It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Friday, April 01, 2022
China Crackdowns Shrink Private Sector’s Slice of Big Business
Tom Hancock, Bloomberg News
China Customs officers raise a Chinese flag during a rehearsal for a flag-raising ceremony along the Bund in front of buildings in the Lujiazui Financial District at sunrise in Shanghai, China, on Tuesday, Jan. 4, 2022. A wall of maturing debt and a surge in seasonal demand for cash will test China’s financial markets this month, putting pressure on the central bank to ensure sufficient liquidity. Photographer: Qilai Shen/Bloomberg , Bloomberg
(Bloomberg) -- China’s regulatory crackdowns last year reduced the private sector’s share of the country’s big businesses for the first time in seven years, but probably won’t be enough to send them into retreat entirely.
Of China’s top 100 listed companies by market capitalization at the end of 2021, 49 were privately owned, down from 53 the previous year, according to a report by the Peterson Institute for International Economics. It’s the first time that number has fallen since 2014.
Private-sector companies were hit last year by Beijing’s tough regulation of sectors ranging from internet platforms and education to real estate, an overhaul which fueled a market selloff that at its most extreme erased $1.5 trillion from Chinese stocks.
The market share decline “is thus directly correlated” with the crackdown, the report’s authors wrote, citing the significant drop in value of well-known firms such as DiDi Chuxing Inc, the ride-hailing giant that was probed by cybersecurity regulators and taken off Chinese app stores shortly after a $4.4 billion U.S. initial public offering in June.
“The perception of dramatically increased policy risk had led to a sharp decrease in Chinese stock prices,” the report’s authors said.
Despite the crackdown, the longer-term trend suggests the influence of large, private sector firms in China may not be diminished that much, according to the report’s authors.
When Xi Jinping came to power in 2012, the number of private companies among China’s top 100 by market capitalization was just 17, nearly a third the amount at the end of last year.
“Its difficult to say if the fall in the private sector’s share will continue. You are not going to see it collapsing,” said Nicolas Veron, a senior fellow at the Washington-based think tank and co-author of the report.
The private sector accounted for 54% of the total market value of the 100 largest listed Chinese companies in 2020, up from 10% in 2010. The drop to 48% last year was “smaller than we expected,” said Tianlei Huang, who co-authored the report.
“The popular narrative is that during the Xi Jinping era the state is coming back. But when we look at the largest companies, private companies are advancing very quickly,” he added.
The authors found a similar rise in China’s private sector when looking at the Fortune 500 list, which includes companies not listed on public stock markets. Privately owned companies made up 25% of Chinese Fortune 500 members in 2021, up from 7% a decade before.
The report found the private sector’s share of revenue received by China’s largest companies has increased, but remains significantly smaller than the share received by state-owned companies, both among listed and Fortune 500 companies. That likely reflects the concentration of state-owned firms in sectors such as heavy industry, utilities and finance, where companies often operate as monopolies or duopolies.
Large privately owned Chinese companies include internet platform companies such as Alibaba and Tencent, along with others in pharmaceuticals, consumer services, electronics manufacturing and logistics, according to the report.
China’s ruling Communist Party said in a key document last year that it has “unshakable” commitments to both developing state-owned companies and supporting and guiding the private sector. Privately owned companies account for more than 60% of China’s GDP, according to official statistics.
The Peterson Institute report authors also noted that Chinese state-owned companies receive a variety of advantages such as easier access to bank lending.
“Our interpretation is despite all the policies under Xi Jinping, the dynamism of the private sector is such that it offsets the policy bias against it,” Veron said.
China hosts Russia, U.S. officials for talks on Afghanistan
BEIJING (Reuters) - Chinese Foreign Minister Wang Yi met his Russian counterpart Sergei Lavrov on Wednesday in the eastern Chinese province of Anhui, where China was set to host two days of meetings on Afghanistan, state broadcaster CGTN reported.
The report gave no other details on their meeting.
Lavrov had arrived earlier in China for talks hosted by Wang that were set to include representatives from Afghanistan's ruling Taliban as well as Pakistan, Iran, Tajikistan, Turkmenistan and Uzbekistan.
Tom West, the U.S. special representative for Afghanistan, will attend a separate meeting at the same venue of the so-called Extended Troika: the China, Russia and the United States plus Pakistan, a U.S. State Department spokesperson said.
That meeting does not include Lavrov and Wang.
The talks come against the backdrop of Russia's invasion of Ukraine and as Afghanistan suffers an economic and humanitarian crisis worsened by a financial aid cutoff following the Taliban takeover as U.S.-led troops departed in August.
