FOMC Minutes Preview: Wither Tariffs

By Newsquawk

Summary

The Minutes to the January FOMC meeting will be read to asses the range of views among the FOMC, particularly in regards to future easing, potential impact of Trump policies, and the final push for inflation. 

• Data since the FOMC has been on the hot side, but this will not be incorporated into the Minutes, so there is a possibility some expectations have shifted (Waller in January did not rule out a March cut, but this week he made the case for rates to remain steady). 
• Within the policy statement, the Fed removed language about making progress towards 2% inflation, but Powell stressed this was just a language clean up and was not meant to signal a policy shift. 
• Many Fed speakers have stated that progress to 2% has not been as fast as hoped, while looking ahead there are now upside risks to inflation with tariffs set to be implemented by US President Trump - some suggest this will be a one time increase, and we will look to see whether or not this is the general consensus on the FOMC.
• Commentary from Fed officials largely expresses uncertainty ahead and given the strength of the labor market, with inflation still above target, holding policy at the current level is the right plan of action. 

Markets are now pricing in 37bps of easing through the year-end with the first cut fully priced by September. The Fed's dot plots (released in December, set to be updated in March), saw the median dot plot pencil in two rate cuts in 2025. Meanwhile, the median estimate of the neutral rate ticked up to 3.0%, although forecasts are wide, ranging from 2.4-3.9%.

Prior Meeting: 

At its January policy meeting, the FOMC kept rates unchanged at between 4.25-4.50%, as expected, in a unanimous decision. The statement adjusted its language, removing a reference to inflation making progress towards the 2% target while still noting inflation remains elevated; Chair Powell claims it was language clean-up, used to shorten the sentence, and was not a policy shift. The statement also described the labour market as having stabilised at a low unemployment rate, contrasting December's assessment that conditions had eased. 

Despite this, the Fed maintained a balanced view on risks to employment and inflation and kept its data-dependent stance on future adjustments. On several occasions, Powell emphasized that the Fed is not in a rush to adjust its policy stance, even when asked about the prospects of a March rate cut. The Fed Chair noted that recent inflation readings, particularly in shelter, suggest progress, but stressed that this is not guaranteed. He acknowledged uncertainty in forecasting due to significant policy shifts but reiterated that the Fed is in a good place to monitor the economy. 

Powell confirmed that the Fed is above its long-run neutral rate estimate, and is closely monitoring reserve levels, with no immediate plan to end quantitative tightening. Powell also stated that the Fed is awaiting clarity on potential changes in fiscal and regulatory policies under President Trump.

Recent Commentary: 

In his semi-annual testimonies to Congress, Powell largely reiterated the themes he spoke about in his post-meeting press conference. However, since then, the aggregate impact of the latest US jobs data, CPI and PPI data resulted in a hawkish shift to the markets' implied pricing for Fed rate cuts; at the time of writing, money markets are pricing in just 36bps of rate reductions in 2025, and have the first fully discounted cut pencilled in for September.

It is worth noting the Minutes are an account of the 29th January meeting, and it will not incorporate information released after that (strong jobs data, hot CPI, and PPI data). The strong data and uncertainty ahead of tariffs has largely seen the FOMC state that policy should be kept steady, and they are in no rush to cut rates further whilst they pan out uncertainties and see how the data comes in ahead.

Tyler Durden Wed, 02/19/2025 - 12:54

Trump Admin Set To Axe NYC's New Congestion Toll, DOT Secretary Duffy Confirms

It's the end of an era, albeit an extremely short one. It seems only fitting that an administration focused on cutting spending an efficiency finally has told New York City - and its bottomless money pit the MTA - that enough is enough. 

New York City's deeply unpopular congestion pricing plan is now set to be scrapped, as the Trump administration will revoke its approval Wednesday, calling the toll “backwards and unfair”, according to the New York Post. The Department of Transportation confirmed the report shortly after the Post's scoop.

The Federal Highway Administration will revoke approval of New York’s controversial congestion pricing plan, according to a letter Transportation Secretary Sean Duffy will send to Gov. Hochul on Wednesday.

“New York State’s congestion pricing plan is a slap in the face to working-class Americans and small business owners. But now the toll program leaves drivers without any free highway alternative and instead takes more money from working people to pay for a transit system, not highways. It’s backwards and unfair,” Duffy said.

The Post writes that the U.S. Department of Transportation will revoke its approval of New York’s congestion pricing plan, officially rescinding the Nov. 21 agreement under the Value Pricing Pilot Program (VPPP). The plan, which imposed a $9 toll on drivers entering Manhattan below 60th Street, had made NYC the most expensive city in the U.S. to drive in.

"The pilot runs contrary to the purpose of the VPPP, which is to impose tolls for congestion reduction — not transit revenue generation,” the DOT stated, adding that the program conflicted with federal highway aid rules, which prohibit tolling on federally funded roads without congressional approval.

Duffy emphasized the program’s economic burden: “Every American should be able to access New York City regardless of their economic means. It shouldn’t be reserved for an elite few.”

In a letter to Gov. Kathy Hochul, Duffy acknowledged that ending the tolls could impact transit funding but dismissed any expectation of long-term reliance on the revenue, noting that the Federal Highway Administration had only approved a pilot project.

The DOT said it will coordinate with project sponsors for an “orderly termination” of the tolls, though it remains unclear when collection will officially end.

As we noted last month, traffic had fallen about 7.5% as a result of the tolls. 

The congestion pricing program was initially set to take effect last year with a $15 charge, but New York Gov. Kathy Hochul later decided to put it on hold. Hochul eventually revived the program with a lower $9 charge.

The governor estimated that the new lower toll would save daily commuters around $1,500 per year when taking into account what they were originally on track to pay, and she promised discounts for commuters at the lower end of the income scale. For example, car owners earning less than $50,000 per year get a 50 percent discount on every toll after their 10th toll in a given month.

President Trump had previously expressed intent to end the program when he takes office.

Tyler Durden Wed, 02/19/2025 - 12:45

Trump Views Boeing As "Lost Cause", Empowers Elon With "Drastic Options" To Ensure Faster Air Force 1 Delivery: Report

Is Trump about to cancel Boeing's iconic Air Force 1 contract?

According to a NYTimes report, Trump is furious about Boeing's repeat delays in delivering two new Air Force One jets, and has "empowered Elon Musk to explore drastic options to prod Boeing to move faster, including relaxing security clearance standards for some who work on the presidential planes."

According to the report, Trump has even discussed whether a luxury jet could be acquired and refitted during the wait. Musk, whom Trump views as an efficiency and productivity magician, has been central to the discussions — consulting with the military, the White House and Boeing, the NYT sources said.

The report goes on to note that Trump regards Boeing as "almost a lost cause", and "often laments how far the company has fallen, wondering aloud what happened to the jet maker and why it seems incapable of building things anymore."

The two heavily modified Boeing 747s currently used interchangeably to fly the president are more than 30 years old and require extensive servicing. And while Trump can have any airplane he wants (and does), the president still views Air Force One as a symbol of power and prestige, and he is infuriated that he begins his second term flying around in the same aging planes that once transported President George H.W. Bush.

Trump's comments took on a more ominous tone in an interview broadcast Tuesday night on Fox News’s “Hannity” when speaking beside Musk, the president excoriated the company, saying, “I mean, they are actually in default, Boeing,” before adding: “They’ve been building this thing forever. I don’t know what’s going on.”

Trump, in a pointed demonstration about his willingness to explore other options, took time on Saturday to kick the tires on a luxury jet sitting at Palm Beach International Airport. Photographers spotted the tail number of the late model 747-8, which revealed the plane to have been owned, at least until recently, by the Qatari royal family, according to registration data.

One radical alternative to waiting on the Boeing jets was to retrofit the Qatari jet Mr. Trump toured over the weekend

The Air Force has already contractually committed to paying Boeing $3.5 billion of the $4.3 billion total set aside for the project. But Boeing is at least three years behind schedule and has already booked $2.4 billion in losses on the contract. 

Boeing’s contract to build the new planes was first signed in 2018, and the planes were originally expected to be delivered in 2024. But now, Boeing’s executives have indicated to the government that they might not be able to deliver the new Air Force Ones until the end of Trump’s second term. 

But Musk, who is known for setting aggressive deadlines at his companies, has insisted that at least one of the planes can be delivered within a year’s time.

And while there is absolutely nothing wrong with Trump's demand to get a working plane soon - after all, it is hardly a secret that Boeing has indeed become the butt of all aerospace jokes in the past 5 years under its catastrophic DEI-empowering leadership - the NYT's angle is, what else, that it would be catastrophic to give Musk even more independent to realign government as he sees fit, especially when a company so critical to the deep state, Boeing, is in the mdidle of it. 

