Zerohedge

A series of disappointing earnings (with peak earnings season this week) from fast-food chains, beverage giants, and consumer companies underscores persistent financial strain on low- and middle-income consumers—pressured by lingering Biden-era inflation and increasing fears over tariffs and mounting economic uncertainty under the current administration. 

On Thursday, McDonald’s reported same-store sales that tumbled 3.6% in the US, the largest year-over-year decline since the second quarter of 2020. The decline was mainly because of sagging visits at stores nationwide. 

McDonald’s CEO Chris Kempczinski wrote in a statement that consumers “are grappling with uncertainty.” He noted that McDonald’s will be able to “navigate even the toughest of market conditions and gain market share.” 

Citi analyst Jon Tower told clients that McDonald’s soft sales should “come as little surprise” to investors, with the fast-food chain “speaking to a muted outlook/challenged global consumer back in mid-February and category high-frequency data/other company 1Q updates all suggesting lower-income guests were pulling back.” 

On Friday morning, Wendy’s slashed its sales outlook for the year, signaling consumers are dialing back their store visits and ticket spending. 

Wendy’s CEO Kirk Tanner stated that the US market faced a “challenging consumer environment.” The fast-food chain warned that the pullback in spending was more acute with customers making below $75,000. 

Last week, Chipotle missed first-quarter revenue estimates and reported that same-store sales had fallen for the first time since 2020. 

Chipotle CEO Scott Boatwright warned investors that a “slowdown in consumer spending” materialized, forcing it to lower the top end of its full-year same-store sales growth outlook. 

At the beginning of the week, Starbucks reported disappointing global comparable sales and profit, with sliding US demand. 

Starbucks CEO Brian Niccol’s turnaround strategy for the coffee chain appears to have stumbled after the company reported four straight quarters of declining sales.

“Our financial results don’t yet reflect our progress, but we have real momentum with our ‘Back to Starbucks’ plan,” Niccol told investors.

Yum Brands, the parent of KFC, Pizza Hut, and Taco Bell, also reported this week. Yum posted a mixed first quarter, with a sales slowdown that began to soften in January but improved through February and March. 

In the consumer goods space, Procter & Gamble reported mixed quarterly results as demand for its products fell. Executives of the company, which owns Tide and Charmin, slashed their full-year outlook for earnings per share and revenue based on consumer slowdown and tariff uncertainty.

The broader pessimism from QSRs and consumer-facing companies mirrors the sharp downturn in the Conference Board’s confidence index, which just sank to a 14-year low.

Labor market conditions also weakened.

In markets, Goldman analyst Nelson Armbrust said consumer discretionary stocks were “net sold for a fourth straight month, driven by short sales outpacing long buys ~5 to 1.” 

Goldman’s take: “Sentiment remains very soft in Consumer, due to both sourcing and tariff concerns, while investors are also focused on the consumer slowdown theme.” 

More broadly, with peak earnings season now behind us, Goldman Chief Equity Strategist David Kostin told clients Friday that results have held up relatively well:

1Q 2025 year/year earnings growth is tracking at 12%, 6 pp higher relative to the start of the reporting season. Better than expected margins have driven the positive surprise so far with the average earnings surprise tracking at 5% vs. an average sales surprise of 1%.

Kostin also noted: 

One lingering question heading into May is whether the slide in consumer spending and sentiment will worsen—or if it can be reversed by a series of positive trade headlines. 

By Julianne Geiger of OilPrice.com

The OPEC+ members currently participating in voluntary production cuts will meet this Saturday, May 3, instead of Monday, May 5, according to Kpler’s Amena Bakr on X. The call is set for noon Vienna time, with the agenda focused on “consensus building around maintaining the sped-up increment of 411K for June.”

Brent crude had slipped nearly 1% by late Friday morning, trading at $61.56. It’s a price level not seen since early 2021—and one that puts most OPEC+ budgets underwater. 

For producers already grappling with restricted output, prices below $65 are a growing fiscal headache.

The accelerated meeting follows mounting tensions within the group. 

Reports suggest Saudi Arabia is signaling it can live with lower prices—a not-so-subtle message to chronic overproducers like Iraq and Kazakhstan.

