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Blain: “The Brutal Reality Of Slowdown Is Becoming Clearer”

Blain: "The Brutal Reality Of Slowdown Is Becoming Clearer"



Blain: "The Brutal Reality Of Slowdown Is Becoming Clearer" Tyler Durden Mon, 08/10/2020 - 08:11

Authored by Bill Blain via,

Who Pulled the Plug?

“Unnervingly coherent and laughably mindless”

This morning’s opening quote isn’t an independent assessment of the Morning Porridge – but is lifted from a newspaper article on Artificial Intelligence.  It ends on a very scary tag: the AI is asked if it is conscious and responds:

 “To be clear, I am not a person.  I am not self-aware.  I am not conscious.  I can’t feel pain.  I don’t enjoy anything.  I am a cold, calculating machine designed to simulate human response and to predict the probability of certain outcomes.  The only reason I am responding is to defend my honour.”  

This is not from some dystopian novel or a reboot of the Terminator series… but from the this morning’s FT

Should we pull the plug or ask it some more questions? 

Back in the real world…

We are now in the depths of the summer doldrums – and markets are showing even less correlation to global events than usual.  Stock and Bond Markets remain chronically distorted by the effects of Central Bank liquidity. China markets have shrugged off the new Trump US sanctions – and Xi has stepped up the arrest of protest figureheads in HK.  Ten-cent has taken a tumble on the back of Trump banning Tik Tok and WeChat – confirming the degree to which individual stocks are vulnerable to shifts in the narrative. Watch for case-by-case wobbles as the China-US rift opens wider – when will China decide to make trouble for Tesla to boost its copy-cars? 

But even the China/US tiff is likely to be something of a sideshow. My first question to the AI machine would be – just how deep is the coming global recession going to be?  Despite some recent strong economic releases, the trend shows the recession is underway. Just read through the news this morning, or open any serious research, and it’s all bad stuff heaped upon yet more depressing noise.  But… when all around are panicking… let me remind you of a critical Blain’s Market Mantra: 

“Things are never as bad as you fear, but never as good as you hope.”

Smile. Be hopeful.

The brutal reality of slowdown is becoming clearer. Surveys predict 1/3 of UK companies are going to announce layoffs and zero wage rises.  Unemployment remains stubbornly high in Europe.  Despite the US adding jobs it’s still well below the long-term trend.  Recovery is not going to be driven by consumption.  New Bank NPL provisions in the US and Europe exceed $140 bln – almost as high as losses from 2008!  Even China’s much vaunted virus recovery seems stuck at 80% return to normality. 

As the crisis deepens, the greed stories are beginning to leak out. If you haven’t read about the naked graft and corruption of Kodak reinventing itself as Big Pharma overnight with the help of US Govt loan, or companies paying bosses massive bonuses shortly before they go bust – then catch up. For every scam that’s been uncovered, hundreds are probably occurring – slipping under the radar because of the incessant deluge of bad news.. These stories are inflaming already frustrated voters. 

If you were expecting the world to return to its proper place by Christmas… welcome to 1939. It feels more and more like we’re in for a long haul of ongoing government support measures, distorted markets and an ever more difficult search for returns in a null-entropy global economy…. Get used to it.. Adapt. 

The trick to understanding investment flows and opportunities over the coming.. months, years or decades.. (I don’t know how long..), will be to understand how the global economy and governments relate, adapt and function in this new reality.  Wide-range change is inevitable. I suspect it goes on for much longer-than-anticipated…  

But I also expect the scale of the ongoing pandemic damage is going to dramatically lessen as we come to understand and cope with Virus.  In time we’ll pretty much forget about COVID-19 as we cope with it’s economic aftermath.

The biggest problem is likely to be Government leadership and critical timing. It’s clear the US administration is barely functional – in election mode they can’t agree on the next stimulus package. Here in the UK it’s just embarrassing noise – there is no sign of any joined-up underlying plan or deep thinking on how the UK is going to adapt, change and cope with the enormous changes the Virus has triggered. Out unmatched ability to “muddle through” is unlikely to help. 

