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Saturday, May 18, 2024

2024-05-18

 ***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:


With US inflation and retail sales both cooling, bets that the Federal Reserve will cut interest rates are back, and there isn’t much left that could stop stocks from hitting new highs.

After most equity markets fully erased April losses — brushing off a perceived delay in rate cuts, sticky inflation and signs of slowing in the US job market — nothing seems to be able to halt stocks. Financial conditions are loose, the economy is holding up and even recovering in Europe, the technical picture is bullish, and the earnings season was overall pretty reassuring once again. ........

Momentum is running in favor of bulls as all major markets are moving firmly into higher gear, with only a few minor overbought warnings flashing so far. It leaves stocks with upside room, while also limiting setbacks for the time being unless there is a major change in the fundamental perception of the environment. ......



The economy is signaling a more volatile, potentially recessionary period. Markets, however, aren’t paying attention. Not only are the twin tail risks of a downturn or resurgent inflation being ignored, but a near-impossible “immaculate acceleration” of boomy growth and benign price appreciation is becoming the base case.

It’s not the first time that markets and the economy have been at odds, but this is one of the most egregious. Just as the economic mood music becomes more somber and underlying signs of persistent price pressures continue to fester, the market has virtually eliminated the tail risks of a recession or an inflationary shock. ......

You don’t have to believe either a recession or unruly inflation are particularly likely to agree that the scant probability they are ascribed is negligently low.

That leaves the stock market in a more precarious position. It has been content to rally through this cycle with the belief the Fed would aggressively cut rates if a recession looked likely, i.e. the tail risk was underwritten. That’s ultimately still the case, but stocks are now happy to power ahead even though this tail is no longer priced by the rates market. ........



The Superstar Economy
  • The stellar performance of the S&P 500 superstars is not representative of the profits of wider corporate America.
  • For the direction of the US jobs market, we should closely monitor the profits of the 6.4 million non-superstar US companies that account for 85 percent of US jobs. These profits have been softening.
  • The US stock market’s record 50 percent valuation premium versus the non-US stock market is pricing generative AI to do through the next decade what the Web 2.0 network effect did through the last decade.
  • But it will be very difficult for the Web 2.0 superstar companies to become generative AI superstar companies, all assuming there are indeed any lasting generative AI superstar companies.
  • Hence, the long-term message is to underweight the US stock market versus the non-US stock market, and the preferred non-US stock market is Europe.
...................... There are two important messages from the stellar performance of the S&P 500 superstars, one for the short term, one for the longer term.

First, the stellar performance of S&P 500 profits is not representative of the profits of wider corporate America. This is crucial because while the evolution of S&P 500 companies’ profits drive their hiring and firing plans, S&P 500 companies account for no more than 15 percent of the 158 million jobs in the US.

For the US jobs market, much more important than S&P 500 companies is wider corporate America that accounts for at least 85 percent of all jobs.

The short-term message is that to pre-empt the direction of the US jobs market, we should closely monitor the evolution of profits at the 6.4 million non-superstar US companies.  These profits have been softening.

Second, even though almost all the last decade’s growth in world stock market profits has come from the US stock market, relative valuations are pricing last decade’s superstar profit outperformance to persist through the next decade. The US stock market is trading at a more than 50 percent premium to the non-US stock market – well above the early 2000s high, and now in uncharted territory.



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... So, what’s behind copper’s strength relative with its peers in the metals group, to crude oil and to the pace of growth in China. The answer seems to boil down to two factors: the energy transition and supply. ....





......... 2023 was an unusual year—despite the headwind of a rising market and mega-cap strength, only 60% of all active large-cap U.S. equity funds underperformed the S&P 500®

.... Among top-quartile funds within all reported active domestic equity categories as of December 2019, not a single fund remained in the top quartile over the next four years








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(not just) for the ESG crowd:



IPS report says replacement fuels well off track to replace kerosene within timeframe needed to avert climate disaster



........... Steel, concrete, plastic, and fertilizer are fundamental to modern civilization yet we have no idea how to make any of them at scale without fossil fuels. Those who think that the solution to our climate crisis is to end the use of fossil fuels do not understand this. Ending fossil fuels would cause society to collapse, and result in more short-term human death and suffering than is expected even in the worst-case scenarios for global heating.

Those who think that a solution is to substitute renewable energy for fossil fuels don’t understand this either. Even if true, we’re a long way from that. At present, wind and solar account for only two-and-half percent of global energy consumption, and all renewables—including hydroelectric and nuclear energy—account for only seven percent using the direct equivalent method.