The 411,000 bpd production increase originally floated as a wake-up call may now be cemented into policy, signaling a strategic shift in Riyadh’s approach.

OPEC+ has pledged to offset 4.57 million bpd of overproduction by mid-2026. But enforcement remains patchy. 

Saturday’s call will test whether Riyadh and Moscow can still steer the ship—or whether quota politics are about to devolve into a full-blown battle for market share.

Meanwhile, a Bloomberg survey released Thursday showed that OPEC’s actual output fell by 200,000 bpd in April, down to 27.24 million – contradicting the group’s planned increase.

Goldman assigns a 70% subjective probability that the announced change in OPEC8+ supply for June will be 0.41mb/d, a 25% probability to a larger increase, and a 5% probability to a 0.14mb/d increase.

Market pessimism is already pricing in a production hike. 

But April’s figures are a reminder: announced increases don’t always materialize. Whether Saudi Arabia will keep absorbing the blow while others cheat—or start using price as a weapon to enforce discipline—won’t be decided in a Vienna video call. It’ll be decided at the wellhead.

A key Trump demand of the Zelensky government was quietly dropped as a condition of peace talks as well as the Ukraine minerals deal, which was finally signed this week.

Washington is no longer seeking to pressure or force President Volodymyr Zelensky to hold elections that could result in his being ousted office for the sake of peace, according to information in The Telegraph. 

“The demand has been quietly dropped from the latest set of American proposals for a ceasefire,” The Telegraph writes. “The American decision to stop demanding elections is designed to placate the Ukrainian officials who have argued against swathes of a seven-point peace plan tabled by Mr Trump.”

The minerals deal still has to be formally approved by Ukraine’s parliament, according to the nation’s constitution. Below is said to be the current seven-point plan offered by Trump, aspects of which were previously rejected by Ukrainian officials…

As for dropping the demand for Zelensky and parliament to hold elections, the Kremlin itself seems to have somewhat quieted down on this in recent weeks.

Without doubt, Moscow still wants to see Zelensky go, but appears willing to not press the issue if he were willing to give up territory for the sake of ceasefire (which so far isn’t happening – not even regarding Crimea).

Zelensky’s term in office expired in May 2024, and Ukrainian parliament has recently reaffirmed the ‘constitutionality’ of Zelensky’s mandate as leader of the country during wartime. Trump soon after taking the Oval called him a ‘dictator’ who canceled elections, and even long before that called him the “world’s greatest salesman” as he received hundreds of billions from the US and Western allies.

Meanwhile, fresh statements from US Secretary of State Marco Rubio express continued optimism on the potential for peace. He says “they’re closer” to peace – in reference to Moscow and Kiev.

“For a hundred days he has done efforts to bring about peace… Look, we’ve gotten closer. We – for the first time – we haven’t known this for three years – we kind of can see what it would take for Ukraine to stop. We can see what it would take for the Russians to stop,” Rubio said.

He then noted, “They’re closer, but they’re still far apart. And it’s going to take a real breakthrough here very soon to make this possible… or I think the president is going to have to make a decision about how much more time we’re going to dedicate to this,” he added.

It’s been widely reported that during Zelensky’s impromptu 15-meeting with President Trump on the sidelines of the pope’s funeral last weekend he was able to ease the pressure on Kiev coming from Trump.

“Zelensky’s advisers were divided about whether he should even risk the tête-à-tête after the disaster in the Oval Office,” Axios reported days after the meeting. “But after it, Zelensky felt he’d managed to shift Trump’s thinking about Putin for the first time, the sources say.”

Authored by Debra Heine via American Greatness,

Health and Human Services Secretary Robert Kennedy Jr. said Wednesday that HHS is no longer facilitating child trafficking in the United States and is instead “very aggressively” searching for the hundreds of thousands of migrant children lost by the Biden administration.

“We have ended HHS’s role as the principal vector in this country for child trafficking,” Kennedy said during a White House Cabinet meeting with President Trump and other top administration officials to mark the first 100 days of the president’s second term.

“During the Biden administration, HHS became a collaborator in child trafficking for sex and for slavery, and we have ended that,” RFK Jr. declared.

In November 0f 2022, an HHS volunteer came forward to accuse the Biden regime of knowingly participating in the sex-trafficking of minor children after observing how it processed unaccompanied migrant children at an HHS Emergency Intake Site in Pomona, California.

