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[Markets] Papa John’s partnership with Shaquille O’Neal is an attempt at ‘cultural relevancy’ Papa John’s, which has struggled since controversy from its founder John Schnatter, has brought Shaquille O’Neal onto its board and marketing effort.
Published:3/26/2019 3:13:06 PM
[Markets] AAPL Angst & Housing Horrors Hamper Stocks As Yield Curve Hits New Lows

Bonds to Stocks...


China stocks had another ugly session overnight...


European markets managed gains on the day led by France & Germany...


Bund yields hover near 2016 lows...


US Futures started to ramp as Asia opened, and again as Europe opened then accelerated through the US open, hitting a wall around the EU close and zig-zagging lower from there...


On the cash side, Trannies and Small Caps outperformed with The Dow lagging...Ubiquitous closing panic-bid of course...


The opening spike was yet another big short-squeeze...


Banks managed gains for a change...


AAPL tumbled back below its 200DMA after the QCOM decision...


Credit markets ended the day wider in spread but rallied all day after the gap at the open...


Strong 2Y Auction provided additional support for the entire bond complex as yields barely budged despite equity gains...


30Y refused to budge...


And the yield curve continued to invert further...


The Dollar lifted back to yesterday's highs as US opened but stuck there...


Crypto limped lower on the day led by Ripple...


WTI Crude managed to extend gains but USD strength sent PMs lower...


WTI held above $60 ahead of tonight's inventory data..


Since Powell threw in the towel, Bonds (red) and Gold (orange) are notable outperformers with stocks (blue) the laggard and the dollar (green) marginally higher. Notice today's action saw The Dow lift to unchanged post-Powell before tumbling...

Published:3/26/2019 3:13:03 PM
[Markets] US STOCKS SNAPSHOT- Wall St ends up, financials break 5-day losing streak U.S. stocks gained on Tuesday, with financials snapping a five-day losing streak as Treasury yields stabilized above 15-month lows. Based on the latest available data, the Dow Jones Industrial Average ... Published:3/26/2019 3:13:03 PM
[Markets] Trump Today: Trump Today: President touts Republicans as ‘party of health care’ as administration targets Affordable Care Act President Donald Trump on Tuesday said the Republicans would be known as “the party of health care,” a day after his administration called the whole of the Affordable Care Act unconstitutional in a legal filing that threw the future of Obamacare into doubt.
Published:3/26/2019 2:40:11 PM
[Markets] Dow Trades Higher as Investors Move Beyond Recession Worries The Dow Jones Industrial Average rose Tuesday after investors moved beyond recession fears sparked by the inverted bond curve. were down slightly after the tech giant unveiled several new services, including Apple TV Plus featuring original content and a news subscription platform called Apple News Plus. Stocks were rising Tuesday as the bond yield curve narrowed and investors moved beyond recession fears. Published:3/26/2019 2:40:11 PM
[Markets] How Millions Were Duped By Russiagate: The "Illusory Truth" Effect

Authored by Caitlin Johnstone via,

“Mueller Finds No Trump-Russia Conspiracy”, read the front page headline of Sunday’s New York Times. Bit by bit, mainstream American consciousness is slowly coming to terms with the death of the thrilling conspiracy theory that the highest levels of the US government had been infiltrated by the Kremlin, and with the stark reality that the mass media and the Democratic Party spent the last two and-a-half years monopolizing public attention with a narrative which never had any underlying truth to it.

There are still holdouts, of course. Many people invested a tremendous amount of hope, credibility, and egoic currency in the belief that Robert Mueller was going to arrest high-ranking Trump administration officials and members of Trump’s own family, leading seedy characters to “flip” on the president in their own self-interest and thereby providing evidence that will lead to impeachment. Some insist that Attorney General William Barr is holding back key elements of the Mueller report, a claim which is premised on the absurd belief that Mueller would allow Barr to lie about the results of the investigation without speaking up publicly. Others are still holding out hope that other investigations by other legal authorities will turn up some Russian shenanigans that Mueller could not, ignoring Mueller’s sweeping subpoena powers and unrivaled investigative authority. But they’re coming around.

The question still remains, though: what the hell happened? How did a fact-free conspiracy theory come to gain so much traction among mainstream Americans? How were millions of people persuaded to invest hope in a narrative that anyone objectively analyzing the facts knew to be completely false?

The answer is that they were told that the Russiagate narrative was legitimate over and over again by politicians and mass media pundits, and, because of a peculiar phenomenon in the nature of human cognition, this repetition made it seem true.

The rather uncreatively-named illusory truth effect describes the way people are more likely to believe something is true after hearing it said many times. This is due to the fact that the familiar feeling we experience when hearing something we’ve heard before feels very similar to our experience of knowing that something is true. When we hear a familiar idea, its familiarity provides us with something called cognitive ease, which is the relaxed, unlabored state we experience when our minds aren’t working hard at something. We also experience cognitive ease when we are presented with a statement that we know to be true.

We have a tendency to select for cognitive ease, which is why confirmation bias is a thing; believing ideas which don’t cause cognitive strain or dissonance gives us more cognitive ease than doing otherwise. Our evolutionary ancestors adapted to seek out cognitive ease so that they could put their attention into making quick decisions essential for survival, rather than painstakingly mulling over whether everything we believe is as true as we think it is. This was great for not getting eaten by saber-toothed tigers in prehistoric times, but it’s not very helpful when navigating the twists and turns of a cognitively complex modern world. It’s also not helpful when you’re trying to cultivate truthful beliefs while surrounded by screens that are repeating the same bogus talking points over and over again.

I’m dealing with a perfect example of the perils of cognitive ease right now. Writing this essay has required me to move outside my familiar comfort zone of political commentary and read a bunch of studies and essays, think hard about new ideas, and then figure out how to convey them as clearly and concisely as possible without boring my audience. This movement away from cognitive ease has resulted in my checking Twitter a lot more often than I usually do, and seeking so much distraction that this essay will probably end up getting published about twelve hours later than I had intended. Having to read a bunch of scholars explaining the precise reasons why I’m acting like such an airhead hasn’t exactly helped my sense of cognitive ease any, either.

Science has been aware of the illusory truth effect since 1977, when a study found that subjects were more likely to evaluate a statement as true when it’s been repeatedly presented to them over the course of a couple of weeks, even if they didn’t consciously remember having encountered that statement before. These findings have been replicated in numerous studies since, and new research in recent years has shown that the phenomenon is even more drastic than initially believed. A 2015 paper titled “Knowledge Does Not Protect Against Illusory Truth” found that the illusory truth effect is so strong that sheer repetition can change the answers that test subjects give, even when they had been in possession of knowledge contradicting that answer beforehand. This study was done to test the assumption which had gone unchallenged up until then that the illusory truth effect only comes into play when there is no stored knowledge of the subject at hand.

“Surprisingly, repetition increased statements’ perceived truth, regardless of whether stored knowledge could have been used to detect a contradiction,” the paper reads.

“Reading a statement like ‘A sari is the name of the short pleated skirt worn by Scots’ increased participants’ later belief that it was true, even if they could correctly answer the question ‘What is the name of the short pleated skirt worn by Scots?’”

Stored knowledge tells pretty much everybody that the “short, pleated skirt worn by Scots” is a kilt, not a sari, but simply repeating the contrary statement can convince them otherwise.

This explains why we all know people who are extraordinarily intelligent, but still bought into the Russiagate narrative just as much as our less mentally apt friends and acquaintances. Their intelligence didn’t save them from this debunked conspiracy theory, it just made them more clever in finding ways of defending it. This is because the illusory truth effect largely bypasses the intellect, and even one’s own stored knowledge, because of the way we all reflexively select for cognitive ease.

Another study titled “Incrimination through innuendo: Can media questions become public answers?” found that subjects can be manipulated into believing an allegation simply by exposure to innuendo or incriminating questions in news media headlines. Questions like, for example, “What If Trump Has Been a Russian Asset Since 1987?”, printed by New York Magazinein July of last year.

You can understand, then, how a populace who is consuming repetitive assertions, innuendo, and incriminating questions on a daily basis through the screens that they look at many times a day could be manipulated into believing that Robert Mueller would one day reveal evidence which will lead to the destruction of the Trump administration. The repetition leads to belief, the belief leads to trust, and before you know it people who are scared of the president are reading the Palmer Report every day and parking themselves in front of Rachel Maddow every night and letting everything they say slide right past their skepticism filters, marinating comfortably in a sedative of cognitive ease.

And that repetition has been no accident. CNN producer John Bonifield was caught on video nearly two years ago admitting that CNN’s CEO Jeff Zucker was personally instructing his staff to stay focused on Russia even in the midst of far more important breaking news stories.

“My boss, I shouldn’t say this, my boss yesterday we were having a discussion about this dental shoot and he goes and he was just like I want you to know what we are up against here,” Bonifield told an undercover associate of James O’Keefe’s Project Veritas.

“And he goes, just to give you some context, President Trump pulled out of the climate accords and for a day and a half we covered the climate accords. And the CEO of CNN said in our internal meeting, he said good job everybody covering the climate accords, but we’re done with it, let’s get back to Russia.

(And before you get on me about O’Keefe’s shady record, CNN said in a statement that the video was legitimate and disputed none of its content, saying only that it stands by Bonifield and that “Diversity of personal opinion is what makes CNN strong, we welcome it and embrace it.”)

Zucker, for his part, told the New York Times in an article published yesterday that he was “entirely comfortable” with CNN’s role in promoting the Russiagate conspiracy theory the way that it did.

“We are not investigators. We are journalists, and our role is to report the facts as we know them, which is exactly what we did,” Zucker said.

“A sitting president’s own Justice Department investigated his campaign for collusion with a hostile nation. That’s not enormous because the media says so. That’s enormous because it’s unprecedented.”

“We are not investigators”? What the fuck kind of dumbass shit is that? So it’s not your job to investigate whether what you’re reporting is true or false? It’s not your job to investigate whether the anonymous sources you’re basing your reports on might be lying or not? It’s not your job to investigate whether or not you’d be committing journalistic malpractice with the multiple completely bullshit stories your outlet has been humiliated by in the last two years? It’s not your job to weigh the consequences of deliberately monopolizing public attention on a narrative which consists of nothing but confident-sounding assertions and innuendo?

“We are not investigators.” So? You’re not dentists or firefighters either, what’s your point? That has nothing to do with the mountains of journalistic malpractice you’ve been perpetrating by advancing this conspiracy theory, nor with the inexcusable brutalization you’ve been inflicting upon the American psyche with your deliberate nonstop repetition of bogus assertions, innuendo, and incriminating questions.

The science of modern propaganda has been in research and development for over a century. If you think about how many advances have been made in other military fields over the last hundred years, that gives you a clear example of how sophisticated an understanding the social engineers must now have of the methods of mass manipulation of human psychology. We may be absolutely certain that there are people who’ve been working to drive the public narratives about western rivals like Russia, and that they are doing so with a far greater understanding of the concepts we’ve touched on in this essay than we have at our disposal.

The manipulators understand our psyches better than we understand them ourselves, and they’re getting more clever, not less. The only thing we can do to keep our heads while immersed in a society that is saturated with propaganda is be as relentlessly honest as possible, with ourselves and with the world. We’ll never be able to out-manipulate the master manipulators, but we can be real with ourselves about whether or not we’re selecting for cognitive ease rather than thinking rigorously and clearly. We can be truthful with our friends, family, coworkers and social media followers wherever untruth seems to be taking hold. We can do our very best to shine the light of truth on the puppeteers wherever we spot them and ruin the whole goddamn show for everyone.

It may not seem like a lot, but truth is the one thing they can’t manipulate, whether it’s truth about them, truth about the world, or truthfulness with yourself. The lying manipulators got us into this mess, so only truth can get us out.

*  *  *

Thanks for reading! My articles are 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. 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.

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Published:3/26/2019 2:40:11 PM
[Markets] The Ratings Game: Bed Bath & Beyond upgraded twice, shares soar after investor activism revealed An activist group would like to see the board of Bed Bath & Beyond replaced.
Published:3/26/2019 2:10:58 PM
[Markets] Wall Street Bonuses Tumbled 17% In 2018, Unchanged In 13 Years

As extensively documented on this website, 2018 was a disastrous year to forgot for most hedge funds, which suffered another year of underperformance compared to both their benchmark and the S&P500, as most once again failed to generate alpha, resulting in a compensation plunge for the "smartest traders in the room." Alas, as the latest annual report from New York State Comptroller Thomas DiNapoli reveals, 2018 was also a dismal year for broader Wall Street compensation in particular and the securities industry in general, even as overall profits rose by double digits.

In a surprising turn of events, DiNapoli reported that despite securities industry profits in 2018 rising by 11%, the average bonus paid to industry employees in New York City declined by almost 17% to $153,700. This was not only the lowest average bonus since 2015, it matches the average bonus payment received all the way back in 2005. In other words, the average Wall Street bonus has remained unchanged for 13 years, with the peak still the $191,400 hit in 2006 with 2017 coming close at $184,400. Yet despite the lamentations of investment bankers everywhere, the $154K bonus was still double the average salary for non-financial New Yorkers.

Wall Street's total bonus pool dropped 14% to an estimated $27.5 billion as employment in the industry increased in New York City. One big caveat: the estimate does not include stock options or other forms of deferred compensation for which taxes have not been withheld.

“Despite a sharp decline in the financial markets in the fourth quarter of 2018, the securities industry still had a good year with increased profits and employment,” DiNapoli said. “Profits grew in 2018 and have nearly doubled since 2015. Bonuses declined in 2018, but the average bonus was still double the average annual salary in the rest of the City’s workforce. It’s too soon to say how the industry will fare in 2019, but trade tensions, a slowing global economy and greater economic uncertainty are all factors that could affect results.”

Every year, DiNapoli’s office releases an estimate of bonuses paid to securities industry employees who work in New York City during the traditional bonus season. Bonuses paid by firms to their employees located outside of New York City (whether in domestic or international locations) are not included. The Comptroller’s estimate is based on personal income tax trends and includes cash bonuses for the current year and bonuses deferred from prior years that have been cashed in.

Despite increased market volatility, and the worst December for the Dow Jones Industrial Average since 1931, the industry had an 11 percent growth in pretax profits for the broker/dealer operations of New York Stock Exchange member firms (the traditional measure of securities industry profits). Profits totaled $27.3 billion in 2018 — up from $24.5 billion in 2017 — the highest level since 2010 and 81 percent higher than in 2015 after adjusting for inflation. Curiously, none of this increase trickled down to workers in the form of higher all in comp.

The report also revealed that employment in New York City’s securities industry increased by 4,700 in 2018 to 181,300 jobs, the highest level in a decade. With solid gains in four of the past five years, employment in the securities industry in the city is still 4 percent smaller than before the financial crisis in 2007. In contrast, the rest of the private sector in the city has grown by 25 percent since 2007.

Some other findings in this year's report:

  • Trading revenue was up 22 percent during the first three quarters of 2018, but was down 6 percent in the fourth quarter. For the year, trading revenue was up 17 percent and accounted for 6 percent of total revenue in 2018.
  • The average salary (including bonuses) in the city’s securities industry ($422,500 in 2017, the latest annual data available) was more than five times higher than the average in the rest of the private sector ($77,100). Nearly one-quarter (24 percent) of the industry’s employees in the city earned more than $250,000, compared with less than 3 percent in the rest of the city’s workforce.
  • The industry accounted for less than 5 percent of the private sector jobs in the city in 2017, but it generated more than one-fifth of all private sector wages paid in the city. DiNapoli estimates that nearly 1 in 11 jobs in the city are either directly or indirectly associated with the securities industry.
  • Securities-related activities are a major source of revenue for both the state and the city. DiNapoli estimates that the securities industry accounted for 18 percent ($14 billion) of state tax collections in state fiscal year (SFY) 2017-18 and 7 percent ($4.2 billion) of city tax collections in city fiscal year (CFY) 2018.

And with banks already warning of sharp drops in trading revenue in 2019, the bad news on pay will continue this year. Compensation including bonuses and salaries for 2019 is likely to fall as pressure to lower fees and volatile markets weigh on firms’ revenue, Johnson Associates said last month.

Read the full New York state report here.

Published:3/26/2019 2:10:15 PM
[Markets] US STOCKS- Wall St edges up; financials on track to snap losing streak U.S. stocks were higher in afternoon trading on Tuesday and financials looked set to snap a five-day losing streak as Treasury yields mostly stabilized following recent losses. The S&P energy index was up 1 percent, leading percentage gains among sectors, as oil prices rose on OPEC supply cuts and expectations of lower U.S. inventories. Benchmark 10-year Treasury yields were mostly steady after recent losses. Published:3/26/2019 2:10:14 PM
[Markets] House fails to overturn Trump's border-emergency veto House fails to overturn Trump's border-emergency veto Published:3/26/2019 1:40:03 PM
[Markets] Dow trades 200 points off intraday high as 10-year Treasury rate holds near lowest since 2017 The Dow Jones Industrial Average on Tuesday and the broader market were trading well off their highs of the session as bond yields held around multiyear lows, implying that investors are finding it difficult to shake fears about sluggish global growth and its impact on the U.S. The Dow was up about 67 points, or 0.3%, at 25,580, in late-afternoon trade, off from its best intrasession level at 25,796. Moves for equities come as the benchmark 10-year Treasury yield was at 2.41%, representing its lowest level since December of 2017, according to Dow Jones Market Data. The lower rates have been a feature of the market of the past several weeks after the Federal Reserve affirmed that it was pausing on further near-term rate hikes. What has followed is a so-called yield-curve inversion, where shorter-dated bond yields rise above their longer-dated counterparts. In this case, yields for the 3-month T-bill rose above those of the 10-year Treasury note for the first time since 2007. An inversion has been an accurate predictor of coming economic recessions in the following 18 to 24 months, research shows. The S&P 500 index , meanwhile, was up 0.3% at 2,806, while the Nasdaq Composite Index was climbing 0.3% at 7,659. Both benchmarks also were off their intraday peaks. Published:3/26/2019 1:40:03 PM
[Markets] Chasing Reality - What If A China Trade Deal & A Dovish Fed Are Not Enough?

Authored by Sven Henrich via,

Following a very aggressive counter rally off the December lows we remain inside the larger trading range of 2018, other than small pullbacks the Q1 rally remains technically uncorrected, but let’s be clear:

Everybody’s chasing reality here: The US administration, the Fed and Wall Street.

  • The US administration promised 3-4% GDP growth and shrinking deficits. Neither is happening, growth is slowing and we just had the largest monthly deficit in US history.

  • The Fed went from autopilot on the balance sheet and rate hikes to neither. Key point: They will not tell you a recession is coming and rate cut risk is rising.

  • Wall Street predicted continued earnings growth for 2019 now we have an earnings recession at least in Q1 with -3.7% earnings growth a growth estimates for full year 2019 may still be too high.

Given the uniformity of overly positive projections that have turned out not to be true, can everyone simply take a step back and acknowledge some uncertainty here? The answer is apparently no. Wall Street is projecting new market highs to come, any negatives that were not projected in the first place are dismissed as temporary glitches and an inverted yield curve? Not a problem. Don’t worry say investment houses such as Goldman Sachs. Never mind that the indicator has a 85% track record of predicting a recession to come.

So nobody predicted the slowdown, the inversion, the earnings recession, but everybody is busy declaring them to be worthy of ignoring. Got it.

I just can’t help myself. Perhaps this is why Brian Sullivan called me “Sven the Sarcastic” on CNBC this morning 

And I do get it, as I outlined in the segment above we have 2 potential upside catalysts in front of us.

A potential China trade deal, a carrot that is continuously dangled in front of markets and perhaps hope that there will be a last Brexit miracle. All possible I suppose, but what if there’s a China trade deal, but a recession is still coming? Nobody is asking that question and the underlying reality is again largely ignored.

Some reality based risk factors to consider:


Global growth continues to slow and Q1 earnings reports/outlooks can ill afford to disappoint. However a coming jump in growth in Q2 would not be surprising as there have been plenty of previous examples of a weak Q1 GDP picture.

Yield curve inversion has a 85% track record of predicting a recession, yet there’s a lot of denial going on that a recession can unfold.

The Upside: With a China deal and/or Brexit miracle a recession may get delayed and this could result in a major rally yet to come for a final game of musical chairs before the eventual rug gets pulled, but let’s not kid ourselves this business cycle is long in the tooth

The Downside: Recession may come a lot sooner than anybody expects. Case 2000/2001. Markets topped in 2000, yield curve inverted, Fed stopped raising rates and 6 months later we had a recession. Looks very similar to now.

The Fed has removed the market carrot of dovishness by going full frontal dovish last week and markets sold off. The Fed has been a key driver of the 2019 rally. Now that carrot is gone and here we are 10 years after the financial crisis with Europe running negative rates and over $10 trillion in negative yield debt floating about and record corporate debt of over $6 trillion. Quite the recovery.


Risk of major topping patterns. Lower highs on all the major indices. Last week the rally stopped just below the January 2018 highs, we need to see new highs or these patterns remain in play.

The 2009 broken trend line has been rejected again. Hence risk remains that Q1 may have been a bear market rally. Unconfirmed (also see “The Reckoning”)

In March the rally diverged significantly and recent highs on $SPX and $NDX were deceiving as they were once again driven by big cap tech while we saw massive underperformance in key indices such as financials, small caps, transports. The message of these indices: Slowdown.

$RUT peaked on February 22nd over a month ago. And look at the underperformance in some of the sectors I mentioned in the interview:

Buybacks are coming out of the system in the next few weeks reducing liquidity.

Q1 earnings and their outlooks. Will companies be forced to reduce outlooks?

And finally: Watch the wedge. It almost broke yesterday, but got saved with gap up today on a relief rally as yields are retreating off of overbought readings on bond and short term oversold readings on indices:

But no worries. Just ignore it all. Perhaps a dovish Fed and a China deal will be enough. What if it’s not?

Did I mention potential major topping patterns?

I guess nobody is asking that question. Too busy chasing reality.

*  *  *

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Published:3/26/2019 1:40:03 PM
[Markets] The eviction crisis is starting to look a lot like the subprime mortgage crisis Stable housing is increasingly out of reach for many Americans, as both rentals and homes to own grow more expensive and options dwindle. Evictions may be one of the most visible manifestations.
Published:3/26/2019 1:08:32 PM
[Markets] Wall Street lifted by gains in techs, energy Markets slid on Friday, when the U.S. Treasury yield curve inverted for the first time since 2007 and added to worries of a global economic slowdown. "The market still has no idea what the evolution of growth is going to be and we are getting these reactionary days like last week and bounce backs like today," said Michael Antonelli, market strategist at Robert W. Baird in Milwaukee. The high-growth tech sector, up 1.25 percent, was supported by Apple Inc and chipmakers, with the Philadelphia Chip index rising 1.55 percent. Published:3/26/2019 1:08:32 PM
[Markets] Apple Tumbles Into Red After Judges Rules In Favor Of Qualcomm, Recommends iPhone Ban

Just three months after what many said was a retaliatory move against the arrest of Huawei's CFO, when a Chinese court ruled in favor of Qualcomm against Apple, banning the sale of some iPhone models across China, now it is - perplexingly - the US' turn.

Apple shares are tumbling back into the red following a decision by International Trade Commission Judge MaryJoan McNamara recommending an import ban on certain iPhones, due to infringement of Qualcomm patents.

Bloomberg reports that the case is one of two that Qualcomm brought at the trade agency, seeking an import ban on iPhones to give it greater leverage in technology licensing negotiations. Qualcomm says it’s due billions of dollars in unpaid royalties on the iPhone as the two tech giants argue over the value of the chipmaker’s patents.

The commission is scheduled to release its final decision in the other case later Tuesday.

There is some hope for Apple, as the judge’s findings are subject to review by the full commission, which has the power to block imports of products that infringe U.S. patents.

Published:3/26/2019 1:08:31 PM
[Markets] The Fed: House Democrat calls Powell’s testimony on bank deregulation ‘disingenuous at best’ Rep. Katie Porter, a freshman Democrat from California, said Tuesday she’s unhappy with answers she received from Fed Chairman Jerome Powell during his testimony to the House Financial Services Committee late last month.
Published:3/26/2019 12:39:53 PM
[Markets] Dow Jones Climbs As One Of Its Maligned Stocks Nears Buy Point The Dow Jones Industrial Average added 0.5% Tuesday afternoon, extending a positive move it made at its 50-day moving average. Published:3/26/2019 12:39:52 PM
[Markets] Venezuela Condemns "Trio Of Misfortune" - Pompeo, Bolton And Rubio, For Blackouts

The United States has again put both Venezuela and Russia on notice, after days ago two military planes carrying a contingency of about 100 Russian troops led by a high ranking officer touched down in Caracas. National Security Adviser John Bolton warned that foreign military "meddling" in Latin America would not be tolerated, while Secretary of State Mike Pompeo called on Russia to "cease its unconstructive behavior".

“The United States will not tolerate hostile foreign military powers meddling with the Western Hemisphere’s shared goals of democracy, security, and the rule of law. The Venezuelan military must stand with the people of Venezuela,” the national security adviser wrote on Monday. Venezuela quickly lashed back, accusing the US of causing the impoverished nation's third mass electricity outage in less than a month on Monday. 

Caracas, Venezuela during the prior March 9th outage, via Getty images.

Monday's outage affected a little over half the nation, including parts of Caracas. Shortly after most of the country's electricity was restored, Venezuelan Vice President Delcy Rodriguez made a televised statement saying the “fascist right” and their American “imperial masters” had attacked key transmission lines, impacting about 57% of Venezuela. 

Rodriquez called out Pompeo, Bolton, as well as Republican Senator Marco Rubio specifically for orchestrating attacks on the Maduro government to cause a coup. He dubbed them “the trio of misfortune, perversity and criminality”.

Maduro's vice president questioned, “What was the objective of this new attack? It was to deprive Venezuela’s people of electricity as happened so terribly just two weeks ago.”

In response to the earlier outages, Venezuela's Defense Ministry vowed to deploy armed forces to protect the national electricity system. 

President Nicolás Maduro had previously blamed Washington for the earlier outages, claiming over Twitter that the Trump administration was engaged in an "electrical war" which was "announced and directed by American imperialism against our people." 

Rodriguez further told state television this week that the opposition was responsible for the mass outage, claiming it "wants to plunge the population into profound unease".

Meanwhile US-backed opposition leader Juan Guaido shot back on Twitter, saying that Maduro "uses these moments to disinform and create anxiety".

Likely as Washington continues to eye Caracas for regime change and destabilizing coup efforts, Russia could be drawn into further on the ground military cooperation, setting the stage for the next potential US-Russia proxy war, similar to the past few years of war in Syria. 

Published:3/26/2019 12:39:52 PM
[Markets] Democratic-leaning states say they’re feeling the pain from the new tax law New York and three other states said in court papers that pressure is rising from the SALT cap.
Published:3/26/2019 12:07:51 PM
[Markets] Ecuadorian Embassy Detains US Journalist As Julian Assange Raises Hell Over Full Body Search: Report

A US journalist found herself locked in a cold, surveilled room within the Ecuadorian embassy in London on Monday, while a furious Julian Assange argued with embassy officials who had barred him from entering the room unless he submitted to a "full-body search and continuous surveillance," according to an account which has been confirmed by WikiLeaks and Assange's legal team

The journalist, Gateway Pundit's Cassandra Fairbanks, has now visited Assange three times in the past year - reporting deteriorating conditions with each trip.

Ecuador granted the WikiLeaks founder asylum in their London embassy in 2012 on the grounds that his extradition to Sweden for a now-dropped sexual assault investigation would likely result in him being sent to the United States, where he could face the death penalty over publishing secret American documents. While Sweden dropped their investigation in 2017, the WikiLeaks founder still faces immediate arrest in the UK for breaching his bail in 2010. 

From the start, Ecuador told both the U.K. and Swedish governments that it would immediately send Assange to Stockholm in exchange for a pledge from Sweden not to use that as a pretext to extradite him to the U.S., something the Swedish government had the power to do but refused. -The Intercept

Ecuador's former president, Rafael Correa, has denounced Assange's treatment under the care of the new Moreno administration as "torture," as his communications with the outside world have been virtually eliminated, and his voice effectively silenced from public discourse. 

Assange's oppressive treatment, and that of his guests, was more evident than ever to Fairbanks: 

The crackdown on visitors was felt before I even entered the embassy. It’s the third time I’ve visited in the past year, and each time the atmosphere seems progressively worse.

Just like my previous visit, since new rules for visitors were enacted, I couldn’t take my phone into the meeting without giving the Ecuadorian officials a swathe of data. If you want to take it in with you, they request its brand, model, serial number, IMEI number, and telephone number. I was also advised that Ecuador could not be trusted to hold my phone while I met with Assange, so I left it behind and walked to the embassy phoneless, several minutes early to make sure I was on time. -Gateway Pundit

Fairbanks detailed the tense standoff between Assange and embassy staff, after they insisted he submit to a full body scan and continuous surveillance during the meeting

Via the Gateway Pundit:

After being searched, the staff directed me into the conference room, where two large visible cameras were pointed at the table. Those were there last time too. I knew the drill — or so I thought. They reminded me multiple times that my visit was only approved until 5 p.m. and that I would need to leave on the dot.

“Just doing my job,” the staff member told me.

A few moments later Assange walked by the door, but could not enter. Embassy staff demanded that he submit to a full-body scan with a metal detector before allowing him in the room. They have not done this with any other visitor in the nearly seven years that he has lived there, including during my previous visits.

“I don’t want to do the body scan. It is undignified and not appropriate,” I heard Assange say. “I am just trying to have a private meeting with a journalist.”

The door was slammed shut by someone from the embassy. I decided to sit and wait.

Not only would they not let Assange in to see me without a body-scan, they also forced his lawyer to be scanned before he could come in to update me on the situation.

After roughly 20 minutes, the lawyer came in and informed me that they were demanding to search Assange. Moreover, we would not be permitted to talk anywhere outside the highly-surveilled room where the Ecuadorians had confined me. Agreeing to these draconian terms would set a bad precedent — so he was unsure if the meeting would go ahead. After appraising me of the situation, he left the room.

A bit later, I decided to leave the room myself for an update from embassy staff. I quickly discovered that the door was locked from the outside. So I went to the second door — that was locked too. That was when I realized that Ecuadorian officials had deliberately imprisoned me in a room.

As this ominous realization dawned on me, I heard a dramatic confrontation unfolding outside.

“What are you frightened of in relation to me meeting with a journalist? What is the embassy afraid of?” Assange asks. I can’t hear the response.

Assange is arguing that as a political refugee the embassy has a duty to protect him — not to treat him as a prisoner.

“Is this a prison?” Assange asks.

“It’s not,” they reply. “You know it’s not.”

The visit to the publisher had, in fact, become eerily similar to visits I have made to inmates at federal penitentiaries in the US. It seemed our government was getting what they wanted from Ecuador, as a former senior State Department official told Buzzfeed in January, “as far as we’re concerned, he’s in jail.”

Assange, clearly agitated, demands to know “why are you surveilling me speaking to a US journalist? Do you think it’s unreasonable for me to expect privacy when I meet with a journalist? Why are you silent?”

The embassy staff member responded that he “can’t say anything.”

“Why can’t you say anything? Don’t you have an excuse? What is the basis? Why are you surveilling an American journalist? What reason should we tell her?” Assange asks.

The conversation becomes hard to hear, as I am still locked in the room.

Assange’s lawyer is also being searched again outside the room, though I can only hear bits and pieces of that conversation. He comes back in with a glass of water and tells me to hang tight. I feel like a prisoner receiving a visit. Finally, someone from the embassy comes in and tells me that I need to go to the lobby so that the ambassador could meet with Assange in the room. The room with the cameras and the bugs.

I see Assange in passing in the lobby and say hi, but it’s cut short as he is directed to the conference room.

Still phoneless, I glance at a clock and notice that it’s 4:19pm I was locked in the room for over an hour.

Sitting in the lobby I hear much of the conversation, so I begin to take notes.

“Is this a prison? This is how you treat a prisoner, not a political refugee!” Assange demands.

Ambassador Jaime Alberto Marchán retorts, saying it’s “for our protection, and to protect you!”

At this point, clearly frustrated, Assange asserts: “I am trying to have a private conversation with a journalist. I am also a journalist — and you’re stopping me from doing my work. How can I safely relay my mistreatment and the illegality going on here to this journalist while under surveillance?”

One of the issues, it seemed, is that Assange wanted to bring a small radio into the conference room to muffle our voices, so the microphones surveilling the room wouldn’t pick up what we were saying as easily. There also appears to be concern that he will share stories with other journalists now that they have him muzzled and gagged.

“You are preventing this journalist from meeting with me in any other room,” Assange says, but only part of the conversation is audible at this point as someone cleaning decided they needed to jingle keys and make a ton of noise for several minutes.

“You have been illegally surveilling me,” Assange sternly insists.

I want you to shut up,” the ambassador says.

“I know you want me to shut up — the Ecuadorian president has already gagged me,” Assange fired back. “I am banned from producing journalism.”

Read the rest of the account here.

Published:3/26/2019 12:07:51 PM
[Markets] The Margin: Help! Depressed millennial earns $61,000 a year but can’t make ends meets Millennials face a nasty set of obstacles on their path to financial security. From student loans and stalled wage growth to nosebleed housing costs and care for aging parents, it’s a tough time to be navigating the early years of adulthood.
Published:3/26/2019 11:37:36 AM
[Markets] The Dow Has Gained 179 Points Because Optimism Is Contagious U.S. stocks are up after upbeat global data. The Dow Jones Industrial Average has gained 0.70% to 25,695.70 at recent check, while the S&P 500 and Nasdaq Composite are both up 1%. Published:3/26/2019 11:37:36 AM
[Markets] Curve Inversion Is Bad, But It's The Steepening After That Kills

Last week the yield curve, or rather the 3 month-10 year spread inverted for the first time since 2007, an event which sparked near-panic in the market as historically curve inversion has preceded the last 7 recessions.

One unique feature about this latest curve inversion, however, is the sequence of events. Traditionally, the yield curve usually tends to flatten as the economy moves later cycle and the Fed increases rates to prevent the economy overheating. As such, the 2s10s spread usually invert earlier than 3M-10Y as it incorporates rate expectations of subsequent hikes.

However, as we observed repeatedly, this did not happen last week, with the 3M-10Y curve inverting alone, which as Goldman observes overnight "is quite unusual." In the last 4 cycles bear flattening (the yield curve level rising with 2y rates increasing faster than 10y rates) has driven curve inversion, while this time the curve have ‘bull flattened’ (the yield curve level falling with 2y rates falling more slowly than 10y rates).

So what caused this reversal in the traditional yield curve flattening sequence? According to Goldman's Alessio Rizzi, this dynamic has been supported by international spillovers from non-US rates "where QE and low growth and inflation expectations have supported lower 10y rates."

As a result, Goldman concludes that "the curve inversion signal could be less powerful for recessions than in the past since long dated yields across regions have become more correlated." In other words, the Fed which will cause the next depression when the "everything bubble" finally bursts, may not have caused the next recession. Or at least Goldman does not think it has. Yet.

In any case, to justify its thesis, Goldman also points out that credit spreads which usually react to recession risk early - did not increase materially last week.

Ok, fine, but what if Goldman's optimistic spin is wrong and a recession is now inevitable? The question then is when?

As we pointed out last week, recessions tend to take time to materialise after curve inversion, in particular recently as expansion phases have become longer. For example in the last 2 cycles, a recession started more than 2 years after the curve inversion date (based on 10y-2y spread). Moreover, tracking the proportion of the curve inversion across different maturities, the signal still remains relatively weak compared to the last 4 recessions where more than 70% of the curve was inverted compared to about 40% currently.

Finally, the question on all investors' lips is how do risk assets perform once the curve flattens and/or inverts. According to backtests from Goldman, while risky assets in general can have positive performance with a flat yield curve, risky asset performances tend to be lower. This is consistent with Goldman's base case forecast combining low (but positive) returns from here given the lack of profit growth and a less favouable macro backdrop.

What is far more notable, as we showed most recently last July, is that since the mid-1980s, significant stock drawdowns (i.e. market crashes) began only when term slope started steepening after being inverted.

Of course this cycle has been different from all prior ones given the ultra low level of rates and so historical results are unlikely to be repeated, and while one can argue that recession risk remains "somewhat low" - as Goldman does - amid an environment of lower returns and high vol of vol, the reality is that nobody knows what will happen to the financial system once the biggest source of profitability for banks - a normal sloping yield curve no longer serves to generate income and causes the loan issuance machinery to grind to a halt.

Published:3/26/2019 11:37:36 AM
[Markets] Outside the Box: 9 ways the housing market may find itself in the middle of a perfect storm The falling 30-year mortgage rate could reverse and hit 6% in the second half of next year despite big constraints on demand among home buyers.
Published:3/26/2019 11:08:28 AM
[Markets] The Reckoning Finally Arrives For The Trump Resistance

Authored by Eli Lake, op-ed via,

With Mueller’s investigation over, Democrats, the news media and the national security state have a lot to answer for...

“The investigation did not establish that members of the Trump campaign conspired or coordinated with the Russian government in its election interference activities.”

That single sentence, taken from Special Counsel Robert Mueller’s report on Russian interference in the 2016 U.S. presidential campaign, calls for a reckoning.

It’s a reckoning for Democrats who saw almost every development in this almost-two-year investigation as another dot connecting a conspiracy Mueller has not found. It’s a reckoning for many in the media that dutifully passed along this theory without scrutiny or context. And it’s a reckoning for many national security officials who abandoned their traditional nonpartisan role as custodians of state secrets to engage in a campaign against a president they loathed.

Their suspicions, I should note, were not unwarranted. During the 2016 election, there was strong evidence that Russia had hacked the emails of leading Democrats, a fact supported by Mueller’s indictments. The country later learned from Mueller that Moscow conducted a social media campaign to flood Twitter and Facebook with fake news and propaganda to discredit Hillary Clinton. Trump, meanwhile, once publicly invited the assistance of the Russians.

But many people who should have known better went beyond suspicion and embraced conspiracy. Remember Senator Harry Reid’s explosive letterto James Comey, released just a few days before the election, alleging that the FBI director possessed devastating information about Trump and his campaign’s ties to Russia? Reid did not provide many details. We now know that many of the allegations to which Reid referred echoed an infamous dossier prepared by a former British spy at the behest of an opposition research firm paid by the Democratic Party.

Reid wasn’t the only one. Last year the House Intelligence Committee released memos that showed how this dossier was part of the underlying evidence the FBI provided in a surveillance application to a secret court to monitor the communications of Carter Page, a low-level foreign policy adviser to the Trump campaign. Page has not been charged with a crime, and yet his reputation has been trashed after a top-secret warrant for his surveillance was leaked to the media.

The dossier set the initial narrative for the Trump administration. After CNN reported that it was included as part of a briefing Comey himself provided to Trump and Obama, Buzzfeed published the whole thing with the helpful caveat that it was not verified and was in places incorrect. The most important takeaway so far of the Mueller probe is that this dossier is garbage.

Then there is the matter of Trump’s first national security adviser, Michael Flynn. He was forced from the administration and into a legal nightmareafter his monitored conversations with Russia’s ambassador to Washington leaked a few weeks before Trump’s inauguration. It’s true that Flynn failed to file as a foreign agent for Turkey, a crime that is normally punished as a slap on the wrist. At the time though, the accusation against Flynn was that he was a Russian spy, based on leaked transcripts that are never supposed to see the light of day. How silly do these hyperventilations look today in light of Mueller’s conclusions?

What’s more, it’s a scandal that no one has investigated how those transcripts were leaked in the first place. Given that the FBI’s own inspector general found that leaking with impunity is commonplace, the bureau’s agents should at least be among the suspects.

Finally, there is that handful of former officials who validated the worst fears of Americans about Trump without ever providing actual evidence. The best example is former CIA Director John Brennan. For the last two years, Brennan has been a frequent guest on cable TV to spread the innuendo that Trump is compromised by Russia. Just this month, he speculated that Mueller would be indicting members of Trump world for criminal conspiracy, even as he insisted he had no “inside knowledge” of Mueller’s deliberations. That last part, at least, turns out to have been true.

The saddest part of all of this is that there was a lot of evidence, hiding in plain sight, that could have spared many collusion proponents their embarrassment. Mueller’s indictment of Roger Stone, for example alleged that Stone was tasked by a senior campaign official to find out what was in the emails that Russia hacked from Wikileaks founder Julian Assange. If the campaign were coordinating with Russia’s influence campaign, why would Stone need to go to Wikileaks?

There were also the transcripts of interviews before the Senate Judiciary Committee of participants in the June 2016 Trump Tower meetings where Donald Trump Jr. and others in the campaign took a meeting with a Russian lawyer who initially promised dirt on Hillary Clinton. Under oath, those witnesses said nothing came of the offer.

And Trump, it should be noted, has appointed Russia hawks at the highest levels. Secretary of State Mike Pompeo, National Security Adviser John Bolton and his predecessor H.R. McMaster, and former Secretary of Defense James Mattis all have long public records when it comes to Russia. If Trump were a Russian stooge, why would he appoint them to such posts? And despite his own baffling sycophancy toward Russian President Putin, Trump has not been weak on Russia in terms of policy.

The end of the Mueller probe is more than just a reckoning. It is also a reminder, if anyone needed another one, that the FBI and the intelligence community can be wrong. And it is a powerful illustration of the importance of keeping spies and lawmen out of politics.

Published:3/26/2019 11:08:28 AM
[Markets] Stock Market News: McDonald's Makes a Buy; Activists Send Bed Bath & Beyond Soaring The stock market rebounded sharply on Tuesday morning. Published:3/26/2019 11:08:28 AM
[Markets] Here’s what happens when you call the suicide prevention hotline Two Parkland shooting survivors and the father of a Sandy Hook shooting victim died by apparent suicide within days of one another.
Published:3/26/2019 10:37:26 AM
[Markets] Chicago prosecutors said to have dropped charges against actor Jesse Smollett Chicago prosecutors said to have dropped charges against actor Jesse Smollett Published:3/26/2019 10:37:26 AM
[Markets] Smollett Charges Dropped After "Emergency Court Appearance" 

Charges were dropped on Tuesday against Empire actor Jussie Smollett for disorderly conduct related to allegedly staging a fake hate crime attack and filing a false police report, according to the Chicago Tribune

A grand jury slapped Smollett with 16 felony counts earlier this month for falsely reporting a hate crime, which his attorney Mark Geragos called "vindictive" and "prosecutorial overkill." 

According to reports, the state of Illinois filed the motion to dismiss the case, which the judge signed off on. The case has also been sealed, according to CBS Chicago's Charlie De Mar. 

"Today, all criminal charges against Jussie Smollett were dropped and his record has been wiped clean of the filing of this tragic complaint against him. Jussie was attacked by two people he was unable to identify on January 29th. He was a victim who was vilified and made to appear as a perpetrator as a result of false and inappropriate remarks made to the public causing an inappropriate rush to judgment," reads a statement from Smollett's attorneys. 

"Jussie and many others were hurt by these unfair and unwarranted actions," the statement continues. "This entire situation is a reminder that there should never be an attempt to prove a case in the court of public opinion. That is wrong. It is a reminder that a victim, in this case Jussie, deserves dignity and respect. Dismissal of charges against the victim in this case was the only just result."

There had been no clue that prosecutors planned the about-face move before the announcement. A publicist for Smollett’s attorney was the first to notify the news media Tuesday morning, issuing an alert that did not elaborate on the nature of the emergency.

The 36-year-old actor, who was free on $100,000 bond, has previously denied lying to police or faking the attack. -Chicago Tribune

Smollett maintains that he was the victim of a predawn hate crime on January 29 in which two men assaulted him while he was on his way home after buying a sandwich; hurling racial and antigay slurs at him, dousing him in a liquid, placing a noose around his neck (which he was still wearing when police arrived later that morning), and punching him in the face. 

