Distinction Matter - Subscribed Feeds

The Biden administration continues to speak out of both sides of its mouth when it comes to Israel and Gaza policy as Progressive Democratic voters continue peeling off in droves, declaring that they can't in good conscience vote for Biden in November.

On Tuesday, the contradictions continued and abounded, as the White House informed Congress it is planning a new $1 billion arms transfer to Israel. And ironically this will mark the first new package since Biden earlier this month announced it paused a weapon shipment to Israel on human rights concerns.

Pool photo/AP

A State Department report has since found that US weapons have likely been used in a way contrary to international humanitarian law, but stopped short of condemning Israel for war crimes.

The Wall Street Journal first broke the news of the new package, writing "The Biden administration notified Congress on Tuesday that it was moving forward with more than $1 billion in new weapons deals for Israel, U.S. and congressional officials said, a massive arms package less than a week after the White House paused a shipment of bombs over a planned Israeli assault on Rafah."

Here's what the newly proposed package includes:

• $700 million in tank ammunition
• $500 million in tactical vehicles
• $60 million in mortar rounds

This follows on the heels of Congress passing and Biden sighing into effect the $95 billion package of foreign aid for Ukraine, Israel, and Taiwan.

Biden's threats to pause shipments of offensive weapons to Israel has come under criticism by Democrat pro-Israel hawks in the last several days. White House Press Secretary Karine Jean-Pierre has responded this week by saying: "We strongly, strongly oppose attempts to constrain the President’s ability to deploy US security assistance consistent with US foreign policy and national security objectives."

Meanwhile, Democrats continue to be angry over the Gaza crisis:

Approximately 13% of poll respondents in six swing states who voted for U.S. President Joe Biden in 2020 but would not vote for him again said that his foreign policy or Israel's war on Gaza were the most important issues determining their vote.

The figure comes as part of a new set of polls released Monday from The New York Times, Siena College, and The Philadelphia Inquirer that show former President Donald Trump narrowly leading Biden in 5 out of 6 crucial battleground states.

"We have warned that this would happen for months, and the Democratic Party didn't give a damn," author and organizer Daniel Denvir wrote on social media in response to the news.

We have warned that this would happen for months and the Democratic Party didn’t give a damn. pic.twitter.com/8KtC294lVZ

The policy debate continues raging within Israel itself, with Minister of Defense Yoav Gallant on Wednesday calling on Netanyahu to affirm that Israel won't govern Gaza after Hamas is defeated.

Munitions stockpiles are running low across the West, whether in Europe or the United States. Supplying Ukraine with arms in its war against Russia has forced Western militaries and defense firms to either make plans or begin boosting the production of bombs, missiles, artillery shells, and suicide drones. 

 On Tuesday, the US Air Force announced a tripling in its monthly production of the giant 30,000-pound Massive Ordnance Penetrator, known as the "bunker-buster." It's the largest non-nuclear bomb the US has in its stockpiles and can only be deployed by a Northrop Grumman B-2 Spirit stealth bomber. 

Bloomberg was among the first to report an increase in bunker-buster bomb production, citing a USAF statement: "Will significantly increase production as needed."  

Officials at the facility told Bloomberg journos during a March tour by General Charles Brown, chairman of the Joint Chiefs of Staff, that new bunker-buster bomb production could rise from currently two, to as many as six or possibly eight bombs per month. 

The Oklahoma plant is being upgraded to support higher production of 2,000- to 30,000-pound bombs. A ribbon-cutting ceremony is scheduled for July 30, and production ramps are expected soon after. 

Ukraine isn't the only conflict area draining Western supplies of munitions. The US has been supplying Israel with bombs and missiles as the conflict with Hamas rages on. And there's a further risk of broadening conflict in the region with Iran. Let's not forget China and the South China Sea. 

Maiya Clark of the Heritage Foundation recently explained the US military-industrial complex can't just turn on a switch and produce more bombs:

"Once the stockpiles are expended, the Department of Defense cannot simply buy more munitions — manufacturing takes years."

Clark continued: 

"Ramping up production after operating at a smaller capacity takes time; contractors have found that it will take them around two years to deliver new Javelins to the Department of Defense (DOD), for example." 

She warned:

"This creates a problem in the present—after all, the war in Ukraine could continue for some time—and it illuminates what could potentially be a much larger problem in the future. The lack of surge capacity creates the risk that, in a protracted war, the US would deplete its stockpiled munitions before replacements could be manufactured and delivered." 

This all plays into an important theme of soaring global military spending as the world fractures into a chaotic, multi-polar state. There's a bull market in defense. 

In a Goldman Materials note this morning covering China and copper, analyst James McGeoch pointed out that the base metal is "having a Cocoa moment." 

