data suggest that reasonable year-end forecasts are now 4.0-4.2% for unemployment and 2.5-2.6% for core PCE.

Staying with central bankers, the ECB meets on Thursday with the council expected to vote to stay on hold for now. See our economists' preview here. Also watch for the quarterly ECB bank lending survey tomorrow. This has tentitatively turned more positive in the last couple of quarters, especially in the expectations component. In terms of the other main non-data highlights, earnings season in the US starts to build, China's Third Plenum starts today through to Thursday with all eyes on potential policies and reforms targeted at key economic issues including the property sector. On the same days the Republican National Convention will take place with the main event being the unveiling of the Vice President nomination and the reaction to the assassination attempt. Staying with politics, Wednesday sees the UK State Opening of Parliament and the King's Speech which contains the new government's legislative program for the year. The following day sees a European Parliament vote on whether European Commission President Von der Leyen gets a second term.

In terms of data and earnings, on a day by day basis the highlights are as follows. Today sees US Empire manufacturing, Eurozone IP with Blackrock and Goldman reporting. Tomorrow sees the very important US retail sales, the NAHB US housing index, German/EuroZone ZEW survey, Canadian CPI with BoA and Morgan Stanley reporting. Wednesday sees US IP, capacity ulitisation, building permits, housing starts, the Fed Beige Book, UK CPI, a 20yr UST auction with Johnson and Johnson and ASML the earnings highlights. Thursday sees the US Phili Fed index, jobless claims as ever, UK employment data, and with TSMC and Netflix reporting. Friday sees Japanese CPI, UK retail sales and public finance data, German PPI with Amex the earnings highlight.

Also of note will be the stock market after a fascinating week last week where the Mag-7 underperformed the index with the highlight being Thursday's largest performance gap between the S&P 500 and the equal weighted equivalent since November 2020, just after the Pfizer vaccine announcement. I did what I thought was a very good CoTD on Friday reminding readers of what happened to other sectors when the tech bubble burst in March 2000. The three "dullest" sectors (Consumer Staples, Healthcare and Utilities) had performed badly in the last few months of the bubble but rallied +25-35% in the final 9 months of the year as tech slumped. It wasn't until 2001 and 2002 that the wider market really slumped. So if tech does see a correction, the market will likely go down given their size, but several sectors could rally notably. See the CoTD from Friday here.

As we start the week, Asian equity markets are seeing low trading volumes with Japan on holiday. The Hang Seng (-1.30%) is leading losses following disappointing economic figures from China while the CSI (+0.07%) and the Shanghai Composite (+0.08%) are fairly flat alongside the KOSPI (+0.02%).

Coming back to China, GDP grew +4.7% y/y in the second quarter (the worst in five quarters), missing the +5.1% forecast and down from +5.3% growth in Q1, hampered mainly by weak consumer spending and demand. On a q/q basis, GDP in the April-June period rose +0.7% from the previous quarter, versus a revised growth of +1.5% in the January-March period. Other data showed that China’s retail sales slowed to +2.0% y/y in June (v/s +3.4% expected and the worst since December 2022) after advancing +3.7% in May, thus highlighting that the world’s second largest economy is struggling to boost consumption. Adding to the negative sentiment, China’s home prices fell again in June, declining -0.67% on the month with existing home prices declining -0.85%.

Meanwhile, industrial output rose +5.3% y/y (v/s +5.0% expected) in June from a year earlier, slowing from +5.6% in May, but above expectations at least. Overall the data means that there will be a lot to discuss at the Third Plenum this week.

Now recapping last week, the main story was around US inflation after the weak US CPI on Thursday (-0.1% vs +0.1% expected) was followed by a fairly sanguine June PPI on Friday. Although headline PPI climbed more than expected, by +0.2% month-on-month (vs +0.1% expected) and +2.6% year-on-year (vs 2.3% expected), the categories used to calculate PCE were on the weaker side. This narrative found further support from the University of Michigan’s preliminary inflation expectations results for July. 1yr expectations were in line with expectations at 2.9% (down from 3.0% last month) and 5-10yr inflation expectations dipped to 2.9% (vs 3.0% expected). The survey also showed consumers becoming slightly more pessimistic on the economic outlook, with consumer sentiment disappointingly dropping from 68.2 to 66.0 (vs 68.5 expected), its lowest level in 8 months.

Off the back of the weaker inflation data, investors dialled up their expectations of Fed rate cuts, with the total number of cuts expected by year-end up +12.6bps to 63bps on the week (+2.2bps on Friday). Markets moved to fully price in a 25bps cut by the September meeting, up from 72% on Monday, spurring a rally in US Treasuries. The 2yr yield ended the week down -15.4bps (and -6.3bps on Friday) to 4.45%, its lowest level since early February. 10yr yields followed suit, falling -9.5bps (and -2.7bps on Friday) to their lowest level (4.18%) since March. In Europe it was a similar story, as 10yr bund yields finished the week -5.9bps lower, although they lost some ground on Friday (+3.3bps).

Risk assets also got a boost with the S&P 500 rising +0.87% (and +0.55% on Friday). The big story within equities was a rotation away from tech mega caps after the CPI print. The Magnificent 7 index was down -1.71% on the week (despite +0.45% on Friday). By contrast, the equal-weighted S&P 500 was up +2.90% (+0.81% Friday), while the small cap Russell 2000 gained +6.00% (and +1.09% on Friday), its largest weekly gain since November. A notable underperformer within the S&P 500 on Friday were banks (-1.50%) after underwhelming results from Wells Fargo (-6.02%), JPMorgan (-1.21%) and Citigroup (-1.81%). Meanwhile, European stocks posted a solid rally, as the STOXX 600 recorded a gain of +1.45% (and +0.88% on Friday).

There were some notable moves in the FX space. The USD dollar index weakened amid prospects of more rate cuts, falling -0.75% (and -0.33% on Friday). This followed a -0.94% decline the week before, making it the weakest two-week run for the dollar YTD. On the other side, sterling reached its highest level against the dollar in almost year at 1.2911, and the strongest against the euro in almost two years at 1.1909. Elsewhere, the yen recovered by +2.4% against the dollar across Thursday and Friday (to 157.83) amid reported FX intervention, having hit a post-1986 low earlier in the week.

Tyler Durden Mon, 07/15/2024 - 07:56

Swatch Shares Crash Most In Four Years As Profits Plunge On China Downturn 

The worsening economic slowdown in China, a massive market for luxury goods such as watches and handbags, weighed on top luxury stocks in Europe on Monday. Shares of Swiss watchmakers and other luxury companies are under the most pressure. 

Swatch Group AG, whose brands include Omega, Blancpain, and jeweler Harry Winston, reported a stunning 70% plunge in operating profit and a 14.3% plunge in sales for the first six months of the year compared with the same period last year. 

Here are the highlights of the earnings report for the first six months of the year

• Net sales of CHF 3 445 million, -14.3% against the previous year at current exchange rates 

• (-10.7% at constant rates). Negative currency impact of CHF -145 million. 

• Operating profit of CHF 204 million (previous year: CHF 686 million). 

• Operating margin of 5.9% (previous year: 17.1%).