The larger problem is that energy substitution is only a theory. It is naive and flawed because it only considers amounts of energy while ignoring rates of energy output.

Society runs on power, not energy. Energy is the potential to do work. Energy must be converted into work for anything to happen in the physical world. Work takes place when energy is transferred to an object by application of force along a displacement. ..........

Renewables have an important place in our energy future but they don’t produce enough power to run modern civilization.

Howard Odum explained this in 1955 when he published his work on the Maximum Power Principle. .........


A Tour of the Jevons Paradox: How Energy Efficiency Backfires

...... In short, boosting efficiency seems like a straightforward way to reduce your use of natural resources. And for you personally, efficiency gains may do exactly that. But collectively, efficiency seems to have the opposite effect As technology gets more efficient, we tend to consume more resources. This backfire effect is known as the ‘Jevons paradox’, and it occurs for a simple reason. At a social level, efficiency is not a tool for conservation; it’s a catalyst for technological sprawl. .................

................................... While this top-level tech is important, when it comes to the Jevons paradox, it’s the bottom-level technology that’s most crucial. And at the very bottom of the industrial stack lies the mainspring of fossil-fuel-based civilization: the heat engine.

For those who are unfamiliar, a heat engine is a machine that converts heat into mechanical work. It’s no exaggeration to say that these machines are the primary driver of industrialization. Without them, fossil fuels are of limited use — they are little more than a source of heat. But with a heat engine, the energy contained in fossil fuels can be converted into more useful forms of work. Today, heat engines are what drive our cars, push our trains, fly our planes, and sail our ships. And heat engines generate the vast majority of our electricity. ................

To summarize, humans play the same game as life — we use efficiency to catalyze sprawl. And for most of human history, we played the game within tight constraints, using only the energy made available by the sun. But our exploitation of fossil fuels obviously changed everything, supercharging our activity beyond what the solar budget could maintain. It’s this lack of constraint that converts the Jevons paradox from a blessing into a curse. .........



Geopolitical Fare:

Johnstone: I Criticize The US Power Alliance Because It's The Most Destructive Force On Earth

I don’t spend my time attacking the US war machine because I have any special love for Hamas, Iran, Russia, China, or any other power. I do it because the US empire is quantifiably the most destructive and tyrannical force on this planet, by an extremely massive margin.

No other power has spent the 21st century killing people by the millions and displacing them by the tens of millions. No other power is circling the planet with hundreds of military bases, starving people around the world with blockades and economic sanctions, staging proxy wars, color revolutions and coups all over the earth, and working to destabilize and destroy any nation anywhere on this planet who dares to defy its dictates.

Only the US empire is doing this. No other power comes anywhere remotely close.

That’s as murderous and tyrannical as it gets. Propaganda-addled empire simps sometimes try to act like it’s strange and suspicious that I spend all my time criticizing the US war machine, when what’s actually strange and suspicious is that everyone else does not. .....


....... With Israel launching genocide 2.0 in Rafah (Gaza) as this is being written, the implied purpose of the violent police repression of protesters on college campuses last week, in conjunction with the media effort to label anyone who objects to the events unfolding as ‘anti-Semitic,’ is to provide political breathing room for the assault of Rafah. It won’t work. The implied logic is clear— the protesters must be cleared before the images of more murdered Palestinians light the world on fire. Missing from ‘the conversation’ is the self-reflection needed to understand that it is the genocide that is politically incendiary, not objections to it. .........

......................... List: remarkably, five of the ten countries with the largest oil reserves have been governed by ‘the new Hitler’ in the last twenty years. Imagine, one Hitler in all of the twentieth century, but five in the last twenty years. In contrast to this Hitler-heavy concentration, four of the remaining countries, Saudi Arabia, UAE, Kuwait, and the US, are liberal democracies (not). Readers are encouraged to read Osama bin Laden’s letter to America (link above) to understand how insidious fake liberal democracy (US) can be for we little people. 


.............. The problem that Ms. Weiner— as well as the Biden administration, the NYPD, and the exterminationist-right in Israel, are trying to overcome is that the protesting students have heard their explanations of the events in Gaza and come to different conclusions. Rather than trying to convince the students otherwise, the official response in the US has been slander, propaganda, censorship, and police violence. This is fundamentally different from making one’s views known as citizens regarding the affairs of state by protesting. Shutting down ‘free-speech’ isn’t its opposite. Coerced speech is. Shutting down ‘free-speech’ is political repression.