The whistleblower, Tara Lee Rodas, went to Project Veritas with her first hand account of how the Biden regime’s corrupt child sponsorship program exploited and endangered vulnerable unaccompanied minors by placing them with criminal, noncitizen sponsors.

In some cases, dozens of unaccompanied alien children (UAC) were sent to the same residence of an unvetted sponsor.

Thousands of these minors “ended up in punishing jobs across the country—working overnight in slaughterhouses, replacing roofs, operating machinery in factories—all in violation of child labor laws,” the New York Times reported in February of 2023.

In August of 2024, the Department of Homeland Security (DHS) Inspector General released a blistering report showing that U.S. Immigration and Customs Enforcement (ICE) had lost track of up to 320,000 unaccompanied minors over the previous five years.

Approximately 291,000 of those were released into the U.S. and never given a date to appear in immigration court.

Another 32,000 children were released with hearing dates but failed to show up to their immigration hearings.

“We’re very aggressively going out and trying to find these 300,000 children that were lost by the Biden administration,” RFK Jr. said Wednesday.

Homeland Security agents in California recently rescued two teenage migrant sisters from Honduras who were being held in captivity at a hotel in West Covina, California, the New York Post reported.

Christopher Ramirez was allegedly “pimping” the  sisters, ages 16 and 18, sources told the Post.

The youngest victim was placed in the custody of Biden’s HHS, which placed her with her sponsor.  The older teen was released after declining “services or placement.”

Cops with the West Covina Police Department initially found the girls and arrested Ramirez on local charges.

The feds are still looking for co-conspirators who helped move the migrant girls, who are from Honduras, from Texas to California and forced them into prostitution, sources said.

Ramirez is also facing federal charges.

The Trump administration has reunited approximately 5,000 unaccompanied migrant children with family members or “safe guardians” in its first 70 days, Department of Homeland Security Assistant Secretary Trici McLaughlin said in an X post.

“Unlike the previous administration, President Trump and Secretary [Kristi] Noem take the responsibility to protect children seriously and will continue to work with federal law enforcement to reunite children with their families,” said McLaughlin.

More than 125,000 New Yorkers relocated to Florida over a recent five-year span, draining the Empire State of nearly $14 billion in income, according to a new report from the Citizens Budget Commission (CBC), a nonpartisan fiscal watchdog, reported on by the New York Post.

Roughly a third of those fleeing New York City—some 41,251 residents—resettled in Miami-Dade, Palm Beach, and Broward counties between 2018 and 2022, resulting in a $10 billion loss in adjusted gross income (AGI) for the city. An additional $3.8 billion in income was lost to other Florida destinations.

“They are getting something more beneficial to them,” said CBC President Andrew Rein. “The key is with any place you need the benefits to outweigh the cost. The question right now for New York is what do we offer?”

The CBC attributes the exodus to a mix of affordability concerns, public safety, quality of life, and lingering pandemic effects. Only 30% of New Yorkers rated city life as “good or excellent” in 2023—down from 50% pre-pandemic.

The Post writes that high-income earners led the charge. Miami-Dade saw an influx of ex-New Yorkers with average incomes topping $266,000. Palm Beach newcomers earned around $189,000, while Fairfield County, Connecticut, drew residents with an average income of $141,000. Notably, New York’s top 1% of earners pay 40% of the state’s income taxes.

“One of the critical issues of our time is keeping our competitiveness for businesses and residents,” Rein said. “We need to focus on ensuring we don’t tax too much, that we are a safe place to live, and that people find quality of life to be high.”

Florida wasn’t the only winner. Nearby suburbs absorbed thousands of city dwellers:

• Long Island gained 138,000 NYC expats, costing the city $11.1 billion in AGI.

• Westchester County added nearly 60,000, for a $5 billion hit.

• Fairfield County took in 31,000, costing $4.9 billion.

• Bergen County, New Jersey, saw over 30,000 newcomers, with a $1.8 billion impact.

Altogether, relocations within the Northeast accounted for a $22.8 billion loss in AGI and a population decline of more than 230,000.

Despite a doubling of millionaires in New York from 2010 to 2022—from 36,000 to 70,000—the state’s share of U.S. millionaires dropped sharply, falling from 12.7% to 8.7%.

