1. Dow Transports Break Below Summer Lows

Transports break below July lows

Transports approaching 200 week moving average on long-term chart

 www.stockcharts.com

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2. EFA Developed International Markets Trades Back to 2020 Levels

Developed International trading below 200 week moving average erases 2 years of gains ….Europe just getting started raising rates

 www.stockcharts.com

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3. Record Low Allocation to Eurozone Markets

Callum Thomas Chart Storm Exiting the Eurozone:  Allocations to Eurozone equities dropped to a record low in the latest BofA fund manager survey. Europe is basically the epicenter of the 2022 macro meltdown, so we should expect this – maybe we can call it rational fear (but at some point it becomes irrational (and a source of opportunity)).

Source:  @HumbleStudent

https://chartstorm.substack.com/p/weekly-s-and-p500-chartstorm-18-september

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4. Emerging Markets Similar Chart….Back to 2020 Levels.

EEM-Emerging markets …watch for 50week moving average (blue) to cross below 200 week average (red)

 www.stockcharts.com

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5. TWLO another Covid Favorite Announces Layoffs

$425 to $73…clear 50 week thru 200 week to downside.

www.stockcharts.com

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6. Blackrock 60/40 Chart Re-Testing 200 Week Moving Average

www.stockcharts.com

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7. U.S. Household Wealth Fell by Record in Second Quarter….$6.1 Trillion…Stocks, Bonds, Real Estate All Down Together

Sept 9 (Reuters) – U.S. household wealth fell by a record $6.1 trillion in the second quarter to its lowest in a year as a bear market in stocks far outweighed further gains in real estate values, a Federal Reserve report showed on Friday.

Household net worth tumbled to $143.8 trillion at the end of June from $149.9 trillion at the end of March, its second consecutive quarterly decline, the Fed’s quarterly snapshot of the national balance sheet showed. Through June, Americans’ collective wealth had fallen by more than $6.2 trillion from a record $150 trillion at the end of 2021.

The net drop in wealth in the second quarter was about $30 billion larger than the previous record decline notched two years earlier, as the onset of the COVID-19 pandemic upended financial markets. That decline – in the second quarter of 2020 – still stands as the largest on a percentage basis at 5.2% versus 4.1% in the most recent report.

The latest fall was led by a $7.7 trillion decline in stock market values as equities slid into a bear market in the first half of the year on worries about surging inflation and the Fed’s aggressive response with interest rate increases. The equity market drop outstripped a $1.4 trillion gain in real estate values.

Total nonfinancial debt rose at a 6.5% annualized rate after rising at an 8.3% rate in the first quarter, the Fed data showed. Household debt growth also slowed to a 7.4% annual rate from 8.3% in the first three months of the year, while business, federal, state and local government debt levels all rose.

Reporting by Dan Burns; Editing by Paul Simao and Bill Berkrot

https://www.reuters.com/markets/us/us-household-wealth-falls-again-second-quarter-fed-says-2022-09-09/

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8. Lowest World Population Growth Since 1950

From Advisors Perspective Blog-The world’s population continues to grow, but the pace of growth has slowed to a rate of under one percent, a pace not seen since 1950. The populations of 61 nations are projected to decrease by 1% or more between now and 2050.

The Decline of Demographicsby Vaibhav Tandon, Ryan James Boyle of Northern Trust,

https://www.advisorperspectives.com/commentaries/2022/09/16/the-decline-of-demographics

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9. Inflation Causing Hardship Across Working and Middle Class

https://www.statista.com/chart/26334/effect-of-price-increases-on-the-financial-situation-of-households/

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10. Getting Through Any Obstacle in Life

An agile mind will help you push forward.

Elaine Fox Ph.D.

The world can feel like an uncertain place. Unless we can learn to live with not being sure, it’s very easy for us to become overwhelmed. What my research in psychology and neuroscience has taught me is that getting used to the intrinsic uncertainty of the world is essential for success: the people who thrive are those with the ability to accept and adapt to constant change and uncertainty.

The good news is that we can improve our ability to adapt. It takes practice and we often need to push ourselves outside our comfort zone. I managed to overcome my reluctance to speak in public and adapted over time to the demands of being an academic psychologist.

