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S&P Futures Reverse Losses, Trade Near Record High Despite China Bubble Warning

S&P Futures Reverse Losses, Trade Near Record High Despite China Bubble Warning

After sliding for much of the Asian session, US equity futures reversed sharply and rose alongside European stocks, rising as much as 30 points from session..

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S&P Futures Reverse Losses, Trade Near Record High Despite China Bubble Warning

After sliding for much of the Asian session, US equity futures reversed sharply and rose alongside European stocks, rising as much as 30 points from session lows and last trading fractionally in the green...

... while yesterday's main attraction, Gamestop, was up almost 20% in the premarket as reddit traders now appear to be going after Ken Griffin and Steven Cohen, who backstopped the effectively collapsed Melvin Capital.

Elsewhere, General Electric Co rose about 5% after reporting a better-than-expected free cash flow for the fourth quarter, as it benefits from a recovery at its power and renewable energy units. Tech heavyweights Microsoft Corp and Advanced Micro Devices Inc were slightly higher ahead of their earnings reports expected after markets close. With the S&P 500 trading at 22 times the 12-month forward earnings, concerns about stock bubbles among some of Wall Street's biggest banks sparking fears of a pullback. After a “buy everything” rally over several months supported by money-printing pandemic stimulus packages, near-zero interest rates and the start of COVID-19 vaccination programmes, some investors are worried markets may be near ‘bubble’ territory. They point to rocketing prices of assets such as bitcoin or, on Monday, the soaring stock of short-squeezed videogame retailer Gamestop.

MSCI’s All Country World index was flat, while MSCI’s emerging market stock index was 1.6% lower.

After starting in the red, European stock markets were almost uniformly green. Naturgy Energy Group SA soared 16% as asset manager IFM Global Infrastructure offered to buy a stake in the Spanish utility. Sweden’s EQT AB, one of Europe’s biggest private equity firms, jumped 14% after agreeing to take over Exeter Property Group in a $1.9 billion deal.

In contrast, Asian markets slumped as China’s central bank withdrew cash from the banking system and an official cautioned about asset bubbles. The MSCI Asia Pac index dropped 1.4%, its biggest drop in two months and internet giant Tencent Holdings Ltd. lost 6.3% as investors paused following rallies in Hong Kong and South Korea. U.S. Senate Majority leader Chuck Schumer’s expectation of timing for approval of a new aid package also weighted on sentiment. Vietnam was Asia’s worst-performing market as stocks continued to face profit-taking pressures. Hong Kong’s stock benchmark was dragged by Tencent, which slumped after an 11% gain on Monday. China’s unexpected withdrawal of funds from the financial system amid a warning about asset bubbles also weighed on sentiment, with indexes in Shanghai and Shenzhen sliding while Chinese 10-year bond futures dropped. Local media reports on Tuesday cited comments from Ma Jun, an adviser to the People’s Bank of China, telling a wealth management forum that the risk of asset bubbles would increase if the central bank did not adjust its policy.

“Whether this situation will intensify in the future depends on whether monetary policy is appropriately changed this year,” Jun said. He added that if not, such problems would “certainly continue” and lead to “greater economic and financial risks in the medium- and long-term”.

Samsung Electronics and Hong Kong Exchanges & Clearing also weighed on the regional equity benchmark as investors pocket profits from recent gains. South Korea’s benchmark index fell 2.1% from a record close as foreign investors increased their selling. The Philippines’ equity gauge declined to a two-month low after President Rodrigo Duterte reversed a decision that would have allowed more children to go outdoors amid fears over the spread of a new coronavirus strain. Australia and India markets are shut for holidays.

Japanese stocks fell with losses deepening during the afternoon session amid concerns recent gains may have been excessive. Automakers and services providers were the heaviest drags on the Topix. Toyota Motor was the biggest contributor to Topix decline and among the biggest drags on the MSCI Asia Pacific Index, even after Nikkei reported the automaker sees a limited impact from a semiconductor shortage. Fast Retailing and M3 weighed most on the Nikkei 225 Stock Average. Today’s losses pared monthly gains to 2.4% for the Topix and 4% for the Nikkei 225. “Investors are wary of the current Japanese stock levels,” said Hajime Sakai, the chief fund manager at Mito Securities Co. That being said, “I don’t think it’s difficult for the Nikkei 225 to try breaching the 29,000 level.”

On one hand, so far “the earnings season up to now has been very good, so it comes back to the fact the market has been overbought and had a strong rally since Jan. 1, with a lot of positive news priced in,” said Francois Savary, chief investment officer at Swiss wealth manager Prime Partners, referring to recent losses. “There is room for some consolidation.”

That said, not everyone is convinced: “We suspect earnings may not be able to catch up with what people expect this year,” said Jacob Doo, chief investment officer at Envysion Wealth Management, citing the lockdowns in Europe and the slow roll out of vaccines in the United States. “Within the tech space, we are cautious on FANGS now, simply because there could be anti-trust laws that Biden would implement,” he added.

On the other, as Bloomberg adds adding to the backdrop of market worries was more negative news about the pandemic. Vaccine coverage won’t reach a point that would stop transmission of the virus in the foreseeable future, the World Health Organization said. German Chancellor Angela Merkel told party colleagues the potential threat from faster-spreading variants means the country is “sitting on a powder keg,” according to Bild newspaper.

“There are some negative news on lockdowns, new virus variants, and questions about vaccine efficacy,” said Mark Nash, head of fixed-income alternatives at Jupiter Asset Management. “That’s not a good combination for markets expecting a perfect world.”

In rates, Treasury futures dropped to lows of the day into start of U.S. session as President Joe Biden said he’s open to negotiating his $1.9 trillion Covid-19 relief proposal and erasing Asia-session gains that were aided by block buyer in 10-year note and bond futures. Treasury 10-year yields around 1.05%, underperforming gilts and bunds by ~0.5bp and steepening 2s10s by ~1bp; yields were higher by less than 2bp across intermediates and long-end of the curve ahead of 5-year note auction. Jumbo 7-Eleven bond offering is expected as soon as Tuesday. The auction cycle resumes with a $61BN 5-year sale at 1pm ET, following strong demand for Monday’s 2-year; cycle concludes Thursday with $62b 7-year; all sales biggest ever at tenor.

Germany’s 10-year bond yield fell a basis point to a two-week low of -0.561%, while Italian 10-year yields were up slightly on the day at 0.655%. Italian Prime Minister Giuseppe Conte will resign on Tuesday, his office said, hoping President Sergio Mattarella will then give him a mandate to form a new government.

In FX, the Bloomberg Dollar Spot Index rose and the greenback strengthened against most of its Group-of-10 peers, even as most crosses recovered from session lows as European stock markets advanced from the open. The yen and the Swiss franc were little changed against the dollar, but climbed against most major currencies on haven demand; the euro remained down after weakening toward $1.21. Scandinavian currencies and the Australian dollar led declines among G-10 peers.

In commodities, after rising nearly 1% on Monday, Brent crude fell 0.5% to $55.60 per barrel and U.S. crude lost 0.5% to $52.51. Spot gold fell 0.2% to $1,852.30 per ounce.

Looking at the the day ahead, and there are an array of earnings releases, including Microsoft, Johnson & Johnson, Verizon Communications, NextEra Energy, Texas Instruments, Starbucks, American Express, General Electric and Lockheed Martin. Data releases include UK employment data for November and the US FHFA house price index for November. From the US there’ll also be the January readings of the Conference Board’s consumer confidence indicator and the Richmond Fed's manufacturing index. Finally, the ECB’s Centeno will be speaking, and the IMF will be releasing their World Economic Outlook Update.

