Individual Economists

Russia Launches Record 188 Drones Against Critical Infrastructure In Ukraine

Zero Hedge -

Russia Launches Record 188 Drones Against Critical Infrastructure In Ukraine

Russia in the overnight hours launched a record number of drones against Ukraine in a single night, Ukraine's air force said, tallying that 188 Iranian Shahed and other drones entered Ukraine.

Ukraine says its air defenses shot down 76 drones across 17 oblasts, while it stated another 95 were "lost" - possibly brought down through electronic warfare. Some of the drones reportedly came from Belarus.

"During the night attack, the enemy launched a record number of Shahed strike unmanned aerial vehicles and unidentified drones," the air force said Tuesday.

Reuters/ABC News

However, some critical infrastructure was damaged, including parts of the national power grid as well as apartment buildings. No casualties were reported despite the huge number of inbound drones.

"The air raid alert in the Kyiv region overnight lasted more than seven hours," reports Associated Press. "Russia is trying to unnerve civilians and wear down their will to resist in the almost 3-year-old war."

According to details from one hard-hit region:

In the western Ternopil region, which is among those spared the worst of the fighting, authorities said drones had damaged a “critical infrastructure facility,” without elaborating.

They said however that the attack had disrupted electricity in the city of Ternopil and surrounding towns, and that engineers were working to stabilise supplies.

On the ground, Russian forces have been advancing in the Khardiv region, with the defense ministry announcing that it has captured the village of Kopanky.

Meanwhile, Moscow says it is readying major retaliation for the latest Ukrainians strikes which used U.S.-supplied ATACMS missiles:

"Retaliatory actions are being prepared," Russia’s Defense Ministry said in a statement that accused Ukraine of launching ATACMS strikes on Saturday and Monday, targeting military sites in the southwestern Kursk region.

The first strike on the Vostochny airbase injured two servicemen, the ministry said, while the second damaged a radar system and resulted in additional injuries.

President Zelensky: "We need greater collective efforts to enforce sanctions and force Russia to stop this war. We must put an end to Russian aggression."

The first ATACMS strikes came last week, nearly simultaneous to attacks also with UK-supplied Storm Shadows. This has violated the Kremlin's "red lines" - but so far it appears Putin is trying to take a patient course, awaiting Trump to enter the White House on Jan.20 in hopes that the West will begin to deescalate.

Tyler Durden Tue, 11/26/2024 - 15:25

Nothing But Blue Skies Do I See: Times Reporter Finds Happiness In Social Media Safe Spaces

Zero Hedge -

Nothing But Blue Skies Do I See: Times Reporter Finds Happiness In Social Media Safe Spaces

Authored by Jonathan Turley via jonathanturley.org,

The recent election produced an outpouring of anger and angst on the left, from pledging to leave the country to not having sex with men for four years. For others, the response was to retreat deeper into the echo chamber of the left. Many liberals are leaving X for a Bluesky, which promises the censorship and monitoring that was reduced after Elon Musk’s purchase of Twitter.

Despite having most of the media and social media as allies, the opposing views of X have become intolerable for many after the election. One such aggrieved user appears to be New York Times tech reporter Kevin Roose, who wrote a column heralding the site as a deliverance for liberals left confused and afraid by the popular vote.Roose writes

“After an hour or so of scrolling through Bluesky the other night, I felt something I haven’t felt on social media in a long time: free.

Free from Elon Musk and his tedious quest to turn X into a right-wing echo chamber where he and his friends are the permanent, inescapable main characters.”

Because Musk dismantled the censorship system, the New York Times reporter now considers it a “right-wing echo chamber.” So, what does that make Bluesky?

Over at X, there is no shortage of trolls from the left and the right. However, it is hardly an echo chamber. Many liberals are among the most influential and criticize the right and others, including Musk and X. It also has its share of far-left trolls. However, it is the fact that it also allows such voices from the right that seems to produce the gasping, hypoxic response of liberals.

Back in the day of Twitter, it was just like the Allman Brothers song:

“BluebirdsSinging a songNothing but bluebirdsAll day long”

Many have shared their own “I can breathe now” take on Bluesky and how it is great to be again among friends — and watched over by social media guardians. Just like the old days. Notably, Roose admits that the site is no X and is unlikely to replace it. Roose admitted when he first joined Bluesky, it was more annoying than liberating:

“It was also, frankly, kind of annoying. The most active posters on my feed were all left-wing Twitter discontents, united in their hatred of Mr. Musk yet unable to stop talking about him. My account went dormant, and I moved on to other platforms.”

To his credit, Roose appeared to miss the diversity of thought in less “moderated” spaces. Nevertheless, it is now a godsend for those seeking greater insulation from opposing views.

Ironically, one lesson from this election is the danger of both the press and pundits in becoming increasingly out of touch with most of the country.  The shock expressed by many is due to a lack of exposure to opposing views — not the need for further ideological isolation.

That cathartic effort is evident in many subscribers who are now boycotting the Washington Post and MSNBC. MSNBC contributor and Washington Post columnist Jennifer Rubin appears to support such efforts. Rubin is an avowed Marxist. Groucho Marxist, that is. Marx famously said, “I don’t want to belong to any club that would accept me as one of its members.” Before supporting resignations at her newspaper (for not endorsing a presidential candidate) or the boycott of Morning Joe (for the hosts speaking to Donald Trump), Rubin was the self-identified Republican columnist of the Post before she called for the party to be burned down.

Liberals would prefer to leave the Post if it is going to introduce opposing views. For the Post owner and publisher, the newspaper is facing an utter disaster after alienating over half of the country by becoming an echo chamber. Publisher and CEO William Lewis put it bluntly by telling the staff, “Let’s not sugarcoat it…We are losing large amounts of money. Your audience has halved in recent years. People are not reading your stuff. Right? I can’t sugarcoat it anymore.”

The response from the Post staff was calls for Lewis to be fired. These reporters and columnists would prefer to lose their jobs than their bias.

Obviously, Roose and others have every right to shelter in place within hardened liberal silos. However, it will do little to bring back readers to the media or voters to the Democrats by creating safe spaces for liberals to avoid being triggered by opposing views.

Now, it is different:

“Never saw the sun shining so brightNever saw things going so rightNoticing the days hurrying byWhen you’re in love, my how they fly”

Different except that things are not “going so right” on Bluesky.

Tyler Durden Tue, 11/26/2024 - 15:05

Ben & Jerry's Sues Parent Company Over Censorship Of Leftist Ideology

Zero Hedge -

Ben & Jerry's Sues Parent Company Over Censorship Of Leftist Ideology

Authored by Dmytro “Henry” Aleksandrov via Headline USA

Infamous leftist ice cream brand Ben & Jerry’s recently sued its parent company, Unilever, for allegedly censoring the woke company’s pro-Palestinian and anti-Israel rhetoric.

The Daily Wire reported that the company constantly pushed far-left talking points. This time, Unilever allegedly pushed back against Ben & Jerry’s supporting anti-Semitic protests on American college and university campuses, with the students urging the U.S. government to stop sending military aid to Israel.

According to the Wire, the fact that the woke Unilever decided to stop Ben & Jerry’s from spreading its leftist ideology shows that the culture and political status quo in this country is changing.

“That says a lot. In case you forgot, Unilever is the leftist company that brings you Dove — the wokest wash around — and Axe, which is now trying to encourage men to forgo macho stereotypes and take on a more progressive version of masculinity instead. The London-based corporation also supports ‘Pride events across the UK and Ireland [and] partners with LGBTQI+ charities,'” the Wire wrote.

Ben & Jerry’s has always opposed Israel, but the mainstream media exposed the company’s anti-Semitism only three years ago. In 2021, Ben & Jerry’s stopped selling its ice cream in Israel‘s territory of the “West Bank” of the Jordan River and east Jerusalem, saying the sales in the territories sought by the Palestinians are “inconsistent with [their] values.”

After that, many American politicians, like former Rep. Lee Zeldin, R-N.Y., Israel, and many states, like FloridaArizona and North Carolina, opposed the company’s anti-Israel decision, and Unilever distanced itself from Ben & Jerry’s at the time of the scandal.

As a result, the woke company lost $111 million in pension funds. Even multiple state attorneys called the company to stop its anti-Israel boycott.

“We, the attorneys general of our respective states, write today to express our grave concerns about Unilever’s decision to engage in a boycott of the State of Israel,” the attorneys general wrote in a letter to Unilever.

“Not only is Israel one of our nation’s closest and most reliable allies, but it is also the only democratic nation in the region and has long been a force for peace and stability.”

However, after that, Ben & Jerry’s only doubled down on its anti-Semitic rhetoric, subjecting its employees to anti-Semitic propaganda and suing Unilever to prevent Israelis from eating the company’s ice cream.

