China Is Waiting For The Fed To Start Easing Before Launching Its Own Stimulus

 By Michael Every of Rabobank

Whatever "it" takes

The market take at the start of the year was rapid, deep Fed cuts were coming. 38 days into in 2024 we have seen some stick to a similar take, but also:

• Red-hot payrolls, even if some say ‘Goskomstat’;
• Powell say no cut in March, bringing June into play as the earliest start-date;
• Red-hot ISM services prices paid;
• The RBA’s first meeting under new rules and new governor Bullock say it could raise rates again if needed (see more on that from Ben Picton here);
• The Fed’s Bostic say the long-term rate of US unemployment might be lower than assumed;
• Kashkari say neutral rates may be higher and he’s keeping his fingers crossed the Fed are done;
• Red-hot German factory orders despite a collapse in auto output; and
• Mester say the Fed should gain confidence to cut “later this year”;

On balance, it’s still reasonable to expect some rate cuts in 2024, but not the “NEW NORMAL HERE WE COME!” wave of their own saliva that some hoped to ride imminently. But stumbling New York Community Bank, now downgraded to junk, saw the “banking crisis!” surf-board polished, and yields and the dollar dip: the Fed *must* cut rates to save them, right? But how does cutting rates bring people back to work in the office or change new regulations in the New York rent-controlled apartment market? More Fed acronyms like BTFP are surely more logical again(?)

Moreover, the BOC’s Macklem said monetary policy can’t solve housing shortages, which opens the door to not even looking at shelter inflation anymore. That logically means it might be able to cut rates sooner; which will of course push housing prices even higher – but that won’t be looked at anymore, so ‘whatever’. (And note the BOC’s ‘non mea culpa’ follows that of the government: apparently *nobody* in Canada is responsible for unaffordable housing. And not just Canada, of course. The ‘whatever’ is global.)     

Chinese markets are truly surfing the Big One, however, on news Xi Jinping is going to meet with market regulators. This dull headline prompted drooling comments on Bloomberg that the authorities were doing “everything they can” except say “time to buy”, and, yes, “whatever it takes.” In short, the algo, headline, political trend is your friend.

The problem is these are all ‘whatever’ takes given nobody has a clue what “it” is that can reverse the $5.6 trillion slump seen in stocks. $278bn didn’t move the needle, nor did $1.4 trillion, so is $7 trillion next to continue the exponential? Where does this money come from? The Beijing promise to help stocks has no details yet, except more short-selling bans and forced SOE buying. And you can’t sort Chinese stocks without sorting Chinese property: and that needs much more than $7 trillion.

There’s also a key link between China and the US that few market takes cover properly. Part of the reason for the drop in US inflation is the slump in China: the Fed doesn’t get that as its economic staff barely understand their own economy. Conversely, China is waiting for the US to start easing before it launches its own stimulus: Bloomberg notes PBOC Governor Pan Gongsheng stating Fed cuts “will expand space for China’s monetary policy operations.” So, when the Fed thinks inflation is done, China will push demand/commodity prices higher again!

Indeed, I contend tighter Fed policy narrows US geopolitical rivals’ room for manoeuvre, keeps commodity prices low, and the dollar top dog: note Powell’s comment Sunday about the importance of the US global economic and security role – maybe he also sees that a little(?)

In geopolitics, the prospect of a ceasefire between Israel and Hamas is fading given the latter’s demands that it means an end to a war.

In response, the Houthis say they will escalate their attacks on global shipping: there are reports they might cut key Red Sea internet cables too. Meanwhile, Bloomberg reports Chinese carriers are getting discounted insurance to sail through the Red Sea, which increases their commercial advantage. Some will say ‘whatever, lower prices’; others, ‘Deep Ship’ at the geopolitical implications.

As if that weren’t enough, we have a slew of other market ‘whatever’ “it” takes on:

• The SEC ruling many hedge funds trading US Treasuries have to register as dealers, increasing bureaucracy and oversight. (Is this really just about the basis trade, or is there a bigger game being played?)
• Former President Trump’s appeal against his DC January 6 court-case being denied, as expected. (However, it still remains uncertain if this trial can proceed before the election given the options Trump has open to him --tradition says the DOJ may not want to proceed, if so--and the possibility that the Supreme Court steps in in some form. Given the crucial importance of this trial to the election, and the election to economic policy, one might think the market would be listening to the most experienced legal takes, not bullet-point headlines: but whatever.)
• The DOJ reportedly being set to give President Biden only a slap on the wrist for having his own stash of classified documents dating from when he was vice president in his garage – Trump is being charged over holding his in Florida. (While the two cases are not the same, this is still likely to polarize US political debate even further into the 2024 election.)

Take from all of this whatever you will!

https://www.zerohedge.com/markets/china-waiting-fed-start-easing-launching-its-own-stimulus

EU Lawmakers Want To Sanction Tucker Carlson Over Putin Interview

 In 1941, American journalist Pierre Huss interviewed German dictator Adolph Hitler in German-occupied Russia as part of a reporting staff orchestrated by CBS News' Edward R. Murrow. He won the George Polk award in 1951 for war time reporting, and was honored by the NY Times in a 1966 obituary.

Nearly 80 years later, EU lawmakers want to sanction Tucker Carlson for his upcoming interview with Russian President Vladimir Putin.

Guy Verhofstadt, a former Belgian Prime Minister and current member of the European Parliament who has called for the EU to impose a "travel ban" on the former Fox News host, told Newsweek that Carlson is nothing more than a "mouthpiece" for former President Donald Trump and Putin.

Guy Verhofstadt

"As Putin is a war criminal and the EU sanctions all who assist him in that effort, it seems logical that the External Action Service examine his case as well," he said.

Former MEP Luis Gariocano told Newsweek that he agrees with Verhofstadt.

"He is no longer a newsman, but a propagandist for the most heinous regime on European soil and the one which is most dangerous to our peace and security," he said of Carlson.

MEP Urmas Paet, who was previously Estonia's foreign minister, told the outlet: "First of all, it should be remembered that Putin is not just a president of an aggressor country, but he is wanted by the International Criminal Court and accused of genocide and war crimes," adding "Carlson wants to give a platform to someone accused of crimes of genocide—this is wrong. If Putin has something to say he needs to say it in front of the ICC. At the same time Carlson is not being a real journalist since he has clearly expressed his sympathy for the Russian regime and Putin and has constantly disparaged Ukraine, the victim of Russian aggression."

"So, for such propaganda for a criminal regime, you can end up on the list of sanctions. This concerns primarily travel ban to EU countries."

Carlson explained on Tuesday that he's interviewing Putin because "Most Americans have no idea why Putin invaded Ukraine or what his goals are now," adding "We are not here because we love Vladimir Putin....We are not encouraging you to agree with what Putin may say in this interview, but we are urging you to watch it. You should know as much as you can."

According to a Telegram channel believed to be run by Kremlin reporters, Tucker's interview may be released Thursday in the late afternoon, EST.

How odd:

https://www.zerohedge.com/geopolitical/eu-lawmakers-want-sanction-tucker-carlson-over-putin-interview

NYCB in Talks to Offload Mortgage Risk, Plans to Sell RV Loans

 

• Bank considers a credit-risk transfer backed by mortgages
• Regional lender’s shares have plunged on real estate concerns

New York Community Bancorp has been reaching out to investors for capital to finance a large portfolio of residential mortgages as pressures on the regional lender mount, according to people with knowledge of the matter.

The company is seeking third-party capital that would inject liquidity into a portfolio of residential mortgages held under its Flagstar Bank unit. Among the options, the institution is considering pursuing a synthetic risk transfer backed by a portfolio of about $5 billion of home loans originated when interest rates were lower, said the people, who asked not to be identified discussing information that isn’t public. In a synthetic securitization, banks offload their exposure to loans by effectively transferring the risk of the assets to the buyer.

https://www.bloomberg.com/news/articles/2024-02-07/nycb-in-talks-to-offload-mortgage-risk-plans-to-sell-rv-loans

Sweden Halts Nord Stream Investigation, Hands Off To Germany, As Hersh Fills In More Blanks

 Prosecutors in Stockholm announced Wednesday they have shut down the investigation into who was behind the 2022 sabotage explosions that crippled Russia's Nord Stream pipelines to Germany.

Sweden has long said it suspected an unknown state actor, and an official statement from its top prosecutor's office now claims "The conclusion of the investigation is that there is no Swedish jurisdiction and that the investigation should therefore be closed." This is because "nothing has emerged to indicate that Sweden or Swedish citizens were involved in the attack that took place in international waters."

Still, the same statement says they now have a "good picture" of the incident after a "systematic and thorough" investigation and this has ultimately led to the conclusion that "Swedish jurisdiction is missing" - according to Swedish Public Prosecutor Mats Ljungqvist. "It is not Sweden's task to continue this investigation."

"We have had good international cooperation with several countries, above all Denmark and Germany, where we have continuously shared information and situational images," it said, also underscoring that Germany's investigation continues, but necessarily under the "secrecy that prevails for international judicial cooperation."