The incident sparked national outrage - with the left-leaning mainstream media and prominent Democrats uncritically supporting Smollett's version of events; holding it up as a prime example of violent Donald Trump supporters

Two suspects in the case, Nigerian-American brothers Ola and Abel Osundario - one of whom has been an extra on Empire, told police that Smollett paid them a combined $3,500 to stage the "attack," and that the three of them had practiced it beforehand. They also said that Smollett was involved in creating a racist letter containing a white substance that was sent to the actor on the Chicago set of Empire.

Controversy erupted earlier this month when texts and emails released by the Cook County State's Attorney's Office revealed that Michelle Obama's former Chief of Staff, Tina Tchen, attempted to have the case transferred to the FBI from the Chicago Police. 

"Spoke to the Superintendent Johnson," Foxx emailed Tchen on Feb. 1, in reference to Chicago Police Superintendent Eddie Johnson. "I convinced him to Reach out to FBI to ask that they take over the investigation." 

Foxx also texted with one of Smollett's relatives whose name was redacted from the text release, saying: "Spoke to the superintendent earlier, he made the ask ... Trying to figure out logistics. I’ll keep you posted." 

"OMG this would be a huge victory" the family member texted back. 

"I make no guarantees, but I'm trying" replied Foxx - who recused herself from the case on Feb. 20. 

Looks like none of that was necessary, as Smollett is now in the clear. 

Published:3/26/2019 10:37:26 AM
[Markets] GLOBAL MARKETS-U.S. bond yields, stocks rebound as risk buying returns Benchmark U.S. Treasury yields rebounded off of 15-month lows on Tuesday while global stock markets broadly surged after a two-session swoon, as risk appetite improved after worries of an economic recession had clouded trading since late last week. Markets have been rattled since Friday, when the 3-month U.S. Treasury yield exceeded the yield on the 10-year note, an inversion of the yield curve that is widely seen as an indicator of a recession. “After a couple of days where investors focused solely on the chances of recession in the U.S. and concerns about slower growth, today is not surprisingly a day where they rethink those probabilities," said Kate Warne, investment strategist at Edward Jones in St. Louis. Published:3/26/2019 10:37:26 AM
[Markets] U.S. consumer-confidence decline is latest sign of rising economic anxiety U.S. consumer-confidence decline is latest sign of rising economic anxiety Published:3/26/2019 10:09:42 AM
[Markets] Metals Stocks: Gold slips from best finish in nearly a month as stocks and yields climb Gold trades in the red Tuesday, at risk of giving back the bulk of the gains from a day earlier that landed the metal at its best finish in about a month. Stocks and other risk-on markets regain some footing, dulling the appeal of the haven metal, for now.
Published:3/26/2019 10:09:42 AM
[Markets] How Apple’s numberless credit card will make it ever harder to break free of its ‘ecosystem' Analysts say the card targets loyal customers who won’t flinch over one more Apple service in their lives. Published:3/26/2019 10:09:42 AM
[Markets] Chick-Fil-A Barred From San Antonio Airport Over 'Anti-LBGTQ Behavior' 

The San Antonio City Council held a vote on March 21 to ban fast-food chain Chick-fil-A from opening a concession at the city’s airport, according to Out in SA.

The City Council voted 6-4 on the ban, citing the company’s extensive history of anti-LGBTQ donations.

“With this decision, the City Council reaffirmed the work our city has done to become a champion of equality and inclusion,” Councilman Roberto C. Treviño told the news outlet in a statement.

“San Antonio is a city full of compassion, and we don’t have room in our public facilities for a business with a legacy of anti-LGBTQ behavior.”

Besides Chick-Fil-A, San Antonio International Airport will include concessions for The Luxury, Smoke Shack BBQ, Local Coffee, Boss Bagels & Coffee, Spurs, IStore, Sip Brew Bar and Market, and Adina’s Market.

“The press release issued by ?the councilmembers was the first we heard of his motion and its approval by the San Antonio City Council," Chick-fil-A told The Hill in a statement.?

"We wish we had the opportunity to clarify misperceptions about our company prior to the vote. We agree with?the councilmembers that everyone should feel welcome at Chick-fil-A. In fact, we have welcomed everyone in San Antonio into our 32 local stores for more than 40 years."

Chick-Fil-A has had an extended history of anti-LGBTQ donations.

In 2012, Dan T. Cathy, an American billionaire and the company’s CEO, said he opposed gay marriage. Later it was revealed that the company's non-profit arm, Chick-Fil-A Foundation, donated large sums of money to political groups that were hostile to LGBTQ rights. It was reported later that year, Chick-Fil-A published a statement that said it would leave same-sex marriage to the government.

Interesting enough, a 2017 tax filing showed the foundation continued to donate millions of dollars to three groups with anti-LGBTQ policies.

Chick-fil-A has taken a political stand for what its Bible-quoting CEO believes in, but over the last several years, mainly since the left-wing media has waged an all-out war on the Trump administration, the fast-food, conservative-loving, chicken-chain has been under an intense microscope from leftist organizations.

Published:3/26/2019 10:09:42 AM
[Markets] Stock market jumps, with tech and energy sectors leading rebound U.S. stocks bound higher Tuesday morning as a rally in the energy and tech sector helped to buoy the broad equity market amid a resumption of U.S.-China trade negotiations. Published:3/26/2019 10:09:42 AM
[Markets] Economic Report: Consumer confidence falls in March in another sign of economic anxiety Consumer confidence fell sharply in March, adding to a recent up-and-down pattern that reflects greater worries about the U.S. economy. The consumer confidence index dropped to 124.1 from 131.4.
Published:3/26/2019 9:36:59 AM
[Markets] Dow Climbs as Investors Move Beyond Recession Worries The Dow Jones Industrial Average rose Tuesday after investors moved beyond recession years that were sparked by the inverted bond curve. were up 1% after the tech giant unveiled several new services, including Apple TV Plus featuring original content and a news subscription platform called Apple News Plus. The Dow Jones Industrial Average rose 245 points, or 0.96%, to 25,761, the S&P 500 rose 1.03% and the Nasdaq was up 1.29%. Published:3/26/2019 9:36:59 AM
[Markets] Hogwashed: A Sullen John Brennan Suggests He May Have Received "Bad Information" On Collusion

A somber looking John Brennan suggested on MSNBC's Morning Joe on Monday that "bad information" may be to blame after more than two years of being dead wrong about Trump colluding with Russia.

Brennan - the former director of the CIA - was so convinced of Trump's collusion that he penned an angry Op-Ed in the New York Times after his security clearance was revoked, titled: "President Trump’s Claims of No Collusion Are Hogwash."

The article starts off with a picture of the very patriotic looking Brennan swearing in before some testimony we're sure was truthful - unless he had bad information of course. 

Mr. Trump’s claims of no collusion are, in a word, hogwash.

The only questions that remain are whether the collusion that took place constituted criminally liable conspiracy, whether obstruction of justice occurred to cover up any collusion or conspiracy, and how many members of “Trump Incorporated” attempted to defraud the government by laundering and concealing the movement of money into their pockets. -John O. Brennan

Last April - after President Trump called former FBI Director James Comey a "proven LEAKER & LIAR," Brennan dusted off his favorite thesaurus and tweeted "Your kakistocracy is collapsing after its lamentable journey." 

And less than one year later - Trump has been vindicated of collusion by special counsel Robert Mueller, leaving Brennan mumbling on MSNBC with a stone-face; "Well, I don’t know if I received bad information but I think I suspected there was more than there actually was," adding - with a mouth full of crow "I am relieved that it’s been determined there was not a criminal conspiracy with the Russian government over our election."

Sounds like hogwash... 

Published:3/26/2019 9:36:59 AM
[Markets] U.S. home-price gains slow to 6½-year low: Case-Shiller U.S. home-price gains slow to 6½-year low: Case-Shiller Published:3/26/2019 9:07:20 AM
[Markets] US STOCKS SNAPSHOT-Wall St opens higher on tech boost Wall Street's main indexes opened higher on Tuesday, for the first time in five sessions, as Apple Inc led gains in technology stocks, while financials were lifted by big banks. The Dow Jones Industrial ... Published:3/26/2019 9:07:20 AM
[Markets] OxyContin Maker Purdue Pharma Reaches $270 Million Settlement With Oklahoma AG

In the first of what will likely amount to billions of dollars in legal settlements shelled out by the Oxycontin creator, Purdue Pharma has reportedly agreed to pay $270 million to settle claims brought by the Oklahoma attorney general that the company's aggressive and misleading marketing practices, according to the Wall Street Journal, which cited an anonymous source familiar with the settlement.

Opioid deaths have skyrocketed in recent years as the federal government has cracked down on overprescribing of pharmaceutical grade opioids, forcing more addicted users to turn to street drugs like heroin, which are increasingly cut with the powerful synthetic opioid fentanyl, causing a surge in overdose deaths that are presently killing more Americans a year than died during the entire war in Vietnam.

The settlement is the first to resolve one of the more than 1,600 lawsuits facing the privately held drugmaker, which is reportedly weighing a bankruptcy filing to avoid what's expected to be an immense legal burden.


Courtesy of Statista

The billionaire Sackler family, which own privately-held Purdue, have been subjected to widespread public scorn over revelations that members of the family pushed the company to misrepresent OxyContin's addictive qualities in its marketing materials and research. The pill, which was prescribed to treat surgery and cancer pain, was widely prescribed during the 2000s, and quickly became the gold standard for pharmaceutical-grade opioids sold on the street in the US. Oxy - as it came to be called - was widely derided as "heroin in a pill", and helped spawn a new generation of opioid addicts who were introduced to the class of drugs via presumably "safer" pharmaceuticals.

After years of unchecked abuse, federal and state governments cracked down on OxyContin, forcing Purdue and other drugmakers to produce abuse-resistant versions of OxyContin, while imposing new limitations and guidelines for prescribers to eliminate so-called "pill mills". But the damage had already been done. The rate of heroin abuse in the US climbed from roughly half a person per 1,000 in 2002 to nearly 3 per 1,000 by the end of 2013, according to data from the CDC. Drug overdose deaths soared to a record high of roughly 70,000 last year, a rise that was largely fueled by deadly street drugs like fentanyl-laced heroin, according to the federal government.

Published:3/26/2019 9:07:20 AM
[Markets] The New York Post: Pentagon authorizes $1 billion for Trump’s border wall The Pentagon has authorized a payment of $1 billion to begin building a portion of President Trump’s proposed southern border wall, according to US officials.
Published:3/26/2019 8:38:02 AM
[Markets] Stocks open higher as focus shifts back to China trade talks U.S. stocks started Tuesday's session higher, as U.S.-China trade negotiations are resuming. U.S. trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will be in China for the negotiations this week. The Dow Jones Industrial Average opened 0.8% higher at 25,709, and the S&P 500 kicked the session off 0.6% higher at 2,815. The technology-heavy Nasdaq Composite Index opened 0.8% stronger at 7,701. Apple Inc. remained in focus after the tech giant unveiled a number of new services as the company shifts from products like the iPhone. Elsewhere, Bed Bath & Beyond climbed higher following a report by The Wall Street Journal saying three activist investors are preparing to launching a proxy fight to replace the company's board. On the economic data front, the consumer-confidence index for March, expected at 133, is due at 10 a.m. Eastern. Earlier, February housing starts came in better than anticipated. Building permits for February and the Case-Shiller home price index for January eased slightly from the previous months. Published:3/26/2019 8:38:01 AM
[Markets] RaboBank: "This Is Not A Healthy Sign As Bond Traders Know"

Submitted by Michael Every of RaboBank

The US yield curve continues to invert: the 3M-10Y Treasury spread is, thanks to a further decline in the latter, now at -5bp, and that was actually off the intra-day lows at the close. This is not a healthy sign, as bond-market watchers should know and equity-market obsessives should rapidly learn: how much further will this run before we see equity markets starting to do the same? Monday was perhaps the start of that action, at least in Asia, though Europe can take some comfort from the healthy German IFO report yesterday.

Talking of running, one purported US presidential candidate, former Stormy Daniels lawyer Michael Avenatti, almost certainly won’t be taking part now he has just been arrested for extortion. Expect that Not-Revolution to be televised today alongside further recriminations from the lack of criminals in the Mueller Report and calls for a report into how that Report got reported – and initiated.

Meanwhile, finally off and running in the eyes of some is the British Parliament, also televised, which has just provided us with what some are calling a revolution – though others, including myself, say it has not. In short, in a series of long, rambunctious debates The Mother of Parliaments voted to take control of the Brexit process from a government that is clearly falling apart. An amendment to allow Parliament to proceed with a series of indicative votes tomorrow over what kind of Brexit they would like, just four days before the original Brexit deadline and a few weeks before the new one of 12 April, was passed. In the eyes of Bremainers, the Remain-majority Parliament is now going to step in and sort this mess out.

Except for the fact the government have already made clear that they are not going to be bound by anything Parliament proposes, even staying in the Customs Union, for example. They see the British constitution as saying agreements like Brexit are made between the EU and the Executive, subject to approval by Parliament, which is not the same as Parliament becoming the Executive – which it really can’t from that stand-point.

This also presupposes that the government does not whip MPs into voting based on party lines. There are threats of more resignations if that happens following three junior ministers yesterday: but frankly, who is even keeping count at this stage?
It also presupposes all options will be on the table, when some such as a second referendum may not be. And can Parliament really agree on anything Brexit-ish anyway given the various options on the table, from Remain to Norway Plus to May’s thoroughly-unpopular deal, to Hard Brexit? One would wager there is no clear majority for anything, which is why we are in this mess in the first place.

Indeed, the BBC politics Brexit specialist agrees that where we are after last night’s Not-Revolution is merely closer to a General Election, which would be a hugely destabilising affair for both major parties given they are completely split on Brexit. Would the Tories be able to hold together to run on May’s Deal as their mandate? And what would Labour run on – a second referendum?! Given both an election and a referendum are forms of plebiscite, isn’t this just a never-endum to avoid facing up to the hard choices?

In short, the only manner in which what we have just seen is a revolution is that the UK is going round in circles: some would argue in a decaying orbit back into the EU; others would look how it has behaved of late and say circling round the drain. Good luck trading GBP through all this!

Day Ahead

Markets will today continue to grapple with a US yield curve that screams “Run!” and some signs of data that suggest a normal walking pace is still acceptable. They will also probably continue to ignore a political backdrop that says “Jump!”

It’s unlikely that the day will add anything much to our understanding of the present underlying dynamic given we already had Kiwi trade numbers, which saw exports up and imports down, and next up we only have US housing starts (consensus: -1.6%), building permits (consensus: -0.9%), and consumer confidence (consensus: 132.5).

There is some central-bank speak from Evans and Harper, but that isn’t going to address the real questions of where next either. Frankly, central banks are as in the dark as the rest of us as to whether a revolution looms ahead or not.

Published:3/26/2019 8:38:01 AM
[Markets] All 30 Dow components post gains in premarket trading All 30 Dow components post gains in premarket trading Published:3/26/2019 8:08:26 AM
[Markets] Economic Report: Home price gains slow to a 6 1/2-year low, Case-Shiller says A closely-watched index of home price gains rose at the slowest pace in nearly 7 years in January.
Published:3/26/2019 8:08:26 AM
[Markets] All 30 Dow stocks trading higher in premarket The 131-point rally in futures for the Dow Jones Industrial Average is unanimous Tuesday, as all 30 components were rising in premarket trade. The biggest gainer was Nike Inc.'s stock, which rose 1.24%, followed by Apple Inc. shares, which climbed 1.20%. Among other gainers, shares of Boeing Co. rose 1.0% and J.P. Morgan Chase & Co. tacked on 0.9% ahead of the open. Published:3/26/2019 8:08:26 AM
[Markets] Now That Parliament Has Seized Control Of Brexit, Here's What Happens Next

Submitted via Ransquawk

LAST NIGHT’S VOTE: The government was defeated by a majority of 27 (329 vs. 302) on the Letwin amendment which seeks to change the rules of parliament on March 27 in order to provide time for lawmakers to debate and hold indicative votes. It is worth noting that three junior ministers resigned in order to vote in favour of the Letwin amendment. Furthermore, MPs voted (311 vs. 314) against the Beckett amendment (F) which called on the government to seek parliament approval on a no-deal if an agreement is not reached 1 week before the Brexit date, while the Labour amendment (D) to provide parliamentary time for lawmakers to find a majority for a different approach on Brexit was not moved. Following last night’s developments, Goldman Sachs analysts maintained their Brexit probabilities (PM May deal ratification 50%, no-deal Brexit 15% and no Brexit 35%) whilst stating that they are skeptical that this week’s votes will prove conclusive.


Morning – Emergency Cabinet meeting

  • 18:00 – ERG meeting

WHAT’S NEXT: In light of the Letwin amendment passing, on Wednesday 27th March, MPs will vote on a series of options to establish what could command a majority in parliament. The result of any such indicative votes would not be binding on the government as it goes against the Tory manifesto. There is no official list of options, although one has been generated by the Commons select committee for exiting the EU.

1. PM MAY’S DEAL: The deal has been rejected twice already by parliament but remains the only deal the EU can quickly ratify and therefore remains an option. If voted on, it will attract support from May loyalists, but DUP and ERG remain opposed.

2. NO DEAL BREXIT: This would lead to the UK leaving the EU on the new revised date of April 12th on WTO terms. HoC have twice voted against this option, albeit by only four votes last time.

3. ELIMINATING A BACKSTOP: This, in theory would mean re-writing the Withdrawal Agreement, something the EU repeatedly dismissed. A variant would be to promote "alternative arrangements" i.e., technology to monitor the flow of good that could replace the backstop. The EU have previously agreed to examine this, although implementation could take years.

4. CANADA-STYLE DEAL: A popular idea with hardcore Brexiteers, this would focus on the future trade deal with the EU rather than the Withdrawal Agreement. In theory, the UK would accept no continuing regulatory alignment with the EU, although is unclear how far the EU is willing to negotiate this. However, this would not solve the impasse regarding the Northern Irish border, nor has there been signs of many Labour are willing to support this.

5. NORWAY-PLUS DEAL: This soft-Brexit alternative would keep the UK in the single market by remaining in the European Economic Area (EEA) and European Free Trade Association (EFTA). Unlike EFTA, the deal would also keep the UK in the customs union (hence the plus). The deal has been promoted by a group of Tory backbenchers, Labour leader Corbyn has also shown some interest and some believe it would be the most popular option given a free vote. The Sun reported last night that over 100 are ready to back this deal after PM May's deal is killed off.

6. LABOUR DEAL: This would mean the UK remains in a customs union with the EU and remain close to the single market. European Council President Tusk has previously deemed this as “promising”, although the plan was rejected by parliament. The Labour deal is unlikely to attract support of the Conservatives.

7. SECOND REFERENDUM: A replay of the 2016 referendum would be a separate option although nobody in parliament is seriously calling for that. However, a referendum could be attached to one of the options above. When a second referendum was put on PM May’s deal before the HoC this month, only 85 MPs voted for it after labour ordered its MPs to abstain.

Published:3/26/2019 8:08:26 AM
[Markets] Outside the Box: 10 stupid ways you’re probably wasting money There’s a lot of hidden waste in your life.
Published:3/26/2019 7:36:10 AM
[Markets] Apple Streams, Boeing’s Airworthiness, and More To Know About Stocks for Tuesday Apple plotted a service-heavy future at its event in California yesterday. China suspended the airworthiness certificate of the 737 MAX jet this morning. Uber is buying a car service in the Middle East for more than $3 billion. Published:3/26/2019 7:36:10 AM
[Markets] Are We Going To New Highs?

Authored by Lance Roberts via,

I recently received the following email:

“Are we going to hit new highs you think, or is this a setup for the real correction?”

The answer is “yes” to both parts.

Thank you for reading. See you next week.

You still here?

Fine, let me explain then.

The “price” of the financial markets are ultimately driven by one thing and one thing only: “expectations.”

Yes, fundamentals, valuations, interest rates, etc. all play an important role, but it is ultimately “expectations” of “the herd” which moves prices. Currently, valuations on stocks are at the second highest level on record, but “expectations” are that a continued “low interest rate environment” can support economic growth allowing stocks to “grow” into their valuations.

This is why Wall Street begin using “forward operating earnings,” which are complete nonsense, to justify high valuations and, you guessed it, “expectations.” (Operating earnings are essentially “made up” earnings without any of the “bad stuff” included.)

For more on this valuation read a recent article we wrote on the topic titled Price to Forecasted Hope.

The problem, historically speaking, is when those “expectations” are disappointing as shown below.  There are three important things worth pointing out:

  1. The top panel is GAAP earnings (what companies REALLY earn) and nominal GDP.

  2. The black vertical line is when the markets begin to “sniff out” something is quite right.

  3. The red bars are when “expectations” are disappointed. 

While “expectations” were indeed disappointing in 2015-2016, the long-term rising trend line was never violated. Secondly, the current warning signal (black vertical line) is in place, but “expectations” have not yet been disappointed.

As I discussed yesterday, one of the biggest problems facing investors is that many have never recovered from the previous two bear markets. While “this time may seem different,” the reality is such is probably not the case.

Let’s review the periods just prior to the onset of the last two bear markets to see if there are any similarities to today’s environment.


Leading up to 2000, the Internet was changing the world. Companies like E*Trade brought investing to the mainstream public and now everybody was a “professional investor.” Despite silly little hiccups like Long-Term Capital Management and the “Asian Contagion,” the markets rocketed higher as expectations were that “clicks per page” had changed the investing dynamic forever. “Buy the dip,” and “Buy and hold” were the investing mantras of the day as retail investors loaded up on risk.

The economy was strong, employment was high, and corporate earnings were soaring as the advent of “operating, or proforma, earnings” established its place in the Wall Street lexicon. It’s was, for all intents and purposes, a “new era.”

The change came in late July of 2000 as stocks recovered from previous dips but failed to reach new highs. The deterioration in price momentum was signaling that something was changing as the Fed had been aggressively tightening monetary policy. By December of 2000, the “buy the dip” mantra and “buy and hold” investing were no more. 

The “all-time” high printed in 2000 would not be seen again for 7-years.


Fast forward to 2006. After the crushing of investors portfolios from 2000-2002, much of the damage had been corrected.

“See, if you had just bought and held, you would be fine.” 

“Buy and hold” and “dollar cost averaging” investment strategies had once again returned to the media headlines. With mortgage rates low and a litany of no cost/low-cost options for getting a mortgage, or using the mortgage as an A.T.M., Wall Street had found a new avenue for liquidity in the “real estate market.”

Once again it seemed as if nothing could go wrong as the flood of liquidity in the system allowed for asset prices to rise. As the market consistently rang out new highs through 2006 and 2007, it was believed once again this “time was different.” 

Even when small west coast banks and two Bear Stearn’s hedge funds collapsed due to their investments in risky “mortgage-backed” instruments, it was quickly ignored by investors as then Fed Reserve Chairman Ben Bernanke soothed the markets with docile tones of a “Goldilocks Economy.”

After a stumble in July of 2007, the market came roaring back, ignoring the growing mortgage and real-estate issues and surged back to hit all-time highs.

That was the last all-time high that would be seen for another 6-years. 


Of course, there are many investors, and more importantly financial advisors, who were not in the markets during those previous two periods. Many individuals simply sold out of the markets, or lost most everything, and never returned. Many financial advisors quit the business and started a different profession.

So, for many the bull market of the last decade seems to be “normal.” Once again, “buy the dip” and “buy and hold”are once again “a thing.” More importantly, “this time is different” because the “Central Banks have the market’s back.” 

But is it?

In reviewing the chart above, there are certainly many similarities between the current market backdrop and those previous bull market peaks. There are also an abundance of risks which Doug Kass noted on Monday:

“I continue to be of the view that 2018 marked the beginning of the end of the 10-year Bull Market and that an important top was in the process of being established last year.

‘Tops are a process, bottoms are an event.’

Consider the following fundamentally based issues and concerns I raised back then (and that still have value, and have been updated in boldface):

  • Downside Risk Dwarfs Upside Reward

  • Global Growth Is Less Synchronized .

  • FAANG’s Dominance Represents an Ever-Present Risk

  • Market Structure Is One-Sided and Worrisome. Machines and algorithms rule the day; they, too, are momentum-based on the same side of the boat. 

  • Higher Interest Rates Not Only Produce a More Attractive Risk-Free Rate of Return, They Also Make It Hard for the Private and Public Sectors to Service Debt.

  • Trade Tensions With China Are Intensifying and Mr. Market Is Improperly Looking Past Marginal Risks.

  • Any Semblance of Fiscal Responsibility Has Been Thrown Out the Window by Both Political Parties. This has very bad ramifications, which shortly may be discounted in lower stock prices, especially as it relates to the servicing of debt — a subject I have written about often. 

  • Peak Buybacks. Buybacks continue apace, but look who’s selling

  • China, Europe and the Emerging Market Economic Data All Signal a Slowdown. It’s in the early innings of such a slowdown based on any real-time analysis of the economic data. 

“Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.” – Benjamin Graham

He is correct.

However, while the “risks” are abundant, they don’t matter until they do. As I noted in last week’s Technical Update:

“The ‘animal spirits,’ which were awakened by consecutive rounds of financial stimulus on a global scale, has enticed investors into the belief that all risks of a market cycle completion have been removed. The problem, as I have discussed previously, is this optimism comes at a point in history diametrically opposed to when President Reagan instituted many of the same conservative policies.

It is this exuberance that reminded me of the following ‘investor psychology’ chart.”

“The third (current) full-market cycle is only 39-years in the making. Given the 2nd highest valuation levels in history, corporate, consumer and margin debt near historical highs, and average economic growth rates running at historical lows, it is worth questioning whether the current full-market cycle has been completed or not?”

As Doug concluded:

“The search for value and comparing it to risk taken is, at its core, the marriage of a contrarian streak and a calculator.

While it is important to gauge the possibility (based on fundamental and technical input) that the market may be making an important market top, it is even more important to distill, based on reasonable fundamental input, what the market’s reward versus risk is. This calculus and taking advantage of the discrepancy between price and intrinsic value trumps everything else that I do in determining market value.

My investment process points me to conclude that, at current prices, downside risk substantially eclipses upside reward.”

This was the case in 1999 and 2007 as well.

The “Goldilocks economy,” the “permanently high plateau,” and “buy and hold” all died at the altar of price reversions. 

And, the answer is “YES.” 

  • Yes, the markets could absolutely rally to, or near, all-time highs.
  • It could also well be the last “all-time” high you see for the next 6-10 years. 
Published:3/26/2019 7:36:10 AM
[Markets] Need to Know: What's next after the S&P 500 fails to hold 2,800 Need to Know: What's next after the S&P 500 fails to hold 2,800 Published:3/26/2019 7:06:31 AM
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Published:3/26/2019 7:06:31 AM
[Markets] Global Stocks, US Futures Rebound As Recession Fears Fade, Yields Rise

And just like that, the panicked freakout over tumbling interest rates around the globe is over with calm returning to global markets as a steadier day for Europe and Asia’s markets and a rebound in bond yields helped ease nerves after a jarring few days dominated by recession worries.

Even as over $10 trillion in global debt now carries a negative yield, a sense of optimism swept across global markets with S&P futures climbing sharply on Tuesday, following a rise in European and Asian shares even as Chinese stocks posted another steep, 1.5% drop, pushing the Shanghai Composite below 3,000 for the first time in two weeks.

Yields on US Treasuries rose across the curve after the 10Y yield closing below the effective fed funds rate of 2.4% on Monday, although the spread between three-month and 10-year rates remained in negative territory. The 10Y shed 5 basis points on Monday and a whopping 17.5 basis points since the Federal Reserve last week ditched projections for raising rates this year.

Meanwhile, fed funds rate futures are now fully factoring in a rate cut later this year, with about an 80 percent chance of a move priced in by September.

“The U.S. yield curve continues to invert,” said Michael Every, Hong Kong-based senior Asia-Pacific strategist at Rabobank. “This is not a healthy sign, as bond-market watchers should know and equity-market obsessives should rapidly learn.”

Equities took the modest rebound in stride, as futures on the Dow Jones, Nasdaq and S&P 500 indexes all advanced, and gains in healthcare companies helped the Stoxx Europe 600 into the green. The bond markets remained the main focus though: 10-year German government bond yields remained below zero as European bonds tracked Treasuries lower and the euro edged up against the greenback.

Earlier in Asia, the MSCI index of Asia-Pacific shares rebounded 1% after losing 1.4% in the previous session, though there were some eye-catching moves. Japan’s Nikkei jumped 2.1% after recording its biggest drop since late December on Monday; the Topix Index jumped more than 2.5 percent, a day after it had its biggest slide this year, helping MSCI Asia Pacific index rise one percent; even the Kospi eked out a 0.3% gain despite a profit warning from Samsung. Meanwhile, the selling in China continued, with the Shanghai Composite dropping below 3000 for the first time in 2 weeks.

India jumped over 1 percent whereas China’s blue-chip CSI300 index dropped more than 1 percent as trade war worries remained. The Aussie 10-year yield nudges three basis points higher after printing record low 1.75% in early trading, meanwhile JGB futures extend losses after uninspiring 40-year bond auction. Emerging-market currencies were steady as shares edged up.

“The world is looking to fade the risk aversion caused by the inversion of the (U.S.) yield curve,” said SocGen's Kit Juckes, adding that it was anyway difficult to position for a hypothetical recessions.

Sure enough, as Reuters notes, investors have been spooked by sharp falls in U.S. bond yields and an inversion of the U.S. Treasury yield curve, widely seen as an indicator of an economic recession.

Going back to bonds, the US Treasury Department will sell $113 billion in coupon notes this week, including $40 billion in two-year notes on Tuesday, $41 billion in five-year notes on Wednesday and $32 billion in seven-year notes on Thursday. Investors will also be watching Fed policymakers scheduled to speak on Tuesday.

With bonds now signalling a recession, the outcome of trade talks between America and China and any developments in Britain’s tortuous exit of the European Union could help determine sentiment from here. “It’s premature to talk about the yield curve meaning that we have to go into recession,” Philip Wyatt, a Hong Kong-based economist for UBS Group AG, said on Bloomberg Television. “It’s possible for the long end to run too far, too fast,” he said of U.S. Treasuries.

In overnight central bank news, Fed's Rosengren (voter, hawk) said returning Fed assets to pre-crisis levels is not desirable nor feasible and that the balance sheet is likely to grow, while he added that it may be important to increase share of Treasury bills as well as lower duration of balance sheet more quickly. Furthermore, Rosengren noted that Fed pause is the responsible action to do now and that the dot plot is not a promise of policy direction which depends on changes to the economy. Separately, Fed's Harker said he was not supportive of the December move and reiterates that he is in wait and see mode, favoring at most one hike this year and one in 2020.

In the currency market, the Bloomberg dollar index marginally stronger while the euro stood firm at $1.1305, having gained a tad on Monday after Germany’s IFO Institute said its business climate index rose to 99.6, beating a consensus forecast of 98.5 and ending six consecutive months of decline. The dollar was 0.6 percent higher versus the yen at 110.42 yen, having hit a 1-1/2-month low of 109.70 on Monday, while British pound was barely budged at $1.3180 after lawmakers voted late on Monday to wrest further control of the Brexit process from Prime Minister Theresa May.

“We expect EUR/USD to stabilize around the current level of 1.13 and see a limited downside for the rest of week,” said currency strategists at ING.

Among commodities, oil prices hovered below their recent four-month peaks, as the prospect of tighter U.S. crude supply was offset by concerns about a slowdown in global economic growth. U.S. crude futures traded at $59.55 per barrel, up three-quarters of a percent on the day but below Thursday’s $60.39, which was its highest level since mid-November.  Brent futures were up 0.7% as rising tension in Venezuela threatened to further curb supplies from the holder of the world’s largest crude reserves.

Gold retreated for the first time in three days, down a third of a percent at $1,317.60 having hit a one-month high of $1,324.60 on Monday.

Housing starts and Conference Board Consumer Confidence readings are due. Scheduled earnings include Carnival and IHS Markit

Market Snapshot

  • S&P 500 futures up 0.2% to 2,813.25
  • STOXX Europe 600 up 0.1% to 374.87
  • MXAP up 1% to 159.86
  • MXAPJ up 0.3% to 523.41
  • Nikkei up 2.2% to 21,428.39
  • Topix up 2.6% to 1,617.94
  • Hang Seng Index up 0.2% to 28,566.91
  • Shanghai Composite down 1.5% to 2,997.10
  • Sensex up 0.5% to 37,982.27
  • Australia S&P/ASX 200 up 0.07% to 6,130.59
  • Kospi up 0.2% to 2,148.80
  • German 10Y yield rose 0.3 bps to -0.025%
  • Euro down 0.05% to $1.1306
  • Brent Futures up 0.5% to $67.56/bbl
  • Italian 10Y yield rose 5.3 bps to 2.148%
  • Spanish 10Y yield rose 0.7 bps to 1.108%
  • Brent Futures up 0.5% to $67.56/bbl
  • Gold spot down 0.4% to $1,316.81
  • U.S. Dollar Index up 0.04% to 96.60

Top Overnight News

  • U.K. Parliament seized control of the Brexit process from Prime Minister Theresa May and will now seek to decide how Britain exits the European Union. In a vote late Monday, the House of Commons split 329 to 302 to schedule votes on a series of alternative strategies, potentially including a second referendum
  • A global rush to buy sovereign debt kept on going in Treasuries Monday, with bond traders increasing wagers that the Federal Reserve will have to cut interest rates later this year. Overnight index swaps showed 25bps worth of easing are expected by the central bank’s October meeting
  • The next step in Attorney General William Barr’s work on the Mueller report is deciding just how much of it to release, and one person is likely to get a big say in the answer: President Donald Trump
  • Oil rebounded along with global markets as pessimism over the global growth outlook eased a little, and rising tension in Venezuela threatened to further curb supplies
  • The global iron ore market will get a glimpse of how dire the supply situation looks when Vale addresses analysts this week for the first time since the fatal dam disaster in January in Brazil
  • U.S. President Donald Trump and a key ally, Senate Judiciary Chairman Lindsey Graham, said Monday that after Robert Mueller closed his Russia probe, they want an investigation of the investigators
  • Federal Reserve Bank of Boston President Eric Rosengren still thinks the central bank’s next move for interest rates is more likely to be a hike than a cut. He just won’t be surprised if that turns out wrong
  • Euro-area banks will know by June how generous the terms of the European Central Bank’s new loans are going to be, according to Governing Council member Olli Rehn
  • Turkish authorities have made it virtually impossible for foreign investors to short the lira. The overnight swap rate for the currency blew out by a whopping 73 percentage points to 96.34 percent on Monday, as offshore funds clamoring to close out long-lira positions failed to find counterparties, according to two people with direct knowledge of the matter

Asian equity markets were mostly higher as the region took the consolidation on Wall St as a cue to pick itself up from the prior day’s sell-off. ASX 200 (+0.1%) was choppy as weakness in energy, tech and financials off-set the strength in miners, while Nikkei 225 (+2.1%) outperformed on bargain hunting after the prior day’s 3% drop and its worst performance YTD with Tokyo sentiment also boosted by currency weakness and reinvestment buying heading into ex-dividend day tomorrow. Hang Seng (-0.2%) and Shanghai Comp. (-1.5%) both began higher, although sentiment in the mainland eventually deteriorated after another PBoC liquidity drain and amid tentativeness ahead of upcoming blue-chip earnings including the Big-4 banks later this week with the industry anticipated to post slower profit growth for a 5th consecutive year. Finally, 10yr JGBs were lower with demand subdued amid the heightened risk appetite in Tokyo and following the mixed results in the 40yr auction.

Top Asian News

  • Once-in-Century Rain Hits Australia as Ports Return After Storm
  • Citigroup Faces Fine for Allegedly Manipulating JGB Futures
  • Election Cash Splash Spurs Southeast Asia’s Biggest Economy
  • Ocado Says Coles Deal to Be Earnings Negative in Current Year

Major European indices are slightly firmer [Euro Stoxx 50 +0.3%] roughly in-line with how they started the session, in-spite of indices drifting somewhat into mixed/negative territory not long after the open. In a similar pattern, after opening the session all in the green, major sectors are now mixed, with some mild outperformance seen in Energy names. The FTSE 100 (+0.3%) is firmer, boosted by the likes of Ocado (+4.3%) after signing a deal with Australian supermarket chain Coles at the top of the index alongside housing names such as Persimmon (+2.3%) and Fresnillo (+1.2%) after positive broker moves. However, the FTSE 100’s gains are hampered by the significant underperformance seen in Ferguson (-9.0%) shares after the Co. warned that FY profit will be towards the lower end of expectations. Other notable movers include, Airbus (+2.4%) after reports just before 16:00GMT yesterday that they had secured an order from China at which Co. shares moved higher and Boeing shares saw some negativity. Subsequently, further details have emerged that the deal is for 300 jets with an estimated value of around USD 35bln; which is almost double the level that had been indicated by French President Macron in 2018. Elsewhere, Rolls Royce (-1.8%) who are in negative territory after being reiterated underweight at Morgan Stanley. Of note for tech names Samsung Electronics (005930 KS) guides Q1 earnigns to be lower than market expectations. For reference Co. shares closed around 0.6% lower.

Top European News

  • Bang & Olufsen Shares Slump as Turnaround Efforts Stall
  • Credit Suisse Raises Miners to Overweight on China Economy Play
  • Intesa Considers Strategic Options for Unlikely-to-Pay Loans
  • Pound Volatility Curve Stays Inverted on Various Brexit Options

In FX, the USD remains rangebound and mixed vs G10 counterparts, as the DXY pivots the 96.500 level with technical resistance capping the upside along with month end rebalancing signals pointing to moderate to modest selling vs several major currencies. However, the Buck is also underpinned ahead of 96.000 amidst relative weakness elsewhere, such as the Yen on improving or more stable risk sentiment, Pound on Brexit and Kiwi pre-RBNZ.

  • JPY - As noted above, an upturn of recovery in risk appetite has prompted an unwind in safe-haven premiums to the detriment of the Yen in particular, and after recent strengthening through 110.00 vs the Usd the headline pair has now rebounded quite markedly through the big figure and a Fib at 110.23 to trip some stops on the way to 110.42. Note, a hefty 1.8 bn option expiry between 110.10-15 for today’s NY cut appears safe at the current juncture.
  • NZD/GBP - Also back under pressure vs the Usd having forged gains on the back of better than forecast NZ trade data in the case of the Kiwi and for Sterling the latest vote in UK Parliament that effectively takes the onus away from PM May in terms of the next Brexit steps. Nzd/Usd is hovering around 0.6900 vs circa 0.6925 at best overnight, while Cable retreated from around 1.3225 to a 1.3160 base again (virtually matching Monday’s low) before rebounding firmly over 1.3200 handle to 1.3250. Note, next up for the Kiwi is March’s RBNZ policy meeting (full preview flagged on the headline feed and within the Research Suite), while the Pound remains hostage to Brexit and will be eyeing Wednesday’s indicative votes.
  • AUD/CAD/EUR - All nudging new or nestling near highs vs the Usd, as the Aussie extends above 0.7100 with some favourable tailwinds via the Aud/Nzd cross that has rebounded firmly over 1.0300 amidst the aforementioned pre-RBNZ Kiwi caution. However, Aud/Usd still has some way to go from 0.7135 to arouse any expiry related interest from 1 bn rolling off from 0.7145 to 0.7150. Meanwhile, the Loonie is trying to extend gains above 1.3400 against the backdrop of firm oil prices and news that China has lifted some bans on Candian canola imports, and the single currency is sitting above 1.1300, albeit tight.
  • EM - A more stable session so far for the TRY and some outperformance vs regional peers as the Lira continues to pare recent heavy losses, albeit due to intervention or various forms of capital repatriation and amidst further spikes in money market rates. Usd/Try currently near the middle of a 5.4660-5.5925 band. Elsewhere, Eur/Huf is also midway between trading parameters (316.80-00) ahead of a widely anticipated NBH rate hike
  • New Zealand Trade Balance (Feb) M/M 12M vs. Exp. -200M (Prev. -914M, Rev. -948M). (Newswires) New Zealand Exports (Feb) 4.82B vs. Exp. 4.70B (Prev. 4.40B, Rev. 4.33B) New Zealand Imports (Feb) 4.80B vs. Exp. 4.90B (Prev. 5.32B, Rev. 5.28B)

In commodities, a firm rebound in the energy complex with WTI and Brent futures advancing further above USD 59.00/bbl and USD 67.50/bbl respectively as global growth pessimism takes a back seat (for now) and risk appetite takes the wheel. OPEC+ members are said to be planning the next JMMC meeting on May 19th after cancelling their April assembly before OPEC+ convenes on June 25-26. ING argues that the cancellation of the April meeting could suggest that the members “are not in agreement to extend the current deal”, set to last until the end of H1 2019. Analysts at ING also speculate that if this is the case, then it is likely that Russia believes an extension is not needed. Nonetheless, traders will be eyeing the usual API crude inventory release later today (2030 GMT/1530 ET) as a fresh catalyst. Elsewhere, metals are relatively mixed with gold (-0.6%) shedding recent gains amid the broad risk appetite whilst copper prices are supported for the same reason. Back to precious metals, UBS raised its 6 and 12-month silver forecasts, both to USD 16.30/oz from USD 15.50/oz and USD 16.00/oz respectively. BHP expects to resume loading iron ore ships at Port Hedland on Tuesday and ramp up output over the approaching days, while it found no major damage from the recent cyclone.

Looking at the day ahead, there are quite a few releases, with a possible highlight being the Conference Board’s consumer confidence reading for March, along with the Richmond Fed’s manufacturing index. In addition, we’ll get February’s data for housing starts and building permits, along with the FHFA’s House Price Index for January. In terms of central bank speakers, we’ve got the Fed’s Harker, Evans and Daly all speaking today, along with the BoE’s Broadbent.

US Event Calendar

  • 8:30am: Housing Starts, est. 1.21m, prior 1.23m
    • Building Permits, est. 1.31m, prior 1.35m
  • 9am: FHFA House Price Index MoM, est. 0.4%, prior 0.3%
  • 9am: S&P CoreLogic CS 20-City MoM SA, est. 0.3%, prior 0.19%
    • S&P CoreLogic CS 20-City YoY NSA, est. 3.8%, prior 4.18%
  • 10am: Richmond Fed Manufact. Index, est. 10, prior 16
  • 10am: Conf. Board Consumer Confidence, est. 132.5, prior 131.4

DB's Jim Reid concludes the overnight wrap

We’re back to Brexit being at the top of the agenda again after a brief interlude as the UK government lost another vote in the House of Commons last night (329-302), with three ministers breaking ranks and resigning to support the amendment. MPs supported the measure put forward by the Conservative backbencher, Sir Oliver Letwin, which allows MPs to take control of the parliamentary timetable away from the government tomorrow, thus allowing Parliament to hold a series of ‘indicative votes, where MPs could vote on a range of Brexit options. After the vote, the government released a statement criticizing the “dangerous, unpredictable precedent” set by the vote, but nevertheless pledged to work with parliament to achieve a reasonable outcome. The statement called for “realism” moving forward and, in her comments to parliament, May referenced a second referendum or an election as potential options. Uncertainty looks set to continue. Sterling is trading weak (-0.08%) this morning.

Oliver Harvey published a helpful explainer overnight titled Brexit: indicative votes. What are they and can they be implemented? (click here ). The seven principal options that have been proposed would be: 1) May’s deal, 2) revocation of Article 50, 3) a second referendum, 4) May’s deal plus a customs union, 5) May’s deal, a customs union and membership in the single market, 6) a free trade agreement, or 7) no-deal Brexit. There is uncertainty as to how the votes could be structured and whether the government would even implement them. So Oli’s base case remains for a general election, but there are many possible permutations discussed in his note.