• Net income of CHF 147 million (previous year: CHF 498 million). 

• Net margin of 4.3% (previous year: 12.4%).

• Net liquidity1) of CHF 1 434 million (December 2023: CHF 1 988 million).

• Equity of CHF 12.2 billion (December 2023: CHF 12.3 billion).

• Equity ratio of 85.8% (December 2023: 86.1%).

• Decline in sales triggered by the sharp drop in demand for luxury goods in China (including Hong Kong SAR and Macau SAR). Only the Swatch brand bucked the negative trend and even increased its sales in China by 10%.

• Sales outside of China (including Hong Kong SAR and Macau SAR) in local currencies at the level of the record year 2023. Total sales 5.6% above the first half of 2022, at constant exchange rates.

• Operating margin in the Watches & Jewelry segment (without Production) at 11.0%.

• Strongly negative operating result in the Production segment in the short term due to the deliberate maintaining of all production capacities and renouncing from layoffs.

• In June, the Group's operating margin already rose again to over 15%, which is a positive sign for the second half of the year 2024.

Swatch shares in Zurich trading plunged as much as 11%, the most since March 2020, when governments worldwide began locking down economies over a virus likely from a Chinese lab.

Shares are back to Covid lows. 

Largest daily decline since the first round of Covid lockdowns in early 2020. 

For the second half of the year, Swatch warned, "The Chinese market (including Hong Kong SAR and Macau SAR) to remain challenging for the entire luxury goods industry until the end of the year." 

Swatch Group Chief Executive Nick Hayek told Bloomberg that the downturn in demand for luxury goods is mainly centered in China. "The big impact is really mainly China," he said.

RBC analyst Piral Dadhania said Swatch's results are worse than expected. He expects "material earnings downgrades" are incoming. 

More from Dadhania (courtesy of Bloomberg):

• Swatch (sector perform, PT CHF240). He expects material earnings downgrades on the back of this

• Sees consensus Ebit reduced by ~30% and a more challenging than expected 2H24

• In Europe, wholesale declined 10% on fears of excessive stock and retailers being more reluctant to reorder

• Meanwhile Japan, Korea and others grew

Here's what other Wall Street analysts are saying:

Vontobel’s Jean-Philippe Bertschy (hold, PT CHF220)

• Says this was an ugly half year for Swatch Group in all respects

• Co's more than 10% sales decrease leads to significant negative operating leverage and more than 3x operating profit decline

• Also notes significant loss in market share in terms of Swiss watch exports

• Notes net cash is melting away

ZKB’s Patrik Schwendimann (market perform)

• Says there will likely be significant profit revisions

• Says China causes massive slump

Meanwhile, luxury companies have faced sliding demand for watches and handbags due to China's slowing economy, as consumers in the world's second-largest economy pull back on spending. 

The latest economic data from China shows that gross domestic product expanded by 4.7% in the second quarter compared with the same period a year earlier, missing forecasts despite Beijing's countless efforts to boost economic growth and, most importantly, consumer confidence. 

Also, on Monday, Burberry's shares plunged more than 15% after the company replaced its CEO. The British luxury clothing brand also warned about first-half losses as it continues to suffer waning demand from its China unit.  

Tyler Durden Mon, 07/15/2024 - 07:45

5 Reasons For A New Gold Playbook

Authored by Ronni Stoeferle via VonGreyerz.gold,

The rise in the gold price this spring was undoubtedly spectacular. In just a few weeks, the gold price rose by almost 20% in USD terms, with a gain of 21.7% for the first half of the year alone. In EUR terms, gold increased 16.4% in the year’s first six months.

The showdown in the gold price we predicted in the In Gold We Trust Report 2023 has passed. What is remarkable is that all of this is happening in an environment where, according to the previous playbook, the gold price should have fallen. The collapse of the correlation between the gold price and actual interest rates raises many questions. In the old paradigm, it was unthinkable that the gold price would trend firmer during sharply rising real interest rates. Gold and gold investors are now entering terra incognita.

Traditional  correlations are breaking down

In addition to the high negative correlation between the gold price and US actual interest rates, the once strong link between investor demand from the West and the gold price has dissolved in recent quarters. Given gold’s record run, one would have expected ETFs to register record inflows. First, things turn out differently, and second, they unfold contrary to expectations: from April 2022 to June 2024, there was a net outflow of almost 780 tons or 20% from gold ETFs. The old gold playbook shows gold should be around USD 1,700, given the fall in ETF holdings.

Consequently, a vital element of the new gold playbook is that the Western financial investor is no longer the marginal buyer or seller of gold. The significant demand from central banks and private Asian investors is the main reason why the price of gold has thrived even in an environment of rising real interest rates.

A reduction in gold ETF holdings when actual interest rates rise is undoubtedly a rational decision from the point of view of the players in the West, provided they assume that:

1. They are not exposed to increased counterparty risks and, therefore, do not need a default-proof asset;

2. Actual interest rates will remain positive in the future, and a second wave of inflation will not occur;

3. They suffer opportunity costs if they underweight traditional asset classes such as equities and bonds or even “concrete gold” (=real estate) at the expense of gold.

In our opinion, all three assumptions should be questioned – and that sooner rather than later.

The marginal actor in the gold market moves from West to East

The global East, on the other hand, is becoming increasingly important. This is hardly surprising given that the West’s share of global GDP continues to decline due to weakening growth and an ageing population.

In addition, many Asian countries have a historical affinity for gold (India and the Gulf States, mainly, are worth mentioning). Still, China is increasingly discovering its preference for gold.

In 2023, demand for gold jewellery totalled 2,092 tonnes. China accounted for 630 tonnes, India for 562 tonnes, and the Middle East for 171 tonnes. Together, these amounts to almost two-thirds of the total demand. Of the nearly 1,200 tonnes of gold bars and coins that were in demand in 2023, almost half went to China (279 tonnes), India (185 tonnes), and the Middle East (114 tonnes).

Gold is also benefiting from other developments. China is discovering gold as an alternative retirement provision precisely because of the structural problems in the real estate market. Gold in beans is currently trendy, especially among China’s youth. The strong demand for gold from Asian central banks is another pillar of this epochal change. These changes are also why certainties, such as the close correlation between the gold price and actual US interest rates, are disintegrating.

Central banks are becoming increasingly crucial for gold demand

Central bank demand accelerated significantly in the wake of the freezing of Russian currency reserves immediately after the Ukraine war outbreak. As a result, central bank demand for gold reached a new record high of over 1,000 tons in 2022, which was only narrowly missed in 2023. Q1/2024 was then the strongest first quarter since records began. It is, therefore, hardly surprising that the share of central bank demand in total gold demand has increased significantly: from 2011 to 2021, the share of central banks fluctuated around the 10% mark, whereas in 2022 and 2023, the share amounted to almost 25%.

The profound distortions triggered by the sanctioning of Russian currency reserves will keep central bank demand for gold high for some time. This is also shown by the recently published World Gold Survey 2024 by the World Gold Council (WGC). According to the survey, 70 central banks assume that central bank gold reserves will continue to grow. Geopolitical instability is the third most crucial reason for central banks’ investment decisions. And geopolitical instability will undoubtedly be with us for some time to come.

