Honduran Caravan Blocked By Government Forces; Migrants Plan Protest Against ‘Narco-Dictator’ President

Honduran Caravan Blocked By Government Forces; Migrants Plan Protest Against ‘Narco-Dictator’ President

A caravan of Honduran migrants were stopped by the region’s security forces, denying an estimated 8,000 Hondurans an opportunity to make a northbound run for the US border in the hopes that the Biden administration would welcome them with open arms.

The caravan was repelled by a coordinated, multi-national military operation which included Honudran forces, according to Reuters. Guatemalan security sent  who sent over 4,500 Hondurans – including more than 600 children, back to Honduras over the last week.

According to the report, the migrants are blaming Honduran President Juan Orlando Hernandez, who has also come under fire from US prosecutors over accusations of links to drug cartels. Angry caravan participants will be holding a protest at the capital Tegucigalpa on Friday.

Among them was 18-year-old Isaac Portillo, who said he felt so desperate upon his forced return to Honduras that he contemplated suicide.

Like other returned migrants, Portillo’s despair quickly turned to anger. He plans to join a march on the capital Tegucigalpa on Friday – only one week after he tried to flee his shattered country.

We’re going to oust this narco-dictator,” he said. “I already have my group ready.” –Reuters

Earlier this month, US prosecutors accused Hernandez of taking bribes from drug traffickers, which comes after his brother was convicted of drug trafficking last year in a US court.

Hernandez claims the accusations have originated from drug traffickers who are angry at his government’s recent crackdown on criminal networks.

The protesters aren’t buying it, however, and have been using social media such as WhatsApp, Telegram and Facebook to call for Hernandez’s ouster.

The angst over the caravan comes amid a perfect storm of a pandemic-driven economic contraction, and what many are calling a poor government response to back-to-back hurricanes in November that caused nearly $2 billion in damages – forcing more than 90,000 people to evacuate to emergency storm shelters.

“All I wanted to do was find work (abroad) so I could help my family and put my little sister back in school,” said the 18-year-old Portillo, who says his family received zero support from the government after the hurricanes.

His father had already lost his job as a security guard when pandemic-related restrictions devastated the economy and his 14-year-old sister had to abandon her studies as the family sank deeper into poverty.

After being deported by Guatemalan authorities this week, Portillo once again found himself living under the bridge where he and his family sought refuge after their home was destroyed in November’s floods. After he said the government threatened to evict them, the family fled again, this time to a relative’s home. –Reuters

According to Tonatiuh Guillen, the former head of Mexico’s immigration institute, suggested that ongoing frustration over the stoppage of caravans could boil over.

“It’s a pressure cooker.”

Tyler Durden
Thu, 01/21/2021 – 22:00


JPMorgan Tries To Slam Bitcoin Again, Fails Spectacularly

JPMorgan Tries To Slam Bitcoin Again, Fails Spectacularly

In its third attempt to talk down bitcoin in the past two months (see here for attempt #1, and  attempts #2), and one which may be succeeding for the time being with bitcoin sliding below $30,000 on Thursday night, erasing all of its YTD gains…

… JPMorgan has published a report aimed at all those bitcoin investors who buy the cryptocurrency for its “diversification” benefits. And in what may come as very bad news for anyone who is buying bitcoin on the assumption that it will serve as a hedge to massively overvalued risk assets, the report published by head of cross-asset strategy John Normand, finds that not only is bitcoin “the least reliable hedge during periods of acute market stress) but because of its popularity among momentum chasing retail investors (who just refuse to HODL), it actually accentuates broad market drawdowns. Which, of course, is obvious to anyone who saw what bitcoin did during the March crash when it lost half its value in days.

Before we go into the details of the report, JPMorgan first gives bitcoin its due (something which its CEO refused to do back in 2017 when he warned that any JPM employee caught trading bitcoin would be fired). As Normand writes, “whether cryptocurrencies are judged eventually as a financial innovation or a speculative bubble, Bitcoin has already achieved the fastest-ever price appreciation of any must-have asset to which it is often compared (chart 1), such as Gold (1970s), Japanese Equities (1980s), Tech stocks (1990s), Chinese Equities (2000s), Commodities (2000s) and FANG stocks (2010s).”

Each of these predecessors began with a compelling narrative and a tagline (“honest money” for Gold, “Japanese economic miracle” for Nikkei, “dot-com revolution” for Nasdaq, “a billion Chinese consumers” for China Equities, “supercycle” for Commodities and “secular growth” for FANGs), and each delivered extraordinary price momentum that challenged standard valuation models at that time. Each also delivered at least one, high-volatility price crash during the price discovery process that reversed more than half the market’s previous gain. Amusingly, while the JPM strategist is basically calling all these phenomena bubbles, he amusingly admits, that “several of these markets (Gold, Nasdaq, Chinese Equities, FANGs) were later vindicated via further all-time highs.”

Needless to say, so has bitcoin which rose above $40,000 just a few days ago, and despite its recent “crash”, it still trading at a level that was a never before seen all time high… some three weeks ago.

So, as Normand rhetorically asks, why bother considering hedging with an asset as unconventional and high-volatility as cryptocurrencies?

He gives a few reasons. One is that “extraordinary monetary and fiscal stimulus over the past year has created one of the broadest and earliest valuation problems of the past 25 years (chart 2), which creates general concerns about portfolio vulnerability to a macro or policy shock.” This can be seen in the chart below showing the near record number of markets whose valuations are more than one std deviation about their long-term average.

In short, JPM is conceding that stocks, and other risk assets, which have market value of over $100 trillion are a bubble, one which can be pricked by any number of “spoilers.” These spoilers range from somewhat familiar ones such as an inability to tame COVID, a destabilizing rise in inflation, a debt-related aftershock, significant regulatory tightening, renewed US-China or US-North Korea conflicts; to the as-yet unseen ones such as an economically debilitating cyberattack or an economically- significant climate catastrophe in a large economy. Another reason to hedge with bitcoin is that the collapse in DM Bond yields to negative levels in Japan and Europe and to only 1% in the US has limited their role as a defensive hedges in global portfolios and forced investors to focus on a range of second-best substitutes across Equities and FICC (Quality stocks, EM Bonds FX hedged, USD vs EM FX, JPY vs any currency, Gold), with cryptocurrencies considered by some to be the private and digital alternative to Gold.

Amusingly, even in a report which seeks to debunks bitcoin’s diversification abilities, the JPM analyst writes that “Bitcoin improves long-term portfolio efficiency, but its contribution will probably diminish as its mainstreaming increases its correlation with cyclical assets. And crypto continues to rank as the least reliable hedge during periods of acute market stress.

Sidestepping the fact that anyone who bought bitcoin and held over the past several years is now exorbitantly rich (and with zero concerns about bitcoin’s diversification capabilities), Normand then observes that developments “over the past year and particularly during the COVID-19 recession, have confirmed this view on the distinction between long-term efficiency and short-term risk management. As a stand-alone asset, cryptocurrencies remain several times more volatile than core asset markets, with 3M realized volatility of 90% compared to about 20% on US Equities and Gold” (chart 3 above).

But herein lies the problem, because when coupled with extraordinary returns in some years, crypto has often generated a much higher Sharpe ratio on average than core markets like Equities or hedge assets like Commodities in general and Gold specifically (chart 7).

Obviously, these averages when cryptos makes tremendous gains, obscure stretches like 2019-20, when crypto proves less efficient than its nearest competitor Gold. Thus, according to JPM the debate over whether Bitcoin or Gold can deliver superior volatility-adjusted returns remains unresolved, unlike some other quite reliable relationships informed by decades of performance trends. Amusingly, according to JPM, US High Yield Credit, for example, “is almost always more efficient than Equities for taking exposure to the US corporate earnings cycle (chart 8), while EM Corporates (CEMBI) and Sovereigns (EMBIG) almost always dominate Local Currency Bonds (GBI-EM in USD terms) for trading EM cycles. And, of course, those who trade any of these non-bitcoin assets would likely end up paying JPM a hefty commission on these trades, whereas purchase of bitcoin tend to make the likes of Coinbase richer. Which, a cynical person, may say is the reason behind JPM’s continued bashing of cryptos.

But we digress. So in its latest attempt to denigrate bitcoin, JPM then goes on to point out that far from a viable risk hedge, “the mainstreaming of cryptocurrencies – particularly with retail investors – appears to be raising its correlation with all cyclical assets (Equities, Credit, Commodities, the EM complex). If sustained, this development could erode diversification value over time.”

True… but said “mainstreaming” of crypto will also push its price higher. Much higher, especially considering just how narrow its penetration is among both institutional investors and the broader investing public. So if one is asked if they would be willing to stick with a few harrowing roller-coaster rides – with zero diversification to such other bubble assets as stocks – if the endgame is bitcoin above $100,000, we are confident that absolutely everyone would respond affirmatively.

What is even more amusing, is that in the very next sentence the JPM strategist seems to observe a fact that refutes his own conclusion, to wit:

Table 1 refreshes correlations amongst cryptocurrencies (proxied by Bitcoin), major asset classes and conventional portfolio hedges (Treasuries, TIPS, Gold and Yen). Measured over a five year sample (top half of table), cryptocurrencies’ co-movement with all markets remains low and seems to highlight their potential diversification value. Indeed, Bitcoin’s correlation coefficients range from 0 to 0.2 and would seem to position it better than the Yen or Gold for hedging purposes.

Which is odd since the whole purpose of the JPM paper is to show that bitcoin is not a good hedge and yet, lo and behold, it turns out to be the best hedge, even if over the past year these correlations have doubled or tripled, coinciding with surging interest in access products such as the Grayscale BTC Fund (chart 10). And yet, even after their rise, JPM still finds that “many pairwise correlations remain moderate (around 0.4)”, which again confirms that bitcoin is arguably the best hedge around. Still this is “concerning” to Normand who notes that “this trend bears watching.” Sure… as does bitcoin’s ascent from 0 to $40,000 in just a few short years, making billionaires out of all its early adopters.

Perhaps realizing that he is not helping his own argument, Normand then cuts to the chase and asks if bitcoin will act as a defensive asset and rise (or remain flat) when stocks selloff. Not surprisingly, he finally finds something that “validates” his thesis:

For tactical investors focused on risks that could crystalize over the next year, the better test of hedge effectiveness is whether a defensive or quasi-defensive asset rallies when Equities experience a material drawdown of perhaps 10% on Global Equities. On this measure, Bitcoin ranks 7th out of 10 alternatives, including: US Treasuries, USD vs EM Currencies, JPY vs USD, CHF vs EUR, Gold, S&P Quality stocks vs Value, EM Local Currency Bonds and UG High Grade. The first five in this list (Treasuries through Gold) are the most conventional and could be backtested further over at least two decades. The last two (EM Bonds with an FX hedge, US High Grade Credit) are potential, emerging hedges on a view that the COVID recession has sponsored two regime changes that alter these asset classes’ correlation with Equities during a crisis. One is that many EM central banks (though of moderate-debt economies) will cut interest rates, and the other is the Fed will buy High Grade Credit. The risk-return properties of these two markets will not approximate what Treasuries delivered when yields were higher and therefore offered greater offsets to declining stock markets during a crisis. But the behavior of EM Bonds and HG Credit could still change enough post-COVID to qualify them as potential diversifiers in a world with few good options.

Here, finally, Normand has successfully goalseeked a chart that fits his narrative, and notes that “for each of these assets, chart 13, chart 14 and table 2 show returns and success rates (the percentage of Equity drawdowns in which the hedge rallied) during the 20 largest Global Equity corrections of the past decade. Bitcoin ranks as the worst in terms of median returns (-5%) and the third worst in terms of success rate (42%).”

Ok so bitcoin sells off as much as or more than stocks do during risk off periods. But why is that any news? And why does JPM even care about bitcoin’s diversification abilities, when instead one should look at it from a very different lens: bitcoin – and all crypto – are merely extremely volatile, ultra-high beta assets which rise much more than stocks during times of massive liquidity injection and drop at or near the pace that stocks drop when liquidity is withdrawn. Over the long run, this means that bitcoin will always win. There is no advanced calculus that one needs to figure this out.

