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[Markets] PFAS Crisis Expands As Millions Of Americans In 43 States Are Exposed To Toxic Chemicals 

Tens of millions of Americans in 43 states may have been exposed to toxic fluorinated compounds known as PFAS in their drinking water.

In a report from May, the non-profit Environmental Working Group (EWG) showed how PFAS had exposed upwards of 19 million Americans through contaminated groundwater. EWG found 610 contaminated locations ranging from public water systems, military bases, military and civilian airports, industrial plants, dumps, and firefighter training sites.

Now the environmental advocacy group has identified 58 more military sites where high levels of PFAS used in firefighting foam have been detected in groundwater or drinking water, from Elmendorf Air Force Base and Fort Richardson, Alaska to Fort Eustis, Virginia, reported the Military Times.

Many of the new locations contain PFAS levels over 100,000 parts per trillion.

"The EPA and the Department of Defense have utterly failed to treat PFAS contamination as a crisis demanding swift and decisive action," said Ken Cook, president of EWG, in a statement announcing the additional contaminated sites.

"'It's time for Congress to end new PFAS pollution and clean up legacy contamination," Cook said.

For decades, the military and other civilian agencies used firefighting foams that contained PFAS. These dangerous chemicals are also in hundreds of everyday household products.

The Centers for Disease Control and Prevention (CDC) has warned that the toxic chemicals are present in the blood samples of the general population. Prior studies have shown the dangerous chemicals have been linked to weakened childhood immunity, thyroid disease, cancer, and other major health issues.

DoD officials are prioritizing cleanup operations for 401 of the sites, said Deborah Morefield, manager of the Defense Environmental Restoration Program in the office of the deputy assistant secretary of defense for the environment.

The cleanup process occurred under a law known as the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, she said. "'It's a long process, and it 'doesn't happen overnight."

Under new DoD policy, the firefighting foam has been banned from training,  maintenance, or testing exercises, Morefield said. "It's only being used for real fire emergencies, and even in those cases, we're treating it as a spill response. We're collecting and trying to make sure it 'doesn't get into the environment further," she said.

Morefield said Congress had allocated additional monies for cleanup sites. "We are trying to get our hands on this, trying to make sure we get the appropriate funding to move forward to take care of our cleanup responsibilities."

Congress introduced new legislation earlier this year that would require the EPA to set new limits for PFAS by 2021-22.

EWG's reports reveal that America's drinking water crisis goes way beyond Flint.

Published:7/16/2019 9:39:12 PM
[Markets] Tech’s day of reckoning on Capitol Hill was long and harsh Tech’s day of reckoning Tuesday on Capitol Hill started with skepticism about Facebook Inc.’s proposed digital currency, and ended with a spirited debate over charges of anti-conservative bias on Alphabet Inc.’s Google search. In between, the industry’s big four took some body blows from both political parties.
Published:7/16/2019 9:39:12 PM
[Markets] Illegal Alien In Sanctuary City Charged With Sexual Assault Of A 6-Year-Old Child

Records obtained by CBS 17 North Carolina show that a Raleigh, North Carolina man is facing multiple child sex charges stemming from a case dating back to January.

The 32 year old man, Alejandro Duarte Aldama, was arrested last week and charged with "indecent liberties with a child and statutory sex offense – child less than 13; defendant 18+" according to a Wake County arrest warrant. 

The warrant claims that he “attempt[ed] to engage in a sex act with…a child who was under the age of 13, namely 6 years old” on Jan. 4.

A follow up report by Breitbart says that law enforcement officials said Aldama "entered the U.S. without inspection, which indicates that he is in the country illegally". Raleigh, where he had been living, is a sanctuary city that protects illegal aliens from being deported. 

As the article points out, this isn't the first case out of North Carolina this year involving illegal aliens and sex crimes against children: 

North Carolina, this year, has seen a number of cases in which illegal aliens have been accused of sex crimes against children. In February, an illegal alien was charged with raping a 14-year-old girl in Harmony, North Carolina, before attempting to flee the U.S. Likewise, two illegal alien teenagers were charged last month for allegedly gang-raping a 13-year-old girl in Chapel Hill, North Carolina.

Aldama is currently being held on $1 million secured bond. 

Published:7/16/2019 9:12:12 PM
[Markets] Congress Courageously Sticks US Taxpayers WIth A $6 Trillion Liability

Authored by Simon Black via,

There seems to be an unwritten rule with lawmakers that, every time they create a terrible piece of legislation, they give it the most noble-sounding name.

The USA PATRIOT Act from 2001 was a great example. It sounds great. Who wouldn’t love a law named for Patriots?

And yet that was easily among the most freedom-killing laws ever passed in US history, giving the federal government nearly unlimited authority to wage war and spy on its own people.

There are so many other examples– the USA FREEDOM Act from 2015 (which renewed many of the worst provisions of the PATRIOT Act).

Or the HIRE Act from 2010, which created some of the most heinous tax rules of the last fifty years.

The names of these laws all sounded wonderful. But their effects were absolutely terrible.

The new SECURE Act will likely be no different.

If you haven’t heard of SECURE, it’s a new piece of legislation aimed at ‘fixing’ the US retirement system.

SECURE stands for “Setting Every Community Up for Retirement Enhancement”, which is pretty clever when you think about it.

People want to associate their retirement with a word like ‘secure’. So even without knowing anything about the law, most people will probably have good feelings about it based solely on the name.

But if you actually read the legislation, SECURE contains a number of predictably terrible consequences.

For starters, SECURE is a basically a gigantic tax increase. And it’s a tax increase that will particularly affect your children when you pass away.

Under current law, you could leave your IRA to your children in a fairly tax efficient way. That’s actually one of the nice things about an IRA.

If your kids inherit your IRA, they’re required to pay out a small portion of the funds each year… and those distributions would be taxable income.

But the current rules only require tiny distributions; your kids are allowed to stretch out the annual payouts over the course of their lives, resulting in very minor taxation.

The new rules completely eliminate this benefit.

Under the SECURE Act, your kids would have ten years to pay out (and be taxed on) the entire value of your retirement account.

This means that the annual payouts would be MUCH larger… thus bumping your children up to a higher tax bracket… meaning that they’ll end up paying much higher taxes on your retirement savings.

This is tantamount to a huge estate tax increase. And it’s one that primarily affects the middle class.

For wealthy people, retirement accounts typically only comprise a small percentage of their assets. So this rule change won’t have much of an impact.

But for the middle class, retirement accounts are often one of the largest sources of their estates. And this legislation will be a significant hit for them.

The US House of Representatives already passed the SECURE Act. And just in case you’re about to start hating on your least favorite political party, you should know that it was passed with almost unanimous support from both parties.

(though I have my doubts whether most members of Congress even read the legislation…)

It’s currently in the Senate and seems likely to pass, so this is a reality to prepare for.

In related news, Congress also made some movement on the Rehabilitation for Multiemployer Pensions Act.

Sadly this one doesn’t have a catchy acronym. But in essence the legislation is their comical attempt to address the multi-trillion dollar problem of unfunded pension plans in the Land of the Free.

We’ve talked about this before a number of times– the vast majority of state, local, and even corporate pension plans in the United States (and worldwide for that matter) simply don’t have enough money to keep their promises.

Moody’s Investor Service estimated last year that the total pension funding gap in the US is $4.4 trillion. A few months ago the American Legislative Exchange Council estimated it at nearly $6 trillion.

Bottom line, it’s a big number.

Pension plans in the United States are currently guaranteed by a quasi-government agency called the Pension Benefit Guarantee Corporation.

The PBGC is sort of like an FDIC for pension funds… so that if a pension plan goes bust, the PBGC will step in with a bailout.

Problem is, the PBGC itself is nearly insolvent and will run out of money in 2025. And its balance sheet is trivial compared to the multi-trillion dollar pension problem.

So Congress came up with a solution: go into DEBT!

According to the new legislation, whenever a pension plan runs out of funds, Congress wants them to borrow money in order to keep making payments to beneficiaries.

This raises an obvious question: who would be insane enough to loan money to an insolvent pension fund?

Well, you’ll be pleased to know that your esteemed members of Congress have courageously signed you up for the task, putting the American taxpayer on the hook for this potential $6 trillion liability.

Clearly this plan is the work of genius.

If nothing else, these two laws point to an obvious conclusion: it’s more important than ever to get your house in order when it comes to retirement planning.

Pension funds aren’t going to be able to keep their promises. Even Social Security, according to its own annual report, will run out of money in 15 years.

And even when you responsibly set aside your own money for retirement, lawmakers will suddenly change the rules and impose a major tax increase on the middle class.

Just imagine the things they’ll do if the Bolsheviks come to power next year…

Published:7/16/2019 8:39:40 PM
[Markets] The Top 25 Metro Areas Make Up Half Of US GDP

The top 25 metro areas make up half of the U.S. GDP. The other 359 smaller cities account for a little over 38 percent of national GDP. As Statista's Sarah Feldman points out, it only takes 19 of the biggest powerhouse cities to make up the same percent of total GDP as the other 359 cites.

The rural-urban divide gets a lot of press, while the divide between major metropolises and smaller ones often gets overlooked.

Infographic: The Top 25 Metro Areas Make Up Half of U.S. GDP | Statista

You will find more infographics at Statista

These smaller cities often face the struggles of aging populations, young workers leaving to coastal cities, and shrinking economies, once bolstered by manufacturing jobs and industries. These U.S. cities, like Cleveland, Columbus, and Buffalo have been struggling to jump start economic development.

The division between bigger cities and smaller cities has a geographic component to it too. Over half of the top 25 economic powerhouses are located on one of the coasts, further playing into the divide between coastal metro areas and the interior of the country.

Published:7/16/2019 8:09:10 PM
[Markets] "They Crushed Our Growth And Ruined Our Product:" YouTube's Ex-Partners Plot Antitrust Revenge

YouTube is headed for a significant antitrust confrontation with its ex-partners, now turned rivals, that seek trustbuster attention on the video giant's advertising platform, Bloomberg reports.

AppNexus Inc., founded by Brian O'Kelley in 2007, helped companies advertise anywhere on the internet. The software was easy to use, was able to be integrated into Google, the biggest ad seller, and Google's YouTube video service.

By 2015, Google halted companies from buying ads on YouTube using external software, which would eventually collapse AppNexus because its clients could no longer advertise on the video platform.

"They crushed our growth and ruined our product," said O'Kelley, who stepped down as AppNexus chief executive officer last year. YouTube represented a large portion of the video inventory that AppNexus offered to advertisers. Those marketers couldn't just ignore YouTube "because it's pretty much a monopoly in that space," he added. "It's not a supply-and-demand problem. It's a 'You just broke our entire business' problem.'"

Bloomberg notes advertising and media entrepreneurs created multi-billion dollar operations around YouTube, only to be crushed by the video giant after a change in the rules of engagement.

Rivals and former employees, who remained anonymous, said Google used YouTube's popularity to attract media and tech firms onto the platform, gaining exclusive access to more videos and ad space.  YouTube then used that supply to, manipulate ad prices, and harvest data about viewers, crushing anyone that tried to compete.

People familiar with this said YouTube didn't wipe out the competition right away. Instead, the video giant made decisions to consolidate the video ad-buying process, with no consideration for its partners and regulatory checks. This triggered a tidal wave of failed companies and fewer choices for advertisers, sources said.

YouTube has no competition in the video advertising space. Interactive Advertising Bureau estimates the video advertising space was roughly $16.3 billion last year. BMO Capital Markets said the video giant accounts for $16 billion in 2018 sales, efficiently commanding the entire industry.

YouTube disagrees with this depiction of its video ad dominance, said it pays out a little more than half of its ad sales to contributors.

Regulators and politicians have taken notice about YouTube squeezing its partners. The Department of Justice is considering an antitrust investigation of Google/YouTube.

YouTube is preparing for upcoming antitrust investigations, its executives contacted its partners to ask how its practices have affected their ad sales, according to another source.

Vevo is one of the best examples of how YouTube squeezed its partners with the intent of crushing them into near bankruptcy.

Vevo was founded in 2008, collected music videos and original programming from creators and distributed the content across the internet -- on Facebook, YouTube, and The goal of Vevo was to be the MTV of the internet to get higher advertising rates.

As YouTube experienced rapid growth, the relationship with Vevo faltered. Vevo music video were some of the hottest videos on YouTube, and advertisers paid more to advertise on those videos. But YouTube came across a significant problem when Vevo featured a video on its platform: it couldn't advertise because Vevo had exclusive rights. The google unit explored ways to correct this error; it first tried to renegotiation with Vevo, then tried to buy it outright, sources said.

YouTube proposed a new contract in 2012 that would have enabled it to also sell ads on Vevo videos operating on its platform, which would effectively crush Vevo's share of the revenue from those ads. Vevo executives declined YouTube's attempt to buy it, and what followed next was shocking: YouTube said it would delete Vevo videos from its platform before the existing contract would expire.

Vevo executives then filed an injunction describing what they said was bullying tactics, and asked a judge to prevent the video giant from removing its videos. The ploy worked. YouTube agreed to a new deal that would keep Vevo videos on the platform and keep exclusive rights to its ad inventory.

Google then acquired a minority stake in Vevo.

YouTube's attempts to kill Vevo continued for years, according to sources. With no way in accessing Vevo's ad inventory, YouTube effectively reduced its influence on the platform.

In 2018, Vevo discontinued its effort to compete with YouTube for a broad consumer audience, "shutting its app and website, and cutting product and engineering staff," Bloomberg said. Months later, YouTube signed a deal with Vevo in what industry sources said it wanted all along: the right to sell ads on Vevo videos.

The Justice Department's top trustbuster Makan Delrahim recently discussed how some tech companies have become too large, and their influence on competition is dangerous. Sort of like when oil refineries declined to sell themselves to Standard Oil about a century ago, the giant cut prices to drive rivals out of business.

YouTube said its tactics were reasonable - industry insiders disagree.

O'Kelley said that the Department of Justice is more attentive than ever before in investigating if YouTube violated antitrust laws. In May, he testified before the Senate Judiciary Committee on digital advertising. "This is not a functioning market," he said. "It enables Google, which doesn't produce content, to monopolize all aspects of the programmatic business and take a disproportionate tax for its trouble."

Published:7/16/2019 7:39:13 PM
[Markets] "If You Provoke The Entire World, Something Very Terrible May Happen"

Authored by Andre Vltchek via,

The United States believes that it is so invincible, exceptional and so frightening that no one would ever dare to protest, let alone defend its people against constant humiliation, economic embargos and military threats.

It used to be like this for quite some time. In the past, the West used to bully the world before and after each well-planned assault. Also, well-crafted propaganda used to be applied.

It was declared that things are done ‘legally’ and rationally. There were certain stages to colonialist and imperialist attacks: “define your goals”, “identify your victim”, “plan”, “brainwash your own citizens and people all over the world”, and then, only then, “bomb some unfortunate country back to the stone ages”.

Now, things are slightly different.

“The leader of the free world” wakes up in the middle of the night, and he tweets. What comes from his computer, tablet or phone, (or whatever he uses), is spontaneous, unpolished and incredibly dangerous. Similar in substance to what made him wake up in the middle of the night, in a first place.

He does not seem to plan; he shoots off from the hip. Today, as I am writing this essay, he has declared that he has “five strategies for Venezuela”. Go figure. Bravo!

Earlier, as he was about to land outside London, he embarked on insulting the Mayor of the British capital, calling him names. A bit like we used to do to each other, when we were five years old, in the neighborhood playground.

He has been regularly offending Mexico, and of course Iran, China and Russia.

He basically tells the leader of the most populous nation on earth – China – to “be there”, at the G20 Summit, or else.

Whenever he and his lieutenants are in the mood, they get busy antagonizing everyone: Cuba and Nicaragua, DPRK and Venezuela, Bolivia and Syria.

Of course, the main “culprits” are always the ‘biggest bad boys’, Russia and China.

Anyone, at any time, could easily land on the proverbial hit list of President Trump, and hawks of his United States of A. It could be India (which, during ‘good submissive times’ is called by the West the “biggest democracy”, or perhaps Turkey (militarily the second mightiest NATO country). The world had been converted into an entity which appears to be run by a bloodthirsty and unpredictable dictatorship. The world is an entity where everyone is terrified of being purged, imprisoned, starved to death, or directly attacked, even liquidated.

It was always like this, at least in the modern history of the planet. Colonialism, neo-colonialism, imperialism: they have many different faces but one common root. A root that has been often hidden deep under the surface.

But this time it is all in the open, raw and brutally honest.

*  *  *

Both George W. Bush and Donald Trump have one thing in common: they are honest.

Bill Clinton and Barrack Obama were both ‘suave’ presidents. They were loved in Europe, as they knew how to speak politely, how to dine elegantly, and how to commit mass murder in a ‘rational, righteous way’; ‘old-fashioned, European-style’.

The brutal, vulgar ways of W. Bush and Donald Trump have been consistently shocking all those individuals who are pleased when things are done ‘stylishly’ and ‘politically correctly’; be it a coup or the starvation to death of millions through embargos. Or be it invasions or ‘smart’ bombing (practically, ‘smart’ meaning very far from the inquisitive eyes).

But it is not only the ‘offended sensibilities’ of predominantly European population, that matter.

The danger is that someone might take Donald Trump seriously, and respond accordingly.

In the past, verbal insults similar to those unleashed now by the US President, could easily have led to a war, or at least to the breaking up of diplomatic relationships.

And now?

In case Westerners have not realized it, yet – people all over the world are indignant. I talk to Libyans, Afghans, Iraqis, Venezuelans, Cubans, Iranians: they hate what comes from Washington; hate it with passion. They know that what is being done to them is terrorism, thuggery. But for now, they do not know how to defend themselves. Not yet, but they are thinking.

The entire world now resembles a brutal ghetto, or a slum, where a heavily armed gang controls the streets, and in fact every corner and alley.

At least in the past, subjugated people were able to hide behind decorative words and ideological pirouettes. They were able to ‘save their face’. They were sodomized in the name of ‘freedom’, ‘democracy’ and ‘human rights’. Now, a horrible reality is flying directly into all directions: “You will do as you are told!” “It is us who will decide.” “Obey, because we said so”. Entire proud nations are being reduced into states of slaves or even worse – lap dogs.

*  *  *

As everyone is well aware, even lackeys and slaves often hold grudges. And abused dogs can bite.

Throughout history, slaves rebelled. True heroes came from rebellious and enslaved nations.

This, what we have now on our planet, is not good, not a healthy situation.

The more countries that are being intimidated, the higher the chances are that somewhere, soon, things will let go; collapse.

Only terrible fear, so far, assures that if a Syrian or a Libyan or an Afghan city is leveled to the ground, there is no real retaliation: urban areas in the USA stay intact.

Only incredible patience of the Russian or Chinese leaders guarantees that, so far, even as their economies are being battered by ridiculous sanctions, the two powerful nations do not retaliate and ruin the US financial system (which is only a paper tiger).

Trump dares. He tortures and humiliates more than half of the world, then looks straight ahead and laughs: “So what are you going to do now?”

So far, the world is doing nothing.

Even the proud and mighty Iran is not ‘crossing the line’. As millions of its people are suffering because of insane sanctions, the Iranian navy is not yet engaging the US battleships that are sailing very near its shores.

Even as more and more US bases are being built right next to both Russia and China’s borders, so far there are no substantial military bases being erected by Moscow or Beijing in places such as Nicaragua, Cuba or Venezuela.

*  *  *

All this may change, soon.

And the so much dreaded (by Washington) “domino effect” may actually take place.

Non-Western leaders have also their ‘bad days’ and terrible nights. They also wake up in the middle of the night, and think, want to communicate and to act.

Imagine an Iranian leader, waking up at 2AM, and suddenly feeling overwhelmed by wrath, because Iranian men, women and children are suffering, for no reason, as a result of the perverse sadism being regurgitated by the West. What if he Tweets an insult, too? What if he just orders, on a spur of the moment, to have all those obsolete US aircraft carriers and destroyers that are floating in the vicinity, be sunk? Iran can do it: everyone knows that it can! Technically, militarily, it is easy: those ships are just sitting ducks.

Then what? Will Washington nuke Iran?

Someone may say: The West is killing millions every year, anyway. Better to fight it, in order to stop it, once and for all. Others may join. And then, then what? Will Trump give orders to kill tens of millions, just to maintain control over the world?

What if the US navy vessels bump into a Russian or a Chinese ship, as they almost did in the South China Sea, recently? What if a Russian or Chinese ship sinks, dozens of sailors die. And there is a retaliation? Then what?

What if Syria has enough and begins shooting down Israeli military jets that are bombing it, and attacking North American and European ‘special forces’ that are still located, illegally, on its territory?

The US is engaged all over the world. France and the UK, too. And if you talk to the people in Africa, Asia, the Middle East, you very soon realize what the real feelings towards Washington are!

If you provoke the entire world, something very terrible may happen!

Now, there is an entire coalition of powerful nations, ready to defend themselves, and also defend each other. Militarily, economically, and ideologically.

The world is not a slave of the West, or the United States. It is not a latrine.

This is the new world. Considering the horrors that were spread by the West, for many long years and centuries, Asia, Africa, “Latin America”, the Middle East and Oceania, are unbelievably patient and forgiving. But the USA and Europe should not take this tolerance for granted. They should not provoke its former and present victims.

Now, we (the people from the previously ruined part of the world) are beginning to speak up: about what is being done to us – to China and Russia, to South America and Africa, and the Middle East. With awareness comes courage. With courage comes pride.

Do not misinterpret our kindness. It is not a weakness. Not anymore. Think twice before you speak (or Tweet). Think a thousand times, before you act!

Published:7/16/2019 7:10:22 PM
[Markets] House Democrats vote to condemn Trump’s ‘racist’ tweets House Democrats vote to condemn Trump’s ‘racist’ tweets Published:7/16/2019 6:46:41 PM
[Markets] Netflix is about to pass yet another subscriber milestone When Netflix Inc. reveals its subscriber additions Wednesday afternoon, it should pass a milestone: 150 million paying subscribers. Published:7/16/2019 6:46:41 PM
[Markets] Earnings Watch: Netflix is about to pass yet another subscriber milestone When Netflix Inc. reveals its subscriber additions Wednesday afternoon, it should pass a milestone: 150 million paying subscribers.
Published:7/16/2019 6:46:41 PM
[Markets] The 2nd Zimbabwean Hyperinflation

Authored by Serban V.C. Enache via Hereticus Economicus blog,

Zimbabwe is once again facing rampant inflation, a rate of almost 100 percent recorded in the month of May.

I felt the need to investigate its macros. As usual, the graphs are based on info from tradingeconomcis. An important development is that last month, the Government removed the legal tender status of foreign currencies and made the new Zimbabwean Dollar [RTGS] the sole legal tender.

The country dropped its national currency back in 2009, and replaced it with a multi [foreign] currency system in efforts to combat hyperinflation at the time. The recent reverse measure, taken by Emmerson Mnangagwa’s administration, comes in response to dire commodity shortages across the country. Mnangagwa replaced Robert Mugabe as president two years ago in a coup. However, without sufficient US dollars to pay for imports, the country’s fuel stations have frequently run out and gasoline prices more than doubled between the months of January and April.

Fuel going up, coupled with the currency’s depreciation, made the cost of food, transportation, and housing utilities to soar. Due to the lack of confidence, as expected, more and more vendors set prices in US dollars.

In a milestone deal with the IMF last month, the Government agreed to cease net money creation [deficit spending] in order to pay its bills, which was a root cause of the sudden hyperinflation. The IMF is monitoring economic reforms for a year under a mutually agreed program. Debt relief was promised at the end of this year, provided the Government respects the deal. Companies are meant to trade RTGS dollars on an official market, but there were few takers. Analysts said that the Government’s gamble to force greater adoption of the RTGS might very well backfire, pushing transactions in foreign currencies underground.

With all these developments in mind, let’s see Zimbabwe’s flow of funds, and later on we’ll look at other indicators. The country has been a net exporter of Aggregate Demand and a net importer of goods for ten years straight. The Domestic Private sector [composed of domestic firms and households] has been going severely into debt for those same ten years. Only in the last two years was it able to net save financial assets, when the Government seriously expanded fiscal deficit spending.

We also see how the country’s money supply shot up, especially in 2018 and 2019. The M2 measurement [which includes cash and checking deposits + savings deposits, money market securities, mutual funds, and other time deposits] reached an all time high of 10.55 billion US dollars last March.

The unemployment figure has remained stable throughout years, but I don’t put much faith in the accuracy of this data, simply because of how the State defines being unemployed. For example, people like subsistence farmers, who consume all of their own output, are categorized as employed. And more to the point, the graph below is based on the “strict unemployed” definition [one who has been without work, is available for work and is actively seeking work]. The broader definition doesn’t require the latter condition.

Those working in the grey [informal] economy include people who do unpaid labor for a family business or paid employees who are not entitled to sick leave or paid holidays. In Zimbabwe, there are a great many who work in these circumstances. If we count as employed those workers on a payroll with taxes deducted at source and pension coverage, then the unemployment estimate is huge.

On to trade. South Africa owns the largest share of Zimbabwe’s exports. In my opinion, the country is far too dependent on its southern neighbor for commerce, and South Africa’s socio-political stability looks bleak these days. It would be better to seek out markets in different countries, in order to minimize risk and better handle potential negative demand shocks [for Zimbabwean exports] and negative supply shocks [for Zimbabwean imports].

The graph below shows Zimbabwe’s exports by countries of destination.

The graph below shows Zimbabwe’s imports by countries of source.

According to the World Bank, Zimbabwe’s exports sector as percentage of GDP last year was 22.9 percent and its imports sector 25.5 percent.

It’s safe to say that strategic bilateral relations cannot be formed, so long as Zimbabwe’s political class doesn’t compromise on a certain vector the country needs to maintain long term. Foreign investors [state and private agents] won’t be willing to come in, if they believe their investments will be at risk at the next election cycle, or if the chances for political instability and social upheaval are high. In recent years, Russia has been paying more attention to Africa, the northern states in particular, investing mostly in oil rigs and nuclear power plant deals. That’s one potential partner state with which the Mnangagwa administration should seek to do business.

Going back to Zimbabwe’s main trade partner, South Africa… that country is experiencing serious problems in rising criminality, and Ramaphosa’s land reform [confiscation without compensation] is bound to fail. In South Africa, since 1994, 21 percent of farms were put into Black African ownership. But more than 80 percent of those farms failed to remain economically active. If you ask Black farmers the reason for that miserable success rate, they blame the Government, and that’s absolutely true. That’s how you know it was a simulation of reform and not a legit effort behind it; because a singular reform, in and of itself, can’t be successful when everything else remains the same. In order to be a commercial success, an agribusiness requires access to infrastructure, to financial and physical capital, crop insurance, skilled labor, competent management, and access to markets capable of absorbing its output at a price which covers operation costs plus the markup.

South Africa [and Zimbabwe] needs a holistic approach to its national problems, and that means a combination of measures. Changing ownership doesn’t fix anything. The goal should be to decommodify land, which can be done via nationalization or [my personal preference] through site value taxation. Complementary measures should include: community land trusts, community banking, a national infrastructure investment plan, a national health care and education service, a national trade strategy, and last but not least, asset-side reform of the financial sector.

Reducing bureaucracy should be a priority as well. Currently, Zimbabwe is ranked 155th in 190 countries in the category of ‘ease of doing business.’ The more complex the laws and regulations are, the more wasteful and corrupt the system is. The State-dirigist method and Single Tax philosophy don’t require more time spent between citizen and bureaucrat, quite the opposite!

After Mugabe’s land reform, Zimbabwe isn’t out of the woods, and its population is growing too.

Using the printing press without any regard to budgetary rules, without any clear goal in mind, will only make the situation worse. The Zimbabwean Dollar [RTGS], in order to appreciate in value, requires a combination of tighter supply and higher demand for it. The Government’s specialists need to determine the country’s potential output vis-a-vis actual output and adjust fiscal policy in consequence. A negative output gap occurs when actual output is less than what the economy can produce at full capacity – while a positive output gap is the reverse and is inflationary.

The Government should aim for a near zero fiscal deficit; should temporarily ban the importation of luxury items, at least for a few years if not several years; should prioritize the importation of vital commodities – fuel, water, pharmaceuticals, grain, milk, and the like. The Central Bank should be ordered to run permanent zero interest rate policy. Reduced interest payments into the economy means a smaller supply of Zimbabwean currency. And the Government should only accept RTGS in payment of its exports, and it should only guarantee bank deposits denominated in RTGS. This combo would be sufficient to halt inflation, bring price stability and political confidence in state institutions and fuel hope for a better tomorrow.

Published:7/16/2019 6:46:41 PM
[Markets] Iran Claims It Rescued "Missing" UAE Tanker After US Said IRGC "Forced" It Toward Iran

The saga of the UAE "mystery" tanker which seems to have disappeared after its transponder went dark late Saturday night, and which no one has heard from since it drifted toward Iranian waters in the Strait of Hormuz over the weekend, has deepened after Iran contradicted US media reports of IRGC involvement. 

The semi-official news agency ISNA said hours after initial reports on Tuesday suggested Iran's military "forced" the vessel into Iranian waters that Iranian navy vessels actually came to the assistance of the disabled foreign oil tanker. The statement indicated the vessel was partially disabled and in desperate need of repairs. 

"(Spokesman) Abbas Mousavi said... that an international oil tanker was in trouble due to a technical fault in the Persian Gulf... After receiving a request for assistance, Iranian forces approached it and used a tugboat to pull it toward Iranian waters for the necessary repairs to be carried out," ISNA said, as cited by Reuters

UAE-owned oil tanker Riah, via The Daily Mail

The AP reported how it all started over the weekend:

Tracking data shows an oil tanker based in the United Arab Emirates traveling through the Strait of Hormuz drifted off into Iranian waters and stopped transmitting its location over two days ago, raising concerns Tuesday about its status amid heightened tensions between Iran and the U.S.

The report detailed that the Riah, a 58-meter oil tanker which operates frequently in the region, switched off its transponder for the first time in three months after 11pm on Saturday, based on tracking data. 

As of Monday "red flags" were raised as US officials began inquiring of the Riah's status. CNN's Pentagon correspondent Barbarra Starr had this to say based on intelligence sources: "US intel increasingly believes UAE tanker MT RIAH forced into Iranian waters over the weekend by #IRGC naval forces. UAE isn't talking."

Via Marine Traffic/The Daily Mail

Summarizing the statements of anonymous US intelligence and defense officials, the Jerusalem Post reported:

US officials believe that the Panama flagged tanker M/I RIAH was seized by the Iranian Revolutionary Guard on Saturday night, when it was crossing the Strait of Hormuz in international waters. Information from the US intelligence agency indicated that the IRGC troops forced the tanker to enter Iranian territorial waters before withdrawing the vessel to Iran's Qeshm Island.

However, this could be another case of hawkish US intelligence and defense officials hyping a false threat. Starr continued based on her source: "Some Gulf sources say ship simply broke down/towed by Iran. US says though no contact with crew. Last location Qesham Island."

Following the UK's controversial and aggressive move to seize a tanker carrying 2 million barrels of Iranian oil of Gibraltar earlier this month, Tehran's military has threatened to in turn intercept UK vessels.

This also comes after repeat pledges over the past year by Iran's leaders following a US sanctions campaign that if Iran is blocked from exporting its oil out of the gulf then no country would be able to traverse the vital oil shipping lanes either. 

The question remains: is this yet another knee-jerk attempt of US officials to immediately "blame Iran" in order to ramp up pressure? Could the "missing" UAE vessel just be the result of an accident or being disabled at sea? 

Published:7/16/2019 6:08:16 PM
[Markets] Dow Jones Futures: Two Big Earnings Movers Late; Lawmakers Hammer Big Tech Stock futures: The market rally stalled Tuesday on President Trump's China trade war threat. United Airlines and CSX moved late on earnings. Lawmakers continued to grill Facebook, Apple and Amazon. Published:7/16/2019 5:39:30 PM
[Markets] Trump To Turkey: "We're Not Going To Sell You The F-35" After Russian Missile Purchase

Turkish President Recep Tayyip Erdogan celebrated the delivery of the first S-400 anti-air missiles on Tuesday, even going so far as to suggest that Turkey and Russia (the system is made by Russian defense contractor Almaz-Almaty) might collaborate on building weapons. But across the Atlantic, President Trump was less than amused.

Washington has repeatedly insisted that if Turkey bought the S-400 over a steeply discounted Patriot missile system, that the US would block the sale of Lockheed Martin's F-35 fighter jets - and unprecedented punishment for a NATO member. And as it turns out, that's exactly what President Trump is planning to do.


During a Cabinet meeting on Tuesday, Trump said "we are now telling Turkey...we're not going to sell you the F-35 fighter jets."

Trump added: "It’s a very tough situation that they’re in. And it’s a very tough situation that we’ve been placed in the United States," Trump said. "With all of that being said, we’re working through it. We’ll see what happens, but it’s not really fair."

But Trump was mum on a more pressing issue: Whether Washington will subject Ankara to sanctions under the Countering America’s Adversaries Through Sanctions Act, or CAATSA. While Erdogan has suggested that Trump would find a way to avoid the sanctions, last year, Congress set a high bar for waiving sanctions under CAATSA.

And what's more, if Washington doesn't make an example of Ankara, it could have a full-blown mutiny on its hands, as New Delhi is also eyeing the S-400.

Trump isn't the only senior US official talking tough about the S-400. During his Senate Armed Services Committee confirmation hearing, Esper said that he has told his Turkish counterpart that "you can either have the S-400 or the F-35, you cannot have both."

But who knows? Maybe one one-on-one phone call between Erdogan and Trump will resolve everything.

Published:7/16/2019 5:39:30 PM
[Markets] Market Extra: Why Greece is selling new bonds at ‘risk-free’ levels akin to U.S. Treasurys Some are hedging their exposure in dollars for positive returns
Published:7/16/2019 5:09:17 PM
[Markets] Dow Jones Futures: Stock Market Rally Stalls; Apple, Facebook, United Airlines, CSX Active Late Stock futures: The market rally stalled Tuesday on President Trump's China trade war threat. United Airlines and CSX moved late on earnings. Lawmakers continued to grill Facebook, Apple and Amazon. Published:7/16/2019 5:09:17 PM
[Markets] Will The Multi-Polar World Be Backed By Gold?

Authored by Tom Luongo,

It’s not news that China and Russia have been buying gold by the hundreds of tonnes. It’s not news that Russia divested itself of most of its U.S. Treasury holdings last year in response to Donald Trump’s sanctions on Rusal, upsetting the global Aluminum market.

Russia has led the charge on central bank gold buying, having increased its official holdings from 400.3 tonnes in Q1 of 2007 to 2168.3 tonnes as of the end of Q1 2019. That’s a 442% increase in gold reserves.

China, on the other hand, has only in the past couple of years joined Russia’s party of announcing its gold buying on a monthly basis. Previously, China would simply drop a 500-600 tonne bomb on the markets and see what would shake out of it.

Now, few people who follow this stuff believe China’s government only owns 1916.3 tonnes of gold. Estimates range from 4000 to 6000 tonnes. Like Russia, very little of China’s domestic production of gold (404 tonnes in 2018) leaves China and makes its way into the global market.

It is mostly absorbed by the Chinese population via purchases off the Shanghai Gold Exchange (SGE). And the PBoC itself uses Chinese banks as proxies to buy its gold overseas from the U.K., Singapore and Switzerland.

Russia’s gold buying consumes most, and sometimes all, of Russia’s domestic production (297 tonnes in 2017). The same is true for Kazakhstan (68.4 tonnes) and a few other countries.

It’s easy when looking at these trends to see that something big may be on the horizon, that gold is on the verge of being re-monetized and a major shakeup to the world financial system is imminent.

That the multi-polar world is here. It’s not, but it’s coming.

The boys at The Duran had a fascinating (if a bit forward-looking) video recently where they discuss the situation brewing between the U.S. and China.

The basic thesis is that the U.S. and China are headed for a mostly amicable divorce of their economies, a disentangling as it were. And that that would then allow for the emergence of the so-called multi-polar world that both Russian President Vladimir Putin and Chinese Premier Xi Jinping are working towards.

On this point I don’t disagree. It’s a strong point Alex Mercouris makes here that the U.S. and China have acknowledged their growing contention in the global economy but that there is no need for a completely antagonistic relationship.

The U.S. doesn’t have to extend the unipolar moment into infinity to ‘win’ this ‘war’ with China. That is globalist thinking, maximalism to the extreme.

The U.S. and China can, strategically, disengage from each other while cultivating different paths for their futures. And this is the essence of the phrase ‘multi-polar.’ If that is Trump’s vision on this that is an improvement over the globalist Davos Crowd perspective so entrenched in Europe, which brooks no dissent from its Borg-like behavior.

It’s neither optimal nor likely but it sets a tone that will shift the future outcomes in the right direction. To do this Trump has to win re-election and be successful in confronting the Swamp via Jeffrey Epstein like I believe he’s doing.

However, and this is the bigger point coming back to gold, I do think Russia and China setting up their part of the multi-polar world based on a gold standard similar to Bretton-Woods is not workable.

There are a number of reasons for this but the main one is that Bretton-Woods never worked in the first place. The discipline of the reserve currency nation, the U.S., was never in observed. We violated the terms of the $35/ounce gold peg immediately.

First, by selling off the greatest hoard of silver ever amassed and then by simply printing the money during the Johnson and Nixon Administrations. It is insane to think that Russia and/or China will for any length of time exhibit any real fiscal discipline that would allow for a Bretton-Woods-style currency regime to work.

This is libertarian critique 101, folks. Just because the U.S. can’t keep its hand out of the cookie jar, doesn’t mean Russia post-Putin will. And the less said about the Chinese shadow banking bubble the better.

Moreover, the U.S. and the EU still have their gold reserves. Even if some or all of it has been lent out to suppress the price at times. I don’t believe that’s been the case since China opened up the Shanghai Gold Exchange and Russia began accumulating in earnest.

That would have put explosive upward pressure on the price of gold as thousands of tonnes would have had to be sourced to settle those positions. Instead, the U.S. and the EU were likely allowed to unwind any short positions over time which allowed years of annual production to flow east.

And this is the fundamental problem of a government-backed gold standard. It will not ever last. Governments create market interventions which have to be paid for via money printing or debt. And both of those things belie the discipline of the gold standard.

There is an infinite gap between the intention of China and Russia to build a multi-polar global financial system between East and West and the re-emergence of a gold-backed currency regime.

Because, for a moment, let’s get real about who owns what gold.

On the West side of the world we have the U.S., EU, BIS, the IMF and the Gulf states.

On the other side we have the central banks in the Russia/China orbit who are currently accumulating gold or are becoming independent actors on the world stage. It’s a bigger list than in the past twenty years, but that list is still small (The BRI Bloc (as defined by me herein) consists of the following countries: Russia, China, India, Iran, Iraq, Turkey, Qatar, Belarus, Uzbekistan, Tajikistan, Kyrgyzstan, Kazakhstan, Thailand, Malaysia, Serbia and Brazil).

Going through World Gold Council numbers for Q1 2019 we get the following numbers. Just over 7000 tonnes of gold for what I’m calling Eastern BRI Bloc, those countries that are both accumulating gold in their reserves and are important partners in China’s Belt and Road Initiative (BRI). It’s impressive that they have added more than 3000 tonnes over the past six-plus years.

Total Belt + Road Bloc Gold Holdings Still Dwarfed by U.S. Reserves.

However, that’s still less than the U.S.’s 8133.5 tonnes let alone the more than 10,000 tonnes that make up the reserves of the European Union countries and doesn’t include the 2814 tonnes owned by the IMF, the 504 tonnes owned by the ECB itself or the 102 tonnes owned by the Bank of International Settlements.

For any discussion of this bloc challenging the reserve status of the U.S. and European systems, There would have to be at least another 6000 tonnes available between China and Russia that are not on their official books to even being to make that argument look realistic.

Let’s use M1 money supply figures for a proxy of what gold backing would look like, just to get a lay of the land.

For all of the talk of the U.S.’s imminent bankruptcy, the gold reserves at current prices make up 9.6% of M1 at current prices ($1415/oz). China’s official gold reserves make up just 1.0% of M1. Even if you believe the upper end of China’s estimated real gold holdings it’s still only 3.3% of M1.

If you count the estimated 16,000 tonnes held privately in China and that was convertible into currency that would still only get China up to 12.2% backing of M1 with gold.

Russia is the closest there is to a gold-backed currency there is. The ruble by that metric (M1) 84.0% backed by Russia’s official gold reserves.

That is an eye-popping number and it tells you that the Russians have very prudently saved over the past fifteen years or so. They have built what we Austrian economists like to call a ‘pool of real savings’ to lever into higher order investments.

Russia is now ready to deploy a significant part of its trade surplus and even some of its pool of real savings to build new and needed infrastructure for Russia. Putin mentioned in his annual 4-hour direct line that he was ready to begin spending some of Russia’s oil revenues, drifting away from neoliberal and monetarist Alexei Kudrin and towards the nationalist/Keynesian Sergei Glazyev.

Given the state of Russia’s finances and a 10+ billion per month trade surplus, this is a no-brainer really. It’s their down-payment on the multi-polar world.

And it marks a specific shift in attitude which will assist China in building out Belt and Road but it will do nothing to allow for a return to any kind of gold standard until China gets its financial house in order.

To sum up, what killed Bretton-Woods was the same thing that killed the British pound post-WWI, a refusal to price gold accurately by the governments printing the money. Britain could have kept the gold standard and more of its empire had it re-valued the pound to reflect the money supply in 1918.

It didn’t and it destroyed the British post-war economy. The same thing is happening now. And the U.S. will either have to allow the world’s assets to plunge by 50-90% or allow the price of gold to rise to reflect the amount of money in circulation.

