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Winners And Losers Of Black Friday 2024

Winners And Losers Of Black Friday 2024

By Daphne Howland of RetailDive,

Despite the push to move up the holiday season to ease the constraints of one of the shortest shopping windows in years, plenty of people saved their lists for after Thanksgiving Day. 

Shoppers are expected to be careful about spending again at the holidays this year. For a couple of years now, inflation has dominated the news, obscured retail sales growth, shaken up consumers and even overshadowed the presidential election that took place early this month. While inflation has eased and some retailers have made a point of slashing prices in recent weeks, budgets continue to be tight for many households. They may not get much relief if the tariffs promised by now President-elect Donald Trump come to pass.

This could have consequences for holiday sales. Nordstrom earlier this week said that sales trailed off at the start of the fourth quarter, suggesting that the momentum it experienced in Q3 may not hold up.

Still, Black Friday was busy. This year, worldwide, Black Friday hit its peak at just after 2 p.m. Eastern time, according to Block, which tracked transactions across its Square, Afterpay, and Cash App Card platforms. U.S. retail sales (excluding auto sales) were up 3.4% compared to Black Friday last year, according to Mastercard’s SpendingPulse report, which measured in-store and online retail sales, included all payment types and was not adjusted for inflation.

Buy now, pay later plans helped finance purchases, driving 8.8% more in online spend than last year, reaching $686.3 million, per Adobe Analytics, which found that to be especially true for mobile shopping, with a 79.3% share compared to desktop so far.

“Our real-time insights show that consumers are comfortably in the gift-giving spirit as price reductions and deals occur across sectors, supporting budgets for holiday shopping,” Michelle Meyer, chief economist at the Mastercard Economics Institute, said in emailed comments.

Further numbers around Thanksgiving weekend sales will continue to be crunched in coming days, but here are the ups and downs of Black Friday so far.

Winners E-commerce

Cyber Monday appears to be losing its meaning, with many shoppers using their phones and computers on Black Friday to make headway on their holiday lists.

Salesforce found that on Friday online sales in the U.S. rose 7% year over year to $17.5 billion, while Adobe found that they rose 10.2% to $10.8 billion. Between 10 a.m. and 2 p.m., $11.3 million was spent online every minute, per Adobe. 

“Crossing the $10 billion mark is a big e-commerce milestone for Black Friday, for a day that in the past was more anchored towards in-store shopping,” Vivek Pandya, lead analyst at Adobe Digital Insights, said in emailed comments. “And with consumers getting more comfortable with everything from mobile shopping to chat bots, we have tailwinds that can prop up online growth for Black Friday moving forward.” 

Chatbots and AI

The current buzz around artificial intelligence is giving rise to both fear and excitement, as questions swirl about the forward leap in tech and its effects, and they made their mark on Black Friday this year. AI and AI agents drove more than $14 billion in global online sales on Black Friday, and retailers employing generative artificial intelligence had a 9% higher conversion rate than those that didn’t, according to Salesforce.

Chatbots powered by AI were influential, as bot-driven clicks to retail sites rose by a whopping 1,800% compared to last year, Adobe found. A fifth of those surveyed by Adobe said they used chatbots to find deals, with 19% using them to find items and 15% using them for brand recommendations.

“Digital retailers who are using generative AI and agents in their customer service experiences saw a nine percent higher conversion rate compared to those who are not,” Caila Schwartz, director of consumer insights at Salesforce, said in emailed comments. “For an industry that is often concerned with margins, especially ahead of rising costs in 2025, this percent increase is a game-changer.”

Toys

The toy category has encountered some rough times lately, with an 8% downturn in sales last year. Circana analysts over the summer warned that signs of a turnaround earlier this year held no guarantees, given ongoing macroeconomic uncertainty around unemployment, record consumer debt, student loans and consumer confidence.

But toys had a good day on Black Friday, with online sales up 622% compared to average daily sales last month, according to Adobe. Top sellers included Harry Potter Lego sets; items related to the “Wicked” movie; card and board games; Disney Princess toys and dolls; and the Cookeez Makery oven playset, per that report.

Losers In-store shopping

Employing old-fashioned seasonal enticements like doorbusters and entertainment, the Mall of America said that people began lining up early afternoon on Thanksgiving Day and that it welcomed more than 13,000 shoppers in the hour after it opened at 7 a.m. on Black Friday.

In general, however, it looks like this year’s e-commerce boost came at the expense of brick-and-mortar stores. Nora Kleinewillinghoefer, a partner in the consumer practice of Kearney, noted that “Black Friday felt quieter” this year in stores, while Michael Brown, also a Kearney partner, noted a relatively subdued day at Garden State Plaza in New Jersey, though he said that shoppers included younger people and some apparel retailers were busy.

Overall, store traffic on Black Friday was down 3.2%, with footfall down 7% in the Midwest, 2.1% in the Northeast, 3.5% in the South and 3.2% in the West, according to data from RetailNext. Mastercard found that Black Friday online sales rose 14.6% year over year, while in-store sales rose just 0.7% year over year.

Moreover, online carts were more than twice the size of in-store carts, according to payment firm Block.

This is in part due to early shopping that seems to have been conducted primarily online, in a year when “the period between Black Friday and Christmas is unusually short,” according to emailed comments from Darpan Seth, CEO of omnichannel order management advisory and software firm Nextuple.

It’s also because retailers are now better at making more goods available online that in previous years may have only been available in stores, Seth said.

Prices and margins

Black Friday has long been about getting good deals, but some discounts this year were especially steep.

Categories more exposed to inflation and higher-priced items were primed for deep price cuts. Plus retailers themselves may preemptively clear out inventory that could eventually be subjected to Trump’s tariffs, according to Nextuple’s Seth.

Adobe found that “discounts exceeded expectations” and were a purchase motivator for toys (with peak discounts of 27.8% off list price), as well as for electronics (27.4% off), televisions (24.2% off), apparel (22.2% off), computers (22% off) and sporting goods (19.5% off). Discounts are expected to remain elevated through the shopping weekend, per that report.

In fact, Black Friday-esque discounts may be found throughout the holiday shopping period, according to Joe Shasteen, global manager of advanced analytics at RetailNext.

“Broader economic pressures, such as high grocery prices and the rising cost of living, may have further impacted shoppers’ behavior,” Shasteen said in emailed comments. “Inflation-fatigued consumers appear to be prioritizing essential purchases and carefully weighing discretionary spending, underscoring the continued importance of value-driven shopping decisions this holiday season. Additionally, many retailers have extended Black Friday deals to widen the shopping window, offering consumers more time to find discounts and spread out their shopping across the holiday period.”

Black Friday

Thanks once again to e-commerce, Thanksgiving Day itself is stealing Black Friday’s thunder as a red-letter retail sales day. This year, shoppers spent $6.1 billion online on Thanksgiving, a record amount that was 8.8% above last year, according to Adobe.

That growth outpaces last year, too, when Thanksgiving Day online sales grew 5.5%, per Adobe’s report. What’s more, holiday shopping in general has been spread out beyond the Thanksgiving-to-Cyber Monday period, experts said.

“With brands expanding their deals across days or even weeks, the once-frenzied in-person rush is evolving into a digital-first experience,” Kearney’s Kleinewillinghoefer said in emailed comments. “Black Friday is no longer just a single shopping event — it has become part of a broader sales extravaganza. With Cyber Monday dominating e-commerce and Travel Tuesday catering to wanderlust, the holiday season is now a crowded marketplace of endless deals.”

Tyler Durden Mon, 12/02/2024 - 07:45

Stellantis CEO Carlos Tavares Abruptly Quits Over "Different Views" With Board 

Stellantis CEO Carlos Tavares Abruptly Quits Over "Different Views" With Board 

Stellantis NV Chief Executive Officer Carlos Tavares has abruptly resigned from the automaker, citing 'different views' with the board of directors, according to an overnight press release. This development comes as auto demand in key markets, including North America, Europe, and China, continues to deteriorate, plunging the entire industry into a vicious downturn. 

"The process to appoint the new permanent Chief Executive Officer is well under way, managed by a Special Committee of the Board, and will be concluded within the first half of 2025," Stellantis stated, adding, "Until then, a new Interim Executive Committee, chaired by John Elkann, will be established." 

Stellantis' Senior Independent Director, Henri de Castries, commented on Tavares' departure: "However, in recent weeks different views have emerged which have resulted in the Board and the CEO coming to today's decision."

The world's fourth-largest carmaker has recently warned about sliding sales and bloated inventory in North America, which led to the profit warning announced in September. By early October, Stellantis CFO Natalie Knight informed her team about the need to take "drastic measures" to shore up the Jeep and Ram parent's finances. Then, in recent weeks, after a nightmare of a year, the automaker began pausing production of certain models. 

Goldman's George Galliers commented on Tavares's departure to clients this AM:

CEO resignation confirmed - Yesterday evening, Stellantis confirmed that it had accepted the resignation of its CEO, effective immediately, citing different views on future direction. Previously, the CEO was due to retire in early 2026, hence, yesterday's departure is just over 12 months earlier than expected. Stellantis confirmed its FY24 guidance for an adj. operating income margin of 5.5-7.0% (GSe 6.2%, company compiled consensus 6.2%) and ind. free cash flow of -€5 to -€10bn (GSe -€7.3bn, cons -€6.9bn). While the outgoing CEO has a long-standing reputation and this announcement is earlier than expected, in light of recent tensions with stakeholders and the step-down in 2024's financial performance, we expect the market to focus on the likely successor. The CFO is due to attend our 16th Annual Industrials and Autos Conference this week.

Press reports of tensions with key stakeholders - Stellantis' financial performance this year has fallen short of expectations, with the company suffering from excess inventory in North America and late to market product launches in Europe. At our 15th Annual Industrials and Autos Conference, the departing CEO spoke about the industry facing a Darwinian race and, therefore, the need to drive efficiencies and cost savings. However, over the course of 2024, press reports suggest this has created tensions with stakeholders including Stellantis' US dealers, US workforce, and politicians in Italy and the UK. In addition, the industry continues to undergo significant pressure as a result of the ongoing transition to BEVs, necessitated by regulation in the UK and Europe, and the potential risk from Chinese competition.

Successful historical performance under the outgoing CEO - The outgoing CEO oversaw the creation of Stellantis through the merger of PSA and FCA, with STLA going on to report a strong 13.4% adj. operating margin in FY22 and 12.8% in FY23 as well as combined ind. FCF >€23bn during the period. Previously, as CEO of PSA, he oversaw a turnaround that led PSA to increase adj. op. margins from 1.5% in 2014 to 8.5% in 2019 with adj. op. income seeing an 8x increase. Even in 2024, we believe the levels of profitability achieved by STLA in emerging markets is notably stronger than peers. Past financial turnarounds, and industry-leading margins were achieved through rigorous pricing and a tough stance on cost. Despite the downturn in STLA's N.American and European performance, in 2024, as a producer of 5 to 6mn units operating in multiple different jurisdictions, the stewardship of Stellantis will be a substantial role for the outgoing CEO's successor.