The debt bomb is ticking – also increasingly in the West

We are entering a new era, particularly evident from developments in the countries with the highest total debt (government, non-financial corporations & households).

Japan occupies the inglorious top spot with just over 400%. The dramatic fall in the value of the Japanese yen -12.3% in the first half of 2024, -32.6% in the past five years and even around 50% compared to the almost all-time high in 2012 – is a symptom of Japan’s increasing imbalance. Accordingly, the economic thermometer in the form of gold prices in the Japanese yen is beating intensely. At the end of June, the gold price had risen by 28.7% since the beginning of the year. Since 2023, it has increased by just over 50% and around 165% since 2019.

France is in second place worldwide and first place in Europe with 330%, making it a much bigger problem child than Italy, which is much maligned in the media. Italy’s total debt is around 80 percentage points lower. The unclear political situation following the surprising election victory of the far-left New Popular Front in the new elections to the National Assembly unexpectedly called by the French President will further exacerbate France’s debt situation.

In addition to the continued, highly loose fiscal policy, the US is in an increasingly tricky domestic political situation just four months before the presidential elections, following the disastrous performance of US President Joe Biden in his first TV debate with his predecessor and challenger – Donald Trump. This will also make solving the US debt problem more difficult, especially as Donald Trump, who is leading in the polls, described himself as the “king of debt” a few years ago. An easing of the situation is, therefore, not to be expected. On the contrary, the next major debt crisis could affect some leading industrialized nations.

The new 60/40 portfolio

The investment environment for gold investors has fundamentally changed. The reorganization of the global economic and political order, the dominant influence of emerging markets on the gold market, the reaching of the limits of debt sustainability, and possibly multiple waves of inflation are causing gold to appreciate. It is, therefore, also time to adapt the traditional 60/40 portfolio to these new realities.

Aside from gold, we also see other alternative asset classes, such as commodities and Bitcoin, as beneficiaries of the new gold playbook. Therefore, we are convinced these two asset classes are indispensable in preparing a portfolio for the new playbook. A suitable portfolio comprises 60% equities and bonds + 40% alternative asset classes.

Our interpretation of the new 60/40 portfolio for long-term investors provides for the following allocation:

Source: Incrementum AG

This marks a clear departure from traditional 60/40 portfolios. Of course, this positioning is not a rule set in stone but rather a guideline based on current market conditions and will evolve with time and changes in the currency environment. The new playbook applies as long as we are in a period of currency instability characterized by vast debt burdens and above-average inflation volatility. In other words, a higher proportion of hard currencies seems necessary until we return to an environment with a stable hard currency – be it a sovereign hard currency or a gold/Bitcoin standard.

Conclusion

We are currently witnessing a fundamental transformation. Old certainties are fading; established strategies are failing. The willingness to question established patterns of thought and break new ground often requires courage, but for those who recognize the signs of the times and dare to change, implementing the new gold playbook opens the door to growth and stability.

In principle, the new gold playbook suggests that the portfolio’s allocation to alternative asset classes should be higher to align appropriately with changes in the investment environment.

Tyler Durden Mon, 07/15/2024 - 05:00

Visualizing The Surge In Defense Spending Of Non-US NATO Members

Non-U.S. members of the North Atlantic Treaty Organization (NATO) have increased their expenditure on defense, with a big spike after the Russian invasion of Ukraine in 2022.

This graphic, via Visual Capitalist's Marcus Lu, visualizes the annual percentage change in defense expenditure among NATO members (excluding the U.S.) since 2012 in real terms.

Data is from NATO.

Non-U.S. NATO Members are Ramping Up Defense Spending

NATO members have significantly increased their defense spending over the past two years, likely due to the ongoing conflicts in Ukraine and, more recently, in Israel.

Twenty-three of NATO’s 32 members are now meeting the minimum level of annual defense spending (2% of GDP) stipulated for countries in the alliance. This is up significantly from 10 member countries in 2023.

Estimates for 2023 and 2024. All percentages are inflation-adjusted using 2015 prices as base year.

The majority of these expenditures will finance troops. It also includes payment of pensions, expenditures for peacekeeping and humanitarian operations, and investment in research and development (R&D).

Despite the growth in expenditures by non-U.S. members, America is still the most significant contributor to NATO’s budget. In 2023, the U.S. accounted for $860 billion spent by member countries in the organization, representing 68% of the total expenditure. This amount is over 10 times more than that of the second-placed country, Germany.

If you enjoy posts like these, check out Breaking Down $1.3T in NATO Defense Spending, which visualizes the expected defense expenditures of NATO members in 2023.

Tyler Durden Mon, 07/15/2024 - 04:15

UK's Labour Party Confirms Brexit Reversal Is Dead And Buried

Authored by Mike Shedlock via MishTalk.com,

I was wondering when Brexit would come up. It has already and I am pleased to confirm the Brexit reversal idea is dead and finally buried.

Not In His Lifetime

[Via Eurointelligence] Already assured of victory at today’s general election in the UK, Sir Keir Starmer has started to make manifesto pledges for beyond 2029. Yesterday he said that the UK would not rejoin the EU within his lifetime, nor would it try to become an associate member of the single market or the customs union.

We are not surprised, except that the issue came up so early. The reason to shut this down right now and as conclusively as he did is that keeping the door open for the future has policy consequences today.

To rejoin even in the medium-distant future would have required him to start closing the massive regulatory gap that has opened since Brexit almost immediately. Most of that gap was due to divergence by the EU itself. The UK did not mirror the 50 or so laws of the Green agenda. It adopted the data protection regulation – GDPR – in the last decade, and maintains its own version to this day. But the UK does not have the EU’s digital markets act, or EU regulation on AI and cryptocurrencies. Nor does have regulation on what is euphemistically called corporate social responsibility – making companies liable for human rights violations in their supply chains. For the UK to rejoin the EU even during a second term would require such a high degree of regulatory convergence that it would dominate all other policy areas.

We see another reason in the EU’s Luddite tendency, its attachment to 20th century technologies and corporatism. We always felt that the undoubtedly large economic gains from goods trade integration need to be set against the opportunity cost of the EU’s failure to partake in the 21st century digital economy. 

The single market, as it is constituted today, is very much a product of 20th century product-focused regulatory thinking.

The Right Decision

Who in their right mind wants to adopt the EU’s green agenda? The EU’s nannycrat legislation on corporate social responsibility? On digital rights? On cryptocurrencies? On anything the EU does?

Those nostalgic for the EU membership need to address those questions.

Congratulations to Boris Johnson for getting Brexit done. Few believed he would.

His problem was not knowing what to do with Brexit once it happened.

Simultaneous Burial

It’s always a mistake to let EU nannycrats set your policy. That’s why Brexit was smart policy even if takes a while to prove that.

Not only did Starmer finally bury EU membership (the Wicked Witch of the East), he buried an even worse customs union idea (the Wicked Witch of the West) in a simultaneous burial.

Congratulations!

Tyler Durden Mon, 07/15/2024 - 03:30

International Oil Companies Caught In Kurdish Smuggling Web

Authored by Tsvetana Paraskova via OilPrice.com,

• A Reuters investigation found that over 1,000 tanker trucks are smuggling at least 200,000 barrels of Kurdish oil per day to Iran and Turkey.