Comex copper futures for July delivery jumped nearly 5% to $5.12 a pound, exceeding an earlier record for the most active contract set in March 2022. According to Bloomberg, the short squeeze "prompted a scramble to divert metal in other regions to US shores."  

Comex copper futures are breaking out. 

Comex copper futures are in one of the biggest-ever backwardation periods - a clear indication of severely tight supply. 

"Short spread and futures holders are being squeezed," Michael Cuoco, head of hedge fund sales for metals and bulk materials at StoneX Group, told Bloomberg. 

Here's more commentary on the copper squeeze in the US via McGeoch: 

Copper got funky on LME close, the …Copper we see arb positions driving  (short CMX/long LME basis producer hedges and other factors) and have seen big unwinds on this, the spread got to +$900 (o’night it got to 1200t….saw people shorting it at $600 and getting stopped out literally hours later). There is also a seemingly large Chinese/Asian position (the arb CMX/SHFE getting bought again over night). The financial flows are typically more CMX heavy (options and outrights) and the change in liquidity. mkt structure is compromised as there is not that much Copper available on CMX to be delivered. For the next two weeks its likely to stay unhinged, as the positions are all against July expiry and we are unsure how it solves ahead of that, ie the delivery mechanism to solve.

Short-squeeze in commodities markets occurs when traders are forced to exit positions due to increasing margin calls or the threat of having to deliver physical material. 

Jia Zheng, head of trading at Shanghai Dongwu Jiuying Investment Management, explained that the surge in the July contract was partly driven by a squeeze on traders involved in reverse arbitrage, where they short Comex and go long on Shanghai copper.

This coincides with dwindling copper mining supplies and a surge in AI data center investments across the US. Additionally, the US and UK have banned Russian aluminum, copper, and nickel.

ZH's The Market Ear penned a note earlier indicating the parabolic price action in copper is getting overextended. 

Authored by Nick Giambruno via InternationalMan.com,

Hal Finney was a pioneering computer scientist, cryptographer, and prominent Cypherpunk who played a crucial role in the early development of Bitcoin.

He was one of the first supporters, contributors, and adopters of Bitcoin.

In short, Finney was a visionary who understood Bitcoin’s potential before almost everyone else.

In December 2010, Finney wrote:

“There is a very good reason for Bitcoin-backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins.

Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the blockchain.

There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases.

Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others.

I believe this will be the ultimate fate of Bitcoin, to be the ‘high-powered money’ that serves as a reserve currency for banks that issue their own digital cash. Most Bitcoin transactions will occur between banks, to settle net transfers.

Bitcoin transactions by private individuals will be as rare as… well, as Bitcoin based purchases are today.”

Bitcoin banking takes the “free banking” concept and makes enormous improvements.

The free banking era in the US lasted from the 1830s to the early 1860s. Minimal regulations and the absence of a central bank characterized it.

Banks were permitted to issue their own currency, known as banknotes, that circulated as money. These banknotes were supposed to be redeemable on demand for the gold or silver reserves they represented.

The value of these banknotes fluctuated based on the perceived solvency of the issuing bank and the distance from the bank itself, as people were less willing to accept notes from distant or unknown banks.

Similarly, Bitcoin banks hold BTC as a reserve asset and issue digital eCash notes redeemable for Bitcoin (either onchain or on the Lightning Network) anytime on demand. These eCash notes are like digital versions of the gold-backed banknotes during the free banking era, but with several significant improvements.

The best way to think of Bitcoin banking is as a massive upgrade to the existing custodial banking models.

Below are a few benefits.

• Private transactions

• Fungibility between different eCash notes

• Low barrier to entry

• Minimizing trust

• Low switching costs

• Convenient and easy to use

• Redeemable at any time

• Backup and recovery of funds

First, we have to understand the basic structure of how a Bitcoin bank could work.

Bitcoin banks are likely to take the form of a federation.

This model reduces trust by distributing control over a group of people or entities. This federated group issues, verifies, transfers, and administers the digital eCash notes—but only if there is consensus among the federation members to take these actions.

The main idea of a federation is that you are reducing the amount of trust needed to run a system by distributing control.

The federation holds its Bitcoin reserves in a multisig wallet, a special type of wallet that requires multiple people’s authorization to spend the funds. Think of it as a safe that requires multiple keys to open.

There will likely be a wide variety of Bitcoin banking federations. Some will be small and focused on local communities, while others will be large and geared towards providing commercial-scale operations.

Naturally, there are risks with any system that depends on trust or third parties.

Bitcoin banks have risks, too, but the main point is that they significantly reduce these risks compared to centralized systems. Specifically, you have to trust that the members of the federation will not form a majority quorum to steal the Bitcoin held in the multisig wallet that backs customer deposits or debase their eCash notes. I’ll discuss these and other risks later.

