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‘Big Short’ Michael Burry Makes a Dire Prediction For 2023

January 2, 2023 Published by Luc Olinga

TheStreet

The legendary investor anticipates a dark scenario for the U.S. economy this year.

Consumers and investors are wondering how much the cost of living will rise as inflation remains at a 40-year high.

But the question that frightens everyone — consumers, markets and government — is whether the economy will enter a recession.

The “R” word is the scary word. But for many economists there is no longer any doubt: recession is on the menu for 2023.

A December survey of 38 economists by Bloomberg showed they saw a 70% chance for a recession next year. That’s up from 65% in November. The economists say the Federal Reserve’s interest rate hikes will cut demand.

They forecast that consumer spending, which makes up two-thirds of GDP, will barely increase in the middle six months of the year.

Median estimates call for GDP growth of only 0.3% in 2023 as a whole. That includes an annualized 0.7% dip in the second quarter and zero growth in the first and third quarters.

“We expect that the Fed will stay in restrictive policy for a while unless the effect on real GDP growth and unemployment becomes particularly severe and inflation has fallen close to target,” said Maria Vassalou, co-chief investment officer of multiasset solutions at Goldman Sachs Asset Management.

‘The US in Recession By Any Definition’

Many business leaders including Elon Musk and Jeff Bezos have also already warned of a recession.

“My advice to people, small business owners is take some risks off the table. If you are going to make a purchase maybe slow down that purchase a little bit,” Bezos said last November. “If you are an individual and you are thinking about buying a new large screen TV maybe slow that down keep that cash, see what happens. Same thing with a refrigerator, a new car whatever, let’s take some risks off the table.”

“If you are a small business maybe delay some capital purchases: do you need that new piece of equipment? Maybe it can wait a little bit, have some cash on hands; just a little bit of risk reduction could make the difference for that small business.”

Michael Burry, the legendary investor who has become the oracle of Wall Street, seems to share this pessimistic diagnosis. He has just given his first predictions for 2023, and these are grim.

Burry claims that regardless of how the word recession is defined, the U.S. economy will be in recession in 2023.

“Inflation peaked,” Burry wrote on Twitter on January 1. “But it is not the last peak of this cycle. We are likely to see CPI lower, possibly negative in 2H 2023, and the US in recession by any definition.”

He then describes a vicious circle. The Federal Reserve, which has raised interest rates to a level not seen since the 2008 financial crisis, will pivot and cut rates, while the federal government should announce a stimulus package to help households strangled by the deteriorating economy.

All of this will end with another resurgence of inflation, which is similar to what happened during the covid-19 pandemic. Basically, we are going to see a rehearsal of what happened after March 2020.

“Fed will cut and government will stimulate. And we will have another inflation spike. It’s not hard,” Burry says.

Former Predictions

The 2008 financial crisis, one of the biggest financial debacles in history, made Burry a legend. It made him one of the examples to follow in the defiance of standard practices in financial circles.

The 2015 film “The Big Short” describes how the investor, who had no particular expertise in finance and real estate, came to understand that the sector had become a sandcastle, with financiers and bankers creating exotic products based on mortgages given to financially fragile households and borrowers with poor credit.

He, therefore, decided to bet on the collapse of the subprime mortgage market, hence the name “Big Short.” History proved him right. Since then, Burry, who now runs hedge fund Scion Asset Management, has become something of a Wall Street oracle.

He embraced this role judging by his Twitter handle which is Cassandra B.C. For traders and risk takers, he is a kind of party spoiler.

In recent months, Burry warned that the economic situation was going to deteriorate seriously, that massive layoffs of white collar workers were on the horizon; he predicted that the stock market was going to have a moment of truth, after two years of prosperity during the pandemic.

All of these warnings came true in 2022.

1 killed, 9 injured in New Year's Eve shooting in Alabama

January 2, 2023 Published by CNN

CNN
—

A 24-year-old man was killed and nine others were injured in a shooting in Mobile, Alabama, Saturday night, according to local police, just blocks from where people had gathered for the city’s New Year’s Eve celebration.

