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Bari Weiss: What Should Be Done To Curb Big Tech?

Bari Weiss: What Should Be Done To Curb Big Tech?

Authored by Bari Weiss via Common Sense with Bari Weiss,

Do your eyes gloss over when you see the words “Section 230 of the Communications Decency Act”? Mine do.

Yet the subject of…

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Bari Weiss: What Should Be Done To Curb Big Tech?

Authored by Bari Weiss via Common Sense with Bari Weiss,

Do your eyes gloss over when you see the words “Section 230 of the Communications Decency Act”? Mine do.

Yet the subject of Big Tech’s might — Should Facebook have the power to ban a president? Should Amazon have the power to ban the sale of a controversial book? Should Twitter have the power to permanently bar a user over a single tweet? And if not, what should the government be doing about it? — is both fascinating and incredibly important.

Supreme Court Associate Justice Clarence Thomas at the swearing-in ceremony for Amy Coney Barrett in October (Tasos Katopodis/Getty Images)

I don’t think there is a group left in America who is happy about the power that companies like Facebook and Twitter and Google have arrogated to themselves. According to a recent poll from Vox and Data for Progress, 59% of Democrats and 70% of Republicans think Big Tech’s economic power is a problem. It’s hard to think of another issue with that kind of bipartisan consensus.

The nature of your anger, of course, depends on where you sit. (Twitter’s decision to ban Trump in January found 87% approval from Democrats and a mere 28% of Republicans in the same poll.) But the point is that this subject touches everyone. 

So why is so much of the writing about tech so confusing? One of the reasons it confuses, I think, is that the loudest “progressive” and “conservative” arguments are the opposite of what you’d imagine.

Progressives are supposed to be against corporate power. And yet on this subject, they are the ones pushing for more of it. They are enraged that these companies don’t crack down harder on “disinformation,” arguing that the Zuckerbergs and Dorseys of the world put profit above principle when they allow groups like QAnon to run wild on their platforms. Sure, President Trump was banned, but only after he lost the election. Why didn’t it happen earlier? Private companies are not hamstrung by the First Amendment, so why do they hesitate to ban dangerous people whose online words lead to real-world violence?

Conservatives are supposed to be for small government and allergic to sweeping intervention. And yet some of the country’s most prominent Republicans find themselves arguing against free enterprise. The crux of their argument, pushed most passionately by Senator Josh Hawley of Missouri, goes like this: The law is handing Big Tech companies a ridiculous and unfair advantage. Section 230 grants companies like Twitter protection from the kind of legal liability that makes a traditional publisher, like a newspaper, vulnerable. Why should tech companies have that privilege, given that they obviously make editorial decisions? Fairness would begin with a repeal of Section 230.

I’m not a person typically accused of being indecisive. But about this issue I feel genuinely torn. 

One part of me says: Government should stay the hell away from private companies. Another part of me, maybe the more passionate part, argues back: Yeah, but Google seems much more like a public road than a private club. 

The case for the former — government, stay out — has been made powerfully by former Michigan congressman Justin Amash and the libertarians of Reason Magazine. Their argument is the classic one: the solution for bad speech is more speech, not censorship or regulation. If you want a sense of what it would look like to get the government involved in tech, well, just pay a visit to the DMV. Or watch Lily Tomlin’s classic SNL sketch about the phone company: “We don’t care. We don’t have to. We’re the phone company.”

But others, most notably NYU law professor Richard Epstein, have made a strong case for the latter. Epstein has argued that these internet behemoths need to be understood as public utilities or common carriers. Just as a railroad can’t refuse to transport a person because they believe the Earth is flat, or a phone company can’t drop a call if the person is talking about Pizzagate, neither should online monopolies have the power to do so. 

It’s a provocative and compelling argument that turns, of course, on whether these companies are, in fact, monopolistic. Those making it would point to some basic numbers. Among them: When Google’s Search engine accounts for 90% of market share can anyone convincingly argue that DuckDuckGo is a real competitor? If Amazon, which has an 80% market share in digital books, blocks the sale of your ebook, do you really have a plausible alternative method of distribution?

