The Baltimore Bridge… and WWIII

The Baltimore Bridge… and World War III

The economic impact of the Baltimore bridge collapse is coming into clearer view today.

The Port of Baltimore — ninth largest in the country, depending on how you count it — is shut down indefinitely. Among other things, it is…

• The busiest port for U.S. car shipments
• The biggest U.S. port by volume for farm and construction machinery
• The second biggest port for U.S. coal exports.

That said, it’s one of the smallest container ports in the Northeast. So the disruption to imports of cheap foreign-made gee-gaws will be minimal.

But once those gee-gaws get here? Well, Amazon has a huge distribution center just east of the Key Bridge. All that truck traffic will be snarled big-time.

For years to come, huge volumes of trucks that used to follow the bridge will instead have to take the western side of the I-695 beltway that surrounds the city. (Yikes: Even before this incident, you’d take your life in your hands every time you get on 695.) Worse, a previously planned construction project along part of that route gets underway later this spring.

As for the cause of the disaster…

Well, as I said yesterday, with any major breaking story it makes sense to wait 24–48 hours for things to shake out.

That said, it’s a reasonable bet that the calamity can be chalked up in part to the “crisis of competence” that afflicts everything from the assembly of doors on Boeing passenger jets to the maintenance of PG&E power lines that start deadly wildfires in California.

Enemy action? Can’t be completely ruled out, as Paradigm’s own Byron King said yesterday in an interview on the Paradigm Press YouTube channel.

It’s speculation, yes, but informed speculation…

In accord with Byron’s assessment is the military analyst William Schryver: “If an enemy did want to bring down a U.S. bridge with significant strategic importance, the bridge in question would have appeared high on the list,” Schryver writes on Xwitter. “It is a bridge with far greater strategic significance for the U.S. than the Kerch Strait Bridge has for Russia.”

Schryver’s analysis jibes spookily with a meme going around this morning…

Yeah, and never mind the timing — less than 96 hours after the terrorist attack on the Crocus concert venue in Moscow.

No, we’re not saying the Russkies did it. But all of this comes at a time when, 25 months into the Ukraine war, the Russia-NATO standoff is quickly going critical.

Because while both Moscow and Washington blame Friday’s concert attack on Muslim radicals, Vladimir Putin asserts there’s a hidden hand…

But don’t take it from us that events are going critical. Take it from Asia Times columnist David Goldman — who was on hand last weekend for a confidential gathering of “a few dozen former Cabinet members, senior military officers, academics and think tank analysts.”

“I can say that I haven’t been so scared since the fall of 1983,” Goldman writes — a time when he was an aide on Ronald Reagan’s National Security Council and the military exercises known as Able Archer damn near touched off nuclear war.

When it comes to the Ukraine conflict, “NATO is still determined to win at any cost,” writes Goldman. “The U.S. foreign policy establishment has staked its credibility on humiliating Russia by pushing NATO’s borders to within a few hundred kilometers of Moscow, while crushing Moscow’s economy through sanctions.”

That’s even though the war is stalemated, Ukraine is out of troops and — as we’ve chronicled from the get-go — the sanctions regime has backfired in spectacular fashion.

“The rules of the meeting prevent me from saying much more but I am free to report what I told the gathering: Sanctions against Russia have failed miserably because Russia had access to unlimited amounts of Chinese (as well as Indian and other) imports, both directly and through a host of intermediaries including Turkey and the former Soviet republics.”

Goldman’s column is worth reading in full. The frightening takeaway is that no one disputed the facts he presented — but “facts weren’t the issue: The assembled dignitaries, a representative sampling of the foreign policy establishment’s intellectual and executive leadership, simply couldn’t imagine a world in which America no longer gave the orders.

“They are accustomed to running things and they will gamble the world away to keep their position.”

Gold’s Next Move: $2,400 (and Then $2,600)

Gold is back within eight bucks of $2,200 — and likely on the way to $2,400.

That’s the assessment of Paradigm trading pro Greg “Gunner” Guenthner — and his chart-based analysis jibes with the fundamentals assessed on Monday by our macro authority Jim Rickards.

“Gold has exploded off its February lows despite a resurgent dollar,” Gunner says. “That’s an impressive feat considering a strong dollar rally has stomped gold not once but twice over extended time frames since early 2022.

“The dollar index has been working off its lows since late December. Yet gold has still managed to maintain higher prices.”

Gunner has heard all the arguments from the skeptics — namely, that silver and the mining stocks haven’t come along for the ride. (Silver is still mired below $25 today — $24.44 at last check.)

“Conditions for this latest gold run are far from perfect,” he concedes. “But that hasn’t put the brakes on the rally. That alone tells us that despite some of the recent setbacks, a strong bid under the gold market should help it (eventually) extend higher.

“If we assume this consolidation area is a halfway point of gold’s rally off its latest retest of $2,000, I think $2,400 is a reasonable short-term upside target.

➢ Ignore Gunner’s guidance at your peril: In early 2013, gold was plummeting below $1,650 and he declared the Midas metal was in a bear market. Boy, did we get an earful from the goldbugs in our readership. One of them called Gunner “the ” But Gunner nailed it — gold slid all the way to $1,050 by the time it bottomed nearly three years later.

After modest losses yesterday, it’s shaping up to be a mixed bag for the major U.S. stock indexes today.

As we write, the Dow is up strongest — more than a half percent to 39,510. The S&P 500 is up a quarter percent to 5,215, and the Nasdaq is slightly in the red at 16,288.

