In the same way, a self-driving car sees its surroundings on city streets, sensors that use machine learning technology allow farm robots to navigate fields. Automation is a growing presence in the farm industry, and a new generation of autonomous robots is helping farmers shape tomorrow's crops.
Crops that can be harvested with barely any or no herbicides would be beneficial not just to humans but also to the environment. An oddly-shaped autonomous farm tractor can eliminate the need for toxic herbicides by using high-powered lasers to weed about 20 acres per day to solve this dilemma.
Robotics company Carbon Robotics unveiled its newest weed elimination robot, Autonomous Weeder, which leverages artificial intelligence, sensors, and lasers to eliminate weeds on commercial farms.
"Traditional chemicals used by farmers, such as herbicides, deteriorate soil health and are tied to health problems in humans and other mammals. A laser-powered, autonomous weed management solution reduces or eliminates farmers' needs for herbicides," Carbon Robotics' website said.
Autonomous Weeder offers an economical path towards organic farming that is generally labor-intensive. The robot also reduces the highly variable cost of manual labor.
"AI and deep learning technology are creating efficiencies across a variety of industries, and we're excited to apply it to agriculture," said Carbon Robotics CEO and Founder Paul Mikesell.
Mikesell continued: "Farmers, and others in the global food supply chain, are innovating now more than ever to keep the world fed. Our goal at Carbon Robotics is to create tools that address their most challenging problems, including weed management and elimination."
Here's a demo video of the farm robot zapping weeds in a field.
Earlier today, we previewed Joe Biden’s American Families Plan (AFP) which provides $1.8 trillion over ten years in new benefit spending and tax credits.
Commenting on the proposal, Goldman economist Alec Phillips writes that he was surprised by the focus of the released plan which is "somewhat narrower than we had initially expected several weeks ago, as it omits any housing or Medicare proposals and focuses solely on child care and nutrition, education, paid leave, and extending a number of the tax credits Congress enacted earlier this year."
On the payment side, the White house proposes $1.5 trillion over ten years in additional taxes to cover most of the cost, with a capital gains tax hike contributing to this, but in today’s release the White House has provided few new details on the topic. The $303BN funding balance will come from an increase in the US budget deficit.
Biden will present the plan when he addresses a joint session of Congress at 9pm ET tonight.
Below we list the main points from the plan as summarized by Goldman:
1. The spending would be spread roughly evenly over the next ten years.
The White House release provides no details on the timing of spending, but judging by the types of spending President Biden proposes, it appears that the spending will be spread roughly evenly over the next ten years. An exception would be the expanded child tax credit that Congress recently enacted, which Biden proposes to extend only through 2025 (he proposes to make permanent a less expensive aspect of recent expansion). However, in essentially all other cases, the White House appears to propose to make these policies permanent. Some policies appear to phase in over several years (e.g., the paid leave proposal). The plan would increase federal spending (including tax credits) by around 0.75% of GDP in 2023-2024, and by a bit less in 2022, according to Goldman calculations.
2. The proposed savings from IRS enforcement are likely to look smaller once they reach Congress.
The White House estimates the proposal would produce $1.5 trillion in additional revenue, of which $700bn would come from closing the gap between what taxpayers owe and what they pay. The White House proposes to require banks to increase reporting of financial flows to the IRS, and to increase funding for IRS enforcement activities (media reports indicate this would raise $80bn over ten years, but the proposal does not include a figure). But according to Goldman, Congressional Democrats might have to look elsewhere to gain this much revenue. A reporting requirement is probably beyond what is allowed to be included in a reconciliation bill, and congressional budget scorekeepers seem unlikely to credit additional IRS funding with $700bn in new revenue. (Last year, CBO estimated a $40bn/10yr bump in funding would produce $100bn in additional revenue, for total savings of $60bn.)
3. The proposed capital gains tax hike also looks likely to face resistance.
President Biden proposes to tax capital gains and dividends at the top marginal rate (39.6%) and to tax gains greater than $1mn at death (under current law, the basis of an asset steps up at death to the transfer value, so the recipient has no taxable gain upon receiving it). The Tax Policy Center has estimated such a policy would raise around $370bn/10yrs. Even with exceptions for active businesses and even with a long payment schedule for any payments due—a recent congressional proposal would allow such taxes to be paid over 15 years — it seems likely that at least a few Democrats will raise concerns about the impact on family businesses and farms. In our view, a capital gains tax increase looks more likely to come in around 28% and to eliminate the step-up in basis at death but to stop short of actually taxing those gains upon death.
4. Health care is notably absent from the proposal.
The proposal includes an extension of the recently expansion of health insurance subsidies, but it omits the other Biden campaign proposals, like lowering the Medicare eligibility age to 60. The proposal also omits a substantial drug pricing reform proposal that the House passed last year and which might have cut Medicare drug spending by as much as $500bn over ten years. The omission is likely due to expected resistance from a few congressional Democrats whose support would have been necessary to pass the bill, and the fact that some of the proposal also omits the Medicare eligibility change. That said, there is still a chance that Congress will include more incremental savings measures in the upcoming legislation.