Indeed, as the NYT notes, "depending on how extensive the pullback would be for lowering security requirements, the cost of speeding the production schedule for the new planes could be to compromise the president’s safety, or the nation’s security, if not managed with extreme care. Boeing executives have argued that there is a safe way to do this, by lowering the security standards for certain classes of workers who do not touch the airplanes’ most sensitive systems."

A Boeing spokeswoman declined to answer questions, writing in a statement, “We don’t have anything to share.”

Boeing stock dumped to session lows on the report which initially made it seem like Boeing was about to lose the contract, and perhaps others, but has since rebounded as readers realized that this is just another hit piece on Elon.

Tyler Durden Wed, 02/19/2025 - 12:25

'TDS Is Real...Like On Meth & Rabies' - Musk Says "Trump Is A Good Man" In Hannity Interview

President Donald Trump and Elon Musk discussed waste, fraud, abuse, and more in a joint interview with Sean Hannity that aired on Feb. 18.

Here’s the full Trump and Elon Musk interview with Sean Hannity. pic.twitter.com/uxcmLyvSNM

— Ian Miles Cheong (@stillgray) February 19, 2025

The world’s wealthiest man and the president of the United States defended the Department of Government Efficiency (DOGE), now facing political opposition and numerous lawsuits as it slashes government spending - including negative publicity for firing and then seeking to rehire key nuclear weapons workers.

Setting the scene for the entire discussion, Musk described going to a dinner party before the election and how the reaction of other guests to him mentioning Trump's name was "like they got shot with a dart in the jugular that contained, like, methamphetamine and rabies."

"You can't have a normal conversation," Musk added, saying that people become "completely irrational" when Trump is discussed.

Musk also sought to make it clear he stands with Trump and vice versa.

“I think President Trump is a good man,” the tech entrepreneur said.

Trump reciprocated, saying he “couldn’t find anyone smarter” than Musk to assist his administration.

Below, The Epoch Times' Nathan Worcester lays out some takeaways from the joint interview on Fox News.

Musk Would Have Endorsed Trump Even Without Assassination Attempt

Musk, best known for his work with SpaceX, Tesla Motors, and other tech firms, publicly backed Trump after an attempt on his life at a rally in Butler, Pennsylvania, in July 2024. But the tech titan’s support was apparently already in the cards.

During the Feb. 18 joint interview, Musk said that he was “going to do it anyway.” The assassination attempt, which claimed the life of Corey Comperatore, simply accelerated Musk’s timeline.

“I sped it up,” Musk said.

The president said he “didn’t know that” about Musk’s endorsement.

Musk went on to stump for the then-candidate. He also donated hundreds of millions to backing Trump.

Musk said his time with Trump deepened his appreciation of the president’s character—a point of contention for Trump’s critics, including some of the Republicans who contested him during the 2024 primary.

“Not once have I seen him do something that was mean or cruel or wrong,” Musk said.

Elon Musk (L) speaks as President Donald Trump looks on in the Oval Office of the White House on Feb. 11, 2025. Jim Watson/AFP via Getty Images

Trump, Musk Say They Are Not at Odds

The two men also talked about the publicity around their joint efforts, accusing the media of trying to fracture their relationship.

As DOGE was taking shape after Election Day, some news outlets reported that Musk’s ascendance was elevating him to a quasi-presidential role, a line of argument advanced by some Democrats.

Trump said Musk phoned him to say, “‘You know, they’re trying to drive us apart.’”

“It’s just so obvious. They’re so bad at it. I used to think they were good at it. They’re actually bad at it, because if they were good at it, I’d never be president,” he added.

Musk also affirmed his commitment to advancing, and not usurping, the elected president. He pointed out that his T-shirt read, “Tech Support.”

“I’m going to provide the president with technology support,” he said. “It’s a very important thing because the president will make these executive orders which are very sensible and good for the country, but then they don’t get implemented.”

Musk on DOGE-Related Conflicts of Interest: ‘I’ll Recuse Myself’

The interview also touched on potential conflicts of interest between Musk’s businesses and DOGE.

Many of the entrepreneur’s firms have benefited from extensive government support, from subsidies for Tesla’s electric vehicles to Pentagon contracts with SpaceX.

Sen. Richard Blumenthal (D-Conn.), a critic of DOGE and Musk, mentioned those possible conflicts in an interview with The Epoch Times earlier on Feb. 18, saying they “ought to deeply trouble progressives.”

Hannity asked Trump about how his administration would handle potential cuts to such areas. Trump said Musk would be kept away from them.

Musk said he would steer clear of those minefields, too.

“I’ll recuse myself,” he said.

Musk, Trump Talk DOGE Workers

The wide-ranging interview repeatedly landed on the topic of DOGE’s employees, which include many engineers.

The president said that Musk “attracts a young, very smart type of person—I call them high-IQ individuals.”

“These guys are smart, and they love the country,” Trump added.

Musk said DOGE’s software engineers “could be earning millions of dollars a year instead of earning a small fraction of that as federal employees.”

Trump described the DOGErs as “very committed people.”

One DOGE aide in the Treasury Department resigned after reporting revealed his history of controversial online posts. Vice President JD Vance and Trump supported his rehiring, after which Musk announced he would be reinstated.

The then-Republican presidential nominee Donald Trump, left, claps as Tesla and SpaceX CEO Elon Musk prepares to depart after speaking at a campaign event at the Butler Farm Show on Oct. 5, 2024, in Butler, Pa. Alex Brandon/AP Photo

Musk, Trump Discuss Bringing Astronauts Home

The trio also discussed a plan to accelerate the rescue of NASA astronauts Sunita Williams and Butch Wilmore.

Initially slated for an eight-day mission, the pair have been stuck on the International Space Station (ISS) since June due to mechanical issues with the Boeing Starliner spacecraft that would have taken them home.

Trump, in January, said he asked SpaceX CEO Musk to expedite their return.

NASA has since moved up a scheduled April return to March. Williams and Wilmore will come back to Earth after the SpaceX Crew-10 mission reaches the ISS.

In the Feb. 18 broadcast, Trump said the two “got left in space,” blaming his predecessor, former President Joe Biden.

Musk said the astronauts’ return “was postponed kind of to a ridiculous degree.”

“We don’t want to be complacent, but we have brought astronauts back from the space station many times before, and always with success,” he said.

On DOGE, $1 Trillion Floated

The pair also talked about just how much waste, fraud, and abuse they expect DOGE to identify.

The president said DOGE was pinpointing “billions—and it will be hundreds of billions—of dollars worth of fraud.”

He predicted Musk would identify $1 trillion in what Hannity called “waste, fraud, abuse, corruption,” adding that he believes that to be “a very small percentage” of that sort of suspect spending.

Musk did not dispute the trillion-dollar figure.

The technologist said that saving money for the American taxpayer “comes down to two things: competence and caring.”

“It stands to reason that if you don’t have competence and you don’t have caring, you’re going to get a terrible deal,” he said.

Trump said that government contracts are not whittled down by the kind of give-and-take common to private-sector negotiations.

“Everybody expects to be cut,” he said.

*  *  *

Things a little crazy right now? Stay calm and focused with IQ Mood

Tyler Durden Wed, 02/19/2025 - 11:20

Nikola's Wild Ride Ends: Shares Halted Following Bankruptcy Filing

Short seller Nathan Anderson, founder of Hindenburg Research, was one of the first to expose electric vehicle and energy company Nikola Corporation's deceptive 2020 promotional video, which showed its Nikola One truck rolling down a hill to simulate full functionality. Years later, as the 'green tech' bubble continues deflating, Nikola has filed for bankruptcy on Wednesday morning...

Nikola issued a press release stating that it filed for Chapter 11 of the Bankruptcy Code in the US Bankruptcy Court for the District of Delaware. The company also filed a motion seeking permission to pursue an auction and sale process under Section 363 of the US Bankruptcy Code. 

The defunct startup listed assets between $500 million and $1 billion and liabilities between $1 billion and $10 billion in its petition. It noted that $47 million in cash was on hand to fund activities. 

"Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate. In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet and preserve cash to sustain our operations. Unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the Board has determined that Chapter 11 represents the best possible path forward under the circumstances for the company and its stakeholders," said Steve Girsky, President and CEO of Nikola.

The filing comes nearly a month after a Bloomberg report showed the startup was exploring options to address dwindling cash reserves, including selling part or all of its business, bringing in partners, or initiating a new funding round. Earlier this month, The Wall Street Journal reported that Nikola was on the brink of bankruptcy. 

We all remember Trevor Milton—the founder and former CEO of Nikola—who was found guilty in 2022 on two counts of securities fraud and one count of wire fraud. Milton's scheme involved promoting the viability of its hydrogen-powered, zero-emission trucks on social media and podcasts, despite having a functional prototype. 

