US Hints At Regime Change In Tehran If Israel Is Attacked

The US is preparing to play Air Force for Israel's skies as it deploys a dozen F-22 stealth raptor jets to the Middle East region. This change in 'force posture' was not debated in Congress (nor is it even really being debated on the mainstream networks), despite that clearly US service members could soon find themselves in the middle of a war between Iran and Israel.

The White House has issued a fresh warning to Tehran on Thursday as it is said to still be gearing up for a strike on Israel in retaliation for the July 31st killing of Hamas leader Ismail Haniyeh at a residence in Tehran. The new warning from Washington includes both negative economic consequences and threats of destabilizing actions directed against the newly elected government of Masoud Pezeshkian.

The attack on Tehran’s embassy compound in Damascus, Syria, on April 1, marked an unprecedented escalation. AFP/Getty Images

"The United States has sent clear messaging to Iran that the risk of a major escalation if they do a significant retaliatory attack against Israel is extremely high," a US admin official told The Wall Street Journal.

The official further said that Tehran has been put on notice over "a serious risk of consequences for Iran’s economy and the stability of its newly elected government if it goes down that path."

Is this a threat of regime change? To the ears of Iranian officials, it will sure sound like it given the country on its eastern border and the country on its western border were both regime-changed by Washington.

Currently, the consensus among US national security officials is that Hezbollah is likely to play a much bigger and coordinated role in any potential Iranian ballistic missile and drone attack on Israel:

Officials also don’t know for sure whether Hezbollah plans to attack at the same time in a coordinated offensive with Iran or separately. Hezbollah has a large arsenal of missiles that can reach Israel and the concern is that the group and Iran might attack at the same time to try to overwhelm Israel’s missile defenses. 

"Last time we got more of a heads up, and this time people are making their best guesses," said a third U.S. official. 

But while the US mainstream media narrative remains that it is exclusively Iran and its regional allies that are the regional 'aggressors' against Israel and the US, the fact remains that it is Israel which has attacked close Tehran ally Syria literally hundreds of times over the past years.

You will find more infographics at Statista

And more recently, Israel attacked the Iranian embassy in Damascus (the aftermath which is pictured above). Nation-states did not attack each other's embassies even during World Wars I and II, and the strike on the diplomatic complex was unprecedented in history as an intentional act prior to Israel's April 1st operation in the Syrian capital.

Tyler Durden Thu, 08/08/2024 - 20:30

"Progress" - NIH Brags About Using Tax Dollars To Fund More Research By Black Scholars

Authored by Micaiah Bilger via The College Fix,

Even as diversity, equity, and inclusion efforts draw increased scrutiny at the state level, a federal government agency is bragging about promoting DEI - and using Americans’ hard-earned tax dollars to do it.

“Progress” is how National Institutes of Health diversity officer Marie Bernard recently described the agency’s work to fund more research by black scholars.

But the massive amount of time and money the NIH is dedicating to DEI in higher education is anything but “progress” when the color of a person’s skin or their “gender identity” is weighed more heavily than their merit.

Meanwhile, professionals are expressing concerns about DEI efforts leading to a lower caliber of students and recent graduates, including future doctors and military leaders.

The NIH has been working since 2011 to close up what an agency-commissioned report described as a “gap” in funding to black researchers, Bernard wrote in a recent blog post on the NIH website.

“Over the last 13 years since the release of the Ginther report, NIH has initiated numerous initiatives to foster diverse perspectives in science,” including a Diversity Program Consortium and institute-wide trainings “to foster diverse perspectives in science,” she wrote.

Her own role as the chief officer for scientific workforce diversity also was created as a result of the report, Bernard wrote.

While “gaps remain in funding rates by race and ethnicity for research project grants,” Bernard said the NIH is “encouraged by the overall trends.”

But Bernard denied that the NIH is funding projects “based on demographic characteristics,” writing:

“Clearly, to benefit from the full range of talent available within the United States and foster creativity and innovation in science, we need as broad a range of voices as possible. … NIH, of course, does not fund based on demographic characteristics, and those data are not available to reviewers during their deliberations. However, we will continue looking at the data retrospectively to determine whether we are achieving equity and evaluating our programs and policies to be assured that there are no barriers to everyone being at the table.”

In the same article, however, she mentioned the NIH Faculty Institutional Recruitment for Sustainable Transformation initiative, which “target[s] early career faculty who have an interest and commitment to [diversity, equity, inclusion, and accessibility].”

That initiative awarded more than $64 million to four universities earlier this year for the purpose of recruiting more “diverse” faculty. And it’s the third round of awards – meaning that is just a fraction of the total funding.

For those wondering why identity politics and DEI have become such a big focus in higher education, consider the old adage “follow the money.”

With the federal government continuing to pour hundreds of millions of dollars into such projects, it is little wonder these controversial ideas are getting so much attention.

Tyler Durden Thu, 08/08/2024 - 20:05

Value Of US Housing Hits Record $50 Trillion, Up 7% In Past Year, Just In Time For Fed Rate Cuts

The Fed's rate hikes were supposed to slow down the economy and, thanks to soaring interest rates, lower prices and make housing more affordable. That did not happen, and instead housing is now the least affordable it has been in US history.

And while an entire generation of potential buyers will be forced to rent indefinitely, the flip side is that anyone who has been lucky enough to buy a house, is celebrating on a day real-estate brokerage Redfin reports that the total value of U.S homes gained $3.1 trillion over the past 12 months to reach a record $49.6 trillion.

In percentage terms, the total value of the US housing market grew 6.6% year over year, laughing in the face of a Fed chair who kept on hiking rates in hopes of lowering prices. Zooming out further, the total value of U.S. homes has more than doubled in the past decade, climbing nearly 120% from $22.7 trillion in June 2014.

"The value of America’s housing market will likely cross the $50 trillion threshold in the next 12 months as there are not enough homes being listed to push prices down," said Redfin Economics Research Lead Chen Zhao. “Mortgage rates have started falling, but many potential sellers and buyers are waiting to make a move, meaning we are likely to continue seeing a pattern where prices slowly tick up. That’s great news for the millions of American homeowners who see their equity rising, but first-time buyers are going to keep finding it tough to find an affordable home.”

That, of course, is an understatement: what Zhao meant is that for millions of Americans, the dream of owning a home is now gone for ever, because if they couldn't afford to buy a house during the most aggressive rate hike cycle since Volcker, the coming rate cuts will certainly not make it easier.

The number of metros where the total value of homes topped $1 trillion grew to eight—doubling from four a year ago—with Anaheim, CA, Chicago, Phoenix and Washington, DC, joining New York, Los Angeles, Atlanta and Boston in the trillion-dollar club. San Diego and Seattle look like they will join them in the next 12 months if home values keep increasing at a similar pace.

It’s worth noting that while San Francisco’s aggregate home value is roughly $700 billion, when combined with neighbors Oakland, CA, and San Jose, CA, the combined Bay Area housing market is worth nearly $2.5 trillion. Likewise, the combined Dallas ($734 million) and Fort Worth, TX ($294 million) metro area also surpasses the $1 trillion mark.

Rural home values outpaced those in urban areas and the suburbs, jumping 7% year over year to $7.8 trillion. The total value of homes in urban areas rose 6% to $10.3 trillion, while the value of homes in the suburbs cracked the $30 trillion mark for the first time, increasing 6.8% to $30.1 trillion.

There are around 57 million homes in the suburbs, compared to 22 million in urban areas and 21 million in rural areas.

Thirteen major metros posted double-digit percentage gains in total property value over the last year, led by relatively-affordable New Jersey metros within commuting distance of New York, where property is more expensive. The value of properties in New Brunswick, NJ rose 13.3% to $582.6 billion, while Newark, NJ climbed 13.2% to $406.2 billion. Anaheim, CA (up 12.1% to $1.1 trillion), Charleston, SC (up 11.8% to $188.9 billion) and New Haven, CT (up 11.8% to $91 billion) rounded out the five metros with the highest gains.

