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Futures Rise Ahead Of Inflation Data As China Reopening Lifts Sentiment Again

Futures Rise Ahead Of Inflation Data As China Reopening Lifts Sentiment Again

US equity futures were set to rise for a second day as upbeat…



Futures Rise Ahead Of Inflation Data As China Reopening Lifts Sentiment Again

US equity futures were set to rise for a second day as upbeat sentiment ahead of tomorrow's key CPI print - which JPM gives 85% odds of pushing stocks at least 1.5% higher - lifted global markets despite a freak outage of key FAA advisory system this morning led to a nationwide ground halt for all domestic flights (until at least 9am) pre. Contracts on the S&P 500 and Nasdaq 100 ticked up 0.1% as of 7:15am ET while Europe’s Stoxx 600 Index rose 0.8%. The FTSE 100 climbed within striking distance of a record high; Asian equities were supported by China lifting Covid restrictions. Among the top corporate news, Credit Suisse weighs cutting by half the bonus pool for 2022 after a turbulent year and Apple plans to start using its own custom displays in mobile devices as early as next year. Treasury yields dropped and the dollar gained for the second day in a row.

Among US premarket movers, airline stocks slipped in New York premarket as the failure of a key pilot notification system operated by the Federal Aviation Administration disrupted air travel. American Airlines Group Inc. fell 1.1% and United Airlines Holdings Inc. was down 0.6%. Delta Air Lines Inc. fell 0.8% as the FAA ordered a ground halt of all flights until at least 9am. Bed Bath & Beyond surged again and were on course for a third day of gains. World Wrestling Entertainment rose as much as 5.3%, extending a rally sparked by speculation that the company may sell itself. Chairwoman and co-CEO Stephanie McMahon announced she’s resigning from the company. Here are some other notable premarket movers:

  • US biotech Prokidney surges 34% after early data from a mid-stage trial of its cell therapy for chronic kidney disease. Jefferies said the treatment has multi-billion dollar potential.
  • CarMax falls 4.8% after JPMorgan cut its recommendation on the used-car retailer to underweight from neutral, citing unfavorable risk-reward following recent outperformance.
  • JinkoSolar Holding ADRs rise 1.9% after Roth Capital upgrades the solar panel maker to buy, saying US policy improvements point to a stronger outlook.
  • Levi Strauss drops 1.5% as Citi downgrades to neutral from buy to reflect what it describes as a challenging US backdrop in the near to medium term.
  • Keep an eye on PTC and Autodesk as Berenberg begins coverage of both US design software companies with buy ratings, and initiates AspenTech at hold, saying all three have the potential to continue outperforming the industry in terms of growth.
  • Data and analytics providers could be in focus as Redburn says they will have a significant opportunity to capitalize on growing and increasingly complex risk factors in financial markets. The broker has buy ratings on MSCI (MSCI US), S&P (SPGI US) and London Stock Exchange (LSEG LN), though initiates Verisk (VRSK US) at sell and cuts Morningstar (MORN US) to neutral.

The gains of US stocks since the start of 2023 has surprised many (very bearish) strategists who believe that much of the advance is conditional on inflation easing, which would allow the Federal Reserve to slow the pace of rate hikes. And while hawkish comments on Monday by San Francisco and Atlanta Fed presidents put a chill on the rally, a lack of subsequent reinforcement by Chair Powell led to a sharp rally on Tuesday. The next test for the market comes on Thursday with the US inflation report which will determine if the Fed hikes by 25bps or 50bps on Feb 1, and it’s widely believed that a lower-than-expected reading would trigger further gains.  Investors are also closely watching technical levels as the S&P 500 Index nears its 200-day moving average.

“Tomorrow’s CPI event risk could be a decider where the S&P 500 can either break above its 200-day moving average, the 4,000 level and the downtrend line, or we head back to 3800,” says Gurmit Kapoor, a cross-asset sales trader at Aurel BGC.

While Powell didn’t directly comment on the Fed’s next steps at a forum in Stockholm, he did say that “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise rates to slow the economy.”

Fed Governor Michelle Bowman said the central bank has more work to do to curb inflation, noting that further tightening is needed.

“We do expect an inflection in central bank policy later on this year,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “More risk-tolerant investors can look to anticipate this turn by phasing into markets, seeking early winners from a global improvement in sentiment, and identifying beneficiaries from China’s reopening. “However, we don’t believe we have yet reached the inflection point in policy or economic growth, and as we enter 2023 we continue to favor a defensive tilt when adding exposure in both equity and fixed-income markets,” he said.

“The prospect of a less cloudy economic outlook in both Europe and the US after recession risks in both regions eased back, combined with the reopening of the Chinese economy, is providing strong support toward risk appetite from investors,” said Pierre Veyret, a technical analyst at ActivTrades. “The lack of clear hints from Fed Chairman Jerome Powell yesterday also contributed to keeping the bullish trading stance alive, and most traders will now look toward tomorrow’s US inflation print for further clues.”