Ben & Jerry’s also pushed the ‘Defund the Police” movement and anti-American propaganda. As a result, the company that didn’t learn from its mistakes lost $2 billion.

Next year, Unilever cut ties with the company, stating that “simplifying [their] portfolio and driving greater productivity will allow [them] to further unlock the potential of this business.”

Tyler Durden Tue, 11/26/2024 - 14:25

FOMC Minutes: "appropriate to move gradually toward a more neutral stance"

Calculated Risk -

From the Fed: Minutes of the Federal Open Market Committee, November 6–7, 2024. Excerpt:
In their discussion of financial stability, participants who commented noted vulnerabilities to the financial system that they assessed warranted monitoring. A couple of participants observed that the banking system was sound but that there continued to be potential risks associated with unrealized losses on bank assets. Many participants discussed vulnerabilities associated with CRE exposures, focusing on risks in the office sector. A few of these participants noted signs that the deterioration of conditions in this sector of the CRE market might be lessening. A couple of participants noted concerns about asset valuation pressures in other markets. Some participants commented on cyber risks that could impair the operation of financial institutions, financial infrastructure, and, potentially, the overall economy; these participants noted, in particular, vulnerabilities that could emanate from third-party service providers. A couple of participants also mentioned third-party service providers in the context of risks associated with brokered and reciprocal deposit arrangements. Several participants noted that leverage in the market for Treasury securities remained a risk and commented that it would be important to monitor developments regarding the market's resilience. A few participants discussed vulnerabilities posed by the growth of private credit and potential links to banks and other financial institutions. A couple of participants commented on the financial condition of low- and moderate-income households that have exhausted their savings and the importance of monitoring rising delinquency rates on credit cards and auto loans. A couple of participants remarked on the successful implementation of the Securities and Exchange Commission's money fund rules, noting that it would reduce financial stability risks posed by domestic MMFs.
...
In discussing the outlook for monetary policy, participants anticipated that if the data came in about as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time. Participants noted that monetary policy decisions were not on a preset course and were conditional on the evolution of the economy and the implications for the economic outlook and the balance of risks; they stressed that it would be important for the Committee to make this clear as it adjusted its policy stance. While emphasizing that monetary policy would be data dependent, many participants noted the volatility of recent economic data and highlighted the importance of focusing on underlying economic trends and the evolution of the outlook when assessing incoming information. Some participants remarked that, at a future meeting, there would be value in the Committee considering a technical adjustment to the rate offered at the ON RRP facility to set the rate equal to the bottom of the target range for the federal funds rate, thereby bringing the rate back into an alignment that had existed when the facility was established as a monetary policy tool.
emphasis added

FOMC Minutes Show "Many" Members Suddenly Favor More Gradual Rate-Cutting-Cycle

Zero Hedge -

FOMC Minutes Show "Many" Members Suddenly Favor More Gradual Rate-Cutting-Cycle

In summary: all of a sudden we go from basically no dissents about slashing rates (pre-election) to "many" thinking slow-down and some thinking "pause" the cutting cycle completely?

*  *  *

Since the last FOMC meeting - just days after the election on November 7th - bonds, the dollar,m and stocks have rallied (excluding the election reaction before the Fed) and crude oil and gold have been dumped (hit most recently amid 'peace' headlines and Bessent's appointment)...

Source: Bloomberg

And while that has been going on, US Macro data has serially un-impressed... having soared higher since before the big cut in September...

Source: Bloomberg

...interesting that the data started to disappoint right after Trump's Red Sweep was confirmed.

Rate-cut expectations have continued to slide since the last FOMC with less than three full cuts now priced in by the end of 2025...

Source: Bloomberg

But, the odds of a December cut have jumped in the last couple of days...

Source: Bloomberg

Additionally, since The Fed began cutting, the Reverse Repo facility has been dramatically drained...

Source: Bloomberg

Recent remarks from Fed officials have seen many echo the line in the statement that risks to the Fed's mandate are roughly in balance. However, Governor Bowman, the most hawkish on the Fed, sees greater risks to the price stability mandate. Many are also keeping their options open, in fitting with Powell, as they wait to see all the data available before acting. Powell acknowledged that inflation is on a "sometimes bumpy" path back to 2%, but he does expect inflation to continue to come down towards the 2% goal.

Nonetheless, after recent inflation data he had said the economy is not sending signals the Fed needs to be in a hurry to lower interest rates.

So what does The Fed want us to hear from the Minutes?

Key highlights from the FOMC Minutes:

  • Some say Fed could pause easing and hold rates at restrictive levels if inflation remains elevated

  • Many said uncertainty over the neutral rate level makes it appropriate to reduce restraint gradually

  • Some said easing could be accelerated if labor market weakened or activity faltered

  • Some judged downside risks to jobs market and economy had diminished

  • Participants anticipated it would be appropriate to move gradually towards a more neutral stance

  • Almost all agreed that risks to achieving dual mandate goals remain roughly in balance

  • Some said it might be appropriate in the future to consider setting the overnight reverse repo rate to the bottom of the Fed Funds Rate target

  • Many saw excessive cooling in the jobs market as having diminished somewhat since September

  • Fed staff forecast called for economic conditions to remain solid, as in its previous assessment: 2024 GDP growth projection seen higher

Some more specifics:

"Many" senior Federal Reserve officials said uncertainty about the so-called neutral level of interest rates supported a more gradual approach in reducing U.S. borrowing costs.

"Many participants observed that uncertainties concerning the level of the neutral rate of interest complicated the assessment of the degree of restrictiveness of monetary policy and, in their view, made it appropriate to reduce policy restraint more gradually," the minutes of the November meeting said.

And suddenly, post-Trump-victory, "some" Fed members think a "pause" is necesary:

"In discussing the positioning of monetary policy in response to potential changes in the balance of risks, some participants noted that the Committee could pause its easing of the policy rate and hold it at a restrictive level if inflation remained elevated, and some remarked that policy easing could be accelerated if the labor market turned down or economic activity faltered."

Chairman Jerome Powell and other senior officials called the elevated readings of inflation a "bump" and they predict more bumps in the future. Still, they continue to believe inflation will slow toward their 2% goal by 2026.

"Incoming data generally remained consistent with inflation returning sustainably to 2%," the minutes said.

Read the full Minutes below:

Tyler Durden Tue, 11/26/2024 - 14:05

Biden Throws Struggling Rivian $6 Billion Lifeline For EV Factory 

Zero Hedge -

Biden Throws Struggling Rivian $6 Billion Lifeline For EV Factory 

The Biden-Harris administration is rushing to spend taxpayer funds before President-elect Trump takes office. To start the week, the administration directed nearly $8 billion to Intel and now billions more to save struggling electric vehicle manufacturer Rivian Automotive.

On Tuesday, the US Department of Energy announced it would offer a direct loan of up to $6.57 billion (including $5.975 billion of principal and $592 million of capitalized interest) to finance Rivian's EV factory in Stanton Springs North, near the City of Social Circle, Georgia. The project was shelved in early March over the urgent need to reduce costs. 

"Today's announcement reinforces the Biden-Harris Administration's commitment to strengthen the nation's manufacturing competitiveness, helping ensure American businesses remain global leaders in the rapidly expanding EV industry," the DoE wrote in a statement. 

Democrats in the White House are spending taxpayer funds like a drunken sailor ahead of Trump entering the White House in less than two months. The Trump administration may claw back the money the Biden team is dishing out as lifelines to struggling companies. 

We view the DoE loan as a lifeline for Rivian, considering it has been unable to meet production and sales targets and has burned through $19 billion since going public in 2021. The cash crunch forced the startup to pause construction of the Georgia plant in March. 

The new Georgia plant could help Rivian boost the production capacity of more affordable models. The R1 vehicle costs $70,000 or more, which is unaffordable for the typical consumer because of high interest rates and elevated inflation.

"This loan would enable Rivian to more aggressively scale our US manufacturing footprint for our competitively priced R2 and R3 vehicles that emphasize both capability and affordability. A robust ecosystem of US companies developing and manufacturing EVs is critical for the US to maintain its long-term leadership in transportation," Rivian CEO RJ Scaringe wrote in a statement.

Rivian noted:

Rivian intends to build the facility in two phases, each resulting in 200,000 units of annual production capacity, for a total of 400,000 units of annual capacity–supporting the sale of American EVs in international markets. Phase 1 of the project is expected to start production in 2028. Rivian is expected to create approximately 7,500 operations jobs through 2030 at the company's future manufacturing facility in Georgia. This is in addition to 2,000 expected full-time construction jobs that will utilize the region's significant talent and workforce to further strengthen the domestic EV ecosystem. These jobs complement the thousands Rivian has already created and plans to maintain at its current plant in Normal, Illinois, which have bolstered the local and regional economy.