Cape Coral, FL was the only metro to record a fall in total home value, dropping 1.6% to $204.2 billion. Sun Belt metros—especially those in Texas—grew slower than those in other regions, with New Orleans (up 0.8% to $128.2 billion), Austin, TX (up 1.9% to $392.8 billion), North Port, FL (up 2.1% to $251.8 billion) and Fort Worth, TX (up 2.3% to $293.7 billion) rounding out the bottom five metros.

Broken down by age group, the total value of homes owned by millennials rose 21.5% year over year to $8.6 trillion in the first quarter of 2024—the most recent period for which generational data is available—nearly four times as fast as any other generation.

The increase is partly due to the overall growth in home prices, but also because millennials are now the largest generation by population and have reached an age and financial position where they make up a larger share of the homebuying market. Around two-thirds of the mortgages taken out in 2023 were issued to homebuyers under the age of 45.

Meanwhile, the total value of homes owned by the Silent Generation fell for the fifth straight quarter, dropping 1.6% to $4.6 trillion. The value of homes owned by baby boomers increased 6.1% to $19 trillion, while Gen X home values rose 5.9% to $13.6 trillion.

Finally, Asians once again made the best decisions, and after falling in 2022-2023, the total value of homes in neighborhoods that are majority Asian bounced back over the past 12 months, rising 9% to $1.4 trillion. The increased value is being caused by price growth in West Coast cities—where many Asian neighborhoods are located.  In comparison, majority white neighborhoods experienced a 6.6% increase in value to $39.4 trillion, while majority Black neighborhoods saw a 5.4% increase in value to $1.4 trillion. The value of homes in majority Hispanic neighborhoods increased 6.4% to $2 trillion.

More in the full report available here.

Tyler Durden Thu, 08/08/2024 - 19:40

LA County To Extend Guaranteed-Income Plan To 2,000 Foster Dependents

Via City News Service,

The Board of Supervisors voted Aug. 6 to expand its “Breathe'' guaranteed-income program to provide financial stipends to more than 2,000 non-minor dependents in the foster care system.

Holly Mitchell, a member of the Los Angeles County Board of Supervisors, speaks to the media in Los Angeles on April 1, 2021. (Patrick T. Fallon/AFP via Getty Images)

In addition to the stipends, the foster dependents will also have access to career and education counseling, financial empowerment training, housing and other programs as recommended by the Department of Consumer and Business Affairs’ Center for Financial Empowerment.

The Breathe guaranteed income program began as a pilot project in March 2022, providing monthly $1,000 payments to 1,000 in-need residents.

Last year, the board agreed to expand the program to include 200 former foster care youth adjusting to life outside the system.

“While Breathe’s initial expansion supports 200 former foster youth, the continued support of transitioning foster youth can provide essential financial stability during such a critical and pivotal time in their lives where data has demonstrated the risks youth exiting care face, including homelessness to justice system involvement,'' according to a motion by Supervisor Holly Mitchell.

According to the motion, funding to expand the program is available through the state’s Flexible Family Support funding. The FFS funding requires that recipients use the money for specific purposes, defined as “extracurricular and enrichment activities that are designed to enhance the foster child or non-minor dependant’s skills, abilities, self-esteem, relationships, and overall well-being and healing.'’

Noting that L.A. County is home to the largest population of youth living in foster care, Mitchell on Tuesday called guaranteed income a “powerful and effective way to truly disrupt poverty.'’

Supervisor Lindsey Horvath also spoke out in favor of the idea, saying foster youth often have the worst outcomes when transitioning out of the system, including homelessness, dropping out of schools, poor health and poverty.

“By offering financial support combined with career and education counseling, financial literacy, housing and benefit access support, we‘ll begin to provide stable transition out of care,’' Horvath said.

The expansion will provide support to two groups of people in the foster system between ages 18 and 21:

-- The first group will be 1,000 people aged 18 and 19, providing them $500 monthly stipends for 18 months, along with access to career and education counseling, financial empowerment training, and other supportive services.

-- The second group will be 1,000 individuals between ages 19 and 21 who are likely to age out of foster care during the 18-month program, providing them with $1,500 quarterly stipends, with the final payment provided in the quarter in which the person turns 21. They would also be provided access to counseling and other supportive services.

To enact the expansion, the board approved through the motion a $4 million increase to a contract with Strength Based Community Change-- the program administrator-- which will also evaluate the program’s impact and how recipients are using the funds.

It also backed a roughly $15 million expansion in the contract with MoCaFi, which distributes the debit cards used in the program and also distributes the stipends to those cards, to cover the costs of the payments.

Tyler Durden Thu, 08/08/2024 - 17:00

UK Authorities Now Arresting People For Posting "Inaccurate Information" On Social Media

Authored by Paul Joseph Watson via Modernity.news,

Authorities in the UK are now arresting people for posting “inaccurate information” on social media, according to a new report.

Sky News reports that a woman has been arrested by Cheshire Police for posting “inaccurate information on social media” about the attacker who stabbed three girls to death in Southport last week.

The 55-year-old woman was arrested near the northern town of Chester on “suspicion of publishing written material to stir up racial hatred and false communications.”

Chief Superintendent Allison Ross gave a statement explaining how the post is alleged to have “fueled” the protests and riots in the UK over the last week, which she asserts started as a result of “malicious and inaccurate communications online.”

JUST IN - UK authorities begin to arrest citizens for social media posts "containing inaccurate information."pic.twitter.com/Mc4QYk5D3V

— Disclose.tv (@disclosetv) August 8, 2024

Ross said the arrest was a warning to others about “the dangers of posting information on social media platforms without checking the accuracy” and that “we are all accountable for our actions.”

UK police are now arresting people for being wrong on the Internet. Let that sink in.

Presumably, the woman will now be thrown in prison along with people who attended the protests, such as Steven Mailen, who has been jailed for 26 months for “shouting” at police officers.

We're literally releasing 500 prisoners early so we can imprison blokes like this for 26! (Twenty Six) months for aggressively shouting at coppers. Not many will have huge sympathy for these rioters but you're insane if you can't see how ridiculous this is. https://t.co/RCa8plOKHX

— Fox (@foxblade98) August 8, 2024

As we highlighted earlier, head of the Met Police Sir Mark Rowley warned that “keyboard warriors” could be hit with terrorism charges for inciting riots online, even if they are living abroad.

Brits have also been warned that merely retweeting information about the riots could lead to criminal charges.

Stephen Parkinson, the Director of Public Prosecutions, told Sky News that people do not even need to personally post the content themselves to be deemed to be committing an offence.

Parkinson said social media users could be guilty of “incitement to racial hatred” if they post “insulting or abusive” content that is “likely to stir up racial hatred.”

*  *  *

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Thu, 08/08/2024 - 16:40

"I F**king Told Them!": Enraged Butler Cop On Bodycam Says He Told Secret Service To Cover Warehouse Used By Shooter, And They Agreed

Bodycam footage from local Pennsylvania police reveal that in the moments after last month's attempted assassination of Donald Trump, an officer says he told the Secret Service to cover the warehouse used by shooter Thomas Matthew Crooks.

The new bodycamera footage was released by the Butler County Police Department, showing the officer who confronted the shooter. (Butler County Police Department)

"I f—ing told them that they needed to post guys f—ing over here…I told them that f—ing Tuesday," said a Butler Township officer in audio captured by his body-worn camera and obtained by the Wall Street Journal.

"I talked to the Secret Service guys. They’re like, ‘Yeah, no problem. We’re going to post guys over here,'" the officer continues.

The footage paints a more complete picture of the anger and frustration moments after Thomas Matthew Crooks was able to fire eight shots at the former president from an AR-style assault rifle. A spectator was killed, two others were injured, and Trump suffered a bullet wound to the ear. The Journal obtained the videos under a public-records request Thursday.

A police officer in one of the videos at one point refers to a suspicious individual who had been lost by authorities. The unidentified officer referred to “a gentleman with a flat face that we were looking for earlier. He was creeping people out.” 

The officer's account, which was broadcast over radio channels, was captured by one of the body cameras. "He was watching people out in the woods by the water tower. I’m not sure he is the gentleman down or not," the officer says.

