Zero­Hedge News

• Luongo: China Queues Up To Join The Davos Beat­down
  Luongo: China Queues Up To Join The Davos Beat­down

  Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

  The head­lines are full of abject ter­ror that Germany’s vaunted indus­trial base can col­lapse, and with it the bank­ing sec­tor, if Rus­sia pulls all nat­ural gas supplies.

  Of course, this is exactly what the EU said they wanted, and the ques­tion now is will they get it, to quote H.L. Mencken, “good and hard.”

  So, finally, after destroy­ing their own econ­omy, the politi­cians in Europe are con­sid­er­ing the right ques­tion, “Did we do this to ourselves?”

  The Euro’s col­lapse yes­ter­day morn­ing to a new twenty-​year low below $1.03 is answer­ing a resound­ing, “Yes. Yes you did.” I’m sure the board at Uniper, now star­ing at a $9+ bil­lion bailout after Vice-​Chancellor Robert Hae­beck and the rest of his Green/​Neocon zealots destroyed their invest­ment in the Nord­stream 2 pipeline, would agree with the market.

  And so much of this is because now the mar­kets are fully hand­i­cap­ping a global reces­sion based on a spate of ter­ri­ble eco­nomic news, includ­ing Ger­many run­ning a trade deficit in May for the first time in 30 years.

  So much for that argu­ment that Europe has a pos­i­tive cash flow state­ment and can’t/won’t break down because of it, c.f. my pod­cast from Feb­ru­ary with Peter Boockvar.

  But to under­stand why things are accel­er­at­ing this quickly, beyond the Fed’s hawk­ish­ness, I think it’s high time we look at what China’s role in this is and will be.

  There’s been a lot of dis­cus­sion about China’s lock­down pol­icy since the begin­ning of the War in Ukraine.

  What did it mean? Are they seri­ously para­noid or was this their very Chi­nese way of sup­port­ing Russia’s efforts in Ukraine by exac­er­bat­ing the mas­sive sup­ply chain break­down cre­ated by Davos’ Coro­n­apoc­a­lypse? You know I side with the lat­ter position.

  So, after a suc­cess­ful BRICS Sum­mit which saw both Iran and Argentina apply for mem­ber sta­tus (and China invit­ing Saudi Ara­bia to join it and the SCO), China announced a week ago they are loos­en­ing the COVID restric­tions on for­eign trav­el­ers into the country.

  China unex­pect­edly slashed quar­an­tine times for inter­na­tional trav­el­ers, to just one week, which sug­gests Bei­jing is eas­ing COVID zero poli­cies. The nation­wide relax­ation of pan­demic restric­tions led investors to buy Chi­nese stocks.

  Inbound trav­el­ers will only quar­an­tine for ten days, down from three weeks, which shows local author­i­ties are eas­ing dra­con­ian curbs on travel and eco­nomic activ­ity as they worry about slump­ing eco­nomic growth sparked by restric­tive COVID zero poli­cies ear­lier this year that locked down Bei­jing and Shang­hai for months (Shang­hai finally lifted its lock­down mea­sures on May 31).

  The result is, as Zero­hedge pointed out at the time, the return of cap­i­tal inflow to China’s equity mar­kets on the announce­ment. But the mar­kets had been fore­cast­ing cap­i­tal flight into China for weeks since bot­tom­ing in April.

  That said, this is a per­fect exam­ple of what I talk about all the time with respect to poten­tial changes in the US polit­i­cal sit­u­a­tion. Mar­kets are always look­ing for changes in inten­tions by the polit­i­cal class.

  These lit­tle changes are seen by traders and investors as edges to be played. They may not pan out, but are bets based on a prob­a­bil­ity cal­cu­la­tion of a state change in pub­lic policy.

  To this end, Fun­gal Joe is going to lift the Trump tar­iffs on Chi­nese imports this week to buy votes by hop­ing infla­tion mod­er­ates. I’m okay with him doing this try­ing to right the ship. Tar­iffs are never the answer, just like sanc­tions. Notice also this has zero to do with mon­e­tary pol­icy and every­thing to do with sup­ply dis­rup­tions caused by gov­ern­ment diktat.