• The smuggling operation generates an estimated $200 million in monthly revenue, but the destination of the funds remains unclear.

• The illicit trade has flourished since a pipeline to Turkey was closed in March 2023 due to a dispute over export rights.

Kurdistan hasn’t been able to export its oil via a pipeline for more than a year now, but crude continues to flow out of the semi-autonomous Iraqi region—on tank trucks to the border with Iran. 

More than 1,000 such tank trucks are estimated to be transporting at least 200,000 barrels per day (bpd) of Kurdish oil to Iran and Turkey, a Reuters investigation has found.  

Although the price of the crude being smuggled out of the northern semi-autonomous region is reportedly around $40 per barrel in these murky deals, the trade is lucrative, especially compared to the hardships the Kurdistan regional government has seen without oil revenues over the past year. 

The smuggling is estimated to be bringing around $200 million per month, according to Reuters, whose reporters talked with more than 20 people, including oil engineers, oil industry sources, traders, government officials, politicians, and diplomats. 

Some of these sources told Reuters that the oil smuggling was likely happening with the knowledge of the regional and federal governments. Once in Iran, the oil is loaded onto ships at the Iranian ports in the Gulf at Bandar Imam Khomeini and Bandar Abbas, or transferred by road to Afghanistan and Pakistan, industry, political, and diplomatic sources told Reuters. 

Other sources said that no one really knows what happens with the $200 million monthly revenue from these operations. 

The smuggling business has thrived since the closure of the pipeline route to the Turkish port of Ceyhan, which the semi-autonomous region of OPEC’s second-largest producer used to ship its oil abroad until March 2023. 

These exports via pipeline to Turkey, of about 450,000 bpd, ceased last year after they were shut in in March 2023 due to a dispute over who should authorize the Kurdish exports. 

The impasse followed an International Chamber of Commerce ruling in March 2023 in a dispute between Turkey and Iraq regarding Kurdistan oil. The ICC ruled in favor of Iraq, which had argued that Turkey should not allow Kurdish oil exports via the Iraq-Turkey pipeline and the Turkish port of Ceyhan without approval from the federal government of Iraq.

Now, only Iraq’s state oil marketing firm SOMO has the right to sell crude oil produced anywhere in Iraq. 

And it looks like the re-opening of the pipeline to Ceyhan on the Turkish Mediterranean coast is not a priority for politicians in Baghdad. 

In November 2023, Norwegian firm DNO, one of the six members of the Association of the Petroleum Industry of Kurdistan (APIKUR), said that the international oil companies operating in Kurdistan would not be producing oil for exports until they have clarity about overdue and future payments and sales terms. 

Some companies have resumed oil production for the local market. 

But industry sources told Reuters that the local buyers, approved to buy the crude, sell it via middlemen for export without the international firms knowing of these re-selling operations. 

The smuggling adds between 200,000 bpd and over 300,000 bpd to Iraqi supply, as estimated by various Reuters sources. Privately, Iraqi officials have cited this trade as one of the reasons why Iraq – OPEC’s second-largest producer – has failed to limit its output under the OPEC+ deal so far. 

Iraq hasn’t complied with the current cuts despite continuously pledging it would show better discipline going forward.  

Compensation plans have been prepared for Iraq, as well as non-OPEC producer Kazakhstan, which is part of the OPEC+ group but has failed to stick to its quota, too. Between January and March 2024 alone, Iraq’s cumulative overproduction stood at 602,000 bpd, per OPEC’s estimates. 

Iraq has a 4-million-bpd cap on production. It pumped 4.189 million bpd in June—down by 25,000 bpd from May, per OPEC’s secondary sources in its latest monthly report released this week. But that’s nearly 200,000 bpd above its target under the OPEC+ deal. 

Tyler Durden Mon, 07/15/2024 - 02:45

Iran's "Moderate" President Is Just Another Hardliner-In-Disguise To Glide In Its Nuclear Weapons Program

Authored by Con Coughlin via The Gatestone Institute,

Before the Biden administration gets too carried away celebrating the election of Iran's so-called moderate president, it should understand that Masoud Pezeshkian's victory is nothing more than a ploy to distract world attention away from Iran's nuclear weapons programme.

While Iranian voters have understandably been focused on electing a new president to replace hardliner Ebrahim Raisi, who was killed in a mysterious helicopter crash in May, the regime has been intensifying its efforts to acquire nuclear weapons.

Pictured: Pezeshkian (front left) visits the shrine of the Islamic Republic's founder Ayatollah Ruhollah Khomeini on July 6, 2024 in Tehran. (Photo by Majid Saeedi/Getty Images)

Reports that Iran has now acquired sufficient quantities of enriched uranium to build nuclear warheads have been confirmed by Rafael Grossi, director general of the International Atomic Energy Agency (IAEA), the UN-sponsored body that is responsible for monitoring the mullahs' nuclear programme.

Speaking in an exclusive interview with London's Sunday Telegraph at the weekend, Grossi said of Iran's long-standing effort to enrich uranium to the level required to develop nuclear warheads, "They have enough material for a few warheads already."

He also warned that it could take Iran just a month or so to assemble a nuclear warhead, given the progress they have made in recent months in their enrichment programme.

"[T]hey could do it in a matter of perhaps a month or a bit more," he conceded, adding that, so far as he knows, the Iranians "do not have nuclear weapons at this point."

The acknowledgement by an internationally respected body such as the IAEA that Iran has now acquired sufficient material to build several nuclear warheads, which could be assembled within the space of a month, is a devastating indictment of the Biden administration's policy of appeasement towards Iran since US President Joe Biden took office.

Rather than confronting Iran over its constant acts of aggression, and Tehran's constant breaches of its commitments to the IAEA over its nuclear programme, Biden has instead concentrated his efforts on engaging with the Iranian regime in the vain hope of resurrecting the flawed JCPOA "nuclear deal" agreed on by the Obama administration back in 2015.

Biden's refusal to hold Iran accountable for its actions has resulted in the Iranian regime receiving billions of dollars in added revenue because of Washington's decision not to enforce oil sanctions against Iran. As a result, the extra funds received by Iran have been used to fund the regime's terrorist networks across the globe, including Hamas in Gaza and Hezbollah in Lebanon.

Moreover, rather viewing the IAEA's confirmation that Iran has now acquired sufficient nuclear material to produce nuclear weapons as a justification for taking a harder line towards Tehran, Pezeshkian's appointment as the country's next president will encourage the Biden administration to maintain its policy of appeasement towards Tehran.

For while Pezeshkian's election victory has been hailed by many world leaders as an indication the Iranian regime is seriously interested in reform, the reality is that the election of Iran's new president is nothing more than business-as-usual so far as the Iranian regime is concerned.

Far from being a moderate politician who is interested in reform, as Iran's apologists would like the world to believe, Pezeshkian's career both as a heart surgeon and, more recently, health minister has been defined by his unwavering loyalty to the country's Supreme Leader, Ayatollah Ali Khamenei, as well the Islamic Republic's hard-line policies.

As Pezeskhian himself remarked immediately after his victory was announced, "I believe in the Supreme Leader, I am totally following him," he said.