5. Congress will want to add and subtract.
At a minimum, we expect that congressional Democrats will want to add a reinstatement of the deduction for state and local taxes (SALT) that congressional Republicans capped in 2017. The policy would cost on the order of $80bn per year, or $400bn to reinstate it through 2025, after which it is already set to revert to the pre-2017 policy. Since most of the benefit would go to those with very high incomes, it looks unlikely that there will be sufficient support to fully reinstate it. Instead, we expect Congress to raise the cap to something like $50k,or reinstate it for taxpayers under a certain income threshold, which could be done at a fraction of the cost. Congressional Democrats might also have to choose among some of the new spending proposals, since Senate rules prohibit reconciliation bills from adding to the deficit after ten years. If the capital gains tax hike is scaled back or the IRS enforcement funding raises less revenue than the White House claims, some provisions will need to be made temporary or dropped from the bill.
6. The legislative strategy should be clearer in a few weeks.
Goldman outlined three potential scenarios for passing the White House proposal:
- pass one large reconciliation bill comprising the American Jobs Plan and the American Families Plan;
- pass two smaller reconciliation bills dealing with those separately, or
- pass bi-partisanbills dealing with traditional infrastructure and, separately, manufacturing and R&D incentives, with the remainder passing in a single reconciliation bill.
All 3 options appear to be under discussion. The congressional committees that handle infrastructure are assembling legislation they hope to pass under regular order (i.e., with bipartisan support), as are the committees dealing with manufacturing and R&D. They appear to be aiming for passage by late May or June.
7. The details will probably remain in flux until Q3.
Over the next several weeks, additional information on these proposals (particularly the scope of potential tax increases) is likely to come in three forms. First, informal comments in the media from centrist Democrats might clarify where the boundaries are on some issues. Second, at some point in May, the Biden Administration should submit a formal budget to Congress (so far the White House has sent only a partial proposal). This is also likely to include more technical detail on the proposed tax increases. Third, the committees with jurisdiction over some of the relevant issues—such as the tax-writing committees—are likely to begin to release details of their legislation that builds on the Biden proposal. However, the most important step in the process won’t come until July or September, which is when we expect the Senate to debate and pass the reconciliation bill. This process can be unpredictable, since congressional Republicans are apt to offer hundreds of amendments to the bill, some of which centrist Democrats might feel political pressure to support.
A shadowy company set up last September linked to a DARPA / FBI contractor who peddled a 'lawful intercept' internet spy device to government agencies and law enforcement a decade ago, took over a massive portion of the Pentagon's idle internet addresses on the day of President Biden's inauguration, according to an in-depth investigation by the Associated Press.
The valuable internet real estate has since quadrupled to 175 million IP addresses which were previously owned by the US Department of Defense - about 1/25th the size of the current internet, and over twice the size of the internet space actually used by the Pentagon.
"It is massive. That is the biggest thing in the history of the internet," said Doug Madory, director of internet analysis at network operating company Kenntic.
The company, Global Resource Systems, was established by a Beverly Hills attorney, and now resides in a shared workspace above a Florida bank.
The company did not return phone calls or emails from The Associated Press. It has no web presence, though it has the domain grscorp.com. Its name doesn’t appear on the directory of its Plantation, Florida, domicile, and a receptionist drew a blank when an AP reporter asked for a company representative at the office earlier this month. She found its name on a tenant list and suggested trying email. Records show the company has not obtained a business license in Plantation.
Incorporated in Delaware and registered by a Beverly Hills lawyer, Global Resource Systems LLC now manages more internet space than China Telecom, AT&T or Comcast. -Associated Press
One name is linked to Global Resource Systems in the Florida business registry - that of Raymond Saulino - who as recently as 2018 was listed in Nevada corporate records as a managing director of a cybersecurity/internet surveillance company called Packet Forensics. According to the report, "The company had nearly $40 million in publicly disclosed federal contracts over the past decade, with the FBI and the Pentagon’s Defense Advanced Research Projects Agency among its customers."
In 2011, Packet Forensics and Saulino, its spokesman, were featured in a Wired story because the company was selling an appliance to government agencies and law enforcement that let them spy on people’s web browsing using forged security certificates.
The company continues to sell “lawful intercept” equipment, according to its website. One of its current contracts with the Defense Advanced Research Projects Agency is for “harnessing autonomy for countering cyber-adversary systems.” A contract description says it is investigating “technologies for conducting safe, nondisruptive, and effective active defense operations in cyberspace.” Contract language from 2019 says the program would “investigate the feasibility of creating safe and reliable autonomous software agencies that can effectively counter malicious botnet implants and similar large-scale malware.”
Saulino is also listed as a principal with a company called Tidewater Laskin Associates. Incorporated in 2018 (and sharing the same Virginia Beach, VA address as Packet Forensics - a UPS store - with different mailbox numbers), Tidewater obtained an FCC license in April 2020 for unknown reasons.
