The Bond Market Is Having A Historic Panic Attack

Thursday, Feb 16, 2023 - 8:33 Submitted by QTR's Fringe Finance

Never before has it been more evident why the bond market is considered the “smart money” and equity market is considered the “dumb money”.

One only needs to look at recent examples, like Bed Bath & Beyond, whose bonds traded for pennies on the dollar while its equity soared and retail tried to generate a short squeeze (despite the fact that the company was heading directly toward bankruptcy) for proof.

In fact, there have been innumerable other examples similar to Bed Bath & Beyond in other meme stocks over the last couple years, but the general point is that bond markets almost always lead the equity markets in assessing risk, helped along by the fact that bonds (1) trade in large increments and (2) are difficult for most retail traders to transact and understand, assuring that unsophisticated investors can’t manipulate them.

The purpose of today’s post - the latest in my series entitled “everyone in the stock market thinks I’m a total dumbass” - is to point out another alarming divergence between the bond market and equity markets.

Forgive me if this is pedestrian for your understanding level, but almost everybody knows that yield curve inversion has preceded almost all recessions in history.

This chart from Axios shows that:

The idea is that, generally, yield curve inversion sends a signal to the market that investors are expecting rate cuts (hence why longer dated maturities price in lower yields than near term maturities, which reflect closer to the actual rate).

For example, if rates are 5% today, a 6 month Treasury bond could have a near 5% yield. But if a 10 year bond has a 3.75% yield, it’s an indication that in the time between the 6 month maturity and the 10 year maturity, the market expects the going rate of bonds to move lower. The bigger the spread between the two bonds gets, the more the market believes rates will diverge from where they currently are.

Despite history being very clear about recessions and yield curve inversion (again, see the chart above), Axios, like some others on Wall Street, have postulated that a move lower in rates would be the effect of deflation, and not necessarily a recession. They pointed out that “…analysts suggest that, rather than a recession, yields on longer-term bonds might instead be pricing in a sharp decline in inflation. That would mean the Fed could stop hiking (and maybe even start cutting) interest rates soon-ish.”

Nothing like having the best of both worlds, right? Rate cuts without a recession? Just hook it up to my bulging Keynesian veins! After all, something has to get PE ratios back to 50x!

The current debate about the market is whether or not the Fed is going to be engineering a soft landing anytime soon. The idea of a soft landing, which ostensibly means that the Fed would…

https://www.zerohedge.com/news/2023-02-16/bond-market-having-historic-panic-attack

Norfolk Southern Eliminated Key Maintenance Role In Derailment Region, Union Says

Thursday, Feb 16, 2023 - 11:40 AM

By Rachel Premack of Freightwaves,

One union of rail workers has questioned declining maintenance standards following the Feb. 3 Norfolk Southern derailment in East Palestine, Ohio, which forced the evacuation of the 5,000-person town earlier this month.

A device that can play a role in preventing derailments is thewayside hot-box detector. It uses infrared sensors to detect bearings, axles or other components of a rail car that are overheating, then uses radio signals to flag rail crews of any overheated components.

The rail car that initiated the derailment had an overheated wheel bearing, according to a Tuesday report from the National Transportation Safety Board. The NTSB is still investigating the cause of the derailment and will publish a preliminary report in two weeks.

Wayside hot-box detectors — also called “hot boxes” — are typically placed every 25 miles along a railroad, according to a Federal Railroad Administration (FRA) report.Their use has contributed to a 59% decrease in train accidents caused by axle- and bearing-related factorssince 1990, according to a 2017 Association of American Railroads study. Declining head counts have led to these mechanisms receiving less preventative maintenance, according to an official from the Brotherhood of Railroad Signalmen union. The FRA has no regulations requiring the use or maintenance of hot boxes.

A hot box in East Palestine notified the crew moments before the train derailed, according to the NTSB’s report. It’s unclear if any hot box prior to East Palestine notified crews. A surveillance video shared on Facebook from an industrial facility in Salem, Ohio, about 20 miles from East Palestine, suggests the train’s axle was already on fire.

Norfolk Southern did not respond to a request for comment, and the FRA declined to comment on the record.From 5 ‘electronic leaders’ to zero in derailment region. Specialized signalmen called “electronic leaders” specialize in maintaining devices like hot boxes.

As recently as three years ago, Norfolk Southern employed five electronic leaders in the area of its rail network that includes East Palestine.Today, it employs zero, according to Christopher Hand, director of research at the Brotherhood of Railroad Signalmen.