Mrs May earlier said that the government won't implement parliamentary votes that contradict manifesto commitments which is pertinent as both the Conservative and Labour manifestos in 2017 committed to leaving the Customs Union and Single Market. So if she is true to her word this could again create fresh gridlock and increase the risk of fresh elections where new manifestos could be created. Nevertheless, May left open the possibility of a third meaningful vote in the coming days, saying that “I continue to have discussions with colleagues across the House to build support, so that we can bring the vote forward this week, and guarantee Brexit.”

Sterling weakened yesterday (-0.10% versus the dollar) but did rally a bit as Parliament took control. Meanwhile ten-year gilt yields (-2.8bps) closed below 1% for the first time in 18 months. When it comes to the curve, attention has focused on the US, but it’s worth noting that the UK’s 2s10s curve has flattened to its lowest level since September 2008, reaching 34.5bps yesterday.

US markets ended the session close to flat, with the S&P 500 and NASDAQ shedding -0.08% and -0.07%, respectively, and the DOW gaining +0.06%. That’s only the eighth day this year when the S&P and DOW moved in opposite directions. The yield curve gave a similarly unclear signal, as the 3m10y and the 3m (18 month forward) vs 3m flattened further into inverted territory, by -2.3bps and -9.4bps to -3.6bps and -35.3bps respectively, while the 2s10s actually steepened by 3.6bps to 15.5bps. That puts the main measure of the yield curve right back in the center of its year-to-date range of between 19.9bps and 11.8bps, with a year-to-date average of 16.0bps. The curve has steepened another basis point this morning with US 10yr and 2yrs up 4bps and 3bps respectively.

Yesterday’s steepening was driven by a big rally in two-year treasuries, where yields fell -6.3bps to their lowest level in almost a year at 2.2499%. The market is pricing in an ever more aggressive timeline of Fed rate cuts, with a full 25bps cut now priced by the end of this year, and a second cut priced by next August. Before last week’s Fed meeting, a cut was not fully priced until the end of 2020.

European equity markets lost further ground yesterday, with the Stoxx 600 (-0.45%) down for a fourth consecutive session. The declines were spread across the continent, with the FTSE 100 (-0.29%), CAC 40 (-0.10%) and the DAX (-0.11%) all closing lower. In sovereign bond markets, 10yr bund yields briefly got altitude sickness and climbed back above zero after a stronger IFO survey but fell again to close down by -1.2bps on the day to reach -0.028%. Peripheral yields went in the opposite direction though with ten-year yields in Italy (+5.3bps) Spain (+3.2bps) and Portugal (+3.4bps) all higher yesterday. The flight to safety also supported gold (+0.67%), which rose for a second consecutive session.

Asian markets are trading mixed this morning with the Nikkei (+2.09%) leading the advancers. The Hang Seng (+0.11%) and Kospi (+0.29%) are also up while the Shanghai Comp (-0.99%) is down. Elsewhere, futures on the S&P 500 are +0.34%. Oil prices are higher this morning (WTI +0.73% and Brent +0.19%) on rising tensions in Venezuela which threaten further curbs to supplies as the US warned Russia not to intervene in the Latin American nation. Separately, Samsung Electronics issued a warning today suggesting it would report disappointing financial results in 2019 due to slumping prices for chips and LCD screens, in another sign of slowing demand for smartphones and other gadgets. The stock is down -0.55% this morning after falling -2.26% yesterday.

In other news, the US House Democrats have now formally requested that Attorney General William Barr should hand over the Special Counsel Robert Mueller’s report to Congress by April 2. The Democratic chairs of six House committees said in a letter to Barr yesterday that the attorney general’s four-page summary of the Mueller report “is not sufficient for Congress, as a coequal branch of government,” to examine President Donald Trump’s conduct.

In data, the German Ifo business climate survey for March came in above expectations at 99.6 (vs. 98.5 consensus). The uptick from February’s revised 98.7 reading puts an end to six successive monthly declines, offering some indication that the German economy could be stabilising. Moreover, the expectations reading (95.6) and the current assessment reading (103.8), both rose from the previous month. However, some caution is warranted as the Ifo readings contradict the message from last Friday’s PMI readings, where the German manufacturing, services and composite readings all fell in March compared to February. The data certainly is conflicting at the moment. The euro appreciated slightly against the dollar after yesterday’s release but ended close to flat at +0.10%.

Other data of note yesterday included the Chicago Fed National Activity Index, which fell to -0.29 in February from an upwardly revised -0.25 in January. However, this was above expectations for a -0.38 reading. Meanwhile, the Dallas Fed Manufacturing Activity index fell back, coming in at 8.3 (vs an expected 8.9 and below last month’s 13.1), and the new orders index fell to 2.4, the lowest level in over two years.

We also had a number of central bank speakers yesterday. From the ECB, Executive Board member Coeure said that “I don’t think that we’ve been to the limit of what we can do” at a discussion in Lisbon. Elsewhere, Patrick Harker, the Philadelphia Fed President, said in a speech in London, that his “current view is that, at most, one rate hike this year, and one in 2020, is appropriate, and my stance will be guided by data as they come in and events as they unfold.” Regarding the US economic outlook, he said that “on balance, the potential risks tilt very slightly to the downside, but I emphasize the word ‘slight.’ I still see the outlook as positive, and the economy continues to grow in what is on pace to be the longest economic expansion in our history.” That’s broadly consistent with his prior comments and our economists have him penciled in as one of the four FOMC members who still expect a hike this year.

Turning to the day ahead, this morning we’ll get the GfK consumer confidence reading for Germany, while from France there’ll be the final GDP reading for Q4, along with March’s manufacturing and business confidence. In the US, there are quite a few releases, with a possible highlight being the Conference Board’s consumer confidence reading for March, along with the Richmond Fed’s manufacturing index. In addition, we’ll get February’s data for housing starts and building permits, along with the FHFA’s House Price Index for January. In terms of central bank speakers, we’ve got the Fed’s Harker, Evans and Daly all speaking today, along with the BoE’s Broadbent.

Published:3/26/2019 7:06:31 AM
[Markets] Bed Bath & Beyond stock soars after report says activists want full board revamp Bed Bath & Beyond stock soars after report says activists want full board revamp Published:3/26/2019 6:36:11 AM
[Markets] Pound Rallies As Brexiteer Leader Tentatively Backs May's Deal

Now that the House of Commons has gone full Lord of the Flies and seized control of Brexit from No. 10, Brexiteers like ERG leader Jacon Rees-Mogg and former Conservative Party leader Iain Duncan Smith have apparently realized that Theresa May wasn't kidding when she said it's either "this deal, no deal or 'no Brexit'".

After more than 30 Tories rebelled against the government last night to help pass the Letwin Amendment, guaranteeing that a series of 'indicative votes' on alternatives to May's deal (including a lengthy Brexit delay and the possibility of holding another referendum) will be held on Wednesday, rumblings that the ERG and DUP might finally relent and back May's deal have apparently been confirmed by Rees-Mogg himself.

During Tuesday's episode of his podcast "The Moggcast", JRM said he'd be willing to back May's deal, because leaving under the conditions imposed by the withdrawal agreement would be preferable to "never leaving at all" - though "no deal" would still be preferable to May's deal.

The pound rallied as traders once again hoped that a 'no deal' Brexit might finally be averted.


If more Brexiteers join with JRM and Dunan-Smith, the pound could see even more upside. But the real test will be winning over the intransigent DUP - the 10 unionist MPs from Northern Ireland who have proved to be the biggest thorn in May's side during the nearly three years since the Brexit referendum. Then again, given the number of Tory rebels who have already crossed May, even finally winning over the Brexiteers might not be enough for May to pass the withdrawal agreement.

Published:3/26/2019 6:36:11 AM
[Markets] The Dow Set to Gain Tuesday Morning Because the World Hasn’t Ended Yet STOCKSTOWATCHTODAY BLOG 6:51 a.m. The Dow Jones Industrial Average looks set for a higher open because the world keeps functioning despite a yield-curve inversion. Dow futures have gained 117 points, or 0. Published:3/26/2019 6:36:11 AM
[Markets] Wall Street is ditching amyloid-based Alzheimer’s drugs. They shouldn't, scientists say Wall Street analysts, reacting to a string of Alzheimer’s drug failures, are telling investors that it’s time to ditch amyloid-based treatments. But scientists don’t agree.
Published:3/26/2019 6:06:23 AM
[Markets] Turkish Lira Flash Smashes Amid Historic Short Squeeze

Just days after Turkish president Erdogan vowed to crackdown on currency speculators and launched a probe against JPMorgan for its Friday reco to short the country's currency to 5.90 vs the dollar, on Tuesday Turkish authorities took their vendetta against short sellers to never before seen levels, when taking a page of the Chinese currency manipulation playbook, they made it virtually impossible for foreign investors to short the lira.

The overnight swap rate soared more than ten-fold increase over the last two sessions to more than 300%, the highest spike on record going back to the nation’s 2001 financial crisis according to Bloomberg, as offshore funds clamoring to close out long-lira positions failed to find counterparties and the cost of a lira short exploded. Think Volkswagen short squeeze but for a currency.

The sudden evaporation of liquidity was partly a result of restrictions imposed by the Banking Regulation and Supervision Agency, or BDDK, imposed during the market rout last summer, which capped the amount of lira that Turkish banks can lend offshore to 25 percent of equity.

But, as Bloomberg notes, the situation escalated and a chill descended on the financial sector in Turkey this week after authorities launched investigations into JPMorgan and other banks for allegedly stoking a lira rout on Friday. President Recep Tayyip Erdogan warned on Sunday that bankers deemed responsible for speculating against the currency would be punished.

Traders who piled into short-term swaps to scoop up the lira’s juicy 24 percent yield over the past months were caught off guard by the currency’s violent depreciation at the end of last week and rushed for the exit at the same time. As a result, lira liquidity evaporated, sending rates soaring.

As a result of the forced squeeze, shortly after 2am EDT, the lira suddenly flash smashed more than 2% in a matter of minutes, the latest abrupt move in a jolt of volatility that has taken hold of Turkey’s currency, as the latest round of shorts capitulated.

Between 2.26am and 2.33am EDT, the lira spiked to 5.474 against the US dollar, from 5.5592, a rise of some 2. And while much of the sharp gains fizzled over the next hour, shorts have continued to cover their positions as shorting costs remain unsustainable.

As the FT notes, the lira’s moves on Tuesday come during a critical time politically, with local elections on Sunday; in order to avoid a sharp devaluation of the currency ahead of the elections, on Monday Turkey’s central bank unveiled a series of operations that helped to prop up the lira, while analysts noted that traders were seeing domestic banks selling large quantities of foreign currency in an apparent attempt to lift the lira.

Published:3/26/2019 6:06:19 AM
[Markets] Uber to buy Mideast ride-sharing service Careem for $3.1 billion Uber to buy Mideast ride-sharing service Careem for $3.1 billion Published:3/26/2019 5:36:11 AM
[Markets] Upgrade: For these 'marijuana moms,' working in weed lets their families live the high life How carpool-driving suburban mommies are taking the marijuana industry to new highs
Published:3/26/2019 5:36:11 AM
[Markets] Avenatti Denies Extortion Charges, Insists "Public Will Learn The Truth About Nike's Crimes"

It looks like Michael Avenatti has made bail, and the "creepy porn lawyer" - whom federal prosecutors on both coasts charged with extortion, embezzlement and bank fraud in a series of indictments announced yesterday - has a message for all of his disappointed fans in the American cable-news cabal.

In a tweet, Avenatti denied charges that he and a cooperating co-conspirator, believed to be celebrity lawyer Mark Geragos (who is representing Jussie Smollett and Colin Kaepernick), tried to extort more than $20 million from Nike after allegedly learning about illegal payoffs made by the company to amateur youth athletes. Charges contained in separate indictment filed by federal prosecutors in California - which alleged that he embezzled settlement money from a client and committed bank fraud - were left unaddressed.


After thanking his supporters, Avenatti said he's "anxious for people to see what really happened" and that "we never tried to extort Nike and that when the evidence is disclosed, the public will see the truth about Nike's crime & coverup."

Meanwhile, in a statement to Fox News, Avenatti addressed the embezzlement charges, denouncing them as "politically motivated" (he said the same thing about his assault charges) and insisting that the had been entitled to every dollar he received.

Avenatti told Fox News that the lawyers who had been suing him for taking a clients' settlement fund - the lawyers apparently got local prosecutors involved - have political motivations and are "close" to the Trump administration. Fox reported that the client in question was Gregory Barela, a person whom Avenattii claimed has close ties to Trump. Barela also has a separate civil suit moving forward against Avenatti. It is presently in Arbitration.

Fox News has exclusively obtained text messages and email conversations between Avenatti, 48, and the former client, Gregory Barela, which documented Barela's efforts for several months in 2018 to locate and obtain funds he was owed pursuant to a settlement agreement that resulted from his intellectual property dispute with an out-of-state company.

Financial documents also reviewed by Fox News show that the money had been wired to an account designated by Avenatti on Jan. 5, 2018, but that Avenatti apparently continued to dodge increasingly frantic questions from the client as to where the funds were.

"We did nothing wrong and were entitled to every dollar received," Avenatti told Fox News. "And of course, [Barela] is represented by a person close to Trump."

The charges, which took the public by surprise when they were announced Monday afternoon, less than an hour after Avenatti sent Nike shares reeling with a tweet about an impending press conference, have likely destroyed the last shreds of credibility enjoyed by the California lawyer. And though he had ruled out pursuing the 2020 Democratic nomination after a previous arrest (he was arrested for allegedly assaulting a woman), one would think that, given the rapidly anti-corporate bent of the ascendant "Democratic Socialist" wing of the Democratic Party, Avenatti might be welcomed as a hero - a kind of contemporary Robin Hood.

Published:3/26/2019 5:07:32 AM
[Markets] Outside the Box: Here’s how Boeing should fix its crisis management around the 737 Max Boeing must immediately change its strategy from passive and closed to active and open.
Published:3/26/2019 4:37:03 AM
[Markets] Livability: How to be a better neighbor Here’s a quick guide to being a good neighbor to the new residents on your block.
Published:3/26/2019 4:05:35 AM
[Markets] Stocks Edge Higher, Taking Cues From Bond Markets, As US Curve Remains Inverted Global stocks edge higher, with Asia rising for the first session in three, while investors continue to take cues on risk from movements in fixed income markets. U.K. Prime Minister Theresa May loses yet another Parliamentary vote on Brexit, which will see lawmakers vote for EU exit alternatives, as pressure mounts on her to resign her position. Global oil prices bump higher as OPEC+ production cuts add support to prices that remain near four-month highs. Published:3/26/2019 4:05:35 AM
[Markets] Luongo: Liberalism's Last Stand - Brexit

Authored by Tom Luongo

When the Soviet Union fell in 1991 Marxism was dealt a near fatal blow. The crown jewel of communism was no more and descended into the worst kind of lawlessness.

Francis Fukiyama famously declared the End of History and the U.S. went on a ‘to the victors go the spoils’ looting of 1990’s Russia that boggles the imagination.

Marxists were left floundering. They were convinced the end of capitalism would occur and communism would win. Their identity was shattered on the shores of collectivism’s inherent inconsistencies.

It’s lack of basic understanding of why man acts and what he hopes to achieve when he acts that dooms all forms of collectivism to eventual failure.

The cries went up among the committed Marxists to then blame the U.S.S.R. that it wasn’t real communism. And their argument shifted to European Democratic Socialism as the superior implementation.

For the past twenty-eight years we’ve been inundated with this by leftists who refuse to give up on the dream. It’s still just warmed-over Marxism but whatever.

The End Of OPM

Now with the European Union facing a populist uprising across the continent they have reached the turning point with Brexit. And the conundrum is enormous.

Brexit is the single most important political event of this century. It’s one of the few things that is bigger than Trump. So, paying close attention to it is important. 
That’s why it has so divided people. It represents an existential threat to the inevitability of modern liberalism. The European Union is the symbol of that inevitability.

Because once that inevitability is breached the European Union will begin to unravel before our eyes.

Donald Trump, for his part, understands this. He is pressing the EU on the issue of tariffs and NATO spending.

He wants to break down the artificial financial support the EU receives to fund its ‘superior democratic socialism’ that U.S. liberals of the Bernie Sanders persuasion believe in.

Famously, former British Prime Minister Margaret Thatcher said, “The problem with socialism is that eventually you run out of other people’s money.”

That’s why Brexit has to be destroyed. Because if it happens and Britain thrives as a result, it will deal a fatal blow to Marxism.

This is why they fear Brexit so much. The EU will fail.

We got a microcosm of that on Thursday when Theresa May left a No-Deal option on the table. The EU Council turned a one-hour rubber stamp session into a five hour grudge match. which resulted in the EU caving at the last moment, offering an unconditional two-week extension to Article 50.

And the EU caved. Finally.

Tax Cows Unite

That’s why the Brits have to be made into voiceless tax-cows milked until they are depleted. That’s what socialism is, a giant tax vacuum which destroys capital and innovation.

And that is where the EU is today. They have run out of the British people’s willingness to fund their dreams of creating a better version of the U.S.S.R.

So is Italy. So is Poland, the Giles Jaunes in France, Hungary, Austria, Spain, the Czech Republic, and even Germany itself.

In the U.S., Trump refuses to pay for Europe’s externalities like defense, education and medical care. He’s attacking the fundamental argument made for socialism today.

It’s a cornerstone of his re-election strategy.

The Marxism of places like Norway, Denmark and the post WWII Great Britain were heavily subsidized not just by the U.S. via NATO and the Marshall Plan but also the massive oil and gas deposits they had relative to the size of the populations they were supporting.

But with the North Sea and Groningen fields drying up so is the revenue. And it’s placing immense strains on the promises of these democratic socialist governments.

Trump understands this. It’s why he’s activated the U.S.’s energy production the way he has. And he’s saying quite clearly to Europe, “No more will we fund your wealth transfers by paying import tariffs to protect inefficient industries and subsidize Germany’s car industry.”

I’ve given Trump a lot of grief in the past two years over tariffs because the economics are clear. Tariffs hurt domestic consumers at the expense of politically-connected domestic producers.

But I have always understood his reasoning for attacking the EU the way he has. I agree with the sentiment just not the implementation.

The End of Empires

Back to Brexit. If the EU wins its fight with the U.K. over this treaty it will be a short-term reprieve for Marxism. They will win a six to nine month grace period.

So, as I said recently on Strategic Culture:

Merkel and Juncker are trying to hold onto their manufactured leverage over the Brits to, in turn, hold onto a Union that is in the process of failing. May and her cabinet are trying to hold onto a relationship with the EU while the UK itself is now in danger of failing.

The Scots are pushing for independence to stay in the EU. Wales is beginning to consider it. Northern Ireland doesn’t like being anyone’s Trojan Horse.

They have thoroughly underestimated the will of the people and it will cost them what little cache they have left with voters. Remember, confidence lost in the institutions of government begets a loss of confidence in the money and their ability to manage it.

Because the global economy is rolling over. The data is everywhere.

The biggest proof is the central banks capitulating. Normalcy will not return to sovereign debt pricing.

The U.S. Yield Curve is a nightmare of convexity that is screaming, “Recession! Dead Ahead!”

Everyone fiddles while their empires burn, including the central banks.

The U.S. yield curve is inverted between 3 months and 10 years. The markets are braced for a severe dollar liquidity crunch. To me it means they know Brexit is irrelevant at this point.

Brexit isn’t the problem. It is the symptom of the far larger one that you can’t steal your way to infinite prosperity.

And that’s why it is inevitable.

Published:3/26/2019 4:05:35 AM
[Markets] Christianity Not A Religion Of Peace Say UK Bureaucrats

Authored by Leesa Donner via,

An asylum request from an Iranian Christian has been rejected by British bureaucrats. The unidentified man said he converted to Christianity because it is a peaceful religion. This, however, did not sit well with the agency in the U.K. that deals with immigration, crime and police, known as the Home Office.

Nathan Stevens, immigration caseworker at law firm Fadiga & Co., posted photos on social media of what he termed an “unbelievably offensive” Home Office refusal letter. Stevens said he was “shocked” by the strident nature of his client’s asylum rejection.

Converting from Islam to Christianity is an act that can get you killed in Iran, where freedom of religion does not exist. As a matter of fact, a religious conversion such as this man’s is punishable by death in the Islamic state. But the British Home Office strongly disagreed with the applicant’s reasoning for adopting his new spiritual path, flatly stating that Christianity is not a religion of peace.

Government Theology

Having studied the Bible in depth (sarcasm intended), the Home Office cited the book of Revelation as evidence for the violent nature of Christianity.

They claimed the prophetic book “is filled with images of revenge, destruction, death, and violence.”

But the bureaucrats didn’t stop there – they cited Jesus’s words in Matthew 10:34, “Do not suppose that I have come to bring peace to the earth. I did not come to bring peace, but a sword.”

Officials went on to say that the man’s stated reason for requesting asylum was essentially paradoxical:

“These examples are inconsistent with your claim that you converted to Christianity after discovering it is a ‘peaceful’ religion, as opposed to Islam which contains violence, rage and revenge.”

The Church of England was incensed by the letter, reports The Daily Telegraph. Paul Butler, the Bishop of Durham, who serves the House of Lords, put in his two cents on the matter:

“I am extremely concerned that a Government department could determine the future of another human being based on such a profound misunderstanding of the texts and practices of faith communities.”

Misinterpreting Scripture

Even casual observers of the Bible will note that one of the many names given to Jesus throughout the Scriptures is the Prince of Peace (John 14:27, Isaiah 9:6, Luke 2:14). The sword that Jesus brought to the world was not a literal weapon; Christian theologians have interpreted Jesus’s sword as the cross or the Gospel. This is so that the world can be reconciled to Him.

Another name for Jesus in the Scriptures is that he is the Truth (John 14:6). And the truth is often divisive. Thus, some reject the Truth and in turn respond with hostility. Jesus Christ was not declaring a Holy War in this Scripture. Rather, he is stating how the world will respond to him.

The twisting of Scripture is nothing new. But doing it in such a way as to deny a man’s right to asylum is a particularly egregious judgment that could sentence this individual to death should he be returned to his homeland. Perhaps the British Home Office should eschew pontificating regarding a subject they appear to know nothing about.

The fact that an English government agency would advocate in opposition to its country’s own historical Christianity as the basis for knowingly placing the life of an asylum seeker in jeopardy is troubling enough to beg the question of whether Jesus was right all along in declaring:

“And this is the condemnation, that light is come into the world, and men loved darkness rather than light, because their deeds were evil (John 3:19).”

Published:3/26/2019 2:37:54 AM
[Markets] Number Of Terrorist Attacks Decreases Globally

The number of terror victims has decreased globally, from more than 27,000 in 2016 to more than 13,000 in 2018, and as Statista's Katharina Buchholz notes, the number of global terror attacks decreased during the same time from more than 24,000 to more than 15,000, according to data from the 2018 Global Attack Index by security analyst IHS Markit.

Less people fell victim to terrorists in countries like Syria, Iraq, Yemen and Somalia, but still the number of terrorist victims remained at a high level, with thousands of victims per country and year in some cases.

Infographic: Number of Terrorist Attacks Decreases Globally | Statista

You will find more infographics at Statista

The terror group that claimed the most lives in 2018 was the Islamic State, even though less people lost their lives in IS attacks compared to 2017.

Afghanistan was the country most heavily affected in 2018 in terms of loss of life, followed by Syria and Iraq. Egypt is an outlier in the statistic, with the lives of 700 people claimed by terror in 2017, including the more than 300 people killed in an attack on a Sufi mosque on the Sinai peninsula in November.

Published:3/26/2019 2:09:50 AM
[Markets] Letter From Britain: An Establishment Blinded By Russophobia

Authored by Alexander Mercouris via,

A British elite challenged by large parts of the British population is rallying around trumped-up fear of Russia as a means of protecting its interests...

Hostility to Russia is one of the most enduring, as well as one of the most destructive, realities of British life. Its persistence is illustrated by one of the most interesting but least reported facts about the Skripal affair.

This is that Sergey Skripal, the Russian former GRU operative who was the main target of the recent Salisbury poisoning attack, was recruited by British intelligence and became a British spy in 1995, four years after the USSR collapsed, at a time when the Cold War was formally over.

In 1995 Boris Yeltsin was President of Russia, Communism was supposedly defeated, the once mighty Soviet military was no more, and a succession of pro-Western governments in Russia were attempting unsuccessfully to carry out IMF proposed ‘reforms’. In a sign of the new found friendship which supposedly existed between Britain and Russia the British Queen toured Moscow and St. Petersburg the year before.

Yet notwithstanding all the appearances of friendship, and despite the fact that Russia in 1995 posed no conceivable threat to Britain, it turns out that British intelligence was still up to its old game of recruiting Russian spies to spy on Russia.

Britain’s Long History of Russophobia

This has in fact been the constant pattern of Anglo-Russian relations ever since the Napoleonic Wars.

Brief periods of seeming friendship – often brought about by a challenge posed by a common enemy – alternating with much longer periods of often intense hostility.

This hostility – at least from the British side – is not easy to understand.

Russia has never invaded or directly threatened Britain. On the only two occasions when Britain and Russia have fought each other – during the Crimean War of 1854 to 1856, and during the Russian Civil War of 1918 to 1921 – the fighting has all taken place on Russian territory, and has been initiated by Britain.

Nonetheless, despite its lack of any obvious cause, British hostility to Russia is a constant and enduring fact of British political and cultural life. The best that can be said about it is that it appears to be a predominantly elite phenomenon.

British Russophobia Peaks

If British hostility to Russia is a constant, it is nonetheless true that save possibly for the period immediately preceding the Crimean War, it has never been as intense as it is today.

Moreover, not only has it reached levels of intensity scarcely seen before, but it is becoming central to Britain’s politics in ways which are now doing serious harm.

This harm is both domestic, in that it is corrupting British politics, and international, in that it is not only marginalising Britain internationally but is also poisoning the international atmosphere.

Why is this so?

Elite British Consensus

For Britain’s elite, riven apart by Brexit and increasingly unsure of the hold it has over the loyalty of the British population, hostility to Russia has become the one issue it can unite around. As a result hostility to Russia is now serving an essential integrating role within Britain’s elite, binding it together at a time when tensions over Brexit risk tearing it apart.

To get a sense of this consider two articles that have both appeared recently in the British media, one in the staunchly anti-Brexit Guardian, the other in the equally staunchly pro-Brexit Daily Telegraph.

The article in the Guardian, by Will Hutton and Andrew Adonis, is intended to refute a narrative of British distinctiveness supposedly invented by the pro-Brexit camp. As such the article claims (rightly) that Britain has historically always been closely integrated with Europe.

However when developing this argument the article engages in some remarkable historical misrepresentation of its own. Not surprisingly, Russia is the subject. Just consider for example this paragraph:

“…..note for devotees of Darkest Hour and Dunkirk: Britain was never “alone” and could not have triumphed [in the Second World War against Hitler] had it been so. Even in its darkest hour Britain could call on its then vast empire and, within 18 months, on the Americans, too.”

Russia’s indispensable contribution to the defeat of Hitler is deleted from the whole narrative. The U.S., which became involved in the war against Hitler in December 1941, is mentioned. Russia, which became involved in the war against Hitler in June 1941, i.e. before the U.S., and whose contribution to the defeat of Hitler was much greater, is not.

Whilst claiming to refute pro-Brexit myths about the Second World War the article creates myths of its own, turning the fact that Russia was an ally of Britain in that war into a non-fact.

The article does however have quite a lot to say about Russia:

“Putin’s Russia is behaving like the fascist regimes of the 1930s, backed by sophisticated raids from online troll factories. Citizens – and ominously younger voters in some European countries – are more and more willing to tolerate the subversion of democratic norms and express support for authoritarian alternatives.

Oleg Kalugin, former major general of the Committee for State Security (the KGB), has described sowing dissent as “the heart and soul” of the Putin state: not intelligence collection, but subversion – active measures to weaken the west, to drive wedges in the western community alliances of all sorts, particularly Nato, to sow discord among allies, to weaken the United States in the eyes of the people of Europe, Asia, Africa, Latin America, and thus to prepare ground in case the war really occurs. To make America more vulnerable to the anger and distrust of other peoples.”

Churchill and Stalin in Moscow in 1942.

History is turned on its head. Not only is the fact that Russia was Britain’s ally in the war against Nazi Germany now a non-fact, but Russia it turns out is Nazi Germany’s heir, a fascist regime like Nazi Germany once was, posing a threat to Britain and the West like Nazi Germany once did.

Moreover who does not agree, and who does not see facing up to Russia as the priority, is at best a fool:

“In Brexit-voting Weymouth, Captain Malcolm Shakesby of Ukip is unruffled by Putin or European populism. He inhabits the cartoon world of British exceptionalism, and his main concern today is Mrs May’s “sellout” of the referendum result.”

Compare these comments about Russia in the staunchly anti-Brexit Guardian with these comments about Russia by Janet Daley in the staunchly pro-BrexitDaily Telegraph.

Janet Daley does not quite say like Hutton and Adonis that Russia is a “fascist regime”. However in her depiction of it she comes pretty close:

“The modern Russian economy is a form of gangster capitalism largely unencumbered by legal or political restraint. No one in the Kremlin pretends any longer that Russia’s role on the international stage is to spread an idealistic doctrine of liberation and shared wealth.

When it intervenes in places such as Syria, there is no pretence of leading that country toward a great socialist enlightenment. Even the pretext of fighting Isil has grown impossibly thin. All illusions are stripped away and the fight is reduced to one brutal imperative: Assad is Putin’s man and his regime will be defended to the end in order to secure the Russian interest. But what is that interest? Simply to assert Russia’s power in the world – which is to say, the question is its own answer.”

Though Moscow has made clear in both word and action that intervention in Syria at Syria’s invitation was to prevent it becoming a failed state and a terrorist haven, Russia it turns out is focused on only one thing: gaining as much power as possible. This is true both of its domestic politics (“gangster capitalism largely unencumbered by legal or political restraint”) and in its foreign policy (“what is that [Russian] interest? Simply to assert Russia’s power in the world – which is to say, the question is its own answer”)

As a result it must be construed as behaving in much the same way as Nazi Germany once did:

“…..we now seem to have the original threat from a rogue rampaging Russia back on the scene, too. A Russia determined to reinstate its claim to be a superpower, but this time without even the moral scruples of an ideological mission: the country that had once joined the respectable association of modern industrialised nations to make it the G8, rather than the G7, prefers to be an outlaw.”

On the question of the threat from Russia both the pro and anti-Brexit wings of the British establishment agree. Standing up to it is the one policy they can both agree on. Not surprisingly at every opportunity that is what they do.

Intolerance of Dissent Construed as a “Threat from Russia”

In this heavy atmosphere anyone in Britain who disagrees risks being branded either a traitor or a fool.

Jeremy Corbyn, the Labour leader, who is known to favour dialogue with Russia, recently had to endure an ugly media campaign which insinuated that he had been recruited as in effect a Communist agent in the 1980s by Czech intelligence.

That claim eventually collapsed when a British MP went too far and said openly what up to then had only been insinuated. As a result he was forced to retract his claims and pay compensation under threat of a law suit. However the question mark over Corbyn’s loyalty is never allowed to go away.

During last year’s general election Corbyn also had to endure an article in the Telegraph by none other than Sir Richard Dearlove, the former head of Britain’s external intelligence agency MI6 (the British equivalent of the CIA). Dearlove also insinuated that Corbyn had been at least a Communist sympathiser or fellow traveller during the Cold War whose sympathies were with the Eastern Bloc and therefore with the various anti-Western and supposedly Communist backed terrorist groups which the Eastern Bloc had supposedly supported:

“Today, Britain goes to the polls. And frankly, I’m shocked that no one has stood up and said, unambiguously, how profoundly dangerous it would be for the nation if Jeremy Corbyn becomes Prime Minister. So let me be clear, the leader of the Labour Party is an old-fashioned international socialist who has forged links with those quite ready to use terror when they haven’t got their way: the IRA, Hizbollah, Hamas. As a result he is completely unfit to govern and Britain would be less safe with him in No 10.

I can give an indication of just how serious this is: if Jeremy Corbyn was applying to join any of this country’s security services – MI5, GCHQ or the service I used to run, MI6 – he would not be cleared to do so. He would be rejected by the vetting process. Far from being able to get into MI5, in the past MI5 would actively have investigated him. And yet this is the man who seeks the very highest office, who hopes in just 24 hours time to run our security services.

Young people in Britain have been terribly affected by recent terror attacks. It is only natural that they should be desperately worried about security problems, and to me it is just such a great shame that they don’t understand the political antecedents of the Labour leader. It is these young people, in particular, I am keen to address. I want to explain just what Corbyn’s whole movement has meant.

During the Cold War the groups he associated with hung out in Algeria, and moved between East Germany and North Korea. It is hard, today, to understand the significance of that. When I talk to students about the Cold War, they assume I am just talking about history. But it has a direct bearing on our security today. Only a walk along the armistice line between North and South Korea, with its astonishing military build up, might give some idea of what was at stake.

……Jeremy Corbyn represents a clear and present danger to the country.”

In light of this the crescendo of criticism Corbyn came under during the peak of the uproar in March following the

Dearlove: Corbyn is a “clear and present danger” (to the establishment.)

Salisbury poisoning attack on Sergey and Yulia Skripal is entirely unsurprising.

Corbyn’s call – alone amongst senior politicians – for the investigation to be allowed to take its course and for due process to be followed, simply confirmed the doubts about his loyalty and his sympathy for Russia already held by the British establishment and previously expressed by people like Dearlove. His call was not seen as an entirely reasonable one for proper procedure to be followed. Rather it was seen as further proof that Corbyn’s sympathies are with Russia, which is Britain’s enemy.

Corbyn is not the only person to be targeted in this way. As I write this Britain is in the grip of a minor scandal because the right-wing businessman Arron Banks, who partly funded the Leave campaign during the 2016 Brexit referendum, is now revealed to have had several meetings with the Russian ambassador and to have discussed a business deal with a Russian businessman.

Though Banks claims to have reported these contacts to the CIA, and though there is not the slightest evidence of impropriety in any of these contacts (the proposed business deal never materialised) the mere fact that they took place is enough for doubts to be expressed about Banks’s reasons for supporting the Leave campaign. Perhaps even more worrying for Banks is that scarcely anyone is coming forward to speak up for him.

Even a politically inconsequential figure like the pop singer Robbie Williams is now in the frame. Just over a year ago Williams gained wide applause for a song “Party like a Russian” which some people interpreted (wrongly in my opinion) as a critique of contemporary Russia. Today he is being roundly criticised for performing in Russia during the celebrations for the World Cup.

Russophobia Undermining British Democracy

The result of this intolerance is a sharp contraction in the freedom of Britain’s public space, with those who disagree on British policy towards Russia increasingly afraid to speak out.

Since establishment opinion in Britain conceives of itself as defending liberal democracy from attack by Russia, and since establishment opinion increasingly conflates liberal democracy with its own opinions, it follows that in its conception any challenge to its opinions is an attack on liberal democracy, and must therefore be the work of Russia.

This paranoid view has now become pervasive. No part of the traditional media is free of it. It has gained a strong hold on the BBC and it is fair to say that all the big newspapers subscribe to it. Anyone who does not has no future in British journalism.

This is disturbing in itself, but as with all forms of institutional paranoia, it is also having a damaging effect on the functioning of Britain’s institutions.

Amid Growing Influence of Intelligence 

One obvious way in which this manifests itself is in the extraordinary growth in both the visibility and influence of Britain’s intelligence services.

Historically the intelligence services in Britain have operated behind the scenes to the point of being almost invisible. Until the 1980s the very fact of their existence was in theory a state secret.

Today, as Dearlove’s article about Corbyn in the Daily Telegraph shows, their leaders and former leaders are not only public personalities, but the intelligence services have come increasingly to fill the role of gatekeepers, deciding who can be trusted to hold public office and who cannot.

Corbyn is far from being the only British politician to find himself under this sort of scrutiny.

Boris Johnson, some time before he became Britain’s Foreign Secretary, made what I am sure he now considers the mistake of writing an article in the Telegraph praising Russia’s role in the liberation of the ancient city of Palmyra in Syria from ISIS.

The result was that on his appointment as foreign secretary, Johnson had a meeting with British intelligence chiefs who ‘persuaded’ him of the need to follow a tough line with Russia. He has in fact followed a tough line with Russia ever since.

Russophobia Infects the Legal System

Steele: Paid for political research, not intelligence.

Establishment hostility to Russia is also enabling interference by the intelligence services in the British legal process.

There is a widespread and probably true belief that the British intelligence services actively lobbied for the grant of asylum to the fugitive Russian oligarch Boris Berezovsky, who they seem to have considered some sort of ‘agent of influence’ in Russia. This despite the fact that it is now widely acknowledged that Berezovsky’s background and activities in Russia should have denied him asylum in Britain.

However what is still largely rumour in Berezovsky’s case is indisputable fact in the Alexander Litvinenko case and in the Skripal cases.

I have previously explained how in the Litvinenko case the claim of Russian state involvement in Litvinenko’s murder made by the British public inquiry is not supported by the publicly available evidence.

What has now become clear is that the main evidence of Russian state involvement in Litvinenko’s murder was not the publicly available evidence, but evidence provided to the public inquiry in private by the British intelligence services. This evidence was seen only by the Judge who headed the inquiry, but seems to have had a decisive effect in forming his view of the case and shaping his report.

American readers may be interested to learn that this evidence was put together by none other than Christopher Steele, the person who gave us the “golden showers” dossier, which has played such an outsized role in the Russiagate affair.

How strong or reliable this evidence is it is impossible to say since, as it is secret, it cannot be independently scrutinised. All I would say is that on two other occasions when Steele is known to have produced similar reports about Russian state activities subsequent enquiries have failed to support them. One is Steele’s “golden showers” dossier, which the FBI has admitted it cannot verify, and which scarcely anyone any longer believes to be true. The other is a report produced by Steele which alleged that Russia had bought the 2018 World Cup by bribing FIFA officials, which subsequent investigation has found was untrue.

It turns out that the evidence used to support the British claim of Russian guilt in the Skripal case is the same: evidence provided in private by British intelligencewhich is not subject to independent scrutiny. As in the Litvinenko case, the British authorities have nonetheless not hesitated to use this evidence to declare publicly that Russia is guilty. This whilst a police investigation is still underway and before any suspect has been identified.

Indeed in the Skripal case the violation of due process has been so gross that it is not even denied. Instead articles have appeared in the British media which say that due process does not apply in cases involving Russia.

That there can be no rule of law without due process, and that excluding cases involving Russia from the need to follow due process is racist and discriminatory appears to concern no one.

Discrimination in Britain Against Russians

Where the intelligence services have led the way, others have been keen to follow.

Recently a House of Commons committee published a report which openly puts pressure on British law firms to refuse business from Russian clients. The best account of this has been provided by the Canadian academic Paul Robinson:

“……that leads me onto the thing which really struck me about this document [The House of Commons committee report – AM]. This was a statement about the British law firm Linklaters, which managed the flotation of EN+. Shortly before this, the report says ‘Both the EN+ IPO [Initial Public Offering] and the sale of Russian debt in London appear to have been carried out in accordance with the relevant rules and regulatory systems, and there is no obvious evidence of impropriety in a legal sense.’Yet, it then goes on to say the following:

“We asked Linklaters to appear before the committee to explain their involvement in the flotation of EN+ … They refused. We regret their unwillingness to engage with our inquiry and must leave others to judge whether their work at ‘the forefront of financial, corporate and commercial developments in Russia’has left them so entwined in the corruption of the Kremlin and its supporters that they are no longer able to meet the standards expected of a UK-regulated law firm.”

This is quite outrageous, and also cowardly. The committee in effect accuses Linklaters of corruption, while avoiding complaints of libel by use of the weasel words ‘we leave to others to judge’ – a way of making an accusation while claiming that one hasn’t. What’s so outrageous about the statement is that comes straight after a confession that the EN+ flotation was completely above board. Linklaters didn’t do anything wrong, and the House of Commons committee knows it. Nevertheless, it sees fit to suggest that the company is ‘no longer able to meet the standards expected of a UK-regulated law firm.’

The implication here is that any company which has extensive dealings with Russian enterprises is ‘entwined in the corruption of the Kremlin’and so unfit to do business. I cannot interpret this as anything other than an attempt by the committee to threaten British companies and intimidate them into dropping their lawful activities. I consider this disgraceful.

The committee’s attitude can be seen again towards the end of the report, when it writes that ‘instead of participating in the rules-based system, President Putin’s regime uses asymmetric methods to achieve its goals, and others – so-called useful idiots – magnify that effect by supporting its propaganda. So, there you have it. People who do with business with Russia are to be publicly shamed as unworthy of the standards expected of the British people, while those who would dare to point this sort of thing out are to be denounced as ‘useful idiots’. Having any dealings with Russia makes one a Kremlin stooge.”

Taking their cue from the House of Commons committee, identical pressure on British law firms to refuse to act for Russian clients is now coming from the media, as explained in this article by the Guardian’s Nick Cohen, which talks of potential Russian clients in these terms:

“In this conflict, it’s no help to think of oligarchs as businessmen. They are closer to the privileged servants of a warlord or mafia boss. Their wealth is held at Putin’s discretion. If they are told to buy influence in the Balkans or fund an alt-news website, they obey. Companies that raise funds on the London markets or oligarchs who move into Kensington mansions may look like autonomous organisations and individuals but, as Garry Kasparov told the committee: “They are agents of a rogue Russian regime, not businessmen. They are complicit in Putin’s countless crimes. Their companies are not international corporations, but the means to launder money and spread corruption and influence.”

To which I would add that in law-governed states even criminals have the right of legal representation and advice. In Britain, if the House of Commons committee and Nick Cohen gets their way, Russians – whether criminals or not – will be the exception.

What is so bizarre about this is that the spectre of massive Russian economic penetration of Britain conjured up by the House of Commons committee is so far removed from reality. The Economist (no friend of Russia) provides the actual figures:

“….the high profile of London’s high-rolling Russians belies the relatively small role that their money plays in the wider economy. Foreigners hold roughly £10 trillion of British assets. Russia’s share of that is just 0.25%, a smaller proportion than that of Finland and South Korea.

Parts of west London have acquired many new Russian residents, and shops to serve them (including an outfitter of armoured luxury cars). Yet even in “prime” London – that is, the top 5-10% of the market – buyers from eastern Europe and the former Soviet Union account for only 5% of sales, according to data from Savills, a property firm. Outside the capital’s swankiest districts, Russians’ influence is minuscule. The departure of oligarchs might affect prices on some streets in Kensington, but not beyond.

The same is true of Britain’s private schools. Some have done well out of Russian parents. But of the 53,678 foreign pupils who attend schools that belong to the Independent Schools Council, only 2,806 are Russian. China, by contrast, sends 9,008 pupils from its mainland, and a further 5,188 from Hong Kong.

Looking at these figures it is difficult to avoid the conclusion that it is the mere presence of Russians, not their number or their wealth or the illicit way in which some of them supposedly came by their money, which for the British establishment is the problem.”

Quite simply, Russians are not welcome, not because they are wealthy or because they are corrupt, but because they are Russians.

Against Russian Media

The same discriminatory approach appears to inform the persistent attacks launched by the British authorities against the Russian television broadcaster RT.

Over the last two years RT has had to repel an attempt by the British authorities to close down its British bank account, has been forced to respond to a succession of complaints from the British media regulator Ofcom, has faced threats of having its British broadcasting licence withdrawn, and has had to endure a campaign of vilification aimed in part at dissuading British public figures from appearing as guests on its programmes.

As to what exactly RT has done – other than vague and unspecific claims that it is a ‘propaganda’ channel – which justifies this treatment, has never been fully explained. 

