Distinction Matter - Subscribed Feeds

The hawkish Washington DC-based think tank, The Institute for Study or War (ISW), had just prior to Ukraine's Sunday shock drone operation which reportedly took out some 40 military aircraft deep inside Russian territory issued a report saying President Vladimir Putin is prepared for war with NATO if things escalate to that point.

A May 30 decree issued by Putin concerning the Russian defense industry base (DIB) would enable the government to legally take over military contractor firms if they do not abide by wartime martial law orders.

"Putin is likely setting legal conditions to allow the Russian government to commandeer elements of Russia's economy and DIB should the Kremlin introduce full martial law in order to transition the country to a full wartime footing," ISW wrote on UnderstandingWar.Org.

"ISW continues to assess that the Kremlin is preparing Russian society and economy for a protracted war in Ukraine, indicating that Russia is not interested in engaging in good faith negotiations to reach a diplomatic settlement to its war in Ukraine."

Certainly Sunday just brought the world a big step closer to witnessing potential all-out war in Eastern Europe, given the Zelensky-ordered drone swarm attacks are already being called 'Russia's Pearl Harbor'.

"The Kremlin is continuing efforts to prepare Russian society and the Russian defense industry base (DIB) for a protracted war with Ukraine and potential future war with NATO," ISW concluded. "Russian President Vladimir Putin signed a decree on May 30 allowing the Russian government to revoke the rights of shareholders of defense industrial enterprises in the event that the enterprise fails to fulfill state defense orders during martial law."

"The decree enables the Russian Ministry of Industry and Trade to appoint a management company to act as the sole executive body of the enterprise in order to fulfill contractual obligations to the Russian government," the study says.

And it applies to "civilian aviation and shipbuilding companies, military development and production companies, and government subcontractors."

And just as useless for them. https://t.co/dIIsGnmBAm

Sunday's major attack on Russian airbases may only serve to accelerate a possible Kremlin move toward martial law and formal declaration of all-out war in Ukraine.

Despite Kiev and Ukraine supporters praising the effectiveness of Sunday's operation, the reality is that instead of translating into strategic battlefield gains, this only pokes the bear in a major way. Unverified reports say that ballistic missiles at silos across Russia are being readied.

We are likely to see Kiev soon get pummeled once again along with places like Odessa which have been for the most part sparred utter destruction thus far in the war.

Ukraine just mounted an attack that marks a turning point in the history of warfare

Hundreds of drones were pre-deployed and then struck 40+ aircraft 1000+ km inside of Russia

>$1B in damage by <$1m of drones

Critical infra is no longer safepic.twitter.com/qaPS3oKD1Y

Russia will likely ramp up attacks on 'command centers' throughout Ukraine, including those believed staffed by foreign advisers and officials. A big question for the Kremlin will be whether Western intelligence helped in Sunday's attacks, which saw several Russian long-range bombers destroyed. Another question that remains is: will Monday's peace talks in Istanbul still proceed at this point? There's little doubt that Putin is readying a massive, painful retaliatory attack on Ukraine.

For months, all we've heard from mainstream economic pundits is that Trump's tariff scheme would lead to absolute chaos; ports would be shut down, inflation would cripple the US economy, and markets would crater. The response was an April rollercoaster in stocks that ended the month higher, while the most recent inflation metrics had core PCE (personal consumption expenditures) coming in at its lowest level in years, while 'supercore' inflation (service-based inflation) dropped the most since COVID. So, just the opposite of what we were told would happen.

On Sunday, Treasury Secretary Scott Bessent disintegrated the conventional wisdom, while raking CBS News' Margaret Brennan over the coals in response to the media's fake news hysteria. 

The key excerpts from the interview:

• BESSENT: "Thus far there have been no price increases - everything has been alarmist. The inflation numbers are actually dropping. We saw the first drop of inflation in four years. The inflation numbers last week, they were very pro-consumer."

• BRENNAN: "But you listen to earnings calls just like we do. You know what Walmart is saying, what Best Buy is saying, and what Target is saying." 

