Connect with us

Luongo: Opening Salvos Thrown, What Are Putin’s Next Steps In Ukraine?

Luongo: Opening Salvos Thrown, What Are Putin’s Next Steps In Ukraine?

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

Last week I…

Published

on

Luongo: Opening Salvos Thrown, What Are Putin's Next Steps In Ukraine?

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

Last week I wrote that Russian President Vladimir Putin rewrote the rules for the geopolitical game board. A week into his campaign to officially “demilitarize and de-Nazify Ukraine” it’s clear to me that Putin’s ambitions lie far beyond this stated goal.

He will, however, stick to that script until that part of the campaign is complete.

Today I want to start outlining where we go next and to do that we have to describe where we are.

Looking around the reports that are the most credible (and properly bracketing for any partisanship) we are staring at a complete, effective neutralization of the Ukrainian Armed Forces (UAF) to hold any of the ethnically-dominant areas of Ukraine.

In a post for my patrons on February 25th, responding to an excellent article by Alistair MacLeod I wrote the following:

MacLeodBoth sides probably do not know how fragile the Eurozone banking system is, with both the ECB and its national central bank shareholders already having liabilities greater than their assets. In other words, rising interest rates have broken the euro system and an economic and financial catastrophe on its eastern flank will probably trigger its collapse.

I’ve been banging my shoe on this table for 3 years now.  If the US/NATO respond with some kind of guerilla war here to hang Ukraine like an albatross around Putin’s neck, as we should expect, then Europe is in big trouble financially.  

Because the financial war will keep escalating as Putin responds militarily.  Remember, he’s openly threatened the ‘decision makers’ here.  And no amount of mealy-mouthed CIA/MI6 disinformation will deter him from action anymore.  

This is always what I meant by “spooks start civil wars, militaries end them.”  There is no more War for Ukraine.  

I still believe that. This isn’t a war for Ukraine, it’s a war for the future of the entire world. Ukraine represents the hill both Davos and Russia have chosen to live or die on.

The Afghanistan Gambit

Davos has refused to let President Zelensky surrender because if he does then legally there is no more war to sanction Russia with. It’s not Putin’s War at that point, it is a settled conflict and terms negotiated.

At that point what’s left of Ukraine can be carved up into pieces. It’s way to early for that to occur, so you’ll see constant threats of peace talks, but that’s only to assuage the fears of the capital markets, which is where Davos has the most control over the situation.

The primary goal of the information war from the West is to push capital markets as far in its favor as possible, keeping things within the bounds of the ‘acceptable’ to avoid any short-term pain. Gold is still under it’s all-time high, which is just hilarious.

That said, in that same post I put up this map of a future Ukraine which I felt, conservatively, would be in effect by the end of this year. Events are moving far faster than that, however.

Chernihiv and Sumy are also in play, as is Lviv as a bargaining chip to Poland. As Fmr. Col. Douglas Macgregor pointed out on Fox News recently, everything east of the Dnieper River will become part of a new Novorussia, if not part of the Russian Federation.

Clearly this is Putin’s initial goal, the partitioning of Ukraine. He’s moved militarily, the EU and the rest of the West have responded financially. Their hope is to turn Ukraine into a quagmire, a la Afghanistan (per Hillary Clinton’s recent remarks), which they hope Russia will not be able to sustain after being choked off from the global economy.

The financial sanctions regime put in place so far are brutal but also full of holes wide enough for Putin to maneuver within and around because of the well understood facts of Russia’s dominance as a global supplier of life-sustaining commodities for the entire world.

This is an asymmetric war.

There isn’t much farther the West can go financially. They’ve seized Bank of Russia foreign assets, for pity’s sake. What other weapons do they really have in their arsenal which can threaten Russia with?

They have, in effect, executed their nuclear first strike against Russia. Once you’ve gone nuclear, where do you go next? Real nukes? Yes, that’s a possibility, sadly, given the people we’re talking about.

