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Saturday, January 11, 2025

2025-01-12

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


Economic and Market Fare:


The Fed has cut interest rates 100 basis points since September, and over the same period, 10-year interest rates are up 100 basis points. This is highly unusual, see charts below. Is it fiscal worries? Is it less demand from abroad? Or maybe Fed cuts were not justified? The market is telling us something, and it is very important for investors to have a view on why long rates are going up when the Fed is cutting.


Rising 10-Year Yields, VIX “Buy Signal” Update (via TheBondBeat)

… Topic #1: Why are 10-year Treasury yields rising when the Fed is cutting rates? The FOMC has reduced the Funds rate by 100 basis points since its first cut on September 18th. Over the same period, 10-year yields have increased by 100 basis points, from 3.7 to 4.7 percent.

This is not the usual course of events, as the following chart of Fed Funds (red line) and 10-year yields (black line) from 1980 to the present clearly shows. The arrows show the start of the last 10 easing cycles, and in every single case 10-year yields either stayed relatively stable or (much more often) declined.


..................... Our read is that markets are simply discounting a still-strong economy rather than either calling the Fed’s bluff or stressing over budget deficits, and the following chart explains our reasoning. It shows real (ex-inflation) 10-year Treasury yields from 2003 to the present.

.... Real rates now are the same as back then, so we can dismiss the idea that deficits are influencing Treasury yields. Rather, a 2 percent real yield is simply the market’s long run view of real neutral interest rates. ......



......... WHY, then, are rates rising?

Not sure I know or can offer more than the right questions to ask. I know who’s opinions (which are ALL created equally, and how some are simply MORE equal than others) matters … and it’s NOT mine.

DATATREK asks / answers and so too does Dr. Ed Yardeni — both notes below.

I DO KNOW markets are like politics and now, since DJT has won, certain things seem to have become ‘OK’ to say out loud.

Same in markets. Something has happened (perhaps the very same event) and it seems ‘OK’ to think about higher for longer.

I’m NOT gratified in the least, although, talked at length last year about ‘Team Rate CUT’ in such a way to get the point across. I didn’t / don’t always agree with lower rate idea. Inflation remained a concern and the idea the Fed MIGHT have broken something (SVB?) did put this view on PAUSE.

Thinking about rates — higher for longer — is / was hard for me, a former bond geek in a seat where, for my entire career, thinking about rates going from upper left to lower right, was generally correct. .........



After 2024 finished with a thud, investors still expect stocks to sparkle in 2025

........... Breadth deterioration at the stock level is also being seen at the sector level (as well as on a global basis). The number of sectors above their 200-day averages has dropped into a range that has been inconsistent with sustained index-level strength over the past quarter-century. .............





 
The new year begins with economic resilience, but investors should brace for a challenging path in 2025. Key economic indicators are still “goldilocks” and signal continued growth at a sustainable pace. The Atlanta Fed's GDPNow tracker aligns closely with major forecasts, projecting about a robust 2.5% GDP growth rate for Q4 2024. Simultaneously, jobless claims remain low, reflecting a healthy labor market. Inflation-sensitive commodities are stable, aside from minor energy fluctuations driven primarily by weather. This backdrop portrays an economy maintaining balance despite heightened interest rates.

Yet, uncertainty exists regarding the Trump administration’s forthcoming economic policies. The market expects immediate action on tariffs, though implementation will take months. In taxation, proposed corporate tax cuts lack the transformative scale of the 2017 tax overhaul when the corporate tax rates went from 35% to 21% and we had a dramatic expansion of the estate tax exemptions and lowering of capital gains taxes. Trump has discussed a further reduction to the 15% corporate tax for products made in the United States. This is a much smaller scale and impact. There has also been no discussion of changing the capital gains rate, even though Republicans would favor that. Regulatory skepticism for big tech persists, raising questions about the growth potential in this key sector.

Valuation levels also warrant scrutiny. The S&P 500’s forward P/E ratio near 23.5x earnings is not cheap, especially as bond yields rise. If we had another 20% gain in stocks in 2025, this would harken back to the gains in 1997, 1998, and the 1999 tech bubble that caused a painful bear market starting in 2000. History reminds us that markets can sustain high valuations temporarily, but risks grow as they deviate further from earnings fundamentals. Analysts currently expect around 17-18% earnings growth in 2025. In 2023 and 2024, two very strong years for the market, we had under 10% earnings growth each year. I wonder what can drive us to these lofty expectations for earnings and that leaves us vulnerable to disappointment.

Bonds remain under pressure, driven by a strong economy, fiscal concerns, and the specter of rising deficits. Long-term Treasury yields, currently around 4.6%, may climb further, potentially reaching the high end of a 4.5-5.5% range. This forecast reflects historical norms where long bonds trade with a premium of 100-150 basis points over Fed Funds in non-recessionary conditions. Such yield dynamics heighten competition for equities, especially those relying on high growth expectations. Dividend-paying stocks, however, retain appeal as their yields remain competitive relative to inflation adjusted bonds while offering dividend growth potential that TIPs do not.

AI and technology remain focal points for market narratives. Signs of rotation into less expensive areas or defensive sectors are still notably absent, leaving the overperformance of growth, at least for the meantime, intact. I could see a market correction in the broad market and a bear market in the Nasdaq if our long-waited market rotation occurs, but the catalyst for this rotation has yet to arrive.


DB: Mapping Markets: Why 2025 can be another great year (via TheBondBeat)

As market strategists, we spend a lot of time thinking about what might go wrong. But the last two years have also demonstrated how the macro news can surprise well on the upside.

After all, most years are normally quite good for markets. In fact since 2008, the S&P 500 has only posted a negative total return in two out of 16 years. Elsewhere, the STOXX 600 and the Nikkei don’t have quite as stellar a record, but they’ve still only posted 4 out of 16 negative years.

So as we look forward to 2025, it’s worth remembering that there's the potential for a lot to go right. After all, many of the most obvious risks are already priced in. There’s no sign of an economic downturn. Financial conditions are very accommodative. Several leading indicators of a US recession are now pointing away from one again. Even if we do get a downturn, central banks now have plenty of scope to cut rates. And whilst there are plenty of geopolitical risks right now, that hasn’t been a factor that markets have traditionally reacted much to.

So what's the upside case for 2025?

1. Starting valuations might be high and evoking comparisons to the dot com bubble, but the dot com bubble burst alongside an economic downturn, of which there’s no sign today….....

2. The current backdrop of rate cuts taking place in a soft landing (rather than a recession) has been incredibly favourable for risk assets historically…...


Can equities turn down without a recession? (via TheBondBeat)

........ Historically, the most common driver of significant losses are recessions. The huge plunges in 2020 and 2008 required an economic contraction, and the bursting of the dot com bubble also happened amidst a slowdown that ended up in a recession in 2001. But right now, there’s no sign of a slowdown, and if anything, several leading indicators are looking increasingly positive.

