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March 2022 Monthly

March will be a pivotal month. Three key elements shape the investment climate: geopolitics, easing of Covid pressures in Europe and North America, and…



March will be a pivotal month. Three key elements shape the investment climate: geopolitics, easing of Covid pressures in Europe and North America, and the continued monetary policy response. 

Russia's threat to Ukraine had been simmering for several weeks before the February 11 warning by the US that an attack was imminent.  It became a significant risk-off factor and added to the pressure on equities, while helping support the bond markets.  

While several concessions were offered, there has been no common ground on the key issue of NATO enlargement. Whatever military victory Putin may enjoy, Russia will see more NATO rather than less.  Not only will NATO boost its presence, but it is possible that Sweden (and maybe Finland) joins the military pact.  The risk is that the economic fallout from Russia's military action spurs more inflation and weaker growth.  Most immediately, it has seen the market downgrade the chances of a large rate hike (50 bp) by the Federal Reserve or the Bank of England at their mid-March meetings.    

The virus appears to be receding and social restrictions are being lifted in Europe and North America. Economies are re-opening.  Delivery times are improving, suggesting supply chain disruptions are easing. After a slow start, the G7 economies appear to be strengthening, with the exception of Japan. Japan imposed new social restrictions in late January that ran through mid-February.  The February composite PMI was below the 50 boom/bust level for the second consecutive month. In the UK and France, the service PMI has risen above the manufacturing PMI, another sign of a post-Covid recovery.  

The normalization of monetary policy takes a big step forward in the coming weeks with the first rate hikes by the US and Canada, and the first balance sheet reduction by the Bank of England.  The European Central Bank will update is forward guidance for its asset purchases and is expected to allow for a hike toward the end of the year.  The Bank of Japan's Yield-Curve Control cap on the 10-year bond at 0.25% may be challenged if global yields drag higher in their wake.   The Reserve Bank of Australia continues to push back against expectations of an early hike, which the swaps market says likely happens in July.  

Commodity prices continue to rise.  The CRB Index rose by about 3.5% in February after a 9.8% gain in January.  It has not had a losing week since mid-December.  Adverse weather conditions in South America are helping boost corn and soy prices, which also translates into higher livestock prices.  Oil prices remain near multiyear highs and the April WTI contract has risen by around a quarter this year. The high does not seem to be in place yet, but a nuclear accord with Iran would boost supply. 

US natural gas prices are up about 20% this year, but partly it is a function of the weak finish last year. Still, it is above the 200-day moving average by around 4%.  Europe's benchmark (Netherlands) has risen by almost 40%.  Higher oil and natural gas prices have knock-on effects on food production via fertilizer and pesticides, let alone transportation. We note that the last three recessions in the US were preceded by a doubling of oil prices.  The price of WTI has doubled since the start of last year. 

Emerging markets have been resilient to start the year.  Brazil and Russia raised rate particularly aggressively 2021 and early this year.  Others, including Hungary, Czech, and Chile have done much of their heavy lifting.  The MSCI Emerging Market Equity Index has held in better than the MSCI World Index of developed countries in the first two months of the year (-4.9% vs. -7.8%).  Year-to-date the JP Morgan Emerging Market Currency Index has risen by almost 1%.  Carry and valuation were often cited as the main considerations.  

Bannockburn's GDP-weighted currency index rose about 0.3% in February as the currencies tended to have appreciated against the dollar.  The Chinese yuan (21.8%) and euro (19.1%) have the most weighting after the US dollar (31%) in the index.  They rose by 0.7% and 0.3% respectively. The strongest performer in the index was the Brazilian real (2.1% weighting) with a 3.0% gain, followed by the Australian dollar's (2.0% weighting) 2.25% increase. The weakest by far was the Russian rouble (2.2% weighting), which tumbled 6.75%.  