One illuminating / particularly troubling aspect of this police repression is that billionaires hired private militias to attack the protesters. The protesters didn’t attack these private militias, they were attacked by them ............


....... And so the war in Western Ukraine is going to be not so much against the Ukrainian army, which is now pretty depleted, but against other NATO troops. And it’s going to be an escalation, and it’s going to be a forever war.

And the objective of the administration here is simply they believe that a forever war will keep depleting Russia’s arms and missiles and tanks and army so that it will be in a lesser position to defend China when Mr. Biden says that he intends to follow the military plans to attack China in 2025 and 2026. So the United States plan is for a forever war basically, extended from the Ukraine to China, and probably in the Near East, because Iran is the third main enemy designated by the United States.

NIMA ROSTAMI ALKHORSHID: Dr. Stein, how do you find the foreign policy of Biden administration in Ukraine?

JILL STEIN: As Michael describes it, this is absolutely Orwellian. It is terrifying. It reflects this mindset of a state of permanent war of a country that thinks that it is the sole imperial power, which is basically rampaging around the world and butting up against conflicts that are huge, that could go global, that could go nuclear. This is unfortunately a microcosm of that mindset.

It has been absolutely clear from the get-go that for NATO to continue to move to the East, violating the promise of the United States and NATO basically to Russia that it would not expand to the East, not one inch after the reunification of Germany, which constituted an existential threat to Russia, which was just recently recovering from the Second World War and the loss of some 20 million, maybe 27 million of its citizens after an invasion over the Ukrainian border.

So Russia is understandably touchy about its border, but no more touchy than the United States is about its borders. In the same way that the United States was ready to go to nuclear war, in fact, we had the nuclear bombs launched and in the air when it was discovered that Russia had placed nuclear missiles in Cuba, we were ready to go to war to prevent that threat of nuclear missiles placed so close to our capital and to our country that there would really be no defense against a launch.

It’s exactly the same for Russia. This is understandable. This is what all informed Russia experts and Russia watchers had advised for years. It was considered insane to be butting up against Russia’s border and to be breaking the promise that had been made to Gorbachev.

It is an extremely warmongering, ill-informed, aggressive policy. When did this war surge? Actually, it goes back to 2014 and the interference of the U.S. in domestic Ukrainian politics in participating very much in the overthrow of the democratically elected ruler, president of Ukraine at the time, who simply wanted neutrality for Ukraine, which is essentially what Russia was asking for, was neutrality, not to take one side or the other. This war has been specifically ginned up by the U.S.

When the war in Afghanistan basically came to its disastrous end, as the whole war had been a disaster, when it finally wrapped up, that’s when the war industry cannot bear for there to be a peace dividend for the people of the world and the people of the United States. Instead, we were then plunged into this ginned up, absolutely unnecessary war, which could have been averted at any point.

Russia was begging for negotiations, which the U.S. basically refused to participate in. After the war had begun, there were negotiations that took place under the auspices of [Türkiye], where Russia showed that it did not want this war, it was ready to come to the table to negotiate and to compromise substantially. The U.S. and the U.K. basically shut it down.

This is a war being ginned up by the war industry. It’s absolutely a disaster. It’s part of an endless war machine that is impoverishing the American people and endangering the whole world. This could go nuclear. .......................








Sci Fare:


........ We found robust evidence for short- to moderate-term beneficial effects of plant-based diets versus conventional diets (duration ≤ 24 months) on weight status, energy metabolism and systemic inflammation in healthy participants, obese and type-2 diabetes patients. Initial experimental studies proposed novel microbiome-related pathways, by which plant-based diets modulate the gut microbiome towards a favorable diversity of bacteria species .........



Results
Overall, vegetarian and vegan diets are significantly associated with better lipid profile, glycemic control, body weight/BMI, inflammation, and lower risk of ischemic heart disease and cancer. Vegetarian diet is also associated with lower mortality from CVDs. ......



Other Fare:

In a scorching talk, marketing professor and podcaster Scott Galloway dissects the data showing that, by many measures, young people in the US are worse off financially than ever before. He unpacks the root causes and effects of this "great intergenerational theft," asking why we let it continue and showing how we could make it end. (Note: This talk contains mature language.)