Around 10 minutes after the shooting, another officer says to a fellow officer "I thought you guys were on the roof. I thought it was you. I thought it was you."

To which "No" can be heard in response.

"What the fuck! Why were we not on the roof? Why weren't we?" the officer replies.

NEW: Butler PA officers at Trump rally after the shooting, discussing that they had warned USSS about vulnerabilities far in advance.

“I f**ing told them to post guys over here. I told the Secret Service Tuesday!” pic.twitter.com/A367aXZKRR

— Still Boneless (@still_boneless) August 8, 2024

As the Epoch Times notes further, the footage also shows the moment an officer with the Butler Township Police Department tried to get on the roof of a building where suspected gunman Thomas Matthew Crooks was perched. Another officer helped lift the responding officer to the roof after rally attendees alerted police that there was an individual on the roof near the rally where Trump was set to speak.

BREAKING: Bodycam video just released shows a police officer being lifted up to the roof of the AGR building, interrupting Thomas Crooks just seconds before he started shooting to assassinate President Trump at the Butler rally. pic.twitter.com/NVU0yR515w

— Dapper Detective (@Dapper_Det) August 8, 2024

In the clip, an officer is seen moving toward a building before another officer tries to hoist him onto the roof. The officer is then seen trying to climb onto the building before he drops down.

Only officers’ hands are seen as he tries to get onto the roof in the video, which does not show Crooks.

Butler Township Police Department Lt. Matthew Pearson last month told a local Pennsylvania news outlet that the officer was not able to draw his firearm because he was holding onto the building. And Butler County Sheriff Michael Slupe told the New York Post last month that the officers who interrupted Crooks may have distracted the shooter before he shot at the former president, hitting him in the ear.

“If I’m interrupted, and I move my gun, you are going to have to reassess that whole situation at this point, so yes, you can make a case that those two officers saved the president’s life,” Slupe told the paper.

He then asked, “Can you imagine 10 seconds before that? That the president was looking straight ahead and where that bullet could have potentially landed.”

More than three weeks after the assassination attempt, federal officials have not disclosed the Crooks’s motive. So far, few details have emerged about the suspect, and his family has not issued a public statement responding to the incident.

The Epoch Times has contacted the Butler Township Police Department for comment. Previous Footage Released Separate bodycam footage from a responding official was released in connection to the July 13 shooting, which killed a rally attendee and injured two others. In late July, Sen. Chuck Grassley’s (R-Iowa) office released rooftop bodycam footage of an officer who responded to the shooting—after Crooks was killed by a Secret Service sniper.

It shows an officer with the Beaver County Emergency Services Unit standing next to a dark-suited man, who appears to be a Secret Service agent, according to a press release from Grassley’s office.

In the clip, at least three other law enforcement officials can be seen, although it is not clear exactly how many were present on the roof when the footage was filmed.

On the ground next to them appears to be the body of Crooks. Although the shooter’s body has been partially blurred in the video, a long trail of blood on the roof can be seen.

The Beaver County officer and the purported Secret Service agent can be heard discussing the timeline of events they believe led up to the assassination attempt, including whether the man lying on the ground next to them is the same man seen in a photo sent out by a member of Beaver County’s sniper team.

“So, this is the guy … that the sniper saw,” the agent says.

“Yes, a Beaver County sniper seen [sic] and sent the pictures out, this is him,” the officer replies.

The Secret Service agent then asks whether or not an abandoned bike that was found in the area belonged to the shooter.

“We don’t know,” the officer responds.

The Beaver County officer then shows the agent photos on his phone.

“I don’t know if you got the same ones I did?” the officer asks the agent, referring to the photos.

“I think I did, yeah, he’s [the shooter] got his glasses on,” the agent replies.

Two days later, Grassley released additional bodycam footage “filmed in the hour following the attempted assassination,” also obtained from the Beaver County emergency department.

That footage shows law enforcement talking about a need to use a drone to secure and inspect a water tower that was onsite, according to his office.

Katabella Reporters contributed to this report. Tyler Durden Thu, 08/08/2024 - 16:20

Big-Tech, Bond Yields, Bitcoin, & Bullion Bounce But Rate-Cut Hopes Fade

A de minimus improvement in (the incredibly noisy) initial jobless claims was all it took to enable the machines to run stocks higher, bond yields followed suit (higher) along with another ugly auctions (30Y). Crude, bitcoin, and gold also rallied (despite the dollar being basically flat).

For some context on the size of the labor market 'surprise' in today's claims data... here is the macro surprise index...

Source: Bloomberg

Before we get into the color, of particular note is the fact that rate-cut expectations have now retraced all of the post-payrolls spike (with the shift still biased more into 2024 than 2025)...

Source: Bloomberg

Nasdaq was the day's best performer (best day since Feb 2023) and the S&P's gain was the best day since Nov 2022...

Stocks, broadly speaking, remain notably lower from payrolls still...

Of particular note, Nasdaq's surge was very technical - ramping up to yesterday's high and then fading back...

The Dow and S&P 500 stalled at critical technical levels too.

Dow at 50DMA...

S&P at 100DMA...

Mag7 stocks bounced to yesterday's highs too, but remain down on the week and down from pre-payrolls...

Source: Bloomberg

VIX slid lower once again (but remains above yesterday's lows)...

Source: Bloomberg

Finally, before we leave equities, Goldman's trading desk notes volumes were down (-15% vs this past week) and S&P top of book (liquidity) continues to be very poor sitting around the 4mm level (YTD average closer to 13mm).

• LOs 4% better for sale (selling macro hedges, pockets of tech and semis on strength, and cons discretionary vs buying industrials, fins, and utes).

• HFs +1.4% better to buy (buying ETFs, info tech, and industrials vs selling cons discretionary, HC, and Utes)

Treasury yields surged higher once again, now back above the pre-payrolls level (for all but the 2Y yield)...

Source: Bloomberg

The 10Y yield surged up to 4.00% (and 2Y moved above it)...

Source: Bloomberg

The dollar ended very modestly lower...

Source: Bloomberg

Gold rallied back above $2400...

Source: Bloomberg

Oil prices extended their rebound today (erasing the payrolls plunge) as tensions in Ukraine and the MidEast picked up once again...

Source: Bloomberg

Bitcoin ripped higher today, touching $60,000 and erasing the Jump-Trading liquidation from Sunday night...

Source: Bloomberg

Finally, as we noted earlier, the rise in rates led to the implied odds of a US recession jumping much higher. But in the UK and Europe they are still relatively low.

Source: Bloomberg

The question is - how long can that divergence remain? Either US odds have to decline or UK and EU recession odds have to rise.

Tyler Durden Thu, 08/08/2024 - 16:00

Apple Revises EU App Store After 'Anti-Steering' Probe

Following the European Commission's announcement in June that Apple violated the Digital Markets Act with its App Store anti-steering rules, the world's most valuable company has revised its policy.

Apple introduced a new fee structure for the EU App Store's "link-outs." This allows app developers to include a link that redirects customers to a web page where they can complete a transaction.

For context, the tech blog 9to5Mac explained:

Previously, Apple enforced strict rules that dictated how apps in the EU were allowed to link out. This included requirements that the link be statically defined, and go directly to their own website, without any parameters to identify the logged-in user in the URL. This limited the ability of apps to directly send users to a webpage where they could pay to add upgrades to their account.

As for the new fee structure, 9to5Mac explained further:

Under today's changes, all of those restrictions are now gone. Apps can offer actionable links with as many dynamic URLs as they please. These links can take the user to anywhere, including as a way to promote other sales channels like alternative app marketplaces. The URLs can include parameters, as long as those parameters are not used for advertising or user profiling.

These links also used to be required to kick the user outside of the current app and into their web browser, like Safari. However, Apple is now allowing these links to be opened inside the originating app, as a modal web view.

Apple is also updating the user disclosure sheet with a new design that is more friendly, and includes an interface toggle for users to opt-out of seeing disclosure sheets when tapping external purchase links in the future. For now, developers have to continue to implement this sheet manually, but Apple announced it will be automatically managed and presented by the ExternalPurchaseCustomLink API in a future iOS update.