In fact, the best explanation of what is going on – and one that JPMorgan will never admit – came from Howard Wang, a former Bridgewater analyst, who put is simply: “Bitcoin Is A Giant Bubble… But The Global Fiat System Is An Even Bigger Bubble.” In fact, Wang’s short note is far more relevant than Normand’s meandering ramblings. Here’s what he said:

Investors are forced to hold $18 trillion of negative yielding debt while $trillions are being printed all around the world. Investors are drowning and are grabbing onto cryptocurrencies as a lifeline.

While the sustained low yields will increase prices and suppress expected returns across all markets, many investors will choose the unknown expected returns of risky assets over the guaranteed losses in bonds. Like panicked prey chased by predators, investors prefer to hide in markets that either have no fundamental metrics, like Bitcoin, or assets with growth stories that leave ample room to imagination, like Tesla.

In the short-term, there is still a lot of dry powder from stimulus checks and some institutions are also making the leap into the crypto space. So this Bitcoin party could continue as long as rates remain low and the printing press hot.

Bitcoin is the flip side of the same coin as fiat currencies, pun intended. Its long-term fate depends on the future of our fiat system. Since the 1980s, deflationary pressures have suppressed interest rates and ultimately necessitated money printing around the world. As long as this trend continues, investors will run away from guaranteed losses in government bonds. Capital will flee up the risk spectrum, pushing up prices, dropping yields and producing asset bubbles along the way.

As long as the world is flooded with money and safe assets offer poor compensation, Bitcoin will be relevant. Volatility and asset bubbles will be a fact of life. Calling the tops of these bubbles will be difficult because the fiat currency yard stick by which we measure prices is itself in a bubble.

That’s all one really needs to know, and any attempts to talk down bitcoin – as JPMorgan has been steadfastly doing for the past few months, whether with hopes of buying some lower or merely talking bitcoin holders out of the asset and transferring them to more conventional holdings where JPM can charge a commission – will prove futile as long as central banks keep rates at zero and inject hundreds of billions of liquidity (while massively diluting existing fiat) into the system. It’s as simple as that.

Actually, buying bitcoin does provide one extra, and absolutely critical, benefit: as even JPMorgan admits, it is the perfect hedge to the financial collapse that always follows such periods of unprecedented monetary experimentation and runaway money printing:

Relative to any other asset class or portfolio hedge, cryptocurrencies would uniquely protect portfolios against a simultaneous loss of faith in a country’s currency and its payments system, because they are produced and they circulate outside conventional and regulated channels (chart 6).

And, as Normand concludes: as insurance (or a lottery ticket) against dystopia, some exposure to these assets could be always justified irrespective of liquidity and volatility concerns.

Well, in this insane world where everyone should be seeking insurance against “dystopia”, we would be delighted to own as much of the cryptocurrency as we possibly can, “irrespective of liquidity and volatility concerns”. So just like your boss back in 2017, thanks for making the decisive case for bitcoin yet again, John.

Tyler Durden
Thu, 01/21/2021 – 21:40


Federal Court Blocks Obamacare Mandate Forcing Doctors To Perform Transgender Surgery

Federal Court Blocks Obamacare Mandate Forcing Doctors To Perform Transgender Surgery

Authored by Janita Kan via The Epoch Times,

A federal court has ruled to protect some doctors and health care providers from being penalized for refusing to perform gender transition procedures on the grounds of religious belief.

In a decision a day before Joe Biden took the oath of office, United States District Court Chief Judge Peter D. Welte from North Dakota granted a request to block the Department of Health and Human Services (HHS) and the Equal Employment Opportunity Commission (EEOC) from enforcing an Obamacare mandate that compels medical professionals and healthcare providers to perform gender transition services.

In 2016, the HHS issued a rule interpreting Section 1557 of the Patient Protection and Affordable Care Act (ACA), which prohibits certain forms of discrimination in healthcare, including sex discrimination.

The rule prohibited insurers and third party administrations from offering or administer health plans with gender-transition exclusions. The regulation also prohibited a healthcare provider from refusing to offer medical services for gender transitions if that provider offered comparable services to others.

The rule did not provide an exemption for religious grounds, arguing that Title IX’s religious exemptions only apply to an educational context. The department at the time also argued that “a blanket religious exemption could result in a denial or delay in the provision of health care to individuals and in discouraging individuals from seeking necessary care.”

The department instead explained that it would consider religious exemptions on an individualized case-by-case basis for claims under the 1993 Religious Freedom Restoration Act (RFRA).

An order of Catholic nuns, a Catholic university, and Catholic healthcare organizations challenged the mandate under the RFRA, while the state of North Dakota joined the lawsuit to challenge the mandate under a federal law known as the Administrative Procedure Act that governs rulemaking by administrative agencies.

The mandate was previously put on hold by a federal judge in North Dakota and was struck down in 2019 by another federal court in Texas. Under the Trump administration, HHS passed a new rule aimed at walking back the mandate. However, the 2020 rule was blocked by separate challenges in other courts.

Welte said in his decision that the plaintiffs have shown “an entitlement” for injunctive relief, saying that a violation under the RFRA is comparable to the deprivation of a First Amendment right.

“The Catholic healthcare entities’ refusal to perform or cover gender-transition procedures is predicated on an exercise of their religious beliefs protected by the First Amendment,” Welte said (pdf).

“Absent an injunction, [plantiffs] will either be ‘forced to violate their sincerely held religious beliefs’ by performing and covering gender-transition procedures ‘or to incur severe monetary penalties for refusing to comply,’” he added.

Attorney Luke Goodrich, senior counsel at Becket, a religious organization representing the plaintiffs, said the court’s decision “recognizes our medical heroes’ right to practice medicine in line with their conscience and without politically motivated interference from government bureaucrats.”

“These religious doctors and hospitals provide top-notch medical care to all patients for everything from cancer to the common cold,” Goodrich said in a statement.

“All they’re asking is that they be allowed to continue serving their patients as they’ve done for decades, without being forced to perform controversial, medically unsupported procedures that are against their religious beliefs and potentially harmful to their patients. The Constitution and federal law require no less.”

During his campaign, Biden had vowed to push LGBTQ rights as part of his agenda, including coverage for care related to gender transitioning and surgery. He signed an executive order on his first day as president to prevent discrimination on the basis of gender identity and sexual discrimination.

Xavier Becerra, who has been tapped by Biden to lead the HHS, had previously argued in favor of using taxpayers’ money to provide transgender individuals in North Carolina with coverage for gender transitioning surgery and treatment.

Some religious liberty advocates and people of faith are worried that the religious freedom protections implemented by the Trump administration could be rolled back under a Biden administration.

Tyler Durden
Thu, 01/21/2021 – 21:20


American Hotels Experienced Worst Year Ever

American Hotels Experienced Worst Year Ever

According to STR, Inc, a hotel industry market data firm, 2020 was absolutely the worst year on record for hotels as industrywide profits fell to zero, as the virus pandemic and resulting government-enforced social distancing measures kept travelers at home. 

STR’s latest report said the US hotel occupancy rate was 44% for the year, down from 66% in 2019. This was the lowest occupancy rate on record. In an earlier STR report, we noted weeks ago that the industry had one billion unsold room nights for the first time, surpassing the record of 786 million in 2009.

Even though S&P Global Ratings warned a few months back that the hotel industry’s recovery may not occur until 2023, STR now believes a recovery in occupancy rates back to 2019 levels may not occur until 2024. 

Best Western CEO David Kong recently told CNN that “If we don’t get a vaccine soon and business doesn’t return, it’s going to get much worse.”

With the vaccine rollout slower than anticipated, along with a rampant virus, leisure travel will most likely remain depressed in the first quarter of 2021. 

Commercial-real estate experts at Trepp outlined last month that the overall credit performance of commercial real estate loans tied to hotels continues to show “pandemic related stress.” 

Even with the industry crushed by the pandemic, stimulus, vaccine hope, and the reopening trade have backstopped BBB- tranche of the CMBX Series 9 index (overly exposed to malls and hotels) from falling lower. 

There’s no real timetable to say when corporate travelers will start booking hotel rooms again, considering the proliferation of work-at-home and Zoom calls. There could be a permanent decline in traveling due to the virus pandemic, resulting in an unprecedented wave of hotel foreclosures. 

Tyler Durden
Thu, 01/21/2021 – 21:00


The Coming New Order

The Coming New Order

Authored by Jeff Thomas via,

For many years, a handful of people have postulated that those who control industry, finance and governments are essentially the same people – a cabal of sorts that have, over generations, solidified their relationships in order to gain greater wealth and power, whilst systematically making things ever more difficult for the free market to exist.

But why should this be? Surely, corporate leaders are more ardently capitalist than anyone else?

Well, on the surface, that might appear to make sense, but once a significant position of power has been achieved, those who have achieved it recognize that, since they’ve already reached the top, the primary concern changes. From then on, the primary concern becomes the assurance that no others are able to climb so high as they have.

At that point, they realise that their foremost effort needs to be a push toward corporatism – the merger of power between government and business.

This is a natural marriage. The political world is a parasitic one. It relies on a continual flow of funding. The world of big business is a study in exclusivity – the ability to make it impossible for pretenders to the throne to arise. So, big business provides the cash; government provides protective legislation that ensures preference for those at the top.

In most cases, this second half of the equation does not mean a monopoly for just one corporation, but a monopoly for a cabal – an elite group of corporations.

This corporatist relationship has deep roots in the US, going back over one hundred years. To this day, those elite families who took control of oil, steel, banking, motor vehicles and other industries a century ago, soon created a takeover of higher learning (universities), health (Big Pharma) and “Defense” (the military-industrial complex).

Through legislation, the US was then transformed to ensure that all these interests would be catered to, creating generations of both control and profit.

Of course, “profit” should not be an evil word, but under crony capitalism, it becomes an abomination – a distortion of the free market and the death of laissez faire economics.

Certainly, this sort of collectivism is not what Karl Marx had in mind when he daydreamed about a workers’ paradise in which business leaders retained all the risk and responsibility of creating and building businesses, whilst the workers had the final word as to how the revenue would be distributed to the workers themselves.

Mister Marx failed in being objective enough to understand that if the business creator took all the risk and responsibility but gave up the ability to decide what happened to the revenue, he’d never bother to open a business. Even a shoeshine boy would reject such a notion and elect to go on the dole, rather than work.

Mister Marx sought more to bring down those who were successful than to raise up those who were not, yet he unwittingly created a new idea – corporate collectivism – in which the very people he sought to debase used the appeal of collectivist rhetoric to diminish both the freedoms and wealth of the average worker.

On the surface, this might appear to be a hard sell – to get the hoi polloi into the net – but in fact, it’s quite easy and has perennially been effective.

Hitler’s New Order was such a construct – the promise to return Germany to greatness and the German people to prosperity through increasingly draconian laws, warfare and an economic revolving door between government and industry.

Of course, a major influx of capital was required – billions of dollars – and this was eagerly provided by US industry and banks. Heads of New York banks not only funded Nazi industry; families such as the Fords, Rockefellers, Morgans, etc., sat on the boards of German corporations.

The Nazi effort failed, as they underestimated the Russian will to fight to the death. (Eighty percent of all German Army deaths were due to the Russian campaign.)

But those in New York were able to regroup and be first in the queue for the restructuring of German industry after the war and, ultimately, profited handsomely.

But most significantly, the idea of corporatist collectivism did not die. Even before the war, the same group of families and corporations had drawn up the plan for Franklin Roosevelt’s New Deal.

Mister Roosevelt was a dyed-in-the-wool Wall Street man and a director of New York banks. In the 1930s and early 1940s, he created, as president, a revolving door that favoured large corporations, whilst the average American was consciously kept at the subsistence level through government entitlements.

The scam worked. Shortsighted Americans not only were grateful; they deified him for it.

Likewise, John Kennedy’s New Frontier sought to revitalize the concept, as did Lyndon Johnson’s Great Society: Give the little people entitlements that keep them little. Tax smaller businesses and create a flow of tax dollars to the elite industries, who, in turn, provide monetary favours to the political class.

The Green New Deal is merely the latest corporate collectivist scheme on the list.

Corporate collectivism can be defined as a system in which the few who hold the legal monopolies of finance and industry gain an overriding control over all others, and in so doing, systematically extract wealth from them.