On the other hand, Russia has so far only committed the necessary troops to neutralize Ukraine. So, in this respect, big advantage Russia.

Facts on the ground are facts. Russia has taken territory it can maintain. By not targeting civilians or civilian infrastructure, Russia has put itself in a very good position to not face an insane insurgency which the West can finance in the way that it has in past conflicts.

Much of NATO’s in-country assets have been neutralized. And you know this because the propaganda and rhetoric have been so thoroughly crude, cartoonish and strident. Again, ask why the financial and informational war has been so intense?

Is it because the West thinks it’s winning or because it’s trying desperately to pivot domestic populations to solidarity after losing massive credibility during the last year with COVID-19 related lockdowns, vax passes, and the unpersoning of whole swaths of Western society?

The Real Russian Cauldron

Now let’s ask the next question that keeps coming up.

Why has Putin not shut off the gas to a Europe that is rapidly running out of it?

Because to do so would target civilian populations. If he’s not targeting civilians in Ukraine to minimize their anger at being invaded, then why would he use that weapon now against civilians in Germany who hold the key to getting overthrowing the insane politicians and oligarchs who provoked this war in the first place?

It doesn’t make any strategic sense. It also speaks to a kind of confidence in Russia’s military position in Ukraine, thereby lending credence to the reports that Russia is achieving her strategic goals on the ground in Ukraine.

Okay, that’s the lay of the land.

So, what are Putin’s real goals? Like I said at the outset, nothing less than breaking the back of Davos and their agents in the US/UK who have tormented Russia for more than a century.

How does he achieve that goal?

Putin is creating incontrovertible facts which his opponents must respond to. Again, he’s setting the operational tempo, like I said last week.

Their counter-moves are insipid and predictable. Ukraine has asked for admission into the EU. The EU is open to this. Georgia is now doing the same thing. Turkey is livid. Hungary is not getting involved.

No one is willing to actually send arms to Ukraine.

What does the EU achieve by adding Ukraine? Do they think because they signed a piece of paper with a person who is de facto not in charge of his country going to change the facts on the ground there?

Do they still think “stroke of the pen, law of the land, kinda cool” matters at this point?

Because if the EU accepts Ukraine into its ranks, then it will be responsible for the next stage of escalation, not Putin. It will then have to figure out how to oust the Russians from their territory.

Last night President Sundowner made the entire US State of the Union about Ukraine. Do they really think a president with an approval rating that is, at best 37%, capable of marshalling the US into fighting a war for Europe against Russia after bankrupting us with NATO for three generations?

If they are, they are more delusional than even I’ve contemplated at this point.

Is NATO prepared to expand now into Ukraine under the umbrella of EU membership?

What’s obvious to me is the neocons and neoliberals controlling the West think they can turn Ukraine into a quagmire for Putin, but what if Putin thinks he can turn Ukraine into a quagmire for them?

Russia is not capable of conquering Europe. But he doesn’t need to to defeat them. He just needs to create a version of the map I posted above.

The Limits of Money Wars

If Putin and Russia have achieved, or are about to achieve, all of their military goals in Ukraine, what do they do to secure those gains?

They have to neutralize the financial war waged against them and create an environment where Europe spends money it doesn’t have, with failing political capital domestically, and bankrupts them completely.

And the first move along those lines was just announced by the Russian Finance Ministry today (VPN and Deepl translator needed).

What does this mean? It means simply that Russia has now, in effect, begun the remonetization of gold for domestic purposes. By removing the VAT on gold purchases Russian citizens can now offset their currency risk with gold and stabilize the domestic monetary situation.

The first step in offsetting financial warfare from the West is allowing the domestic population to be immune to collapses in their currency from foreign actors pulling capital out of the country. Companies doing international business now have an alternative to hold time deposits which are far less volatile than the ruble without penalty. Gold becomes the coin of Russia’s international business.

It’s the beginning of the process of draining physical gold from the global market and control over its price by the ponzi schemes that are the COMEX and the LBMA.