In June, German automaker Volkswagen provided Rivian with a $5 billion investment lifeline in the form of a joint venture, which helped to stem its cash hemorrhaging. 

Multiple lifelines have been thrown at Rivian ahead of Trump's expected elimination of the EV tax credit, worth up to $7,500 for new EVs and $4,000 for used ones. Tesla CEO Elon Musk has applauded Trump's move to roll back EV tax credits because it will bankrupt his competitors. 

In markets, Rivian shares are up 8% in premarket trading at around $12.56. As of Monday's close, shares were down 50% year-to-date, with about 18% of the float short, equal to about 135 million shares. 

The Biden-Harris team continues to spend taxpayer funds like drunken sailors. This creates terrible optics, as voters have made it very clear that the era of reckless spending should be over.

Tyler Durden Tue, 11/26/2024 - 13:45

Solid 5Y Auction Sees Highest Direct Bid In A Decade

Zero Hedge -

Solid 5Y Auction Sees Highest Direct Bid In A Decade

After yesterday's stellar 2Y auction, many expected today's sale of 5Y paper to be similarly solid especially with yields flattish on the session after yesterday's massive flattening which pushed the 2s10s back into inversion. And they were not disappointed.

Starting at the top, the auction priced at a high yield of 4.197%, up from 4.138% in October and the highest since Jun. It also stopped through the When Issued 4.199% by 0.2bps. This was the first non-tailing auction since June.

The bid to cover was also solid: at 2.43, it was up from 2.39 last month and above the 2.38 six-auction average.

The internals were uglier: indirects were awarded 64.12%, down from 76.35% and the lowest since February. But while foreign buyers were leery, local Direct bidders were not and at 24.58%, Directs took down the biggest chunk of the auction since July 2014. This meant that Dealers were left with just 11.3% of the auction, the lowest since September 2023.

Overall, a decent, if hardly spectacular auction and one which did little to move yields in the secondary market.

Tyler Durden Tue, 11/26/2024 - 13:33

Nearly 10,000 Buildings Destroyed By Hezbollah In Israel's North: Report

Zero Hedge -

Nearly 10,000 Buildings Destroyed By Hezbollah In Israel's North: Report

Via The Cradle

More than 9,000 buildings and 7,000 vehicles have been damaged or destroyed by Hezbollah operations against the Israeli north since the start of the war, Yedioth Ahronoth reported on Tuesday – highlighting the "unimaginable" losses ahead of a potential ceasefire deal with Lebanon. 

"In the conflict line settlements, there is almost no building that does not require renovation - or demolition and rebuilding," said the Israeli newspaper’s electronic site Ynet

Destroyed building at Israeli settlement in north, via AFP.

According to property tax data obtained by Ynet, "a disturbing partial image emerges that indicates destruction and damage to approximately 9,000 buildings and over 7,000 vehicles that were damaged mainly by Hezbollah fire."

Ynet adds that "about NIS 140 million [$38,368,316] has been paid to compensate for the damages."

The data indicates that "there are many injuries in the north that have not yet been reported, because the tenants are being evacuated or because the injuries are in areas that cannot be entered according to the army's instructions."

The report highlights that the northern settlements and cities of Kiryat Shmona, Manara, Shtula, Zarit, Nahariya, and Shlomi sustained the heaviest damage throughout the war. Most of the damage was to residential buildings. The Hebrew outlet says the destruction has not been properly documented and is "shrouded in a heavy fog."

In Kiryat Shmona, the losses are "unimaginable." Its Mayor, Avichai Stern, reported that every home in Kiryat Shmona needs renovation, which will take months. Public buildings have also been damaged, and renovation of schools alone requires around four months. 

Stern states that there is no government plan in place to receive the settlers back north. He says they will decide to leave again once they see the reality they returned to. "When they see where they returned and to what reality they returned – the second wave of departure will be wider."

"Apart from a budget framework of NIS 15 billion [$4,119,765,000] for all the settlements in the north, there is no plan approved by the government. Not security, not economic, not social, and not any response to resilience, and the communities that fell apart and the infrastructures that were destroyed," he added.

"The State of Israel has no idea what the extent of the damage is and what needs to be done and treated the day after the war," says Moshe Davidovitz, chairman of the Conflict Line Settlements Forum. 

The first months of the war last year saw Hezbollah meticulously target border settlements, nearby bases, and military sites. As Israel continued to escalate, Hezbollah’s operations gradually extended deeper north. 

After the pager terror attacks in Lebanon and the assassination of Hezbollah's secretary-general Hassan Nasrallah, and in the weeks that followed, Haifa and Tel Aviv entered the Lebanese resistance's range of fire. 

The Ynet report comes ahead of an expected announcement of a ceasefire agreement between Hezbollah and Israel, which US and Israeli officials say is close. Israel’s Prime Minister Benjamin Netanyahu is expected to approve the deal during a security cabinet meeting on Tuesday afternoon.

Beirut has expressed cautious optimism, as Netanyahu has consistently blocked a deal from going through in Gaza for over a year. The agreement focuses on UN Resolution 1701. As part of the deal, Hezbollah is required to withdraw beyond the Litani River, with the Lebanese army deploying its forces south. 

Yet Israelis and the settler officials from the battered north are furious about the potential agreement and are far from satisfied with the fact that the deal reportedly stipulates that Lebanese army forces are responsible for dismantling Hezbollah infrastructure along the border. 

The settlers feel the government has abandoned them. Many refuse to return to the ravaged wasteland from which they were forced to evacuate at the start of the fighting, as they feel Hezbollah has not been deterred and view the agreement as a surrender

Tyler Durden Tue, 11/26/2024 - 13:20

Israeli Cabinet Has Approved A Ceasefire In Lebanon

Zero Hedge -

Israeli Cabinet Has Approved A Ceasefire In Lebanon

Update(1315ET): After months of heavy fighting which has included airstrikes and an IDF ground invasion of Lebanon, it finally looks official. Israel's Channel 12 and others are reporting Tuesday evening (local time) that the Israeli cabinet has approved a ceasefire in Lebanon.

In announcing the ceasefire, Netanyahu called out both Iran and Syria's Assad. He stressed that Israel is "Determined to prevent Iran from having nuclear arms" and that Assad is "playing with fire" in his coordination with the Islamic Republic and Hezbollah. The prime minister also stressed that Hezbollah will be attacked if its fighters break the deal. Netanyahu added that the ceasefire deal means Israel will now focus on the Iranian threat. He pledged that all Israeli citizens in the north will be able to return to their homes.

"We were able to achieve many of our goals during this war," he said. The ceasefire is expected to take effect Wednesday. Jerusalem Post writes, "Presidents Biden and Macron will announce the deal during the night, with the alleged agreement set to take effect at 10 a.m. tomorrow."

Some Lebanese continue to have doubts that it will actually take effect or hold...

An Al Jazeera correspondent in Lebanon observes, "People in Lebanon were waiting for this speech. Despite the fact Netanyahu was talking about the Israelis ceasing the ceasefire any time they want, people will be cherry-picking the positives here." According to more:

The Israeli prime minister talked about a "paradigm shift in security for Israel". He mentioned every adversary in the Arab world you can think of, and he made it clear the ceasefire was done on their terms and according to their timing.

There is some truth to that. However, there are two conflicts being fought in Lebanon: there is the massive air campaign and Israel has wreaked devastating havoc across the country; but there’s also the ground incursion near the border in the south.

President Biden is expected to take credit for putting together the proposal which has been agreed upon.

* * *

Israel on Tuesday unleashed what eyewitnesses say marked the biggest airstrikes on Beirut yet, hitting 20 sites across the city's southern suburbs within two minutes.

The Israeli military (IDF) said the air force conducted "a widespread attack" on Hezbollah targets there. "After issuing an unusually broad evacuation warning for 20 buildings in the southern suburbs of the Lebanese capital, a Hezbollah stronghold, the IDF said that within two minutes, it had struck all 20 sites," Times of Israel writes. "The fast and extensive wave of airstrikes was carried out by eight fighter jets, according to the military."

Aftermath of Tuesday's large-scale Israeli airstrikes on Beirut, AFP

The targets were in the areas of Al-Hadath, Haret Hreik and Burj Al-Barajneh – which are known Hezbollah strongholds. Residents were reportedly urged to evacuate. It's being described the highest number of buildings issued evacuation warnings by the IDF in a single day.

Dahiyeh, which has been a frequent target for strikes since the bombing raids began, saw huge plumes of smoke hovering above buildings in the aftermath. The area is home to some one million people. Also on Tuesday the IDF has begun publishing evacuation orders for central Beirut, significantly outside any area considered a Hezbollah stronghold.

As for the ongoing ground offensive in southern Lebanon, IDF troops have as of Tuesday pushed the furthest north since the incursion began

Israeli soldiers reached the Litani river in southern Lebanon on Tuesday for the first time since they began ground operations in the country in mid-September, marking a symbolic milestone in their campaign.