• BESSENT: "But Margaret, I also know what Home Depot and Amazon are saying. I know what the South China Morning Post wrote within the past 24 hours - that 65% of the tariffs will likely be eaten by the Chinese producers." 

• BRENNAN: "The reality is there will either be less inventory, or things will be at higher prices, or both." 

• BESSENT: "Margaret, when we were here in March, you said there was going to be big inflation. There hasn't been any inflation. Actually, the inflation numbers were the best in four years. So why don't we stop trying to say 'this could happen,' wait and see what does happen. 

NEW: Treasury Secretary Scott Bessent strikes down CBS News’ Margaret Brennan by reminding her about her own previous comments about inflation.

Another rough weekend for Margaret.

Brennan: “The reality is there will either be less inventory or things at higher prices or both.”… pic.twitter.com/eONA9xNqxT

Bessent also pushed back on a warning by JPMorgan Chase CEO Jamie Dimon, who said that a crack in the bond market "is going to happen."

"I’ve known Jamie a long time, and for his entire career he’s made predictions like this," said Bessent. "Fortunately none of them have come true. That’s why he’s a great banker. He tries to look around the corner."

Brennan: Dimon predicted a debt market crisis,

Bessent: For his entire career, he's made predictions like this, fortunately none of them have come true. That's why he's a banker, a great banker pic.twitter.com/Kk5q50jnZu

Bessent also insisted that the US "is never going to default," as the deadline for raising the debt ceiling yet again approaches.

"That is never going to happen," he told Brennan, adding "We are on the warning track and we will never hit the wall."

Bessent's comments come as the US Senate returns this week to take up President Donald Trump's 'Big Beautiful Bill,' which includes an increase in the debt limit before the so-called "X-date" when the Treasury runs out of cash and special accounting measures that would allow it to operate it within the debt ceiling and still meet federal obligations on time.

"We don’t give out the ‘X date’ because we use that to move the bill forward," Bessent said (yet, he told lawmakers last month that the US was likely to exhaust its ability to borrow by August if the debt ceiling isn't raised or suspended by then.

"The United States of America is never going to default. That is never going to happen," Treasury Secretary Scott Bessent says ahead of a summer deadline to increase or suspend the debt limit, telling @margbrennan, "we are on the warning track, and we will never hit the wall."… pic.twitter.com/ZKXPnd5FEQ

Last week the Trump administration lashed out at Beijing for what they said was a violation of a US-Chinese tariff truce reached in May. Today, Bessent said he's confident that this "will be ironed out" in a call between Trump and Chinese president Xi Jinping "very soon." 

According to White House National Economic Council Director Kevin Hassett, the call is expected to take place this week - telling ABC's This Week that Trump "is going to have a wonderful conversation about the trade negotiations this week with President Xi."

“My expectation is that both sides have expressed a willingness to talk.”

Top White House economic adviser Kevin Hassett said it is possible that Pres. Trump and Chinese President Xi Jinping will speak this week about the ongoing trade battle.https://t.co/URF3j1NkNa pic.twitter.com/wwwKkLdOjX

On Friday, US Trade Rep. Jamieson Greer accused Beijing of failing to comply with several elements of the trade agreement brokered in Geneva, insisting that China continues to "slow down and choke off things like critical minerals and rare-earth magnets."

Bessent addressed this on Sunday, saying "Maybe it’s a glitch in the Chinese system, maybe it’s intentional," adding "We’ll see after the president speaks with the party chairman."

We are not seeking to decouple from China, but we must take steps to de-risk.

Withholding essential products from global industrial supply chains is not the behavior of a reliable trading partner. pic.twitter.com/wq4HkaECRT

Submitted by Peter Tchir of Academy Securities

Wall of Confusion

I think that we have seen the word “uncertainty” far too many times in the past few months. While uncertainty had its time and place, maybe confusion is a better description?

This is a natural evolution of last weekend’s Uncertainty – Main Street vs Wall Street.

We will use “confusion” or “confusing” as much as possible today. That might be a weird approach to writing a report that is designed to help guide investors and corporations through these markets, but it is where we are.