Galliers reaffirmed a "Buy" rating on Stellantis shares trading in Europe, noting, "We apply a P/E target multiple of 5.0x to our 2025 EPS to derive a 12-month price target of €16/$17." 

Shares in Milan plunged 8.5% on the news, the lowest intraday print since July 2022. On the year, shares have fallen 45%. 

Here's what other Wall Street analysts had to say (list courtesy of Bloomberg):

Bernstein (market-perform)

  • Analysts led by Daniel Roeska struggle to "identify any scenario under which these events can be positively spun as far as the stock price is concerned"
  • Say investors will now likely have to wait until the arrival of the next CEO for more reliable answers
  • Think the market will be wondering why the board "considered that not having a permanent CEO for some months was preferable to keeping the current CEO"

RBC (sector perform)

  • Analyst Tom Narayan says this announcement is a surprise, but wonders if it was related to the CEO's already planning to retire in early 2026
  • Management changes made in early October did seem "odd" and this could also have played a role
  • "Entirely possible that Stellantis can get through this rough patch," but a bunch of potential headwinds such as CO2 compliance in Europe, Chinese competition, risk of US tariffs leave RBC on the sidelines

Morgan Stanley (overweight)

  • Think overall investor opinions of the CEO were favorable, despite the company's "considerable underperformance" this year, analyst Javier Martinez de Olcoz Cerdan writes
  • Tavares was overall recognized for role in delivering merger, efforts on cost-cutting, commitment to execution and "agile" Chinese OEM strategy
  • Wonders if exit may herald a new strategic direction, creating uncertainty for investors until a new CEO is appointed

JPMorgan (overweight)

  • Analyst Jose Asumendi says exit of a CEO and a CFO in such a short period seems unprecedented, creating "challenge" for investors
  • Chairman John Elkann, who will lead the interim leadership committee, does have good track record across differing industrial groups which provides "solid base" for now
  • However, there is unlikely to be any significant major earnings improvement priced in by investors for FY25 until the management team is reset

Jefferies (hold)

  • Not entirely surprising news, but leaves the company without a CEO at a time when a number of "critical decisions" need to be made, analyst Philippe Houchois writes
  • Understands that Tavares wanted to actively contribute to turning around performance before his previously planned 2026 exit, but that the board likely sanctioned his proposals or management style

European automakers have been struggling as a whole.

The collapse in profitability under Tavares' watch has been disastrous. 

Tyler Durden Mon, 12/02/2024 - 07:20

Hunter's Lawyer Moves To Dismiss Indictment After Pardon

Hunter's Lawyer Moves To Dismiss Indictment After Pardon

Update (2257ET): And of course, Hunter Biden's lawyer has moved to dismiss his indictment based on his pardon.

*  *  *

President Joe Biden is pardoning his son Hunter, despite Biden and the White House repeatedly denying he would do so.

The pardon comes ahead of Hunter's Dec. 12 sentencing for his conviction on federal gun charges, as well as an upcoming Dec. 16 sentencing in a separate criminal case in which he pleaded guilty on federal tax evasion charges.

The pardon, which is "Full and Unconditional," is expected to cover both the gun conviction and the guilty plea, and covers offenses "which he has committed or may have committed or taken part in" over a nearly 11-year period from Jan. 1, 2014 through Dec. 1, 2024. Including this, which Donald Trump was impeached for asking about.

In a statement, Biden said Hunter was "treated differently" by his own Justice Department, adding that the charges only came about "after several of my political opponents in Congress instigated them to attack me and oppose my election."

"In trying to break Hunter, they've tried to break me," Biden continued, adding "Enough is enough."

Wow...

In recent months Biden has said he wouldn't pardon Hunter...

"I will not pardon him," Biden said in June. However, according to NBC News, Biden has been discussing a pardon with his closest aides since Hunter's June conviction, adding that the decision was made at the time for the president to lie and say he wouldn't pardon him.

In November, White House press secretary Karine Jean-Pierre reiterated that Joe's position hadn't changed.

"We’ve been asked that question multiple times. Our answer stands which is ‘no,’" she said.

And when asked on Monday if Biden is still committed to not pardoning Hunter, White House spokesperson Andrew Bates said "The president has spoken to this."

Jill Biden also said Hunter wouldn't receive a pardon.

"Joe and I both respect the judicial system, and that’s the bottom line," she told NBC News in June.

And remember...

Tyler Durden Mon, 12/02/2024 - 06:25

China To Shun Iranian Oil On Mounting Trump Sanction Fears

China To Shun Iranian Oil On Mounting Trump Sanction Fears

After years of abusing Iranian sanctions and flooding China's economy with cheap Iranian oil, China’s larger independent refiners are set to shun Iranian oil “imminently” because of their exposure to the US banking system, said Energy Aspects, which expects sanctions to tighten under Trump.

These plants only started buying Iranian crude this year after receiving guidance from the US State Department that sanctions wouldn’t be enforced by the Biden administration, according to a note from the industry consultant, which didn’t name the refiners. If confirmed that would be the latest foreign policy scandal by the captured and corrupt Biden admin, which has made a mockery of sanctions enforcement, especially if the alternative is sharply higher oil and gas prices.

In any case, with the imminent arrival of Trump, the Chinese refining sector will be under significant pressure to consolidate and the government might be “willing to sacrifice the teapots to score some easy points against Trump by clamping down Iranian imports.”

Limiting access would raise the cost of feedstock and slash margins for teapots and help Beijing to trim capacity.

Activity by independent refiners has picked up in the spot market, with a number of plants securing barrels from the Middle East in recent trades, on top of WAF grades purchased two weeks ago. These were all unsold, discounted barrels from the previous cycles.

With Iranian oil set to become extremely scarce, China’s independent refiners have snapped up barrels from across the Middle East and Africa as offers of Iranian oil remain scarcer and more expensive than usual, in part due to broadening US sanctions.

In a separate Bloomberg report, we learn that a large Chinese processor bought about 10 million barrels of grades from Abu Dhabi and Qatar, according to traders who asked not to be identified. The cargoes are for loading in December and January, and helped to clear an overhang of unsold crude from previous trading cycles, they added.

China’s independent refiners, known as teapots, typically favor cheaper Iranian crude and take around 90% of the OPEC producer’s exports, but a slowdown in the amount of oil available to purchase has forced a change in buying habits. The incoming Trump administration has also led to some large processors backing away from Tehran’s crude due to their exposure to US banking, according to Energy Aspects.

Traders and shippers put the scarcity of Iranian supply down to the broadening of US sanctions in October to include more dark fleet tankers plying the Iran-China trade. That move has crimped the number of vessels available for ship-to-ship transfers, tightening supply and driving prices higher (see "Satellite Analysis Shows Enormity Of Secretive Oil Shipping Hub Funneling Iranian Crude To China").

Flows of Iranian oil to China have dipped more than 10% this month compared with October, according to Kpler. Meanwhile, the volume of West African crude is at the highest on a monthly basis in at least two years, partly driven by the spike in Iranian oil prices, Sentosa Shipbrokers wrote in a report.

Beijing’s move to issue more import quotas to teapots has also spurred buying activity, traders said. Refiners were asked to submit requests to purchase more crude a few months ago and were provided verbal approvals this week, but some started buying ahead of the confirmation, they added.

Refiners in Shandong province collectively sought an allocation of about 3.8 million tons, or 28.5 million barrels, which will be valid until the end of the year, according to traders.

The initial build-up of Middle Eastern oil was spurred by bumper trading activity in contracts linked to the Dubai market in recent months. That led to the delivery of cargoes that ultimately went unconsumed and had to find buyers at a later date, traders said.

President-elect Donald Trump has already rattled the market with the threat of tariffs on China, Canada, and Mexico, and investors are closely watching to see how his administration will approach Iran. Sanctions on the OPEC producer are expected to tighten, according to Energy Aspects.

Key concerns include the possibility dark fleet tankers will be sanctioned en-route to their destination, a move that would spook the ports waiting to receive the vessels and lead to cargoes being stranded at sea.

We previously discussed how ship-to-ship transfers off Malaysia are also set to face more scrutiny, a process used to mask the origin of Iranian cargoes by re-labeling them as Malaysian oil.

Tyler Durden Mon, 12/02/2024 - 05:45

Mirror, Mirror On The Wall, Which Is The Most Worrisome EU Country Of Them All?

Mirror, Mirror On The Wall, Which Is The Most Worrisome EU Country Of Them All?

Authored by Robert Burrows via BondVigilantes.com,

Renewed concerns of European fragmentation: France’s economic and political struggles...

Source: Bloomberg, as at November 2024

What is incredibly surprising is how little differentiation there is among European issuers. Perhaps this signals that there are no concerns within Europe and that the European Central Bank (ECB) has all the necessary tools to stem any divergence. Perhaps investors already view the bloc as a shared fiscal union, suggesting there should be no differentiation.

Source: Bloomberg, as at November 2024

As France grapples with deepening economic and political challenges, the possibility of European fragmentation will likely become a topic of discussion once again. The country’s long-standing fiscal pressures, political instability, and rising populism are troubling for France and the broader European Union (EU). With France playing a pivotal role in the EU’s economic and political structure, its struggles raise questions about the strength of European unity, especially in an era marked by increasing global uncertainty.

France’s economic troubles: debt and stagnation

France’s economic challenges are rooted in years of sluggish growth, high unemployment, and rising public debt. The nation’s debt-to-GDP ratio now exceeds 110%, a level that puts increasing strain on the government’s ability to invest in its economy.

France continues to run worrying deficits akin to the equally worrying US.

Source: Bloomberg, as at November 2024

However, the difference between France and the US is that the US is in a position to raise taxes. Whether the US does is another story altogether, but at least it is in the position to do so. France, on the other hand, is likely at or close to peak tax-raising levels. If there are any further tax increases, the tax revenue could in fact fall as per the Laffer curve1 That leaves reduced spending as the only viable option to bring deficits under control. It is doubtful that the electorate will tolerate significant reductions in spending. Another consideration is that the US can control its monetary policy. In contrast, France is a hostage to the policy set by the ECB for the EU as a whole.

Source: OECD. Provisional 2023 data. *Japan and Australia unable to provide provisional, therefore numbers used are 2022 data.