Today, this system has become so refined that, although the average American has a flat screen TV and an expensive smartphone, he cannot raise $400 to cover an emergency that occurs in his life. He is, for all practical purposes, continually bankrupt, but still functioning in a zombie-like existence of continual dependency.

This, on the surface, may not seem all that dangerous, but those who cannot buy their way out of a small emergency are easily controlled. Just create an emergency such as an uber-virus and that fact will be illuminated quickly.

In order to maximise compliance in a population, maximise their dependence.

As stated above, this effort has been in play for generations. But it is now reaching a crescendo. It’s now up to speed in most of the former Free World and those who hold the strings are ready for a major step forward in corporate collectivism.

In the coming year, we shall see dramatic changes appearing at a dizzying rate. Capital controls, migration controls, internal movement controls, tax increases, confiscation of assets and the removal of “inalienable” rights will all be coming into effect – so quickly that before the populace can even grasp the latest restrictions, new ones will be heaped on.

As this unfolds, we shall witness the erosion of the nation-state. Controls will come from global authorities, such as the UN, the IMF and the WEF. Organisations that have no formal authority over nations will increasingly be calling the shots and people will wonder how this is possible. Elected officials will increasingly become mere bagmen, doing the bidding of an unelected ruling class.

The changes that take place will be not unlike a blanket that is thrown over humanity.

The question then will be whether to, a) give in to this force, b) to fight it and most likely fall victim to it, or c) seek a means to fall outside the perimeter of the blanket.

*  *  *

Unfortunately most people have no idea what really happens when a government goes out of control, let alone how to prepare… The coming economic and political crisis is going to be much worse, much longer, and very different than what we’ve seen in the past. That’s exactly why New York Times best-selling author Doug Casey and his team just released an urgent video. Click here to watch it now.

Tyler Durden
Thu, 01/21/2021 – 20:40


Sequoia To Pay Interested Employees In Bitcoin

Sequoia To Pay Interested Employees In Bitcoin

With increasingly more institutions converting some (or in the case of MicroStrategy, most) of their cash equivalents into bitcoin, one key spoke of an all-bitcoin corporate ecosystem remained elusive: actual payment to employees in bitcoin. That changed today when Sequoia Holdings, not the hedge fund but the “employee-owned provider of high-end software development and engineering services centered on improving the analytic, collection, collaboration and sharing of data”, announced that it is now giving employees the option to receive a portion of their salary in cryptocurrencies like Bitcoin.

“We’re excited to offer the members of our team this new benefit,” said T. Richard Stroupe, Jr., co-founder and CEO of Sequoia. “Many of our employees are enthusiastic supporters of cryptocurrency, and we’re happy to help them gain exposure to this trillion-dollar asset class.”

Under the new program, Sequoia employees may elect to defer a portion of their salary into Bitcoin, Bitcoin Cash, or the Ethereum platform’s ether. The company is partnering with a third-party payroll processing firm to withhold taxes and convert the remainder into cryptocurrency, which will be held in a digital wallet administered by the payroll processor.

The mechanism is similar to how an employee would defer a portion of his or her salary toward a 401(k) retirement savings plan. In this case, though, the deferral is after tax.

Russell Okung, an offensive tackle for the Carolina Panthers of the National Football League, recently made headlines for becoming the first professional football player to receive a portion of his salary in Bitcoin, in much the same way that Sequoia employees may elect to.

“Cryptocurrency has emerged as an important alternative to traditional investments like stocks and bonds,” Stroupe said. “We’re proud to give the members of our team the ability to easily invest in cryptocurrency and build their savings.”

Of course, any employees who chose to be paid in bitcoin are urged to have nerves of steel because while the cryptocurrency has exploded in the past year, it has suffered a sharp drop in the past few days, which for those with little patience could serve to quickly tame any enthusiasm of continued payment in the cryptocurrency.

Tyler Durden
Thu, 01/21/2021 – 20:20


Japan To Cancel “Doomed” Olympics: Report

Japan To Cancel “Doomed” Olympics: Report

Senior members of the Japanese government have privately concluded that the Tokyo Olympics won’t happen this year due to the COVID-19 pandemic, and efforts have now shifted on securing the Games for the 2032 Olympics – the next available opportunity, according to The Times, whose source added that the winter virus spike ‘tipped the balance’ and forced Japan into a state of emergency.

According to a senior member of the ruling coalition, there is agreement that the Games, already postponed a year, are doomed. The aim now is to find a face-saving way of announcing the cancellation that leaves open the possibility of Tokyo playing host at a later date. “No one wants to be the first to say so but the consensus is that it’s too difficult,” the source said. “Personally, I don’t think it’s going to happen.” -The Times

That said, the International Olympic Committee (IOC) and the Japanese Government continue to maintain publicly that the Games can proceed – as Prime Minister Yoshihide Suga told parliament this week that “We will have full anti-infection measures in place and proceed with preparation and with a determination to achieve the Games that can deliver hope and courage throughout the world.”

If the Olympics are indeed canceled, it would be a financial disaster for Japan, after the country spent at least $25 billion on preparations for the event – with around 75% of that coming from public funds.

The aim now is to maintain the façade of battling determinedly to go ahead in the hope that when they are inevitably cancelled the 2032 Games will be given to Tokyo out of sympathy.

Paris is due to host the Games in 2024 and Los Angeles has been chosen as the venue for 2028. A decision on which city will stage the Olympics in 2032 is expected to be taken by 2025. -The Times

“Suga is not emotionally invested in the Games,” the source told The Times, adding “But they want to show that they are ready to go, so that they will get another chance in 11 years. In these circumstances, no one could really object to that.”

The Olympics have only been canceled three times in the past; 1916, 1940 and 1944, all due to world wars. The Tokyo games were originally slated for 2020, only to be moved to 2021 after Australia and Canada announced they would not send athletes amid the pandemic.

“If someone like President Biden was to say that US athletes cannot go, then we could say, ‘Well, now it is impossible’,” said the senior source.

The current position of the IOC is to hold a televised Tokyo Olympics with no spectators – only athletes, which would allow the Committee to maintain its lucrative broadcast rights. The Japanese government, however, would lose out on ticket sales – causing former Primer Minister Yoshiro Mori to rule out the televised-only option.

Tyler Durden
Thu, 01/21/2021 – 20:00


Argentine Central Bank’s Sudden Dollar Shortage Sparks Fears Of Mass Corporate Credit Crisis

Argentine Central Bank’s Sudden Dollar Shortage Sparks Fears Of Mass Corporate Credit Crisis

Despite Emerging Markets’ recent surge higher on the heels of a dumping dollar and massive global liquidity injections, at least one country is facing crisis rather than crescendo.

MSCI Emerging Market stocks have soared…

Source: Bloomberg

YPF, a 99-year-old oil company that some have called Argentina’s flaghship company, is threatening a large-scale default on its bonds after the central bank refused to let YPF buy the full amount of dollars it needed to pay notes coming due in March.

“The central bank’s message is pretty clear,” said Santiago Barros Moss, a TPCG analyst in Buenos Aires.

“There just aren’t enough dollars in Argentina for corporates right now.”

The last few months have seen the peso collapse (despite a weaker USDollar) to 86/USD – a record low – making the dollar-debt payments for Argentina’s corporations exceedingly expensive.

Source: Bloomberg

And that – along with the fact that global oil markets have collapsed – led YPF to send a press release in the dead of night laying out a plan to saddle creditors with losses in a debt exchange.

Implicit in its statement, as Bloomberg reports, was a threat that traders immediately understood – failure to reach a restructuring deal could lead to a flat-out suspension of debt payments – and they began frantically unloading the shale driller’s bonds the next morning. Today, some two weeks later, the securities trade as low as 56 cents on the dollar.

“The central bank’s decision really put YPF between a rock and a hard place,” said Lorena Reich, a corporate-debt analyst at Lucror Analytics in Buenos Aires.

Source: Bloomberg

Argentina’s cash crunch couldn’t come at a worse time for YPF, which was already facing a drop in demand because of the pandemic.

The task is even more urgent as the South American winter approaches with YPF unable to meet domestic gas demand, meaning Argentina will have to boost imports – and fork over precious hard currency – in the middle of a global spike in prices.

But, as Bloomberg notes, the central bank’s refusal to sell YPF the dollars it needs to pay its obligations, despite the company’s earlier efforts to refinance its short-term debt, is a bad sign for all overseas corporate bonds from Argentina, according to the financial services firm TPCG.

The concern is that if the country’s flagship company isn’t eligible to buy dollars at the official exchange rate as the bank seeks to hold onto hard-currency reserves, no one else will be either.

And this, among other reasons, is why The Fed must keep injecting dollars into the world… or face this kind of crisis from DMs as well as EMs.

Tyler Durden
Thu, 01/21/2021 – 19:40


Senate Dems File Ethics Complaint Against Cruz, Hawley For Objecting To Electoral Results

Senate Dems File Ethics Complaint Against Cruz, Hawley For Objecting To Electoral Results

Congressional Democrats – who objected to the electoral results for the last three GOP presidents – have filed an ethics complaint against GOP Senators. Ted Cruz (TX) and Josh Hawley (MO) for objecting to the Electoral College results.

The Senate Ethics Committee should investigate their conduct to fully understand their role. The actions of which we know demand an investigation and a determination whether disciplinary action is warranted. Until then, a cloud of uncertainty will hang over them and over this body,” wrote Democratic Sens. Sheldon Whitehouse (RI), Ron Wyden (OR), Tima Smith (MN), Richard Blumenthal (CT), Mazie Hirono (HI), Tim Kaine (VA) and Sherrod Brown (OH).

The complaint wants the Ethics Committee to investigate whether Cruz and Hawley failed to “[p]ut loyalty to the highest moral principles and to country above loyalty to persons, party, or Government department,” or if they engaged in “improper conduct reflecting on the Senate” linked to the January 6 Capitol ‘riot.’

The Democratic senators also outlined several questions they believed should be probed as part of an Ethics Committee investigation including if they were in touch with coordinators for the rally, if they encouraged any “insurrectionist” acts or if they “engaged in criminal conduct, or unethical or improper behavior.”

“While it was within Senators’ rights to object to the electors, the conduct of Senators Cruz and Hawley, and potentially others, went beyond that,” they wrote in the letter to Ethics Committee leadership. 

Cruz and Hawley, two potential 2024 presidential contenders, have denounced the mob that breached the Capitol but they’ve also stood by their decisions to object to the Electoral College results from Arizona and Pennsylvania, respectively. –The Hill

During the counting of electoral votes, Cruz objected to Arizona’s results, while Hawley objected to Pennsylvania’s results following the Capitol attack, when a group of Trump supporters and at least one prominent member of BLM breached the Capitol building and occupied it for a brief period of time before leaving on their own.

The Democratic Senators are also asking the Ethics Committee to “offer recommendations for strong disciplinary action, including up to expulsion or censure, if warranted by the facts uncovered.”

Tyler Durden
Thu, 01/21/2021 – 19:20


McConnell Lays Out Trump Impeachment Timeline As GOP Rep Files Articles Against Biden

McConnell Lays Out Trump Impeachment Timeline As GOP Rep Files Articles Against Biden

While the left is split between wanting to hammer the final nail in Trump’s coffin (through the Senate impeachment trial) and tending to its aggressive agenda of new laws, spending, and government control, U.S. Senate Republican Leader Mitch McConnell (R-KY) issued a statement today regarding his proposed timeline for the first phases of an impeachment trial of former president Trump.

“I have sent a proposed timeline for the first phases of the upcoming impeachment trial to Leader Schumer and look forward to continuing to discuss it with him.

“Senate Republicans are strongly united behind the principle that the institution of the Senate, the office of the presidency, and former President Trump himself all deserve a full and fair process that respects his rights and the serious factual, legal, and constitutional questions at stake. Given the unprecedented speed of the House’s process, our proposed timeline for the initial phases includes a modest and reasonable amount of additional time for both sides to assemble their arguments before the Senate would begin to hear them.

“At this time of strong political passions, Senate Republicans believe it is absolutely imperative that we do not allow a half-baked process to short-circuit the due process that former President Trump deserves or damage the Senate or the presidency.”