Wall of Worry

Wall Street is well known for climbing the “Wall of Worry.” Some have tried to argue that Wall Street climbed a Wall of Uncertainty in the past couple of months, but that does not seem accurate.

• Stocks plummeted as “Liberation Day” created certainty on tariffs – and that certainty was scary.
• Stocks rebounded as the President “pivoted” away from tariffs to the budget. While tariffs have remained a staple of the Wall Street diet, the headlines have had less and less impact, as the consensus view is that the headlines are “grandstanding” and the final results will be “manageable.”

Where we have been, for a week or longer, is figuring out how well Wall Street can climb a Wall of Confusion? On the prior Friday, when the President sent out his Truth Social posts threatening Tim Cook’s company with tariffs on a certain product, and 50% for the EU (after all the “progress” on China), many people figuratively “threw up their hands.” From a quiet Friday, to assessing the likelihood of these posts becoming policy. For me, I believe, I literally “threw my hands in the air” as the announcement was confusing in terms of timing, scope, and even reality. If we had to identify a moment in time, where the narrative should maybe switch from uncertainty to confusing, it was that series of posts (the EU one, not surprisingly, was “fixed” by the open on Tuesday, and the other one seems to have died off for now).

While uncertainty and confusion are related, they are not the same thing (at least we don’t think so).

Wall of Confusion – (That’s What the World is Today)

Okay, the song is actually “Ball of Confusion” but “Wall of Confusion” seemed more relevant to me (and I’m slightly embarrassed to admit, I thought the song was “Wall of Confusion” – but in my defense, I was never a big Love and Rockets fan, and it was more difficult to find song lyrics back in the day). Moving on, from that faux pas, there are some reassuring things about the song.

Run, run, run but you sure can't hide
An eye for an eye, a tooth for a tooth
Vote for me and I'll set you free

Ball of confusion (oh, yeah)
That's what the world is today, hey, hey

The sale of pills are at an all time high
Young folks walking 'round with their heads in the sky
The cities ablaze in the summer time
And oh, the beat goes on

Evolution, revolution, gun control, sound of soul
Shooting rockets to the moon, kids growing up too soon
Politicians say more taxes will solve everything
And the band played on

So, 'round and around and around we go
Where the world's headed, nobody knows

If you read the lyrics, you might be wondering if something is seriously wrong with me! How are these lyrics even remotely reassuring?

The fact that Love and Rockets felt it was timely to remake this song in 1985, and we are still around (and in general, thriving) tells me that we made it through the last 40 years, and maybe things weren’t so different?

The Temptations released the original version back in 1970!

So, the same set of words, broadly applicable today, were applicable over 55 years ago!

• The bad news is that we’ve gone 55 years and haven’t seemed to have fixed all that much.
• The good news is that we’ve flourished even with these issues and as much as today might seem different, in reality, it might not be that different. I really find that encouraging.

I assume the “ball” referred to in the song is the Earth, and yes, there is a depressing (and scary) element to the lyrics. For today, I’m going to take to heart that the world has been (and probably always will be) confusing, but we can make it through that.

On that positive note, maybe we should just end today’s report here?

While that would be nice, I do feel compelled to get across a few of the most confusing things.

Sentiment By Party Is Confusing?

We will devote as little text as possible to the University of Michigan Survey (and even that is more time than this survey deserves). We touched on the massive gap between Democrats and Republicans in Together We Stand. Overall, things would be better as the nation gravitates to a relatively uniform plan (not something we have today, but it is something that Jamie Dimon seemed to hit on in a recent interview).

1-year inflation expectations dropped from 7.3% to 6.6% in the most recent survey – though, Republicans, Democrats, and Independents all submitted for higher 1-year inflation. How is that even possible?

I was prepared for “mood” swings, like we saw in sentiment, where Democrats were less negative (economic data and stocks have been doing well, and the administration has backed off some policies), while Republican sentiment dropped a bit – presumably because of the PIVOT?

For me, sentiment surveys are on the cusp of shifting from confusing to irrelevant.

In any case, I certainly don’t know how we are supposed to use them in this day and age of social media, etc.

Tariff Inflation Confusion

Maybe I’m the only one confused by the potential impact of tariffs on inflation?

