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[Markets] UK Company Creates Knives Without Tips As Crime Wave Soars To Decade High UK Company Creates Knives Without Tips As Crime Wave Soars To Decade High

Authored by Paul Joseph Watson via Summit News,

A UK company is marketing a new range of knives without sharp tips in response to soaring knife crime levels, which just hit another decade high.

Sheffield-based company Viners has produced the “Assure” range, square-ended knives which are “shaped to reduce and prevent injuries, accidents and fatalities.”

The knives were “repeatedly tested to ensure the tip does not pierce skin intentionally or otherwise,” the company told the Independent.

Data published by the Ministry of Justice yesterday shows that knife crime offenses in England and Wales have soared to the highest level in a decade.

26,364 offenses were recorded in the year to September 2019, which represents a 3% increase on last year and the highest number since 2009.

Attempts by the government to tackle the issue have been derided as “racist” by leftists and the media despite the fact that official statistics show 73% of offenders are from a black or ethnic minority background.

When an initiative was launched to put anti-stabbing messages on chicken takeaway boxes, the scheme was soon cancelled because it was seen as bigoted to assume that black people like to eat fried chicken (fact check; they do).

As I have documented, the knife crime problem in the UK and particularly London continues to get worse because the underlying causes are not being addressed.

  • The scaling back of “stop and search” because it’s “racist”.

  • The ongoing emasculation of UK police forces who are being trained that mean words and ‘hate crime’ is more important than people dying.

  • Fatherless black homes.

  • UK street gangs becoming more violent to compete with immigrants from countries like Congo and Somalia.

  • The ongoing mass importation of people from violent countries in general.

  • Drill rap music that encourages young people to commit murder.

  • Political leaders like Sadiq Khan refusing to even admit there’s a problem to protect their own pathetic legacies.

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Tyler Durden Mon, 01/20/2020 - 03:30
Published:1/20/2020 2:55:49 AM
[Markets] Stocks - Europe Seen Unchanged; IMF Forecasts due at Davos By Peter Nurse Published:1/20/2020 2:15:54 AM
[Markets] One Bank Is Selling Its Super-Rich Clients Products To Predict The 2020 Election One Bank Is Selling Its Super-Rich Clients Products To Predict The 2020 Election

As if there already wasn't enough at stake during this year's electionwhat with the Democrats wholeheartedly pushing for full-on socialism, investment bank Julius Baer has decided to make it even more interesting.

The bank is pitching its rich clients on a way to bet on the U.S. election, selling as much as $40 million of structured notes tied to large American companies hinging on which party will hold the White House next year, according to Bloomberg. In theory, you pick the note that corresponds to the winning party and you should be able to profit. 

The bank is selling "Democrat Victory" notes that include names like Ford and Walmart, while its "Republican Victory" notes include names like Google, Amazon and Citigroup. To us, there doesn't seem to be much of a difference between these portfolios, which seem to be more of a marketing gimmick.

The bank oversees 422 billion Swiss francs and intends on "wading into the debate" about the political drivers of our current market rally. And while structured products to play the election may seem like an odd idea in the U.S., they are big business in Switzerland, where they brought in 94 billion Swiss francs in the third quarter alone. 

Martin Raab, a Zurich-based senior portfolio manager at Asset Security Trust said: “I am sure that other issuers will shortly come up with some similar thematic baskets for their retail clients.”

The notes have a term of one year and pay out the performance at maturity. They have entry costs between 1.28% and 1.4% and are more expensive than a typical ETF. "Structured products use derivatives to track the performance of an underlying asset," Bloomberg notes.

Strategists continue to keep President Trump's policies in focus as we move closer to the election. Jefferies Group strategists recently wrote that industries like healthcare and financials would see "quite significant changes" if a Democrat wound up winning the election. 

Raab also took exception to some of the baskets, questioning why Amazon would be in the Republican-themed basket, especially since the company just lost a cloud computing contract with the U.S. government. He also points out that a Democratic administration likely wouldn't cause outperformance in names like Coca-Cola. 

Vontobel Holding AG sold similar notes to predict the 2016 election. More than 80% of the firm's customers bet on Hillary Clinton. 

And most importantly, we hope no one spoils this for Julius Baer and reminds them that no matter who wins, it's Fed policy that is truly catalyzing the insane mania behind today's market. 

Tyler Durden Mon, 01/20/2020 - 02:45
Published:1/20/2020 2:15:54 AM
[Markets] Dow Jones Newswires: Accor launches €300 million share buyback The program is part of a larger plan announced in December to return EUR1 billion to shareholders over the next two years, the French hotel group said.
Published:1/20/2020 2:15:53 AM
[Markets] Dow Jones Newswires: Anglo American agrees $526.5 million offer for Sirius Minerals Anglo American said that Sirius Minerals’ North Yorkshire polyhalite project has the potential to become a world-class, low-cost and long-life asset.
Published:1/20/2020 1:44:58 AM
[Markets] The 'Great Replacement' In Switzerland The 'Great Replacement' In Switzerland

Authored by Guillaume Durocher via The Unz Review,

After the article on the Great Replacement in Belgium, I present you the following translation of an article by Polémia on the situation in Switzerland. The Swiss situation is unique, if only because of the country’s objective excellence and exceptional quality of life, and the extraordinary practice of direct democracy. Thus we have the rather rare situation of citizens actually being allowed to vote on whether and in what conditions new people should be allowed into their country.

Make no mistake: the scale of demographic change is also tremendous in Switzerland, but mainly because of European immigration and even Europeans find it very difficult to accede to Swiss nationality (there is no birthright citizenship). Thus Switzerland provides a model how people might preserve a nice country in the future: a highly-selective, citizenist little republic founded on gentrified democratic localism.

*  *  *

Great Replacement in Europe: Switzerland, in difficulty, tries to resist

by Paul Tormenen

Switzerland has experienced very significant immigration over the past decades. This immigration is a source of fears or even rejection on the part of a portion of the Swiss people. These fears concern basically two issues: competition on the labor market by Europeans and the challenge to the [Swiss] cultural model posed by non-Europeans; all the more so in that, recently, the integration of the non-European population is failing to be realized.

In the face of this, the Swiss authorities’ responses oscillate between openness and firmness. A firmness which is occasionally demanded by the people in the form of the referenda which are regularly organized in Switzerland. Selective immigration is not an empty slogan in this country, even if a part of the political opposition would like the government to go much further on this issue.

Very significant migration flows

Since the Second World War, Switzerland has experienced two significant waves of immigration. The first coincided with the industrial growth of the 50s and 60s. The second began in 1975 and has continued ever since.

After the Second World War, the Swiss government granted many residence permits to mostly European workers in a context of industrial recovery. Immigration was then suddenly stopped with the repatriation of almost 300,000 foreign workers during the economic crisis caused by the first oil shock of 1973. Every year since then, Switzerland has welcomed a rising and significant number of foreigners, in proportion to its population.

Whereas 92,000 immigrants permanently moved to the country in 1981, they were 146,000 in 2018. Net migration (immigrants minus emigrants) has always been positive for the 1962-2017 period. On average 163,000 more people entered the country every year than left during this period. . . .

A growing immigrant population

The foreign population is constantly increasing in Switzerland. It rose from 14% of the total population in 1980 to 25% today. The Swiss Confederation is among the countries with the highest proportion of residents born abroad.

Whereas the country had 285,000 resident foreigners in 1951, there are now 2.1 million. The country’s population meanwhile numbers 8.5 million.

Europeans (Italians, Germans, Portuguese, and French) represent the biggest contingents of the foreign population residing in Switzerland (80%).

The population of immigrant origin (foreigners born abroad, naturalized citizens born in Switzerland, or naturalized citizens and foreigners born in Switzerland with at least one parent born abroad) was estimated in 2017 to make up 37% of the population.

Among the resident non-European population, Asians[1] (165,000), Africans (109,000) and Turks (67,000) form the largest contingents. According the Pew Research Center, around 6% of the population is Muslim, around 400,000 people. According to Pew’s forecasts, the Muslim population could in 2050 make up between 8% and 12% of the Swiss population.

European immigration

Competition on the labor market between foreigners and citizens as well as the scale immigration have been criticized both with regard to European and non-European immigration. Several agreements on the free movement of EU citizens have been signed between Bern and the European Union since 2000, but they remain contested, in particular by the SVP (Swiss People’s Party). This party has, for many years, sought to annul these agreements. This has raised concerns among people living across the Swiss border, notably many Frenchmen.

Non-European immigration

While non-European immigration concerns only a minority of the population in Switzerland, several warning signs are showing that integration is proving difficult or even a failure for a portion of immigrants.

  • A study by the Zurich university of sciences came to the conclusion that 21% of young Muslims living in Switzerland consider that sharia law is superior to Swiss law.

  • At the extreme of radicalization, a Swiss central Islamic committee has been established with some 3,500 members. The organization has been accused of encouraging its members to engage in polygamy and female genital mutilation. Its members are also being sued for supporting Al Qaeda.

  • Islamic proselytism has occasionally occurred in Swiss schools. Thus in Winterthur, teachers have complained that Muslim students are encouraging non-Muslims to fast during ramadan.

  • As in other European countries, the Gulf monarchies have been accused of flooding Islamic cultural centers with money. One of the authors of Qatar Papers [a book detailing Qatari financing of Islamic activities in Europe] explained in Geneva: “The goal is to take in charge every Muslim individual living Europe from cradle to grave.” The funds of the World Islamic League based in Saudi Arabia “are apparently financing mosques and organizations preaching a Wahhabi form of Islam” according to a professor at the University of Bern. Turkish mosques [in Switzerland] are apparently being financed by [Turkey’s] Directorate of Religious Affairs, a report from which asserts that Islam is superior to Christianity and Judaism, and that religious dialogue is unacceptable. One could enumerate many more such examples. Though Islamism is spreading in Switzerland, the country has many effective “watchdogs” who are active both in documenting these realities and in initiatives aiming to ban or at least reduce them.

A questionable integration

Whether in terms of welfare, crime, or social behavior, many statistics and incidents show that the ‘integration’ of a part of the non-Europeans is an empty slogan.

Referenda on immigration

Swiss citizens have been invited to vote many times on immigration issues. The following issues have recently been subject to referenda in recent years:

  • A ban on the building of minarets (2009)

  • The actual deportation of foreign criminals (2010 and 2016)

  • The end of mass migration (2014)

  • The primacy of national law over international agreements (2018). This last proposal was rejected, even though unchosen immigration (family reunification, asylum) stems from international agreements and treaties signed by the country. As the lawyer J. L. Harouel has observed: “public liberties have been overridden by fundamental rights, which mainly benefit immigrants, who systematically accede to all the rights and advantages of European peoples.”

The expulsion of foreign criminals (2010 vote), the ban on building minarets, and the limitation of immigration all won the required double majority of both voters and cantons. However, the vote against mass immigration did not lead to new rules for the movement of people between Switzerland and the European Union, because of the gridlock of the EU institutions. A new referendum on the subject will normally be organized in 2020.

National preference and selective immigration

Despite significant immigration, Switzerland has long wished to maintain control over migratory flows and protect its labor market. The country’s selective immigration policy is evident in the conditions demanded to come, live, and work in the country:

  • In 2014 Switzerland adopted a rule requiring employers to inform residents of job opportunities in certain fields, before being allowed to look further afield.

  • For non-Europeans, access to the labor market is even more Draconian: there is a genuine national preference here. The employer must prove that no Swiss may be employed if a position is given to a foreigner. Quotas for foreign workers are in place. Integration into Swiss society is also evaluated over time.

  • Selective immigration policy is also evident in the higher and higher qualifications required of immigrants, which facilitates their entry into the labor market.

  • The acquisition of Swiss nationality is very demanding: one must live in Switzerland for 12 years and know the country’s ways and customs in order to claim Swiss nationality. There is no birthright citizenship for second-generation immigrants.

Other initiatives aim to regain control of a situation which, in the eyes of many Swiss, is deteriorating:

  • The Swiss Confederation does not hesitate to deport foreign criminals, as 1000 were in 2017.

  • The Swiss government has not ratified the 2017 Marrakesh Pact on migration.

  • Some cantons, such as Tessin and Saint Gall, have banned the burqa.

On matters of asylum, a tough line is also being adopted:

  • Refugees will no longer be allowed to travel abroad.

  • In April 2019, the Federal Council took several measures to accelerate refugees’ entering the labor market, with a mandatory integration track (language-learning over three years, numbered targets for entry into the labor market, etc).

  • Those whose asylum claims have been rejected are less likely to be authorized to work in Switzerland.

  • Switzerland is remarkable in Europe for the rate of deportation of rejected asylum-seekers: 56% of deportation decisions are implemented, where the average is only 36% in Europe (and 12% in France).

The consequences are apparent: whereas the number of asylum claims is exploding in France, they decreased in Switzerland between 2017 and 2018. More and more rejected asylum-seekers are fleeing Switzerland for France, this especially concerns Eritreans.

In the face of significant migratory flows, the Swiss government has taken measures aiming to increase standards relative to immigration, to reduce immigration, and to defend the natives’ way of life.

The Swiss can, thanks to their democratic system, make proposals and express themselves on issues subject to referenda. They most recently affirmed their rejection of mass immigration. If the concrete measures to actually fulfill the popular will can, on some occasions, be disappointing, the referenda have enabled tougher policies to be adopted.

Tyler Durden Mon, 01/20/2020 - 02:00
Published:1/20/2020 1:15:54 AM
[Markets] Asia Markets: Japan’s Nikkei edges higher ahead of Bank of Japan meeting Japanese stocks edged higher Monday as investors looked for trading clues ahead the Bank of Japan’s start to its two-day policy meeting.
Published:1/19/2020 10:51:27 PM
[Markets] $6.4 Trillion And Counting - How The Military-Industrial Complex Hijacked The War On Terror $6.4 Trillion And Counting - How The Military-Industrial Complex Hijacked The War On Terror

Authored by Eric Margolis,

Ike Was Right!

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists, and will persist.

Now this conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence—economic, political, even spiritual—is felt in every city, every Statehouse, every office of the Federal government. We recognize the imperative need for this development. Yet, we must not fail to comprehend its grave implications. Our toil, resources, and livelihood are all involved. So is the very structure of our society.”

General Dwight D Eisenhower
Farewell address 1961

Congress just passed a near trillion dollar military budget at a time when the United States faces no evident state threats at home or abroad. Ike was right.

Illustrating Ike’s prescient warning, Brown University’s respected Watson Institute just released a major study which found that the so-called ‘wars on terror’ in Iraq, Afghanistan, Syria and Pakistan have cost US taxpayers $6.4 trillion since they began in 2001.

The extensive study found that over 800,000 people have died as a result of these military operations, a third of them civilians. An additional 21 million civilians have been displaced by US military operations. According to the Pentagon, these US wars have so far cost each American taxpayer $7,623 – and that’s a very conservative estimate.

Most of this money has been quietly added to the US national debt of over $23 trillion. Wars on credit hide the true cost and pain from the public.

As General Eisenhower warned, military spending has engulfed the nation.

A trillion annual military budget represents just about half the world’s military expenditures. The Pentagon, which I’ve visited numerous times, is bustling with activity as if the nation was on a permanent war footing.

The combined US intelligence budget of some $80 billion is larger than Russia’s total military budget of $63 billion. US troops, warplanes and naval vessels are stationed around the globe, including, most lately, across Africa. And yet every day the media trumpets new ‘threats’ to the US. Trump is sending more troops to the Mideast while claiming he wants to reduce America’s powerful military footprint there. Our military is always in search of new missions. These operations generate promotions and pay raises, new equipment and a reason for being.

Back in the day, the Republican Party of General Eisenhower was a centrist conservative’s party with a broad world view, dedicated to lower taxes and somewhat smaller government. It was led by the Rockefellers and educated Easterners with a broad world view and respect for tradition.

Today’s Republican Party is a collection of rural interests from flyover country, handmaidens of the military industrial complex and, most important, militant evangelical Christians who see the world through the spectrum of the Old Testament. Israel’s far right has come to dominate American evangelists by selling them a bill of goods about the End of Days and the Messiah’s return. Many of these rubes see Trump as a quasi-religious figure.

Mix the religious cultists – about 25% of the US population – with the farm and Israel lobbies and the mighty military industrial complex and no wonder the United States has veered off into the deep waters of irrationality and crusading ardor. The US can still afford such bizarre behavior thanks to its riches, magic green dollar, endless supply of credit and a poorly educated, apathetic public too besotted by sports and TV sitcoms to understand what’s going on abroad.

All the war party needs is a steady supply of foreign villains (preferably Muslims) who can be occasionally bombed back to the early Islamic age. Americans have largely forgotten George W. Bush’s lurid claims that Iraqi drones of death were poised to shower poisons on the sleeping nation. Even the Soviets never ventured so deep into the sea of absurdity.

The military industrial complex does not care to endanger its gold-plated F-35 stealth aircraft and $13 billion apiece aircraft carriers in a real war against real powers. Instead, the war party likes little wars against weak opponents who can barely shoot back. State-run TV networks thrill to such minor scraps with fancy headlines and martial music. Think of the glorious little wars against Panama, Grenada, Somalia, Iraq, Syria, Afghanistan and Libya. Iran looks next.

The more I listen to his words, the more I like Ike.

Tyler Durden Sun, 01/19/2020 - 23:45
Published:1/19/2020 10:51:27 PM
[Markets] The Military And State Can't Handle The Trump Truth The Military And State Can't Handle The Trump Truth

Authored by Larry Johnson via Sic Semper Tyrannis blog,

An excerpt from a soon to be released book, "A Very Stable Genius" (which appeared in Saturday's edition of the Washington Post) apparently was written with the intent of presenting Donald Trump as a crazed, unstable individual.

The authors of this hit job (two Washington Post reporters) clearly relied on Rex Tillerson, Gary Cohn and Jim Mattis as primary sources. But rather than expose Trump as mentally unfit to be President, the authors unwittingly expose their own extreme bias and highlight how the men Trump named to key positions in his administration--Tillerson at State, Cohn at the White House and Mattis at DOD--tried to undermine the President and drug their feet in carrying out Trump's directives.

These men, in my view, are bureaucratic cowards. They should have resigned if they felt so strongly about Trump's violations. But they wanted to hang on to their little pieces of turf.

The piece is introduced with this telling paragraph:

So on July 20, 2017, Mattis invited Trump to the Tank for what he, Tillerson, and Cohn had carefully organized as a tailored tutorial. What happened inside the Tank that day crystallized the commander in chief’s berating, derisive and dismissive manner, foreshadowing decisions such as the one earlier this month that brought the United States to the brink of war with Iran. The Tank meeting was a turning point in Trump’s presidency. Rather than getting him to appreciate America’s traditional role and alliances, Trump began to tune out and eventually push away the experts who believed their duty was to protect the country by restraining his more dangerous impulses.??

Yep. Trump's a bad, crazy, deranged individual because he did not want to continue the failed policies of the last 20 years. That's the complaint of these Deep Staters in a nutshell. And Donald Trump, unlike the serpentine politicians that infest Washington, did not speak praise to the faces of these clowns and then backstab them in the press and to other members of his Administration. Nope. He called them out to their face. Can't have that. Telling people off to their faces is just so uncouth. Always better, according to the Swamp creatures, to say one thing to a person's face and then trash the hell out of them when they are not around.

Let's look at the key issues discussed in this brief that put the reporters panties in a knot.

“The post-war international rules-based order is the greatest gift of the greatest generation.” Mattis then gave a 20-minute briefing on the power of the NATO alliance to stabilize Europe and keep the United States safe.

Trump's response should not have surprised these guys if they had paid attention to the campaign:

We should make money off of everything.

”?Trump proceeded to explain that NATO, too, was worthless. U.S. generals were letting the allied member countries get away with murder, he said, and they owed the United States a lot of money after not living up to their promise of paying their dues.?“They’re in arrears,” Trump said, reverting to the language of real estate. He lifted both his arms at his sides in frustration. Then he scolded top officials for the untold millions of dollars he believed they had let slip through their fingers by allowing allies to avoid their obligations.“

Trump was exactly right with regards to NATO. It is an anachronism. The equivalent of maintaining the horse cavalry in the U.S. Army on the eve of World War II. But there is a lot of money and high paying jobs for senior officers to be had. Cannot let that sugar tit dry up.

The men at around the table also tried to thwart Trump on Iran:

He wanted out of the Iran nuclear deal that President Obama had struck in 2015, which called for Iran to reduce its uranium stockpile and cut its nuclear program.?

It’s the worst deal in history!” Trump declared.?

“Well, actually .?.?.,” Tillerson interjected.?

“I don’t want to hear it,” Trump said, cutting off the secretary of state before he could explain some of the benefits of the agreement.

“They’re cheating. They’re building. We’re getting out of it. I keep telling you, I keep giving you time, and you keep delaying me. I want out of it.”?

Here again Trump never hid his intent with respect to Obama's Iran deal. So why the surprise on the part of Mattis and Tillerson?

Next up, Afghanistan:

Trump erupted to revive another frequent complaint: the war in Afghanistan, which was now America’s longest war. He demanded an explanation for why the United States hadn’t won in Afghanistan yet, now 16 years after the nation began fighting there in the wake of the 9/11 terrorist attacks. Trump unleashed his disdain, calling Afghanistan a “loser war.”

That phrase hung in the air and disgusted not only the military leaders at the table but also the men and women in uniform sitting along the back wall behind their principals. They all were sworn to obey their commander in chief’s commands, and here he was calling the war they had been fighting a loser war.??

“You’re all losers,” Trump said. “You don’t know how to win anymore.”?

You may not like the tone, but Trump's position was not new nor should it have been unexpected. To his credit he called out the Generals to their face. And he was factually correct. We defeated the Japanese and German armies in four years. Here we are entering our 19th year of a meaningless war in Afghanistan and all we have to show are losses of hundreds of millions of dollars and the deaths and maiming of thousands of U.S. military personnel. Damn straight Mr. President. We've been pouring U.S. taxpayer dollars down an open sewer that masquerades as a country. For what purpose?

Then we get this "pity party":

They stunned nearly everyone in the room, and some vowed that they would never repeat them. Indeed, they have not been reported until now.?

“I wouldn’t go to war with you people,” Trump told the assembled brass.?Addressing the room, the commander in chief barked, “You’re a bunch of dopes and babies.”?

For a president known for verbiage he euphemistically called “locker room talk,” this was the gravest insult he could have delivered to these people, in this sacred space. The flag officers in the room were shocked. Some staff began looking down at their papers, rearranging folders, almost wishing themselves out of the room. A few considered walking out. They tried not to reveal their revulsion on their faces, but questions raced through their minds.

“How does the commander in chief say that?” one thought. “What would our worst adversaries think if they knew he said this?”?

Grab the damn fainting couch. Trump told the assembled military leaders who had presided over a military stalemate in Afghanistan and the rise of ISIS as "losers." Not a one of them had the balls to stand up, tell him to his face he was wrong and offer their resignation. Nope.

They preferred to endure such abuse in order to keep their jobs. Pathetic.

This excerpt in the Washington Post tells the reader more about the corruption of the Deep State and their mindset than it does about Trump's so-called mental state. Trump acted no differently in front of these senior officers and diplomats than he did on the campaign trail.

He was honest. That is something the liars in Washington cannot stomach.

Tyler Durden Sun, 01/19/2020 - 22:55
Published:1/19/2020 10:17:03 PM
[Markets] In "Spectacular" Jail Break, 75 Prisoners Including 6 Contract Killers Flee Paraguay Jail Through Tunnel In "Spectacular" Jail Break, 75 Prisoners Including 6 Contract Killers Flee Paraguay Jail Through Tunnel

Someone has been watching too many reruns of The Shawshenk Redemption.

In a dramatic prison escape that would make both Andy Dufresne and El Chapo proud, no less than 75 prisoners, all members of a violent Brazilian gang - one of South America's most notorious - which also included six contract killers, launched what Bloomberg called a "spectacular jail break" in Paraguay.

The Pedro Juan Caballero city jail entrance on Jan. 19 after dozens of inmates escaped; Photo: AP.

According to the newspaper ABC, the prisoners pulled a page out of one of Stephen King's most popular stories, and fled through a large tunnel.

Or maybe they didn't, because as the country's Interior Minister Euclides Acevedo told the TV station Telefuturo, the tunnel, which started in a cell and ended outside the prison walls, may have been a decoy to mask the fact that most of the escapees simply walked out of the main door. And as an indication of the sheer chaos and corruption in Latin America's penal system, investigators believe some of the former inmates may even have left the prison in previous days.

The escaped prisoners were members of the drug gang First Command of the Capital, known as PCC, Justice Minister Cecilia Perez told Telefuturo; the gang, sporting more than 10,000 members, is one of Brazil’s largest criminal organizations. The PCC dominates the drug trade and prisons in Sao Paulo and in recent years has expanded its operations into other countries including Paraguay; in 2012, the group unleashed a wave of violence that included more than 200 murders in protest of the election of Fernando Haddad as Sao Paulo’s mayor.

After the escape, no less than five prison guards were arrested and the head of the prison - who was conveniently on holiday at the time - as been fired, news channel NPY reported.

That said, if Andy Dufresne's historic jailbreak was indeed the inspiration for the escape, then the Paraguay version appears to have been the work of rank amateurs: as Bloomberg notes, the tunnel was the work of days if not weeks, as the amount of soil shifted could not have passed unnoticed and was easily visible from the prison corridor, Perez explained as television images showed dozens of bags of soil piled up in a cell.

Clothes are seen in a tunnel entrance where inmates escaped from Pedro Juan Caballero city jail. Source: AP

Yet even if this particular escape was more luck than skill, we are confident the same group will have ample opportunity to show off its capabilities in the near future. According to InSight Crime, which investigates organized crime in Latin America, the PCC has also been blamed for several large heists including the biggest armed robbery in Paraguay’s history, in which the headquarters of security company Prosegur in Ciudad del Este was attacked by a gunmen who broke in using long tunnels and walked away with $40 million in an assault that was carried out with a wide array of weapons, including AK 47s, C4 explosives, infrared weapons, snipers and even anti-aircraft guns and a helicopter. We described that particular robbery in April 2017 in "In "Spectacular Heist" Dozens Of Heavily-Armed Robbers Steal $40 Million From Paraguay Vault."

In 2017, the Wall Street Journal reported that the PCC was trying to recruit members of Colombia’s FARC rebel group for their expertise in heavy weaponry.

Tyler Durden Sun, 01/19/2020 - 22:30
Published:1/19/2020 9:44:10 PM
[Markets] Puerto Ricans Find Warehouse Full of Emergency Supplies From Hurricane Maria Puerto Ricans Find Warehouse Full of Emergency Supplies From Hurricane Maria

Submitted by The Organic Prepper

Back in 2017, when the island territory was devastated by Hurricane Maria, loads of emergency supplies were sent to help residents who lost power, many for as long as a year after. But…those supplies were never distributed. Instead, water, food, and cots were stashed away in a warehouse ever since. Watch the video below, which has rightly gone viral.

Residents in Ponce, a city in the southern part of Puerto Rico, discovered the stash of supplies and blogger Lorenzo Delgado posted the video footage above. People broke into the building after Puerto Rico was hit by a powerful earthquake last week.

With anger spreading in the U.S. territory after video of the event in Ponce appeared on Facebook, Gov. Wanda Vázquez quickly fired the director of the island’s emergency management agency.

The governor said she had ordered an investigation after learning the emergency supplies had been piled in the warehouse since Hurricane Maria battered Puerto Rico in September 2017.

Vázquez said inaction by the fired official, Carlos Acevedo, was unacceptable.

“There are thousands of people who have made sacrifices to help those in the south, and it is unforgivable that resources were kept in the warehouse,” the governor said…

…The mayor of Ponce, María Meléndez, said he had not known about the warehouse and its contents.

“This is outrageous,” she said. “Everyone knows what us mayors went through after Hurricane Maria to try and get help to our cities and how we’ve worked these weeks to provide basic supplies to people affected by earthquakes. Those involved owe us an explanation.” (source)

The White House was criticized for a lackluster response.

You may recall that in the aftermath of Hurricane Maria, President Trump was harshly criticized for not sending sufficient aid to the hard-hit island. But it appears that much of the aid that was dispensed was never given to the people who needed it the most. It’s interesting to note that President Trump is currently under fire for restrictions placed on billions of dollars of aid that were just approved to help Puerto Ricans recover from a recent earthquake, citing corruption in the Puerto Rican government.

Even as pressure has mounted for him to release emergency assistance, the president has maintained his assertions that the money will not be well spent. On Wednesday, the White House budget office made clear how those assertions had shaped relief.

To gain access to $8.2 billion in recovery money and $8.3 billion in disaster prevention funds, Puerto Rico will have to submit budget plans to its federally mandated fiscal control board, which will track where the money goes. It will also have to bolster its property registration database…

…the fiscal control board is viewed in Puerto Rico as unaccountable to the people. And Puerto Rican officials are not inclined to tell workers they will be paid less than the minimum wage. With regard to the property and deed registrations, Puerto Ricans have long used informal ownership records.

The restriction relating to the electrical grid may just be a practical one: Congress has already appropriated a separate tranche of money specifically for the electrical grid, though it has yet to be allocated. (source)

Given the fact that all this aid was hidden in a warehouse while people struggled for two years, it’s difficult to dispute that the new funds could likewise be misused.

Commenting on the news, Donald Trump, Jr., "I look forward to the Wall to wall coverage of this now that we found out @realDonaldTrump was right all along."

He probably shouldn't hold his breath.

Tyler Durden Sun, 01/19/2020 - 22:05
Published:1/19/2020 9:14:43 PM
[Markets] India's Half-Finished "Ghost Towns" Leave Middle Class In Crisis India's Half-Finished "Ghost Towns" Leave Middle Class In Crisis

If you thought the American housing market was a mess during the immediate aftermath of the collapse, wait until you read about what's going in India.

Rapid economic growth and the government's gradual economic liberalization have caused the ranks to India's middle class to boom. The emerging Hindu middle class is already reshaping Indian society: Prime Minister Narendra Modi owes his electoral victories to this group, and his reform agenda was designed with the goal of sheparding even more of the country's 1.4 billion citizens into the higher income bracket.

Modi's first term included several important reforms, including simplifying India's byzantine tax system and instituting a simplified system for taxing goods and services (though some argue that it must still be simplified further. He's also helped modernize the country's bankruptcy laws.

But as the country's growing wealth has sparked a flight from India's crowded urban slums to its more spacious suburbs, they're struggling with a shortage of homes, a shortage that has been made even more intense thanks to roughly half a million apartments that have been sitting unfinished for years.

Across the country, outside major cities like New Delhi and Mumbai, hundreds of developments have been stranded by developers, many of which have declared bankruptcy, or simply run out of money to finish the projects, according to the Wall Street Journal.

India's banks, already saddled with bad loans, are refusing to lend any more money to the developers. As a result, millions of Indians who put up their life savings as a down payment on a new, yet-to-be-built apartment have essentially been left bereft, with no money and nowhere to live.

Most are now making ends meet by cutting out any and all luxuries, and relying on friends and family, as they wait to see if the apartments they paid for will ever be finished.

Delhi has the largest number of apartments delayed by more than three years, but the problem is nearly universal across India's cities and emerging suburbs.

Here's a brief recounting of how India got to this point: market liberalizations that began in the early 2000s prompted a crush of developers and consumers all borrowing money either to build homes or to buy them.

But unfortunately, India's stodgy system of local regulations hadn't been liberalized enough, and many developers quickly racked up unanticipated delays thanks to difficulty in securing government clearances. Others had trouble hiring enough skilled workers to build the apartment complexes.

As a result, the number of buildings that are taking five or even ten years to build has skyrocketed.

One woman who spoke with WSJ poured her savings into a new apartment ten years ago. But the development was halted a few years after construction started, and she has no recourse for retrieving her savings.

Jonaki Ray took a loan to buy an apartment in 2009 that has tied up her life savings for more than a decade. To pay for her mortgage, and an apartment she has rented in the meantime, she stopped splurging on things like vacations abroad and a new car.

Ms. Ray has finally been given the keys to the unit, but still has no plans to move in. She has to finish the interiors on her own, and she is worried about safety as no one else on her floor has moved in.

"There is this thing looming over me and I don’t know what is going to happen,” she said. "It’s always there at the back of my head."

These half-built "Ghost towns" now dot the outskirts of India's cities, creating an outrageous blight on the landscape.

Wish Town, a development in the New Delhi suburb of Noida, encapsulates the plight of middle-class Indians who sank their life savings into

The construction workers are long gone, the site’s cement factory and cranes have stopped working. Signs mark aborted projects: a "Sports Field" is still a cauliflower patch, the "Social Club" a shell of a building.

Construction stopped in 2016 when the developer couldn’t pay its debt. Only about half of the 40,000 apartments that were to house close to 200,000 people have been finished and handed over to their buyers. Those who have moved in complain that the golf club, gyms, pools, retail spaces and restaurants advertised by its developer, Jaypee Group have largely yet to be built.

Modi regularly riffs on India's housing crisis and the plight of those who have lost their savings. But it's unclear what, if anything, his government plans to do about it.

One data provider used by WSJ put the total value of all the delayed developments at $50 billion, 10x the number from five years ago. 

The question now is: Will Modi commit the enormous resources necessary for a bailout? Or risk alienating the base that just handed him a second term in office?

Whatever happens, the crisis is just one of the myriad reasons why international investors are beginning to lose faith in Modi's India.

Tyler Durden Sun, 01/19/2020 - 21:40
Published:1/19/2020 8:45:39 PM
[Markets] Mutual Funds Weekly: Loving these underloved stocks can add value to your portfolio — plus other top investing tips These money and investing stories hit home with MarketWatch readers this past week.
Published:1/19/2020 8:19:05 PM
[Markets] "Reality Is Officially Here": Nobody Buying Homes In Greenwich Is Paying Top Dollar Anymore "Reality Is Officially Here": Nobody Buying Homes In Greenwich Is Paying Top Dollar Anymore

Today in optimistic real estate news...

...almost all housing in Greenwich is now selling for discounts to the sticker price. 90% of single family deals that closed in the fourth quarter were for less than what the seller was asking, according to Bloomberg. This marks the biggest percentage of deals dating back to mid 2017.

The average discount to the asking price was 9.6%, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

But the best news is that the price cuts didn't do much to improve sales, which fell by 12% from a year earlier to 117. However, they did contribute to a decline in Greenwich's listings - the biggest decline since Q1 2017 - as owners refused to discount their properties. 

Jonathan Miller, president of Miller Samuel said: “Reality is officially here. We’re getting to a point where they have to decide: Do they want to ever sell, or do they want to withdraw?”

Homeowners in the area are adjusting to the climate where even wealthy buyers have become sensitive to price. Wall Street bonuses have been on the decline and shoppers are showing less interest in oversized estates far from transit and retail. New tax laws that limit deductions have also acted as a headwind for the area.

Dealmaking hasn't increased in any of the last five quarters, but low mortgage rates still have buyers on the prowl for value. Contracts at the end of the year pricked up slightly, which could suggest a stronger Q1 on its way. As of Dec. 31, there were 74 transactions pending, which is up 54% from the year prior. 

David Haffenreffer, manager of the Greenwich office of Houlihan Lawrence: “At the right price there’s always an audience.” 

“People are recognizing there are deals to be had,” he continued.

One section of town, north of the Merritt Parkway, saw deals jump 54%. The area is replete with sprawling estates set back from "winding two lane roads". It was the largest increase for any neighborhood, but was the area where the buyers also got the largest discounts. 

The neighborhood was also home to the biggest sale of the quarter, after the owners of an estate took a 45% haircut from a price they paid in 2010. The estate sold once belonged to Mel Gibson and sold last month for $13.25 million after being on the market for seven years. 

Tyler Durden Sun, 01/19/2020 - 20:55
Published:1/19/2020 8:19:05 PM
[Markets] Hedge Fund CIO: Once All Investing Becomes Passive, Then The Information Contained In Market Prices Will Be Meaningless Hedge Fund CIO: Once All Investing Becomes Passive, Then The Information Contained In Market Prices Will Be Meaningless

Submitted by Eric Peters, CIO of One River Asset Management


“I look at historical relationships that appear to no longer operate as before,” said the investor. “I look at measures of valuation that are stretched to levels rarely seen,” he continued.

"I look at corporate share buybacks as the only meaningful inflow. I look at outflows from retail investors and the flags that this raises."

"Then I look at the fact that global interest rates have never been negative like this. I look at the working population and it has never before aged and shrunk like this."

"And I look at the world and just don’t know how anyone can be certain of anything."

* * *


"Start with what we know for sure,” said Big Foot, creeping quietly through global markets, trackers desperate to front-run his every step.

"If 100% of all investing is passive, then the information contained in market prices is meaningless,” continued the CEO of one of the industry’s largest investment firms.  In 2009, assets in actively-managed mutual funds were 3x those of index-based funds/ETFs. In August 2019, US index-based fund/ETF assets surpassed actively managed assets. That trend continues.

With each incremental dollar that moves from active to passive management, roughly five more cents flow into equities (active managers hold 5% cash buffers while passive funds generally do not).

"We also know that if 100% of equity is taken private, then public markets would cease to exist." The average institutional portfolio holds a 25% allocation in alternative investments. Of that allocation, private equity investments have surged to 25% of the assets, up from 18% in 2018. Private equity funds have $1.5trln in dry powder that will fail to pay fees unless their managers buy equity, which continues to appreciate.

US equity market capitalization is $35tlrn, a record 1.55x America’s $22.3trln annual GDP. “But what we do not know for sure is whether there comes a point well before 100% of all investing is done passively, or before all public equity is taken private, that the market price becomes meaningless,” said Big Foot.

You see, in a world where all investing is passive, how much would an incremental $1bln inflow move market prices up? How about a $1bln outflow? The price moves would become utterly extraordinary in such a world. And in a world where all public equity is taken private, PE managers would surely mark their holdings steadily higher, to ever more extreme multiples.

"Nor do we know whether we have already reached that point." 

Tyler Durden Sun, 01/19/2020 - 20:33
Published:1/19/2020 7:45:41 PM
[Markets] One Dead As Speeding Tesla "Crashes And Bursts Into Flames" In California Intersection Saturday Night One Dead As Speeding Tesla "Crashes And Bursts Into Flames" In California Intersection Saturday Night

No sooner do we report that the NHTSA is considering a petition to investigate 500,000 Teslas for unintended acceleration, than another Tesla driver winds up dead.

Police are in the middle of investigating what is being called a "single vehicle crash" involving a Tesla that "crashed and burst into flames" in Pleasanton, California.

The driver of the vehicle was killed, according to ABC 7. His identity has not yet been released.

The crash was reported on Saturday night at about 6pm local time at the intersection of West Las Positas Boulevard and Hacienda Drive.

The Tesla was going southbound and lost control near the intersection. It then crashed into a sign outside of an apartment complex before catching on fire. 

The intersection was closed for several hours on Saturday night as a result of the crash. 

"The car was going so fast, it actually took out a street signal," the on-the-scene reporter says in her coverage. 

Your move, NHTSA.  

We will update this story as more information becomes available. 