Moreover, developers can now take advantage of these capabilities in the EU, without agreeing to alternative business terms. That means they can remain in the App Store and avoid paying the Core Technology Fee on installs. However, there is a new substitute fee structure instead …

Apple will also introduce two new fee structures for apps that link out of its App Store, including an initial 5% acquisition fee for new users and a 10% store services fee for any sales made by app users on any platform within the 12 months of the app installation.

9to5Mac pointed out:

Apple says the new structure results in lower fees for developers in both the alternative and existing terms for linking out, especially for existing users. This is because previously Apple charged upwards of 17% and the Core Technology Fee, for the privilege of linking out to an alternative payment method.

In June, the commission officially investigated Apple App Store's anti-steering rules outside the platform. 

Apple is changing its App Store policies to comply with the Digital Markets Act and avoid fines by the EU. 

Tyler Durden Thu, 08/08/2024 - 15:40

'Dubious About A Soft Landing': JPMorgan Chase CEO Jamie Dimon Warns Of Possibility Of Stagflation

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Jamie Dimon, the chief executive of JPMorgan Chase, warned that the chance of the U.S. economy making a “soft landing” is not a certainty, coming amid volatility spikes seen in the major U.S. stock indexes over the past week.

JPMorgan Chase & Co. CEO Jamie Dimon speaks during the Business Roundtable CEO Innovation Summit in Washington on Dec. 6, 2018. (Jim Waton/AFP via Getty Images)

“There’s a lot of uncertainty out there,” Dimon told CNBC on Wednesday. “I’ve always pointed to geopolitics, housing, the deficits, the spending, the quantitative tightening, the elections, all these things cause some consternation in markets.”

For the past few years, Dimon has been issuing warnings about persistently high inflation and whether a soft landing, meaning the economy would avoid a recession, is feasible.

The executive added that he’s not sure whether the Federal Reserve can meet its inflation goal of about 2 percent. He told CNBC that the chance of a soft landing is about 35 or 40 percent.

JP Morgan CEO Jamie Dimon on CNBC:

> America is alive and well
> Skeptical of inflation reaching 2% goal
> Fed commentary and rate cuts don’t matter as much as people think
> Savings could impact spending
> Credit doesn’t indicate we’re in a recession$SPY $SPX #Stockmarkets pic.twitter.com/8MNpMKfTWZ

— Nick W (@NiklasWebb) August 7, 2024

“There’s always a large range of outcomes,” Dimon said. “I’m fully optimistic that if we have a mild recession, even a harder one, we would be okay. Of course, I’m very sympathetic to people who lose their jobs. You don’t want a hard landing.”

In April, in an interview with The Associated Press, he said that people “should be worried about” the possibility of stagflation but was still hopeful for a soft landing. “I’m just a little more dubious than others that a [soft landing] is a given,” he said at the time.

The Federal Reserve rapidly raised interest rates in 2022 and 2023 after inflation hit the highest levels in decades. Officials with the central bank said they want to lower rates at some point with the 2 percent goal as their target.

Dimon’s prediction comes as the three major U.S. stock indexes saw another loss on Wednesday as tremors from Monday’s plunge continue to reverberate. But on Thursday’s opening, the Dow Jones Industrial Average rose 0.69 percent, or about 300 points, while the Nasdaq Composite index increased nearly 1 percent. The S&P 500 also rose nearly 1 percent Thursday morning.

The market rose as it was reported by the U.S. Department of Labor that first-time filings for jobless benefits fell to 233,000 for the past week, or a decline of 17,000 from the previous one. New U.S. unemployment claims have been rising and hit their highest since August last year in the most recent week before that.

Other Activity

Outside the United States, European shares fell and Japan’s Nikkei 225 index closed 0.7 percent lower, undoing some of the calm a day earlier when the Bank of Japan (BOJ) indicated it would be more cautious with any future interest rate increases. The South Korea-based Kospi index also dropped slightly, closing down 0.45 percent.

Deputy BOJ Governor Shinichi Uchida told reporters and business leaders in the Japanese city of Hakodate on Wednesday that the central bank will not increase interest rates when markets are experiencing instability.

“As we’re seeing sharp volatility in domestic and overseas financial markets, it’s necessary to maintain current levels of monetary easing for the time being,” Uchida said, adding that the interest rates will “obviously” be changed if the volatility affects the price outlook.

But he stressed that “we won’t raise interest rates when financial markets are unstable.”

Europe’s continent-wide Stoxx 600 index fell 0.9 percent after climbing 1.5 percent on Wednesday. Germany’s DAX index was down 0.6 percent and Britain’s FTSE 100 decreased by 1 percent.

In late August, Federal Reserve Chair Jerome Powell is expected to offer remarks on what he believes the United States needs when global bankers and Fed officials gather at an annual economic symposium in Jackson Hole, Wyoming. After that, the Fed’s Open Market Committee is slated to meet in mid-September.

“If we do get the data that we hope we get, then a reduction in our policy rate could be on the table at the September meeting,” Powell said last week.

Reuters contributed to this report.

Tyler Durden Thu, 08/08/2024 - 15:20

"Numbers Aren't Jiving To The Real World" - Huge Revisions Leave Traders Questioning Biden Admin's Energy Data

Just over a year ago, we commented on the "massive" revisions that the statistical arm of Biden administration's Department of Energy - the Energy Information Administration (EIA)...

The Biden admin will not stop fabricating data and draining the SPR to push the price of oil lower https://t.co/mxYq4hyCnY

— zerohedge (@zerohedge) June 30, 2023

Adding to those who questioned the 'fabrication' that:

When is the last time demand estimates were revised lower

— zerohedge (@zerohedge) June 30, 2023

Zoom forward a year and the 'revisions' across multiple (government-supplied) macro data items are now well known and widespread... and statistically noteworthy that the revisions tend to be negative (implying the initial data was 'optimistic')...

Payrolls (7 of the last 10 months have seen downward revisions)...

Consumer Confidence (9 of the last 12 months have seen confidence revised lower)...

The situation has become so widespread that even the mainstream media is forced to admit that there is something odd going on.

Specifically, circling back to our initial thoughts, Reuters reports this morning that a string of dramatic revisions to official U.S. oil consumption data have unnerved market participants who rely on the figures to trade.

The EIA published a monthly update last week that showed U.S. oil consumption at a seasonal record in May as motorists burnt more gasoline than even before the pandemic.

That data conflicted with weekly updates published that month showing oil and fuel demand struggling to even match last year's levels.

The EIA says the weekly figures for May were off because preliminary readings overestimated gasoline output and undercounted exports. The agency does not expect weekly estimates to be as accurate as monthly data, but to be consistent in showing general trends.

Of course it just happens that the initially 'weak' demand figures helped lower crude and gasoline prices at a time when inflation was rearing its ugly head once again and Bidenomics was hitting the wall. And as is the case with payrolls revisions (or consumer confidence), traders reactions to the revisions are dramatically less sensitive than they are to the original prints.

However, as Reuters reports, these discrepancies (we are being polite) are starting to make market participants question the version of reality they are being sold.

"It makes you wonder why anyone is paying attention to the weekly numbers," said Tom Kloza, head of energy analysis at Oil Price Information Service (OPIS). Many fuel marketers have expressed disbelief over the revisions the EIA made to its numbers in May, he added.

A trader at one of the largest commodities distribution firms said the revisions left them befuddled, and warned such changes could ultimately hurt consumers as decisions on how much fuel to import are influenced by the EIA data.

"It's a trend that's a little concerning to me," GasBuddy analyst Patrick De Haan says.

"The EIA has been the bedrock for analysts, but skeptics may be gaining more validity to arguments that the EIA numbers aren't jiving to the real world."

Since when did the 'real world' have anything to do with macro data during an election year?

Tyler Durden Thu, 08/08/2024 - 15:00

Buy The Dip... Or Embrace The Rotation?