“Our competitiveness depends in part on quality of life and public safety,” said Rein. “Simply put, some people found the value proposition of other places to be higher than New York City.”

Authored by Lance Roberts via RealInvestmentAdvice.com,

In investing, success is often judged by numbers – returns on investment, percentage gains, and the ability to outperform benchmarks like the S&P 500. 

However, some investors frequently pursue a peculiar set of “awards” without realizing the pitfalls they embody. These unspoken goals, while tempting, rarely lead to sustainable investment success. If there were awards for some of these common but ill-advised behaviors, they would likely cause more harm than good. Here are some of the “investing awards” you’ll never receive, because chasing them isn’t worth the cost.

I Never Sold At A Loss Medal

Market volatility is an inherent aspect of investing. Striving to avoid all losses, or drawdowns, is unrealistic. Trying to sidestep volatility often leads to lower returns and missed growth opportunities. Overly conservative investments may not keep pace with inflation, steadily eroding purchasing power. Managing risk effectively instead of avoiding it is essential for long-term portfolio success.

Many investors pride themselves on never realizing a loss, believing that holding every position until it turns profitable is a badge of honor. However, this mindset often leads to holding onto poor performers indefinitely, tying up capital that could be better deployed elsewhere. This behavior is a classic example of behavioral mistakes investors make, specifically the “disposition effect,” where investors hold losing assets too long while selling winners too early. Focusing solely on avoiding losses often damages overall portfolio returns.

Like everything in life, there is a “season” and a “cycle.” When it comes to the markets, “seasons” are dictated by the “technical and economic constructs,” and the “cycles” are dictated by “valuations.” The seasons are shown in the chart below.

As such, successful investing requires disciplined pruning to maintain a healthy garden. Recognizing when an investment no longer aligns with your strategy and cutting losses early frees up capital for better opportunities. There is no award for stubbornly holding a stock that continues to drag down your portfolio.

I Took On As Much Risk As I Could Award

During bull markets, taking on excessive risk seems attractive. High-risk assets like speculative tech stocks or cryptocurrencies often deliver eye-catching gains. Some investors view risk-taking as bravery. But the reality is that high risk doesn’t guarantee higher returns; it is frequently quite the opposite. As Howard Marks previously discussed, risk and volatility aren’t the same thing. For years, many investors (and academics) have been taught that volatility, the ups and downs of stock prices, equals risk. However, volatility is just one part of the picture, but risk is the probability of losing money. Just because prices bounce around doesn’t mean you’re at risk of a loss.

However, “High risk equals high reward” is not always true. Just because an investment has a higher degree of risk does not guarantee it will deliver superior returns. Given that risk is the probability of losing money, taking on excess risk does increase the potential for poor returns over time. In other words, increasing risk increases the potential for significant losses. As such, investors must be careful about chasing returns without fully understanding the risks. The goal should be to weigh the possible outcomes and ensure the potential reward is worth the risk taken.

A good example was in 2022, when retail investors chasing meme stocks, SPACs, and IPOs suffered significantly heavier losses than the index. At that time, the ARK Innovation Fund, managed by Cathy Wood, was an example of peak speculation in the market. However, since then, those investments failed to recover. In other words, speculative risk-taking did not lead to outsized returns.

Sustainable investing requires aligning investments with financial goals and risk tolerance to avoid exposing one’s future to unnecessary volatility. Diversification, not reckless risk-taking, remains the best tool for improving risk-adjusted returns. While speculative investments lack the excitement and thrill, prudent investors build strategies focused on taking calculated, strategic risks that contribute to long-term wealth.

“You don’t get rewarded for taking risk; you get rewarded for buying cheap assets. And if the assets you bought got pushed up in price simply because they were risky, then you are not going to be rewarded for taking a risk; you are going to be punished for it.” – Jeremy Grantham

Successful investors avoid “risk” at all costs, even if it means underperforming in the short term. The reason is that while the media and Wall Street have you focused on chasing market returns in the short term, ultimately, the excess “risk” built into your portfolio will lead to inferior long-term returns. Wile E. Coyote never received an award for chasing the Roadrunner over the cliff.