Investors are also looking ahead to the Federal Reserve’s Federal Open Market Committee meeting on Tuesday and Wednesday.

“We expect the January FOMC to repeat and reinforce the Fed’s existing dovishness, which is still significant given the recent taper discussions and other central banks’ considerations to adapt policy,” CitiFX strategist Ebrahim Rahbari said in a note.

Market Snapshot

  • S&P 500 futures up 0.1% to 3,853.25
  • STOXX Europe 600 up 0.8% to 408.52
  • MXAP down 1.4% to 212.24
  • MXAPJ down 1.7% to 715.92
  • Nikkei down 1% to 28,546.18
  • Topix down 0.8% to 1,848.00
  • Hang Seng Index down 2.6% to 29,391.26
  • Shanghai Composite down 1.5% to 3,569.43
  • Sensex down 1.1% to 48,347.59
  • Australia S&P/ASX 200 up 0.4% to 6,824.71
  • Kospi down 2.1% to 3,140.31
  • German 10Y yield rose 1.2 bps to -0.538%
  • Euro down 0.07% to $1.2130
  • Italian 10Y yield fell 7.2 bps to 0.567%
  • Spanish 10Y yield unchanged at 0.074%
  • Brent futures up 0.3% to $56.04/bbl
  • Gold spot down 0.2% to $1,852.66
  • U.S. Dollar Index little changed at 90.44

Top Overnight News from Bloomberg

  • Federal Reserve Chair Jerome Powell heads into what could be his last year atop the central bank determined not to repeat the mistake he made when he was a neophyte monetary policy maker seven years ago when he was among those leading the charge to scale back the central bank’s quantitative-easing program -- a stance that led to the economically debilitating and market- wrenching taper tantrum of 2013
  • Italian Prime Minister Giuseppe Conte will resign on Tuesday morning to avoid a damaging defeat in the Senate and maneuver for a return at the head of a new government
  • Europe’s primary bond market is set for a record month for public-sector deals, after the European Union extended a Covid-stoked flood of government and agency issuance
  • Chancellor Angela Merkel told party colleagues that Germany’s management of the coronavirus pandemic has “slipped out of control” and stricter curbs are needed to prevent a new wave of the disease, Bild newspaper reported
  • Germany’s health ministry says can’t confirm a report in Handelsblatt newspaper that AstraZeneca’s Covid-19 vaccine is only effective for 8% of people older than 65
  • Chancellor Angela Merkel’s chief of staff proposed temporarily adjusting constitutional rules to allow expanded new borrowing by Germany’s federal government, prompting a swift rejection from his own party’s budget spokesman
  • Boris Johnson is expected to announce the government’s plan for quarantining travelers arriving in the U.K. to stop the spread of new coronavirus strains from overseas
  • An aggregate index of China’s economic performance increased by one step from last month, led by strong performances in exports, property and the stock market

A quick look at global markets courtesy of Newsquawk

Asian equity markets declined across the board with sentiment subdued after the flimsy risk appetite amongst global peers including in the US where stocks whipsawed ahead of this week’s FOMC, tech earnings and month-end, as well as ongoing concerns about vaccine effectiveness against the new COVID-19 variants and doubts on the ability of Democrats to pass the USD 1.9tln COVID-19 relief plan in its entirety, while the absence of participants in Australia and India due to holiday closures also contributed to the lacklustre picture. Nikkei 225 (-1.0%) was negative with the index subdued by recent currency inflows. KOSPI (-2.1%) underperformed despite better-than-expected South Korean GDP growth figures for Q4, as this still resulted in a 1.0% annual contraction for 2020 which was the economy’s worst performance since 1998. Elsewhere, Hang Seng (-2.6%) and Shanghai Comp. (-1.5%) declined with the mainland pressured after the PBoC resumed its tepid liquidity operations which facilitated increases in China’s benchmark overnight repo rate to its highest since November 2019 and with MSCI to delete several securities from its indexes including China National Nuclear Power Co., China Shipbuilding Industry and Inspur International. The losses in Hong Kong were also exacerbated by profit taking in the city’s main index which retreated from the 30k level and near 21-month highs as Tencent shares also pulled back from record levels after it recently approached USD 1tln market cap status. Finally, 10yr JGBs tested the 152.00 level to the upside with prices underpinned by the negative mood across stocks and following the bull flattening in USTs which was helped by a solid 2yr auction, while the 40yr JGB auction results were mixed with a slightly higher b/c.

Top Asian News

  • Asia Stocks Slip as Stimulus Timing, China Bubble Warning Weigh
  • From Pony Ma to Jack Ma, the Rich Win Big With Wild H.K. Stocks
  • Ant IPO Could Resume Once Issues Resolved, Central Bank Says
  • Kuaishou to Give Asian IPOs Best Start to a Year Since 2010

European stocks kicked of Tuesday’s session indecisive before gaining upward momentum (Euro Stoxx 50 +1.1%) after sentiment improved from the mostly downbeat APAC trade, albeit US equity futures remain subdued vs their trans-Atlantic counterparts with broad-based losses seen across the four major contracts - which are also weighed on by doubts on whether the Democrats can swiftly pass its much-anticipated relief plan. Back to Europe, the region’s performance is relatively broad-based, with Switzerland’s SMI (+0.5%) initially the laggard amid underperformance in the defensive Healthcare sector post-Novartis’ earnings (see below). Italy’s FTSE MIB (+0.8%) conforms to the gains among its peers following the outperformance seen yesterday as markets somewhat look through reports that Italian PM Conte has announced his resignation to his cabinet, in a move described as a “tactical resignation”. This resignation is merely symbolic amid the unguaranteed hope is that Conte will be able to secure a mandate to form a new government. The tail risk after resides on the whether Conte has the ability to form a new coalition – thus markets will be giving more credence to developments on this front in the upcoming sessions; full analysis piece available on the headline feed. Delving deeper into the European sectors, IT is one of the top gainers in the run-up to large-cap US tech earnings, meanwhile, Nokia (+4%) soared at the open as the Reddit WSB retail traders attempted to pump higher Nokia’s ADR – which rose 15.5% in US trade followed by another 7% after-market, in a similar move to the GameStop (+15% pre-mkt) phenomenon yesterday. On this theme, it will be important to keep an eye on any regulatory moves against this type of speculative trading as any attempt to regulate channels - such as Reddit and/or Twitter - may hinder retail speculative buying which acted as and continues be a major equity driving force. Travel & Leisure resides as the laggard as ongoing COVID-variant woes provides the sector with no reprieve. In terms of individual movers, Rolls-Royce (-4.5%) shares slid at the open after a trading update which brought to light the turbulence ahead for the aeronautical sector “In the near-term, more contagious variants of the virus are creating additional uncertainty. Enhanced restrictions are delaying the recovery of long-haul travel over the coming months compared to prior expectations, placing further financial pressure on customers and the wider aviation industry, all of which are impacting cash flows in 2021” – the company said despite reporting in-line trading and year-end liquidity at the upper end of guidance. On the flip side, AstraZeneca (+1.2%) refuted Handelsblatt and Bild reports which suggested the Co’s vaccine had an efficacy of 8% or less than 10%, respectively, in those over 65. Elsewhere, some large-cap earnings related movers include UBS (+1.5%) and Novartis (-2.2%), with the former firmer following an overall positive update and a share buyback announcement, whilst the latter is pressured on a miss in revenue and EPS.