Officers responded to a report of shots fired in the 200 block of Dauphin Street around 11:14 p.m. CT, the Mobile Police Department said in a news release.

When officers arrived, they found an “unknown subject” had shot a 24-year-old man, who was pronounced dead at the scene, the release said.

Nine other victims, ranging in age from 17 to 57, also suffered gunshot wounds and were taken to local hospitals “with injuries ranging from non-life-threatening to severe,” according to the release.

Police have taken a suspect, a man, into custody in connection with the shooting.

“The subject is receiving medical treatment and, upon release, will be transported to Metro Jail and charged with murder,” Mobile Police Cpl. Katrina H. Frazier said.

It’s unclear what motivated the shooting, which happened as crowds were in the downtown area for the MoonPie Over Mobile event.

“This is an active investigation,” Mobile Police said in the release. “We will provide updates as details become available.”

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[World] Viking Orion: Cruise passengers stranded after marine growth halts ship

January 2, 2023 Published by BBC News

Image caption,

The Viking Orion in 2021

Hundreds of passengers have been stranded on a cruise ship off the Australian coast after a potentially harmful growth was found on its hull.

The Viking Orion was reportedly denied permission to dock in Adelaide after authorities discovered “biofoul” – an accumulation of microorganisms, plants, algae, or small animals.

This can allow invasive species to be imported into non-native habitats.

Officials said the ship’s hull must be cleaned before entering Australia.

Previous reports suggested the growth was a fungus, but this was not confirmed by the Australian fisheries department.

The department said the management of biofoul was a “common practice for all arriving international vessels” and that the ship had to be cleaned to avoid “harmful marine organisms being transported” into Australian waters.

“Professional divers were engaged directly by the vessel line/agent to clean the hull while at anchor outside Australian waters,” it added.

The ship was also reportedly denied permission to dock at Christchurch, Dunedin and Hobart. One passenger wrote on Twitter that over 800 guests remained onboard, many of whom were “upset and angry” by the company’s “negligence”.

The 14-deck, 930-person ship – which was built in 2018 – has reportedly dropped anchor around 17 miles (27km) off the coast while the cleaning occurs.

In a statement, operator Viking admitted that a “limited amount of standard marine growth” was being cleared from the ship’s hull and said that this had caused the vessel to “miss several stops on this itinerary”.

But it said that it expected to sail towards the city of Melbourne in the coming hours, where it would dock on 2 January. “Viking is working directly with guests on compensation for the impact to their voyage,” it added.

In a letter on Friday, the ship’s captain apologised that “the current cruise falls short of your expectations” and said a member of Viking’s customer relations team would make an “adjusted offer of compensation” to guests in the coming days.

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Trump tax returns raise alarms about fairness of U.S. tax code

January 2, 2023 Published by The Hill

A preliminary review of the thousands of pages of Donald Trump’s tax returns released by a key Congressional committee on Friday confirms that the former president was using business losses in the tens of millions of dollars to reduce his annual tax liability, in some cases all the way down to zero.

While one of Trump’s main businesses was found guilty of criminal tax fraud earlier this month, Trump himself has so far not been accused of doing anything illegal with his taxes and personal accounting.

But that’s raising more urgent questions about the fairness of the U.S. tax code and tax regulations, which number in the millions of words and in the case of Trump proved effectively unenforceable.

Advocates for tax reform say that a shift in mindset is needed, that a flawed conception of taxation as punitive and economically destructive is what allows for the sort of serial tax avoidance on display in the Trump tax returns.

“With the release of Donald Trump’s tax returns we have learned that he did not pay any federal income taxes [in some years],” Frank Clemente, director of tax advocacy group Americans for Tax Fairness, said in a statement to The Hill.

Clemente said that Trump’s tax avoidance was made possible by “a loophole-ridden tax system in need of fundamental change.”

Trump on Friday touted his ability to use the tax code to his advantage, specifically praising his use of business losses to wipe out his own personal tax bill.