At one point, Nikola commanded a $30 billion market cap ... five years later, it's now worth zero ... Thank you for playing. 

Trading is halted in the premarket. 

Nikola is the prime example of greenwashing during the green energy bubble during the Biden-Harris regime years. 

Trevor Milton responds to reader mail @elonmusk pic.twitter.com/yOhYeonsoO

— Whole Mars Catalog (@WholeMarsBlog) August 2, 2021

LoL. 

Tyler Durden Wed, 02/19/2025 - 10:40

Mexico Threatens To Sue Google Over 'Gulf Of America' Naming Dispute

Authored by Tom Ozimek via The Epoch Times,

Mexico’s President Claudia Sheinbaum threatened to sue Google over its decision to display the name “Gulf of America” across the entire body of water rather than just the portion of the Gulf that lies within U.S. jurisdiction, arguing that the expansive naming violates Mexican sovereignty.

Sheinbaum’s announcement comes after weeks of escalating tensions between the Mexican government and the U.S. tech giant over its labeling of the Gulf on Google Maps. While people using the app in Mexico see “Gulf of Mexico,” those based in the United States now see “Gulf of America,” following a Jan. 20 decree issued by U.S. President Donald Trump to revise certain names of geographical features so that they “honor American greatness.”

At a press conference on Feb. 17, Sheinbaum said Mexico had formally asked Google to fully restore “Gulf of Mexico” as the primary name for the entire body of water, arguing that Trump’s renaming applied only to the U.S. continental shelf.

“We do not agree with this,“ Sheinbaum said of Google’s naming policy for the Gulf, adding that Mexico ”will wait for Google’s response and if not, we will proceed to court.”

The United States directly controls the waters of the Gulf approximately 12 nautical miles from its shores, according to the National Oceanic and Atmospheric Administration. It also maintains what is known as an exclusive economic zone stretching 200 miles offshore, where it can extract natural resources like oil. Mexico is arguing that the mapping policy violates Mexican sovereignty and that the United States only has jurisdiction over roughly half of the Gulf.

Mexican authorities previously asked Google to change its naming policy for the Gulf and, during the press conference, Sheinbaum shared a written response to the request from Cris Turner, Google’s vice president of government affairs and public policy.

Turner wrote in the Feb. 10 letter that Google’s decision to display the name Gulf of America to U.S.-based users is based on an impartial and consistent application of its maps policies across all regions, which involves using names that are prescribed by authoritative sources.

“As we first announced two weeks ago, and consistent with our product policies, we’ve begun rolling out changes in Google Maps. We would like to confirm that people using Maps in Mexico will continue to see ‘Gulf of Mexico,’“ Turner wrote.

”The United States Geographic Names Information System (GNIS) has officially updated ‘Gulf of Mexico’ to ‘Gulf of America.’ To reflect the update made by the GNIS, beginning today, people in the US will see ‘Gulf of America.’ Everyone else will see both names.”

Turner added that Google representatives are willing to meet in person with the Mexican government to engage in “constructive dialogue” on the matter.

Google did not respond to a request for comment from The Epoch Times by publication time.

The renaming has also drawn controversy within the United States, where news outlet The Associated Press (AP) has opted to continue using “Gulf of Mexico,” while acknowledging Trump’s renaming. 

The AP’s editorial stance led to the White House barring its reporters from several events and limiting their access to the Oval Office and Air Force One.

“The Associated Press continues to ignore the lawful geographic name change of the Gulf of America,” White House Deputy Chief of Staff Taylor Budowich said in a Feb. 14 statement on social media.

“This decision is not just divisive, but it also exposes the Associated Press’ commitment to misinformation,“ Budowich continued. ”While their right to irresponsible and dishonest reporting is protected by the First Amendment, it does not ensure their privilege of unfettered access to limited spaces, like the Oval Office and Air Force One.”

The White House moves prompted criticism from the AP and concerns about press freedom from the White House Correspondents’ Association. AP Senior Vice President and Executive Editor Julie Pace condemned the restrictions.

“It is alarming that the Trump administration would punish AP for its independent journalism,” Pace said in a statement. “Limiting our access to the Oval Office based on the content of AP’s speech not only severely impedes the public’s access to independent news, it plainly violates the First Amendment.”

Eugene Daniels, president of the White House Correspondents’ Association, issued a statement accusing the White House of “seeking to curtail the press freedoms enshrined in our Constitution“ and of looking ”to punish a news outlet for not advancing the government’s preferred language.”

The White House has defended its decision to limit Oval Office and Air Force One access to AP reporters, while noting that AP journalists and photographers will continue to enjoy access to the broader White House complex.

Tyler Durden Wed, 02/19/2025 - 10:20

Back To Par: Musk's X Eyes Fresh Funding Round At $44 Billion

X's financial outlook appears to be steadily improving as recent high-yield fund managers' interest in the company's debt soared. Adding to the momentum, Elon Musk announced earlier this month that the advertiser boycott has unraveled—a major development that could significantly boost the company's revenue in the coming quarters.

Revenue should improve rapidly this year, as the advertising boycott winds down

— Elon Musk (@elonmusk) February 6, 2025

Now, Bloomberg reports that X is preparing to raise money from investors at a $44 billion valuation—the same as when Musk acquired the company in 2022. This would mark X's first investment round since Musk took it private that year. Neither X nor Musk has confirmed the report's legitimacy.

The investment round would mark a significant turnaround for X, which has been battered by collapsing ad revenue after NGOs and corporate media waged war on the 'free speech' platform. X's recovery represents the emergence of new media that will dominate the conversation through President Trump's second term, hence why investor demand is returning. 

Bloomberg noted that late last year, Fidelity Investments marked down its X stake by more than 70% from the 2022 sale price.

However, in a recent interview with Tucker Carlson, Prince Alwaleed bin Talal, a major X investor, stated: "We never devalued it [X]. Some entities did devalue it by 30, 40, even 50%. But now, after the election, with President Trump and the strong alliance between Musk and Trump, we've seen the market revalue X dramatically—at least to its par value of $44 billion."

Carlson asked the Saudi investor: "What do you think X's actual value?"

Alwaleed responded: "I think the value is more than double the $44 billion valuation." 

Meanwhile, xAI is reportedly raising $10 billion in a new funding round, which would value the startup at around $75 billion. 

Musk's xAI Reportedly In Talks For $10B Raise At $75B Valuation As Grok 3 Launch Nears https://t.co/XfCyaqbF2i

— zerohedge (@zerohedge) February 14, 2025

On Monday evening, XAI released the Grok 3 chatbot, which Musk views as the "smartest AI on Earth." 

In fact, the chatbot might be... 

The xAI team revealed that Grok3 outperformed Alphabet's Google Gemini, DeepSeek's V3 model, Anthropic's Claude, and OpenAI's GPT-4o across math, science, and coding benchmarks.

Musk's xAI Unveils "State Of The Art" Grok 3 AI Bot, Surpassing OpenAI & DeepSeek https://t.co/FnsMyfVy0Y

— zerohedge (@zerohedge) February 18, 2025

Readers should listen to Carlson and Alwaleed's conversation. The X video should be started around the 11:30-minute mark to understand why Alwaleed sees X's value more than doubled from par value. 

Prince Alwaleed bin Talal is one of the biggest media investors in the world. Here’s why he thinks X now dominates everything.

(0:00) Prince Alwaleed bin Talal’s Thoughts on Donald Trump
(2:26) Saudi Arabia’s Relationship With Israel and Iran
(6:55) Negotiating With Trump
(7:56)… pic.twitter.com/PwFlDgCper

— Tucker Carlson (@TuckerCarlson) February 5, 2025

When is X IPO??

and 5 days later

*ELON MUSK’S X IS IN TALKS TO RAISE MONEY AT $44B VALUATION https://t.co/x20xxLtVrN

— zerohedge (@zerohedge) February 19, 2025

. . . 

Tyler Durden Wed, 02/19/2025 - 07:20

How Much Does Each US State Import From The EU

As a bloc, the European Union is the largest source of American imports, valued at more than $600 billion in 2024.

However, not all of that trade is spread evenly between America’s 50 states.

This map, via Visual Capitalist's Pallavi Rao, shows the share of U.S. imports from the EU by each state.

Figures are sourced from USA Trade, a database provided by the Census Bureau.

Who Imports the Most from the EU?

Nearly one-fifth of all U.S. imports were sourced from the EU in 2024. But that share varies widely by state (or territory).