You can watch the news coverage of the event from the ABC feed here:

Tyler Durden Sun, 01/19/2020 - 20:10
Published:1/19/2020 7:15:29 PM
[Markets] McConnell "Kill Switch" Rule Will Shut Down Impeachment If Dems Get Wild McConnell "Kill Switch" Rule Will Shut Down Impeachment If Dems Get Wild

Unfortunately for Senate Majority Leader Mitch McConnell, too many moderate Republicans have sided with Democrats in insisting that the impeachment trial proceed. If the shoe was on the other foot, and McConnell was able to win over more conservative and moderate Democrats, President Trump's legal team would be able to easily win a vote to dismiss at the outset of the trial, effectively ending it before it could really begin.

But prtisan rancor aimed at the president and his allies in Congress remains at an all-time high. Even as Democrats bash the president for allegedly putting politics above doing what's right for the country, they are proceeding with the impeachment charade, despite being doomed from the start.

After a frenetic holiday weekend of dealmaking, McConnell is apparently nearly finished drafting the rules of engagement for the impeachment trial.

According to a leak that was picked up by Axios and Brietbart, among others, McConnell is still planning to include a "kill switch" in the impeachment trial rules that would allow the president's legal team to call for a dismissal if Democrats try to violate the rules or engage in any "shenanigans."

The provision will allow Trump's team to quickly push for a summary judgment or dismissal at any time. It comes after some Senators tried - and failed - to change the Senate rules to dismiss the charges because of Pelosi's decision to delay transferring the articles of impeachment.

According to Breitbart, if McConnell succeeds in including the kill switch, he will have outmaneuvered Democrats and proved once again that he's a better leader than Pelosi. Even though a few moderates tentatively sided with the Democrats and insisted there should be a trial, Republicans still have the upper hand - because the minute the Dems start to push the envelope, the moderate Republicans will return to vote with McConnell to dismiss.

The Republican leadership and President Trump himself have assented - and at times even welcomed - a trial. At this point, the American people have already seen the transcript of Trump's July call with his Ukrainian counterpart, they've been told that the aid was eventually released, and even heard it from Zelensky himself that there was no quid pro quo involving opening an investigation into the Bidens.

And now, if the Dems try to do something extreme like include even more alleged "bombshells" from Lev Parnas or anyone else outside the framework for the trial, McConnell will be able to shut them down. 

"If Schiff or the Democrats try anything untoward like they did in the House, the president and the Senate have the option to shut the whole thing down and blow it all up on them. That means Republicans hold the upper hand, and should things get crazy—while there are not currently enough votes to dismiss the trial or outright off the bat acquit Trump—after Democrat partisan gamesmanship there likely would be enough votes to dismiss the whole thing."

Meanwhile, as the two sides battle over whether witnesses will be called, at least one of the lawyers who will be pleading Trump's case to the Senate - Harvard's Alan Dershowitz - told the Hill that he plans to argue that the articles of impeachment are invalid because they don't include truly impeachable offenses, which would justify a Senate vote to end the matter.

But will Democrats see it that way? We're not so sure.

So far, at least, the Dems and their supporters in the press have tried to imbue the proceedings with a dramatic flair. The media lapped it up when Cheryl Johnson, a black woman and the clerk of the House, delivered the articles of impeachment against President Trump on Martin Luther King Jr.'s real birthday.

Most of these reports neglected to point out that the entire impeachment process will mostly be managed by Adam Schiff and Jerry Nadler, two old white men.

At least if McConnell has his way, the Dems will mostly be limited to transparent and ham-fisted melodrama. There's plenty of evidence that the public's perception of the president has been very little affected by the whole circus. If anything, the Dems excoriations of the president and his team have soured the public against them.

Even though Democratic strategists bet the farm that impeachment would help them defeat Trump in 2020.

Tyler Durden Sun, 01/19/2020 - 19:30
Published:1/19/2020 6:47:26 PM
[Markets] The Ugly Truth About How Much Americans Have Been Spied On By The Gov't Since 2001 The Ugly Truth About How Much Americans Have Been Spied On By The Gov't Since 2001

Authored by B.N.Frank via,

We’ve all heard about at least some of this before.  Thanks to Full Measure for producing this new segment reminding us about why this should tick us off. Independent journalist Sharyl Attkisson also provides an update about her own computer intrusion by the U.S. government in this video.

We begin with an examination of one of the worst abuses of government power that could happen in our society - Illegal spying on U.S. citizens.

Amid findings about egregious violations by our intelligence community, there’s a criminal investigation. And the court that approves surveillance on U.S. citizens has instructed the FBI to implement new safeguards as of this week. As our intelligence agencies face what may be their biggest scrutiny in decades, we examine how we got here.

Our examination of government surveillance controversies begins in 2001. Under FBI Director Robert Mueller, new rules were imposed to address FBI abuses.

FBI Agents had repeatedly gotten caught submitting false information to the Foreign Intelligence Surveillance Court to justify wiretapping or spying on U.S. citizens.

Unfortunately, increasing surveillance on non-consenting Americans by a variety of entities seems to be the new norm thanks to new and unsafe technology being forcibly installed throughout our communities (see 1234567) and even on our homes

Tyler Durden Sun, 01/19/2020 - 18:50
Published:1/19/2020 6:17:28 PM
[Markets] Nadler Demands "All Witnesses Must Be Heard, Except Hunter Biden", Chuck Todd Defends Parnas' "Evidence" Nadler Demands "All Witnesses Must Be Heard, Except Hunter Biden", Chuck Todd Defends Parnas' "Evidence"

NBC's Chuck Todd reconfirmed his role in the 'resistance' this weekend as he clashed with Senator David Perdue (R- G.A.) on Sunday over the upcoming impeachment trial and whether Lev Parnas should testify.

Perdue told Todd on NBC's "Meet the Press" that Parnas, a colleague of President Trump's attorney, Rudy Giuliani, shouldn't testify because his testimony would be considered "second-hand information."

"This is a distraction," Perdue said.

"This a person that's been indicted. Right now, he's out on bail. He's been meeting with the House Intel Committee. If the House felt like this information was pertinent, I would think they would have included him."

Todd fired back and said:

"How is it second hand? He was in Ukraine. He was doing the bidding," adding that Parnas has key "material evidence that might help connect some dots."

Perdue responded by saying Parnas is trying "to get his sentence reduced."

Perdue defended Trump's actions in Ukraine by indicating the administration was concerned about corruption involving an American citizen. He also rejected a suggestion by Todd that Trump was close to Parnas.

Parnas made the rounds on the mainstream media last week, stopping by none other than the Rachel Maddow Show Wednesday night to claim that he was sent to Ukraine at the order of Rudy Guiliani and Trump to uncover dirt on Joe Biden's son, Hunter Biden.

The schizophrenia is astonishing.

  • In October of 2019, European businessman, Lev Parnas, who claimed to have “explosive information about corruption involving Hillary Clinton and Joe Biden”, was arrested at Dulles airport on “campaign finance violations.”

  • And, now, just three months later, Parnas is dropping impeachment bombshells on Trump.

The interview came the same day the impeachment articles were delivered to the Senate.

Separately on Sunday, Nadler spoke with Brennan on CBS's "Face the Nation" that "in any trial, all relevant witnesses must be heard," except, Nadler added, for Hunter Biden, who should not be a witness in the impeachment trial because he does not know the allegations against the president.

So - to clarify the left's position on witnesses:

  • Parnas - who is at best a secondary witness and worst desperate for a deal to avoid prison - should be a witness "as he can connect the dots;"

  • but Hunter Biden - who is absolutely at the center of the whole debacle with regard corruption and Trump's decisions - shouldn't be a witness because "he has no knowledge of the accusations."

Once again the Dems ties themselves in circles after Pelosi slow-played the process - despite exclaiming how critical and urgent it was.

Senator Lindsey Graham (R- S.C.) held nothing back in his disgust at the political "malarkey" under way. In an interview with "Fox News Sunday" anchor Chris Wallace, graham blasted that House Speaker Nancy Pelosi (D- C.A.) had "orchestrated the trial of holy hell" against the president next week.

Graham said from day one, Pelosi and Democrats waged war against Trump.

"You took 48 days to impeach this president," he told Wallace.

"You did not allow him to call any witnesses. He could not have a lawyer present during the House Intel Committee. This has been a partisan railroad job. And you're asking for fairness in the Senate? You violated every norm of what we do."

Graham ended the interview by saying once the impeachment trial is over, the nation can start healing.

"This has been a political hit job. This is political revenge. What they're doing to the presidency is a danger to the institution itself," he warned.

The impeachment trial starts Tuesday, and this will be one of the most crucial moments of the Trump presidency as the Democrats have gone all-in.


Trump's legal team said Saturday the impeachment trial is "a dangerous attack on the right of the American people to freely choose their president."

"This is a brazen and unlawful attempt to overturn the results of the 2016 election and interfere with the 2020 election, now just months away," the legal team stated.

And one can't help but feel the Trump legal team and Graham are right when the schizophrenic blinkered perspectives of the House managers' media appearances (and liberal media acquiescence) is considered.  

Tyler Durden Sun, 01/19/2020 - 18:30
Published:1/19/2020 5:48:02 PM
[Markets] Eric Peters: Peter Navarro Was Right - Tariffs Have Spurred Growth, Not Hampered It Eric Peters: Peter Navarro Was Right - Tariffs Have Spurred Growth, Not Hampered It

Submitted by Eric Peters, CIO of One River Asset Management

“Conventional economic models ignore how Trump’s tariffs boost investment and national security,” wrote Peter Navarro, the President’s Director of Trade and Manufacturing Policy.

His Jan 13th WSJ opinion piece, like most things Navarro publishes, provide real insight into Trump policy/thinking. But Navarro is an annoying hothead, so most people dismiss him.

I’ve condensed his piece: “Critics of Trump’s transformational trade policies continue to insist that the tariffs are hindering rather than helping the boom. Yet with each new tariff the economy remains robust, wages continue to rise, and inflation stays muted (while the economic losses for China continue to grow).

Tariffs have spurred growth, not hampered it. Why have the gloom-and-doom forecasters been so wrong? The errors come from flaws in traditional economic models. Anti-tariff analysts typically rely on static "partial equilibrium" models. While a tariff on steel might boost employment in that industry, for example, the price of steel would rise for car makers downstream, which would then suffer lower production and fewer jobs.

Each tariff shrinks total employment, depresses wages, and increases inflation—or at least that’s how these forecasts typically go. Yet what is missing from these forecasts is a 'general equilibrium' analysis of tariffs, which would assess the whole economy, with a concomitant 'dynamic scoring' of their effects, to account for the new investment tariffs induce. Over time this tariff-induced investment, along with lower taxes and sensible deregulation, will boost growth and job creation. Higher domestic production will also help offset any price hikes from the tariffs.

Trump’s imposition of actual tariffs has made the threat of tariffs more credible, and a variety of tariff threats have borne robust results. In addition to missing the upside of supporting American industries, critics overlook the ways the US has suffered under open trade. Expanded trade with China in the 2000s contributed to the loss of tens of thousands of American factories and millions of manufacturing jobs and the hollowing out of many communities. What followed was an associated rise in the rates of divorce, drug addiction, crime, depression and death, particularly among blue-collar men no longer able to support their families at a decent wage.

The national-security externalities associated with Trump trade policy may be even more consequential. A case in point is the tariffs being used as leverage to defend America’s technological crown jewels from being forcibly transferred to Chinese companies—from artificial intelligence, robotics and autonomous vehicles to quantum computing and blockchain. These industries comprise the core of the next generation of weapons systems needed to repel threats from rivals like China, Russia and Iran.

One must ask the anti-tariff forecasters: Where are the benefits of a freer and more secure American homeland counted in your models? An honest, modern analysis of the Trump tariffs would acknowledge the widespread market distortions that currently disadvantage American workers, parse the complex ways tariffs affect trade partners’ behavior, appropriately discount short-term price impacts, and dynamically score the many long-term positive effects.

Tyler Durden Sun, 01/19/2020 - 18:10
Published:1/19/2020 5:18:16 PM
[Markets] Dow Jones Futures: Stock Market Rally Faces Next Test; Netflix, Texas Instruments Earnings Due, With Apple, Disney Implications Futures: Earnings season is the the next test for the hot stock market rally. Netflix and Texas Instruments earnings are due Tuesday night. Published:1/19/2020 5:18:16 PM
[Markets] Bloomberg Journo Fabricates Bernie Sanders Quote About Buttigieg Having A 'Gay Problem' Bloomberg Journo Fabricates Bernie Sanders Quote About Buttigieg Having A 'Gay Problem'

In the latest example of MSM hackery, Bloomberg reporter Emma Kinery took it upon herself to fabricate a quote from Bernie Sanders (I-VA) to suggest that 2020 candidate Pete Buttigieg has a 'gay' problem.

During an interview with New Hampshire Public Radio, Sanders was asked if gender is "still an obstacle for female politicians," to which he replied: "yes, but I think everybody has their own set of problems. I'm 78 years of age, that's a problem ... If you're looking at Buttigieg, he's a young guy."

Except, Kinery - in a now-deleted tweet, quoted Sanders as saying:

"Buttigieg is young and Buttigieg is gay."

With no explanation or apology, Kinery deleted her tweet and re-tweeted a verbatim transcript:


Tyler Durden Sun, 01/19/2020 - 17:30
Published:1/19/2020 4:45:53 PM
[Markets] NewsWatch: Value stocks are making a comeback, and here’s how to get in early 4 ways to love underloved value stocks.
Published:1/19/2020 4:17:05 PM
[Markets] The Question For 2020: Can Fundamentals Ramp Up Before Policy Fades The Question For 2020: Can Fundamentals Ramp Up Before Policy Fades

Authored by Morgan Stanley's chief cross-asset strategist, Andrew Sheets

Markets are always subject to varied and shifting sets of drivers. Over the last 12 months, it has been a story of four – policy, sentiment, valuation and fundamentals. The question for 2020 is whether the last (fundamentals) can ramp back up before the first (policy) fades. It’s a race that makes us more nervous about the market after April and tactically mindful that several of our sentiment measures are now flashing red.

In the first phase of last year’s rally, policy, valuation and sentiment offset weak fundamentals. Global earnings revisions, trade volumes and manufacturing data all deteriorated sharply in early 2019. But the other three factors were still there, and in a big way. The Fed responded aggressively with easier policy via rate cuts. Valuations had adjusted meaningfully in late 2018, providing a more supportive base. And sentiment, if not universally negative, was a long way from optimistic.

Then, as markets rose, valuations fell by the wayside... By the middle of 2019, valuations for both global equities and credit had moved back above their five-year (and 10-year) averages. Fundamentals remained weak, which together with richer valuations might explain why global equities trod water between May and September. But thankfully (for the market), supportive policy and sentiment were hanging around. The Fed began increasing its balance sheet again at a US$60 billion/month clip in October, and measures of investor positioning remained subdued, reflecting continued concerns about fundamental weakness.

...and then sentiment melted away... With markets pushing higher into the new year, a wide variety of measures suggest a significant increase in optimism. Net length in S&P 500 futures contracts is the highest since 2014. The put/call ratio has plunged. Morgan Stanley’s Global Risk Demand Index (US Pat. No. 7,617,143), which measures ‘fear’ and ‘greed’, is near its highest levels in the last 10 years. And to put a human face on these datapoints, investor polling of the 160+ investors who attended our recent Global Insights Day in London this week was the most positive in years.

...which leaves policy. Whether or not the Fed intended to provide material easing when it restarted purchasing securities in October at a US$60 billion/month clip, that was the effect. Stocks rallied, credit spreads tightened further and the dollar fell, all easing financial conditions. But with valuations higher, sentiment positive and fundamentals still soft, policy is now carrying a heavy load.

And so the race with fundamentals begins

Our interest rate strategists expect the Fed to end its US$60 billion/month of T-Bill purchases at the end of April and replace them with US$15 billion/month of purchases across the Treasury curve. This ‘step-down’ in Fed support lends credence to the idea that gains in 2020 will be front-loaded.

The question will be whether fundamental improvement can get there first. Our economics team sees global growth rebounding and key parts of the manufacturing cycle picking up. But so far, we see this driving only a modest and highly uneven recovery in global earnings. One reason why we remain positive on equities in Korea and Japan is conviction that the earnings pick-up in these markets is real and can meet bottom-up consensus expectations.

But there’s also a risk that fundamental improvement has even less time. While the pace of increase in permanent assets on the Federal Reserve’s balance sheet should remain steady through April, my colleague Kelcie Gerson from our interest rate strategy team notes that the growth in reserves may be ending around now, as the Fed dials back on repo operations. If the size of reserves, rather than the balance sheet, is a better measure of policy support, fundamentals have even less time to pick up, and the current earnings season becomes more important.

Tyler Durden Sun, 01/19/2020 - 17:05
Published:1/19/2020 4:17:05 PM
[Markets] The Tight Rope Market The Tight Rope Market

Authored by Sven Henrich via,

None of us can know where markets would be trading without the Fed’s constant massive liquidity injections, but now that the bubble recognition has gone mainstream (BloombergFT) and acknowledged by at least one Fed president (Kaplan) I think it’s fair to say: Lower, much lower.

But while investors continue to dance on the liquidity driven momentum rally right into major resistance currently ignored data keeps suggesting that risk is much higher than anyone is willing to acknowledge. Indeed these data points suggest investors may be walking a precarious tight rope without even realizing it.

I do my best to keep pointing out these data points, but so far admittedly in vain:

Since the Fed is currently hosting the most expensive frat party of all time it’s no wonder that investors are currently ignoring everything else consequences be damned.

I’ll let the reader be the judge, but below are a few charts I think are worth documenting as they highlight what investors are entirely ignoring at this stage.

And no I’m not talking about valuations. I’ve already made that point in the Ghosts of 2000, valuations are at records highs on many measures and that goes without saying. Valuations are high during any bubble, but rather there are underlying data trends that often precede coming recessions.

What recession? Everybody has declared recession risk to have faded. Why? Because stock prices have rallied to new all time highs? When has that ever be an indication that there is no recession risk ahead? Markets made new all time highs in the Fall of 2007. The recession started in December of 2007. Markets rallied to new all time highs in 2000. Did that mean there was no recession in 2001/2002? Of course now.

If anything high optimism is always a concern as it historically it is followed by, well, less optimism:

Yield curves have un-inverted and everybody declares recession risk to be over. Why?

The steepening has traditionally been the red flag ahead of a recession. Along with a slew of other data points that everybody is again ignoring.

In order for markets to grow into excessive valuations you need growth to follow suit. In order to see growth to emerge you need to see an expansion investment and credit.

Commercial and industrial loan growth shows none of that, it continues to decline:

Often associated with coming recessions it signals that companies are not as confident as markets who are hoping for a 2016 repeat. But then we didnt have a yield curve inversion and then steepening.

In context then it’s perhaps noteworthy that suddenly job openings have dropped hard, the most in this cycle:

This cycle remains very much long in the tooth and slowing employment growth is always a red flag at the end of a cycle. Where are the great new hiring plans?

May I remind everyone there’s a US election coming and this one may have consequences. I can’t predict elections, but depending on outcome it may bring about a  change in tax outlook.

Corporations surely must know that they were handed an unprecedented gift during the Trump presidency that may not last forever:

Uncertainty breeds risk and corporations may well hold off on big expansionary plans until after the election, especially considering that there a few signs that industrial production growth is picking up at this stage:

In fact, despite being awash in cash and in a tax nirvana corporations appear to dial it back on the buyback bonanza front:

As they do when they sense growth issues ahead (see 2007 into 2008).

On that note, here’s a little watched indicator, heavy weight truck sales:

Oddly enough that one dropped hard in front of the last 2 recessions following an aggressive ramp up. And it just did as well.

These data points are by far an exhaustive list, but they show a confluent picture of data points that suggest recession risk is not off the table. If anything they show factors that are entirely consistent with previous business cycles coming to an end.

And if this rally is all Fed driven, then it’s the Fed that will have brought about the final spurt of excess that will lead to an ugly reversion that could bring about the very recession it was so scared of in the first place.

It’s not like financial asset valuations versus the the underlying size of the economy are historically outsized or anything:

The New York Fed Nowcast keeps showing less than 2% GDP growth for Q4 2019 and Q1 2020. 1.2% and 1.7% respectively.

That’s the growth we get with a $400B expansion in the Fed’s balance sheet, 3 rate cuts and a trillion dollar deficit?

It’s almost as if the Fed’s power to stimulate growth is waning:

I submit investors, drunk at the latest Fed party, are walking a very tight rope. Who’s the designated driver once the party ends?

*  *  *

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Tyler Durden Sun, 01/19/2020 - 16:15
Published:1/19/2020 3:42:40 PM
[Markets] Never Before Seen Market Complacency, As Everyone Goes Even More "All In" Never Before Seen Market Complacency, As Everyone Goes Even More "All In"

Last weekend, we pointed out that according to the latest flow data as compiled by Deutsche Bank's Parag Thatte, virtually every segment of the market - from institutional to retail investors, and systematics such as quants, risk-parity, vol-targeters, and CTAs - were essentially "all-in" stocks (if you missed it, please read "Institutions, Retail And Algos Are Now All-In, Just As Buybacks Tumble").

Fast forwarding to today, when the S&P just had another impressive meltup week, sending the S&P more than 3% higher YTD and for the 11th consecutive year blowing the professional investing community out of the water (hedge funds have underperformed the S&P on every single day of 2020 so far)...

... we find that investors are, inasmuch as that is possible, even more "all in" stocks. So without boring readers with the same narrative as we laid out last weekend, for the simple reason that nothing has changed since then, here is a quick rundown the key charts showing just how vested (and invested) everyone is in stocks as of this moment.

We start with consolidated equity positioning, representing a weighted average of Z-scores for positioning and flows indicators used by Deutsche Bank in tracking its entire positional universe:

A somewhat simpler and perhaps more accurate take, one based on the aggregated equity futures positioning as a % of Open Interest, shows that asset managers and levered funds have never been longer!

A similar picture emerges when looking at just net positioning in S&P 500 futures among asset managers and leveraged funds.

Curiously, while Discretionary investors are almost at all time highs, if not quite, Systematic investors have now thrown all caution to the wind, perhaps as a result of the sharp drop in VIX Y/Y, and have never been more invested:

Among the systematics, the bullishness of risk parity is now almost literally off the charts.

Likewise for vol-control funds, these are at the maximum of their theoretical maximum equity allocation.

And while CTAs have had a higher beta to equities in the past, this too is rising fast and approaching the all time high.

In one ominous sign that we are taking the stairs higher and will take the parachute on the way down, the higher we get, the lower overall market liquidity gets.

Another ominous signal: hedge funds are unable to keep up with the meltup in the broader market, with hegde fund shorts dominating performance ever since the summer of 2018, and preventing the 2 and 20 community to keep up with the S&P500.

And as a result of the negative contribution from shorts which are once again outperforming the broader market, hedge fund beta is near the lowest in the four years.

As a result of aggressive central bank intervention which has effectively wiped out risk, extreme put-to-call ratios indicate near record complacency...

... as does collapsing implied vol and skew.

This has also led to near all time low short interest across single stocks and ETFs:

Meanwhile, the biggest conundrum of 2019 has carried over into 2020, as massive equity outflows persist and offset tremendous inflows in bonds as well as money market funds, suggesting the primary buyer remains stock buybacks...

... despite stable inflows into tech, real estate and utilities.

Last but certainly not least, the biggest concern for stocks is the precipitous decline in announced buybacks: without this single biggest buyer of stocks over the past 10 years, just who will propell stocks to new all time highs once sentiment reverse and marginal traders start dumping?


Tyler Durden Sun, 01/19/2020 - 16:00
Published:1/19/2020 3:12:39 PM
[Markets] Tax Guy: How to go back in time and cash in on 2018 tax breaks before it’s too late ‘Tax extenders’ legislation retroactively resurrected tax breaks for 2018 — here’s how to claim them.
Published:1/19/2020 3:12:39 PM
[Markets] US Drug Overdose Deaths Drop For First Time Since 1990 US Drug Overdose Deaths Drop For First Time Since 1990

Authored by Paula Liu via,

For the first time in nearly three decades, the deaths resulting from drug overdose in the United States have dropped, according to multiple reports.

As reported by The New York Times, according to government data that was published on Jan. 15, the total amount of deaths resulting from drug overdose dropped around 5 percent in 2019.

“[For the] first time in almost 30 years, we’ve seen a decline in the number of Americans dying from an overdose—its a 5 percent reduction,” said Jim Carroll, the director of the Office of National Drug Control Policy, according to The Hill.

The news outlet reported that Carroll was appointed director in 2018 by President Donald Trump.

“It’s a result of everything - its working on the supply of drugs that are coming in but it’s also working on demand. It’s getting more people into treatment and its spreading the message on prevention,” Carroll said.

Carroll commended some local officials for trying to look past incarceration as a means to solve the epidemic, and instead looking for ways to offer treatment. Instead of arresting drug users, the goal is to treat and educate them as an individual. Carroll stated that this method had made a difference in the community.

According to the report, the drop was primarily attributed to the number of deaths from prescription opioid drugs, one of the drugs that had set off an epidemic in the United States. The New York Times reported that the opioid epidemic was so catastrophic that the drug had decreased the life expectancy in the country.

The Centers for Disease Control and Prevention (CDC) stated that 67.8 percent of the drug overdose deaths back in 2017 (which was 70,237 deaths) was due to opioid drugs, according to data on drug overdose deaths. In addition, on average 130 Americans die every single day from an opioid drug overdose, according to the CDC.

As a result of the epidemic, some of the states have tackled the issue head on, and created programs to help counter the amount of deaths as a form of solution, according to The Hill.

Andrew Kolodny, the co-director of opioid policy research at Brandels University said that the drop in deaths could be a turning point, calling the decrease “light at the end of the tunnel,” but said that the decrease was still nothing to celebrate because the amount of people who died from drug overdoses is still very high, according to The New York Times.

Tyler Durden Sun, 01/19/2020 - 15:25
Published:1/19/2020 2:44:53 PM
[Markets] MSNBC Promotes Biden Lie That Sanders 'Doctored' Video; Politico Debunks, Sirota Simmers MSNBC Promotes Biden Lie That Sanders 'Doctored' Video; Politico Debunks, Sirota Simmers

Bernie Sanders and Joe Biden are having an old man fight.

In a January 7 newsletter, Sanders' campaign wrote that Biden "lauded" former Republican House Speaker Paul Ryan's efforts to cut social security - claiming "In 2018, Biden lauded Paul Ryan for proposing cuts to Social Security and Medicare."

In truth, Biden said that Ryan was "correct" to have gone after Social Security and Medicare - as it's "the only way" to make the numbers work, though the former VP later clarified that America needs a progressive tax code that "raises enough revenue to make sure that the Social Security and Medicare can stay - still needs adjustments, but can stay."


After Sanders' campaign claimed that Biden lauded Ryan's plan, Biden lied - claiming Sanders 'doctored' the video.

"PolitiFact looked at it and they doctored the photo, they doctored the piece and it’s acknowledged that it’s a fake," Biden falsely claimed.

Politifact didn't say the video was doctored, though they did suggest that Sanders had mischaracterized Biden's comments. Interestingly, Politifact omits Biden's mention that Social Security and Medicare would 'still need adjustments.'

Sanders' campaign hit back in a Saturday statement from Campaign Manager Fritz Shakir, who said "Joe Biden should be honest with voters and stop trying to doctor his own public record of consistently and repeatedly trying to cut Social Security," adding "The facts are very clear: Biden not only pushed to cut Social Security — he is on tape proudly bragging about it on multiple occasions."

Biden, meanwhile, said on Saturday "It is simply a lie, that video that’s going around. And ask anybody in the press, it’s a flat lie. They acknowledged that," adding "This is a doctored tape. And I think it’s beneath him. And I’m looking for his campaign to come forward and disown it. But they haven’t done it yet."

Politico set the record straight on Saturday, noting that the video was not doctored, and that Biden has a "long-standing record of entertaining cuts" to the programs - only for MSNBC to peddle the 'doctored video' accusation on air. Sanders speechwriter David Sirota called them out over Twitter on Sunday.

In short:

Tyler Durden Sun, 01/19/2020 - 15:00
Published:1/19/2020 2:12:52 PM
[Markets] How The Supreme Court Could Be Pulled Into The Trump Impeachment How The Supreme Court Could Be Pulled Into The Trump Impeachment

Authored by Jonathan Turley,

After its 2000 decision in Bush v. Gore, Justice David Souter reportedly “wept” when the role of the Supreme Court was raised in determining the outcome of the presidential election.

The court continues to grapple with the legacy – and controversy – of that decision. With the still developing Senate trial in President Trump’s impeachment, the court could soon be pulled into the flip side of Bush v. Gore, not who could be declared but who should be removed as president.

Despite what Trump counsel Rudolph W. Giuliani has declared in calling for the court to nullify the impeachment, the Constitution does not state any function of the court in impeachments other than the limited role of the chief justice as the presiding judge. That suits most justices just fine. Most justices would prefer to drink molten lead than get pulled into another presidential legitimacy case.

Yet, the Trump impeachment trial may force that cup to the lips of the justices. With a trial starting in the Senate on Thursday, the looming question over the Senate will be whether to allow witnesses. While I strongly disagreed with the House in rushing this impeachment forward rather than waiting a couple of months to complete its record, I still support a trial with witnesses in the Senate. If witnesses are called, however, the court could be forced to finally face a question more than 50 years in the making.

In 1974, the Supreme Court ruled in United States v. Nixon and ordered the release of the Watergate tapes to special prosecutor Leon Jaworski – and ultimately to Congress. Nixon resigned roughly two weeks later. That case has spawned a variety of interpretations of its rejection of executive privilege, including one interpretation I call the “Nixon fallacy.” The fallacy goes something like this:

Impeachment so exceeds in importance executive-privilege claims that the Supreme Court has already declared that criminal or impeachment investigations take precedence over privilege so any withholding of testimony or documents is per se obstruction.

In reality, the Supreme Court never said anything like that.

Yes, the court rejected what it described as the claim of an “absolute, unqualified Presidential privilege of immunity” to withhold relevant evidence in a criminal investigation. But it did not say that a president could not invoke privilege over the testimony in an impeachment proceeding or that such privilege assertions could not ever prevail. Indeed, it did not even categorically reject such claims in a criminal investigation but simply said that “without more” of a justification from Nixon, the tapes would have to be turned over to the Watergate special prosecutor.

A national security adviser speaking to a president about the delivery of military aid to a foreign country is the very definition of a core protected area of executive privilege. That does not mean the White House would win in a fight over John Bolton’s testimony. However, it does mean Trump has a viable and recognized basis for withholding information in this area – creating an issue capable of judicial review and resolution.

So, here is one scenario. The Senate crosses the Rubicon and both sides call witnesses from Bolton to Hunter Biden to give depositions. While Biden would not be able to refuse to testify absent a Fifth Amendment plea (which could be overcome by a grant of immunity), the White House would try to halt Bolton’s participation under a claim of privilege. The White House would presumably push the case into the federal district court, which would have to review each area of questioning to determine if executive privileges or congressional prerogatives should prevail. Appeals would follow. And all that assumes the Senate is willing to wait for those courts to rule.

The problem is time. It took only three months to litigate the Nixon tapes controversy from the district court to a final decision of the Supreme Court. By refusing to delay the impeachment vote, the House effectively gave up control of its own case. The Senate may have little time or patience to allow the House to correct that blunder.

In my view, Bolton should testify. Indeed, he should have been subpoenaed in the House. There are valid privilege claims to be raised, but he can clearly answer questions narrowly tailored to the issue of a quid pro quo.

The only body less eager to grapple with those claims than the Senate is the Supreme Court. The aversion is only enhanced by the possibility of recusal of Chief Justice John G. Roberts Jr. in any appeal, leaving the court with a risk of a tie vote on a critical impeachment question. Over a decade after she ruled in Bush v. Gore, Sandra Day O’Connor was still expressing regrets and wondered aloud, “Maybe the court should have said, ‘We’re not going to take it, goodbye.'”

But that may be difficult when the Senate is waiting roughly 1,500 feet away for an answer on what Bolton might say. Three branches of government would literally be locked in a constitutional hold with the curious figure of Bolton sitting in the center. Before he speaks, the court may have no alternative but to be heard.

Tyler Durden Sun, 01/19/2020 - 14:35
Published:1/19/2020 1:42:11 PM
[Markets] Syrian Jihadists Filmed Jet-Setting To Next Proxy War On Commercial Plane Syrian Jihadists Filmed Jet-Setting To Next Proxy War On Commercial Plane

Turkish President Recep Tayyip Erdogan has continued warning that terrorist groups as well as a 'flood of refugees' will show up on Europe's shores if the Tripoli government were to fall to renegade General Khalifa Haftar, amid his continued offensive to control the Libyan capital. Erdogan's statement came a day before he heads to Berlin for a major peace conference which will attempt to halt the fighting. 

And yet look who's sending actual jihadists into the already war-ravaged country on comfortable commercial jets:

Middle East media outlet Arab News describes the footage as follows:

A video has emerged showing dozens of what appear to be Syrian rebels on an Afriqiyah Airways plane headed to Libya where they will allegedly fight alongside the country’s Government of National Accord (GNA), Libyan newspaper Al-Shahid has claimed.

In the video, the men — three of whom were seen wearing military uniforms — are on their way to Libya where they will reportedly fight as mercenaries for the GNA’s militias.

The shocking video of what is supposed to be a "covert" Turkey-sponsored mission to bolster the Tripoli GNA government with both Syrian jihadist FSA mercenaries (and separately Turkish national troops) confirms new reporting in The Guardian this week.

According to the bombshell Guardian report:

Two thousand Syrian fighters have traveled from Turkey or will arrive imminently to fight on the battlefields of Libya, Syrian sources in all three countries have said, in an unprecedented development that threatens to further complicate the north African state’s intractable civil war.

The deployment came after Turkey agreed last month to come to the aid of the Libyan prime minister, Fayez al-Sarraj, who is backed by the UN, in the face of a months-long campaign by his rival, the warlord Khalifa Haftar.

This perhaps makes Erdogan's latest 'warning' appear something more like a 'threat' in which he's the one actually holding the trigger

“Europe will encounter a fresh set of problems and threats if Libya’s legitimate government were to fall,” Erdogan said.

“Terrorist organisations such as ISIS [ISIL or Daesh] and al-Qaeda, which suffered a military defeat in Syria and Iraq, will find a fertile ground to get back on their feet,” he continued. “Keeping in mind that Europe is less interested in providing military support to Libya, the obvious choice is to work with Turkey, which has already promised military assistance,” Erdogan added.

Erdogan has long claimed Turkey's intervention in Libya is to "combat terrorism" — which for Ankara means defeating pro-Haftar forces. 

Meanwhile, journalist for The Sunday Times Hala Jaber has noted Turkey's latest foreign adventurism includes sending the same "guns for hire" once used to try and oust Assad to Libya.

Or we might even say many foreign fighters are going "back" to Libya, given in the early years of the Syrian war many thousands of jihadists from North Africa were allowed to enter northern Syria via Turkey to assist in the Western/Gulf military alliance in regime change efforts there. 

* * * 

Libyan Islamists backed by the West toppled Gaddafi and destroyed much of the country in the 2011 war. Here they are posing at Tripoli's international airport in 2014 after capturing and destroying airplanes

The rebel group Libyan Dawn in a 2014 bid to take Tripoli's airport, via Daily Mail.
Tyler Durden Sun, 01/19/2020 - 14:10
Published:1/19/2020 1:13:56 PM
[Markets] IMF Chief Warns Global Economy Faces New "Great Depression" IMF Chief Warns Global Economy Faces New "Great Depression"

How's this for some New Years optimism?

The new head of the IMF, who took over from Christine Lagarde in November, warned that the global economy could soon find itself mired in a great depression.

During a speech at the Peterson Institute, IMF Chairwoman Kristalina Georgieva compared the contemporary global to the "roaring 20s" of the 20th century, a decade of cultural and financial excess that culminated in the great market crash of 1929.

According to the Guardian, this research suggests that a similar trend is already under way, and though the collapse might not be around the corner, when it comes, it will be impossible to avoid.

While the inequality gap between countries has closed over the last two decades, the gap within most developed countries has widened, leaving millions more vulnerable to a global downturn than they otherwise would have been.

In particular, she singled out the UK for criticism: "In the UK, for example, the top 10% now control nearly as much wealth as the bottom 50%. This situation is mirrored across much of the OECD (Organisation for Economic Co-operation and Development), where income and wealth inequality have reached, or are near, record highs."

She also warned about the potential for climate change to become a bigger obstacle for humanity, while increased trade protectionism instills more volatility in markets.

She added: “In some ways, this troubling trend is reminiscent of the early part of the 20th century – when the twin forces of technology and integration led to the first gilded age, the roaring 20s, and, ultimately, financial disaster."

She warned that fresh issues such as the climate emergency and increased trade protectionism meant the next 10 years were likely to be characterised by social unrest and financial market volatility.

"If I had to identify a theme at the outset of the new decade, it would be increasing uncertainty," she said.

Of course, the IMF isn't the first institution to try and gird the global financial system against the affects of climate change. It also isn't the first international institution to warn Britain about the possible economic fallout from Brexit.

Back in December, the Bank of England said it would set up "tough" climate stress tests for banks and insurers in the UK. The tests would involve three different scenarios stretching out over decades.

However, critics quickly pointed out that the tests would essentially be toothless. Regardless of whether institutions pass or fail, the results will initially only be published in aggregate without naming individual institutions, though the BoE hasn't ruled out naming and shaming in the future.

While geopolitical tensions are back in the headlines thanks to Iran, Hong Kong, and a rash of protest movements around the world, few would argue that the bull market that dominated the last decade was in any way impacted by geopolitics. Instead, the market largely ignored geopolitical tensions, and allowed itself to be carried ever-higher by a flood of easy money from central banks.

This is further evidenced by the fact that, every time the Fed has tried to wean the American economy off of rock-bottom interest rates or the central bank's ever-expanding balance sheet, markets have reacted with fury.

Having considered all of this, we'd like to present another scenario: if Trump loses in November, and the Fed regains the courage to raise interest rates now that President Trump isn't around to publicly browbeat and humiliate them, that might be enough to send markets into a tailspin, even if the Dems take the 'market friendly' road and nominate Joe Biden.

Tyler Durden Sun, 01/19/2020 - 13:20
Published:1/19/2020 12:43:45 PM
[Markets] "Buy The Dip" - An American Tradition Since 1987 "Buy The Dip" - An American Tradition Since 1987

Authored by Bruce Wilds via Advancing Time blog,

Buy the dip has been an American tradition since 1987. The first truly modern global financial crisis unfolded in the autumn of  that year. October 19, 1987, has become the day known infamously as “Black Monday. It set forth a chain reaction of market distress that sent global stock exchanges plummeting in a matter of hours. In the United States, the Dow Jones Industrial Average (DJIA) dropped 22.6 percent in a single trading session. This loss remains the largest one-day stock market decline in history and marks the sharpest market downturn in the United States since the Great Depression.

Note Where "Buy The Dip" Started (click to enlarge)

The important significance of this event lies in the fact Black Monday underscored the concept of “globalization,” which was still quite new at the time. The event demonstrated the extent to which financial markets worldwide had become intertwined and technologically interconnected. This led to several noteworthy reforms, including exchanges developing provisions to pause trading temporarily in the event of rapid market sell-offs. More importantly, it forever altered the Federal Reserve’s response on how to use “liquidity” as a tool to stem financial crises.