They also come amid widespread condemnation of the Taliban's U-turn last week on allowing girls to attend public high schools, which has sparked consternation among funders ahead of a key aid donors conference.
The retention of the ban prompted U.S. officials to cancel talks in Doha with the Taliban and a State Department warning that Washington saw the decision as "a potential turning point in our engagement" with the militants.
The United States believes that it shares with other Extended Troika members an interest in the Taliban making good on commitments to form an inclusive government, cooperate on counterterrorism and rebuild the Afghan economy, the State Department spokesperson said.
Last week, Wang visited Kabul, where he met acting Afghan foreign minister Amir Khan Muttaqi to discuss political and economic ties, including starting work in the mining sector and Afghanistan's possible role in China's Belt and Road infrastructure initiative, the Afghan foreign ministry said.
Muttaqi was set to attend the meeting in China.
(Reporting by Yew Lun Tian and Tony Munroe; Editing by Raju Gopalakrishnan)
LEADER OF TROTSKYIST WSWS TAKES ON HOLLYWOOD
2022 Academy Awards: Will Smith’s disorientation, Hollywood’s and America’s
The incident involving actor Will Smith and comic Chris Rock at the Academy Awards on Sunday night has grabbed public attention worldwide. Video clips of the episode have now been viewed hundreds of millions of times
Smith, seated in the front row at the annual film awards ceremony, charged the stage and slapped Rock on live television, after the comic had made a tasteless but essentially innocuous joke about Smith’s wife, Jada Pinkett Smith, and her shaven head.
The audience at the Dolby Theatre in Los Angeles went silent—as did the ABC television broadcast, for an unprecedented 30 seconds or more. Upon returning to his seat, a censored (in the US) Smith could be seen twice screaming at Rock, “Keep my wife’s name out of your f---ing mouth.”
“Despite some backstage consultations, the organization and producers decided not to remove Smith from the event,” Deadline reported. Less than half an hour later, Smith was permitted to deliver a rambling, tearful acceptance speech after he won the best actor award for King Richard (directed by Reinaldo Marcus Green).
Will Smith, right, hits presenter Chris Rock on stage while presenting the award for best documentary feature at the Oscars on Sunday, March 27, 2022, at the Dolby Theatre in Los Angeles. (AP Photo/Chris Pizzello)
While vaguely apologizing, Smith ended up essentially defending his action, comparing himself to the figure he plays in King Richard, Richard Williams, the father of tennis players Venus and Serena Williams. Williams, Smith said, “was a fierce defender of his family.” Later in his speech, he commented, “I look like the crazy father, just like they said about Richard Williams, but love will make you do crazy things.”
Rock has so far declined to press assault charges with the Los Angeles police, but he would certainly be within his rights to do so. On Monday, the Academy of Motion Picture Arts and Sciences issued a statement condemning “the actions of Mr. Smith at last night’s show. We have officially started a formal review around the incident and will explore further action and consequences in accordance with our Bylaws, Standards of Conduct and California law.”
On Monday night, Smith issued a more direct, if formulaic apology in an Instagram post, asserting that violence “in all of its forms is poisonous and destructive. My behavior at last night’s Academy Awards was unacceptable and inexcusable.” He then went on to excuse himself, on the grounds that “a joke about Jada’s medical condition was too much for me to bear and I reacted emotionally.”
Smith went on, “There is no place for violence in a world of love and kindness.” He concluded, “I am a work in progress.” The actor, generally known for his amiable and easy-going film and television persona, is 53 years old—it might be time for him to act his age. In any event, a contrite appearance somewhere with Oprah Winfrey would presumably allow him back into Hollywood’s good graces.
Jennifer Lawrence and Rob Morgan in Don't Look Up
If the Academy officials possessed any genuine integrity, they would have asked Smith to leave the Dolby Theatre and allowed him to pick up his award at some other time, or they might have delivered it to him. Statements condemning Smith’s violence, after essentially condoning it, ring entirely hollow.
The inability to discipline Smith, at least initially, speaks to the larger issues involved. The actor belongs to the world of celebrities, whose immense wealth (Smith is estimated to be worth $350 million) and fame put them largely beyond the normal reach of the authorities or mere mortals generally—unless, of course, an alleged sexual transgression or “micro-aggression” is involved.
The cult of celebrity has reached an advanced and severely damaging stage in America, having “flourished” dramatically in recent decades. As the actual conditions of life have drastically worsened for tens of millions, the need to live vicariously through others “more fortunate,” to lead a fantasy life, has grown exponentially. As we noted more than two decades ago, “Excessive celebrity must be linked to inequality, indeed becomes a rationale for inequality and reinforces it, ideologically and materially. The heaping of fame and wealth upon a single individual, or a handful of individuals, is only possible and meaningful if the vast majority have no access to those rewards.”