Harnessing the benefits of an agile mind can be transformative. It’s important to remember that we are active stewards of our own well-being, rather than passive victims of change and so we must actively manage our approach to life. Our natural skills of agility are necessary to help us navigate a complex and unpredictable world. I have seen time and again how developing an agile mindset—the capacity to flex our thoughts, feelings, and actions—can transform our lives and bolster our resilience. 

Maintaining a flexible mind allows us to thrive amid change. The first step is to accept that change and uncertainty are an inescapable part of life. Our lives will change, many times, sometimes for the better, sometimes for the worse. It is how we navigate those shifts that shape our present and our future happiness. If you are reluctant to change, or wary of trying out new things, this is something you need to work on.

Whether it is coping with a difficult boss, managing a complex team, dealing with hyperactive children, resolving a dispute with a friend, or boosting your energy, you need an internal compass that helps you choose the right strategy for the moment. If this compass is off even slightly, you can veer a long way from your course. Here are four important ideas that will point you in the right direction as you navigate your way through life.

• Mental agility: The capacity to be agile and nimble in how you think, act, and feel so that you can navigate your way through all sorts of terrain, the rough as well as the smooth, and adapt well to changing circumstances. The science shows that agility is made up of four distinct components—what I call the “ABCD of agility,” adaptability, balancing our life, changing or challenging our perspective, and developing our mental competence.
• Self-awareness: An ability to look inside yourself so that you can gain a deep self-understanding and appreciation of your core values. This will help you become more aware of your hopes, dreams, and abilities.
• Emotional awareness: Part of self-awareness, but so important in our lives that it becomes a pillar of its own. Learning to accept and nurture all your emotions, those that feel bad as well as those that feel good, is vital. As is the ability to regulate your emotions and harness them in service of your values and goals rather than letting them boss you around.
• Situational awareness: This feeds off two of the other pillars, self-awareness, and emotional awareness, but also incorporates the capacity to understand your immediate surroundings—to look outside—so that you gain a deep intuitive awareness of the context as well as your own“gut feelings.” This mix of inner and outer awareness informs you as to how well you can operate in that environment.

These four vital psychological talents are a potent mental weapon to help you make the decision to stick or to switch to another approach, and to get that decision right more times than you get it wrong. Ultimately, that will help you to operate at the top of your game.

https://www.psychologytoday.com/us/blog/the-nature-human-emotions/202209/getting-through-any-obstacle-in-life

1. Margin Debt as a Percentage of Market Value Coming Down.

Amazing how high this chart has stayed since 2005 due to super low-rate environment.

From Steve Blumenthal On My Radar CMG Wealth  https://www.cmgwealth.com/ri-category/on-my-radar/

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2. No Earnings Recession in America Yet

Irrelevant Investor blog-As earnings season wraps up, we’re still not seeing much deterioration in corporate America. S&P 500 earnings grew 6.3% for the second quarter, with 75% of companies beating bottom-line expectations. S&P 500 earnings grew 6.3% for the second quarter, with 75% of companies beating bottom-line expectations. This looks nothing like a recession, where the average decline in earnings is 21.3%.

https://theirrelevantinvestor.com/2022/09/09/the-bullish-case/

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3. Contra Indicator….Retail Investors Fleeing Equities

BofA Survey Shows Investors Fleeing Equities en Masse on Fear of Recession

• Record 52% of respondents underweight stocks, cash levels jump
• Hartnett sees short-term stock rally before declines resume

By

Sagarika Jaisinghani

Investors are fleeing equities en masse amid the specter of a recession, with allocations to stocks at record lows and cash exposure at all-time highs, a Bank of America Corp. survey showed.

A historically high 52% of respondents said they are underweight equities, while 62% are overweight cash, according to the bank’s global fund manager survey, which included 212 participants with $616 billion under management in the week through Sept. 8.

As concerns over the economy escalate, the number of investors expecting a recession has reached the highest since May 2020, strategists led by Michael Hartnett wrote in a note on Tuesday. Sentiment is “super bearish,” with the energy crisis further weighing on risk appetite, they said. A net 42% of global investors are underweight European equities, the largest such position on record.

Global stocks have had a roller-coaster ride in the past few months. Declines have been driven by fears that central banks will remain hawkish for longer and tip the economy into a recession, while rallies have been fueled by low investor positioning and optimism around peaking US inflation.