Again it is difficult to avoid the impression that the British establishment’s fundamental problem with RT is that it is simply a Russian channel broadcasting in Britain that scrutinizes establishment policies and actions – a fundamental responsibility of journalism, which is largely missing in British media. 

Free speech is a human right in Britain except apparently for Russians.

This discriminatory approach towards Russia and Russians replicates the increasingly ugly and frankly racist way in which Russians are regularly depicted in Britain today.

As to the general effect of that on British society, I repeat here what I wrote back in 2016:

“Racial stereotyping is always something to complain about. It is dehumanising, intolerant and ugly. It is racist and profoundly offensive of its target. This is so whenever it is used to mock or label any ethnicity or national or cultural group. Russians are not an exception.

A society that indulges in it, and which tolerates those who do, forfeits its claim to anti-racism and interracial tolerance. The fact that it is treating just one ethnic group – Russians – in this way, denying them the moral and legal protection which it accords others, in no way diminishes its racism and intolerance. It emphasises it.”

British society is not just the poorer for it. It is deeply corrupted by it, and this corruption now touches every aspect of British life.

Britain Becoming Marginalised

If the result of the British establishment’s paranoia about Russia is deeply corrosive within Britain itself, its effect on British foreign policy has been entirely negative. 

At its most basic level it has meant a total breakdown in relations between Britain and Russia.

British and Russian leaders no longer talk to each other, and summit meetings between British and Russian leaders have come to a complete stop. Boris Johnson’s last visit to Russia is universally acknowledged to have been a complete failure, and following the Skripal affair British officials and members of Britain’s Royal Family are now even boycotting the World Cup in Russia.

Indeed British public statements about the World Cup have been all of a piece with the British establishment hostility to Russia, with Johnson recently comparing it to Hitler’s 1936 Olympics and with another House of Commons committee warning British fans of the supposed dangers of going to to Russia to watch them.

This complete absence of dialogue with Russia is a serious problem for Britain as some British officials quietly acknowledge.

Russia is after all a powerful nation and any state which still wishes to exercise influence on world affairs must engage with Russia in order to achieve it. The British establishment’s hostility to Russia however makes that impossible.

The result is that major international questions such as the Ukrainian crisis, the Syrian conflict and the gathering crisis in the Middle East caused by the U.S.’s withdrawal from the Iranian nuclear deal – in all of which Russia is centrally involved – are being handled without British involvement.

May: Becoming a bit player.

Where Angela Merkel of Germany and Emmanuel Macron of France talk to Russia and have thereby managed to carve out for themselves important roles in world affairs, Britain’s Theresa May is a bit player.

However, instead of drawing the obvious conclusion from this, which is that refusing to talk to the Russians is the high road to nowhere, the British have doubled down, seeking to regain relevance by leading an international crusade against Moscow. 

The strategy – which bears the unmistakeable imprint of Johnson – was set out in grandiose terms in a recent article in The Guardian:

“The UK will use a series of international summits this year to call for a comprehensive strategy to combat Russian disinformation and urge a rethink over traditional diplomatic dialogue with Moscow, following the Kremlin’s aggressive campaign of denials over the use of chemical weapons in the UK and Syria.

British diplomats plan to use four major summits this year – the G7, the G20, Nato and the European Union – to try to deepen the alliance against Russia hastily built by the Foreign Office after the poisoning of the former Russian double agent Sergei Skripal in Salisbury in March.

“The foreign secretary regards Russia’s response to Douma and Salisbury as a turning point and thinks there is international support to do more,” a Whitehall official said. “The areas the UK are most likely to pursue are countering Russian disinformation and finding a mechanism to enforce accountability for the use of chemical weapons.”

Former Foreign Office officials admit that an institutional reluctance to call out Russia once permeated British diplomatic thinking, but say that after the poisoning of Skripal and his daughter, Yulia, that attitude is evaporating…..

Ministers want to pursue a broad Russian containment strategy at the coming summits covering cybersecurity, Nato’s military posture, sanctions against Vladimir Putin’s oligarchs and a more comprehensive approach to Russian disinformation.”

It has taken no more than a few weeks since that article appeared on 3 May 2018 for this whole grandiose strategy to fall apart.

Not only have Merkel and Macron each visited Russia since the article was published, but Italy now has a new Russia-friendly government, and Spain may soon do so also. Adding insult to injury, Germany is now casting doubt on Britain’s actions following the Salisbury poisoning attack,

All of this however is eclipsed by Donald Trump’s comments at the G7 saying that Russia should be readmitted to the G7 and having his officials inform the British media that he is becoming increasingly irritated by the British prime minister’s lectures.

In the event not only did Trump fail to meet May one-to-one at the G7 summit, but he refused to agree the summit’s final communique, which criticised Russia.

Needless to say, amidst the collapse of the summit, the plan May had apparently intended to unveil at the summit for anew international rapid response unit to respond to Russian-backed assassinations and cyber attacks fell by the wayside.

Far from gaining relevance by leading an international crusade against Russia, the British are increasingly finding that no one else is interested and that May’s and the British establishment’s obsession with Russia instead of enhancing Britain’s importance is making Britain increasingly irrelevant.

Poisoning the International Atmosphere

The British establishment is in fact making the fundamental mistake of thinking that other countries not only share their obsession with Russia, but that they necessarily value their relations with Britain more than  with Russia.

This is a strange view given that Russia is arguably a more powerful nation than Britain.

It is nonetheless true that the British establishment’s anti-Russian fixation is having an internationally damaging effect.

Many Western governments have their own issues with Russia, and in such a situation it is not surprising that British paranoia about Russia finds a ready echo.

The most recent example of this is of course the orchestrated expulsion by various Western governments of Russian diplomats in the immediate aftermath of the Salisbury poisoning attack.

However the most damage has been done in the U.S.

Britain and Russia-gate

The full extent of the British role in the Russiagate scandal is not yet clear, but there is no doubt that it was both extensive and crucial.

The individual who arguably has played the single biggest role in generating the scandal is Christopher Steele, the compiler of the “golden showers” dossier, who is not only British but who is a former British intelligence officer.

It is now becoming increasingly clear – as Joe Lauria wrote last year in Consortium News– that the dossier has played a key role in the whole scandal, being accepted for many months by U.S. investigators – including it turns out by Special Counsel Robert Mueller’s investigators – as providing the ‘frame-narrative’ for the case of alleged collusion between the Russians and the Trump campaign.

The Steele dossier is in fact very much of a piece with the paranoid conception of Russia which has taken hold in Britain, though (as I have pointed out previously) the dossier’s description of how government decisions are made in Russia isabsurd.

Critics of the dossier in the United States rightly draw attention to the fact that it is ‘research’ paid for by Donald Trump’s political opponents in the Hillary Clinton campaign, whilst there is also a view popular amongst some Republicans (wrongly in my opinion) that it is a provocation concocted by Russian intelligence in order to disrupt the U.S. election process and embarrass Trump.

By contrast, insufficient attention is paid, in my opinion, to the fact that it is a British compilation put together in Britain by a former British spy at a time when Britain is in the grip of a particularly bad bout of Russia paranoia.

Steele himself is someone who by all accounts has fully bought into this paranoia. Indeed his previous role in preparing reports about Russia’s supposed role in Litvinenko’s murder and the World Cup bid, and also apparently in the Ukrainian crisis, suggests that he has played no small role in creating it.

Steele is not however the only British official or former official to have played an active role in Russia-gate.

Steele himself is known for example to have a close connection to Dearlove, the former MI6 Director who called Corbyn “a clear and present danger.” It seems that Dearlove and Steele discussed the “golden showers” dossier at a meeting in London’s Garrick Club at roughly the same time that Steele was in contact about it with the FBI.

Another far more more important British official to have taken an active role in the Russiagate affair was Robert Hannigan, the head of GCHQ – Britain’s equivalent to the NSA – who visited the U.S. in the summer of 2016 to brief the CIA about British concerns over alleged contacts between the Russians and Trump’s campaign.

Hannigan: Brought Steele dossier to the CIA.

Though Hannigan’s trip to Washington in the summer of 2016 was first spoken of in April 2017, it has never been confirmed that the Steele dossier, which he brought with him to show to the CIA, was part of the evidence of supposed contacts between the Russians and Trump’s campaign.  That it was, however, is strongly suggested by an article in The Washington Post on June 23, 2017, which amongst other things said the following:

“Early last August, an envelope with extraordinary handling restrictions arrived at the White House. Sent by courier from the CIA, it carried “eyes only” instructions that its contents be shown to just four people: President Barack Obama and three senior aides.

Inside was an intelligence bombshell, a report drawn from sourcing deep inside the Russian government that detailed Russian President Vladimir Putin’s direct involvement in a cyber campaign to disrupt and discredit the U.S. presidential race.

But it went further. The intelligence captured Putin’s specific instructions on the operation’s audacious objectives — defeat or at least damage the Democratic nominee, Hillary Clinton, and help elect her opponent, Donald Trump…..

The CIA breakthrough came at a stage of the presidential campaign when Trump had secured the GOP nomination but was still regarded as a distant long shot. Clinton held comfortable leads in major polls, and Obama expected that he would be transferring power to someone who had served in his Cabinet.

The intelligence on Putin was extraordinary on multiple levels, including as a feat of espionage.

For spy agencies, gaining insights into the intentions of foreign leaders is among the highest priorities. But Putin is a remarkably elusive target. A former KGB officer, he takes extreme precautions to guard against surveillance, rarely communicating by phone or computer, always running sensitive state business from deep within the confines of the Kremlin.”

This almost certainly refers to the early entries of Steele’s dossier, which is the only report known to exist which claims to have been “sourc[ed from] deep inside the Russian government [and to have detailed] Russian President Vladimir Putin’s direct involvement in a cyber campaign to disrupt and discredit the US Presidential race”.

The Washington Post says that the CIA’s report to Obama drew on “critical technical intelligence on Russia provided by another country”.

That points to Hannigan being the source, with Hannigan being known to have visited the U.S. and to have briefed the CIA at about the time the CIA sent its report to Obama.

Hannigan likely provided the CIA with a mix of wiretap evidence and the first entries of the dossier.

The wiretap evidence probably detailed the confused but ultimately innocuous contacts the young London- based Trump campaign aide George Papadopoulos was having at this time with the Russians. It is highly likely the British were keeping an eye on him at the request of the U.S., which the British would have been able to do for the U.S. without a FISA warrant since Papadopoulos was based in Britain.

Taken together with the first entries of the dossier, the details of Papadopoulos’s activities could easily have been misconstrued to conjure up a compelling case of collusion between the Trump campaign and the Russians. Given the paranoid atmosphere about Russia in Britain it would not be surprising if this alarmed Hannigan.

Needless to say if extracts from the dossier really were provided to the CIA by the head of one of Britain’s most important intelligence agencies, then it becomes much easier to understand why the CIA and the rest of the U.S. intelligence community took it so seriously.

Halper: Infiltrated Carter and Trump campaigns.

Then there is the case of Stefan Halper, an American academic lecturing at Cambridge University, who is friends and a business partner with Dearlove.  Halper was inserted by the FBI into the Trump campaign in early July 2016 to befriend Papadopoulos in London.  In 1980, the CIA inserted Halper into Jimmy Carter’s reelection campaign to help the Reagan camp by stealing information, including a Carter briefing book before a presidential debate.

Suffice to say that just as the British origin of the dossier has in my opinion been overlooked, so has the extent to which it circulated and was given credence in top circles within Britain before it made its full impact in the United States.

Overall, though the extent of the British role in the Russiagate affair is still not fully known, what information exists points to it being very substantial and important. In fact it is unlikely that the Russiagate scandal as we know it would have happened without it.

As such the Russiagate scandal serves as a good example of how British paranoia about Russia can infect the political process in another Western country, in this case the U.S.

Campaigning against Russia

Russia-gate is in fact only the most extreme example of the way that Britain’s anti-Russian obsession has damaged the international environment, though because of the effect it has had on the development of domestic politics in the United States it is the most important.

There have been countless others. The British have for example been the most implacable supporters amongst the leading Western powers of the ongoing sanctions drive against Russia. Britain for instance is known to have actively – though so far unsuccessfully – lobbied for Russian banks to be cut off from the SWIFT interbank payments system, which were it ever to happen would be by far the most severe sanction imposed by the West on Russia to date.

Beyond the effect on the international climate of the constant anti-Russian lobbying of the British government, there is the further effect of the ceaseless drumbeat of anti-Russian agitation which pours out of the British media and various British-based organisations and NGO.

These extend from well-established organisations like Amnesty International – which misrepresented the case against the Pussy Riot performers by claiming that they had been jailed for “holding a gig in a church” – to other less established organisations such Bellingcat and the Syrian Observatory for Human Rights, both of which are based in Britain. As it happens, the Syrian Observatory for Human Rights is known to have received funding from the British government, as apparently have the White Helmets.

In addition Bill Browder, the businessman who successfully lobbied the U.S. Congress to pass the Magnitsky Act, and who has since then pursued a relentless campaign against Russia, is now also based in Britain and has British citizenship.

The great international reach of the British media – the result of the worldwide use of the English language and the international respect some parts of British media such as the BBC still command – means that this constant stream of anti-Russian publicity pouring out of Britain has a worldwide impact and is having an effect that has to be taken into account in any study of current international relations.

Rami Abdul Rahman: The one-man Observatory

The Price of an Obsession

The British establishment’s obsession with Russia is something of a puzzle.

Britain today is not a geopolitical rival of Russia’s as it was in the nineteenth century and as the U.S. is today. British antagonism to Russia cannot therefore be explained as the product of a geopolitical conflict.

Russia is not a military or political threat to Britain. There is no history of Russia threatening or invading Britain. Russia is not an economic rival, and Russian penetration of the British economy is minimal and vastly exaggerated.

It is sometimes said that there are things about modern Russia that the British find culturally, ideologically or politically distasteful, and that this is the reason for Britain’s intense hostility to Russia. However Britain has no difficulty being best of friends with all sorts of countries such as the Gulf Monarchies or China which are culturally, ideologically and politically far more different from Britain than Russia is. Logically that should make them more distasteful to Britain than Russia is, but it doesn’t seem to do so. In these cases economic interests clearly take precedence over any concerns for human rights.

Ultimately however the precise cause of the British establishment’s obsession with Russia does not actually matter. What does matter is that it is an obsession, which should be recognised as such, and that like all other obsessions is ultimately destructive.

In Britain’s case the obsession is not only corrupting Britain’s domestic politics and the working of its institutions.

It is also marginalising Britain, limiting its options, and causing growing exasperation amongst some of its friends.

In addition it blinds the British to their opportunities. If the British were able to put their obsession with Russia behind them they might notice that at a time when they are quitting the European Union Russia potentially has a great deal to offer them.

It is sometimes said that Britain produces very little that Russia needs, and it is indeed the case that trade between Russia and Britain is very small, and that most of Russia’s import needs are met by countries like Germany and China.

However Britain is able to provide Russia with the single thing that Russia arguably needs most at this stage in its development. This is not machinery or technology, all of which it is perfectly capable of producing itself, but the one thing it is truly short of: investment capital.

In the nineteenth century British capital played a key role in the industrialisation of America and in the opening up of the American West. There is no logical reason why it could not do something similar today in Russia. Indeed the marriage between Europe’s biggest financial centre (Britain) and Europe’s potentially most productive economy (Russia) is an obvious one.

In the twentieth century Britain’s long history of economic involvement in the U.S. paid handsome political dividends. Perhaps the same might one day be the case between Britain and Russia. Regardless of that, economic engagement with Russia would at least provide Britain with a plan for an economic future outside the EU, something which because of Brexit it urgently needs but which currently it completely lacks.

For anything like that to happen the British will first have to address the reality of their obsession, and the damage it is doing to them. At that point they might even start to do something about it. Britain’s relative success since the 1960s in overcoming other forms of racism and prejudice which had long existed in Britain shows that such a thing is possible if the problem is recognised and addressed. However I have to say that there is no sign of it happening at the moment.

In the meantime the rest of the world needs to understand that when it comes to Russia, the British are suffering from a serious affliction. Failing to do that risks the infection spreading, with the disastrous consequences we have seen with the Russia-gate scandal in the US.

There is even a chance that refusing to listen to the British about Russia might have a good effect on Britain. If the British realise that the world is no longer listening to them then they might start to understand the extent of their own problem.

If so than the world would be doing Britiain a favour, even if at the moment the British cannot see it.

Published:3/26/2019 1:06:38 AM
[Markets] Can Japan Join The Multipolar Revolution – Or Will US Imperialism Bring It To Heel?

By Federico Pieraccini via Strategic Culture Foundation

Relations between Japan and Russia have long been the subject of discussion within international-relations circles. The meetings between Prime Minister Abe and President Putin have been going on for years, yet the situation regarding the peace treaty between the two countries, never signed since the conclusion of the Second World War, is difficult to resolve. While the discussions appear to be about the status of the Kuril islands, they are in reality more profound, covering the role that Japan and Russia play in Asia, especially with regard to the other two regional superpowers, namely China and the United States.

Vladimir Putin and Shinzo Abe have met 25 times over five years, an average of five meetings a year, one every two-and-a-half months. Such an active relationship not only demonstrates the closeness between the two leaders but also their difficulty in trying to reach an agreement to solve the longstanding territorial dispute surrounding the Kuril Islands.

Understandably, Moscow does not intend in any way to renounce its sovereignty over the islands, especially given the geostrategic significance of the port city of Vladivostok. This important Russian city hosts Russia’s Pacific Fleet; and when one looks at the map, it is easy to understand the importance of the Kuril Islands. If these islands were militarized against the Russian Federation, then they could effectively block the Russian fleet’s access to the Pacific. Moscow faces the same problem with the Black Sea Fleet, where it needs to navigate through the Turkish Straits to reach the Mediterranean; the same is the case with the Baltic Fleet, located in St Petersburg and Kaliningrad, with Russian naval vessels having to navigate between Finland and Estonia, if coming from St Petersburg, and then through the Danish straits, between Sweden and Denmark, to reach the Atlantic Ocean.

For military and strategic reasons, unfettered access to the oceans is an absolute necessity for a major power like the Russian Federation; hence the importance of the Northern Fleet’s position in Severomorsk, and of the naval base in Tartus, Syria, which effectively allows Moscow to have access to the Atlantic and the Mediterranean Seas without having to worry about Turkey or the Nordic countries vis-a-vis St Petersburg and Kaliningrad.

The question is more complex with regard to Vladivostok, given that Russia has little other option other than to sail through the Kuril Islands to gain access to the Pacific Ocean, making it imperative for Moscow to maintain control over these islands. Leaving aside the historical results of the Second World War, which conferred on the Russian Federation full sovereignty over the islands in question, today this dispute prevents the two countries from further deepening their economic and even political ties. Putin has repeatedly reiterated in Abe's presence the need for both countries to sign the peace agreement and reach a compromise over the disputed islands. Putin proposed a mutual use of the islands by Japan and Russia in terms of ports and the free trade for goods and even proposed the issuing of a dual passport to the citizens of the islands in order to guarantee maximum freedom of movement.

Whenever Abe and Putin meet, the Russians make several overtures that only see their Japanese counterparts respond with such unacceptable proposals as the return of sovereignty over the entire Habomai, Shikotan, Kunashir and Iturup islands (as they are known in Japan). Russian diplomacy has even tried to separate the question of the islands from the post-WWII peace agreement between Tokyo and Moscow in order to accelerate one of the crucial aspects in the relations between the two countries, but to no avail.

Abe in particular seems to prefer to use the issue of the Kuril Islands and the peace treaty as a means of balancing himself between various regional powers. The South China Morning Post, which does not exactly represent a disinterested perspective, recounts the latest developments between the Russian and the Japanese premier:

Japanese Prime Minister Shinzo Abe sparked outrage in Moscow when he spoke of the need to help Russians on the islands "accept and understand that the sovereignty of their homes will change hands." The Russians furiously summoned the Japanese ambassador to complain that Abe's statements were an "attempt to artificially raise the temperature" over the issue of a possible peace treaty.

In addition to Russia's national-security considerations surrounding the Pacific Fleet, there is an important aspect of Japan-Russia relations that needs to be mentioned. The trade between the two countries has increased by 18% in 2018 in comparison to the previous year, reaching almost $15 billion. This, in an environment where many agreements are not ratified for lack of a peace agreement, severely limits cooperation in certain strategic sectors.

There is also the regional and global aspect of this relationship, which is of considerable importance for several reasons. First of all, the geographical position of the two countries determines their influence in the Asian region, which is going to constitute the center of gravity for geopolitics in the 21st century. The second factor is the privileged relations Tokyo has with Washington and Moscow has with Beijing respectively.

To fully understand the multipolar revolution in progress, the quadrilateral scenario involving Japan, Russia, China and the United States seems to be the most suitable. Washington's move to abandon the Trans-Pacific Partnership and impose sanctions and tariffs on allies and enemies alike has left few weapons available to Japan to offset China's economic weight, thus forcing Abe to engage in constructive dialogue with Xi Jinping. The recent meetings between the two leaders have laid the foundations for a future economic cooperation that until a few years ago seemed practically unthinkable.

The progress being made between the two rival powers of Japan and China has prompted Putin and Russian diplomacy to bring about strong economic cooperation for the future. To this end, the Eastern Economic Forum held in Vladivostok saw the participation of Abe and Xi Jinping, together with Vladimir Putin, aimed at reaffirming how cooperation and economic development is an achievable goal for all parties involved.

Abe stated, "We will push bilateral ties to a new stage so as to construct a foundation for peace and prosperity in north-east Asia", expressing the intentions of the three leaders to advance mutually beneficial cooperation.

Washington, as usual, is the elephant in the room, now relegated to a vanishing past where the superpower made the decisions and others obeyed. From Washington's unipolar perspective, the rapprochement between Russia and China is seen as a nightmare, not to mention Japan’s dialogue with Russia over a peace treaty.

Abe seems to have adopted Erdogan's ambiguous style, ready to balance himself against multiple powers to extract the most advantage for Japan. It is a strategy that often does not pay and may in fact only end up exasperating the other parties.

Japan, like the Europeans, should abandon its undue deference to the United States and the accompanying status as a colonial outpost. The pressing need to develop peaceful and fruitful relations with such neighbors as Russia and China should override Washington's desire to sabotage them.

The emerging international multipolar reality is based on dialogue, cooperation, development, mutual respect, and deterrence. The Asian region is the place where important interests of regional and global powers will intersect in the immediate future. The need for China, Russia, India and Japan to put aside their differences and conflicting strategies will become imperative as Washington demonstrates its readiness to exacerbate existing differences for the purposes of preventing regional integration in a multipolar context.

The prospect of a peace agreement between Russia and Japan represents the first step in this direction, but it also requires a strong spirit of independence to resist Washington. The trade policies implemented by Trump, and his approach towards international relations, offers Washington's allies like Tokyo the opportunity to advance an independent foreign policy free of Washington’s diktats. This can already be seen in such commercial partnerships as those involving Huawei and such technology fields as those involving 5G technology.

Published:3/25/2019 11:34:36 PM
[Markets] US Concealed Secret 9/11 Tapes Of Alleged Mastermind Plotting With Co-Conspirators: Lawyer

The United States concealed the existence of taped telephone calls between the alleged mastermind of the Sept. 11 attacks, Khalid Shaikh Mohammed, who spoke in code with three of his accused co-conspirators, according to the New York Times

The tapes featuring Khalid Shaikh Mohammed and three of his accused co-conspirators were made between April and October 2001, prosecutors say. (United States Department of Justice)

The existence of the tapes was revealed by their defense attorney, Jay Connell, as part of a protest over plans for prosecutors to use them as evidence at the death penalty trial more than 17 years after 19 hijackers took four commercial airplanes by force - crashing them into the World Trade Center, the Pentagon and a Pennsylvania field, killing nearly 3,000 people according to the 9/11 Commission Report - aspects of which have been refuted by groups such as Architects & Engineers for 9/11 truth

Defense attorneys have known of the tapes since September 30, 2016 - when prosecutors handed over audio and transcripts of the conversations, making clear that they intended to use them against the men at trial. When the defense attorneys attempted to investigate the tapes - including the method used by the government to record the calls, they hit a brick wall. The original trial judge, Army Col. James L. Poul had secretly issued an order preventing them from knowing about the call collection system - or asking questions about it. 

Connell - who questioned in court whether the tapes were recorded during the years that Mohammed and the other defendants were imprisoned in the CIA's secret prison system - is now arguing that the tapes should not be allowed as evidence in the death penalty trial, as the defendants' basic right to challenge the evidence being used against them are being violated. 

Mr. Connell, who is representing Mr. Mohammed’s nephew, Ammar al-Baluchi, said that prosecutors secretly obtained a ruling in August 2018 from Colonel Pohl forbidding defense lawyers from learning how the phone calls were collected or investigating that question. The phone calls in at least two languages were made between April and October 2001.

Mr. Connell said the restriction on investigating the origins of the tapes violated a defendant’s basic right to challenge the evidence being used against him. He argued in court on Monday that the evidence should be suppressed or that the case should be dismissed. He said the constraints the defense faces regarding the tapes violate the Sixth Amendment, which sets out the rights of defendants in a trial. -NYT

According to the report, the military trial judges have yet to decide which aspects of the Constitution apply to military commissions - war courts established by President George W. Bush following the 9/11 attacks. 

Arguing for the government, prosecutor Clayton Trivett responded that defense attorneys should be allowed to question an FBI linguist who analyzed the tapes and compared the defendants' voices to determine that they belonged to Mohammed, his nephew al-Baluchi and the two other alleged plotters. Trivett added that the defense team should be able to question the FBI analyst who decoded the conversation.

The only catch? They still don't get to know about how the calls were recorded

The only restriction, he said, is on defense lawyers trying to investigate “how the United States government got those calls,” something prosecutors persuaded the judge would endanger national security.

Colonel Pohl had said prosecutors could describe the evidence as having been acquired from “telephone calls from between April and October 2001 that were later determined to pertain to the planned attacks on Sept. 11, 2001.” -NYT

The Times notes that "The Hunt For KSM" author Terry McDermott said that he found during his research that US satellites "randomly scooped up calls" between Mohammed and an alleged deputy, Ramzi bin al-Sihbh. 

"The N.S.A. intercepted calls but didn’t listen to them or translate them until after 9/11," McDermott said. "Afterward, they went through this stuff and found out what it was."

Trivett denied that the voice samples were from the CIA black site prior to their transfer to Guantánamo in 2016 to stand trial. 

This week, attorneys will argue in what will be the 24th round of pretrial hearings since the men were arraigned in 2012, in front of military judge Col. Keith Parrella of the Marines. 

Published:3/25/2019 11:04:03 PM
[Markets] Flight cancellations mount as FAA keeps Boeing 737 Max planes grounded American Airlines said it was extending cancellations through April 24. Southwest is making cancellations five days out. Published:3/25/2019 10:36:01 PM
[Markets] Asia Markets: Asian markets mostly gain after Monday’s slide Asian markets largely gained in early Tuesday trading, a day after a regional sell-off sparked by fresh worries of a U.S. recession.
Published:3/25/2019 10:36:00 PM
[Markets] Apologies To President Trump

Authored by Sharyl Attkisson, op-ed via The Hill,

With the conclusions of special counsel Robert Mueller’s probe now known to a significant degree, it seems apologies are in order.

However, judging by the recent past, apologies are not likely forthcoming from the responsible parties.

In this context, it matters not whether one is a supporter or a critic of President Trump.

Whatever his supposed flaws, the rampant accusations and speculation that shrouded Trump’s presidency, even before it began, ultimately have proven unfounded. Just as Trump said all along.

Yet, each time Trump said so, some of us in the media lampooned him. We treated any words he spoke in his own defense as if they were automatically to be disbelieved because he had uttered them. Some even declared his words to be “lies,” although they had no evidence to back up their claims. 

We in the media allowed unproven charges and false accusations to dominate the news landscape for more than two years, in a way that was wildly unbalanced and disproportionate to the evidence.

We did a poor job of tracking down leaks of false information. We failed to reasonably weigh the motives of anonymous sources and those claiming to have secret, special evidence of Trump’s “treason.”

As such, we reported a tremendous amount of false information, always to Trump’s detriment.

And when we corrected our mistakes, we often doubled down more than we apologized. We may have been technically wrong on that tiny point, we would acknowledge. But, in the same breath, we would insist that Trump was so obviously guilty of being Russian President Vladimir Putin’s puppet that the technical details hardly mattered.

So, a round of apologies seem in order.

Apologies to Trump on behalf of those in the U.S. intelligence community, including the Department of Justice and the FBI, which allowed the weaponization of sensitive, intrusive intelligence tools against innocent citizens such as Carter Page, an adviser to Trump’s presidential campaign.

Apologies also to Page himself, to Jerome Corsi, Donald Trump Jr., and other citizens whose rights were violated or who were unfairly caught up in surveillance or the heated pursuit of charges based on little more than false, unproven opposition research paid for by Democrats and the Hillary Clinton campaign.

Apologies for the stress on their jobs and to their families, the damage to their reputations, the money they had to spend to hire legal representation and defend themselves from charges for crimes they did not commit.

Apologies on behalf of those in the intelligence community who leaked true information out of context to make Trump look guilty, and who sometimes leaked false information to try to implicate or frame him. 

Apologies from those in the chain of command at the FBI and the Department of Justice who were supposed to make sure all information presented to the Foreign Intelligence Surveillance Court (FISC) is verified but did not do so.

Apologies from the Foreign Intelligence Surveillance Act (FISA) court judges who are supposed to serve as one of the few checks and balances to prevent the FBI from wiretapping innocent Americans. Whether because of blind trust in the FBI or out of ignorance or even malfeasance, they failed at this important job.

Apologies to the American people who did not receive the full attention of their government while political points were being scored; who were not told about some important world events because they were crowded out of the news by the persistent insistence that Trump was working for Russia.

Apologies all the way around.

And now, with those apologies handled — are more than apologies due?

Should we try to learn more about those supposed Russian sources who provided false “intel” contained in the “dossier” against Trump, Page and others?

Should we learn how these sources came to the attention of ex-British spy Christopher Steele, who built the dossier and claimed that some of the sources were close to Putin?

When and where did Steele meet with these high-level Russian sources who provided the apparently false information?  

Are these the people who actually took proven, concrete steps to interfere in the 2016 election and sabotage Trump’s presidency, beginning in its earliest days?

Just who conspired to put the “dossier” into the hands of the FBI?

Who, within our intel community, dropped the ball on verifying the information and, instead, leaked it to the press and presented it to the FISC as if legitimate?

“Sorry” hardly seems to be enough.

Will anyone be held accountable?

Published:3/25/2019 10:36:00 PM
[Markets] Foreigners Dump Most Chinese Stocks On Record As Rally Fizzles

While the stock market bubble for China's locals may be a long way from bursting, with Shanghai margin debt still soaring by the day as more and more Chinese investors park cash into the best performing (for now) stock market of the year...

... foreign investors have seen, and had, enough, and on Monday, as Chinese stocks slumped, foreigners dumped the most Chinese shares on record via stock trading connects as they steered away from risk and the country’s benchmark index fell below the key 3,100 level.

According to Bloomberg calculations, overseas investors sold a net of 10.8 billion yuan ($1.6 billion) of mainland shares Monday, the biggest single-day sale since the second exchange link with Hong Kong opened in December 2016, as the Shanghai Composite joined a global rout on growth concerns, sliding 2%.

“Investors tend to be more risk-averse after recent data showed signs of economic slowdowns in major economies,” KGI Asia's Ben Kwong told Bloomberg. “They’d sell high-risk assets such as Chinese equities. Some investors would lock in profits after such a big rally to avoid uncertainties.”

And, as the chart above shows, they clearly are doing so.

The question is whether they will continue to do so: even after Monday’s loss, the Shanghai Composite Index remains 22% higher in 2019 and is the best performing major index worldwide.

Alas, if historical precedent serves, this outperformance will not continue: foreign investors have had a history of successfully timing exits. As Bloomberg notes, the last two times they dumped a similar amount of Chinese shares via the exchange links, the Shanghai gauge dropped at least 7% over the following days.

Published:3/25/2019 10:04:59 PM
[Markets] A Failed ICO Has Ended Up On eBay

The cryptocurrency sector has struggled since the bubble popped in December 2017, battling through a vicious bear cycle that collapsed the initial coin offering (ICO) market.

One failed ICO has recently called it quits; the company listed itself on eBay last week for $60,000.

Sponsy, a decentralized platform that allows sponsors and sponsees to conduct sponsorship deals, was expecting to raise millions of dollars in late 2017, even though it didn't have a product. The founder told the Financial Times that it was the norm for a company to raise tens of millions of dollars without a real product during the Great Crypto Bubble of 2017-2018. However, the company's lawyer advised Ivan Komar, the founder of the platform, not to ICO before a real product was built. Komar said that listening to his lawyer was the greatest mistake he made.

Here is the transcript of FT's conversation with Komar who sums up what went wrong in the Great Crypto Bubble of 2017-2018: 

We hired a lawyer and that was a big mistake for us. Because our lawyer basically told us that we should not launch any ICO before we built a real product that might have some users. And I asked him why, because I saw so many ICOs out there who did not have any idea for any product, yet they managed to raise tens of millions of dollars.

Komar acknowledged that the lawyer's advice was probably the right advice from the customer's — or token-buyers — point of view, but not from the point of view of raising money. So what would Sponsy have done differently if they had the chance again, we asked?

We would not have tried to build a product first, we would have tried to run a token sale as soon as possible, to jump into this crypto craze bandwagon, and raise as much money as possible before building any product. And that’s exactly what others were doing.

Instead, rather than launching in late 2017 when “this crypto craze bandwagon” was in full swing, Komar waited until summer 2018, by which stage, he says, the “market had vanished and nobody was interested in our offer”.

So even though there is no market for ICOs, or at least not for his ICO, Komar is hoping his eBay auction will attract an “enterprise client” with a big blockchain R&D budget — he suggested Bosch — or an individual who wants to try to launch an ICO into the non-existent market. Or just someone who wants to start a sponsorship platform that has nothing to do with blockchain or crypto. Komar told us:

The core business model would run just as well in the centralised world without any tokens or crypto or blockchain... They can easily eliminate the crypto functionality out of this. The core component is a platform — it doesn’t require any crypto or blockchain component to work. Just a typical, centralised server.

Again Komar — without necessarily realizing it — had managed to rather nicely encapsulate the spaciousness and incoherence of the ICO bubble. All Sponsy requires to function is a “typical, centralized server”, and yet its tagline is: “Decentralised Sponsorship Platform”.

The eBay listing also contained some other potentially attractive promises to prospective buyers, such as:

Full set of investment documents

Designed and approved by investment bankers.

Aside from the fact that it seemed a little odd to be selling any kind of preapproved investment documents, this seemed good! Which investment bank had approved the project, we wanted to know? At that point Komar, who is Belarusian but seemed to speak perfectly decent English, appeared to get in a bit of a twist:

“Approved” might be a huge word for it. It might be some kind of exaggeration. We did have a law firm based in the UK that ran some sort of audit of our project, and it ranked it, and the rank that we got was pretty high and the risk we got was pretty low. This was an audit by a British firm. This couldn’t be called a fully fledged investment banking audit, it’s just some firm that was considering investing in crypto.

* * *

FT said it was best that Komar listened to his lawyer's advice about not ICO-ing without a product. That is because nine months later, U.S. courts ruled ICO frauds would fall under securities law.

Komar believes $60,000 minimum bid on eBay is a "very low" amount for the platform. He said the amount should be north of $200,000.

Glancing at the listing on Monday morning, there are four days left on the auction with zero bids and no watchers.

Published:3/25/2019 9:35:14 PM
[Markets] Russiagate Might Be Dead, But Big Tech Censorship Is Here To Stay

Authored by Mike Krieger via Liberty Blitzkrieg blog,

I have certain rules I live by. My first rule: I don’t believe anything the government tells me. Nothing. Zero.

– George Carlin

Let me tell you, you take on the intelligence community and they have six ways from Sunday at getting back at you.

– Senate Majority Leader Chuck Schumer in a 2017 interview on MSNBC

As someone whose website was slandered by the earliest manifestations of the hysterical Russiagate mob, I could go on and on now that’s the whole spectacle’s been disproven, but I’m not going to do that. Rather, I want to highlight how despite the whole thing blowing up, we’ll be living with severe direct consequences for years to come.

First, it’s important to point out that none of Russiagate’s most irresponsible grifters will face any serious repercussions for wasting the country’s time, money and energy on a fake story for the past two years. Russiagate was as much a business model as it was a conspiracy theory, and some of it’s most shameless peddlers made out like bandits over the past couple of years.

As Glenn Greenwald noted:

Let’s not forget Luke Harding, a guy who literally wrote a book titled “Collusion,” which naturally soared to the top of the New York Times bestseller list.

Of course, nothing seriously damaging will happen to Rachel, Luke or the other myriad Russiagate charlatans who drove and profited handsomely from what was by far the biggest conspiracy theory of the past two years. Will they be banned from Facebook, Twitter or YouTube? Of course not, despite the fact that they played a larger role than anybody else with respect to driving our national conversation into a cesspool of insanity, xenophobia and falsehoods.

Nevertheless, you can be sure Tim Cook, Sundar Pichai and Mark Zuckerberg will never come out and condemn them for peddling endless amounts fake news. No tech giant scarlet letter will be forthcoming for the priests and priestesses of Russiagate; but why not?

The simple answer is that all the public concern about “fake news” was just a ruse — the tech giants were just pretending to care about it. The real objective was to appease angry politicians by finding an excuse to erase and de-rank opinions that don’t conform to the dispositions and leanings that dominate the executive suites of the largest tech companies and the power players in establishment Washington D.C.

Incredibly enough, the entire push that convinced much of the public of a pressing need to encourage tech giants to aggressively censor and ban certain opinions was driven by Russiagate in the first place. In other words, hysteria and fear that Russian propaganda would infect the minds of the American public was a primary driver in getting much of our culture to accept flippant de-platforming from tech giants across the platforms that have come to dominate online conversation in this country. Russiagate is now over, but tech giant censorship remains. We’ve been scammed in far more serious and long-lasting ways than meets the eye.

Now would be a good time to revisit a few excerpts from last year’s piece, These Are the Times Bitcoin Was Made For:

Donald Trump’s election and Bernie Sanders’ unexpectedly strong run in a rigged Democratic primary really shook the neoliberal/neocon establishment to its core. The status quo response has been as pathetic as it’s been extraordinary, with the hysteria so completely off the wall I sometimes wonder if the whole Russia-Trump collusion narrative was invented and propagated for the sole purpose of promoting a cultural acceptance of censorship.

There are two crucial attack vectors being targeted when it comes to punishing the transgressions of American thought criminals; money and communications, and we need to understand that Alex Jones is our cultural guinea pig. The tech giants started by kneecapping his voice by simultaneously de-platforming his presence from many of today’s dominant communications platforms. Now PayPal’s moved in to make payments more difficult, thus threatening his ability to earn money. You don’t have to like anything Alex Jones does to see how dangerous this is. What’s being done to him can and will be to done to others deemed undesirable by Silicon Valley oligarchs should they get popular enough. What’s emerging is a playbook on how to exert pressure and encourage self-censorship in the digital age and you better pay attention.

Let’s take another step back to take stock of where we’re at. Sure a bunch of scam-artist pundits and fake journalists were momentarily embarrassed, but these people have no shame and many of them already achieved fame and fortune. Moreover, just like the banker crooks of the financial crisis era and the Iraq war WMD peddlers that came before them, these people are more likely to be promoted than face any life-altering consequences for the society damaging lies they spread. In fact, our system is so completely rigged in favor of certain kinds of opinions, not even the most bald faced liars amongst them will even see their social media accounts shuttered.

So yes, Russiagate has blown up spectacularly, but we’re still left with selective tech giant censorship which focuses on a certain type of “conspiracy theory” or fake news. What Facebook, Apple, Google and others have made clear at this point is that fake news is fine as long as it’s repeating lies of the government or intelligence agencies. There’s no amount of war-creating government inspired fake news someone can spread that will ever get you banned by the tech giants, but if you dare to have a discussion about vaccines, 9/11 or flat-earth, you’ll never be heard from again.

Russiagate ending doesn’t alter this entrenched and very dangerous double standard. We’re once again left with a monumental falsehood exposed, yet the damage has already been done to public discourse and the ability to freely communicate on America’s dominant tech platforms. As such, we’ll continue to be led apathetically in a very restrictive and unfree direction unless we wake up and make some serious changes.

Yes, a ridiculous, false and deranged conspiracy theory has been disproven, but the damage has already been done — and the damage is severe.

*  *  *

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Published:3/25/2019 8:42:41 PM
[Markets] The Wall Street Journal: Bed Bath & Beyond’s CEO, board targeted by activist investors A trio of activist investors thinks Bed Bath & Beyond Inc.’s business model has gotten sleepy and plans to give the big-box retailer a wake-up call.
Published:3/25/2019 8:03:55 PM
[Markets] Hello Jerome Powell, We Have Questions

Authored by Mike Shedlock via MishTalk,

This is an open letter to Jerome Powell and the Fed...

Dear Mr. Powell,

In your March 8 speech on Normalization and the Road Ahead, you spoke of diversity, zero-bound interest rate problem, and the Fed's path to normalization.

You noted "Makeup strategies are probably the most prominent idea and deserve serious attention," while simultaneously admitting an "uncertain distance between models and reality".

With that admission, you raised far more questions that you answered.

Here is a series of questions from your speech to which the American public deserves answers.

Inflation Targeting Questions

  1. Given two certified bubbles that happened under 2% inflation targeting, why not a lower target of 1% or 0%, if any target at all?

  2. The implied assumption in the catch-up theory is that two errors are better than one. But how can it make sense to discuss makeup strategies when non-bubble inducing targets are not fully understood?

  3. Given the Fed has never spotted a bubble in real time, why should anyone believe we aren't in one right now?

  4. Demographics are deflationary. How does that justify a 2% inflation target or any other specific target?

  5. Prior to 1983, the BLS directly placed housing prices in the CPI. Had housing prices been in the CPI in 2004-2006, might not the Fed have been more aggressive in hiking? Doesn't the same apply more recently?

Today, Chicago Fed President Charles Evans says inflation could run to 2.5% before rate hikes are needed. There is neither justification for this or credibility behind the statement given the Fed repeated missing of targets.

Diversity Questions

Diversity should mean more that race, background, and gender.

  1. Where is diversity of thought regarding inflation if all the members are of a monetarist or Keynesian school?

  2. How is the Austrian economic viewpoint represented at the Fed given there is not a single Austrian economist?

Phillips Curve

The Phillips curve provides an excellent example of the "uncertain distance between models and reality".

A 2017 Fed Study of the Phillips Curve concluded "Phillips curve models are not relatively good at forecasting inflation on average."

Charts suggest the Phillips Curve "works" about half the time on a random basis, meaning the theory doesn't work at all.

Why do so many on the Fed place faith in discredited models?

Inflation Expectations

In your speech, you said "Persistently weak inflation could lead inflation expectations to drift downward."

Why does it matter?

Scrutiny of elastic vs inelastic items in the CPI shows it doesn't.

?Inelastic items constitute just over 80% of the CPI. Here are some questions for the Fed to ponder.

Inelastic Item Questions

Q: If consumers think the price of food will drop, will they stop eating? Will they eat twice as fast if they expect prices will rise?

Q: If consumers think the price of gas will drop, will they stop driving?

Q: If consumers think the price of rent will drop, will they hold off renting until that happens? Will they rent two apartments if they expect the price to rise?

Q: Will consumers delay medical services if they think prices will drop? Will they have two operations if they think prices will rise??

Elastic Item Questions

Q. If someone needs a refrigerator, toaster, stove or a toilet because it broke, will they wait two months if they think prices will decline?