From a rational point of view, Smith’s action was undoubtedly bizarre. The actor first smiled in response to Rock’s jibe, before apparently girding his loins for battle. As with a large portion of Hollywood personalities’ behavior, it is almost impossible in this case to distinguish feeling from playing at feeling. The assault felt contrived, artificial. Such people are always acting. We have no idea what went through Smith’s head in those few seconds. “What am I expected to do?” he might have thought. “If I just sit here, I may be laughed at for allowing my wife to be insulted in public.”
Denzel Washington and Frances McDormand in The Tragedy of Macbeth
It is also possible that Smith had absorbed too much from the mediocre, Williams family-authorized “biopic” for which he was about to receive an award. He may have been acting on the basis of some nonsense he drew from the Richard Williams story about “defending” wife, family, etc. If so, it was an absurd and pathetic miscalculation. Smith now runs the risk of being remembered more for this moment than for any of his film or television appearances.
The episode on Sunday reveals something real about the Hollywood environment, but so much of that environment is itself unreal. Like everything “royal,” Hollywood royalty too has a great deal false and deceptive about it. Stars have money and attention heaped upon them, and they—and much of the public—may interpret that, under certain conditions, as a sign of quasi-divine approval. The gods, however, do not hand out the gift of full psychological and personal development so freely. An actor may have a persona, face and physique that “works,” to one extent or another, in front of a camera, and yet remain extremely limited as a human being. Given a change in circumstances, such as took place between Smith’s slap and his pitiable, semi-incoherent acceptance speech a short while later, a Hollywood “prince” may suddenly appear to be “only a washed-out man with a flabby lower lip,” to borrow a phrase.
Smith’s reference to the fact that there was “no place for violence in a world of love and kindness” has to be seen in the proper context. The incident Sunday night was immediately shocking, because public events in the US, pre-packaged and largely embalmed, are not usually intruded upon by anything unexpected.
But, in the larger sense, there is not the slightest reason to view the Smith-Rock altercation as “shocking.” American life is exceedingly, excessively violent. Some 40,000 people, for example, are killed by guns every year in the US. Three months into 2022, there have already been 112 mass shootings, more than one a day, and more than 4,400 killings and more than 5,800 suicides involving firearms.
American military forces are everywhere. The Pentagon officially acknowledges some 800 bases around the world, in 80 countries. After making war on and devastating Serbia, Afghanistan, Iraq, Libya, Syria and other countries, resulting in mass death and misery, the Biden administration has turned its attention toward Russia and threatens to unleash a third world war.
Moreover, the specific conditions of 2022, in the midst of an entirely avoidable pandemic, that has ended 1 million lives in the US, must be factored into the maddened, desperate goings-on at the Academy Awards and in other arenas. The film industry may officially ignore COVID-19, having devoted no more than a minute or two Sunday night to the catastrophic pandemic, but COVID-19 has not ignored the film industry. Performers, writers and crew members have lost their lives. Devastating financial losses took place in 2020 and 2021. The future of the movie theater business is in question. Hollywood has increasingly become a factory for producing a handful of bland, empty “blockbusters.” The normal insecurity of the acting profession has been multiplied by a significant factor.
Inevitably, the legitimately appalled response to the Smith outburst has been seized upon by the identity politics brigade as a sign of “white racism.” The Guardian headlined an article, “White outrage about Will Smith’s slap is rooted in anti-Blackness. It’s inequality in plain sight.” The piece claimed that the reaction to the Smith slap “feels precious at best, and downright racist at worst.” The backlash against Smith, we are told, “is rooted in not just anti-Blackness, but respectability politics as well.” This type of “performative pearl-clutching is only ever reserved for Black men who mess up.”
These stupid, preposterous remarks were echoed in various quarters. For all intents and purposes, National Public Radio (NPR) defended Smith, referring to the “many online” who asserted that “For once … here was a Black man publicly sticking up for his Black wife—and her Black hair—on a stage where Blackness has historically been overlooked or outright shunned.”
Race and gender politics received their inevitable, disgraceful due at the Academy Awards ceremony itself. Virtually nothing takes place in Hollywood these days that has not been vetted by the identity politics censors and calculators. When Ariana DeBose, the least impressive of the lead performers in West Side Story, accepted her award as best supporting actress, she presented herself as “an openly queer woman of color, an Afro‑Latina, who found her strength in life through art.”
Overall, if the Smith-Rock episode could overshadow the rest of the awards program, it was because the rest of the awards program could so relatively easily be overshadowed.