Strategists at top banks including Deutsche Bank AG and JPMorgan Chase & Co. say bleak investor sentiment — often a contrarian indicator for a stock rally — is likely to drive equities higher into the year-end.

https://www.bloomberg.com/news/articles/2022-09-13/bofa-survey-shows-nadir-in-stock-allocations-amid-recession-fear?srnd=premium&sref=GGda9y2L

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4. 30 Year Treasury Yield Breaks Out to New Highs

Still Below 10-Year Highs

https://www.macrotrends.net/2521/30-year-treasury-bond-rate-yield-chart

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5. One-Year Implied Inflation Falling in Unison with Crude Oil Prices.

JP Morgan Private Bank

https://privatebank.jpmorgan.com/gl/en/home

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6. Natural Gas Futures in Europe Plunge 44% from Peak

by Wolf Richter  Storage above target, floating LNG import terminals going into service.

The prices of natural gas futures in Europe, after increasing 20-fold since March 2021, have plunged amid falling demand, above-target gas-storage increases, a growing list of floating LNG import terminals, and surging imports of LNG from the US and other parts of the world.

The front-month October TTF contract in the Netherlands – a benchmark for northwest Europe – plunged by 8% on Monday from Friday, and by 44% from the peak on August 26, to €191.02 per megawatt-hour (MWh) at the close today (data via Investing.com).

The spike in futures prices was driven by speculation following Russia’s threats to cut, and then by its actual cuts, of gas deliveries to Europe. But those sky-high prices caused large shifts, not only lowering demand but also lining up new supply. And with this type of huge spike, and then plunge, there may well be some big energy speculators and assorted hedge funds that ended up on the wrong side with massively leveraged positions.

https://wolfstreet.com/2022/09/12/natural-gas-futures-plunge-44-from-peak-in-europe/

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7. U.S. Gasoline Down 89 Consecutive Days…Longest Streak Since 2015

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8. One-Third of Workers Would Quit Before Returning 5 Days a Week

Bloomberg-About one-third of US workers would quit or start looking for another job if told to return to the workplace five days a week, higher than the global average. The rate was highest in the UK.  By

Katia Dmitrieva and

https://www.bloomberg.com/news/articles/2022-09-08/work-from-home-is-loved-worldwide-even-if-wall-street-hates-it?srnd=premium&sref=GGda9y2L

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9. The Top Ranked Colleges List That No One Likes

EDUCATION -Morning Brew

The list that no one likes is out 

Jon Lovette/Getty Images

US News & World Report released its yearly ranking of the best colleges in the country yesterday. But this year’s list comes amid a growing number of complaints about how the scores that mean a lot to wide-eyed future loan borrowers (and the administrators who will eventually ask them for money) are calculated. Besides controversial criteria like incoming students’ SAT scores and the level of alumni donations, one of the main problems critics have with the list is that it attributes 20% of its ranking formula to what amounts to basically a popularity contest. US News sends a yearly survey to college admins asking them to rate other schools’ “academic quality.” Even Education Secretary Miguel Cardona, although not referring to the US News list directly, said last month that college rankings that value reputation above things like economic mobility are “a joke.” There’s even more drama this year…Columbia University dropped from No. 2 to No. 18 because it didn’t submit any data while it investigated a math professor’s claims that the school might be fudging some numbers. On Friday, the university admitted to the fudging. Final fun fact: 19 of the top 20 schools on this year’s list cost $55,000+ per year to attend.—MM

https://www.morningbrew.com/daily

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10. Walking and Alzheimer’s

People who do this one thing every day have HALF the dementia risk than the rest of us

Brett Arends

The things to remember about dementia are that it is absolutely horrible for you and everyone around you; it’s a high probability; and when it comes to fighting it or avoiding it you are pretty much on your own.

Alzheimer’s disease and related dementias are currently killing 6.5 million people in the United States and devastating the lives of many times that when you count the patients’ friends and family. The National Institutes of Health reckons this number is likely to double in the next four decades.

The last study found that people in their 70s had nearly a one in three chance of getting this horrific brain disease before they died, and that was a study of the people born in the 1920s. Those born later, who are likely to live longer, face an even higher risk.