I’m a Long-Term Investor (Only When I’m Losing Money) Certificate

A common rationalization is to claim to be a long-term investor only when losses mount. When an investment underperforms, investors often tell themselves they are simply “staying the course,” using time to justify inaction. Research by Barberis and Thaler (2003) on behavioral biases shows that loss aversion—the tendency to prefer avoiding losses over acquiring gains—strongly influences this behavior.

True long-term investing demands more than patience; it requires a disciplined, objective framework. This means purchasing quality assets with strong fundamentals, establishing clear investment theses, and periodically reassessing those theses. Successful investors, like Warren Buffett, have emphasized that staying invested in a poorly performing asset without reevaluating it is not long-term investing—it is emotional decision-making disguised as strategy.

A good example is Intel (INTC) versus Texas Instruments. Over the last five years, Intel has lost 62% of its value as it lost its chip-making dominance to companies like AMD, Nvidia, Broadcom, and others. For investors holding Intel, many are hoping that something will occur and they can recover that loss. However, at any point over the last 5 years, they could have sold Intel and bought virtually any other chip maker and increased their wealth. While there are many examples, this exemplifies the point of opportunity cost. Holding a losing asset for long periods eats away at the wealth-building process and consumes our most precious commodity: time.

Building a resilient portfolio is not about loyalty to individual positions. It is about effective asset allocation, risk management, and ongoing evaluation. Markets evolve, industries change, and even once-promising companies can lose their competitive edge. Recognizing when an investment no longer fits your portfolio’s long-term goals—and having the discipline to move on—is a hallmark of professional investing, not a weakness.

I Never Used Stop-Losses Or Managed Risk Ribbon

Some investors view risk management strategies like stop-losses, portfolio rebalancing, and diversification as unnecessary restraints on potential gains. Instead, they trust intuition, believing they can “ride out” volatility. Behavioral research (Shefrin, 2000) shows that overconfidence is one of individual investors’ most common mistakes, often leading to catastrophic losses when market conditions change suddenly.

Managing risk effectively isn’t about fear or pessimism. It is about protecting your capital from irreparable damage so that you can continue participating in future market growth. Stop-losses are designed not to predict downturns but to limit exposure to individual positions that deteriorate beyond acceptable thresholds. Similarly, rebalancing prevents portfolios from drifting into unintended risk concentrations over time.

An example of risk management can be very simplistic. For example, using a 40-week moving average as a “risk off” indicator can help avoid more protracted market drawdowns.

We can apply a “risk management” strategy to that moving average to reduce risk during corrective periods. For this example, when the S&P 500 breaks below the 40-week moving average, stock exposure is reduced by 50%, and it reverses to 100% when the index crosses above that moving average. The results are shown below.

While there are times when investors were triggered to reduce and then increase exposures quickly, the 2000 and 2008 financial crises underscored the consequences of unmanaged portfolios. Many investors holding full exposures to equities without risk controls suffered permanent losses (Brunnermeier, 2009). Risk management is the bridge between surviving market turbulence and thriving in long-term wealth creation. No one ever received an award for riding markets substantially lower. Such is not a testament to resilience—it is an avoidable failure.

I Beat the S&P 500 Medallion

Outperforming the S&P 500 is often portrayed as the ultimate measure of investing success. However, data from the SPIVA U.S. Scorecard shows that approximately 85% of actively managed U.S. equity funds underperform their benchmarks over ten years. While not every manager underperforms yearly, and periods of outperformance exist, the persistent challenge highlights the difficulty of consistently beating the S&P 500.

Pursuing benchmark-beating returns can lead investors into dangerous territory. Studies in behavioral finance (Statman, 2000) show that investors chasing outperformance often engage in high-turnover strategies, excessive trading, and speculative bets. These behaviors introduce additional risks and higher transaction costs that erode potential gains. The result is that investors, while trying to “beat the index, ” consistently underperform over time. As noted in the 2024 Dalbar Research report:

As noted above, even the most simplistic of risk management strategies can improve returns over time while maintaining a focus on investment goals. Instead of fixating on beating the benchmark, focus on building a portfolio that aligns with your financial goals and personal risk tolerance. Ultimately, true investing success isn’t measured against a broad index. No one will ever give you an award for beating an index from one year to the next. However, they will measure your success by what matters most: whether you achieved your objectives, like securing a comfortable retirement or funding important goals.