The brutal reality is that the whole notion that Iran has just elected a more moderate president is nothing more than a confidence trick perpetrated by the regime's hardliners who, after the intense pressure they have come under in recent months because of the brutal repression of anti-regime protesters, realised they needed to take drastic measures to justify the regime's legitimacy.

Giving the appearance, therefore, that the Iranian people have got their wish of electing a "moderate" leader will go some way -- or so they hope -- to alleviating the pressure on the regime, thereby allowing it to concentrate its energy on its real priorities, such as its efforts to acquire nuclear weapons.

One of the fundamental principles of Iran's Islamic constitution is, after all, that ultimate authority lies not with the president but with the country's Supreme Leader.

Such is the control exercised by the Khamenei's hardline supporters over the entire Iranian political system that all candidates -- Pezeshkian included -- must first be vetted by the Guardian Council, the custodians of the Islamic revolution who report directly to the Supreme Leader.

As a senior official with Iran's Islamic Revolutionary Guard Corps admitted to The Telegraph, in the wake of the election, that Pezeshkian had only been allowed to compete in the election to "legitimise the vote".

"No one in the Guardian Council or the office of the Supreme Leader did not expect that coming, he was just approved to boost turnout," one official said.

It is vital, therefore, that the Biden administration fully understands the cynicism shown by Iran's hardliners in seeking to legitimise their brutal regime before making any further overtures to the country's so-called moderate president.

In the uncompromising world of Iran's autocratic Islamic republic, there is no such thing as a moderate Iranian president -- a fact that Iran's long-suffering people know only too well.

Tyler Durden Mon, 07/15/2024 - 02:00

China's GDP Growth Unexpectedly Tumbles As New Home Prices Plunge Most In 9 Years

China’s economic growth collapsed to just 4.7% YoY in the second quarter, missing all but one economist's forecast, as the world's second largest economy is slowly but surely grinding to a halt (absent a bazooka stimulus).

GDP, which rose 5.3% in the first quarter, had been expected to rise 5.1% based on economists polled by Bloomberg; instead growth slumped to just 4.7%, the lowest growth since March 2023.

In sequential terms, GDP fell to 0.7% QoQ in Q2 from 1.5% in Q1. Industrial production growth remained solid at +5.3% yoy in June, despite a moderation from +5.6% yoy in May, thanks to strong export growth.

China has grappled with weak consumer demand and a prolonged property slowdown, prompting greater intervention from policymakers in recent months, but in the absence of a bazooka stimulus - both fiscal and monetary - it is unlikely that anything will change and growth will continue to cool quarter after quarter, until there is a brutal recession and/or civil unrest.

Elsewhere, industrial production rose 5.3% in June, slightly above expectations of 5.0% but below the 5.6% increase in Q1, while retail sales rose just 2.0% missing expectations of 3.4% by a wide margin and in line with sluggish tourism revenue growth during the Dragon Boat Festival and the soft 618 Online Shopping Festival. Fixed Investment rose 3.9%, right on top of reduced expectations, and reflecting the tug-of-war between policy support, adverse weather conditions and still-depressed property investment.

Separately, new home prices in China fell 4.9% year on year last month, the fastest pace of decline in nine years, according to Bloomberg calculations, while new construction starts and property investment were down 23.7% and 10.1%, respectively, in the first half of the year.

According to Goldman, taking Q2 GDP and June activity data together, "domestic demand remained sluggish despite strong exports, and more policy easing is necessary through the remainder of this year, especially on the fiscal and housing fronts."

The data release came as the Chinese Communist party’s Central Committee on Monday launched its third plenum, a four-day meeting in which the country’s leadership is expected to set the direction of economic policy. The last such event was held in 2018.

Beijing has set a full-year economic growth target of about 5%, and unless Beijing launches a bazooka stimulus, it has precisely zero chance of hitting it.

Tyler Durden Sun, 07/14/2024 - 23:30

Escobar: The Yemen-Russia Riddle

Authored by Pepe Escobar via The Cradle,

Sanaa is eagerly engaging with Moscow in a bid to expand its astounding military gains into both the economic and diplomatic realms. While trade with Russia may be integral to blunting the effects of the siege of Yemen, Sanaa also views membership in the BRICS as a ‘golden opportunity’ to establish lasting Persian Gulf security.

Yemen’s stellar strategic maneuvering in defense of Palestine from its dramatically ascendant role in West Asia’s Axis of Resistance is acquiring the contours of an epic odyssey – eagerly scrutinized by the Global Majority.  

As if the unprecedented humiliation of the US Navy in the Bab al-Mandab and the Red Sea was not enough, Ansarallah targeted an Israeli ship with a Hatem-2 hypersonic missile, a remarkable advancement in indigenous technological development.

These prodigious strategic-military advances displayed by Ansarallah at the same time revived the always simmering, unfinished war and blockade launched against Yemen in 2015 by Saudi Arabia and the UAE with the usual US and UK backing.

Riyadh abhors the Yemeni resistance like the plague. Instead of Sanaa, Yemen’s recognized capital city, it supports an anti-Ansarallah’ government’ sitting in Aden, sort of recognized by the ‘rules-based international order.’ In truth, though, that government actually sits in a luxury Riyadh hotel.

Ansarallah has tried hard to negotiate a prisoner exchange involving captured Saudi pilots traded for jailed Hamas members in Saudi Arabia. Riyadh has not only refused but threatened that bank transfers to and from Yemen would be blocked, and Sanaa’s international airport and sea ports would be shut down.

Ansarallah’s response was stark: if Yemeni banking is blocked, the Saudi Arabian banking system would be destroyed. If Sanaa airport is targeted, the same would happen to Saudi airports.

So, the war that never ended is suddenly and ominously back on track. Ansarallah would have no problem targeting Saudi Arabia’s oil production as retaliation to a full blockade – considering its proven capability with brand-new missiles and naval drones. The consequences for global oil markets would be catastrophic.  

Two delegations come to Moscow…

Yemen represents the classic case of a fierce resistance actor in the context of the emerging multipolar, multi-nodal world. So that begs the question of where multipolar/multi-nodal champion Russia stands when it comes to Yemen’s fight.  

Which brings us to the fascinating case of two Yemeni delegations that recently visited Moscow.

One of them, led by a senior Ansarallah official, met in Moscow with the Russian President’s Special Envoy to the Middle East (West Asia) and Africa, Mikhail Bogdanov.

They discussed not only the ongoing Gaza genocide but also what Ansarallah describes as “the American–British aggression on Yemen,” a reference to ongoing western naval operations in the Red Sea that have – unsuccessfully – sought for months to thwart Yemeni ops against Israel-bound and Israel-associated shipping vessels. A retaliatory siege, if you will.

The Yemenis reassured the Russians that their maritime operations “do not pose a threat to international navigation or target anyone, but rather support the Palestinian people and respond to the American and British airstrikes on Yemen.” Ansarallah praised Russia’s understanding and expressed gratitude for: 

Russia’s position against the American–British aggression on Yemen and their support for the humanitarian and political process in our country. We also reviewed the outcomes of the de-escalation efforts between Yemen and the aggressor countries and highlighted the necessity of reaching a comprehensive solution that ensures Yemen’s unity and sovereignty.