Given the numbers I just laid out that should give you an idea of just how much higher gold has to go to balance the books of the world. And no one in power, other than the Russians, are prepared for that kind of event.

Because until that happens there is no incentive for gold to circulate as money, or the discipline of the gold standard to be observed.

What China is doing, like Russia and the rest of the BRI Bloc, is they are building gold reserves to build the confidence of the world for the day when trust in the Western system fails. By having significant gold ‘backing’ but without convertibility those countries today adding to their rainy day funds will be the places capital will flow towards to avoid the whirlwind.

That is when the multi-polar world can be inaugurated.

*  *  *

Join my Patreon if you want to understand how to navigate the gold bull market.

Published:7/16/2019 5:09:17 PM
[Markets] What Happened in the Stock Market Today See why J.B. Hunt soared and Domino's plunged on a down day for the broader markets. Published:7/16/2019 4:39:07 PM
[Markets] Trump Is Fueling A Tribal War In Nancy's House

Authored by Patrick Buchanan via,

President Donald Trump’s playground taunt Sunday that “the Squad” of four new radical liberal House Democrats, all women of color, should “go back and help fix the totally broken and crime-infested places from which they came,” dominated Monday morning’s headlines.

Yet those headlines smothered the deeper story.

The Democrats are today using language to describe their own leaders that is similar to the language of the 1960s radicals who denounced Democratic segregationist governors like Ross Barnett and George Wallace.

Consider what the four women have been saying.

Alexandria Ocasio-Cortez has accused Speaker Nancy Pelosi of attacking “newly elected women of color.” Was she calling Pelosi a “racist”?

“No!” protested AOC. But it sure sounded like it.

AOC’s chief of staff Saikat Chakrabarti attacked Native American Rep. Sharice Davids for her vote on a Pelosi-backed bill that sent $4.6 billion in aid to the border but lacked the restrictions on Trump policies progressives had demanded.

Chakrabarti described Davids’ vote as “showing her … enable a racist system,” adding that some Democrats “seem hell bent to do to black and brown people what the old Southern Democrats did in the ’40s.”

The House Democratic Caucus ripped Chakrabarti, “Who is this guy and why is he explicitly singling out a Native American woman of color?”

At a Netroots Nation conference this weekend, African American Rep. Ayanna Pressley declared: “We don’t need any more brown faces that don’t want to be a brown voice. … We don’t need any more black faces that don’t want to be a black voice.”

This comes close to calling members of the Black Caucus “Uncle Toms.”

Monday, the president doubled down, tweeting:

“We all know that AOC and this crowd are a bunch of Communists, they hate Israel, they hate our own Country, they’re calling the guards along our Border (the Border Patrol Agents) Concentration Camp Guards, they accuse people who support Israel as doing it for the Benjamin’s”

The “Benjamins” recalls the accusation of Somali-born Ilhan Omar of Minnesota that the Israel Lobby buys the votes of members of Congress.

“It’s all about the Benjamins baby.”

Rashida Tlaib of Michigan is the other congresswoman in Trump’s sights. Together, the four have achieved a prominence that almost exceeds that of Majority Leader Steny Hoyer or Majority Whip James Clyburn.

The four — AOC, Tlaib, Pressley, Omar — have no clout in the Democratic caucus. But because of the confrontations they have caused and the controversy they have created, they have a massive media following.

Paradoxically, their interests in winning cheers as the fighting arm of the Democratic Party coincide with the interests of Donald Trump. He entertains and energizes his base by answering in kind their attacks on him and by adopting incendiary rhetoric of his own. He is now assuming the old “America! Love it or Leave it!” stance in going after the four women as anti-American ingrates.

They, by calling Trump a criminal, racist and fascist for whom impeachment proceedings should have begun months ago, elate and energize the outraged left of their party.

Among the presidential candidates, some have begun to side with the four, with Bernie Sanders saying Pelosi has been “a little” too tough on them.

On “Meet the Press,” Bernie added: “You cannot ignore the young people of this country who are passionate about economic and racial and social and environmental justice. You’ve got to bring them in, not alienate them.”

Trump’s Sunday attack forced Pelosi to stand with her severest critics, and she re-elevated the race issue with this tweet: “When Trump tells four American Congresswomen to go back to their countries, he reaffirms his plan to ‘Make America Great Again’ has always been about making America white again.”

Do Democrats believe that refighting the racial battles of the 1960s that were thought to have been resolved is a winning hand in 2020?

Does Pelosi think that demeaning white America is going to rally white or minority Americans to Democratic banners?

The race issue had already arisen in the first debate when Sen. Kamala Harris called out front-runner Joe Biden for befriending segregationist Senate colleagues in the ’70s and ’80s, and for colluding with them to block court-ordered busing to achieve racial balance in the public schools.

Observing the clash between Trump and these women, the rank and file of the Democratic Party are being forced to take sides. Many will inevitably side with the fighters, as Democratic moderates appear timid and tepid.

Trump is driving a wedge right through the Democratic Party, between its moderate and militant wings. With his attacks over the last 48 hours, Trump has signaled whom he prefers as his opponent in 2020. It is not Biden; it is “the Squad.”

Sunday, Pelosi recited again her mantra, “Diversity is our strength; unity is our power.” It sounded less like a proclamation than a plea.

We see the diversity. Where is the unity?

Published:7/16/2019 4:39:07 PM
[Markets] The New York Post: Jeffrey Epstein assets listed in financial disclosure form filed by lawyers add up to value of $559,120,954 The single-page document had been kept under seal away from the public until the Manhattan federal judge overseeing Epstein’s sex-trafficking case released it Monday, dismissing it as “cursory.”
Published:7/16/2019 4:39:07 PM
[Markets] The Dow Slipped 24 Points Because More China Tariffs Are Back in Play The three main U.S. stock indexes all drifted lower on Tuesday after President Donald Trump said at a White House cabinet meeting that he could impose more tariffs on Chinese imports if he wanted. Big banks reported better-than-expected earnings for the second quarter. Published:7/16/2019 4:09:55 PM
[Markets] NATO Affiliate 'Accidentally' Reveals Locations Of 150 US Nuclear Weapons In Europe

A NATO-affiliated body accidentally published a document which revealed the locations of US nuclear weapons throughout Europe, according to the Washington PostThe document was subsequently deleted and replaced with a final version of the report which omits where US bombs are stored. 

A version of the document, titled “A new era for nuclear deterrence? Modernisation, arms control and allied nuclear forces,” was published in April. Written by a Canadian senator for the Defense and Security Committee of the NATO Parliamentary Assembly, the report assessed the future of the organization’s nuclear deterrence policy.

But what would make news months later is a passing reference that appeared to reveal the location of roughly 150 U.S. nuclear weapons being stored in Europe. -Washington Post

A copy of the document was published Tuesday by Belgian newspaper De Morgen, which reads "These bombs are stored at six US and European bases — Kleine Brogel in Belgium, Büchel in Germany, Aviano and Ghedi-Torre in Italy, Volkel in The Netherlands, and Incirlik in Turkey." 

As a matter of practice, neither the US nor its European partners disucss the location of America's nuclear weapons on the continent. 

"We do not comment on the details of NATO’s nuclear posture," said a NATO official cited by the Post, who added "This is not an official NATO document."

A number of European outlets, however, viewed the report as confirmation of an open secret. “Finally in black and white: There are American nuclear weapons in Belgium,” ran the report in De Morgen. “NATO reveals the Netherlands’s worst-kept secret,” said Dutch broadcaster RTL News.

The presence of U.S. nuclear weapons in Europe was indeed “no surprise,” Kingston Reif, director for disarmament and threat-reduction policy at the Arms Control Association, said in an email. “This has long been fairly open knowledge.” -Washington Post

And while there has never been an official disclosure of this nature regarding the US stockpiles, a diplomatic cable from a US ambassador to Germany revealed concerns over how long the weapons would be stored. 

"A withdrawal of nuclear weapons from Germany and perhaps from Belgium and the Netherlands could make it very difficult politically for Turkey to maintain its own stockpile," reads the November 2009 memo written by then-US Ambassador Philip Murphy. 

As the Post notes, the placement of US weapons around Europe stems from an agreement reached during the 1960s, designed as both a Cold War deterrent to the Soviet Union, as well as to convince European nations that they don't need to develop their own nuclear weapons programs. 

But times have changed. In 2016, after a coup attempt and the rapid spread of the Islamic State extremist group next door, analysts openly wondered whether Turkey was really such a great place to store nuclear weapons.

Meanwhile, near Germany’s Büchel air base, the failure of arms-control treaties with Russia has prompted fears about a new arms race. -Washington Post

"The military mission for which these weapons were originally intended — stopping a Soviet invasion of Western Europe because of inferior U.S. and NATO conventional forces — no longer exists," according to Reif. 

Published:7/16/2019 4:09:54 PM
[Markets] Deep Dive: 3 stocks that can make you money despite a trade war or recession Brian Beitner of Chautauqua Capital Management names three companies he believes can easily navigate rough waters.
Published:7/16/2019 4:09:54 PM
[Markets] Stocks close down after Trump says ‘a long way to go’ on trade and investors digest bank earnings U.S. stocks retreat Tuesday as investors digest trade war talk and a trio of bank earnings, a day after major equity indexes eked out a round of fresh all-time closing highs Monday Published:7/16/2019 3:37:49 PM
[Markets] The Moneyist: I treated my girlfriend to a vacation for paying off her car loan — how do I convince her to pay off her student debt? ‘Are these major red flags or is it just a matter of financial literacy?’
Published:7/16/2019 3:10:37 PM
[Markets] Turbocharged Trannies Outperform As Semis Suffered; Crude & Cryptos Crash

If Trump is Tariff-Man, then Powell is Rocket-Man, sending stocks to the moon Alice (but today his chatter could not hold markets green)...


Trump tamped down stocks by raising concerns about the China trade truce, Powell promised to save the world in a speech in Paris... but it wasn't enough...


S&P broke a 5-day win streak but Nasdaq was worst on the day with Trannies soaring...


FANG Stocks appears to have hit the wall again...



German stocks dominated Europe's continued dip-buying bounce...


But Chinese stocks went nowhere after Monday's mysterious panic bid...


Credit markets decompressed notably on the day (though rallied back a little in the afternoon)...


Treasury yields were up 2-3bps across the curve today but 30Y remains lower (in yield) on the week...


The dollar surged back up near last week's Powell comments levels...


Cryptos were clubbed today as the Facebook Libra hearings raised the specter of further regulatory panic among US lawmakers...Ethereum has bloodbath'd down almost 30% since Friday...


With Bitcoin battered back below $10k, near one-month lows...


Big day for silver as crude prices were pummeled...


Oil prices plummeted as positive words from Pompeo on Iran derisked any geopol premium in crude...


Gold was down on the day but futures remained above $1400...


Silver is dramatically outperforming gold (after the ratio hit 26 year highs)


Finally, Deutsche is not Lehman, ok!

And Tesla is not Enron.

And 2019 is not 1998...

Trade accordingly.

Published:7/16/2019 3:10:37 PM
[Markets] Stocks end lower, retreating from records after Trump stokes trade uncertainty Stocks end lower, retreating from records after Trump stokes trade uncertainty Published:7/16/2019 3:10:37 PM
[Markets] US STOCKS SNAPSHOT-U.S. stocks end lower on concerns about bank earnings, trade Published:7/16/2019 3:10:37 PM
[Markets] Johnstone: New CNN Assange Smear Piece Is Amazingly Dishonest, Even For CNN

Authored by Caitlin Johnstone via,

CNN has published an unbelievably brazen and dishonest smear piece on Julian Assange, easily the most egregious article of its kind since the notoriously bogus Assange-Manafort report by The Guardian last year. It contains none of the “exclusive” documents which it claims substantiate its smears, relying solely on vague unsubstantiated assertions and easily debunked lies to paint the WikiLeaks founder in a negative light.

And let’s be clear right off the bat, it is most certainly a smear piece. The article, titled “Exclusive: Security reports reveal how Assange turned an embassy into a command post for election meddling”, admits that it exists for the sole purpose of tarnishing Assange’s reputation when it reports, with no evidence whatsoever, that while at the Ecuadorian embassy Assange once “smeared feces on the walls out of anger.” Not “reportedly”. Not “the Ecuadorian government claims.” CNN reported it as a fact, as an event that is known to have happened. This is journalistic malpractice, and it isn’t an accident.

Whenever you see any “news” report citing this claim, you are witnessing a standard smear tactic of the plutocratic media. Whenever you see them citing this claim as a concrete, verified fact, you are witnessing an especially aggressive and deliberate psyop. The Ecuadorian embassy was easily the most-surveilled building in the world during Assange’s stay there, and the Ecuadorian government has leaked photos of Assange’s living quarters to the media in an attempt to paint him as a messy houseguest in need of eviction, so if the “feces on the walls” event had ever transpired you would have seen photos of it, whether you wanted to or not. It never happened.

“New documents obtained exclusively by CNN reveal that WikiLeaks founder Julian Assange received in-person deliveries, potentially of hacked materials related to the 2016 US election, during a series of suspicious meetings at the Ecuadorian Embassy in London,” the article begins.

In its very first sentence the article invalidates all the claims which follow it, because its use of the word “potentially” means that none of the documents CNN purports to have contain any actual evidence. It’s worth noting at this time that there is to this day not one shred of publicly available evidence that any of the Democratic Party emails published by WikiLeaks in 2016 were in fact “hacked” at all, and could very well have been the result of a leak as asserted by former British ambassador Craig Murray, who claims to have inside knowledge on the matter.

The glaring plot holes in the Mueller report’s assertions about Russia being the source of the 2016 WikiLeaks drops have already been ripped wide open by journalist Aaron Maté’s meticulous analysis of the report’s timeline in an article accurately titled “CrowdStrikeOut: Mueller’s Own Report Undercuts Its Core Russia-Meddling Claims”. The CNN smear piece, which claims to “add a new dimension to the Mueller report”, is entirely relying on this porous timeline for its reporting. Plot holes include the fact that Mueller claims (and CNN repeats) that the Russians transferred the emails to WikiLeaks on or around July 14, which Maté notes is “a full month after Assange publicly announced that he had them.”

CNN kicks off its smear piece with the inflammatory claim that “Assange met with Russians and world-class hackers at critical moments”, mentioning both “Russians” and “hackers” in the same breath in an attempt to give the impression that the two are related. It’s not until paragraph 43 and 46, long after most people have stopped reading, that the articles authors bother to inform their readers that the “hackers” in question are German and have no established connection to the Russian government whatsoever. The “Russians” counted among Assange’s scores of visitors consist of RT staff, who have always consistently reported on WikiLeaks, and a “Russian national” about whom almost nothing is known.

The article falsely labels Assange a “hacker”, a defamatory claim the mass media circulates whenever it wants to tarnish Assange’s reputation. Assange, of course, is a publisher. WikiLeaks publishes materials which are given to it, it doesn’t “hack” them.

CNN also repeats the long-debunked lie that RT “published articles detailing the new batches of emails before WikiLeaks officially released them” during the 2016 election, citing no evidence because this never happened. RT reported on a WikiLeaks release in October 2016 after it had been published by WikiLeaks but before the WikiLeaks Twitter account had tweeted about it, and western propagandists willfully conflated WikiLeaks publications with tweets from the WikiLeaks Twitter account in order to make it look like RT had insider knowledge about the publications.

In reality, RT was simply watching the WikiLeaks site closely for new releases in order to get an early scoop before other outlets, because Podesta email leaks had been dropping regularly.

“That is a LIE that’s been debunked over and over,” tweeted RT America editor Nebojša Malic? in response to the smear. “We published ONE article about the emails that were RELEASED already, just not TWEETED about yet, because WikiLeaks had been releasing them like clockwork and we paid attention. It’s called journalism, they should try it sometime.”

“Yes that is fake news,” tweeted RT’s Ivor Crotty. “I was the editor on the team that monitored wikileaks and by Podesta 6 we knew they tweeted at 9am EST each day (1pm Dublin) — so we checked the database by reverse searching and discovered a new dump, tweeted about it, and the conspiracy theorists jumped.”

“RT already addressed this in 2016, convincingly if you read the sequence of events they lay out: the Podesta emails appeared on the WikiLeaks website before WikiLeaks sent a tweet about it,” Maté tweeted at CNN’s Marshall Cohen. “Ignoring that allows for the conspiracy theory you propose. It’s ridiculous to suggest that RT-Wikileaks ‘were coordinating behind the scenes’ based on the fact that RT tweeted about the Podesta emails AFTER they appeared on WL’s site, but BEFORE WL tweeted about them. You’re implicating RT in a conspiracy… for doing journalism.”

It’s not possible to research the “RT had advance knowledge of WikiLeaks drops” conspiracy theory without running across articles which debunked it at the time, so the article’s authors were likely either knowingly lying or taking dictation from someone who was.

“Spanish newspaper El Pais on July 9: ‘Spanish security company spied on Julian Assange’s meetings with lawyers’. Add little security state propaganda and 6 days later you get from CNN: ‘How Julian Assange turned an embassy into command post for election meddling’,” notedShadowproof managing editor Kevin Gosztola in response to the CNN smear, a reminder of how a little narrative tweaking can turn a story on its head in support of the powerful.

This would be the same CNN who told its viewers that it’s against the law to read WikiLeaks, with Democratic Party prince Chris Cuomo lying “Remember, it’s illegal to possess these stolen documents; it’s different for the media, so everything you learn about this you’re learning from us.” The same CNN which falsely reported that Assange is a pedophile not once, but twice. The same CNN which has been caught blatantly lying in its Russiagate coverage, which has had to fire journalists for misreporting Russiagate in a media environment where that almost never happens with Russia stories, which has deleted evidence of its journalistic malpracticeregarding Russiagate from the internet without retraction or apology.

So this latest attempt to tarnish Julian Assange’s reputation from CNN is not surprising. Nor is it surprising that the article contains exactly zero of the “exclusive documents” which it says validate its claims and insinuations. Nor is it surprising that CNN is using invisible evidence which almost certainly came into its hands through a government agency to give weight to its smear. But the sheer volume of disinformation and deceit they were able to pack into one single article this time around was just jaw-dropping. Even for CNN.

*  *  *

The best way to get around the internet censors and make sure you see the stuff I publish is to subscribe to the mailing list for my website, which will get you an email notification for everything I publish. My work is entirely reader-supported, so if you enjoyed this piece please consider sharing it around, liking me on Facebook, following my antics on Twitter, throwing some money into my hat on Patreon or Paypalpurchasing some of my sweet merchandise, buying my new book Rogue Nation: Psychonautical Adventures With Caitlin Johnstone, or my previous book Woke: A Field Guide for Utopia Preppers. For more info on who I am, where I stand, and what I’m trying to do with this platform, click here. Everyone, racist platforms excluded, has my permission to republish or use any part of this work (or anything else I’ve written) in any way they like free of charge.

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Published:7/16/2019 2:38:11 PM
[Markets] US STOCKS-S&P 500 edges lower after mixed bank earnings, Trump comments Published:7/16/2019 2:38:11 PM
[Markets] The New York Post: Disneyland has been empty of late — by Disney park standards — and the new ‘Star Wars’ attraction appears to be a factor Crowd-control measures put in place to coincide with the June opening of Star Wars: Galaxy’s Edge, a new “land” that added 20% to the California park’s capacity, may be working too well, depending on one’s perspective.
Published:7/16/2019 2:38:11 PM
[Markets] Trump turns up trade pressure on China as he threatens Google probe President Donald Trump on Tuesday turned up fresh pressure on China over trade with the U.S., as he vowed to “take a look” into allegations that Google’s work with Beijing is treasonous. Published:7/16/2019 2:08:21 PM
[Markets] Stocks slip after Trump says ‘a long way to go’ on trade and investors digest bank earnings U.S. stocks retreat Tuesday as investors digest trade war talk and a trio of bank earnings, a day after major equity indexes eked out a round of fresh all-time closing highs Monday Published:7/16/2019 1:57:13 PM
[Markets] Rickards: Trump's Currency War Declaration Has Sparked A Multi-Year Gold Rally

Authored by James Rickards via The Daily Reckoning,

Trump has had it!

He is apparently declaring a currency war on the rest of the world. Trump resents China and Europe cheapening the yuan and the euro against the dollar in order to help their exports and hurt ours.

He says it’s time for the U.S. to cheapen the dollar also. Trump has a point. If you put a 25% tariff on many Chinese exports to the U.S. (as Trump has done) or a 25% tariff on German cars exported to the U.S. (as Trump has threatened to do), it can be a powerful way to reduce the U.S. trade deficit and generate revenue for the U.S. Treasury.

But a trading partner can undo the effect of the tariff just by cheapening its currency.

Let’s say a Chinese-made cellphone costs $500 in the U.S. If you slap a 25% tariff on the imported phone, the immediate effect is to raise the price by $125.

A simple solution to tariffs is to devalue your currency by 20% against the dollar. Local currency costs do not change, but the cellphone now costs $400 when the local currency price is converted to U.S. dollars.

A 25% tariff on $400 results in a total cost of $500 — exactly the same as before the tariffs were imposed. Tariff costs have been converted into lower production costs through currency manipulation.

There’s only one problem with Trump’s currency war plan. There’s nothing new about it. The currency wars started in 2010 as described in my 2011 book, Currency Wars. 

As soon as one country devalues, its trading partners devalue in retaliation and nothing is gained. It’s been described as a “race to the bottom.” Currency wars produce no winners, just continual devaluation until they are followed by trade wars.

That’s exactly what has happened in the global economy over the past 10 years. But the final step in the sequence is often shooting wars. That’s what happened leading up to WWII. Let’s hope the currency wars and trade wars don’t turn into shooting wars as they did in the 1930s.

Meanwhile, the Fed is a critical player in the currency war because it has a major influence on the dollar.

The world is waiting to see what it does at its policy meeting on July 31. There is almost no chance the Fed will raise rates. The choices are to cut rates or keep rates unchanged. The market is betting heavily on a rate cut, for what it’s worth.

If the Fed cuts rates, we’ll have to see how other central banks react. But the Fed has many factors to consider when it meets later this month…

For the past 10 years, Fed policy changes have been relatively straightforward to forecast, based on a simple model. The model said the Fed would raise rates consistently in 0.25% increments until rates are normalized around 4% (the amount needed to cut in case of recession).

The exceptions (where the Fed would “pause” on rate hikes) would occur when job creation is low or negative, markets are disorderly or strong disinflation threatens to turn to deflation. Markets certainly became disordered late last year, when the U.S. stock market nearly entered a bear market. And so the Fed paused.

None of those conditions apply today. Job creation is strong, markets are at all-time highs and disinflation is mild. But a new factor has entered the model, which is the fear of causing a recession.

Estimated growth for the second quarter of 2019 is 1.3% annualized, compared with 3.1% in the first quarter. Using the Fed’s own models (which are different from mine), the Fed is concerned that if they don’t cut rates, a market correction and recession may occur.

But if they do cut rates, inflation may result due to tight labor markets and higher costs due to tariffs.

This Fed decision will likely come down to the wire. Second-quarter GDP will be reported on July 26, and personal income and outlays will be reported on July 30. Both data points (and underlying inflation data) will be available right before the July 31 decision date.

Markets will cheer a rate cut and probably sell off if the Fed does not cut rates. But both the markets and the Fed itself will have to wait until the last possible minute before this conundrum is resolved.

And the world will be watching very closely.

The dollar price of gold has been on a roller-coaster ride for the past six years. But the past six weeks have been a turbocharged version of that. Investors should expect more of the same for reasons explained below.

The six-year story is the more important for investors and also the more frustrating. Gold staged an historic bull market rally from 1999 to 2011, going from about $250 per ounce to $1,900 per ounce, a 650% gain.

Then, gold nose-dived into a bear market from 2011 to 2015, falling to $1,050 per ounce in December 2015, a 45% crash from the peak and a 51% retracement of the 1999-2011 bull market. (Renowned investor Jim Rogers once told me that no commodity goes from a base price to the stratosphere without a 50% retracement along the way. Mission accomplished!)

During that precipitous decline after 2011, gold hit a level of $1,417 per ounce in August 2013. It was the last time gold would see a $1,400 per ounce handle until last month when gold briefly hit $1,440 per ounce on an intra-day basis. At last, the six-year trading range was broken. Better yet, gold hit $1,400 on the way up, not on the way down.

The range-bound trading from 2013 to 2019 was long and tiring for long-term gold investors. Gold had rallied to $1,380 per ounce in May 2014, $1,300 per ounce in January 2015, and $1,363 per ounce in July 2016 (a post-Brexit bounce).

But, for every rally there was a trough. Gold fell to $1,087 per ounce in August 2015 and $1,050 per ounce in December 2015. The bigger picture was that gold was trading in a range. The range was approximately $1,365 per ounce at the top and $1,050 per ounce at the bottom, with lots of ups and downs in between. Yet, nothing seemed capable of breaking gold out of that range.

The good news is that gold has now broken out to the upside. The $1,440 per ounce level is well within reach and the $1,400 per ounce level seems like a solid floor, despite occasional dips into $1,390 per ounce territory. Gold’s trading at $1,416 today.

More importantly, a new multi-year bull market has now emerged. Turning points from bear to bull markets (and vice versa) are not always recognized in real time because investors and analysts are too wedded to the old story to see that the new story has already started.

But, looking back it’s clear that the bear market ended in December 2015 at the $1,050 per ounce level and a new bull market, now in its fourth year, is solidly intact. The recent break-out to the $1,440 per ounce level is a strong 37% gain for the new bull market. This price break-out has far to run. (The 1971 – 1980 bull market gained over 2,100%, and the 1999 – 2011 bull market gained over 650%).

The price action over the past six weeks has been even wilder than the price action over the past six years. As late as May 29, 2019, gold was languishing at $1,280 per ounce. Then it took off like a rocket to $1,420 per ounce by June 25, 2019, an 11% gain in just four weeks.

Gold just as quickly backed-down to $1,382 per ounce on July 1, rallied back to $1,418 per ounce on July 3, and fell again to $1,398 per ounce on July 5. These daily price swings of 1.5% are the new normal in gold. Again, the good news is that the $1,400 per ounce floor seems intact.

What’s driving the new gold bull market?

From both a long-term and short-term perspective, there are three principal drivers: geopolitics, supply and demand, and Fed interest rate policy; (the dollar price of gold is just the inverse of dollar strength. A strong dollar = a lower dollar price of gold, and a weak dollar = a higher dollar price of gold. Fed rate policy determines if the dollar is strong or weak).

The first two factors have been driving the price of gold higher since 2015 and will continue to do so. Geopolitical hot spots (Korea, Crimea, Iran, Venezuela, China and Syria) remain unresolved and most are getting worse. Each flare-up drives a flight-to-safety that boosts gold along with Treasury notes.

The supply/demand situation remains favorable with Russia and China buying over 50 tons per month to build up their reserves while global mining output has been flat for five years.

The third factor, Fed policy, is the hardest to forecast and the most powerful on a day-to-day basis. The Fed has a policy rate-setting meeting on July 31. There is almost no chance the Fed will raise rates. The issue is whether they will cut rates or stand pat.

The case for cutting rates is strong. U.S. growth slowed in the second-quarter to 1.3% (according to the most recent estimate) from an annualized 3.1% in the first-quarter of 2019. Inflation continues to miss the Fed’s target of 2.0% year-over-year and has been declining recently. Trade war fears are adding to a global growth slowdown.

On the other hand, the June employment report showed strong job creation, continued wage gains, and increase labor force participation. All of those indicators correspond to higher future inflation under Fed models. The G20 summit between President Trump and President Xi of China led to a truce in the U.S.-China trade war and the prospect of continued talks to end the trade war.

In short, there’s plenty of data to support rate cuts or no cuts in July. The Fed is biding its time. Meanwhile, the market is highly uncertain. A good headline on trade results in a stronger dollar and weaker gold. The next day, a bad headline on growth results in a weaker dollar and stronger gold.

This dynamic explains the erratic up-and-down price movements of the past week. The dynamic is likely to continue right up until the July 31 Fed meeting in two weeks.

With so much uncertainty and volatility in the dollar price of gold lately, what is the prospect for a rally in precious metals prices and stocks that track them?

Right now, my models are telling us that the gold rally will continue regardless of the Fed’s action on July 31.

Expectations today are that the Fed will cut rates at the next FOMC meeting, but the probabilities are far from a sure thing. If the Fed cuts rates, the market will simply move its expectations of further rate cuts to the next FOMC meeting (September 18). The weak dollar/strong gold rally will continue.

If the Fed does not cut rates, gold may suffer a short-term drawdown, but markets will assume the Fed made a mistake. Expectations for a 50bp (0.5%) rate cut in September will start to build.

That new forward expectation will power gold higher just as surely as the missed July rate cut.

That covers gold. But what about silver?

Many investors assume there is a baseline silver/gold price ratio of 16:1. They look at the actual silver/gold price ratio of 100:1 and assume that silver is poised for a 600% rally to restore the 16:1 ratio. These same investors tend to blame “manipulation” for silver’s underperformance.

That analysis is almost entirely nonsense. There is no baseline silver/gold ratio. (The “16:1 ratio” is an historical legacy from silver mining lobbying in the late 19th century, a time of deflation, when farmers and miners were trying to ease the money supply by inflating the price of silver with a legislative link to gold.

The result was “bimetallism,” an early form of QE. The ratio had nothing to do with supply/demand, geology, or any other fundamental factor. Bimetallism failed and was replaced with a strict gold standard in 1900).

This does not mean there is no correlation between gold and silver prices. As Chart 1 below reveals, there is a moderately strong correlation between the two. The coefficient of determination (expressed as r2) is 0.9.

This means that over 80% of the movement in the price of silver can be explained by movements in the price of gold. The remaining silver price factors involve industrial demand unrelated to gold prices.

Chart 1

Recently, a huge gap has opened up between the rally in gold prices (shown in gold on Chart 1 with a right-hand scale) compared to silver prices (shown in grey on Chart 1 with a left-hand scale).

Given the historically high correlation between gold and silver price movements, and the recent lag in the silver rally, the analysis suggests that either gold will fall sharply or silver will rally sharply.

Since I have articulated the case for continued strength in gold prices, my expectation is that gold will continue to outpace silver.

Either way, both metals are heading higher.

Published:7/16/2019 1:57:13 PM
[Markets] IEA: Huge Oil Glut Coming In 2020

Authored by Nick Cunningham via,

The oil market saw a rather significant surplus in the first half of 2019, much larger than previously expected. Looking forward, supplies are set to tighten in the second half of the year, but that may only be a hiatus before the glut returns.

Global oil supply exceeded demand by about 0.9 million barrels per day (mb/d) in the first six months of this year, according to the International Energy Agency’s latest Oil Market Report. This retrospective look upends the prevailing sentiment that occurred just a few weeks ago. For instance, the IEA said that the oil market saw a surplus of about 0.5 mb/d in the second quarter, while the agency previously thought there was going to be a 0.5 mb/d deficit.

“This surplus adds to the huge stock builds seen in the second half of 2018 when oil production surged just as demand growth started to falter,” the IEA said.

“Clearly, market tightness is not an issue for the time being and any re-balancing seems to have moved further into the future.”

The extension of the OPEC+ cuts through the first quarter of 2020 removes a major uncertainty, but the IEA said it “does not change the fundamental outlook of an oversupplied market.”

The conclusions echo those of OPEC itself, which said in its own report published a day earlier that the “call on OPEC” will be significantly lower next year. Rising U.S. shale production will exceed additional demand both this year and next, which means that the market could see a significant surplus in 2020. In other words, OPEC+ faces a conundrum: Keep its current production cut deal intact and face a worsening glut, or cut further.

“On our balances, assuming constant OPEC output at the current level of around 30 mb/d, by the end of 1Q20 stocks could increase by a net 136 mb. The call on OPEC crude in early 2020 could fall to only 28 mb/d,” the IEA said. OPEC produced 29.83 mb/d in June.

OPEC put demand for its oil at a higher 29.3 mb/d next year, which, to be sure, is a rather significant discrepancy from the IEA figure. However, the conclusion is the same – OPEC may be forced to slash production further if it wants to head off a price slide. OPEC’s figures imply that it may need to cut output by 560,000 bpd; the IEA implies a deeper 1.8 mb/d reduction might be needed.

The IEA was diplomatic, saying that the threat of a renewed surplus “presents a major challenge to those who have taken on the task of market management.” Notably the IEA did not downgrade its demand forecast, sticking with growth of 1.2 mb/d for this year. Days earlier, the U.S. EIA downgraded its demand estimate to 1.1 mb/d. The Paris-based IEA was more optimistic about a rebound in economic growth, even as it downgraded its second quarter demand growth figure by a whopping 450,000 bpd to just 800,000 bpd year-on-year.

All three of the major forecasters – OPEC, IEA and EIA – see robust supply growth from U.S. shale. The specific figures vary, but they generally see non-OPEC production (with U.S. shale accounting for most of the total) growing by around 2 mb/d this year, and by even more next year. In other words, non-OPEC supply growth for both 2019 and 2020 exceed demand.

The one bit of uncertainty in those forecasts is the unfolding slowdown in the U.S. shale industry. As Bloomberg reported, “pipeline limits, reduced flow from wells drilled too close together, low natural gas prices and high land costs” are putting a squeeze on Texas shale drillers. Financial results are bad, and have been rather grim for quite some time. Despite huge increases in production (or, because of such extraordinary growth) North American oil companies have burned through $187 billion in cash since 2012.

The big question is whether or not the blistering rate of growth begins to slow as investors sour on the industry. Right now, there is only patchy evidence of this, with the rig count down and the pace of growth seemingly on the wane. Bloomberg cited more than a half dozen shale drillers that have dramatically scaled back their production growth forecasts as they slow the pace of drilling. It remains to be seen if, in the aggregate, U.S. output begins to flatten out.

If that occurs, it would be a massive relief to OPEC, which would find its task of rebalancing a bit easier. Otherwise, by 2020, the cartel may be forced to cut production by even more than it already has.

Published:7/16/2019 1:38:06 PM
[Markets] Earnings Outlook: Snap earnings: Investors need to see clear signs of a turnaround Snap shares have soared this year on expectations that the company is finally turning its business around, and the Snapchat maker will be looking to prove that narrative with its next earnings report.
Published:7/16/2019 1:38:06 PM
[Markets] "No Champagne For S&P 3000": Why Wall Street Doesn't Believe The Market Should Be At All Time Highs

The Fed's (and the president's) obsession with pushing stocks to all time highs has succeeded: the S&P is trading well above 3,000 (much to the chagrin of Morgan Stanley), and if it was Powell's objective to also get everyone invested in the biggest asset bubble of all time, he is certainly making headway.

As we reported yesterday, both retail investors...

... and hedge funds...

... are gradually capitulating, and together with systematic, risk-parity funds...

... and CTAs...

... are pouring ever more cash into the stock market.

Today, the latest Fund Manager Survey published by Bank of America's Michael Hartnett cemented these observations, and as BofA notes, this month’s survey "found investors have added risk, rotating into cyclical plays (equities, Europe, industrials, banks) and out of defensive ones (bonds, REITs, utilities, staples)"

As a result, the average cash balance fell to 5.2% from 5.6%, if still above the 10-year average of 4.6% as investors’ allocation to cash ticks down 2ppt to net 41% overweight, also well above the long-term average. As Hartnett reminds us, the FMS "Cash Rule" has been in "buy" territory for the past 17 months.

At the same time, the BofA  Bull & Bear indicator ticks down to 3.0, close but above the contrarian "buy" signal of 2.0 (as a reminder, the FMS Cash Rule works as follows: when average cash balance rises above 4.5%, a contrarian buy signal is generated for equities. When the cash balance falls below 3.5%, a contrarian sell signal is generated.)

The reversal in sentiment following the May drop and the June surge, is most evident in the allocation to global equities which has retracted almost all of last month’s dip, rising 31ppt to net 10% overweight.

So with market professionals and retail investors, capitulating and jumping into the (boiling) pool, to mix metaphors about Wall Street and frogs, one would assume that investors are delighted by what is going on, perhaps?

Wrong: in fact, one can best describe the investors mood as "fear and loathing", with Hartnett noting that there is "No champagne for SPX 3000", for several reasons:

  • Nobody expects growth, making the recent equity spike artificial and entirely on the back of central bank multiple expansion. As BofA writes, "FMS global growth expectations rise from last month’s decade low, rebounding 20ppt to net 30% of investors surveyed expecting global growth to weaken over the next year." As a remninder, last month saw the most bearish growth expectations since the 2000/01 & 2008/09 recessions.

  • Nobody expects inflation, suggesting that as central banks are powerless to stimulate the broader economy, they will be continue to stimulate risk assets. Indeed, only a net 1% of the responding fund managers expect higher global CPI in the next year, "the most bearish inflation outlook in seven years"

  • A recession is imminent as this is now the longest expansion on record: according to the survey, a net 73% of investors think the business cycle is a risk to financial market stability, marking an 8-year high.

  • A record number of investors are worried about debt: in the most ironic observation, a net 48% of investors are concerned about corporate leverage and yet they scramble to buy the debt issued by these same companies; global profit expectations remain flat at net 41% of those surveyed saying they expect profits to deteriorate in the next yea

  • The buybacks are too high: Last but not least, we find the very definition of irony as the survey found that a record number of fund managers, or 38%, find that corporate payout ratios (including share buybacks) are too high. In other words, everyone is buying stocks because buybacks are record high, and yet everyone is also angry thatr buybacks are record high.

The common theme: yes, the Fed managed to push the S&P to 3,000... and the reason there is "no champagne on Wall Street", and instead fear and loathing dominates, is because nobody believes that number is real, credible or justifiable without i) the Fed's backstopping, ii) with the economy sliding and iii) on the back of record buybacks. As a result, yes - stocks may be at record highs, but it's only because the Fed pushed investors - against their will - into the stock market. And it doesn't take a rocket scientist to guess what will happen when at the first sign of trouble, investors with little faith in the market, rush for the exits.

“The dovish Fed and trade truce have caused investors to reduce cash and add risk,” said Michael Hartnett, chief investment strategist, “but their expectations of an earnings recession and debt deflation still dominate sentiment. The pain trade for the summer remains up in stocks and yields.”

* * *

And speaking of risks, the final observations from the latest FMS lay out what Wall Street thinks is the biggest tail risk, which like last month remains "Trade War" at 36%, if sharply lower than the month before; monetary policy impotence climbs to the second spot at 22%, and a China slowdown (12%) and bond market bubble (9%) round out the top four

Meanwhile, in terms of position crowding risk, Long US Treasuries (37%) remains at the top of the list of the most crowded trades identified by fund managers, ahead of Long US Tech (26%) and Long IG corporate bonds (12%).

For the TL/DR crowd, we have reached the "bazooko circus" stage in the stock market.

Published:7/16/2019 1:16:33 PM
[Markets] The Margin: ‘I hope you lose’: Even many ‘Game of Thrones’ fans don’t think the show deserves all these Emmy nominations The overall fan reaction was as mixed for the HBO hit’s record-setting Emmy nominations as it was for the show’s final season.
Published:7/16/2019 1:16:33 PM
[Markets] GLOBAL MARKETS-Stocks fall, U.S. yields rise on retail sales data A gauge of global equities fell on Tuesday and U.S. Treasury yields climbed as a stronger-than-anticipated report on retail sales raised the possibility the Federal Reserve could move towards a less dovish stance. U.S. retail sales rose 0.4% in June, as households stepped up purchases of motor vehicles and a variety of other goods. While the Fed is still largely expected to cut rates by a quarter of a percentage point at its July 30-31 policy meeting, expectations for a more aggressive half a percentage point cut have been scaled back. Published:7/16/2019 1:16:33 PM
[Markets] Blue Apron stock soars as news of Beyond Meat menus sparks a round of short covering Shares of meal-kit company Blue Apron Inc. rallied Tuesday, after the company said it would start adding Beyond Meat Inc.’s plant-based proteins to its menus starting in August, sparking a round of short covering. Published:7/16/2019 12:46:17 PM
[Markets] Oil Dives As Trump Says No Iran Regime Change; Pompeo Says They're "Ready To Negotiate"

Oil dove sharply on Tuesday after back-to-back comments from President Trump and Secretary of State Mike Pompeo signaling a potential de-escalation of tensions in the region. 

Earlier in the day President Trump reiterated during a Cabinet meeting, "We're not looking for regime change," adding "We want them out of Yemen.

Pompeo, seated next to Trump, said that Tehran is ready to negotiate over its missile program for the first time.

"For the first time … the Iranians said they are ready to negotiate on their missile program," said Pompeo. 

Trump added "They’d like to talk, and we’ll see what happens," adding that Iran "can't have a nuclear weapon." 

The comments sent oil tumbling. 

Earlier this week Iranian Foreign Minister Mohammad Javad Zarif said that negotiations between Washington and Tehran would be possible if the Trump administration eases sanctions on the Islamic Republic. Zarif told NBC Nightly News in an interview that aired Monday that they're "wide open" to talks if the sanctions are removed. 

Mr. Zarif offered an initially high price for such negotiations — the halt of U.S. arms sales to both Saudi Arabia and the United Arab Emirates, two key U.S. allies in the Persian Gulf.

But the fact that he mentioned it at all potentially represents a change in policy. The country’s ballistic missile program remains under control of the Iranian paramilitary Revolutionary Guard, which answers only to Supreme Leader Ayatollah Ali Khamenei. -Washington Times

Last week the international agency that monitor's Iran's compliance with the 2015 nuclear deal confirmed that Iran had exceeded the authorized level of uranim enrichment - the country's second major breach of the pact in recent weeks. 