In Europe, real-estate and mining stocks led a 0.4% gain in the Stoxx Europe 600 Index amid subsiding inflation worries. Miners were boosted by optimism China’s economic reopening will spur demand for metals. Among the top corporate news, Credit Suisse weighs cutting by half the bonus pool for 2022 after a turbulent year. Here are some of the biggest European movers on Wednesday:

  • Vestas shares jump as much as 5.6%, the most in a month, after being raised to buy at Jefferies, which says an inflection point has been reached for wind-turbine manufacturers
  • JD Sports shares jump as much as 6.5%, reaching April highs, after the sports retailer said it sees headline pre-tax profit toward the top end of current market expectations
  • TeamViewer shares gain as much as 7.3% after the software company reported preliminary 4Q billings. RBC says the firm posted “a surprisingly stronger- than-expected finish to the year”
  • Corbion rises as much as 11%, reaching an almost 11-month high, after Barclays upgrades to overweight in note on “renewed conviction” following the Dutch ingredients maker’s CMD
  • Bang & Olufsen rises as much as 4.5% on better-than-expected 2Q results. Nordnet says “B&O does what it can and maybe even a little more” despite a challenging environment
  • Grafton shares rise as much as 4.7% after it predicted its profit will be at the top end of analysts’ forecasts. Investec expects 2022 underlying consensus profit to edge up
  • Direct Line shares slump 30%, pulling peers down with it, after saying it no longer expects to pay a final dividend; news that is likely to be a “major shock” to the market, Jefferies says
  • Adyen declines as much as 3.4% after BofA cuts the stock to neutral, saying risks of further slowdown in e-commerce sales and margin compressions are not properly accounted for
  • Maersk shares fall as much as 4.1%, the most since November, after Goldman Sachs cut its recommendation to sell, anticipating a “great unwind” in air and sea freight markets
  • Eurofins Scientific declines as much as 4.9% and is among the worst performers on France’s SBF 120 index after two brokers cut their recommendations for the French laboratory group

Earlier in the session, Asia’s equity benchmark resumed its advance, led by gains in key regional markets including Japan, South Korea and Hong Kong.  The MSCI Asia Pacific Index climbed as much as 0.9% to the highest level in almost five months before paring about half of its gain. Tencent and Alibaba were the top contributors, with tech and communication services among the major sectoral boosters.

“A lot of traders and investors see the US being closer to peak inflation — if we have not already passed that point. Then that as a corollary also indicates an end to global central bank rate hike cycles,” said Justin Tang, head of Asian research at United First Partners.  Though Chinese shares dropped on Wednesday, with liquor giant Kweichow Moutai among the decliners, investor sentiment remains bullish amid further signs of fading regulatory risks in the tech sector as well as more support coming for property developers. The dramatic recovery in Chinese equities, with a gauge of mainland companies listed in Hong Kong up more than 40% in about two months, helped the broad Asian benchmark enter a bull market this week. The key gauge is outperforming US peers so far in 2023 boosted by optimism over China’s reopening and a weakening dollar.

“In general the Chinese markets have been a pretty tough place to invest for almost five years now. So that recovery we’ve seen from below, there’s still a lot of value, support in the marketplace,” David Perrett, co-head of Asian equities at M&G Investment Management, said in an interview with Bloomberg TV

In FX, the Bloomberg dollar gauge rose, after hovering near a seven-month low and the greenback was mixed against its Group-of-10 peers, though most currencies traded in relatively narrow ranges. The euro traded in a narrow $1.0726-1.0757 range

  • The Australian dollar led G-10 gains after solid inflation and retail sales prints for November reinforced expectations for a quarter-percentage-point interest rate hike at the Reserve Bank’s first meeting of the year next month. CPI advanced 7.4% seasonally adjusted from a year earlier, up from 6.9% in October and exceeding economists’ median estimate. Core prices, or the trimmed-mean gauge, climbed to 5.6% in November compared with a forecast 5.5%. Retail sales beat most estimates.
  • The yen was sandwiched between large options expiring on Wednesday. Japan’s 30-year bonds gained after an auction of this tenor met resilient demand and the central bank announced unscheduled debt purchases.
  • The Egyptian pound plunged 5% against the US dollar on Wednesday, after the International Monetary Fund said authorities were showing commitment to a flexible exchange rate.

In rates, treasury yields trimmed their advance from the previous session as yields shed up to 6bps as the curve bull-flattened and with the rate on 10-year debt slipping to below 3.58% as investors remained focused on the price outlook for the US. UK spreads flatter, leading core European rates higher with 2s10s, 5s30s tighter by 5.5bp and 2.5bp on the day; Bunds also bull-flattened and outperformed Treasuries as money markets eased ECB tightening bets before a German 10-year bond sale. Focus is also on scheduled ECB speeches. Japan’s 30-year bonds gained after an auction of this tenor met resilient demand and the central bank announced unscheduled debt purchases.

