When "Making It" Becomes Hopeless

Authored by Charles Hugh Smith via OfTwoMinds blog,

No wonder so many people devote themselves to curating an artificial digital representation of themselves that they reckon is worthy of recognition and status.

What does it take to "make it" in today's economy? As described in Withdrawing from the Rat Race Is Going Global, the world has changed in fundamental ways that have made it much more difficult to "make it" into the ranks of the middle class, and even harder to claw one's way into the higher reaches of the economic order, i.e. the top 10%.

In summary, developed economies have been stripped of secure, well-paid manual-labor work, the purchasing power of wages has declined, prices of assets such as homes have skyrocketed out of reach and the mass overproduction of elites (those with college diplomas and advanced degrees) has created a winner-take-all competitive pressure cooker with few winners and an abundance of also-rans.

In other words, the work-a-day world has become far more complex and far more demanding than it was two generations ago. It's not just making enough to pay the bills that's more demanding; the work is more demanding, as is everyday life, which now demands far more shadow work--work we do to manage life's complexities that we're not paid for. Having children is far more expensive and demanding, too, as the competition for upper-middle class slots now starts in Kindergarten.

Many individuals do not have the armor and weaponry needed to enter the arena and survive the competition. It's easy to dismiss them as "lazy," but that's not the issue. It's also easy to dismiss them as snowflakes, young people who have been shielded from life's rougher edges by overprotective parents, leaving them ill-equipped for the slings and arrows of modern life.

But this isn't the issue, either. The real issue is the social and economic demands now exceed the carrying capacity of many people. Where it was possible to find a secure low-level job that could support a household and find a place in society's pecking order two generations ago with limited social / work skills, now it's essentially impossible: low-level work is insecure and too poorly paid to support a household, and it is viewed as demeaning and unworthy of respect.

How do humans respond when they're viewed as worthless and they feel hopeless? In the Hollywood script, they pick themselves up, dust themselves off, gather a discarded shield and sword off the blood-soaked sand of the arena and go out and kick some derriere. ("Take that, nepo scum!")

Many people manage to do this and we applaud their grit and determination. But not every individual wins in this battle. Many pick up the shield and the sword and are immediately trampled. They make a realistic assessment that they can't possibly reach the lofty goals demanded of them, and so they are effectively excluded from what is now considered "normal life."

This comment on a Reddit thread speaks to the increasing demands of "normal life":

I obviously can't speak for everyone, but I can give some insight based on my own social withdrawal: modern life is overwhelming. It feels like there's a lot that's expected of you. In many ways modern life is a giant competition for wealth and status, but instead of competing just within your community, you have to compete with millions of people all around the world. It feels daunting, if not impossible. Why compete in a contest you know you can't win? It's pointless, it's a waste of time and energy. I feel very much like, "well, what's the point?"

So they drop out of the competition. Maybe they take a part-time gig job, maybe they move back home to take care of a parent or grandparent, or they become a recluse.

Hikikomori--hiki, to withdraw--komori, inside--is an extreme form of voluntary social isolation from society. The term originated in Japan but the abandonment of conforming to the demands of society is not limited to Japan. Withdrawing from the demands of what passes for "normal life" is not limited to extremes of seclusion; it is a spectrum of withdrawal that includes giving up on striving for upper-middle class membership (which goes by terms such as lying flat and let it rot) to minimizing engagement with the world in a variety of ways.

The medical professions have naturally sought to frame this voluntary seclusion as a psychiatric disorder, but it is not a disease or disorder, it is a psychological response to an impossible set of familial and social-economic demands in a social order that no longer offers a positive role, socially or economically, for the marginalized and those lacking what it takes to meet the increasing demands of an economy of surplus elites striving for the diminishing pool of jobs that provide both 1) a secure middle-class income and 2) a way of life that doesn't strip the worker of everything but work.

This is not so much a mystifying disorder as an understanding that seclusion is viewed as the only available response left to social-economic exclusion.

In a hyper-globalized, hyper-financialized developed economy, there are no social or economic roles left for those who cannot enter the coliseum of "highly productive workers" and emerge victorious. Part-time precarious work is all that's available to them, and it's poorly paid and earns zero status or respect, so the impoverishment of those for whom this is best they can manage is both physical and psychological.

Trying to live up to the standards of "normal life" extracts more than they have to give in return for an awareness of inadequacy and demands more than they can give in return for the impossibility of meeting expectations in a social order in which ridicule, exclusion and harassment are normalized.

Unable to qualify for social approval and validation--winners must have high social skills and oversized ambitions, be willing to work insanely long hours and pass grueling all-or-nothing exams, then work insanely long hours to prove one's social merit, marry and have children whose success in a competitive pressure cooker is a heavy responsibility--those who lack these traits either endure a quite realistic sense of the hopelessness of "succeeding" in a competition they are ill-equipped to survive, much less win, or withdraw from the hell of other people (recalling Sartre's famous line in No Exit: Hell is other people.).

Those who are excluded have said the pain of loneliness is easier to bear than the pain of dealing with other people.

Where working class jobs in factories once offered security, community and a positive identity of being a productive, valued worker, now the physical-labor jobs are viewed as demeaning and those doing the work find their work isn't validated or respected.

In previous generations, education, vehicles, healthcare and housing were all affordable to anyone with steady work who exhibited basic frugality in service of saving. A great many jobs offered security, community, a positive identity and a ladder of social mobility to lower-middle class stability that then served as a platform for one's children to climb even higher.

Now working class jobs are characterized by insecurity and precariousness, a threadbare social circle of other workers and neighbors passing through and very little validation of being a contributing member of society.

No wonder so many people devote themselves to curating an artificial digital representation of themselves that they reckon is worthy of recognition and status, and perhaps even admiration and envy. The real world no longer offers much of an avenue for their real selves to receive what every human wants: to be recognized as an individual who contributes to the greater whole to the best of their ability and is thus worthy of self-respect and the respect of others.

I will have more to say about this striving for an artificial substitute for authentic recognition and identity in my next post.

*  *  *

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Tyler Durden Wed, 05/08/2024 - 16:35

ARM Loses Leg After Downbeat Annual Revenue Forecast

It was all looking good for a second or two as ARM Holdings released earnings with top- and bottom-lines beating expectations...

• *ARM HOLDINGS PLC 4Q TOTAL REV. $928M, EST. $880.4M

• *ARM HOLDINGS PLC 4Q ADJ EPS 36C, EST. 30C

So good, so far, then the chip designer said that sales will be $875 million to $925 million in the June quarter (which compares favorably with an average analyst estimate of $868 million).

But then the hammer fell...

However, the company forecasts that for fiscal 2025, which ends next March, revenue will be $3.8 billion to $4.1 billion - while analysts' estimates were for a total of $4.01 billion.

Three months ago, an upbeat forecast sent its shares soaring and helped turn the company into an AI darling on Wall Street, but ARM shares are trading down 10% after-hours on tonight's report...

In an interview, CEO Rene Haas said Arm remains “very confident in the long-term growth.”

“A lot of the strategies we put in place a couple of years ago are all coming together,” he said.

Maybe so, but just not fast enough for investors.

Tyler Durden Wed, 05/08/2024 - 16:22

Bond Yields & Black Gold Bounce As Hawkish FedSpeak Slows Stocks

Mixed bag today:

• Macro (ugly wholesale sales print, implied gasoline demand at decade-lows ex-COVID, GDPNOW up at 4.18%?),

• Micro (TRIP exposed as M&A premium evaporates exposing reality of tourism business, UBER hinting at consumer pain, SHOP signaled more consumer pain, AFRM cut revenues forecasts as BNPL schemes falter - more consumer pain, TSLA tumbled on DoJ probe of FSD),

• Geopolitical (Rafah invasion begins).

But perhaps the most important thing was Fedspeak, which continues to lean hawkish with Collins saying:

“The recent upward surprises to activity and inflation suggest the likely need to keep policy at its current level until we have greater confidence that inflation is moving sustainably toward 2%,” Collins said Wednesday at the Massachusetts Institute of Technology.

“The recent data lead me to believe this will take more time than previously thought,” she said.

In a moderated conversation following her remarks, Collins added:

“I do think that holding in this restrictive range for longer will — in an orderly way in my baseline — would slow the economy.”

Artist's impression of FedSpeak today...

Which pushed rate-cut expectations lower...

Source: Bloomberg

Treasury yields were up across the curve with the long-end underperforming (30Y +4bps, 2Y +1bps). Only the 2Y yield is higher on the week though...

Source: Bloomberg

Interestingly, The Dow managed to shrug this off and rose for the sixth straight day while Small Caps lagged The S&P and Nasdaq ended the day around unch...

The dollar continued to rebound off Friday's payrolls plunge lows...

Source: Bloomberg

Despite the dollar trend higher, gold chopped around in a very narrow range today...

Source: Bloomberg

Bitcoin ETFs returned to net outflows yesterday (though very small)...

Source: Bloomberg

...and spot bitcoin prices drifted lower (thanks to another slam down overnight from the perp futures market)....

Source: Bloomberg

But today's big winner was crude oil, with WTI surging back from below $77 to above $79 after a surprise crude draw and MidEast tensions (theoretically) hotting up again as Israel enters Rafah...

Source: Bloomberg

Crucially, this was the fourth day in a row that crude found support at its 100DMA...

Source: Bloomberg

Finally, don't 'Sell in May, and Go Away" this year, according to BofA's technical analysts... because Presidential election years can see big summer rallies...

June-August is the second strongest 3-month period of the year for all years going back to 1928 with the SPX up 65% of the time on an average return of 3.2%.

In Presidential election years, the SPX is up 75% of the time from June-August on an average return of 7.3%.

Tyler Durden Wed, 05/08/2024 - 16:00

The Three Reasons People Hate Trump...

Authored by Brent Hamacheck via American Greatness,

In my recently published book, Dissidently Speaking: Change the Words. Change the War: I use both logic and empiricism to prove (I do mean prove) that there is absolutely no such thing as “right wing-left wing” as we use the terms in this country.  They are nothing more than non-defined terms used to characterize and label people with whom we don’t agree.  I will go so far as to say that the terms are a socially acceptable form of hate speech.

When we say that “the left hates Donald Trump,” it isn’t just mistaken; it’s fallacious. 

Since there is no such thing as “left-right,” as we use the terms, there is no possible way for the “left” to hate Trump.

But he is hated by many, and there are three reasons why.

If you are a Trump supporter, there is some good news to be found in this article.  It will give you a way to potentially break through and change the minds of people in two of the three groups, and it will also help you to focus whatever hostile energy you need to dispense upon the third group, one that you cannot change and one that poses a threat to what some ignorantly label as our democracy but is more correctly understood as our republic.

Since people like acronyms, catchy abbreviations, and words that can be turned into hashtags, I will frame my breakdown of the three reasons people hate Donald Trump as the Triple S’s: Silly, Subconscious, and Sinister.

Let’s take them in order.

First are the “sillies.”  These are people who hate Trump purely because of his demeanor.  They don’t like the way he throws insults around, the way he has been caught on tape talking about women, or any of a number of other reasons that relate to personal attributes as opposed to matters of policy or his ability to govern.  I say this is silliness because we are not voting for a person; we are voting for the president. Many of the people in this group, when you ask them about Trump’s policies, agree with much or most of what he tried to do or wants to do as president.  The idea that they are putting personality above policy or principle is simply silly.

They are not asking Trump to do magic tricks and entertain the children at their five-year-old daughter’s birthday party.  If they like, they can ask Barack Obama to do that.  He seems congenial enough.  The real question is, would you rather have Obama’s smile and his socialist approach to governance, or would you rather have a somewhat caustic and abrasive person (Winston Churchill comes to mind) who tries to do what you think is better for the nation?

A quick note to say that I am making no attempt to endorse or criticize Donald Trump.  I am simply identifying why people hate him.  I am going to spend a moment on the term “hate” shortly.

The second group of folks with what gets called “Trump derangement syndrome” are those who hate the candidate-in-chief for reasons that are subconscious or subliminal. 

There are three main drivers of this subconscious hatred.  They are guilt, shame, and altruism.

Donald Trump is unapologetic in his love of country and his claims that America is exceptional and that the needs of our nation and its citizens must be placed first in any and all considerations involving domestic policy or foreign diplomacy.  This message resonates with at least half the nation, and the fire and brimstone with which he delivers it explains the energy and enthusiasm found at his rallies.  Every Trump appearance feels like the Beatles landing in America in 1964.

For a large number of people, however, while they are experiencing the rich bounty that is daily life in the United States, they know that not everyone within our borders enjoys it to the same extent they do, and even fewer do so outside of our borders.  They carry with them a feeling of guilt that they are doing so well, that their lives are so comfortable, and that they simply can’t support a person who runs around saying that America is great and Americans come first. To see Donald Trump aggressively touting such a message makes them feel ashamed.  Nobody likes feeling ashamed.

Guilt and shame then feed into one of, if not the most, destructive of all human thought patterns, which is that of altruism.  This is the notion that self-sacrifice is the highest form of virtue.  This abhorrent concept (often associated with Christianity, which is interesting insofar as the term and the concept were created 1800 years after Christ’s death and by an atheist at that) tears at the mind of many who find it difficult to spend their daily lives struggling with the notion that in order to be good they need to be willing to harm, or even destroy, themselves in the process.

Take a person who is already in inner conflict, feeling guilty, ashamed, and needing to sacrifice, and give them Donald Trump, who effectively screams “No! Don’t do that!” into their ears, and you can get an almost involuntary, subconscious, visceral internal revolt.  While voices inside their heads are screaming to be ashamed of America, Donald Trump is screaming to be proud of America from the outside.  They hate him for the conflict he brings into their lives.

These first two groups of Trump haters can be reached through constructive engagement, genuine questioning and listening, and the patient and persistent application of both. 

There is a third group of Trump haters who cannot be reached and with whom all must reckon. 

Those are the sinister ones—the ones who are not conflicted by Trump’s “America first” message but who are instead vehemently opposed to it.

These are the people who are rightly labeled as globalists—people who want America to recede into the middle of a heterogenous, global community, setting its strong nation-state aside and becoming no more significant in world affairs than are the nations of Chad, Azerbaijan, or Guyana.  “Lead from behind” is just one of the more coffee mug-ready ideas that they hold, all of which seek to have us become part of Orwell’s Oceania.

These people don’t want to confront China; they want to make money with it.  These people do not want to protect our borders; they want to open them so that we can water down our national identity.  These people don’t want us to be energy independent; they want to tilt at energy windmills by installing actual windmills and curry favor with the United Nations and the World Economic Forum (two decidedly anti-American and anti-Trump organizations).

This sinister group, hateful of the very thought of American supremacy, simply detests Donald Trump and knows that he has created an awakening among his followers as to their designs to rebuild an unleavened America.  They truly hate the man, and they consciously and irrationally want him off the stage.  How far will they go to give him the hook?  I will let you conjecture in the same manner as we are left to conjecture the veracity of results in the 2020 election or the assassination of JFK.

You cannot convert this third group, but you can’t ignore them either.  These folks who want world membership instead of leadership are not going away, and they are not going to recede into the shadows.  If you are a Trump supporter and if you like the whole concept of America first, then your best bet is to work with members of the first two groups of Trump-haters and strive for conversions.  Only with numbers can you control the threat from the “sinisters.”

I want to address why I am using the term “hate” (one my mother told me never to use).  I chose it not to defend it in any metaphysical sense but simply to pick a term that generally conveys intensity.  For the most part, the typical person opposed to Trump is not one with a pair of reading glasses on their nose, an opera playbill in their hand, and an affected English accent, claiming they have some subtle points of contention with the man’s positions.  The strength and intensity of his delivery create the same kind of equal and opposite reaction within those for whom it does not resonate.  It is Newtonian.

Perhaps, a bit twisted and imperfect in its logic, we can say that Donald Trump’s love of country generates feelings of hatred, love’s literary opposite, in response?

I have long been on record as predicting that Joe Biden will not be the man on the actual ballot come November.  It made perfect sense for the Democrats to run him for reelection so as to not turn his presidency into one of lame duck status two years into his first term.  That said, the current president clearly suffers from cognitive decline and cannot serve another four years.  I also believe he cannot actually beat Donald Trump in November, save for the intervention of some Herculean election tampering efforts.

If I am wrong and Biden is on the ballot in November, then Trump supporters have much less to fear from the Trump haters.  If, however, my prediction that he is replaced at the convention (my long-held fear is that Michelle Obama steps in; I see her as unbeatable) after stepping aside for “personal reasons” comes true, then reaching out to the first two categories of Trump haters becomes far more important.  You will need to flip some of them.  You will not be able to do it by going to Trump rallies and posting on your social media, where other Trump followers follow you.  You will need to meet them on their turf, on their platforms, and in their living rooms.  This will not be a home game for you.  You are going to have to go on the road and put on your away jersey.

I wish you strength, courage, and success.  While my own personal feelings about the former president are mixed, my strong opposition to the third group of his haters is clear and unwavering.  It needs to be a sort of political “Great Commission” to go out and make believers not out of all three nations of Trump haters, just the first two.

*  *  *

Brent Hamachek is the author of the recent Amazon top new release, Dissidently Speaking: Change the Words. Change the War.  The book is a commentary on the divisions all too common in today’s America. All proceeds from its sale go to support a not-for-profit dedicated to promoting constructive engagement between young people.

Tyler Durden Wed, 05/08/2024 - 15:45

Someone Is Lying: Atlanta Fed Claims US GDP Is 4.2% While DOE Reports Lowest Gasoline, Diesel Demand Since Covid

On one hand, the Atlanta Fed triumphantly blasted earlier today that Bidenomics is the greatest thing since sliced bread, helping push its Q2 GDP Nowcast to a whopping 4.2%, up from its latest estimate of 3.3%.

On the other hand, Biden's own DOE - in its latest attempt to slam oil, gas and diesel prices because nothing will crush Biden's re-election chances faster than an oil price spike in the summer - reported that demand for gasoline and diesel in the United States has plunged to its lowest seasonally since the onset of the COVID pandemic, "sparking concern that economic activity is now becoming stagnant as refining margins hit news lows not seen in months", Reuters reported.

As shown in the chart below, monthly averages for the week ended May 3 show gasoline demand at 8.63 million barrels per day–a figure not seen since May 2020, at the start of the pandemic, based on EIA data.

Data also showed demand for distillates - the most accurate proxy for overall economic activity - plunged to 3.6 million bpd, which was also a seasonal low not hit since the pandemic. Additionally, for the first time in approximately three months, the 3-2-1 crack spread which serves as a barometer for refining markets, was trading under $26.50 per barrel on Wednesday, Reuters reports, for the lowest crack spread in three years.

Needless to say, this means someone is lying: either the US economy is shrinking, which bad for Biden,  or gasoline demand is far higher than reported, which is also bad for Biden. But since under the current fascist regime truth is a casualty to getting re-elected, we are being served a fake Potemkin village, one where growth is exploding as energy prices are tumbling, day after day and somehow people still believe this bullshit.

"The gasoline situation was going to be looked at by everybody and it definitely disappointed," Mizuho analyst Robert Yawger told Reuters, adding that "If that's indicative of the performance of the economy, that's bad all around."

The EIA inventory report showed U.S. distillates adding 600,000 barrels to inventory for the week ended May 3, with average production at 4.8 million barrels per day. Gasoline inventory also increased by 900,000 barrels for the week ended May 3, with production averaging 9.5 million barrels per day.

Crude oil prices lost more ground on Wednesday following the EIA’s weekly inventory report, which showed a draw of 1.4 million barrels for the week to May 3, but following a significant 7-million-barrel build from the previous week that put downward pressure on prices.

Tyler Durden Wed, 05/08/2024 - 15:30

Creditors Of Bankrupt FTX To Receive As Much As 142% Of What They Are Owed

Back in March, when eyeing the tremendous rebound in the crypto space, we joked that creditors in Sam Bankman-Fried's bankrupt exchange, FTX, would recover 200% of their claims.

FTX bankruptcy will be the first Chapter 11 where creditors recover 200% of their claims

— zerohedge (@zerohedge) March 2, 2024

Well, as so often happens in the "new abnormal", it turns out that we were not joking, because according to the latest reorg plan filed by the bankrupt FTX on Tuesday, most - or roughly 98% of its creditors - would get back 118% of what they had on the FTX platform the day the company entered Chapter 11 bankruptcy. Amazingly, some creditors will recover as much as 142% of what they are owed. Claims will be repaid in cash within 60 days of court approval, although payouts are likely several months away, as FTX winds its way through the final stages of the bankruptcy case.

Under the plan, other non-governmental creditors would get back 100% of their claims plus up to 9% interest to compensate them “for the time value of their investments.” The arrangement is still subject to approval by the Delaware bankruptcy court overseeing the bankruptcy case.

As Coindesk reports, the proposed payouts are higher than earlier estimates from the FTX estate, which said in October it expected to pay back only 90% of customer funds which still was a hefty haul for a bankruptcy where most said recoveries would be virtually nil. In January, current FTX CEO John Jay Ray III revised that estimate, telling the court he expected to be able to pay customers back in full.

So how did FTX creditors - who typically receive just pennies on the dollar for their holdings - luck out so tremendously, and most of them will actually make money following the bankruptcy? Simple: as we hinted in March, FTX has benefited from a historic rally in cryptocurrencies including Solana, a token heavily backed by convicted fraudster and FTX founder Sam Bankman-Fried (in fact, some have wondered if the tremendous ascent of Solana - a B-grade token which traditionally crashes every few months, and is generally the laughing stock within the crytpo community - wasn't another market manipulation meant to generated 100%+ recoveries). 

Other sources of value, including investments made by FTX and Alameda Research – such as its 8% stake in AI startup Anthropic, which was sold piecemeal to institutional investors for $884 million in March – have been liquidated to generate cash to pay back the claims.

“In any bankruptcy, this is just an unbelievable result,” said FTX Chief Executive Officer, John Ray, who took over the firm when it collapsed.

In a Tuesday press release, the FTX estate said it expects to have between $14.5 and $16.3 billion in cash available for distribution by the time a plan is approved by a Delaware bankruptcy court – the result of a year-and-a-half of scraping together the company’s scattered assets around the world and liquidating them.

“As previously disclosed, FTX.com had a massive shortfall at the time of the Chapter 11 filing in November 2022 – holding only 0.1% of the Bitcon and only 1.2% of the Ethereum customers believed it held,” the press release stated. “Accordingly, Debtors have not been able to benefit from the appreciation of these missing tokens during these Chapter 11 cases.”

FTX's new reorganization plan would also settle a host of claims from regulators and government agencies, including the IRS and Commodity Futures Trading Commission (CFTC).

The IRS agreed to resolve its $24 billion in claims in return for a $200 million cash payment and a $685 million subordinated claim that will only be paid out after all creditors and other governmental entities.

The CFTC and other unnamed governmental claimants agreed to subordinate their claims as long as FTX users and investors were paid in full with interest. There are also plans for a special fund created to make “supplemental restitution” to certain customers and creditors, though the details of this agreement have not been finalized, according to the press release.

A hearing to discuss the proposed plan is scheduled for June.

Former FTX CEO and convicted fraudster Sam Bankman-Fried previously attempted to use the estate’s ability to pay back customers in full as evidence that the collapse of his exchange had “zero” harm to its customers. Before his sentencing in March, Bankman-Fried’s lawyers argued that their client should receive a light sentence, in part because customers would get all their money back.

Ironically, if it hadn't been for the Terra-Luna "stablecoin" implosion exactly two years ago which triggered a liquidation cascade across the crypto universe including a 50% plunge in bitcoin in one month in May and June 2022, not only would FTX still be viable, but SBF would be a free man and also one of the world's richest people.

Ray, along with dozens of FTX creditors, wrote to the court arguing that the estate’s ability to claw together enough to money pay back his victims – the result of “tens of thousands of hours … spent digging through the rubble of Mr. Bankman-Fried’s sprawling criminal enterprise to unearth every possible dollar, token or other asset” – doesn’t mean his conduct wasn’t criminal.

Bankman-Fried was sentenced to 25 years in prison. He plans to appeal his sentence and conviction. In retrospect, considering that those who had money in his bankrupt exchange got as much as a 42% return, he may well end up with a reduced sentence.

Tyler Durden Wed, 05/08/2024 - 15:05

From Dodge Data Analytics: Dodge Momentum Index Rose 6% in April

The Dodge Momentum Index (DMI), issued by Dodge Construction Network, increased 6.1% in April to 173.9 (2000=100) from the revised March reading of 164.0. Over the month, commercial planning improved 12.6% and institutional planning dropped 6.3%.

“The Dodge Momentum Index (DMI) saw positive progress in April, alongside a deluge of data center projects that entered the planning stage,” stated Sarah Martin, associate director of forecasting at Dodge Construction Network. “Outsized demand to build Cloud and AI infrastructure is supporting above-average activity in the sector. Most other categories, however, faced slower growth over the month. Across these industries, it’s likely that owners and developers are grappling with uncertainty around interest rates and labor shortages, thus delaying their decisions to push projects into the planning queue. If interest rates begin to tick down in the latter half of 2024, more substantive growth in nonresidential planning activity should follow.”

A flood of data center projects entered planning in April, causing robust growth in the commercial segment of the DMI, while traditional office and hotel projects continued to face slower momentum. Warehouse planning was basically flat. On the institutional side, education and healthcare planning activity receded again – in part, driven by another month of weak life science and R&D laboratory activity. Year over year, the DMI was 1% lower than in April 2023. The commercial segment was up 6% from year-ago levels, while the institutional segment was down 15% over the same period.
...
The DMI is a monthly measure of the value of nonresidential building projects going into planning, shown to lead construction spending for nonresidential buildings by a full year.
emphasis added

Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 173.9 in April, up from 164.0 the previous month.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year".  This index suggests a slowdown in 2024.  
Commercial construction is typically a lagging economic indicator.

Japan Is Now Caught In A Doom Loop

By Russell Clark, author of the Capital Flows and Asset Market substack

Japan and Treasuries

My interest in Japan dates from 1991 when I was fresh faced high school exchange student in Kobe. There are no prizes for finding me in the above photo. I was the only “foreigner” in the school, and would go days without seeing anyone else that looked like me or even speaking English. I managed to combine my knowledge and experience in Japan with my other love, economics. I don’t think its too much of an exaggeration to say I owe my career and wealth through studying the Japan experience carefully and then applying those lessons to the rest of the world.

One of the most fascinating things about Japanese, economically speaking, is that almost its entire foreign reserves are made up of US treasuries, with almost no gold. As the right hand side column below shows, the share of gold as foreign exchange reserves is highest for the “old world”, while new powers such as China, Japan, Taiwan and Saudi Arabia have relatively low shares.

In absolute terms, China and Japan are by far the largest holders of foreign exchange reserves.

While China has larger foreign reserves than Japan now, Japan basically “invented” the idea of sovereign bonds as foreign exchange reserves. During the gold standard days, if a country like the US wanted to consume more than it produced, it would need to transfer gold overseas. With limited gold supply, this limited consumption. Moving to a treasury based financial system essentially removed this constraint. The only issue is whether other governments would accept treasuries or not.

Why did Japan buy treasuries? Well when the bubble economy burst in the early 1990s, the BOJ cut rates to near zero, but the Yen did not collapse as expected.

In fact in the first stages of BOJ interest rates cuts, the Yen actually rallied. The failure of monetary policy to work as it should led the Ministry of Finance to intervene to try and help weaken the Yen, and official buying of US dollar assets took off.

In pro-labor terms, when a government is pro-capital it wants to devalue to reduce the wages of its workers. This creates a trade surplus, which should cause the currency to appreciate, but if the government wants to keep the exchange rate competitive (i.e. keep real wages low), then it needs to buy more and more treasuries. A pro-labor government is happy to see its currency appreciate, and hence does not build foreign currency reserves. What is odd recently is that even as the BOJ remains extremely tardy in its monetary policy response, the Ministry of Finance in Japan has started using foreign reserves to “strengthen” the Yen. As the Economist points out, Japan is currently intervening in the currency market to try and strengthen the Yen.

We don’t know the cost of the foreign exchange intervention at the moment [ZH: we do, it was $59BN], but as can be seen above, Japanese foreign exchange reserves have not been rebuilt since the last intervention in 2022. Japan also does not run the structural trade surplus that it did from 1980 to 2010.

With falling foreign exchange reserves, trade deficit, and the likely increase in defence spending that the Russian-Ukrainian war implies, BOJ policy looks increasingly wrong. Markets seem to agree, with 10 year JGB yields at 13 year highs.

With either a Biden or Trump presidency in 2025, the chances of an austerity driven fiscal policy or a change in trade policy looks unlikely to me. The Japanese may well be caught in a doom loop, where they need to sell more foreign reserves to prop up the currency, which cause US yields to rise, which causes the Yen to weaken further and so on.

Until and unless the BOJ becomes more aggressive, Treasuries look like to have a systematic buyer turn into a systematic seller. China is likely a seller of treasuries and buyer of gold for political and strategic reasons, and Japan is a seller of treasuries for economic reasons. I am still baffled to why retail investors prefer treasuries to gold.

Japan was the key to understanding why treasuries did so well form 1980 to 2020. I think it is now the key to understanding why treasuries are going to do poorly from 2020 onwards.

Tyler Durden Wed, 05/08/2024 - 14:45

State Department Hiding Documents That "Credibly Suggest" COVID-19 Lab Leak: House Investigators

The House Select Subcommittee on the Coronavirus Pandemic has revealed that classified documents from the State Department "credibly suggest" that COVID-19 originated from a "lab-related accident in Wuhan, China," and that the CCP "attempted to cover up the lab leak."