Published:7/16/2019 12:46:13 PM
[Markets] Dow Jones Overcomes Apple Drop; These IPO Stocks Aim At New Buy Points The Dow Jones Industrial Average is holding firm after last week's bullish gains. Apple is cooling off after a new breakout attempt. IPOs are rallying. Published:7/16/2019 12:46:13 PM
[Markets] Stocks slip to near session lows after Trump says ‘a long way to go’ on trade U.S. stocks retreat Tuesday as investors digest trade war talk and a trio of bank earnings, a day after major equity indexes eked out a round of fresh all-time closing highs Monday Published:7/16/2019 12:08:42 PM
[Markets] U.S. manufacturing is in recession: Fed data U.S. manufacturing is in recession: Fed data Published:7/16/2019 12:08:42 PM
[Markets] Turkey Rejects EU Sanctions As "Not Serious" - Will Send 4th Drilling Ship Near Cyprus

Perhaps to be expected, Turkey's response to yesterday's EU announcement of impending economic and political sanctions to be brought against Ankara has been to swiftly and immediately double down on drilling, while dismissing the crisis as "not serious". Turkey has now sent its fourth oil and gas exploration ship to the eastern Mediterranean after European leaders condemned its drilling in EU-member Cyprus' territorial waters. Turkish Foreign Minister Mevlut Cavusoglu responded:

"Calling the EU's decision sanctions means taking it seriously. You shouldn't do that, the decision was made to satisfly Greek Cypriots. These things don't have any effect on us."

Image source: Anadolu Agency

Turkey's Anadolu Agency reports, "Turkey will send its fourth ship to the Eastern Mediterranean region to continue its exploration and drilling, the country’s energy and natural resources minister said on Tuesday. It will join the Fatih and recently deployed Yavuz, and the seismic vessel the Barbaros Hayrettin Pasa which has conducted exploration in the Mediterranean since April 2017.

"The MTA Oruc Reis seismic research ship, which has been conducting seismic surveys in the Black Sea and Marmara since August 2017, will be sent to conduct seismic surveys in the Mediterranean Sea," Energy minister Fatih Donmez announced.

This was accompanied by FM Cavusoglu warning the EU that Turkey plans to increase its drilling and exploration activities in the East Mediterranean while "protecting the rights" of Turkish Cypriots. Ankara's position is that it has the same rights as the Greek Cypriot government to drill in the region, which Turkey interprets as including waters that expand 200 miles from EU member Cyrprus' coast, brazenly asserting ownership over a swathe of the Mediterranean that even cuts into Greece's exclusive economic zone.

On Monday, following a meeting of EU foreign ministers in Brussels, the European Union announced that it will bring sanctions against Turkey for violating Cyprus' waters, which has also involved Turkey sending drones, F-16 fighters, and warships to escort the few drilling ships it's already deployed off Cyprus. 

Austrian Federal Minister for Europe, Integration and Foreign Affairs Alexander Schallenberg also announced Monday the extent of the planned sanctions:

"Today, we will adopt a number of measures against Turkey — less money, fewer loans through the European Investment Bank, freeze of aviation agreement talks. Naturally, other sanctions are possible."

"We are fully behind Cyprus," the EU official added while addressing the crisis.

Meanwhile, there are unverified reports that Turkey has struck major gas reserves, which if confirmed will only intensify the crisis. Per Turkey's Ahval news

Turkey’s drill ship “Fatih” has found its first gas reserves in the potentially hydrocarbon rich area around the island of Cyprus, Turkish Cypriot newspaper Kibris Postasi reported on Monday. The Fatih is the first Turkish surveying vessel to begin drilling in the seas around the island. The second, “Yavuz”, began drilling operations in July.

A Greek Cypriot newspaper, Fileleftheros, reported earlier this week that the Fatih had struck gas reserves of up to 170 billion cubic metres in the waters off Paphos in Greek Cypriot-controlled southwest Cyprus. Kibris Postasi quoted a diplomatic source as saying the story was credible.

“It’s true that Turkey found something”, the newspaper quoted its “high level” source as saying. The source said a formal announcement would have to be made by the Turkish Petroleum Corporation.

Last week the Turkish drilling vessel Yavuz sailed to an area off Cyprus’ east coast — the second to follow a first drilling vessel, Fatih, which had already been exploring in Cypriot waters. Turkey has sent military assets to "protect" the vessels from interference. 

Cyprus has long condemned Turkey's aggressive oil and gas explorations as a "second invasion" in reference to the creation in 1974 of the breakaway Turkish Republic of Northern Cyprus after a military takeover.

Published:7/16/2019 12:08:42 PM
[Markets] The Fed: Fed chief Powell says he thinks core inflation picked up a bit in June Fed Chairman Jerome Powell said Tuesday that Fed officials think core PCE inflation was 1.7% in June, up from 1.6% in May. The government won’t release the data until the end of the month.
Published:7/16/2019 12:08:42 PM
[Markets] Short covering plays part as Blue Apron rockets 50% on Beyond Meat news Short covering plays part as Blue Apron rockets 50% on Beyond Meat news Published:7/16/2019 11:39:16 AM
[Markets] Swamp(y) Things

Grant's Almost Daily, submitted by Grant's Interest Rate Observer

Get your shinebox

A friend checks in from the Long Island Expressway:

Our mobile correspondent writes:

The 21st century stock tip from the shoeshine boy is the bus wrapped in an ad touting Sharespost, where anyone can “access the new private market.”

Swamp things

A trio of corporate situations unfolding in Washington, D.C. may have important ramifications for their respective investors.

A quick update on each follows:

On Friday, the U.S. Court of Federal Claims dismissed a lawsuit from Oracle Corp. asserting that the Defense Department’s $10 billion Joint Enterprise Defense Infrastructure (JEDI) procurement contract was structured to unfairly favor, Inc.’s Web Services unit.  Judge Eric Bruggink ruled that the award has not been marred by “organizational conflicts of interest,” as alleged by Oracle, and that the litigant failed by its own admission to meet the JEDI requirements in the first place.

That decision seemingly clears the way for Amazon and Microsoft, Inc. to vie for the winner-take-all contract, one that has been beset by claims of cronyism related to three former DoD employees with close ties to AWS.

For AWS, which leveraged a $600 million CIA contract in 2013 to gain commercial deals and represents a critical part of the Amazon success story (the unit chipped in 62% of consolidated operating income in the most recent quarter), the JEDI award would be the proverbial cherry on top.  But obstacles remain, as the DoD inspector general and FBI public corruption unit continue a joint investigation of conflicts of interest claims.

Meanwhile, Senator Marco Rubio (R-FL) sent a letter Thursday to national security advisor John Bolton criticizing the single award structure as “contrary to industry best practices, statutory preferences, and the Administration’s Cloud Smart guidelines” and asked for a delay to the award to “ensure a fair and open process.”  

Perhaps most importantly, the CIA announced in April it will shift toward a multi-cloud strategy by 2021 as opposed to continuing to exclusively rely on AWS. Of course, Amazon is fighting to protect its turf, signing a $294 million lease for its “HQ2” in Crystal City, VA, up the street from the CIA headquarters in Langley.

Next, the ongoing merger saga involving Sprint Corp. and T-Mobile U.S., Inc.  The corporate suitors continue to negotiate the spin-off of wireless assets to Dish Network Corp. in their efforts to secure approval from the Department of Justice (which is forthcoming “any day,” according to Bloomberg). On Thursday, The Wall Street Journal reported that the negotiations are “dragging” and will likely extend beyond the July 29 deadline. Hang-ups include: potential restrictions on Dish flipping the spectrum assets acquired by the pair and limitations on data traffic that Dish can send through the T-Mobile network, per The Journal.

While negotiations continue apace, a coalition of more than a dozen state attorneys general who are suing to halt the merger prepare their next move. On Friday, the Capitol Forum reported that the DoJ delay will allow the group of 14 attorneys general to potentially “request that the Oct. 7 start of the trial be delayed.” Hopes for a timely deal consummation following DoJ approval are up in the air: “If it’s up to the states, a decision in the federal case wouldn’t come for some time.”

Finally, the price-gouging saga involving TransDigm Group, Inc. continues to develop. In February, an audit from the DoD inspector general found that the company charged “excess profits” on 46 out of 47 selected spare parts, including markups of as high as 4,451%.

The company agreed to pay back the $16.1 million in “excess profits” identified in the report, but that hasn’t prevented bipartisan pushback against the TDG business model. On June 14, senior officials at the DoD issued a memo directing staff to “require the submission of uncertified cost or pricing data to support prices proposed by TransDigm and its subsidiaries.”  

On Friday, Sen. Charles Grassley (R-IA) wrote a letter lamenting the DoD’s inability to ascertain pricing information from its contractors and suggesting new amendments those loopholes, while Rep. Ro Khanna (D-CA), who has proposed similar legislation, commented in June: “It’s more than evident that TransDigm can’t be trusted, so singling them out is warranted.”

As noted by the Federal News Network, current law allows vendors to refuse to provide price data for individual transactions below $2 million, a statute of which TDG was all too aware. According to a report from the House Oversight Committee, TransDigm “coached” employees to maintain prices below that threshold and avoid providing cost documentation whenever possible. Fat markups appear to be a crucial feature for TransDigm, which has long pursued a roll-up business model and which carries net debt in excess of six times consensus 2019 Ebitda.

Published:7/16/2019 11:39:16 AM
[Markets] The Dow Is Slightly Lower Because Nothing Can Lift Stocks Today The major U.S. stock indexes were effectively flat Tuesday despite strong earnings from Goldman Sachs, Johnson & Johnson, and JPMorgan Chase. A rise in U.S. consumer spending in June also didn’t lift markets. Published:7/16/2019 11:39:16 AM
[Markets] Blue Apron stock soars as news of Beyond Meat menus sparks a round of short covering Shares of meal-kit company Blue Apron Inc. rallied Tuesday, after the company said it would start adding Beyond Meat Inc.’s plant-based proteins to its menus starting in August, sparking a round of short covering.
Published:7/16/2019 11:39:16 AM
[Markets] Trump says ally and tech investor Thiel ‘believes Google should be investigated for treason’ and he will ’take a look’ President Donald Trump says his administration will “take a look” at allegations made by Silicon Valley venture capitalist Peter Thiel that Google-parent Alphabet Inc. has been infiltrated by the Chinese government. Published:7/16/2019 11:06:39 AM
[Markets] NewsWatch: Stocks waver, Dow hits new intraday high as investors parse trio of bank earnings U.S. stocks steady early Tuesday morning with investors digesting a trio of bank earnings after major equity indexes eked out a round of fresh all-time closing highs Monday
Published:7/16/2019 11:06:39 AM
[Markets] US Grants Visa To Iran FM But "Sharply Curtails" His Movements Near UN Building

An opening that could cool tensions, or just a brief pause in the continued build-up to a near-future war?

On Sunday, Iranian President Hassan Rouhani said in a televised speech he's ready to hold talks with the United States if it lifts sanctions and returns to its commitments under the 2015 nuclear deal. “We have always believed in talks... if they lift sanctions, end the imposed economic pressure and return to the deal, we are ready to hold talks with America today, right now and anywhere,” Rouhani said.

However, in an interview following the overture, Secretary of State Mike Pompeo dismissed it as “the same offer that he offered to John F. Kerry and Barack Obama.” Pompeo concluded, “President Trump will obviously make the final decision. But this is a path that the previous administration had gone down and it led to the (Iran nuclear deal) which this administration, President Trump and I both believe was a disaster.”

Pompeo also said during the Sunday night interview that the US has granted a visa to Iranian Foreign Minister Javad Zarif — who just earlier this month was reportedly the focus of potential US sanctions alongside top IRGC commanders and officials — but that his movements would be greatly limited and "sharply curtailed"

File image: Iranian FM Zarif at the UN. 

"U.S. diplomats don’t roam around Tehran, so we don’t see any reason for Iranian diplomats to roam freely around New York City, either," Pompeo said.

“It’s absolutely appropriate that we provide Foreign Minister Zarif and his delegation with all the rights that they are due under the U.N. headquarters agreement, and nothing more than that,” he said further.

According to The Washington Post:

Pompeo said in a telephone interview that Foreign Minister Mohammad Javad Zarif and his delegation will be permitted to travel between U.N. headquarters and the Iranian mission six blocks away, and to the residence of Iran’s U.N. ambassador nearby. The group arrived in New York on Sunday morning.

The "restricted" travel and movement regimen comes after President Trump said last week that sanctions on Iran would soon increase "substantially". 

UN headquarters building in New York. Image source: CBS

This despite European signatories to the 2015 JCPOA France, Britain and Germany urging an immediate resumption of dialogue, citing fears the nuclear pact is on the brink of falling apart. 

“We believe that the time has come to act responsibly and to look for ways to stop the escalation of tension and resume dialogue,” the heads of state of the three countries said in a joint statement.

Published:7/16/2019 11:06:39 AM
[Markets] Think your income level is too high for a Roth IRA? Think again Think your income level is too high for a Roth IRA? Think again Published:7/16/2019 10:44:31 AM
[Markets] Stocks waver, Dow hits new intraday high as investors parse trio of bank earnings U.S. stocks steady early Tuesday morning with investors digesting a trio of bank earnings after major equity indexes eked out a round of fresh all-time closing highs Monday Published:7/16/2019 10:44:30 AM
[Markets] UAE Tanker "Disappears" In Persian Gulf, US Blames Iran

The plight of a "mystery" UAE tanker that's gone missing in the Persian Gulf now threatens to again send tensions with Iran soaring. Its location transmission signal was turned off Sunday as it drifted toward Iranian waters and it hasn't been heard from since, with even United Arab Emirates officials staying silent about it. The AP reports:

Tracking data shows an oil tanker based in the United Arab Emirates traveling through the Strait of Hormuz drifted off into Iranian waters and stopped transmitting its location over two days ago, raising concerns Tuesday about its status amid heightened tensions between Iran and the U.S.

The report details that the Riah, a 58-meter oil tanker which operates frequently in the region, switched off its transponder for the first time in three months after 11pm on Saturday, based on tracking data. 

File image: A fishing boat speeds past an oil tanker in the distance in Fujairah, United Arab Emirates. Source: AP

As of Monday "red flags" were raised as US officials began inquiring of the Riah's status. CNN's Pentagon correspondent Barbarra Starr had this to say based on intelligence sources: "US intel increasingly believes UAE tanker MT RIAH forced into Iranian waters over the weekend by #IRGC naval forces. UAE isn't talking."

However, this could be another case of hawkish US intelligence and defense officials hyping a false threat. Starr continued based on her source: "Some Gulf sources say ship simply broke down/towed by Iran. US says though no contact with crew. Last location Qesham Island."

Following the UK's controversial and aggressive move to seize a tanker carrying 2 million barrels of Iranian oil of Gibraltar earlier this month, Tehran's military has threatened to in turn intercept UK vessels.

This also comes after repeat pledges over the past year by Iran's leaders following a US sanctions campaign that if Iran is blocked from exporting its oil out of the gulf then no country would be able to traverse the vital oil shipping lanes either. 


Published:7/16/2019 10:44:30 AM
[Markets] Key Words: As backlash against Trump’s ‘go back’ comments builds, here’s Ronald Reagan’s ‘love letter to immigrants’ Ronald Reagan’s final speech as president has resurfaced across social media following Trump’s tweetstorm.
Published:7/16/2019 10:44:30 AM
[Markets] Blue Apron jumps 20% after news of Beyond Meat inclusion in delivered meals Blue Apron jumps 20% after news of Beyond Meat inclusion in delivered meals Published:7/16/2019 10:06:57 AM
[Markets] Bank Run: Deutsche Bank Clients Are Pulling $1 Billion A Day

There is a reason James Simons' RenTec is the world's best performing hedge fund - it spots trends (even if they are glaringly obvious) well ahead of almost everyone else, and certainly long before the consensus.

That's what happened with Deutsche Bank, when as we reported two weeks ago, the quant fund pulled its cash from Deutsche Bank as a result of soaring counterparty risk, just days before the full - and to many, devastating - extent of the German lender's historic restructuring was disclosed, and would result in a bank that is radically different from what Deutsche Bank was previously (see "The Deutsche Bank As You Know It Is No More").

In any case, now that RenTec is long gone, and questions about the viability of Deutsche Bank are swirling - yes, it won't be insolvent overnight, but like the world's biggest melting ice cube, there is simply no equity value there any more - everyone else has decided to cut their counterparty risk with the bank with the €45 trillion in derivatives, and according to Bloomberg Deutsche Bank clients, mostly hedge funds, have started a "bank run" which has culminated with about $1 billion per day being pulled from the bank.

As a result of the modern version of this "bank run", where it's not depositors but counterparties that are pulling their liquid exposure from DB on fears another Lehman-style lock up could freeze their funds indefinitely, Deutsche Bank is considering how to transfer some €150 billion ($168 billion) of balances held in it prime-brokerage unit - along with technology and potentially hundreds of staff - to French banking giant BNP Paribas.

One problem, as Bloomberg notes, is that such a forced attempt to change prime-broker counterparties, would be like herding cats, as the clients had already decided they have no intention of sticking with Deutsche Bank, and would certainly prefer to pick their own PB counterparty than be assigned one by the Frankfurt-based bank. Alas, the problem for DB is that with the bank run accelerating, pressure on the bank to complete a deal soon is soaring.

Here are the dynamics in a nutshell, (via Bloomberg): Deutsche Bank CEO Christian Sewing is pulling back from catering to risky hedge-fund clients, i.e. running a prime brokerage, as he attempts to radically overhaul the troubled German lender while BNP CEO Jean-Laurent Bonnafe wants to expand in the industry. A deal of this magnitude would be a stark example of the German firm’s retreat from global investment banking while potentially transforming its French rival from a small player in the so-called prime-brokerage industry to one of Europe’s biggest.

Of course, publicly telegraphing that DB is in dire liquidity straits and needs an in-kind transfer of its prime brokerage book would spark an outright panic, and so instead the story has been spun far more palatably, i.e., "BNP is providing “continuity of service” to Deutsche Bank’s prime-brokerage and electronic-equity clients as the two companies discuss transferring over technology and staff", according to a July 7 statement. The ultimate goal of the talks is for BNP to take over the vast majority of client balances, which are slightly less than $200 billion currently.

There is just one problem: nothing is preventing those clients who would be forcibly moved from a German banking giant to a French banking giant from redeeming their funds. And that's just what they are doing.

Which is why the final shape of the deal remains, pardon the pun, fluid, and it is unclear how it will proceed, facing a multitude of complexities, including departing clients.

In an attempt to stop the bank run, BNP executives are meeting with U.S. hedge-fund clients this week to convince them to stay following similar sit-downs with European funds last week, Bloomberg sources said.

However, if this gambit fails, and hedge funds keep moving their business elsewhere, officials at the German bank may just relegate its assets tied to the prime finance division into the newly formed Capital Release Unit, i.e. the infamous "bad bank" which is winding down unwanted assets totaling 288 billion euros ($324 billion) of leverage exposure, and the prime brokerage is responsible for much of the 170 billion euros of leverage exposure that’s coming from the equities division into the division, also known as CRU, a presentation shows.

It also means that countless hegde funds are suddenly at risk of being gated on whatever liquid exposure they have toward Deutsche Bank.

To be sure, Deutsche Bank’s hedge fund balances have been declining throughout the year as speculation swirled around Sewing’s intentions for the prime brokerage, but the rate of redemptions was far lower than $1 billion per day. Now that the bank jog has become a bank run, the next question is how much liquidity reserves does DB really have and what happen if hedge funds clients - suddenly spooked they will be the last bagholders standing - pull the remaining €150 billion all at once.

We are confident we will get the answer in a few days if not hours, until then please enjoy this chart which compares DB's stock decline to that of another bank which was gripped by a historic liquidity run in its last days too...

Published:7/16/2019 10:06:57 AM
[Markets] Outside the Box: Think your income is too high to contribute to a Roth? Think again It’s like found money for your retirement.
Published:7/16/2019 10:06:56 AM
[Markets] Organizer Of Google Sexual Harassment Walkout Leaves The Company

One of the organizers of last November's massive Google walkout, Meredith Whittaker, has left the company. Her departure, first announced over Twitter by a Google software engineer, was confirmed by the company. 

Whittaker and another walkout organizer, Claire Stapleton said that they faced retaliation after November's protest against how the company handles sexual harassment and misconduct allegations.

In a message posted to many internal Google mailing lists Monday, Meredith Whittaker, who leads Google’s Open Research, said that after the company disbanded its external AI ethics council on April 4, she was told that her role would be “changed dramatically.” Whittaker said she was told that, in order to stay at the company, she would have to “abandon” her work on AI ethics and her role at AI Now Institute, a research center she cofounded at New York University. -Wired

During the November walkout - sparked by a sweetheart payout to Android co-creator Andy Rubin, who walked away with a $90 million package despite being "credibly accused" of forcing a woman to give him a blowjob in 2013 - employees demanded that the company implement measures against harassment and discrimination, as well as an end to forced arbitration, a safe and anonymous process to report sexual misconduct, and a publicly disclosed sexual harassment transparency report, according to Tech Crunch

Over the past year, Google employees have also protested a Pentagon contract to develop AI, as well as China's "Project Dragonfly" search project which would help the Chinese government to track and surveil citizens. Amid the controversies, Whittaker was one of the most outspoken voices. 

While at Google, Whittaker also served with AI Now, an ethics organization affiliated with New York University that she co-founded. The group often criticizes businesses and government agencies for using AI systems, like facial recognition, in policing and surveillance. Whittaker also publicly denounced some Google decisions, including the appointment of Kay Coles James, a conservative think tank leader, to an AI ethics board. Google soon nixed the board.

"People in the AI field who know the limitations of this tech, and the shaky foundation on which these grand claims are perched, need to speak up, loudly. The consequences of this kind of BS marketing are deadly (if profitable for a few)," Whittaker wrote on Twitter on Sunday. -Bloomberg

Stapleton, meanwhile, left the company in June - saying that had she remained, she could expect "public flogging, shunning and stress." 

Published:7/16/2019 9:41:01 AM
[Markets] Jeffrey Epstein wants to pay bail of $77 million to be put under house arrest at his Upper East Side mansion Epstein’s proposed bail package could theoretically get 6,000 defendants out of jail.
Published:7/16/2019 9:41:01 AM
[Markets] US STOCKS-Wall Street muted after mixed bank earnings U.S. stock indexes treaded water on Tuesday as Wall Street's big banks swung between gains and losses after their quarterly results drew mixed reactions from investors. Goldman Sachs rose 2.4% and Wells Fargo gained 0.5% after the banks reported quarterly profit that topped estimates. Hopes of an interest rate cut by the Federal Reserve as early as this month to cushion the economy from any slowdown due to trade tensions have helped Wall Street's three main indexes scale fresh record highs in July. Published:7/16/2019 9:41:01 AM
[Markets] Watch Live: Senate Grills Facebook Crypto Head About "Libra" Digital Currency

Ever since Facebook unveiled its plans to introduce a new 'stablecoin' cryptocurrency called Libra, governments around the world have been up in arms, accusing Facebook of trying to undermine global financial stability, sideline fiat currencies and opening up a new avenue for criminals hoping to launder their ill-gotten gains.

Yesterday, Treasury Secretary Steven Mnuchin took this fearmongering a step further by warning that crypto could be a 'national security threat' and saying that the Treasury Department has "very serious concerns" about Libra (amusingly, the market promptly trolled Mnuchin by piling into bitcoin). And the House has already introduced a bill that would effectively killed Libra before it launches. Jerome Powell said during his Congressional testimony last week that he has "serious concerns" about Libra relating to money laundering, financial stability and other issues. And let's not forget the now infamous Libra/Libor mixup.

On Tuesday morning at 10 am, David Marcus, Facebook's articulate, press-friendly, head of Calibra (the FB subsidiary charged with overseeing the Libra project) will appear before the Senate Banking Committee for what we expect will be a brutal grilling as both Democrats and Republicans unite in their disdain of the project.

Watch the fireworks live below:

Published:7/16/2019 9:06:25 AM
[Markets] U.S. business inventories increase 0.3% in May WASHINGTON (MarketWatch) - Business inventories in the U.S. rose 0.3% in May, the Commerce Department said Tuesday. Sales rose 0.2% in the month. The ratio of inventories to sales, meanwhile, was unchanged at 1.39. That's how many months it would take to sell all the inventory on hand. One year ago, the inventory-to-sales ratio was 1.34. An increase in inventories adds to gross domestic product while a decrease subtracts from it. The increase in inventories in May was also unchanged at 0.5%. Published:7/16/2019 9:06:25 AM
[Markets] Lear cuts sales and earnings guidance Lear cuts sales and earnings guidance Published:7/16/2019 8:37:14 AM
[Markets] J.P. Morgan cuts NII outlook as rate outlook swings to 3 cuts from zero in 3 months J.P. Morgan Chase & Co. lowered its full-year outlook on net interest income, as the banking giant now assumes the Federal Reserve will cut interest rates up to three times this year. Chief Financial Officer Jennifer Piepszak said on the post-earnings conference call that net interest income is now expected to be $57.5 billion, according to a transcript provided by FactSet, compared with the FactSet consensus of $57.9 billion. In the first-quarter conference call, then-CFO Marianne Lake said NII was expected to be "$58-plus-billion," when the it was assumed that there would be zero interest rate cuts. The stock was last down 0.4% in premarket trading, but has been up as much as 1.3% and down as much as 2.1% after earnings were reported. It has climbed 16.7% year to date through Monday, while the Dow Jones Industrial Average has climbed 17.3%. Published:7/16/2019 8:37:14 AM
[Markets] Recession Looms: Cass Freight Index Negative For 7th Month

Authored by Mike Shedlock via MishTalk,

According to Cass, "Freight shipments signal economic contraction".

The Economic Outlook from Freight’s Perspective is not promising.

  • With the -5.3% drop in June following the -6.0% drop in May, we repeat our message from last month: the shipments index has gone from “warning of a potential slowdown” to “signaling an economic contraction.”

  • May and June’s drops are significant enough to pose the question, “Will the Q2 ’19 GDP be negative?”

  • We acknowledge that all of these negative percentages are against extremely tough comparisons; and the Cass Shipments Index has gone negative before without being followed by a negative GDP.

  • The weakness in spot market pricing for many transportation services, especially trucking, is consistent with the negative Cass Shipments Index and, along with airfreight and railroad volume data, strengthens our concerns about the economy and the risk of ongoing trade policy disputes. Weakness in commodity prices and the decline in interest rates have joined the chorus of signals calling for an economic contraction.

  • We are concerned about the severe declines in international airfreight volumes (especially in Asia) and the ongoing swoon in railroad volumes, especially in auto and building materials.

  • We see the weakness in spot market pricing for transportation services, especially in trucking, as consistent with and a confirmation of the negative trend in the Cass Shipments Index.

  • As volumes of chemical shipments have lost momentum, our concerns of the global slowdown spreading to the U.S., and the trade dispute reaching a ‘point of no return’ from an economic perspective, grow.

European Airfreight

European airfreight volumes have been negative since March 2018, but only by a small single-digit margins (-1% to -3%), until November 2018. Unfortunately, since then, volumes have started to further deteriorate. Our European Airfreight Index was down a concerning -7.2% in April, only down -2.6% in May, before dropping -7.9% in June. Although by itself distressing, it’s the Asian data that has become the most alarming.

Asia Pacific Airfreight

Asian airfreight volumes were essentially flat from June to October 2018, but have since deteriorated at an accelerating pace (November -3.5%, December -6.1%, January -5.4%, February -13.3%, March -3.6%, -10.2% in April, -8.5% in May, and -8.6% in June).

Shanghai Airfreight


If the overall volume wasn’t distressing enough, the volumes of the three largest airports (Hong Kong, Shanghai, and Incheon) are experiencing the highest rates of contraction. Even more alarming, the inbound volumes for Shanghai have plummeted. This concerns us since it is the inbound shipment of high value/low density parts and pieces that are assembled into the high-value tech devices that are shipped to the rest of the world.

Free Markets

It is extremely refreshing to see analysis giving free trade a big plug. And in the face of Trumpian foolishnees, it is all the more refreshing.

This is what Cass had to say:

The data underlying economic history is clear: the more unrestricted and robust global trade is, the more prosperous the global population becomes. Open markets of free trade are the greatest method to efficiently allocate resources and ensure that the best quality goods made by the most efficient producers are available to everyone. Unrestricted global trade lifts hundreds of millions, even billions, of the world’s population out of poverty. ‘Protectionism,’ like so many government regulations and programs, frequently produces results that are the exact opposite of the intended outcome.

Shipment Index vs GDP

At first glance, the GDP for the 1st quarter seems very inconsistent with overall freight volumes. Using the Cass Shipments Index as a predictive proxy, we did not expect the BEA to report 3.2% as its initial estimate or 3.1% as its first revision. We won’t be surprised if the final report includes further downward revisions.

In the methodology used to calculate GDP, all increases in inventory are counted as additions to the GDP, all imports are counted as a negative to the GDP and all exports are counted as a positive to the GDP. Backing out the rising inventories, slowing imports and slightly higher exports, reduces the Q1 GDP to less than 1.5%.


Inventories Piling Up

I agree with the Cass take on inventories.

Yet, the July 10 GDPNow Assessment of 1.4% includes a -1.01 adjustment for inventories.

Thus, the "Real Final Sales" estimate by the GDPNow model is 2.4%.

Real Final Sales is the true bottom line assessment of the economy.

Why a Negative Adjustment?

But why does GDPNow have a negative inventory build?

I have been struggling with that all quarter.

On July 3, I commented the Manufacturing Sector is Rolling Over But Inventories Keep Piling Up.

Inventory Wildcard

If inventories are somehow negative, real final sales, will be higher than the baseline report.

The reverse is also true. If the baseline GDP number is 1.3% and CIPI (Change in Private Inventories) ass 1.0%, we are talking a bottom line estimate of 0.3%, more in line with what Cass expects.

We will have a better idea tomorrow when a slew of economic reports on inventories, industrial production, and retail sales.

Bottom Line

Cass concludes with this bottom line assessment: "More and more data are indicating that this is the beginning of an economic contraction. If a contraction occurs, then the Cass Shipments Index will have been one of the first early indicators once again."

Published:7/16/2019 8:37:14 AM
[Markets] Why it’s time to cut millennials some slack for being financially dependent on their parents ‘I pay for lunch at work and I pay for my Netflix account.’
Published:7/16/2019 8:37:14 AM
[Markets] Victoria's Secret Boss Wexner Swears He Didn't Know About Epstein Penchant For Pedophilia

Billionaire and former Jeffrey Epstein associate Les Wexner told his employees Monday that he regrets ever crossing paths with the disgraced pedophile financier, according to Bloomberg.

Wexner, founder of L Brands Inc. which owns Victoria's Secret, said in an internal email that he "was NEVER aware of the illegal activity" Epstein is accused of committing. "As you can imagine, this past week I have searched my soul ... reflected ... and regretted that my path ever crossed his." said the 81-year-old mogul of Epstein. 

After launching a business relationship in the 1980s, Wexner and Epstein formed 'a financial and personal bond that baffled longtime associates,' according to the New York Times

"I think we both possess the skill of seeing patterns," Wexner told Vanity Fair in 2003. "But Jeffrey sees patterns in politics and financial markets, and I see patterns in lifestyle and fashion trends." 

Wexner would go on to open doors for Epstein - who managed "many aspects of his financial life." 

By 1995, Epstein was a director of the Wexner Foundation and Wexner Heritage Foundation and president of Wexner’s N.A. Property Inc., which developed the Ohio town of New Albany, where Wexner lives. Epstein also was involved in Wexner’s superyacht, “Limitless,” attending meetings at the London studios of the firm that designed the vessel. -Bloomberg

In the email to employees originally reported by the Columus Dispatch, Wexner says that he severed ties with Epstein nearly 12 years ago - after the financier pleaded guilty to a sex crime involving a teenage girl.

"I would never have guessed that a person I employed more than a decade ago could have caused such pain to so many people," Wexner said in the email. "I would not have continued to work with any individual capable of such egregious, sickening behavior as has been reported about him."

Yet, Epstein portrayed himself as a way for young models to perform sexual favors in exchange for a backdoor into Victoria's Secret. According to a former Manhattan-based modeling agent cited by the New York Post, "Some of those girls got in.

"It was still significant cash for a young model doing the catalog," an agent told the Post. "They weren’t making hundreds of thousands but they could make about $5,000 a week modeling for the campaigns or the catalog. Not all the girls sent to him got jobs, but a lot of them did." 

Italian model Elisabetta Tai who claims Epstein tried to coerce her into performing sex acts in exchange for a Victoria's Secret gig.

In short, Wexner had an extremely close business relationship with Epstein - who allegedly engaged in sexual favors with girls, some of whom later worked for Wexner, yet the 81-year-old knew nothing of Epstein's proclivities. 

Others have distanced as well, reports Bloomberg

Others have also sought to distance themselves from Epstein in recent days, including hedge fund manager Glenn Dubin and his wife Eva Andersson-Dubin.

Andersson-Dubin, a former model who became a physician, previously dated Epstein and continued to socialize with him after his time in jail. Epstein had invested in Dubin’s hedge fund and was also considered a friend. -Bloomberg

"The Dubins are horrified by the new allegations against Jeffrey Epstein," they said in a statement. "Had they been aware of the vile and unspeakable conduct described in these new allegations, they would have cut off all ties and certainly never have allowed their children to be in his presence."

And despite Epstein being a registered sex offender and pedophile, Andersson-Dubin thought he had rehabilitated himself and deserved a second chance. 

"She is mortified that she, like so many others, was deceived by him, and feels terrible for the young women who have been harmed by his actions," reads their statement. 

Former President Bill Clinton similarly 'disavowed' Epstein, claiming on Monday that he "knows nothing about the terrible crimes Jeffrey Epstein pleaded guilty to in Florida some years ago, or those with which he has been recently charged in New York." 

Clinton also claimed that he's only been on Epstein's recently-sold 'Lolita Express' a total of four times, despite flight logs and pilot records clearly indicating otherwise. 

According to research by investigative journalist Conchita Sarnoff, Clinton "was a guest of Epstein's 27 times," adding "many of those times Clinton had his Secret Service with him and many times he did not."  

And as the New York Times points out, despite Epstein's status as a registered sex offender beginning in 2008, and his 13 month work-release sweetheart prison stay, many people continued to associate with him. 

Powerful female friends served as social guarantors: Peggy Siegal, a gatekeeper for A-list events, included him in movie screenings, and Dr. Eva Andersson-Dubin, a champion of women’s health, maintained a friendship that some felt gave him credibility. Mr. Epstein put up a website showing Stephen Hawking and other luminaries at a science gathering he had organized.

If you looked up Jeffrey Epstein online in 2012, you would see what we all saw,” Leon Botstein, the president of Bard College, said in an interview. He seemed “like an ex-con who had done well on Wall Street,” who was close to the Clintons and gave money to academic pursuits, Dr. Botstein said. That was why, he noted, Bard accepted an unsolicited $50,000 in 2011 for its high schools, followed later that year and in 2012 by another $75,000 in donations. -NYT

Now that Epstein is decidedly radioactive, none of his past associates seemingly knew anything - and are horrified at the monster they never saw coming.

Published:7/16/2019 8:07:46 AM
[Markets] The Dow Is Gaining Again as Goldman Sachs Climbs on Strong Earnings After all three stock indexes closed at records on Monday, investors don’t seem ready to charge too far ahead just yet. Published:7/16/2019 8:07:46 AM
[Markets] NewsWatch: U.S. stocks set to tread water as investors parse trio of bank earnings U.S. stock futures trade on either side of unchanged Tuesday morning while awaiting a trio of bank earnings of bank earnings which are likely to set the tone for the day, after major equity indexes eked out a round of fresh all-time closing highs Monday
Published:7/16/2019 8:07:46 AM
[Markets] Retail sales pop again in June in good sign for consumer-driven U.S. economy Sales at U.S. retailers rose solidly in June for the fourth month in a row, pointing to a strong rebound in consumer spending in the second quarter that suggests the economy is not as fragile as the Federal Reserve apparently believes. Published:7/16/2019 7:46:08 AM
[Markets] June Retail Sales Smash Expectations

Retail Sales growth has slowed since the Q1 rebound but June saw a notable surge, with the control group (used for GDP) surging 0.7% MoM (4.6% YoY - the most in a year)

Retail sales were higher for almost everything except:

  • Electronics and Appliance Stores -0.3%

  • Gasoline Stations -2.8%

  • Department Stores -1.1%

With non-store retail sales (Amazon etc.) soaring against the demise of department stores

So, over to you Mr.Powell, the consumer seems very comfortable and is spending... do we really need a rate cut?

Published:7/16/2019 7:46:08 AM
[Markets] Economic Report: Retail sales pop again in June in good sign for consumer-driven U.S. economy Sales at U.S. retailers rose solidly in June for the fourth month in a row, pointing to a strong rebound in consumer spending in the second quarter that suggests the economy is not as fragile as the Federal Reserve apparently believes.
Published:7/16/2019 7:46:08 AM
[Markets] U.S. import-prices data provide latest evidence of weak inflation U.S. import-prices data provide latest evidence of weak inflation Published:7/16/2019 7:46:08 AM
[Markets] Market Snapshot: U.S. stocks set to tread water as investors parse trio of bank earnings U.S. stock futures trade on either side of unchanged Tuesday morning while awaiting a trio of bank earnings of bank earnings which are likely to set the tone for the day, after major equity indexes eked out a round of fresh all-time closing highs Monday
Published:7/16/2019 7:06:53 AM
[Markets] Johnson & Johnson shares up in premarket after earnings top target Johnson & Johnson shares up in premarket after earnings top target Published:7/16/2019 7:06:53 AM
[Markets] The Dow Is Steady as Earnings Roll In Johnson & Johnson, Goldman Sachs, and JPMorgan Chase all turned in higher earnings than expected in reports out this morning. The latest figures on retail sales are the next point to watch. Published:7/16/2019 7:06:53 AM
[Markets] Google Shares Slide As Trump Agrees Company Should Be Investigated For Treason

President Trump has apparently taken Peter Thiel's supposition that Google could be in cahoots with the Chinese military to heart. In a tweet Tuesday morning, Trump reiterated Thiel's claim that the "seemingly treasonous" company might be working with the Chinese government and that the Trump Administration would "take a look."

Shares of Google parent Alphabet were off more than 1% on the Trump tweet.










Published:7/16/2019 7:06:53 AM
[Markets] TSX futures point to a lower open Published:7/16/2019 6:36:25 AM
[Markets] London markets climb as pound tumbles on fear of no-deal Brexit London markets climbed on Tuesday as the pound continued to tumble on Brexit concerns despite strong U.K. wages growth.
Published:7/16/2019 6:36:25 AM
[Markets] JPMorgan Trading Revenues Miss Across The Board, Cuts Net Interest Income Outlook

Just like yesterday's Q2 earnings season-opening report by Citigroup, JPMorgan beat on the top and bottom line, and the stock initially spiked higher. And just like yesterday, JPMorgan reported poor results in two core segments, with revenue in trading and investment banking missing expectations, hitting the stock. Finally just like Citi, JPM disappointed on Net Interest Income, cutting its NII guidance from $58 billion to $57.5 billion. The stock, just like Citi yesterday, initially jumped but then slumped lower as the second bank to report earnings left a bitter taste in investors' mouths.

First, the highlights. JPMorgan reported Q2 EPS of $2.82, and adjusted EPS of $2.59, which excluded $0.23 in income tax benefits, both of which beat the consensus estimate of $2.50, on "managed" revenue of $29.57BN, which also beat expectations of $28.9 billion, and was 4% higher than a year ago. Net income at the largest U.S. bank 16% rose to $9.65 billion from $8.32 billion. Net interest income was $14.5 billion, up 7.5% y/y, and in line with the estimated $14.56 billion.

And while JPMorgan paraded with its "Fortress balance sheet", what traders cared the most about was results from JPM's Corporate and Investment Bank, which disappointed as the main divisions missed expectations, to wit:

  • Total markets revenue was $5.4B was flat YoY including a gain from the IPO of a strategic investment in Tradeweb; However, excluding this one time gain, revenues was down 6% YoY
  • FICC sales & trading revenue was $3.69 billion, up 6.9% from the prior year, and beating the estimate of $3.33 billion. This number however included a gain from the IPO of a strategic investment in Tradeweb; excluding this gain, revenue was down 3% YoY
  • Investment banking revenue was just $1.78 billion, down a sharp -8.9% y/y, and below the estimate of $1.81 billion
  • Equities sales & trading revenue also missed, dropping 12% Y/Y to $1.73 billion, and also missing the estimate of $1.82 billion; Equity Markets revenue was down 12% YoY, primarily driven by derivatives, compared to a strong prior year.
  • Securities Services revenue of $1.0B, down 5% YoY, with deposit margin compression and a business exit partially offset by increased client activity
  • Treasury Services revenue also dropped, sliding 4% to $1.1BN, with deposit margin compression largely offset by higher balance and fee growth.

Meanwhile, as most revenue components declined, expenses of $5.5BN were higher 2% Y/Y, the opposite of what Citi reported yesterday.

JPM didn't give much color on the drops in investment banking revenues, simply noting that it reflects "lower fees across products." This is disappointing as Citi yesterday reported an increase in debt underwriting, so analysts might want to get some answers from Dimon on this.

Here's what Dimon did say on the firm's trading and investment banking results:

"Markets performance was relatively steady on slightly lower client volume, probably due to slightly higher global macroeconomic and geopolitical uncertainties. Although the global wallet was down, year-to-date the Firm ranked #1 in Global IB fees and gained share across products and regions, with particular strength from Commercial Banking, where gross IB revenue was up 8% for the first half of the year."

Yet while markets and trading disappointed, JPM's consumer-focused unit benefited from seemingly strong U.S. households: Dimon highlighted an 8% increase in credit card loans while deposits climbed 3%.

That said, the bank reported a roughly 2% drop in average loans, to $467.2 billion. Average loans at its home lending unit were responsible for the fall - those fell about 7% to $224.7 billion.