I’ve seen a number of surveys where the group running the survey is trying to figure out if tariffs are “inflationary” or “deflationary.” A valid goal, but what if the answer is both? Or kind of? Or first one, then the other?

We will now subject you to one of our very amateur charts, but one that can clarify the view that we have had (and continue to have) on tariffs.

Overall premise (which we’ve outlined in the past):

• Tariffs, initially, result in some upward pressure on prices
  • Price increases take time, as the tariffs get paid and prior inventory is worked off
  • Price increases take time because many prices have already been contracted
  • Price increases take time due to uncertainty/confusion over whether the tariffs will remain in place
  • Smaller levels of tariffs will be split between the exporter, importer, and consumer

The numbers on the “left” scale, ranging from -4 to 10, should be viewed more as a “scale” of deflationary, low, medium, and very high inflation, rather than as estimates of the percentage impact on tariffs.

While what we consider “manageable” tariffs have some inflationary pressures, it will act more or less as “business as usual.”

For higher tariff levels, we believe there will be some serious questions about the supply chain.

As tariffs increase, the pricing dynamic shifts, at least initially, from “attribution,” to real fear about supply chain issues. 

That will create much higher inflation, much quicker as consumers and businesses scramble to adjust to potentially disruptive supply chains.

Higher levels of tariffs are highly likely to slow the economy down. Once we get over the initial “supply chain” issues, it seems logical to assume the economy will experience a slowdown. Inflation will reduce the number of goods consumed. 

Profit margins will erode. Serious re-thinking of the global economy will occur, which will lead to deflation, as spending will drop.

Over time, in all scenarios, we should drift back to a no or limited effect.

It is probably accurate to say that tariffs are a “one-time” adjustment to prices, but that “one-time” adjustment will actually occur over a period of time.

That is why it will be difficult for the Fed to cut, as tariffs slowly leak their way into the system.

Very high levels of tariffs will likely be deflationary, as they will hurt the economy, possibly severely (which is what the market was pricing in, before the 90-day pause was instituted). Incidentally, this is what ZeroHedge said back in June 2024 in "The Experts Are All Wrong About Inflation Under A Trump Presidency"

The impact of tariffs is likely to be confusing: If our view is correct, and any inflationary pressures take time to play out, it will be difficult to separate any inflation from tariffs versus all of the other forces shaping the economy and prices.

Confusing? Possibly, though we would argue this is a logical framework to think about tariffs and inflation.

Economic Data Is and Will Be Confusing

Since the election, companies and individuals have had to think about the following:

• Potential deregulation and aggressive efforts along the lines of National Production for National Security. That was highly anticipated, then seemed to take a back seat, but is moving to the forefront again (the Nippon/U.S. Steel deal is an example.)
• M&A. Was a big hope for Wall Street. That too faded, but has been bouncing back.
• Tariffs. Buying ahead of tariffs. Slowdown as Liberation Day tariffs hit. More buying as the pause went into effect.
• Government Job Cuts and Spending Cuts. DOGE brought out the “chainsaw” – literally, on stage, but then not much seemed to happen. The Big, Beautiful Bill seems to bring back spending.

Companies and individuals have had to navigate some or all of the above as these factors affect their businesses.

While it is always difficult to estimate the “steady state” of the economy and separate the “signal from the noise,” I cannot think of a more difficult time than now.

On the government side, what was probably a drag, has become less of a drag on the economy (assuming the bill gets passed).

On the tariff side, it probably increased demand for products (and presumably labor), with a potential slowdown as any backlog is worked off.

Then you have survey response rates. We have bashed on sentiment surveys enough, but the BLS continues to see declines in survey response rates. The Establishment data, for NFP (which we get this week) gets a response rate of about 43%, down from over 60% a decade ago. So not even half of the firms bother to respond, for one of the most important pieces of data that we get.

We argued in last month’s Instant Reaction that the adjustment from the birth/death model seemed inconsistent with many other things we had been tracking (and it ultimately was the main driver of the report).

We may well get more confusing data on the jobs front this month. There is a camp that believes the jobs data has been overstated, and we have at least one foot in that camp, for the reasons we’ve been detailing.