“The ‘Trump’ tax returns once again show how proudly successful I have been and how I have been able to use depreciation and various other tax deductions as an incentive for creating thousands of jobs and magnificent structures and enterprises,” Trump said in a statement.

In an apparent violation of IRS policy, which mandates that presidents receive regular audits, U.S. tax collectors were not auditing Trump on an annual basis, according to the Ways and Means Committee report released last week.

The reason for that isn’t clear, but the complexity of Trump’s financial situation and the tax laws that enable it may have been to be too much for the IRS to handle with resources dedicated to it.

“The individual tax return of the former President included the activities of hundreds of related and pass-through entities, numerous schedules, foreign tax credits, and millions of dollars in [net operating loss] carryforwards,” the Ways and Means report found.

The lone IRS agent assigned to one of Trump’s audits noted “that the lack of resources was the reason for not pursuing certain issues on the former President’s returns.”

“With over 400 flow-thru returns reported on the form 1040, it is not possible to obtain the resources available to examine all potential issues,” an internal IRS memo stated, according to the report.

While the committee dumped thousands of pages of documents on Trump’s taxes on Friday, it did not release IRS audit files along with them — a notable omission since the reason for obtaining and releasing Trump’s returns was supposed to be IRS oversight.

“Where are the IRS workpapers?” tax expert Steve Rosenthal said in an email to The Hill. “I thought the Ways and Means Committee was sharing Trump’s tax returns to allow the public to assess the IRS audit. The Joint Tax Committee reported the IRS audit was abysmal, which seems correct. But Joint Tax used the IRS workpapers to illuminate. We ought to see them also.”

The IRS is set to receive $80 billion in additional funding over the next decade, nearly doubling the operating budget of the agency on an annual basis and improving its capacity to audit complex business operations like those belonging to Trump.

But a structural discrepancy in the U.S. tax system between the way workers and business owners are taxed means that this new money for law enforcement might not be as effective as more legal reforms.

“Under the current system, American workers pay virtually all their tax bills while many top earners avoid paying billions in the taxes they owe by exploiting the system,” Treasury Secretary Janet Yellen said in 2021.

“At the core of the problem is a discrepancy in the ways types of income are reported to the IRS: opaque income sources frequently avoid scrutiny while wages and federal benefits are typically subject to nearly full compliance. This two-tiered tax system is unfair and deprives the country of resources to fund core priorities,” she said.

Tax reform advocates say it’s time to be taxing wages and capital in the same way.

“We should tax income from wealth the same as income from work. Very little of Trump’s money was earned by working—most was just ‘earned’ when he sold assets he inherited that had grown in value,” Amy Hanauer, director of the Institute for Taxation and Economic Policy, wrote in an editorial for Newsweek.

“This is backwards. Lawmakers should equalize these rates so that someone who wakes up at 6 a.m. and trudges to work in the rain doesn’t pay a higher rate than someone who sits in their inherited mansion watching the stock portfolio they were given grow,” she wrote.

Speaking in November, Fred Goldberg, who was IRS Commissioner under George H.W. Bush, said that simplifying the U.S. tax code has long been a moonshot for lawmakers.

“That’s been the holy grail for 40 years,” he said.

Beyond the policy questions raised by Trump’s labyrinthine returns, their release represents the latest chapter in years of political sparring over the former president’s business career and the tactics he used to amass his wealth and fame.

Throughout his first political career, Trump and his supporters pledged he would be a ruthless dealmaker on behalf of the American people. While Trump attributed his success to a tireless work ethic and unique ability to dominate negotiations, a series of financial records, media reports, and lawsuits exposed his heavy reliance on tax credits, bankruptcy litigation and fraud to build a real estate empire.

Democrats often criticized Trump for claiming to be a virtuosic businessman despite declaring bankruptcy four times and amassing billions of dollars in debt to finance a string of deals. They also sought Trump’s tax returns to assess the true nature of his wealth and the depth of his financial connections abroad.

“As the public will now be able to see, Trump used questionable or poorly substantiated deductions and a number of other tax avoidance schemes as justification to pay little or no federal income tax in several of the years examined,” said Rep. Don Beyer (D-Va.) in a Friday statement.

