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Stocks Shrugs Off China Second Wave Fears, Asian Clashes, Rise On Stimulus Hopes

Stocks Shrugs Off China Second Wave Fears, Asian Clashes, Rise On Stimulus Hopes

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Stocks Shrugs Off China Second Wave Fears, Asian Clashes, Rise On Stimulus Hopes Tyler Durden Wed, 06/17/2020 - 08:01

For the third day in a row, global markets have shrugged off concerns about rising global coronavirus cases and that China is set to suffer a "second wave" as much of Beijing is once again under lockdown, with US equity futures advancing and European shares adding to their best gains in almost a month thanks to continued government and central bank stimulus and hopes of a rapid economic recovery.

As we accurately previewed earlier, Tuesday data showed US retail sales enjoyed a record 17.7% rebound in May, but new infections have hit record highs in six U.S. states, Brazil infections surged by a record 34,918, Iran warned it may need a new lockdown, and China cut flights and closed schools to contain a fresh outbreak in Beijing and a clear second wave in the country.

The theme of a strong global economic rebound "will need to be balanced against the 2nd wave COVID risks which are more difficult to assess, and we would argue investors have assumed to be perhaps more modest than in reality," said MUFG’s Head of Research Derek Halpenny quoted by Reuters.

Geopolitical tensions also remain rife with India reporting 20 of its soldiers were killed in clashes with Chinese troops at a disputed border site, while North Korea rejected a South Korean offer to send special envoys and said it would redeploy troops at the border. However, in a world where only central bank liquidity matters, all geopolitical concerns were quickly forgotten.Sentiment was also boosted after a simple, cheap steroid, dexamethasone, used to reduce inflammation in other diseases such as arthritis, reduced death rates by around a third among the most severely ill COVID-19 patients admitted to hospital.

“It is one of the best pieces of news we’ve had through this whole crisis,” Britain’s Health Secretary Matt Hancock said.

As a result, MSCI’s index of World shares rose 0.2%, having climbed 2.2% the previous day to reclaim a good portion of the ground it lost last week. European shares rebounded, after early gains of 1% were trimmed in half but with increases in real-estate and construction-firm shares brought fresh momentum to the Stoxx Europe 600 Index.

Asian equities saw a modest move higher except for shares in South Korea, which were volatile in the wake of rising tensions with North Korea, with the won currency sliding against the dollar.  Most other markets in the region were up, with Thailand's SET gaining 1% and Australia's S&P/ASX 200 rising 0.8%, while Japan's Topix Index dropped 0.4% after jumping almost 5% on Tuesday for its biggest daily gain in three months.  The Topix declined 0.4%, with Toho System and Enigmo falling the most. The Shanghai Composite Index rose 0.1%, with China Building Test and Nanjing Iron & Steel posting the biggest advances.

As Bloomberg notes, investor optimism toward risk assets is reflecting bets that new virus outbreaks won’t lead governments to pull back from gradually reopening their economies, even though Fed Chair Powell said the U.S. economy has a long way to go before it reverses the substantial damage done by the pandemic.

"Global markets could remain stretched between a health situation likely to remain a threat in several regions for some time on the one hand, and a stream of positive macro figures confirming that we have passed the low point on the other," said Xavier Chapard, a global macro strategist at Credit Agricole. He added that "the Fed’s priorities are shifting from emergency actions aimed at preventing a market melt-down to long-lasting actions to support the fastest possible recovery in the real economy", although we kinda disagree with that considering the Fed strategically re-announced the launch of its bond buying operation just as the market was about to drop below its gamma neutral level on Tuesday.

“There is little doubt that the global economy bottomed in April and is poised to post record-high growth rates over May and June, strongly lifting 3Q GDP above its 2Q trough,” wrote economists at JPMorgan. “But questions about the extent of lasting damage will have to wait for a number of months before being resolved.”

In rates, 30Y rose 2bps at 1.55%, having risen by the most in a month on Tuesday, and 10-year German Bunds led a flurry of similar rises in Europe ahead of a 5 billion euro bond sale. “The tension between better economic data and rising COVID-19 cases continues to drive market volatility,” said Antoine Bouvet, senior rates strategist at ING in London.

In FX, the Bloomberg Dollar Index swung between small gains and losses, though the upside seemed capped by the 200-DMA; the greenback advanced versus most Group-of-10 peers, though most traded in confined ranges. Risk-sensitive currencies were little changed against the dollar after earlier being weighed down on concern over the resurgence of the coronavirus outbreak, particularly in China. The euro reversed an early London-session gain; German bunds declined, with the oversubscription rate falling at an auction. The pound slumped; it had earlier bounced back from a slight decline after U.K. inflation data came in at its weakest since 2016, increasing expectations for more BOE stimulus.

In commodities, gold was stuck at $1,725 and well within the $1,670/$1,764 range of the past few weeks. Gains in oil prices slowed amid an increase in U.S. crude inventories. They had climbed 3% on Tuesday after the International Energy Agency (IEA) raised its oil demand forecast for 2020. Brent crude futures swung 1% higher to $41.35 a barrel, while U.S. crude ticked up 16 cents to $38.54.

Expected data include housing starts, mortgage applications reported earlier rose to the highest level since 2009.

Market Snapshot

  • S&P 500 futures up 0.9% to 3,155.75
  • STOXX Europe 600 up 0.8% to 366.28
  • MXAP up 0.2% to 158.71
  • MXAPJ up 0.5% to 511.09
  • Nikkei down 0.6% to 22,455.76
  • Topix down 0.4% to 1,587.09
  • Hang Seng Index up 0.6% to 24,481.41
  • Shanghai Composite up 0.1% to 2,935.87
  • Sensex up 0.7% to 33,846.95
  • Australia S&P/ASX 200 up 0.8% to 5,991.80
  • Kospi up 0.1% to 2,141.05
  • German 10Y yield rose 6.2 bps to -0.365%
  • Euro up 0.06% to $1.1271
  • Italian 10Y yield fell 6.1 bps to 1.269%
  • Spanish 10Y yield rose 1.8 bps to 0.551%
  • Brent futures down 0.3% to $40.82/bbl
  • Gold spot down 0.2% to $1,722.58
  • U.S. Dollar Index up 0.2% to 97.12

Top Overnight News from Bloomberg

  • President Donald Trump’s trade chief, Robert Lighthizer, will tell U.S. lawmakers Wednesday that the time has come to renegotiate America’s fundamental tariff commitment at the World Trade Organization
  • Beijing reported new virus cases Wednesday, having closed schools and canceled more than 1,200 flights as authorities grapple with stemming the outbreak without sealing off the city
  • The European Commission on Wednesday will unveil a set of proposals to bolster local industries in fighting back against companies that receive aid from foreign governments. The plan could ban these non-EU firms from making acquisitions, or force them to divest assets, and allow the commission to impose fines
  • Italian Prime Minister Giuseppe Conte will likely seek parliament’s approval for about 10 billion euros ($11 billion) in extra spending soon, government officials said, in the latest step to revive one of Europe’s most vulnerable economies
  • South Korea warned North Korea against further provocations, after Kim Jong Un’s regime pledged to dismantle the last remnants of President Moon Jae-in’s legacy of rapprochement and move troops into disarmed border areas
  • The U.K. published its negotiating objectives for a trade deal with Australia and New Zealand, which the government said could boost exports by about 1 billion pounds ($1.3 billion) as it seeks to expand trade links after Brexit

Asian equity markets failed to fully sustain the positive handover from Wall St with regional bourses indecisive amid geopolitical tensions, COVID-19 fears and with early underperformance in Japan due to a firmer currency and weaker than expected trade data. ASX 200 (+0.8%) and Nikkei 225 (-0.6%) traded mixed as upside in consumer stocks and tech kept the Australian benchmark afloat, while sentiment among Tokyo exporters was subdued by a firmer currency and after the latest trade data showed a larger than expected slump in Exports Y/Y, with Japan’s US-bound exports at the fastest pace of decline since March 2009 and its trade surplus with the US at a record low. KOSPI (+0.1%) swung between gains and losses on increasing tensions in the Korean peninsula after North Korea demolished its inter-Korean liaison office in Kaesong yesterday and is reportedly to deploy the army to Kaesong and Mt. Kumgang. There were also criticism from North Korean leader Kim’s sister on South Korean President Moon which prompted a response from the Blue House that it will not tolerate North Korea's senseless remarks anymore and the Defense Ministry warned that North Korea will pay the price if it takes actual military action. Hang Seng (+0.6%) and Shanghai Comp. (+0.1%) conformed to the non-committal tone after another net liquidity drain by the PBoC and amid concerns regarding the outbreak in Beijing where the city government raised its COVID-19 emergency response to level II from level III and resulted to the cancellation of 1255 flights. In addition, deadly clashes between India and China at the Himalayan border where 20 Indian soldiers were killed also contributed to the ongoing geopolitical concerns. Finally, 10yr JGBs were slightly higher after having rebounded off support just below 152.00 although the underperformance of Japanese stocks and BoJ’s presence in the market only provided marginal gains for JGBs.

Top Asian News

  • Citi Sees Higher Chance of Possible Default for Hilong Bonds
  • RBA Saw Australian House Prices Falling 7% Over the Next Year
  • Foiled Kidnapping Hurls Publicity-Shy Tycoon Into Spotlight
  • Yes Bank Is Said to Plan $1 Billion Public Share Offering

European equities had a tame start to the session as bourses opened with very modest gains following a mixed APAC handover, before the region edged higher since the cash open. Europe has since given up early gains [Euro Stoxx 50 +0.1%] to return to levels seen around the cash open. Peripheries lag with Spain’s IBEX (-0.9%) is the marked underperfomer thus far and Italy’s FTSE MIB (-0.1%) also in the red – potentially heading into the European Council meeting with pessimistic rhetoric from Chancellor Merkel and European Council President Michel on the likelihood of a concensus on the Recovery Fund being reached on Friday. The periphery could also be seeing jitters of a second wave having been hit hard by the initial outbreak. Sectors are mixed with defensives overall faring better than cyclicals, whilst the breakdown sees Travel & Leisure the laggard amid fears of further disruptions to operations due to a second wave. On that front, Carnival (-3.5%) shares continue to deteriorate alongside the update from Norwegian Cruse Line – who cancelled all voyages until October. Elsewhere, European Auto names and part makers remain under pressure as May car registrations slumped 57% YY, with Renault (-1.2%), Daimler (-1.1%), Continental (-1.8%) and Ferrari (-1.5%) all at the foot of their respective bourses. HSBC (+0.1%) trades choppy but just about holds onto gains amid reports the group is poised to cut headcount by some 35k over the medium term; however, the firm could be further embroiled in politics, with Global Times stating that some observers have said the Anglo-Sino bank may experience more severe consequences for their collusion with the US against Huawei.

Top European News

  • U.K. Inflation at Weakest Since 2016 Adds Pressure on BOE to Act
  • German CabinetOkays $70 Billion in Debt to Combat Recession
  • Brexit Heartlands Are Paying the Highest Price for Coronavirus
  • Forget This Year’s Highs for European Equities, Strategists Warn

In FX, a rather muted start to the midweek EU session, as the Dollar consolidates following yesterday’s revival on encouraging US economic recovery leads via retail sales. However, the DXY remains relatively underpinned within a narrow 97.264-96.796 band amidst similarly tight ranges vs major counterparts in the run up to Fed Chair Powell’s 2nd semi-annual testimony and more data that could provide further evidence for or against the circa April COVID-19 trough theory in the form of housing starts and building permits.

  • NOK/SEK/AUD/CHF/NZD - The Norwegian Crown continues to rebound from Monday’s deep risk aversion and crude retracement lows, with Eur/Nok testing support ahead of 10.7000 awaiting further confirmation from the Norges Bank tomorrow that benchmark rates have hit the lower (zero in this case) bound. Meanwhile, the Swedish Krona has also regained some poise amidst mixed NIER GDP forecast revisions and jobs data, as Eur/Sek hovers near 10.5100 compared to a high just shy of 10.5800. Similarly, the Aussie and Kiwi have regrouped after more volatile trade overnight and Tuesday’s even sharper swings to revisit 0.6900 and pivot 0.6450 against their US peer respectively, and with the latter now looking for independent inspiration from NZ GDP tonight. Elsewhere, the Franc and Loonie are both meandering, around 0.9500 and 1.3550, eyeing the SNB on Thursday and Canadian CPI later today.
  • JPY/GBP/EUR - Marginal G10 underperformers, with the Yen still restrained below 107.00 in wake of a wider than expected Japanese trade deficit on weak internals and stymied by decent option expiry interest at 107.25 (1.1 bn), while Cable topped out ahead of 1.2600 and the 200 DMA again, albeit holding around the 100 DMA (1.2526) after little reaction to in line/softer UK inflation metrics. The Euro is also fading from a test of round number/psychological resistance at 1.1300, and testing support through the 50 DMA (1.1233) that sits close to recent sub-1.1230 lows and stops said to be residing on a break of 1.1228.
  • EM - Broad sentiment is notably more fragile against the backdrop of several geopolitical hotspots that could spiral given recent developments, and on that note the Lira is underperforming as Turkey steps up its offensive against PKK/YPG targets in Northern Iraq, with Usd/Try back over 6.8500 at one stage in contrast to flat/fractionally softer trade in Usd/Zar and Usd/Mxn.

In commodities, WTI and Brent front-month futures initially grinded higher in early European trade, having had somewhat of a lacklustre APAC session with the complex pressured by Beijing curbing some 60% of its flights in a bid to stem a second virus outbreak, whilst a surprise build in Private Inventories added to the downside factors. Nonetheless, the complex has given up recent gains as traders eye the release of the OPEC Oil Market Report for June alongside the start of the JTC meeting, and against the backdrop of heightened geopolitical tensions. Tomorrow’s JMMC meeting will see the committee (composed of Saudi, Russia, Iraq, UAE, Kuwait, Nigeria, Algeria, Venezuela and Kazakhstan) reviewing secondary source data alongside current market fundamentals before proposing policy recommendations – no policy will be set at this meeting. In terms of compliance, reports note that Iraq is aligning its cuts with the OPEC+ pact, shipping data and industry sources suggest the second largest OPEC member’s exports have declined some 300k BPD thus far in June. WTI July reliquinshed the USD 38/bbl to the downside (vs. 37.21/bbl low) whilst Brent August similarly lost its USD 41/bbl handle (vs. 40.03/bbl low). In terms of other scheduled events, the weekly DoEs could provide some volatility (in the short term at least) – with headline crude stocks seen drawing 152k barrels (vs. Private Inventory build of 3.9mln barrels). Elsewhere, spot gold succumbs to a firmer Buck as the yellow metal prints fresh session lows. It’s worth noting for precious metals that ETFs increased holdings gold holdings for a fifth consecutive session in which it added almost 48k oz yesterday to bring this year’s net buying to 18mln oz. Copper prices see modest gains well within yesterday’s ranges amid the indecisive APAC tone – prices remain north of USD 2.50/lb but just under USD 2.60/lb.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior 9.3%
  • 8:30am: Housing Starts, est. 1.1m, prior 891,000; MoM est. 23.46%, prior -30.2%
  • 8:30am: Building Permits, est. 1.25m, prior 1.07m; MoM est. 16.79%, prior -20.8%

DB's Jim Reid concludes the overnight wrap

This morning we are hurtling deep into the 21st century here at DB Research as we have launched a new trial video research format. In this first trial you’ll see me talk through June’s market sentiment survey for four and a half minutes. It might be worth watching just to see the results of my wife’s attempts to style and pimp my WFH set up. We have guitars, books and a copy of an old master on an easel. The painting on the easel was a creative way of blocking out light from a window which is a bit of a VC nightmare. The painting was left over from my last house where we commissioned art students in Russia to paint replicas of old paintings at a very reasonable price and make them look old. Not obvious pieces but nice ones. Given my wife went to Art College she hated this philistine approach from me but I said I wasn’t prepared to pay for many antique oils. If anyone can recognise the painting then I’ll be very impressed!! Here is the link to the video. Let us know if the format is interesting to you and what you’d like to see on it from DB Research (link here).

In another WFH appearance from my crib, this Thursday (12:30pm London time) I’m taking part in a small fireside roundtable webinar on China, commodities and the reflation trade organised by our mining and metals team but containing macro content from our Chinese economist, China strategist, our commodities strategist and also myself. Feel free to register here.

While we are in full advertising mode, yesterday Henry Allen on my Thematic team put out a report that we’ve been working on looking at what might be the next massive tail risk after Covid-19, looking at events including further pandemics, volcanoes, solar flares, wars and earthquakes. The main takeaway is that there’s a one-in-three chance that the next decade will see at least one of a major flu pandemic killing more than 2m people; a globally catastrophic volcanic eruption; a major solar flare; and a global war. So some pretty striking stuff. You can read the full report here.

The most exciting thing today is the return of the English Premier League. I’m not sure I’ll ever be so happy to see Aston Villa vs Sheffield United or indeed ever watch that fixture again. Hopefully one of the tail risk disasters mentioned above won’t come before Liverpool are crowned champions within the first few games of the restart. In terms of markets, yesterday felt like one of those children’s football matches where one minute everyone rushes up the pitch towards the opposition’s goal to try to score before the other side then do exactly the same at the opposite end thus ensuring no formation, no structured defending and no tactics. Just an end to end slug fest. Indeed markets went from bullish, to worried, to extreme bullish to worried and back to bullish again.

By the end of the session, the S&P 500 was up +1.90% in its 3rd straight move upwards, with every sector moving higher on the day and only 35 stocks down. The VIX volatility index continued to unwind from its intraday peak early yesterday morning London time (44.44) with a further -0.73pts fall to close at 33.67. Energy stocks led the move higher in the US, with WTI up +2.67% and Brent crude up +2.79%. The latter closed above $40/barrel for the first time since risk assets dropped sharply last Thursday.

So going through the bewildering array of headlines, let’s begin with the pandemic. The good news yesterday was that an Oxford University trial reported that the steroid dexamethasone was found to reduce coronavirus deaths by a third in patients who required ventilation. In fact it was described by England’s Chief Medical Officer on twitter as “the most important trial result for COVID-19 so far.” On the other hand, there were some less positive developments elsewhere, with Beijing announcing that schools would be shut and online classes resuming for all grades, following a new cluster of cases in the city, that has also seen them raise their Covid-19 emergency response to the second-highest level. Further, the city has also ordered that people will have to be tested for the virus before being allowed to leave the city and has imposed restrictions on visits to all residential compounds with those in areas with medium and high-risk areas being barred from accepting visitors.

Over in the US the news wasn’t exactly positive either as the case numbers in certain states continued to move in a concerning direction. In Florida they reported a +3.6% rise in cases yesterday, above the 7-day average of +2.5% and the most absolute cases reported in a day since the pandemic started. While in Texas, which has been something of a hotbed recently, the number of virus hospitalisations rose by +8.3%, the most in nearly 2 weeks. Cases in the state rose by +3.7% - the most in week - with the absolute number (3,358) the largest during the pandemic. California new cases rose by +2.3%, above the weekly average of 2.1% while confirmed hospitalisations rose by 7.5% to 3,335 across the state, the most since the first week of May. Much like we’ve previously highlighted in the Corona Crisis Daily in countries like the UK and France, there appears to be a Tuesday effect in some US states, where the Sunday and Monday reporting is slightly lower and then cases rise more sharply on Tuesday. Texas, California, Arizona, and Florida all have seen a noticeable rise in case growth on 4 out of the last 5 Tuesdays when compared to the 2 days prior. Remember our usual case and fatality tables are in the full report today. Click on “view report” at the top.

Against the worrying virus backdrop, a stunningly strong US retail sales report for May offered further hope to investors that the economy might be able to bounce back quicker than many had expected. The headline figure saw an increase of +17.7%, more than double the +8.4% expected, while the previous month’s decline was revised to show a smaller -14.7% contraction (from -16.4%). Autos dragged up the overall number, with vehicles and parts seeing a +44.1% rise in May, but even the ex-auto number at +12.4% (vs. +5.5% expected) came in stronger than anticipated, with increases in every category on the month. President Trump expressed his approval, tweeting that “Wow! May retail sales show biggest one-month increase of ALL TIME, up 17.7%. Far bigger than projected. Looks like a BIG DAY FOR THE STOCK MARKET, AND JOBS!”

We also saw a couple of geopolitical flare-ups yesterday, which in another world could have easily blown the rally off course. Firstly, we got the news not long after going to press yesterday that North Korea had blown up an inter-Korean liaison office on their side of the border, which comes against the backdrop of escalating threats from North Korea towards the south in recent weeks. North Korea has said overnight that it will be deploying troops on its side of the border where it had joint projects with South Korea, and to the Mount Kumgang tourist area. Secondly, there was a clash between Indian and Chinese soldiers yesterday in which at 3 Indian troops were confirmed to have been killed during a fight, before a further 17 passed away from injuries according to a New York Times report. A Chinese foreign ministry spokesman said that two Indian soldiers had crossed into Chinese territory on Monday, and that “They provoked and attacked the Chinese side, leading to a severe physical brawl.” By the looks of things it seems as though both sides are trying to de-escalate the situation, but this is nevertheless a very unwelcome development in an environment not short of possible risks.

In terms of the broader market moves, as mentioned the S&P 500 saw its 3rd upward move in a row, while the Dow Jones (+2.04%) and the NASDAQ (+1.75%) also saw strong performances. European equities outperformed their US counterparts, with the STOXX 600 up +2.90%, while the DAX, FTSE MIB, and IBEX were all up over 3%. Core sovereign bonds sold off as investors moved out of safe havens, with yields on 10yr US Treasuries (+3.1) and bunds (+1.9bps) both climbing. That said, there was another notable narrowing of peripheral spreads in Europe, with the spread of Greek 10yr yields over bunds falling by -7.8bps to their tightest level since late February. 10yr BTP spreads narrowed by -8.0bps.

The rally has taken a pause overnight with bourses slightly lower in Asia. Indeed the Nikkei (-0.81%), Hang Seng (-0.03%), Shanghai Comp (-0.10%) and Kospi (-0.03%) are all in the red with only the ASX (+0.54%) currently up. The geopolitical tensions we noted above have weighed on the Korean Won (-0.71%) and the Indian Rupee (-0.24%) while yields on 10y USTs are down -2.5bps and futures on the S&P 500 are trading down -0.25%. WTI oil has also retraced 3%. In other overnight news, Japan’s trade surplus with the US dropped -97% yoy in May to $96mn, the lowest in data going back to 1979, as car shipments declined by -79% yoy.

Back to the US, and Fed Chair Powell appeared before the Senate Banking Committee yesterday, as part of the semi-annual monetary policy report to the Congress. In his prepared remarks, Powell said that in spite of indicators that pointed towards a stabilisation or a small rebound in activity, “the levels of output and employment remain far below their pre-pandemic levels, and significant uncertainty remains about the timing and strength of the recovery.” So clearly not wanting to let positive data like the jobs report let people think the economy is out of the woods yet. Given this testimony occurred only days after the FOMC this was never likely to move the dial much but Powell’s tone on corporate bond purchases were a bit confusing. He suggested that purchases will be switched from ETFs to bonds but maintaining the same dollar amount. In speaking to Craig who covers US credit and who is, to be fair, co-authoring this report today, he suggests that at face value this would suggest the Fed will buy far far less than the $250bn capacity that the SMCCF has. So far ETF purchases have averaged between $1-1.5bn per week for context. The expectation was that bond purchases would be in addition to ETF purchases and also that bond purchases would be greater given the larger available universe to purchase from. We will see if this was a misinterpretation issue or an actual policy announcement. Credit had earlier been on an almighty tear. From opening levels iTraxx Main, Crossover, US IG and HY CDX were -10, -65, -6 and -32bps tighter at their spread lows for the session before closing a slightly more subdued close at -6, -33, -1 tighter and +2bps wider respectively. Cash did seemingly have a better day however, with US HY and IG spreads in particular 47bps and 12bps tighter respectively.

Powell was not the only Fed speaker yesterday as Fed Vice Chair Clarida weighed in on the inflation debate citing the pandemic as a deflationary shock. He indicated that the Fed is placing a high priority on keeping inflation expectation anchored, amidst risks of long-term inflation expectations falling due to the economic fallout. He admitted that these are not new concerns saying, “that measures of longer-term inflation expectations were, when the downturn began, at the low end of a range that I consider consistent with our 2% inflation objective and, given the likely depth of this downturn, are at risk of falling below that range.”

Wrapping up with yesterday’s other data now. The industrial production numbers from the US weren’t quite as positive as the retail sales figures, though they did show a +1.4% rebound in May (vs. +3.0% expected). That said, the NAHB’s housing market index rose to 58 (vs. 45 expected), so all eyes will be on today’s housing starts and building permits data to see if that rebound in housing is evident in other releases. Here in the UK meanwhile, the headline unemployment rate for the 3 months from February to April unexpectedly remained at 3.9% (vs. 4.7% expected). However, digging further into the labour market data showed things weren’t quite so rosy. The number of weekly hours worked fell to the lowest seen since 2013, while the number of vacancies in the more up-to-date March-May period fell to 476k, the lowest since 2012.

To the day ahead now, and we’ll hear from Fed Chair Powell once again today before the House Financial Services Committee, while the Fed’s Mester will also be speaking. On the data front, we’ll get a bunch of data releases out for May, including UK CPI, EU27 new car registrations and the final Euro Area CPI reading. Over in the US, there’ll also be housing starts and building permits, while Canada will also release their CPI.

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Walmart joins Costco in sharing key pricing news

The massive retailers have both shared information that some retailers keep very close to the vest.

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As we head toward a presidential election, the presumed candidates for both parties will look for issues that rally undecided voters. 

The economy will be a key issue, with Democrats pointing to job creation and lowering prices while Republicans will cite the layoffs at Big Tech companies, high housing prices, and of course, sticky inflation.

The covid pandemic created a perfect storm for inflation and higher prices. It became harder to get many items because people getting sick slowed down, or even stopped, production at some factories.

Related: Popular mall retailer shuts down abruptly after bankruptcy filing

It was also a period where demand increased while shipping, trucking and delivery systems were all strained or thrown out of whack. The combination led to product shortages and higher prices.

You might have gone to the grocery store and not been able to buy your favorite paper towel brand or find toilet paper at all. That happened partly because of the supply chain and partly due to increased demand, but at the end of the day, it led to higher prices, which some consumers blamed on President Joe Biden's administration.

Biden, of course, was blamed for the price increases, but as inflation has dropped and grocery prices have fallen, few companies have been up front about it. That's probably not a political choice in most cases. Instead, some companies have chosen to lower prices more slowly than they raised them.

However, two major retailers, Walmart (WMT) and Costco, have been very honest about inflation. Walmart Chief Executive Doug McMillon's most recent comments validate what Biden's administration has been saying about the state of the economy. And they contrast with the economic picture being painted by Republicans who support their presumptive nominee, Donald Trump.

Walmart has seen inflation drop in many key areas.

Image source: Joe Raedle/Getty Images

Walmart sees lower prices

McMillon does not talk about lower prices to make a political statement. He's communicating with customers and potential customers through the analysts who cover the company's quarterly-earnings calls.

During Walmart's fiscal-fourth-quarter-earnings call, McMillon was clear that prices are going down.

"I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3," he said.

He was specific about where the chain has seen prices go down.

"Our general merchandise prices are lower than a year ago and even two years ago in some categories, which means our customers are finding value in areas like apparel and hard lines," he said. "In food, prices are lower than a year ago in places like eggs, apples, and deli snacks, but higher in other places like asparagus and blackberries."

McMillon said that in other areas prices were still up but have been falling.

"Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year and high teens versus two years ago. Private-brand penetration is up in many of the countries where we operate, including the United States," he said.

Costco sees almost no inflation impact

McMillon avoided the word inflation in his comments. Costco  (COST)  Chief Financial Officer Richard Galanti, who steps down on March 15, has been very transparent on the topic.

The CFO commented on inflation during his company's fiscal-first-quarter-earnings call.

"Most recently, in the last fourth-quarter discussion, we had estimated that year-over-year inflation was in the 1% to 2% range. Our estimate for the quarter just ended, that inflation was in the 0% to 1% range," he said.

Galanti made clear that inflation (and even deflation) varied by category.

"A bigger deflation in some big and bulky items like furniture sets due to lower freight costs year over year, as well as on things like domestics, bulky lower-priced items, again, where the freight cost is significant. Some deflationary items were as much as 20% to 30% and, again, mostly freight-related," he added.

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Walmart has really good news for shoppers (and Joe Biden)

The giant retailer joins Costco in making a statement that has political overtones, even if that’s not the intent.

Published

on

As we head toward a presidential election, the presumed candidates for both parties will look for issues that rally undecided voters. 

The economy will be a key issue, with Democrats pointing to job creation and lowering prices while Republicans will cite the layoffs at Big Tech companies, high housing prices, and of course, sticky inflation.

The covid pandemic created a perfect storm for inflation and higher prices. It became harder to get many items because people getting sick slowed down, or even stopped, production at some factories.

Related: Popular mall retailer shuts down abruptly after bankruptcy filing

It was also a period where demand increased while shipping, trucking and delivery systems were all strained or thrown out of whack. The combination led to product shortages and higher prices.

You might have gone to the grocery store and not been able to buy your favorite paper towel brand or find toilet paper at all. That happened partly because of the supply chain and partly due to increased demand, but at the end of the day, it led to higher prices, which some consumers blamed on President Joe Biden's administration.

Biden, of course, was blamed for the price increases, but as inflation has dropped and grocery prices have fallen, few companies have been up front about it. That's probably not a political choice in most cases. Instead, some companies have chosen to lower prices more slowly than they raised them.

However, two major retailers, Walmart (WMT) and Costco, have been very honest about inflation. Walmart Chief Executive Doug McMillon's most recent comments validate what Biden's administration has been saying about the state of the economy. And they contrast with the economic picture being painted by Republicans who support their presumptive nominee, Donald Trump.

Walmart has seen inflation drop in many key areas.

Image source: Joe Raedle/Getty Images

Walmart sees lower prices

McMillon does not talk about lower prices to make a political statement. He's communicating with customers and potential customers through the analysts who cover the company's quarterly-earnings calls.

During Walmart's fiscal-fourth-quarter-earnings call, McMillon was clear that prices are going down.

"I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3," he said.

He was specific about where the chain has seen prices go down.

"Our general merchandise prices are lower than a year ago and even two years ago in some categories, which means our customers are finding value in areas like apparel and hard lines," he said. "In food, prices are lower than a year ago in places like eggs, apples, and deli snacks, but higher in other places like asparagus and blackberries."

McMillon said that in other areas prices were still up but have been falling.

"Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year and high teens versus two years ago. Private-brand penetration is up in many of the countries where we operate, including the United States," he said.

Costco sees almost no inflation impact

McMillon avoided the word inflation in his comments. Costco  (COST)  Chief Financial Officer Richard Galanti, who steps down on March 15, has been very transparent on the topic.

The CFO commented on inflation during his company's fiscal-first-quarter-earnings call.

"Most recently, in the last fourth-quarter discussion, we had estimated that year-over-year inflation was in the 1% to 2% range. Our estimate for the quarter just ended, that inflation was in the 0% to 1% range," he said.

Galanti made clear that inflation (and even deflation) varied by category.

"A bigger deflation in some big and bulky items like furniture sets due to lower freight costs year over year, as well as on things like domestics, bulky lower-priced items, again, where the freight cost is significant. Some deflationary items were as much as 20% to 30% and, again, mostly freight-related," he added.

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When Military Rule Supplants Democracy

When Military Rule Supplants Democracy

Authored by Robert Malone via The Brownstone Institute,

If you wish to understand how democracy ended…

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When Military Rule Supplants Democracy

Authored by Robert Malone via The Brownstone Institute,

If you wish to understand how democracy ended in the United States and the European Union, please watch this interview with Tucker Carlson and Mike Benz. It is full of the most stunning revelations that I have heard in a very long time.

The national security state is the main driver of censorship and election interference in the United States.

“What I’m describing is military rule,” says Mike Benz.

“It’s the inversion of democracy.”

Please watch below...

I have also included a transcript of the above interview. In the interests of time – this is AI generated. So, there still could be little glitches – I will continue to clean up the text over the next day or two.

Note: Tucker (who I consider a friend) has given me permission to directly upload the video above and transcript below – he wrote this morning in response to my request:

Oh gosh, I hope you will. It’s important.

Honestly, it is critical that this video be seen by as many people as possible. So, please share this video interview and transcript.

Five points to consider that you might overlook;

First– the Aspen Institute planning which is described herein reminds me of the Event 201 planning for COVID.

Second– reading the comments to Tucker’s original post on “X” with this interview, I am struck by the parallels between the efforts to delegitimize me and the new efforts to delegitimize Mike Benz. People should be aware that this type of delegitimization tactic is a common response by those behind the propaganda to anyone who reveals their tactics and strategies. The core of this tactic is to cast doubt about whether the person in question is unreliable or a sort of double agent (controlled opposition).

Third– Mike Benz mostly focuses on the censorship aspect of all of this, and does not really dive deeply into the active propaganda promotion (PsyWar) aspect.

Fourth– Mike speaks of the influence mapping and natural language processing tools being deployed, but does not describe the “Behavior Matrix” tool kit involving extraction and mapping of emotion. If you want to dive in a bit further into this, I covered this latter part October 2022 in a substack essay titled “Twitter is a weapon, not a business”.

Fifth– what Mike Benz is describing is functionally a silent coup by the US Military and the Deep State. And yes, Barack Obama’s fingerprints are all over this.

Yet another “conspiracy theory” is now being validated.

Transcript of the video:

Tucker Carlson:

The defining fact of the United States is freedom of speech. To the extent this country is actually exceptional, it’s because we have the first amendment in the Bill of Rights. We have freedom of conscience. We can say what we really think.

There’s no hate speech exception to that just because you hate what somebody else thinks. You cannot force that person to be quiet because we’re citizens, not slaves. But that right, that foundational right that makes this country what it is, that right from which all of the rights flow is going away at high speed in the face of censorship. Now, modern censorship, there’s no resemblance to previous censorship regimes in previous countries and previous eras. Our censorship is affected on the basis of fights against disinformation and malformation. And the key thing to know about this is that they’re everywhere. And of course, this censorship has no reference at all to whether what you’re saying is true or not.

In other words, you can say something that is factually accurate and consistent with your own conscience. And in previous versions of America, you had an absolute right to say those things. but now – because someone doesn’t like them or because they’re inconvenient to whatever plan the people in power have, they can be denounced as disinformation and you could be stripped of your right to express them either in person or online. In fact, expressing these things can become a criminal act and is it’s important to know, by the way, that this is not just the private sector doing this.

These efforts are being directed by the US government, which you pay for and at least theoretically owned. It’s your government, but they’re stripping your rights at very high speed. Most people understand this intuitively, but they don’t know how it happens. How does censorship happen? What are the mechanics of it?

Mike Benz is, we can say with some confidence, the expert in the world on how this happens. Mike Benz had the cyber portfolio at the State Department. He’s now executive director of Foundation for Freedom Online, and we’re going to have a conversation with him about a very specific kind of censorship. By the way, we can’t recommend strongly enough, if you want to know how this happens, Mike Benz is the man to read.

But today we just want to talk about a specific kind of censorship and that censorship that emanates from the fabled military industrial complex, from our defense industry and the foreign policy establishment in Washington. That’s significant now because we’re on the cusp of a global war, and so you can expect censorship to increase dramatically. And so with that, here is Mike Benz, executive director of Foundation for Freedom online. Mike, thanks so much for joining us and I just can’t overstate to our audience how exhaustive and comprehensive your knowledge is on this topic. It’s almost unbelievable. And so if you could just walk us through how the foreign policy establishment and defense contractors and DOD and just the whole cluster, the constellation of defense related publicly funded institutions, stripped from us,

Mike Benz:      

Our freedom of speech. Sure. One of the easiest ways to actually start the story is really with the story of internet freedom and it switched from internet freedom to internet censorship because free speech on the internet was an instrument of statecraft almost from the outset of the privatization of the internet in 1991. We quickly discovered through the efforts of the Defense Department, the State Department and our intelligence services, that people were using the internet to congregate on blogs and forums. And at this point, free speech was championed more than anybody by the Pentagon, the State Department, and our sort of CIA cutout NGO blob architecture as a way to support dissident groups around the world in order to help them overthrow authoritarian governments as they were sort of build essentially the internet free speech allowed kind of insta regime change operations to be able to facilitate the foreign policy establishments State Department agenda.     

Google is a great example of this. Google began as a DARPA grant by Larry Page and Sergey Brin when they were Stanford PhDs, and they got their funding as part of a joint CIA NSA program to chart how “birds of a feather flock together online” through search engine aggregation. And then one year later they launched Google and then became a military contractor. Quickly thereafter, they got Google Maps by purchasing a CIA satellite software essentially, and the ability to use free speech on the internet as a way to circumvent state control over media over in places like Central Asia and all around the world, was seen as a way to be able to do what used to be done out of CIA station houses or out of embassies or consulates in a way that was totally turbocharged. And all of the internet free speech technology was initially created by our national security state – VPNs, virtual private networks to hide your IP address, tour the dark web, to be able to buy and sell goods anonymously, end-to-end encrypted chats.    

All of these things were created initially as DARPA projects or as joint CIA NSA projects to be able to help intelligence backed groups, to overthrow governments that were causing a problem to the Clinton administration or the Bush administration or the Obama administration. And this plan worked magically from about 1991 until about 2014 when there began to be an about face on internet freedom and its utility.

Now, the high watermark of the sort of internet free speech moment was the Arab Spring in 2011, 2012 when you had this one by one – all of the adversary governments of the Obama Administration: Egypt, Tunisia, all began to be toppled in Facebook revolutions and Twitter revolutions. And you had the State Department working very closely with the social media companies to be able to keep social media online during those periods. There was a famous phone call from Google’s Jared Cohen to Twitter to not do their scheduled maintenance so that the preferred opposition group in Iran would be able to use Twitter to win that election.            

So free speech was an instrument of statecraft from the national security state to begin with. All of that architecture, all the NGOs, the relationships between the tech companies and the national security state had been long established for freedom. In 2014, after the coup in Ukraine, there was an unexpected counter coup where Crimea and the Donbas broke away and they broke away with essentially a military backstop that NATO was highly unprepared for at the time. They had one last Hail Mary chance, which was the Crimea annexation vote in 2014. And when the hearts and minds of the people of Crimea voted to join the Russian Federation, that was the last straw for the concept of free speech on the internet in the eyes of NATO – as they saw it. The fundamental nature of war changed at that moment. And NATO at that point declared something that they first called the Gerasimov doctrine, which was named after this Russian military, a general who they claimed made a speech that the fundamental nature of war has changed.

(Gerasimov doctrine is the idea that) you don’t need to win military skirmishes to take over central and eastern Europe. All you need to do is control the media and the social media ecosystem because that’s what controls elections. And if you simply get the right administration into power, they control the military. So it’s infinitely cheaper than conducting a military war to simply conduct an organized political influence operation over social media and legacy mediaAn industry had been created that spanned the Pentagon, the British Ministry of Defense and Brussels into a organized political warfare outfit, essentially infrastructure that was created initially stationed in Germany and in Central and eastern Europe to create psychological buffer zones, basically to create the ability to have the military work with the social media companies to censor Russian propaganda and then to censor domestic, right-wing populist groups in Europe who were rising in political power at the time because of the migrant crisis.

So you had the systematic targeting by our state department, by our intelligence community, by the Pentagon of groups like Germany’s AFD, the alternative for Deutsche Land there and for groups in Estonia, Latvia, Lithuania. Now, when Brexit happened in 2016, that was this crisis moment where suddenly they didn’t have to worry just about central and eastern Europe anymore. It was coming westward, this idea of Russian control over hearts and minds. And so Brexit was June, 2016. The very next month at the Warsaw Conference, NATO formally amended its charter to expressly commit to hybrid warfare as this new NATO capacity. So they went from basically 70 years of tanks to this explicit capacity building for censoring tweets if they were deemed to be Russian proxies. And again, it’s not just Russian propaganda this, these were now Brexit groups or groups like Mateo Salvini in Italy or in Greece or in Germany or in Spain with the Vox Party.

And now at the time NATO was publishing white papers saying that the biggest threat NATO faces is not actually a military invasion from Russia. It’s losing domestic elections across Europe to all these right-wing populace groups who, because they were mostly working class movements, were campaigning on cheap Russian energy at a time when the US was pressuring this energy diversification policy. And so they made the argument after Brexit, now the entire rules-based international order would collapse unless the military took control over media because Brexit would give rise to Frexit in France with marine Lapin just Brexit in Spain with a Vox party to Italy exit in Italy, to Grexit in Germany, to Grexit in Greece, the EU would come apart, so NATO would be killed without a single bullet being fired. And then not only that, now that NATO’s gone, now there’s no enforcement arm for the International Monetary fund, the IMF or the World Bank. So now the financial stakeholders who depend on the battering ram of the national security state would basically be helpless against governments around the world. So from their perspective, if the military did not begin to censor the internet, all of the democratic institutions and infrastructure that gave rise to the modern world after World War II would collapse. So you can imagine the reaction,

Tucker Carlson:

Wait, ask

Mike Benz:      

Later. Donald Trump won the 2016 election. So

Tucker Carlson:

Well, you just told a remarkable story that I’ve never heard anybody explain as lucidly and crisply as you just did. But did anyone at NATO or anyone at the State Department pause for a moment and say, wait a second, we’ve just identified our new enemy as democracy within our own countries. I think that’s what you’re saying. They feared that the people, the citizens of their own countries would get their way, and they went to war against that.

Mike Benz:      

Yes. Now there’s a rich history of this dating back to the Cold War. The Cold War in Europe was essentially a similar struggle for hearts and minds of people, especially in central and Eastern Europe in these sort of Soviet buffer zones. And starting in 1948, the national security state was really established. Then you had the 1947 Act, which established the Central Intelligence Agency. You had this world order that had been created with all these international institutions, and you had the 1948 UN Declaration on human rights, which forbid the territorial acquisition by military force. So you can no longer run a traditional military occupation government in the way that we could in 1898, for example, when we took the Philippines, everything had to be done through a sort of political legitimization process whereby there’s some ratification from the hearts and minds of people within the country.  

Now, often that involves simply puppet politicians who are groomed as emerging leaders by our State Department. But the battle for hearts and minds had been something that we had been giving ourselves a long moral license leash, if you will, since 1948. One of the godfathers of the CIA was George Kennan. So, 12 days after we rigged the Italian election in 1948 by stuffing ballot boxes and working with the mob, we published a memo called the Inauguration of organized political warfare where Kennan said, “listen, it’s a mean old world out there. We at the CIA just rigged the Italian election. We had to do it because if the Communist won, maybe there’d never be another election in Italy again, but it’s really effective, guys. We need a department of dirty tricks to be able to do this around the world. And this is essentially a new social contract we’re constructing with the American people because this is not the way we’ve conducted diplomacy before, but we are now forbidden from using the war department in 1948.”

They also renamed the war department to the Defense Department. So again, as part of this diplomatic onslaught for political control, rather than it looking like it’s overt military control, but essentially what ended up happening there is we created this foreign domestic firewall. We said that we have a department of dirty tricks to be able to rig elections, to be able to control media, to be able to meddle in the internal affairs of every other plot of dirt in the country.

But this sort of sacred dirt in which the American homeland sits, they are not allowed to operate there. The State Department, the Defense Department, and the CIA are all expressly forbidden from operating on US soil. Of course, this is so far from the case, it’s not even funny, but that’s because of a number of laundering tricks that they’ve developed over 70 years of doing this.

But essentially there was no moral quandary at first with respect to the creation of the censorship industry. When it started out in Germany and in Lithuania and Latvia and Estonia and in Sweden and Finland, there began to be a more diplomatic debate about it after Brexit, and then it became full throttle when Trump was elected. And what little resistance there was was washed over by the rise in saturation of Russiagate, which basically allowed them to not have to deal with the moral ambiguities of censoring your own people.

Because if Trump was a Russian asset, you no longer really had a traditional free speech issue. It was a national security issue. It was only after Russiagate died in July, 2019 when Robert Mueller basically choked on the stand for three hours and revealed he had absolutely nothing. After two and a half years of investigation that the foreign to domestic switcheroo took place where they took all of this censorship architecture, spanning DHS, the FBI, the CIA, the DOD, the DOJ, and then the thousands of government funded NGO and private sector mercenary firms were all basically transited from a foreign predicate, a Russian disinformation predicate to a democracy predicate by saying that disinformation is not just a threat when it comes from the Russians, it’s actually an intrinsic threat to democracy itself.

And so by that, they were able to launder the entire democracy promotion regime change toolkit just in time for the 2020 election.

Tucker Carlson:

I mean, it’s almost beyond belief that this has happened. I mean, my own father worked for the US government in this business in the information war against the Soviet Union and was a big part of that. And the idea that any of those tools would be turned against American citizens by the US government, I think I want to think was absolutely unthinkable in say 1988. And you’re saying that there really hasn’t been anyone who’s raised objections and it’s absolutely turned inward to manipulate and rig our own elections as we would in say Latvia.

Mike Benz:      

Yeah. Well, as soon as the democracy predicate was established, you had this professional class of professional regime change artists and operatives that is the same people who argued that we need to bring democracy to Yugoslavia, and that’s the predicate for getting rid of Milošević or any other country around the world where we basically overthrow governments in order to preserve democracy. Well, if the democracy threat is homegrown now, then that becomes, then suddenly these people all have new jobs moving on the US side, and I can go through a million examples of that. But one thing on what you just mentioned, which is that from their perspective, they just weren’t ready for the internet. 2016 was really the first time that social media had reached such maturity that it began to eclipse legacy media. I mean, this was a long time coming. I think folks saw this building from 2006 through 2016.

Internet 1.0 didn’t even have social media from 1991 to 2004, there was no social media at all. 2004, Facebook came out 2005, Twitter, 2006, YouTube 2007, the smartphone. And in that initial period of social media, nobody was getting subscriber ships at the level where they actually competed with legacy news media. But over the course of being so initially even these dissonant voices within the us, even though they may have been loud in moments, they never reached 30 million followers. They never reached a billion impressions a year type thing. As a uncensored mature ecosystem allowed citizen journalists and independent voices to be able to outcompete legacy news media. This induced a massive crisis both in our military and in our state department in intelligence services. I’ll give you a great example of this in 2019 at meeting of the German Marshall Fund, which is an institution that goes back to the US basically, I don’t want to say bribe, but essentially the soft power economic soft power projection in Europe as part of the reconstruction of European governments after World War ii, to be able to essentially pay them with Marshall Fund dollars and then in return, they basically were under our thumb in terms of how they reconstructed.

But the German Marshall Fund held a meeting in 2019. They held a million of these, frankly, but this was when a four star general got up on the panel and posed the question, what happens to the US military? What happens to the national security state when the New York Times is reduced to a medium sized Facebook page? And he posed this thought experiment as an example of we’ve had these gatekeepers, we’ve had these bumper cars on democracy in the form a century old relationship with legacy media institutions. I mean, our mainstream media is not in any shape or form even from its outset, independent from the national security state, from the state Department, from the war department, you had the initial, all of the initial broadcast news companies, NBC, ABC and CBS were all created by Office of War Information Veterans from the War department’s effort in World War ii.

You had these Operation Mockingbird relationships from the 1950s through the 1970s. Those continued through the use of the National Endowment for Democracy and the privatization of intelligence capacities in the 1980s under Reagan. There’s all sorts of CIA reading room memos you can read even on cia.gov about those continued media relations throughout the 1990s. And so you always had this backdoor relationship between the Washington Post, the New York Times, and all of the major broadcast media corporations. By the way, Rupert Murdoch and Fox are part of this as well. Rupert Murdoch was actually part of the National Endowment for Democracy Coalition in 1983 when it was as a way to do CIA operations in an aboveboard way after the Democrats were so ticked off at the CIA for manipulating student movements in the 1970s. But essentially there was no CIA intermediary to random citizen journalist accounts. There was no Pentagon backstop.

You couldn’t get a story killed. You couldn’t have this favors for favors relationship. You couldn’t promise access to some random person with 700,000 followers who’s got an opinion on Syrian gas. And so this induced, and this was not a problem for the initial period of social media from 2006 to 2014 because there were never dissident groups that were big enough to be able to have a mature enough ecosystem on their own. And all of the victories on social media had gone in the way of where the money was, which was from the State Department and the Defense Department and the intelligence services. But then as that maturity happened, you now had this situation after the 2016 election where they said, okay, now the entire international order might come undone. 70 years of unified foreign policy from Truman until Trump are now about to be broken.

And we need the same analog control systems. We had to be able to put bumper cars on bad stories or bad political movements through legacy media relationships and contacts we now need to establish and consolidate within the social media companies. And the initial predicate for that was Russiagate. But then after Russiagate died and they used a simple democracy promotion predicate, then it gave rise to this multi-billion dollar censorship industry that joins together the military industrial complex, the government, the private sector, the civil society organizations, and then this vast cobweb of media allies and professional fact checker groups that serve as this sort of sentinel class that surveys every word on the internet.