We’re anticipating a 22% Q2 decline in UK GDP… dwarfing the scale of slowdown in the US and Europe. In a superb article on Bloomberg, Marcus Ashworth contrasts the doom and gloom being expressed by the banks and business, with the rosy outlook from the Bank of England – which expects an 18% rebound in Q3! I should like a quarter ounce of whatever Mr Bailey is smoking please… The reality is few workers are heading calls to return to work. 

Landlords and Retail tenants have cooked up an interesting solution to the conundrum that shops and restaurants can’t afford to pay their rents – they are asking Government to step in to make up the rental payments. That’s an interesting call.. does government decide to smooth the economy by bailing out commercial property, or does it let evolution take its course? The high-street was already in crisis before the virus. Shopping, and large offices are going to be changed utterly by the Pandemic.

Yet, here on the South Coast of England – you would hardly know there is a crisis underway. The pretty Devon village of Salcombe was absolutely heaving with visitors this weekend.  It’s a favourite summer hideaway with the Chelsea-set, but this year its busier than ever with frustrated gilded-young things who can’t go to their favourite White Lines destinations. Everyone is trying to look “oh so casual” in their brand-new sailing gear. The water is jam-packed with paddle-boarders who know not what they are doing. (I knew what I was doing.. I was falling off the d*mn thing..)

Apparently, there’d been a mini-riot one evening, so the streets were being patrolled by fully tooled up police – who must have been wondering what threat the mobs of inebriated and braying Henrys, Thomases, Casandras and Imogens presented.  The shops and restaurants were mobbed – what recession? (We decided to eat on the boat instead – which worked pretty darn well.) As I read about UK bosses being paid 250x the average worker’s salary and ignoring shareholder votes on bonuses.. I’m wondering just what the rest of miserable Britain is thinking of government bailouts going into the Elites’ pockets…  

Meanwhile, I made the mistake of posting a photo of us and the kids on the boat over the weekend. Our local Coronanazi Gauleiter was furious - demanding to know what social distancing was being done, and haranguing me about “Didn’t I Understand the Crisis?”  Our village site is peppered with similar posts about the stupidity of people walking too close to others, or not wearing a mask with filling up their cars with petrol (apparently they might kill the next customer who picks up the nozzle if they breathe on it). 

It’s hard to see how the UK will recover from the terror the virus has created. 

Is there any point delaying inevitable change via yet more government bailout spending? Or should we just let it happen and invest in the future, rather than bailing out the past… 

Big Problems.. Big Answers.  Move Forward.

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Desperate Gazans Raid UN Food Warehouses As Norway, France Condemn ‘Disproportionate’ Israeli Attacks

Desperate Gazans Raid UN Food Warehouses As Norway, France Condemn ‘Disproportionate’ Israeli Attacks

After three week under Israeli siege…



Desperate Gazans Raid UN Food Warehouses As Norway, France Condemn 'Disproportionate' Israeli Attacks

After three week under Israeli siege and a bombing campaign which has been unprecedented in its intensity, Gazans are getting increasingly desperate. The Strip is almost completely enveloped in darkness, also with communications cut, which happened Friday, and the United Nations is now warning of a total breakdown in civic order.

UN Relief and Works Agency for Palestine Refugees (UNRWA) in Gaza has said that thousands of Palestinians have broken into several of its warehouses in the Strip, raiding wheat, flour, and hygiene stores - among other basic necessities stored there.

AFP/Getty Images: Palestinians take supplies from a UN-run aid centre in Deir al-Balah on Saturday

"This is a worrying sign that civil order is starting to break down after three weeks of war and a tight siege,” UNRWA director Thomas White told press agencies. 

UN Secretary-General Antonio Guterres has also in fresh Sunday statements called the crisis a "nightmare" and again urged a ceasefire. "The situation in Gaza is growing more desperate by the hour. I regret that instead of a critically needed humanitarian pause, supported by the international community, Israel has intensified its military operations."

Over the weekend the Gazan death toll surpassed 8,000 - with Gaza's Health Ministry saying that most of these are women and young people. The Biden administration, which has repeatedly affirmed that it "stands with Israel", has also said that it doesn't trust casualty figures being issued by Hamas or Palestinian sources.