In commodities, oil reversed an earlier decline as traders weighed the outlook for stronger Chinese demand against a reported build in US crude stockpiles. Optimism over demand from China was evident in the iron ore market, with the steel-making ingredient rallying above $120 a ton in Singapore. Copper rose above $9,000 a ton for the first time since June, fueled by hopes of increased consumption by the world’s top user of the metal.

Looking to the day ahead now, it's a quiet day and data releases include US Mortgage applications. Otherwise, central bank speakers include the ECB’s Holzmann, Villeroy and De Cos.

Market Snapshot

  • S&P 500 futures up 0.2% to 3,948.50
  • MXAP up 0.5% to 162.36
  • MXAPJ up 0.3% to 535.96
  • Nikkei up 1.0% to 26,446.00
  • Topix up 1.1% to 1,901.25
  • Hang Seng Index up 0.5% to 21,436.05
  • Shanghai Composite down 0.2% to 3,161.84
  • Sensex little changed at 60,124.03
  • Australia S&P/ASX 200 up 0.9% to 7,195.34
  • Kospi up 0.3% to 2,359.53
  • STOXX Europe 600 up 0.5% to 448.06
  • German 10Y yield little changed at 2.25%
  • Euro up 0.1% to $1.0746
  • Brent Futures up 0.8% to $80.75/bbl
  • Brent Futures up 0.8% to $80.76/bbl
  • Gold spot up 0.5% to $1,885.60
  • U.S. Dollar Index little changed at 103.25

Top Overnight News from Bloomberg

  • The collective hive mind of Wall Street is backing a view that the euro rally is just getting started. With energy prices tumbling and calls for a region-wide recession falling to the wayside, a clear narrative is emerging that the worst of the economic damage is over and European assets are cheap
  • In Germany, Italy and Spain — three of the currency bloc’s top four economies — anxiety at inflation over the next year is close to or below the average since the euro was introduced in 1999, European Commission data show
  • Only a slowdown in core inflation can alter the ECB’s resolve to raise interest rates, according to Governing Council member Robert Holzmann
  • The ECB needs to be pragmatic as it raises interest rates in the coming months to get to a level by the summer that is sufficiently high to bring inflation back toward 2%, Governing Council member Francois Villeroy de Galhau said
  • The French economy continued to grow at the end of 2022 and should avoid a contraction in the first weeks of the year despite headwinds from surging energy prices, a Bank of France survey showed
  • China shouldn’t bail out the debt that local governments take off their balance sheets so as to discourage them from allowing hidden liabilities to snowball out of control, according to former Finance Minister Lou Jiwei
  • Japan’s Finance Ministry will likely issue sovereign bonds to fund decarbonization efforts from the latter half of fiscal year 2023 after assessing investor needs, Michio Saito, a senior official at the ministry, says in a TV Tokyo interview

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks initially tracked the advances on Wall Street after Fed Chair Powell refrained from any major policy rhetoric and as participants looked ahead to upcoming US CPI data with hopes of softening price growth. ASX 200 tested the 7,200 level to the upside with the index led by outperformance in the mining and materials sectors, while participants also digested better-than-expected Retail Sales and a pickup in monthly inflation metrics. Nikkei 225 gained as earnings trickled in with outperformance in Yaskawa Electric after growth in its top and bottom lines, while there was encouragement from news that Fast Retailing will boost wages by as much as 40%. Hang Seng and Shanghai Comp were firmer for a bulk of the session after the PBoC pledged support measures including for the property sector and boosted its short-term liquidity efforts ahead of next week’s Lunar New Year celebrations, although gains were capped in the mainland after the recent mixed loans and aggregate financing data.

Top Asian News

  • PBoC injected CNY 65bln via 7-day reverse repos with the rate kept at 2.00% and it injected CNY 22bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 71bln net daily injection.
  • Analysts noted there is room for China to cut RRR and interest rates this year, while analysts also see room for a rate cut in the property sector, according to China Securities Journal.
  • BoJ offered to buy JPY 100bln in 1-3yr JGBs, JPY 100bln in 3-5yr JGBs, JPY 300bln in 5yr-10yr JGBs, JPY 200bln in 10yr-25yr JGBs and JPY 50bln in 25yr+ JGBs, while it also offered to buy an unlimited amount of JGBs at a fixed rate with maturities of 1yr-3yr and 3yr-5yr in an unscheduled announcement.
  • Stocks Climb Amid Optimism Over Inflation, China: Markets Wrap
  • Egypt Pound Plunges 5% in Test of Shift to Currency Flexibility
  • Russia to Restart FX Operations in Yuan Under Fiscal Rule
  • Philippine Finance Chief Sees Rate Hike Cycle Nearing End

European bourses are firmer across the board, Euro Stoxx 50 +0.8%, with an easing in yields seemingly spurring a modest extension of opening gains. Sectors are primarily in the green, though Insurance names are pressured in sympathy with Direct Line while Retail-related stocks are supported after updates from the likes of JD Sports. US futures posting marginal gains, ES +0.2%, with the US docket particularly thin ex-supply ahead of Thursday's CPI. US FAA has reported a system equipment outage, all flights nationwide have been grounded, according to a source familiar with the situation, cited by NBC Washington reporter.