Meanwhile, inflationary pressures from rising energy prices, supply chain disruptions, and the global fallout from the Ukraine war are making life increasingly difficult for French citizens.

Fiscal constraints, including the country’s ‘excessive deficit procedure’ limit the government’s ability to spend its way out of these problems. This economic stagnation has hit low- and middle-income families the hardest, fuelling social unrest and discontent. With a growing sense that economic inequality is deepening, populist movements are gaining traction in France, pushing back against traditional political parties and calling into question the benefits of European integration.

Political instability and fragmentation in France

France’s political landscape has fractured, as seen in the recent election. The traditional parties of the centre-left and centre-right, which have long dominated French politics, have weakened considerably. The recent election saw no party win a majority; a left-leaning coalition won 188 seats, the centrist coalition won 161 seats, and the far-right won 142 seats. Consequently, the far right became the single largest party and no party was able to claim a majority. The outcome was a fragile centre-right government propped up by Marine Le Pen’s far-right party.

The rise of Marine Le Pen’s far-right National Rally and Jean-Luc Mélenchon’s far-left La France Insoumise reflects deep divisions within French society. These parties tap into frustrations over economic stagnation, immigration, and disillusionment with the EU’s role in France’s domestic affairs.

This political fragmentation has not just created a challenging environment for Emmanuel Macron’s government, but it has severely hampered its ability to push through much-needed reforms. Macron’s centrist platform, which was supposed to bridge the political spectrum, has instead alienated both sides, and attempts at pension reform, labour law changes, and economic liberalisation have been met with widespread protests, most notably the ‘Yellow Vest’ movement.

The inability to implement structural reforms is compounding France’s economic challenges. With the government hamstrung by opposition forces and increasing populist sentiment, France’s political future is uncertain. As France teeters on the edge of further instability, the implications for the European Union are significant.

A recent hint of concern for the EU came from the European Commission’s acceptance of France’s budget proposals (which are unlikely to come to fruition given the government’s instability) and allowing France to postpone its deficit reduction efforts from 2027 to 2029. In contrast, the Commission’s judgement on the Dutch budget, which is well within the rules, has been delayed. Perhaps the Commission is fretting over larger issues.

The European Union: a fragile union?

France and Germany have always been key pillars of the European Union. However, as economic and political instability deepens in both France and, more recently, Germany, it brings into question the stability of the EU itself. In recent years, the EU has already faced major challenges, from Brexit to the sovereign debt crises in Greece, Italy, and Spain. The COVID-19 pandemic, followed by the energy crisis and the war in Ukraine, have further tested the bloc’s resilience.

In France, populist leaders like Marine Le Pen have openly criticised the EU’s bureaucracy and called for reclaiming French sovereignty, particularly in immigration, trade, and economic policy. Though Le Pen’s position on leaving the EU has softened in recent years, her anti-EU rhetoric still resonates with a sizable portion of the French electorate. This raises concerns about France’s continued commitment to EU integration.

Should France’s economic situation deteriorate further, and populist movements gain even more ground, it could trigger renewed debates over the future of the EU. The rise of populism in one of the EU’s core member states could embolden other Eurosceptic movements across the continent, leading to renewed fragmentation pressures.

Energy crisis and inflation: pressures across Europe

The energy crisis and surging inflation are not unique to France, but they have heightened economic tensions across Europe. Germany, once the EU’s economic engine, is also facing severe challenges due to rising energy prices, weakening manufacturing and industrial sectors, and constrained fiscal spending due to the debt brake. Countries like Italy and Spain, which have already faced sovereign debt crises in the past, remain vulnerable to economic shocks.

While the EU has shown resilience in the face of these challenges, France’s fiscal problems could add further strain. If one of the EU’s key economies falters, it would complicate efforts to maintain unity, especially when fiscal solidarity is already a contentious issue. A divided French government could struggle to support broader EU initiatives, such as energy transition policies and climate goals, which require unified political will and significant financial investment.

The consequences of French economic decline for the EU

If France’s economic and political situation worsens, it could destabilise the European Union in several ways. First, the loss of French leadership in EU policy debates could leave a vacuum that is difficult to fill. France has long been an advocate of closer European integration, especially in areas like defence, foreign policy, and economic regulation. A weakened France could slow the pace of EU reforms and complicate decision-making within the bloc.

Second, France’s decline could embolden other Eurosceptic countries. Italy’s populist movements, Hungary’s nationalist government, and Poland’s increasing resistance to EU authority all point to a growing sense of disillusionment with European integration. France’s struggles could add fuel to this fire, leading to more calls for looser ties within the EU or, in extreme cases, further exits from the union.

Finally, renewed economic fragmentation could strain the ECB’s ability to manage monetary policy across the eurozone. As countries face diverging economic challenges, the ECB could find it increasingly difficult to balance inflation control with the need for growth stimulus in struggling economies. This could lead to further financial instability, making it harder to hold the eurozone together.

Conclusion

France’s economic and political difficulties are not just a domestic issue; they have profound implications for the European Union as a whole. The combination of rising debt, political fragmentation, and populist movements within France could exacerbate concerns about the future of European integration. As one of the EU’s most important members, France’s trajectory will play a crucial role in shaping the future of the union. While the EU has survived numerous challenges in the past, France’s ongoing struggles could spark renewed debates over fragmentation, threatening the unity that has been a cornerstone of the European project for decades.

Tyler Durden Mon, 12/02/2024 - 05:00

Mapping The Average Student Loan Debt-Load By State

Mapping The Average Student Loan Debt-Load By State

Total federal student loan debt in the U.S. stands at approximately $1.73 trillion, with 43 million borrowers as of 2023, and has experienced significant growth over the past 15 years, increasing by about 232.7% since 2009.

The average federal student loan debt across the 50 U.S. states, Puerto Rico, and the District of Columbia amounts to $29.9 billion per state in 2024, according to the Education Data Initiative.

This visualization, via Visual Capitalist's Kayla Zhu, shows the average student loan debt per borrower, by state. Only federal student loan debt is included.

Data comes from the U.S. Department of Education and U.S. Census Bureau via the Education Data Initiative, and is updated as of October 2024.

Which State Has the Highest Student Loan Debt?

Below, we show the average federal student loan debt by state as of October 2024.

State Average Federal Student Loan Debt District of Columbia $54,795 Maryland $43,692 Georgia $42,026 Virginia $40,137 Florida $39,262 Illinois $39,055 South Carolina $38,770 North Carolina $38,695 New York $38,690 Delaware $38,683 Vermont $38,404 Oregon $38,168 Hawaii $38,158 California $37,829 Alabama $37,709 Colorado $37,392 Mississippi $37,254 New Jersey $37,201 Michigan $36,974 Tennessee $36,886 Washington $36,762 Connecticut $36,672 Pennsylvania $36,267 Alaska $35,821 Arizona $35,675 Missouri $35,675 Massachusetts $35,529 Ohio $35,033 New Hampshire $34,884 Louisiana $34,866 Nevada $34,589 Maine $34,292 New Mexico $34,280 Minnesota $34,071 Montana $33,945 Arkansas $33,858 Utah $33,746 Texas $33,581 Kentucky $33,470 Idaho $33,281 Rhode Island $33,270 Indiana $33,243 Kansas $33,119 Wisconsin $32,628 Nebraska $32,377 West Virginia $32,358 Oklahoma $32,103 Wyoming $31,503 Puerto Rico $31,022 South Dakota $30,928 Iowa $30,925 North Dakota $29,647 Other/Unspecified* $25,279

Washington, D.C. leads the U.S. in average federal student loan debt at $54,795 per borrower and has the highest share of borrowers, with 17.2% of residents in debt.

Many borrowers in D.C. are recent graduates, including a significant number with master’s degrees, compounding the strain of the city’s steep cost of living.

Second-ranked Maryland, which borders D.C., is also one of the most educated states in the country. Around 43% of Maryland residents have earned at least a bachelor’s degree, significantly higher than the national average of 35%.

North Dakota has the nation’s lowest average student loan debt, and it’s the only state with average debt under $30,000, at $29,647. Only about 11.2% of state residents have student loan debt.

To learn more about labor statistics by state, check out this graphic which shows the union membership rates by state.

Tyler Durden Mon, 12/02/2024 - 04:15

How The Rush To Net Zero Is Accelerating Britain's Industrial Decline

How The Rush To Net Zero Is Accelerating Britain's Industrial Decline

Authored by 'Sallust' via DailySceptic.org,

It’s Toytown basic economics that the price of any commodity or service is determined by the relationship between supply and demand. The less there is of anything, the higher its price will be, depending on the level of demand. The greater the level of supply the lower the price, and thus the greater the demand and usage.

Nothing could exemplify that better than energy. Restricting the supply of energy whether by design or circumstance, or even elevating the price artificially with taxes and levies, is bound to inhibit demand. And that diminishes the economy.

The Telegraph has published an article by Jonathan Leake on how Net Zero has accelerated Britain’s national decline:

For Ed Miliband and Sir Keir Starmer, Net Zero is the route to clean energy, economic growth and turning the U.K. into a global green superpower.

Across the Atlantic, however, Britain’s drive for “decarbonisation” is increasingly seen as an economic experiment – one that risks tipping the U.K. from miniscule economic growth into full-scale decline.

Chris Wright, Donald Trump’s nominee for US energy secretary, has warned that Britain’s rush to ditch fossil fuels in favour of wind and solar power is causing higher prices, driving away energy-intensive businesses and contributing to Britain’s national decline.

“The U.K., although no longer part of the EU, has continued aggressive climate policies that have driven up energy prices for its citizens and industry,” he wrote in a recent report. “The once world-leading United Kingdom now has a per capita income lower than even the poorest state in the United States.”

Leake doesn’t dispute the effects of climate change or “other consequences of greenhouse gas emissions”. His main point is that a key part of Net Zero policy is to reduce energy usage, but only in Britain. How much less?

To quote the Government’s advisory Climate Change Committee: “In our Balanced Net Zero Pathway, the U.K. economy becomes much more energy efficient, with total energy demand falling by around 33% in end-use sectors between now and 2050.”

Improved efficiency – delivering more output for the same amount of fuel, or less – could help to deliver a reduction in energy consumption. Yet huge advances would be necessary to yield a reduction in consumption of a third. Many observers believe the tail will wag the dog when it comes to this target, meaning the U.K. may be forced to curtail energy use in order to hit it.

For Wright and others, slashing energy consumption by a third and still expecting growth is heresy – an economic experiment no other country has achieved, or even attempted before.

Their view – one supported by most economists – is that access to energy has historically always been directly related to prosperity. The more energy we have, the richer we will become. And if we have less, we get poorer.