Calls to the number listed on the Tidewater Laskin FCC filing are answered by an automated service that offers four different options but doesn’t connect callers with a single one, recycling all calls to the initial voice recording.
Saulino did not return phone calls seeking comment, and a longtime colleague at Packet Forensics, Rodney Joffe, said he believed Saulino was retired. Joffe, a cybersecurity luminary, declined further comment. Joffe is chief technical officer at Neustar Inc., which provides internet intelligence and services for major industries, including telecommunications and defense. -AP
And now a company linked to Saulino, which didn't exist before September, took control of a massive chunk of the Pentagon's internet space on inauguration day for unknown reasons.
According to a terse and opaque explanation from the Pentagon's Brett Goldstein - head of the Defense Digital Service which is running the project, the military hopes to "assess, evaluate and prevent unauthorized use of DoD IP address space" and "identify potential vulnerabilities" in order to defend against cyber-intrusions by global adversaries who consistently infiltrate US networks - occasionally from unused internet blocks. What that has to do with Global Resource Systems is anyone's guess.
Explanations for what the internet space could be used for are purely speculative, and include "honeypots" - machines set up with vulnerabilities laid as bait to draw hackers, "Or it could be looking to set up dedicated infrastructure — software and servers — to scour traffic for suspect activity."
"This greatly increases the space they could monitor," said Madory.
Why did the Pentagon choose Global Resource Systems - a company linked to a 'spooky' individual - on inauguration day? "As to why the DoD would have done that I’m a little mystified, same as you," internet pioneer Paul Vixie told AP.
More via AP:
Deepening the mystery is Global Resource Systems’ name. It is identical to that of a firm that independent internet fraud researcher Ron Guilmette says was sending out email spam using the very same internet routing identifier. It shut down more than a decade ago. All that differs is the type of company. This one’s a limited liability corporation. The other was a corporation. Both used the same street address in Plantation, a suburb of Fort Lauderdale.
“It’s deeply suspicious,” said Guilmette, who unsuccessfully sued the previous incarnation of Global Resource Systems in 2006 for unfair business practices. Guilmette considers such masquerading, known as slip-streaming, a ham-handed tactic in this situation. “If they wanted to be more serious about hiding this they could have not used Ray Saulino and this suspicious name.”
Guilmette and Madory were alerted to the mystery when network operators began inquiring about it on an email list in mid-March. But almost everyone involved didn’t want to talk about it. Mike Leber, who owns Hurricane Electric, the internet backbone company handling the address blocks’ traffic, didn’t return emails or phone messages.
Despite an internet address crunch, the Pentagon — which created the internet — has shown no interest in selling any of its address space, and a Defense Department spokesman, Russell Goemaere, told the AP on Saturday that none of the newly announced space has been sold.
With stocks tumbling following the report that Joe Biden is considering a proposal that would double the capital gains tax, as investors dump in hopes of locking in existing cap gains rates - an exercise in futility if Biden and the socialists in Congress decide to make such a tax change retroactive to all of 2021 - Bloomberg quickly polled several Wall Street traders who focused on the policy’s implications for investing, and concluded that while it was too soon to panic, prospects of a higher levy on stock profits could spark near-term selling as investors look to skirt a higher rate.
Chris O’Keefe, managing director at Logan Capital Management
The first impact would be people deciding they are either going to take their gains now to try to get ahead of it. You could see people pull forward their gains to this year. It would potentially reduce the flow of capital because people would be less willing to take gains and move onto something else. People would be less willing to trade if they had to pay a tax that high.
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance
It will incentivize selling this year before it does anything else. In the years to come, it will probably discourage selling, to some extent, but may also discourage buying as well as people look at other things to do with their money. The higher the taxes, the less people are likely to participate in activities that cost them tax.
Dan Suzuki, Richard Bernstein Advisors LLC’s deputy chief investment officer
It’s more aggressive than what people were expecting. I would personally fade the reaction though. Seems very unlikely that it will pass in its current state, so it would be heavily diluted.
Sameer Samana, Wells Fargo Investment Institute’s senior global market strategist
If this is the start of less market-friendly policies, it could make the gains from here a lot choppier. We worry less about an increase in corporate tax rates and more about capital gains taxes/changes in stepped up basis. Those latter two have a much more chilling and direct effect on how people invest.
Max Gokhman, head of asset allocation at Pacific Life Fund Advisors
I don’t think anyone is truly surprised that Biden is unveiling a cap gains tax, but what few people expected is that he’d do it so soon and in this magnitude. Unless it’s effective retroactively for 2021, it’s likely to be a 2022 rule -- in that case you will see at least marginal selling this year. And while retail investors get a lot of press right now for being a dominant force in day-to-day volume, the reality is that most stocks held by individuals are held by the wealthiest ones.