This is a first step in rebuilding confidence in the Russian banking system rather than what we’re seeing in the West which is the ritualistic assault on privacy, wealth generation and the value of our labor, which is degrading rapidly thanks to inflation, which will rage from here as all energy and commodity markets are scared to death of Davos’ financial war on Russia.

As Luke Gromen pointed out on Twitter this is the big signal that the petrodollar system is headed for the ashbin of history.

With the global oil market in a complete state of shock as no one wants to run afoul of US and/or EU sanctions on Russian energy, the price of oil here potentially goes parabolic. At that point reality hits the money masters squarely in the face.

Those that brave the waters will get their oil at a steep discount, those that don’t will pay through the nose, further accelerating the decline of those economies as inflation spirals out of control and the people put the blame, not on Putin, but on the people in charge.

Moreover, Russia has kept the gas flows going to ensure that money keeps flowing into the country to finance further expansion of its gold reserves.

The current shock will abate. Russia is not Iran. It can insure its own tanker fleet. It can deliver the oil. If Iran could survive what Trump did to them, Russia can thrive under this new regime, changing the entire flow of capital around the world.

Now, I want to turn your attention to the other news of which further corroborates that Davos and Europe are trapped. FOMC Chair Jerome Powell testified today telling the world that the Fed will still hike 25 basis points in March. Bullard came out and said the Fed has to withdraw accommodation to maintain its credibility.

Further Powell blamed both the Fed and Congress for inflation. It’s a result of too much spending.

Powell even floated the idea that the world can have more than one reserve currency (!!). Meanwhile Biden is talking about bringing back Build Back Better and sending us down the road to financial ruin.

The fight between Davos and the Fed, which I identified last summer is real, folks. That leaves a belligerent yet impotent Europe caught between the Scylla of a Fed drying up the global supply of dollars and the Carbides of a Russian military capable of withstanding anything Europe throws at them if the US doesn’t get involved, i.e. this doesn’t go nuclear.

NATO isn’t getting involved in Ukraine even if Ukraine becomes an EU member. They can have the landlocked rump of what’s left over. If Putin is smart, which he is, he will offer the Poles Lviv and Hungary Transcarpathia. The EU gets the dregs.

It’s clear from the wailing and gnashing of the Neocon/Neolibs that they want Putin Milosevic’d for daring to put them in this position. They still dream of overthrowing him. It’s also clear that there are a lot of people who are not down with the willful destruction of the current global economy within the upper reaches of US policy makers and European corporate boards.

This is the real fight for the future and if Davos thinks extreme demand destruction will be tolerated for any length of time over a regional conflict like Ukraine because it’s their ox being gored, then this war, while still raging is, in effect, already over.

*  *  *

Join My Patreon if you like seeing two moves ahead

BTC: 3GSkAe8PhENyMWQb7orjtnJK9VX8mMf7Zf
BCH: qq9pvwq26d8fjfk0f6k5mmnn09vzkmeh3sffxd6ryt
DCR: DsV2x4kJ4gWCPSpHmS4czbLz2fJNqms78oE
LTC: MWWdCHbMmn1yuyMSZX55ENJnQo8DXCFg5k
DASH: XjWQKXJuxYzaNV6WMC4zhuQ43uBw8mN4Va
WAVES: 3PF58yzAghxPJad5rM44ZpH5fUZJug4kBSa
ETH: 0x1dd2e6cddb02e3839700b33e9dd45859344c9edc
DGB: SXygreEdaAWESbgW6mG15dgfH6qVUE5FSE

Tyler Durden Thu, 03/03/2022 - 03:30

Read More

Continue Reading

Uncategorized

Mortgage rates fall as labor market normalizes

Jobless claims show an expanding economy. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.

Published

on

Everyone was waiting to see if this week’s jobs report would send mortgage rates higher, which is what happened last month. Instead, the 10-year yield had a muted response after the headline number beat estimates, but we have negative job revisions from previous months. The Federal Reserve’s fear of wage growth spiraling out of control hasn’t materialized for over two years now and the unemployment rate ticked up to 3.9%. For now, we can say the labor market isn’t tight anymore, but it’s also not breaking.