The uncertainty, or even “confusion,” is likely slowing hiring, but it is also likely slowing dismissals, as companies don’t want to be understaffed if the PIVOT is Real and Positive.

I’m Confused Why World Leaders Are Not Golfing with Trump

We have mentioned how Abe of Japan learned to golf so he could play with Trump. The President said incredibly nice things about Abe during his speech about the U.S./Nippon Steel deal.

It seems pretty simple. Learn to golf (if you don’t already know how). Invite him to the best course your country has to offer. Get permission to do a military flyover while he is at the course. Expect a “reciprocal” at Mar-a-Lago. Don’t take the game too seriously and make sure you lose, possibly by a lot.

If I didn’t have a big defense budget, a need for airplanes, or massive amounts of chips, this would seem like a good plan to me. Heck, even if you need any or all of the above, it seems like a good plan!

I’m confused why more world leaders aren’t golfing with Trump? It seems funny, but I am serious.

Bottom Line

With all the confusion, we continue to believe that you should “stay the course” based on your current convictions, until evidence mounts that the course you are on is incorrect.

Policy pivots need to be addressed immediately. Fortunately, even with policy pivots, we seem to have time to absorb them, unlike in March and early April.

On the data front, expect some data to be confusing, or even misleading, but try to sort out the overall trend before correcting course.

Rates. Moderately bullish. We published Add Duration on May 22nd. The 10-year had closed at 4.6% the night before and is now back to 4.4%. It should have some more room to run to lower yields, especially as yields globally seem to have found support. I think we should be pricing in 3 cuts this year, starting in July.

Credit. Should continue to chug along.

Equities. Broad markets seem ok here, but extended. The “everyone is bearish” narrative has largely flip-flopped. Individual sectors may be the key here, as we digest the confusion and what it means for the economy and specific sectors. If anything, the equity market seems to be living a little bit too much on Hopium rather than concrete announcements.

• The pivot, budget, and Trump put seem fully priced in.
• Difficulties getting deals closed (including risk of sanctions on Russia, if no ceasefire is reached), seem not to be getting priced in.
• It has been awhile since we’ve used Hopium, but it seems to be the one word that is emerging from the confusion.

We can navigate through confusion, but I think we will be most successful navigating through it if we accept that confusion is different than uncertainty (as convoluted as that might sound).

Also, let’s remember the song that inspired this whole thing was released 55 years ago, and as much as the issues remain relevant, the nation, and individuals in the nation as a whole, have a lot more than we had back then!

Earlier this week, Ukrainian President Volodymyr Zelensky called for a three-way summit with Donald Trump and Vladimir Putin, likely in response to Russia's accelerated gains on the eastern front as well as the mass missile and drone attacks on Kyiv.  "If Putin is not comfortable with a bilateral meeting, or if everyone wants it to be a trilateral meeting, I don't mind. I am ready for any format," Zelensky stated after admitting that the Kremlin had amassed at least 50,000 troops near the northern Sumy region of Ukraine. 

The Kremlin responded with suspicion to the idea, noting that Zelensky was looking for 'clout' and a 'legitimacy boost' by inserting himself at the table between Russia and the US in the initial talks.  And, to be fair, the real diplomatic discussion is between Russia and the US, not Russia and Ukraine.

The conflagration in Ukraine is a clear proxy war with NATO officials managing the details of the conflict behind the scenes.  Ukraine's entire intel apparatus is reliant on NATO reconnaissance technology and their long range missile and drone strikes require NATO personnel and satellites to aim and guide the weapons.  The Ukraine war is between Russia and NATO; Ukraine and Zelensky are incidental.  

Zelensky appears to have taken offense to Russia's claim that he is chasing clout in a recent statement in which he asserted that meetings with Russia were "meaningless" without more pressure from the US and Europe.  He also begged for even more money and weapons to be sent to Ukraine from western partners while suggesting that long range attacks were the best way to bring the war to the Russians and convince them to accept a ceasefire agreement.

In other words, it appears that Zelensky was indeed interested in diplomatic negotiations until it became clear that he would not be at the center of them. 