  This change by China sig­nals an inten­tion by the CCP to open China back up to tourism and busi­ness devel­op­ment that isn’t likely to be reversed. I expect this to be real and for China to make even more lit­tle moves like this as the sum­mer drags on and mar­kets churn in the West.

  With that change, cap­i­tal inflow lessens the pres­sure on both the Hong Kong dol­lar (HKD) and the Hang Seng while giv­ing China more cover to loosen mon­e­tary pol­icy with­out nec­es­sar­ily rais­ing rates and cre­ates another place for cap­i­tal to flow now that the ECB has capitulated.

  Chris­tine Lagarde’s recent state­ments about fight­ing infla­tion being “more art than sci­ence” is just say­ing the quiet parts out loud. But it was what came out of the ECB’s emer­gency meet­ing a cou­ple of weeks ago that finally sig­naled the end for the euro in the minds of investors.

  Not only is Germany’s indus­trial base being lit­er­ally destroyed glee­fully by its gov­ern­ment, now the ECB is going to sell Ger­man debt to buy Ital­ian and Span­ish debt to keep from drown­ing. This is akin to bail­ing water out of one end of the boat only to throw it in the other end.

  Cou­ple these things with the frankly, dis­as­trous G-​7 Sum­mit where the biggest col­lec­tion of unse­ri­ous buf­foons gath­ered to ban the sale of Russ­ian gold and con­tem­plate a global price cap on oil.

  … words fail me.

  Hon­estly, after this G-​7 the rush into the BRICS Alliance as well the Eurasian Eco­nomic Union (EAEU) will be unstop­pable. What seri­ous investor with real cap­i­tal appre­ci­a­tion goals is going to look at this group of com­mit­ted (and com­mit­table) lunatics and think, “Yes! I can trust my money with Boris John­son, Joe Biden and Ursula Von der Leyen!”

  No, they are look­ing at this crap and open­ing up Tradestation.

  The fact that Justin Trudeau was even invited should have been your sell signal.

  While the BRICS were talk­ing about a new trade set­tle­ment cur­rency and adding mem­bers, the G-​7 was talk­ing World War III while get­ting caught spend­ing more time on photo ops than sub­stan­tive dialogue.

  Unse­ri­ous peo­ple with sopho­moric ideas and an anti­quated sense of their global impor­tance (espe­cially true of the UK and Ger­many) is not a recipe for global cap­i­tal inflow over the long term.

  When you look at the fragility of the EU, the UK, and Canada you real­ize that the only thing prop­ping up global mar­kets at this point is the hope that the U.S. mid-​terms are a com­plete refu­ta­tion of the Davos agenda.

  If that doesn’t hap­pen, if some­how Soros and Davos steal enough seats and put a bunch of RINOs back into Con­gress and the Sen­ate to freeze any reform of Wash­ing­ton D.C. the col­lapse of the West will accel­er­ate very quickly.

  Again, go back to what I said at the out­set, the mar­kets are look­ing for early indi­ca­tors, edges, they can play to front run a big change in a country’s domestic/​foreign policy.

  If the US has an hon­est polit­i­cal rev­o­lu­tion in Novem­ber replete with the stir­rings of enti­tle­ment reform and fis­cal san­ity while the Fed con­tin­ues rais­ing rates, then that would be a mas­sive buy sig­nal for not only the US but also China.

  If not the US begins its col­lapse and hap­pens for mul­ti­ple reasons.

  The first is obvi­ous. Insane Pro­gres­sives and Com­mies will be embold­ened to destroy what’s left of the Rule of Law in the US.: pack the SCO­TUS, ban guns, etc.

  That will send cap­i­tal flee­ing to rel­a­tively safe places like Pakistan.

  The sec­ond is almost as obvi­ous. It will con­firm and solid­ify for a crit­i­cal mass of peo­ple that the gov­ern­ment is irre­deemable and it’s time for either a new con­ven­tion of States, per my recent con­ver­sa­tion with Bill Fawell, or seces­sion as the only real options left.

  Because when all peace­ful means of revolt are taken away from peo­ple, vio­lence ensues.