Here’s how it works.

Someone who wants to obtain eCash notes will first download the software to interact with the federated Bitcoin bank. Then, you will send Bitcoin (onchain or Lightning) to the federated Bitcoin bank and receive eCash notes in return.

With a federated Bitcoin bank, you can also sell something and receive eCash notes in your wallet. You could also earn eCash notes from your employer as they deposit your salary into your wallet, just like they do with your traditional bank account today.

Bitcoin banking federations are meant to be interoperable with the Lightning Network—an open, peer-to-peer network built on Bitcoin that allows for nearly instantaneous transactions and almost zero fees. You can use eCash notes anywhere that Lightning is accepted.

With Bitcoin banking federations, you can withdraw to another federation or your own Bitcoin wallet (onchain or Lightning) anytime on demand.

Unlike self-custody wallets, Bitcoin banking federations can help users recover their funds if they lose access to their wallets.

Suppose you want to spend your eCash with a merchant with a different Bitcoin banking federation. This is where the Lightning Gateways come in. They are market makers who provide liquidity between Bitcoin (onchain and Lightning) and various eCash notes issued by different banking federations for a small fee.

When you send an eCash payment to a merchant at a different banking federation, you will send the eCash to a Lightning Gateway, which will then send the correct eCash to the merchant. Or suppose the Lightning Gateway doesn’t have liquidity in the merchant’s eCash notes. In that case, it will find another Lightning Gateway that does, send that Lightning Gateway a Lightning payment, and then the second Lightning Gateway will forward the payment to the merchant in its eCash note.

In short, Lightning Gateways will provide liquidity that increases the fungibility between numerous eCash notes issued by different Bitcoin banking federations.

It’s like seamlessly sending a payment from PayPal to a user on Cash App, Venmo, or another platform.

If this seems complicated, don’t worry. This just explains how a Bitcoin banking application on your phone would work under the hood. It does all of this in the background without your input. For the user, it will be a seamless experience of simply scanning a QR code and authorizing a payment on a phone application.

Most internet users do not know how TCP/IP or SSL works, but they use it daily in the background as they browse the web. I expect a similar dynamic with Bitcoin, the Lightning Network, federated Bitcoin banks, and various Bitcoin-backed eCash notes.

The graphic below does an excellent job illustrating how transactions with different eCash notes from different federated Bitcoin banks would work. It’s from Eric Yakes, author of The 7th Property: Bitcoin and the Monetary Revolution, which I consider the best resource for understanding the mind-bending potential of Bitcoin banking.

Source: Eric Yakes

Bitcoin Banking and Privacy

Financial privacy is one of the biggest benefits federated Bitcoin banks will offer over traditional custodians.

Chaumian eCash is what will enable it.

The name is a nod to cryptographer and Cypherpunk David Chaum, who created a way to provide secure and anonymous online transactions, much like using cash in the physical world.

With Chaumian eCash, users can spend money online without revealing their identity or transaction details to anyone, including the recipient or the federated Bitcoin banks and Lightning Gateways involved in the transaction.

One of the key features of Chaumian eCash is its use of blind signatures, a cryptographic technique that allows a federated Bitcoin bank to sign and validate eCash notes without actually seeing the transaction details.

In other words, a federated Bitcoin bank knows a valid eCash note has been issued and spent, but it doesn’t know who spent it or on what. Further, they will not be able to know individual account balances nor the identity of those who redeem an eCash note for Bitcoin.

Those running a federated Bitcoin bank will only be able to know the total amount of BTC held in reserves in the federation’s multisig wallet and the total amount of eCash notes outstanding for redemption.

This is a revolutionary improvement in financial privacy over existing custodial solutions, which offer no privacy whatsoever.

The strong privacy protections that Chaumian eCash offers enable another critical benefit: censorship resistance.

With PayPal, Venmo, traditional bank accounts, and other traditional custodial financial services, they can block a payment or cancel your account whenever they want under any pretext they find convenient.

With federated Bitcoin banks, they are unable to censor or block transactions. Thanks to the strong privacy protections from Chaumian eCash, they can’t know the details of each transaction, so they can’t block or prevent them.

In short, with federated Bitcoin banks and Chaumian eCash, we have, for the first time, a convenient custodial solution that is resistant to censorship.

Fedimint

Perhaps the most promising implementation of federated Bitcoin banks is Fedimint.

Fedimint is an open-source protocol that allows anyone to create a federated Bitcoin bank with a few clicks.

Using Fedimint to set up a federated Bitcoin bank costs nothing. No licenses or permission is needed.

In short, Fedimint could do to the banking cartels what Uber did to the taxi cartels.

Rug Pull Risk

Like all Layer 2 solutions, federated Bitcoin banks are a trade-off. They are less secure than self-custody but offer more convenience, ease of use, and privacy, among other benefits.