Over the course of the past few months the establishment media and European officials have hinted that the war in Ukraine is not going well.  The realities of attrition warfare are taking hold and eventually Ukraine and NATO will have to admit that they are losing.  It's a reality many analysts have been trying to warn about for at least the past year, but anyone listening to the propaganda from the western media would assume that Ukraine is on the verge of sweeping the Russian out of the country.

This is simply not the case.  Russian forces are breaking through on multiple fronts and they seem to be massing for a large scale offensive in the north.  Ukraine's military is on it's last legs, which is the only reason why Zelensky has deigned to entertain the idea of peace talks at all.  He is also realizing that it is highly unlikely that the US will ever intervene with boots on the ground - The fundamental strategy of Kyiv and NATO officials was to lure the US and European public to support troop deployments and direct war with Russia.

European politicians are keen on the idea of sending in troops, but without US involvement they will not be able to effectively fight Russian forces in a brand of warfare far different from the typical maneuver warfare they are used to.

Donald Trump has sought to balance his peace negotiations with carrot and stick incentives for both sides of the conflict, but it may be too late for a deal as neither government is anxious for a realistic agreement.  Zelensky is forever demanding greater intervention by NATO countries and wants all territory taken by the Russians to be returned.  This isn't going to happen. 

Vladimir Putin, perhaps rightfully, is concerned about negotiating a ceasefire only to have progressives take power again in the US and upend any deal that is struck.  The motivation for Russia to press for a total victory and the removal of the government in Kyiv is high.        

Authored by Jack Phillips via The Epoch Times (emphasis ours),

The World Health Organization (WHO) has said that the COVID-19 variant NB.1.8.1 is causing more infections worldwide, as China’s health agency said it’s the dominant variant.

A laboratory technician works on samples to be tested for COVID-19 at the Fire Eye laboratory, a COVID-19 testing facility, in Wuhan, China, on Aug. 5, 2021. STR/AFP via Getty Images

The new strain was named as a “variant under monitoring” by the UN health body last week, while the U.S. Centers for Disease Control (CDC) confirmed a small number of cases were circulating in the United States.

WHO Says New Variant Spreading

WHO said in an update on May 28 that the variant is driving up cases in parts of the world and is currently spreading in Southeast Asia, the western Pacific regions, and the Mediterranean.

“The recent increases have been observed in four countries and areas to date: Cambodia, China, Hong Kong ... and Singapore,” the UN group said.

The variant LP.8.1 is currently the dominant version worldwide, according to WHO. But both LP.8.1. and NB.1.8.1 have not shown signs that they would cause an “increased public health risk” when “compared to other circulating variants,” the U.N. health body stated.

Reports From China

In a recent update, the Chinese CDC said that NB.1.8.1 makes up the majority of cases in China, while some Chinese doctors have gone on record in state-run media to say that one symptom that is being reported is a sharply painful sore throat.

The Chinese CDC has been criticized over the years for not being transparent with its case and death figures throughout the pandemic. The Trump administration and some U.S. intelligence officials have said that the virus appeared to have emerged from a top-level laboratory in Wuhan, China, in late 2019 before the Chinese Communist Party (CCP) attempted to cover it up and downplay its significance.

Some outside experts have questioned the actual death toll and case numbers reported by the regime since the pandemic’s start in early 2020.

Dr. Jonathan Liu, professor at the Canadian College of Traditional Chinese Medicine, director of the Kang Mei TCM Clinic, and skeptic of data Chinese CDC figures on COVID-19, said official data for March reported that seven people died from COVID-19 that month. He suggested in an interview with The Epoch Times that such a number is unreal.

“With normal epidemic rates, such a low figure is implausible. Canada, with a sparse population and good sanitation, reported 1,915 COVID deaths from August last year to May this year—over 200 per month. How could China, with its dense population, have only seven deaths monthly?” Liu told The Epoch Times last week.

The Chinese CDC also “has not reported the rate of severe cases, hospitalization rate, or mortality rate,” said Sean Lin, assistant professor at the Biomedical Science Department of Fei Tian College, former U.S. Army microbiologist, and Epoch Times contributor.