Leading up to this event the stock markets raced upward during the first half of 1987 gaining a whopping 44 percent in just seven months. This, of course, created concerns of an asset bubble, however, few market traders expected the market could unravel so viciously. Prior to US markets opening for trading on Monday morning, stock markets in and around Asia began plunging. In response investors rapidly began to liquidate positions, and the number of sell orders vastly outnumbered willing buyers near previous prices, creating a cascade in stock markets.

Thomas Thrall, a senior professional at the Federal Reserve Bank of Chicago, who was then a trader at the Chicago Mercantile Exchange later said, “It felt really scary, people started to understand the interconnectedness of markets around the globe.”

Without a doubt, several new developments in the market enlarged and exacerbated the losses on Black Monday. Things like international investors becoming more active in US markets and new products from US investment firms, known as “portfolio insurance” had become very popular. These included the use of options and derivatives. A number of structural flaws also fueled the losses. At the time of the crisis, stock, options, and futures markets used different timelines for the clearing and settlements of trades, creating the potential for negative trading account balances and forced liquidations.

That is when, Alan Greenspan, then Federal Reserve chairman, came forward on October 20, 1987, with a statement that would shape traders' actions for decades. Fed Chairman Alan Greenspan said, “The Federal Reserve, consistent with its responsibilities as the Nation's central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system” Prior to this markets were seen as a much riskier venture. The great legacy from the events taking place in 1987 is rooted in the actions and swift response of the Fed, that the central bank would backstop markets. This premise has grown over time.

After Black Monday, regulators overhauled trade-clearing protocols and developed new rules. One of the most important is known as circuit breakers which allow exchanges to halt trading temporarily in instances of exceptionally large price declines.  Under these rules, the New York Stock Exchange will temporarily halt trading when the S&P 500 stock index declines 7 percent, 13 percent, and 20 percent. This is done in order to provide investors time to make better informed decisions during periods of high market volatility and reduce the chance of panic. Risk managers also re-calibrated the way they valued options.

Unlike previous financial crises, the Black Monday decline was not associated with a deposit run or any other problem in the banking sector. Still, it was very important because the Fed’s response set a precedent that has over time when coupled with other events massively increased the moral hazard associated with intervention in free markets. Following the rout stock markets quickly recovered a majority of their Black Monday losses. In just two trading sessions, the DJIA gained back 57 percent, of the Black Monday downturn. Because of the Fed action in less than two years, the US stock markets surpassed their pre-crash highs and was not followed by an economic recession.

And now for the grand point of this post, we should not underestimate how the Fed’s response to Black Monday ushered in a new era of investor confidence in the central bank’s ability to control market downturns. The actions by Fed Chairman Greenspan galvanized the mantras "buy the dip" and "don't fight the Fed" and powered them to the top of trading lexiconsIt has also been a key factor in allowing the stock market to morph into a much larger symbol of the economy than it merits. This is reflected in how over the decades growth in the financial sector has soared dwarfing that in the real economy.

Decades Of Nikkei Action (click to enlarge)

To all those market aficionados that forget markets can fall and for decades fail to regain their luster I point to the Japanese markets and their fierce meltdown in 1990. The chart to the right would look far more depressing had the market trends over the last decade coupled with buying from the central Bank Of Japan not bolstered its performance. We should also remember many market high-flyers simply vanish into a deep hole and that during the 1930s the Fed was unable to bring the economy out of its funk.

Another often overlooked issue is how changes in tax laws over the years have moved more wealth into stocks. These include the often forgotten and seldom mentioned changes many made by the Bush administration following the dotcom bust and 9-11. These factors and money constantly funneled into markets by pension funds and such coupled with soaring central bank liquidity has levitated markets to record high, after record high, despite stagnant fundamentals. It seems the "fear of missing out" and exuberance has caused many investors to become blind to the idea that years of profits can vanish in a blink of the eye.

This should force us to question the utter madness displayed in the widening disconnect between current valuations and underlying fundamentals. It could be argued that because of these actions QE has amplified speculation as investors seeking yield now feel almost invulnerable to future losses. We can cast away all the terms and warnings about "moral hazards" and "slippery slopes," however that does not guarantee they will not return to haunt us. Historically our hubris and arrogance has shined  as a beacon illuminating the fact that every time those in high finance declare it is different this time they have been proven wrong.     

Tyler Durden Sun, 01/19/2020 - 12:55
Published:1/19/2020 12:11:41 PM
[Markets] Not Just Hunter: Widespread Biden Family Profiteering Exposed Not Just Hunter: Widespread Biden Family Profiteering Exposed

Clinton Cash author Peter Schweizer is out with a new book, "Profiles in Corruption: Abuse of Power by America’s Progressive Elite," in which he reveals that five members of the Biden family, including Hunter, got rich using former Vice President Joe Biden's "largesse, favorable access and powerful position."

Frank Biden, Vice President Joe Biden, & Mindy Ward

While we know of Hunter's profitable exploits in Ukraine and China - largely in part thanks to Schweizer, Joe's brothers James and Frank, his sister Valerie, and his son-in-law Howard all used the former VP's status to enrich themselves.

Of course, Biden in 2019 said "I never talked with my son or my brother or anyone else — even distant family — about their business interests. Period."

As Schweizer puts writes in the New York Post; "we shall see."

James Biden: Joe's younger brother James has been deeply involved in the lawmaker's rise since the early days - serving as his the finance chair of his 1972 Senate campaign. And when Joe became VP, James was a frequent guest at the White House - scoring invites to important state functions which often "dovetailed with his overseas business dealings," writes Schweizer.

Consider the case of HillStone International, a subsidiary of the huge construction management firm, Hill International. The president of HillStone International was Kevin Justice, who grew up in Delaware and was a longtime Biden family friend. On November 4, 2010, according to White House visitors’ logs, Justice visited the White House and met with Biden adviser Michele Smith in the Office of the Vice President.

Less than three weeks later, HillStone announced that James Biden would be joining the firm as an executive vice president. James appeared to have little or no background in housing construction, but that did not seem to matter to HillStone. His bio on the company’s website noted his “40 years of experience dealing with principals in business, political, legal and financial circles across the nation and internationally…”

James Biden was joining HillStone just as the firm was starting negotiations to win a massive contract in war-torn Iraq. Six months later, the firm announced a contract to build 100,000 homes. It was part of a $35 billion, 500,000-unit project deal won by TRAC Development, a South Korean company. HillStone also received a $22 million U.S. federal government contract to manage a construction project for the State Department. -Peter Schweizer, via NY Post

According to Fox Business's Charlie Gasparino in 2012, HillStone's Iraq project was expected to "generate $1.5 billion in revenues over the next three years," more than tripling their revenue. According to the report, James Biden split roughly $735 million with a group of minority partners.

David Richter - the son of HillStone's parent company's founder - allegedly told investors at a private meeting; it really helps to have "the brother of the vice president as a partner."

Unfortunately for James, HillStone had to back out of the major contract in 2013 over a series of problems, including a lack of experience - but the company maintained "significant contract work in the embattled country" of Iraq, including a six-year contract with the US Army Corps of Engineers.

In the ensuing years, James Biden profited off of Hill's lucrative contracts for dozens of projects in the US, Puerto Rico, Mozambique and elsewhere.

Frank Biden, another one of Joe's brothers (who said the Pennsylvania Bidens voted for Trump over Hillary), profited handsomely on real estate, casinos, and solar power projects after Joe was picked as Obma's point man in Latin America and the Caribbean.

Months after Joe visited Costa Rica, Frank partnered with developer Craig Williamson and the Guanacaste Country Club on a deal which appears to be ongoing.

In real terms, Frank’s dream was to build in the jungles of Costa Rica thousands of homes, a world-class golf course, casinos, and an anti-aging center. The Costa Rican government was eager to cooperate with the vice president’s brother.

As it happened, Joe Biden had been asked by President Obama to act as the Administration’s point man in Latin America and the Caribbean.

Frank’s vision for a country club in Costa Rica received support from the highest levels of the Costa Rican government— despite his lack of experience in building such developments. He met with the Costa Rican ministers of education and energy and environment, as well as the president of the country. -NY Post

And in 2016, the Costa Rican Ministry of Public Education inked a deal with Frank's Company, Sun Fund Americas to install solar power facilities across the country - a project the Obama administration's OPIC authorized $6.5 million in taxpayer funds to support.

This went hand-in-hand with a solar initiative Joe Biden announced two years earlier, in which "American taxpayer dollars were dedicated to facilitating deals that matched U.S. government financing with local energy projects in Caribbean countries, including Jamaica," known as the Caribbean Energy Security Initiative (CESI).

Frank Biden's Sun Fund Americas announced later that it had signed a power purchase agreement (PPA) to build a 20-megawatt solar facility in Jamaica.

Valerie Biden-Owens, Joe's sister, has run all of her brother's Senate campaigns - as well as his 1988 and 2008 presidential runs.

She was also a senior partner in political messaging firm Joe Slade White & Company, where she and Slade White were listed as the only two executives at the time.

According to Schweizer, "The firm received large fees from the Biden campaigns that Valerie was running. Two and a half million dollars in consulting fees flowed to her firm from Citizens for Biden and Biden For President Inc. during the 2008 presidential bid alone."

Dr. Howard Krein - Joe Biden's son-in-law, is the chief medical officer of StartUp Health - a medical investment consultancy that was barely up and running when, in June 2011, two of the company's execs met with Joe Biden and former President Obama in the Oval Office.

The next day, the company was included in a prestigious health care tech conference run by the Department of Health and Human Services (HHS) - while StartUp Health executives became regular White House visitors between 2011 and 2015.

StartUp Health offers to provide new companies technical and relationship advice in exchange for a stake in the business. Demonstrating and highlighting the fact that you can score a meeting with the president of the United States certainly helps prove a strategic company asset: high-level contacts. -NY Post

Speaking of his homie hookup, Krein described how his company gained access to the highest levels of power in D.C.:

"I happened to be talking to my father-in-law that day and I mentioned Steve and Unity were down there [in Washington, D.C.]," recalled Howard Krein. "He knew about StartUp Health and was a big fan of it. He asked for Steve’s number and said, ‘I have to get them up here to talk with Barack.’ The Secret Service came and got Steve and Unity and brought them to the Oval Office."

And then, of course, there's Hunter Biden - who was paid millions of dollars to sit on the board of Ukrainian energy giant Burisma while his father was Obama's point man in the country.

But it goes far beyond that for the young crack enthusiast.

With the election of his father as vice president, Hunter Biden launched businesses fused to his father’s power that led him to lucrative deals with a rogue’s gallery of governments and oligarchs around the world. Sometimes he would hitch a prominent ride with his father aboard Air Force Two to visit a country where he was courting business. Other times, the deals would be done more discreetly. Always they involved foreign entities that appeared to be seeking something from his father.

There was, for example, Hunter’s involvement with an entity called Burnham Financial Group, where his business partner Devon Archer — who’d been at Yale with Hunter — sat on the board of directors. Burnham became the vehicle for a number of murky deals abroad, involving connected oligarchs in Kazakhstan and state-owned businesses in China.

But one of the most troubling Burnham ventures was here in the United States, in which Burnham became the center of a federal investigation involving a $60 million fraud scheme against one of the poorest Indian tribes in America, the Oglala Sioux.

Devon Archer was arrested in New York in May 2016 and charged with “orchestrating a scheme to defraud investors and a Native American tribal entity of tens of millions of dollars.” Other victims of the fraud included several public and union pension plans. Although Hunter Biden was not charged in the case, his fingerprints were all over Burnham. The “legitimacy” that his name and political status as the vice president’s son lent to the plan was brought up repeatedly in the trial. -NY Post

Read the rest of the report here.

Tyler Durden Sun, 01/19/2020 - 12:30
Published:1/19/2020 11:52:25 AM
[Markets] US Forces In Tense Showdown With Russian Convoy On Blocked Syrian Highway US Forces In Tense Showdown With Russian Convoy On Blocked Syrian Highway

An extremely dangerous and rare incident played out in northeast Syria between the conflict's two most powerful rival forces on Saturday when opposing American and Russian military convoys encountered each other on a highway. 

The incident was filmed and published online by anti-Assad opposition group Syrian Observatory for Human Rights (SOHR), which described a major traffic jam outside the city of Al-Malikiyah, an oil-producing area of the country which has been occupied by American troops.

SOHR said the busy highway was halted "after US forces prevented a Russian patrol from continuing its way to countryside of Al-Malikiyah city."

Though not precisely clear which convoy was the aggressor side from the video — or which caused the blockage — needless to say it was a tense and potentially explosive encounter given Moscow sees US presence in Syria as illegal and as an act of military aggression, while Washington in turn sees Russian troops as enemies bolstering Assad and Iran in the Middle East.

Other regional outlets, for example in Turkish media, also blamed the US side for maneuvering to block the Russian troops' advance. Anadolu reports the Russian patrol was blocked from going near a key oil field in the area

According to information Anadolu Agency obtained from reliable local sources, U.S. soldiers blocked a Russian military patrol en route to the oil field.

Tension occurred between the two groups, when U.S. soldiers asked Russian soldiers to return to the Amuda district in the northwest of Hasakah.

Russian soldiers had to return to where they came from as their way to Rumeylan, where the U.S. airbase is located, was blocked.

Russian patrols have reportedly stepped up operations in sensitive areas with US troops still stationed nearby, specifically in places like the region's Rumeilan oil field, in Syria's far northeast near the Iraq border. 

Reporter for Voice of America news Mutlu Civiroglu noted Syrian Kurdish militia fighters intervened in order to ease tensions. 

Meanwhile, Russia-based military analyst Mark Sleboda pointed out just how many things could have gone wrong in the tense encounter. 

"Imagine how close this was to an international incident between nuclear armed great powers involving uniformed soldiers coming home in body bags," he commented on Twitter.

Tyler Durden Sun, 01/19/2020 - 12:00
Published:1/19/2020 11:13:09 AM
[Markets] NewsWatch: Man who made a killing during financial crisis says that, at some point, the stock market will slow down — but, till then, ‘I love riding a horse that’s running’ David Tepper is going to take his horse to the Old Town Road and ride till he can’t no more.
Published:1/19/2020 11:13:09 AM
[Markets] Resistance Is Futile - When Does The FOMO Momo Say No Mo'? Resistance Is Futile - When Does The FOMO Momo Say No Mo'?

Authored by Sven Henrich via,

Does a liquidity driven momentum market that seemingly does not care about valuationsriskopen gaps and technical extensions face any resistance at all? Are there technical limits for a market that goes up every day, every week and every month?

History teaches us that there are such limits and I’ll share a few charts to provide some context.

As it were this most recent OPEX week did what happens more often than not: Compress volatility further offering little to no 2 way price discovery exhibiting some of the most intra-day compressed price ranges ever:

The discussed repo and liquidity machine continues to relentlessly drive the market action:

As a result of the continuous one way action many individual stocks are not only historically valued, but also overbought.

These conditions have persisted for weeks, so little new on that front, but to give historic recognition its due a weekly chart of $AAPL showing a weekly 90 RSI has to be appreciated:

What’s the appropriate term here? Piling in? Buy till you die?

And yes I can’t resist but also show the same chart on a linear basis:

It is this point in time we get the FOMO treatment courtesy of Barron’s and Forbes:

Don’t be left behind, get on board. Reckless as far as I’m concerned, but nobody cares.

How do I know that nobody cares? Because demand for protection of any sort is scrapping at the bottom of the barrel.
See some of the put/call ratios:

Sometimes extreme complacency gets punished, sometimes it does not.

The faith in the Fed remains absolute, too strong is their influence on equity prices via their liquidity injections which do not appear to stop for months on end, so who’s to say when the dynamic shifts. Not until they withdraw liquidity is the conventional wisdom at the time.

Yes charts like $APPL leave little doubt that this market his very much overbought and reversion risk keeps increasing. Hence I maintain that the higher this market stretches without breathing the more dangerous it becomes.

So are there any signs of technical resistance?

Firstly recognize we have some of steepest and narrowest channels in history. One sizable down day or week and all of these patterns break to the downside with technical consequences:



$NDX is of particular interest here as the furious rally has accomplished something very interesting on Friday:

$NDX futures tagged its 4 year trend line that has proven to be resistance time and time again. And $NDX has raced toward that trend line with a weekly RSI north of 81. Ironically an RSI not unlike the one seen in January 2018 when the index also tagged that very same trend line.

To expand on the historical rhyme $NDX components above their 200MA have reached 87 exceeding even the January 2018 level:

In 2017 readings of that magnitude did not mean the end of the bull run then, but these types of readings can clearly lead to trouble.

It is then the same measure for the 50MA that is of interest:

A negative divergence versus the year end highs in 2019.  These divergences can persist, but are an early signal that something is amiss.

Another signal indicator, the $BPNDX also has reached a level historically consistent with coming reversals:

All of these speak of resistance reached on the internal front.

Indeed its the cumulative advance/decline index for the Nasdaq that sends that same message clearly:

Not only overbought, but divergent as well.

All of these readings and signals are coming in context of a yearly chart for $NDX that has precisely zero price precedence in being able to sustain such a vast extension without ending in tears:

But don’t be left behind. Just jump on board they say.

No, it’s not different this time. This cycle is exactly like the previous ones. And hence it’ll end the same way as the previous ones: With bears being mocked while bulls being reckless and greedy throwing all caution to the wind.

We may not know the outcome for a while, but in the here and now markets are approaching some notable points of resistance while demand for protection is at a historic low.

Don’t be left behind? Don’t be left holding the bag more likely.

*  *  *

For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.

Tyler Durden Sun, 01/19/2020 - 11:30
Published:1/19/2020 10:42:20 AM
[Markets] Dramatic Video Shows Turkish Coast Guard Deliberately Smashing Into Migrant Boat Dramatic Video Shows Turkish Coast Guard Deliberately Smashing Into Migrant Boat

After a week which tragically witnessed a sudden uptick in refugee and migrant incidents and drowning deaths in the Mediterranean, a dramatic video has been published online showing the Turkish Coast Guard resorting to extreme measures while intercepting migrant boats. 

The video, which first appeared via a Middle East Telegram or other social media channel, shows a small crowded motor boat full of Syrian refugees being rammed by a much larger Turkish patrol boat

The video appeared online and went viral on Sunday; however, it's uncertain the precise date or location, but it likely took place in the Aegean Sea. 

Women and children can be heard screaming in the video while trying to get away from the fast-approaching Turkish vessel, after which the larger coast guard boat rams into the migrants at high speed. It's unclear the extent of injuries suffered by those in the packed boat, and no one appears armed or to have been acting aggressively.

Turkey's coast guard has long been accused of taking harsh measures to prevent an estimated 60,000 to new refugees attempting to traverse the Mediterranean. It's hardly the first time migrant and refugee boats have been rammed during the dangerous trip; however, past incidents have involved human-trafficking boats or piracy-related groups and not state actors like in this case. 

Meanwhile, Europe has documented a significant rise in migrants attempting to enter the EU via the eastern Mediterranean throughout 2019:

More than 82,000 migrants attempted to enter the EU from the eastern Mediterranean route in 2019, driven by the situation in Syria, and instability in Afghanistan, the Frontex Executive Director Fabrice Leggeri said in Brussels.

In 2018, 55,900 unauthorised entries were detected from the same route, while three years ago, at the height of the migrant crisis, there were 885,386.

Source: Frontnex/Flourish data via EuroNews.

This after the peak of the migrant crisis in 2015 and 2016. Turkey's President Erdogan has recently warned a flood of refugees could impact Greece and other EU states if more is not done to help Turkey stave off the crisis, even lately voicing it as a "threat" if the EU doesn't support Ankara's Syria plans.

Many are predicting 2020 could mark a return to the worst of the past five year crisis, given the ongoing Turkish military incursion in northern Syria and a resumed Russia-Syria military offensive against jihadist militants in Idlib province. 

Tyler Durden Sun, 01/19/2020 - 11:00
Published:1/19/2020 10:12:14 AM
[Markets] Netflix expresses interest in signing Prince Harry and Meghan Markle after #Megxit Netflix chief content officer Ted Sarandos said he would welcome talks with the Sussexes after they quit their royal duties.
Published:1/19/2020 10:12:14 AM
[Markets] Market Continues "Euphoric" Advance As 3500 Becomes Next Target Market Continues "Euphoric" Advance As 3500 Becomes Next Target

Authored by Lance Roberts via,

Market Continues Euphoric Advance

In last week’s missive, I discussed a couple of charts which suggested the markets are pushing limits which have previously resulted in fairly brutal reversions. This week, the market pushed those deviations even further as the S&P 500 has now pushed into 3-standard deviation territory above the 200-WEEK moving average.

There have only been a few points over the last 25-years where such deviations from the long-term mean were prevalent. In every case, the extensions were met by a decline, sometimes mild, sometimes much more extreme. 

The defining difference between whether those declines were mild, or more extreme, was dependent on the trend of financial conditions. In 1999, 2007, and 2015, as shown in the chart below, financial conditions were being tightened, which led to more brutal contractions as liquidity was removed from the financial system. 

Currently, the risk of a more “substantial decline,” is somewhat mitigated due to extremely easy financial conditions. However, such doesn’t mean a 5-10% correction is impossible, as such is well within market norms in any given year. 

This is particularly the case given how extreme positioning by both institutions and individual investors has become. With investor cash and bearish positions at extreme lows, with prices extremely extended, a reversion to the mean is likely and could lean toward to the 10% range.

One of the other big concerns remains the concentration of positions driving markets higher. Lawrence Fuller analyzed this particular extreme in the market. (H/T G. O’Brien)

“One similarity between the Four Horseman of 2000 and the mega-caps of 2020 is their tremendous influence on the overall market, as can be seen below by their cumulative weightings. The weighting of today’s top five names is now 17.3%. I’m not suggesting that history is going to repeat itself, but often it rhymes.

If you lived and invested through the 1990s, as I did, then you’ll understand what I am talking about when I say that the dot-com boom was a sentiment-driven rally. I’m starting to see the same explanation for the current rally, as there really haven’t been any concrete fundamental developments to explain or validate it. The momentum stocks are rising in price day after day on hopes and expectations, and Wall Street analysts are happy hop on board for the ride, as usual.”

Lawrence is correct. There has not been a fundamental improvement to support the rise in the market currently. As shown in the chart below, S&P just released its 2021 estimates for the S&P 500, which is estimated to come in at $171/share. 

What you should notice is that estimates for 2021 are now $3 LOWER than where estimates for the end of 2020 stood in April 2019. Importantly, between April 2019 and present, as earnings estimates were continually ratcheted lower, the S&P 500 index rose by 17.5%

While Apple, which we own, is the “cheapest” of the “4-horseman” currently, it is only “cheap” because of rather aggressive share repurchases. Here are some interesting stats:

In the 5-years from 2015:

  • Earnings per share (EPS) grew by just $2.69 per share or $0.53 per share annually.

  • Sales only grew by $26.45 billion or $5.29 billion/year.

  • Shares outstanding, however, declined by 1.13 billion

However, during that same 5-year period, Apple’s share price has risen by 210%.  

The only reason Apple “appears” to be cheap is because of the massive infusion of capital used to reduce the number of shares outstanding. As a business, it is a great company, but it is a fully mature company, which is struggling to grow revenues. With a P/E of 27 and price-to-sales (P/S) ratio of 5.36, investors are grossly overpaying for the earnings growth and will likely be disappointed with future return prospects. 

So why do we still own Apple? Because “fundamentals don’t matter” currently as the momentum chase, fueled by the Fed’s ongoing liquidity interventions, has led to a “runaway train.” But, understanding that eventually fundamentals will matter, is why we have taken profits out of our position twice since January 2019.

Just remember, “price is what you pay, value is what you get.”

Next Stop, 3500

As noted last week, in July of 2019, we laid out our prognostication the S&P 500 could reach 3300 amid a market melt-up though the end of the year. On Friday, the S&P 500 closed at 3329, with the Dow pushing toward 29,350.

With the Federal Reserve continuing to pump liquidity into the market currently, we are raising our 2020 estimate for the S&P to 3500 as “the mania” goes mainstream. There is absolutely NO FUNDAMENTAL basis for raising the target; it is ONLY a function of the momentum chase.

This urgency to take on “risk,” as investors pile into “passive indexes” under a “no market risk” assumption, can be seen in the extreme lows of the put/call ratio.

With the Federal Reserve’s ongoing “Not QE,”  it is entirely possible the markets could continue their upward momentum towards S&P 3500, and Dow 30,000. Clearly, the “cat is out of the bag” if CNBC even realizes it’s the Fed:

“On Oct. 11, the central bank announced it would begin purchasing $60 billion of Treasury bills a month to keep control over short-term rates. The magnitude of the purchases resembles the quantitative easing program the Fed conducted during and after the financial crisis.”

“The increase in the Fed’s balance sheet has been in near lockstep with the stock market’s climb. The balance sheet has expanded 10% since October, while the S&P 500 shot up 12%, including notching its best fourth quarter since 2013.”

With the Federal Reserve continuing to “ease” financial conditions, there is little to derail higher asset prices in the short-term. However, we continue to see cracks in the “economic armor,” like Friday’s plunge in “job openings,” continued deterioration in earnings estimates, weaker growth rates in employment, and negative revisions to data, like wages, which suggest the market is well ahead of the economy. (Last week, negative revisions wiped out all the wage growth for the bottom 80% of workers.)

But, as I said, “fundamentals” don’t matter currently. As CNBC noted:

“The problem front and center is how investors are looking past the continuous earnings rout, betting on a snapback as soon as the first quarter of 2020. S&P 500 earnings are expected to drop by 0.3% in the fourth quarter of 2019, marking the first back-to-back quarterly decline since 2016, according to Refinitiv.”

While “fundamentals” may not seem to matter much currently, eventually, they will.

Tyler Durden Sun, 01/19/2020 - 10:30
Published:1/19/2020 9:42:40 AM
[Markets] Troop Injuries "Emerged Days After": Pentagon's Shifting Iran Attack Casualty Narrative Gets More Absurd Troop Injuries "Emerged Days After": Pentagon's Shifting Iran Attack Casualty Narrative Gets More Absurd

A mere days ago the American public was still being told there were no American casualties as a result of Iran's Jan.8 ballistic missile attack on an Iraqi base hosting US forces. 

And over a week ago, days following the attack, Secretary of Defense Mark Esper said there was only damage to property at Al-Asad air base, going so far as to underscore: "Most importantly, no casualties, no friendly casualties, whether they are US, coalition, contractor, etc.," according to an official statement at the time.

But after on Friday it was revealed that eleven US soldiers were injured in the attack some of them significantly given they were flown out of Iraq to be treated for head injuries  belatedly confirmed by US officials, the Pentagon is now pretending there was never a discrepancy in its clearly shifting accounts. Eight were actually flown all the way to medical facilities in Germany for advanced treatment, with three flown to Kuwait.  

Defense Secretary Mark Esper speaking at the Pentagon, via the AP.

"The Pentagon said on Friday there had been no effort to play down or delay the release of information on concussive injuries from Iran's Jan. 8 attack on a base hosting U.S. forces in Iraq, saying the public learned just hours after the defense secretary," Reuters reports. 

And then of course the gratuitous implication that anyone claiming otherwise has a conspiracy theory agenda: "This idea that there was an effort to de-emphasize injuries for some sort of amorphous political agenda doesn't hold water," Pentagon spokesman Jonathan Hoffman said.

Even CNN flatly charges that "Official US reports about the attack have shifted since it occurred." This much is obvious to anyone regardless on both sides of the aisle, whether supporters of Trump's Iran policy or not:

Asked about the apparent discrepancy, a Defense official told CNN, "That was the commander's assessment at the time. Symptoms emerged days after the fact, and they were treated out of an abundance of caution."

Now the Pentagon's explanation appears to be that Esper wasn't even informed of the eleven injured personnel until Thursday, as "only a certain set of injuries" are required to be reported to the Defense Secretary's office, according to CNN.

"Immediate reporting requirements up to the Pentagon are for incidents threatening of life, limb or eyesight, so actually (Traumatic Brain Injury) wouldn't rise to that threshold," Pentagon spokesperson Alyssa Farah said on Friday.

Photos which have emerged from Iraq's al-Asad airbase where US forces are stationed show extensive damage from the Iranian ballistic missile attack, via Scripps.

In summary, the Pentagon wants you to believe that the biggest military attack on US forces in the Middle East in years via Iranian ballistic wasn't really that closely monitored for casualties... as if the entire upper echelons of the DoD chain of command had better and "more important" things to do than to closely monitor and assess injuries from the strike.

Next we'll be informed there was some innocuous and casual Netflix binge-watching in Pentagon offices the days following Iran's major ballistic missile attack on American forces. When you've lost even CNN and the entire mainstream, you've most definitely lost the plot. 

Tyler Durden Sun, 01/19/2020 - 09:55
Published:1/19/2020 9:12:57 AM
[Markets] The Bank Of England's Governor Fears A Liquidity Trap The Bank Of England's Governor Fears A Liquidity Trap

Authored by Frank Shostak via The Mises Institute,

The global economy is heading towards a “liquidity trap” that could undermine central banks’ efforts to avoid a future recession according to Mark Carney, governor of the Bank of England. In a wide-ranging interview with the Financial Times (January 8, 2020), the outgoing governor warned that central banks were running out of ammunition to combat a downturn:

If there were to be a deeper downturn, more than a conventional recession, then it’s not clear that monetary policy would have sufficient space.

He is of the view that aggressive monetary and fiscal policies will be required to lift the aggregate demand.

What Is a Liquidity Trap?

In the popular framework that originates from the writings of John Maynard Keynes, economic activity is presented in terms of a circular flow of money. Spending by one individual becomes part of the earnings of another individual, and spending by another individual becomes part of the first individual's earnings.

Recessions, according to Keynes, are a response to the fact that consumers — for some psychological reasons — have decided to cut down on their expenditure and raise their savings.

For instance, if for some reason people become less confident about the future, they will cut back their outlays and hoard more money. When an individual spends less, this will supposedly worsen the situation of some other individual, who in turn will cut their spending. A vicious cycle sets in. The decline in people's confidence causes them to spend less and to hoard more money. This lowers economic activity further, causing people to hoard even more, etc.

Following this logic, in order to prevent a recession from getting out of hand, the central bank must lift the growth rate of the money supply and aggressively lower interest rates. Once consumers have more money in their pockets, their confidence will increase, and they will start spending again, reestablishing the circular flow of money, so it is held.

In his writings, however, Keynes suggested that a situation could emerge when an aggressive lowering of interest rates by the central bank would bring rates to such a level from which they would not fall further. As a result, the central bank would not be able to revive the economy. This, according to Keynes, could occur because people might adopt the view that interest rates have bottomed out and that rates should subsequently rise, leading to capital losses on bond holdings.

As a result, people's demand for money will become extremely high, implying that people would hoard money and refuse to spend it no matter how much the central bank tries to expand the money supply. As Keynes wrote,

There is the possibility, … that, after the rate of interest has fallen to a certain level, liquidity-preference may become virtually absolute in the sense that almost everyone prefers cash to holding a debt which yields so low a rate of interest. In this event the monetary authority would have lost effective control over the rate of interest.

Keynes suggested that once a low–interest rate policy becomes ineffective, authorities should step in and spend. The spending can be on all sorts of projects — what matters here is that a lot of money must be pumped to boost consumers' confidence. With a higher level of confidence, consumers will lower their savings and raise their expenditure, thereby reestablishing the circular flow of money.

Is There Too Little Spending?

In the Keynesian framework, the ever-expanding monetary flow is the key to economic prosperity. What drives economic growth is monetary expenditure, and when people spend more of their money, it implies that they save less.

Conversely, when people reduce their monetary spending in the Keynesian framework, it is viewed as a sign of increased saving. In this way of thinking, saving is considered bad news for the economy — the more people save, the worse things become. (The liquidity trap comes from too much saving and a lack of spending, so it is held.)

Observe, however, that people do not pay with money but rather with the goods that they have produced. The chief role of money is as a medium of exchange. Hence, the demand for goods is constrained by the production of goods, not the amount of money. (The role of money is to facilitate the exchange of goods.)

To suggest that people could have almost an unlimited demand for money that supposedly leads to a liquidity trap is to suggest that people do not exchange money for goods anymore.

Obviously, this is not a realistic scenario, given the fact that people require goods to support their lives and well-being. People demand money not merely in order to accumulate it but to employ it in exchange.

Money can only assist in exchanging the goods of one producer for the goods of another. The medium of exchange service that it provides has nothing to do with the production of final consumer goods. This means that it has nothing to do with real savings, either.

What permits the increase in the pool of real savings is the increase in capital goods. With more capital goods, i.e., tools and machinery, workers' ability to produce more goods and of an improved quality is likely to increase. The state of the demand for money cannot alter the amount of final consumer goods produced — only the expansion in the pool of real savings can boost the production of these goods.

Likewise, an increase in the supply of money does not have any power to grow the real economy.

Contrary to popular thinking, a liquidity trap does not emerge in response to a massive increase in consumers' demand for money but comes as a result of very loose monetary and fiscal policies, which inflict severe damage to the pool of real savings.

The Liquidity Trap and the Shrinking Pool of Real Savings

According to Mises in Human Action,

The sine qua non of any lengthening of the process of production adopted is saving, i.e., an excess of current production over current consumption. Saving is the first step on the way toward improvement of material well-being and toward every further progress on this way.

As long as the growth rate of the pool of real savings stays positive, productive and nonproductive activities can be sustained.

Trouble erupts, however, when, on account of loose monetary and fiscal policies, a structure of production emerges that ties up much more consumer goods than it releases. That is, the consumption of final goods exceeds the production of these goods. The excessive consumption relative to production of consumer goods leads to a decline in the pool of real savings. This in turn weakens the support for individuals that are employed in the various stages of the production structure, resulting in the economy plunging into a slump.

Once the economy falls into a recession due to the falling pool of real savings, any government or central bank attempt to revive the economy must fail. Not only will these attempts fail to revive the economy, they will deplete the pool of real savings further, prolonging the economic slump.

The shrinking pool of real savings exposes the erroneous nature of the commonly accepted view that loose monetary and fiscal policies can grow an economy. The fact that central bank policies become ineffective in reviving the economy is due not to a liquidity trap, but to the decline in the pool of real savings. This decline emerges due to loose monetary and fiscal policies. To stave off personal bankruptcy, individuals are likely to increase their holdings of money — cash becomes king in such a situation.

The ineffectiveness of loose monetary and fiscal policies to generate the illusion that the central authorities can grow an economy has nothing to do with a liquidity trap. The policy ineffectiveness is always relevant whenever the central authorities are attempting to “grow an economy.” The only reason why it appears that these policies “work” is because the pool of real savings is still expanding.

Tyler Durden Sun, 01/19/2020 - 09:20
Published:1/19/2020 8:41:56 AM
[Markets] "We're Ready To Fight": 1000s Expected At Massive Gun-Rights Rally At Virginia Capitol "We're Ready To Fight": 1000s Expected At Massive Gun-Rights Rally At Virginia Capitol

As various pro-gun rights groups prepare to gather at Virginia's state capitol in Richmond on Monday in what's expected to be one of the largest pro-gun rallies in recent memory, Democratic Gov. Ralph Northam has declared a state of emergency, police are busy setting up barricades and temporary holding pens - and one lawmaker has even arranged to spend most of the day in a safe house, according to the Washington Examiner.

The rally is expected to draw tens of thousands, and fears about Charlottesville-style violence are prompting police to scour the web for any signs of a violent plot.

Already, the FBI has arrested three alleged members of a violent white supremacist group who were planning on attending the rally.

As Republicans battle for the hearts and minds of the people against a state government that is unilaterally controlled by Democrats, Todd Gilbert, Virginia’s House Republican leader, warned on Saturday that white supremacist groups trying to spread "hate, violence, or civil unrest" would not be welcome at a pro-gun rally in the state’s capital on Monday, according to Reuters.

"Any group that comes to Richmond to spread white supremacist garbage, or any other form of hate, violence, or civil unrest isn’t welcome here," he said. "While we and our Democratic colleagues may have differences, we are all Virginians and we will stand united in opposition to any threats of violence or civil unrest from any quarter."

Organized by the Virginia Citizens Defense League, a group that annually lobbies the state legislature against new gun-control laws, this year's rally is simply a much larger manifestation of the group's annual gun-rights rally at the capitol.

As the Dems who control the state government plot a slew of new gun control measures in a state that has historically been more permissive about gun rights, Virginia has transformed into ground zero in the fight over gun rights in America. Already, gun owners across the state have been scrambling to buy up as many guns as they can before the new legislation takes effect, fostering a boom among gun sellers.

The tension even prompted President Trump to weigh in with a tweet on Friday: "That's what happens when you vote for Democrats, they will take your guns away."

One NRA member approached by a Washington Examiner reporter while rallying outside a legislative building earlier this week said gun-rights advocates in the state wouldn't stand by idly while their rights are stripped away.

"We’re not going to be quiet anymore. We’re going to fight them in the courts and on the ground. The illegal laws they’re proposing are just straight up unconstitutional," said Timothy Forster, of Chesterfield, Virginia, an NRA member who had one handgun strapped to his shoulder and another tucked into his waistband as he stood outside a legislative office building earlier this week. VCDL president Philip Van Cleave said he’s heard from groups around the country that plan to send members to Virginia, including the Nevada-based, far-right Oath Keepers, which has promised to organize and train armed posses and militia.

While the rally has attracted a substantial amount of media attention, Virginia's gun-rights activists have identified another strategy to try and subvert the state legislature's authority. As the New York Times reports, gun-control activist Philip Van Cleave and others are pushing municipalities around the state to pass or consider "2A Sanctuary" legislation that would in effect preserve certain gun rights in towns across the state.

Anyone planning on the attending the rally should keep this in mind: Dems have permanently banned guns inside the Capitol building, and Gov. Northam has declared a temporary state of emergency to ban all weapons from Capitol Square during the rally - a plea for the state SCOTUS to rule these measures unconstitutional was rejected on Friday - to prevent "armed militia groups storming our Capitol."

Of course, even though organizers have taken pains to block far-right militias and outright white supremacists from attending the rally, we imagine these efforts will be lost on MSNBC, which should waste no time declaring every participant a dangerous gun nut.

Tyler Durden Sun, 01/19/2020 - 08:45
Published:1/19/2020 8:12:02 AM
[Markets] NewsWatch: Man who made a killing during financial crisis says that, at some point, the stock market will slow down — but, till then, ‘I love riding a horse that’s running’ David Tepper is going to take his horse to the Old Town Road and ride till he can’t no more.
Published:1/19/2020 8:12:02 AM
[Markets] Value stocks are making a comeback, and here’s how to get in early 4 ways to love underloved value stocks.
Published:1/19/2020 7:14:37 AM
[Markets] The Unexpected Consequences Of Germany's Anti-Nuclear Push The Unexpected Consequences Of Germany's Anti-Nuclear Push

Authored by Irina Slav via,

Germany, the poster child for renewable energy, sourcing close to half of its electricity from renewable sources, plans to close all of its nuclear power plants by 2022. Its coal-fired plants, meanwhile, will be operating until 2038. According to a study from the U.S. non-profit National Bureau of Economic Research, Germany is paying dearly for this nuclear phase-out--with human lives.