Tucker Carlson:

Thank you again for this almost unbelievable explanation of why this is happening. Can you give us an example of how it happens and just pick one among, I know countless examples of how the national security state lies to the population, censors the truth in real life.

Mike Benz:      

Yeah, so we have this state department outfit called the Global Engagement Center, which was created by a guy named Rick Stengel who described himself as Obama’s propaganda in chief. He was the undersecretary for public affairs essentially, which is the liaison office role between the state department and the mainstream media. So this is basically the exact nexus where government talking points about war or about diplomacy or statecraft get synchronized with mainstream media.

Tucker Carlson:

May I add something to that as someone I know – Rick Stengel. He was at one point a journalist and Rick Stengel has made public arguments against the First Amendment and against Free Speech.

Mike Benz:      

Yeah, he wrote a whole book on it and he published an op-Ed in 2019. He wrote a whole book on it and he made the argument that we just went over here that essentially the Constitution was not prepared for the internet and we need to get rid of the First Amendment accordingly. And he described himself as a free speech absolutist when he was the managing editor of Time Magazine. And even when he was in the State Department under Obama, he started something called the Global Engagement Center, which was the first government censorship operation within the federal government, but it was foreign facing, so it was okay. Now, at the time, they used the homegrown ISIS predicate threat for this. And so it was very hard to argue against the idea of the State Department having this formal coordination partnership with every major tech platform in the US because at the time there were these ISIS attacks that were, and we were told that ISIS was recruiting on Twitter and Facebook.

And so the Global Engagement Center was established essentially to be a state department entanglement with the social media companies to basically put bumper cars on their ability to platform accounts. And one of the things they did is they created a new technology, which it’s called Natural Language processing. It is a artificial intelligence machine learning ability to create meaning out of words in order to map everything that everyone says on the internet and create this vast topography of how communities are organized online, who the major influences are, what they’re talking about, what narratives are emerging or trending, and to be able to create this sort of network graph in order to know who to target and how information moves through an ecosystem. And so they began plotting the language, the prefixes, the suffixes, the popular terms, the slogans that ISIS folks were talking about on Twitter.

When Trump won the election in 2016, everyone who worked at the State Department was expecting these promotions to the White House National Security Council under Hillary Clinton, who I should remind viewers was also Secretary of State under Obama, actually ran the State Department. But these folks were all expecting promotions on November 8th, 2016 and were unceremoniously put out of jobs by a guy who was a 20 to one underdog according to the New York Times the day of the election. And when that happened, these State Department folks took their special set of skills, coercing governments for sanctions. The State Department led the effort to sanction Russia over the Crimea annexation. In 2014, these State Department diplomats did an international roadshow to pressure European governments to pass censorship laws to censor the right-wing populous groups in Europe and as a boomerang impact to censor populace groups who were affiliated in the us.

So you had folks who went from the state department directly, for example, to the Atlanta Council, which was this major facilitator between government to government censorship. The Atlanta Council is a group that is one of Biden’s biggest political backers. They bill themselves as NATO’s Think Tank. So they represent the political census of NATO. And in many respects, when NATO has civil society actions that they want to be coordinated to synchronize with military action or region, the Atlantic Council essentially is deployed to consensus build and make that political action happen within a region of interest to nato.

Now, the Atlantic Council has seven CIA directors on its board. A lot of people don’t even know that seven CIA directors are still alive, let alone all concentrated on the board of a single organization that’s kind of the heavyweight in the censorship industry. They get annual funding from the Department of Defense, the State Department, and CIA cutouts like the National Endowment for Democracy.

The Atlantic Council in January, 2017 moved immediately to pressure European governments to pass censorship laws to create a transatlantic flank tank on free speech in exactly the way that Rick Stengel essentially called for to have us mimic European censorship laws. One of the ways they did this was by getting Germany to pass something called Nets DG in August, 2017, which was essentially kicked off the era of automated censorship in the us. What Nets DG required was, unless social media platforms wanted to pay a $54 million fine for each instance of speech, each post left up on their platform for more than 48 hours that had been identified as hate speech, they would be fined basically into bankruptcy when you aggregate 54 million over tens of thousands of posts per day. And the safe haven around that was if they deployed artificial intelligence based censorship technologies, which had been again created by DARPA to take on ISIS to be able to scan and ban speech automatically.

And this gave rise to what I call these weapons of mass deletion. These are essentially the ability to sensor tens of millions of posts with just a few lines of code. And the way this is done is by aggregating basically the field of censorship science fuses together two disparate groups of study, if you will. There’s the sort of political and social scientists who are the sort of thought leaders of what should be censored, and then there are the sort of quants, if you will. These are the programmers, the computational data scientists, computational Linguistics University.

There’s over 60 universities now who get federal government grants to do the censorship work and the censorship preparation work where what they do is they create these code books of the language that people use the same way they did for isis. They did this, for example, with COVID. They created these COVID lexicons of what dissident groups were saying about mandates, about masks, about vaccines, about high profile individuals like Tony Fauci or Peter Daszak or any of these protected VIPs and individuals whose reputations had to be protected online.

And they created these code books, they broke things down into narratives. The Atlanta Council, for example, was a part of this government funded consortium, something called the Virality Project, which mapped 66 different narratives that dissidents we’re talking about around covid, everything from COVID origins to vaccine efficacy. And then they broke down these 66 claims into all the different factual sub claims. And then they plugged these into these essentially machine learning models to be able to have a constant world heat map of what everybody was saying about covid. And whenever something started trend that was bad for what the Pentagon wanted or was bad for what Tony Fauci wanted, they were able to take down tens of millions of posts. They did this in the 2020 election with mail-in ballots. It was the same. Wait,

Tucker Carlson:

There’s so much here and it’s so shocking. So you’re saying the Pentagon, our Pentagon, the US Department of Defense censored Americans during the 2020 election cycle?

Mike Benz:      

Yes, they did this through the, so the two most censored events in human history, I would argue to date are the 2020 election and the COVID-19 pandemic, and I’ll explain how I arrived there.

So the 2020 election was determined by mail-in ballots, and I’m not weighing into the substance of whether mail-in ballots were or were not a legitimate or safe and reliable form of voting. That’s a completely independent topic from my perspective.

Then the censorship issue one, but the censorship of mail-in ballots is really one of the most extraordinary stories in our American history. I would argue what happened was is you had this plot within the Department of Homeland Security. Now this gets back to what we were talking about with the State Department’s Global Engagement Center. You had this group within the Atlanta Council and the Foreign Policy Establishment, which began arguing in 2017 for the need for a permanent domestic censorship government office to serve as a quarterback for what they called a whole of society counter misinformation, counter disinformation alliance.

That just means censorship. To counter “miss-dis-info”. But their whole society model explicitly proposed that we need every single asset within society to be mobilized in a whole of society effort to stop misinformation online. It was that much of an existential threat to democracy, but they fixated in 2017 that it had to be centered within the government because only the government would have the clout and the coercive threat powers and the perceived authority to be able to tell the social media companies what to do to be able to summon a government funded NGO Swarm to create that media surround sound to be able to arm an AstroTurf army of fact checkers and to be able to liaise and connect all these different censorship industry actors into a cohesive unified hole. And the Atlantic Council initially proposed with this blueprint called Forward defense. “It’s not offense, it’s Forward Defense” guys.

They initially proposed that running this out of the State Department’s Global Engagement Center because they had so many assets there who were so effective at censorship under Rick Stengel, under the Obama administration. But they said, oh, we are not going to be able to get away with that. We don’t really have a national security predicate and it’s supposed to be foreign facing. We can’t really use that hook unless we have a sort of national security one. Then they contemplated parking it, the CIA, and they said, well, actually there’s two reasons we can’t do that. The is a foreign facing organization and we can’t really establish a counterintelligence threat to bring it home domestically. Also, we’re going to need essentially tens of thousands of people involved in this operation spanning this whole society model, and you can’t really run a clandestine operation that way. So they said, okay, well what about the FBI?

They said, well, the FBI would be great, it’s domestic, but the problem is is the FBI is supposed to be the intelligence arm of the Justice Department. And what we’re dealing with here are not acts of law breaking, it’s basically support for Trump. Or if a left winging popularist had risen to power like Bernie Sanders or Jeremy Corbin, I have no doubt they would’ve done in the UK. They would’ve done the same thing to him there. They targeted Jeremy Corbin and other left-wing populist NATO skeptical groups in Europe, but in the US it was all Trump.

And so essentially what they said is, well, the only other domestic intelligence equity we have in the US besides the FBI is the DHS. So we are going to essentially take the CIA’s power to rig and bribe foreign media organizations, which is the power they’ve had since the day they were born in 1947. And we’re going to combine that with the power with the domestic jurisdiction of the FBI by putting it at DHS. So DHS was basically deputized. It was empowered through this obscure little cybersecurity agency to have the combined powers that the CIA has abroad with the jurisdiction of the FBI at home. And the way they did this, how did a cyber, an obscure little cybersecurity agency get this power was they did a funny little series of switcheroos. So this little thing called CISA, they didn’t call it the Disinformation Governance Board. They didn’t call it the Censorship Agency. They gave it an obscure little name that no one would notice called the Cybersecurity and Infrastructure Security Agency (CISA) who his founder said, we care about security so much, it’s in our name twice. Everybody sort of closed their eyes and pretended that’s what it was. CISA was created by Active Congress in 2018 because of the perceived threat that Russia had hacked the 2016 election.

And so we needed the cybersecurity power to be able to deal with that. And essentially on the heels of a CIA memo on January 6th, 2017 and a same day DHS executive order on January 6th, 2017, arguing that Russia had interfered in the 2016 election and a DHS mandate saying that elections are now critical infrastructure, you had this new power within DHS to say that cybersecurity attacks on elections are now our purview. And then they did two cute things. One they said said, miss dis and Malformation online are a form of cybersecurity attack. They are a cyber attack because they are happening online. And they said, well, actually Russian disinformation is we’re actually protecting democracy and elections. We don’t need a Russian predicate after Russiagate died. So just like that, you had this cybersecurity agency be able to legally make the argument that your tweets about mail-in ballots if you undermine public faith and confidence in them as a legitimate form of voting was now you were now conducting a cyber attack on US critical infrastructure articulating misinformation on Twitter and just like that.

Tucker Carlson:

Wait- in other words, complaining about election fraud is the same as taking down our power grid.

Mike Benz:      

Yes, you could literally be on your toilet seat at nine 30 on a Thursday night and tweet, I think that mail-in ballots are illegitimate. And you were essentially then caught up in the crosshairs of the Department of Homeland Security classifying you as conducting a cyber attack on US critical infrastructure because you were doing misinformation online in the cyber realm. And misinformation is a cyber attack on democracy when it undermines public faith and confidence in our democratic elections and our democratic institutions, they would end up going far beyond that. They would actually define democratic institutions as being another thing that was a cybersecurity attack to undermine and lo and behold, the mainstream media is considered a democratic institution that would come later. What ended up happening was in the advance of the 2020 election, starting in April of 2020, although this goes back before you had this essentially never Trump NeoCon Republican DHS working with essentially NATO on the national security side and essentially the DNC, if you will, to use DHS as the launching point for a government coordinated mass censorship campaign spanning every single social media platform on earth in order to preens the ability to dispute the legitimacy of mail-in ballots.

And here’s how they did this. They aggregated four different institutions. Stanford University, the University of Washington, a company called Graphica and the Atlantic Council. Now all four of these institutions, the centers within them were essentially Pentagon cutouts you had at the Stanford Air Observatory. It was actually run by Michael McFaul, if you know Michael McFaul. He was the US ambassador to Russia under the Obama administration, and he personally authored a seven step playbook for how to successfully orchestrate a color revolution. And part of that involved maintaining total control over media and social media juicing up the civil society outfits, calling elections illegitimate in order to. Now, mind you, all of these people were professional Russia, Gators and professional election delegitimizes in 2016, and then I’ll get that in a sec. So Stanford, the Stanford Observatory under Michael McFaul was run by Alex Stamos, who was formerly a Facebook executive who coordinated with ODNI and with respect to Russiagate taking down Russian propaganda at Facebook.

So this is another liaison essentially to the national security state. And under Alex Stamos at Sanford Observatory was Renee Diresta, who started her career in the CIA and wrote the Senate Intelligence Committee report on Russian disinformation, and there’s a lot more there that I’ll get to another time. But the next institution was the University of Washington, which is essentially the Bill Gates University in Seattle who is headed by Kate Starboard, who is basically three generations of military brass who got our PhD in crisis informatics, essentially doing social media surveillance for the Pentagon and getting DARPA funding and working essentially with the national security state, then repurposed to take on mail-in ballots. The third firm Graphica got $7 million in Pentagon grants and got their start as part of the Pentagon’s Minerva initiative. The Minerva Initiative is the Psychological Warfare Research Center of the Pentagon. This group was doing social media spying and narrative mapping for the Pentagon until the 2016 election happened, and then were repurposed into a partnership with the Department of Homeland Security to censor 22 million Trump tweets, pro-Trump tweets about mail-in ballots.

And then the fourth institution, as I mentioned, was the Atlantic Council who’s got seven CIA directors on the board, so one after another. It is exactly what Ben Rhodes described during the Obama era as the blob, the Foreign Policy Establishment, it’s the Defense Department, the State Department or the CIA every single time. And of course this was because they were threatened by Trump’s foreign policy, and so while much of the censorship looks like it’s coming domestically, it’s actually by our foreign facing department of Dirty tricks, color revolution blob, who were professional government toppers who were then basically descended on the 2020 election.

Now they did this, they explicitly said the head of this election integrity partnership on tape and my foundation clipped them, and it’s been played before Congress and it’s a part of the Missouri Biden lawsuit now, but they explicitly said on tape that they were set up to do what the government was banned from doing itself, and then they articulated a multi-step framework in order to coerce all the tech companies to take censorship actions.

They said on tape that the tech companies would not have done it but for the pressure, which involved using threats of government force because they were the deputized arm of the government. They had a formal partnership with the DHS. They were able to use DHS’ proprietary domestic disinformation switchboard to immediately talk to top brass at all the tech companies for takedowns, and they bragged on tape about how they got the tech companies to all systematically adopt a new terms of service speech violation ban called delegitimization, which meant any tweet, any YouTube video, any Facebook post, any TikTok video, any discord posts, any Twitch video, anything on the internet that undermine public faith and confidence in the use of mail-in ballots or early voting drop boxes or ballot tabulation issues on election day was a prima fascia terms of service violation policy under this new delegitimization policy that they only adopted because of pass through government pressure from the election integrity partnership, which they bragged about on tape, including the grid that they used to do this, and simultaneously invoking threats of government breaking them up or government stopping doing favors for the tech companies unless they did this as well as inducing crisis PR by working with their media allies.

And they said DHS could not do that themselves. And so they set up this basically constellation of State Department, Pentagon and IC networks to run this censorship campaign, which by their own math had 22 million tweets on Twitter alone, and mind you, they just on 15 platforms, this is hundreds of millions of posts which were all scanned and banned or throttled so that they could not be amplified or they exist in a sort of limited state purgatory or had these frictions affixed to them in the form of fact-checking labels where you couldn’t actually click through the thing or you had to, it was an inconvenience to be able to share it. Now, they did this seven months before the election because at the time they were worried about the perceived legitimacy of a Biden victory in the case of a so-called Red Mirage Blue Shift event.

They knew the only way that Biden would win mathematically was through the disproportionate Democrat use of mail-in ballots. They knew there would be a crisis because it was going to look extremely weird if Trump looked like he won by seven states and then three days later it comes out actually the election switch, I mean that would put the election crisis of the Bush Gore election on a level of steroids that the National Security state said, well, the public will not be prepared for. So what we need to do is we need to in advance, we need to preens the ability to even question legitimacy.

Tucker Carlson:

Out, wait, wait, may I ask you to pause right there? Key influences by, so what you’re saying is what you’re suggesting is they knew the outcome of the election seven months before it was held.

Mike Benz:      

It looks very bad.

Tucker Carlson:

Yes, Mike. It does look very bad

Mike Benz:      

And especially when you combine this with the fact that this is right on the heels of the impeachment. The Pentagon led and the CIA led impeachment. It was Eric ? from the CIA, and it was Vindman from the Pentagon who led the impeachment of Trump in late 2019 over an alleged phone call around withholding Ukraine aid. This same network, which came straight out of the Pentagon hybrid warfare military censorship network, created after the first Ukraine crisis in 2014 were the lead architects of the Ukraine impeachment in 2019, and then essentially came back on steroids as part of the 2020 election censorship operation. But from their perspective, I mean it certainly looks like the perfect crime. These were the people. DHS at the time had actually federalized much of the National Election Administration through this January 6th, 2017 executive order from outgoing Obama. DHS had Jed Johnson, which essentially wrapped all 50 states up into a formal DHS partnership. So DHS was simultaneously in charge of the administration of the election in many respects, and the censorship of anyone who challenged the administration of the election. This is like putting essentially the defendant of a trial as the judge and jury of the trial. It was

Tucker Carlson:

Very, but you’re not describing democracy. I mean, you’re describing a country in which democracy is impossible.

Mike Benz:      

What I’m essentially describing is military rule. I mean, what’s happened with the rise of the censorship industry is a total inversion of the idea of democracy itself. Democracy sort draws its legitimacy from the idea that it is ruled by consent of the people being ruled. That is, it’s not really being ruled by an overlord because the government is actually just our will expressed by our consent with who we vote for. The whole push after the 2016 election and after Brexit and after a couple of other social media run elections that went the wrong way from what the State Department wanted, like the 2016 Philippines election, was to completely invert everything that we described as being the underpinnings of a democratic society in order to deal with the threat of free speech on the internet. And what they essentially said is, we need to redefine democracy from being about the will of the voters to being about the sanctity of democratic institutions and who are the democratic institutions?

Oh, it’s the military, it’s NATO, it’s the IMF and the World Bank. It’s the mainstream media, it is the NGOs, and of course these NGOs are largely state department funded or IC funded. It’s essentially all of the elite establishments that were under threat from the rise of domestic populism that declared their own consensus to be the new definition of democracy. Because if you define democracy as being the strength of democratic institutions rather than a focus on the will of the voters, then what you’re left with is essentially democracy is just the consensus building architecture within the Democrat institutions themselves. And from their perspective, that takes a lot of work. I mean, the amount of work these people do. I mean, for example, we mentioned the Atlantic Council, which is one of these big coordinating mechanisms for the oil and gas industry in a region for the finance and the JP Morgans and the BlackRocks in a region for the NGOs in the region, for the media, in the region, all of these need to reach a consensus, and that process takes a lot of time, it takes a lot of work and a lot of negotiation from their perspective.

That’s democracy. Democracy is getting the NGOs to agree with BlackRock, to agree with the Wall Street Journal, to agree with the community and activist groups who are onboarded with respect to a particular initiative that is the difficult vote building process from their perspective.

At the end of the day, a bunch of populous groups decide that they like a truck driver who’s popular on TikTok more than the carefully constructed consensus of the NATO military brass. Well then from their perspective, that is now an attack on democracy, and this is what this whole branding effort was. And of course, democracy again has that magic regime change predicate where democracy is our magic watchword to be able to overthrow governments from the ground up in a sort of color revolution style whole of society effort to topple a democratically elected government from the inside, for example, as we did in Ukraine, Victor Jankovich was democratically elected by the Ukrainian people like him or hate him.

I’m not even issuing an opinion, but the fact is we color revolution him out of office. We January 6th out of office, actually, to be frank, I mean with respect to the, you had a state department funded right sector thugs and 5 billion worth of civil society money pumped into this to overthrow democratically elected government in the name of democracy, and they took that special set of skills home and now it’s here, perhaps potentially to stay. And this has fundamentally changed the nature of American governance because of the threat of one small voice becoming popular on social media.

Tucker Carlson:

May I ask you a question? So into that group of institutions that you say now define democracy, the NGOs foreign policy establishment, et cetera, you included the mainstream media. Now in 2021, the NSA broke into my private text apps and read them and then leaked them to the New York Times against me. That just happened again to me last week, and I’m wondering how common that is for the Intel agencies to work with so-called mainstream media like the New York Times to hurt their opponents.

Mike Benz:      

Well, that is the function of these interstitial government funded non-governmental organizations and think tanks like for example, we mentioned the Atlantic Council, which is NATO’s think tank, but other groups like the Aspen Institute, which draws the lion’s share of its funding from the State department and other government agencies. The Aspen Institute was busted doing the same thing with the Hunter Biden laptop censorship. You had this strange situation where the FBI had advanced knowledge of the pending publication of the Hunter Biden laptop story, and then magically the Aspen Institute, which is run by essentially former CIA, former NSA, former FBI, and then a bunch of civil society organizations all hold a mass stakeholder censorship simulation, a three day conference, this came out and yo Roth was there. This is a big part of the Twitter file leaks, and it’s been mentioned in multiple congressional investigations.

But somehow the Aspen Institute, which is basically an addendum of the National Security state, got the exact same information that the National Security State spied on journalists and political figures to obtain, and not only leaked it, but then basically did a joint coordinated censorship simulator in September, two months before the election in order just like with the censorship of mail-in ballots to be in ready position to screens anyone online amplifying, wait a second, a news story that had not even broken yet.

Tucker Carlson:

The Aspen Institute, which is by the way, I’ve spent my life in Washington. It’s kind a, I mean Walter Isaacson formerly of Time Magazine ran it, former president of CNNI had no idea it was part of the national security state. I had no idea its funding came from the US government. This is the first time I’ve ever heard that. But given, assuming what you’re saying is true, it’s a little weird or starnge that Walter Isaacson left Aspens to write a biography of Elon Musk?

Mike Benz:      

No? Yeah, I don’t know. I haven’t read that book. From what I’ve heard from people, it’s a relatively fair treatment. I just total speculation. But I suspect that Walter Isaacson has struggled with this issue and may not even firmly fall in one particular place in the sense that Walter Isaacson did a series of interviews of Rick Gel actually with the Atlantic Council and in other settings where he interviewed Rick Gel specifically on the issue of the need to get rid of the First Amendment and the threat that free speech on social media poses to democracy. Now, at the time, I was very concerned, this was between 2017 and 2019 when he did these Rick Stangle interviews. I was very concerned because Isaacson expressed what seemed to me to be a highly sympathetic view about the Rick Stengel perspective on killing the First Amendment. Now, he didn’t formally endorse that position, but it left me very skittish about Isaacson.

But what I should say is at the time, I don’t think very many people, in fact, I know virtually nobody in the country had any idea how deep the rabbit hole went when it came to the construction of the censorship industry and how deep the tentacles had grown within the military and the national security state in order to buoy and consolidate it. Much of that frankly did not even come to public light until even last year. Frankly, some of that was galvanized by Elon Musk’s acquisition and the Twitter files and the Republican turnover in the house that allowed these multiple investigations, the lawsuits like Missouri v Biden and the discovery process there and multiple other things like the Disinformation governance board, who, by the way, the interim head of that, the head of that Nina Janowitz got her start in the censorship industry from this exact same clandestine intelligence community censorship network created after the 2014 Crimea situation.

Nina Janowitz, when her name came up in 2022 as part of the disinformation governance board, I almost fell out of my chair because I had been tracking Nina’s network for almost five years at that point when her name came up as part of the UK inner cluster cell of a busted clandestine operation to censor of the internet called the Integrity Initiative, which was created by the UK Foreign Office and was backed by NATO’s Political Affairs Unit in order to carry out this thing that we talked about at the beginning of this dialogue, the NATO sort of psychological inoculation and the ability to kill, so-called Russian propaganda or rising political groups who wanted to maintain energy relations with Russia at a time when the US was trying to kill the Nord Stream and other pipeline relations. Well,

Well, Nina Janowitz was a part of this outfit, and then who was the head of it after Nina Janowitz went down, it was Michael Chertoff and Michael Chertoff was running the Aspen Institute Cyber Group. And then the Aspen Institute then goes on to be the censorship simulator for the Hunter Biden laptop story. And then two years later, Chertoff is then the head of the disinformation governance board after Nina is forced to step down.

Tucker Carlson:

Tucker Carlson: Of course, Michael Chertoff was the chairman of the largest military contractor in Europe, BAE military. So it’s all connected. You’ve blown my mind so many times in this conversation that I’m going to need a nap directly after it’s done. So I’ve just got two more questions for you, one short one, a little longer short. One is for people who’ve made it this far an hour in and want to know more about this topic. And by the way, I hope you’ll come back whenever you have the time to explore different threads of this story. But for people who want to do research on their own, how can your research on this be found on the internet?

Mike Benz:      

Sure. So our foundation is foundation for freedom online.com. We publish all manner of reports on every aspect of the censorship industry from what we talked about with the role of the military industrial complex and the national security state to what the universities are doing to, I sometimes refer to as digital MK Ultra. There’s just the field of basically the science of censorship and the funding of these psychological manipulation methods in order to nudge people into different belief systems as they did with covid, as they did with energy. And every sensitive policy issue is what they essentially had an ambition for. But so my foundationforfreedomonline.com website is one way. The other way is just on X. My handle is at @MikeBenzCyber. I’m very active there and publish a lot of long form video and written content on all this. I think it’s one of the most important issues in the world today.

Tucker Carlson:

So it certainly is. And so that leads directly and seamlessly to my final question, which is about X. And I’m not just saying this because I post content there, but I think objectively it’s the last big platform that’s free or sort of free or more free. You post there too, but we’re at the very beginning of an election year with a couple of different wars unfolding simultaneously in 2024. So do you expect that that platform can stay free for the duration of this year?

Mike Benz:      

It’s under an extraordinary amount of pressure, and that pressure is going to continue to mount as the election approaches. Elon Musk is a very unique individual, and he has a unique buffer, perhaps when it comes to the national security state because the national security state is actually quite reliant on Elon Musk properties, whether that’s for the electrical, the Green Revolution when it comes to Tesla and the battery technology there. When it comes to SpaceX, the State Department is hugely dependent on SpaceX because of its unbelievable sort of pioneering and saturating presence in the field of low earth orbit satellites that are basically how our telecom system runs to things like starlink. There are dependencies that the National Security state has on Elon Musk. I’m not sure he’d have as much room to negotiate if he had become the world’s richest man selling at a lemonade stand, and if the national security state goes too hard on him by invoking something like CFIUS to sort of nationalize some of these properties.

I think the shock wave that it would send to the international investor community would be irrecoverable at a time when we’re engaged in great power competition. So they’re trying to sort of induce, I think a sort of corporate regime change through a series of things involving a sort of death by a thousand paper cuts. I think there’s seven or eight different Justice Department or SEC or FTC investigations into Elon Musk properties that all started after his acquisition of X. But then what they’re trying to do right now is what I call the Transatlantic Flank Attack 2.0. We talked in this dialogue about how the censorship industry really got its start when a bunch of State Department exiles who were expecting promotions took their special set of skills in coercing European countries to pass sanctions on themselves, to cut off their own leg off to spite themselves in order to pass sanctions on Russia.   

They ran back that same playbook with doing a roadshow for censorship instead for sanctions. We are now witnessing Transatlantic Flank attack 2.0, if you will, which is because they have lost a lot of their federal government powers to do this same censorship operation they had been doing from 2018 to 2022. In part because the house has totally turned on them, in part because of the media, in part because Missouri v Biden, which won a slam dunk case, actually banning government censorship at the trial court and appellate court levels. It is now before the Supreme Court, they’ve now moved into two strategies.

One of them is state level censorship laws. California just passed a new law, which the censorship industry totally drove from start to finish around, they call it platform accountability and transparency, which is basically forcing Elon Musk to give over the kind of narrative mapping data that these CIA conduits and Pentagon cutouts were using to create these weapons of mass deletion, these abilities to just censor everything at scale because they had all the internal platform data. Elon Musk took that away.

They’re using state laws like this new California law to crack that open. But the major threat right now is the threat from Europe with something called the EU Digital Services Act, which was cooked up in tandem with folks like NewsGuard, which has a board of Michael Hayden, head of the CIA NSA and a Fourstar General. Rick Stengel is on that board from the state department’s propaganda office. Tom Ridge is on that board from the Department of Homeland Security. Oh, and Anders Fogh Rasmussen – he was the general secretary of NATO under the Obama administration. So you have NATO, the CIA, the NSA four star General DHS, and the State Department working with the EU to craft the censorship laws that now are the largest existential threat to X other than potentially advertiser boycotts. Because there is now disinformation is now banned as a matter of law in the EU.  

The EU is a bigger market for X than the us. There’s only 300 million in the USA. But there is 450 million people in Europe. X is now forced to comply with this brand new law that just got ratified this year where they either need to forfeit 6% of their global annual revenue to the EU to maintain operations there, or put in place essentially the kind of CIA bumper cars, if you will, that I’ve been describing over the course of this in order to have a internal mechanism to sensor anything that the eu, which is just a proxy for NATO deems to be disinformation. And you can bet with 65 elections around the globe this year, you can predict every single time what they’re going to define disinformation as. So that’s the main fight right now is dealing with the transatlantic flank attack from Europe.

Tucker Carlson:

This is just one of the most remarkable stories I’ve ever heard, and I’m grateful to you for bringing it to us. Mike Benz, executive director of the Foundation for Freedom Online, and I hope we see you again in

Mike Benz:      

Thanks, Tucker.

Tucker Carlson:

Free speech is bigger than any one person or any one organization. Societies are defined by what they will not permit. What we’re watching is the total inversion of virtue.

*  *  *

Republished from the author’s Substack

Tyler Durden Fri, 03/08/2024 - 23:00

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