At the same time, JPM's 2Q provision for credit losses was $1.15 billion, down -5% y/y, and below the estimated $1.52 billion.

"We continue to see positive momentum with the U.S. consumer – healthy confidence levels, solid job creation and rising wages – which are reflected in our" consumer unit, Dimon said.

It is worth noting that as Bloomberg notes, the consumer unit was the only part of the bank to report a year-on-year increase in net income.

Looking at JPM's commercial bank, revenue also dropped 5% to $2.21 billion, worse than the flat print expected, so expect even more questions what caused the unit to sputter. The bank in the press release blames a strong year-ago quarter and lower net interest income on deposit balances.

Meanwhile, like Citi, JPM kept overall costs in check, as non-interest expenses came in just 2 percent higher at $16.3 billion, something analysts expected. The bank says the slight uptick came from "continued investments in the business" and higher auto lease depreciation.

And speaking of cost-cuts, JPM cut about 1,000 jobs in the quarter, with headcount now coming in at 254,983 in the quarter, and Bloomberg notes that while JPMorgan has been opening branches in a few new cities around the country, they're closing them just as fast in others, and total branches finally dropped below the 5,000 line - ending the quarter with just 4,970 branches, below the 5,028 branches they had at the end of the first quarter. 

Finally, the nail in the coffin to the Q2 JPM results was the bank's full year Net Interest Income outlook, which was cut from $58 billion to $57.5 billion, as declining rates cut half a billion dollars from the bank's total revenue, and confirming that if the Fed does follow Europe into NIRP (or even merely ZIRP), it is the banks that will get hit first.

What all this meant for investors: the stock initially popped, but has since dropped as markets were concerned by the revenue declines and misses in the bank's trading group, the cut in Net Interest Income forecasts, and the lack of a cost-cutting program that is as aggressive as that undertaken by Citi.


Published:7/16/2019 6:36:25 AM
[Markets] J.P. Morgan Chase revenue, earnings outpace analysts' consensus estimates J.P. Morgan Chase revenue, earnings outpace analysts' consensus estimates Published:7/16/2019 6:05:00 AM
[Markets] European markets cautious as Fed-induced rally subsides and trade war looms European markets edged down on Tuesday as the dust settled on last week’s rally and concerns over a trade war tempered gains.
Published:7/16/2019 5:37:50 AM
[Markets] Beat the System: Mira Sorvino is proof the rich and famous get the same bad investing advice as everyday Americans Comments from this Hollywood star sum up the most common mistakes made when investing in the stock market.
Published:7/16/2019 5:07:19 AM
[Markets] Erdogan Celebrates Delivery Of S-400s, Says Turkey Should Build New Weapons With Russia

With few other options at its disposal, Washington has been forced to threaten to withhold deliveries of F-35 fighters to Turkey in retaliation for Ankara's purchase of a batch of Russian-made S-400 anti-air missiles.

But with several more shipments of the anti-aircraft missiles due by the end of the summer, Turkish leader Recep Tayyip Erdogan isn't backing down. Rather, during remarks in the capital on Monday, he celebrated the arrival of the missiles, and said he would like to co-produce weapons with Russia, according to RT.


Speaking on the third anniversary of the failed coup attempt that set off one of the greatest purges in Turkish history, Erdogan promised that the newly-acquired S-400 weapons systems would be fully deployed in less than a year. Russian cargo planes began delivering the components on Friday, and more parts are expected to be delivered soon.

"And as of today, the eighth plane arrived and started being unloaded. Inshallah [God willing], we will be done by April 2020," Erdogan said. Then, he said the Turkish government would "go much further" with a view to setting up "joint production with Russia."

The purchase of the S-400 systems has elicited threats of retaliation from the US, which has vowed to cut Turkey, a fellow NATO member, off from sales of advanced weapons like the F-35, while also threatening sanctions (last year, Trump terminated a preferential trade agreement with Turkey in the spat over the S-400).

If Turkey continues to cooperate with Russia on things like arms purchases, expect Washington to impose sanctions and tariffs as Turkey tests the future of NATO.

Published:7/16/2019 5:07:19 AM
[Markets] FA Center: This legendary Vanguard fund manager had the right stuff to beat the market John Neff’s preparation and discipline gave Vanguard Windsor Fund a performance edge, writes Mark Hulbert.
Published:7/16/2019 4:44:21 AM
[Markets] UK, Philippines Side With Huawei: Why Is The US Behind On 5G?

Authored by Mike Shedlock via MishTalk,

In a global 5-G battle, Trump has forced nations to take sides. The EU, UK, and the Philippines will buck Trump.

The Wall Street Journal reports Philippines Has Chosen Sides: Not the U.S.

The U.S.-China technology war is raging around the world, but the Philippines is no longer torn. It is binding its telecommunications future to China’s.

The country got its first taste of next-generation 5G services in late June with gear supplied by Huawei Technologies Co. This month, a new carrier backed by state-owned China Telecommunications Corp. will begin rolling out a network largely designed in China, to be executed by Chinese engineers in the Philippines.

The moves are a blow to the U.S., which has in recent months pushed allies to shun Huawei. U.S. officials contend Chinese companies could be compelled to conduct espionage for Beijing.

Huawei, which has repeatedly said it wouldn’t spy for China, estimates its 5G equipment will spread across more than 130 countries, including in Europe. Huawei’s 5G system is up and running in South Korea and will be deploying in the United Arab Emirates this year. Both countries are U.S. allies.

Chinese companies’ dominant presence in Philippine telecom networks stands to move the Southeast Asian country further away from the U.S., its treaty ally—testing a relationship that has already grown strained.

No Technical Reason to Exclude Huawei

The Register reports MPs Find 'No Technical Grounds' to Exclude Chinese Giant.

The UK's Science and Technology Select Committee said it can't find any "technical grounds" for chopping Huawei out of the UK's 5G and other telco networks, but said government should consider "ethical" issues and its relationship with "allies".

The committee of Commons MPs wrote in a letter (PDF) to Minister of Fun [Secretary of State for Digital, Culture, Media and Sport] Jeremy Wright that Huawei's involvement in the 5G network posed no techie issues, excepting, of course, the not-so-minor point that if the country pulls the Chinese firm's kit from either its current or future networks, it could cause "significant delays".

The UK will have to choose between bowing down to Trump and doing what it thinks best.

Huawei in Germany

Earlier this year, Angela Merkel Ignored Trumpian Pressure to ban Huawei in 5G auction.

“There are two things I don’t believe in,” Merkel said in an onstage discussion on Tuesday at the Global Solutions summit in Berlin. “First, to discuss these very sensitive security questions publicly, and second, to exclude a company simply because it’s from a certain country.’’

European carriers have warned governments that sidelining Huawei would delay fifth-generation networks by years.

The threat escalated when Nato’s Supreme Allied Commander in Europe, US General Curtis Scaparrotti, warned Germany that Nato forces would cut communications if Berlin were to work with Huawei.

NATO Threat

If the US will not share sensitive NATO data with Germany, so what?

Heck, it's likely a good thing to not listen to US propaganda about Russia, Iran, or whatever.

What's It Really About?

The US is just as likely to have security back doors as China, if not more so.

This isn't really a security.

Rather, 5-G is Tied Up in Trump's Trade War Disputes.

What do 5G and the Chinese telecom-gear maker Huawei have to do with the escalating trade war between the US and China? In a word: everything. 5G, the next generation of wireless, will not only allow you to download an entire season of Stranger Things in minutes, but also serve as the foundation to support the next generation of infrastructure, including billions of internet-connected devices powering smart cities, cool new VR and AR applications and driverless cars.

"The leader of 5G stands to gain hundreds of billions of dollars in revenue over the next decade, with widespread job creation across the wireless technology sector," the Defense Innovation Board, a group of American business leaders and academics, said in a report for the US Department of Defense earlier this spring.

How's the US Doing? 

Wireless industry trade association the CTIA claims the US is "tied" with China. And it's advocating for policy objectives to keep pushing the US toward dominance. But the Defense Innovation Board offered a more dismal outlook. In its report issued in April it offered a scathing assessment: "The country that owns 5G will own many of these innovations and set the standards for the rest of the world," it said. "That country is currently not likely to be the United States."

Why is the US Behind?

  1. China has invested massive amounts of money in companies such as Huawei to develop 5G technology, to great success.

  2. Chinese companies hold the majority of the world's 5G patents. The Chinese government also controls China's wireless service market and is pushing its three major providers, China Mobile, China Unicom and China Telecom, to combine efforts to develop a standalone 5G network that'll commercially launch in 2020.

  3. There are no major US companies building and developing 5G telecom equipment. Thanks to decades of market consolidation, US companies once dominant in providing telecom gear have been sold to foreign companies.

  4. The defense department assessment is the US hasn't been quick enough in making available the wireless spectrum that's essential to deploying the service. And the spectrum the US is making available is the wrong kind.

  5. The US has been allocating a lot of so-called millimeter wave or mmWave spectrum, which can transmit huge amounts of data very fast. But signals can travel only over short distances, and interference like trees or even bad weather can disrupt service. The problem with using this spectrum is that it's hugely expensive to build a network this way. And it'll be impossible to blanket the nation with the service, because it'll be too costly.

  6. The US needs midband and low-band spectrum in the mix. The only problem is that the prime spectrum that could be used for this service is already being used by the military. And getting government agencies to share spectrum with commercial entities is no easy task.

Trump Prepares to Ease Ban

On May 24, Venture Beat reported Trump’s Glib Approach to Huawei Invites Nasty Unintended Consequences.

The U.S. government has spent the last year and a half making the case that Huawei is an international security threat — a telecommunications hardware company that could help China’s government surveil communications and seize control of 5G-networked assets. But President Donald Trump suggested yesterday that this “very dangerous” company may not be such a threat after all as the U.S. might be willing to look the other way if China agrees to a trade deal.

Does this sound like pay-to-play politics? Of course. After the last two years, is anyone even slightly surprised that Trump would shrug off international security concerns to settle an economic dispute? Of course not.

Regardless of how this situation plays out, Trump’s glib attitude toward trade relations with Huawei is inviting highly unpleasant and long-lingering consequences. The most obvious: Foreign rivals now can plausibly argue that the U.S. targets individual companies to force political outcomes, which is effectively an economic form of hostage-taking.

No Trust

The current state of affairs is likely irrelevant. It can change on a whim for any reason or non-reason.

Companies may seek to install Huawei equipment only to be told days or even hours later they need to rip it out.

There is no reason to believe any decision Trump makes will stick.

You cannot run a business this way and you shouldn't run a country this way either.

Published:7/16/2019 4:09:04 AM
[Markets] Livability: Why you should chuck it all and move to Alaska This family left everything they knew behind to go to Alaska — it was the best decision they ever made.
Published:7/16/2019 4:09:04 AM
[Markets] Opponents Of Italy's Salvini Accuse Him Of Being 'Puppet Of Putin'

Matteo Salvini's hope for a "Trump-style revolution" In Italy has not only rankled his center-left opponents, but also his nominal allies, coalition allies - the populist League party - who have joined in an investigation into whether Salvini and his political allies received broke campaign finance laws by receiving money from the Russia government, Bloomberg reports.

The scandal over the Russian financing has dogged Salvini - who is not only the leader of the League Party, but also the de facto ruler of Italy, after a close ally, Gianluca Savoini, was caught soliciting illegal party funding from three Russians nationals.


The story has dominated the Italian press for the past week, and Salvini has tried - unsuccessfully - to distance himself from the political scandal.

Initially, Salvini said he didn't know how Savoini, a close advisor to the Interior Minister, ended up at a fundraiser where Russians had sought to funnel money to Salvini's party.

Savoini, a one-time Salvini spokesman, attended a July 4 dinner with Russian President Vladimir Putin in Rome, and the deputy premier has said he doesn’t know how his associate came to be there. On Sunday, however, Prime Minister Giuseppe Conte undermined that account, saying in a statement that Savoini had in fact been invited by Salvini’s office.

With western leaders struggling to come to grips with the scope of Russian attempts to undermine their democracies, suggests that the most powerful home-grown opponent of the European Union may have been colluding with the Kremlin.

Now, Salvini and Trump have one more thing in common: Not only are they both reviled by leftists in their respective countries, but Salvini's opponents are now blaming his electoral triumph on interference from the Russians. Like Trump, Salvini has broken ranks with other western leaders, but he's openly advocated for the removal of UN sanctions against Russia. What's an even worse look for Salvini, his party has been pushing to ease sanctions on Russia. He has also rejected his fellow Western European countries' findings that Putin's 'meddling is a 'malign influence.'

So far, the scandal has done nothing to dent Salvini's popularity with his fellow Italians - he remains the most popular political figure in Italian politics.

But it has further strained his relationship with his coalition partner, the Five Star Movement, which has called for an investigation into the source of the money . Of course, with Five Star perennially terrified that Salvini might move to drop them from the ruling coalition, they have every incentive to cooperate with the opposition.

Unsurprisingly, the opposition center-left Democratic Party has laso kept up the pressure, with former PM Paolo Gentiloni urgingi Salvinii to resign.

The timing of the scandal is beyond suspicious. Salvinis' party trounces the competition in Italy and picks of dozens of European Parliament seats, helping form a block of anstiestablishment MPs who could create serious problems for Brussels. So it makes sense that they would try to discredit the nettlesome populist, who has disparaged the euro, thumbed his nose at EU budget rules and generally threatened to upset the status quo in Brussels, with the one tried-and-true smear: Salvini is a Russia agent and the populists' rise in Italy isn't the result of a democratic choice - rather, it's Puiin's fault.

Published:7/16/2019 3:34:49 AM
[Markets] This Arms Deal Could Trigger A New "Cold War"

Authored by Cyril Widdershoven via,

The long-awaited, and feared, delivery of Russian S-400 missile systems to Turkey has started.

In spite of US and European warnings that Ankara should reconsider the Russian arms deal, to prevent economic and possibly military sanctions, Turkish president Erdogan has put his foot down. At a Turkish airbase next to Ankara, the Turkish army has received a first batch of S-400 parts. Turkey’s Ministry of Defense has stated. The coming days new deliveries are expected, threatening not only a possible more hawkish military stance by Turkey in Syria, but increasing risks in the East Med. as a whole.

Ankara also needs to prepare for severe US sanctions, which could include barring Turkey, as a NATO member, from the US F-35 stealth fighter program and banning its defence firms from the United States. Erdogan’s official reaction until now has always been that the S400s are necessary for the country’s security.  Official plans indicate that the S400s will be deployed next to Syrian border, and around Ankara. The coming days a vessel will bring around 100 missiles to Turkey from Russia. And during the next two months, the Turkish military will receive training in Russia. The whole development is causing a severe crisis within NATO, and has put the EU on edge. 

The ongoing Russian-Turkish military cooperation is worrying, as Turkey is the 2nd largest NATO member in terms of armed forces. The Turkish military is also involved in a troop build-up on the Syrian border in preparation for a possible incursion against U.S.-backed Kurdish militants, Habertürk news reported. The East Med region has been already warned by the growing assertiveness and military power projections in and around Cyprus with regards to offshore drilling operations.

With the East Med slowly becoming a major conflict zone, the Russian S-400s could not have come at a more difficult moment. With offshore gas operations off Egypt, Israel and Cyprus being threatened by an ever more hawkish Turkish president Tayyip Erdogan, a military conflict for energy access is already brewing. Even after strong warning signals by Brussels and Washington, Ankara’s maritime forces have set sail and are in contested waters. EC President Donald Tusk has warned that “its continued escalation (Turkey) and challenge to the sovereignty of our Member State Cyprus will inevitably lead the EU to respond in full solidarity”.  Brussels already has decided to suspend negotiations on the Comprehensive Air Transport Agreement and agrees not to hold further meetings of the high-level dialogues for the time being. The EU has also reduced the pre-accession assistance to Turkey for 2020 and invites the European Investment Bank to review its lending activities in Turkey, notably with regard to sovereign-backed lending. Ankara is confronted by growing involvement of Washington, after the latter has agreed to the so-called East Med Act, which will allow the US to fully support the trilateral partnership of Israel, Greece and Cyprus. It opens also the door for a full US lifting of its long-standing arms embargo on Cyprus.

(Click to enlarge)

Turkey is looking at a new “Cold War” situation, this time in the East Mediterranean. Confronted by growing regional assertiveness, and military support for Cyprus (Israel, Egypt), a new front has been built up. Looking at Erdogan’s wounded ego, election defeats and potential splits in his AK Party and growing Russian support, unexpected developments and irrational thoughts could easily lead to further escalation.  Bolstered by his Russian spring moves, such as the S-400 deal, Ankara could call the bluff of its adversaries.

(Click to enlarge)

The conflict could be an unexpected bullish factor for energy markets. Especially because most analysts have overlooked the fact that a regional conflict could involve Turkey’s control over the Turkish Straits (Bosphorus and Dardanelles). The latter is a major potential chokepoint for petroleum liquids transit from the Caspian Sea region. Even that total maritime oil and petroleum product volumes through the Turkish Straits has declined since 2011, 2.2-2.4 million bpd of products still flow through the Straits. The majority of oil moving through these shipping lanes supplies Western and Southern Europe. Most Black Sea ports are the main oil export routes for Russia and other Eurasian countries including Azerbaijan and Kazakhstan. At the same time, the Turkish Straits total number of vessels is still at around 48,000 per year. Apart from this, Turkey also has become a natural gas hub to Europe, due to its extended oil and gas pipeline infrastructure. 

Some signs show a tendency for conflict the coming months, or weeks. A regional East Med-Turkish conflict will be detrimental to oil and gas flows to Europe. Potentially several millions of barrels per day of crude and petroleum products will be taken out of the market.

Published:7/16/2019 2:34:54 AM
[Markets] GLOBAL MARKETS-Asian shares creep higher as wary investors await U.S. data, earnings Most Asian stock markets rose on Monday, but gains were limited as investors awaited U.S. retail sales data and corporate earnings to gauge the health of the world's biggest economy ahead of a likely U.S. rate cut later this month. German DAX futures were up 0.04%, FTSE futures were down 0.18%, and financial spreadbetters saw France's CAC 40 opening flat. China's blue-chip CSI300 index fell 0.3% as investors fretted over slower growth in the world's second-largest economy and the impact of the Sino-U.S. trade war, even as new data highlighted Beijing's efforts to boost spending. Published:7/16/2019 2:07:37 AM
[Markets] "Combat Ready" Missile Seized During Police Raid On Italian Neo-Nazis

Years ago both Gaddafi and Assad famously warned that as their nation's borders were being flooded with NATO-backed arms and insurgents, the weapons and terrorist flow would soon go the other way into Europe.  And now more confirmation of this dark prediction come true in spectacular fashion with this unusual intro from the BBC: "Anti-terrorism police in northern Italy have seized an air-to-air missile and other sophisticated weapons during raids on far-right extremist groups."

An actual "combat ready" missile was seized near Forli airport in Italy, via Sky News.

If it sounds too bizarre or surreal to be true, the photographs alone from the breaking report are even more shocking, which show a five-foot long monster of a rocket with a large military shipping container. 

What's more is the interesting likely origin of what's being described as a "combat ready" missile: it's from the gulf country of Qatar, which has for years been a major weapons source fueling wars across the Middle East, from Syria to Yemen to North Africa. 

"During the operation, an air-to-air missile in perfect working order and used by the Qatari army was seized," Italian police said in a statement.

Via the BBC/EPA: "The missile is reported to be in good condition for combat use."

The missile was uncovered among a large cache of smaller arms during a major Italian police operation to break-up dangerous far-right militant groups:

Three people were arrested - two of them near Forli airport. Neo-Nazi propaganda was also seized, in raids in several cities.

Italian media say the raids were part of an investigation into Italian far-right help for Russian-backed separatist forces in eastern Ukraine.

...The Turin special police force, called Digos, led the operations, assisted by police in Milan, Varese, Forli and Novara.

Those among the arrested were alleged to have been active in fighting which has raged since 2014 in Ukraine's Donetsk and Luhansk regions.

Despite the BBC falsely reporting that those among the arrested had been supporting pro-Russian separatists in Ukraine, the Italian police press release states the opposite

Media reports suggest the missile was bound for the front lines in war-torn eastern Ukraine, or it may have also been up for sale on the black market. 

Italy's national police published images on social media showing weapons captured in multiple raids in different cities. 

Smaller arms and Nazi paraphernalia were also recovered during the Italian special police raids on known far right militant groups, via Sky News.

The recovered rocket was only identified by Italian authorities as an "air-to-air" missile, suggesting it would need to be mounted on an aircraft, but few other details over its type were given, other than its Qatari origin prior to reaching Italy. 

Analysts online were quick to identify it as a likely Matra Super 530, which is a French-manufactured short to medium-range air-to-air missile.

Reports suggest the two men arrested specifically in relation to the missile, which was found at an airport hangar, may have been attempting to sell it. 

Media outlets identified some among the more notable and politically active suspects as Fabio Del Bergiolo, 50, an Italian ex-customs officer and far-right Forza Nuova party activist; Alessandro Monti, 42, a Swiss national; and 51-year old Italian Fabio Bernardi.

As the Middle East and again increasingly the Libya war 2.0, as well as Mediterranean migrant departure points become increasingly destabilized, we expect to hear about more such stories of heavy weaponry supplied by gulf states making their way to Europe's shores. 

Published:7/16/2019 2:07:37 AM
[Markets] Mainstream Media Hide Skripal's Connections To Russiagate-Trump Case

Authored by Eric Zuesse via The Strategic Culture Foundation,

First of all, everyone should read this:  “The 10 Worst, Most Embarrassing US Media Failures on the Trump-Russia Story”. It is important background for understanding what follows, because the following helps to explain what is displayed in that brilliant prior article.

News has slowly been getting out that the British Government’s account of the poisoning of the Skripals is a fabrication which had been done in order to escalate hostilities against Russia, and that when information from Democratic Party and Clinton campaign computers subsequently became either leaked or hacked to Wikileaks, the Democratic National Committee hired, in order to investigate that, British contractors who were also involved in the Skripal fraud, and Skripal himself might have been a crucial part of the Russiagate-Trump operation. Russiagate — the alleged collusion between the Trump campaign and the Russian Government — resulted from this DNC-UK team. There was collusion, but it was between the US Government (then under Obama) and the UK Government (under Cameron and then May), directed against Trump, and not actually between candidate Trump and the Russian Government, directed against Clinton. The present report summarizes the gradual making-public of this actual history.

Developing that case about the real collusion has been and is a remarkably slow process, because the evidence in the real case requires extensive expertise in order to understand and interpret correctly the relationships between the people who were involved in it. So: the following summary encapsulates those relationships; and, at all points, it will link directly to the reports by the courageous investigative journalists who have participated in making public parts of what is, effectively, a key component of the history of the US Obama Administration’s collusion with the UK Government in order to cripple — and having the aim to overthrow — Trump’s US Government, in the event that Trump would win the 2016 US Presidential contest, as he did. (Perhaps the main reason for this manufactured case against Trump was that Trump had publicly criticised NATO, and that doing this, by any US Presidential candidate who has a real chance of winning his or her Party’s nomination, is prohibited by the Deep State — the rulers of both Parties, and of both US and UK.)

Throughout this peeling-off (thus far) of the layers of this onion that’s behind both the Skripal fraud and the Russiagate fraud, the case became progressively stronger that the US and UK Governments were actually colluding together, in order to prevent any possibility that the Cold War would end on the US-and-allied side, as it had decades earlier ended only on Russia’s side in 1991. All of this has been done so to keep in place the myththat when Russia ended the Cold War on its side in 1991, the US and its allies likewise ended it on their side, instead of secretly proceeded forward on their side of the Cold War (as they have done), their ultimate aim being to gradually isolate and then take control of Russia’s Government, and thereby emerge with incontestable control over the entire planet, the first and only globally all-encompassing empire, a dictatorial government of the entire world — any imperialistic regime’s dream — an unchallengeable rule over everyone. Both the Skripal set-up and the Russiagate-Trump scam (and the cover-ups of both) were parts of that broader international operation.

*  *  *


Layer 1:

On 8 May 2018, David Allan Miller of the University of Bath in England headlined at Spinwatch, “Revealed: rebranded D-Notice committee issued two notices over Skripal affair”, and he posted, and then commented upon, a leaked email that the UK’s Defence and Security Media Advisory (DSMA) office had distributed to all of UK’s major news-media, which started:

From: DSMA Secretary <>

Date: 7 March 2018


To: DSMA Secretary <>

Private and Confidential: Not for Publication, Broadcast or for use on Social Media


The issue surrounding the identity of a former MI6 informer, Sergei Skripal …

You can see the full notice here. It instructs all of the major news-media to hide “the identifies [identities] of intelligence agency personnel associated with Sergei Skripal.” This, of course, would include the name of his MI6 handler, Skripal’s MI6 boss.

David Miller then went on to summarize the evidence:

On the evening of 6 March [2018] a Russian opposition news outlet Meduza, styling itself ‘Russia’s free press in exile’, published a long piece on Skripal in English. [Dr. Miller didn’t link to it, but it is dated “March 6, 2018” and opens “On March 4, a 66-year-old former colonel in Russia’s Military Intelligence Directorate was hospitalized in critical condition in Salisbury, England,” and that Meduza article can be seen here.] Citing a variety of online sources including in Russian, some from over a decade old, identifying Pablo Miller as the MI6 agent inside the Estonian embassy who had recruited Sergei Skripal. By the next afternoon, the notice [on 7 March] was issued to the mainstream media. The Telegraph was the first mainstream outlet to discuss – in discreet and decorous terminology – the connection between Skripal and a ‘security consultant’ who is ‘understood to have known him for some time’ and ‘is also based in Salisbury’. … The Telegraph reported that the ‘consultant’ worked at the same company (Orbis Business Intelligence) that compiled the controversial dossier on Donald Trump and Russia – paid for by the Clinton campaign and the Democratic National Convention. The consultant was, as we now know, Pablo Miller, who had ‘known’ Skripal in the specific sense that he was his MI6 handler. Some, such as Guardian journalist Luke Harding, have suggested that Miller never worked for Orbis, but this seems to be false. …

The notice helps to encourage the climate of anti-Russian hysteria implying that investigative reporting on this matter that might discuss British intelligence is in effect Russian propaganda. This is a nice illustration of David Leigh’s phrase from nearly 40 years ago: ‘the obverse of the secrecy coin is always propaganda’.

It is a standing rebuke to the notion that journalism should question power, that 15 senior media people should agree to sit on this censorship committee. As well as the BBC, ITV, ITN and Murdoch’s Sky News, representing broadcasters, there are a variety of representatives from the broadsheet and tabloid press, regional and Scottish newspapers and magazines and publishing – including two News UK and Harper Collins, (both owned by Murdoch) as well as Trinity Mirror, the Daily Mail and the Guardian. On the government side of the committee are the chair from the MoD and four intelligence connected representatives from the MoD (Dominic Wilson, Director General Security Policy), Foreign Office (Lewis Neal, Director for National Security), Home Office (Graeme Biggar, unspecified post in the OSCT) and Cabinet Office (Paddy McGuinness, Deputy National Security Adviser for Security, Intelligence, and Resilience).

The DSMA [Defence and Security Media Advisory] committee likes to cultivate the impression that it is a rather uninteresting committee that is, as a former vice chair of the committee (a journalist) put it, ‘is emphatically not censorship… but voluntary, responsible media restraint’. Then working at Sky News, that vice chair, Simon Bucks, is now CEO at the Services Sound and Vision Corporation, the broadcasting service which says it is ‘championing the Armed Forces’. Bucks also wrote [in the Guardianthat the DSMA committee is ‘the most mythologised and misunderstood institution in British media. … ‘Slapping a D-notice’ on something the establishment wanted suppressed has been the stuff of thrillers, spy stories and conspiracy theories for more than a century.”

This is a typical deception used regularly by defenders of the British system of censorship.

Layer 2:

This comes from Ludwig De Braeckeleer: “Salisbury Incident — UK Media silenced by D-Notices Over Skripal Affair” Posted on May 10, 2018 [two days after David Miller’s article, and adding context to it]

Quick Analysis

In the aftermath of the Skripal incident, the UK government moved quickly to ‘protect’ the identity of Sergei Skripal as well as the identity of his former MI6 handler Pablo Miller who happens to live near Salisbury.

On March 7, the first D-Notice was issued, but their names had already been revealed.

At the same time, a few journalists planted false information regarding Pablo Miller and Orbis, the private Intel company that became famous because of the infamous dossier Chris Steele compiled on Trump’s Russiagate.

On March 8, Gordon Corera tweeted that his sources were certain that no link exists between Skripal and Orbis or Chris Steele.

On the same day, Luke Harding suggested that Miller never worked for Orbis, which is obviously untrue. Pablo Miller had listed his employment by Orbis Business Intelligence on his LinkedIn profile.

So, this much is certain. The UK government has quickly moved to black out the identity of Pablo Miller and his connections to both Sergei Skripal and Orbis.

In 2017, a D-Notice was already issued against British journalists revealing the identity of the Trump’s Dossier author (Chris Steele).

Multiple British outlets ignored this advice and revealed his name anyway, including BBC News, The Daily Telegraph and The Guardian.

The use of a D-Notice is not a rare event. But it is not used very frequently either.

I believe that a couple of such notices have been issued annually on average in the UK over the last ten years. And we KNOW that at least three of these notices were issued in connection with the Skripal and Orbis Affair(s?). Stay tuned!


Revealed: rebranded D-Notice committee issued two notices over Skripal affair — SpinWatch

The DSMA notices can be found here:

DSMA notice 7 March 2018

DSMA notice 14 March 2018

Layer 3

On 19 March 2018, the anonymous “Moon of Alabama” blogger headlined “No Patients Have Experienced Symptoms Of Nerve Agent Poisoning In Salisbury” and was perhaps the first person to put it all together:

Is this third person the MI6 agent Pablo Miller who in 1995 recruited Skripal as British double agent. Miller who was also involved in handling the MI6 assets Boris Berezovski and Alexander Litvinenko. Pablo Miller who lives close to Sergej Skripal in Salisbury and is considered to be his friend? The same Pablo Miller who worked with former MI6 agent Christopher Steele’s Orbis Business Intelligence which created the ‘dirty dossier’ about Donald Trump? How deep were the Skripals involved in making up the fake stories in the anti-Trump dossier for which the Clinton campaign paid more than $168,000. Did the Skripals threaten to talk about the issue? Is that why the incident [the poisoning] happened?

Layer 4

On 5 July 2019, Aaron Maté issued his enormous study, “CrowdStrikeOut: Mueller’s Own Report Undercuts Its Core Russia-Meddling Claims”, which points out that:

There is also reason to question CrowdStrike’s impartiality. Its co-founder, Dmitri Alperovitch, is a nonresident senior fellow at the Atlantic Council, the preeminent Washington think tank [NATO’s PR agency, actually] that aggressively promotes a hawkish posture towards Russia. CrowdStrike executive Shawn Henry, who led the forensics team that ultimately blamed Russia for the DNC breach, previously served as assistant director at the FBI under Mueller.

And CrowdStrike was hired to perform the analysis of the DNC servers by Perkins Coie – the law firm that also was responsible for contracting Fusion GPS, the Washington, D.C.-based opposition research firm that produced the now discredited Steele dossier alleging salacious misconduct by Trump in Russia and his susceptibility to blackmail.

Layer 5

On 31 August 2017, Scott Ritter issued his “DUMBSTRUCK: a HomeFront Intelligence Report on how America was conned about the DNC hack”, which described how

the DNC prohibited the US Government from having access to the evidence, and instead went directly to the major ‘news’-media in order to (mis)inform the public what had happened:

At first the DNC tried to get the FBI to make the attribution call, figuring that it would garner more attention coming from the US government. But when the FBI wanted full access to the DNC server so that it could conduct a full forensic investigation, the DNC balked. Instead, after meeting with Alperovitch and Henry, the DNC and CrowdStrike devised a strategy to take the case to the public themselves. Alperovitch prepared a formal technical report that singled out the Russians for attribution. When it was ready, the DNC invited in a reporter from the Washington Post named Ellen Nakashima, who was given exclusive access to senior DNC and CrowdStrike personnel for an above-the-fold, front-page article. … The Post article, published on the morning of June 14, 2016, went viral, with nearly every major media outlet.

Layer 6

On 11 June 2019, Matt Kennard posted a long string of tweets:

Matt Kennard [abbreviated here]


Guardian’s deputy editor @paul__johnson joined state censorship D-Notice committee (run by MOD) after Snowden revelations in sop to British spooks. In board minutes, they thank him for being “instrumental in re-establishing links” between UK mil/intel and Guardian. Explains a lot

10:09 AM – 11 Jun 2019

Matt Kennard


Who was @carolecadwalla’s “highly placed contact with links to US intelligence” who fed her clear disinformation? (Mueller report makes clear Podesta/DNC leaks transmitted digitally). Since Snowden, intel agencies have used Guardian/Obs to launder their disinformation operations.

Matt Kennard


Guardian dep ed @paul__johnson joins D-Notice comm for 1st meeting at MOD in 2014. Air Vice-Marshal Vallance reports relationship w/ Guardian has “continued to strengthen”. Alongside Air Commodore Adams and Brigadier Dodds he’s now in “regular dialogues” w/ “Guardian journalists”

12 Jun 2019 


So: not only was it “Pablo Miller as the MI6 agent inside the Estonian embassy who had recruited Sergei Skripal,” but “In the aftermath of the Skripal incident, the UK government moved quickly to ‘protect’ the identity of Sergei Skripal as well as the identity of his former MI6 handler Pablo Miller who happens to live near Salisbury.” MI6 was covering its tracks. And, “At the same time, a few journalists planted false information regarding Pablo Miller and Orbis, the private Intel company that became famous because of the infamous dossier Chris Steele compiled on Trump’s Russiagate.” And, “Pablo Miller had listed his employment by Orbis Business Intelligence.” And, “Orbis Business Intelligence … compiled the controversial [MI6 Christopher Steeledossier on Donald Trump and Russia – paid for by the Clinton campaign and the Democratic National Convention [Democratic National Committee]. The consultant was, as we now know, Pablo Miller, who had ‘known’ Skripal in the specific sense that he was his MI6 handler.” And, “CrowdStrike was hired to perform the analysis of the DNC servers by Perkins Coie – the law firm that also was responsible for contracting Fusion GPS, the Washington, D.C.-based opposition research firm that produced the now discredited Steele dossier alleging salacious misconduct by Trump in Russia and his susceptibility to blackmail.” And, “At first the DNC tried to get the FBI to make the attribution call, figuring that it would garner more attention coming from the US government. But when the FBI wanted full access to the DNC server so that it could conduct a full forensic investigation, the DNC balked. Instead, after meeting with Alperovitch and Henry, the DNC and CrowdStrike devised a strategy to take the case to the public themselves.” And, “Since Snowden, intel agencies have used Guardian/Obs to launder their disinformation operations.”

Masterful. The Obama-Clinton DNC and MI6, and their hired private contractors, worked together to frame Russia for both the Skripal poisonings and the Trump victory.

And yet, key questions remain unanswered: “How deep were the Skripals involved in making up the fake stories in the anti-Trump dossier for which the Clinton campaign paid more than $168,000. Did the Skripals threaten to talk about the issue? Is that why the incident [their poisoning] happened?” There is the possibility that the Skripals’ poisoning was an inside job, by a contractor, for the UK and/or US Governments.

Not to mention other questions: Why are the Skripals still prohibited from speaking to the press and from answering questions in a court? After all, Boris Johnson, who is likely soon to be UK’s Prime Minister, lied, and repeatedly, in order to allege that UK’s Porton Down intelligence lab had identified Russia as the source of the poison: “Asked how the British government could be so sure Russia was behind the attack, Johnson deferred to ‘the people from Porton Down,’ who he said were ‘absolutely categorical.’” And here’s how corrupt he is.

But the historical background of this entire matter — both Skripal and Trump-Russiagate — is obvious: MI6 is Britain’s equivalent to America’s CIA. That was Obama’s CIA. This was entirely a MI6-CIA disinformation campaign, which was an extension from Obama’s (and the UK Government’s) participation in US President G.H.W. Bush’s decision, on 24 February 1990, to continue the Cold War until Russia becomes swept up in, controlled by the USAnd Britain’s Guardian served the Deep State as the core conduit for disinformation to the public on this particular operation (Russiagate-Trump — Obama’s operation to make irreversible Obama’s public restoration (most obvious in Ukraine) of the Russia-is-America’s-top-enemy meme), for and on behalf of the Deep State, so as to continue G.H.W. Bush’s Cold War, inside the US — never to reverse it, until ‘victory’ is achieved.

The “special relationship” between the US and UK (CIA and MI6) is obviously to assist each other in deceiving the other’s public. (Not only did MI6 participate in deceiving UK’s public to fear and despise Putin, but it was crucial in deceiving the US public that Trump was Putin’s stooge.)

On 21 March 2016, the Washington Post had headlined “Trump questions need for NATO, outlines noninterventionist foreign policy” and reported:

“I do think it’s a different world today, and I don’t think we should be nation-building anymore,” Trump said. “I think it’s proven not to work, and we have a different country than we did then. We have $19 trillion in debt. We’re sitting, probably, on a bubble. And it’s a bubble that if it breaks, it’s going to be very nasty. I just think we have to rebuild our country.”

He added: “I watched as we built schools in Iraq and they’re blown up. We build another one, we get blown up. We rebuild it three times and yet we can’t build a school in Brooklyn. We have no money for education because we can’t build in our own country. At what point do you say, ‘Hey, we have to take care of ourselves?’ So, I know the outer world exists and I’ll be very cognizant of that. But at the same time, our country is disintegrating, large sections of it, especially the inner cities.”

Five days later, the New York Times bannered “Transcript: Donald Trump Expounds on His Foreign Policy Views”and reported his saying, “NATO is obsolete” because it “was set up to talk about the Soviet Union. Now of course the Soviet Union doesn’t exist now.” How would the controlling owners of corporations such as Lockheed Martin — and extractive international US corporations such as ExxonMobil — feel about that? NATO has produced a significant portion of Lockheed’s sales, and of Exxon’s access to other nations’ natural resources. That sort of thing — enforcement and extension of empire — is NATO’s real purpose. And it didn’t end when the USSR’s communism, and Warsaw Pact, did in 1991.

The Skripal poisonings had occurred earlier that same month, March 2016. And the DNC went to the very same UK operators that UK did in order to frame Russia for Skripal’s poisoning — but now to place that Russian frame around Trump’s face. All of this was part of the US empire’s decision, which had been made on 24 February 1990, to conquer Russia.

In the timeline of events leading up to the DNC’s hiring of its investigators, we also have this, in 2016,

29 April: The DNC discovers the penetration of its servers by unknown hackers. An emergency meeting is calledbetween Debbie Wasserman-Schultz (DNC Chief Executive), Amy Dacey (DNC Technology Director), Andrew Brown, and Michael Sussmann, a lawyer for Perkins Coie. Sussmann is a former federal prosecutor for the DOJ whose expertise is computer crime. …

4 May: Five days after first discovering the server penetration at the DNC, Michael Sussmann – of Perkins Coie – finally calls CrowdStrike to arrange for analysis of the problem.

In other words: Sussman wanted to privatize the ‘investigation’ instead of to hand to the FBI control over it, which would have given the FBI subpoena-power to require the DNC to provide to the FBI access to their computers — the actual evidence which was in their posession on their end of the case. Even the Special Counsel, Robwrt Miller, had no access to that crucial evidence.

Furthermore, Aaron Maté’s painstakingly thorough analysis of the entire Mueller Report, on July 5th, showed “CrowdStrikeOut: Mueller’s Own Report Undercuts Its Core Russia-Meddling Claims”; and, so, even regarding the allegations that Mueller makes against Russia (not merely regarding whether Trump was colluding with Russia), Mueller’s Report was trash — extremely unreliable and untrustworthy. Mueller has a long history as being a Deep State agent.

And through all of this has been the US and UK Governments’ imprisoning-without-trial Julian Assange — for many years including the part that was spent at the Ecuadorean Embassy — and never even negotiating with Assange for him to answer questions under oath such as “Did that information come to you physically via a thumb-drive or instead purely by electronic transmission?” “Did Craig Murray bring it to You?” They’d rather kill Assange or keep him incommunicado in prison for life, than to do that. Why? And Trump, himself, is part of this, no less than Obama was. Obviously, both Presidents serve the same Deep State (even though they serve different billionaires in it).

This, at least, is a credible scenario. There is no evidence for the PR’d one, regarding either Skripal or Russiagate-Trump. There are accusations, but no case, for those.

*  *  *

NOTE: In the current hyper-partisan American political climate, when a vast majority of the supporters of each of the two Parties hates the opposite Party so much as to be closed-minded - blinded to the reality of their ownParty’s evilness, and to its incessant lying and cover-ups - I should make clear that there is nothing in this article that is, at all, supportive toward either Party. My personal view is that, ever since at least 1981, only Deep State controlled people have lived in the US White House and controlled Congress. As a group, they have perpetrated incalculable harm (such as this) to the entire world. Their only masters have been America’s billionaires. America certainly is a dictatorship, no democracy — it represents only its hundreds of billionaires and their millions of agents, no public at all. The two Parties represent the two factions into which America’s aristocracy have divided themselves. Neither represents the public. Each represents only a faction of America’s billionaires. A democracy cannot consist merely of contending factions of the aristocracy. That’s not a democracy. It’s like almost all other dictatorships throughout history. But the vast majority of Americans refuse even to consider this scientifically proven fact, that America is a dictatorship, not a democracy. For example: recently, a Democratic Party propaganda site, the Daily Beast, headlined “Mueller Missed the Crime: Trump’s Campaign Coordinated With Russia”, and the law-professor who wrote it ignored the much deeper criticisms that Maté’s article leveled against the Mueller Report. A prominent Democratic Party propaganda site continues, even now, “The Moscow Project” about “Trump’s collusion with Russia.” Closed-minded people are simply closed-minded — and that’s the vast majority. They’re open only to ‘information’ that confirms their prejudices. This widespread closed-mindedness is the Deep State’s biggest protector. The manufacture of consent is based upon it. Being open-minded doesn’t mean being gullible — a fool, manipulable. Being closed-minded does. Most people aren’t even aware of that basic epistemological-psychological fact. It’s the reason why both among Democrats and among Republicans, the vast majority still trust their Party, even after all of the blatant and consistent lying of the US Government at least since 9/11. Any Government with a track-record like this, warrants zero trust, and gets that from any intelligent citizen.