The study looked at electricity generation data between 2011 and 2017 to assess the costs and benefits of the nuclear phase-out, which was triggered by the Fukushima disaster in 2011 and which to this day enjoys the support of all parliamentary powers in Europe’s largest economy. It just so happens that some costs may be higher than anticipated.

The shutting down of nuclear plants naturally requires the replacement of this capacity with something else. Despite its reputation as a leader in solar and wind, Germany has had to resort to more natural gas-powered generation and, quite importantly, more coal generation. As of mid-2019, coal accounted for almost 30 percent of Germany’s energy mix, with nuclear at 13.1 percent and gas at 9.3 percent.

The authors of the NBER study have calculated that “the social cost of the phase-out to German producers and consumers is $12 billion per year (2017 USD). The vast majority of these costs fall on consumers.” 

But what are these social costs--exactly?

“Specifically,” the authors wrote, “over 70% of the cost of the nuclear phase-out is due to the increased mortality risk from local air pollution exposure as a consequence of producing electricity by burning fossil fuels rather than utilizing nuclear sources.”

The culprit is coal. According to the study, some 1,100 people die because of the pollution from coal power generation every year. This, the authors say, is a lot worse than even the most pessimistic cost estimates of so-called “nuclear accident risk” and not just that: 1,100 deaths annually from coal-related pollution is worse even when you include the costs of nuclear waste disposal in the equation.

The results of the study, which used machine learning to analyze the data, surprised the authors. The cost of human lives had not been expected to be the largest cost associated with the nuclear phase-out.

“Despite this, most of the discussion of the phase-out, both at the time and since, has focused on electricity prices and carbon emissions – air pollution has been a second order consideration at best,” one of the authors, economist Steven Jarvis, told Forbes.

Just two decades ago, air pollution was a top concern for many environmentalists. Now, carbon emissions and their effect on climate seem to have taken over the environmental narrative and, as the research from NBER suggests, this is leading to neglecting important issues. Meanwhile, there are voices—and some of them are authoritative voices—that are warning a full transition to a zero-emission economy is impossible without nuclear power, which is virtually emission-free once a plant begins operating.

None other than the International Energy Agency—a staunch supporter of renewables—said in a report last year that the phase-out of nuclear capacity not just in Germany but everywhere could end up costing more than just increased carbon emissions as the shortfall in electricity output would need to be filled with fossil fuel generation capacity, just like it is filled in Germany. 

Why can't renewables fill the gap? Here’s what the IEA had to say:

“If other low-carbon sources, namely wind and solar PV, are to fill the shortfall in nuclear, their deployment would have to accelerate to an unprecedented level. In the past 20 years, wind and solar PV capacity has increased by about 580 gigawatts in advanced economies. But over the next 20 years, nearly five times that amount would need to be added. Such a drastic increase in renewable power generation would create serious challenges in integrating the new sources into the broader energy system.”

Translation: we are not adding wind and solar fast enough and we can never add them fast enough without risking a grid meltdown.

Even Germany’s fellow EU members recognize the importance of nuclear power. Leaving aside France, where it is the single largest source of energy, accounting for 60 percent of electricity generation, the EU members agreed in December to include nuclear power in their comprehensive climate change fighting plan, which the union voted on at the end of the year.

“Nuclear energy is clean energy,” the Czech Prime Minister, Andrej Babis, said at the time. “I don’t know why people have a problem with this.”

The reason so many people have a problem with nuclear is, of course, obvious. Actually, there are two reasons: Chernobyl and Fukushima. One might reasonably argue that two accidents for all the years nuclear power has been used for peaceful purposes by dozens of nuclear plants make the risk of a full meltdown a small one, but statistics is one thing--fear is an entirely different matter.

The problem with nuclear plants, in most opponents’ minds, is that a meltdown may be rare, but when it does happen, it is far more disastrous than a blackout caused by a slump in solar energy production, for example. 

There is no way to remove the risk of a nuclear reactor meltdown entirely. Reactor makers are perfecting their technology, enhancing safety features, and making sure the risk will be minimal, but the risk remains, deterring politicians--those in the ultimate decision-making position--to make a pragmatic decision that, as the NBER research suggests, could actually save lives.

Tyler Durden Sun, 01/19/2020 - 08:10
Published:1/19/2020 7:14:36 AM
[Markets] Internal Boeing Emails Claim 777X Shares MAX Problem Internal Boeing Emails Claim 777X Shares MAX Problem

Internal emails from Boeing staff members working on the 737 MAX were made public earlier this month have revealed new safety problems for the company's flagship 777X, a long-range, wide-body, twin-engine passenger jet, currently in development that is expected to replace the aging 777-200LR and 777-300ER fleets, reported The Telegraph.

Already, damning emails released via a U.S. Senate probe describes problems during the MAX development and qualification process. The emails also highlight how Boeing employees were troubled by the 777X – could be vulnerable to technical issues. 

Emails dated from June 2018, months before the first MAX crash, said the "lowest ranking and most unproven" suppliers used on the MAX program were being shifted towards the 777X program. 

The email further said the "Best part is we are re-starting this whole thing with the 777X with the same supplier and have signed up to an even more aggressive schedule."

Another Boeing employee warned about cost-cutting measures via selecting the "lowest-cost suppliers" for both MAX and 777X programs.

"We put ourselves in this position by picking the lowest-cost supplier and signing up to impossible schedules. Why did the lowest ranking and most unproven suppliers receive the contract? Solely based on the bottom dollar. Not just the Max but also the 777X! Supplier management drives all these decisions."

Like the MAX, the 777X is an update of an outdated airframe from decades ago, which is an attempt by Boeing to deliver passenger jets that are more efficient and provide better operating economics for airlines. 

Back in September, we noted how the door of a new 777X flew off the fuselage while several FAA inspectors were present to evaluate a structural test. 

Boeing's problem could stem from how it used the "lowest-cost suppliers" to develop high-tech planes on old airframes to compete with Airbus. The result has already been devastating: two MAX planes have crashed, killing 346 people, due to a malfunctioning flight control system, and 777X failing a structural ground test. 

Boeing's C-suite executives push for profitability (at the apparent expense of safety) has, by all appearances, been a disaster; sacrificing the safety of the planes to drive sales higher to unlock tens of billions of dollars in stock buybacks - that would allow executives to dump their stock options at record high stock prices.

Tyler Durden Sun, 01/19/2020 - 07:35
Published:1/19/2020 6:41:52 AM
[Markets] Can Africa Save The World Economy From 'Peak Growth'? Can Africa Save The World Economy From 'Peak Growth'?

Authored by Jim O'Neill via Project Syndicate,

Whether or not the 2010s were a "lost decade," one thing is clear: many countries fell short of their potential, possibly squandering their last best shot of registering strong GDP growth. In the decade ahead, demographic realities will catch up to China and the West, and the world will need a productivity miracle to offset the effects.

At the start of a new decade, many commentators are understandably focused on the health of the global economy. GDP growth this decade most likely will be lower than during the teens, barring a notable improvement in productivity in the West and China, or a sustained acceleration in India and the largest African economies.

Until we have final fourth-quarter data for 2019, we won’t be able to calculate global GDP growth for the 2010-2019 decade. Still, it is likely to be around 3.5% per year, which is similar to the growth rate for the 2000s, and higher than the 3.3% growth of the 1980s and 1990s. That slightly stronger performance over the past two decades is due almost entirely to China, with India playing a modestly expanding role.

Average annual growth of 3.5% for 2010-2019 means that many countries fell short of their potential. In principle, global GDP could have increased by more than 4%, judging by the two key drivers of growth: the size of the workforce and productivity. In fact, the 2010s could have been the strongest decade of the first half of this century. But it didn’t turn out that way. The European Union endured a disappointing period of weakness, and Brazil and Russia each grew by much less than in the previous decade.

The prospects for the coming decades are not as strong.

China’s labor-force growth is now peaking, and the populations of Japan, Germany, Italy, and other key countries are aging and in decline. True, some countries and regions that underperformed in the teens could now catch up; but much will depend on the realization of several positive developments.

For example, given the EU’s demographics, it would take a significant improvement in productivity to boost the rate of GDP growth. More expansionary fiscal policies in many countries – including, possibly, Germany – could produce a temporary acceleration this year and perhaps through 2021. But it is hard to see how a stimulus-driven expansion could be sustained much beyond that point. Europeans can talk all they want about “structural reform.” But without effective productivity-enhancing measures, the EU’s growth potential will remain in decline.

As for Brazil and Russia, it would be highly disappointing if both countries were to register the same weak growth of the past decade. Yet, to get from around 1% annual growth to 3.5-4% annual growth would probably require another commodity-price boom, in addition to major productivity enhancements. Given that both countries tend to eschew reform whenever commodity prices are booming – a classic symptom of the “commodities curse” – it is doubtful that either will reach its potential this decade (though, if one had to bet, Brazil has a better chance than Russia).

In China, a further deceleration in trend GDP growth is highly likely, owing to demographic realities. When I offered my earlier assessment of the BRICs (Brazil, Russia, India, and China) at the start of this century, it was already clear that by the end of the 2010s, China would be feeling the growth-constraining effects of a peaking workforce. Accordingly, I estimated that its real (inflation-adjusted) annual GDP growth in the 2020s would be around 4.5-5.5%. To achieve growth above that range would require a significant increase in productivity. In light of China’s investments in technology and shift to more domestic consumption, productivity certainly could improve. But whether that will be enough to overcome China’s other well-known challenges remains to be seen.

For its part, the United Kingdom could achieve stronger growth this decade, but it could also suffer a slowdown, depending on how it deals with Brexit and its aftermath. In any case, the country’s influence on global GDP is likely to be modest.

Then there is the United States, where annual growth potential appears to be just over 2%. Without more fiscal stimulus and an indefinite continuation of ultra-easy monetary policies, it is difficult to see how the US could exceed this rate. Moreover, it has been more than a decade since the US experienced a recession. Were that to happen in the months or years ahead, the US would have an even smaller chance of reaching its growth potential for the 2020s.

Last but not least are the still-smaller economies with enormous growth potential. While countries such as Indonesia (and perhaps Mexico and Turkey) are becoming more relevant in an assessment of global GDP, it is India that promises to have the largest influence in the 2020s and beyond. The country’s demographics will remain in an economic sweet spot for at least another decade.

Were the Indian government to adopt the right mix of growth-enhancing reforms, it could easily achieve annual growth in the range of 8-10%. And, because India is already close to being the world’s fifth-largest economy, that would have a significant influence on global GDP growth. The problem, of course, is that the current government has shown no indication that it will pursue positive reforms. On the contrary, it has launched a debilitating new culture war.

That leaves Africa. As matters stand, no African economy is large enough to influence global GDP on its own. But, as a region, Africa’s GDP is close to that of India, which means that if enough of its major economies can achieve strong growth, the effects will be felt more broadly. The rise of Africa seems both desirable and inevitable to me. Whether the continent can drive global GDP growth will be a key question for the coming decade.

Tyler Durden Sun, 01/19/2020 - 07:00
Published:1/19/2020 6:10:12 AM
[Markets] The Week Ahead: Monetary Policy in Focus, with the PBoC, BoJ, BoC, and the ECB in Action It’s a big week on the monetary policy front, with stats also to influence… Published:1/19/2020 5:41:53 AM
[Markets] US Stocks: Boosted by Trade Deal, Better Economic Data, Solid Bank Earnings The better-than-expected economic data demonstrated the resilience of the U.S. consumer in keeping the current economic expansion alive, and the solid corporate earnings from U.S. banks points toward the importance of the Fed holding interest rates at favorable price levels. Published:1/18/2020 11:38:32 PM
[Markets] Why Is Western Media Not Questioning The Mysterious Death Of Australian Youth Activist Wilson Gavin? Why Is Western Media Not Questioning The Mysterious Death Of Australian Youth Activist Wilson Gavin?

Authored by Robert Bridge via The Strategic Culture Foundation,

Following a protest against a ‘drag queen story time’ at a library in Australia, Wilson Gavin, 21, the president of the University of Queensland Liberal National Club, was found dead the next morning at a train station.

Local media, while going out its way to portray Gavin and his fellow protesters as hell-raisers, has yet to ask any serious questions with regards to the young man’s alleged suicide – at a time when he was reportedly house-sitting for a Liberal National Party Senator.

If ever there was a story that epitomizes exactly how low Western media has sunk, the story involving the events leading up to the tragic death of Wilson Gavin would have to rank very high.

On Sunday, Gavin and about fifteen members of the University of Queensland’s Liberal National Club (UQLNC) walked into the Brisbane Square Library where a ‘Drag Queen Story Hour’ event for children was in full swing. Gavin went face-to-face with the star of the show, drag queen Johnny Valkyrie, aka Queenie, as the group began to chant “drag queens are not for kids.” No violence, no broken chairs, just a group of university students expressing their displeasure with a controversial event that is sponsored by the local government, i.e. the taxpayers.

What happened next was as predictable as winter in Russia. Social media lit up with thousands of people providing their personal commentary on the incident. An extra big log was tossed on the fire as the popular Australian band, The Veronicas, shared footage of the incident on Instagram, with the smug remark, ‘bigotry is alive in Brisbane today.’

The New Zealand Herald described the social media backlash that ensued against Wilson Gavin by quoting a friend, who wished to remain anonymous (“out of fear of becoming a target” too, the paper explained): “Gavin was relentlessly trolled with vile insults and taunts, and … received some messages with an encouragement that he die.”

“Some members of his family, classmates and friends were tracked down and contacted, while his school, The University of Queensland, was publicly encouraged to kick him out.”

The between-the-line message here seems to be, ‘see what happens to people who protest too much?’

As the media went to great lengths to demonstrate the public wrath Gavin had incurred for daring to speak his mind at a library event (The Herald exhausted the bulk of its article discussing the “dangers of mob rule” on social media and “public shaming”), it failed to show the tremendous outpouring of support that he and his fellow students had received. The comments on social media were divided into two camps, which is normally the case involving any controversial subject. After all, millions of people are vigorously opposed to the idea of drag queens reading stories to children at public libraries, or at any other venue for that matter. Yet the media seriously downplayed that side of the debate, pushing the idea that “public shaming” led to Gavin’s decision to end his life. More on that later.

Another particularly inexplicable aspect about the media coverage is that every single publication sympathized with the drag queens and their ‘storytelling’ to very young children, as if nothing could be more natural. What books were the queens reading from? We are never told, but somehow I doubt it was Jack and Jill, unless one or both of them had undergone a sex-change operation along the way. But I digress.

The main message the media strove to deliver was that the young protesters were mean brutes, intimidating the performers and frightening staff and children, as if the sight of well-dressed college students chanting a slogan was the worst possible thing that could happen to them. Meanwhile, there was zero discussion about the possible psychological effects a child may experience when confronted with drag queens, as well as their personal choice of fine literature. No discussion as to why there needs to be a Drag Queen Story Time for children – paid for out of the public purse – in the first place. No comments provided by respectable psychologists about the possible mental side effects these children could face down the road. Instead, the media pushed the ridiculous narrative that the families suffered the very worst ordeal.

ABC Australia, for example, interviewed Jenny Griffin, a mother of two children, ages 6 and 8, who commented, “I was worried, I was concerned for my kids’ safety,” she said. “This was their first introduction to this more violent homophobia.”

Valkyrie, aka Queenie, said, “There were children crying, families distressed and of course, [fellow drag queen] Diamond (whose full stage name is ‘Diamond Good-rim,’ a clear allusion to a sexual act that should be considered inappropriate for children) and I were victim to vilification, harassment and nuisance.”

After several minutes of publicly expressing their criticism, the Queensland students peacefully exited the building, escorted by a single security guard.

End of story? Unfortunately not.

Early the next morning, Wilson Gavin was found dead at a train station as the result of “critical injuries.” Within a matter of hours the media was calling his death a suicide. Before continuing, a few necessary words about Mr. Gavin.

Wilson Gavin, as president of the LNC at his university, courted controversy on numerous occasions in the course of his short life. At the age of 19, Gavin, and despite being homosexual, voiced his opposition to gay marriages by organizing a ‘You Can Say No’ rally and making several appearances on national television.

On another occasion, Gavin brilliantly defended the British monarchy on an episode of “Outsiders,” a political talk show.

“I’m a lover of all things traditional. I’m a lover of all things beautiful,” he said on the show.

“And there’s nothing more traditional in this country than the monarchy.”

Judging by Gavin’s extremely confident demeanor in those past interviews, and at the library protest, he did not come across as a person who could be easily upset by hurtful remarks over social media. Indeed, just the opposite. He seemed to relish the opportunity to prove his detractors wrong. In short, he was a young intelligent man with a successful future ahead of him, and that fact may have unsettled his enemies. Although it is impossible to know what is going on inside of any person’s head, the fact that Gavin’s alleged suicide has shocked so many people is telling.

According to the Star Observer (“Setting Australia’s LGBTI agenda since 1979,” it declares in its masthead), “Gavin was found dead at Chelmer Railway Station this morning at 7:07am. Ambulance officers who attended say he died from critical injuries, but have provided no further details.”

On Thursday, The Guardian provided one short sentence regarding police accounts of the death: “Police did not treat his death as suspicious.”

In place of hard-hitting questions, the article provided the number for a suicide hotline as if the case was already closed. While a nice gesture that is not the sort of information the public needs from the media. Journalists need to be asking how a young man met his early demise at a train station in the wee hours of the morning following a protest that triggered a lot of controversy on social media. The public deserves to know more about the circumstances of the alleged suicide considering the context of events prior to that tragic moment Why is the possibility of foul play not mentioned – not even within the context to deny it, as if this were some sort of impossibility – as a matter of protocol in such a case?

One more note. As mentioned earlier, on the weekend of his death, Gavin had been minding the home of a politician, who has been identified as federal Liberal National Party Senator Paul Scarr, the Daily Mail Australia reported. Yet Liberal National politicians have said they have been disaffiliated from the UQLNC that Gavin headed since last month. Now, considering how media rarely shies away from sensational stories, the fact that it is not following up on this bit of information is, at the very least, strange.

Since the death of Wilson Gavin and the protest he organized, two petitions have been started on Brisbane City Council’s website to ban the Drag Queen Story Time events.

Tyler Durden Sat, 01/18/2020 - 23:30
Published:1/18/2020 10:39:48 PM
[Markets] False Flag? Fmr CIA Officer Suggests US Hacked Ukrainian Plane Transponder To Provoke Iran Shootdown False Flag? Fmr CIA Officer Suggests US Hacked Ukrainian Plane Transponder To Provoke Iran Shootdown

Philip Giraldi, a former counter-terrorism specialist and military intelligence officer of the CIA, penned a piece in the American Herald Tribune speculating that the U.S. launched several cyber-attacks, one on an Iranian missile defense system, and another on the transponder of the doomed Ukrainian plane.

Giraldi explains the Iranian missile operator experienced extreme "jamming" and Ukraine International Airlines Flight 752's transponder was switched off several minutes before the two Russian made Tor missiles were launched. 

"The shutdown of the transponder, which would have automatically signaled to the operator and Tor electronics that the plane was civilian, instead automatically indicated that it was hostile. The operator, having been particularly briefed on the possibility of incoming American cruise missiles, then fired," he said.

Giraldi said the Tor missile system used by Iran is vulnerable to being hacked or "spoofed," and at the same moment, Flight 752's transponder was taken offline "to create an aviation accident that would be attributed to the Iranian government."

The Pentagon has reportedly developed technologies that can trick enemy radars with false and deceptively moving targets, he said. 

"The same technology can, of course, be used to alter or even mask the transponder on a civilian airliner in such a fashion as to send false information about identity and location. The United States has the cyber and electronic warfare capability to both jam and alter signals relating to both airliner transponders and to the Iranian air defenses. Israel presumably has the same ability," Giraldi said.

Iran made the claim Wednesday that "enemy sabotage" cannot be ruled out in the downing of the plane. 

Iranian Brigadier General Ali Abdollahi suggested the U.S. hacked missile defense systems to make it appear Flight 752 was an incoming missile. 

Iranian President Hassan Rouhani also accused the U.S. of being responsible for the downing of the plane, saying that:

"The root of all sorrows goes back to America... this cannot be a reason for us not to look into all the root causes."

He added that:

"One cannot believe that a passenger plane is struck near an international airport while flying in a [commercial] flight channel," after previously saying that IRGC commanders were not the only ones involved in the plane downing, noting that "There were others, too."

The Iranian parliament also stated that "we are in powerful confrontation with the criminal U.S. and do not allow a mistake… to pave the ground for misusing the issue by the enemies."

Giraldi concludes by saying electronic warfare by the U.S. to bring down a civilian jet and blame it on Iran "suggests a premeditated and carefully planned event" to create a false flag for the next world war. 

Tyler Durden Sat, 01/18/2020 - 23:00
Published:1/18/2020 10:11:40 PM
[Markets] How The US Wages War To Prop Up The Dollar How The US Wages War To Prop Up The Dollar

Authored by Ryan McMaken via The Mises Institute,

At Counterpunch, Michael Hudson has penned an important article that outlines the important connections between US foreign policy, oil, and the US dollar.

In short, US foreign policy is geared very much toward controlling oil resources as part of a larger strategy to prop up the US dollar. Hudson writes:

The assassination was intended to escalate America’s presence in Iraq to keep control of the region’s oil reserves, and to back Saudi Arabia’s Wahabi troops (Isis, Al Quaeda in Iraq, Al Nusra and other divisions of what are actually America’s foreign legion) to support U.S. control of Near Eastern oil as a buttress of the U.S. dollar. That remains the key to understanding this policy, and why it is in the process of escalating, not dying down.

The actual context for the neocon’s action was the balance of payments, and the role of oil and energy as a long-term lever of American diplomacy.

Basically, the US's propensity for driving up massive budget deficits has created a need for immense amounts of deficit spending. This can be handled through selling lots of government debt, or through monetizing the debt. But what if there isn't enough global demand for US debt? That would mean the US would have to pay more interest on its debt. Or, the US could monetize the debt through the central bank. But that might cause the value of the dollar to crash. So, the US regime realized that it must find ways to prevent the glut of dollars and debt from actually destroying the value of the dollar. Fortunately for the regime, this can be partly managed, it turns out, through foreign policy. Hudson continues:

The solution [to the problem of maintaining the demand for dollars] turned out to be to replace gold with U.S. Treasury securities (IOUs) as the basis of foreign central bank reserves. After 1971, foreign central banks had little option for what to do with their continuing dollar inflows except to recycle them to the U.S. economy by buying U.S. Treasury securities. The effect of U.S. foreign military spending thus did not undercut the dollar’s exchange rate, and did not even force the Treasury and Federal Reserve to raise interest rates to attract foreign exchange to offset the dollar outflows on military account. In fact, U.S. foreign military spending helped finance the domestic U.S. federal budget deficit.

An important piece of this strategy has been a continued alliance with Saudi Arabia. Saudi Arabia maintains the world's largest capacity for oil production, and it was the largest single producer of crude for most of the period from the mid-1970s to 2018, when the US surpassed both Saudi Arabia and Russia.

But Saudi Arabia remains under the US thumb:

what Saudi Arabia does not save in dollarized assets with its oil-export earnings is spent on buying hundreds of billion of dollars of U.S. arms exports. This locks them into dependence on U.S. supply [of] replacement parts and repairs, and enables the United States to turn off Saudi military hardware at any point of time, in the event that the Saudis may try to act independently of U.S. foreign policy.

So maintaining the dollar as the world’s reserve currency became a mainstay of U.S. military spending. Foreign countries do not have to pay the Pentagon directly for this spending. They simply finance the U.S. Treasury and U.S. banking system.

However, any move away from this status quo tends to be met with paranoia and intervention from the US:

Fear of this development was a major reason why the United States moved against Libya, whose foreign reserves were held in gold, not dollars, and which was urging other African countries to follow suit in order to free themselves from “Dollar Diplomacy.” Hillary and Obama invaded, grabbed their gold supplies (we still have no idea who ended up with these billions of dollars' worth of gold) and destroyed Libya's government, its public education system, its public infrastructure …

But the role of oil-producing states goes beyond merely churning dollars and US debt to keep the dollar afloat. These countries also provide the foot soldiers for many US interventions in terms of terrorists and guerrilla fighters who can be used against US enemies. Hudson declares:

The Vietnam War showed that modern democracies cannot field armies for any major military conflict, because this would require a draft of its citizens. That would lead any government attempting such a draft to be voted out of power. And without troops, it is not possible to invade a country to take it over.

The corollary of this perception is that democracies have only two choices when it comes to military strategy: They can only wage airpower, bombing opponents; or they can create a foreign legion, that is, hire mercenaries or back foreign governments that provide this military service.

That is, the US regime can certainly get away with lots of bombing operations and other low-manpower operations. But anything that might require conscription is a political nonstarter. Hudson notes that Saudi Arabia, with its particularly rabid and extreme strain of Islam is quite useful:

Here once again Saudi Arabia plays a critical role, through its control of Wahabi Sunnis turned into terrorist jihadis willing to sabotage, bomb, assassinate, blow up and otherwise fight any target designated as an enemy of “Islam,” the euphemism for Saudi Arabia acting as U.S. client state. (Religion really is not the key; I know of no ISIS or similar Wahabi attack on Israeli targets.) The United States needs the Saudis to supply or finance Wahabi crazies. So in addition to playing a key role in the U.S. balance of payments by recycling its oil-export earnings into U.S. stocks, bonds and other investments, Saudi Arabia provides manpower by supporting the Wahabi members of America’s foreign legion, ISIS and Al-Nusra/Al-Qaeda. Terrorism has become the “democratic” mode of today's U.S. military policy.

Hudson also notes that the term "democracy," when used in the context of foreign policy, has very little to do with what a normal person would regard as democracy. Rather,

From the U.S. vantage point, what is a “democracy”? In today’s Orwellian vocabulary, it means any country supporting U.S. foreign policy. … The antonym to “democracy” is “terrorist.” That simply means a nation willing to fight to become independent from U.S. neoliberal democracy.

And this leads us to Iran. Hudson explains:

America’s hatred of Iran starts with its attempt to control its own oil production, exports and earnings. It goes back to 1953, when Mossadegh was overthrown because he wanted domestic sovereignty over Anglo-Persian oil. The CIA-MI6 coup replaced him with the pliant Shah, who imposed a police state to prevent Iranian independence from U.S. policy. The only physical places free from the police were the mosques. That made the Islamic Republic the path of least resistance to overthrowing the Shah and re-asserting Iranian sovereignty.

Thus, we got the Islamic revolution of 1979 which has led to forty years of Iran refusing to play ball in the US dollar maintenance regime that is demanded of other oil-producing nations in the Middle East.

The US is unlikely to let up on this effort so long as Iran continues to refuse to take orders from DC on these matters. It's true that the US can't do much about China and Russia. But Iran — unlike North Korea, which wisely secured nuclear arms for itself — remains an easy target because of its lack of nuclear capability.

Being a leftist, Hudson includes some unfortunate stuff about "neoliberalism," as if low taxes and freedom to trade were somehow driving global war. Hudson also concocts a theory about how this oil-dollar policy is driving global warming. That's a bit of a stretch, but the connection between foreign policy and the US dollar that he identifies is a key factor that tends to be almost universally ignored by the mainstream media. As China and Russia work ever harder to undermine the dollar and its geopolitical position, small countries like Iran will become even more important in the US's drive to maintain the dollar's status quo. But it remains to be seen how long the US can keep it going.

Tyler Durden Sat, 01/18/2020 - 22:30
Published:1/18/2020 9:39:05 PM
[Markets] F-18 Fighters To Drop Live Bombs On Florida Swamp This Weekend F-18 Fighters To Drop Live Bombs On Florida Swamp This Weekend

According to a statement published by the Naval Air Station Jacksonville, the US Navy is preparing to conduct live bombing raids with fighter jets at a training facility in the middle of Florida this weekend. 

The Navy will fly McDonnell Douglas F/A-18 Hornets from 11 a.m. to 11 p.m. from Saturday through Sunday, dropping live and inert bombs at Pinecastle Range Complex in the Ocala National Forest.

Residents in surrounding communities will hear explosions and loud noises, especially fighter jets traveling at subsonic speeds. 

Here's a 2012 video of an F-18 jet "5 miles" from the Pinecastle Range completing a tactical turn. 

A 2011 video records the moment when bombs were dropped on the range. 

Local news station provides more information about Pinecatle Range. 

Residents from Volusia, Lake and Marion counties will hear fighter jets and bombs throughout the weekend. Residents as far as Seminole and northern Orange County could also hear explosions. 

"During bombing periods, wildlife may be temporarily displaced. Use extra caution when driving through the Ocala National Forest and surrounding areas," the Navy said. "Secure any items around your residence that could attract wildlife. Always be mindful of larger animals, including black bears, and practice bearwise measures."

With the threat of war elevated in 2020 – the Navy is actively preparing its pilots for combat by bombing the hell out swamps in the middle of Florida. 

Tyler Durden Sat, 01/18/2020 - 22:05
Published:1/18/2020 9:08:31 PM
[Markets] The Moneyist: ‘I’m sick to death of him.’ My 70-year-old boyfriend sits in front of the TV and has no savings — is it too late to tell him to go? ‘I own the house and I’m ready to just give it to him and walk away with my small retirement fund.’
Published:1/18/2020 8:38:27 PM
[Markets] The Quiet Crisis: Deaths Caused By Alcoholism Have More Than Doubled The Quiet Crisis: Deaths Caused By Alcoholism Have More Than Doubled

Opioid overdoses may have leveled off last year after soaring over the last ten, but Americans are still dying in droves from another, far more popular substance: alcohol.

According to a series of studies cited by MarketWatch, the number of Americans drinking themselves to death has more than doubled over the last two decades, according to a sobering new report. That far outpaces the rate of population growth during the same period.

Researchers from the National Institute on Alcohol Abuse and Alcoholism studied the cause of death for Americans aged 16 and up between 1999 and 2017. They determined that while 35,914 deaths were tied to alcohol in 1999, it doubled to 72,558 in 2017. The rate of deaths per 100,000 soared by 50.9% from 16.9 to 25.5.

Over that 20-year period, the study determined that alcohol was involved in more than 1 million deaths. Half of these deaths resulted from liver disease, or a person drinking themselves to death, or a drug overdose that involved alcohol.

For more context: In 2017 alone, 2.6% of roughly 2.8 million deaths in the US were alcohol-related.

One doesn't need to be a chronic alcoholic to suffer from alcohol: Nine states - Maine, Indiana, Idaho, Montana, New Jersey, New York, North Dakota, Ohio and Virginia -  saw a "significant" increase in adults who binge drink, a dangerous activity that can lead to deadly car crashes and other fatal accidents, according to a report released Thursday by the CDC.

And across the country, Americans who binge drink are consuming more drinks per person: That number spiked from 472 in 2011 to 529 in 2017, a 12% increase.

Historically, men have been more predisposed to "deaths of despair" than women: But a study published in "Alcoholism: Clinical and Experimental Research" found that the largest increase in recent years in these types of deaths occurred among non-hispanic white women.

Public health crises tied to substance abuse have been plaguing American for decades. So, what is it about our contemporary society that's causing deaths to skyrocket?

There's some food for thought.

Tyler Durden Sat, 01/18/2020 - 21:15
Published:1/18/2020 8:22:31 PM
[Markets] It Was Rod: DOJ Court Filing Reveals Rosenstein Behind Strzok-Page Text Dumps It Was Rod: DOJ Court Filing Reveals Rosenstein Behind Strzok-Page Text Dumps

Former Deputy Attorney General Rod Rosenstein authorized the release to the media of text messages between 'FBI lovebirds' Peter Strzok and Lisa Page, many of which revealed deep animus towards then-candidate Donald Trump while they were investigating him during the 2016 presidential campaign, according to Politico.

In a Friday night court filing submitted shortly before midnight, Rosenstein says he made the decision to protect Strzok and Page from the damaging effects of lawmakers and others releasing the texts for use as political ammunition.

In the messages, Strzok and Page regularly disparaged Trump and appeared to seek to reassure each other he could not be elected. Both called Trump an “idiot” and said Democratic nominee Hillary Clinton deserved to win.

The texts also included murky discussions of an “insurance policy” to guard against Trump’s election. Trump backers have interpreted the reference as a plan to use the then-ongoing investigation into ties between Trump advisers and Russia as way to prevent him from taking office or undermine his presidency, but Strzok and Page have denied any such intent. -Politico

Lisa Page - who sued the DOJ and FBI in December over the release, appears to be pissed.

Strzok has separately sued the agencies as well - for which Rosenstein's admission was submitted as part of the government's defense. The former DAG says that public disclosure of the texts was inevitable in connection with testimony he was set to give the next day in front of the House Judiciary Committee.

"With the express understanding that it would not violate the Privacy Act and that the text messages would become public by the next day in any event, I authorized [Justice’s Office of Public Affairs] to disclose to the news media the text messages that were being disclosed to Congressional committees," wrote Rosenstein.

In November, the Justice Department asked U.S. District Court Judge Amy Berman Jackson to throw out Strzok’s suit, which challenges both his firing from the FBI and the release of the texts. However, Strzok’s attorneys countered in a court filing last month that one reason to allow the suit to proceed was that Justice Department was being vague about just who made the final call to give the messages.

Arguing that an air of mystery continued to surround the disclosure, Strzok lawyer Aitan Goelman called “revealing” Justice’s decision to seek dismissal of the suit without identifying the responsible official.

“An agency cannot avoid Privacy Act liability for a disclosure actually made for an improper purpose by eliciting a sanitized after-the-fact rationale from an official who does not have all of the facts,” Goelman wrote. -Politico

According to Rosenstein, his aides originally suggested that he should delay sending the texts to Congress until after his testimony in front of the House, however he thought it would be "inappropriate" to do so for that reason. He also said he decided to give them to the media prior to his testimony over concerns that they would be cherrypicked and weaponized.

"The Department’s Office of Public Affairs … recommended providing the text messages to the media because otherwise, some congressional members and staff were expected to release them intermittently before, during and after the hearing, exacerbating the adverse publicity for Mr. Strzok, Ms. Page and the Department," wrote Rosenstein. "Providing the most egregious messages in one package would avoid the additional harm of prolonged selective disclosures and minimize the appearance of the Department concealing information that was embarrassing to the FBI."

See the filing below:

Tyler Durden Sat, 01/18/2020 - 20:50
Published:1/18/2020 8:07:14 PM
[Markets] "Hard" Of Hearing: PornHub Being Sued By Deaf Man For Lack Of Closed Captioning "Hard" Of Hearing: PornHub Being Sued By Deaf Man For Lack Of Closed Captioning

Visuals are sometimes difficult to enjoy without context.

At least, that's the argument being made by Yaroslav Suris, who is suing the popular online porn site claiming that its lack of closed captioning for the deaf and hearing-impaired is discriminatory. 

Suris is claiming that the website violates his rights under the Americans With Disabilities Act, according to TMZ, who first broke the story. 

He claims that the deaf and hearing impaired can't understand the audio tracks of videos on the website and claims that some of his favorite titles - with names like "Hot Step Aunt Babysits Disobedient Nephew," "Sexy Cop Gets Witness to Talk" and "Daddy 4K -- Allison comes to Talk About Money to Her Boys' Naughty Father" - are difficult to follow.

This is a man who obviously appreciates artistic integrity of the actors and actresses...

He also says that he would pay for a Premium subscription to PornHub, but that it is pointless to shell out the money for it without closed captioning. Because we all know there isn't enough free porn out there - and there definitely isn't enough free porn with closed captioning. 

He is suing PornHub not only to request closed captioning, but also for damages.

PornHub, on the other hand (no pun intended), actually does have some closed captions.

PornHub's VP, Corey Price responded by saying: 

"We understand that Yaroslav Suris is suing Pornhub for claiming we’ve denied the deaf and hearing impaired access to our videos. While we do not generally comment on active lawsuits, we’d like to take this opportunity to point out that we do have a closed captions category."

We hope Yarslav doesn't spend too much of his spare time on the site, however. He could wind up deaf and blind. 

Tyler Durden Sat, 01/18/2020 - 20:25
Published:1/18/2020 7:37:09 PM
[Markets] Why Laws Against Hate Speech Are Dangerous Why Laws Against Hate Speech Are Dangerous

Authored by Fjordman via The Gatestone Institute,

In November 2019, Germans celebrated the collapse of the Berlin Wall and the reunification of Germany 30 years earlier. That same month, Chancellor Angela Merkel, in a speech to the German federal parliament (Bundestag), advocated more restrictions on free speech for all Germans. She warned that free speech has limits:

"Those limits begin where hatred is spread. They begin where the dignity of other people is violated. This house will and must oppose extreme speech. Otherwise, our society will no longer be the free society that it was."

Merkel received great applause.

Critics, however, would claim that curtailing freedom in order to protect freedom sounds a bit Orwellian. One of the first acts of any tyrant or repressive regime is usually to abolish freedom of speech. Merkel should know this: she lived under a repressive regime -- in the communist dictatorship of East Germany, where she studied at Karl Marx University.

The First Amendment to the United States Constitution protects freedom of speech, specifically speech critical of the government, and prohibits the state from limiting free speech. The First Amendment was placed first in the Bill of Rights because the American Founding Fathers realized that freedom of speech is fundamental to a free society. US President George Washington said:

"For if Men are to be precluded from offering their Sentiments on a matter, which may involve the most serious and alarming consequences... reason is of no use to us; the freedom of Speech may be taken away, and, dumb and silent we may be led, like sheep, to the Slaughter."

Without freedom of speech, you cannot truly be free. Freedom of speech exists precisely to protect the minority from the tyranny of the majority.

What exactly is "hate speech," and who gets to define it? Those who love justice usually also hate injustice. But what is justice? Social justice? Economic justice? Ecological justice? Religious fundamentalist justice? Climate justice?

Hate may be a negative emotion, but you cannot ban emotions. Envy and jealousy are also widely considered negative feelings. Yet we do not ban them. Envy of people who are wealthier than you is arguably a component of Socialist and Marxist political parties everywhere.

The concept of a "hate crime" is also flawed. If you rob, assault or murder people, that is equally injurious regardless of the motivation of the assailant or of who the victim is. We should not have different penalties depending upon whether the victim is a gay black man, a straight white man, a Muslim woman or a Christian nun, or we will end up with a kind of a legal caste system.

Although the legal system should not be based on feelings or emotions, we see an increasing tendency toward this subjectivity. There is a tendency to censor certain viewpoints because they might "offend" others. The problem is, it is not the inoffensive things that need protecting; it is only the offensive things that do. When, in the US, the National Socialist Party of America wanted to march though Skokie, Illinois, home to many Holocaust survivors, the Supreme Court decided that the Nazis' right of free speech overrode suppressing the marchers. According to the Bill of Rights Institute:

"In these cases, National Socialist Party of America v. Village of Skokie (1977), and Brandenburg v. Ohio (1968), the Supreme Court held that the First Amendment protects individuals' rights to express their views, even if those views are considered extremely offensive by most people...