Specifically, you have to trust that the members of the federation will not collude to form a majority quorum to steal the Bitcoin held in the multisig wallet that backs customer deposits.

The size of that quorum will vary between different federations. The larger the quorum, the more distributed the risk.

It could be as small as a 2-of-3 setup, meaning there are three authorized users, and two are needed to spend the Bitcoin reserves in the federation’s multisig wallet, or as large as a 99-of-100 and anything in between.

Rug pull risk will naturally vary between different banking federations.

Local Bitcoin banking federations could mitigate this risk because known community members would operate them. They would likely suffer serious legal, reputational, and physical consequences for stealing their neighbors’ money.

With larger commercial Bitcoin banking federations, depositors could mitigate this risk with private insurance, rating agencies, and other market solutions.

In any case, ongoing due diligence of federated Bitcoin banks will be important. Depositors will have to do this or find someone to do it.

Centralization Risk

Trusted third parties are centralized vulnerabilities. Governments can capture and coerce them.

This is precisely how governments used the gold standard to bootstrap the fiat currency system into existence.

First, people used physical gold as money. Then, to scale, they necessarily turned to third parties, like banks, that stored gold and issued gold IOUs to facilitate trade. Governments captured those third parties and then gradually removed the gold backing from the IOUs until they were nothing more than confetti. In short, that is how the fiat currency system was born.

Could something similar occur with Bitcoin?

Bitcoin has a great chance of avoiding this fate because of its extreme portability and decentralization.

In the past, government agents could simply show up at a bank and demand they hand over their physical gold reserves to a centralized depository.

Let’s presume government agents would even be able to identify someone running a federated Bitcoin bank.

What could they do?

If the federated Bitcoin bank had been set up with sufficient geographical and political diversification, there’s not much they could have done. They could, at most, detain the one person in their jurisdiction running the federated Bitcoin bank.

Let’s say there was a quorum of 7-of-10, and the other nine federation members were located in different political jurisdictions. The Bitcoin reserves would be safe because the one person the government agents detained could not reach a quorum to spend them. The other nine federation members could then take further defensive measures to ensure the safety of the federation’s BTC.

In short, it would be exponentially more challenging for governments to capture, coerce, and centralize federated Bitcoin banks than it was for them to do the same with banks under the gold standard.

Hal Finney noted that there will likely be a market for the various eCash notes, and their values will fluctuate depending on how the market evaluates their risk. I expect eCash notes with more exposure to riskier jurisdictions to trade a discount to their Bitcoin reserves to reflect this risk.

Remember, with the open-source Fedimint protocol, anyone can easily form a federated Bitcoin bank. This low barrier to entry also helps mitigate the centralization risk.

With the traditional banking system—and banking under the gold standard—the government needs to control a relatively small number of banks and entities. With federated Bitcoin banks, anyone could potentially operate one—permission from a centralized banking cartel is not required.

Here’s the bottom line.

If governments attempted to capture, centralize, and coerce federated Bitcoin banks, I believe it would be a fruitless game of whack-a-mole.

Debasement Risk

There is also a risk that the people running a federated Bitcoin bank could secretly collude to debase their eCash notes.

Consider the example of the bankrupt exchange FTX, which created many more claims to Bitcoin than the actual BTC held in reserve. FTX account holders who thought they owned Bitcoin and did not withdraw were left holding the bag.

I think several factors will mitigate this risk with federated Bitcoin banks.

First, the cost of switching to another federated Bitcoin bank or withdrawing is low and can occur anytime. The ease at which a potential bank run could occur should put fear in the hearts of those attempting any debasement scheme.

I expect other market-based incentives, such as memberships in exclusive clubs for Bitcoin banks with the best reputations and other reputation systems, will help minimize the debasement risk.

The low barrier to entry to creating a federated Bitcoin bank and low switching costs means there will likely be cut-throat competition. If the market suspects a Bitcoin bank is debasing its eCash notes, it will be an excellent opportunity for a competitor to grab market share.

Likewise, speculators could play an important role. They will be there to short the eCash notes of Bitcoin banks suspected of engaging in debasement.

Conclusion

Bitcoin is a revolutionary innovation for the base monetary layer and provides a foundation for a new financial system.

Consider the implications of the trustless Bitcoin base layer in combination with the Lightning Network, federated Bitcoin banks issuing Chaumian eCash, and other trust-minimized Layer 2 solutions for scaling and convenience.

The amount of value they could unlock is astonishing. It could usher in a new era of free banking worldwide.

While the Bitcoin megatrend is no longer in its infancy, it is still early, and you are not too late. Bitcoin has a long way to go before it emerges as the world’s dominant money and displaces the traditional financial system.