The key labor data line in this expansion is the weekly jobless claims report. Jobless claims show an expanding economy that has not lost jobs yet. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.

From the Fed: In the week ended March 2, initial claims for unemployment insurance benefits were flat, at 217,000. The four-week moving average declined slightly by 750, to 212,250


Below is an explanation of how we got here with the labor market, which all started during COVID-19.

1. I wrote the COVID-19 recovery model on April 7, 2020, and retired it on Dec. 9, 2020. By that time, the upfront recovery phase was done, and I needed to model out when we would get the jobs lost back.

2. Early in the labor market recovery, when we saw weaker job reports, I doubled and tripled down on my assertion that job openings would get to 10 million in this recovery. Job openings rose as high as to 12 million and are currently over 9 million. Even with the massive miss on a job report in May 2021, I didn’t waver.

Currently, the jobs openings, quit percentage and hires data are below pre-COVID-19 levels, which means the labor market isn’t as tight as it once was, and this is why the employment cost index has been slowing data to move along the quits percentage.  

2-US_Job_Quits_Rate-1-2

3. I wrote that we should get back all the jobs lost to COVID-19 by September of 2022. At the time this would be a speedy labor market recovery, and it happened on schedule, too

Total employment data

4. This is the key one for right now: If COVID-19 hadn’t happened, we would have between 157 million and 159 million jobs today, which would have been in line with the job growth rate in February 2020. Today, we are at 157,808,000. This is important because job growth should be cooling down now. We are more in line with where the labor market should be when averaging 140K-165K monthly. So for now, the fact that we aren’t trending between 140K-165K means we still have a bit more recovery kick left before we get down to those levels. 




From BLS: Total nonfarm payroll employment rose by 275,000 in February, and the unemployment rate increased to 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in government, in food services and drinking places, in social assistance, and in transportation and warehousing.

Here are the jobs that were created and lost in the previous month:

IMG_5092

In this jobs report, the unemployment rate for education levels looks like this:

  • Less than a high school diploma: 6.1%
  • High school graduate and no college: 4.2%
  • Some college or associate degree: 3.1%
  • Bachelor’s degree or higher: 2.2%
IMG_5093_320f22

Today’s report has continued the trend of the labor data beating my expectations, only because I am looking for the jobs data to slow down to a level of 140K-165K, which hasn’t happened yet. I wouldn’t categorize the labor market as being tight anymore because of the quits ratio and the hires data in the job openings report. This also shows itself in the employment cost index as well. These are key data lines for the Fed and the reason we are going to see three rate cuts this year.

Read More

Continue Reading

Uncategorized

Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month

Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month

Last month we though that the January…

Published

on

Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month

Last month we though that the January jobs report was the "most ridiculous in recent history" but, boy, were we wrong because this morning the Biden department of goalseeked propaganda (aka BLS) published the February jobs report, and holy crap was that something else. Even Goebbels would blush. 

What happened? Let's take a closer look.

On the surface, it was (almost) another blockbuster jobs report, certainly one which nobody expected, or rather just one bank out of 76 expected. Starting at the top, the BLS reported that in February the US unexpectedly added 275K jobs, with just one research analyst (from Dai-Ichi Research) expecting a higher number.

Some context: after last month's record 4-sigma beat, today's print was "only" 3 sigma higher than estimates. Needless to say, two multiple sigma beats in a row used to only happen in the USSR... and now in the US, apparently.

Before we go any further, a quick note on what last month we said was "the most ridiculous jobs report in recent history": it appears the BLS read our comments and decided to stop beclowing itself. It did that by slashing last month's ridiculous print by over a third, and revising what was originally reported as a massive 353K beat to just 229K,  a 124K revision, which was the biggest one-month negative revision in two years!