Other countries “cannot know the actual situation” in China because of the CCP’s attempts to downplay the true state of COVID-19 domestically, he added.

WHO’s recent update noted that new variant cases have increased in the western Pacific region, which includes China.

Other Governments Respond

Officials in South Korea on Friday said its government is closely monitoring COVID-19 cases in China and Hong Kong, while the country’s Central Disaster and Safety Countermeasures Headquarters conducted a meeting that morning on the situation.

“COVID-19 cases are increasing in some neighboring countries, including Hong Kong, China and Thailand, which is concerning,” Second Deputy Director General Lee Han-kyung of the Ministry of the Interior and Safety told JoongAng Daily. “People aged 65 and older, as well as residents of high-risk facilities, should get vaccinated now to prevent severe illness and death.”

The Korean Medical Association also said it has “concerns” due to large fluctuations in the daily weather temperatures and “increased population movement due to domestic and international travel.”

“There is considerable concern about a COVID-19 resurgence, and with more indoor activities likely due to the hot weather, the risk of respiratory infections spreading may increase,” the association told the JoongAng Daily.

In India, Delhi Health Minister Pankaj Singh told the PTI news service on May 26 that there is no need to panic over the strain.

“We have advised hospitals to be ready with beds, oxygen, essential medicines, and equipment, just in case. This is a part of standard preparedness,” he told the newswire service. “There is no need to worry. COVID caused by the new variant is similar to a normal viral illness. The patients who have come in so far are experiencing mild symptoms like fever, cough, and cold.”

This week, officials in Taiwan sent an alert about COVID-19 and stated that people in the country should wear a mask and wash their hands. Taiwanese officials earlier this month had reported a rise in cases.

CDC Says Case Numbers Are Low

U.S. officials appeared to downplay the significance of the new variant, suggesting that it’s not worse than any of the ones that are currently in circulation.

In a statement to The Epoch Times on Sunday night, a CDC spokesperson said that the health agency “is aware of reported cases of COVID-19 NB.1.8.1 in China and is in regular contact with international partners.”

“It has not met the threshold for inclusion in the COVID Data Tracker dashboard. We monitor all SARS-CoV-2 sequences, and if it increases in proportion, it will appear on the Data Tracker dashboard,” the spokesperson added, noting that fewer than 20 sequences of the variant have been found so far.

A new report cites an internal memo from the General Services Administration informing 'Big Tech' that the Trump administration is expanding its cost-cutting review of federal contractors beyond consulting firms to include now technology providers—specifically value-added resellers (VARs) like Dell and CDW.

The letter, obtained by The Wall Street Journal, was sent by Josh Gruenbaum, Commissioner of the GSA's Federal Acquisition Service, to 10 tech firms in recent weeks, demanding an explanation of services and a breakdown of costs and markups, targeting inflated pricing practices and inefficiencies.

Gruenbaum oversees the review of federal contractors and has given tech firms until June 11 to respond. The US spends a staggering $82 billion annually on IT products and services through a complex procurement process. He noted that some of these services carry excessive markups and inflate costs to taxpayers, warning the tech firms, "This must change."

"We don't need to outsource everything; we don't need to always go and buy bespoke, specialized products and services," Gruenbaum told WSJ in an interview, adding, "The point is, really, can you shape shift the way the federal government does business? We think unequivocally 'yes.'"

WSJ provided an update on contract cancellations since President Trump stepped into office:

• 11,297 contracts canceled across 60 agencies, saving $33 billion

• 2,809 consulting contracts terminated

The shift in scrutiny to streamline the bloated federal government, from consulting firms to big tech, comes as Booz Allen slashed up to 2,500 in June. The consulting firm specializes in government and defense consulting, generating a whopping 98% of its revenue from government-related work. 

Goldman analysts recently downgraded Booz Allen from "Neutral" to "Sell," noting medium-term revenue growth is expected to be flat as federal civilian spending comes under pressure and priorities shift within various federal agencies.

DOGE data shows that Booz Allen has had 68 contracts canceled, with 41 of these being contracts that had not been fully paid out, and the remainder having been fully paid. The 60 contracts account for over $600 million in deals.