  While these evil peo­ple think they are unas­sail­able, the real­ity is that they are not. If you doubt me, go look at video of the Dutch Farmer’s Rev­o­lu­tion for con­fir­ma­tion of just how angry peo­ple truly are.

  None of the issues sur­round­ing the Dems have worked at this point.

  No amount of SSRI-​addled, known-​to-​law-​enforcement-​enabled shoot­ings will roll out gun con­trol in the US.

  No amount of screech­ing from unfuck­able purple-​hairs will bring back Roe v. Wade.

  No amount of sex­ual deviance at the pub­lic schools will usher in legal­ized pedophilia.

  These are the posi­tions Democ­rats have staked their future as a party on and most of Amer­ica is sin­cerely fed up with it while their busi­nesses are looted, their bank accounts are emp­tied and their kids sexually-​assaulted at school by strippers.

  This is why I fully expect voter fraud costs to soar this Novem­ber and for the 2000(00) Mules strat­egy to fail as a result. Proud Boys and Oath­keep­ers will gladly stand out­side drop boxes look­ing for some douchebag with a hand­ful of fake bal­lots to “question.”

  This means they will just print votes out of thin air, but they can only really do that in places like California.

  China open­ing back up for busi­ness is good news. End­ing COVID restric­tions are nec­es­sary to shift­ing the flow of cap­i­tal from mat­tresses back into the global econ­omy. But it won’t hap­pen fast enough with­out a polit­i­cal rev­o­lu­tion in the US to stave off a year or two of messy activ­ity as sup­ply chains reroute.

  If China opens up more and the mid-​terms are a blowout for nor­mal peo­ple there is ample room for the Fed to keep going higher with rates from a US gov’t bud­get per­spec­tive. A good arti­cle recently from Wolf Street reminds us (and me) that only new debt is sub­ject to the higher rates the Fed is now charging.

  We have his­tor­i­cally low debt ser­vic­ing costs.

  The bud­get is still a mess and it’s why enti­tle­ment reform is the key polit­i­cal issue going for­ward. So, if Soros wins this fall and Davos remains firmly in con­trol of Wash­ing­ton, then there is no hope for America’s future as a 50-​state com­pact. They will burn the rest of this coun­try to the ground before giv­ing up con­trol of it.

  Even if the mid-​terms go well, the tran­si­tion period before the new Con­gress is sat will be horrific.

  Between now and then expect them to push a NATO casus belli in Ukraine on us to try and save Biden’s Depends bud­get, Johnson’s ter­ri­ble hair and Scholz’s saggy man boobs.

  This is how they will counter China mov­ing to attract cap­i­tal, by start­ing another war.

  The prob­lem for all of them is that China ulti­mately wins either way. All they will do is delay the inevitable because as I pointed out the other day, there isn’t the pro­duc­tive capac­ity TODAY to fight a two-​front war in Europe and the Pacific.

  If NATO moves on Rus­sia, China will move on Tai­wan.The Rus­sians are sali­vat­ing at the prospect of the Brits com­ing in to fight them in Ukraine to free up the US to take on China.

  And the West will lose both wars simul­ta­ne­ously, on the off-​chance the whole thing doesn’t go nuclear. I do believe push­ing the US into polit­i­cal cri­sis is the ulti­mate Davos play here. The prob­lem is, since Putin moved on Ukraine the way he did, there is no pulling that off with­out atom­iz­ing Europe in the process.

  So, for once, Davos is star­ing at a Hobson’s Choice rather than their vic­tims. That Vlad, what a card!

  China doesn’t want war with the US any­more than Rus­sia does. So open­ing up China’s econ­omy and Biden lift­ing tar­iffs here are the right capital-​attracting moves to force even more insta­bil­ity on Europe.

  If we avoid WWIII, along with the Fed putting Con­gress in a fis­cal straight­jacket, then we can effect real polit­i­cal change in the US

  Every­one wins.

  I do believe this is the sin­gle most impor­tant point every other ana­lyst has missed over the past cou­ple of years. The point of beat­ing Davos is to stop WWIII, stop the messy dis­so­lu­tion of the US which would be a cat­a­stro­phe for every­one, and end the cycle of vio­lence which has emanated from the Euro­pean colo­nial pow­ers for centuries.