Pics of the Week:





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Monday, May 13, 2024

2024-05-13

 **** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:


.................... Stocks are expecting a soft or no landing. They are currently behaving in a way consistent with the Fed’s first rate cut — the most likely move if it changes rates this year — occurring in the absence of a recession. However, rate cuts that happen when there is a slump have historically led to a much worse outcome for equities — both before and after the recession — than currently priced ..............





The Fed started publishing the dot plot in 2012, and comparing the Fed’s forecasts with the forecasts from Fed funds futures yields three important conclusions, see charts below:
  1. The Fed’s and the market’s forecasts about the future path of the Fed funds rate are almost always wrong.
  2. The forecasts are very similar, and the Fed has managed to anchor market expectations about where it thinks the Fed funds rate is going.
  3. The direction of the forecasting mistake is always identical, suggesting that the market is taking its cue about the future path of interest rates from the Fed’s dot plot.
The good news is that the Fed is able to anchor market expectations, and thereby reduce volatility in financial markets. 

The bad news is that when the Fed’s forecast is wrong and the FOMC has to move from three cuts in 2024 to say, one cut, it will hurt Fed credibility.

The US economy’s lower interest-rate sensitivity, combined with strong structural and cyclical tailwinds to growth, brings us to the conclusion that the Fed will not cut interest rates in 2024.

Wafer-thin spreads on corporate debt don’t matter — until they do. There are several potential triggers for risk premia to flare, denting credit portfolios.

Spreads have collapsed across the board, from investment-grade and junk bonds to collateralized loan obligations. The extra yield investors get for owning US high-grade corporate debt instead of government bonds is the lowest in two-and-a-half years.

At less than 90 bps, that’s far below the five-year average of about 120 bps. As a percentage of all-in yield, it’s the least since 2007.





................................. The right way to think about debt may be best captured by one of the oldest maxims: “There are old investors, and there are bold investors, but there aren’t many old bold investors.” 


"There's A Lag In The Real Economy... And It's Hitting Now" - Ed Dowd Warns Of "Huge Credit Crisis Coming"


There will be blood: Lenders warn of bank failures at TRD forum
“I don’t think most of the banks understand what is on their balance sheets”


You can’t fight a war without understanding your enemy.  That’s an adage as old as war itself.  Which means it’s very old.

Joe Stiglitz doesn’t understand his enemy.

Now, that’s an odd thing to say bout someone who’s worldview is hardly a secret.  Stiglitz has given it his best shot for decades.  He’s one of the few big name economists worth reading on a regular basis.  But that doesn’t mean he always says things that add up.

He’s a roll lately and his latest book is attracting a lot of attention. So it should because it is an attempt to undo some of the immense damage economists have done to society over the past few decades.  In particular it is an attempt to reframe the notion of “freedom”.  ...........

For those of you now coughing angrily into your coffee, let me repeat — inevitably create.

Power matters.  Economies are expressions of underlying social power structures.  They are not perfectly smoothly operating systems suspended in midair.  They sit firmly on the ground.  Social ground.  And all social ground is littered with the hills and valleys of power relationships.

Economists, in their quest for scientific purity, have sought to minimize the impact power has.  They go to great lengths to sanitize their models of the muddling effect power implies.  Which is why their models most often fail to track reality very well.

So.  No.  Neoliberalism was never, ever, about strengthening democracy.  It was about something else.  It was about the capture, or more correctly, the recapture of power, by an elite that resented the social consequences of the policies put in place to rebuild society after the collapse of older versions of capitalism in the Great Depression.  Those policies had both corroded the power and diluted the wealth of the old elite.  So a counter attack was conceived. .........


Canada’s Secret Is Out: Growth Is Dead



MMT Fare:

Recently, the neglected question of why the US government borrows, given that it can print money, has arisen in the context of discussions surrounding a new documentary, Finding the Money. As L. Randall Wray observes in this one-pager, Modern Money Theory has been providing answers to this question for some time; and, he argues, it is a topic that mainstream economists are ill-equipped to address, since very few concern themselves with the monetary operations that underlie the question of why a currency-issuing government issues debt.



The first and most obvious is to control inflation. As I've explained before on this channel, every time the government spends, it creates new money to do so. It borrows it from the Bank of England, it spends it into the economy to deliver on its policies, and then it has to tax to bring that money back out of the economy under its control, when it cancels it. Literally. It puts it out of use.

That's the biggest reason why we tax, but there are five other reasons as well.

The second one, many people think is a little obscure, but let me make it clear. Unless we did have tax, and unless we had to pay it using the currency that the government creates - the pound in the case of the UK -  then that pound would not have value. ..........