Meanwhile the amount that the federal government spends each year on research to fight this disease is less than 0.1% of the amount it spent during two years fighting Covid. Or, to put it another way, at current rates, Uncle Sam will take more than 1,000 years to spend as much on Alzheimer’s research as he spent fighting COVID-19. Meanwhile, a new scandal has raised questions about how much research into dementia over the past 15 years was based on faulty data.

So I’ll take the good news where I can get it, and some very heartening new data has just been published in JAMA (Journal of the American Medical Association) Neurology.

In a nutshell: Just walking a lot more could do a lot to cut our risks of developing dementia. It could actually cut our risk in half.

And, remarkably, the ideal target is about 9.800 steps a day: In other words, just shy of the magic 10,000 steps a day figure — a number that was apparently plucked out of the blue by the marketing department of a Japanese clock company several decades ago.

Weird, but true.

The latest findings were based on a study of nearly 80,000 people in the U.K. over several years. They involved comparing actual data from step counters, such as Fitbits, worn by subjects with follow-ups 7 years later.

“In this cohort study, a higher number of steps was associated
with lower risk of all-cause dementia,” report the authors. “The findings suggest that a dose of just under 10,000 steps per day may be optimally associated with a lower risk of dementia. Steps performed at higher intensity resulted in stronger associations.”

Those who walked 3,800 steps a day had a 25% lower risk of developing dementia in the study. Those who walked 9,800 had a 50% lower risk. Those who walked at least 6,000 steps and who walked reasonably quickly for about half an hour a day had 62% lower likelihood of developing dementia.

Naturally in the real world there are all sorts of caveats. How far are we looking at correlation or causation? Will other studies find similar things? If the follow-ups were just 7 years later, what would longer term numbers show?

We’ll have to stay tuned for more research, as usual. Meanwhile, I will take what I can get. I bought a $25 step counter for my wrist from Amazon a couple of years ago. It’s rapidly turning into my best healthcare investment.

There are three key takeaways from the research.

The first is that the benefits of walking really seem to kick in if you average at least 3,800 steps a day.

The second is that the optimum average is about 9,800.

And the third is that just casually wandering around doesn’t get you the full benefit. For maximum advantage, we should try to walk “purposefully,” at a rate of “112 steps a minute,” for at least half an hour a day.

Human beings, of course, spent most of the last million years walking lots every day, eating unprocessed foods, and fasting a lot when there was no food around. It is probably no coincidence that despite all the gazillions spent on advanced medical techniques, we are slowly rediscovering that our bodies really want to walk a lot, eat unprocessed foods, and fast a lot.

Who knew?

https://www.marketwatch.com/story/people-who-do-this-one-thing-every-day-have-half-the-dementia-risk-than-the-rest-of-us-11662994041?mod=home-page

1. Remove Top 10 Stocks from S&P….Remaining Group 14.6x P/E

JP Morgan

https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/

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2. Bond Bear Market-AGG Bond Index -21% in 20 Months….Down More than S&P in 12 Months.

Bearish chart…50 week moving average thru 200 week to downside…trading below 200 week moving average and approaching new lows

www.stockcharts.com

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3. Gas Prices $5.02 to $3.72

From Sam Ro According to GasBuddy’s Patrick De Haan, the national average price of gasoline fell to $3.72 on Friday, down from its high of $5.02 on June 14. This is great news as energy is a major driver of most measures of inflation.

https://finance.yahoo.com/news/two-ways-of-thinking-about-this-chart-of-stocks-and-recessions-132828658.html

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4. SPAC ETFs are Being Delisted

1. Behind the Markets Podcast with Wharton Finance Professor Jeremy Siegel and co-host Jeremy Schwartz –  Featuring Matthew Topley

Wharton Finance Professor and author of Stocks for the Long Run, Jeremy Siegel and co-host Jeremy Schwartz, Global Chief Investment Officer at WisdomTree, discuss the how and why of market performance with leading economists and market strategists so you know what’s ahead for the economy and your portfolio.

I am honored to be featured on the show! Thank you Jeremy Schwartz and Jeremy Siegal! And thank you all for listening!

Please reach out with any questions or to discuss any of the topics in more detail.