  The US can sur­vive this fis­cally and polit­i­cally. The SCO­TUS just flipped off the com­mies. The peo­ple are reject­ing woke anti-​storytelling like Lightyear and nearly every­thing Net­flix and Ama­zon pro­duce.

  Seen recently in the Finan­cial Times, even Black­rock is see­ing the light.

  This tells me that Blackrock’s bal­ance sheet is in seri­ous trou­ble. It tells me their AUM is falling and their ESG/​DEI strat­egy is gut­ting the com­pany from within. I wouldn’t doubt for a sec­ond that Larry Fink bet the farm on Obama/​Schwab get­ting rid of Pow­ell and now they are star­ing at a col­lapse as Pow­ell says, “My turn.”

  For all of their power, this is still a com­pany with just $36 bil­lion in share­holder equity. Apple sells that many iPhones in 2 months.

  I’d love noth­ing more than to see Black­rock become the next Lehman Moment. I’m sure most of Wall St. wouldn’t either. There is blood in the water folks and the sharks are cir­cling Europe. Maybe Jamie Dimon will change his mid­dle name to Bruce just to make the point clear to everyone.

  I’m sad I gave up popcorn.

  * * *

  Join my Patreon if you like Popcorn

  Tyler Dur­den Wed, 07/​06/​2022 — 21:25
• Mass Shoot­ing By Two Ille­gal Immi­grants In Rich­mond Foiled by Tip­ster: Police
  Mass Shoot­ing By Two Ille­gal Immi­grants In Rich­mond Foiled by Tip­ster: Police

  Police claim a tip from a con­cerned cit­i­zen foiled a planned mass shoot­ing at an evening July 4^th cel­e­bra­tion at a packed Rich­mond amphitheater.

  Now, 52-​year-​old Julio Alvardo-​Dubon and 38-​year-​old Rol­man A. Bal­acar­cel sit in the Rich­mond city jail, each ini­tially charged with being a non-U.S. cit­i­zen in pos­ses­sion of a firearm. Both are Guatemalans in the United States ille­gally, and it’s been claimed at least one has already been deported mul­ti­ple times.

  Appar­ently reflect­ing the fact that he was only charged with ille­gal pos­ses­sion, Alvardo-Dubon’s bond was set at just $15,000, and it isn’t clear if he’s already been released, accord­ing to the Asso­ci­ated Press. There’s no report yet of Balacarcel’s bond.

  At a Wednes­day after­noon press con­fer­ence, Rich­mond police chief Ger­ald Smith cred­ited a “hero” cit­i­zen who called police after over­hear­ing a con­ver­sa­tion about a planned mass mur­der at the city’s July 4^th cel­e­bra­tion at Dog­wood Dell, a 2,400-seat amphithe­ater in the city’s Byrd Park.

  “There’s no telling how many lives this cit­i­zen saved with one phone call,” Smith said. The tip came in on July 1. That same day, police pro­ceeded to a res­i­dence on the 1000 block of Colum­bia Avenue.

  Smith said Alvarado-​Dubon con­sented to police enter­ing with­out a war­rant. “Once inside that res­i­dence, they saw evi­dence in plain view that cor­rob­o­rated the witness’s state­ment,” said Smith, who later spec­i­fied that the evi­dence was “firearms in plain view.”

  Under advice from the Depart­ment of Home­land Secu­rity, police arrested Alvarado-​Dubon for being an alien in pos­ses­sion of a firearm, and seized two assault rifles, one hand­gun and 223 rounds of ammunition.

  Rich­mond police then put sur­veil­lance on Bal­acar­cel, whom Smith described as Alvardo-Dubon’s room­mate. On July 5, police con­cluded they had prob­a­ble cause to arrest Bal­acar­cel on the same charge, and did so near Char­lottesville, Vir­ginia.

  “Their intent was to con­duct a mass shoot­ing at our Fourth of July cel­e­bra­tion,” said Smith, who gave no indi­ca­tion that police found spe­cific evi­dence of the plot, or that either of the two con­fessed to it.