Top European News

  • ECB's Villeroy says they will need to be pragmatic on speed of hikes, will have to raise rates more in the coming months. Should aim to reach the terminal rate by the summer. Domestic inflation is likely to peak in H1, will avoid hard landing scenario.
  • ECB's Holzmann says rates will need to rise significantly further to reach levels that are sufficiently restrictive to ensure a timely return of inflation to target. Inflation is expected to subside but risks remain to the upside. There are no signs of de-anchored market expectations.
  • Activist Coast Capital Sells Vodafone Stake Within a Year
  • Russia to Sell Yuan From Wealth Fund as Oil Price Hits Budget
  • Ukraine Latest: Zelenskiy Says Russian War Won’t Turn to WWIII
  • Direct Line Shares Tumble as Insurer Cuts Dividend on Claims


  • DXY forms a foothold on 103.000 handle within a tight band post-Powell and pre-US CPI.
  • Aussie outperforms on perky inflation metrics, strong retail sales data and gains in iron ore prices, AUD/USD holds near 0.6900 and AUD/NZD rebounds from around 1.0800 to top 1.0850.
  • Euro retains grasp of 1.0700 handle, but Sterling sags around 1.2150 axis and Yen weakens after closing below a Fib to circa 132.75 and away from decent option expiries at 132.50.
  • PBoC set USD/CNY mid-point at 6.7756 vs exp. 6.7776 (prev. 6.7611)

Fixed Income

  • Core benchmarks continued to gain momentum throughout the morning with little clear sign of concession pre-supply and perhaps deriving some support from ECB remarks.
  • However, the rally has run out of steam with a sub-par German outing aiding the pullback, with Bunds and Gilts now sub 137.00 and 103.00 respectively.
  • Stateside, USTs have been following suit and it remains to be seen if the looming 10yr supply will influence broader action, an auction which follows Tuesday's strong 3yr.
  • UK DMO is to launch a new conventional Gilt maturing October 2053 in the week commencing January 23rd.


  • WTI and Brent have experienced a firmer start to the mid-week session, with the benchmarks posting upside of around USD 0.30/bbl within relatively narrow ranges that keeps the complex within WTD and recent parameters
  • US and allies are reportedly preparing the next round of sanctions on Russian oil, via WSJ; intending to cap the sales price of Russian exports of refined petroleum products.
  • Russian Kremlin, on possible losses from oil price caps, says there have been hardly any cases of the caps yet.
  • Chinese Commerce Ministry will continue to impose anti-subsidy tariffs on dried distillers grains with solubles (DDGS) imported from the US.
  • Standout mover has been LME Copper which eclipsed the USD 9k mark in an extension of yesterday’s price action after fairly contained/rangebound APAC trade for base metals.
  • Spot gold is modestly firmer and resides towards the top-end of a USD 1872-1886/oz range, which is a fresh multi-month high leaving the figure itself as resistance before the May 2022 USD 1909/oz peak.


  • Russia's ambassador to the US commented that the US training of Ukrainian troops on Patriot systems confirms Washington's de facto participation in the conflict and that the US administration's goal is to inflict the most damage on Russia on the battlefield by the hands of Ukrainians, according to Reuters.
  • Russian Kremlin says there is a positive dynamic in the military situation around Ukrainian town of Soledar Putin is open to discussions on Ukraine.
  • Russian Rights Commissioner says important ceasefire proposals have been made during her meeting with Turkish and Ukrainian colleagues in Turkey, via Reuters.
  • Russia and Iran are working on a new shipping corridor to bypass sanctions and are looking to work with India, according to Nikkei. ]

US Event Calendar

  • 07:00: Jan. MBA Mortgage Applications 1.2%, prior -10.3%

DB's Jim Reid concludes the overnight wrap

Morning from Helsinki where snow is on the ground. This is the start of a whistle stop 4 countries in 2 days 2023 outlook tour. I've been coming here around this week every year for about the last 25, apart from the last 2 due to Covid. So it's nice to have the old routine back. In the past I've landed in wild snow storms, seen the temperature hit -20c, seen piles and piles of snow, and yet everything always runs. Impressive! This year it's all fairly calm with the temperature just above zero.