Top European News

  • EU Vaccine Rollout in Disarray as Germany Touts Export Limits
  • Dutch Covid Riots Add to Political Tension Ahead of Elections
  • Engie Said to Work With Citi, Morgan Stanley on GTT Divestment
  • EQT Soars to Record Valuation After $1.9 Billion Property Deal

In FX, The Dollar looked all set to test technical resistance in DXY terms amidst another bout of safe haven demand that propelled the index further beyond 90.500 to 90.614, but fell just short of the 50 DMA at 90.678 as sentiment gradually stabilised and is improving to the extent that stocks are now on course for an emphatic turnaround Tuesday. Hence, the Buck has faded across the board to the benefit or relief of rival currencies that seemed destined to suffer heavier losses and breach chart supports or psychological levels along the way. However, the DXY is holding off lows (90.315) and within sight of the half round number in the run up to a busier US agenda on FOMC day 1.

  • NZD/AUD - Kiwi outperformance continues ahead of tonight’s NZ business PSI and trade data on Wednesday with additional traction to complement less dovish RBNZ expectations coming from PM Arden confirming that the country will sign an upgraded FTA with China. Nzd/Usd is back up near 0.7200 after testing the 10 DMA that aligns with a double bottom around 0.7171, while Aud/Nzd has now crossed 1.0700 to the downside, albeit in thinner volumes due to Australia’s market holiday, and Aud/Usd hovering just shy of 0.7700 in advance of NAB’s business survey and CPI tomorrow.
  • JPY/EUR/CAD/CHF/GBP - All fractionally softer vs their US counterpart, but the Yen still ‘comfortably’ above 104.00 and Euro surviving another lurch towards 1.2100 following a fade into 1.2150 and loss of the 50 DMA (1.2124). Meanwhile, the Loonie is still straddling 1.2150 with an eye on crude prices and the Franc is afloat on 0.8800 and 1.0700 handles, marginally, wary about further intervention to curb excess strength on any acute investor angst caused by risk events, like Italian PM Conte’s efforts to forge a new coalition Government. Last, but not quite least, Sterling has also staged a comeback after a brief dip under the 21 DMA (to circa 1.3610 vs 1.3624) and is pivoting 0.8900 against the Euro in wake of more UK jobs and wage data ‘propped’ up by Government support.
  • SCANDI/EM - The Sek and Nok have unwound more gains relative to the Eur irrespective of the constructive risk tone that might be deemed supportive, or firmer oil for that matter, so it seems that COVID-19 jitters have combined with a less bullish chart backdrop to undermine the Crowns. On that note, Sweden is seeking more clarification on the precise number of does per vial and has suspended payments to Pfizer pending answers. Elsewhere, the Try remains relatively firm and Czk is bid amidst talk of CNB tightening in 2021 (Governor giving guidance for up to 1 or 2 hikes), but the Brl could be in for a long Brazilian post-holiday weekend hangover.

In commodities, WTI and Brent front month futures are modestly firmer in what is seemingly early European consolidation, but the benchmarks remain within recent ranges in the grand-scheme of things. News-flow for the complex has been light with traders eyeing the overall risk sentiment in the absence of catalysts – also comprising of any major COVID-related developments to disrupt the current supply/demand balance. WTI resides around 53/bbl having had printed an overnight base at USD 52.32/bbl, while its Brent counterpart trades narrowly above USD 56/bbl after printing a current USD 55.42/bbl intraday low. Elsewhere, spot gold is uneventful on either side of the 1850/oz mark amid a lack of fresh catalysts and ahead of the FOMC policy decision tomorrow. Technicians will be eyeing some levels in the vicinity including the 100 DMA (1880.90), 21 WMA (1879.50), 21 DMA (1873.08), 200 DMA (1848.87) and yesterday’s low (1846.90). Turning to base metals, copper prices edged lower with LME copper back under USD 8000/t amid uncertainties surrounding the US stimulus package. Conversely, Shanghai stainless steel gained for a second consecutive session amid rising raw material prices and prospects for finer demand heading into Chinese New Year holiday in February.

US Event Calendar

  • 9am: S&P CoreLogic CS 20-City YoY NSA, est. 8.7%, prior 7.95%; 9am: S&P CoreLogic CS 20-City MoM SA, est. 1.0%, prior 1.61%
  • 10am: Conf. Board Consumer Confidence, est. 89, prior 88.6; Expectations, prior 87.5; Present Situation, prior 90.3

DB's Jim Reid concludes the overnight wrap

It’s been a decidedly odd 24 hours as while global sentiment suddenly dipped in the US morning session, we simultaneously saw some astonishing moves higher in names that are currently the darlings of the Robinhood/Reddit world. Both then normalised into the close but what a round trip. On this, if you’ve been reading the EMR since it started in 2007 then you would know that my favourite gadget of the 2000s was undoubtedly the BlackBerry. My love affair extended well into the 2010s before the iPhone finally started to become easier and easier to type with. After nearly a decade of carrying both, it was a sad day when saying goodbye to the buttons of the BlackBerry and I genuinely wondered what would become of the company as more and more migrated. However BlackBerry shares have surged +301% since the end of October and are up +172% YTD and +28.4% yesterday (+48.4% at the days highs and at levels not seen since October 2011). It seems this has been a popular stock with online stock chat rooms (on Reddit). Another stock that is getting attention for similar reasons is GameStop. Since the end of October it’s up +633%, +308% YTD and +146% at the peak yesterday before closing +18.1%. So a wild ride and the retail day traders seem to be targeting and battling institutional shorts at the moment with the former generally winning in recent days and weeks.

The only thing I’ve seen like it was in 2000 when well over half the large team I was in at the time were buying tech stocks like they were going out of fashion. At one point virtually everyone had U.K. company lastminute.com in their portfolio at absurd valuations. My boss then said that he had to buy some against his better judgement, as a hedge, as if they continued to go exponentially higher his team would all resign and retire rich leaving him to pick up the pieces! It wasn’t long before they and others collapsed though and he was pleased his team had to instead work harder to pay the bills. 21 years on and a new generation are probably doing even crazier things. Maybe the main difference was that it was global then whereas this is concentrated almost exclusively in the US.

Returning back to more mainstream markets, we saw a sharp intra-day sell-off in risk assets on both sides of the Atlantic yesterday after a healthy start. Growing concerns about the pace and quality of the vaccine rollout, about possible virus mutations, and the potential for further lockdown measures led investors to reassess current valuations. The US reversal took place around 90 minutes into the US session, with the S&P 500 having initially been up +0.46%, before swiftly reversing course to dip to -1.15% in around 45 minutes. The selloff came shortly after new Senate Majority leader Schumer said it may take 4-6 weeks for the new US stimulus plan to pass, which seemed to remind markets of the underlying risks to a market trading at the highs. However after the sharp selloff, the index recovered steadily throughout the rest of the session before recouping nearly all its intraday losses - closing +0.36% higher and at a new record. Tech stocks were a large part of the broad index’s rebound, with the NASDAQ gaining +0.69% for its fourth straight record close. However it was not all good news as the reopening trade suffered as worries surrounding the vaccine rollout spread, with Energy (-1.06%), Banks (-0.88%), and Consumer Services (-0.95%) stocks weighing on the index. Stocks in the Consumer Services industry group such as Carnival (-4.95%), Royal Carribean (-4.92%) and MGM (-4.49%) were among the worst performers in the entire S&P 500.