Trump and his Republican supporters in Congress, however, defended the former president’s business practices as a basic part of operating in real estate. The former president anointed himself the “king of debt” in 2016 amid frequent criticism of his past bankruptcies, which he called an effective way of keeping his business going.

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Biden's border crisis: Our immigration courts have a 2,023,441 case backlog and it's more than we can handle

January 2, 2023 Published by Fox News

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The Border Patrol had more than 2.2 million encounters with illegal crossers between ports of entry on the Southwest border in fiscal 2022.

A recent report from the DHS Inspector General indicates that most of the illegal crossers are not put in detention facilities or expelled under Title 42, but rather are processed for outcomes allowing them to be released into the United States to wait for immigration hearings. This has overwhelmed the immigration courts.

The immigration court backlog was 1,262,765 cases at the end of fiscal 2020, which was the last full fiscal year of the previous administration. Under the current administration, it has risen to 2,023,441 cases as of the end of November 2022.

ICE DEPORTATIONS REMAINED WELL BELOW TRUMP-ERA LEVELS IN FY 2022, AMID HISTORIC BORDER CRISIS

Almost 800,000 of them have submitted asylum applications and are waiting for an asylum hearing. The average wait from when an application is filed to when an applicant’s case will be heard is 1,572 days, or 4.3 years.

DHS Secretary Alejandro Mayorkas has been criticized for lack of border enforcement.
(AP Photo/Jose Luis Magana)

Moreover, many others have been allowed to enter the United States to wait for an asylum hearing but have not filed an asylum application yet. And the number of asylum seekers is likely to increase greatly when Title 42 is terminated.

The administration seems to want to deal with this problem by finding faster ways to adjudicate the applications instead of admitting fewer asylum seekers to give the immigration court a chance to catch up.

For instance, on May 28, 2021, the administration announced a new Dedicated Docket which is supposed to expeditiously and fairly make decisions on the immigration cases of newly arrived families who are apprehended between ports of entry at the Southwest Border. INA §1325(a) provides that such entries are crimes subject to imprisonment for up to two years.

DHS Secretary Alejandro Mayorkas says in the announcement that, “Families who have recently arrived should not languish in a multi-year backlog; today’s announcement is an important step for both justice and border security.”

The immigration court backlog was 1,262,765 cases at the end of fiscal 2020, which was the last full fiscal year of the previous administration. Under the current administration, it has risen to 2,023,441 cases as of the end of November 2022.

He is referring to newly arriving families, not the families who already are languishing in the multi-year backlog.

The announcement concludes that while “the goal of this process is to decide cases expeditiously, fairness will not be compromised.”

Dedicated Dockets are not new or fair.

The Obama and Trump administrations also had Dedicated Dockets for newly arriving migrants to prevent them from having to wait a long time for a hearing.

The Vera Institute of Justice claims that as prior efforts to use expedited dockets have demonstrated, Dedicated Dockets do not provide due process. Court records for a two-year period during the Obama administration show that it was rare for an unrepresented family in Dedicated Docket proceedings to file the papers needed to seek asylum or other forms of relief from deportation. Only 1 in 15 (6.5 percent) managed to do this without representation.

According to a recent TRAC report, more than 110,000 cases have been assigned to the current administration’s Dedicated Docket, and nearly 40,000 of them have been completed. The vast majority (83%) of the completed cases were closed within 300 days from the date of receiving a Notice to Appear in removal proceedings.

But a price must be paid for doing this. Georgetown Law School Professor Paul Schmidt points out that when Dedicated Docket judges are not available to hear cases on the general docket, it places extra burdens on their judicial colleagues who are handling the general docket cases.

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And taking judges away from the general docket to serve on the Dedicated Docket also reduces the number of judges who are available for doing cases that would reduce the backlog.

TRAC found that only 34% of the families whose cases have been completed had representation, and few families without representation have been able to complete the paperwork required for filing an asylum application.