Britain’s Industrial Revolution, driven by cheap and abundant coal, is proof, Wright says, of the theory. But with decline in energy usage now far advanced, it’s clear the prioritising of climate targets is having a drastic impact on Britain’s wealth and productive capacity.

In 1970, U.K. industry consumed the equivalent of 62 million tonnes of oil each year, making most of what the nation needed including energy intensive products like steel, cement and petrochemicals. Manufacturing was by far the largest sector of the economy, contributing 30.1% of total output.

Last year, manufacturing accounted for just 9% of the U.K.’s economy.

The point is that a key part of Net Zero policy is to reduce energy usage, but only in Britain. Other countries don’t matter because it’s all about the U.K. Government’s climate policy.

For example, one of the U.K.’s proudest boasts is that it has slashed emissions from more than 800 million tonnes in 1990 to just under 400 million tonnes in 2023. These figures refer to the greenhouse gases emitted within Britain’s borders, from power stations, vehicles, homes, offices and industry.

However, it excludes all the emissions generated from things we buy from abroad, including cars, clothes, steel and cement. Such “consumption emissions” have grown, from under 200 million tonnes of CO2 in 1990 to 400 million tonnes today

If you add our overseas and domestic emissions together, the overall U.K. carbon footprint is about 800 million tonnes. This is only a slight decrease from 1990 and the U.K. has paid a pretty high price to achieve it, including continuing high energy prices and increased vulnerability to global price shocks and shortages.

“The U.K. has too little production, too much consumption, too little savings and too much debt,” Dieter Helm, Professor of Energy Economics at Oxford University, wrote recently. “Perhaps not surprisingly, since it takes time for the politics to catch up with the economics, the new Labour Government is in the process of doubling down on all four of these.

“Current (and proposed) economic policy is perpetuating an unsustainable economy. What is unsustainable will not be sustained. It will have to end, probably in a series of economic crises played out into the future. The next generation will pay the price.”

Leake goes on to explain that the U.K. is not the U.S. and does not have abundant supplies of energy on its doorstep. Britain is dependent on imports.

The key conflict then is between replacing old sources of energy with new ones or simply reducing energy consumption. Britain is steadily running down its oil-refining and steel-manufacturing capacity.

For Miliband, falling energy consumption is a sign of progress rather than an ominous portent. A spokesman for the Department of Energy Security and Net Zero said: “Making the U.K. a clean energy superpower is essential to end the U.K.’s dependency on insecure fossil fuel markets.”

Exactly where we are headed is therefore not clear. It’s also a moot point whether any government can survive enforcing a vision of the future with policies that seem destined to make people poorer, more immobile, colder, hungrier, and with less and less choice in the matter.

Readers may remember the irony of this pronouncement five-and-a-half years ago:

“We will be able to look back on this period – this extraordinary period – as the beginning of a new golden age for our United Kingdom.”

 - Boris Johnson, statement to the Commons July 25th 2019

He was right about it being an extraordinary period.

Tyler Durden Mon, 12/02/2024 - 03:30

Chad & Senegal Are Teaming Up To Expel France From The Sahel

Chad & Senegal Are Teaming Up To Expel France From The Sahel

Authored by Andrew Korybko via Substack,

France and the US are expected to apply a three-pronged policy for pushing back against this...

Thursday was an historic day for African geopolitics since Chad announced that it’s expelling French troops while Senegal said that it plans to do the same in the near future. These are France’s last military outposts in the Sahel after it was expelled from Burkina Faso, Mali, and Niger, which now form the Sahelian Alliance that’s also merging into a Confederation. The immediate consequence is that Russian influence will likely surge while France is expected to turn the Ivory Coast into its top regional base.

These trends align with the larger one of Africa becoming a theater of competition in the New Cold War. The West wants to retain its declining unipolar hegemony while Russia and China are leading the push by the non-West to accelerate multipolar processes there. The first manifests itself through coups, Color Revolutions, and insurgencies (collectively known as Hybrid War) while the second takes the form of Russia helping its partners counteract these threats as China provides no-strings-attached economic aid.

The latest development confirms that the African Hinterland is the continent’s bastion of multipolarity while the coastal periphery serves as both the entry point and redoubt for unipolarity, which mirrors the dynamics in Eurasia. This in turn lends further credence to Professor Alexander Dugin’s theory about the historical rivalry between land powers and sea powers. In the African context, Eurasia’s land powers are helping their fellow Hinterland partners liberate themselves from the influence of Eurasia’s sea powers.

These same sea powers, in this case France (which historically has a dual sea-land identity) and the US, are now retreating to the sea-aligned Ivory Coast after being kicked out of the Sahel. This will place more pressure on Nigeria, which is an African land power that has a long history of close ties with Western sea powers like the UK and the US. The aforesaid were on full display during summer 2023’s Western-backed debacle after it unsuccessfully pressured Niger to reinstall its ousted leader and threatened to invade it.

The failure to reap any tangible dividends from this needlessly aggressive policy led to a grand strategic rethinking that culminated in Nigeria becoming an official BRICS partner after October’s summit. This was a positive step, but nothing has yet been done to resolve the country’s infamous corruption nor its seemingly intractable spree of long-running ethno/religious-regional conflicts, both of which can be externally exacerbated by the West to manipulate its foreign policy or punish it if this approach fails.

It's one thing for the West to lose its geostrategic position in the Sahel, which includes some of the world’s poorest countries (Senegal is head and shoulders above the rest but still has lots of poverty), and another entirely to lose Nigeria, which has huge energy reserves and is Africa’s most populous country. France and the US’ post-Sahelian retrenchment in the Ivory Coast is only useful insofar as providing a base from which to destabilize the Sahelian Alliance/Confederation but is useless vis-à-vis Nigeria.

Observers can accordingly expect the West (led by the US and France) to apply a three-pronged policy for pushing back against the latest multipolar achievements: 1) more Hybrid War against the Sahelian Alliance/Confederation; 2) more outreaches to Nigeria; and 3) Hybrid War against it too if this fails. The Ivory Coast will play a central role in the first aspect; the second will take diplomatic and economic forms; while the third can manifest through covert support (including military) for existing armed groups.

No suggestion is being made about the success of this predicted policy, just that part or all of this sequence will likely unfold due to the friction between Western/non-Western and unipolar/multipolar interests in Africa, which was worsened by France’s latest military blow in the Sahel. It and the US might still need time to cook up a plan for how to most effectively respond to everything, but nobody should doubt that they’ll do something, and whatever it is will be aimed at restoring their lost hegemony.

Tyler Durden Mon, 12/02/2024 - 02:00

The Nuclear Energy World Awaits Trump

The Nuclear Energy World Awaits Trump

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

America’s nuclear energy industry has something special going for it.

“Nuclear energy is one of the few issues that receives bipartisan support across the country,” Maria Korsnick, the president and CEO of the Nuclear Energy Institute, told The Epoch Times in a statement.

The then former U.S. President Donald Trump and Republican presidential nominee, speaks at a campaign rally at McCamish Pavilion in Atlanta, Ga., on Oct. 28, 2024. Anna Moneymaker/Getty Images

Democrat-aligned billionaires like Bill Gates have invested heavily in advanced nuclear, as have Republican-aligned billionaires like John Catsimatidis. Meanwhile, sustained, large-scale opposition to nuclear power from the left has mostly dissipated, at least in the United States. Environmentalists increasingly see it as an attractive source of carbon-free baseload power.

Physicist James Walker, CEO of the microreactor firm Nano Nuclear Energy Inc., pointed out that the ADVANCE Act of 2024, key legislation for the deployment of new reactor technologies, was backed by Republicans and Democrats alike. As part of the Fire Grants and Safety Act, it gained overwhelming support from both parties in the House of Representatives, where it passed 393 to 13, and in the Senate, where it passed 88 to 2.

A Nov. 12 policy blueprint from the Biden White House outlines a plan to triple the country’s nuclear energy capacity over the next quarter century.

It certainly appears that the outgoing administration and Democrat-led Senate are pro-nuclear. Yet, with Donald Trump’s reelection, “there also might be additional benefit,” Walker told The Epoch Times.

He hopes the new administration will spur domestic production of a fuel used by advanced nuclear reactors. Russia and China dominate the supply chain for that fuel, which is called high-assay, low-enriched uranium (HALEU).

Earlier this year, the U.S. banned the importation of Russian uranium, with any waivers set to expire by 2028. In October, the Department of Energy awarded six companies contracts for HALEU production.

“I can’t see, even under the new administration, that relationship being remedied enough that we can go back to sourcing Russian weapons-grade material,” Walker said.

At a Nov. 21 Heritage Foundation roundtable on nuclear energy, Constellation Energy’s David Brown said that American firms involved in producing low-enriched uranium, also supplied by Russia and other countries, have generally set the end of this decade as their launch date, but progress has been slow.

Even amid the bipartisan push for advanced reactors, some scientists and activists worry HALEU is far more easily weaponized than low-enriched uranium, which has become more of a concern recently as the possibility of nuclear war lurches back into public discourse.

“The risk of nuclear war is currently higher than it has been since the Cuban Missile Crisis,” Matthew Bunn, a nuclear and energy policy analyst at the Harvard Kennedy School, told The Epoch Times via email.

“The acute issue is Iran, which is now closer to the edge of a nuclear weapons capability than ever before.”

‘We Need to Revolutionize How We Think’

Trump’s vision includes a new National Energy Council that, in his words, will cover “all forms of American energy” and blaze a trail to American energy dominance. Its prospective members include his pick for energy secretary, fracking innovator Chris Wright. Wright sits on the board of directors of a fission reactor company, Oklo Inc.

Liberty Oilfield Services Inc. CEO Chris Wright on the floor of the New York Stock Exchange on Jan. 12, 2018. Lucas Jackson/Reuters

The council’s chair, likely Interior Secretary Doug Burgum, would also be part of the National Security Council.

Trump’s planned Department of Government Efficiency, or DOGE, will be led in part by businessman Vivek Ramaswamy. During his own presidential run, Ramaswamy called to eradicate the Nuclear Regulatory Commission or NRC.

He described the agency as “the damper on the revival of nuclear energy in the United States of America.”

Some other insiders have shared similar frustrations with the regulatory status quo.

“We need to revolutionize how we think, how we regulate,” said Jack Spencer, an energy and environmental policy researcher at the Heritage Foundation, during the Nov. 21 nuclear energy roundtable.

Doug Bernauer, the CEO of microreactor startup Radiant Nuclear, objected to the pace of reactor licensing in a Nov. 20 post on X.

“No new nuclear reactor design has been licensed in over 50 years in the US. ... Will DOGE fix nuclear?” Bernauer wrote.