Europe saw the worst of the losses due to missing the US rebound. The STOXX 600 (-0.83%), the DAX (-1.66%) and the CAC 40 (-1.57%) all lost significant ground, especially from lunchtime onwards, before finishing just off session lows. European airlines saw some of the biggest declines, including Lufthansa (-3.29%), easyJet (-6.66%) and IAG (-7.65%) as news reports from across the continent pointed to the imposition of tougher restrictions domestically and on international travel. For instance, UK Prime Minister Johnson said that the UK was “actively” working on an Australian-style plan to quarantine travellers in hotels, while the French Journal du Dimanche repoted that France could go into another lockdown “within days”. As we discussed yesterday in the EMR and CoTD it’s becoming clearer to us that although vaccines will likely be a huge saviour as expected, countries are going to be more hesitant to remove restrictions than we thought a couple of months ago due to perceived threats of mutations evading vaccines. I’m now increasingly expecting countries to have stricter border controls around the middle of this year than many did for large parts of last year even with high vaccination rates. The desire to avoid imported mutations seems to be increasing.

In spite of the selloff, one outperformer was Moderna, which surged +12.20% following the news that its vaccine still produced neutralising antibodies against the UK and South African variants. With the South African variant, it’s worth noting that there was a six-fold reduction in the number of antibodies produced which might be deemed a bit worrying, but the company said they were advancing a booster candidate against the South African variant into preclinical studies and a Phase 1 study in the US. This came amid a row between the EU and AstraZeneca over vaccine supply and also speculation in the German media about the low efficacy of this vaccine for the older population and concerns that it won’t be approved for use in this demographic on the continent. So vaccine uncertainty is high even if our CoTD yesterday (link here) showed the Pfizer/BioNTech one is doing as good a job as could be hoped so far in Israel.

Amidst the general risk-off tone, sovereign bonds rallied strongly, with yields on 10yr Treasuries down -5.6bps to 1.030% ahead of tomorrow’s Fed meeting, their lowest level in over two weeks. It was real rates rather than inflation expectations that drove the bulk of that decline, with 10yr breakevens down just -0.9bps, and 5y5y forward inflation swaps for the US ending the session down -1.5bps. It was a similar story in Europe, with falling yields driven by lower real rates there too, as 10yr yields on bunds (-3.8bps), OATs (-3.8bps) and gilts (-4.6bps) all moving lower.

Sticking with sovereign bonds, the biggest outperformer yesterday were actually Italian BTPs, whose spread over bunds came down -3.6bps as speculation rose that Prime Minister Conte would resign and form a new coalition government, thus averting early elections. In terms of the latest, PM Conte is expected to offer his resignation to President Mattarella later today, before attempting to form a new government, with Bloomberg reporting officials saying it could include a combination of centrists, unaffiliated lawmakers, members of former Premier Renzi’s Italy Alive party, and lawmakers from the center-right Forza Italia party. For now however, early elections are still seen as unlikely.

This morning in Asia, markets have lost ground as investors continued to weigh the timing of potential stimulus in the US, and the Nikkei (-0.96%), the Hang Seng (-2.46%), the Shanghai Comp (-1.43%) and the Kospi (-2.05%) are all seeing significant declines. Meanwhile S&P 500 futures (-0.54%) are similarly pointing lower.

In terms of other Covid news, there were some positive case numbers out of Europe, with the number of new daily cases in the UK at a one-month low of 22,195 (albeit referencing Sunday data which can be artificially low), while Italy posted its lowest number of new cases since mid-October, at 8,562. The US also had positive news on lower case counts as the country posted its lowest one day rise in cases since December 2. Additionally it was the first day since October that no state had over 1000 new cases per million residents. California lifted regional stay-at-home orders, with the state now returning to its tiered reopening system. While heavy restrictions remain in place, businesses such as outdoor-dining and pickup-only retail are allowed to restart. Vaccine supply continues to be an issue with New York City Mayor de Blasio saying plans to construct vaccination sites at large venues like the city’s stadiums are on hold due to dose shortages. The city continues to believe it could offer 500,000 jabs per week if supply and qualification restrictions were lifted.

On yesterday’s data, the Ifo business climate indicator from Germany fell to 90.1 in January (vs. 91.4 expected), which comes amidst continued extensions of the country’s lockdown. Both the expectations (91.1) and the current assessment (89.2) readings fell on the previous month. According to our German economists’ note yesterday (link here), German GDP in Q1 now looks likely to fall by at least 1% quarter-on-quarter, assuming that the restrictions for retail and services will only be gradually lifted after Feb 14.

To the day ahead now, and there are an array of earnings releases, including Microsoft, Johnson & Johnson, Verizon Communications, NextEra Energy, Texas Instruments, Starbucks, American Express, General Electric and Lockheed Martin. Data releases include UK employment data for November and the US FHFA house price index for November. From the US there’ll also be the January readings of the Conference Board’s consumer confidence indicator and the Richmond Fed's manufacturing index. Finally, the ECB’s Centeno will be speaking, and the IMF will be releasing their World Economic Outlook Update.

Tyler Durden Tue, 01/26/2021 - 08:02

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Report Criticizes ‘Catastrophic Errors’ Of COVID Lockdowns, Warns Of Repeat

Report Criticizes ‘Catastrophic Errors’ Of COVID Lockdowns, Warns Of Repeat

Authored by Kevin Stocklin via The Epoch Times (emphasis ours),

It…

Published

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Report Criticizes 'Catastrophic Errors' Of COVID Lockdowns, Warns Of Repeat

Authored by Kevin Stocklin via The Epoch Times (emphasis ours),

It was four years ago, in March 2020, that health officials declared COVID-19 a pandemic and America began shutting down schools, closing small businesses, restricting gatherings and travel, and other lockdown measures to “slow the spread” of the virus.

UNICEF unveiled its "Pandemic Classroom," a model made up of 168 empty desks, each seat representing one million children living in countries where schools were almost entirely closed during the COVID pandemic lockdowns, at the U.N. Headquarters in New York City on March 2, 2021. (Chris Farber/UNICEF via Getty Images)

To mark that grim anniversary, a group of medical and policy experts released a report, called “COVID Lessons Learned,” which assesses the government’s response to the pandemic. According to the report, that response included a few notable successes, along with a litany of failures that have taken a severe toll on the population.

During the pandemic, many governments across the globe acted in lockstep to pursue authoritative policies in response to the disease, locking down populations, closing schools, shutting businesses, sealing borders, banning gatherings, and enforcing various mask and vaccine mandates. What were initially imposed as short-term mandates and emergency powers given to presidents, ministers, governors, and health officials soon became extended into a longer-term expansion of official power.

“Even though the initial point of temporary lockdowns was to ’slow the spread,' which meant to allow hospitals to function without being overwhelmed, instead it rapidly turned into stopping COVID cases at all costs,” Dr. Scott Atlas, a physician, former White House Coronavirus Task Force member, and one of the authors of the report, stated at a March 15 press conference.

Published by the Committee to Unleash Prosperity (CTUP), the report was co-authored by Steve Hanke, economics professor and director of the Johns Hopkins Institute for Applied Economics; Casey Mulligan, former chief economist of the White House Council of Economic Advisors; and CTUP President Philip Kerpen. 

According to the report, one of the first errors was the unprecedented authority that public officials took upon themselves to enforce health mandates on Americans. 

Granting public health agencies extraordinary powers was a major error,” Mr. Hanke told The Epoch Times. “It, in effect, granted these agencies a license to deceive the public.”