China Fare:


........... But there’s a limit to how far such a strategy can go. Some industries are now plagued by overcapacity concerns, while there’s a rising threat of protectionism from foreign countries that have seen a flood of Chinese imports. And in recent months, industrial loan growth has slowed after the epic surge.

As a result, strategists at Clocktower note that China may be in the potentially treacherous position where credit demand from both households and corporations is falling at the same time.


Why that is important? The strategists explained:

A credit collapse will be a death knell for a highly leveraged economy like China. If the public sector does not come to support credit growth in a timely manner, a sharp growth deceleration is likely to occur going forward as economic agents will be forced to cut consumption and investment to meet their debt obligations.



........................... The decrease of real estate prices is also contributing to the weakness of consumption. Housing assets account for about 70% of the assets held by households. The falling value of housing assets is deterring consumption expenditures. According to Harvard University Professor Kenneth Rogoff and others, China’s real estate sector directly and indirectly accounted for 25% of its GDP in 2021. The contraction of this sector is having a substantial impact.

Moreover, in view of China’s demographic structure, it is highly likely that the demand for residential housing will gradually diminish going forward.  .............



It has long been understood that most financial data provided by the Chinese government is propaganda designed to misrepresent the country's true economic circumstances. At best, their statistics provide half the truth and the rest has to be discerned through deeper investigation. When systemic crisis events take place in China it usually comes as a shock to much of the world exactly because they expend considerable resources in order to hide instability behind a thin veneer of fabricated progress.

The biggest story in China in the new millennia has been nation's debt explosion. China's debt-to-GDP ratio is currently estimated at nearly 300% (official numbers), with most of the liabilities accrued in the past 15 years. ......


Abstract
...... Both parties [the US and China] thus worry about the possibility that financial interdependence can be weaponized yet find it hard to extricate themselves from the inevitability of financial interdependence absent a clean break from an entrenched pattern of trade imbalances. 


Professor Jing Men delves into the perspectives of Chinese scholars, experts, and policy advisors concerning China’s interactions with the Western world.



Bubble Fare:

***** Hussman: This Is Where You Start Bear Markets From

As of last week, the total return of the S&P 500 was even with 3-month Treasury bill returns since the valuation peak of January 2022, more than two years ago. In our view, investors continue to “grasp at the suds of yesterday’s bubble,” ignoring extreme valuations, lopsided bullish sentiment, emerging pressure on profit margins, economic conditions at the border of recession (though the evidence is not yet decisive) and most important for near-term outcomes, unfavorable market internals.

An improvement in the uniformity of market internals would not improve our expectations for long-term returns, nor would it reduce the risk of severe market losses over the completion of this cycle. Still, improved internals would encourage a more neutral or even constructive near-term outlook (albeit with position limits and safety nets). For now, rich valuations, unfavorable market internals, and other elements of our discipline hold us to a defensive outlook.

Regardless of how much we might comment on underlying market conditions, particularly valuations, remember the condition of market internals drives much of our investment outlook at each point in time – particularly with the adaptations we adopted in 2021. Valuations are like potential energy, and it’s important to know when you’re sitting on a powder keg. But investor psychology, which we infer from market internals, is the main catalyst that suppresses or releases that potential energy.

The chart below shows our most reliable valuation measure, based on its correlation with actual subsequent S&P 500 total returns across a century of market cycles: the ratio of nonfinancial market capitalization to corporate gross value-added, including estimated foreign revenues.

Notice that the current extreme is just shy of those observed in August 1929 and January 2022. The current level is about three times the historical norm. We’ve seen this sort of valuation extreme before, but as Jeremy Grantham observed, “you’ve only seen it once or twice.” .................


The arithmetic is straightforward. Over the past 10, 20, and 30 years, both nonfinancial corporate revenues and nominal GDP have grown at an average annual rate of about 4.5%, which includes the impact of the recent bout of inflation. Meanwhile, the dividend yield of the S&P 500 currently stands at 1.4%. Assuming that valuations remain at a “permanently high plateau,” prices would grow at the same annual pace as fundamentals. Add the dividend yield, and estimated long-term S&P 500 total returns – assuming permanently elevated valuations – come to about 5.9% annually.

Now allow MarketCap/GVA to retreat from its current extreme of 3.2 over the coming decade, but no lower than the level of 1.7 we observed in early 2020. In that case, the estimated total return includes not only growth in fundamentals and dividend income, but also the annualized impact of the change in valuations:

Estimated 10-year S&P 500 total return: 1.045*(1.7/3.2)^(1/10) – 1 + 0.014 = -0.5% annually

Now assume that MarketCap/GVA instead retreats to its historical norm of 0.98. Historically, that level has been consistent with run-of-the-mill subsequent S&P 500 total returns averaging 10% annually. Valuations regularly fell below that historical norm (followed by high subsequent market returns) in much of U.S. market history before 1995. As I noted at the time, the S&P 500 also dropped to undervalued levels in October 2008. In contrast, recent market returns have relied on valuations pushing to record highs. Suppose that valuations a decade from today instead reach that norm of 0.98:

Estimated 10-year S&P 500 total return: 1.045*(0.98/3.2)^(1/10) – 1 + 0.014 = -5.8% annually

Such seemingly preposterous long-term return estimates, like those I proposed in 2000 and 2007, are largely a reflection of basic arithmetic. In the short run, stock prices will go wherever investor psychology will take them. Yet, be it a speculative bubble or a risk-averse panic, stocks continue to be claims on a stream of future cash flows, and long-term returns are still determined by the prices investors pay.

Given that 10-year Treasury bonds currently yield about 4.5% annually, it should not be surprising that our estimate of the likely 10-year “equity risk premium” (S&P 500 total returns in excess of Treasury returns) stands at the lowest level in history. The chart below shows this projection in data since 1928. Notably, there’s no complex data mining here. The projected S&P 500 total return is just linear in (log) valuations.

We presently estimate that the S&P 500 is likely to lag Treasury bond returns by a record -9.3% annually over the coming 12-year period. That’s worse than the August 1929 low of -6.4%. Worse than the 2000 low of -7.9%, a point when I was also projecting negative 10-year S&P 500 total returns and an -83% loss in technology stocks (the tech-heavy Nasdaq 100 went on to lose an improbably precise -83%).

Show us a financially reasonable and more reliable estimate of the likely equity risk-premium, and we would happily use it. Why wouldn’t we? The problem is that we haven’t found any alternative estimation approach, not the Fed Model, not Shiller-Black-Jirav, not Damodaran, nothing, better correlated with actual, subsequent S&P 500 total returns than the methods we use. ...........

Still, if you’re looking for the “optimistic case” for market valuations, the chart below is it. It shows the ratio of the S&P 500 to analyst estimates of year-ahead “forward” operating earnings, strictly in data since 1990. This is as bullish a view as I can offer. Unfortunately, with the S&P 500 price/forward earnings currently above 20, it still implies estimated 10-year S&P 500 total returns in the low single digits, implying a slightly negative 10-year risk premium relative to Treasury bonds. ...........

For decades, I’ve noted that extreme valuations do not necessarily imply near-term market losses. The only way valuations can ever reach levels as extreme as 1929, 2000, 2021 and today is by blowing through lesser valuation extremes for years. This leads to the dangerous tendency to abandon valuations as uninformative and useless. That’s a mistake.

Valuations matter profoundly when estimating long-term market returns and likely full-cycle market losses. Yet market returns over shorter segments of the cycle are mainly driven by investor psychology – specifically, whether investors are inclined toward speculation versus risk-aversion. ........................................

On the economic front, forward-looking measures remain at levels that have historically defined the border between expansion and new recession, but we have no particularly strong views here. We would need to see greater deterioration across a broad range of leading measures to expect a recession with confidence, and we don’t see that yet. .................


......... To be intentionally defensive means that whatever we might miss here is an intentional miss. Even during the recent bubble, the preponderance of market gains occurred in periods of favorable valuations, favorable internals, or both. We’ve made our adaptations in this bubble, and we’re comfortable maintaining our discipline, in the knowledge that even the most extreme market conditions are impermanent. As Jeremy Grantham recently observed, “This is where you start bear markets from.”



Vids of the Week:

Bad data & bad policy will force the Fed to scramble to cut rates


Exhausted consumers are "Spent Up & Lent Up", so economy will slow




Quotes of the Week:

Knausgard: Good decisions are based on experience and experience is based on past bad decisions. This is the basic algorithm of learning. Our mistakes have a didactic value and the bigger they are, the more learning power they contain (the more severe the consequences, the more likely we will internalize their message)


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(not just) for the ESG crowd:

"I'd make this the lead story in every paper and newscast on the planet," said Bill McKibben. "If we don't understand the depth of the climate crisis, we will not act in time."

The average monthly concentration of carbon dioxide in the atmosphere jumped by a record 4.7 parts per million between March 2023 and March 2024, according to new data from NOAA's Mauna Loa Observatory in Hawaii. ..........




Turning nature into currency is a plan to resurrect the imperial heyday


A trip to the Beijing Auto Show reveals just how advanced China's EVs are. So what are the so-called "foreign" automakers doing about it?



Geopolitical Fare:

Life sentences for speech? Pre-crime detention? Ex post facto law? Anonymous accusers? It's all in Justin Trudeau's "Online Harms Bill," a true "threat to democracy"

......... There was little initial uproar. What could be wrong with increasing child safety, or “protecting the vulnerable”?

Then people read the bill.

“If you look at the purpose of this law, it’s actually quite noble and most lawyers would agree with it,” says Canadian attorney Dan Freiheit. “Online safety, protecting children’s physical and mental health.” But the actual text?

“It’s wild,” Freheit says.

Trudeau was lying when he said C-63 was “very, very specifically focused on correcting kids.” The purview of the Online Harms Act extends far beyond speech, reimagining society as a mandated social engineering project, creating transformational new procedures that would: ...................

Things you’re saying, things you’ve already said, things an administrative judge thinks you might say, all barred, with neighbors deputized as enforcers? Good times. Leave it to Trudeau, a frequent trailblazer in new forms of illiberalism in the digital age, to come up with this quantum leap downward on the rights front. C-63 is a Frankenstein’s Monster combining the worst censorship ideas already deployed by supposed ally government-in-laws like Europe’s Digital Services Act, Australia’s updated Australian Communications and Media Authority Act (ACMA), and Scotland’s Hate Crime and Public Order Act, which saw 7,152 complaints in its first week when the law took effect last month. ..............


An Opportune Time For System Change?


Fascism is a monster born of capitalist parents. It came as the end-product of centuries of capitalist bestiality, exploitation, domination, and racism. (Walter Rodney)

......... WWII is a perfect example. It left us with long-lasting collective memory and powerful images which have been both didactic and traumatic. Mankind has discovered deep and disturbing secrets about itself which took years to digest and internalize leading to distorted lessons and incomplete conclusions.

Eighty years have elapsed. We have enjoyed an unprecedented period of peace and prosperity, but, despite substantial temporal distance, powerful collective memory of the trauma remains. Fascism has become a metaphor that condenses all aspects of that experience. However, by giving way to that metaphor, its essence has been lost leaving us without power to recognize its core. In the meantime, neoliberalism has created a fertile ground for fascism to flourish and has delivered people into its hands. Populist leaders have harvested the growing libidinal surplus of the forgotten white worker, the unintended victim of neoliberalism, as the newcomer to the ranks of excess population. Now, more than ever before, confronted with new political realities, we are talking again about WWII and its origins, in an attempt to grasp what happened and how and extract new lessons and guidance. Despite the privilege of hindsight, today we seem to be in no better position than a 100 years ago, blind to the warning signs of fascism. Due to decades of its pathologizing we have lost sight of its true nature and have been late to recognize the reality of its present tide. .................

Fascist ideology is not simply an instrument of deception, but a fragment of an old and romantic antagonism to capitalism derived from deprivations in contemporary life with a longing for a vague “other”.  ..........

Fascism is an elite solution to the organic crisis of a profit regime confronted by the threat of organized class struggle amid the vacillations of an imperialist order ...................................

People fall for fascism for the same reason they fall for other fraudulent financial schemes. When free money is offered or quick fixes promised, we don’t ask for a rationale, we take it. Fascism’s appeal is fueled by people’s inability to understand the laws of probability and likelihood of realization of false promises. Capitalism creates desperation and victims who are ready to embrace fraudulent promises in the absence of real solutions, and as long as there is capitalism, there will be fascist movements and uprisings. We will never be able to eradicate it. If properly diagnosed on time, we will only be able to downgrade it to temporary and manageable outbursts. This is the best outcome we can achieve. .......



......................... The war regime is also evident in the militarization of the social field. Sometimes this takes the explicit form of suppressing dissent and rallying around the flag. But it also manifests in a more general attempt to reinforce obedience to authority at multiple social levels. ...................