The area in question is Eastern Region North – Division B, shown in red on the map. It runs east to west from Mansfield, Ohio, to Harrisburg, Pennsylvania, and north to south from Morgantown, West Virginia, to Astabula, Ohio. It also includes rail track in Pittsburgh, as well as Youngstown, Ohio.

Eastern Region North – Division B, shown in red, no longer employs electronic leaders, according to the Brotherhood of Railroad Signalmen. This role maintains devices that can prevent equipment failures and derailments. (Source: BRS)

Hand said electronic leaders know hot-box detectors “inside out.” But the position, which typically requires years of experience and higher pay, has become less common at railroads across the country. Electronic leaders also taught newer signalmen how to operate devices like the hot boxes. After that position was eliminated in Norfolk Southern’s Division B, Hand said its responsibilities were likely transferred to a signal maintainer. Their main role is to keep up with government-mandated tests of equipment — and hot boxes aren’t under federal regulations.

“Once they eliminated that position, it fell to the signal maintainers who had no knowledge, no training or very, very little training on these hot-box detectors,” Hand said in an interview with FreightWaves. Across the rail industry, Hand saidmost signalmen are exclusively spending time on these government-mandated tests, rather than doing preventive maintenance, like cleaning and greasing.

For years, the federal government required railroads to conduct a type of brake test on rail cars that had not been operated for four or more hours. As of 2020, rail operators may wait up to 24 hours to conduct this test. The Association of American Railroads, an industry association that includes Norfolk Southern, lobbied for this change starting in 2017, according to the Federal Register. The FRA estimated that changing this rule would save the rail industry nearly $600 million over a 10-year period.

The Association of American Railroads was also key in rolling back Obama-era legislation that would have required railroad companies to update their braking systems from a 19th-century design to an electronic one, as the Huffington Post reported on Wednesday.

https://www.zerohedge.com/markets/norfolk-southern-eliminated-key-maintenance-role-derailment-region-union-says

DHS Warns Millions Of iPhone Users To Change Settings Over "Zero-Day Spyware"

by Tyler Durden

Thursday, Feb 16, 2023 - 10:32 AM

An agency within the Department of Homeland Security has warned owners of Apple products of a security vulnerability which affects iPhones, iPads and MacOS devices.

According to Apple, "an app may be able to execute arbitrary code with kernel privileges," and that with another vulnerability, "processing maliciously crafted web content may lead to arbitrary code execution," which the company says "may have been actively exploited."

On February 14, the DHS’s Cybersecurity and Infrastructure Security Agency (CISA) issued a statement advising users and administrators to "to review the Apple security updates page for the following products and apply the necessary updates as soon as possible."

Apple has responded to the vulnerability with updates for Safari 16.3.1, iOS 16.3.1 and iPadOS 16.3.1, and macOS 13.2.1.

"Just looking at a website, which ought to be harmless, or opening an app that relies on web-based content for any of its pages (for example its splash screen or its help system), could be enough to infect your device," said security research firm Sophos, which described the flaws as a "zero-day spyware implant bug."

"If you install Firefox (which has its own browser ‘engine’ called Gecko) or Edge (based on a underlying layer called Blink) on your Mac, those alternative browsers don’t use WebKit under the hood, and therefore won’t be vulnerable to WebKit bugs."

Company spokesman Scott Radcliffe told Endgadget that it doesn't have any more details on the exploits mentioned in the security updates.

More via The Epoch Times:

How to Update

Generally, Apple users have automatic updates turned on. However, if that’s not the case, a user can go to the Apple menu, then click “About this Mac,” and click “Software Update.”

On iPad, iPhone, or another iDevice, they can go to “Settings,” then “General,” then “Software Update.”

“If your Apple product isn’t on the list, notably if you’re stuck back on iOS 15 or iOS 12, there’s nothing you can do right now, but we suggest keeping an eye on Apple’s HT201222 page in case your product is affected and does get an update in the next few days,” Sophos notes.

https://www.zerohedge.com/technology/dhs-warns-millions-iphone-users-change-settings-over-zero-day-spyware

Russian Diplomats Issue Dire Warnings That War With US Is Close 1 of 2

Thursday, Feb 16, 2023 - 10:11 AM Authored by Kyle Anzalone & Will Porter,

The Kremlin’s top diplomat has warned that Western involvement in Ukraine is nearing "the point of no return," accusing the United States and the NATO bloc of attempting to transform the country into a "Russophobic military stronghold." Meanwhile, Moscow’s UN envoy declared that all of Russia’s "red lines" have already been crossed.