I have little doubt The Bitcoin Supremacy will be one of the biggest financial trends of the decade. I believe that patient investors will reap substantial gains.

That’s why I’ve just released an urgent PDF report revealing three crucial Bitcoin techniques to ensure you avoid the most common—sometimes fatal—mistakes.

Check it out as soon as possible because it could soon be too late to take action. Click here to get it now.

Rice is a staple food for over 3.5 billion people worldwide, especially in Asia, Latin America, and Africa. It's grown in over 100 countries, with 90% of the world's rice produced in Asia. We have been tracking the prices of Thai white rice, which surged to 15-year highs in 2023 and has since consolidated at these highs with risks of a further upside breakout. 

According to new data from the Thai Rice Exporters Association, Thai white rice 5% broken, an Asian benchmark, rose nearly 6% to $649 a ton, inching closer and closer to last year's highs. Since early 2022, prices have surged 64%. 

We continue to follow Thai rice prices because rice is a critical staple food for billions of people worldwide. 

Here are some of the risks we've pointed out in the last few years:

• Sept. 2022: The Stage Is Being Set For A Massive Global Rice Shortage

• May 2023: Global Rice Shortage Looms, Set To Be The Biggest In Decades

• May 2023: Thai Rice Crop In Crosshairs Of El Nino As Farmers Are Warned About Water Shortages

• July 2023: "So It Begins ": US Supermarkets Hit With Buying Panic As India Bans Rice Exports

• August 2023: Rice Crisis Sends Prices To Highest Levels Since 2008

• September 2023: "Go Easy On The Curry": HSBC Warns Rice Crisis Reminiscent Of '2008 Asian Food Price Scare'

• November 2023: Rice Nears 15-Year High As Global Food Crisis 'Much Worse Than 2008'

The good news is that global food prices measured via the UN's Food and Agriculture Organization print below the 2010 Arab Spring level, an area of risk where high food prices cause social instabilities in third-world countries. However, some of the latest prints show that food inflation could increase. 

If prices do surge from here, let's remind readers of this 2008 headline from The Guardian:

Food inflation is certainly not going away. That's evident in the prices of cocoa, OJ, coffee, beef, and many other items at the supermarket. 

Oil prices are tumbling this morning despite lower CPI (juicing rate cut hopes), weak retail sales (but strong gas station spending), and a big draw reported overnight by API. It seems the main downside driver was IEA lowering its 2024 demand forecast.

• World oil demand is forecast to grow by 1.1 million barrels per day this year, down 140,000 bpd from last month's projection.

• Global crude inventories surged in March by 34.6 million barrels as trade disruptions pushed oil on water to a post pandemic high, according to the IEA.

The question is - will the official data confirm API's big crude draw and re-energize prices.

API

• Crude -3.1mm (-1.1mm exp)

• Cushing -601k

• Gasoline -1.27mm (unch exp)

• Distillates +349k (+300k exp)

DOE

• Crude -2.508mm (-1.1mm exp)

• Cushing -341k

• Gasoline -235k (unch exp)

• Distillates -45k (+300k exp)

The official data shows inventory draws across the board with crude stocks down 2.5mm barrels...

Source: Bloomberg

The Biden admin continued to add to the SPR, adding 593k barrels...

Source: Bloomberg

US Crude production remains flat near record highs at 131.mm b/d...

Source: Bloomberg

WTI was trading just above $77 ahead of the official print and rallied further on the across-the-board draws...

Finally, we note that refinery utilization rates are back above 90%, the highest since January. Rates increased in all regions, with the Midwest rising for the second straight week to 90.8%, from 85.2% in the previous week, as refineries wake up from maintenance.

Volatility in "meme stocks" continued in premarket trading on Wednesday as AMC Entertainment Holdings announced a debt-for-equity exchange for $163.9 million in bonds maturing in 2026. This strategy mirrors management's approach that helped the struggling movie theater chain capitalize on retail day traders to boost liquidity in 2021. 

A regulatory filing released Wednesday morning detailed how AMC reached a deal to swap about $164 million of its 10% notes due 2026 for 23.3 million shares of newly issued stock. The new stock is valued at $7.33 per share. 

"AMC, much of whose debt trades at distressed prices, has been chipping away at its maturities through other swaps and buybacks. It exchanged around $200 million of the debt for shares last year," Bloomberg pointed out. 

Today's news sparked a rally in AMC's high-yield bonds. The company has over $2.5 billion in outstanding bonds, most of which will mature in 2026. 

News of the added supply sent shares down nearly 9% in premarket trading to the low $6 handle. 

Shares were as high as $11.48 early Tuesday in the multi-day meme stock mania, triggered by a post on X from Roaring Kitty, also known as Keith Gill, on Sunday night.