Crude is little moved after the Energy Department’s weekly inventory numbers at $81.51. Bitcoin is back below $70,000.

An AI Marriage of Convenience (Apple-Google)

If Apple and Google form an AI alliance, Paradigm’s AI authority James Altucher suspects it would be a temporary marriage of convenience.

Yesterday, Apple set the dates for its 2024 Worldwide Developers Conference — June 10–14.

Usually Day One at WWDC is when CEO Tim Cook does his dog-and-pony-show touting the latest and greatest devices and upgrades.

Last week we took note of the rumors that Apple is in talks with Google about using Google’s Gemini AI platform to power several AI-enabled features of the next major iOS release.

“Although Apple and Google compete ferociously in the market for smartphones,” says James, “the two have a long-standing partnership to make Google the default search engine on iPhone… a privilege Google pays a tidy $20 billion annually to maintain.”

So it’s not outlandish to think the two could pair up on AI. But again, James says an AI tie-up might prove to be a short-term affair — buying time for Apple to finally flesh out its AI strategy.

“This wouldn’t be the first time Apple brought in another company to partner on a product until they could develop a fully polished product of their own,” he points out. “Back in 2005, Apple teamed up with Motorola to release a phone, the Motorola Rokr, that included iTunes, while the iPhone was in development.”

The circa-2005 Motorola ROKR — informally known as “the iTunes phone”
[Photo by Creative Commons user AnVuong1222004]

“I believe an Apple plus Google partnership would be similarly temporary,” James says. “AI is too big of an opportunity for Apple to outsource completely.

“Long term, the success of Apple products like the iPhone and Vision Pro will depend on Apple’s ability to offer best-in-class AI capabilities.”

For its part, “Google has a lot to lose by being passed over as Apple’s AI partner, and would likely pay Apple for the privilege of being the default AI on iPhone.

“I’m going to keep an eye on Google’s stock in the coming weeks for updates on Gemini and the potential Apple partnership. I also plan to stay on the lookout for any potential backdoor investment opportunities to take advantage of a Google plus Apple partnership.”

The Demographics of Diapers

Sign of the times from the world’s fastest-aging country…

“A Japanese nappy maker has announced that it will stop producing diapers for babies in the country and, instead, focus on the market for adults,” reports the BBC.

“Oji Holdings is the latest firm to make such a shift in a rapidly aging Japan, where birth rates are at a record low.” As it is, sales of adult diapers have exceeded those for infants for more than a decade.

As recently as the 1970s, Japan recorded over 2 million births per year. Last year? Barely 750,000 — and that was down 5.1% from the year before.

“Japan now has one of the world's oldest populations,” the Beeb continues, “with almost 30% of them aged 65 or older. Last year, the proportion of those aged above 80 surpassed 10% for the first time.”

Other developed economies in Asia are on a similar trajectory — South Korea, Taiwan, Singapore.

And eventually, China. Credible estimates from the likes of author Peter Zeihan project the population of 1.4 billion could be cut in half between 2020–2050. For all the chatter you hear these days about how China is 10 FEET TALL, long-term the Middle Kingdom looks like a jugger-not.

Mailbag: A “MAGA Megaphone?”

“What the hell is wrong with the managing editor of 5 Bullets?” writes a reader getting today’s mailbag off to a rousing start.

“Why would he think that anyone would be interested in his pathetic MAGA views in a newsletter that's supposed to be about business and money?

“I'm not interested in his ignorant take on why Brian Sicknick had two strokes and died. As a physician of 35 years, Penn Stanford Cleveland Clinic NIH trained, I can tell you it was from what happened the day before.

“Either stick to money and business or I think I will have to have a refund on everything because I will not allow you to use this platform coming to me as a MAGA megaphone.

“Your political views are your political views. You are entitled to them and I'm entitled to think you're full of s*** and don't want to read it.”

Dave responds: Just wait till I write my “case against Trump” issue later this year and I hear it from the other side. Not everyone falls into a binary us-versus-them model. You do know that, right?

More to the point, I never asserted there was no connection between the riot and the officer’s death. You inferred that after I had the temerity to point out that even the mainstream had to acknowledge the fire-extinguisher-bashing narrative was errant.

That said, perhaps I should have cited an additional example from the financial realm to make my point about waiting 48 hours to see how events shake out.

So here it is — the infamous “flash crash” of May 6, 2010. That morning, the Dow industrials crashed 9% in a matter of minutes, only to recover most of those losses a couple of hours later. Several individual names, including blue chips like Procter & Gamble, took even wilder swings.

The initial narrative was that a trader at a major firm, perhaps Citi, mistyped a trade as “billions” rather than “millions.” No, that made no sense, not even then.

Soon, Wall Street and the media alike just waved the whole thing off as one of those ineffable mysteries of finance.

Finally in 2015, the feds got around to fingering a patsy. We were supposed to believe it was all the fault of a 36-year-old man still living with his parents in suburban London but who was savvy enough to control tax shelters in Nevis and Anguilla.

In any event, Navinder Singh Sarao was extradited to the United States and pleaded guilty to spoofing (placing orders with the intent of canceling them before execution) and wire fraud. In 2020 he was sentenced to time served plus a year of home confinement.

Granted, that explanation made no sense either. (I said as much the day after Sarao was indicted.) And it certainly didn’t do much to encourage trust in “the system.”

With that in mind, let’s hope the investigators at the Key Bridge site can come up with an explanation that everyone can agree on.

And that it doesn’t lead to World War III…

Best regards,

 

 

 

 

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets