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[Markets] ‘I support higher taxes’: The billionaire behind the National Debt Clock has had it with Trump By the end of 2018, the nation will hit a milestone: The federal government’s total debt will exceed all debt that U.S. households have for mortgages, credit cards, cars, student loans and other personal loans for the first time in modern history, according to JPMorgan. Published:9/17/2018 7:58:13 AM
[Markets] Stubborn Market Refuses to Quit, Pessimists Notwithstanding Overbought technical conditions, negative seasonality and the likelihood that tariffs will be imposed on Chinese goods this week are not stopping the indices. Both the S&P 500 and the Dow Jones Industrial Average (DJIA) enjoyed five straight days of gains last week and are sitting close to all-time highs. The positive price action is preventing market players from embracing the pessimistic arguments that are quite logical, compelling and easy to make. Published:9/17/2018 7:58:12 AM
[Markets] New York Fed's regional economic index falls in September New York Fed's regional economic index falls in September Published:9/17/2018 7:58:12 AM
[Markets] Key Events This Week: Economics Takes A Back Seat To Politics

While it might not quite have the headline grabbing events of the past week, but there's still some interesting events for markets to be aware of next week. The flash September PMIs in Europe and the US highlight the economic data, while there's a number of potentially interesting meetings scheduled including a North and South Korea summit, an informal EU summit where Brexit will be a focus, US and Japan trade talks, and the UN General Assembly. There's also a BoJ meeting where the status quo is expected to continue.

As DB's Craig Nicol writes, it's probably the various political events rather than the data or central bank meetings and speeches that markets will be most focused on. On Sunday Wall Street executives met with Chinese officials in Beijing in a meeting chaired by former PBoC Governor Zhou Xiaochuan to discuss trade tensions between the US and China, which however did not lead to any breakthroughs. On Tuesday we've then got the scheduled three-day summit between North and South Korea leaders Kim Jong Un and Moon Jae-in in Pyongyang. This will be the first trip by a South Korean leader to North Korea in eleven years. On the same day, the UN General Assembly opens although the general debate doesn't begin until September 25th. On Wednesday we've then got an informal two-day meeting of EU leaders in Salzburg with migration the key topic, but also expect Brexit to be discussed and therefore headlines off the back of it.

Elsewhere, it's hard to ever rule out trade related headlines from having their say in markets. On Friday the second round of the US-Japan "free, fair and reciprocal" trade talks are scheduled to take place, although they may be canceled if Trump announces the $200BN in new Chinese import tariffs.

Meanwhile it's a fairly quiet week for data next week but the highlight is the release of the flash September PMIs in Europe and the US on Friday. For the eurozone, the composite is expected to stay more or less stable at 54.4 with both the manufacturing and services components more or less unchanged also. In the US, the services print is expected to hold at 54.8 but the consensus for the manufacturing reading is a small jump to 55.0 from 54.7 last month.

Away from that, the rest of the data in the US next week is largely second tier. On Monday we'll get the September empire manufacturing reading, Tuesday the NAHB housing market index, Wednesday housing starts, building permits and the Q2 current account balance, and Thursday initial jobless claims, Philly Fed PMI, leading index and existing home sales. In Europe, the final August CPI revisions for the euro area on Monday, August inflation in the UK on Wednesday and August retail sales data in the UK on Thursday are the highlights. There's nothing of note in China, while Japan's August CPI report on Friday is the highlight there.

Speaking of Japan, the BoJ meeting on Wednesday is unlikely to be a particularly market moving event. Our economists and the market expect no change to the current policy stance following the tweaks made in July. However there should be some focus on Governor Kuroda's press conference and particularly any questions about widening the 10y JGB trading band - which we are yet to have seen any real evidence of. Another event to watch in Japan next week is the LDP leadership election on Thursday. The only candidates are Abe and former defense minister Ishiba. The expectation is that Abe will win re-election to a third term.

Elsewhere, other things worth watching next week include EU Brexit Chief Negotiator Michel Barnier briefing EU Affairs Ministers in Brussels on Tuesday, Italy Finance Minister Tria also speaking at an event in Milan on Tuesday and Russian Finance Minister Siluanov meeting China's Vice Premier Han Zheng the same day, BoE Chief Economist Haldane speaking on Wednesday and ECB President Draghi delivering a lecture in Berlin the same day, and lastly euro area finance ministry officials discussing Greece, the EMU and budgets on Thursday.

Finally, it's worth also noting that Friday is a quadruple witching day for US markets - something that only occurs four times a year on the third Friday in March, June, September and December - and which can trigger a decent uptick in volatility and volumes. For those rightly confused as to what this entails, a quadruple witching day is when the quarterly expiration of futures and options on indexes and stocks occurs on the same day. So something to be aware of even if a little left field.

Key events broken down by day, courtesy of Deutsche Bank:

  • Monday: It's a fairly quiet start to the week on Monday with the highlight being the final August CPI revisions for the euro area. Away from that we'll get September house price data in the UK overnight, and the September empire manufacturing reading in the US.
  • Tuesday: It's another quiet day for data on Tuesday with the September NAHB house market index reading in the US the only release of note. Away from that though, South Korea President Moon Jae-in meets for a three-day summit in North Korea with Kim Jong Un while the UN General Assembly opens (with the general debate beginning September 25th). EU Chief Brexit Negotiator Michel Barnier is also due to brief EU affairs ministers in Brussels while Italy's Finance Minister Tria is due to speak in Milan. Russia's Finance Minister Siluanov is also due to meet China Vice Premier Han Zheng.
  • Wednesday: The likely main focus on Wednesday will be the BoJ rate meeting outcome. In addition to that, the two-day EU Summit in Salzburg will also be worth a watch. Data wise, August trade data in Japan, August inflation data in the UK, the Q2 current account balance in the US and housing starts and building permits also in the US will be released. Meanwhile ECB President Draghi is due to speak in Berlin while the BoE's Haldane speaks in Estonia.
  • Thursday: It's another fairly quiet day for data on Thursday with August retail sales in the UK, September euro area consumer confidence, weekly jobless claims, August leading index and August existing home sales data all in the US due. Away from that Japan's Liberal Democratic Party Leadership contest outcome is due, while euro area finance ministry officials are due to meet to discuss Greece, the EMU and budgets.
  • Friday: It's a reasonably busy end to the week on Friday for data. Overnight we'll get August CPI in Japan while the big focus in Europe and the US will be the flash September PMIs. The UK will also release August public finances data while France will confirm its final Q2 GDP revisions. Away from that, a second round of trade talks between Japan and the US is scheduled for the end of the week.

Finally, here is a focus on key events in the the US from Goldman, which notes that the key economic releases this week are the housing starts on Wednesday and the Philadelphia Fed manufacturing index report on Thursday.

Monday, September 17

  • 08:30 AM Empire State manufacturing index, September (consensus +23.0, last +25.6)

Tuesday, September 18

  • 10:00 AM NAHB housing market index, September (consensus 66, last 67)

Wednesday, September 19

  • 08:30 AM Current account balance, Q2 (consensus -$103.3bn, last -$124.1bn)
  • 08:30 AM Housing starts, August (GS +6.4%, consensus +5.7%, last +0.9%); Building permits, August (consensus +0.5%, last +0.9%): We estimate housing starts grew 6.4% in August, a faster pace than in July (+0.9%). Building permits now look high relative to starts, especially in the volatile multifamily category. However, while housing starts still appear somewhat low relative to demographic trends, we expect higher interest rates and tax reform to weigh on homebuilding in the next few quarters.

Thursday, September 20

  • 08:30 AM Philadelphia Fed manufacturing index, September (GS +20.0, consensus +15.8, last +11.9); We estimate the Philadelphia Fed manufacturing index rebounded 8.1pt to +20.0 in September, recovering most of its 13.8pt decline in August. Other indicators of manufacturing activity such as the ISM have been fairly firm in recent weeks, and combined with encouraging industrial sales commentary, we expect a higher reading this month.
  • 08:30 AM Initial jobless claims, week ended September 15 (GS 210k, consensus 210k, last 204k); Continuing jobless claims, week ended September 8 (consensus 1,705k, last 1,696k): We estimate initial jobless claims rose by 6k to 210k in the week ended September 15, following a 1k decline in the previous week, where the timing of the Labor Day holiday may have temporarily lowered claims. Initial jobless claims continue to decline steadily, and we believe there is scope for this trend to continue.
  • 10:00 AM Existing home sales, August (GS +0.5%, consensus +0.8%, last -0.7%); We look for existing homes sales to increase by 0.5% in August based on regional housing data, following a 0.7% decline in July. Existing home sales are an input into the brokers' commissions component of residential investment in the GDP report.

Friday, September 21

  • 09:45 AM Markit Flash US manufacturing PMI, September preliminary (consensus 55.0, last 54.7)
  • 09:45 AM Markit Flash US services PMI, September preliminary (consensus 55.0, last 54.8)

Source: Deutsche Bank, BofA, Goldman

Published:9/17/2018 7:58:12 AM
[Markets] Capitol Report: Kavanaugh’s accuser willing to testify, lawyer says | Trump reportedly believes there’s ‘conspiracy’ to torpedo nomination The attorney for Christine Blasey Ford, who has accused Supreme Court nominee Brett Kavanaugh of sexual assault in the 1980s, told NBC’s ‘Today’ that Ford believes the incident was ‘attempted rape’ and is willing to testify publicly before the Senate Judiciary Committee.
Published:9/17/2018 7:58:12 AM
[Markets] Oil Might Finish Just above $70 Next Week On September 13, US crude oil’s implied volatility was 25.4%, which is ~9% above its 15-day average. The inverse relationship between oil prices and oil’s implied volatility is illustrated in the following graph. Since reaching a 12-year low in February 2016, US crude oil active futures have risen 161.7%. Crude oil’s implied volatility has fallen ~66.2% since February 11, 2016. Published:9/17/2018 7:00:51 AM
[Markets] Salesforce Founder Marc Benioff Buys Time Magazine For $190M

While the US media has survived a precipitous drop in advertising revenue as tech giants like Facebook and Google have continued to hollow out the industry, Silicon Valley billionaires have been stepping in to purchase struggling legacy media organizations, seeing a valuable opportunity to peddle influence and protect their interests.

The latest example of this trend broke Sunday night when the Wall Street Journal reported that Salesforce founder Marc Benioff and wife Lynne Benioff have agreed to purchase Time Magazine from Koch brothers-owned Meredith Corp. only eight months after the Kochs had purchased Meredith after Meredith had bought what was formerly the magazine portfolio of Time Warner (itself now merged with AT&T). The sale price: $190 million.


Like Jeff Bezos, who purchased the struggling Washington Post in 2013 and provided the company with a badly needed infusion of capital, the Benioffs are purchasing Time as private individuals. Meredith had put several magazines, including Time, Sports Illustrated, Fortune and Money up for sale earlier this year. The deal is expected to close within 30 days.

In a statement to WSJ, Benioff praised Time as "a strong business" (which is overly generous, to say the least, after more than a decade of shrinking revenues) and clarified that it would have nothing to do with Salesforce (at least not officially, that is).

In an interview, Mr. Benioff said, "We’re investing in a company with tremendous impact on the world, one that is also an incredibly strong business. That’s what we’re looking for when we invest as a family."

Specifically, the Benioffs said they were interested in the magazine's "large audience" and growing digital business.

The Benioffs are optimistic about Time’s large audience and growing video business. "The power of Time is its unique story telling of the people and issues that affect us all and connect us all," said Mrs. Benioff.

Still, the couple will be taking over a publication whose business has been hammered from ongoing declines in print advertising and newsstand sales. Many magazines have struggled to transition into digital-first businesses as traditional sources of revenue have eroded. The Benioffs said they won’t have a role in day-to-day operations of the magazine or journalistic decisions. Mr. Benioff said the family doesn’t plan to acquire any other magazine titles from Meredith.

The Benioffs are the latest wealthy people from the tech world to buy a traditional news publication. In 2013, Jeff Bezos, chief executive of Inc., bought the Washington Post. And last year, Laurene Powell Jobs, the wife of the late Steve Jobs, acquired a majority stake in the Atlantic magazine via her organization, the Emerson Collective.

Surprisingly, WSJ neglects to explore why the Benioffs might be interested in Time. For example, Bezos has leveraged his ownership of Amazon to protect his interests, with the paper emerging as a relentless critic of the Trump Administration (Trump has attacked WaPo as Amazon's "chief lobbyist) that marshaled its resources to stop Roy Moore from being elected to Jeff Sessions old Senate seat last year. More recently, WaPo has helped to sabotage the SCOTUS nomination of Brett Kavanaugh - something that until very recently appeared all-but-assured. Instead, WSJ found a rent-a-quote expert to deliver a quote about how these billionaires are motivated by nothing more than a "belief in journalism."

"What they all share in common is that they believe in journalism," said Robin Steinberg, a media consultant.

Since it was launched by two Yale graduates in 1923, Time has emerged as one of the most iconic - albeit left-leaning - American newsmagazines. Its Time "Person of the Year" award is a media event in and of itself. By buying the magazine, the Benioffs will now be able to influence the magazine's coverage in myriad ways, both direct and indirect, while also offering editorial support for the "progressive" causes that Benioff, an "activist" CEO in the WSJ's estimation, has long supported.

The sale marks a new chapter for a magazine that has been one of the country’s most powerful political and cultural forces, its red-bordered covers synonymous with the week’s most important events. Special issues, such as its annual Person of the Year, and the magazine’s Time 100, an annual list of the 100 most influential people in the world, have become stand-alone media events in their own right.

"Time has resonance because it has always presented a very American point of view," said Richard Stengel, a former managing editor of the magazine. "It was all about providing analysis, about breaking new ideas, with sophistication and polish."

Mr. Stengel expressed confidence that the publication will survive, comparing it to "a classic piece of waterfront property."

While the magazine has struggled with digital, its print circulation is down significantly.

Under Time Inc., the magazine sought to cut printing costs while investing in digital opportunities. Time has slashed its circulation significantly to 2.3 million for the six-month period ended June 30, according to the Alliance for Audited Media, down from 3 million in the same period a year earlier.

At the same time, it has tried to expand its digital reach.’s audience grew to 31.7 million multiplatform unique visitors in July 2018, up from nearly 27.4 million in July 2015, according to media measurement firm comScore Inc.

But with a billionaire at the helm, the magazine will benefit from a badly needed new cash, as the Benioffs measure the return on this investment not on dollars earned, but on the level of influence they can now exert on the culture - and on politicians who might otherwise pass regulations and other laws contrary to the interests of Salesforce.

Published:9/17/2018 7:00:51 AM
[Markets] Tyson Foods stock falls after CEO steps down Tyson Foods stock falls after CEO steps down Published:9/17/2018 7:00:51 AM
[Markets] Market Extra: This hidden factor could soon make stocks much more volatile Trading in the U.S. stock market has been quiet of late, but the calm may not last for long.
Published:9/17/2018 7:00:51 AM
[Markets] Metals Stocks: Gold gets a lift from wavering dollar, stocks Gold futures prices inch higher Monday as investors questioned the dollar rally’s near-term durability, a boost for global demand for the precious metal priced in the U.S. unit.
Published:9/17/2018 6:24:26 AM
[Markets] Trump Threatens More Tariffs, Boasts "Jobs And Dollars" Are Flowing Back To US

With investors already nervous about the prospect of President Trump slapping the next round of tariffs on Chinese goods as soon as Monday (US stock futures, which have so far internalized these trade tensions with surprising equanimity, were down slightly in early trade), President Trump boasted on Twitter that his trade war has produced only positive results, including boosting jobs and revenues while "cost increases" have been negligible (even though we could name more than a few CEOs who would beg to differ).

According to Trump, "tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country - and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be 'Tariffed!'"

Dow future crept lower following Trump's latest tweetstorm, which also featured rants about Obama's ineffectual economic policies...

...While the president asserted that the US steel industry is already benefiting from Trump's tariffs on aluminum and steel.

Remember, as President Trump prepares to slap tariffs on another $200 billion in Chinese goods entering the US (tariffs that, as Deutsche Bank recently pointed out, will likely have a material impact on US supply chains and consumers, particularly when China retaliates)...


...This will become the most important chart in the world as President Trump has repeatedly cited the divergence of US stocks from ex-US as evidence that he is winning the trade war.


And as a reminder, here's a handy timeline of the trade dispute.

China Trade

Published:9/17/2018 6:17:43 AM
[Markets] Market Snapshot: Stock futures inch lower as U.S.-China trade worries return to focus U.S. stock-index futures were slightly lower on Monday, suggesting a modest pullback from the previous week’s solid gains, which returns major indexes within striking distance of record levels.
Published:9/17/2018 6:17:43 AM
[Markets] The Wall Street Journal: DowDuPont CEO Edward Breen to assume executive chairman role at specialty-products spinoff DowDuPont Inc. Chief Executive Edward Breen will assume the top executive position at the specialty-products company that will be created next year as part of the conglomerate’s yearslong plan to split into three entities.
Published:9/17/2018 5:24:44 AM
[Markets] EU Official Caught In Vulgar Outburst Reacting To Italy's Salvini On Migrants

Italy's populist right-wing interior minister Matteo Salvini has evoked fury from European lawmakers after making a reference to African "slaves" while addressing a migration conference in Vienna on Friday.

One European minister went so far as to heckle Salvini as he spoke, and unable to contain his anger interrupted the speech and unleashed in a vulgar outburst

Italy's Matteo Salvini and Luxembourg's Jean Asselborn

Salvini was presenting the rationale for his staunch opposition to accepting more migrants and refugees crossing the Mediterranean from Africa  a deeply unpopular opinion among EU leadership, however something that's launched him to popularity in his own Italy and explained that Italians and other Europeans need to be encouraged to have more babies, as opposed to caving to EU pressure to open their borders to a continued influx of migrants. 

In response to one somewhat bizarre argument espoused by a handful of European leaders that greater migrant acceptance could be the solution to Europe's ageing populations and low birth rates Salvini, who is head of the anti-immigration League Party (or Lega) explained the answer is simply to encourage strong families and higher birth rates.

“I’ve heard colleagues say that we need immigration because the population of Europe is getting older, but I have a completely different viewpoint,” said Salvini. “I believe that I’m in government in order to see that our young people have the number of children that they used to a few years ago and not to transplant the best of Africa’s youth to Europe."

Apparently this was too much for Luxembourg's foreign minister, Jean Asselborn, who began audibly uttering "blah, blah, blah..." as Salvini tried to talk

Salvini continued with a comment that was too much for his audience of EU bureaucrat: “Maybe in Luxembourg they need to do this, but in Italy we need to help people have more children, rather than bring in modern-day slaves (from Africa) to replace the children we're not having," he said.

He appeared to be referencing the argument common in some circles that migrants can happily fill low-paying service jobs that Europeans don't want, which right-wing movements have criticized as itself a subtle form of racism and classism. 

Salvini then pressed the minister over whether he could freely finish his speech, to which Asselborn replied in French, “In Luxembourg, sir, we have welcomed thousands of Italians who came to work in our country, as migrants, so that you in Italy had money for your children.”

Luxembourg's minister finished with the words “Merde, alors”. The phrase “Merde alors” literally and commonly means “shit then”, but is actually closer to the English “f*cking hell”.

Watch the heated exchange here...

Ironically the whole exchange came as the UN high commissioner for refugees, Filippo Grandi, divulged to reporters that he previously urged Salvini to tone down his "aggressive" language on the migrant issues previously in the week. 

But clearly Salvini didn't take the advice to heart then or now, as he subsequently shared a video clip of the exchange with his 3 million followers on Facebook with the words, “Look at the reaction (of the minister). He didn’t take it very well.”

Salvini, whose populist government came into power last June and sparked tensions with the EU over its immigration crackdown, proudly published a video of the interaction on his Facebook page, and commented alongside the post: “The Luxembourg minister declared this morning that we need migrants because Europe is ageing. I told him I instead work towards young Italians (and Europeans) returning to bringing children into the world, because we don’t want new slaves.”

And previously on Thursday both Salvini and Luigi Di Maio, his partner in the government, rebuked the the EU’s economics affairs commissioner, Pierre Moscovici of France, for likening populist leaders in Europe to “little Mussolinis”.

Salvini, who political observers say may have singlehandedly doubled his party's popularity, told the French politician “wash his mouth out” for insulting Italy. 

At the rate things are going, and as EU leaders continue their patronizing lecturing on the evils of nationalist movements, we expect Savini's surging popularity to continue even outside of Italy's borders. 

Published:9/17/2018 4:51:37 AM
[Markets] Mobile home values might rise as fast as regular homes—here’s why that matters Recent data challenges the idea that manufactured housing isn’t a strong investment.
Published:9/17/2018 4:51:37 AM
[Markets] Azov Sea Flashpoint: Russia, Ukraine Teetering On The Brink Of War

Authored by Peter Korzun via The Strategic Culture Foundation,

Ukraine has increased its military presence in the Azov Sea region. Ukraine’s National Security and Defense Council met on Sept. 7 and agreed to take a variety of steps to boost the country’s combat capabilities in the area, including the creation of a missile-equipped naval infantry group to counter potential amphibious attacks and naval shore bombardments. Ukraine’s Gurza-M-class armored artillery boats have been brought in to boost the naval component of the forces deployed in the region. 

Russia and Ukraine enjoy free use of the Sea of Azov under the 2003 “Agreement between the Russian Federation and the Ukraine on cooperation in the use of the sea of Azov and the strait of Kerch.” The document is in place but it does not specify any precise border. The parties agree that the Sea of Azov and the Strait of Kerch are the internal waters of both Ukraine and Russia.

Talks have dragged on for a long time but have failed to produce a solution. Ukraine does not want to recognize Russia’s rights, which are based on the fact that Crimea has joined the Russian Federation. Moreover, Ukrainian authorities insist on their right to detain any ship traveling to or from Crimea without Kiev’s permission. 

Ukraine is calling for the imposition of international sanctions against Russian Black Sea ports, due to what it calls the “blockade” of the Sea of Azov. It has already imposed punitive measures unilaterally. Tensions have heightened since March, when ships were detained and searched.  On March 24, Ukrainian border guards stopped the Russian-flagged, Crimean-registered Nord fishing vessel in the Sea of Azov. The ship was hijacked. The crew members reported being interrogated and abused by Ukrainian authorities who held them accountable under domestic laws, not recognizing the crew as Russian citizens. The detained sailors were finally set free to return to Crimea without passports. Ukraine violated a number of international agreements and this marked the beginning of a campaign of provocative actions that has been waged ever since. Last month, the Russian Mekhanik Pogodin tanker was detained in the Ukrainian port of Kherson. Russia compared the move to the activities of Somali pirates.

The US is taking sides in order to ratchet up the tensions.  The State Department has taken a deliberately provocative stance, urging Ukraine toward confrontation. Without bothering to study the details, it simply puts the blame on Russia as usual for anything that goes wrong. Washington is goading Ukraine into seeking a military solution, including such unrealistic but dangerous ideas as using the warships of NATO’s standing force to protect its shipping lanes, mining the Azov Sea, or  using fast-moving attack vessels to encircle a large Russian naval asset from all directions like a wolf pack. This tactic was invented by German Admiral Karl Dönitz during WWII, when “wolf packs” of U-boats were used to attack capital ships.  The very fact that such ideas have been generated and are floating around shows how unwise it is to abet Ukraine by throwing unconditional support behind it. 

Stephen Blank of the American Foreign Policy Council, a leading US expert on Russia, believes that the US administration “should send anti-ship missiles available from or through the US-AGM-84 Harpoon Block II, AGM-158C LRASM A, and the Norwegian Naval Strike Missile” as well as “a viable launch platform and a targeting system, particularly a radar.” The author thinks this should be done right now, without delay. His article was published on Sept. 7 by the Atlantic Council, the prestigious think tank that advises the State Department and enjoys great influence among those who shape US foreign policy.  In another article, Mr. Blanc calls for supplying Ukraine with platforms — older ships that have been decommissioned or are about to retire.  Last month, Mykola Bielieskov, the Deputy Executive Director at the Institute of World Policy, called for fast-track shipments to Ukraine of the Harpoon Block II ER+ anti-ship missile, enabling it to attack Russian vessels. The idea of providing Ukraine with Island-class coast guard ships is under consideration by the US government. On Sept. 1, Kurt Volker, US Special Representative for Ukraine Negotiations, stated that the US administration “is ready to expand arms supplies to Ukraine in order to build up the country’s naval and air defense forces.”

The powers that be have failed to keep their promises and improve the lives of ordinary people in Ukraine. The presidential election will be held in March 2019. A threatening Russian bogeyman is needed to explain away the failures. The country’s economy and finances are in the doldrums and corruption is staggering.   None of the problems have been solved and the West is getting tired of Ukraine. The fairy tale about Moscow’s “aggressive foreign policy” comes in handy right when the Ukrainian rulers need a scapegoat.   

Nobody needs an armed conflict in the Azov Sea region. A number of countries are interested in protecting the right of free passage, enabling vessels to arrive at their destination ports  without risk or delay. The region does not have to be a flashpoint. Russia and Ukraine could sit down at a round table to discuss controversial issues, as the 2003 agreement stipulates the parties should do in order to settle their disputes, should they have any, but that’s not what the State Department is calling for. The only option the US administration is considering is that of providing Ukraine with arms to fight Russia and then egging Kiev on to escalate the tensions. And those are already dangerously running high. A spark can ignite a big fire at any time if the problem is not addressed in a positive way without saber rattling. It’s a pity the US is playing such a destructive role. The time is right for Russian and Ukrainian experts and officials to set their differences aside and start talking to find a peaceful solution to this urgent problem. 

Published:9/17/2018 4:19:34 AM
[Markets] NerdWallet: What to do about your home and mortgage if you’re hit by a disaster Here are answers to 8 frequently asked questions if you’re affected by a hurricane, flood or other disaster.
Published:9/17/2018 4:19:34 AM
[Markets] Turkey Sentences Ex-British Soldier To 8 Years In Prison For "Membership In Terror Group"

Middle East based Al Masdar News confirms that Turkey has sentenced an ex-British soldier to nearly eight years in prison for joining the Kurdish-led People’s Protection Units (YPG) in Syria. Joe Robinson, 25, is a former army medic who had previously served with UK forces in Afghanistan in 2012.

He was first arrested on charges of "membership in a terrorist organization" by Turkish security forces on a beach in July 2017 while he was on holiday inside of the country. The Independent reports: "He was handed a seven-and-a-half year sentence after a trial, which he was not allowed to attend, on Friday."

And further: "His student fiancée, Mira Rojkan, who was arrested at the same time, was given a suspended sentence for 'terrorism propaganda'. She says all she did was share pro-Kurdish posts on Facebook and YouTube."

Former British soldier Joe Robinson and his fiance Mira Rojkan were arrested a year ago after entering Turkey from Syria. 

Robinson was accused of fighting with the Kurdish YPG in Syria before he took the brief holiday in Turkey. The British national upon his arrest in 2017 had been reportedly aiding the YPG in their fight against the Islamic State in Syria. Turkey considers the YPG to be an offshoot of the outlawed Kurdistan Workers Party (PKK) and an enemy of the Turkish state.

According to prior reporting in the Independent, Robinson was detained at the resort of Didim, on the Aegean coast, with his girlfriend Mira Rojkan, a Bulgarian living in Leeds, along with her mother who had accompanied them.

“Both the women were subsequently released, but the Turkish authorities have stated that 23 year old Mr Robinson, from Accrington in Lancashire, is being investigated in connection with terrorist offences and is likely to face charges,” according to the report of their initial arrest.

A Turkish defense official had issued Ankara's official position in the following statement: “The YPG is the PKK by another name and the PKK is considered a terrorist organisation not just by us but the UK as well. Of course anyone fighting with a terrorist organization will be investigated and there is a strong possibility of charges and a long sentence if he is found guilty.”

The YPG is leading the US-backed Syrian Democratic Forces (SDF) which has bases throughout northern and eastern Syria. The SDF was previously engaged in heavy clashes with ISIS in Raqqa city, before its liberation in 2017. 

A US-led coalition spokesperson told The Independent in an earlier interview that for the United States there is a distinction between the Kurdistan Workers Party (PKK) and the People’s Protection Units (YPG).

We disagree with the Turkish position that the YPG and the PKK are the same organization. The Coalition recognizes the threat the PKK poses to Turkey, but Turkey cannot pursue that fight at the expense of our common fight against terrorists that threaten us all,” the Pentagon officail said, in reference to the war on ISIS jihadists.

Meanwhile, Britain has reportedly done little to seek Robinson's release during his year of incarceration ahead of this week's trial, to the immense frustration of his family. A Foreign Office spokesman said: "We stand ready to provide consular assistance to a British national in Turkey."

The news comes as another Westerner is also facing terror charges in a high profile case. 

Pastor Andrew Brunson, a 50-year-old evangelical pastor from Black Mountain, North Carolina was detained in 2016, and is now undergoing trail while in house arrest for charges including espionage and aiding terrorist groups after being accused of cooperating with "Kurdish terrorists" and colluding with the Gulenist Islamic movement; he faces up to 35 years in prison if found guilty. He's been in Turkish custody for nearly two years.

Over the summer Congress voted to block the impending sale of Lockheed Martin's advanced F-35 stealth fighter to Turkey, and tensions between the US and Turkey has been at their highest in years. 

The British ex-soldier Robinson's stiff 8-year sentence may be an indication of what's to come for Brunson.

As President Trump has personally on multiple occasions weighed in on Pastor Brunson's detention, any level of similar sentencing would likely unleash a storm of controversy in the US, and immense pressure on Turkey from the White House. 

Published:9/17/2018 3:22:21 AM
[Markets] US Stocks Weaken as Trump Preps $200 Billion Tariff Move in China Trade War Global stocks weaken amid reports that President Donald Trump will imposed 10% tariffs of $200 billion worth of China-made goods as early as today. China vows to retaliate, with reports it plans to target U.S. supply chain with export limits as U.S. tariff level looks set to surpass total China export total. China's Shaghai Composite slides 1.1% to close at the lowest level in nearly four years. Published:9/17/2018 2:54:22 AM
[Markets] The Rotherham 'Grooming' Trial And Total Inability Of British Authorities To Protect Their Youth

Authored by Jon Hall via Free Market Shooter blog,

Grooming gangs, where youths are plied with gifts and friendship to make sexual abuse more acceptable to them, are sadly nothing new across London and Europe. However, the newly released, sordid details of an alleged victim of a sexual grooming gang in Rotherham, England displays just how bad the incidents are and can quickly become.

A victim of the Rotherham grooming gang alleges that she was raped by 100 “Asian” men by the age of 16 after being “passed around” by abusers from the age of 13.

The girl, who isn’t named, and is instead labeled as Girl B in media surrounding the trial, described how she became pregnant at a young age and had her childhood “snatched away” by the abuse she suffered between 1998 and 2001,with her experience being detailed in a video interviewed played in an England Court last week.

Among the accused are Tanweer Ali, 37, and Mohammed Imran Ali Akhtar, 37, who both allegedly indecently assaulted Girl B numerous times when she was under the age of 16.

Girl B explained of her long period of abuse and suffering:

I can honestly say that by the age of 16 I had slept with 100 Asian men – some I didn’t see again. The ones who come and use you for one time are the ones who are hard to remember...

I didn’t know at the time I was being passed around when I was 13 but I know now I’m older. Before, we would just enjoy going on holiday with our granddad but he had advantage taken of us – we were children one minute and adults the next...

The victim told the court she disliked Ali Akhtar at first but eventually “fell” for him after he allegedly visited her “every day” in the early morning hours after finishing his shift as a delivery driver. Akhtar and the other men on trial have denied charges which include counts of indecent assault, rape, child abduction, sex trafficking, and supplying cannabis.

When the children and youth of your communities are being abused and violated for years, extreme reaction is needed to rectify such disgusting incidents.

Most recently, there was another gang uncovered in Huddersfield, England, which will likely lead to the same outcome as the grooming gang found in Telford at the beginning of the year – authorities shrugging their shoulders and freely allowing the warping and degradation of society to continue by ignoring the true scope of the abuse.

As more horrid details of abuse and suffering unfold, it’s plain that people grow more and more weary of their elected representatives inability to solve or even address the issues – the question that remains is when the boiling point will reach its maximum peak and bubble over into chaos, with consequences unable to taken back once they are unleashed upon the communities across Europe and England.

Published:9/17/2018 2:54:21 AM
[Markets] Asian shares fall on fears over US-China tariffs standoff Asian shares were mostly lower Monday on reports that President Donald Trump will soon place tariffs on $200 billion more of Chinese goods, even as officials worked to iron out tensions between the world's two largest economies. ANALYST'S TAKE: "Trade issues and their impact on the global economy are likely to dominate investor focus this week," Stephen Innes of OANDA said in a commentary. Published:9/17/2018 1:53:46 AM
[Markets] Watch: 100s Of Illegal Migrants Crossing Balkan Mountain Passes

Hundreds of migrants are trying to cross the Croatian border from Una-Sana Canton every day...

GEFIRA points out that, according to the estimates, there are between 3,000 and 3,500 migrants in Bihac, and new groups from many countries of Asia and Africa arrive daily.

Many of them try to cross the well-guarded border of the Republic of Croatia and continue their journey towards the countries of Western Europe,  through the mountain of Plješevica.

Members of the Mountain Rescue Service Bihac registered columns of migrants in an attempt to illegally cross the state border near Bihac. 

Source: krajina

Published:9/17/2018 1:53:39 AM
[Markets] Here's How Turkey Stalled The Syrian-Russian Offensive On Idlib

Authored by Elijah Magnier, Middle East based chief international war correspondent for Al Rai Media

Turkey is pushing further reinforcements of troops, commando units and tanks into the northern Syrian city of Idlib and around it, for a specific objective: to disrupt the attack against the city by the Syrian forces and their allies supported by Russia.

Ankara is indeed taking advantage of the Russian slowing down of its strategy to liberate the city from jihadists (including al-Qaeda) due to the US threat to bomb the Syrian Army and government forces under that excuse of “using chemical weapons”. This “chemical weapon” has become part of the battle of Idlib, used as a tool to wage war on Syria just as the war is coming to an end.

Russia considers the Turkish reinforcements as a breach of the Astana Turkish-Russian-Iranian deal, which limited the number of observation points and the military presence around the city and rural areas of Idlib. Moreover, Russia effectively considers Turkey to be unable to fulfil its commitment to totally end the presence of jihadists, especially including the group of al-Qaeda, stationed in the city and around it.

In fact, the Turkish president Erdogan has asked for an extended delay to meet the Russian and the Iranian demands related to Idlib. This delay has been rejected by the government of Damascus whose leaders believe it is counterproductive to the interests of the country (to liberate the whole of Syria) and, further, would confirm Russian President Putin's hesitancy which is apparently due to the US threat.

Decision makers in Damascus said the following:

Turkey has offered Russia the protection of its military base in Hmaymeem by preventing any further drone attack against it. The Russian base has been subject to over 55 armed drone attacks, all shot down by the Russian defence system around the base which is on the Syrian coast. Actually, Russia itself is prepared to attack rural Latakia in order to create a safety zone for its base and remove the presence of the jihadists who have claimed responsibility for most of the attacks. 

Russia has rejected the Turkish offer, asking Ankara to abide by its agreement and eliminate the Jihadists from the city using Turkish influence to avoid the attack. Damascus believes Turkey would like to annex Idlib and is, therefore, rejecting any deal with Turkey beyond the one already signed in Astana which consisted of a commitment to finish off all jihadists.

Furthermore, according to the sources, Turkey “promised to include Jabhat al-Nusra, aka Hay’at Tahrir al-Sham, within one single army in Idlib to satisfy the Russian demands and show its control over the jihadists. Ankara’s troops are bringing in more military personnel – as Turkey presents it – to support all Turkish proxies in their battle against jihadists who refuse to surrender or merge with the other groups.

According to recent information provided by Turkish intelligence to Russia and Iran, the Turkish army is prepared to attack any group refusing to submit to Turkey. Moreover, it seems that hundreds of jihadists have left Syria for another destination. Ankara is facilitating the exit- or else- of all jihadists: otherwise, these will have to fight and die in Idlib,” the sources explained. 

Turkey is asking for more time, to delay the attack against Idlib for few more weeks. In the meantime, Syria’s allies are determined to control the rural area around Idlib, including rural Hama and Latakia. For this purpose, and for fear of a possible attack on Aleppo by jihadists as a way to divert the Syrian forces attack, the allies are sending large numbers of troops digging in for defensive purposes around Aleppo.

Presidents Putin and Erdogan will meet Monday to discuss the tense Idlib standoff.

Syria’s allies and Damascus itself consider Russia to have slowed down the pace of its attack, thus allowing Turkey to raise concerns worldwide about the necessity of the attack on Idlib. Turkey encouraged the US to take its time to prepare its bank of objectives (targets) in Syria in the case it decides to bomb Syria.

Also, it has pressed the international community, mainly the Europeans, to intervene to prevent a possible “flood of refugees and jihadists towards the continent of Europe in the case of an attack on Idlib”.

And this week, the two superpowers (Russia and the US) have conducted military maneuvers in the Mediterranean facing the Syrian coast and in Syria (Tanf). So they are indeed “walking on the edge of an abyss” while flexing their muscles to each other.

According to my sources, Turkey “is asking for more time to solve the situation in Idlib without a fight. Also, it is proposing to solve the issue of tens of thousands of its armed Syrian proxy militants when the political reconciliation has matured. All these indicate strongly that Turkey is not willing to leave Syria”.

Moscow has substantial strategic interests engaged with Ankara (commercial exchange, armaments, plus facilitating and selling energy) as well as with Tehran (commerce and energy exchange- one consequence of the Turkish rejection of the US unilateral sanctions on Iran). President Erdogan is playing on this strategic relationship to stop the battle of Idlib.

Nevertheless, both Russia and Iran themselves sustain a more profound strategic relationship with Syria, where the desire to put an end to the war and see all of Syria liberated is much stronger.

“There is no plan to attack the city of Idlib for now”, say the sources. The liberation of rural Hama, Latakia and Idlib are the main objectives. The almost two million Syrian civilians are not expected to exit to Turkey or Europe. They are invited to leave all areas which are under the control of the jihadists (mainly al-Qaeda and its partners or its armed supporters) and move into the city of Idlib under Turkish control.

What is clear so far is the certainty that President Assad is not ready to give up Idlib to President Erdogan. Assad is said to be ready to start the attack in a few weeks even alone, at the cost of dragging everybody behind him onto the battlefield.

Published:9/17/2018 1:21:47 AM
[Markets] Asian Stocks Lower on Trump’s Latest Tariff Threats - Asian equities were mostly lower in morning trade on Monday on reports that U.S. President Donald Trump is likely to announce new tariffs on about $200 billion on Chinese imports as early as later today. Published:9/17/2018 12:27:52 AM
[Markets] Asian shares fall on fears over US-China tariffs standoff Asian shares were mostly lower Monday on reports that President Donald Trump will soon place tariffs on $200 billion more of Chinese goods, even as officials worked to iron out tensions between the world's two largest economies. Hong Kong's Hang Seng index tumbled 1.9 percent to 26,768.17. The Russell 2000 index of smaller-company stocks, which is less vulnerable to flare-ups in trade tensions, added 0.4 percent to 1,721.72. Published:9/16/2018 11:18:56 PM
[Markets] Asia Markets: Asian markets battered as trade tensions escalate Asian stock markets sank in early trading Monday following an end-of-week rebound in the region, as trade tensions between the U.S. and China appeared poised to reach new highs.
Published:9/16/2018 10:51:58 PM
[Markets] Key Words: ‘Our democracy is in crisis,’ Hillary Clinton warns in essay blasting Trump Clinton issues a call for Americans to fend off the Trump administration’s “assault on our democracy.”
Published:9/16/2018 10:22:10 PM
[Markets] Three New Deals: Why The Nazis And Fascists Loved FDR

Authored by David Gordon via The Mises Institute,

[Three New Deals: Reflections on Roosevelt's America, Mussolini's Italy, and Hitler's Germany, 1933-1939. By Wolfgang Schivelbusch. Metropolitan Books, 2006. 242 pgs.]

Critics of Roosevelt's New Deal often liken it to fascism. Roosevelt's numerous defenders dismiss this charge as reactionary propaganda; but as Wolfgang Schivelbusch makes clear, it is perfectly true. Moreover, it was recognized to be true during the 1930s, by the New Deal's supporters as well as its opponents.

When Roosevelt took office in March 1933, he received from Congress an extraordinary delegation of powers to cope with the Depression.

The broad-ranging powers granted to Roosevelt by Congress, before that body went into recess, were unprecedented in times of peace. Through this "delegation of powers," Congress had, in effect, temporarily done away with itself as the legislative branch of government. The only remaining check on the executive was the Supreme Court. In Germany, a similar process allowed Hitler to assume legislative power after the Reichstag burned down in a suspected case of arson on February 28, 1933. (p. 18).

The Nazi press enthusiastically hailed the early New Deal measures: America, like the Reich, had decisively broken with the "uninhibited frenzy of market speculation." The Nazi Party newspaper, the Völkischer Beobachter, "stressed 'Roosevelt's adoption of National Socialist strains of thought in his economic and social policies,' praising the president's style of leadership as being compatible with Hitler's own dictatorial Führerprinzip" (p. 190).

Nor was Hitler himself lacking in praise for his American counterpart. He "told American ambassador William Dodd that he was 'in accord with the President in the view that the virtue of duty, readiness for sacrifice, and discipline should dominate the entire people. These moral demands which the President places before every individual citizen of the United States are also the quintessence of the German state philosophy, which finds its expression in the slogan "The Public Weal Transcends the Interest of the Individual"'" (pp. 19-20). A New Order in both countries had replaced an antiquated emphasis on rights.

Mussolini, who did not allow his work as dictator to interrupt his prolific journalism, wrote a glowing review of Roosevelt's Looking Forward. He found "reminiscent of fascism … the principle that the state no longer leaves the economy to its own devices"; and, in another review, this time of Henry Wallace's New Frontiers, Il Duce found the Secretary of Agriculture's program similar to his own corporativism (pp. 23-24).

Roosevelt never had much use for Hitler, but Mussolini was another matter. "'I don't mind telling you in confidence,' FDR remarked to a White House correspondent, 'that I am keeping in fairly close touch with that admirable Italian gentleman'" (p. 31). Rexford Tugwell, a leading adviser to the president, had difficulty containing his enthusiasm for Mussolini's program to modernize Italy: "It's the cleanest … most efficiently operating piece of social machinery I've ever seen. It makes me envious" (p. 32, quoting Tugwell).

Why did these contemporaries see an affinity between Roosevelt and the two leading European dictators, while most people today view them as polar opposites? People read history backwards: they project the fierce antagonisms of World War II, when America battled the Axis, to an earlier period. At the time, what impressed many observers, including as we have seen the principal actors themselves, was a new style of leadership common to America, Germany, and Italy.

Once more we must avoid a common misconception. Because of the ruthless crimes of Hitler and his Italian ally, it is mistakenly assumed that the dictators were for the most part hated and feared by the people they ruled. Quite the contrary, they were in those pre-war years the objects of considerable adulation. A leader who embodied the spirit of the people had superseded the old bureaucratic apparatus of government.

While Hitler's and Roosevelt's nearly simultaneous ascension to power highlighted fundamental differences … contemporary observers noted that they shared an extraordinary ability to touch the soul of the people. Their speeches were personal, almost intimate. Both in their own way gave their audiences the impression that they were addressing not the crowd, but each listener as an individual. (p. 54)

But does not Schivelbusch's thesis fall before an obvious objection? No doubt Roosevelt, Hitler, and Mussolini were charismatic leaders; and all of them rejected laissez-faire in favor of the new gospel of a state-managed economy. But Roosevelt preserved civil liberties, while the dictators did not.

Schivelbusch does not deny the manifest differences between Roosevelt and the other leaders; but even if the New Deal was a "soft fascism", the elements of compulsion were not lacking. The "Blue Eagle" campaign of the National Recovery Administration serves as his principal example. Businessmen who complied with the standards of the NRA received a poster that they could display prominently in their businesses. Though compliance was supposed to be voluntary, the head of the program, General Hugh Johnson, did not shrink from appealing to illegal mass boycotts to ensure the desired results.

"The public," he [Johnson] added, "simply cannot tolerate non-compliance with their plan." In a fine example of doublespeak, the argument maintained that cooperation with the president was completely voluntary but that exceptions would not be tolerated because the will of the people was behind FDR. As one historian [Andrew Wolvin] put it, the Blue Eagle campaign was "based on voluntary cooperation, but those who did not comply were to be forced into participation." (p. 92)

Schivelbusch compares this use of mass psychology to the heavy psychological pressure used in Germany to force contributions to the Winter Relief Fund.

Both the New Deal and European fascism were marked by what Wilhelm Röpke aptly termed the "cult of the colossal." The Tennessee Valley Authority was far more than a measure to bring electrical power to rural areas. It symbolized the power of government planning and the war on private business:

The TVA was the concrete-and-steel realization of the regulatory authority at the heart of the New Deal. In this sense, the massive dams in the Tennessee Valley were monuments to the New Deal, just as the New Cities in the Pontine Marshes were monuments to Fascism … But beyond that, TVA propaganda was also directed against an internal enemy: the capitalist excesses that had led to the Depression… (pp. 160, 162)

This outstanding study is all the more remarkable in that Schivelbusch displays little acquaintance with economics. Mises and Hayek are absent from his pages, and he grasps the significance of architecture much more than the errors of Keynes. Nevertheless, he has an instinct for the essential. He concludes the book by recalling John T. Flynn's great book of 1944, As We Go Marching.

Flynn, comparing the New Deal with fascism, foresaw a problem that still faces us today.

But willingly or unwillingly, Flynn argued, the New Deal had put itself into the position of needing a state of permanent crisis or, indeed, permanent war to justify its social interventions.

"It is born in crisis, lives on crises, and cannot survive the era of crisis…. Hitler's story is the same." … Flynn's prognosis for the regime of his enemy Roosevelt sounds more apt today than when he made it in 1944...

"We must have enemies," he wrote in As We Go Marching. "They will become an economic necessity for us." (pp. 186, 191)

Published:9/16/2018 10:22:10 PM
[Markets] "The Big Short's" Steve Eisman Reveals Where The Next Crisis Will Come From (And His Favorite Long Idea)

Overnight, we presented the views of 4 people who saw the last financial crisis coming, and shared their outlook for the future. There was one name we forgot, however, perhaps the most famous of all: Steve Eisman, who was popularized by the movie The Big Short, and who not only "saw it coming", but made a lot of money in the process.

Now a fund manager at Neuberger Berman in New York, Eisman spoke to the Financial Post’s Barbara Shecter about the crisis, its aftermath, and how he’s investing now. Below we present the key highlights, including not only his takes on former Fed Chair Alan Greenspan, but also the Fed's response to the financial crisis, how markets responded to the crisis, his views on US, Canadian and European banks, the risks to the US economy, where the next crisis will come from, and what his favorite long idea is currently.

As published originally in the Financial Post

Steve Eisman, Hector Retamal / AFP / Getty Images

Q: This Saturday (Sept. 15) marks 10 years since the collapse of Lehman Bros. What has been the most significant change you’ve seen in global markets since then?

A: I think the biggest change, at least in the United States, is how much more extensively and harshly banks are regulated. Let’s use Citigroup as an example. So just before the financial crisis started, Citigroup was levered about 33 to 1. Today, it is levered about 10 to 1. That is, in my world, like comparing the distance from Mercury to Pluto. It’s such an enormous change it’s hard to even describe it. I can honestly say for the first time in all the many, many years that I have covered the financial services sector, I actually think the banking system in the United States is safe.

Q: What about Canada?

A: One of the potential issues with the Canadian banks is that the risk weights that are given to mortgages are exceptionally low and that’s because there have been no losses in Canada for 25, 30 years. So for example, if you look at the larger Canadian banks, you’ll see that they assume the risk rates are in the single digits — and to get to that number they assume 85 per cent of the mortgages that they have that are not government-guaranteed will produce losses of 20 basis points or less per year.

Q: That’s low?

A: Yeah I would say so but, hey, it’s Canada.

Q: And Europe?

A: Look, I’m very critical of U.S. regulators before the crisis — I think they were horrendous, just horrendous. But post-crisis I think they’ve done a good job. And they basically did two things: they made the banks write down their losses as quickly as possible, and they made them raise a lot of capital. And the combination basically allowed the financial system to heal relatively quickly. In Europe, they took a bit of a different attitude. I think they felt that if the banks wrote down assets too quickly it would sink the economies, and so they were much more permissive. In Italy, we’re still dealing with the same non-performing loans they had 10 years ago. And the second thing is that while they certainly made banks raise capital so that their leverage ratios are better than they were, they’re still 1.5 to two times more than the United States, the absolute leverage.

Q:  How do you think history will judge the Fed’s response to the crisis?

A: If I had to give it a grade, I’d say pre-crisis I’d give the Fed an F. And I would say that Alan Greenspan will go down in history as the worst Chairman of the Federal Reserve in the history of the United States. I’d say, during the crisis (Ben) Bernanke did a very good job, I’d give him a B or B+, and that’s what I think about how they did.

Q: And post-crisis?

A: I think they did a very good job regulating the banks under the leadership of Daniel Tarullo.