The incident highlighted a ceremony that struck the wrong note at almost every turn. While CODA, a generally well-intentioned and humane film, won awards for best picture, supporting actor (Troy Kotsur) and adapted screenplay (director Siân Heder), the two most serious works by far up for awards, the biting satire Don’t Look Up (Adam McKay) and Joel Coen’s The Tragedy of Macbeth, came away empty-handed.
As we noted in February, Minamata (Andrew Levitas) and A Hero (Asghar Farhadi), neither of which received any nominations, were “the two most obviously deserving films … entirely and disgracefully ignored by Academy voters.” For that matter, with all its limitations, Steven Spielberg-Tony Kushner’s West Side Story (one award) involved far greater thought and skill than most the films that gathered in numerous prizes.
All in all, it should come as no surprise that much of the American population is alienated from and even hostile toward the film world, which largely turns its back on the population’s greatest problems and focuses incessantly on petty issues of vital interest to the affluent middle class. ABC’s broadcast of the Academy Awards on Sunday attracted an estimated audience in the US of 15.3 million viewers, an improvement on last year’s all-time low of 10.4 million, but still the second worst in history. As recently as 1998, more than 48 million Americans watched the ceremony.
At one point, for several decades of the last century, the Hollywood film studios and considerable sections of the American population spoke the same language, or at least could understand one another.
“In January 1940,” David Wallechinsky and Irving Wallace explained, John Ford’s “The Grapes of Wrath [a film about the Great Depression and its victims] opened to unanimous critical praise, surprise, and awe. Public response was equally overwhelming. Opening day attendance at New York’s Rivoli Theatre broke all previous records.” William Wyler’s The Best Years of Our Lives, about the difficulties of World War II veterans, sold an estimated 55 million movie tickets in 1946, i.e., to more than half the adult population. But then, overall, 80 million people went to movie theaters every week that year.
Developments in the class struggle, the emergence of a mass movement aimed against the foundations of the existing social order, must bring forward new artistic voices and forces onto the scene. The present situation is simply untenable.
Trump Prosecutors Who Quit Never Planned to Stay for N.Y. Trial
Greg Farrell, Bloomberg News
Former U.S. President Donald Trump speaks during the Conservative Political Action Conference (CPAC) at The Rosen Shingle Creek on February 26, 2022 in Orlando, Florida. , Photographer: Joe Raedle/Getty Images
(Bloomberg) -- One of the two New York prosecutors who quit over the slow pace of a criminal probe into former President Donald Trump said the pair had always intended to leave the Manhattan District Attorney’s office at some point before the case went to a trial, which would likely take years.
Mark Pomerantz, 70, and Carey Dunne, 63, resigned last month when new District Attorney Alvin Bragg stopped supporting their aggressive push to bring criminal charges and expressed skepticism about their strategy. Both men had been recruited by Bragg’s predecessor, Cyrus Vance, whose term expired in December.
“My intent was to stay in the office and work on the prosecution of Donald Trump,” Pomerantz said in a phone interview. “At the same time, Carey and I made it clear that since the case would take a number of years, neither of us would stay for the duration of the prosecution.”
Dunne couldn’t be reached immediately for comment.
Whether Dunne and Pomerantz would stick around may have been an important consideration for Bragg. He inherited a high-profile criminal probe of Trump that hadn’t led to an indictment after three years under Vance and would likely take years longer to complete if it went to trial. Bragg’s office declined to comment.
Both men wrote resignation letters, but Bragg’s office turned down a freedom-of-information request to disclose them publicly because the letters contained discussion of an ongoing criminal investigation and referenced grand jury matters. However, a copy of Pomerantz’s letter appeared in the New York Times last week, which first reported on the men’s February departures.
In the letter, Pomerantz criticized Bragg’s decision not to file charges in the near term.
“I fear that your decision means that Mr. Trump will not be held fully accountable for his crimes,” Pomerantz wrote. “I have worked too hard as a lawyer, and for too long, now to become a passive participant in what I believe to be a grave failure of justice. I therefore resign from my position as a Special Assistant District Attorney, effective immediately.”
Economists Now Predict Multiple Half-Point Rate Hikes in Canada
Erik Hertzberg, Bloomberg News
Tiff Macklem, governor of the Bank of Canada, speaks during a news conference in Ottawa, Ontario, Canada, on Thursday, March 3, 2022. Macklem said the Bank of Canada expects its balance sheet to shrink quickly once it starts the process of running off its bond holdings, in a speech where he sought to reassure Canadians the withdrawal of stimulus will be “deliberate and careful.” , Bloomberg
(Bloomberg) -- Markets and economists are expecting the Bank of Canada to embark on one of the most aggressive tightening cycles in the central bank’s history as officials race to bring inflation back under control.