2. Institutional Traders Net Speculative Put Hedging Last Week was 3x More Than 2008

@sentimentrader

Sometimes, there’s a chart that just blows your hair back. In 22 years of doing this, none stand out like this one. Last week, institutional traders bought $8.1 billion worth of put options. They bought less than $1 billion in calls. This is 3x more extreme than 2008.

https://twitter.com/sentimentrader

3. International Equity Panic?….Net Outflows from International Stocks 20 Weeks in a Row

From Dave Lutz Jones Trading “Everybody is slowing down, but the U.S., because of the continuing strength of the jobs market, still seems to be slowing more slowly” – Investors have added money to U.S. equity-focused stock and mutual funds for four of the past six weeks, according to Refinitiv Lipper data, while yanking money from international stock funds for 20 consecutive weeks. That’s the longest streak since a 22-week run of outflows that ended in October 2019, WSJ reports.

4. European Central Bank Well Behind U.S….Rates Barely Positive and Inflation 9.1%

Inflation in the Eurozone jumped to 9.1% in August, a new record in the Eurozone data going back to 1997, according to preliminary data released today by Eurostat. It topped out at 25.2% in Estonia. Germany hit at a record 8.8%.

https://wolfstreet.com/2022/08/31/runaway-inflation-in-the-eurozone-which-kicked-off-in-mid-2021-sets-new-record-wakes-up-even-ridiculously-reckless-ecb/

5. $11B Invested in Solar and Wind for 2022….Passing Oil for First Time Ever.

WSJBy Miriam Gottfried

https://www.wsj.com/articles/blackstone-carlyle-take-different-sides-on-oil-and-gas-investment-11662024781?mod=itp_wsj&ru=yahoo

6. Spread in One-Year Performance Between Small Cap Growth and Large Cap Value Hits Internet Bubble Levels

Bespoke Investment Group

https://www.bespokepremium.com/interactive/posts/think-big-blog/historic-small-cap-volatility

7. Retail Trading Volume Drops to Pre-Covid Levels

Zerohedge-A better indicator of retail capitulation comes from Vanda’s tracker of total retail investors’ traded value in US securities, which has dropped to pre-Covid levels, or around $11BN per day…

https://www.zerohedge.com/markets/retail-traders-throw-towel

8. 77% of Single Family Home Renter Renewed Rental Leases…Record Amount.

https://www.linkedin.com/in/johnburns7/

9. U.S. Labor Day holiday air passengers exceed 2019 levels – TSA

By David Shepardson

WASHINGTON, Sept 6 (Reuters) – U.S. officials screened 8.76 million air travelers over the four-day Labor Day weekend, marking the first time holiday weekend screening volume has exceeded 2019 pre-pandemic levels.

The U.S. Transportation Security Administration (TSA) said Tuesday the four-day period topped the 8.24 million passengers screened over the Labor Day weekend in 2019, which traditionally marks the end of the busy U.S. summer travel season.

A space launch in Florida that could have impacted air travel over the weekend was scrubbed. On Monday, U.S. airlines canceled 108 flights and delayed 4,075, according to FlightAware.

Overall, U.S. summer travel did not meet early expectations as U.S. airlines trimmed summer capacity by 16% and adjusted staffing models to account for the time it takes to hire and train new employees.

On Thursday, the Transportation Department (USDOT) said the largest U.S. airlines had made “significant changes” to customer service plans with nearly all agreeing to offer passengers meals and overnight stays for delays within their control after a rough summer for travel, during which hundreds of thousands of flights were canceled or delayed.

Reuters reported that many of the changes to the customer service plans came after Secretary Pete Buttigieg told airlines Aug. 19 that he would publish a “dashboard” comparing customer protections airlines that were offering ahead of the busy U.S. Labor Day travel weekend.

Buttigieg said in the first six months, roughly 24% of U.S. airlines domestic flights were delayed and 3.2% were canceled.

“Americans have experienced an unacceptable level of flight — of flight delays and cancellations this year due to airline issues,” White House press secretary Karine Jean-Pierre said Thursday.