In a Tuesday letter to Secretary of Stater Antony Blinken, Committee Chairman Brad Wenstrup (R-OH) asks that the State Department declassify the records to "share the truth" about the origins of COVID-19 with the American people.

Wenstrup noted that the documents were previously unclassified and released in a 'highly redacted' form to satisfy a Freedom of Information Act (FOIA) request, but the unredacted version which remains classified suggests:

1. COVID-19 originated from a lab-related accident in Wuhan, China;
2. The CCP acted to prevent, and in fact obstructed, a fulsome investigation into these matters; and
3. A seamless relationship between the WIV and the Chinese People’s Liberation Army.

Wenstrup has requested a 'staff level briefing' by May 14, and notes that the briefing was previously requested on April 24 of this year, "with the goal of it occurring prior to the Select Subcommittee's hearing with the President of EcoHealth Alliance, Inc. - and known WIV collaborator--Dr. Peter Daszak," but that "the Department responded that it could not support a briefing on that timeline.

The highly redacted version of the letter can be seen below:

Tyler Durden Wed, 05/08/2024 - 14:25

Finding The Next Apple Using Buffett's Logic

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

On the heels of Apple’s latest earnings report, the Wall Street Journal shared an article discussing how Apple became such an oversized investment of Warren Buffett’s company, Berkshire Hathaway. Given their success with Apple shares we think it is worth understanding the logic that drove Buffett to accumulate such a large position in Apple.

Unbeknownst to most, Todd Combs, a member of the Berkshire portfolio management team, is responsible for bringing Apple to Buffett’s attention. However, not all credit goes to Combs. Buffett presented Combs with a challenge that ultimately highlighted Apple’s value proposition. With this same challenge, we will take a stab at finding the next Apple.

The inspiration for our challenge and a few quotes in this article come from a Wall Street Journal article entitled Apple is Buffett’s Best Investment.

Berkshires Massive Stake Of Apple

Before finding the next Apple stock, it’s worth visualizing how Berkshire’s investment in Apple has grown over time as a percentage of Berkshire Hathaway and of Apple’s total shares outstanding.

The bar graph below compares Berkshire’s percentage ownership of Apple to that of the four largest mutual fund and ETF complexes. Berkshire had no position in Apple in 2015 and now holds over 5% of the company. Only Vanguard has a more significant position.

The following graphs plot the surge in the number of shares owned by Berkshire and the value of its shares.

The pie chart below shows that Apple comprises almost half of Berkshire’s portfolio. The next largest holding is Bank of America at 10%.

Buffett Doesn’t Like Tech

Ironically, when Berkshire started buying Apple shares, Warren Buffett had an aversion to technology stocks. When asked why, he said he didn’t invest in companies he didn’t understand. He now admits that was a mistake.

While it may have been a mistake not to buy more technology companies in the mid twenty-teens, Buffett was able to appreciate what Apple truly was. While it is classified as and widely considered a technology company, Buffett got his head around Apple by likening it to a consumer goods company. Per the aforementioned Wall Street Journal article:

Considering the stock, though, Buffett began to see it as a consumer-goods company with enviable, latent pricing power, rather than as a tech or an electronic-device maker, according to people who have spoken to him. The loyalty consumers had for Apple products, especially the iPhone, suggested to Buffett that they would be willing to pay much more for upgraded versions of the phone in the years ahead, a sure way to boost profits.

Todd Combs- The Unknown Mastermind

The Wall Street Journal article introduces Todd Combs, one of Berkshire Hathaway’s lesser-known portfolio managers. According to the article, around 2016, Buffett challenged Combs to find a stock that met specific criteria.

Among the stocks Combs found meeting the fundamental criteria and large enough for Berkshire to purchase was Apple. The rest is history. Since they started accumulating Apple in 2015, it has gained 650%, more than four times the S&P 500 over the same period.

Given Combs’ success, we thought it would be interesting to use the logic Buffett challenged Combs with and produce a similar scan. Let’s see if we can find the next Apple.  

Buffett’s Logic

The following paragraph from the WSJ article is the logic Buffett imparted to Combs, leading to their ownership of Apple.

This time, Buffett asked Combs to identify a stock in the S&P 500 that met three criteria.

1. The first: a reasonably cheap price/earnings multiple of no more than 15, based on the next 12 months’ projected earnings.

2. The stock also had to be one the managers were at least 90% sure would enjoy higher earnings over the next five years.

3. And they had to be at least 50% confident that the company’s earnings would grow by at least 7% annually for five years or longer.

What made the search a little more difficult was that the companies that met the criteria also had to have a market cap large enough so Berkshire could buy enough of to move the needle of its portfolio but not overly impact the demand for the stock.

The Combs Scan

In addition to the criteria in Buffett’s challenge, we added sales growth of at least 5% over the last five years. This helps us thin the list of companies to those already exhibiting strong top-line growth. We also removed financial, limited partnerships, REITs, and real estate stocks as their valuations and growth rates are not as easily comparable using traditional valuation metrics. Lastly, we disqualified Chinese companies due to the potential for political implications.

The following are the factors we used to screen for the next Apple.

• Market cap > $50 billion

• Price to Forward Earnings <15

• Five-year expected earnings growth >5%

• Sales growth in last five years > 5%

• No financial, limited partnerships, REITs, real estate, or Chinese companies.

Many stocks meet the size, earnings, and sales growth criteria. But only two companies have cheap enough valuations to make the cut as shown below. 

Currently, Berkshire has 5.242 million shares of T-Mobile, which is .20% of the portfolio. T-Mobile met our criteria, but its 5-year expected earnings growth is slightly below Buffett’s 7% bogey.

Berkshire does not hold EOG but has other oil and gas exploration companies, including Occidental Petroleum and Chevron.

Summary

Warren Buffett is an investing legend and one of the wealthiest people in the world. He takes a value orientation with a long-term investment horizon.

The Berkshire Hathaway portfolio, which also owns private companies, has done exceptionally well versus the market, as shown below. However, he goes through prolonged periods of poor relative performance versus the market.

The graph shows that over the last 30 years, Berkshire’s price return has tripled that of the S&P 500.

However, there are four notable extended periods where he grossly underperformed the market.

Also of note is that Berkshire handily beat the market in the recession and drawdowns of the dot com bubble and financial crisis. Such attests to his value orientation.

Tyler Durden Wed, 05/08/2024 - 14:05

Watch: Boeing 767 Cargo Plane Crash-Landed In Turkey  

Amid continuous and what seems like weekly turmoil at Boeing, which includes another whistleblower's death, new probes by the Federal Aviation Administration, and a series of mid-air mishaps with various Boeing planes, a 787 cargo plane in Turkey suffered a landing gear malfunction, resulting in the plane landing on its nose. 

Daily Mail reports the Boeing 767 cargo plane took off from Paris' Charles de Gaulle airport earlier this morning and was headed to Istanbul when the pilot realized a malfunction. 

Dramatic footage has been posted on X, showing the pilot landing on the main landing gear and keeping the nose of the plane up as long as possible because of the malfunctioning front landing gear.

A Boeing 767 cargo plane crash-landed at Istanbul airport with a loose landing gear

The plane belonging to the American postal company Fedex was on a flight from Paris. It landed only at the second attempt and "pecked" its nose into the runway. There were no casualties. pic.twitter.com/d1OsgUrxVq

— NEXTA (@nexta_tv) May 8, 2024

The plane's nose then slammed onto the runway at Istanbul, eventually sliding to a stop. 