Goldman also expects government IT outlays to slow in the coming year.

Here are the 20 other companies with the highest percentage of revenue from the US government.

The key takeaway is that the federal procurement process is in urgent need of reform. Looking ahead, the White House is expected to ask Congress next week to formally codify several cost-cutting measures from the Department of Government Efficiency (DOGE).

Submitted by Thomas Kolbe,

Germany is planning to introduce a 10% special tax targeting U.S. tech giants. At least now we know what the German government needs a “Minister of State for Culture and Media” for: to invent new taxes.

Illustration via Bitcoinsensus

If the ongoing trade dispute with the United States has taught us anything, it’s that Europeans are no innocent lambs when it comes to protectionism. On the contrary, they’ve mastered the art of shielding their markets through subtle mechanisms—while their media machine works overtime to conceal these maneuvers from the public.

Weimer's Unexpected Mission

Wolfram Weimer, recently appointed Minister of State for Culture and Media, traditionally oversees a largely symbolic post linked to coalition horse-trading. Now, however, the office is being used to launch a direct political strike: a new tax to intervene in the tariff conflict with the U.S.

Weimer frames the digital tax as an act of social justice. With his “Platform Solidarity Contribution,” he aims to hold big tech companies accountable and break up their “quasi-monopolistic structures.” According to Weimer, Germany must reduce its dependence on U.S. infrastructure and contribute to “media diversity.” This is precisely where caution is warranted. When politicians start preaching solidarity, it usually ends up costing taxpayers and consumers dearly.

A Deliberate Provocation

Forget solidarity—this tax is nothing less than a calculated provocation aimed squarely at Washington. At a time when Donald Trump has paused threatened 50% tariffs on EU imports until July 9, hoping to find a negotiated solution, Europe responds with a punch in the face.

Moves like this digital tax won’t bring Brussels closer to a deal. Quite the opposite: they sour the climate and push transatlantic relations further into confrontation. Whether Germany realizes it or not, this tax confirms what many in the U.S. already suspect: Europeans are not truly interested in free trade—they're protectionists at heart.

This isn't the Art of the Deal—this is the Art of Closing the Door.

Europe’s Tech Failure

The underlying issue is both well-known and uncomfortable: Europe has failed to build its own competitive tech sector. Instead, the continent has meticulously crafted a vast and questionable regulatory framework. One wonders who this regulation is meant to serve when the sector it targets barely exists.

It’s a bureaucratic chimera—a Brussels-born behemoth now fed by Berlin, following Austria’s lead with a similar tax that met widespread criticism. In Vienna, that criticism also fell on deaf ears.

As is often the case with new levies, there’s a real concern that companies will simply pass on the added costs to consumers—through digital services, advertising, or subscriptions. What officials claim won’t affect users may well end up hitting them directly.

Industry groups like Bitkom already warned back in April that a digital tax could drive up prices for software, cloud services, and digital tools—slowing digital adoption and hurting both consumers and businesses.

Risk to Germany’s Innovation Landscape

Beyond the obvious financial burden for users, the proposed German digital tax carries serious structural risks. Though it targets international tech giants, its ripple effects could weaken Germany’s digital economy as far as it exists.

Startups and mid-sized IT firms reliant on global platforms would face rising costs. Innovation would be penalized, not rewarded—sending the wrong message to investors and stalling Germany’s already sluggish digital transformation.

On top of this looms the risk of escalating trade tensions: those who tax digital services must expect analog retaliation. Ultimately, this tax undermines Germany’s competitiveness without delivering a viable homegrown tech alternative.

Symbolic Politics Instead of Real Strategy

In the end, the digital tax is a symbolic gesture—politically driven, economically questionable. Europe again gets lost in micromanagement, passive-aggressive policies, and a complete lack of creative, future-oriented thinking.

When all else fails, the reflex is always the tax hammer. But this tax won’t hit the monopolies—it will hit their users. Not the tech behemoths, but the small players in the digital ecosystem.

And once again, it reveals the old European habit of making rules where freedom and competition would be far more productive.