Published:7/16/2019 1:04:18 AM
[Markets] Ebola-Stricken Man Takes Bus To DRC Travel Hub With 2 Million Residents

The Congolese health ministry announced that a pastor infected with Ebola took a bus to the city of Goma late Sunday, the first time the virus has spread to the major travel hub and home to more than two million people. 

The man, traveling from Butembo, was quickly identified and transported to an Ebola treatment center, while authorities say that they have tracked down the other 18 passengers aboard the bus and would vaccinate them on Monday, according to the Washington Post

"Because of the speed with which the patient was identified and isolated, and the identification of all the other bus passengers coming from Butembo, the risk of it spreading in the rest of the city of Goma is small," the ministry said in a statement. 

The official statement was echoed by WHO director-general Dr. Tedros Adhanom Ghebreyesus, who said "Goma is a city of two million people, near the border with Rwanda, and is a gateway to the region and the world," adding "We are confident in the measures we are put in place and hope that we will see no further transmission of Ebola in Goma." 

"Nevertheless, we cannot be too careful." 

The outbreak has killed 1,665 people as of Monday, while nearly 700 have survived the virus, which causes high fevers and internal bleeding. Days with dozens of new cases are common, despite a massive public health intervention across the affected area. 

Health workers worry that some cases — if not whole transmission chains — are in places that are inaccessible because of poor infrastructure or insecurity, making the extent of the outbreak hard to fully measure.

The area where the outbreak is taking place is also home to one of Congo’s most protracted and violent conflicts — a patchwork of ethnic militias, vigilantes and government-aligned forces.

Fighting has at times targeted the Ebola response, hampering it and leading to spurts of new cases. Near the outbreak’s epicenter in the city of Beni on Monday, two health workers were killed by unknown assailants. Tedros Ghebreyesus, the WHO director general, said there have been almost 200 attacks on health workers, killing seven, since January. -Washington Post

As the Post points out, the virus is now present in two cities with populations exceeding one million people - Butembo being the other. The current outbreak is the second-worst on record, after the 2013-2016 epidemic which killed 11,300 in West Africa. 

Published:7/16/2019 12:12:40 AM
[Markets] Key Words: Trump is ‘a racist president,’ George Conway says “But Sunday left no doubt. Naivete, resentment and outright racism, roiled in a toxic mix, have given us a racist president.”
Published:7/15/2019 11:13:06 PM
[Markets] A Sultan Shines In The Court Of The Dragon King

Authored by Pepe Escobar via The Saker blog,

The graphic image of Turkey pivoting away from NATO towards the Russia-China strategic partnership was provided, in more ways than one, by Turkish President Tayyip Erdogan visiting Chinese President Xi Jinping in Beijing right after the G20 in Osaka.

BEIJING, CHINA – JULY 02: President of Turkey, Recep Tayyip Erdogan (R) and Chinese President Xi Jinping (L) walk past the honor guards during an official welcoming ceremony at Great Hall of the People in Beijing, China on July 02, 2019. Volkan Furuncu / Anadolu Agency

Turkey is a key hub in the emerging New Silk Roads, or Belt and Road Initiative. Erdogan is a master at selling Turkey as the ultimate East-West crossroads. He has also expressed much interest in joining the Shanghai Cooperation Organization (SCO), led by Russia-China, whose annual summit took place in Bishkek a few days before Osaka.

In parallel, against hell and high water – from threats of sanctions by the US Congress to NATO warnings – Erdogan never budged from Ankara’s decision to buy Russian S-400 defense missile systems, a $2.5-billion contract according to Rostec’s Sergei Chemezov.

The S-400s start to be shipped to Turkey as early as this week. According to Turkish Minister of Defense Hulusi Akar, their deployment should start by October. Much to Washington’s ire, Turkey is the first NATO member state to buy S-400s.

Xi, as he welcomed Erdogan in Beijing, stressed the message he crafted together with Putin in their previous meetings in St Petersburg, Bishkek and Osaka: China and Turkey should “uphold a multilateral world order with the United Nations at its core, a system based on international law.”

Erdogan, for his part, turned up the charm – from publishing an op-ed in the Global Times extolling a common vision of the future to laying it out in some detail. His target is to consolidate Chinese investment in multiple areas in Turkey, directly or indirectly related to Belt and Road.

Addressing the extremely sensitive Uighur dossier head on, Erdogan deftly executed a pirouette. He eschewed accusations from his own Foreign Ministry that “torture and political brainwashing” were practiced in Uighur detention camps and would rather comment that Uighurs “live happily” in China. “It is a fact that the peoples of China’s Xinjiang region live happily in China’s development and prosperity. Turkey does not permit any person to incite disharmony in the Turkey-China relationship.”

This is even more startling considering that Erdogan himself, in the past decade, had accused Beijing of genocide. And in a famous 2015 case, hundreds of Uighurs about to be deported from Thailand back to China ended up, after much fanfare, being resettled in Turkey.

New geopolitical caravan

Erdogan seems to have finally realized that the New Silk Roads are the 2.0 digital version of the Ancient Silk Roads whose caravans linked the Middle Kingdom, via trade, to multiple lands of Islam – from Indonesia to Turkey and from Iran to Pakistan.

Before the 16th century, the main line of communication across Eurasia was not maritime, but the chain of steppes and deserts from Sahara to Mongolia, as Arnold Toynbee wonderfully observed. Walking the line we would find merchants, missionaries, travelers, scholars, all the way to Turko-Mongols from Central Asia migrating to the Middle East and the Mediterranean. They all formed the stuff of interconnection and cultural exchange between Europe and Asia – way beyond geographical discontinuity.

Arguably Erdogan is now able to read the new tea leaves. The Russia-China strategic partnership – directly involved in linking Belt and Road with the Eurasia Economic Union and also the International North-South Transportation Corridor – considers Turkey and Iran as absolutely indispensable key hubs for the ongoing, multi-layered Eurasia integration process.

A new Turkey-Iran-Qatar geopolitical and economic axis is slowly but surely evolving in Southwest Asia, ever more linked to Russia-China. The thrust is Eurasia integration, visible for instance via a frenzy of railroad building designed to link the New Silk Roads, and the Russia-Iran transportation corridor, to the Eastern Mediterranean and the Red Sea and, eastwards, the Iran-Pakistan corridor to the China-Pakistan Economic Corridor, one of Belt and Road’s highlights.

This is all being supported by interlocking transportation cooperation agreements involving Turkey-Iran-Qatar and Iran-Iraq-Syria.

The end result not only consolidates Iran as a key Belt and Road connectivity hub and China’s strategic partner, but also by contiguity Turkey – the bridge to Europe.

As Xinjiang is the key hub in Western China connecting to multiple Belt and Road corridors, Erdogan had to find a middle ground – in the process minimizing, to a great extent, waves of disinformation and Western-peddled Sinophobia. Applying Xi Jinping thought, one would say Erdogan opted for privileging cultural understanding and people-to-people exchanges over an ideological battle.

The flags of China and Turkey flutter in Beijing during Erdogan’s visit to China on July 2. Photo: Wang Xin/ ImagineChina / AFP

Ready to mediate

In conjunction with his success at the court of the Dragon King, Erdogan now feels emboldened enough to offer his services as mediator between Tehran and the Trump administration – picking up on a suggestion he made to Japanese Prime Minister Shinzo Abe at the G20.

Erdogan would not have made that offer if it had not been discussed previously with Russia and China – which, crucially, are member signatories of the Iran nuclear deal, or Joint Comprehensive Plan Of Action (JCPOA).

It’s easy to see how Russia and China should consider Turkey the perfect mediator: a neighbor of Iran, the proverbial bridge between East and West, and a NATO member. Turkey is certainly much more representative than the EU-3 (France, UK, Germany).

Trump seems to want – or at least gives the impression of imposing – a JCPOA 2.0, without an Obama signature. The Russia-China partnership could easily call his bluff, after clearing it with Tehran, by offering a new negotiating table including Turkey. Even if the ineffective – in every sense – EU-3 remained, there would be real counterbalance in the form of Russia, China and Turkey.

Out of all these important moves in the geopolitical chessboard, one motivation stands out among top players: Eurasian integration cannot significantly progress without challenging the Trumpian sanction obsession.

Published:7/15/2019 11:13:06 PM
[Markets] GLOBAL MARKETS-Asian shares inch up as cautious investors await U.S. data, earnings Major Asian equity indicators nudged higher on Monday as investors awaited U.S. retail sales data and corporate earnings to gauge the health of the world's biggest economy, with markets remaining focused on a likely U.S. rate cut this month. China's blue-chip CSI300 index was 0.4% lower. "A U.S. rate cut should make it easier for central banks in Asia to ease their policies, boosting domestic demand in the region," said Yukino Yamada, senior strategist at Daiwa Securities. Published:7/15/2019 10:33:41 PM
[Markets] More Than A Precious Metal: How Platinum Improves Our World

Authored by Nicholas LePan via,

Within the hierarchy of precious metals, there is only one metal that could arguably stand above gold, and that is platinum.

This is due in large part to the metal’s rarity throughout history. Its earliest known use was on the Casket of Thebes in Ancient Egypt. South American Indigenous populations also used platinum for jewelry.

But platinum’s value goes beyond being a precious metal—its specific properties have made it indispensable to the modern economy, improving both the health and the wealth of the world.

Platinum’s Industrial Applications

Today’s infographic comes to us from the World Platinum Investment Council and outlines specifically how specific platinum’s properties are used in the modern economy.

There are four primary uses of platinum aside from investment demand.

  1. Manufacturing

  2. Healthcare

  3. Environmental

  4. Renewable Power

Let’s look into all of these cases a little deeper.

1. Manufacturing

Platinum’s versatility in manufacturing has quadrupled its demand since 1980. Its catalytic properties are critical to the production of fertilizers, and more specifically, platinum’s efficiency in converting ammonia to nitric acid paved the way for large-scale fertilizer production.

Around 90% of the nitrogen produced using platinum catalysts is used to make 190 million tonnes of fertilizers each year.

2. Healthcare

Platinum is a biologically compatible metal because it is both non-toxic and stable. It does not react negatively with or affect body tissues, which makes it an ideal material for medical tools. Platinum’s use in medicine dates back to 1874 for its use in arthroscopic tools. Its stability also makes it ideal for pacemakers and hearing assist devices today.

While non-threatening to healthy cells, platinum compounds known as cisplatin can damage cancer cells and treat testicular, ovarian, lung, bladder, and other cancers. Given these crucial applications, the World Health Organization has put cisplatin on its List of Essential Medicines.

3. Environmental

Platinum is a critical material in the fight for cleaner air and in the construction of energy-efficient fiberglass. It is used in catalytic converters in exhaust systems of gas-powered vehicles, reducing the emission of harmful pollutants. In addition, platinum is used in the manufacturing process of high-end glass that improves the heating and cooling efficiency of homes and offices.

4. Renewable Power

Platinum’s catalytic properties make it critical to cleaning up air pollution, producing renewable hydrogen, and unleashing its power in fuel cells. Electrolysis, which can turn water into hydrogen and oxygen, works best when passing an electric current through platinum electrodes.

Fuel cells are set to power a new generation of emission-free vehicles, and platinum membranes are used inside of them as well.

More Than Precious

More than a precious metal, platinum has many applications that make it a critical material for the modern economy in years to come.

Published:7/15/2019 10:33:41 PM
[Markets] Zucked Again! Facebook's Founder Admits To Interfering In Political Speech

Authored by Mac Slavo via,

Censorship is alive and well! Facebook’s founder Mark Zuckerberg admitted that the social media giant actively interfered with political speech leading up to the Irish abortion referendum.  Facebook systematically deleted posts it didn’t like while promoting those it did.

During a recent talk, Zuckerberg admitted that the social media network banned a number of pro-life advertisements ahead of the Irish abortion referendum. According toPJ Media, during a recent interview at this year’s Aspen Ideas Festival, Zuckerberg began to explain how the social media firm is attempting to work with the governments of other countries to determine what political speech should be allowed on the site. Zuckerberg gave an example of Facebook’s interaction with the Irish government ahead of a 2018 referendum on the legalization of abortion in the country.

Big Tech has officially taken sides, and they’ve sided with tyranny. According to Breitbart News, Zuckerberg explained that American pro-life groups wanted to run Facebook ads targeted towards Irish citizens. Not wanting to allow free speech and buckling like a slave to the government, Facebook reached out to the Irish “authorities” to determine whether or not the ads should be allowed at the time. Zuckerberg stated: “Their response at the time was, ‘we don’t currently have a law, so you need to make whatever decision you want to make.’”

So Facebook’s CEO “Zucked” pro-lifers. “We ended up not allowing the ads,” Zuckerberg stated. Pro-life activist Lila Rose commented on how Silicon Valley tech executives have reacted towards the issue of abortion in a tweet which can be seen below:

The narrative has been chosen and the government and their accomplices in Big Tech and Big Pharma will decide what you hear, read, and see. Almost everything is now manipulated.  But it isn’t just Facebook that’s teamed up to control the narrative. Twitter, Google, and YouTube are also complicit.

Violent Antifa Accounts Don’t Violate Twitter’s Rules: Conservatives Banned And Censored

Google Manipulated YouTube Search Results To Program Users’ Behavior

People are being fed their own slavery and attaching their own chains at this point. Regardless of what side of the abortion debate you come down on, squashing speech you don’t like from the other side certainly isn’t helping make you look like you’re “right.” It makes you look like you’re hiding information you don’t want anyone to think about because you’ve already made the decision for them. Just like the “Russian meddling” situation: who cares what others say? Are people really so afraid of information that disagrees with their already cemented bias that they can’t handle free speech?

Whether Russia created ads to influence an election or not, and whether pro-life groups created ads to influence an election or not, it’s not Zuckerberg’s job to dictate what information people see. Free speech is the enemy to misinformation and that’s likely why authoritarians are actively trying to kill it.

Published:7/15/2019 10:09:12 PM
[Markets] Asia Markets: Asian markets little changed as investors await earnings reports Asian shares were little changed and mixed in quiet trading Tuesday amid a lack of fresh market-moving news as investors looked ahead to earnings season and Wall Street again closed at record highs.
Published:7/15/2019 10:09:12 PM
[Markets] The Wall Street Journal: Prologis buying Industrial Property Trust, a rival REIT, in $3.9 billion deal Prologis Inc. has agreed to buy real-estate investment trust and warehouse owner Industrial Property Trust in a deal valued at $3.99 billion including debt, the company said Monday.
Published:7/15/2019 9:34:33 PM
[Markets] Jon Corzine Accepts Regulatory Ban As Part Of His $600 Million Wall Street "Comeback"

The SEC is making sure that the next time Jon Corzine takes to Wall Street, he will be restricted from wagering his own capital separately from his investor's money, according to Bloomberg. This was the type of trading that sunk his prior firm, MF Global Holdings Limited, just eight years ago.

Despite this, many are going to be asking an obvious question: why is he allowed to return to Wall Street to begin with?

Corzine was banned from the futures industry when his firm MF Global went bankrupt and despite his new fund, JDC–JSC, not generating much buzz, it still launched early last year in New York.

Corzine was, of course, a US senator and governor of New Jersey and has pitched his new fund as a way to leverage his experience on Wall Street to anticipate how Donald Trump's policies would affect markets. In other words, he'll probably just be buying S&P futures and SPY ETFs.

He set out with the goal of raising $100 million to $300 million during his first year of trading, but the fund had only taken about $53 million from US investors as of early February. This number jumped to over $600 million in late March, but could be a result of the firm taking on leverage – just what he needs.

Since the firm's assets exceeded $150 million, it was forced to register with the SEC. Even though most applications are approved automatically, some managers with a disciplinary record can face restrictions. One of Corzine's lawyers worked with the SEC to develop these new restrictions to improve the likelihood that the fund's registration would be granted.

In a proposed agreement with the SEC, Corzine can contribute to his fund but is prohibited from trading outside of it. The firm must also adopt new procedures to protect customer cash and hire an independent compliance consultant.

Jason Scharfman of Corgentum Consulting said:

"It’s more of a burden, but it’s not insurmountable for Corzine. There are going to be more eyes on him, but as a result, he will be more careful and more insulated.”

Corzine famously crashed and burned at MF Global after making $6 billion in proprietary bets on European sovereign debt. The firm was then hit by a cash crunch tied to the trades and $1 billion in client funds went temporarily missing. The fund was then forced to file for bankruptcy and the Commodity Futures Trading Commission later filed a lawsuit against the fund and Corzine.

Corzine settled allegations in 2017 by paying a paltry $5 million penalty and consenting to a lifetime ban from the futures industry.

The CFTC didn’t block him from other parts of Wall Street, so he was able to start this new hedge fund. Now, he’s trying to win SEC approval approval to expand it.

"If Corzine wants people to give him money, he will do what he has to do to make sure that happens,” Scharfman concluded.

Published:7/15/2019 9:34:33 PM
[Markets] Asian shares tick up, U.S. data, earnings in focus ahead of Fed Asian shares inched up on Tuesday as traders awaited U.S. retail sales data and more corporate earnings to gauge the health of the world's biggest economy, with markets remaining focused on a likely U.S. rate cut by the end of the month. U.S. data on Tuesday is expected to show that retail sales gained 0.1% in June, according to the median estimate of economists polled by Reuters. Signs of trade tensions weighing on corporate profits and the fading impact of tax cuts would underscore the U.S. Federal Reserve's concerns over slowing business investment, he said. Published:7/15/2019 9:04:14 PM
[Markets] "Trucking Apocalypse" Continues As 40-Year-Old Cali Trucking Company Shuts Down "Effective Immediately"

40 year old California trucking outlet Timmerman Starlite Trucking, Inc. is the latest victim in the "trucking apocalypse" and announced that it would be shutting down effective immediately, according to FreightWaves

30 employees are expected to lose their jobs as a result. The company is based in a mid sized city about 100 miles east of San Francisco and had a fleet of 30 trucks, 150 trailers and 28 drivers. 

The company's owner cited "a tough freight market and environmental regulations" as reasons for the shut down. The company announced the shutdown on its Facebook page. 

Owner Colby Bell said:

“We tried to provide a healthy work environment for our employees and give them the best wages and benefits we could. But in the end, the rates that were available did not support the cost structure needed to compensate our employees appropriately.”

Carriers have also been hit with rising costs and operational pressure over the past 2 years. Wage increases for drivers, combined with insurance renewal rates and more expensive equipment have made profitability a challenge. 

Additionally, fuel rates have moved higher:

Fuel expenses, particularly in a tax- and regulation-loving state like California have also been way up in the past three years. Since Feb 2016, retail diesel prices in the state have increased from $2.29/gallon to $3.95/gallon, roughly equivalent to $.25 per mile. At $1.49 per mile, this will cost a carrier 17% of their operating profits if they aren’t on a fuel-surcharge program.

Larger carriers are able to recover most, if not all of this in the form of a fuel surcharge. Unfortunately, Starlite was likely too small to have much leverage of their shipper relationships to do so.

Recall, just days ago we documented  that regional truck carrier LME "suddenly and abruptly" shut its doors. 

The company is a regional carrier based in Minnesota that operated throughout the Midwest. The company had terminals in 30 locations across the U.S. and through interline agreements services all of North America. It also worked with major companies like 3M, John Deere and Toro. 

The company reportedly included "over 600 men and women" and has been listed as having 382 power units and 1,228 trailers, with 424 truck drivers. 

Published:7/15/2019 9:04:14 PM
[Markets] Global Markets: Asian shares tick up, U.S. data, earnings in focus ahead of Fed Asian shares inched up on Tuesday as traders awaited U.S. retail sales data and more corporate earnings to gauge the health of the world's biggest economy, with markets remaining focussed on a likely U.S. rate cut by the end of the month. U.S. data on Tuesday is expected to show that retail sales gained 0.1% in June, according to the median estimate of economists polled by Reuters. Signs of trade tensions weighing on corporate profits and the fading impact of tax cuts would underscore the U.S. Federal Reserve's concerns over slowing business investment, he said. Published:7/15/2019 8:34:45 PM
[Markets] "Democratic Socialism" Explained

Via The Babylon Bee,

You can’t go into a Whole Foods or indie record store without hearing somebody talk about it: democratic socialism.

Is it a radical new idea that we should try out in our nation, or is it an old idea with the word “democratic” stapled to the front to make it sound more palatable?

Find out in this handy explainer from your friends at The Babylon Bee:

What is Democratic Socialism?

Democratic Socialism is a growing movement in America promising every citizen the most basic human rights, including but not limited to free healthcare, a government-guaranteed job making at least $15 per hour, free college tuition, guaranteed housing, broadband internet access, and cage-free vegan lattes.

How would the government pay for all of that?

By rightfully appropriating money from terrible, evil, oppressive, hardworking, enterprising citizens who have earned wealth via the dreaded free market economy that has led to unprecedented human flourishing. Governments are known for being the most efficient spenders of money, and so surely would do an excellent job as stewards of your wealth—err, we mean, the public’s wealth.

Isn’t it immoral to take most of the money people earn?

No—actually, it’s the right thing to do. People with money only got that money because of inherent privilege, racism, sexism, bigotry, homophobia, transphobia, patriarchy, and all kinds of other unfair power structures and phobias. You know what, we’re a little concerned with all the questions you’re asking here. It sounds like someone needs to spend a little more time in a democratic re-education loyalty center! KILL THE KULAKS!

How does Democratic Socialism differ from just “Socialism”?

It has the word “Democratic” in front of it, you see, which means it is achieved by promoting identity politics, stoking class warfare, and cranking that entitlement mentality up to 11, instead of literal violent overthrow of the government. Besides, voting for the government to seize people’s wealth is totally different from the government deciding to do so on their own, right? Err… uh… DID WE MENTION YOU GET FREE STUFF?? Say it with us: Socialism good, Democratic Socialism better!

It seems like if you try to run the numbers, there’s just no way Democratic Socialism is a fiscally feasible form of government.

“Run the numbers”? “Fiscally feasible”? Have you been paying attention, like, at all? Do you want free money, or are you part of the problem? YOU GET FREE MONEY, AND YOU GET FREE MONEY - ERRYBODY GETS FREE MONEEEEEEEEEEEY!!!

Is there an example of this form of government working out well in the world?

YES! Venezuela is a socialist paradise, having achieved an almost totally equal distribution of hunger and lack of basic necessities. With features like 46,000% inflation, mass starvation, empty grocery stores, and total economic collapse, it’s a great real-world example of a socialist utopia! THAT’S HOW YOU STICK IT TO THE CORPORATE OLIGARCHY, BABY! OWN THE CAPITALISTS WITH THIS ONE GREAT TRICK!

As you can see, the centralization of wealth and power to an elite few in government is perfectly in line with the ideas America was founded on. Now let’s get out there and democratically seize the means of production, comrades!

*  *  *

Readers of the Bee, if just a small fraction of our visitors became subscribers, we'd have enough funding to stop running ads and reduce our dependence on big tech companies like Facebook and Google. Will you partner with us to make this possible?

Published:7/15/2019 8:34:44 PM
[Markets] The New York Post: Democratic congresswomen fire back at Trump The four freshman congresswomen targeted by President Donald Trump in a series of tweets and comments saying they should leave the country if they don’t like it retaliated Monday by decrying the commander-in-chief’s hardline border policies and history of racial controversies.
Published:7/15/2019 8:05:17 PM
[Markets] The Number Of Global Earthquakes Is 3 Times Above Normal

Authored by Michael Snyder via The Economic Collapse blog,

Within the last 48 hours we have seen large earthquakes going off like firecrackers all along the Ring of Fire.  As you will see below, a magnitude 6.1 quake just hit Japan, a magnitude 6.6 quake just hit Australia and a magnitude 7.3 earthquake just hit Indonesia.  And of course all of this comes just about a week after southern California was hit by the two largest earthquakes that it has experienced in more than two decades. 

So is all of this shaking unusual?  Just a few moments ago, I pulled up the most recent data from Earthquake Track, and what I discovered is more than just a little bit alarming.  Looking at the entire globe, we have averaged 193 earthquakes of magnitude 1.5 or greater per day so far in 2019.  That is very high, but it pales in comparison to what we have witnessed over the last week.  Within the last seven days, our planet has experienced an average of more than 677 earthquakes of magnitude 1.5 or greater per day.  That means that the number of global earthquakes right now is more than 3 times above normal.

And the number of very large earthquakes is at a frighteningly high level as well.  According to the USGS, there have been 121 earthquakes of at least magnitude 4.5 around the world within the last seven days, and that includes the magnitude 6.1 earthquake that just hit Japan.

Incredibly, that quake in Japan brought the number of global earthquakes of magnitude 6.0 or greater that we have seen so far this year up to a grand total of 84.  The following comes from the Big Wobble

Last nights quake brings the total of major quakes (mag 6+) to 84, incredibly all but 7 of them striking the Pacific Ring Of Fire.

The last 38 major quakes this year, going back to the 3rd of May have occurred along the Pacific Ring Of Fire.

But on Sunday we had to add two more to that total.

The first actually tied the record for the largest earthquake that western Australia has ever seen

The equal-largest earthquake recorded in Australia has hit off the Kimberley coast, shaking items off shelves and stunning local residents who had never felt a tremor before.

The 6.6 magnitude undersea quake struck at 3.39pm AEST on Sunday between Port Hedland and Broome, GeoScience Australia reported.

The second was even larger.  When a magnitude 7.3 earthquake hit Indonesia on Sunday, it sparked tsunami fears and made headlines all over the globe

A terrifying 7.3-magnitude earthquake has sparked panic after it rocked the remote Maluku islands in eastern Indonesia today.

Scared residents were seen fleeing through the streets and heading for high ground, though no tsunami warning was issued after the land-based quake struck.

None of this is “normal”.  As I keep warning my readers, we have entered a time of tremendous global instability, and the U.S. is certainly not going to be exempt.

In fact, we just witnessed a magnitude 4.0 earthquake in Montana.  The following comes from Ricky Scaparo

According to reports from the USGS, A 4.0 earthquake has rattled Manhattan, Montana. This earthquake follows the string of quakes that have rattled the globe over the past few weeks producing powerful earthquakes in Southern California and rattling Seattle, Washington. We will give you more information as we receive it.

The magnitude 4.6 earthquake in Seattle that he mentioned definitely got a lot of attention when it struck very early on Friday morning.  According to a USGS geophysicist, that quake was “widely felt throughout the Seattle area”…

A magnitude 4.6 earthquake shook Seattle and the Puget Sound region just before 3 a.m. Friday, according to the United States Geological Survey.

“It’s been widely felt throughout the Seattle area,” said Paul Caruso, a USGS geophysicist.

I know that California is receiving most of the attention right now, but we definitely need to keep a close eye on the Northwest, because they are definitely overdue for a “Big One” of their own and there are several volcanoes in the region that could literally go off at any time.

Meanwhile, the shaking in southern California simply will not stop.  According to Cal Tech, there have been 10,303 earthquakes of all magnitudes in California and Nevada within the last seven days.

In case you are wondering, that is not “normal” either.

The magnitude 7.1 earthquake that we witnessed back on July 5th did not cause an enormous amount of damage because it happened in a very remote location.

But we should definitely not take that quake lightly, because it was extremely powerful.  According to the Los Angeles Times, it actually “packed the energy of 45 nuclear bombs”…

When the magnitude 7.1 earthquake ruptured the earth in the Mojave Desert, it packed the energy of 45 nuclear bombs of the type that fell on Hiroshima.

Can you imagine if such a quake had happened in downtown Los Angeles?

And if a magnitude 9.0 earthquake were to hit southern California someday, it would be 707 times more powerful than the magnitude 7.1 earthquake that we just witnessed.

Hopefully such a quake is still a long way off, but we have witnessed renewed shaking in the region within the last 24 hours.  The following comes from the Express

California has since experienced a number of aftershocks with a seismic swarm hitting southern California in the past 24 hours.

Over the course of the last 24 hours, there have been 762 earthquakes in California, 29 earthquakes were over a magnitude of 2.5.

Unfortunately, this is not just a localized phenomenon.

As I showed at the beginning of this article, the number of global earthquakes is three times above normal right now.

Our entire planet is being greatly shaken, and many believe that what we have witnessed so far is just the beginning.

Published:7/15/2019 8:05:16 PM
[Markets] "The Air Force Will Protect Its Assets": Govt Warns Facebook Group Against Planned Raid Of 'Area 51'

Recall, two days ago we reported that more than 700,000 Facebook users had "jokingly" signed up to a group that was planning to storm Area 51 in September. The U.S. Air Force site is often the center of many alien conspiracy theories and the "joke" idea was an attempt to "see them aliens".

It looks as though the government now wants to make sure that those behind the "joke" know it is being taken very seriously. 

According to CNN, a spokesperson for the U.S. Air Force said: "[Area 51] is an open training range for the U.S. Air Force, and we would discourage anyone from trying to come into the area where we train American armed forces."

The statement then includes the ominous sounding sentence:

"The U.S. Air Force always stands ready to protect America and its assets."

According to TMZ, authorities have said that "anyone who commits a crime in or around Area 51 -- including trespassing -- will be arrested and prosecuted to the fullest extent of local and military law."

In addition, "local cops will work together to curb any attempts to even wander near Area 51 property," the statement says. 

"If we [N]aruto run, we can move faster than their bullets. Lets see them aliens," the Facebook group for the event on Facebook says. 

The plan was supposedly to meet at a nearby “tourist attraction” where those storming the area would “coordinate [their] entry.”

There's been more than 21,000 posts on the event's page, with some users posting ideas about formations and "game plans" on how the raid would take place. 

One user even wrote a disclaimer:

Hello US government, this is a joke, and I do not actually intend to go ahead with this plan. I just thought it would be funny and get me some thumbsy uppies on the internet. I'm not responsible if people decide to actually storm area 51."

"They can't stop all of us," the event page says.  

It sounds like the government begs to differ. 

Published:7/15/2019 7:32:54 PM
[Markets] 'Racist Disgrace': Susan Rice Slams Chinese Diplomat Who Says Black Families Ruin White Neighborhoods

Former US Ambassador and Netflix board member Susan Rice called a senior Chinese diplomat a "racist disgrace" in a heated Twitter spat on Sunday. 

In defending China's mass detention of Muslims via a series of now-deleted tweets, Islamabad-based diplomat Lijian Zhao first noted that "37 countries" have sent a joint letter to the UN supporting China's position, while "22 countries" - none of which are Muslim, are against it. 

What steamed Rice, however, was Zhao's assertion that "If you're in Washington, D.C., you know the white never go to the SW area, because it's an area for the black & Latin," adding "There's a saying ‘black in & white out’, which means that as long as a black family enters, white people will quit, & price of the apartment will fall sharply."

Rice snapped back, "You are a racist disgrace. And shockingly ignorant too." 

"Ambassador Cui, I expect better of you and your team. Please do the right thing and send him home.

Zhao added about 90 minutes later "The population of Southeast is predominantly black. Racism in US has existed since the colonial era. Racial stratification continues to occur in employment, housing, education, lending, & government."

Responding directly to Rice, Zhao said "You are such a disgrace, too. And shockingly ignorant, too. I am based in Islamabad. Truth hurts. I am simply telling the truth." 

Bloomberg reports that when asked about the Twitter dispute on Monday, China's foreign ministry spokesman Geng Shuang said: "I don’t know the specific situation, but that "we resolutely oppose the interference of the U.S. and individual Western countries in interfering in China’s internal affairs with the Xinjiang issue."

Published:7/15/2019 7:04:16 PM
[Markets] Japan's Old Age Colony: A Demographic/Fiscal Death Trap

Authored by Selahattin Imrohoroglu, Sagiri Kitao, and Tomoaki Yamada via,

Japan leads the advanced economies in the speed and magnitude of demographic ageing and has the highest debt-to-output ratio. Rising social insurance expenditures are projected to far outpace revenues and to create a fiscal burden. This column presents sobering projections for Japanese government debt in the absence of reform, but argues that a combination of policies, including policies to encourage greater labour participation by women and to enhance productivity, could achieve sustainability.

Japan is ageing fast. Its dependency ratio, defined as the ratio of the population aged 65 and above to the population aged 20-64, was 48% in 2015. It is predicted to rise to 80% by the early 2050s and to stay at around 80% during the second half of the century.

Expenditures for age-related social insurance programmes - such as pensions, public health care, and long-term care insurance - are projected to rise significantly, far outpacing the projected revenues and insurance premia collected as the size of the working age population continues to shrink rapidly. Previous research found that a major increase in taxation, in the order of 30-50% of total consumption, would be needed to finance the demographic transition without any reform (e.g. Braun and Joines 2015, Kitao 2015, Hansen and Imrohoroglu 2013); otherwise, debt will reach an unsustainable level in the not too distant future (e.g. Doi, et al 2011, Hoshi and Ito 2014).

In two papers (Imrohoroglu et al. 2016, 2018), we simulate future paths of individuals’ life-time income, consumption, and saving and calculate projections of future government budget balances and debt. As in Storesletten (2003), we build a life-cycle model with complete markets to assess the impact of demographic ageing and various scenarios involving fiscal responses and economic assumptions that affect fiscal sustainability in Japan. In understanding the magnitude and consequences of demographic ageing, we allow annual deficits to be added to the existing government debt, abstracting from the possibility of default or inability to issue additional bonds.

Most importantly, we treat details of the social insurance system in Japan - including public pension, health insurance and long-term care insurance programmes - separately from other government expenditure and revenue items. We include detailed payment arrangements, as well as the system of co-pay and premium payments that differ by age, employment type, and individual earnings. It is quantitatively important to incorporate the finances of these insurance when in predicting the future paths of fiscal variables in Japan.

Projected demographic ageing in Japan implies that, without any reform or changes in the labour market, annual budget deficits will reach 10% of GDP by 2040 and 18% by 2070. The net debt-to-GDP ratio would reach the unprecedented and unrealistic level of 230% by 2040 and 630% by 2070. As shown in Figure 1, four components - expenditures for public pensions, health insurance, long-term care (LTC) programmes, and debt servicing - would contribute equally to the rising deficits and debt, with the interest payments rising more rapidly as more debt is accumulated.

Figure 1. Sources of net borrowing (% of GDP)

So, what to tackle?

Fiscal sustainability is impossible without reform. It is also very difficult to achieve sustainability with a single tool. However, we find that a combination of policy reforms and changes in the labour market and productivity would solve the problem.

In particular, an increase in female employment (with wage increases and employment regularisation) would make a major difference. More female participation and increased earnings would not only increase income tax revenues but also the budgets of all three social insurance programmes. A major obstacle is the work disincentive and what is essentially a severe penalty for more women working that is embedded in the current social insurance policy and tax system. Efforts by policymakers to correct these mechanisms and to move in the direction of not discouraging more participation and achieving growth will be essential for long-run fiscal soundness. We note, however, that these changes require significant structural reforms and can only be implemented with a long-term and credible commitment.

Increasing the consumption tax rate from the current 8% to 10% in 2019 would reduce fiscal pressures in the short run. A further increase to a level that is comparable to other advanced economies would help alleviate significantly the accumulation of debt in the long run.

Achieving fiscal sustainability is difficult but not impossible. For example, a combination of policies such as raising the full retirement age to 67, reducing pension benefits, raising the co-pays in public medical expenditures and long-term care spending to 20%, increasing women’s earnings and employment characteristics to match those of men, and raising the consumption tax rate to 15% would achieve fiscal sustainability and lead to significant fiscal consolidation with a lower debt-to-GDP ratio in 2050 than in 2020.

Published:7/15/2019 6:34:32 PM
[Markets] The Wall Street Journal: L Brands CEO Les Wexner claims he was unaware of Jeffrey Epstein’s alleged criminal behavior L Brands Inc. founder and longtime Chief Executive Leslie Wexner said he wasn’t aware of his former money manager Jeffrey Epstein’s alleged criminal behavior, breaking his silence on the matter to say that his “heart goes out to each and every person who has been hurt.”
Published:7/15/2019 6:03:13 PM
[Markets] FBI To Ramp Up Social Media Surveillance

The FBI plans to step up its efforts to gather information from social media - issuing a call last week for a new tool to monitor Twitter, Facebook, Instagram and other platforms "in a timely fashion."

Citing the use of social media by terrorist groups, domestic threats, criminal organizations and foreign intelligence services, the FBI "needs near real time access to a full range of social media exchanges in order to obtain the most current information available," according to the request for proposal

In addition to information such as user IDs, the feds are interested in "emails, IP addresses, telephone numbers, and likely aliases" used over social media. The tool would also allow for location-based trackingpersistent keyword monitoring, and access to one's personal social media history

The FBI has justified the tool by claiming it is in response "to an increasing number of threats to U.S. national interests that are identifiable, with ever-greater frequency, through social media platforms."

It is an acknowledged fact that virtually every incident and subject of FBI investigative interest has a presence online. Consequently, law enforcement gaining lawful access (i.e., access that is authorized, appropriate, and consistent with applicable law and policy) to this data will result in early detection and/or containment of the magnitude of any harm caused by these threats.

To protect US citizens, a method employed by the FBI is the acquisition of subscriptions granting access to tools. These allow for the exploitation of lawfully collected/acquired from social media platforms and stored, vetted and formatted by a vendor. The missioncritical exploitation of social media enables the Bureau to proactively detect, disrupt, and investigate an ever growing diverse range of threats. More specifically, the Bureau provides real-time situational awareness of indicators and warnings of emerging social media incidents. -FBI

Can't they just ask the NSA?

Published:7/15/2019 6:03:12 PM
[Markets] Global Debt Hits $246 Trillion, 320% Of GDP, As Developing Debt Hits All Time HIgh

According to the latest IIF Global Debt Monitor released today, debt around the globe hit $246 trillion in Q1 2019, rising by $3 trillion in the quarter, and outpacing the rate of growth of the global economy as total debt/GDP rose to 320%

This was the second-highest dollar number on record after the first three months of 2018, though debt was higher in 2016 and 2017 as a share of world GDP. Total debt was broken down as follows:

  • Households: 60% of GDP
  • Non-financial corporates: 91% of GDP
  • Government 87% of GDP
  • Financial Corporations: 81% of GDP

And while the developed world has some more to go before regaining the prior all time leverage high, with borrowing led by the U.S. federal government and by global non-financial business, total debt in emerging markets hit a new all time high, thanks almost entirely to China... 

... which has been on such a debt issuance rampage, it would make even Uncle Sam blush, as Chinese corporations owed the equivalent of more than 155% of GDP in March, or nearly $21 trillion, up from about 100% of GDP, or $5 trillion, two decades ago.

And here is a startling fact: according to Fundamental Intelligence, a bond market consultancy, Chinese firms accounted for 42% of all corporate bonds issued in EMs this year, which it warned raised the risk of defaults next year and in 2021.

As a result of China's ravenous debt appetite, emerging economies had the highest-ever level of debt (both corporate and household) at the end of Q1, both in dollar terms and as a share of their gross domestic product, according to the FT's report  on the latest IIF data.

The IIF pointed out the obvious, namely that lower borrowing costs thanks to central banks’ monetary easing had encouraged countries to take on new debt. Amusingly, by doing so, this makes rising rates even more impossible as the world's can barely support 100% debt of GDP, let alone 3x that.

Sure enough, as Sonja Gibbs the IIF’s managing director for global policy initiatives, said "It’s almost Pavlovian. Rates go down and borrowing goes up. Once they are built up, debts are hard to pay down without diverting funds from other goals, whether that’s productive investment by companies or government spending.”

And that, in a nutshell, is why the world is doomed to a central-bank created boom-bust cycle, as once there is just too much debt, there will either by hyperinflation or a wave of global sovereign and corporate defaults.

Breaking down the debt increase, the combined debts of 30 large Developing Economies rose to 216.4% of GDP in March, from 212.4% a year earlier, sending it to $69.1 trillion in dollar terms, with Gibbs noting that much of the risk in EM debt was concentrated in the corporate sector (mostly that of China), where debts were equal to 92.6% of GDP in March — higher than the comparable figure for the non-financial corporate sector in developed markets, according to the IIF.

And while corporate debt in the developed world has kept pace with GDP growth in the past two decades, in EMs it has risen almost 50%.

“There has been so much unfettered access to capital markets that it has changed the landscape over the past decade,” Ms Gibbs said. “Not just on the corporate side but in terms of the contingent liabilities on governments.”

This is not a group of borrowers with long experience of managing debt over economic cycles. Once you get into a downturn, a lot of firms have a lot of debts that they will have difficulty in paying.”

Another risk: in emerging markets, the IIF said that business is increasingly relying on short-term borrowing which “leaves some highly indebted firms more exposed to swings in global risk appetite."

And something else to keep in mind, in prior debt cycles China never allowed full-blown corporate bankruptcy and debt restructuring, as insolvent companies were either bailed out or nationalized. Which means that once the downturn comes, China will be facing a tsunami of defaults the likes of which it has literally never experienced before.

As for developed countries, the debt auto pilot here is fully engaged: total debt increased by $1.6 trillion in the quarter to $177 trillion. That includes $69 trillion in the U.S., where government borrowing has been on the rise; in other news just the total US debt is now the same as the debt across all the emerging markets.