Dollar:   There is no doubt that the Federal Reserve will launch a new monetary cycle at the mid-March meeting.  At one point, the market had priced in a little more than an 80% chance of a 50 bp move out of the gate. The pushback was mild, but the market understood, and the odds now are near 28%, which may still be high.  The focus is on the updated economic projections and any fresh guidance on the balance sheet.  At issue is terminal target rate in the cycle.  In December, five officials projected the Fed funds target rate in 2024 would be above the long-term rate of 2.5% (all but two Fed officials saw it above 2.0%-2.5%).   The Federal Reserve is getting closer to deciding the parameters of its balance sheet strategy.  It may be a bit early for details, but Chair Powell could confirm a start around midyear.  Meanwhile, the US economy is slowing sharply after the historic inventory contribution that lifted Q4 22 growth to about 7fx%.  The Atlanta Fed's GDP tracker sees Q1 growth at 1.3% while the median forecast in Bloomberg's survey is for 1.6% GDP at an annualized pace. Still, a strong rebound is likely to play out before the more sustained slowdown, we expected, starting in H2.  


Euro:  First it was the divergence of monetary policy that drove the euro to $1.1120 in January.  The euro recovered to almost $1.15 on February 10, the day before the US warned that Russia could invade Ukraine. Then it was actual invasion took the euro to almost $1.1100.  The European Central Bank's leadership opened the door to a rate hike later this year, before the US warning about Russia's deadly intentions, the market began pricing in a hike in June.  This seemed exaggerated at the time.  The ECB has been very clear on the sequence.  Bond buying, under the Asset Purchase Program will end shortly before the first rate hike. To prepare for a possible hike, the ECB needs to adjust its forward guidance on its asset purchases at the March 10 meeting. It will likely reaffirm purchases in Q2, but it may look for an exit shortly thereafter.  The market has pushed the first rate hike back to the end of Q3. Meanwhile, the US-German two-year interest rate differential continues to trend in the US favor.  Consider that at the end of last September, the US premium was a little less than 100 bp. Now it is near 200 bp.  On the eve of the pandemic, it was almost 220 bp, although there is not a one-to-one correspondence between the exchange rate and the interest rate differential, the euro was in a range between $1.10 and nearly $1.1250 in December 2020.   

(February 25 indicative closing prices, previous in parentheses)

Spot: $1.1270 ($1.1150)

Median Bloomberg One-month Forecast $1.1300 ($1.1175) 

One-month forward $1.1280 ($1.1160)    One-month implied vol 7.0% (6.0%)    



Japanese Yen:  Unlike most other large economies, Japan continues to experience deflationary pressures as seen by the GDP deflator (-1.3% year-over-year Q4 2021) or the January CPI (excluding fresh food and energy, -0.5% year-over-year).  This, coupled with signs of a weak Q1 has persuaded the market that BOJ is on hold until after Governor Kuroda's term ends in April 2023.  Given the monetary policy divergence and the deterioration of the balance of payments (with rising oil and commodity prices), the yen appears vulnerable.  However, the exchange rate's correlation with the change in the US 10-year yield has slackened, while improving with equities. In other words, its "safe haven" status is outweighing carry considerations.  Still, on balance, we look for the dollar to challenge the January and February high near JPY116.35.  Above those highs, there appears to be little chart-based resistance ahead of the late 2016/early 2017 high around JPY118.60.  


Spot: JPY115.55 (JPY115.25)      

Median Bloomberg One-month Forecast JPY115.00 (JPY115.15)     

One-month forward JPY115.50 (JPY115.20)    One-month implied vol 6.3% (6.1%)



British Pound: Sterling was stuck in a $1.35-$1.36 range for most of February.  Intraday violations common but there was only one close outside the range until Russia invaded Ukraine.  It briefly crashed through $1.32 before rebounding.  The UK gets only 5%-6% of its oil and gas from Russia, but foreign direct investment exposure can be substantial for some companies in some sectors.  Consider that BP has a 20% stake in Rosneft.  The Bank of England meets on March 17.  The market has dramatically downgraded the risk of a 50 bp move, which had been rejected in favor a 25 bp move by a 5-4 vote in February.  Before the US warning about a full-scale Russian attack, the swaps market had more than a 60% chance the BOE would deliver a 50 bp hike in March.  Two weeks later the odds have fallen to less than 20%, the lowest since mid-December.  With the base rate at 50 bp, the BOE will stop reinvesting maturing proceeds of its holdings, and GBP28 bln of bond maturing in March that will not be recycled.  The outright selling of assets from its balance sheet can begin when the base rate reaches 1.0% but it is not a trigger as much as a pre-condition.   