Also, on Tuesday, AMC completed a previously disclosed ATM. The deal was completed through Citigroup Global Markets, Barclays Capital, B. Riley Securities, and Goldman Sachs & Co., raising about $250 million in new capital for the struggling company. 

The old saying goes, "Strike while the iron is hot." That's precisely what AMC's management is doing: taking advantage of retail day traders by completing ATM and debt-for-equity exchanges. Somehow, this company, which should've been dead a long time ago, continues to stay alive with help from day traders.

With the CPI report came in on top of expectations on 3 of the 4 closely watched metrics, with just headline CPI coming in at 0.3%, just shy of the 0.4% expected (with the retail sales print coming in far uglier and missing across the board), there has been some debate among the usual commenting suspects whether this inflation report was enough to tip the scales to an earlier rate cut or not, although the consensus seems to suggest that the print was enough to keep September, if not the July, FOMC meeting in play for a rate cut.

Below we quote some of the most active Wall Street economists and strategists who have already manged to sneak in a bullet point or two with their kneejerk response to the CPI print.

Neil Birrell, CIO at Premier Miton Investors:

“The usual excitement over US inflation ended up being a damp squib, as it came in exactly as expected. However, retail sales were weaker than expected and the core rate is back to levels not seen for quite some time, which might well see optimists calling for rate cuts and markets rallying.”

Capital Economics

"Core CPI was even better than it looked, particularly given that we already know the PPI components that feed into the Fed’s preferred PCE deflator measure came in, on balance, weaker than expected. We estimate that core PCE increased by around 0.20%m/m. All things considered, this is consistent with the Fed cutting interest rates in September."

David Russell, Global Head of Market Strategy at TradeStation

"Shelter didn’t ease as hoped, but there was improvement in transportation and healthcare. The number wasn’t perfect, but we’re staggering toward lower inflation. Weaker data on retail sales and the Empire Index also suggest growth is slowing, which keeps rate cuts on the table. It was a trifecta of dovish news."

Nick "Nikileaks" Timiraos, WSJ resident Fed leaker:

"One good print can't offset three unfavorable ones. It may take a couple more for officials to get over the PTSD of the Q1 inflation. It reduces the risk of any shift to a neutral bias (ie, open the door to hikes)."

Florian Lepo, Lombard Odier Asset Management

“With this in-line inflation print, rates are likely to break the [4.4%] level, dragged down by real rates. With that, the dollar should fall, supporting most assets labeled in it.”

Rubeela Farooqi, chief US economist at High Frequency Economics:

“Overall, price pressures remain elevated but are moving in the right direction. We think the data support the case for a patient approach on policy decisions from the Fed going forward although the base case remains one of lower rates this year.”

Gregory Faranello, head of US rates for AmeriVet Securities:

“Fed friendly data for the most part with both the CPI and retail sales. Both indicate a tempering which is what the Fed is looking for. These numbers support Chair Powell’s notion of ‘higher for longer’ to potentially lower.”

Ira Jersey, head of rates at Bloomberg

“The relief-rally knee-jerk reaction may be more about retail sales slowing meaningfully than the close-to-expected CPI. Sales have tended to lead goods CPI by a few months. The CPI report being pretty close to consensus underlines the continuing trend of lower-volatility core CPI sectors contributing nearly 4% on a year-on-year basis, while higher-volatility ones (right now generally goods sectors) contribute nothing. So although the data was broadly in line, inflation continues to run above the Fed’s comfort level, meaning near-term rate cuts aren’t likely.”

Source: Bloomberg

Authored by Brandon Smith via Alt-Market.us,

There are two classic propaganda narratives used by governments when it comes to keeping the public invested in any war campaign that does nothing to advance their national interests:

• First, there’s the “commitment” lie, which says that once you step in to support a war effort you then must stay exponentially committed, even if that war effort is exposed as pointless. Anytime the public pulls back from that war in a bid to reconsider what purpose it serves they are ridiculed for potentially “risking lives” and setting the stage for defeat. In other words, you must support the effort blindly. You’re not allowed to examine the conflict rationally, because who wants to be blamed for losing a war?

• Second, there’s the “domino effect” lie, which says that if you allow a particular “enemy” to win in one conflict, they will automatically be emboldened to invade other countries until they own the entire planet. It’s the same claim used to trick the American populace into supporting the war in Vietnam and it rarely turns out to be true. In fact, nations that engage in regional wars tend to be so weakened by the fighting that they don’t have the means to move on to another country even if they wanted to.

In the US we heard both of these narratives heading into the recent congressional vote for billions more in monetary and logistical aid to Ukraine. Neocons and Democrats worked together to force the bill through with a percentage of true conservatives fighting to stop it. Those conservatives were attacked relentlessly by the media for “helping the Russians”, but the reality that no one in the mainstream wants to talk about is that Ukraine has already lost the war.