Of course, that does not mean that this month's jobs print won't be revised lower: it will be, and not just that month but every other month until the November election because that's the only tool left in the Biden admin's box: pretend the economic and jobs are strong, then revise them sharply lower the next month, something we pointed out first last summer and which has not failed to disappoint once.

To be fair, not every aspect of the jobs report was stellar (after all, the BLS had to give it some vague credibility). Take the unemployment rate, after flatlining between 3.4% and 3.8% for two years - and thus denying expectations from Sahm's Rule that a recession may have already started - in February the unemployment rate unexpectedly jumped to 3.9%, the highest since February 2022 (with Black unemployment spiking by 0.3% to 5.6%, an indicator which the Biden admin will quickly slam as widespread economic racism or something).

And then there were average hourly earnings, which after surging 0.6% MoM in January (since revised to 0.5%) and spooking markets that wage growth is so hot, the Fed will have no choice but to delay cuts, in February the number tumbled to just 0.1%, the lowest in two years...

... for one simple reason: last month's average wage surge had nothing to do with actual wages, and everything to do with the BLS estimate of hours worked (which is the denominator in the average wage calculation) which last month tumbled to just 34.1 (we were led to believe) the lowest since the covid pandemic...

... but has since been revised higher while the February print rose even more, to 34.3, hence why the latest average wage data was once again a product not of wages going up, but of how long Americans worked in any weekly period, in this case higher from 34.1 to 34.3, an increase which has a major impact on the average calculation.

While the above data points were examples of some latent weakness in the latest report, perhaps meant to give it a sheen of veracity, it was everything else in the report that was a problem starting with the BLS's latest choice of seasonal adjustments (after last month's wholesale revision), which have gone from merely laughable to full clownshow, as the following comparison between the monthly change in BLS and ADP payrolls shows. The trend is clear: the Biden admin numbers are now clearly rising even as the impartial ADP (which directly logs employment numbers at the company level and is far more accurate), shows an accelerating slowdown.

But it's more than just the Biden admin hanging its "success" on seasonal adjustments: when one digs deeper inside the jobs report, all sorts of ugly things emerge... such as the growing unprecedented divergence between the Establishment (payrolls) survey and much more accurate Household (actual employment) survey. To wit, while in January the BLS claims 275K payrolls were added, the Household survey found that the number of actually employed workers dropped for the third straight month (and 4 in the past 5), this time by 184K (from 161.152K to 160.968K).

This means that while the Payrolls series hits new all time highs every month since December 2020 (when according to the BLS the US had its last month of payrolls losses), the level of Employment has not budged in the past year. Worse, as shown in the chart below, such a gaping divergence has opened between the two series in the past 4 years, that the number of Employed workers would need to soar by 9 million (!) to catch up to what Payrolls claims is the employment situation.

There's more: shifting from a quantitative to a qualitative assessment, reveals just how ugly the composition of "new jobs" has been. Consider this: the BLS reports that in February 2024, the US had 132.9 million full-time jobs and 27.9 million part-time jobs. Well, that's great... until you look back one year and find that in February 2023 the US had 133.2 million full-time jobs, or more than it does one year later! And yes, all the job growth since then has been in part-time jobs, which have increased by 921K since February 2023 (from 27.020 million to 27.941 million).

Here is a summary of the labor composition in the past year: all the new jobs have been part-time jobs!

But wait there's even more, because now that the primary season is over and we enter the heart of election season and political talking points will be thrown around left and right, especially in the context of the immigration crisis created intentionally by the Biden administration which is hoping to import millions of new Democratic voters (maybe the US can hold the presidential election in Honduras or Guatemala, after all it is their citizens that will be illegally casting the key votes in November), what we find is that in February, the number of native-born workers tumbled again, sliding by a massive 560K to just 129.807 million. Add to this the December data, and we get a near-record 2.4 million plunge in native-born workers in just the past 3 months (only the covid crash was worse)!

The offset? A record 1.2 million foreign-born (read immigrants, both legal and illegal but mostly illegal) workers added in February!