There are reports that communications were restored to much of the Gaza Strip as of Sunday, possibly the result of growing international pressure on the Israelis. Ten more aid trucks have also reportedly crossed from Egypt on Sunday.

According to Al Jazeera, "The Israeli military said on Sunday it had struck more than 450 targets over the past 24 hours, including Hamas command centres, observation posts and antitank missile launching positions. It said more ground forces were sent into Gaza overnight." The Israeli ground offensive has continued expanding, with The Guardian observing, "Under the cover of strikes and artillery, Israeli ground troops have begun moving into the north of the strip in Beit Lahia and Beit Hanoun in what the Israeli prime minister, Benjamin Netanyahu, described as the “second stage” of the war triggered by Hamas."

IDF troops have been seen reaching a point some two miles into Gaza:

Israeli troops appear to have advanced over two miles into Gaza, according to a CNN analysis of video published by an Israeli media outlet. 

The troops in the video, taken on Saturday, are seen putting an Israeli flag on a Gaza resort hotel's roof. CNN geolocated the video to an area just over two miles from the Gaza-Israeli border.

"Soldiers of the 52 Battalion of the 401 Brigade are waving the Israeli flag in the heart of Gaza, by the beach," a soldier is heard saying in the video, taken several miles north of central Gaza City. "We will not forgive nor forget, and we’ll not stop until the victory."

Palestinian sources are also saying another major hospital, which is treating hundreds of patients and giving shelter to over 10,000, has come under attack:

Israeli airstrikes have “caused extensive damage to hospital departments and exposed residents and patients to suffocation” at the Al-Quds Hospital, the Palestinian Red Crescent Society said Sunday.

The aid organization accused Israel of “deliberately” launching the airstrikes “directly next to Al-Quds Hospital, with the aim of forcing the medical staff, displaced people, and patients to evacuate the hospital.”

Major bulldozing and tank operations have been observed on the beach in Gaza...

A statement cited in The Times of Israel described:

The IDF says troops killed a number of Hamas gunmen who opened fire at the ground forces in the Strip, and other terrorists identified on the beach in Gaza, near the southern Israel community of Zikim.

Hamas and the IDF have continued to exchange gunfire, but the status of forces on either said remains unknown and for the moment lost in the fog of war. At this point, if either suffers significant casualties, they are unlikely to make it publicly known.

IDF tanks on the coast of the northern Gaza Strip on Sunday. Image: Israeli Army

Meanwhile, the intensifying crisis for Palestinian civilians has not only led to massive street protests in various nations, particularly in Europe, but has resulted in rare criticism aimed at Israel from leading Western nations. The French government has issued scathing criticism of "unacceptable" Israeli settler attacks on Palestinians in the West Bank:

More than 100 Palestinians have been killed in the West Bank since the outbreak of war in the Gaza Strip earlier this month, mostly during raids by Israeli forces or attacks by settlers, according to the Ramallah-based health ministry.

“France strongly condemns the settler attacks that have led to the deaths of several Palestinian civilians over the past few days in Qusra and Sawiya, as well as the forced departure of several communities,” said a foreign ministry statement.

And Norway too has condemned what it says is a massive and "disproportionate" response and death toll among Palestinians in the wake of the Oct.7 Hamas terror attack which killed 1,400 people. "International law stipulates that [the reaction] must be proportionate. Civilians must be taken into account, and humanitarian law is very clear on this. I think this limit has been largely exceeded," Prime Minister Jonas Gahr Store aid in a public broadcast radio interview.

"Almost half of the thousands of people killed are children," he stressed. "Israel has the right to defend itself, and I recognize that it is very difficult to defend against attacks from an area as densely populated as Gaza,” Store said. "Rockets are still being fired from Gaza into Israel, and we condemn this."

Even the White House has begun to urge caution, with national security advisor Jake Sullivan telling the Sunday shows that even though Hamas used civilians as "human shields" - it's still ultimately Israel's responsibility to avoid hitting them.

"They’re putting rockets and other terrorist infrastructure in civilian areas. That creates an added burden for the Israeli Defense Forces," he said. "But it does not lessen their responsibility to distinguish between terrorists and innocent civilians and to protect the lives of innocent civilians as they conduct this military operation."