In recent days, social media video and Lebanese media reports have shown Israeli troops around the river near the town of Khiam, south of the river, where Hezbollah also says its fighters have engaged in heavy fighting with Israeli forces.

This ramp-up in attacks has come hours ahead of an expected major announcement that Israel has agreed to a ceasefire in Lebanon, with Times of Israel confirming in the afternoon (local time)--

"Prime Minister Benjamin Netanyahu is meeting with his security cabinet now" as his ministers are "expected to approve a ceasefire in the fight against Hezbollah in Lebanon."

An official statement from Netanyahu’s office is expected by 2pm eastern (per some local reporting). Not everyone is happy with it.

Former prime minister Naftali Bennett represents the anger of many. He pointed out in a fresh statement "Hezbollah still has its stockpile of tens of thousands of rockets." He said this means "it can continue producing [weapons] and rearming.”

More huge strikes on the Bekaa Valley on Tuesday:

Via X

"An impressive military achievement by IDF soldiers and commanders is being translated into a total security-diplomatic failure," Bennett stressed. Some Israeli officials are concerned that the truce arrangement does nothing to effectively alleviate the problems of northern Israel, which has seen some 80,000 residents indefinitely evacuated from their homes for more than a year. As for the current ceasefire deal on the table... will it actually hold?

Tyler Durden Tue, 11/26/2024 - 13:15

FOMC Minutes Preview

Zero Hedge -

FOMC Minutes Preview

The November the FOMC Minutes will be released a day earlier than usual on account of the Thanksgiving holiday on Thursday. Also, the Minutes are an account of the 7th November meeting. Therefore, while they may discuss the Trump victory, they will not incorporate the recent inflation data, which saw an in-line CPI report but hotter than expected PPI report.

Below is a summary of what to expect courtesy of Newsquawk

Summary: The minutes will be released at 2:00 pm EST, but will likely be deemed as stale given recent data and commentary. Recent data saw in line CPI but hotter than expected PPI, with attention turning to the PCE data on Wednesday. Fed Chair Powell, after the two data points, said he projects October Core PCE at 2.8%, up from the 2.7% in September. Recent Fed speak has seen Chair Powell state data shows that the Fed does not need to be in a hurry to cut rates, while hawk Bowman has called for a cautious approach. Meanwhile, many others are keeping their options open, waiting for the data to determine the Fed's decision making process. The minutes will be eyed to garner the Fed's views on the balance of risks to the mandate in reference to the recent cooling of the labour market and the "bumpy" inflation readings. Focus will also be on clues for guidance, but it will likely show policymakers want to keep options open and make decisions meeting by meeting.

November FOMC Recap:

  • At its November meeting, the FOMC cut rates by 25bps to 4.50-4.75%, in line with market pricing and analyst expectations, and in a unanimous decision.
  • The statement saw some changes: it removed language that it "has gained greater confidence that inflation is moving sustainably toward 2%"; it also adjusted its explanation of why the Fed cut rates, to "in support of its goals," as opposed to "in light of the progress on inflation and the balance of risks."
  • Fed Chair Powell confirmed in the press conference these changes were not meant to send a signal on policy, but the language beforehand was a test for the Fed to cut rates, and now that it has started to ease policy, that test has already been completed.
  • The statement changes further confirmed the Fed's commitment that they are focused on both sides of the Fed's mandate, as opposed to just inflation.
  • The Fed maintained language that risks to both sides of the mandate are "roughly in balance" and it still describes inflation as "somewhat elevated", while it acknowledged that labor market conditions have generally eased.

Recent Commentary: Recent remarks from Fed officials have seen many echo the line in the statement that risks to the Fed's mandate are roughly in balance. However, Governor Bowman, the most hawkish on the Fed, sees greater risks to the price stability mandate. Many are also keeping their options open, in fitting with Powell, as they wait to see all the data available before acting. Powell acknowledged that inflation is on a "sometimes bumpy" path back to 2%, but he does expect inflation to continue to come down towards the 2% goal. Nonetheless, after recent inflation data he had said the economy is not sending signals the Fed needs to be in a hurry to lower interest rates.

Outlook: The minutes will unlikely give fresh clues to what they are to do in December, but it will likely echo what Powell and Co. have said that they will make decisions meeting by meeting on a data-dependent approach. Regarding December specifically, Fed Chair Powell, before the November meeting, said as long as the economy evolves as expected, then to expect a 25bps rate cut in November, and 25bps in December. However, the Fed cut by 25bps in November, but recent inflation data has shown a lack of progress and is being described as a "bump" in the Fed's path back to 2%. The Fed Chair then stated that data shows the Fed does not need to be in a hurry to lower interest rates, stressing that policy is not on a pre-set path. There hasn't been anything committal regarding the December meeting, Fed's Collins has said a 25bps rate cut is certainly on the table, but it is not a done deal. Goolsbee said he does not like tying Fed hands when asked about December, noting there is still more data to come. Hawk Bowman has expressed cause for concern regarding recent inflation data, and that the Fed should pursue a cautious approach. Note, money markets are currently pricing in around 15bps of easing, which implies a 60% probability of a 25bps rate cut in December, however the latest Reuters survey found that the vast majority of economists (94/106) expect a 25bps rate cut.

Election: Given the latest meeting took place the day after the Presidential Election, the decision would have incorporated the Trump victory. However, the Fed has made it clear they will not front-run policy and it is unlikely to have an impact for the December meeting. Nonetheless, looking ahead Powell did state in the Press Conference, in response to a question about the impact of Trump's touted policies, said "forecasts of those economic effects would be included in our models of the economy and would be taken into account through that channel".

Tyler Durden Tue, 11/26/2024 - 13:00

Credit Spreads: The Markets Early Warning Indicators

Zero Hedge -

Credit Spreads: The Markets Early Warning Indicators

Authored by Lance Roberts via RealInvestmentAdvice.com,

Credit spreads are critical to understanding market sentiment and predicting potential stock market downturns. A credit spread refers to the difference in yield between two bonds of similar maturity but different credit quality. This comparison often involves Treasury bonds (considered risk-free) and corporate bonds (which carry default risk). By observing these spreads, investors can gauge risk appetite in financial markets. Such helps investors identify stress points that often precede stock market corrections.

The chart shows the annual rate of change in the S&P 500 market index versus the yield spread between Moody’s Baa corporate bond index (investment grade) and the 10-year US Treasury Bond yield. Rising yield spreads consistently coincide with lower annual rates of return in the financial market.

Another measure we watch is the spread between corporate “junk” bonds (BB), often referred to as “high yield,” to the “risk-free” rate of U.S. Treasury bonds.

The “Junk to Treasury bond” spread provides signals of market stress or impending market corrections. The reason is that if you are buying bonds that have a high risk of default (aka “junk bonds”), you should be paid a premium for the risk that is undertaken relative to the “risk-free” rate offered by U.S. Treasury bonds. The spread identifies when investors are willing to speculate in the markets and forgo the “risk premium.”

As shown, this has typically not ended well, which is why understanding credit spreads is important to investing outcomes.

Why Credit Spreads Matter

Many financial prognosticators on YouTube and other media suggest that an imminent crash is coming. This is understandable, given the substantial advance over the last two years. But just because the market has increased significantly doesn’t mean a crash is imminent. As Carson Research pointed out recently, the current advance following the 2022 correction is relatively young regarding months of advance. However, 1966, 1970, and 2020 show a reversion after a two-year advance is not out of the question.

However, credit spreads can greatly assist in determining the risk of a correction or bear market.

Credit spreads reflect the perceived risk of corporate bonds compared to government bonds. The spread between risky corporate bonds and safer Treasury bonds remains narrow when the economy performs well. This is because investors are confident in corporate profitability and are willing to accept lower yields for higher risks. Conversely, during economic uncertainty or stress, investors demand higher yields for holding corporate debt, causing spreads to widen. This widening often signals investors are growing concerned about future corporate defaults, which could indicate broader economic trouble.

The two charts above show that credit spreads are essential for stock market investors. Watching spreads provide insights into the health of the corporate sector, which is a major driver of equity performance. When credit spreads widen, they often lead to lower corporate earnings, economic contraction, and stock market downturns.

Widening credit spreads are commonly associated with increased risk aversion among investors. Historically, significant widening of credit spreads has foreshadowed recessions and major market sell-offs. Here’s why:

  1. Corporate Financial Health: Credit spreads reflect investor views on corporate solvency. A rising spread suggests a growing concern over companies’ ability to service their debt. Particularly if the economy slows or interest rates rise.

  2. Risk Sentiment Shift: Credit markets tend to be more sensitive to economic shocks than equity markets. When credit spreads widen, it typically indicates that the fixed-income market is pricing in higher risks. This is often a leading indicator of equity market stress.