Specifically, Leader McConnell shared the following proposed pre-trial timeline with the Republican Conference today:

When the articles arrive, the House Managers would exhibit (read) the articles to the Senate, Senators would be sworn in the Members as the Court of Impeachment, and would issue a summons to former President Trump.  While we do not know what day the Managers will choose, Leader McConnell has asked for this to occur on Thursday, January 28. 

Former President Trump would have one week from that day to answer the articles of impeachment (February 4).  The House’s pre-trial brief would also be due then.

The President would then have one week from the day he submits his answer to submit his pre-trial brief (February 11).  That means former president Trump has fourteen total days from when we issue the summons to write his pre-trial brief.  The House would also submit its replication on this date.

The House would then have two days to submit their rebuttal pre-trial brief (February 13).  

This approach tracks the structure of the Clinton and Trump pre-trial processes. 

The periods between due dates are longer than in 1999 or 2020, but this is necessary because of the House’s unprecedented timeline.

So far we have not seen any response from Senate Democrat Leader Schumer, but we do note the timing is ironic as (in what appears to be more PR stunt than anything else) freshman Rep. Marjorie Taylor Greene announced via Twitter video Thursday that she’s filed articles of impeachment on President Joe Biden.

As’s Jennie Taer reports, Rep. Greene earlier pledged on Newsmax on January 13 to do so on the first day of Biden’s presidency, as reported.

“We cannot have a President of the United States that is willing to abuse the power of the office of the presidency and be easily bought off by foreign governments, foreign Chinese energy companies, Ukrainian energy companies. So on January 21st, I will be filing articles of impeachment on Joe Biden,” said Rep. Greene.

As w3e noted, while this is unlikely to proceed, that did not stop Democratic Reps such as Al Green from incessantly posting articles during Trump’s term (as early as May 2017).

Tyler Durden
Thu, 01/21/2021 – 19:11


Intel Released Earnings Early Because Hacker “Stole Financially Sensitive Information” From Its Website

Intel Released Earnings Early Because Hacker “Stole Financially Sensitive Information” From Its Website

Something unexpected happened at exactly 3:47pm this afternoon: that’s when wire services like Bloomberg reported Intel’s Q4 financial results, some 13 minutes ahead of the scheduled release time.

Some speculated that the early release was a fat finger from an overzealous intern who sent the news to Businesswire a few minutes early. Others, such as us, joked that Intel just couldn’t contain its excitement at the impressive earnings report which sent the formerly beaten down stock surging to its June highs.

Turns out it was neither, because according to the FT, Intel said it was the victim of a hacker who stole financially sensitive information from its corporate website on Thursday, prompting the company to release its earnings statement ahead of schedule.

CFO George Davis told the Financial Times that the chipmaker believed an attacker had obtained advanced details about a strong earnings report it was due to publish after the market closed; upon discovery of the problem, Intel published its formal earnings announcement with the official release coming out six minutes before the market closed.

“An infographic was hacked off of our PR newsroom site,” Mr Davis said. “We put [our earnings] out as soon as we were aware.”

The CFO said that the leak was the result of an illicit action that had not involved any unintentional disclosure by the company itself.

An Intel spokesperson added: “We were notified that our infographic was circulating outside the company. I do not believe it was published. We are continuing to investigate this matter.”

Actually it was published, and are speculating, it appears that the reason Bloomberg managed to report the company’s results even before the 6 minute early release is because it managed to scrape the hacked Intel’s inforgraphic at 348pm, which laid out the company’s key highlights.

As noted earlier, the earnings revealed an unexpectedly strong bounce in Intel’s sales of chips for PCs as a result of the coronavirus pandemic, as more people bought laptops to work and study from home, as well as more powerful gaming PCs. Specifically, the volume of PC chips Intel sold jumped 33% in the quarter, a period in which tech research group IDC said the number of machines shipped globally had risen by 26 per cent, to cap the strongest year for the PC industry in a decade.

Although Intel’s revenue slipped 1 per cent in the fourth quarter, to $20bn, that was $2.5bn ahead of Wall Street expectations. Revenue from PC chips rose 9 per cent, to $10.9bn.

Tyler Durden
Thu, 01/21/2021 – 19:00


2021: More Troubles Likely

2021: More Troubles Likely

Authored by Gail Tverberg via Our Finite World blog,

Most people expect that the economy of 2021 will be an improvement from 2020. I don’t think so. Perhaps COVID-19 will be somewhat better, but other aspects of the economy will likely be worse.

Back in November 2020, I showed a chart illustrating the path that energy consumption seems to be on. The sharp downturn in energy consumption has occurred partly because the cost of oil, gas and coal production tends to rise, since the portion that is least expensive to extract and ship tends to be removed first.

At the same time, prices that energy producers are able to charge their customers don’t rise enough to compensate for their higher costs. Ultimate customers are ordinary wage earners, and their wages are not escalating as rapidly as fossil fuel production and delivery costs. It is the low selling price of fossil fuels, relative to the rising cost of production, that causes a collapse in the production of fossil fuels. This is the crisis we are now facing.

Figure 1. Estimate by Gail Tverberg of World Energy Consumption from 1820 to 2050. Amounts for earliest years based on estimates in Vaclav Smil’s book Energy Transitions: History, Requirements and Prospectsand BP’s 2020 Statistical Review of World Energy for the years 1965 to 2019. Energy consumption for 2020 is estimated to be 5% below that for 2019. Energy for years after 2020 is assumed to fall by 6.6% per year, so that the amount reaches a level similar to renewables only by 2050. Amounts shown include more use of local energy products (wood and animal dung) than BP includes.

With lower energy consumption, many things tend to go wrong at once: The rich get richer while the poor get poorer. Protests and uprisings become more common. The poorer citizens and those already in poor health become more vulnerable to communicable diseases. Governments feel a need to control their populations, partly to keep down protests and partly to prevent the further spread of disease.

If we look at the situation shown on Figure 1 on a per capita basis, the graph doesn’t look quite as steep, because lower energy consumption tends to bring down population. This reduction in population can come from many different causes, including illnesses, fewer babies born, less access to medical care, inadequate clean water and starvation.

Figure 2. Amounts shown in Figure 1, divided by population estimates by Angus Maddison for earliest years and by 2019 United Nations population estimates for years to 2020. Future population estimated to be falling half as quickly as energy supply is falling in Figure 1. World population drops to 2.8 billion by 2050.

What Is Ahead for 2021?

In many ways, it is good that we really don’t know what is ahead for 2021. All aspects of GDP production require energy consumption. A huge drop in energy consumption is likely to mean disruption in the world economy of varying types for many years to come. If the situation is likely to be bad, many of us don’t really want to know how bad.

We know that many civilizations have had the same problem that the world does today. It usually goes by the name “Collapse” or “Overshoot and Collapse.” The problem is that the population becomes too large for the resource base. At the same time, available resources may degrade (soils erode or lose fertility, mines deplete, fossil fuels become harder to extract). Eventually, the economy becomes so weakened that any minor disturbance – attack from an outside army, or shift in weather patterns, or communicable disease that raises the death rate a bit – threatens to bring down the whole system. I see our current economic problem as much more of an energy problem than a COVID-19 problem.

We know that when earlier civilizations collapsed, the downfall tended not to happen all at once. Based on an analysis by Peter Turchin and Sergey Nefedov in their book, Secular Cycles, economies tended to first hit a period of stagflation, for perhaps 40 or 50 years. In a way, today’s economy has been in a period of stagflation since the 1970s, when it became apparent that oil was becoming more difficult to extract. To hide the problem, increasing debt was issued at ever-lower interest rates.

According to Turchin and Nefedov, the stagflation stage eventually moves into a steeper “crisis” period, marked by overturned governments, debt defaults, and falling population. In the examples analyzed by Turchin and Nefedov, this crisis portion of the cycle took 20 to 50 years. It seems to me that the world economy reached the beginning of the crisis period in 2020 when lockdowns in response to the novel coronavirus pushed the weakened world economy down further.

The examples examined by Turchin and Nefedov occurred in the time period before fossil fuels were widely used. It may very well be that the current collapse takes place more rapidly than those in the past, because of dependency on international supply lines and an international banking system. The world economy is also very dependent on electricity–something that may not last. Thus, there seems to be a chance that the crisis phase may last a shorter length of time than 20 to 50 years. It likely won’t last only a year or two, however. The economy can be expected to fall apart, but somewhat slowly. The big questions are, “How slowly?” “Can some parts continue for years, while others disappear quickly?”

Some Kinds of Things to Expect in 2021 (and beyond)

[1] More overturned governments and attempts at overturned governments.

With increasing wage disparity, there tend to be more and more unhappy workers at the bottom end of the wage distribution. At the same time, there are likely to be people who are unhappy with the need for high taxes to try to fix the problems of the people at the bottom end of the wage distribution. Either of these groups can attempt to overturn their government if the government’s handling of current problems is not to the group’s liking.

[2] More debt defaults.

During the stagflation period that the world economy has been through, more and more debt has been added at ever-lower interest rates. Much of this huge amount of debt relates to property that is no longer of much use (airplanes without passengers; office buildings that are no longer needed because people now work at home; restaurants without enough patrons; factories without enough orders). Governments will try to avoid defaults as long as possible, but eventually, the unreasonableness of this situation will prevail. The impact of defaults can be expected to affect many parts of the economy, including banks, insurance companies and pension plans.

[3] Extraordinarily slow progress in defeating COVID-19.

There seems to be a significant chance that COVID-19 is lab-made. In fact, the many variations of COVID-19 may also be lab made. Researchers around the world have been studying “Gain of Function” in viruses for more than 20 years, allowing the researchers to “tweak” viruses in whatever way they desire. There seem to be several variations on the original virus now. A suicidal/homicidal researcher could decide to “take out” as many other people as possible, by creating yet another variation on COVID-19.

To make matters worse, immunity to coronaviruses in general doesn’t seem to be very long lasting. An October 2020 article says, 35-year study hints that coronavirus immunity doesn’t last long. Analyzing other corona viruses, it concluded that immunity tends to disappear quite quickly, leading to an annual cycle of illnesses such as colds. There seems to be a substantial chance that COVID-19 will return on an annual basis. If vaccines generate a similar immunity pattern, we will be facing an issue of needing new vaccines, every year, as we do with flu.

[4] Cutbacks on education of many kinds.

Many people getting advanced degrees find that the time and expense did not lead to an adequate financial reward afterwards. At the same time, universities find that there are not many grants to support faculty, outside of the STEM (Science, Technology, Engineering or Math) fields. With this combination of problems, universities with limited budgets make the financial decision to reduce or eliminate programs with reduced student interest and no outside funding.

At the same time, if local school districts find themselves short of funds, they may choose to use distance learning, simply to save money. This type of cutback could affect grade school children, especially in poor areas.

[5] Increasing loss of the top layers of governments.

It takes money/energy to support extra layers of government. The UK is now completely out of the European Union. We can expect to see more changes of this type. The UK may dissolve into smaller regions. Other parts of the EU may leave. This problem could affect many countries around the world, such as China or countries of the Middle East.

[6] Less globalization; more competition among countries.

Every country is struggling with the problem of not enough jobs that pay well. This is really an energy-related problem. Instead of co-operating, countries will tend to increasingly compete, in the hope that their country can somehow get a larger share of the higher-paying jobs. Tariffs will continue to be popular.

[7] More empty shelves in stores.

In 2020, we discovered that supply lines can break, making it impossible to purchase products a person expects. In fact, new governmental rules can have the same impact, for example, if a country bans travel to its country. We should expect more of this in 2021, and in the years ahead.

[8] More electrical outages, especially in locations where reliance on intermittent wind and solar for electricity is high.

In most places in the world, oil products were available before electricity. On the way down, we should expect to see the reverse of this pattern: Electricity will disappear first because it is hardest to maintain a constant supply. Oil will be available, at least as long as is electricity.

There is a popular belief that we will “run out of oil,” and that renewable electricity can be a solution. I do not think that intermittent electricity can be a solution for anything. It works poorly. At most, it acts as a temporary extender to fossil fuel-provided electricity.

[9] Possible hyperinflation, as countries issue more and more debt and no longer trust each other.