Also disappointing is the following: "I will also not be able to comment anything further on the conclusions of the Swedish investigation or comment on any suspected persons in the Swedish investigation," Ljungqvist said.

Presumably, Russia fully cooperated as well, given the statement is absent some kind of censure on this front, and long gone are the early days after the blast of blaming Russia for the destruction of its own vital pipeline, as was common in Western media in the weeks that followed Sept. 26, 2022. However, the Kremlin has repeatedly complained that it has been denied access or any insight into the ongoing Western investigations.

At the same time, Russia has at various times laid blame on the US, Britain and Ukraine for the covert operation which permanently severed this key method of access supplying energy to the lucrative European market.

Kremlin spokesman Dmitry Peskov said Wednesday Russia will now follow closely what Germany will do to investigate the explosions. "Of course, now we need to see how Germany itself reacts to this, as a country that has lost a lot in relation to this terrorist attack," he said. Moscow further suspects that given the likelihood of Western intelligence services or Ukraine being behind the sabotage attack, this is all a big stall tactic and that each investigation will ultimately point nowhere. 

Responsible Statecraft points out that "All signs since the year anniversary of the blasts have been pointing — in bright neon — to Ukraine as the culprit." However, legendary journalist Seymour Hersh has been reporting since February 2023 that an elite team of US Navy deep sea divers with the assistance of the CIA as well as Norwegian intelligence did it. He has not backed off his bombshell findings despite the mainstream press seeming to settle on a narrative saying a rogue group of Ukrainian operators sailing on a small boat were behind it.

Hersh said the covert op had the full knowledge and oversight of the Biden administration, but naturally US officials have consistently denied it in those rare instances they are publicly asked about Hersh's reporting.

Hersh has written a follow-up and bit of a retrospective this week, saying "Thursday marks one year since I reported President Joe Biden’s decision in the fall of 2022 to send a signal of resolve to Vladimir Putin by destroying Nord Stream 1 and 2, the Russian natural gas pipelines. Nord Stream 1 had turned Germany into the most powerful economic force in Western Europe."

"I won’t dwell on the failure of the mainstream media to follow up on that story—some reporters, as I learned decades ago, have inside sources and others do not," Hersh wrote. And on the failed investigations:

Nothing more about the cause of the underwater bombings has been heard since from either Sweden or Denmark, although both nations knew, as I have written, that the US was practicing underwater diving in the Baltic Sea for months before the explosions. The failure of the two nations to complete their inquiry may have stemmed from the fact, as I was told, that some senior officials in both countries understood precisely what was going on.

Below are more excerpts from Hersh's latest piece entitled The Nord Stream Pipelines and the Perils of Containment...

* * *

Putin would have canceled the invasion

It is now widely accepted that Putin would have delayed or canceled the invasion if Secretary of State Antony Blinken had assured him that Ukraine would not be permitted to join NATO. That promise was not made. Instead, Biden publicly warned Putin two weeks before the Russians attacked that America would destroy the newly constructed pipeline, Nord Stream 2, that was prepared to funnel Russian gas to Germany. Putin had already slowed down and then cut off the earlier pipeline, Nord Stream 1, that began delivering gas to Germany a decade earlier.

The cheap gas helped propel Germany into becoming the dominant manufacturing entity in Western Europe. Since the late 1950s, the United States and its Western European allies had worried about the political impact of Russian energy.

A CIA plan to convince Putin to "back off"

The idea of blowing up Nord Stream 1 and 2 had come from the American intelligence community, spearheaded at the time by the CIA. The community had been asked in late 2021 for options—American actions—that could convince Putin to back off. It was with this understanding that a most secret CIA unit was organized to find a way to do what President Biden wanted: to present Putin with a threat that could stop the Russian president from going to war. Bolstered by the CIA’s confidence, Biden stunned the intelligence community by threatening to blow up Nord Stream at a White House news conference on February 7, 2022, with German Chancellor Olaf Scholz standing at his side.

The CIA team, ensconced in secrecy in Norway, continued to work on its assignment, and found a way to get the complicated job done by early spring. The understanding then, in the view of some of the planners, was for Biden to pull the trigger and publicly tell Putin that he had done what he threatened to do and he, Putin, had to understand that he was dealing with an American president whose words were to be taken seriously. But Biden changed his mind at the last minute—a time had been set for the underwater detonation of bombs that had been planted  earlier—and the operation was put on hold. The CIA team was given no explanation, and the American bombs were left in place, to be triggered whenever Biden chose to do so.