"American writer Noam Chomsky said 'If we don't believe in freedom of expression for people we despise, we don't believe in it at all.' Individuals who express unpopular opinions are protected by the First Amendment. The First Amendment prevents majorities from silencing views with which they do not agree—even views that the majority of people find offensive to their very core. "

Possibly many things people say will be considered offensive to somebody, somewhere. In 1600, Giordano Bruno was burned alive at the stake as a heretic for saying that the universe has no center, and stars are suns, surrounded by planets and moons. The findings of Charles Darwin were challenged by the "Scopes Monkey Trial" in 1925, when a high-school teacher in Tennessee, John T. Scopes, was charged with violating state law by teaching the theory of human evolution.

Just a few years ago, it was uncontroversial to state that there are only two biological sexes. After all, this is a fact that would seem pretty straightforward. Yet recently, even this simple statement has become explosive. When the tennis champion Martina Navratilova questioned the fairness of having transgender men compete in sports again women, but was eventually driven to "apologize."

In the UK, a physician, David Mackereth, recently lost his government job as a medical assessor after more than three decades for refusing to renounce his view that gender is determined at birth.

People who claim to combat "hate" often seem to be quite full of hate themselves. Some Americans claim that US President Donald J. Trump is a racist, yet themselves express open hatred toward Trump, and those who vote for him. They do not object to hating. They just seem to believe that their hate is the only legitimate one.

In 2013, the American scholar Robert Spencer was banned by British authorities from entering the UK. Spencer the author of many books about Islam and runs the website Jihad Watch.

The Koran sura 9:5 has verse stating:

"When the sacred months are over slay the idolaters wherever you find them. Arrest them, besiege them, and lie in ambush everywhere for them. If they repent and take to prayer and render the alms levy, allow them to go their way. God is forgiving and merciful."

The exact translation of this verse can be debated, but the Arabic verb qatala generally means to kill, slay or murder somebody. How come it is all right to publish the original source, prescribing murder, but that it is "hate speech" to point out that quote?

Robert Spencer and others have observed, for instance, that verse 9:5 and other intolerant verses in the Koran have been quoted repeatedly by militant Muslims to justify jihad attacks and violence (for instance herehere and here). Although other religious books also contain violence, as the scholar Bruce Bawer points out:

"Sometimes, when one points out these rules, people will respond: 'Well, the Bible says such-and-such.' The point is not that these things are written in Islamic scripture, but that people still live by them."

Muslims in Britain and other Western nations are free to spread teachings that are hateful towards non-Muslims. Yet because non-Muslims such as Robert Spencer pointed out that some teachings are hateful and have inspired actual atrocities, UK authorities banned Spencer for spreading "hate."

One sees, then, that restrictions against "hate speech" often do not really ban hate speech; instead they may actually be protecting certain forms of hate speech against legitimate inquiry.

Laws against "hate speech" and "racism" always lead to political censorship, because the definition of what constitutes "hate" is always influenced by politics and ideology. Laws against hate speech or racism should therefore be removed. No person has the right "not to be offended." Freedom of speech means saying and hearing things with which you may disagree. What remains important is to be able to say and hear them.

Tyler Durden Sat, 01/18/2020 - 20:00
Published:1/18/2020 7:07:21 PM
[Markets] Haftar Blocks All Libyan Oil Exports Day Before Berlin Peace Conference Haftar Blocks All Libyan Oil Exports Day Before Berlin Peace Conference

Given Libyan commander Khalifa Haftar has over the past two years captured the majority of the oil and gas rich country's energy producing regions, he's now playing his biggest card yet to leverage international peace talks in his favor amid a final push for his Libyan National Army (LNA) forces to take Tripoli. 

Bloomberg reports Saturday that the Benghazi-based 'rebel' general has now "blocked oil exports at ports under his control, slashing output by more than half and posing a potential setback for an international conference on Sunday that aims to broker an end to a civil war in the OPEC nation."

Image source: AP via

The major talks Sunday are due to be held in Berlin, and a who's who of external backers of each side of the conflict will be in attendance, including Putin, Erdogan, France's Macron, and UK Prime Minister Boris Johnson, as well as the Italian prime minister and US Secretary of State Mike Pompeo.

The Berlin conference comes after a failed deal to establish a ceasefire in Moscow earlier in the week, when Haftar left the city after the head of the UN-backed Government of National Accord (GNA) in Tripoli, Fayez al-Sarraj, actually signed the agreement. Haftar also reportedly secretly scuttled to different Mediterranean capitals, including Athens, in a bid to gain recognition as legitimate leader on the ground.

Haftar's drastic move to block oil exports is likely aimed at torpedoing the Berlin meeting before it even starts, given he's proven intransigent in the face of international pressure for him to halt the ongoing Tripoli offensive — even during the talks hosted by one of his key political backers Vladimir Putin. 

Libya's National Oil Corp. (NOC) has now declared Force Majeure, per Bloomberg:

As a result of the blockage of ports in the central and eastern parts of the country, oil output will fall by about 800,000 barrels a day, costing $55 million daily, the National Oil Corp. said in a statement on Saturday. The NOC declared Force Majeure, which can allow Libya, which holds Africa’s largest-proven oil reserves, to legally suspend delivery contracts.

The stoppage also has military implications on the ground, given the GNA's national army relies on the country's oil revenue to purchase weapons via Tripoli's central bank. The NOC has placed sole blame on Haftar for the shutdown, while the LNA has claimed to be listening to the demands of "the people". 

GNA's Fayez Al-Sarraj (left) and Gen. Khalifa Haftar, via the AFP.

Speaking to Bloomberg, European Council on Foreign Relations top official Arturo Varvelli acknowledged the action as bold ploy by Haftar to control Berlin discussions before they commence. “It could be counterproductive as it could make the Europeans, who are the largest consumers of Libyan oil, very upset,” he said.

And S&P Global Platts warns the country's oil sector could enter a "tailspin"

Libya's oil sector could go into a tailspin with two-thirds of its total crude oil production of around 1.20 million b/d at risk after its key oil ports were suspended Saturday by the Libyan National Army...

There's huge potential for fireworks at the conference itself, given international heavyweights on either side of the conflict will be represented.

Turkey's Erdogan has recently ordered troops to prop up the Tripoli government, not to mention Turkish drones and military hardware which have for months already been active in defense of the capital against pro-Haftar forces. 

Oil exports make up over 90% of Libya's national revenue and as the below 2019 Stratfor map demonstrates, Haftar has long held the majority of the nation's oil fields.

Russia, for its part, is believed to have hundreds of mercenaries from the Wagner Group embedded within Haftar's forces. And complicating matters in the emerging proxy war, Egypt, the Saudis, and UAE (and most recently the Trump White House, apparently) also back Haftar, while Italy, Turkey, and other UN member nations back the GNA's Sarraj. 

Meanwhile, Haftar has vowed repeatedly to not give up until he has control of the Libyan capital, despite fighting for months staying at a relative stalemate. So the Berlin conference outcome is not looking good before it even starts. 

Tyler Durden Sat, 01/18/2020 - 19:35
Published:1/18/2020 6:37:06 PM
[Markets] Why ‘irrationally bullish’ investors are getting nervous as the stock market races to uncharted territory Where is this stock market head in the coming days and weeks? That is the trillion-dollar question some nervous strategists, analysts and traders are wrestling with, following a relatively brisk rally for equities to kick off 2020. Published:1/18/2020 6:09:45 PM
[Markets] Mystery Chinese Virus Has Likely Infected Over 1,700 As It Sweeps Across China And Japan Mystery Chinese Virus Has Likely Infected Over 1,700 As It Sweeps Across China And Japan

While there have been more than 60 confirmed cases of a new mystery virus emerging from Wuhan, China, UK experts estimate that closer to 1,700 have been sickened with the SARS-like pneumonia, according to the BBC.

"I am substantially more concerned than I was a week ago," disease specialist Prof Neil Ferguson told the outlet.

The work was conducted by the MRC Centre for Global Infectious Disease Analysis at Imperial College London, which advises bodies including the UK government and the World Health Organization (WHO). -BBC

The estimate was calculated by the Imperial College of London based on the following assumptions: 

  • Wuhan International Airport has a catchment population of 19 million individuals [1].
  • There is a mean 10-day delay between infection and detection, comprising a 5-6 day incubation period [8,9]  and a 4-5 day delay from symptom onset to detection/hospitalisation of a case (the cases detected in Thailand and Japan were hospitalised 3 and 7 days after onset, respectively) [4,10].
  • Total volume of international travel from Wuhan over the last two months has been 3,301 passengers per day. This estimate is derived from the 3,418 foreign passengers per day in the top 20 country destinations based on 2018 IATA data [11], and uses 2016 IATA data held by Imperial College to correct for the travel surge at Chinese New Year present in the latter data (which has not happened yet this year) and for travel to countries outside the top 20 destination list.

According to the report, "It is likely that the Wuhan outbreak of a novel coronavirus has caused substantially more cases of moderate or severe respiratory illness than currently reported. The estimates presented here suggest surveillance should be expanded to include all hospitalised cases of pneumonia or severe respiratory disease in the Wuhan area and other well-connected Chinese cities. This analysis does not directly address transmission routes, but past experience with SARS and MERS-CoV outbreaks of similar scale suggests currently self-sustaining human-to-human transmission should not be ruled out."

To that end, airports in Singapore and Hong Kong have been screening passengers from Wuhan, while three US airports announced similar measures on Friday at three major airports; San Francisco, Los Angeles and New York. While most of the cases have occurred in China, there has been at least one reported in Japan, after a Chinese national traveled from Wuhan to his home in Kanagawa Prefecture.

About the virus:

The BBC also reports that this virus is just one of six Coronaviruses known to infect people.

At the mild end they cause the common cold, but severe acute respiratory syndrome (Sars) is a coronavirus that killed 774 of the 8,098 people infected in an outbreak that started in China in 2002.

Analysis of the genetic code of the new virus shows it is more closely related to Sars than any other human coronavirus. -BBC

According to Ferguson, it's "too early to be alarmist" over the virus, but that "people should be considering the possibility of substantial human-to-human transmission more seriously than they have so far," adding "It would be unlikely in my mind, given what we know about coronaviruses, to have animal exposure, be the principal cause of such a number of human infections."

Understanding how a novel virus is spreading is a crucial part of assessing its threat.

The WHO's China office said the analysis was helpful and would help officials plan the response to the outbreak.

"Much remains to be understood about the new coronavirus," it said. "Not enough is known to draw definitive conclusions about how it is transmitted, the clinical features of the disease, the extent to which it has spread, or its source, which remains unknown." -BBC

So far just two deaths have been reported.

Tyler Durden Sat, 01/18/2020 - 18:45
Published:1/18/2020 6:09:44 PM
[Markets] Watch: The Fed's Evil Juggernaut Watch: The Fed's Evil Juggernaut

Authored by Adam Taggart via,

Juggernaut: (n) massive inexorable force, campaign, movement, or object that crushes whatever is in its path

The US Federal Reserve is once again force-feeding liquidity into the system. At its fastest rate ever.

The result? Record high stock prices whose valuations defy all logic.

What’s wrong with that? Shouldn’t we just enjoy the party and be grateful for our rising 401ks?

What’s wrong is that the Fed’s actions are dooming us. Their poisonous cocktail of endless cheap money and rock-bottom interest rates is hastening a terminal breakdown of the economy, while deliberately enriching a tiny cadre of elites to the ruin of everyone else.

Though most remain blind to this, Fed policy (and the similar ones pursued by the other major world central banks) is directly responsible for, or a major contributor to, many of the biggest challenges society is facing.

Tens of millions of Boomers who can’t afford to retire. Tens of millions of Millennials who can’t afford to purchase a home. History’s largest wealth gap between the 1% and everyone else. Relentless increases in the cost of living while real wages remain stagnant. Depletion and degradation of our key natural resources by zombie companies run without profits. We can thank the Fed for all of these ills, plus many more.

All we’re offered in return is the fake reassurance that “everything is awesome” because stocks are higher today than they were yesterday. As if that really makes a difference when the top 1% owns 50% of all stocks and the top 10% owns over 90%.

And when today’s epicly distorted markets reach their breaking point — which may be imminent given the truly manic action recently — not only will the resulting damage be commensurately epic, but it will injure the 99% FAR more than the 1% who benefitted from it.

Mass layoffs. Bankruptcies. Destroyed retirement portfolios and pensions. State and city budget crises. Higher taxes. More fees. Cancelled social services. Hollowed-out communities.

The Fed’s deliberate policy of privatized gains for the elite and socialized losses for the masses ensures that Joe Sixpack is going to take it in the shorts while Reginald Caviar-Maybach will still receive his record bonus from Goldman Sachs.

Which is why the video below is essential viewing for anyone not currently CEO of a too-big-to-fail bank or too busy counting their $billions.

We brought together several of the best monetary and macroeconomic minds to explain exactly what is transpiring and what concerned individuals like you should be preparing for.

Here’s our full 90-minute video WTF: What The Fed?!?, featuring Grant Williams, Mike Maloney, Charles Hugh Smith and Chris Martenson:

Understanding the nature of what is underway is critical. While the Fed’s liquidity juggernaut rolls on, it will continue to crush equality, opportunity and fairness for the masses. But once it stalls, the systemic crash and societal upheaval that will follow will be even more horrific for those not prepared for it.

Tyler Durden Sat, 01/18/2020 - 18:20
Published:1/18/2020 5:37:18 PM
[Markets] Trump Blasts "Brazen, Unlawful" Coup Attempt After House Files Impeachment Legal Brief Trump Blasts "Brazen, Unlawful" Coup Attempt After House Files Impeachment Legal Brief

Ahead of Tuesday's opening arguments in the Senate impeachment trial, House Democrats - seven impeachment managers led by Intelligence Committee Chairman Adam Schiff - filed their legal brief today.

The 111-page summons urges the Senate to "eliminate the threat that the President poses to America’s national security" as it lays out the case against President Trump.

The House legal filing (due by 5pmET) reiterates the findings of the House Intelligence and Judiciary panels, which, after hearing from witnesses and experts, settled on charging Trump with abuse of power and obstruction of Congress.

Additionally, the case that House prosecutors sent to the Senate references new evidence that wasn’t part of the impeachment inquiry, including material from Lev Parnas, an associate of Trump’s personal lawyer Rudy Giuliani, according to Democratic officials familiar with the argument.

President Trump's legal team outlined the fiery response to its impeachment summons, calling the two articles of impeachment passed by the House last month “a dangerous attack on the right of the American people to freely choose their president.”

The six-page document - which they stressed is different from the brief that is not due until Monday - offers a taste of the rhetoric expected to be deployed by the president’s defenders in the Senate.

“This is a brazen and unlawful attempt to overturn the results of the 2016 election and interfere with the 2020 election, now just months away,” the filing states.

Trump’s legal team, led by White House counsel Pat Cipollone and Trump personal lawyer Jay Sekulow, is challenging the impeachment on both procedural and constitutional grounds, claiming Trump has been mistreated by House Democrats and that he did nothing wrong.

Notably, at least four of the impeachment managers, including Schiff, are scheduled to appear Sunday on political talk shows.

Former Rep. Trey Gowdy (R-SC) told Fox News this week that he predicts President Donald Trump’s Senate trial will be short and that the president’s best defense is a review of the transcript.

“The transcript is the single best piece of evidence that the president has,” Gowdy said. “Who brought up Rudy Giuliani’s name? It wasn’t Donald Trump. It was Zelensky. This was the second call, not the first call. If President Trump were really hell-bent on ensuring that Ukraine investigate the Bidens, would he not have brought that up in the first telephone call he had with Zelensky? Why wait till the second?”

“As far as the timing of this trial is concerned, Trey, they are estimates that it could be quick, it could last as long as six weeks,” Fox News co-host Sandra Smith said. “Where do you fall on that, and what is the length of time mean?”

“I mean God help us if it lasts six weeks,” Gowdy responded. “The investigation is over, so it’s Schiff’s job to present the case. If he’s going to present the case on the paper with the depositions, it shouldn’t take that long. I don’t need Adam to read the depositions to me; the jury can go read it themselves.”

“If they open it up to witnesses, and they want Bolton, and then there’s some Republicans that want four or five other witnesses, it could last six weeks,” Gowdy continued. “Sandra, I just have not met anyone whose opinion has changed during the pendency of this investigation. I can’t identify – maybe three open-minded jurors in the U.S. Senate. I just don’t, no matter how long it lasts, I don’t think it’s gonna change anyone’s mind in the Senate or among my fellow citizens. The shorter the better.”

Fox News co-host Bill Hemmer asked, “Did you want to give us a time frame for that?”

“I’m saying two weeks,” Gowdy said. “If it goes six weeks, then they’re going to have to make some hard decisions on which witnesses are important enough to hear from and which ones, while they may have relevant evidence, we just don’t – I think in terms of a real trial.”

“Why would you ever not call a witness if that witness has relevant information?” Gowdy continued. “How do you pick which ones to call and which ones not to? You can never do that in a real trial. So, if we’re going to open this thing up anew to a brand new investigation, then call everybody, and God knows how long that’ll take.”

“President Trump has done nothing wrong and is confident that this team will defend him, the voters, and our democracy from this baseless, illegitimate impeachment,” White House Press Secretary Stephanie Grisham said in a statement on Friday night.

Tyler Durden Sat, 01/18/2020 - 17:55
Published:1/18/2020 5:07:22 PM
[Markets] Browbeaten Target Employee Gets GoFundMe Vacation After Public Shaming By 'Gaping A**hole' Journalist Browbeaten Target Employee Gets GoFundMe Vacation After Public Shaming By 'Gaping A**hole' Journalist

A GoFundMe for a browbeaten Target manager has reached more than $18,000 after a notorious internet troll's temper tantrum over a mispriced toothbrush went viral.

Target Tori and David Leavitt (via

Liberal journalist David Leavitt - who the late Anthony Bourdain once called a "gaping asshole" for mocking victims of a terrorist bombing - tried to publicly shame the Target manager, known as "Target Tori" after she refused to sell him a $90 toothbrush which had accidentally been marked at .01c, based on a Massachusetts law (he likely misinterpreted).

When Tori put her foot down, Leavitt called the cops and threatened to take Target to court.

After Leavitt's post went viral, he was caught in a lie trying to defend himself when he claimed to have not been to a dentist in over three years - only for an old tweet to surface in which he bragged about turning off Fox News in the Dentist's office.

And while the internet came to Tori's defense, President Trump's favorite meme maker - Carpe Donktum - set up a GoFundMe to send '#TargetTori on a vactation' which has raised more than $23,000 as of this writing.

Tori was reached, and full control of the GoFundMe has been granted to her.

Tyler Durden Sat, 01/18/2020 - 17:30
Published:1/18/2020 4:46:55 PM
[Markets] NewsWatch: Man who made a killing during financial crisis says that, at some point, the stock market will slow down — but, till then, ‘I love riding a horse that’s running’ David Tepper is going to take his horse to the Old Town Road and ride till he can’t no more.
Published:1/18/2020 4:06:13 PM
[Markets] Trump Suggests He Ordered Soleimani Killed For "Saying Bad Things About Our Country" Trump Suggests He Ordered Soleimani Killed For "Saying Bad Things About Our Country"

Adding more to the ever evolving rationale for the Jan.3 Qassem Soleimani killing which has brought the Middle East to the brink of a new major war, President Trump told Republic donors Friday night that the IRGC Quds force chief was “saying bad things” about the U.S. before his death.  

High-dollar donors were gathered for a fundraiser at Trump's Mar-a-Lago estate, where Trump offered a play-by-play of sorts surrounding the decision-making behind the admittedly bold and risky move to strike the elite Iranian military leader via drone as he passed through Baghdad's international airport. Soleimani was “saying bad things about our country” prior to the US taking action, Trump described of his decision

"How much of this shit do we have to listen to?" Trump was quoted as saying in audio of the event obtained by CNN. "How much are we going to listen to?" The president continued, suggesting that Soleimani's anti-American invectives were ultimately a convincing enough reason to sway Trump toward issuing the final order. 

Image via Daily Beast/Getty

Trump further admitted the killing "shook up the world" given that from the perspective of Iran and its allies "He was supposed to be invincible"

However, like with prior official statements surrounding the controversial military operation, which subsequently triggered a move in Iraqi parliament to boot American forces from the country, no specific evidence was offered that Soleimani was an "imminent" threat to US national security in the region. Previously contradictory statements have come out of the administration saying US embassies in the region were under threat of bombing. 

Describing that the drone strike took out "two for the price of one" in reference to slain Iraqi Shia paramilitary commander Abu Mahdi al-Mohandes, who had been at the airport to greet Soleimani, Trump gave a more detailed accounting than ever before of proceedings in the 'situation room' (which had been set up at Mar-a-Lago) that night.

According to CNN's summary of the new details recounted in the speech:

He went on to recount listening to military officials as they watched the strike from "cameras that are miles in the sky."

"They're together sir," Trump recalled the military officials saying. "Sir, they have two minutes and 11 seconds. No emotion. '2 minutes and 11 seconds to live, sir. They're in the car, they're in an armored vehicle. Sir, they have approximately one minute to live, sir. 30 seconds. 10, 9, 8 ...' "

"Then all of a sudden, boom," he went on. "'They're gone, sir. Cutting off.' "

"I said, where is this guy?" Trump continued. "That was the last I heard from him."

During these latest remarks Trump spoke of Soleimani as a "noted terrorist" who "was down on our list" and "was supposed to be in his country" before he landed in Iraq that fateful night. 

However, during the night of boasting the president predictably avoided the question of what's next in terms of US relations with its uneasy Middle East ally. Washington now finds itself in the awkward and increasingly precarious situation of being at the center of popular Iraqi anger and wrath, while also wanting to 'stay the course' in the country to "curtail Iran".

It goes without saying the Soleimani killing has set off a chain of events which are entirely unpredictable and possibly disastrous for Americans in the region, which could lead to a another significant military conflict and quagmire in the region.

Tyler Durden Sat, 01/18/2020 - 16:30
Published:1/18/2020 3:38:50 PM
[Markets] Investors Face "Grave Danger" - Wait 30 Years For Nothing Or Lose 67% Now Investors Face "Grave Danger" - Wait 30 Years For Nothing Or Lose 67% Now

As the market is levitated by central bank liquidity to record high after record high despite stagnant fundamentals, one asset manager is quantifying the mass hypnosis and warns investors are in "grave danger."

"Investors should keep in mind that market valuations stand nearly three times the historically run-of-the-mill valuation levels from which stocks have historically generated run-of-the-mill long-term returns," says John Hussman, president of the Hussman Investment Trust, in his latest note to investors.

"In fact, the highest level of valuation ever observed at the end of any market cycle in history was in October 2002, and even that level is less than half of present valuation extremes."

To Hussman, this indicates that there's a wide disconnect between valuations and underlying fundamentals.

"This doesn't mean that valuations have 'stopped working,'" he said.

"It means that speculative psychology plays an important role over shorter segments of the market cycle, and that investors place themselves in grave danger if they assume, at points of extreme confidence, that valuations can be ignored."

The business media is awash with asset-gatherers and commission-rakers arguing that low interest rates "justify" higher stock market valuations, but as Hussman explains

"...that’s really equivalent to saying that 'low prospective returns in the bond market justify low prospective returns in the stock market'... Emphatically, nothing about that argument changes the fact that elevated stock market valuations imply lower future investment returns. We also have to ask how much of a valuation premium is actually ‘justified’ by low interest rates."

Adding that...

"It’s there that investors have inadvertently created a world of future pain for themselves."

So just how much pain?

"The risks that investors face don't care whether their investment horizon is 10 years, or 12 years, or 20 years," he said. "The problem is that at present valuation extremes, passive investors are locking in dismal future return prospects regardless of their investment horizon."

And so how do we get back to historically run-of-the-mill valuation norms?

The answer is simple:

"Wait nearly 30 years, allowing both the U.S. economy and U.S. corporate revenues to grow at the same rate as the past two decades, while stock prices remain unchanged, with no intervening periods of recession or investor risk-aversion, or alternatively (and far more likely), watch the S&P 500 lose two-thirds of its value over the completion of this market cycle."

Couldn't happen? Ask the Japanese...

Buy... and wait passively.

Presently, Hussman estimates that S&P 500 total returns will fall short of Treasury bond returns by about 2.5% annually over the coming 12-year period, which is equivalent to saying that we estimate negative total returns for the S&P 500 itself over that horizon.

Future generations, Hussman argues, seeing the collapse of this bubble in hindsight, will marvel that today’s speculative extremes were ever possible; that they were ever invited and embraced by investors.

They will look back on the entire episode, just as we look at the aftermath 1929, and 2000, and 2007, shaking their heads at the utter madness of it all.

"What QE actually did was to amplify yield-seeking speculation: in the attempt of each successive holder to get rid of their zero-interest hot potatoes, the valuations of stocks and bonds were progressively bid up until everything – all of it – is now priced at levels that promise near-zero future long-term returns. That’s exactly where we are today."

Finally, Hussman concludes, one thing is clear: the Federal Reserve seems to have little grasp of the non-linearities involved in managing such a deranged balance sheet.

Tyler Durden Sat, 01/18/2020 - 16:00
Published:1/18/2020 3:07:22 PM
[Markets] ‘Even two paychecks can only go so far.’ How skyrocketing child-care costs put aspiring home buyers in a bind Families making under $1,500 a month shelled out nearly 40% of their income to child-care expenses, according to one estimate.
Published:1/18/2020 3:07:22 PM
[Markets] US Military Jams GPS Across East Coast As FBI Seizes Night-Vision Devices US Military Jams GPS Across East Coast As FBI Seizes Night-Vision Devices

Authored by Mike Adams via,

In case you didn’t fully realize that something big is about to take place in America, file these two facts in your brain:

#1: The U.S. military, Carrier Strike Group Four (CSG4), is jamming GPS signals from Jan 16th – 24th

...which may overlap the planned deep state false flag event in Richmond, Virginia. Richmond is just at the margins of the range of the GPS jamming exercise map released by the military (see below). The epicenter of the so-called “exercise” is off the coast of Georgia. The official FAA announcement claims no jamming will take place on Monday, Tuesday or Wednesday next week, but we don’t trust the FAA, so your mileage may vary. Remember, too, that 90% of the American population below the age of 30 has never read a paper map and can’t use a compass.

The GPS jamming exercise continues through Jan. 24th and effects South Carolina, North Carolina, Virginia, Eastern Tennessee, Alabama and all of Florida. The AOPA (Aircraft Owners and Pilots Association) has posted details of the warning here.

The FAA has also issued a flight advisory warning aircraft pilots that GPS will fail for “several hours each day” during this military jamming exercise. See:

Map of the Carrier Strike Group Four GPS testing

Here are the areas that will be impacted:

Note that this is the U.S. military testing GPS jamming capabilities in anticipation of an event that would require such jamming (obviously). Consider the convergence of events now shaping up:

  • The impeachment trial of President Trump by the U.S. Senate, presided over by the treasonous sellout SCOTUS Justice Roberts, who already sold out America to Obama under the wildly unconstitutional “Obamacare” decision years ago.

  • The Jan. 20th “Lobby Day” event in Richmond, Virginia, where deep state operatives are absolutely trying to put together a false flag event to cause violence and blame gun owners.

  • The Mysterious drone flights over Colorado, Oklahoma and Nebraska, recently followed up by an emergency meeting with the Oklahoma legislature on a military base, where they were briefed about something “horrific” and “life altering.”

  • The FBI’s sudden attempts to confiscate high-end night vision tubes from distributors, indicating an emergency need for night vision capabilities in an agency led by a treasonous traitor (Chris Wray) and that has a long history of planning and carrying out terrorism plots across America, according to the New York Times and the Kansas City Star.

#2: FBI invokes “imminent domain” to seize high-end night vision tubes

The FBI is now claiming “imminent domain” to essentially seize high-end night vision tubes (that power night vision goggles) from distributors in the United States. This indicates the FBI has an emergency effort under way to acquire large numbers of night vision devices in anticipation of some urgent event which will take place at night (possibly another FBI false flag operation like Oklahoma City or the 1993 attempted World Trade Center bombing which was entirely masterminded by the FBI).

As Dave Hodges is reporting from The Commonsense Show, Bob Griswold from relates a shocking event where he had already locked in the purchase of 70 night vision tubes from his distributor, and had those tubes invoiced and committed. Within hours, the FBI claimed imminent domain over the tubes, effectively “seizing” them from Ready Made Resources before they could even be shipped.

We reviewed a letter written to RMR by their distributor, confirming that the government preempted the order to RMR and claimed they had ownership over the gear because they were the government.

An hour ago, I spoke with Griswold on the phone to confirm the situation, and he told me he thought there were, “No more than 200 high-end night vision devices remaining in the entire country.” (This excludes the crappy gen 1 and gen 2 night vision devices, which nobody wants anyway.)

I’m told that inventory units are flying off the shelves and will be gone everywhere in the next 1-2 business days. Yes, there is a run on night vision in America, happening right now.

Here’s the relevant question: What is the FBI planning that would require hundreds of night vision devices?

Answer: Probably another bombing, mass shooting, mass casualty event or some other terrorism flashpoint that the FBI is famous for causing. Just ask the church members of Waco, Texas… or not, since they’re all dead, thanks to the FBI and ATF.

Earlier this week, Alex Jones declared on his broadcast that the deep state was going to “attempt to assassinate Trump next week.” Could this military exercise, and the FBI night vision devices, and the drones scanning the Midwest all be related?

Most likely, yes.

Listen to my urgent false flag warning podcast which covers the possibility of deliberate violence being staged for Monday, Jan. 20th, in Richmond, Virginia:

Tyler Durden Sat, 01/18/2020 - 15:30
Published:1/18/2020 2:36:43 PM
[Markets] Bitcoin prices are kicking off 2020 just like they ended 2019 — outperforming the stock market Bitcoin’s price surged nearly 98% in 2019, as measured by futures traded on the CME Group Inc. and is up 23% so far this year. Here’s why. Published:1/18/2020 2:05:49 PM
[Markets] Megxit Done Deal: Harry, Meghan Reach Deal Quitting Royal Life, Give Up Royal Titles Megxit Done Deal: Harry, Meghan Reach Deal Quitting Royal Life, Give Up Royal Titles

One family's crusade to break from the unbearable bondage of royalty is finally over, or in other words, Megxit is a done deal.

Prince Harry and Meghan Markle, also known as the Duke and Duchess of Sussex, will no longer use the titles His and Her Royal Highness "as they are no longer working members of the Royal Family" Buckingham Palace announced Saturday, as part of an agreement that lets them build a life away from intense media scrutiny as members of the royal family.

"Following many months of conversations and more recent discussions, I am pleased that together we have found a constructive and supportive way forward for my grandson and his family," Queen Elizabeth II said in a statement.

"Harry, Meghan and Archie will always be much loved members of my family," she said. " I recognize the challenges they have experienced as a result of intense scrutiny over the last two years and support their wish for a more independent life."

As disclosed in the agreement, Harry and Meghan "understand that they are required to step back from Royal duties, including official military appointments. They will no longer receive public funds for Royal duties."

They also shared their wish to repay Sovereign Grant expenditure for the refurbishment of Frogmore Cottage, which will remain their UK family home.

Frogmore House, which was a gift from the Queen to Harry and Meghan

With Brexit no longer dominating the British press, the announcement that the couple wished to step back back from the royal family had thrown Britain’s monarchy into turmoil and dominated the headlines. Even though Harry has only a remote prospect of becoming king - he’s sixth in line, behind his father, brother, and nephews and niece - there was outrage that, with his wife, he wanted to become financially independent and "carve out" a "progressive new role."

Still, as the following chart summarizing the net worth of UK's royalty shows, the former "Duke and Duchess" should be just fine.

According to Statista, Prince William and Prince Harry have similar incomes and net worth, and reportedly earn $6.6 million annually from the Sovereign Grant, which they split, and each have an estimated net worth that ranges around $40 million. Prince Harry’s income could fluctuate once his title is renounced. Rumors claimed Markle, who had a net worth of about $5 million before marrying Harry thanks to her acting career, was already inking up a deal with Disney to do voiceovers for future projects, though the money will reportedly go to charity.

In a separate statement, earlier this week the queen discussed the wishes of Harry and Meghan, a former actress, with her immediate family. The queen at the time described the talks as “very constructive.”

The Queen said the recent discussions led to a "supportive way forward for my grandson and his family." She said she was "particularly proud of how Meghan has so quickly become one of the family."

It now appears that it took Meghan even less time to leave the family.

Tyler Durden Sat, 01/18/2020 - 15:00
Published:1/18/2020 2:05:49 PM
[Markets] China's Gold Hoarding: Will It Cause The Price Of Gold To Rise? China's Gold Hoarding: Will It Cause The Price Of Gold To Rise?

Submitted by Jan Nieuwenhuijs of Voima Insight.

There are reasons to think that the gold price will rise faster than expected.

Since 2009 China has withdrawn 12,000 tonnes of gold from the rest of the world, where the short and medium-term gold price is set. For reasons I will explain, a tighter market outside of China can make the price of gold price rise faster than many expect. I believe the gold price will rise, because of excessive debt levels around the world, and incessant money printing by central banks. Central banks will try and resolve the debt burden through currency depreciation (inflation). China has been preparing for this scenario by buying gold.

One of the key drivers in recent decades for the US dollar gold price is real interest rates. It is thought that when interest rates on long-term sovereign bonds, minus inflation, are falling, it becomes more attractive to own gold as it is a less risky asset than sovereign bonds (gold has no counterparty risk). However, gold doesn’t yield a return (unless you lend it). So, when real rates rise, it becomes more attractive to own bonds.

Although the correlation is clear, it might change in the future. Possibly, when real rates fall, the gold price will rise faster than before. Let me explain why.

In my previous post, we have seen that the gold price in the short and medium-term is mainly set in the West by institutional supply of and demand for above-ground stocks. For the gold price, what matters is how much above-ground stock is in strong hands, i.e., owners of gold that will not be easily persuaded to sell.

A significant change in the global economy in the past two decades was the rapid expansion of China’s economy. As early as the 1980s, China started to liberalize its economy, but it was only after it joined the World Trade Organization in 2001 that its economy gained significance internationally. At the time of writing, the size of China’s economy is second globally. In 2002 China freed up its gold market with the opening of the Shanghai Gold Exchange (SGE).

Because of the aforementioned developments, and its Eastern mentality regarding gold, a few years after the Great Financial Crisis (GFC), China became a major player in the global gold market. It was a net importer since the 1990s, but imports grew in 2010 and exploded in 2013.

China’s central bank (which supervises the SGE) and other government departments have been stimulating physical gold ownership. One reason the government erected the SGE, was to allow the people to have direct access to the wholesale market and to be able to trade 999.9 fine gold at the lowest spreads. The stimulation program is sometimes referred to as the “People’s Gold.” In 2012, President of the China Gold Association, Sun Zhaoxue, wrote in Qiushi, the leading academic journal of the Chinese Communist Party’s Central Committee:

Because gold possesses stable intrinsic value, it is both the cornerstone of a countries’ currency and credit, as well as a global strategic reserve. Without exception, world economic powers established gold strategies at the national level. … the state will need to elevate gold to an equal strategic resource as oil and energy, …

In addition, because individual investment demand is an important component of China’s gold reserve system, we should encourage individual investment demand for gold. Practice shows that gold possession by citizens is an effective supplement to national reserves and is very important to national financial security. … We should advocate to ‘store gold among the people’ [“People’s Gold”] and guide a healthy positive development in this segment. … This is the objective under our gold strategy. 

The world economy faces new changes, new challenges and new opportunities. Therefore, we must relook the status and function of gold from a strategic height, and create and implement a national gold strategy, to strengthen our country’s ability to counter complex situations.

Several national central banks in Europe will agree with Sun Zhaoxue, as they’re slowly preparing for Plan B: gold.

In 2016 the SGE launched a smartphone application called “Yijintong” to further ease gold trading for everyone. Note, the government has mainly facilitated the infrastructure for gold trading in China. Nobody forces Chinese citizens to buy gold. “China has been infatuated with gold for thousands of years,” according to former Managing Director of the Far East for the World Gold Council, Albert L.H. Cheng.

The launch of “Yijintong” (Gold App). Source: SGE Annual Report 2016.

When the Chinese population had an opportunity to buy gold, so they did. According to my estimates, there are currently 20,398 metric tonnes owned by the private sector in China. The People’s Bank of China (PBoC) holds 1,948 tonnes, bringing the total to 22,346 tonnes. Up 230% from 2009.

Since the GFC, China has net imported 12,000 tonnes of gold. The gold came from the rest of the world, where the price is set in the short and medium-term. At this stage, it’s prohibited by the PBoC to export gold from the Chinese domestic market—all 20,398 tonnes of it. Gold owned by the Chinese is in strong hands. The fact the market in the West has become tighter can make gold go up faster than expected, according to my analysis. Needless to say, when sovereign bonds are downgraded (rated as riskier), the dynamic between real rates and gold will change too.

From industry insiders and circumstantial evidence, I believe the PBoC holds at least twice the amount of gold officially disclosed. Underreporting their gold reserves allowed the PBoC to accumulate at lower prices. Metal held by the PBoC, in addition to officially reported, was bought abroad and would add another 2,000 tonnes to China’s net import since the GFC. But I will leave this subject for a forthcoming article. I exclude speculative data in the paragraphs and charts above.

One reason for the gold price to rise is because the global debt-to-GDP ratios are excessive, and will be lowered, partially, through inflation. Debt in moderation can cause real economic progress. However, debt in excess can cause bubbles, stagnation, or depressions; too much debt caused the GFC. Unfortunately, the medicine we took was more debt. Last week, the World Bank warned the current debt wave is “the largest, fastest, and most broad-based wave of debt accumulation in advanced economies as well as in emerging and developing economies” since the 1970s.

NEW TODAY | Global debt reached a new all-time high of 322% of GDP in Q3 2019, with total debt nearing $253 trillion.

Access the Global Debt Monitor report and database here:

— IIF (@IIF) January 13, 2020

Since the GFC, central banks have embarked on unconventional monetary policy. Through Quantitative Easing, i.e., printing money and ultra-low interest rates, initially, some economic pain was avoided, but the underlying problem got worse. Across the board, debt-to-GDP levels have gone up (world debt is now at a record 322% of GDP). It seems to me that unconventional monetary policy is counterproductive, and not just because debt has expanded. Consider some of the unintended consequences: Stock markets are addicted to the printing press, asset bubbles are everywhere, and inequality is rising. So-called zombie companies (kept alive through artificially low interest rates) decrease productivity. Instead of spending more, consumers are spending less because the low-interest rates policy makes them feel insecure about the future. How to get out of this situation?

Ever lower rates encourages the taking on of ever more debt which then can't be serviced with higher rates requiring even lower rates which then encourages the taking on even more debt which then can't be serviced by even lower highs in rates requiring even lower rates...etc..

— Sven Henrich (@NorthmanTrader) January 6, 2020

In the stalemate, Christine Lagarde, the new head of the European Central Bank, is urging the few countries with relatively low debt levels, to “stimulate” the economy by borrowing and spending. Meanwhile, she holds key interest rates below zero and the printing press active. The Federal Reserve has reignited its printing press last September, which gave the US stock market another catalyst. When push comes to shove, our monetary “leaders” will always revert to printing money. There is a sense of logic in this, as to not intervene would undermine a central banks’ right to exist.