Kim Forrest, chief investment officer of Bokeh Capital Partners
Prices are set by the balance of buyers and sellers so if you have more incentive to be a more active trader to reduce taxes, that’s going to put limits on how high stocks can go because there will be more sellers. And that’s the market mechanism on any given day. I’m not saying that ultimately but you’re artificially creating sales.
Chris Grisanti, chief equity strategist at MAI Capital Management
The devil will be in the details -- will it be retroactive to January 1 of this year and then you wouldn’t need to sell right away? Will it be the beginning of next year? That all begs the question, will it get passed? With taxes especially there’s a lot of horse trading before the final deal. There are a lot of moving parts. One thing investors can be sure of is that taxes are going up and we have to at least partially pay for all the money we’ve been spending on stimulus.
Dave Portnoy, Owner of DDTG Global
Preston Byrne had an interesting take, pointing out that it would be "awesome Millennials and Gen Xers agreed to Gamestop the hell out of this and refuse to sell anything until the tax is repealed"
On a more ominous note, it would appear Silicon Valley's honeymoon with the Harris-Biden presidency could be ending fast as billionaire VC Tim Draper rage-tweeted that the potential doubling of the capital gains rate could kill off American job creation...
43.4% capital gains tax might kill the golden goose that is America/Silicon Valley. People need an incentive to build long term #startups of value. In California, that would be a 56.4% tax burden. >50% Spells death to job creation.
— Tim Draper (@TimDraper) April 22, 2021
Draper does have a 'solution' to this tyrannical soak-the-rich scheme, tweeting that the "antidote for oppressive government and runaway taxes is... Bitcoin."
Finally, since none of this actually applies to the rich who invest via hedge funds which are offshore tax entities, here is a snapshot of the current mood in the Cayman Islands.
International Man: Deagel is a private online source for the military capabilities of the world’s nation-states. It recently released a shocking five-year forecast.
The report analyzes countries by projected population size, GDP, defense budget, and more.
In it, they predict a 70% reduction in the size of the United States population.
This is a bold prediction. What are your thoughts on this?
Doug Casey: I’ve got to say that I wasn’t familiar with Deagel - it keeps a low profile. Deagel is in the same business as Jane’s—which has been in the business of analyzing weapons systems for many decades.
A look at the Deagel website, which is quite sophisticated, makes it clear we’re not dealing with some blogger concocting outrageous clickbait. It seems to be well-connected with defense contractors and government agencies like the CIA.
They’ve predicted that about 70% of the US population, and about the same percentage in Europe, is going to disappear by 2025. It’s hard to believe that anybody in their position would make a forecast like that. There’s no logical business reason for it, especially since it was done before the COVID hysteria gripped the world. It stretches a reader’s credulity.
Could it possibly happen? It would be the biggest thing in world history. Does it have a basis in reality, or is it just some bizarre trolling exercise? I’m not sure—it’s hard to take almost anything from any source at face value these days. But for the last several years, I’ve been saying that World War III would basically be a biological war. Of course, it will have substantial conventional, nuclear, space-based, and AI/computer elements as well, but its most serious component will be biological. Essentially, it will involve the use of bacteria and viruses to wipe out the enemy. The odds are that it will be between the US and China. But since anyone with a CRISPR in their garage can hack the genome and DNA of almost anything and anybody… there are no limits to the possibilities.
Certainly, from the Chinese point of view, a biological war makes all the sense in the world. That’s because the Han Chinese share a lot of genetic similarities. Presumably, a bacteria or virus can be bred to favor the Chinese and take out most everybody else. The fact is that anything that can be done eventually will be done. It’s just the law of large numbers.
Somebody might respond, “Well, that’s horribly racist.” Of course it’s racist. Notwithstanding rational and philosophical arguments against it, all ethnic groups and countries are quite naturally racist. A fear of different racial and ethnic groups has been bred into humans, as a survival mechanism, over the hundreds of thousands of years since we became biologically modern.
All races and ethnic groups like to think that they’re “the best” or the most worthy, and that non-members are “other”, perhaps only marginally human. Biological warfare plays directly into feeling.
Americans who—like everybody else—see themselves as “the good guys”, believe we’re immune to that. However, don’t forget that the US pioneered modern biowarfare. Fort Detrick, Maryland, has been an epicenter of it for over 70 years, and there are undoubtedly many other more clandestine sites where US government agencies are working on biological warfare. No doubt the Chinese and other major powers are working clandestinely as well. It’s not something anybody wants to advertise for many reasons.
What shocks me is not that a biowar is being researched or even actively wargamed, but that a connected organization like Deagel is actually saying it publicly. It’s not like what goes on in the spook community is an open book.
Deagel doesn’t explicitly say what, exactly, will cause the great die-off. But there are many advantages to biological warfare over other types of warfare, so it will probably be featured. It’s probably inevitable, now that the technology has made it practical.
What are the advantages of biowar? What might wargaming generals like about it?