Conclusion: Building a Smarter Path to Investing Success

To avoid the costly mistakes outlined above, investors must adopt a disciplined, process-driven approach to managing their portfolios. Sustainable investment success comes from understanding, not reacting to, market behavior. Here are the critical steps you should take:

• First, embrace losses as part of the investment journey. Prune weak investments when they no longer fit your strategy, reallocating capital to stronger opportunities rather than waiting for recoveries that may never come.

• Second, respect risk. Avoid equating bravery with excessive risk-taking. Build portfolios aligned with your personal financial goals and loss tolerance, focusing on diversification and asset valuation rather than speculative bets.

• Third, redefine long-term investing. Remaining loyal to a poor investment out of hope wastes time and wealth. Maintain objectivity by reassessing whether each holding still meets your original investment thesis.

• Fourth, implement active risk management. Use stop-loss strategies, periodic rebalancing, and technical indicators like the 40-week moving average to protect against significant drawdowns. Managing risk is about ensuring survival, not limiting success.

• Finally, stop chasing the S&P 500. Focus instead on achieving your financial objectives with consistent, risk-adjusted returns. Outperformance is meaningless if you fail to meet real-world needs, like securing retirement income or building generational wealth.

Successful investing is not about winning arbitrary “awards.” It is about managing risk, preserving capital, and steadily compounding returns toward your goals. Ignore the noise, stay disciplined, and remember: no one hands out awards for reckless investing—only consequences.

According to fresh reporting in Haaretz, Israel is preparing tens of thousands of orders calling more reserve soldiers to active duty, amid an expected expansion of ground operations in the Gaza Strip.

But more reservists are increasingly needed as Israel’s military once again becomes more engaged in places like Syria, Lebanon, the Golan Heights, and security crackdowns in the West Bank.

The Haaretz report suggests that a surge of additional soldiers will free up more forces to focus efforts on defeating Hamas in Gaza.

One of the areas of expected new operations is the town of Muwasi on the Gaza coast. Israel is claiming that it has become a safe haven for Hamas, and that militants are hiding in what has become a sprawling tent city of the internally displaced, and so has to be cleared of all Palestinians.

Prime Minister Benjamin Netanyahu has meanwhile unleashed fresh controversy related to these expanded operations. He essentially admitted that the remaining hostages are not the country’s top priority, but the ultimate defeat of Hamas is.

“We have many objectives, many goals in this war. We want to bring back all of our hostages,” Netanyahu said. “That is a very important goal. In war, there is a supreme objective. And that supreme objective is victory over our enemies. And that is what we will achieve,” he added. He had issued the words at an Independence Day event in Jerusalem on Thursday.

This was enough to outrage families of the victims, who have been begging Israeli leaders to restart negotiations with Hamas, in hopes of brokering the freedom of the remaining captives.

The Hostages and Missing Families Forum issued a response to these words of Netanyahu. “Prime minister, the return of the hostages is not ‘less’ important – it is the supreme goal that should guide the government of Israel,” a statement said. “The families of the hostages are concerned.”

As for the remaining captives, Netanyahu addressed this is the same remarks, saying “We want to bring all our hostages home. We’ve so far brought back 147 alive, and 196 total,” but that “There are another up to 24 alive, 59 total, and we want to return the living and the dead.”

Netanyahu’s description of goals in Gaza and what he prioritizes were echoed in prior remarks last week by hardline Israeli Finance Minister Bezalel Smotrich in a CNN interview.

The war which has been on since the terror attacks of Oct.7, 2023 – has become deeply divisive among Israeli society:

Hundreds of Israelis walking in Tel Aviv tonight with photos of children killed in Gaza demanding to stop the attacks now. pic.twitter.com/XjDA9o6EIe

— Breaking the Silence (@BtSIsrael) April 26, 2025

“We need to tell the truth — bringing back the hostages is not the most important goal. It is, of course, a very, very, very, very important goal,” he began his comments. And there was a but…

“But anyone who wants to destroy Hamas and eliminate the possibility of another Oct. 7 must understand that in Gaza, there can’t be a situation where Hamas remains present and intact,” he emphasized.