Q: What’s surprised you as an investor over the past decade?

A: I think what surprised me most about the markets was how quickly they recovered and how quickly people forgot what happened.

Q: Why do you think that happened?

A: I think that’s a function of the fact that the Fed embarked on this great quantitative easing experiment. There were three Q/Es: QE1 took place in the spring of 2009 when markets were just dead. This was very successful and so the fixed income markets went back to normal. And then two years later, the Fed decided that, hey, interest rates are zero, the economy is really not growing, we’re worried we going to go back into a recession. So they went out and bought U.S. government bonds and mortgage bonds backed by Fannie Mae and Freddie Mac, and the idea was they were therefore removing trillions of dollars worth of risk-free assets from the marketplace with the idea that that would force both investors and companies to go out on the risk curve. The idea was that that would somehow get companies, for example, to build factories and hire people and that would get the economy growing faster.

Q: And that wasn’t as successful?

A: In my view it failed, 100 per cent. It caused the stock market to go up because people took all that liquidity and invested it in the stock market, but it did not cause the economy to grow even 10 basis points faster. I like to nickname quantitative easing “monetary policy for rich people.” You could quote me on that. You know, they took a shot; it didn’t work. And then they doubled down and did it again. Same result.

Q:  From a global perspective, what is the biggest risk today that people aren’t talking about?

A: I’m pretty sanguine these days about the U.S. economy. I don’t see any real risks out there.  A lot of the things I usually look at that would tell you there might be a problem — like changes in credit quality — are not showing any signs of stress. And I think the only real threat is some sort of global trade war.

Q: Is the current growth of the U.S. economy sustainable?

A: I don’t know. All I can say is that given the data I look at I don’t see any slowdown until 2020. It’s just not in the data. Again, barring a trade war it could stay more or less like it is — three per cent, high twos growth rate, which is pretty powerful for us.

Q:  Where will the next crisis come from?

A: I think it’ll come in the corporate sector because I think that’s where a lot of the debt’s been issued. It’s not going to come from the consumer sector. But you need a real slowdown in the economy for that to happen.

Q: When you look back at the crisis of 2008, do you think of it as “lesson learned”?

A: Well, lesson learned in the sense that the banking system is much less levered than it was. But other people are more levered, so we’ll see how they do next time around. But whatever happens, it’s not going to be a systemic issue. Let’s make a hypothetical: say there’s a recession and let’s say there’s a lot of these high-yield companies go bankrupt. That’s not a systemic problem, that’s a problem for the people who own those bonds. If you ask yourself what made that crisis different, there were four elements to it. There was too much leverage, a big asset class (residential real estate) blew up in everybody’s face, important firms owned that asset class, and number four was derivatives, like credit default swaps, that tied balance sheets of all the institutions together. So this one bank went down, another bank would go down. Today, they’re less levered — maybe some of them will own some of an asset class that blows up but since they’re less levered it’s not going to destroy them.

Q: Has your approach to investing changed? I think you were quoted a few years ago saying that judging stocks on the fundamentals was not a good business anymore.

A: Back then, I was running a hedge fund that just invested long/short in financials. And what I was really trying to say was that in a world where rates are zero, and credit quality is pristine, investing in financial stocks to try and generate alpha out of them had become unbelievable difficult. So it’s, like, you took my game away from me! It was impossible to differentiate for a long time. I still do long/short but I do all sectors.

Q: We’ve been talking about big shorts for 10 years now. What is your favourite long idea?

A: I think there are certain companies in the U.S. that are kind of oligopolistic, that are big data stories, where they control the data that they sell, and there’s very little competition. There are three companies like that in my portfolio. Equifax is an example, but there are a few others that have massive databases and because it’s so expensive to recreate what they have, there can only be a few companies that do it. Google controls a lot of data but it’s a different kind of data. It’s not the same thing. The best predictor of consumer action is the databases that the consumer credit bureaus have of their credit behaviour. It’s every loan you have, and whether you’ve paid monthly on everything that you’ve ever had. It’s the best database I know of.

Published:9/16/2018 9:54:47 PM
[Markets] America's Fake-Money System: Honest Work For Dishonest Pay

Authored by Economic Prism's MN Gordon, annotated by Acting-Man's Pater Tenebrarum,

Misadventures and Mishaps

Over the past decade, in the wake of the 2008-09 debt crisis, the impossible has happened.  The sickness of too much debt has been seemingly cured with massive dosages of even more debt.  This, no doubt, is evidence that there are wonders and miracles above and beyond 24-hour home deliveries of Taco Bell via Door Dash.

The global debtberg: at the end of 2017, it had grown to USD 237 trillion. Obviously this is by now a slightly dated figure, as debt issuance has continued with gay abandon this year. [PT]

But how can dosages of more debt be the cure for too much debt?  Can more Cutty Sark be the cure for a dipsomaniac?  Certainly, in both instances, and after some interim relief, the cure always proves to be much worse than the disease.

Without question, a moment of clarity is approaching that will bisect the world of today from the world of tomorrow, like the Patriot Act bisects the present world from its prior state of bliss.  Thus, what follows is a rudimentary preview of what’s in store.  But first, some context is in order…

The fake money system – a system centered on debt based legal tender and centrally fabricated interest rates – produces booms and busts of greater extremes with each progression of the business cycle.  This century alone we’ve experienced two iterations of these boom and bust scenarios.  First the dotcom bubble and bust.  Then the housing boom and crash.

The “well-contained” end of the housing boom…  [PT]

Make no mistake, these booms and busts were anything but garden variety gyrations of the business cycle.  In fact, the Federal Reserve’s finger prints are all over them.  The booms originated from Fed monetary policy misadventures.  The busts were triggered by Fed monetary policy mishaps.

Anatomy of a Mishap

Presently, we are closing in on a decade’s long economic boom and bull market in stocks. This boom, like the boom of the mid-2000s, advanced during an extended period of monetary policy misadventures. This was the ZIRP and QE misadventure from 2009 through 2015, which distorted financial markets and disfigured the economy.

The last several years of this boom and bull market, however, have been a monetary policy transition period. First the Fed tapered back QE. Then the Fed began ever so slightly reducing its balance sheet and raising the federal funds rate.

Total assets held by the Federal Reserve system and the federal funds rate. It will be interesting to see at what level the next bust will be triggered. In fact, busts have already been triggered elsewhere in the world, as a number of emerging markets have recently gone over the cliff. [PT]

Obviously, the Fed’s tightening operations over the last several years have been done with kid gloves.  The tightening increments have been subtle. They have also been telegraphed from a mile away.  But that doesn’t mean a monetary policy mishap, and subsequent bust, will somehow be averted.

The crossover into the monetary policy mishap stage is never apparent until well after the fact.  In truth, the crossover may have already happened… and we just don’t know it.  The mishap will come as a surprise.

On a glorious day, much like today, when everything appears to be unfolding according to plan, all of the suddenly, out on the margins, an emerging market economy will be stricken by a debt crisis and go kaput.  Moments later, during much confusion and panic, another two or three more emerging markets will also croak.

Is something sinister lurking in Lehman’s ruins? [PT]

Then Fed Chair Powell, just as Bernanke did at the onset of the subprime mortgage meltdown, will step forward with calming confidence and declare the sickness to be contained.  But the reassurance will be short lived.  Because the contagion will have already spread to the center of the financial system.

Then, to Wall Street’s astonishment, a major financial institution will collapse – like Lehman Brothers a decade ago – and the flow of credit will be reduced to that of cold molasses.  After that, things will really get out of hand…

Honest Work for Dishonest Pay

The impending crisis, intensified by the dual stressors of currency and trade wars, will bring with it a vast collection of state sponsored solutions to save the world from itself.  Any and all ideas, ranging from the absurd to the ludicrous, will be put to the acid test so long as they meet two very critical criteria. They must preserve the status quo and further concentrate wealth into the hands of the few.

One trio of bad ideas, which was burped into the atmosphere last weekend by former IMF chief economist Olivier Blanchard, is for the Fed to combat the next recession by buying stocks, financing the deficit, and directly purchasing goods.  Surely, Blanchard’s a clever fellow.  He’s even a Professor of Economics emeritus at MIT.

Optimized credit crunch outcome. You need a scientific monetary policy for that… [PT]

Yet, predictably, Blanchard didn’t mention that the Fed would need to create money from thin air so that it could buy stocks, loan it to the government, and go on its massive spending spree.  Perhaps these massive helicopter money drops would prevent asset prices from deflating.  But they would also destroy any remaining semblance of market-derived pricing and perpetuate an upside-down economy.

Blanchard also didn’t mention that these actions would transfer the ownership of publicly traded companies, and future tax payer labors, to the Fed.  Conceivably, there are infinitely many places where this could all lead – though we don’t suspect any of them would be very appealing.

Former IMF chief economist and arch-Keynesian Olivier Blanchard – a well-known fount of truly atrocious voodoo-economics ideas, one nuttier than the next. The books in the background of this picture are probably meant to indicate that he’s been properly indoctrinated (they certainly haven’t made him any smarter). We have yet to come across a headline with his name in it that doesn’t cause us to inwardly cringe. Where do they find these people? Well, this one they found in France, inter alia home to luminaries like Marxist economist Thomas Pikkety, a country in which government spending has reached a staggering 58% of GDP, which has become one of the poster children for economic stagnation. It is hard to believe that economists like Turgot, Bastiat or de Molinari also came from France. What has happened to the French classical liberal tradition? Very little of it, if anything, seems to have survived. If we sound less than respectful it is because we consider people like Blanchard a danger to civilization – as are all central planners and would-be central planners. It is utterly appalling how much outright economic nonsense is paraded as the “solution” to the rolling catastrophe the interventionism of bureaucrats of his ilk has brought about in the first place. [PT]

One direction Blanchard’s plan would take us is to a place where taxpayers and the company’s they work for would be reduced to milk cows not for the federal government… but for private bankers.  This, in turn, would complete the central banker’s long desired wealth extraction scheme.

Still, that doesn’t mean things would be all bad. Here at the Economic Prism we are eternal optimists. We see the glass half full. We make lemonade with our lemons. When we spill salt, we throw a pinch over our left shoulder and right into the devil’s eyes.

Moreover, as a milk cow for private bankers we’re confident we would still find plenty of satisfaction – and have a little fun too – while providing an honest day’s work for a dishonest day’s pay.

Published:9/16/2018 8:44:05 PM
[Markets] Inside Netflix’s high-stakes quest to win Best Picture The company’s moves with Alfonso Cuarón's "Roma" may not only determine the next best-picture winner — they’ll reveal whether Netflix can finally move from disruptive outsider to mainstream player. Published:9/16/2018 8:10:22 PM
[Markets] Key Words: Jamie Dimon walks back Trump criticism, gives him ‘some credit’ for strong economy Jamie Dimon, the chief executive of JPMorgan Chase & Co., on Sunday took back comments he made last week that he would beat Donald Trump in a presidential race because he’s smarter than Trump is.
Published:9/16/2018 8:10:21 PM
[Markets] The Wall Street Journal: Border Patrol agent arrested, suspected of being serial killer A U.S. Border Patrol agent was arrested Saturday on suspicion of killing four women and attempting to kidnap another victim.
Published:9/16/2018 7:47:56 PM
[Markets] Escobar: Greater Eurasia Is Coming Together In The Russian Far East

Authored by Pepe Escobar via The Asia Times,

The Eastern Economic Forum in Vladivostok has become a crucial part of strategic integration between China, Russia and other countries in northeast Asia, a graduation assimilation set to transform the current world system...

Xi Jinping and Vladimir Putin were involved in a joint cooking venture. Pancakes with caviar (blin, in Russian), chased down with a shot of vodka. It just happened at the Eastern Economic Forum in Vladivostok. Talk about a graphic (and edible) metaphor sealing the ever-evolving ‘Russia-China comprehensive strategic partnership’.

For a few years now the Vladivostok forum has been offering an unequaled roadmap tracking progress on Eurasia integration.

Last year, on the sidelines of the forum, Moscow and Seoul delivered a bombshell: a trilateral trade platform, crucially integrating Pyongyang, revolving around a connectivity corridor between the whole Korean peninsula and the Russian Far East.

Roundtable topics this year included integration of the Russian Far East into Eurasian logistic chains; once again the Russian link-up with the Koreas – aiming to build a Trans-Korean railway connected to the Trans-Siberian and a “Pipelineistan” branch-out into South Korea via China. Other topics were the Russia-Japan partnership in terms of Eurasian transit, centering on the link-up of the Trans-Siberian and Baikal-Amur Mainline (BAM) upgrades to a projected railway to the island of Sakhalin, and then all the way to the island of Hokkaido.

The future: Tokyo to London, seamlessly, by train.

Then there was integration between Russia and ASEAN – beyond current infrastructure, agricultural, and shipbuilding projects to energy, agro-industry sector and forestry, as outlined by Ivan Polyakov, chairman of the Russia-ASEAN Business Council.

Essentially this is all about the simultaneous build-up of a growing East-West and also North-South axis. Russia, China, Japan, the Koreas and Vietnam, slowly but surely, are on their way to solid geoeconomic integration.

Arguably the most fascinating discussion in Vladivostok wasCrossroads on the Silk Road, featuring, among others, Sergey Gorkov, Russian deputy minister of economic development; Wang Yilin, chairman of China’s oil giant CNPC, and Zhou Xiaochun, vice-chairman of the board of directors of the essential Boao Forum.

Moscow’s drive is to link the New Silk Roads or Belt and Road Initiative (BRI) with the Eurasian Economic Union (EAEU). Yet the ultimate geoeconomic target is even more ambitious; a “Greater Eurasian partnership”, where BRI converges with the EAEU, the Shanghai Cooperation Organization (SCO) and ASEAN. At its core lies the Russia-China strategic partnership.

The roadmap ahead, of course, involves striking the right chords in a complex balance of political interests and management practices amid multiple East-West projects. Cultural symbiosis has to be part of the picture. The Russia-China partnership is increasingly inclined to reason in go (weiqi, the game) terms, a shared vision based on universal strategic principles.

Another key discussion in Vladivostok featured Fyodor Lukyanov, research director at the always essential Valdai Discussion Club, and Lanxin Xiang, director of the Centre of One Belt and One Road Studies at the China National Institute for SCO International Exchange. That centered on the geopolitics of Asian interaction, involving key BRICS members Russia, China and India, and how Russia might be able to capitalize on it while navigating the harrowing sanctions and trade war swamp.

All power from Siberia

It all comes back to the basics and the evolving Russia-China strategic partnership. Xi and Putin are implicated to the core. Xi defines the partnership as the best mechanism to “jointly neutralize the external risks and challenges”. For Putin, “our relations are crucial, not only for our countries, but for the world as well.” It’s the first time ever that a Chinese leader has joined the Vladivostok discussions.

China is progressively interconnecting with the Russian Far East. International transport corridors – Primorye 1 and Primorye 2 – will boost cargo transit between Vladivostok and northeast China. Gazprom is about to complete the Russian stretch of the massive Power of Siberia gas pipeline to China, in agreement with CNPC. Over 2,000 kilometers of pipes have been welded and laid from Yakutia to the Russian-Chinese border. Power of Siberia starts operating in December 2019.

According to the Russian Direct Investment Fund (RDIF), the partnership is evaluating 73 investment projects worth more than $100 billion. The overseer is the Russian-Chinese Business Advisory Committee, including more than 150 executives from leading Russian and Chinese companies. The CEO of RDIF, Kirill Dmitriev, is convinced “particularly promising transactions will be found in bilateral deals that capitalize on the Russia-China relationship.”

In Vladivostok, Putin and Xi once again agreed to keep increasing bilateral trade on yuan and rubles, bypassing the US dollar – building upon a mutual decision in June to increase the number of yuan-ruble contracts. In parallel, Economic Development Minister Maksim Oreshkin advised Russians to sell US dollars and buy rubles.

Moscow expects the ruble to appreciate to around 64 per US dollar next year. It’s currently trading at around 70 rubles against the dollar, dragged down by US sanctions and the dollar weaponization wreaking havoc in BRICS members Brazil, India and South Africa, as well as potential BRICS Plus states such as Turkey and Indonesia.

Putin and Xi once again reaffirmed they will continue to work in tandem on their inter-Korean roadmap based on “dual freeze” – North Korea suspends nuclear tests and ballistic missile launches while the US suspends military drills with Seoul.

But what really seems to be capturing the imagination of the Koreas is the Trans-Korean railway. Kim Chang-sik, head of railway development in Pyongyang said: “We will further develop this project on the basis of negotiations between Russia, North Korea and South Korea, so that the owners of this project will be the countries of the Korean peninsula.”

That connects to what South Korean President Moon Jae-in said only three months ago: “Once the Trans-Korean main line is built, it may be connected to the Trans-Siberian Railway. In this case, it would be possible to deliver goods from South Korea to Europe, which would be economically beneficial not only to South and North Korea, but to Russia as well.”

Understanding the matryoshka

Contrary to misinformed or manipulated Western hysteria, the current Vostok war games in the Russian Far East’s Trans-Baikal, including 3,000 Chinese troops, are just a section of the much deeper, complex Russia-China strategic partnership. This is all about a matryoshka: the war game is a doll inside the geoeconomic game.

In ‘China and Russia: The New Rapprochement’, Alexander Lukin, from the National Research University Higher School of Economics in Moscow, lays down the roadmap in detail; the evolving, Eurasia-wide economic partnership is part of a much larger, comprehensive concept of “Greater Eurasia”. This is the core of the Russia-China entente, leading to what political scientist Sergey Karaganov has dubbed, “a common space for economic, logistic and information cooperation, peace and security from Shanghai to Lisbon and from New Delhi to Murmansk.”

Without understanding the Big Picture enveloping debates such as the annual gathering in Vladivostok, it’s impossible to understand how the progressive integration of BRI, EAEU, SCO, ASEAN, BRICS and BRICS Plus is bound to irreversibly change the current world-system.

Published:9/16/2018 7:47:56 PM
[Markets] "We've Reached Never-Never-Land" Austin Fitts Warns Americans Face "The End Of Financial Security"

Via Greg Hunter’s,

Investment advisor and former Assistant Secretary of Housing, Catherine Austin Fitts, predicts the global financial system “will take some big hits before the end of the year.”

Fitts explains, “Right now, economists say the dollar is ‘dangerous and dominant.’ It’s still, if you look at the market shares around the world, it’s still very, very significant portion of total reserves. So, it’s still very important. At the same time, the U.S. dollar hegemony is probably not going to last forever..."

"So, I think the long term dollar looks very weak. Short term, it doesn’t look like it’s coming apart anytime soon, as far as I can see. What that means is when you have something that is dangerous and dominant, you have the possibility of extreme volatility events.

That’s the new code word for the ‘you know what’ hits the, you know what. Whether it’s different countries exploding economically, or we whether are pressuring people that makes them very uncomfortable, these kinds of fights over shrinking pies are very dangerous because they mean covert wars. They mean overt wars, and the more we steal pies from each other instead of making new pies, the worse the situation gets. That’s what you are seeing. The system is not stable.

Fitts goes on to say, “The real push are for real assets: real assets reflected in a stock, or real assets reflected by real estate or precious metals.”

There is good reason people are going to real assets. The U.S. government is “missing” $21 trillion between the DOD and HUD. This fact was uncovered by Fitts and economist Dr. Mark Skidmore last year. What was the government’s answer to this gigantic accounting fraud that is the size of the federal deficit? Give the government’s budgets basically classified national security status. Fitts says,

“Apparently, the people leading the audit have come to them and said if we do this audit, we will disclose classified projects. So, the board (Federal Accounting Standards Advisory Board – FASAB) came out with a new policy. I say it is illegal. You cannot do it under the financial management laws, and you certainly cannot do it under the Constitution, and it said you can keep classified off the books, which means you can cook the books and you can basically do whatever you want. This matches up with the waiver given to the national security advisor that says corporations, if he waives them (regulations), can also cook their books with the SEC...

Now, we have the corporations making money, and they can cook their books under the law, and apparently the government can too. So, when the board made the statement and announced this new policy, they made the point that if they didn’t do this, the only alternative was to redact the Department of Defense financial statements, which meant you would have to redact the U.S. government’s financial statements, which means we have reached “Never, Never Land,” which also means the whole thing is a joke...

As a matter of policy, they are saying you have to give them, for the IRS, for the Census and all these other things, complete financial disclosure and honest financial disclosure by pain of law or you go to prison, but they can make up whatever they want.

They can publish financial statements that are complete fiction with no accountability to you and call it national security. What this is doing is engineering complete financial insecurity for every American citizen. This is the end of financial security.”

In closing, Fitts says, “I am a gold fan..."

"You also want to have as little leverage and debt as possible...

I am also a silver fan, and I am getting reports that silver is getting hard to find. Gold is down 8% for the year and silver is down 16%, but go and try to buy a bunch of silver. It’s tough.”

Join Greg Hunter as he goes One-on-One with Catherine Austin Fitts, Publisher of The Solari Report.

Published:9/16/2018 7:05:40 PM
[Markets] Flake calls for no Kavanaugh vote until after accuser is heard A vote on Supreme Court nominee Brett Kavanaugh’s confirmation was thrown into doubt Sunday after Sen. Jeff Flake said he’s currently “not comfortable voting yes” following accusations from a California professor that Kavanaugh sexually assaulted her as a teenager.
Published:9/16/2018 7:05:40 PM
[Markets] The Wall Street Journal: Overpressure in pipes caused Massachusetts gas explosions The series of deadly gas explosions and fires in three communities north of Boston last week occurred after too much natural gas was pumped into a section of pipe owned by Columbia Gas, causing the combustible fuel to leak into homes, authorities said Sunday.
Published:9/16/2018 6:36:53 PM
[Markets] Trump Will Send "Presidential Alert" To Every Cell Phone In America On Thursday

The Federal Emergency Management Agency  (FEMA), in coordination with the Federal Communications Commission (FCC), will conduct a nationwide test of the Emergency Alert System (EAS) and Wireless Emergency Alerts (WEA) on September 20th.

The emergency communications drill will begin at 2:18 p.m. EDT through 2:20 p.m. EDT. Every cell phone in the US will receive a text message from President Trump.

All US wireless firms and more than 100 mobile carriers are participating in the exercise that allows for presidential alerts, FEMA wrote in a Thursday press release.

“The EAS [Emergency Alert System] is a national public warning system that provides the president with the communications capability to address the nation during a national emergency,” FEMA said in a statement.

Cell phones will receive a text message that states "Presidential Alert" and "THIS IS A TEST of the National Wireless Emergency Alert System. No action is needed."

Separate from the FEMA statement, a FEMA National Test Fact Sheet detailed how the EAS is used with radio and television broadcasters, cable systems, satellite radio and television providers, and wireline video providers. The upcoming FEMA EAS message will read: 

"THIS IS A TEST of the National Emergency Alert System. This system was developed by broadcast and cable operators in voluntary cooperation with the Federal Emergency Management Agency, the Federal Communications Commission, and local authorities to keep you informed in the event of an emergency. If this had been an actual emergency, an official message would have followed the tone alert you heard at the start of this message. A similar Wireless Emergency Alert test message has been sent to all cell phones nationwide. Some cell phones will receive the message; others will not. No action is required."

The WEA system is currently in use to warn the public about dangerous weather, missing children, and other vital information. The FEMA WEA message will read: 

"THIS IS A TEST of the National Wireless Emergency Alert System. No action is needed."

The goal of the test will evaluate the readiness to distribute an emergency message nationwide and determine whether improvements are needed, FEMA said in a statement. The upcoming alerts will be sent using FEMA’s Integrated Public Alert and Warning System (IPAWS), which allows government officials to send emergency messages to multiple communications networks, including the EAS and WEA as part of the nation’s modern alert and warning infrastructure.

FCC Chairman Ajit Pai explains how the Wireless Emergency Alert system works

Despite Trump’s obsession with Twitter as a direct means of communicating, experts told NBC News last week that President Trump will not abuse the “Presidential Alert" system.

"If you separate this from the politics and personality of any individual president then this is a great idea and an amazing use of technology to reach everybody if they’re in harms way," said Karen North, director of the Annenberg Digital Social Media program at the University of Southern California.

UCLA communications professor Tim Groeling agreed, told NBC via email, "broadcast-based emergency alert systems ... have remained professional and impartial over decades."

How did Twitter respond to Trump's new communication channels?

So when the tens of millions of Americans get the "Presidential Alert" on September 20, do not freak out -- it is just President Trump debuting the new emergency communication systems that broadcast personalized emergency messages on a much larger plane than Twitter.

As for the many folks who have blocked him on social media, well, it is almost certain that there will be an uproar when liberals look at their phones and see a text message from Trump later this week. 

Published:9/16/2018 6:36:53 PM
[Markets] The World's Most Bearish Hedge Fund Unveils A New "Big Short"

It was another tough month for Horseman Global, which we previously dubbed "the world's most bearish hedge fund", due to its exposure which, while fluctuating, has been net short for the past 6 years and most recently had a net short position of -43.5%.

In August, the fund dropped another 5%, bringing its total return for 2018 to -10.40%, setting up for another painful year for Horseman LPs who have underperformed the market since 2015.

The fund's underperformance was not lost on CIO Russell Clark, who writes that while he likes "big ideas, and I like trying to do something different. When it works, its great. But when it doesn't, it's average" admits that "lately, performance has been very average." He attributed the reason for that to "US assets and the dollar which are drastically outperforming all other markets", something we have discussed extensively in prior posts.

Clark's lament is the same as that from Goldman Sachs, namely that running a large fiscal deficit with record low unemployment "makes little sense" - Goldman went so far as describing this state of affairs as only observed during war time -  and with US oil production beginning to slow, he warns that "something is likely to break."

Being bearish on the US dollar and US assets has hurt. I had a very similar problem, and similar lackluster performance from 2009 to 2011, when I thought Chinese monetary and fiscal policy was similarly deluded

Still Clark, and Horseman, continue undeterred, and as he writes in his latest letter to investors (who appear to be shrinking, with AUM under Horseman Global now down to $488MM), he has seen "lots of good short themes in the markets over the last year including Western corporates suffering from Chinese competition, higher commodity price and bond yield impacting the corporate bond market, an investment grade borrower getting downgraded and dislocating the high yield market, the collapse in crypto currencies and their negative impact on the semiconductor market and finally the destruction of the short volatility trade."

Yet none of these were enough to get Clark truly excited, because as he further explains "all of these are ideas that hold water from a macro perspective, but they lacked one important factor: An industry that investors so believed in, they would continue to hold even as the sector began to break down."

Now, with just 2 weeks left in the third quarter and with Horseman increasingly desperate for a Hail Mary trade, Clark writes that "finally, this month we think we found" what may be the next big short trade.

Here is his explanation of why the semiconductor space may be due to for a big drop in the coming months:

We had been looking at the semiconductor market for a while, but mainly looking at cutting edge semiconductor makers, and their exposure to cryptocurrency mining. However, one of our shorts, Applied Materials, stated in a conference call that the majority of its orderbook is for lagging technology, not leading as had been expected.

What is lagging semiconductor technology? To simplify massively, it tends to be sensors. Sensors take real world data and convert it to electronic data. When we looked closer, we found that investors had become enamored with this area for two reasons. One; the "internet of things" had convinced investors that demand would remain strong for the foreseeable future, and two; "the breakdown of Moore's Law" had meant that supply was constrained.

We found that the number of lagging semiconductor fabs were forecast to increase after declining for years.

Finally, we had found the sector that investors believe in, even as fundamentals declined. We also know that the Chinese are entering this sector. All we needed was a market signal. And right on cue, a Japanese sensor producer, Renesas, warned on Q2 profits and then followed this up with a cash bid for US producer Integrated Device Technology at seven times sales! That's what I call ringing the bell.

As we continued to look at the sensor industry, we began to see that the sector was seeing a slowdown in orders from the auto sector and particularly in China after a long period of growth. The auto sector is a big buyer of sensors. Higher commodity prices are starting to affect the profitability of auto firms globally, which have large amounts of debt. Ford has been downgraded to one notch above high yield and looks likely to become a fallen angel. General Motors could well follow.

With that in mind, here is Horseman's latest portfolio allocation:

The short book is made up of sensor related stocks, autos and banks that will be affected by deterioration in the corporate debt market. The long book has seen us reduce or exit miners that produce commodities tied to the auto industry, such as copper, nickel and zinc. While the Chinese auto market is slowing, the effect on profitability is likely to impact foreign producers who dominate this market.

And visually:

His parting thoughts underscore why Clark remains (painfully) bearish:

2011 and 2018 are playing out very similarly for me. Easy momentum trades of the past year are breaking down, and investors are herded from one area to another. While all the talk is of an emerging market crisis, the biggest emerging markets are all engaging in reform, while the developed markets are still overly reliant on easy money. In 2011, selling the then outperforming emerging markets, and buying Irish debt was the right trade. And in 2018, shorting developed markets and buying emerging markets looks the right trade now.

Published:9/16/2018 5:34:04 PM
[Markets] ‘The Predator’ tops box office despite weak opening Despite a disappointing opening weekend haul, “The Predator” easily took the weekend box-office crown.
Published:9/16/2018 5:34:04 PM
[Markets] Next Phase Of Florence Disaster Arrives: "Catastrophic" River Floods, Massive Mudslides

As meteorologists expected, the storm formerly known as Hurricane Florence (it was downgraded to a tropical depression on Sunday after previously being cut to a tropical storm) is stubbornly lingering over the Carolinas and dumping an unceasing assault of warm ocean water on the state.

Radar showed that parts of the storm were impacting six states, but North and South Carolina remained in the bulls eye. The worst hit parts of North and South Carolina have already been inundated with more than two feet of rain, and forecasters are saying there could be an additional 1.5 feet before the end of day Sunday, according to the Associated Press. For this reason, disaster analysts have said the storm is expected to be the costliest in US history, with damages exceeding $170 billion.

While wind speeds have slackened to 35 mph from an initial windspeed of more than 90 mph when Florence first came ashore, the storm has continued its crawl west at 8 mph. At 5 am, the storm was centered about 20 miles southwest of Columbia, South Carolina.


Meteorologists forecast "catastrophic" flooding in both North and South Carolina, as some areas will be coated with more than 40 inches of rain, according to USA Today. Meanwhile, the death toll has risen to 15 people, and is expected to rise.

"These rainfall amounts will produce catastrophic flash flooding, prolonged significant river flooding and an elevated risk for landslides in western North Carolina and far southwest Virginia," the hurricane center warned.

Sections of two interstates, I-40 and I-95, were shut down due to flooding and debris. Several rivers were approaching record levels, and officials warned that cresting in some areas won't come until later in the week.

Swansboro, NC, a historic town known for its tourism situated by the coast recorded the highest rainfall total with 34 inches as of Sunday morning.

"This is historic in terms of the amount of rain from one storm in North Carolina," said meteorologist Bob Oravec.

Videos of the flooding circulated on twitter:

And experts said the damage is far from over.

North Carolina was getting the worst of it as the heaviest rains fell around the northern edge of the storm. But coastal South Carolina was also getting pummeled. Myrtle Beach was hit with more than 7 inches of rain.


And almost 60,000 utility customers were without power across the northern part of SC.

In New Bern, hundreds of people were rescued from their flood-swamped homes. Evidence of Hurricane Florence’s wrath was sprawled across the lawn of the Patty and Philip Urick’s home on the Neuse River, all but destroyed by violent flooding.

Scores of neighbors faced similar damage after the water crested near the tops of their doorways. As water and debris accumulated, front doors caved in and garage doors ripped apart, sending water into homes and washing out what was inside.

The couple, who moved into their three-story row home 14 years ago, rode out the storm.

"We figured we were safe here on the second floor," said Philip Urick, 82. "We also surmised the storm was not going to be near as severe as it was."

In one heartwarming story, the so-called "Cajun Navy" - a group of civilians using their boats to rescue trapper residents who first achieved some measure of fame after Hurricane Harvey - staged a rescue at a flooded animal shelter.

In Newport, rescuers were able to reach a flooded animal shelter after the Carteret County Humane Society put out a call for help on Facebook. The Cajun Navy, a group of volunteers in boats, brought two stranded shelter workers, 43 dogs, 80 cats and roughly 15 chickens to safety.

President Trump praised FEMA first responders in a Tweet on Sunday.

Meanwhile, Fayetteville, NC Mayor Mitch Colvin told people living within a mile of the Cape Fear and nearby Little River that they had until 3 pm Sunday to get out.

FEMA Chief Brock Long said Sunday during an appearance on "Meet the Press" that the recovery from Florence will be "ugly," but that the state "will get through this."

Parts of the North Carolina mountains have declared a state of emergency, while the Blue Ridge Parkway shut down as the region braces for mudslides, according to CBS 17.

Even higher rain amounts are possible in isolated areas. A flash flood watch is in effect for most of the area through Monday evening.

"We do expect some flash flooding, we're going to expect probably some slope failures, some landslides, and there will be some trees down and there will be some power outages," said Jimmy Brissie, emergency management director of Henderson County.

The storm's heavy rain is expected to continue soaking the Carolinas, western Virginia and eastern West Virginia into Monday.

Published:9/16/2018 4:16:38 PM
[Markets] The Wall Street Journal: Trump said U.S. companies would rush to repatriate cash, but most have not U.S. companies have moved cautiously in repatriating stockpiled overseas profits in response to last year’s tax-law change, despite the Trump administration’s assertions that trillions of dollars would return home quickly and supercharge the domestic economy.
Published:9/16/2018 4:16:38 PM
[Markets] Amazon Employees Investigated Over Suspected Black Market For Information, Favors

Amazon has launched an investigation to track down a sophisticated network of employees running a "black market" of confidential information and favors, illegally sold through intermediaries to site merchants in order to give them a competitive advantage over other sellers, reports the Wall Street Journal

In addition to providing sales metrics, search keywords and reviewers' email addresses, bribed Amazon employees would delete negative feedback for around $300 per review, with middleman brokers typically demanding a five-review minimum from merchants looking to game the system. 

Employees of Amazon, primarily with the aid of intermediaries, are offering internal data and other confidential information that can give an edge to independent merchants selling their products on the site, according to sellers who have been offered and purchased the data, brokers who provide it and people familiar with internal investigations.


In exchange for payments ranging from roughly $80 to more than $2,000, brokers for Amazon employees in Shenzhen are offering internal sales metrics and reviewers’ email addresses, as well as a service to delete negative reviews and restore banned Amazon accounts, the people said.


Amazon is investigating a number of cases involving employees, including some in the U.S., suspected of accepting these bribes, according to people familiar with the matter. -WSJ

The data brokers primarily operate ion China, as the number of new Amazon sellers in the country has been skyrocketing. The Journal speculates that "Amazon employees in China have relatively small salaries, which may embolden them to take risks.

Considering that Amazon employees in the US are some of the most poorly paid in tech and retail (Jeff Bezos was recently booed by his own employees over low wages), perhaps the WSJ's theory holds water. 

The internal probe was launched after a tip over the practice in China was sent to Eric Broussard, an Amazon VP in charge of overseeing global marketplaces. The company has since moved key executives into different positions in China to try and "root out the bribery," reports the Journal

“We hold our employees to a high ethical standard and anyone in violation of our Code faces discipline, including termination and potential legal and criminal penalties,” an Amazon spokeswoman said of the situation, confirming that the company is investigating the claims. The same applies to sellers: "We have zero tolerance for abuse of our systems and if we find bad actors who have engaged in this behavior, we will take swift action against them," she said. 

Merchant network

A major component of Amazon's success is its massive network of third-party merchants, where the company derives the majority of merchandise sales. Over two million merchants now offer an estimated 550 million products over Amazon, which constitutes over half of all units sold on the site. Third party sales constituted an estimated $200 billion in gross merchandise volume last year, according to estimates by FactSet. As such, "Sellers must aggressively compete to get their products noticed on the first page of search results, where customers typically make most of their purchase decisions," notes the Journal

Evolving manipulations

Merchants have long sought competitive advantages over each other - first gaming Amazon's automated ranking system, by paying people to leave fake reviews and drive traffic to products. 

After some time, the black market for internal information emerged, as bribed employees began providing data and access to various benefits, according to a person who has facilitated by brokers. 

Brokers are the middlemen between Amazon employees and sellers who want negative reviews deleted or access to internal sales information. Brokers search for Amazon employees on Chinese messaging platform WeChat and send messages asking them if they would like to provide these services in exchange for cash, according to brokers and sellers who say they have been approached by brokers.

The going rate for having an Amazon employee delete negative reviews is about $300 per review, according to people familiar with the practice. Brokers usually demand a five-review minimum, meaning that sellers typically must pay at least $1,500 for the service, the people said. -WSJ

For a lower fee, merchants can pay Amazon employees for the email addresses of verified reviewers, giving them the opportunity to reach out to those who have left negative reviews for the opportunity to persuade them to adjust or delete their comment - sometimes bribing the reviewer with a free or discounted product. 

Also offered for sale is proprietary sales information, "such as the keywords customers typically use to search for items on Amazon’s site, sales volume and other statistics about buyers’ habits, according to the people," enabling Amazon sellers to better craft product descriptions in a manner which will boost their search result rankings. 

At a recent conference hosted for sellers—which wasn’t run by Amazon—a broker pulled up internal keyword results on his laptop. The broker said $80 can buy information on sales data, the number of times users searched for a certain product and clicked on a product page, which sellers are bidding for advertisements and how much those cost, according to the person who viewed the results. -WSJ

One seller in China told the Journal that competition on the website had become so intense that he needs to cheat in order to gain a competitive advantage. "If I don't do bad things I will die," he said. 

If all else fails in rooting out the black market, perhaps Bezos will simply release the hounds: 

Published:9/16/2018 3:28:39 PM
[Markets] The New York Post: Kavanaugh accuser comes forward: ‘He was trying to attack me’ The woman who has accused Brett Kavanaugh of attacking her during a high school party in the 1980s came forward Sunday, saying the Supreme Court nominee drunkenly pinned her to a bed, groped her over her clothes and put his hand over her mouth when she tried to scream, according to a new report.
Published:9/16/2018 3:28:39 PM
[Markets] From Malta To Prague: Mapping The Most Crypto-Friendly Travel Destination?

Authored by Stephen O'Neal via,

Backed with continuing adoption, crypto-holidays have become a reality. At this point, flights and hotels all around the world can be booked with Bitcoin (BTC). Still, some cities are more ready to accept your BTC — and major altcoins — than others, depending on the local infrastructure and crypto-related policies.

image courtesy of CoinTelegraph

According to data from Coinmap, currently there are around 13,150 venues, shops and ATMssupporting Bitcoin on the planet, and that number has been unhesitatingly growing since late 2013.

However, as Gili Gershonok, a crypto nomad who deliberately chooses not to have a bank account, told Cointelegraph, ignoring fiat money while travelling becomes more difficult, as all of the crypto prepaid cards she heavily relied on were canceled in early 2018.

“I feel like more and more barriers are being set against folks who dare to have a lifestyle that's off the financial grid… The process of going crypto-to-cash is getting more complicated, especially for those who prefer to keep their privacy and avoid high fees — both highly prioritized values across the crypto community.”

All of that being said, Gershonok reassured that traveling with BTC is still possible, drawing a parallel between crypto and casual tourists:

“I don't think there's a huge difference in the financial behaviors of [the two]. In Prague, I mostly keep to cash, which I can easily withdraw out of one of many crypto ATMs across the city. I try to find crypto payment options for online transactions and as the cliché goes, for everything else — there's plastic.”

Gershonok advises those who want to try traveling fiat-free for themselves to start with their current location, and keep security in mind:

“Go crypto for a week in your hometown and see what questions and challenges you come across. It would also be advisable to consider some security scenarios, like, what you would do if your phone, laptop, luggage are lost or stolen — and have contingencies in place.”

As the end of the summer nears, here are some of the most crypto-friendly destinations that might be worth trying.

Prague, Czech Republic


Home to SatoshiLabs, the manufacturer of the Trezor hardware wallet, Prague hosts the most BTC-accepting venues in the world, as per Coinmap data. There, Bitcoin can be used for renting apartments, paying for food and drinks in various bars and restaurants, or even visiting a crypto-friendly cinema. Gershonok confirms that Prague is one of the most comfortable cities for virtual currencies, naming it her personal favorite:

“Businesses with crypto POS and ATMs are not everything [there]. Prague also has a really well-informed, well-connected and active crypto community. I feel like there's more people here who casually know about cryptocurrencies and blockchain basics than in other places I've visited.”


At state level, the Czech Republic leans toward a liberal approach to cryptocurrencies. In 2017, the local central bank declared that virtual currencies don’t represent a threat to the conventional banking system via an announcement dubbed “Don’t be afraid of Bitcoin.” In it, the watchdog argued that fiat currencies are still most suitable for commerce, and the traditional monetary system can’t be marginalized by cryptocurrencies because of crypto’s volatility.

However, by the end of 2017, the Finance Ministry introduced an Anti-Money Laundering  (AML) law partly restricting BTC. The bill requires local crypto exchanges to reveal the identity of customers so that they will no longer be able to “hide behind fake names or nicknames.”

Ljubljana, Slovenia


While Ljubljana does not necessarily come to mind when thinking of most crypto-advanced cities, the capital of Slovenia hosts a ‘Bitcoin city’, aptly named BTC city, inside itself — a complex with 500 retail stores spread across 475,000 square meters. A special cryptocurrency transaction system called Elipay is set to be integrated into BTC City after a testing round. Nevertheless, a number of cafes, a water park, sneaker shops, etc., have already begun accepting cryptocurrencies. The prime minister of Slovenia, Dr. Miro Cerar, has reportedly visited and encouraged the concept of BTC City, which also hosts the nation’s largest mining rig. Additionally, there are about 20 BTC-accepting venues in Ljubljana’s city center, according to Coinmap.


There’s no clear regulation for cryptocurrencies in Slovenia at the moment. In 2017, however, the Slovenian Financial Stability Board issued a warning to Slovenians, advising them to be cautious when investing in ICOs and digital currencies, as there are no laws policing those areas.

Nevertheless, local government is clearly interested in blockchain. In October 2017, the government of Slovenia announced its plans to position the country as the leading destination of blockchain technology in the European Union, while also studying the potential applications of the technology in public administration.

The Caribbean


In April 2018, the Caribbean Tourism Organization (CTO) teamed up with Barbados-based blockchain startup Bitt Inc. to facilitate “the implementation of more efficient payment processes for tourism-related products and services.” Essentially, CTO wants to explore how cryptocurrencies can improve the local tourist industry, which is one of the main sources of income in the Caribbean, especially after large U.S. banks started to withdraw capital from the region due to the 'de-risking' policy. Hugh Riley, the CTO’s secretary general, told local media:

“The Caribbean aims to fully examine the advantages offered by new financial technology… In particular, blockchain financial services have the potential to advance the objectives of specific programs and activities within the tourism sector. The CTO has a responsibility on behalf of our members to fully explore those possibilities.”

While the actual outcome of that collaboration is still intangible, if the Caribbean continues to move in that direction, local beaches might attract an array of crypto entrepreneurs willing to spend their savings there.


Caribbean countries are approaching crypto adoption at the state level as well. In March, the Eastern Caribbean Central Bank (ECCB) announced a national cryptocurrency called the Digital Eastern Caribbean Dollar (DXCD), which is planned to be introduced alongside fiat money in eight Eastern Caribbean countries. Donaldson Romeo, premier of Montserrat, declared earlier this year:

“The decision to move closer to a cashless society is in keeping with our overall development strategy, and also that of the ECCB.”

Amsterdam, Netherlands


Amsterdam is one of the pioneering cities in terms of virtual currencies. It famously houses the Bitcoin Embassy, a community hub nearby the local sex museum where crypto enthusiasts gather to attend and organize workshops or do social networking in the local cafe. Additionally, there are about 40 more BTC-friendly venues, including a bike rental, among others. The annual Bitfilm festival dedicated to all things crypto has also been hosted there.


In March, a Dutch court categorized Bitcoin as a “transferable value” after the court ruled in favor of a plaintiff who was owed 0.591 BTC.

In May, the government issued a report which considered cryptocurrency to be broadly “low risk” in relation to financial stability. However, soon after, the Netherlands Authority for the Financial Markets (AFM) questioned whether entities dealing in cryptocurrency had conformed to licensing laws, due to the high risks being involved.

Tokyo, Japan


Coinmap shows that there are around 80 crypto-friendly businesses in Tokyo, one of the largest amounts on the planet. For instance, popular conveyor-belt sushi restaurant Numazuko accepts cryptocurrencies, as well as Hackers Bar which hosts live programming sessions, not to count a number of crypto ATMs.


Such openness in regard to cryptocurrencies comes as no surprise considering that Bitcoin and altcoins can be used as a legally-accepted means of payment in Japan. Local watchdogs regulate the industry via thorough AML and Know Your Customer (KYCcompliance checks, while the Japan’s self-regulatory crypto exchange body makes sure to cooperate with the state.

Berlin, Germany


Bitcoin’s popularity in Germany’s capital was highlighted by The Guardian in 2013, back when mainstream culture was dismissing the digital currency as solely a crypto-anarchic tool. In Berlin, Bitcoin can be used not only to drink and eat at local bars and restaurants (more than 50 within the city center area accept crypto), but for more sophisticated things as well — for instance, the European School of Management and Technology located in Berlin has been accepting BTC as a means of payment since December 2016.


Cryptocurrencies are not legal tender in Germany, but they have been recognized as ‘private money’ by the German Finance Ministry since 2013. Interestingly, according to the German Income Tax Act, if investors hold their assets (cryptos) for more than one year, their coins become fully tax exempt, making Germany extra attractive to hodlers.

Zug, Switzerland


While Zug may be not as well equipped for usual BTC-financed tourist activities as other cities on the list, it nonetheless represents a historical city for crypto enthusiasts. Proudly championing the title of “Crypto Valley,” Zug is home to numerous blockchain startups. Cryptocurrencies can be used for municipal-related activities, such as paying rent or even registering a company.


In Switzerland, “cryptocurrencies are neither money nor a foreign currency, nor a financial supply for goods and services tax (GST) purposes.” Its unclear legal status, however, does not prevent the government from experimenting with blockchain, like using the technology for municipal voting, for instance.



As soon as you get to Malta, head over to the Bitcoin & Auto Trader located in Qormi to claim your obligatory Lambo with your crypto savings — granted, assuming that you’ve got enough coins, obviously. After that, you can drive to a crypto-friendly sushi restaurant to celebrate the new purchase. While the local infrastructure for BTC use is still somewhat immature, the situation might change soon after more positive regulations are introduced — and there are reasons to suspect they are coming.


In March, the largest crypto exchange in the world, Binanceannounced it was moving its headquarters to Malta. In response, Malta’s prime minister, Joseph Muscat, revealed the island’s plan to become the “global trailblazers in the regulation of blockchain-based businesses.”

On July 4, the local government passed three laws that allow companies to issue new cryptocurrencies and trade the existing ones. Most importantly, on that day, Malta became the first country in the world to provide a coherent regulatory framework in the field of blockchain. This week, it continued its path to become the ‘blockchain island,’ as the University of Malta announceda €300,000 blockchain and distributed ledger technology (DLT) scholarship fund in conjunction with the Malta Information Technology Agency (MITA).

San Francisco, U.S.


San Francisco boasts around 120 crypto-friendly venues, being an internationally-recognized hub for crypto evangelists. There’s the famous Crypto Castle, a mecca for crypto traders dreaming to multiply their investments and join the ranks of crypto millionaires, as well as numerous BTC-accepting businesses. In fact, San Francisco is so advanced in terms of crypto that even a local federal court accepts bail bonds paid in BTC.


Cryptocurrencies are still in an unclear regulatory zone in the U.S., despite being watched by various regulators like the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), who define digital currencies depending on their purview. Nevertheless, the U.S. has been crafting a blueprint for crypto regulations, granting the rights to trade BTC futures and issuing a special trading license in New York.

Buenos Aires, Argentina


Buenos Aires has been unofficially named the capital of Bitcoin in Latin America. It boasts a surprising amount of crypto businesses — around 140, as per Coinmap — being up in the top three along San Francisco and Prague. According to a local crypto-related media outlet, Buenos Aires has a Bitcoin publishing house and a taxi service among businesses accepting BTC. Moreover, individual professionals like photographers, professors, designers, technicians and psychologists have reportedly been accepting crypto for their services there.


Bitcoin’s success in Argentina could be attributed to the inflation of the national currency and manipulated exchange rates — those economic problems led some citizens to decentralized currencies.

The governor of Argentina’s central bank was responsible for proposing the July 2018 deadline for regulatory proposals at the G20 summit in March — however, the date has been postponed until at least October.

Published:9/16/2018 3:00:19 PM
[Markets] Spygate Operative Nellie Ohr To Testify Before Congress This Week About Work For Fusion GPS

Nellie Ohr will sit for an interview with Congress next week, according to Rep. John Ratcliffe (R-TX). 

Ohr, an expert on Russia who speaks fluent Russian, is a central figure in the nexus between Fusion GPS - the opposition research firm paid by the Clinton campaign to produce the "Steele Dossier " - and the Obama Justice Department - where her husband, Bruce Ohr, was a senior official. Bruce was demoted twice after he was caught lying about his extensive involvement with Fusion's activities surrounding the 2016 US election.