Markets have also been relatively quiet over the last 24 hours as we await tomorrow's all important US CPI print. There was some speculation that remarks from Fed Chair Powell could inject some volatility into proceedings but overall markets turned steadily higher after his lack of commentary on the policy outlook at his panel in Stockholm.

Looking through the various moves yesterday, some of the biggest came from longer-dated core sovereign bond yields. For instance, yields on 10yr Treasuries were up +8.7bps to 3.619%, marking their biggest daily increase so far this year, and taking yields up to their highest level since the weak ISM services release last Friday. We have given back -3bps of that climb in Asia as I type. The rise yesterday though came as investors took out some of the dovish expectations for the Fed they’d been pricing over recent days, with the futures-implied rate for end-2023 up by +2.0bps on the day to 4.459%. Separately, we also heard from the Treasury Department that they were increasing the size of their T-bill auctions. It comes with many expecting that they’ll soon announce extraordinary measures in order to avoid exceeding the statutory cap imposed by the debt ceiling.

Sticking with the US Treasury Department, it was reported yesterday that Treasury Secretary Yellen has agreed to remain in her post after having been asked to by President Biden last month. This is a confirmation of Secretary Yellen’s own professed wished from back in November when she said she intended to stay through the entirety of Biden’s first term. This means at least one part of the upcoming debt ceiling negotiations will have some stability. Bloomberg reported that the Biden administration was preparing to turnover some cabinet-level positions now that the midterms are over.

Over in Europe it was a similar story, with yields on 10yr bunds (+8.0bps) seeing the largest increase on the day, along with smaller increases for OATs (+7.0bps) and BTPs (+3.6bps). And as in the US, the moves occurred with investors taking out some of the dovishness priced for the ECB, which got further support after the ECB’s Schnabel said that “interest rates will still have to rise significantly” and that “inflation will not subside by itself”.

When it comes to the Fed, we did hear from Chair Powell yesterday, but despite the anticipation he didn’t comment on the policy outlook. He was speaking on a panel on central bank independence, and stuck to that topic by defending the merits of an independent monetary policy. Interestingly, he acknowledged that “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy.” Otherwise, he explicitly said that the Fed should “stick to our statutory goals and authorities”, and said that they would not be a “climate policymaker”. With little to go off from Powell, the focus will now turn to tomorrow’s US CPI release for December.

With Powell not taking a hawkish tone, equities drifted higher after Europe logged off. The S&P 500 ticked +0.70% higher, with both the NASDAQ (+1.01%) and the Dow Jones (+0.56%) also rising. The rally had a distinct risk-on tone with communications (+1.29%) and consumer discretionary (+1.26%) names outperforming while defensives like staples (-0.16%) and utilities (+0.04%) lagged. Having closed beforehand and catching up to the US reversal late Monday, European equities pulled back with the STOXX 600 down -0.59% on the day.

Asian markets are stronger this morning. As I type, the Nikkei (+1.02%) is leading gains followed by the Hang Seng (+1.01%), the KOSPI (+0.40%), the CSI (+0.22%) and the Shanghai Composite (+0.20%). Outside of Asia, stock futures in the US are fluctuating with contracts on the S&P 500 (+0.04%) just above flat while those on the NASDAQ 100 (-0.05%) are trading fractionally lower. Meanwhile, European futures tied to the DAX (+0.55%) are catching back up.

Early morning data showed that inflationary pressures are yet to ease in Australia as CPI advanced +7.3% y/y in November (v/s +7.2% expected), up from a surprise pullback to +6.9% in October. The latest inflation reading is at its highest level in 30 years with housing costs being the main contributor to the annual increase. Separately, retail sales rebounded +1.4% m/m in November, buoyed by consumer appetite for Black Friday sales despite rising interest rates and high inflation. Market expectations were for a +0.6% gain as against October’s upwardly revised +0.4% rise. The Australian dollar (+0.39%) nudged higher against the dollar, trading at $0.69 on the prospect of more interest rate hikes by the Reserve Bank of Australia (RBA).

In commodity news, copper prices are trading at the highest level since June inching towards $9,000 a ton as China’s exit from the Zero Covid policy enhanced the demand outlook of the commodity.

Elsewhere yesterday, the French government outlined a plan that would see the country’s retirement age rise to 64 by 2030, up from 62 at present. Moves to reform the pension system have long been an ambition of President Macron’s, but a previous attempt in his first term was postponed during the Covid-19 pandemic, and there remains opposition from trade unions and some other political parties. Macron’s party no longer has an absolute majority in parliament either, but they have made some concessions to the conservative Les Républicains to try and secure their votes.

In other news, the World Bank released their latest round of economic projections yesterday, with their global growth projection for 2023 now at +1.7%, marking a downgrade from their +3.0% forecast back in June. Those downgrades were mainly driven by the advanced economies, where growth is now seen at just +0.5% (vs. +2.2% in June), but the forecasts for emerging market and developing economies were also lowered, with this year’s growth now seen at +3.4% (vs. +4.2% in June).