  3. Liquidity Drain: As investors become more risk-averse, they shift capital from corporate bonds to safer assets like Treasuries. The flight to safety reduces liquidity in the corporate bond market. Less liquidity potentially leads to tighter credit conditions that affect businesses’ ability to invest and grow, weighing on stock prices.

Given the exceptionally low spread between corporate and treasury bonds, the bull market remains healthy.

The Most Important Credit Spread: High-Yield vs. Treasury Spread

While there are several credit spreads to monitor, the high-yield (or junk bond) spread versus Treasury yields is considered the most reliable. That spread has been a reliable predictor of market corrections and bear markets. The high-yield bond market consists of debt issued by companies with lower credit ratings. Such makes them more vulnerable to economic slowdowns. As such, when investors become concerned about economic prospects, they demand significantly higher returns to hold these riskier bonds. When that happens, the spreads widen warning of increasing risks.

Historically, sharp increases in the high-yield spread have preceded economic recessions and significant market downturns, giving it a high degree of predictive power. According to research by the Federal Reserve and other financial institutions, the high-yield spread has successfully anticipated every U.S. recession since the 1970s. Typically, a widening of this spread by more than 300 basis points (3%) from its recent low has been a strong signal of an impending market correction.

Key Historical Examples:
  • 2000 Dot-Com Bubble: Before the tech bubble burst, the high-yield spread began widening in early 2000, warning of increased corporate credit risk. As the spread expanded, the stock market declined steeply later that year.

  • 2007–2008 Financial Crisis: The high-yield spread widened significantly as early as mid-2007, well before the 2008 stock market crash. Investors recognized the growing credit risk among corporations, particularly in the financial sector, which eventually led to the Great Recession.

  • 2020 COVID-19 Crash: As the global economy ground to a halt, the high-yield spread soared in early 2020, anticipating the severe stock market correction that followed in March.

I reconstructed the chart above to show the Treasury Bond to Junk Bond (BB) spread versus the annual rate of change in the market. The spread between Treasury and “high yield” bonds rose before significant market corrections. Currently, that spread shows no sign that the risk of a more severe market correction is prevalent.

As investors, we suggest monitoring the high-yield spread closely because it tends to be one of the earliest signals that credit markets are beginning to price in higher risks. Unlike stock markets, which can often remain buoyant due to short-term optimism or speculative trading, the credit market is more sensitive to fundamental shifts in economic conditions.

A significant increase in the high-yield spread typically suggests that:

  • Corporate earnings may decline: Companies with lower credit ratings may struggle to refinance debt at favorable rates, leading to lower profitability.

  • Economic growth is slowing: A widening spread often reflects concerns that the economy is heading for a slowdown, which can lead to reduced consumer spending, lower business investment, and weaker job growth.

  • Stock market volatility may rise: As credit conditions tighten, investor risk appetite tends to decrease, resulting in higher volatility in equity markets.

What This Means for Your Portfolio

If the high-yield spread does start to widen, it may be time to reassess your portfolio’s risk exposure. Consider the following steps:

  • Reduce exposure to high-risk assets: This includes speculative stocks and high-yield bonds, likely to be hit the hardest in a downturn.

  • Increase exposure to defensive assets: Treasury bonds, gold, and other sectors like utilities and consumer staples may offer protection in a volatile market.

  • Review liquidity needs: Ensure your portfolio has enough liquidity to weather market stress without selling assets at unfavorable prices.

While bear market and crash predictions generate headlines, clicks, and views, most perennial calls continue to be wrong, leading investors to miss out on generating investment gains. Instead of listening to generally incorrect market analysis, credit spreads, particularly the high-yield spread versus Treasuries, are critical indicators for predicting stock market downturns. Historically, they have been a reliable early warning signal of recessions and bear markets.

However, there is no evidence that a “bear is on the prowl.”

When spreads do widen, we will certainly let you know.

*  *  *

Stay ahead of the market by regularly monitoring credit spreads and other key financial indicators. For more in-depth analysis and tailored investment advice, visit RealInvestmentAdvice.com to ensure your portfolio is prepared for any market environment.

Tyler Durden Tue, 11/26/2024 - 12:40

Judge In Daniel Penny Trial Rejects Defense Motion For Dismissal

Zero Hedge -

Judge In Daniel Penny Trial Rejects Defense Motion For Dismissal

Authored by Michael Washburn via The Epoch Times,

Judge Maxwell Wiley on Nov. 25 declined to dismiss the case against former U.S. Marine Daniel Penny after hearing defense lawyers’ and prosecutors’ arguments without the jury present.

Penny is on trial for manslaughter and criminally negligent homicide related to the death of Jordan Neely on May 1, 2023.

The judge did agree to include a limiting instruction regarding witness testimony in his final instructions to the jury, which is set to begin deliberating on the controversial case next week after closing arguments set for Dec. 2.

The limiting instruction will tell the jury not to take into consideration any subjective opinions that witnesses may have let slip about the guilt or innocence of the defendant.

During oral arguments on Nov. 25, defense lawyer Thomas Kenniff sought to persuade the judge that legal precedent existed for dismissing the case against Penny, who simply exercised a lawful right to defend himself and others when Neely entered an uptown F train at Manhattan’s Second Avenue stop.

Citing a transcript of the police interview, Kenniff said: “So, on page 18, Mr. Penny tells the officers that Mr. Neely says, in some substance, ‘If I don’t get this and this, I’m going to go to jail forever.’

“After throwing his jacket, Mr. Neely says, ‘If I don’t get this and this, I’ll kill everyone, I am prepared to go to jail for life.’”

Kenniff also cited portions of the interview with Penny and described Neely “getting in people’s faces, and people getting out of the way.”

Later in the transcript, Penny states his frank concern that Neely would have harmed women and children on the subway.

Under direct examination from prosecutors on Nov. 8, one of those passengers, Lori Sitro, described the fear she felt for herself and her small son in the face of Neely’s aggressive and menacing conduct.

Sitro said she moved the little boy’s stroller in front of him to keep him safe.

Kenniff also cited the testimony of witness Derrick Clay, who had testified that he wondered what Neely might have in his pockets.

The defense lawyer also brought up the testimony of yet another witness, Yvette Rosario, who described feeling such terror as the scene unfolded that she thought she might pass out.

“I would submit that it’s overwhelming, from a subjective and an objective standpoint, that Mr. Neely was attempting to carry out a robbery.”

Kenniff then attempted to counter prosecution claims that Neely simply wanted food and water.

He said that, when someone demands food, that person does not actually expect others to pull a sandwich from a bag and offer it; rather, the demand is clearly for money to purchase whatever the person making the demand may be in need of.

Judge Wiley asked Kenniff for case law to support his arguments.

Kenniff cited the 1980 case of People v. Davis, which concerned a December 1978 incident where a court officer driving a bus in Brooklyn shot a man who got onto the bus, refused to pay the fare, behaved aggressively and menacingly, and attempted to rob the driver.

Kenniff acknowledged that there was “not a wealth of case law” in this area, but added: “I think what we have here with Mr. Neely is light years more immediate, more direct, more obvious than anything like that,” he said.

Jordan Neely in New York on May 12, 2023. Courtesy Mills & Edwards, LLP via AP

The Prosecution Responds

Prosecutor Dafna Yoran attempted to refute Kenniff’s characterization of what happened on May 1, 2023.

She acknowledged that Neely had larcenous intent and that his conduct made passengers fear for their safety.

But Yoran portrayed Neely as someone in the grip of mental illness and addiction, who needed help, and wasn’t a robber of the type that Kenniff had described in his invocations of earlier case law.

“Most people talked about ‘I’m hungry, I’m thirsty,’ and it was an expression of his frustration. We’re talking about a man who is having a psychotic attack, who is on K-2, who is unhinged,” she said.

“No reasonable person would think that the solution was to give him what he wants. If they gave him water, if they gave him food, if they gave him $100, nothing was going to stop” the menacing conduct, she said.

Kenniff then tried to use the prosecutor’s admission against her, saying that the train ride between Second Avenue, where Neely got on, and Broadway-Lafayette, the next station, was about 30 seconds at most.

“The notion that there was an opportunity here for de-escalation—‘Here, let me give you $5,’ or whatever it is—is just not a reality. The fact that [he] is mentally unstable does not make him incapable of a robbery,” he said.

It was incumbent on the court to view the evidence in the light most favorable to the defense, Kenniff argued.

The judge appeared largely unmoved by the legal arguments and case law he invoked.

“I’m skeptical about giving a discharge,” the judge said.

“I anticipated you asking for it, but I’m still skeptical that it’s there.”

The judge made a small concession to the defense, agreeing to include the limiting instruction to the jury excluding witnesses’ opinions from consideration.