The emergent war regime is also visible in the seeming paradox regarding the continual failures of recent hegemonic war campaigns. For at least a half century now, the US military, despite being the most lavishly funded and technologically advanced fighting force on the planet, has done nothing but lose wars, from Vietnam to Afghanistan and Iraq. The symbol of such failure is the military helicopter carrying off the last remaining American personnel, leaving a devastated landscape in its wake. Why does such a powerful war machine keep failing? One obvious answer is that the United States is no longer the imperialist hegemon that some still believe it to be. Yet this dynamic of failure also discloses the overarching global power structure that such conflicts help to sustain. Here it is worth recalling Foucault’s work on the perpetual failures of the prison to accomplish its stated goals. Since its inception, he remarks, the penitentiary system, ostensibly dedicated to correcting and transforming criminal behaviours, has repeatedly done the opposite: increasing recidivism, turning offenders into delinquents and so on. ‘Perhaps’, he suggests, ‘one should reverse the problem and ask oneself what is served by the failure of the prison . . . Perhaps one should look for what is hidden beneath the apparent cynicism of the penal institution.’ In this case, too, we should reverse the problem and ask what is served by the failures of the war machine – what is hidden beneath its apparent aims. What we discover when we do so is not a cabal of military and political leaders plotting behind closed doors. It is rather what Foucault would call a governance project. The incessant parade of armed confrontations, large and small, serve to prop up a militarized governance structure that takes different forms in different places, and is guided by a multi-level structure of forces, including the dominant nation-states, the supranational institutions and competing sectors of capital, which sometimes align and sometimes conflict.

The intimate relation between war and circuits of capital is nothing new. .........



"And they’ll say that we are disturbing the peace. There is no peace. What bothers them is that we are disturbing the war."
Howard Zinn, Boston Common, 1971.



How could they do this to us? Why does Kiev want to destroy us?

These are the questions that the people of Donbas have been asking themselves for the past 10 years. Considered from Switzerland or France, they may seem incongruous, as we are so used to believing that only Ukrainians are suffering from the war with Russia. We don't want to know that the battle has been going on for a decade and has primarily affected the civilian population of Donbas. .........


Read an Open Letter From Scholars and Professors Across the Country


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In a world without seams, things falls apart


Inmates do billions of dollars of work for companies and governments each year. A landmark lawsuit alleges many are being kept in prison because the business is just too good.


Part one, "Truest Crime." From a series by E.R. doctor Matt Bivens

............................. Things got so bad that when heroin (diacetylmorphine) arrived, it was welcomed as an improvement. Chemists had discovered it decades earlier, but in 1898 the pharmaceutical company Bayer started selling it as Heroisch, German for “heroic.” 

Heroin was a trade name. It was Heroin™ — brought to you by Bayer! 

Doctors desperate for something safer than morphine often convinced themselves this new drug wasn’t addictive. ..............

Ordinary Americans weren’t buying it, and by 1906 we had established the federal Food & Drug Administration, because moms want to know if it’s got heroin. Cure-alls like the morphine-and-alcohol-based Mrs. Winslow’s Soothing Syrup definitely did quiet fussy babies, but it’s believed thousands never woke up again. .........

That should have been peak “Opioid Crisis.” But it was only 2007. Heck, George W. Bush was still president. The Sacklers were never contrite. They’d been raking in about $1 billion a year for more than a decade. The $600 million fine sounded impressive — but the Sacklers shrugged, cut the government in to the tune of less than 5% of the cash rolling in, and got right back to slinging opioids. And in the 17 years since, everything has gotten terribly worse. ........

Pondering these massive new settlements, I remember thinking, “Walmart? Johnson & Johnson? Surely some innocents have been caught up in an indiscriminate dragnet?”

Wrong. Don’t look into this if you don’t want to know. Like competitive bicyclists, many had lined up to slipstream behind Purdue Pharma and its deranged, anti-social marketing of OxyContin®. Perhaps none of those other corporations would have dared try to convince physicians and nurse practitioners to hand out opioids like candy. But the Sacklers dared and met with success — instant success, shocking success, in perhaps the most shameful episode in the history of medicine. 

The other companies might have been surprised, but they all fell eagerly in line behind. ............

But wait long enough, and Big Pharma always wins. Amoral, soulless corporations — often the same ones paying out massive settlements — have maneuvered skillfully to reassert control over the addiction market they’ve created. ........




Paul Cooper's hit podcast is now a book. He talks to Middle East Eye about the decline and fall of empires both ancient and modern



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An extreme geomagnetic storm hit Earth for the first time in over 20 years, causing stunning aurora displays across northern Europe and very low latitudes in the U.S.

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