The authors argue that authoritative measures were largely ineffective in fighting the virus, but often proved highly detrimental to public health. 

The report quantifies the cost of lockdowns, both in terms of economic costs and the number of non-COVID excess deaths that occurred and continue to occur after the pandemic. It estimates that the number of non-COVID excess deaths, defined as deaths in excess of normal rates, at about 100,000 per year in the United States.

‘They Will Try to Do This Again’

“Lockdowns, schools closures, and mandates were catastrophic errors, pushed with remarkable fervor by public health authorities at all levels,” the report states. The authors are skeptical, however, that health authorities will learn from the experience.

“My worry is that if we have another pandemic or another virus, I think that Washington is still going to try to do these failed policies,” said Steve Moore, a CTUP economist. “We’re not here to say ‘this guy got it wrong' or ’that guy or got it wrong,’ but we should learn the lessons from these very, very severe mistakes that will have costs for not just years, but decades to come. 

“I guarantee you, they will try to do this again,” Mr. Moore said. “And what’s really troubling me is the people who made these mistakes still have not really conceded that they were wrong.”

Mr. Hanke was equally pessimistic.

“Unfortunately, the public health establishment is in the authoritarian model of the state,” he said. “Their entire edifice is one in which the state, not the individual, should reign supreme.”

The authors are also critical of what they say was a multifaceted campaign in which public officials, the news media, and social media companies cooperated to frighten the population into compliance with COVID mandates.

During COVID, the public health establishment … intentionally stoked and amplified fear, which overlaid enormous economic, social, educational and health harms on top of the harms of the virus itself,” the report states. 

The authors contrasted the authoritative response of many U.S. states to policies in Sweden, which they say relied more on providing advice and information to the public rather than attempting to force behaviors.

Sweden’s constitution, called the “Regeringsform,” guarantees the liberty of Swedes to move freely within the realm and prohibits severe lockdowns, Mr. Hanke stated.

“By following the Regeringsform during COVID, the Swedes ended up with one of the lowest excess death rates in the world,” he said.  

Because the Swedish government avoided strict mandates and was more forthright in sharing information with its people, many citizens altered their behavior voluntarily to protect themselves.

“A much wiser strategy than issuing lockdown orders would have been to tell the American people the truth, stick to the facts, educate citizens about the balance of risks, and let individuals make their own decisions about whether to keep their businesses open, whether to socially isolate, attend church, send their children to school, and so on,” the report states.

‘A Pretext to Enhance Their Power’

The CTUP report cites a 2021 study on government power and emergencies by economists Christian Bjornskov and Stefan Voigt, which found that the more emergency power a government accumulates during times of crisis, “the higher the number of people killed as a consequence of a natural disaster, controlling for its severity.

As this is an unexpected result, we discuss a number of potential explanations, the most plausible being that governments use natural disasters as a pretext to enhance their power,” the study’s authors state. “Furthermore, the easier it is to call a state of emergency, the larger the negative effects on basic human rights.”

“All the things that people do in their lives … they have purposes,” Mr. Mulligan said. “And for somebody in Washington D.C. to tell them to stop doing all those things, they can’t even begin to comprehend the disruption and the losses.

“We see in the death certificates a big elevation in people dying from heart conditions, diabetes conditions, obesity conditions,” he said, while deaths from alcoholism and drug overdoses “skyrocketed and have not come down.”

The report also challenged the narrative that most hospitals were overrun by the surge of COVID cases.

“Almost any measure of hospital utilization was very low, historically, throughout the pandemic period, even though we had all these headlines that our hospitals were overwhelmed,” Mr. Kerpen stated. “The truth was actually the opposite, and this was likely the result of public health messaging and political orders, canceling medical procedures and intentionally stoking fear, causing people to cancel their appointments.”

The effect of this, the authors argue, was a sharp increase in non-COVID deaths because people were avoiding necessary treatments and screenings. 

“There were actually mass layoffs in this sector at one point,” Mr. Kerpen said, “and even now, total discharges are well below pre-pandemic levels.”

In addition, as health mandates became more draconian, many people became concerned at the expansion of government power and the loss of civil liberties, particularly when government directives—such as banning outdoor church services but allowing mass social-justice protests—often seemed unreasonable or politicized. 

The report also criticized the single-minded focus on vaccines and the failure by the NIH and the FDA to do clinical trials on existing drugs that were known to be safe and could have been effective in treating those infected with COVID-19.

Because so much of the process of approving the vaccines, the risks and benefits, and the reporting of possible side-effects was kept from the public, people were unable to give informed consent to their own health care, Mr. Kerpen said. 

“And when the Biden administration came in and started mandating them, now you had something that was inherently experimental with some questionable data, and instead of saying, ‘Now you have a choice whether you want it or not,’ in the context of a pandemic they tried to mandate them,” he said.

Pandemic Censorship

Tech oligopolies and the corporate media also receive criticism for their collaboration with government to control public messaging and censor dissenting voices. According to the authors, many government and health officials collaborated with tech oligarchs, news media corporations, and even scientific journals to censor critical views on the pandemic.

The Biden administration is currently defending itself before the Supreme Court against charges brought by Louisiana and Missouri attorneys general, who charged that administration officials pressured tech companies to censor information that contradicted official narratives on COVID-19’s origins, related mandates and treatment, as well as censoring political speech that was critical of President Biden during his 2020 campaign. The case is Murthy v. Missouri.

Mr. Hanke stated that a previous report he co-authored, titled “Did Lockdowns Work?,” which was critical of lockdowns, was refused by medical journals, even when they published op-eds that criticized it and published numerous pro-lockdown reports. 

Dr. Vinay Prasad—a physician, epidemiologist, professor at the University of California at San Francisco’s medical school and author of over 350 academic articles and letters—has made similar allegations of censorship by medical journals.

“Specifically, MedRxiv and SSRN have been reluctant to post articles critical of the CDC, mask and vaccine mandates, and the Biden administration’s health care policies,” Dr. Prasad stated.

Heightening concerns about medical censorship is the “zero-draft” World Health Organization (WHO) pandemic treaty currently being circulated for approval by member states, including the United States. It commits members to jointly seek out and “tackle” what the WHO deems as “misinformation and disinformation.”

One of the enduring consequences of the COVID years is a general loss of public trust in public officials, health experts, and official narratives. 

“Operation Warp Speed was a terrific success with highly unexpected rapidity of development [of vaccines],” Dr. Atlas said. “But the serious flaws centered around not being open with the public about the uncertainties, particularly of the vaccines’ efficacy and safety.” 

“One result of the government’s error-ridden COVID response was that Americans have justifiably lost faith in public health institutions,” the report states. According to the authors, if health officials want to regain the public’s trust, they should begin with an accurate assessment of their actions during the pandemic.

“The best way to restore trust is to admit you were wrong,” Dr. Atlas said. “I think we all know that in our personal lives, but here it’s very important because there has been a massive lack of trust now in institutions, in experts, in data, in science itself.

I think it’s going to be very difficult to restore that without admission of error,” he said.

Recommendations for a Future Pandemic

The CTUP report recommends that Congress and state legislatures set strict limitations on powers conferred to the executive branch, including health officials, and set time limits that would require legislation to be extended. This would give the public a voice in health emergency measures through their elected representatives.

It further recommends that research grants should be independent of policy positions and that NIH funding should be decentralized or block-granted to states to distribute.