Overall, only 2,894 out of 39,187 families who had hearings in fiscal 2022 were granted asylum. The cases in which asylum was granted represent just 7.4% of the completed cases.

The Vera Institute of Justice would address this problem by providing representation for every migrant in Dedicated Docket proceedings. According to the Institute, “No immigrant should be forced to go through immigration court proceedings without legal defense.”

Is that even possible? And if it is possible, who is going to pay for it? INA §1229a(b)(4), which provides that migrants have the “privilege of being represented” in removal proceedings, specifies that it must be “at no expense to the Government.”

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Frankly, I think the main problem is that the administration is flooding our already overwhelmed immigration court with a tsunami of illegal crossers who claim that they are asylum seekers.

The attempt to relieve the immigration court’s backlog crisis with a Dedicated Docket didn’t work for the Obama administration and it isn’t working for the current administration either.

Nolan Rappaport was detailed to the House Judiciary Committee as an executive branch immigration law expert for three years. He subsequently served as an immigration counsel for the Subcommittee on Immigration, Border Security and Claims for four years. Prior to working on the Judiciary Committee, he wrote decisions for the Board of Immigration Appeals for 20 years. Follow him at: https://nolanhillop-eds.blogspot.com

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Crowds gather as Pope Emeritus Benedict XVI's body lies in state at Vatican

January 2, 2023 Published by Fox News

Members of the public waited for hours to pay their respects to Pope Emeritus Benedict XVI as his body lies in state in St. Peter’s Basilica.

As daylight broke, 10 white-gloved Papal Gentlemen — lay assistants to pontiffs and papal households — carried the body on a cloth-covered wooden stretcher up the center aisle of the mammoth basilica to its resting place in front of the main altar under Bernini’s towering bronze canopy.

According to The Associated Press, a Swiss Guard saluted as the body was brought in via a side door after Benedict’s remains, placed in a van, had been transferred from the chapel of the monastery grounds where the late pontiff died at the age of 95 on Saturday morning.

People wait in a line to enter Saint Peter’s Basilica at the Vatican where late Pope Emeritus Benedict XVI is being laid in state at The Vatican, Monday, Jan. 2, 2023.
(AP Photo/Alessandra Tarantino)

Thousands of people braved the damp weather to view Benedict’s body. The line of people snaked around St. Peter’s Square.

Around 25,000 people are expected to pass by the body on the first day of viewing.

POPE EMERITUS BENEDICT XVI DEAD AT 95, VATICAN SAYS

Public viewing lasts for 10 hours on Monday in St. Peter’s Basilica. Twelve hours of viewing are scheduled for Tuesday and Wednesday before Thursday morning’s funeral, which will be led by Pope Francis, at St. Peter’s Square.

FILE- Pope Francis greets Pope Emeritus Benedict XVI during a mass to create 20 new cardinals during a ceremony in St. Peter’s Basilica at the Vatican Feb. 14, 2015.
(Reuters/Tony Gentile/File Photo)

The service will be open to the public and the Vatican has provided contacts for Catholics worldwide wishing to concelebrate the mass remotely.

POPE BENEDICT’S VISION OF CATHOLICISM, VATICAN II, AND THE FUTURE OF THE CHURCH ENDURE THROUGH HIS TEACHINGS

Benedict was elected to the papacy in 2005. He later claimed that he prayed he would not be chosen throughout the conclave but was forced to accept what he believed was God calling him to greater service.

In February 2013, at 85 years old, Benedict became the first pope in 600 years to resign from his post.

People look at the body of late Pope Emeritus Benedict XVI laid out in state inside St. Peter’s Basilica at The Vatican, Monday, Jan. 2, 2023.
(AP Photo/Andrew Medichini)

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“I have come to the certainty that my strengths, due to an advanced age, are no longer suited to an adequate exercise [of the pontificate],” he said at that time.

On June 29, 2021, Benedict celebrated the Platinum Jubilee — 70th anniversary — of his ordination into the priesthood.

The Associated Press and Fox News’ Timothy Nerozzi contributed to this report.