Addressing lawmakers at Russia’s State Duma on Wednesday, Foreign Minister Sergei Lavrov outlined the causes of the current conflict in Ukraine and the deterioration of US-Russia relations, saying Washington has a "maniacal desire to revive the neo-colonial unipolar world order."

"An integral part of this policy is the long-term containment of Russia, including through the expansion of NATO towards our borders, as well as the transformation of fraternal Ukraine into a Russophobic military stronghold," he said. "In recent years, this line of Washington and its European satellites has reached the point of no return."

After the fall of the Soviet Union, Washington and several other Western states gave assurances to Moscow that the NATO alliance would not expand beyond Germany. However, in the years since, Presidents Bill Clinton, George W. Bush, Barack Obama and Donald Trump have each allowed new members to join the alliance, all of them inching closer to Russia’s borders.

Starting in 2008, NATO has repeatedly declared its intention to someday allow Ukraine to become a member, again reiterating that pledge at a recent alliance summit. The move would cross the "brightest of all red lines" for Moscow, as was previously noted by then-State Department official and current CIA Director William Burns, who penned a 2008 memo warning of the geopolitical perils of extending membership to Kiev.

Still, President Joe Biden has refused to change course, insisting it is up to Ukraine whether it would like to join the US-led military bloc while effectively making Kiev a de facto member in the meantime. In an interview with Newsweek on Tuesday, Russia’s UN envoy Dmitry Polyanskiy argued that the West has not respected Moscow’s core security concerns, and has become directly involved in the conflict in Ukraine.

"All the red lines have already been crossed by Western countries. There is already semi-direct involvement of NATO in the conflict because it’s not only weaponry but it’s intelligence," he said. "It’s the situation when the targets of certain artillery systems, in particular HIMARS, these targets can be hit only with the coordination with Washington."

Last week, the Washington Post reported that Ukraine relies on American intelligence for selecting targets. Since the start of the year, the White House has authorized the shipment of main battle tanks and long-range rockets to Kiev. Additionally, NATO appears to be preparing to send Western-made warplanes to Ukraine.

"It means that NATO is not only providing weapons but also are choosing the targets for Ukrainian strikes," Polyanskiy continued.

He went on to allege thatcitizens from NATO countries are already fighting – as well as getting captured and killed – in Ukraine. "We know this from the people that we capture and from the bodies that we see on the battlefield." The ambassador said Western weapons would only escalate the conflict, even warning that foreign intervention could eventually trigger a nuclear war…

https://www.zerohedge.com/geopolitical/russian-diplomats-issue-dire-warnings-war-us-close

>>18359230

2 of 2

🚨#BREAKING: "NATO must be ready for long standoff with Russia" - Secretary General of NATO

And remember, in the last few days:

• Tanks sent to Ukraine

• NATO considering jets

• Possible US responsibility re Nordstream attack

Yet all we are talking about are balloons… pic.twitter.com/w2kMN96Tfw

— Mario Nawfal (@MarioNawfal) February 16, 2023

"It’s absolutely clear that any deliveries of weapons to the zone of conflict, of course, is like pouring oil into the fire," he said, adding "If you are dealing with a nuclear power and if you are citing the goal of inflicting defeat to this nuclear power, you should have all the options in mind of our possible response."

In their remarks, both diplomats also pointed to potential American involvement in the destruction of the Nord Stream pipelines. Last week, investigative journalist Seymour Hersh published a bombshell report claiming that Washington planned to bomb the pipelines.

The White House has denied that it had any part sabotaging the line, though Senator Mike Lee later acknowledged that it was possible.

On Wednesday, Polyanskiy said that Moscow requested a UN meeting next week to address Hersh’s reporting. Lavrov rejected denials from the Biden administration, saying the West is "lying, hiding the truth about the terrorist attacks on the Nord Stream and Nord Stream-2 gas pipelines, just as they lied about the Minsk agreements."

Former German Chancellor Angela Merkel claimed the Minsk agreement, which ostensibly was meant to end the civil war in Ukraine, was really intended to give Kiev time to build up its military. In a December 1 interview with Der Spiegel, Merkel said that she believes that during the Minsk talks, she was able to buy the time Ukraine needed to better fend off a Russian attack.

https://www.zerohedge.com/geopolitical/russian-diplomats-issue-dire-warnings-war-us-close

How did Bidan and Admin think they were ever get away with blowing up these pipelines? They should have listened to the CIA this time….honestly!

