Russian forces have just suffered what may be theirsingle biggest loss of the war in an attack, after a Ukrainian strike killed multiple dozens, or possibly hundreds, of newly mobilized troops in the east of the country. Moscow is now pointing to a US role in the devastating attack.
"Russia’s Defense Ministry said Monday that Ukrainian forces used a U.S.-supplied Himars rocket system to destroy a facility used as a base for mobilized troops in the city of Makiivka," The Wall Street Journal reports of the attack in Russian-occupied Donbas.
The Federal Aviation Administration (FAA) on Monday said it had slowed flight volume over Florida as it worked to resolve a problem with an air traffic computer system.
The problem hampered a system known as the En Route Automation Modernization (ERAM) used to control air traffic, according to a spokesperson at the U.S. regulator who did not provide further details.
The issue emerged after a massive winter storm snarled air travel during the Christmas holiday season, crippling operations at low-cost carrier Southwest Airlines.
The 117th Congress adjourned after passing a$1.7 trillionomnibus spending package. The logic of doing this is pretty simple: Members get to bring home millions of dollars in grants and projects as a reward for their constituents’ votes.
Such politics is downright Machiavellian. It took the rising Republican majority in the House of Representatives out of the equation. The 18 Senate Republicans who voted for the package believe they have reinforced their “independent” and “reasonable” bona fides with the public. In October 2023, when this resolution expires and House Republicans likely will oppose more spending, they will be branded by some in the news media as anti-government radicals.
Predictably, Sen. Rand Paul (R-Ky.), in his “Festivus Report,” showcased $482 billion in wasted expenditures. Others are critical of sending money to protect borders abroad while we ignore the crisis at our southern U.S. border. Fiscal conservatives lament that the package will increase inflation. So, the very simple question that no one is asking: What problems will $1.7 trillion in new spending solve?
American Federation of Teachers President Randi Weingarten recently compared President Biden favorably to Franklin Delano Roosevelt. In fact, she said that Biden has done “more than any other president since FDR — and maybe more than FDR.” Hmm. And she was a history teacher, go figure.
Let’s review some of what Roosevelt did. First, he asked for permission from the American people, during his campaign in 1932, to fundamentally change the relationship between them and their federal government. To offset the Great Depression and put people to work, Roosevelt’s Works Progress Administration built “more than 4,000 new school buildings, erected 130 new hospitals, laid roughly 9,000 miles of storm drains and sewer lines, built 29,000 new bridges, constructed 150 new airfields, paved or repaired 280,000 miles of roads and planted 24 million trees to alleviate loss of topsoil during the Dust Bowl.”
That means FDR is responsible for building the Hoover Dam, Triborough Bridge, San Antonio RiverWalk, LaGuardia Airport, Lincoln Tunnel, San Francisco Bay Bridge, and the Benjamin Franklin Bridge and Fairmount Park in Philadelphia. These projects just scratch the surface, though. He also shepherded our country while the Allies fought and won World War II. After the New Deal and a world war, in 1946 the national debt stood at $269 billion. By comparison, in 2022 under Biden, the national debt reached a staggering $30.8 trillion — and it will only grow with this latest omnibus spending package.
In 2023, the federal government will tax and borrow to spend at least $1.7 trillion. Will this money help secure our southern border, where millions of migrants are crossing illegally and border agents are seizing deadly fentanyl being smuggled into the U.S.? Will spending this money help lower inflation? Will it assure people who live in America’s big cities that hundreds more will not lose their lives to gun violence? Will it make America’s public schools the envy of the world, in terms of measurable student performance? Can it increase the will to work among Gen Z? Solve the homeless crisis? Break the cycle of poverty among the disadvantaged? Will it end racism?
Please, add your own questions to the list, if you like. The answer will be the same, no matter the question. None of these problems will be solved even after spending $1.7 trillion in taxpayer dollars.
The American people need to demand that the relationship they have with their elected leaders changes — from one where politicians bring home the pork to one where they actually solve problems. Looking forward to the 2024 presidential election cycle, let’s resolve to make that year another like 1932, one in which a candidate speaks plainly to the people, agreeing that we cannot sustain massive spending without producing tangible results. We need candidates and leaders who propose marshaling the power of the federal government to expedite solutions.
On March 4, 1933, FDR comforted Americans and challenged their spirit, saying, “The only thing we have to fear is fear itself.” In 2024, we will need a leader with compassion, vision and the grit to swim against the tide in Washington that lifts all politicians but does little to solve major problems the American people face. We could draw upon another FDR quote: “I pledge you, I pledge myself, to a New Deal for the American People.”