Notably, the Ohrs had extensive contact with Christopher Steele, the ex-MI6 spy who authored the salacious anti-Trump dossier used to justify spying on the Trump campaign during the election, and later to smear Donald Trump right before he took office in 2017. According to emails turned over to Congress and reported in late August, the Ohrs would have breakfast with Steele on July 30 at the downtown D.C. Mayflower hotel - days after Steele had turned in several installments of the infamous dossier to the FBI. The breakfast took place one day before the FBI/DOJ launched operation "Crossfire Hurricane," the codename for the official counterintelligence investigation into the Trump campaign. 

"Great to see you and Nellie this morning Bruce," Steele wrote shortly following their breakfast meeting. "Let’s keep in touch on the substantive issues/s (sic). Glenn is happy to speak to you on this if it would help," referring to Fusion GPS co-founder Glenn Simpson. 

No stranger to the US intelligence community, Nellie Ohr represented the CIA's "Open Source Works" group in a 2010 "expert working group report on international organized crime" along with Bruce Ohr and Glenn Simpson.

Meanwhile, some have wondered if Nellie's late-life attraction to Ham radios was in fact a method of covertly communicating with others about the Trump-Russia investigation, in a way which wouldn't be surveilled by the NSA or other agencies. 

was Nellie Ohr’s late-in-life foray into ham radio an effort to evade the Rogers-led NSA detecting her participation in compiling the Russian-sourced Steele dossier? Just as her husband’s omissions on his DOJ ethics forms raise an inference of improper motive, any competent prosecutor could use the circumstantial evidence of her taking up ham radio while digging for dirt on Trump to prove her consciousness of guilt and intention to conceal illegal activities. -The Federalist

In mid-August, President Trump called Bruce Ohr a disgrace - tweeting: "Will Bruce Ohr, whose family received big money for helping to create the phony, dirty and discredited Dossier, ever be fired from the Jeff Sessions  “Justice” Department? A total joke!"

Needless to say, Congress will have no shortage of questions to ask Nellie.  

Published:9/16/2018 2:35:11 PM
[Markets] The Conversation: The gap between those high-carb and low-carb studies is smaller than you think Look at the details.
Published:9/16/2018 1:58:22 PM
[Markets] Ben Bernanke's 'Waffle House' Bluff Exposed

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

Yes, it is hard to believe, but still happening: 10 years after Lehman the very same people who either directly caused the financial crisis of 2008 or made things much much worse in its aftermath, are not only ALL walking around freely and enjoying even better paid jobs than 10 years ago, they are even asked by the media to share their wisdom, comment on what they did to prevent much much worse, and advise present day politicians and bankers on what THEY should do.

You know, what with all the wisdom, knowledge and experience they built up... Because that’s the first thing you’ll hear them all spout: Oh YES!, they learned so many lessons after that terrible debacle, and now they’re much better prepared for the next crisis, if it ever might come, which it probably will, but not because of but despite what their wise ass class did back in the day.

Which never fails to bring back up the question about Ben Bernanke, who said right after Lehman that the Fed was entering ‘uncharted territory’ but ever after acted as if the territory had started looking mighty familiar to him, which is the only possible explanation for why he had no qualms about throwing trillion after trillion of someone else’s many at the banks he oversaw.

Somewhere along the line he must have figured it out, right, or he wouldn’t have done that?! He couldn’t still have been grasping in the pitch black dark the way he admitted doing when he made the ‘uncharted territory’ comment?! Thing is, he never returned to that comment, and was never asked about it, and neither were Draghi, Kuroda or Yellen. Did they figure out something they never told us about, or were and are they simple blind mice?

We have an idea, of course. Because we know central bankers serve banks and bankers, not countries or societies. Ergo, after Lehman crashed, whether that was warranted or not, Bernanke and the Fed focused on saving the banks that were responsible for the crisis, instead of the people in the country and society that were not.

They threw their out-of-thin-air trillions at making the asset markets look good, especially stock markets. Knowing that’s what people look at, and knowing foreclosures are of fleeting interest and can be blamed on borrowers, not lenders, anyway when necessary.

And obviously they knew and know they are and were simply blowing yet another bubble, just this time the biggest one ever, but the wealth transfer that has taken place under the guise of saving the economy has made the rich so much money they can’t and won’t complain for a while. They actually WILL eat cake.

Everyone else, sorry, we ran out of money, got to cut pensions and wages and everything else now. Healthcare? Nice idea, but sorry. Housing, foodstamps? Hey, what part of ‘the government is broke’ don’t you understand? You’re on your own, buddy. Remember the America Dream? Let that be your Yellow Brick Road.

The banking class is going to divest of their shares, while the individuals, money funds and pensions funds who are also in stocks because nothing else made money, will find their cupboards and cabinets replete with empty bags. Right after that the economy will start tanking, and for real this time. Want a loan to buy a home, a car, to start a business? Sorry, told you, there’s no money left.

But look, the banks are still standing! You don’t understand this, but that’s much more important. And oh well, those were all honest mistakes. And the ones that perhaps weren’t, shareholders paid big fines for those, didn’t they? See, we can’t have those banking experts in jail, because we need them to build the economy back up after the next crisis. The knowledge and experience, you just can’t replace that.

And it will be alright, you’ll see. Sure, it’ll be like Florence and all of her sisters blew themselves all over flyover country, but hey, that cleans up a lot of stuff too, right? And who needs all that stuff anyway? What is more important for the economy after all, Lower Manhattan or Appalachia?

And who are you going to blame for all this? We strongly suggest you blame Donald Trump, we sure as hell will at the Fed. So just fall in line, that’s better for everyone. Blame his tax cuts, or better even, blame his trade wars. Nobody likes those, and they sound credible enough to have caused the crash when it comes.

Anyway, while you’re stuck with the emergency menu at Waffle House, we hope your socks’ll dry soon, we really do, and we’re sorry about Aunt Mildred and the dogs and cats and chickens that have gone missing, but then that’s Mother Nature, don’t ya know?! Even we can’t help that. All we can really do is keep our own feet dry.

Central bankers haven’t merely NOT saved the economy, they have used the financial crisis to feed additional insane amounts of money to those whose interests they represent, and who already made similarly insane amounts, which caused the crisis to begin with. They have not let a good crisis go to waste.

But judging from the comments and ‘analyses’ on Lehman’s 10-year anniversary, the financial cabal still gets away with having people believe they’re actually trying to save the economy, and they just make mistakes every now and then, because they’re only human and uncharted territory, don’t you know?! Well, if you believe that, know that you’re being played for fools. Preferences and priorities are crystal clear here, and you’re not invited.

All the talk about how important it is that a central bank be independent is empty nonsense if that does not also, even first of all, include independence from financial institutions like commercial banks etc. Well, it doesn’t. Ben Bernanke’s Waffle House is nothing but a front for Grand Theft Auto.

Published:9/16/2018 1:58:22 PM
[Markets] China May Skip Trade Talks, Cripple US Supply Chains After New Trump Tariffs

When discussing yesterday's WSJ report that the Trump admin may slap the new, $200BN round of tariffs on Chinese imports as soon as tomorrow, we said that such an escalation would likely derail talks with top Chinese officials, currently scheduled in Washington for Sept. 27 and Sept. 28. Now, in a follow up report, the WSJ has confirmed that in light of the Trump's imminent  announcement, China is considering declining Trump’s offer of trade talks later this month as Trump's "pressure tactics" aren’t "sitting well" with Beijing, which has repeatedly said it wouldn’t negotiate under threat.

"There is a lot of uncertainty right now,” a Chinese official told the WSJ. "If more tariffs come out, the Chinese side could very well choose not to go." That said, a final decision has not yet been made on the trips, and will depend on what Trump does in the coming days.

Underscoring China's growing anger toward Trump's negotiating tactics, Yang Weimin, a former senior economic adviser to President Xi Jinping, said on Sunday that "China never said it doesn’t want to negotiate with the U.S.... But the U.S. side has to show sincerity” toward resolving the trade dispute. Added a current senior official who advises the leadership on foreign-policy matters: "China is not going to negotiate with a gun pointed to its head."

While China's lack of desire to negotiate would hardly come as a surprise - after all there will be little to discuss if Trump does pull the trigger on even more tariffs - what may come as a shock to US businesses is how China plans to retaliate to the $200BN in new tariffs.

Yesterday, we noted that Beijing could prompt respond "qualitatively" by selectively targeting US companies which have a major presence in China, such as US auto makers or Apple. It now appears that China's escalation will be even more targeted, and that some Chinese officials involved in advising the leadership are proposing to step up the trade fight a notch by restricting China’s sales of materials, equipment and other parts key to U.S. manufacturers’ supply chain.

Furthermore, as discussed yesterday, these restrictions - which risk crippling production until replacement supplies are sourced, a process that would take an lengthy period of time in today's "just in time" procurement world, could even apply to Apple’s iPhones, which are assembled in mainland China, the WSJ cited officials as saying without elaborating.

China can adopt “export restraints” as a way to hit back at the U.S. in addition to retaliatory tariffs, former Finance Minister Lou Jiwei told a gathering of Chinese and American academics and business executives Sunday.

Which is not to say that China has given up hope. As we reported on Friday, China’s leaders continue to court U.S. businesses to get them to lobby against the Trump tariffs. On Sunday, representatives from American multinationals, along with academics and others from both China and the U.S., attended a special session of the China Development Forum at the Diaoyutai State Guesthouse, a complex of buildings on manicured grounds. The meeting, usually held in the spring, was convened to mark the 40th anniversary of the Communist government’s adoption of pro-market policies (which alas have yet to bear any real fruit).

At the same time, a group of Wall Street bankers were invited to a financial forum in a different guesthouse building and are scheduled to meet with Vice Premier Wang Qishan on Monday.

The reason why Beijing is bypassing Washington and bringing the fight straight to US corporations is that Chinese officials have expressed growing frustration in dealing with the Trump administration, which has demanded not only better terms for trade but an end to industrial subsidies and other policies Beijing sees as vital to securing China’s economic future.

Lou, the former finance minister who is now head of China’s national pension fund and a senior government adviser, observed - correctly - that current U.S. policy toward China is aimed at “containing China’s economic rise."

“That is not going to change in the near term,” said Mr. Lou, known as a hawkish voice in China’s policy-making circle. “But that’s not going to work, either.”

One thing is clear: while China will not launch the next round of tariffs first - instead perhaps hoping that an implementation delay after the tariffs are announced in the coming days could give Beijing a chance to come up with an offer acceptable to Trump - Chinese officials are loath to appear to be making concessions to the U.S. Many even believe the only way to get the U.S. back to the talks is through tit-for-tat tactics.

But China's biggest concern is that the good cop/bad cop tactics employed by Trump and Mnuchin are now a major nuisance: Chinese officials regularly complain that they don’t know whether any U.S. officials are empowered to cut a deal.

In addition, they worry that any offer Beijing makes to Mr. Mnuchin could be opposed by trade hawks led by U.S. Trade Representative Robert Lighthizer and trade adviser Peter Navarro and then get turned down by Mr. Trump.

As for Trump, it is unlikely that he will change his mind, faced with the need for more distractions from ongoing domestic turbulence. Unfortunately, as we concluded yesterday, once Trump enacts the new tariffs, "it will only be a matter of time before the downstream effects hit the US economy, focusing on the US consumer who is about to find the costs of many Chinese imports suddenly spiking."

However, as long as the S&P continues to rise and diverge from China's bear market and the slide in global stocks...

... Trump will merely further escalate the tit-for-tat trade war until one day the algos finally reverse and the S&P tumbles, catching down to the rest of the world."

Published:9/16/2018 12:56:51 PM
[Markets] FBI Had No Clue About Trump-Russia Collusion When Mueller Took Over: Lisa Page

A newly reported comment made by former FBI attorney Lisa Page during her May testimony to Congress has revealed a "momentous fact," according to The Hill's John Solomon: after nine months of investigations - which included the use of a well-paid spy to infiltrate the Trump campaign, The FBI had no clue whether there was any collusion between Trumpworld and Russia when the case was handed over to special counsel Robert Mueller. 

It’s a reflection of us still not knowing,” Page told Rep. John Ratcliffe (R-Texas) when questioned about texts she and Strzok exchanged in May 2017 as Robert Mueller was being named a special prosecutor to take over the Russia investigation.

With that statement, Page acknowledged a momentous fact: After nine months of using some of the most awesome surveillance powers afforded to U.S. intelligence, the FBI still had not made a case connecting Trump or his campaign to Russia’s election meddling.

Page opined further, acknowledging “it still existed in the scope of possibility that there would be literally nothing” to connect Trump and Russia, no matter what Mueller or the FBI did. -The Hill

"As far as May of 2017, we still couldn’t answer the question," said Page at another point. 

In short - the FBI's lead attorney on the Trump-Russia investigation said the agency had no evidence of Trump-Russia collusion, while special counsel Robert Mueller has yet to produce a shred of evidence either. 

Comey corroborates...

As Solomon notes, ex-FBI Director James Comey told the Senate shortly after he was fired that there was "not yet evidence to justify invstigating Trump for colluding with Russia." 

"When I left, we did not have an investigation focused on President Trump," Comey told Congressional investigators. 

Meanwhile, Page's lover Peter Strzok - who spearheadsed the FBI's counterintelligence investigation before Mueller took over, texted "there's no big there, there." 

The Department of Justice (DOJ) inspector general asked Strzok shortly before he was fired from the FBI what he meant by that text, and he offered a most insightful answer.

Strzok said he wasn’t certain there was a “broad, coordinated effort” to hijack the election and that the evidence of Trump campaign aides talking about getting Hillary Clinton dirt from Russians might have been just a “bunch of opportunists” talking to heighten their importance.

Strzok added that, while he raised the idea of impeachment in some of his texts to Page, “I am, again, was not, am not convinced or certain that it will,” he told the IG. -The Hill

In short, James Comey, Peter Strzok and Lisa Page have all said or implied that the FBI had nothing linking Trump to Russia. Which, as John Solomon concludes, raises the question: If there was no concrete evidence of collusion, why did we need a special prosecutor?

Page's admission also sugests that the FBI and DOJ officials were likely behind a series of leaks to the media just before Mueller's appointment which made collusion evidence look far stronger than investigators knew it to be. It also suggests that the MSM - "perhaps longing to find a new Watergate," were "far too willing to be manipulated by players in a case that began as a politicial opposition research project funded by Trump's Democratic opponent, Hillary Clinton, and led by a former British intelligence agent, Christopher Steele, who despised Trump." 

At what point does Trump simply demand Mueller lay his cards on the table? 

Published:9/16/2018 12:26:38 PM
[Markets] Browder-Gate Broadens - EU Threatens Cyprus With 'Article 7' Over Russian Assistance

Authored by Tom Luongo,

It’s been quite a week for Article 7 of the Lisbon Treaty.  First Hungary and now Cyprus.  And all because of some guy named Bill Browder?

Despite numerous warnings and obstacles, Cyprus continues to assist Russia in investigating the finances of Bill Browder.  This has resulted in letters of warning to Cypriot President Nicos Anastasiades as well as lawsuits by Browder citing the investigation violates his human rights.

Like everything else in this world, just ask Browder.

Last fall Browder and 17 MEP’s launched a two-pronged assault on Cyprus to end their assisting Russia’s investigation into Browder.  Browder with the lawsuit.  The MEP’s with a letter of warning.

The lawsuit has failed, however.  The Nicosia District Court handed down a ruling recently which allowed for Browder to sue for damages to his reputation but not putting an injunction on the investigation.

More than a month ago the Nicosia District Court said that the cooperation with Russia in its politically motivated probe would violate the human rights of Bill Browder and his associate Ivan Cherkasov and the two would have good prospects in claiming damages from the government. Still, the court rejected Browder’s application for an order preventing Cypriot authorities from cooperating with Russia in its proceedings against him on the grounds that any damage would not be irreparable.

And this is where this gets interesting.

Because now in light of this ruling the stakes have been raised. Four of those original 17 MEP’s, many of whom are on the infamous “Soros List” as being in the pay of Open Society Foundation, sent a more serious letter of warning to Anastasaides threatening Cyprus with censure via Article 7 of the Lisbon Treaty for not upholding the European Union’s standards on human rights.

Now this is a dangerous escalation in service of an investigation into someone who, agree or not, Russia has a legitimate interest in pursuing.  Dismissing all of Russia’s concerns about Browder as ‘politically motivated’ is pure grandstanding.  It carries no weight of law and stinks of a far deeper and more serious corruption.

Because if Browder was as pure as the driven snow as he presents himself to the world then he would have no issue whatsoever in Cyprus opening up his books to Russia and put his question of guilt to rest once and for all.

The ruling from the court stated that Cypriot officials are not barred from helping Russia get to the bottom of Browder’s web of offshore accounts, all of which, according to Russian lawyer Natalya Veselnitskaya, run through Cyprus.

From RT last year:

“He [Browder] is afraid of the Russian probe that has conclusive evidence of his financial crimes and proof that his theory of Magnitsky’s death is an absolute fake. That’s why Browder is ready to stage any provocation,” Veselnitskaya said. She went on to say that the investor’s decision to intervene was particularly “influenced by the fact that the entire network of offshore companies that make up his organized criminal group is located on the territory of Cyprus.”

The incident that Veselnitskaya was referring to took place in late October 2017. At that time, 17 members of the European Parliament appealed to Cypriot President Nikos Anastasiades in an open letter, in which they called on him to stop assisting Russia in its investigation against Browder.

Remember, Veselnitskaya was the woman who met with Donald Trump Jr. during the 2016 campaign.  She was adamant she had information that was pertinent to them.  The Mueller probe and the media tried to spin that meeting as her giving Trump access to Hillary Clinton’s e-mails.

But what she was really trying to give them was the low-down on Browder, the Magnitsky Act and the whole rotten, sordid history of him, Edmund Safra of Republic National Bank and the raping of Russia by them and others in the 1990’s.

And to show Trump that the Magnitsky Act was built on a lie and the sanctions against Russia should be lifted because of this.

Some of this I covered in an earlier article.

The Real Browder Story

And this is the whole point.  Browder’s story is fiction.

Magnitsky was his accountant and not his lawyer, who knew all about his dealings and could convict Browder of a raft of crimes far greater than the ones Russia already has in absentia.

Putin had no interest in having Magnitsky executed or beaten to death in prison.  If anyone had an incentive to keep Magnitsky alive it was Vladimir Putin.  If anyone had incentive to have Magnitsky die in prison it was Browder.  And so, the whole story that Browder has woven, the myth around himself is so insane that it bears repeating over and over.

Browder’s story is fiction.

Because when you stop and put all the pieces together you realize a number of things and none of them are good.

First, Browder was deeply enmeshed in the plot to frame Yeltsin for stealing $7 billion in IMF money which created the conditions for bringing Putin to power.

Second, he, Mihail Khordokovsky and others have systematically lobbied Congress and the European Parliament to peddle this false story of the brave freedom fighter Magnitsky against the evil Putin to get revenge, in Khordokovsky’s case, on Putin for deposing him from power in Russia and stealing back the wealth Khordokovsky stole during the Yelstin years, namely Yukos.

And for Browder it was the culmination of years of work to destroy Russia from within and stay one step ahead of the hangman’s noose.  His 2015 book Red Notice is a work of near fiction as outlined by Alex Krainer in his book The Grand Deception: The Truth About Bill Browder, The Magnitsky Act and Anti-Russia Sanctions.

And the Magnitsky Act was the way everyone interested who can prove this could be silenced through sanctions.

But, it’s bigger than that.

This was policy.

The Magnitsky Act is a lynchpin of American and European foreign policy to destroy Russia and subjugate the world.

It was enacted alongside other legislation to take back control of the political narrative of the world; rein in free speech on the internet by tying any activity not approved of by The Davos Crowd to be subject to sanctions on the nebulous basis of ‘human rights violations.’

The Magnitsky Act has weaponized virtue-signaling and, in my mind it was intentionally done to open up another path to protect the most vile and venal people in the world to arrogate power to themselves without consequence.

Today we stand on the brink of an open hot war between the U.S. and Russia because of the lies which have been stacked on top of each other in service of this monstrous piece of legislation.

With each day it and its follow-up, last year’s Countering America’s Adversaries Through Sanctions Act (CAATSA), are used as immense hammers to bring untold misery to millions around the world.

People like Browder are nothing by petty thieves.  It is obvious to me he started out as a willing pawn because he was young, hungry and vaguely psychopathic.  The deeper he got in it the more erratic his behavior became.

Browder is being protected by powerful people in the U.S. and EU not because he’s so important but because exposing him exposes them.

This is why another country is being threatened with the stripping of what few rights sovereign nations have within the EU, Cyprus, over his books.

Poland stood up for Hungary the other day over ideological reasons.  No one seems ready to stand up to the conspiracy surrounding Browder, Khordokovsky and the Magnitsky Act.

But, if someone in power finally does, it could change everything we think we know about geopolitics.

*  *  *

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Published:9/16/2018 12:10:16 PM
[Markets] NewsWatch: These 4 called the last financial crisis. Here’s what they see causing the next one Leverage. Low-quality debt. The warning signs are there.
Published:9/16/2018 11:26:18 AM
[Markets] Jamie Dimon Apologizes To Trump (Again), Insists He's "Done With Politics"

Just in case you missed it the first time, JP Morgan Chase & Co. CEO Jamie Dimon sincerely wants the world to know that he's truly sorry for the mean-spirited comments about President Trump that he made earlier this week. To wit, in an appearance on ABC's "This Week" earlier today, the CEO again insisted that he has no plans to challenge President Trump in 2020. In fact, Dimon insisted, he has no political ambitions whatsoever - which might help assuage the concerns of major JPM shareholders (not to mention members of Dimon's board) who expect him to stick around for at least another four years, like he promised.

"I'm done with politics," Dimon declared in response to a question from ABC's Rebecca Jarvis, blaming his impudent remarks on "machismo." Dimon's decision to quit while he's ahead is hardly surprising, considering has reputation for being one of the most shrewd leaders on Wall Street (and, as ABC pointed out, the last CEO of a major US bank who is still standing 10 years after Lehman's bankruptcy). 

That's because, unlike Trump, Dimon is a staunch Democrat who has insisted that his wealth "wasn't a gift from daddy" (even though his father was a wealthy banker whose connections served as a launchpad for Dimon's own career). And given the recent wave of progressive and socialist candidates, the Democratic base has made it clear that they won't accept another corporatist nominee, especially not a banker like Dimon.


For readers who missed the fireworks, Dimon waded into a minor controversy on Wednesday when he boasted to an audience at a JPM philanthropy event that he could beat Trump in an election, adding that "I'm tougher than he [Trump] is, I'm smarter than he is". Though Dimon quickly backpedaled and apologized to Trump, that didn't stop the president from slamming Dimon, who was once rumored to be a top Treasury Secretary pick, as a "nervous mess" and someone who lacks "the smarts and the aptitude" to occupy the Oval Office.

During the interview, Dimon insisted that he's not "ever" going to run for president, and that his intemperate remark "proves" that he wouldn't be a good politician.

JARVIS: So you're, you're done with politics?


JARVIS: No running for president for you.



DIMON: Well, I never say never to anything but no.


DIMON: Yeah, I shouldn't have said it. And I -- more out of frustration and a little of my own machismo, but I shouldn't have said it. And so -- it also proves I wouldn't be a good politician.

Dimon also made it a point to stroke the president's ego by implying that Trump's economic policies deserve the primary credit for the present economic boom, not Obama's.

DIMON: You know, when President Trump was elected confidence skyrocketed, consumers, small business, large corporate and because pro-business, pro-competitive taxes, pro some regulatory reform, and that has helped the economy. So it's impossible for me to tease out how much but it has helped the economy, just like that President Obama helped to stop the economy from getting much worse.

But they also did policies, I think, that slowed down growth. So, some of those are being reversed. So, yeah, he should take some credit for that.

JARVIS: What kind of grade would you give President Trump purely on the economy?

DIMON: I'd say pretty good.

JARVIS: B plus? A minus?

DIMON: Yeah, something like that.

Of course, these are only words (and Dimon did clarify that he "never says never to anything"), and they certainly don't preclude him from having a sudden change of heart between now and the 2020 Iowa Caucuses. But even if Dimon did run, we doubt working Americans would share the media elite's enthusiasm for his wonky policy proposals. Because, while "pragmatic" solutions like converting the earned income tax credit to a payroll tax might win over the New York Times editorial board, its poverty-fighting implications would likely be lost on the average voter. And though we must admit "that's why I'm richer than you" has the makings of an epic campaign slogan, we suspect American workers might find it the slightest bit patronizing.

Published:9/16/2018 11:26:18 AM
[Markets] US Diplomats Involved In Trafficking Of Human Blood And Pathogens For Secret Military Program

By Dilyana Gaytandzhieva; Originally appeared on

Pentagon scientists have been deployed in 25 countries and given diplomatic immunity to research deadly viruses, bacteria and toxins at US military offshore biolaboratories under a $2.1 billion DoD program. (Source: DTRA)

The US Embassy to Tbilisi transports frozen human blood and pathogens as diplomatic cargo for a secret US military program. Internal documents, implicating US diplomats in the transportation of and experimenting on pathogens under diplomatic cover were leaked to me by Georgian insiders. According to these documents, Pentagon scientists have been deployed to the Republic of Georgia and have been given diplomatic immunity to research deadly diseases and biting insects at the Lugar Center – the Pentagon biolaboratory in Georgia’s capital Tbilisi.

This military facility is just one of the many Pentagon biolaboratories in 25 countries across the world. They are funded by the Defense Threat Reduction Agency (DTRA) under a $ 2.1 billion military program – Cooperative Biological Engagement Program (CBEP), and are located in former Soviet Union countries such as Georgia and Ukraine, the Middle East, South East Asia and Africa.

Instead of investing in the health of its own citizens the US government has spent $161 million of US taxpayer money on the Lugar Center in Tbilisi for research on deadly diseases and biting insects abroad. (©Al Mayadeen TV)
The secret facility is located just 17 km from the US Vaziani military airbase in Georgia’s capital Tbilisi.

The Pentagon bio-laboratory is heavily guarded. All passers-by within a radius of 100 m are filmed although the military biolaboratory is located within a residential area.

I am being filmed while talking to local residents on the street near the Pentagon biolaboratory and I want to know why the security guards are filming me. (©Al Mayadeen TV)

The security guards warn me that if I do not comply, show my passport and leave this place, I will be arrested. My official request to the Lugar Center for access to the facility and for interviews has also been rejected.

Secret experiments at night

However, I go back at night when the laboratory is seemingly still working. No matter how far the distance the air is laden with the smell of chemicals. This smell coming from the Lugar Center at night is blown by the wind to the residential area. Local residents from the Alexeevka neighbourhood, where the laboratory is located, complain that dangerous chemicals are being secretly burnt at night and that hazardous waste is being emptied into the nearby river through the laboratory’s pipes.

A diplomatic car with US Embassy registration plates can be seen in the car park of the Lugar Center at night when the laboratory is seemingly still working. (©Al Mayadeen TV)

A few hours later, the diplomatic vehicle is still in the car park of the Lugar Center. There is a strong smell of chemicals in the area. (©Al Mayadeen TV)

Locals complain of constant headaches, nausea, high blood pressure and dizziness when chemicals are being burnt at night in the laboratory which is just a couple of hundred meters from their homes.

“There is a smoke – black, red, green at night or especially early in the morning at around 3, 4 a.m. Even the hens have died. They put a big pipe underground and connected it to the drains. This smell comes from there. It smells like rotten eggs and decaying hay. The smell is so bad and is spread in different directions by the wind”, says Eteri Gogitidze who lives in a block of flats next to the laboratory.

“I have a thyroid disease. There are families of three people in the neighborhood and all three of them have a thyroid disease. They say it is because of the laboratory”, explains Eteri Gogitidze from the Alexeevka Neighbouthood where the laboratory is located. (©Al Mayadeen TV)
Albert Nurbekyan who lives about 300 m from the laboratory shows the four chimneys from the Lugar Center which release smoke at night. (©Al Mayadeen TV)

“Sometimes the wind spreads a smell of rotten eggs. Once I woke up early in the morning and noticed violet smoke coming from the laboratory. At night time they let the smoke out so that people don’t see. Why at night, what are they hiding from us?, he asks and then provides another worrying fact: “There are big blue plastic pipes along this street (from the laboratory) and from where everything goes to the river which is 3-4 km away. Not only do they pollute our air, but they also poison our water.”

Locals: Poisonous gas killed two Filipinos

Neighbours recall a tragic incident involving four Filipinos who worked at the Lugar Center. Two of the foreigners died of an alleged gas poisoning in their rented flat in block 44 of the Alexeevka Settlement.

“The first time when they called the Emergency service we were told that they had food poisoning from fish. But the second time when the ambulance came there was foam coming out of their mouths. They were shouting: “Help, Help!” When they passed away, they took them away and covered it all up. It all happened here”, Albert Nurbekyan shows the sealed off flat where the foreign scientists died.

Another witness, Elvira Ratiani who lived next door witnessed the foreigners die before her eyes. “They were my neighbors, we lived on the same floor, and once they were poisoned, and asked us to call the Emergency service. We phoned and the Emergency service saved them. They said it was probably fish poisoning. The second time, they knocked on the door and again asked for help. There were four Filipinos, two of them were saved, but the other two died”, recalls Elvira Ratiani who lives in the fatal block 44 of the Alexeevka Settlement right next to the laboratory.

Human blood and pathogens as diplomatic cargo to the US Embassy – leaked documents

Internal documents and correspondence between the Ministry of Health of Georgia and the US Embassy to Tbilisi show what experiments have been conducted at the Lugar Center. Leaked documents reveal that the US Embassy to Tbilisi transports pathogens, as well as frozen human blood, as diplomatic cargo.

The US Embassy to Tbilisi is the address to which pathogens and blood samples are being shipped as diplomatic cargo. The Embassy’s press office declined to comment. (©Al Mayadeen TV)

This letter from the Ministry of Health of Georgia to the US Embassy in Tbilisi exempts the importation from registration as the American diplomats claim the frozen human blood is needed for research purposes in connection with an American program on Hepatitis C in Georgia.

Diplomatic cargo shipments are exempt from inspection and taxes. According to instructions from The Pentagon’s Defense Threat Reduction Agency (DTRA), which oversees and funds the laboratories, biological material for the needs of the program must be shipped as hand-carrying items to the US embassies.

In cases of importing to Russia, this biological material must be carried by diplomats in a diplomatic pouch and sealed as diplomatic cargo.

The Pentagon: Prostitutes strictly prohibited, no sex abroad

Other instructions to US personnel working under the military program prohibit the use of prostitutes, and any interaction with individuals who may reasonably be assumed to be working as prostitutes.

Romantic, intimate or sexual relations with local citizens or among team members are strongly discouraged as “foreign security services are known to use the enticement of such relations to exploit foreign officials”. As such, a relationship with foreign nationals must be reported to DTRA as soon as possible, the document reads.

US scientists test viruses under diplomatic immunity

Tasked with the program at the Lugar Center are biologists from the US Army Medical Research Unit-Georgia (USAMRU-G) along with private American contractors and the US Center for Disease Control (CDC). Certain zones of the laboratory are classified zones and are accessible only to American citizens with security clearance. They are accorded diplomatic immunity under the 2002 US-Georgia Agreement on defense cooperation.

The USA-Georgia agreement accords diplomatic status to the US military and civilian personnel (including diplomatic vehicles), working on the Pentagon program in Georgia.

Joshua Bast is the deputy director of the US Army Medical Research Unit-Georgia (USAMRU-G). The American military scientist drives a diplomatic car and enjoys diplomatic immunity, without being a diplomat.

Joshua Bast leaves the Lugar Center in a diplomatic car of the US Embassy to Tbilisi. (©Al Mayadeen TV)

He has been deployed to Georgia since 2015 by the Pentagon Walter Reeds Army Institute of Research. His military unit also operates a separate laboratory inside the Lugar Center – the Walter Reeds Army Institute of research laboratory. However, when I confront him at the entrance of the laboratory, he flatly denies that he works at the Lugar Center.

However, leaked e-mails between the Pentagon and the Georgian Ministry of Health (below) proves him wrong. Joshua Bast does work at the Lugar Center.

Joshua Bast is the deputy director of USAMRU-Georgia, according to leaked correspondence between the Pentagon medical research unit in Georgia and the Georgian Health Ministry. The address of USAMRU-Georgia indicated in this official e-mail (above) is the address of the Lugar Center (16 Kakheti Highway, Tbilisi).

Why does a Pentagon employee lie about his workplace? I have not received any answer. Joshua Bast drives off immediately after being challenged. He is not the only US non-diplomat working on the Pentagon program, who has been accorded diplomatic immunity. There are six diplomatic cars in the car park of the laboratory, all of them with registration plates of the US Embassy.

Six diplomatic vehicles of the US Embassy are parked in the car park of the Lugar Center. (©Al Mayadeen TV)

The Lugar Center security guard warns me to stay where I am and not to move. However, I run away. (©Asya Ivanova)

After I refuse to comply the security guards jump into an unmarked car. But I manage to escape.

Security guards are patrolling the area around the laboratory while I am hiding on the nearby bridge. (©Asya Ivanova)

These security guards patrolling the area around the laboratory in an unmarked car are paid for by the Pentagon and not by the government of Georgia, according to information obtained from the US Federal Contract registry. Hence, Georgia has no control over the activities of its foreign sponsor. Furthermore, the Pentagon scientists can work in direct violation of international law.

International law is not applicable

Under a 3 year-long agreement between the Walter Reeds Army Institute and the Georgian National Center for Disease Control (NCDC), the Pentagon has been given full access to the local collection of deadly bio agents in order to study them. These are agents which can cause Anthrax, Tularemia, Brucella and plague.

According to the agreement’s provisions, “international law is not applicable to this Agreement, the parties agree that no court, tribunal or international entity has jurisdiction or authority to consider or provide judgement in case of disputes arising between the parties of this agreement”.

Drone for releasing of toxic mosquitoes

The work that US diplomats perform at the Lugar Center has nothing to do with diplomacy and does not fall under the Vienna Convention on Diplomatic Relations. Joshua Bast, for instance, is an entomologist and researches insects, according to a video released by the US Embassy to promote the peaceful purposes of the otherwise military program of the US in Georgia.

A screen grab from a video promoting the peaceful intentions of the Pentagon program. Joshua Bast is presented as entomologist.

Why does an entomologist work for the US Army and why is he accorded diplomatic immunity? Entomological warfare is a type of biological warfare that uses insects to transmit diseases. Georgia borders on the US main rival – Russia. Moscow has repeatedly voiced its concerns about the potential development of biological weapons near the Russian borders, including the spread of diseases through insects.

Such fears are not groundless, considering a recent US patent for a Toxic Mosquito Aerial release system, granted by The United States Patent and Trademark Office in 2014. The invention includes a drone which can release infected mosquitoes.

According to the patent documents, the drone is capable of delivering lethal and non-lethal toxins, including any agent that can be carried and administered by a mosquito.

The inventor of the drone for the releasing of toxic mosquitoes S. Mill Calvert has patented 42 similar military inventions for the US Army and Special forces, including stroke-inducing bullets ,in a span of just two years from 2013 to 2015. A person with such a name however does not exist in the US citizens registry. The US patent Lawyer, Louis Ventre, who filed the application, declined to comment if this name was a pseudonym and who his client actually was (the e-mails below).

The inventor of the drone for the releasing of toxic mosquitoes S. Mill Calvert has patented 42 similar military inventions for the US Army and Special forces, including stroke-inducing bullets ,in a span of just two years from 2013 to 2015. A person with such a name however does not exist in the US citizens registry. The US patent Lawyer, Louis Ventre, who filed the application, declined to comment if this name was a pseudonym and who his client actually was (the e-mails below).

Since the start of the project on flies at the Lugar Center Georgia has been infested with sand flies. Local people complain of being bitten by these newly appeared flies while naked in their bathrooms (a fly in a bathroom on the right)

The Pentagon scientists have also performed experiments involving tropical mosquitos and ticks in Georgia. In 2016, 21 590 ticks were collected for a DNA database for future studies at The Lugar Center under the Pentagon project “Assessing the Seroprevalence and Genetic Diversity of Crimean-Congo Hemorrhagic Fever Virus (CCHFV) and Hantaviruses in Georgia”.  The Pentagon projects involving ticks coincided with an inexplicable outbreak of Crimean-Congo hemorrhagic fever (CCHF) which is caused by infection through a tick-borne virus. In 2014 34 people became infected (amongst which a 4-year old child). A total of 60 cases with 9 fatalities have been registered in Georgia since 2009, according to a leaked e-mail sent by the Lugar Center director Amiran Gamkrelidze to the Minister of Health of Georgia David Sergeenko.

34 people became infected with CCHF in Georgia in 2014 alone. (Source: NCDC-Georgia)

White Powder over Chechnya

The Defense Threat Reduction Agency (DTRA), which runs the US military program at the Lugar Center in Georgia, is alleged to have already performed field tests with an unknown substance in Chechnya, Russia. In June 2017 local citizens reported on a drone disseminating white powder close to the Russian border with Georgia.


The Pentagon does have drones for powder dissemination of biological agents, according to information obtained from the US Federal contracts registry. Such field tests involving drones for bio-agent dispersion have been performed since 2012 at Dugway Proving Ground, Utah. The military facility not only produces live bio agents which includes anthrax, botulinum toxin, tularemia, etc. under the pretext of studying them, but also disseminates them though aerosol, powder and explosives, as proven in a 2012 US Army Report.

An offer for commercial work by the US Army – field tests involving bio-agents and drones can be found published on a US federal contracts website.

US Army documents and photos show that the Pentagon has developed various dissemination methods for bioterrorism attacks including by explosives.

Source: Capabilities Report 2012, West Desert Test Center
Dissemination of contaminants for biological/chemical tests (©Dugway Proving Ground)
Dissemination of simulants by explosives. (©Dugway Proving Ground)
Liquid Dissemination (©Dugway Proving Ground)
Powder Dissemination (©Dugway Proving Ground)
Dissemination on the test grid (© Dugway Proving Ground)

Besides having various military capabilities to disperse bio agents, DTRA has also full access to the Russian borders, granted under a military program called Georgia Land Border Security Project. The activities, related to this project have been outsourced to a private American company – Parsons Government Services International. Parsons has been awarded a $17.7 million contract under the Pentagon border security project in Georgia. DTRA has previously contracted Parsons for similar border security projects in Lebanon, Jordan, Libya and Syria. Interestingly, a subcontractor working on this border security project – TMC Global Professional Services, also happens to be contracted by DTRA for scientific support at the Lugar Center. The same American company – TMC, which works at the Lugar Center also carries out surveillance for WMD on the Georgian borders. The project coincides with the incident involving powder dissemination which was reported and filmed in neighbouring Chechnya close to the Georgian border.

Private contractors

The Defense Threat Reduction Agency (DTRA) has outsourced much of the work under the military program to private companies, which are not accountable to Congress, and which can operate more freely and move around the rule of law.

This e-mail for instance, dated 16 February 2018, was sent by an employee of the private Contractor, TMC Global Professional Services, on behalf of the Pentagon unit at the Lugar Center, to ask for a meeting with the Georgian Minister of Health.

TMC was awarded a $3.8 million contract in 2016 running until 2021 for support services at the Lugar Center. Interestingly, the same year the same private company was awarded another $975 million counter narcoterrorism contract by the Pentagon.  Why has a company, which works for the Pentagon on a program to counter narcotics, been concurrently given work at a military laboratory which burns chemicals at night?

Leaked documents reveal another company involved in the program in Georgia – Booz Allen Hamilton.

In June 2013, Edward Snowden — at the time a Booz Allen employee contracted to projects of the National Security Agency (NSA) — publicly disclosed details of the classified mass surveillance and data collection programs of the US around the world.

Snowden’s former employer – Booz Allen Hamilton, has been awarded five lucrative contracts by the Defense Threat Reduction Agency (DTRA) since 2010 running until 2022, totaling at least $ 358 million for intelligence support and chemical weapons agents support services. According to the company’s website it has developed a web-based platform for the Defense Threat Reduction Agency (DTRA) and the US intelligence community. The system currently holds more than 9 terabytes of intelligence data and grows by about 1.5 million records every week.

The Pentagon has spent at least $161 million on the Lugar Center in Tbilisi under a contract with the private American contractor – CH2M Hill. This is half of the total sum of $ 361.4 million that the company had been awarded to operate Pentagon bio-laboratories in Georgia, Uganda, Tanzania, Iraq, Afghanistan and South East Asia.

According to CH2M Hill, the US company has secured biological agents and employed former bio warfare scientists at The Lugar Center. These are scientists who are working for another American company involved in the military program in Georgia – Battelle Memorial Institute.

Battelle as a $59 million subcontractor at the Lugar Center has extensive experience in research on bio-agents, as the company has already worked on the US Bio-weapons Program under 11 previous contracts with the US Army in the past. Source: US Army Activities in the US, Biological Warfare Programs, vol. II, 1977, p. 82

The same company also worked for the CIA under the Project Clear Vision (1997-200) Its stated goal was to reconstruct a Soviet-era anthrax bomblet in order to test its dissemination characteristics. The clandestine CIA-Battelle operation was omitted from the US Biological Weapons Convention declarations submitted to the UN.

The inauguration of the Lugar Center in Tbilisi in 2011. Andrew C. Weber (on the right) –then US Assistant Secretary of Defense (2009-2014), US DoD Deputy Coordinator for Ebola Response (2014-2015), is currently a Metabiota ( the US contractor) employee.

The US Company Metabiota Inc. has been awarded $23.9 million in federal contractsunder the Pentagon’s DTRA program in Georgia and Ukraine for scientific and technical consulting services. Metabiota had been contracted to perform work for DTRA befor and during the Ebola crisis in West Africa and was awarded $3.2 million (2012-2015) for work in Sierra Leone at the epicenter of the Ebola outbreak.

Metabiota worked on a Pentagon’s project at the epicenter of the Ebola crisis, where three US biolabs are located.

Journalist expelled from the European Parliament for confronting US official on bioweapons

I asked US Assistant Secretary of Health Robert Kadlec for a comment during a conference on biological weapons at the European Parliament in Brussels and was immediately expelled from the conference.

Ethnic Bioweapons

Documents reveal some of the projects funded by the Pentagon. Among them projects related to Russia. The US Air Force has been specifically collecting Russian RNA and synovial tissue samples raising fears in Moscow of a covert US ethnic bio-weapons program.


The Pentagon has also studied the Russian Anthrax Strain at the Lugar Center for which Russia has a vaccine, a Russian Yersinia pestis Strain (which causes plague), as well as the Genome sequence of the Russian Crimean-Congo hemorrhagic fever virus strain.

According to the genome study, the Russian “DNA is available from Dr. Mikeljon Nikolich”. He is one of the Pentagon scientists at the Lugar Center and is tasked with genome research on strains in pathogen collections from former Soviet Union countries, as a leaked document (below) reveals.

In 2017 Pentagon scientists sequenced the genome of a Russian strain of Crimean Congo Hemorrhagic Fever (CCHF).

Leaked e-mails, between the director of the Lugar Center Amiran Gamkrelidze and the Minister of Health of Georgia David Sergeenko, also reveal an ongoing Pentagon project on Crimean Congo Hemorrhagic fever in the country.

Georgians used as laboratory rabbits

The minister’s e-mails also reveal another American project on Hepatitis C in Georgia including cases of death. The pilot study of the US Center for Disease Control in Georgia is called “Simplified Diagnostics and Monitoring of Hepatitis C Infected Patients in Rural Primary Care Settings Using Newly Approved Pan-Genotypic Antiviral Therapy”. It is designated as confidential information. The Ministry of Health of Georgia has signed an Agreement with the US Center for Disease Control and the private American pharmaceutical company Gilead. According to this agreement, the American side provides free medicines for Hepatitis C treatment. In exchange, the private American company cannot be held accountable for any damage (intentional or not) which may result from the program. The agreement is signed by David Sergeenko from the Georgian side.

Minister of Health of Georgia David Sergeenko in a Gilead drugs advertisement promoting the success of the program. (©Gilead)

Minister David Sergeenko has signed an agreement with Gilead which absolves the private American pharmaceutical company of any investigation – meaning that Gilead cannot be held accountable for any damage (intentional or not) which may result from the program.

From Paris with love

Leaked e-mails between minister Sergeenko and the US Center for Disease Control (CDC) which supports the program on Hepatitic C in Georgia reveal private meetings in Paris between the government officials and Gilead.

Confidential reports: At least 100 death cases in Georgia

Leaked confidential documents show at least 100 deaths reported to Gilead, over the last 3 years, of patients under treatment with the Gilead drugs Sovaldi and Harvoni which had been provided to them for free.

Georgians have been used as laboratory rabbits for a new Hepatitis C experimental treatment  by the private American company along with the US Center for Disease Control. Moreover, in some of the death cases reports sent to Gilead from the Georgian Ministry of Health the cause of death is indicated as unknown or not related to the treatment. 30 Georgians died during the drug clinical trials in December 2015 alone. Another 30 death cases were reported in April 2016, also in the span of only a month. It is worth noting that the drugs are neither emergency resuscitation drugs for patients in clinical death condition, nor cancer palliative drugs. Most causes of death remain obscure and some diagnoses do not correlate with the International Classification of Diseases by WHO.

A discrepancy in a 2017 death case report from the Georgian Ministry of Health to Gilead raises questions – how can a dead patient continue his treatment after his death?

30 cases of death were reported in April 2016 alone. According to the reports, however, the cause of death was not linked to the treatment or was unknown.

30 cases of death were reported in April 2016 alone. According to the reports, however, the cause of death was not linked to the treatment or was unknown

To make things worse, the US government agency has launched the ostensibly altruistic project on free medicines for the poor Georgian people in partnership with the private American company Gilead thus being in direct conflict of interest.  A financial report for 2017 reveals that the same company Gilead is among the main sponsors of the Center for Disease Control Foundation.

The biggest shareholder in Gilead is the former US Minister of Defense Donald Rumsfeld.

On 5 September 2018, the Anticorruption Department of the Georgian National Security Agency announced that it had launched an investigation into the Hepatitis C program.

The US-funded Lugar Center in Tbilisi may have been involved in illegal experiments on Georgian citizens, the country’s former security minister Igor Giorgadze has claimed, citing leaked documents he obtained. He said he managed to acquire over 100,000 pages of documents about the research done at the Richard Lugar Center.

The minister of Health of Georgia David Sergeenko did not respond to my questions. The leaked e-mails though show the minister’s reaction.

The minister has forwarded the e-mail to his press center swearing at me in Georgian: “Who the hell is she and where did she get my e-mail from?”

Coincidentally I was inexplicably locked up in the bedroom of my rented flat in Tbilisi while sleeping and was freed by Emergency services who accessed the locked room through the roof.

The police have no answer as to who had broken into the flat, locked me up and why, given that nothing had been stolen.  Probably someone does not want journalists to investigate what chemicals are secretly burnt at night in the Pentagon funded laboratory and why a private contractor on a Pentagon program to counter narcotics also happens to work at the same laboratory.

Published:9/16/2018 10:48:39 AM
[Markets] FDA keeps warning about the controversial supplement kratom, but companies keep deceptively selling it Two companies that sell wholesale quantities of kratom and claim their products can treat opioid addiction just got warnings from the FDA.
Published:9/16/2018 10:13:47 AM
[Markets] "KING OF STORMS" Devastates Hong Kong, Makes Landfall in China Sunday

On Friday, two massive storms -- Hurricane Florence and Typhoon Mangkhut -- made devastating landfall on opposite ends the world, but are leaving behind destruction in different ways. For Florence, it was mainly a rain event in the Carolinas. For Mangkhut, it was the wind that devastated the Philippines on Friday/Saturday, and now wreaking havoc in Hong Kong and southern China on Sunday.

"Storms forming in the western Pacific tend to hit with much higher winds and the people who live in their path are often poorer and more vulnerable," said Gabriel Vecchi, a Princeton University hurricane and climate scientist.

Mangkhut made landfall Friday on the northeastern part of Luzon island in the Philippines with sustained winds of 165 mph. Florence had been degraded to a Category 1 storm with 90 mph winds as it approached North Carolina’s coast.

One day after landfall, Mangkhut was over the open water — weakened but headed across the South China Sea toward China. Florence, meanwhile, unleashed record-setting rain on parts of the North Carolina coastline. Many regions in southeastern North Carolina have seen 15 to 30 inches of rain.

Weather experts say Mangkhut may end up being the deadlier storm.

Hong Kong and southern China braced for impact on early Sunday as damaging winds and heavy rain from Mangkhut collided with the densely populated coast, a day after officials confirmed 49 people dead on Luzon island.

Al Jazeera said approximately half a million people had been evacuated from seven major cities in Guangdong province of China, and the Hong Kong Observatory, a local newspaper, warned people to stay away from the coastline as massive waves and storm surges wiped out structures.

Mangkhut made landfall in Guangdong, a coastal province of southeast China, borders Hong Kong and Macau, on Sunday, packing wind speeds of more than 100 mph.

The national meteorological center said southern China "will face a severe test caused by wind and rain" and urged officials to prepare for a disaster.

The Hong Kong Observatory said Mangkhut had weakened, but its intense rainbands brought heavy downfall and high winds.

Bloomberg said 900 flights were canceled in Hong Kong on Sunday due to the typhoon, while bus and ferry services, as well as high-speed train service to the airport, had been suspended.

Hong Kong and Macau announced a rare No. 10 typhoon warning signal, the highest level on the weather threat system, as the storm battered the region on Sunday. CGTN reported that Macau’s main attraction, local casinos, were ordered by the government to close for the first time in history.

Incredible footage of the storm surfaced on social media showing fierce winds throwing people to the ground, swaying buildings, smashed windows and severe flooding.

“It swayed for quite a long time, at least two hours. It made me feel so dizzy,” said Elaine Wong, who lives in a high-rise tower in Kowloon.

“It’s the worst I’ve seen,” resident Martin Wong told Reuters. “I’ve not seen the roads flood like this, (and) the windows shake like this, before.”

Twitter user Jen Zhu tweeted: "When the warning says stay inside, stay inside."

The amount of footage circulating on social media is impressive. Some videos show destructive winds tearing off roofs and parts of buildings in Hong Kong and nearby areas. Hong Kong is basically shut down, and in Shenzhen, some 12 or so miles away, several small buildings were swept away.

Downtown Hong Kong on early Sunday looked like a scene from an apocalyptic movie.

Massive twister spotted somewhere in Hong Kong

The damage is unreal 

The typhoon, dubbed the “King of Storms” by Chinese media, shut down ports, oil refineries and industrial plants in the region. Government officials had reduced power on the grid as a precaution. In Shenzhen, electricity supply to more than 130,000 homes was cut on Sunday.

Further inland, the storm fueled concerns about sugar production in Guangdong, which accounts for about 10 percent of national output. China sugar futures jumped last week on worries for the cane crop could get wiped out. The region is also China’s most populated province, with a population of more than 100 million.

The Shenzhen airport, shut since Saturday, will be closed on Monday. Flights have also been canceled in Guangzhou and the island of Hainan, China’s southernmost province.

Bloomberg showed scenes of crashing waves, innundated streets and trees half-bent by the strong winds as Mangkhut unleashed hell.

As one Twitter user summed up the disasters, Keynesians are going to have a field day with the next round of credit injections for storm-struck regions in Hong Kong, China, and the US. Paul Krugman could not have been happier with the developments at play...

Published:9/16/2018 10:13:47 AM
[Markets] BCA: The "Bubble In Everything" Threatens $400 Trillion In Assets

By now, it's a very familiar question: how high can the Fed hike rates before it causes a major market "event."

Two weeks ago, Stifel analyst Barry Banister became the latest to issue a timeline on how many more rate hikes the Fed can push through before the market is finally impacted. According to his calculations, just two more rate hikes would put the central bank above the neutral rate - the interest rate that neither stimulates nor holds back the economy. The Fed's long-term projection of its policy rate has risen from 2.8% at the end of 2017 to 2.9% in June. As the following chart, every time this has happened, a bear market has inevitably followed.

A similar argument was made recently by both Deutsche Bank and Bank of America, which in two parallel analyses observed last year that every Fed tightening cycle tends to end in a crisis.

Now, it's the turn of BCA research to warn that ultimately the fate of risk assets depends on the relative size of the inflationary impulse being spawned by the Fed vs the remnant disinflationary impulse from monetary policies over the past decade.

In a report issued on Friday, BCA's strategists make the key point that the performance of bonds - and stocks - in an inflation scare would depend on the relative size of the inflationary impulse compared with the disinflationary impulse that resulted from sharply lower risk-asset prices.

They make the point that if central banks were more concerned about the inflationary impulse, which at least for Fed chair Powell appears to be the case for now - Janet Yellen's "lower for longer revised forward guidance" notwithstanding - they would have to keep tightening - in which case, bond yields would be liberated to reach elevated territory. Conversely, if the bigger worry was the disinflationary impulse, which arguably is the case from a legacy standpoint, central banks would quickly reverse course, and bond yields would return to the lowlands. Thus, the disinflationary impulse from lower risk-asset prices would end up as the bigger issue.

BCA then goes on to note that the current episode of elevated risk-asset valuations is not unprecedented, but there is a crucial difference today with past experiences. Previous episodes of elevated risk-asset valuations tended to be localized, either by geography or sector: 1990 was focused in Japan; 2000 was focused in the dot-com related sectors; 2008 was focused in the U.S. mortgage and credit markets and preceded the emerging market credit boom.

By comparison, BCA warns - echoing a point made here on numerous occasions - the post-2008 global experiment with quantitative easing, and zero and negative interest rate policies have boosted the valuations of all risk-assets across all geographies and all asset-classes - global equities (see chart), global credit, and global real estate. The "bubble in everything" as some call it.

This broader overvaluation makes things "considerably more dangerous" for investors, as BCA estimates that the total value of global risk-assets is $400 trillion, equal to about five times the size of the global economy.

The takeaway is that any inflationary impulse would - through higher bond yields - undermine the valuation support of global risk-assets that are worth several times the size of the global economy. Thereby, it could unleash a potentially much larger disinflationary impulse. Or stated simply, the higher yields go, the lower they will eventually drop during what Albert Edwards has dubbed the next deflationary "ice age."

Published:9/16/2018 9:35:29 AM
[Markets] Police Stumped In Search For Missing Wikileaks-Linked Cybersecurity Expert

Nobody has heard from cybersecurity expert and occasional Wikileaks collaborator Arjen Kamphuis since he checked out of his hotel in Bodo, Norway one month ago.

In the intervening weeks, items purportedly belonging to Kamphuis, including his ID and a recently purchased kayak, were discovered by a local fisherman 50 kilometers from his hotel. While this would at first seem to suggest some type of fatal accident, in a strange twist, authorities say that both Kamphuis' work and mobile phones were briefly switched on more than 1,700 km from Bodo 10 days after Kamphuis - who is Dutch and was purportedly traveling back to Amsterdam when he disappeared - was seen leaving his hotel.


But despite authorities best efforts, there are still more questions than answers, as the Guardian makes clear in a story about Kamphuis' disappearance. Though police have suspiciously insisted that Kamphuis' disappearance had nothing to do with the fact that Bodo houses a Norwegian military airbase, or that the country's secret cyber defense operations were situated not far from where Kamphuis was staying. 

Police have denied any connection between Kamphuis’s disappearance and the fact that Bodø houses a Norwegian military airbase, and that buried deep inside a nearby mountain is a major part of the Scandinavian country’s secret cyber defence operations.

With an internet campaign using the hashtag #FindArjen to locate him, unconfirmed sightings of Kamphuis have also been reported in Sweden, Denmark, Germany and several parts of Norway.

To the consternation of Kamphuis' friends and family, who are apparently hoping that he merely decided to take a break from society for a little while, Wikileaks has ratcheted up suspicion by floating several theories and highlighted several suspicious developments, including the fact that the Norwegian military have reportedly joined the search.

The grassroots campaign to find him has been spread with the help of the hashtag #FindArjen.

As rumors and speculation about his disappearance intensify, Kamphuis' loved ones have pushed back against so-called conspiracy theories that he may have been on a secret mission on behalf of Wikileaks, or that he may have been targeted by Russian or Western intelligence. Meanwhile, unconfirmed sightings have been reported in Germany, Denmark and Norway.

Officially, Norwegian police believe his disappearance could be linked to one of three possibilities.

Police said on Thursday they were "holding all possibilities open in respect to what might have happened" to Kamphuis and pursuing three distinct lines of inquiry: a "voluntary disappearance" including a possible suicide; an accident; or foul play.

Some of Kamphuis' friends told the Guardian that he has gone "off the grid" before, and that they remain hopeful that he will surface when he feels ready.

Carlo said Kamphuis had "gone off grid before. It can be good for the soul. I was worried before, and it is worrying now. But I have strong faith he will come back into the welcoming arms of his friends when he is ready, in his own time." Van der Leest told Dutch radio that while Kamphuis "certainly didn’t come across as someone who was planning to be away for a long time. He had lots of appointments."

Though reports that he purchased a kayak and told a salesperson that he was heading to the Norwegian fjords have left many concerned that he may have encountered some trouble while he was out.

Dutch police have said Kamphuis bought a foldable kayak before leaving the Netherlands, telling the salesman who sold it to him that he was planning on going canoeing in the fjords.

Other friends said Kamphuis was no daredevil. "If he’s heading into dangerous territory, he always seeks out company," Helma de Boer told NRC Handelsblad. "And he always has good equipment. His motto is: 'better safe than sorry.'"

Still, it's worth considering that Kamphuis has helped Wikileaks and many other organizations - some controversial, some not - thwart intelligence agencies and other prying organizations. That type of work could help a man make enemies who are both motivated and resourceful (doubly so if he was caught doing some unauthorized snooping). Then again, there's also the possibility that he may have tried to fake his own death - leaving his possessions in the water on purpose to convince authorities that he drowned. But one would think that such a talented cybersecurity engineer would understand the risks of using his phone.

On the other hand, if he was engaged in some type of clandestine errand, why draw more attention to himself by continuing to make daily headlines?

Published:9/16/2018 9:12:38 AM
[Markets] Greece: "Humanitarian Aid" Organization's People-Smuggling

Submitted by Maria Polizoidou of Gatestone Institute

  • Emergency Response Centre International (ERCI) describes itself as a "Greek nonprofit organization that provides emergency response and humanitarian aid in times of crisis...." It has reportedly abetted the illegal entry into Greece of 70,000 immigrants since 2015, providing the "nonprofit" with half a billion euros per year.

  • ECRI evidently received 2,000 euros from each illegal immigrant it helped to enter Greece. In addition, its members created a business for "integrating refugees" into Greek society, granting it 5,000 euros per immigrant per year from various government programs (in education, housing and nutrition).

  • With the government of Greece seemingly at a loss as to how to handle its refugee crisis and safeguard the security of its citizens, it is particularly dismaying to discover that the major NGO whose mandate is to provide humanitarian aid to immigrants is instead profiting from smuggling them.

Migrants arrive at a beach on the Greek island of Kos after crossing part of the Aegean sea from Turkey in a rubber dinghy, on August 15, 2015. (Photo by Milos Bicanski/Getty Images)

On August 28, thirty members of the Greek NGO Emergency Response Centre International (ERCI) were arrested for their involvement in a people-smuggling network that has been operating on the island of Lesbos since 2015. According to a statement released by Greek police, as a result of the investigation that led to the arrests, "The activities of an organised criminal network that systematically facilitated the illegal entry of foreigners were fully exposed."

Among the activities uncovered were forgery, espionage and the illegal monitoring of both the Greek coastguard and the EU border agency, Frontex, for the purpose of gleaning confidential information about Turkish refugee flows. The investigation also led to the discovery of an additional six Greeks and 24 foreign nationals implicated in the case.

ERCI describes itself as:

"[A] Greek nonprofit organization that provides emergency response and humanitarian aid in times of crisis. ERCI's philosophy is to identify the gaps of humanitarian aid and step in to assist in the most efficient and impactful manner. Currently ERCI has 4 active programs working with refugees in Greece in the areas of Search and Rescue, Medical, Education and Refugee Camp Coordination."

In spite of its stated mission and non-profit profile, however, ECRI -- according to Greek authorities, has earned considerable sums of money from its serving as a conduit for illegal activities. ECRI evidently received 2,000 euros from each illegal immigrant it helped to enter Greece. In addition, its members created a business for "integrating refugees" into Greek society, granting it 5,000 euros per immigrant per year from various government programs (in education, housing and nutrition). ERCI has reportedly abetted the illegal entry into Greece of 70,000 immigrants since 2015, providing the "non-profit" with half a billion euros per year.

This revelation, however, does not begin to cover the extent of the illegal activities surrounding the entry of migrants into Greece. In 2017, for instance, Greek authorities arrested 1,399 people-smugglers, some under the cover of "humanitarian" operations; and during the first four months of 2018, authorities arrested 25,594 illegal immigrants.

More worrisome than the literally steep price paid to people-smugglers by the immigrants themselves -- or that doled out by the Greek government in the form of integration subsidies -- is the toll the situation is taking on Greek society as a whole.

According to Greek police statistics, there were 75,707 robberies and burglaries reported in 2017. Of these cases only 15,048 were solved, and 4,207 were committed by aliens. In addition, the police estimate that more than 40% of serious crimes were committed by illegal immigrants. (Legal and illegal immigrants in Greece make up 10-15% of the total population.)

In 2016, Greek prisons reportedly contained 4,246 Greeks and 5,221 foreigners convicted of serious crimes: 336 for homicide; 101 for attempted homicide; 77 for rape; and 635 for robbery. In addition, thousands of cases are still pending trial.

In a recent heart-wrenching case on August 15, a 25-year-old college student from Athens -- on a visit home from his studies at a university in Scotland -- was murdered by three illegal immigrants while he was out touring the city with a female friend from Portugal.

The three perpetrators, two Pakistanis and an Iraqi ranging in age from 17 to 28, told police that they first attacked the young woman, stealing money, credit cards, a passport and a cell phone from her purse, but when they realized that her phone was "old," they went for the young man's phone, threatening him with a knife. When he tried to fend them off, they said in their confession, they shoved him and he fell off a cliff to his death. After the interrogation, it transpired that the three killers were wanted for 10 additional robberies in the area.

In an angry letter to Greek Prime Minister Alexis Tsipras, members of parliament and the mayor of Athens, the mother of the victim accused Tsipras of "criminal negligence" and "complicity" in her son's murder.

"Instead of welcoming and providing "land and water" to every criminal and dangerous individual with savage instincts," she wrote, "should the state not think first of the safety of its own citizens, whose blood it drinks daily [economically]? [Should the state] abandon [its citizens] to ravenous gangs, for whom the worth of a human life has less meaning than the value of a cell phone or a gold chain?"

Although those were the words of a grieving mother, they are sentiments widely felt and expressed throughout Greece, where such incidents are increasingly common.

On August 29, two weeks after that murder, six immigrants in northern Greece verbally assaulted a 52-year-old man on the street, apparently for no reason. When he ignored them and kept walking, one of them stabbed him in the shoulder blade with a 24-cm (9.4-inch) knife, landing him in the hospital.

Two days earlier, on August 27, approximately 100 immigrants, protesting the living conditions in their camp in Malakasa, blocked the National Highway for more than three hours. Drivers stuck on the road said that some of the protestors went on a rampage, bashing cars with blocks of wood. To make matters worse, police on the scene said that they had not received instructions from the Ministry of Citizen Protection to clear the highway or protect the victims. Gatestone was told upon further queries, that there was no official statement from the police or the ministry, just the drivers' statements.

With the government of Greece seemingly at a loss as to how to handle its migrant crisis and safeguard the security of its citizens, it is particularly dismaying to discover that the major NGO whose mandate is to provide humanitarian aid to immigrants is instead profiting from smuggling them. The recent arrest of ERCI members underscores the need to scrutinize all such organizations.

Maria Polizoidou, a reporter, broadcast journalist, and consultant on international and foreign affairs, is based in Greece. She has a post-graduate degree in "Geopolitics and Security Issues in the Islamic complex of Turkey and Middle East" from the University of Athens.

Published:9/16/2018 8:23:23 AM
[Markets] How to tell if your future boss is a narcissist Brain teaser questions in interviews are associated with certain ‘dark traits.’
Published:9/16/2018 8:23:23 AM
[Markets] Mnuchin Lists Park Ave. Apartment For $33 Million, Three Times What He Paid For It

No sooner did we report that the housing "recovery" over the last 10 years has skipped many "underwater" communities in the United States, than we found confirmation of the opposite: Treasury Secretary Steve Mnuchin is selling his Park Avenue apartment in Manhattan for three times the price that his aunt paid for it 18 years ago. He has listed the apartment for $32.5 million. His Aunt is listed as the broker on the sale. 

The sale is happening at the same time that residents of numerous commuter towns across the United States have seen the values of their houses collapse to less than half of what they were in 2006, prior to the housing crisis.

Mnuchin recently listed the 6500 square-foot, 12 room apartment that he bought from his aunt in 2000. It was purchased then for just $10.5 million. It had been in his family since the 1960s and, when he turns around to list the property this time, he stands to net $22 million more than what he paid for it, if his asking price is met.

The apartment is being listed by Warburg Realty and is located inside of 740 Park Ave., inside the historic Rosario Candela building. Other famous former tenants of this building include the Rockefellers and the Kochs. Currently, Stephen Schwarzman, the CEO of Blackstone Group, lives there. The building was developed by Jacqueline Kennedy Onassis' grandfather.

Other than that, it’s just your average ordinary run of the mill apartment on Park Avenue: five bedrooms, a wall wood paneled library, a wet bar, a formal dining room, a private elevator, 11 foot ceilings, marble floors and a sweeping spiraling staircase that still has its original banister.

The first floor of the apartment has six bathrooms and an 800 square-foot living room.

Upstairs, the apartment has a master suite, walk-in cupboards, study, two more bathrooms and three extra bedrooms. The apartment spans two levels in the building on both the eighth and the ninth floor and it also has a large kitchen with a "breakfast nook".

While that all seems extremely glamorous, Mnuchin hasn’t even used this apartment as his main residence, reportedly. Mnuchin was living in California before his appointment to the Trump administration, but has since bought a $12.6 million apartment in Washington DC.

We're glad to hear that Mnuchin was able to ride out the housing crisis successfully. We were worried about him for a moment.

Published:9/16/2018 7:36:09 AM
[Markets] 3 Things to Watch in the Stock Market This Week FedEx is one of several big-name stocks set to announce earnings results over the next few trading days. Published:9/16/2018 6:50:38 AM
[Markets] Economic Preview: Vibrant U.S. economy should weather Hurricane Florence with just a blip The damage caused by hurricane Florence could muddy the picture on the economy in the next month or two, but make no mistake: The U.S. is still growing rapidly and little is standing in its way.
Published:9/16/2018 5:55:24 AM
[Markets] This Iowa city forged an unusual friendship with China and its president. Then came the soybean tariffs. The U.S.-China trade war causes angst in Muscatine, which has long celebrated its bond with Xi Jinping. Published:9/15/2018 10:40:23 PM
[Markets] NewsWatch: These 4 called the last financial crisis. Here’s what they see causing the next one Leverage. Low-quality debt. The warning signs are there.
Published:9/15/2018 10:40:22 PM
[Markets] Martin Armstrong Asks: "Will Global Warming Sink the Netherlands?"

Submitted by Armstrong Economics

A friend of mine was taking a class in geography in university for the credits. The professor was all about brainwashing the class about Global Warming. The pitch was that with reducing air pollution from cars, it would be possible to save the Netherlands otherwise the seas will rise and the country will vanish from the face of the earth.

I find it really incredible how these people promote that everything on the planet is somehow our fault. Most of the ancient city of Alexandria, Egypt, from the time of Cleopatra is under water. Sure, that must have been caused by too many chariots in rush hour and the farting of horses like cows that the EU regulates.

Then there is the discovery of ancient sea fossils in the middle of Australia which shows that obviously, Australia was once under water. Dinosaur-age fossilized remains of extremely tiny organisms that are found in the sea have been discovered in the center of the arid Australian desert. This confirms that this area was, at least for a short time, under by sea water some 40 million years before Australia’s large inland sea existed.

I grew up in New Jersey. One of the few memories I have as a child was going down to the clay pits with the boys in search of dinosaurs since they had found one in the area. Sort of a pre-Indiana Jones excursion. But they also found ancient sea creatures in the area. During the Precambrian period, New Jersey was covered by a shallow sea that was home to stromatolite forming bacteria. During the early part of the Paleozoic, New Jersey was still under water. Fossils of various sea creatures were discovered in New Jersey. The state was home to creatures like brachiopods and trilobites. By the Silurian period, the northern part of the state was home to a river system. Sea levels rose and fell throughout the remainder of the state’s Paleozoic rock record long before people existed. There are no local rocks of Carboniferous or Permian age and then during the Triassic, the state became a terrestrial ecoregion. Then there were local lakes which became the home to various crustaceans. On land, dinosaurs left behind footprints and continued to do so into the Jurassic period. Much of the state was covered by sand which became known as the Pinelands.

The rise and fall of land have been going on for millions of years. It is part of the ecosystem itself and we are a bunch of narcissists to think that we are somehow even capable of changing the climate. We are no more than a flea on the back of a dog that can be shaken off when we become too annoying. When my friend texted me what the professor said that if we stopped driving our cars we could save the Netherlands, I texted back the ancient source I had read back in school.

There was a Greek geographer and explorer by the name of Pytheas of Massalia, but no copies of this work have survived. Nonetheless, we have others who have quoted Pytheas who recorded an account of the Low Countries, or what we call the Netherlands.  Pytheas passed the Low Countries on his way to Heligoland around c. 325 BC.  He wrote that “more people died in the struggle against water than in the struggle against men”. This is our earliest account of the region. Then we have the Roman author Pliny from the 1st century AD who wrote:

There, twice in every twenty-four hours, the ocean’s vast tide sweeps in a flood over a large stretch of land and hides Nature’s everlasting controversy about whether this region belongs to the land or to the sea. There these wretched peoples occupy high ground, or manmade platforms constructed above the level of the highest tide they experience; they live in huts built on the site so chosen and are like sailors in ships when the waters cover the surrounding land, but when the tide has receded they are like shipwrecked victims. Around their huts they catch fish as they try to escape with the ebbing tide. It does not fall to their lot to keep herds and live on milk, like neighboring tribes, nor even to fight with wild animals, since all undergrowth has been pushed far back.

Going back about 2,000 years ago, much of the Netherlands was covered by extensive peat swamps. The coastal dunes formed a natural embankment which prevented the swamps from draining. The first inhabitants were attracted to the rich soil compared to the peat swamps and sandy soil. They appear to have begun to protect themselves against floods by constructing their homes on artificial hills they created of which Pliny wrote about. Archeological evidence suggests that there was a cycle to the region between 500BC and 700AD where there were periods of habitation and abandonment as the sea level rose and fell.

It was not until the 9th century when the sea level rose again which forced people to raise their artificial hills higher. These small hills began to be connected forming villages and they began to construct dikes when communities could act in unison. It was not until after 1000AD that the population began to grow dramatically. This created more labor but a demand for more land. This is when we see the construction of dikes become more widespread. By 1250 most dikes had been connected into a continuous sea defense.

The Edict of Expulsion was a royal decree issued by King Edward I (1272-1307) of England on July 18th, 1290, expelling all Jews from the Kingdom of England. Why? The Jews were the king’s personal property, and he was free to tax them at will whereas British citizens could not be taxed without their consent which was obtained from Parliament. Edward I borrowed extensively from the Jews and taxes them to the point that they were no longer a source of revenue. He then expelled them and they were not allowed to take their property so it was the final confiscation to fund his war with France. Meanwhile, it was Philip IV (1268-1314AD) of France who seized the Knights Templar, the Catholic Church moving it to Avignon installing a French Pope, and confiscating the assets of Italian bankers who were lending money to Edward I. This greed for taxation contributed to the first migration of the Jews to the Low Countries.

Sephardic Spanish Jews had once constituted one of the largest and most prosperous Jewish communities in the world and were regarded as the unquestioned leader of the Jewish world. During this period Sephardic Spanish Jews ended definitively with the anti-Jewish riots of 1391 about 100 years after the 1290 expulsion from England. Then about 100 years later, there was in Spain the Alhambra Decree of 1492 against the Jews. It seems that every time society could not repay the Jewish bankers,  the borrowers suddenly discovered they were OMG Jewish. Consequently, the majority of Jews in Spain around 200,000 converted to Catholicism after the Alhambra Decree. Those who refused were forced into exile and migrated to the Netherlands where they began insurance and trading of commodities, bonds, and stocks in Amsterdam.

So to me, to even listen to some university professor claim that we can save the Netherlands by reducing CO2, I just cannot believe we have such idiots who know nothing and ignore history entirely while professing to students what amounts to just propaganda. And they want tens of thousands of dollars annually per student to be brainwashed. Unbelievable! Tell a lie often enough, it become a fact and then truth.

Published:9/15/2018 10:40:21 PM
[Markets] What happened when N.C. cut taxes like the GOP wants to do for the whole nation The tax changes in North Carolina have produced neither a fiscal calamity nor a win-for-all economic prosperity. Instead, the state has simply had the same growth as much of the country. Published:9/15/2018 3:22:22 AM
[Markets] U.S. stocks notch weekly gain but finish Friday session little-changed U.S. stocks notch weekly gain but finish Friday session little-changed Published:9/15/2018 3:22:22 AM
[Markets] US Market Indexes Close With Weekly Gains Dow Jones closes at 26,154.67 on Friday Published:9/15/2018 3:22:21 AM
[Markets] For Canadian marijuana investors, coming to U.S. is a ‘crapshoot’ that can end in lifetime ban Visiting the U.S. is a “crapshoot” that could lead to a lifetime ban for foreign nationals who are invested or work in the Canadian marijuana industry, which could hurt the booming sector, immigration lawyers said Friday.
Published:9/15/2018 3:22:21 AM
[Markets] Politicians Warn Spy Chief: There Is A New Threat Called "Deep Fakes"

Authored by Mac Slavo via,

United States politicians are coming up with some wonderful descriptive terms to help use fear to get more restrictive laws passed.  Now lawmakers are warning the spy chief of a real threat called the “deep fakes.”

Thanks to modern technology, the U.S. government ruling class now has another scary fear-mongering problem they are dubbing “deep fakes.”

Technology has reached a point where people can now create near-perfect faked videos of people saying things they never actually said, reported Tech Crunch. “Deep fakes” use existing footage mixed with artificial intelligence and machine learning to be made to look like, or at least come close to, the real thing.

Who else can see the writing on the wall and believes this could be nothing more than a fear mongering attempt to cull free speech even more? Politicians are always looking for reasons to remove rights from others, so it makes sense that they ‘d make a huge deal out of people being able to make realistic videos.  The fight to remain relevant as a politician has begun.

US lawmakers are so worried about these faked videos that they now claim they can be “used by the enemy to harm national security.” Yet, unsurprisingly, one of the first uses of deep fake videos was for porn. Creators would make videos by superimposing faces onto the bodies of others.  The real issue to the political elites though is scaring the public over “national security.”

Lawmakers think that deep fakes could be used as part of wider disinformation campaigns in an effort to sway elections or spread false news.  There it is... the fake news shadow. It isn’t the disinformation they care about, its that people just might be able to figure out for themselves who is oppressing them (hint: it isn’t Russia.)

“Deep fakes could become a potent tool for hostile powers seeking to spread misinformation,” wrote Representative Adam Schiff, the ranking Democrat on the House Intelligence Committee, in a letter to Dan Coats, the director of national intelligence.

“As deep fake technology becomes more advanced and more accessible, it could pose a threat to United States public discourse and national security, with broad and concerning implications for offensive active measures campaigns targeting the United States,” said the letter, co-signed by Representatives Stephanie Murphy (D-FL) and Carlos Curbelo (R-FL). 

If you guessed that the government is more likely than not going to use this as an excuse to continue to kill free speech, you’d most likely be correct.

Schiff, Murphy, and Curbelo want the director of national intelligence (who oversees the nation’s intelligence community) to report back on its assessment of how deep fake technology could harm national security interests, reported Tech Crunch.  They want to know if there are countermeasures (laws, regulations, and the reduction of freedom) to protect against “foreign influence.” The DNI’s office was asked to report back to Congress by mid-December.

Published:9/15/2018 3:22:20 AM
[Markets] Global Markets: Asian shares rise as China and U.S. weigh fresh talks Asian shares nudged higher on Friday as moves by the United States and China to resolve a bitter trade dispute and a sharp interest rate hike in crisis-hit Turkey supported global risk appetite. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.4 percent in early trade, following gains on Wall Street overnight. Australian shares were up 0.5 percent, while Japan's Nikkei stock index gained 0.9 percent. Published:9/13/2018 10:21:47 PM
[Markets] On The Brink With Russia In Syria Again, 5 Years Later

Authored by Ray McGovern via,

The New York Times, on September 11, 2013, accommodated Russian President Vladimir V. Putin’s desire “to speak directly to the American people and their political leaders” about “recent events surrounding Syria.”

Putin’s op-ed in the Times appeared under the title: “A Plea for Caution From Russia.” In it, he warned that a military “strike by the United States against Syria will result in more innocent victims and escalation, potentially spreading the conflict far beyond Syria’s borders … and unleash a new wave of terrorism. … It could throw the entire system of international law and order out of balance.”

Three weeks before Putin’s piece, on August 21, there had been a chemical attack in the Damascus suburb of Ghouta and Syrian President Bashar al-Assad was immediately blamed. There soon emerged, however, ample evidence that the incident was a provocation to bring direct U.S. military involvement against Assad, lest Syrian government forces retain their momentum and defeat the jihadist rebels.

In a Memorandum for President Barack Obama five days before Putin’s article, on September 6, the Veteran Intelligence Professionals for Sanity (VIPS) had warned President Barack Obama of the likelihood that the incident in Ghouta was a false-flag attack.

Despite his concern of a U.S. attack, Putin’s main message in his op-ed was positive, talking of a growing mutual trust:

“A new opportunity to avoid military action has emerged in the past few days. The United States, Russia and all members of the international community must take advantage of the Syrian government’s willingness to place its chemical arsenal under international control for subsequent destruction. Judging by the statements of President Obama, the United States sees this as an alternative to military action. [Syria’s chemical weapons were in fact destroyed under UN supervision the following year.]

“I welcome the president’s interest in continuing the dialogue with Russia on Syria. We must work together to keep this hope alive … and steer the discussion back toward negotiations. If we can avoid force against Syria, this will improve the atmosphere in international affairs and strengthen mutual trust … and open the door to cooperation on other critical issues.”

Obama Refuses to Strike

In a lengthy interview with journalist Jeffrey Goldberg published in The Atlantic much later, in March 2016, Obama showed considerable pride in having refused to act according to what he called the “Washington playbook.”

Clapper (far right): No slam dunk Assad did it. (Office of DNI)

He added a telling vignette that escaped appropriate attention in Establishment media. Obama confided to Goldberg that, during the crucial last week of August 2013, National Intelligence Director James Clapper paid the President an unannounced visit to caution him that the allegation that Assad was responsible for the chemical attack in Ghouta was “not a slam dunk.”

Clapper’s reference was to the very words used by former CIA Director George Tenet when he characterized, falsely, the nature of the evidence on WMD in Iraq while briefing President George W. Bush and Vice President Dick Cheney in December 2002. Additional evidence that Ghouta was a false flag came in December 2016 parliamentary testimony in Turkey.

In early September 2013, around the time of Putin’s op-ed, Obama resisted the pressure of virtually all his advisers to launch cruise missiles on Syria and accepted the Russian-brokered deal for Syria give up its chemical weapons. Obama follow public opinion but had to endure public outrage from those lusting for the U.S. to get involved militarily. From neoconservatives, in particular, there was hell to pay.

Atop the CNN building in Washington, DC, on the evening of September 9, two days before Putin’s piece, I had a fortuitous up-close-and-personal opportunity to watch the bitterness and disdain with which Paul Wolfowitz and Joe Lieberman heaped abuse on Obama for being too “cowardly” to attack.

Five Years Later

In his appeal for cooperation with the U.S., Putin had written these words reportedly by himself:

“My working and personal relationship with President Obama is marked by growing trust. I appreciate this. I carefully studied his address to the nation on Tuesday. And I would rather disagree with a case he made on American exceptionalism, stating that the United States’ policy is ‘what makes America different. It’s what makes us exceptional.’ It is extremely dangerous to encourage people to see themselves as exceptional, whatever the motivation. There are big countries and small countries, rich and poor, those with long democratic traditions and those still finding their way to democracy. Their policies differ, too. We are all different, but when we ask for the Lord’s blessings, we must not forget that God created us equal.”

In recent days, President Donald Trump’s national security adviser, John Bolton, has left no doubt that he is the mascot of American exceptionalism. Its corollary is Washington’s “right” to send its forces, uninvited, into countries like Syria.

“We’ve tried to convey the message in recent days that if there’s a third use of chemical weapons, the response will be much stronger,” Bolton said on Monday. “I can say we’ve been in consultations with the British and the French who have joined us in the second strike and they also agree that another use of chemical weapons will result in a much stronger response.”

As was the case in September 2013, Syrian government forces, with Russian support, have the rebels on the defensive, this time in Idlib province where most of the remaining jihadists have been driven. On Sunday began what could be the final showdown of the five-year war. Bolton’s warning of a chemical attack by Assad makes little sense as Damascus is clearly winning and the last thing Assad would do is invite U.S. retaliation.

Haley: Already knows who did it. (UN Photo)

U.S. Ambassador to the UN, Nikki Haley, with remarkable prescience, has already blamed Damascus for whatever chemical attack might take place. The warnings of direct U.S. military involvement, greater than Trump’s two previous pin-prick attacks, is an invitation for the cornered jihadists to launch another false-flag attack to exactly bring that about.

Sadly, not only has the growing trust recorded by Putin five years ago evaporated, but the likelihood of a U.S.-Russian military clash in the region is as perilously high as ever.

Seven days before Putin’s piece appeared, citizen Donald Trump had tweeted: “Many Syrian ‘rebels’ are radical Jihadis. Not our friends & supporting them doesn’t serve our national interest. Stay out of Syria!”

In September 2015 Trump accused his Republican primary opponents of wanting to “start World War III over Syria. Give me a break. You know, Russia wants to get ISIS, right? We want to get ISIS. Russia is in Syria — maybe we should let them do it? Let them do it.”

Last week Trump warned Russian and Syria not to attack Idlib. Trump faces perhaps his biggest test as president: whether he can resist his neocon advisers and not massively attack Syria, as Obama chose not to, or risk the wider war he accused his Republican opponents of fomenting.

*  *  *

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Published:9/13/2018 10:21:47 PM
[Markets] US Biological Warfare Program In The Spotlight Again

Authored by Peter Korzun via The Strategic Culture Foundation,

This is a scoop to bring the US biological warfare effort back into the spotlight. On Sept. 11, Russian media reported that the Richard Lugar Center for Public Health Research laboratory, a research facility for high-level biohazard agents located near Tbilisi, Georgia, has used human beings for conducting biological experiments.

Former Minister of State Security of Georgia Igor Giorgadze said about it during a news conference in Moscow, urging US President Donald Trump to launch an investigation. He has lists of Georgians who died of hepatitis after undergoing treatment in the facility in 2015 and 2016. Many passed away on the same day. The declassified documents contain neither the indication of the causes of deaths nor real names of the deceased. According to him, the secret lab run by the US military was established during the tenure of former Georgian President Mikheil Saakashvili. The viruses could spread to neighboring countries, including Russia, Igor Giorgadze warned.

The laboratory’s work is tightly under wraps. Only US personnel with security clearance have access to it. These people are accorded diplomatic immunity under the 2002 US-Georgia Agreement on defense cooperation.

Eurasia Review reported that in 2014 the Lugar Center was equipped with a special plant for breeding insects to enable launching the Sand Fly project in Georgia and the Caucasus. In 2014-2015 years, the bites of sand flies such as Phlebotomins caused a fever. According to the source, “today the Pentagon has a great interest to the study of Tularemia, also known as the fever of rabbits, which is also equated with biological weapons. Distributors of such a disease can be mites and rodents”.

It makes remember the statement made by Nikolai Patrushev, Head of Russia's Security Council, in 2015. He warned about the threat stemming from biological weapons laboratories that operate on the territories of the Commonwealth of Independent States (CIS). He specifically mentioned the Richard G. Lugar Center in Georgia.

The US has bio laboratories in 25 countries across the world, including the post-Soviet space. They are funded by the Defense Threat Reduction Agency (DTRA). Foreign inspectors are denied access to them. It should be noted that independent journalist investigations have been made public to confirm the fact that the US military conducts secret research to pose a threat to environment and population. Jeffrey Silverman, an American journalist who has lived in Georgia for many years, is sure the Richard Lugar Center, as well as other labs, is involved in secret activities to create biological weapons. Georgia and Ukraine have been recently hit by mysterious disease outbreaks, with livestock killed and human lives endangered. The US military operates the Central Reference Laboratory in Kazakhstan since 2016. There have public protests against the facility.

In 2013 a Chinese Air Force Colonel Dai Xu accused the US government of creating a new strain of bird flu now afflicting parts of China as a biological warfare attack. According to him, the American military released the H7N9 bird flu virus into China in an act of biological warfare. It has been reported that the source of Ebola virus in West Africa were US bio-warfare labs.

Russian experts do not exclude the possibility of using a stink-bug by the US military as a biological weapon. A couple of years ago, mosquitoes with Zika virus have been spotted in Russia and South Ossetia to cause outbreaks of human and animal flu.

The US activities violate the Biological Weapons Convention (BWC), a legally binding treaty that outlaws biological arms. It effectively prohibits the development, production, acquisition, transfer, retention, stockpiling and use of biological and toxin weapons and is a key element in the international community’s efforts to address the proliferation of weapons of mass destruction. In force since 1975, the convention has 181 states-parties today. The BWC reaffirms the 1925 Geneva Protocol, which prohibits the biological weapons use. In 1969, US President Richard Nixon formally ended all offensive aspects of the US biological warfare program. In 1975, the US ratified both the 1925 Geneva Protocol and the BWC.

Negotiations on an internationally binding verification protocol, which would include on-site inspections by an independent authority to the BWC, took place between 1995 and 2001. The US did not sign up. Its refusal to become a party to the verification mechanisms makes any attempt to enhance the effectiveness of the BWC doomed. A Review Conference is held every five years to discuss the convention’s operation and implementation. The last one, which convened in November 2016, was a frustration with minimal agreement on the final document and no substantive program of work to do before the next event takes place in 2021. There is little hope the BWC will ever be strengthened to have teeth. With no verification mechanism, the US military bio-warfare labs will always be a matter of concern. The issue is serious enough to be included into global security architecture. The UN General Assembly is the right place to raise it. Its 73rd session will open on September 18. 

Published:9/13/2018 9:51:51 PM
[Markets] Outside the Box: Salesforce is finally getting some real competition — and it’s from Microsoft Investors are bullish on Salesforce, but don’t overlook the inroads Microsoft is making.
Published:9/13/2018 9:21:30 PM
[Markets] Catastrophe Bondholders Panic As Insurers' Models Failed To Predict Hurricane Florence

Though it's still more than 500 mile out from the US coastline, Hurricane Florence is already pummeling the financial models that insurance companies - not to mention the investors who help capitalize insurers - use to price risk. Because of this, institutional and retail holders of so-called "catastrophe bonds" could brook huge losses that could deter them from buying these types of bonds in the future - which could deprive insurers of a crucial source of funding.

The bonds, which gained popularity in the aftermath of Hurricane Andrew, allow insurers and reinsurers to transfer risk to a pool of investors. Basically, investors receive a premium if insurers go a set amount of time without paying out a major claim. But if a natural disaster strikes, bondholders will lose some or all of their principle.


But unfortunately for these investors, the risk models that banks and buyers use to price this risk are moot in the face of extremely rare storms like Florence, which appears to be much more devastating than these models would have reflected. The problem with this, according to WSJ, is that, in situations like this one, investors must struggle with true uncertainty, rather than risk (which can be priced). Plus, storm surges and torrential rains are expected to lead to catastrophic flooding in coastal areas - something that is difficult for financial models to measure.

Investors don’t like unexpected losses: They represent uncertainty, which can’t be calculated, rather than risk, which can be priced. A major unexpected loss is likely to make investors think twice before rushing back into alternative capital, so the industry could take longer to recover and prices could rise more sharply. That is good for the insurers left behind—so long as their losses haven’t been too great—but makes insurance more costly for everyone else.

Florence is unusual not only because of where it is heading, but also because it is expected to slow down dramatically when it nears the coast, according to AIR Worldwide, a risk modeling firm. This slow speed and the peculiar shallow coastal shelf off the Carolinas are likely to help the storm suck up more water and gather power, producing a bigger storm surge, pushing more seawater inland and bringing much more rain over several days. That means higher winds for longer and more flooding.

Flood risk is much harder to model than other perils because the high resolution that models need, which requires detailed land survey data and extra computing power. Flooding was a big problem after Hurricane Harvey in Texas last year, but there was limited flood insurance cover in the state. Analysts at Jefferies think there is much more private flood insurance in North Carolina for homes and businesses. Also, since last year, the National Flood Insurance Program has bought more private reinsurance including the sale of its first catastrophe bonds, increasing the amount of money at risk from flood losses in general.

With at least three other powerful storms forming in the Atlantic, this year's hurricane season could match, or even exceed, the colossal toll suffered during last year's hurricane season.  However, cat bond trading on the secondary market experienced a notable bump ahead of the hurricane season. 


Only two hurricanes as strong as Florence have hit the Carolinas in modern history: Hazel (1954), which caused $15 billion worth of losses when adjusted for inflation, and Hugo (1989), which cost $20 billion, according to modeling firm RMS.

The industry has seen a big increase of new capital since the financial crisis, mainly through flows of fast-moving, alternative capital into catastrophe bonds and similar products. In 2008, alternative capital represented $19 billion, or 6%, of total reinsurance capital; at the end of the first quarter this year that had grown to $95 billion, or 16%, of industry capital, according to Moody’s Investors Service.

To be sure, losses incurred by policy holders last year far exceeded the $100 billion forecast, which is giving insurers some hope. Even after photos of Hurricane Maria flooded cable news, pricing on cat bonds barely budged. Some companies now believe that losses would need to not just exceed, but more than double, expectations to impact pricing in the cat bond market. But others are less confident.

Last year, people in the industry spoke of a $100 billion loss as the kind of event that would finally push up pricing after years of declines or low growth. But the three Atlantic storms that hit the U.S. and Caribbean in 2017 caused losses greater than that and pricing still barely moved. Now industry participants think it would take $250 billion in losses, according to a survey this week from specialist research firm, Artemis. However, if the losses were more surprising, because they were beyond what models typically predicted, then a smaller loss of $150 billion could cause a contraction in the supply of capital to insurance markets and a rise in prices.

Still, given the storm's unusual path, which could hammer areas not accustomed to hurricanes, there's a chance that some bond buyers might balk. What's worse, one meteorologist highlighted a disturbing sign that the storm could be even more damaging than analysts presently expect.

But insurance companies aren't the only financial services companies that could suffer as a result of the storm. Over a longer time horizon, regional banks that sport a large depositor base in the affected areas could face difficulties as demand for residential mortgages and other consumer financial products slackens. Raymond James’s David Long highlighted a few of these banks in a note published this morning, adding that since most homes in coastal areas of North Carolina, South Carolina and Virginia don't have flood insurance, meaning that default rates on residential mortgages could spike. Fortunately for these lenders, the losses will be borne by the firms that bought up and bundled the mortgages, rather than the originating bank.

Separately, Fig Partners analyst Kevin Fitzsimmons said there are 14 publicly-traded banks headquartered in Florence's projected landfall zone, a swath of coastline that includes Charleston, S.C., Myrtle Beach, S.C., Wilmington, N.C. and Norfolk, VA.

Here's a summary of their points, courtesy of BBG:

  • 19 of Raymond James’s covered banks have exposure to 10 coastal areas likely to be in the storm’s path; as a percentage of deposits, Towne Bank has the most exposure (~73% of total deposits in impacted regions), followed by Carolina Financial (~47%); Union Bankshares has 14.5%, United Community ~8%, First Bancorp 7.5%, Synovus 5.4%, BB&T 5.3%; remaining 12 banks have 5% of their deposit base in impacted regions

  • Banks with commercial real estate (CRE) exposure may see some material impacts, with construction/land development loans, farming/agriculture loans likely most impacted

  • C&I loans may suffer if businesses can’t operate/suffer damages, though some businesses may benefit (hardware stores, contractors), and insurance will be big factor

  • Banks may see more deposits from insurance claims, government assistance, grants/other fundraising efforts; banks providing low-rate loans to those affected may stimulate local economy

While the future is, of course, uncertain, the anxieties engulfing the cat bond market are just one more healthy reminder that financial models have their shortcomings. And when investors become too reliant on their outputs, they're vulnerable to a potentially devastating surprise.

Published:9/13/2018 9:21:29 PM
[Markets] Global Shipping Rates Collapse As Trade War Spreads

When President Donald Trump fired the first shot of his trade war cannon at China, the market for international shipping rates spiked higher in April through July amid a jump in demand for hauling of bulk commodities that are essential in powering the Asian country's economy, as traders sought to front-run the implementation of tariffs.

Fast forward several months, with the Trump administration on the verge of slapping even more tariffs on Chinese goods worth $200 billion, and the uncertainties around global trade appear to have finally collapsed some shipping rates.

BIMCO's chief shipping analyst Peter Sand said, “85.3% of Chinese seaborne imports from the US and 58.5% of US seaborne imports from China could become affected by the trade war, if the US and China implement tariffs on a further USD 200 and USD 60 billion worth of goods respectively." And with no demand to pull forward from the future left, Bloomberg reports that demand for the transportation of iron ore and coal on 1,000-foot Capesize vessels has collapsed by 39% since reaching a 2018 peak in early August.

"Some of the weakness we have seen in dry bulk freight rates can to some extent be attributed to growing uncertainty around the trade war," said Sand, who provides industry trends for more than 2,000 ship owners and operators.

"It is an increasing worry that we hear amongst our members."

Shipping analysts say freight costs offer insights into turning points of the global economy and trade growth. That was the basis behind our late August post "Latest Freight Data Confirms Alarming Slowdown In Global Trade" because a normal environment, increased shipping volumes of iron ore to China's steel mills are a sign that the country's construction industry is humming along. Coal is also used to monitor power generation in the region.

However, things have reversed recently, and capesize day rates dropped 3.9% to $16,559 a day on Wednesday, according to data from the Baltic Exchange. Last month, the prices stood at $27,283 on Aug. 06. Fourth-quarter forward freight agreements declined to $23,750, having been at $26,600 on Aug. 21, data from Clarkson Securities show.

At the same time, the popular Baltic Dry Index - a more comprehensive measure of commodity transportation costs - sank to 1,411 points, its lowest since late June.

Adding to the confusion, Trump said last week that he has lined up an additional $267 billion of Chinese products to tax “on short notice if I want.” That is on top of the already proposed $200 billion in tariffs that could severely damage US consumers.

For the first time in the ongoing trade war, the latest tit-for-tat round has seen China unable to respond proportionately to the $200 billion. And since China imports much less than it exports to the US, if the trade war expands Beijing will have to look at alternative ways for its retaliatory measures.

According to Hellenic Shipping News, China is expected to unleash new "weapons" in the trade battle including targeting US consumer products (Apple) or hitting US investments in China.

Whatever format the next round of the trade war takes, the impact on the global shipping industry will be promptly realized, as uncertainty is about to create a global growth shock that could reprice many assets around the world.

Last week, Bloomberg highlighted that the world trade monitor compiled by the CPB Netherlands Bureau for Economic Policy Analysis showed the rolling three-month trade volumes are not only in decline but have entered into negative territory, an ominous harbinger of economic trouble.

As Bloomberg notes, "the drop is particularly striking given that commodities, one of the largest and most volatile subsets of globally traded goods, have been doing quite well – the CPB’s indexes of fuels and non-fuel commodities both reached the highest levels since 2014 in May."

Instead, confirming the ominous recent developments in Brazil, where a clustering of supply-chain linked problems has resulted in a near paralysis in the country's shipping industry, Bloomberg notes that "the weakness is coming not from materials but from manufactured goods, as global supply chains seize up."

With the CPB index printing negative throughout the second quarter of the year, that echoes the numerous reports of a slowdown in the US. Manufactures “reported higher prices and supply disruptions that they attributed to the new trade policies,” according to the Federal Reserve’s July Beige Book, in addition to “higher input prices and shrinking margins.”

There are strong indications that the trade war - as it progresses into the fourth quarter and beyond - is starting to leave noticeable and severe consequences on the international shipping market that could result in a global growth shock. With that in mind, the dangers of the next US recession could soon be realized as early as late 2019/20. As for who gets the blame, it seems the Trump administration could be the scapegoat.

Published:9/13/2018 8:56:16 PM
[Markets] The Wall Street Journal: Cuomo beats Nixon in New York Democratic primary Gov. Andrew Cuomo fended off a left-flank challenge led by Cynthia Nixon in a Democratic Primary Thursday, according to the Associated Press.
Published:9/13/2018 8:56:16 PM
[Markets] The clash of the brash: JPMorgan’s Jamie Dimon gets into a kerfuffle with Trump The president tweeted disparagingly about the chief executive of JPMorgan Chase after he boasted during a bank event that he could “beat Trump” in an election. The 24-hour spat lit up Wall Street at a time when presidential speculation about Dimon has begun to arise. Published:9/13/2018 8:32:45 PM
[Markets] Jonathan Burton's Life Savings: Ray Dalio: Rising debt, income inequality and political polarization are a recipe for a nasty downturn Billionaire hedge-fund manager Ray Dalio warns that the next financial crisis will threaten capitalism and democracy.
Published:9/13/2018 8:32:44 PM
[Markets] Global Markets: Asian shares rise as China and U.S. weigh fresh talks Asian shares nudged higher on Friday as moves by the United States and China to resolve a bitter trade dispute and a sharp interest rate hike in crisis-hit Turkey supported global risk appetite. MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was up 0.4 percent in early trade, following gains on Wall Street (.N) overnight. Australian shares (.AXJO) were up 0.5 percent, while Japan's Nikkei stock index (.N225) gained 0.9 percent. Published:9/13/2018 8:32:43 PM
[Markets] Education Is Not A Right

Authored by José Niño via The Mises Institute,

Among issues in American politics, public education remains a sacred cow for many voters.