No amount of additional funding or arms shipments are going to help them, and it has nothing to do with conservatives questioning the validity of war spending. Anyone who has a basic understanding of military strategy knows that the key to winning is ALWAYS manpower first, logistics second. Not superior technology or armaments, not superior cash and certainly not popular support from foreign interests.

This is especially true in a war of attrition, and attrition is in fact the method being used by Russia to systematically whittle down Ukraine’s forces. However, the western media refuses to discuss what’s really happening and has been acting as a hype machine for Ukraine instead.

In September of 2022 I noted that the Russian pullback to the Donbas was not the “retreat” the western media made it out to be. Many establishment talking heads claimed that this was the beginning of the end for Vladimir Putin and that Ukrainian forces would be taking Crimea in the near future.

I argued that Russia was likely trying to consolidate its position as western artillery and tanks flooded into Ukraine. I also suggested that Russia wanted to avoid urban combat in major cities while tens-of-thousands of seasoned mercenaries were rushing to the front from the US and Europe. I predicted that the Russian pullback was in preparation for surgical strikes on western Ukraine’s resources and grid infrastructure.

With Ukraine’s grid heavily damaged, a large portion of the population would leave the cities and head for Europe until the war played out. Putin has specifically avoided major fighting within larger urban centers for a reason. Driving civilians out of metropolitan areas would make it easier for Russia to strike Ukraine in a secondary offensive without risking extensive collateral damage in the form of civilian casualties. This is exactly what has happened.

Almost 7 million Ukrainians left the country outright in the past 2 years, with another 6 million displaced (mostly from larger cities). Currently, Russia is moving to push civilians out of Kharkiv, Ukraine’s second biggest city, and they will probably be successful given their momentum and the destruction of water and power resources. With civilians out of the way a more aggressive attack can then be initiated.

Russia has been using an “artillery bubble” as a tool to protect ground forces as they push an advance. Meaning, troops will only attack as far as the artillery can reach. Artillery is vital to a large scale offensive. Coincidentally, Russia doubled its importation of explosive materials commonly used for artillery in the past several months. They are now reportedly producing triple the amount of artillery that NATO is providing to Ukraine.

Mainstream analysts claim the push towards Kharkiv move might be a feint, allowing Russia to increase the size of its buffer zone. They continue to assert that Russia doesn’t have the forces necessary for a major offensive. I would say it depends on how weak Ukraine’s defensive lines actually are. Russia has been consistently using large scale Pincer movements to envelop defensive positions and destroy them.

In the past two weeks alone Russia has gained considerable ground. Russian troops recently made confirmed advances northwest of Svatove (Luhansk Oblast), near Avdiivka (Donetsk Oblast), in Robotyne (Zaporizhzhya Oblast), and in east (left) bank Kherson Oblast, U.S.-based think tank Institute for the Study of War reported on May 6th. The reason for this is relatively simple – Ukraine lacks the manpower to effectively establish defense in-depth. All the reports coming from the front support this theory.

That is to say, Ukraine’s defensive lines are a facade with no secondary positions or trenches to stall Russian breakthroughs. Once the Russians cut the main line there’s nothing much stopping them from gaining large stretches of ground. Some analysts have blamed this development on a lack of Ukrainian foresight or strategic preparedness, but I would argue that they just don’t have enough people to defend more than a single forward line.

My position is backed by numerous reports of the government’s desperate struggles with conscription. For the past six months the average age of Ukraine recruits is 43 years old. Meaning, youth recruitment is waning, either because younger people don’t want to fight and are avoiding the draft by leaving the country, or too many have died.

The conscription problem has been hidden by the western media for many months now, but even corporate news platforms are starting to admit that there is a severe lack of new recruits. Front line fighters have been complaining for months that they need to be cycled away from the trenches and given rest.

Another bad sign is the fact that Ukraine has been using Special Forces soldiers for trench duty. These units are trained specifically for asymmetric hit-and-run warfare, not sitting in mud holes waiting for artillery strikes to rain down on their fixed and exposed positions. It seems like pure stupidity, but it makes sense if Ukraine is actually running out of people to hold their only defensive line.

The cover-up of massive casualties is something I mentioned in past articles on the war and I think it bears repeating: Western warhawks continue to claim that it will be “cheaper” to use Ukrainian soldiers to fight Russia than to fight a larger war down the road with American and European lives.

The sociopathy behind this rationale is disturbing. The lack of manpower in Ukraine cannot be solved. It is a product of endless death paid for with our tax dollars. NATO has prolonged the fighting with funding and arms, but not to win, only to sacrifice more people in a bloody conflict Ukraine is destined to lose.