State Code Share of Imports from EU Imports from EU Puerto Rico PR 47.45% $14,827,939,382 Indiana IN 46.21% $58,696,886,377 North Carolina NC 45.19% $43,190,299,106 Rhode Island RI 38.76% $4,811,129,055 New Hampshire NH 34.34% $4,210,174,126 Maryland MD 33.38% $16,922,259,371 South Carolina SC 32.49% $22,516,150,106 Kentucky KY 31.45% $34,508,188,293 Pennsylvania PA 29.92% $48,948,155,420 Arkansas AR 29.26% $2,347,996,891 New Jersey NJ 26.71% $60,043,736,742 Wisconsin WI 26.33% $11,291,219,102 Connecticut CT 25.08% $7,733,489,979 Massachusetts MA 24.53% $14,854,690,324 Virginia VA 23.00% $12,617,378,403 Kansas KS 22.73% $3,815,663,236 Florida FL 22.65% $33,055,394,955 Georgia GA 21.87% $38,709,201,060 Alabama AL 21.84% $9,572,045,837 Iowa IA 21.63% $3,234,515,753 Ohio OH 20.46% $20,713,680,097 Delaware DE 19.46% $2,823,169,754 New York NY 19.38% $56,253,075,401 Tennessee TN 19.37% $29,680,640,856 West Virginia WV 18.69% $1,044,513,660 Mississippi MS 18.68% $5,063,183,179 Nebraska NE 17.23% $1,797,362,857 Missouri MO 16.81% $5,553,291,392 Colorado CO 15.50% $3,780,588,821 Illinois IL 14.73% $38,673,531,824 Minnesota MN 13.95% $6,657,656,253 South Dakota SD 13.29% $263,551,579 Arizona AZ 12.90% $6,510,499,935 Oregon OR 12.39% $4,077,324,213 Dist of Columbia DC 12.35% $311,130,823 Maine ME 10.85% $905,295,913 New Mexico NM 10.62% $1,088,307,866 Louisiana LA 10.25% $5,397,517,736 Hawaii HI 10.24% $308,842,118 North Dakota ND 10.23% $465,275,359 Nevada NV 9.97% $2,363,994,855 Oklahoma OK 9.75% $2,446,788,138 Wyoming WY 9.58% $202,765,852 Texas TX 9.52% $48,350,514,495 Michigan MI 8.02% $15,589,543,085 California CA 7.62% $46,827,583,908 Utah UT 7.46% $1,994,437,354 Vermont VT 7.20% $436,562,742 Washington WA 6.65% $5,317,907,948 Alaska AK 6.63% $281,189,813 Idaho ID 4.99% $525,479,461 Montana MT 2.80% $273,250,489

For example, Indiana, North Carolina, and Puerto Rico all sourced more than 40% of their 2024 imports from the EU.

This is an impact of the pharmaceutical manufacturing industry which has a foothold in all three U.S. locations and Ireland.

In fact, Ireland is Indiana and North Carolina’s top import partner, bucking the Canada–Mexico dichotomy.

Reciprocal Tariffs and What They Mean for U.S.–EU Trade

President Trump recently announced reciprocal tariffs, intending to match American duties with what trade partners have for American products.

One of his biggest complaints has been the levies on American cars sold in the EU, which are more than what the U.S. charges on European cars in America.

Motor vehicles are a top three EU export to America, following pharmaceuticals, and crude oil. Once these tariffs go into effect, duties will increase on European cars sold in the U.S., thereby increasing prices.

However, the pharmaceutical sector could be hit the hardest. As CNBC reports, the U.S. imports necessities including: surgical and medical instruments, medical devices (like CRT machines), vaccines, hearing aids, and artificial joints.

Aside from reciprocal tariffs, President Trump has also announced blanket tariffs on foreign steel coming into the country. Check out creator Statista’s Countries Most Affected by Steel Tariffs for a breakdown.

Tyler Durden Wed, 02/19/2025 - 06:55

Trevor Noah Suggests 'Integration' Of Black & White People Was A Mistake

Authored by Paul Joseph Watson via Modernity.news,

During an appearance on a podcast, comedian Trevor Noah suggested that the “integration” of black and white people in America was a mistake.

Noah said he had found himself “wondering” whether or not “integration was the right move,” particularly in the context of schooling, referring to the 1960’s civil rights era and the end of segregation.

The comedian made it clear that he thought the “racism” brought about by segregation was a bad thing and that people shouldn’t have been punished for their skin color in terms of being discriminated against in society.

Show host Trevor Noah and Princeton professor Ruha Benjamin suggest segregation should be reintegrated into American schools, says integration was not "the right solution."

Noah: "I would love to know if you think integration was the right solution."

Benjamin: "No. I… pic.twitter.com/ujhbtmupbF

— Collin Rugg (@CollinRugg) February 18, 2025

However, he then pointed out that Finland was a stable, prosperous and high trust society largely because it is overwhelmingly homogenous.

“I think part of the reason Finland is able to do it is because, have you been to Finland? I’ve been to Finland. You know who’s in Finland? Finnish people. That’s it,” said Noah.

“And because they’re all Finnish, there’s an idea of like, no we’re all headed in the same direction, we all know what our actions mean.”

Noah then explained how it is far easier for people of similar ethnicities and cultures to communicate with each other without there being any confusion.

“Already there’s an implicit trust because we already know what certain actions, words and vibes mean,” he said.

Noah then asked Princeton Professor Ruha Benjamin if she thought “integration was the right solution” to the questions raised by the civil rights movement.

Benjamin responded that she didn’t think integration was the right solution and that “segregation and “integration weren’t the only options” because black people were forcefully integrated into a “supremacist culture.”

If a white person had made the same arguments, they’d be cancelled in a heartbeat.

But setting aside that for a moment, is Noah essentially correct?

*  *  *

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Wed, 02/19/2025 - 06:30

G7 Weighing Tightening Russian Oil Price Cap At War's 3-Year Mark

The Group of Seven is looking to send a big anti-Russia message on Feb. 24, the three-year anniversary of Putin's invasion of Ukraine, with a potential tightening of an oil price cap intended to further hurt revenue for Russia's war machine.

Bloomberg has revealed a G7 draft statement Tuesday calling for member nations to collectively redraw the price limit, which is currently set at $60 a barrel for crude oil. The document spells out pressure for Russia to "incentivize it to negotiate a meaningful peace" in Ukraine; however, it's anything but clear whether this is being called for in cooperation with Trump officials, who are engaged in direct talks with Moscow.

The draft at one point references "troops and resources on the ground, coupled with robust international oversight to monitor agreed-upon lines," Bloomberg writes.

Image: EPA-EFE

But based on the wording, it does seem a last-ditch parallel effort to jump-start a peace arrangement with Moscow, as European nations in particular seek a 'seat at the table' - given both Zelensky and EU officials were completely cut out of Tuesday's meetings with Russian representatives in Saudi Arabia.

According to more of the content:

The draft indicates the allies would “recognize” Ukrainian President Volodymyr Zelenskiy’s “readiness to engage in talks to end the war,” while warning that Russian President Vladimir Putin’s terms for peace “have so far amounted to Ukraine’s complete capitulation.” The draft shows the allies are planning to meet with Zelenskiy on Feb. 24.

Allies will call, according to the draft, for a “common sense peace that is fair, a peace that lasts,” which would entail “a durable security guarantee.”

The initial oil price cap by the Western allies, first implemented in December 2022, proved too easy for Russia to work around, as India and China have remained the biggest buyers of Russian crude, and have proven not so compliant.

The outgoing Biden administration in December then sought to ratchet sanctions on Russian oil, including sanctions on Surgutneftgas and Gazprom Neft, two Russian oil firms which together account for 25% of exports. Middlemen who supply Russian oil have also been targeted.

This new planned G7 initiative would aim to severely disrupt Russian oil exports to India and China, and if successful could give Trump's team more leverage in negotiations with Moscow. But Bloomberg also notes:

The allies will maintain their line that any negotiation to end the war “must involve Ukraine’s full participation,” and leave it open to pursuing Euro-Atlantic integration.

It’s hard to be sure what tightening or adapting the cap would look like in practice. While a lower price could be one option, another could be to try to bolster enforcement of the current measure.

The incoming Treasury Secretary, Scott Bessent, says he believes the Biden Administration's sanctions on Russia were not aggressive enough, and he would support imposing harsher sanctions on Russian oil companies pic.twitter.com/8zw8QzlRBm

— Michael Tracey (@mtracey) January 16, 2025

During a late Tuesday afternoon press Q&A from Mar-a-Lago, Trump blasted critics of his peace plan, saying "I hear they're upset about not having a seat. Well, they've had a seat for three years." This was in response to Ukrainians feeling 'betrayed' by being left out of current talks with Moscow.

Meanwhile, there are reports saying Trump and Putin could finally meet face-to-face by month's end, as the sides potentially progress toward a firm deal.