Spot: $1.3410 ($1.3400)   

Median Bloomberg One-month Forecast $1.3500 ($1.3450) 

One-month forward $1.3405 ($1.3395)   One-month implied vol 7.0% (6.5%)



Canadian Dollar:  Like sterling, the Canadian dollar spent most of February in a clear range.  It broke down on the dramatic wave of risk-aversion on the Russian invasion, but, unlike sterling, it was back into the old range within 24 hours.  The US dollar's range was CAD1.2650-CAD1.2660 on the downside and CAD1.28 on the upside.  It shot up to CAD1.2860 but returned to CAD1.27 the following day.   The Bank of Canada meets on March 2.  The swaps market sees a 75% chance that the Bank of Canada delivers a 50 bp to initiate its tightening cycle.  The market is discounting almost 180 bp of hikes over the next 12 months and peaking between 2.25%-2.50% next year from 25 bp now.  It is the most among the G7 countries.  It is also where the central bank sees the neutral rate.  The Bank of Canada is also expected to signal that it plans on letting the balance sheet shrink passively, not replacing maturing securities shortly.  


Spot: CAD1.2715 (CAD 1.2770) 

Median Bloomberg One-month Forecast CAD1.2600 (CAD1.2690)

One-month forward CAD1.2710 (CAD1.2765)    One-month implied vol 6.7% (7.1%) 



Australian Dollar: After falling 2.7% in January, the Australian dollar rebounded by 2.25% in February.  Of the major currencies, only the New Zealand dollar outperformed it and its central bank hiked rates for the third consecutive meeting and announced its balance sheet reduction strategy.  Australia's economy appeared to recover quickly from the Covid-related disruption that pushed the January composite PMI below the 50 boom/bust level (46.7).  It bounced back in February to 55.9, the highest since last June.  Higher commodity prices are delivering a positive terms of trade shock.  The average monthly trade surplus was A$10.2 bln last year compared with an average of nearly A$5.7 bln in 2019. While the Reserve Bank of Australia acknowledges the possibility of rate hike later this year, the market is considerably more aggressive.  The swaps market has discounted around 145 bp in tightening over the next 12 months.  However, in recent weeks, the market has pushed the first hike in Q3 from Q2.  For the last four months, the Australian dollar has mostly traded between $0.7000 and $0.7300.  This range may continue to dominate.   


Spot:  $0.7220 ($0.6990)       

Median Bloomberg One-Month Forecast $0.7200 ($0.7090)     

One-month forward $0.7230 ($0.6995)     One-month implied vol 10.0% (10.4%)   



Mexican Peso:  The peso appreciated by 1.4% in February.  Latam currencies shined. and accounted for four of the top six EM performers, led by the 3% gain in the Brazilian real.  At her first meeting as Governor of the Bank of Mexico, Rodriguez delivered a 50 bp hike. With price pressures still accelerating, she is poised to repeat it at her second meeting on March 24.   It would bring the target rate to 6.5%.  Recall that in the last cycle, Banxico had raised its target to 8.25% before cutting by in August 2019.  It was at 7.25% in January 2020.  The swaps market expects it to peak in early near year in the 8.00%-8.25% area.  The key is inflation, which has been above 7% for three months through January.  The bi-weekly inflation report had it accelerating in mid-February.  Mexican asset markets are underperforming.  Consider, the yield on its 10-year dollar bond is up 100 bp this year.  Brazil's is up half as much. Mexico's equity benchmark is off almost 1.4% this year while the MSCI Latam equity index is up 11.5%.  The dollar set five-month lows in late February slightly below MXN20.16. It peaked in late January near MXN20.9150.  The bulk of the move is probably behind it and the MXN20.00-MXN20.10 area may offer a nearby floor.   