Published:7/15/2019 5:32:31 PM
[Markets] The Dow Ends Flat Because It’s Earnings Season and Everyone’s Treading Lightly The three main U.S. stock indexes all made marginal gains on Monday. Two had set new records last week, with the S&P 500 topping 3,000, and the Dow Jones Industrial Average breaching 27,000. Published:7/15/2019 5:05:18 PM
[Markets] US Grants Visa To Iran FM But Movements Near UN Building "Sharply Curtailed"

An opening that could cool tensions? Or just a brief pause in the continued build-up to a near-future war? On Sunday, Iranian President Hassan Rouhani said in a televised speech he's ready to hold talks with the United States if it lifts sanctions and returns to its commitments under the 2015 nuclear deal. “We have always believed in talks... if they lift sanctions, end the imposed economic pressure and return to the deal, we are ready to hold talks with America today, right now and anywhere,” Rouhani said.

However, in an interview following the overture, Secretary of State Mike Pompeo dismissed it as “the same offer that he offered to John F. Kerry and Barack Obama.” Pompeo concluded, “President Trump will obviously make the final decision. But this is a path that the previous administration had gone down and it led to the (Iran nuclear deal) which this administration, President Trump and I both believe was a disaster.”

Pompeo also said during the Sunday night interview that the US has granted a visa to Iranian Foreign Minister Javad Zarif — who just earlier this month was reportedly the focus of potential US sanctions alongside top IRGC commanders and officials — but that his movements would be greatly limited and "sharply curtailed"

File image: Iranian FM Zarif at the UN. 

“U.S. diplomats don’t roam around Tehran, so we don’t see any reason for Iranian diplomats to roam freely around New York City, either,” Pompeo said.

“It’s absolutely appropriate that we provide Foreign Minister Zarif and his delegation with all the rights that they are due under the U.N. headquarters agreement, and nothing more than that,” he said further.

According to The Washington Post:

Pompeo said in a telephone interview that Foreign Minister Mohammad Javad Zarif and his delegation will be permitted to travel between U.N. headquarters and the Iranian mission six blocks away, and to the residence of Iran’s U.N. ambassador nearby. The group arrived in New York on Sunday morning.

The "restricted" travel and movement regimen comes after President Trump said last week that sanctions on Iran would soon increase "substantially". 

UN headquarters building in New York. Image source: CBS

This despite European signatories to the 2015 JCPOA France, Britain and Germany urging an immediate resumption of dialogue, citing fears the nuclear pact is on the brink of falling apart. 

“We believe that the time has come to act responsibly and to look for ways to stop the escalation of tension and resume dialogue,” the heads of state of the three countries said in a joint statement.

Published:7/15/2019 5:05:18 PM
[Markets] The Wall Street Journal: Trump’s Fed pick Judy Shelton has skipped almost half of EBRD board meetings One of President Donald Trump’s latest picks for the Federal Reserve, economic commentator Judy Shelton, has amassed a spotty attendance record on the board of the European development bank where she serves as U.S. envoy.
Published:7/15/2019 5:05:18 PM
[Markets] Trump Rage-Tweets At "Radical Left Democrats" - "If You're Not Happy Here, Leave!"

Much like the great majority of Americans (judging by the latest polls), President Trump appears to have had enough with the "Radical Left Democrats" constant spewing of seemingly anti-American sentiment.

In a triple-down on his sentiment over the weekend (and statement this morning), the president has just rage-tweeted the same message: "If you are not happy here, you can leave," but that was far from all he said...

"We will never be a Socialist or Communist Country," he began, adding that "certain people HATE our Country... They are anti-Israel, pro Al-Qaeda, and comment on the 9/11 attack, 'some people did something'," seemingly focusing in on AOC and her squad.

"Radical Left Democrats want Open Borders, which means drugs, crime, human trafficking, and much more..." he raged, concluding his brief tweetstorm with a reminder of his achievements and to "Keep America Great."

The president’s attacks were aimed at Democratic Reps. Alexandria Ocasio-Cortez (N.Y.), Rashida Tlaib (Mich.), Ayanna Pressley (Mass.) and Ilhan Omar (Minn.) The first three were all born in the U.S. Omar is a naturalized citizen who was a refugee from Somalia.

Trump finished off his twitter tirade by signaling what was perhaps his goal all along...

"The Dems were trying to distance themselves from the four “progressives,” but now they are forced to embrace them. That means they are endorsing Socialism, hate of Israel and the USA! Not good for the Democrats!"

No matter how much Pelosi tries to push AOC et al. out of the limelight, they just keep coming back.

Published:7/15/2019 4:34:48 PM
[Markets] What Happened in the Stock Market Today From failed takeover talks to a massive new partnership, see why these stocks were on the move on a quiet day for the broader markets. Published:7/15/2019 4:02:25 PM
[Markets] Key Words: Disney heiress ‘livid’ after going to one of her family’s theme parks undercover Abigail Disney said distressed workers told her about “foraging for food in other people’s garbage.”
Published:7/15/2019 4:02:24 PM
[Markets] AOC And 'Snot-Nosed Punk' Chief-Of-Staff Alienating Moderate Democrats, Helping Trump: Rahm Emanuel

In a recent Maureen Dowd WSJ Op-Ed, Scaling Wokeback Mountain, former Chicago mayor Rahm Emanuel said that Rep. Alexandria Ocasio-Cortez and her "snot-nosed punk" chief-of-staff Saikat Chakrabarti are essentially destroying the Democratic party and handing Republicans a win. 

Chakrabarti sent shock waves through the Democratic caucus when he posted a tweet about the border bill comparing moderate and Blue Dog Democrats — some of whom are black — to Southern segregationists in the ’40s. -WSJ

"What votes did you get?" said Emanuel, slamming the 33-year-old Chakrabarti. "You should only be so lucky to learn from somebody like Nancy who has shown incredible courage and who has twice returned the Democratic Party to power." 

"We fought for years to create the majorities to get a Democratic president elected and re-elected, and they’re going to dither it away. They have not decided what’s more important: Do they want to beat Trump or do they want to clear the moderate and centrists out of the party? You really think weakening the speaker is the right strategy to try to get rid of Donald Trump and everything he stands for?" said Emanuel. 

Dowd, in turn, called Chakrabarti a "real instigator," noting that the Justice Democrats co-founder and "former Silicon Valley Bernie Bro assumed he could apply Facebook's mantra, "Move fast and break things," to one of the oldest institutions in the country." 

But Congress is not a place where you achieve radical progress — certainly not in divided government. It’s a place where you work at it and work at it and don’t get everything you want.

The progressives act as though anyone who dares disagree with them is bad. Not wrong, but bad, guilty of some human failing, some impurity that is a moral evil that justifies their venom. -WSJ

Meanwhile, internal Democratic polls reveal that swing voters are absolutely turned off by AOC and other progressive Democrats

If the Democratic party continues to fracture as it slides further to the left, Jeb Bush might even have a chance in 2024. 

Published:7/15/2019 4:02:24 PM
[Markets] Dow, Nasdaq post record close as stocks edge higher Dow, Nasdaq post record close as stocks edge higher Published:7/15/2019 3:32:09 PM
[Markets] EU Agrees To Sanction Turkey For Drilling In Cypriot Waters

A surprisingly muscular response beyond mere threatening rhetoric out of the European Union over Turkey's violations of Cypriot territorial waters related to offshore drilling operations: the EU has agreed to bring financial and political sanctions against Turkey after repeat warnings of the past weeks. 

European Union officials on Monday agreed political and financial sanctions against Turkey after Ankara went ahead with drilling operations off Cyprus despite repeated warnings, European diplomats said. — AFP

"The conclusions on Turkey have been adopted and they will be made public in the coming hours," the EU's foreign policy chief Federica Mogherini told reporters following a meeting of foreign ministers. 

AP photo: July 9, 2019 file photo, a Turkish Navy warship patrols near Turkey's drilling ship ' Fatih ' that is making its way towards the eastern Mediterranean near Cyprus.

Austrian Federal Minister for Europe, Integration and Foreign Affairs Alexander Schallenberg also announced prior to Mogherini's remarks Monday from Brussels:

"Today, we will adopt a number of measures against Turkey — less money, fewer loans through the European Investment Bank, freeze of aviation agreement talks. Naturally, other sanctions are possible."

"We [the] are fully behind Cyprus," Schallenberg added while addressing the crisis, which has involved Turkey laying claim to a waters extending a whopping 200 miles from EU member Cyrprus' coast, brazenly asserting ownership over a swathe of the Mediterranean that even cuts into Greece's exclusive economic zone.

Last week the Turkish drilling vessel Yavuz sailed to an area off Cyprus’ east coast — the second to follow a first drilling vessel, Fatih, which had already been exploring in Cypriot waters. Notably, the vessels have been accompanied by the Turkish military, including drones, F-16 fighters, and warships.

Cyprus has long condemned Turkey's aggressive oil and gas explorations as a "second invasion" in reference to the creation in 1974 of the breakaway Turkish Republic of Northern Cyprus after a military takeover. 

Source: Stratfor

The AFP reports the following after the EU ministers' meeting and announcement of impending sanctions

The details are not due to be published until 10:00 pm (2000 GMT), but the most serious measure is understood to be a cut of 145.8 million euros ($164 million) in the European funds allocated to Turkey for 2020.

The European Investment Bank has been asked to revisit the conditions set out for providing financial support to Ankara, according to several European sources.

The EU is also expected to downgrade its dialogue with Turkey, without cutting it off completely.

Turkey's actions and expansive claims inside Cyprus' exclusive economic zone have been condemned by the US, European Union, and Egypt, with NATO officials recently signalling to Turkey that it was out of line. 

Ankara has not only confirmed the drilling operations but has positively boasted about its oil and gas expansion in the eastern Mediterranean. The only compromise it's offered, even while sending warships and military planes to "protect" its drilling vessels, has been to offer dialogue over a "cooperation" proposal between the Turkish-held part of the island and internationally recognized Cyprus. 

Should the Turkish military attempt to enforce its drilling claims and run up against Cypriot and Greek vessels, it could spark a deadly encounter which would force the EU and NATO to finally weigh in more forcefully. 

Published:7/15/2019 3:32:06 PM
[Markets] GLOBAL MARKETS-China data steadies stocks as U.S. earnings get underway A gauge of global stocks rose modestly on Monday after economic data from China came in as expected, but equities on Wall Street slipped on weakness in financials in the wake of Citigroup's earnings report. China's second-quarter annual GDP growth rate fell to a 27-year low of 6.2%, as expected, while June reports on industrial production, retail sales and urban investment were above forecasts. Published:7/15/2019 3:32:06 PM
[Markets] Trump Today: Trump steps up attacks on Democratic congresswomen as he signs manufacturing order President Donald Trump on Monday stepped up attacks on four Democratic congresswomen, as he signed an order on U.S. manufacturing and took a victory lap over the Chinese economy.
Published:7/15/2019 3:32:04 PM
[Markets] A Drastic Re-Organization Of Everyday Life In America Looms

Authored by James Howard Kunstler via,

What Looms Behind

Don’t hold your breath waiting for a coherent pre-election debate about the mother-of-all-issues facing this republic, namely, that we can’t afford the living arrangements Americans think of as “normal” anymore. This quandary has stalked us since the millennium turned. It thunders through all the activities of daily life, and the tensions emanating from it are so agonizing and difficult to face that our politics have deflected off into the kind of hysteria spawned by bad dreams.

As the great Wendell Berry pointed out years ago, this is about the nation’s home economics: energy and resources in, production out, surplus wealth saved. America had a brush with reality in 2008 when all the distortions of our home economics came together and whapped the country between the eyes with a two-by-four. Our energy-in was faltering. US oil production had fallen to a new low of under 4 million barrels a day and we were importing around 15 million. We papered over the problem with borrowed money in ever-larger amounts. This dynamic prompted ever riskier work-arounds on Wall Street, especially “innovations” in securitized debt, which invited criminal shenanigans. It blew up badly. Wealth vaporized. Industries collapsed. Homes and jobs were lost. Lives ruined.

The fairy-tale narrative since then is that technology rode to the rescue. The shale oil miracle “solved” the energy-in problem. Sure seems like it. But lots of things aren’t what they seem to be. Shale oil was a neat stunt. Turns out you can produce a helluva lot of it by paying more to pull it out the ground than you get from selling it. You can goose the process nicely by paying for it with borrowed money. And so it has gone. America now produces a new record of over 12 million barrels a day, and most of the companies doing it can’t make a red cent. And since it is increasingly obvious that they won’t ever pay back the money they borrowed before, they are unlikely to get new loans to continue their profitless operations.

Notice how rapidly shale oil production shot up after 2008. It’s worth a peek at analyst Steve St. Angelo’s latest essay on shale oil company debt (Finance Costs Are Killing the Shale Industry) to understand just how this stunt worked. As blogger Tim Morgan at Surplus Energy Economicspoints out, the dis-economics of  energy production — and shale oil in particular — are stealthily damaging everyday life:

“…the world economy is already suffering from these effects, and these have prompted the adoption of successively riskier forms of financial manipulation in a failed effort to sustain economic ‘normality.’”

That tells you exactly why the stock markets are at record highs now, along with US oil production.

What the nation doesn’t get is that the shale oil industry is sure to collapse, and at least as rapidly as it shot up. So, expect the stock markets to collapse with it, along with tremendous collateral damage to all the other instruments that represent “money” — bonds, currencies, and their derivatives. It will make the 2008 episode look like a mere overturned poker table when it happens. In the meantime, many of the activities enabled by the oil industry are wrecking the planet, not just CO2emissions, but the plastics and chemical industries especially. So, the oil quandary bites at both ends: damned if it quits on us and damned if it keeps going.

That’s the main issue of our time. We’re faced with the imminent and rather drastic re-organization of everyday life in America without oil. It should be reasonable to assume that the process will be disorderly, and the longer we ignore it, the more disorderly it will be. Granted, it is a tall order for politicians to talk about things this scary. The hard truth is that intelligent responses to this quandary would require heroic effort and painful change — and would probably be emotionally unacceptable to voters.

It would entail the dismantling of suburbia and all of the activities associated with it, a severe shrinking of government at every level, the abandonment of most of our military playthings and overseas commitments, a wholesale overturning of Agri-Biz as currently practiced (along with a transition to smaller scale farming with a much higher percentage of the population working at it), and a stupefying aggregate loss of perceived wealth.

I’m describing events that go far beyond the common understanding of political revolution — though these discontinuities will surely produce political and social strife of a high order. This mega-issue and its spinoffs are what looms behind all the pitiful political comedy of the moment, especially the incendiary buffooneries of race and “gender.”

image source

Ponder this as you read the latest New York Times sponsored melodramas about “white supremacy” and the unfair pay in women’s soccer tournaments.

Published:7/15/2019 3:05:04 PM
[Markets] Beat the System: This is the simplest money rule of all time: Don’t be a debt zombie If you owe money on your credit cards, just about everything is a luxury.
Published:7/15/2019 3:05:04 PM
[Markets] Is the Fed on the verge of sparking a stock-market ‘melt-up’? The Federal Reserve is almost certain to cut rates at the end of July — but don’t expect a melt-up, usually marked by a powerful rally followed by a substantial selloff, says Mark Haefele, global chief investment officer at UBS Global Wealth Management. Published:7/15/2019 3:05:04 PM
[Markets] US STOCKS-S&P trades near flat as Citigroup results weigh on bank stocks The benchmark S&P 500 index struggled for direction in choppy trade on Monday as earnings season began in earnest with a mixed quarterly report from Citigroup Inc. Citigroup shares erased early losses in afternoon trading and were last up 0.3%. Shares of S&P 500 banks - including JPMorgan Chase & Co, Goldman Sachs Group Inc and Wells Fargo & Co, set to report results on Tuesday - fell 1.0% in the wake of Citigroup's results. Published:7/15/2019 2:37:51 PM
[Markets] A major new study suggests it’s possible to avoid developing dementia — here are 5 ways to reduce your risk The study was published Monday by scientists at the University of Exeter and presented at the Alzheimer’s Association International Conference 2019 in Los Angeles.
Published:7/15/2019 2:37:50 PM
[Markets] Dirty Tesla: "15 Pounds" Of Dirt Trapped In Model 3 Continues To Reveal Stunning Design Flaw

Back in March, we revealed how pro-Tesla blogs identified a substantial design flaw with Elon Musk's Model 3.

The Model 3, which became infamous for having its bumpers fall off, was found to have a design flaw in its underbody that causes the car to trap and retain dirt, water and sand from roadways, according to electrek, who in March published an article detailing the flaw.

The blog pointed out that Tesla has "often been accused of designing cars for the Californian climate" and that water, dirt and sand used to de-ice roads in colder climates are susceptible to getting trapped in the underbody of Model 3 cars.

Posted in Feburary, Eric Bolduc, who owns a body shop in Quebec found significant amounts of sand and dirt accumulating in the underbody panel at the back of every Model 3 he has worked on so far.

There's even a striking video of him removing sand and dirt stuck inside of a Model 3 before working on the car. The video shows him approach the vehicle, repeatedly tap the underbody of the vehicle with a mallet, and then watch what appears to be an avalanche of sand and dirt fall out from a Model 3 on a lift.

This mechanic has worked on about 25 Model 3 vehicles and he says that he always finds about 10 to 20 pounds of sand and dirt stuck in the panel, due to what he believes is a lack of proper drainage. In one case, he extracted over 35 pounds of dirt from the underbody of a Model 3. He believes that the dirt is coming from behind one of the wheels.

Another video detailing the design flaw was published on July 2nd by YouTube account Dirty Telsa.

This Model 3 owner in the video, while servicing his car at 15,000 miles in his driveway, discovered about 15 pounds of dirt in the undercarriage.

Of course, it is normal for dirt to get in the underbody of any vehicle, but the panel generally has more drainage to allow dirt and water to exit quicker.

And the lack of drainage could explain the back bumper falling off of Model 3s after heavy rain.

So far, not to our knowledge, Tesla hasn't provided a fix to the serious design flaw. We wonder if there's an "over-the-air" update for this?

Published:7/15/2019 2:37:50 PM
[Markets] Stock market under pressure as second-quarter earnings season gets under way U.S. stocks trade mixed Monday, building on record finishes from last week, as a wave of second-quarter earnings are set to kick off. Published:7/15/2019 2:02:42 PM
[Markets] New US House Bill Would Ban Big Tech From 'Banking', Fine Facebook's Libra $1 Million Per Day

Shortly before Treasury Secretary Stephen Mnuchin held his crypto-fearmongering press conference, CoinTelegraph's Kollen Post reports that a drafted bill entitled “Keep Big Tech out of Finance” has surfaced online, allegedly deriving from within the United States House of Representatives Financial Services Committee. The document’s metadata dates it July 12.

The bill’s provenance is unconfirmed, but crypto news site The Block quotes an inside source as saying it is with the Financial Services Committee. 

The document reads: 

A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as medium of exchange, unit of account, store of value, or any other similar function, as defined by the Board of Governors of the Federal Reserve System.” 

The alleged bill goes on to define “a large platform utility” as a tech company that earns annual global revenues in excess of $25 billion

Given that Libra is scheduled for hearings before the Senate Banking Committee on July 16 and with the House Financial Services Committee on July 17, this bill seems designed to preempt congressional authority to take decisive action on the issue of Libra.

image courtesy of CoinTelegraph

In fact, as Reuters reports, the legislation proposes to impose a $1 million fine daily upon any firm that violates its proposed rules.

Libra has attracted commentary and criticism from many corners. Chair of the Financial Services Committee Maxine Waters initiated the congressional hearings on Libra on June 18 by calling for a moratorium on the project. As Cointelegraph reported at the time, Representative Waters wrote: 

 “Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action” 

The night of July 11, US President Donald Trump tweeted similar concerns about the lawfulness of crypto usage, expressing opposition to Libra, Bitcoin and cryptocurrencies as a whole, instead promoting the continued dominance of the U.S. dollar.

Reuters nonetheless anticipates that “pro-innovation” Republicans will put their muscle behind blocking such a move, and that the bill could face yet steeper resistance should it pass the lower chamber and be debated in the U.S. Senate.

Published:7/15/2019 2:02:42 PM
[Markets] Molson Coors stock dragged down by double downgrade Shares of Molson Coors Brewing Co. dropped toward its lowest close in over 5 years Monday after a double downgrade at Bank of America Merrill Lynch, which said the beer brewer will likely have to spend more and make less to stem the decline in its beer brands.
Published:7/15/2019 2:02:42 PM
[Markets] GLOBAL MARKETS-China data supports stocks as U.S. earnings season begins A gauge of global stocks edged higher on Monday after economic data from China came in as expected, although stocks on Wall Street slipped as financials showed some weakness in the wake of Citigroup's earnings report. China's second-quarter annual GDP growth rate fell to a 27-year low of 6.2%, as expected, while June reports on industrial production, retail sales and urban investment were above forecasts. Published:7/15/2019 1:34:53 PM
[Markets] Despite Analysts' Fear Of "Bumpy Earnings Ride" Ahead, Investors "Are All-In On Stocks"

Global stocks have re-surged back near record highs, US equities are at record highs, and European companies have rallied an impressive 15% in the last few weeks ahead of earnings season.

This scream higher has occurred despite a major divergence with earnings revisions - continuously negative for months...

However, thanks in major part to The Fed's massive flip-flop and The ECB's promises, investors are doubling-down on bets that the party will continue. Bloomberg reports that the three largest exchange-traded funds that track the S&P 500 Index took in a combined $6.2 billion last week, just as the benchmark topped 3,000 for the first time, data compiled by Bloomberg show. Of the more than 1,600 U.S.-listed equity ETFs, these three -- known by their tickers SPY, IVV, and VOO -- received more cash than any other funds in one of their best weeks of 2019.

Investors are “all-in on equities,” Steven DeSanctis, a U.S. stocks strategist for Jefferies wrote in a Monday report.

Much of the cash that flowed into ETFs last week went to large-cap funds designed as core holdings, he wrote.

It's not just retail investors either. Hedge Funds are "aaalllllllll aboard!"

But, so far, the broader rally has been more the result of expectations for the easing of central bank policy than anything else, according to strategists at Bank of America Merrill Lynch. Indeed, hopes of a trade truce didn’t have much effect on stocks.

And finally, we've seen this kind of hope-filled decoupling between (soaring) stock prices and (downward) earnings revisions...

And things didn't work out so well that time.

And finally, we note that as stocks have risen, investors have been buying puts far more than calls...

Not exactly the kind of bullish sentiment that supports an extended breakout.

Published:7/15/2019 1:34:53 PM
[Markets] Project Syndicate: Another reason your wages are low: it’s cheaper to hire convicts U.S. workers must compete against low-paid workers in other countries, but they also face another source of competition much closer to home: prison labor.
Published:7/15/2019 1:34:53 PM
[Markets] Callon Petroleum’s takeover of Carrizo Oil & Gas reignites the energy M&A market The latest Permian Basin play is a ‘merger of equals’ between Callon Petroleum and Carrizo Oil & Gas, the first after Chevron Corp. lost out in the battle for Anadarko Petroleum Corp. Published:7/15/2019 1:01:48 PM
[Markets] Callon Petroleum’s takeover of Carrizo Oil & Gas reignites the energy M&A market The latest Permian Basin play is a ‘merger of equals’ between Callon Petroleum and Carrizo Oil & Gas, the first after Chevron Corp. lost out in the battle for Anadarko Petroleum Corp.
Published:7/15/2019 1:01:48 PM
[Markets] These Shareholders Must All Be Stoned…

Submitted by Adventures in Capitalism

I have watched the publicly traded Canadian cannabis sector in stunned awe for the past few years. I really cannot think of a worse place to be invested. You have the basic economics of growing celery, with all the government regulation of an HMO, complete with the regulatory risk of manufacturing pharmaceuticals, with a two-tier system of legal and illegal producers—where legal prices are dramatically more expensive, with hundreds of entrants, funded with billions in equity capital who don’t care about near-term economics, all locked in a vicious price war, focused on gaining marketing share. If it sounds like an insane place to invest—that’s because it is—particularly as demand is stagnating. You’d have to be stoned out of your mind, to want to own any of these companies.

I’m willing to admit that early entrants made fortunes as they navigated Byzantine legal structures and capitalized on the initial gold rush phase. However, the boom is rapidly collapsing. Let’s face it, cannabis is a commodity product, it is priced based on supply and demand. With a lag, you can build endless production facilities and produce unlimited quantities of cannabis. It’s called “weed” for a reason. When this happens, what do you think happens to pricing? This is why, despite billions in subsidies, there aren’t many rich farmers. Agriculture is a terrible business.

Above are some charts from Health Canada. As you can see, recreational legalization has done little for overall demand as most “recreational demand” was previously considered “medical demand” and it was easy to get a doctor to prescribe cannabis. Meanwhile, supply is growing dramatically faster. In fact, there are now 24 months of supply of dried cannabis and 15 months of supply of cannabis oil. This is while every publicly traded cannabis company is talking about dramatically increasing production.

As we have learned with every commodity product from; solar panels to rare earths to lithium to vanadium to bandwidth capacity to shale oil to natural gas, when supply swamps demand, pricing deteriorates, fixed costs stay constant and operating losses explode. Cannabis is no different—except the valuations are even nuttier and most producers are flush with cash, focused on ramping production and gaining market share. Did I mention how nutty the valuations are?

Now, I know the counterpoint here: “Kuppy, they’re building brands. The barley and hops in a beer are worth less than the aluminum can. If you have a brand, you no longer have a commodity product.”

I’m not going to dispute that fact. However, thousands of beer brands co-exist, while only a few leaders actually make much money at it. The difference is that most of the cannabis companies are losing money during the peak margin phase as they’re all equity funded and focused on market share—not profits. When pricing inevitably collapses, the operating losses will astound people. Even worse, the legal sector is fighting against a black market that has dramatically cheaper product. Besides, most consumers are not branded consumers—yet. That part will come, but much later. After the shake-out, winners can be chosen. By that point, these companies will trade at fractions of current valuations.

What is happening in Canada will happen one by one to the individual US states. A weed will always out-grow its demand if you throw unlimited capital at it. The idea that you can dump excess product from one place to another is silly because the current patchwork of laws was created to protect local producers and jobs—meanwhile black-market players will continue to arbitrage cheap supply into protected demand regions and undercut legal producers. That said, I feel that we are a year or three too early to talk about the collapse in US cannabis companies. That will come—don’t worry. For now, I’m focused on Canadian names.

I have been wanting to write this article for some time, but the timing didn’t feel right. There were too many people chasing cannabis and too few stocks to play. Now, the capital markets have done what they always do—separate idiots from their money. There are hundreds of these things. Most won’t make it. Even the winners will likely see their share prices collapse. I wanted to see cannabis supply swamp demand. I wanted to see revenues start to comp negative, even though volumes were still increasing. I think we’ll see all of these in Q3 or at worst Q4. Most importantly, I wanted to see the charts break. I don’t short much, but I sometimes buy puts. Calling tops is hard. Shorting unprofitable businesses with high debt levels, after the charts have “broken,” is easier. These charts look “broken” to me. I am no great chartist, so I’m going to call this the “head and shoulders; about to collapse” pattern. Yea, I invented that (deal with it). There has been a lot of volatility in the sector before, but never before has it occurred while fundamentals were also rolling over. I think this is the real deal.

Canadian Cannabis ETF

In the end, I’m an economic historian. Every new sector always has a similar arc of revenue growth, market share gains, un-profitability, collapse, bankruptcy and consolidation. Cannabis will follow a similar arc.

We’re at the cusp of the collapse phase.

In a few years, maybe we can pick through the wreckage and find a few winners to own for the recovery phase. Until then, I own a collection of puts, put spreads and even some ITM calls I sold on a basket of these companies. Please don’t ask me which ones. I purposely didn’t name names. Just assume that if it’s Canadian, liquid, has liquid options, is unprofitable and has high debt, it’s probably in my basket. (Besides, I need some Ponzi-Sector shorts as this whole thing is about to blow…)

Disclosure: Structurally short a basket of unprofitable Canadian Cannabis companies. (Besides, I prefer my beer and cheap Bourbon—stoners are sorta annoying…)

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Published:7/15/2019 1:01:48 PM
[Markets] Epstein & The Explosive Crisis Of The Deep State

Authored by Charles Hugh Smith via OfTwoMinds blog,

Since the battle is for the legitimacy of the state, it must be waged at least partially in the open.

Speculations by outsiders must give Deep State insiders many opportunities to chuckle, "if only they knew." We don't know, of course, and public leaks are engineered to misdirect our attention from what's actually going on or "frame" our understanding in a positive way.

Decades later, history reveals a very ordinary mix of great successes and horrific failure in secret operations, caused by errors of judgment, faulty intelligence, poor planning and so on. In other words, life isn't tidy, either inside or outside the Deep State.

Nonetheless we can postulate a few things with some certainty. One is that the Deep State-- the unelected, permanent government which includes not just the intelligence community but a vast array of agencies and institutions as well as the top-level structures of diplomacy, finance and geopolitics--is not monolithic. There are different views and competing camps, but the disagreements and bureaucratic wars are kept out of sight.

Two, we know that at critical junctures of history one camp wins the narrative battle and establishes the over-riding direction of state policy. Put another way, one camp's understanding of the era's most pressing problems becomes the consensus, and from then on disagreements are within the broad outlines of the dominant ideology.

The end of World War II was a critical juncture. The proper role of the U.S. in the postwar era was up for grabs, and over the course of a few years, the CIA and other intelligence agencies were established and the doctrine of containment of the Soviet Union became the dominant narrative, a narrative that held with remarkable consistency for four decades until the Soviet Union collapsed in 1991.

This collapse was another critical juncture, and debates over America's role in this "unipolar era" were finally settled in favor of the geopolitical-activist ideology of neoconservatism (Neocons).

This globalist ideology led to a variety of policy disasters and is now discredited in many circles, and has been under attack within the Deep State for some time. This is the divided Deep State I've written about for the past five years.

Is the Deep State Fracturing into Disunity? (March 14, 2014)

Is the Deep State at War--With Itself? (December 14, 2016)

The failures of Neocon globalism have ushered in another critical juncture. What is America's proper role in a multi-polar world that is fracturing across multiple faultlines? This critical juncture is a manifestation of a broader profound political disunity in America and many other nations.

The corporate media has obligingly portrayed this profound political disunity as a contest between "good globalism" and "bad populism," a clear attempt to smear all those who see the dark side of globalism as a threat to the nation and indeed the world. This bias reflects the continued dominance of the Neocon-globalist camp.

But the cracks are now visible. The mainstream "influential" press has recently been publishing critiques admitting the failures of Neocon globalism and agonizing about how to "save" the globalist agenda despite its failures.

Globalization’s Wrong Turn--And How It Hurt America (Foreign Affairs)

I have long held that there is a camp within the Deep State that grasps the end-game of Neocon globalism, and is busy assembling a competing nation-centric strategy. There is tremendous resistance to the abandonment of Neocon globalism, not just from those who see power slipping through their fingers but from all those firmly committed to the hubris of a magical faith in past success as the guarantor of future success.

Michael Grant described this complacent clinging to what's failed in his excellent account The Fall of the Roman Empire, a short book I have been recommending since 2009:

There was no room at all, in these ways of thinking, for the novel, apocalyptic situation which had now arisen, a situation which needed solutions as radical as itself. (The Status Quo) attitude is a complacent acceptance of things as they are, without a single new idea.

This acceptance was accompanied by greatly excessive optimism about the present and future. Even when the end was only sixty years away, and the Empire was already crumbling fast, Rutilius continued to address the spirit of Rome with the same supreme assurance.

This blind adherence to the ideas of the past ranks high among the principal causes of the downfall of Rome. If you were sufficiently lulled by these traditional fictions, there was no call to take any practical first-aid measures at all.

The faction within the Deep State that no longer accepts traditional fictions is gaining ground, and now another fracture in the Deep State is coming to the fore: the traditionalists who accept the systemic corruption of self-serving elites and those who have finally awakened to the mortal danger to the nation posed by amoral self-serving elites.

The debauchery of morals undermines the legitimacy of the state and thus of the entire power structure. As I recently noted in Following in Rome's Footsteps: Moral Decay, Rising Inequality (June 29, 2019), America's current path of moral decay and soaring wealth/power inequality is tracking Rome's collapse step for step.

Enter the sordid case of Jeffrey Epstein, suddenly unearthed after a decade of corporate-media/elitist suppression. It's laughable to see the corporate media's pathetic attempts to glom onto the case now, after actively suppressing it for decades:Jeffrey Epstein Was a Sex Offender. The Powerful Welcomed Him Anyway. (New York Times) Where was the NYT a decade ago, or five years ago, or even a year ago?

Of all the questions that are arising, the signal one is simply: why now? There are many questions, now that the dead-and-buried case has been dug up: where did Epstein get his fortune? Why did he return to the U.S. from abroad, knowing he'd be arrested? Why was the Miami Herald suddenly able to publish numerous articles exposing the scandalous suppression of justice after 11 years of silence? Years later, victims recount impact of Jeffrey Epstein abuse.

Here's my outsider's take: the anti-Neocon camp within the Deep State observed the test case of Harvey Weinstein and saw an opportunity to apply what it learned. If we draw circles representing the anti-Neocon camp and the moralists who grasp the state's legitimacy is hanging by a thread after decades of amoral exploitation and self-aggrandizement by the ruling elites, we would find a large overlap.

But even die-hard Neocons are starting to awaken to the danger to their power posed by the moral collapse of the ruling elites. They are finally awakening to the lesson of history, that the fatal danger to empires arises not from external foes but from inside the center of power as elite corruption erodes the legitimacy of the state.

The upstarts in the Deep State have united to declare open war on the degenerates and their enablers, who are everywhere in the Deep State: the media, the intelligence community, and on and on.

Since the battle is for the legitimacy of the state, it must be waged at least partially in the open. This is a war for the hearts and minds of the public, whose belief in the legitimacy of the state and its ruling elites underpins the power of the Deep State.

If this wasn't a war over the legitimacy of the state, the housecleaning would have been discrete. Insiders would be shuffled off to a corporate boardroom or do-nothing/fancy title office, or they'd retire, or if necessary, they'd die of a sudden heart attack or in a tragic accident (if only they knew).

The cockroaches are scurrying, and the challenge now is to crush as many as possible before they find cover. Bullies are at heart cowards, and once the bullies who were untouchable due to powerful friends in powerful places are exposed to an accounting of their behavior, they will spill the beans on everyone in a craven attempt to lighten the consequences of their corruption and debauchery.

Power is a funny thing: when it dissipates suddenly, it dissipates completely.

All those who were confident they were untouchable might want to heed this sign: carefully fall into the cliff.

The hidden conflicts within the Deep State are emerging, and the resulting crisis will be explosive. Remember, the housecleaning must be public or the legitimacy of the state will go over the cliff. If the Deep State wants to retain its power, it must root out the corrupt degenerates before they bring down the entire rotten structure.

*  *  *

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format. 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 (PDF). My 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 New benefit for subscribers/patrons: a monthly Q&A where I respond to your questions/topics.

Published:7/15/2019 12:37:37 PM
[Markets] Guggenheim’s Minerd says he has been approached about Fed job Guggenheim Partners’s chief investment officer Scott Minerd said Monday he has been in talks about taking a seat on the Federal Reserve Board. Published:7/15/2019 12:37:37 PM
[Markets] Buy This, Not That: 10 astounding Amazon Prime Day deals not to miss, according to deal pros Smart shoppers can save big on everything from the Instant Pot to the Apple Watch to the Roomba.
Published:7/15/2019 12:37:37 PM
[Markets] Stocks under increasing pressure Monday as second-quarter earnings season opens Stocks under increasing pressure Monday as second-quarter earnings season opens Published:7/15/2019 12:07:51 PM
[Markets] ECB Hires ex-Goldman Banker And Vatican Auditor As Watchdog

As one Goldmanite departs (i.e., Mario Draghi, whose term ends on October 31) another Goldmanite arrives at the ECB.

Now that Christine Lagarde (who had her share of run-ins with the French law especially her guilty conviction in 2016 over a €400MM payment to Bernard Tapie) has been picked to head Europe's central bank, the European Central Bank has hired Elizabeth McCaul, a former Goldman Sachs banker who later led an audit of the Vatican’s scandal-ridden bank, as one of its top banking supervisors, the bank said last week.

She is one of three new ECB representatives on the Single Supervisory Board, which oversees the euro zone’s 114 largest banks according to Reuters.

McCaul will join the ECB from Promontory Financial Group, a prominent US consultancy firm - famous Wall Street "revolving door" which sends financial execs into positions of power - which agreed to pay $15 million to New York’s banking regulator in 2015 to settle accusations of whitewashing a report on Standard Chartered Bank

Even more curious is that during her stint at Promontory, now owned by IBM, McCaul helped audit the Vatican’s bank during a clean-up ordered by Pope Francis in 2013 and also did consultancy work for the ECB during the set-up of the Single Supervisory Mechanism. Before that, McCaul was Superintendent of Banks for the State of New York, having joined that department after a decade as a banker at Goldman Sachs.

And yes - there's more - a mother of seven, McCaul is married to former Goldman Sachs partner Frank Ingrassia, who used to head the bank's municipal finance group.

She will be joined on the Single Supervisory Board by Edouard Fernandez-Bollo, who currently works for the French banking watchdog, and Kerstin af Jochnick, until Thursday the first deputy governor of the Swedish central bank.

In other words, all the people who are directly and indirectly invested in perpetuating the status quo which has failed to result in any tangible change for the past decade, will be in charge of making sure that Lagarde gets the precisely right advice - from Goldman and others - to not threaten the perpetuation of what has worked only for the ultra wealthy for the foreseeable future.

Published:7/15/2019 12:07:50 PM
[Markets] Jim Rogers Warns: "Worst Bear Market" Is Coming

Via Money And Markets,

On a recent call with, no-nonsense economic guru Jim Rogers restated his concern that a bear market was on the way, and investors should be on the lookout for small signs to avoid another crisis like 2008.

Although Rogers could not give a timeline for the bear market to arrive, he did say that it will be the “worst in my lifetime,” a prediction he’s stuck by for a while now, and the key to spotting a market correction lies within smaller markets.

Via Economic Times:

How do you view US stock markets currently?

I am not investing in US stock market because I expect problems to come in the next year or two. I am not buying shares.

In the US market, some of the stocks like Apple and Google go up every day. They never go down, which is a dangerous sign in any stock markets. When you have a few stocks always going up and the movement has been concentrated and that seems to be what is happening in the US stock market.

Any timeline, any horizon that you have for this bear market that you are foreseeing?

No, I will just say it will be the worst in my lifetime. It has been over 10 years since we had a serious bear market in the United States. I would suspect by the end of this year or next year, it will start. These things always start small, where people are not looking and then they work to the major markets, and then you see them on the major news.

In 2007, Iceland went bankrupt but nobody noticed or cared. Then Ireland went bankrupt. Then a few weeks later, Bear Sterns went bankrupt and a few weeks later Northern Rock, the English Bank, went bankrupt. Then eventually Lehman brothers went bankrupt and by then, everybody knew there was a problem. But it had been there for over a year and it has always worked that way. It starts when we are not watching. It has already started. Latvia collapsed. Argentina, Venezuela, Turkey, some banks in India are having problems, Indonesia has started having problems. It has not made to evening news yet.

All these markets are small but until they make it to the big markets, people do not notice.

Rogers also told that he believes a trade deal will arrive soon between the United States and China amid escalating tariffs, but it may not mean much as even more trade wars will begin, contributing to the catastrophic bear market scenario Rogers mentioned above.

Do you think there will be a US-China trade deal soon and why? 

Yes, it will because both sides need it and they both have expectations. So, yes, there is going to be some good news coming out fairly soon and we will all be happy for a while. But it will not last very long because the next time the American stock market or the economy starts having problems, Mr. Trump is going to blame that on Asia and come out with more trade wars, not just against China but against Japan, Korea and everybody because Mr. Trump in his heart thinks trade war is good. He is surrounded by people who think a trade war is good. He thinks he can win a trade war. He does not know history, thinks he is smarter than history or both.

I know he is thinking he is smarter than history and I doubt if he knows history. So, we will have more trade wars next year, the year after and that is why another reason the next time we have a bear market, it is going to be the worst in my lifetime.

Rogers goes more in-depth about Chinese, Indian and Russian markets. Click here to read the interview in full.

Published:7/15/2019 11:34:24 AM
[Markets] Buy Deere Stock Because There Will Be No Global Recession, Analyst Says Bank of America now thinks Deere Stock is a buy, but there is no clear consensus on the stock on Wall Street. Published:7/15/2019 11:34:23 AM
[Markets] Livongo Health IPO: 5 things to know about the digital-health startup Livongo Health Inc., a digital-health startup that’s looking to help people manage chronic diseases, has set terms for its planned IPO.
Published:7/15/2019 11:34:23 AM
[Markets] "What A Strange Place We Find Ourselves In"

Authored by Bloomberg's Richard Breslow,

Officially-set interest rates are coming down. This isn’t a surprise. Could Fed Chairman Jerome Powell have been more explicit? But perhaps the breadth of central banks that are going overtly dovish should be given a lot more attention. In a steady stream, more and more are getting in on the act. That fact can have more of a shock-and-awe effect on asset prices than the Fed or the ECB being even more aggressive than expected. It’s more likely to have longer-lasting consequences.

The result is that the monetary policy toolkits we are constantly measuring and assessing are bigger than is commonly assumed. This goes a long way toward countering the assertion that monetary policy has run out of oomph near the zero bound.

Markets can bounce around. Even correct. But the underlying dynamics of lower for longer and constant central-bank vigilance of financial conditions that have been fueling global asset bubbles are unlikely to change.

Markets, companies and economies are being told to stay leveraged, and that this is no time to be prudent. If you ever needed proof that we are in this trade too deep, this is it. The world’s social order may look like mayhem personified, but its central bankers appear to be drawing ever closer together. One should be careful of rushing to fade the long-term trends, or of taking too much solace from what the price action would ordinarily suggest in a risk-on environment.

Acting IMF Chair David Lipton made the party line quite clear with his latest message. He openly encouraged policy accommodation during an interview with the Financial Times ahead of G-7. Don’t hesitate, was essentially the message. Close calls go to the doves. When he said he didn’t want to mention individual countries, he wasn’t just being circumspect. It read like a green-light exhortation for continued, even greater, liquidity all around.

This week’s meetings hold out the promise of being more interesting than one would normally expect. Watch to see if there is a single song sheet used jointly by the assembled. Any and all academic discussions about Phillips Curves and the like are a smoke screen for decisions already made. We are back in the central-bank comfort zone. The global economy is slowing, so go out and buy risk.

What a strange place to find ourselves, that the biggest threat to current asset prices could be a resolution of the tariff issue. It makes it really hard to differentiate between where it’s best to go in search of yield in the interim. Good news could, counter-intuitively, lead to a bout of risk-off for markets, if not the real economy, and that could have differing effects on various carry trades. Most particularly in foreign-exchange trades involving countries especially sensitive to higher rates.

There was a modicum of optimism after the G-20 that there might be some light at the end of the tunnel on the trade disputes. But it’s very difficult to hear the message on rates and the state of the global economy and not wonder how these officials are handicapping the imminence of a breakthrough. And hence, the frustrating current market calm.

If trade barriers are inflationary, any uptick in the readings will be completely ignored in rate-setting meetings. But the effect on prices won’t be completely ignored. The longer end of the yield curve will have to take some notice.

As the recent steepening approaches technical-resistance levels that have proven themselves to be quite important, the yield curve may be the most interesting trade to watch.

Published:7/15/2019 11:05:11 AM
[Markets] GLOBAL MARKETS-Chinese data supports stocks as U.S. earnings season picks up A gauge of global stocks advanced on Monday as economic data from China came in as expected, although stocks on Wall Street were little changed as financials showed some weakness in the wake of Citigroup's earnings report. China's second-quarter annual GDP growth rate fell to a 27-year low of 6.2%, as expected, while June reports on industrial production, retail sales and urban investment were above forecasts. Published:7/15/2019 11:05:11 AM
[Markets] Amazon workers strike to protest working conditions on Prime Day — labor union says ‘human beings are not robots’ Prime Day is pushing workers to protest unfair labor conditions, low-wages during Amazon’s biggest deal day of the year
Published:7/15/2019 11:05:11 AM
[Markets] GE loses a bull, and stock falls Shares of General Electric Co. dropped Monday, after UBS backed away from its bullish stance, citing significant outperformance in the face of continued power market weakness and a significant decline in interest rates. Published:7/15/2019 10:31:26 AM
[Markets] Epstein Safe Had 'Piles Of Cash', Diamonds And Expired Passport Claiming Saudi Residency

FBI agents who cracked open a safe in Jeffrey Epstein's Manhattan mansion discovered "piles of cash," dozens of diamonds and an expired passport from the 1980s that listed his residence as Saudi Arabia, according to the Daily Beast - which notes that it is unclear whether this is the same safe that contained nude or semi-nude photographs believed to be of underage girls. 

It's also a different safe than the one allegedly in an 'off-limits' room on his private island in the Caribbean. 

Federal prosecutors revealed the findings during a Monday bail hearing, for which US District Judge Richard Berman said he would announce a ruling on Thursday. Some of Epstein's accusers were present during the courtroom session to oppose his request for release on house arrest pending trial for sex-trafficking underage girls. Both federal prosecutors and a federal probation office have recommended against letting Epstein out on bail, suggesting that he is a flight risk who should remain detained. 

Monday’s hearing follows a flurry of filings in which Epstein’s defense team and federal prosecutors dueled over whether the filthy-rich money manager would go on the lam if he was released.

The government argued that Epstein’s international connections and wealth—estimated at more than $500 million in a court document—meant it would be easy for him to get beyond the arm of the law.

Even if he didn’t turn fugitive, prosecutors argued, Epstein has a history of witness-tampering, including wiring $350,000 late last year to two alleged accomplices after the Miami Herald published its expose on his Florida plea deal. -Daily Beast

Epstein's attorneys have offered up a bail package which would allow the registered sex-offender and self-admitted pedophile to hang out at his palacial 21,000 sqft, $77 million 1930s Manhattan mansion while wearing a GPS monitoring device. He would also install surveillance cameras inside and out and deregister his cars and aircraft if released on bail "in an amount set by the court after reviewing additional information regarding Mr. Epstein's finances," according to the Daily Mail

Prosecutors say Epstein's mansion "provides no value whatsoeveras collateral, "because the defendant would thus be likely to lose that property following a conviction." 

The government similarly noted that Epstein's offer to put his Gulfstream jet up for collateral is bogus, as the financier "recently sold a second plane and thus presumably has cash on hand to replace the posted aircraft without difficulty if need be." 

The wealthy financier's lawyers have also argued that he's protected under the terms of a 2008 immunity deal, writing "In essence, the government seeks to remand a self-made New York native and lifelong American resident based on dated allegations for which he was already convicted and punished – conduct the relitigation of which is barred by a prior federal nonprosecution agreement." 

More than a decade ago, authorities in Florida investigated Epstein for the very same thing, but U.S. Attorney Alex Acosta signed off on a sweetheart deal that allowed him to plead guilty to a state prostitution charge. He served 13 months of an 18-month-sentence in jail, while being allowed to leave for several hours during the day on work release.

The Miami Herald investigation of that plea deal, along with lawsuits by accusers, helped amp up the pressure on Epstein, and the U.S. Attorney in Manhattan launched a new probe, which culminated in an indictment and arrest warrant earlier this month. -Daily Beast

Meanwhile, prosecutors have left the door open to a superseding indictment which could contain more charges - or add alleged accomplices as co-defendants, according to the Beast

Although the indictment details alleged crimes against just three girls between 2002 and 2005, other accusers have come forward since Epstein’s arrest—in New York and New Mexico, where he owns a spread of land called the Zorro Ranch.

Epstein also owns a private island in the Caribbean and a lavish estate in Palm Beach, a fleet of cars and a private jet that has hosted former President Bill Clinton, actor Kevin SpaceyPrince Andrew, and lawyer Alan Dershowitz.

Two of Epstein’s accusers have said in court papers that Dershowitz was aware of and even took part in the sex with minors—which he has vigorously denied. Clinton put out a statement last week distancing himself from Epstein, but failed to mention at least one dinner they attended. -Daily Beast

Epstein's 2008 'sweetheart' deal has already claimed one casualty - former Labor Secretary Alexander Acosta, who was forced to step down last week following national outrage over his actions in the case. 


Published:7/15/2019 10:31:26 AM
[Markets] The face of Britain’s new £50 note is this WWII codebreaker considered the father of computer science Bank of England Gov. Mark Carney reveals that computer science pioneer Alan Turing will be featured on the new polymer note by the end of 2021.
Published:7/15/2019 10:31:26 AM
[Markets] Amazon Taps Celebrities For Prime Day Buzz As New Member Growth Slows

Now that Amazon Prime Day has begun to rival Black Friday as a driver of sales, the company has turned to celebrity endorsements in order to boost sales and attract new Prime members amid sagging membership figures, according to Bloomberg

From Will Smith and his son slinging water to Kobe Bryant peddling deodorant - Amazon may have officially jumped the shark. They've even got actor and former Calvin Klein underwear model Mark Wahlberg pushing protein powder. 

Amazon's competitors, meanwhile, are scrambling to put better deals in front of click-happy consumers. 

Discounted pressure cookers and gadgets just aren't enough to stand out when shoppers can find a flurry of bargains elsewhere. Walmart started a competing four-day sale on Sunday. Target is emphasizing sales on its exclusive clothing and home goods shoppers can’t buy on Amazon. -Bloomberg

eBay is even trolling Amazon by offering a "crash sale" - alluding to Amazon's website crashing last year - where it has placed deep discounts on smartphones, electronics and fashion. All of these competitors are emphasizing that you don’t need a paid membership like you do with Amazon.

In total, 250 retailers are staging their own sales to compete with Prime Day - up from 194 last year.

How is the celebrity push working so far?

So far it's looking good for Amazon. On July 15, the company held a concert with Taylor Swift - while just about every Demographic is being represented by at least a B-list celebrity or better. 

As of Friday, the sale has so far generated about 12 billion media impressions - about the same amount that H&M was able to generate after striking a deal with Netflix to sell 80s style clothing featured in "Stranger Things". 

It is estimated that shoppers are going to spend $5.8 billion on Amazon during the two day sale, an 11% increase from last year's 36 hour sale when converted to spending per hour.

Stacy Jones, who runs the entertainment marketing agency Hollywood Branded said:  “Amazon is giving these celebrities the opportunity to sell their brands on a very powerful platform.”

The sale also shows CEO Jeff Bezos is new thinking about the value of celebrity promotion. Amazon had previously relied on customer reviews to drive sales instead of celebrity endorsements. But in 2016, when the company saw success after splurging for its first Super Bowl commercial that starred Alec Baldwin and Dan Marino, it became clear that celebrity promotion could be worth it.

To that end, Amazon debuted "The Celebrity Store" last year, which carries products endorsed by people like Zac Efron and Serena Williams - moves which pushed the online retail giant further into the influencer marketing realm and has prompted stars to seek out partnerships. Spiritcook enthusiast Lady Gaga has an exclusive line of beauty products coming soon, while Heidi Klum will be offering a new fashion program that will stream only on Amazon video next year.

"It’s amazing how much the needle has moved in the other direction," said former Amazon ad exec Steve Susi. "We were told that Bezos resisted celebrity endorsements because it just seemed so inauthentic and un-Amazonian."

The company says it has more than 100 million Prime members worldwide, but data shows that new subscriptions are slowing.

Josh Lowitz, co-founder of Consumer Intelligence said: "They can’t keep adding 10 million new Prime members every quarter because everyone has already made up their minds about that. This is more traditional marketing around a big sales event, which is more celebrity driven."

Published:7/15/2019 10:05:20 AM
[Markets] We Test Drove Harley-Davidson’s New Electric Motorcycle. Here’s How It Sounds. Harley is launching an electric motorcycle with 146-mile range that goes from zero to 60 miles an hour in about three seconds. The bike sounds nothing like a traditional Hog, but Barron’s still had a lot of fun throttling its easy-to-use electric motor. Published:7/15/2019 10:05:20 AM
[Markets] Mark Hulbert: Would financial literacy help to prevent poverty in retirement? The latest recommendation from the federal government’s ‘Financial Literacy and Education Commission’.
Published:7/15/2019 10:05:20 AM
[Markets] Blain: There Are Two Kinds Of "China Watcher"

Blain's Morning Porridge, submitted by Bill Blain of Shard Capital

"If you play good cricket, a lot of bad things may remain hidden"

What a Splendid Sports Sunday: Wimbledon, Grand Prix and the extraordinary finish to the Cricket World Cup. It’s rare for a Scotsman to be cheering for England – but this one did even though the Kiwi’s are basically Scots Version 2.1. Can the markets offer anything as thrilling this week?

The big start to the week is China.

Growth has slowed to 6.2%, down from 6.4% in April – the slowest in China’s modern history. It’s still a pretty impressive number by the standards of the West, and it provides an enormous upside lift to the whole Global economy which only gets bigger as China grows. Or, it would if the numbers could be trusted – say the China bears. There is a consensus across analysts that real growth is between 1.5-1.8% lower reflecting the vested bureaucratic inclination to inflate return and growth metrics to look good – it happens at both local and state government level. (I am reliably informed “cadre patriotic bias” and inflated numbers are corrected at state level before they are released.)

The market is programmed to look for bad news out of China. Falling exports confirm the asymmetric trade hit on China as the resumed discussions with the US meander nowhere. Enacted Tariffs remain in place. The PBOC will likely be forced to act to further ease rates and the effects will be felt on China mainstreet.

As everyone constantly reminds us, the Chinese economy is in transition from export to consumption led. It now exhibiting all the features of modern economics, and is lumbered with bank crashes, credit issues and the perennial problems of regulating the Chinese banking system to deliver capital to the right companies. The Bank of China is conflicted – trying to improve lending standards to avoid further banking failures, while pumping the economy through easing and lower reserve requirements. While the government has eased rules for infrastructure finance, the bank has been trying to direct capital away from the highly inefficient and over-leveraged state sector towards more nimble private companies. If it sounds familiar – it is. China is an increasingly mature economy. It’s a difficult exercise in state-controlled finance – and its effectiveness is open to question. Just like in Europe!

Which bring us to the third part of the economy – consumers who are supposed to be driving China’s long-term extraordinary growth. Unemployment remains low. Wages have ballooned over recent years – and continue to outperform. China has become a consumer economy – the move from the poor countryside to the rich cities continues, and is going some of the way to relieve the demographic issues China’s one-child policy left in terms of a nation “getting old before it gets rich”.

There are two kinds of China Watcher:  

  • The first are the Doom-Sayers; who expect the worst, and reckon China is hotbed of simmering worker resentment under the power of the state. They are expected to rise up, cast off their shackles, and rebel in fury at the corruption of the power elites, the environmental collapse of the country in terms of water and air quality and pollution, and their thirst for “democratic liberty”, or whatever the libertarians are calling it these days.   
  • The second are the doubters; who believe the numbers are corrupted, that’s China’s economy is struggling, the economy can’t continue to post recent growth gains, and real GDP is going to continue falling as the country matures with an inefficient state banking system, a glut of inefficient state companies and a host of private companies starving for capital. As China growth falls between 3-4%, the global implications will be dire.

Perhaps there should be a third perspective. Acknowledge China is struggling with tariffs, growth and transition. But it’s also built more roads, railways and airports over the last decade than the rest of the world. Its funding education fully at a time when the west is asking students to enter indentured slavery for a second rate degree. Banking systems have been challenged, but survived. Wages are high and Chinese consumers are seen around the globe. Its working… Its time to take a fresh look at China, shake off the complacency it can’t possibly make state capitalism work, and figure out what even 5% China growth means long-term.

Let’s go back to the Cricket.

I knew there was a Cricket World Cup on, but since I don’t have Sky Sports, the only reason I know anything about it is because Sky let Channel 4 show the final. Pretty much the same across the country – less than 500,000 folk have watched any of the games in the UK (India Pakistan was probably highest.) Yesterday, we ended up watching it on one TV while the other was showing the Tennis – both climaxed around the same time! The Cricket was mesmerising!

The issue is English Cricket – are they doing the best for their sport with an inclusive TV package with a pay-channel? Cricket has become something of a minority sport since it left the airwaves. If you are a cricket fanatic – and I am not, just an occasional fan – then you buy a subscription. If you don’t, your only contact with the dull thwack of willow will be through short highlights, or days like Sunday, then it’s clear we’ve been missing something. If 12 million people were watching the English Footballing Lionesses in the Women’s football recently, how many would have watched England in a final? (Shame about the scheduling on a Sports Super Sunday.)

Which begs the question – Would English cricket gain more in terms of take-up by young people, wider participation and larger sponsorship deals for players and the sport by doing a deal with a terrestrial free TV station, or should they remain on the fringe with Sky? Reader comments please!

Published:7/15/2019 9:30:40 AM
[Markets] "It’s Time To Say Goodbye To The Rally In Everything"

Authored by Wes Goodman, Bloomberg macro commentator

It was nice while it lasted but the “Rally in Everything” inspired by the dovish Federal Reserve is likely coming to an end -- thanks to the dovish Federal Reserve.

U.S. bonds and stocks have climbed together for most of 2019 as expectations for Fed easing led yields lower and underpinned equities.

Chair Jerome Powell threw a wrench in the works last week by actually putting the central bank on a path toward cutting interest rates.

It may be counter-intuitive, but a likely rate cut this month means long-term Treasuries are vulnerable. That’s because what the central bank ultimately wants is faster inflation, which will eat into demand for long-duration assets.

St. Louis Fed President James Bullard, who showed foresight by voting for a reduction in June, summed it up by saying he would like “to make modest moves to try to re-center inflation and inflation expectations at our 2% target."

The 10- year TIPS break-even rates, the bond market’s measure of inflation expectations, are starting to reverse a two-month decline. Up to about 1.77% Friday from 1.62% in mid-June, they still have a way to go to get to 2%.

The June CPI report last week also seemed to vindicate Powell’s earlier assessment that some of the recent slowdown in inflation was transitory -- the core rate of 2.1% matched the highest this year.

The Fed will likely be easing at a time when the broader economy, though slowing, is still chugging along. As Atlanta Fed President Raphael Bostic said “the aggregate numbers look pretty good."

Long bonds, those most sensitive to inflation, are already suffering. A 30-year Treasury sale last week was a flop and yields rose to the highest since May. Meanwhile, the S&P 500 and Dow Jones Industrial Average both set record highs last week.

Stocks and bonds are beginning to move out of sync -- look for the decoupling to continue.

Published:7/15/2019 9:02:42 AM
[Markets] Stocks waver as second-quarter earnings get under way U.S. stocks traded mixed Monday, building on record finishes from last week, as a wave of second-quarter earnings are set to kick off. Published:7/15/2019 9:02:41 AM
[Markets] Trump: No Asylum For Central Americans Who Travel Through Mexico

In what we suspect will be immediately greeted by an avalanche of "we're a nation of (legal) immigrants" and calls of 'racism' and 'hitler', AP reports that the Trump administration on Monday moved to end asylum protections for most Central American migrants.

According to a new rule published in the Federal Register, asylum seekers who pass through another country first will be ineligible for asylum at the U.S. southern border.

The rule, expected to go into effect Tuesday, also applies to children who have crossed the border alone.

AP does not, however, that there are some exceptions:

If someone has been trafficked, if the country the migrant passed through did not sign one of the major international treaties that govern how refugees are managed (though most Western countries have signed them)...

or if an asylum-seeker sought protection in a country but was denied, then a migrant could still apply for U.S. asylum.

The new rule also will apply to the initial asylum screening, known as a "credible fear" interview, at which migrants must prove they have credible fears of returning to their home country. It applies to migrants who are arriving to the U.S., not those who are already in the country.

By way of background, things have escalated quite dramatically in the last decade:

  • During the budget year for 2009, there were 35,811 asylum claims, and 8,384 were granted.

  • During 2018 budget year, there were 162,060 claims filed, and 13,168 were granted.

Immigration courts are backlogged by more than 800,000 cases, meaning many people won't have their asylum claims heard for years despite move judges being hired.

As AP notes, the policy is almost certain to face a legal challenge, and we suspect some judge somewhere in California is already drafting the order to strike down this policy, so don't hold your breath for any further slowdown in illegal border crossings.

Published:7/15/2019 8:30:22 AM
[Markets] Buy This, Not That: This is the No. 1 thing to buy on Amazon Prime Day Deal experts on what to buy, including items that are at the lowest price ever
Published:7/15/2019 8:30:22 AM
[Markets] Boeing Stock Is Slipping as the Dow Keeps Chugging Ahead STOCKSTOWATCHTODAY BLOG Gathering Strength. Stocks are in line to start the week off strong, with Dow Jones Industrial Average futures, S&P 500 futures, and Nasdaq Composite futures all 0.2% higher ahead of the open. Published:7/15/2019 8:30:22 AM
[Markets] Symantec shares plunge on reported halt in Broadcom deal talks Symantec shares plunge on reported halt in Broadcom deal talks Published:7/15/2019 8:30:22 AM
[Markets] New York Fed's manufacturing gauge shows July rebound New York Fed's manufacturing gauge shows July rebound Published:7/15/2019 8:01:24 AM
[Markets] Stock Futures Rise; Boeing Hampers Dow Jones, Citigroup Earnings Beat CrowdStrike and Amazon stock led stock futures higher early Monday, as investors cheered Citigroup's Q2 report and banks led the Dow Jones. Published:7/15/2019 8:01:24 AM
[Markets] Manufacturing Employment Expectations Crash Despite Empire Fed Survey Rebound

After June's plunge in regional Fed business surveys, July's Empire Fed headline printed a better-than-expected +4.3 (exp +2.0) from -8.6 in June.

However, despite the pickup in the main index, details of the report show that the industry continues to struggle.

A gauge of current orders crept up, though more of the state’s factories said bookings were lower in July than higher.

And, both current and future expectations for employment tumbled, with the latter crashing to its weakest since January 2016...

Worse still, as Reuters Economist Jeoff Hall notes, the internals of the New York Fed Empire State Manufacturing Survey were less flattering than the headline. In fact, an ISM-like weighting of the components produced a PMI reading of 49.0 in July, up from 48.4 in June but still recessionary.


Published:7/15/2019 8:01:24 AM
[Markets] Economic Report: Empire State manufacturing index climbs out of negative territory in July The New York Fed Empire State Manufacturing Survey’s main index rebounded modestly to 4.3 in July after a minus 8.6 reading in the prior month, the regional Fed bank said Monday.
Published:7/15/2019 8:01:24 AM
[Markets] Need to Know: How stock-market investments are like Fyre Festival tickets Need to Know: How stock-market investments are like Fyre Festival tickets Published:7/15/2019 7:37:04 AM
[Markets] Food Shortage Warnings Begin As Tropical Storm Barry Rips Through America's Heartland

Authored by Michael Snyder via The End of The American Dream blog,

The middle of the country has been relentlessly hammered by endless rain and unprecedented flooding for months, and now it is about to be absolutely pummeled by Tropical Storm Barry.  Needless to say, this is going to cause even more headaches for Midwestern farmers.  At this point, millions of acres of prime farmland are not going to be planted at all this year, and there are tens of millions of other acres where crops are really, really struggling.  Those farms desperately need some warm, sunny weather for a while, but instead they are about to get hit by another enormous storm.  In the end, this could potentially turn out to be the worst growing season in modern history, and it comes at a time when crops are literally failing all over the planet.  Sadly, we really struggle to feed everyone on the globe even during the best years, and so what will things look like if worldwide harvests are catastrophic during the second half of 2019?

I want to make it clear that we have not reached a full-blown crisis yet, but what we are seeing are some very early signs of trouble which could greatly escalate in the months ahead.

For example, it is being reported that we are now facing a “shortage of avocados”

shortage of avocados has sent prices soaring.

Wholesale prices of avocados are more than double what they were just a year ago.

Most of the extra cost is being passed onto consumers, with retail prices almost doubling.

That is certainly not the end of the world, because we can definitely survive without avocados.

But corn is another matter altogether.  All over the middle portion of the United States, corn fields look absolutely disastrous right now.  For example, just check out this photo which a reader took of a corn field in Illinois on July 6th.  The corn should be at least waist high by now, but instead it is barely out of the ground and most of that field appears to be covered by water.

It is still very early, and we shall see how the rest of the growing season plays out, but some analysts are already starting to use the word “shortage” in connection with this crisis…

U.S. corn will be in short supply, but emotions, fears, and hoarding could push it to shortage,” says Ned Schmidt, editor of the Agri-Food Value View Report. The “reality of the situation will develop over time, pushing December 2019 corn to $5.05” a bushel by year end.

Of course many of my readers were greatly concerned about the recent nationwide “tortilla shortage” at Taco Bell, but for the moment that shortage appears to have been resolved

Taco Bell confirmed to Fox News that they’ve resolved the issues with their suppliers and that the affected restaurants should be able to offer customers the entire menu. This includes all burritos and quesadillas.

A spokesperson for Taco Bell told Fox News, “We appreciate our burrito-loving customers’ patience. We have worked closely with our suppliers to resolve any shortages, and most, if not all, of our impacted restaurants should be offering our full menu so fans can now enjoy their Taco Bell favorites from the classic Bean Burrito to the new Steak Reaper Ranch Fries burrito.”

Far more alarming is the photo of a “product shortage” at Wal-Mart which has been floating around social media.

I do not know who originally took this photo, and I am unable to confirm if this same notice has been posted at locations around the country, but it is definitely alarming…

This is just another reminder of how dependent we are on America’s farmers.

If they do not grow our food, we do not eat.

And now Tropical Storm Barry is going to dump enormous amounts of rain on farms throughout the middle portion of the country all the way through Wednesday.

It is being reported that approximately 11 million people are currently under flash flood warnings right now, and this storm is moving very, very slowly

As of Sunday afternoon, Barry was crawling north across Louisiana at around 9 mph — slower than a bicyclist. That means it’s still hovering over the same state where it made landfall Saturday, dumping copious amounts of rain on cities already deluged.

And it’s not even close to done.

“Barry is expected to produce additional rain accumulations of 3 to 6 inches across portions of the lower Mississippi Valley with isolated maximum amounts of 10 inches across eastern Arkansas, western Tennessee, southeast Missouri, and northwest Mississippi,” the NHC said.

The slower this storm moves, the more rain it will dump, and we are talking about immense amounts of water.

In fact, at one point it was being projected that Barry would dump 14 trillion gallons of rain on Louisiana, Mississippi and Arkansas

Heavy rain packs the biggest danger over the region through the weekend. Forecasters said up to 20 inches is expected over southeast Louisiana, including New Orleans, Baton Rouge and Alexandria, and in southwest Mississippi, with as much as 25 inches in some isolated areas.

In all, some 14 trillion gallons of rainwater is forecast to fall on Louisiana, Mississippi and Arkansas during Barry, according to an estimate from BAM Weather meteorologist Ryan Maue.

The current track of this storm is going to take it over some of the hardest hit areas of Missouri, Illinois, Indiana and Ohio.

Needless to say, a lot of farmers are saying prayers and hoping for a miracle.

Weather patterns are behaving very, very strangely all over the world, and many believe that the worst is yet to come.  I encourage you to get prepared for the challenging times that are ahead while you still can.

For now any food shortages will just be minor inconveniences, but if harvests around the world are as disastrous as many are projecting, that could soon change in a major way.

Published:7/15/2019 7:37:04 AM
[Markets] Empire State manufacturing index rebounds in July after steep drop The New York Fed Empire State Manufacturing Survey’s main index rebounded modestly to 4.3 in July after a minus 8.6 reading in the prior month, the regional Fed bank said Monday. Published:7/15/2019 7:37:04 AM
[Markets] U.S. stock market set to extend record rally as investors await second-quarter earnings U.S. stocks on Monday poised to climb modestly, building on record finishes from last week, as a wave of second-quarter earnings are set to kick off. Published:7/15/2019 7:06:42 AM
[Markets] London markets rise as China growth slump lifts stimulus hopes London markets nudged higher on Monday as China’s slowest growth rate in 27 years sparked hopes of fresh stimulus.
Published:7/15/2019 7:06:42 AM
[Markets] Peter Thiel Slams "Treasonous" Google For Choosing China Over US Military 

During a talk Sunday at the National Conservatism conference in Washington, Peter Thiel, perhaps the most visible tech entrepreneur to back President Donald Trump, earning the eternal enmity of his fellow Silicon Valley denizens (and necessitating a move to LA), had some harsh words for his one-time friends.

The billionaire investor singled out Google for agreeing to work closely with China, trying to get its search engine back into the Chinese market, while deciding to let a US defense department contract that gave the military access to its artificial intelligence tools lapse.

These actions by Google, Thiel suggested, were "seemingly treasonous," he said during the opening of his speech. Even going so far as to question whether Google parent Alphabet's AI research program had been "infiltrated" by foreign intelligence.

He asked whether Google parent Alphabet Inc.’s AI research program or senior management had been “infiltrated” by foreign intelligence agencies. "These questions need to be asked by the FBI and the CIA," Thiel said, "And I’d like them to be asked in a not excessively gentle manner."

This wouldn't be the first time suspicions of treasonous activity have dogged American tech companies. Who could forget CFUS's recent decision to force a Chinese company to sell its entire ownership in Grindr for security reeasows.

On a more positive note, Thiel praised Trump on Sunday for his efforts to win a trade deal with China, which he termed a "signature achievement" of the administration, along with the detente with North Korea.

By the standards of the event, Thiel was more mild than many of the tech bashers in attendance - unsurprisingly, Thiel doesn't support the breakup of big tech companies, given that he still sits on Facebook's board.

Instead, Missouri Senator Josh Hawley, a Republican who’s proposed reforming Section 230 of the 1996 Communications Decency Act, which frees tech companies from responsibility for any content posted on their sites.

"I think Facebook and Google are a good examples of what is it we’re talking about," Hazony said in an interview on Sunday. "These are spectacularly impressive entrepreneurs, but you need to ask the question if Americans are better off with [Google and Facebook] single-handedly determining what should be censored?"

The event wasn't focused on tech, but coming so soon after President Trump's social media summit, it's hardly surprising that the abuse of social media would factor heavily.

Published:7/15/2019 7:06:42 AM
[Markets] Citi shares up in premarket after sales and profit rise Citi shares up in premarket after sales and profit rise Published:7/15/2019 7:06:41 AM
[Markets] Callon Petroleum says it will buy Carrizo Oil & Gas for $3.2 billion Callon Petroleum says it will buy Carrizo Oil & Gas for $3.2 billion Published:7/15/2019 6:32:22 AM
[Markets] Vice Index Points To Stalling Retail Salkes

Submitted by SouthBay Research

No Stagflation

Under current global/China slowdown conditions, deflation is likely.  The semiconductor world is showing that pain at the moment.  But it's a mixed blessing: a stagnant economy is the price to pay for falling costs.


The big factor this month is that the Trump tax effect is fading.  

Continued wage and payroll growth coupled with mild inflation is keeping consumer spending up.  History says that the combination of no headwinds and no tailwinds won't last. Spending continues to expand but data points to a slower pace in 4Q. Summer spending is budgeted well in advance (hotels and planes booked months ago, for example) and sentiment was strong.

Look for a dip in spending in California and New York as tax returns are smaller due to reduced deduction on income taxes from changes in State and Municipal deductions.

Note: The Vice Index typically leads Retail spending by 5 months. The Trump Tax Cut was immediately distortive, so the leading quality was disrupted

Gambling Stalls

The tax cut party has ended Although payrolls and higher wages are conducive to more gambling activity, the real boost has been last year’s tax cut.

Accelerating off that base is difficult, as the figures show. But that’s the same for all household spending – last year’s surge is fading.

The chart above averages the rates of gambling growth for Detroit, Maryland, Connecticut, Atlantic City, & Pennsylvania

Cannabis, Uber & Free Market Economics

The US taxi industry is a case study in supply and demand. When the Depression hit, many unemployed workers used their cars to become taxi drivers. The surge in supply led to a collapse in prices. Cities like New York throttled back the supply by issuing a limited number of licenses. Supply dropped, and prices rose.

Everything reversed course when Uber entered the market. A surge in supply has again meant falling prices in the ‘for hire’ market.

Cannabis is experiencing a similar taste of free market economics.

To be sure, the market isn’t exactly open. In California, for example, cannabis is now legally for sale but that’s only in theory: municipalities haven’t licensed very many retailers.

And even more laissez faire States like Colorado limit the number of producers.

If Uber represents one end of the spectrum in a comparatively free market and taxi cabs represent the other end of the spectrum where supply is significantly constrained, then cannabis today is closer to the Uber end of the market, at least compared to where it was when it was illegal and supply was thereby significantly restrained.

And the same market forces have immediately hit prices: cannabis prices have collapsed in Colorado. In 2015 pot wholesale prices peaked at $2,000 per pound. It was $1,300 in 2017 but by late last year had fallen to $800 per pound. The cause of the sudden collapse: most producers came online in 2017.

The story is similar where pot has been legalized for a few years: wholesale prices are trending around $700 per pound in Oregon, Washington & California. By comparison, it’s $2,500 in New Mexico, which just legalized cannabis.

In other words, cannabis tax revenues are a net gain but many of the expectations don’t take into consideration the price drops that come from legalization. And cannabis legalization also affects tax revenues in other ways. For example, alcohol tax revenues have been affected in Colorado because consumers have turned to pot smoking. But on th eother hand, salty snack and ice cream consumption has jumped in areas where cannabis is legal.

Published:7/15/2019 6:32:22 AM
[Markets] Earnings Outlook: Microsoft earnings: Trillion-dollar valuation is banking on continuing cloud growth Growth of Microsoft Corp.’s cloud service Azure will be key in determining whether the software giant maintains its leading trillion-dollar market cap after its earnings report.
Published:7/15/2019 6:32:22 AM
[Markets] Good data or not, UBS still expects a half-point rate cut Economists at UBS still anticipate a half-point cut from the Fed at the upcoming Federal Open Market Committee meeting due to end July 31, even with good economic data. Published:7/15/2019 6:04:26 AM
[Markets] Netflix earnings: No more ‘Friends,’ but plenty of new enemies are on the way It’s the calm before the competitive storm when streaming video giant Netflix Inc. is scheduled to report second-quarter financial results Wednesday after the market’s close.
Published:7/15/2019 6:04:26 AM
[Markets] Top 5 Things to Know in the Market on Monday - Here are the top five things you need to know in financial markets on Monday, July 15: Published:7/15/2019 5:37:58 AM
[Markets] Trump Miight Fire Ross Over Citizenship Question Embarrassment

After more than a year of rumors about the commerce secretary's imminent departure, it seems as if President Trump has finally had enough of the Commerce Secretary whom Trump once claimed was "past his prime."

NBC News reports that Trrump has told his aides that he's considering firing Ross after the Commerce Department failed to convince the Supreme Court that the citizenship question should be added to the 2020 census. SCOTUS rejected the government's argument because, or so it claimed, the Commerce Department's lawyer didn't adequately explain why the question was essential, and urged Ross to come back with a better reason.


But Ross has survived previous rumors of his imminent firing, and with Labor Secretary Alex Acosta having only just departed over his role in striking the 'sweetheart' deal for Jeffrey Epstein, the Trump administration has nearly two dozen acting secretaries or deputies that some have sarcastically labeled a currency crisis.

Of course, this wouldn't be the first time Ross has gotten flack for his actions and comments. During the government shutdown, his perceived indifference to the suffering of furloughed workers earned him a reputation for being out of touch. And let's not the scandal over Ross possible misrepresenting his personal assets.

Whatever happens with Ross, now one of the few remaining cabinet secretaries who has been there since the beginning, some expect Ross will be gone by the end of the summer.

However, Trump and Ross do have a relationship that dates back to before he joined the administration. The two men know each other for 25 years, and once socialized together in Palm Beach. Ross, a registered Democrat, broke ranks in early 2016 to endorse Trump, saying America needed a more radical approach to government.

Then again, when Trump was asked by NBC News if he blamed Ross for the census failures, Trump said 'no, he didn't let me down'.

Ross would be the 10th Senate-confirmed member of the Cabinet to leave the administration, in addition to dozens of senior officials, including five communications directors, two chiefs of staff, two national security advisers, two press secretaries, the Federal Bureau of Investigations director, the U.S. ambassador to the United Nations, the National Economic Council director, the Small Business Administrator and the Chair of the Council of Economic Advisers.

Published:7/15/2019 5:37:57 AM
[Markets] Outside the Box: Answers to your questions about Roth conversions Pay attention to recent tax code changes.
Published:7/15/2019 5:02:59 AM
[Markets] Outside the Box: This 401(k) move before you retire guarantees monthly income in old age Converting part of your retirement savings into an annuity makes financial sense, writes Robert Pozen.
Published:7/15/2019 4:30:14 AM
[Markets] Next Avenue: These women are at most financial risk in retirement The surprising news from a recent report and what you can do if you’re one of them.
Published:7/15/2019 4:03:42 AM
[Markets] Margolis: Turkey Calls Trump's Bluff

Authored by Eric Margolis via

Turkey has just called Donald Trump’s bluff by going ahead with the purchase of Russian S-400 anti-aircraft missiles. The outrage in Washington is volcanic. Trump is vowing to rain fire and brimstone sanctions down on the disobedient Turks.

The S-400 is Russia’s premier anti-air missile. It is believed highly effective against all forms of aircraft – including stealth planes – cruise missiles, medium range ballistic missiles, drones, and some other types of missiles. It offers the choice of a self-directing version with its own radar seeker, or a less expensive, "semi-active" version that is guided by its launch-battery radar.

Russian military plane unloading first batch of S-400 components near Ankara. Image source: Turkish Defense Ministry via AP

What makes this AA missile (SS-21 in NATO terminology) particularly deadly is its remarkable 400 km range. The S-400 is said by Russia to be able to unmask stealth aircraft. I’ve been told by Soviet security officials as far back as 1990 that their radars could detect US stealth aircraft.

The missile’s remarkable range and detection capability puts at risk some of the key elements of US war fighting capability, notably the E-3 AWACS airborne radar aircraft, US electronic warfare aircraft, tankers and, of course, fighters like the new stealth F-35, improved F-15’s, F-22’s and B-1, B-2 and venerable B-52 heavy bombers used to carry long-ranged cruise missiles.

The Russian AA system can "shoot and scoot" – firing and then quickly moving. Even more important, the S-400 system costs about half the price of its leading competitor, the US Patriot PAC-2 system. The S-400 may also be more reliable and accurate. The Great White Father in Washington is not happy.

The Trump administration brought heavy pressure on Turkey not to buy the S-400, threatening to cancel Turkey’s order for 100 of the new, stealthy F-35’s. Few thought the Turks would defy the US on this issue, but they failed to understand the depths of Turkey’s anger at the US.

Most Turks believe that the US engineered the failed 2016 coup against the democratic government in Ankara working through a shadowy religious organization run by the spiritual-political leader, Fethullah Gulen, who lives in exile in the United States. Turkey’s elected president, Recep Tayyip Erdogan, had been too independent-minded for Washington, clashing over US policy to Syria and the Gulf. He had also incurred the wrath of America’s Israel lobby for demanding justice for the Palestinians.

Turkey is now under economic attack by Washington. President Trump is threatening sanctions (read economic warfare) against Turkey, an old, loyal US ally. During the Korean War, Turkish troops saved American soldiers from Chinese encirclement. But Turks are mostly Muslim, and Muslims are hated by Trump and his allies.

S-400 missiles are now arriving in Turkey. What will Trump do? Cancel sale to Turkey of the F-35 and other military equipment or spare parts. Threaten to oust Turkey from NATO. Get Israel and Greece to menace Turkey.

Turkey can live without the F-35. It’s too expensive and may be more vulnerable than advertised. The Turks can get similar, less expensive warplanes from Russia. India and China are both buying the S-400. Even the Saudis may join them though Moscow is delaying the sale. S-400’s are also stationed in Syria with Russian forces and are slated to go to sea in a naval version.

If the US reacts with even more anger, Turkey could threaten to withdraw from NATO and kick the US out of its highly strategic air base in southeast Turkey at Incirlik. It’s worth recalling that Turkey provided NATO’s second largest army after the US. Someone has to remind the deeply unknowing Trump that NATO without Turkey will be declawed. Equally important, that a Turkey unconstrained by NATO membership, will seek sources of oil which it lacks and desperately needs, and new alliances.

Only a century ago, Iraq’s rich oil fields used to be part of the Ottoman Empire until taken away by the British and French imperial powers. The days of a subservient, tame Turkey may be ending.

Published:7/15/2019 4:03:42 AM
[Markets] Iran To UK: We'll Continue Oil Exports "Under Any Conditions" As Detained Tanker Crew Released

As the "tanker wars" continue Iran’s Foreign Minister Mohammad Javad Zarif warned his British counterpart Jeremy Hunt in a telephone call on Saturday that Iran plans to continue its oil exports "under any conditions".

Zarif also repeated Iranian demands for the UK to release the Grace 1 oil tanker, seized over a week ago after it was boarded by Royal Marines off Gibraltar. It had been carrying 2 million barrels of Iranian oil and was alleged to have been bound for Syria, in violation of EU sanctions; however, Tehran has accused the UK of fundamentally doing the United States' bidding. 

In a public statement posted to Twitter, Hunt informed Zarif that the UK would release the tanker if it received guarantees it would not go to Syria

Iran tanker file photo, via Middle East Monitor

On Saturday the four-member crew of the detained tanker had been released, which could serve to ease tensions, according to the WSJ.

They were being interviewed and questioned as to the nature of the voyage, and whether they intended to violate EU sanctions on Syria — which it appears they were given the ship had gone all the way around the south of Africa from the gulf instead of the usual route of the Suez canal, something which had raised suspicions. 

Meanwhile France's foreign minister said over the weekend that Iran's decisions to breach caps on uranium enrichment was “a bad reaction to ... (a) bad decision,” according to Reuters, and said the region is stumbling dangerously into war. 

“The situation is serious. The rise of tensions could lead to accidents,” French Foreign Minister Jean-Yves Le Drian told reporters.

Iran has recently issued a 60-day window for France and other EU nations to salvage the deal, saying it will blow through another uranium enrichment ceiling by early September is nothing is done to both rescue the deal and ease US-led sanctions.

Published:7/15/2019 3:32:57 AM
[Markets] Dow Futures Grind Higher Ahead of Q2 Earnings Kick-Off; China GDP Slows on Trade U.S. equity futures are pointing to a flat open on Wall Street Monday as investors both prep for a key set of data releases that will gauge the strength of the consumer economy and brace for the start of the second quarter earnings season. Published:7/15/2019 3:06:49 AM
[Markets] Britain Ramps Up Media War On Russia

Authored by Finian Cunningham via The Strategic Culture Foundation,

The British government appears to be more and more aping a Monty Python-type farce with each passing day. Soon the absurd ensemble will be complete if either Boris Johnson or Jeremy Hunt becomes the next prime minister.

This week the mandarins at the Ministry of Funny Walks ruled that two internationally respected Russian news media channels were banned from attending a global conference on “press freedom”.

RT and another Russia-based news outlet Sputnik were refused permission by the British government to participate in the Global Conference for Media Freedom, held in London.

A British Foreign Office spokesperson said:

“We have not accredited RT or Sputnik because of their earlier role in spreading disinformation.”