Q. Better deals on TVs and computers are always around the corner. Does that stop TV and computer purchases?

Inflation Expectation Conclusions

Except in the case of hyperinflation where a person will rush to spend cash instantly, people buy consumer items based on need, not expectations.

However, people do behave differently when it comes to assets.

Asset Price Expectations

  • People do buy stocks it they believe prices will rise. They avoid stocks or sell them if they expect prices will drop.

  • People will stretch to buy a home if they expect prices to rise. They wait if they expect prices will drop.

Home Price Index vs Owner's Equivalent Rent

In 2011, I proposed an HPI-CPI model in which the Home-Price-Index (HPI) replaced the Owners' Equivalent Rent (OER) component of the CPI.

Here is a chart from 2013, created by Advisor Perspectives at my request at the time (my comments in purple).

?Towards the end of 2005, real interest rates were positive according to the CPI, but -4% according to my model.

A similar, but more current Advisor Perspectives chart suggests the same is happening now.

From 1990 until 1999, increase in home prices matched increases in OER. That divergence culminated in 2007 when people suddenly threw in the towel on buying houses.

The Fed missed the significance of the OER substitution in 1983. Had home prices been in the CPI, we would have had more aggressive rate hikes.

Three Bubbles, Two Confirmed

We have had three major bubbles since 2000.

The Fed does not see the third one now just as Alan Greenspan didn't spot the dotcom bubble and Ben Bernanke did not see the housing bubble.

BIS Study on Deflation

The BIS study Costs of Deflations: A Historical Perspective investigated output growth in numerous deflations over a 140-year period, in 38 economies.

Deflation Study Conclusions

  • The evidence from our long historical data set sheds new light on the costs of deflations. It raises questions about the prevailing view that goods and services price deflations, even if persistent, are always pernicious. It suggests that asset price deflations, and particularly house price deflations in the postwar era, have been more damaging.

  • Deflation may actually boost output.

  • Lower prices increase real incomes and wealth.

?Three Wrong Economic Models

  1. Deflation Group-Think

  2. Inflation Expectations

  3. ?Phillips Curve

At the top of the list of widely-believed but false central bank economic theories is the notion that falling retail prices are bad for the economy.

Central banks acting on those group-think beliefs attempt to modify inflation exceptions while not factoring in asset price appreciation.

Invariably, the result is bubbles.

Asset Valuation Models

Numerous metrics including the Shiller PE ratio, the Q-Ratio, and Greenspan's Valuation Model show we are amidst yet another spectacular asset bubble.?

Shiller PE Ratio?

Greenspan Valuation Model

Final Key Questions

Why does the Fed ignore asset valuation models that do work over the long haul in favor of economic models that admittedly have an "uncertain distance between models and reality"?

Why, Jerome Powell?

Unlike others, I do not believe these are purposeful actions by the Fed for the benefit of banks, so the only logical answer is the Fed does not properly understand what inflation is, how to measure it, or the vast array of problems associated blowing asset bubbles.

Published:3/25/2019 8:03:55 PM
[Markets] Saudi Arabia Using 140-Year-Old Loophole To Soak Up California's Scarce Water Supply

Saudi Arabia is exploiting a farming loophole in California which allows a tiny, poverty-stricken desert town to use as much water as it needs for agriculture, for free - circumventing harsh water restrictions imposed in the Saudi Kingdom, reports The Guardian.

In particular, the Saudis are after alfalfa to feed their cows - setting up shop in Blythe, California - home to roughly 21,000 people (6,000 of whom live in prison) about four hours east of Los Angeles. Fondomonte Farms is a subsidiary of Saudi-based Almarai, one of the largest food production companies in the world. Every month, Fondomonte ships boat-loads of alfalfa to a massive port stationed on the Red Sea, just outside Saudi Arabia's King Abdullah City. 

The state of the Colorado river can be traced, in part, to a water claim approved by the federal government all the way back in the 1800s when a British gold rush-era prospector named Thomas Blythe first laid eyes on the desert expanse adjacent to the rushing Colorado river and submitted a water claim application to the federal government.

That 1877 water claim, now owned by the Palo Verde Irrigation District, ensures that Blythe has “unquantified water rights for beneficial use”; in other words, as much water as those living and farming within the district could possibly need in this water-scarce region, and for free.


With the Saudi Arabian landscape there being mostly desert and alfalfa being a water-intensive crop, growing it there has always been expensive and draining on scarce water resources, to the point that the Saudi government finally outlawed the practice in 2016. In the wake of the ban, Almarai decided to purchase land wherever it is cheap and has favorable water conditions to produce enough feed for its 93,000 cows. -The Guardian

The system to move water to Blythe is "really unique," according to JR Echard - assistant manager of the Palo Verde Irrigation District. "We’re in the desert, but we live next to a massive river and have rights to it."

Fallowing contracts

One thing that's apparently not making the Saudis happy are "fallowing contracts," in which farmers are paid not to plant a portion of their fields so that water can be diverted into the cities such as Los Angeles and San Diego. The Palo Verde Irrigation District is currently three years into a 30 year contract for this, which - to the Saudis - "drives the company mad" according to an employee, as "alfalfa-hungry Fondomonte would prefer to plant every inch." 

Despite the poverty affecting 23% of Blythe residents (vs. 12% nationally), the Fondomonte has been a boon. "Everyone wants to be working here," the employee, "Jim," told The Guardian

Not only does the company employ more than 100 locals full-time – as compared with the part-time or seasonal labor found on most farms – and with 401ks, vacation and health insurance, but they also support local farmers by purchasing their alfalfa to add to their bales and ship overseas.

“There are a lot of exporters here,” Jim said of US farmers and farm operations selling their crops to overseas markets. “They have been exporting from here for 30 or 40 years. I don’t see how this farm is any different.”

“The Saudis, they’re here buying up at a good price,” Echard explained. “They’re just the same as everyone else. They buy local. It’s a shot in the arm for the economy.” -The Guardian

When Almarai embarked on its ambitious land grab in the western US, environmentalists and average citizens alike were outraged. "Saudi Hay Farm in Arizona Tests State’s Supply of Groundwater," read the headline from one NPR article from November 2015. "Saudi Arabia is Outsourcing its Drought to California," penned Gizmodo. 

That said - UC Davis professor and alfalfa expert Dan Putnam wonders why there's little to no outrage over crops which are far more water intensive, such as almonds, which California ships 70% of overseas. "Or oranges? Or lettuce?" 

Putnam, along with many farmers I spoke to, urges people to consider how much water crisscrosses the globe in the current supply chain. It’s not just alfalfa, and it’s not just agriculture. People will find goods at the cheapest prices, and companies in areas with unstable resources will relocate elsewhere.


On our way back from the dam to the district offices, Echard drove me up along the access roads to get a panorama of the canals, and past some bright fields of alfalfa. We then drove to a part of valley where, in partnership with various environmental organizations, the Palo Verde Irrigation District had planted a large grove of trees to revive some of the habitat that once stretched so abundantly along this part of the Colorado. In August, he told me, it can be 115F (46C) outside, but under this canopy of trees, it might be 20 degrees cooler.

And while Almarai's loophole doesn't seem to be raising many pitchforks right now, one has to wonder how the Saudi takeover of Californian alfalfa land - using free water - will go over during the next drought. 

Published:3/25/2019 7:34:16 PM
[Markets] Ilargi Meijer: "Can We Lock Up Rachel Maddow Now?"

Authored by Raúl Ilargi Meijer via The Automatic Earth

Message to Bernie Sanders, Joe Biden, Kamala Harris, Tulsi Gabbard and the rest of the crew: you can stop asking for campaign donations, because you no longer stand a chance in the 2020 elections. Your own party, and the media who support you, made sure of that. Or rather, the only chance you would have is if you guys start another smear campaign against your president, and I wouldn’t recommend that.

I don’t want to start another Lock Her Up sequence, that’s too ugly for my taste. But three parties in this No Collusion disaster must be held accountable: US intelligence, the Democratic party, and the media. You can’t just let it go, too much water under the bridge. No can do. “The Democrats need to move on”, a recent ‘soft line’, is not good enough. They must be held to account.

Bill Barr can investigate the FBI and DOJ, but the obstacles there are obvious: investigating the investigators. The Democratic party would mean going after individuals, but sure, let’s see what Loretta Lynch, Debbie Wasserman-Schultz and Maxine Waters have to say for themselves and take it from there, before you get to Hillary. The media, though, is something else altogether.

Freedom of the press, and freedom of opinion, is one thing. Conducting a 2-year+ smear campaign against your own president is another. So what does US law say about this? Let’s hear it. Since Trump made Bill Barr the new Attorney General, Barr is instrumental in answering these questions. Is it a smear campaign? Is that acceptable? Is it legal? Asking for a friend.

Not a soul could blame me if I were to gloat because what I’ve said since the 2016 elections has been proven: there is no collusion between ‘the Russians’ and Donald Trump and there never was. But I don’t feel much like gloating because 1) it’s old news and 2) this tale is far from over. The media, and the Democrats, are not going to cave in, because they have nowhere left to ‘cave into’.

The biggest shame, I think, is not that the media will just keep doing what they have, but that a remnant, a residue of all the made-up narratives will remain in their audience’s minds, long after Robert Mueller has said it was all lies all that time. That the public will say: there’s been so much, surely some of it must be true?! The power of repetition.

The same media that has spun the collusion theme all this time will simply continue doing what it’s done, just perhaps without using that term -and not even that is sure. Don’t let’s forget, and I’ve said this 1000 times, that while there is a dose of genuine hatred of their own president involved, and some political issues, most of all it’s about their business model. Trump scandals mean readers and viewers. And money.

Because of that, or at least partly because of it, I would seriously like to ask what the odds are of putting Rachel Maddow behind bars. How many lies can you tell, and how often can you repeat them, about anyone, but certainly about your President, before someone calls you on it? Trump can’t really defend himself, or couldn’t as long as Mueller was busy, but this can’t be.

Does the fact that you work for the media protect you to the extent that you can just say anything? And Maddow of course is just an example, albeit an extreme one, but the same goes for CNN, New York Times et al. What freedoms do you have as a journalist? And at what point are you no longer a journalist at all? Who decides that?

BuzzFeed said Mueller was in possession of evidence that Trump directed Michael Cohen to lie to Congress. Mueller himself had to discredit that. The Guardian’s Luke Harding wrote a #1 NYT bestselling book called “Collusion” before writing an article with Dan Collins claiming that Manafort had met with Assange multiple times in London.

Not a word of that was true. But Harding And Collins and their editor still work at the Guardian, and no apologies or corrections were ever issued. And at some point you have no choice but to ask: where does it stop? Where do we draw the line? Can anyone who labels themselves a journalist and/or anyone employed by MSM, say anything they want? From sources:

The nonpartisan Tyndall Report pegged the total amount of time devoted to the story on the evening newscasts of ABC, CBS and NBC last year at 332 minutes, making it the second-most covered story after the Senate confirmation hearings of Supreme Court Justice Brett Kavanaugh.

According to a count by the Republican National Committee released Sunday, The [Washington] Post, The New York Times, and have written a combined 8,507 articles [since 2017] mentioning the special counsel’s investigation [into nonexistent collusion], some 13 articles a day. The cable news networks, particularly CNN and MSNBC, have added hundreds of hours of discussion about the topic, too.

And they wrote many more in 2016 as well. They were on a mission. Tyler Durden adds:

Mueller’s 40 FBI agents issued over 2,800 subpoenas, executed “nearly 500 search warrants,” and “obtained over 230 orders for communication records. They also issued 13 requests to foreign governments for evidence and interviewed approximately 500 witnesses.

All that time, and all those resources, dedicated to a figment of the imagination, invented out of this air to derail a presidential election and a presidency. Where do we think these people see their country go? I must admit I’m not sure about that one. But I see Bernie Sanders on the anti-Trump wagon, and AOC and Tulsi trying to get on, and I think: please don’t do that, it doesn’t go anywhere.

I’ve called for a second special counsel many times, and I can’t imagine there won’t be one, and as much as I think it’s desperately needed, it’s obvious at the same time that it can only divide the nation further.

There was a reason Trump was elected: people had gotten sick of what was there before, of what Republicans and Democrats had to offer. And there is absolutely nobody in either party who addresses that issue. In other words, there’s still nobody who is listening to those people. So they tune into Rachel Maddow and her kind of ‘reporting’.

Looks like Bill Barr will be badly needed. And that to restore the credibility of US intelligence, he will need to clean up the FBI and DOJ and get rid of all those who’ve taken part in the collusion debacle. A formidable task. I’d suggest he start with Maddow et al and take it from there. Find out who feeds the media their fantasy stories.

Oh, and now that collusion’s off the table, free Julian Assange. Let Robert Mueller show he’s not as much of a coward as he looks until now. To that end, let him swallow the Guccifer 2.0 nonsense as well. That Rachel Maddow makes things up from scratch, doesn’t mean Special Counsels should do that too. Mueller knows exactly what this is about.

A friend (not exactly a Trump fan) mailed me last night saying this was never a witch hunt. And I’m thinking: maybe that depends on how you define it. Here’s one definition: “an unforgiving, evidence-scant campaign against a group of people with unpopular views.” Not too far off, is it?

Time for spring cleaning, Bill Barr.

Published:3/25/2019 7:03:01 PM
[Markets] Puerto Rico faces food-stamp crisis as Trump vents about federal aid to island While Congress delays food-stamp funding, impoverished residents of the hurricane-battered territory have already started cutting back. Published:3/25/2019 6:33:19 PM
[Markets] The Wall Street Journal: McDonald’s buys Israeli startup in its biggest acquisition in decades McDonald’s Corp. is buying Israeli digital startup Dynamic Yield Ltd., in a bid to improve in-store ordering and online marketing at the burger giant.
Published:3/25/2019 6:33:18 PM
[Markets] "I Felt So Stupid" - Canadian Crypto Trader Lost $75,000 When Quadriga Collapsed

QuadrigaCX customers who lost thousands of dollars (and, in some cases, tens or hundreds of thousands of dollars) have probably accepted by now that they will likely never see that money. While many had held out hope that the "lost" coins - purportedly locked in the exchange's cold storage wallets when its founder died unexpectedly, taking the private keys to those wallets to his grave - might be recovered, those hopes were probably dashed earlier this month when the firm's auditor disclosed that it had located the cold storage wallets on the blockchain, and determined that they had been empty since April.

Though some unsavory new revelations about the exchange have trickled out in recent weeks (Bloomberg uncovered the criminal past of one of its co-founders who left the exchange long before the hack/heist/whatever purportedly took place), exactly what happened and - more importantly - what authorities are doing about it, remains a mystery.


But that hasn't stopped aggrieved customers from sharing their sob stories with any journalist who might listen. We've already heard from the Canadian software engineer who lost his entire life savings - nearly half a million US dollars - when Quadriga collapsed thanks to one ill-timed cross-border transaction. Now, MarketWatch brings us the story of one Toronto-based crypto trader who lost $75,000 when Quadiga went under. Again, according to him, the loss was due to a mis-timed transfer, and an bid price that was probably too good to be true.

"I needed the cash so I just looked for the best price and thought this is the best place to sell," said Bill Tsao, a Toronto-based cryptocurrency trader, in an interview with MarketWatch. "It was just over one hundred thousand dollars ($74,800 U.S. dollars) to pay down some mortgage and cover some other personal items."

The trader, Bill Tsao, made the sale on Jan. 28, just before Quadriga's website crashed, never to be revived.

Tsao sold his bitcoin shortly before 2 a.m. Eastern time on Jan. 28, according to data from Then, just a few hours later, Quadriga’s website went down - it would never come back online.

Initially, the exchange posted a notice saying it was undergoing routine maintenance. But soon, reports about the founder's death and the exchange's bankruptcy filing appeared in the press.

Tsao, who started trading bitcoin in mid-2017 when one coin was trading at around $4,000, said that he has lost "millions" trading crypto. But the money he sunk into Quadriga stings the most - because he should have known better.

Tsao said he is down “millions” trading cryptocurrency, but this loss is the most frustrating. “Right now I can’t do anything until the investigation is over. I have sent emails, filled out tickets but I have got nothing back."

However, there was a red flag that Tsao said he missed: The price of bitcoin on the Quadriga exchange was trading at a near $600 premium, what some view as a sign that an exchange has liquidity issues. "All I wanted was the best price," he said.

"I felt so stupid not really looking into the site further before I [did] that."

It was an expensive lesson. But hopefully other crypto traders can learn from Tsao's mistake: If a price quote looks too good to be true, it probably is.

Published:3/25/2019 6:33:18 PM
[Markets] British lawmakers take Brexit control away from May’s government British lawmakers take Brexit control away from May’s government Published:3/25/2019 6:03:04 PM
[Markets] Why The Fed Should Announce An Emergency 50bps Rate Hike Tomorrow

Submitted by Harris Kupperman from Adventures in Capitalism

A very smart and wealthy friend always reminds me that you have to invest in the market landscape that exists today—not the one you wish for. That said, I like to think of myself as a pragmatist who views the capital markets through the lens of financial history. That history would imply that the Fed should keep hiking rates and ignore the yield curve. In fact, if I were the chair of the Fed, I’d have an emergency 50bps hike today; just to show that I’m serious about putting the economy back on a sound footing for future growth.

To start with, capital markets exist to finance businesses—they should not exist to drive economic growth through a distributed wealth effect that narrowly benefits the wealthy who have capital market assets. The state of affairs that exists today, is an anomaly historically—it isn’t sustainable and shouldn’t be supported by the Fed at the expense of the rest of the economy. Capital market bubbles are disruptive and destructive of long-term GDP growth. Today’s bubble is unparalleled by almost any historical standard—only made possible by abnormally cheap credit along with an implicit Federal Reserve put.

Since the Fed sets the cost of capital, they need to change priorities from supporting financial bubbles to supporting the actual economy. The cost of capital should be at a level that allows businesses to profitably re-invest in growth endeavors. If capital is so cheap that returns on capital investment are minimal, businesses instead focus on driving returns through financial engineering. This isn’t only because they’re obsessed with their stock options—it is because they now have no viable investment opportunities in a world where there is endless competition funded with almost free and limitless capital.

The rapidly expanding Profitless Prosperity Sector is competing with and impairing large swaths of the economy. How do you compete with a business that is totally indifferent to profitability as long as there is enough revenue growth to support a future capital raise? It’s as if a malignant Ponzi Sector is now consuming the real economy. This Ponzi sector was created and propagated by free money from the world’s central banks.

Have recent Federal Reserve rate increases taken a bite out of animal spirits? Let’s be serious here; we’re a few dozen basis points removed from a nearly trillion-dollar bubble in fake blockchain currencies. At this time last year, anyone could put a dog on a coin and have it valued at 2 billion dollars—Bitcoin is still worth $9 billion. We’re 25 basis points removed from companies like Tilray (TLRY – USA) issuing debt where the interest expense was multiples on next year’s expected revenue—forget profits which will likely never exist. If investors were this lax with their underwriting, capital is still far too easy. As I’ve shown many times on this site, whether it’s shale oil or shipping, shared office space or start-up restaurants, if capital is too plentiful, it is invested in too many ventures that crush everyone’s returns.

But Kuppy; doesn’t the shape of the yield curve prove that the Fed has gone too far? In a global market, where central banks have pushed yields into negative territory and hoarded other countries’ bonds while trying to depress their own currencies, yield curves have stopped mattering. Due to manipulation, I believe that the yield curve is no longer the same indicator that it was in past periods.

What will happen if rates increase? You’ll see a decline in asset values, you’ll probably see something of an economic slow-down. The Ponzi economy will collapse as investors start asking if these businesses will ever hit profitability, instead of asking what the Series D round will get priced at. Basically, there will be a bunch of pain.

Then there will be a healing process and economic life will go on. The alternative is for the Fed to forever ensure that asset values only go up and that the cost of capital remains suppressed which suppresses returns on capital in all businesses. If there are no down periods and capital is always oversupplied—future growth will be limited.  This is the lesson of Japan’s odyssey with low interest rates.

At the same time, cheap capital has created a wave of populism which will eventually prove de-stabilizing if allowed to continue. How can you blame people who cannot afford to own their homes because ratios of housing prices to incomes are multiple standard deviations above historical levels (low interest rates lead to elevated property prices)? Or afford retirement because any low-risk option has no yield? Or sustain the family restaurant business; as there are now 27 competing burrito-bowl chains on their block, all funded by $20 million Series B rounds and focused on increasing comp sales by giving away the product at half of cost along with a free beer?

Low interest rates have basically created a two-tier system of those with and without financialized assets.

So, yeah, I’d say screw-it. I’d raise rates 50bps tomorrow and raise them again a few weeks later. I’d make sure that I got the VIX into the triple digits and that I took out a few over-leveraged financial groups. I’d make sure I kept rates elevated for long enough to bankrupt the Ponzi Sector (from unprofitable tech to shale oil to everything in-between). I don’t say this because I’d profit off it. In fact, I would probably have a gruesome year as I’m almost always net long. However, a short and sharp house-cleaning is good for long-term economic growth—which really should be the Fed’s mandate, as opposed to tomorrow’s SPZ print. We’ve transitioned from the gold standard to the spooz standard and I don’t think it is healthy.

The best analogy here is how naturally occurring forest fires burn fast and rejuvenate the forest. If you suppress forest fires for a century (as we have done in the US), then when the forest does catch fire, it overwhelms our ability to fight it. Forest fires are increasingly bigger and more damaging to ecological systems, rather than the small contained fires that would naturally occur and burn themselves out. Economic systems are no different. Short, sharp recessions that reset the deck are healthy. Building up a generation of financial excess is destabilizing because the bubble will eventually pop—just like the monster forest fire eventually ignites.

So Kuppy, if we use your plan, won’t there be an extreme blood-letting, since the fires have been suppressed for so long? Yeah; probably. Might as well get it done with. Re-inflating the Everything Bubble of 2018 is surely worse…

Published:3/25/2019 6:03:04 PM
[Markets] Stocks Close Flat as Investors Watch Yield Curve 2 to 10-year Treasury yields lead to inverted yield curve Published:3/25/2019 6:03:04 PM
[Markets] The Wall Street Journal: Rapid expansion pushes WeWork’s annual loss to nearly $2 billion WeWork Cos. on Monday said its loss last year doubled to nearly $2 billion, as the nine-year-old company spent heavily in an effort to rapidly expand its network of shared offices around the world.
Published:3/25/2019 5:35:39 PM
[Markets] Global Markets Start the Week Lower Winnebago Industries reports earnings Published:3/25/2019 5:35:38 PM
[Markets] Pound Climbs As MPs Seize Control Of Brexit Debate

It appears a cross-party group of lawmakers who have been conspiring for weeks to wrest power away from Theresa May's government has emerged victories after a contentious Monday evening vote.

During the vote on the "Letwin Amendment" , hordes of Tory backbenchers joined with opposition MPs, and even some government ministers (one of whom, Minister for Business and Industry Richard Harrington, resigned from the cabinet to support the amendment) to defy the government whips and vote to assume control over the Commons agenda. The amendment, which had been put forth by Tory MP Sir Oliver Letwin, passed by a slim margin of 329 vs. 302.

Here's the text.

LETWIN Amendment A: Seeks to change the rules of parliament on March 27 in order to provide time for lawmakers to debate and hold indicative votes. It has been signed by more than 120 lawmakers. The result of any such indicative votes would not be binding on the government but if it showed a majority for an alternative Brexit path. A similar amendment voted on earlier this month lost by two votes, this is therefore expected to have a good chance of passing.

The amendment calls for time to be set aside on Wednesday for a series of 'indicative votes' on alternatives to the withdrawal agreement that May negotiated with the EU. The options will range from a 'soft' Brexit that could cross certain of May's 'red lines' (like remaining in the customs union and/or single market), to a second referendum, to "no Brexit at all".

Harrington wrote a scathing resignation letter, blaming May for "playing roulette with lives and livelihoods of the vast majority of people in this country."

The pound strengthened on the vote, which upped the odds of a 'softer' Brexit, or - like we said above - no Brexit.


Published:3/25/2019 5:35:38 PM
[Markets] The Wall Street Journal: Canada may tie its approval of trade deal to removal of Trump’s tariffs Canada’s foreign minister indicated Monday the government might delay ratification of the revised North American free-trade deal until the Trump administration lifts its tariffs against Canadian steel and aluminum.
Published:3/25/2019 5:03:27 PM
[Markets] MSNBC Anchor On Avenatti Arrest: "My Head Is Officially Going To Explode"

Monday has probably been the single most embarrassing day for members of "the resistance" and their partners in the cable news media since Nov. 7, 2016. Not only did Pulitzer prize winning journalist Glenn Greenwald trash the Russian collusion narrative as a "total fraud and scam" and "the saddest media spectacle I've ever seen," but the arrest of former Stormy Daniels attorney, one-time 2020 wannabe and prominent Trump antagonist Michael Avenatti has sent cable news reporters combing through their feeds to hastily delete any embarrassing tweets and photos.

Before Avenatti's myriad personal scandals - ranging from physical abuse to stiffing former employees - finally caught up with him, he was a darling on left-leaning shows that aligned themselves with the "#resistance" - mostly on MSNBC and CNN.

And now that he has been indicted by two different sets of federal prosecutors (on opposing coasts, no less) for trying to extort more than $20 million from Nike (a blue-chip company, no less), these same journalists who cozied up to Avenatti and helped inflate his presidential ambitions now find themselves in an extremely awkward position.

Understandably, Avenatti's arrest, which seemingly came out of nowhere, was a lot to process for the pundit set.  And no one articulated this sense of frustration and utter embarrassment better than MSNBC anchor Ali Velshi, who said Monday afternoon that his "head is going to officially explode" after news that Avenatti had been arrested on charges of extortion, bank fraud and embezzling money from clients broke.

"My head is officially going to explode," Velshi said to NBC News Investigations reporter Tom Winter. "I don’t understand what this is about."

Velshi then complimented Avenatti, calling him "one of the finest people in American in terms of his ability to garner publicity."

To put all of this in context: Avenatti was booked on cable news shows - primarily CNN and MSNBC - roughly 200 times in 2018.

That's a lot of air time for America's favorite "creepy porn lawyer."

Watch the clip from Velshi's report below:

Published:3/25/2019 5:03:27 PM
[Markets] Key Words: A Republican senator is proposing his own climate-change plan. Just don’t call it the ‘Green New Deal’ A Republican senator on Monday took to the Senate floor to discuss what’s bothering him.
Published:3/25/2019 4:33:43 PM
[Markets] Israeli Airstrikes Rock Gaza, Target Hamas Command, After Netanyahu Cut Short US Trip

As predicted, a major Israeli assault on the Gaza Strip is underway after an early Monday morning long-range rocket launch from the strip scored a direct hit on a home in central Israel. The Israeli Defense Forces (IDF) struck targets across the strip throughout the evening Monday, and targeted the offices of Hamas’ supreme leader, though there were no early reports of fatalities, but Gaza's Health Ministry cited at least seven wounded in the campaign. 

Israel says it's responding to an early Monday morning rocket launch from Gaza which destroyed a residential home in Mishmeret, an agricultural town north of Tel Aviv, which reportedly left at least seven Israelis injured, including children, after the family was able to escape the flaming building.

Buildings ablaze in Gaza City during reported Israeli strikes on March 25, 2019, via AFP

Prime Minister Benjamin Netanyahu announced in the immediate aftermath of the prior Hamas attack that he would be returning to Tel Aviv from a visit to the United States, cutting short his trip to Washington, saying he would “respond forcefully” to the rocket attack, on the same morning President Trump signed an order officially recognizing Israeli sovereignty over the occupied Golan Heights, seized from Syria in 1967, in a move which Netanyahu also welcomed as "historic". 

“The [Israeli Defense Forces] has begun striking Hamas terror targets throughout the Gaza Strip,” the IDF confirmed in a statement.

Amidst the Israeli onslaught on Gaza, Israel opened public bomb shelters throughout most major cities, and its 'Iron Dome' missile defense systems appeared busy as Hamas responded to the Israeli assault with its own rockets. According to the AP, by Monday evening Hamas had fired at least ten rockets since the IDF aerial attack began. 

“Israel will not tolerate this. I will not tolerate this,” Prime Minister Benjamin Netanyahu said while meeting with Trump at the White House moments before he departed for Tel Aviv. “Israel is responding forcefully to this wanton aggression,” he said. “We will do whatever we must do to defend our people and defend our state.”

Hamas leadership has been widely reported to be hiding in anticipation of the strikes. According to the AP, the IDF is now especially going after Hamas military commanders

Several airstrikes rocked Gaza, including an explosion that destroyed the office of Hamas leader Ismail Haniyeh. The Israeli military issued a statement confirming it bombed the building, which had “served as an office for many military meetings.” An earlier blast destroyed a multistory building in Gaza City that Israel said had served as a Hamas military intelligence headquarters.

It is expected that the IDF will lead a "strong Israeli military retaliation" especially as it comes just two weeks ahead of Netanyahu's most high pressure reelection campaign of his career, and as the prime minister faces down indictments related to multiple corruption charges and a rising opposition.

Monday's attack came less than two weeks after rockets were fired from Gaza toward Tel Aviv, resulting in a large-scale Israeli air attack on Gaza, after which Hamas leaders claimed the initial rocket launch was "accidental". 

With that prior incident, alongside increasingly violent clashes along the Israeli-Gaza border fence connected with ongoing "Great March of Return" protests, observers have noted the two sides appear to be hurtling toward another confrontation. 

As of late in the evening on Monday local Middle East time, Hamas media began reporting unconfirmed statements that Egypt has successfully negotiated a cease-fire between Israel and the Gaza factions, though it's unclear if or when the IDF will end its military operations. 

Published:3/25/2019 4:33:43 PM
[Markets] The Dow Rose 15 Points Because Apple’s Presentation Didn’t Wow Apple shares slipped after the iPhone maker unveiled its video-streaming service and other goodies. The Dow Jones Industrial Average added 0.06% to end at 25,516.83. The S&P 500 slipped 0.08% to close at 2798.36, and the Nasdaq Composite lost 0.07% to end at 7637.54. Published:3/25/2019 4:33:42 PM
[Markets] Upgrade: Half of parents who entrusted their kids with this money move now regret it When and how to give your kid a credit card
Published:3/25/2019 4:02:41 PM
[Markets] Stock buybacks among S&P 500 companies mark a record streak The amount of shares repurchase among S&P 500 companies in the last three months of 2018 hit a record in the fourth quarter, marking the fourth consecutive quarterly all-time high and the longest such streak on record. Published:3/25/2019 4:02:40 PM
[Markets] How Ocasio-Cortez Branded Herself Into A Weaponized Media Darling

Rep. Alexandria Ocasio-Cortez may not be the most seasoned politician on the hill, and she may have a few tax issues and transparency issues to address, but the 29-year-old media darling from New York has captured the hearts and minds of progressive Democrats - in no small part because of her effective use of branding and social media. 

The freshman Congresswoman has teamed up with a subsidiary of Discovery, Inc., digital-media firm NowThis - which carefully curates footage of AOC at her best, then shoots it over for her to amplify over her large and growing social media footprint, according to Bloomberg

Shortly after U.S. Representative Alexandria Ocasio-Cortez schooled witnesses in a Congressional hearing on campaign-finance laws, the editors at NowThis sprang into action.

The digital-media company, which makes short videos for social networks, took her remarks, added captions and its logo, and posted them on Twitter. Ocasio-Cortez retweeted the video twice to her 3 million-plus followers, and with more than 40 million views, it’s the most popular Twitter clip ever for NowThis. -Bloomberg

AOC's rise has also been a godsend to establishment media outlets, who have been in desperate need of a new Democratic hero ever since Hillary Clinton was exposed as a mercenary and dethroned. As Bloomberg notes, "Young, charismatic and armed with provocative ideas, she’s garnered widespread coverage — on podcasts, magazine covers, including the latest Time magazine, late-night talk shows and Twitch streams."

And it isn't just the left - Fox News brings up AOC almost nightly, far more than rivals MSNBC and CNN, suggesting that "she's a ratings magnet for the opposition media, too." 

"Media brands court her. They want her to retweet them," said Emily Bell, director of the Tow Center for Digital Journalism at Columbia University. "She has become a platform for some media brands rather than the other way around."

One company that has benefited is CBS Corp., owner of the CBS and Showtime networks. Her February interview on Showtime’s “Desus & Mero,” the program’s debut after its move from Viceland, drew about 40 percent more viewers than average. Her January appearance on “The Late Show with Stephen Colbert” produced one of its biggest Mondays ever.

The number of articles about Ocasio-Cortez has surged in recent months, according to Chartbeat, a publishing analytics company. The average article about her gets 1,300 page views, or roughly double what typical political articles generate, the firm found. -Bloomberg

When Time Magazine did a cover story on AOC, it generated 270,000 unique visitors in 24 hours to their website, around 55% more than the average cover story

NowThis, which is partly owned by cable programmer Discovery Inc., covers Ocasio-Cortez because she speaks about issues its audience cares about, like climate change and income inequality, not simply because she’s popular, Stephanopoulos said. Still, Ocasio-Cortez is the youngest-ever congresswoman, and videos and articles about her tend to get more views because her fans are also young and engaged with social media. -Bloomberg


"With some of these young elected officials who are more socially savvy, when you cover them it gets more traction," says NowThis president Athan Stephanopoulos. "A lot of their followers are sharing it, and it gets into the digital-media ecosystem faster."

According to Huffington Post's head of audience, Mike Barry, "We do see a strong interest from our readers regarding Alexandria Ocasio-Cortez," adding "Her background and path to becoming a candidate is fascinating, relevant and newsworthy for HuffPost’s audience."

HuffPo, a subsidiary of Verizon, has published at least 68 articles with AOC's name in the headline this year. The media outlet uses audience data to see what's resonating with readers, "and often commissions work that reflects those insights," according to Barry. "There is a big segment of the overall population interested in her." 

And not just among fans who share her politics. Ocasio-Cortez describes herself as a “democratic socialist,” which can be a hot-button term for Republicans.

Ocasio-Cortez has received extensive coverage in parts of Rupert Murdoch’s empire, which includes News Corp. and Fox Corp. As Vanity Fair noted, Murdoch’s New York Post recently published 24 articles about her on its website over a six-day period. Fox News discusses her so often that Ocasio-Cortez has complained the channel “has turned into ‘AOC TMZ,’” referring to the celebrity-news website that traffics in gossip.

On Feb. 14, for instance, Amazon scrapped plans to open a new headquarters in New York City, a project that Ocasio-Cortez had opposed. The next day, her name was mentioned 38 times on Fox News and 29 times on the Fox Business Network, compared with seven times on CNN and six on MSNBC, according to TVEyes, a media-monitoring firm. -Bloomberg

In short, AOC is a bona fide media darling - drawing positive attention from both liberals and the likes of Sean Hannity, who described her as "the new leader of the Democratic party," adding that the Green New Deal she introduced "will destroy the lifeblood of our economy." 

A representative of Fox News noted that some hosts on the network have had positive things to say about AOC, with Laura Ingraham, for example, calling her "impressive." 

"At Fox, she plays into their need for a villain now that Hillary Clinton is no longer relevant," said Bell.

"A Kardashian who speaks likes Bernie Sanders is an incredible combination." 

Published:3/25/2019 4:02:40 PM
[Markets] Stocks end little changed as 10-year Treasury yield hits lowest since 2017 Stocks end little changed as 10-year Treasury yield hits lowest since 2017 Published:3/25/2019 3:32:06 PM
[Markets] S&P Swings Wildly After Breaching 2800 Support As Yield Curve Crashes

On the same day the MSCI Asia index posted its worst daily drop for 2019 as Asian markets caught up with Friday's US pounding, it was another ugly day for US stocks which spent most of the day in the red, with the S&P breaching the 2,800 support level, although the Emini failed to drop below 2790 which has emerged as a new key resistance level.

One possible reason for the solid defense: as Nomura's Charlie McElligott explained earlier, if and when the S&P dips below the "gamma" threshold sell level which is around 2777, both dealers and CTAs would see a pick up in selling, which would then make the market new "default" direction lower and potentially leading to a retest of the December lows.

Curiously, despite the Russell 2000 CTAs, which as McElligott noted earlier are currently 50.4% long, and would sell and flip to short under 1536.21 to get to -100% short, the small-cap index held on, and after some initial weakness, managed to stage a sharp rally into the European close, and successfully remained in the green as institutional buying appeared to offset systematic selling.

The Nasdaq closed just barely in the red, and even though most FAANG stocks were green, Apple disappointed, sliding after its major new services unveiling - including a new credit card, streaming video and a video game offering - disappointed traders, with the stock closing 1.3% lower.

But despite the sharp, if contained gyrations in US equities,the big action was in rates, where earlier today the 10Y yield plunged to the lowest level since 2017 shortly after 2pm, sliding below the effective fed funds rate of 2.40%, only to stage a modest rebound into the close.

Earlier in the session, Australia’s 10-year bond yield dropped to an all-time low and Japan’s hit the lowest since September 2016.

More concerning was the ongoing slide in the 3 Month-10 Year spread - the Fed's favorite recession indicator - which briefly plunged as much as -7bps before recovering the drop to just -3bps.

It wasn't clear what precipitated today's aggressive buying across the curve, although according to Bloomberg's Edward Bollingbroke, a reason for the move may have been convexity flows (as convexity hedging occurs as mortgage rates fall, making borrowers more likely to refinance; higher expected prepay rates reduce MBS duration, which portfolio managers can then offset via receiving in swaps. It was also a driver behind Friday's Treasuries rally).

Whatever the reason for the aggressive purchases, the US Treasury "curve" is now anything but...

... and in fact looks like the infamous Nike swoosh, which itself was in the news today when it first Tumbled after Michael Avenatti tweeted he would hold a presser exposing criminality at the sport shoemaker, then quickly rebounded on news that the "creepy porn lawyer" had hoped to extort millions of dollars from the company, only to be arrested shortly after his tweet in the latest vindication for Donald Trump.

There were far less fireworks in the FX space today: after plunging the most since last summary, on Monday the turkish lira staged a powerful bounce as the USDTRY tumbled the most in almost a year, one day after Turkey threatened to probe JPM for its short lira recommendation and warned manipulators it would go after them personally.

The pound retreated as May said she doesn’t yet have enough support to put her Brexit deal to a vote in Parliament and will continue to try to convince MPs to back it. As lawmakers try to take control of the process, she’s wielding the threat of a long extension if her deal isn’t passed.

Meanwhile, the British pound retreated after fluctuating in early trading in the latest daily stop hunt, as Theresa May said she doesn’t yet have enough support to put her Brexit deal to a vote in Parliament and will continue to try to convince MPs to back it. As lawmakers try to take control of the process, she’s wielding the threat of a long extension if her deal isn’t passed. Yet while a plunge in the sterling would be welcome for May to reinforce the gravity of the situation, FX traders are increasingly ignoring the latest day to day developments in the neverending saga and instead focused on inflicting max pain to both longs and shorts.

Looking ahead the question is: will Asia continue its selling as the US bond market now screams global recession, and will the S&P finally breakdown as it breaches the next support level of 2,777 and if so, will it retest the December lows over 400 points lower, as so many bears have recently predicted.

Published:3/25/2019 3:32:05 PM
[Markets] GLOBAL MARKETS-U.S. Treasury yields hit lowest since late 2017, global stocks fall Benchmark U.S. Treasury debt yields fell to their lowest since late 2017 on Monday and a gauge of world stocks dropped for a second straight session on persistent concerns over global economic growth. The 10-year U.S. Treasury yield fell below 2.4 percent for the first time since December 2017. Wall Street's main indexes ended little changed during a choppy session after falling sharply on Friday. Published:3/25/2019 3:32:05 PM
[Markets] Capitol Report: Fannie-Freddie reform could rewrite a familiar Washington script It may be the fool-me-once nature of the debate over Fannie and Freddie – Congress has been trying to get them out of conservatorship nearly as long as they’ve been in – but many Washington-watchers think the most likely outcome is no change at all.
Published:3/25/2019 3:03:12 PM
[Markets] Venmo Is Sending Customers To Collections For As Little As $7

Venmo is ramping up its collection efforts on users that owe the company money due to transactions "going awry", according to a new Wall Street Journal article

The company is now threatening users who carry negative balances with debt collectors. The company also recently amended its user agreement to allow it to seize users' PayPal accounts in order to collect money it is owed. The company says it can refer customers to collections for amounts as high as $3000 and as low as $7.

In December, the company put in its user agreement that it may “engage in collection and other efforts to recover [money owed to Venmo] from you.” Venmo is telling its delinquent users that by “not paying, you run the risk of being reported to a collection agency.” The company didn't comment to the WSJ about the number of times it will warn a user about collections, nor did it comment about how many times it actually follows through on collection threats. 

“These changes, which have been a PayPal policy for a while, are a result of our efforts to drive policy consistency across platforms," a Venmo spokeswoman said. 

The difficulty in turning Venmo into a profit center for PayPal is a microcosm of the larger problem banks face with trying to make finance quicker, yet still profitable. 

Over the past year and a half, PayPal has rolled out several different attempts to try and monetize Venmo better, including debit cards and allowing people to buy online using the service. Venmo is on pace to bring in more than $200 million in revenue in 2019, according to CEO Dan Schulman's comments on a January conference call.

The majority of the $62 billion in volume Venmo processed last year came from transfers where Venmo charges no fees and bears the cost to process them. As money transfers to and from Venmo accounts instantly, and it sometimes can take a day or two for banks to catch up, people can wind up owing Venmo money, resulting in them having a negative account balance. 

The article also highlights a couple named Jordan and Emily Cole, who wound up getting scammed out of $281 for concert tickets they tried to buy off of Craigslist. Despite the seller never delivering the tickets, going silent and absconding with their money, Venmo said they were on the hook for the money. After about a month, they got a letter from Venmo's collections department. 

“We sympathize that you were a victim of a scam. But you do make these transactions at your own risk and Venmo is not liable or responsible for any loss that comes from violating our user agreement,” the company wrote to the Coles. 

After Mr. Cole spoke to Wells Fargo, PayPal and (more importantly, we're sure) a reporter about their story, Venmo dropped its demands. 

Published:3/25/2019 3:03:12 PM
[Markets] Key Words: Why investors should stop worrying about global contagion and enjoy the firing U.S. economy Economic stresses from Europe to Asia continue to stoke fears that a global slowdown could spread to the U.S. and wreak havoc in the stock market. But Josh Brown, CEO of Ritholtz Wealth Management, isn’t losing any sleep over it.
Published:3/25/2019 2:35:15 PM
[Markets] Forget Fake News, Trade In Fake Goods Hits Half A Trillion Dollars

Authored by Alex Kimani via,

Black-market traders have increasingly been tapping into an invisible network to funnel  a wide range of goods into global markets right under the noses of customs and border protection agents—to the tune of over $500 billion.  

All of the merchandise —- including luxury designer wares such as Chloé ankle boots, Chanel Le Boy bags, Saint Laurent wallets or chic Ray-Ban shades - are not authentic brand-name products but inexpensive replicas that are undeniably, shamelessly fake.

And they now command a half-trillion-dollar market that’s expanding at astronomical rates.

The market for counterfeit goods has reached alarming proportions, powered by tech-savvy traders lurking in dark corners of the internet.

According to a report by the European Union’s intellectual property office (EUIPO) and the Organization for Economic Co-operation and Development (OECD), the market for illicit goods has grown by over 100 percent over the past decade, with counterfeits accounting for 3.3 percent ($590 billion) of international trade in 2016 compared to $250 billion in 2008. Interestingly, the surge came against a backdrop of falling global trade volumes.

China leads the way

The report was compiled by analyzing thousands of customs seizures, with footwear, clothing, leather goods and IT equipment topping the list of the most frequently seized imported fakes.

(Click to enlarge)

Source: The Guardian

The report also reiterated another well-known trend: China, by far, remains the biggest source of fake goods. China was the main source of counterfeit products in 9 out of 10 categories tracked by the trade watchdogs with as many as 27 percent of seized goods being traced back to the country. Other leading offenders include India, Malaysia, Pakistan, Turkey, Thailand and Vietnam.