Airlines argue that the commitments largely reflect what they were doing even if it was not in writing. The White House says the written commitments made the promises enforceable by the Department of Transportation.

https://www.reuters.com/markets/us/us-labor-day-holiday-air-passengers-topped-2019-levels-tsa-2022-09-06/

10. Farnam Street Small Thoughts

he funny thing about teenagers is that very often the best of them, the most interesting and curious, are rather lousy high school students. They have other things on their minds than geeking out every single point on the AP U.S. history exam. They are very often readers, and preparation for elite-college admission does not allow one to be a reader; it’s far too time consuming. These “lousy” students were often among my favorites, and I never feared that they were going to lose a chance at a great education because they didn’t have the stuff of an “elite” admission. They themselves were smart. They didn’t need some Ferrari of a college nudging them along the path to a great education; they were going to get one wherever they went.”

— Caitlin Flanagan

“The problem isn’t that you’re too busy. You are too busy, but that’s not the problem. If you view being busy as the problem, there is no solution. You will always be too busy, and that will never change. As Andy Grove once noted: “A manager’s work is never done. There is always more to be done, more that should be done, always more than can be done.” The problem is that you’re acting like a firefighter instead of a fire marshal.”

— Ed Batista

https://fs.blog

1. The Financial Advisor Success Podcast by Michael Kitces – Featuring Matthew Topley

Michael Kitces is a leader in the finance industry with over 200,000 unique visitors to his blog every month! His podcast, The Financial Advisor Success Podcast, is one of the most popular in the market.

On his show he interviews leading advisors and industry consultants, discusses practice management tips, and gives a behind-the-scenes look at how the best advisory firms are built and run.

I am honored to be featured on the show that I have been listening to for many years. Thank you Michael Kitces! And thank you all for listening!

Please reach out with any questions or to discuss any of the topics in more detail.

2. 60/40 Worst Start to Year Ever

Wisdom Tree Andrew Okrongly This year has offered no shortage of headaches, but the most acute source of pain for most traditional portfolios has been the positive correlation between falling stock and bond prices.

There is historical precedent for balanced 60/40 portfolios experiencing negative calendar year returns. What makes 2022 so uniquely challenging? So far, it is the first time in recent history when both stocks and bonds have had steep, simultaneous declines.

Calendar Year Returns of a Traditional 60/40 Portfolio

Managing Portfolio Volatility as Correlations Rise | WisdomTree

3. Follow Up to Yesterday’s Volatility Comments….Number of “Extreme” Days Classified as Gain or Loss of 1%

Dorsey Wright-Another measure of volatility we use at Dorsey Wright is the number of extreme daily moves in the S&P 500 Index, which is classified by a gain or loss of at least 1% in value. This can help compare how the extreme movement seen this year relates to historical market environments. 79 days so far this year have seen a gain or loss exceeding 1% in value, equating to 48% of the trading days (through 8/29). Using historical data back to April 1987, only two other years have seen a higher percentage of volatile trading days: 2008 at 53% and 2002 at 50%. Other high years to note include 2009 at 46% and 2020 at 44%. Of the 79 days, 39 have seen SPX gain 1% while 40 have been 1% down days. While we have seen almost the same number of extreme up and down days so far this year, the down days have certainly felt more frequent as the losses have been sharper.

https://www.nasdaq.com/solutions/nasdaq-dorsey-wright

4. September Poor Monthly Return History

Reminder historically, on average, September has been the worst month of the year for the S&P500 (returns were -0.5% on average, and positive only 47% of the time).

5. Facebook..Another Household Tech Name Giving Back 5 Years of Gains.

https://www.google.com/finance/quote/META:NASDAQ?sa=X&ved=2ahUKEwjV5eewzYD6AhXok4kEHT6PACUQ3ecFegQIGBAg&window=5Y

6. XRT Retail Sector ETF…Inflation and Consumer

XRT Re-testing 200 week moving average…50 day sloping downward….-40% from highs

www.stockcharts.com

7. Short Credit/Bonds ETFs

TBF short 20-year treasury ETF….breaks out to new highs …50day thru 200day to upside bullish.