My concern is that money printing and more government-induced debt will ultimately lead to high inflation. Central banks will be reluctant to raise interest rates when that happens, as it would make the debt unserviceable. A “side effect” of high inflation, is that it reduces the debt burden. (Debt is fixed in nominal terms, of which the real value is eroded through inflation.) It’s an old trick to get out of debt through inflation, and governments are likely to choose this route.

In the scenario described above real rates will fall, and the price of gold will go up.

Hedge fund manager and debt cycle expert Ray Dalio stated in July 2019:

Governments are likely to continue printing money to pay their debts with devalued money. That’s the easiest and least controversial way to reduce the debt burdens and without raising taxes. 

In a leading financial journal, The Economist, the same solution was presented:

good old fashion currency debasement [/inflation] and the annihilation of nominal creditors (most of which reside outside the US). We have done this before in our 200+ year history and we will surely do it again.

Ole Hansen, head of commodity strategy at Saxo Bank, noted on January 9, 2020, “The story for gold is still there…. the United Nations food agency reported Thursday that its global food price index rose to a five-year high in December to 181.7 points. We expect the inflation story to unfold throughout the year.” Just because we haven’t seen staggering inflation numbers in developed nations for forty years, doesn’t mean it’s not on the table.

Like I said before, I think in the current environment, the gold price can rise faster than expected. Aside from the speed with which the gold price can rise—in a debt-based monetary system, the gold price is guaranteed to rise in the long run—equally important is that inflation will create winners and losers. If your savings are in fiat money and you own debt, you will lose. If you own hard assets, such as gold, and you are in debt, you will win. Perhaps this is why Sun Zhaoxue wrote, “The world economy faces new changes, new challenges and new opportunities. Therefore, we must relook the status and function of gold from a strategic height, and create and implement a national gold strategy.” Having 22,346 tonnes of gold within Chinese borders will protect against currency depreciation.

Ms. Lagarde confirmed she aims for currency depreciation when last November, she said, “We should be happier to have a job than to have our [fiat] savings protected.” Fortunately, there is gold in Europe too.

The views expressed on Voima Insight are those of the author(s) and do not necessarily reflect the official views or position of Voima Gold.

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Tyler Durden Sat, 01/18/2020 - 14:30
Published:1/18/2020 1:35:42 PM
[Markets] The New York Post: Meghan Markle is hunting for luxury real estate in Canada’s billionaire’s row Meghan Markle is house-hunting in one of Canada’s most exclusive enclaves, eyeing a $27 million waterfront property in Vancouver, in yet another sign that she and Prince Harry are planning a permanent move away from Britain’s royals.
Published:1/18/2020 1:11:13 PM
[Markets] Pentagon's No.2 General Says North Korea Building New Missiles "Fast" Pentagon's No.2 General Says North Korea Building New Missiles "Fast"

The Pentagon's second highest commander while addressing a defense gathering in Washington on Friday accused North Korea of building new missiles "as fast as anybody on the planet". 

Gen. John Hyten, the vice-chairman of the Joint Chiefs of Staff, said during remarks that North Korea is “building new missiles, new capabilities, new weapons as fast as anybody on the planet.”

The commander of U.S. Strategic Command, Air Force Gen. John E. Hyten. Image source: DoD

The top commander didn't offer any specifics or evidence on the "new missiles" other than the charge comes after talks between Washington and Pyongyang have stalled.

"If you want to go fast in the missile business you need to test fast, fly fast and learn fast. Look at Space X in this country. There were some pretty spectacular failures. Did they stop? No," Gen. Hyten said during his talk at the Center for Strategic & International Studies in Washington.

"That is what North Korea has been doing and North Korea has been building new missiles, new capabilities, new weapons as fast as anybody on the planet with the 115th most powerful economy in the world. Speed itself is efficiency," he added.

Interestingly Hyten has been a key US Air Force supporter of the new US Space Force, and has advocated for making it even more aggressive and robust than is currently planned for in the coming years. 

While again no particular or damning evidence for his claims against Pyongyang were offered, North Korean state media did release an ominous statement at the start of the new year by Kim Jong Un warning there would never be denuclearization on the Korean peninsula so long as the US maintains its hostile and aggressive posture in the region

Upon the end of the "The 5th Plenary Meeting of the 7th Central Committee of the Workers' Party of Korea," Kim had said in a January 2nd released statement: "the DPRK will steadily develop necessary and prerequisite strategic weapons for the security of the state until the US rolls back its hostile policy towards the DPRK and lasting and durable peace-keeping mechanism is built."

Tyler Durden Sat, 01/18/2020 - 14:00
Published:1/18/2020 1:11:13 PM
[Markets] Could Trump's Next Fed Chair Be A "Goldbug"? Could Trump's Next Fed Chair Be A "Goldbug"?

Authored by Tho Bishop via The Mises Institute,

This week, Donald Trump formally nominated Judy Shelton and Christopher Waller for vacant governorships on the Federal Reserve. Waller, the Vice President of the Richmond Fed, is widely viewed as a standard Fed nominee with the reputation of being a "dove" who has criticized recent interest rate hikes.

It is Judy Shelton who is particularly interesting.

A former campaign adviser for Trump, Shelton has been a vocal Fed critic who has praised the gold standard in the past. While she has recently advocated for lower interest rates, she has also been a critic of the Fed's policy of paying interest on excess reserves that has become a key policy tool since 2008. Shelton's nomination is also interesting  due to her background standing in stark contrast to most of her colleagues. 

As Joseph Salerno has noted:

The good news is that Ms. Shelton is not a technically trained academic economist, indoctrinated in the prevailing orthodoxy. She holds a doctorate in business administration from the University of Utah and has spent most of her career in the world of free-market policy think tanks, including stints at the Hoover Institute and the Atlas Network. She also writes refreshingly and articulately in favor of the gold standard, or some version of it.

The bad news is that she leans heavily toward supply-side economics, which is deeply flawed on monetary policy. Like most supply-siders, the position she advocates may be summed up in the motto, “I favor sound money—and plenty of it.”

Still, though by no means an Austrian, Shelton's voice on the Fed would create some much needed ideological diversity to the central bank.

In reacting to an interview with Ms. Shelton last June, Jeff Deist wrote:

Her comments represent the most substantive attack on the Fed, and central banking generally, by any potential nominee to the Fed board in recent history. She not only challenges how Jerome Powell and Fed officials conduct monetary policy, but whether they can conduct it competently at all....

So Shelton doesn't want to End the Fed. But in the parlance of woke America, she's an "ally." Recognizing the limits of central bank omniscience, and challenging its benevolence, are important first steps on the road to redeeming our money and our economy. 

In fact, it was precisely these unorthodox views that make her nomination a less-than-sure thing, even with a Republican-controlled Congress.  As Bob Murphy has noted, her competency in financial history has made her the target of criticism from establishment powers on both left and right. Particularly of issue is comments made by Republican Senators, often offering criticism with intellectual depth on par with their colleague Ms. Ocasio-Cortez. For example, when asked about Shelton's views on gold, Senator Richard Shelby, the Chairman of the Senate Banking Committee, could only offer:

The gold standard would probably shatter a lot of people’s dreams around the world right now...There was a reason to get off of it.

The fact that the administration insisted on nominating Shelton, in spite of the public concerns, demonstrates a certain level of confidence that her nomination will not be shot down. 

What's particularly interesting is that CNBC notes that there has been speculation that Shelton could be a potential for Jerome Powell if Trump is still in office at the end of the Fed chair's term in 2022. If so, that would bring someone who the Wall Street Journal described as a "goldbug" to the office of America's top central banker.

Of course, as Alan Greenspan's tenure showed, that may not actually mean much.

Tyler Durden Sat, 01/18/2020 - 13:30
Published:1/18/2020 12:36:15 PM
[Markets] Outside the Box: 10 tips for retirees who want to start their own business Ready to leave your job but don’t want to retire?
Published:1/18/2020 12:07:33 PM
[Markets] Virginia Gun Sales Soar As Dems Consider Draconian "Assault Weapons" Ban Virginia Gun Sales Soar As Dems Consider Draconian "Assault Weapons" Ban

Ever since Virginia's Democrats retook the state assembly and Senate in November, Democratic Gov. Ralph "blackface" Northam and the legislature have been gearing up to pass a draconian gun control bill.

Unsurprisingly, many Virginians feel strongly about preserving their second amendment rights, and the state has traditionally enforced a more permissive stance toward firearm ownership. But now, lawmakers are tossing around ideas like an "assault weapons ban" - language that has been criticized as vague and even nonsensical. Several moderate Democrats have even expressed reservations about supporting a sweeping gun-control bill if it includes the ban.

"A lot of people don’t really understand assault weapons and how complicated the issue really is," said Democratic Sen. John Edwards. "It’s going to be very difficult to figure out a way to do it. But we’re studying it, that’s all I can say."

And yet, lawmakers are pressing ahead, prompting a vicious backlash that has even prompted Gov. Northam to declare a state of Emergency because armed militia groups planned to storm the capitol.

As the gun-control debate rages, thousands of Virginians have been rushing to gun stores across the state to buy up firearms before it's too late.

Per Fox 5 Washington DC:

"Business has been absolutely crazy," explained Jerry Rapp, owner of SpecDive Tactical in Alexandria. Rapp said business has increased by 200 to 300 percent since the last election, although that doesn’t mean the news is all good for the gun shop owner and his customers. "People are really on edge. They’re worried about their Second Amendment rights. They’re worried about the future of what you can and cannot have as a firearm."

As one gun buyer put it, since Democrats have expressed open hostility to the 2nd Amendment, it makes more sense to just be prepared.

"If they’re willing to make laws that will strip your second amendment right, I mean who’s to say what could happen, so yeah, I’m gonna get it while I can," Roberson said.

According to FBI data, the number of firearm background checks ballooned in Virginia last month to nearly 77,000, up from 53,000 a year before. That's an increase of roughly 45%. That's in keeping with a national trend that we highlighted earlier this month.

President Trump has even chimed in, warning that your "2nd Amendment is under very serious attack".

Meanwhile, communities across Virginia are already looking into ways to sidestep any new state laws. The map below shows the counties that have enacted, or are considering, "Second Amendment Sanctuary" legislation.

The gun control debate has already ratcheted up tensions across the state. And things are only just getting started.

Tyler Durden Sat, 01/18/2020 - 13:00
Published:1/18/2020 12:07:33 PM
[Markets] Boeing’s Latest MAX Software Problem Explains Why The Stock Remains Too Risky More concerns about software in the grounded jet drove Boeing shares down Friday. The level of uncertainty swirling around Boeing shares is “unprecedented.” Published:1/18/2020 11:37:59 AM
[Markets] GAO Is Wrong - Dershowitz Confirms Trump Had Right To Withhold Ukraine Funds GAO Is Wrong - Dershowitz Confirms Trump Had Right To Withhold Ukraine Funds

Authored by Alan Dershowtiz via The Gatestone Institute,

U.S. Government Accountability Office (GAO) has gotten the constitutional law exactly backwards. It said that the "faithful execution of the law" - the Impoundment Control Act- "does not permit the president to substitute his own policy priorities for those congress has enacted into law ."

Yes, it does - when it comes to foreign policy.

The Constitution allocates to the president sole authority over foreign policy (short of declaring war or signing a treaty). It does not permit Congress to substitute its foreign policy preferences for those of the president.

To the extent that the statute at issue constrains the power of the president to conduct foreign policy, it is unconstitutional.

Consider the following hypothetical situation: Congress allocates funds to Cuba (or Iran or Venezuela). The president says that is inconsistent with his foreign policy and refuses to release the funds. Surely the president would be within his constitutional authority. Or consider the actual situation that former President Barack Obama created when he unilaterally made the Iran deal and sent that enemy of America billions of dollars without congressional approval. I do not recall the GAO complaining about that presidential decision, despite the reality that the Iran deal was, in effect, a treaty that should require senate approval that was never given.

Whatever one may think about the substantive merits of what President Donald Trump did or did not do with regard to the Ukrainian money— which was eventually sent without strings —he certainly had the authority to delay sending the funds. The GAO was simply wrong in alleging that he violated the law, which includes the Constitution, by doing so.

To be sure, the statute requires notification to Congress, but if such notification significantly delays the president from implementing his foreign policy at a time of his choice, that too would raise serious constitutional issues.

Why then would a nonpartisan agency get it so wrong as a matter of constitutional law.

There are two obvious answers:

  1. In the age of Trump there is no such thing as nonpartisan. The political world is largely divided into people who hate and people who love President Trump. This is as true of long term civil servants as it is of partisan politicians. We have seen this with regard to the FBI, the CIA, the Fed and other government agencies that are supposed to be nonpartisan. There are of course exceptions such as the inspector general of the Department of Justice who seems genuinely non-partisan. But most civil servants share the nationwide trend of picking sides. The GAO does not seem immune to this divisiveness.

  2. Even if the GAO were non-partisan in the sense of preferring one political party over the other, it is partial to Congress over the president. The GAO is a congressional body. It is part of the legislative, not executive, branch. As such, it favors congressional prerogatives over executive power. It is not surprising therefore that it would elevate the authority of Congress to enact legislation over that of the president to conduct foreign policy.

In any event, even if the GAO were correct in its legal conclusion — which it is not— the alleged violation would be neither a crime nor an impeachable offense. It would be a civil violation subject to a civil remedy, as were the numerous violations alleged by the GAO with regard to other presidents. Those alleged violations were barely noted by the media. But in the hyper-partisan impeachment atmosphere, this report received breathless "breaking news" coverage and a demand for inclusion among the articles of impeachment.

If Congress and its GAO truly believe that President Trump violated the law, let them go to court and seek the civil remedy provided by the law. But let us not continue to water down the constitutional criteria for impeachment by including highly questionable, and on my view wrongheaded, views about violations of an unconstitutional civil law.

Tyler Durden Sat, 01/18/2020 - 12:30
Published:1/18/2020 11:37:59 AM
[Markets] Morbidly Obese "Jabba The Jihadi" ISIS Leader Caught In Iraq Morbidly Obese "Jabba The Jihadi" ISIS Leader Caught In Iraq

A long 'most wanted' ISIS mufti responsible for ordering gruesome killings, kidnappings, rapes, as well as the destruction of the northern Iraqi city of Mosul's ancient heritage has been captured by an elite Iraqi SWAT team raid.

The massively obese terror leader named Shifa al-Nima, known within the Islamic State as Abu Abdul Bari, has been dubbed “Jabba the Jihadi” and photos posted online showed that after his capture police had to load him onto the back of a flatbed truck to accommodate his some 560-pounds. 

Considered one of the biggest captures in recent months due to his heading up still active but underground "ISIS gangs" in the region, he was nabbed at his hideout in Mosul earlier this week. Lately he was known to issue sermons and messages to his followers to target Iraqi police. 

And according to an Iraqi police statement, “He is considered one of the foremost leaders of ISIS and was responsible for issuing fatwas that led to the murder of scholars and clerics.”

The fat mufti was also well-known for issuing a fatwa in 2014 to bomb one of Mosul's most revered pilgrimage sites — a mosque believed to be site of the tomb of the Prophet Jonah — which attracted Muslims and Christians alike.

The Islamic State's strict Wahhabi interpretation of Islam forbids such veneration of tombs or religious places, and therefore sought to demolish any historical site it considered 'unIslamic'. 

Destroyed Shrine of the Prophet Yunus, via Reuters

The military news outlet Stars & Stripes detailed some among the more popular memes which spread online in the wake of the ISIS cleric's capture

Memes including “He puts the fat in fatwa” spread on social media after photos were posted of Bari seated on cushions inside his apparent hideout in one image and loaded into the back of a pickup truck in another.

The images of his arrest would strike a psychological blow against ISIS, Maajid Nawaz, founder of the London-based counter-extremist organization Quilliam, wrote on Facebook.

“Gluttony is frowned upon by jihadists. But also, ISIS branded themselves as fighters possessing rare courage & discipline... meanwhile this walrus was their top religious cleric,” he said.

Iraqi police suggest he was still making appearances in local mosques long after ISIS reign of terror, inciting hatred and violence against police and Iraqi leaders. 

Nima was captured in Mansour neighborhood of Mosul by the Nineveh police command and is now in prison, awaiting trial, after which he could face execution. 

Tyler Durden Sat, 01/18/2020 - 12:00
Published:1/18/2020 11:06:15 AM
[Markets] The Federal Reserve is stuck in quantitative-easing hell Since September, the central bank, through the Federal Reserve Bank of New York, has been purchasing securities hand over fist to alleviate short-term pressures in the overnight money markets. Powell and the Fed have repeatedly denied this is a new phase of “quantitative easing (QE),” three rounds of which added $3.6 trillion to the Fed’s balance sheet in the years after the financial crisis. Published:1/18/2020 10:41:39 AM
[Markets] Living On Borrowed Time Living On Borrowed Time

Authored by MN Gordon via,

Practically the entirety of Congress now believes that the ability to pay should not limit the ability to promise people whatever they want.  There’s no poll of members of Congress to support this assertion.  We base it on what they’ve communicated by real, material actions.

Remember, per the Constitution, Congress – and in particular, the House of Representatives – is vested with the “power of the purse.”  They retain the authority to tax and spend public money for the federal government.  Over the last 50 years Congress has demonstrated they give less than half a rip about the government’s ability to pay.

Congress may be good at taxing.  But they’re even better at spending.  According to the Treasury Department, the annual budget deficit, the shortfall between tax receipts and spending, for the 2019 calendar year topped $1.02 trillion.  But that’s nothing…

The budget deficit for the first three months of the 2020 fiscal year, which started in October, is up 12 percent over this time last year.  Specifically, the deficit for the first three months of the 2020 fiscal year is $357 billion.  At this rate, the annual 2020 fiscal year deficit will eclipse $1.4 trillion.

The deficit, of course, is funded with Treasury debt.  And since mid-October, nearly half the Treasury debt has been purchased by the Federal Reserve.  If you recall, starting in mid-October, the Fed began conjuring money out of thin air at a rate of $60 billion a month for the sole purpose of buying Treasuries.

Over the next decade, as debt and deficits go vertical, more and more of the Treasury’s borrowing will be financed via the printing press.  Here’s why…

Inverted Pyramid

New U.S. Census Bureau figures show that the U.S. population is growing at an annual rate of 0.48 percent.  If it wasn’t for immigrants, which are entering the USA at a reduced rate, the U.S. population would be in decline.  Business Insider offered several anecdotes:

“The census data capped 10 years of sluggish US population growth.  The 2010s may enter the record books as the slowest decade in population growth since the first Census in 1790….  And low fertility and an increase in deaths are projected to continue into the 2020s.

“The prospect of demographic stagnation is playing a critical role in projections of slower U.S. economic growth over the next decade, given smaller increases in the numbers of working-age Americans and as baby boomers continue retiring.  Going forward, a ballooning number of retirees would rely on a shrinking number of workers to power the economy.”

Quite frankly, this ‘going forward’ scenario is unworkable.

You see, when an economy’s supported by a young and growing demographic, the burden of public debt quickly dissipate.  At the local level, long term municipal bonds are issued, and then repaid by a larger and more prosperous tax base.  Public pension funds also work reasonably well when supported by a growing work force.

But as the economy ages, and growth stalls, the legacy costs become insurmountable.  In effect, the age demographic transitions from a well-functioning pyramid, with a large base of workers supporting a small tip of retirees, to a top heavy inverted pyramid.

By then the public grifters, like intestinal tapeworms, have taken control from the inside.  Rather than making a course correction, they devour their host.  That’s when the gig is finally up.

Local governments default.  Pensioners get the shaft.  Public services diminish.  Infrastructure falls to derelict, decay and disrepair.  And formerly grand properties degenerate to single room occupancy housing for the wicked…much like Los Angeles’s Hotel Alexandria in the 1990s.

Living On Borrowed Time

At the national level, the rules are a bit different.  With the Fed and Treasury working in concert with a fiat dollar, and Congress raising the debt ceiling with little reservation, it is impossible for the U.S. government to technically default.  However, to keep perpetuating more and more debt, the Fed and Treasury resort to mass currency debasement.

As noted above, the Fed is currently printing $60 billion a month and loaning it to the Treasury.  This is financing about 50 percent of the deficit through the first quarter of fiscal year 2020.  Moreover, this $60 billion a month is in addition to the nightly liquidity blasts of upwards of $80 billion the Fed applies to the overnight funding market to price fix the repo rate below 2 percent as part of its program of repo madness.

Without the Fed’s fake money intervention, Washington would be forced to raise taxes, reduce spending, accept a much higher interest rate, and default.  The progression would happen in short order.  Plus, the financial system would blowout to the extreme.

Yet there’s no turning back.  There’s no graceful way out.  There’s no backing away from QE or repo madness.

When it comes down to it, population and age demographics make it impossible to support the accumulated debt of yesterday’s spending.  The likelihood of growing our way out of this mess is next to none.

So what are we left with?  We’re left with debt financing by way of fake money from the Fed.

Make no mistake, we’re living on borrowed time.  The day will come when the costs of debt monetization exceeds any benefits.  That’s when those costs will be paid with ruinous price inflation.  And, as it happens, ruinous price inflation is very costly.

In the meantime, everything’s awesome.  Shares of Tesla are trading at over $500.  Somebody say amen.

Tyler Durden Sat, 01/18/2020 - 11:30
Published:1/18/2020 10:41:39 AM
[Markets] The Margin: Millennials like White Claw better than wine — and it’s shaking up the alcohol industry Americans are buying less wine for the first time in 25 years
Published:1/18/2020 10:08:50 AM
[Markets] Northeast Next Stop For Large-Scale Winter Storm  Northeast Next Stop For Large-Scale Winter Storm 

The National Weather Service (NWS) warned a powerful winter storm could affect travel for millions of people across the Midwest and Northeast this weekend.

The storm is so massive, that two-thirds of the U.S. will be under weather advisors on Saturday. Accumulating snow is expected in the Upper Midwest, Great Lakes, and parts of the Northeast through Saturday. Snow totals could range from 6 to 12 inches in some regions. 

"This storm will produce a widespread footprint of heavy snows from the Upper Mississippi Valley, across the Great Lakes, northern N.Y. State into central to the north of New England with snow totals in the 6 to 12 "+ range possible," NWS wrote.

Snow will end in the Midwest by early afternoon. Minnesota, Michigan, and Northern Iowa could end up with 8 to 12 inches. 

From the Baltimore–Washington metropolitan area to Philadelphia to New York, snow will start in the afternoon and continue throughout the day. By late afternoon/evening, snow is expected to change over to a wintery mix then rain for some regions located on the coast. 

"This will be another tricky forecast for the big cities along the I-95 corridor," said CNN meteorologist Taylor Ward.

"New York City and Boston will likely see 2 to 4 inches of snow before everything ends as rain Saturday night and early Sunday," said Ward.

The Baltimore–Washington metropolitan area could see 1 to 3 inches of snow – but a changeover to rain could depress totals. 

Interior portions of the Northeast will see the heaviest snow. Some regions, including update New York and Northern Maine, could see 8 to 12 inches by the overnight hours. 

Chicago O'Hare International Airport, Detroit Metro Airport, Ronald Reagan Washington National Airport, Baltimore/Washington International Thurgood Marshall Airport, and major airports in New York City could see a spike in delays as the storm moves from the Ohio Valley to Northeast by Saturday afternoon. 


Tyler Durden Sat, 01/18/2020 - 11:00
Published:1/18/2020 10:08:50 AM
[Markets] The Fed: Wall Street reformers stunned by new proposals from Fed’s top bank regulator Wall Street reformers expressed shock Friday about new proposals by the Fed’s Vice Chairman for Supervision Randal Quarles about how Fed bank supervisors should do their work.
Published:1/18/2020 9:37:06 AM
[Markets] If Promoting Wealth Inequality & Social Breakdown Is Bad, The Fed Is Evil If Promoting Wealth Inequality & Social Breakdown Is Bad, The Fed Is Evil

Authored by Charles Hugh Smith via OfTwoMinds blog,

The Fed will destroy the nation by widening the wealth/income inequality that is breaking down the nation's social order.

President Reagan was widely mocked in America when he declared the Soviet Union an evil empire, but this calling things by their real name had a profound impact in the Eastern Bloc. The mockery stemmed from the secularized American view that there was precious little moral difference between the USSR and the US, that the USSR was a legitimate "alternative system," and that ramping up Cold war tensions was not just dangerous but useless, as the USSR was as permanent (or more so) than the US.

None of which turned out to be true. While all nation-states harbor multitudes of sins, the Soviet Empire was unique in its mass suppression of basic human rights, its economic failure to better the lives of its imprisoned populations while its military might soared, and the perverse union of a Kafkaesque bureaucracy and an Orwellian propaganda machine epitomized by the old Soviet-era joke that "we pretend to work and they pretend to pay us."

Fast-forward to today's USA where soaring wealth and income inequality is making a social breakdown all but inevitable. Wages for the majority of households have gone nowhere for the past two decades, while the incomes of the top 5% have skyrocketed, with the majority of the gains flowing to the top 0.1%. (See charts below.)

History shows that fast-widening gaps between the super-wealthy / top 5% and the rest of the citizenry inevitably generate social disorder and breakdown. This dynamic is already painfully visible in rising homelessness, suicide rates, opioid addictions, burnout, intolerance, etc.

While there are many dynamics in play that exacerbate wealth / income inequality, the primary driver is the Federal Reserve's near-infinite giveaways to the financial and corporate elites. If we examine why our economy has become a winner take most casino, we find the gaming tables are rigged to favor the few closest to the Fed's money spigots: when JP Morgan gets in trouble by leveraging socially parasitic bets, the Fed steps in and saves their gambles by printing hundreds of billions of dollars in repos.

As a result of the Fed backstop, JP Morgan reported blow-out earnings.

The net result of the Fed's goosing the stock market ever higher is soaring wealth inequality as the average US household gains precious little from record highs, and whatever gains they might have are sequestered in 401Ks and IRAs until they retire.

The Fed justifies its enrich the already rich policies by claiming some of this newly created wealth will trickle down to the masses via walking the wealthy's dogs, polishing their Mercedes, tutoring their over-scheduled kids, busing their tables at $100 per plate bistros and so on.

The stagnant wages of the masses are the trickle down. Average Carlos and Carlita don't get an unlimited line of credit from the Fed; only bankers, financiers and corporations get an unlimited line of credit from the Fed.

If an alien force was purposefully widening America's wealth / income gap to destabilize the nation's social order, would we hesitate to call this force evil? Would we rationalize this force as "no worse than any other force" and an "alternative system" with the same moral standing as free markets and democracy?

Ours is a moral universe, and the first necessary step is to call things by their real name: the Fed is evil. Any force that relentlessly promotes fast-widening wealth / income inequality, knowing full well that the inevitable result is social breakdown, is evil.

If this force were external, its evil nature would not be denied or defended. But because the Fed favors the wealthy and powerful, it masks its evil behind an Orwellian cloak of PR much like the former USSR.

The parallels with the Evil Empire don't stop there. While the Fed pillages the vast majority of Americans and diverts the nation's wealth to the top 0.1%, it claims, absurdly and speciously, to be "helping the commoner." This is as Orwellian as it gets.

The Fed will destroy the nation by widening the wealth/income inequality that is breaking down the nation's social order.

 Let's call things by their real name: the Fed is evil.

*  *  *

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Tyler Durden Sat, 01/18/2020 - 10:30
Published:1/18/2020 9:37:06 AM
[Markets] Air Force Conducts Ground Test Of Hypersonic X-60A Missile Air Force Conducts Ground Test Of Hypersonic X-60A Missile

President Trump revealed earlier this month that the US is currently developing hypersonic missiles and touted that the weapons were "big, powerful, lethal, and fast."

Trump's mention of hypersonic missiles occurred during his national address last Wednesday as he spoke about escalating tensions with Iran.

"Our missiles are big, powerful, accurate, lethal, and fast, "Trump said. 

"Under construction are many hypersonic missiles. The fact that we have this great military and equipment, however, does not mean we have to use it. We do not want to use it. American strength, both military and economic, is the best deterrent," he added.

The hypersonic missile under development that President Trump was likely referencing is the US Air Force Research Laboratory's (AFRL) X-60A, an air-launched, single-stage rocket designed to reach speeds of Mach 5 to March 8, reported Flight Global

AFRL moved a step closer to initial flight tests after it recently conducted test firings of its engines while on the ground at Cecil Spaceport in Jacksonville, Florida.

"This test series was a critical step in reducing risk and gathering necessary system integration data in preparation for our upcoming flight tests," said Barry Hellman, AFRL X-60A program manager.

The X-60A has been designed to be air-launched from the undercarriage of a NASA C-20A, a military version of the Gulfstream III. 

The initial flight test could take place in the second half of this year: "When we go to flight later this year, we hope to demonstrate the capability of the X-60A to provide affordable access to hypersonic flight conditions, which will position AFRL to deliver an innovative test capability for the Air Force and other [US Department of Defense] organizations," Hellman said. 

The hypersonic race is well underway. It has been said the US is falling behind the curve in hypersonic development as Russia and China race ahead with test flights and deployments. 

The next global conflict will be fought with fifth-generation stealth fighters and hypersonic missiles. 

Tyler Durden Sat, 01/18/2020 - 09:55
Published:1/18/2020 9:09:55 AM
[Markets] Stock market is “eerily reminiscent of January 2018” when stocks suffered rapid correction, technical analyst says Make no mistake, this market move is not normal, and is not something which should be able to continue technically into and through February without a major hiccup, according to technical analyst Mark Newton Published:1/18/2020 9:09:55 AM
[Markets] San Francisco 49ers hope to score big with digital dashboard of fan data Built on top of data collected by SAP analytics cloud and resembling an air-traffic control room, the team’s Executive Huddle service is housed in a suite at Levi’s amid popcorn, drinks, and assorted snacks.
Published:1/18/2020 9:09:55 AM
[Markets] Stock-market momentum is driving Wall Street to uncharted territory — and that’s making even ‘irrationally bullish’ investors nervous Where is this stock market head in the coming days and weeks? That is the trillion-dollar question some nervous strategists, analysts and traders are wrestling with, following a relatively brisk rally for equities to kick off 2020. Published:1/18/2020 8:38:50 AM
[Markets] Uncle Sam Just Used Its Financial Nuclear Weapon Again Uncle Sam Just Used Its Financial Nuclear Weapon Again

Authored by Simon Black via,

In August of 1945, the United States became the only country to drop nuclear bombs on an enemy.

Hiroshima and Nagasaki were largely destroyed in the blink of an eye. And the Japanese had no choice but to surrender to the Allies, finally ending World War II.

Ever since, world superpowers have been rapidly advancing weapons technology, constantly raising the bar for destructive power.

It won’t surprise you to find out that the most powerful and destructive weapon in the world, though, by far, is claimed by the United States.

But this weapon has nothing to do with America’s nuclear arsenal. It doesn’t even require bullets.

I’m talking about the US dollar.

The US is still the world’s dominant superpower, still the largest economy in the world. And the US dollar is still the world’s dominant reserve currency.

This means that the VAST MAJORITY of international trade and cross-border financial transactions take place in US dollars.

  • When Saudi Arabia’s state-owned oil company sells petroleum to the Chinese, that transaction takes place in US dollars.

  • Last year when Air France (a European airline) agreed to purchase 60 jets from Airbus (a European aircraft manufacturer), that contract was negotiated in US dollars– even though both parties are European!

  • When commodities traders buy and sell cotton futures on the national mercantile exchange… in PAKISTAN… those trades are settled in US dollars.

  • When the IMF stepped in to bail out Argentina back in 2018 with an emergency loan, those funds were paid in US dollars.

  • And right now as I write these words, the Chile-based agriculture business I founded several years is selling literally millions of pounds of blueberries to wholesale buyers in Europe and Asia. Those deals are also closed in US dollars.

You get the idea. The US dollar is at the center of global commerce. Commercial banks, central banks, governments, sovereign wealth funds, and businesses around the world all need US dollars if they expect to be able to do any business internationally.

And that’s what makes the dollar such a powerful weapon: the US government can threaten foreign countries with nearly total financial collapse.

The US government realized it had this power roughly two decades ago after the September 11th attacks.

In their efforts to track down terrorist organizations and obtain intelligence, the Treasury Department began strongarming foreign banks to hand over financial information about suspected terrorists by threatening to revoke access to US dollars.

The threat worked. And a new weapon was born.

In 2010, they made some serious upgrades when Congress passed the Foreign Account Tax Compliance Act, known as FATCA.

FATCA forces EVERY foreign bank and financial institution IN THE WORLD to share information about their depositors with the Treasury Department.

And if these foreign banks refuse to comply? You guessed it. They’ll lose access to US dollars.

We’ve continued to see the US government rely on this tactic more and more over the past ten years; in 2015, for example, the Treasury Department famously hit French bank BNP Paribas with an $8.9 billion fine.

BNP’s egregious crime? They were doing business with countries that the US government doesn’t like– countries like Cuba and Iran.

But wait a minute. BNP is a FRENCH bank! France has no beef with Cuba or Iran!

Doesn’t matter. Uncle Sam doesn’t like Cuba and Iran. BNP did business with Cuba and Iran. So BNP was punished.

And if BNP didn’t pay this ridiculous $8.9 billion fine? Yep, you know what’s coming– they’d lose their access to US dollars.

Just last week they did it again when the Iraqi parliament voted to expel all US troops from the country.

Now, it was just a non-binding resolution anyhow, which means it was just politicians making a bunch of noise. But the US government hit back, threatening Iraq with the loss of US dollar access if they went forward with the idea.

To be honest, when used in the right circumstances, this entire concept is pretty ingenious. It’s a powerful weapon that, unlike bombs and drones, causes no loss of life.

But the US government has been relying on this tactic WAAAY too much. Frankly they’re starting to look like a bunch of rowdy teenagers in skeleton costumes beating up a weakly Ralph Machio.

And every time they loudly threaten another country or foreign bank with losing US dollar access, they’re essentially daring the rest of the world to come up with another option.

Remember, America only has this power because there is no alternative to the US dollar. Not yet.

But people can only be threatened so many times before they start working on a solution.

In many respects it’s already happening. Countries like Russia and China are already engaging in trade with one another without the use of US dollars. And more and more governments are starting to hold Chinese renminbi as official reserves.

So far these actions have barely dented the US dollar’s dominance, so there’s not going to be any major change for at least the next several years.

But the world is definitely moving in that direction. They’ve learned that the US government is happy to weaponize its currency… so, fool me twice, shame on me.

Having the world’s dominant reserve currency is an enormous privilege that provides many economic benefits. And it has changed many times throughout history– from the Roman solidus to the Spanish real de ocho. It never lasts forever.

And at some point in the future when the US loses its dominant reserve status, historians will look back and realize they did it to themselves.

Tyler Durden Sat, 01/18/2020 - 09:20
Published:1/18/2020 8:38:50 AM
[Markets] Pace of new-home construction skyrockets in December to a 13-year high, but significant headwinds remain Warmer-than-usual weather gave a boost to residential construction across the country.
Published:1/18/2020 8:38:50 AM
[Markets] 'Leave The Hijab On': Germans Now 'Obsessed' With Refugee Porn 'Leave The Hijab On': Germans Now 'Obsessed' With Refugee Porn

After the mass migration into Germany of roughly a million refugees over the last several years, Germans have become 'obsessed' with refugee porn, according to The Sun, citing data from adult content platform "xhamster," which reports roughly 800,000 monthly searches for the fetish.

In fact, entire film companies are now specializing in refugee smut and so-called 'hijab porn' - in which Middle Eastern porn stars in subjugated roles wear their religious headgear while being sexually dominated by white males.

According to the report "the headwear often stays on even when all the other garments have been taken off."

The majority of refugee porn titles depict female protagonists in subjugated roles, who are often made to look like they have Middle Eastern origins. In explicit scenes, they are often shown as being dominated sexually by white males. A main feature in many of these adult film productions is the wearing of the hijab — the Islamic head covering used by many Muslim women; the religious headwear is frequently fetishized as a symbol representing female migrants as a whole, and only in the rarest of cases is it taken off at all — even if all other garments have been removed in the depicted scenes.

Some of the refugee porn movies also feature the Arabic language or other foreign tongues as part of their narratives in a further attempt to present migrants as mysterious, out-of-place objects of sexual desire. -InfoMigrants

According to the report, Google searches for said porn have skyrocketed over the past four years, while major porn websites host hundreds of refugee / hijab videos.

In the weeks leading up to the Austrian parliamentary elections in September of 2019, the phrase "refugee porn" high a two-year high. During the 2017 Austrian election, searches for the term had nearly doubled vs. a month earlier. Meanwhiule, German searches for "refugee porn" spiked in Saxony leading up to the September election as well.

Adding a dash of legitimacy to Germany's newfound obsession is Professor Jakob Pastötter, a sexual scientist and cultural anthropologist, who told InfoMigrants in October that "Sexuality is a means to familiarize yourself with things that are alien to you. By approaching new phenomena from a sexual angle we get to understand these things better," and that "Pornography doesn't simply just show sex. People want to experience at the very least a rudimentary link between the sexual acts they view and themes from everyday life, as is the case with refugee porn."

Professor Jakob Pastoötter believes that ethically produced pornography is part of a healthy sexuality | Photo: Jakob Pastötter

That said, InfoMigrants suggests that the porn genre objectifies migrants with violent narratives that promote rape and sex trafficking.

"(Pornography) is the public face of a larger network of sexual exploitation which deliberately recruits from foster homes, shelters serving various desperate populations and otherwise seeks out poor people from across the world to feed a supply chain with a constant need for fresh bodies," said Jennifer Johnson, Associate Professor and Chair of Sociology at Virginia Commonwealth University.

Pastötter disagrees - saying that "Only a small minority of so-called refugee porn films focus on aspects like humiliation. I believe that those more violent films are mainly addressed at an audience who like to watch porn, in which domination always plays a key role anyway."

"Think about the likelihood of actually meeting a refugee woman, let alone having sex with one against the backdrop that the majority of migrants to Europe are men. It's even less likely to actually happen than that common porn cliché about the pizza delivery boy who happens to also offer sexual services for a tip. This is all just about fulfilling fantasies, and should really be communicated as such."

Tyler Durden Sat, 01/18/2020 - 08:45
Published:1/18/2020 8:05:22 AM
[Markets] Ocasio-Cortez sums up inequality in 5 words after Dow breaks through 29,000 The New York Democrat tweeted her thoughts on “inequality in a nutshell,” in a response to NBC’s coverage of a fresh high for the Dow Jones Industrial Average on Friday. Published:1/18/2020 8:05:22 AM
[Markets] Add Salvini's Return To The Growing List Of Europe's Problems Add Salvini's Return To The Growing List Of Europe's Problems

Authored by Tom Luongo via The Strategic Culture Foundation,

When Matteo Salvini’s Lega won the state elections in Umbria in late October few, if any, noticed. Lega and the Brothers of Italy and Forza Italia took at whopping 53% of the vote, with Lega taking 37%.

It was this result that should have had everyone in Brussels worried. But since they had just gotten finished patting themselves on the back for maneuvering around Salvini’s attempt to force an election the month before, the news quickly moved to the back burner amongst all of the Brexit drama.

But, the result in Umbria was important because it showed Lega’s ability to turn a center-Left stronghold against history. The Democrats (PD) had held sway there for over fifty years. But no longer.