>>18358697

BS! Bidan wouldn't willingly help a republican state, DeWine is saying it knowing Bidan never called. DeWine is gettting himself deeper and deeper in the shit.

National Guard cannot make the call if he is talking about the vent and controlled burn, only Manager on site from EPA can do this by law. Liars, all of them.

>>18359278

Thank God!

>>18359213

Don't they all keep their security clearance after leaving? You know like all the traitors at news stations now?

Norfolk Southern Eliminated Key Maintenance Role In Derailment Region, Union Says

Thursday, Feb 16, 2023 - 11:40 AM

By Rachel Premack of Freightwaves,

One union of rail workers has questioned declining maintenance standards following the Feb. 3 Norfolk Southern derailment in East Palestine, Ohio, which forced the evacuation of the 5,000-person town earlier this month.

A device that can play a role in preventing derailments is thewayside hot-box detector. It uses infrared sensors to detect bearings, axles or other components of a rail car that are overheating, then uses radio signals to flag rail crews of any overheated components.

The rail car that initiated the derailment had an overheated wheel bearing, according to a Tuesday report from the National Transportation Safety Board. The NTSB is still investigating the cause of the derailment and will publish a preliminary report in two weeks.

Wayside hot-box detectors — also called “hot boxes” — are typically placed every 25 miles along a railroad, according to a Federal Railroad Administration (FRA) report.Their use has contributed to a 59% decrease in train accidents caused by axle- and bearing-related factorssince 1990, according to a 2017 Association of American Railroads study. Declining head counts have led to these mechanisms receiving less preventative maintenance, according to an official from the Brotherhood of Railroad Signalmen union. The FRA has no regulations requiring the use or maintenance of hot boxes.

A hot box in East Palestine notified the crew moments before the train derailed, according to the NTSB’s report. It’s unclear if any hot box prior to East Palestine notified crews. A surveillance video shared on Facebook from an industrial facility in Salem, Ohio, about 20 miles from East Palestine, suggests the train’s axle was already on fire.

Norfolk Southern did not respond to a request for comment, and the FRA declined to comment on the record.From 5 ‘electronic leaders’ to zero in derailment region. Specialized signalmen called “electronic leaders” specialize in maintaining devices like hot boxes.

As recently as three years ago, Norfolk Southern employed five electronic leaders in the area of its rail network that includes East Palestine.Today, it employs zero, according to Christopher Hand, director of research at the Brotherhood of Railroad Signalmen.

The area in question is Eastern Region North – Division B, shown in red on the map. It runs east to west from Mansfield, Ohio, to Harrisburg, Pennsylvania, and north to south from Morgantown, West Virginia, to Astabula, Ohio. It also includes rail track in Pittsburgh, as well as Youngstown, Ohio.

Eastern Region North – Division B, shown in red, no longer employs electronic leaders, according to the Brotherhood of Railroad Signalmen. This role maintains devices that can prevent equipment failures and derailments. (Source: BRS)

Hand said electronic leaders know hot-box detectors “inside out.” But the position, which typically requires years of experience and higher pay, has become less common at railroads across the country. Electronic leaders also taught newer signalmen how to operate devices like the hot boxes. After that position was eliminated in Norfolk Southern’s Division B, Hand said its responsibilities were likely transferred to a signal maintainer. Their main role is to keep up with government-mandated tests of equipment — and hot boxes aren’t under federal regulations.

“Once they eliminated that position, it fell to the signal maintainers who had no knowledge, no training or very, very little training on these hot-box detectors,” Hand said in an interview with FreightWaves. Across the rail industry, Hand saidmost signalmen are exclusively spending time on these government-mandated tests, rather than doing preventive maintenance, like cleaning and greasing.

For years, the federal government required railroads to conduct a type of brake test on rail cars that had not been operated for four or more hours. As of 2020, rail operators may wait up to 24 hours to conduct this test. The Association of American Railroads, an industry association that includes Norfolk Southern, lobbied for this change starting in 2017, according to the Federal Register. The FRA estimated that changing this rule would save the rail industry nearly $600 million over a 10-year period.

The Association of American Railroads was also key in rolling back Obama-era legislation that would have required railroad companies to update their braking systems from a 19th-century design to an electronic one, as the Huffington Post reported on Wednesday.

https://www.zerohedge.com/markets/norfolk-southern-eliminated-key-maintenance-role-derailment-region-union-says