I often say that I expect oil and energy prices to stay low, but this doesn’t really hold if many countries around the world issue more and more government debt as a way to try to keep businesses from failing, debt from defaulting, and stock market prices inflated. There is a danger that all prices will inflate, and that sellers of products will no longer accept the hyperinflated currency that countries around the world are trying to provide.

My concern is that international trade will break down to a significant extent as hyperinflation of all currencies becomes a problem. The higher prices of oil and other energy products won’t really lead to any more production because prices of all goods and services will be inflating at the same time; fossil fuel producers will not get any special benefit from these higher prices.

If a significant loss of trade occurs, there will be even more empty shelves because there is very little any one country can make on its own. Without adequate goods, population loss may be very high.

[10] New ways of countries trying to fight with each other.

When there are not enough resources to go around, historically, wars have been fought. I expect wars will continue to be fought, but the approaches will “look different” than in the past. They may involve tariffs on imported goods. They may involve the use of laboratory-made viruses. They may involve attacking the internet of another country, or its electrical distribution system. There may be no officially declared war. Strange things may simply take place that no one understands, without realizing that the country is being attacked.


We seem to be headed for very bumpy waters in the years ahead, including 2021. Our real problem is an energy problem that we do not have a solution for.

Tyler Durden
Thu, 01/21/2021 – 18:40


China Appeals To “Kind Angels” Of Biden Administration, Blames Trump For “Burning Bridges”

China Appeals To “Kind Angels” Of Biden Administration, Blames Trump For “Burning Bridges”

China is hoping for a rapid ‘reset’ of sorts with Washington now with President Joe Biden in the White House. After state media headlines out of China on Tuesday into Wednesday said “Good Riddance Mr. Trump” as Xinhua wrote, Thursday’s tone out of the foreign ministry was markedly different.

While essentially placing sole blame on Trump and his top officials, foreign ministry spokeswoman Hua Chunying said in the latest press briefing remarks that “kind angels can triumph over evil forces” in America.

“In the past years, the Trump administration, especially (former Secretary of State Mike) Pompeo, has laid too many mines that need to be removed, burned too many bridges that need to be rebuilt, damaged too many roads that need to be repaired,” Hua began.

Via Politico

“I believe if both countries put in the effort, the kind angels can triumph over evil forces,” she told a daily briefing Thursday. Her word choice was then featured across state media headlines.

Speaking specifically on Biden’s inaugural speech Wednesday, Hua added:

“President Biden also mentioned in his inauguration speech that Americans have much to heal, much to restore. This is exactly what China-U.S. relations need.”

However, there’s little doubt that China was miffed at the fact that Taiwan’s de facto ambassador to Washington had been officially invited to attend and was present for the inauguration. 

Related to growing tensions centered on both Taiwan and Hong Kong, China had slapped sanctions on a who’s who of top outgoing Trump administration officials on Wednesday. Significantly, 28 Trump admin figures will be permanently barred from travel or doing business either on the Chinese mainland or Hong Kong.

“China announces decision to sanction 28 U.S. figures who it alleged to have severely violated China’s sovereignty, including officials in the Trump administration, according to a statement from the Chinese foreign ministry,” Bloomberg reported shortly after Biden took the oath of office Wednesday.

When asked about the dramatic act of ‘revenge’ against the Trump people, Biden’s administration called the move “unproductive and cynical,” according to Reuters. But it’s also very likely that many within the new administration are quietly gleeful over the severe restrictions regarding doing any business in China or Hong Kong by the targeted Trump officials.

Tyler Durden
Thu, 01/21/2021 – 18:20


Anti-Trump “Oversight Board” To Determine Whether Trump Will Regain Access To Facebook

Anti-Trump “Oversight Board” To Determine Whether Trump Will Regain Access To Facebook

Authored by Paul Joseph Watson via Summit News,

Facebook has announced it will leave the decision on whether or not to uphold Donald Trump’s suspension to its “oversight board,” a body that includes a Muslim Brotherhood activist and a leftist who once publicly made Barron Trump the butt of a crass joke.

Who could possibly predict what’s coming next?

Facebook suspended Trump for 2 weeks after the Capitol building incident and has now extended the suspension, although it hasn’t yet gone as far as Twitter in permanently removing Trump’s account.

In a statement released today, the social media behemoth said it would put the decision on whether to restore Trump’s access (and potentially permanently removing his account) in the hands of it’s “independent” Oversight Board.

“Given its significance, we think it is important for the board to review it and reach an independent judgment on whether it should be upheld. While we await the board’s decision, Mr. Trump’s access will remain suspended indefinitely,” said Nick Clegg, Facebook’s VP of global affairs and communications.

While Facebook and the mainstream media continue to refer to the Oversight Board as “independent,” it is full of anti-Trump technocrats, academics and activists.

As we highlighted last year, one of the board’s most influential members is Pamela Karlan, a leftist who infamously made Barron Trump the punch line of a joke during President Trump’s impeachment hearings.

“The Constitution states that there can be no titles of nobility,” said Karlan during the rant.

“So while the president can name his son Barron, he can’t MAKE him a baron.”

Melania Trump responded to the attack on Barron, a minor, by telling Karlan she “should be ashamed” of herself. The Trump administration called Karlan’s statement “disgusting” and she subsequently apologized.

Karlan also once described herself as a “snarky, bisexual, Jewish women” and was described by the New York Times as a “full-throated, unapologetic liberal torchbearer.”

Another member of Facebook’s Oversight Board is Tawakkol Karman, an enthusiastic supporter of the Muslim Brotherhood, an Islamist organization that has been blamed for terrorist attacks in the Middle East.

They both sound so “independent”! Trump is surely guaranteed to get his Facebook account back.

As we previously highlighted, despite Parler being banned from the Internet over its alleged role in the Capitol building attack, it subsequently emerged that the siege had in fact been overwhelmingly facilitated by Facebook.

*  *  *

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Tyler Durden
Thu, 01/21/2021 – 18:00


Despite Record Year, Wall Street Firms Refuse To Hike Banker Pay

Despite Record Year, Wall Street Firms Refuse To Hike Banker Pay

Two days ago, when reporting on Goldman’s blockbuster Q4 earnings report (and again, the the next day with Morgan Stanley just as impressive results), we pointed out that even as bank revenues soared on the back of the pandemic profit bonanza, employee comp was in fact declining and was, at best, flat, saying “higher bank revenues and much lower comp: this is the end of an era for  bankers/traders who used to share in firm upside”

We were confident some major financial outlet would promptly piggyback on this observation, and this morning Bloomberg did not let us down, and in a report titled “Wall Street Gets Frugal With Employees After Pandemic Windfall”, it wrote that despite what turned out to be a record year for most top banks, “average pay per employee rose $271 at top U.S. banks last year” and “even where revenue soared, compensation costs rose much less.”

To be sure, ahead of Q4 earnings there were conflicting reports with some predicting a decline for traders and dealmakers, in some cases as much as 30%, while others expecting a modest increase for top performers (especially among for hedge funds), but now that the results are in, it’s not pretty. Quote Bloomberg:

Deluged by client orders and often working from home, Goldman Sachs Group Inc.’s workforce generated 15% more revenue per employee during the tumult of 2020. But as the year wound down, the firm had spent an average of just 2% more on each person.

Inside JPMorgan Chase & Co.’s investment bank, revenue per employee surged 22%. The figure for pay: up 1%.

Then again, perhaps it’s just a case of lumping all bankers within the same compensation line. To be sure, few big U.S. banks disclose figures revealing how they compensated Wall Street-oriented workforces, and especially when it comes to compensation broken down by various segments. And while it is very likely that the superstar traders and rainmakers will get a raise and/or generous year-end bonuses, the prevailing image across banks was one of surprising pay restraint:

Earnings reports in recent days underscored anew how hard 2020’s tumult battered other business lines such as lending, where banks stockpiled tens of billions to cover bad loans. Despite the flurry of activity on Wall Street, total revenue at the nation’s six banking giants was little changed last year. The group boosted average pay per employee by a mere $271.

One possible reason for the stingy comp is that these same firms that enjoyed a bumper year thanks to the covid lockdowns – which left millions unemployed – are bracing for tougher times in Washington, where Democrats “skeptical” of large financial-industry paychecks are ascendant. As Bloomberg notes, “from President Joe Biden’s recent picks of veteran watchdogs — such as Gary Gensler for the Securities and Exchange Commission and Rohit Chopra for the Consumer Financial Protection Bureau — to his focus on inequality, there are signs the industry faces both tougher scrutiny and regulation.”

The changing of the guard may further embolden lawmakers and other critics who want to publish more data on industry wages, curb pay for chief executive officers and restrict bonuses that could encourage risk-taking.

“The optics aren’t good right now for large payouts”, Mayra Rodriguez Valladares, a former analyst at the NY Fed who now trains bankers and regulators through her consulting firm, MRV Associates, told Bloomberg. “The more you reward the big lenders, the big traders, they take on more risk,” which would attract criticism, she said. Well, yes, but it would also attract bailouts so in the end everyone wins. Except taxpayers of course.

While we expect most bankers to be furious for not getting a substantial raise to match the surging revenue of their employers, the news should probably not be a surprise, and as Bloomberg adds hints “have been emerging for weeks that some banks would opt to keep a lid on compensation for Wall Street operations pulling in loads of cash, ending a years-long period in which revenue and compensation have generally moved by similar degrees.”

By late November, Bank of America Corp. executives were discussing proposals to keep its bonus pool for sales and trading at the prior year’s level. By December, Citigroup aimed to leave its overall pot unchanged for equities, while boosting it for bond traders by at least 10%. More-generous increases approaching 20% were under discussion in Goldman Sachs and JPMorgan, but even there, the thinking was that moves would vary widely.

In the end, however, the news was bad with Goldman’s earnings showing the firm cut the share of revenue it spent on compensation to 30% last year, down from about 34% or more in the prior three years. At JPMorgan’s corporate and investment banking division the ratio fell to just 24%, down from 28% in those earlier years. Morgan Stanley also shaved two percentage points off its compensation ratio.

Asked about the drop in comp, Goldman CFO Stephen Scherr said that “our philosophy remains to pay for performance, and we are committed to compensating top talent. Our full year compensation ratio is at a record low, reflecting the operating leverage in our franchise. As we have said in the past, we view the compensation ratio metric as less relevant to the firm as we build new scale platform businesses.”

As Bloomberg concludes, the last time revenue growth and compensation growth diverged so wildly was in 2009, when Wall Street earnings rebounded from the 2008 financial crisis amid a withering public backlash against the industry’s pay practices. Critics of the industry’s excesses have kept a close eye on bonus trends ever since although Wall Street promptly resumed its generous ways as the post-GFC recovery continued on the back of QE1, QE2, QE3 and so on.

Ironically, the 2010 Dodd-Frank Act set the stage for stage for much heavier regulation of executive compensation, but several of its key rules were never fully adopted by the Obama administration (which, as a reminder, received generous donations from Wall Street). The prohibition on incentive-based payment arrangements that can encourage inappropriate risk-taking by bankers still hasn’t yet been finalized. And while some major banks have voluntarily instituted clawback provisions since the 2008 crisis, few have used them.

That may change now: Rodriguez Valladares expects policy makers will pay more attention to the gaps in pay between senior executives and employees on the lower rungs.

“Where legislators can play a very good role is to say: ‘Well hang on, you’re getting paid 100 times more than your teller, why is that?’” she said. “‘And you’ve been underpaying these people, so pay them more.’”

That’s one angle; the other is that with much more scrutiny on Wall Street pay now, bankers – who used to leverage potential job offers from competitors – will now be stuck, both at home and in the current position since few others can offer generous pay raises, certainly not the hedge funds who are shuttering left and right as they continue to underperform not only the market but the average 16-year-old Robinhood trader.

Tyler Durden
Thu, 01/21/2021 – 17:40


Deist: What Biden/Harris Will Do

Deist: What Biden/Harris Will Do

Authored by Jeff Deist via The Misess Institute,

Paraphrasing the late Murray Rothbard, the “two party” system in America during the twentieth century worked something like this: Democrats engineered the Great Leaps Forward, and Republicans consolidated the gains.

Wilson, Roosevelt, and Johnson were the transformative presidents; Eisenhower, Nixon, and Reagan offered only rhetoric and weak tea compromises. In politics, being for something always beats being against something, and Republicans were never much against expanding federal power provided they had a place at the trough.