Spot: MXN20.35 (MXN20.80)  

Median Bloomberg One-Month Forecast MXN20.50 (MXN20.78)  

One-month forward MXN20.46 (MXN20.90)     One-month implied vol 11.0% (10.6%)



Chinese Yuan:  Few observers seem to place any importance on Chinese officials claim that it is making the currency move flexible.  The yuan still can only move in a 2% band around the reference rate that the central bank sets daily ostensibly submissions by its banks.  Although it does not appear to intervene directly, it can still have various levers of influence.   The yuan has risen against the dollar for six of the past seven months.  The currency moves are small but have a cumulative effect. In February, the yuan rose by about 0.7% against the dollar.  It was sufficient to lift it to a new four-year high and what appears to be a new record-high against its trade-weighted basket (CFETS).  After cautioning the market against driving the yuan higher and raising the reserve requirement for foreign currency deposits (earned in part from selling the yuan to offshore buyers), the PBOC shifted in February.  It began setting the dollar's reference rate below expectations.  While a couple of large asset managers have reduced their weightings of Chinese bonds as the premium over Treasuries narrows considerably, foreign investors have been buying Chinese stocks outside of the technology and property sectors.  It is difficult to know the extent of the official tolerance of a stronger yuan when monetary and fiscal policy is more stimulative.  The dollar's low from 2017 was around CNY6.24-CNY6.25.  


Spot: CNY6.3175 (CNY6.3615)

Median Bloomberg One-month Forecast CNY6.3800 (CNY6.3895) 

One-month forward CNY6.3300 (CNY6.3820)    One-month implied vol 3.1% (3.1%)




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What Follows US Hegemony

What Follows US Hegemony

Authored by Vijay Prashad via,

On 24 February 2023, the Chinese Foreign Ministry released a…



What Follows US Hegemony

Authored by Vijay Prashad via,

On 24 February 2023, the Chinese Foreign Ministry released a twelve-point plan entitled ‘China’s Position on the Political Settlement of the Ukraine Crisis’.

This ‘peace plan’, as it has been called, is anchored in the concept of sovereignty, building upon the well-established principles of the United Nations Charter (1945) and the Ten Principles from the Bandung Conference of African and Asian states held in 1955. The plan was released two days after China’s senior diplomat Wang Yi visited Moscow, where he met with Russia’s President Vladimir Putin.

Russia’s interest in the plan was confirmed by Kremlin spokesperson Dmitry Peskov shortly after the visit: ‘Any attempt to produce a plan that would put the [Ukraine] conflict on a peace track deserves attention. We are considering the plan of our Chinese friends with great attention’.

Ukraine’s President Volodymyr Zelensky welcomed the plan hours after it was made public, saying that he would like to meet China’s President Xi Jinping as soon as possible to discuss a potential peace process. France’s President Emmanuel Macron echoed this sentiment, saying that he would visit Beijing in early April. There are many interesting aspects of this plan, notably a call to end all hostilities near nuclear power plants and a pledge by China to help fund the reconstruction of Ukraine. But perhaps the most interesting feature is that a peace plan did not come from any country in the West, but from Beijing.

When I read ‘China’s Position on the Political Settlement of the Ukraine Crisis’, I was reminded of ‘On the Pulse of Morning’, a poem published by Maya Angelou in 1993, the rubble of the Soviet Union before us, the terrible bombardment of Iraq by the United States still producing aftershocks, the tremors felt in Afghanistan and Bosnia. The title of this newsletter, ‘Birth Again the Dream of Global Peace and Mutual Respect’, sits at the heart of the poem. Angelou wrote alongside the rocks and the trees, those who outlive humans and watch us destroy the world. Two sections of the poem bear repeating:

Each of you, a bordered country,
Delicate and strangely made proud,
Yet thrusting perpetually under siege.
Your armed struggles for profit
Have left collars of waste upon
My shore, currents of debris upon my breast.
Yet today I call you to my riverside,
If you will study war no more. Come,
Clad in peace, and I will sing the songs
The Creator gave to me when I and the
Tree and the rock were one.
Before cynicism was a bloody sear across your
Brow and when you yet knew you still
Knew nothing.
The River sang and sings on.

History, despite its wrenching pain
Cannot be unlived, but if faced
With courage, need not be lived again.

History cannot be forgotten, but it need not be repeated. That is the message of Angelou’s poem and the message of the study we released last week, Eight Contradictions of the Imperialist ‘Rules-Based Order’.