Authored by Louis-Vincent Gave via EvergreenGavekal.com,

Back in 2000, when technology stocks hit the wall, one of Gavekal’s first clients told us: “It’s OK. Bear markets serve an important purpose: they return capital to its rightful owners.”

Behind this cynicism lies an inherent truth.

Bear markets do tend to shake out “weak hands,” clean out retail investors, and punish those who operate with too much leverage. Another key function of bear markets is to transfer leadership from one country or sector or asset class to another.

This brings us to today’s single most important question: is the current shakedown in the Nasdaq, Nikkei, and US dollar an opportunity to buy more of these assets on the dip? Or is it now time for investors to look for new stories?

The answer to this all-important question might well be provided by the Federal Reserve. Unsurprisingly given the recent market action, the clamor for the Fed to cut interest rates is now as loud as a pair of Justin Trudeau’s socks. But what would a cut mean for asset prices?

Let’s start with the old Gavekal notion that assets have value (i) because they are rare, like gold, diamonds, vintage Ferraris and impressionist paintings, or (ii) because they are useful, i.e. because they generate cash flows. Bearing this distinction in mind, it becomes obvious that the bull market of recent years was primarily a bull market in “efficient” assets rather than a bull market in “scarce” assets. And few things are as efficient at generating cash flows as large-cap technology stocks. So, what has triggered the market meltdowns of recent days?

• A shakedown of over-leveraged investors, who through cheap credit in yen leaned too far over their skis. If so, the Fed doesn’t really need to cut. All we are seeing is assets being transferred from weak to strong hands, or as our client would put it, “capital returning to its rightful owners.”

• A reflection of an unfolding economic slowdown. If so, a Fed rate cut would make sense.

• The sudden realization by investors that their expectations of future efficiency had departed massively from reality. In this case, a bear market in efficiency assets has now started.

Gavekal clients who have taken the time to read the reports I have put out over the last couple of months will know I have planted my flag firmly on the third explanation. The hype over artificial intelligence, and the consequent heady valuations of AI-related stocks, departed too far from any possible reality. Now we have started the adjustment phase.

The market environment has therefore changed. But would a Fed rate cut put Humpty Dumpty together again? It is unlikely.

Instead, a Fed rate cut, if and when it happens, will amplify a number of trends that are already starting to emerge.

1) The underperformance of the US dollar. One interesting feature of the current sell-off is that the US dollar has failed to catch a safety bid. Instead, Asian currencies (apart from the Indian rupee) have risen over the past couple of weeks. This is highly unusual. But it may not be that surprising. Over the last couple of years, China has been running trade surpluses on a scale the world has never seen before. Even so, we haven’t seen the US dollars that China has earned abroad flow home to push the renminbi and local asset prices higher. Instead, the entrepreneurs behind China’s trade surpluses have likely chosen to recycle their US dollar earnings into the one asset class that seemed absolutely fire-proof: large-cap US stocks. If these stocks are now rolling over, what will China’s trade surpluses be recycled into? What if they end up in high-yielding domestic assets? In such a world, the renminbi will benefit from powerful tailwinds, as there are no natural sellers of the Chinese currency.

2) The strength of precious metals. Gold has been very strong lately in spite of China’s economic weakness, the hawkishness of the Fed and the strength of the US dollar. If some or all of these variables now reverse, gold could really surge. This brings me back to the question I started with: if the Fed starts to cut rates meaningfully in the weeks to come, will we go back to the same Mag-7, US tech, US dollar bull market? Or will belief in US exceptionalism go out the window, and—as in the first decade of the century—will we get a bull market in commodities and emerging markets, the usual beneficiaries of a weak US dollar environment?

My belief is that a looser Fed will not reignite the bull market in efficiency shares.

That ship has now sailed.

In fact, big holders of the Mag-7 should be lobbying for the Fed to sit on its hands, because only with a structurally strong US dollar will Microsoft, Alphabet, Nvidia and the rest attract the foreign and domestic capital needed for these stocks to recapture their highs, and power on to higher heights.

By contrast, a looser Fed will help to confirm the transition away from efficiency shares to scarcity assets.

Tyler Durden Thu, 08/08/2024 - 14:40

Investors Pull $2.2 Billion From ARKK In 2024 As Cathie Wood Underperforms Nasdaq By -30% YTD

Cathie Wood appears to be doing what she does best: buying the 'dip' in an overvalued market, socking away aggressively valued companies that have a knack for plunging far further than market indexes on selloffs.

The ARKK fund manager is buying shares of Amazon.com Inc., Advanced Micro Devices Inc. and Roku Inc. amidst the recent market volatility, Bloomberg reported this week. 

But ARKK closed at its lowest levels since November and at YTD lows on Wednesday, amidst the volatility, while the NASDAQ was still in green territory for the year, the report says. Wood's flagship 'innovation' fund is down about -24% YTD versus the QQQ, which is up about 6.8%, as of Thursday mid-morning. 

That's a pretty noticeable underperformance for just 8 months into the year. And investors seem to be taking note: about 75% of ARKK's value from 2021 has been wiped away and, as of Tuesday, investors have withdrawn $2.2 billion from ARKK in 2024, setting it up for its worst year of outflows since its 2014 inception, Bloomberg writes.

Overall, Cathie Wood's seven active ETFs have experienced $11.5 billion in outflows since early 2021, according to Strategas data.

Todd Sohn, an ETF strategist at Strategas said: “The past few years, really, have been a challenge. Ark has a history of high-conviction, concentrated investing via their ETFs — there’s a tendency for the team to use sharp market selloffs as an opportunity to add long exposure to their strongest ideas.”

The only problem? Many would argue a quick snapback from all time highs may not be a "sharp market selloff". 

In late May, Zero Hedge contributor Quoth the Raven was quick to criticize Cathie Wood blaming a 'great depression' for her poor performance - all before the recent volatility even took place. 

Post-Tesla's 2020 surge, QTR argued that Wood's fund has been dead money: "Since then, Wood’s ARKK flagship fund has been dead money when compared to its NASDAQ benchmark. One by one, investors have watched other investments that Wood has made alongside Tesla get decimated.

For example, the “visionary” tech investor made a strategic decision to hold off and miss the surge in Nvidia — literally the hottest name in tech the last 2 years — while riding names like Invitae and Ginkgo Bioworks into bankruptcy and the toilet, respectively."

"To compound her dreadful numbers, Wood has offered up bizarre, hallucinogenic price targets, unbridled optimism about her own performance going forward that, in my opinion, has been very misleading, and bursts of macro-sounding non-sequiturs as excuses," he wrote. 

In May with the market sitting at all-time highs—Wood claimed markets were experiencing "a search for cash and safety."

In fact, she said the search for safety at the beginning of the summer had been "as intense as that during the Great Depression in the early 1930s." 

Back in February, Morningstar listed her as one of the top 15 funds that have destroyed the most wealth over the past decade and said the ARK family of funds had wiped out $14.3 billion in shareholder value.

ARK, home of the flagship ARK Innovation ETF ARKK, tops the list for value destruction. After garnering huge asset flows in 2020 and 2021 (totaling an estimated $29.2 billion), its funds were decimated in the 2022 bear market, with losses ranging from 34.1% to 67.5% for the year. Many of its funds enjoyed a strong rebound in 2023, but that wasn’t enough to offset their previous losses. As a result, the ARK family wiped out an estimated $14.3 billion in shareholder value over the 10-year period—more than twice as much as the second-worst fund family on the list. ARK Innovation alone accounts for about $7.1 billion of value destruction over the trailing 10-year period.

Wood was top of the heap in wealth-destroying:

Tyler Durden Thu, 08/08/2024 - 14:00

Majority Of Americans Oppose Using US Troops To Defend Israel: Poll

Authored by Dave DeCamp via AntiWar.com,

The majority of Americans oppose the idea of US troops being used to defend Israel if it comes under attack by Iran, according to a poll conducted by the Chicago Council on Global Affairs that was released on Tuesday.

The poll, conducted from June 21–July 1, 2024, found that 56% of Americans oppose US troops defending Israel, while 42% support the idea. Support for defending Israel is stronger among Republicans, with 53% in favor and only 32% of Democrats in favor.