This got us thinking about whether there could be an equity decline without a recession. The answer is yes, but large selloffs outside a recession are pretty infrequent. Moreover, when they do happen, it’s often like 2022 as investors start to fear and price in a recession, even if one hasn’t happened yet. Another very common theme across these declines are Fed rate hikes beforehand.

So if economic growth stays robust and the Fed don’t start pivoting in a hawkish direction, it’s not implausible that elevated valuations continue for some time. However, if signs of a slowdown emerge or rate hikes move back on the table, the historic precedents show that equities are capable of a notable decline, even without a recession.



Trump has promoted a number of plans to make America strong – at other countries’ expense. Given his “we win; you lose” motto, some of his plans would produce the opposite effect of what he imagines.

That would not be much of a change in U.S. policy. But I suggest that Hudson’s Law may be peaking under Trump: Every U.S. action attacking other countries tends to backfire and end up costing American policy at least twice as much .............

So I think that Trump is living in a past world – especially given the right-wing Republican “hard money” crowd pining for the old gold-exchange standard, insisting that government money creation is inherently inflationary (as if bank credit is not at all). I guess that’s what makes him a genius: He’s able to hold two opposing views at the same time, each with its own logic that contradicts his other view. ..........................

Stated another way: How long will debtor countries agree to remain in a system that had promised to help them grow, when all it has done is leave them further in debt and forced them to sell off mineral rights, infrastructure and public enterprise to raise the money to pay these debts in order to maintain their exchange rates? The system is rigged against them. ...............



The long stagnation that began in the mid- to late 1970s and continues to the present day is evidenced by a long-term secular decline in the growth rate of output, the growth rate of new investment, and capacity utilization. This stagnation has been one with a half-century of real wage flattening for nonsupervisory workers and a dramatic increase in the wealth holdings of the upper classes and managerial elites.1

Associated with this stagnation has been an increasing concentration of firms across a whole panoply of industrial and financial settings. In addition to numerous manufacturing industries, we might list: oil, banking, food production, distribution and retailing, legacy airlines, credit cards, high-tech services (inclusive of search engines and computer facilities), music delivery, phone services, and internet retailing.2 This increasing concentration has solidified monopoly power across the economy and, in accordance with the tendency of monopoly power to slow down investment growth, helps explain the general slowdown of growth over the last fifty years.3

It is the purpose of this article to relate how this creeping stagnation has added its own force in contributing to the monopoly power associated with consolidation and to current wealth disparities. The argument runs along two lines. The first concerns how the imperative for corporate growth channels monies into mergers when the prospects for new investment slow up. The second (and related aspect) concerns the generation of corporate monies in excess of new investment (termed free cash) that, together with debt, funds mergers. Free cash results from federal deficits derivable in large part from: (1) tax rate reductions on the rich and (2) efforts to counter stagnation and episodes of financial unraveling. Free cash funds mergers and acquisitions, but has not been limited to such.4 Free cash has acted as flow collateral for the expansion of corporate debt to provide mega-funds for spillage into equity markets. In addition to mergers, this spillage consists of expanded dividends and stock buybacks. Amounting to trillions of dollars, this disgorging of cash has been a major force for expanding the wealth positions of the rich. .......................


Bubble Fare:

Trump will usher in a speculative frenzy.

........................................ Other catastrophes are easy to imagine: bank failures, exchange collapses, giant Ponzi schemes faltering. Still, the biggest risk with crypto has little to do with crypto at all.
If Congress passes FIT21 or a similar bill, it would invent a novel asset class called “digital commodities”—in essence, any financial asset managed on a decentralized blockchain. Digital commodities would be exempted from SEC oversight, as would “decentralized finance” firms. In the FIT21 bill, any firm or person can self-certify a financial product as a digital commodity, and the SEC would have only 60 days to object.

This is a loophole big enough to fit an investment bank through. ...............................



...... As we enter 2025, the financial markets are optimistic. That optimism is fueled by strong market performance over the last two years and analyst’s projections for continued growth. However, as “Curb Your Enthusiasm” often demonstrates, even the best-laid plans can unravel when overlooked details come to light. Here are five reasons why a more cautious approach to investing might be warranted in 2025.

........ Current valuations suggest that stocks are priced for perfection as investors bid up asset prices ahead of what a declining economic growth rate can deliver. This leaves little room for error. In other words, investors are essentially betting on corporations’ flawless execution in a year when macroeconomic uncertainties loom large.




That the free-enterprise economy is given to recurrent episodes of speculation will be agreed. There is protection only in a clear perception of the characteristics common to these flights… There are, however, few matters on which such a warning is less welcomed. Those involved with the speculation are experiencing an increase in wealth – getting rich or being further enriched. No one wishes to believe that this is fortuitous or undeserved; all wish to think that it is the result of their own superior insight or intuition. Speculation buys up, in a very practical way, the intelligence of those involved. As long as they are in, they have a strong pecuniary commitment to belief in the unique personal intelligence that tells them that there will be yet more.”
– John Kenneth Galbraith, A Short History of Financial Euphoria
On December 6, the S&P 500 set the most extreme level of valuations on record, exceeding both the 1929 and 2000 market peaks on measures that we find best-correlated with actual, subsequent 10-12 year S&P 500 total returns across a century of market cycles.

Reliable valuation measures are enormously informative about both long-term investment returns and the potential depth of market losses over the completion of any given market cycle. At the same time, valuations are of strikingly little use in projecting market outcomes over shorter segments of the market cycle. Investor psychology – the desire to speculate, or the aversion to risk – has a much stronger impact, which is why we also have to attend to factors including market internals, sentiment, short-term overextension / compression, and monetary policy (while unfavorable market internals dominate monetary easing, favorable internals amplify it).

Amid the untethered enthusiasm about artificial intelligence, and prospects for deregulation and lower corporate taxes, it’s worth repeating that despite all the society-changing innovations of the past 20-30 years, both GDP and S&P 500 Index revenues (which include the impact of stock buybacks) have grown at an average rate of only about 4.5% annually. That’s slower, not faster, than the growth rate during the preceding half-century.

Yes, the largest companies are very profitable, but that’s nearly always true at speculative extremes. That cohort of mega-cap companies is constantly changing, and except on their approach to extremes like 1929, 1972, 2000, and today, the companies with the largest market capitalizations have historically gone on to lag the S&P 500 over time .............

Having priced the stock market at elevated multiples of record earnings, investors now require profit margins to sustain record highs permanently – simply for growth in earnings and payouts to match the 4.5% revenue growth rate of recent decades, and they require the S&P 500 price/revenue ratio to remain at a permanently high plateau, three times its historical norm.