Tyler Durden Wed, 02/19/2025 - 05:45

Denmark Set To Announce "Massive" Rearmament Plans

By TheLocal.dk

Danish Prime Minister Mette Frederiksen said her government would announce plans on Wednesday for a "massive" rearming of Denmark's military due to the growing threat posed by Russia.

"We must upgrade massively to protect Denmark. And we must rearm massively to avoid war," Frederiksen told parliament on Tuesday.

She did not disclose any details or sums, but according to Danish public broadcaster DR, the government is expected to announce the creation of a 50-billion-kroner ($7 billion) fund for additional defence spending in 2025-2026.

The government had considered doubling the size of the fund, but determined that there was currently not enough defence equipment on offer to be able to purchase for a larger amount, according to the broadcaster.

Among the items on the government's wishlist are air defence systems, which it does not currently have, DR said.

Frederiksen told parliament the rearming would need to happen "quickly", amidst a "difficult situation for our country, kingdom and continent."

Denmark is currently experiencing "the most dangerous situation in our lifetime."
"This is worse than during the Cold War," she said.

After emergency talks in Paris over the US change in policy on the Ukraine war, Frederiksen warned that Russia is "threatening all of Europe now".

The war in Ukraine has been about Russia's "imperial dreams, about building a stronger and a bigger Russia, and I don't think they're going to stop in Ukraine", she told reporters.

She warned the US against attempts to agree on a "fast" ceasefire that would give Russia the chance "to mobilise again, attack Ukraine or another country in Europe".

Should the Danish fund's size be confirmed at 50 billion kroner, that would bring Denmark's defence spending to three percent of its gross domestic product (GDP), according to Danish daily Berlingske.

US President Donald Trump has demanded that NATO allies more than double their defence spending targets to five percent of GDP.

The United States currently spends around 3.4 percent of GDP on defence.

Denmark has been one of Ukraine's strongest backers.

Since the outbreak of the war in February 2022, Danish support to Ukraine has amounted to some $7.52 billion in military support and around $741 million in civilian contributions, according to the Danish foreign ministry.

Tyler Durden Wed, 02/19/2025 - 05:00

Steep Backwardation in European Diesel Amid Surging Supply Pressures

Europe’s diesel markets are flashing signs of tightness, with near-term diesel contracts on Tuesday hitting the steepest backwardation--a situation where futures contracts for prompt delivery are more expensive than those further down the curve--since March.

Backwardation is often interpreted as a sign of limited supply, with traders now willing to pay a premium for fuel that’s available sooner.

In contrast, Europe’s natural gas prices have pulled back sharply, with Title Transfer Facility (TFF) natural gas futures falling to €47.94 per megawatt-hour on Tuesday, down almost 20% from a two-year high of €59 hit on February 10th as shortage concerns eased. 

Last week, Germany, France and Italy came up with a proposal to ease EU gas storage requirements in a bid to normalize the market. Under the current European Commission regulation mandates, all EU nations are required to refill their storage caverns to 90% capacity by November, with interim targets set for February, May, July, and September. EU gas storage is currently under 45% full, making it difficult to meet the requirement of 90% by November 1. That’s well below last year's 67% mark at a corresponding point and the 10-year average of 51% for the same period. 

The continent’s seasonal draw has been bigger than in the previous two winters due to colder weather, lower wind power generation due to low wind speeds and the termination of Russian gas imports via Ukraine. The situation is even more dire in Germany, Europe’s largest economy, with its underground sites currently only 48% full, a significant decrease from the 72% recorded at the same time last year, according to data from Gas Infrastructure Europe (GIE). However, warmer temperatures in northwest Europe coupled with a surge in LNG imports are now helping slow withdrawals.

Further, the markets are beginning to price in a potential return of more Russian gas to Europe. According to Tyler Richey, co-editor at Sevens Report Research, a ceasefire to the Russia-Ukraine war could be bearish for oil and gas prices if Trump pushes for removal of sanctions on the Russian energy industry. 

The latest sanctions by the Biden administration roughly tripled the number of directly sanctioned Russian crude oil tankers, enough to affect around 900,000 barrels per day (bpd). Whereas it’s highly likely that Russia will try to circumvent the sanctions by employing even more shadow fleet tankers and ship-to-ship transfers, StanChart predicted 500,000 bpd of displacements over the next six months.

Tyler Durden Wed, 02/19/2025 - 04:15

Satellite Imagery Reveals 7 New Israeli Army Outposts In Syria

Via The Cradle

The Israeli army has set up at least seven new military outposts in southern Syria, satellite imagery published by Haaretz newspaper on 18 February has revealed. 

The new military sites were established in Mount Hermon, Hader, Jubata al-Khashab, Al-Hamidiyah, Quneitra, Al-Qahtaniyah, and Tel Kudna. They aim to serve as "operational hubs for troops" in Syria as part of a reorganization of the Israeli presence in the south of the country, Haaretz said. 

Via Planet Labs

The sites include living quarters, command centers, clinics, bathrooms, and showers. Israeli occupation forces swept across southern Syria after the fall of former president Bashar al-Assad’s government in December last year, moving past the demilitarized zone and expanding their decades-long illegal occupation in the country. 

Facing "harsh" and "uninhabitable" conditions, Tel Aviv’s forces began setting up infrastructure to allow for a prolonged stay, the newspaper adds. 

Earlier this month, Israeli Army Radio reported that occupation forces have discreetly established a security zone within Syrian territory, with nine permanent sites already under advanced construction. 

Three army brigades currently operate on Syrian territory, an increase from the one-and-a-half battalions stationed in the occupied Golan Heights before 7 October 2023, the army radio added.

Stillframe from footage of new IDF Syria outpost under construction, IDF/Haaretz.

Invading forces have recently seized precious water sources such as the Al-Wahda Dam on the Yarmouk River Basin and others. 

Hundreds of Israeli airstrikes have also destroyed former Syrian army air and naval bases, as well as aircraft, air defense systems, and missile stores.

"The IDF will remain at the summit of the Hermon and the security zone indefinitely to ensure the security of the communities of the Golan Heights and the north, and all the residents of Israel," Israeli Defense Minister Israel Katz said late last month during a visit to the occupied Syrian territory. 

Satellite imagery reveals Israel has built at least seven new bases in Syria, all along the buffer zone, from the Syrian Mt Hermon, down south towards tri-border area with Jordan

w @yanivkub / Planet Labs PBChttps://t.co/Z4iaRxc5Ul pic.twitter.com/cKqKxPUIgF

— avi scharf (@avischarf) February 18, 2025

"We will not allow hostile forces to establish themselves in the security zone in southern Syria ... we will act against any threat," he added.

Tyler Durden Wed, 02/19/2025 - 03:30

Poland's Security Chief Shares Some Interesting Insight About The Ukrainian Conflict's Endgame

Authored by Andrew Korybko via substack,

He said that nobody in Europe knows what Trump’s plan actually is, they’re unable to assemble the approximately 100,000 troops that a prolonged peacekeeping mission in Ukraine would require, and Poland still remains reluctant to participate in any such mission even if it’s heavily pressured to do so.

Chief of Poland’s National Security Bureau Dariusz Lukowski gave an interview to Radio ZET on Monday about his country’s position towards the Ukrainian Conflict. According to him, it shouldn’t send peacekeepers to Ukraine, but this still can’t be ruled out in the future despite Prime Minister Donald Tusk once again explicitly saying that it won’t do so. That’s because there’d be a lot of pressure on Poland to get involved if others dispatch their peacekeepers there first, but he’s still unsure whether it’ll happen.

He assessed that Europe as a whole doesn’t have the 100,000 troops ready that would be required for patrolling the over 1,000-kilometer-long frontline for the decade that he expects such a mission to last at minimum. Even if Poland doesn’t participate on the ground, however, he said that it could still “secure the airspace over Ukraine. A form of air policing. Aircraft based in Poland could patrol the airspace of Ukraine.” Such scenarios would naturally depend on the outcome of the Russian-US talks though.

About that, Lukowski said that new US Secretary of Defense Pete Hegseth didn’t brief his hosts about the details of Trump’s envisaged peace plan during last week’s visit nor request them to participate in any peacekeeping mission. He added that “We tried to ask the American side such a question (about their negotiating strategy), because we are interested in what types of instruments they would like to use to convince Putin to adopt such and such a solution and not others, but no specifics were given.”

Another point that this top security official made was that outgoing President Andrzej Duda “tried to convey in a very clear way how Poland perceives Russian issues, that Russia cannot be trusted”, but he didn’t say whether he thought that Hegseth will listen to what the Polish leader had to say. 