Short High Yield ETF never got close to Covid highs

www.stockcharts.com

8. The Strategic Petroleum Reserve Lowest Level in 38 Years

www.chartr.com

9. Philadelphia Stopped Arresting Shoplifters…..$5.6B loss to small business owners in Pa. last year.

Phila Inquirer by Craig R. McCoy and Dylan Purcell

Late last year, a retail trade group sought to put a price tag on retail theft across the United States. Its report found that Pennsylvania trailed only California in the dollar amount of thievery. It also determined that as a share of all sales, Pennsylvania’s annual $5.6 billion loss last year was the highest in the nation.

https://www.inquirer.com/news/philadelphia-shoplifting-rising-retail-20220901.html

10. Contrarian Edge – Vitaliy Katsenelson Grew Up in Russia

Putin: The Mask is Off. Europe is Next.- Vitaliy Katsenelson, CFA

Readers have asked me for my updated thoughts on the war in Ukraine. Here are my somewhat unstructured but definitely very gloomy thoughts. I promise next week’s email will be about a much brighter subject.

I wrote a four-part series on the war in Ukraine. If you missed it, you can read it here.

This war is not about Ukraine

When Putin started the war, he tried to shift the blame to NATO, calling it the instigator. He argued that Russia had no choice but to defensively launch the war to prevent NATO from surrounding Russia from all sides. Reality, of course, was very different. NATO was a sclerotic, toothless, mission-less defense (not offense) alliance in retirement, collecting its “peace dividend” from the breakup of the Soviet Union. Most of its European members maintained their defense spending below NATO charter rules.

Yes, the US, arguably NATO’s most important member, was increasing its defense spending. But Russia was an afterthought in the rationale for this increased spending. Our single focus was on China. Of course, ironically, this offended the sensitive Russian ego. Russians felt that nobody feared and respected them anymore.

Another excuse Putin used to sell the war to Russians was that the mighty Russian army was purifying Ukraine from Nazis and drug addicts. This was a lie. Ukraine has about as many Nazis as any other country in Europe, no more and no less. I wrote a lengthy essay on this topic. And if Putin was really worried about drug addicts, Russia should have invaded San Francisco instead.

A few days ago, Putin finally lifted his veil of pretense. He compared himself to Peter the Great and the war in Ukraine to Russia’s 21-year war with Sweden. He said (I am paraphrasing) that Peter had returned land to and fortified Mother Russia, and he added that now it was his time to do the same. Putin openly wants to be Vlad the Great, and Russia looks at Europe as its oyster.

Most (not all) Russians outsource their thinking to a few TV channels controlled by the government, where they are told what to think by a few propagandists. You may see a parallel between this and some Americans and their favorite TV networks. Take this American image and multiply it by a thousand and you’ll get the level of brainwashing of an average Russian. The message on Russian TV is carefully curated by the Kremlin, and you can, for instance, go to jail for calling this war a war.

Russian propagandists packaged Putin’s empire-building message so that it seemed not to have come from a shirtless KGB thug but to have come down from Mount Sinai. Suddenly, Russians started looking at themselves as the descendants of Genghis Khan, destined to expand Russia’s borders to the old extents of the Tatar-Mongol Empire (basically encompassing all of Europe). The propagandists even started quoting Peter the Great: “We’ll take from Europe everything we need and then turn our bare ass to it,” And they openly used the threat of nuclear weapons, accompanying their threats with, “It is not our fault that you [Europe] are weak and we are strong.”

What in the past was an educated surmise has now become as clear as rain: If not stopped in Ukraine, Putin’s Russia will continue its excursion into the rest of the ex-Soviet republics – defenseless Moldova, Belarus (which is already a Russian vassal state), Kazakhstan, Tajikistan, Kyrgyzstan, and others are next.

After Putin is done Frankensteining the Soviet Union back together with countries that are not part of NATO, he may move on to Baltic countries that are NATO members. I know, that is unimaginable. But so was the invasion of Ukraine and a shirtless thug openly discussing his plans to return land to and fortify Stepmother Russia by invading other countries and carelessly threatening the use of nuclear weapons.

This war is not about Eastern Ukraine or even Ukraine. It is about stopping Hitler in 1939 after he had already invaded Poland but before he marched on the rest of Europe.