Given our own 4-year baseline expectation for real GDP growth of just 1.5% (see The Turtle and the Pendulum), even 4.5% nominal growth would require either a 3% inflation rate in the coming years, or a 2% inflation rate coupled with a jump in productivity that fully restores the 1948-2000 average.

One might hope for higher inflation, imagining that it might produce higher nominal growth and accompanying market returns, but that would require valuations to remain at record extremes. Unfortunately, valuations are the first casualty of persistent inflation. In fact, except when valuations have been at least 25% below historical norms, the S&P 500 has lagged Treasury bills, on average, when consumer price inflation has been anything over 4%.

There’s no question that investors are eager to justify record valuation multiples by appealing to the growing share of technology companies in the S&P 500. Yet the technology sector itself is trading at the highest multiple to revenues on record. Meanwhile, the growth rate of overall S&P 500 revenues, which include the technology sector, is below historical norms while the S&P 500 price/revenue multiple is three times its historical norm, easily eclipsing the 1929 and 2000 peaks.

Still, for the moment, neither valuations nor arithmetic matter to investors. As Galbraith observed, “As long as they are in, they have a strong pecuniary commitment to belief in the unique personal intelligence that tells them that there will be yet more.”

Hence the sort of magazine cover Barron’s ran only a week after the S&P 500 set its recent record high – “Embrace the bubble.” ..........................

Put simply, these so-called “errors” contain information. It’s enormously tempting to imagine, at bubble highs, that glorious backward-looking returns, far greater than those previously implied by valuations, demonstrate that historical standards of value are outdated and obsolete. In their 1934 classic, Security Analysis, Benjamin Graham and David Dodd described the mood surrounding the 1929 market peak, observing that investors had abandoned their attention to valuations because “the records of the past were proving an undependable guide to investment.”

In truth, there was an enormous warning in the “error” between the returns investors were enjoying and the returns suggested by valuations. Presently, that same kind of “error” offers the same warning as those that misled investors to ignore valuations in 1929 and 2000. ................



Vid Fare:




Quotes of the Week:

Mauboussin: Our probability assessments shift based on how others present information to us.

Lyngen: The bearish tone in the Treasury market is difficult to fade at the moment, and so we won’t attempt to fight the move

MS: Defense wins championships, but don't forget you still have to score.

UBS: Our rationale is based on our view that the Fed will cut rates more than the market currently expects. Interest rates remain in restrictive territory. There continues to be cyclical weakness in the interest-ratesensitive parts of economies such as housing. Marketbased inflation expectations remain stable. And the growth-unfriendly, rather than friendly, policy items appear to be first on the agenda from the new US administration.

JPM: For as long as retail investors continue to pour money into the AI theme, the AI led boom in stock markets is likely to continue.

&: Deviations from fair value persistent in equities. Deviations from fair value more mean reverting in rates.

&: Do not overemphasize risk scenarios when investing.

Noland: For better or worse, the Trump administration will force momentous change both at home and abroad. From the perspective of my analytical framework, it’s not coincidental that our President returns to the White House with the world at the brink – with manias and acutely vulnerable speculative Bubbles; with a deeply maladjusted U.S. economy and associated inequality and acute societal strain; with political dysfunction and corruption; with escalating trade and military wars at risk of spiraling out of control; with an antagonistic world and precarious geopolitics. For the foreseeable future, there may be a need for CBB warning labels: “Some readers may find the following content offensive and disturbing.”

............ &: "I would repeat a critical maxim: Bubbles inflate or burst. Importantly, last year’s spectacular “terminal phase excess” creates quite a predicament. Manic speculative excesses and leveraged speculation ensure market fragility, as well as systemic frailty that significantly elevates crash risk. Last year’s only looser financial conditions fueled deeper economic structural maladjustment."



Charts:
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(not just) for the ESG crowd:



Global warming is moving faster than the best models can keep a handle on.

Fifty years into the project of modeling Earth’s future climate, we still don’t really know what’s coming. Some places are warming with more ferocity than expected. Extreme events are taking scientists by surprise. Right now, as the bald reality of climate change bears down on human life, scientists are seeing more clearly the limits of our ability to predict the exact future we face. The coming decades may be far worse, and far weirder, than the best models anticipated. ...........


The signal that the ENDGAME has started.

..... 2025 is starting off with the global ocean about +0.25°C HOTTER than 2023. It takes a MASSIVE amount of energy to warm up the oceans that much.

............................. CO2 levels surged in 2023 because the Terrestrial Land Carbon Sinks failed almost completely.

........ Hansen estimates that the dimming of the ALBEDO has increased the Energy Flow into the Climate System an amount equivalent to a jump of +100ppm in CO2 levels.

........................... BUT the mainstream models cannot account for 2024’s sustained warmth and GMST of +1.6°C over baseline.

A sustained JUMP in the GMST like +0.4°C in 4 years (2020–2024) implies that either a new forcing has been added to the Climate System OR that warming was being “masked” by a cooling effect which suddenly stopped.

That's a BIG problem for the Moderate faction in climate science. They have decided what “mainstream” climate science WAS for the last 40 years. A big JUMP in the GMST like this implies the mainstream climate models are WRONG.

2025 will tell us just HOW BAD things actually are.



............. In The March of Folly (1985), Barbara Tuchman described the self-destructive habit of leaders repeatedly pushing failed policies against their own interests. She highlighted glaring historical blunders: the Trojans dragging the wooden horse into Troy, corrupt Renaissance Popes fueling the Protestant Reformation, Britain’s bungled handling of the American colonies sparking revolution, and the U.S. sinking deeper into Vietnam despite obvious failure.

Most of today’s energy policies could easily join Tuchman’s list of follies—chasing unsustainable strategies, ignoring hard limits, and favoring short-term gains over long-term stability. The same arrogance and denial that led past empires to collapse are driving modern energy decisions straight into failure.




Radical Acceptance, Part Three

.......... "Moreover, Hayhoe’s solution of talking is beyond hypocritical. Hayhoe is a Christian climate scientist preaching the gospel of talking to others while blocking nearly everyone on social media who dares to disagree with her message of hope and optimism by discussing worse-case scenarios. When Hayhoe blocks those who bring up the scary parts, she is perpetuating the very silence she claims to be fighting against."



U.S. B.S.:


Yves here. This piece sets out the plight of what next for Democrats in class warfare terms, which is a useful frame. I am not even sure, however, that many who are in positions of influence relative to the party are even able to swallow the idea that the path for the Team Blue to recover is to embrace much derided populism, which has come to be equated with anti-intellectualism and bigotry, contrary to its historical tradition.

Les Leopold also points out, as a step in restoring some semblance of cred, that elite Dems would also have to admit where they made policy errors. But this again seems impossible; I can envision key figures recoiling, as if presented with a raw roadkilled squirrel carcass on a fine china in a fancy restaurant. Most members of our soi-disant leadership have deeply internalized that their status depends on never admitting they were wrong, much the less apologizing. That is why Democrats never fail but can only be failed by their feckless voters.

Mind you, even though this is a US issue, the repudiation of PMC elite politicians may be moving a bit faster in Europe due to worsening economic conditions on top of mainstream leaders being all on board with cutting social spending to fund military spending, which voters soundly and roundly oppose. ..................


Canadian leaders are falling over themselves to placate the incoming Trump administration. It doesn’t have to be this way



........ The FTC is planning to take Meta to court over anti-trust violations this year. Want to bet they change their minds?

Amazon is nothing but a giant sucking anti-trust violation.

Olds will remember that Microsoft was almost broken up by an anti-trust suit. The government was clearly winning its case in 2000, but when Bush Jr. took power, the government suddenly decided to drop the case. Saved Gates billions and billions.

Trump’s tariff plans are going to hit a lot of companies hard, but some will likely get waivers, as Apple did. Wouldn’t you pay a million dollars, or ten million, to predispose Trump to make sure you get a waive that will save you billions?

Sure you would.

Wearing kneepads for the President and other important political figures is part of the CEO’s job .............



Hague fugitive Joe Biden has awarded the Presidential Medal of Freedom to U2 singer Bono, because that’s the sort of thing that happens in a society where everything is fake and we are led by the least among us. Other recipients of the medal this year include Hillary Rodham Clinton and George Soros. ...........



Geopolitical Fare:


............. As always, the international media segments the information and explains each event to us by certain local factors, sometimes correct, sometimes false. While we are struggling with this mixture, we fail to perceive that all these events belong to a larger plan and that it is not possible to win on a front if we do not know how far it extends.

What we are witnessing is the third stage of the plan developed by Donald Rumsfeld and Admiral Arthur Cebrowski in 2000 [1]. In the American tradition, which General Smedley Butler summarized in his famous 1933 speech “War Is a Racket” [2], the Pentagon has set itself the mission of destroying all political institutions in the “Greater Middle East” (i.e., an area from Algeria to Kazakhstan to Somalia, with the exception of Israel and possibly Morocco) ............


An assessment of the Trudeau government’s complicity in Israel’s genocide in Gaza.

The last two years of Prime Minister Justin Trudeau’s tenure have been marked by a massive escalation of several interconnected geopolitical crises. Canada remains a feeble and largely irrelevant ‘middle power,’ but is nonetheless actively complicit in worsening these already catastrophic crises. This article will focus on one important example: Israel’s genocide in Gaza.

The Trudeau government’s complicity in Israel’s genocide highlights both its legacy as a pro-war vassal regime that is fundamentally subservient to American foreign policy, and its consistent appeasement of the Israel lobby. It is a government rank with hypocrisy on human rights and international law, and one whose record ought to finally put to rest the myth that Canada is a “peacekeeping” nation.  ......



......... Sometimes all you can do is stare wordlessly at the absolute gall of these freaks.

.................... So the US is indirectly backing the genocidal atrocities it now denounces in Sudan, while aggressively defending the genocidal atrocities it is directly backing in Gaza.

This announcement comes as Biden and his handlers push through one last $8 billion weapons shipment to Israel in the last days of his term, a final blood-soaked punctuation mark on an ugly legacy of mass murder throughout Biden’s far-too-long political career. ..............



The Washington Post editors have long argued for prolonging the war in Ukraine. .........


Putinism at 25, US Truth and Reconciliation Committee for 2025, The End of the Liberal Era?, Stewart Lee The Little Shit, My Life With Penguins in the Antarctic

........................ I am not Russian, I do not want to be Russian, I don’t even want Russia in the EU (it’s far too big and too foreign). However, I cannot but admire the man and his efforts to resurrect Russia from the disastrous Yeltsin era. Any objective analysis of his time in office has to conclude that he has done a very good job with respect to politics, society, economy, and even defense (especially when you factor into it how the USA has been chipping away at Russia the entire time). Ben Aris reflects on 25 years of Volodya, and he too can’t help but possess a grudging admiration from the man ...........

............ Much of this is either forgotten, ignored, and hand-waved away, as these overtures to the West complicate the narrative in which Putin is an imperialist bent on domination. ............



We believe what we want to believe. This is especially true if we find that what might, horribly, actually be true is just too much to bear. Safer, easier, more comforting to believe a falsehood that is simpler, happier, more consistent with everything else we were always taught (conditioned) to believe.

So, instead of acknowledging that we are the mass murderers, the genociders, the oppressors, the liars, the propagandists, the war-mongers, we much prefer to believe that it was someone else at fault. We were just defending ourselves, protecting our ‘democracy’, our ‘freedom’, and our way of life. The real villains are savages, animals, evil and insane.

And instead of realizing our gullibility in believing for years the carefully honed lies, distortions, manipulations and propaganda of the information sources we always trusted — the media, our teachers, our parents, our friends, the people we looked up to — it’s so much easier and more tempting to believe that what the whistleblowers are saying, what the investigative reporters are saying, what the demonstrators in the streets are saying, is just fake news, rabble-rousing, stories planted and activities organized by ‘foreign state’ propagandists to confuse and undermine us.

Surely ‘our side’ would never blow up a pipeline essential to the well-being of millions, and create the largest environmental disaster in history in the process. Surely the people we voted for would never brutally overthrow an elected foreign government and replace it with a puppet government that would then unleash a reign of terror on its citizens. Surely our ‘defence’ forces would never deliberately, indiscriminately cause mass civilian casualties, destroy infrastructure, and displace millions of people, to purposefully wreck a country so we can steal its land and resources. Only ‘bad guys’ do that.

There can come a point at which it is no longer possible to reconcile what we believe — and desperately want to believe — with what is obviously actually true. ...........



Sci Fare:

Studies reveal how risky play can benefit child development. But encouraging it can be a challenge for parents.






Renowned neurologist Richard Cytowic exposes the dangers of multitasking in the digital age.



Related Fare:

Is it Possible to Read Walden When You Own a Smartphone?

....................... Reading Walden and other books that operate at those lower, crunchier gears is an autological experience – the act of reading it all but compels you to adopt the mindset it describes. Whether this was on purpose or was just the way Thoreau’s mind worked, he knew something we need reminding of these days: Doing the right thing slowly and with difficulty will always be better than doing the wrong thing quickly and effortlessly. 



Fun Fare:




Pics of the Week:


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Saturday, January 4, 2025

2025-01-04

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


Economic and Market Fare:


The closely watched Santa Claus Rally period officially wraps up tomorrow. This historically strong seven-day stretch for stocks was first discovered by Yale Hirsch back in 1972. Hirsch, creator of the Stock Trader’s Almanac, officially defined the period as the last five trading days of the year plus the first two trading days of the new year.

The Santa Claus Rally usually generates a lot of headlines due to the market’s tendency to post strong returns over this short period — or perhaps it receives more attention because it occurs during a usually slow financial news cycle. Regardless, since 1950, the S&P 500 has generated an average return of 1.3% during the Santa Claus Rally period, with positive returns occurring 79% of the time. This compares to the market’s average seven-day return and positivity rate of 0.3% and 58%, respectively. Finally, back-to-back years of negative Santa Claus Rally periods are rare, occurring only in 1993–1994 and 2015–2016.


Another important aspect of the Santa Claus Rally period is its linkage to January and the following year’s returns. As Yale Hirsch put it, “If Santa Claus should fail to call, bears may come to Broad and Wall.” As highlighted below, historical data supports this adage. When investors are on the “nice” list and Santa delivers a positive rally, the S&P 500 has generated an average January return of 1.4% and an average following-year return of 10.4%. This compares to the respective average January and following returns of -0.2% and 6.1% when investors are on the “naughty” list and receive a negative Santa Claus Rally return.

........... December did not live up to its reputation of being a strong month for stocks, an important reminder that seasonality trends may represent the climate, but they do not always reflect the weather. The Federal Reserve has been the scapegoat for the selling pressure after policymakers delivered a hawkish rate cut earlier this month. However, we don’t believe they should take all the blame for the recent dip. Rates were rising well before the Federal Open Market Committee Meeting on December 18, while market breadth and momentum indicators were deviating from price action. Technical damage has been most acute on a short-term basis. The S&P 500 has dipped below its 50-day moving average but remains above its longer-term uptrend. However, we believe near-term downside risk remains elevated given the recent deterioration in market breadth and momentum, stretched bullish sentiment, and macro headwinds from higher rates and a stronger dollar.


DB: December, Q4 and 2024 Performance Review (via TheBondBeat)

2024 was another strong year for asset returns, as economic growth surprised on the upside and central banks finally began to cut rates. That meant the S&P 500 posted a total return of +25%, marking the first time since the late-1990s where it’s achieved back-to-back annual returns above 20%. The index was powered by further gains for the Magnificent 7, which were up +67%, and other risk assets did very well too. Indeed, credit spreads tightened further whilst Bitcoin more than doubled. Moreover, the US exceptionalism narrative helped push the US Dollar to its strongest annual close since 2001.

Yet despite the generally upbeat performance, there were plenty of bumps along the way. Rate cuts took longer than many expected, meaning that sovereign bonds struggled to gain traction. In fact, the 10yr Treasury yield rose for a 4th consecutive year, which is the first time that’s happened since the 1980s. Political developments also caused several wobbles, particularly around April as tensions in the Middle East escalated. Over in France, the country’s assets underperformed amidst the political uncertainty. And there was huge (albeit brief) market turmoil in the summer, as weak US data and a BoJ rate hike led to the unwinding of the yen carry trade. So with quite a few concerns still in the background, gold prices posted their strongest annual gain since 2010.

… Year in Review – The high-level macro overview
… Whilst global bonds recovered strongly over Q3, October was then their worst monthly performance since September 2022, back when the Fed were still hiking by 75bps per meeting. That was partly driven by strong economic data, as the US jobs report showed nonfarm payrolls were up +254k in September, with upward revisions. On top of that, the core CPI print for September also hit a 6-month high. And fiscal policy was back in focus as well, as prediction markets placed a growing probability that the Republicans would win the Presidency and both chambers of Congress, which was seen as raising the likelihood of fiscal stimulus compared to divided government. Meanwhile in the UK, the government announced additional borrowing in its budget, which contributed to a notable widening in the spread of gilt yields over bunds, with the 10yr spread moving above its 2022 peak when Liz Truss was PM.

…Which assets saw the biggest gains of 2024?
Equities: Global equity markets advanced across almost every region in 2024. The S&P 500 was up +25.0%, the STOXX 600 rose +9.6%, and Japan’s Nikkei advanced +21.3%. Emerging markets were relatively weaker, but the MSCI EM index still posted a +8.0% gain.

.............. As we look forward to the year ahead, it’s also worth remembering that none of the last 5 years have exactly gone to plan or consensus in the macro sphere. 2020 was the best example of that, with the pandemic making the 2020 outlooks redundant by the end of Q1. And since then, the surprises have kept on coming. After all, the surge of inflation in 2021 surprised virtually everyone if you look back at consensus forecasts. Then in 2022, markets were caught completely off guard by the most aggressive rate-hiking cycle since the 1980s. By 2023, the consensus was then expecting a US recession that didn’t happen. And in 2024, the upside growth surprises continued, and the S&P 500 has just seen its strongest two-year performance since the late-1990s …



......... Three consecutive years of double-digit gains don't happen too often. Nevertheless, that’s what we are expecting: We see the S&P 500 increasing 19.0% this year to 7000. However, we think it could be a bumpier ascent than in recent years, especially during the next couple of months. Fed officials are likely to be less dovish in the coming weeks. In addition, uncertainty about fiscal, trade, and immigration policies might continue to put upward pressure on bond yields. .............



But keep in mind that 'usually' does not mean 'always'

…Stocks rallied in 2024 with the S&P 500 climbing 23.3% to close the year at 5,881.63.

A resilient U.S. economy bolstered sales growth during the year. Meanwhile, corporations widened their profit margins, which amplified earnings growth. Already-high stock market valuations got richer — but this can be at least partly explained by the prospects for further margin gains and earnings growth in 2025 and beyond.

It’s the latest reminder that the stock market usually goes up.

If you feel uneasy about the >20% gain, you really shouldn’t. Gains of this scale are actually common.

As we discussed in October, you don’t earn long-term average returns by experiencing a lot of average years. You earn them by experiencing a lot of above-average years and some below-average years.

........


#137: The Sentiment Cycle and Late Stage Dynamics

......... The Last Bear Standing was born on Twitter on April 1, 2021 as a rebuttal to the mania of the day. The bull market that began with contrarian optimism around COVID a year prior had morphed into a frenzy, fueled by easy money, options, and social contagion — YOLO meets FOMO. Optimism led to ignorance and eventually an unwind — one that began almost exactly three years ago.

The bear market of 2022 was brief but punishing. Despite ongoing economic growth, stocks and bonds fell on fears of rising inflation, rapidly tightening monetary conditions, margin compression, global instability, macroeconomic pessimism, and an energy crisis. The tide of sentiment washed out — evidenced by declining margin debt balances, rising put volumes, and widening volatility indices, credit spreads.

But the economy did not crater — in fact, it proved far more durable than most expected, leaving a tall wall of worries to climb. By 2023, the trough in mega-cap tech earnings which had pummeled Nasdaq turned upwards. Massive new investment in infrastructure, manufacturing, and data centers reinvigorated the landscape. Interest rates steadied as inflation waned, banks were bailed out of their bad bets on duration, the commercial real estate implosion never arrived. As contrarian optimism became conventional wisdom, the new bull market took full swing.