In October 2022, Cuba’s Centre for International Policy Research (CIPI) held its 7th Conference on Strategic Studies, which studied the shifts taking place in international relations, with an emphasis on the declining power of the Western states and the emergence of a new confidence in the developing world. There is no doubt that the United States and its allies continue to exercise immense power over the world through military force and control over financial systems. But with the economic rise of several developing countries, with China at their head, a qualitative change can be felt on the world stage. An example of this trend is the ongoing dispute amongst the G20 countries, many of which have refused to line up against Moscow despite pressure by the United States and its European allies to firmly condemn Russia for the war in Ukraine. This change in the geopolitical atmosphere requires precise analysis based on the facts.

To that end, our latest dossier, Sovereignty, Dignity, and Regionalism in the New International Order (March 2023), produced in collaboration with CIPI, brings together some of the thinking about the emergence of a new global dispensation that will follow the period of US hegemony.

The text opens with a foreword by CIPI’s director, José R. Cabañas Rodríguez, who makes the point that the world is already at war, namely a war imposed on much of the world (including Cuba) by the United States and its allies through blockades and economic policies such as sanctions that strangle the possibilities for development. As Greece’s former Finance Minister Yanis Varoufakis said, coups these days ‘do not need tanks. They achieve the same result with banks’.

The US is attempting to maintain its position of ‘single master’ through an aggressive military and diplomatic push both in Ukraine and Taiwan, unconcerned about the great destabilisation this has inflicted upon the world. This approach was reflected in US Defence Secretary Lloyd Austin’s admission that ‘We want to see Russia weakened’ and in US House Foreign Affairs Committee Chairman Michael McCaul’s statement that ‘Ukraine today – it’s going to be Taiwan tomorrow’. It is a concern about this destabilisation and the declining fortunes of the West that has led most of the countries in the world to refuse to join efforts to isolate Russia.

As some of the larger developing countries, such as China, Brazil, India, Mexico, Indonesia, and South Africa, pivot away from reliance upon the United States and its Western allies, they have begun to discuss a new architecture for a new world order. What is quite clear is that most of these countries – despite great differences in the political traditions of their respective governments – now recognise that the United States ‘rules-based international order’ is no longer able to exercise the authority it once had. The actual movement of history shows that the world order is moving from one anchored by US hegemony to one that is far more regional in character. US policymakers, as part of their fearmongering, suggest that China wants to take over the world, along the grain of the ‘Thucydides Trap’ argument that when a new aspirant to hegemony appears on the scene, it tends to result in war between the emerging power and existing great power. However, this argument is not based on facts.

Rather than seek to generate additional poles of power – in the mould of the United States – and build a ‘multipolar’ world, developing countries are calling for a world order rooted in the UN Charter as well as strong regional trade and development systems. ‘This new internationalism can only be created – and a period of global Balkanisation avoided’, we write in our latest dossier, ‘by building upon a foundation of mutual respect and strength of regional trade systems, security organisations, and political formations’. Indicators of this new attitude are present in the discussions taking place in the Global South about the war in Ukraine and are reflected in the Chinese plan for peace.

Our dossier analyses at some length this moment of fragility for US power and its ‘rules-based international order’. We trace the revival of multilateralism and regionalism, which are key concepts of the emerging world order. The growth of regionalism is reflected in the creation of a host of vital regional bodies, from the Community of Latin American and Caribbean States (CELAC) to the Shanghai Cooperation Organisation (SCO), alongside increasing regional trade (with the BRICS bloc being a kind of ‘regionalism plus’ for our period). Meanwhile, the emphasis on returning to international institutions for global decision-making, as evidenced by the formation of the Group of Friends in Defence of the UN Charter, for example, illustrates the reinvigorated desire for multilateralism.

The United States remains a powerful country, but it has not come to terms with the immense changes taking place in the world order. It must temper its belief in its ‘manifest destiny’ and recognise that it is nothing more than another country amongst the 193 members states of the United Nations. The great powers – including the United States – will either find ways to accommodate and cooperate for the common good, or they will all collapse together.

At the start of the pandemic, the head of the World Health Organisation, Dr Tedros Adhanom Ghebreyesus, urged the countries of the world to be more collaborative and less confrontational, saying that ‘this is the time for solidarity, not stigma’ and repeating, in the years since, that nations must ‘work together across ideological divides to find common solutions to common problems’.