Political elites incessantly remind us that public education is a fundamental pillar of civilization. Without public education, we would continue to be uneducated savages.

All the innovations we see before us like the Internet would not be possible if it weren’t for the state-provided education pipeline.

Or so we are told.

Misunderstanding Rights

Academics and politicians assert that education is a “right,” thus compelling the state to step in and maintain a monopoly on the service.

Education, despite what conventional wisdom says, is an economic good, not a right. By definition, economic goods are scarce and satisfy the necessities and desires of consumers. Unfortunately, myopic elected officials often ignore this inconvenient truth.

This misconception emerges from a fundamental misunderstanding of what constitutes a right, specifically the overemphasis of positive rights over negative rights. Professor Aeon Skoble does an excellent job in breaking down the differences between positive and negative rights:

“Fundamentally, positive rights require others to provide you with either a good or service. A negative right, on the other hand, only requires others to abstain from interfering with your actions. If we are free and equal by nature, and if we believe in negative rights, any positive rights would have to be grounded in consensual arrangements.”

In sum, negative rights like life, liberty, and property prohibit others, especially government entities, from interfering with their persons or property.

Positive rights hold individual rights in contempt. Interventionists and politicians use abstractions such as “society” to justify the forceful confiscation of resources from one group of people to another group of people without any form of compensation or consent.

Since the emergence of the Bismarckian welfare state, positive rights have formed the pillar of public policymaking in the West and countless other countries. From education down to pensions, there exists a religious devotion to the idea the state must mandate individuals to either participate in a certain activity or be forced to give up their income to provide another individual with said good or service.

Free Education is Not so Free After All

Nearly two centuries of government involvement in education has conditioned citizens to believe that not only is education an entitlement, but it is somehow free. This outlook is myopic at best.

A substantial segment of the population doesn’t even use public education. Those who opt out of public education like homeschoolers and private schoolers are still forced to subsidize others who attend public schools. As Frederic Bastiat observed, the “Government is the great fiction through which everybody endeavors to live at the expense of everybody else.”

Bastiat’s astute observation, unfortunately, flies over the heads of the masses, who have been duped by politicians and the intelligentsia into believing these services are “free” and must be provided by the collective whole of society.

The real tragedy in this equation is the misallocation of resources that would otherwise have been used for more productive activities. People see the public schools, but they don’t look beyond stage one. They overlook the productive endeavors that could have been created had that money not been redistributed in the first place.

It’s no stretch to say that under a system where people can keep their money they still have the ability to build their own educational arrangements on the free market.

Therein lies the beauty of an economy free from government coercion. Entrepreneurial ventures would emerge spontaneously and tailor their services according to consumer preferences, not by bureaucratic design or the whims of political elites.

Education is another Market Service

There is nothing magical about education; it functions like any other good or service. For most professions there is an inherent demand for educated workers. So, it stands to reason that people will work in their own self-interest to educate themselves or build educational institutions to give others the necessary tools for joining the work force.

In fact, there already exist parallel educational institutions such as Coursera, Khan Academy, and Lynda where people can acquire high demand skills at reasonable prices.

Not to mention alternative forms of schooling like Montessori education also give us a sneak preview to what education would look like on the free market.

The Never-Ending Cycle of Bureaucracy

But when we start declaring everything a right, thus requiring government involvement, a new set of problems emerge.

When the state appropriates a sector of the economy, it not only monopolizes it, the state destroys any semblance of economic calculation. Destroying the ability of property owners to compare costs and gains, or discern profits and losses, ensures incoherent economic decision-making and a sub-optimal experience for consumers of said products or services.

This observation has gone from the theoretical to the practical.

In the United States, the Department of Education’s budget started out at $14.5 billion in 1979 and currently stands close to $70 billion. When other spending initiatives like the school breakfast and lunch and Head Start programs are included, the total comes out to nearly $100 billion .

Completely disregarding indicators of American government schools underperforming against international competitors, the federal government continues its futile quest intervening in education.

In the land of government services, incompetence is rewarded with bigger budgets and larger bureaucratic privileges. On the other hand, free enterprise responds to consumers, who have the power to put organizations out of business if their services are not up to par.

The concept of education having to enjoy a government monopoly exemplifies the arrogance of political actors who think that free people are incapable of bringing educational services to the free market.

We have the potential of living in a Jetson’s world of education, but the political class insists on using Flintstones practices like state coercion to provide education.

Published:9/13/2018 8:32:43 PM
[Markets] The Ritual Burial Of The US Constitution

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

In the wake of a number of the Lehman and 9/11 commemorations in America, and as a monster storm is once again threatening to cause outsize damage, we find ourselves at a pivotal point in time, which will decide how the country interacts with its own laws, its legal system, its Constitution, its freedom of speech, and indeed if it has sufficient willpower left to adhere to the Constitution as its no. 1 guiding principle.

The main problem is that it all seems to slip slide straight by the people, who are -kept- busy with completely different issues. That is convenient for those who would like less focus on the Constitution, but it’s also very dangerous for everyone else. Americans should today stand up for freedom of speech, or it will be gone, likely forever.

The way it works is that president Trump is portrayed as the major threat to ‘the rule of law’, which allows other people, as well as companies and organizations, to drop below the radar and devise and work on plans and schemes that threaten the country itself, and its future as a nation ruled by its laws.

Bob Woodward’s book “Fear: Trump in the White House” and the anonymous op-ed published in the NYT a day later serve as a good reminder of these dynamics. If you succeed in confirming people’s idea that Trump is such an unhinged idiot that an unelected cabal inside the White House is needed to save the nation from the president it elected, you’re well on your way.

Well on your way to separate the country from its own laws, that is. Not on your way to saving it. You can’t save America by suspending its Constitution just because that suits your particular political goals or points of view.

Late last night, Michael Tracey wrote on Twitter:

 “Trump’s preference to pull out of Afghanistan is depicted in the Woodward book as yet another crazy impulse that the “adults in the room” successfully rein in.”

 “We’re going to save you from yourselves, thank us later!”

Nobody voted for those adults in the room anymore than anyone voted for the Afghanistan ‘war’ to enter year 17.

Meanwhile Infowars said: 

“Several people within Trump’s inner circle know the threat to the mid-terms and his re-election chances that social media censorship poses, including Donald Trump Jr. and Brad Parscale, his 2020 campaign manager. However, older members of the administration are completely unaware of the fact that banning prominent online voices and manipulating algorithms can shift millions of votes and are oblivious to the danger. This ignorance has placed a temporary block on Trump taking action, despite the president repeatedly referring to Big Tech censorship in tweets and speeches over the last few weeks.”

Yes, Infowars, I know, everybody loves to hate Alex Jones. And perhaps for good reasons, at least at times. But does that mean he can be banned from a whole slew of internet platforms without this having been run by and through the US court system? Without even one judge having examined the ‘evidence’, if it even existed, that leads to such banning, blocking and shadowbanning?

Alex Jones is an ‘easy example’ because he’s so popular. Which is also, undoubtedly, why all the social media platforms ban him so easily, and all at the same time. ‘He’s a terrible person’, say so many of their readers. But that’s not good enough, far from it. Twitter and Facebook should never be allowed to ban anyone, using opaque ‘Community Standards’ or ‘Terms and Conditions’ interpreted by kids fresh out of high school.

These platforms have important societal functions. They are for instance the new conduits governments, police, armies use to warn people in case of emergencies and disasters. You can’t ban people from those conduits just because a bunch of geeks don’t like what they say. If you can at all, it will have to be done through the legal system.

That this is not done at present poses an immense threat to that legal system, and to the Constitution itself. But Americans, and indeed Congressmen and Senators, have been trained in a Pavlovian way to believe that it’s not Google and Facebook who threaten the Constitution, but that it’s Trump and his crew.

Meanwhile, Trump is being put through Bob Mueller’s Special Counsel legal wringer 24/7, while Alphabet, Jack Dorsey and Mark Zuckerberg escape any such scrutiny at all. That discrepancy, too, is eating away at the foundations of American law.

And like it or not, Trump had it right when he said “You look at Google, Facebook, Twitter and other social media giants and I made it clear that we as a country cannot tolerate political censorship, blacklisting and rigged search results..”

America as a country cannot tolerate a few rich companies deciding whose voice can be heard, and whose will be silenced. It is entirely unacceptable. That goes for voices Trump doesn’t want to hear as much as it does for whoever Silicon Valley doesn’t. That’s why neither should be in charge of making such decisions. It kills the Constitution.

None of the above means that everyone should be free to post terrorist sympathies or hate speech on social media platforms. But it does mean that legislative and judicial systems must define what these things mean, that this not be left up to arbitrary ‘Community Standards’ interpreted by legally inept Silicon Valley interns, nor should it be left to secret algorithms to decide what news you see and what not.

America itself hangs in the balance, and so do many other western countries. What exactly is the difference between China’s overt internet censorship and America’s hidden one? That is what needs to be defined, and that can only be done by the legal system, by Congress, by the courts, by judges and juries.

And it’s not something that has to be invented from scratch, it can and must be tested against the Constitution. That is the only way forward. That social media have taken over the country by storm, and nary a soul has any idea what that means, can never be an excuse to leave banning and silencing voices over to private parties, whoever they are.

It’s not a unique American problem. In Europe there are all sorts of attempts to ban ‘hate speech’, but there are very few proposals concerning who will define what that is. And since Europe has no Constitution, but instead has 27 different versions of one, it will be harder there. Then again, it will also be easier to get away with all sorts of arbitrary bannings etc.

Hungary will be inclined to ban totally different voices than for instance Denmark and so on. And nobody over there has given any sign of understanding how dangerous that is. Banning ‘hate speech’ doesn’t mean anything if the term hasn’t been properly defined. But that also allows for banning voices someone simply doesn’t like. To prevent that from happening, we have legal systems.

It’s essential, it’s elementary, Watson. But it’s slipping through our fingers because our politicians are either incapable of, or unwilling to, comprehending the consequences. Why stick out your neck when nobody else does? It’s like the anti-thesis of what politics means: stay safe.

So the social media’s industry’s own lobbying has a good shot at getting its way: they tell Washington to let them regulate themselves, and everything will be spic and dandy. That would be the final nail in the Constitution’s coffin, and it’s much closer than you think. Do be wary of that.

In the end it comes down to two things I’ve said before. First, there is no-one who’s been as ferociously banned - and worse -  the way Julian Assange has. His ban goes way beyond Silicon Valley, but it does paint a shrill portrait of how far the US, CIA, FBI, is willing to go, and to step beyond the Constitution, to get to someone they really don’t like.

But has Assange ever violated and US law, let alone its Constitution? Not that we know of. Mike Pompeo has called WikiLeaks a ‘hostile intelligence service’, and the DOJ has said the 1st Amendment, and thereby of necessity the entire US Constitution, doesn’t apply to Assange because he’s not an American, but both those things are devoid of any meaning, at least in a court of law.

Bob Woodward has an idea of what Assange faces, and he’d do much better to focus on helping him than trying to put Trump down through anonymous sources. And that also leads me to why I, personally, have at least some sympathy for Alex Jones, other than because he’s being attacked unconstitutionally: Jones ran/runs a petition for Trump to free Julian Assange.

Come to think of it: it’s when that petition started taking off that Jones’s ‘real trouble’ started. Given how closely interwoven Silicon Valley and the FBI and CIA have already become, I’m not going to feign any surprise at that.

And before you feel any wishes and desires coming up to impeach Trump, do realize that he may be the only person standing between you and a complete takeover of America by the FBI/NSA/CIA/DNC and Google/Facebook/Twitter, which will be accompanied by the ritual burial of the Constitution.

Think Trump is scary? Take a step back and survey the territory.

Published:9/13/2018 7:55:16 PM
[Markets] Vertical Group: Tesla Has Nearly Exhausted Demand For Its AWD Model 3, Look Out In Q4

Submitted by Gordon Johnson of Vertical Group

It Seems TSLA Has Nearly Fully Exhausted its AWD Model 3 Demand... Look out in 4Q18!!!

Summary: In conjunction with another private investor, we have put together the below analysis. In short, our analysis suggests TSLA will exhaust its Model 3 all-wheel-drive/performance (“AWD/performance”) backlog by October 2018. What does this mean? Well, assuming our analysis is right, either TSLA will materially ramp down its M3 production (which appears to already be underway), begin to sell the long-awaited short-range (i.e., $35K) option, or begin shipping a lot of cars to Europe/ROW. In any of these scenarios, we see 4Q18 as a likely “scary” outcome for TSLA (and also see a large production and/or delivery miss on-tap for 3Q18). Our analysis, done in conjunction with another investor, is detailed below.

THE ANALYSIS: As detailed here (link), using the TSLA Model 3 Order Tracker (“TM3OT”) spreadsheet, one can get a sample of the number of TSLA customers waiting for VIN numbers as well as those waiting for delivery of the Rear Wheel Drive (“RWD”) and All Wheel Drive (“AWD”) Long-Range (“LR”) Model 3 (“M3”) as of today (i.e., Exhibit 1 below shows these numbers for the RWD variant); this is found in the “Deliveries” tab of the TM3OT spreadsheet (link) highlighted above. And, importantly, for those who question this data source, we note that 9/8/18-to-9/13/18 a total of 13 M3-LR cars have been delivered (suggesting the data is being updated real-time, and, more importantly, stable).

Exhibit 1: TSLA RWD LR Configurations – 86 in Total as of 9/13/18

Source: TM3OT link.

SO WHAT? With such a low level of M3 RWD LR cars in the backlog, the question turns to… How many M3 All Wheel Drive (“AWD”) LR vehicles are there in the backlog? Well, using the same link highlighted above, as of this morning the TM3OT website had 1,803 AWD LR cars that have been configured and waiting for a VIN or in receipt of a VIN. Where does this data come from? Well, on the “VINs” tab of the TM3OT spreadsheet (link) we add Model 3 LR AWD numbers by month, as well as the Model 3 Performance numbers by month to get to the 1,803 AWD LR configurations as of today (i.e., 9/13/18). More specifically, in Exhibit 2 below, we show how many of the 1,803 configurations are waiting for VINs (i.e., open order backlog) vs. how many have received VINs (i.e., the car is built). By way of background, the 1,803 figure we cite above is the aggregation of both those waiting on VINs and those who have received VINs.

Exhibit 2: TSLA AWD and Performance Configurations

Source: TM3OT link.

So what does all this mean? Well, we’ve been tracking VINs assigned ÷ (VINs assigned + Waiting on VIN) to gauge/estimate the number of open order backlog for M3 AWD LR cars that have been filled. Stated differently, this gives one a leading indicator into how much demand TSLA has left for its AWD/performance cars, something we feel VERY FEW on both the sell-side and buy-side have done work on to-date (everyone is focused on supply, but we feel demand is going to potentially push TSLA into crisis, as soon as 4Q18).

In fact, below, in Exhibit 3, we show how this number has evolved, on a daily basis, more recently, using the TM3OT spreadsheet (link).

Exhibit 3: % of Model 3 AWD and Performance Configurations Filled

Source: TM3OT link.

WHAT DOES IT ALL MEAN?: Looking to the “Production” link in the TM3OT spreadsheet, one can see that the total number of AWD/performance cars produced is 17,470 (Exhibit 4). Thus, assuming 50% of the AWD/performance orders have been manufactured, one arrives at 36K of total AWD/performance orders – we extrapolate this figure based on TM3OT production estimates from the spreadsheet, which implies an open order backlog of just under 18K (an average of ~3K M3 AWD LR Performance cars/week of production). Thus, applying our estimate that 50% of the open order backlog has been satisfied, this means M3 AWD LR Performance demand of ~18K cars (i.e., 36K × 50% = 18K) exists.

Exhibit 4: Model 3 Production Estimates

Source: TM3OT link.

Stated differently, this suggests, assuming ~5K M3s produced per week, TSLA has just 3-4 weeks of M3 AWD LR Performance demand left, meaning demand will be fully exhausted at some point in Oct. 2018 (yes, you heard that right). As we’ve been saying for some time now, it is our opinion, based on the analysis above, that TSLA has formidable demand constraints at present. While everyone is focused on supply and 5K M3 cars/week, as these demand headwinds become increasingly clear, we expect TSLA’s stock to come under considerable pressure. Caveat emptor.

WHERE WE COULD BE WRONG IN THE ABOVE ANALYSIS? We note a couple of potential push-back points from the bulls, namely:

  1. The TM3OT spreadsheet is a sample of total orders; thus, should the order rate being processed in the TM3OT spread sheet (i.e., roughly 5% of total orders) differ from that of people not putting their numbers into the spread sheet, via the Tesla Motor Club (“TMC”) website, our conclusions could be off – we are comfortable with our conclusions given, as detailed in Exhibit 4 above, how accurate the TM3OT has been historically;
  1. This analysis looks at just the backlog of AWD/Performance M3 figures; along these lines, given TSLA has other demand streams, namely: (a) international reservations, (b) eventually, the short range (“SR”) M3 (i.e., the “coveted” $35K car), as well as (c) their ability to stimulate demand via leases, we may be missing a large chunk of TSLA’s future sales – we are comfortable here given we believe many of these pools will be lower margin sales, and thus a headwind to one of the key reasons bulls remain optimistic; and
  1. There may be a difference between reported order vs. the overall population – until we see proof of this, we don’t see this as an overwhelming risk.

WHAT TO DO HERE? We would be short TSLA’s stock given the above, as well as our view that Elon Musk’s indirect guidance (via what appears to be a leaked memo to TSLA employees last week) that TSLA will double both production and deliveries in 3Q18 is mathematically highly unlikely (see this link for Mr. Musk’s prediction, and this link for an highly respected TSLA analyst repeating this guidance on national TV). What do we mean? Well, simply: (1) 2Q18 deliveries were 40.7K and 2Q18 production was 53.3K, thus a total of ~94K cars (i.e., Model S + X + 3), that (2) suggests total 3Q18 production + deliveries of 188K cars, consequently (3) assuming 50K S + X cars produced + delivered (i.e., 25K produced and 25K delivered, which would represent a -4% fall in 3Q18 deliveries y/y, vs. the -6% fall in 1H18 Model S + X deliveries TSLA has seen this year), that leaves 138K M3 cars produced + delivered, and (4) assuming this is split between 69K deliveries and 69K cars produced, using InsideEvs numbers for TSLA M3 deliveries in July + August of 14,205 and 17,800, respectively, or 32.05K in total, TSLA would have to deliver ~37K M3s in September alone, or 9.2K M3s/week. Given TSLA is nowhere near producing this level of M3s at present, we see Mr. Musk’s guidance as highly unlikely.

Published:9/13/2018 7:18:54 PM
[Markets] Stocks - S&P Closes Higher Amid Apple-Inspired Rally - The S&P 500 closed higher as an Apple-inspired rally stoked investor appetite for risker assets, offsetting mixed signals on trade. Published:9/13/2018 6:44:38 PM
[Markets] The New York Post: Gas explosions cause dozens of fires in Massachusetts towns Dozens of homes burst into flames in three towns outside Boston on Thursday, sending thick plumes of black smoke into the sky and forcing mass evacuations.
Published:9/13/2018 6:44:38 PM
[Markets] Assault On Syria's Idlib Risks "Scattering Terrorists" Abroad, French Foreign Minister Warns

French Foreign Minister Jean-Yves Le Drian warned this week in a surprisingly frank statement that a Syrian government offensive on anti-Assad insurgent held Idlib could scatter thousands of foreign militants abroad, posing a security threat to the West.

His comments were made on Tuesday, after France previously pledged it would join any potential US coalition strikes on Syria if Assad uses chemical weapons in Idlib. 

"There are in all likelihood dozens of French fighters from both Al-Qaeda and Daesh (ISIS)" in Idlib, Le Drian told France's BFMTV, according to the AFP. He further said that there were "also many terrorists from other nations who could scatter" in the event of a joint Syrian-Russian offensive, warning of "risks for our security".

French Foreign Minister Jean-Yves Le Drian

Le Drian's words reveal a bizarre twist in logic concerning the West's role in the now seven-year long grinding conflict, which now seems to be slowly winding down ahead of the Syrian Army's fight to take back Idlib Province, barring major Western military intervention. 

On the one hand the French FM is acknowledging, similar to prior admissions of the US State Department, that al-Qaeda held (Hayat Tahrir al-Sham) Idlib is controlled by dangerous terrorist elements; while on the other hand he's suggesting they only belong in Syria

The West has long been accused by both Damascus and Moscow of sponsoring the rise of foreign jihadist armies, including ISIS, as way to pressure and ultimately topple the Assad government

One of the more shocking admissions of this strategy came in 2016, when then Secretary of State John Kerry was caught on audio telling a Syrian opposition gathering, which met on the sidelines of a UN General Assembly meeting, that Obama hoped to use ISIS as leverage against Assad.

According to Kerry on the leaked audio (25:50):

"And we know that this was growing, we were watching, we saw that Daesh was growing in strength, and we thought Assad was threatened"... "(We) thought, however, we could probably manage that Assad might then negotiate. But instead of negotiating he got Putin to support him."

In the past weeks Western leaders have focused their arguments against a Syrian assault on Idlib around the humanitarian aspect, saying an air and ground invasion to root out the insurgency could result in the worst humanitarian crisis in recent history.

However, Le Drian's words are remarkably honest in terms of ulterior motives the West has for seeking to stop the offensive: he ultimately promoted a desire to see the international terrorist menace be confined only to Syria, where jihadists can fight the government, but which never spill over into Europe

Other threats from Western leaders over the Assad military build-up near Idlib have continued this week, with US Ambassador the UN Nikki Haley addressing Syrian allies Russia and Iran, saying “Don’t test us again” in a Wednesday night Fox News interview.

“Any offensive on the civilian people in Idlib was going to be dealt with,” Haley told Fox News’ Bret Baier, in a repeat of multiple past similar threats in recent weeks. 

Importantly, it appears Haley's threats of attacking the Syrian government have now expanded to beyond the scenario of the US reacting militarily to a chemical attack, but to a mere conventional military assault on Idlib itself. 

Published:9/13/2018 6:44:38 PM
[Markets] US Market Indexes Report a Fourth Day of Closing Gains Dow Jones closes at 26,145.99 for a gain of 0.57% Published:9/13/2018 6:23:58 PM
[Markets] Canadian marijuana investors could face lifetime bans from entering U.S. Canadians who invest in marijuana-related stocks, as well as those who use pot or work in the cannabis industry, could be banned from ever entering the U.S., according to a report Thursday.
Published:9/13/2018 6:23:58 PM
[Markets] UC Boulder Labels "Illegal Alien" A "Problematic Phrase"

Authored by Grace Gottschling via Campus Reform,

The University of Colorado-Boulder has removed the term  “illegal aliens” from its library catalog in favor of “more ethical subject headings” to foster an “inclusive atmosphere.”

Library subject headings are used to help researchers find relevant material by using certain keywords. Now, at UC Boulder, student researchers can use terms like “noncitizen,” and “undocumented immigrants” to find documents that previously were only identified by the legal designation of “illegal alien.”

The library, which changed 5,367 records, has opted for “more ethical subject headings” rather than the “problematic” phrase “in an effort to foster diversity and inclusion,” according to its website. 

The change is part of the university’s Libraries’ Strategic Plan for 2016-2020 which seeks to “provide services, spaces, and collections that foster belonging, curiosity, openness, discovery, creativity, and reflection,” according to the strategic plan.

The American Library Association resolved to change the subject heading in 2016, but the U.S. House of Representatives voted to keep using the phrase “illegal aliens.” UC Boulder decided to follow the ALA resolution, according to Candace Smith, Assistant Vice Chancellor of Strategic Media Relations.

“There were about 5,500 bibliographic records that were enhanced with the ethical subject headings, and the updates are done on a monthly basis,” Smith told Campus Reform. “There are no plans to phase out “illegal aliens” as a search heading, so long as it remains a subject heading in the Library of Congress Subject Headings.”

“We support open access, open data and open educational resources in an effort to support access to information and knowledge,” Smith added. “Our exhibits and events also embody our inclusivity efforts, such as the Libraries’ upcoming welcome event for transfer students, many of whom are veterans.”

Published:9/13/2018 6:23:58 PM
[Markets] AMD stock takes a breather after 5-month rally of more than 200% Advanced Micro Devices Inc. shares back off 12-year highs Thursday, playing the contrarian chip stock as the rest of the chip sector rebounds from a recent selloff.
Published:9/13/2018 5:49:58 PM
[Markets] Facebook Starts "Fact Checking" Photos And Videos Using AI

Facebook on Thursday announced the expansion of their fact-checking army to send "photos and videos to all of our 27 partners in 17 countries around the world," after using an artificial intelligence which will use "various engagement signals, including feedback from people on Facebook, to identify potentially false content." 

The company says that because people share millions of photos and videos on Facebook each day, it creates an "easy opportunity for manipulation by bad actors."  

How would an unsuspecting Facebook user know if this was real or not?

"The same hoax can travel across different content types, so it’s important to build defenses against misinformation across articles, as well as photos and videos," said Facebook.

Facebook categorizes photo / video "misinformation" into three categories: "(1) Manipulated or Fabricated, (2) Out of Context, and (3) Text or Audio Claim. These are the kinds of false photos and videos that we see on Facebook and hope to further reduce with the expansion of photo and video fact-checking." 

So, if Facebook users report a picture or video suspected of being Fake News, Facebook AI will use machine learning to analyze said reports and then filter them to humans to make the final decision on what's real and what's fake. 

For example: 

Per Facebook: 

How does this work? 

Similar to our work for articles, we have built a machine learning model that uses various engagement signals, including feedback from people on Facebook, to identify potentially false content. We then send those photos and videos to fact-checkers for their review, or fact-checkers can surface content on their own. Many of our third-party fact-checking partners have expertise evaluating photos and videos and are trained in visual verification techniques, such as reverse image searching and analyzing image metadata, like when and where the photo or video was taken. Fact-checkers are able to assess the truth or falsity of a photo or video by combining these skills with other journalistic practices, like using research from experts, academics or government agencies. -Facebook

As we get more ratings from fact-checkers on photos and videos, we will be able to improve the accuracy of our machine learning model. We are also leveraging other technologies to better recognize false or misleading content. For example, we use optical character recognition (OCR) to extract text from photos and compare that text to headlines from fact-checkers’ articles. We are also working on new ways to detect if a photo or video has been manipulated. These technologies will help us identify more potentially deceptive photos and videos to send to fact-checkers for manual review. Learn more about how we approach this work in an interview with Tessa Lyons, Product Manager on News Feed. -Facebook

"The same false claim can appear as an article headline, as text over a photo or as audio in the background of a video," Facebook product manager Tessa Lyons said in the statement. "In order to fight misinformation, we have to be able to fact-check it across all of these different content types."

4chan is going to have a lot of fun with this...

Published:9/13/2018 5:49:57 PM
[Markets] MarketWatch First Take: Why would anybody buy the iPhone XS? Apple Inc. generally saves the best features for its top-of-the-line devices, but this year its cheapest new model is looking especially good.
Published:9/13/2018 5:14:24 PM
[Markets] Bank Of England Warns "No Deal" Brexit Would Lead To Chaos, Crisis "As Bad As 2008 Crash"

It seems like it was only yesterday that Bank of England governor Mark Carney was predicting fire and brimstone metaphorically, and a recession literally, if Britain votes for Brexit. Well, Brexit happened, the recession didn't, and the Bank of England went so far as to hike rates in an attempt to cool off the economy which did everything but enter a recession.

Fast forward to today, when Carney was at it again, and in another masterclass of central banker propaganda, delivered a "chilling" warning to embattled PM Theresa May, warning that a hard, or "no-deal" Brexit could lead to economic chaos as bad as the 2008 financial crash and would unleash a property crash that could see house prices fall by 35%. The property crash would be driven by rising unemployment, depressed economic growth, higher inflation and higher interest rates, the head of the central bank said.

Mark Carney sent a "chilling" no-deal warning to the UK government

During a briefing of senior ministers on BOE’s modelling on the consequences of the EU agreeing to a skeleton deal, one in which a few ad hoc arrangements are struck and a worst case chaotic exit, Carney said that he would not be able to avert a crisis by cutting interest rates - when the bank also predicted a dire recession - and that inflation and unemployment would rise.

Carney said that unlike the BoE’s rate cut in 2016, this time the shock to Britain’s economy would come from disruption on the supply side, as trading relations between the UK and EU took a hit.

“He explained that in those circumstances, there would be a contraction of supply,” said one witness to the cabinet talks. “If you cut rates you would end up with higher inflation.”

Last week, the governor made similar warnings in public, telling MPs on the Treasury committee that in a disorderly no-deal Brexit, “the real income squeeze will return for households across the country for a few years”.

But what about the UK's banks: wouldn't they also be devastated by a hard Brexit, potentially leading to a preemptive bank run? Why, no. Because somehow despite modeling the apocalypse, Carney said the bank's "stress tests" of the UK’s financial system showed that it could withstand the worst case scenario.


The all too clear political propaganda continued when Carney boosted May’s position, saying that if she struck the Brexit deal based on her much-criticized Chequers exit plan presented to Brussels in July - which has led to several near revolts within Brexiteer conservatives -  the economy would outperform current forecasts, because it would be better than the bank’s assumed outcome.

In other words, anything but a hard Brexit.

One can see why Jacob Rees-Mogg, leader of the Eurosceptic European Research Group, last month called Carney, who earlier this week agreed to stay in post through Brexit until January 2020, "the high priest of Project Fear."

According to the FT, Theresa May had intended the three-and-a-half hour cabinet meeting to review no-deal contingency plans and to send a signal to the EU that Britain was prepared for the prospect of Brexit talks failing. Instead, Carney - a former Goldman employee and a consummate globalist - and Philip Hammond, chancellor, "joined forces to deliver a blow-by-blow account of why such a scenario would be economically damaging and that there would be little the BoE or Treasury could do about it."

Hammond said the Treasury would be constrained in its ability to tackle the crisis by boosting spending, noting the country was "still recovering from the aftermath of the 2008 crash" and questioning the effectiveness of a fiscal stimulus in one country.

One observer of the meeting in Downing Street said: “All of the predictions were grim and the numbers were chilling. Carney was listened to respectfully. He took a few questions afterwards, but none of them were hostile.”

Maybe they were not hostile then, but they will be soon: Tory Eurosceptic MPs will soon ridicule the BOE head's warnings, claiming - correctly - that both the BoE and Treasury both miscalculated the economic consequences of Brexit, which they also painted as a singularly dire event.

Jacob Rees-Mogg, leader of the Eurosceptic European Research Group, last month called Carney, who this week agreed to stay in post through Brexit until January 2020, “the high priest of Project Fear”.

So did the "fear priest's" threats lead to any change in sentiment? Not at all, as both sides remained entrenched in their views. The only agreement at the cabinet meeting was that a no deal outcome was "unlikely but possible."

A spokesman told the FT said that Whitehall departments had “significantly ramped up” their no-deal planning in recent weeks. Which simply means that Carney will need to ramp up the apocalyptic forecast even more during his next public appearance.

Published:9/13/2018 5:14:24 PM
[Markets] Personal Finance Daily: What items to pack in your ‘financial go-bag’ and the credit card perk consumers are losing Thursday's top personal finance stories
Published:9/13/2018 4:41:31 PM
[Markets] FBI Won't Investigate Sexual Misconduct Allegation Against Kavanaugh

Update: According to the Washington Post, The FBI won't investigate the allegations lodged against Kavanaugh, so he'll simply be tainted with the spectre of a nebulous accusation for the rest of his career. 

Perhaps we can read about it someday the alleged victim's book. 


California Democratic Rep. Dianne Feinstein has released a frustratingly vague statement about a letter in her possession which allegedly accuses Supreme Court nominee Brett Kavanaugh of "an incident involving Kavanaugh and a woman while they were in high school," reports The Intercept

"Senate Judiciary Committee have privately requested to view a Brett Kavanaugh-related document in possession of the panel’s top Democrat, Dianne Feinstein, but the senior California senator has so far refused, according to multiple sources familiar with the situation." -The Intercept

The letter reads: 

“I have received information from an individual concerning the nomination of Brett Kavanaugh to the Supreme Court. That individual strongly requested confidentiality, declined to come forward or press the matter further, and I have honored that decision. I have, however, referred the matter to federal investigative authorities” 

So Feinstein won't show her colleagues on the Senate Judiciary Committee, however she did forward the allegations to the FBI, one week before the Judiciary Committee is set to vote on Kavanaugh's nomination

According to the New York Times, the incident involved possible sexual misconduct. 

Two officials familiar with the matter say the incident involved possible sexual misconduct between Judge Kavanaugh and a woman when they were both in high school. -NYT 

The Intercept reports that the letter took a "circuitous route to Feinstein," related to someone affiliated with Stanford University, who authored the letter "and sent it to Rep. Anna Eschoo," a local Democrat. 

Eshoo passed the letter to her fellow Californian, Feinstein. Word began leaking out on the Hill about it, and Feinstein was approached by Democrats on the committee, but she rebuffed them, Democratic sources said. Feinstein’s fellow senators want their own opportunity to gauge whether or not the letter should be made public, rather than leaving it to Feinstein to make that call unilaterally. The sources were not authorized to speak on the record, and said that no senators on the committee, other than Feinstein, have so far been able to view the letter. -The Intercept

Meanwhile, the anonymous accuser has reportedly lawyered up and is being represented by whistleblower attorney Debra Katz, who is also counsel to Weinstein company executive Irwin Reiter, along with two women who allege former NPR news exec Michael Oreskes sexually harassed them. 

Published:9/13/2018 4:41:30 PM
[Markets] Investors shouldn't let trade tensions scare them out of US equities, investment expert says Amid trade tensions, don't jump ship on U.S. equities yet, U.S. Bank's Lisa Erickson says. Nela Richardson, investment strategist at Edward Jones, says she feels comfortable with small- or mid-cap stocks in the U.S., but for large-cap, look internationally. Amid trade tensions, don't jump ship on U.S. equities yet, U.S. Bank's Lisa Erickson told CNBC on Thursday. Published:9/13/2018 4:41:30 PM
[Markets] How major US stock indexes fared Thursday U.S. stocks made solid gains Thursday as Apple and Qualcomm led a rally in technology companies. Drugmakers and health insurers also rose. Published:9/13/2018 4:12:25 PM
[Markets] NewsWatch: These 4 called the last financial crisis. Here’s what they see causing the next one Leverage. Low-quality debt. The warning signs are there.
Published:9/13/2018 4:12:25 PM
[Markets] Alex Jones Was Banned By Twitter For Mean Words, Yet Antifa Groups Calling For Assassination Thrive

Submitted by FarLeftWatch

Antifa groups are using Twitter and Facebook to advocate for the assassination of President Trump

While social media companies collude to silence right-of-center influencers, violent far-left extremist groups appear to be given a pass. This NYC based antifa group has been using their “leftist privilege” to freely violate Twitter and Facebook Terms of Service. In another glaring example of “non existent social media bias”, this extremist group is apparently allowed to use their social media account to advocate for murder.

The Base is a NYC based “anarchist center” that is run by the Revolutionary Abolitionist Movement, a violent extremist group that we have covered extensively. The extremist group is currently offering downloadable poster and stickers that include images of guns and other calls to violence but the most concerning was an image that depicted the murder of President Donald Trump.

Advocating for the murder of your political opposition is very prevalent in far-left circles. Another prominent antifa website, It’s Going Down, is also currently using Twitter and Facebook to distribute a poster that depicts the murder of President Trump. We published a detailed report about this poster almost a year ago and have reported this tweet to Twitter multiple times but it is still live and the extremist group that created it is still free to recruit and radicalize new members on both Twitter and Facebook.

Another prominent far-left website that uses Twitter and Facebook to advocate for political violence is Crimethinc. This “decentralized anarchist collective” designed a distributed a poster that compares Donald Trump supporters to Nazis and encourages their followers to use violence against them.

In this example, a Seattle antifa group is using their Twitter account to distribute the personal information of ICE agents as well as their family members. Just like other Tweets we have referenced in this report, this one is still live even though we have reported it to Twitter multiple time.

There are endless examples of far-left extremist groups using their social media accounts to advocate for political violence but one more that warrants a mention is Redneck RevoltThis paramilitary organization claims to have over 30 active cells nationwide and until recently they offered a downloadable guerrilla warfare manual on their website that included sections on “kidnapping”, “executions”, and “terrorism”.

Why is this important? Firstly, it demonstrates the institutional bias of the giant tech companies that allow these accounts to actively violate their Terms of Service. And secondly, far-left extremist are escalating their violence. Just over the last seven days a GOP office was attacked by an arsonist, there was an assassination attempt of a GOP candidate, and a Democratic Socialist threatened to carry out a mass shooting against Trump supporters in D.C. These violent attacks are the predictable outcome of a media-industrial complex that constantly misrepresents the facts and gaslights Trump and his supporters as “fascists”. “racists”, “bigots”, etc.

The mission of Far Left Watch is to investigate, expose, and combat the far-left. Please share this article via Twitter, Facebook, etc. and encourage friendly media and YouTube content creators to report on this information. 

If you like our work please support us by donating to our Patreon account or making a a one time donation here.

Published:9/13/2018 4:12:24 PM
[Markets] US STOCKS-Wall St rises with Apple, easing trade concerns Apple led a rebound in technology shares and boosted all three major U.S. stock indexes on Thursday, while trade worries eased after China welcomed new talks with the United States. The Dow inched closer to its all-time high hit on Jan. 26, closing at its highest since Feb. 1 and just 1.8 percent below the Jan. 26 close. Published:9/13/2018 3:51:57 PM
[Markets] CryptoWatch: Cryptos surge off lows, but don’t expect gains to last, says analyst Cryptocurrency prices are in recovery mode Thursday, with all major coins clawing back from recent losses. However, the current state of play could be the calm before the storm, according to one crypto analyst.
Published:9/13/2018 3:51:57 PM
[Markets] Bill Gross Used Massive Amounts Of Leverage To Double Down On Losing Interest-Rate Bet

The heavy losses suffered by Bill Gross's Unconstrained Bond Fund have been widely discussed, as market commentators have loudly mused about the veteran manager's tabloid divorce and the continued success that his former colleagues at PIMCO have enjoyed in his absence. And in the latest update on travails facing Gross and his remaining investors, Bloomberg reported Thursday that Gross's losses have been exacerbated by the conspicuously high leverage ratio he employed at the fund.


According to BBG, Gross pushed the leverage ratio at his Unconstrained Bond Fund to 13:1 during the first half of the year, even as the Treasury yield curve continued to flatten in defiance of his expectations that long-term bund and Treasury yields would converge. 

But unfortunately, as Mario Draghi reaffirmed Thursday morning, the collapse of the "global synchronized growth" narrative has smothered any immediate incentive for the ECB to unwind its massive monetary stimulus, allowing continued "policy divergence" to push spreads wider.

Gross, who as manager of the Janus Henderson Global Unconstrained Bond Fund has struggled to generate returns and attract capital, increased his average futures exposure as much as 13-fold from January through June, according to a filing. The derivative bets may help explain the fund’s turbulence -- because while investments in futures can boost potential returns, they can also generate out-sized losses.

Investors have yanked roughly half a billion dollars from Gross's fund so far this year, according to MorningStar data, as it has suffered several vertigo-inducing pullbacks, including a 3% pullback on May 29 that was the biggest one-day drop of the year among large bond funds. During the first half alone, Gross's losses totaled $153 million on what was a $2 billion fund at the beginning of the year.

Gross realized almost $153 million of losses on interest-rate futures in the first half, a significant dent for what was a $2 billion fund at the time. It suffered several big swings during the first six months of this year, most notably a 3 percent plunge on May 29. That drop, which was the year’s largest single-day decline by a big bond fund, jarred investors and increased scrutiny of Gross’s stewardship.

"Losing 3 percent in a day in equities is not calamitous, but in bonds it is enormous," said Richard Klitzberg, an asset management consultant to institutions and high-net-worth families. "He was running billions of dollars and either got the trade completely mis-positioned or was very highly levered."

Gross said in July that his fund has scaled back his convergence bet. Yet, an Aug. 30 filing suggests Gross used futures to double down on the strategy, only to have it once again blow up in his face. These losses have left Janus's Unconstrained fund down nearly 6% on the year.

Interest rate futures would be the simplest way to execute Gross’s convergence trade, said David Ader, chief macro strategist at Informa Financial Intelligence, adding that the Janus fund could go long on 10-year Treasuries futures and short on those for 10-year bunds.


The average value of the fund’s futures contracts purchased rose to $1.45 billion in the first half of this year from $112 million reported for the six months ended Dec. 31, according to the filings. The average value of its futures contracts sold also rose, to $1.1 billion from $214 million, over the same time period.

Janus Unconstrained’s combined losses on futures tied to commodities, currencies, equities and interest rates totaled $212 million during the first half of this year, including the $153 million lost on interest-rate bets. Though the total was partially offset by roughly $86 million of gains on options, that’s a lot of money for any fund to lose on futures, said Ader.

"It gives new meaning to the term unconstrained," he said.

Janus disclosed that the fund did hold some futures tied to U.S. and German debt, as well as options on such futures, as of March 31 and June 30. The filings don’t show positions on other days during the first half of the year like May 29, instead reporting the average exposure to futures during the period.

Since early this year, Gross's poor performance has weighed on Janus's stock, which is down more than 20% this year. And Gross's boss is quickly growing tired of his one-time star hire's performance. In a rare public rebuke last month, the company's CEO described Gross's performance as "disappointing."  Meanwhile, Gross's former employees at Pimco are proving that the firm is thriving without him, a reality that would bruise the ego of even the most mellow investment managers (and as anybody who has followed Gross's antics over the past three years will know, Gross is anything but mellow).

We wonder: Have the twin humiliations of his divorce and Pimco's continued success caused the one-time "bond king" to go on tilt? Or is he seeing something that the rest of the market is missing?

Published:9/13/2018 3:51:57 PM
[Markets] BookWatch: Bernanke, Geithner and Paulson ‘have invented alternative history’ of Lehman collapse, professor says Ben Bernanke, Timothy Geithner and Henry Paulson are ‘inventing alternate history’ about the financial crisis, Laurence Ball, an economics professor at Johns Hopkins University, said in an interview with MarketWatch.
Published:9/13/2018 3:13:13 PM
[Markets] Dow ends up over 140 points; S&P 500 finishes higher for fourth straight day Dow ends up over 140 points; S&P 500 finishes higher for fourth straight day Published:9/13/2018 3:13:13 PM
[Markets] Stocks Face Swarm Of Hindenburg Omens As Treasury Vol Nears Record Low

Nothing can stop it...

A growing cluster of Hindenburg Omens is raising anxiety levels...

As US equities decouple from the rest of the world and push to ever higher record highs.

As Bloomberg notes, on both the New York Stock Exchange and the Nasdaq there have been eight of these technical patterns over the past six sessions, Sundial Capital's Jason Goepfert said, the biggest cluster since 2014 and the third-longest stretch in 50 years.

The indicator, named after the German zeppelin that caught fire and crashed more than eight decades ago, gauges indecision in the market and is designed to predict a decline within 40 days.

And while warning signals are flashing in equity land, uncertainty in US Treasury bond markets has plummeted to near record lows...

The CBOE/CBOT 10-year U.S. Treasury Note Volatility fell to 3.38 today, which is the lowest since December when it fell to a record low.

Back to today's markets, they were uncharacteristically quiet with Trump's tweet denial of WSJ's trade talks story the only news catalyst for a move... (Small Caps and Trannies underperformed on the day)


But that impact yuan more than stocks...


S&P topped 2,900 intraday and it appears someone wanted to ensure a close above that level...

Thanks to some panic-selling of vol in the last 30 mins...

China stocks were miraculously lifted in the afternoon session...


If you're in the mood for a laugh, here is China's 'Tesla' - NIO - which soared 72% today (after its disappointing IPO yesterday at the low end of its range)...



Treasury yields tumbled on the CPI miss this morning, but retraced those gains after Europe closed...


The Dollar Index dropped once again (3rd drop in the last 4 days)...


But EM FX was mixed with Argentina and Brazil dropping as Lira, Rand, and Ruble rallied...

Cryptocurrencies bucked their recent trend and ended in the green today, with Bitcoin managing to scramble up to unchanged on the week...


Despite the dollar weakness, commodities could not maintain a bid, fading after the CPI disappointment as Reflation bets faded...


WTI dropped back below $69 and Gold futures pushed down towards $1200...


Finally, we thought it interesting that the entire Chinese stock market capitalization is now just 5 times larger than AAPL's (down from nearly 14 times back at the peak of its 2015 bubble)...

The country’s stock market, which is no longer the world’s second biggest, has dropped in value as concerns over economic growth and a trade war with the U.S. linger. China’s market capitalization now stands at $5.7 trillion, leaving its multiple over Apple near the lowest since 2012, according to data compiled by Bloomberg.



Published:9/13/2018 3:13:13 PM
[Markets] US STOCKS SNAPSHOT-Wall St rises with Apple, easing trade fears Apple led a rebound in technology shares and boosted all three major U.S. stock indexes on Thursday, while trade worries eased after China welcomed new talks with the United States. The Dow Jones Industrial ... Published:9/13/2018 3:13:13 PM
[Markets] Trump punches back at Jamie Dimon, calling the CEO of JPMorgan a ‘poor public speaker’ and a ‘nervous mess’ President Trump just intensified a war of words with Jamie Dimon, the CEO of the country’s largest bank. Published:9/13/2018 2:43:01 PM
[Markets] Skripal Suspects Appear For First Time In Shocking Interview: We Are "Framed Tourists"

The same day the US announced it plans a second round of "very severe" sanctions on Russia over the use of a nerve agent in connection to the West's allegations surrounding the Skripal poisoning, the alleged perpetrators of the poison attack have appeared on RT News for an exclusive interview with RT's Editor-in-Chief Margarita Simonyan.

Suffice it to say the whole strange Skripal saga just got a lot more bizarre. The pair told Simonyan in the televised interview that they had nothing to do with it, but were very excited to visit the famous Salisbury cathedral as mere sightseers and were in the Salisbury town briefly on two consecutive days, but that they are not GRU agents or Russian spies

"Our friends had been suggesting for a long time that we visit this wonderful town," they said, and explained that after the short visit, their "whole lives were turned upside down" as they suddenly became "framed tourists" caught up in the Skripal cause after being falsely accused by UK authorities

The pair sat stone-faced throughout the interview and delivered brief, concise answers to RT's questions, while consistently claiming to have been visiting Britain as tourists, but while also acknowledging it was indeed them that appeared in CCTV footage published by the UK authorities

“Salisbury? A wonderful town?” RT's Margarita Simonyan asked. “Yes,” Petrov answered tersely. “It is a tourist town,” Boshirov offered. “There’s a famous cathedral there... It is famous not just in Europe, but in the whole world. It’s famous for its 123-metre spire, it’s famous for its clock, the first one [of its kind] ever created in the world, which is still working.”

Upon the start of the interview wherein the two confirm their true identities as Alexander Petrov and Ruslan Boshirov to RT's Simonyan, the interview proceeds:

SIMONYAN: The guys we all saw in those videos from London and Salisbury, wearing those jackets and trainers, it's you?

PETROV: Yes, it’s us.

SIMONYAN: What were you doing there?

PETROV: Our friends have been suggesting for quite a long time that we visit this wonderful city.

SIMONYAN: Salisbury? A wonderful city?


SIMONYAN: What makes it so wonderful?

BOSHIROV:  It’s a tourist city. They have a famous cathedral there, Salisbury Cathedral. It’s famous throughout Europe and, in fact, throughout the world, I think. It’s famous for its 123-meter spire. It’s famous for its clock. It’s one of the oldest working clocks in the world.

Petrov then explains that the pair planned to visit famous tourist sites in London and in and around Salisbury, but parts of their trip were cut short because of heavy snowfall and inclement weather.

The pair say they only spent three days total in England, due their decision to cut it short, but were in Salisbury for some of that time, on two consecutive days:

SIMONYAN: So, you travelled to Salisbury to see the clock?

PETROV: No, initially we planned to go to London and have some fun there. This time, it wasn’t a business trip. Our plan was to spend some time in London and then to visit Salisbury. Of course, we wanted to do it all in one day. But when we got there, our plane couldn't land on its first approach. That’s because of all the havoc they had with transport in the UK on March 2 and 3. There was heavy snowfall, nearly all the cities were paralyzed. We were unable to go anywhere.

BOSHIROV: It was in all the news. Railroads didn't work on March 2 and 3. Motorways were closed. Police cars and ambulances blocked off highways. There was no traffic at all – no trains, nothing. Why is it that nobody talks about any of this?

SIMONYAN: Can you give a time line? Minute-by-minute, or at least hour-by-hour, or as much as you can remember. You arrived in the UK – like you said, to have some fun and to see the cathedral, to see some clock in Salisbury. Can you tell us what you did in the UK? You spent two days there, right?

PETROV: Actually, three.

SIMONYAN: OK, three. What did you do for those three days?

PETROV: We arrived on March 2. We went to the train station to check the schedule, to see where we could go.