Having climbed the wall of worries, 2024 was a year of extension. Extension in valuations, as expanding multiples provided outsize returns. Extension in leverage via margin debt and call options. Extension from demonstrated technological winners to speculative technological gambits. By the end of the year, it became impossible to avoid the déjà vu. Or, as I wrote in November, the market has Jumped the Shark.

In short, over the nearly four year history of TLBS, market sentiment seems to have come full circle. 




**Market Outlook:** Expect lower yields in 2025, limited reflationary trade, and lower inflationary pressures due to oil market dynamics and shelter component adjustments.

**Investment Strategy:** Favor bonds over stocks due to high starting valuations and tight credit spreads. Focus on income and diversification through individual bonds and closed-end funds.

**Risks and Opportunities:** Watch for economic slowdown in the US, potential growth scare, and geopolitical factors. AI investment and pro-growth policies could boost sentiment and corporate spending…......


In The Decades Of Surplus Productivity
  • Behavior of the U.S. Treasury yield curves continue to confuse and confound
  • Flatter figuratively forever
  • Don’t conflate yield volatility for price inflation
The irony in the fact that the only thing that is clear in this new year is that monetary policy is a mess isn’t lost on the Treasury market. This situation, of course, has been building for years as the surplus productivity led widening of the output gap has, by and large, been allowed to encroach across the entire economic landscape pushing labor’s share of income to 76 year lows and price volatility to new heights. These two results strike at the heart of the Fed’s dual mandate of full employment and stable prices which means that momentary policy is increasingly failing the economy as a whole; reflected in the the behavior of the yield curves. Given its generally silent and stealth approach, surplus productivity is the crucial piece that many continue to miss in today’s economic puzzle leaving many bewildered as to just what the Fed is doing or not doing enough of. However, if the ability to predict is the best test of any theory, then surplus productivity’s forecast impact on everything, much less the trending dynamics of the 2yr/30yr yield curve over these past 6 years proves that it is much more than a force to be dealt with; it is THE force to be reconciled with in the economy in 2025 and much beyond.


A key technical indicator hovers at levels last seen before the market peaked in 2022.

..... In the last five decades, the S&P 500 has gained more than 20% in a year on fifteen separate occasions. The average annual return of those years hovers at 27.3%.

In the 12 months after each of those strong performances, the index’s average return hovers at 14.1%, according to data from LPL Financial. 

......... Indeed, strategists across Wall Street remain bullish for 2025 with an average forecast of a 14% gain for the S&P 500, according to the 16 firms tracked by Opening Bell Daily. 

The Magnificent Seven stocks’ valuations continue to balloon, and analysts expect earnings growth to improve for names outside that batch, too. ...........




***** The Rules Of Bob Farrell – An Updated Illustrated Guide

.......... Bob was a Wall Street veteran with over 50 years of experience crafting his investing rules. Farrell obtained his master’s degree from Columbia Business School and started as a technical analyst at Merrill Lynch in 1957. Even though Farrell studied fundamental analysis under Gramm and Dodd, he turned to technical analysis after realizing there was more to stock prices than balance sheets and income statements. Farrell became a pioneer in sentiment studies and market psychology. His ten rules on investing stem from personal experience with dull markets, bull markets, bear markets, crashes, and bubbles. In short, Farrell saw it all and lived to tell about it.

With that said, let’s dive into Bob Farrell’s famous rules:

1) Markets tend to return to the mean (average price) over time. .......

2) Excesses in one direction will lead to an opposite excess in the other direction. ...........

3) There are no new eras – excesses are never permanent. .........

4) Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways ............

5) The public buys the most at the top and the least at the bottom. .........

6) Fear and greed are stronger than long-term resolve. ..........

7) Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names. .........

8) Bear markets have three stages – sharp down, reflexive rebound, and a drawn-out fundamental downtrend ..........

9) When all the experts and forecasts agree, something else will happen. ........

10) Bull markets are more fun than bear markets ...........



China Fare:

Overindebtedness, overbuilding and overcapacity are causing problems at home and abroad


China's top analysts expect Beijing to push for greater consumption and infrastructure investment to deal with Trump.


Economists Have Drawn the Wrong Lessons From the Failures of the 1930s

................................ Economists weren’t always so mixed up. In his classic 1944 book, International Currency Experience, Ragnar Nurkse wrote that “the devaluation of a currency is expansionary in effect if it corrects a previous overvaluation, but deflationary if it makes the currency undervalued.” Tariffs, which are close cousins of currency devaluation, act in the same way. They reduce domestic consumption and force up domestic savings rates. A country with low consumption and excess savings (like the United States in the 1920s or China today) tends to be one with an undervalued currency, in which case tariffs, like currency depreciation, are likely to be deflationary. But in a country with excessively high levels of consumption, like the modern United States, the same policy can be expansionary. Done under current circumstances, in other words, tariffs could increase employment and wages in the United States, raising living standards and growing the economy.



Quotes of the Week:

Melody Wright: In many ways I don’t feel like 2024 really happened. If 2023 was a blur, 2024 just felt like a high-speed car chase that went by even faster than 2023. So many headlines, so much drama, so many limited hangouts, so many frauds. Fact and fiction became impossible to discern, and by the end of 2024 I think we are all just a bit exhausted.



Charts:
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(not just) for the ESG crowd:



The third global threat: a politically induced systemic event

.................................... Machiavelli, if he were here to advise, would have warned that
There is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things.



We develop and implement a new method for identifying wasted subsidies and use it to provide systematic evidence of the misallocation of carbon offsets in the Clean Development Mechanism—the world's largest carbon offset program. Using newly constructed data on the locations and characteristics of over 1,000 wind farms in India, we estimate that at least 52 percent of approved carbon offsets were allocated to projects that would very likely have been built anyway. We estimate that the sale of these offsets to regulated polluters resulted in substantially higher global carbon dioxide emissions.





U.S. B.S.


The new year has kicked off with some truly bizarre and highly suspicious major news events. A US military veteran killed 14 people when he drove a pickup truck into a crowd in New Orleans early New Year’s Day and was then killed in a shootout with police. Hours later, another US military veteran reportedly blew himself up in a Tesla Cybertruck outside of the Trump International Hotel in Nevada.

Both men had worked at Fort Bragg (now called Fort Liberty), a large North Carolina military base which has become notorious for mysterious homicides, an epidemic of drug overdoses, and rampant child sex abuse. Both had also participated in the US occupation of Afghanistan, and both used the same app to rent their vehicles. ............