Via AP

The survey also found that 55% of Americans oppose US troops defending Israel if it comes under attack by a neighboring country.

The results come as the Biden administration is vowing to defend Israel from an expected Iranian reprisal attack for the killing of Hamas’s political chief, Ismail Haniyeh, in Tehran.

A major coordinated attack launched by Iran and its allies could result in American casualties, and the US support for Israel risks a major regional war.

The US defended Israel from an Iranian attack in April, which came in response to the Israeli bombing of the Iranian consulate in Damascus, Syria.

The Biden administration intervened directly to protect Israel and is pledging to do so again without any authorization from Congress or any debate on the matter.

The Chicago Council showed the lowest level of support for defending Israel among Americans since the Chicago Council began asking the question in 2010. In 2015, 2018, and 2021, the majority of Americans (53%) supported the idea.

The Chicago Council attributed the lower level of American support for defending Israel to Israel’s onslaught in Gaza. "The unrelenting Israeli attacks against Gaza have likely dampened American willingness to defend Israel, especially among Democrats," reads an article published on the Chicago Council website.

Tyler Durden Thu, 08/08/2024 - 13:40

Ugly 30Y Auction Has Biggest Tail Since November

After yesterday's dire 10Y auction, which sent yields surging and stocks tumbling, the last thing the market needed was another debacle of an auction, but that's precisely what it got moments ago when today's 30Y auction tailed by 3.1bps, the exact same as yesterday's 10Y sale, and predictably yields spiked after both.

Stopping at a high yield of 4.314%, today's sale of $25 billion in 30Y paper saw the lowest yield since January's 4.229% and was down sharply from the 4.405% in July. And, like last month, today's auction tailed and by a substantial amount: with the When Issued trading at 4.283%, this was the biggest tail since November.

The Bid to Cover was also in line with last month: at 2.308, it was right on top of last month's 2.299 if below the six-auction average of 2.406.

The internals were a modest improvement to last month, with Indirects taking 65.3%, up from last month's 60.8%, but below the 6-auction average 66.4%. And with Directs awarded 15.5%, or also well below the recent average of 18.4%, Dealers were left holding 19.2%, the highest since last November.

Overall, this was another ugly auction, with the one redeeming quality perhaps being that yields have tumbled in recent days, which is why buyers in the second market were few and far between, and are merely waiting for bond prices to retrace some more of their recent gains before they step in.

 

Tyler Durden Thu, 08/08/2024 - 13:21

Burger King Owner's Earnings Fall Short Of Estimates On "Consumer Pressures"

Restaurant Brands International, the owner of Burger King, Tim Hortons, Popeyes, and Firehouse Subs, posted second-quarter earnings that were weaker than expected by the average Wall Street analyst. This is more evidence that the consumer downturn theme is gaining momentum as low/mid-tier consumers pull back on spending amid elevated inflation and high interest rates. 

"Our priorities and balance of thoughtful investments with cost discipline allow us to navigate short-term consumer pressures and drive sustainable results for our business and our franchisees," CEO Josh Kobza stated in the second quarter earnings result press release.  

Here's a snapshot of what RBI reported compared with what the average Wall Street analyst tracked by Bloomberg was expecting:

• Comparable sales +1.9% vs. +9.6% y/y, estimate +2.88% (Bloomberg Consensus)

RBI's earnings per share, excluding certain items, and revenues were roughly in line for the quarter. 

• Adjusted EPS 86c vs. 85c y/y, estimate 87c

• Revenue $2.08 billion, +17% y/y, estimate $2.03 billion

Comparable sales beat at Tim Hortons but missed at Burger King, Popeye's, and Firehouse Subs. 

• Tim Horton's comparable sales +4.6%, estimate +3.77%

• Burger King comparable sales -0.1%, estimate +3.42%

• Popeye's comparable sales +0.5%, estimate +3.3%

• Firehouse Subs comparable sales -0.1%, estimate +2.46%

Bloomberg pointed out:

The company missed estimates for sales growth at restaurants open more than 13 months, as a stronger-than-foreseen showing for Tim Hortons' Canada business couldn't offset unexpected weakness in the rest of the operation. System-wide sales, which also include newer restaurants, was also just short of expectations.

Consumers around the world are pulling back from dining out as they cope with elevated prices and less spending money. Chains have responded with a series of deals, including Burger King's $5 meal in the US, which it launched ahead of rival McDonald's Corp. in a fight for market share.

RBI reaffirmed its long-term guidance from a February investor event, forecasting an average growth of 3% in comparable sales and 5% in net restaurant growth through 2028.

RBI joins the growing list of companies exposed to low/mid-tier consumers who have warned about a pullback in customer spending. These companies have either been cutting prices or offering 'deals.' 

Recall our note from July 9 titled "Restaurant Stocks Slide As Wall Street Sours On Consumer." 

On Wednesday, new revolving credit data from June unexpectedly tumbled as consumers near a breaking point. 

Maxed out credit cards and record low savings, no wonder consumers are pulling back on restaurant spending. 

Let's not forget this. 

Even Disney warned this week that sliding theme park demand and "moderating consumer demand" should weigh on experiences in the coming quarters. 

Consumers are under severe stress. And you bet these folks will vote with their empty wallets come November. ​​​​​​

Tyler Durden Thu, 08/08/2024 - 13:20

Rickards: "Put On Your Crash Helmet. You Might Need It Very Soon"

Authored by James Rickards via DailyReckoning.com,

This Means War!

Not surprisingly, the stock market bounced back today after yesterday’s mini-crash — the “buy the dip” theme is deeply entrenched in today’s market.

But don’t make the mistake of thinking that stocks will continue on their way to record highs. There are too many red flags to ignore, although Wall Street would like you to ignore them.

Meanwhile, yesterday’s market swoon distracted people from a major developing story that I originally planned to address:

We’re staring at the prospect of a major new Middle East war. We’re confronting a very dangerous situation with major implications for global markets.

Any day now, or even any minute now, Iran is expected to take strong military action against Israel. By the time you read this article, it may have already started.

At this point, it’s not a matter of if, but of when.

Israel Escalates Bigly Against Iran

Iran’s pending action is a response to two recent Israeli assassinations of key figures strongly linked to Iran:

• The first assassination killed a leader of Hezbollah, a key Iranian proxy. That occurred in Lebanon, Hezbollah’s base

• Less than 24 hours later, Israel assassinated the political leader of Hamas, Ismail Haniyeh. That assassination actually occurred in Iran itself, as Haniyeh was in Tehran to attend the swearing-in ceremony for Iran’s new president.

Israel hasn’t accepted responsibility for Haniyeh’s killing, but there’s little reason to believe it wasn’t Israel. It’s still not clear how the assassination actually occurred.

Some reports claim a missile killed him in the Tehran apartment in which he was staying. That means the missile would have been launched from within Iran, which raises a lot of questions.

Other reports say Haniyeh was killed by remotely detonated explosives, previously planted in the apartment by Israeli operatives, potentially with the collaboration of Iranian security agencies.

The conflicting claims aren’t insignificant. Under certain interpretations of international law, the use of explosives isn’t a casus belli, or a justification for war. But the use of a missile is.

Either way, I don’t think Iran appreciates that distinction.

Iran Vows “Harsh” Revenge

Iran has pledged “harsh” revenge for the two assassinations. Sources report that neighboring Arab states, along with the U.S., are pleading with Iran to limit its retaliatory action.

Jordan has even dispatched its senior diplomat to Tehran to argue for a limited response. That’s Jordan’s first official visit to Iran in over 20 years, which underscores the severity of the situation.

All reports indicate that Iran has rebuffed these overtures. It’s determined to hit Israel hard, even if it results in a large-scale war. From Iran’s perspective, a strong response makes sense.

Let’s revisit April’s Iranian missile and drone attacks on Israel which, again, were launched in retaliation for Israel’s strike on Iran’s consulate in Syria.