All of the above concerns what could be described as the Yemeni political process delegation. In Oman, while waiting to collect their Russian visas, they crossed paths with another Yemeni group: let’s call it the geoeconomics delegation.

This delegation was led by Dr Fouad al-Ghaffari, special advisor to Yemeni Prime Minister Dr Abdulaziz Saleh bin Habtoor’s National Salvation Government in Sanaa.

Habtoor is a leading Yemeni intellectual and the author of the remarkable Undeterred: Yemen in the Face of Decisive Storm, which highlights key details of the war launched in 2015 “by a hostile coalition of 17 countries,” fully supported by the US and the EU, and complete with air, sea, and land blockades.

The prime minister explains the economic war, as the Yemeni Central Bank was transferred to Aden; the biological war, which led to a horrendous break out of cholera across the nation; and how the Arab League was bought and paid for all the way. He stresses how “this is the first war in History in which all the rich Arab countries stand together under the cloak of the most powerful imperialist country in an unsacred coalition against the poorest country in the Arabian Peninsula.”  

That war is far from over. Yemen is suffering badly. The specter of a large famine has not disappeared. So, the focus of Dr Ghaffari’s delegation clearly had to be humanitarian and centered on food security.  

He tells The Cradle what Yemen expects to receive from Russia’s Ministry of Agriculture: 

We have food to export and import from Russia. We should have a shipping line between Russia and Yemen at Hodeidah port. Last month, another Yemeni delegation was in China. There were good contacts, and they are now developing an agreement. Here, I came as an adviser to the Prime Minister, and parallel to the Russian presidency of BRICS, I came to highlight the importance of developing an agriculture connection – and food security connection – between us and Russia. We need Russian expertise on all this. We have special products in Yemen that we want to export – and now we are fighting a boycott by the US and the west. We want Russian products instead of products coming from Europe.

Ghaffari adds, “Some Russian products do come to Yemen – but they don’t come directly. They come from Gulf countries or African countries. But not as Russian products. In Yemen, there are no Russian products. Now, after 96 years of Russia–Yemen relations, Yemen is defining itself as a good player in our region. It’s a time for BRICS to unite – and to fight back against the US model.”

Yemen’s BRICS drive

Dr Ghaffari further explains what, in effect, breaks down as the possible geoeconomic integration of Yemen: 

We had good signs from official contacts, and the Prime Minister in Yemen welcomes that. The objective is to close a deal with Moscow. We have a vision. We want to explain this vision of how to bring the North and South of Yemen together into one railway. This brings us back to 15 years ago when Russian Railways had a project. We bring oil, gas, [and] agriculture investment to seaports. Maybe Yemen could do that by itself in 50 years, but with good help, we can do it in one or two years.

He says a long discussion was also held in Moscow on Yemen’s desire to apply for BRICS membership – and the pitfalls involved:

We have been working close to BRICS for 10 years in Yemen, because we believe in this vision, if we have a chance to become a member. I am the only adviser to the Prime Minister for BRICS advancement. We want to work with BRICS. We now have a golden opportunity.

The prime minister’s office in Sanaa has sent letters to the Russian Ministry of Foreign Affairs expressing its desire to join BRICS. If these contacts develop, Moscow could certainly invite Sanaa to participate as an observer in the BRICS summit in Kazan in October. 

But does the recent BRICS membership of Saudia Arabia and the UAE create an instant obstacle in Yemen’s pathway to joining the multipolar powerhouse?

Ghaffari doesn’t seem to think so, linking Yemen’s BRICS drive to establishing “security in the Gulf. The Emirates and Saudis are now in BRICS. BRICS could take all of us together.”

So Dr Ghaffari’s delegation visited Russia with several objectives: to study the opportunity of establishing a joint agricultural company, to discuss import and export opportunities and shipping methods, to discuss cooperation within the BRICS strategy for economic partnership in agriculture, to learn about the Russian experience in boycotting western products; to introduce the specificity of Yemeni products, especially coffee, honey, and cotton into the Russian market, and to discuss the construction of one of the Yemeni dams.

Add to this a key diplomatic objective: to discuss the possibility of a Yemeni representative attending the upcoming BRICS summit. “We stand with Russia. Russia should have a complete picture of what happens in Yemen. If Yemen is not at the summit, something would be missing in the region.”

Moscow, Beijing, and Tehran would certainly agree. But then hardcore geopolitical reality calls. The Russian Federation, forced to protect an extremely delicate geopolitical balance between Iran and Saudi Arabia inside BRICS, may still be far from solving the Yemen riddle.

Tyler Durden Sun, 07/14/2024 - 23:20

Chinese Regulators Intensify Efforts To Tighten Control Over Financial Markets

By Charlie Zhu and Helen Sun, Bloomberg Markets Live reporters and strategists

Three things we learned last week:

1. Chinese regulators intensified efforts to tighten their control over financial markets. The People’s Bank of China effectively narrowed its interest rate corridor, placing a much higher floor on the costs banks pay to borrow overnight from each other.

For longer-term bond yields, local branches of the National Financial Regulatory Administration asked some rural lenders to shorten the average duration of their bond holdings, joining the PBOC’s recent efforts to prevent yields from falling further.

For stocks, the securities watchdog took some of its most extreme measures yet to restrict short selling and quantitative trading strategies, providing a boost to some of the key indexes.

While recent policies have their respective rationale, they could come at long-term or macro economic costs, according to Nomura Holdings Inc. Measures to control the yield curve might mitigate financial risks, but weak domestic demand need lower interest rates to stimulate borrowings, economists at Nomura wrote in a report last week.

China’s financial industry has already been reeling from slower growth and regulatory crackdowns. Ping An Bank Co. is relocating more than 100 staff based in Shanghai to its Shenzhen home base to cut costs, while PricewaterhouseCoopers LLP is cutting staff across its China operations amid an exodus of corporate clients.

2. Domestic demand remains week despite efforts to stimulate consumption. The consumer price growth hovered near zero for a fifth month, with the statistics bureau attributing it to promotions for the annual “618” shopping festival.

“The deteriorating labor market will limit the potential for any quick and sustained recovery in consumption and hence inflation,” economists led by Zhou Yingke at Barclays Plc wrote in a report.

Meanwhile, credit expansion also missed estimates. Exports in June jumped more than expected, highlighting the importance of external demand in underpinning China’s economy. Together with weak imports, the country registered a record trade surplus.

3. Baidu’s tests of unmanned auto driving have reminded people the future has arrived. China’s Internet search leader is investing in generative AI and autonomous driving to diversify its business. With Beijing supporting robotaxis in ride hailing and car rental fleets, Baidu’s shares in Hong Kong posted the biggest weekly gain in more than one-and-a-half years.

Tyler Durden Sun, 07/14/2024 - 22:50

Former CDC Director Says FDA Underreported Adverse Vax Side Effects To Prevent Vaccine Hesitancy

Authored by Debra Heine via American Greatness,

Dr. Robert Redfield, the former director of Centers for Disease Control and Prevention (CDC) said Thursday that the U.S. Food and Drug Administration (FDA) pushed a false “safe and effective” COVID vaccine narrative by underreporting adverse events. The mRNA shots “never should have been mandated,” Redfield told the Senate Committee on Homeland Security and Governmental Affairs Committee on Thursday.