The system is broken. Where are the political leaders who understand that taxpayers are overpaying for a dearth of solutions?
Dennis M. Powell is an issues and crisis management consultant at Massey Powell, which he founded in 1985, and the author of the upcoming book, “Leading from the Top: Presidential Lessons in Issues Management.”
German youth in migrant-heavy neighborhoods once again turned Berlin and other German cities into war zones on New Year’s Day, but this year, news reports indicate that attacks were especially brutal and targeted rescue services, including ambulance workers.
In Berlin, police and firefighters responded to 3,943 incidents, with 15 firefighters and 18 police officers injured. According to Bild newspaper, there were “particularly bad attacks in the hotspot neighborhoods of Kreuzberg and Neukölln with a high proportion of migrants.”
“There were dozens of attacks,” says Interior Senator Iris Spranger, of the Social Democrats (SPD).
In Kreuzberg, for example, after young men set fire to barricades, firefighters who arrived to extinguish the fire were attacked by 200 hooded men. In Neukölln, which is one of the most multicultural neighborhoods in Germany, 50 perpetrators fired rockets at emergency force services.
In one disturbing scene, a group of men were filmed attacking an ambulance, hurling objects inside the vehicle’s open rear doors.
Other videos show youths hurling rockets at ambulances as they attempt to drive down Berlin streets.
Many of the incidents were caught on film, with the clips featuring burning vehicles, fires in tall apartment blocks, and one police officer being struck by a rocket directly on his helmet, which then burst into flames. One officer and one firefighter suffered from severe injuries and remain hospitalized.
“Our vehicles were fired at with birdshot ammunition,” says Thomas Kirstein of the Berlin Fire Department. Police report that an “illegal bullet bomb” was thrown at a fully occupied police car. In another video, a man shoots out a police car window.
In the ensuing chaos, 103 people (98 men and five women) were arrested. The Berlin police wrote on Twitter, “The violence that our colleagues had to experience on New Year’s Eve is unbearable. It is a task for society as a whole to clearly counteract this. We thank you all for your commitment and wish the injured a speedy recovery.”
Another video showed migrant youth mocking a firefighter as he attempted to give an interview to news outlets.
The next morning, burned-out buses and automobiles could be seen across Berlin.
Georg Pazdersk, former AfD parliamentary group leader in the Berlin House of Representatives, wrote: “When are we finally going to admit that we have a huge problem with young male migrants from archaic societies who don’t want to integrate. Silencing the problem means continuing to promote it.”
Other cities, such as Duisburg, were hit with violence as well, including attacks on rescue services.
“One can only shake one’s head. The political leadership in Berlin takes no responsibility for this disaster. It has sympathy for people who break rules,” Neukölln’s former mayor, Social-Demcrat (SPD) Heinz Buschkowsky, told Bild.
“The lunatics are becoming are appearing more and more. Every festive event is a welcome occasion to attack the authorities…That’s the enemy, and they must be fought.”
“Even experienced emergency personnel are shocked by the extent of the brutality. This must finally come to an end. The state must no longer stand by while chaotic people repeatedly attack police officers and firefighters. These are not trivial offenses, they are crimes,” CDU Berlin chapter leader Kai Wegner told Bild.
Previous years also featured extreme violence, especially in Neukölln.
In a statement released by the AfD, the party wrote, “Anarchy reigned in Berlin on New Year’s Eve. It was a first foretaste of future everyday life in German cities because although the authorities and the press are adamantly silent when it comes to the specific naming of the perpetrators, the countless videos of that night speak volumes: They are young, violent men with a southern appearance who hardly speak German. And not only can they immigrate unhindered, they also get paid for a nice life by the traffic-light government with tax money.
The conclusion that is now being drawn from the riots is as typical as it is naïve: a ban on firecrackers and cameras on the rescue vehicles should fix it. As if the corresponding clientele would be impressed by these measures. There is only one effective remedy against such scenes: finally protect the borders and deport criminal migrants immediately,.”
In 2016, approximately 2,500 German women were raped and sexually assaulted by North African and Middle Eastern men in Cologne and other cities in an event that fueled the rise of the Alternative for Germany party and anti-immigration sentiment in Germany.