Closing statements in the trial are scheduled to begin on Dec. 2.

Tyler Durden Tue, 11/26/2024 - 11:25

Amgen Crashes As Anti-Obesity Drug Results Disappoint; Novo & Lilly Surge On Proposed Biden Coverage Rule

Zero Hedge -

Amgen Crashes As Anti-Obesity Drug Results Disappoint; Novo & Lilly Surge On Proposed Biden Coverage Rule

Shares of Eli Lilly and Novo Nordisk surged on Tuesday following news that the Biden administration plans to propose a rule allowing the federal government to cover a significant portion of the tab of "miracle" weight-loss drugs. However, news from Amgen about clinical trial results of its weight-loss drug, while meeting Wall Street expectations, failed to outperform Eli Lilly's blockbuster treatment, Zepbound.

Let's begin with Amgen shares crashing 12% after the Phase 2 study with MariTide showed only a 20% average weight loss at 52 weeks in 592 obese patients. 

Wall Street analysts forecasted MariTide would be able to shed about 25% of the patient's body weight on average over the course of one year and exceed the performance of existing drugs offered by Lilly and Novo. About 11% of patients discontinued MariTide during the trial, a much higher discontinuation rate versus the other medications on the market.

"Given already excellent efficacy with both Lilly and Novo, difficult to know how MariTide fits in the market other than as a niche player for patients adamant about taking an injection less often than weekly," Mizuho's Jared Holz told Bloomberg via email. 

Amgen wrote in a press release, "Nausea and vomiting were predominately mild, transient and primarily associated with the first dose," adding, "The incidence of nausea and vomiting was substantially reduced with dose escalation."

Other Wall Street analysts commented on MariTide's results (courtesy of Bloomberg):

Jefferies (Buy, $294)

  • "The results are on the lower end of the expectations of 20-25% and the company noted there was no plateau of weight loss so there is more pot’l weight loss beyond 52 weeks," analysts led by Michael J. Yee wrote in a note
  • Says there will be some "relative investor disappointment on the overall topline efficacy at 20% appreciating that we do not know the individual arms and more to be disclosed"
  • "Bulls will be a little disappointed today - while bears will say AMGN is no longer a major player here to be concerned on"

Citi (Neutral, PT to $310 from $335)

  • Says data on monthly dosing was not reported, and "will likely weigh on shares until more is disclosed," analysts led by Geoff Meacham wrote
  • "Without monthly dosing, there could be headwinds in MariTide carving a long-acting injectable niche in the market"
  • "We anticipate AMGN trading downwards of $25+ on these data and take our TP to $310 (-$25)"

Amgen shares crashed 12% - the largest daily decline since the October 2000 DotCom bust...

Meanwhile, Lilly and Novo shares moved higher after the Biden administration proposed a rule that would require the Medicare insurance program—already footing the bill for weight loss drugs for health conditions such as diabetes—to expand coverage to an estimated 3.4 million older Americans on Medicare and four million more adults in Medicaid programs.

Bloomberg cited a White House official who said the plan would "slash out-of-pocket costs by as much as 95% for the drugs that can carry a price tag of $1,000 a month."

This new proposed coverage would cost taxpayers $25 billion over ten years, adding $11 billion in federal Medicaid costs and $4 billion in state costs. The goal of the incoming Trump administration will be to slash spending, not increase handouts to big pharma. 

Trump's pick of Robert F. Kennedy Jr. to lead the Department of Health and Human Services would ensure that healthy food would be the most affordable solution to "solve the obesity and diabetes crisis" instead of big pharma's GLP-1 drugs.

Tracking the GLP-1 craze in markets, Goldman's index of companies with high exposure to GLP-1s reversed much of the gains before and after the election on RFK Jr. risks. As a result, companies at risk from GLP-1s' success are now outpacing on the year. 

The key takeaway is that competition in the GLP-1 market is heating up. Meanwhile, RFK Jr.'s move to solve the obesity and diabetes crisis won't be with pharma drugs, but through a focus on clean, healthy food.

Tyler Durden Tue, 11/26/2024 - 11:05

A Note Of Caution For Those Who View Bessent As A Return To Orthodoxy

Zero Hedge -

A Note Of Caution For Those Who View Bessent As A Return To Orthodoxy

By Benjamin Picton, Senior Macro Strategist at Rabobank

Bessent Into Orthodoxy?

Markets extended recent gains yesterday in apparent reaction to Donald Trump’s decision to nominate hedge fund manager Scott Bessent as Treasury Secretary. The S&P500 closed 0.30% higher at 5987, the DOW gained almost 1% to close at 44,736 and the NASDAQ was up 0.27% to 19,055. The EuroStoxx 50 rose 0.23%, the FTSE100 was up 0.36% and the ASX200 gained 0.28% to close at a fresh all-time high of 8,417.

The Treasury curve bull flattened as 2-year yields fell 10.4bps to 4.27% and 10-year yields dropped by 12.7bps to 4.27%. As you have no-doubt deduced, this means that the 2s10s Treasury spread is now completely flat and poised to drift back into inversion if the recent flattening momentum continues. Curiously, this puts us back into a similar position as the one that prevailed immediately before the FOMC cut the Fed Funds rate by 50bps on September 18th. RaboResearch views this as a short-term cyclical move and our expectation for longer-term bear-steepening of the Treasury curve remains.

The Bloomberg Dollar Spot Index was 0.61% lower on the day as EUR, JPY and GBP all squeezed out gains. High-beta currencies like the AUD, NZD and CAD were notable laggards, with the Loonie actually losing ground against the big Dollar. The Loonie is falling further this morning after Donald Trump suggested that he would impose tariffs of 25% on all products from Canada and Mexico. The EUR, AUD and NZD are also being heavily offered in early trade.

The relative underperformance in CAD and AUD yesterday might have had something to do with the sharp fall in energy prices that accompanied rumours that Israel and Hezbollah are poised to agree a ceasefire deal in Lebanon. The intuition behind this move being that a pause in hostilities between Israel and Iran’s favourite proxy perhaps lessens the probability of escalation against Iran itself, which might have impacted oil supplies flowing out of the Hormuz Strait. Brent crude fell 2.69% to $73.15/bbl.

The appointment of Bessent might have also had some influence on energy prices. Markets are clearly breathing a sigh of relief at the nomination of a Wall Street insider who has a CV that includes a stint working for George Soros when the latter famously “broke the Bank of England” by shorting Sterling against the Deutsche Mark in the 1990s. More than a few commentators are suggesting that Bessent might act as a “voice of reason” within the Trump cabinet, and act to temper some of the more hawkish policy predilections of the Administration. Bessent has previously indicated his support of policies to substantially expand US oil production and cut the fiscal deficit, which would be disinflationary on both the supply and demand side.

Aside from a long career as a successful macro fund manager, Bessent has also lectured in economic history at Yale and, as reported in the Wall Street Journal, wants to be involved in the “grand global economic reordering” that he sees taking place. Perhaps contrary to the narrative implied by the price action yesterday, Bessent is not opposed to the use of tariffs and his advocacy for the appointment of a ‘Shadow Fed Chair’ as a form of forward guidance (initiated by executive government) suggests that he is open to policy actions that would curtail the independence of the Fed and give the President more control over the full suite of economic policy levers.

This might sound familiar to regular readers of this publication. RaboResearch’s Global Strategist, Michael Every, has written extensively since 2016 on the re-ordering of the global economy and the re-emergence of Great Power competition.

The reform of institutional settings adopted during the unipolar period of increased trade liberalization and globalization to better support state aims is a logical consequence of a paradigm shift in the way that the global system works. A more mercantilist approach that favors state aims and control of strategic supply chains over efficiency of production and low inflation implies a different infrastructure of government to what currently prevails.

As a student of economic history, Bessent seems to understand this. Perhaps that should raise a note of caution for market participants hurriedly interpreting the appointment of a “Wall Street insider” as a step back towards the orthodoxy of the last 30 years.

Tyler Durden Tue, 11/26/2024 - 10:45

Trump Win Sparks Surge In Consumer Confidence; Stock Market Expectations Hit Record High

Zero Hedge -

Trump Win Sparks Surge In Consumer Confidence; Stock Market Expectations Hit Record High

Consumer confidence among Americans soared in November, building on October's gains, as trump' election victory sparked a surge in both the Present Situation and the Expectations sub-index...

Source: Bloomberg

That is the biggest percentage jump in the Present Situation Index since summer 2021 as vaccines rolled out and 'saved the world'...

Source: Bloomberg

Rather oddly, amid the improved optimism., expectation for purchases (for cars, homes, and durables) all fell modestly in November...

Source: Bloomberg

But, The Board's labor market indicator showed the jobs situation improve considerably after an ugly few months...

Source: Bloomberg

...and expectations for stock market gains continued to surge while inflation (and interest rate) expectations fell to post-COVID lows...