Finally, there wasn’t a great deal of other data yesterday. One release in the US was the NFIB’s small business optimism index, which fell more than expected to 89.8 in December (vs. 91.5 expected). That’s the second-lowest reading in over a decade. Elsewhere, French industrial production grew by a faster-than-expected +2.0% in November (vs. +0.8% expected).

To the day ahead now, and data releases include Italian retail sales for November. Otherwise, central bank speakers include the ECB’s Holzmann, Villeroy and De Cos.

Tyler Durden Wed, 01/11/2023 - 08:04

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As We Sell Off Our Strategic Oil Reserves, Ponder This

As We Sell Off Our Strategic Oil Reserves, Ponder This

Authored by Bruce Wilds via Advancing Time blog,

One of Biden’s answers to combating…



As We Sell Off Our Strategic Oil Reserves, Ponder This

Authored by Bruce Wilds via Advancing Time blog,

One of Biden's answers to combating higher gas prices has been to tap into America's oil reserves. While I was never a fan of the U.S. Strategic Petroleum Reserve (SPR) program, it does have a place in our toolbox of weapons. We can use the reserve to keep the country running if outside oil supplies are cut off. Still, considering how out of touch with reality Washington has become, we can only imagine the insane types of services it would deem essential next time an oil shortage occurs.

Sadly, some of these reserves found their way into the export market and ended up in China. We now have proof that the President's son Hunter had a Chinese Communist Party member as his assistant while dealing with the Chinese. Apparently, he played a role in the shipping of American natural gas to China in 2017. It seems the Biden family was promising business associates that they would be rewarded once Biden became president. Biden's actions could be viewed as those of a traitor or at least disqualify him from being President.

The following information was contained in a letter from House Oversight Committee ranking member James Comer, R-Ky. to Treasury Secretary Janet Yellen dated Sept. 20. 

"The President has not only misled the American public about his past foreign business transactions, but he also failed to disclose that he played a critical role in arranging a business deal to sell American natural resources to the Chinese while planning to run for President.”

Joe Biden, Comer said, was a business partner in the arrangement and had office space to work on the deal, and a firm he managed received millions from his Chinese partners ahead of the anticipated venture. While part of what Comer stated had previously been reported in the news, the letter, cited whistleblower testimonies, as well as emails, a corporate PowerPoint presentation, and a screenshot of encrypted messages. These as well as  bank documents that committee Republicans obtained suggest Biden’s knowledge and involvement in the plan dated back to at least 2017.

The big point here is;

  • The Strategic Petroleum Reserve, which was established in 1975 due to the 1973 oil embargo, is now at its lowest level since December 1983.

In December 1975, with memories of gas lines fresh on the minds of Americans following the 1973 OPEC oil embargo, Congress established the Strategic Petroleum Reserve (SPR). It was designed “to reduce the impact of severe energy supply interruptions.” What are the implications of depleting the SPR and is it still important?

The U.S. government began to fill the reserve and it hit its high point in 2010 at around 726.6 million barrels. Since December 1984, this is the first time the level has been lower than 450 million barrels. Draining the SPR has been a powerful tool for the administration in its effort to tame the price of gasoline. It also signaled a "new era" of intervention on the part of the White House. 

This brings front-and-center questions concerning the motivation of those behind this action. One of the implications of Biden's war on high oil prices is that it has short-circuited the fossil investment/supply development process.  Capital expenditures among the five largest oil and gas companies have fallen as the price of oil has come under fire. The current under-investment in this sector is one of the reasons oil prices are likely to take a big jump in a few years. Production from existing wells is expected to rapidly fall.

The Supply Of Oil Is Far More Constant And Inelastic Than Demand

It is important to remember when it comes to oil, the supply is far more constant and inelastic than the demand. This means that it takes time and investment to bring new wells online while demand can rapidly change. This happened during the pandemic when countries locked down and told their populations and told them to stay at home. This resulted in the price of oil temporarily going negative because there was nowhere to store it.

Draining oil from the strategic reserve is a short-sighted and dangerous choice that will impact America's energy security at times of global uncertainty. In an effort to halt inflationary forces, Biden released a huge amount of crude oil from the SPR to artificially suppress fuel prices ahead of the midterm elections. 

To date, Biden has dumped more SPR on the market than all previous presidents combined reducing the reserves to levels not seen since the early 1980s. In spite of how I feel about the inefficiencies of this program, it does serve a vital role. It is difficult to underestimate the importance of a country's ability to rapidly increase its domestic flow of oil. This defensive action protects its economy and adds to its resilience. 