In a report Monday, Bank of Montreal ramped up its timeline, predicting Canada will see back-to-back, half-percentage-point hikes at the central bank’s next two policy decisions, beginning April 13. Bank of America Corp. and Citigroup Inc. are forecasting three consecutive 50-basis-point increases. Markets are more sanguine, with just one outsized move priced in over the next two decisions.
The new rate calls represent a marked shift in the outlook for borrowing costs that will take many Canadians by surprise and represent a major test for an economy with one of the highest total debt burdens in the developed world. Steeper expectations were stoked last week when Deputy Governor Sharon Kozicki said in a speech the bank will “act forcefully” to quell inflation, which is now rising 5.7% annually, the fastest pace in three decades.
“The Bank of Canada needs to take the punch bowl away as soon as possible,” Carlos Capistran, an economist at Bank of America, said by email. “We expect them to withdraw stimulus quickly.”
Other central banks, including the Federal Reserve, have pivoted to a more hawkish stance amid red flags about more persistent inflation and supply chain snarls created by the war in Ukraine. Chairman Jerome Powell and other U.S. monetary policymakers have put a half-point hike on the table for the Fed’s meeting in May and suggested more to come.
Bank of Canada officials led by Governor Tiff Macklem began the hiking cycle earlier this month, when they raised their policy interest rate to 0.5%, from the emergency low of 0.25%. Trading in overnight swaps suggest the benchmark rate will climb to almost 3% over the next 12 months -- a pace of tightening that hasn’t been seen in decades.
The Bank of Canada raised its policy rate by more than 2 percentage points in the years leading up to the global financial crisis in 2007, but that took place over a period of three years. The Bank of Canada last hiked by 50 basis points in 2000.
Perhaps the last comparable scenario was when policy makers hiked rates by a full percentage point at one meeting in 1998 to defend a sagging currency, a move that was quickly reversed just months later.
It will be tricky process, and some economists warn high household debt levels may ultimately prevent officials from moving too aggressively. Still, Macklem may be paying the price for waiting too long to start raising interest rates because of what proved to be erroneous assumptions about transitory inflation.
“The bank must now accelerate lift off because they didn’t take flight when they had a chance to earlier,” Derek Holt, an economist at Bank of Nova Scotia, said by email. “That’s going to cause more economic anxiety than if had they moved earlier.”
US Job openings remain high even as the number of workers quitting increases
AFP March 29, 2022
The number of job openings was little changed last month, while the number of people quitting jobs increased.
The Labor Department released its Job openings and labor summary on Tuesday, and job openings last month remained near record levels at 11.3 million on the last day of February. Quits increased to 4.35 million as the Great Resignation persisted.
The data released by the Labor Department serve as indicators of how much demand there is for workers in the U.S. economy and the extent to which employers are still struggling with labor shortages months after the economy began recovering from the Coronavirus pandemic.
While the gap between available positions and the unemployed grew even wider – an increasing number of Americans quit their jobs. The data shows that 4.35 million workers left in February, an increase of 94,000 from the previous month.
Federal Reserve officials watch the JOLTS report closely for signs of labor market slack. The extremely tight jobs picture has helped drive inflation higher, which in turn has pushed the Fed to start raising interest rates.
There are still roughly three million or so people who have not returned to the workforce, according to government data.
“Looking at how poorly our labor force has grown so far this year, if companies want to win the war for the talent they need to engage the people who may not be actively seeking work right now, or be the first option people see when they do return,” Ron Hetrick, a senior economist at Emsi Burning Glass, a data and research company, wrote in a note.
Economists are waiting eagerly for the Friday release of the BLS’s nonfarm payrolls count for March. Experts by Dow Jones are expecting growth of 490,000 and an increase in average hourly earnings of 0.4 percent for the month and 5.5 percent on a 12-month basis.
WARNING THE R WORD; RECESSION
Stock Surge Is a Bear-Market Trap With Curve Inverted, BofA Warns
Vildana Hajric and Katie Greifeld, Bloomberg News
BC-Stock-Surge-Is-a-Bear-Market-Trap-With-Curve-Inverted BofA-Warns , via Bloomberg
(Bloomberg) -- The 11% surge in U.S. stocks in the past two weeks has the hallmarks of a bear-market rally that might give way to deeper losses.
That’s the conclusion of analysts at Bank of America, who say warning signs are flashing for a market that has climbed “despite clearly weaker fundamentals,” including a Federal Reserve bent on raising rates sharply this year to battle persistent inflation.