Source: Bloomberg

Does any of this seem like American consumers need another 25bps rate cut?

Tyler Durden Tue, 11/26/2024 - 10:35

Mexico Threatens Trump With Counter-Tariffs, China Cries Foul

Zero Hedge -

Mexico Threatens Trump With Counter-Tariffs, China Cries Foul

One day after President-elect Trump pledged to slap a 25% tariff on all goods coming from Mexico and Canada until they tighten border security, and an extra 10% on China until the CCP cracks down on fentanyl smuggling, Mexican President Claudia Sheinbaum - a leftist ideologue trained in radical student protest movements - lashed out.

First, she threatened counter-tariffs...

"One tariff would be followed by another in response, and so on until we put at risk common businesses,." Sheinbaum said, referring to US automakers operating plants on both sides of the border.

But then she said Mexico had made progress stemming the flow of migrants, insisting that "caravans of migrants no longer reach the border," (though was that really due to Mexico, or Trump's election?) before blaming American culture for the drug epidemic - calling it "a problem of public health and consumption in your country’s society."

"It is unacceptable and would cause inflation and job losses in Mexico and the United States," Sheinbaum continued, before criticizing US spending on weapons - suggesting that the money should instead be spent regionally to address the migration problem.

"If a percentage of what the United States spends on war were dedicated to peace and development, that would address the underlying causes of migration," she said.

Of note, Mexico leads in total percentage of goods imported into the United States, followed by China and Canada.

We assume 'underlying causes of migration' = bribing Guatemala, Honduras and Colombia - the thing Kamala Harris was sent down to negotiate. 

Chinese spokesperson for the Chinese embassy in Washington, Liu Pengyu, responded as well - saying "No one will win a trade war or a tariff war," adding "the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality."

On Monday, Trump took to Truth Social to blast Mexico, Canada and China over drug smuggling and border security, writing:

As everyone is aware, thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before. Right now a Caravan coming from Mexico, composed of thousands of people, seems to be unstoppable in its quest to come through our currently Open Border. On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!

Trump then 'truthed' about China... writing:

I have had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States – But to no avail. Representatives of China told me that they would institute their maximum penalty, that of death, for any drug dealers caught doing this but, unfortunately, they never followed through, and drugs are pouring into our Country, mostly through Mexico, at levels never seen before. Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America. Thank you for your attention to this matter.

Trump has previously threatened tariffs of up to 60% on Chinese exports to the US, stirring concerns over international trade.

"Many companies will completely halt their trade with the U.S.," said Tu Xinquan, director of the China Institute for WTO Studies at the University of International Business and Economics in Beijing.

"If the tariffs were not that huge, larger companies could cope better with the situation than medium and small companies. But if it’s 60%, no one can face that."

Among the industries expected to be hit hardest by new tariffs are light manufacturing and textiles, as well as steel and computers, according to Chinese brokerage Caicong Securities.

During Trump's first term in office, he imposed tariffs on more than $360 billion worth of Chinese products - of which the Biden administration maintained the vast majority, and layered on new tariffs on products such as steel, solar cells, and electric vehicles.

Trump also wants to end an exemption for Chinese goods valued at under $800 - many of which are offered through Amazon's third-party marketplace as well as Chinese platforms Temu and Shein.

"This would be a crushing blow to Chinese exporters who have built business models around those low-value exports," said Eswar Prasad, a professor of trade policy at Cornell University and a former head of the China division at the International Monetary Fund, AP reports.

As ING noted on Tuesday:

Whilst most in the market assume that Trump will be using tariffs as a large bargaining stick – in this case to tighten US border controls – we would be careful of dismissing their market impact as some grandstanding. If 25% tariffs came close to seeing the light of day in Mexico, USD/MXN would be a 24/25 story, not just 21. We already think the currencies of Mexico and Canada will have a tougher Trump 2.0 than they did during his first term.

In response to Trump's tariff threat, the Mexican peso slumped more than 2%, paring losses to trade 1.4% lower later in Tuesday morning trade.

Tyler Durden Tue, 11/26/2024 - 10:20

US New Home Sales Crashed In October

Zero Hedge -

US New Home Sales Crashed In October

After existing home sales unexpectedly ticked up in October, analysts expected new home sales to slow after their recent resurgence (-1.8% MoM). They were right... BUT... the magnitude is mind-boggling!

New Home Sales collapsed 17.3% MoM in October. That is the largest MoM drop since July 2013

Source: Bloomberg

That MoM plunge dragged sales down 9.4% YoY to 610k SAAR - the lowest since Nov 2022

Source: Bloomberg

Of course, all the revisions are lower...

Hurricanes Helene and Milton, which tore through parts of the Southeast, delayed sales in the nation’s biggest housing region and dragged down sales overall.

Sales in the South decreased 28% to 339,000, the slowest pace since April 2020. Sales also fell in the West, but rose in the Northeast and the Midwest.

Source: Bloomberg

Finally, we note that the median sale price of a new home increased to $437,300 in October, the highest in 14 months.

Does this mean November's data will see a massive surge in new home sales? ...even as rates have increased significantly?

Tyler Durden Tue, 11/26/2024 - 10:12

Congress's Jan. 6 Investigation Looks Less And Less Credible

Zero Hedge -

Congress's Jan. 6 Investigation Looks Less And Less Credible

Authored by Jonathan Turley,

On Jan. 6, 2021, the nation was rocked by the disruption of the certification of Joe Biden as our next president. With Donald Trump set to return to the White House in 2025, it is astonishing how much of that day remains a matter of intense debate.

Those divisions are likely only to deepen after a slew of recent reports that have challenged the selective release of information from the House January 6 Committee.

January 6 remains as much a political litmus test as it is a historical event. Whether you refer to that day as a riot or an insurrection puts you on one side or the other of a giant political chasm. I viewed the attack on that day as a desecration of our constitutional process, but I did not view it as an insurrection. I still don’t.

It was a protest that became a riot when a woefully insufficient security plan collapsed. And that is a view shared by most Americans. One year after the riot, a CBS poll showed that 76 percent viewed it as a “protest gone too far.”

A Harvard study also found that those arrested on that day were motivated by loyalty to Trump rather than support for an insurrection.

A recent poll found that almost half of the public (43 percent) felt that “too much is being made” of the riot and that it is “time to move on.”

Of course, that still leaves a little over half who view the day as “an attack on democracy.”

The continued distrust of the official accounts of Jan. 6 reflects a failure of the House Democrats, and specifically former House Speaker Nancy Pelosi (D-Calif.), to guarantee a credible and comprehensive investigation.

The House Select Committee to investigate January 6 was comprised of Democrat-selected members who offered only one possible view: that January 6 was an attempt to overthrow our democracy by Trump and his supporters. The committee hired a former ABC News producer to create a slick, made-for-television production that barred opposing views and countervailing evidence. The members, including Republican Vice Chair Liz Cheney, played edited videotapes of Trump’s speech that removed the portion where Trump called on his supporters to protest “peacefully.”

The committee fostered false accounts, including the claim that there was a violent episode with Trump trying to wrestle control of the presidential limousine. The Committee knew that the key Secret Service driver directly contradicted that account offered by former White House aide Cassidy Hutchinson.

While the Democrats insisted that Trump’s speech constituted criminal incitement, he was never charged with that crime — not even by the motivated prosecutors who pledged to pursue such charges. The reason is that Trump’s speech was entirely protected under the First Amendment. Such a charge of criminal incitement would have quickly collapsed in court.

Nevertheless, the Washington Post, NPR, other media and the committee members called Jan. 6 an “insurrection” engineered by Trump. Figures such as Rep. Jamie Raskin (D-Md.) insisted the committee had evidence that Trump organized a “coup” on Jan. 6, 2021. That evidence never materialized.

The lack of adequate security measures that day has long puzzled many of us. After all, there had been a violent riot at the White House before January 6, in which more officers were injured and Trump had to be moved to a secure location. The National Guard had to be called out to protect the White House, but those same measures (including a fence) were not ordered at the Capitol.

Two of the recent reports offered new details related to those questions.

One report confirmed that Trump did, in fact, offer the deployment of the National Guard in anticipation of the protest. The Jan. 6 Committee repeatedly dismissed this claim. After all, it would be a rather curious attempt at an insurrection if Trump was suggesting the use of thousands of troops to prevent any breach of Congress. The committee specifically found “no evidence” that the Trump administration called for 10,000 National Guard members to be sent to Washington, D.C., to protect the Capitol. The Washington Post even supposedly “debunked” Trump’s comments with an award of “Four Pinocchios.”

Yet evidence now shows that Trump personally suggested the deployment of 10,000 National Guard troops to prevent violence. For example, a transcript includes the testimony of former White House Deputy Chief of Staff Anthony Ornato in January 2022 with Liz Cheney present. Ornato states that he clearly recalled Trump’s offer of 10,000 troops.