By Tony Pasquariello, Goldman head of hedge fund sales
For only the third time since 1926, both US stocks and bonds lost money in 2022 (the other two occurrences were 1931 and 1969).
The intra-year path was extraordinary -- be it the high print on inflation (I wonder when we’ll see a 9.1% headline on CPI again), the Fed’s response (425 bps of hikes across just seven meetings) or the geopolitical backdrop (one variable that very much carries through to 2023).
Then consider this fundamental oddity: US real GDP growth should only amount to +0.7% this year (Q4/Q4) ... yet, there’s been over 4.5mm new jobs created (payrolls survey) [ZH: with even the Philly Fed confirming our speculation that the BLS is fabricating job numbers it's no longer much of an oddity].
In that context, I’ll borrow a line from Barton Biggs, which I think captures the raw material of what served folks well in 2022:
Although those quantitatively inclined would disagree, to me, investing is much more an art than a science ... experience, diligence, a knowledge of history, an open mind, and an obsessive nature are all important ingredients for the successful [investor] ... as are intuition, imagination, flexibility and maybe just a touch of the seeing eye.
What of 2023?
For the macro crowd, my instinct is these tensions won’t go quietly into the night and the opportunity set will remain decently target rich (e.g. China and Japan could be very actionable theaters).
At the same time, I concede that the broad setup across asset prices today is far less asymmetric than it was at the start of this year.
Therefore, I suspect we’re shifting from a macro environment that favored aggressive trading (see chart below) and brute force (i.e. US 2-year notes surged from 70 bps to 470 bps, that’s about as good as it gets for trend following strategies) to one that is more nuanced, featuring less volatility and more dispersion across markets (which should play to the strengths of RV and equity long/short).
With thanks to Ben Snider in Goldman Research, what follows from here is a check-down of the score board ... I also included the recap on last year at the very bottom of this note, if only for a compare-and-contrast that speaks (quite loudly) for itself.
* * *
The tale of the tape in 2022:
1. The S&P 500 fell by 19%. Including dividends, the total return was -18%. This ranks in the 5th percentile of all annual returns since 1962.
2. Realized volatility was 24%. This ranks in the 92nd historical percentile.
3. Putting those together, the ratio of S&P return-to-vol was -0.7, ranking in the 12th historical percentile.
4. The largest S&P peak-to-trough drawdown during the year was 25%, almost 2x the median historical annual drawdown.
5. The market traded higher on just 43% of days in 2022, the second worst year since WWII (after 1974). This is interesting: the median gain on those days was 115 bps, the highest in postwar history.
6. 31% of S&P stocks posted positive returns, including 66 names up 20% or more and 18 names up 50% or more. On the other side, 188 stocks closed down more than 20% and 26 names were down 50% or more.
7. NDX returned -32%, lagging S&P by 14 percentage points and registering the worst year of underperformance since 2002.
8. US Treasury 10-year notes returned -16%, the worst return on record.
9. Only two of the GICS level one sectors generated positive returns: energy +65%, utilities +2%.
10. The worst sectors: communication services -40%, consumer discretionary -37%, information technology -28%.
11. The best global markets (in local FX): Venezuela +254%, Turkey +207%, Argentina +142%.
12. The worst: Russia -37%, South Korea -24%, China A-shares -20%.
13. Finally, I’ll conclude with a chart, from Ryan Hammond in GIR: as mentioned before, you have probably seen work suggesting that one should not try to time the markets, as missing the best days is a serious drag on returns. While that rang true again (see the gray line), for the world's best traders, note how dodging the worst days this year generated an immense amount of alpha (see the light blue line):
Malteries Soufflet, a branch of French agribusiness group InVivo, said on Monday it had signed an agreement to take over Belgian malthouse Castle Malting, one of the oldest producers of the beer ingredient in the world.
When InVivo announced the takeover of its peer Soufflet late 2021, it said it aimed to become the world's largest malt maker within five years by doubling the size of its malt business through external growth.
Castle Malting, called "La Malterie du Château" in French, is located near the castle of Beloeil in southern Belgium. Established in 1868, it is the oldest malting plant in the country and one of the oldest in the world.
Belgium is famous for its beers offering a large variety of flavours, colours and alcohol strengths. It is also a major malt producer with exports to more than 160 countries.
Castle Malting would give Malteries Soufflet the opportunity to develop its activity in the higher value-added craft beer market where it is not very present, InVivo said.
The acquisition is due to be finalised in the first quarter, it said. Financial details were not immediately available.