BOSHIROV: The initial plan was to go there for a day. Just take a look and return the same day.

PETROV: To Salisbury, that is. One day in Salisbury is enough. There’s not much you can do there.

BOSHIROV: It’s a regular city. A regular tourist city.

SIMONYAN: OK, I get that. That was your plan. But what did you actually do? You arrived. There was heavy snowfall. No trains, nothing. So, what did you do?

PETROV: No, we arrived in Salisbury on March 3. We wanted to walk around the city but since the whole city was covered with snow, we spent only 30 minutes there. We were all wet.

In comments that will likely be able to be easily proven or disproven, he followed with: "There are no pictures. The media, television – nobody talks about the fact that the transport system was paralyzed that day. It was impossible to get anywhere because of the snow. We were drenched up to our knees."

In Salisbury, Petrov continued, the two intended "to see Stonehenge, Old Sarum, and the Cathedral of the Blessed Virgin Mary. But it didn’t work out because of the slush." But they blame the harsh conditions for quickly canceling their plans and "transport collapse", and they returned the train station after their initial arrival in the town via train from London. 

SIMONYAN: All right. You went for a walk for 30 minutes, you got wet. What next?

PETROV: We travelled there to see Stonehenge, Old Sarum, and the Cathedral of the Blessed Virgin Mary. But it didn’t work out because of the slush. The whole city was covered with slush. We got wet, so we went back to the train station and took the first train to go back. We spent about 40 minutes in a coffee shop at the train station.

BOSHIROV: Drinking coffee. A hot drink because we were drenched.

PETROV: Maybe a little over an hour. That’s because of large intervals between trains. I think this was because of the snowfall. We went back to London and continued with our journey.

BOSHIROV: We walked around London…

SIMONYAN: So, you only spent an hour in Salisbury?

PETROV: On March 3? Yes. That’s because it was impossible to get anywhere.

SIMONYAN: What about the next day?

PETROV: On March 4, we went back there, because the snow melted in London, it was warm.

BOSHIROV: It was sunny.

PETROV: And we thought – we really wanted to see Old Sarum and the cathedral. So we decided to give it another try on March 4.

SIMONYAN: Another try to do what?

PETROV: To go sightseeing.

BOSHIROV: To see this famous cathedral. To visit Old Sarum.

SIMONYAN: So, did you see it?

BOSHIROV: Yes, we did.

PETROV: On March 4, we did. But again, by lunchtime, there was heavy sleet.

BOSHIROV: For some reason, nobody talks about this.

PETROV: So we left early.

In total, the pair say they spent only an hour on their first day in Salisbury "because it was impossible to get anywhere," before taking a train back to London. The men say this all happened on March 3rd, the day before the alleged poisoning of Sergei Skripal, a former Russian military officer and double agent for the UK's intelligence services, and his daughter Yulia Skripal, in the same town. 

However, they say they returned to sightsee in Salisbury the next day, March 4, on the day of the Skripal attack.

And continuing, RT's Simonyan asked them to divulge proof that they took photographs of the sites. The pair agreed they would provide their tourist photographs to the media as proof of their story.

SIMONYAN: Is it beautiful?

BOSHIROV: The cathedral is very beautiful. There are lots of tourists, lots of Russian tourists, lots of Russian-speaking tourists.

PETROV: By the way, they should have a lot of pictures from the cathedral.

SIMONYAN: Your pictures, you mean?

PETROV: They should show them.

SIMONYAN: I assume you took some pictures while at the cathedral?

PETROV: Of course.

BOSHIROV: Sure, we did. We went to a park, we had some coffee. We went to a coffee shop. We walked around, enjoying those beautiful English Gothic buildings.

PETROV: For some reason, they don’t show this. They only show how we went to the train station.

SIMONYAN: If you give us your pictures, we can show them. So, while you were in Salisbury, did you go anywhere near the Skripals home?

PETROV: Maybe. We don’t know.

BOSHIROV: What about you? Do you know where their house is?

SIMONYAN: I don’t. Do you?

BOSHIROV: We don't either.

PETROV: I wish somebody told us where it was.

And Boshirov added after the series of questions concerning the Skripal residence: "Maybe we passed it, or maybe we didn’t. I’d never heard about them before this nightmare started. I’d never heard this name before. I didn’t know anything about them."

On the issue of the alleged "perfume bottle" the UK police claim to have identified as used for delivery of the nerve agent, the two accused men said the prospect is "absurd".

SIMONYAN: When you arrived in the UK, when you were in London or in Salisbury, throughout your whole trip, did you have any Novichok or some other poisonous agent or dangerous substance with you?


PETROV: It’s absurd.

SIMONYAN: Did you have that bottle of Nina Ricci perfume which the UK presents as evidence of your alleged crime?

BOSHIROV: Don’t you think that it’s kind of stupid for two straight men to be carrying perfume for ladies? When you go through customs, they check all your belongings. So, if we had anything suspicious, they would definitely have questions. Why would a man have women's perfume in his bag?

PETROV: Even an ordinary person would have questions. Why would a man need perfume for women?

And on the issue of the widely circulated and somewhat mysterious (considering the same exact time stamp for each) security camera photographs at Gatwick airport...

SIMONYAN: Right. Here’s the photo that’s got the whole world puzzled. Gatwick. You’re going through the gate at the same time, even at the same second. How do you explain that?

BOSHIROV: I think it’s for them to explain.

PETROV: How can we explain it?

CCTV images of Petrov and Boshirov at Gatwick airport on 2 March 2018.

BOSHIROV: We always go through the gate together. Through the same gate, with the same customs officer. One after another. We walked through that corridor together. We’re always together. As to how it happened – us walking there at the same second and then separately – I think it’s a question that should be put to them.

PETROV: Yeah, on the point of us always going through it together – my English is a bit better, so if any problem crops up, I’m there to help Ruslan out.

SIMONYAN: So you went through together? You didn’t take different corridors?

PETROV: No, we never go through separately.

BOSHIROV: No, never.

SIMONYAN: So what about these photos then? You say it never happened? Or were they doctored?

BOSHIROV: Well, I don’t really know…

PETROV: It’d be a good thing if we could actually remember it…

BOSHIROV: … how they do these things over there. When you arrive at an airport, or leave one, when you go somewhere or other, you never think about the cameras… There’s nothing interesting about them. How they film, or what, or where – I’m not interested in any of that and so I never took any notice. Given that it was them who published these photos with this time on them and all, I think the best thing to do would be to ask them. 

Near the end of the interview, the two men explicitly denied working for GRU and demanded a formal apology from the UK government over the whole gambit of accusations.

But when pressed further about how they know each other and their past, said they preferred not give too many public details about their lives, but explained they worked as part of a fitness nutrition supplements business. 

Published:9/13/2018 2:43:01 PM
[Markets] The Next Financial Crisis Is Right On Schedule (2019)

Authored by Charles Hugh Smith via OfTwoMinds blog,

Neither small business nor the bottom 90% of households can afford this "best economy ever."

After 10 years of unprecedented goosing, some of the real economy is finally overheating: costs are heating up, unemployment is at historic lows, small business optimism is high, and so on--all classic indicators that the top of this cycle is in.

Financial assets have been goosed to record highs in the everything bubble.Buy the dip has worked in stocks, bonds and real estate--what's not to like?

Beneath the surface, the frantic goosing has planted seeds of financial crisis which have sprouted and are about to blossom with devastating effect. There are two related systems-level concepts which illuminate the coming crisis: the S-Curve and non-linear effects.

The S-Curve (illustrated below) is visible in both natural and human systems.The boost phase of rapid growth/adoption is followed by a linear phase of maturity in which growth/adoption slows as the dynamic has reached into the far corners of the audience / market: everybody already caught the cold, bought Apple stock, etc.

The linear stage of maturity is followed by a decline phase that's non-linear.Linear means 1 unit of input yields 1 unit of output. Non-linear means 1 unit of input yields 100 unit of output. In the first case, moving 1 unit of snow clears a modest path. In the second case, moving 1 unit of snow unleashes an avalanche.

The previous two bubbles that topped/popped in 2000-01 and 2008-09 both exhibited non-linear dynamics that scared the bejabbers out of the central bank/state authorities accustomed to linear systems.

In a panic, former Fed chair Alan Greenspan pushed interest rates to historic lows to inflate another bubble, thus insuring the next bubble would manifest even greater non-linear devastation.

Ten years after the 2008-09 Global Financial Meltdown, analysts are still trying to understand what happened. For example, the new book Crashed: How a Decade of Financial Crises Changed the World by Adam Tooze is an attempt to autopsy the meltdown and investigate the mindset and assumptions that led to the panicky bailouts and frantic goosing of a third credit/asset bubble--the bubble which is about to pop with even greater non-linear effects.

This is the nature of non-linear dynamics: everything is tightly tied to everything else. Tightly bound/connected systems are hyper-coherent, i.e. every component is tightly bound /correlated to other components.

This is how the relatively modest-sized subprime mortgage market ($500 billion) almost toppled the entire $200 trillion global financial market.

The vast imbalances created by 10 years of unceasing goosing will unleash a non-linear avalanche of reversions to the mean and rapid unwinding of extremes. Consider the impact on hedges, a necessary function of the financial system. With yields so low, the cost of hedging negatively impacts returns, so hedging has been abandoned, trimmed or distilled down to magical-thinking (shorting volatility as the "can't lose" hedge for all circumstances).

With shorting volatility being the one-size-fits-all hedge, the signaling value of volatility has been distorted. The same can be said of other measures: the information value of traditional financial signals have been lost due to manipulation and/or goosing.

The interconnectedness of global markets means a small blaze in a distant market can quickly become a conflagration. Put these two together and you get a perfect setup for crisis and crash: nobody really knows anything because the signals have been distorted, but everyone thinks they know everything-- sell volatility and buy the dip. It works great until it doesn't.

Meanwhile, beneath the "best economy ever" the rot is accelerating. This article on the empty storefronts proliferating throughout New York City's neighborhoods, This Space Available, mentions one dynamic in passing that is an example of the distortions that will be unwound in the next financial crisis.

Desperate for yield in the near-zero yield world engineered by central banks, investors have piled into commercial real estate and overpaid for buildings as the bubbles in rents and valuations expanded in tandem.

These owners are now trapped: their lenders demand long-term leases that lock in nosebleed rents, but back in the real world, no business can survive paying nosebleed rents, and agreeing to long-term leases in this environment is akin to committing financial suicide.

If you actually want to make a profit, it's impossible to do so paying current commercial rent rates. And if you want to retain the absolutely critical flexibility you'll need to adjust as conditions change, you can't sign a long-term lease. Everyone signing a long-term lease today will be declaring bankruptcy in 2019 when the recession trims sales but leaves expenses unchanged.

In other words, neither small business nor the bottom 90% of households can afford this "best economy ever." The financial markets have completely disconnected from reality, and the process of reconnection will unravel all the imbalances and extremes and deflate every interconnected bubble.

The current fantasy is that bubbles will never pop and recessions are a thing of the past; financial engineering can maintain bubbles and "growth" forever. Everything is distorted to the point that those wandering the hall of mirrors believe they know everything they need to know to continue reaping fat returns on capital.

Conventional thinking that performs well in linear eras is disastrously ill-prepared to navigate non-linear eras like the one we'll be entering in 2019 - right on schedule.

*  *  *

My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free in PDF format. My new book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition.  Read the first section for free in PDF format.  If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

Published:9/13/2018 2:14:12 PM
[Markets] Ray Dalio: Rising debt, income inequality and political polarization are a recipe for a nasty downturn Billionaire hedge-fund manager Ray Dalio warns that the next financial crisis will threaten capitalism and democracy. Published:9/13/2018 2:14:12 PM
[Markets] The Ratings Game: iPhone XR creates some drama for Apple’s new lineup Despite a fairly straightforward iPhone launch event, Apple Inc.’s approach to the iPhone XR is sparking some debate.
Published:9/13/2018 2:14:12 PM
[Markets] Metals Stocks: Gold prices settle lower in pullback from 2-week high Gold futures finish lower Thursday, pulling back a day after scoring their highest finish in two weeks.
Published:9/13/2018 1:46:19 PM
[Markets] US Government Spends A Record $433 Billion In One Month As Deficit Explodes

Two days ago we previewed the the US budget deficit for the first 11 months of fiscal 2018, which according to CBO data, hit $895 billion, up $222 billion or 39% from the same period last year. Additionally, we noted that according to CBO calculations, the US would hit a $1 trillion deficit in calendar 2019, one year sooner than the previous forecast of 2020.

Today, the US Treasury released the detailed budget deficit breakdown for the month of September and the first 11 months of the year, and the numbers are scary.

According to the latest Monthly Treasury Statement, in August, the US collected only $219BN in tax receipts - consisting of $106BN in individual income tax, $93BN in social security and payroll tax, a negative $3BN in corporate tax and $24BN in other taxes and duties- a drop of 3.2% from the $226BN collected last August...

... but more concerning was that in August, the 12 month trailing receipt total was barely higher compared to a year ago, up just 0.3% Y/Y after rising as much as 3.1% at the end of 2017, and on the verge of turning negative year over year.

The real highlight of the August budget report was that government outlays, or total spending, soared to $433.3 billion, not only 30% higher than a year ago, but the highest government monthly outlay of any month on record.

This is where the money was spent: social security ($108BN), defense ($65BN), Medicare ($83BN), Interest on Debt ($32BN), and Other ($146BN).

This resulted in a August budget deficit of $214 billion, which was not only one of the highest one-month deficits on record, but also the highest August deficit on record.

The August deficit brought the cumulative 2018F budget deficit to over $898BN during the first 11 month of the fiscal year, up a whopping 40% over the past year.

This was the highest 12 month cumulative deficit since February 2013; as a reminder the deficit is expect to increase further amid the tax and spending measures, and rise above $1 trillion as soon as next year.

And while the August numbers had a few calendar quirks, until recently Most Wall Street firms forecast a deficit for fiscal 2018 - which closes on September 30 - of about $850 billion, a number which has already been surpassed by $50 billion, at which point things get... much worse. As we showed In a recent report, CBO has also significantly raised its deficit projection over the 2018-2028 period.

But while out of control government spending is clearly a concern, an even bigger problem is what happens to not only the US debt, which recently hit $21.3 trillion, but to the interest on that debt, in a time of rising interest rates.

As the following chart shows, US government Interest Payments are already rising rapidly, and just hit an all time high of $538 billion in Q2 2018. 

Interest costs are increasing due to three factors: an increase in the amount of outstanding debt, higher interest rates and higher inflation. Needless to say, all three are increasing; furthermore, a rise in the inflation rate boosts the upward adjustment to the principal of TIPS, increasing the amount of debt on which the Treasury pays interest, turbocharging the amount of interest expense.

The bigger question is with short-term rates still just around 2%, what happens when they reach the mid-3% as the Fed's dot plot suggests it will?

Published:9/13/2018 1:46:19 PM
[Markets] Bezos Launches $2 Billion Fund To Help The Homeless And Preschoolers

With Amazon's mistreatment of workers at its subsidiaries and subcontractors once again occupying space in the headlines (thanks in no small part to the efforts of Sen. Bernie Sanders and his Stop BEZOS act), Amazon founder Jeff Bezos is leveraging his immense wealth to try and whitewash his reputation as a ruthless - and the world's wealthiest - capitalist with some good-old-fashioned philanthropy.


After soliciting suggestions for his first charitable initiative last year, Bezos on Thrusday unveiled the "Bezos Day One Families Fund" and "Bezos Day One Academies Fund". Both initiatives will be overseen by an entity that Bezos is calling the "Bezos Day One Fund," which he will seed with $2 billion from his personal fortune. The funds will out grants to organizations focused on helping the homeless, while also "creating a network of new, non-profit, tier-one preschools in low-income communities."

The fund's vision statement - "no child sleeps outside" - comes from the charity Mary's Place in Seattle, according to Bloomberg.

Adding a dash of irony to the statement, Bezos vowed to use "the same set of principles that have driven Amazon" to ensure his charity's success. Indeed, at Bezos funded preschools, "the child will be the customer."

As Bloomberg points out, before the launch of Day One, Bezos had been a nonentity in the world of philanthropy. Even his Bezos Family Foundation was started largely with wealth accrued by his parents, who were early investors in Amazon.

Until now, Bezos has made only small initial steps into giving. The Bezos Family Foundation, which is best known for its support of children’s education, has been largely funded by his parents from Amazon holdings they acquired as early investors in their son’s enterprise. Outside of that, Bezos and his family’s known donations have included gifts to Princeton University and Seattle’s Fred Hutchinson Cancer Research Center, according to the Chronicle of Philanthropy.

To be sure, Amazon has launched programs to help the homeless in Seattle, recently renovating a vacant building to serve as a homeless shelter. But these efforts have, at best, merely offset the bump in homelessness that Amazon's headquarters has inadvertently caused by drawing tens of thousands of well-paid corporate workers to the city. What's worse, the company also successfully pressured the city council to repeal an employee head tax earlier this year that would have been used to fund programs for the homeless.

And while we'd like to believe that Bezos' intentions in launching this effort are nothing but pure, it's worth considering that Amazon Web Services is presently jockying for an immensely lucrative contract to convert the Pentagon's IT infrastructure to the cloud. That contract could be worth as much as $10 billion over as many years.

On Twitter, Michael Krieger put it best...

Published:9/13/2018 1:12:09 PM
[Markets] "Hurricane Hunters" : Meet the Pilots Flying Through Hurricane Florence

While most people are evacuating and trying to get as far away from Hurricane Florence as possible, others, like the Mississippi-based Hurricane Hunters, get into airplanes and fly right into the vortex to find and record detailed information about the storm that most current satellite images and weather technologies can’t.

The Hurricane Hunters group, profiled in a recent WSJ report, was founded in the mid-20th-century by former World War II pilots who had extensive experience flying in poor conditions. The Hurricane Hunters and their 10 planes are all part of the Air Force Reserve's 403rd wing and are funded by both the United States Department of Defense and the Department of Commerce.

What are these Hurricane Hunters able to pick up that traditional weather technologies can't? According to Pilot Capt. Ben Blair:

“The satellites are good at picking up the visible stuff from a top-down perspective. But we actually get the temperature, the pressure, wind speed, dew point and all that good stuff from inside the storm itself, from the core.”

An example: the result of a flight that the group undertook on Tuesday of this week helped the National Hurricane Center adjust its estimate of Florence's windspeeds higher then they had been previously. The update came less than two hours after the Hurricane Hunters group had collected the data. It was the Hunters' data, on Wednesday, that also helped to determine that wind speeds had decreased to near 125 mph.

The group began to track Florence on Monday and flights have continued around the clock since. The group will make its last flight right before the hurricane is about to make landfall. Lieutenant Black stated that large and slow moving storms, similar to Hurricane Harvey in 2017, can take sometimes more than 10 flights to monitor.

First Lieutenant Garrett Black of the Hunters, who is also a meteorologist, said about Hurricane Florence "It’s going to be a beast."

While flying through Hurricane Florence on Tuesday, the plane used by the Hunters moved in a strategic series of triangles that helped it reach points where it needed to drop sensors. The flights always make left turns so that they work with, instead of against, the rotation of the storm.

These planes generally travel slower and at a lower altitude than most aircraft. They fly through the storms at between 5,000 and 10,000 feet in at about 200 mph. Commercial flights usually fly in about 35,000 feet more than 500 mph.

"If you get too fast going through that kind of severe turbulence, it can bend things on the aircraft.” Capt. Blair said.

The sensors that the group uses are $700 groups of sensory electronics in cardboard wrapped capsules. They are dropped strategically at points along the outer bands of the storm, the eyewall and the eye itself. Once dropped, the  capsules fall at the rate of a half mile per minute. From there, they send back data three times per second on things like barometric pressure and wind speed.

The data from these capsules is combined with data from a device that is placed below the right wing on the plane itself. These devices, called SFMRs ("stepped frequency microwave radiometers"), gauge storm intensity and send their data back to the National Weather Service, where they can use it within 20 minutes.

On Tuesday's flight through the storm, one of the Hurricane Hunter planes shook as it encountered gusts of wind as high as 167 mph. When it hit the eye, the ride became smooth, even with some "occasional patches of blue sky". The eye was estimated by the storm chasers to be 36 miles in diameter at the time. 

But the lieutenant also said that the eye wall of the storm was getting stronger, and that was a sign of the storm strengthening. “This thing is not messing around,” Lt. Black concluded.

Published:9/13/2018 12:42:34 PM
[Markets] Tepper has been cutting his stock-market holdings, says Wall Street in ‘late innings’ Billionaire David Tepper, one of Wall Street’s top all-time hedge-fund managers, on Thursday offered a less-than-bullish outlook for stocks, pointing to fears of clashes with China on trade and a bull market that is in its 10th year as cause for moderation. Published:9/13/2018 12:42:34 PM
[Markets] Forecaster of the Month: Next recession won’t come from household debts, prize-winning forecaster says The next recession won’t be the fault of U.S. households like the last one was, said Ellen Zentner, chief U.S. economist at Morgan Stanley and the winner of the Forecaster of the Month contest for August.
Published:9/13/2018 12:42:33 PM
[Markets] Wall Street gains extended as tech stocks rise and trade-war jitters ease Wall Street gains extended as tech stocks rise and trade-war jitters ease Published:9/13/2018 12:15:55 PM
[Markets] Decade later: Safer financial system yet much hasn't changed On the brink of crumbling a decade ago, America's financial system was saved by an extraordinary rescue that revived Wall Street and the economy yet did little for individuals who felt duped and left to suffer from the reckless bets of giant banking institutions. The government intervention shored up the banking system, allowed credit to flow freely again and helped set the economy on a path toward a painfully slow but lasting recovery from the Great Recession. In the process, though, millions endured job losses, foreclosures and a loss of financial security and struggled to recover with little outside help. Published:9/13/2018 12:15:55 PM
[Markets] The Wall Street Journal: U.S. sanctions Russian and Chinese tech firms it says are North Korean front companies The U.S. Treasury Department on Thursday sanctioned two Russian and Chinese technology firms it said are front countries for North Korea
Published:9/13/2018 12:15:55 PM
[Markets] Strong Demand For 30Y Treasurys In Week's Final Auction

Just like yesterday's 10Y auction, which priced only a few basis points away from the August high yield, so moments ago the week's final auction, a 30 Year reopening of Cusip SD1 priced just barely away from the August auction, stopping at 3.088%, on the screws with the 3.088% When Issued, and 0.2bps lower than the 3.090% last month. This shows just how tight the auction range has been in recent months, and despite some notable moves over the past month, earlier today 10Y Treasury vol just hit a new all time low.

The internals on today's auction showed that, just like yesterday, demand remains brisk for US duration, with the Bid to Cover of 2.34, above last month's 2.274 and in line with the 6 month average of 2.36. Indirects were also solid, taking down 61.7% of the auction, just below the 62.2% last month but above the 61.3% average; Directs took down 11.3%, the most since April, leaving 27.0% for Dealers who ended up with less than both last month's 29.7%, and the 6 month average of 27.6%.

And as another week of Treasury issuance comes to a close, buyers have yet to represent any reluctance to buy US treasurys despite a surge in issuance coming down the pipeline as the US budget deficit funding needs are set to soar.

Published:9/13/2018 12:15:55 PM
[Markets] US stocks jump as inflation slows; tech rebounds NEW YORK (AP) — U.S. stocks are climbing Thursday after the Labor Department said inflation slowed a bit in August. Technology companies like Apple and Microsoft made some of the largest gains after a recent bout of uncertainty, and chipmaker Qualcomm jumped after it announced a big stock repurchase. Published:9/13/2018 11:40:33 AM
[Markets] US Destroyer Enters Mediterranean As Syria Tensions Build; Carrier On Standby

An American battleship, the USS Bulkeley destroyer, has reportedly entered the Mediterranean and is headed for Syria, equipped with over 50 Tomahawk missiles. This deployment comes after previous reports of the attack submarine USS Newport News (SSN-750) arriving in the Mediterranean, and after the arrival Tuesday of A U.S. Marine Corps small attack carrier full of F-35B stealth jets, the USS Essex, in the Middle East region as detailed by the military website, Task and Purpose

The Russian news agency Interfax now reports that American forces in the region possess up to 200 Tomahawk cruise missiles available to strike targets in Syria if ordered to do so.

The Wasp-class amphibious assault ship USS Essex (LHD 2) on Sept. 4, 2018, via US Navy

And the USS Essex, part of the 13th Marine Expeditionary Unit (MEU), has rapid deployment forces of Marine units designed for immediate amphibious landing in coastal areas, along with a advanced stealth fighter aircraft.

Gerald Olin, commander of Amphibious Squadron of which the Essex is part, has defined the deployment's mission as follows: “The embarked Marines of 13th MEU allow us the flexibility to rapidly respond to crises and set conditions that promote security in the region.”

The build-up in and near the Mediterranean comes amidst a massive Russian navy presence along Syria's coast and after two weeks of threats from US officials that America will react "swiftly and appropriately" should Assad launch a chemical weapons attack. 

Though Russian bombing over Idlib began days ago, it appears a full Syrian Army and Russian assault has been delayed partly over the objections of Turkey. 

Guided missile destroyer USS Bulkeley, via US Navy

According to Task and Purpose the agile Essex small carrier is designed for quick military action and response

Until recently, the U.S. had no capital ships and just one or two destroyers in the Mediterranean, but the USS Essex, a small, flat-deck aircraft carrier used to launch U.S. Marine Corps F-35B stealth jets that can take off almost vertically, just arrived off the horn of AfricaUSNI News reports.

Though the Essex remains on the opposite side of the Suez Canal from Russia’s ships in the Mediterranean, it’s a quick-moving ship. Additionally, the F-35Bs can fly about 550 miles out from the ship in stealth configurations that make them hard to detect for enemy defenses.

Last week Russia conducted major military drills along Syria's coast as a show of force. On Saturday footage released by Russia’s Defense Ministry showed marine special forces equipped with the latest Russian gear landing on the shores of the Syrian Latakia province.

As part of the staged invasion, the Russian Marines used helicopters, fast attack craft and armored vehicles while landing from major amphibious ships under cover of dozens of Russian combat aircraft.

Meanwhile, Pentagon officials have said that the US “does not seek to fight the Russians, the government of Syria or any groups that may be providing support to Syria."

However, the US responded to the Russian drills by its own drill involving over 100 Marines flown to southeast Syria for "snap live-fire exercises" in order to send a "strong message" to Russia after earlier last week Moscow warned its forces could attack in the area near US-occupied At Tanf. 

Published:9/13/2018 11:40:33 AM
[Markets] Project Syndicate: Who really creates value in an economy? The billionaires, or us? The only way to revive our economies fully requires the public sector to reprise its pivotal role as a strategic, long-term, and mission-oriented investor, writes Mariana Mazzucato.
Published:9/13/2018 11:40:33 AM
[Markets] Stocks Rise, S&P 500 Heads for Fourth Day of Gains Here Are 3 Hot Things to Know About Stocks Right Now The Dow Jones Industrial Average has risen for two straight sessions, while the S&P 500 has closed higher for three. Apple Inc. rose 3.2% after the tech giant unveiled three new iPhones. Published:9/13/2018 11:26:08 AM
[Markets] Latest Tesla Software Update "Disabled" Autopilot

Many Tesla owners have lost all autopilot functionality as a result of the company’s latest "over the air" software update, according to Jalopnik . Tesla knows about the issue and has promised to fix it by Friday of this week, according to the article, saying it was "a known issue".

Tesla has been sending out its latest "over the air" software update over the course of this week. The purpose of the software update was to increase the capabilities of Autopilot and help it further incorporate traffic lights, stop signs, lane changes and off-ramps.

As a reminder, numerous Tesla Autopilot incidents have occurred when a vehicle moves out from in front of a Tesla vehicle, and/or when there's an option to take an off-ramp nearby. Videos like this one, on YouTube, have confirmed the issue:

A driver cited in the story noticed that their software update had failed on Tuesday and, after talking to a representative at Tesla who said it would be fixed Wednesday, discovered that Autopilot had been disabled completely.

The customer service experience was also problematic for this owner: it took a half hour to reach a Tesla representative by phone, who then went on to explain that there was no "immediate fix", but rather that the issue should just be resolved "soon". In total the owner had to wait a total of an hour and a half to get an answer from a Tesla representative.

An email reportedly sent by Tesla stated "The current estimate is that the issue should be solved in the next two days." We doubt those who shelled out $5,000 extra for Autopilot will be thrilled with this response.

As a reminder, the autopilot "issue" has emerged just hours after Elon Musk himself tweeted out that customers "may experience longer response times", supposedly due to "a large increase" in vehicle deliveries.

The company’s ability to update software over the air has received both positive and negative scrutiny. Skeptics are worried that it gives the company too much control over the functionality of vehicles, while supporters point to successes like fixing the Model 3 braking issue that was raised by Consumer Reports earlier this year.

Published:9/13/2018 11:26:08 AM
[Markets] Facebook to begin fact checking memes Facebook to begin fact checking memes Published:9/13/2018 11:26:08 AM
[Markets] In One Chart: The story of the bull market, in four charts By one measure, the financial crisis reached its flashpoint 10 years ago this week, when the storied investment bank Lehman Brothers filed for the largest bankruptcy in corporate history.
Published:9/13/2018 11:26:08 AM
[Markets] Copper Miners: Tough to Love, Even Tougher to Hate Freeport-McMoRan (FCX), the leading US-based copper miner (DIA), is having a tough year. The stock has lost 27.7% YTD (year-to-date) based on the closing prices on September 12. Other copper miners are also feeling the heat. Copper is caught in the US-China trade war. Copper prices are hovering near $6,000 per metric ton. In June, copper rose past $7,200 per metric ton to a four-year high. Published:9/13/2018 10:46:20 AM
[Markets] Amazon's Bezos unveils plan for $2 billion philanthropic push Amazon's Bezos unveils plan for $2 billion philanthropic push Published:9/13/2018 10:46:20 AM
[Markets] US To Impose "Very Severe" Sanctions On Russia Over Skripal Case

In the latest salvo meant to convince Mueller that Trump is not a pawn of the Kremlin, a State Dept official said on Thursday that the US plans a second round of "very severe" sanctions on Russia over use of nerve agent. The stated reason: Russia has not allowed on-site chemical weapons inspections, nor has it provided reassurance that it won’t use nerve agents against its own people, says Manisha Singh, Asst. Sec. for bureau of economic and business affairs

"We are looking at this November deadline” under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991, Singh said, adding that "we plan to impose a very severe second round of sanctions."

The sanctions will kick in some time in November, presumably just after the November midterms, if Moscow does not take steps in the wake of the poisoning of former Russian spy Sergei Skripal in the United Kingdom, Assistant Secretary of State Manisha Singh said on Thursday.

"We have indicated to them that they can evade, they can make themselves not subject to these sanctions if they allow the onsite inspections, if they give us a verifiable assurance that they will not use these nerve agents against their own people again," Singh said. "They have not done so so far, so to that extent, we are looking at this November deadline as absolutely, we plan to impose a very severe second round of sanctions under the CBW [Biological Weapons and Warfare Elimination Act]."

While US sanctions on Russia are hardly new, what is surprising this time is that the new round will include not only defense procurement and aid, but also target the country's increasingly unstable banking sector. Quote Sing: "It’s going to include banking sanctions, prohibition on procurement of defense articles, aid money -- it’s a laundry list of items that will penalize the Russian government."

In kneejerk response, the ruble slumped, erasing most intraday gains resulting from the slumping dollar, although it has since recouped some of the losses.

In early August, the United States announced a new round of sanctions against Russia over its alleged involvement in the poisoning of former Russian spy Sergei Skripal and his daughter Yulia in UK's Salisbury in March.

The first wave of restrictions took effect on August 22, while the second package would depend on Moscow's future policies.

Published:9/13/2018 10:46:19 AM
[Markets] Economic Report: Mortgage rates hit 6-week high with housing market at a crossroad Rates for home loans reach a six-week high as upbeat economic data and a bulging deficit spur a yield-lifting bond sell-off and big questions grip the housing market.
Published:9/13/2018 10:46:19 AM
[Markets] Benchmark U.S. mortgage rate hits 6-week high Benchmark U.S. mortgage rate hits 6-week high Published:9/13/2018 10:11:42 AM
[Markets] Trump punches back at Dimon, calls CEO of JPMorgan ‘poor public speaker & nervous mess’ President Trump just intensified a war of words with Jamie Dimon, the CEO of the country’s largest bank. Published:9/13/2018 10:11:42 AM
[Markets] Here Is Apple's iPhone Pricing Strategy In One Chart

Apple's latest - and disappointing - annual iPhone product unveiling also revealed the two biggest headaches troubling CEO Tim Cook today: first is the lack of a new "must have" gadget (Apple watch EKG aside), with the iPhone failing to impress the faithful for the second year in a row, and prompting sellside analysts to conclude that for one more year there won't be a "must have"  iPhone supercycle.

Second is that as a result of this lack of creativity and innovation, and perhaps due to market saturation, iPhone sales have now been largely stagnant for three years, with AAPL reporting a modest decline in iPhone sales in the last quarter.

Which leads us to the most closely watched part of yesterday's Apple presentation: the price points of the various iPhones, which will be key in establishing both projected and realized average selling prices. And since total revenue is a function of total sales x prices, Apple is now focusing exclusively on the price point, realizing that volumes may have topped out.

For the best visual representation of just how inflationary Apple's "price hiking" strategy is, we present readers with the following chart from Horace Dediu, which shows that after pricing the original iPhone 1 around $500 a decade ago, the top end iPhone XS Max 512 will now cost $1,449 - or as much as a top of the line notebook computer - with many of the "well-equipped" new models selling for over $1,000, while a variety of legacy models will still be available for as low as $500.

In other words, a price point for everyone, with Apple naturally hoping, that the bulk of the new iPhones sold will be among the highest pricing tiers.

Will this strategy, coupled with the magnetic attraction of Apple's ecosystem work, or will Apple's lack of innovation and chronic recent plagiarism of the best Samsung features eventually end up costing Cook remains to be seen. The first channel checks of the new iPhone will be available in late October when the new generation of iPhones goes on sale. Check back then.

One thing is clear: for all those who claim that new technology is supposed to be deflationary, Tim Cook's strategy is anything but.

Published:9/13/2018 10:11:42 AM
[Markets] Trump's FEMA administrator Brock Long is under investigation Trump's FEMA administrator Brock Long is under investigation Published:9/13/2018 9:43:10 AM
[Markets] Trump Denies WSJ Report, Says "Under No Pressure To Make Deal With China"

The reason why the market spiked yesterday just before noon, if briefly, was a WSJ report that the Trump admin is reaching out to China for a new round of trade talks, in an effort "to give Beijing another opportunity to address Washington’s concerns over trade issues before the Trump administration implements additional tariffs on Chinese imports."

Many took this with a grain of salt - after all this would be the third time in the past month that the US and China were supposedly trying to break the trade war deadlock - but more importantly, the person behind the outreach was noted globaliset Steven Mnuchin who as we said yesterday, "is well known to be for a resumption of better trade relations", while trade hawk Navarro has been pushing for a far more hard line stance with China.

To resolve this confusion, we said "Perhaps the best option is just to wait for Trump to tweet his own thoughts on the matter."

Well, moments ago Trump did just that, when he poured cold water on the diplomatic implications of the WSJ's report, tweeting that "The Wall Street Journal has it wrong, we are under no pressure to make a deal with China, they are under pressure to make a deal with us."

Why? Because as we also said yesterday, Trump remains convinced that he has all the bargaining leverage because - according to the stock market - he is winning the trade war with Beijing, to wit:

Our markets are surging, theirs are collapsing. We will soon be taking in Billions in Tariffs & making products at home.

So where does that leave us? Well, pretty much where we were before the WSJ report, or as Trump put it, "If we meet, we meet?"

While any other day, the Trump tweet - which could be seen as a catalyst for further trade disputes - would be bullish for the dollar and bearish for the S&P, today the combination of the CPI miss and the hawkish ECB has led to virtually no response at all in the market, at least for now, and stocks remained strongly higher, with the S&P above 2,900 and just shy of new all time highs.

That said, Chinese assets were clearly far more impacted, and the AUD slumped just as the the offshore Yuan quickly dropped over 200 pips on the Trump comment.

Published:9/13/2018 9:43:10 AM
[Markets] GLOBAL MARKETS-Trade hopes, Turkey rate hike feed the bulls Signs of movement in the U.S.-China trade stand-off and a rate hike in emerging market trouble spot Turkey sent an index of global stocks higher on Thursday as risk appetite returned. Wall Street opened higher, following broad gains in Europe and Asia's major markets, after news that U.S. President Donald Trump's administration had put out feelers to Beijing for a new round of trade talks. Turkey's central bank also made a rare show of independence, ignoring a fresh bashing from President Tayyip Erdogan and jacking up its interest rates by more than one-third to 24 percent. Published:9/13/2018 9:43:10 AM
[Markets] Trump Today: Trump Today: President disputes Puerto Rico hurricane death toll and blasts JPMorgan’s Dimon President Donald Trump on Thursday accused Democrats of inflating Puerto Rico’s death toll from Hurricane Maria to make him look bad, as he hit back at JPMorgan Chase & Co. Chief Executive Jamie Dimon.
Published:9/13/2018 9:43:09 AM
[Markets] Albert Edwards: Why We Are Destined To Repeat The Mistakes Of The Past

With everyone and their grandmother opining on the 10 year anniversary of the start of the global financial crisis, it was inevitable that the strategist who predicted the great crash (and according to some has been doing the same for the past decade) - SocGen's Albert Edwards - would share his thoughts on what he has dubbed the "10th anniversary of chaos."

In it, the SocGen skeptic slams the trio of Bernanke, Geithner and Paulson who have been not only penning op-eds in recent days, but making the media rounds in a valiant attempt to redirect the spotlight from the culprits behind the crisis, writing that "they just never recognized beforehand that the economy was a massive credit bubble, just like it is now" and points to central bank arrogance as the "main reason why we should still be scared."

Of course, just like 10 years ago, as long as the market keeps going up, nobody is actually "scared" and instead everyone is enjoying the ride (just as the legion of crypto fans who are no longer HODLing). The "fear" only comes when the selling begins, and by then it's always too late to do anything about the final outcome as yet another bubble bursts.

Below we excerpt some of the observations from Edwards' "A thought on the 10th anniversary of chaos"

Central Bank arrogance is one of the main reasons why we should still be scared. As a former official at the NY Fed, Peter Fisher, recently noted, “The Fed has acknowledged no failures. All the experiments have been successful, every one: no failures, no negative side-effects, no perverse consequences, only diminishing returns.”

Most press outlets are looking back ten years to the anniversary of the bankruptcy of Lehman's and the ensuing financial crisis. To be sure, those were torrid times. Maybe it was because it was only two weeks before my wedding that I didn't see Lehman's bankruptcy as quite as important as most other commentators. Maybe I was a bit distracted.

Without doubt, the Lehman's bankruptcy caused the financial system to seize up and for many this was the cause of the ensuing deep downturn and hence the focus on this one high profile event. But I have always found this explanation disingenuous and often an ex-post justification for those who had drunk the kool-aid and never foresaw the financial crisis and economic slump - and that includes policymakers.

For even before the Sept 15 Lehman bankruptcy, the US economy had already collapsed into deep recession. In September 2008 we now know US payrolls declined 443,000 after a fall of 277,000 in August, and an average 190,000 decline in Q2. Although these numbers have been revised down, even at that time the Sept 2008 was reported as a fall of 159,000 - having already lost 600,000 jobs that year (September's 2008 survey was taken the week before the Lehman's bankruptcy, so was unaffected by the fallout).

I was amused to read the NY Times op-ed, co-authored by the three leading US policy makers at the time of the crisis (Ben Bernanke, Tim Geithner and Henry Paulson). In a piece entitled “What We Need to Fight the Next Financial Crisis” they lament the fact that "Congress has taken away some of the tools that were crucial to us during the 2008 panic. It's time to bring them back (link)."

Tools! Apparently, they always need more tools. Rubbish, they had all the tools necessary. They just never recognised beforehand that the economy was a massive credit bubble - just like it is now. It was worse than that. In 2005 Bernanke had even derided an interviewer who asked him about the possibility that the housing bubble could burst. And I also remember Shelia Bair, who headed up the FDIC (the Federal bank liquidator) at the time, and had successfully seized and closed many banks during that period, including the massive Washington Mutual, lamenting that she had not even been consulted about Lehman's.

Regulation...if only the policymakers had more regulation... I invite you to re-read this seminal note from my former colleague, Dylan Grice, which explains how more bank regulation since the crisis has merely succeeded in giving us an illusion of safety - link.

I also like Jim Grant's riposte to the above cited NYT op-ed (H/T Zero Hedge, link). Grant quotes Peter Fisher, formerly a senior official at the NY Fed (see quote above in bold). Speaking last year at Grant's conference, Fisher offered a commanding critique of the crisis-era response led by the authors of the NYT op-ed. I think the quote above just about sums up the despair many like me feel about our policymakers and why they are destined to repeat the mistakes of the past.

Published:9/13/2018 9:23:44 AM
[Markets] The Ratings Game: CBS board and management shake-up is a clear benefit for shareholders, analyst says Analysts at MoffettNathanson raised their stock price target for CBS Corp. to $65 from $58, saying the recent settlement between the company and controlling shareholder National Amusements Inc. would bring ‘clear structural benefits for CBS shareholders.’
Published:9/13/2018 9:23:43 AM
[Markets] Supreme Court nominee's explanation of baseball-ticket debt Supreme Court nominee's explanation of baseball-ticket debt Published:9/13/2018 9:23:43 AM
[Markets] US STOCKS-Wall St gains on tech rebound, trade relief U.S. stocks rose on Thursday as Apple led a rebound in technology shares and trade worries eased after China said it was open to fresh talks with the United States. The technology sector climbed 0.97 percent, the most among the 11 major S&P sectors, boosted by a 1.3 percent rise in Apple. Apple, which has said a "wide range" of its products could be hit by tariffs, fell 1.2 percent on Wednesday when it unveiled its largest-ever iPhone, but made only small changes to its line-up, which were widely expected. Published:9/13/2018 9:23:43 AM
[Markets] Good news for retailers: Americans are spending on big-ticket items Americans spent a record $2 billion online over the Labor Day weekend, giving retailers reason to hope ahead of the closely watched holiday season. Published:9/13/2018 8:41:05 AM
[Markets] Correction: U.S. initial jobless claims fall to 204,000 Correction: U.S. initial jobless claims fall to 204,000 Published:9/13/2018 8:41:04 AM
[Markets] Google Responds To Leaked Video As Damning History Of Bias Haunts Company; Parscale Calls For Investigation

Google has cobbled together a response to an internal video leaked to Breitbart which depicts the company's top brass comforting each other as they mourn Hillary Clinton's 2016 election loss. For example: 

In a late Wednesday statement, Google spokeswoman Riva Sciuto said "For 20 years, everyone at Google has been able to freely express their opinions at these meetings" (just not over email - like conservative former employee James Damore, who is currently suing Google for discrimination after he was fired for criticizing the company's diversity policies).

"Nothing was said at that meeting, or any other meeting, to suggest that any political bias ever influences the way we build or operate our products," Google's statement continues. "To the contrary, our products are built for everyone, and we design them with extraordinary care to be a trustworthy source of information for everyone, without regard to political viewpoint." 

Except several examples suggest otherwise... 

Searching Google images for the word "idiot" (still) displays pictures of Trump and his sons, while a leaked company email read on Monday night by Fox News's Tucker Carlson reveals that the company helped create ads and donated funds to a partisan Latino group which physically bussed voters to vote for Hillary Clinton during the 2016 election. 

Google also "accidentally" left Trump off of search for "presidential candidates" in July 2016, after he won the GOP primary. The company chalked it up to a "technical bug" which occurred because "Only the presidential candidates participating in an active primary election were appearing." 

Trump left off of "presidential candidate" search results due to "technical bug" 

 After fix: 

In another example, a viral video created by SourceFed - which Google has removed from YouTube - depicts several autocomplete search results for "Hillary Clinton" which the company claims proves Google "has been actively altering search recommendations in favor of Hillary Clinton's campaign." 

The company, which was also accused of hiding negative articles on Clinton, denied the accusations.

Evidence of Google helping Hillary goes back years.

Fmr. Google Chairman Eric Schmidt With Hillary Campaign "Staff" Badge

In an April 15, 2014 email from Google's then-Executive Chairman Eric Schmidt found in the WikiLeaked Podesta emails, titled "Notes for a 2016 Democratic Campaign," Schmidt tells Cheryl Mills that "I have put together my thoughts on the campaign ideas and I have scheduled some meetings in the next few weeks for veterans of the campaign to tell me how to make these ideas better.  This is simply a draft but do let me know if this is a helpful process for you all." 

Another email from February 2015 suggested that the Google Chairman remained active in its collaboration with the Clinton campaign: John Podesta wrote that Eric Schmidt met with HR "about the business he proposes to do with the campaign. He says he's met with HRC" and adds that "FYI. They are donating the Google plane for the Africa trip"

Meanwhile, according to a Breitbart report by Allum Bokhari, "By inserting negative search suggestions under the name of a candidate, search engines like Google can shift the opinions of undecided voters by up to 43.4 percent, according to new research by a team at the American Institute for Behavioral Research and Technology and reported exclusively by Breitbart News." 

Parscale calls for an investigation

In response to the viral video leaked to Breitbart, President Trump's 2016 digital campaign manager and 2020 re-election campaign manager, Brad Parscale, called for an investigation over Twitter. 

Parscale humorously added: "Only @Google could make @facebook look like the good guys. Mark should send them a gift." 

Responses have varied from WTF to Collusion... 

Published:9/13/2018 8:41:04 AM
[Markets] US STOCKS SNAPSHOT-Wall St opens higher on tech rebound, easing trade worries U.S. stocks opened higher on Thursday, as technology stocks bounced back and trade worries eased after China said it was open to new trade talks with the United States. The Dow Jones Industrial Average ... Published:9/13/2018 8:41:04 AM
[Markets] Trump calls J.P. Morgan CEO Dimon a 'poor public speaker' and 'nervous mess' Trump calls J.P. Morgan CEO Dimon a 'poor public speaker' and 'nervous mess' Published:9/13/2018 8:09:56 AM
[Markets] "Even Rescuers Can't Stay": Deadly Rain, Storm Surges Expected Even As Florence Weakens To Cat 2

With roughly 24 hours remaining until Hurricane Florence makes landfall in southeastern North Carolina, the storm has reportedly weakened to a Category 2 Hurricane. But meteorologists warn that this isn't any reason for comfort: Because while the storm's winds have slowed (from around 140 mph to a maximum of 125 mph), the potential for devastation from what's expected to be one of the most extreme storms in American history remains acute.

And while the storm is no longer considered a "major" hurricane, CNN reports that its reach has expanded. And with the first wind bands set to batter the state beginning later Thursday, the Associated Press warned.

Despite the downgrade, officials warned that the storm will still have a devastating impact.

"Do you want to get hit with a train or do you want to get hit with a cement truck?" said Jeff Byard, an administrator with the Federal Emergency Management Agency.

Analysts are projecting as much as $30 billion in losses due to the storm. In what looks like a best case scenario, Florence eventually could strike as merely a Category 1 hurricane with winds less than 100 mph, but that’s still enough to cause at least $1 billion in damage, Weather Underground meteorology director Jeff Masters said.

According to the NHC, The storm is expected to unleash extreme storm surges, historic flooding, and damaging winds beginning later Thursday, with the southeastern portion of North Carolina set to bear the brunt of Florence's wrath. Rainfall could range between 20 inches to a staggering 40 inches. Between the rains and the storm surge, the flooding could be "catastrophic," the Washington Post warned. As the storm moves inland on Friday, a pocket of tropical-storm-force winds nearly 400 miles wide will engulfing much of southern North Carolina and nearly all of South Carolina.

As of 5 am on Thursday, the storm's winds were topping out at around 110 mph as it barreled northwest at 17 mph. Per the NHC, the storm is about 205 miles east-southeast of Wilmington, NC. The storm's winds extend 80 miles from its center, while tropical-storm-force winds extend 195 miles outward.

Some of the heavy rains associated with the storm could creep into neighboring Georgia, which could see rains between 6 inches and 12 inches. In the Carolinas, the rain could break North Carolina's record for a tropical storm, 24 inches, which was set in 1999 near Wilmington. As the storm moves inland, Virginia, West Virginia , Maryland, Washington and Pennsylvania could also experience heavy rains of up to 8 inches, with downed trees and flooding also a possibility.

Here's a breakdown on how large the storm surge could be in certain areas (courtesy of the Washington Post) at its highest, the surges could reach up to 13 feet:

  • Cape Fear to Cape Lookout, including the Neuse, Pamlico, Pungo and Bay Rivers: 9 to 13 feet
  • North Myrtle Beach to Cape Fear: 6 to 9 feet
  • Cape Lookout to Ocracoke Inlet: 6 to 9 feet
  • South Santee River to North Myrtle Beach: 4 to 6 feet
  • Ocracoke Inlet to Salvo, N.C.: 4 to 6 feet
  • Salvo to North Carolina/Virginia Border: 2 to 4 feet
  • Edisto Beach to South Santee River: 2 to 4 feet

State officials continued their warnings after issuing evacuation orders affecting some 3 million people in the Carolinas. The storm's lurch south led Georgia’s governor to declare a state of emergency Wednesday afternoon for all 159 counties, with a population of 10.5 million people. In the Carolinas and Virginia, more than 10 million people are under a storm watch. Hundreds of schools have closed, and federal officials have warned that the millions of people in the storm's path could be without electricity for weeks if high winds down power lines and massive rainfall floods equipment. There are 16 nuclear reactors in the region, and crews at the one closest to where landfall is forecast readied the station, at Brunswick, for a shutdown.