Biden's actions have put the whole country at risk. Critics of his policy pointed out the Strategic Petroleum Reserve was designed for use in an emergency not as a tool to manipulate elections. Another one of Biden's goals may be to bring about higher oil prices to reduce its use and accelerate the use of high-cost green energy.

Either way, Biden's war on oil has not made America's energy policies more efficient or the country stronger.

Tyler Durden Sat, 03/25/2023 - 18:30

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The Disinformation-Industrial Complex Vs Domestic Terror

The Disinformation-Industrial Complex Vs Domestic Terror

Authored by Ben Weingarten via,

Combating disinformation…



The Disinformation-Industrial Complex Vs Domestic Terror

Authored by Ben Weingarten via,

Combating disinformation has been elevated to a national security imperative under the Biden administration, as codified in its first-of-its-kind National Strategy for Countering Domestic Terrorism, published in June 2021.  

That document calls for confronting long-term contributors to domestic terrorism.

In connection therewith, it cites as a key priority “addressing the extreme polarization, fueled by a crisis of disinformation and misinformation often channeled through social media platforms, which can tear Americans apart and lead some to violence.” 

Media literacy specifically is seen as integral to this effort. The strategy adds that: “the Department of Homeland Security and others are either currently funding and implementing or planning evidence–based digital programming, including enhancing media literacy and critical thinking skills, as a mechanism for strengthening user resilience to disinformation and misinformation online for domestic audiences.” 

Previously, the Senate Intelligence Committee suggested, in its report on “Russian Active Measures Campaigns and Interference in the 2016 Election” that a “public initiative—propelled by Federal funding but led in large part by state and local education institutions—focused on building media literacy from an early age would help build long-term resilience to foreign manipulation of our democracy.” 

In June 2022, Democrat Senator Amy Klobuchar introduced the Digital Citizenship and Media Literacy Act, which – citing the Senate Intelligence Committee’s report – would fund a media literacy grant program for state and local education agencies, among other entities. 

NAMLE and Media Literacy Now, both recipients of State Department largesse, endorsed the bill. 

Acknowledging explicitly the link between this federal counter-disinformation push, and the media literacy education push, Media Literacy Now wrote in its latest annual report that ... 

... the federal government is paying greater attention to the national security consequences of media illiteracy.

The Department of Homeland Security is offering grants to organizations to improve media literacy education in communities across the country. Meanwhile, the Department of Defense is incorporating media literacy into standard troop training, and the State Department is funding media literacy efforts abroad.

These trends are important for advocates to be aware of as potential sources of funding as well as for supporting arguments around integrating media literacy into K-12 classrooms. 

When presented with notable examples of narratives corporate media promoted around Trump-Russia collusion, and COVID-19, to justify this counter-disinformation campaign, Media Literacy Now president Erin McNeill said: “These examples are disappointing.”

The antidote, in her view is, “media literacy education because it helps people not only recognize the bias in their news sources and seek out other sources, but also to demand and support better-quality journalism.” (Emphasis McNeill’s)

Tyler Durden Sat, 03/25/2023 - 17:30

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G7 Vs BRICS – Off To The Races

G7 Vs BRICS – Off To The Races

Authored by Scott Ritter via,

An economist digging below the surface of an IMF report has…



G7 Vs BRICS - Off To The Races

Authored by Scott Ritter via,

An economist digging below the surface of an IMF report has found something that should shock the Western bloc out of any false confidence in its unsurpassed global economic clout...

G7 leaders meeting on June 28, 2022, at Schloss Elmau in Krün, Germany. (White House/Adam Schultz)

Last summer, the Group of 7 (G7), a self-anointed forum of nations that view themselves as the most influential economies in the world, gathered at Schloss Elmau, near Garmisch-Partenkirchen, Germany, to hold their annual meeting. Their focus was punishing Russia through additional sanctions, further arming of Ukraine and the containment of China.

At the same time, China hosted, through video conference, a gathering of the BRICS economic forum. Comprised of Brazil, Russia, India, China and South Africa, this collection of nations relegated to the status of so-called developing economies focused on strengthening economic bonds, international economic development and how to address what they collectively deemed the counter-productive policies of the G7.

In early 2020, Russian Deputy Foreign Minister Sergei Ryabkov had predicted that, based upon purchasing power parity, or PPP, calculations projected by the International Monetary Fund, BRICS would overtake the G7 sometime later that year in terms of percentage of the global total.

(A nation’s gross domestic product at purchasing power parity, or PPP, exchange rates is the sum value of all goods and services produced in the country valued at prices prevailing in the United States and is a more accurate reflection of comparative economic strength than simple GDP calculations.)

Then the pandemic hit and the global economic reset that followed made the IMF projections moot. The world became singularly focused on recovering from the pandemic and, later, managing the fallout from the West’s massive sanctioning of Russia following that nation’s invasion of Ukraine in February 2022.