These wise words must be heeded.

Tyler Durden Sun, 03/19/2023 - 23:30

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Spread & Containment

“True Stories… Could Fuel Hesitancy”: Stanford Project Worked To Censor Even True Stories On Social Media

"True Stories… Could Fuel Hesitancy": Stanford Project Worked To Censor Even True Stories On Social Media

Authored by Jonathan Turley,




"True Stories... Could Fuel Hesitancy": Stanford Project Worked To Censor Even True Stories On Social Media

Authored by Jonathan Turley,

While lost in the explosive news about Donald Trump’s expected arrest, journalist Matt Taibbi released new details on previously undisclosed censorship efforts on social media. The latest Twitter Files revealed a breathtaking effort from Stanford’s Virality Project to censor even true stories. After all, the project insisted “true stories … could fuel hesitancy” over taking the vaccine or other measures. The effort included suppressing stories that we now know are legitimate such as natural immunity defenses, the exaggerated value of masks, and questions over vaccine efficacy in preventing second illnesses. The work of the Virality Project to censor even true stories should result in the severance of any connection with Stanford University.

We have learned of an ever-expanding coalition of groups working with the government and social media to target and censor Americans, including government-funded organizations.

However, the new files are chilling in the details allegedly showing how the Virality Project labeled even true stories as “anti-vaccine” and, therefore, subject to censorship. These files would suggest that the Project eagerly worked to limit free speech and suppress alternative scientific viewpoints.

Taibbi describes the Virality Project as “a sweeping, cross-platform effort to monitor billions of social media posts by Stanford University, federal agencies, and a slew of (often state-funded) NGOs.”

He added: “We’ve since learned the Virality Project in 2021 worked with government to launch a pan-industry monitoring plan for Covid-related content. At least six major Internet platforms were ‘onboarded’ to the same JIRA ticketing system, daily sending millions of items for review.”

According to Taibbi, it targeted anyone who did not robotically fall in line with the CDC and media narratives, including targeting postings that shared “Reports of vaccinated individuals contracting Covid-19 anyway,” research on “natural immunity,” suggesting Covid-19 “leaked from a lab,” and even “worrisome jokes.”

That included evidence that it “knowingly targeted true material and legitimate political opinion, while often being factually wrong itself.”

The Virality Project warned Twitter that “true stories … could fuel hesitancy,” including stories on “celebrity deaths after vaccine” and the closure of a central New York school due to reports of post-vaccine illness.

The Project is part of the Cyber Policy Center at Stanford and bills itself as “a joint initiative of the Freeman Spogli Institute for International Studies and Stanford Law School, connects academia, the legal and tech industry and civil society with policymakers around the country to address the most pressing cyber policy concerns.”

The Center launched the Project as a “a global study aimed at understanding the disinformation dynamics specific to the COVID-19 crisis.”

As with many disinformation projects, it became a source of its own disinformation in the effort to suppress alternative views.

It is being funded by Craig Newmark Philanthropies and the Hewlett Foundation.

On its website, it proclaims: “At the Stanford Internet Observatory our mission is to study the misuse of the internet to cause harm, and to help create policy and technical mitigations to those harms.” It defines its mission to maintain the truth as it sees it:

“The global COVID-19 crisis has significantly shifted the landscape for mis- and disinformation as the pandemic has become the primary concern of almost every nation on the planet. This has perhaps never happened before; few topics have commanded and sustained attention at a global level simultaneously, or provided such a wealth of opportunities for governments, economically motivated actors, and domestic activists alike to spread malign narratives in service to their interests.”

What is even more disconcerting is that groups like the Virality Project worked against public health by suppressing such stories that are now considered legitimate from the efficacy of masks to the lab origin theory. It was declaring dissenting scientific views to be dangerous disinformation. Nothing could be more inimical to the academic mission. Yet, Stanford still heralds the work of the Project on its website.

There is nothing more inherently in conflict with academic values than censorship. Stanford’s association with this censorship effort is disgraceful and should be a matter for faculty action. This is a project that sought to censor true stories that undermined government or media narratives.