Lukowski continued by claiming that Russia could attack Poland at any moment but said that he doesn’t believe that the US would betray Poland even if that happens by abandoning it to face Russia all on its own.

Even so, he warned that Poland still needs three years “to have the capabilities to effectively resist or deter a potential adversary from attacking our country”, likely in a nod to the “East Shield” part of the “European Defense Line” that his country is building along its borders with Kaliningrad and Belarus. 

In any case, Lukowski said that his country’s plan is to survive for 2-3 weeks until support can arrive from its allies, which interestingly suggests a much longer delay in NATO aid than most observers expect.

Perhaps the top takeaway from his interview though was his admission that Poland failed in its plans to produce its own ammo. 

In his words, “It's bad. In many areas we don't have independence. This is a classic situation that we observe in Ukraine and a lesson that needs to be learned. If we do not have our own potential, guaranteed supplies, others will decide on the pace and manner of conducting war.” 

He then said that he doesn’t understand why this problem persists and warned about its consequences.

Lukowski’s interview confirmed Poland’s hesitation to directly involve itself in the Ukrainian Conflict exactly as Deputy Prime Minister Krzysztof Gawkowski signaled last November when warning that Zelensky wants to provoke a war between them and Russia. 

It’s also out of the loop when it comes to the ongoing Russian-US peace talks despite Hegseth describing Poland as America’s “model ally” during last week’s visit. 

Poland therefore isn’t expected to make any dramatic or rash moves for the time being.

Tyler Durden Wed, 02/19/2025 - 02:00

These Are The Largest Sovereign Wealth Funds In The World

In 1953, the Kuwait Investment Authority became the world’s first sovereign wealth fund, designed to manage the country’s excess oil wealth.

Since then, numerous funds have launched, with the 100 largest globally holding $13.7 trillion in assets. Sovereign wealth funds are large pools of money run by governments that are typically resource-rich, such as Saudi Arabia and Kuwait. They may also have large foreign-exchange reserves, such as China and Singapore.

This graphic, via Visual Capitalist's Dorothy Neufeld, shows the world’s largest sovereign wealth funds, based on data from the Sovereign Wealth Fund Institute.

The Top 10 Sovereign Wealth Funds, by Assets

Here are the biggest sovereign wealth funds, managing over $9.6 trillion in combined assets:

 

Norway runs the largest globally, thanks to its vast oil and gas production in the North Sea, which generates 10% of the country’s GDP.

In 2024, the fund earned a record $222 billion in profit fueled by strong gains across the tech sector. Last year, Apple, Microsoft, and Nvidia stood as the fund’s top holdings.

Following next in line are China’s two biggest funds, holding $2.4 trillion in assets. In particular, these funds play a key role in financing the Belt and Road Initiative and other strategic industries. Through these funds, billions have been invested in railroads, green energy, and mining projects across Africa. Notably, Chinese investment across the region is 2.5 times greater than Western nations put together.

Ranking in fifth is Saudi Arabia’s Public Investment Fund, with $925 billion in assets. Over the past decade, it has made a $3.5 billion stake in Uber, along with investments in Nintendo and Heathrow Airport. In 2025, the fund plans to invest $1 billion in sports streaming service DAZN.

America’s First Sovereign Wealth Fund

In early February, President Trump signed an executive order to establish an American sovereign wealth fund, although the source of these funds remains unclear.

Typically, these funds are financed by budget surpluses, yet the U.S. faces a $1.8 trillion deficit. Not only that, it is the fifth consecutive year the deficit has run over $1 trillion. While Trump suggested the fund can be used to buy TikTok to allow it to continue operating in the U.S., the fund will not be fully launched for another year.

To learn more about this topic from an investment holdings perspective, check out this graphic on the green investments of sovereign wealth funds.

Tyler Durden Wed, 02/19/2025 - 01:45

China FX Outflows Soar As Beijing Prepares For Next Currency Devaluation, Priming Next Bitcoin Doubling

Back in October 2023, when we pointed out that China's FX outflows had just hit a whopping $75BN - the single biggest monthly outflow since the 2015 currency devaluation - we concluded that the "unfavorable interest rate spread between China and the US will likely imply persistent depreciation and outflow pressures in coming months", or in other words, "September's biggest FX outflow in years is just the beginning, and very soon - in addition to geopolitics and central banks - the world will also be freaking out about the capital flight out of China... not to mention where all those billions in Chinese savings are going and which digital currency the Chinese are using to launder said outflows."

We wrote that on October 20, 2023, when Bitcoin was trading just under $30,000, a level it had been for much of 2023. And, just as we correctly predicted at the time...

Clockwork: every time China FX outflows surge, bitcoin erupts.

From last Friday: China Capital Flight Panic Eruptshttps://t.co/j0eWLnbFMq

— zerohedge (@zerohedge) October 24, 2023

... following this surge in Chinese FX outflows, bitcoin - traditionally China's preferred means to circumvent Beijing's great capital firewall since gold is, how should one put it, a bit more obvious when crossing borders - promptly soared more than 100% in the next 4 months.

That was just the start, because only a few months later, in July 2024, we wrote the follow up as China's capital flight returned with a vengeance, namely "China FX Outflows Soar As Beijing Dumps Record US Securities, Priming Next Bitcoin Surge" which coincided with a Reuters report according to which, it was China's massive wall of inert capital that has been one of the key drivers of bitcoin moves, and never more so than during periods of FX and capital outflows which usually precede some form of capital controls... which regular (and hopefully very rich) readers will of course, recall has been our core, and unwavering, bitcoin thesis since 2015!

In any event, the sharp resumption of Chinese capital outflows, which we also highlighted in July, is why we also predicted at the time that "almost a year after our first correct prediction that China's spike in FX outflows would send bitcoin surging, it's time to do it again."

You'll never guess what happened next! And in case you really can't, here is the answer: bitcoin exploded again, nearly doubling again over the next 5 months!

We bring all this up because more than a year after our first correct prediction that China's spike in FX outflows would send bitcoin surging, and almost six months after our second correct prediction that China's spike in FX outflows would send bitcoin surging (sic), it's time to do it again.

One wouldn't know it, however, if one merely looked at the official Chinese FX reserve data published by the PBOC, here nothing sticks out. In fact, at $3.2 trillion, reported Chinese reserves are now near the highest level in past nine years, and monthly flows are very much stable as shown in the chart below, with the latest month indicating a modest uptick in Fx reserves.

The problem, of course, is that as we have explained previously China's officially reported reserves - and any official economic "data" for that matter - are woefully and purposefully inaccurate.

Instead, if one uses our preferred gauge of FX flows, one which looks at i) onshore outright spot transactions; ii) freshly entered and canceled forward transactions, and iii) the SAFE dataset on “cross-border RMB flows, we find that China's net outflows were a massive $82 billion in January, which is a staggering burst of capital flight, one larger than the spike in FX outflows we first highlighted in October 2023, and the second biggest going back all the way to the great Chinese devaluation of 2015!

The data shows roughly equal contributions from both the current account channel showed, which sizeable FX outflows in January, as well as what has been dubbed "unusual cross-border RMB flow."

Here are the details: in January, we saw $42bn in net outflows via onshore outright spot transactions, and slight outflows via freshly entered and canceled forward transactions. Another SAFE dataset on "cross-border RMB flows" showed outflows of $40bn in the month, suggesting net receipts of RMB from onshore to offshore. Combined, our preferred FX flow measure therefore suggests $82 billion in net FX outflows in January, in comparison with US$8bn net FX outflows in December.

The current account channel showed sizable net outflows (US$21bn in January vs. US$2bn inflows in December). There was a net inflow of US$14bn related to goods trade in January vs. an inflow of US$35bn in December. While we do not yet have the January goods trade data (which will be released along with February trade data in March), historical patterns suggest a larger January trade surplus when the Lunar New Year date is earlier than usual like this year. The smaller inflows therefore imply that goods trade surplus FX conversion ratio likely declined in January from 33% in December. The FX outflows related to services trade deficit edged up to $33bn (vs. an outflow of $32bn in December). The income and transfers account showed outflows of US$2bn in January, slightly higher than the US$1bn outflows in December.

Turning to the far more important portfolio investment channel (which is where crypto flows tend to be located) we find net FX outflows in November (US$0.2bn in January vs. US$1.3bn outflows in December). Bond Connect flows showed US$3bn outflows vs. US$2bn inflows in December. The cross-border RMB outflows might be partly due to the US$16bn Southbound flows from onshore to offshore, though this is not captured by the portfolio investment channel of FX settlement.