- First, it doesn’t destroy materiel. That’s a huge plus. After all, what’s the point of conquering a country if all you have to show for it is a smoking radioactive ruin? That’s the major advantage of the neutron bomb, of course; it kills the people but limits damage to buildings. Bioweapons essentially make atomic weapons obsolescent.
- Second, bioweapons can be structured to attack only certain racial groups. That’s potentially either a big advantage or disadvantage to China. The diverse population of the US could also be either an advantage or a disadvantage, depending on who strikes first. But, on the bright side, you can perhaps immunize your own population, or at least the military and “essential” workers, to control the damage.
- Third, bioweapons are very cheap and easy to fabricate. Anyone with access to a good high school chemistry lab is in business. There’s no need for expensive and tricky U-235 or, for that matter, any of the junk toys the Pentagon spends hundreds of billions on.
- Fourth, bioweapons don’t need sophisticated delivery systems; again, no need for B-2s, B-52s, cruise missiles, ICBMs, or any of that. A sick tourist or two, or a few packages sent in the mail, can get the job done.
- Fifth, bioweapons, whether they’re viruses or bacteria, not only offer plausible deniability but the potential to blame a third party. You can launch an attack, and nobody can really be sure who did it. Or even that an attack is, in fact, being launched.
There’s every advantage to biological warfare from an aggressor’s point of view. And, the aggressor doesn’t even have to be a nation-state, which is, of course, another excuse for governments to further clamp down on their populations, as COVID has shown. Guns are good self-defense weapons, and governments are trying to eliminate them; basement biowar labs are strictly offensive. Imagine the bureaucratic enforcement possibilities.
International Man: In addition, Deagel included a lengthy disclaimer, which states:
“After COVID, we can draw two major conclusions:
- The Western world success model has been built over societies with no resilience that can barely withstand any hardship, even a low-intensity one. It was assumed, but we got the full confirmation beyond any doubt.
- The COVID crisis will be used to extend the life of this dying economic system through the so-called Great Reset.”
Doug, you’ve written extensively about the economic, political, cultural, and social decline in the US—long before it became a popular topic of discussion.
Has anything changed in your perspective on the future of the US?
Doug Casey: No. I’m afraid the election of actual Bolsheviks in 2020—and I don’t use that term lightly—has sealed its fate. Not to mention that the nomenklatura in most major cities and states are cut from the same cloth.
In point of fact, the US is on such a self-destructive path that the Chinese don’t have to do anything in order to win. All they need to do is lay back and be quiet. The West is destroying itself.
As for this COVID crisis, it impresses me as 80% hysteria, a bad flu season that has been blown out of proportion. It’s well known (insofar as anything can be known, considering the abysmal quality of reporting and the extreme politicization of the issue) that COVID mainly affects the elderly, the sick, and the obese. The average age of descendants is 80; however, the ages of those who die are rarely mentioned. The media reports the number of COVID cases constantly, but that’s as meaningless as counting who gets a common cold. Anyway, aren’t all those who get infected become immune? A virus—like the Hong Kong flu, the Asian flu, the Bird flu, and the Swine flu—goes viral, then goes away. Even the Spanish flu, which was actually serious, came and went without destroying the economy. Nonetheless, the public has been so terrorized that they’re panicking to take potentially dangerous experimental injections. Even though there are numerous cheap drugs that can mitigate the virus after diagnosis, they’re never prescribed. The opinions of physicians and world-class scientists who differ with Fauci—an overpaid lifelong government employee—are actively suppressed. However, this is a whole different subject.
There is one thing I question about Deagel’s statement that you quoted: “The COVID crisis will be used to extend the life of this dying economic system through something called the Great Reset.” That’s a very odd statement because the crisis isn’t extending the life of the dying economic system. It’s putting the final nail in its coffin. It would be nice to hear how they figure that out, as COVID seems to be medically vastly overblown. The Great Reset has nothing to do with preserving the current economic system; it’s about formalizing a new one.
Here’s a wild and crazy thought. What if the real problem isn’t so much the COVID virus itself.
What if the real problem is the new vaccines. What if, after X number of months or years, they turn out to have very deadly effects? There’s a reason new drugs are tested over a period of years, which is far from the case here. Ted Turner, Bill Gates, and numerous others who think they’re “elite” have long said that the earth’s population ought to be reduced radically, perhaps by 80%. Is it too shocking to believe that some group would take advantage of this to cull the human population? It’s something that would be hard to believe even in a science fiction novel. But it now appears to be technically feasible. History is replete—overrun, actually—with psychos who try to destroy everybody once they get in power.
In point of fact, science fiction is a much better predictor of the future than any think tank has ever been. So maybe there’s a Dr. Evil at large, anxious to eliminate deplorables and other undesirables. If he exists, I doubt today’s woke transgender version of James Bond can counter him. Who knows where this is going? But it’s the wrong direction, and the trend is still accelerating.