Mixed Reactions From Industry to DOGE

Some in the nuclear industry have reservations about DOGE.

John Kutsch, the leader of the Thorium Energy Alliance, hopes the administration makes its cuts carefully.

“There’s actual useful things the Department of Energy does,” he told The Epoch Times, citing the agency’s role in nuclear weapons management.

Kutsch believes the closure of the Bureau of Mines during the 1990s was a mistake that ultimately hampered American mining. He said he doesn’t want to see something similar happen again.

“We don’t have critical materials readily available in this country because we can’t open up a mine to save our lives,” he said.

Walker also sounded a note of caution about possible cuts.

“Downsizing something like the NRC might not inherently make it better, because they still will need a lot of people to do a lot of work,” the nuclear industry entrepreneur said.

Walker was cheerier about the prospect of using artificial intelligence to speed up licensing of new reactor designs, at least if such an approach proves technologically feasible.

“You could probably reduce the number of people by an order of magnitude,” he said.

Walker hopes that the administration can develop a better approach to regulating advanced reactors. The current framework, he said, is adapted to the large, light-water reactors currently operating on the U.S. grid.

Nuclear power plant Vogtle Unit 3 and 4 sites are under construction near Waynesboro, Ga., in February 2017. Georgia Power/Handout via Reuters DoE Destruction of Uranium-233 Worries Thorium Advocates

While Kutsch defended some aspects of the Department of Energy, he’s not happy with its approach to uranium-233, a uranium isotope that can be used in thorium-based nuclear energy production.

“This is what gets me mad about bureaucracies,” said Kutsch, whose organization in 2023 signed a memorandum of understanding with El Salvador.

Kirk Sorensen of Flibe Energy, a molten salt reactor company exploring thorium in one of its designs, described uranium-233 as “a marvelous pre-fuel” during the Heritage roundtable with Spencer and Brown.

The Department of Energy has started eliminating the U-233 stored at Oak Ridge National Laboratory.

“Originally created in the 1950s and 1960s for potential use in reactors, U-233 proved to be an unviable fuel source,” the Department of Energy stated in a June post on its disposition project webpage.

An aerial view of the Oak Ridge National Laboratory campus in a file photo. Oak Ridge National Laboratory via The Department of Energy

Sorensen said the department’s U-233 disposition “should be stopped immediately.”

Kutsch said much of that stored U-233 could be used in thorium-based molten salt reactors or in nuclear medicine.

Sen. Tommy Tuberville’s (R-Ala.) proposed bill, the Thorium Energy Security Act of 2022, aimed to facilitate U-233 storage and mandate reports on China’s thorium-based reactor research. It never moved out of committee.

Tyler Durden Sun, 12/01/2024 - 23:20

Seattle Sees First Net Increase In Police Officers In 4 Years

Seattle Sees First Net Increase In Police Officers In 4 Years

Don't call it a comeback...days after President Trump has been re-elected, Seattle has announced it has seen its first net increase in police officers in four years, according to an exclusive new report from KIRO.

The Seattle Police Department reported its first net increase in officers in four years, adding five to seven in the last quarter, reversing losses since 2020.

Council President Sarah Nelson attributed the earlier decline to a 2020 pledge by most council members to halve police funding, which led to officer departures and reduced the force to about 900, well below the 1,400 target.

Nelson said: “Morale was significantly impacted when officers felt their jobs were at risk. However, this recent net positive is a step in the right direction.”

KIRO reported that as the city council reviews its budget, the focus is on addressing underspending and ensuring effective allocation of funds. Council President Sarah Nelson stressed the need for transparency and accountability, particularly in public safety and social services.

The 2025-2026 budget includes key investments: $3.2 million to sustain 300 shelter beds, $3.5 million for 23 new CARE positions, and $14.5 million for health initiatives. Nelson underscored the importance of measurable performance metrics to evaluate the impact of these expenditures.

She added: “We need to see the big picture by knowing exactly what we’re spending right now. Transparency is absolutely key.”

Nelson highlighted additional ongoing efforts to address public safety and budget challenges, emphasizing the need for transparency and accountability in spending. Initiatives include maintaining the Storefront Repair Fund to assist small businesses, boosting police hiring with competitive wages, and investing in addiction treatment to tackle the fentanyl crisis and homelessness.

Nelson called for improved oversight of departmental budgets and nonprofit grants to ensure funds align with policy goals, alongside performance reviews for programs like affordable housing and emergency response. She remains hopeful these measures will enhance public safety and fiscal efficiency.

Tyler Durden Sun, 12/01/2024 - 22:45

China Would Be Taking A Major Risk If It Deployed PMCs To Myanmar To Protect BRI Projects

China Would Be Taking A Major Risk If It Deployed PMCs To Myanmar To Protect BRI Projects

Authored by Andrew Korybko via Substack,

The US could do to China in Myanmar what it’s currently doing to Russia in Ukraine...

The latest phase of Myanmar’s nearly four-year-long conflict, which is part of the world’s longest-running civil war that first began in 1948, has seen the military (locally known as the Tatmadaw) retreat from the minority-majority and resource-rich periphery since October 2023’s Operation 1027. They now only control less than half of the country’s territory. Here are some background briefings over the past year to bring unaware readers up to speed about this worsening conflict and its military-strategic dynamics:

* 8 February: “Myanmar’s Three-Year-Long Conflict Isn’t As Simple As It Seems At First Glance”

* 23 February: “America Is Preconditioning The Public For More Meddling In Myanmar”

* 5 March: “American Meddling Could Disrupt Myanmar’s Fragile Chinese-Mediated Peace Process”

* 18 March: “Myanmar’s Rebels & Their Foreign Supporters Really Dislike Thailand’s Four-Point Plan”

* 28 March: “TASS’ Interview With Myanmar’s Leader Had An Interesting Connectivity Tidbit”

* 5 April: “The West Is Returning To The Rohingya Issue In An Attempt To Divide & Rule This Part Of Asia”

* 27 May: “Bangladesh Warned About A Western Plot To Carve Out A Christian Proxy State In The Region”

* 2 June: “There’s A New Coordinated Push For More Western Meddling In Myanmar”

* 7 August: “Russia Has Limited Means For Helping Myanmar Wage Its War On Terror”

What’s most important for casual observers to know is that China has ties with the “Three Brotherhood Alliance” (3BA) that’s behind Operation 1027. The People’s Republic relied on some of their members for facilitating trade with the rest of Myanmar in prior years but then pivoted to supporting last year’s offensive so as to punish the Tatmadaw. China was angry about its past fling with the US as well as its alleged refusal to crack down on cross-border cybercrime and human trafficking rings.

At the same time, the US has also been backing the 3BA and other armed anti-state militias from the get-go since it considers them to be its best chance for carrying out regime change in this geostrategically positioned country at the crossroads of East, South, and Southeast Asia. The US also wants to threaten China’s Belt & Road Initiative (BRI) projects there that are part of the China-Myanmar Economic Corridor (CMEC), which includes pipelines, a port at Kyaukphyu in the Bay of Bengal, and a planned railroad.

The 3BA’s unexpected military success, which was facilitated by Beijing’s tacit support and refusal to punish them by cutting off their economic lifelines in the People’s Republic, threw China into a dilemma. It can either let events unfold at the risk of losing all influence in Myanmar after the US superceded its own over the 3BA, possibly leading to CMEC’s cancellation or it falling under the US’ proxy control, or it can intervene with private military contractors (PMC) like the latest reports claim that it’s planning:

* 15 November: “Myanmar Junta Planning Joint Security Firm with China”

* 20 November: “China’s joint security proposal sparks controversy in Myanmar”

* 21 November: “Are Chinese private armies entering the fray in Myanmar?”

* 23 November: “What happens when China puts boots on the ground in Myanmar?”

* 26 November: “Myanmar: How far will China go to keep junta afloat?”

None of these reports have been confirmed by China or the Tatmadaw so readers should be cautious, but in the event that there’s any truth to them, they’d represent an unprecedented escalation of the conflict. China’s latest call for peace talks might fall flat just like the ceasefire that it mediated earlier this year so it might feel compelled to unconventionally intervene via PMCs so as to safeguard its investments and influence there out of desperation.

That fateful move would entail the following risks:

1. From Mission Creep To Quagmire

Chinese PMCs might only be authorized to defend BRI projects at first, but this could easily evolve into providing logistical, intelligence, and eventually battlefield support to the Tatmadaw, thus raising the chances of a larger intervention that might even become a formal one with time just like Vietnam did. They might even get trapped in a quagmire due to the ethno-regional complexity of the world’s longest-running conflict as well as the mountainous and jungled geography in which it’s being fought.

2. China’s PMCs Lack Experience

There are no credible reports indicating that China’s PMCs have anywhere near the level of experience that American, other Western, and Russian ones do. Their possibly creeping involvement in this potential quagmire might therefore prove disastrous since they’ll either be defending or advancing against militants with literally decades-worth of experience on their home turf. The Chinese state and its people might also have less of a tolerance for high casualties than their aforesaid counterparts do.

3. Hastening The US’ Return To Asia

Trump 2.0 is already expected to “Pivot (back) to Asia” upon the inevitable end of the Ukrainian Conflict, whenever that might be and regardless of the terms, but they’ll have an even greater incentive to accelerate this process if China unconventionally intervenes in Myanmar. That development would predictably be spun as “aiding a genocidal military dictatorship” in order to justify this move, which could also lead to increased American involvement in the conflict as their proxy war there intensifies.

4. Falling Into A Brzezinski-Esque Trap

The above risk directly leads to the next one of the US having possibly planned this entire time to set a Brzezinski-esque trap for China in Myanmar along the lines of what that late National Security Advisor set for the erstwhile USSR in Afghanistan. The purpose is to draw it ever deeper into this seemingly intractable series of ethno-reginal conflicts in order to bleed it dry, establish the pretext for more sanctions, and rally a growing number of countries across the world against it.

5. Cross-Border Proxy Attacks

Just like the US uses Ukraine to launch cross-border artillery attacks and even raids against Russia, including the now-infamous invasion of Kursk that still hasn’t been pushed back one-quarter of a year since it started, so too might the US use the 3BA or other anti-state militias against China. The purpose would be to humiliate the People’s Republic and provoke an overreaction like more mission creep or an outmatched response that’s exploited to rally even more countries against it.

China is certainly aware of the risks that any unconventional PMC intervention in the Myanmarese Conflict would entail, but the military-strategic dynamics have changed so much over the past year that it might be willing to throw caution to the wind. That would be uncharacteristic of China, however, so it might ultimately not happen. If it does go through with this, then it might become as much of a game-changer as Russia’s special operation has been, for better or for worse depending on how it unfolds.