The Epstein argument seems to have gotten a powerful boost earlier this week from Justice Clarence Thomas. 

In President Joe Biden v. Knight First Amendment Institute at Columbia University, handed down on Monday, the Supreme Court tossed out a lower court ruling which held that, in blocking people on Twitter, President Trump violated their First Amendment rights. The case doesn’t matter: Trump’s no longer president, so the whole thing is moot. What matters is the concurrence written by Thomas, which laid out a roadmap for possible government regulation of companies like Google, Facebook and Twitter. 

The thrust of Thomas’s argument:

Today’s digital platforms provide avenues for historically unprecedented amounts of speech, including speech by government actors. Also unprecedented, however, is the concentrated control of so much speech in the hands of a few private parties. We will soon have no choice but to address how our legal doctrines apply to highly concentrated, privately owned information infrastructure such as digital platforms.

And more:

It changes nothing that these platforms are not the sole means for distributing speech or information. A person always could choose to avoid the toll bridge or train and instead swim the Charles River or hike the Oregon Trail. But in assessing whether a company exercises substantial market power, what matters is whether the alternatives are comparable. For many of today’s digital platforms, nothing is.

It is worth reading the whole thing. Justice Thomas clearly wants to see a case on this. 

David Sacks, a venture capitalist with a consistently insightful Twitter account, thinks that would be a good thing, not least because the current consensus position among conservatives is misguided.

Republicans like Hawley and Ted Cruz are understandably angry about the status quo, but they’ve latched onto the wrong remedy, Sacks says. “Conservative demands to repeal 230 are basically a rage tweet. It wouldn’t stop Big Tech censorship, it would make it worse,” he told me in a conversation this week. “Ending Section 230 would only make companies like Facebook and Google censor more because more liability would make them even more risk-averse about the speech they allow on their platforms. In the meantime, it would also hurt small, innovative tech companies who would be vulnerable to frivolous lawsuits.”

The Epstein position, Sacks thinks, has it right. “Why try to incentivize good behavior by threatening to punish Big Tech? Just require it. That’s what the common carrier solution does.”

I think Sacks’s view of the big picture here is quite convincing:

“When speech got digitized, the town square got privatized and the First Amendment got euthanized. If you can’t speak online — or if your ability to speak online is controlled by a tiny handful of companies with no due process  — how do you really have a free speech right in this country any more?” he said. “Imposing a common carrier obligation on Big Tech would prevent these corporations from doing what they are doing now: discriminating on the basis of creed.”

As Sacks makes his case, I can hear the retort I’ve heard others make so many times: If you hate a platform so much, nothing’s stopping you from making a new one.

That argument feels flimsier than ever these days. When Trump got banned from Twitter, the argument was: So what? It’s Twitter. And Twitter is a private company. Jack Dorsey can boot whoever he wants. And anyway, Trump can go to Parler. 

But then Parler got kicked out of the Apple and Google app stores, so the argument became: well, you can still create a website. But then AWS stopped hosting Parler. As Sacks put it: “You shouldn’t have to build a new Internet to post a tweet.”

When Dr. Seuss’s estate discontinued six of his titles over apparent racism, that’s one thing. When eBay decided they would not allow the reselling of those titles? That’s something else. 

When 60 Minutes decides to selectively edit an interview with Florida Gov. Ron DeSantis, that’s one thing. But when YouTube decides to delete a video of the governor criticizing the various Covid-19 policies with physicians and scientists? That’s something else.

Big Tech companies insist that they are just removing “disinformation” and “hate speech” from their platforms, but as we’ve seen, these are terms with ever-evolving definitions. Tom Cotton’s June Op-Ed in The New York Times, for example, was literal violence according to more than 800 New York Times staffers. Never mind that Cotton’s argument was one at least 60% of Americans agreed with.

In the past few months, for example, Amazon updated its content guidelines by adding the following line: “We don’t sell certain content including content that we determine is hate speech.” In October, the company barred Eli and Shelby Steele’s documentary, “What Killed Michael Brown?” (After public outcry, the company reversed the decision.) Ryan Anderson, a conservative author and president of the Ethics and Public Policy Center, had his book about transgender issues banned from the online marketplace in March. As of today, it remains impossible to buy on Amazon.