Iran’s attack was almost staged. It was telegraphed in advance, giving Israel (as well as U.S. forces in the region) time to prepare for it. The great majority of Iranian drones and missiles were shot down, and Israel suffered very little damage.

We Don’t Really Mean It?

It was as if Iran was saying, “We have to retaliate for your attack on our consulate, but we don’t want further escalation. So we’re going to let you know what we’re going to do and give you time to prepare for it. Our attack won’t really hurt you, but we have to do it in order to save face.”

Israel conducted its own retaliatory strike on Iran, but it was limited, and that was the end of it. Both sides could wipe their hands clean and move on.

But Israel’s latest assassinations changed all that. They represented significant escalations against Iran, especially the assassination in Iran’s own territory.

Imagine the U.S. response if Russia, for example, assassinated a key U.S. ally attending the inauguration of an American president.

So why would Iran listen to pleas for a limited, measured response this time? It took that approach in April, and Israel escalated anyway. So in this instance, Iran has no incentive to limit its retaliation. In its view, deterrence has failed. The only logical response is to punish Israel as hard as it can.

That of course raises the question: How might Iran retaliate?

Iran’s Options

It could take the form of drone and missile attacks, similar to the ones in April, only more intense. Iran could also enlist its proxies like Hezbollah to attack Israel from southern Lebanon, forcing Israel to fight a two-front war (Gaza being the first, which is still ongoing).

Or it could be a combination of both. Hezbollah is a much more formidable fighting force than Hamas, so Israel will have its hands full if it has to confront Hezbollah.

Meanwhile, The U.S. is sending warships and aircraft to the region to support Israel. What can go wrong? It’s not hard to envision a scenario in which the U.S. is dragged into the fighting.

Yesterday, a rocket attack on a U.S. base in Iraq injured five personnel. It’s not known who’s responsible at this point, but it could very likely be an Iranian proxy. It’s hard to imagine the timing was just coincidental.

Here’s the larger point: Israel’s assassinations and Iran’s pending retaliation illustrate the dangers of having a weak, unfit, lame-duck American president like Joe Biden. Here’s why…

Geopolitical Consequences of Biden’s Weakness

The U.S. has previously restrained Israel from taking stronger action against Iran. The U.S. has been pursuing a Gaza ceasefire and a hostage deal. Sources claim the Biden administration felt it was close to a breakthrough before the assassinations.

The two assassinations torpedoed whatever chances there were of a hostage deal. Would Israel have acted against strong U.S. interests if a firm president was in office? It’s highly unlikely. It’s apparent that Benjamin Netanyahu has little respect for a greatly diminished, lame-duck Biden who’s on the way out.

That’s why Biden’s diminished condition isn’t just a domestic concern. It has potentially serious geopolitical consequences, which are presently unfolding. And does anyone believe Kamala Harris is a viable alternative? Netanyahu almost certainly doesn’t.

If we’re not in a recession already (I believe we entered one in May or June), we’re clearly heading for one. A new Middle East war will drive up the price of oil, maybe dramatically depending on how the conflict unfolds. That means higher prices at the pump, which are already too high for many Americans.

What if Iran shuts down the Strait of Hormuz, ending all oil exports from the Persian Gulf (or the Arabian Gulf, depending on who you’re talking to)?

That could be the final nail in the coffin of the Biden economy. We’d be staring in the face of a major recession that would crush average Americans.

All I can say is put on your crash helmet. You might need it very soon.

Tyler Durden Thu, 08/08/2024 - 13:00

Don't Throw Away A Nest Egg

By Teeuwe Mevissen, senior macro strategist at Rabobank

Don’t throw away a nest egg!

As this week made clear once more, it is always important to keep a nest egg for a rainy day. Being able to whether storms is crucial when one is invested in risky assets so one is not forced to sell risky positions when it hurts most i.e. during sharp corrections as we saw very  recently. This is all the more true when people with modest means who try to make some money on the stock market start losing their jobs due to a cooling labour market. Moreover it also teaches us to not put all your eggs in one basket. People who had a concentrated stock portfolio in tech surely must have panicked briefly seeing their stocks tank with double digit percentages.

The same goes for playing a hand in a game like poker. A Chinese variant of poker called throwing eggs has become so popular that China called on officials to stop playing the widely popular poker game because it’s hurting their work. The game has gone viral in the past two years and China now fears that the addictive game is “corrupting the work style of cadres” according to the Beijing Youth Daily earlier this week. Since Xi already urged officials to not misinterpret or procrastinate the party’s orders, it is questionable if party cadres playing guandan are playing the right cards. Indeed, participating in throwing eggs, one would expect to end up egg faced sooner rather than later!

Yesterday, the Bank of Japan (BOJ) showed that it might have scared itself with its previous hawkish tone of less than a week ago. The BoJ raised its interest rate from 0.10%  to 0.25% in a surprise hike and initially did not exclude further hikes. Furthermore the BoJ also unveiled plans to halve the pace of its monthly bond buying by the first quarter of 2026.

In an attempt to calm nervous market participants, BoJ Deputy Governor Shinichi Uchida pledged yesterday to refrain from hiking interest rates as long as markets are unstable. Still, these signals from central banks make one question again if central banks are there to protect market participants and to what extent this goes hand in hand with true capitalism. Regardless, markets received the news with enthusiasm and continued recovering from the sharp correction earlier this week.

At the same time US yields have been climbing a bit, which resulted in some support for USD/JPY towards a level of slightly higher than 147. However, markets have still significantly reassessed the Fed’s policy stance and are still expecting more rate cuts than at the start of last month. But as our head of G-10 currency forecasting rightfully mentioned last Tuesday, much remains unclear and next week’s US PPI and CPI data and Jackson hole will likely provide more clarity regarding the Fed’s future path. That has not prohibited her from reviewing our USD/JPY forecast which she now believes will reach a level of about 145 in about three months from now.

This morning important data came in from Japan. As the unwinding of yen carry trades have rattled markets, August saw foreign selling of Japanese bonds and Japan buying foreign bonds. However, there was no noticeable change regarding the volumes traded. In contrast, Japan’s buying of foreign stocks did show a sharp spike and came in at the highest figure since the data is being published.

We also received leading indicators via Japan’s economic watchers surveys that showed that the surveyed managers asses the current situation with a value of 47.5 (as expected) while the outlook came in at 48.3 (slightly lower than expected.) Both still indicate slowing activity but the values were better than the previous month of June

Tyler Durden Thu, 08/08/2024 - 12:20

For The First Time, F-16 Fighter Jets Spotted In Combat Over Ukraine

A Russian official in Ukraine's Kherson region has reported that a US-supplied F-16 fighter jet has been seen flying over the southern Ukrainian territory which lies just north of Crimea. This marks a first sighting in Ukrainian skies, after this past weekend President Zelensky confirmed the arrival of the initial batch of the jet fighters from European partners.

Pavel Filipchuk, the head of the administration of the Kakhovka municipal district in the Kherson Region, posted to Telegram Thursday the following message: "F-16s have been flying over our district since yesterday." No verified video of the flights over the region have emerged just yet, however.

Illustrative: Ukrainian presidency's office

The Russian official followed by expressed confidence that "they will be shot down and destroyed soon," according to state-run Sputnik. 

"F-16s in Ukraine. We did it," President Zelensky said at a Sunday ceremony from an unnamed airbase, allowing reporters to view two of the parked aircraft. The Economist later indicated that ten have so far been delivered, out of a pledged total of 79.

Russia's reaction has been to vow that the jets will be destroyed just like the US and European-supplied tanks from earlier in the conflict:

Kremlin press secretary Dmitry Peskov previously vowed that Western-made F-16s flying for Ukraine would be "shot down".

"But of course, these deliveries will not have any significant impact on the development of events on the front," he added.

The consensus among even Western mainstream media is that the F-16s will not be a game-changer. Additionally, Zelensky is already pressing Washington and its allies for more.

