- Internet freedom: Almost dodged a bullet?
- Pentagon leak reinvigorates RESTRICT Act
- Zach Scheidt: About those bank earnings
- Ethereum’s “Shanghai upgrade”
- A Pentagon contractor underwrites a “killer” opera… A reader calls BS on gold… Policy over personality… And more!
For a few days, it seemed as if freedom had dodged a bullet.
On March 30, we sounded the alarm about the RESTRICT Act of 2023 — described by shrewd observers as “a Patriot Act for the internet.”
Ostensibly, the legislation would give the president the authority to ban the TikTok app. In reality, it grants the executive branch the authority to “enforce any mitigation measure to address any risk” to national security, broadly defined. Indeed the language is so broad that U.S. citizens could be designated as “foreign individuals” who pose a national security threat.
How might that play out? “Use your imagination,” writes J.D. Tuccille at Reason; “government officials implementing the law certainly will.”
The following day, March 31, it looked as if momentum behind the RESTRICT Act had hit a wall.
“Key senators are now suggesting they’re ambivalent about RESTRICT,” said a report from Politico. “A right-wing backlash to the legislation is building.”
Fox News host Jesse Watters gave an especially hard time to Sen. Lindsey Graham (R-South Carolina). “I don’t think I support the RESTRICT Act,” said Graham — even though he was one of over 20 co-sponsors.
The bill’s lead sponsor, Sen. Mark Warner (D-Virginia), “also had to defend the bill,” said Politico, “from accusations that it would undermine free speech and expand government surveillance.”
And then… and then came the leak of top-secret Pentagon documents.
“The Biden administration is looking at expanding how it monitors social media sites and chatrooms,” reported NBC News last week, “after U.S. intelligence agencies failed to spot classified Pentagon documents circulating online for weeks, according to a senior administration official and a congressional official briefed on the matter.”
Specifically, NBC said the White House is looking at “expanding the universe of online sites that intelligence agencies and law enforcement authorities track.”
More to the point, “the Leaker tale will also surely be framed as reason to pass the RESTRICT Act,” writes independent journalist Matt Taibbi at his Racket News site.
Taibbi calls the bill “the wet dream of creepazoid Virginia Sen. Mark Warner, which would give government wide latitude to crack down on ‘communication technology’ creating ‘undue or unacceptable risk’ to national security…
“Watch how this thing will be spun. It’s going to get ugly fast.”
The number of RESTRICT Act sponsors in the Senate is now up to 25 — one out of every four senators — 13 Democrats, 12 Republicans.
That includes Lindsey Graham, who reiterated his support for the bill the day after the Jesse Watters interview. We’ll keep you posted on the state of play.
[Ed. note: Don’t miss colleague Byron King’s take on the leak, posted last Thursday at The Daily Reckoning. Byron is Paradigm’s natural resources authority, but he’s also got serious military chops as a retired U.S. Navy officer.]
The big market story at the start of the week is… gold slipping back below $2,000.
The selling began as soon as trading on the Comex opened at 8:00 a.m. EDT. At last check, the bid is down to $1,987. Silver has likewise cracked below a round number, now $24.92.
Stocks are mostly treading water — the Dow flat at 33,871, the S&P 500 down a quarter percent at 4,128 and the Nasdaq down 0.4% at 12,073.
The S&P remains on the high end of its trading range of the last five months between 3,800–4,200. “We’ve got earnings season started with the bank billions, a lot of money being made,“ says Paradigm trading guru Alan Knuckman. “Let’s see how that translates into market action.” If the S&P can break through 4,200, the next upside target is 4,600. Earnings season resumes in earnest tomorrow.
About those bank earnings: Three of the Big Four commercial banks reported Friday, including the biggest of them all, JPMorgan Chase. “During the first quarter, JPM earned $4.32 per share on revenue of $39.34 billion,” says Paradigm’s retirement specialist Zach Scheidt. “The stock shot sharply higher following the report as investors breathed a sigh of relief.”
In recent weeks, Zach has been telling us the big banks will actually benefit from the crisis in the regional players. ”That’s because businesses and individuals are moving their accounts away from small regional banks and into the safety of top-tier banks like JPM. And that’s exactly what’s happening.”
We have two economic data points today, both with insight into the economy’s performance so far in April…
- New York state manufacturing: After four-straight negative monthly readings, the New York Fed’s Empire State Manufacturing index is back in positive territory at 10.8. This data set is volatile, but it suggests the downturn in the factory sector is at least pausing
- Homebuilder sentiment: Anything below 50 is subpar, and the Housing Market Index from the National Association of Home Builders rings in at 45. Still, that’s the highest in seven months — thanks to falling mortgage rates and lean inventory among the existing housing stock.
Crypto prices are hanging tough: Indeed, Ethereum has survived what more than a few crypto bros thought would be a crushing event.
As you might recall, Ethereum finished its transition last year from a “proof of work” model like Bitcoin to a much less energy-intensive “proof of stake” model.