The result showed that even though Salvini was no longer in a governmental office in Rome, his popularity hadn’t waned. It’s clear that polling since then has seen Lega hold its position as the dominant party in Italy, which has Lega commanding 31-33% of the vote.

The real story, however, is the surge of the Brothers of Italy (FdL) who are picking up disaffected Forza Italia voters and held them for months now, continuing to hold a solid 10%.

In short, Italian polls haven’t moved much in months despite Salvini and Lega being ousted from the ruling coalition when coalition partner Five Star Movement (M5S) made a backroom deal with PD which has only accelerated M5S’s slide in the polls. Remember, M5S was formed to stop PD from holding onto power and challenging them on EU membership and continued adoption of the euro as Italy’s currency.

Making that deal with the establishment like that has alienated a lot of M5S’s base and it’s support is now threatening to collapse below the all-important 16% level, which once breached to the downside opens the door for someone else to gain dramatically.

And that is the backdrop against which the PD/Five Star Movement (M5S) government is dealing with.

Lega alone polls close to or better than PD/M5S together nationally. And it is the upcoming state election in Emilia-Romagna on January 26th that is their next headache. As the Financial Times pointed out in a recent article, Salvini and Lega have made serious inroads in what is a traditionally heavily left-leaning area.

Giorgio Bennetti, a 35-year-old sweets seller with a stall in Ferrara’s centre, believes that many voters are willing to switch to the right to express a general political dissatisfaction. Local issues, such as the collapse of the Ferrara savings bank — 130,000 investors lost their savings — have also given voters reason to want to punish the PD, which was in charge both locally and nationally when the rescue happened in 2015.

“This is a protest vote; people don’t believe that the left is working for them any more,” Mr Bennetti says. “My grandmother used to say that people have no problem changing their shirts from red to black if they need to.”

But similar to what Donald Trump did in 2016 and Boris Johnson just pulled off in the U.K. these nominally right-wing candidates became the champions of domestic working middle class.

In Italian political terms, the former Communists in Emilia-Romagna now firmly trust Salvini to protect their futures and the jobs rather than the traditional left parties.

Current polling there has Lega with 31% of the vote, a massive 12-point rise over the last election while PD has lost even more down 20 points.

Since parties can campaign in coalitions in Italy the current center-left versus center-right numbers in Emilia-Romagna are within a couple of points. But Salvini’s guys are rising fast and it’s very possible that the polls haven’t quite caught up to the shift in sentiment leading into the election.

This happened in 2018 where Lega was polling behind Forza Italia by a couple of points and would up coming out of the election four points up and the dominant player in the center-right coalition. That paved the way for the scenario that led to the short-lived Euroskeptic coalition between Lega and M5S.

So, the probability of a center-right government coming into being in Emilia-Romagna is growing by the day. And that puts the national coalition at serious risk.

 “This coalition is already so fragile that the only thing gluing it together is their fear of Salvini,” says Erik Jones, professor of European studies and international political economy at the Johns Hopkins School of Advanced International Studies in Bologna. “If they lose it is hard to see how they make it through the spring.”

This fear is well-founded and no matter how hard they try and hold it together political forces within Italy will ultimately tear it apart. Losing Emilia-Romagna would create serious panic in the ranks of both ruling parties.

But the political establishment in Rome is dead set on keeping Salvini out of power for as long as possible. And that goes double for the traditional EU leadership in Brussels. But one thing working in Salvini’s favor here is that it has been German Chancellor Angela Merkel pulling the strings in Rome to keep the Italians in sync with German fiscal and monetary demands.

But Merkel is on the way out and there is a concerted challenge to German rule coming from French President (for now) Emmanuel Macron. Macron wants fiscal integration and the euro-zone is suffering from Merkel’s insistence on punitive austerity.

I expect the next leadership challenge in Italy will not be fought nearly as hard as in the past by the EU. Salvini either wants a stronger seat at the decision-making table for EU fiscal policy for Italy or be let out of the monetary union. In that sense Salvini is a future ally for Macron against Merkel and her successor.

I can see Macron and new ECB President Christine Lagarde not fighting Salvini’s rise to power to help them remake the EU’s fiscal structure, prevailing upon the Italian old guard like President Sergio Mattarella to allow the government to collapse and not fight new elections, which Salvini will win in a walk, likely with just the Brothers of Italy as his coalition partner depending on how the vote lays out.

At that point things get really hairy for Merkel as a Salvini as Prime Minister will be in the position to dictate terms to Germany having Lagarde and Macron on his side, tacitly.

Because, remember folks, when you owe the bank a thousand dollars it’s your problem. When you owe the bank a few hundred billion dollars it’s the bank’s problem, in this case, specifically German banks.

That’s where Salvini’s leverage lies and he knows it. But with the changing of the guard in Brussels and Strassbourg, he would finally be in a position to use it.

Tyler Durden Sat, 01/18/2020 - 08:10
Published:1/18/2020 7:38:33 AM
[Markets] Will you ‘feel pretty stupid’ holding cash? One trader revisits Ray Dalio’s laughable call and warns of a similar drop Almost exactly two years ago, investing legend Ray Dalio turned heads with one of the worst short-term market calls in recent memory. Kevin Muir says a similar scenario could be on the way. Published:1/18/2020 7:38:33 AM
[Markets] In One Chart: Will you ‘feel pretty stupid’ holding cash? One trader revisits Ray Dalio’s laughable call and warns of a similar drop Almost exactly two years ago, investing legend Ray Dalio turned heads with one of the worst short-term market calls in recent memory. Kevin Muir says a similar scenario could be on the way.
Published:1/18/2020 7:38:33 AM
[Markets] Europe Leads The World In Environmental Protection Europe Leads The World In Environmental Protection

Earlier this week, the European Union unveiled their European Investment Plan aimed at shifting 1 trillion euros into making the economy more environmentally friendly over the next 10 years.

Statista's Willem Rpoer reports that the investment plan is in line with European Commission president Ursula von der Leyen’s Green Deal, which looks to make the European continent carbon-neutral by 2050. Since taking office, Von der Leyen has made climate change her top priority.

European countries have typically been leaders in the fight against climate change, with many ranking lowest in carbon emissions globally and highest in environmental quality. The newest trillion-euro investment plan looks to solidify Europe as the global example for combating global warming as other continents like Asia and North America continue to produce high carbon emissions and lag behind in renewable energy sources.

In 2019, Yale University released their Environmental Performance Index (EPI) for all 180 countries in order to gauge which countries had the highest environmental quality and which had the lowest.

Infographic: Europe Leads the World in Environmental Protection | Statista

You will find more infographics at Statista

The EPI measures two dimensions, environmental health and ecosystem vitality, through numerous metrics that focus on biodiversity, air and water quality, climate and agriculture.

European and North American countries held the highest overall scores, while Asian and African countries saw the lowest, globally.

The index doesn’t take into account the average GDP per capita in each country or the overall economic viability for a country and government to produce a healthy environment.

Tyler Durden Sat, 01/18/2020 - 07:35
Published:1/18/2020 7:04:12 AM
[Markets] Economic Report: The U.S. economy still isn’t firing on all cylinders. Here’s what needs to change American consumers have been carrying the economy on their back, but they sure could use more help from business.
Published:1/18/2020 7:04:12 AM
[Markets] The Prospects For A Sound-Money Revolt Against The Dollar And Euro The Prospects For A Sound-Money Revolt Against The Dollar And Euro

Authored by Brendan Brown via The Mises Institute,

In the last decade, the combination of virulent asset price inflation and low reported consumer price inflation crippled sound money as a political force in the US and globally. In the new decade, a different balance between monetary inflation’s “terrible twins” — asset inflation and goods inflation — will create an opportunity for that force to regain strength. Crucial, however, will be how sound money advocacy evolves in the world of ideas and its success in forming an alliance with other causes that could win elections.

It is very likely that the deflationary nonmonetary influences of globalization and digitalization, which camouflaged the activity of the goods-inflation twin during the past decade, are already dissipating.

The pace of globalization may have already peaked, before the Xi-Trump tariff war. Inflation-fueled monetary malinvestment surely contributed to its prior speed. One channel here was the spread of highly speculative narratives about the wonders of global supply chains.

Digitalization’s potential to camouflage monetary inflation in goods and services markets, on the other hand, has come largely via its impact on the dynamics of wage determination. It has forged star firms with considerable monopoly power in each industrial sector. Obstacles preventing their technological and organizational know-how from seeping out to competitors means that wages are not bid higher across labor markets in similar fashion to earlier industrial revolutions. These obstacles reflect the fact that much investment is now in the form of firm-specific intangibles. Even so, such obstacles tend to lose their effectiveness over time.

As deflation fades, monetary repression taxes (collected for governments through central banks' manipulation of rates to low levels so as to achieve 2 percent inflation despite disinflation as described) will undergo metamorphosis into open inflation taxes as the rate of consumer price inflation accelerates. Governments cannot forego revenue given their ailing finances. Simultaneously, asset inflation will proceed down a new stretch of highway where many crashes occur.

Historical Circumstances of Empowerment of Sound Money Forces

If the small sample size of monetary history is any guide, the combination of asset market crashes and high goods inflation empowers sound money forces in the political arena. Widespread public resentment against higher goods and services prices and wealth loss (whether by strong inflation or crash) is responsible for the shift.

By contrast, when the goods-inflation twin is camouflaged (as during the 2010s) and asset inflation is rife, unhappiness among some savers about the monetary repression tax is more than matched (in terms of electoral impact) by happiness among large segments of the population about rising wealth and the comforting performance of their pension funds.

If the asset inflation ends without the goods-inflation twin emerging from its camouflage, then most likely there would be a further triumph for unsound money, as was the case in the 1930s and again in the aftermath of the 2008 crash. The bankers, mortgage brokers, and securities salespersons would be blamed, not the money printers, though the latter’s political masters might suffer the consequences even without direct attribution.

The last time we had the combination of high goods inflation coupled with crash-prone asset markets was in the later stages of the great monetary inflation from the early 1960s to the 1970s. Sound money did become a political force both in Europe and the US despite the most effective groupings' advancement of the flawed doctrines of monetarism.

The seriousness of the flaws and whether these could be lessened by various forms of financial system reconstruction were never put to the test. In the US, the Reagan administration by 1985 had decided on a new devaluation policy (highlighted by the Plaza Accord), endorsed at the start by then Fed chairman Paul Volcker. Earlier the same administration had undermined the original purpose of a commission to study a return to the gold standard (law signed by President Carter in 1980) by packing it with opponents. In Europe, the dollar devaluation of the mid-1980s created the political dynamics towards monetary union which proved fatal to discount margin (DM) monetarism.

After the waxing and waning of monetarism, the US adopted gradually the 2 percent inflation standard built on emperor’s-new-clothes econometrics and expectations inertia. The newly established European Monetary Union followed suit. This all occurred just as nonmonetary deflationary forces were gaining power. At first globalization was the strongest force; later it was digitalization and resource abundance (especially of shale oil and gas).

A Sound Money Resurgence?

As the camouflage of goods and services inflation now thins, a climb in consumer price inflation may undermine the equity market and lead to an early dose of asset deflation. Governments will then double down on money printing. If that asset deflation nonetheless leads to great depression, sound money advocacy will remain dead.

However, if there is no great depression and goods inflation picks up sharply into the next cycle beyond a normal recession, sound money will have its chance. The extent of malinvestment during the monetary inflation of the past decades will be revealed in the wake of asset price deflation. Effective capital shortage resulting from the obsolescence of malinvestment will mean that goods and services price inflation can pick up faster and earlier than much conventional macroeconomic modeling would suggest as the business cycle upswing gets under way.

In this case there will still be a problem for sound money advocacy in the political arena. We can count the number of US senators in favor of sound money on one hand — and less in European parliaments. There is no ready popular brand of ideology of sound money analogous to Friedman’s 1970s monetarism.

Popular branding is difficult. The fundamental prerequisite to monetary soundness is an anchoring of the monetary system, which is accomplished by designing a monetary base for which a broad and stable demand exists that is not hugely sensitive to small changes in interest rates. This is not an easy concept to popularize. Successful anchoring means that automatic mechanisms would keep money under control without any official setting or manipulation of interest rates or any targeting of the price level.

It is hard to imagine a brand “catching on” that does not include gold. which has potential and actual popular appeal. A natural ally of sound money forces promoting this brand could be antimonopolists, found on both sides of the aisle. Big Tech and Big Finance are joining with Big Government in pursuing the war against cash. While this rages, gold money and the little saver stand little chance.

In Europe the forces of sound money would have a natural base in Germany, Holland, Belgium, and Austria. These forces could build on resentment toward transfers to southern Europe and negative rates. The main counterforce for now are the Greens. Watch how European Central Bank chief Lagarde is playing to the Green Party in Germany, expecting it to be an equal partner to the Christian Democrats in the next government, probably at some point in 2020.

A gold-backed euro based in northern Europe seems like fantasy for now, but it is more plausible than a gold dollar as an outcome of this decade.

Tyler Durden Sat, 01/18/2020 - 07:00
Published:1/18/2020 6:08:58 AM
[Markets] Escobar Exposes America's Existential Battle To Stop Eurasian Integration Escobar Exposes America's Existential Battle To Stop Eurasian Integration

Authored by Pepe Escobar via The Saker blog,

Coming decade could see the US take on Russia, China and Iran over the New Silk Road connection

Iranian seamen salute the Russian Navy frigate Yaroslav Mudry while moored at Chabahar on the Gulf of Oman during Iran-Russia-China joint naval drills. The photo was provided by the Iranian Army office on December 27, 2019. Photo: AFP / HO / Iranian Army office

The Raging Twenties started with a bang with the targeted assassination of Iran’s General Qasem Soleimani.

Yet a bigger bang awaits us throughout the decade: the myriad declinations of the New Great Game in Eurasia, which pits the US against Russia, China and Iran, the three major nodes of Eurasia integration.

Every game-changing act in geopolitics and geoeconomics in the coming decade will have to be analyzed in connection to this epic clash.

The Deep State and crucial sectors of the US ruling class are absolutely terrified that China is already outpacing the “indispensable nation” economically and that Russia has outpaced it militarilyThe Pentagon officially designates the three Eurasian nodes as “threats.”

Hybrid War techniques – carrying inbuilt 24/7 demonization – will proliferate with the aim of containing China’s “threat,” Russian “aggression” and Iran’s “sponsorship of terrorism.” The myth of the “free market” will continue to drown under the imposition of a barrage of illegal sanctions, euphemistically defined as new trade “rules.”

Yet that will be hardly enough to derail the Russia-China strategic partnership. To unlock the deeper meaning of this partnership, we need to understand that Beijing defines it as rolling towards a “new era.” That implies strategic long-term planning – with the key date being 2049, the centennial of New China.

The horizon for the multiple projects of the Belt and Road Initiative – as in the China-driven New Silk Roads – is indeed the 2040s, when Beijing expects to have fully woven a new, multipolar paradigm of sovereign nations/partners across Eurasia and beyond, all connected by an interlocking maze of belts and roads.

The Russian project – Greater Eurasia – somewhat mirrors Belt & Road and will be integrated with it. Belt & Road, the Eurasia Economic Union, the Shanghai Cooperation Organization and the Asia Infrastructure Investment Bank are all converging towards the same vision.


So this “new era”, as defined by the Chinese, relies heavily on close Russia-China coordination, in every sector. Made in China 2025 is encompassing a series of techno/scientific breakthroughs. At the same time, Russia has established itself as an unparalleled technological resource for weapons and systems that the Chinese still cannot match.

At the latest BRICS summit in Brasilia, President Xi Jinping told Vladimir Putin that “the current international situation with rising instability and uncertainty urge China and Russia to establish closer strategic coordination.” Putin’s response: “Under the current situation, the two sides should continue to maintain close strategic communication.”

Russia is showing China how the West respects realpolitik power in any form, and Beijing is finally starting to use theirs. The result is that after five centuries of Western domination – which, incidentally, led to the decline of the Ancient Silk Roads – the Heartland is back, with a bang, asserting its preeminence.

On a personal note, my travels these past two years, from West Asia to Central Asia, and my conversations these past two months with analysts in Nur-Sultan, Moscow and Italy, have allowed me to get deeper into the intricacies of what sharp minds define as the Double Helix. We are all aware of the immense challenges ahead – while barely managing to track the stunning re-emergence of the Heartland in real-time.

In soft power terms, the sterling role of Russian diplomacy will become even more paramount – backed up by a Ministry of Defense led by Sergei Shoigu, a Tuvan from Siberia, and an intel arm that is capable of constructive dialogue with everybody: India/Pakistan, North/South Korea, Iran/Saudi Arabia, Afghanistan.

This apparatus does smooth (complex) geopolitical issues over in a manner that still eludes Beijing.

In parallel, virtually the whole Asia-Pacific – from the Eastern Mediterranean to the Indian Ocean – now takes into full consideration Russia-China as a counter-force to US naval and financial overreach.

Stakes in Southwest Asia

The targeted assassination of Soleimani, for all its long-term fallout, is just one move in the Southwest Asia chessboard. What’s ultimately at stake is a macro geoeconomic prize: a land bridge from the Persian Gulf to the Eastern Mediterranean.

Last summer, an Iran-Iraq-Syria trilateral established that “the goal of negotiations is to activate the Iranian-Iraqi-Syria load and transport corridor as part of a wider plan for reviving the Silk Road.”

There could not be a more strategic connectivity corridor, capable of simultaneously interlinking with the International North-South Transportation Corridor; the Iran-Central Asia-China connection all the way to the Pacific; and projecting Latakia towards the Mediterranean and the Atlantic.

What’s on the horizon is, in fact, a sub-sect of Belt & Road in Southwest Asia. Iran is a key node of Belt & Road; China will be heavily involved in the rebuilding of Syria; and Beijing-Baghdad signed multiple deals and set up an Iraqi-Chinese Reconstruction Fund (income from 300,000 barrels of oil a day in exchange for Chinese credit for Chinese companies rebuilding Iraqi infrastructure).

A quick look at the map reveals the “secret” of the US refusing to pack up and leave Iraq, as demanded by the Iraqi Parliament and Prime Minister: to prevent the emergence of this corridor by any means necessary. Especially when we see that all the roads that China is building across Central Asia – I navigated many of them in November and December – ultimately link China with Iran.

The final objective: to unite Shanghai to the Eastern Mediterranean – overland, across the Heartland.

As much as Gwadar port in the Arabian Sea is an essential node of the China-Pakistan Economic Corridor, and part of China’s multi-pronged “escape from Malacca” strategy, India also courted Iran to match Gwadar via the port of Chabahar in the Gulf of Oman.

So as much as Beijing wants to connect the Arabian Sea with Xinjiang, via the economic corridor, India wants to connect with Afghanistan and Central Asia via Iran.

Yet India’s investments in Chabahar may come to nothing, with New Delhi still mulling whether to become an active part of the US “Indo-Pacific” strategy, which would imply dropping Tehran.

The Russia-China-Iran joint naval exercise in late December, starting exactly from Chabahar, was a timely wake-up for New Delhi. India simply cannot afford to ignore Iran and end up losing its key connectivity node, Chabahar.

The immutable fact: everyone needs and wants Iran connectivity. For obvious reasons, since the Persian empire, this is the privileged hub for all Central Asian trade routes.

On top of it, Iran for China is a matter of national security. China is heavily invested in Iran’s energy industry. All bilateral trade will be settled in yuan or in a basket of currencies bypassing the US dollar.

US neocons, meanwhile, still dream of what the Cheney regime was aiming at in the past decade: regime change in Iran leading to the US dominating the Caspian Sea as a springboard to Central Asia, only one step away from Xinjiang and weaponization of anti-China sentiment. It could be seen as a New Silk Road in reverse to disrupt the Chinese vision.

Battle of the Ages

A new book, The Impact of China’s Belt and Road Initiative, by Jeremy Garlick of the University of Economics in Prague, carries the merit of admitting that, “making sense” of Belt & Road “is extremely difficult.”

This is an extremely serious attempt to theorize Belt & Road’s immense complexity – especially considering China’s flexible, syncretic approach to policymaking, quite bewildering for Westerners. To reach his goal, Garlick gets into Tang Shiping’s social evolution paradigm, delves into neo-Gramscian hegemony, and dissects the concept of “offensive mercantilism” – all that as part of an effort in “complex eclecticism.”

The contrast with the pedestrian Belt & Road demonization narrative emanating from US “analysts” is glaring. The book tackles in detail the multifaceted nature of Belt & Road’s trans-regionalism as an evolving, organic process.

Imperial policymakers won’t bother to understand how and why Belt & Road is setting a new global paradigm. The NATO summit in London last month offered a few pointers. NATO uncritically adopted three US priorities: even more aggressive policy towards Russia; containment of China (including military surveillance); and militarization of space – a spin-off from the 2002 Full Spectrum Dominance doctrine.

So NATO will be drawn into the “Indo-Pacific” strategy – which means containment of China. And as NATO is the EU’s weaponized arm, that implies the US interfering on how Europe does business with China – at every level.

Retired US Army Colonel Lawrence Wilkerson, Colin Powell’s chief of staff from 2001 to 2005, cuts to the chase: “America exists today to make war. How else do we interpret 19 straight years of war and no end in sight? It’s part of who we are. It’s part of what the American Empire is. We are going to lie, cheat and steal, as Pompeo is doing right now, as Trump is doing right now, as Esper is doing right now … and a host of other members of my political party, the Republicans, are doing right now. We are going to lie, cheat and steal to do whatever it is we have to do to continue this war complex. That’s the truth of it. And that’s the agony of it.”

Moscow, Beijing and Tehran are fully aware of the stakes. Diplomats and analysts are working on the trend, for the trio, to evolve a concerted effort to protect one another from all forms of hybrid war – sanctions included – launched against each of them.

For the US, this is indeed an existential battleagainst the whole Eurasia integration process, the New Silk Roads, the Russia-China strategic partnership, those Russian hypersonic weapons mixed with supple diplomacy, the profound disgust and revolt against US policies all across the Global South, the nearly inevitable collapse of the US dollar. What’s certain is that the Empire won’t go quietly into the night. We should all be ready for the battle of the ages.

Tyler Durden Fri, 01/17/2020 - 23:45
Published:1/17/2020 11:19:40 PM
[Markets] All The World's Wealth In One Visualization All The World's Wealth In One Visualization

The financial concept of wealth is broad, and it can take many forms.

While your wealth is most likely driven by the dollars in your bank account and the value of your stock portfolio and house, Visual Capitalist's Jeff Desjardins notes that wealth also includes a number of smaller things as well, such as the old furniture in your garage or a painting on the wall.

From the macro perspective of a country, wealth is even more all-encompassing — it’s not just about the assets held by private households or businesses, but also those owned by the public. What is the value of a new toll bridge, or an aging nuclear power plant?

Today’s visualization comes to us from, and it shows all of the world’s wealth in one place, sorted by country.

Total Wealth by Region

In 2019, total world wealth grew by $9.1 trillion to $360.6 trillion, which amounts to a 2.6% increase over the previous year.

Here’s how that divvies up between major global regions:

Last year, growth in global wealth exceeded that of the population, incrementally increasing wealth per adult to $70,850, a 1.2% bump and an all-time high.

That said, it’s worth mentioning that Credit Suisse, the authors of the Global Wealth Report 2019 and the source of all this data, notes that the 1.2% increase has not been adjusted for inflation.

Ranking Countries by Total Wealth

Which countries are the richest?

Let’s take a look at the 15 countries that hold the most wealth, according to Credit Suisse:

The 15 wealthiest nations combine for 84.3% of global wealth.

Leading the pack is the United States, which holds $106.0 trillion of the world’s wealth — equal to a 29.4% share of the global total. Interestingly, the United States economy makes up 23.9% of the size of the world economy in comparison.

Behind the U.S. is China, the only other country with a double-digit share of global wealth, equal to 17.7% of wealth or $63.8 trillion. As the country continues to build out its middle class, one estimate sees Chinese private wealth increasing by 119.5% over the next decade.

Impressively, the combined wealth of the U.S. and China is more than the next 13 countries in aggregate — and almost equal to half of the global wealth total.

Tyler Durden Fri, 01/17/2020 - 23:25
Published:1/17/2020 10:32:49 PM
[Markets] OK Boomer: Ex-Citi Banker Wins Ageism Case After Boss Calls Him "Old... Set In His Ways" OK Boomer: Ex-Citi Banker Wins Ageism Case After Boss Calls Him "Old... Set In His Ways"

Today in "anytime you fire someone it's always a case of discrimination" news...

A former investment banker for Citigroup has won an age discrimination case against the bank after one of his bosses called him "old" and "set in his ways" when he was laid off at age 55.

A London Tribunal ruled in the ex-banker's favor this week, finding that Niels Kirk was dismissed unfairly. Kirk had previously been a managing director for energy banking, according to Bloomberg. He had previously been employed at Citigroup for 26 years and wasn't given any warning about a proposed restructuring. 

Citi says it will appeal the decision.

One of his bosses, 54 year old Manolo Falco, denied making the statement but did concede that Kirk “had some very difficult relationships with other senior bankers.” But the judge ruled that Falco's evidence was "less than convincing", while Kirk had taken notes in the meeting. 

The judge presiding said: “The remark appeared to the tribunal to be the kind of throwaway remark Mr. Falco could make.”

The size of any award will be determined at a later hearing. Once an employee proves they are a victim of discrimination, a tribunal can order damages that are higher than the cap of about $109,000.

Kirk's performance ranking had fallen from a 1 (best) to 3 (good) between 2014 and 2016. His overall compensation also fell from $1.24 million in 2014 to about $600,000 in 2016. 

Citi claims its “position as set out in the litigation is that Mr. Falco did not make that comment.” Citi also says it's upset with the decision "particularly given the small age gap between Mr. Kirk and the employee who was ultimately appointed to the role."

Kirk's hired successor wasn't much younger, at just 51 years old. 

Citi has 51 managing directors in the company's EMEA Corporate Banking Department and, as of 2016, three were over the age of 55 and fifteen were 50 and older. 

“Gray hair is very important in this industry,” Falco told the court last year. 

Tyler Durden Fri, 01/17/2020 - 22:45
Published:1/17/2020 10:02:25 PM
[Markets] Which markets are closed for Martin Luther King Jr. Day (and which aren’t)? U.S. stock and bond markets will be closed on Monday in observance of the Martin Luther King Jr. holiday, coming as Wall Street absorbs a record-setting rally for equities. Published:1/17/2020 10:02:25 PM
[Markets] Could ISIS Take Control Over Iraq's Largest Oil Field? Could ISIS Take Control Over Iraq's Largest Oil Field?


As always, it’s the fear of sanctions that provides the leverage Trump seeks in this cat-and-mouse game with Iran. And this time, the leverage is over Iraq, which would like to see both American and Iranian forces out of the country, for obvious reasons. 

There is nothing ISIS would love more than this. 

It would also devastate Iraq because the sanctions threatened would include blocking access to Iraq’s U.S.-based account where all the oil revenues are kept. That threat stands if Iraq moves to kick U.S. forces out of the country.

That would mean victory for Iran (temporarily). Kicking out Iranian forces is not nearly as simple because the line between state and non-state actors is blurred, at best. 

A few weeks ago, a U.S. drawdown of military forces in Iraq was already expected, but that now seems unlikely because of the implications. 

The very military base that Iran attacked following the assassination of General Soleimani was already preparing for a drawdown. 

In addition to the threat of sanctions on oil money, a U.S. withdrawal would likely open the door for an ISIS return.  

What Iraqis Want

There is no consensus on this question, other than the fact that no one wants Iraq to be the proxy battleground between the United States and Iran. 

It’s a fair point, and Iraqis have had a very difficult time enjoying anything close to sovereignty since the fall of Saddam Hussein. 

While the Iraqi parliament has voted for U.S. troops to leave, they do not represent a unified voice. The Sunni elements of parliament did not participate in the vote. Neither did the Iraqi Kurds. 

Shia factions in Iraq are, of course, pushing for a U.S. withdrawal, but the Sunnis and Kurds see this as a dangerous opportunity for pro-Iranian Shia factions to take even more control of the central government in Baghdad.

They don’t necessarily want a huge U.S. troop presence, but they are more fearful of a complete withdrawal that would leave them over-exposed to pro-Iranian forces. They also aren’t interested in being very loud about this fear.

In this atmosphere, there is already talk in certain Sunni circles of carving Iraq up to create yet another autonomous region such as that governed by the Kurdistan Regional Government (KRG) in the north of Iraq. 

A Sunni-dominated region would include Anbar, Saladin, Nineveh and Diyala provinces, and would leave all of Basra’s oil to pro-Iranian factions. 

Already, Sunni leaders are mentioning this as an option, pointing to what they call the “successful” example of the Kurdistan region. 

The disintegration of Iraq was already progressing prior to the latest showdown between Iran and the United States. The country has been teetering over the edge of anarchy since 2003, when a single party (the Baath Party) was destroyed and Iraq became “governed” by multiple parties with even more fractious factions and a weak military that pro-Iranian Shia militias found easy to influence. 

But this is far from just a sectarian conflict.  

The mass protests that were already threatening Iraq’s fragile stability were Shi’ite-versus-Shi’ite. The Sunnis were not involved, nor the Kurds. They were just watching things unfold, warily. 

One of the biggest mistakes the casual Western news reader makes is accepting a black-and-white narrative when it comes to Iraq. There is a very distinct group of Shi’ites that has a nationalist bent and is militantly against Iranian influence in an independent Iraq. This was a genuine uprising against highly corrupt and ineffective state institutions. 

Then there is a second group of pro-Iranian Shi’ites who have been brutally putting down the popular uprising. This group exists in order to maintain Iran’s influence.

The problem now, for the U.S., is that the confrontation between the U.S. and Iran on Iraqi soil is more likely to bring these two groups together than it is to pull them further apart, which would have been a real threat to Iranian influence in Iraq. 

Indeed, both Shia groups are calling for a U.S. withdrawal. 

In this territory, you have to pick your evil, and for some time it’s been pro-Iranian forces and pro-U.S. forces against ISIS. 

That’s not going to happen anymore, to the great delight of the Islamic State. 

In 2011, a U.S. troop withdrawal from Iraq sent an open invitation to ISIS. In 2020, it will do the same. 

The Biggest Threat to Iraqi Oil

For oil prices, the only real benefit to the Iran-Iraq conflict at this point is that Iraq is at a bit of a standstill when it comes to developing new projects, though its existing production will not be affected by any evacuation of U.S. oil workers, which has been minimal so far

Since Iraq is already OPEC’s biggest over-producer, this is a bit of a balm on compliance.

But the biggest threat to Iraqi oil in recent months has been Shia protesters fed up with a corrupt government. No one else is willing to touch the oil. 

The biggest immediate threat is not Basra oil--it’s Kirkuk oil. 

A U.S. troop withdrawal could easily relaunch a sectarian civil war in Iraq, and Kirkuk would be the first to fall. 

Kirkuk is in northern Iraq, but outside the official territory of the Kurdistan Regional Government (KRG). 

It’s also one of ISIS’ key stomping grounds, and the only reason they have been kept from taking over this region entirely is the effort of a U.S.-led international anti-ISIS coalition, in which Kurdish Peshmerga forces played an integral role since 2014. 

A withdrawal of U.S. troops at this point will ensure a return of ISIS, and a sectarian conflict is exactly what the Islamic State is hoping for.  

At an attack on the K-1 base just in northwest Kirkuk in December launched the latest round in the Iran-U.S. proxy war in Iraq. 

Prior to that, ISIS had already started escalating attacks on this base, with ISIS seeing a window of opportunity in an American shift to defense against Iran and Hezbollah in Iraq. We’re already seeing the uptick in ISIS attacks--and the focus is definitively Kirkuk. 

Coalition forces may have won the Battle of Kirkuk in 2016, but ISIS is still there. 

Basra oil is safe, for now. The biggest threat is to Kirkuk’s 9 billion barrels. This is where the next round of this conflict starts, and it will be ISIS that ultimately wins any ‘proxy’ war. 

Tyler Durden Fri, 01/17/2020 - 22:25
Published:1/17/2020 9:31:57 PM
[Markets] Now, Everyone Pays The Piper: The End Of China's Economic Miracle Now, Everyone Pays The Piper: The End Of China's Economic Miracle

Authored by Brett Redmayne-Titley via Watching Rome Burn blog,

In emulating the American economic raison d’etre, China has attempted to develop its unique capitalist model while ignoring that it too will soon suffer the same fate for the same reason: Unsustainable debt. When examining the recent realities of Chinese banking and finance over the past year it seems the steam that president Xi Jinping touts as powering the engine of his purported economic miracle of a master-planned economy is only a mirage, now almost completely evaporated before his eyes.

Like the many other similarly foolish western nations, China seeks only one path out of this fiscal death spiral, one that will likely spell doom and/or revolution in many countries soon: More debt.

China is becoming increasingly unable to continue to pay into the base of the world’s largest pyramid scheme of an economy and the cracks in the bubble are showing. This past year, saw three of the 4,279 Chinese lenders almost fail, if not for the massive intervention by the People’s Bank of China (PBoC) of immediate liquidity via more debt. The Chinese economic miracle is built on unsustainable debt-based infrastructure projects over the past two decades that have provided China with a face of prosperity to show the world, but this is only a mask to hide the limited countrywide success of the Chinese miracle into the rural areas. The injection of $Trillions in capital has seen China distribute these sums across the base of its economy creating a GDP that hit a high of 14.2 % in 2007 then averaged nearly 9% for the next decade before dropping yearly to 6.1% in 2018. All this growth had produced a personal affluence to a sub-set of Chinese society that has stoked this appearance of a flourishing economy.

This Chinese economic Keynesian trick of interjection of liquidity into national infrastructure is somewhat similar to the TVA and national works projects funded under Roosevelt’s depression-era New Deal. In this approach employment and therefore a growing tax base accelerated year after year as workers and corporations received the short-lived benefits of this massive windfall of available liquidity.

China’s method of stimulus is of course distinguished from today’s American model that merely shovels the injection of its own manufactured $Trillions by using multiple fiscal tricks to by-pass the citizenry and instead shovel the cash straight into the wallets of the already super-wealthy. Meanwhile, the US peasant once again pines in the “Hope” of yet another election.

The Metrics of a Failing Economy

Many analysts have for nearly a decade opined that China’s belief in national fixed-asset investment, the biggest engine of China’s economy, has long been the fundamental contributor to Chinese GDP growth, which was directly proportional to an ongoing increase in public and private debt. China has relied on export and debt-financed fixed asset investment for growth for over two decades,” said Ho-Fung Hung, Professor in political economy at the Johns Hopkins University.

But as the world economy slows while the metrics show a recession looming China’s economy is already cooling rapidly. “And as the central government and banking system keeps producing new loans to absorb the debt, it leads to the continuous debt buildup,” Maximilian Kärnfelt, an analyst with the Berlin-based Mercator Institute for China Studies, told news service DW, adding that infrastructure investment still largely drives China’s economic growth since fixed investment contributed to 45 per cent of China’s GDP in 2016.

In a sign of the disaster to come, the first Bank to almost fail was Baoshang Bank Co. in May 2019. In this instance, for the first time in twenty years, the government took over control and seized the bank. This progression next took form when Chinese regulators took a different approach by ordering three state-owned financial institutions to buy significant stakes in Bank of Jinzhou Co. When, Shandong-based Heng Feng Bank, which had failed to disclose its financial statements for two straight years, required a bail-out, the bank sold new shares for about $14 billion to a group of investors including a unit of China’s public sovereign wealth fund and a local government-backed asset management firm.

Although these were some of the smaller rural banks, as shown this past month in Chinese reports, their economy is following the world in a quantified slowdown that has seen GDP slip yearly since 2012. Making the matter worse a similar world slow-down in purchasing is already affecting China’s manufacturing-based economy. The three bank failures were only the tip of a huge iceberg.

China’s $40 Trillion banking system dwarfs the American system at double the size, with over 4,000 small, medium and massive, state-owned banks. The world’s four largest banks, including behemoth ICBC ($4TN), are all Chinese.

The failure of just three banks was important enough that Chinese regulators submitted Chinese banks to a stress test and the results were shocking. China’s central bank admitted that China’s banking sector is “showing signs of strain.” The stress tests had revealed that over 13% of China’s 4,379 lenders were designated “high risk” by the central bank’s report. With this amounting to over 570 banks, and thus multiplied by the three existing examples of bank bail-out funding, with the Chinese economy following the world into recession, the financial numbers and likelihood of any future series of bail-outs are truly biblical. If not, fiscally impossible.

Separately, the PBOC also stress-tested 30 medium- and large-sized banks in the first half of 2019. In the base-case scenario, assuming GDP growth dropped to 5.3% – or well above where China’s real GDP is now nine out of 30 major banks failed and saw their capital adequacy ratio drop to 13.47% from 14.43%. In the worst-case scenario, assuming GDP growth of 4.15%, or just 2% below the latest official Chinese GDP report, seventeen out of the thirty of these major banks failed the test. Separately, a liquidity stress test at 1,171 banks, representing nearly three-quarters of China’s banking sector by total assets, showed that ninety failed in the base-case and 159 in the worst-case scenario. The metrics of any collective bail-out indicates that China has upwards of an insurmountable $20 trillion problem rapidly approaching.

In reaction to these first three bank failures, the stress tests and poorer economic news China did what centrally planned economies do: Chinese policymakers focused on strengthening oversight and regulation by the PBoC and gave it authority to write new rules for much of the financial sector. The China Banking Regulatory Commission and the China Insurance Regulatory Commission will now be merged as part of an overhaul aimed at resolving existing problems such as unclear responsibilities and cross-regulation as well as closing regulatory loopholes and curbing risk in the $40-43 trillion (€34.78 trillion) banking and insurance industries.

With the metrics of China’s banking system already cause for considerable concern to the tune of $20 Trillion, this huge obligation is as much a mirage as the economy since it fails to add to the account the very large and un-tabulated Shadow Banking loans which would add $Trillions in debt to China’s already highly leveraged systemic banking risk. The International Monetary Fund (IMF), which provides- despite its predatory legacy- some excellent yearly analysis of worldwide economic developments has warned China’s problems could lead to “financial distress” in the world’s second-biggest economy. China is seen as one of the economies most vulnerable to a banking crisis, although Beijing has repeatedly assured that the risks are under control. In response to the PBoC reports, Chinese Finance Minister Xiao Jie echoed that the situation “was under control.”

China’s Economic Tricks of Sustainability.

As the world economic body politic runs out of any remaining gas to keep a pilot light under the rapidly cooling metrics that show their long forestalled recession is near and certain, China is also contracting.

The national debt of China, which is the total amount of money owed by the Chinese government and all organizations and branches stands at nearly CNY 38 Trillion ( $5.4 TN) and 54.44% of GDP.

Chinese debt has been accumulating ever more rapidly. The Institute for International Finance (IIF) reported that year-on-year, in Q1 of 2019 China’s corporate, household and government debt increased 6% more from 297% of GDP to an incredible 303%. However, this is also more than a 100% increase since 2008 and amounts to 15% of all global debt.

These figures do not include the off-the-books “Shadow Banking loans that some estimates predict would triple that debt percentage to much closer to $16 Trillion. The problems are most serious in China’s rural banking sector where an ever nervous public has reacted with two late-2019 bank runs at China’s Henan Yichuan Rural Commercial Bank and then at Yingkou Coastal Bank.