  A motive has not yet been iden­ti­fied, nor have police deter­mined how the duo acquired the weapons. Smith said nei­ther had a record of pre­vi­ous engage­ments with Rich­mond police.

  A reporter at the press con­fer­ence said his sources indi­cate at least one of the two has been deported mul­ti­ple times, asked Smith how he felt about it. “It can be frus­trat­ing when things like that occur, that peo­ple who shouldn’t actu­ally be here are crim­i­nals [and] actu­ally con­tinue to be able to do those types of things.”

  Tyler Dur­den Wed, 07/​06/​2022 — 21:05
• Investors Take Bit­coin Off Exchanges As Crypto Win­ter Set­tles In
  Investors Take Bit­coin Off Exchanges As Crypto Win­ter Set­tles In

  By Imman­ual John Mil­ton, Bloomberg Mar­kets Live com­men­ta­tor and reporter

  As the crypto win­ter deep­ens, only the staunchest Bit­coin investors are still hold­ing onto their tokens — but not on the exchanges.
  Investors in the world’s biggest cryp­tocur­rency are going into hiber­na­tion mode with on-​chain activ­ity drop­ping by 13% in early July from November’s highs — lev­els last seen in the bear phases of 2018 and 2019 when Bit­coin was worth less than $10,000 – accord­ing to a Glassnode analysis.

  The risk-​off mar­ket mood is spread­ing to the cryp­tocur­rency exchanges as investors with­draw and stow their coins off-​line in crypto wal­lets instead. The exchanges have seen their bal­ances drop more than 20% from a Jan. 20 peak, accord­ing to Glassnode.

  “Bit­coin has seen a near com­plete expul­sion of mar­ket tourists, leav­ing the resolve of HODLers as the last line stand­ing,”accord­ing to a Glassnode newslet­ter dated July 4. Bit­coin fell below $20,000 last month for the first time since 2020.

  While sev­eral activ­ity lev­els — a demand indi­ca­tor — have trended down­ward in recent weeks, there still appears to be a sta­ble holder base, as prices hover around $20,000. HODLers — stal­wart investors who refuse to sell — are evi­dent as Glassnode says rel­a­tively flat trans­ac­tion activ­ity shows con­tin­ued Bit­coin consolidation.

  Key lev­els to watch for Bit­coin are $18,910, a level that prices have dipped below twice in mid-​June, and $21,557, around its late-​June highs, accord­ing to Craig John­son, chief mar­ket tech­ni­cian at Piper San­dler Companies.

  “There’s no fun­da­men­tals for crypto, of course. It’s just purely price action,” John­son said in an inter­view on Fri­day. “You’re just going to look at this and say, until you break out of that range — up or down — you are not going to make any con­clu­sion that there’s a trend change yet. We’re just short-​term con­sol­i­dat­ing in the con­text of a longer-​term downtrend.”

  A close above $26,000 or $28,000 could finally put a stop to the down­ward slide the token has been on since April, John­son said.

  The rout in Bit­coin has hit Coin­base Global Inc. the hard­est as the exchange saw a drop of 450,000 Bit­coin over the last two years. Binance, which recently part­nered with Tik­Tok cre­ator Khaby Lame and soc­cer star Cris­tiano Ronaldo, has seen an increase of 300,000 Bit­coin over the same times­pan, mak­ing it the most pop­u­lar Bit­coin exchange, per Glassnode and TXMC.

  Recent breaks in oper­a­tions, such as Coinflex’s and Vauld’s pause in with­drawals and CoinLoan’s reduc­tion in with­drawal amounts, have decreased investor trust in exchanges. Illiq­uid sup­ply increased by 223,000 Bit­coin in June as investors migrated funds to wal­lets from exchanges, accord­ing to Glassnode data. Of that 223,000, large-​scale crypto hold­ers made up much of that out­flow from the exchanges as they with­drew over 140,000 tokens in June. These whales have been respon­si­ble for exchange out­flows of almost 8.7 mil­lion, or over 40% of the global sup­ply of Bitcoin.

  “The Bit­coin bear is in full swing, and in its wake, the HODLers of last resort are the last ones stand­ing,” Glassnode said.

  Tyler Dur­den Wed, 07/​06/​2022 — 20:45