George W. Bush challenged this dynamic in the early twenty-first century. Despite his own intellectual incuriosity, he used the terrorist events of 9-11 to advance a particularly noxious “conservative” foreign policy and justify a growing domestic surveillance state. The results were plenty transformative, from the Ashcroft/Yoo doctrine of unitary executive power to initiating two disastrous Middle East wars. Renditions, CIA black sites, waterboarding, and Guantanamo Bay all became part of the national lexicon. And everyone got paid, from Big Pharma in the form of a Medicare Part D drug benefit to teachers’ union bureaucrats supporting the Bush–Ted Kennedy alliance known as No Child Left Behind. Throw in the Orwellian Department of Homeland Security and its Transportation Security Administration, and Bush’s most visible legacy may be forever ruining air travel in America.

Donald Trump is no George W. Bush. Today, despite all his bluster and the Left’s absolute derangement toward him, Donald Trump leaves office as a caretaker president. His real record, not his rhetoric and Twitter persona, will prove to be astonishingly in keeping with the DC status quo. His America First talk on jobs and trade, his schizophrenic foreign policy, his actual actions with respect to immigration policy, and even his vaunted tax cuts were not all that different in substance than anything Hillary Clinton might have done. Trump’s difference was tone, not substance, but along with his outsider status that was enough to earn him the vicious enmity of the Swamp.

We have essentially endured a four-year national paroxysm over nothing, and for nothing. Think about that. All of this hate and division was not rooted in “policy” whatsoever, but in the political class’s hatred and contempt for even purely rhetorical challenges to its power.

So what will the Biden/Harris administration do?

For starters, they will assume only cowed opposition from the Mitch McConnell GOP. As Trump departs, national Republicans are eager and relieved to return to their role as the polite warmonger loser caucus. The party looks to wash away any vestiges of Trumpism and embrace the leadership of atavistic figures like Mitt Romney, Liz Cheney, and Nikki Haley.

But Joe Biden and Kamala Harris clearly smell blood after recent events at the US Capitol and their Senate victories in Georgia, looking to fully repudiate Trump and hang the GOP in the process. More importantly, they are under tremendous pressure from their left progressive flank, having relied on Bernie Sanders and Elizabeth Warren supporters while championing Antifa, BLM, and LGBT causes as centerpieces of their campaign. 

Therefore we should expect a muscular progressive agenda advanced by Biden, some of it in the first hundred days via executive orders of dubious legality. Helpfully, incoming White House chief of staff Ron Klain issued a memo outlining all the robust actions Biden will take immediately to remove any whiff of Donald Trump’s presence from the Beltway.

We should expect national covid mandates and lockdowns, aggressive climate change regulations, Medicare for All legislation, student loan forgiveness, and a host of federal rules perversely focused on race, gender, and sexuality in government, schools, workplaces, and corporate boardrooms. Amnesty for immigrants will be front and center, along with DC and Puerto Rican statehood. Supreme Court packing will be a particularly contentious topic, as many Democrats think two Trump appointees are illegitimate and conservatives in the Senate see the judicial branch as the last bulwark against the Left. 

As for taxes, the word is UP. They’re going up. But despite his campaign promises, one suspects the Biden administration will slow play any capital gains tax hikes. An awful lot of blue state Americans enjoyed big stock market gains in 2020, and this may temper their enthusiasm for overcoming wealth inequality. Also telling will be whether Biden in fact pushes to change the particular tax rules for private equity firms known as “carried interest.” And he will rush to restore the full deductibility of state income taxes, which the Trump tax bill limited, injuring wealthy taxpayers in high-tax blue states. After all, he knows his base.

Kamala Harris is the wildcard in this story. Has any US president in modern history been elected with the widespread expectation he would not complete his term in office? Not only will Mr. Biden be the oldest chief executive elected, but he clearly shows signs of cognitive decline and often stumbles to find words—as one would expect of a man his age. Harris’s presidential campaign raised an uninspiring $40 million, more than half of which came from wealthy donors. She failed to generate excitement both in polls and at the ballot box, underperforming with her party’s left flank and failing to win a single Democratic delegate or primary. Virtually no Democrats voted for her to become president.

By virtue of her age and status as a “person of color,” Harris certainly leans left of her boss. He is the old war-horse for corporate Delaware; she is the youngish hip senator from progressive California. But if Joe Biden dies or steps down—both reasonably possible over the next four years—Harris surely becomes a transformative figure.

Either way, the Biden administration inherits a political landscape wildly favorable to it. Politicians, journalists, CEOs, and people of all political stripes (including libertarians) celebrate the deplatforming and unpersoning of Trump, making clear their contempt for and desire to punish his supporters.

Democratic socialists now discover their love of discrimination by “private companies,” supporting Deep Tech purges of recalcitrant voices or anyone who dares question election legitimacy. Alternative social media site Parler takes “build your own platform” to heart, only to be excluded by Android and Apple app stores and kicked off its Amazon web hosting. BLM/Antifa activists who spent the summer burning buildings and calling for city police departments to disband sound like Nixonian champions of law and order when it comes to the halls of Congress. And left progressives learn to Love the Bomb as they cheer the military occupation of DC with twenty-five thousand National Guard soldiers over a nonexistent threat to Biden’s virtual inauguration (look for permanent stationing of troops around Capitol Hill, like in any good banana republic). Fencing now surrounds the sacred Capitol building; apparently walls do work to keep mere citizens a good distance away from the “People’s House.” 

Meanwhile populism, that dirtiest of dirty words used to describe democracy when the wrong guy wins, is entirely warranted when elites fail this badly. It won’t just go away. If the Biden administration really wants to create a de facto class of political dissidents, particularly among the flyover Deplorables, they may find resistance to their new Reconstruction(!) stronger than they imagine. Populists are not insurrectionists or traitors, nor are they domestic terrorists. And politically vanquished people regroup and resurface in different forms, sometimes virulent forms.

Is mass democracy across a country of 330 million people the answer? Is any degree of subsidiarity permissible, to allow for local control and greater social cohesion? Or must states fully and finally become glorified federal counties, archaic throwbacks to old conceptions of America? If Biden or Harris truly wants to transform America, these are the questions they must grapple with. The Left is in no mood for reconciliation with Trump supporters, but punishment is not a policy. It is the act of tyrants.

Tyler Durden
Thu, 01/21/2021 – 17:20


Biden EO Lets Transgender Athletes Compete Against Biological Females, Chill In Locker Room

Biden EO Lets Transgender Athletes Compete Against Biological Females, Chill In Locker Room

On Wednesday, President Biden signed a flurry of 14 ‘Day One’ Executive Orders, most of which are targeted at walking back President Trump’s agenda – such as stopping border wall construction, rejoining the Paris Climate Agreement, rejoining the World Health Organization, and ending the Keystone XL pipeline.

One of the orders, titled “Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation,” has been advertised as providing workplace protections for gay and transgender individuals. The EO, however, also reinstates the Obama-era Title IX regulations which allow biologically male transgender athletes to compete in women’s sports – a topic of heated debate as biologically female competitors continue suffer defeat at the hands of individuals with a well-established physical advantage.

Connecticut transgender athlete Andraya Yearwood dominates the 2018 state championships – setting records in the girls 100-meter and 200-meter races

President Trump famously ended the Title IX transgender provisions, saying that the Obama administration falsely identified sex as “gender identity” vs. “biological gender.”

The Biden EO also allows athletes with gender dysphoria to hang out in the locker room of their choice.

“Every person should be treated with respect and dignity and should be able to live without fear, no matter who they are or whom they love.  Children should be able to learn without worrying about whether they will be denied access to the restroom, the locker room, or school sports,” reads the Executive Order.

As author Ryan Anderson, PhD writes at, there are clear reasons ‘for treating males and females differently (yet still equally).

These differences do not have to do with how people choose to “identify.” They have to do with what men and women are: males or females of the human species.

The Institute of Medicine at the National Academy of Sciences published a report in 2001 titled “Exploring the Biological Contributions to Human Health: Does Sex Matter?” The executive summary answered the question in the affirmative, saying that the explosive growth of biological information “has made it increasingly apparent that many normal physiological functions—and, in many cases, pathological functions—are influenced either directly or indirectly by sex-based differences in biology.

…Something similar is true for the Trump policies on Title IX and school sports. For an argument about discrimination to succeed, you’d have to say that an athlete with male muscle mass, bone structure, and lung capacity (to take just a few specifics) is comparable, similarly situated to an athlete with female muscle mass, bone structure, and lung capacity.

If you can recognize that these are not in fact comparable, similarly situated individuals, then it’s hard to make a claim that “discrimination” in the pejorative sense has occurred.

Yes, we’ve treated males and females differently—we have an NBA and a WNBA—but that is precisely in order to treat them equally. Equality—fairness—in athletic competition frequently requires taking the bodily differences between males and females seriously. –

Meanwhile, Biden’s Executive Order clashes with Idaho state law, after Governor Brad Little signed the Fairness in Women’s Sports act in March of 2020 – making it the first state to ban transgender girls from participating in girls and women’s sports. In November, Trump’s Justice Department filed a legal brief in the 9th Circuit Court of Appeals in support of the Act, after an Idaho court found that it discriminated against some transgender athletes, allowing biological males to play in sports designed only for biological females.

Less than two weeks ago, transgender powerlifter JayCee Cooper sued USA Powerlifting, the sport’s largest US-based organization, after she was barred from women’s competitions on the basis of gender identity. Cooper’s lawsuit, filed by the advocacy group Gender Justice, asserts that the USAPL is in violation of the Minnesota Human Rights Act, and notes that other powerlifting and athletic organizations have allowed transgender women to participate if their hormone levels are below certain thresholds.

JayCee Cooper

In 2019, USA Powerlifting published guidelines surrounding transgender competitors.

“USA Powerlifting is not a fit for every athlete and for every medical condition or situation,” reads the organization’s Transgender Participation Policy. “Simply, not all powerlifters are eligible to compete in USA Powerlifting.”

Men naturally have a larger bone structure, higher bone density, stronger connective tissue and higher muscle density than women,” it continues.

These traits, even with reduced levels of testosterone do not go away. While MTF [male-to-female] may be weaker and less muscle than they once were, the biological benefits given them at birth still remain over than of a female.

As Kelli Ballard wrote last year, Save Women’s Sports produced an article on its website entitled “Male Athletes Are Taking Over Women’s Cycling.” In the piece, Mary Verrandeaux, a member of the 1985 U.S. National Team, said:

It is without a doubt that allowing men, who identify as women, to continue to compete in women’s categories is the end of women’s sports. Women’s opportunities, records, scholarships, and championships are now being awarded to biological men. This has already destroyed the sanctified intent of women competing against other women – not women competing against biological men who ‘identify as women.’”

Recognizing and respecting people for who they are – biologically or emotionally — does not mean trouncing other individuals’ rights. Here’s a little food for thought. If transgenders who identify as females can’t understand the ‘danger’ they pose to the world of women’s sports, then how can they truly claim to be female? If they cannot identify with the challenges facing natural-born females as they usurp their titles and trophies, how can they claim womanhood?

Save Women’s Sports summarized the issue:

This is the beginning of the end for women’s sports. We cannot allow this abuse of female athletes and mockery of women’s sports to continue. It is not bigotry to defend biology, and it is not hate speech to defend your rights.

Is that really what Biden-voting mothers and fathers wanted for their athlete daughters?

Tyler Durden
Thu, 01/21/2021 – 17:00


IBM Plunges After Reporting Lowest Q4 Revenue This Century, Slowdown In Cloud And Another Grotesque EPS Fudge

IBM Plunges After Reporting Lowest Q4 Revenue This Century, Slowdown In Cloud And Another Grotesque EPS Fudge

There was some hope last year that IBM was finally turning things around: after all, after 5 consecutive quarters of declining revenues, the company had just managed to grow its top-line for the first time since Q2 2018 – when revenue grew by a paltry 0.1% – and only for the 4th time in the past 8 years. Alas it was not meant to be, and moments ago IBM revealed that revenue declined again in Q4, dropping for the third consecutive quarter, sliding a whopping 6.5%, the biggest decline since 2015 – and while Red Hat revenue rose by 19%, boosting cloud revenue by 10% (including $738MM in internal revenue), total external cloud and cognitive revenues of $6.8 billion once again missed expectations of $7.3BN, and more ominously, were a decline of 4.5% from last year.

Then again “boosted” may be using the term loosely: at $20.4BN in total revenue, and once again missing consensus expectations of a $20.6BN print, IBM’s Q4 2020 was its worst fourth quarter for sales this century.

Some more Q4 revenue details, which missed across all key categories, including cloud and cognitive:

  • Cloud and cognitive software revenue $6.84 billion, estimate $7.26 billion
  • Global business services revenue $4.17 billion, estimate $4.17 billion
  • Global technology services revenue $6.57 billion, estimate $6.79 billion
  • Systems revenue $2.50 billion, estimate $2.48 billion

And while IBM’s Q4 adjusted, non-GAAP EPS of $2.07 beat expectations of $1.79, if down a whopping 56% Y/Y, as usual this was the product of lots of “artificial intelligence” and aggressive accounting magic because the unadjusted EPS was $1.41, or 32% below the adjusted number. The GAAP to non-GAAP bridge was, as usual, ridiculous and a continuation of an “one-time, non-recurring” addback trend that started so many years ago we can’t even remember when, but one thing is certain: none of IBM’s multiple-time, recurring charges are either one-time, or non-recurring.

We have said it before, but we’ll say it again: here is IBM’s “one-time, non-recurring” items In Q3…

… and in Q2 …

…. and in Q1 …

… and Q4 2019…

And here is the actual “beat” in context:

“We made progress in 2020 growing our hybrid cloud platform as the foundation for our clients’ digital transformations while dealing with the broader uncertainty of the macro environment,” said Arvind Krishna, IBM chairman and chief executive officer. “The actions we are taking to focus on hybrid cloud and AI will take hold, giving us confidence we can achieve revenue growth in 2021.”

Maybe… and yet just like the past three quarters, IBM did not have enough “visibility” into the future to give any guidance for 2021.

There was some good news: in Q4, when IBM’s free cash flow was $6.1 billion, the company did not return all of that to shareholders; instead it handed out just $1.5 billion in dividends.

So where did the remaining cash go? “In 2020 we increased investment in our business across R&D and CAPEX, and since October, announced the acquisition of seven companies focused on hybrid cloud and AI,” said James Kavanaugh, IBM senior vice president and chief financial officer. “With solid cash generation, steadily expanding gross profit margins, disciplined financial management and ample liquidity, we are well positioned for success as the leading hybrid cloud platform company.”

And speaking of cash flow, IBM ended the second quarter with $14.3 billion of cash on hand which includes marketable securities, up $1.3 billion from Q2. Debt, including Global Financing debt of $20.9 billion, totaled $65.4, up from $64.7 billion.

And some more good news: it appears that IBM is finally paying down its debt, which, including Global Financing debt of $21.2 billion, totaled $61.5 billion, down $3.9 billion since the end of the third quarter, and down $11.5 billion since closing the Red Hat acquisition.

Bottom line: while IBM’s core business remains a melting ice cube, the bigger concern was the slowdown in Cloud growth, which led to another dismal quarter for revenue and (unadjusted EPS). Worse, now that IBM is in cash paydown mode, it means little to no growth opportunities, and after algos read through the boilerplate, was enough to send IBM stock tumbled over 3%, erasing all gains for 2021.

Tyler Durden
Thu, 01/21/2021 – 16:40


Peter Schiff: Biden Takes The Helm Of A Sinking Ship

Peter Schiff: Biden Takes The Helm Of A Sinking Ship


Joe Biden was inaugurated on Jan. 20, becoming the 46th president of the United States. And as Peter Schiff put it in his podcast, he took the helm of a sinking ship.

But the stock markets sure don’t act like the ship is taking on water. All four major stock indices close at new record highs on inauguration day. Peter said this proves that the stock market rally really didn’t have much to do with Donald Trump.

If the stock market gains were really attributable to Donald Trump’s policies, and Joe Biden is already unwinding those policies and reversing as many as he can by executive order, why are all the stock markets making record highs? To me, that shows you that the stock market couldn’t care less about Biden being president, because it didn’t matter that Trump was president. This stock market rally that Donald Trump took credit for was not the result of Donald Trump’s policies.”

Peter has said from the beginning that the stock market wasn’t going up because of Donald Trump. And it didn’t go up on inauguration day in anticipation of Joe Biden. The stock market is going up because of the Federal Reserve.

Wall Street knows that. And they know that despite the change in the White House, there is no change at the Federal Reserve. Fed policy is going to be consistent. It is going to remain the same. And I think Joe Biden sent a message to Wall Street of the continuity by nominating Janet Yellen, who was the head of the Federal Reserve, to kind of cement in the minds of the markets, or the participants in the markets, that it is business as usual at the Fed — that they will keep in printing money, they will keep interest rates artificially low, in order to sustain asset bubbles. And that is what the stock market is celebrating.”

At this point, it doesn’t really matter who is sitting in the Oval Office as long as the Fed continues to supply the monetary heroin.

Looking back at the Trump era, it’s pretty clear he failed to “Make America Great Again.” To do so would have required stepping on a lot of political landmines while dealing with the deep-rooted problems of Social Security, Medicare and the national debt – the so-called third rail of politics.

The hope was that Donald Trump would not be shy about grabbing that third rail. Instead, he completely ignored it, and so the problems got much bigger during the Trump presidency.”

Trump wasn’t willing to do the painful things necessary to address the underlying problems facing the US. He wasn’t willing to take steps that would have tanked the stock market. But as Peter says, the stock market needed to go down despite the short-term pain it would have caused.

Had Donald Trump done the right thing, the stock market would have gone down. But that would have been a good thing. Overpriced stocks, overpriced real estate, that’s part of the problem. Part of the solution is allowing these assets to reprice to more reflect their actual value rather than the bubble that the Fed had been inflating. We need real economic growth, not another bubble. And unfortunately, that’s all we got under Trump.”

And now the markets expect the same thing to continue under President Biden. Peter said that’s where he thinks the markets and the country are wrong.

I think that there is a false sense of confidence that this can continue, whereas I think we’re nearing the end.”

A lot of people reason that things were basically OK under President Obama and therefore things under Biden won’t be too bad either. But Peter said the problems Biden is inheriting from Trump pale in comparison to the problems Obama inherited from George W. Bush. Mind you, these aren’t problems that Trump created. They’re the same problems he inherited from Obama.

It’s just that they got a lot bigger while [Trump] was president because he refused to do anything about the problems. The problems got bigger and bigger, to the point where they’re now so enormous that I think it’s impossible for Biden to get out of Dodge and hand this problem to the next president. I think this is the end of the line.”

Peter admitted that he’s had this feeling before and that he underestimated how long we could kick the can down the road. He said he didn’t expect so many people would be fooled into believing that the Fed could normalize rates and shrink its balance sheet after the extraordinary monetary policy launched during the Great Recession.

But just because we were able to kick the can down the road for as many years as we have doesn’t mean we can continue to do it with the same degree of success. Because the can is now so large that it can’t be kicked. If you try to kick it, you’re just going to break your foot.”

The reason QE 1, QE2 and QE 3 didn’t crash the dollar was because so many people believed the Fed would be able to unwind the policy.

But nobody is going to buy into it again. Nobody is going to bite on this a second time. Everybody knows at this point that QE is infinite. Everybody knows that the Fed is never going to shrink its balance sheet. The balance sheet is going to grow in perpetuity. It’s just that now people are under the delusion that it’s OK. They don’t realize that the only reason it worked the first time was because the world was convinced that it was temporary and a one-off emergency measure.”

On top of that, Biden is inheriting an economy that is fundamentally in much worse shape.

We’re in an even deeper economic hole. Despite the fact that the stock market is at record highs, the actual economy is in worse shape now, much worse shape, than it was in 2008.”

Peter said the bottom line is we’re not going to get away with this again, even though we got away with it in the past, and the inevitable dollar crisis is going to be that much worse because they did manage to kick the can so far down the road.

Tyler Durden
Thu, 01/21/2021 – 16:20


Growth Stocks’ “Line In The Sand” Defended Again, Bitcoin Battered

Growth Stocks’ “Line In The Sand” Defended Again, Bitcoin Battered

Big-Tech stocks rallied today as Small Caps lagged and the S&P and Dow trod water as yesterday’s exuberance faded with an ugly close…

But sentiment, complacency, and ignorance continued to drive to ever higher highs…Over 86% of Nasdaq composite stocks are trading above their 200-day moving average – that is the highest number since February 2004.

Source: Bloomberg

Notice that historically spikes like this have commonly been faced with near-term corrections.

Additionally, as The Bear Traps Report notes, the Battle Royale between re-opening and further lockdowns continues.

It is all about Reflation vs. Deflation risk, Commodities – Value vs. Nasdaq, the trade of the year. Lockdowns will concentrate profits in the hands of the few (FAANGM), re-opening will steepen the curve, position capital in value, and commodities, when 1.69 breaks in the ratio, it will be a large event…

Source: Bloomberg

Despite value equities significant outperformance over-growth since September, the key ratio we highlighted last week, once again failed to break below key support. The Russell 1000 growth / value ratio bounced at the same level it has 5 times over the past few months.

Source: Bloomberg

This continues to be our line-in-the-sand, a break lower here would bring a meaningful stretch of value outperformance in our view. Last week it appeared very likely (a ration key level break), this week capital flowed back into growth FAANGM, the trade of the year will be on the break, still think its Q1, maybe late q1.If JNJ’s vaccine does come to the mkt … perhaps sometime as early as March, that’s going to be a game-changer in terms of supply.

Over the last few days, the risk of mutation outpacing vaccine is giving stay at home plays a lift, supporting RLG! This above is the only reason (Treasuries) 10s are not 1.30% by now !!!

Source: Bloomberg

And while that “line in the sand” still holds, it appears investors continue to put thei rhead in the sand on any form of risk recognition…

Source: Bloomberg

And this is why…

Source: Bloomberg

Meanwhile, the dollar was sold…

Source: Bloomberg

And so were bonds…

Source: Bloomberg

And so was bitcoin…

Source: Bloomberg

Oil ended the day lower…

… unable to push higher…

Source: Bloomberg

Gold managed to hold on to very modest gains after yesterday’s dump’n’pump…


Finally, amid all the messianic exaltation of yesterday’s inauguration: “we are saved”, it is worth remembering that every President has suffered serious stock market drawdowns sooner or later…

  1. Hoover: -86%

  2. FDR: -54%

  3. Bush W: -51%

  4. Nixon: -47%

  5. Bush W: -43%

  6. FDR: -34%

  7. Trump: -34%

  8. Nixon: -34%

  9. Reagan: -33%

  10. FDR: -29%

  11. Truman: -28%

  12. JFK: -27%

  13. Reagan: -25%

  14. LBJ: -22%

  15. Obama: -22%

  16. IKE: -21%

  17. Bush: -19%

  18. Clinton: -19%

  19. Carter: -17%

h/t The Bear Traps Report

And there’s more good news on the virus…

Source: Bloomberg

Tyler Durden
Thu, 01/21/2021 – 16:00


Intel Shares Surge After Big Beat-And-Raise

Intel Shares Surge After Big Beat-And-Raise

So much for a ‘kitchen sink’ quarter ahead of new CEO Gelsinger’s reign…

In an early, surprise, earnings release, Intel crushed top- and bottom-line expectations for the quarter

  • *INTEL 4Q ADJ EPS $1.52, EST. $1.11

  • *INTEL 4Q REV. $18.3B, EST. $17.50B

And furthermore raised expectations for the next quarter and for 2021 overall (according to Bloomberg):

  • *INTEL SEES 1Q REV. $17.4B, EST. $16.18B

  • *INTEL SEES 1Q ADJ EPS $1.10, EST. 95C

  • *INTEL SEES 2021 REV. $75.3B, EST. $70.40B

  • *INTEL SEES 2021 ADJ EPS $4.90, EST. $4.53

Outgoing CEO Bob Swan said:

We significantly exceeded our expectations for the quarter, capping off our fifth consecutive record year.