Check out that film and that book. Controversial, perhaps. But do they strike you as anything within the realm of hateful?

Such politically motivated silencing has profound political consequences.

Think, for example, about the Hunter Biden laptop story. In the month before the 2020 presidential election, Twitter locked the New York Post, which broke the story, out of its own Twitter account for weeks and refused to let the paper back onto the platform until it deleted its tweets about its own reporting. Facebook suppressed the story on users’ newsfeeds. The story was, variously, a conspiracy theory, disinformation, misinformation, a Russian plot, or irresponsible because the documents were unverified. (Was the same standard applied to the Steele dossier?)

Fast forward to this week: The laptop story has since been mostly backed up. Jack Dorsey now says how he handled the Post story was a “total mistake.” But should he have the power to censor a story of political consequence, one that could shift the outcome of an election?

More to the point: When every single major tech company is making the exact same decision over who to deplatform and what to ban, doesn’t that seem like the behavior of a cartel? Why should a handful of billionaires have the power to decide that some Americans’ speech rights are more sacred than others?

Tyler Durden Sun, 04/11/2021 - 11:10

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Four Years Ago This Week, Freedom Was Torched

Four Years Ago This Week, Freedom Was Torched

Authored by Jeffrey Tucker via The Brownstone Institute,

"Beware the Ides of March,” Shakespeare…

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Four Years Ago This Week, Freedom Was Torched

Authored by Jeffrey Tucker via The Brownstone Institute,

"Beware the Ides of March,” Shakespeare quotes the soothsayer’s warning Julius Caesar about what turned out to be an impending assassination on March 15. The death of American liberty happened around the same time four years ago, when the orders went out from all levels of government to close all indoor and outdoor venues where people gather. 

It was not quite a law and it was never voted on by anyone. Seemingly out of nowhere, people who the public had largely ignored, the public health bureaucrats, all united to tell the executives in charge – mayors, governors, and the president – that the only way to deal with a respiratory virus was to scrap freedom and the Bill of Rights. 

And they did, not only in the US but all over the world. 

The forced closures in the US began on March 6 when the mayor of Austin, Texas, announced the shutdown of the technology and arts festival South by Southwest. Hundreds of thousands of contracts, of attendees and vendors, were instantly scrapped. The mayor said he was acting on the advice of his health experts and they in turn pointed to the CDC, which in turn pointed to the World Health Organization, which in turn pointed to member states and so on. 

There was no record of Covid in Austin, Texas, that day but they were sure they were doing their part to stop the spread. It was the first deployment of the “Zero Covid” strategy that became, for a time, official US policy, just as in China. 

It was never clear precisely who to blame or who would take responsibility, legal or otherwise. 

This Friday evening press conference in Austin was just the beginning. By the next Thursday evening, the lockdown mania reached a full crescendo. Donald Trump went on nationwide television to announce that everything was under control but that he was stopping all travel in and out of US borders, from Europe, the UK, Australia, and New Zealand. American citizens would need to return by Monday or be stuck. 

Americans abroad panicked while spending on tickets home and crowded into international airports with waits up to 8 hours standing shoulder to shoulder. It was the first clear sign: there would be no consistency in the deployment of these edicts. 

There is no historical record of any American president ever issuing global travel restrictions like this without a declaration of war. Until then, and since the age of travel began, every American had taken it for granted that he could buy a ticket and board a plane. That was no longer possible. Very quickly it became even difficult to travel state to state, as most states eventually implemented a two-week quarantine rule. 

The next day, Friday March 13, Broadway closed and New York City began to empty out as any residents who could went to summer homes or out of state. 

On that day, the Trump administration declared the national emergency by invoking the Stafford Act which triggers new powers and resources to the Federal Emergency Management Administration. 

In addition, the Department of Health and Human Services issued a classified document, only to be released to the public months later. The document initiated the lockdowns. It still does not exist on any government website.