The G7 failed to heed the economic challenge from BRICS, and instead focused on solidifying its defense of the “rules based international order” that had become the mantra of the administration of U.S. President Joe Biden.


Since the Russian invasion of Ukraine, an ideological divide that has gripped the world, with one side (led by the G7) condemning the invasion and seeking to punish Russia economically, and the other (led by BRICS) taking a more nuanced stance by neither supporting the Russian action nor joining in on the sanctions. This has created a intellectual vacuum when it comes to assessing the true state of play in global economic affairs.

U.S. President Joe Biden in virtual call with G7 leaders and Ukrainian President Volodymyr Zelenskyy, Feb. 24. (White House/Adam Schultz)

It is now widely accepted that the U.S. and its G7 partners miscalculated both the impact sanctions would have on the Russian economy, as well as the blowback that would hit the West.

Angus King, the Independent senator from Maine, recently observed that he remembers

“when this started a year ago, all the talk was the sanctions are going to cripple Russia. They’re going to be just out of business and riots in the street absolutely hasn’t worked …[w]ere they the wrong sanctions? Were they not applied well? Did we underestimate the Russian capacity to circumvent them? Why have the sanctions regime not played a bigger part in this conflict?”

It should be noted that the IMF calculated that the Russian economy, as a result of these sanctions, would contract by at least 8 percent. The real number was 2 percent and the Russian economy — despite sanctions — is expected to grow in 2023 and beyond.

This kind of miscalculation has permeated Western thinking about the global economy and the respective roles played by the G7 and BRICS. In October 2022, the IMF published its annual World Economic Outlook (WEO), with a focus on traditional GDP calculations. Mainstream economic analysts, accordingly, were comforted that — despite the political challenge put forward by BRICS in the summer of 2022 — the IMF was calculating that the G7 still held strong as the leading global economic bloc.

In January 2023 the IMF published an update to the October 2022 WEO,  reinforcing the strong position of the G7.  According to Pierre-Olivier Gourinchas, the IMF’s chief economist, the “balance of risks to the outlook remains tilted to the downside but is less skewed toward adverse outcomes than in the October WEO.”

This positive hint prevented mainstream Western economic analysts from digging deeper into the data contained in the update. I can personally attest to the reluctance of conservative editors trying to draw current relevance from “old data.”

Fortunately, there are other economic analysts, such as Richard Dias of Acorn Macro Consulting, a self-described “boutique macroeconomic research firm employing a top-down approach to the analysis of the global economy and financial markets.”

Rather than accept the IMF’s rosy outlook as gospel, Dias did what analysts are supposed to do — dig through the data and extract relevant conclusions.

After rooting through the IMF’s World Economic Outlook Data Base, Dias conducted a comparative analysis of the percentage of global GDP adjusted for PPP between the G7 and BRICS, and made a surprising discovery: BRICS had surpassed the G7.

This was not a projection, but rather a statement of accomplished fact:

BRICS was responsible for 31.5 percent of the PPP-adjusted global GDP, while the G7 provided 30.7 percent.

Making matters worse for the G7, the trends projected showed that the gap between the two economic blocs would only widen going forward.

The reasons for this accelerated accumulation of global economic clout on the part of BRICS can be linked to three primary factors:

  • residual fallout from the Covid-19 pandemic,

  • blowback from the sanctioning of Russia by the G7 nations in the aftermath of the Russian invasion of Ukraine and a growing resentment among the developing economies of the world to G7 economic policies and

  • priorities which are perceived as being rooted more in post-colonial arrogance than a genuine desire to assist in helping nations grow their own economic potential. 

Growth Disparities

It is true that BRICS and G7 economic clout is heavily influenced by the economies of China and the U.S., respectively. But one cannot discount the relative economic trajectories of the other member states of these economic forums. While the economic outlook for most of the BRICS countries points to strong growth in the coming years, the G7 nations, in a large part because of the self-inflicted wound that is the current sanctioning of Russia, are seeing slow growth or, in the case of the U.K., negative growth, with little prospect of reversing this trend.

Moreover, while G7 membership remains static, BRICS is growing, with Argentina and Iran having submitted applications, and other major regional economic powers, such as Saudi Arabia, Turkey and Egypt, expressing an interest in joining. Making this potential expansion even more explosive is the recent Chinese diplomatic achievement in normalizing relations between Iran and Saudia Arabia.

Diminishing prospects for the continued global domination by the U.S. dollar, combined with the economic potential of the trans-Eurasian economic union being promoted by Russia and China, put the G7 and BRICS on opposing trajectories. BRICS should overtake the G7 in terms of actual GDP, and not just PPP, in the coming years.

But don’t hold your breath waiting for mainstream economic analysts to reach this conclusion. Thankfully, there are outliers such as Richard Dias and Acorn Macro Consulting who seek to find new meaning from old data. 

Tyler Durden Sat, 03/25/2023 - 07:00

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