The strategists caution that the selloff that took the S&P 500 12% from its January record is not over and sharp rallies are typical of volatility in bear markets, with some of the biggest on record occurring in the throes of the dot-com meltdown and the global financial crisis. A closely watched Treasury market metric flashed a recession warning Tuesday, adding to worries a restrictive Fed will damage the economy.
“The worsening macro backdrop and market-unfriendly Fed make sustained U.S. equity gains unlikely,” strategists including Gonzalo Asis and Riddhi Prasad wrote. The Fed isn’t likely to come to the market’s rescue at any point and, in fact, the central bank is welcoming of tighter financial conditions to aid its battle against inflation. “In practice, this means lower risk assets.”
For now, investors aren’t heeding any warnings. The S&P 500 jumped 1.2% Tuesday for its ninth gain in 11 sessions, even as the yield on two-year Treasuries popped above the 10-year rate for the first time since 2019.
But 10-day stretches of big gains have been common in bear markets. There were four that exceeded the 10-day rally of 10% through Monday in 11 bear markets since 1927, the BofA strategists wrote.
It’s not hard to find reasons for caution. The war in Ukraine still has commodity markets in turmoil, with fertilizer the latest product to skyrocket in price. Oil prices are still elevated, adding to inflationary pressures the Fed has promised to tamp down, even if it damages demand.
The strategists recommend investors sell out-of-the-money calls to hedge against both downturns as well as any potential short-term run-ups, which they say will be “limited.”
Bulls argue that despite the Fed’s push to slow growth, companies will still be able to deliver profit gains that justify valuations. Corporate America, in particular, is most insulated from the impact of sanctions on Russia, at the same time that bonds around the world have been in freefall.
BofA’s strategists said it would take softer inflation for stocks to be able to add to the latest gains -- something the bank’s economists don’t expect. They also warn that any easing of tensions in eastern Europe would remove a threat to growth but also give the Fed cover to hike faster.
The rates markets, for one, are exhibiting a lot more signs of stress. An increase in rates volatility over the past 10 days, as measured by the MOVE Index, relative to falling equity-markets volatility, as measured by the VIX, has been the largest since 2009 and is one of the biggest ever, BofA says. Following the 2009 episode, the S&P 500 fell 7% over the following six weeks.
Stocks registered a big pullback at the start of the year, and investors are now wondering if the market’s mired in a bear market. “We believe so,” Katerina Simonetti, senior vice president at Morgan Stanley Private Wealth Management, said in a Bloomberg Radio interview.
“We believe that yes, in fact, this is a bear market, we have been in a bear market for quite some time,” she said. Her team came into the year worried about valuations, Fed tightening, inflation and a growth slowdown, and the war in Ukraine worsens many of those concerns.
“Now, this is not to say that there are no pockets of opportunity in this market, there absolutely are, and investors should be in position to take advantage of them,” Simonetti said. “But they are bear market rallies and they have to be seen as such.”
No, the inversion of the US yield curve between 5- and 30-year maturities doesn’t forecast a recession, contrary to what every financial publication in the English language has been saying.
Yes, the yield curve inverted before the 2008 recession. This time is different. The difference is obvious if we separate the yield curve into “real” yields and inflation expectations.
Treasury Inflation Protected Securities, or TIPS, protect investors against inflation (or at least against increases in the Consumer Price Index, the US government’s flawed measure of inflation), by boosting the payout of principal by the increase in the CPI over the maturity of the note. The difference between the 10-year Treasury yield of 2.46% and the 10-year TIPS yield of negative 0.52%, or about 3%, is the inflation rate at which an investor in TIPS and an investor in ordinary coupon Treasuries will break even. It’s called the “breakeven inflation rate.”
An inverted yield curve (short-term interest rates are higher than long-term interest rates) is supposed to mean that investors expect lower economic activity in the future and hence lower interest rates. That’s what it meant back in 2007.
Today, it means that investors think that inflation will be much lower in the future than it is now. The breakeven inflation slope is sharply negative. Meanwhile, the real yield curve is positive. That’s the opposite of what we saw in 2007.
If investors really expected a recession, they would also expect the Fed to cut interest rates, or at least hold them steady at today’s low levels. But the TIPS curve says that the market expects Fed tightening – which won’t happen if the economy falls into recession.
That doesn’t exclude the possibility of a recession, to be sure. Consumers might balk at higher prices and stop spending, and the Fed’s gradual squeeze on interest rates might pop the US housing bubble. There are some signs of squishiness in consumer spending. The widely followed University of Michigan Consumer Confidence Index has fallen almost to the 2008 recession lows.