$BA

❖ A Boeing 767 cargo plane has crashed upon landing in Turkey this morning after its landing gear failed when it came in to land.

The flight, operated by American postal service FedEx, took off from Paris' Charles de Gaulle airport early this morning and was headed for… pic.twitter.com/8jTUMF51jp

— *Walter Bloomberg (@DeItaone) May 8, 2024

Local authorities reported no casualties. However, this incident adds to the ongoing issues with Boeing planes.

Tyler Durden Wed, 05/08/2024 - 13:45

Record-Matching 10Y Auction Tails Despite Solid Demand

After yesterday's stellar 3Y auction kickstarted refunding week, moments ago the Treasury sold a 10Y paper in an auction that left a bit to be desired.

Starting at the top, the 10Y auction size rose from $39BN in April to a record-matching $42BN in May, and surpassing the record auction sizes sold during the peak of the covid crisis.

The high yield was 4.483%, down modestly from last month's 4.56% but tailing the 4.473% When Issued by 1basis point, the third consecutive tail in a row.

The bid to cover rose from 2.336 to 2.486%, right on top of the 2.49% six-auction average.

The internals were also ok, with Indirects awarded 65.5%, up from 61.8%, if below the 66.1% recent average. And with Directs taking down 18.7%, modestly above the 17.0% recent average, Dealers were left with 15.7% of the auction, the lowest since February.

Overall, this was a solid if slightly soggy auction, where the biggest negative was the modest tail, although in retrospect, there have been 13 tails in the past 15 10Y auctions, so the top-line disappointment is now pretty much standard, and the fact that internals were an improvement from last month is probably why yields did not spike after the auction.

Tyler Durden Wed, 05/08/2024 - 13:23

Private US Firm With Special Forces Veterans To Take Control Of Rafah Border Crossing

Despite the Biden administration repeatedly warning Israeli leadership in public against a full-scale Rafah invasion, President Biden actually greenlighted the IDF's takeover of the Rafah border crossing, Axios has revealed. The report comes amid questions over whether Netanyahu has crossed Biden's "red line" on Rafah.

The report insists that Israel hasn't crossed that line, so long as the scope of the operation remains limited and does not result in mass civilian displacement and humanitarian catastrophe. Speaking of the Biden-Netanyahu phone call on Monday, a senor Israeli official told Axios, "Biden didn't pull the hand break on the capture of the Rafah crossing during the call." So far the IDF has focused on airstrikes and limited ground incursions in the city's east, after dropping thousands of leaflets telling civilians to exit the area.

US private security contractors, via Associated Press

However, the US administration has taken the unprecedented step of withholding ammo and bomb shipments to Israel in order to send a 'message'. 

An Israeli Haaretz report issued Tuesday has further revealed that there was actually some level of cooperation and coordination with Washington on an IDF tank unit's takeover of Rafah crossing. This was reportedly to ensure no weapons for Hamas can pass into the Strip via the large crossing.

The US, Israel, and Egypt have agreed that a private American security firm will take control of Rafah Crossing and oversee it. As of Wednesday, the IDF has announced it reopened the crossing, and it is retaining full control for now.

"The parties agreed that a private American security company will assume management of the crossing after the IDF concludes its operation. Israel has also pledged not to damage the crossing's facilities to ensure its continuous operation," wrote Haaretz. However, "State Department spokesperson Matthew Miller said on Wednesday that he is not aware of Israel agreeing to transfer control of the crossing."

This is also to exert leverage in negotiations. "Israel believes that Hamas' loss of control over the Rafah crossing would be a significant setback for the group," Haaretz noted. "It will not be able to collect taxes imposed on trucks and goods and will no longer be able to bring in weapons and other items banned from entering Gaza."

Haaretz revealed limited details on the US defense firm in question and has not named it. It employs elite former US military personnel such as ex-special forces operators: 

As part of Israel's efforts to win agreement for a Rafah operation, negotiations have been underway with a private company in the U.S. that specializes in assisting armies and governments around the world engaged in military conflicts. The company has operated in several African and Middle Eastern countries, guarding strategic sites like oil fields, airports, army bases and sensitive border crossings. It employs veterans of elite U.S. Army units.

Under the understandings between the three countries, when Israel has completed its limited operation in the border crossing area, the U.S. company will take responsibility for operating the facility. That includes monitoring goods arriving in the Gaza Strip from Egypt and preventing Hamas from re-establishing control of the crossing. According to the agreement, Israel and the U.S. will assist the company as necessary.

It the report is accurate, it would mean American military contractors would be put in harm's way, and that US elite veterans could eventually enter a firefight with Palestinian militants.

You know what this conflict was missing? Private U.S. military contractors with no legal oversight.https://t.co/WmH5bLwC2A

— Jenn Williams (@jenn_ruth) May 7, 2024

US contractors on the ground would certainly also be seen as a key target for Hamas and other Palestinian militant groups (such as PIJ). Hamas has long warned that any foreign troops or military entity that enters the Gaza Strip will find itself under attack.

But there has yet to be any official government confirmation of the US contractor plan for Rafah crossing from either Washington or Tel Aviv, and time will tell if such a controversial plan comes to fruition. If it happens, this means American military contractors would be active in two major hot conflicts: Ukraine and Gaza (not to mention in eastern Syria and Iraq as well).

Tyler Durden Wed, 05/08/2024 - 12:25

Treasury Yields To Stay Sticky As Neutral-Rate Fears Loom Large

Authored by Ven Ram, Bloomberg cross-asset strategist,

Treasury yields at the back end of the curve may stay higher for longer if Neel Kashkari is right about the short-run neutral rate.

Core PCE has averaged 2.9% so far this year, above the 2.6% the Fed estimated in its March dot plot, which itself marked an upward revision. While the April jobs data was softer than forecast, the average jobless rate this year is just 3.8% - well below levels that the Fed reckons will be needed to bring the labor market back into balance.

The policy committee “has more work to do” if inflation is going to settle around 3%, Kashkari commented in his latest essay posted on the Fed Minneapolis website. 

For good measure, he has also penciled in a higher short-run neutral rate.

The neutral rate, where an economy is at full employment and inflation steady, is still elevated at 1.12%, based on the latest update of the Laubach-Williams model:

That compares with the Fed’s implicit assumption of a 60-basis point real neutral rate, based on its March summary of economic projections.

If core PCE were to bob around 3%, as Kashkari fears, and assuming the Laubach-Williams model provides a more realistic reading of the real neutral rate, the implied nominal policy rate would be north of 4% - making the current rate less restrictive.

This is why Kashkari remarked that there is the prospect of interest rates having to go higher, although he added that it isn’t the most likely scenario (note also that he doesn’t vote on monetary policy this year).

However marginal that prospect may look now, market pricing must reflect the possibility of such a scenario.

And at around 4.47%, Treasury 10-year yields are doing just that.

With so many factors sapping sentiment, longer-dated Treasuries will find it hard to rally just yet.

Tyler Durden Wed, 05/08/2024 - 12:05

Today, in the Calculated Risk Real Estate Newsletter: 1st Look at Local Housing Markets in April

A brief excerpt:

NOTE: The tables for active listings, new listings and closed sales all include a comparison to April 2019 for each local market (some 2019 data is not available).

This is the first look at several early reporting local markets in April. I’m tracking over 40 local housing markets in the US. Some of the 40 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

Closed sales in April were mostly for contracts signed in February and March when 30-year mortgage rates averaged 6.78% and 6.82%, respectively (Freddie Mac PMMS). This is down from the 7%+ mortgage rates in the August through November period (although rates are now back above 7% again)..
...
In April, sales in these markets were up 10.2% YoY. In March, these same markets were down 9.4% year-over-year Not Seasonally Adjusted (NSA).