It’s unknown how many hostages might still be alive. Family members worry that with each passing day and week, the chances of survival grow slim, also given the steady bombings and that it’s an active war zone, also with little food and medicines.

Authored by T.J.Muscaro via The Epoch Times,

The Department of Justice filed a complaint under the False Claims Act on May 1 against three health insurance companies and three large insurance brokerage organizations, alleging that hundreds of millions of dollars in kickbacks were paid by the insurance companies to the brokers in exchange for enrollments into their Medicare Advantage plans.

The insurer defendants are Aetna Inc., and its affiliates, Humana Inc., and Elevance Health Inc. (formerly known as Anthem). The broker defendants are eHealth Inc. and one of its affiliates, GoHealth Inc., and SelectQuote Inc. According to the complaint, the kickbacks were allegedly paid out from 2016 through at least 2021.

DOJ explained in a press release that the Medicare Advantage Program beneficiaries may choose to enroll in plans offered by private insurance companies, and many of those beneficiaries rely on brokers to help them choose the best plan to meet their needs.

“Rather than acting as unbiased stewards, the defendant brokers allegedly directed Medicare beneficiaries to the plans offered by insurers that paid brokers the most in kickbacks, regardless of the suitability of the MA plans for the beneficiaries,” the DOJ stated in its press release.

“According to the complaint, the broker organizations incentivized their employees and agents to sell plans based on the insurers’ kickbacks, set up teams of insurance agents who could sell only those plans, and at times refused to sell MA plans of insurers who did not pay sufficient kickbacks.”

DOJ also alleged that Humana and Aetna conspired with the brokers to discriminate against beneficiaries with disabilities deemed to be less profitable by allegedly threatening to withhold the kickbacks to the brokers.

“Health care companies that attempt to profit from kickbacks will be held accountable,” said Deputy Assistant Attorney General Michael Granston of the Justice Department’s Civil Division. 

“We are committed to rooting out illegal practices by Medicare Advantage insurers and insurance brokers that undermine the interests of federal health care programs and the patients they serve.”

The lawsuit was originally filed under whistleblower provisions under the False Claims Act, which permits the United States to intervene and take over the action.

“The alleged efforts to drive beneficiaries away specifically because their disabilities might make them less profitable to health insurance companies are even more unconscionable,” said U.S. Attorney Leah B. Foley for the District of Massachusetts.

“Profit and greed over beneficiary interest is something we will continue to investigate and prosecute aggressively. This office will continue to take decisive action to protect the rights of Medicare beneficiaries and vulnerable Americans.”

According to the complaint, violations of the False Claims Act carry mandatory civil penalties per claim, and three times the amount of the government’s damages sustained due to the defendant’s actions.

Update (1200ET): US equity markets extended gains this morning following a report from The Wall Street Journal that Beijing is considering ways to address the Trump administration’s gripes over China’s role in the fentanyl trade, potentially offering an off-ramp from hostilities to allow for trade talks to start.

So, despite all the legacy media’s claims that ‘no’ talks were under way, WSJ reports that Chinese leader Xi Jinping’s security czar, Wang Xiaohong, in recent days has been inquiring about what the Trump team wants China to do when it comes to fentanyl.

In a visible shift in tone Friday, China’s Commerce Ministry said it was weighing starting talks with the U.S. to halt a trade war while expressing Beijing’s wish for the Trump administration to “show sincerity” to talk. Previously, the ministry had demanded that Washington slash its steep tariffs on China first as a condition for negotiations.

Stocks surged further on the report…

.

With the S&P 500 now having erased all losses post-Liberation Day…

* * *

China has quietly started to exempt some US goods from tariffs that likely cover around $40 billion worth of imports (or around 24% of Chinese imports from the US in 2024), in what looks like an effort to soften the blow of the trade war on its own economy. 

“China is likely trying to mitigate damage to its economy by avoiding a collapse in key imports,” DiPippo said. 

“The exemptions shouldn’t be interpreted as a signal to the US, as China has been quiet about its exemptions, working through business channels and avoiding public statements.”

While this move mirrors the shift by the Trump administration – exempting smartphones and other electronics from its own “reciprocal” tariffs, including the 145% levies on China (those US exemptions apply to about $102 billion, or roughly 22% of US imports from China last year) – we suspect there is more behind this decision.