International Man: The disclaimer in the Deagel report goes on to say,
“The collapse of the Western financial system – and ultimately the Western civilization – has been the major driver in the forecast along with a confluence of crisis with a devastating outcome. As COVID has proven Western societies embracing multiculturalism and extreme liberalism are unable to deal with any real hardship.”
Is the Western civilization seeing a confluence of crises coming together in a perfect storm?
Doug Casey: That’s a very good point. It seems like everything is starting to happen at once and at a hyperbolically accelerating rate. While the worlds of science and technology are approaching Ray Kurzweil’s utopian Singularity, the worlds of politics and sociology are approaching a dystopian anti-Singularity.
Let’s briefly look at the financial, economic, social, and political aspects of the potential collapse.
We’re absolutely en route to a gigantic financial crisis, featuring the destruction of the US dollar. And with it, the savings of a large percentage of the planet’s people will be impoverished because their savings are in dollars. Much of the value people thought they had in stocks, bonds, real estate, pensions, and insurance could disappear.
That’s bad enough, but what’s worse are the economic consequences. We’re likely to see wholesale unemployment, a collapse in business activity, and corporate bankruptcies, even while taxes go up radically. I’m increasingly of the opinion there will be a crack-up boom along the way; however, we might be entering that as we speak.
What’s even worse are the social ramifications, such as critical race theory, which emphasizes the differences between race groups, creating actual race hatred. One consequence of the financial and economic upsets will be riots like those of 2020. The mass migration of people from alien cultures who don’t share Western values into the US and Europe is destabilizing. The US has, in fact, become a multicultural domestic empire.
The political consequences are evident. The Biden people in Washington, D.C. are exactly the same personality types who took over Russia in 1917 or France in 1789. They aren’t going to let go of the apparatus of power now that they’ve got it. They will find a way to re-install themselves in 2024.
What about the military? The US spends something like $1 trillion on defense annually, but nobody knows for certain. These budgets are complicated; military spending is hidden here, there, and everywhere. It doesn’t defend the United States; it just antagonizes foreigners. It’s also interesting that the Department of Defense is now trying to root out conservative political views from the rank-and-file soldiers.
But let’s get back to what could collapse the populations of North America and Europe by over 50%. Perhaps Deagel is anticipating a serious collapse of complex society because food won’t be grown, processed, and sent to cities. Maybe COVID is seen as just a catalyst. Most people in today’s highly urbanized world, from cubicle dwellers to ghetto rats, are incapable of surviving for more than a week if supply chains break.
International Man: The report also discusses a prediction regarding a potential war that involves Russia and China against the US.
What are your thoughts on this? Is it likely that we’ll see a conflict of this kind during the 2020s?
Doug Casey: As I said earlier, a war, at least with China, seems inevitable. It will likely be fomented by the US because, as the economy goes bad, governments always look for somebody else, an outsider, to blame.
At this point—and I recognize this will outrage jingoists and nationalists—the US government is actually the most dangerous force on the face of the planet. Much more dangerous than the Chinese, the Russians, or anybody else. Why? The US government is unique in actively and aggressively looking for trouble absolutely everywhere, sticking its nose into everything. Only the US has troops in a hundred other countries and is fighting hot wars in several more.
It’s said, for instance, that the Russians are aggressors because they may retake the Crimea and the Donbas region. Most Americans, who can’t even find these places on the map, are unaware that Crimea had been part of Russia since it was taken from the Ottomans in the 18th century and is mostly populated by ethnic Russians. Nikita Kruschev arbitrarily transferred it from the Russian SSR to the Ukrainian SSR in 1954 for personal political reasons shortly after Stalin’s death. The current problem started only after the US fomented a coup d’etat, a so-called color revolution, in Ukraine in 2014. It then made sense for Putin to retake it, much like the US tried to overthrow Castro after he ousted Batista.
In any event, it’s a problem between Russia and Ukraine and none of our business. The Biden regime butting in is somewhat analogous to Russia threatening war over the US owning Puerto Rico. We don’t need a serious war with Russia over nothing.
Taiwan is similar. Historically, it’s just a secessionist Chinese province—or not. Perhaps it’s a government in exile. But no matter; these are meaningless legalisms. Frankly, I’m on the side of Taiwan, but it’s none of our business whether they go to war with each other. US government intervention could easily start a conflict with China. It might end with the sinking of a couple of US carrier groups, or it might evolve into World War 3.
And, of course, we’re still in Afghanistan, Central Asia, and the Middle East. Plus Africa and God knows where else. The US is unnecessarily and stupidly whacking hornet’s nests everywhere in the world, bankrupting itself and making enemies, setting the stage for something really significant.
It’s often said that with every crisis comes great opportunity.
While such catastrophes do create upheaval and uncertainty in financial markets, Visual Capitalis's Aran Ali details below that they can also lead to new opportunities for investors, as asset classes react to different environments.
Since the World Health Organization (WHO) declared COVID-19 to be a pandemic on March 11, 2020, the performance of vaccine stocks have been varied—but with some notable winners that notched triple or quadruple digit returns.