Meanwhile, as noted above, the official FX reserves (released earlier in the month) edged up to US$3,209bn in January from US$3,202bn in December. One possible explanation for this odd divergence is that FX valuation effects raised FX reserves by $5bn in January, so after adjusting for FX valuation effects, FX reserves increased US$1bn. In addition, Goldman notes that commercial banks' net external assets rose by US$15bn in January (vs. a US$72bn increase in December

Luckily, there is a simple "sanity check" way to confirm that the capital inflows story is propaganda, and China is once again suffering another scorching period of capital flight: just look at FX. Indeed, after after the yuan surged in the fall, coinciding with a period of relative dollar weakness, since October we have seen a surge in the USDCNH spot, as one would expect when there is capital flight, most likely driven by rising fears of Trump tariffs and the implicit devaluation the yuan would suffer in order to offset tariffs which according to Trump would start around 10% and likely rise much higher.

But wait there's more.

Where the capital flight story gets really interesting, is when we look at what Chinese public and private entities were doing with US assets according to official Treasury data. What we find is that according to Treasury International Capital data, in December Chinese investors sold $14BN in US securities (bonds, MBS, corporate bonds, and stocks), and more notably, following a record sale in May, China has been a constant seller of US securities in the past 6 months!

So if one had to guess what was going on, as the yuan slumped in October, November and December (before a modest bounce on unfounded hopes that Trump's tariffs will be far less punitive than expected) as the capital flight resumed, the hit to the yuan would have been even bigger had China not liquidated a record amount of US securities starting in May, while the PBOC was buying much more gold, and while China's middle and upper classes were quietly buying up bitcoin through Macau and other illicit venues.

And while Chinese policymakers are still keen on maintaining FX stability (or at least create that impression) as the countercyclical factors in the daily CNY fixing remained deeply negative and front-end CNH liquidity tightened notably in recent weeks, the reality is that with China desperate to boost its exports at a time when its great mercantilist competitor, Japan, has hammered the yen to the lowest level in 3 decades, it is only a matter of time before the currency devaluation advocates win, as they did in 2015. No surprise that the biggest China-related story in recent months came from Reuters, and reported that Beijing in already planning how to devalue the yuan in response to Trump tariffs. And if you really want to see what capital flight from China really looks like, just wait until we get another 2015-style "one-time" devaluation.

As an aside, we hope we don't have to remind readers that the first big trigger for bitcoin's unprecedented eruption higher starting in 2015 was - you guessed it - China's August 2015 FX devaluation, as we correctly noted at the time when we predicted that bitcoin would explode from $250 to the thousands; in retrospect we were very conservative.

So don't be surprised if in the next 6 months Bitcoin doubles again - for the third time in the past year - and the move has little to do with ETF inflows, the halving, a pro-crypto Trump administration, or frankly anything else taking place in the US, and instead is entirely driven by China's massive wall of money which at last check was almost 3x bigger than the US.

Tyler Durden Tue, 02/18/2025 - 23:54

Beijing Underground Command Center Signals Preparation For Conflict

Authored by John Mills via The Epoch Times,

The media recently reported that China’s People’s Liberation Army is building the world’s biggest military base underground in possible preparation for conflict with the United States.

Large enough to fit 10 Pentagons, the new super large facility should not be a surprise - it is a logical and iterative next step of a long program of underground facilities by China. The command center is on the western outskirts of the capital city of Beijing.

In about 2011, stories began to appear around China’s “Underground Great Wall.”

“In March 2008, China’s state-run CCTV network broke the news about a 5,000-kilometre-long network of hardened tunnels built to house the Chinese Second Artillery Corps’s (sic) increasingly modern force of nuclear-tipped ballistic missiles,” The Diplomat reported on Aug. 20, 2011.

Hui Zhang of Harvard’s Belfer Center downplayed China’s Underground Great Wall and explained it was only “defensive in nature.”

Prior to the Underground Great Wall, the People’s Liberation Army Navy built a large underground submarine base on Hainan Island that is still being expanded and improved.

The new command center in Beijing is described by online media BulgarianMilitary.com as a “command-and-control center for the PLA in wartime.“ The report notes that ”the site’s sheer scale, combined with its underground elements, points to a design built for survival,“ and  ”experts believe that the complex will feature a series of underground nodes, perhaps even a hidden subway system, all interconnected by subterranean passageways.”

When completed, this facility—now dubbed the “Beijing Military City” by Western military analysts—will be the largest underground command center in the world, possibly in history.

Western Equivalents Are Limited in Comparison

Zhang of the Belfer Center described the Beijing Military City as defensive in nature. That is one viewpoint but should also be measured and compared in terms of equivalency in the West. The challenge is that there is little equivalency in the West in modern times.

There are underground facilities dating back to the Cold War days in the West, but most have been decommissioned. Canada’s “Diefenbunker” in Ottawa is a museum and tourist attraction. In the UK, there was the Central Government War Headquarters (CGWHQ), close to Bristol, about 100 miles due west of London, which could accept about 4,000 to 5,000 essential personnel for the Continuity of Government (COG).

In the United States, there was The Greenbrier Hotel in West Virginia, where, at one time, Congress would relocate to in case of conflict; it is now a museum with a gift shop. The Pentagon contains the existing National Military Command Center, which is in the above-ground basement, but also has a backup at Raven Rock and air and ground mobile alternate command posts. The White House has an alternate facility for COG, if necessary.

Strategic Command at Offutt Air Force Base in Omaha, Nebraska, has an underground facility that is being rebuilt due to a flood in 2019 that damaged part of the facility. The vaunted and historic Cheyenne Mountain Complex in Colorado Springs, Colorado, was essentially closed around 2005 but was reopened beginning in 2015 as a backup for the above-ground facilities below at Peterson Air Force Base.

Most of the Cold War facilities in the West closed because there was a perception there was no compelling reason to keep them open, along with the enormous maintenance costs to keep them operational. The reality is that all of these Western facilities, whether they are active or museum pieces, would fill up only a small portion of the operational side of the underground Beijing Military City currently under construction.

China’s New Underground Headquarters

The message being sent from the construction is a theme of preparation for conflict. Bulgarian military expert Boyko Nikolov said, “This isn’t just about protecting assets; it’s about creating a self-sustaining, impenetrable hub that could coordinate China’s war efforts from the shadows.”

Dennis Wilder, former head of the China analysis section at CIA and senior adviser for Asia at the White House, said, “If the report is correct, it is a sign of China’s intention to build not only world-class conventional power but also advanced nuclear war fighting capabilities.”

The iterative buildup from the Hainan underground submarine base to the underground “Great Wall” for China’s ground-based nuclear force to the now-revealed Beijing Military City is likely the largest aggregation of underground military facilities in history. The indicators are that it is part of a pathway to conflict. Noted China expert Gordon Chang has framed it as “China is preparing for war, America is not.”  The assessment cannot be clearer or starker.

China is building and expanding underground facilities as protected wartime command and control centers to ensure COG. The West has nominal equivalent facilities; most have been converted into museums that would need significant modernization and time if they were to be brought back into service.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Tue, 02/18/2025 - 23:25

ESG And DEI Are Down But Not Out, Analysts Say

Authored by Kevin Stocklin via The Epoch Times (emphasis ours),

Despite recent eulogies for the environmental, social and governance (ESG) movement, as well as diversity, equity, and inclusion (DEI) policies, many insiders say the funeral is premature.

Illustration by The Epoch Times, Shutterstock

“Their demise is inevitable, and it has been accelerated,” David Bahnsen, chief investment officer of the Bahnsen Group and formerly an asset manager at Morgan Stanley, told The Epoch Times.

However, “they are not over,” he said.

The ESG movement began two decades ago with a U.N. initiative, sketched out in a 2004 position paper called Who Cares Wins, to get private companies in line with the U.N.’s Sustainable Development Goals.

Those goals included, among other things, climate action and gender and racial equity, and they aligned with corporate trends such as “conscious capitalism” and “stakeholder capitalism,” which redirected companies from merely serving owners to serving employees, the community, and the environment.

Institutional asset managers gave the ESG movement critical leverage over companies because they collectively own about 80 percent of the shares in S&P 500 companies. Immediately upon its introduction, ESG was endorsed by 23 financial institutions collectively representing more than $6 trillion in assets at the time.

Most major banks, asset managers, and insurance companies quickly joined U.N.-sponsored climate clubs, including the Net Zero Banking Alliance, the Net Zero Asset Managers initiative, and the Net Zero Insurance Alliance. This was followed by a proliferation of ESG rating agencies, consultants, accountants, and others dedicated to measuring companies’ compliance with ESG criteria.

Twenty years later, the winds appear to have shifted. In 2024, half of the Net Zero Insurance Alliance members quit, while the Net Zero Asset Managers initiative suspended its activities in January after several of its largest members, including BlackRock, left the group.