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What counts as the world's steepest street?

January 2, 2023 Published by GrilloCOM Grab

Baldwin Street in Dunedin, New Zealand, has the Guinness World Record for “steepest paved road over a continuous distance of …

It's been a bleak year for stocks. This is what investors can expect in 2023 — according to history

January 2, 2023 Published by CNBC News

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5.4 magnitude earthquake strikes Northern California and 'felt more violent' than the previous quake, official says

January 2, 2023 Published by CNN

CNN
—

An earthquake struck Northern California Sunday morning for the second time in less than a two-week span, according to the US Geological Survey.

The 5.4 magnitude earthquake occurred about 30 miles south of Eureka and was centered about 9 miles southeast of Rio Dell, the USGS said. The earthquake was a shallow one, occurring at a depth of about 17.3 miles, according to preliminary information from the agency.

Rio Dell Mayor Debra Garnes said the quake shook her house.

“It was crazy. The earthquake felt more violent this time,” Garnes told CNN. “It was shorter, but more violent. My refrigerator moved two feet. Things came out of the refrigerator. There’s a crack in my wall from the violence of it.”

Garnes said a neighbor’s house also had a crack in the wall from the quake.

This is the second earthquake to strike the Northern California region in less than a month. A 6.4 earthquake that shook the region on December 20 left two people dead. Garnes said 27 homes were red-tagged – meaning they were unsafe due to damage – and 73 homes yellow-tagged in Rio Dell from that quake.

“We are kind of starting over – we had moved from our response to recovery, and now we are basically in both,” Garnes told CNN’s Pamela Brown Sunday. “We have to be back in response because the southern end of town really took it hard this time.”

The mayor said 30% of the town’s water is shut down and the town lost “pockets” of power. There is a 35-foot crack in one of the town’s main roads, she said.

Some homes and buildings that were damaged in the December quake were damaged more Sunday and some may have to be torn down, Garnes said.

But the mayor said there has been a “tremendous response from the community,” in the form of state and local agencies as well as aid from neighboring towns.

“Literally everyone is trying their best to help us get through this,” Garnes said.

As of Sunday morning, the USGS said the latest quake is a green pager, indicating there were no estimated fatalities and very low estimated economic losses.

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Hope Hicks to aide on Jan. 6: ‘We all look like domestic terrorists now’

January 2, 2023 Published by Jared Gans

Just In | The Hill

Former White House aide Hope Hicks told a fellow aide in text messages during the Jan. 6, 2021, insurrection that “We all look like domestic terrorists now” as Trump supporters stormed the Capitol.

Texts released by the House select committee investigating that day show Hicks texting with Julie Radford, former chief of staff to Ivanka Trump, as the violence unfolded.

“In one day he ended every future opportunity that doesn’t include speaking engagements at the local proud boys chapter,” Hicks said, apparently referring to former President Trump.

Radford responded “Yup,” seemingly agreeing.

“And all of us that didn’t have jobs lined up will be perpetually unemployed,” Hicks said, also saying she is “so mad and upset,” adding “We all look like domestic terrorists now.”

“Oh yes I’ve been crying for an hour,” Radford replied.

Hicks texted that former White House Director of Strategic Communications Alyssa Farah Griffin, who resigned about a month before the attack, looked like a “genius.”

The two women also discussed the resignation of Stephanie Grisham, who served as chief of staff to former first lady Melania Trump. Radford texted that Grisham’s decision seemed “self serving.”

Grisham has emerged as a significant critic of the Trump administration in the nearly two years since the end of his presidency.

The Jan. 6 committee has released many materials and transcripts with witnesses over the past week as it has wrapped up its work ahead of the conclusion of this session of Congress. The committee completed its final report last month, referring four criminal charges against former President Trump to the Justice Department.

The criminal referrals are nonbinding, but the committee’s action marked the first time a congressional committee has recommended a former president face criminal charges.

Blog Briefing Room, News, domestic terrorism, Donald Trump, Hope Hicks, House Jan. 6 committee, Jan. 6 insurrection, Julie Radford Read More