Here’s how much a $1,000 investment would be worth as of March 31, 2021, if you had put money into each vaccine stock at the start of the pandemic:
The Business of Vaccines
The returns on vaccine stocks have varied greatly. They are staggering in the case of Novavax and Moderna, but also seem quite underwhelming, when considering the likes of Sanofi, AstraZeneca, and Pfizer.
One factor for the discrepancy in stock price performance is the revenue potential from vaccine sales relative to the rest of the existing business, as vaccine sales will have a much greater impact on the fundamentals of smaller companies.
For example, before the pandemic, Novavax had revenues of just $18.7 million—this meant that capturing any portion of global vaccine sales would create massive value for shareholders. On the flipside, vaccine sales are much less likely to impact the fundamentals of Sanofi’s business, since the company already is generating $40.5 billion in revenue.
To put it into perspective, analysts are expecting total sales from COVID-19 vaccines to be around $100 billion, with $40 billion in post-tax profits.
Vaccine Stocks vs the S&P 500
Even in a booming and valuable industry, it’s difficult to identify the long-term leaders. For example, in the mobile phone market, there was a time where the likes of Motorola, Nokia, and Blackberry appeared untouchable, but eventually lost out.
Similarly, with the limited information available at the start of the pandemic, few, if any, could have separated the winners and losers from this group with accuracy.
In the past year, the S&P 500 grew 44.9%—meaning that only three of the seven vaccine stocks have seen their share prices outperform the market.
Nobody said helping solve a global pandemic guarantees a pay off.
One week after Michael Wilson presciently warned that the recent breakdown of small caps was "a warning sign that the reopening would be more difficult" than anticipated by the market...
... while also cautioning that "the underperformance in IPOs and SPACs is a signal that the excessive liquidity provided by the Fed is finally being overwhelmed by supply", Morgan Stanley's chief equity strategist has published a fresh warning that markets are about to hit some potentially major turbulence as the "rising cost pressures/supply shortages, the definitive peak rate of change on economic data and earnings revisions and demand being overwhelmed by supply are all contributing to the deterioration in lower quality, smaller capitalization, and the more cyclical parts of the market."
Wilson then points out that the market "gets" the approaching headwinds, which explains why "IPOs and SPACs have also been trading poorly for the past few months" and which in Wilson's experience "is an early warning sign on real-time liquidity dynamics." As such, Morgan Stanley continues to recommend "moving up the quality curve and skewing more defensively as earnings season proves to be a sell-the-news event."
Picking up on what Goldman said overnight, namely that it now appears that the best of the economic surge is now behind us (and markets are starting to price it in), Wilson noted that while "over the past few weeks, economic data has been nothing short of spectacular" it's really not that much of a surprise, at least relative to expectations. And, to Wilson that's what ultimately matters for investors. Furthermore, as shown in the chart below, "many data series are peaking from a rate of change standpoint. In fact, the rally in bonds over the past few weeks has surprised many but the reality is that these strong data were well understood by markets." As the MS strategist explains it simply, "if rates didn't move up on the back of record economic data surprises last year, it's not hard to see why they didn't react more to the strong data of the past few weeks when it wasn't such a surprise."
To be sure, Wilson has repeatedly noted that the "peak" rate of change has passed over the past few weeks and this observation is "core to our view that we are moving from early cycle to mid cycle in this recovery." What's even more notable is that "It's happening about twice as fast" as we have experienced in the prior three recessions/recoveries, which also very much fits with the bank's view that this cycle will be different – most notably, that it will run hotter but also shorter. As such, there are implications for equity portfolio managers to consider: In particular, Wilson notes his call to upgrade one's portfolio by moving up the quality curve three weeks ago – high quality has started to outperform low quality, a move which Wilson thinks will continue.
In addition to the shift toward quality, Wilson says he has "witnessed a move up the cap curve and a peaking of cyclicals vs defensives, all of which are in line with our change in recommendations over the past month (Exhibit 3). As part of this same shift, we downgraded discretionary and upgraded staples, which has not yet started to work but we still think presents a good opportunity because it's another expression of our view."
Validating his point, Wilson also notes that most of the cyclical, speculative and lower quality indices on a global basis have been underperforming now for months. While the high-quality S&P 500 and Nasdaq 100 are making new all-time highs, the following indices have peaked and failed to make new highs:
- Bovespa (1/18),
- Kospi (1/11),
- ACWI ex-US (2/16),
- NYSE FANG+ (2/16),
- Nikkei (2/16),
- EEM (2/18),
- MSCEI (2/18),
- Shanghai Comp (2/18),
- Eurostoxx Banks (3/18).
If that wasn't enough, Morgan Stanley also observes that "many commodities are also laboring to make new highs as the high-quality S&P 500 and Nasdaq 100 breakouts look more and more isolated."
Finally, picking up on a point he first made last weekend, Wilson warns that "the breadth of participation has deteriorated significantly whether we are talking about the very broad Russell 3000 index or Nasdaq Composite. "What this really means to the equity strategist is that the market "gets it" and is preparing for what is likely to be a more difficult environment for stocks and risk assets generally.
And, as he has discussed in recent week, Wilson cautions that there are several concerns fast approaching that will become more obvious over the next few weeks – more specifically i)rising cost pressures/supply shortages, ii) the definitive peak rate of change on earnings revisions and iii) demand being overwhelmed by supply.
On that last point, Wilson - and everyone else - has been watching how poorly IPOs and SPACs have been trading, which is an early warning sign on real time liquidity dynamics, which are typically difficult to gauge.
So has Wilson turned full bear?
Perhaps sensing that this question is coming, the chief MS equity strategist concedes that while he is less bullish on the more speculative / cyclical parts of the market in the near term, he retains high conviction in his reflationary view over the next 12 months:
Hence, we remain Overweight Financials, Materials and Industrials. Meanwhile, we remain Neutral on Tech and Overweight Healthcare given the greater valuation headwinds on the former.
Having said that, in the very near term, the top MS equity strategist does think rates can come in further as risk comes out during this mid-cycle transition, which should favor reasonably priced high-quality large-cap tech stocks like GOOGLE.
By Chetan Ahya, Morgan Stanley's Chief Economist and Global Head of Economics
Central Bank Digital Currencies – The Next Disruption
We do not usually associate disruption with central banks. But a major move to introduce central bank digital currencies (CBDCs) could actually disrupt the financial system.
CBDCs are a new form of digital cash intended to serve as a substitute for physical cash. They will be a liability of the central bank, which will maintain them in a centralized ledger. CBDCs should not be confused with cryptocurrencies, which either are pegged to an underlying asset or backed by a public blockchain. Cryptocurrencies are not a viable form of digital cash for payments on a large scale, given the high computational and energy intensity of the validation process using distributed ledger technologies. However, they will continue to perform other functions. For instance, investors may perceive that cryptocurrencies can be a store of value (akin to precious metals) to hedge against the effects of central banks’ aggressive monetary easing.
Efforts to introduce CBDCs are gaining momentum, with as many as 86% of the world’s central banks exploring digital currencies. China has launched pilot trials in a number of cities, the ECB recently concluded a public consultation on a digital euro and will make a decision this summer, and the Boston Fed is set to release its initial research in the fall.
What explains this sudden concerted interest? We see three main reasons:
- Monetary sovereignty: Private payment networks have proliferated rapidly. As they gain market share, these networks can become the primary means of transaction for many users. The central banks’ concern is that money will circulate almost exclusively within the networks, posing a threat to central bank control of the monetary system.
- Financial stability: Any potential failure by a private provider of digital money could disrupt the payment system and lead to financial stability risks. While regulators have taken steps to mitigate these risks, they cannot eliminate them. In contrast, the central bank both creates and holds a CBDC, hence will be able to guarantee its reliability as a medium of exchange for transactions.
- Financial inclusion: The rise of private, narrow money networks risks excluding segments of the general public, e.g., the unbanked population. A CBDC, just like physical cash, can be made broadly available and may even foster greater financial inclusion.
With these objectives in mind, we think that central banks will implement consumer-facing retail digital currencies, accessible to the public through financial intermediaries and running on a centralized ledger system controlled by monetary authorities.
Nevertheless, when something as fundamental as what you use to make payments changes, the effects can be far-reaching.
Commercial banks will face the risk of disintermediation. Once CBDC accounts are launched, consumers will be able to transfer their bank deposits there, subject to limits imposed by the central banks. Moreover, the technological infrastructure of CBDCs will make it easier for new non-bank entities to enter the payments space and accelerate the transition towards digital payments. These factors will increase competitive pressures on commercial banks.
In a digital economy, data provide a competitive edge. We see a tug-of-war playing out between consumers who are privacy-conscious and want to keep their transactions anonymous and fintech companies that will innovate and incentivize consumers to get onto their platforms in order to acquire transaction data. If the fintechs’ efforts succeed, network effects could proliferate, allowing fintechs to take market share from banks.
CBDCs also have the potential to disrupt the international payments system. If a country’s CBDC gains acceptance for international transactions, significant advantages could accrue to the issuer country in financing costs and control over financial transactions, similar to the US dollar’s privileged role today. Some central banks like the ECB and the PBOC see the move towards digital currency as an opportunity to raise the international status of their currencies and increase their use in cross-border payments. On the other hand, emerging markets want to limit the use of foreign digital currencies in their economies (e-dollarization).
Innovations are typically viewed with caution and their disruptive potential is usually underestimated. While central banks’ CBDC initiatives are not intended to disrupt the banking system, they will likely have unintended disruptive consequences. The pace of disruption will hinge on how quickly network effects take hold in a CBDC system. The more widely digital currencies are accepted, the more opportunity for innovation and the greater the scope for disruption to the financial system.