Interestingly, the latest fake goods report seems to closely mirror another 2016  independent report titled: Social media and luxury goods counterfeit: a growing concern for government, industry and consumers worldwide that was published in the Washington Post.

Both reports identified the explosive growth in online technologies as a key reason for the proliferation in the trade in counterfeit goods.

Many counterfeit sellers are technology-savvy and use instant messenger apps such as Telegram or Whatsapp that provide end-to-end encryption to hide their nefarious activities.

They are also adept at using fake accounts, spam bots or deploy botnets to avoid being flagged by internal security systems and post thousands of images on a daily basis. If an account is exposed and blocked by Instagram, it often reappears under a new profile name sometimes in a matter of hours.

Buyers of luxury goods, beware: luxury products seem to be the category most heavily targeted by sellers of these scam products.

According to the Washington Post report, as many as 20 percent of 750,000 Instagram posts about top fashion brands that they analyzed featured illicit products with Prada, Chanel, Fendi, Louis Vuitton along with Cartier and Rolex among the most affected luxury brands.

Overall, the internet acts as a ‘giant amplifier’ that provides an almost direct line that connects producers and consumers with no filters or barriers.

The hidden psychological cost

While the internet has no doubt played a big part in expanding the fake goods business, it’s highly likely that most buyers of counterfeit products do it the traditional way - from some backstreet vendor where they can see, touch, feel, smell and readily identify them as cheap knockoffs.

It has always seemed like the fashion industry was merely engaging in marketing rhetoric when it tells us that counterfeits are bad for us. Many people who knowingly buy fake goods do it in an attempt to polish their self-image—cheaply and through deception. Yet, studies have shown that such people could be biting off more than they can chew—by incurring a huge psychological burden that makes them feel compelled to cheat in other areas of life, too.

One such study by researchers from Harvard Business School, UNC Chapel Hill and Duke University published in Scientific American, makes for compelling reading.

So maybe it’s not just a clever ruse drummed up by makers of ostentatious goods. All those dudes rocking faux Prada belts and ladies swinging plastic Birkin bags might succeed in fooling everyone but themselves.

Published:3/25/2019 2:02:20 PM
[Markets] Amazon's stock bounces back into positive territory after Apple TV+ announcement Shares of Inc. bounced back into positive territory in afternoon trade Monday, after Apple Inc. announced its Apple TV+ video subscription service. Apple said the TV app will be available on Amazon Fire TV "in the future," and will offer suggestions for shows and movies from a number of streaming apps, including Amazon Prime. Amazon's stock was up 0.4% in afternoon trade, after being down as much as 1.0% and up as much as 0.7% at its intraday extremes, which were both hit before Apple's Special Event. Amazon's stock has rallied 18% year to date and Apple's stock has run up 19%, while the Dow Jones Industrial Average has gained 9.1%. Published:3/25/2019 2:02:19 PM
[Markets] Games maker stocks fall a bit further after Apple Arcade game subscription service Shares of games makers took an afternoon hit Monday, after Apple Inc. introduced a new game subscription service called Apple Arcade. Shares of Activision Blizzard Inc. fell 0.7%, after being little changed ahead of the announcement; Electronic Arts Inc. as down 1.3%, after being down about 0.7% ahead of the announcement; and Take-Two Interactive Software Inc. eased 0.5%, after being little changed before the announcement. GameStop Corp.'s stock gave up 3.2%, but was down 2.4% ahead of the Apple Arcade announcement. Meanwhile, Apple shares shed 1.8% to pace the Dow Jones Industrial Average's decliners. Published:3/25/2019 1:32:32 PM
[Markets] Nobody Forgot About Dre's $70 Million USC Donation; Rap Icon Deletes Post About Daughter's College Acceptance

Rap legend Dr. Dre has deleted an Instagram post bragging about his daughter getting into the University of Southern California (USC) without "jail time" - seemingly referring to the recent college admissions scandal - after news resurfaced of a $70 million donation he made to the university with producer Jimmy Iovine in 2013.

In the now-deleted post, Dre wrote "My daughter got accepted into USC all on her own. No jail time!!!" - along with a photo of himself and daughter Truly Young holding her acceptance letter. 

Dre, whose real name is Andre Young, made a $70 million donation with producer Jimmy Iovine in 2013 for the creation of the Jimmy Iovine and Andre Young Academy For Arts, Technology and the Business of Innovation. 

"Iovine And Young Hall" set to open in 2019

While we have no idea if Truly aced her SAT and had a 5.0 GPA - but the optics of Dre's bragging in light of his massive donation are decidedly not great. 

In early March, federal prosecutors revealed a $25 million college admissions bribery scandal involving parents such as Full House actress Lori Loughlin, who was indicted with her husband for paying $500,000 in bribest to get their two daughters into USC - one of many universities involved. 

Published:3/25/2019 1:32:31 PM
[Markets] Tax Guy: What to do if you inherit your spouse’s IRA Learn how to calculate required minimum withdrawals from an IRA you inherited from your spouse.
Published:3/25/2019 1:03:33 PM
[Markets] BookWatch: New generation of startups threaten blue-chips like CVS and UnitedHealth DowDuPont and Caterpillar also at risk from “decouplers”.
Published:3/25/2019 1:03:32 PM
[Markets] Chinese Star Trader Raises $10 Billion in 10 Hours

With the S&P trading not far from its all time highs, conventional wisdom would suggest that actively managed asset managers and hedge funds have never had it easier to attract outside capital. Unfortunately for the actively managed community, in a world in which central banks have made all risks redundant (and staked their credibility and reputation on overturning the business cycle while assuring no more bear markets) alpha generation has become virtually impossible and as a result, last week Hedge Fund Research reported that new hedge fund launches have sunk to their lowest level since the start of the century as untried managers struggled to attract capital in 2018, a year of widespread disappointment for investors in the asset class.

How bad is it? In 2018, just 561 new hedge funds were launched, the lowest number since 2000 while total fund liquidations surpassed new launches for the second year in a row.

Meanwhile, average hedge fund management fees remained at the lowest level since HFR began publishing these estimates in 2008, while the average incentive fee fell slightly from the prior quarter. The average management fee remained unchanged at an estimated 1.43 percent, while the average incentive fee fell narrowly by -3 bps to 16.90 percent.

But while US-based fund managers have nothing but stingy LPs and performance fee misery to look forward to, in China - where a new stock market bubble has been forming since the start of the year, just three years after the last bubble burst - it's never been easier to raise capital.

In fact, as Bloomberg reports, it took just 10 hours for a star Chinese stock picker to attract more than 70 billion yuan ($10 billion) of orders for his new firm’s debut mutual fund, yet another sign of the frothy investor exuberance in the world’s best-performing (for now) equity market.

The fund, which will invest 60% to 95% of its assets in equities, is the manager’s first offering since he left Orient Securities Asset Management Co. after two decades at the state-backed money manager.

According to Bloomberg, Shanghai-based Foresight Fund, managed by Chen Guangming, said on Friday that it stopped accepting client subscriptions after blowing past its 6 billion yuan fundraising target.... in less than half a day! While the fund didn’t disclose the amount of orders it received, people familiar with the matter said they topped 70 billion yuan, including about 20 billion yuan via China Merchants Bank Co.’s fund distribution platform.

Chen Guangming

The "panic" capital allocation will hardly come as a surprise: investors have piled into China’s $7.2 trillion stock market this year, propelling the Shanghai Composite Index to a 24% gain following encouragement from the government, and buoying an asset-management industry that many see as the last big frontier for international firms like BlackRock and Vanguard. While Chinese policy makers have generally been supportive of the inflows, they would prefer to avoid a repeat of the speculative frenzy that fueled the nation’s 2015 equity boom and bust.

It may, however, be too late as the rush into Chen’s Foresight Fund suggests overshooting is a risk.

Of course, there may be another, simpler reason for the frenzy to allocate capital to Chen: he may be the closest thing China has to a superstar fund manage; one of his old funds has gained about 700% since May 2009, trouncing a 32% increase for the Shanghai Composite over the same period.

The Foresight Fund’s successful debut was driven by a “highly shrewd” sales and marketing campaign that made smart use of social media and will become a case study for international managers seeking to roll out products in China, Z-Ben Advisors, an asset-management research firm, wrote in an emailed note on Friday. BlackRock, Vanguard and JPMorgan Chase & Co. are among global firms that have pursued a bigger presence in China’s asset-management industry after regulators loosened foreign ownership rules.

Of course, there is such a thing as being a too successful trader in China: recall that back in 2016, China's "Warren Buffett" was arrested on charges of manipulating securities market and inside trading after posting unprecedented gains. Then again, that was after the bubble burst and the government needed a scapegoat; which is why if we were Chen, we'd be nervous - he is now the public face of the latest stock market bubble, which like all bubbles before it, will end in tears.

Until then, however, any "up and rising" US-based hedge fund managers who have found little success in capital raising on US soil may want to try their luck in Shanghai. 

Published:3/25/2019 1:03:31 PM
[Markets] The Yield Curve Has Inverted. Here’s What History Says Could Happen to the Stock Market Next. The inversion of the yield curve is often a recession warning, but the stock market could still continue to rise, according to new research. Published:3/25/2019 1:03:31 PM
[Markets] Michael Avenatti Arrested In Extortion Plot Against Nike

Update: Just minutes after lawyer Michael Avenatti tweeted his tease of a press conference tomorrow claiming Nike is involved in a college basketball scandal, Bloomberg reports that Avenatti was just charged by federal prosecutors in New York with attempting to extort millions of dollars out of Nike Inc. by threatening to release damaging information about the company, which did not meet his demands.

Avenatti is alleged to have told Nike that he would cancel a press conference critical of sports apparel company only if it paid an unidentified client $1.5 million, and hired him and another California lawyer to conduct an internal investigation for $15 million to $25 million.

Avenatti is accused of wire fraud and bank fraud. He was arrested Monday, prosecutors said.

CNN's Erica Orden tweeted the details:

" SDNY is charging Michael Avenatti for "attempting to extract more than $20M in payments from a publicly traded company by threatening to use his ability to garner publicity to inflict substantial financial & reputational harm on the company if his demands were not met.""

According to the complaint filed in federal court, Avenatti told Nike attorneys by phone last week if his demands were not met, "I'll go take ten billion dollars off your client's market cap ... I'm not f*cking around."

And Nike shares are rebounding...

SDNY is having a press conference on the Avenatti charges at 2:30pm.

*  *  *

As March Madness hits its stride, former Stormy Daniels' lawyer Michael Avenatti has found another outlet for his unique legal capabilities. In a tweet, Avenatti warned:

"Tmrw at 11 am ET, we will be holding a press conference to disclose a major high school/college basketball scandal perpetrated by @Nike that we have uncovered. This criminal conduct reaches the highest levels of Nike and involves some of the biggest names in college basketball."

The reaction was instant with NKE shares falling to their lowest since early February...

This news comes after Nike shares have been sliding recently following weak domestic orders.




Published:3/25/2019 12:31:38 PM
[Markets] Trump Today: Trump Today: Trump signs proclamation recognizing Golan Heights, praises Mueller after being cleared of collusion President Donald Trump on Monday signed a proclamation recognizing Israel’s hold over the disputed Golan Heights as he praised the special counsel after being cleared of collusion.
Published:3/25/2019 12:01:24 PM
[Markets] Stocks struggle for direction as growth fears weigh on market sentiment U.S. stocks meander Monday as the market’s attempted to regroup after data showing weakness on the global economic front triggered heavy losses last Friday even as a major political uncertainty was put to rest with the release of Special Counsel Robert Mueller’s report. Published:3/25/2019 12:01:23 PM
[Markets] "It's Coming": Graham Vows To Investigate FBI's "Unprofessional Conduct" And 'Troubling' Behavior By Lynch, Comey

Senate Judiciary Chairman Lindsey Graham (R-SC) said in a Monday press conference that he's going to get to the bottom of "unprofessional conduct" and "shady behavior" by the Justice Department and the FBI surrounding the 2016 US election, and will call on Attorney General William Barr to appoint another Special Counsel "that would look into what happened with the FISA warrant," and "what happened with the counterintelligence investigation.

Graham also laid out that while he hopes AG Barr will release as much of the Mueller report as possible, certain information would need to be redacted. 

"The rule of law applies both to Republicans and Democrats," said Graham, one day after a four-page summary of special counsel Robert Mueller's report cleared Trump and his team of colluding with Russia to win the election, while AG Barr and Deputy AG Rod Rosenstein cleared Trump of obstruction. 

Graham says he's going to get to the bottom of former FBI Director James Comey's behavior in regards to the Clinton email investigation, the Weiner laptop, and the infamous "Tarmac" meeting between Bill Clinton and Obama Attorney General Loretta Lynch, which the South Carolina Republican suggested was 'something more' than just a casual encounter.  

On Sunday night, Graham posted an ominous reply to Comey, after the former FBI Director posted a photo of a man in a forest with the caption "So many questions," to which Graham replied "Could not agree more. See you soon." 

Meanwhile in the House, Rep. Devin Nunes (R-CA) is reportedly preparing criminal referrals for individuals who "perpetuated this hoax," according to journalist Paul Sperry. 

Watch Graham's entire press conference below:

Published:3/25/2019 12:01:23 PM
[Markets] Pompeo Demands Moscow "Cease Unconstructive Behavior" In Venezuela 

As we predicted a number of times before, a proxy war between Russia and the United States appears now heating up in Venezuela — this after over the weekend Russia sent a military transport plane filled with Russian troops commanded by First Deputy Commander-in-Chief of the Land Forces of Russia Gen. Vasily Tonkoshkurov, which landed in Caracas Saturday. We also reported the major development this morning that new satellite images reveal a major deployment of S-300 air defense missile systems to a key airbase south of Caracas.

Russia's highly visible deployment of a small troop contingency along with a reported 35 tons of cargo has resulted in a direct and firm response from Washington as on Monday morning the US Secretary of State called on Russia to “cease its unconstructive behavior”.

Pompeo has been touring the Middle East over the past days. Image source: Reuters

According to Reuters Pompeo conveyed the message directly via a phone call with his Russian counterpart Foreign Minister Sergey Lavrov.

Spokesman Robert Palladino addressed the phone call in the following statement:

The secretary told Russian Foreign Minister Lavrov that the United States and regional countries will not stand idly by as Russia exacerbates tensions in Venezuela.

Palladino added that Pompeo specifically condemned Russian military support for the “illegitimate regime of Nicolas Maduro.” 

Pompeo had earlier this month vowed to continue to put "unconstrained" pressure on the Maduro regime after it became apparent that all internal coup attempts by the Juan Guaido-led opposition had failed. 

As we reported previously this week's tensions follows a high-level meeting in Rome last week, during which Russia reiterated a grave warning to the US – Moscow will not tolerate American military intervention to topple the Venezuelan government with whom it is allied - thus it appears Russia is taking no chances with its South American ally.

One of those warnings delivered directly by Russia’s deputy foreign minister Sergei Ryabkov to US “special envoy” on Venezuelan affairs Elliot Abrams is understood to have been that no American military intervention in Venezuela will be tolerated by Moscow.

Perhaps paralleling the Syria situation, this could be the start of a scenario where the greater the proxy action and threats from the United States, the more Russia will slowly intervene at the behest of Maduro. 

All of these developments signalling closer Russian-Venezuelan military-to-military cooperation in the face of Washington saber rattling come after three months ago the two allies held military exercises on Venezuelan soil, which the US at the time had condemned as Russia encroachment in the region. 

Published:3/25/2019 11:39:07 AM
[Markets] Probability of Trump's being removed from office early hits all-time low Probability of Trump's being removed from office early hits all-time low Published:3/25/2019 11:01:44 AM
[Markets] Over $10 Trillion In Debt Now Has A Negative Yield

NIRP is back.

On Friday, when Germany reported disastrous mfg and service PMI prints, the 10Y German Bund finally threw in the towel, with the yield sliding back under zero for the first time in three years. When that happened, and when the 3M-10Y yield curve inverted in the US right around that time, just over $400 billion in global debt changed the sign on its yield from positive to negative.

As a result, the total notional of global negative yielding debt soared on Friday, rising above $10 trillion for the first time Since September 2017, and which according to Bloomberg has intensified "the conundrum for investors hungry for returns while fretting the brewing economic slowdown."

Paradoxically, the amount of negative-yielding debt has nearly doubled in just six months, and confirms that the global asset bubble is back because as Gary Kirk, a founding partner at London-based TwentyFour Asset Management, said "money managers face increasing pressure to reprise the yield-chasing mentality synonymous with quantitative easing."

“This obviously tempts those investors holding cash to move along the maturity curve -- or down the rating curve -- to seek yield, which is once again becoming a scarce commodity,” he said. “It’s a classic late-cycle conundrum.”

Despite the Fed's renewed herding of investors into the riskiest assets, Kirk is so far "resisting the temptation" to snap up longer-dated credit obligations that will be the first to default when the next recession hits, and prefers duration bets in interest-rate markets.

Others won't be so lucky: as we noted last Friday, the 'reverse rotation', or flood into fixed income instruments, is accelerating and fund flows confirmed the fresh panic for yield just as the specter of QE4 returns as investors in the latest week parked $6.6 billion into investment-grade funds, $3.2 billion into high-yield bonds and $1.2 billion into emerging-market debt, according to EPFR data.

"The extraordinary abrupt end to central bank hiking cycle + Fed paranoia of credit event is uber-bullish credit & uber-bearish volatility," BofA's Michael Hartnett wrote on Thursday night.

Meanwhile, negative yields mean that investors will lose money just by holding bonds to maturity, and are merely hoping that the Fed's insanity will push prices even higher, allowing them to sell to other panicked bond investors at even lower yields down the road, which wouldn't be that difficult if a global depression emerges, resulting in negative growth and/or outright deflation. But - as Bloomberg notes- along the way, risk assets may be entering the danger zone.

"We’ve never seen monetary easing so long, so broad, so big," William Blair's Brian Singer told Bloomberg. "What’s happened after every significant period of accommodation is a reckoning. This time the bubble is lower-rated credit and illiquid private assets."

How or when this bubble ends remains unclear; one thing is certain: when Ben Bernanke said in 2014 that there will be no rate normalization in his lifetime, he was - perhaps for the only time in his career - correct.

Published:3/25/2019 11:01:43 AM
[Markets] The Dow Gains 27 Points Because Last Week’s Selloff May Have Gone Too Far Although worries about global growth remain, a brutal selloff at the end of last week may have some investors looking for bargains. Published:3/25/2019 11:01:43 AM
[Markets] Dow industrials edge into positive territory Dow industrials edge into positive territory Published:3/25/2019 10:31:52 AM
[Markets] In One Chart: Probability of Trump being forced out of office early plunges after Mueller report If gamblers have it right, President Donald Trump won’t be calling in the moving vans early now that Special Counsel Robert Mueller’s probe into possible coordination between his campaign and Russia ahead of the 2016 election is complete.
Published:3/25/2019 10:31:52 AM
[Markets] German billionaire family that owns Einstein Bros. Bagels admits Nazi past The Reimann family, believed to be one of Germany's wealthiest, also owns majority stakes in companies such as Krispy Kreme, Panera Bread and Peet's Coffee. Published:3/25/2019 10:31:52 AM
[Markets] Glenn Greenwald: Russia Collusion 'Conspiracy' Was "Saddest Media Spectacle I Have Ever Seen"

Offering one of the most scathing responses to the Mueller report summary released Sunday night, Glenn Greenwald, a Pulitzer Prize winning journalist and founding editor of the Intercept, appeared on Democracy Now! Monday, where he lambasted the mainstream press for helping to perpetuate the "total fraud" that was the Russia collusion narrative.

The Intercept editor, who lives in Brazil with his partner, has been one of the most consistent voices speaking out about the mainstream press's indulgence in "Russia collusion" conspiracy porn, blaming Rachel Maddow and her ilk for helping to discredit the broader media by spewing alarmist propaganda about the Mueller probe, and getting their audience's hopes up for a major reveal that might ultimately end with Trump being driven from office...possibly in handcuffs.


Greenwald, who appeared on DN alongside former New York Times journalist David Cay Johnston, who argued the other side - that the Mueller report hasn't satisfied questions of collusion or corruption - and that Trump remains a Russian "asset" (though he clarified that he didn't believe Trump was an actual agent in the employ of Russian intelligence).

During a conversation where he compared Maddow to Judy Miller (The disgraced NYT journalist who spread misinformation on behalf of the Bush Administration during the runup to the Iraq War), Greenwald said the media's spinning of Russia conspiracy theories wasn't just incorrect, but also harmful.

"This is the saddest media spectacle I have ever seen since I began practicing journalism in 2005 and what makes it even sadder is to watch all the people who invested their journalistic credibility into what proved to be a complete and total fraud and scam continue to try and cling to some vestige of credibility by continuing to spin conspiracy theories that are even more reckless and more unhinged than those we've been subjected to for the past three years."

The problem with propagating this narrative, Greenwald explained, is that it has helped inflame tensions between the US and Russia, putting both countries in a precarious position regarding the potential for a nuclear conflict. Saying that Trump is beholden to Russia would cut against Trump Administration policies that have actually been more aggressive than those of Trump's predecessor.

"That's the tragedy of everything that just happened...all the things that do deserve attention and investigation have received none...because this idea drowning everything out has been a complete fairy tale...We have the for him being a Russian asset is it's so irresponsible to say that because the reality is the conflict between the US and Russia has been higher than it has ever been in decades. How can you say Trump is a client of the Kremlin when he's trying to oust one of Russia's most important client states in Venezuela, or when he's pressuring Angela Merkel to stop buying Russian natural gas?"

"Over and over the Trump Administration has taken actions that have been more aggressive than the Obama administration against the Kremlin."

And while allegations of election hacking should absolutely be investigated, treating Russia's interference as unprecedented and nefarious has transformed the US into a laughingstock internationally...because Washington has spent the last 70 years since WWII meddling in the politics of both its neighbors and other countries further afield.

"That any country would dare to interfere in our sacred and glorious democracy when the United States has done very little since the end of WWII but going around the world and interfering in every Democracy they can find...including Brazil the country in which I'm currently living...and even Russia. This doesn't make it right for Russia to do it, but we've never kept it in perspective that meddling in other countries' elections isn't some grave never before seen's part of regular business."

"All of this outrage...has made the US a laughing stock to the hundreds of millions of people who live in countries where the US has done this and far, far worse."

What's worse, the Russia collusion investigation has distracted from other, more important, wrongs committed by Trump: Namely, the prosecution of Wikileaks and the 'torture' of Chelsea Manning.

"The Trump Administration has made no secret of the fact that they want to prosecute Wikileaks for the crime in their eyes for disclosing confidential of the gravest threats we can imagine to press freedom. Chelsea Manning is being put back into solidarity confinement to torture her to say things about Wikileaks that aren't true..."

"...I hope that gets way more attention."

His comments during the interview echoed many of the same points Greenwald made during a series of tweets sent earlier Monday morning.

Readers can listen to the full interview below...

...and watch a video clip here.

Published:3/25/2019 10:31:51 AM
[Markets] Chart shows threat of Trump being forced out of office plunges after Mueller report If gamblers have it right, President Donald Trump won’t be calling in the moving vans early now that Special Counsel Robert Mueller’s probe into possible coordination between his campaign and Russia ahead of the 2016 election is complete. Published:3/25/2019 10:31:51 AM
[Markets] Key Words: Sarah Sanders says Mueller probe accusations were ‘equal to treason’ in heated interview with Savannah Guthrie The White House press secretary told Savannah Guthrie on ‘Today’ that the Barr letter fully exonerated President Trump.
Published:3/25/2019 10:00:31 AM
[Markets] 200 Million People At Risk: National Weather Service Warns Worse To Come In Apocalyptic Midwest Floods

Authored by Michael Snyder via The End of The American Dream blog,

The flooding that just struck the middle part of the country was the worst blow to U.S. farmers in decades, but now the National Weather Service is telling us that it was just “a preview of what we expect throughout the rest of the spring”. 

Can that possibly be true? 

After the immense devastation that we have already witnessed, how much worse can the flooding possibly get?  Already we have seen thousands of homes and farms be completely destroyed, and we are being told that the total economic damage is in the billions of dollars.  Sadly, the truth is that a lot worse is still yet to come.  Thanks to a very snowy winter, a massive amount of snow is going to melt during the next several weeks, and that alone would produce tremendous flooding.  But on top of all of that melting snow, forecasters are telling us that it will be a very rainy spring.  In fact, the Weather Channel is warning that there will be “above-average precipitation across much of the Lower 48” over the next three months, and one meteorologist is forecasting that it is “not looking like we are going to see any dry stretches anytime soon”.  And this is on top of all of the very heavy rainfall that has been falling in recent weeks.  At this point, the Mississippi River basin has already gotten “three times as much rainfall as in a normal year”.

Even without any additional flooding, U.S. food production would be way down this year.  The recent flooding is going to keep thousands of farmers from planting crops on time, and thousands of others are not going to be able to use their fields at all.

But when you factor in what is going to happen over the next three months, we are talking about an agricultural disaster of unprecedented magnitude in modern American history.

At this moment, some areas in the Upper Midwest still have “more than 20 inches of snow” on the ground…

In the eastern Dakotas and Minnesota, more than 20 inches of snow remains on the ground. The Missouri, Ohio, and Mississippi Rivers drain the central United States, but it takes several weeks for the water to travel downstream. In the meantime, emergency officials are warning local residents to make evacuation plans as well as purchase flood insurance in certain areas.

All of that water has to go somewhere, and authorities are warning that 200 million people are at risk

The record-setting floods deluging the Midwest are about to get a lot worse. Fueled by rapidly melting snowpack and a forecast of more rainstorms in the next few weeks, federal officials warn that 200 million people in 25 states face a risk through May.

A lot of people out there seem to think that the flooding will just be isolated to the major rivers, but that is simply not true.

Yes, all-time flooding records will continue to be shattered along the Missouri and Mississippi Rivers, but the National Weather Service is telling us that nearly “the entire eastern two-thirds of the nation” will be dealing with flooding this spring…

Almost the entire eastern two-thirds of the nation should see flooding this spring, National Weather Service deputy director Mary Erickson said at a news conference on Thursday. Some 25 states are forecast to see “moderate” to “major” flooding, the weather service said.

The Midwest floods are “a preview of what we expect throughout the rest of the spring,” she said. “The flooding this year could be worse than what we have seen in previous years … even worse than the historic floods we saw in 1993 and 2011,” Erickson added.

Are you starting to get the picture?

This is the worst case scenario for U.S. flooding that surpasses all previous worst case scenarios.  Thousands more farms will be destroyed.  Billions of dollars worth of additional damage will be done to our agricultural industry.  Food production is going to come up way short, and we are all going to experience tremendous pain at the supermarket as food prices skyrocket.

If you live in any of the following areas, you need to have your emergency plan ready, because things are about to get really, really bad…

The areas under the highest risk of moderate to major flooding, according to NOAA, are the upper, middle and lower Mississippi River basins, including the mainstem Mississippi River, Red River of the North, Great Lakes, eastern Missouri River, lower Ohio River, lower Cumberland River and Tennessee River basins.

U.S. farmers have already lost millions upon millions of bushels of wheat, corn and soybeans to the flooding that has already happened.  As I have repeatedly stressed, our planet is changing, weather patterns are becoming more severe, and even if they understood what is happening there is absolutely nothing that the radical environmentalists can do to stop it.

Just look at what is happening on the other side of the world.  Australia was just hit by a “severe category 3 cyclone”, and this came exactly one day after it was hit by a category 4 cyclone

A severe category 3 cyclone blew into the key mining region of Pilbara in Western Australia Sunday, forcing evacuations and a halt to port operations, as the north of the country dealt with the effects of an even more powerful storm that hit the previous day.

Cyclone Veronica weakened from a category 4 storm before its core winds hit the coast near the mining centre of Port Hedland, but officials warned the system was slow moving and would continue pounding the region with gale force winds and heavy rain for 24 to 48 hours.

We are witnessing things that we have never seen before, and “the new normal” is just going to keep getting stranger and stranger.

If you live anywhere in the middle portion of the country, please take this flooding very seriously.  Authorities are using apocalyptic language to describe this crisis, and they are not exaggerating the potential threat one bit.

Published:3/25/2019 10:00:30 AM
[Markets] Stocks skid Monday as growth worries outweigh Barr summary of Mueller report Stocks skid Monday as growth worries outweigh Barr summary of Mueller report Published:3/25/2019 9:33:54 AM
[Markets] Futures Movers: Oil futures edge lower as investors fret over a world-wide economic slowdown Oil futures fall on Monday amid persistent worries about a recessionary environment taking hold of major global economies and the potential effect contractions could have on energy demand.
Published:3/25/2019 9:33:54 AM
[Markets] US stocks open lower on concerns over global growth U.S. stocks edged lower in early trading Monday, extending losses from a broad sell-off last week, as new economic data stoked investors' worries over slowing global growth. Chipmaker Nvidia dropped 1.5 percent, UnitedHealth Group fell 1.5 percent and Halliburton gave up 1.7 percent. A sharp decline in bond yields last week also fueled the wave of selling. Published:3/25/2019 9:33:53 AM
[Markets] AAPL Breaks Below Key Technical Level As Yield Curve Inversion Accelerates

No dead cat bounce in stocks, or the yield curve, after Friday's flush.

Stocks are down from the open, erasing a small bounce into the open...


As AAPL loses its 200DMA ahead of its "Netflix-Killer" launch...


But the yield curve keeps collapsing...


Published:3/25/2019 9:33:53 AM
[Markets] Avocados recalled over listeria concern Avocados recalled over listeria concern Published:3/25/2019 9:00:47 AM
[Markets] Upgrade: The quiet desperation of Gen X workers across America “I was sitting in a grey cubicle 10 hours a day and still had little to show for it except a title and a stressful life,” one Gen Xer tells MarketWatch.
Published:3/25/2019 9:00:47 AM
[Markets] Wall Street opens lower as global growth fears persist (Reuters) - U.S. stocks opened lower on Monday, weighed by technology shares, as investors worried about global growth fears. The Dow Jones Industrial Average fell 11.60 points, or 0.05 percent, at the ... Published:3/25/2019 9:00:47 AM
[Markets] Here Comes The Selling: CTAs, Dealer Gamma Flip Short Today

For weeks, the market "inexplicably" continued to levitate even as investors relentless drained equity funds, a move which BofA said on Friday was "solely driven by corporate buybacks/derivative call buying/short-covering/ retail single stock buying." Well, all of that is now ending, especially with buybacks set to end for the next month now that the Q1 earnings blackout period is upon us. And following Friday's violent rout which sent the S&P back to 2,800, the trader calculus has changed drastically according to Nomura's Charlie McElligott (who is so far winning the quant feud with JPM's Marko Kolanovic).

Commenting on Friday’s “growth scare” spasm, the Nomura strategist says that it looks to have set-off widespread portfolio/strategy rebalancing, following the brutal global economic data (Euro PMIs contracting alongside US Manu/Services/Composite PMI “misses” as well) — and which then saw wholesale inversions throughout the US front-end as palpable “recession” risk was reintroduced to the “market-psyche."

This “acceleration towards the end-game” - which will eventually force the Fed to cut rates not by 25bps but unleash a 50bps easing bazooka - drove a powerful mean-reversion in Cross-Asset Risk Premia, as many crowded “YTD winners” saw large blasts of monetization / “size-down,” while “losers” were much more nuanced, specifically within US Equities, many shorts were pressed/grossed-up to hedge on the selloff, "although we did see a very-obvious “up in quality” defensive-type shift as well, with “Beta” (US Eq “Beta” factor L/S largest 1d drawdown since Brexit June 2016) and Small Caps (bottom-five worst 1d return in RTY since Brexit June 2016) “purged” vs a grab into “Low Vol” / Bond-Proxies.”

The bigger point, as McElligott recaps, Friday was not a simple “de-risking” trade in US Equities — but instead it was a wholesale portfolio rebalancing/rotation which saw "tremendous" thematic-/sector-/factor- performance-dispersion as follows:

  • US Equities “Beta” factor -4.4%, the largest one-day drawdown since 6/27/16 (post-Brexit vote)
  • US Eq “Volatility” factor -4.1%, the largest one-day drawdown since 10/24/18 and second-largest since Brexit
  • US Eq “PEG” factor (Growth) -2.1%, the third-largest one-day drawdown since 5/3/12, ‘bottom 5’ worst day since 2010
  • US Eq “Default Risk” factor -2.0%, the largest one-day drawdown since 1/22/19 and fourth-largest since 5/24/17
  • US Eq “Commodities” factor -2.1%, worst day of 2019
  • US Eq “Predicted LTG” factor (Growth) -1.7%, worst day of 2019
  • US Eq “Analyst Coverage” factor -2.0%, 2nd worst day of 2019
  • US Eq “Cash / Assets” factor (de facto “Growth vs Value”)  -1.8%, the third-worst day of 2019
  • US Eq “Volatility Adjusted Momentum” factor +1.6%, best day of 2019
  • US Eq “Dividend Payout” factor +1.7%, 2nd best day of 2019
  • US Eq “ROIC” factor (Quality) +0.9%, 2nd best day of 2019
  • US Eq “ROA” factor (Quality) +1.0%, 2nd best day of 2019
  • US Eq “Debt / Equity” factor four-day return (+2.1%) the largest since the four-session period ending 3/7/16

The rotation wasn’t restricted to just to US stocks, as we saw massive moves in Cross-Asset Risk-Premia on Friday as well, and which continued on Monday with Asia's biggest drop of 2019.

Making matters worse, many of the YTD gains for the active investing community were wiped out in just a few hours as Friday’s violence was particularly notable via powerful selloffs in 2019 YTD winner “Carry” strategies, with -2 to -3.5 z-score  drawdowns in Credit- and Currency- “Carry,” while not surprisingly,  Interest Rate Volatility “Carry” was hit the hardest in light of Friday’s blowout / reversal in the US Rates vol surface. At the same time, the 2019 YTD Cross-Asset Risk-Premia loser “Momentum” benefited from 1) the return of Vol and 2) the flattening / inversions in front-end curves.

Enough about what already happened: what traders wants to know is what happens next?

Here, the bigger problem is that many of the supports of the biggest rally to start the year since 1987 are rapidly falling away, with arguably the most important of these, the "long gamma" positioning by the dealer community - which as McElligott notes helped "pin" the market at 2,830-2,840 - now sharply reduced, with spot S&P nearing the point where dealers will flip "short gamma", and where selling will become the default mode of the market.

But wait, there's more: because just weeks after they were forced to turn bullish, Nomura's CTA model estimates that the Russell trend-followers will "flip short" by the end of the day, of course barring a large rally. Specifically, Russell 2000 CTAs, currently 50.4% long, will sell and flip to short under 1536.21 to get to -100% short; alternatively expect buying over 1578.57 to get max long.

This is due to the phenomenon Charlie has been discussing in the past two weeks w.r.t. the mechanical pulling higher of sell-triggers in conjunction with Friday’s selloff through said “sell” level.

For those curious - which would be most traders desperate for key buy/sell trigger levels - McElligott posts his latest cross-asset systemic trend "trigger" level breakdown, where the key highlight is that in the next few days we will see equities "sell triggers" keep pushing higher and closer to the declining spot level of the S&P.

  • S&P 500, currently 100% long, selling under 2777.31 to get to 50%, more selling under 2636.65 to get to -100% , flip to short under 2636.93, max short under 2636.65
  • NASDAQ 100, currently 100% long, selling under 7048.5 to get to 50%, more selling under 6677.31 to get to -100% , flip to short under 6678.05, max short under 6677.31
  • Euro Stoxx 50, currently 100% long, selling under 3175.37 to get to 50%, more selling under 3026.85 to get to -100% , flip to short under 3027.17, max short under 3026.85
  • HangSeng CH, currently -50% short, more selling under 11311.46 to get to -75%, max short under 11310.31, buying over 11712.02 to get to 100% , more buying over 11710.87 to get to 25% , flip to long over 11710.87, max long over 11710.87
  • USD_10Y, currently 100% long, selling under 121.32 to get to 28%, more selling under 118.8 to get to -100% , flip to short under 118.81, max short under 118.8
  • EUR_10Y, currently 100% long, selling under 160.82 to get to 28%, more selling under 156.67 to get to -100% , flip to short under 156.68, max short under 156.67
  • GBP_10Y, currently 100% long, selling under 122.37 to get to 28%, more selling under 119.56 to get to -100% , flip to short under 119.57, max short under 119.56
  • EUR_10Y, currently 100% long, selling under 160.82 to get to 28%, more selling under 156.67 to get to -100% , flip to short under 156.68, max short under 156.67
  • EURUSD, currently -100% short, buying over 1.1496 to get to -58%, more buying over 1.2671 to get to 41% , flip to long over 1.2671, max long over 1.2671
  • USDJPY, currently 16% long, more selling under 102.4307 to get to -41%, flip to short under 102.4307, max short under 102.4197, buying over 110.4216 to get to 58% , more buying over 110.4316 to get to 100% , max long over 110.4316
  • GBPUSD, currently -16% short, more buying over 1.4352 to get to 41%, flip to long over 1.4352, max long over 1.4354, selling under 1.2706 to get to -58% , more selling under 1.2705 to get to -100% , max short under 1.2705
  • AUDUSD, currently -100% short, buying over 0.7091 to get to -58%, more buying over 0.7694 to get to 41% , flip to long over 0.7694, max long over 0.7694
  • USDCNH, currently 16% long, more selling under 6.3912 to get to -41%, flip to short under 6.3912, max short under 6.3905, buying over 6.9267 to get to 58% , more buying over 6.9274 to get to 100% , max long over 6.9274
  • WTI, currently -13% short, more buying over 59.61 to get to 8%, flip to long over 59.61, max long over 68.32, selling under 57.4 to get to -30% , more selling under 57.39 to get to -46% , max short under 44.0
  • Gold, currently 23% long, more selling under 1261.94 to get to -3%, flip to short under 1261.94, max short under 1210.07, buying over 1327.8 to get to 40% , more buying over 1327.94 to get to 56% , max long over 1386.93
  • Copper, currently -46% short, more buying over 6319.94 to get to -11%, flip to long over 6320.57, max long over 6552.16, selling under 5960.89 to get to -73% , more selling under 5960.26 to get to -100% , max short under 5960.26

Finally, recall that last Thursday we posted "Battle Of The Quants: Kolanovic Counters McElligott With 6 Reasons Why It's Time To Buy." Considering that the very next day saw the second most brutal selloff of 2019 and one which if McElligott is right will continue for a while, it is safe to say that we will not see any updates from the JPM quant until the next major market uptick.


Published:3/25/2019 9:00:46 AM
[Markets] American says it cannot forecast cost of Boeing 737 Max grounding American says it cannot forecast cost of Boeing 737 Max grounding Published:3/25/2019 8:31:06 AM
[Markets] Economic Report: February hiring slump tugs down Chicago Fed’s national economic measure A much weaker-than-expected February hiring total, a potentially one-month surprise within a still-strong job market, soured the latest broad-based measure of the U.S. economy that’s issued each month by the Chicago Federal Reserve.
Published:3/25/2019 8:31:06 AM
[Markets] Trader Warns Yield Curve Inversion Confirms Fed's "Inadvertent Transmission Of A Sense Of Panic"

Via Bloomberg's Richard Breslow,

It isn’t all that meaningful to debate whether the inverted yield curve in the U.S. that occurred Friday will lead to a recession a year from now. Nothing is written in stone. Whether one comes to pass or not doesn’t validate nor negate the signal one way or the other.

The point is, it was a clear sign that investors perceive that there is trouble lurking now. And you need to trade accordingly. We aren’t talking about making a decision about investing in a new manufacturing facility or a share buyback. But whether it is better, here and now, to be looking to add to 10-year longs at 2.50% or fade the market against 2.40%.

It is a mistake to watch how the shape of the Treasury curve evolves and start parsing the U.S. data in isolation. Because if you do that, it is in fact reasonable to conclude that the market has probably overreacted. As has the Fed. If not in deed, in how they conveyed their message. They inadvertently transmitted a sense of panic, the assurances that the economy is in a “good place” notwithstanding.

[ZH: The market is now pricing an easier Fed in 2019 than ECB]

But it just isn’t possible to escape the fact that how the rest of the world is faring directly affects the U.S. economy and asset prices. Just how attractive U.S. assets and the dollar appear has to be judged through the prism of what are the global alternatives. Not to mention, where along the duration spectrum, the Treasury Department decides to finance the growing deficit.

The PMI data out of Europe really shook people up. The core country readings were horrid and sent bunds back below zero. They were the seminal data at the end of last week and had global repercussions, including for Treasuries and U.S. equities. Today’s IFO data from Germany seems to have lifted traders’ mood. It’s not a question of whether Germany was cured over the weekend. It’s of the need to just keep on reminding ourselves that these are markets that are excessively fickle. Which is another way of saying, it doesn’t take much to cause things to turn on a dime.

If you are watching 10-year Treasuries, the low in yield from the very beginning of the year is shaping up to be an enormous pivot level. It may seem far away, but really isn’t. If Friday’s move was real, you shouldn’t expect this level, circa 2.55%, to be breached. If bund traders conclude negative yields aren’t actually appropriate, we could easily see that Treasury pivot come into play. Overnight volumes in Treasury futures ran very high. There is a lot of interest at these levels. The market hasn’t been moving on air.

As far as equities are concerned, the S&P 500 traded conveniently down to and settled at its first major technical level at 2800.

It was instructive that I heard more people discuss how much further it can fall and still be “corrective.” Oddly fewer seemed to be arguing to take advantage of this “gift.” I can’t wait to see what will be written this evening.

Emerging-market currencies, gold, crude and the Dollar Index have all traded to meaningful technical levels. I won’t try to predict where everything will be at the end of the week. But it seems clear that when we close the books on the first quarter they won’t be here.

Published:3/25/2019 8:31:06 AM
[Markets] Archer Daniels blames winter weather for hit to first-quarter earnings Archer Daniels blames winter weather for hit to first-quarter earnings Published:3/25/2019 8:01:02 AM
[Markets] Jeff Reeves's Strength in Numbers: 5 biotech stocks that could be the next big winners Pick your spots based on either high-potential drug trials or the likelihood of an acquisition.
Published:3/25/2019 8:01:02 AM
[Markets] Rabobank: "No Reds Under Every Bed. No Putin On The Ritz"

Submitted by Michael Every of Rabobank

Unhappy Friday

What a Friday that was. German manufacturing slumped badly; global manufacturing followed; yields tumbled; 10-year Bunds went below zero again for the first time since 2016; the US yield curve inverted 3M-10Y and 1Y-5Y, which has a pretty flawless record of calling US recessions (our call for 2020 already, of course); and the Turkish Lira collapsed again. So join the dots. The global economy is in real trouble long before central banks have come up with a cure for the new normal. Bonds have been right all along and equities have been wrong (as is always the case in my experience). And the knee-jerk ‘sell USD trade’ after a dovish shift by the Fed looks as silly as it always was - because if the US is in trouble, then everyone else is in far deeper doo-doo. Think second-order and third-order effects, people, not first-order.