The White House Coronavirus Response Task Force, led by the Vice President, will coordinate a whole-of-government approach, including governors, state and local officials, and members of Congress, to develop the best options for the safety, well-being, and health of the American people. HHS is the LFA [Lead Federal Agency] for coordinating the federal response to COVID-19.

Closures were guaranteed:

Recommend significantly limiting public gatherings and cancellation of almost all sporting events, performances, and public and private meetings that cannot be convened by phone. Consider school closures. Issue widespread ‘stay at home’ directives for public and private organizations, with nearly 100% telework for some, although critical public services and infrastructure may need to retain skeleton crews. Law enforcement could shift to focus more on crime prevention, as routine monitoring of storefronts could be important.

In this vision of turnkey totalitarian control of society, the vaccine was pre-approved: “Partner with pharmaceutical industry to produce anti-virals and vaccine.”

The National Security Council was put in charge of policy making. The CDC was just the marketing operation. That’s why it felt like martial law. Without using those words, that’s what was being declared. It even urged information management, with censorship strongly implied.

The timing here is fascinating. This document came out on a Friday. But according to every autobiographical account – from Mike Pence and Scott Gottlieb to Deborah Birx and Jared Kushner – the gathered team did not meet with Trump himself until the weekend of the 14th and 15th, Saturday and Sunday. 

According to their account, this was his first real encounter with the urge that he lock down the whole country. He reluctantly agreed to 15 days to flatten the curve. He announced this on Monday the 16th with the famous line: “All public and private venues where people gather should be closed.”

This makes no sense. The decision had already been made and all enabling documents were already in circulation. 

There are only two possibilities. 

One: the Department of Homeland Security issued this March 13 HHS document without Trump’s knowledge or authority. That seems unlikely. 

Two: Kushner, Birx, Pence, and Gottlieb are lying. They decided on a story and they are sticking to it. 

Trump himself has never explained the timeline or precisely when he decided to greenlight the lockdowns. To this day, he avoids the issue beyond his constant claim that he doesn’t get enough credit for his handling of the pandemic.

With Nixon, the famous question was always what did he know and when did he know it? When it comes to Trump and insofar as concerns Covid lockdowns – unlike the fake allegations of collusion with Russia – we have no investigations. To this day, no one in the corporate media seems even slightly interested in why, how, or when human rights got abolished by bureaucratic edict. 

As part of the lockdowns, the Cybersecurity and Infrastructure Security Agency, which was and is part of the Department of Homeland Security, as set up in 2018, broke the entire American labor force into essential and nonessential.

They also set up and enforced censorship protocols, which is why it seemed like so few objected. In addition, CISA was tasked with overseeing mail-in ballots. 

Only 8 days into the 15, Trump announced that he wanted to open the country by Easter, which was on April 12. His announcement on March 24 was treated as outrageous and irresponsible by the national press but keep in mind: Easter would already take us beyond the initial two-week lockdown. What seemed to be an opening was an extension of closing. 

This announcement by Trump encouraged Birx and Fauci to ask for an additional 30 days of lockdown, which Trump granted. Even on April 23, Trump told Georgia and Florida, which had made noises about reopening, that “It’s too soon.” He publicly fought with the governor of Georgia, who was first to open his state. 

Before the 15 days was over, Congress passed and the president signed the 880-page CARES Act, which authorized the distribution of $2 trillion to states, businesses, and individuals, thus guaranteeing that lockdowns would continue for the duration. 

There was never a stated exit plan beyond Birx’s public statements that she wanted zero cases of Covid in the country. That was never going to happen. It is very likely that the virus had already been circulating in the US and Canada from October 2019. A famous seroprevalence study by Jay Bhattacharya came out in May 2020 discerning that infections and immunity were already widespread in the California county they examined. 

What that implied was two crucial points: there was zero hope for the Zero Covid mission and this pandemic would end as they all did, through endemicity via exposure, not from a vaccine as such. That was certainly not the message that was being broadcast from Washington. The growing sense at the time was that we all had to sit tight and just wait for the inoculation on which pharmaceutical companies were working. 