Demand for the computing performance Intel delivers remains very strong and our focus on growth opportunities is paying off. It has been an honor to lead this wonderful company, and I am proud of what we have achieved as a team. Intel is in a strong strategic and financial position as we make this leadership transition and take Intel to the next level.”

INTC shares surged over 7% to their highest since June 2020 on the news…



Tyler Durden
Thu, 01/21/2021 – 15:57


Einhorn’s Greenlight Made A Record 25% In Q4, Mocks Tesla’s “Valuation-Indifferent” Investors: Full Letter

Einhorn’s Greenlight Made A Record 25% In Q4, Mocks Tesla’s “Valuation-Indifferent” Investors: Full Letter

Ending a period of dismal performance which sent his AUM tumbling in recent years, today David Einhorn sent out a letter to investors in which he was delighted to announced that in Q4, his hedge fund returned 25%: “this was the best quarterly result in Greenlight’s history. Longs contributed 42% while shorts detracted 15% and macro detracted 1%.” The reason for the surge: the dramatic outperformance of value stocks: “after nine months in which growth stocks relentlessly outperformed value stocks, the fourth quarter had a moderate reversal. For the year, however, the Russell 1000 Pure Growth index returned 67% while the Russell 1000 Pure Value index was essentially flat.” The record Q4 performance was enough to push Greenlight to green for the year, with a 5.2% return for the entire 2020.

As Einhorn explains, in Q4 “nearly the entire long book performed exceptionally well. The leader was Green Brick Partners (GRBK), which surged from $16.10 to $22.96 per share as strong results caused a significant upward revision to the forecasted earnings trajectory of the company. Brighthouse Financial (BHF) recovered part of its earlier decline, advancing from $26.91 to $36.21 as the yield curve steepened and value stocks did better. AerCap Holdings (AER) bounced from $25.19 to $45.58 following enthusiasm that the COVID-19 vaccines will lead to a recovery in air travel.”

The poker affiicionado also revealed that new positions established earlier in the year (he did not initiate or close out any significant positions during the quarter), Resideo Technologies (REZI), NCR Corporation (NCR), Change Healthcare (CHNG) and inflation swaps, “were also significant contributors” to the outperformance (more in the full letter below).

Einhorn then spends a few paragraphs laying out his investment case in two formerly private companies, FuboTV and Danimer…

We occasionally invest in private companies. We don’t often discuss them because the investments are small and infrequent; we generally consider them only when it’s something very promising coming to us from an established relationship. This quarter two of our private investments went public and led to significant gains.

FuboTV (FUBO) is a streaming service that offers a sports-focused “skinny” bundle of TV channels that also includes a variety of news and entertainment content. Essentially, this is the type of package that Apple unsuccessfully tried to assemble for years…

* * *

After being introduced to Danimer Scientific (DNMR) in 2014, we invested privately a year ago. DNMR makes Nodax, a biodegradable plastic. Plastics are a global environmental problem, and nobody likes using paper straws. Enter Nodax, which is made by feeding vegetable oil to bacteria and then transforming the fat bacteria into a type of plastic that will decompose even in salt water.

… before introducing investors to another already-public investment, NeuBase Therapeutics which Greenlight invested in several years ago at an average price of $3.96:

The combination of the frothy environment for companies with large addressable markets and NBSE’s own pre-clinical progress leaves us surprised that NBSE hasn’t yet joined the “story stock” party. NBSE is a “platform” company with a technology called PATrOL, which develops highly targeted therapies that increase, decrease or change the protein function of genes.

Like DNMR, the addressable market is immense. While there is a long path from here to products on the market, NBSE’s current market capitalization of less than $200 million prices in little chance of success. We think the risk-reward is asymmetrical. NBSE ended the year at $6.99.

The remaining bulk of the letter is spent on Einhorn’s nemesis, Tesla, which he famously accused of being a fraud in several previous letters.

He starts off by lamenting the underperformance of the fund’s shorts focused mostly in high-flying tech stocks. As a reminder in October, Einhorn predicted that the tech bubble popped on Sept 2, 2020… an observation which has proven incorrect, as Einhorn explains:

The short portfolio had a difficult quarter and continued to generate losses in a rising market. Last quarter we postulated that the technology bubble had popped and that September 2, 2020 might have been the top of this cycle. We should clarify what we meant, as our language was imprecise. We don’t believe that all technology stocks are in a bubble; we believe that a growing number of “story stocks” that have become disconnected from valuation are in a bubble. Nonetheless, the theory that it has popped has proven to be incorrect. The bubble is alive and well, and we covered the bubble basket we had put in place with a moderate loss.

As one would expect, Einhorn saves the best for last, in this case his latest thoughts on Tesla which we present below without commentary (highlights our):

We also managed to sidestep most of the significant second-half rally in Tesla (TSLA), as we adjusted our position ahead of its inclusion in the S&P 500 index. Even so, TSLA was our largest loser in 2020, with most of the losses coming in the first half of the year.

TSLA cars are not a fad; if they were, TSLA would sell many more than it does. The fad is in owning TSLA stock. We have quipped before that twice a silly stock price is not twice as silly, it’s still just silly. But what about 20 times a silly price? In the 2000 internet bubble, Cisco Systems peaked out at 29 times revenue, which would be a discount to where TSLA now trades.

This begs the question as to why a stock might trade at 20 times a silly price. Of course, there is the possibility that we are just wrong and bad at measuring silliness. But setting that aside, we think that the answer is that certain stocks [ZH: i.e., TSLA] are held exclusively by valuation-indifferent investors. In our early training, one of the first concepts we learned is market capitalization, or the share price times the number of shares outstanding. This is what a company is worth in the market today. Valuation analysis means comparing the market capitalization to various indications of value. It might be a comparison to current and future revenues, earnings, cash flows, asset values, etc.

When we speak of valuation-indifferent investors, we mean investors for whom valuation is not part of the process. They either will not, cannot, or choose not to consider valuation as a factor.

Will not: Index funds are the most obvious valuation-indifferent investors. In fact, to the extent a stock is overvalued, index funds are required to buy even more of it. Passive investing has become so prevalent that passive index investors are no longer price-takers, buying at the prevailing price set by active investors engaging in a vigorous effort to determine the correct value, but rather price-makers. Their demand sets the price. From our perspective, price-making rather than price-taking calls into question the entire premise of passive investing.

Cannot: A second group of valuation-indifferent investors are the new masses of retail investors, who simply have no training or competency in valuation. Historically, their influence has been limited by stock-brokers or financial advisors who determine suitability and provide advice. Today, no advice or suitability is needed. Download an app and start trading, commission free. Log onto the app and it will give you a “free” share in a highly speculative stock to get you going. Many in this group think an “expensive” stock is one that trades at $100 a share and a “cheap” stock is one that trades at $5 a share.

Choose not to: A third group of valuation-indifferent investors are professional investors who have decided that valuation is not part of the process. As Howard Marks described in his recent memo “Something of Value,” the attitude is to “hold on as long as the thesis is right and the trend is upward.” This investor group thinks it’s unproductive to consider if the market capitalization exceeds even the best case estimates of the present value of future earnings by an order of magnitude. This goes far beyond buying growth at a reasonable price or even growth at any price. It takes the traditional advice of letting your winners run to its logical extreme.

When the last holder of a stock that has valuation as part of the process exits and the shares are held more or less exclusively by members of those groups, the stock becomes disconnected from fair value. Valuation becomes irrelevant and the stock price itself may as well be a random number. The only point in observing that various money-losing companies, without any proprietary advantage, are trading at valuations that imply they will someday become industry leaders, is to marvel at just how speculative the bubble in disconnected stocks has become.

In addition to Tesla’s “valuation-indifferent” investors, Einhorn also lashed out at the sellside “analysts” who have enabled this euphoria (in addition to the Fed of course):

Yes, Wall Street analysts will provide research that purports to support inflated valuations and give “price targets.” The key is to understand that price targets follow stocks, rather than lead them. A higher stock price generates higher price targets and a lower stock price generates falling price targets. Wall Street analysts didn’t blow the whistle on the internet bubble, and they won’t do any different this time around.

Einhorn concludes by giving himself a modest pat on the back:

While 2020 represented a historic underperformance of value, the fourth quarter demonstrated that when the headwinds abate, we can achieve attractive results. As we enter the new year, our net long exposure of 64% is higher than it has been in some time. We are positioned for higher inflation, a strong housing market and rising interest rates. If things generally go this way, value stocks should continue their recent outperformance. We are excited to turn the page into 2021.

Hopefully Greenlight’s investors share the same excitement.

The full letter is below:

Tyler Durden
Thu, 01/21/2021 – 15:52


Judge Rejects Parler Bid To Force Amazon To Resume Hosting

Judge Rejects Parler Bid To Force Amazon To Resume Hosting

A federal judge in Seattle rejected an emergency request by social media platform Parler to force Amazon to restore web hosting services for the Twitter competitor, which was kicked off the Amazon Web Services (AWS) platform following the January 6th protest at the US Capitol.

US District Judge Barbara Rothstein, a Carter appointee, said that Parler failed to successfully argue that they would be likely to prevail on the merits of its claims, or that a preliminary injunction was warranted out of public interest.

Parler was suspended on January 10, leaving roughly 12 million users unable to connect to the conservative-friendly service.

Amazon claimed that Parler violated its contract by failing to effectively address ‘extremist content’ by people calling for violence against political foes surrounding the inauguration.

“Parler has failed to do more than raise the specter of preferential treatment of Twitter by AWS,” wrote Rothstein.

Parler, meanwhile, claims that Amazon is in breach of contract, and kicked them off AWS out of “political animus” to benefit Twitter – another AWS client which Parler says failed to censor violent content targeting conservatives.

That said, Parler has partially returned with a new hosting service, Epik, which also hosts Twitter competitor Gab. In a Monday message, Parler CEO John Matze wrote: “Now seems like the right time to remind you all—both lovers and haters—why we started this platform,” Matze. “We believe privacy is paramount and free speech essential, especially on social media. Our aim has always been to provide a nonpartisan public square where individuals can enjoy and exercise their rights to both. We will resolve any challenge before us and plan to welcome all of you back soon. We will not let civil discourse perish!”

Tyler Durden
Thu, 01/21/2021 – 15:46


Meet The ETF That’s “Doubling Down” On Blank Check Companies And SPACs

Meet The ETF That’s “Doubling Down” On Blank Check Companies And SPACs

As if a disproportionate rush into both SPACs and ETFs over the last few years weren’t great enough ideas on their own, they’re now in the midst of combining.

When, in the future, we look back at the ruin the market has become, we may want to remember the day that an ETF focused only on investing in blank check companies decided to “double down” on its exposure to them. For those that need clarity, this is a passively managed ETF that invests in companies with no business or operations yet. 

The Accelerate Arbitrage Fund was launched in April by Julian Klymochko, Bloomberg noted on Thursday, and now has exposure to 150 SPACs. The firm is shifting its business model from boring old arbitrage to the newer, shinier and more exciting SPAC world. Why? Because SPACs have become “so lucrative”, Klymochko says. 

“It’s real hard to get excited about merger arbitrage these days,” he said.

The ETF trades on the TSE and has returned about 42% since April 7. This compares to the 8.9% return offered over the same time from the S&P Merger Arbitrage Total Return Index. SPAK, another ETF that trades on the NYSE, has returned about 17% since its launch in October. 

237 SPACs have debuted on U.S. exchanges in 2020, raising $79 billion, the report notes. At least 54 have started trading this year. One of the more successful SPACs to have launched in 2020 was DraftKings, while fellow SPAC Nikola drew intense criticism after being labeled “an intricate fraud” by noted short seller Hindenburg Research. 

Matt Waddell, a New York-based analyst at United First Partners, says that quality of companies may be further scrutinized going forward. He believes that SPAC listings could slow to a couple a week, from dozens per day, in 2021.

And in true “passive investing” style, Accelerate says it doesn’t hold SPACs post-listing. Their goal is to get exposure prior to an IPO and then exit. It is already looking at investing in the Liberty Media SPAC and Softbank’s coming SPAC.

Accelerate says its AUM has grown over 1100% year over year. 

Tyler Durden
Thu, 01/21/2021 – 15:30