“Staking relies on deposits by users to operate the blockchain,” explains Paradigm crypto guru James Altucher. “Stakers place deposits as collateral, which they risk losing if they cheat or break the blockchain rules. In exchange, stakers earn a steady stream of interest for their contribution.”
Last week brought the much-touted “Shanghai upgrade” — in which “stakers now have the option of withdrawing their deposits following a predetermined amount of time.”
As you might imagine, there were worries that stakers would try to withdraw their Ethereum and exchange it for either fiat money or other cryptocurrencies.
Instead, Ethereum plowed through $2,000 for the first time since August. This morning it’s at $2,083. (Bitcoin is at $29,459.)
James figures Ethereum might oscillate around the $2,000 mark for a while. But looking forward, “the blockchain’s smart contract capabilities, ecosystem of developers and speed of transactions make it a far more appealing alternative than rivals like Bitcoin… Longer term, I expect that Ethereum could eventually trade for $10,000.”
[In the interest of keeping our team accountable: In early 2022, James forecast in this space that Ethereum would reach $100,000 before 2023. Obviously that didn’t pan out as “crypto winter” set in. But the drivers behind Ethereum that inspired him to make that extremely bullish call have not changed.]
You can’t make this stuff up: The Pentagon contractor General Dynamics is underwriting production of a new opera about killer drones.
Grounded will make its debut this fall at the Kennedy Center in Washington, D.C. (Where else, right?)
The premise, according to the Kennedy Center website: “Jess is a hotshot F-16 fighter pilot, an elite warrior trained for the sky. When an unexpected pregnancy grounds her, she’s reassigned to the ‘chair force’ to control drones in Afghanistan from the comfort of a trailer in Las Vegas… As Jess tracks terrorists by day and rocks her daughter to sleep by night, the boundary between her worlds becomes dangerously permeable.”
Broadway composer Jeanine Tesori wrote the score, playwright George Brant the libretto.
It’s based on Brant’s one-woman play of the same name; Anne Hathaway tried to pull off a Southern accent in a 2015 production. In that setting, the treatment of remote-controlled death was ambivalent; at the end, a conflicted Jess tells her audience to “know that you are not safe,” but from her tone, you can tell her heart isn’t in it.
“With a leading weapons maker involved, it’s a little hard to believe that this new production will end with such a dour take,” quips Connor Echols at the Responsible Statecraft website.
Especially when you consider the F-16 is made by none other than GD…
To the mailbag, and a frustrated goldbug we’ve started hearing from regularly…
“So gold is back below $2K because of some ridiculous U of Michigan report about consumer sentiment, where they probably call the same 400 people every time….and based on that, gold is hammered down? Looks like bull**** to me – even worse than the very slight gain in the dollar.
“I go back to my suspicion that every little excuse they can whip up – or fabricate – to keep the dollar price down, they’ll do it. Who knows that U of M even reported the results accurately? You know the adage about statistics.”
The 5: You can complain… or you can take advantage of the artificially low prices to keep stacking! Personally I picked up a few more shares of a gold-miner mutual fund on Friday.
“I find it interesting when people continue to try and tie everything back to President Trump,” a reader writes after our Saturday edition on blowback from the trade war.
“Biden doesn’t have the negotiation skills Trump did and does. To say that a success in China isn’t/wasn’t possible when a new and disastrous deck of cards has been dealt out of which success is expected is more than questionable.”
Adds another: “I found Emily Clancy’s article on Trump’s trade war with China rather flawed and upsetting. She blames Trump for the failure and then goes on how the Biden administration is failing us as if we do not know he is and has been a Chinese asset for many years.
“Setting aside your personal beliefs and staying with what is rumored to happen and labeling it as such and what is actually happening as it pertains to the market, not the success or failure of a past president, would have been much more appropriate.”
The 5: It might be hard for some folks to believe in this day and age… but the critique was one of policies and not personalities.
By and large, we’re partial to free trade around here. And by “free trade” we don’t mean it the way the globalists do — 700-page treaties with all manner of carve-outs for special interests.
“Since at least Adam Smith, it is a well-known fact that free trade is one of the keys to prosperity,” writes Luis Pablo de la Horra at Intellectual Takeout. ”Yet the case for tariffs keeps coming back like a bad penny.”
When Trump embarked on his trade war five years ago, we recalled the specter of George W. Bush’s 2002 steel tariffs — a naked ploy for midterm election votes in Pennsylvania, Ohio and West Virginia.
Research by the Institute for International Economics found the tariffs indeed saved 3,500 steel jobs. Unfortunately, industries that relied on cheap imported steel cut at least 12,000 jobs — perhaps as many as 43,000.
Another study by the Citac Foundation pegged the number of lost jobs far higher, at 200,000.
So it doesn’t surprise us at all to see Trump’s steel and aluminum tariffs led to higher costs for companies like American Keg… and higher prices for struggling U.S. consumers.
Nor, cynics that we are, does it surprise us that Biden has left the tariffs in place. Economic folly is frequently a bipartisan affair…
Best regards,
Dave Gonigam
The 5 Min. Forecast