By summer 2020, you recall what happened. A restless generation of kids fed up with this stay-at-home nonsense seized on the opportunity to protest racial injustice in the killing of George Floyd. Public health officials approved of these gatherings – unlike protests against lockdowns – on grounds that racism was a virus even more serious than Covid. Some of these protests got out of hand and became violent and destructive. 

Meanwhile, substance abuse rage – the liquor and weed stores never closed – and immune systems were being degraded by lack of normal exposure, exactly as the Bakersfield doctors had predicted. Millions of small businesses had closed. The learning losses from school closures were mounting, as it turned out that Zoom school was near worthless. 

It was about this time that Trump seemed to figure out – thanks to the wise council of Dr. Scott Atlas – that he had been played and started urging states to reopen. But it was strange: he seemed to be less in the position of being a president in charge and more of a public pundit, Tweeting out his wishes until his account was banned. He was unable to put the worms back in the can that he had approved opening. 

By that time, and by all accounts, Trump was convinced that the whole effort was a mistake, that he had been trolled into wrecking the country he promised to make great. It was too late. Mail-in ballots had been widely approved, the country was in shambles, the media and public health bureaucrats were ruling the airwaves, and his final months of the campaign failed even to come to grips with the reality on the ground. 

At the time, many people had predicted that once Biden took office and the vaccine was released, Covid would be declared to have been beaten. But that didn’t happen and mainly for one reason: resistance to the vaccine was more intense than anyone had predicted. The Biden administration attempted to impose mandates on the entire US workforce. Thanks to a Supreme Court ruling, that effort was thwarted but not before HR departments around the country had already implemented them. 

As the months rolled on – and four major cities closed all public accommodations to the unvaccinated, who were being demonized for prolonging the pandemic – it became clear that the vaccine could not and would not stop infection or transmission, which means that this shot could not be classified as a public health benefit. Even as a private benefit, the evidence was mixed. Any protection it provided was short-lived and reports of vaccine injury began to mount. Even now, we cannot gain full clarity on the scale of the problem because essential data and documentation remains classified. 

After four years, we find ourselves in a strange position. We still do not know precisely what unfolded in mid-March 2020: who made what decisions, when, and why. There has been no serious attempt at any high level to provide a clear accounting much less assign blame. 

Not even Tucker Carlson, who reportedly played a crucial role in getting Trump to panic over the virus, will tell us the source of his own information or what his source told him. There have been a series of valuable hearings in the House and Senate but they have received little to no press attention, and none have focus on the lockdown orders themselves. 

The prevailing attitude in public life is just to forget the whole thing. And yet we live now in a country very different from the one we inhabited five years ago. Our media is captured. Social media is widely censored in violation of the First Amendment, a problem being taken up by the Supreme Court this month with no certainty of the outcome. The administrative state that seized control has not given up power. Crime has been normalized. Art and music institutions are on the rocks. Public trust in all official institutions is at rock bottom. We don’t even know if we can trust the elections anymore. 

In the early days of lockdown, Henry Kissinger warned that if the mitigation plan does not go well, the world will find itself set “on fire.” He died in 2023. Meanwhile, the world is indeed on fire. The essential struggle in every country on earth today concerns the battle between the authority and power of permanent administration apparatus of the state – the very one that took total control in lockdowns – and the enlightenment ideal of a government that is responsible to the will of the people and the moral demand for freedom and rights. 

How this struggle turns out is the essential story of our times. 

CODA: I’m embedding a copy of PanCAP Adapted, as annotated by Debbie Lerman. You might need to download the whole thing to see the annotations. If you can help with research, please do.

*  *  *

Jeffrey Tucker is the author of the excellent new book 'Life After Lock-Down'

Tyler Durden Mon, 03/11/2024 - 23:40

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CDC Warns Thousands Of Children Sent To ER After Taking Common Sleep Aid

CDC Warns Thousands Of Children Sent To ER After Taking Common Sleep Aid

Authored by Jack Phillips via The Epoch Times (emphasis ours),

A…

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CDC Warns Thousands Of Children Sent To ER After Taking Common Sleep Aid

Authored by Jack Phillips via The Epoch Times (emphasis ours),

A U.S. Centers for Disease Control (CDC) paper released Thursday found that thousands of young children have been taken to the emergency room over the past several years after taking the very common sleep-aid supplement melatonin.