Sales in most of these markets are down compared to January 2019. Sales in Nashville are up compared to 2019.
...
This is a year-over-year increase NSA for these early reporting markets. However, there were two more working days in April 2024 compared to April 2023, so sales Seasonally Adjusted will be lower year-over-year than Not Seasonally Adjusted sales.
...
This was just a few early reporting markets. Many more local markets to come!

There is much more in the article.

Ukraine Passes Bill To Recruit Prisoners For Depleted Army Ranks

The severe manpower crisis of Ukraine's armed forces continues to be on display, particularly after the recent decision of the government to deny embassy and consular services for Ukrainian men of fighting age who live abroad but refuse to come back home.

Ukraine's parliament on Wednesday just once again upped the controversy and advanced a dramatic change in law and national policy. It passed a bill enabling select prisoners to be released in order to fight in the armed forces.

Via Associated Press

"The parliament has voted 'yes,'" MP Olena Shuliak, head of Zelensky's party, announced in a social media post. "The draft law opens the possibility for certain categories of prisoners who expressed a desire to defend their country to join the Defense Forces," she said.

Ironically Moscow has previously come under international condemnation and mockery for just such a policy.

AFP and other international outlets acknowledged this as follows: "Long-opposed to the measure and having criticized Moscow's mobilization of prisoners to fill its ranks, Kyiv has recently U-turned amid fresh Russian advances on the battlefield," a report said.

The legislation still has to be signed by parliament's chairperson and President Zelensky in order to come into force as an active policy. The bill includes the following reported stipulations and parameters:

• Prisoners must volunteer
• Only those with three or more years left on their sentence can apply
• Those convicted of violent sexual crimes are not eligible
• Former high-ranking officials and those guilty of "serious corruption" are not eligible
• Prisoners who killed two or people are not eligible

One glaring aspect is that it appears literal murderers can possibly still go free if they join the army, so long as they killed no more than one person, based on the AFP's reporting

The following unexpected and bizarre line is in the AFP report detailing the new Ukrainian bill:

Among those not eligible to serve include those found guilty of sexual violence, killing two or more people, serious corruption and former high-ranking officials, Shuliak said.

However, some conflicting information has emerged. The below is via a Ukrainian news source:

Shuliak told Ukrainska Pravda that the following will not be eligible to join the Armed Forces of Ukraine: those who have committed premeditated murder, rapists and paedophiles, corrupt officials, those who have committed crimes against the foundations of Ukraine's national security, and those who have held a particularly responsible position, including MPs and ministers.

Meanwhile, Ukrainians living abroad are said to be outraged at the government's efforts to lure them back to Ukraine by the denial of consular services. One 19-year old man living abroad told Al Jazeera the following:

“I support individual battalions in Ukraine with donations every month – this is my duty,” said Anton, who works as a waiter.

“But I don’t want to fight, as I don’t trust our government. They don’t care about people. And they don’t care if there’s a war going on, they’re corrupt and keep stealing the money that we pay for the army. Why go to war for a state who only wants to steal?” he said bitterly.

Another 35-year old man currently in Poland (where many Ukrainian families fled once the war began) told Al Jazeera as follows: "If the army could guarantee that my work would be aligned with my skills and knowledge, I would go back. I could help with drones and other technology. But getting a rifle and shooting would not be the most efficient way of utilizing my skills."

Ukraine forces continue losing ground along front line positions in the east. Not only are they outgunned, but the more experienced fighters who have been in it from nearly the beginning are exhausted, with commanders having few options in terms of rotating in fresh battalions from the back.

Tyler Durden Wed, 05/08/2024 - 11:45

Pro-Palestinian GWU Student "Tribunal" Calls For Campus Leaders To Be Beheaded On Guillotines

By Jennifer Kabbany, of The College Fix

Video that emerged over the weekend from the pro-Palestinian occupation encampment at George Washington University shows some students gleefully cheering for their campus leaders to be executed on guillotines.

The footage was captured by a citizen journalist named “Stu” who recorded the group’s so-called “People’s Tribunal” livestreamed on Instagram.

“At the George Washington University Gaza Solidarity Encampment today, the protesters held a ‘People’s Tribunal’ where they put President Ellen Granberg, Provost Christopher Bracey, the Board of Trustees, @GWPolice, and many others on trial,” Stu posted on X on May 3.

“Is it normal for students to want to hang their provost and chop the heads off of the Board of Trustees,” Stu asked. “When will [George Washington University leaders] finally do something? If the students hurt any of these people in any way, the university will be completely at fault.”

At the George Washington University Gaza Solidarity Encampment today, the protesters held a "People's Tribunal" where they put President Ellen Granberg, Provost Christopher Bracey, the Board of Trustees, @GWPolice, and many others on trial.

Is it normal for students to want to… pic.twitter.com/M8F543q0MV

— Stu (@thestustustudio) May 3, 2024

The video is one of several extreme scenes that have been captured at the encampment on the Washington D.C. campus. Another includes the removal of the American flag and a Palestinian one hoisted in its place.

Now in its 11th day, “University President Ellen Granberg said GW is unequipped to manage the pro-Palestinian encampment in University Yard and called on GW’s partners, including D.C. officials, for their ‘full support’ on Sunday,” the GW Hatchet student newspaper reported.

“In the message to community members at about 2:30 p.m., Granberg said all of the University’s efforts to end the encampment or deter protesters from escalation have failed, including discussions with students, the assistance of local police and administrative consequences. She said the encampment is ‘potentially dangerous’ and no longer qualifies as a student demonstration,” the Hatchet reported.

Granberg’s memo stated in part that “when protesters overrun barriers established to protect the community, vandalize a university statue and flag, surround and intimidate GW students with antisemitic images and hateful rhetoric, chase people out of a public yard based on their perceived beliefs, and ignore, degrade, and push GW Police Officers and university maintenance staff, the protest ceases to be peaceful or productive. All of these things have happened at GW in the last five days.”

Daily Reminder that the American flag is not being flown at George Washington University pic.twitter.com/KpCoYkWleQ

— Stu (@thestustustudio) May 5, 2024

As for the guillotine video, the Post Millennial reported that “a woman leads the activists in chants to chop the heads off the Board of Trustees, GWU President Ellen Grandberg, and Provost Christopher Bracey,” adding:

In the mock tribunal, the woman asks “How do the people find you?”

The crowd shouts, “Guilty!” then “Guillotine! Guillotine! Guillotine!”

“Bracey, Bracey, we see you! You assault students too. Off to the motherf*cking gallows with you,” the woman chants, along with the gleeful activists.

Moving on to the Board of Trustees, she states “On the charges of having a vested interest in the genocide of Palestinian people as they profit off Zionist weapons and purchases that you refuse to divest the apartheid as they line their pockets. The people find you.”

“Guilty!” The crowd screams with a mix of mob rage and joy.

“To the Guillotine!” the girl yells. “Board of Trustees, we charge you with genocide. I hope all that money is gonna save you when you’re rotting in jail.”

The crowd calls out President Grandberg, as well. “On the charges of using our tuition dollars to fund genocide, and selling out students to Zionist interest, the people find you?”

“Guilty!” The crowd yells.

“As you already know where I am sending her,” she adds, referring to the guillotine. “Her and her f*ck *ss bob.”

Writing on PJ Media, Grayson Bakich argued the tribunal takes crazy to a whole new level.