Their argument also assumes that Americans and Europeans are going to jump blindly into military service in a war against Russia. I don’t know about Europeans, but I do know for a fact that most Americans are not going to buy in and will refuse a draft. The majority of the US public doesn’t even want to send further aid to Ukraine; they certainly aren’t going to go die for Ukraine. The arrogance of the warhawks is mind boggling.

The bottom line is this: Ukraine is about to be overrun. They didn’t have the manpower to effectively launch a counteroffensive. They don’t have the manpower to establish defense in-depth. And, they are using their most seasoned soldiers as cannon fodder in the trenches.

This dynamic demands that diplomatic solutions be entertained, but no one seems to be talking about that. Why?

As I theorized in my article ‘World War III Is Now Inevitable – Here’s Why It Can’t Be Avoided’, the underlying plan may very well be to try to force Americans and Europeans to accept an expanding war with Russia. The western public has been bombarded with lies about Ukraine’s ability to win; when they lose people will be shocked and incensed by the outcome.

Maybe the elites hope that the populace will be so angry about the loss that they will rally around a larger war effort by NATO? The French government has already asserted that they are willing to send troops to Ukraine in direct confrontation with Russia, while Lithuania and Poland have said they will not rule out the possibility.

Now is the time for peace negotiations, BEFORE Ukraine is overrun. Will this happen? Probably not. But when diplomacy is removed from the table completely the only conclusion we can come to is that a greater war is desired. And when greater war is desired, we also have to conclude that our leadership has something substantial to gain by putting the world at risk.

You might be on the side of Ukraine, you might be on the side of Russia, you might not care about either side, but there’s no denying that this war is being escalated by special interests and we need to ask why?

*  *  *

If you would like to support the work that Alt-Market does while also receiving content on advanced tactics for defeating the globalist agenda, subscribe to our exclusive newsletter The Wild Bunch Dispatch.  Learn more about it HERE.

Authored by Jesse Coghlan via CoinTelegraph.com,

Ilya Sutskever, the co-founder and chief scientist of OpenAI’s for-profit arm who helped briefly oust CEO Sam Altman last year, is leaving the artificial intelligence firm.

“After almost a decade, I have made the decision to leave OpenAI,” Sutskever wrote in a May 14 X post saying he was going to work on a “personally meaningful” project. He added he was confident the firm would build an artificial general intelligence (AGI) that is “safe and beneficial.”

Altman posted on X that Sutskever and OpenAI would “part ways” and the former chief scientist “has something personally meaningful he is going to go work on.”

Source: Ilya Sutskever

pic.twitter.com/qyPMIcvcsY

OpenAI announced Jakub Pachocki as its new chief scientist. Pachocki has been the firm’s director of research since 2017 and led the development of its GPT-4 large language model.

Sutskever was part of an effort that successfully saw OpenAI’s board briefly push out Altman as CEO in November last year before he was later re-hired to the role after backlash from employees.

The Information reported at the time that Sutskever — who was one of six board members for the nonprofit OpenAI, Inc. — told employees Altman’s ouster was the board doing its duty to ensure OpenAI “builds AGI that benefits all of humanity.”

Sutskever later wrote in a November X post:

“I deeply regret my participation in the board’s actions.“

After Altman was rehired, Sutskever stepped down from OpenAI’s board and it’s been unclear what role he had at the firm which sparked the meme template “Where is Ilya?” that speculated what position he had at OpenAI.

Source: Elon Musk

AGI is a term for a hypothetical artificial intelligence that can perform the same as or better than humans on a range of tasks.

Altman said last month he doesn’t care how much it costs to make an AGI, even if he spends $50 billion a year.

Others, such as Ethereum co-founder Vitalik Buterin, have called for a measured approach to developing a possible intelligent AI saying it poses unknown risks.

Authored by Simon White, Bloomberg macro strategist,

A simple model projects April’s month-on-month CPI to come in at 0.4%. Problem is most other estimates are 0.4%, leaving markets particularly exposed to a miss in either direction. The long gamma position in stocks could get unwound pretty quickly if the inflation outturn is big enough.

The chart below shows a simple regression of month-on-month CPI and PPI final demand (from 2009 to 2022, and running out of sample since then). As we can see the model seems to persistently underestimate CPI. For April’s CPI based on today’s latest final demand PPI data, it projects 0.36%, i.e. 0.4% rounded.

It suggests a lot of people are perhaps looking at it similarly. If we use the estimate for PPI final demand (0.3%) or the actual outturn (0.5%), we get 0.3% or 0.4% for April CPI. Just like everyone else.

Even if analysts aren’t using PPI to estimate CPI, there’s a remarkable lack of variance in these forecasts. A print lower than 0.3% or more than 0.4% could move markets quite significantly in either direction (revisions notwithstanding).