Tyler Durden Sun, 10/29/2023 - 15:05

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Visualizing The Key Investment Theme Of Each Decade (1950-Today)

Visualizing The Key Investment Theme Of Each Decade (1950-Today)

Over modern history, a key investment theme has broadly characterized each…



Visualizing The Key Investment Theme Of Each Decade (1950-Today)

Over modern history, a key investment theme has broadly characterized each decade.

In each case, a particular asset class, sector, or region captivated investors for an extended period, driving returns and outperforming the rest of the market.

In the graphic below, Visual Capitalist's Dorothy Neufeld shows 70 years of key investment themes, based on analysis from Ruchir Sharma of Morgan Stanley Investment Management via NS Capital.

Investment Themes by Decade

These decade-defining themes are often the product of a confluence of factors, including the macroeconomic environment, geopolitics, monetary policy, or other structural shifts like technological disruption.

Here are the central investment themes since the 1950s, each with at least 400% cumulative returns over each period:

*Price change for gold and oil, represented as an average. **Equity market performance of Brazil, Russia, India, China and oil prices, represented as an average.

The 1950s saw a boom in European stocks during the post-war recovery. This was fueled by significant investment from corporations and governments as Europe became more integrated.

Then in the 1960s, investors poured into blue chip stocks in the “Nifty Fifty” including Johnson & Johnson, Disney, and Coca-Cola. The main premise was that these strong franchises would deliver high returns over the long run. During the 1973-1974 bear market, shares cratered.

As oil skyrocketed from $3.35 to $32.50 through the 1970s amid production and output cuts, commodities dominated, along with emerging economy exporters of oil and gold.

Later, through the 1980s, Japanese stocks dramatically increased. In 1989, the Tokyo Stock Exchange made up 41% of all global equities. It had eclipsed the value of the U.S. equity market just two years earlier.

In part owing to strong U.S. economic growth, American tech stocks flourished through the 1990s. While many high-flying tech stocks were wiped out during the crash in 2000, some still remain today. Qualcomm, which jumped 2,620% in 1999, is a multi-billion dollar semiconductor company. Amazon and Cisco were other survivors of this era.

Pivoting from growth assets, investors returned to commodities and emerging markets over the 2000s, this time with BRIC economies—Brazil, Russia, India, and China. The 2010s saw the rise of FAANG stocks as tech proliferated across countless industries.

The Next Decade Ahead

Given how each decade seems to be defined by a key investment theme, Sharma suggests that it won’t be another driven defined by American stocks.

The disconnect between the size of U.S. equity markets, at 43% of the global share, and its economic output, which is 26% of the world’s total, is one reason driving a new shift.

Another factor is stark differences in valuations. Today, the U.S. stock market compared to the rest of the world is at its highest relative level in 100 years, suggesting it is overvalued and primed for a shift.

Whether global stocks gain a greater global equity market share—to become a key investment cycle of this decade—remains an open question.

Tyler Durden Sun, 10/29/2023 - 13:25

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DOJ Corroborated Information From FBI Source Who Provided Biden Bribery Allegations: Official

DOJ Corroborated Information From FBI Source Who Provided Biden Bribery Allegations: Official

Authored by Zachary Stieber via The Epoch Times…



DOJ Corroborated Information From FBI Source Who Provided Biden Bribery Allegations: Official

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

U.S. Department of Justice officials corroborated some of the information an FBI source provided to the bureau on allegations that then-presidential candidate Joe Biden and his son, Hunter Biden, were bribed, a former official who worked on the case said in newly reviewed testimony.

"We did corroborate certain things" from the source, Scott Brady, the former U.S. attorney for the Western District of Pennsylvania, told a U.S. House of Representatives panel on Oct. 23.

President Joe Biden and his son Hunter Biden attend the annual Easter Egg Roll on the South Lawn of the White House in Washington on April 10, 2023. (Drew Angerer/Getty Images)

Members of Congress obtained and released over the summer a copy of the summary from FBI agents who spoke with the source, with the source conveying comments from Burisma executives concerning the Bidens.

Among them was the claim that it cost $5 million to pay one Biden and $5 million to pay another Biden.