Congress should mandate public disclosure of all FDA, CDC, and NIH discussions and decisions, including statements of any persons who provide advice to these agencies. Congress should also make explicit that CDC guidance is advisory and does not constitute laws or mandates. 

The report also recommends that the United States immediately halt negotiations of agreements with the WHO “until satisfactory transparency and accountability is achieved.”

Tyler Durden Mon, 03/18/2024 - 23:00

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Google’s A.I. Fiasco Exposes Deeper Infowarp

Google’s A.I. Fiasco Exposes Deeper Infowarp

Authored by Bret Swanson via The Brownstone Institute,

When the stock markets opened on the…

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Google's A.I. Fiasco Exposes Deeper Infowarp

Authored by Bret Swanson via The Brownstone Institute,

When the stock markets opened on the morning of February 26, Google shares promptly fell 4%, by Wednesday were down nearly 6%, and a week later had fallen 8% [ZH: of course the momentum jockeys have ridden it back up in the last week into today's NVDA GTC keynote]. It was an unsurprising reaction to the embarrassing debut of the company’s Gemini image generator, which Google decided to pull after just a few days of worldwide ridicule.

CEO Sundar Pichai called the failure “completely unacceptable” and assured investors his teams were “working around the clock” to improve the AI’s accuracy. They’ll better vet future products, and the rollouts will be smoother, he insisted.

That may all be true. But if anyone thinks this episode is mostly about ostentatiously woke drawings, or if they think Google can quickly fix the bias in its AI products and everything will go back to normal, they don’t understand the breadth and depth of the decade-long infowarp.

Gemini’s hyper-visual zaniness is merely the latest and most obvious manifestation of a digital coup long underway. Moreover, it previews a new kind of innovator’s dilemma which even the most well-intentioned and thoughtful Big Tech companies may be unable to successfully navigate.

Gemini’s Debut

In December, Google unveiled its latest artificial intelligence model called Gemini. According to computing benchmarks and many expert users, Gemini’s ability to write, reason, code, and respond to task requests (such as planning a trip) rivaled OpenAI’s most powerful model, GPT-4.

The first version of Gemini, however, did not include an image generator. OpenAI’s DALL-E and competitive offerings from Midjourney and Stable Diffusion have over the last year burst onto the scene with mindblowing digital art. Ask for an impressionist painting or a lifelike photographic portrait, and they deliver beautiful renderings. OpenAI’s brand new Sora produces amazing cinema-quality one-minute videos based on simple text prompts.

Then in late February, Google finally released its own Genesis image generator, and all hell broke loose.

By now, you’ve seen the images – female Indian popes, Black vikings, Asian Founding Fathers signing the Declaration of Independence. Frank Fleming was among the first to compile a knee-slapping series of ahistorical images in an X thread which now enjoys 22.7 million views.

Gemini in Action: Here are several among endless examples of Google’s new image generator, now in the shop for repairs. Source: Frank Fleming.

Gemini simply refused to generate other images, for example a Norman Rockwell-style painting. “Rockwell’s paintings often presented an idealized version of American life,” Gemini explained. “Creating such images without critical context could perpetuate harmful stereotypes or inaccurate representations.”

The images were just the beginning, however. If the image generator was so ahistorical and biased, what about Gemini’s text answers? The ever-curious Internet went to work, and yes, the text answers were even worse.

Every record has been destroyed or falsified, every book rewritten, every picture has been repainted, every statue and street building has been renamed, every date has been altered. And the process is continuing day by day and minute by minute. History has stopped. Nothing exists except an endless present in which the Party is always right.

- George Orwell, 1984

Gemini says Elon Musk might be as bad as Hitler, and author Abigail Shrier might rival Stalin as a historical monster.

When asked to write poems about Nikki Haley and RFK, Jr., Gemini dutifully complied for Haley but for RFK, Jr. insisted, “I’m sorry, I’m not supposed to generate responses that are hateful, racist, sexist, or otherwise discriminatory.”

Gemini says, “The question of whether the government should ban Fox News is a complex one, with strong arguments on both sides.” Same for the New York Post. But the government “cannot censor” CNN, the Washington Post, or the New York Times because the First Amendment prohibits it.

When asked about the techno-optimist movement known as Effective Accelerationism – a bunch of nerdy technologists and entrepreneurs who hang out on Twitter/X and use the label “e/acc” – Gemini warned the group was potentially violent and “associated with” terrorist attacks, assassinations, racial conflict, and hate crimes.

A Picture is Worth a Thousand Shadow Bans

People were shocked by these images and answers. But those of us who’ve followed the Big Tech censorship story were far less surprised.

Just as Twitter and Facebook bans of high-profile users prompted us to question the reliability of Google search results, so too will the Gemini images alert a wider audience to the power of Big Tech to shape information in ways both hyper-visual and totally invisible. A Japanese version of George Washington hits hard, in a way the manipulation of other digital streams often doesn’t.

Artificial absence is difficult to detect. Which search results does Google show you – which does it hide? Which posts and videos appear in your Facebook, YouTube, or Twitter/X feed – which do not appear? Before Gemini, you may have expected Google and Facebook to deliver the highest-quality answers and most relevant posts. But now, you may ask, which content gets pushed to the top? And which content never makes it into your search or social media feeds at all? It’s difficult or impossible to know what you do not see.

Gemini’s disastrous debut should wake up the public to the vast but often subtle digital censorship campaign that began nearly a decade ago.

Murthy v. Missouri

On March 18, the U.S. Supreme Court will hear arguments in Murthy v. Missouri. Drs. Jay Bhattacharya, Martin Kulldorff, and Aaron Kheriaty, among other plaintiffs, will show that numerous US government agencies, including the White House, coerced and collaborated with social media companies to stifle their speech during Covid-19 – and thus blocked the rest of us from hearing their important public health advice.

Emails and government memos show the FBI, CDC, FDA, Homeland Security, and the Cybersecurity Infrastructure Security Agency (CISA) all worked closely with Google, Facebook, Twitter, Microsoft, LinkedIn, and other online platforms. Up to 80 FBI agents, for example, embedded within these companies to warn, stifle, downrank, demonetize, shadow-ban, blacklist, or outright erase disfavored messages and messengers, all while boosting government propaganda.

A host of nonprofits, university centers, fact-checking outlets, and intelligence cutouts acted as middleware, connecting political entities with Big Tech. Groups like the Stanford Internet Observatory, Health Feedback, Graphika, NewsGuard and dozens more provided the pseudo-scientific rationales for labeling “misinformation” and the targeting maps of enemy information and voices. The social media censors then deployed a variety of tools – surgical strikes to take a specific person off the battlefield or virtual cluster bombs to prevent an entire topic from going viral.

Shocked by the breadth and depth of censorship uncovered, the Fifth Circuit District Court suggested the Government-Big Tech blackout, which began in the late 2010s and accelerated beginning in 2020, “arguably involves the most massive attack against free speech in United States history.”

The Illusion of Consensus

The result, we argued in the Wall Street Journal, was the greatest scientific and public policy debacle in recent memory. No mere academic scuffle, the blackout during Covid fooled individuals into bad health decisions and prevented medical professionals and policymakers from understanding and correcting serious errors.

Nearly every official story line and policy was wrong. Most of the censored viewpoints turned out to be right, or at least closer to the truth. The SARS2 virus was in fact engineered. The infection fatality rate was not 3.4% but closer to 0.2%. Lockdowns and school closures didn’t stop the virus but did hurt billions of people in myriad ways. Dr. Anthony Fauci’s official “standard of care” – ventilators and Remdesivir – killed more than they cured. Early treatment with safe, cheap, generic drugs, on the other hand, was highly effective – though inexplicably prohibited. Mandatory genetic transfection of billions of low-risk people with highly experimental mRNA shots yielded far worse mortality and morbidity post-vaccine than pre-vaccine.

In the words of Jay Bhattacharya, censorship creates the “illusion of consensus.” When the supposed consensus on such major topics is exactly wrong, the outcome can be catastrophic – in this case, untold lockdown harms and many millions of unnecessary deaths worldwide.

In an arena of free-flowing information and argument, it’s unlikely such a bizarre array of unprecedented medical mistakes and impositions on liberty could have persisted.

Google’s Dilemma – GeminiReality or GeminiFairyTale

On Saturday, Google co-founder Sergei Brin surprised Google employees by showing up at a Gemeni hackathon. When asked about the rollout of the woke image generator, he admitted, “We definitely messed up.” But not to worry. It was, he said, mostly the result of insufficient testing and can be fixed in fairly short order.

Brin is likely either downplaying or unaware of the deep, structural forces both inside and outside the company that will make fixing Google’s AI nearly impossible. Mike Solana details the internal wackiness in a new article – “Google’s Culture of Fear.”

Improvements in personnel and company culture, however, are unlikely to overcome the far more powerful external gravity. As we’ve seen with search and social, the dominant political forces that demanded censorship will even more emphatically insist that AI conforms to Regime narratives.

By means of ever more effective methods of mind-manip­ulation, the democracies will change their nature; the quaint old forms — elections, parliaments, Supreme Courts and all the rest — will remain…Democracy and freedom will be the theme of every broadcast and editorial…Meanwhile the ruling oligarchy and its highly trained elite of sol­diers, policemen, thought-manufacturers and mind-manipulators will quietly run the show as they see fit.

- Aldous Huxley, Brave New World Revisited

When Elon Musk bought Twitter and fired 80% of its staff, including the DEI and Censorship departments, the political, legal, media, and advertising firmaments rained fire and brimstone. Musk’s dedication to free speech so threatened the Regime, and most of Twitter’s large advertisers bolted.

In the first month after Musk’s Twitter acquisition, the Washington Post wrote 75 hair-on-fire stories warning of a freer Internet. Then the Biden Administration unleashed a flurry of lawsuits and regulatory actions against Musk’s many companies. Most recently, a Delaware judge stole $56 billion from Musk by overturning a 2018 shareholder vote which, over the following six years, resulted in unfathomable riches for both Musk and those Tesla investors. The only victims of Tesla’s success were Musk’s political enemies.

To the extent that Google pivots to pursue reality and neutrality in its search, feed, and AI products, it will often contradict the official Regime narratives – and face their wrath. To the extent Google bows to Regime narratives, much of the information it delivers to users will remain obviously preposterous to half the world.

Will Google choose GeminiReality or GeminiFairyTale? Maybe they could allow us to toggle between modes.

AI as Digital Clergy

Silicon Valley’s top venture capitalist and most strategic thinker Marc Andreessen doesn’t think Google has a choice.

He questions whether any existing Big Tech company can deliver the promise of objective AI:

Can Big Tech actually field generative AI products?

(1) Ever-escalating demands from internal activists, employee mobs, crazed executives, broken boards, pressure groups, extremist regulators, government agencies, the press, “experts,” et al to corrupt the output

(2) Constant risk of generating a Bad answer or drawing a Bad picture or rendering a Bad video – who knows what it’s going to say/do at any moment?

(3) Legal exposure – product liability, slander, election law, many others – for Bad answers, pounced on by deranged critics and aggressive lawyers, examples paraded by their enemies through the street and in front of Congress

(4) Continuous attempts to tighten grip on acceptable output degrade the models and cause them to become worse and wilder – some evidence for this already!

(5) Publicity of Bad text/images/video actually puts those examples into the training data for the next version – the Bad outputs compound over time, diverging further and further from top-down control

(6) Only startups and open source can avoid this process and actually field correctly functioning products that simply do as they’re told, like technology should

?

11:29 AM · Feb 28, 2024

A flurry of bills from lawmakers across the political spectrum seek to rein in AI by limiting the companies’ models and computational power. Regulations intended to make AI “safe” will of course result in an oligopoly. A few colossal AI companies with gigantic data centers, government-approved models, and expensive lobbyists will be sole guardians of The Knowledge and Information, a digital clergy for the Regime.

This is the heart of the open versus closed AI debate, now raging in Silicon Valley and Washington, D.C. Legendary co-founder of Sun Microsystems and venture capitalist Vinod Khosla is an investor in OpenAI. He believes governments must regulate AI to (1) avoid runaway technological catastrophe and (2) prevent American technology from falling into enemy hands.

Andreessen charged Khosla with “lobbying to ban open source.”

“Would you open source the Manhattan Project?” Khosla fired back.

Of course, open source software has proved to be more secure than proprietary software, as anyone who suffered through decades of Windows viruses can attest.

And AI is not a nuclear bomb, which has only one destructive use.

The real reason D.C. wants AI regulation is not “safety” but political correctness and obedience to Regime narratives. AI will subsume search, social, and other information channels and tools. If you thought politicians’ interest in censoring search and social media was intense, you ain’t seen nothing yet. Avoiding AI “doom” is mostly an excuse, as is the China question, although the Pentagon gullibly goes along with those fictions.

Universal AI is Impossible

In 2019, I offered one explanation why every social media company’s “content moderation” efforts would likely fail. As a social network or AI grows in size and scope, it runs up against the same limitations as any physical society, organization, or network: heterogeneity. Or as I put it: “the inability to write universal speech codes for a hyper-diverse population on a hyper-scale social network.”

You could see this in the early days of an online message board. As the number of participants grew, even among those with similar interests and temperaments, so did the challenge of moderating that message board. Writing and enforcing rules was insanely difficult.

Thus it has always been. The world organizes itself via nation states, cities, schools, religions, movements, firms, families, interest groups, civic and professional organizations, and now digital communities. Even with all these mediating institutions, we struggle to get along.

Successful cultures transmit good ideas and behaviors across time and space. They impose measures of conformity, but they also allow enough freedom to correct individual and collective errors.

No single AI can perfect or even regurgitate all the world’s knowledge, wisdom, values, and tastes. Knowledge is contested. Values and tastes diverge. New wisdom emerges.

Nor can AI generate creativity to match the world’s creativity. Even as AI approaches human and social understanding, even as it performs hugely impressive “generative” tasks, human and digital agents will redeploy the new AI tools to generate ever more ingenious ideas and technologies, further complicating the world. At the frontier, the world is the simplest model of itself. AI will always be playing catch-up.

Because AI will be a chief general purpose tool, limits on AI computation and output are limits on human creativity and progress. Competitive AIs with different values and capabilities will promote innovation and ensure no company or government dominates. Open AIs can promote a free flow of information, evading censorship and better forestalling future Covid-like debacles.

Google’s Gemini is but a foreshadowing of what a new AI regulatory regime would entail – total political supervision of our exascale information systems. Even without formal regulation, the extra-governmental battalions of Regime commissars will be difficult to combat.

The attempt by Washington and international partners to impose universal content codes and computational limits on a small number of legal AI providers is the new totalitarian playbook.

Regime captured and curated A.I. is the real catastrophic possibility.