Videotapes have also emerged showing Pelosi privately admitting that she and Democratic leadership were responsible for the security failure on Jan. 6.

Another new report from Rep. Barry Loudermilk (R-Ga.), who chairs the House Administration’s Subcommittee on Oversight, shows that it was the Defense Department that delayed the eventual deployment of National Guard in the critical hours of the riot.

The evidence shows that, at 3:18 p.m., Army Secretary Ryan McCarthy “tells sheltering Members of Congress that he is not blocking the deployment of the National Guard and, while referencing the D.C. National Guard, shares that ‘We have the green light. We are moving.’” However, the secretary of the Army’s own timeline indicates that the DCNG did not physically leave the Armory until 5 pm.

That was the critical period for the riot. Around 2:10 p.m., people surged up the Capitol steps. Just an hour later, McCarthy said troops were on their way. At 4:17 p.m., Trump made his public statement asking rioters to stop — roughly an hour and a half later. Yet it was not until 5 pm that the troops actually left for the Capitol.

The House is also under greater scrutiny this week for new information on the shooting of the only person to die on Jan. 6. While Democrats have referred to many deaths on that day, the only person who died in the riot itself was Ashli Babbitt, a protester shot by Capitol Police.

I have long disagreed with the findings of investigations by the Capitol Police and the Justice Department in clearing Captain Michael Byrd for this shooting. The media lionized Byrd and, in sharp contrast to other police shootings during that period, blamed the deceased. Again, an unjustified shooting of a protester would not fit the media narrative.

The concerns over the shooting were heightened by the Justice Department’s bizarre review and report, which notably did not state that the shooting was justified. Instead, it declared that it could not prove “a bad purpose to disregard the law” and that “evidence that an officer acted out of fear, mistake, panic, misperception, negligence, or even poor judgment cannot establish the high level of intent.”

Babbitt, 35, was an Air Force veteran who was clearly committing criminal acts of trespass, property damage and other offenses at the time she was shot. However, Babbitt was unarmed when she tried to climb through a broken window.

Byrd stated “I could not fully see her hands or what was in the backpack or what the intentions are.” In other words, Byrd admitted he did not see a weapon. He took Babbitt’s effort to crawl through the window as sufficient justification to kill her. It was not. And it is worth noting that Byrd could just as well have hit the officers standing just behind Babbitt.

The new report confirms that Byrd had prior disciplinary and training issues, including “a failed shotgun qualification test, a failed FBI background check for a weapon’s purchase, a 33-day suspension for a lost weapon and referral to Maryland state prosecutors for firing his gun at a stolen car fleeing his neighborhood.” In one incident, detailed in a letter from Loudermilk, Byrd was suspected of lying about the circumstances under which he shot at the fleeing car.

None of this means that Trump or even Babbitt are without fault in this matter. Trump’s speech was clearly “reckless and wrong,” and Babbitt herself was involved in that riot. However, these reports only further highlight what we still do not know about that day.

*  *  *

Jonathan Turley is the Shapiro professor of public interest law at George Washington University and the author of “The Indispensable Right: Free Speech in an Age of Rage.”

Tyler Durden Tue, 11/26/2024 - 09:20

US Home Prices Rose At Slowest Pace In A Year In September

Zero Hedge -

US Home Prices Rose At Slowest Pace In A Year In September

Home prices in America's 20 largest cities rose (again) in September (the latest data from S&P CoreLogic's Case Shiller index) but at a slower pace than expected (+0.18% MoM vs +0.3% exp vs +0.33% prior)...

Source: Bloomberg

That left home prices up 4.57% YoY (below the 4.7% expected and the slowest annual pace since Sept 2023.

“Home price growth stalled in the third quarter, after a steady start to 2024,” says Brian D. Luke, CFA, Head of Commodities, Real & Digital Assets.

“The slight downtick could be attributed to technical factors as the seasonally adjusted figures boasted a 16th consecutive all-time high.”

West Coast cities are seeing home price growth slowing fast with Seattle, San Diego, LA, San Francisco, and Portland all seeing home price declines on a MoM basis...

Arguably, (lagged) mortgage rates increased during that period, and dipped since (positive short-term for the highly smoothed and lagged Case Shiller series), but as is clear, things do not end well...

Source: Bloomberg

However, home price appreciation does seem to track very closely with bank reserves at The Fed (6mo lag)...

Source: Bloomberg

Which suggests the pace of home price appreciation is set to slow further from here...

Tyler Durden Tue, 11/26/2024 - 09:11

Jussie Smollett, The Chicago Way, And MAGA

Zero Hedge -

Jussie Smollett, The Chicago Way, And MAGA

Authored by Steve Cortes via RealClearPolitics,

Justice is denied by the corrupt blue state powerbrokers

In his epic poem “Chicago,” Carl Sandburg popularized the moniker of Chicago as the “city of big shoulders.” But the famed poet also described the unsavory underbelly of this metropolis: “And they tell me you are crooked, and I answer: Yes, it is true...”

For six years now, Jussie Smollett has exploited that crookedness – and has escaped justice for the ludicrous hoax he perpetrated against the people of Chicago and against the tens of millions of believers in the America First movement.

The Illinois Supreme Court just overturned the conviction of Jussie Smollett for completely fabricating a crime hoax that was concocted to build sympathy and fame for the actor. Though Smollett was convicted and sentenced already, with both rulings upheld by the Illinois Appellate Court, the partisan state high court let Smollett walk away freely, claiming “due process violations.”

But despite this ruling on a technicality, the facts of the case remain undisputed. Back in January 2019, Smollett absurdly claimed that he was randomly assaulted by bigoted “MAGA” thugs on a dark downtown Chicago street, during a polar vortex so bone-chillingly cold that even Chicagoans stayed almost entirely indoors. He then claims these phantom Trumpers poured bleach on him, called him slurs, and put a noose around his neck. Um, yeah … how dumb do you have to be to believe that tale?

The bitter cold alone was a sufficient reason to doubt his fantastical claims, as I stated immediately on CNN, where I then worked as a commentator from Chicago. I was summarily put into a “time out” by the channel, the first of several such TV benchings.

But Smollett received fawning sympathy and praise from the powerbrokers of the Ruling Class, from celebrities to elected officials. Then a U.S. senator, Kamala Harris posted to Twitter that the episode represented “an attempted modern day lynching.”

Once the hoax was revealed fully due to diligent detective work by the Chicago Police Department, Jussie faced criminal charges for the serious crime of inventing such a heinous crime. In a city full of constant violence, the cops of the Second City should not be chasing down ghost perpetrators dreamed up by a troubled and fame-starved B-list actor.

But even more importantly, Jussie fed into a propaganda machine that the ruling class used throughout Trump’s first term to paint the entire movement of patriotic populism as bigoted and retrograde. Smollett knowingly leveraged the media and Democratic Party narrative that prejudice motivated Trump supporters, rather than a yearning for American sovereignty and for Main Street prosperity.

In this regard, Smollett disparaged not just the good citizens of Chicago, but the masses nationwide who support this giant young political movement. When Smollett completely invented a story and claimed to be the victim of an attack that he himself orchestrated, he committed a clear and punishable crime. 

At first, the corrupt, Soros-backed local prosecutor, Kim Foxx, offered Smollett a sweetheart deal of incredible leniency. I wrote about it back in 2019 for RealClear Politics:

Notwithstanding the absurdity of his allegations and the meticulous work of the Chicago PD, the office of State’s Attorney Kim Foxx decided, without informing police officials or the Chicago mayor, to allow Smollett to walk away from the serious proceedings, practically scot-free. The charges were dropped, the case was sealed, and the only penalty Smollett faced at all was the forfeiture of his $10,000 posted bail.

But, after a lot of legal machinations and the intervention of a judge and a Chicago special prosecutor, Smollett was then convicted of the serious crimes he committed.

Now that conviction has been overturned, and the “Chicago Way” of endemic corruption prevails. The “crookedness” that Carl Sandburg wrote about still festers. But the ramifications extend far beyond Chicago itself. In blue jurisdictions across America, it becomes increasingly clear that parallel systems of jurisprudence exist. From Alvin Bragg’s New York City to Chicago to Fulton County, Georgia, corrupt prosecutors and courts target political enemies and protect political allies, even reprehensible ones like Jussie Smollett. We cannot function as a healthy republic with dual tracks of jurisprudence. As such, this latest Smollett abuse should serve to compel corrective action across the nation to achieve true equal justice, under law.

Steve Cortes is former senior advisor to President Trump, former commentator for Fox News and CNN, and president of the League of American Workers, a populist right pro-laborer advocacy group.  

Tyler Durden Tue, 11/26/2024 - 09:00

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