But that has nothing to do with the yield curve viewed properly, that is, as two curves – a real interest rate curve and an inflation-expectations curve.
U.S. Trade Aide Brad Setser Is Leaving Biden Administration
Eric Martin and Shawn Donnan, Bloomberg News
(Bloomberg) -- Brad Setser, an adviser to U.S. Trade Representative Katherine Tai who’s called for cracking down on countries seen as undervaluing their currencies, is leaving the Biden administration.
Setser, who was appointed in February 2021, is returning to the Council on Foreign Relations, according to people familiar with the matter, who asked not to be named before a public announcement.
Setser’s “insight and intellect have been a tremendous asset to USTR in our first year,” Tai said in an emailed statement to Bloomberg News. “I will always appreciate his willingness to return to public service and the counsel he provided as we developed the Biden-Harris Administration’s new approach to trade policy.”
Setser declined to comment when reached by phone Tuesday. CFR’s media office didn’t immediately respond to a request for comment.
Before joining the USTR, Setser spent the previous five years as a senior fellow at the New York-based think tank, where he wrote the “Follow the Money” blog, analyzing global capital flows to discuss issues including Puerto Rico’s debt and Taiwan’s foreign-exchange reserves. Setser also previously served as an official at the Treasury Department from 2011 to 2015.
In 2019, Setser called on the U.S. government to subject economies with large trade surpluses to close scrutiny on whether they were intervening to keep their currencies undervalued -- with the willingness to enact “meaningful penalties for persistent manipulation.”
“Small countries that have intervened excessively in the recent past would face immediate pressure to change their policies, and large countries like China that once intervened heavily would be put on notice,” Setser wrote in a CFR memo.
The Biden administration has kept tariffs on more than $300 billion in imports from China imposed during Donald Trump’s administration, but held off on launching a new investigation of the country’s trade practices under Section 301 of the Trade Act of 1974 -- the statute used to impose the duties.
Some trade observers had speculated that Setser’s appointment at the USTR would lead to the agency taking a greater and more aggressive role in addressing unfair currency practices -- usually the purview of Treasury. But in the most prominent case featuring currency issues, the Treasury negotiated with Vietnam’s central bank to reach an agreement allowing more flexibility in its currency. The U.S. held off on imposing tariffs on Vietnam, a possibility raised under Trump.
In its latest report to Congress in December, the Treasury didn’t designate any economy as a currency manipulator, though it did name China, Vietnam and Taiwan as trading partners that have failed to live up to global agreements not to use their currencies to obtain unfair trade advantages. The Biden administration overall has taken a less aggressive approach to the twice-yearly currency review than during the Trump administration.
Jacques Bude, a retired professor whose parents were murdered in the German government’s Auschwitz death camp because they were Jewish, is giving his support to a Palestinian family seeking justice for an Israeli war crime.
“The Ziada family suffered a painful loss due to the decision of Israeli commanders to bomb civilian targets in Gaza in July 2014 and it is incomprehensible that the courts in The Hague granted functional immunity to the commanders,” Bude said.
Ismail Ziada, a Palestinian-Dutch citizen, has since 2018 been suing two senior commanders for a lethal bombing attack on his family’s home during Israel’s 2014 assault on Gaza.
They are Israeli defense minister Benny Gantz and former air force chief Amir Eshel.
Gantz was Israeli army chief during Israel’s summer 2014 assault on Gaza that killed more than 2,200 Palestinians, including more than 550 children.
It killed Ismail Ziada’s 70-year-old mother Muftia, his brothers Jamil, Yousif and Omar, sister-in-law Bayan, and 12-year-old nephew Shaban, as well as a seventh person visiting the family.
Shortly after the deadly 2014 attack on the Ziada family home, 91-year-old Dutch citizen Henk Zanoli expressed his shock and pain by returning his Righteous Among the Nations medal to Israel.
Zanoli and his mother were given the medal by Israel’s Yad Vashem Holocaust memorial for hiding a Jewish child from Nazi occupation forces from 1943 until the Netherlands was liberated in 1945.
Ziada is seeking hundreds of thousands of dollars in damages from Gantz and Eshel.
However Dutch courts rejected his lawsuit on the grounds that the pair have immunity from civil liability because they were carrying out official functions.
In February, Ziada announced he is taking his case to the Dutch supreme court.
The family is represented by noted Dutch human rights lawyer Liesbeth Zegveld.
Costs for the lawsuit are being crowdfunded through public donations.
“The Israeli government throws in large sums for the defense of the war criminals, whilst the family has to initiate a crowdfunding campaign to be able to access justice,” Bude said.