Said otherwise, not only has all job creation in the past 6 years has been exclusively for foreign-born workers...

Source: St Louis Fed FRED Native Born and Foreign Born

... but there has been zero job-creation for native born workers since June 2018!

This is a huge issue - especially at a time of an illegal alien flood at the southwest border...

... and is about to become a huge political scandal, because once the inevitable recession finally hits, there will be millions of furious unemployed Americans demanding a more accurate explanation for what happened - i.e., the illegal immigration floodgates that were opened by the Biden admin.

Which is also why Biden's handlers will do everything in their power to insure there is no official recession before November... and why after the election is over, all economic hell will finally break loose. Until then, however, expect the jobs numbers to get even more ridiculous.

Tyler Durden Fri, 03/08/2024 - 13:30

Read More

Continue Reading

International

Angry Shouting Aside, Here’s What Biden Is Running On

Angry Shouting Aside, Here’s What Biden Is Running On

Last night, Joe Biden gave an extremely dark, threatening, angry State of the Union…

Published

on

Angry Shouting Aside, Here's What Biden Is Running On

Last night, Joe Biden gave an extremely dark, threatening, angry State of the Union address - in which he insisted that the American economy is doing better than ever, blamed inflation on 'corporate greed,' and warned that Donald Trump poses an existential threat to the republic.

But in between the angry rhetoric, he also laid out his 2024 election platform - for which additional details will be released on March 11, when the White House sends its proposed budget to Congress.

To that end, Goldman Sachs' Alec Phillips and Tim Krupa have summarized the key points:

Taxes

While railing against billionaires (nothing new there), Biden repeated the claim that anyone making under $400,000 per year won't see an increase in their taxes.  He also proposed a 21% corporate minimum tax, up from 15% on book income outlined in the Inflation Reduction Act (IRA), as well as raising the corporate tax rate from 21% to 28% (which would promptly be passed along to consumers in the form of more inflation). Goldman notes that "Congress is unlikely to consider any of these proposals this year, they would only come into play in a second Biden term, if Democrats also won House and Senate majorities."

Biden also called on Congress to restore the pandemic-era child tax credit.

Immigration

Instead of simply passing a slew of border security Executive Orders like the Trump ones he shredded on day one, Biden repeated the lie that Congress 'needs to act' before he can (translation: send money to Ukraine or the US border will continue to be a sieve).

As immigration comes into even greater focus heading into the election, we continue to expect the Administration to tighten policy (e.g., immigration has surged 20pp the last 7 months to first place with 28% in Gallup’s “most important problem” survey). As such, we estimate the foreign-born contribution to monthly labor force growth will moderate from 110k/month in 2023 to around 70-90k/month in 2024. -GS

Ukraine

Biden, with House Speaker Mike Johnson doing his best impression of a bobble-head, urged Congress to pass additional assistance for Ukraine based entirely on the premise that Russia 'won't stop' there (and would what, trigger article 5 and WW3 no matter what?), despite the fact that Putin explicitly told Tucker Carlson he has no further ambitions, and in fact seeks a settlement.

As Goldman estimates, "While there is still a clear chance that such a deal could come together, for now there is no clear path forward for Ukraine aid in Congress."

China

Biden, forgetting about all the aggressive tariffs, suggested that Trump had been soft on China, and that he will stand up "against China's unfair economic practices" and "for peace and stability across the Taiwan Strait."

Healthcare

Lastly, Biden proposed to expand drug price negotiations to 50 additional drugs each year (an increase from 20 outlined in the IRA), which Goldman said would likely require bipartisan support "even if Democrats controlled Congress and the White House," as such policies would likely be ineligible for the budget "reconciliation" process which has been used in previous years to pass the IRA and other major fiscal party when Congressional margins are just too thin.

So there you have it. With no actual accomplishments to speak of, Biden can only attack Trump, lie, and make empty promises.

Tyler Durden Fri, 03/08/2024 - 18:00

Read More

Continue Reading

Trending