The Centers for Disease Control and Prevention (CDC) headquarters in Atlanta, Georgia, on April 23, 2020. (Tami Chappell/AFP via Getty Images)

The agency said that melatonin, which can come in gummies that are meant for adults, was implicated in about 7 percent of all emergency room visits for young children and infants “for unsupervised medication ingestions,” adding that many incidents were linked to the ingestion of gummy formulations that were flavored. Those incidents occurred between the years 2019 and 2022.

Melatonin is a hormone produced by the human body to regulate its sleep cycle. Supplements, which are sold in a number of different formulas, are generally taken before falling asleep and are popular among people suffering from insomnia, jet lag, chronic pain, or other problems.

The supplement isn’t regulated by the U.S. Food and Drug Administration and does not require child-resistant packaging. However, a number of supplement companies include caps or lids that are difficult for children to open.

The CDC report said that a significant number of melatonin-ingestion cases among young children were due to the children opening bottles that had not been properly closed or were within their reach. Thursday’s report, the agency said, “highlights the importance of educating parents and other caregivers about keeping all medications and supplements (including gummies) out of children’s reach and sight,” including melatonin.

The approximately 11,000 emergency department visits for unsupervised melatonin ingestions by infants and young children during 2019–2022 highlight the importance of educating parents and other caregivers about keeping all medications and supplements (including gummies) out of children’s reach and sight.

The CDC notes that melatonin use among Americans has increased five-fold over the past 25 years or so. That has coincided with a 530 percent increase in poison center calls for melatonin exposures to children between 2012 and 2021, it said, as well as a 420 percent increase in emergency visits for unsupervised melatonin ingestion by young children or infants between 2009 and 2020.

Some health officials advise that children under the age of 3 should avoid taking melatonin unless a doctor says otherwise. Side effects include drowsiness, headaches, agitation, dizziness, and bed wetting.

Other symptoms of too much melatonin include nausea, diarrhea, joint pain, anxiety, and irritability. The supplement can also impact blood pressure.

However, there is no established threshold for a melatonin overdose, officials have said. Most adult melatonin supplements contain a maximum of 10 milligrams of melatonin per serving, and some contain less.

Many people can tolerate even relatively large doses of melatonin without significant harm, officials say. But there is no antidote for an overdose. In cases of a child accidentally ingesting melatonin, doctors often ask a reliable adult to monitor them at home.

Dr. Cora Collette Breuner, with the Seattle Children’s Hospital at the University of Washington, told CNN that parents should speak with a doctor before giving their children the supplement.

“I also tell families, this is not something your child should take forever. Nobody knows what the long-term effects of taking this is on your child’s growth and development,” she told the outlet. “Taking away blue-light-emitting smartphones, tablets, laptops, and television at least two hours before bed will keep melatonin production humming along, as will reading or listening to bedtime stories in a softly lit room, taking a warm bath, or doing light stretches.”

In 2022, researchers found that in 2021, U.S. poison control centers received more than 52,000 calls about children consuming worrisome amounts of the dietary supplement. That’s a six-fold increase from about a decade earlier. Most such calls are about young children who accidentally got into bottles of melatonin, some of which come in the form of gummies for kids, the report said.

Dr. Karima Lelak, an emergency physician at Children’s Hospital of Michigan and the lead author of the study published in 2022 by the CDC, found that in about 83 percent of those calls, the children did not show any symptoms.

However, other children had vomiting, altered breathing, or other symptoms. Over the 10 years studied, more than 4,000 children were hospitalized, five were put on machines to help them breathe, and two children under the age of two died. Most of the hospitalized children were teenagers, and many of those ingestions were thought to be suicide attempts.

Those researchers also suggested that COVID-19 lockdowns and virtual learning forced more children to be at home all day, meaning there were more opportunities for kids to access melatonin. Also, those restrictions may have caused sleep-disrupting stress and anxiety, leading more families to consider melatonin, they suggested.

The Associated Press contributed to this report.