President Trump has approved emergency disaster declarations for the Carolinas and Virginia, which frees up funds for relief and recovery. "We’re as ready as anybody has ever been," he said after a briefing with FEMA chief Brock Long and Homeland Security Secretary Kirstjen Nielsen.

"North Carolina, my message is clear," a grim Gov. Roy Cooper said at a briefing Wednesday. "Disaster is at the doorstep and it's coming in."

"You put your life at risk by staying," North Carolina Gov. Roy Cooper said. "Don't plan to leave once the winds and rains start."

Both Cooper and South Carolina Gov. Henry McMaster told the more than 1 million people who have been directed to leave that if they don't do so, they will be on their own.

Even some hardened locals who have weathered previous storms are deciding to leave, according to CNN.

"Even the rescuers cannot stay there," he said.

Already, more than 300,000 people have left South Carolina. In Carolina Beach, authorities have instituted a 24-hour curfew and ceased allowing traffic to the island via the only bridge between the island and the mainland. The town is less than 5 feet above sea level and officials worry that as many as 1,000 of the town's 6,300 residents plan to stick it out.

Susan Faulkenberry Panousis has stayed in her Bald Head Island, North Carolina home during prior hurricanes, but not this time. She packed up what she could and took a ferry. "When that last ferry pulls's unnerving to see it pull away and know, 'That's the last chance I have of getting off this island,'" she said Wednesday.

The storm has captivated astronauts aboard the International Space Station. Some of them have taken to tweeting pictures of the storm.

But even after Florence passes, several other storms are brewing in the Atlantic that could soon threaten areas along the eastern seaboard and the Gulf Coast.


Satellite imagery shared with the Associated Press shows the sheer size of the storm:

And as we pointed out earlier, farmers in the region are scrambling to find shelter for their hogs as the storm looks set to cause massive disruptions to the hog farming industry.


Published:9/13/2018 8:09:56 AM
[Markets] U.S. stock futures inch higher as S&P 500 tries for 4th up day in a row U.S. stock-index futures rose modestly on Thursday, suggesting Wall Street could extend its recent slight uptrend to a fourth straight session. Published:9/13/2018 8:09:56 AM
[Markets] Watch Live: Draghi Explains The End Of QE As He Trims Eurozone Growth Forecast

As discussed earlier, Draghi could again disappoint those looking for market volatility. With the ECB seemingly on auto-pilot mode ahead of the conclusion of its PSPP programme and not expected to move on rates until “at least through the summer of 2019”, the topics for discussion are relatively limited.

It is unlikely that journos will use this meeting as an opportunity to grill the ECB President on what exactly “at least through the summer of 2019” means given his resistance to such questions in July. Draghi will also likely take a similar approach this time to any questions about his tenure despite continued speculation over who his successor could be next year.

As a result, the  bulk of the focus for the press conference could center around the updated economic projections - which are expected to be cut - trade protectionism and general economic commentary with no immediate policy decisions expected.

One matter that could prompt more questions during the the conference could be the Bank’s view on reinvestments, and specifically with the PSPP winding down during Q4, markets will require greater clarity on the ECB’s approach to reinvestments with speculation fueled by reports in July over a potential “operation twist” mechanism. UBS believes that the “ECB has some flexibility to extend the duration of monthly PSPP purchases to at least partially offset the PSPP portfolio maturity decay”. However, the Swiss-bank concedes that such an issue faces “implementation constraints due to issue(r) limits, limited flexibility on capital key allocation and fragmented liquidity across the EGB markets are likely to prevent the ECB from formalising a duration target for the PSPP portfolio”. Overall, SocGen do not see this as a pressing issue and ultimately “see no material policy impact from these decisions”.

Meanwhile, the focus continues to reside on Italy with the newly-installed government taking an increasingly conciliatory tone with regards to their budgetary intentions. Despite this seemingly new approach from the populists, a clash between the nation and the EU seems almost inevitable. Such a clash would lead to grave concerns over Italy’s fiscal discipline with worries also heightened by fears over the nation’s intentions for debt held at the ECB. Subsequently, journalists will likely probe Draghi on his views on the matter and what mechanisms the Bank has to counter any potential Italian crisis. However, Goldman Sachs expect “Mr. Draghi to avoid making any direct market commentary related to Italy or Italian policy proposals. With regards to ECB treatment of Italian debt, we expect Mr. Draghi to be nonspecific and refer to the general rules already in place.

While no surprises are expected, the market could respond harshly to any Draghi comments that are out of line as shown in the table below.

Live press conference below:

Published:9/13/2018 7:38:24 AM
[Markets] IRhythm's stock selloff unwarranted as Apple Watch not a threat, analyst says The record selloff in iRhythm Technologies Inc. on Wednesday, after Apple Inc. said its Series 4 Watch was cleared by the Food and Drug Administration as a heart monitor, has created a "buying opportunity, said analyst Robbie Marcus at J.P. Morgan, because the new could actually be seen as a win for the maker of heart monitoring devices. IRhythm's stock had tumbled 6.6% on Wednesday, the biggest one-day decline since it went public in October 2016. "We don't see Apple turning the iWatch into a regulated medical device approved for clinical diagnosis; to be clear, Apple Watch is approved for over-the-counter (OTC) use and is not a continuous monitor," Marcus wrote in a note to clients. "Attaining an approval with a similar label to iRhythm's Zio would significantly slow the rate of innovation and put the consumer device at the whim of the FDA." If anything, Marcus said more patients will be able to check their own heartbeat, and then go visit a doctor to be prescribed Zio in order to get a more comprehensive analysis of their heart health. IRhythm's stock, which was still inactive in premarket trade, has soared 81.8% over the past 12 months, while Apple shares have climbed 38.5% and the Dow Jones Industrial Average has rallied 17.3%. Published:9/13/2018 7:38:24 AM
[Markets] Economic Report: Consumer inflation climbs again in August, CPI shows, but pace of increase slows American families paid more for gas, rent, airfare and other consumer staples in August, but the rate of increase in inflation slowed for the first time in almost a year. The consumer price index rose by 0.2% in August.
Published:9/13/2018 7:38:24 AM
[Markets] ECB makes no rate move, still expects no change until at least summer 2019 ECB makes no rate move, still expects no change until at least summer 2019 Published:9/13/2018 7:12:25 AM
[Markets] There’s now a $1,000 gulf between Apple’s cheapest and most expensive iPhones Apple didn’t mention the SE and 6 models at the launch of its new iPhones.
Published:9/13/2018 7:12:23 AM
[Markets] Another Coalition Strike On Yemen Civilian Bus Occurs The Same Day US Affirms It Stands By Saudis

Just as the U.S. in typical fashion continues lecturing countries like Syria, Russia, and Iran over severe human rights violations, including allegations of everything from launching barrel bomb strikes on civilian areas in Idlib to chemical weapons attacks to sensational spy poisoning ops in the U.K., the Saudi-US coalition in Yemen has attacked another bus full of children and civilians in Yemen

On Wednesday multiple Yemeni journalists reporting from on the ground confirmed a new airstrike resulting in mass civilian casualties, this time a Saudi-US coalition strike scored a direct hit on a bus station in beseiged Hodeidah City.

The strike occurred the same day Secretary of State Mike Pompeo and Secretary of Defense James Mattis announced they've certified the legality of US assistance to the coalition in Yemen before Congress.

Aftermath of the reported Wednesday airstrike in Hodeidah, via Hussain Albukhaiti

And this further comes, as NPR reports, after a long litany of instances of the coalition "causing disproportionate civilian deaths in the Yemen conflict because of airstrikes that have hit markets, weddings and even a bus carrying children from summer camp." The Red Cross identified 40 children dead from that first major bus attack in Yemen's north on August 9th. 

Sanaa-based journalist Ahmad Algohbary reports of the new Wednesday attack:

Civilians were Killed & injured by Saudi led coalition airstrikes on bus station in Hodeidah City, Yemen. The warplanes are preventing the paramedics from getting into the attack scene.

Mainstream media has been slow to pick up the new report, however the graphic video of the aftermath of the horrific airstrike spread quickly on social media, and was quickly picked up by various journalists (warning: graphic content).

The video shows what appears to be a burning bus or large vehicle in the aftermath of an alleged airstrike, with casualties lying on the ground, some of them lifeless and beginning to be evacuated by first responders. 

Early unconfirmed reports counted upwards of 15 men, women, and children among the dead, with many more wounded. 

Beirut-based Al Masdar News reports, citing a local human rights group:

According to their report, at least 15 civilians were killed in the Kilo area of the Hodeidah Governorate after the Saudi Coalition heavily bombarded this part of the province.

This latest bombing the Saudi Coalition comes as the Gulf-backed forces resume their large-scale offensive inside the Hodeidah Governorate.

Also on Wednesday Secretary of Defense James Mattis and Secretary of State Mike Pompeo certified the legality of US assistance to the coalition in Yemen.

Mattis, subsequent to Pompeo's announcement of Congressional approval, published a statement reaffirming the United States' commitment to partnering with the Saudis and UAE in their war on Yemen's Houthi rebels, seen by Washington as Iran's proxy.

Secretary Mattis' statement begins, "I endorse and fully support Secretary Pompeo's certification to the Congress that the governments of Saudi Arabia and United Arab Emirates are making every effort to reduce the risk of civilian casualties and collateral damage to civilian infrastructure resulting from their military operations to end the civil war in Yemen".

A handful of Congressional leaders have sought to shut down US military action in Yemen.

Pompeo's certification allows the Pentagon to continue fueling coalition jets, and other areas of partnership such as intelligence sharing. 

The statements also come as the United Nations has declared the Yemen war the worst humanitarian crisis in the world.

Published:9/13/2018 7:12:23 AM
[Markets] Futures Movers: Oil prices fall as IEA data reveal record rise in output among OPEC members Oil futures fall in early Thursday trade as a global inventory report shows production among OPEC members surged in August, pushing global inventories to a record
Published:9/13/2018 6:40:44 AM
[Markets] Missing Wikileaks Associates' Belongings Discovered In Waters Near Norway

More than three weeks after Wikileaks associate Arjen Kamphuis disappeared without a trace, a local fisherman has discovered his belongings in a sea in northern Norway, prompting local police to search the water and land around where the items were found, the Daily Mail reports.

Arjen Kamphuis, 47, had been missing since leaving his hotel in the northern Norwegian town of Bodo on Aug. 20. He was staying there while on holiday, but the time had come for him to travel back to his home country, the Netherlands. He had been expected to fly home to Amsterdam on Aug. 22, but Kamphuis didn't show up for his flight, which was set to depart from the Norwegian town of Trondheim, located more than 700 kilometers south of Bodo.


Kamphuis's belongings were found in the waters of a fjord near Kvaenflaget, some 30 miles east of Bodo. Police have so far refused to comment beyond confirming that the items belonged to Kamphuis.

"Due to the ongoing investigation the police do not at this time wish to release any information about which specific items that have been found," Norwegian police said in a statement on Wednesday.

An avid hiker, Kamphuis disappeared after leaving his hotel in Bodø, Norway on August 20, as we reported earlier this month. He was set to fly out of Trondheim on August 22 after a 10-hour train ride. Wikileaks said that it's possible Kamphuis disappeared on the 10-hour train ride between Bodo and Trondheim, though authorities have claimed he had taken a train from Bodo to the town of Rognan on the day he disappeared.

"The train between the two takes (approximately) 10 hours, suggesting he disappeared either in Bodo, Trondheim or on the train," the organization said.

Judging by a recent tweet claiming that Kamphuis' cellphone was used more than ten days after his disappearance, Wikileaks remains hopeful that Kamphuis will eventually be found alive. Though news of the cellphone's activation has only added to the mystery. His phone was purportedly used near the southwestern city of Stavanger on Aug. 30, which is roughly 1,600 km from Bodo. But authorities could not confirm if it was Kamphuis who had switched the phone on. Both German and Dutch SIM cards had been used by the phone on that day.

So far, authorities have given no indication that foul play was involved in his disappearance.

Police are reportedly examining three theories to explain Kamphuis' disappearance: a voluntary disappearance including a possible suicide, an accident, or a crime.

"We haven't made enough progress in the case to be able to eliminate or confirm any of these three theories," said inspector Bjarte Walla."We are keeping all options open."

However, a friend of Kamphuis has emphasized that his involvement with Wikileaks was "minimal" and that he really only helped the organization with information security to secure its valuable trove of leaked documents. The same friend added that "there were absolutely no signs that he wanted to disappear," claiming instead that he "wanted to live a private life."


Still, speculation over what's happened to the Assange associate has ranged from "going dark" for a clandestine Wikileaks mission to being killed by agents of the "five eyes" intelligence alliance.

Posters bearing Kamphuis's likeness have begun circulating online:


Published:9/13/2018 6:40:44 AM
[Markets] Lira Soars After Massive Rate Hike Of 625bps To 24%

President Erdogan will be very unhappy.

Hours after President Erodgan slammed the central bank for high rates and runaway inflation, the central bank defied the president and surprised markets by hiking far more than the 325bps expected, raising the one week repo rate by 625bps to 24% from 17.75%, some 3% above the expected 21% and sending the Lira surging as much as 5% in the process.

To justify its decision, the central bank said that the decelaration in domestic demand has became more visible, and said that "despite the milder impact of demand conditions on inflation, elevated levels of inflation and inflation expectations continue to pose risks on the pricing behavior."

Here is the CBRT press release:

The Monetary Policy Committee (the Committee) has decided to increase the policy rate (one week repo auction rate) from 17.75 percent to 24 percent.

Recently released data indicate a more significant rebalancing trend in the economic activity. External demand maintains its strength, while slowdown in domestic demand accelerates.

Recent developments regarding the inflation outlook point to significant risks to price stability. Price increases have shown a generalized pattern across subsectors, reflecting the movements in exchange rates. Deterioration in the pricing behavior continues to pose upside risks on the inflation outlook, despite weaker domestic demand conditions. Accordingly, the Committee has decided to implement a strong monetary tightening to support price stability.

The Central Bank will continue to use all available instruments in pursuit of the price stability objective. Tight stance in monetary policy will be maintained decisively until inflation outlook displays a significant improvement. Inflation expectations, pricing behavior, lagged impact of recent monetary policy decisions, contribution of fiscal policy to rebalancing process, and other factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered.

It should be emphasized that any new data or information may lead the Committee to revise its stance.

The summary of the Monetary Policy Committee Meeting will be released within five working days.

In a separate release on lira liquidity management, the CBRT said that Central Bank funding, which is currently provided through overnight lending, "will be provided via one-week repo auctions starting from September 14, 2018." adding that the one-week transition period has been envisaged for providing all of the funding via one-week auctions.

In kneejerk response to the far bigger than expected rate hike, the Turkish lira surged as much as 5%, dropping from 6.40 vs the dollar to as high as 6.00 before reversing some gains.


Published:9/13/2018 6:21:05 AM
[Markets] Battered Turkish lira rallies after central bank hikes borrowing rate Battered Turkish lira rallies after central bank hikes borrowing rate Published:9/13/2018 6:21:04 AM
[Markets] Need to Know: Here’s how stocks perform as hurricanes bear down A big storm is brewing in the Carolinas, but what does that mean for investors? Our call of the day offer a soothing stat, along with some ideas on how to play the weather, or not.
Published:9/13/2018 6:21:04 AM
[Markets] Slowing Hurricane Florence expected to hammer parts of eastern coastline for days The outer band of rains from Hurricane Florence, expected to bring life-threatening storm surges and several feet of rainfall, are approaching the coastline.
Published:9/13/2018 5:46:16 AM
[Markets] Apple, Adobe, Tesla and New Trade Talks - 5 Things You Must Know U.S. stock futures rose on Thursday, Sept. 13, and Asia stocks posted solid gains as investors reacted to a small step forward in trade negotiations between the U.S. and China. White House economic adviser Larry Kudlow told reporters that Treasury Secretary Steven Mnuchin invited top Chinese officials to re-start trade talks amid speculation that Donald Trump may delay imposing planned tariffs on $200 billion worth of China-made goods until after the mid-term elections in November because of pressure from U.S. business leaders. The economic calendar in the U.S. on Thursday includes the Consumer Price Index for August at 8:30 a.m. ET. Published:9/13/2018 5:16:16 AM
[Markets] Turkish Lira Crashes After Erdogan Attacks Central Bank Hours Before Rate Decision

After a few weeks of relative stability in the Turkish Lira, the currency many say started the current EM turmoil, moments ago the TRY collapsed after Erdogan decided to slam the country's "independent" central bank.

Just hours before a widely expected and critical rate hike by the Turkish central bank, President Recep Erdogan attacked the central bank for continuously missing inflation targets just two hours before the country's monetary authority announced its interest rates decision.

"I have never seen the central bank meeting its year-end inflation forecast," Erdogan said in speech at Confederation of Turkish Tradesmen and Craftsmen meeting in Ankara. 

Stating that inflation is the result of wrong steps by central bank, Erdogan warned the central bank saying that Turkey "should cut this high interest rate", even as economists and traders around the globe expect another rate hike of as much as 400 bps to be announced shortly.

While bashing the bank, Erdogan repeated his bizarre "theory" on the relationship between interest rates and inflation, saying that rate hikes only lead to faster price gains.

Erdogan claimed that "interest rate is the reason, inflation is the result" and said that "if you are saying the opposite, you don’t know this business."

While conventional economics says that higher rates slow demand and lower inflation, Erdogan has long preached the opposite even as the market repeatedly told him he is wrong, sending the lira crashing in recent months and making it one of the worst performing currencies of 2018, plunging over 41% YTD.

Erdogan also said that Turkey "will suspend some tendered projects" that haven’t started yet, and explained that his "sensitivity on interest rates remains the same" even as he clarified that the central bank is independent and will take its own decisions, even as he made it painfully clear that a major rate hike will be frowned upon.

“This is not a crisis, it’s a manipulation" he concluded.

The Turkish central bank is set to announce its benchmark one-week policy rate at 2 pm in Istanbul. The median estimate in a Bloomberg survey forecast the rate would be increased to 21 percent from 17.75%.

And following a few weeks of calm, the TRY promptly crashed, tumbling as much as 3% on Erdogan's comments, which will now make any announcement by the central bank moot as traders panic what Erdogan may do even if the CBRT does hike rates as expected.

One potential silver lining: as Bloomberg's Mark Cudmore points out, "by the sounds of things, there’s a possibility for some form of capital controls will be implemented, potentially killing speculative lira shorts." And while that might save the lira from collapse in the short-run, "it will hurt the economy for a long-time to come."

Published:9/13/2018 5:16:16 AM
[Markets] Market Snapshot: U.S. stock futures inch higher as S&P 500 tries for 4th up day in a row U.S. stock futures edge higher Thursday, signaling the S&P 500 could gain for a fourth session in a row.
Published:9/13/2018 5:16:16 AM
[Markets] "Leaking Like Mad": FBI-DOJ-MSM Collusion Went Far Deeper Than Previously Known

The FBI's coordination with the mainstream media surrounding the 2016 US election - a "media leak strategy" which was first first revealed Tuesday, goes far deeper than first reported, according to Fox Newswhich obtained "new communications between the former lovers." 

A December 15, 2016 email appears to discuss a "political" leaking operation, in which others were "leaking like mad" amid the Trump-Russia probe.

“Oh, remind me to tell you tomorrow about the times doing a story about the rnc hacks,” Page texted Strzok.

“And more than they already did? I told you Quinn told me they pulling out all the stops on some story…” Strzok replied.

A source told Fox News “Quinn” could be referring to Richard Quinn, who served as the chief of the Media and Investigative Publicity Section in the Office of Public Affairs. Quinn could not be reached for comment.

Strzok again replied: “Think our sisters have begun leaking like mad. Scorned and worried, and political, they’re kicking into overdrive.

In one passage, Strzok apparently misreads a reference to "rnc" as "mc," and then, realizing his error, blames "old man eyes."

It is unclear at this point to whom Strzok was referring when he used the term “sisters.” -Fox News

"Sisters" may refer to sister agency.

“Sisters is an odd phrase to use,” retired FBI special agent and former FBI national spokesman John Iannarelli told Fox News Wednesday. “It could be any intelligence agency or any other federal law enforcement agency. The FBI works with all of them because, post 9/11, it’s all about cooperation and sharing.

The US intelligence community is comprised of 17 agencies, including the CIA, the Office of the Director of National Intelligence, the FBI and the National Security Agency. 

Fox News notes that the "leaking like mad" reference was texted the same day that several US news outlets reported that Russian President Vladimir Putin was personally involved - and personally approved, Russian meddling in the 2016 presidential election.

Several days before that, an article titled "Russian Hackers Acted to Aid Trump in Election, U.S. Says," was published in the New York Times, which cited "senior administration officials." 

Then, on January 10, 2017, The Times published another article which suggested that Russian hackers had "gained limited access" to the Republican National Committee (RNC) - the same day that BuzzFeed News published the "Steele Dossier" accusing President Trump of a variety of salacious and unproven ties to Russia. 

Following the text about “sisters leaking,” Strzok wrote to Page:

And we need to talk more about putting C reporting in our submission. They’re going to declassify all of it…

Page replied: “I know. But they’re going to declassify their stuff, how do we withhold…

We will get extraordinary questions. What we did what we’re doing. Just want to ensure everyone is good with it and has thought thru all implications,” Strzok wrote. “CD should bring it up with the DD.” 

A source told Fox News that “C” is likely in reference to classified information, whereas “CD” is Cyber Division, and DD could refer to former FBI Deputy Director Andrew McCabe.

McCabe was fired by Attorney General Jeff Sessions in March for making an unauthorized disclosure to the news media, and "lacked candor" under oath on multiple occassions. 

It is unclear what “submission” Strzok and Page were referring to. -Fox News

A source also told Fox News that the messages were part of the newly released batch of Strzok-Page communications obtained by DOJ Inspector General Michael Horowitz, who uncovered them as part of his investigation into the FBI's conduct in the Russia investigation. 

Published:9/13/2018 4:37:41 AM
[Markets] Five ways to profit from the cold winter just around the corner Natural gas inventories are low, and weather forecasts are dire.
Published:9/13/2018 4:37:41 AM
[Markets] World stocks rise on report of US-China trade talks SINGAPORE (AP) — Many global markets climbed Thursday following a report that the U.S. has proposed a new round of trade negotiations with China before going ahead with plans to slap tariffs on $200 billion or more in Chinese goods. Published:9/13/2018 4:37:41 AM
[Markets] Yes, Sweden Is A Domino

Authored by Jeffrey Snider via Alhambra Investment Partners,

Over the weekend, another European nation turned toward the populist direction. It was enough to get one’s attention when Italy did it, but Sweden is something else altogether. The country has been long held out as an exemplar of everything that is right with globalization. They have industry, youth, etc. How in the world could another “far right” party score so much?

These elections are, obviously, confusing for the mainstream. UK’s leftist Guardian newspaper declared, Real Story of Sweden’s Election Is Not About March of the Far Right. Meanwhile, Politico Europe said, Why Sweden’s Election Was All About the Rise of the Far Right. The only thing any of them really know is that they despise the “far right.”

I detest these politics, largely because they are wildly unhelpful. The mainstream has walled off all discourse into these neat little boxes. The reason a far simpler explanation can’t be put forward, one that encompasses all these entrenching passions, is the stink of Economics.

Sweden is an economic paradise, we are told, a steady industrial powerhouse. Furthermore, right now, Europe’s economy is booming. Central bank policies, including those pursued by the often aggressive Riksbank, have allegedly succeeded. Vast political disassociation therefore must be about something else.

Except, it’s not. Not really. There will always be extremes. These aren’t typically palatable options because most people want to be in the center. It’s only when the center doesn’t, or can’t, offer plausible, sensible solutions and ideas that extremes however distasteful can become the only realistic options. Swedes, as Italians or Brazilians, know that meaningful change must today be forced on the reluctant political establishment of “both” sides.

If the status quo won’t even admit there is a problem, the problem is insurmountable by usual means. Below is Sweden’s actual status quo, behold the paragon of global manufacturing stability:

Time and again we see this same pattern all over the world. Economists will have you believe macro history in Europe began with the ECB’s NIRP in 2014, or its QE in 2015. Things are mostly positive since, and in 2017 they were more positive than usual. This is a false sense of economic progress because it omits the wider context that instead declares how each economy, save a few like Germany, has actually shrunk.

In fact, the “good times” that began in the second half of 2016 actually prove the opposite case of Europe’s presumed boom. It has been thoroughly lackluster by historical standards . What that says is Europe’s economy, Sweden within the paradigm, is stuck in the same condition as it has been over the last eleven years. It swings between downturns, always “unexpected”, and unusually mild upturns. Nothing more than that.

There is, by virtue of such little absolute progress last year, a clear ceiling on economic growth which is devastating in its own right. What that proves is this economic shrinking is permanent, or at least so long as the status quo is maintained, the one that gets all its economic narratives from the local central bank office.

Following repeated downturns often quite severe this is where the political story isn’t really about the far right or the far left. It’s about Economists who refuse to allow they really, really don’t know what they are doing.

The positive rhetoric surrounding Reflation #3 in Europe was simply mischaracterizing the situation, and mostly out of mainstream desperation. The upturn that began in the middle of 2016, and not because of some delayed reaction to the ECB’s policies, was greater but only in comparison to Reflation #2. This mild difference was predictably attributed to central bank aggressiveness, and then wrongly extrapolated into a full recovery scenario (because Economists and central bankers don’t understand what’s really driving the global economy in either direction).

Thus, Europe, like the rest of the world, is facing the prospects of realizing just how oversold Reflation #3 has been at the same time as the increasing likelihood it has already ended perhaps many months ago.

Industrial Production in Europe, one of the key components to Europe’s 2017 “boom”, has been lower since last November. It tumbled in February following the big eurodollar eruption that resulted in stock market liquidations at the end of January (among other monetary “anomalies”). IP had rebounded somewhat in May 2018, leading many to jump the gun and declare the interruption “transitory” projecting the recovery would then proceed as expected.

However, Eurostat’s update for July 2018 shows now a second consecutive monthly decline since (both June and July). At a seasonally-adjusted index value of 105 in the latest month, that’s lower than April. Lower highs and lower lows.

The politics of Europe, then, are surprisingly simple at the same time they are increasingly terrifying. If Sweden’s economy can’t avoid the same eurodollar-driven upturn/downturn cycling as the rest of the world, what does that project for long-term prospects beyond the economy and beyond Sweden?

In macro terms, we know where this goes. The economy appears to take a step forward, in 2017 employing a slightly elongated gait, but then it falls backward. The result is both an economy that ends up going nowhere as well as repeated confusion among the general population wondering where this boom could possibly be. Mistrust is the least surprising element in all of this.

The real danger is in how all this plays out under the increased social pressures of a shrunken, chronically sick economy where nobody trusts anyone because the status quo just refuses to accept that reality. Central bankers and Economists would rather the world burn than admit they’ve screwed everything up so badly.

The way out is, therefore, right where it’s always been: central banks. Not in the next big central bank idea (that’s just recycling what Japan has already failed at), but in cleaning house and rethinking the whole thing from the ground up. The only question is which breaks first: Economists’ collective conscience, or the political structure?

Once may be random (though it was a really, really big one). Twice is a pattern. Four times? Unassailable proof.

Published:9/13/2018 4:08:34 AM
[Markets] NerdWallet: Do you really know what it takes to retire early? Retiring early can be a one-two punch that will knock you out if you don’t do the math.
Published:9/13/2018 4:08:34 AM
[Markets] Iranian Money Exits For Turkey's Troubled Economy As Immigrants Buy Up Turkish Property

A new extensive report in Middle East Eye charts the unsurprising trend of Iranians of means pulling money out of Iran to invest and lay down roots abroad. The only surprise, however, is that they appear to be fleeing one smashed economy for another troubled one in the region: Turkey has experienced a surge in recent Iranian real estate purchases in the country, according to the report

One Iranian economic migrant interviewed by Middle East Eye summarizes the trend: “To survive and to have a better life, we chose to migrate to Turkey,” said Ali, an Iranian living in Ankara. “Iranian currency has lost its value, even against Turkey’s," he said, but the Turkish lira still remains more affordable for Iranians than the euro or the dollar.

Image via Hurriyet Daily, Istanbul

"That’s why Iranian’s first step would always be Turkey, even when they actually want to migrate to Europe or America,” Ali said. For other Iranians who had ever had an inkling of relocating abroad, those plans have now been dramatically hastened, as people's entire savings have turned to nothing seemingly overnight. 

“Over one night, I lost half of it after the US president issued an ultimatum and then killed the nuclear deal,” another Iranian told Middle East Eye while filing immigration paperwork at an Istanbul office. 

Last week the rial for the first time since President Trump pulled the US from the 2015 Iran nuclear deal began trading at over 150,000 rials to $1USD in the currency exchange shops of Tehran, which marks a dramatic plummet of 140 percent since the since the May White House decision to end its terms of the JCPOA agreement and reimpose new rounds of crippling sanctions. 

And in the past weeks international journalists have witnessed residents in Tehran and other cities frantically lining up outside money changing offices attempting to get dollars, which the shops are only allowed to issue if citizens can present an airline ticket for travel abroad. Things like diapers and many basic staples which rely on imported raw material to make have largely disappeared from store shelves.

Since last week money-change offices in the country began shuttering their shops once the rial began hitting upward of 150,000 rials to the dollar. 

Tehran has been loathe to say it publicly, but some immigration officials in the country have acknowledged Iranians of any available means are exiting the country in droves, though official statistics have yet to be released, according to Middle East Eye

And many are headed to Turkey, as a bump in Turkish real estate seems to indicate. 

The Middle East Eye report begins by explaining Turkey's own economic woes in its deepening spat with Washington which began in earnest over the summer:

The value of the Turkish lira has plummeted by more than 40 percent since the start of the year amid concern over the country’s monetary policy and as a diplomatic row between Ankara and Washington has intensified.

But this hasn’t put off Iranians. According to the Turkish Statistical Institute, TUIK, the number of properties bought by Iranians in Turkey jumped in the first six months of the year to 944 compared to 792 in all of 2017.

Turkey has remained open to trade with Iran and has continued to purchase Iranian oil in defiance of Washington demands. Simultaneously amidst increasingly closer ties in the face of a common enemy other Turkish institutions have remained open to Iranians, including readily available loans from Turkish banks and a place to store their assets while Iran attempts to weather the storm. 

Since the US pullout of the Iran nuclear deal, Iranians "have purchased around 1,000 homes and apartments in Turkey" according to Reza Kami, chairman of the Iran-Turkey Chamber of Commerce.

He explained of the surge, "Besides easy regulations and no need to get visas, people's predictions about their assets losing their value have played a key role in their decisions.” Likely, this is only the beginning of a trend which is sure to add to the crush of Iran's economic collapse. 

Published:9/13/2018 3:39:43 AM
[Markets] U.S. Stock Futures Improve Amid Potential Thaw in China Trade Tensions Global stocks were modestly firmer as investors hoped a potential thaw in trade war tensions between the U.S. and China will renew bullish sentiment. European markets, however, started cautiously ahead of policy meetings from the Bank of England and the European Central Bank. U.S. dollar index drifts lower as sentiment improves, with traders also citing yesterday's surprise dip in factory gate inflation. Published:9/13/2018 3:06:19 AM
[Markets] Poland Is Deathly Afraid Of Contracting The EU's "Social Diseases"

Authored by Andrew Korybko via Oriental Review,

Polish “gray cardinal” Jaroslaw Kaczynski warned how his country could be infected by the EU’s “social diseases”.

The influential politician was speaking at his party’s convention over the weekend when he reaffirmed Poland’s commitment to remaining in the EU, though with the important caveat that this “doesn’t mean we should repeat the mistakes of the West and become infected with social diseases that dominate there.”

He didn’t specify exactly what he meant by this, but it can safely be assumed that one of the chief socio-religious ideologues of the EuroRealism movement was referring to the bloc’s policy of so-called “open borders” and attendant lack of interest in assimilating and integrating civilizationallydissimilar migrants, the normalization of non-traditional sexual relations such as homosexuality and other practices, and possibly also the liberalization of abortion laws.

Poland has recently come under criticism for gradually turning into what the ruling party’s opponents describe as a “clerical state” because of the predominant influence that Catholicism wields over the government.

While it might be uncommon for a contemporary European state to rely on religious values when formulating policy, it’s actually nothing out of the ordinary elsewhere in the world. For example, many majority-Muslim countries base their laws off of Islam, including secular ones such as Syria as can be evidenced by Chapter 1, Article 3 of its 2012 constitution where it’s clearly written that “Islamic jurisprudence shall be a major source of legislation”.

All of this correlates to the rising role of Civilizationalism in International Relations ever since the end of the Old Cold War.

Jaroslaw Kaczynski, the leader of Law and Justice party (PiS)

The ruling authorities in Poland feel it incumbent upon themselves to make their country the vanguard of Christian values in Europe following the forced secularization that took place in Central & Eastern Europe during the communist period and which continued into the present day after the secular states of Western Europe imposed their values onto the region during the EU’s rapid expansion there.

The traditionally minded majority of the Polish population feel like they’re losing their unique culture, which is inextricably tied to Catholicism, by the EU’s aggressive secularization and what they popularly consider to be the clandestine Islamization of the continent by Muslim migrants, hence Kaczynski’s channeling of their sentiment in warning about the bloc’s “social diseases”.

Published:9/13/2018 3:06:19 AM
[Markets] Meet Turkey’s New Sovereign Wealth Fund Chairman, Who Has "Now Taken Public Companies Prisoners"

What does a man who already controls pretty much everything in his country  from politics to the judiciary to defense  give to himself? How about direct takeover of his country's sovereign wealth fund? 

President Recep Tayyip Erdogan has appointed himself chairman of Turkey’s sovereign wealth fund after recent promises to exert greater influence over the economy. He's nixed the old guard management and hand-picked their replacements, in a move his political rival, presidential candidate who lost the June election, Muharrem Ince, has aptly described as taking "public companies prisoners".

And not to be one to break medieval sultanate tradition, he's further named his son-in-law and Finance Minister Berat Albayrak as deputy chairman.

Calling this latest move a “crazy example” of the country’s poor management under Erdogan, Ince wrote on Twitter immediately after the news was made public: “The man who has captured the state?.?.?.?has now taken public companies prisoners”.

He continued, “This desire to control everything will in the end give way to controlling nothing. And the country pays the bill.”

Beginning in September of 2017, Erdogan indicated he would seek the wealth funds's reorganization after dismissing its chairman over its failure to meet targets.

Bloomberg reports the bombshell, but not entirely shocking latest news in Erdogan's long struggle to control everything under the sun:

Zafer Sonmez, head of Turkey and Africa for Malaysia’s government investment vehicle Khazanah Nasional Bhd, was named general manager. Treasury and Finance Minister Berat Albayrak, Erdogan’s son-in-law, will also sit on the board, according to a decree published in the Official Gazette.

The overhaul comes two years after the government formed the fund to capitalize on $200 billion of state assets and put a lid on market turmoil in the wake of a failed coup attempt. But the organization’s goals and strategy were never clearly defined and internal strife led to the firing of its first chief executive officer after Erdogan publicly expressed his disappointment.

Bloomberg lists the wealth fund as including stakes in Turkish AirlinesTurk Telekom, state lenders TC Ziraat Bankasi AS and Turkiye Halk Bankasi AS, and further the stock exchange, Turkey's national postal service, state oil and pipeline companies, and the national lottery and railway.

Why keep up the charade of even signing paperwork anymore? 

Funny enough it doesn't appear Erdogan is comfortable with even his own adviser, Yigit Bulut, overseeing the fund as confirmed in FT's quip"The changes to the sovereign wealth fund sidelined one of the president’s own advisers, Yigit Bulut, who is renowned for once claiming that Mr Erdogan’s enemies were trying to kill him through telekinesis."

Among the newly Erdogan-hand picked board members, per Bloomberg, are Rifat Hisarciklioglu, head of the Turkish chambers of commerce; Huseyin Aydin, head of the banking association and Ziraat CEO; Arda Ermut, the head of Turkey’s investment support and promotion agency; Erisah Arican, a professor and member of the Borsa Istanbul board; and businessman Fuat Tosyali.

Crucially, FT reports the timing of the move as coming just before a major interest rate announcement:

The latest change came ahead of a critical interest rate announcement on Thursday, a decision seen as a pivotal test of the independence of Turkey’s central bank.

Murat Cetinkaya, the central bank governor, has caused dismay among international investors by resisting calls to raise rates even as inflation has soared to 18 per cent.

Well so much for even a facade of "independence"... 

Meanwhile the lira has lost about 40 percent of its value this year after Ankara's summer long growing spat with Washington and as global institutional concerns over management of the economy have deepened. 

Apparently Erdogan's solution is as simple as... "don't worry the Sultan is in... I got this". 

Published:9/13/2018 2:39:21 AM
[Markets] Asian stocks rise on possible US-China talks amid tensions SINGAPORE (AP) — Asian markets were mostly higher Thursday after a report that the U.S. proposed a new round of trade negotiations with China quelled fears that a dispute between the world's two largest economies was spiraling out of control. Published:9/13/2018 2:20:16 AM
[Markets] Asian stocks rise on possible US-China talks amid tensions Asian markets were mostly higher Thursday after a report that the U.S. proposed a new round of trade negotiations with China quelled fears that a dispute between the world's two largest economies was spiraling out of control. Hong Kong's Hang Seng index jumped 1.6 percent to 26,760.54. Published:9/13/2018 1:43:22 AM
[Markets] 'Catastrophic': EU Passes Copyright Directive Including Internet 'Link Tax' and 'Upload Filter'

Submitted by Planet Free Will

The European Parliment has passed a controversial copyright directive that contains provisions which force tech giants to install content filters and sets in place a potential tax on hyperlinking.

The bill was passed in a final vote of 438 – 226 and will need to be implemented by individual EU member states.

Critics of the directive have been laser-focused on two key provisions: Articles 11 and 13, which they have dubbed the “link tax” and “upload filter.”

The most important parts of this are Articles 11 and 13. Article 11 is intended to give publishers and papers a way to make money when companies like Google link to their stories, allowing them to demand paid licenses. Article 13 requires certain platforms like YouTube and Facebook stop users sharing unlicensed copyrighted material.

Critics of the Copyright Directive say these provisions are disastrous. In the case of Article 11, they note that attempts to “tax” platforms like Google News for sharing articles have repeatedly failed, and that the system would be ripe to abuse by copyright trolls.

Article 13, they say, is even worse. The legislation requires that platforms proactively work with rightsholders to stop users uploading copyrighted content. The only way to do so would be to scan all data being uploaded to sites like YouTube and Facebook. This would create an incredible burden for small platforms, and could be used as a mechanism for widespread censorship. This is why figures like Wikipedia founder Jimmy Wales and World Wide Web inventor Tim Berners-Lee came out so strongly against the directive. – The Verge

Member of the European Parliament, Axel Voss, who played a lead roll in pushing for both articles 11 and 13, thanked his fellow MEPs “for the job we have done together” in the wake of the vote.

“This is a good sign for the creative industries in Europe,” Voss said.

Dutch MEP Marietje Schaake was not nearly as excited as Voss after the vote. In a statement, the Dutchman said: “The Parliament squandered the opportunity to get the copyright reform on the right track. This is a disastrous result for the protection of our fundamental rights, ordinary internet users and Europe´s future in the field of artificial intelligence. We have set a step backwards instead of creating a true copyright reform that is fit for the 21st century.”

Opponents of the directive have been using the hashtag #SaveYourInternet on social media.

Some are pointing out that the new copyright push could potentially block or ban memes from being shared on the European internet.

Julia Reda, a German Pirate Party lawmaker, reacted to the result of the vote by saying it was “catastrophic” for sports fans. 

summary of the directive describes the internet as the main marketplace for distribution and access to copyright-protected content. Those who support further EU intervention in copyright law say that the difficulty for content creators to enforce their rights to the work they post online “could put at risk the development of European creativity and production of creative content.”

According to a letter signed by world-renowned computer scientist Tim Berners, and internet pioneer Vint Cerf, articles 11 and 13 will not only affect the professional content creator but also the average internet user:

In particular, far from only affecting large American Internet platforms (who can well afford the costs of compliance), the burden of Article 13 will fall most heavily on their competitors, including European startups and SMEs. The cost of putting in place the necessary automatic filtering technologies will be expensive and burdensome, and yet those technologies have still not developed to a point where their reliability can be guaranteed. Indeed, if Article 13 had been in place when Internet’s core protocols and applications were developed, it is unlikely that it would exist today as we know it.

The impact of Article 13 would also fall heavily on ordinary users of Internet platforms—not only those who upload music or video (frequently in reliance upon copyright limitations and exceptions, that Article 13 ignores), but even those who contribute photos, text, or computer code to open collaboration platforms such as Wikipedia and GitHub.

While it will be interesting to see how EU member states take to the copyright overhaul, this latest piece of legislation isn’t the only move by the superstar which should have those suspicious of censorship worried

And just as a side note, it appears Twitter doesn’t want its users to know about Article 13.


As PFW reported on September 5, the European Union is in the final stages of crafting legislation that will force big tech and internet companies to censor “extremist” content and cooperate with law enforcement

The bill is expected to be released by the end of the month and will absolutely require companies such as Google, Facebook, and Twitter to swiftly remove any content considered terroristic from their platforms.

EU Commissioner in charge of Justice, Consumers and gender equality, Vera Jourová , speaks at a news conference on a second monitoring of the illegal online hate speech code of conduct in Brussels, Belgium, 1 June 2017. [Olivier Hoslet/EPA]

In March, the European Commission told such companies that they had three months to show they were removing “extremist” content more rapidly or face legislation forcing them to do so.

EU recommendations were sent out at the time regarding the speedy removal of all content including terrorist content, incitement to hatred and violence, child sexual abuse material, counterfeit products, and copyright infringement.

The threat eventually led to the creation of an online “code of conduct” aimed at fighting racism and xenophobia across Europe, an effort both the EU and big tech collaborated on.

According to European Justice Commissioner Vera Jourova, that an existing code of conduct to counter hate speech could remain voluntary.

“(But on) terrorist content, we came to the conclusion that it is too serious a threat and risk for European people that we should have absolute certainty that all the platforms and all the IT providers will delete the terrorist content and will cooperate with law enforcement bodies,” Jourova said on Wednesday.

“Yes, this is in the final stage,” she added, addressing the new bill.

While details of the new legislation remain hidden, the Financial Times in August learned that law enforcement will be in charge of flagging content for censorship.

EU security commissioner Julian King also had mentioned last month that the bill will “likely” turn the agreed upon “code of conduct” into mandatory law, placing the prediction by Jourova that it will remain voluntary on shakey grounds.

The big tech – EU code of conduct establishes “public commitments” for tech companies, including the requirement to review the “majority of valid notifications for removal of illegal hate speech” in less than 24 hours. It was also crafted to make it easier for law enforcement to notify firms directly of any unwanted content.

Within the code is a narrow explanation of “hate speech,” being defined as “all conduct publicly inciting to violence or hatred directed against a group of persons or a member of such a group defined by reference to race, colour, religion, descent or national or ethnic origin.”

The nature of enforcing censorship based on a narrow and subjective term such as “hate speech” is likely to keep suspicions high that these types of decision aren’t about creating a safer world, but rather a world in which superstates like the EU control the content people see online for political purposes.

Published:9/13/2018 1:43:22 AM
[Markets] White House Threatens Military Response Against Iran-Backed Militias in Iraq

Iraq may once again, for the first time in nearly a decade, become a theater of US-Iran confrontation according to a White House statement published Tuesday evening.

“The United States will hold the regime in Tehran accountable for any attack that results in injury to our personnel or damage to United States government facilities,” press secretary Sarah Sanders said in a written statement posted to “America will respond swiftly and decisively in defense of American lives.”

Image source: Long War Journal

The threat of military force comes after the American embassy in Baghdad's 'green zone' came under a brazen overnight mortar attack last Thursday, which left no one injured but started a blaze near the sprawling embassy's gate.

Up to four mortars were fired in what officials confirmed was a targeted assault American diplomatic soil. Defense analysts and officials were quick to blame Iran-backed militias in the area, which had previously in the week vowed in a joint statement to expel all "foreign occupying forces" from the country. 

And days later multiple rockets were fired at the Basra airport, which is also site of the United States consulate for the area. Though denying it had a role in events in Basra or Baghdad, Tehran's leaders did admit to a major missile attack on the headquarters of the Kurdistan Democratic Party in Northern Iraqi Kurdistan, which resulted in up to a dozen killed and scores wounded. 

The White House statement, which condemns "life threatening attacks" against "the United States consulate in Basra and against the American embassy compound in Baghdad" also follows two weeks of heightened sectarian tensions across various parts of the country, but especially the southern Sunni-majority city of Basra, where the Iranian consulate was burned to the ground after it was stormed by a mob late last week. 

The statement puts Iran on notice and pledges that it will be held responsible for such incidents: "Iran did not act to stop these attacks by its proxies in Iraq, which it has supported with funding, training, and weapons," reads the press release

US officials have yet to reveal any evidence that Iran was directly behind either the embassy or Basra consulate attacks, but days prior ten pro-Iran Shia militias in the country published a statement vowing to expel foreign troops and advisers by force if they didn't immediately leave Iraq. 

“We will deal with them [foreign troops in Iraq] as occupying forces, and we will use our legitimate rights by employing all possible means to force them out of the country,” the Iraqi factions warned, adding that foreign troops were "in their sights".

The statement first published last Tuesday further declared there was an “Anglo-American-led dirty and dangerous conspiracy to impose a devilish coalition” on the people of Iraq which seeks to weaken the government and make Baghdad a puppet of Brett McGurk, who is the White House appointed special envoy for the anti-ISIL coalition. 

The Shia militias later blamed Washington for being behind the mass anti-Iran and anti-Iraqi government protests that engulfed Basra and resulted in the Iranian consulate being burned down along with dozens of Shia militia headquarters and other facilities across the city. 

“The American Embassy is directing the situation in Basra,” charged Abu Medhi al-Mohandis in public statements. Mohandis is a well-known Shiite militia commander who U.S. officials accuse of long being on Iran's payroll. 

All of this also comes after allegations that Iran has transferred ballistic missiles to its proxy forces in Iraq, which are said to be easily capable of hitting Tel Aviv and Riyadh, according to Western and Iraqi intelligence sources cited in a recent Reuters report

Given current broader tensions in the region and charges of "Iranian expansion" it will be interesting to see if the US again ramps up operations in Iraq. Should the proxy war waging across the border in Syria actually come to an end, it may very well be that Iraq again becomes the new ground zero for the West's anti-Iran proxy war.  

Published:9/13/2018 1:14:26 AM
[Markets] Turkey's Latest Power Grab: A Naval Base In Cyprus?

Authored by Debalina Ghoshal via The Gatestone Institute,

  • The possibility of a Turkish naval base on Cyprus does not bode well for the chances of a Cyprus reunification deal, particularly after the breakdown of the July 2017 peace talks, which were suspended when "Turkey had refused to relinquish its intervention rights on Cyprus or the presence of troops on the island."

  • Turkey has 30,000 soldiers stationed on Cyprus, the northern part of which it has illegally occupied since 1974.

  • "If Greek-Turkish tensions escalate, the possibility of another ill-timed military provocation could escalate with them... Moreover, such a conflict might open up an even greater opportunity for Russian interference." - Lawrence A. Franklin.

Turkey's Naval Forces Command has "submitted a proposal to the Ministry of Foreign Affairs stating that Turkey should establish a naval base in the Turkish Republic of Northern Cyprus," according to Turkey's strongly pro-Erdogan daily, Yeni Safak, which recently endorsed the proposal for the base in an article entitled, "Why Turkey should establish a naval base in Northern Cyprus."

"The base will enable the protection of Northern Cyprus' sovereignty as well as facilitate and fortify Turkey's rights and interests in the Eastern Mediterranean, preventing the occupation of sea energy fields, and strengthening Turkey's hand in the Cyprus peace process talks."

Having a naval base in northern Cyprus would also strengthen the self-proclaimed "Turkish Republic of Northern Cyprus," which is recognized only by Turkey. Cyprus is strategically important: a naval base there would give Turkey easier access to the Eastern Mediterranean's international trade routes and greater control over the vast undersea energy resources around Cyprus. In the past, Turkey has blocked foreign vessels from drilling for these resources; in June, Turkey began its own exploration of the island's waters for gas and oil.