Mueller Lite

Then we got the news that the Mueller Report has been handed over to the US Attorney General...and that was that. No more indictments. No impeachment of Trump. No proof of collusion. No Reds under every bed. No Putin on the Ritz. Unless something else appears related to it, the whole Mueller affair was, in short, the nothing-burger I have kept calling it in the Daily since it first started - and hence it has no market impact. Yet it isn’t a nothing-burger. As Rolling Stone’s acerbic Matt Taibbi --no Trump fan he!!-- notes, this utter mis-selling of events by channels like CNN and MSNBC, as well as newspapers like The Guardian, means “Russiagate is this generation’s WMD times a million”, a reference to the scare-stories on Saddam Hussein’s “nukes” that led us to the 2003 Iraq War, and then to Iranian regional dominance and to ISIS, etc. In this case, the lasting damage is that after having screamed “Fake News!” and “Witch Hunt!” for nearly two years, President Trump can now Tweet “No Collusion. No Obstruction. Complete and Total EXONERATION. KEEP AMERICA GREAT!” and be legally correct. Which does nothing for the reputation of the media at a time when populism is not just knocking on the door, but is inviting itself in for tea and biscuits. On which front…

Moore is less

Far more significant, and of course overlooked by the same media rabidly obsessed with Russia and impeachment, was Trump announcing he will nominate Stephen Moore to join the Federal Reserve. This is an intellectual appointment on par with Larry Kudlow, not Janet Yellen. As one journalist reports it, the sequence of events ran allegedly like this: “Scoop on how this went down: At lunch last week, Kudlow showed Trump Stephen Moore’s op-ed in WSJ. Trump said: Why didn’t we make him Fed chair. Kudlow said you could name him to one of open seats. Trump said call him.”

Those who have seen my recent ‘The Age of Rage’ presentation, or suffered through the 17,500-word special report (which at a push can be folded into a panic room or bunker by those who know origami), will know that I raised the question of how markets would react if we got truly politicised central banks ahead under populism- for example, if Trump appointed son-in-law Kushner to the FOMC rather than making Middle-East peace. Just that scenario, but with Moore not Kushner, is now playing out. If Trump wins in 2020 —and with Mueller toothless why not?— then the next Fed is going to look a lot less “sound money” and a lot more “Mad money”. Except, of course, the irony is that the existing Fed has hardly covered itself in glory. It’s mountain of PhDs and experts failed to see the dot com bubble; blew a housing bubble; failed to see he GFC; failed to see QE would distort everything that matters; failed to see wages wouldn’t rise; failed to see they were raising rates when they didn’t need to; and are now finally right in moving towards cutting rates by accident not design. As such, would a Trumpy Fed actually do any worse? Clearly Moore is a further sign that monetary policy as we’ve known it is over and fiscal and monetary policy combined are going to be the way forward (as I argued back in 2017’s Heaven or Hell-icopters). In other words, shades of MMT - the modern monetary theory traditional economists like Paul “the Internet isn’t important/China isn’t important for world trade/I don’t know what endogenous money is” Krugman are scrambling to now pooh-pooh.

Is that threat negative for the USD? Yes. But it’s even worse for everyone else for many reasons - just ask Turkey. If things are so bad that we need to get that radical, the US will still be the place to be: and if everyone is heading for MMT then only a few currencies are going to be in international demand, topped by USD, as the unwritten rule of MMT is that it needs to sit alongside mercantilism and/or capital controls to work properly...and on that basis it’s not too many USD you need to worry about offshore, but too few. Potentially, Moore really is less.


Today is yet another day where even with this kind of backdrop we focus on Brexit yet again, as PM May fights off what the media is suggesting will be a palace coup to topple her, given that while she stays on and robotically refuses to budge on her Red Lines, Hard Brexit looms. Parliament can do what it wants, but it needs to find a compromise it can live with this week, and have May then agree to listen to it, or off the White Cliffs of Dover the UK goes. Yes, a million people (and not Jeremy Corbyn) just marched through London to say “not in my name”, but that will have as much effect as the same number of marchers did in 2003 over the Iraq War unless May goes: but will she? The latest news is her ministers are actually rallying round her. How very “Russian”.

Published:3/25/2019 8:01:02 AM
[Markets] Premarket Trading Mixed: Boeing, Apple Hoist Dow Jones Boeing climbed in otherwise weak premarket trading Monday, as markets awaited the Apple streaming launch and the Dow Jones industrials faced a monthly decline. Published:3/25/2019 8:01:02 AM
[Markets] Currencies: Dollar edges lower as currencies retrace Friday’s moves Many currencies, including the majors, are retracing last week’s movements on Monday, leading to little action in the U.S. dollar and euro, as well as a rebound from losses in emerging markets.
Published:3/25/2019 7:30:15 AM
[Markets] For The Average Investor, The Next Bear Market Will Likely Be The Last

Authored by Lance Roberts via,

Just recently Anna-Louise Jackson published an interesting article asking if “The Financial Crisis” still haunted your investing. To wit:

“This month marks the 10-year anniversary of the current bull market’s beginnings. Yet, many Americans remain reluctant to invest in the stock market, a scary hangover from the 2007-09 recession.

From October 2007 to March 2009, the S&P 500 plummeted nearly 57% and it took more than five years for the index to recover. But the share of Americans with money invested in the stock market still hasn’t returned to pre-recession levels, according to various studies.

In 2018, a Gallup Poll survey found 55% of respondents were invested in stocks or stock funds, either personally or jointly with a spouse, down from 65% in 2007. Among those younger than 35, the drop-off is especially pronounced: An average of 38% of the youngest Americans owned stocks from 2008 to 2018, down from 52% in the 2006-2007 period.”

The rest of the article is the typical pedestrian advice of accepting that bear markets happen, ride it out, and hope for the best. (Read this for why you shouldn’t.)

What Anna missed was the most crucial aspect of what is happening to the relationship between individuals and Wall Street.

The Loss Of “Trust”

A surprising number of Americans who have financial advisors don’t trust them to act in their best interests. In a 2016 poll by the American Association of Individual Investors (AAII)65% of respondents said they mistrust the financial services industry to some degree. In fact, only 2% of respondents claim to trust financial professionals “a lot,” while 15% say they trust them “a little.” 

It isn’t just the “Baby boomer” generation who have “lost trust,” but the up and coming millennial generation as well. 

Can you blame them? 

After two major bear markets, years of retirement savings goals were wiped out. More importantly, financial plans which depended on 6%, or more, in annual returns were decimated due to the time lost in getting to retirement goals. This isn’t just recently; this has been the case throughout history.

All those promises of “buy and hold” investing cranking out 7-8% average annual rates of return, every single year, have simply not happened. The chart below of real S&P 500 returns from 1965 to present with forward return projections, illustrates the problem. 

The forward projections are based on two assumptions:

  1. Current valuations which suggest weaker front loaded returns, and;

  2. Stocks remain in a longer-term trend of 7% average growth.

This is for example purposes only to show the issue of variable versus average rates of return.

In the example, while the market did indeed deliver 7% annualized rates of return, the years spent getting back to even following down years, corrections, and outright bear markets left investors well short of what Wall Street had promised them. (This is one of the fatal flaws in financial planning which is the use of “average” versus “variable” rates of return.) 

Compounding this problem has been years of Wall Street effectively “raping and pillaging” individuals for the benefit of their “institutional” clientèle. 

study by Lawrence Brown, Andrew Call, Michael Clement, and Nathan Sharp clearly showed the conflict of interest between their own self-interest and you. The study surveyed analysts from the major Wall Street firms to try and understand what went on behind closed doors when research reports were being put together. In an interviewwith the researchers, John Reeves and Llan Moscovitz wrote:

“Countless studies have shown that the forecasts and stock recommendations of sell-side analysts are of questionable value to investors. As it turns out, Wall Street sell-side analysts aren’t primarily interested in making accurate stock picks and earnings forecasts. Despite the attention lavished on their forecasts and recommendations, predictive accuracy just isn’t their main job.”

The chart below is from the survey conducted by the researchers which shows the main factors that play into analysts compensation.  It is quite clear that what analysts are “paid” to do is quite different than what retail investors “think” they do.

“Sharp and Call told us that ordinary investors, who may be relying on analysts’ stock recommendations to make decisions, need to know that accuracy in these areas is ‘not a priority.’ One analyst told the researchers:

‘The part to me that’s shocking about the industry is that I came into the industry thinking [success] would be based on how well my stock picks do. But a lot of it ends up being “What are your broker votes?”‘

A ‘broker vote’ is an internal process whereby clients of the sell-side analysts’ firms assess the value of their research and decide which firms’ services they wish to buy. This process is crucial to analysts because good broker votes result in revenue for their firm. One analyst noted that broker votes ‘directly impact my compensation and directly impact the compensation of my firm.’”

The question becomes then “If the retail client is not the focus of the firm then who is?” 

The survey table below clearly answers that question.

Not surprisingly you are at the bottom of the list. The incestuous relationship between companies, institutional clients, and Wall Street is the root cause of the loss of trust in the financial system. It is a closed loop which is portrayed to be a fair and functional system; however, in reality, it has become a “money grab” that has corrupted not only the system but the regulatory agencies that are supposed to oversee it.

But it isn’t just Wall Street’s fault.

You Are Part Of The Problem

While the “financial system” is very lucrative for Wall Street, as we discussed last week, it hasn’t been for Main Street. 

Most individuals desperately want to believe they are giving their life savings to someone they can trust, who knows more than they do, and will specifically look out for their best interest. 

As we have already established, the “advice” game isn’t really built that way. 

However, it isn’t all their fault. Clients also put their “financial advisors” into a precarious position of having to chase market returns or suffer career risk. 

I consistently meet with individuals who swear they are conservative about their investing. They don’t want to take any risk but want S&P 500 index returns. 

In other words, they want the impossible:

“All of the upside reward, but none of the downside risk.” 

This demand for performance, which requires an exceptional amount of investment risk, forces advisors to “cave to demands” rather than “do what is right” by their client. The risk to the advisor is that if they don’t acquiesce to the client’s demands, the client goes to another advisor who promises them the impossible.

It’s the same as going to a doctor who tells you to stop eating a pound of salt every day. Instead of doing what he says, you search out a “quack” who tells you it’s just fine. 

In both cases, in the short-term, it will seem as if the “quack” is right. In long-run, you will wind up paying a higher price than you ever imagined,.

You are responsible for keeping your greed in check.

“But if I had been conservative, I would have missed out on the bull market.” 

Not really. 

The chart below shows the nominal total return of stocks versus bonds. 

Since 2000, you could have owned a portfolio of bonds and virtually had the same performance as owning stocks without the volatility(Okay, bonds underperformed by $1, literally.)

What Can You Do?

Here are the core principles we use with every one of our clients.

  • Understanding that Investing is not a competition. There are no prizes for winning but there are severe penalties for losing.

  • Checking emotions at the door. You are generally better off doing the opposite of what you “feel” you should be doing.

  • Realizing the ONLY investments you can “buy and hold” are those that provide an income stream with a return of principal function.

  • Knowing that market valuations (except at extremes) are very poor market timing devices.

  • Understanding fundamentals and economics drive long term investment decisions – “Greed and Fear” drive short term trading.  Knowing what type of investor you are determines the basis of your strategy.

  • Knowing the difference: “Market timing” is impossible – managing exposure to risk is both logical and possible.

  • Investing is about discipline and patience. Lacking either one can be destructive to your investment goals.

  • Realizing there is no value in daily media commentary – turn off the television and save yourself the mental capital.

  • Investing is no different than gambling – both are “guesses” about future outcomes based on probabilities.  The winner is the one who knows when to “fold” and when to go “all in”.

  • Most importantly, realizing that NO investment strategy works all the time. The trick is knowing the difference between a bad investment strategy and one that is temporarily out of favor.

Unfortunately, most investors remain woefully behind their promised financial plans. Given current valuations, and the ongoing impact of “emotional decision making,” the outcome is not likely going to improve over the next decade or possibly two.

Markets are not cheap by any measure. If earnings growth continues to wane, economic growth slows, not to mention the impact of demographic trends, the bull market thesis will collapse as “expectations” collide with “reality.” This is not a dire prediction of doom and gloom, nor is it a “bearish” forecast. It is just a function of how the “math works over time.”

This time is “not different.” The only difference will be what triggers the next valuation reversion when it occurs.

For most, the next bear market will be their last. 

Published:3/25/2019 7:30:15 AM
[Markets] Need to Know: The D.C. news, and it's not Mueller, that could juice stocks Need to Know: The D.C. news, and it's not Mueller, that could juice stocks Published:3/25/2019 7:03:27 AM
[Markets] This startup seeks to identify water problems before they become crises Ketos raised $9 million in its latest funding round that it will use to grow a platform that aims to upgrade and improve the quality and safety of the water supply.
Published:3/25/2019 7:03:27 AM
[Markets] Dow Jones Futures Tilt Lower; Apple Streaming, Boeing In Focus Stock futures were flat to lower Monday morning. The Apple streaming service event is Monday. Don't expect the Boeing 737 Max to fly soon. Published:3/25/2019 7:03:27 AM
[Markets] Major Israeli Assault On Gaza Imminent As Netanyahu Cuts Short US Trip

A major Israeli assault on the Gaza Strip is considered imminent after an early Monday morning long-range rocket launch from the strip struck a house in central Israel.

The attack destroyed a residential home in Mishmeret, an agricultural town north of Tel Aviv, which reportedly left at least seven Israelis injured, including children, after the family was able to escape the flaming building. 

Destroyed residence in Mishmeret, Israel. Image source AP

Israeli TV images showed a badly damaged residential house which police said had also burst into flames as a result of the direct hit. Though Israeli's foreign ministry was quick to identify the launch as originating in Gaza, the Palestinian side had not confirmed the attack. 

Crucially, Israeli Prime Minister Benjamin Netanyahu quickly announced early Monday that he was immediately returning to Tel Aviv, cutting short his visit to the United States so he can “respond forcefully” to the rocket, according to The Wall Street Journal.

The WSJ also predicted that the rocket attack is likely to prompt "strong Israeli military retaliation" especially as it comes just two weeks ahead of Netanyahu's most high pressure reelection campaign of his career, and as the prime minister faces down indictments related to multiple corruption charges and a rising opposition. 

In a video message early Monday, Netanyahu said, "There has been a criminal attack on the State of Israel and we will respond forcefully." He added, "In a few hours I will meet with President Trump. I will return to Israel immediately afterward."

This further comes days after President Trump stated in a bombshell tweet that the US must formally recognize Israeli sovereignty over the Golan Heights, something Netanyahu expressed public gratitude for.

On Sunday Israel’s Minister of Foreign Affairs Yisrael Katz told Reuters that he expects Trump to formally sign an order recognizing such as early as Monday. 

Air raid sirens wailed in the Sharon area, northeast of Tel Aviv shortly after 5am, sending residents running for their bomb shelters. The attack that followed destroyed a residential home in the agricultural town of Mishmeret, over 80km north of Gaza, injuring seven people, including a six-month-old baby, children aged two and three, and a 12-year-old girl. Army reservists have now been called up— The Independent

Netanyahu is expected to send a tough message to Hamas in response to the rocket attack, but perhaps more importantly in front of his domestic base so near the election.

Chief among Netanyahu's rivals for the prime minister's seat, centrist ex-general Benny Gantz, has recently challenged Netanyahu on foreign policy, saying the right-wing leader has “bankrupted national security”.

Prior file photo, via Reuters

Monday's attack came less than two weeks after rockets were fired from Gaza toward Tel Aviv, resulting in a large-scale Israeli air attack on Gaza, after which Hamas leaders claimed the initial rocket launch was "accidental". 

With that prior incident, alongside increasingly violent clashes along the Israeli-Gaza border fence connected with ongoing "Great March of Return" protests, observors have noted the two sides appear to be hurtling toward another confrontation. 

Published:3/25/2019 7:03:27 AM
[Markets] AT&T and Viacom reach deal that will keep Comedy Central, MTV and other channels AT&T and Viacom reach deal that will keep Comedy Central, MTV and other channels Published:3/25/2019 6:37:29 AM
[Markets] Need to Know: Mueller aside, why stocks could be about to deliver explosive gains While it might not amount to “total exoneration,” as Donald Trump put it, it’s hard to argue that the Mueller report didn’t deliver a tidy little victory the president. But is it a victory for investors
Published:3/25/2019 6:37:29 AM
[Markets] Will Apple Unveil Its 'Netflix Killer' On Monday? Here's What To Expect

If Apple CEO Tim Cook was hoping to dominate the media spotlight on Monday for an Apple launch event that's expected to be nothing short of revolutionary, the he couldn't have picked a worse day: The release of AG Barr's summary of the Mueller report, as well as the ongoing Brexit drama, will vie for investors' attention - along with the beginning of another round of trade talks in Beijing (though we likely won't see any substantive leaks until later in the week).


Nevertheless, prominent Apple analyst Dan Ives, and many others, are saying that Monday's event could mark an inflection point for the company, as Cook is expected to finally unveil new services packages that could rival Amazon Prime and Netflix, marking Apple's heralded transition from a consumer tech into a bona fide services company.

Partly out of necessity, as sales of Apple's all-important iPhone, along with other products, have stagnated, Cook has been touting Apple's climbing services revenue during interviews and earnings calls.


Though details are still sketchy, Apple is expected to unveil a subscription news service (powered by the Wall Street Journal and Vox), a streaming video service, a subscription video game service, and its new credit-card business (a joint venture with America's favorite consumer bank, Goldman Sachs. The card will help users focus on 'financial wellness'). According to the Wall Street Journal, some Apple employees are calling the potential Apple TV streaming app a "Netflix Killer."


Courtesy of WSJ

Apple has already discussed offering discounts to users who subscribe to multiple services, and, according to Bloomberg, it might even launch a prime-like bundle combining all of its new offerings.

The result could be a 'revolutionary shift', Ives said.

"This is a pivotal shift for Apple and in our opinion the biggest strategic move since the iPhone was unveiled in 2007," said Dan Ives, an analyst at Wedbush Securities. "There is massive pressure on Cook and Apple to deliver on services, with streaming content a potential linchpin of growth."

Given Apple's base of 1.2 billion active devices, Ives believes the services could expand to 100 million subscribers within the next five years. This could translate into up to $10 billion in annual revenue.

"If Apple executes with minimal speed bumps and aggressively acquires content, given the company’s massive installed base and unmatched brand loyalty we believe reaching 100 million subscriptions in the medium term (3 to 5 years) is a realistic goal that could translate into a $7 billion to $10 billion annual revenue stream over time," Ives wrote in a recent note to investors.

In another interesting twist, Apple unveiled a slew of new products, including its long-anticipated new Apple airpods, with a press release published on its website last week, which only further underlines the company's commitment to services. With that in mind, here's a breakdown - courtesy of Bloomberg - of everything we know about the services that may (or may not) be introduced on Monday:

Apple Video:

  • The service will focus on original content, including TV shows and movies from producers such as Damien Chazelle, M. Night Shyamalan, and Oprah.
  • There are documentaries, such as "Elephant Queen," and animations, like “Wolfwalkers” by Oscar-nominated studio Cartoon Saloon, along with a re-imagining of the “Amazing Stories” from Steven Spielberg, and a drama starring Jennifer Aniston and Reese Witherspoon.
  • An important, unanswered question: Will the company keep its streaming creations exclusive to Apple devices, or release them on Android phones and other distribution channels?
  • Apple’s original content will begin rolling out toward the end of the year.
  • A major component will be a feature for tapping into bundles of content from providers like HBO, Starz, and Showtime -- similar to Amazon’s Channels offering.
  • Netflix and Hulu won’t be involved.
  • Apple has big ambitions for the service, and is hiring people with experience in promoting movies and TV shows for awards including the Emmys and Oscars.

Apple News:

  • This service will combine stories from newspapers, websites, and magazines into a new tab in the Apple News app on iPhones, iPads, and Macs.
  • Apple plans to charge about $10 a month.
  • The service will come as part of an upcoming iOS 12.2 software update, which will also include a redesigned icon and interface for the Apple News app.
  • The New York Times and The Washington Post are not part of the service, but The Wall Street Journal and Vox will participate.
  • Apple based the service on Texture, an app it acquired last year. Texture lets users subscribe to more than 200 magazines, and most of those will transfer to Apple’s new service. (Bloomberg Businessweek and Bloomberg Markets are currently part of Texture).

Goldman Partnership:

  • Apple and Goldman Sachs Group Inc. are working on a joint credit card tied to the iPhone and Apple Pay app.
  • Goldman CEO David Solomon is planning to attend Monday’s event, suggesting the partnership will either be announced or a deal is near.
  • Apple’s iOS 12.2 update will include a new Wallet app that lays the groundwork for the Goldman credit card.
  • The card will support a new virtual rewards and tracking system to encourage timely payments.

The event, Apple's third to be held at the Steve Jobs Theater in Cupertino since the venue opened two years ago, is expected to begin at 10 am PT (1 pm ET). Interested parties can watch it live on the company's livestream here.

Published:3/25/2019 6:37:29 AM
[Markets] Dow Jones Futures Try To Rebound; Apple Streaming, Boeing In Focus Stock futures reversed lower, signaling more selling. The Apple streaming service event is Monday. Don't expect the Boeing 737 Max to fly soon. Published:3/25/2019 5:59:35 AM
[Markets] May Offers Brexiteers A Deal: 'Back The Withdrawal Agreement, And I Will Resign'

The leading Brexiteers have made a lot of noise demanding that Prime Minister Theresa May should resign. But during a hastily organized Sunday summit at Chequers, the prime minister's country house, May forced them to acknowledge a simple, if unpalatable fact: That the Tories, having already failed to oust her in a no confidence vote, have no obvious alternative for deposing May. 

Yet, in a sign that exhaustion with the interminable Brexit nightmare is swiftly setting in, the Prime Minister has reportedly decided to offer the group, which includes Boris Johnson (who penned a weepy Telegraph op-ed lambasting May and calling for the PM to step down), Jacob Rees-Mogg, Iain Duncan-Smith, Steve Baker, David Davis (the former Brexit Secretary) and others, a marginally attractive deal: Back MV3 - that is, a third meaningful vote on the withdrawal agreement (remember, the last two were defeated by historic margins) - and May will commit to resigning.


Some might ask: Hasn't May already promised to resign? Yes, but not until some still-undetermined date before the next general election. But a bigger issue is that neither side has a whole lot of trust in the other. May has reportedly refused to serve up her own head until the vote has passed (for fear of an 11th-hour betrayal), while the ERG (the parliamentary group of roughly 70 conservative backbenchers) and DUP (the 10 MPs from Northern Ireland who have allied with the ERG in opposing May's deal) are hesitant to back the deal over concerns May might renege on her promise.

ITV's Robert Peston has more:

At this point, the backing of ERG leaders and the DUP might not even be enough to push the deal through. As Peston points out, the PM has alienated too many opposition MPs and loyalist remainers.

So, now that May has resisted yet another wave of pressure and communicated to her political antagonists that she isn't going anywhere - at least, not yet - what is next on her agenda? Well, on Monday, there will be an emergency cabinet meeting to consider possibly holding a series of indicative votes to see what type of plan MPs might actually support (second referendum? A 'softer' Brexit? Straight-up revoking Article 50 and pretending the whole Brexit nightmare never happened?)

But regardless of what the cabinet decides, a cross-party group of rebel backbenchers, led by Tory MP Sir Oliver Letwin, might very well force one anyway by seizing control of the Commons - and they might succeed, in a vote that's expected as soon as Monday evening.

However, the indicative vote plan has a major flaw (which is probably why it hasn't already been tried, at least not in earnest): Despite all of the squabbling and intraparty infighting, there has never been a credible alternative to the withdrawal agreement. Which is one reason why, as Peston ponted out, Johnson and the other hard-core Brexiteers might be preparing for "the mother of all u-turns": Possibly agreeing to back May's deal in exchange for her resignation and commitments involving the talks over the future trade deal, which would take place during the transition period.

Whatever happens, May is expected to address MPs in the Commons just after 3:30pm London Time (11:30 am ET), with votes on Brexit amendments expected to take place at 10 pm (6 pm ET), as the countdown until April 12 - the new Brexit Day - continues.

Published:3/25/2019 5:29:29 AM
[Markets] Market Snapshot: U.S. stock futures indicate fresh losses ahead for Wall Street U.S. stock futures eased on Monday, indicating investors remain jittery over the global economy and equities may struggle to recover from Friday’s sharp losses.
Published:3/25/2019 4:59:58 AM
[Markets] U.S. stock futures indicate fresh losses ahead for Wall Street U.S. stock futures eased on Monday, indicating investors remain jittery over the global economy and equities may struggle to recover from Friday’s sharp losses. Published:3/25/2019 4:59:58 AM
[Markets] Outside the Box: Why ‘facial discrimination’ against older workers is robbing millennials of valuable life skills Companies benefit when their ‘Modern Elders’ and younger workers learn from each other, writes Chip Conley.
Published:3/25/2019 4:29:37 AM
[Markets] Capitalism Saved Sweden

Authored by Michael Munger via The American Institute for Economic Research,

Josh Billings famously diagnosed a problem with beliefs:

"I honestly believe it is better to know nothing than to know what ain't so.”

I am astonished at how many students, and for that matter adults, in the U.S. honestly believe that the U.S. should model itself after Sweden because Sweden has shown that socialism works.

I will leave aside the question of whether the U.S. should try to “be like” Sweden; they are very different countries, with different histories and different institutions. But it is important to refute, using simple and widely available empirical evidence, the claim that Sweden is “socialist.” It is not. In fact, Sweden is one of the most robustly capitalist nations on earth.

By socialism, I mean a system that relies on state ownership and control of the means of production, state direction of production decisions, and direct state control of education and employment decisions of individuals. If one does not mean those things, then that would require a little more thinking about what “socialism” means. If by “socialism” you mean prosperity and rule of law, then you are confused.

There are several important issues to discuss, to understand the differences between capitalism and socialism.

First, ownership. Ownership solves the problem of the commons. In capitalism, ownership is (largely) private; under socialism, the state owns and controls the major productive resources of the society. It is sometimes noted that private ownership has a “short time horizon,” as owners focus on profits. But in fact private ownership tends toward valuing the future, because investment now can earn profits in the future.

In fact, it is political incentives that force a short-run perspective. If we are talking about “democratic socialism” (few socialists actually favor Stalinism), then the time horizon of officials does not extend beyond the next election. In the U.S., that means that there is a two-year window, and that is in November of even-numbered years, before every member of the House of Representatives has to stand for reelection. As Marian Tupy wrote:

Historically speaking, environmental damage emanating from socialist production was vastly greater than environmental damage emanating from capitalist production. All and I repeat all academic studies done in the aftermath of the collapse of the Soviet empire found the quality of the environment in the formerly socialist countries to be inferior to those in capitalist countries.

Private ownership provides better information about future values, and better incentives to value the future, than democratic socialism.

Second, opportunity costs. Using prices gives useful signals about relative scarcity, and incentives for decentralized, emergent, but highly organized individual action. A socialist system sets prices, rather than allowing prices to adjust to reflect the dynamics of fast-moving events.

The problem seems like a narrow technical obstacle, but in fact it is fundamental. Top-down social planning is not just difficult; it’s literally impossible. No individual or group can collect enough information quickly enough, and design incentives persuasive enough, to solve the problem, at scale. And by “scale” I mean somewhere around 10,000 total individuals. Clearly, it is possible to organize groups smaller than that using “command” networks, because (as R.H. Coase pointed outin 1937) that’s why there are firms embedded in markets.

For large groups, where individuals operate independently, the knowledge possessed by one person is not communicated to other individuals. That means (as I argued in this video) that the opportunity costs of resources are not represented in the decision process of participants. More simply, you do one thing when you should do something else; I use one resource when I should share or send that resource to someone else who needs it more.

Socialism operates without prices, either because the state is one big firm, with no mechanism for communicating opportunity costs internally, or because the democratic process determines what prices “should” be based on voting, rather than the reconciliation of diverse plans and purposes achieved by market processes.

Third, coercion. Without prices, we must either rely on desires of individual dictators, or state control expressed through majority rule. Without prices in the form of salaries, there is no way to direct people toward job shortages except coercive force. That means that when there is a shortage of one kind of worker, especially in an occupation where there is little social prestige or intrinsic benefit, the state must use the threat of violence to induce people to work.

And where there is a surplus of another kind of worker, especially in an occupation with lots of social prestige and great intrinsic benefits, the state must ration available positions by setting up some kind of wasteful rent-seeking contest. More simply, the only way to get sanitation workers in a socialist system is conscription; the only way to select among the many applicants for teaching positions is to use excessive educational licensing, or favoritism by the authorities.

How do market systems solve this problem? By adjusting the prices we call “wages.” In some cases, that means garbage collectors make more than teachers. Is that “fair”? In a market system, the wages that send signals to people choosing careers are means of directing people voluntarily, rather than coercively. Ideas about how much people “should” make, based on political preferences, are simply disconnected from the economic problem of occupational choice. Socialist systems must, by definition, direct workers into occupations they would not choose voluntarily.

Scandinavia: A World Center of Capitalism

Now that I have discussed the differences between capitalism and socialism, let’s consider the question I started out with: is Sweden socialist? I often participate in debates on capitalism vs. socialism, and students often give Sweden as an example of how socialism “works.” Well, yes, Sweden works, that’s true. But it works because it is one of the most capitalist nations in the world! It became capitalist after trying socialism, and reaching the (correct) conclusion that socialism just doesn’t work.

If you think Sweden is socialist, then you know something that just ain’t so. As has been documented repeatedly by popular treatments and more scholarly discussions, any use of the actual measures of economic freedom that constitute capitalism show Sweden is solidly in the camp of fully market-oriented economies. As Andreas Bergh points out in his 2016 book, Sweden and the Revival of the Capitalist Welfare State, it is inconceivable to think of the Sweden of the current decade as being anything other than a capitalist, and in fact libertarian, country.

It is fair to say that Sweden was socialist, at least in terms of temperament and the direction of public policy. In 1975, Sweden’s state owned well over half of the productive resources in the country, and directed prices in much of the rest. It subsidized debt, in part paradoxically by having enormously high tax rates with generous deductions for borrowers. Its attempts at “Keynesian” policy interventions were clumsy, were mistimed, and created disastrous uncertainty in investment returns even in the portions of the economy that were still market-oriented.

The state taxed successful industries heavily, and used the proceeds to subsidize industries that were inefficient, corrupt, and failing. This meant that interest rates on capital were prohibitive, especially when you tack on double-digit inflation.

To protect workers, the state required that wages could not be cut, and also enforced a panoply of restrictions on firing, layoffs, and other means of adjusting hours. Swedish products shot up in price, and the government was forced into a series of devaluations of the krona that made purchases of imported products beyond the reach of much of the middle class.

The electorate took a dim view of all of this. The tax system was a Rube Goldberg mechanism, with a level of complexity and arbitrary favoritism that encouraged distortion of investment into whatever happened to be taxed less, rather than whatever might produce useful products. Gunnar Myrdal, hardly a conservative, famously asked in 1978 whether Swedes “had turned into a people of swindlers.”

Fortunately for its citizens, but unfortunately for those who think Sweden is still socialist, the Swedish government, more or less by universal consensus, turned sharply back toward capitalism beginning in about 1995. It deregulated domestic industry, privatized its education and pension systems, and opened the economy to international trade and competition. The reason it did this is precisely because capitalism, wherever it is practiced seriously in a system with rule of law and protection for property rights, always creates prosperity.

As Harvard’s Torben Iversen put it, in his book Capitalism, Democracy, and Welfare:

Labor-intensive, low-productivity jobs do not thrive in the context of high social protection and intensive labor-market regulation, and without international trade countries cannot specialize in high value-added services. Lack of international trade and competition, therefore, not the growth of these, is the cause of current employment problems in high protection countries. (p. 74)

At present, Sweden is the 19th most capitalist country in the world, measured based on property rights, trade openness, and freedom to use stock to create new corporations. In fact, Sweden is in the top 15 most capitalist nations in terms of property rights, financial freedom, and business freedom. Most sectors are largely unregulated, and the freedom to move capital makes Sweden among the most capitalist nations in the world.

As the figure below shows, this change was sharp, and intentional. Between 1999 and 2001, Sweden deregulated most of its economy, sold off most of its dinosaur-slow state-owned enterprises, and converted substantial parts of its welfare commitments into private systems.

(Generated from the 2019 Heritage Foundation Index of Economic Freedom)

As a result, at present Sweden is the 6th most protective of private property rights, of all the nations in the world. By comparison, the U.S. is 25th most protective, our Fifth Amendment notwithstanding. If a nation has powerful protections for private property, even if the ownership protected is of the means of production, that is not socialism, no matter what you think you know.

  • Sweden fully privatized its pension system, moving from “defined benefit” to “defined contribution.” Yes, there is a means-tested add-on guaranteed pension top-up for the least well off, but the first-line system is personal pension accounts, invested in one of 700 private index funds, managed by private fund managers. It is the most privatized pension system, by far, in all of Europe.

  • Sweden has a 100 percent universal voucher system for education. There are questions about whether Sweden’s educational system works as well as it should, but it is one of the most private (and not socialist) education systems in the world.

Sweden is not alone in rejecting socialism and embracing capitalism. If you look at the general trend in the countries of Northern Europe, it has become much more capitalist in the past 25 years, after its own failed experiments with socialism. In particular, on the measures I have discussed, Denmark, Finland, and Norway are all three even more capitalist than Sweden.

You may recall that in 2016 a number of Bernie Sanders supporters held up Denmark as the example of the kind of “socialism” they envisioned for the U.S. Speaking at Harvard's Kennedy School, Denmark’s prime minister (Lars Løkke Rasmussen) told students “[I have] absolutely no wish to interfere in the presidential debate in the US” but politely told them that what they thought they knew about Denmark just ain’t so:

I know that some people in the US associate the Nordic model with some sort of socialism. Therefore I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy…. The Nordic model is an expanded welfare state which provides a high level of security for its citizens, but it is also a successful market economy with much freedom to pursue your dreams and live your life as you wish.

In terms of deregulation of business freedoms, measured in the Fraser Institute’s “Index of Economic Freedom,” Denmark, Finland, and Norway are the 7th, 8th, and 9th most free; Sweden is 12th.

The U.S.? It is 15th. The U.S. is rapidly regulating new industries, and further restricting old ones, at the state level in particular. The expansion of professional “licensing” rules, supposedly for the benefit of consumers but in fact in support of organized corporate interests, is making the U.S. less capitalist every day.

My own view is that the U.S. still has strong institutions of its own, and that we simply need to restore business and investor confidence in our economy. But those of you who prefer the Swedish system, where robust capitalism is used to create prosperity and then redistribution is used to support welfare programs, are entitled to those beliefs.

Just please, please don’t call Sweden “socialist.” ’Cause it ain’t so.

Published:3/25/2019 4:00:27 AM
[Markets] Global Stocks Slump on Growth Concerns; US Treasury Yield Curve Remains Inverted Global stocks retreat on growth concerns as bond markets continue to suggest near-term recession in the world's biggest economy and manufacturing data hits multi-year lows. U.S. Treasury curve remains inverted between 3-month bills and 10-year notes after tipping for the first time since 2007 last week, although Chicago Fed President Evans plays down the implications for near-term recession. US equity sentiment gets a modest boost from Muller report conclusions, which suggest there was no Russian collusion with the Trump campaign during the 2016 election, even as many questions regarding the probe remain unanswered.. Published:3/25/2019 3:29:46 AM
[Markets] Top-Secret UK Ops In Yemen Exposed; Several Operators Wounded While 'Advising' Saudis

At least five British Special Forces commandos have been wounded in a series of gun battles over the last several months as part of a top-secret UK military campaign in Yemen, according to the Daily Mail

The elite Special Boat Service (SBS) troops, whose presence in the war-ravaged country is shrouded in secrecy, suffered gunshot injuries in fierce clashes with Iranian-backed rebel militia in recent months.

The SBS men were treated for leg and arm wounds following the battles in the Sa’dah area of northern Yemen, where up to 30 crack British troops are based. The casualties are understood to be now recovering in the UK. -Daily Mail

The UK's involvement in the Saudi-Yemen conflict has shocked Brits, as the four-year war between US-backed Saudis and Iran-backed Yemen has triggered the world's largest humanitarian crisis, while an estimated 10,000 people have been killed in battle. Some Yemeni reporters and regional humanitarian organizations have suggested the actual figure is closer to 70,000.

Also revealed by The Mail is that Royal Air Force (RAF) engineers sent to Saudi Arabia to repair the kingdom's fleet of military aircraft were almost killed in a 'suicide drone' strike on the King Khalid air base, where Tornado jets used to bomb civilians in Yemen are housed. The drone reportedly exploded on the runway, destroying two Tornados, however the Ministry of Defense said no UK personnel were wounded. 

In response to the revelations, former Minister Andrew Mitchell said last night the UK was ‘shamefully complicit’ in Saudi Arabia’s role in Yemen. He called on the Government to provide further explanations to Parliament about the role of the British troops. -Daily Mail

"The guys are fighting in inhospitable desert and mountainous terrain against highly committed and well-equipped Houthi rebels. The SBS’s role is mainly training and mentoring but on occasions they have found themselves in firefights and some British troops have been shot," an SBS source told the Mail. "In a contact a few weeks ago, a SBS guy was shot in the hand and another guy was shot in the leg. Their injuries were a reminder that this is a very dangerous assignment. Obviously nothing about the mission will be confirmed publicly by the Ministry of Defence unless a UK soldier is killed – they’d have to announce that.

Brits and US are aligned with jihadis who use child soldiers. 

The conflict has also seen British Special Forces fighting on the same side as jihadis and militia which use child soldiers. This is because Saudi Arabia and the United Arab Emirates, its main partner in the war, have bribed Yemeni tribal leaders with links to Al Qaeda to take their side in the conflict. -Daily Mail

"It’s not just the odd youth either – child soldiers can make up to 40 per cent of the manpower in these militia units. In spite of their disadvantages, the militia do most of the fighting in Yemen because the Saudi soldiers don’t want to leave their air-conditioned camps," said a former British serviceman who returned earlier this year from Yemen. "These militia follow an Islamic fundamentalist agenda. The tribal leaders accept payments from the Saudis and the UAE in return for youths aged 13 and 14 to bolster the front line. They are poorly armed and have no body armour. So they get picked off by the Iranian-backed rebels."

All about the benjamins

While the Pentagon threatened last August to cut off support to Saudi Arabia over civilian casualties, in September, we reported that Secretary of State Mike Pompeo argued that US support for the Saudi coalition bombing campaign should continue. Per theWSJ

Most of the State Department’s military and area specialists urged Mr. Pompeo in the memo to reject certification “due to a lack of progress on mitigating civilian casualties.”

But what ultimately tipped to scales in favor of continued support? Money, of course. 

The only group that urged him to fully support the Saudi-led coalition was the Bureau of Legislative Affairs, which argued in the memo that “lack of certification will negatively impact pending arms transfers.”

The State Department’s legislative team said “failure to certify may also negatively impact future foreign military sales and direct commercial sales to the region.”

Thus the Raytheon sale of 120,000 precision-guided missiles to Saudi Arabia and the United Arab Emirates — a deal said to be worth over $2 billion  appears the ultimate decider here

In August, the Saudi-US coalition in Yemen attacked a bus full of children and civilians, which as NPR reported at the time - was just one of a long litany of instances of the coalition "causing disproportionate civilian deaths in the Yemen conflict because of airstrikes that have hit markets, weddings and even a bus carrying children from summer camp." The Red Cross identified 40 children dead from that first major bus attack in Yemen's north on August 9th. 

All of this will provide anti-war 2020 Democratic candidate Tulsi Gabbard with plenty of ammunition to appeal to Trump voters who wanted an anti-interventionist. 

Published:3/25/2019 3:29:46 AM
[Markets] Decentralize The French State

Authored by Jose Nino via The Mises Institute,

With the gilets jaunes (yellow vests) protests raging for more than three months, the European Union’s viability as a political entity has come into question.

Indeed, the EU has gone through a whirlwind of economic and political upheavals since the eurozone crisis of 2009. In 2016, the EU experienced a political earthquake when the Brexit referendum occurred, and British voters decided that it was time for the UK to leave the EU.

To a certain extent, the Brexit vote was a manifestation of British populism. Now, the French populists have made themselves known in the form of the yellow vest movement.

But what are the implications of this?

France’s Out-of-Control Leviathan

France is not exactly in the best economic shape. The unemployment rate has hovered around nine to ten percent during the past decade. The cost of living has risen considerably thanks to government regulations. So, Macron’s failed gas tax proposal, which would have hurt the working class pretty hard, only exacerbates France’s sub-optimal economic situation.

And this is only the tip iceberg as far as France’s over-burdened economy goes.

Research from the Institut Économique Molinari found that the tax burden “typical workers” in France face is higher than any of its European counterparts. Fiscal restraint has not been France’s strong suit with government spending accounting for 56 percent of GDP. On the regulatory front, France is a mess. Its Code du Travail, a 1,600 page, 10,000-article legislative monstrosity, has greatly hamstrung its labor market. According to the Heritage Foundation’s 2019 Index of Economic Freedom, France’s Labor Freedom score places it very close to the “repressed” category.

In a cruel twist of irony, France has reverted back to its monarchical political economy, dominated by an interventionist state that heavily regulates, subsidizes, and controls certain sectors of the economy.

Sadly, many of the yellow vest protestors have not comprehended the 800-pound elephant in the room that is French statism.

Could Flawed Ideology Derail the Yellow Vest Movement?

Claudio Grass noted how the yellow vests protestors have “no unified or homogenous political beliefs, party affiliations or ideological motivation.” In fact, some of their demands are quite contradictory and reek of statism. When we take a look at the yellow vests’ demands, they are all over the place. From tax cuts for the working class, to rent control and an increased minimum wage, this movement is the embodiment of ideological incoherency.

However, the yellow vests are not necxessarily doomed as there’s always a silver lining in political crises such as these.

The Decentralization Silver Lining

The yellow vest movement does present a golden opportunity to position the ideas of decentralization.

In other words, this movement should first pivot to a “Frexit” of sorts that emphasizes a withdrawal from the EU. But like Brexit, France shouldn’t stop with just leaving the EU. As Philip Booth pointed out with the UK, most European countries like Britain and France still have work to do in liberalizing their economies.

Convincing millions of Frenchmen to arrive at some kind of political consensus that favors free markets is still a tall order in the current intellectual climate of interventionism. Instead of getting caught up in the ideological intricacies of promoting drastic changes to the French political economy, there should be a focus on more radical forms of decentralization.

Proposals that include the decentralization of the welfare state should obviously be on the table. But why stop there? The French should listen to the separatist movements taking place in regions like Brittany and French Catalonia and let them break away. The more competing jurisdictions within France, the better it is for human freedom and innovation.

The 20th century was one of hyper-centralization and government encroachment in all aspects of human life. France can break free from this cycle of centralization by carrying out its own Frexit and then facilitating breakaway movements within its traditional nation-state boundaries.

The 21st century need not repeat the errors of the 20 th century. France can lead the charge by buckinguniversalist political wisdom and fully embracing separatism.

Published:3/25/2019 2:32:25 AM
[Markets] Children Make Perfect Propaganda Props

Need to push through a propaganda campaign to utterly transform society?

Want people to not only accept but actively embrace their own impoverishment?

Well just get yourself some youthful true believers to do your propagandizing for you!

Source: The Strategic Culture Foundation

Published:3/25/2019 2:03:24 AM
[Markets] The "American Party" Within The Institutions Of The European Union

Authored by Manlio Dinucci via The Voltaire Network,

The European Parliament has just adopted a resolution which requires that the Union stop considering Russia as a strategic partner, but rather as an enemy of humanity. At the same time, the Commission sent a warning about the Chinese threat. Everything is unfolding as if the United States were manœuvering the Union into playing a part in their own supremacist strategy.

« Russia can no longer be considered as a strategic partner, and the European Union must be ready to impose further sanctions if it continues to violate international law » - this is the resolution approved by the European Parliament on 12 Mars with 402 votes for, 163 against, and 89 abstentions. The resolution, presented by Latvian parliamentarian Sandra Kalniete, denies above all any legitimacy for the Presidential elections in Russia, qualifying them as « non-democratic », and therefore presenting President Putin as a usurper.