Urging people to “make a donation, no matter how small,” Bude added, “we can and must help the Ziada family in this groundbreaking legal fight for justice.” “Never again”
In 2017, Bude, who is from Belgium, told The Electronic Intifada that “my parents were deported when I was 8. They were murdered in Auschwitz.”
“If I had remained with my parents I would be dead,” Bude added. “Not one child of my age from Belgium came back from deportation.”
Bude survived the war because he was hidden by farmers.
In 1949, the 16-year-old Bude was shipped by the Zionist movement against his will to Israel along with other Jewish orphans. But he hated it there.
“I did not want to stay right from the start,” Bude said.
“They were real racist militarists,” he recalled. “Don’t expect much nuance about Jewishness and Israel from me. For me, Israel is founded on ethnic cleansing. And if I identify with somebody, it is the Palestinian kid.”
While Bude does not make a direct parallel between the Holocaust and Israel’s crimes, he does draw universal lessons from the European genocide.
“The duty of memory is to say never more dehumanization,” Bude said. “If we say ‘never again,’ we have to decide where we stand and condemn it.”
His solidarity with the Ziada family is a practical and moving application of that lesson.
Jordan king: Israel must respect Muslim rights at Al-Aqsa
King Abdullah and Israeli defence minister Gantz meet before Ramadan, a year after tensions led to war in Gaza.
Tensions between Palestinians and Israeli security forces in Jerusalem during last year’s Ramadan helped contribute to the eruption of Israel's 11-day offensive on the Gaza Strip in May
[File: Ahmad Gharabli/AFP]
Published On 29 Mar 202229 Mar 2022
Jordan’s King Abdullah has called on Israel to respect Muslim rights at the Al-Aqsa Mosque compound, in a meeting with Israeli Defence Minister Benny Gantz in Amman.
The meeting on Tuesday appeared to be a joint effort to lower Israeli-Palestinian tensions as the holy month of Ramadan approaches.
The Royal Palace said that the king “stressed that maintaining the comprehensive calm requires respecting the right of Muslims to perform their religious rites in the blessed Al-Aqsa Mosque”.
Gantz discussed “the measures that Israel is planning to take in order to enable freedom of prayer in Jerusalem and Judea and Samaria”, an Israeli statement said, using Biblical names referring to the West Bank. Their talks focused on “regional and security challenges”, it added.
The statement did not elaborate on any steps Israel might take to facilitate worship in Jerusalem, the site of Al-Aqsa Mosque, a friction point where confrontations between Palestinians and Israeli forces could trigger a wider conflict.
The meeting followed a two-day summit in Israel attended by the foreign ministers of the United Arab Emirates, Bahrain, Morocco, and Egypt, as well as US Secretary of State Anthony Blinken.
The Palestinians were not invited to the summit, despite the continuing Israeli occupation of Palestinian territories being a central feature of Arab-Israeli relations for the last 50 years. While the Arab ministers convened in Israel, King Abdullah paid a rare visit on Monday to the occupied West Bank, where he held talks with Palestinian President Mahmoud Abbas.
The king’s high-profile visit, his first in nearly five years, and Jordan’s absence from the ministers’ meeting, were reminders that the Palestinian issue has not disappeared from the regional agenda.
The monarch’s visit was widely seen as an attempt to avert any flare-ups in the occupied West Bank and East Jerusalem before Ramadan, and the Easter and Passover holidays next month – a volatile period in the past.
Raids by Israeli security forces on the Al-Aqsa compound, as well as attacks on worshippers, and the attempted eviction of Palestinian families from Jerusalem’s Sheikh Jarrah neighbourhood during last year’s Ramadan helped contribute to the eruption of Israel’s 11-day offensive on the Gaza Strip in May.
Citing security concerns, Israel has imposed age limits on Muslim worshippers at Al-Aqsa during periods of tension and restricted Palestinian travel to Jerusalem from the West Bank, territory that it captured, along with the eastern part of the holy city, in a 1967 war.
Israel and Jordan maintain close security ties and have diplomatic relations, but relations have soured in recent years because of tensions over Jerusalem’s holy sites, Israel’s expansion of West Bank settlements and the lack of any progress in the long-moribund peace process with the Palestinians.
Israeli President Isaac Herzog is expected to hold talks with King Abdullah in Jordan on Wednesday, official sources told Reuters on Tuesday.
Although Herzog paid a clandestine visit last year after taking office, his trip to Amman would be the first official state visit by an Israeli president since the two countries signed a landmark peace treaty in 1994. The Israeli presidency is a largely ceremonial position.