Tyler Durden Mon, 03/11/2024 - 21:40

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Red Candle In The Wind

Red Candle In The Wind

By Benjamin PIcton of Rabobank

February non-farm payrolls superficially exceeded market expectations on Friday by…

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Red Candle In The Wind

By Benjamin PIcton of Rabobank

February non-farm payrolls superficially exceeded market expectations on Friday by printing at 275,000 against a consensus call of 200,000. We say superficially, because the downward revisions to prior months totalled 167,000 for December and January, taking the total change in employed persons well below the implied forecast, and helping the unemployment rate to pop two-ticks to 3.9%. The U6 underemployment rate also rose from 7.2% to 7.3%, while average hourly earnings growth fell to 0.2% m-o-m and average weekly hours worked languished at 34.3, equalling pre-pandemic lows.

Undeterred by the devil in the detail, the algos sprang into action once exchanges opened. Market darling NVIDIA hit a new intraday high of $974 before (presumably) the humans took over and sold the stock down more than 10% to close at $875.28. If our suspicions are correct that it was the AIs buying before the humans started selling (no doubt triggering trailing stops on the way down), the irony is not lost on us.

The 1-day chart for NVIDIA now makes for interesting viewing, because the red candle posted on Friday presents quite a strong bearish engulfing signal. Volume traded on the day was almost double the 15-day simple moving average, and similar price action is observable on the 1-day charts for both Intel and AMD. Regular readers will be aware that we have expressed incredulity in the past about the durability the AI thematic melt-up, so it will be interesting to see whether Friday’s sell off is just a profit-taking blip, or a genuine trend reversal.

AI equities aside, this week ought to be important for markets because the BTFP program expires today. That means that the Fed will no longer be loaning cash to the banking system in exchange for collateral pledged at-par. The KBW Regional Banking index has so far taken this in its stride and is trading 30% above the lows established during the mini banking crisis of this time last year, but the Fed’s liquidity facility was effectively an exercise in can-kicking that makes regional banks a sector of the market worth paying attention to in the weeks ahead. Even here in Sydney, regulators are warning of external risks posed to the banking sector from scheduled refinancing of commercial real estate loans following sharp falls in valuations.

Markets are sending signals in other sectors, too. Gold closed at a new record-high of $2178/oz on Friday after trading above $2200/oz briefly. Gold has been going ballistic since the Friday before last, posting gains even on days where 2-year Treasury yields have risen. Gold bugs are buying as real yields fall from the October highs and inflation breakevens creep higher. This is particularly interesting as gold ETFs have been recording net outflows; suggesting that price gains aren’t being driven by a retail pile-in. Are gold buyers now betting on a stagflationary outcome where the Fed cuts without inflation being anchored at the 2% target? The price action around the US CPI release tomorrow ought to be illuminating.

Leaving the day-to-day movements to one side, we are also seeing further signs of structural change at the macro level. The UK budget last week included a provision for the creation of a British ISA. That is, an Individual Savings Account that provides tax breaks to savers who invest their money in the stock of British companies. This follows moves last year to encourage pension funds to head up the risk curve by allocating 5% of their capital to unlisted investments.

As a Hail Mary option for a government cruising toward an electoral drubbing it’s a curious choice, but it’s worth highlighting as cash-strapped governments increasingly see private savings pools as a funding solution for their spending priorities.

Of course, the UK is not alone in making creeping moves towards financial repression. In contrast to announcements today of increased trade liberalisation, Australian Treasurer Jim Chalmers has in the recent past flagged his interest in tapping private pension savings to fund state spending priorities, including defence, public housing and renewable energy projects. Both the UK and Australia appear intent on finding ways to open up the lungs of their economies, but government wants more say in directing private capital flows for state goals.

So, how far is the blurring of the lines between free markets and state planning likely to go? Given the immense and varied budgetary (and security) pressures that governments are facing, could we see a re-up of WWII-era Victory bonds, where private investors are encouraged to do their patriotic duty by directly financing government at negative real rates?

That would really light a fire under the gold market.

Tyler Durden Mon, 03/11/2024 - 19:00

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