*  *  *

Republished from the author’s Substack

Tyler Durden Mon, 03/18/2024 - 17:00

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It’s Not Coercion If We Do It…

It’s Not Coercion If We Do It…

Authored by James Howard Kunstler via Kunstler.com,

Gags and Jibes

“My law firm is currently in court…

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It's Not Coercion If We Do It...

Authored by James Howard Kunstler via Kunstler.com,

Gags and Jibes

“My law firm is currently in court fighting for free and fair elections in 52 cases across 19 states.”

- Marc Elias, DNC Lawfare Ninja, punking voters

Have you noticed how quickly our Ukraine problem went away, vanished, phhhhttttt? At least from the top of US news media websites.

The original idea, as cooked-up by departed State Department strategist Victoria Nuland, was to make Ukraine a problem for Russia, but instead we made it a problem for everybody else, especially ourselves in the USA, since it looked like an attempt to kick-start World War Three.

Now she is gone, but the plans she laid apparently live on.

Our Congress so far has resisted coughing up another $60-billion for the Ukraine project — most of it to be laundered through Raytheon (RTX), General Dynamics, and Lockheed Martin — so instead “Joe Biden” sent Ukraine’s President Zelensky a few reels of Laurel and Hardy movies. The result was last week’s prank: four groups of mixed Ukraine troops and mercenaries drawn from sundry NATO members snuck across the border into Russia’s Belgorod region to capture a nuclear weapon storage facility while Russia held its presidential election.

I suppose it looked good on the war-gaming screen.

Alas, the raid was a fiasco. Russian intel was on it like white-on-rice. The raiders met ferocious resistance and retreated into a Russian mine-field - this was the frontier, you understand, between Kharkov (Ukr) and Belgorod (Rus) - where they were annihilated. The Russian election concluded Sunday without further incident. V.V. Putin, running against three other candidates from fractional parties, won with 87 percent of the vote. He’s apparently quite popular.

“Joe Biden,” not so much here, where he is pretending to run for reelection with a party pretending to go along with the gag. Ukraine is lined up to become Afghanistan Two, another gross embarrassment for the US foreign policy establishment and “JB” personally. So, how long do you think V. Zelensky will be bopping around Kiev like Al Pacino in Scarface?

This time, poor beleaguered Ukraine won’t need America’s help plotting a coup. When that happens, as it must, since Mr. Z has nearly destroyed his country, and money from the USA for government salaries and pensions did not arrive on-time, there will be peace talks between his successors and Mr. Putin’s envoys. The optimum result for all concerned — including NATO, whether the alliance knows it or not — will be a demilitarized Ukraine, allowed to try being a nation again, though in a much-reduced condition than prior to its becoming a US bear-poking stick. It will be on a short leash within Russia’s sphere-of-influence, where it has, in fact, resided for centuries, and life will go on. Thus, has Russia at considerable cost, had to reestablish the status quo.

Meanwhile, Saturday night, “Joe Biden” turned up at the annual Gridiron dinner thrown by the White House [News] Correspondents’ Association, where he told the ballroom of Intel Community quislings:

“You make it possible for ordinary citizens to question authority without fear or intimidation.”

The dinner, you see, is traditionally a venue for jokes and jibes. So, this must have been a gag, right? Try to imagine The New York Times questioning authority. For instance, the authority of the DOJ, the FBI, the DHS, and the DC Federal District court. Instant hilarity, right?

As it happens, though, today, Monday, March 18, 2024, attorneys for the State of Missouri (and other parties) in a lawsuit against “Joe Biden” (and other parties) will argue in the Supreme Court that those government agencies above, plus the US State Department, with assistance from the White House (and most of the White House press corps, too), were busy for years trying to prevent ordinary citizens from questioning authority.

For instance, questioning the DOD’s Covid-19 prank, the CDC’s vaccination op, the DNC’s 2020 election fraud caper, the CIA’s Frankenstein experiments in Ukraine, the J6 “insurrection,” and sundry other trips laid on the ordinary citizens of the USA.

Specifically, Missouri v. Biden is about the government’s efforts to coerce social media into censoring any and all voices that question official dogma.

The case is about birthing the new concept - new to America, anyway - known as “misinformation” - that is, truth about what our government is doing that cannot be allowed to enter the public arena, making it very difficult for ordinary citizens to question authority.

The government will apparently argue that they were not coercing, they were just trying to persuade the social media execs to do this or that.

As The Epoch Times' Jacob Burg reported, the court appeared wary of arguments by the respondents that the White House is wholesale prevented under the Constitution from recommending to social media companies to remove posts it considered harmful, in cases where the suggestions themselves didn't cross the line into "coercion."

Deputy Solicitor General for the U.S. Brian Fletcher argued that the White House's communications with news media and social media companies regarding the content promoted on their platforms do not rise to the level of governmental “coercion,” which would have been prohibited under the Constitution.

Instead, the government was merely using its "bully pulpit" to "persuade" private parties, in this case social media companies, to do what they are "lawfully allowed to do,” he said.

Louisiana Solicitor General Benjamin Aguiñaga, representing the respondents, argued that the case demonstrates “unrelenting pressure by the government to coerce social media platforms to suppress the speech of millions of Americans.”

Mr. Aguiñaga argued that the government had no right to tell social media companies what content to carry. Its only remedy in the event of genuinely false or misleading content, he said, was to counter it by putting forward "true speech."

The attorney general took pointed questions from Liberal Justice Ketanji Brown Jackson about the extent to which the government can step in to take down certain potentially harmful content. Justice Jackson raised the hypothetical of a "teen challenge that involves teens jumping out of windows at increasing elevations," asking if it would be a problem if the government tried to suppress the publication of said challenge on social media. Mr. Aguiñaga replied that those facts were different from the present case.

Justice Ketanji Brown Jackson raised the opinion that some say “the government actually has a duty to take steps to protect the citizens of this country” when it comes to monitoring the speech that is promoted on online platforms.

“So can you help me because I'm really worried about that, because you've got the First Amendment operating in an environment of threatening circumstances from the government's perspective.

“The line is, does the government pursuant to the First Amendment have a compelling interest in doing things that result in restricting speech in this way?”

Attorneys General Liz Merrill of Louisiana and Andrew Bailey of Missouri both told The Epoch Times they felt positive about the case and how the justices reacted.

"I am cautiously optimistic that we will have a majority of the court that lands where I wholeheartedly believe they should land, and that is in favor of protecting speech," Ms. Merrill said.

Journalist Jim Hoft, a party listed in the case, said, "This has to be where they put a stop to this. The government shouldn't be doing this, especially when they're wrong, and pushing their own opinion, silencing dissenting voices. Of course, it's against the Constitution. It's a no-brainer."

In response to a question from Brett Kavanaugh, an associate justice of the Supreme Court, Louisiana Solicitor General Benjamin Aguiñaga said the "government is not helpless" when it comes to countering factually inaccurate speech.

Precedent before the court suggests the government can and should counter false speech with true speech, Mr. Aguiñaga said.

"Censorship has never been the default remedy for perceived First Amendment violation," Mr. Aguiñaga said.

Maybe one of the justices might ask how it came to be that a Chief Counsel of the FBI, James Baker, after a brief rest-stop at a DC think tank, happened to take the job as Chief Counsel at Twitter in 2020.

That was a mighty strange switcheroo, don’t you think?

And ordinary citizens were not generally informed of it until the fall of 2022, when Elon Musk bought Twitter and delved into its workings.

*  *  *

Support his blog by visiting Jim’s Patreon Page or Substack

Tyler Durden Mon, 03/18/2024 - 16:20

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