One of the delivered F-16 in service with the PS ZSU armed with AIM-120 AMRAAMs somewhere in Ukraine. @John_A_Ridge
Source https://t.co/MjYUtaCx61 pic.twitter.com/t5Iy95CcEo

— War Armor (@WarArmor13) August 8, 2024

Prior statements of US defense officials confirmed that the Pentagon is equipping the F-16s with advanced weaponry and modern missiles.

As the The Wall Street Journal previously indicated, this will include air-to-ground AGM-88 HARM missiles, bomb sights, diameter bombs, AMRAAM advanced air-to-air missiles, and AIM-9X short-range air-to-air missiles.

Tyler Durden Thu, 08/08/2024 - 12:00

Monster Beverage Sees Worst Growth Since 2020 Amid Energy Drink Downturn 

Shares of Monster Beverage fell in premarket trading after the energy drink maker reported second-quarter earnings per share that fell short of the average Wall Street analyst tracked by Bloomberg. The report also revealed that drink volumes slid to their worst rate since the beginning of the virus pandemic. All of this reaffirms our view low/mid-tier consumers are continuing to pull back on spending.

"We are a blue-collar brand and our consumers are more hard-pressed than consumers in other categories," Monster Co-Chief Executive Officer Rodney C. Sacks told investors on an earnings call. 

Second-quarter revenue increased at the slowest pace since Q2 2020, rising just 2.5% to $1.9 billion. This missed the average analysts' expectations tracked by Bloomberg of $2.02 billion. Sales volumes also fell short, coming in at 212 million cases in the quarter, missing the 215 million estimate.

Here's a snapshot of second-quarter earnings (courtesy of Bloomberg):

• EPS 41c vs. 39c y/y, estimate 45c (Bloomberg Consensus)

• Net sales $1.90 billion, +2.5% y/y, estimate $2.02 billion

• Monster Energy Drinks net sales $1.74 billion, estimate $1.84 billion

• Strategic Brands net sales $109.2 million, estimate $108.7 million

• Alcohol Brands net sales $41.6 million, -32% y/y, estimate $66.9 million

• Other net sales $7.0 million, -4.1% y/y, estimate $7.44 million

• Net sales outside the United States $746.0 million, +4.3% y/y

• Volume 212.19 million unit cases, +6.9% y/y, estimate 215.42 million

• Average net sales per case $8.73, -3% y/y, estimate $8.91

• Gross margin 53.6% vs. 52.5% y/y, estimate 53.5%

• Operating margin 27.7% vs. 28.2% y/y, estimate 29%

• Operating expense $492.3 million, +9.3% y/y, estimate $497 million

Shares of Monster plunged 11% in premarket trading. 

Goldman's Bonnie Herzog commented on the report, telling clients, "We maintain our Buy rating on MNST despite a disappointing Q2 that caught most by surprise." 

"Expectations heading into MNST's Q2 print had pulled back, the result of a slowdown in US energy drink category growth recently, which mgmt acknowledged at their recent shareholder meeting, weighed largely by pressured c-store traffic levels and some reduction in consumer spending," Herzog said. 

She continued, "That said, MNST's Q2 topline growth of +2.5% y/y (vs our/cons ests of +8.9%) was even worse than feared, dragged in part by unfavorable FX headwinds - with FX neutral sales growth of +6.1% (+7.4% ex-alcohol brands). While US sales were pressured as expected, up just 1.3%, the big surprise was international sales which were up only 4.3% (although up 13.7% ex f/x) as the energy drink category in certain European countries saw a slowdown." 

Volume trends across the entire US energy drink industry have turned negative, signaling that cash-strapped consumers are pulling back after a series of price hikes. These volume trends are at their lowest levels since the early Covid lockdowns.

Sales growth trends for energy drinks appear to have slowed a couple of quarters after Jerome Powell & company began raising interest rates in early 2022. Elevated inflation and high interest rates financially crushed working-poor and middle-class households. 

Herzog lowered Monster's 12-month price target to $63 versus the prior target of $66 "based on an equal-weighted P/E of 31.5x and EV/EBITDA of 23.0x, both on our FY25 estimates (both unchanged)," adding that estimates and price targets could change based on deteriorating C-store traffic and weakness in sales. 

Here's what other Wall Street analysts are saying about the downturn in the energy drink market (courtesy of Bloomberg):

Jefferies (buy)

• The quarter was worse than feared, analyst Kaumil Gajrawala says
• "The plan to increase prices in the US by 5% seems at odds with a slowing category and consumer weakness"
• PT lowered to $60 from $61

Citi (buy)

• As analyst Filippo Falorni had expected, the results were "very soft," though the magnitude was worse than anticipated
• International sales were well below Falorni's forecast, impacted by shipment weakness in EMEA
• "We continue to see near-term downside given the scanner data weakness, but remain Buy rated on a 12-month basis as we believe the US category slowdown is more cyclical than secular"
• PT cut to $54 from $60

Piper Sandler (neutral)

• Near-term headwinds are growing as global growth slows, analyst Michael Lavery writes
• Notes US energy drink category momentum has slowed; however, Monster is still going through with a price hike in the US, pointing to rebounds in categories momentum in other markets that have previously weathered slowdowns of their own
• "While we agree with this thinking, it is unclear how long any such rebound may take to materialize"
• PT cut to $46 from $59

Bloomberg Intelligence

• "US energy-drink sales are under pressure from a more price- conscious consumer and tougher category competition than in prior periods," analyst Kenneth Shea writes

The downturn in the energy drink market is another ominous sign that the consumer slowdown is gaining momentum ahead of the presidential election. It underscores how failed Bidenomics has been detrimental to the working poor and middle class.

Tyler Durden Thu, 08/08/2024 - 11:20

UK's Met Police Chief Threatens "Keyboard Warriors" With Terrorism Charges

Authored by Paul Joseph Watson via Modernity.news,

Head of the Met Police Sir Mark Rowley has warned that “keyboard warriors” could be hit with terrorism charges for inciting riots online, even if they are living abroad.

Rowley made the comments in response to waves of rioting that unfolded across the UK following the murder of three young girls at a Taylor Swift dance class in Southport by a 17-year-old of Rwandan migrant origin via his parents.

Asserting that the “full force of the law” would be used against offenders, Rowley made it clear that this included not just people physically involved in the riots, but those who make inflammatory comments about them on social media.

Head of the Met Police Sir Mark Rowley warns even people abroad will be arrested for mean posts. He seems to infer also @elonmusk.

With the First Amendment I don't think an extradition request it'd get past the most under qualified lawyer. pic.twitter.com/buX0Tmc82V

— David Atherton (@DaveAtherton20) August 8, 2024

“And whether you’re in this country committing crimes on the streets or committing crimes from further afield online, we will come after you,” Rowley threatened.

A Sky News reporter than mentioned Elon Musk as a ‘high profile figure’ who was “whipping up hatred,” when in fact Musk merely asked Prime Minister Keir Starmer, “Why aren’t all communities protected in Britain?”.

“What are you considering when it comes to dealing with people who are whipping up from behind a keyboard and maybe is in a different country,” the reporter asked Rowley.

“Being a keyboard warrior does not make you safe from the law, you can be guilty of offences of incitement, of stirring up racial hatred, there are numerous terrorist offences regarding the publishing of material, all of those offences are in play if people are provoking hatred and violence on the streets and we will come after those individuals just as we will physically confront on the streets the thugs and the yobs who are causing the problems for communities,” said Rowley.

As we highlighted yesterday, authorities have warned Brits that merely retweeting information about the riots could lead to criminal charges.

Stephen Parkinson, the Director of Public Prosecutions, told Sky News that people do not even need to personally post the content themselves to be deemed to be committing an offence.

Parkinson said social media users could be guilty of “incitement to racial hatred” if they post “insulting or abusive” content that is “likely to stir up racial hatred.”

'We do have dedicated police officers who are scouring social media to look for this material, and then follow up with arrests.'

The director of public prosecutions of England and Wales warns that sharing online material of riots could be an offencehttps://t.co/PYaeP7gPAQ pic.twitter.com/kOGWDPrlyz

— Sky News (@SkyNews) August 7, 2024

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Tyler Durden Thu, 08/08/2024 - 08:50