..... I don’t pretend to know what’s going on with all this. All I know is that as the US prepares to inaugurate a new president whose cabinet has been packed full of Iran hawks, it’s probably a good idea to remain intensely skeptical of any and all narratives which might be used to manufacture consent for more aggression in the middle east.





Geopolitical Fare:

Not the best of all years. Annus Horriblus.

Gaza: Genocide continues and seems likely to be successful. I’d guess the actual casualties are somewhere north of 700K at this point, they sure aren’t anywhere close to the official numbers.  Guess “never again” didn’t meany anything.

Hezbollah: Held the Israelis off on the ground, but were devastated by Mossad assassinations and terrorism (the cell phone attack) plus a bombing campaign against civilians they were unwilling to endure. Some signs the war may start up again after the 60 day ceasefire, but without air defense, I don’t think they have it in them to tough it out. Could be wrong.

Syria: I don’t know anyone who expected the Syrian army to collapse the way it did. Israel’s occupied an area about 4X that of Gaza and destroyed most of the Syrian army’s stockpiles, plane and air defenses. Syria’s pretty much defenseless. Some signs of a guerilla war starting against the new “government”. Meanwhile Turkey and its proxies are hammering the Kurds.

Iran: the leadership has proved extremely cautious, though the youngs in the Revolutionary Guard are not and when Khamenei dies, there may be a change in policy. Proved that Israel can’t stop their missile attacks, but unwilling to use them except under extreme provocation and pressure from the youngs. Lost their Syrian ally and Hezbollah has taken hard hits, while the population has lost faith in the system. Not a good year for them.

Russia: continues to grind forward in Ukraine. Economy is doing very well, thanks and they’re now arguably the 4th largest economy in the world, having overtaken Germany. Solid alliance with China. Pretty good year, actually.

Ukraine War: Russia’s winning and all signs are that the Ukrainian army is running out of manpower. Assuming Putin doesn’t accept a peace deal (he shouldn’t, unless Trump offers a better deal than Trump’s likely to offer) I expect the Ukrainian army to collapse in 2025 and the war to go big arrow. Most likely the war will end in a humiliating surrender, perhaps even an unconditional one.

Europe: Industrial collapse, especially in Germany. Germany and France are now ungovernable by either the center-right or left. France is being kicked out of Africa. China is buying fewer and fewer German cars and European goods. America is cannibalizing European industry thanks to lower energy costs. Without a massive turnaround in policy Europe is headed for a massive decline. Wouldn’t expect EU collapse in 2025, but 2026 is possible.

America: Continues its slow decline. Cannibalizing its allies industry to try to sustain itself. Largely unable to create new tech outside of the information sector. Costs are insane, the rabble are getting uppity and Trump is likely to pursue policies better for oligarchs than ordinary people. Loss in Ukraine will be a huge hit to American prestige and power.

Massive eighteen percent increase in homelessness, even as billionaires have doubled their wealth since 2020.

Yemen: The only truly moral nation in the world, as the only one going all out to try and stop a genocide. I don’t like their ideology much, but when they’re the only people standing up, so what?

Anglosphere (Canada, Britain, Australia): experimented with massive immigration and its skyrocked housing and rent and caused massive political instability. Labour and the Canadian Liberals will lose their next elections, but the people who will replace them are Trump-style tards and decline will continue even as looting of the public sector intensifies.

China: Slowing growth but still doing fine, thanks. Massive investment in industry, has taken the lead in about 80% of tech fields, including electric vehicles and drones. Pumping out naval vessels like there’s no tomorrow and has over a 1,000 ICBMs now. Moving up the semiconductor chain far faster than almost anyone (except me) predicted. Eating America and Europe’s lunch in the developing world, since they offer cheaper goods, development and loans without the hypocritcal lectures about human rights.

Generally speaking the decline of the American empire, the rise of a new cold war, the end of neoliberal globalization and the age of revolution and war are all on track as I predicted years ago. Climate change is accelerating, we’re ignoring it and morons are worried about population declines when humanity is in vast population overshoot. This isn’t the worst year of you lives, it’s the best year of the rest of your lives in geopolitical, economic and ecological terms.

Annus Horribulus will return next year.


How energy and resource depletion undermined the post WWII world order and democracy

First, some background
Let’s start with the basics driving all this upheaval around the world: energy. Industry, (geo)politics and the economy are all functions of affordable energy, and that practically means fossil fuels. Like it or not, we live in a self-destructing economic paradigm, where all of our essential technologies — from concrete to iron and steel, or from fertilizers to plastic and transport fuels — are solely based on high carbon-density fuels. Despite causing climate and ecological mayhem — as well as being very much finite — industrial civilization remains hopelessly dependent on them. Bad news is, that no proposed alternative so far has proved to have the potential to take their place soon enough and at an adequate scale to prevent both an economic and ecological collapse.

Simply put: there is no such thing as an “energy transition”. It’s a myth. All proposals, from wind and solar to hydrogen, depend on minerals mined, delivered and refined by using these polluting fuels in copious amounts. As soon as the extraction of fossil fuels begin to decline, you can bet that the production of solar panels and wind turbines will eventually follow suit. And since diesel fuel is also used to grow and deliver crops, the question whether to burn it to mine minerals for EV batteries, or use it to grow food to prevent hunger will resolve itself rather quickly. And only when you add our propensity for war whenever resources grow thin, you start to really appreciate the relative peace and calm we have today. .............................................

Political Implications
I find it harder and harder to talk about the real life implications of energy and resource depletion without addressing the hot mess people call ‘politics’ downstream to it. Keep in mind, though, that state affairs are just theater, an emotional roller coaster ride designed to manufacture consent for more war, and to divert your attention away from the obscene levels of social inequality and the terrifying levels of ecological destruction. And what did our corporate-oligarchic elite — infesting both sides of the political divide — do while you were not watching? They have demolished what little remained of our democratic institutions, and used their media apparatus to hypernormalize even the weirdest of things happening (or just bury them under a pile of irrelevant manure). ........................................