As we highlighted just a week ago, China’s already fragile economy faced a serious crisis from the tariff-driven cuts to supply of US ethane and the potential for that to force mass plastics factory closures.

“The situation is dire for China’s ethane crackers as they have no alternative to US supply,” said Manish Sejwal, an analyst at Rystad Energy AS, using an industry term for such facilities.

 “Unless they are granted tariff exemptions, they may have to stop production or close shop.”

Well guess what just happened… buried deep among the 131 items is, you guessed it – industrial chemicals (which likely includes US Ethane supplies).

Bloomberg reports that it’s unclear where the list came from and it hasn’t been officially confirmed, but at least half a dozen companies in China have been able to bring in goods from the list without paying tariffs, according to people familiar with the matter, who asked not to be identified discussing confidential information.

No matter the reason – forced by factory closure crisis or simply goodwill – there are tentative signs the US-China trade standoff could be shifting. 

The Chinese Commerce Ministry said on Friday it’s assessing the possibility of trade talks with the US, giving a lift to equity markets.

“The US has recently sent messages to China through relevant parties, hoping to start talks with China,” the ministry said in a statement released during a mainland holiday. 

“China is currently evaluating this.”

The timing of the tit-for-tat escalation and de-escalation is very similar to last time (though this time the pain was far greater to prompt the walkbacks on both sides)…

The list of exemptions is said to be dynamic and will be continuously adjusted depending on China’s needs, according to people familiar with the matter.

Authored by Philip Wegmann via RealClearPolitics,

Performance reviews are about to become much more difficult for the upper echelon of federal government employees.

The Trump administration will soon introduce rules to end what the Office of Personnel Management describes as an “everyone gets a trophy” culture permeating the federal workforce, RealClearPolitics is first to report.

The ranks of the Senior Executive Service, top bureaucrats serving throughout the government and across administrations, swelled to around 8,000 under President Biden. Most live in Washington, D.C. They typically earn an annual salary between $183,000 and $250,000. An overwhelming majority, 96%, according to an OPM memo, receive above-average performance ratings even as public trust in government continues to crater.

But standards will soon tighten. It is called “forced distribution.”

The new OPM rule limits the number of bureaucrats who can earn top ratings, a metric tied to promotions and end-of-the-year bonuses. It also eliminates Biden-era requirements that evaluated executives based on their promotion of diversity, equity, and inclusion.

The stated goal is instead an evaluation of job performance, not political ideology. Now only top performers, acting OPM director Chuck Ezell told RCP, will earn top performance rankings. 

“The American people deserve a federal government led by executives who are held to the highest standards,” Ezell said. “This proposed rule restores accountability, rewards true excellence, and ensures senior leaders deliver real results. OPM is proud to take this important step to strengthen performance among the highest levels of the federal workforce.”

The elite of career civil servants, these senior employees are normally little noticed and non-controversial. Permanent bureaucracy has come under attack during the Trump administration, however, and the White House sees the top ranks of federal employees as the face of the so-called “deep state.”

“There are no participation trophies,” a White House official said of the new standards, telling RCP that from now on, trophies, in this case top-tier performance rankings, “are for winners.”

The new standards come as Trump continues his long march through the administrative state. His administration has already implemented rules to gut civil service protections for government employees perceived as undermining the White House agenda. Thousands of federal workers have been fired. Entire government agencies, in some cases, shuttered.

Critics accuse the White House of trying to politicize the federal workforce and of trying to remake the executive agencies in Trump’s image. The Senior Executives Association, a trade group for federal employees with an office in downtown D.C., previously balked at proposed reforms. The head of that organization, Marcus Hill, insisted that top bureaucrats had earned their jobs through merit “based on demonstrated competence, character and capability in their fields of expertise.”

But the administration argues that change is needed because a sclerotic establishment is undermining self-government. This is the mission of Elon Musk and his team at the Department of Government Efficiency.

“If the bureaucracy is in charge, then what meaning does democracy actually have?” Musk asked earlier this year while fielding questions from reporters in the Oval Office.

“If the people cannot vote and have their will be decided by their elected representatives,” he said while standing behind the Resolute Desk next to the seated president, “then we don’t live in a democracy.”