As Gary Kasparov says, Russia under Putin has turned into a mob state. Mobsters respect strength and feast on weakness. I truly hope that as we start feeling the effects of the war on our wallets and war coverage gradually slips from primetime news to once a week updates, our resolve in supporting Ukraine doesn’t wane. Let’s be honest; Ukrainians are losing their lives on our behalf. If we don’t support them with weapons now, it will be our soldiers fighting the Russian Army in Estonia or Poland in a few years on behalf of NATO.

Ukrainians are fighting for their freedom

It is easy for some people to just look at a map, redraw a couple lines, and say that what used to belong to Ukraine now goes to Russia. That is what French President Macron told President Zelensky: that the West needs to let Putin be spared humiliation and that Ukraine should consider ceding some territory to Russia. This makes my blood boil; it is like asking a rape victim to leave a good review for their rapist on Yelp. Putin completely controls what the Russian people see and what they think. He can create his version of reality, divorced from facts and truth. He does so daily.

Ukrainians are not just fighting for their land; they are fighting for their freedom.

Thanks to Putin’s propaganda machine, the majority of Russians believe that Ukraine is on the brink of becoming Nazi Germany. I was talking to my brainwashed middle school Russian classmate, and he was telling me, “Did you see the swastikas tattooed on the Azov fighters who surrendered [after holding out for two months] in Mariupol?” I had not. He continued, “When they surrendered, some of them were shirtless, and you could clearly see that they were Nazis.”

I told him that he and his countrymen should look in the mirror.

I’m as reviled by Nazi symbols and beliefs as much as any Jew that had relatives murdered in the Holocaust, but being a Nazi is a lot more than just having a swastika tattooed on your body. It is about what you do and how you act. I paraphrased Forrest Gump: “A Nazi is what a Nazi does”. These Azov fighters, depite a tiny minority in their ranks that actually have swastika tattoos, were fighting for the independence of their country against a foe that proclaims it hates Nazis but is in fact a modern Nazi regime.

(I realize that this topic contains an incredible amount of complexity and nuance; to understand it, please read my essay on Nazis in Ukraine).

When we see the Nazi symbol we immediately stop thinking. Our emotions overwhelm us, and with good reason. But let’s think about it calmly – what is Nazism today?

It is the most recent, extreme version of nationalism, where one race or country believes it is superior to others and is willing to do any amount of killing to enforce its dominance.

It pains me to say this, but Russia today is sick with its own sort of Nazism. Just as Nazis believed they were the superior race, Russia believes it is superior to Ukraine and other nations. Russia wants to delete the Ukrainian identity, as though the country has no right to exist.

Don’t believe me?

This article (you can use Google Translate to read it) is the Russian version of Mein Kampf. It was published by the Russian Information Agency, a state-owned domestic news agency – an information arm of the Kremlin.

Ukraine, as history has shown, is impossible as a nation state, and attempts to “build” one naturally lead to Nazism. Ukrainism is an artificial anti-Russian construction that does not have its own civilizational content, a subordinate element of an alien and alien civilization.… Further denazification of this mass of the population consists in re-education, which is achieved by ideological repression (suppression) of Nazi attitudes and strict censorship: not only in the political sphere, but also necessarily in the sphere of culture and education.

Denazification will inevitably also be a de-Ukrainization – a rejection of the large-scale artificial inflation of the ethnic component of self-identification of the population of the territories of historical Little Russia and New Russia, begun by the Soviet authorities.

As Russia captures Ukrainian cities, it immediately starts “de-nazifying” and “Russifying” them. It prevents people from traveling elsewhere in Ukraine and allows them to travel only to Russia (think: the Wall in East/West Germany). It switches the functional currency to the ruble. It starts rewriting history by canceling the Ukrainian curriculum in schools. It wants Ukrainians to forget their culture and their language. Just like a rapist asking his victim to love him, Putin wants to force Ukrainians to fall in love with their new Russian nation.

Ukrainians are not just fighting for their land. They are fighting for the right to speak their own language, for their culture, for freedom of thought, for the right to be part of the West and maintain its liberal values.

My advice to Mr. Macron: If you want to save Putin from humiliation, I have heard that Burgundy is nice in August. Though Russians prefer potato vodka to French wine, they’ll adapt, and you can benefit from learning to say “I surrender” in Russian.

On a cheerier note, Ukrainians have chosen the design for a new stamp. It is called “Good evening, we are from Ukraine.”

https://contrarianedge.com/