Tyler Durden Sun, 12/01/2024 - 22:10

The Top 5 States Americans Are Leaving

The Top 5 States Americans Are Leaving

Americans are constantly on the move, with many leaving their home states in search of better opportunities, lower living costs, or a change in scenery. Some states see more departures than others, raising the question of what’s driving people to pack up and leave.

This visualization, via Visual Capitalist's Kayla Zhu, shows the top five states that American residents moved away from in 2023 and their migration outflows, with the top three states where people from those states moved to labeled.

State-by-state migration flow data comes from the U.S. Census Bureau and is updated as of August 2024. Only residents aged one year and older were included and the data includes Puerto Rico but does not include U.S. island territories.

Which States Did Americans Move Away From in 2023?

Below, we show the top five states that Americans moved away from in 2023, with each states’ total number of residents who left, and the number of residents who went to the top three outbound states.

The average American moves about 11 times throughout their life, according to Steinway Moving and Storage. U.S. Census Bureau data shows that in 2023, 12% of Americans moved to a different residence within the country.

Some stayed close to home and moved within their home state, while others embarked on cross-country relocations. Out of those who moved to a different residence in 2023, 80% moved within their state and 20% moved to a different state.

Interestingly, three out of the top five states Americans are moving away from–Florida, Texas, and California–are also seeing the highest number of new residents from other states.

These states experience high migration turnover due to factors like job opportunities, housing affordability, tax policies, and lifestyle preferences such as weather and urban amenities.

New Yorkers Have Been Leaving In Droves

New York has also seen high levels of domestic out-migration since 2012, primarily due to job transfers, family reasons, or wanting to own a new home.

As one of the most expensive states to live in, it’s no surprise that many people are leaving New York due to affordability concerns and a desire for better quality of life.

Additionally, the pandemic-driven shift to remote work led to significant workforce losses in major metropolitans like New York, San Francisco, and Los Angeles.

To learn more about American domestic migration check out this graphic which shows the top five states Americans are moving to.

Tyler Durden Sun, 12/01/2024 - 21:35

Study Finds Plant-Based Food Additive Associated With Increased Insulin Resistance

Study Finds Plant-Based Food Additive Associated With Increased Insulin Resistance

Authored by George Citroner via The Epoch Times (emphasis ours),

A new study suggests potential health risks associated with carrageenan (derived from red seaweed), a common food additive used as a thickener and found in everything from ice cream to plant-based milk.

Hanna Lepisto/Shutterstock

Researchers found that overweight people who ate foods with the additive became more insulin resistant and had more inflammation.

“In overweight participants, carrageenan exposure resulted in lower whole body and hepatic insulin sensitivity,” the study authors wrote, highlighting the need for further investigation into food additives that consumers might consider harmless.

Carrageenan Linked to Reduced Insulin Sensitivity, Inflammation

The research, published in BMC Medicine on Tuesday, was a randomized, double-blind, placebo-controlled trial involving 20 young, healthy male participants who received either 250 milligrams of carrageenan or a placebo twice daily over two weeks.

Key outcomes of the study included the measurement of insulin sensitivity through various tests, including the oral glucose tolerance test. Although no significant differences in overall insulin sensitivity were observed among all participants, interactions between participants’ body mass index (BMI) and their exposure to carrageenan or the placebo were notable.

In overweight people, carrageenan led to lower insulin sensitivity, increased brain inflammation, and higher levels of inflammatory markers (C-reactive protein and interleukin-6).

Additionally, carrageenan was linked to increased intestinal permeability, suggesting the participants’ digestive systems might allow substances to enter the bloodstream more easily. The study also showed immune cell activation and increased pro-inflammatory proteins released from white blood cells after carrageenan exposure. This supports the theory that the additive may influence insulin sensitivity by fostering inflammation.

While existing research demonstrates carrageenan’s correlation with heightened metabolic risks, inflammation, and gut disruption, the precise molecular mechanisms driving these adverse effects remain unclear.

While previous animal studies had suggested that carrageenan could induce glucose intolerance and worsen the adverse effects of high-fat diets, the new study represents one of the first clinical investigations into the additive’s effects on human glycemic response.

The researchers called for further research into the long-term health impacts of carrageenan and similar food additives, particularly in populations at higher risk for developing Type 2 diabetes.

Cutting Out Carrageenan

Carrageenan is fairly common in highly processed foods, dairy products such as chocolate milk and ice cream, and plant milks, Stephanie Schiff, a registered dietician and certified diabetes care and education specialist at Huntingdon Hospital, a part of Northwell Health in New York, told The Epoch Times.

The additive can be easily avoided if you’re eating a diet based on whole foods that are as close to their natural state as possible, she noted.

“If a food is made in a factory and has ingredients that are not familiar or are difficult to pronounce, it is likely highly processed and may contain carrageenan,” Schiff said. “If you’re eating a packaged good that is creamy or thick, check the label; it may contain carrageenan.” Although carrageenan is approved by the U.S. Food and Drug Administration (FDA), Schiff noted that it has no nutritional value.

Schiff also recommended a whole-food, plant-focused diet to circumvent carrageenan and other unhealthy additives. Alternatives such as gellan, locust bean, guar, and xanthan gums can be used in place of carrageenan without the associated health risks. However, she cautioned that buying organic does not guarantee a product is free from carrageenan.

The amount of carrageenan in a typical Western diet can range from 250 milligrams to 2 to 4 grams per person per day. Carrageenan is the fourth-most commonly consumed food additive in pediatric patients with Crohn’s disease, according to research.

The U.S. Department of Agriculture (USDA) currently allows carrageenan in organic food, despite opposition from the National Organic Standards Board (NOSB), a federal advisory board that makes recommendations on organic food and products.

Carrageenan Isn’t the Only Additive of Concern

According to Schiff, people should be aware of other additives commonly found in processed foods, including:

  • Sodium Nitrite: Found in processed meats, nitrites have been linked to a higher risk of several types of cancer when heated.
  • High-Fructose Corn Syrup: This sweetener is associated with weight gain, diabetes, and inflammation.
  • Trans Fats: Present in hydrogenated and partially hydrogenated oils, these fats can increase the risk of heart disease, stroke, and diabetes.
  • Monosodium Glutamate (MSG): MSG can cause sweating, flushing, numbness, palpitations, and tingling in sensitive individuals.
Tyler Durden Sun, 12/01/2024 - 21:00

Turkish Intelligence Directing Extremist Offensive In Northwest Syria: AFP

Turkish Intelligence Directing Extremist Offensive In Northwest Syria: AFP

Via The Cradle

Militants from the Al-Qaeda-affiliated Hayat Tahrir al-Sham (HTS) currently invading Aleppo, Syria's second-largest city, are taking orders from Turkish intelligence, French news agency AFP has reported.

HTS, formerly known as the Nusra Front, launched a lightning offensive from the group's stronghold in Idlib Governorate on Wednesday. Its fighters took over numerous villages in the Aleppo countryside before taking control of large parts of Aleppo City on Saturday, including the ancient citadel. AFP writes that "Opposition sources in touch with Turkish intelligence said Turkey had given a green light to the offensive."

An AFP correspondent in HTS-held Idlib further reported that "The jihadists and their Turkey-backed allies took orders from a joint operations command." During the US-backed covert war on Syria that began in 2011, the CIA and allied intelligence agencies established joint operations rooms in southern Turkey and Amman, Jordan, to direct the activities of their extremist proxies fighting the Syrian government.

Image source: AFP

Izvestia reported that the current HTS attack on Aleppo was coordinated between Turkish, Ukrainian, and French intelligence, with Israeli support and US approval.

The Russian newspaper said the assault was originally planned for March but was launched early in response to events in Lebanon. On Wednesday, a ceasefire took effect to halt 66 days of brutal fighting between Hezbollah and the Israeli army in Lebanon.

Just as the ceasefire began, Israel turned its sights on Syria by bombing Lebanese-Syrian border crossings in an effort to prevent weapons transfers from Syria to Hezbollah.

Syrian army sources said on Saturday that Israel was also backing the extremists attacking Aleppo and areas on the Idlib front. In the past, Israel has kept its support for Al-Qaeda groups in Syria covert so as not to damage their credibility in the eyes of Arabs and Sunni Muslims.

Prime Minister Benjamin Netanyahu held a special security discussion Friday evening with the heads of the defense establishment to discuss the current fighting in Syria.

According to Yedioth Ahronoth, Israeli officials view the Turkish-backed extremist advance on Aleppo as an opportunity to weaken Syria, which is a key ally of Hezbollah and Iran in the Axis of Resistance.

An unnamed Israeli official told the Hebrew newspaper that the fighting "is something we need to closely monitor and see how it develops.'"

"It doesn't necessarily affect us, especially not in the short term, but any erosion of stability in a neighboring country could also impact us. It seems here that there are also opportunities for change," the official said.

Tyler Durden Sun, 12/01/2024 - 19:50

"This Is Nuts": NYC Pays Pakistani-Owned Roosevelt Hotel $220 Million To House Illegal Aliens 

"This Is Nuts": NYC Pays Pakistani-Owned Roosevelt Hotel $220 Million To House Illegal Aliens 

Americans should be outraged by New York City's $220 million sweetheart deal with Pakistan to lease the prestigious Roosevelt Hotel in Midtown Manhattan as a luxury shelter for illegal aliens. The most alarming issue is that NYC paid a foreign government to help house the migrants.

X user John LeFevre resurfaced a 2023 news story, first published by The Economic Times, regarding Pakistan's decision to lease the iconic Roosevelt Hotel to the local government, sympathetic to globalist policies, such as open borders. 

For some context, Pakistan has owned the Roosevelt Hotel since 1979. State-owned Pakistan International Airlines acquired the trophy property through its investment arm, PIA Investments Limited. 

According to the 2023 report, the lease agreement spans three years, during which NYC stuffed thousands of illegal aliens into the 1,250-room hotel like cattle—funded entirely by taxpayers. This arrangement has sparked outrage about how NYC paid a foreign gov't to help support the invasion of the third world into a first-world city.

"The hotel is owned by the government of Pakistan, and the deal was part of a $1.1 billion IMF bailout package to help Pakistan avoid defaulting on their international debt," LeFevre wrote on X. 

According to the public records website The Org, Najeeb Samie is a director at Roosevelt Hotel Corporation, as well as a director at Habib Bank and board member and managing director at PIA Investments.

Samie's connection with Habib Bank is alarming, given that in 2017, the New York State Department of Financial Services fined the Pakistani bank $225 million and surrendered its license to operate in the US over compliance failures in its New York branch, such as weaknesses in monitoring transactions for potential links to terrorism financing and sanctions evasion. 

Meanwhile, the Department of Government Efficiency, aka DOGE's Vivek Ramaswamy (also led by Elon Musk), is livid over NYC funding a foreign gov't entity with taxpayer dollars in supporting the migrant invasion. He called the migrant housing scheme totally "nuts":

"A taxpayer-funded hotel for illegal migrants is owned by the Pakistani government which means NYC taxpayers are effectively paying a foreign government to house illegals in our own country. This is nuts.

Musk also chimed in, calling it "Crazy."

Here's what X users had to say: 

What in the actual!

Tyler Durden Sun, 12/01/2024 - 19:15

AOC May Launch 2028 Bid In Likely Redux Of Kamala Blunder

AOC May Launch 2028 Bid In Likely Redux Of Kamala Blunder

Authored by Luis Cornelio via Headline USA,

Leftist Rep. Alexandria Ocasio-Cortez is rumored to be a candidate in the 2028 presidential election, immediately drawing laughter and mockery from critics on social media. 

Ocasio-Cortez’s name “always bubbles to the top” when Democrats discuss the party’s future, The Hill noted Friday in a compilation list of potential presidential contenders. 

One leftist strategist claimed the congresswoman has impressed Democrats by cutting “through the BS and telling it like it is.” This positive characterization sharply contrasted with online comments from users on X. 

Former Rep. Matt Gaetz reacted to the news by jesting, “Alex has told people she’s running in 2028 since 2019.” 

This comment appears to reference the suggestion made by some Democrats in 2020 that Ocasio-Cortez would have been a presidential “front-runner” had she not been so young. 

One user shared Ocasio-Cortez’s infamous crying photo at the southern border, with a Trump-Vance sign photoshopped into the image.

Another user shared an AI-generated image of Ocasio-Cortez as a swamp-like comic villain, with incoming Vice President JD Vance’s face photoshopped onto a Captain America costume in the image. 

“Think of the memes!” the second user said, predicting that an Ocasio-Cortez candidacy would invite mockery. 

Podcast host and author Alec Lace mocked Ocasio-Cortez by recalling how her endorsement of outgoing Rep. Jamaal Bowman failed to save him from losing his Democratic primary. 

A second Democratic strategist told The Hill that Ocasio-Cortez and her leftist “Squad” are deemed too controversial. 

“She and the ‘squad’ started pushing too hard, too fast,” the Democrat said. “D.C. doesn’t work that way. And our party doesn’t work that way. We need to get back to the basics.” 

A potential Ocasio-Cortez candidacy could mirror outgoing Vice President Kamala Harris’s first presidential bid in 2020. 

Harris launched her campaign as a progressive leader but ultimately failed to make it to the primaries.

Her campaign was plagued by controversy, wasteful spending and ineffective staff. Four years later, Harris would renounce most of her leftist policies in a failed bid to appear moderate. 

Tyler Durden Sun, 12/01/2024 - 18:40

Thanksgiving 5-Day US Box Office Sets Record At $420M; AMC CEO Calls Moviegoer Surge A "National Phenomenon" 

Thanksgiving 5-Day US Box Office Sets Record At $420M; AMC CEO Calls Moviegoer Surge A "National Phenomenon" 

Paul Dergarabedian, a media analyst for Comscore, revealed on X on Sunday afternoon that US domestic box offices set a record, raking in $420 million over the five-day Thanksgiving holiday period. According to Deadline, Disney's Moana sequel was the most popular movie, attracting 17.4 million admissions,  Universal's Wicked with 8.7 million viewers, and Paramount's Gladiator II drew 3.3 million from Wednesday through Sunday. 

Dergarabedian said Comscore reports "a monumental Thanksgiving weekend (and week) for movie theatres!"

He noted that "this weekend's overall total estimated 3-day Domestic box office is around $272M (5-day at an estimated $420M) & YTD 2024 (now at $7.781B through Sunday) is down now just 6.4% vs. 2023, Note: a week ago Sunday the YTD deficit was at 10.6%!" 

X user Tony Denaro posted that the top ten grossing flicks for the five-day period hit new records.

"Press reporting that Americans are pouring into movie theatres this holiday weekend for Moana 2, Wicked and Gladiator II," AMC Entertainment Holdings CEO Adam Aron wrote on X. 

He noted, "So many appealing movies in theatres. Smaller titles too like Red One, Conclave and Juror #2. Be part of a national phenomenon." 

For nearly a week, we have reported on the surge of moviegoers attending AMC's theaters nationwide...

Shares of AMC closed around the $5 handle on Friday. 

Bloomberg data shows 13.3% of the float is short, or about 49.8 million shares. 

Going to the theaters is apparently back. 

Any AMC rally on this news should be approached with caution, as the company is burdened by $4 billion in long-term debt and hefty interest payments. This may only suggest that CEO Aron might hit equity markets on any significant pop.

Tyler Durden Sun, 12/01/2024 - 18:05

Death Toll From Islamist Assault On Aleppo Nears 500 As Iran Says 'Firmly Supports' Assad

Death Toll From Islamist Assault On Aleppo Nears 500 As Iran Says 'Firmly Supports' Assad

President Bashar al-Assad has reportedly sent large reinforcements to the southern Aleppo area after Al-Qaeda linked insurgents' shock offensive which captured the city. Assad said he will defend Syria's stability and territorial integrity.

The London-based political opposition group Syrian Observatory for Human Rights said Sunday that the total death toll from the fighting is over 400 people on both sides. The tally includes the deaths of 214 members of Hayat Tahrir al-Sham and allied factions which launched the assault.

Associated Press: Islamist insurgents captured a Syrian army tank in the town of Maarat al-Numan, southwest from Aleppo, Syria, Saturday.

And at least 137 pro-government forces and 61 civilians have been killed. The AFP has described that the military campaign launched out of Idlib is being coordinated from an operations room in Turkey.

AFP wrote on Friday that "Opposition sources in touch with Turkish intelligence said Turkey had given a green light to the offensive." AFPs correspondent in HTS/AQ-held Idlib additionally reported that "The jihadists and their Turkey-backed allies took orders from a joint operations command."

A fresh report in Israeli media has acknowledged that this is all about weakening the 'Iran axis':

But the primary reason for the success of the rebel offensive and the collapse of the regime forces is the effectiveness of Israel’s military operations against Hezbollah and Iran since October 8, 2023.

HTS had been building up its military capabilities for years in preparation for such an offensive.

“The group operates a professionally staffed military academy run by defectors from the Syrian military, and it has restructured its armed wing into a conventional armed force structure,” wrote Charles Lister, Syria expert at the Middle East Institute. “In recent years, it has also developed ‘special forces’ units dedicated to covert operations, lightning raids behind enemy lines, and nighttime operations.”

In prior years, any time an air and artillery campaign against Al-Qaeda held Idlib would ramp up, there would be an outcry from the West, and more condemnation of Damascus and Moscow, urging their militaries to halt efforts to take back Idlib.

According to more on the Israeli and Sunni Islamists' efforts to roll back the pro-Tehran axis:

"The timing is not coincidental," Carmit Valensi, head of the Northern Arena Program at the Institute for National Security Studies in Tel Aviv, told The Times of Israel.

"They identify well the critical, even historical, weakness that the ‘Resistance Axis,’ primarily Hezbollah and Iran, find themselves in," she continued.

As for Iran, it says that it firmly supports Assad in a new statement. Iran’s top diplomat Abbas Araghchi said Sunday he will soon arrive in Damascus to deliver a strong message of support for Syria’s government and military, Iranian state media has said.

"I am going to Damascus to convey the message of the Islamic Republic to the Syrian government," Iranian Foreign Minister Abbas Araghchi said. He pledged that Iran will "firmly support the Syrian government and army," IRNA news agency said.

Iran is pointing the finger at Washington and Tel Aviv for this new jihadist offensive:

Araghchi again called the surprise rebel offensive a plot by the United States and Israel.

"The Syrian army will once again beat these terrorist groups as in the past," the foreign minister added.

In the past couple days of Aleppo fighting, not only has the Islamic Republic's consulate in the major northern city come under attack, but there have been reports that an Iranian general may have been killed.

The HTS-led coalition is attacking Kurdish groups in the environs of northern Aleppo as well. Currently there are reports the militants are reinforcing their positions near Hama, possibly poised to attack the central city next.

After years and years of crippling sanctions, the Syrian Army remains in a precarious position in terms of resources and logistics. "Outside the city of Hama, Syrian government military vehicles could be seen all over the roads, apparently abandoned by fleeing government troops after they ran out of fuel," The New York Times writes Sunday.

* * *

As a reminder, amid this renewed conflict the United States still occupied large portions of Syria, and curiously the HTS/AQ militant groups are not attacking these US-occupied areas...

Tyler Durden Sun, 12/01/2024 - 16:55

Cruising Into Year End?

Cruising Into Year End?

By Peter Tchir, chief strategist of Academy Securities

For the record, I am not advocating cruising into year-end. I think there will be potential opportunities to be captured by diligent asset managers and corporations. We will focus on yields and credit spreads today. But let’s start by hoping that you all had a great Thanksgiving! Last weekend’s An Amazing Country (with some questions) hopefully helped you navigate through some holiday meal discussions (or more likely, work discussions), and it remains relevant today, as does 3D Chess or 52-Card Pickup.

In fact, now that “consensus” has become that everything President-elect Trump does is “just a start” to his bargaining, I’m a little concerned that the market has become a little too complacent. Yes, we were arguing for this view, but it is surprising how quickly it seems to have morphed into a consensus trade.

Around the World with Academy Securities

In case you missed our Around The World report on Wednesday, it covers the usual suspects, but with some different twists and turns.

Sierpinski Triangle

As there is a lot of chatter about “chaos” (along with our analysis of 3D Chess versus 52-Card Pickup), I’ve been thinking a lot about the Sierpinski Triangle. You start with any type of triangle. Then, you start rolling the dice and moving from your current position in the triangle to one halfway to the corner “selected” by the die. Once you’ve gone a couple of turns to “seed” the solution, you mark the points and repeat ad infinitum. What seems random, creates, with 100% certainty, an elaborate pattern that I cannot believe many people would have guessed to be the output of this exercise (it is often one of the early chapters on anything about chaos theory).

So, as we watch the machinations coming out of D.C., we are still left wondering whether an elaborate pattern will emerge from the current selection process.

It does seem that the market went from doubting all the moves out of D.C. (which seemed too pessimistic) to suddenly seeing order (or at least no major stumbling blocks) from D.C. – which might be too optimistic.

Expect Some Chaos

Okay, chaos is probably too strong of a word, but I do think that the market should be prepared for some setbacks, as not every negotiation or appointment will go smoothly. It is the nature of President-elect Trump’s style – from his old real estate days to his first term as president – he will push, he will be aggressive, and there will be some confusion.

Inflation

Inflation might be the trickiest variable to estimate right now. Over time, we could see the economy turn one way or the other, and we could see the jobs situation change, but inflation, in my view, has  the widest range of possible outcomes in the coming months.

  • Tariffs, as discussed last week, could push inflation higher. That is not our base case (and is not consensus), but there is some risk here.

  • Immigration issues could impact inflation quite dramatically. Again, we covered this last week, and our base case is that Trump will go after some high profile wins and listen to some of his constituents, who don’t want wholesale deportations that would disrupt the labor force. Again, consensus seems to have moved in this direction as well, but our conviction on this base case is medium (at best) and there could be risks that are not being priced in appropriately.

  • The natural ebbs and flows of supply and demand. We were in the camp that believed inflation was under control, but not tamed (call it, settling into a 1.75% to 2.75% range). As businesses are allegedly pulling forward purchases to avoid potential tariffs, as China continues to try to stimulate its economy, and as we see policy to promote “onshoring,” there are some risks of inflation moving back to the high end of our range, which would likely make the Fed (and bond markets) uncomfortable.

  • Commodity prices should help the inflation story if we really are going to see a “Drill Baby Drill” mentality. Or, as discussed in detail last weekend (yes, I’m referring to that fairly often, but it forms the building blocks for much of our current work), we could see a pushback against “Not In My Backyard”, but commodity prices should remain under control (while commodity related companies can do very well with increased production).

Rates

Positioning has been and will continue to be a factor.

I’ve been pointed to the “Commitment of Traders” report: there is a lot of short interest by speculators, especially in the 10-year part of the curve. It apparently has been coming down, but if traders remain short, it will continue to help support bond prices. TLT, a 20+ year ETF, has been seeing outflows even as yields went higher – another potential indicator that positioning remains “underweight” bonds.

The negative buzz around the deficit and bond yields seems to have dissipated. In a quick note on Friday to our capital markets team and via Bloomberg to the clients I’m in IB chats with, we reduced our bullish outlook on bonds at 4.19% on 10s.
We actually saw buying right up to the last minute on Friday’s trading, but I think with the “index extension” trade over and back to full days to trade bonds, it will be difficult for the rally to continue Our target was 4.1% to 4.2%, and while we are at the high end of our range, the rally has been almost too ferocious of late to be truly believable. The fears around tariffs, immigration, and the deficit (which were overdone), have now been replaced with a degree of complacency that doesn’t seem deserved.

China TIC data showed China holding $772 billion of Treasuries at the end of September. That number has been between $780 billion and $767 billion (a very narrow range) since February. There is no obvious reason for China to grow their holdings, and if anything, as they continue their efforts to stimulate their economy and gird for potential tough negotiations with Trump, we could see them lowering the amount held in the coming months. Not a big problem for markets, but not helpful as we have a lot of bonds to auction in the coming months.

The Fed:

  • 1 cut in the next two meetings, probably this one.

  • A terminal rate of 3.875% next year, a bit above the 3.45% priced in for December 2025 (according to the Bloomberg WIRP function).

Bond Yields:

  • Expect the 10-year to inch a touch higher, pushing back towards 4.3%, with a lot of difficulty getting back to 4%.

Should be a good “range trading” environment, with a much greater risk of 50 bps higher than 50 bps lower from here, for the long end.

Credit

It has been almost six months since we devoted serious attention to the credit markets.

Back in June, we published How Tight Can Credit Spreads Go?, and were unequivocally and unapologetically bullish on credit. We listed trends like private credit, banks competing for lending (to grow their net interest margin), and how much the high yield bond market has changed as reasons why fretting over old charts makes little sense. We dragged out our old standbys – Maslow’s Hierarchy of a Credit Bubble, The 5 Circles of Bond Investor Hell, and a picture of one of the remaining IG 200 hats! If you lived through the GFC and traded CDX indices, you likely remember the hats.

While CDX didn’t get to 20 bps, it has traded very well, as has any measure of corporate bond spreads.

While I remain very comfortable with credit, it is more difficult to sit here near the lows and continue to add to credit. It might not take much to “upset” the apple cart here, at least a little. While the arguments for liking credit so much (at what already seemed like tight levels back in June) largely remain in place, they are all a bit worn here. Just like that favorite shirt that is still up there on your list, but you can tell that it is getting dated.

If you go back two years, we are still at, or near, the lowest average yield for the corporate bond index (it varies with time, depending on the type of issuance, maturity, rating, etc.). We’ve seen a brief reprieve on the rates side, but even though I’m bullish credit (kind of) and bullish rates (but not really at this moment), the Bloomberg League Tables show $1.58 trillion issued this year and $1.2 trillion issued last year.

The number of scenarios that are likely to play out, ending with higher average yields on this index, are more numerous and plausible than those scenarios that drive this average yield lower.

  • Much lower Treasury yields. I don’t see how we get to much lower Treasury yields from here, without some sort of a problem facing the economy. Something that we’re trying to do could backfire, but I find it difficult to believe that credit spreads will remain tight if we see Treasuries rally significantly from here. Sure, we can get back to 4%, but the scenario for a “benign” move back to 3.7% doesn’t seem plausible to me. I’m recalling a longtime client once telling me that the best interest rate hedge, if you own high-yield bonds, is to own Treasuries. It sounds backwards, but works surprising well in times of stress – which is what would have to be occurring to push yields lower now.

  • Much higher Treasury yields. This risk seems much greater than getting much lower yields (especially as the opposite view becomes consensus). It is extremely difficult for spreads to keep up with bond yields. It just becomes difficult for spreads to move even 10 bps tighter from these levels, if bond yields move 25 bps higher. So yes, higher Treasury yields will likely be accompanied by tighter spreads, but all-in yields will be higher.

Sure, Goldilocks could make an appearance and let overall yields go lower, but Goldilocks tends to be a better acquaintance of equity traders than fixed income traders!

Bottom Line

If you are a fixed income asset manager, you can switch to moderately underweight duration here. If you are a corporate bond manager, I think it’s time to get back down to a normal, rather than overweight, position. Maybe even inch towards underweight/short. While it is anathema for hedge funds to think about running IG credit without rate hedges, I think betting on overall yields going higher is the right move, as scenarios with significantly lower overall yields seem unlikely.

If you are an issuer, do the opposite and look for opportunities to sell debt at reasonable yields. While some people will be on vacation, coupon payments, maturing debt, and the pressure to match indices do not take time off in December. There will be cash coming into the market, and in this day and age, even desks that are half-staffed can process a LOT of bonds! I’d rather take advantage of what I think will turn out to be a decent overall yield, relative to what we might see in January.

If you are an equity investor, nothing has really changed - be nimble, trade the ranges, and be overweight sectors that are catching up. Seasonality should still be helpful, but since people have been talking about (and presumably positioning for) seasonality since September, I’m a bit skeptical it will be overwhelmingly strong, at least at the start of the month.

Be long on risks that benefit from a push to extract and refine commodities, if not domestically, much closer to home (and further away from China). Be wary of big tech at these valuations and watch carefully for China’s attempts to push their brands globally, especially into emerging markets – that is a risk that still seems largely dismissed, even as it is occurring.

Everything that comes across my stream in terms of CRE scares me, which the contrarian in me finds even more tempting. The exact opposite is occurring with crypto, but watch out for a rug pull there. Hopefully you all had a great Thanksgiving weekend and a fun holiday season, but I suspect that the market will create multiple opportunities to adjust portfolios as D.C. will remain front and center.

Tyler Durden Sun, 12/01/2024 - 16:20

"It's Illegal": Canadian Media Sues OpenAI For 'Scraping Large Swaths Of Content' To Train Chatbot

"It's Illegal": Canadian Media Sues OpenAI For 'Scraping Large Swaths Of Content' To Train Chatbot

Five Canadian media companies are suing OpenAI, alleging that the ChatGPT creator has breached copyright and online terms of use in order to train the popular chatbot.

The joint lawsuit, filed on Friday in the Ontario Superior Court of Justice, follows similar suits brought against OpenAI and Microsoft in 2023 by the New York Times, which claimed copyright infringement of news content related to AI systems.

The Canadian outlets - which include the Globe and Mail, the Toronto Star and the Canadian Broadcasting Corporation (CBC), are seeking what could amount to billions of dollars in damages, as they have demanded 20,000 Canadian dollars (US$14,700) for each article they claim was illegally scraped and used to train ChatGPT.

"OpenAI is capitalizing and profiting from the use of this content, without getting permission or compensating content owners," the group said in a Friday statement, adding that they're responsible for the "bulk of Canada’s journalistic content."

The plaintiffs are also seeking a share of OpenAI's profits, as well as a halt to the use of future content.

"OpenAI regularly breaches copyright and online terms of use by scraping large swaths of content from Canadian media to help develop its products, such as ChatGPT," the group said in a statement.

"OpenAI’s public statements that it is somehow fair or in the public interest for them to use other companies’ intellectual property for their own commercial gain is wrong," they added. "Journalism is in the public interest. OpenAI using other companies’ journalism for their own commercial gain is not. It’s illegal."

The lawsuit claims that OpenAI circumvented specific technological and legal tools - such as the Robot Exclusion Protocol, copyright disclaimers and paywalls, which exist in part to prevent scraping or other types of unauthorized use of their published content.

In the NYT vs. OpenAI and Microsoft case, which is currently in discovery, the Times claims the company similarly broke laws to train ChatGPT, as well as provide search results.

The Canadian case has a narrower focus - scraping data for training - not search results, and does not name Microsoft.

"We believe we have a strong case related to the training of the models. The training of the models is the core of the problem," said Sana Halwani, a partner at the Canadian law firm Lenczner Slaght, which represents the media organizations in the lawsuit, in a statement to the NYT.

The Canadian publishers could find some of their claims easier to prove than others, with copyright infringement being the toughest, according to Lisa Macklem, a lecturer King’s University College at Western University in Ontario, who is an expert in copyright and media law. -NYT

"While it seems obvious that OpenAI is infringing copyright, it is technically very difficult to prove, and this underscores the immediate and pressing need to have regulations put in place, demanding, at the very least, transparency on what is in the training data of generative AI," said Macklem.

OpenAI's problems don't end there. Over the summer, Elon Musk - who co-founded OpenAI in 2015 but left in 2018 under bad circumstances, sued OpenAI, claiming that two of its founders, Sam Altman and Greg Brockman, breached the company's founding contract by putting commercial interests ahead of the public good.

Tyler Durden Sun, 12/01/2024 - 15:45

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