She accuses Russia not only of « violation of the territorial integrity of Ukraine and Georgia », but also the « intervention in Syria and interference in countries such as Libya », and, in Europe, of « interference intended to influence elections and increase tensions ». She accuses Russia of « violation of the arms control agreements », and shackles it with the responsibility of having buried the INF Treaty. Besides this, she accuses Russia of « important violations of human rights in Russia, including torture and extra-judicial executions », and « assassinations perpetrated by Russian Intelligence agents by means of chemical weapons on European soil ».

After these and other accusations, the European Parliament declared that Nord Stream 2 – the gas pipeline designed to double the supply of Russian gas to Germany across the Baltic Sea - « increases European dependence on Russian gas, threatens the European interior market and its strategic interests […] and must therefore be ended ».

The resolution of the European Parliament is a faithful repetition, not only in its content but even in its wording, of the accusations that the USA and NATO aim at Russia, and more importantly, it faithfully parrots their demand to block Nord Stream 2 – the object of Washington’s strategy, aimed at reducing the supply of Russian energy to the European Union, in order to replace them with supplies coming from the United States, or at least, from US companies. In the same context, certain communications were addressed by the European Commission to those of its members, including Italy, who harboured the intention to join the Chinese initiative of the New Silk Road. The Commission alleges that China is a partner but also an economic competitor and, what is of capital importance, « a systemic rival which promotes alternative forms of governance », in other words alternative models of governance which so far have been dominated by the Western powers.

The Commission warns that above all, it is necessary to « safeguard the critical digital infrastructures from the potentially serious threats to security » posed by the 5G networks furnished by Chinese companies like Huawei, and banned by the United States. The European Commission faithfully echoes the US warning to its allies. The Supreme Allied Commander in Europe, US General Scaparrotti, specified that these fifth generation ultra-rapid mobile networks will play an increasingly important role in the war-making capacities of NATO – consequently no « amateurism » by the allies will be allowed.

All this confirms the influence brought to bear by the « American Party », a powerful transversal camp which is orienting the policies of the EU along the strategic lines of the USA and NATO.

By creating the false image of a dangerous Russia and China, the institutions of the European Union are preparing public opinion to accept what the United States are now preparing for the « defence » of Europe. The United States - declared a Pentagon spokesperson on CNN – are getting ready to test ground-based ballistic missiles (forbidden by the INF Treaty buried by Washington), that is to say new Euromissiles which will once again make Europe the base and at the same time, the target of a nuclear war.

Published:3/25/2019 1:02:44 AM
[Markets] Hunt For Blue November: Democrats Would Sooner Destroy America Than Lose To Trump In 2020

Authored by Robert Bridge via The Strategic Culture Foundation,

With the likelihood of a Democratic candidate ousting Trump in 2020 looking like mission impossible, the party is resorting to a number of desperate and even dangerous tactics to steal as many voters as possible.

Perhaps the best way to gauge the desperation that has overrun the Democratic camp like kudzu in June is the frenzy that has greeted the arrival of Beto O’Rourke, the former lawmaker who recently announced his candidacy for the 2020 election. If the Liberals believed in God, their response to Beto’s arrival would rank up there with the Second Coming of Christ himself, entering stage left on a skateboard, hair trailing behind with a hint of hope and gunge polluting the air.

Perhaps in other less delusional periods of American history, Beto the marionette, who gesticulates as if his strings were being yanked by an epileptic after a tasing, would be seen for what he is. Exactly what that might be is hard to nail down, but it is certainly not presidential material. Yet the fact that so many Democrats and media have worked themselves into collective hysteria over this guy, whose most notable career moves to date are marrying an heiress, writing exceptionally bad poetry and losing to Ted Cruz in the Texas Senate race, speaks volumes as to how shallow the Democratic bench is, where a host of other unlikely players include Elizabeth ‘Pocohantas’ Warren and Bernie ‘the multi-millionaire Socialist’ Sanders. Then there is Joe Biden, 76, who didn’t need a leaker to spill the beans on his apparent intentions to run. He did it quite nicely all by himself. But one needn't focus on the Lefts dismal presidential choices; there are many other places to find examples of Democratic decline and degeneration. 

The Hunt for Blue November

If ever there was a perfect symbol of the political schizophrenia dividing the nation straight down its frontal lobe, it’s the yet-to-be-built wall on the Mexico border.

For law and order Republicans, the image of illegal immigrants gate-crashing America’s border is noxious to every tenet of conservative thinking, which has little patience for freeloaders, line cutters and ultra-violent criminals. Ironically, Democrats once-upon-a-time also looked upon the arrival of undocumented immigrants with an equal amount of wariness and alarm, until they realized that the invasion translated nicely into future voters. Then, concerns about a criminal element overrunning the country vanished as Republicans were labeled the racists and fear mongers for having the audacity to defend the border. Now there is even talk among Democrats to give these illegals Social Security!

Now that Trump has declared a national emergency and the Pentagon has found the pocket change to plug the border leak, the Democrats have plumbed the democratic depths for new ways to win over voters. And since they have no platform to speak of, aside from Trump bashing, they must resort to unsavory methods. One creative method for robbing the ballot involves ‘robbing the cradle,’ that is, reducing the voting age from 18 to 16 years old. Yes, allow adolescents who are too young to legally drink alcohol, buy smokes and fight in wars to participate in such discussions. Sounds like a genius plan. Although the measure was defeated in the House it shows which way the political winds are blowing. The Democrats understand that the minds of the youth, thanks to the liberal indoctrination they’ve been receiving gratuitously at public schools across the nation, have been for all intent and purposes “captured,” as Nancy Pelosi nicely described it.

Another effort to capture voters involves a direct attack on the one document Democrats seem to loathe the most, the Constitution, and specifically the 12th Amendment, which mandates that the Electoral College determines the outcome of presidential elections. Their desire to change the structure of the process is understandable since both former Vice President Al Gore and former Secretary of State Hillary Clinton both lost presidential elections despite having won the popular vote.

The Democrats wish to ignore the purpose of the Electoral College, which the Founding Fathers instituted as a means to prevent the country from being overrun by ‘mob rule,’ which it has successfully accomplished since first being implemented in the 1804 election. Without the system in place, the so-called ‘fly-over states’ would disappear from the political radar, while all of the attention would fall on the large urban areas and heavily populated states. Regardless of these considerations, which date back to ancient times and the Greeks, who understood a thing or two about mob rule and tyranny, the Democrats have endorsed the so-called National Popular Vote Compact, which has already been signed by 12 states and the District of Columbia, representing 181 Electoral College electors.

Some may argue on this point that the Supreme Court, especially considering its increasing conservative slant, would never allow such a motion to slide. Well, the Liberals have a plan to circumvent that little irritant as well. They will simply pack the Supreme Court with more justices. In other words, mob rule. Problem solved.

“The Kavanaugh court is a partisan operation, and democracy simply cannot function when stolen courts operate as political shills,” Brian Fallon, director of Demand Justice and a former Hillary Clinton press secretary, told Politico.

“We are thrilled to… undo the politicization of the judiciary.”

Especially when that ‘politicization’ does not favor the left.

And here is where the whole notion of ‘mob rule’ stands out in stark contrast with the original intentions of Americas Founders. Despite their purported concern about foreign entities, namely Russia, tarnishing the squeaky clean US political machine, the Democrats are totally fine with illegal aliens participating in the election process. Nothing speaks ‘mob rule’ more than that decision, which shows exactly how far the Democrats are willing to subvert the political process, not to mention the rule of law, in order to extend their cultural and political control over the country. These unhinged efforts, which have absolutely nothing in common with democratic principles, must be stopped for the sake of the Republic.

Published:3/24/2019 10:57:55 PM
[Markets] San Francisco's 'Super Rich' Dominate A Widening US Wealth Divide

San Francisco is one of the few places in America where software engineers who earn hundreds of thousands of dollars a year routinely suffer the indignity of accidentally stepping in a steaming pile of human feces as they exit their crappy, overpriced one-bedroom apartments in the Mission District to grab a $20 burrito and $10 latte. That's part of SF's charm. After all, there's a reason it is, by some measures, the most unaffordable major city in the country.


And while the gap between the middle class and the wealthy is widening in pretty much every American city, San Francisco's 'super rich' tech industry elite continue to lead the way. According to Bloomberg, the gap between the city's 'super rich' and 'middle class' (whatever that means in San Francisco) widened in 2017 by $118,000 to $529,500. On average, the city's top 5% of earners earned $623,310 in 2017, compared with $102,785 for its middle class.

Across the US, the gap increased by nearly 50% between 2012 and 2017, widening from $268,000 to $333,000, per the BBG analysis.

Super Rich

Of course, SF wasn't the only city where the gap between the rich and middle-class widened. Of the 100 cities analyzed by BBG, only 1 - Jackson, Mississippi - saw the gulf shrink, thanks to shrinking average income among the top 5%.

In a testament to the city's dominance as a posterchild for economic inequality, even when the parameters are adjusted slightly to account for a larger number of people in the 'wealthy' category and the bottom rung of the city's economic ladder. In this, the gap between the wealthiest 20% and the poorest 20%, San Francisco still takes the No. 1 spot, with the income disparity widening by $79,600 to $339,900 in 2017. San Jose, Seattle, New York and San Diego rounded out the ranking's top 5.


In another BBG analysis measuring the income disparities within the middle class (which BBG defines as the difference between households in the 30th percentile vs households in the 80th percentile), SF and neighboring San Jose took the top two spots.


And with the cost of living surging across California, it's hardly surprising that the state has seen the largest net loss of residents as frustrated Californians seek more affordable climes like Nevada and Texas. And many of those who haven't left wish they could.

Published:3/24/2019 10:28:14 PM
[Markets] Asia Markets: Asian markets plunge on recession fears Asian markets plummeted in early trading Monday, amid heightened recession worries.
Published:3/24/2019 9:58:20 PM
[Markets] Are We Already In The Matrix?

Authored by Riz Virk via,


Note: This is one in a series of articles for the 20th anniversary of the release of The Matrix, and the release of my new book, ; The Simulation Hypothesis: An MIT Computer Scientist Shows Why AI, Quantum Physics, and Eastern Mystics All Agree We Are In a Video Game. Here, I’ll review some of the scientific reasons why this may be the case. A version of this article was originally published on

From Science Fiction to Science

This year on March 31 marks the 20th anniversary of the release of the groundbreaking film, The Matrix and the release of my new book, The Simulation HypothesisThe Matrix was influential in many ways?—?the incredible special effects, the no holds barred action, etc. Like Star Warsbefore it, it has gone on to become a cultural phenomenon that extends well beyond the film itself. This is partly because of its philosophy; The Matrix is perhaps the most popular incarnation of what we now call “the simulation hypothesis”?—?which is the idea that we are all living in a giant shared online video game.

Admittedly, the idea sounds like science fiction. The creators of the Matrix, the Wachowskis, claimed to have been influenced by the work of Philip K. Dick, among others. The many adaptations of Dick’s work are well known, including Blade Runner, Total Recall, the Man in the High Castle, the Adjustment Bureau. In his stories, Dick was often obsessed with what was real and what was fake about reality and about the human experience?—?dealing with issues of artificial intelligence, simulated reality and fake memories.

The Matrix, you’ll recall, starred Keanu Reeves as Neo, a hacker who encounters enigmatic references to something called the Matrix online. This leads him to the mysterious Morpheus (played by Laurence Fishburne, and aptly named after the Greek god of dreams) and his team.

Even if you haven’t seen The Matrix, you’ve probably heard of what happens next, in perhaps its most iconic scene, Morpheus gives Neo a choice: take the “red pill” to wake up and see what the Matrix really is, or take the “blue pill” and keep living his life. Neo takes the red pill and “wakes up” in the real world to find that what he thought was real was actually an intricately constructed computer simulation?—?basically an ultra-realistic video game!

Keanu Reeves in the Matrix (src: Movie Web)

When the Matrix came out, the idea of living in a video game was squarely in the realm of science fiction. Today, the simulation hypothesis is debated seriously by computer scientists, philosophers, physicists and others. The reason this argument is taken more seriously now is two-fold:

  1. the philosophical “simulation argument”, put forward by Oxford’s Nick Bostrom, and

  2. the “video game simulation argument”, about the rapid development of video games, put forth by, among others, Elon Musk.

Two Major Developments

The first was when Oxford professor Nick Bostrom published his 2003 paper, “Are You Living in a Simulation?” Bostrom didn’t say much about video games; instead he made a clever statistical argument. Bostrom theorized that if a civilization ever got the Simulation Point, it would create many ancestor simulations, each with large numbers (billions or trillions?) of simulated beings. Since the number of simulated beings would vastly outnumber the number of real beings, any beings (including us!) were more likely to be living inside a simulation than outside of it! Other scientists, including physicists have taken up this argument.

In the video game version of this argument, we have the rapid advancement of graphics technology. Elon Musk, speaking at the Code Conference in 2016, asserted that 40 years ago, we had pong, which was essentially two lines and a dot. Today we have VR and AR and MMORPGs?—?all based on 3D technology. If the pace of video game development continues, in a few decades we would have hyper-realistic games, indistinguishable from reality.

I call this point the Simulation Point, and in my new book, The Simulation Hypothesis, one part is dedicated towards the stages of technology needed to reach this point. It’s much easier to see a path from today’s VR to something like The Matrix than it was in 1999 when the movie was released. With games like Fortnite, Minecraft, and League of Legends having millions of online players interacting in a shared online world, the idea that we might actually be in a shared connected simulated world doesn’t seem so far-fetched as it might have in 1999.

In this article, we go beyond Bostrom’s and Musk’s simulation arguments to explore some of the reasons why science might be telling us we are in a simulated reality, like the Matrix.

1. Pixels, Resolution, Virtual and Augmented Reality

Today we are already seeing with Virtual Reality that “full immersion” is possible. Anyone who has played a convincing VR game will realize that it’s possible to forget about the real world and “believe” the world you are seeing is real.

As a great example, I was playing a prototype of a Ping Pong VR game last year (built by Free Range Games), and even though it wasn’t realistic resolution, I lost myself and thought I was playing ping pong for real. So much so that I set the paddle on the ping pong “table” and leaned against the table. Of course, it was a VR table so it didn’t really exist?—?I ended up dropping the paddle (actually the Vive controller) onto the floor. As I leaned into the “table” I almost fell over before realizing that there was no table. In other words, to quote from The Matrix, there is no spoon.

The immersion comes not just from the number of pixels, but from the controls and responsiveness that VR is able to achieve. In the novel (and Steve Spielberg film) Ready Player One, which was about a VR world called the OASIS, users had lightweight glasses and wore haptic suits and walked on omnidirectional treadmills to add realism. In that world, the OASIS was preferable to real life.

The fact that 3D models can be used to create realistic looking objects in films(a glance at movies like Blade Runner 2049 will convince you that we have enough pixel resolution to create realistic looking objects), and that 3D printers can be used to “print” physical objects shows that the physical world can be represented by information, a key part of the simulation hypothesis.

Where does the responsiveness and fidelity come from? The limitations today are in real-time rendering and in they way that objects interact with each other inside the world. Most games have a physics engine and a rendering engine. The physics engine is never fully realistic (otherwise it would take you too long to go from one part of the game to the other), and the rendering engine is what’s responsible for making you “see” what the world looks like by deciding what color pixels go where. We can easily see that full immersion may be possible in a few years time.

2. Pixels, Quanta, and Zeno’s Paradox

Speaking of pixels, could it be that what we call the physical world also consists of pixels?

I recall late nights at MIT during my undergrad years where I had philosophical debates with my classmates about the nature of reality. This was the first time I’d heard of Zeno’s paradox, who presented it in terms of Achilles and a Tortoise. If Achilles was behind the tortoise, and he always had to make up half the distance, how could he ever get there?

Zeno’s parado involved Achilles and the Tortoise.

Lurking underneath this paradox is the question of whether space is quantized or if it is continuous. The idea was that if space was continuous, like numbers are (you can always find an infinite number of numbers in between any two numbers), how is it possible to touch an object such as the wall? You would always have to cover half the distance and never quite get there.

This was my first hint that space might be quantized.

Today’s physicists generally acknowledge Planck constant as being the smallest amount of space that anything can be measure. Moreover, physicists tell us that most of what we think of as a solid object is actually 99% empty space, especially if you look inside the atom. The quanta in quantum physics consists of discrete quantities?—?of energies or “states” that a particle can exist in. Newton’s equations assumed a continuous amount of space; it turns out the universe may be more quantized than we thought.

A related question is whether time is quantized? In all computer simulations, there is the idea of “generation” or “steps” in the simulation. These are some multiple of the processor clock-speed, which is the minimum speed at which something could be measured for any simulation running on that processor. Whether time is quantized in the real world is an open question, though there are some that suggest it is, and planck’s time constant (the amount of time it takes the speed of light to travel the planck length) is the minimum quantied time. If so, this would be more evidence that we live in a computation based reality.

3. The Collapse of the Probability Wave, Quantum Indeterminacy

In quantum physics one of the most intriguing ideas is the probability matrix, which is an interpretation of how subatomic particles can exhibit properties of both a wave and a solid particle at the same time. At the level of an electron or a photon, the wave is interpreted as a set of probabilities of where the particle might be at any given time. When we observe a particular possibility, then the probability wave is said to “collapse” and we see a single particle in a particular location. This is called Quantum Indeterminacy.

How does the probability wave collapse? This is one of the biggest mysteries in physics. The best answer physicists have come up with is that consciousness somehow determines the collapse. Max Planck once wrote, “I consider consciousness as fundamental and matter as derivative”.

An even bigger mystery is why does the universe work this way?

The simulation hypothesis provides a pretty good answer. The reason that video games have advanced so far in a few decades is because of optimization techniques. It would be impossible even for today’s computers to render in real time all the pixels of a single 3D world?—?instead, information is stored as 3D models outside the rendered world and then only what a particular character can see from a certain angle is rendered. The golden rule of video game rendering engines is: render only that which can be observed!

Many adherents of the simulation hypothesis think that quantum indeterminacy is an optimization technique with the same basic idea: only render that which is being observed.

The most famous example of this is Schrodinger’s cat, the poor feline who is trapped in a box with radioactive material. After an hour, the probability is that hte cat is either dead or alive. Common sense tells us that the cat is already either dead or alive, and when we open the box we are merely finding out what happened. Quantum physics tells us this is wrong: until we are there to obeserve it, the cat is actually both alive and dead at the same time?—?what’s called a quantum superposition!

4. Future Selves, and Parallel Universes

Another related aspect of Quantum Physics that sounds like science fiction is the Parallel Universes theory, where we branch into different “universes” when we make decisions. If that’s true, then there is a directed graph of multiple universes that are branching out each time we make a decision, resulting in different timelines (in fact, the parallel universes theory was put forward to solve the grandfather paradox of time travel).

Which of those universes do we branch into? this may have to do with the one that is most “optimal”?—?meaning these universes may or may not exist as actual physical realities.

The Minimax algorithm looks at possible futures, calculating which one is the most optimal for a video game.

Physicist Fred Alan Wolf, for example, says that information from these possible futures is coming to us in the present and that we send out an “offer wave” into the future, which is interacting with the “offer waves” coming from the future to the present. Which possible future we navigate to depends on which choices we make, and how these two waves super-pose on each other (or cancel each other out). These are startling results. Future probable selves are sending back information to the present, and we are consciously choosing which path to follow.

This reminded me of the very first video game I made back at MIT. The way that the computer chose the next move was to project the possible futures, and then use a certain algorithm to “rank” those futures, and then bring those values back to the present and then the AI would choose the path to follow.

Did the possible futures we were calculating in our game actually exist? Or were they just probabilities? I realized that this isn’t too much different from what’s happening at the quantum level, except that in existing games like chess or checkers, we use a simple function (based on the rules of the game) to decide which of the paths is most optimal. We used the “minimax” algorithm in game design, trying to maximize our score and minimize our opponents score at each “turn of the future”.

Physicist Thomas Campbell, in his 2003 book, My Big TOE (Theory of Everything) also proposes that there is a fundamental function and that we are essential in a computatiuonal universe that branches off possibilities and uses an evaluation function, just like a video game! He and a team from Caltech raised funds in 2018 on kickstarter for a series of experiements to try to prove this!

5. The Speed of light

Another big mystery is why the speed of light is one of the few constants, one of the few fundamental values in physics. In fact, all matter has been equated with energy, and energy may be a derivative of light itself. While other things change, including gravity and space-time, Einstein found that the speed of light remains fixed.

Why would the speed of electromagnetic waves be the same speed at which information can travel through the universe?

In video games, it turns out that pixels are based on light?—?they are illuminated for a temporary period, and all communication happens between computers at the speed of light. Just as in relativity where simultaneity cannot really be guaranteed, the same is true video games?—?each player is working off of his computer and responding to information about the game, which is being sent to cloud servers outside the rendered world. The cloud serve is doing its best to respect simultaneity and order the events, but it may actually be impossible.


Along with the statistical simulation argument and the advance in video game technology, these are some of the reasons why scientists are starting to take the simulation hypothesis seriously. In fact, many physicists and biologists are starting to realize that underneath the physical objects they are studying, the universe is actually information.

Famous physicist John Wheeler in his autobiography wrote “it from bit”?—?meaning that bits, not matter, are the fundamental “thing in the universe”. In fact, he said physics went through three phases in his career and each phase was an evoluation of our understanding of the universe. The fist phase was that “everything was a particle” (material, newtonian model), then “everything was a field” (quantum probability model), and finally, “everything is information” or bits.

If everything was information, or bits, then this would not only be consistent with a video game simulation like that in The Matrix, it would explain some of the big unanswered questions in science?—?why does it work this way?

While we aren’t able to duplicate The Matrix at this stage of our technology, our computer science and video games have gotten far enough along that we are well on the road to the Simulation Point.

*  *  *

Buy Rizwan Virk’s book The Simulation Hypothesis: An MIT Computer Scientist Shows Why AI, Quantum Physics, and Eastern Mystics All Agree We Are In a Video Game, or find out more at

Published:3/24/2019 9:58:20 PM
[Markets] NZ On Edge: Festival Evacuated Over 'Far-Right' Tattoo; Crime To Download, Distribute Manifesto

New Zealand is on edge following the March 15 terror attacks at two Christchurch mosques that left 50 dead. 

On Saturday, around 5,000 concertgoers were evacuated from the Homegrown Music Festival in Wellington because a festival worker reported someone with a 'far-right' tattoo.

After the roughly 30 minute evacuation, the tattoo was discovered to be "traditional" instead, according to the New Zealand Herald (h/t Cassandra Fairbanks of Gateway Pundit)

"Some of the Homegrown crew identified a person that they were concerned about and police made the call that person needed to be found," said Homegrown spokeswoman Kelly Wright, adding that the incident was an "innocent misunderstanding."

"It all happened at the change-over of the music so people were moving around and police couldn't spot the person immediately so they made the call to evacuate the stage. The person was found and it turned out that is was a completely innocent misunderstanding and everyone was allowed to return."

Illegal manifesto

According to New Zealand's Chief Censor David Shanks, a so-called manifesto attributed to suspected gunman Brenton Tarrant was ruled "objectionable" on Saturday, making it a crime to possess or distribute it anywhere in the country. 

"People who have downloaded this document, or printed it, should destroy any copies," said Shanks. 

"There is an important distinction to be made between ‘hate speech,’ which may be rejected by many right-thinking people but which is legal to express, and this type of publication, which is deliberately constructed to inspire further murder and terrorism," said Shanks, adding "It crosses the line." 

Prosecutors have also gone after people who shared that video.

As of Thursday, at least two people had been charged with sharing the video via social media, under a law that forbids dissemination or possession of material depicting extreme violence and terrorism.

Others could face related charges in connection with publicizing the terrorist attack, under a human rights law that forbids incitement of racial disharmony. -NYT

"It promotes, encourages and justifies acts of murder and terrorist violence against identified groups of people," said Shanks. "It identifies specific places for potential attack in New Zealand, and refers to the means by which other types of attack may be carried out. It contains justifications for acts of tremendous cruelty, such as the deliberate killing of children." 

As far as 'hate speech' which is 'legal to express,' Shanks may want to touch base with police in Masterton, who announced that they were charging a 28-year-old woman with 'inciting racial disharmony' over a Facebook post which contained an "upsetting" message related to "the events in Christchurch and this person's views on what had occurred."

Senior Sergeant Jennifer Hansen

"We were made aware that this post had been put up on Facebook which had upset a number of people to the point that they felt uncomfortable taking kids to school because of the comments that had been made," said Sergeant Jennifer Hansen. 

Meanwhile, several Kiwis who have shared videos of the Christchurch massacre at work have been fired

Last week, New Zealand authorities have reminded citizens that they face up to 10 years in prison for "knowingly" possessing a copy of the New Zealand mosque shooting video - and up to 14 years in prison for sharing it. Corporations (such as web hosts) face an additional $200,000 ($137,000 US) fine under the same law. 

Free speech advocates, however, are concerned with Ardern’s censorship-heavy approach.

“People are more confident of each other and their leaders when there is no room left for conspiracy theories, when nothing is hidden,” Stephen Franks, a constitutional lawyer and spokesman for the Free Speech Coalition, told AP.

“The damage and risks are greater from suppressing these things than they are from trusting people to form their own conclusions and to see evil or madness for what it is.”

Speaking about Tarrant’s first-person-shooter-style video, counterterrorism expert Jennifer Breedon told RT that banning such videos does nothing to prevent future attacks.

“We need to stop putting band-aids on gunshot wounds,” she said. “We’re spending so much time talking about ‘we can’t have videos like this’...rather than answering questions that need to be asked.”

Into the memory hole

Meanwhile, journalist Nick Monroe noted that New Zealand news outlet Stuff has deleted an article in which a 30-year-old New Zealand resident converted to Islam and was "introduced to radical Islam at the Al-Noor mosque in Christchurch."

New Zealand has also banned books by author Jordan Peterson

In short, "never let a good crisis go to waste" applies in New Zealand.  

Published:3/24/2019 9:28:12 PM
[Markets] Tesla raising prices on inventory cars by about 3%, Elon Musk says Prices on Tesla vehicles have bounced up and down in recent months, irritating some prospective customers.
Published:3/24/2019 8:57:53 PM
[Markets] New Jersey Legislators Demand "Huck Finn" Be Removed From State's Schools

Via The College Fix,

Here we go again: A pair of lawmakers in New Jersey want the state’s schools to stop using the classic Mark Twain novel “Adventures of Huckleberry Finn“ in their classrooms.

As reported by Politico, although the book contains numerous “anti-racist and anti-slavery themes” it also features over 200 mentions of the N-word. New Jersey State Assembly members Verlina Reynolds-Jackson and Jamel Holley contend the latter “can cause students to feel upset, marginalized or humiliated and can create an uncomfortable atmosphere in the classroom.”

The lawmakers’ non-binding resolution notes various school districts in Pennsylvania, Virginia, Minnesota and Mississippi have ditched the book from their curricula.

“There are other books out there that can teach about character, plot and motive — other ways besides using this particular book for that lesson,” Reynolds-Jackson told Politico. 

She noted the catalyst for the measure was a cyber-bullying incident against a black student which featured racist epithets and threats of lynching … but admitted Twain’s novel had nothing to do it.

According to the American Library Association, “Huck Finn” was the 14th most challenged or banned book from 2000-2009.

Top 20 Banned/Challenged Books: 2000-2009

1. Harry Potter (series), by J.K. Rowling
2. Alice series, by Phyllis Reynolds Naylor
3. The Chocolate War, by Robert Cormier
4. And Tango Makes Three, by Justin Richardson/Peter Parnell
5. Of Mice and Men, by John Steinbeck
6. I Know Why the Caged Bird Sings, by Maya Angelou
7. Scary Stories (series), by Alvin Schwartz
8. His Dark Materials (series), by Philip Pullman
9. ttyl; ttfn; l8r g8r (series), by Lauren Myracle
10. The Perks of Being a Wallflower, by Stephen Chbosky
11. Fallen Angels, by Walter Dean Myers
12. It’s Perfectly Normal, by Robie Harris
13. Captain Underpants (series), by Dav Pilkey
14. The Adventures of Huckleberry Finn, by Mark Twain
15. The Bluest Eye, by Toni Morrison
16. Forever, by Judy Blume
17. The Color Purple, by Alice Walker
18. Go Ask Alice, by Anonymous
19. Catcher in the Rye, by J.D. Salinger
20. King and King, by Linda de Haan

From the story:

The Assembly resolution by Reynolds-Jackson and Holley states that the book’s inclusion in school curricula “in effect requires adolescents to read and discuss a book containing hurtful, oppressive, and highly offensive languages directed towards African-Americans.”

While the resolution does not state that “Adventures of Huckleberry Finn“ is a racist book, Reynolds-Jackson — who said she read it “many years ago“ — believes it is.

“I think this is a racist book,” she said. “I think in the climate that we’re in right now, where you have a president that is caging up our children and separating us in this way, I think to use this book in this climate is not doing the African-American community any justice at all.”

However, Reynolds-Jackson acknowledged that several teachers she spoke with like teaching the book.

“I think you have to make sure you have a strong instructor to lead that conversation and those technical skills in developing our students,” she said.

Acclaimed (black) author Toni Morrison, who as a child was disturbed by the novel, said that she grew to appreciate the book in “later readings.” She noted that attempts to censor the classic are “a purist yet elementary kind of censorship designed to appease adults rather than educate children.”

h/t: RedState

Published:3/24/2019 8:57:53 PM
[Markets] House Intel Readies Criminal Referrals For Clinton Operatives Who "Perpetuated This Hoax"

Just hours after President Trump proclaimed "It began illegally. And hopefully somebody is going to look at the other side. This was an illegal takedown that failed..."

It seems the "other side" may just get what they deserved.

Source: GrrrGraphics

Here is Nunes from Friday...

Rep. Devin Nunes is reportedly referring will make criminal referrals to Attorney General Bill Barr on FBI, DOJ officials who perpetrated this hoax.

Nunes earlier tweeted: "The Russia investigation was based on false pretenses, false intel, and false media reports. House Intel found a yr ago there was no evidence of collusion, and Democrats who falsely claim to have such evidence have needlessly provoked a terrible, more than two-year-long crisis."

And now Sperry is reporting that Nunes is preparing criminal referrals: "House Intel has evidence Clinton operatives & hi-level FBI & DOJ officials started Trump-Russia investigation in "late 2015/early 2016" &that House GOP will be making criminal referrals to AG"

The 'coup' comes full circle...

Source: GatewayPundit

How long before #LockThemUp starts trending?

Published:3/24/2019 8:28:04 PM
[Markets] Dow Jones Futures Reverse Lower; Apple Streaming, Boeing In Focus Stock futures reversed lower, signaling more selling. The Apple streaming service event is Monday. Don't expect the Boeing 737 Max to fly soon. Published:3/24/2019 8:28:04 PM
[Markets] 50% Of Female Economists Claim Sex Discrimination, Assault Or Harassment

A recent American Economic Association survey revealed that almost half of female economists have claimed to be the target of gender discrimination, with many also reporting assault and harassment. The survey was sent to more than 45,000 current and former AEA members. 

48% of women reported discrimination based on sex and 22% reported bias for their marital status or caregiving responsibilities, according to a Bloomberg report. The survey included more than 9,000 current and former members of the AEA from November to February. 

85 members reported assaults by other economists or students and 179 members reported attempted assaults. 405 had run-ins with "unwanted attention" from peers. The survey also documented racial discrimination, showing that 27% of black respondents claimed they were discriminated in promotion decisions and 23% claimed bias in teaching assignments. More than 33% of black respondents claimed they were discriminated against with regard to compensation. 

The head of the AEA circus act, including President Ben Bernanke, flanked by intellectual heavyweights Janet Yellen and Olivier Blanchard wrote in a letter: “Many members of the profession have suffered harassment and discrimination during their careers, including both overt acts of abuse and more subtle forms of marginalization. This is unacceptable.”

They continued: “It’s important to weed out harassment and discrimination but it’s likewise essential to take action to widen the pipeline of women and minorities entering the field and to help those already in the field to advance professionally.”

The group plans on expanding on steps taken last year to combat harassment, including adopting a code of conduct and creating a discussion forum. The group will also approve a formal vetting process to ensure that executive committee members and others, such as journal editors, comply with the code of conduct.

At a meeting in January, Yellen said that the group needed to "think about" how professional sanctions could be placed on academics with a known history of past misconduct.

Maybe once they are done, they should publicly shame them by forcing them to admit that gold is money.

Published:3/24/2019 7:57:48 PM
[Markets] Dow Jones Futures Signal No Rebound; Apple Streaming, Boeing In Focus Stock futures signaled no rebound after Robert Mueller found no Trump collusion with Russia. The Apple streaming service event is Monday. Don't expect the Boeing 737 Max to fly soon. Published:3/24/2019 7:57:48 PM
[Markets] With its ties in Washington, Boeing has taken over more and more of FAA’s job Four weeks before a Lion Air jet plunged into the Java Sea in October, Congress passed little noticed provisions that gave Boeing even more power to oversee itself. Published:3/24/2019 7:27:19 PM
[Markets] Cryptocurrencies Are Here To Stay

Authored by Gerald Dwyer via The American Institute for Economic Research,

Is Bitcoin doomed to failure? It is not hard to find commentary on the internet indicating that Bitcoin is bound to fail. The authors invariably point to aspects of Bitcoin’s implementation today and argue that the current state is not consistent with success.

I take these comments about Bitcoin as comments about private cryptocurrencies more generally and will treat them that way.

It is hard to foresee Bitcoin’s future.

Ken Olsen said that "there is no reason for any individual to have a computer in his home" in 1977. It is easy to square that statement with computers of the day. Few would have found it worthwhile to have a computer in a dedicated computer room at a controlled temperature of about 65 degrees with backup power to avoid catastrophic damage. The statement is ridiculous in light of the computers in many people’s pockets today. A Samsung S8 is over 20 times more powerful than supercomputers of that day.

Many aspects of Bitcoin and cryptocurrencies more generally are likely to change in the coming decades. There is no reason to think that innovation in cryptocurrencies stopped with the creation of Bitcoin. There are issues. But it is not a large stretch of imagination to imagine some or all of them will be resolved in various ways.

It is fair to say that cryptocurrencies are not obviously likely to replace, for example, the dollar used in transactions in the United States given reasonably good monetary policy, a point made byWill Luther, for example. There is no obvious gain to people in the United States from changing to a different currency to buy groceries. A currency has to have problems such as hyperinflation in Venezuela for cryptocurrencies to become viable for use on a regular basis. Cryptocurrencies also are a good way to circumvent capital controls.

That said, it also is true that the current incarnation of Bitcoin has issues if it is to become a currency in common use anywhere. “Scalability” is a term that summarizes many of these issues. The number of separate transactions on Bitcoin’s blockchain is quite limited. The maximum number of Bitcoin transactions is currently capped at about 400,000 per day. This is trivial compared to the number of transactions that Visa processes, about 150,000,000 per day.

The amount of electricity used in Bitcoin’s proof-of-work mining algorithm is as much as some small countries use. A further substantial increase in electricity use would be a large increase in the demand for electricity worldwide.

Both of these things are problems remaining to be solved.

While increasing the size of blocks in the blockchain would be one way to solve the problem of the number of transactions, that would create a massive blockchain copied by millions of users, which would require a huge amount of storage space given current technology. Maybe digital storage space will continue to dramatically fall in price. Maybe transactions will occur on sidechains off the main blockchain. Maybe transactions will occur in institutions similar to today’s cryptocurrency exchanges. These exchanges already have far more trades than cryptocurrency blockchains. Maybe something else will arise. We don’t know today what solutions entrepreneurs will come up with. If we did, they would exist now.

Electricity use requires a different solution. Mining — the proof of work used in Bitcoin — is a way to reach consensus on the state of the blockchain. New mechanisms for resolving issues such as this arise frequently. For example, new auctions have been designed to divvy up the spectrum for use by smartphones. One possible replacement known today for proof of work is proof of stake. Proof of stake is a method of reaching consensus based on the ownership of the asset, not the use of resources to win a contest. Innovations are quite likely.

Two recent articles claim that Bitcoin is doomed to fail because of other issues related to mining. Both are wrong.

One article by Atulya Sarin nicely lays out an argument for a death spiral, an argument that also can be found elsewhere. A lower price for Bitcoin lowers the return from mining, so miners suffer losses and stop mining. Eventually it does not pay to mine. The problem with this simple statement of the argument is that it is based on the total expenditure by miners including mining equipment. Some purchases of mining equipment that were profitable when the price of Bitcoin was above $10,000 would not be made today. But the payments for the equipment are sunk costs that cannot be avoided by no longer mining. If using the mining equipment generates revenue greater than the cost of running the equipment, it will be kept in use. This revenue may not cover the cost of the purchase, but that cannot be helped.

A better version of the argument made by Sarin is that changes in the difficulty of mining are made roughly every two weeks and are determined so that the previous blocks would have been found at the rate of one every 10 minutes. If the price of Bitcoin falls far enough, it may pay to withdraw from mining and wait for the difficulty to decrease. All miners might withdraw because the electricity cost of mining is greater than the value of the new bitcoins awarded. This argument ignores the transactions fees paid by holders of bitcoins though, which would increase to compensate the smaller number of miners. Production of bitcoins might decrease, and validation of transactions might take longer in the short term, but mining will continue as long as there is a demand for transactions, in part because transactions fees can increase.

Another article, by Kevin Dowd, argues that there is a fundamental flaw in mining, namely that it is a natural monopoly. This recent article is a short summary of an argument made earlier, which I addressed in a blog post at the time. In short, bitcoin mining is a game that can be won or lost when there is competition. There is a risk of losing the race to create a new block. If there were only one miner, the game could only be won and there would be no risk. Therefore, a single miner or a big mining firm has an advantage because the larger the miner, the less risk of losing.

There is a disadvantage, though, to having a mining monopoly. A monopoly in a cryptocurrency would destroy or radically change the cryptocurrency because a major selling point of cryptocurrencies is the impersonal, somewhat anonymous aspect of transactions. Someone buying or selling a cryptocurrency need not trust anyone else involved in the transaction, including miners. If a monopolist was doing the mining, it would be very important to trust them. Requiring such trust would radically alter the basis of cryptocurrencies and possibly kill it. Everyone other than a possible monopolist has an incentive to avoid a mining monopoly even if the possible monopolist doesn’t see it that way. And miners do prefer not to obtain a monopoly, at least sometimes. Bitcoin mining firms have reduced their capacity when they have gotten too close to having a dominant share in mining. Even absent voluntarily limiting mining capacity and mining, there are other ways to limit miners from having too big a share of new blocks.

Recent developments in mining of Ethereum Classic illustrate how a miner’s share of the market can be limited. A version of the natural-monopoly problem short of a complete monopoly is called a “51 percent attack”: a miner has more computing power than the rest of the network and can alter the consensus achieved to create gains for himself at others’ expense. The cryptocurrency Ethereum Classic has had an actual 51 percent attack based on concentrated computing power in the hands of one miner. The short-term solution has been to increase the time to finalize transactions. One possible long-term solution is to alter the rules for accepting blocks. In short, innovations will occur to adapt to the problem and impose costs on miners who have too large a share of mining.

There is no reason to think that cryptocurrencies will disappear. They are useful now for some things. While hardly perfect, Bitcoin and similar cryptocurrencies in existence now have no fundamental flaw. Moreover, cryptocurrencies will change in unexpected ways to become increasingly useful to people.

Published:3/24/2019 7:27:18 PM
[Markets] The Wall Street Journal: Viacom and AT&T in standoff that could leave 24 million TV viewers blacked out Viacom Inc. and AT&T Inc. were continuing negotiations to avert a programming blackout that would leave more than 24 million pay-TV customers without channels like MTV, Comedy Central and Nickelodeon, after their earlier contract expired at midnight Friday.
Published:3/24/2019 6:57:00 PM
[Markets] New Jersey AG Sues 'Ghost Gun' Company Over Illegal Sale To Special Agent

New Jersey’s attorney general on Friday sued a California "ghost gun" company that ships 80% completed assault rifles and pistols to buyers who don't need a background check by simply completing the remaining 20% of the gun at home, reported Bloomberg.

The civil lawsuit against U.S. Patriot Armory claims the company sold an AR-15 80% Pistol Kit to a special agent after receiving a cease-and-desist letter to halt sales in New Jersey.

New Jersey Attorney General Gurbir Grewal, said the complaint is the first in the country by a state against a ghost gun manufacture.

"New Jersey law is clear, ghost guns are illegal in our state," Grewal said.

"Since U.S. Patriot Armory decided to ignore our laws and advertise and sell ghost guns to New Jersey residents, I'm taking action. We're filing the first state civil enforcement action against a ghost gun company to demand penalties and to get an order blocking New Jersey sales. This is my message to the entire ghost gun industry: If you continue selling dangerous and unlawful weapons into our state, we will come after you in court, just like we did against U.S. Patriot Armory today."

These weapons are known as ghost guns because there are no serial numbers engraved on the frame. Buyers of the incomplete weapon legally bypass background checks and registration regulations.

The lower receiver, which by law is legally considered a gun, can be completed from an 80% receiver without filing government paperwork or identity checks. The remaining 20% of the work can be completed using a standard drill press.

YouTube video describes the process of ghost gun building 

California-based U.S. Patriot Armory did not respond to Bloomberg's requests for comment.

The complaint also seeks a court order instructing U.S. Patriot Armory to include a disclaimer on its website warning that ghost guns are illegal in the state. Residents face five years in prison for purchasing ghost guns, and ten years if it's an assault rifle, Grewal said.

State governments are frightened that criminals and or even terrorist are acquiring untraceable AR-15 ghost guns. In the next several years, states are expected to band together to outlaw these weapons.

Published:3/24/2019 6:57:00 PM
[Markets] A Different View Of Venezuela's Energy Problems

Authored by Gail Tverberg via Our Finite World blog,

It would be easy to write a story about Venezuela’s energy problems and, in it, focus on the corruption and mismanagement that have taken place. This would make it look like Venezuela’s problems were different from everyone else’s. Taking this approach, it would be easy to argue that the problems wouldn’t have happened, if better leaders had been elected and if those leaders had chosen better policies.

I think that there is far more behind Venezuela’s financial and energy problems than corruption and mismanagement.

As I see the story, Venezuela realized that it had huge oil resources relative to its population, back as early as the 1920s. While these oil resources are substantial, the country misestimated how high a standard of living that these resources could support. To try to work around the issue of setting development goals too high, the country chose the path of distributing the benefits of oil exports in an almost socialistic manner. This socialistic approach, plus increased debt, hid the problem of a standard of living that could not really be supported for many years. Recent problems in Venezuela show that these approaches cannot be permanent solutions. In fact, it seems likely that Venezuela will be one of the first oil-exporting nations to collapse.

How the Subsidy from High-Priced Exported Oil Works 

Oil is a strange resource. The cost of oil production tends to be quite low, especially for oil exporters. The selling price is based on a world oil price that changes from day to day, depending on what some would call “demand.” The difference between the selling price and the cost of extraction can make oil exporters rich. In a sense, this difference might be considered an “energy surplus” that is being distributed to the economies of oil exporters. The greater the energy surplus being distributed, the greater the quantity of goods and services (made with energy products) that can be purchased from outside the country with the hard currency that is made available through the sale of oil.

In fact, the existence of such a profitable resource tends to crowd out development of other, less profitable, enterprises. Thus, Venezuela has tended to be a country whose economy revolves around oil. There is a small amount of agriculture and quite a bit of services, but for the most part, the goods used by the economy must be purchased from outside the country. Furthermore, nearly all of the revenue that is available to purchase these goods comes from the sale of oil exports. Thus, the economy tends to follow the fortune of oil sales.

Figure 1 shows a rough estimate of the benefit that Venezuela’s oil exports have provided in inflation-adjusted US dollars. Based on this approach, the per capita benefit from oil exports seems to have peaked very early, in about 1981.