At the end of 2018, the budget deficit of the Chinese government was close to five per cent. However, if the off-balance-sheet (“shadow”) financing of local governments is taken into consideration, the budget deficit rises to over 11 per cent. However, at the end of 2014, the official government deficit stood at less than one per cent, but an accounting which includes local “shadow” funding was around five per cent.

China’s shadow banking system is so-called since this myriad of endemic lending trickery is believed to be massive in total and kept off the books. These risky, undisclosed loans entered China’s financial system in 2009 throwing open the doors to debt for a Chinese population hungry for investment in order to pay for all those Chinese and internationally made western goods.

The main kind of shadow deposit is generally offered as a wealth management product (WMPs). Chinese banks offer these via aggressive marketing of high-interest-rate accounts as their alternative to savings accounts which are regulated to a maximum return of 3 %. Since these sanctioned shadow loans advertise a return of as much as 8% or more, normal banking customers have been throwing their miraculously large paychecks into these funds by the billions.

One reason WMPs offer higher rates is that they are based on much riskier bank loans, much like the precursor to the late ’80s, early ’90’s American savings and loan meltdown. Incredibly, banks don’t hold these loans on their balance sheets or set aside capital against their potential defaults. Instead, they typically extend this debt via intermediaries called trust companies—firms that are not allowed to accept deposits or formally loan out money but are allowed to manage it. The trust companies create investment products like WMPs, which banks market for them in return for a commission.

With some smaller Chinese banks having already found themselves either getting bailed out or the subject of a bank run, one reason is that, like America, China’s interbank/repo rates have surged amid growing counterparty concerns of the many banks seeking depleting available liquidity. This has forced many banks to rely almost entirely on new deposits to fund themselves, forcing them to hike their deposit rates to keep their funding levels stable. Like any Ponzi trick in banking, new cash is required to sustain these thousands of lending pyramids. With the economy in decline, this need has lead to some desperate regional banks offering incentives for depositor’s cash that would make the long-ago American “free toaster” seem ordinary.

China has a massive pork famine that has seen disease wipe out 40% per cent of its pig population in 2019. With China being the world leader in pork consumption these bank’s desperations have created some interesting incentives to attract depositors. The SCMP reports that new clients who deposited 10,000 yuan (US$1,430) or more in a three-month time deposit at the Linhai Rural Commercial Bank in Duqiao in Zhejiang province were then eligible to enter a lottery to win a portion of pork ranging from 500 grams (18 ounces) to several kilograms. Other rural commercial banks in northern China’s Hebei province and western China’s Guizhou province have also launched similar pork rewards programs. Dushan Rural Commercial Bank, located in the remote mountainous county in Guizhou, offered a coupon for 10 yuan (US$1.4) worth of pork for every 10,000 yuan of new deposits.

This solution has been touted as uniquely beneficial to these banks since, instead of offering higher rates which only accelerate the bank’s insolvency due to requiring higher payouts on deposits, the bank is instead making a one-time payment, and the unusual incentive is enough to garner substantial new deposits.

PBoC cuts in its key lending rates in August ’19 designed to stimulate a slowing economy have only exacerbated net interest margin pressures on these banks. With less income from returns on their loans and without the many funding options available to China’s much larger banks, these increasingly high-interest rates that China’s smaller banks have to offer in order to attract new cash deposits could further lead to their insolvency.

It’s been over four years since the last official Chinese benchmark rate cut. With America leading the way across the globe with rate cuts aplenty and China still having a base rate of far higher than the US rate of < 1.5%, it was only a matter of time for China to also drop rates.

With the new authority given to the PBoC, this key Loan Prime Rate (LPR) has become the new Benchmark Reference Rate to be used by banks for lending. This, like most recent decisions are designed to interject further liquidity in the form of debt once again into a still failing economy by lowering borrowing costs for small businesses. This rate will be now set monthly (20th of every month) and will be linked to the Medium-term Lending Facility rate. The current 1 year LPR stands at 4.15% after its latest cut on Nov 30 versus the Benchmark Rate of 4.35%. This number is sure to continue to shrink and can be considered a key indicator of Chinese frustration at retaining needed annual GDP growth since the result of this one move lowered the costs of the roughly 152 trillion yuan ($21.7 trillion) in yuan-denominated outstanding loans held by financial institutions (that are actually on the books) in a further hopeful attempt to again boost economic growth.

Just mere days after the 20 bps cut the PBoC further highlighted its desperate need for capital, announcing that it will be lowering the required reserve ratio (RRR) – or the amount of money banks are required to have on hand – by 50bps for commercial lenders. Currently, the required reserve ratio is 13% for large banks and 11% for small banks. The cut, which is the first since September, will bring the blended reserve ratio for Chinese banks to the lowest level since October 2007. In doing so PBoC effectively released about 800 billion yuan ($115 billion) in instant liquidity from out of the already cash-strapped financial system.

All these adjustments by China and the PBoC do little to control or pay-off increasing debt and are designed to maintain the Chinese miracle of TVA style infrastructural improvements that has been the employment engine of its economic growth. China’s new development of the Belt and Road Initiative (BRI), although a masterstroke in Eurasian commerce, also serves to continue the illusion.

As traditional monetary policy becomes ineffective to boost the economy, Chinese President Xi has installed twelve former executives at the state-run financial institutions across the country who will support the communist government’s ability to combat banking and debt difficulties, reported Taipei Times.

These appointments are in response to growth collapsing to a three-decade low in 2019. New manufacturing orders did increase but this was in large- and medium-sized enterprises. Small enterprises continued deeper into contraction and new non-manufacturing orders slowed, pushing employment further into quantified contraction.

An easier to understand recessionary metric, passenger car vehicle sales, fell yet again in December, plunging 3.6% to 2.17 million units, according to the China Passenger Car Association. This marks the 18th drop in the past 19 months for the country. Sales fell 7.5% in 2019 and 6% in 2018. GM said that its sales were down 15% in China and said that pressure into 2020 would likely continue.

Meanwhile, local Chinese manufacturers’ numbers are also down. BYD Co. posted an 11% drop in 2019 sales and SAIC Motor reported a “similar decline”.

Worse, exports to the United States were down 23% from the prior year.

Running from the Piper’s Call

But, it seems that China has no choice but to carry on with the façade of financed infrastructure projects as the only path to survival. Said Victor Shih, an associate professor of political economy at the University of California in San Diego;

“Because it [infrastructure investment] already is a large contributor to growth, the slowing investment will substantially reduce growth rates. This is not what the leadership wants.”

Shih’s assertion seemed confirmed when last year, President Xi said Chinese banks would lend 380 billion yuan ($55.09 billion) to support Belt and Road cooperation, and Beijing would also inject 100 billion yuan into a Silk Road Fund. Some observers view the project as an instrument designed to help the Chinese economy, with state-owned companies in specific sectors expected to profit massively from its implementation.

But they still need funding and Chinese banks on their own volition may be reluctant to get involved when already having troubles of their own. Andrew Collier, managing director at Orient Capital Research, says

“The banks [may] remain leery of these projects because they doubt they will be profitable and they will be stuck with bad loan. In the end, we are going to see increasing defaults among smaller institutions, the collapse of private loans via wealth management products, and growing layoffs in areas of the country with less political power.”

Making matter worse, a study conducted by the Center for Global Development estimates that the initiative could increase debt sustainability-related banking problems in eight countries also involved in the BRI.

“I still think that if growth falls below a certain level, the top leadership will order a stimulus, which involves acceleration in debt growth,” said Victor Shih. “That is the only viable tool in China’s arsenal if the economy slows too much.”

As noted in a recent article by University of Helsinki economics professor Tuomas Malinen, China has stimulated its economy aggressively in Q1 and Q3 2019 but interestingly has not continued its past emphasis on infrastructure investments as in 2015/2016. Q3 of 2019 saw record-breaking stimulus programs, however, China concentrated instead on providing loose credit to enterprises through both conventional and “shadow” banks.

As Malinen forewarns:

“What is notable is that even with this record stimulus, China has kept its economy growing barely above the ‘official rate’. This tells us that the Chinese economy has reached or is very close to reaching the point of debt saturation, where households and corporations simply cannot absorb any more debt, and any new debt-issuance fails to stimulate the economy.”

Though a massive infrastructure-spending program could revive growth, the ability of China to issue fiscal stimulus is starting to be seriously limited. This effectively means that China is fiscally unable to underwrite massive infrastructure projects and so any new world-economy-saving stimulus from China, as in 2015/2016, will be practically impossible. New infrastructure initiatives- if recessionary metrics continue to deteriorate- could only be realized if those costs are directly monetized by the PBoC. This would be the weapon of last resort for China but , when considering a declining economy, may soon be inevitable.

As Goes China…?

China is just one more working example of the failure of the many globalist economies worldwide that are already similarly suffering in the grip of massive unsustainable- if not orchestrated- debt. Which country becomes the first to trigger the almost certainly pending domino effect of global economic collapse, is merely a rhetorical question at this point. As goes China…?

This week in an interview, former Reagan OMB director David Stockman highlighted the global economic link to China, saying,

“The world economy would be not nearly as good as it looks had the Chinese not been borrowing like there’s no tomorrow and building regardless of whether its efficient or profitable.”

Stockman added, in summation,

“The whole global economy is really dependent on China piling even more debt onto the $40 trillion pile they already have.”

China economically continues to play the financial role of Kenneth Lay to its American mentor’s Bernie Madoff. But in the last few months China has shown, like so many other so-called first world economies, that it too is now all-in at the casino and using only borrowed money in a desperate effort to stay at the table…or starve.

Worldwide, many countries already burn in political turmoil of their own debt-ridden making as their own primal forces of nature squeeze their populations with the resultant new mantra of ever increasing austerity while the IMF and World Bank waits in the wings, salivating to gobble-up the carcass.

Alas, when it comes to unsustainable national endemic debt one primal truth is now being heard clearly in China, as in other Central bank boardrooms across the globe, and the empty dinner plates of their public…

When the time comes to pay the piper, that debt will be paid, no matter…but the Piper will take, in lieu of payment, pork, flesh, blood, or… dreams!

Tyler Durden Fri, 01/17/2020 - 21:45
Published:1/17/2020 9:02:51 PM
[Markets] Retail Carnage Continues: Bose Lays Off 100s, Shutters All Retail Stores Retail Carnage Continues: Bose Lays Off 100s, Shutters All Retail Stores

Taking the award for Most Continents Covered While Shrinking Retail Footprint this week is Bose, which will be laying off hundreds of employees to close retail stores across the world. 

The company plans on closing its entire retail footprint in North America, Europe, Japan, and Australia, according to The Verge. It adds up to a total of 119 stores, according to a spokesperson. The closures are slated to happen "over the next few months".

And the company was direct in why it was making the move: it stated this week that its products “are increasingly purchased through e-commerce”.

The company has had a brick and mortar presence since 1993 and has locations across many shopping centers and malls scattered around the U.S. The stores help showcase the company's headphones, speakers and other hardware. But there are usually similar demo areas in stores like Best Buy, which still sells Bose products. 

The company hasn't said exactly how many people would be laid off, stating: 

“Originally, our retail stores gave people a way to experience, test, and talk to us about multi-component, CD and DVD-based home entertainment systems. At the time, it was a radical idea, but we focused on what our customers needed, and where they needed it — and we’re doing the same thing now.”

Colette Burke, vice president of Global Sales, continued:

"It’s still difficult, because the decision impacts some of our amazing store teams who make us proud every day. They take care of every person who walks through our doors – whether that’s helping with a problem, giving expert advice, or just letting someone take a break and listen to great music. Over the years, they’ve set the standard for customer service. And everyone at Bose is grateful.”

The company says it will keep stores open elsewhere:

 “In other parts of the world, Bose stores will remain open, including approximately 130 stores located in Greater China and the United Arab Emirates; and additional stores in India, Southeast Asia, and South Korea.”

The company also says it is offering outplacement assistance and severance to employees.

Meanwhile, the move may not surprise Zero Hedge readers, as we noted just two days ago that mall vacancies are hitting two-decade highs. 

US retailers announced 9,300 store closings in 2019, according to Coresight, indicating that the retail apocalypse and a massacre of malls are far from over. Mall operators saw a surge of store closures in 2H19 and ahead of Christmas despite a relatively stable consumer that has been leveraging up via the use of credit cards

Barbara Denham, a senior economist at Reis, said one notable trend during the 2019 holiday season was the shift in spending habits from brick and mortar stores to online. Denham said recent vacancy statistics paint a disastrous picture for shopping malls as vacancy rates have surged to a record high of 9.7%.

Tyler Durden Fri, 01/17/2020 - 21:25
Published:1/17/2020 8:37:40 PM
[Markets] The Moneyist: ‘Perhaps a little pain would help.’ My ex-husband won’t leave our home and rents rooms on Airbnb — should I stop him? ‘Needless to say, he feels no urgency to settle and continues to find ways to prolong the process.’
Published:1/17/2020 8:37:40 PM
[Markets] Middle Age Misery Peaks At 47 For Most Americans, Study Finds Middle Age Misery Peaks At 47 For Most Americans, Study Finds

Middle age can be a miserable time, particularly for a certain cohort of Gen Xers who are struggling through divorce, a dead-end career, insufficient savings or overwhelming debt.

But David Blanchflower, a professor at Dartmouth College and former BoE policy maker, examined data across 132 countries to measure the relationship between wellbeing and age.

And what he found surprised him, according to Bloomberg.

He concluded that every country has a "happiness curve" that's U-shaped over a typical lifetime.

"The curve’s trajectory holds true in countries where the median wage is high and where it is not and where people tend to live longer and where they don’t," Blanchflower wrote in a study that was published Monday by the NBER.

For most of the developed world, the age of peak unhappiness is 47.2 years old.

Most of a person's middle years are miserable, according to the study. But oddly enough, as we approach the golden years, we start to appreciate life a little bit more.

Perhaps that has something to do with approaching retirement age (something millennials might never reach). Or maybe it's simply the wisdom of age.

But for most of life, expect the misery to get worse before it gets better. Just one more reason why Americans are seeking mental health advice in droves.

Tyler Durden Fri, 01/17/2020 - 20:45
Published:1/17/2020 8:01:29 PM
[Markets] Beware This Looming Stock Market Killer The bond market has been the stock market’s best friend in its run toward Dow 30,000. Low bond yields have induced corporations to borrow. The outpouring of bond supply has been fed by investor demand. Published:1/17/2020 7:36:26 PM
[Markets] The Population Collapse Behind Rates, Debt, & The Asset Price Explosion The Population Collapse Behind Rates, Debt, & The Asset Price Explosion

Authored by Chris Hamilton via Econimica blog,

This may not be a surprise to many males, but human females are unlike the rest of the animals on earth.  Human females have a unique and totally differentiating factor from nearly all other animal life; their bodies cease being capable of pregnancy approximately half way through their life cycle.  This natural change to sterility (menopause) does not happen in the animal kingdom (nor in human males) essentially so long as they live (ok, actually there may be a couple of whales and porpoises that may also go through menopause...but I digress).  Animals and male humans are still able to reproduce nearly until the end.  But not human females.  Even before menopause fully takes over, typically around 50 years of age, fertility rates drop radically after 40 and miscarriages surge among those able to get pregnant.  By 45, pregnancies essentially cease.

What the hell does this have to do with economics, you may be asking yourself?

Judging the size and change of humankinds population is quite different than any other species on earth because of this truncated period of fertility among human females. Thus, to gauge the direction of our species, and the future consumption and potential economic activity, we must focus on annual births versus the 20 to 40 year-old female population and understand that the post childbearing, 40+ year-old female population is, from a fertility perspective, simply an inert echo chamber. The 20 to 40 and 40+ year-old populations shown below through 2040 are not estimates or projections but actual persons which already exist and (absent some pandemic, world war, or change in life spans) will slide through the next 20 years.  All data (except where noted) comes from the UN World Population Prospects 2019 and they collect / compile all the data from the national and regional bodies.  The only real variables in what I'll show below are immigration, deaths, and births over the next 20 years.  I also primarily focus on the world excluding Africa.  Africa consumes so little, has relatively very low emigration rates, is highly reliant on the rest of the world for it's economic growth, but from a population perspective, is growing so rapidly as to skew the picture.

But at the onset of a declining childbearing population (excluding Africa) and ongoing declines in fertility rates, the UN projects that the decline in births (excluding Africa) since 1989 will only continue.  But I'll show why significantly lower annual births are far more realistic than the UN projections.  And given nation after nation is reporting "shocking" declines in births in 2018 and again 2019...the estimated numbers of births are only set to be significantly lower as something very momentous is appears to be happening.

Last 70 years...

1950-'89 +32 million annual births, +375 million female 20-40 year-olds, +320 million female 40+year-olds

1989-'20 -17 million annual births, +230 million female 20-40year-olds, +680 million female 40+year-olds

Next 20 years...

2020-'40 -10 million births annually by 2040, -32 million female 20-40year-olds, +435 million female 40+year-olds

Below, looking at the same data as above, but focusing on the year over year change of 20 to 40 year-olds (red columns) versus the same for 40+ year-olds (blue columns), annual births (black line), and federal funds rate (yellow line).  From a global population perspective, the 1980's were the turning point; federal funds rate peaking in 1981 (restricting access to capital as the growth in global demand was at its zenith), annual childbearing female population growth peaking in 1985 (adding nearly 18 million females in that year alone), and annual births subsequently peaking in 1989. Since 1989, the under 40 year old annual growth keeps decelerating, the births keep declining, and the federal funds rate moving lower.

In 2020 or 2021, the global childbearing population of females (excluding Africa) will begin outright declining.  The only thing rising was the annual growth of the 40+ year old population.  However, the echo of annual growth among the post childbearing female population will peak around 2028...and then rapidly begin the deceleration glide path (still growing, but much slower while the childbearing population will continue to be in outright decline indefinitely).

Looking at the pictures through the global regions.

East Asia (China, Japan, Taiwan, S/N Korea, Mongolia)

For East Asia, 1989 was peak annual births, and the crossover point of post-childbearing outnumbering childbearing was in 2000.  Births continue tanking and so is the childbearing female population.  Only the fertility-wise inert post childbearing population continues soaring.  By 2040, the region is set to reach a 2.8 post-childbearing to childbearing ratio.  The higher this ratio moves, the greater the financial and societal pressure of elderly generations on the younger generations...further negatively impacting fertility rates and economic demand/growth.


2020 births will be about 50% lower than the 1989 peak, and given the known decline of a minimum of 45 million females of childbearing age by 2040 (and almost 70 million fewer, or -30% fewer, than the 2000 peak) there is really no good reason (other than massive government intervention) that births don't fall significantly further.  My guestimate in blue is likely to be far too "optimistic".  By 2040, there will be more than 2.7 post-childbearing females for every potential mother.  And now a trade deal with a nation that has an indefinitely shrinking domestic demand and massive housing over-capacity, factory overcapacity, etc. for a population (let alone middle class population) that will never be coming...hmm, interesting.


If Japan were a human, now would be about the time to bring in hospice care.  From a growth perspective, they are terminal as even the 40+ year-old segment is now making its turn to decline along with births and the childbearing population.  By 2040, there will be more than 3.7 post-childbearing females for every potential mother.  What saved Japan during the long decline in domestic demand, a long rise in global export now over.  The Japanese / German models of reliance on exports to make up for decelerating/declining domestic demand was premised on fast rising global demand which is simply no longer supported by a growing population of potential consumers.

South Korea

Again and again I am shocked when I look at South Korea.  The 70% collapse in annual births will only continue picking up speed to the downside as those capable of childbearing are in freefall...while the 40+ population dwarf's the under 40 year-olds by more than 2 to 1 now and will be almost 4 to 1 by 2040 (a done deal, not a prediction).  Absent state mandated pregnancies (or the like) births will fall in excess of 80% and may even be down 90%+ by 2040?  A society collectively choosing not to reproduce or replace themselves...essentially committing a collective suicide at a time of the most relative plenty Korea has ever known, it boggles the mind!?!  Again, collapsing domestic demand while global export markets are turning away and inward to meet their boggles the mind and this is not going to be pretty.

Eastern Europe (Russia, Belarus, Bulgaria, Ukraine, Czechia, Hungary, Poland, Moldova, Romania, Slovakia)

By 2030, the childbearing females of Eastern Europe will be nearly a third fewer than existed as of 2011.  I am suggesting that given a third fewer potential females of childbearing age and given continuing flat to falling fertility rates...births will be significantly lower than the UN is projecting.  The existing decline of 50% is likely to be down something like 70%+ by 2040.  Like Japan, Eastern Europe's post-childbearing population is set to begin declining around 2030, and accelerating depopulation will be the order of the day.  2030 will also be the peak post-childbearing to childbearing ratio at nearly 3 to 1.

Western Europe

Not as dramatic as East Asia or Eastern Europe thanks to ongoing immigration, but the destination is the same.  Growing quantities among the post childbearing population and ever fewer births and potential mothers.  Almost a 2.9 post child-bearing to child-bearing ratio by 2040.  The weight of the promises made to the old to be paid from the young is a crushing weight only further depressing births.

United States

The charts for the US have a big problem, they assume high rates of immigration (primarily of childbearing age) to maintain a flat childbearing population shown from 2020 through 2040.  However, the reality is that in 2019, the US had the lowest population growth in it's history for three reasons, tanking births, net outflow among illegal Mexicans, and far tighter border controls reducing immigration to a relative trickle.  Further, the locations that US immigrants are now coming from (China, India) and the education and income levels of the females coming in is with fertility rates even lower than the general US population.  Surging costs of living (rent, healthcare, insurance, daycare, education, etc.) beyond income is forcing females to work to avoid financial wreck.  Getting married, having children is simply a luxury more and more simply find beyond their means...and given widely available contraceptives, this is more of a choice than ever.  Minimum of 2.2 ratio by 2040...but if the childbearing population falls, as I expect, the ratio (and societal weight it represents) will move northward.

Latin America (Western Hemisphere except US/Canada)

Births are declining, the childbearing population is at it's zenith and will shortly begin its secular decline, and only the post-childbearing population is growing.  By 2040, the childbearing to post childbearing ratio will be about 1.8 to 1.

Southeast Asia (Cambodia, Brunei, Indonesia, Lao, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam)

The growth of the childbearing population is over and a decades long period of a flat childbearing population is underway.  Births will likely slowly recede with declining fertility rates among a zero growth childbearing population.  By 2040, the post childbearing will outnumber the childbearing by a 1.8 to 1 ratio.

South Asia (India, Pakistan, Afghanistan, Bangladesh, Iran, Bhutan/Nepal, Sri Lanka)

Like Southeast Asia, a long period of zero growth among annual births will be coming through the childbearing population beginning in 2030.  By 2040, India's childbearing population will essentially be at it's peak and the 1.4 post childbearing to 1 childbearing ratio will be ready to rip higher over the next two decades.  The engine of population growth among the worlds most populous region has already stalled and begun to reverse although it will take decades before this is apparent in the overall population numbers.

But Africa Will Continue To Populate The Earth!?!

Finally, the chart below shows the year over year change in births among the world (excluding Africa) versus year over year change in Africa, from 1950 through 2040.  Note the great gyrations for births among the world (black line) versus the smooth and steady year over year increases in Africa (aqua line)...except that one deceleration around 2018?!?  All forward growth among births is anticipated to take place in Africa, essentially just offsetting the declining births among the remainder of the world.

Getting a closer look from 2000 through 2040, the great 2008 through 2018 deceleration (still growing, but much slower) in growth of births among Africa is much more noticeable.  Also of import, this UN report came out in early 2019, and the last hard data is through 2018 most everything from 2019 on is projections.  So, note the hard data 2008 through 2018 is suggesting the same issues plaguing the worldwide slowdown in births is likely impacting Africa as well.  Of course, with a fast rising childbearing population in Africa, the UN demographers immediately project that Africa's births will return to high year over year increases from 2019 onward...rather than suggesting that the same something that has turned global births upside down world-over will continue to show up in Africa.  Definitely something to watch as, again, the only thing keeping global births from really tanking has been Africa, but I've a funny feeling this depopulation contagion is likely working it's way through Africa now.

What is the point of all this?

The global economy is premised on perpetual growth of demand, of supply, of money, of asset prices, etc.  But the pre-eminent engine for the growth (at least for the last few centuries) has been a rising population.  More people need more of everything.  This means more factories, more supply networks, more infrastructure, more homes, more cars, creating more employment, etc.  Including more loans and debt being lent into existence, particularly among the younger populations allowing for the purchase of vehicles, homes, etc. in the present to be repaid "later".  But when the collective younger adult population, undertaking the vast majority of leverage, ceases growing and all the growth shifts to older and elderly adults, who undertake relatively low levels of debt or in elderly years move to outright deleverage...the money supply ceases to grow organically and begins to shrink antithetically to a perpetually growing system. 

It has been a long run-up since WWII to get here; decades of rate hikes during accelerating demand (constricting supply of money and causing inflation), then decades of rate cuts during decelerating demand (expanding supply of money and causing deflation but simultaneously asset inflation), resultant debt through individuals, corporations, and federal governments, all intertwined with the deceleration of population growth.  Since 2009, the Fed is committed to buying bonds so as to avoid a free-market pricing for those bonds and avoid yields on US debt that would soar and consume much/most of the federal taxes collected.  The Fed is also now committed to not allow free-market pricing of assets based on decelerating population growth of young and large deleveraging among elderly.  I think it is also highly likely the Fed (and/or agents at its direction) are also manipulating precious metals and/or crypto's so as to hide the severity of the situation.

All of this is inorganic money creation taking place now is to mask the fundamental accelerating weakness that a low population growth can organically support.  The Federal government and Federal Reserve have now gone so far that any deceleration in inorganic growth (let alone outright declines in balance sheet, rate hikes, declines in excess reserves, tax hikes, lower federal deficits) have a high potential to take the economy into not a recession but a depression unlike the world has known.  The primary ingredients for removing ourselves from previous recessions/depressions no longer exist.  Global demand will begin declining indefinitely as this demographic picture plays out and rates back at zero will do little to move the needle (aside from more asset inflation).  The fast rising population of elderly will continue to consume less than they did in their prime years and deleverage more...far beyond the capability of the young adults to offset the financial, economic, and currency impacts.  The true picture is that a generations reset is likely in the offing before the demographic and depopulation dynamics can be turned around, before the debt can all be extinguished, before the overcapacity can be expunged.

And I guess, the trillion dollar question should be how did we get here?  Were the gyrations in the population and subsequent decelerations (and imminent population collapses in many nations/regions) simply the result of birth care becoming widely available, urbanization, female employment rates, etc. etc. that happened of their own accord...or if instead this is by design as central banks had an over-riding mandate since the 1970's (not unlike China...but by a different means), only now becoming clear?!?  Was this simply humankind going beyond itself or was this imminent collapse centrally designed and engineered?

Tyler Durden Fri, 01/17/2020 - 20:25
Published:1/17/2020 7:36:25 PM
[Markets] Got Gold? - David Rosenberg Warns "We're Going To Have Helicopter Money" Got Gold? - David Rosenberg Warns "We're Going To Have Helicopter Money"

Authored by Christoph Gisiger via,

David Rosenberg, Chief Economist & Strategist of Rosenberg Research, doesn’t believe in the sustainability of the stock market rally, and warns that investors may be disappointed at the end of the year. He is bullish on energy stocks - and predicts that the gold price will surge to $3000.

Mr. Rosenberg is also the author of Breakfast with Dave, a daily distillation of his economic and financial market insights.

"At this level, many things have to go optimally so that the prices are higher at the end of the year," comments David Rosenberg on the growing complacency among investors.

The renowned economist and strategist is one of the most profound experts on the U.S. economy and one of the last remaining skeptics to warn of a correction.

His bearish view is based on exorbitantly high equity valuations and over-optimistic earnings expectations. He also thinks that the US consumer sector is in worse shape than the consensus believes.

Rosenberg, who recently launched his own economic consulting firm, explains in this extensive interview with The Market/NZZ why he is pleasantly surprised by the phase one agreement between the United States and China, why the Federal Reserve's balance sheet is currently the most important determinant for the financial markets, and why he is betting on gold, Treasuries, energy stocks and emerging markets.

Mr. Rosenberg, after a strong start to the year, equity markets seem to be somewhat more hesitant recently. What’s your outlook for the coming months?

This is a liquidity and momentum driven market. It’s been that way for the past four months where the correlation between the S&P 500 and the Fed’s balance sheet has expanded to a 95% relationship. This is a case of a very accommodative Fed policy. The double-digit growth in the money supply is bypassing the real economy and has entered into asset markets broadly, and specifically into equities. So as long as the Fed is in the game priming the monetary pump, shorting stocks is going to be a very dangerous game to play.

How sustainable is this rally?

I’m not bullish. Valuations are at extreme levels and the level of complacency is also a red flag. There are needles in the haystack, but this overall market rally is more a house of straw than a house of brick. You can rent liquidity rallies, and you can rent them for an extended period of time, but they’re very difficult to own. This is not a fundamentally based bull market like in the 1980s and 1990s. Back then, gains in stocks where premised on much better demographics and much more solid productivity growth.

What are your main concerns regarding the U.S. economy?

There’s this view that we’re going to have either a growth stabilization globally or a re-acceleration of economic growth. I don’t see that in any leading indicator. I think there’s going to be a lagged response in the U.S. economy to the sharp slowing that we saw abroad. Remember, twelve years ago it was the rest of the world that ultimately followed the U.S. This time around, the U.S. will follow the rest of the world.

Then again, concerns of a U.S. recession have faded since last summer. Are we definitely out of the woods?

People will claim that there is no recession. Statistically speaking that’s true as far as GDP is concerned. But we know for a fact that we actually had a four-quarter earnings recession. I never quite understood why GDP is so important to an equity investor who is buying an earnings stream. There’s no ticker “GDP” on the New York Stock Exchange. So it’s not about the overall level of GDP, it’s really about earnings and about the fact that if you look at the 30% share of the U.S. economy that is outside of the consumer space, we actually have been in a recession in the past two quarters.

Why would you exclude the other 70% of the economy from an investor’s point of view?

As an equity strategist, you look at the stock market from a breadth perspective to gauge the overall health of the marketplace. You should do the same thing to examine the breadth of GDP. On a median basis, the U.S. economy has stopped growing three quarters ago. Also, the U.S. consumer is not as nearly in good shape as people think. We see signs that the labor market is starting to show some fatigue. Moreover, there is a big split between spending growth on discretionary and non-discretionary items where things don’t look as robust. We surely saw that not just in the latest retail sales report but also in the CPI numbers this week. If consumer demand was really that strong the underlying inflation rate would be accelerating not decelerating. The Fed would not be cutting interest rates three times and then re-extending its balance sheet at a rate that even exceeds what they were doing with QE3.

How stimulative is monetary policy right now?

The most important correlation to the stock market today is the Fed’s balance sheet. The power of the Fed has become so acute that it has replaced the economy as a principle influence over the stock market to the point where there is only a 7% correlation between GDP and the S&P 500. Historically, in any given cycle that relationship was anywhere between 30% and 70%. The amount of easing that the Fed has done since the beginning of October by expanding the balance sheet is just about as strong in terms of basis points as the three rate cuts they engineered last year. They have cut rates almost a 150 basis points when you look at it on an equivalent basis.

How are the financial markets going to react when the Fed tries to wind down its “Not-QE”-program?

A lot will depend on what the macroeconomic background looks like, especially what’s happening with earnings estimates. But we have a template of what happened when the Fed provided a lot of liquidity juice to the marketplace with the Y2K special lending facilities in late 1999. At that time, the market strongly surged, and kept on rallying into the early part of 2000. Then, the Fed started to withdraw that liquidity and it wasn’t a pretty picture.

Keep in mind that the recession didn’t start until March of 2001, even though the problems in the stock market and particularly in technology started about a year ahead of the economic downturn.

What do you think will happen this time?

It’s tough to time when the Fed is finally going to sit back and say: “Ok, you know what: I’m not handing any more candy to the kindergarten class”. My sense is that the response to the Fed no longer priming the pump could be significant. We could end up unwinding almost anything we saw since last October. That wouldn’t surprise me at all. It doesn’t necessarily bring you a 20% stock market correction, but it certainly could bring you a 10% pull back.

At what level will the S&P 500 trade at the end of the year?

I would be surprised if the market is higher than today. The question will be how much lower, because earnings are going to be very challenged to meet the double-digit growth forecast based on the consensus view. Earnings will disappoint this year and I don’t think we’re going to get another 4-point multiple expansion. The question also will be the extent to which companies continue on this path of share buybacks. The principal source of demand in the stock market have been the corporations themselves. There is a big disconnect between the dollar level of earnings and earnings per share. The share count has been driven down to the lowest level in two decades, and that’s providing the support on a per share basis.

On a positive note, the U.S. and China have finally signed the long-awaited trade agreement. What do you make out of this deal?

The deal preserves the U.S. bargaining “stick” in the form of tariffs remaining on $360 billion of goods imported from China. But investors do seem impressed with this ‘Phase One’ trade deal, which did end up addressing IP protection issues, forced technology transfer, and termination clauses/dispute resolutions if either party reneges. Even skeptics like me have to be open minded to the possibility that there is more to this agreement than met the eye initially. At a minimum, the hostilities appear to be behind us for now and President Trump does have something tangible to campaign on. But the trade war is not over despite rising hopes that this trade deal with China is going to open up a prolonged period of appeasement. In fact, this is a much broader economic war between two clashing ideologies.

It’s not much more than two weeks until the start of the Democratic primaries. To what degree are the U.S. elections going to impact the financial markets?

Most market participants think that Donald Trump has a lock on the November elections. He may well, but I don't think the odds are as close to a 100% as people think. There is going to be political risk in polling, and that’s going to inject more volatility into the marketplace.

What should investors do in this kind of environment?

I believe in Bob Farrell’s 10 Rules for investing. He was a legend at Merrill Lynch & Co. for several decades, and his first rule is that markets tend to return to the mean over time. Whether you’re looking at price/earnings, price/book or price/Ebitda, we’re pressing against the valuation levels we saw at the peaks back in 2000. So at this stage, a lot of things have to go right for the market to continue to appreciate until the end of the year. It can happen, but there is going to be bumps along the road. So to me, it’s less about buying the index. It’s more about identifying the sectors and subsectors that will hold up well in that sort of environment.

What’s your advice for a Swiss investor coping with deeply negative interest rates?

You want to be investing in things that are reversely correlated to negative interest rates. Firstly, as a Swiss investor or a European investor, I truly would want to be invested in bonds that have a positive yield and liquidity. That means you want to be in other countries’ fixed income markets where Central Banks have the capacity to ease monetary policy. The United States fits that bill. That’s why I’m still a big fan of Treasuries. I think the U.S. Treasury market will be a very good refuge.

Where else do you spot opportunities?

Gold is inversely correlated with either near zero rates, zero rates, or negative rates which makes it an ideal investment. Mark Twain coined the phrase "Lies, damned lies, and statistics". But the thing about charts is that they don’t lie. Gold went through a long-term, multi-year basing period. Now, it has broken out and the chart looks fantastic. Also, gold is no country’s liability. For example, in the United States M2 growth is running at double digits. So when you compare the new supply of gold against the supply of money coming into the system from Central Banks, to me it’s a very clear cut case that you want to have very high exposure to bullion.

You’re predicting that the gold price will surge to $3000 an ounce. What are the fundamentals your forecast is based on?

It’s just a matter of when, not if. Gold demand is predicated on the final act which is going to be right-out debt monetization. When we get to the lows of the next recession, we’re going to find that these Central Banks that already have been extremely aggressive are going to engage in what is otherwise known as the “debt jubilee” or a right-out debt monetization which was actually the final chapter of the Bernanke playbook. Remember, Ben Bernanke got his nickname “Helicopter Ben” because in a speech in 2002 he suggested that helicopter money could always be used to prevent deflation. So we’re going to have helicopter money.

That doesn’t sound very encouraging.

Would you ever have thought that, at or near the peak of this cycle interest rates would be at the lowest level since the 1500s? Just imagine what happens to monetary policy in the next downturn.

What do you think?

This debt morass has been the principal reason why - notwithstanding how wonderful the stock market has done - this has been the weakest global expansion on record. What happens in the next recession is that the cash flows to service that debt are going to become significantly impaired and we’re going to get a destabilizing default and delinquency cycle. I know, that sounds absolutely horrible, but we’ve hit the end of the road on negative interest rates, and we’ve really hit the end of the road on quantitative easing. So the Central Banks are going to go into a new, non-conventional toolkit called debt monetization. They will lose control of the monetary base and then we will go into a situation where, even with technology and with aging demographics in the industrialized world, we will be talking about inflation again. That might come in the next 18 to 24 months, and gold is going to skyrocket.

Do you also see attractive investments in the stock market?

There is not a lot of visibility in terms of earnings. But defense and aerospace is an area where the earnings surprises will be on the upside for the foreseeable future. So you want to participate in that. Every single country is raising its defense budget, and Donald Trump has successfully pressured his NATO allies to ramp up their military spending. For the first time in the post World War II area, we see Japan doing the same thing. We’re not talking about classic warfare. We’re really talking about defense technology and cybersecurity. It’s just like the chart of gold: Even though multiples in this sector have been re-rated because of the earnings visibility, this is a chart you want to buy.

What about opportunities from a value perspective?

The energy sector’s market capitalization relative to the overall stock market valuation is the lowest it’s ever been. We’re down to almost a 4% energy share of the S&P 500. That’s lower than it was when the oil price was $11 a barrel back in 1998. We will not all be sitting in driverless electric cars three years from now. Fossil fuels are not going to go away that quickly. At this stage, there is a very firm floor. The energy sector is nowhere close to being priced for where oil prices are right now and there is justification for why the oil price will remain close to where it is for an extended period of time. So in a world where practically every asset class from real estate to corporate credit to equities is extremely expensive, energy offers very deep value. At peaks of the cycle this is where you want to be buying.

Are there also promising investments globally?

Sticking to the concept of mean reversion, I want to be taking my profits out of growth and moving into value. Part and parcel of that is taking profits in the US and moving them into other markets that are a lot cheaper and that have lagged well behind. Emerging markets are inherently riskier, but the valuations are very compelling. Moreover, I expect the U.S. dollar to go down rather than go up which is an additional benefit for the emerging market space.

What countries should investors look at?

You can’t get much cheaper than Hong Kong. But there are other markets that look pretty attractive. I would say Korea is another market that you would be focusing on as well.

And how about countries in the developed world?

The most positive story is Japan. I continue to believe that Prime Minister Shinzo Abe has emerged as a transformational leader. There has been a positive re-rating of Japan’s secular growth rate as a result of his policies. The back of deflation has been broken by the Bank of Japan. So Japan is a market that’s under owned and relatively inexpensive. There is going to be a positive re-rating, not just in terms of Japan’s GDP growth rate. There are also nascent signs of an equity culture being developed that reminds me a lot of what happened in the U.S. in the early 1980s.

Tyler Durden Fri, 01/17/2020 - 19:45
Published:1/17/2020 7:01:09 PM
[Markets] Long-dated government bond rates rise the most in more than a week on upbeat data, 20-year debt announcement Long-dated U.S. Treasury yields edge higher Friday morning af