Sullivan blamed Russia first

Sullivan—who, as I reported last February, was the major player in generating a secret potential pre-war threat to Russia—provided an answer that was breathtaking in its obfuscation. “First,” he responded, “Russia has done what it frequently does when it is responsible for something . . . which is to make accusations that it was really someone else who did it. We’ve seen that repeatedly over time.” He said that the president was also clear—which he was not –that “there is more work to do on the investigation before the United States government is prepared to make an attribution in this case.” The White House, he said, would not make a “definitive determination” until its allies in the region concluded their work. 

Sullivan said that Russia’s suggestion that the US was involved in the bombing was “flat out false. Russian know they’re false. But, of course, that is part of their playbook.”

Russia excluded from investigations

Sweden and Denmark, whose governments had every reason to know what had taken place, announced within days of the explosions that they would work together to investigate the explosions. On October 2, Germany said it would work with Sweden and Denmark on the inquiry. Twelve days later the Russian foreign ministry expressed its “bewilderment” at being excluded from the inquiry. On that day, too, Sweden said it would not join in the inquiries because it would involve the transfer of information related to Sweden’s national security. 

Hersh in his new note goes on to cite Emmanuel Todd, a French demographer and political scientist, who explains that that "one of the great goals of American politics, and therefore of NATO, was to stop the inevitable reconciliation of Russia and Germany" given that despite US-led sanctions it remained that Russia was “evincing economic stability." Hersh cites him to conclude:

"This was a great source of fear," Todd said, "and that is why the Americans"—he cited my Nord Stream exposé—"blew up the Nord Stream pipeline." 

The full Hersh piece can be accessed at this Substack here.

https://www.zerohedge.com/geopolitical/sweden-halts-nord-stream-investigation-hands-germany-hersh-fills-more-blanks

Border Deal Apparently Dead, How Does the US Stop the Surge?

Senate Minority Leader Mitch McConnell threw in the towel on a border deal so bad it never should have been inked. Meanwhile, let’s discuss the numbers.

According to US Customs and Border Protection, fiscal year 2024 is off to a record start.

Border Synopsis

• Although the vast majority of migrants come through Mexico, only 20 percent are from Mexico.
• Venezuela, much further away, accounts for nearly 15 percent.
• Cuba and Haiti each accounts for more migrants than Canada, Brazil, China, Russia, Turkey, Romania, and Burma combined.
• In just three months, Venezuela has 148,074 migrants in fiscal year 2024 compared to 334,914 in all of 2023.

These are the official counted numbers. How many untracked migrants is uncertain.

Contiguous Countries

I am trying to get a handle on that Tweet. As I see it, contiguous means Canada and Mexico only. Even if it doesn’t, Biden is sure to interpret the law as he sees fit.

The point may be moot because this deal may have just died.

Senators Rush to Salvage Ukraine Aid After Border Deal Fails

It appears Senate Minority Leader Mitch McConnell has finally thrown in the towel on a compromise that should never been made in the first place.

The Wall Street Journal reports Senators Rush to Salvage Ukraine Aid After Border Deal Fails

Senators threw in the towel Tuesday on a $118 billion national-security and border package after sharp opposition from Republicans scuttled the deal, forcing frustrated lawmakers to urgently seek for a backup plan to deliver aid to Ukraine as it loses ground in its campaign to repel Russia.

The surrender to political reality left Democrats seething over what they called a bait and switch by Republicans after four months of talks, while GOP lawmakers said the deal’s border provisions weren’t strong enough. Both sides, however, signaled they could try to move to a narrower bill focused on foreign assistance and weapons once they get past Wednesday, when the doomed package will get a vote in the Senate.

“It looks to me and to most of our members as if we have no real chance here to make a law,” said Senate Minority Leader Mitch McConnell (R., Ky.). He said lawmakers still “ought to tackle the rest of it because it’s important,” ticking off aid for Ukraine, Israel and Taiwan. “Not that the border isn’t important, but we can’t get an outcome.”

No Deal is Better than a Bad Deal

Biden wants to pin this on Trump but who is is that made 64 regulation changes weakening the border?

Trump’s motives may be suspect but his statement is accurate: No deal is better than a bad deal.

Where’s Border Czar Kamala Harris?

The LA Times reports Kamala Harris was tapped to fix the immigration crisis. Then the problem shifted

President Biden, facing a political crisis at the U.S.-Mexico border in the early days of his administration, tapped Vice President Kamala Harris to lead a high-profile response that would bet heavily on improving conditions in three Central American countries.

It was known as the “root causes” strategy. The border, administration officials argued, was only a symptom. If the United States could improve economic, security and political conditions in Honduras, El Salvador and Guatemala, fewer people would risk the perilous journey and much of the problem could be solved, they reasoned.

“It was focused on a long-term scenario and it was focused on countries that are no longer the primary sending countries,” said Ariel Ruiz Soto, a senior policy analyst with the Migration Policy Institute, a nonpartisan research group.

“You can’t have a ‘root causes’ strategy for every country in the Western Hemisphere,” said Aaron Reichlin-Melnick, policy director of the American Immigration Council, an immigrants’ rights group.

El Salvador’s president, Nayib Bukele, has alarmed human rights advocates with his broad crackdown on gangs that includes widespread arrests and detentions. He ran for reelection Sunday in defiance of a constitutional term limit. But Bukele’s crackdown has played a big role in stemming migration from El Salvador, as residents who once feared gang violence are no longer compelled to leave, according to specialists.

Biden’s Trojan Horse Immigration Deal

On January 30, I commented Biden’s Trojan Horse Immigration Deal Would Allow Another 1.8 Million Migrants

The Senate finally released more details of the bipartisan border package last Friday. House speaker Mike Johnson immediately blasted the deal, and deservingly so.

On February 6,I commented Biden Proposes Ankle Bracelets and Commands Will Solve the Immigration Problem

The ankle bracelet is a farce. What is to stop someone from taking off the bracelet and vanishing forever in a sanctuary city?

Now I wonder What else is lurking in the bill we don’t know about. I searched for hours trying to find the full text of the bill on Tuesday and came up empty. The Senate never posted the text.

Biden can attempt to fix the problems he created or not. To date, neither Biden nor Harris have done anything useful.

Instead, Biden has kept his campaign promise to keep the border open. Why should anyone trust him now?

He can start by undoing the mess his regulations created.

https://mishtalk.com/economics/border-deal-apparently-dead-how-does-the-us-stop-the-surge/

Sky News Journo: Biden's Garbled Speech Why Americans Concerned About His Cognitive Health

 by Paul Joseph Watson via Modernity.news,

A Sky News journalist flagged up the latest example of Biden’s garbled speech, admitting that it shows why many Americans are concerned about the state of his cognitive health.

During a monologue about the Israel/Gaza situation, Biden looked incredibly confused and struggled to get his words out.

“There is some movement, and I don’t wanna, I don’t wanna,” said Biden before pausing at length and then stuttering, “choose my words…”

“There’s some movement, there’s been a response from a uh…” he said before trailing off again.

“The the, there’s been a response from…the opposition, but um, it, it, yes I’m sorry, from Hamas,” says Biden, apparently having to be reminded by someone off camera of the word ‘Hamas’.

Sky News’ US correspondent Mark Stone pointed out the obvious.

“This, from President Biden, tells us something about how the negotiations between Israel & Hamas are going,” Stone posted on X.

“It also, frankly, shows why so many in America and beyond are concerned about the age of the American president who is insisting on running again.”

Stone’s remarks are interesting because they emphasize how even people within the establishment media are now openly acknowledging that Biden has big problems.

Sky News as an organization has also been very friendly to the Biden administration in terms of coverage of his presidency.

As we highlighted yesterday, in another embarrassing gaffe, Biden claimed he spoke with former French President Francois Mitterrand during a 2021 G7 summit.

Mitterrand died in 1996.

Donald Trump has called for debates between himself and Joe Biden to be held as soon as possible, “for the good of the country.”

“He can’t talk. He can’t do anything. He’s ruining our country and I don’t think he’s going to run,” Trump said.

https://www.zerohedge.com/political/sky-news-journalist-admits-garbled-speech-shows-why-americans-are-concerned-about-bidens

BridgeBio, Kyowa Kirin Partner with Upfront Payment of $100 M for an Exclusive License

 - BridgeBio grants Kyowa Kirin exclusive license to develop and commercialize infigratinib for skeletal dysplasias in Japan

- BridgeBio to receive upfront payment of USD 100 million with royalties up to the high-twenties percent, with additional milestone-based payments

- Infigratinib is a once daily oral treatment option under development for achondroplasia, which was well-tolerated and demonstrated potentially best-in-class efficacy in PROPEL 2, a Phase 2 study in children with achondroplasia

- PROPEL 3, a Phase 3 study of infigratinib in achondroplasia is underway globally outside of Japan with the first child dosed in December 2023

- Infigratinib adds to Kyowa Kirin’s successful portfolio in the therapeutic areas of bone & mineral diseases

https://www.biospace.com/article/releases/bridgebio-pharma-and-kyowa-kirin-announce-partnership-with-an-upfront-payment-of-100-million-for-an-exclusive-license-on-infigratinib-in-skeletal-dysplasias-in-japan/