Turkey's Naval Forces Command has "submitted a proposal to the Ministry of Foreign Affairs stating that Turkey should establish a naval base in the Turkish Republic of Northern Cyprus." Pictured: The Turkish Navy frigate TCG Oruçreis. (Image source: CC-BY-SA-3.0/Brian Burnell via Wikimedia Commons)

This is not the first time that Turkey has set its sights on the area's resources. In 2014, Ankara dispatched surveillance vessels and warships to Cyprus's Exclusive Economic Zone (EEZ) to search for hydrocarbons. This incident took place just before the leaders of Greece, Cyprus and Egypt deepened their an energy-cooperation, "freezing Turkey out." As soon as the accord was signed, Cypriot President Nicos Anastasiades blasted "Turkey's provocative actions," saying that they "do not just compromise the peace talks [between Greek and Turkish Cypriots]... [but] also affect security in the eastern Mediterranean region."

At the time, UN-brokered reunification negotiations, which had been renewed after a long hiatus, ended unsuccessfully yet again, as a result of Turkey's search for hydrocarbons in the EEZ. According to a November 2014 report in the Guardian:

"Turkey's decision to dispatch a research vessel into disputed waters last month not only resulted in talks being broken off but has exacerbated the row over drilling rights."

The possibility of a Turkish naval base does not bode well for the chances of a Cyprus reunification deal, particularly after the breakdown of the July 2017 peace talks between Turkish-Cypriot leader Mustafa Akinci and Cypriot President Nicos Anastasiades. The talks were suspended when "Turkey had refused to relinquish its intervention rights on Cyprus or the presence of troops on the island." Turkey has 30,000 soldiers stationed on Cyprus, the northern part of which it has illegally occupied since 1974.

Another factor that may be contributing to the Turkish Navy's desire for a base in Cyprus is Israel. Aside from Ankara's extremely rocky relations with Jerusalem, Israel and Cyprus have been working to forge an agreement to join their electricity grids and construct a pipeline to link their gas fields to mainland Europe. Although they are in a dispute over development rights of one of these gas fields, Aphrodite, they are invested in reaching a solution that will not damage their increasingly friendly relations.

Erdogan's considerations should concern NATO, of which Turkey, surprisingly, is still a member, and the rest of the West. As Lawrence A. Franklin recently wrote for Gatestone:

"If Greek-Turkish tensions escalate, the possibility of another ill-timed military provocation could escalate with them. The ability of NATO to respond to other conflicts in the area could be affected, as well as NATO air and naval assets based in both countries. Moreover, such a conflict might open up an even greater opportunity for Russian interference."

Published:9/13/2018 12:49:36 AM
[Markets] Asian Stock Markets Mixed as US Seeks to De-escalate Trade Tensions – Asian equity markets opened mixed on Thursday morning as Washington proposed a new round of trade talks with Beijing that could help to de-escalate a trade war between the two. Published:9/13/2018 12:49:35 AM
[Markets] Putin and Xi Jinping Affirm Both "Oppose Unilateralism And Trade Protectionism" In Summit

Presidents Vladimir Putin and Xi Jinping met on the sidelines of the Eastern Economic Forum in Vladivostok on the Sino-Russian border Tuesday. Simultaneously Russia and China kicked off unprecedented joint military exercises as part of Russia's annual Vostok war games, which will run for a week and includes thousands of Chinese People's Liberation Army troops, and some 300,000 Russian personnel. 

President Putin has of late sought closer relations with China, which Russia shares a massive 4,200km border with, amidst both countries experiencing deep tensions with the West, including US sanctions against Moscow and a growing trade war between China and Washington.

It's the third time this year the two leaders have met and the fact that it was planned at the inauguration of Vostok 2018 no doubt sent a strong signal to Washington that the two countries' usually chilly relations are warming fast in the face of a common increased threat from the West. 

According to China’s state broadcaster CCTV, Xi affirmed to Putin that“Both nations have to oppose unilateralism and trade protectionism, and build a new type of international relations and shared human destiny.”

The two leaders toast improved relations at the Eastern Economic Forum on Tuesday. 

Putin in return reportedly pledged mutual good faith commitment to boosting ties, noting the wide range of mutual national interests: “We have a relationship of trust in the sphere of politics, security and defense,” he said. “We know that you [Xi] personally pay great attention to the development of Russian-Chinese relations.”

The two also discussed areas of potential greater cooperation in science and technology, counterterrorism, as well as China's ambitious "Belt and Road Initiative". The two acknowledged their prior one-on-one summits as "fruitful" the last being their July Johannesburg meeting, and before that a June meeting in Beijing.  

And significantly, simultaneous to the Putin-Xi meeting, The Hindu reports, it's more than the Vostok games where on the ground improvement of ties are already happening

On Tuesday, Russia-China Investment Fund (RCIF) — a joint undertaking of the state-owned China Investment Corporation and Russian sovereign wealth fund — announced that a group of of Russian and Chinese businesses are considering 73 joint investment projects, with a cumulative value of more than $100 billion. CNBC reported that cooperation between China and Russia is an issue of global importance as both nations try to achieve economic stability despite the pain of U.S. penalties — sanctions against Russia and an escalating tariff war against China.

Ahead of Tuesday's meeting China’s ambassador to Russia, Li Hui, described Sino-Russian relations as being “at their best in history” in statements made on Sunday. President Xi’s attendance at the annual economic forum constitutes the first ever by a Chinese leader.

Vladimir Putin and Xi Jinping make pancakes during a visit to the Far East Street exhibition on the sidelines of the Eastern Economic Forum in Vladivostok, Russia. Image source: Reuters

And concerning China's sending some 3,200 PLA elite forces troops, along with 30 fix-wing aircraft and helicopters to deploy during the exercise, Carnegie Moscow Center analyst, Alexander Gubuev, summarized why the West will closely monitor the games with increased alarm, per a Financial Times report:

This is pretty huge. These major exercises are designed to simulate responses to aggression from external enemies. For decades, China has been considered one of those potential threats. Thus, to invite them to participate suggests that now they are seen as allies against other aggressors.”

The exercises, which are annual and held in different regions which Moscow considers among four strategic military sectors, are designed to simulate an attack on a foreign power. 

“Both Beijing and Moscow are looking to demonstrate that trade wars and sanctions will only push them to develop new alliances," comments senior analyst Florence Cahill for a risk consultancy group as cited in FT. And explained further, “As long as their prevailing worldview is shaped by an animus towards a US-led international order, co-operation on all levels between Moscow and Beijing will likely be more pronounced than competition between them.”

China’s defense ministry put out a statement Tuesday saying that the country’s participation in Vostok 2018 would enhance the counter-attacking capabilities of its armed forces and reinforce ties with Russia.

The remarks, no doubt, were intended directly for the Trump administration. 

Published:9/13/2018 12:13:47 AM
[Markets] John Whitehead: What I Don't Like About Life In Post-9/11 America

Authored by John Whitehead via The Rutherford Institute,

“A patriot must always be ready to defend his country against his government.”

 - Edward Abbey, American author

Life in a post-9/11 America increasingly feels like an endless free fall down a rabbit hole into a terrifying, dystopian alternative reality in which the citizenry has no rights, the government is no friend to freedom, and everything we ever knew and loved about the values and principles that once made this country great has been turned on its head.

We’ve walked a strange and harrowing road since September 11, 2001, littered with the debris of our once-vaunted liberties.

We have gone from a nation that took great pride in being a model of a representative democracy to being a model of how to persuade the citizenry to march in lockstep with a police state.

Osama Bin Laden right warned that “freedom and human rights in America are doomed. The U.S. government will lead the American people in — and the West in general — into an unbearable hell and a choking life.”

These past 17 years have proven Bin Laden right in his prediction.

What began with the passage of the USA Patriot Act in October 2001 has snowballed into the eradication of every vital safeguard against government overreach, corruption and abuse. 

The citizenry’s unquestioning acquiescence to anything the government wants to do in exchange for the phantom promise of safety and security has resulted in a society where the nation is being locked down into a militarized, mechanized, hypersensitive, legalistic, self-righteous, goose-stepping antithesis of every principle upon which this nation was founded.

This is not freedom.

This is a jail cell.

Set against a backdrop of government surveillance, militarized police, SWAT team raids, asset forfeiture, eminent domain, overcriminalization, armed surveillance drones, whole body scanners, stop and frisk searches, roving VIPR raids and the like—all of which have been sanctioned by Congress, the White House and the courts—our constitutional freedoms have been steadily chipped away at, undermined, eroded, whittled down, and generally discarded.

Our losses are mounting with every passing day.

Free speech, the right to protest, the right to challenge government wrongdoing, due process, a presumption of innocence, the right to self-defense, accountability and transparency in government, privacy, press, sovereignty, assembly, bodily integrity, representative government: all of these and more have become casualties in the government’s war on the American people, a war that has grown more pronounced since 9/11.

Since the towers fell on 9/11, the American people have been treated like enemy combatants, to be spied on, tracked, scanned, frisked, searched, subjected to all manner of intrusions, intimidated, invaded, raided, manhandled, censored, silenced, shot at, locked up, and denied due process.

In allowing ourselves to be distracted by terror drills, foreign wars, color-coded warnings, underwear bombers and other carefully constructed exercises in propaganda, sleight of hand, and obfuscation, we failed to recognize that the true enemy to freedom was lurking among us all the while.

The U.S. government now poses a greater threat to our freedoms than any terrorist, extremist or foreign entity ever could.

While nearly 3,000 people died in the 9/11 attacks, the U.S. government and its agents have easily killed at least ten times that number of civilians in the U.S. and abroad since 9/11 through its police shootings, SWAT team raids, drone strikes and profit-driven efforts to police the globe, sell weapons to foreign nations, and foment civil unrest in order to keep the military industrial complex gainfully employed.

No, the U.S. government is not the citizenry’s friend, nor is it our protector, and life in the United States of America post-9/11 is no picnic.

In the interest of full disclosure, here are some of the things I don’t like about life in a post-9/11 America:

I don’t like being treated as if my only value to the government is as a source of labor and funds.

I don’t like being viewed as a consumer and bits of data.

I don’t like being spied on and treated as if I have no right to privacy, especially in my own home.

I don’t like government officials who lobby for my vote only to ignore me once elected. I don’t like having representatives incapable of andunwilling to represent me. I don’t like taxation without representation.

I don’t like being bullied by government bureaucrats, vigilantes masquerading as cops, or faceless technicians.

I don’t like being railroaded into financing government programs whose only purpose is to increase the power and wealth of the corporate elite.

I don’t like being forced to pay for wars abroad that serve no other purpose except to expand the reach of the military industrial complex.

I don’t like being subjected to scans, searches, pat downs and other indignities by the TSA.

I don’t like VIPR raids on so-called “soft” targets like shopping malls and bus depots by black-clad, Darth Vader look-alikes.

I don’t like fusion centers, which represent the combined surveillance efforts of federal, state and local law enforcement.

I don’t like being treated like an underling by government agents who are supposed to be working for me. I don’t like being threatened, intimidated, bribed, beaten and robbed by individuals entrusted with safeguarding my rights. I don’t like being silenced, censored and marginalized. I don’t like my movements being tracked, my conversations being recorded, and my transactions being catalogued.

I don’t like free speech zones, roving bubble zones and trespass laws that restrict Americans’ First Amendment rights.

I don’t like laws that criminalize Americans for otherwise lawful activities such as holding religious studies at homegrowing vegetables in their yard, and collecting rainwater.

I don’t like the NDAA, which allows the president and the military to arrest and detain American citizens indefinitely.

I don’t like the Patriot Act, which opened the door to all manner of government abuses and intrusions on our privacy.

I don’t like the Department of Homeland Security (DHS), which has become America’s standing army in direct opposition to the dire warnings of those who founded our country. 

I don’t like military weapons such as armored vehicles, sound cannons and the like being used against the American citizens.

I don’t like government agencies such as the DHS, Post Office, Social Security Administration and Wildlife stocking up on hollow-point bullets. And I definitely don’t like the implications of detention centers being built that could house American citizens. 

I don’t like the fact that police departments across the country “have received tens of thousands of machine guns; nearly 200,000 ammunition magazines; thousands of pieces of camouflage and night-vision equipment; and hundreds of silencers, armored cars and aircraft.”

I don’t like America’s infatuation with locking people up for life for non-violent crimes. There are thousands of people in America serving life sentences for non-violent crimes, including theft of a jacket, siphoning gasoline from a truck, stealing tools, and attempting to cash a stolen check.

I don’t like paying roughly $29,000 a year per inmate just to keep these nonviolent offenders in prison.

I don’t like having my hard-earned taxpayer dollars used against me.

I don’t like the partisan nature of politics today, which has so polarized Americans that they are incapable of standing in unity against the government’s abuses.

I don’t like the entertainment drivel that passes for news coverage today.

I don’t like the fact that those within a 25-mile range of the border are getting a front row seat to the American police state, as Border Patrol agents are now allowed to search people’s homes, intimately probe their bodies, and rifle through their belongings, all without a warrant.

I don’t like public schools that treat students as if they were prison inmates. I don’t like zero tolerance laws that criminalize childish behavior. I don’t like a public educational system that emphasizes rote memorization and test-taking over learning, synthesizing and critical thinking.

I don’t like police precincts whose primary purpose—whether through the use of asset forfeiture laws, speed traps, or red light cameras—is making a profit at the expense of those they have sworn to protect. I don’t like militarized police and their onerous SWAT team raids.

I don’t like Department of Defense and DHS programs that transfer surplus military hardware to local and state police. I don’t like local police dressing and acting as if they were the military while viewing me as an enemy combatant.

I don’t like government programs that reward cops for raiding homes and terrorizing homeowners.

I don’t like being treated as if I have no rights.

I don’t like cash-strapped states cutting deals with private corporations to run the prisons in exchange for maintaining 90% occupancy rates for at least 20 years. I don’t like the fact that American prisons have become the source of cheap labor for Corporate America.

I don’t like answering to an imperial president who operates above the law.

I don’t like the injustice that passes for justice in the courts.

I don’t like prosecutors so hell bent on winning that they allow innocent people to suffer for crimes they didn’t commit.

I don’t like the double standards that allow government officials to break laws with immunity, while average Americans get the book thrown at them.

I don’t like cops who shoot first and ask questions later.

I don’t like police dogs being treated with more respect and afforded more rights than American citizens.

I don’t like living in a suspect society.

I don’t like Americans being assumed guilty until they prove their innocence.

I don’t like technology being used as a double-edged sword against us.

Most of all, I don’t like feeling as if there’s no hope for turning things around.

Now there are those who would suggest that if I don’t like things about this country, I should leave and go elsewhere. Certainly, there are those among my fellow citizens who are leaving for friendlier shores. 

However, I’m not giving up on this country without a fight.

I plan to keep fighting, writing, speaking up, speaking out, shouting if necessary, filing lawsuits, challenging the status quo, writing letters to the editor, holding my representatives accountable, thinking nationally but acting locally, and generally raising a ruckus anytime the government attempts to undermine the Constitution and ride roughshod over the rights of the citizenry.

Our country may be in deep trouble, but all is not yet lost.

The first step begins with you. 

1. Get educated. Know your rights. Take time to read the Constitution. Study and understand history because the tales of those who seek power and those who resist them is an age-old one. The Declaration of Independence is a testament to this struggle and the revolutionary spirit that overcame tyranny. Understand the vital issues of the day so that you can be cognizant of the threats to freedom. Stay informed about current events and legislation.

2. Get involved. Become actively involved in local community affairs, politics and legal battles. As the adage goes, “Think nationally, act locally.” America was meant to be primarily a system of local governments, which is a far cry from the colossal federal bureaucracy we have today. Yet if our freedoms are to be restored, understanding what is transpiring practically in your own backyard—in one’s home, neighborhood, school district, town council—and taking action at that local level must be the starting point. Responding to unmet local needs and reacting to injustices is what grassroots activism is all about. Getting involved in local politics is one way to bring about change.

3. Get organized. Understand your strengths and weaknesses and tap into your resources. Play to your strengths and assets. Conduct strategy sessions to develop both the methods and ways to attack the problem. Prioritize your issues and battles. Don’t limit yourself to protests and paper petitions. Think outside the box. Time is short, and resources are limited, so use your resources in the way they count the most.

4. Be creative. Be bold and imaginative, for this is guerilla warfare—not to be fought with tanks and guns but through creative methods of dissent and resistance. Creatively responding to circumstances will often be one of your few resources if you are to be an effective agent of change. Every creative effort, no matter how small, is significant.

5. Use the media. Effective use of the media is essential. Attracting media coverage not only enhances and magnifies your efforts, it is also a valuable education tool. It publicizes your message to a much wider audience. 

6. Start brushfires for freedom. Take heart that you are not alone. You come from a long, historic line of individuals who have put their beliefs and lives on the line to keep freedom alive. Engage those around you in discussions about issues of importance. Challenge them to be part of a national dialogue. As I have often said, one person at a city planning meeting with a protest sign is an irritant. Three individuals at the same meeting with the same sign are a movement. You will find that those in power fear and respect numbers. This is not to say that lone crusaders are not important. There are times when you will find yourself totally alone in the stand you take. However, there is power in numbers. Politicians understand this. So get out there and start drumming up support for your cause.

7. Take action. Be prepared to mobilize at a moment’s notice. It doesn’t matter who you are, where you’re located or what resources are at your disposal. What matters is that you recognize the problems and care enough to do something about them. Whether you’re 8, 28 or 88 years old, you have something unique to contribute. You don’t have to be a hero. You just have to show up and be ready to take action.

8. Be forward-looking. Beware of being so “in the moment” that you neglect to think of the bigger picture. Develop a vision for the future. Is what you’re hoping to achieve enduring? Have you developed a plan to continue to educate others about the problems you’re hoping to tackle and ensure that others will continue in your stead? Take the time to impart the value of freedom to younger generations, for they will be at the vanguard of these battles someday.

9. Develop fortitude. What is it that led to the successful protest movements of the past headed by people such as Martin Luther King Jr.? Resolve. King refused to be put off. And when the time came, he was willing to take to the streets for what he believed and even go to jail if necessary. King risked having an arrest record by committing acts of nonviolent civil disobedience. A caveat is appropriate here. Before resorting to nonviolent civil disobedience, all reasonable alternatives should be exhausted. If there is an opportunity to alter the course of events through normal channels (for example, negotiation, legal action or legislation), they should be attempted.

10. Be selfless and sacrificial. Freedom is not free—there is always a price to be paid and a sacrifice to be made. If any movement is to be truly successful, it must be manned by individuals who seek a greater good and do not waver from their purposes. It will take boldness, courage and great sacrifice. Rarely will fame, power and riches be found at the end of this particular road. Those who travel it inevitably find the way marked by hardship, persecution and strife. Yet there is no easy way. 

11. Remain optimistic and keep hope alive.  Although our rights are increasingly coming under attack, we still have certain freedoms. As I make clear in my book Battlefield America: The War on the American People, we can still fight back. We have the right to dissent, to protest and even to vigorously criticize or oppose the government and its laws. The Constitution guarantees us these rights. In a country such as the United States, a citizen armed with a knowledge of the Bill of Rights and the fortitude to stand and fight can still be a force to be reckoned with, but it will mean speaking out when others are silent.

Practice persistence, along with perseverance, and the possibilities are endless. You can be the voice of reason. Use your voice to encourage others. Much can be accomplished by merely speaking out. Oftentimes, all it takes is one lone voice to get things started. So if you really care and you’re serious and want to help change things for the better, dust off your First Amendment tools and take a stand - even if it means being ostracized by those who would otherwise support you.

It won’t be easy, but take heart. And don’t give up.

Published:9/12/2018 11:03:49 PM
[Markets] Asian stocks rise on possible US-China talks amid tensions SINGAPORE (AP) — Asian markets were mostly higher on Thursday after a report that the U.S. had proposed a new round of trade negotiations with China quelled fears that a dispute between the world's two largest economies was spiraling out of control. Published:9/12/2018 10:36:07 PM
[Markets] Cryogenics Firm Sued For $1 Million After Mistakenly Cremating Scientists' Head

Apparently somebody wasn't using their head.

A cryogenics firm based in Scottsdale, Ariz. is in hot water after it mistakenly cremated the body of a renowned scientist, preserving only his head, against the wishes of the scientists' surviving family. Now, the man's son is hoping to sue the company for $1 million due to the "emotional distress" he suffered as a result of the mistake made by the. The firm, known as the Alcor Life Extension Foundation, has been freezing clients' heads and bodies since 1982, according to the Daily Telegraph.

The company is facing a $1 million lawsuit after Kurt Pilgeram said he was sent a package from Alcor "which purportedly contained his father’s cremated remains, except allegedly for his father’s head," which was being preserved in one of the company' coolers.


Dr. Max More, founder of Alcor (courtesy of the Daily Telegraph)

According to legal documents, Pilgeram was "shocked, horrified and extremely distressed" when he learned the fate of his father's body (we imagine he also wanted a refund for $120,000, the difference between the $200,000 the company charges for full-body preservation and the preservation of just a head)

The younger Pilgeram said having his full body preserved was extremely important to his late father. Meanwhile, Alcor, which is run by Dr. Max More, a British-born scientist, was obligated under an agreement to preserve all of his father’s remains "no matter how damaged" and that the company violated this agreement when it cremated him.

Dr. Laurence Pilgeram devoted much of his career to researching the aging process. He died back in 2015 at the age of 90 of what's believed to have been a heart attack.

The Pilgeram family is now suing Alcor for $1 million.

"Mr. Pilgeram claims his father would never have paid for the service if he knew his entire body wasn’t going to be preserved," the lawsuit states.

Alcor is presently responsible for preserving the remains of 159 individuals.

Published:9/12/2018 10:36:07 PM
[Markets] Nvidia announces new data-center inference push with Turing GPUs After giving its longtime fans, gamers, the first shot at its newest graphics-processing units, Nvidia Corp. is next looking to use its new Turing technology to boost its artificial-intelligence efforts.
Published:9/12/2018 10:36:07 PM
[Markets] Fear, Intimidation And Wage Theft: Amazon Delivery Drivers Suffer 'Inhumane' Working Conditions

As Whole Foods workers push back against the crushing demands of their Amazonian overlords, stories of more labor abuses perpetuated by the e-commerce giant - which has developed a reputation for ruthless efficiency - are coming to light.


The latest horror story was published on Tuesday by Business Insider, and purports to tell the stories of drivers for Amazon delivery subcontractors who complain about unsafe working conditions and pressure to deliver packages on time at all costs - even if it means speeding, peeing in bottles or delaying critical medical care.

In interviews over the course of eight months, drivers described a variety of alleged abuses, including lack of overtime pay, missing wages, intimidation, and favoritism. Drivers also described a physically demanding work environment in which, under strict time constraints, they felt pressured to drive at dangerously high speeds, blow stop signs, and skip meal and bathroom breaks.

Many of their accounts were supported by text messages, photographs, internal emails, legal filings, and peers.

BI reportedly spoke with 31 current or former drivers for its subcontracted "Amazon Flex" delivery service. These drivers have become a crucial part of its push to circumvent FedEx and UPS, and some of the stories that the organization managed to corroborate wold be unacceptable anywhere else.

The BI story began with one worker's story about being told by their supervisor to drop off their packages before heading to the hospital after slicing his hand to the bone.

Zachariah Vargas was six hours into his shift delivering packages for Amazon.

He was about to drop off a package when he accidentally slammed the door of his truck on his hand. The door clicked shut, trapping his middle and ring fingers.

Once he freed his fingers, the blood began to pour. Both of Vargas' arms started to shake involuntarily. The lacerations were deep. Vargas thought he glimpsed bone when he wiped away the blood.

Panicked, Vargas called his dispatch supervisor, who was working at a nearby Amazon facility.

He said he received no sympathy.

"The first thing they asked was, 'How many packages do you have left?'" he told Business Insider.

When the employee pushed back, his supervisor, who operated out of an Amazon facility using Amazon equipment, even though they technically functioned as a subcontractor, gestured to an Amazon floor employee and issued a chilling warning.

The same manager ordered Vargas to unload his truck and pointed toward an Amazon official at the warehouse and told him: "Amazon is watching you. They don't like when undelivered packages come back."

But while these employees suffer abuses and indignities meted out by their mercenary bosses, Amazon is reveling in its "cost-effective" employment structure whereby it can utilize employee labor without taking responsibility for the employees.

For Amazon, paying third-party companies to deliver packages is a cost-effective alternative to providing full employment. And the speed of two-day shipping is great for consumers. But delivering that many packages isn't easy, and the job is riddled with problems, according to interviews with 31 current or recently employed Amazon-affiliated delivery workers with experience across 14 third-party companies spanning 13 cities.

Given the company's reputation for treating its workers like expendable meat puppets, it's hardly a surprise that Sen. Bernie Sanders on Wednesday introduced the Stop Bad Employers by Zeroing Out Subsidies (Stop BEZOS) Act. The bill, which was named to implicate Amazon CEO Jeff Bezos, would tax corporations with at least 500 employees for the value of public assistance those workers receive.

* * *

But while Amazon contractors struggle to make ends meet, Amazon CEO Jeff Bezos and the rest of the company's board are heading to Washington for a series of meetings, dinners and even a widely hyped speaking engagement that have kick-started rumors that Washington DC will be the location of Amazon's HQ2. The company, which launched the search a year ago, has reportedly been kicking the tires of different locations in the DC metro area, including towns in Maryland and Virginia, according to the Washington Post. 

Amazon has booked the Renwick Gallery for a 40-person dinner on Tuesday, though neither the museum or Amazon would offer any details about the event. On Thursday, Bezos is set to give a talk at the Economic Club of Washington that is expected to be its most popular event since Warren Buffett spoke there in 2012. Virginia Gov. Ralph Northam, Maryland Gov. Larry Hogan and D.C. Mayor Muriel E. Bowser are all expected to attend. Bezos will also deliver the keynote address at an Air Force conference at National Harbor on Sept. 19, which WaPo suggested could be tied to Amazon Web Services' pursuit of a massive contract with the Pentagon that could be worth $10 billion over 10 years.

And despite the recent FAANG pullback, Amazon shares continue to hover just below $2,000 a share, leaving Bezos, the world's wealthiest man, with a fortune of more than $150 billion.

Published:9/12/2018 10:06:02 PM
[Markets] Asia Markets: Asian markets finally pick up, race to gains After widespread declines to start the week, Asian stock markets bounced back Thursday, led by strong gains in Japan and Hong Kong, as the U.S. offered to renew trade talks with China.
Published:9/12/2018 10:06:02 PM
[Markets] S&P 500 Gains Amid Trade Hopes The S&P 500 edged higher for the third straight session Wednesday, with gains in consumer-staples and trade-sensitive sectors offsetting declines in financial and technology firms. After the U.S. and Mexico reached a deal on trade recently, some investors are waiting to see if potential agreements with Canada, the European Union and China could boost global growth later in the year. The S&P 500 and Dow Jones Industrial Average eked out gains following a Wall Street Journal report that the U.S. is reaching out to China for a new round of trade talks. Published:9/12/2018 9:32:49 PM
[Markets] What Would It Take To 'Win' The "War On Drugs"?

Authored by Jacob Hornberger via The Future of Freedom Foundation,

After decades of warfare, the federal drug war has become a predictable cycle.

Drug dealer, drug gang, or drug user busted. DEA agents celebrate the bust. Newspaper reporters laud the DEA. Defendants prosecuted, convicted, and sent to jail.

And then?

Then, the cycle repeats itself. Drug dealer, drug gang, or drug user busted. DEA agents celebrate the bust. Newspaper reporters laud the DEA. Defendants prosecuted, convicted, and sent to jail.

And again and again and again. Month after month. Year after year.  Decade after decade. The cycle never stops.

Normally when one wages a war, he strives for victory. But no one ever defines what victory in the drug war would look like. The feds seem satisfied to simply engage in the same cycle, over and over again, into perpetuity.

Some proponents of the drug war say that if only the federal government really cracked down in the war on drugs, the war could be won. But what they fail to recognize is that over the years, the federal government really has cracked down.

The feds adopted mandatory-minimum sentences, which took sentencing discretion out of the hands of federal judges and imposed draconian sentences for drug-law violations.

They enacted asset-forfeiture laws, which enable the DEA to seize people’s money without charging them with any offense.

They bash people’s door down in the middle of the night, violently raiding their homes, oftentimes killing the inhabitants or their pets.

They arbitrarily stop, search, abuse, and humiliate people, especially African-Americans.

In some cases, they have even resorted to planting drugs on people.

None of it has brought victory. The cycle simply continues to repeat itself, over and over again. Drug bust, followed by prosecution, conviction, and incarceration, followed by a new drug bust, followed by prosecution, conviction, and incarceration.

Drug-war proponents might say, “Jacob, the problem is that we haven’t really, really cracked down. If we got the military involved and authorized our soldiers to fight this war like a real war, where they could raid people’s homes whenever they wanted, search whoever they like, and kill anyone suspected of violating drug laws, victory would finally be ours.”


Why hasn’t drug-war victory been declared in the Philippines? According to Human Rights Watch, the Philippine government has killed more than 12,000 drug suspects in the last two years of drug warfare. No arrests. No trials. No convictions. No incarcerations. Just straight-out killing.

Yet, still no victory! In fact, they continue to wage their war on drugs with even more ferocity. What gives with that? It’s pretty much impossible to crack down more than arbitrarily killing drug-war suspects outright. Doesn’t that imply that if the DEA and the U.S. military were given the same power here in the United States, killing tens of thousands of Americans would still not lead to drug-war victory?

Consider Mexico, where the military has long played an active role in the country’s drug war. According to the Guardian,

It is 11 years since the then president Felipe Calderón launched a militarised crackdown on drug cartels deploying thousands of soldiers and promising an end to the violence and impunity. But the bloodletting continues, the rule of law remains elusive and accusations of human rights abuses by state security forces abound. All the while, Mexico continues to race past a series a grim milestones: more than 200,000 dead and an estimated 30,000 missing, more than 850 clandestine graves unearthed. This year is set to be the country’s bloodiest since the government started releasing crime figures in 1997, with about 27,000 murders in the past 12 months.

Do we really want the federal government to go down Mexico’s road by bringing in the U.S. military to try to win the drug war? Why should we expect different results here?

If the objective of the drug war is stop people from possessing or distributing drugs, that objective has obviously not been achieved despite decades of warfare. Moreover, in the process of trying to achieve that objective, the federal government has unleashed massive death, destruction, ruination of lives, exorbitant spending, and loss of liberty and privacy. In fact, when we look back on this whole thing, the only thing the drug war has really accomplished is jobs for DEA agents, federal prosecutors, federal judges, and, yes, black-market drug dealers.

I say: Let’s just legalize drugs, which would, in one fell swoop, eradicate drug gangs and drug cartels, along with the necessity for DEA agents and federal prosecutors and federal judges whose jobs depend on the drug war. It would also keep drug use and drug abuse in the private sector, including rehabilitation, where they belong.

That would be a genuine victory.

Published:9/12/2018 9:32:49 PM
[Markets] The Wall Street Journal: A third of U.S. companies in China may put off investments over trade worries A new survey of U.S. companies doing business in China found that 31.1% are considering delaying or canceling investment decisions over uncertainties created by tariffs and U.S.-China trade friction.
Published:9/12/2018 9:32:49 PM
[Markets] Washington's Choice: WWIII Or Saving Face In Syria

Authored by Tom Luongo via The Strategic Culture Foundation,

Sometimes when I step back from the overwhelming flow of geopolitical insanity I’m reminded of the old adage that coming close only counts in horseshoes and hand grenades.

To which, I always add, “And nuclear war.”

I’ve been watching the build up to the operation to liberate Idlib in Syria which includes the endless neocon and Israeli moral preening warning Assad against using chemical weapons with a sense of detachment.  And I keep thinking to myself, “Do they really think we’re that stupid?”

Three times the chemical weapons canard has been used to justify further aggression against Syria and three times a full-blown U.S. invasion has been averted. First by Vladimir Putin’s deft diplomacy and General Dunford’s refusal to implement a ‘no-fly zone’ in 2013 and then during the Trump years with ineffectual air strikes on Syrian airbases.

How much of that ineffectuality of those airstrikes were designed by Defense Secretary James Mattis to avoid a wider conflagration and how much was Russian EW/missile defense is anyone’s guess.

The truth most likely lies somewhere in the middle.

That is why everyone who is worrying about the U.S.’s blustering over Syria’s Idlib campaign needs to take a big step back and think the scenario through.

Because the neoconservatives and Israel are forcing the situation to its crisis point, thinking they can manipulate the headlines and the levers of power to still eke out a victory in Syria that will allow them to continue on their quest to destroy Russia first and conquer the rest of Asia after that.

And they are willing to blackmail us with the threat of WWIII over 50,000 head-chopping mercenaries to get their cookie. 

However, when you factor in the men actually in charge of the U.S. military chain of command, Trump and Mattis, and you realize the lengths to which Mattis’ field commanders have gone to avoid direct confrontation with Russian forces, you come to the conclusion that the men who will actually fight this war the neoconservative provocateurs and laptop bombardiers are clamoring for won’t actually pull the trigger.

The reasons for this are manifest.

First, the potential for the conflict to go nuclear is too high for rational men to take that chance.  Mattis and Russian Defense Minister Sergei Shoigu are hard-bitten, no-nonsense men.  Neither underestimates the other’s resolve to defend their men and national interests.

So, once the shooting starts expect it to get ugly quick.  Therefore it is unlikely to get to that point.

Second, there is no profit in that kind of escalation for the people who profit from war.  The banks and the military weapons makers thrive in low-intensity, frozen conflicts which keep sales flowing and governments indebted to pay for them.

In an age of nuclear weapons, proxy wars fought by mercenaries with drones are far more profitable than any large-scale invasions.  I hate to say this but from a discounted cash flow perspective Lockheed-Martin wants predictability to cover their quarterly dividends to shareholders more than they want to bring about the supposed Zionist plan for Greater Israel.

Sorry to burst everyone’s conspiracy theories.

Third and most importantly, the U.S. cannot afford a non-nuclear confrontation with Russia that punctures the illusion of U.S. military superiority.  Too much of the world’s confidence in the dollar itself rests in the U.S.’s ability to project power and defend its interests militarily.

This confidence is a mixture of that military capability and the U.S.’s traditional position of a country with an excellent legal framework within which to do business.  It is fashionable among geopolitical critics, myself included, to get caught up in the rhetoric and projection of a sclerotic and weakening United States, but legally it is still one of the best places on earth to do business.

But, as Martin Armstrong pointed out recently, Trump’s domestic opposition has openly declared sedition against him this week in the New York Times.  Former Secretary of State, John Kerry, is doing the talk show circuit calling for a constitutional crisis over Trump allegedly being unfit for office.  And George Soros is paying protesters to disrupt the confirmation hearing of Brett Kavanaugh to the Supreme Court.

If allowed to run its course to impeachment in the event of the Republicans losing control of the House in November, this would be a death blow to the U.S.’s reputation as a nation of laws rather than a nation of men.  The U.S. dollar would not recover from such a blow to its credibility, especially in light of Trump’s nearly-unhinged use of sanctions and threats of tariffs, weaponizing the dollar indiscriminately.

And this is why Vladimir Putin openly showed his hand to the world in March.  Strategically, he let everyone know that any confrontation between Russia and the U.S. would result in the U.S losing its status as the world’s pre-eminent military power.

This is why the neocons and the U.S./U.K. Deep State have been so adamant in accelerating its provocations against Russia.  They have to present us with the Faustian bargain of WWIII before Russia has these weapon systems fully deployed.

It’s also why Trump and Mattis are allowing them to have their head.  It feeds Trump’s “Art of the Deal” strategy for negotiations while also allowing him the opportunity to save face after Idlib is liberated regardless of whether another chemical weapons attack is staged.

I think we won’t see one here. 

The way out of Syria for the U.S. with its face-saved is to thunder and bluster, threaten fire and brimstone just like Trump did with Kim Jong-un and use that to explain why Assad showed restraint and didn’t use chemical weapons this time.

I can even see Trump tweeting something about three strikes and he would be out. 

Once Idlib is liberated Mattis will happily begin pulling vulnerable troops out of al-Tanf and Afghanistan.  That’s why I believe he went there to the surprise of the CIA house-organ Washington Post last week.

And then the neocon and Israeli muddying of the waters will move to the Geneva talks, but we’ll cross that Rubicon when it approaches.

Published:9/12/2018 8:25:02 PM
[Markets] The Wall Street Journal: Charles Rettig wins confirmation as IRS commissioner The Senate confirmed Charles Rettig to run the Internal Revenue Service, giving the veteran California tax lawyer one of the toughest, most thankless jobs in the federal government.
Published:9/12/2018 8:25:01 PM
[Markets] The Wall Street Journal: AT&T CEO suggests shifting spending from Turner networks to HBO AT&T Inc.’s boss said the company may shift resources to HBO from other parts of its newly acquired Time Warner business to step up programming investments and use data on its customers’ tastes and habits to inform its content bets, part of a plan to compete with streaming giant Netflix Inc.
Published:9/12/2018 7:39:18 PM
[Markets] More Yale Freshmen Identify As LGBTQ Than Conservative, Survey Finds

Authored by Aryssa Damron via The College Fix,

Queer freshmen greatly outnumber conservatives at the university, according to a survey

A Yale Daily News survey of freshmen students at that university found that more students of the class of 2022 identify on the LGBTQ spectrum than as conservative, and that queer freshmen even outnumber other sizable demographics in the class, such as Protestants and Catholics.

The paper’s survey, the results of which are composed of 864 respondents, or just over one-half of the freshman class, found that only nine percent of respondents identified as “somewhat conservative,” with one percent identifying as “very conservative.” LGBTQ respondents, on the other hand, greatly outnumberd conservatives in total: According to the survey, “nearly 5 percent [of respondents] identify as gay and just over 9 percent as bisexual or transsexual. Three percent opted not to answer, and the remaining 8 percent identified as asexual, ace spectrum or questioning their sexual orientation.”

This combined demographic outnumbers even Protestants and Catholics, whom the survey identified as 16 percent and 15 percent of the incoming class, respectively.

2018 Gallup poll estimated that 4.5 percent of all Americans identified as LGBTQ.

Liberal students in the class of 2022 also greatly outnumber conservatives on campus, according to The Daily News‘s findings.

“Nearly three-fourths” of surveyed students identified as liberal, with thirty percent identifying as “very liberal.” These disparities are mirrored in the faculty composition at Yale: A 2017 Daily News survey of Yale professors found that three-quarters identified as liberal while less than 10 percent identified as conservative. Over 90 percent of faculty members in the humanities identified as liberal while that number hovered in the mid-60s for STEM faculty.

Yale’s Dean of Student Affairs, Camille Lizarribar, did not respond to requests for comment on whether Yale was taking steps to increase ideological diversity on campus. Lizarribar was prominent last year in the debate over changing the term “freshman” to the gender-neutral term “first-year” in university communications.

Cameron Koffman, the president of the school’s William F. Buckley, Jr. Program, said that is it “not surprising” that so many students on campus lean left and that it would be obvious “if one were to spend a few days at Yale, sit in on classes, and talk to people.”

“The best thing the University can do is make sure that conservatives on campus feel comfortable voicing their opinions and ensuring that students understand that the administration firmly supports free speech and intellectual diversity,” Koffman said.

Jamie Kirchick, a Yale College alumnus who is running a petition to be a candidate for the Yale Board of Trustees, told The College Fix via email that “Yale is increasingly out of touch with America, and America is increasingly out of touch with Yale.”

“Central to the American college experience must be not just exposure to people of different racial backgrounds but also different life experiences and viewpoints,” Kirchick said.

One suggestion he had for a solution was “a pre-read program, modeled on Princeton, where every incoming freshman reads two books that put forth different arguments about an important contemporary or historical debate.”

Yale’s issues with viewpoint diversity came under scrutiny in 2015 when Professors Nicholas and Erika Christakis were publicly targeted by students after Erika wrote an email that suggested students should not be so easily offended by things such as Halloween costumes. A swift backlash from students followed. At one point a mob of students surrounded Nicholas on campus, with one student turning hysterical and shrieking at him, “Who the fuck hired you?” Nicholas eventually resigned his position at a residential college on campus, while Erika resigned her position teaching at the school.

In an op-ed for The Washington Post, Erika Christakis wrote:

“By affirming only the narrow right to air my views, rather than helping the community to grapple with its intense response, an unfortunate message was made plain: Certain ideas are too dangerous to be heard at Yale.”

In that same piece, she expressed concern that “students will eventually give up trying to engage with each other, a development that will echo in our wider culture for decades.”

Shortly after Erika’s email, the William F. Buckley Jr. Program conference, which that was year focused on free speech, was besieged by protestors, one of whom spit on an attendee.

A 2016 Yale Daily News survey found that 95 percent of conservative students on campus thought that their conservative views were unwelcome. One respondent was quoted as saying “I just get the general vibe that Republicans aren’t respected for their beliefs as much as maybe the liberal people are.” Overall, 75 percent of respondents said that Yale “does not provide a welcoming environment for conservative students to share their opinions on political issues.”

Published:9/12/2018 7:39:17 PM
[Markets] Middle-class income rose above $61,000 for the first time last year, U.S. Census Bureau says The median U.S. household earned $61,372 in 2017, the highest recorded level and a sizable jump from the prior year, the U.S. Census reported Wednesday. Published:9/12/2018 7:08:36 PM
[Markets] Stocks - S&P Ekes out Gain as Apple's Swing Lower Offsets Optimism Over Trade - The S&P 500 eked out a win on Wednesday as optimism over U.S.-China trade helped offset a retreat in tech. Published:9/12/2018 7:08:35 PM
[Markets] MarketWatch First Take: From iPhone to AIPhone: Apple’s new chips are key to its future Apple Inc.’s three new iPhones contain a cluster of chips, including an artificial intelligence chip that literally will make its new smartphones even smarter.
Published:9/12/2018 7:08:35 PM
[Markets] FEMA Simulated A Cat 4 Hurricane Striking East Coast Just Months Before Florence

Earlier this year, government disaster planners simulated a Category 4 hurricane strike alarmingly similar to Hurricane Florence unfolding on a dangerously vulnerable stretch of the US East Coast. 

A fictional "Hurricane Cora" was modeled to charge up the Chesapeake Bay and strike Washington, D.C., created by the Federal Emergency Management Agency (FEMA) and Argonne National Laboratory.

Simulated Cone graphical forecast for Hurricane Cora, used for the 2018 National Level Exercise. (This is NOT an actual hurricane, but is used for testing our nation’s preparedness for hurricane impacts.)

Associated Press (AP) said the computer models showed "catastrophic damage" from the hurricane, which some experts warn that Hurricane Florence could produce a disaster comparable to 2005's Hurricane Katrina in the Carolinas and surrounding states.

The fictional hurricane knocked out the power grid for most gas stations in the Mid-Atlantic region, severely damaged a nuclear power plant, and blocked critical shipping channels in the Chesapeake Bay, according to a Department of Energy simulation manual.

"What they were trying to do was create a worst-case scenario, but it's a very realistic scenario," said Joshua Behr, a research professor at Virginia's Old Dominion University who is involved in disaster modeling and simulations.

Realistic indeed, it just so happens that months after the government's Cora simulation, Hurricane Florence, a Category 4 storm is expected to hit the same general area -- roughly 200 miles south of the modeled area in Wilmington, N.C.

On Wednesday, the National Hurricane Center (NHC) said the storm was 575 miles southeast of Cape Fear, North Carolina. It had maximum sustained winds of 130 mph and could make landfall in the Carolinas by the end of the week.

AP also said the fictional storm made landfall in the densely populated Hampton Roads region, causing a massive 15-foot storm surge and more than 9 inches of rain to the coastal area within the first six hours of landfall. Models showed main routes -- used for evacuations as well as for first responders -- in and around the coastal regions of Virginia, were severely damaged and allowed a delayed response of search and rescue teams.

Cora slammed +100 mph sustained winds into three nuclear power stations. One was critically damaged. Models also showed thirty-three major power substations were at risk for storm surge and inland flooding.

Ed Vallee, a meteorologist at Vallee Wx Consulting, warned that "Florence will approach the Carolina coast Thursday night into Friday with winds in excess of 100 mph along with flooding rains. This system will approach the Brunswick Nuclear Plant as well as the Duke-Sutton Steam Plant."

He tweeted several weather models Tuesday morning that forecasts rainfall amounts 15-40" range in some regions along the coast.

One of those models is the ECMWF Total Precipitation, which shows the most torrential rain could be situated around the two nuclear power plants in Wilmington, North Carolina.

Aside from Florence, the fictional storm damaged critical roads, bridges, and debris blocked the Newport News Channel and other waterways.

Coast Guard Station Cape Charles lost power, and Coast Guard Station Chincoteague was severely damaged by high winds. Models also showed cataphoric damage at Reagan National Airport in Washington.

The make-believe hurricane knocked out hundreds of cell towers, and power was lost to 135 data centers in Virginia and another 60 in Maryland.

The scenario projected hurricane-force winds for a 50-mile radius from the storm's center, damaging residential neighborhoods and critical infrastructure.

AP notes that the Cora hurricane simulation makes no mention of deaths and injuries but instead focuses on infrastructure.

Another remarkable similarity between the Cora simulation and Florence's path: already saturated ground on that part of the Mid-Atlantic coast.

"What I fear is that saturation, combined with a storm that kind of stalls out," said Behr, who has studied vulnerable populations in the paths of Hurricane Katrina on the Gulf Coast and in the Hampton Roads region.

If parts of the East Coast, Mid-Atlantic, and or the South East are deluged with water, it could be a Katrina 2.0, Behr said.

"I believe that those patterns are also going to manifest in Hampton Roads if and when a large storm hits," he said. "The vulnerability of our populations are quite similar to New Orleans. Displacement, pain, suffering, property loss. All those things are going to play out in a fashion that has parallels to how Katrina played out."

AP warns that Hampton Roads, a coastal region inhabited by 1.7 million people in cities such as Norfolk, Virginia, and Virginia Beach, could experince difficulties in evacuations.

"I've heard people say Virginia Beach is the world's largest cul-de-sac in the sense that there are not a lot of ways to evacuate," said Michelle Covi, an assistant professor of practice with Old Dominion University and Virginia Sea Grant, a science group that works with other universities in the region on coastal issues.

"You can't go north because of the Chesapeake Bay," she said. "You can't really go south, and in this case you wouldn't want to because the storm is that way. You generally want to go west, but again there are lots of water bodies."

It seems as government disaster planners at FEMA have been preparing for "the big one," maybe it will be Florence? 

Published:9/12/2018 7:08:34 PM
[Markets] Interactive Brokers Defects From Nasdaq To IEX As "Dominoes Start To Fall"

Not much has been heard from IEX since the Securities and Exchange Commission (much to our amazement) flipped the bird to the all-powerful HFT lobby and granted the exchange's request for a license, cementing IEX's status as the US's 13th stock exchange while also approving the company's vaunted "speed bump" - a mechanism that slows down trades by 350 millionths of a second to help protect its customers from being front run by predatory HFT algos.

That was more than two years ago. But on Wednesday, headlines about the subject of Michael Lewis's best-selling novel "Flash Boys" hit the tape when Interactive Brokers announced that it would become the first company to list its shares on IEX. The shares, which are presently listed on the Nasdaq, will migrate to IEX's platform on Oct. 5, where it will start trading under the ticker IBKR.

IEX broke the news in a press release Wednesday morning:

IEX Group, Inc., which operates America’s newest stock exchange, announced today that Interactive Brokers Group, Inc. (NASDAQ GS:IBKR), an automated global electronic broker, will be the first company to list its stock on IEX. Interactive Brokers’ common stock, which is currently listed on the Nasdaq Stock Market, is expected to begin trading on IEX on Friday, October 5, 2018 and will continue to be listed under the IBKR ticker symbol.

"We are excited and honored to welcome Interactive Brokers as the inaugural IEX Founding Issuer," said Brad Katsuyama, CEO and co-founder of IEX Group, Inc. "Interactive Brokers is a visionary financial services company that shares IEX’s philosophy and commitment to fairer markets."

"I have long admired Interactive Brokers Chairman and Founder Thomas Peterffy’s bold, candid, and consistent view that equity markets are here to serve investors and his critical role in innovating the industry over the past four decades. In fact, his 2010 keynote speech to the World Federation of Exchanges on the important role that stock exchanges play in the marketplace partly inspired me to co-found IEX, so for me personally, things have certainly come full circle," said Mr. Katsuyama.

Thomas Peterffy, Interactive Brokers' founder and chairman, said that while being the first company to list with a new exchange has its risks, he believes that Interactive Brokers will now be able to offer better execution for its institutional and retail clients (particularly since HFTs won't be able to wedge themselves between their buy and sell orders).


As CNBC points out, despite their initial resistance, other exchanges have adopted their own versions of IEX's "speed bump" to try and signal to customers that they, too, were willing to take a stand against HFT manipulation. However, rivals like the NYSE included exceptions for certain "electronic market makers".

On twitter, traders heralded Interactive Brokers' move, pointing out that now that the levee has broken, each successive defection would come more quickly and easily. As Sal Aruk points out, Peterffy has been consistent on Payment for Order Flow and internalization to ensure customers get the best execution possible.


Others asked: Will the dominoes now start to fall?

IEX's rivals are probably wondering the same thing. Because after failing to stop IEX at every turn - first by lobbying against IEX receiving its license and then trying to undermine it by instituting their own versions of IEX's speed bump - the established exchanges might now need to consider something they've heretofore resisted: Genuine change that would benefit retail and institutional customers over HFT.

Published:9/12/2018 6:33:26 PM
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