The Democrat-controlled Senate oversight hearing entitled “Risky Research: Oversight of U.S. Taxpayer Funded High-Risk Virus Research,” included witnesses  Dr. Gerald Parker, Dr. Carrie Wolinetz, Dr. Kevin Esvelt, and Redfield.

Former President Trump’s CDC director accused the Biden government of suppressing data about vaccine injuries in an effort to prevent vaccine hesitancy.

“There was not appropriate transparency from the beginning about the potential side effects of these vaccines, and I do think there were inappropriate decisions by some to try to underreport any side effects because they argued that would make the public less likely to get vaccinated” Redfield testified.

Redfield said the biggest mistake of all was the Biden regime’s decision to mandate the mRNA products.

“They never should have been mandated,” he said. “It should have been open to personal choice. They don’t prevent infection, they do have side effects.”

A growing number of doctors and scientists now say that the cost to society and the cost to the individual taking the COVID injection far outweighed any of the proposed benefits.

Senator Ron Johnson (R-Wis.) pointed out that Biden regime officials like Dr.  Peter Marks, head of the FDA’s Center for Biologics Evaluation and Research, continue to deny that the injections are dangerous.

“They’re saying they [vaccine side effects] are rare and they’re mild,” Johnson said.

“The FDA should release all of the safety data they have,” Redfield replied. “I was very disappointed to hear that they’re planning to hold on to that [safety data] until 2026,” he continued. “That really creates a sense of a total lack of trust in our public health agencies toward vaccination. It’s counterproductive,” he added.

Johnson lamented that he has been unable to get Rep. Gary Peters (D-Wis.), the chairman of the the Senate Homeland Security Committee, to issue any subpoenas to the relevant health agencies to obtain the safety data.

“I would suggest you do that,” the Republican told Peters.

Johnson was poised to spearhead investigations into COVID vaccine malfeasance himself as Chair of the Permanent Subcommittee on Investigations starting in 2023, but Republicans did not gain the majority in the 2022 midterm elections.

The Wisconsin senator said there’s “a lot more” being covered up than the COVID origin story.

“There are many aspects of our miserably failed response to COVID that needs to be uncovered, not the least of which, the sabotage of early treatment,” Johnson said. “The public has a right to know.”

Tyler Durden Sun, 07/14/2024 - 22:45

Project 2025 & The Continued Democrat Meltdown

Authored by Richard Truesdell and Keith Lehmann via American Greatness,

Tying Donald Trump to Project 2025 is the latest desperation tactic from Democrats. But it’s likely to backfire. It might actually create a new generation of Conservatives in the process.

Last year, the Heritage Foundation published the Mandate for Leadership as assembled by a consortium of people and think tanks called Project 2025. It is a compilation of long-standing recommended Conservative policies for the next Republican administration. The Project 2025 group claims the document is “the Conservative movement’s unified effort to be ready for the next Conservative administration to govern at noon, January 20, 2025.”

It absolutely petrifies progressive Democrats.

Looking at a portion of the 900+ page compendium, we note that it contains policy suggestions that have been embedded within the Conservative platform for over sixty years. We also note that proclamations from right-leaning think tanks such as the Heritage Foundation are routinely attacked from the left as being “radical” in nature and “out of touch” with ordinary Americans. This is nothing new. The left and progressives, especially, see this as the latest bogeyman to motivate the base as the Biden candidacy spins out of control.

What is new here is the odd tactical decision of the Biden-Harris campaign to demonize the Heritage Foundation and tie the organization’s work to Donald Trump, who has nothing to do with Heritage and had no participation with Project 2025. It’s quite doubtful Trump even knew about Project 2025 until the Biden-Harris campaign decided it would characterize it as “Donald Trump’s Project 2025 Agenda” as “something every American should be scared of.”

When we first saw references to Project 2025 appear, we knew that it was not organic. When all the usual suspects—MSDNC, CNN, the New York Times, the Washington Post, Axios, Politico, NPR, Media Matters for America, and dozens of those image memes flooding your timeline on Facebook—we knew it was no accident. As we like to say, there are no coincidences in partisan politics.

Calling this “Donald Trump’s Project 2025 agenda” is yet another droplet in the endless ocean of lies from the Biden administration and its leftwing enablers. Here is another example of the obvious disinformation coming from the left (hit the link to see how remarkably unhinged these people are).

While some of the points are true (i.e., ending the Department of Education, using public funding for private religious schools, increasing Arctic oil drilling), over 90 percent of these claims are outright lies, many of which are not even mentioned in the document. Project 2025 responded to this with an enumerated list of 30 “myths vs. facts.”

This attack on Project 2025 and the attempt to connect their agenda to Trump seem to have a very strange appeal to ignorant Biden-Harris voters. Previously, hardly anyone, even among Republican and Conservative political junkies, had even heard of the Heritage Foundation, a relatively low-key, center-right institution that has never been considered a radical fringe organization. A vast majority of Americans are now hearing about Heritage for the first time.

What might actually emerge is a broader awareness of the Heritage Foundation and its Conservative work among citizens who would not have otherwise found out if the Biden-Harris campaign had not made such a huge stink. The curiosity of voters will drive them to check out Project 2025, in which they will find five primary policy pillars intended to restore the Constitution as the country’s primary governing guide. We have distilled the five massively detailed policy proposals as follows:

First, and arguably most important, “The president must enforce the Constitution and laws as written, rather than proclaiming new ‘law’ unilaterally. Legislatures make the laws in a republic, not executives.” (With the SCOTUS controlled by its current Conservative majority, this is downright scary to far-left progressives.)

Second, “We must rediscover and adhere to the Founder’s wise division of war powers, whereby Congress, the most representative and deliberative branch, decides whether to go to war; and the executive…decides how to carry it out once begun.” Our multi-generational experimentation in presidentially initiated wars demonstrates that “we depart from our Constitutional design at our peril.” Over the vast majority of our history, especially in the 20th century, it was a Congressional Declaration of War that had the United States enter World War Two, not a Presidential Declaration of War.

Third, the president and the State Department must “stop skirting the Constitution’s treaty-making requirements and stop enforcing ‘agreements’ which haven’t been ratified by the Senate as the Constitution requires, as if they were proper treaties.” Republicans as well as Democrats are guilty of this. Is it any wonder that no new wars were started during the four years of the first Trump administration?

Fourth, “The Senate has been extraordinarily lax in fulfilling its constitutional obligation to confirm presidential appointees.” This results in unconfirmed, “acting” officials carrying out executive-branch responsibilities for months or years without Senate approval. Not to hold Democrats totally to blame here, the Senate ceded its war-making powers to the Executive Branch, starting with George W. Bush and continuing through the Obama and Biden administrations. Our growing involvement in the Ukraine conflict serves no real United States policy agenda other than to keep deep state warmongers like Victoria Nuland happy under Republican as well as Democrat administrations.