“Stu Stu Studios also posted a longer version, but the fact that these kids are openly and publicly calling for the deaths of specific people who can very likely hear them just underscores how insane these ‘protests’ really are,” Bakich wrote.

“After all, these are the same students who vandalized the statue of George Washington on campus with a keffiyeh, Palestinian flags, and anti-Israel stickers, as my friend Catherine Salgado wrote about earlier this week.”

Tyler Durden Wed, 05/08/2024 - 11:25

Sam Altman-Backed Nuclear Company Wins Shareholder Approval For NYSE Listing

Sam Altman, CEO of Open AI and the man who's name has basically become synonymous with AI, has won investor approval for his latest project, nuclear company Oklo, which is set to list on the NYSE Friday via a SPAC .

The company, which trades as ALCC until then will debut under the symbol OKLO at the end of the week. Altman is chairman of the company, which will design and deploying advanced fission power plants to provide the clean and affordable energy needed to power the flood of data centers popping up around the nation as part of the AI revolution.

The company will finalize its deal with AltC Acquisition Corporation today. The merger with AltC, a SPAC backed by Altman and Michael Klein, valued Oklo at $850 million when announced in July. As was announced in a press release yesterday: 

AltC stockholders voted to approve the business combination between AltC and Oklo Inc. ("Oklo"), a fast fission clean power technology and nuclear fuel recycling company. Almost 100% of the votes cast at the meeting, representing approximately 72.7% of AltC's outstanding shares, voted to approve the business combination (the "Transaction").

The company's mission is "to provide clean, reliable, affordable energy on a global scale through the design and deployment of next-generation fast reactor technology", the release says. 

As Bloomberg noted this week, Oklo - which aims to deploy its first commercial advanced reactor in the U.S. before the decade's end - signed a non-binding letter of intent with Diamondback Energy last month to collaborate on a 20-year power purchase agreement.

The idea here is similar to that discussed last month, when we warned that the shortage of power is delaying new data centers by two to six years, and is also driving Big Tech companies into the energy business: Amazon recently struck a $650 million deal to buy a data center in Pennsylvania powered by an on-site 2.5 gigawatt nuclear plant.

Susquehanna nuclear plant in Salem Township, Penn., along with the data center recently purchased by Amazon. (Photo: Talen Energy).

Backed by investors like Jeff Bezos, Bill Gates, and Peter Thiel, the who's who of the AI revolution, nuclear fusion startups are gaining traction. Sam Altman, who invested in Oklo in 2015, believes the company is "best positioned to commercialize advanced fission energy solutions," per a July press release.

The completion of the Oklo merger will mark ex Citi veteran dealmaker Michael Klein's fifth successful de-SPAC after closing two blank-check firms last year. Last week, he returned to the SPAC market with Churchill Capital Corp. IX, raising $287.5 million. While SPACs fell out of favor after the 2020-2021 boom, there's been a modest revival with serial sponsors like Klein, Nabors Industries, Mistral Capital, and Eric Rosenfeld raising millions for new deals.

Last month, we published a lengthy report discussing why even as the AI trade may be fizzling, the "electrification" trade, aka the "Power-Up America" trade - so urgently needed to run all those electricity-gobbling data centers needed to run AI - is just getting started and has in fact outperformed substantially both the broader AI and Data-Center Equipment baskets over the past two months...

... and Altman - who teamed up with another power company, Exowatt, earlier this year to focus on clean energy for AI power -agrees: "Fundamentally today in the world, the two limiting commodities you see everywhere are intelligence, which we're trying to work on with AI, and energy," Altman told CNBC in 2021. 

For those who missed it, in "The Next AI Trade," we outlined various investment opportunities for powering up America, most of which have dramatically outperformed the market. In the next iteration, we will likely add Oklo to the list of beneficiaries certainly ahead of the inevitable cascade of Buy ratings sure flood the name over the next month.

Tyler Durden Wed, 05/08/2024 - 11:05

Singapore Air Force Suspends F-16 Training Missions Following Crash

Update (1105ET):

The Republic of Singapore Air Force has suspended all training missions for the General Dynamics F-16 Fighting Falcon jet while an investigation into this morning's crash continues.

*   *   * 

A Republic of Singapore Air Force (RSAF) General Dynamics F-16 Fighting Falcon jet crashed on Wednesday after experiencing an "issue" during take-off. 

The Ministry of Defence said, "The pilot successfully ejected and the plane crashed thereafter within Tengah Air Base. The pilot is conscious and able to walk. He is receiving medical attention and no other personnel are hurt." 

Here's ForeFlight data on Tengah Air Base. 

"Full investigations are underway to make sure all factors are identified and rectified decisively," Minister for Defense Ng Eng Hen said in a Facebook post. 

The RSAF did not elaborate on what caused the downing of the US-made fighter jet, which was the RSAF's first incident with the fighter in two decades. 

Stateside, on Monday, a Lockheed Martin F-22 stealth fighter experienced a "mishap" during landing at Savannah/Hilton Head International Airport. 

Simultaneously, in a significant development for the ongoing war in Eastern Europe, Belgium, Denmark, Norway, and the Netherlands have committed to providing F-16s to Ukraine. In response, Russia issued a warning on Monday, stating that the deployment of F-16s in Ukraine would be viewed as an escalation. 

Tyler Durden Wed, 05/08/2024 - 11:01

After China Offers "Partial Support" For Robotaxis, Biden's DoJ Probes Tesla Over Deceptive Self-Driving Claims

In what appears to be just the latest 'lawfare' angle of attack against Elon Musk (and his freedom of speech enabling platform), President Biden's Department of Justice is examining whether Tesla committed securities or wire fraud by misleading investors and consumers about its electric vehicles’ self-driving capabilities.

Tesla’s Autopilot and Full Self-Driving systems assist with steering, braking and lane changes - but are not fully autonomous - and Reuters reports that, according to three people familiar with the matter, the DoJ is checking statements by the automaker and Chief Executive Elon Musk suggesting cars can drive themselves.

Investigators are exploring whether Tesla committed wire fraud, which involves deception in interstate communications, by misleading consumers about its driver-assistance systems, the sources said.

They are also examining whether Tesla committed securities fraud by deceiving investors, two of the sources said.

The Securities and Exchange Commission is also investigating Tesla’s representations about driver-assistance systems to investors, one of the people said. The SEC declined to comment.

TSLA shares are down around 3-4% in the pre-market on the headlines...

Presumably, the Biden administration knows best exactly what level of full autonomy 'counts'; knows best what tolerance for 'death' is allowed on the streets; and knows best just what the buyers of Tesla's FSD system expected.

It appears the Biden administration also knows better than Beijing since Chinese officials told Musk that China "welcomes Tesla to do some robotaxi tests in the country" and hopes it to "set a good example", and sources indicated that the Chinese government may have offered partial support for this FSD rollout plan.

China Daily reports that, despite increasing protectionism, including the U.S. ban on TikTok, China has signaled its willingness to welcome multinational companies to test advanced technologies for mutual benefit.

Earlier this year, Musk confirmed that Tesla would unveil its long-anticipated robotaxi on August 8. With China being Tesla's second-largest market, trade reports suggest the robotaxi could help the U.S. automaker regain market share from local carmakers.

And why go after Musk? (rhetorical question of course) - ...because no other executive at any firm in history has ever exaggerated claims about product features.

Meanwhile, at the leading manufacturer of charging stations in Europe...

The headquarters of @alpitronic, the leading provider of charging stations in Europe, is in flames. pic.twitter.com/KkMgi7XPuC

— Roland Pircher (@piloly) May 8, 2024

 

Tyler Durden Wed, 05/08/2024 - 11:00