................. So treat the following list of events lightly, and always keep the larger context in mind:
  • Trump won the election after multiple attempts on his life (one of which almost got through).
  • Governments of the two largest EU economies fell in quick succession: first in France, then in Germany. In both cases (beyond the usual political theater) one can find deficit spending and a collapsing real economy as root causes for their malaise.
  • Elections got annulled in Romania on dubious claims; but not independent from the fact that an alternative candidate had a significant chance of winning it. So much for democracy.
  • Moldova and Georgia, two countries outside the EU (and with significant number of Russian residents as well as expats living in Russia), experienced a massive pressure campaign from the EU to elect a pro-western leader. In the case of Moldova, they succeeded, and no protests, sabotage, or anything similar followed. In case of Georgia, following an election where no outside interference has been proved so far and which a pro-independence party won by a huge margin, revolts were “spontaneously” organized, the French born president failed to step down peacefully and the country was hit by sanctions.
  • The Syrian state collapsed in an insurgency led by western backed “moderate rebels”. With it the Axis of Resistance led by Iran has also came to an end, with Russian military presence in the country likely to follow suit.
  • The South Korean president has launched a failed coup against his own parliament, and planned to start a limited war with North Korea (together with sending even more weapons and troops to Ukraine to fight alleged North Korean soldiers there).
  • After crossing all possible red lines, Russian territory (in Kursk of all places) was invaded by a NATO trained, armed and led force (containing French, Polish, English and Romanian elements) presumably to capture the nuclear power plant there. A few months later, long range missiles were lobbed on Russian territory — based on western satellite intelligence and with the help of NATO personnel programming targeting data into these armaments (1).
  • In response to these events, the Yuzhmash missile factory and armored vehicle maintenance site in Dnipro, Ukraine was hit by an entirely new hypersonic weapon, the Oreshnik (a road mobile rocket-system with a range of 5500 km and a speed of 10–12 Mach).
  • Both Russia and Europe, as a result of these escalations, warned their citizens to prepare for a hot war in the coming years.
  • Last week, a high ranking general in Moscow was assassinated. Who, by the way, was collecting hard evidence on Western military involvement in biological and chemical warfare labs and activities from Syria to Ukraine.
  • The incoming US president has threatened Greenland, Panama, and Mexico with taking control over their territories / assets, and called Canada the 51st state.
Viewed in the larger context of energy and resource depletion what we have here is not an isolated war in Europe or the Middle East between a country and its neighbors, or some random political events around the world, but a global war between western and Eurasian powers waged on many fronts.  .................................






Apparently Donald Trump wants to bring it back under American control. Here's a crazier idea



Sci Fare:

Short sleepers cruise by on four to six hours a night and don’t seem to suffer ill effects








Other Fare:

Welsh: Tracking the Signs of Decline in America

If you want to be a decent analyst, let alone a forecaster, you need to know how to find real information. A lot of official statistics are either useless (inflation, unemployment numbers) or misleading. ...........



Escaping from the matrix of the mainstream western worldview is like escaping from a cult: it starts with one tiny heresy. One small, secret thought that goes against all your indoctrination.

Maybe it’s the realization that you’ve been lied to your whole life about Israel and Palestine. Maybe it had something to do with watching the mass media manufacture consent for the invasion of Iraq. Whatever it is, it starts out as a tiny little mental suspicion that the information sources you’ve been trusting to help form your understanding of the world might not be nearly as trustworthy as you’d been led to believe. ................

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Those are the kinds of sparks we’re trying to get flying when working to wake people up from the indoctrination of the empire. We’re trying to get those first tiny heresies to form in people’s minds, using whatever’s happening in the news at the moment or whatever relevant ideas are trending.

We don’t need to get anyone to wake all the way up in one go — we just need to get the snowball rolling. ...............

Every day there’s something coming up that you can show anyone who will listen to you, saying, “See? Look at that! They lied! They’re lying right now! I wonder what else they’re lying about?” .........



When Avril Haines, Director of National Intelligence, announced during Event 201’s pandemic drill in 2019 that they would “flood the zone with trusted sources,” few understood this preview of coordinated narrative control. Within months, we watched it unfold in real time—unified messaging across all platforms, suppression of dissent, and coordinated narrative control that fooled much of the world.

But not everyone stayed fooled forever. Some saw through it immediately, questioning every aspect from day one. Others thought it was just incompetent government trying to protect us. Many initially accepted the precautionary principle—better safe than sorry. But as each policy failure pointed in the same direction—toward more control and less human agency—the pattern became impossible to ignore. Anyone not completely subsumed by the system eventually had to confront its true purpose: not protecting health or safety, but expanding control.

Once you recognize this pattern of deception, two questions should immediately arise whenever major stories dominate headlines: “What are they lying about?” and “What are they distracting us from?” ..............

The template is consistent: Saturate media with emotional spectacles while advancing institutional agendas with minimal scrutiny. ........................

Most revealing is what they don’t cover. Notice how quickly stories disappear when they threaten institutional interests. Remember the Epstein client list? The Maui land grab? The mounting vaccine injuries? The silence speaks volumes.  .....................

These decisions aren’t accidental—they result from media ownership, advertiser influence, and government pressure, ensuring the narrative remains tightly controlled. .......................

The hardest truth isn’t recognizing the programming—it’s confronting what it means for human consciousness and society itself. We’re watching real-time evidence that most human minds can be captured and redirected through sophisticated psychological operations. Their thoughts aren’t their own, yet they’d die defending what they’ve been programmed to believe. ......................



If a large chunk of the public can be persuaded that a man who is incapable of finding the door is “sharp as a tack,” they can be made to believe a lot of other things too...

Only in the world of political make-believe we inhabit in the West would The Wall Street Journal’s account of Biden’s years-long cognitive decline, and its concealment by his officials, count as a scoop.

And only in a world in which the billionaire-owned media alone constructs and polices what counts as reality would the WSJ be able to run this story without also being expected to consider what it signifies about America’s professed democracy.

The emperor, we are now told, was naked all along. How did it take more than four years for the fearless, tenacious billionaire-owned media to notice? ...........

But more significant than the media deceptions are the fact that much of the public fell for them, not once but over and over again: day after day, week after week, month after month, year after year.

Why? Because far too many of us are in the grip of the West’s propaganda system. We believe that the billionaire-owned media is to be trusted, that it serves the public good, not private wealth.

If a large chunk of the public can be persuaded that a man who is incapable of finding the door through which he’s supposed to leave is “sharp as a tack”, then why would they not also believe that the United States is promoting democracy as it has laid waste to the Middle East over the past two decades to control the region’s oil?

Or that Washington is seeking peace for the world and Ukraine by arming it with ever-more offensive weapons against a nuclear-armed Russia so that the U.S. can place ballistic missiles on Moscow’s doorstep?

Or that the U.S. wants a ceasefire in Gaza even as it supplies the munitions, intelligence and diplomatic cover for Israel to carry out a genocide there?

The problem is that, subjected to a lifetime of elite propaganda, many are readier to believe that very propaganda than the evidence of their own own eyes. They are truly hypnotised. ..........

Does the U.S. run by itself? Does it need a president? Or is the president nothing more than a figurehead for a permanent bureaucracy that expects to wield power from the shadows, unobserved by voters and unaccountable to them? Is the U.S. a democracy, or is the democracy just a facade behind which a wealth elite maintains its power?

Biden has given us the answer. Were you listening?



QOTW:

Taibbi: If you’re in the growing population of Americans that is tired of being fed streams of sensational and inexplicable news stories, while authorities that appear to delight in public confusion sit back with buttoned lips, yesterday might have been the last straw. We are officially Gaslit Nation



Fun Fare:




Pics of the Week:


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