The irony of it. The British government is peddling unsubstantiated accusations (more accurately, ridiculous slander) against Russian media which is then invoked as “justification” for censorship at a much-vaunted international conference supposedly dedicated to freedom of the press. You could hardly make the farce up. It’s a kind of cross between George Orwell and Monty Python.

What the British government is doing is blatantly ramping up the media war against Russia. London is giving a license for further outrageous repression of Russian news media, as well as piling on demonization of Russia as a state.

In the same week it was reported that fellow NATO member Lithuania has blocked the news website of Sputnik in the Baltic country.

Previously, France had banned RT and Sputnik journalists from attending public press conferences held by President Emmanuel Macron. In the US, Sputnik radio stations have been curbed from reaching their American audiences.

Russia’s foreign ministry slammed the British and Lithuanian moves this week as putting unreasonable obstacles on the professional work of Russian news media.

RT and Sputnik are internationally recognized news outlets with accredited offices and reporters based in countries all around the world. Just because the channels are financially supported by the Russian government is no grounds whatsoever for accusing them of being “Kremlin operations”. Most countries maintain some level of government sponsorship of their respective national news media.

The British Broadcasting Corporation and France 24 are prime examples. The US’s Voice of America and Radio Free Europe are other well-known instances of government-funded broadcasters. Should they be henceforth pejoratively labelled as “London, Paris, or Washington operations” if we use the same criterion?

Moscow warned this week that British media outlets working in Russia can expect reciprocal restrictions after the banning of RT and Sputnik at the London conference.

If we go down that route of bans and counter-bans, then international news media, journalistic integrity and the principle of free speech will be increasingly eroded. Perhaps that baleful outcome is exactly what the British and other NATO governments want to achieve in a desperate, underhand attempt to shut down Russia’s news perspective.

What’s really going on here is the thin-skinned British authorities and others simply cannot abide the fact that Russian news media have provided an alternative perspective on international politics. A perspective that often sheds critical light on British, US and NATO foreign policies and conduct. It is also a perspective which seems to be increasingly appreciated by greater numbers of international audiences and viewers, including those of Britain and America.

In recent years, Western mainstream news media has witnessed a phenomenal collapse in credibility among Western public over numerous issues. From illegal wars in the Middle East to spurious allegations about “Russian meddling” in elections, Western media have been exposed over and over again as peddlers of government-sanctioned propaganda.

Public trust in Western media seems to be at an all-time low which in turn undermines the authority and credibility of their governments. The fault, perhaps one could say “crisis” in credibility, is inherent. It has little to do with Russia or its media, although Russian news channels like RT and Sputnik have certainly contributed in a legitimate way to exposing the malfeasance of Western governments.

On international politics, such as the NATO-backed covert war for regime change in Syria, or the deplorable incitement of tensions by Washington and London towards Iran, Russian news media have provided a critical source of reporting and analysis. Often that alternative perspective has allowed Western public to hold their governments and derelict media to account. The fable of “the emperor with no clothes” comes to mind.

It is bitterly ironic that an independent journalist like Julian Assange of the Wikileaks website is being currently detained in a maximum security British prison on trumped-up extradition charges to the US for spying – when Assange’s real “crime” is that he exposed American and British war crimes in Iraq and elsewhere. Arguably, Assange’s credibility and appreciation among ordinary citizens the world over is much higher than either of the US or British governments, or their mainstream media.

The same dichotomy applies to the two above-mentioned Russia-based news channels. Not able to cope with hearing the critical message, the British government has resorted to shooting the messenger. However, the British and international public can see what’s going on here, and so the “emperor” is hastily, clumsily trying to cover up the embarrassment from being exposed.

But, more sinisterly, the British assault on press freedom is ramping up a global media war in which Russia is being targeted by NATO powers. The first casualty of war is the truth. And that suggests a war is dangerously looming. That’s why freedom of press is more urgent than ever. But don’t expect the British government to rescue it. It’s trying to bury it – albeit with its la-de-da pretensions of virtue.

Published:7/15/2019 2:37:53 AM
[Markets] The $3.8 Billion Aircraft Carrier That Sprang A Leak

It triggered embarrassing headlines across the globe late last week and over the weekend: "Britain's new multi-billion aircraft carrier HMS Queen Elizabeth was forced to cut short sea trials this week after springing a leak," reported CNN.

It was the "future flagship" of the Royal Navy's fleet, and embarked from Portsmouth for sea trials last month, but then a leak so severe that it reached "neck-high" in some flooded parts of the ship forced a hasty return to its Portsmouth base.

HMS Queen Elizabeth, via Global Look Press

"Following a minor issue with an internal system on HMS Queen Elizabeth, the ship's company were required to remove a small volume of water from the ship," a Royal Navy spokesperson said. "An investigation into the cause is underway."

The "minor issue" involved a whopping 250 tons of water (66,000 gallons) flooding two compartments and a stairwell inside the 65,000-ton warship. 

A number of UK media reports said the cause was a likely high-pressure sea water pipe which burst. Days following the incident, which was first revealed middle of last week, the Royal Navy reported that the ship's hull remained undamaged and that all the water was successfully pumped out.

"During her time out of the water, 284 hull valves were changed, both rudder blades were removed and cleaned, her sea inlet pipes were inspected, all sacrificial anodes were replaced and a renewed coat of anti-foul paint was applied to the ship's bottom," a Royal Navy press release described further.

The Royal Navy calls the Queen Elizabeth as well another carrier still under construction, the HMS Prince of Wales, "the largest and most advanced warships ever built for the Royal Navy."

The ship has reportedly been plagued by other mechanical issues such as a shaft seal leak resulting the ship taking on 200 liters of water every hour, as well as sprinklers being falsely triggered in an aircraft hangar, according to the BBC.

Also interesting is that its captain was removed last May due to misuse of a British Defence Ministry vehicle, the BBC reported. 

Published:7/15/2019 1:58:15 AM
[Markets] "Sweden Is At War"

Authored by Judith Bergman via The Gatestone Institute,

  • In 2017, a Swedish police report, "Utsatta områden 2017" ("Vulnerable Areas 2017") showed that there are 61 such areas -- also known as no-go zones -- in Sweden. They encompass 200 criminal networks, consisting of an estimated 5,000 criminals. Most of the inhabitants are non-Western immigrants and their descendants.

  • In March, the Swedish National Forensic Centre estimated that since 2012, the number of shootings classified as murder or attempted murder had increased by almost 100 percent.

  • "Sweden is at war and it is the politicians who are responsible. Five nights in a row, cars have been set on fire in the university town of Lund. Such insane acts have occurred on hundreds of occasions in various places in Sweden over the past fifteen years. From 1955 to 1985, not a single car was ignited in Malmö, Gothenburg, Stockholm or Lund.... None of these criminals is starving or lacking in access to clean water. They have a roof over their heads and they have been offered free schooling.... They do not live in dilapidated houses.... It is called upbringing and this is missing for thousands of girls and boys in Swedish homes today." — Björn Ranelid, Swedish author, Expressen, July 5, 2019.

  • "Very few things were better in Sweden [before].... We have built a strong country, where we take care of each other. Where society takes responsibility and no man is left alone". — Swedish Prime Minister Stefan Löfven.

  • Sadly, many Swedes probably feel terribly left alone in a country that increasingly resembles a war zone.

In 2018, Sweden experienced a record number of lethal shootings, 306 in all. Forty-five people were killed and 135 injured nationwide, most deaths occurring in Region South, where Malmö is located. In March, the Swedish National Forensic Centre estimated that since 2012, the number of shootings classified as murder or attempted murder has increased by almost 100 percent. The Centre also found that the most popular weapon used in the shootings is the Kalashnikov assault rifle. "It is one of the world's most manufactured weapons and used in many wars," said the Centre's team manager, Mikael Högfors. "When they are no longer needed... they are smuggled into Sweden".

In the first six months of 2018, according to the police, almost every other shooting took place in a "vulnerable area", also known as no-go zones. In 2017, a Swedish police report, "Utsatta områden 2017" ("Vulnerable Areas 2017") disclosed that there are 61 such areas in Sweden. They encompass 200 criminal networks, consisting of an estimated 5,000 criminals. Most of the inhabitants are non-Western immigrants and their descendants.

The police wrote in the 2017 report that global ethnic conflicts are replicated in the vulnerable areas:

"... the [Swedish] judiciary and the rest of [Swedish] society do not understand these conflicts or have answers to how they can be solved. The police therefore need to have a better knowledge of the world and understanding of events in order to interpret what is happening in the areas. The presence of returnees, sympathizers for terrorist groups such as the Islamic State, al Qaeda and al-Shabaab, and representatives of Salafist-oriented mosques, contribute to tensions between these groups and other residents in the vulnerable areas. Since the summer of 2014, when a Caliphate was proclaimed in Syria and Iraq, sectarian contradictions have increased, especially between Sunnis, Shiites, Levantine Christians, and nationalists of Kurdish origin". (p 13)

On June 3, the police released a new list revealing that there are now 60 such areas, instead of the previous 61. That does not mean, however, that much has improved. On the contrary.

In 2019, shootings still continue apace. In Malmö -- a city of more than 300,000 inhabitants, one third of whom were "born abroad" according to the city's statistics -- a 25-year-old man was shot dead outside a social services office on June 10, while on the same day, at Malmö Central Station, police shot a man who said he had a bomb in his bag and was alleged to have behaved in a threatening way. That evening, two men were shot in the Lorensborg area of Malmö. Later that night, two explosions shook the city.

Because of the increased number of shootings, city employees are now apparently so uncomfortable about working in the city that the Malmö municipality has released guidelines on how municipal workers -- especially those who work in home care, rehabilitation and short-term housing -- can remain safe in the city as they go about their jobs.

Under the heading, "Personal safety - tips and advice on how to avoid getting into unwanted situations", the municipality advises its employees to "Plan your itinerary - know your area...try to minimize the time from when you park your bike / car until you enter [the destination]". Also, "Before leaving a building, look out first and make an assessment of the surroundings to avoid getting into an unwanted situation... keep away from people who are considered potentially threatening or dangerous and increase the distance if there are no other people nearby".

One city employee, who received the guidelines, accused the municipality of hypocrisy: "To the media, the municipality says that everything is fine, even though it is not. Then they send this type of mail to their employees".

The municipal government's guidelines on safety seem appropriate for a civil war zone, such as Beirut once was, rather than for the once-peaceful city of Malmö.

Beirut also comes to mind in the Swedish city of Linköping, where in early June an explosion blasted through a residential building, until it looked as if it had been pounded in a war. Miraculously, no one was killed in the blast, but 20 people were injured. The police suspect that the incident was gang-related. A few weeks later, two men were shot in the Linköping district of Skäggetorp -- on the police list of "vulnerable areas" or "no-go zones".

After that, on June 30, in more gang related incidents, three shootings took place in three different suburbs in Stockholm. Two people, one of whom had been shot in the head, died. One of the murdered men, a rapper named Rozh Shamal, had earlier been convicted of assault, robbery and drug offenses, among other things. This year, just in Stockholm, eleven people have already been shot to death -- the same number as for all of 2018. This year in Sweden, more than twenty peoplehave so far been shot to death.

"The development is unacceptable," said the head of the police's national operational department (Noa), Mats Löfving. "In many cases, military automatic weapons are used. We see a reduction in the number of those injured in firearm violence, but the number of killings does not go down".

On July 1, National Police Chief Anders Thornberg said that the situation is "extraordinarily serious". He claimed , however, that the police have not lost control of the gangs and that the main task is to stop the growth in the number of young criminals. "For every young man who gets shot, there are 10-15 new ones ready to step in," he said. Only a few days later, however, he added that Swedes will have to get used to the shootings for the foreseeable future:

"We think this [the shootings and the extreme violence] might continue for five to ten years in the particularly vulnerable areas," Thornberg said. "It is also about drugs. Drugs are established in society, and ordinary people buy them. There is a market that the gangs will continue to fight over".

The leader of the opposition party Moderaterna, Ulf Kristersson, called the situation, "extreme for a country that is not at war".

Bombed buildings and shootings are not all that is plaguing Sweden. In addition, cars are regularly set on fire. The small picturesque university town of Lund, close to Malmö, has recently been suffering from extensive car fires. The police have not yet identified the suspects. "We see an increase in car fires right now, it is clearly worrying", said Patrik Isacsson, local police area manager in Lund. He noted that car fires usually increase during the summer months, but have also been increasing over the years. "We do not know yet who the perpetrators are, so I can only speculate, but this type of arson is usually set by young people. That it happens during summertime can be because young people are unemployed and out there a lot".

"I definitely think that these are young people who have not found their place in society, who know they are not accepted," commented a sociologist of law at Malmö University, Ingela Kolfjord, "that the climate has hardened and that they are constantly seen as 'the other'. Car fires are not just a way of showing their displeasure but a way of showing that they are frustrated, desperate and angry."

Swedish author Björn Ranelid disagreed. "Sweden is at war and it is the politicians who are responsible" he wrote in Expressen.

"Five nights in a row, cars have been set on fire in the university town of Lund. Such insane acts have occurred on hundreds of occasions in various places in Sweden over the past fifteen years. From 1955 to 1985, not a single car was torched in Malmö, Gothenburg, Stockholm or Lund. ...When a female sociologist at Malmö University explains the crimes [as a consequence] of youths being frustrated... she speaks nonsense... She repeats things that could have been said by a parrot. None of these criminals is starving or lacking in access to clean water. They have a roof over their heads and they have been offered free schooling for nine or twelve years. They do not live in dilapidated houses. All of them... have had a higher material standard in their homes than several thousands of the children and young people who grew up at Ellstorp in Malmö where I lived with my parents and two siblings, in 47 square meters in two small rooms and a kitchen from 1949 to 1966".

Ranelid concluded:

"It is called upbringing and this is missing for thousands of girls and boys in Swedish homes today. It's not about money or where you happen to be born in the world. It has nothing to do with politics or ideology. It is about ethics, morality and co-existence between people".

Car fires, frequent and widespread, are just one of the new aspects of living in the formerly idyllic city of Lund. In January, a so-called unaccompanied minor from Afghanistan, Sadeq Nadir, sought to murder several people in the city by ramming into them with a stolen car. Although he claimed to have converted to Christianity, material found in his apartment showed that he wanted to wage jihad and become a martyr. He told the police that his intention had been to kill. The event was initially classified as an attempt at a terrorist crime but then changed to a charge of ten attempted murders. Although Sadeq had admitted that his intention was to kill, the Swedish district court did not find that Sadeq could be convicted for either terrorism or attempted murder. The court argued that he had not been driving "fast enough" to cause a concrete risk of death. In the same vein, although Sadeq was found to have written texts about jihad and martyrdom and claimed to be acting for Allah, the court did not find that he had acted from any religious terrorist motives. He was convicted of merely causing danger to others and threatening them.

What is the Swedish government's assessment of the violent and volatile situation? Swedish Prime Minister Stefan Löfven, condemned the recent shootings:

"We have tightened several penalties considerably, including the punishment for illegally possessing weapons and explosives such as hand grenades. We have also given the police increased powers for... camera surveillance and information collection".

On July 2, the government presented proposals for combating gun violence, including harsher penalties for improper possession of explosive materials and new powers for customs officials to block packages suspected of containing weapons or explosives. According to the opposition, the proposals have come too late. "This could have been done a year ago, too. There have never been so many shootings in Sweden. I think it is obvious to most people that what the government has done is not enough", said Johan Forssell from the opposition party, Moderaterna.

As late as June 6, on Sweden's National Day, Prime Minister Stefan Löfven, while acknowledging that Sweden "still has serious societal problems" remarked, "Very few things were better in Sweden" before:

"But even though we can think of old times as an idyll with red cottages and green meadows, very few things were better before. During a national day celebration, I think we should celebrate just that, how much we have achieved as a country. We have built a strong country, where we take care of each other. Where society takes responsibility and no man is left alone".

Sadly, many Swedes probably feel terribly left alone in a country that increasingly resembles a war zone.

Published:7/15/2019 1:31:52 AM
[Markets] Channel 4's "Inside Idlib" – The Last Gasp Of A Dying Fake News Campaign

Authored by Kit Knightly via,

Channel 4 just announced a new addition to their on-going “Iside Idlib” report: a 10-minute video which – they claim – is evidence of the Russian and Syrian governments committing a war crime.

The war-crime itself is said to be a “double-tap” airstrike, ie. An airstrike, waiting for the first responders to arrive, and then another airstrike. (The term actually originates from US drone strikes in Yemen, Somalia and Pakistan…I don’t know if C4 had any special reports about that.)

Watch the video, do you see evidence of a war crime?

Here’s what I saw:

  • Fairly quiet countryside.

  • Men in White Helmets running around some fig trees.

  • Men in White Helmets shouting in Arabic.

  • A dust cloud.

  • A damaged van/ambulance.

  • An injured man/a man pretending to injured/a dummy (You can never be sure with the WH).

  • More running and shouting.

  • One more dust cloud, much further away.

  • People in white helmets looking sad.

Here’s what I didn’t see:

  • Any Russian or Syrian planes.

  • Any Russian or Syrian military personnel.

  • Any Russian or Syrian military equipment.

  • Any evidence of the “first airstrike”.

  • Any bombs falling.

  • Any evidence of a war crime.

If this is really the best they have, then they have nothing. It is, frankly, embarrassing.


The written report that accompanies the video isn’t much better – it’s essentially just a Cliff Notes version of Jon Snow’s rather simpering commentary, but there’s some interesting language to deconstruct, and omissions to take note of.

An investigation by Channel 4 News has obtained evidence of possible war crimes in Syria

I just love this beginning part. So up itself, so pompous.

We KNOW there was no “investigation”, they didn’t dig this up or ferret it out – the people who made it want it to be on TV. That’s the reason they made it. Channel 4’s “investigation” was checking their email.

Either GCHQ directly dumped it into their inbox one morning, or some NGO proxy did it for them…either way, there was no “investigation”. At best – at best – there were some fact checks AFTER they got the video, just to make sure they weren’t going to make fools of themselves. (Spoiler alert: they did).

As a general rule, with Western mainstream media, when they say “an investigation has obtained” they honestly do mean “someone emailed this to us”. That goes double for bellingcat. That’s just how it works.

…with airstrikes that appear to deliberately target rescuers.

Er…no they don’t. There are five “airstrikes” in the video (according to them, I only saw 2 at most). Of these five, only one (allegedly) hit anywhere even vaguely near an ambulance. If the Syrian airforce have a miss-rate of 80% how on earth are they winning this war?

Footage caught on multiple cameras allegedly shows a so-called ‘double-tap’ operation in Idlib province

They keep coming back to this “multiple cameras” angle, I don’t know why. I think it might be a pre-emptive defence against accusations of fakery, maybe? Which would be pretty revealing in and of itself.

Oh, by the by, the “multiple cameras” are the go-pros and bodycams being worn by the White Helmets. I don’t know if they always wear them, or if they just wore them to that scene. Either way, it’s weird.

If they always wear them…well, they must be expensive, and given the White Helmets are just plucky little volunteers that’s a hell of an investment. (Also, if the white Helmets are always wearing portable cameras, you’d think – five years into their existence – they’d have some pretty solid evidence of war crimes in Syria by now. But apparently this is the best they’ve got. Funny that).

If they put them on for this event especially, well, that’s obviously fishy.

Evidence of this kind has rarely been seen before; a complete incident caught on multiple cameras.

…there they go with the multiple cameras thing again. It’s really nothing like as compelling as they seem to think it is.

Oh, and “evidence of this type” has been seen MANY times before.

I can’t tell you how many videos of dusty men screaming into walkie talkies I’ve seen. Each and every one labelled “daring rescue caught on camera” or “Syrian war crimes exposed”. This is no different. (In fact, it’s worse, because the field of fig trees is actually quite nice, compared with Indistinguishable Pile of Rubble #6).

It’s not a “complete incident” either, because even by their own admission we never saw the initial “strike”, supposing it actually happened.

But, if proven, the so-called “double-tap” tactic is a war crime.

Yes, and the Flat Earth theory if proven, would totally and irreversibly change our understanding of the universe.

“If proven” is a great phrase that way…it sounds serious, like it means something. It carries the implication of “and it will be soon”, but what it actually means – is that it’s not even close to being proven yet.

The war crime isn’t proven to have even happened, let alone to have been carried out by the Russian Syrian Air Force. And it won’t beproven, because the video has no evidence in it.

The footage is barely evidence, let alone proof. It could be recreated with 2 Go Pros, a barrel of dust and some discount fireworks.


Interestingly, though he’s obviously a man sincerely concerned about human rights and truth and all that good stuff, Mr Snow leaves out a fair amount of information about the White Helmets.

For example, he says that “Assad’s government considers [the White Helmets] enemy combatants.” But he doesn’t say what that’s the case.

Just to fill you all in, Assad’s government “considers the White Helmets enemy combatants” because they are directly funded by the American and British governments and because they regularly support – and even take part in – terrorist activities.

He says that “over 250” of the White Helmets have been killed, but doesn’t say that they claim to have a staff of over 3000 (paid) volunteers.

So, despite being just “carpenters and bakers”, and despite being constantly deployed to war-zones, and despite being the victims of the murderous Assad regime’s nefarious “double-tap” tactics….only 8% of them have been killed. In five years. Less than one per week.

Considering the sheer number of hospitals the Syrians and Russians are alleged to have bombed – well into triple figures by now – that’s actually remarkable. Almost impossible, you might say. Those white helmets must really work.

My favourite part is when Snow has to describe the trick of “smearing mud on the ambulances to hide the White Helmets logo”, without once pausing to question:

1) Where these plucky little ex-bakers managed to get all these modern ambulances customised with their own logo.

2) Why they don’t just stop painting the logo on in the first place.

Just reflect for a second – they have a logo.

How bonkers is that? They’re supposed to be a destitute resistance movement, helping the poor victims of Assad’s brutality. Volunteer bakers and carpenters and school teachers who just want to help…and someone, at some point, is supposed have said “Guys, we should get a logo done,”.

That’s insane.

Did the French Resistance get a logo designed and then tool around occupied Paris in vans with their name painted on the side?

It’s just so…Western. So focus group. So public relations. So modern. The logo has to exist because that’s the brand. They need the logo to help sell the message. It’s the only way they know how to work.

It’s been done to death, but the White Helmets – as the media paint them – just don’t make any sense. They are a narrative beyond ridiculous, that simply can’t exist in the real world, and watching media pundits earnestly describing the Looney Tunes madhouse they’re trying to sell us has become funny.

*  *  *

I honestly don’t know what the point of this exercise was. It says nothing new, it shows nothing new. It’s a news story from two years ago, warmed up and repackaged.

The public is well past the White Helmets’ schtick, we all know what they are by now. The White Helmets are what you get when you give Al Qaeda a makeover. The result of a Western PR agency tasked with rebranding the unrebrandable.

This fight is over, and our side won. I don’t know what C4, or whoever supplied them this video, were hoping to achieve, but I can tell you they won’t achieve it.

This is the best evidence they have, the best they’ve ever had, they say that themselves. And it’s nothing. The information war for Syria is over. The White Helmets’ PR push failed. Turns out Assad didn’t have to go after all.

It’s really time the UK media woke up to this fact.

At this point it’s just getting sad.

Published:7/14/2019 11:27:53 PM
[Markets] These Are The Best And Worst States To Start A Small Business

Building a small business from inception to the point where its thriving and set up for long-term success is no small feat.

According to data from the Bureau of Labor Statistics, about 1/5th of all startups don’t survive to their first birthday. And nearly half will never make it to their fifth.

But as Wallethub points out, there are different reasons why startups fail. Among them, a bad location is one of the most commonly cited. But beyond situating the business in a popular thoroughfare, choosing the right state to launch your business can also make a huge difference in its odds of success.

States that offer the right conditions for success, such as access to cash, skilled workers, affordable office space and other factors, can be critical in helping a business thrive.

In a recent study, WalletHub compared the 50 states across 26 metrics for startup success, assigning each state a number in each category, then computing which states are the most business-friendly overall.

The results are hardly surprising: High-tax, Democrat-controlled states in the northeast offer some of the worst conditions for businesses, while low-tax states, Republican-controlled states in the Sun Belt have some of the best conditions.

Source: WalletHub

See the complete ranking below:

  1. Texas 
  2. Utah   
  3. Georgia   
  4. North Dakota 
  5. Oklahoma   
  6. Florida   
  7. Arizona   
  8. California   
  9. Montana   
  10. Colorado   
  11. Idaho   
  12. Washington   
  13. Mississippi
  14. North Carolina
  15. Louisiana
  16. Kansas
  17. Minnesota
  18. Michigan
  19. Nebraska
  20. Tennessee
  21. Kentucky
  22. South Dakota
  23. Maine
  24. Indiana
  25. Nevada
  26. Oregon
  27. New Mexico
  28. Alaska
  29. Alabama
  30. Wisconsin
  31. Arkansas
  32. Missouri
  33. Wyoming
  34. Ohio
  35. Illinois
  36. Massachusetts
  37. Iowa
  38. South Carolina
  39. Virginia
  40. Maryland
  41. West Virginia
  42. New York
  43. Vermont
  44. Delaware
  45. Pennsylvania
  46. Connecticut
  47. Hawaii
  48. New Hampshire
  49. New Jersey
  50. Rhode Island
Published:7/14/2019 11:00:14 PM
[Markets] Turkey's Erdogan Vows To "Significantly" Cut Rates As Trump Set To Roll Out Sanctions Over S-400 Purchase

Lately not a week passes without some dismal news involving Turkey hitting the tape, and yet the lira continues to levitate, blissfully ignorant of the storm clouds headed for Ankara, levitating on hopes the Fed will cut rates and sprinkle golden showers on emerging markets. However, in light of the two latest developments, the Mrs Watanabe sellers of USDTRY may finally pay attention.

On Sunday, Turkish President Recep Tayyip Erdogan - who last weekend fired the head of the central bank for not cutting rates fast enough, and who has now become the de facto head of the CBRT - promised "significantly lower interest rates by the end of the year", Bloomberg reported.

“We aim to reduce inflation to one digit by the end of this year,” Erdogan told journalists in Istanbul, according to the state-run Anadolu news agency. “As we achieve this, we will achieve our year-end interest rate target as well." Of course, should interest rates drop to one digit, the USDTRY will promptly collapse to two, as the rate differential between the lira and the dollar collapses, removing the main incentive to go long the lira at a time when the Turkish economy remains in crisis.

Having founded the economic school of Erdoganomics, according to which inflation can be achieved only by lowering rates, the Turkish president and his US counterpart have quickly become kindered spirits when it comes to monetary policy. And just as Trump heaps pressure and insults on Fed Chair Powell, Erdogan has frequently accused the central bank of keeping borrowing costs too high. Last month, he complained that while the Fed was moving toward a rate cut, Turkey’s policy rate of 24% “is unacceptable.”

Then, the last trace of any pretense that Turkey under Erdogan will forever be a banana republic came on July 6, when Erdogan unexpectedly dismissed the former central bank head, Murat Cetinkaya and made it clear that he expects his replacement as central bank governor to follow the government’s line on monetary policy. Cetinkaya had held rates steady for more than nine months.

Meanwhile, even as Trump and Erdo may be BFFs when it comes to firing head of central banks, the US president and his advisors have reportedly settled on a sanctions package to punish Turkey for receiving parts of a Russian S-400 missile defense system and plans to announce it in the coming days, Bloomberg wrote in a separate report.

News of the imminent sanctions was somewhat unexpectedly considering that when Trump and Erdogan met at the G-20 summit in Japan in June, the U.S. president suggested possible leniency on sanctions. He sought to blame the Obama administration for Turkey’s decision to buy the Russian equipment, saying the impasse is “not really Erdogan’s fault.”

According to Bloomberg, the administration "chose one of three sets of actions devised to inflict varying degrees of pain under the Countering America’s Adversaries Through Sanctions Act, the people said, without identifying which set had been chosen. The plan needs Trump’s approval."

Russian Il-76, carrying the first batch of equipment of S-400 missile defense system, arrives at Murted Air Base in Ankara, Turkey on July 12, 2019.

Trump is said to unveil the sanctions late next week, and - in an unexpected act of courtesy to Ankara - intends to wait until after Monday’s anniversary of a 2016 coup attempt against Turkey’s President Recep Tayyip Erdogan to avoid fueling further speculation that the U.S. was responsible for the uprising. And while we don't know the details of the prepared sanctions, we know the following:

The plan was developed after days of discussions between officials at the State and Defense departments and the National Security Council. It awaits a sign-off by Trump and his top advisers, the people said, requesting anonymity to discuss a sensitive matter. A State Department spokeswoman declined to comment.

While not nearly as bad as that with other non-Saudi middle-eastern nations, the relationship between the U.S. and Turkey has deteriorated over the course of the civil war in Syria, where U.S. backing for Kurdish militants frustrated Turkey, which considers the group an extension of the separatists it’s fighting at home. Erdogan has also criticized the US for not extraditing Gulen, whom he accuses of masterminding the fake attempted "coup" the served as the launchpad for Erdogan's transformation to an "executive president" last year, read quasi dictator.

Acting U.S. Defense Secretary Mark Esper said Friday that Washington’s position that Turkey can’t have both the F-35 and the Russian missile system “has not changed.” Esper spoke with Defense Minister Hulusi Akar in the afternoon, and the Turkish government said in a statement that a U.S. delegation would visit next week to keep discussing the issue.

Published:7/14/2019 10:27:43 PM
[Markets] "A 6th Grader Should Know America’s Foreign Policy Is Ridiculous"

Authored by Bill Rice, Jr.

Policies which can ensure peace or ignite wars are important. Given this, one might think more Americans would critically examine the basic assumptions which form the basis of our nation’s foreign policy. 

As best I can tell, only three such assumptions or premises exist:

  1. To defend America and its borders, our government must posses the world’s strongest military. It should also not be reticent about using - or threatening to use - said military.
  2. The freedoms Americans cherish are fragile, and bad actors are plotting to steal them from us.
  3. If reasons 1 and 2 are not persuasive enough, or do not apply to every geopolitical situation, America must still be willing to use its military to protect its “national interests.”

All three of these assumptions are ridiculous, a fact any bright 12-year-old should recognize.

Regarding Assumption 1 - Surely any American with a 6th grade education is aware of the fact that the world’s two largest oceans happen to  “guard” the east and west coasts of the American mainland. Furthermore, any 12-year-old should know that the probability America’s neighbors to the north and south would attack our country is What this means to you and me is that if America proper is going to be attacked (and subdued), it’s going to have to be attacked by a nation a vast distance from our borders.

By the time a conscientious student reaches 10th grade he or she should be able to identify the tiny number of nations that might possess the means to occupy or “take over” America. These nations can be counted on three fingers - Russia, China and (if we really want to stretch things) Germany.

However, plenty of high school students should be inquisitive enough to ask a common-sense question: Why would these nations attempt to do such a thing?

Hopefully every American high school has at least a few students who know that occupying a nation with a land mass as vast as America, and with a militarily as powerful as America’s, would require a massive and sustained military operation.

Given that America has 320 million citizens - and if one assumes that a good portion of these citizens are feisty, armed and will be a tad put out at being occupied - subduing and securing America will not be a quick nor easy task.  As a guess, such a commitment might require at least 12 million troops, troops rotating in and out of America over, say, a 20-year-period.

Leaving aside the massive costs of such a mission,  how many nations actually have 12 million troops to spare? 

China might. But before China could deploy these 12 million troops into “theater,” would not America’s government have already fired 1,000 nuclear missiles into China (and any nation allied with China)? And would these nations not respond in kind?

That is, by the time all the mushroom clouds evaporated, it’s unlikely a single “military power” would possess even 150,000 troops to guard its own ruins (much less possess the planes or ships to transport scores of divisions to America).

No - any way you war-game it - invading and occupying America is a non-starter. This is the case for every government on the planet. (And is doubly true for China, which would have obliterated the bulk of its international customers).

Regarding real “national security,” America is in fact the most secure nation on the face of the earth. One could go further. It’s probably the most secure nation in the history of the world … that is, if our government would simply follow Switzerland’s example and quit stirring up hornet nests all over the world. Or: Simply follow the “Golden Rule.”

In truth, the only nation that requires a massive military is a nation that is either surrounded by potential enemies, or a nation that seeks to use its military to expand its empire and/or its “spheres of meddling influence.” I leave it to the reader to decide which description best fits America over recent decades.

Assumption 2 - that our nation’s pro-active military “protects our freedoms” - is equally absurd. 

Apparently the fear here is that if America does NOT invade and/or attack Iraq (or Iran or Syria or Libya or North Korea or Venezuela or Cuba or Afghanistan) these “enemies” will somehow eliminate our freedoms. (Surely a sizable percentage of Americans believe that one of the main reasons our troops are in all of these countries is to “protect our freedoms,” ergo these nations must be a “threat” to these freedoms.)  

However, a bright 10th grade civics student should be astute enough to ask an obvious question: How exactly would a nation eradicate our freedoms? 

Wouldn’t these nations also have to put millions of “boots on the ground?”  Wouldn’t this nation(s) have to occupy hundreds of thousands of square miles of U.S. territory and take control of every level of our government, our courts, our police forces, our newspapers, the places we work?

Consider just one of our nation’s freedoms, the “right to bear arms.” To eliminate this freedom/right, these nations would have to figure out a way to take away my brothers’ or your father’s pistols, shot guns, hunting rifles and semi-automatics. Good luck with that, Iran.

To this day I don’t understand how Saddam Hussein or Muammar Gaddafi jeopardized my freedom to worship as I see fit, or was going to stop me from making one of my contrarian posts on the Internet. Still, according to the thinking of most Americans, this is exactly what these suckers were scheming to do. 

Plus, as any bright 10th grade civics students should know (at least those who have read George Orwell’s 1984), it is our own government that’s far more likely to take away our liberties and freedoms than a hodgepodge group of terrorists located in impoverished nations 10,000 miles from our borders.

Assumption 3 -  the only way America can defend its “national interests” is to start wars and change regimes all over the globe, or threaten to do these things - is a tougher nut to crack with satire. (This is largely because “national interest” is such a vague, subjective and ever-changing term). But I’ll try.

Yes, our neocon policies certainly advance the “interests” of some Americans. These Americans basically include military contractors, who become richer from these policies, and politicians, who get to feel even more important by creating new “threats” that tough and wise politicians get to eliminate. 

On the financing end, mega banks benefit. I guess a few psychopaths who enjoy killing people might relish participating in a new war. 

But excluding the 100,000 or so people in these categories,  319.9 million other Americans do not profit a dime from this quest to pursue “America’s (alleged) interests.”

In reality, wars and gargantuan military budgets send America’s government deeper into the red. The only way to pay for such a “policy” is to print even more money, a process which ultimately causes even greater inflation, and the standard of living of millions of Americans to decline even more. This policy, continued ad infinitum, will also require even more taxes, which further erodes Americans’ “freedom” to keep their own money. 

And the above applies only to those of us who who will not be killed, wounded or become suicidal after returning from these global missions to “protect our freedoms” or, if one prefers, “advance our national interests.”

So to sum up:

  • No nation is going to invade America.
  • No nation’s government (except our own) is going to take away our freedoms.
  • The only American “interest” in pursuing these wars is to give more money or power to a handful of people and institutions who are already rich and powerful.

That is, every assumption that justifies our nation’s foreign policy is nonsensical, bogus and ridiculous. Any bright high school student who has been exposed to the concept of critical thinking should be able to cut through the propaganda and recognize these arguments as specious.

One must therefore ask why more Americans don’t recognize this and demand that our leaders abandon these policies, policies that make America less secure, policies implemented by a government that seeks to expand its control over our lives (a condition that is the opposite of freedom)?

The answer is as simple as it is depressing. Most Americans do NOT recognize these points as true or valid. Not only do most Americans reject these arguments, they often smear those who make them as unpatriotic or naive. 

Instead, the vast majority of Americans listen to the policy-makers with ph D’s in international relations,  or “experts” in government and the CIA, or “authorities” at think tanks who purport to understand “the way the world really works.”

That is, “We the People” have made a colossal mistake. We’ve listened to, and trusted, the wrong people.

Published:7/14/2019 9:57:32 PM
[Markets] Asia Markets: Asian markets retreat as China’s GDP growth fails to meet already low expectations Asian markets fell in early trading Monday, as China posted its weakest quarterly GDP growth in at least 27 years.
Published:7/14/2019 9:57:32 PM
[Markets] Fired UK Ambassador Who Trash-Talked Trump Also Vouched For Christopher Steele

Britain's recently resigned ambassador to the US vouched for the credibility of Christopher Steele - the former MI6 spy who cobbled together a Russian-sourced dossier full of fabrications about Donald Trump. 

Photo via the Daily Mail

Sir Kim Darroch, who resigned after confidential memos were leaked in which he slammed President Trump and his administration, told a US official that Steele was "absolutely" legit, according to the Sunday Telegraph

Today The Sunday Telegraph can also disclose that Sir Kim is said to have vouched for the credibility of Christopher Steele, the author of an explosive dossier of claims about Donald Trump’s ties to Russia, in conversation with at least one US official. Asked whether Mr Steele, a former MI6 officer, was "legit", Sir Kim replied: "Absolutely". His comments later appeared in the New Yorker magazine. -Sunday Telegraph

Of note, the suspected leaker has reportedly been identifiedand a foreign state has been ruled out as the culprit. 

Steele was commissioned by Fusion GPS to produce the infamous dossier ultimately paid for by the Hillary Clinton campaign and the DNC during the 2016 US election. It was later used to secure a FISA spy warrant on one-time Trump campaign aide Carter Page, and later used to smear the president in the court of public opinion. 

Interestingly, a top official with the US Justice Department warned the FBI that Steele's research was inaccurate and was likely biased due to its origins as an opposition research document. As we noted in May, ten days before the FBI used the now-discredited dossier to apply for a Foreign Intelligence Surveillance Act (FISA) warrant to spy on Trump campaign aide Carter Page, Steele met with Deputy Assistant Secretary of State Kathleen Kavalec, who took handwritten notes of the encounter.

Steele told Kavalec that Russia had a "technical/human operation run out of Moscow targeting the election," which recruited US emigres to "do hacking and recruiting. Steele added that "Payments to those recruited are made out of the Russian consulate in Miami." 

Except that's a lie - as Kavalec debunked the assertion in a bracketed comment: "It is important to note that there is no Russian consulate in Miami."

Steele had also been flagged flagged for admitting that his research was political and facing an Election Day deadline, as his client was "keen to see this information come to light prior to November 8."

Notes and testimony from senior Justice Department official Bruce Ohr make clear Steele admitted early on that he was “desperate” to get Trump defeated in the election, was working in some capacity for the GOP candidate’s opponent, and considered his intelligence raw and untested. Ohr testified that he alerted FBI and other senior Justice officials to these concerns in August 2016. -The Hill

 Steele left his MI6 career to found his own company, Orbis Business Intelligence, with another former spy according to the Daily Mail

Published:7/14/2019 9:27:38 PM
[Markets] Why Stimulus Can't Fix Our Energy Problems

Authored by Gail Tverberg via Our Finite World blog,

Economists tell us that within the economy there is a lot of substitutability, and they are correct. However, there are a couple of not-so-minor details that they overlook:

  • There is no substitute for energy. It is possible to harness energy from another source, or to make a particular object run more efficiently, but the laws of physics prevent us from substituting something else for energy. Energy is required whenever physical changes are made, such as when an object is moved, or a material is heated, or electricity is produced.

  • Supplemental energy leverages human energy. The reason why the human population is as high as it is today is because pre-humans long ago started learning how to leverage their human energy (available from digesting food) with energy from other sources. Energy from burning biomass was first used over one million years ago. Other types of energy, such as harnessing the energy of animals and capturing wind energy with sails of boats, began to be used later. If we cut back on our total energy consumption in any material way, humans will lose their advantage over other species. Population will likely plummet because of epidemics and fighting over scarce resources.

Many people appear to believe that stimulus programs by governments and central banks can substitute for growth in energy consumption. Others are convinced that efficiency gains can substitute for growing energy consumption. My analysis indicates that workarounds, in the aggregate, don’t keep energy prices high enough for energy producers. Oil prices are at risk, but so are coal and natural gas prices. We end up with a different energy problem than most have expected: energy prices that remain too low for producers. Such a problem can have severe consequences.

Let’s look at a few of the issues involved:

[1] Despite all of the progress being made in reducing birth rates around the globe, the world’s population continues to grow, year after year.

Figure 1. 2019 World Population Estimates of the United Nations. Source:

Advanced economies in particular have been reducing birth rates for many years. But despite these lower birthrates, world population continues to rise because of the offsetting impact of increasing life expectancy. The UN estimates that in 2018, world population grew by 1.1%.

[2] This growing world population leads to a growing use of natural resources of every kind.

There are three reasons we might expect growing use of material resources:

(a) The growing world population in Figure 1 needs food, clothing, homes, schools, roads and other goods and services. All of these needs lead to the use of more resources of many different types.

(b) The world economy needs to work around the problems of an increasingly resource-constrained world. Deeper wells and more desalination are required to handle the water needs of a rising population. More intensive agriculture (with more irrigation, fertilization, and pest control) is needed to harvest more food from essentially the same number of arable acres. Metal ores are increasingly depleted, requiring more soil to be moved to extract the ore needed to maintain the use of metals and other minerals. All of these workarounds to accommodate a higher population relative to base resources are likely to add to the economy’s material resource requirements.

(c) Energy products themselves are also subject to limits. Greater energy use is required to extract, process, and transport energy products, leading to higher costs and lower net available quantities.

Somewhat offsetting these rising resource requirements is the inventiveness of humans and the resulting gradual improvements in technology over time.

What does actual resource use look like? UN data summarized by shows that extraction of world material resources does indeed increase most years.