I am not hopeful that Stanford will sever its connection to the Project.  Censorship is now the rage on campuses and the Project is the perfect embodiment of this movement. Cloaking censorship efforts in self-righteous rhetoric, the Project sought to silence those who failed to adhere to a certain orthodoxy, including scientific and public health claims that were later found flawed or wrong. The Project itself is an example of what it called “media and social media capabilities – overt and covert – to spread particular narratives.”

Stanford should fulfill its pledge in creating the Virality Project in fighting disinformation by eliminating the Virality Project.

Tyler Durden Sun, 03/19/2023 - 17:55

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Royal Caribbean Officially Makes Controversial Change

The cruise line has made a controversial change that some passengers will love while others will be angry.



The cruise line has made a controversial change that some passengers will love while others will be angry.

During the early days of the cruise industry's comeback from the covid pandemic, Royal Caribbean outlawed smoking in the casino. At the time, the Centers for Disease Control (CDC) required passengers to wear masks in public areas of the ship except when eating or drinking while stationary.

Smoking was, at first, a sort of loophole. People would smoke in the casino and remove their masks (or at least move them to the side) while playing slot machines. That basically meant that unlike drinking, where your mask could be moved and then replaced for a sip, smokers were essentially not wearing a mask.

DON'T MISS: Carnival Cruise Line Comments on a Possible (Very) Adult Change

Royal Caribbean (RCL) - Get Free Report closed that loop by fully outlawing smoking in its casinos while masks were still required. That was something that smokers weren't happy about, but probably understood given how large a role the CDC was playing in setting cruise ship rules.

Once the CDC stopped requiring masks (and regulating cruise ships at all), Royal Caribbean reverted to its pre-pandemic smoking policies. That meant that every casino on its ships had a smoking section. Technically, smoking is only allowed when actually playing a slot machine, but that's hard to enforce and the casinos quickly filled back up with smoke.

Now, the cruise line has officially made a long-rumored move that should make non-smokers really happy while angering a whole different group of the cruise line's passengers.

Image source: Matt Cardy/Getty Images

Oasis-Class Ships Getting Non-Smoking Area

Wonder of the Seas, the newest member of Royal Caribbean's Oasis class was originally built to sail out of China. It was moved to Florida due to the covid pandemic which created a sort of happy accident for non-smokers.

The ship was built with a secondary casino that was originally intended as a high rollers room. Once the ship was repurposed to sail from the United States, that smaller casino was shifted from an area designed to cater to big-money players into a non-smoking casino.

For months, it has been rumored that the cruise line would turn the "Jazz on 4" space -- the same location as the non-smoking "Golden Roon" on Wonder of the Seas -- into similar non-smoking casinos. Royal Caribbean never commented on those rumors, but it did warn passengers on some sailings that service in the Diamond Lounge, an area next to Jazz on 4 reserved for Diamond and higher members of the company's loyalty program, would be disrupted due to construction.

The results of that construction have been revealed on another Oasis-class ship, Harmony of the Seas. Johnny Travalor shared pictures of the new casino in a Facebook group for fans of Royal Caribbean's casinos.

"The brand new non-smoking casino on Harmony officially opened today and I have been here since the opening playing, donating!" he shared.

That's not official confirmation that all Oasis-class ships will have Jazz on 4 turned into a non-smoking casino, but all signs point in that direction.

Royal Caribbean Makes Some Passengers Mad

No change on a cruise ship will make all passengers happy. Some Royal Caribbean gamblers have suggested that the non-smoking area, which is much smaller than the original casino, should be the smoking area.

"Maybe once they see the non-smokers are bursting at the seam in that space and the smoking casino isn’t as crowded they will reverse it," Barb Boyer Green shared.

"That should be the smoking room...seems like the non-smokers are being put in a closet," Maureen Ethier added.

Not all passengers, however, are upset because of the size of the non-smoking area. Some are lamenting the loss of Jazz on 4, which hosted live jazz music.

"I think this is an overall loss, with now an entertainment area being taken over on this ship. I always enjoyed the jazz club and this will do nothing for the smell of the ship, net loss for all passengers" Justin Rogers wrote.

"It was our fav such a sad day. It was our escape, great talent, romantic, not another venue like it. Such a shame," added Julia Doumad.

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