Fifth, the Justice Department must “respect the constitutional guarantee of freedom of speech rather than try to police speech.” Oh my God, where do we start here? The encroachment on the First Amendment started under Bush with the Patriot Act in the aftermath of 9/11 and has accelerated since then, especially under Obama and Biden. Biden’s Department of Justice especially has used deep state violations of its police powers against ordinary citizens, like many of the J6 demonstrators as well as journalists who neglect to toe the administration’s line.

Each of these five points is a cap, not an expansion, of presidential power. The Biden-Harris campaign making such an effort to characterize Project 2025 as enabling a presidential power grab is a classic case of projection.

Tying Trump to Heritage is a losing proposition, indicative of a campaign in desperation to change the subject from their complete and total meltdown in the wake of Biden’s catastrophic performance in the first debate and his subsequent interview with former Bill Clinton operative, George Stephanopoulos. It will backfire as expected and could lead to a broadening of acceptance toward Conservative principles among the American population.

Keep up the good work, Democrats!

***

Richard Truesdell is a former consumer electronics retail executive and automotive travel photojournalist. In the last 25 years, he has visited more than 35 countries on six continents. A former high school history teacher with a BA in Political Science from Waynesburg University, he is a lifelong Conservative moderate who has turned his thoughts and keyboard to political commentary and popular culture. A cross-section of his writings can be found here.

Keith Lehmann is a retired consumer electronics industry executive who has written extensively on technology, transportation, and international travel. Living in Southern California for over fifty years, he has first-hand exposure to societal and cultural happenings of the left and submits decidedly realism-based, Conservative viewpoints, much of which can be found on his Substack.

Tyler Durden Sun, 07/14/2024 - 22:10

Mapping High School Graduation Rates By State

A high school diploma not only represents the development of essential knowledge and skills but is also a critical step toward personal and professional growth.

This graphic, via Visual Capitalist's Bruno Venditti, shows the percentage of public school students who graduate with a regular high school diploma in each U.S. state. Data is sourced from the U.S. Department of Education, National Center for Education Statistics, for the school year 2021–22.

West Virginia Has the Highest Graduation Rate

The U.S. average high school graduation rate was 87% in the school year 2021–22.

West Virginia has the highest graduation rate, with 91% of its students graduating. Meanwhile, the District of Columbia has the lowest graduation rate, with 76%.

State Percentage West Virginia 91 Tennessee 90 Wisconsin 90 Kentucky 90 Massachusetts 90 Iowa 90 Missouri 90 Texas 90 Virginia 89 Kansas 89 Connecticut 89 Mississippi 89 New Hampshire 88 Delaware 88 Utah 88 Alabama 88 Arkansas 88 Indiana 88 Florida 87 Illinois 87 Pennsylvania 87 Nebraska 87 California 87 New York 87 North Carolina 86 Maryland 86 Ohio 86 Maine 86 Hawaii 86 Montana 86 New Jersey 85 North Dakota 85 Georgia 84 South Carolina 84 Minnesota 84 Washington 84 Rhode Island 83 Louisiana 83 Vermont 83 Colorado 82 Wyoming 82 Nevada 82 Oregon 81 Michigan 81 Idaho 80 Alaska 78 Arizona 77 District of Columbia 76 New Mexico Not available Oklahoma Not available

Given that West Virginia typically struggles in rankings like this, this top placement might be surprising to some. This high graduation rate is part of a concerted effort by the state to increase its graduation rate.

In 2011, West Virginia’s graduation rate sat at 72% (which would put them dead last by today’s standards). How did the state see such a significant improvement? A data-driven early warning system was put in place to target individuals when they are at most risk of dropping out and using interventions to keep them on pace to graduate.

Alabama, also an early adopter of this system, saw a steep improvement in their graduation rate over the past decade and a half.

If you enjoy posts like these, check out Mapped: Personal Finance Requirements by State, which visualizes where high school students are required to take a personal finance course.

Tyler Durden Sun, 07/14/2024 - 21:35

Property Tax & The Death Of The American Dream

Via SchiffGold.com,

While the primary catalyst for the original English pilgrims to venture to America was religious freedom, a strong desire for independence followed closely behind. They desired to be independent of two things: poverty and government meddling. This spirit carried into the American Revolution and informed domestic policy for many years. The Homestead Act of (FIND YEAR) was enacted to allow citizens a type of independence those who first fled Britain could only dream of. Remote settlers earned their own homes by proving their merit to Mother Nature. It was fairly easy to live as one wished without violating rules and regulations. The law was a fairly small framework that attempted to allow lives free from violence and evil. The two curses they fled were now powerfully refuted. The poverty caused by government oppression of the past was replaced by success or failure based upon individual action. 

While poverty enabled and created by tyranny guided pilgrims to leave, it was no easy road in the new land. Settlers often dealt with great hunger and lack because they knew it was better than the guaranteed squalor they would have faced in Europe. Americans had to bet on their futures using their competence and capabilities. They received the fruits of their labor and often lived far better than they could have before. The American government was in place to protect their ability to live a private life in which they received the benefits of their labor.

The whole American vision was built upon delayed gratification. There was no guarantee that a homesteader’s crops would thrive in any given year. Individuals who were less competent were forced to settle for a life that, while far better than before they emigrated, was below the standard of other more competent settlers. Homesteaders who wanted to fill their stomachs in winter would find they had no seed to plant in the spring. Months and years of hardship were endured to secure ownership and the ability to rest.

The government’s primary role was to protect people against anyone who desired to intrude on their hard-earned peace, whether foreign nations or malicious citizens. People worked for security and the ability to give their children security. Land was a constant investment that directly reflected its developer’s work ethic and rewarded their competency. Unlike in Europe, land was very accessible to the common man. Rather than working for lords and barons, land distinguished Americans and allowed them to work for themselves.

At the beginning of the 19th century, property taxes were small, primarily by the acre, and did not rise often. As administrative bloat and government corruption grew, property taxes gradually grew and morphed into something powerful and harmful to the core of the American dream. Property taxes became not just on the acre, but also on the valuation of the property. In some states, this tax is higher than 2% yearly. A 500,000$ house, a great deal in many locations, would force the owner to pay over 10,000$ yearly just to live on the land that they own. In complete opposition to the vision of the past, inflation and increasingly high valuations mean that as time goes on, landowners will be forced to work more just to make ends meet.

If a family worked hard to make a life on a humble piece of land and became surrounded by a luxury housing development, the resulting higher valuation would drive them to live somewhere else. This incentive to move shifts Americans towards a consumer culture rather than a culture of creation. There is less reason to put effort into any piece of land or community if an indeterminate amount of “rent” must be paid every year. That “rent” used to be primarily the sweat of the brows of the owners of that land as they worked tirelessly to cultivate it.

That vision has been replaced and land seems more like a luxury for the ultra-wealthy than any meaningful part of the American identity. Even small bits of land are not often loved and held for long. Moving constantly has become a favorite pastime of many families as they cannot seem to escape high taxes and inflation. Families continually downsizing or moving to other states cannot be sustainable as a national strategy. We must either make urban living far more appealing or face many families forced to choose between unappealing apartments or paying through the nose for ever-smaller houses. Property taxes exacerbate the attack on the root of American identity.

Tyler Durden Sun, 07/14/2024 - 21:00