Mr. Biden worked for Burisma, a Ukrainian firm, for years while President Biden was vice president, including in 2016. That's the year the discussion involving bribery took place, the source told the FBI in 2020.

Mr. Brady, appointed under President Donald Trump in 2017, told members this week he was tasked by superiors to accept and vet Ukraine-related information sent to or gathered by the U.S. Department of Justice (DOJ), which includes the FBI.

"We were to assess the credibility of information and anything that we felt was credible or had indicia of credibility, we were then to provide to the offices that had predicated grand jury investigations that were ongoing," Mr. Brady, who was asked to resign by President Biden after he took office, told the House panel.

Lack of Communication

After working to corroborate some of the information from the interview summary, Mr. Brady said his team passed the summary and the work they'd done to multiple offices, including the U.S. attorney's office for the District of Delaware.

That office is headed by U.S. Attorney David Weiss, another Trump appointee. Mr. Weiss has for years been investigating Mr. Biden for intentional tax avoidance and other crimes.

Mr. Brady's team briefed Mr. Weiss' team in October 2020 on the summary, known as an FD-1023.

"What we were doing was, as a part of the briefing, giving them the investigative steps that we had taken within our limited ability to corroborate the information that the [source] had provided us, and we informed them that we felt that the 1023 had indicia of credibility sufficient to merit further investigation," Mr. Brady said. "And so that's what we communicated to them."

Neither Mr. Weiss' office nor any of the other U.S. attorney's offices who received the 1023 from Mr. Brady's team reached back out about the document, according to Mr. Brady.

He said there was "both a skepticism of the information that we were developing, that we had received, and skepticism and then weariness of that information" from Mr. Weiss and Mr. Weiss' team.

"I don't want to speculate as to why, but I know that there was no information sharing back to us about what they were—or very limited. And, at one point, the communication between our offices was so constricted that we had to provide written questions to the investigative team in Delaware, almost in the form of interrogatories, and receive written answers back," Mr. Brady said.

That was not normal, he added.

Mr. Weiss' office declined to comment.

Ukraine Funding

The FBI source was reinterviewed in 2020 by the FBI at the request of Mr. Brady, who wanted more details about the allegations regarding the Bidens. The summary that resulted was ultimately obtained and released by Sen. Chuck Grassley (R-Iowa) and Rep. James Comer (R-Ky.).

The document showed the source traveled to Ukraine and spoke with top Burisma executives, including owner Mykola Zlochevsky. The source said executives said Burisma hired Mr. Biden “to protect [the company], through his dad, from all kinds of problems" and that Mr. Biden would take care of problems "through his dad."

Ukraine's president ultimately ousted Viktor Shokin, the prosecutor who was investigating Burisma, at the behest of President Biden.

“I said, ‘We’re leaving in six hours. If the prosecutor’s not fired, you’re not getting the money,'" President Biden said at a public event in 2018, relaying the interaction about a $1 billion loan guarantee he threatened to withhold. “Well, son of a [expletive]. He got fired.”

The FBI has largely declined to comment on the substance of the document but said previously the summary was part of a "sensitive investigation" and should not have been released to the public.

The transcripts of the recent congressional interviews with Mr. Brady and U.S. Attorney E. Martin Estrada, appointed by President Biden, were obtained and reviewed by The Epoch Times.

In his interview, Mr. Estrada confirmed IRS whistleblower accounts and said he rejected Mr. Weiss' request to partner to prosecute Mr. Biden in California.

Mr. Estrada also said that he believed several attorneys with Mr. Weiss' office were able to bring charges in his district, the Central District of California, and that he offered office space and administrative support if they did.

Mr. Biden was ultimately charged with tax and firearm crimes in Delaware. He has not been charged in California or Washington, another district where the Biden-appointed U.S. attorney turned down a request from Mr. Weiss to partner.

Mr. Weiss earlier this year was made special counsel as he continues investigating Mr. Biden. Both Mr. Weiss and Attorney General Merrick Garland, appointed under President Biden, have been unable to explain why he needed to be made special counsel if he already had what they described as the "ultimate authority" to bring charges against the target.

Mark Tapscott contributed to this report.

Tyler Durden Sun, 10/29/2023 - 12:50

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