A 2024 Securities and Exchange Commission (SEC) order that required listed companies to produce audited reports of their CO2 emissions and their plans to reduce them, faced numerous court challenges and was recently shelved. And on the social justice front, a parade of companies recently announced that they are downsizing their diversity programs.

“ESG is on death watch,” Daniel Cameron, CEO of the 1792 Exchange, an analytics nonprofit, told The Epoch Times. “You saw a lot of iconic brands last year walk away from DEI in particular.”

Companies stepping back from diversity programs include Amazon, Google, Target, Meta, Walmart, Boeing, Molson Coors, Lowe’s, Ford, Toyota, Harley-Davidson, Jack Daniels, Caterpillar, John Deere, McDonald’s, Nissan, Stanley Black & Decker, and Tractor Supply.

People pass a sign for JPMorgan Chase & Co. at its headquarters in New York City on Oct. 2, 2012. Spencer Platt/Getty Images Rethinking or Rebranding

Some experts say this trend may be little more than rebranding.

“Boeing, who just got rid of its [DEI] department, noted in the press release that none of them were laid off; they were distributed across the company in other roles,” Will Hild, executive director of Consumers’ Research and a longstanding critic of ESG, told The Epoch Times.

And many companies, including Apple, Cisco, Costco, Microsoft, Delta Airlines, and JPMorgan Chase have defended their DEI programs and insist they will keep them in some form.

Tim Schwarzenberger, portfolio manager at Inspire Investing, says the notion that “DEI is dead or it’s on life support” is wrong.

“I was talking to a major energy company, talking to their chief diversity officer—they have their livelihood on the line,” Schwarzenberger told The Epoch Times.

Defenders say that the ideas behind ESG have been wrongly maligned.

BlackRock CEO Larry Fink, formerly an outspoken advocate for ESG, stated in 2023 that he no longer uses the term because it has been “politicized and weaponized.”

“DEI is not a synonym for the ’S’ in ESG,” Julie Anderson, a professor of management at American University’s Kogod School of Business, told The Epoch Times. “When I refer to the ‘S,’ it’s usually labor, health, and human rights.

“Politics has intentionally conflated and stolen the ‘S’ category and turned it into a gender and racial issue, which is a fraction of what it really is.”

Whether it goes by ESG or another name, its underlying principles appear to be alive and well.

According to a November 2024 study on ESG-related shareholder proposals by Harvard Law School, over the past decade, “the number of proposals on environmental and social topics exploded, surpassing the governance and compensation topics that had dominated the discourse in mid-2010s.”

The study found that environmental and social proposals accounted for 62 percent of the total in 2024, up from 44 percent in 2014. More recently, environmental and social proposals increased by 57 percent between 2020 and 2022 and hit a record of 610 proposals for the year ending in June 2024.

Read the rest here...

Tyler Durden Tue, 02/18/2025 - 21:45

Woman Robs Princeton TD Bank Of More Than $60,000 Using Painted Water Gun

After 4 years of Soros-funded DAs and a soft-on-crime administration, it's just getting too bold, brazen and downright easy for criminals.

Now, a New Jersey woman allegedly robbed a TD Bank in Princeton with a painted water gun, escaping with $60,500, according to the New York Post.

Ciara Brascom, 39, allegedly robbed a TD Bank in Princeton using a painted squirt gun, prosecutors say.

Wearing a COVID mask, red glasses, and a blue hat, she pulled the toy gun from her pocket and handed the teller a note demanding money, threatening to use the weapon if the alarm sounded.

A teller led Brascom to the vault, where she grabbed the cash and fled, prosecutors allege. She was identified and charged in September after meeting with federal agents in Princeton. Brascom later admitted financial struggles drove her to the crime, authorities said.

The complaint says: “In particular, she admitted that she went to a store to purchase an imitation, toy gun that looked like an authentic gun to use during the robbery.”

“She stated that the store lacked such a toy gun, so she instead purchased a pack of water pistols and can of black spray paint to make it look more realistic,” it continues. 

The New York Post report said that she carried the cash out in her hands.

Tyler Durden Tue, 02/18/2025 - 21:20

How A US Iron Dome Could Reshape Global Nuclear Relations

Authored by Ryan Morgan via The Epoch Times (emphasis ours),

The U.S. Missile Defense Agency is already searching for cutting-edge missile defense technologies after President Donald Trump signed a new executive order, calling for an “Iron Dome for America.”

An illustration of a potential U.S. defense system that President Donald Trump is directing agencies to investigate. Illustration by The Epoch Times, Shutterstock, Getty Images

The executive order gave the Department of Defense 60 days to evaluate the U.S. missile defense network and overhaul it with hypersonic weapon sensors, space-based missile interceptors, and other so-called “non-kinetic” missile defense capabilities.

Trump has also tasked military leaders with conceiving new ways to stop incoming threats earlier than ever before, including before they launch.

Four days after Trump signed the order, the Missile Defense Agency published a request for information from arms industry insiders on promising advancements to meet Trump’s call for a better missile defense shield.

The quick turnaround suggests the Trump administration is urgently pursuing advanced new strategic defenses at a moment of growing U.S. competition with Russia and China.

Both nations have made advances in offensive strategic weapons technology in recent years, and the U.S. military has struggled to keep pace.

While Trump’s order calls for several new missile defense capabilities, a major focus is on evaluating what systems already exist and whether they’re deployed in the right manner to protect the United States and forward-deployed U.S. troops and allies.

Daniel Flesch, a senior policy analyst for the Allison Center for National Security at the Heritage Foundation, described Trump’s order as a holistic approach that expands on capabilities the U.S. military already has.

President Donald Trump signs executive orders at the Capital One Arena in Washington on Jan. 20, 2025. Madalina Vasiliu/The Epoch Times

“Where are the gaps, and where do we need to develop or invest?” Flesch told The Epoch Times.

The launch trajectory of a strategic weapon like a nuclear-armed intercontinental ballistic missile (ICBM) is generally divided into three phases.

The “boost phase” is the initial stage as a weapon burns its propellant at launch. After a ballistic missile expends most of its propellant in the liftoff, it begins its main course of flight toward its target, known as the “midcourse.”

Finally, after reaching the apex of its trajectory, a ballistic missile will fall toward its target in what’s known as the “terminal phase” of its trajectory.

The U.S. Navy currently has both land and ship-based variants of the SM-3 missile that can intercept enemy ballistic missiles in space, at the height of their mid-course flight. The U.S. Army also has ground-based interceptors for mid-course interceptions.

For ballistic missile interceptions in the terminal phase of flight, the Navy has the ship-based SM-6 missile, while the Army has the Terminal High Altitude Area Defense system and newer variants of the Patriot air-defense missile system.

The midcourse presents the largest window for an intercept but requires sophisticated interceptors capable of reaching ballistic missiles at high altitudes, including in space.

Terminal phase interceptors don’t have to reach as high as midcourse interceptors, but it’s a narrow and high-stakes window to stop a ballistic missile before it reaches its final target.

The boost phase presents an attractive opportunity to stop a missile threat because the missile is less capable of evading interceptors or deploying decoys, but detecting a launch in this early stage is difficult, as is having an effective system in position to stop it.

The U.S. Army test fires a Patriot missile, a mobile missile defense interceptor deployed by the United States. Ringo Chiu/AFP via Getty Images, U.S. Army

Along with new and improved sensors for tracking the trajectory of weapons throughout their flight, Trump’s order envisions a network of space-based interceptors that could stop threats in their boost phase.

Weapons researchers have long considered high-powered lasers as one potential option for boost phase interceptions.

The United States and Israel have both seen advancements with lasers for intercepting drones and missiles, but more improvements may be needed to effectively counter sophisticated ballistic missiles.

Trump’s order could potentially renew development for an airborne laser system for boost-phase interceptions, such as the U.S. Air Force’s shelved Boeing YAL-1 airborne laser aircraft.

A ‘Star Wars’ Sequel

Trump’s Iron Dome for America takes direct inspiration from the Strategic Defense Initiative (SDI), a missile defense program President Ronald Reagan put in motion in 1983.

“President Ronald Reagan endeavored to build an effective defense against nuclear attacks, and while this program resulted in many technological advances, it was canceled before its goal could be realized,” Trump’s order states.

SDI indeed looked to develop space-based and non-kinetic interception capabilities that many critics dismissed as figments of science fiction. The initiative was referred to, often derisively, as Reagan’s “Star Wars” program.

Trump’s concept for a network of space-based interceptors bears a close resemblance to at least one SDI concept, codenamed “Brilliant Pebbles,” which called for the deployment of potentially thousands of small satellites, each armed with interceptors to stop enemy ballistic missiles in the boost phase.

Read the rest here...

 

Tyler Durden Tue, 02/18/2025 - 20:55